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PROSPECTUS SUPPLEMENT
(To Prospectus Dated June 10, 1996)
ADVANTA CREDIT CARD MASTER TRUST II
$605,500,000 Class A Floating Rate Asset Backed Certificates, Series 1996-D
$38,500,000 Class B Floating Rate Asset Backed Certificates, Series 1996-D
ADVANTA NATIONAL BANK USA
Seller and Servicer
ADVANTA NATIONAL BANK
Seller
Each Class A Floating Rate Asset Backed Certificate, Series 1996-D
(collectively, the "Class A Certificates") and each Class B Floating Rate Asset
Backed Certificate, Series 1996-D (collectively, the "Class B Certificates" and,
together with the Class A Certificates, the "Certificates") will represent an
undivided interest in the ADVANTA Credit Card Master Trust II (the "Trust")
formed pursuant to a Pooling and Servicing Agreement among Advanta National Bank
USA ("AUS"), Advanta National Bank ("ANB" and, together with AUS, the "Banks")
and Bankers Trust Company, as trustee. The
(Continued on next page)
THERE CURRENTLY IS NO SECONDARY MARKET FOR THE CERTIFICATES, AND THERE IS NO
ASSURANCE THAT ONE WILL DEVELOP. THE UNDERWRITERS EXPECT, BUT ARE NOT OBLIGATED,
TO MAKE A MARKET IN THE CERTIFICATES. THERE IS NO ASSURANCE THAT ANY SUCH MARKET
WILL DEVELOP OR CONTINUE. POTENTIAL INVESTORS SHOULD CONSIDER, AMONG OTHER
THINGS, THE INFORMATION SET FORTH IN "RISK FACTORS" COMMENCING ON PAGE S-17
HEREIN AND ON PAGE 14 IN THE PROSPECTUS.
THE CERTIFICATES REPRESENT INTERESTS IN THE TRUST AND DO NOT REPRESENT INTERESTS
IN OR OBLIGATIONS OF ADVANTA CORP., ADVANTA NATIONAL BANK USA, ADVANTA NATIONAL
BANK OR ANY AFFILIATE THEREOF, EXCEPT TO THE LIMITED EXTENT DESCRIBED HEREIN. A
CERTIFICATE IS NOT A DEPOSIT AND IS NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION (THE "FDIC"). THE RECEIVABLES ARE NOT INSURED OR GUARANTEED BY THE
FDIC OR ANY OTHER GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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PRICE TO UNDERWRITING PROCEEDS TO THE
PUBLIC(1) DISCOUNT BANKS(1)(2)
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Per Class A Certificate 99.96875% .325% 99.64375%
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Per Class B Certificate 100.00000% .375% 99.62500%
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Total $643,810,781 $2,112,250 $641,698,531
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(1) Plus accrued interest, if any, at the Class A Certificate Rate or the Class
B Certificate Rate, as applicable, from June 18, 1996.
(2) Before deduction of expenses payable by the Banks estimated at $620,000.
Underwriters of the Class A Certificates
J.P. MORGAN & CO.
LEHMAN BROTHERS
MERRILL LYNCH & CO.
SALOMON BROTHERS INC
UBS SECURITIES
Underwriter of the Class B Certificates
J.P. MORGAN & CO.
June 10, 1996
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(Continued from previous page)
property of the Trust includes a portfolio of VISA(R) (R) credit card
receivables (the "Receivables") generated or to be generated from time to time
in the ordinary course of business in a portfolio of consumer revolving credit
card accounts (the "Accounts"), all monies due in payment of the Receivables and
certain other property, as described more fully herein, including the benefits
of funds on deposit in the Cash Collateral Account as described herein. In
addition, the Collateral Interest (as defined herein) will be issued in the
initial amount of $56,000,000 and will be subordinate to the Certificates. The
Certificateholders will be entitled to certain assets of the Trust, including
the right to receive a varying percentage of each month's collections with
respect to the Receivables at the times and in the manner described herein. The
Banks own the remaining undivided interest in the Trust not represented by the
Certificates or the certificates of any other Series and any uncertificated
interests in the Trust issued as Series Enhancement, and AUS will continue to
service the Receivables. The Banks have offered and from time to time may offer
other Series of certificates that represent undivided interests in certain
assets of the Trust, which may have terms significantly different from the
Certificates.
Interest will accrue on the Class A Certificates from June 18, 1996 (the
"Closing Date") through July 14, 1996, and from July 15, 1996 through August 14,
1996, and with respect to each Interest Period thereafter, at the rate of .15%
per annum above the London interbank offered quotations for one-month United
States dollar deposits ("LIBOR") prevailing on the related LIBOR Determination
Date (as defined herein) determined as described herein (the "Class A
Certificate Rate"). Interest will accrue on the Class B Certificates from the
Closing Date through July 14, 1996, and from July 15, 1996 through August 14,
1996, and with respect to each Interest Period thereafter, at the rate of .30%
per annum above LIBOR prevailing on the related LIBOR Determination Date
determined as described herein (the "Class B Certificate Rate"). Interest with
respect to the Certificates will be distributed on the 15th day of each month
or, if such 15th day is not a Business Day (as defined herein), the next
succeeding Business Day (each, a "Distribution Date"). Principal with respect to
the Class A Certificates is scheduled to be distributed to the Class A
Certificateholders on the December 2002 Distribution Date, or earlier in certain
circumstances described herein. Principal with respect to the Class B
Certificates is expected to be distributed to the Class B Certificateholders on
the January 2003 Distribution Date, or earlier or later in certain circumstances
described herein. The Class B Certificates will be subordinated to the Class A
Certificates to the extent necessary to fund payments on the Class A
Certificates as described herein. In addition, the Certificates will have the
benefit of the Collateral Interest and funds on deposit in the Cash Collateral
Account as described herein.
The Certificates initially will be represented by certificates which will be
registered in the name of Cede & Co., the nominee of The Depository Trust
Company. The interests of holders of beneficial interests in the Certificates
("Certificate Owners") will be represented by book-entries on the records of The
Depository Trust Company and participating members thereof. Definitive
Certificates will be available to Certificate Owners only under the limited
circumstances described in the Prospectus. See "Description of the
Certificates -- Definitive Certificates" in the Prospectus.
Application will be made to list the Series 1996-D Certificates on the
Luxembourg Stock Exchange.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CERTIFICATES AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
The Certificates offered hereby constitute a separate Series of Certificates
being offered by the Banks from time to time pursuant to their Prospectus dated
June 10, 1996. This Prospectus Supplement does not contain complete information
about the offering of the Certificates. Additional information is contained in
the Prospectus and investors are urged to read both this Prospectus Supplement
and the Prospectus in full. Sales of the Certificates may not be consummated
unless the purchaser has received both this Prospectus Supplement and the
Prospectus.
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SUMMARY OF TERMS
The following is qualified in its entirety by reference to the detailed
information appearing elsewhere in this Prospectus Supplement and the
accompanying Prospectus. Certain capitalized terms used herein are defined
elsewhere in this Prospectus Supplement and the accompanying Prospectus. A
listing of the pages on which some of such terms are defined is found in the
"Index of Principal Terms" in this Prospectus Supplement and the accompanying
Prospectus. Other Series which may be issued pursuant to other similar
prospectus supplements and prospectuses or disclosure documents may also use
such capitalized terms in such prospectuses or documents. However, in such
cases, reference to such terms will, unless the context otherwise requires, only
be made in the context of such other Series.
TRUST......................... The ADVANTA Credit Card Master Trust II (the
"Trust").
THE CERTIFICATES AND THE
COLLATERAL INTEREST........... Each of the Class A Floating Rate Asset Backed
Certificates, Series 1996-D (the "Class A
Certificates") and the Class B Floating Rate
Asset Backed Certificates, Series 1996-D (the
"Class B Certificates," together with the
Class A Certificates, the "Certificates")
offered hereby represents a specified
undivided interest in the assets of the Trust
allocated to the Certificates (the "Investor
Interest"). The term "Class A
Certificateholders" refers to holders of the
Class A Certificates, the term "Class B
Certificateholders" refers to holders of the
Class B Certificates, the term
"Certificateholders" refers to holders of the
Certificates, and the term "Series" refers to
any series of certificates issued by the
Trust, including the series ("Series 1996-D")
of which the Certificates form a part. The
Certificates will be issued pursuant to the
Amended and Restated Pooling and Servicing
Agreement dated as of December 1, 1993, as
amended and restated as of May 23, 1994, and
as amended by Amendment Number 1 dated as of
July 1, 1994, between Advanta National Bank
USA ("AUS"), as seller (in such capacity, a
"Seller") and servicer (in such capacity, the
"Servicer"), and Bankers Trust Company, as
trustee (the "Trustee"), as further amended
by Amendment Number 2 dated as of October 6,
1995 among AUS, as Seller and Servicer,
Advanta National Bank ("ANB" and, together
with AUS, the "Banks") as seller (in such
capacity, a "Seller" and together with AUS,
the "Sellers") and the Trustee (the "Master
Pooling and Servicing Agreement") and a
related supplement thereto (the "Supplement"
and, together with the Master Pooling and
Servicing Agreement, the "Pooling and
Servicing Agreement" (unless the context
otherwise requires)). See "Description of the
Certificates." In addition, an undivided
interest in the Trust (the "Collateral
Interest") will be issued concurrently with
the issuance of the Certificates as part of
Series 1996-D in an initial amount of
$56,000,000 (the "Collateral Initial Investor
Amount") and will, together with the amounts
on deposit in the Cash Collateral Account,
constitute the Series Enhancement for the
Certificates.
The Certificates will be available for purchase
in minimum denominations of $1,000 and in
integral multiples of $1,000 in excess
thereof. Except in certain limited
circumstances as described in the Prospectus
under "Description of the
Certificates -- Definitive Certificates," the
Certificates will only be available in book-
entry form.
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The Trust's assets will be allocated among the
Investor Interest, the Collateral Interest,
the interests of the holders of other Series
and the interest of the holders of the Seller
Certificates (the "Sellers' Interest"), as
described below. The aggregate amount of
Principal Receivables and amounts, if any, on
deposit in the Excess Funding Account
allocated to the Certificateholders and the
Collateral Interest (the "Invested Amount")
will be $575,000,000 on the Closing Date (the
"Initial Invested Amount"). The Invested
Amount will, except as otherwise provided
herein, increase up to a maximum amount of
$700,000,000 during the Funding Period,
remain fixed during the Revolving Period and
decline thereafter during the Accumulation
Period or Rapid Amortization Period as
principal is deposited into the Principal
Funding Account or paid on the Certificates.
The Invested Amount is subject to increase
during the Funding Period to the extent
amounts are withdrawn from the Pre-Funding
Account and paid to the Sellers in connection
with an increase in the amount of Principal
Receivables in the Trust. The aggregate
amount of Principal Receivables and amounts,
if any, on deposit in the Excess Funding
Account, allocated to the Class A
Certificateholders (the "Class A Invested
Amount") will be $497,375,000 on the Closing
Date (the "Class A Initial Invested Amount").
The aggregate amount of Principal Receivables
and amounts, if any, on deposit in the Excess
Funding Account allocated to the Class B
Certificateholders (the "Class B Invested
Amount") will be $31,625,000 on the Closing
Date (the "Class B Initial Invested Amount").
The aggregate amount of Principal Receivables
and amounts, if any, on deposit in the Excess
Funding Account allocated to the Collateral
Interest (the "Collateral Invested Amount")
will be $46,000,000 on the Closing Date (the
"Collateral Initial Invested Amount"). During
the Funding Period, the Class A Invested
Amount, the Class B Invested Amount and the
Collateral Invested Amount may increase under
certain conditions as the Sellers' Interest
is increased until the Class A Invested
Amount is equal to $605,500,000, the Class B
Invested Amount is equal to $38,500,000 and
the Collateral Invested Amount is equal to
$56,000,000. Thereafter, the Class A Invested
Amount will remain, prior to the commencement
of the Accumulation or Rapid Amortization
Period, fixed at such Class A Invested
Amount, except if there are unreimbursed
Class A Investor Charge-Offs or if a Series
1996-D Pay Out Event or a Trust Pay Out Event
occurs. In addition, the Class B Invested
Amount will decline in certain circumstances
as a result of (a) the allocation to the
Class B Certificates of Defaulted Amounts,
including such amounts otherwise allocable to
the Class A Certificates, and (b) the
reallocation of collections of Principal
Receivables otherwise allocable to the Class
B Certificates to fund certain payments in
respect of the Class A Certificates. Any such
reductions in the Class B Invested Amount may
be reimbursed out of Excess Spread, if any,
Excess Finance Charges allocable to Series
1996-D, the reallocation of certain amounts
allocable to the Collateral Interest and
certain amounts, if any, on deposit in the
Cash Collateral Account as described herein.
The Seller Amount will fluctuate as the
amount of Principal Receivables in
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the Trust, the invested amount of each Series
and the amounts on deposit in the Excess
Funding Account and the Principal Funding
Account change from time to time. The
Sellers' Interest will represent the right to
the assets of the Trust not allocated to the
Investor Interest, the Collateral Interest or
the holders of investor certificates of other
Series (the Investor Interest, the Collateral
Interest and the interest in the assets of
the Trust held by the holders of investor
certificates of other Series is referred to
herein as the "Certificateholders'
Interest").
The Class A Certificates will represent the
right to receive from the assets of the Trust
allocated to the Investor Interest and the
Collateral Interest funds up to (but not in
excess of) the amounts required to make
payments of interest on the Class A
Certificates for the period from the Closing
Date through July 14, 1996, and for the
period from July 15, 1996 through August 14,
1996, and with respect to each Interest
Period thereafter, at the rate of .15% per
annum above the London interbank offered
quotations for one-month United States dollar
deposits ("LIBOR") determined as set forth
under "Description of the
Certificates -- Interest Payments" (such
rate, the "Class A Certificate Rate"), and
payment of principal on the December 2002
Distribution Date or, in certain limited
circumstances, monthly payments of principal
during the Rapid Amortization Period, to the
extent of the Class A Invested Amount. See
"Description of the Certificates -- General,"
"-- Interest Payments" and "-- Principal
Payments."
The Class B Certificates will represent the
right to receive from the assets of the Trust
allocated to the Investor Interest and the
Collateral Interest funds up to (but not in
excess of) the amounts required to make
payments of interest on the Class B
Certificates for the period from the Closing
Date through July 14, 1996, and for the
period from July 15, 1996 through August 14,
1996, and with respect to each Interest
Period thereafter, at the rate of .30% per
annum above LIBOR (such rate, the "Class B
Certificate Rate"), and monthly payments of
principal, following the payment in full of
the Class A Investor Amount, during the
Accumulation Period or the Rapid Amortization
Period, to the extent of the Class B Invested
Amount. See "Description of the
Certificates -- General," "-- Interest
Payments" and "-- Principal Payments."
The Certificates represent beneficial interests
in the Trust only and do not represent
interests in or obligations of Advanta Corp.,
AUS, ANB or any affiliate thereof except to
the limited extent provided herein. None of
the Certificates, the Accounts or the
Receivables are insured or guaranteed by the
Federal Deposit Insurance Corporation (the
"FDIC") or any other governmental agency or
instrumentality.
RECEIVABLES................... The aggregate amount of Principal Receivables
and Finance Charge Receivables in the
Accounts as of April 30, 1996 equaled
$7,260,315,553 and $75,317,231, respectively.
The aggregate undivided interest in the
Principal Receivables and amounts on deposit
in the Excess Funding Account, if any,
evidenced by the Certificates will never
exceed the sum of the Class A Invested
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Amount and the Class B Invested Amount,
regardless of the total amount of Principal
Receivables in the Trust and amounts on
deposit in the Excess Funding Account, if
any, at any time. See "The Receivables."
REGISTRATION OF
CERTIFICATES.................. The Certificates initially will be represented
by certificates registered in the name of
Cede & Co. ("Cede"), as the nominee of The
Depository Trust Company ("DTC"). No person
acquiring a beneficial interest in the
Certificates (a "Certificate Owner") will be
entitled to receive a definitive certificate
representing such person's interest (a
"Definitive Certificate"), except in the
event that Definitive Certificates are issued
under the limited circumstances described
herein. Investor Certificateholders may elect
to hold their Investor Certificates through
DTC (in the United States) or Cedel or
Euroclear (in Europe). See "Description of
the Certificates -- Definitive Certificates"
in the Prospectus.
SELLERS....................... Advanta National Bank USA and Advanta National
Bank, each a national banking association and
an indirect wholly-owned subsidiary of
Advanta Corp., are the Sellers of the
Receivables and the originators of the assets
of the Trust. See "Summary of Terms --
Sellers" and "The Banks and Advanta Corp." in
the Prospectus. Advanta National Bank USA
changed its name from Colonial National Bank
USA on May 20, 1996.
SERVICER...................... Advanta National Bank USA. The principal
executive offices of AUS are located at
Brandywine Corporate Center, 650 Naamans
Road, Claymont, Delaware 19703. See "The
Banks and Advanta Corp." in the Prospectus.
Advanta National Bank USA changed its name
from Colonial National Bank USA on May 20,
1996.
COLLECTIONS................... All collections of Receivables will be
allocated by the Servicer between amounts
collected on Principal Receivables and
amounts collected on Finance Charge
Receivables. All such amounts will then be
allocated in accordance with the respective
interests of the Class A Certificateholders,
the Class B Certificateholders, the holder of
the Collateral Interest (the "Collateral
Interest Holder"), the holders of the Seller
Certificates and the holders of certificates
and uncertificated interests of other Series,
if any, in the Principal Receivables and in
the Finance Charge Receivables. Subject to
certain exceptions, the Servicer will deposit
all collections of Receivables distributable
to Certificateholders, the Collateral
Interest Holder and to holders of
certificates and uncertificated interests of
other Series, if any, in the Collection
Account no later than the day prior to the
applicable Distribution Date. See
"Description of the
Certificates -- Allocation Percentages."
INTEREST...................... Interest on the Certificates for each Interest
Period will be distributed on the 15th day of
each month or, if such day is not a Business
Day, on the next succeeding Business Day
(each, a "Distribution Date"), commencing
August 15, 1996, in an amount equal to the
product of (i) (a) the actual number of days
in the related Interest Period divided by
360, times (b) the Class A Certificate Rate
or Class B Certificate Rate, as applicable,
and (ii) the outstanding principal amount of
the Class A Certificates or the outstanding
principal amount of the Class B
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Certificates, as applicable, as of the
preceding Record Date (or, in the case of the
August 1996 Distribution Date, as of the
Closing Date). The "Interest Period," with
respect to any Distribution Date, will be the
period from the previous Distribution Date
through the day preceding such Distribution
Date, except the initial Interest Period will
be the period from the Closing Date through
August 14, 1996, the day preceding the
initial Distribution Date. The term "Business
Day" means any day other than a Saturday,
Sunday or a day on which banking institutions
in New York, New York, Claymont, Delaware, or
Philadelphia, Pennsylvania (or, with respect
to the determination of LIBOR, London,
England) or any other state in which the
principal executive offices of AUS, ANB or
any Additional Seller are located, are
authorized or obligated by law, executive
order or governmental decree to be closed.
The "Monthly Period," with respect to any
Distribution Date will be the period from and
including the first day of the preceding
calendar month to and including the last day
of such calendar month (other than the
initial Monthly Period, which will commence
on the Closing Date and end on July 31,
1996). See "Description of the
Certificates -- Interest Payments."
ADDITIONAL AMOUNTS AVAILABLE
TO CERTIFICATEHOLDERS......... If Class A Available Funds are less than the
sum of (i) current and overdue Class A
Monthly Interest, (ii) current and overdue
Class A Additional Interest, (iii) current
and overdue Class A Servicing Fee and (iv)
the Class A Investor Default Amount, with
respect to the related Distribution Date,
Excess Spread and Excess Finance Charges
allocable to Series 1996-D will be applied to
fund the deficiency (the "Class A Required
Amount"). "Excess Spread" for any
Distribution Date will equal the sum of (a)
the excess of Class A Available Funds over
the sum of the amounts referred to in clauses
(i), (ii), (iii) and (iv) above, (b) the
excess of Class B Available Funds over the
sum of (i) current and overdue Class B
Monthly Interest, (ii) current and overdue
Class B Additional Interest and (iii) current
and overdue Class B Servicing Fee and (c) the
Collateral Available Funds not used, if AUS
or the Trustee is no longer the Servicer, to
pay current and overdue Collateral Servicing
Fee. If Excess Spread and Excess Finance
Charges allocable to Series 1996-D with
respect to such Distribution Date are less
than the Class A Required Amount, amounts, if
any, on deposit in the Cash Collateral
Account will then be withdrawn to fund the
remaining Class A Required Amount. If Excess
Spread and Excess Finance Charges allocable
to Series 1996-D with respect to such
Distribution Date and amounts, if any, on
deposit in the Cash Collateral Account are
less than the Class A Required Amount,
Reallocated Principal Collections allocable
first to the Collateral Invested Amount and
then the Class B Invested Amount with respect
to the related Monthly Period will then be
used to fund the remaining Class A Required
Amount. If Reallocated Principal Collections
with respect to such Monthly Period are
insufficient to fund the remaining Class A
Required Amount for the related Distribution
Date, then a portion of the Collateral
Invested Amount will be reduced by the amount
of such deficiency (but not by more than the
Class A
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Investor Default Amount for such Monthly
Period). If such reduction would cause the
Collateral Invested Amount to be reduced
below zero, the Class B Invested Amount will
be reduced by the amount by which the
Collateral Invested Amount would have been
reduced below zero (but not by more than the
excess of the Class A Investor Default Amount
for such Monthly Period over the amount of
such reduction in the Collateral Invested
Amount) to avoid a charge-off with respect to
the Class A Certificates. If the Class B
Invested Amount is reduced to zero, the Class
A Invested Amount will be reduced by the
amount by which the Class A Required Amount
for any Distribution Date exceeds the sum of
(i) Excess Spread and Excess Finance Charges
allocated to Series 1996-D, (ii) amounts, if
any, on deposit in the Cash Collateral
Account and (iii) Reallocated Principal
Collections for the related Monthly Period,
but not by more than the excess of the Class
A Investor Default Amount for such Monthly
Period over the aggregate reductions in the
Collateral Invested Amount and the Class B
Invested Amount with respect to such Monthly
Period, and the Class A Certificateholders
will bear directly the credit and other risks
associated with their undivided interest in
the Trust. See "Description of the
Certificates -- Reallocation of Cash Flows"
and "-- Allocation of Investor Default
Amount."
If Class B Available Funds are less than the
sum of (i) current and overdue Class B
Monthly Interest, (ii) current and overdue
Class B Additional Interest and (iii) current
and overdue Class B Servicing Fee and (iv)
the Class B Investor Default Amount, if any,
with respect to the related Distribution
Date, Excess Spread and Excess Finance
Charges allocable to Series 1996-D and not
required to pay the Class A Required Amount
will be applied to fund the deficiency (the
"Class B Required Amount"). If Excess Spread
and Excess Finance Charges allocable to
Series 1996-D with respect to such
Distribution Date not required to pay the
Class A Required Amount are less than the
Class B Required Amount, amounts, if any, on
deposit in the Cash Collateral Account not
required to fund the Class A Required Amount
will be withdrawn and applied to fund the
Class B Required Amount. If such amounts
available with respect to such Distribution
Date are insufficient to pay the Class B
Required Amount, Reallocated Principal
Collections allocable to the Collateral
Invested Amount for the related Monthly
Period not required to fund the Class A
Required Amount will then be used to fund the
remaining Class B Required Amount. If
Reallocated Principal Collections allocable
to the Collateral Invested Amount with
respect to such Monthly Period are
insufficient to fund the remaining Class B
Required Amount for the related Distribution
Date, then the Collateral Invested Amount
will be reduced by the amount of such
deficiency (but not by more than the Class B
Investor Default Amount for such Monthly
Period). If such reduction would cause the
Collateral Invested Amount to be reduced
below zero, the Class B Invested Amount will
be reduced by the amount by which the Class B
Required Amount for any Distribution Date
exceeds the sum of Excess Spread and Excess
Finance Charges
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allocated to Series 1996-D not required to
pay the Class A Required Amount and amounts,
if any, on deposit in the Cash Collateral
Account not required to pay the Class A
Required Amount and Reallocated Principal
Collections not required to pay the Class A
Required Amount for the related Monthly
Period, but not by more than the excess of
the Class B Investor Default Amount for such
Monthly Period over the reduction in the
Collateral Invested Amount with respect
thereto, for such Monthly Period. In the
event of a reduction of the Class A Invested
Amount, the Class B Invested Amount or the
Collateral Invested Amount, the amount of
principal and interest available to fund
payments with respect to the Class A
Certificates and the Class B Certificates
will be decreased. See "Description of the
Certificates -- Reallocation of Cash Flows"
and "-- Allocation of Investor Default
Amount."
EXCESS FINANCE CHARGES........ "Excess Finance Charges" means amounts
designated by another Series for allocation
to Series within Group One and which,
pursuant to the Master Pooling and Servicing
Agreement and any related supplement, are
allocable to Series 1996-D. Series 1996-D
will be the thirteenth Series issued by the
Trust which will be outstanding on the
Closing Date. Series 1996-D will be the
twelfth Series included in a group of Series
("Group One") expected to be issued by the
Trust from time to time. See "Annex 1."
Additional Series are expected to be issued
from time to time by the Trust.
THE CASH COLLATERAL ACCOUNT... A cash collateral account (the "Cash Collateral
Account") will be held in the name of the
Trustee for the benefit of the
Certificateholders and the Collateral
Interest Holder. The Cash Collateral Account
will have a beginning balance of $14,000,000
which may be increased (i) under certain
circumstances, and subject to certain
conditions described herein, in connection
with the application of collections of
Principal Receivables to decrease the
Collateral Invested Amount and (ii) to the
extent collections of Excess Spread and
Excess Finance Charges allocable to Series
1996-D are required to be deposited therein
as described below. See "Description of the
Certificates -- The Cash Collateral Account."
To the extent set forth herein, withdrawals
will be made from the Cash Collateral Account
to pay the Class A Required Amount first,
then to pay the Class B Required Amount and
then to pay any unpaid Collateral Servicing
Fee. See "Description of the
Certificates -- Reallocation of Cash Flows."
AMOUNTS AVAILABLE AS
ENHANCEMENT................... On each Distribution Date, the amount of
enhancement (the "Enhancement") available to
the Certificateholders will equal the lesser
of (i) the sum of the Collateral Investor
Amount and the amount, if any, on deposit in
the Cash Collateral Account (the "Available
Enhancement Amount") and (ii) the Required
Enhancement Amount. The "Required Enhancement
Amount" with respect to any Distribution Date
means, subject to certain limitations more
fully described herein, the greater of (i)
the product of (a) the sum of (I) the sum of
the Class A Invested Amount and the Class A
Floating Percentage of the Pre-Funded Amount
and (II) the sum of the Class B Invested
Amount and the Class B Floating Percentage of
the Pre-Funded Amount,
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each as of such Distribution Date after
taking into account distributions made on
such Distribution Date, minus the amount of
funds on deposit in the Cash Collateral
Account after taking into account all
deposits and withdrawals on such Distribution
Date, and (b) a fraction, the numerator of
which is 10% and the denominator of which is
the excess of 100% over 10% and (ii) the sum
of (A) the product of (I) $700,000,000, (II)
1% and (III) a fraction the numerator of
which is equal to the Available Cash
Collateral Amount as of the immediately
preceding Distribution Date and the
denominator of which is the Total Enhancement
for such Distribution Date and (B) the
product of (I) $700,000,000, (II) 3% and
(III) a fraction the numerator of which is
equal to the Collateral Invested Amount as of
the immediately preceding Distribution Date
and the denominator of which is the Total
Enhancement for such Distribution Date,
subject to certain limitations. "Total
Enhancement" with respect to any Distribution
Date means the sum of the Available Cash
Collateral Amount and the Collateral Investor
Amount as of the immediately preceding
Distribution Date. With respect to any
Distribution Date, if the Available
Enhancement Amount is less than the Required
Enhancement Amount, certain Excess Spread and
Excess Finance Charges allocable to Series
1996-D will be used first to increase the
Collateral Invested Amount to the extent of
any prior unreimbursed reductions in the
Collateral Invested Amount and then deposited
into the Cash Collateral Account to the
extent of such shortfall. See "Description of
the Certificates -- Application of
Collections -- Excess Spread; Excess Finance
Charges." On any Distribution Date, to the
extent that the sum of the amount on deposit
in the Cash Collateral Account plus the
Collateral Investor Amount exceeds the
Required Enhancement Amount, such amount may
be paid to the Collateral Interest Holder and
will not be available to the
Certificateholders. See "Description of the
Certificates -- The Cash Collateral Account."
FUNDING PERIOD................ During the period from and including the
Closing Date to but excluding the earlier of
(i) the commencement of the Rapid
Amortization Period, (ii) the date on which
the Invested Amount first equals $700,000,000
and (iii) September 30, 1996 (the "Funding
Period"), the Pre-Funded Amount will be
maintained in a trust account to be
established with the Trustee (the
"Pre-Funding Account"). The "Pre-Funded
Amount" means the principal amount on deposit
in the Pre-Funding Account, which initially
will equal $125,000,000. Funds on deposit in
the Pre-Funding Account will be invested by
the Trustee in Eligible Investments.
During the Funding Period, funds on deposit in
the Pre-Funding Account will be withdrawn on
a monthly basis to the extent of any
increases in the Invested Amount as a result
of an increase in the amount of Principal
Receivables in the Trust to the extent that
the Seller Amount on the last day of a
Monthly Period during the Funding Period
exceeds the product of (A) the sum of 1.0%
and the Required Seller Percentage on such
date and (B) the sum of the aggregate amount
of Principal Receivables in the Trust and
amounts on deposit in the Excess Funding
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Account on such day; provided, however, that
the Invested Amount will in no event exceed
$700,000,000 or increase by an amount in
excess of the Pre-Funded Amount immediately
prior to giving effect to such increase.
Certificateholders will have no further right
to or interest in such funds upon their
withdrawal from the Pre-Funding Account in
connection with such increases in the
Invested Amount. Should the Pre-Funded Amount
be greater than zero at the end of the
Funding Period, the amounts remaining on
deposit in the Pre-Funding Account will be
payable pro rata to the Class A
Certificateholders, the Class B
Certificateholders and the Collateral
Interest Holder on the next succeeding
Distribution Date and result in a reduction
of the Class A Investor Amount, the Class B
Investor Amount and the Collateral Investor
Amount. See "Description of the
Certificates -- Pre-Funding Account."
REVOLVING PERIOD.............. No principal will be payable to or for the
benefit of Certificateholders during the
period (the "Revolving Period") from and
including the Closing Date to but not
including the earlier of (i) the commencement
of the Accumulation Period and (ii) the
commencement of the Rapid Amortization
Period. The accumulation period with respect
to the Certificates (the "Accumulation
Period"), which includes separate
accumulation periods for the Class A
Certificates and the Class B Certificates, is
scheduled to begin at the close of business
on February 28, 2002. Subject to the
conditions set forth herein under
"Description of the
Certificates -- Postponement of Accumulation
Period," the day on which the Revolving
Period ends and the Accumulation Period
begins may be delayed to no later than the
end of the day on October 31, 2002. During
the Revolving Period, collections of
Principal Receivables allocated to the
Certificates and the Collateral Interest
(other than Reallocated Principal Collections
that are used to pay any deficiency in the
Class A Required Amount or the Class B
Required Amount) will generally be paid from
the Trust to the holders of the Seller
Certificates or to amortizing or accumulating
Series in Group One or deposited into the
Excess Funding Account. See "Description of
the Certificates -- Principal Payments."
ACCUMULATION PERIOD; PRINCIPAL
PAYMENTS.................... Unless a Series 1996-D Pay Out Event or a Trust
Pay Out Event shall have occurred, (a) the
Class A accumulation period (the "Class A
Accumulation Period") will begin at the end
of the day on the last day of the Revolving
Period and will end on the earliest of (i)
the commencement of the Rapid Amortization
Period, (ii) the payment in full to the Class
A Certificateholders of the Class A Investor
Amount, and (iii) the Series 1996-D
Termination Date, and (b) the Class B
accumulation period (the "Class B
Accumulation Period") will commence on the
first day of the Monthly Period immediately
preceding the Class B Principal Commencement
Date and end on the earliest of (i) the
commencement of the Rapid Amortization
Period, (ii) the payment in full to the Class
B Certificateholders of the Class B Invested
Amount and (iii) the Series 1996-D
Termination Date. During the Accumulation
Period, the Available Investor Principal
Collections will no longer be paid to the
holders
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of the Seller Certificates or to amortizing
or accumulating Series in Group One or
deposited into the Excess Funding Account as
described above but instead will be deposited
monthly, along with certain other amounts
constituting Available Investor Principal
Collections, on each Distribution Date
beginning with the Distribution Date in the
month following the commencement of the
Accumulation Period in a trust account
established by the Servicer for the benefit
of Certificateholders (the "Principal Funding
Account") to be accumulated for payment to
the Certificateholders as provided herein,
first to the Class A Certificateholders,
which payment is anticipated to be on the
Class A Expected Final Distribution Date, and
then (following payment in full of the Class
A Investor Amount) to the Class B
Certificateholders, which payment is
anticipated to be on the Class B Expected
Final Distribution Date. With respect to any
Distribution Date, during either the Rapid
Amortization Period or the Accumulation
Period, until the Class B Invested Amount is
paid in full and subject to certain other
exceptions, "Collateral Monthly Principal"
shall mean an amount equal to the lesser of
(A) the sum of (x) Collateral Principal
Collections and (y) Available Investor
Principal Collections not applied to Class A
Monthly Principal or Class B Monthly
Principal and (B) the excess, if any, of (i)
the amount on deposit in the Cash Collateral
Account plus the Collateral Investor Amount
over (ii) the Required Enhancement Amount
(the "Enhancement Surplus"). During the
Accumulation Period and the Rapid
Amortization Period, collections of Principal
Receivables generally will be allocated to
the Invested Amount in a ratio the numerator
of which is the Invested Amount as of the
last day of the Revolving Period and the
denominator of which is the greater of (x)
the sum of the aggregate amount of Principal
Receivables and the principal amount on
deposit in the Excess Funding Account as of
the last day of the prior Monthly Period and
(y) the sum of the numerators used to
calculate the Series Percentages applicable
to Principal Receivables for all Series
outstanding; provided, however, that such
ratio is subject to adjustment to give effect
to additions of Additional Accounts. See
"Description of the
Certificates -- Allocation Percentages,"
"-- Application of Collections" and
"-- Principal Payments."
With respect to any Distribution Date relating
to the Accumulation Period, if Available
Investor Principal Collections in the prior
Monthly Period are equal to or greater than
the sum of (i) the Controlled Accumulation
Amount on such Distribution Date and (ii) the
existing Deficit Controlled Accumulation
Amount (as defined below), if any, from the
immediately preceding Distribution Date (such
sum for such Distribution Date, the
"Controlled Deposit Amount," provided that
the Controlled Deposit Amount on any
Distribution Date after the payment in full
of the Class A Certificates shall not exceed
the Class B Invested Amount), then the
Controlled Deposit Amount will be deposited
into the Principal Funding Account, and the
excess of such Available Investor Principal
Collections over the Controlled Deposit
Amount and any amounts thereof applied as
Collateral Monthly Principal will be paid
from the Trust to the
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holders of the Seller Certificates or to
other amortizing or accumulating Series in
Group One or deposited into the Excess
Funding Account. The existing "Deficit
Controlled Accumulation Amount" means, on any
Distribution Date, the excess, if any, of the
Controlled Deposit Amount from the prior
Distribution Date over the Available Investor
Principal Collections.
If the Available Investor Principal Collections
in the prior Monthly Period are less than the
Controlled Deposit Amount, such remaining
Available Investor Principal Collections will
be deposited into the Principal Funding
Account, and the excess of the Controlled
Deposit Amount over such Available Investor
Principal Collections will be the Deficit
Controlled Accumulation Amount for the
succeeding Monthly Period. See "Description
of the Certificates -- Application of
Collections."
All amounts in the Principal Funding Account
will be invested at the direction of the
Servicer by the Trustee in certain Eligible
Investments. Investment earnings (net of
investment losses and expenses) on funds on
deposit in the Principal Funding Account (the
"Principal Funding Investment Proceeds")
during the Accumulation Period will be
included in Class A Available Funds with
respect to each Distribution Date.
Funds on deposit in the Principal Funding
Account will be available to pay the Class A
Certificateholders in respect of the Class A
Investor Amount on the Class A Expected Final
Distribution Date. If the aggregate principal
amount of deposits made to the Principal
Funding Account are insufficient to pay in
full the Class A Investor Amount on the Class
A Expected Final Distribution Date, the Rapid
Amortization Period will commence as
described below and on each Distribution Date
thereafter until the Class A Investor Amount
is paid in full the Class A
Certificateholders will receive distributions
of Class A Monthly Principal. Although it is
anticipated that during the Class A
Accumulation Period, funds will be deposited
in the Principal Funding Account in an amount
equal to the applicable Controlled
Accumulation Amount with respect to each
Distribution Date and that scheduled
principal will be available for distribution
to the Class A Certificateholders on the
Class A Expected Final Distribution Date, no
assurance can be given in that regard. See
"Maturity Assumptions" herein.
On the Class B Expected Final Distribution
Date, provided that the Class A Investor
Amount is paid in full on the Class A
Expected Final Distribution Date and the
Rapid Amortization Period has not commenced,
Available Investor Principal Collections will
be used to pay the Class B Invested Amount as
described herein. If the Available Investor
Principal Collections are insufficient to pay
the Class B Invested Amount on the Class B
Expected Final Distribution Date, the Rapid
Amortization Period will commence as
described below and on each Distribution Date
thereafter following the payment in full of
the Class A Certificates until the Class B
Invested Amount is paid in full, the Class B
Certificateholders will receive distributions
of Class B Monthly Principal. Although it is
anticipated that scheduled principal will be
available for distribution to the
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Class B Certificateholders on the Class B
Expected Final Distribution Date, no
assurance can be given in that regard. See
"Maturity Assumptions" herein.
If a Series 1996-D Pay Out Event or Trust Pay
Out Event occurs during the Accumulation
Period, the Rapid Amortization Period will
commence and any amount on deposit in the
Principal Funding Account will be paid to the
Class A Certificateholders on the
Distribution Date following the Monthly
Period in which the Rapid Amortization Period
commences.
CLASS A EXPECTED FINAL
DISTRIBUTION DATE........... The December 2002 Distribution Date.
CLASS B EXPECTED FINAL
DISTRIBUTION DATE........... The January 2003 Distribution Date.
RAPID AMORTIZATION PERIOD;
PRINCIPAL PAYMENTS.......... During the period beginning with the occurrence
of any Series 1996-D Pay Out Event or Trust
Pay Out Event and ending on the earlier of
(i) the payment in full to the
Certificateholders of the Class A Investor
Amount and the Class B Invested Amount and
payment in full to the Collateral Interest
Holder of the Collateral Invested Amount and
(ii) the Series 1996-D Termination Date (the
"Rapid Amortization Period"), Available
Investor Principal Collections will no longer
be paid from the Trust to the holders of the
Seller Certificates or to amortizing or
accumulating Series in Group One or deposited
into the Excess Funding Account as described
above but instead will be distributed on each
Distribution Date, first to the Class A
Certificateholders until the Class A Investor
Amount has been paid in full and then to the
Class B Certificateholders until the Class B
Invested Amount is paid in full, beginning
with the Distribution Date following the
Monthly Period in which the Rapid
Amortization Period commences. See
"Description of the Certificates -- Series
1996-D Pay Out Events and Trust Pay Out
Events" for a discussion of the events which
might lead to the commencement of the Rapid
Amortization Period. See "Description of the
Certificates -- Application of Collections."
SUBORDINATION OF THE CLASS B
CERTIFICATES AND THE
COLLATERAL INTEREST......... The Class B Certificates will be subordinated
as described herein to the extent necessary
to fund payments with respect to the Class A
Certificates as described herein. In
addition, the Collateral Interest will be
subordinated to the extent necessary to fund
certain payments with respect to the
Certificates. If the Collateral Invested
Amount and the amount on deposit in the Cash
Collateral Account are reduced to zero, the
Class B Certificateholders will bear directly
the credit and other risks associated with
their undivided interest in the Trust. To the
extent the Class B Invested Amount is
reduced, and is not reinstated, the amount of
principal distributable to the Class B
Certificateholders will be reduced. See
"Description of the Certificates --
Subordination."
SHARED COLLECTIONS OF
PRINCIPAL RECEIVABLES......... To the extent that collections of Principal
Receivables allocated to the Certificates or
the Collateral Interest are not needed to
make
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payments to or for the benefit of
Certificateholders or the Collateral Interest
Holder, such collections may be applied to
cover principal payments due to or for the
benefit of other Series, if any, in Group
One. Any such application of collections will
not result in a reduction of the Class A
Invested Amount, the Class B Invested Amount
or the Collateral Invested Amount. In
addition, during the Accumulation Period,
certain collections of Principal Receivables
allocated to other Series in Group One, to
the extent such collections are not needed to
make payments in respect of such other
Series, may be applied to cover principal
amounts payable to or for the benefit of the
Certificateholders or the Collateral Interest
Holder. See "Description of the
Certificates -- Shared Collections of
Principal Receivables."
REQUIRED SELLER PERCENTAGE.... The Required Seller Percentage applicable to
Series 1996-D is currently 5%, provided that
the Required Seller Percentage may be reduced
to as low as 2% if each Seller delivers an
officer's certificate stating that such
reduction will not have an Adverse Effect and
the Rating Agency Condition is satisfied.
RECORD DATE................... With respect to any Distribution Date, the last
Business Day of the month preceding such
Distribution Date.
OPTIONAL REPURCHASE........... The Certificates will be subject to optional
purchase by the Sellers on any Distribution
Date after the Investor Amount is less than
or equal to 5% of the Initial Investor
Amount, unless certain events as specified in
the Pooling and Servicing Agreement have
occurred. The purchase price on the
Distribution Date on which such purchase
occurs will be equal to the Investor Amount
plus accrued and unpaid interest on the
Certificates and the Collateral Interest as
described herein. See "Description of the
Certificates -- Optional Repurchase."
FINAL PAYMENT OF PRINCIPAL AND
INTEREST; TERMINATION OF
TRUST....................... The interest of the Certificateholders in the
Trust will terminate following the earlier of
(i) the day after the Distribution Date on
which the Investor Amount is paid in full and
(ii) the earlier of the June 2005
Distribution Date and the termination of the
Trust (the "Series 1996-D Termination Date").
All principal and interest will be due and
payable no later than the Series 1996-D
Termination Date. See "Description of the
Certificates -- Final Payment of Principal
and Interest; Termination" in the Prospectus.
TRUSTEE....................... Bankers Trust Company.
TAX STATUS.................... Subject to the matters discussed under "Certain
Federal Income Tax Consequences" herein and
in the Prospectus, Special Tax Counsel to the
Banks will deliver its opinion to the effect
that, under existing law, the Class A
Certificates and the Class B Certificates
will properly be characterized as debt for
Federal income tax purposes on the date of
issuance. Under the Pooling and Servicing
Agreement, the Certificate Owners will agree
to treat the Certificates as indebtedness for
income tax purposes. See "Certain Federal
Income Tax Consequences" herein and in the
Prospectus for additional information
concerning the application of Federal income
tax laws.
ERISA CONSIDERATIONS.......... Under the regulations issued by the Department
of Labor, the Trust's assets would not be
deemed "plan assets" of any em-
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ployee benefit plan holding interests in the
Class A Certificates if certain conditions
are met, such that the Class A Certificates
would constitute "publicly-offered
securities," including that interests in the
Class A Certificates be held by at least 100
persons independent of the Sellers and each
other upon completion of the public offering
being made hereby. The Class A Underwriters
expect, although no assurance can be given,
that interests in the Class A Certificates
will be held by at least 100 such persons,
and it is anticipated that the other
conditions of the "publicly-offered security"
exception contained in the regulations will
be met. If the Trust's assets were deemed to
be "plan assets" of such a plan, there is
uncertainty as to whether existing exemptions
from the "prohibited transaction" rules of
the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), would apply to
all transactions involving the Trust's
assets. Accordingly, employee benefit plans
contemplating purchasing interests in the
Class A Certificates should consult their
counsel before making a purchase. See "ERISA
Considerations" in the Prospectus.
The Class B Underwriter currently does not
expect that the Class B Certificates will be
held by at least 100 such persons and,
therefore, does not expect that such Class B
Certificates will qualify as publicly-offered
securities under the regulation referred to
in the preceding paragraph. Accordingly, the
Class B Certificates may not be acquired by
(a) any employee benefit plan that is subject
to ERISA, (b) any plan or other arrangement
(including an individual retirement account
or Keogh plan) that is subject to Section
4975 of the Code, or (c) any entity whose
underlying assets include "plan assets" under
the regulation by reason of any such plan's
investment in the entity. By its acceptance
of a Class B Certificate, each Class B
Certificateholder will be deemed to have
represented and warranted that it is not
subject to the foregoing limitation.
CERTIFICATE RATINGS........... It is a condition to the issuance of the Class
A Certificates that they be rated in the
highest rating category by at least one
nationally recognized rating agency.
It is a condition to the issuance of the Class
B Certificates that they be rated in one of
the three highest rating categories by at
least one nationally recognized rating
agency.
The rating agency or rating agencies rating the
Certificates, the Collateral Interest or any
other Series are collectively referred to
herein as the "Rating Agencies" or
individually as a "Rating Agency." The
Certificates offered hereby are investment
grade asset-backed securities within the
meaning of the Act and the rules promulgated
thereunder.
LISTING....................... Application will be made to list the Series
1996-D Certificates on the Luxembourg Stock
Exchange.
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RISK FACTORS
Limited Liquidity. There is currently no market for the Certificates. The
Underwriters expect to make a secondary market in the Certificates, but are not
obligated to do so. There can be no assurance that a secondary market will
develop or, if it does develop, that such market will provide Certificateholders
with liquidity of investment or that it will continue for the life of the
Certificates.
Rating of the Certificates. It is a condition to the issuance of the Class
A Certificates that they be rated in the highest rating category by at least one
nationally recognized rating agency. It is a condition to the issuance of the
Class B Certificates that they be rated in one of the three highest rating
categories by at least one nationally recognized rating agency. The rating of
the Certificates is based primarily on the value of the Receivables, the
availability of funds on deposit in the Cash Collateral Account as support for
the Certificates and, in the case of the Class A Certificates, the subordination
of the Class B Certificates and the Collateral Interest and, in the case of the
Class B Certificates, the subordination of the Collateral Interest. The ratings
of the Certificates are not a recommendation to purchase, hold or sell
Certificates, and such ratings do not comment as to the marketability of the
Certificates, any market price or suitability for a particular investor. There
is no assurance that any rating will remain for any given period of time or that
any rating will not be lowered or withdrawn entirely by any such rating agency,
if in its judgment circumstances so warrant.
Limited Amounts of Credit Enhancement. Although credit enhancement with
respect to the Certificates will be provided by the funds held in the Cash
Collateral Account and the subordination of the Collateral Interest, such
amounts are limited. If the Collateral Invested Amount and any amount on deposit
in the Cash Collateral Account are reduced to zero, the Class B
Certificateholders will bear directly the credit and other risks associated with
their undivided interest in the Trust and the Class B Invested Amount may be
reduced. If the Class B Invested Amount is reduced to zero, Class A
Certificateholders will bear directly the credit and other risks associated with
their undivided interest in the Trust. See "Description of the Certificates --
Allocation Percentages," "-- Allocation of Investor Default Amount" and "-- The
Cash Collateral Account."
Effect of Subordination of Class B Certificates; Principal Payments. The
Class B Certificates are subordinated in right of payment of principal to the
Class A Certificates. Payments of principal in respect of the Class B
Certificates will not commence until after the final principal payment with
respect to the Class A Investor Amount has been made as described herein.
Moreover, the Class B Invested Amount is subject to reduction if the Class A
Required Amount for any Monthly Period is greater than zero and is not funded
from Excess Spread and Excess Finance Charges allocated to Series 1996-D,
Reallocated Principal Collections with respect to the Collateral Invested
Amount, amounts, if any, on deposit in the Cash Collateral Account, and
reductions in the Collateral Invested Amount. To the extent the Class B Invested
Amount is reduced, the percentage of collections of Finance Charge Receivables
allocable to the Class B Certificateholders will be reduced. See "Description of
the Certificates -- Allocation Percentages" and "-- Reallocation of Cash Flows."
If the Class B Invested Amount is reduced to zero, the Class A
Certificateholders will bear directly the credit and other risks associated with
their undivided interest in the Trust. See "Description of the
Certificates -- Subordination."
Discount Option. Pursuant to the Pooling and Servicing Agreement, the
Sellers have the option to designate a fixed percentage or a variable percentage
of Receivables that otherwise would be treated as Principal Receivables to be
treated as Finance Charge Receivables. Any such designation would result in an
increase in the amount of Finance Charge Receivables and a slower rate of
payment of collections in respect of Principal Receivables than otherwise would
occur. Pursuant to the Pooling and Servicing Agreement, the Sellers can make
such a designation without notice to or the consent of Certificateholders. The
Sellers must provide 30 days' prior written notice to the Servicer, the Trustee
and each Rating Agency of any such designation, and such designation will become
effective only if (i) in the reasonable belief of the Sellers such designation
would not cause to occur a Pay Out Event with respect to any Series or an event
which with notice or the lapse of time or both would constitute a Pay Out Event
with respect to any Series and (ii) the Rating Agency Condition is satisfied.
See "Description of the Certificates -- Discount Option" in the Prospectus.
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Book-Entry Registration. The Certificates initially will be represented by
certificates registered in the name of Cede, the nominee for DTC, and will not
be registered in the names of the Certificate Owners or their nominees. As a
result, unless and until Definitive Certificates are issued, Certificate Owners
will not be recognized by the Trustee as Certificateholders, as that term is
used in the Pooling and Servicing Agreement. Until such time, Certificate Owners
will only be able to exercise the rights of Certificateholders indirectly
through DTC and its participating members (in the United States) or Cedel or
Euroclear (in Europe). See "Description of the Certificates -- Book-Entry
Registration" and "-- Definitive Certificates" in the Prospectus.
THE BANKS' CREDIT CARD ACTIVITIES
BILLING AND PAYMENT
Nearly all of the accounts in the Advanta Consumer Credit Card Portfolio
are subject to finance charges at prime indexed variable rates ranging from 5.9%
to 20.3% for purchases and cash advances, or London interbank offered rate
indexed variable rates ranging from 5.9% to 22.0% for purchases and cash
advances. For more information, see "The Banks' Credit Card
Activities -- Billing and Payments" in the Prospectus.
DELINQUENCIES AND LOSS EXPERIENCE
The following tables set forth the delinquency and loss experience for each
of the periods shown for the Advanta Consumer Credit Card Portfolio. As of April
30, 1996, the Advanta Consumer Credit Card Portfolio includes receivables from
accounts the receivables of which were transferred to trusts similar to the
Trust in an aggregate amount equal to $2.7 billion ("Prior Securitizations"). As
of April 30, 1996, the Advanta Consumer Credit Card Portfolio also includes
approximately $7,336 million of receivables from accounts the receivables of
which were transferred by the Banks to the Trust. Additional Accounts have been
designated for inclusion in the Trust from time to time (the "Master Trust II
Sales") as set forth in Annex II. The Accounts in the Trust Portfolio have been
selected from accounts in the Advanta Consumer Credit Card Portfolio based on
certain eligibility criteria specified in the Pooling and Servicing Agreement.
See "The Receivables." There can be no assurance that the delinquency and loss
experience for the Receivables will be similar to the historical experience set
forth below.
DELINQUENCY EXPERIENCE
ADVANTA CONSUMER CREDIT CARD PORTFOLIO
(DOLLARS IN THOUSANDS)
AS OF AS OF DECEMBER 31,
MARCH 31, ------------------------------------
1996 1995 1994 1993
----------- ---------- ---------- ----------
Receivables Outstanding(1)(2).................. $11,670,089 $9,984,291 $6,535,664 $3,922,086
Receivables Contractually Delinquent as a
Percentage of Receivables Outstanding:
30-59 days................................... 1.10% 1.12% 0.89% 0.96%
60-89 days................................... 0.56 0.57 0.44 0.54
90 or more days.............................. 1.01 0.95 0.71 0.89
---------- ---------- ---------- ----------
Total................................ 2.67% 2.64% 2.04% 2.39%
========== ========== ========== ==========
- ---------------
(1) Includes the receivables transferred in connection with the Prior
Securitizations and Master Trust II Sales.
(2) Receivables Outstanding consists of all amounts due from cardholders as
posted to the accounts.
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LOSS EXPERIENCE
ADVANTA CONSUMER CREDIT CARD PORTFOLIO
(DOLLARS IN THOUSANDS)
THREE MONTHS
ENDED YEAR ENDED DECEMBER 31,
MARCH 31, ------------------------------------
1996 1995 1994 1993
------------ ---------- ---------- ----------
Average Receivables Outstanding(1)(2).......... $ 10,599,363 $7,677,833 $4,675,005 $3,012,060
Gross Losses(3)................................ 87,506 205,715 126,557 115,835
Recoveries..................................... 3,535 12,874 11,339 9,869
Net Losses..................................... 83,971 192,841 115,218 105,966
Net Losses as a Percentage of Average
Receivables Outstanding...................... 3.17%(4) 2.51% 2.46% 3.52%
- ---------------
(1) Includes the receivables transferred in connection with the Prior
Securitizations and Master Trust II Sales.
(2) Average Receivables Outstanding is the sum of receivables outstanding at the
beginning and end of each month during the period indicated, divided by
twice the number of months in the period indicated.
(3) Total Gross Losses are presented net of adjustments made pursuant to AUS's
normal servicing procedures, including removal of incorrect or disputed
finance charges and reversal of annual cardholder fees on cardholder
accounts which have been closed. Losses do not include accrued finance
charges that have been written off or fraud losses.
(4) Annualized.
INTERCHANGE
In respect of Interchange attributed to the cardholder charges for
merchandise and services in the Accounts, the Banks will be required, pursuant
to the terms of the Pooling and Servicing Agreement, to transfer to the Trust on
the Business Day immediately preceding the Distribution Date an amount equal to
one-twelfth of 1.25% of the outstanding balance of the Principal Receivables
allocable to the Series 1996-D at the end of the last day of the preceding
Monthly Period.
THE RECEIVABLES
The Receivables in the Initial Accounts were conveyed to the Trust on
December 9, 1993 (the "Initial Closing Date"). The Initial Accounts were
selected from the Advanta Consumer Credit Card Portfolio satisfying criteria set
forth in the Pooling and Servicing Agreement (the "Criteria") as applied on
October 31, 1993 (the "Initial Cut Off Date"). Receivables in Additional
Accounts have been conveyed to the Trust from time to time since the Initial
Closing Date as set forth in Annex II. Such Receivables arose in Additional
Accounts selected from the Advanta Consumer Credit Card Portfolio satisfying the
Criteria as applied on the relevant cut off date (the "Relevant Cut Off Date").
All such Accounts and any additional Receivables which have arisen from those
Accounts conveyed to the Trust are hereinafter referred to as the "Trust
Portfolio." In order to meet the Criteria, each Account must, on the Relevant
Cut Off Date, among other things, have been in existence and maintained by the
Bank that owns such Account, have a cardholder with a billing address in the
United States, its territories or possessions or a military address, and, except
under certain circumstances, not be an account the credit card or cards with
respect to which have been reported to the Bank that owns such Account as having
been lost or stolen. See "Description of the Certificates -- Representations,
Warranties and Covenants" in the Prospectus. Cardholders whose accounts are
included in the Advanta Consumer Credit Card Portfolio have billing addresses in
all 50 states, the District of Columbia, Puerto Rico, Guam, the Virgin Islands
and certain foreign countries. Pursuant to the Pooling and Servicing Agreement,
the Sellers may be obligated (subject to certain limitations and conditions) to
designate Additional Accounts to be included as Accounts and to convey to the
Trust all Receivables of such Additional Accounts, or may elect to automatically
designate Additional Accounts and convey the Receivables therein whether such
Receivables are then existing or thereafter created. See "Description of the
Certificates -- Addition of Accounts" in the Prospectus. These accounts must
meet the criteria set forth above as of the Relevant Cut Off Date that the Banks
designate such accounts as Additional Accounts. Throughout the term of the
Trust, the Accounts from which the Receivables arise will be the same MasterCard
and VISA accounts designated by the Sellers on the Relevant Cut Off Date (plus
any Additional Accounts subsequently designated as described above). In
addition, as of the Relevant Cut Off Date and on the date any new Receivables
are created, each Seller will
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represent and warrant to the Trust that the Receivables meet the eligibility
requirements specified in the Pooling and Servicing Agreement. See "Description
of the Certificates -- Representations, Warranties and Covenants" in the
Prospectus.
In connection with the conveyance of Receivables in Additional Accounts on
March 26, 1996, the Sellers caused $10,000,000 to be deposited by a party
selected by the Sellers into an Eligible Deposit Account (the "March Yield
Supplement Account") held by the Trustee for the benefit of the
certificateholders of all Series (including the Certificateholders). In
connection with the conveyance of Receivables in Additional Accounts on May 1,
1996 and May 13, 1996, the Sellers caused $15,000,000 to be deposited by a party
selected by the Sellers into an Eligible Deposit Account (the "May Yield
Supplement Account") held by the Trustee for the benefit of the
certificateholders of all Series (including the Certificateholders). In
connection with the conveyance of Receivables in Additional Accounts expected to
be conveyed to the Trust on the Closing Date, the Sellers will cause $6,000,000
to be deposited by a party selected by the Sellers into an Eligible Deposit
Account (the "June Yield Supplement Account") held by the Trustee for the
benefit of the certificateholders of all series (including the
"Certificateholders"). Funds on deposit in the March Yield Supplement Account,
the May Yield Supplement Account and the June Yield Supplement Account will be
invested by the Trustee at the direction of the Sellers in Eligible Investments.
Amounts on deposit in the March Yield Supplement Account (together with certain
investment earnings thereon) have been and will be released and deposited into
the Collection Account in nine monthly installments on the last Business Day of
each month commencing on April 30, 1996. Amounts on deposit in the May Yield
Supplement Account (together with certain investment earnings thereon) will be
released and deposited into the Collection Account in eight monthly installments
on the last Business Day of each month commencing on June 28, 1996. Amounts on
deposit in the June Yield Supplement Account (together with certain investment
earnings thereon) will be released and deposited into the Collection Account in
six monthly installments on the last Business Day of each month commencing on
July 31, 1996. Each deposit into the Collection Account from the March Yield
Supplement Account, the May Yield Supplement Account and the June Yield
Supplement Account will be treated as collections of Finance Charge Receivables.
Pursuant to the Supplement, the party which made the deposits into the March
Yield Supplement Account and the May Yield Supplement Account and the party
which will make the deposit into the June Yield Supplement Account will be
considered a separate Class of investor certificates solely for purposes of
voting after the occurrence of an Insolvency Event regarding the liquidation of
the Receivables and the continuance of the Trust. See "Description of the
Certificates -- Trust Pay Out Events" in the Prospectus.
The Receivables (including receivables in the Additional Accounts the
receivables of which where conveyed to the Trust on May 1, 1996 and May 13, 1996
and which will not be conveyed to the Trust until the Closing Date), as of April
30, 1996 totalled $8,528,336,711 in 3,913,733 Accounts. The Accounts had an
average credit limit of $5,966. The percentage of the aggregate total Receivable
balance to the aggregate total credit limit was 36.5%. The average age of the
Accounts was approximately 16.8 months.
The following tables summarize the Trust Portfolio (including receivables
in the Additional Accounts the receivables of which were conveyed to the Trust
on May 1, 1996 and May 13, 1996 and which will not be conveyed to the Trust
until the Closing Date) by various criteria as of the close of business on April
30, 1996. Because the future composition of the Trust Portfolio may change over
time, these tables are not necessarily indicative of future results.
COMPOSITION BY ACCOUNT BALANCE
TRUST PORTFOLIO
PERCENTAGE
OF TOTAL PERCENTAGE
NUMBER OF NUMBER OF OF TOTAL
ACCOUNT BALANCE ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
- ------------------------------------------ --------- --------- -------------- -----------
Credit balance............................ 63,933 1.6% $ (5,387,405) (0.1)%
$0.00..................................... 1,114,385 28.5 0 0.0
$0.01 to $1,000.00........................ 672,382 17.2 244,946,650 2.9
$1,000.01 to $2,500.00.................... 556,942 14.2 976,188,506 11.4
$2,500.01 to $5,000.00.................... 913,658 23.4 3,479,219,570 40.8
$5,000.01 to $7,500.00.................... 485,555 12.4 2,922,596,359 34.3
Over $7,500.00............................ 106,878 2.7 910,773,031 10.7
--------- --------- -------------- -----------
Total..................................... 3,913,733 100.0% $8,528,336,711 100.0%
======== ======== ============= ========
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COMPOSITION BY CREDIT LIMIT
TRUST PORTFOLIO
PERCENTAGE
OF TOTAL PERCENTAGE
NUMBER OF NUMBER OF OF TOTAL
CREDIT LIMIT BALANCE ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
- ------------------------------------------ --------- --------- -------------- -----------
$0.00 to $1,000.00........................ 119,839 3.1% $ 13,783,357 0.2%
$1,000.01 to $2,500.00.................... 294,055 7.5 276,426,718 3.2
$2,500.01 to $5,000.00.................... 1,100,808 28.1 2,150,780,220 25.2
$5,000.01 to $7,500.00.................... 1,557,862 39.8 3,784,959,278 44.4
Over $7,500.00............................ 841,169 21.5 2,302,387,138 27.0
--------- --------- -------------- -----------
Total..................................... 3,913,733 100.0% $8,528,336,711 100.0%
======== ======== ============= ========
COMPOSITION BY PERIOD OF DELINQUENCY
TRUST PORTFOLIO
PERCENTAGE
OF TOTAL PERCENTAGE
PERIOD OF DELINQUENCY NUMBER OF NUMBER OF OF TOTAL
(DAYS CONTRACTUALLY DELINQUENT) ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
- ------------------------------------------ --------- ---------- -------------- -----------
Not Delinquent............................ 3,737,550 95.5% $7,915,188,334 92.8%
1 to 29 days.............................. 122,117 3.1 413,261,456 4.8
30 to 59 days............................. 21,628 0.6 75,733,983 0.9
60 to 89 days............................. 11,576 0.3 43,993,128 0.5
90 to 119 days............................ 8,431 0.2 31,679,063 0.4
120 to 149 days........................... 6,070 0.2 23,088,494 0.3
150 to 179 days........................... 4,996 0.1 19,370,907 0.2
180 or more............................... 1,365 0.0 6,021,346 0.1
--------- ---------- -------------- -----------
Total..................................... 3,913,733 100.0% $8,528,336,711 100.0%
======== ======== ============= ========
COMPOSITION BY ACCOUNT AGE
TRUST PORTFOLIO
PERCENTAGE
OF TOTAL PERCENTAGE
AGE NUMBER OF NUMBER OF OF TOTAL
(IN MONTHS) ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
- ------------------------------------------ --------- ---------- -------------- -----------
0 to 6 months............................. 869,750 22.2% $2,410,602,698 28.3%
Over 6 to 12 months....................... 855,264 21.8 1,936,608,676 22.7
Over 12 to 24 months...................... 1,408,190 36.0 2,893,051,438 33.9
Over 24 to 36 months...................... 383,183 9.8 740,535,263 8.7
Over 36 to 60 months...................... 26,812 0.7 37,974,642 0.4
Over 60 months............................ 370,534 9.5 509,563,994 6.0
--------- ---------- -------------- -----------
Total..................................... 3,913,733 100.0% $8,528,336,711 100.0%
======== ======== ============= ========
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GEOGRAPHIC DISTRIBUTION OF ACCOUNTS AND RECEIVABLES
TRUST PORTFOLIO*
PERCENTAGE
NUMBER OF TOTAL PERCENTAGE
OF NUMBER OF OF TOTAL
STATE ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
- ------------------------------------------ --------- --------- -------------- -----------
Alabama................................... 47,014 1.2% $ 95,942,958 1.1%
Alaska.................................... 6,471 0.2 16,750,150 0.2
Arizona................................... 55,391 1.4 127,977,442 1.5
Arkansas.................................. 33,427 0.9 76,622,824 0.9
California................................ 570,576 14.6 1,342,823,650 15.7
Colorado.................................. 68,558 1.8 146,317,708 1.7
Connecticut............................... 52,574 1.4 116,205,151 1.4
Delaware.................................. 13,434 0.4 29,389,592 0.3
District of Columbia...................... 8,092 0.2 17,403,471 0.2
Florida................................... 236,443 6.0 499,965,326 5.9
Georgia................................... 84,281 2.2 182,487,644 2.1
Hawaii.................................... 14,322 0.4 32,122,730 0.4
Idaho..................................... 16,759 0.4 35,867,893 0.4
Illinois.................................. 165,459 4.2 337,362,260 4.0
Indiana................................... 84,799 2.2 179,526,356 2.1
Iowa...................................... 45,473 1.2 88,337,877 1.0
Kansas.................................... 38,917 1.0 90,010,688 1.1
Kentucky.................................. 38,150 1.0 77,483,450 0.9
Louisiana................................. 51,008 1.3 101,851,110 1.2
Maine..................................... 743 0.0 1,626,421 0.0
Maryland.................................. 86,723 2.2 191,732,765 2.3
Massachusetts............................. 103,662 2.7 221,845,564 2.6
Michigan.................................. 134,449 3.4 304,976,228 3.6
Minnesota................................. 85,857 2.2 174,658,711 2.0
Mississippi............................... 25,157 0.6 50,948,693 0.6
Missouri.................................. 76,662 2.0 166,256,584 1.9
Montana................................... 11,855 0.3 23,829,936 0.3
Nebraska.................................. 23,152 0.6 47,465,414 0.6
Nevada.................................... 28,578 0.7 69,127,464 0.8
New Hampshire............................. 17,556 0.4 40,471,801 0.5
New Jersey................................ 146,858 3.8 315,487,614 3.7
New Mexico................................ 20,751 0.5 45,631,714 0.5
New York.................................. 314,511 8.0 702,347,638 8.2
North Carolina............................ 79,503 2.0 161,577,753 1.9
North Dakota.............................. 8,772 0.2 17,085,736 0.2
Ohio...................................... 153,365 3.9 319,951,790 3.8
Oklahoma.................................. 43,422 1.1 99,027,611 1.2
Oregon.................................... 48,088 1.2 102,280,953 1.2
Pennsylvania.............................. 169,041 4.3 333,645,083 3.9
Rhode Island.............................. 16,931 0.4 37,324,799 0.4
South Carolina............................ 38,342 1.0 78,418,146 0.9
South Dakota.............................. 9,004 0.2 18,378,779 0.2
Tennessee................................. 70,479 1.8 144,229,048 1.7
Texas..................................... 246,477 6.3 575,641,440 6.8
Utah...................................... 24,656 0.6 49,436,704 0.6
Vermont................................... 8,139 0.2 17,489,292 0.2
Virginia.................................. 93,648 2.4 200,863,552 2.4
Washington................................ 83,654 2.1 193,338,068 2.3
West Virginia............................. 18,332 0.5 36,474,505 0.4
Wisconsin................................. 81,793 2.1 165,208,274 1.9
Wyoming................................... 7,060 0.2 15,569,507 0.2
All Others................................ 5,365 0.1 11,540,844 0.1
--------- --------- -------------- -----------
Total..................................... 3,913,733 100.0% $8,528,336,711 100.0%
======== ======== ============= ========
- ---------------
* Based on billing addresses as of April 30, 1996.
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MATURITY ASSUMPTIONS
The Pooling and Servicing Agreement provides that Class A
Certificateholders will not begin to receive payments of principal until the
Class A Expected Final Distribution Date or following the occurrence of a Series
1996-D Pay Out Event or a Trust Pay Out Event which results in the commencement
of the Rapid Amortization Period. Class B Certificateholders will not receive
payments of principal until the payment in full of the Class A Investor Amount.
Unless and until a Series 1996-D Pay Out Event or a Trust Pay Out Event occurs,
on each Distribution Date during the Accumulation Period, monthly deposits of
principal equal to the lesser of (a) Available Investor Principal Collections
and (b) the Controlled Deposit Amount will be made into the Principal Funding
Account.
Although it is anticipated that a single principal payment will be made to
Class A Certificateholders in an amount equal to the Class A Investor Amount on
the December 2002 Distribution Date (the "Class A Expected Final Distribution
Date") and that a single principal payment will be made to Class B
Certificateholders in an amount equal to the Class B Invested Amount on the
January 2003 Distribution Date (the "Class B Expected Final Distribution Date"),
no assurance can be given in that regard.
A "Series 1996-D Pay Out Event" occurs, with respect to Series 1996-D only,
either automatically or after specified notice, upon (a) failure of the Sellers
to make certain payments or transfers of funds for the benefit of the
Certificateholders within the time periods stated in the Pooling and Servicing
Agreement, (b) material breaches of certain representations, warranties or
covenants of the Sellers, provided, however, that such determination will be
made, for so long as the Collateral Invested Amount is greater than zero,
without reference to whether any funds are available pursuant to any Series
Enhancement, (c) (i) with respect to the end of any Monthly Period, as
determined on the third Business Day preceding the related Distribution Date
(the "Determination Date"), with respect to which the Seller Amount is less than
the Required Seller Amount as of the last day of such Monthly Period, the
failure of the Sellers to convey Receivables in Additional Accounts to the Trust
such that the Seller Amount is at least equal to the Required Seller Amount on
or prior to the tenth Business Day following such Determination Date or (ii)
with respect to the end of any Monthly Period with respect to which the
aggregate Principal Receivables in the Trust are not at least equal to the
Required Principal Balance as of the last day of such Monthly Period, the
failure of the Sellers to convey Receivables in Additional Accounts to the Trust
such that the aggregate Principal Receivables in the Trust are at least equal to
the Required Principal Balance on or prior to the tenth Business Day following
such Determination Date, (d) the average of the Net Portfolio Yield for three
consecutive Monthly Periods being a rate which is less than the average of the
Base Rate for such period, (e) the occurrence of a Servicer Default having a
material adverse effect on the Certificateholders, provided, however, that such
determination will be made, for so long as the Collateral Invested Amount is
greater than zero, without reference to whether any funds are available pursuant
to any Series Enhancement, or (f) failure to pay in full (i) the Class A
Investor Amount on the Class A Expected Final Distribution Date or (ii) the
Class B Invested Amount on the Class B Expected Final Distribution Date. The
term "Net Portfolio Yield" means, with respect to any Monthly Period, the
annualized percentage equivalent of a fraction the numerator of which is the sum
of (a) the amount of collections of Finance Charge Receivables during such
Monthly Period allocable to the Certificates and to the Collateral Interest
including any other amounts that are to be treated as Collections of Finance
Charge Receivables under the Pooling and Servicing Agreement, after subtracting
therefrom the Defaulted Amount allocable to the Class A Certificates, the Class
B Certificates and the Collateral Interest for the Distribution Date with
respect to such Monthly Period, plus (b) the amount of any Principal Funding
Investment Proceeds for the related Distribution Date, plus (c) the amount of
any investment earnings (net of investment losses and expenses) on funds on
deposit in the Pre-Funding Account for the related Distribution Date, plus (d)
the amount of funds, if any, to be withdrawn from the Reserve Account that,
pursuant to the Supplement, are required to be included in Class A Available
Funds with respect to such Distribution Date, and the denominator of which is
the Investor Amount as of the last day of the prior Monthly Period. For any
Monthly Period, the "Base Rate" will be equal to the annualized percentage
equivalent of a fraction, the numerator of which is equal to the sum of (i) the
Class A Monthly Interest, (ii) the Class B Monthly Interest, (iii) the
Collateral Monthly Interest and (iv) the Monthly Servicing Fee, each with
respect to the related Distribution Date and the denominator of which is the
Investor Amount as of
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the last day of the preceding Monthly Period; provided, however, if the Rating
Agency Condition is satisfied with respect thereto, for purposes of determining
the Base Rate, the Monthly Servicing Fee shall be replaced with an amount equal
to one-twelfth the product of (a) the Net Servicing Fee Rate and (b) the
Servicing Base Amount. A "Trust Pay Out Event" occurs, with respect to the
Certificates and each other Series automatically upon (a) an Insolvency Event
relating to any Seller, (b) the Trust becoming an "investment company" within
the meaning of the Investment Company Act of 1940, as amended (the "Investment
Company Act"), or (c) the inability of any Seller to transfer Receivables to the
Trust in accordance with the Pooling and Servicing Agreement. Although the Banks
believe that the likelihood of a Series 1996-D Pay Out Event or a Trust Pay Out
Event occurring is remote, there can be no assurance that a Series 1996-D Pay
Out Event or a Trust Pay Out Event will not occur. See "Description of the
Certificates -- Series 1996-D Pay Out Events and Trust Pay Out Events."
In the event of the occurrence of a Series 1996-D Pay Out Event or a Trust
Pay Out Event, the Rapid Amortization Period will begin. During the Rapid
Amortization Period, first the Class A Certificateholders and then, following
the payment in full of the Class A Investor Amount, the Class B
Certificateholders will be entitled to receive monthly payments of principal
equal to the Available Investor Principal Collections received by the Trust
during the related Monthly Period (plus the principal amount on deposit in the
Principal Funding Account) until the Class A Investor Amount or Class B Invested
Amount, as applicable, are paid in full. Allocations of Principal Receivables
will be based on the Principal Allocation Percentage. See "Description of the
Certificates -- Allocation Percentages."
The following table sets forth the highest and lowest cardholder monthly
payment rates for the Advanta Consumer Credit Card Portfolio during any month in
the periods shown and the average of the cardholder monthly payment rates for
all months during the period shown, in each case calculated as a percentage of
total opening monthly account balances during the periods shown. Payments shown
in the table include amounts which would be deemed payments of Principal
Receivables and Finance Charge Receivables with respect to the Accounts.
MONTHLY PAYMENT RATES
ADVANTA CONSUMER CREDIT CARD PORTFOLIO
THREE MONTHS
ENDED YEAR ENDED DECEMBER 31,
MARCH 31, -------------------------
1996 1995 1994 1993
------------ ----- ----- -----
Lowest................................................. 9.36% 9.29% 11.55% 13.22%
Highest................................................ 10.23% 12.42% 14.25% 15.57%
Monthly Average........................................ 9.88% 10.73% 12.98% 14.39%
The amount of collections on Receivables may vary from month to month due
to seasonal variations, general economic conditions, changes in tax law and
payment habits of individual cardholders. There can be no assurance that
collections of Principal Receivables with respect to the Trust Portfolio, and
thus the rate at which Certificateholders could expect to accumulate or receive
payments of principal on their Certificates during the Accumulation Period or
the Rapid Amortization Period, will be similar to the historical experience set
forth above. In addition, the ability of the Certificateholders to be paid the
applicable Class A Investor Amount or the Class B Invested Amount on the Class A
Expected Final Distribution and the Class B Expected Final Distribution Date,
respectively, may be dependent upon the availability of Shared Principal
Collections. Since the Trust, as a master trust, may issue additional Series
from time to time, there can be no assurance that the issuance of additional
Series or the terms of any additional Series might not have an impact on the
timing of payments received by Certificateholders. Further, if a Series 1996-D
Pay Out Event or a Trust Pay Out Event occurs, the average life and maturity of
the Certificates could be significantly reduced.
RECEIVABLE YIELD CONSIDERATIONS
The yield on the Advanta Consumer Credit Card Portfolio for the three
months ended March 31, 1996 and for each of the three years in the period ended
December 31, 1995 is set forth in the following table. The
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historical yield figures in the table are calculated on an accrual basis.
Collections on the Receivables will be on a cash basis and may not reflect the
historical yield experience in the table. For example, during periods of
increasing delinquencies, accrual yields may exceed cash yields as amounts
collected on credit card receivables lag behind amounts accrued and billed to
cardholders. Conversely, as delinquencies decrease, cash yields may exceed
accrual yields as amounts collected in a current period may include amounts
accrued during prior periods. Yield on both an accrual and a cash basis will be
affected by numerous factors, including the finance charges on the Receivables,
the amount of the annual cardholder fee and other fees and charges, changes in
the delinquency rate on the Receivables and the percentage of cardholders who
pay their balances in full each month and do not incur finance charges. There
can be no assurance that the revenue from finance charges and fees for the
Receivables will be similar to the historical experience set forth below. See
"Risk Factors" in the Prospectus.
REVENUE FROM FINANCE CHARGES AND FEES
ADVANTA CONSUMER CREDIT CARD PORTFOLIO(1)
THREE MONTHS
ENDED YEAR ENDED DECEMBER 31,
MARCH 31, -------------------------------
1996(2) 1995(2) 1994(2) 1993(2)
------------ ------- ------- -------
Average Monthly Accrued Fees and
Charges(3)(4).................................... $29.94 $27.03 $22.98 $21.62
Average Account Balance(5)......................... 2,783 2,435 2,044 1,761
Yield From Fees and Charges(3)(4).................. 12.91%(6) 13.32 % 13.49 % 14.73 %
- ---------------
(1) The figures shown do not include revenue attributable to Interchange.
(2) Includes the receivables transferred in connection with the Prior
Securitizations and Master Trust II Sales.
(3) Fees and Charges are comprised of finance charges, annual cardholder fees
and certain other service charges.
(4) Average Monthly Accrued Fees and Charges and Yield from Fees and Charges are
presented net of adjustments made pursuant to AUS's normal servicing
procedures, including removal of incorrect or disputed finance charges and
reversal of finance charges accrued on charged off accounts.
(5) Average Account Balance includes purchases, cash advances and billed and
unpaid finance and other charges, and is calculated based on the average of
the opening monthly account balances for accounts with balances during the
periods shown.
(6) Annualized.
The yield for the Advanta Consumer Credit Card Portfolio shown in the above
table is comprised of three components: finance charges, annual cardholder fees
and other service charges, such as late charges. The yield related to annual
cardholder fees (on those accounts which assess such fees) and other service
charges varies with the type and volume of activity in, and the balance of each
account. The Banks currently assess annual cardholder fees of $10 to $50 for
certain of its credit card accounts. Most accounts originated since March 1987
do not carry an annual cardholder fee. See "The Banks' Credit Card Activities"
herein and in the Prospectus. As account balances increase, an annual cardholder
fee, which remains constant, represents a smaller percentage of the aggregate
account balance.
The decline in portfolio yield demonstrated in the above table is the
result of the Banks' focus on the direct solicitation of low rate, prime rate
and London interbank offered rate based, no annual fee credit card accounts and
the fluctuations in the prime rate during the period shown. Certain of the most
recently originated credit card accounts have a lower introductory rate which
might have the effect of lowering finance charge income on such accounts below
the level indicated in the above table. The Trust Portfolio contains a greater
proportion of receivables arising under such accounts than does the Advanta
Consumer Credit Card Portfolio.
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DESCRIPTION OF THE CERTIFICATES
The Certificates will be issued pursuant to the Pooling and Servicing
Agreement entered into among Advanta National Bank USA, as Seller and as
Servicer of the Accounts and the Receivables, Advanta National Bank, as Seller,
and Bankers Trust Company, as Trustee for the Certificateholders, substantially
in the form filed as an exhibit to the Registration Statement of which the
Prospectus is a part. Pursuant to the Master Pooling and Servicing Agreement,
the Sellers may execute further supplements thereto among each of the Sellers
and the Trustee in order to issue additional Series. See "Description of the
Certificates -- New Issuances" in the Prospectus. The Trustee will provide a
copy of the Master Pooling and Servicing Agreement (without exhibits or
schedules), including any Supplements, to Certificateholders without charge upon
written request. The following summary describes certain terms of the Pooling
and Servicing Agreement and is qualified in its entirety by reference to the
Pooling and Servicing Agreement.
GENERAL
The Certificates will represent undivided interests in the Trust, including
the right to a floating percentage (in the case of collections of Principal
Receivables during the Revolving Period, which collections will be allocated to
the Certificates and paid to the holders of the Seller Certificates, to
amortizing or accumulating Series in Group One or, in certain limited
circumstances described herein, to the holder of the Collateral Interest, or
deposited into the Excess Funding Account, and in the case of collections of
Finance Charge Receivables and Defaulted Receivables at all times) or a
resettable fixed/floating percentage (in the case of collections of Principal
Receivables during the Accumulation Period or the Rapid Amortization Period)
(each, the "Series Percentage") of all cardholder payments on the Receivables;
provided, however, that on any Distribution Date during the Accumulation Period,
the amount to be deposited in the Principal Funding Account in respect of
collections of Principal Receivables will be limited to the Controlled Deposit
Amount on such Distribution Date. See "-- Allocation Percentages." For any
Monthly Period, the portion of the Principal Receivables and any amounts on
deposit in the Excess Funding Account represented by the Certificates and the
Collateral Interest (the "Invested Amount") will be equal to the Initial
Invested Amount, plus the amount of any increases in the Invested Amount during
the Funding Period as a result of withdrawals from the Pre-Funding Account in
connection with any increases in the amount of Principal Receivables in the
Trust, minus the amount of principal deposits into the Principal Funding
Account, minus (without duplication of the amount of principal deposits into the
Principal Funding Account) the amount of principal payments paid to the
Certificateholders and the Collateral Interest Holder (other than any principal
payments made from any amounts on deposit in the Pre-Funding Account at the end
of the Funding Period) and minus any unreimbursed reductions in the Invested
Amount. See "Description of the Certificates -- Defaulted Receivables; Rebates
and Fraudulent Charges" in the Prospectus and "-- Allocation of Investor Default
Amount" herein. Each Certificate represents the right to receive monthly
payments of interest for the related Interest Periods at the applicable
Certificate Rate for such Interest Periods from collections of Finance Charge
Receivables and, in certain circumstances, from withdrawals from the Cash
Collateral Account and Reallocated Principal Collections, and deposits or
payments of principal during the Accumulation Period or the Rapid Amortization
Period funded from collections of Principal Receivables allocated to the Class A
Invested Amount and the Class B Invested Amount (plus certain other amounts
specified herein, including, during the Accumulation Period, certain collections
of Principal Receivables otherwise allocable to other Series, to the extent such
collections are not needed to make payments to or for the benefit of such other
Series).
The Sellers hold the interest in the Principal Receivables and the amounts
on deposit in the Excess Funding Account, if any (the "Seller Amount"), not
represented by the Certificates, the Collateral Interest and the certificates of
and uncertificated interests in other Series, if any. The Sellers hold an
undivided interest in the Trust (the "Sellers' Interest"), including the right
to a percentage (the "Seller Percentage") of all cardholder payments on the
Receivables.
During the Revolving Period, the Investor Amount will remain constant
except in certain limited circumstances (including the circumstance where there
are amounts remaining in the Pre-Funding Account at the end of the Funding
Period that are paid to Certificateholders). See "Description of the
Certificates --
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Defaulted Receivables; Rebates and Fraudulent Charges" in the Prospectus and
"-- Pre-Funding Account" and "-- Allocation of Investor Default Amounts" herein.
The amount of Principal Receivables, however, will vary each day as new
Principal Receivables are created and others are paid. The Seller Amount will
fluctuate daily, therefore, to reflect the changes in the amount of the
Principal Receivables. During the Accumulation Period or the Rapid Amortization
Period, the Invested Amount will decline for each Monthly Period as cardholder
payments of Principal Receivables are collected and deposited in the Principal
Funding Account or paid to the Certificateholders.
INTEREST PAYMENTS
Interest will accrue on the Certificates at the applicable Class A
Certificate Rate or Class B Certificate Rate from the date of the initial
issuance of the Certificates (the "Closing Date"). Interest at such applicable
rate will be paid to the Certificateholders on each Distribution Date beginning
on August 15, 1996.
Interest payments on the Certificates on any Distribution Date will be
calculated on the outstanding principal amount of the Class A Certificates or
the Class B Certificates, as applicable, as of the preceding Record Date (or, in
the case of the first Distribution Date, as of the Closing Date) based upon the
applicable Certificate Rate for the related Interest Period. Interest due but
not paid on any Distribution Date will be payable on the next succeeding
Distribution Date together with additional interest on such amount at the
applicable Certificate Rate plus 2.00%.
Interest on the Class A Certificates and the Class B Certificates will be
calculated on the basis of the actual number of days in the related Interest
Period and a 360-day year. The Class A Certificates will bear interest for the
period from the Closing Date through July 14, 1996, and for the period from July
15 through August 14, 1996, and with respect to each Interest Period thereafter,
at the rate of .15% per annum above the London interbank offered quotations for
one-month United States dollar deposits ("LIBOR") determined as set forth below.
The Class B Certificates will bear interest for the period from the Closing Date
through July 14, 1996, and for the period from July 15 through August 14, 1996,
and with respect to each Interest Period thereafter, at the rate of .30% per
annum above LIBOR determined as set forth below.
The Trustee will determine LIBOR on June 14, 1996 for the period from the
Closing Date through July 14, 1996 and on July 11, 1996 for the period from July
15, 1996 through August 14, 1996, and for each Interest Period thereafter, on
the second Business Day prior to every Distribution Date, commencing with the
August 1996 Distribution Date (each, a "LIBOR Determination Date").
"LIBOR" means, as of any LIBOR Determination Date, the rate for deposits in
United States dollars for a one-month period which appears on Telerate Page 3750
as of 11:00 a.m., London time, on such date. If such rate does not appear on
Telerate Page 3750, the rate for that LIBOR Determination Date will be
determined on the basis of the rates at which deposits in United States dollars
are offered by the Reference Banks at approximately 11:00 a.m., London time, on
that day to prime banks in the London interbank market for a one-month period.
The Trustee will request the principal London office of each of the Reference
Banks to provide a quotation of its rate. If at least two such quotations are
provided, the rate for that LIBOR Determination Date will be the arithmetic mean
of the quotations. If fewer than two quotations are provided as requested, the
rate for that LIBOR Determination Date will be the arithmetic mean of the rates
quoted by three major banks in New York City, selected by the Servicer, at
approximately 11:00 a.m., New York City time, on that day for loans in United
States dollars to leading European banks for a one-month period.
"Telerate Page 3750" means the display page currently so designated on the
Dow Jones Telerate Service (or such other page as may replace that page on that
service for the purpose of displaying comparable rates or prices).
"Reference Banks" means three major banks in the London interbank market
selected by the Servicer.
The determination of LIBOR by the Trustee and the Trustee's subsequent
calculation of the applicable Certificate Rate for the relevant Interest Periods
shall (in the absence of manifest error) be final and binding on each
Certificateholder. The Class A Certificate Rate or Class B Certificate Rate
applicable to the then
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current Interest Period may be obtained by telephoning the Trustee at its
Corporate Trust Office at (800) 735-7777.
On each Distribution Date, Class A Monthly Interest and Class A Monthly
Interest previously due but not distributed to the Class A Certificateholders
will be paid to the Class A Certificateholders from Class A Available Funds for
the related Monthly Period. To the extent Class A Available Funds for such
Monthly Period are insufficient to pay such interest, Excess Spread and Excess
Finance Charges allocated to Series 1996-D, amounts, if any, on deposit in the
Cash Collateral Account and Reallocated Principal Collections allocable first to
the Collateral Invested Amount and then the Class B Invested Amount will be used
to make such payments. "Class A Available Funds" means, with respect to any
Monthly Period, an amount equal to the sum of (a) the Class A Floating
Percentage of collections of Finance Charge Receivables allocated to the Series
1996-D Certificates with respect to such Monthly Period (including any
investment earnings on amounts on deposit in the Pre-Funding Account and certain
other amounts that are to be treated as collections of Finance Charge
Receivables in accordance with the Pooling and Servicing Agreement), (b) the
amount of Principal Funding Investment Proceeds, if any, with respect to such
Distribution Date and (c) the amount of funds, if any, to be withdrawn from the
Reserve Account that, pursuant to the Supplement, are required to be included in
Class A Available Funds with respect to such Distribution Date, less (d) the
Class A Floating Percentage of Servicer Interchange.
On each Distribution Date, Class B Monthly Interest and Class B Monthly
Interest previously due but not paid to the Class B Certificateholders will be
paid to the Class B Certificateholders from Class B Available Funds for the
related Monthly Period. To the extent Class B Available Funds for such Monthly
Period are insufficient to pay such interest, Excess Spread and Excess Finance
Charges allocated to Series 1996-D, amounts, if any, on deposit in the Cash
Collateral Account and Reallocated Principal Collections allocable to the
Collateral Invested Amount will be used to make such payment. "Class B Available
Funds" means, with respect to any Monthly Period, an amount equal to the Class B
Floating Percentage of collections of Finance Charge Receivables allocated to
the Series 1996-D Certificates with respect to such Monthly Period (including
any investment earnings on amounts on deposit in the Pre-Funding Account and
certain other amounts that are to be treated as collections of Finance Charge
Receivables in accordance with the Pooling and Servicing Agreement) less the
Class B Floating Percentage of Servicer Interchange.
PRE-FUNDING ACCOUNT
The Servicer will establish and maintain in the name of the Trustee, on
behalf of the Certificateholders and the Collateral Interest Holder, the
Pre-Funding Account with an Eligible Institution. Funds on deposit in the
Pre-Funding Account will be withdrawn on a monthly basis to the extent of any
increases in the Invested Amount during the Funding Period as a result of an
increase in the amount of Principal Receivables in the Trust to the extent that
the Seller Amount on the last day of any Monthly Period during the Funding
Period exceeds the product of (A) the sum of 1.0% and the Required Seller
Percentage on such date and (B) the sum of the aggregate amount of Principal
Receivables in the Trust and amounts on deposit in the Excess Funding Account on
such day; provided, however, that the Invested Amount will in no event exceed
$700,000,000 or increase by an amount in excess of the Pre-Funded Amount
immediately prior to giving effect to such increase. Should the Pre-Funded
Amount be greater than zero at the end of the Funding Period, any principal
amounts remaining on deposit in the Pre-Funding Account will be withdrawn for
pro rata distribution to Certificateholders and the Collateral Interest Holder
on the next succeeding Distribution Date.
All amounts on deposit in the Pre-Funding Account will be invested by the
Trustee in Eligible Investments. On each Distribution Date with respect to the
Funding Period, all net investment income earned on amounts in the Pre-Funding
Account during the preceding Monthly Period will be withdrawn from the
Pre-Funding Account and deposited into the Collection Account for distribution
to Certificateholders and the Collateral Interest Holder. Such investment income
will be deemed to be collections of Finance Charge Receivables allocable to the
Certificates and the Collateral Interest for such Monthly Period.
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PRINCIPAL PAYMENTS
During the Revolving Period (which begins on the Closing Date and ends on
the day before the commencement of the Accumulation Period or, if earlier, the
Rapid Amortization Period), no principal payments will be made to the
Certificateholders (other than any principal payment made from any amount on
deposit in the Pre-Funding Account at the end of the Funding Period). On each
Distribution Date during the Revolving Period, collections of Principal
Receivables allocable to the Certificateholders' Interest and the Collateral
Interest will, subject to certain limitations, including the allocation of any
Reallocated Principal Collections with respect to the related Monthly Period to
pay the Class A Required Amount and the Class B Required Amount and payments of
Collateral Monthly Principal, be treated as Shared Principal Collections.
Collateral Monthly Principal will be applied in accordance with the Loan
Agreement. The "Loan Agreement" means the Loan Agreement, dated as of the
Closing Date, among the Sellers, the Servicer, the Cash Collateral Depositor,
the Trustee and the Collateral Interest Holder, as amended, supplemented or
otherwise modified from time to time.
The first principal payment (other than any principal payment made from any
amount on deposit in the Pre-Funding Account at the end of the Funding Period)
will be made to the Certificateholders on the earlier of the Class A Expected
Final Distribution Date or on the Distribution Date in the month following the
month in which the Rapid Amortization Period commences. On each Distribution
Date with respect to the Class A Accumulation Period, an amount equal to the
least of (a) Available Investor Principal Collections on deposit in the
Collection Account with respect to such Distribution Date, (b) the applicable
Controlled Deposit Amount for such Distribution Date and (c) the Class A
Invested Amount, will be deposited in the Principal Funding Account for payment
to the Class A Certificateholders on the Class A Expected Final Payment Date or
on the first Distribution Date with respect to the Rapid Amortization Period.
After the Class A Investor Amount has been paid in full, on each Distribution
Date with respect to the Class B Accumulation Period, amounts equal to the least
of (a) Available Investor Principal Collections on deposit in the Collection
Account with respect to such Distribution Date (minus the portion of such
Available Investor Principal Collections applied to Class A Monthly Principal on
such Distribution Date), (b) the applicable Controlled Deposit Amount for such
Distribution Date and (c) the Class B Invested Amount will be paid to the Class
B Certificateholders until the Class B Invested Amount has been paid in full.
"Available Investor Principal Collections" means, with respect to any
Monthly Period, an amount equal to the sum of (a) (i) an amount equal to the
product of the Invested Principal Collections multiplied by the sum of the Class
A Principal Percentage and the Class B Principal Percentage, minus (ii) the
amount of Reallocated Principal Collections with respect to such Monthly Period
used to fund the Class A Required Amount (excluding certain Reallocated
Principal Collections that have resulted in a reduction of the Collateral
Invested Amount), plus (b) any Shared Principal Collections with respect to
other Series in Group One that are allocated to Series 1996-D, plus (c) any
other amounts which pursuant to the Supplement are to be treated as Available
Investor Principal Collections with respect to the related Distribution Date,
plus (d) an amount equal to the excess, if any, of Collateral Principal
Collections over Collateral Monthly Principal. "Invested Principal Collections"
means, with respect to any Monthly Period, the Principal Allocation Percentage
of all collections of Principal Receivables received during such Monthly Period.
"Collateral Principal Collections" means, with respect to any Monthly
Period, the Invested Principal Collections less an amount equal to the product
of (i) Invested Principal Collections with respect to such Monthly Period and
(ii) the sum of the Class A Principal Percentage and the Class B Principal
Percentage with respect to such Monthly Period, plus the amount, if any, of
Excess Spread and Excess Finance Charges to be distributed pursuant to clauses
(h) and (i) of "-- Application of Collections -- Excess Spread; Excess Finance
Charges" on the related Distribution Date, minus the amount of Reallocated
Principal Collections with respect to such Monthly Period which are required to
fund any deficiency in the amounts to be distributed pursuant to the Class A
Required Amount or the Class B Required Amount for the related Distribution Date
(excluding Reallocated Principal Collections which have been allocated to reduce
the Class B Invested Amount).
On each Distribution Date during the Rapid Amortization Period until the
Class A Investor Amount has been paid in full or the Series 1996-D Termination
Date occurs, the Class A Certificateholders will be entitled
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to receive Available Investor Principal Collections in an amount up to the Class
A Investor Amount. After payment in full of the Class A Investor Amount, the
Class B Certificateholders will be entitled to receive, on each such
Distribution Date, Available Investor Principal Collections until the earlier of
the date the Class B Invested Amount is paid in full and the Series 1996-D
Termination Date.
POSTPONEMENT OF ACCUMULATION PERIOD
Upon written notice to the Trustee, the Servicer may elect to postpone the
commencement of the Class A Accumulation Period, and extend the length of the
Revolving Period, subject to certain conditions including those set forth below.
The Servicer may make such election only if the Accumulation Period Length
(determined as described below) is less than nine months. On each Determination
Date, until the Class A Accumulation Period begins, the Servicer will determine
the "Accumulation Period Length," which is the number of months expected to be
required to fully fund the Principal Funding Account no later than the Class A
Expected Final Distribution Date, based on (a) the expected monthly collections
of Principal Receivables expected to be distributable to the Certificateholders
of all Series, assuming a principal payment rate no greater than the lowest
monthly principal payment rate on the Receivables for the preceding twelve
months and (b) the amount of principal expected to be distributable to
certificateholders of Series which are not expected to be in their revolving
periods during the Class A Accumulation Period. If the Accumulation Period
Length is less than nine months, the Servicer may, at its option, postpone the
commencement of the Class A Accumulation Period such that the number of months
included in the Class A Accumulation Period will be equal to or exceed the
Accumulation Period Length. The effect of the foregoing calculation is to permit
the reduction of the length of the Class A Accumulation Period based on the
investor interest of certain other Series which are scheduled to be in their
revolving periods during the Class A Accumulation Period and on increases in the
principal payment rate occurring after the Closing Date. The length of the Class
A Accumulation Period will not be less than one month.
SUBORDINATION
The Class B Certificateholders' Interest and the Collateral Interest will
be subordinated to the extent necessary to fund certain payments with respect to
the Class A Certificates. In addition, the Collateral Interest will be
subordinated to the extent necessary to fund certain payments with respect to
the Class B Certificates. Certain principal payments otherwise allocable to the
Class B Certificateholders may be reallocated to the Class A Certificateholders
and the Class B Invested Amount may be reduced. Similarly, certain principal
payments allocable to the Collateral Interest may be reallocated to the Class A
Certificateholders and the Class B Certificateholders and the Collateral
Invested Amount may be reduced. To the extent the Class B Invested Amount is
reduced, the percentage of collections of Finance Charge Receivables allocated
to the Class B Certificateholders in subsequent Monthly Periods will be reduced.
Moreover, to the extent the amount of such reduction in the Class B Invested
Amount is not reimbursed, the amount of principal distributable to the Class B
Certificateholders will be reduced. See "-- Allocation Percentages,"
"-- Reallocation of Cash Flows," and "-- Application of Collections -- Excess
Spread; Excess Finance Charges."
ALLOCATION PERCENTAGES
Pursuant to the Pooling and Servicing Agreement, with respect to each
Monthly Period the Servicer will allocate among the Class A Certificates, the
Class B Certificates and the Collateral Interest, the certificateholders'
interest for all other Series issued and outstanding and the Sellers' Interest
all collections of Finance Charge Receivables and Principal Receivables and the
Defaulted Amount with respect to such Monthly Period.
Collections of Finance Charge Receivables and the Defaulted Amount with
respect to any Monthly Period will be allocated to Series 1996-D based on the
Floating Allocation Percentage. The "Floating Allocation Percentage" means, with
respect to any Monthly Period, the percentage equivalent (which percentage shall
never exceed 100%) of a fraction, the numerator of which is the Invested Amount
as of the last day of the preceding Monthly Period (or with respect to the first
Monthly Period, the Initial Invested Amount) and the denominator of which is the
greater of (1) the sum of (x) the total amount of the Principal
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Receivables in the Trust as of such day (or with respect to the first Monthly
Period, the total amount of Principal Receivables in the Trust on the Closing
Date) and (y) the principal amount on deposit in the Excess Funding Account as
of such day and (2) the sum of the numerators used to calculate the Series
Percentages with respect to Finance Charge Receivables or Defaulted Receivables,
as applicable, for all Series of certificates then outstanding; provided,
however, that such ratio is subject to adjustment to give effect to additions of
Additional Accounts. Such amounts so allocated will be further allocated between
the Class A Certificateholders, the Class B Certificateholders and the
Collateral Interest Holder in accordance with the Class A Floating Percentage,
the Class B Floating Percentage and the Collateral Floating Percentage,
respectively. The "Class A Floating Percentage" means, with respect to any
Monthly Period, the percentage equivalent (which percentage shall never exceed
100%) of a fraction, the numerator of which is equal to the Class A Invested
Amount as of the close of business on the last day of the preceding Monthly
Period (or with respect to the first Monthly Period, the Class A Initial
Invested Amount) and the denominator of which is equal to the Invested Amount as
of the close of business on such day (or with respect to the first Monthly
Period, the Initial Invested Amount). The "Class B Floating Percentage" means,
with respect to any Monthly Period, the percentage equivalent (which percentage
shall never exceed 100%) of a fraction, the numerator of which is equal to the
Class B Invested Amount as of the close of business on the last day of the
preceding Monthly Period (or with respect to the first Monthly Period, the Class
B Initial Invested Amount) and the denominator of which is equal to the Invested
Amount at the close of business on such day (or with respect to the first
Monthly Period, the Initial Invested Amount). The "Collateral Floating
Percentage" means, with respect to any Monthly Period, the percentage equivalent
(which percentage shall never exceed 100%) of a fraction, the numerator of which
is the Collateral Invested Amount as of the close of business on the last day of
the preceding Monthly Period (or with respect to the first Monthly Period, the
Collateral Initial Invested Amount) and the denominator of which is equal to the
Invested Amount as of the close of business on such day (or with respect to the
first Monthly Period, the Initial Invested Amount).
Collections of Principal Receivables will be allocated to Series 1996-D
based on the Principal Allocation Percentage. The "Principal Allocation
Percentage" means, with respect to any Monthly Period, the percentage equivalent
(which percentage shall never exceed 100%) of a fraction, the numerator of which
is (a) during the Revolving Period, the Invested Amount as of the last day of
the immediately preceding Monthly Period (or, in the case of the first Monthly
Period, the Closing Date) and (b) during the Accumulation Period or the Rapid
Amortization Period, the Invested Amount as of the last day of the Revolving
Period, and the denominator of which is the greater of (i) the sum of the total
amount of Principal Receivables in the Trust as of the last day of the
immediately preceding Monthly Period and the principal amount on deposit in the
Excess Funding Account as of such last day (or, in the case of the first Monthly
Period, the Closing Date) and (ii) the sum of the numerators used to calculate
the Series Percentages applicable to Principal Receivables for all Series
outstanding as of the date as to which such determination is being made;
provided, however, that such ratio is subject to adjustment to give effect to
additions of Additional Accounts. Such amounts allocated to the
Certificateholders will be further allocated between the Class A
Certificateholders and the Class B Certificateholders based on the Class A
Principal Percentage and the Class B Principal Percentage, respectively. The
"Class A Principal Percentage" means, with respect to any Monthly Period (a)
during the Revolving Period, the percentage equivalent (which shall never exceed
100%) of a fraction, the numerator of which is equal to the Class A Invested
Amount as of the last day of the immediately preceding Monthly Period (or, in
the case of the first Monthly Period, the Closing Date), and the denominator of
which is equal to the Invested Amount as of such day (or, in the case of the
first Monthly Period, the Closing Date) and (b) during the Accumulation Period
or the Rapid Amortization Period, the percentage equivalent (which shall never
exceed 100%) of a fraction, the numerator of which is the Class A Invested
Amount as of the last day of the Revolving Period, and the denominator of which
is the Invested Amount as of such last day. The "Class B Principal Percentage"
means, with respect to any Monthly Period, (i) during the Revolving Period, the
percentage equivalent (which percentage shall never exceed 100%) of a fraction,
the numerator of which is the Class B Invested Amount as of the last day of the
immediately preceding Monthly Period (or, in the case of the first Monthly
Period, the Closing Date) and the denominator of which is the Invested Amount as
of such day (or, in the case of the first Monthly Period, the Closing Date) and
(ii) during the Accumulation Period or the Rapid Amortization Period, the
percentage equivalent (which
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percentage shall never exceed 100%) of a fraction, the numerator of which is the
Class B Invested Amount as of the last day of the Revolving Period, and the
denominator of which is the Invested Amount as of such last day. Collections of
Principal Receivables allocable to Series 1996-D and not allocated to the Class
A Certificateholders or the Class B Certificateholders will be allocated, in an
amount up to the Collateral Invested Amount, to the Collateral Interest Holder.
As used herein, the following terms have the meanings indicated:
"Class A Invested Amount" for any date means an amount equal to (i) the
Class A Initial Invested Amount, plus (ii) the amount of any increases in the
Class A Invested Amount during the Funding Period on or prior to such date,
minus (iii) the amount of principal payments (other than principal payments made
from amounts on deposit in the Pre-Funding Account on the first Distribution
Date following the end of the Funding Period) made to the Class A
Certificateholders on or prior to such date, minus (iv) the excess, if any, of
the aggregate amount of Class A Investor Charge-Offs for all prior Distribution
Dates over the aggregate amount of any reimbursements of Class A Investor
Charge-Offs for all Distribution Dates prior to such date and minus (v) the
principal amount on deposit in the Principal Funding Account (the "Principal
Funding Account Balance").
"Class B Invested Amount" for any date means an amount equal to (i) the
Class B Initial Invested Amount, plus (ii) the amount of any increases in the
Class B Invested Amount during the Funding Period on or prior to such date,
minus (iii) the amount of principal payments (other than principal payments made
from amounts on deposit in the Pre-Funding Account on the first Distribution
Date following the end of the Funding Period) made to Class B Certificateholders
on or prior to such date, minus (iv) the excess, if any, of the aggregate amount
of Class B Investor Charge-Offs for all prior Distribution Dates over the
aggregate amount of any reimbursement of Class B Investor Charge-Offs for all
Distribution Dates preceding such date, minus (v) the aggregate amount of
Reallocated Principal Collections for all prior Distribution Dates which have
been used to fund the Class A Required Amount with respect to such Distribution
Dates (excluding any Reallocated Principal Collections that have resulted in a
reduction of the Collateral Invested Amount), minus (vi) an amount equal to the
amount by which the Class B Invested Amount has been reduced to fund the Class A
Investor Default Amount on all prior Distribution Dates as described under
"-- Allocation of Investor Default Amount," and plus (vii) the aggregate amount
of Excess Spread and Excess Finance Charges allocated to Series 1996-D and
applied on all prior Distribution Dates for the purpose of reimbursing amounts
deducted pursuant to the foregoing clauses (iv), (v) and (vi) provided, however,
that the Class B Invested Amount may not be reduced below zero.
"Collateral Invested Amount" means an amount equal to (i) the Collateral
Initial Invested Amount, plus (ii) the amount of any increases in the Collateral
Invested Amount during the Funding Period on or prior to such date, minus (iii)
the aggregate amount of principal payments (other than principal payments made
from amounts on deposit in the Pre-Funding Account on the first Distribution
Date following the end of the Funding Period) made with respect to the
Collateral Interest prior to the date of determination, minus (iv) the aggregate
amount of Reallocated Principal Collections allocable to the Collateral Invested
Amount for all prior Distribution Dates which have been used to fund the Class A
Required Amount or the Class B Required Amount, minus (v) an amount equal to the
aggregate amount by which the Collateral Invested Amount has been reduced to
fund the Class A Investor Default Amount and the Class B Investor Default Amount
on all prior Distribution Dates as described under "-- Allocation of Investor
Default Amount," minus (vi) an amount equal to the product of the Collateral
Floating Percentage and the Investor Default Amount (the "Collateral Default
Amount") with respect to any Distribution Date that is not funded out of Excess
Spread and Excess Finance Charges allocated to Series 1996-D and available for
such purpose on such Distribution Date, and plus (vi) the aggregate amount of
Excess Spread and Excess Finance Charges allocated and available to reimburse
amounts deducted pursuant to the foregoing clauses (iv), (v) and (vi); provided,
however, that the Collateral Invested Amount may not be reduced below zero.
"Invested Amount," for any date means an amount equal to the sum of the
Class A Invested Amount, the Class B Invested Amount and the Collateral Invested
Amount.
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"Class A Investor Amount" for any date means an amount equal to the sum of
the Class A Invested Amount, plus the Class A Floating Percentage of the
Pre-Funded Amount, plus the Principal Funding Account Balance.
"Class B Investor Amount" for any date means an amount equal to the sum of
the Class B Invested Amount plus the Class B Floating Percentage of the
Pre-Funded Amount.
"Collateral Investor Amount" for any date means an amount equal to the sum
of the Collateral Invested Amount plus the Collateral Floating Percentage of the
Pre-Funded Amount.
"Investor Amount," for any date means an amount equal to the sum of the
Class A Investor Amount, the Class B Investor Amount and Collateral Investor
Amount.
"Series Investor Amount" for any date means an amount equal to the
numerator of the Principal Allocation Percentage on such date.
REALLOCATION OF CASH FLOWS
With respect to each Distribution Date, on each Determination Date, the
Servicer will determine the amount (the "Class A Required Amount"), which will
be equal to the amount, if any, by which (a) the sum of (i) Class A Monthly
Interest for such Distribution Date, (ii) any Class A Monthly Interest
previously due but not paid to the Class A Certificateholders on a prior
Distribution Date, (iii) any Class A Additional Interest and any Class A
Additional Interest previously due but not paid to the Class A
Certificateholders on a prior Distribution Date, (iv) the Class A Servicing Fee
for such Distribution Date and any unpaid Class A Servicing Fee and (v) the
Class A Investor Default Amount, if any, for such Distribution Date exceeds (b)
the Class A Available Funds. If the Class A Required Amount is greater than
zero, Excess Spread and Excess Finance Charges allocated to Series 1996-D and
available for such purpose will be used to fund the Class A Required Amount with
respect to such Distribution Date. If such Excess Spread and Excess Finance
Charges available with respect to such Distribution Date are less than the Class
A Required Amount, amounts, if any, on deposit in the Cash Collateral Account
will then be used to fund the remaining Class A Required Amount. If such Excess
Spread and Excess Finance Charges and amounts, if any, on deposit in the Cash
Collateral Account are insufficient to fund the Class A Required Amount,
collections of Principal Receivables allocable first to the Collateral Interest
and then to the Class B Certificates for the related Monthly Period
("Reallocated Principal Collections") will then be used to fund the remaining
Class A Required Amount. If Reallocated Principal Collections with respect to
the related Monthly Period, together with Excess Spread and Excess Finance
Charges allocated to Series 1996-D and amounts, if any, on deposit in the Cash
Collateral Account are insufficient to fund the Class A Required Amount for such
related Monthly Period, then the Collateral Invested Amount will be reduced by
the amount of such excess (but not by more than the Class A Investor Default
Amount for such Distribution Date). In the event that such reduction would cause
the Collateral Invested Amount to be a negative number, the Collateral Invested
Amount will be reduced to zero, and the Class B Invested Amount will be reduced
by the amount by which the Collateral Invested Amount would have been reduced
below zero (but not by more than the excess of the Class A Investor Default
Amount, if any, for such Distribution Date over the amount of such reduction, if
any, of the Collateral Invested Amount with respect to such Distribution Date).
In the event that such reduction would cause the Class B Invested Amount to be a
negative number, the Class B Invested Amount will be reduced to zero, and the
Class A Invested Amount will be reduced by the amount by which the Class B
Invested Amount would have been reduced below zero, but not by more than the
excess, if any, of the Class A Investor Default Amount for such Distribution
Date over the amount of the reductions, if any, of the Collateral Invested
Amount and the Class B Invested Amount with respect to such Distribution Date as
described above. Any such reduction in the Class A Invested Amount will have the
effect of slowing or reducing the return of principal and interest to the Class
A Certificateholders. In such case, the Class A Certificateholders will bear
directly the credit and other risks associated with their interest in the Trust.
See "-- Allocation of Investor Default Amount."
With respect to each Distribution Date, on each Determination Date, the
Servicer will determine the amount (the "Class B Required Amount"), which will
be equal to the amount, if any, by which the sum of
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(i) Class B Monthly Interest for such Distribution Date, (ii) any Class B
Monthly Interest previously due but not paid to the Class B Certificateholders
on a prior Distribution Date, (iii) any Class B Additional Interest and any
Class B Additional Interest previously due but not paid to the Class B
Certificateholders on a prior Distribution Date, (iv) the Class B Servicing Fee
for such Distribution Date and any unpaid Class B Servicing Fee and (v) the
Class B Investor Default Amount, if any, for such Distribution Date exceeds the
Class B Available Funds. If the Class B Required Amount is greater than zero,
Excess Spread and Excess Finance Charges allocated to Series 1996-D not required
to pay the Class A Required Amount or reimburse Class A Investor Charge-Offs
will be used to fund the Class B Required Amount with respect to such
Distribution Date. If such Excess Spread and Excess Finance Charges available to
fund the remaining Class B Required Amount with respect to such Distribution
Date are less than the Class B Required Amount, amounts, if any, on deposit in
the Cash Collateral Account not required to fund the Class A Required Amount
will then be used to fund the remaining Class B Required Amount. If such Excess
Spread and Excess Finance Charges and amounts, if any, on deposit in the Cash
Collateral Account are insufficient to pay the Class B Required Amount,
Reallocated Principal Collections allocable to the Collateral Interest not
required to pay the Class A Required Amount for the related Monthly Period will
then be used to fund the remaining Class B Required Amount. If such Reallocated
Principal Collections allocable to the Collateral Interest with respect to the
related Monthly Period are insufficient to fund the remaining Class B Required
Amount, then the Collateral Invested Amount remaining after any adjustments made
thereto for the benefit of the Class A Certificateholders will be reduced by the
amount of such insufficiency (but not by more than the Class B Investor Default
Amount for such Distribution Date). In the event that such a reduction would
cause the Collateral Invested Amount to be a negative number, the Collateral
Invested Amount will be reduced to zero, and the Class B Invested Amount will be
reduced by the amount by which the Collateral Invested Amount would have been
reduced below zero (but not by more than the excess of the Class B Investor
Default Amount for such Distribution Date over the amount of such reduction of
the Collateral Invested Amount), and the Class B Certificateholders will bear
directly the credit and other risks associated with their interests in the
Trust. See "-- Allocation of Investor Default Amount."
Reductions of the Class A Invested Amount or Class B Invested Amount shall
thereafter be reimbursed and the Class A Invested Amount or Class B Invested
Amount increased to the extent of Excess Spread and Excess Finance Charges and
Reallocated Principal Collections available for such purposes on each
Distribution Date. See "-- Application of Collections -- Excess Spread; Excess
Finance Charges." When such reductions of the Class A Invested Amount and Class
B Invested Amount have been fully reimbursed, reductions of the Collateral
Invested Amount shall be reimbursed until reimbursed in full in a similar
manner.
APPLICATION OF COLLECTIONS
Payment of Interest, Fees and Other Items. On each Distribution Date, the
Trustee, acting pursuant to the Servicer's instructions, will apply the Class A
Available Funds, Class B Available Funds (see "-- Interest Payments" above) and
Collateral Available Funds in the following priority:
(A) On each Distribution Date, an amount equal to the Class A Available
Funds with respect to such Distribution Date will be distributed in the
following priority:
(i) an amount equal to Class A Monthly Interest for such Distribution
Date, plus the amount of any Class A Monthly Interest previously due but
not paid to the Class A Certificateholders on a prior Distribution Date,
plus any additional interest with respect to interest amounts that were due
but not paid to the Class A Certificateholders on a prior Distribution Date
at a rate equal to the Class A Certificate Rate plus 2% per annum ("Class A
Additional Interest"), will be distributed to the Class A
Certificateholders;
(ii) an amount equal to the Class A Servicing Fee for such
Distribution Date, plus the amount of any Class A Servicing Fee previously
due but not distributed to the Servicer on a prior Distribution Date, will
be distributed to the Servicer (unless such amount has been netted against
deposits to the Collection Account);
(iii) an amount equal to the Class A Investor Default Amount for such
Distribution Date will be treated as a portion of Available Investor
Principal Collections for such Distribution Date; and
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(iv) the balance, if any, shall constitute Excess Spread and shall be
allocated and distributed as described under "-- Excess Spread; Excess
Finance Charges" below.
(B) On each Distribution Date, an amount equal to the Class B Available
Funds with respect to such Distribution Date will be distributed in the
following priority:
(i) an amount equal to Class B Monthly Interest for such Distribution
Date, plus the amount of any Class B Monthly Interest previously due but
not paid to the Class B Certificateholders on a prior Distribution Date,
plus any additional interest with respect to interest amounts that were due
but not paid to the Class B Certificateholders on a prior Distribution Date
at a rate equal to the Class B Certificate Rate plus 2% per annum ("Class B
Additional Interest"), will be distributed to the Class B
Certificateholders;
(ii) an amount equal to the Class B Servicing Fee for such
Distribution Date, plus the amount of any Class B Servicing Fee previously
due but not distributed to the Servicer on a prior Distribution Date, will
be distributed to the Servicer (unless such amount has been netted against
deposits to the Collection Account); and
(iii) the balance, if any, shall constitute Excess Spread and shall be
allocated and distributed as described under "-- Excess Spread; Excess
Finance Charges" below.
(C) On each Distribution Date, an amount equal to the Collateral Available
Funds with respect to such Distribution Date will be distributed in the
following priority:
(i) if AUS or the Trustee is no longer the Servicer, an amount equal
to the Collateral Servicing Fee for such Distribution Date, plus the amount
of any Collateral Servicing Fee previously due but not distributed to the
Servicer on a prior Distribution Date, will be distributed to the Servicer
(unless such amount has been netted against deposits to the Collection
Account); and
(ii) the balance, if any, shall constitute Excess Spread and shall be
allocated and distributed as described under "-- Excess Spread; Excess
Finance Charges" below.
"Class A Monthly Interest" means, with respect to any Distribution Date, an
amount equal to the product of (i) (A) a fraction, the numerator of which is the
actual number of days in the period from and including the preceding
Distribution Date to but excluding such Distribution Date and the denominator of
which is 360, times (B) the Class A Certificate Rate and (ii) the outstanding
principal amount of the Class A Certificates as of the preceding Record Date;
provided, however, with respect to the first Distribution Date, Class A Monthly
Interest shall be equal to the interest accrued on the outstanding principal
amount of the Class A Certificates at the applicable Class A Certificate Rate
for the periods from the Closing Date through July 14, 1996 and from July 15,
1996 through August 14, 1996.
"Class B Monthly Interest" means, with respect to any Distribution Date, an
amount equal to the product of (i) (A) a fraction, the numerator of which is the
actual number of days in the period from and including the preceding
Distribution Date to but excluding such Distribution Date and the denominator of
which is 360, times (B) the Class B Certificate Rate and (ii) the outstanding
principal amount of the Class B Certificates as of the preceding Record Date;
provided, however, with respect to the first Distribution Date, Class B Monthly
Interest shall be equal to the interest accrued on the outstanding principal
amount of the Class B Certificates at the applicable Class B Certificate Rate
for the periods from the Closing Date through July 14, 1996 and from July 15,
1996 through August 14, 1996.
"Collateral Available Funds" means, with respect to any Monthly Period, an
amount equal to the Collateral Floating Percentage of the collections of Finance
Charge Receivables allocated to Series 1996-D (including any investment earnings
on amounts on deposit in the Pre-Funding Account and any other amounts that are
to be treated as collections of Finance Charge Receivables in accordance with
the Pooling and Servicing Agreement), less the Collateral Floating Percentage of
Servicer Interchange.
"Excess Spread" means, with respect to any Distribution Date, an amount
equal to the sum of the amounts described in clause (A) (iv) above, clause (B)
(iii) above and clause (C) (ii) above under "-- Payment of Interest, Fees and
Other Items."
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Excess Spread; Excess Finance Charges. On each Distribution Date, the
Trustee, acting pursuant to the Servicer's instructions, will apply Excess
Spread and Excess Finance Charges allocated to Series 1996-D with respect to the
related Monthly Period to make the following distributions in the following
priority:
(a) an amount equal to the Class A Required Amount, if any, with
respect to such Distribution Date will be used to fund any deficiency
pursuant to clauses (A) (i), (ii) and (iii) above under "-- Payment of
Interest, Fees and Other Items" provided that, in the event the Class A
Required Amount for such Distribution Date exceeds the amount of Excess
Spread and Excess Finance Charges allocated to Series 1996-D, such Excess
Spread and Excess Finance Charges shall be applied first to pay amounts due
with respect to such Distribution Date pursuant to clause (A)(i) above
under "-- Payment of Interest, Fees and Other Items", second to pay the
Class A Servicing Fee pursuant to clause (A)(ii) above under "-- Payment of
Interest, Fees and Other Items" and third to pay the Class A Investor
Default Amount for such Distribution Date pursuant to clause (A)(iii) above
under "-- Payment of Interest, Fees and Other Items;"
(b) an amount equal to the aggregate amount of Class A Investor
Charge-Offs which have not been previously reimbursed will be treated as a
portion of Available Investor Principal Collections for such Distribution
Date as described under "-- Payments of Principal" below;
(c) an amount up to the Class B Required Amount, if any, with respect
to such Distribution Date will be used to fund any deficiency pursuant to
clauses (B)(i) and (ii) above under "-- Payment of Interest, Fees and Other
Items" provided that, in the event the Class B Required Amount for such
Distribution Date exceeds the remaining amount of Excess Spread and Excess
Finance Charges allocated to Series 1996-D, such Excess Spread and Excess
Finance Charges shall be applied first to pay amounts due with respect to
such Distribution Date pursuant to clause (B)(i) above under "-- Payment of
Interest, Fees and Other Items," and second to pay the Class B Servicing
Fee pursuant to clause (B)(ii) above under "-- Payment of Interest, Fees
and Other Items;"
(d) an amount equal to the Class B Investor Default Amount for such
Distribution Date will be treated as a portion of Available Investor
Principal Collections for such Distribution Date as described under
"-- Payments of Principal" below;
(e) an amount equal to the aggregate amount by which the Class B
Invested Amount has been reduced pursuant to clauses (iv), (v) and (vi) of
the definition of "Class B Invested Amount" under "-- Allocation
Percentages" above (but not in excess of the aggregate amount of such
reductions which have not been previously reimbursed) shall be treated as a
portion of Available Investor Principal Collections for such Distribution
Date;
(f) an amount equal to Collateral Monthly Interest for such
Distribution Date, plus the amount of any Collateral Monthly Interest
previously due but not paid to the Collateral Interest Holder on a prior
Distribution Date, plus any additional interest with respect to amounts
that were due but not paid to the Collateral Interest Holder on a prior
Distribution Date at a rate equal to the Collateral Rate ("Collateral
Additional Interest"), will be distributed to the Collateral Interest
Holder for application in accordance with the Loan Agreement;
(g) an amount equal to the Collateral Servicing Fee due but not paid
to the Servicer on such Distribution Date or a prior Distribution Date
shall be paid to the Servicer;
(h) an amount equal to the Collateral Default Amount for such
Distribution Date shall be treated as a portion of Collateral Principal
Collections with respect to such Distribution Date;
(i) an amount equal to the aggregate amount by which the Collateral
Invested Amount has been reduced pursuant to clauses (iv), (v) and (vi) of
the definition of "Collateral Invested Amount" under "-- Allocation
Percentages" above (but not in excess of the aggregate amount of such
reductions which have not been previously reimbursed) shall be treated as a
portion of Collateral Principal Collections for such Distribution Date;
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(j) an amount up to the excess, if any, of the Required Cash
Collateral Amount over the remaining Available Cash Collateral Amount
(without giving effect to any deposit to the Cash Collateral Account made
on such date) shall be deposited into the Cash Collateral Account;
(k) an amount equal to the aggregate of any other amounts then owed to
the Collateral Interest Holder or otherwise to be applied pursuant to the
Loan Agreement out of collections of Excess Spread and Excess Finance
Charges allocated to Series 1996-D shall be applied in accordance with the
Loan Agreement;
(l) an amount up to the excess, if any, of the Required Reserve
Account Amount over the principal amount on deposit in the Reserve Account
will be deposited in the Reserve Account; and
(m) the balance, if any, will constitute a portion of Excess Finance
Charges for such Distribution Date and will be available for allocation to
other Series in Group One or to the holders of the Seller Certificates as
described in "Description of the Certificates -- Sharing of Excess Finance
Charges" in the Prospectus.
"Collateral Monthly Interest" means, with respect to any Distribution Date,
an amount equal to the product of (i) (A) a fraction, the numerator of which is
the actual number of days in the period from and including the preceding
Distribution Date to but excluding such Distribution Date and the denominator of
which is 360, times (B) the Collateral Rate and (ii) the Collateral Investor
Amount as of the preceding Record Date; provided, however, with respect to the
first Distribution Date, Collateral Monthly Interest shall be equal to the
interest accrued on the Collateral Initial Investor Amount at the applicable
Collateral Rate for the periods from the Closing Date through July 14, 1996 and
from July 15, 1996 through August 14, 1996.
"Collateral Rate" means a rate specified in the Loan Agreement not greater
than one-month LIBOR plus 1% per annum.
Payments of Principal. On each Distribution Date, the Trustee, acting
pursuant to the Servicer's instructions, will distribute Available Investor
Principal Collections (see "-- Principal Payments" above) in the following
priority:
(A) on each Distribution Date with respect to the Revolving Period,
all such Available Investor Principal Collections, which are not allocated
at the option of the Sellers as part of Collateral Monthly Principal to
make a payment with respect to the Collateral Interest, will be treated as
Shared Principal Collections and applied as described under "Description of
the Certificates -- Shared Principal Collections" in the Prospectus; and
(B) on each Distribution Date with respect to the Accumulation Period
or the Rapid Amortization Period, all such Available Investor Principal
Collections will be distributed or deposited in the following priority:
(i) an amount equal to Class A Monthly Principal will be deposited
in the Principal Funding Account for payment to the Class A
Certificateholders on the earlier to occur of the Class A Expected Final
Distribution Date or the first Distribution Date with respect to the
Rapid Amortization Period;
(ii) for each Distribution Date beginning on the Distribution Date
on which the Class A Investor Amount is paid in full (the "Class B
Principal Commencement Date"); provided, that if the Class A Investor
Amount is paid in full on the Class A Expected Final Distribution Date
and the Rapid Amortization Period has not commenced, the Class B
Principal Commencement Date will be the Class B Expected Final
Distribution Date, an amount equal to Class B Monthly Principal for such
Distribution Date will be paid to the Class B Certificateholders;
(iii) the balance, if any, may be treated as Collateral Monthly
Principal if so required by the definition thereof; and
(iv) the balance, if any, will be treated as Shared Principal
Collections and applied as described under "Description of the
Certificates -- Shared Principal Collections" in the Prospectus.
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On each Distribution Date, the Trustee, acting pursuant to the Servicer's
instructions, will distribute Collateral Principal Collections (see
"-- Principal Payments" above) on deposit in the Collection Account in the
following priority:
(C) on each Distribution Date with respect to the Revolving Period,
all such Collateral Principal Collections will be distributed or deposited
in the following priority:
(i) an amount equal to Collateral Monthly Principal for such
Distribution Date, up to the Collateral Invested Amount on such
Distribution Date, will be applied in accordance with the Loan
Agreement; and
(ii) the balance, if any, will be treated as Available Investor
Principal Collections and applied as described in clause (A) above;
(D) on each Distribution Date with respect to the Accumulation Period
or the Rapid Amortization Period, all such Collateral Principal Collections
will be distributed or deposited in the following priority:
(i) an amount equal to Collateral Monthly Principal for such
Distribution Date, up to the Collateral Invested Amount on such
Distribution Date, will be applied in accordance with the Loan
Agreement; and
(ii) the balance, if any, will be treated as Available Investor
Principal Collections and applied as described in clause (B) above.
"Class A Monthly Principal" with respect to any Distribution Date relating
to the Class A Accumulation Period or the Rapid Amortization Period will equal
the least of (i) the Available Investor Principal Collections on deposit in the
Collection Account with respect to such Distribution Date, (ii) for each
Distribution Date with respect to the Class A Accumulation Period (and on or
prior to the Class A Expected Final Distribution Date), the Controlled Deposit
Amount for such Distribution Date and (iii) the Class A Invested Amount on such
Distribution Date.
"Class B Monthly Principal" with respect to any Distribution Date,
beginning with the Class B Principal Commencement Date, will equal the least of
(i) the Available Investor Principal Collections on deposit in the Collection
Account with respect to such Distribution Date (minus the portion of such
Available Principal Collections applied to Class A Monthly Principal on such
Distribution Date), (ii) for each Distribution Date with respect to the Class B
Accumulation Period, the Controlled Deposit Amount for such Distribution Date
and (iii) the Class B Invested Amount on such Distribution Date.
"Collateral Monthly Principal" means (i) on any Distribution Date prior to
the Distribution Date on which the Class B Invested Amount is paid in full, an
amount equal to the lesser of (A) Collateral Principal Collections with respect
to such Distribution Date plus Available Investor Principal Collections (not
including any amounts specified in clause (d) of the definition of "Available
Investor Principal Collections") not applied to Class A Monthly Principal or
Class B Monthly Principal on such Distribution Date and (B) the Enhancement
Surplus on such Distribution Date, if any (including any Enhancement Surplus
resulting from the transfer of funds to the Cash Collateral Account pursuant to
the Loan Agreement and the Supplement), (ii) beginning with the Distribution
Date on which the Class B Invested Amount is paid in full, an amount equal to
the sum of the Available Investor Principal Collections with respect to such
Distribution Date (minus the portion of such Available Investor Principal
Collections applied to Class A Monthly Principal and Class B Monthly Principal
on such Distribution Date) and the Collateral Principal Collections with respect
to such Distribution Date; and (iii) on any Distribution Date, in addition to
the amounts, if any, set forth in items (i) and (ii), at the option of the
Sellers, and after receipt by the Servicer and the Trustee of a written
determination by each Rating Agency that such action will not result in a
reduction or withdrawal of the then current ratings of the Class A Certificates
or the Class B Certificates, an amount established by the Sellers and consistent
with any restrictions set forth in the determination of the Rating Agency;
provided, however, with respect to any Distribution Date, Collateral Monthly
Principal will not exceed the Collateral Invested Amount.
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"Controlled Accumulation Amount" means (a) for any Distribution Date with
respect to the Class A Accumulation Period, the maximum Class A Invested Amount
during the Revolving Period divided by nine, subject to upward adjustment in
connection with the postponement of the Class A Accumulation Period, and (b) for
any Distribution Date with respect to the Class B Accumulation Period, the
maximum Class B Invested Amount during the Revolving Period.
"Deficit Controlled Accumulation Amount" means (a) on the first
Distribution Date with respect to the Class A Accumulation Period or the Class B
Accumulation Period, the excess, if any, of the Controlled Accumulation Amount
for such Distribution Date over the amount distributed from the Collection
Account as Class A Monthly Principal or Class B Monthly Principal, as the case
may be, for such Distribution Date and (b) on each subsequent Distribution Date
with respect to the Class A Accumulation Period or the Class B Accumulation
Period, the excess, if any, of the Controlled Deposit Amount for such subsequent
Distribution Date over the amount distributed from the Collection Account as
Class A Monthly Principal or Class B Monthly Principal, as the case may be, for
such subsequent Distribution Date.
PRINCIPAL FUNDING ACCOUNT
Pursuant to the Supplement, the Servicer will establish and maintain the
principal funding account as a segregated trust account held for the benefit of
the Certificateholders (the "Principal Funding Account"). During the Class A
Accumulation Period, the Trustee at the direction of the Servicer will transfer
Available Investor Principal Collections to the Principal Funding Account as
described under "-- Application of Collections -- Payments of Principal."
Funds on deposit in the Principal Funding Account will be invested by the
Trustee at the direction of the Servicer in Eligible Investments. Investment
earnings (net of investment losses and expenses) on funds on deposit in the
Principal Funding Account (the "Principal Funding Investment Proceeds") will be
included in Class A Available Funds with respect to each Distribution Date.
RESERVE ACCOUNT
Pursuant to the Supplement, the Servicer will establish and maintain the
reserve account as a segregated trust account held for the benefit of the
Certificateholders (the "Reserve Account"). The Reserve Account is established
to assist with the subsequent distribution of interest on the Certificates
during the Class A Accumulation Period. With respect to each Distribution Date
from and after the Reserve Account Funding Date, but prior to the termination of
the Reserve Account, the Trustee, acting pursuant to the Servicer's
instructions, will apply Excess Spread and Excess Finance Charges allocated to
the Certificates (to the extent described above under "-- Application of
Collections -- Excess Spread; Excess Finance Charges") to increase the amount on
deposit in the Reserve Account (to the extent such amount is less than the
Required Reserve Account Amount). The "Reserve Account Funding Date" will be the
Distribution Date with respect to the Monthly Period which commences no later
than three months prior to the Monthly Period in which, as of the related
Determination Date, the Class A Accumulation Period is scheduled to commence, or
such earlier date as the Servicer may determine. The "Required Reserve Account
Amount" with respect to any Distribution Date on or after the Reserve Account
Funding Date will be equal to (a) the product of (i) .5% of the Class A Investor
Amount as of the preceding Distribution Date (after giving effect to all changes
therein on such date) and (ii) a fraction, the numerator of which is the number
of Monthly Periods scheduled to be included in the Class A Accumulation Period
as of such date, and the denominator of which is nine, provided that if such
numerator is one, the Required Reserve Account Amount will be zero, or (b) any
other amount designated by the Sellers, provided, that if such designation is of
a lesser amount, the Sellers shall have provided the Servicer and the Trustee
with evidence that the Rating Agency Condition has been satisfied and each
Seller shall have delivered to the Trustee a certificate of an authorized
officer to the effect that, based on the facts known to such officer at such
time, in the reasonable belief of such Seller, such designation will not cause a
Series 1996-D Pay Out Event or a Trust Pay Out Event or an event that, after the
giving of notice or the lapse of time, would cause a Series 1996-D Pay Out Event
or a Trust Pay Out Event to occur. On each Distribution Date, after giving
effect to any deposit to be made to, and any withdrawal to be made from the
Reserve Account, the Trustee will withdraw from the Reserve Account an amount
equal to the excess, if any,
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of the amount on deposit in the Reserve Account over the Required Reserve
Account Amount and will apply such amount in accordance with the Loan Agreement.
Provided that the Reserve Account has not terminated as described below,
all amounts on deposit in the Reserve Account with respect to any Distribution
Date (after giving effect to any deposits to, or withdrawals from, the Reserve
Account to be made on such Distribution Date) will be invested by the Trustee at
the direction of the Servicer in Eligible Investments. The interest and other
investment income (net of investment expenses and losses) earned on such
investments will be retained in the Reserve Account (to the extent the amount on
deposit is less than the Required Reserve Account Amount) or deposited in the
Collection Account and treated as collections of Finance Charge Receivables
allocable to Series 1996-D.
On or before each Distribution Date with respect to the Class A
Accumulation Period and on the first Distribution Date with respect to the Rapid
Amortization Period, a withdrawal will be made from the Reserve Account, and the
amount of such withdrawal will be deposited in the Collection Account and
included in Class A Available Funds in an amount equal to the lesser of (a) the
Available Reserve Account Amount with respect to such Distribution Date and (b)
the excess, if any, of a portion of the Class A Monthly Interest determined in
accordance with the Pooling and Servicing Agreement over the Principal Funding
Investment Proceeds with respect to such Distribution Date; provided, that the
amount of such withdrawal shall be reduced to the extent that funds otherwise
would be available to be deposited in the Reserve Account on such Distribution
Date. On each Distribution Date, the amount available to be withdrawn from the
Reserve Account (the "Available Reserve Account Amount") will be equal to the
lesser of the amount on deposit in the Reserve Account (before giving effect to
any deposit to be made to the Reserve Account on such Distribution Date) and the
Required Reserve Account Amount for such Distribution Date.
The Reserve Account will be terminated following the earlier to occur of
(a) the termination of the Trust pursuant to the Pooling and Servicing
Agreement, (b) the date on which the Class A Investor Amount is paid in full and
(c) if the Class A Accumulation Period has not commenced, the occurrence of a
Series 1996-D Pay Out Event or a Trust Pay Out Event or, if the Class A
Accumulation Period has commenced, the earlier of the first Distribution Date
with respect to the Rapid Amortization Period and the Class A Expected Final
Distribution Date. Upon the termination of the Reserve Account, all amounts on
deposit therein (after giving effect to any withdrawal from the Reserve Account
on such date as described above) will be distributed to the Collateral Interest
Holder for application in accordance with the Loan Agreement. Any amounts
withdrawn from the Reserve Account and distributed to the Collateral Interest
Holder as described above will not be available for distribution to the
Certificateholders.
PAIRED SERIES
The Certificates are subject to being paired with one or more other Series
(each, a "Paired Series") on or after the commencement of the Accumulation
Period or the Rapid Amortization Period. Each Paired Series will be pre-funded
with an initial deposit to a funding account or will have a variable principal
amount. Any such funding account will be held for the benefit of such Paired
Series and not for the benefit of the Certificateholders. Upon payment in full
of the Certificates, assuming that there have been no unreimbursed charge-offs
with respect to any related Paired Series, the aggregate investor amount of such
Paired Series will have been increased by an amount up to an aggregate amount
equal to the Investor Amount. The issuance of a Paired Series will be subject to
the conditions described under "Description of the Certificates -- New
Issuances" in the Prospectus. There can be no assurance that the terms of any
Paired Series might not have an impact on the calculation of the Series
Percentage or the timing or amount of payments received by a Certificateholder.
SHARED COLLECTIONS OF PRINCIPAL RECEIVABLES
To the extent that collections of Principal Receivables allocated to the
Certificates or the Collateral Interest are not needed to make payments to or
for the benefit of the Certificateholders or the Collateral Interest Holder,
such collections may be applied to cover principal payments due to or for the
benefit of other
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Series in Group One. Any such application of collections will not result in a
reduction of the Invested Amount of the Certificates.
Similarly, certain collections of Principal Receivables allocated to other
Series in Group One, to the extent such collections are not needed to make
payments to or for the benefit of certificateholders of such other Series
("Shared Principal Collections"), will be applied, if necessary, to cover
payments of principal due to Certificateholders during the Accumulation Period.
There can be no assurance that such Shared Principal Collections will be
available to cover payments of principal or deposits due on any Distribution
Date during the Accumulation Period. If no such Shared Principal Collections
were available to the Certificates, the Class A Investor Amount may not be paid
in full by the Class A Expected Final Distribution Date and the Class B Invested
Amount may not be paid in full by the Class B Expected Final Distribution Date.
Such Shared Principal Collections may also be allocated to other Series either
currently outstanding or to be issued by the Trust in the future. To the extent
such Shared Principal Collections are allocated to other Series, the pro rata
share of such Shared Principal Collections allocated to Certificateholders will
be reduced.
THE CASH COLLATERAL ACCOUNT
The Cash Collateral Account will be held for the benefit of the
Certificateholders, the Collateral Interest Holder and the Cash Collateral
Depositor, as their interests appear in the Supplement, and in the case of the
Cash Collateral Depositor, in the Loan Agreement (which interest, in the case of
the Cash Collateral Depositor, will be subordinated to the interests of the
Certificateholders and the Collateral Interest Holder as provided in the
Supplement). Funds on deposit in the Cash Collateral Account will be invested in
certain Eligible Investments. On each Distribution Date, all interest and
earnings (net of losses and investment expenses) accrued since the preceding
Distribution Date on funds on deposit in the Cash Collateral Account will be
applied in accordance with the Loan Agreement.
The Cash Collateral Account will be funded on the Closing Date in the
initial amount of $14,000,000 which amount will include the proceeds of a loan
to be made by one or more financial institutions to be selected by the Sellers
(such financial institution or institutions, the "Cash Collateral Depositor").
Such loan will be repaid pursuant to the Loan Agreement.
On each Distribution Date, the amount available to be withdrawn from the
Cash Collateral Account (the "Available Cash Collateral Amount") will be equal
to the least of (i) the amount on deposit in the Cash Collateral Account (before
giving effect to any deposit to be made to, or withdrawal from, the Cash
Collateral Account on such Distribution Date), (ii) the Required Enhancement
Amount and (iii) the Invested Amount as of such date. The "Required Enhancement
Amount" with respect to any Distribution Date means the greater of (i) the
product of (a) the sum of (I) the sum of the Class A Invested Amount and the
Class A Floating Percentage of the Pre-Funded Amount and (II) the sum of the
Class B Invested Amount and the Class B Floating Percentage of the Pre-Funded
Amount, each as of such Distribution Date after taking into account
distributions made on such Distribution Date minus the amount of funds on
deposit in the Cash Collateral Account after taking into account all deposits
and withdrawals on such Distribution Date, and (b) a fraction, the numerator of
which is 10% and the denominator of which is the excess of 100% over 10% and
(ii) the sum of (A) the product of (I) $700,000,000, (II) 1% and (III) a
fraction the numerator of which is equal to the Available Cash Collateral Amount
as of the immediately preceding Distribution Date and the denominator of which
is the Total Enhancement for such Distribution Date and (B) the product of (I)
$700,000,000, (II) 3% and (III) a fraction the numerator of which is equal to
the Collateral Invested Amount as of the immediately preceding Distribution Date
and the denominator of which is the Total Enhancement for such Distribution
Date; provided, however, that (i) if certain withdrawals are made from the Cash
Collateral Account or if a Series 1996-D Pay Out Event or a Trust Pay Out Event
occurs or if there are certain reductions in the Collateral Invested Amount, the
Required Enhancement Amount for such Distribution Date shall equal the Required
Enhancement Amount for the Distribution Date immediately preceding the
occurrence of such drawing or such Series 1996-D Pay Out Event or a Trust Pay
Out Event or reduction in Collateral Invested Amount, (ii) in no event shall the
Required Enhancement Amount exceed the sum of the Class A Invested Amount and
the Class B Invested Amount on any such date, and (iii) the Required Enhancement
Amount may be reduced without the consent of the Certificateholders, if the
Sellers
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shall have received written notice from each Rating Agency that such reduction
will not result in the reduction or withdrawal of the then current rating of the
Certificates and each Seller shall have delivered to the Trustee a certificate
of an authorized officer to the effect that, based on the facts known to such
officer at such time, in the reasonable belief of such Seller, such reduction
will not cause a Trust Pay Out Event or an event that, after the giving of
notice or the lapse of time, would constitute a Series 1996-D Pay Out Event to
occur.
On each Distribution Date, one or more withdrawals may be made from the
Cash Collateral Account in an amount up to the Available Cash Collateral Amount,
to fund the amounts specified in clauses (a) through (e) and (g) of
"-- Application of Collections -- Excess Spread; Excess Finance Charges" in the
order of priority specified therein.
Under certain circumstances specified in the Loan Agreement, the Sellers or
the Collateral Interest Holder will have the option to elect to deposit certain
amounts held pursuant to the Loan Agreement into the Cash Collateral Account,
which will result in a reduction of the Collateral Invested Amount. Any such
election will have the effect of converting all or a portion of the Enhancement
in the form of the Collateral Invested Amount into Enhancement in the form of
amounts on deposit in the Cash Collateral Account.
On each Distribution Date, the Servicer or the Trustee, acting pursuant to
the Servicer's instructions, will apply Excess Spread and Excess Finance Charges
(to the extent described above under "-- Application of Collections -- Excess
Spread; Excess Finance Charges") to increase the amount on deposit in the Cash
Collateral Account to the extent such amount is less than the Required Cash
Collateral Amount. The "Required Cash Collateral Amount" means on any date of
determination the Required Enhancement Amount less the Collateral Investor
Amount. In addition, if on any Distribution Date the amount on deposit in the
Cash Collateral Account exceeds the Required Cash Collateral Amount, such excess
will be withdrawn and applied in accordance with the Loan Agreement.
ALLOCATION OF INVESTOR DEFAULT AMOUNT
On each Determination Date, the Servicer will calculate the Investor
Default Amount for the preceding Monthly Period. The term "Investor Default
Amount" means, for any Monthly Period, the product of (i) the Floating
Allocation Percentage with respect to such Monthly Period and (ii) the Defaulted
Amount for such Monthly Period. A portion of the Investor Default Amount will be
allocated to the Class A Certificateholders (the "Class A Investor Default
Amount") on each Distribution Date in an amount equal to the product of the
Class A Floating Percentage applicable during the related Monthly Period and the
Investor Default Amount for such Monthly Period. A portion of the Investor
Default Amount will be allocated to the Class B Certificateholders (the "Class B
Investor Default Amount") in an amount equal to the product of the Class B
Floating Percentage applicable during the related Monthly Period and the
Investor Default Amount for such Monthly Period. A portion of the Investor
Default Amount will be allocated to the Collateral Interest Holder in an amount
equal to the Collateral Default Amount. An amount equal to the Class A Investor
Default Amount for each Monthly Period will be paid from Class A Available
Funds, Excess Spread and Excess Finance Charges allocated to Series 1996-D or
from amounts, if any, on deposit in the Cash Collateral Account and Reallocated
Principal Collections and applied as described above in "-- Application of
Collections -- Payment of Interest, Fees and Other Items," "-- Application of
Collections -- Excess Spread; Excess Finance Charges" and "-- Reallocation of
Cash Flows." An amount equal to the Class B Investor Default Amount for each
Monthly Period will be paid from Excess Spread and Excess Finance Charges
allocated to Series 1996-D or from amounts, if any, available under the Cash
Collateral Account and Reallocated Principal Collections allocable to the
Collateral Invested Amount and applied as described above in "-- Application of
Collections -- Excess Spread; Excess Finance Charges" and "-- Reallocation of
Cash Flows."
On each Distribution Date, if the Class A Required Amount for such
Distribution Date exceeds the sum of Excess Spread and Excess Finance Charges
allocable to Series 1996-D, amounts, if any, on deposit in the Cash Collateral
Account and Reallocated Principal Collections, the Collateral Invested Amount
will be reduced by the amount of such excess, but not by more than the Class A
Investor Default Amount for such Distribution Date. In the event that such
reduction would cause the Collateral Invested Amount to be a
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negative number, the Collateral Invested Amount will be reduced to zero, and the
Class B Invested Amount will be reduced by the amount by which the Collateral
Invested Amount would have been reduced below zero, but not by more than the
excess, if any, of the Class A Investor Default Amount for such Distribution
Date over the amount of such reduction, if any, of the Collateral Invested
Amount with respect to such Distribution Date. In the event that such reduction
would cause the Class B Invested Amount to be a negative number, the Class B
Invested Amount will be reduced to zero, and the Class A Invested Amount will be
reduced by the amount by which the Class B Invested Amount would have been
reduced below zero, but not by more than the excess, if any, of the Class A
Investor Default Amount for such Distribution Date over the amount of the
reductions, if any, of the Collateral Invested Amount and the Class B Invested
Amount with respect to such Distribution Date as described above (a "Class A
Investor Charge-Off"), which will have the effect of slowing or reducing the
return of principal to the Class A Certificateholders. If the Class A Invested
Amount has been reduced by the amount of any Class A Investor Charge-Offs, it
will thereafter be increased on any Distribution Date (but not by an amount in
excess of the aggregate Class A Investor Charge-Offs) by the amount of Excess
Spread and Excess Finance Charges allocated to Series 1996-D and available for
such purpose as described under "-- Application of Collections -- Excess Spread;
Excess Finance Charges."
On each Distribution Date, if the Class B Required Amount for such
Distribution Date exceeds the sum of Excess Spread and Excess Finance Charges
allocable to Series 1996-D and not required to pay the Class A Required Amount,
amounts, if any, on deposit in the Cash Collateral Account not required to pay
the Class A Required Amount and Reallocated Principal Collections allocable to
the Collateral Interest and not required to pay the Class A Required Amount,
then the Collateral Invested Amount will be reduced by the amount of such
excess. In the event that such reduction would cause the Collateral Invested
Amount to be a negative number, the Collateral Invested Amount will be reduced
to zero, and the Class B Invested Amount will be reduced by the amount by which
the Collateral Invested Amount would have been reduced below zero, but not by
more than the excess, if any, of the Class B Investor Default Amount for such
Distribution Date over the amount of such reduction, if any, of the Collateral
Invested Amount with respect to such Distribution Date (a "Class B Investor
Charge-Off"). If the Class B Invested Amount has been reduced by the amount of
any Class B Investor Charge-Offs, it will thereafter be increased on any
Distribution Date (but not by an amount in excess of the aggregate Class B
Investor Charge-Offs) by the amount of Excess Spread and Excess Finance Charges
allocated to Series 1996-D and available for such purpose as described under
"-- Application of Collections -- Excess Spread; Excess Finance Charges."
OPTIONAL REPURCHASE
On the Distribution Date occurring on or after the date that the Investor
Amount is reduced to 5% or less of the Initial Investor Amount, the Sellers will
have the option (to be exercised in their sole discretion) to repurchase the
Certificates. The purchase price of the Certificates and the Collateral Interest
will be equal to the Investor Amount as of the last day of the Monthly Period
preceding the Distribution Date on which such purchase occurs plus accrued and
unpaid interest on the unpaid principal amount of the Certificates plus accrued
and unpaid interest on the Collateral Interest. Following any such repurchase,
the Certificateholders will have no further rights with respect to the
Receivables.
SERIES 1996-D PAY OUT EVENTS AND TRUST PAY OUT EVENTS
The Revolving Period will continue through February 28, 2002 (or such later
date resulting from postponement of the Class A Accumulation Period), unless a
Series 1996-D Pay Out Event or a Trust Pay Out Event occurs prior to such date.
A Series 1996-D Pay Out Event refers to any of the following events, which are
applicable only to Series 1996-D (although other Series may have similar or
identical pay out events):
(a) failure on the part of the Sellers (i) to make any payment or
deposit on the date required under the Pooling and Servicing Agreement on
or before the date occurring five Business Days after the date such payment
or deposit is required to be made; or (ii) duly to observe or perform in
any material respect any other covenants or agreements of the Sellers in
the Pooling and Servicing Agreement, which failure has a material adverse
effect on the Certificateholders (which determination will be made, for so
long as the Collateral Invested Amount is greater than zero, without
reference to whether any funds are available
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pursuant to any Series Enhancement) and continues unremedied for a period
of 60 days after written notice of such failure shall have been given to
the Sellers by the Trustee, or to the Sellers and the Trustee by the
holders of Certificates aggregating not less than 50% of the outstanding
principal balance of the Certificates;
(b) any representation or warranty made by the Sellers in the Pooling
and Servicing Agreement or any information required to be given by the
Servicer on behalf of the Sellers to identify the Accounts proves to have
been incorrect in any material respect when made or delivered and continues
to be incorrect in any material respect for a period of 60 days after
written notice of such failure shall have been given to the Sellers by the
Trustee, or to the Sellers and the Trustee by the holders of Certificates
aggregating not less than 50% of the outstanding principal balance of the
Certificates and as a result the interests of the Certificateholders are
materially and adversely affected (which determination shall be made, for
so long as the Collateral Invested Amount is greater than zero, without
reference to whether any funds are available pursuant to any Series
Enhancement); provided, however, that a Series 1996-D Pay Out Event shall
not be deemed to have occurred with respect to this subparagraph (b) if the
Sellers have accepted reassignment of the related Receivable or all such
Receivables, if applicable, during such period (or such longer period as
the Trustee may specify) in accordance with the provisions of the Pooling
and Servicing Agreement;
(c) with respect to the end of any Monthly Period (i) with respect to
which the Seller Amount is less than the Required Seller Amount, the
failure of the Sellers to convey on or prior to the tenth Business Day
following the related Determination Date Receivables in Additional Accounts
to the Trust such that the Seller Amount is at least equal to the Required
Seller Amount or (ii) with respect to which the aggregate Principal
Receivables are less than the Required Principal Balance, the failure of
the Sellers to convey on or prior to the tenth Business Day following the
related Determination Date Receivables in Additional Accounts to the Trust
such that the aggregate Principal Receivables are at least equal to the
Required Principal Balance;
(d) the Net Portfolio Yield averaged over three consecutive Monthly
Periods is less than the Base Rate averaged over such period;
(e) any Servicer Default occurs which would have a material adverse
effect on the Certificateholders (which determination shall be made, for so
long as the Collateral Invested Amount is greater than zero, without
reference to whether any funds are available pursuant to any Series
Enhancement); or
(f) the Class A Investor Amount shall not be paid in full on the Class
A Expected Final Distribution Date or the Class B Invested Amount shall not
be paid in full on the Class B Expected Final Distribution Date.
A Trust Pay Out Event refers to any of the following events, which are
applicable to the Certificates and other Series:
(g) an Insolvency Event relating to any Seller;
(h) the Trust becomes an "investment company" within the meaning of
the Investment Company Act; or
(i) the inability of any Seller for any reason to transfer Receivables
to the Trust in accordance with the provisions of the Pooling and Servicing
Agreement.
In the case of any event described in subparagraphs (a), (b) or (e), a
Series 1996-D Pay Out Event or a Trust Pay Out Event will be deemed to have
occurred only if, after any applicable grace period described in such clauses,
the Trustee or Certificateholders and the Collateral Interest Holder evidencing
undivided interests aggregating not less than 50% of the aggregate unpaid
principal amount of the Certificates and the Collateral Interest, by written
notice to the Sellers and the Servicer (and to the Trustee if given by the
Certificateholders and the Collateral Interest Holder), declare that a Series
1996-D Pay Out Event has occurred with respect to the Certificates and the
Collateral Interest and is continuing as of the date of such notice, and in the
case of any event described in subparagraphs (c), (d), (f), (g), (h) or (i), a
Series 1996-D
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Pay Out Event or a Trust Pay Out Event will be deemed to have occurred without
any notice or other action on the part of the Trustee, or the Certificateholders
and the Collateral Interest Holder immediately upon the occurrence of such
event. Upon the occurrence of a Series 1996-D Pay Out Event or a Trust Pay Out
Event, the Rapid Amortization Period will commence. In such event, distributions
of principal to the Certificateholders in the priority provided for above will
begin on the first Distribution Date following the month in which the Series
1996-D Pay Out Event or the Trust Pay Out Event occurred.
If an Insolvency Event occurs with respect to any Seller, the Collateral
Interest and any Cash Collateral Depositor (to the extent of any outstanding
loan amount by such Cash Collateral Depositor pursuant to the Loan Agreement)
will each be deemed to be a Class for purposes of voting on whether to liquidate
the Receivables. See "Description of the Certificates -- Trust Pay Out Events"
in the Prospectus.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The share of the Servicing Fee allocable to the Certificates and the
Collateral Interest with respect to any Distribution Date (the "Monthly
Servicing Fee") will be equal to one-twelfth of the product of (a) 2.00% (the
"Servicing Fee Rate") and (b) the Invested Amount as of the last day of the
Monthly Period preceding such Distribution Date (the amount calculated pursuant
to this clause (b) is referred to as the "Servicing Base Amount"); provided,
however, with respect to the first Distribution Date, the Monthly Servicing Fee
will be $700,000. On the Business Day immediately preceding each Distribution
Date (the "Transfer Date") for which AUS or the Trustee is the Servicer, a
portion of Interchange equal to one-twelfth the product of (i) 1.0% and (ii) the
Servicing Base Amount with respect to the related Monthly Period that is on
deposit in the Collection Account shall be withdrawn from the Collection Account
and paid to the Servicer in payment of a portion of the Monthly Servicing Fee
with respect to such Monthly Period ("Servicer Interchange"). Should the
Servicer Interchange on deposit in the Collection Account on any Transfer Date
with respect to the related Monthly Period be less than one-twelfth of 1.0% of
the Servicing Base Amount as of the last day of such Monthly Period, the Monthly
Servicing Fee with respect to such Monthly Period will not be paid to the extent
of such insufficiency of Servicer Interchange on deposit in the Collection
Account. The Servicer Interchange with respect to the first Transfer Date shall
be equal to $350,000.
The share of the Monthly Servicing Fee allocable to the Class A
Certificateholders with respect to any Distribution Date (the "Class A Servicing
Fee") will be equal to one-twelfth of the product of (a) the Class A Floating
Percentage, (b) the Net Servicing Fee Rate and (c) the Servicing Base Amount;
provided, however, that with respect to the first Distribution Date, the Class A
Servicing Fee will be $302,750. The share of the Monthly Servicing Fee allocable
to the Class B Certificateholders with respect to any Distribution Date (the
"Class B Servicing Fee") will be equal to one-twelfth of the product of (a) the
Class B Floating Percentage, (b) the Net Servicing Fee Rate and (c) the
Servicing Base Amount; provided, however, that with respect to the first
Distribution Date, the Class B Servicing Fee will be equal to $19,250. "Net
Servicing Fee Rate" shall mean (a) so long as AUS is the Servicer, 0.5% per
annum, (b) so long as the Trustee is the Servicer, 1.0% per annum and (c) if AUS
or the Trustee is no longer the Servicer, 2.0% per annum. The Class A Servicing
Fee and the Class B Servicing Fee shall be payable to the Servicer solely to the
extent amounts are available for distribution in respect thereof as described
under "-- Application of Collections -- Payment of Interest, Fees and Other
Items" above.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
CHARACTERIZATION OF THE CERTIFICATES AS INDEBTEDNESS
Based on the application of existing law to the facts as set forth in the
Pooling and Servicing Agreement and other relevant documents, Orrick, Herrington
& Sutcliffe, special counsel to the Banks ("Special Tax Counsel"), will deliver
its opinion to the effect that the Certificates will properly be treated as
indebtedness for Federal income tax purposes. See "Certain Federal Income Tax
Consequences" in the Prospectus.
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UNDERWRITING
Subject to the terms and conditions set forth in the underwriting agreement
relating to the Certificates (the "Underwriting Agreement"), the Banks have
agreed to sell to the underwriters named below (the "Class A Underwriters"), and
each of the Class A Underwriters has agreed to purchase from the Banks, the
principal amount of Class A Certificates set forth opposite its name below.
PRINCIPAL AMOUNT
OF CLASS A
UNDERWRITER CERTIFICATES
--------------------------------------------------------------------- ----------------
J.P. Morgan Securities Inc........................................... $121,100,000
Lehman Brothers Inc. ................................................ 121,100,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated............................................ 121,100,000
Salomon Brothers Inc................................................. 121,100,000
UBS Securities LLC................................................... 121,100,000
----------------
Total...................................................... $605,500,000
=============
The Banks have been advised by the Class A Underwriters that the Class A
Underwriters propose initially to offer the Class A Certificates to the public
at the prices set forth on the cover page of this Prospectus Supplement and to
certain dealers at such price less a concession not in excess of .225% of the
principal amount of the Class A Certificates. The Class A Underwriters may allow
and such dealers may reallow a concession not in excess of .150% of the
principal amount of the Class A Certificates to certain other dealers. After the
initial public offering, the public offering price and such concessions may be
changed.
Subject to the terms and conditions set forth in the Underwriting
Agreement, the Banks have agreed to sell to the underwriter named below (the
"Class B Underwriter" and together with the Class A Underwriters, the
"Underwriters") and the Class B Underwriter has agreed to purchase from the
Banks, the principal amount of Class B Certificates set forth opposite its name
below.
PRINCIPAL AMOUNT
OF CLASS B
UNDERWRITER CERTIFICATES
--------------------------------------------------------------------- ----------------
J.P. Morgan Securities Inc........................................... $ 38,500,000
The Banks have been advised by the Class B Underwriter that the Class B
Underwriter proposes initially to offer the Class B Certificates to the public
at the price set forth on the cover page of this Prospectus Supplement and to
certain dealers at such price less a concession not in excess of .275% of the
principal amount of the Class B Certificates. The Class B Underwriter may allow
and such dealers may reallow a concession not in excess of .200% of the
principal amount of the Class B Certificates to certain other dealers. After the
initial public offering, the public offering price and such concessions may be
changed.
The Banks have agreed that they will indemnify the Underwriters against
certain liabilities, including liabilities under the Act, or contribute to
payments the Underwriters may be required to make in respect thereof. The
Underwriters have agreed to reimburse the Banks for certain expenses of the
issuance and distribution of the Certificates.
Each Underwriter has represented and agreed that (a) it has complied and
will comply with all applicable provisions of the Financial Services Act of 1986
and the Public Offers of Securities Regulations 1995 (the "Regulations") with
respect to anything done by it in relation to the Certificates in, from or
otherwise involving the United Kingdom; (b) it has only issued or passed on and
will only issue or pass on in the United Kingdom any document received by it in
connection with the issue of the Certificates if that person is of a kind
described in Article 11(3) of the Financial Services Act of 1986 (Investment
Advertisements) (Exemptions) Order 1995 or is a person to whom such document may
otherwise lawfully be issued or passed on; and (c) it has not offered or sold
and, during the period of six months from the date hereof, will not offer or
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sell any Certificates to persons in the United Kingdom except to persons whose
ordinary activities involve them in acquiring, holding, managing, or disposing
of investments (as principal or agent) for the purposes of their businesses or
otherwise in circumstances which have not resulted and will not result in an
offer to the public in the United Kingdom within the meaning of the Regulations.
LEGAL MATTERS
Certain legal matters relating to the issuance of the Certificates will be
passed upon for AUS and ANB by Gene S. Schneyer, Esq., General Counsel of AUS
and as General Counsel of Advanta Corp., the parent company of ANB and in that
capacity as counsel to ANB with respect to the matters described herein, and,
with respect to the Federal tax consequences of such issuance and certain other
legal matters, by special counsel to the Sellers, Orrick, Herrington &
Sutcliffe. Mr. Schneyer owns or has the right to acquire a number of shares of
common stock of Advanta Corp. well below 1% of the outstanding common stock of
Advanta Corp. Certain legal matters relating to the issuance of the Certificates
and ERISA matters will be passed upon for the Underwriters by Orrick, Herrington
& Sutcliffe.
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INDEX OF PRINCIPAL TERMS
TERM PAGE NO.
- ---------------------------------------------------------------------------------- ---------
Accounts.......................................................................... S-2
Accumulation Period............................................................... S-11
Accumulation Period Length........................................................ S-30
ANB............................................................................... S-1
AUS............................................................................... S-1
Available Cash Collateral Amount.................................................. S-41
Available Enhancement Amount...................................................... S-9
Available Investor Principal Collections.......................................... S-29
Available Reserve Account Amount.................................................. S-39
Banks............................................................................. S-3
Base Rate......................................................................... S-23
Business Day...................................................................... S-7
Cash Collateral Account........................................................... S-9
Cash Collateral Depositor......................................................... S-41
Cede.............................................................................. S-6
Certificate Owner................................................................. S-6
Certificate Owners................................................................ S-2
Certificateholders................................................................ S-3
Certificateholders' Interest...................................................... S-5
Certificates...................................................................... S-1,3
Class A Additional Interest....................................................... S-34
Class A Available Funds........................................................... S-28
Class A Certificateholders........................................................ S-3
Class A Certificates.............................................................. S-1,3
Class A Certificate Rate.......................................................... S-2,5
Class A Accumulation Period....................................................... S-11
Class A Expected Final Distribution Date.......................................... S-23
Class A Floating Percentage....................................................... S-31
Class A Initial Invested Amount................................................... S-4
Class A Invested Amount........................................................... S-4,32
Class A Investor Amount........................................................... S-33
Class A Investor Charge-Off....................................................... S-43
Class A Investor Default Amount................................................... S-42
Class A Monthly Interest.......................................................... S-35
Class A Monthly Principal......................................................... S-38
Class A Principal Percentage...................................................... S-31
Class A Required Amount........................................................... S-7,33
Class A Servicing Fee............................................................. S-45
Class A Underwriters.............................................................. S-46
Class B Additional Interest....................................................... S-35
Class B Available Funds........................................................... S-28
Class B Certificate Rate.......................................................... S-2,5
Class B Certificateholders........................................................ S-3
Class B Certificates.............................................................. S-1,3
Class B Accumulation Period....................................................... S-11
Class B Expected Final Distribution Date.......................................... S-23
Class B Floating Percentage....................................................... S-31
Class B Initial Invested Amount................................................... S-4
Class B Invested Amount........................................................... S-4,32
Class B Investor Amount........................................................... S-33
Class B Investor Charge-Off....................................................... S-43
Class B Investor Default Amount................................................... S-42
Class B Monthly Interest.......................................................... S-35
Class B Monthly Principal......................................................... S-38
Class B Principal Commencement Date............................................... S-37
Class B Principal Percentage...................................................... S-31
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TERM PAGE NO.
- ---------------------------------------------------------------------------------- ---------
Class B Required Amount........................................................... S-8,33
Class B Servicing Fee............................................................. S-45
Class B Underwriter............................................................... S-46
Closing Date...................................................................... S-2,27
Collateral Additional Interest.................................................... S-36
Collateral Available Funds........................................................ S-35
Collateral Default Amount......................................................... S-32
Collateral Floating Percentage.................................................... S-31
Collateral Initial Invested Amount................................................ S-4
Collateral Initial Investor Amount................................................ S-3
Collateral Interest............................................................... S-3
Collateral Interest Holder........................................................ S-6
Collateral Invested Amount........................................................ S-4,32
Collateral Investor Amount........................................................ S-33
Collateral Monthly Interest....................................................... S-37
Collateral Monthly Principal...................................................... S-12,38
Collateral Principal Collections.................................................. S-29
Collateral Rate................................................................... S-37
Controlled Accumulation Amount.................................................... S-39
Controlled Deposit Amount......................................................... S-12
Criteria.......................................................................... S-19
Deficit Controlled Accumulation Amount............................................ S-13,39
Definitive Certificate............................................................ S-6
Determination Date................................................................ S-23
Distribution Date................................................................. S-2,6
DTC............................................................................... S-6
Enhancement....................................................................... S-9
Enhancement Surplus............................................................... S-12
ERISA............................................................................. S-16
Excess Finance Charges............................................................ S-9
Excess Spread..................................................................... S-7,35
FDIC.............................................................................. S-1,5
Floating Allocation Percentage.................................................... S-30
Funding Period.................................................................... S-10
Group One......................................................................... S-9
Initial Closing Date.............................................................. S-19
Initial Cut Off Date.............................................................. S-19
Initial Invested Amount........................................................... S-4
Interest Period................................................................... S-7
Invested Amount................................................................... S-4,26,32
Invested Principal Collections.................................................... S-29
Investment Company Act............................................................ S-24
Investor Amount................................................................... S-33
Investor Default Amount........................................................... S-42
Investor Interest................................................................. S-3
June Yield Supplement Account..................................................... S-20
LIBOR............................................................................. S-2,5,27
LIBOR Determination Date.......................................................... S-27
Loan Agreement.................................................................... S-29
March Yield Supplement Account.................................................... S-20
Master Pooling and Servicing Agreement............................................ S-3
Master Trust II Sales............................................................. S-18
May Yield Supplement Account...................................................... S-20
Monthly Period.................................................................... S-7
Monthly Servicing Fee............................................................. S-45
Net Portfolio Yield............................................................... S-23
Net Servicing Fee Rate............................................................ S-45
Paired Series..................................................................... S-40
Pooling and Servicing Agreement................................................... S-3
S-49
50
TERM PAGE NO.
- ---------------------------------------------------------------------------------- ---------
Pre-Funded Amount................................................................. S-10
Pre-Funding Account............................................................... S-10
Principal Allocation Percentage................................................... S-31
Principal Funding Account......................................................... S-12,39
Principal Funding Account Balance................................................. S-32
Principal Funding Investment Proceeds............................................. S-13,39
Prior Securitizations............................................................. S-18
Rapid Amortization Period......................................................... S-14
Rating Agencies................................................................... S-16
Rating Agency..................................................................... S-16
Reallocated Principal Collections................................................. S-33
Receivables....................................................................... S-2
Reference Banks................................................................... S-27
Regulations....................................................................... S-47
Relevant Cut Off Date............................................................. S-19
Required Cash Collateral Amount................................................... S-41
Required Enhancement Amount....................................................... S-9,41
Required Reserve Account Amount................................................... S-39
Reserve Account................................................................... S-39
Reserve Account Funding Date...................................................... S-39
Revolving Period.................................................................. S-11
Seller............................................................................ S-3
Seller Amount..................................................................... S-26
Seller Percentage................................................................. S-26
Sellers........................................................................... S-3
Sellers' Interest................................................................. S-4,26
Series............................................................................ S-3
Series 1996-D..................................................................... S-3
Series 1996-D Pay Out Event....................................................... S-23
Series 1996-D Termination Date.................................................... S-15
Series Investor Amount............................................................ S-33
Series Percentage................................................................. S-26
Servicer.......................................................................... S-3
Servicer Interchange.............................................................. S-45
Servicing Base Amount............................................................. S-45
Servicing Fee Rate................................................................ S-45
Shared Principal Collections...................................................... S-41
Special Tax Counsel............................................................... S-45
Supplement........................................................................ S-3
Telerate Page 3750................................................................ S-27
Total Enhancement................................................................. S-10
Transfer Date..................................................................... S-45
Trust............................................................................. S-1,3
Trust Pay Out Event............................................................... S-24
Trust Portfolio................................................................... S-19
Trustee........................................................................... S-3
Underwriters...................................................................... S-46
Underwriting Agreement............................................................ S-46
S-50
51
ANNEX I
OTHER SERIES ISSUED
The Certificates will be the sixteenth Series to be issued by the Trust.
The table below sets forth the principal characteristics of the Series 1994-B
Certificates, the Series 1994-D Certificates, the Series 1995-A Certificates,
the Series 1995-B Certificates, the Series 1995-C Certificates, the Series
1995-D Certificates, the Euro Series 1995-E Certificates, the Series 1995-F
Certificates, the Series 1995-G Certificates, the Series 1996-A Certificates,
the Series 1996-B Certificates and the Series 1996-C Certificates, the other
Series heretofore issued by the Trust and currently outstanding. Series 1995-B
and Euro Series 1995-E each were issued in an offering exempt from the
registration requirements of the Act. Solely for purposes of this Annex I,
"LIBOR" shall mean London interbank offered quotations for United States dollar
deposits determined as set forth in the related Series Supplements.
SERIES 1994-B
Initial Invested Amount................... $450,000,000
Initial Pre-Funded Amount................. $300,000,000
Invested Amount as of May 31, 1996........ $750,000,000
Class A Certificate Rate.................. One Month LIBOR plus .28% per annum
(capped at 12% per annum)
Class B Certificate Rate.................. One Month LIBOR plus .53% per annum
(capped at 12% per annum)
Collateral Rate........................... No higher than One Month LIBOR plus 1.00%
per annum
Initial Enhancement Amount................ $75,000,000
Series Servicing Fee Rate................. 2% per annum
Stated Series 1994-B Termination Date..... October 1, 2001
Series Issuance Date...................... July 19, 1994
SERIES 1994-D
Initial Invested Amount................... $600,000,000
Initial Pre-Funded Amount................. $400,000,000
Invested Amount as of May 31, 1996........ $1,000,000,000
Class A Certificate Rate.................. One Month LIBOR plus .16% per annum
Class B Certificate Rate.................. One Month LIBOR plus .36% per annum
Collateral Rate........................... No higher than One Month LIBOR plus 1.00%
per annum
Initial Enhancement Amount................ $105,000,000
Series Servicing Fee Rate................. 2% per annum
Stated Series 1994-D Termination Date..... September 1, 2000
Series Issuance Date...................... October 11, 1994
A-1
52
SERIES 1995-A
Initial Invested Amount................... $600,000,000
Initial Pre-Funded Amount................. $100,000,000
Invested Amount as of May 31, 1996........ $700,000,000
Class A Certificate Rate.................. One Month LIBOR plus .180% per annum
Class B Certificate Rate.................. One Month LIBOR plus .375% per annum
Collateral Rate........................... No higher than One Month LIBOR plus 1.00%
per annum
Initial Enhancement Amount................ $73,500,000
Series Servicing Fee Rate................. 2% per annum
Stated Series 1995-A Termination Date..... January 1, 2003
Series Issuance Date...................... January 18, 1995
SERIES 1995-B
Maximum Certificate Investor Amount....... $400,000,000
Investor Amount as of May 31, 1996........ $100,000,000
Certificate Rate.......................... Commercial Paper Index
Initial Enhancement Amount................ $41,000,000
Series Servicing Fee Rate................. 2% per annum
Stated Series 1995-B Termination Date..... November 1, 1999 (extendible)
Series Issuance Date...................... March 22, 1995
SERIES 1995-C
Initial Invested Amount................... $375,000,000
Initial Pre-Funded Amount................. $200,000,000
Investor Amount as of May 31, 1996........ $575,000,000
Class A Certificate Rate.................. Three Month LIBOR plus .20% per annum
Class B Certificate Rate.................. Three Month LIBOR plus .34% per annum
Collateral Rate........................... No higher than One Month LIBOR plus 1.00%
per annum
Initial Enhancement Amount................ $60,375,000
Series Servicing Fee Rate................. 2% per annum
Stated Series 1995-C Termination Date..... January 1, 2005
Series Issuance Date...................... April 27, 1995
SERIES 1995-D
Initial Invested Amount................... $450,000,000
Initial Pre-Funded Amount................. $150,000,000
Investor Amount as of May 31, 1996........ $600,000,000
Class A Certificate Rate.................. One Month LIBOR plus .19% per annum
Class B Certificate Rate.................. One Month LIBOR plus .32% per annum
Initial Enhancement Amount................ $63,000,000
Series Servicing Fee Rate................. 2% per annum
Stated Series 1995-D Termination Date..... February 1, 2004
Series Issuance Date...................... July 25, 1995
A-2
53
EURO SERIES 1995-E
Initial Invested Amount................... $275,000,000
Initial Pre-Funded Amount................. $25,000,000
Investor Amount as of May 31, 1996........ $300,000,000
Class A Certificate Rate.................. Three Month LIBOR plus .09% per annum
Class B Certificate Rate.................. Three Month LIBOR plus .21% per annum
Initial Enhancement Amount................ $31,500,000
Series Servicing Fee Rate................. 2% per annum
Stated Series 1995-E Termination Date..... December 15, 2000
Series Issuance Date...................... September 6, 1995
SERIES 1995-F
Initial Invested Amount................... $750,000,000
Initial Pre-Funded Amount................. $100,000,000
Investor Amount as of May 31, 1996........ $850,000,000
Class A-1 Certificate Rate................ 6.05% per annum
Class A-2 Certificate Rate................ One Month LIBOR plus .19% per annum
Class B Certificate Rate.................. One Month LIBOR plus .30% per annum
Initial Enhancement Amount................ $65,875,000
Series Servicing Fee Rate................. 2% per annum
Series 1995-F Termination Date............ August 1, 2003
Series Issuance Date...................... November 21, 1995
SERIES 1995-G
Initial Invested Amount................... $500,000,000
Investor Amount as of May 31, 1996........ $500,000,000
Class A Certificate Rate.................. One Month LIBOR plus .14% per annum
Class B Certificate Rate.................. One Month LIBOR plus .29% per annum
Collateral Rate........................... No higher than One Month LIBOR plus 1.00%
per annum
Initial Enhancement Amount................ $50,000,000
Series Servicing Fee Rate................. 2% per annum
Series 1995-G Termination Date............ June 2002 Distribution Date
Series Issuance Date...................... December 15, 1995
SERIES 1996-A
Initial Invested Amount................... $400,000,000
Initial Pre-Funded Amount................. $100,000,000
Investor Amount as of May 31, 1996........ $500,000,000
Class A-1 Certificate Rate................ 6.0% per annum
Class A-2 Certificate Rate................ One Month LIBOR plus .23% per annum
Class B Certificate Rate.................. One Month LIBOR plus .35% per annum
Collateral Rate........................... No higher than One Month LIBOR plus 1.00%
per annum
Initial Enhancement Amount................ $43,750,000
Series Servicing Fee Rate................. 2% per annum
Series 1996-A Termination Date............ November 2005 Distribution Date
Series Issuance Date...................... January 18, 1996
A-3
54
SERIES 1996-B
Initial Invested Amount................... $750,000,000
Investor Amount as of May 31, 1996........ $750,000,000
Class A Certificate Rate.................. Three Month LIBOR plus .230% per annum
Class B Certificate Rate.................. Three Month LIBOR plus .375% per annum
Collateral Rate........................... No higher than One Month LIBOR plus 1.00%
per annum
Initial Enhancement Amount................ $75,000,000
Series Servicing Fee Rate................. 2% per annum
Series 1996-B Termination Date............ January 2007 Distribution Date
Series Issuance Date...................... March 26, 1996
SERIES 1996-C
Initial Invested Amount................... $700,000,000
Investor Amount as of May 31, 1996........ $700,000,000
Class A Certificate Rate.................. Three Month LIBOR plus .120% per annum
Class B Certificate Rate.................. Three Month LIBOR plus .250% per annum
Collateral Rate........................... No higher than Three Month LIBOR plus
1.00% per annum
Initial Enhancement Amount................ $70,000,000
Series Servicing Fee Rate................. 2% per annum
Series 1996-C Termination Date............ November 2003 Distribution Date
Series Issuance Date...................... May 13, 1996
A-4
55
ANNEX II
RECEIVABLES IN ADDITIONAL ACCOUNTS
CONVEYED TO THE TRUST BY THE BANKS
NUMBER OF RECEIVABLES IN
ASSIGNMENT DATE RECEIVABLES RELEVANT ADDITIONAL ADDITIONAL
NUMBER TRANSFERRED TO TRUST CUT OFF DATE ACCOUNTS(1) ACCOUNTS(1)
- ---------- -------------------- -------------------- --------- --------------
1 May 16, 1994 March 31, 1994 276,371 $ 367,091,261
2 July 1, 1994 May 31, 1994 157,629 $ 202,859,562
3 August 17, 1994 July 31, 1994 226,342 $ 351,961,171
4 September 23, 1994 August 31, 1994 192,815 $ 299,924,106
5 November 18, 1994 October 31, 1994 332,866 $ 406,625,727
6 January 6, 1995 November 30, 1994 217,320 $ 316,458,944
7 March 15, 1995 February 28, 1995 291,057 $ 348,693,399
8 April 18, 1995 March 31, 1995 143,714 $ 168,739,171
9 May 23, 1995 April 30, 1995 98,330 $ 137,485,579
10 July 18, 1995 June 30, 1995 322,271 $ 432,984,240
11 August 15, 1995 July 31, 1995 126,338 $ 188,302,827
12 August 31, 1995 August 11, 1995 67,968 $ 94,548,321
13 November 21, 1995 October 25, 1995 285,122 $ 491,863,655
14 December 15, 1995 November 26, 1995 265,376 $ 369,389,253
15 January 18, 1996 December 26, 1995 182,985 $ 330,263,251
16 February 19, 1996 January 31, 1996 269,467 $ 560,543,656
17 March 26, 1996 February 29, 1996 150,460 $ 330,531,723
18 May 1, 1996 March 31, 1996 68,056 $ 251,797,517
19 May 13, 1996 March 31, 1996 219,150 $ 499,241,938
20 Closing Date April 30, 1996 244,770 $ 636,632,670
- ---------------
(1) The amounts shown are as of the Relevant Cut Off Date.
56
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE BANKS OR
THE UNDERWRITERS. NEITHER THIS PROSPECTUS SUPPLEMENT NOR THE PROSPECTUS
CONSTITUTES AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS, NOR ANY SALE HEREUNDER OR THEREUNDER,
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION
HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THEIR RESPECTIVE DATES
OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE BANKS OR THE TRUST SINCE
SUCH DATES.
------------------
TABLE OF CONTENTS
PAGE
----
PROSPECTUS SUPPLEMENT
Summary of Terms.......................
Risk Factors...........................
The Banks' Credit Card Activities......
The Receivables........................
Maturity Assumptions...................
Receivable Yield Considerations........
Description of the Certificates........
Certain Federal Income Tax
Consequences.........................
Underwriting...........................
Legal Matters..........................
Index of Principal Terms...............
PROSPECTUS
Prospectus Supplement..................
Reports to Certificateholders..........
Available Information..................
Incorporation of Certain Documents by
Reference............................
Summary of Terms.......................
Risk Factors...........................
Formation of the Trust.................
The Banks' Credit Card Activities......
Use of Proceeds........................
The Banks and Advanta Corp. ...........
Certain Legal Aspects of the
Receivables..........................
Description of the Certificates........
Enhancement............................
Certain Federal Income Tax
Consequences.........................
ERISA Considerations...................
Plan of Distribution...................
Underwriting...........................
Legal Matters..........................
Index of Principal Terms...............
ADVANTA
CREDIT CARD
MASTER TRUST II
$605,500,000
Class A Floating Rate
Asset Backed Certificates,
Series 1996-D
$38,500,000
Class B Floating Rate
Asset Backed Certificates,
Series 1996-D
ADVANTA NATIONAL BANK USA
Seller and Servicer
ADVANTA NATIONAL BANK
Seller
UNDERWRITERS OF THE CLASS A CERTIFICATES
J.P. MORGAN & CO.
LEHMAN BROTHERS
MERRILL LYNCH & CO.
SALOMON BROTHERS INC
UBS SECURITIES
UNDERWRITER OF THE CLASS B CERTIFICATES
J.P. MORGAN & CO.
PROSPECTUS SUPPLEMENT
(LOGO)KThis document is printed entirely on recycled paper.