<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-A/A
(Amendment No. 1)
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
WORLD FINANCIAL NETWORK NATIONAL BANK ON BEHALF OF
WORLD FINANCIAL NETWORK CREDIT CARD MASTER TRUST
(ISSUER IN RESPECT OF THE 6.70% CLASS A ASSET BACKED
CERTIFICATES, SERIES 1996-A, 7.00% CLASS B ASSET BACKED
CERTIFICATES, SERIES 1996-A, 6.95% CLASS A ASSET BACKED
CERTIFICATES, SERIES 1996-B, 7.20% CLASS B ASSET BACKED
CERTIFICATES, SERIES 1996-B)
----------------------------------------------------------
(Exact name of registrant as specified in its charter)
UNITED STATES 34-1610866
(State of incorporation or (I.R.S. Employer
organization) Identification No.)
4590 EAST BROAD STREET
COLUMBUS, OHIO 43213
(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Name of each exchange on which
Title of each class each class is to be
to be so registered: registered:
- -------------------- -----------
NOT APPLICABLE NOT APPLICABLE
-------------- --------------
If this Form relates to the If this Form relates to the
registration of a class of registration of a class of
debt securities and is debt securities and is to
effective upon filing pursuant become effective
to General Instruction simultaneously with the
A(c)(1), please check the effectiveness of a concurrent
following box. [_] registration statement under
the Securities Act of 1933
pursuant to General
Instruction A(c)(2), please
check the following box. [_]
Securities to be registered pursuant to Section 12(g) of the Act:
6.70% CLASS A ASSET BACKED CERTIFICATES, SERIES 1996-A;
7.00% CLASS B ASSET BACKED CERTIFICATES, SERIES 1996-A;
6.95% CLASS A ASSET BACKED CERTIFICATES, SERIES 1996-B; AND
7.20% CLASS B ASSET BACKED CERTIFICATES, SERIES 1996-B;
<PAGE>
ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
This Registration Statement relates to (in addition to the items set
forth in the immediately succeeding paragraph): (i) the 6.70% Class A
Asset Backed Certificates, Series 1996-A; the 7.00% Class B Asset
Backed Certificates, Series 1996-A (collectively, the "Series 1996-A
Certificates"). A description of the Series 1996-A Certificates,
including provisions concerning distributions with respect thereto and
other matters, is contained under the caption "Description of the
Certificates" in the Prospectus Supplement relating to the
Series 1996-A, dated April 30, 1996, included in the Registrant's
Registration Statement on Form S-3 (File No. 333-998). Such Prospectus
Supplement is attached hereto as Exhibit 1.
This Registration Statement relates to (in addition to the items set
forth in the immediately preceding paragraph): (i) the 6.95% Class A
Asset Backed Certificates, Series 1996-B; the 7.20% Class B Asset
Backed Certificates, Series 1996-B (collectively, the "Series 1996-B
Certificates"). A description of the Series 1996-B Certificates,
including provisions concerning distributions with respect thereto and
other matters, is contained under the caption "Description of the
Certificates" in the Prospectus Supplement relating to the
Series 1996-B, dated April 30, 1996, included in the Registrant's
Registration Statement on Form S-3 (File No. 333-998). Such Prospectus
Supplement is attached hereto as Exhibit 2.
ITEM 2. EXHIBITS
1. Prospectus Supplement relating to the Series 1996-A, dated April 30,
1996
2. Prospectus Supplement relating to the Series 1996-B, dated April 30,
1996
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the Registrant has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized.
WORLD FINANCIAL NETWORK CREDIT CARD
MASTER TRUST
By: WORLD FINANCIAL NETWORK
NATIONAL BANK
By: /s/ Dan T. Groomes
----------------------------
Date: June 29, 1996 Name: Dan T. Groomes
Title: Vice President - Finance
<PAGE>
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED APRIL 9, 1996
$492,250,000
WORLD FINANCIAL NETWORK CREDIT CARD MASTER TRUST
$445,500,000 6.70% Class A Asset-Backed Certificates, Series 1996-A
$46,750,000 7.00% Class B Asset-Backed Certificates, Series 1996-A
WORLD FINANCIAL NETWORK NATIONAL BANK
Transferor and Servicer
-----------
Each 6.70% Class A Asset-Backed Certificate, Series 1996-A (collectively, the
"Class A Certificates") and each 7.00% Class B Asset-Backed Certificate,
Series 1996-A (collectively, the "Class B Certificates" and, together with
the Class A Certificates, the "Certificates") will represent the right to
receive certain payments from the World Financial Network Credit Card Master
Trust (the "Trust"), created pursuant to a Pooling and Servicing Agreement
between World Financial Network National Bank ("WFN"), as transferor and
servicer, and The Bank of New York, as trustee. The property of the Trust
includes receivables (the "Receivables") generated from time to time in a
portfolio of open end credit card accounts (the "Accounts") and all
monies due or to become due in payment of the Receivables. In addition,
the Collateral Interest (as defined herein) will be issued in the
initial amount of $57,750,000 and will be subordinated to the
Certificates as described herein. Additional enhancement for the
Certificates will be provided in the form of a Cash Collateral Account,
which will initially be funded with a deposit of $13,750,000. WFN
initially will own the remaining undivided interest in the Trust not
represented by the Certificates, the Collateral Interest and other
interests issued by the Trust from time to time and will service the
Receivables. WFN has offered and may from time to time offer other
Series of certificates that evidence undivided interests in certain
assets of the Trust, which may have terms significantly different
from the Certificates. Certain capitalized terms used in this
Prospectus Supplement are defined in this Prospectus Supplement on
the pages indicated in the "Index of Terms for Prospectus
Supplement" on page S-45 of this Prospectus Supplement or on the
pages indicated in the "Index of Terms for Prospectus" on page 72
of the accompanying Prospectus.
(continued on next page)
THERE CURRENTLY IS NO SECONDARY MARKET FOR THE CERTIFICATES, AND THERE IS
NO ASSURANCE THAT ONE WILL DEVELOP. POTENTIAL INVESTORS SHOULD
CONSIDER, AMONG OTHER THINGS, THE INFORMATION SET FORTH IN
"RISK FACTORS" ON PAGE 19 IN THE PROSPECTUS.
-----------
THE CERTIFICATES WILL REPRESENT INTERESTS IN THE TRUST ONLY AND WILL NOT
REPRESENT INTERESTS IN OR RECOURSE OBLIGATIONS OF THE TRANSFEROR OR THE
SERVICER OR ANY AFFILIATE OF EITHER OF THEM. A CERTIFICATE IS NOT A
DEPOSIT AND NEITHER THE CERTIFICATES NOR THE UNDERLYING AC-
COUNTS ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT IN-
SURANCE CORPORATION (THE "FDIC") OR ANY OTHER GOVERN-
MENTAL AGENCY. THE RECEIVABLES ARE NOT INSURED OR
GUARANTEED BY THE FDIC OR ANY OTHER GOVERNMEN-
TAL AGENCY.
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 OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
<CAPTION>
Price to Underwriting Proceeds to
Public(1) Discount Transferor(1)(2)
--------- ------------ ----------------
<S> <C> <C> <C>
Per Class A Certificate.......... 99.8125% 0.3250% 99.4875%
Per Class B Certificate.......... 99.8750% 0.5000% 99.3750%
Total............................ $491,356,250.00 $1,681,625.00 $489,674,625.00
</TABLE>
- -------
(1) Plus accrued interest, if any, at the Class A Rate or the Class B Rate, as
applicable, from May 9, 1996.
(2) Before deduction of expenses estimated to be $964,553.
-----------
The Certificates are offered by the Underwriters when, as and if issued by
the Trust and accepted by the Underwriters and subject to the Underwriters'
right to reject orders in whole or in part. It is expected that the
Certificates will be delivered in book-entry form on or about May 9, 1996,
through the facilities of The Depository Trust Company, Cedel Bank, societe
anonyme, and the Euroclear System.
Underwriters of the Class A Certificates
CS First Boston
Chase Securities Inc.
Citicorp Securities, Inc.
Goldman, Sachs & Co.
J.P. Morgan &
Underwriter of the Class B Certificates Co.
CS First Boston
The Date of this Prospectus Supplement is April 30, 1996
<PAGE>
(continued from previous page)
Interest will accrue on the Class A Certificates from May 9, 1996 (the
"Closing Date") through June 14, 1996 and with respect to each Distribution
Period (as defined herein) thereafter, at a fixed rate of 6.70% per annum (the
"Class A Rate"). Interest will accrue on the Class B Certificates from the
Closing Date through June 14, 1996 and with respect to each Distribution
Period thereafter, at a fixed rate of 7.00% per annum (the "Class B Rate").
Interest with respect to the Certificates will be distributed on June 17, 1996
and on the 15th day of each month thereafter (or, if such 15th day is not a
business day, the next succeeding business day) (each, a "Distribution Date")
and will be calculated on the basis of a 360-day year of twelve 30-day months.
Principal payments with respect to the Class A Certificates will be payable on
each Distribution Date commencing with the March 2001 Distribution Date.
Principal payments with respect to the Class B Certificates will be payable on
the August 2001 Distribution Date (the "Class B Scheduled Payment Date"),
provided that principal payments will not commence to the Class B Holders
earlier than the Distribution Date on which the final principal payment has
been made to the Class A Holders. Principal on the Class A Certificates and
the Class B Certificates may be paid to the Holders thereof earlier or later
under the circumstances described herein. See "Maturity Considerations"
herein.
The Class B Certificates will be subordinated to the Class A Certificates,
and the Collateral Interest will be subordinated to the Class A Certificates
and the Class B Certificates, as described herein. Additional Enhancement for
the Certificates will be provided in the form of the Cash Collateral Account.
------------
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 Transferor from time to time pursuant to its Prospectus
dated April 9, 1996. This Prospectus Supplement does not contain complete
information about the offering of the Certificates. Additional information is
contained in the Prospectus, and purchasers 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.
S-2
<PAGE>
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 in this summary are
defined elsewhere in this Prospectus Supplement and the accompanying
Prospectus. A listing of the pages on which some of the terms are defined is
found in the "Index of Terms for Prospectus Supplement" and the "Index of Terms
for Prospectus."
TYPE OF SECURITIES.......... 6.70% Class A Asset-Backed Certificates, Series
1996-A (the "Class A Certificates") and 7.00%
Class B Asset-Backed Certificates, Series 1996-A
(the "Class B Certificates," and together with
the Class A Certificates, the "Certificates").
TRUST....................... The World Financial Network Credit Card Master
Trust (the "Trust") was formed pursuant to a
pooling and servicing agreement, dated as of
January 17, 1996 (the "Pooling Agreement"), be-
tween World Financial Network National Bank
("WFN" or the "Bank"), as transferor (the
"Transferor") and as servicer of the Receiv-
ables, and The Bank of New York, as trustee (the
"Trustee"). As used in this Prospectus Supple-
ment, the term "Holders" refers to holders of
the Certificates, the term "Class A Holders" re-
fers to holders of the Class A Certificates, the
term "Class B Holders" refers to holders of the
Class B Certificates and the term "Pooling
Agreement" (unless the context requires other-
wise) refers to the Pooling Agreement as supple-
mented by the supplement relating to the Certif-
icates (the "Series 1996-A Supplement").
CERTIFICATE INTEREST AND Each of the Certificates offered hereby repre-
PRINCIPAL.................. sents the right to receive certain payments from
the assets of the Trust. The Trust's assets will
be allocated among the Class A Holders (the
"Class A Interest"), the Class B Holders (the
"Class B Interest"), the Collateral Interest
Holder (the "Collateral Interest," and together
with the Class A Interest and the Class B Inter-
est, the "Series Interest"), the interest of the
holders of other undivided interests in the
Trust issued pursuant to the Pooling Agreement
and applicable Series Supplements and the Trans-
feror (the "Transferor Interest"), as described
below. The Collateral Interest in the initial
amount of $57,750,000 (which amount represents
10.5% of the initial Invested Amount) consti-
tutes Enhancement for the Certificates. The pro-
vider of such Enhancement is referred to herein
as the "Collateral Interest Holder." Allocations
will be made to the Collateral Interest, and the
Collateral Interest Holder will have voting and
certain other rights, as if the Collateral In-
terest were a subordinated class of Certifi-
cates. Additional Enhancement for the Certifi-
cates will be provided in the form of the Cash
Collateral Account.
The Class A Certificates will represent the right
to receive from the assets of the Trust allo-
cated to the Class A Certificates funds up to
(but not in excess of) the amounts required to
make (a) payments of interest accruing from the
Closing Date through June 14,
S-3
<PAGE>
1996 and with respect to each Distribution Pe-
riod thereafter, at a fixed rate of 6.70% per
annum (such rate, the "Class A Rate"), and (b)
payments of principal during the Controlled Am-
ortization Period or, under certain limited cir-
cumstances, during the Early Amortization Peri-
od, to the extent of the Class A Invested
Amount, which may be less than the unpaid prin-
cipal balance of the Class A Certificates in
certain circumstances described herein.
The Class B Certificates will represent the right
to receive, from the assets of the Trust allo-
cated to the Class B Certificates, funds up to
(but not in excess of) the amounts required to
make (a) payments of interest accruing from the
Closing Date through June 14, 1996 and with re-
spect to each Distribution Period thereafter, at
a fixed rate of 7.00% per annum (such rate, the
"Class B Rate") and (b) payments of principal
scheduled to be paid on the Class B Scheduled
Payment Date or, under certain limited circum-
stances, during the Early Amortization Period,
to the extent of the Class B Invested Amount,
which may be less than the unpaid principal bal-
ance of the Class B Certificates in certain cir-
cumstances described herein. No principal will
be paid to the Class B Holders until the Class A
Invested Amount is paid in full.
The Class A Invested Amount and the Class B In-
vested Amount will, except as otherwise provided
herein, remain fixed at $445,500,000 and
$46,750,000, respectively during the Revolving
Period. The Class A Invested Amount will decline
in certain circumstances if the Class A Reduc-
tion Amount allocated to the Class A Certifi-
cates exceeds funds allocable thereto as de-
scribed herein and the Class B Invested Amount,
the Collateral Interest and the Available Cash
Collateral Amount are zero. The Class B Invested
Amount will decline in certain circumstances as
a result of (a) the reallocation of collections
of Principal Receivables otherwise allocable to
the Class B Interest to fund certain payments in
respect of the Class A Certificates and (b) the
allocation to the Class B Interest of the Class
B Reduction Amount, including such amounts oth-
erwise allocable to the Class A Interest when
the Collateral Interest and the Available Cash
Collateral Amount are zero.
The Class A Certificates, the Class B Certifi-
cates and the Collateral Interest will each in-
clude the right to receive (but only to the ex-
tent needed to make required payments under the
Pooling Agreement) varying percentages of col-
lections of Finance Charge Receivables and Prin-
cipal Receivables and will be allocated varying
percentages of Default Amounts and Uncovered Di-
lution Amounts during each calendar month (a
"Monthly Period"). Collections of Finance Charge
Receivables, Default Amounts and Uncovered Dilu-
tion Amounts at all times, and collections of
Principal Receivables during the Revolving Peri-
od, will be allocated to the Series Interest
based on the Floating Allocation Percentage and
will be further allocated among the Class A In-
terest, the Class B Interest and the Collateral
Interest based on the Class A Float-
S-4
<PAGE>
ing Allocation Percentage, the Class B Floating
Allocation Percentage and the Collateral Float-
ing Allocation Percentage, respectively, appli-
cable during the related Monthly Period. Collec-
tions of Principal Receivables during the Con-
trolled Amortization Period and the Early Amor-
tization Period will be allocated to the Series
Interest based on the Fixed Allocation Percent-
age and will be further allocated among the
Class A Interest, the Class B Interest and the
Collateral Interest based on the Class A Fixed
Allocation Percentage, the Class B Fixed Alloca-
tion Percentage and the Collateral Fixed Alloca-
tion Percentage, respectively. See "Description
of the Certificates--Allocation Percentages",
"--Application of Collections" and "--Early Am-
ortization Events" herein and "Description of
the Certificates--Early Amortization Events" in
the Prospectus.
The final distribution of principal and interest
on the Certificates will be made no later than
the February 2004 Distribution Date. Each Cer-
tificate will be retired on the day following
such Distribution Date, whether as a result of
optional reassignment to the Transferor or oth-
erwise. Series 1996-A will terminate on the ear-
liest to occur of (a) the Distribution Date on
which the Invested Amount is paid in full, (b)
the termination of the Trust pursuant to the
Pooling Agreement and (c) the February 2004 Dis-
tribution Date (such earliest to occur, the "Se-
ries 1996-A Termination Date"). After the Series
1996-A Termination Date, no further principal or
interest payments will be made on the Certifi-
cates (except as described in "The Description
of the Certificates--Series 1996-A Termination
Date; Certain Distributions" herein).
RECEIVABLES................. The Receivables arise in Eligible Accounts in the
Approved Portfolios. The Receivables consist of
Principal Receivables and Finance Charge Receiv-
ables.
The aggregate amount of Receivables in the Ac-
counts as of the beginning of the day on April
1, 1996 was $1,259,463,052, comprised of
$1,234,074,160 of Principal Receivables and
$25,388,892 of Finance Charge Receivables. The
amount of Finance Charge Receivables will not
affect the Invested Amount or the amount of the
Transferor Interest, all of which are determined
on the basis of the amount of Principal Receiv-
ables in the Trust. The aggregate amount of
Principal Receivables in the Trust evidenced by
the Certificates and the Collateral Interest
will never exceed the amount of the Invested
Amount regardless of the total amount of Princi-
pal Receivables in the Trust at any time.
DENOMINATIONS............... Beneficial interests in the Certificates will be
offered for purchase in denominations of $1,000
and integral multiples thereof.
REGISTRATION OF The Certificates initially will be represented by
CERTIFICATES............... Certificates registered in the name of Cede &
Co., as the nominee of DTC. No Certificate Owner
will be entitled to receive a Definitive Certif-
icate, except under the limited circumstances
described herein.
S-5
<PAGE>
Holders may elect to hold their Certificates
through DTC (in the United States) or Cedel or
Euroclear (in Europe). Transfers will be made in
accordance with the rules and operating proce-
dures described herein. See "Description of the
Certificates--Definitive Certificates" in the
Prospectus.
SERVICING FEE............... The Servicer will receive a monthly fee as ser-
vicing compensation from the Trust on each
Transfer Date. On each Transfer Date, the Class
A Servicing Fee, the Class B Servicing Fee and
the Collateral Interest Servicing Fee will be
paid as described under "Description of the Cer-
tificates Servicing Compensation and Payment of
Expenses" herein. See also "The Pooling and Ser-
vicing Agreement--Servicing Compensation and
Payment of Expenses" in the Prospectus.
INTEREST.................... Interest on the Certificates for each Distribu-
tion Period will be distributed on June 17,
1996, and on the 15th day of each month thereaf-
ter, or if such day is not a business day, on
the next succeeding business day (each, a "Dis-
tribution Date"), in an amount equal to (a) with
respect to the Class A Certificates, the product
of (i) one-twelfth, (ii) the Class A Rate and
(iii) the outstanding principal balance of the
Class A Certificates as of the preceding Record
Date (or in the case of the first Distribution
Date, as of the Closing Date) (provided that the
interest payable to the Class A Certificates for
the first Distribution Date will be $2,984,850)
and (b) with respect to the Class B Certifi-
cates, the product of (i) one-twelfth, (ii) the
Class B Rate and (iii) the outstanding principal
balance of the Class B Certificates as of the
preceding Record Date (or in the case of the
first Distribution Date, as of the Closing Date)
(provided that the interest payable to the Class
B Certificates for the first Distribution Date
will be $327,250). Interest for any Distribution
Date due but not paid on such Distribution Date
(such amount with respect to the Class A Certif-
icates, the "Class A Deficiency Amount," and
such amount with respect to the Class B Certifi-
cates, the "Class B Deficiency Amount") will be
payable on the next succeeding Distribution
Date, together with additional interest on such
amount at the applicable Certificate Rate plus
2% per annum (such amount with respect to the
Class A Certificates, the "Class A Additional
Interest," and such amount with respect to the
Class B Certificates, the "Class B Additional
Interest"). Interest on the Certificates will be
calculated on the basis of a 360-day year of
twelve 30-day months.
The "Distribution Period" with respect to any
Distribution Date will be the period from and
including the previous Distribution Date through
the day preceding such Distribution Date, except
the initial Distribution Period will be the pe-
riod from and including the Closing Date through
the day preceding the initial Distribution Date.
Interest payments on each Distribution Date will
be funded from the portion of Finance Charge Re-
ceivables collected during the preceding Monthly
Period and certain other available amounts (a)
with respect to the Class A Certificates, allo-
cated to the
S-6
<PAGE>
Class A Interest, and, if necessary, from Excess
Spread, Available Cash Collateral Amounts and
Reallocated Principal Collections (to the extent
available), (b) with respect to the Class B Cer-
tificates, allocated to the Class B Interest
and, if necessary, from Excess Spread, Available
Cash Collateral Amounts and Reallocated Collat-
eral Principal Collections (to the extent avail-
able) and (c) with respect to the Collateral In-
terest, from Excess Spread. See "Description of
the Certificates--Reallocation of Cash Flows"
and "--Application of Collections--Payment of
Interest, Fees and Other Items" herein and "Risk
Factors--Enhancement" in the Prospectus.
REVOLVING PERIOD............ The "Revolving Period" for the Certificates means
the period from and including the Closing Date
to, but not including, the commencement of the
earlier of (a) the Controlled Amortization Pe-
riod and (b) the Early Amortization Period. Dur-
ing the Revolving Period, Available Investor
Principal Collections otherwise allocable to the
Series Interest will, subject to certain limita-
tions, be treated as Shared Principal Collec-
tions and allocated to the holders of other Se-
ries of certificates issued and outstanding or,
subject to certain limitations, paid to the
Transferor or deposited into the Excess Funding
Account. See "Description of the Certificates--
Principal Payments" herein. See "Description of
the Certificates--Early Amortization Events"
herein and in the Prospectus for a discussion of
the events which might lead to the termination
of the Revolving Period prior to the commence-
ment of the Controlled Amortization Period.
CONTROLLED AMORTIZATION Unless an Early Amortization Event occurs, the
PERIOD..................... controlled amortization period for the Certifi-
cates (the "Controlled Amortization Period") is
scheduled to begin at the beginning of business
on February 1, 2001. The Controlled Amortization
Period will end on the earliest of (i) the com-
mencement of the Early Amortization Period, (ii)
payment of the Invested Amount in full and (iii)
the Series 1996-A Termination Date. During the
Controlled Amortization Period, prior to the
payment of the Class A Invested Amount in full,
amounts equal to the least of (a) Available In-
vestor Principal Collections for the related
Monthly Period, (b) the sum of the Controlled
Amortization Amount for such Monthly Period and
any portion of the Controlled Amortization
Amount for any prior Monthly Period that has not
yet been distributed to the Class A Holders
(such sum, the "Controlled Payment Amount" for
such Monthly Period) and (c) the Class A In-
vested Amount on such Transfer Date will, on
each Transfer Date beginning with the Transfer
Date in the month following the commencement of
the Controlled Amortization Period be deposited
into the Distribution Account for distribution
to the Class A Holders. On each Transfer Date
during the Controlled Amortization Period after
the Distribution Date on which the Class A In-
vested Amount has been paid in full, an amount
equal to the lesser of (a) Available Investor
Principal Collections for the related Monthly
S-7
<PAGE>
Period and (b) the Class B Invested Amount on
such Transfer Date will be deposited into the
Distribution Account for distribution to the
Class B Holders until the Class B Invested
Amount has been paid in full. If, for any
Monthly Period, the Available Investor Principal
Collections for such Monthly Period exceed the
applicable Controlled Payment Amount, the amount
of such excess will be first paid to the Collat-
eral Interest Holder to the extent of the Col-
lateral Monthly Principal and then will be
treated as Shared Principal Collections and al-
located to the holders of other Series of cer-
tificates within the same Group issued and out-
standing or, subject to certain limitations,
paid to the Transferor or deposited into the Ex-
cess Funding Account. See "Description of the
Certificates--Application of Collections" here-
in.
If the Class A Invested Amount is not paid in
full on the July 2001 Distribution Date (the
"Class A Final Scheduled Payment Date"), the
Early Amortization Period will commence. Al-
though it is anticipated that during the Con-
trolled Amortization Period prior to the payment
of the Class A Invested Amount in full, funds
will be distributed to the Class A Holders in an
amount equal to the applicable Controlled Amor-
tization Amount on each Distribution Date, no
assurance can be given in that regard. See "Ma-
turity Considerations" herein.
On the Class B Scheduled Payment Date, provided
that the Class A Invested Amount is paid in full
prior to such date and the Early Amortization
Period has not commenced, Available Investor
Principal Collections will be used to pay the
Class B Holders in respect of the Class B Inter-
est as described herein. If the Available In-
vestor Principal Collections are insufficient to
pay the Class B Invested Amount in full on the
Class B Scheduled Payment Date, the Early Amor-
tization Period will commence. Although it is
anticipated that scheduled principal will be
available for distribution to the Class B Hold-
ers on the Class B Scheduled Payment Date, no
assurance can be given in that regard. See "Ma-
turity Considerations" herein.
If an Early Amortization Event occurs during the
Controlled Amortization Period, the Early Amor-
tization Period will commence.
Other Series offered by the Trust may or may not
have amortization or accumulation periods like
the Controlled Amortization Period for the Cer-
tificates, and such periods may have different
lengths and begin on different dates than such
Controlled Amortization Period. Thus, certain
Series may be in their revolving periods while
others are in periods during which collections
of Principal Receivables are distributed to or
held for the benefit of certificateholders of
such other Series. In addition, other Series may
allocate Principal Receivables based upon dif-
ferent investor percentages. See "Description of
the Certificates--New Issuances" in the Prospec-
tus for a discussion of the potential terms of
any other Series.
S-8
<PAGE>
EARLY AMORTIZATION PERIOD... During the period from the day on which an Early
Amortization Event has occurred and ending on
the earlier of (a) the payment of the Invested
Amount in full and (b) the Series 1996-A Termi-
nation Date (the "Early Amortization Period"),
Available Investor Principal Collections will be
distributed monthly on each Distribution Date to
the Class A Holders and, following payment of
the Class A Invested Amount in full, to the
Class B Holders and, following payment of the
Class B Invested Amount in full, to the Collat-
eral Interest Holder beginning with the Distri-
bution Date in the month following the commence-
ment of the Early Amortization Period. See "De-
scription of the Certificates--Early Amortiza-
tion Events" herein and in the Prospectus for a
discussion of the events which might lead to the
commencement of the Early Amortization Period.
SUBORDINATION OF THE CLASS
B CERTIFICATES AND THE
COLLATERAL INTEREST........
The Class B Certificates and the Collateral In-
terest will be subordinated, as described here-
in, to the extent necessary to fund payments
with respect to the Class A Certificates as de-
scribed herein. In addition, the Collateral In-
terest will be subordinated to the extent neces-
sary to fund certain payments with respect to
the Class B Certificates. Additional Enhancement
for the Certificates will be provided in the
form of the Cash Collateral Account. If the
Class B Invested Amount, the Collateral Interest
and the Available Cash Collateral Amount are re-
duced to zero, the Class A Holders will bear di-
rectly the credit and other risks associated
with their interest in the Trust. If the Collat-
eral Interest and the Available Cash Collateral
Amount are reduced to zero, the Class B Holders
will bear directly the credit and other risks
associated with their interest in the Trust. To
the extent the Class B Invested Amount is re-
duced, the percentage of collections of Finance
Charge Receivables allocable to the Class B
Holders in subsequent Monthly Periods will be
reduced. Such reductions of the Class B Invested
Amount will thereafter be reimbursed and the
Class B Invested Amount increased on each Trans-
fer Date by the amount, if any, of Excess Spread
for such Transfer Date available for that pur-
pose. To the extent the amount of such reduction
in the Class B Invested Amount is not reim-
bursed, the amount of principal and interest
distributable to the Class B Holders will be re-
duced. See "Description of the Certificates--
Subordination" herein.
ADDITIONAL AMOUNTS
AVAILABLE TO HOLDERS.......
With respect to any Transfer Date, Excess Spread
and any Required Draw Amount will be applied to
fund the Class A Required Amount and the Class B
Required Amount, if any. The "Class A Required
Amount" means the amount, if any, by which the
sum of (a) the Class A Monthly Interest for such
Transfer Date, (b) the Class A Deficiency
Amount, if any, for such Transfer Date, (c) the
Class A Additional Interest, if any, for such
Transfer Date, (d)
S-9
<PAGE>
the Class A Servicing Fee for the prior Monthly
Period, (e) the Class A Servicing Fee, if any,
due but not paid on any prior Transfer Date, (f)
the Class A Investor Default Amount, if any, for
such Transfer Date and (g) the Class A Uncovered
Dilution Amount for the related Monthly Period,
exceeds the Class A Available Funds for the re-
lated Monthly Period. The "Class B Required
Amount" means the amount, if any, equal to the
sum of (i) the amount, if any, by which the sum
of (A) the Class B Monthly Interest for such
Transfer Date, (B) the Class B Deficiency
Amount, if any, for such Transfer Date, (C) the
Class B Additional Interest, if any, for such
Transfer Date, (D) the Class B Servicing Fee for
the prior Monthly Period and (E) the Class B
Servicing Fee, if any, due but not paid on any
prior Transfer Date, exceeds the Class B Avail-
able Funds for the related Monthly Period and
(ii) the sum of (A) the Class B Investor Default
Amount, if any, for such Transfer Date and (B)
the Class B Uncovered Dilution Amount for the
related Monthly Period. "Excess Spread" for any
Transfer Date will equal the sum of (1) the ex-
cess of (A) Class A Available Funds for the re-
lated Monthly Period over (B) the sum of the
amounts referred to in clauses (a) through (g)
in the definition of "Class A Required Amount"
above, (2) the excess of (A) Class B Available
Funds for the related Monthly Period over (B)
the sum of the amounts referred to in clause (i)
in the definition of "Class B Required Amount"
above, (3) Collateral Available Funds for the
related Monthly Period not used, in certain cir-
cumstances, to pay the Collateral Interest Ser-
vicing Fee for the prior monthly period and the
Collateral Interest Servicing Fee, if any, due
but not paid on any prior Transfer Date and (4)
Excess Finance Charge Collections, if any, allo-
cated to the Series Interest pursuant to the
Pooling Agreement as described under "--Sharing
of Excess Finance Charge Collections" herein and
in the Prospectus. For each Transfer Date, to
the extent available, a Required Draw Amount may
be withdrawn from the Cash Collateral Account in
order to cover certain amounts that are not cov-
ered by available Excess Spread for that Trans-
fer Date. See "Description of the Certificates--
Cash Collateral Account; Required Enhancement
Amount" herein.
If, on any Transfer Date, Excess Spread and any
Available Cash Collateral Amount is less than
the Class A Required Amount, then Reallocated
Principal Collections allocable first to the
Collateral Interest and then to the Class B In-
terest with respect to the related Monthly Pe-
riod will be used to fund the remaining Class A
Required Amount. If Reallocated Principal Col-
lections with respect to such Monthly Period are
insufficient to fund the remaining Class A Re-
quired Amount for the related Transfer Date,
then the Collateral Interest (after giving ef-
fect to reductions for any Collateral Charge-
Offs and Reallocated Principal Collections on
such Transfer Date) will be reduced by the
amount of such deficiency (but not by more than
the Class A Reduction Amount
S-10
<PAGE>
for such Monthly Period). In the event that such
reduction would cause the Collateral Interest to
be a negative number, the Collateral Interest
will be reduced to zero, and the Class B In-
vested Amount (after giving effect to reductions
for any Class B Investor Charge-Offs and any Re-
allocated Class B Principal Collections on such
Transfer Date) will be reduced by the amount by
which the Collateral Interest would have been
reduced below zero (but not by more than the
Class A Reduction Amount for such Monthly Peri-
od). In the event that such reduction would
cause the Class B Invested Amount to be a nega-
tive 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 more than the Class A Reduction
Amount for such Monthly Period) (such reduction,
a "Class A Investor Charge-Off"). If the Collat-
eral Interest and the Class B Invested Amount
are reduced to zero, the Class A Holders will
bear directly the credit and other risks associ-
ated with their undivided interest in the Trust.
See "Description of the Certificates--Realloca-
tion of Cash Flows" and "--Defaulted Receiv-
ables; Dilutions" herein.
If, on any Transfer Date, Excess Spread and any
Available Cash Collateral Amount not required to
pay the Class A Required Amount and to reimburse
Class A Investor Charge-Offs is less than the
Class B Required Amount, Reallocated Principal
Collections allocable to the Collateral Interest
for the related Monthly Period not required to
pay the Class A Required Amount will be allo-
cated to fund the remaining Class B Required
Amount. If such remaining Reallocated Principal
Collections allocable to the Collateral Interest
with respect to such Monthly Period are insuffi-
cient to fund the remaining Class B Required
Amount for the related Transfer Date, then the
Collateral Interest (after giving effect to re-
ductions for any Collateral Charge-Offs, Reallo-
cated Principal Collections and any adjustments
made thereto for the benefit of the Class A
Holders) will be reduced by the amount of such
deficiency (but not by more than the Class B Re-
duction Amount for such Monthly Period). If such
reduction would cause the Collateral Interest to
be a negative number, the Collateral Interest
will be reduced to zero, and the Class B In-
vested Amount will be reduced by the amount by
which the Collateral Interest would have been
reduced below zero (but not by more than the ex-
cess, if any, of the Class B Reduction Amount
for such Monthly Period over such reduction in
the Collateral Interest with respect to such
Monthly Period) (such reduction, a "Class B In-
vestor Charge-Off"). In the event of a reduction
of the Class A Invested Amount, the Class B In-
vested Amount or the Collateral Interest, the
amount of principal and interest available to
fund payments with respect to the Class A Cer-
tificates and the Class B Certificates will be
decreased. See "Description of the Certifi-
cates--Reallocation of Cash Flows" and "--De-
faulted Receivables; Dilutions" herein.
S-11
<PAGE>
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 Investor Holders.
The Cash Collateral Account will have a begin-
ning balance of $13,750,000 (which amount repre-
sents 2.5% of the initial Invested Amount). See
"Description of the Certificates--Application of
Collections--Excess Spread" and "--Cash Collat-
eral Account; Required Enhancement Amount" here-
in. To the extent set forth herein, withdrawals
will be made from the Cash Collateral Account to
pay, first, the Class A Required Amount and then
to pay the Class B Required Amount. See "De-
scription of the Certificates--Reallocation of
Cash Flows" and "--Defaulted Receivables; Dilu-
tions" herein. If, for any Transfer Date, there
is an Enhancement Surplus, an amount equal to
the excess (if any) of the amount of such En-
hancement Surplus over the amount of the Collat-
eral Interest will be withdrawn from the Cash
Collateral Account and applied in accordance
with the Loan Agreement. See "Description of the
Certificates--Cash Collateral Account; Required
Enhancement Amount" herein.
REQUIRED ENHANCEMENT The "Required Enhancement Amount" with respect to
AMOUNT..................... any Transfer Date means with respect to each
Transfer Date, the greater of (a) an amount
equal to 13% of the Invested Amount on such
Transfer Date, after taking into account pay-
ments (including payments on the Collateral In-
terest) to be made on the related Distribution
Date and (b) $16,500,000; provided, that (x) if,
on or prior to such Transfer Date, there have
been any Required Draw Amounts or any reductions
in the Collateral Interest pursuant to clauses
(c), (d) or (e) of the definition of such term,
or an Early Amortization Event occurs with re-
spect to Series 1996-A, then the Required En-
hancement Amount for such Transfer Date shall,
subject to clauses (y) and (z), equal the Re-
quired Enhancement Amount on the Transfer Date
immediately preceding such reduction, Required
Draw Amount or Early Amortization Event, (y) in
no event will the Required Enhancement Amount
exceed the sum of the outstanding principal
amounts of (i) the Class A Certificates and (ii)
the Class B Certificates, each as of the last
day of the Monthly Period preceding such Trans-
fer Date after taking into account the payments
to be made on the related Distribution Date and
(z) the Required Enhancement Amount may be re-
duced or increased at Transferor's option at any
time if the Transferor, the Servicer, the Col-
lateral Interest Holder and the Trustee have
been provided evidence that the Rating Agency
Condition has been satisfied. See "Description
of the Certificates--Cash Collateral Account;
Required Enhancement Amount" herein.
If on any Transfer Date, the Available Enhance-
ment Amount is less than the Required Enhance-
ment Amount, certain Excess Spread amounts, if
available, will be used to increase the Collat-
eral Interest or the Available Cash Collateral
Amount to the extent of such shortfall. After
such application of those Excess Spread amounts,
any remaining Excess Spread amounts will be ap-
plied in accordance with the Loan Agreement
among the Trustee, the
S-12
<PAGE>
Transferor, the Servicer and the Collateral In-
terest Holder (the "Loan Agreement") or paid to
the Transferor and will not be available to the
Holders.
SHARING OF EXCESS FINANCE
CHARGE COLLECTIONS.........
To the extent that collections of Finance Charge
Receivables allocated to the Series Interest
(and certain other amounts that are to be
treated as collections of Finance Charge Receiv-
ables allocated to the Series Interest) are not
needed to make payments in respect of the Series
Interest as described herein under "Description
of the Certificates--Application of Collec-
tions," such Excess Finance Charge Collections
will be applied to make payments with respect to
other Series in Group One in accordance with the
Pooling Agreement. In addition, Excess Finance
Charge Collections otherwise allocable to cer-
tain other Series in Group One, to the extent
not required to make payments in respect of such
Series, may be applied to cover shortfalls in
amounts payable from Excess Spread as described
under "Description of the Certificates--Applica-
tion of Collections" herein.
SHARED PRINCIPAL To the extent that collections of Principal Re-
COLLECTIONS................ ceivables allocated to the Series Interest are
not needed to make payments on the Series Inter-
est, such collections ("Shared Principal Collec-
tions") will be allocated to cover certain prin-
cipal payments due to or for the benefit of
certificateholders of other Series in Group One
or, under certain circumstances, deposited into
the Excess Funding Account. Any such realloca-
tion or deposit will not result in a reduction
in the Invested Amount with respect to Series
1996-A. In addition, collections of Principal
Receivables and certain other amounts otherwise
allocable to other Series in Group One, to the
extent such collections are not needed to make
payments to or deposits for the benefit of the
certificateholders of such other Series, may be
applied to cover principal payments due to or
for the benefit of the holders of the Class A
Certificates and the Class B Certificates or the
Collateral Interest Holder. See "Description of
the Certificates--Shared Principal Collections"
herein.
PAIRED SERIES............... Series 1996-A may be paired with one or more
other Series (each a "Paired Series"). If a
Paired Series is issued with respect to Series
1996-A, following the issuance of such Paired
Series, as the Invested Amount is reduced, the
invested amount of the Paired Series may in-
crease by an equal amount. This will have the
effect of increasing the invested amount of the
Paired Series by an amount that otherwise would
have increased the Transferor Amount. If an
Early Amortization Event occurs with respect to
any such Paired Series prior to the payment in
full of the Certificates, the allocation per-
centages used to determine the Certificates'
share of principal collections may be reduced,
which may delay the final payment of principal
to the Holders. See "Maturity Considerations--
Paired Series," "Description of the Certifi-
cates--Paired Series" and "Description of the
Certificates--Allocation Percentages" herein.
S-13
<PAGE>
OPTIONAL REPURCHASE......... The Series Interest will be subject to optional
repurchase by the Transferor on any Distribution
Date on or after the Distribution Date on which
the Invested Amount is reduced to an amount less
than or equal to $27,500,000 (5% of the initial
Invested Amount), if certain conditions set
forth in the Pooling Agreement are met. The re-
purchase price will be equal to the sum of the
Invested Amount and all accrued and unpaid in-
terest on the Certificates and the Collateral
Interest through the day preceding the Distribu-
tion Date on which the repurchase occurs. See
"The Pooling and Servicing Agreement--Termina-
tion of the Trust" in the Prospectus.
TAX STATUS.................. Special Tax Counsel will opine on the Closing
Date that under existing law the Certificates
will be characterized as debt for Federal income
tax purposes and the Trust will not be an asso-
ciation or publicly traded partnership taxable
as a corporation. Under the Pooling Agreement,
the Transferor, the Servicer, the Holders and
the Certificate Owners will agree to treat the
Certificates as debt for Federal, state, local
and foreign income and franchise tax purposes.
See "U.S. Federal Income Tax Consequences" in
the Prospectus for additional information con-
cerning the application of Federal income tax
laws.
ERISA CONSIDERATIONS........ Subject to considerations described below, the
Class A Certificates may be eligible for pur-
chase by employee benefit plan investors. Under
a regulation issued by the Department of Labor,
the Trust's assets would not be deemed "plan as-
sets" of an employee benefit plan holding the
Class A Certificates if certain conditions are
met, including that the Class A Certificates
must be held, upon completion of the public of-
fering made hereby, by at least 100 investors
who are independent of the Transferor and of one
another. Based on information provided by any
underwriter, agent or dealer involved in the
distribution of the Class A Certificates offered
hereby, the Transferor will notify the Trustee
as to whether or not the Class A Certificates
will be expected to be held by at least 100 sep-
arately named persons at the conclusion of the
offering. The Transferor anticipates that the
other conditions of the regulation will be met.
If the Trust's assets were deemed to be "plan
assets" of an employee benefit plan investor
(e.g., if the 100 independent investor criterion
is not satisfied), violations of the "prohibited
transaction" rules of the Employee Retirement
Income Security Act of 1974, as amended
("ERISA"), could result and generate excise tax
and other liabilities under ERISA and section
4975 of the Internal Revenue Code of 1986, as
amended (the "Code"), unless a statutory, regu-
latory or administrative exemption is available.
It is uncertain whether existing exemptions from
the "prohibited transaction" rules of ERISA
would apply to all transactions involving the
Trust's assets. Accordingly, fiduciaries or
other persons contemplating purchasing the Cer-
tificates on behalf or with "plan assets" of any
employee
S-14
<PAGE>
benefit plan should consult their counsel before
making a purchase. See "ERISA Considerations" in
the Prospectus.
The Underwriters currently do not expect that the
Class B Certificates will be held by at least
100 such persons and, therefore, do not expect
that such Class B Certificates will qualify as
publicly-offered securities under the regulation
referred to in the preceding paragraph. Accord-
ingly, the Class B Certificates may not be ac-
quired by (a) any employee benefit plan that is
subject to ERISA, (b) any plan or other arrange-
ment (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 regula-
tion by reason of any such plan's investment in
the entity. By its acceptance of a Class B Cer-
tificate or an interest therein, each Class B
Holder and Certificate Owner will be deemed to
have represented and warranted that it is not
subject to the foregoing limitation.
CLASS A CERTIFICATE RATING.. 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 Rating Agency.
The rating of the Class A Certificates by a Rat-
ing Agency reflects such Rating Agency's assess-
ment of the likelihood that the Holders of the
Class A Certificates will receive the payments
of interest and principal required to be made
under the Pooling Agreement, which in turn is
based primarily on the value of the Receivables
and the terms of the Class B Certificates, the
Collateral Interest and the Cash Collateral Ac-
count. A rating is not a recommendation to buy,
sell or hold securities and may be subject to
revision or withdrawal at any time by the as-
signing Rating Agency. Each rating should be
evaluated independently of any other rating. See
"Risk Factors--Limited Nature of Rating" in the
Prospectus for a discussion of other limitations
to credit ratings.
CLASS B CERTIFICATE RATING.. 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
Rating Agency. The rating of the Class B Certif-
icates by a Rating Agency reflects such Rating
Agency's assessment of the likelihood that the
Holders of the Class B Certificates will receive
the payments of interest and principal required
to be made under the Pooling Agreement, which in
turn is based primarily on the value of the Re-
ceivables and the terms of the Collateral Inter-
est and the Cash Collateral Account. A rating is
not a recommendation to buy, sell or hold secu-
rities and may be subject to revision or with-
drawal at any time by the assigning Rating Agen-
cy. Each rating should be evaluated indepen-
dently of any other rating. See "Risk Factors--
Limited Nature of Rating" in the Prospectus for
a discussion of other limitations to credit rat-
ings.
S-15
<PAGE>
WFN'S CREDIT CARD PORTFOLIO
GENERAL
The Receivables to be conveyed to the Trust by WFN pursuant to the Pooling
Agreement have been or will be generated from transactions made by holders of
selected credit card accounts included in the Trust Portfolio. A description
of the Bank's credit card business is contained in the Prospectus under the
heading "The WFN Credit Card Business."
The Receivables arise in a portfolio (the "Trust Portfolio") of consumer
open end credit card accounts serviced by WFN. Initially the Trust Portfolio
is made up of Eligible Accounts included in the private label credit card
programs of Lane Bryant, Inc., Lerner New York, Inc., Express, Inc.,
Structure, Inc., Victoria's Secret Stores, Inc., Victoria's Secret Catalogue,
Inc., Limited Stores, Inc., Abercrombie & Fitch, Inc., Henri Bendel, Inc. and
Brylane L.P. (which includes programs related to the Lane Bryant, Lerner New
York and Roamans catalogues and initially excludes cards related to the
Kingsize and Sue Brett catalogues) and the Limited Fashion Group credit card
program (the "Identified Portfolio"), which make up a substantial majority of
the credit card accounts serviced by WFN.
COMPOSITION BY CREDIT CARD PROGRAM
IDENTIFIED PORTFOLIO
<TABLE>
<CAPTION>
PERCENT OF
RECEIVABLES
OUTSTANDING
-----------
<S> <C>
Express/Limited Fashion Group....................................... 20.81%
Brylane(/1/)........................................................ 18.79%
Lane Bryant......................................................... 17.62%
Lerner.............................................................. 14.90%
Victoria's Secret Stores/Catalogue.................................. 11.80%
Limited............................................................. 9.22%
Structure........................................................... 5.82%
Henri Bendel........................................................ 0.66%
Abercrombie & Fitch................................................. 0.38%
-------
Total........................................................... 100.00%
</TABLE>
- --------
(1) Includes programs related to Lane Bryant, Lerner New York and Roamans
catalogues.
BILLING AND PAYMENTS
WFN generates and mails directly to cardholders monthly statements
summarizing account activity and processes cardholder monthly payments.
Customers receive a grace period of approximately 30 days in order to make
payments in respect of purchases and thus avoid finance charges. Currently,
cardholders in the programs included in the Identified Portfolio must make a
monthly minimum payment at least equal to 10% of the account balance, as well
as any past due amounts. Such minimum monthly payments are subject to a $10
minimum payment ($20 for Henri Bendel). The minimum monthly payment may be
changed by WFN from time to time at its discretion.
Finance charges assessed on the accounts are based on the average daily
balance outstanding on an account during a monthly billing period and are
calculated by multiplying the average daily balance by the applicable periodic
finance charge rate. Finance charges are assessed from the date of purchase
although a grace period of approximately 30 days is available to avoid the
finance charge if the account is paid in full by the due date. Payments are
generally applied in the following order: (i) to fees assessed on the account,
(ii) to finance charges, and (iii) to the unpaid principal balance of
purchases allocated first to the longest outstanding receivable. The annual
finance charge rate is currently 22.8%, with the exception of the Henri Bendel
private label credit card, which carries a 21.6% annual finance charge rate in
order to accommodate the slightly more upscale customer focus. Finance charge
rates may be changed by WFN from time to time at its discretion. WFN offers a
lower prime-based rate to certain Cardholders currently making up a small
percentage of the accounts.
S-16
<PAGE>
WFN generally does not assess annual membership fees on accounts. A limited
number of accounts require payment of annual fees (generally ranging from $20
to $30), although under various marketing programs these fees may be waived or
rebated. For most credit card accounts, WFN also assesses late fees (ranging
from $5 to $10 depending on the past due payment amount) and returned check
charges (generally $10).
DELINQUENCY AND LOSS EXPERIENCE
An account is considered delinquent if the minimum payment due is not
received by the billing due date. At that time, the account is given a status
of 30 days delinquent. Under current policies, a message requesting payment is
printed on a Cardholder's billing statement after a scheduled payment has been
missed. After an account becomes 30 days delinquent, a proprietary collection
scoring system automatically scores the risk of the account becoming more
delinquent and the account is assigned a collection strategy. The key measures
used to score an account are (i) age of account, (ii) number of previous
delinquencies, (iii) outstanding balance, and (iv) previous payment history.
The strategy dictates the contact schedule and collections priority for the
account.
WFN may enter into arrangements with cardholders to extend or otherwise
change payment schedules under plans proposed by various consumer credit
counseling agencies which can include a reduction of monthly minimum payments
and a suspension of finance charge accruals and late fees.
Efforts to collect delinquent receivables are made by the WFN collection
department and, if necessary, by collection agencies and outside attorneys.
The collections departments consist of approximately 506 full-time
equivalents. New collectors undergo training which includes courses in
professional debt collection, the Fair Debt Collection Practices Act and
negotiating skills. These courses are also available on a "refresher" basis
for experienced collectors.
Specific collection actions include dunning letters, telephone calls using
automated dialing equipment, no action and sending the account to the mid-
range collections group. The mid-range collection staff handles the
intermediate to serious collection efforts. Unlike the auto-dial collections
staff, the mid-range collectors are responsible for their own individual
accounts and are reviewed accordingly. The mid-range collections group can
take past due accounts as early as 30 days past due.
Accounts are charged off when they become contractually 180 days past due,
in accordance with the policies set forth by the Office of the Comptroller of
the Currency. Accounts may be re-aged during delinquency if the obligor
demonstrates a willingness and ability to repay by making at least three
consecutive minimum payments and certain other conditions are satisfied.
Charging privileges on accounts of cardholders in bankruptcy are revoked
immediately upon official notification of the bankruptcy and the accounts are
charged off at the first billing date following official notification of the
bankruptcy. Accounts of cardholders may also be charged off prior to the
normal charge-off date upon the occurrence of certain events, such as the
death of the cardholder or if it is determined that charges on the account
were fraudulently made.
S-17
<PAGE>
The following tables set forth the delinquency and loss experience for each
of the periods shown for the Identified Portfolio of credit card accounts. The
Identified Portfolio's delinquency and loss experience is comprised of segments
of credit card accounts which may, when taken individually, have delinquency
and loss characteristics different from those of the overall Identified
Portfolio of credit card accounts. There can be no assurance that the
delinquency and loss experience for the Receivables in the future will be
similar to the historical experience of the Identified Portfolio set forth
below.
DELINQUENCY EXPERIENCE
IDENTIFIED PORTFOLIO(/1/)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
JANUARY 31,
-----------------------------------------------------------------------------------------------
1996 1995 1994 1993
----------------------- ----------------------- ----------------------- -----------------------
PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
OF TOTAL OF TOTAL OF TOTAL OF TOTAL
RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Receivables
Outstanding........... $1,349,658 100.00% $1,286,174 100.00% $1,030,104 100.00% $756,826 100.00%
Receivables Delinquent:
31-60 Days........... 67,308 4.99% 62,920 4.89% 49,997 4.85% 29,258 3.87%
61-90 Days .......... 27,328 2.02% 23,359 1.82% 17,718 1.72% 10,566 1.40%
91 or More Days...... 43,599 3.23% 36,301 2.82% 24,081 2.34% 17,041 2.25%
Total............... $ 138,235 10.24% $ 122,580 9.53% $ 91,796 8.91% $ 56,865 7.51%
</TABLE>
- --------
(1) The Receivables Outstanding (and Receivables Delinquent within each
category) in each account are measured as of the most recent applicable
billing cycle end date on or prior to January 31 in the specified year.
LOSS EXPERIENCE
IDENTIFIED PORTFOLIO
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FISCAL YEAR(/1/)
------------------------------------------
1995 1994 1993 1992
---------- ---------- -------- --------
<S> <C> <C> <C> <C>
Average Receivables
Outstanding(/2/).................. $1,248,885 $1,085,668 $830,894 $655,645
Total Gross Charge-Offs(/3/)....... 112,645 80,926 55,163 51,363
Recoveries......................... 18,738 14,939 12,022 11,053
Net Charge-Offs.................... 93,907 65,987 43,141 40,310
Net Charge-Offs as a percentage of
Average Receivables Outstanding... 7.52% 6.08% 5.19% 6.15%
</TABLE>
- --------
(1) WFN's fiscal year ends on the Saturday closest to January 31 of each
calendar year. A fiscal year is designated by the calendar year in which it
begins.
(2) Average Receivables Outstanding is the average of the receivables balances
at the beginning of each month in the period indicated.
(3) Total Gross Charge-Offs includes charge-off of principal, interest and
fees.
S-18
<PAGE>
REVENUE EXPERIENCE
The following table sets forth the total revenues from finance charges and
fees billed with respect to the Identified Portfolio for each of the periods
shown. The figures in the table represent amounts billed to accountholders
before deductions for charge-offs, returned merchandise, and customer disputes
or other expenses and reductions due to fraud.
REVENUE EXPERIENCE
IDENTIFIED PORTFOLIO
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FISCAL YEAR(/1/)
------------------------------------------
1995 1994 1993 1992
---------- ---------- -------- --------
<S> <C> <C> <C> <C>
Average Receivables
Outstanding(/2/).................. $1,248,885 $1,085,668 $830,894 $655,645
Total Finance Charges and
Fees(/3/)......................... 284,016 243,825 188,165 150,101
Total Finance Charges and Fees as a
percentage of Average Receivables
Outstanding....................... 22.74% 22.46% 22.65% 22.89%
</TABLE>
- --------
(1) WFN's fiscal year ends on the Saturday closest to January 31 of each
calendar year. A fiscal year is designated by the calendar year in which
it begins.
(2) Average Receivables Outstanding is the average of the receivables balances
at the beginning of each month in the period indicated.
(3) Fees include late fees and return check fees (which are, under the terms
of the Pooling Agreement, allocated to the Trust).
THE RECEIVABLES
The Receivables conveyed to the Trust initially arise in all of the Eligible
Accounts in the Identified Portfolio. Pursuant to the Pooling Agreement, the
Transferor has the right, subject to certain limitations and conditions set
forth therein, to designate from time to time Additional Accounts and to
transfer to the Trust all Receivables of such Additional Accounts, whether
such Receivables are then existing or thereafter created. Any Additional
Accounts designated pursuant to the Pooling Agreement must be Eligible
Accounts as of the date the Transferor designates such accounts as Additional
Accounts. Certain accounts ("Automatic Additional Accounts") are automatically
designated to the Trust upon their creation. In addition, the Transferor will
be required to designate certain other accounts ("Supplemental Accounts") to
the extent available. See "Risk Factors--Effects of Additional Trust Assets",
"The Receivables" and "The Pooling and Servicing Agreement--Addition of Trust
Assets" in the Prospectus. The "Required Retained Transferor Percentage" for
purposes of Series 1996-A is 7%. However, during the months of November,
December and January of each year, the Minimum Transferor Amount will be
determined as if the Required Retained Transferor Percentage were 9%.
Furthermore, pursuant to the Pooling Agreement, the Transferor will have the
right (subject to certain limitations and conditions) to designate certain
Removed Accounts and to require the Trustee to reconvey all Receivables in
such Removed Accounts to the Transferor, whether such Receivables are then
existing or thereafter created. See "The Receivables" and "The Pooling and
Servicing Agreement--Removal of Accounts" in the Prospectus. Throughout the
term of the Trust, the Accounts from which the Receivables arise
(collectively, the "Trust Portfolio") will be the Accounts designated by the
Transferor on the Trust Cut Off Date plus any Additional Accounts minus any
Removed Accounts. As of the Trust Cut Off Date and, with respect to
Receivables in Additional Accounts, as of the related date of their conveyance
to the Trust, and on the date any new Receivables are created, the Transferor
has represented and warranted and will represent and warrant to the Trust that
the Receivables meet the eligibility requirements specified in the Pooling
Agreement. See "The Pooling and Servicing Agreement--Representations and
Warranties" in the Prospectus.
S-19
<PAGE>
As of the beginning of the day on April 1, 1996, the Receivables in the
Trust Portfolio made up approximately 99.4% of the receivables in the
Identified Portfolio. The receivables in the Identified Portfolio, as of the
beginning of such day, included $1,241,274,945 of principal receivables and
$26,271,018 of finance charge receivables. The accounts in the Identified
Portfolio had an average principal receivable balance of $200.65 and an
average credit limit of $678.00. The percentage of the aggregate total
receivable balance to the aggregate total credit limit was 12.6%. The average
age of such accounts was approximately 40 months. As of the beginning of the
day on April 1, 1996, cardholders whose accounts were included in the
Identified Portfolio had billing addresses in all 50 States and the District
of Columbia (and less than 1% had billing addresses outside the United
States).
The following tables summarize the Identified Portfolio by various criteria
as of the beginning of the day on April 1, 1996. Because the future
composition of the Identified Portfolio may change over time, these tables are
not necessarily indicative of the composition of the Identified Portfolio at
any subsequent time. In each of these tables, the numbers of accounts and
receivables outstanding in each account are measured as of the most recent
applicable billing cycle end date on or prior to April 1, 1996. These tables
exclude $3,883,351 in receivables that were subject to promotional payment
deferral programs as of the most recent applicable billing cycle end date. In
addition, except as otherwise indicated, these tables exclude accounts that
were flagged by WFN as a bankruptcy, fraud or deceased write-off subsequent to
the applicable billing cycle end date.
COMPOSITION BY ACCOUNT BALANCE
IDENTIFIED PORTFOLIO
<TABLE>
<CAPTION>
PERCENT
OF PERCENT OF
NUMBER OF NUMBER OF RECEIVABLES RECEIVABLES
ACCOUNT BALANCE RANGE ACCOUNTS ACCOUNTS OUTSTANDING OUTSTANDING
- --------------------- ---------- --------- -------------- -----------
<S> <C> <C> <C> <C>
Credit Balance................. 174,560 0.60% $ (5,618,266) -0.45%
No Balance..................... 22,708,193 78.62% 0 0.00%
$.01 - $50.00.................. 1,169,579 4.05% 32,920,255 2.66%
$50.01 - $100.00............... 1,140,998 3.95% 84,613,751 6.83%
$100.01 - $150.00.............. 838,325 2.90% 103,937,073 8.39%
$150.01 - $250.00.............. 1,115,278 3.86% 219,113,380 17.68%
$250.01 - $350.00.............. 679,379 2.35% 201,147,288 16.23%
$350.01 - $500.00.............. 534,275 1.85% 222,284,463 17.94%
$500.01 - $1,000.00............ 467,633 1.62% 310,685,763 25.07%
$1,000.01 - $1,500.00.......... 47,544 0.16% 55,356,454 4.47%
$1,500.01 or more.............. 7,766 0.03% 14,821,035 1.20%
---------- ------- -------------- -------
Total........................ 28,883,530 100.00% $1,239,261,196 100.00%
========== ======= ============== =======
</TABLE>
S-20
<PAGE>
COMPOSITION BY CREDIT LIMIT
IDENTIFIED PORTFOLIO
<TABLE>
<CAPTION>
PERCENT
OF PERCENT OF
NUMBER OF NUMBER OF RECEIVABLES RECEIVABLES
CREDIT LIMIT BALANCE ACCOUNTS ACCOUNTS OUTSTANDING OUTSTANDING
- -------------------- ---------- --------- -------------- -----------
<S> <C> <C> <C> <C>
$0.............................. 2,432,453 8.42% $ 136,522,446 11.02%
$.01 - $100.00.................. 1,229,182 4.26% 16,740,180 1.35%
$100.01 - $250.00............... 2,542,895 8.80% 66,776,813 5.39%
$250.01 - $350.00............... 2,143,712 7.42% 67,398,298 5.44%
$350.01 - $500.00............... 6,103,322 21.13% 149,063,680 12.03%
$500.01 - $750.00............... 4,430,632 15.34% 194,393,720 15.69%
$750.01 - $1,000,000............ 7,933,356 27.47% 296,169,728 23.90%
$1,000.01 - $1,250.00........... 1,076,016 3.73% 151,383,999 12.22%
$1,250.01 - $1,500.00........... 553,920 1.92% 85,404,571 6.89%
$1,500.01 - $2,000.00........... 347,767 1.20% 63,008,679 5.08%
$2,000.01 - $2,500.00........... 38,949 0.13% 7,776,458 0.63%
$2,500.01 or more............... 51,326 0.18% 4,622,624 0.37%
---------- ------- -------------- -------
Total......................... 28,883,530 100.00% $1,239,261,196 100.00%
========== ======= ============== =======
</TABLE>
COMPOSITION BY PERIOD OF DELINQUENCY
IDENTIFIED PORTFOLIO(/1/)
<TABLE>
<CAPTION>
PERIOD OF DELINQUENCY PERCENT OF PERCENT OF
(DAYS CONTRACTUALLY NUMBER OF NUMBER OF RECEIVABLES RECEIVABLES
DELINQUENT) ACCOUNTS ACCOUNTS OUTSTANDING OUTSTANDING
- --------------------- ---------- ---------- -------------- -----------
<S> <C> <C> <C> <C>
Not Delinquent............... 27,336,140 94.52% $ 861,454,939 69.45%
Up to 30 Days................ 1,071,578 3.71% 250,592,150 20.20%
31 to 60 Days................ 273,946 0.95% 64,129,625 5.17%
61 to 90 Days................ 85,483 0.30% 21,122,226 1.70%
91 or more Days.............. 154,967 0.54% 43,151,247 3.48%
---------- ------- -------------- -------
Total...................... 28,922,114 100.00% $1,240,450,187 100.00%
========== ======= ============== =======
</TABLE>
- --------
(1) Includes accounts that were flagged by WFN as a bankruptcy, fraud or
deceased write-off subsequent to the applicable billing cycle end date.
COMPOSITION BY ACCOUNT AGE
IDENTIFIED PORTFOLIO
<TABLE>
<CAPTION>
PERCENT OF PERCENT OF
NUMBER OF NUMBER OF RECEIVABLES RECEIVABLES
AGE ACCOUNTS ACCOUNTS OUTSTANDING OUTSTANDING
- --- ---------- ---------- -------------- -----------
<S> <C> <C> <C> <C>
Not More than 12 Months........ 5,455,373 18.89% $ 263,380,986 21.25%
Over 12 Months to 24 Months.... 5,970,897 20.67% 285,092,832 23.01%
Over 24 Months to 36 Months.... 4,810,585 16.66% 214,076,445 17.27%
Over 36 Months to 48 Months.... 2,171,119 7.52% 96,230,330 7.77%
Over 48 Months to 60 Months.... 1,351,010 4.68% 66,050,744 5.33%
Over 60 Months................. 9,124,546 31.59% 314,429,859 25.37%
---------- ------- -------------- -------
Total........................ 28,883,530 100.00% $1,239,261,196 100.00%
========== ======= ============== =======
</TABLE>
S-21
<PAGE>
GEOGRAPHIC DISTRIBUTION OF ACCOUNTS
IDENTIFIED PORTFOLIO
<TABLE>
<CAPTION>
PERCENT
OF PERCENT OF
NUMBER OF NUMBER OF RECEIVABLES RECEIVABLES
STATE ACCOUNTS ACCOUNTS OUTSTANDING OUTSTANDING
- ----- ---------- --------- -------------- -----------
<S> <C> <C> <C> <C>
Alabama......................... 389,552 1.35% $ 22,085,446 1.78%
Alaska.......................... 32,920 0.11% 1,394,721 0.11%
Arizona......................... 366,994 1.27% 14,242,637 1.15%
Arkansas........................ 175,458 0.61% 10,090,040 0.81%
California...................... 2,829,127 9.79% 119,135,974 9.61%
Colorado........................ 348,363 1.21% 11,972,541 0.97%
Connecticut..................... 476,268 1.65% 17,192,042 1.39%
Delaware........................ 83,788 0.29% 4,162,526 0.34%
Florida......................... 1,790,780 6.20% 77,442,433 6.25%
Georgia......................... 689,700 2.39% 37,025,869 2.99%
Hawaii.......................... 45,746 0.16% 1,622,105 0.13%
Idaho........................... 86,989 0.30% 2,691,813 0.22%
Illinois........................ 1,518,611 5.26% 61,652,701 4.97%
Indiana......................... 549,072 1.90% 21,988,747 1.77%
Iowa............................ 250,910 0.87% 8,007,357 0.65%
Kansas.......................... 238,825 0.83% 9,125,706 0.74%
Kentucky........................ 324,314 1.12% 14,097,760 1.14%
Louisiana....................... 500,782 1.73% 26,725,375 2.16%
Maine........................... 100,911 0.35% 3,592,228 0.29%
Maryland........................ 660,368 2.29% 30,241,198 2.44%
Massachusetts................... 938,964 3.25% 32,698,427 2.64%
Michigan........................ 1,017,999 3.52% 42,198,587 3.41%
Minnesota....................... 497,287 1.72% 15,108,563 1.22%
Mississippi..................... 224,393 0.78% 13,467,950 1.09%
Missouri........................ 540,861 1.87% 21,797,560 1.76%
Montana......................... 41,334 0.14% 1,119,787 0.09%
Nebraska........................ 162,183 0.56% 5,830,873 0.47%
Nevada.......................... 119,132 0.41% 5,928,661 0.48%
New Hampshire................... 116,999 0.41% 3,903,533 0.31%
New Jersey...................... 1,147,409 3.97% 46,901,725 3.78%
New Mexico...................... 117,493 0.41% 4,899,673 0.40%
New York........................ 2,735,521 9.47% 123,322,915 9.95%
North Carolina.................. 698,441 2.42% 37,180,816 3.00%
North Dakota.................... 54,681 0.19% 1,519,764 0.12%
Ohio............................ 1,591,468 5.51% 63,088,707 5.09%
Oklahoma........................ 280,068 0.97% 11,931,173 0.96%
Oregon.......................... 250,206 0.87% 7,903,552 0.64%
Pennsylvania.................... 1,597,167 5.53% 67,897,006 5.48%
Rhode Island.................... 174,216 0.60% 6,725,118 0.54%
South Carolina.................. 341,442 1.18% 18,327,796 1.48%
South Dakota.................... 55,003 0.19% 1,584,344 0.13%
Tennessee....................... 493,146 1.71% 24,267,832 1.96%
Texas........................... 1,736,413 6.01% 92,538,372 7.47%
Utah............................ 173,517 0.60% 5,829,514 0.47%
Vermont......................... 47,122 0.16% 1,609,298 0.13%
Virginia........................ 802,143 2.78% 36,598,636 2.95%
Washington...................... 419,375 1.45% 15,102,253 1.22%
West Virginia................... 195,525 0.68% 7,681,319 0.62%
Wisconsin....................... 475,213 1.65% 13,912,554 1.12%
Wyoming......................... 32,883 0.11% 1,086,045 0.09%
District of Columbia............ 91,410 0.32% 5,344,931 0.43%
Guam............................ 5,237 0.02% 278,829 0.02%
Foreign......................... 249,801 0.86% 7,185,864 0.58%
---------- ------- -------------- -------
Total......................... 28,883,530 100.00% $1,239,261,196 100.00%
========== ======= ============== =======
</TABLE>
S-22
<PAGE>
MATURITY CONSIDERATIONS
The Pooling Agreement provides that Class A Holders will not commence
receiving payments of principal until the March 2001 Distribution Date, or
earlier in the event of an Early Amortization Event which results in the
commencement of the Early Amortization Period. The Class B Holders will not
begin to receive payments of principal until the final principal payment on
the Class A Certificates has been made.
Controlled Amortization Period. On each Transfer Date related to a Monthly
Period falling in the Controlled Amortization Period (which is scheduled to
begin at the opening of business on February 1, 2001) prior to the payment of
the Class A Invested Amount in full, an amount equal to, for each Monthly
Period, the least of (a) the Available Investor Principal Collections, (b) the
"Controlled Payment Amount" for such Monthly Period (which equals the sum of
the Controlled Amortization Amount for such Monthly Period and any portion of
the Controlled Amortization Amount for any prior Monthly Period that has not
been previously distributed to the Class A Holders) and (c) the Class A
Invested Amount, will be deposited into the Distribution Account for
distribution to the Class A Holders on the related Distribution Date. After
the Class A Invested Amount has been paid in full, Available Investor
Principal Collections, to the extent required, will be distributed to the
Class B Holders on each Distribution Date until the earlier of the date the
Class B Invested Amount has been paid in full and the Series 1996-A
Termination Date. After the Class A Invested Amount and the Class B Invested
Amount have each been paid in full (and, in certain circumstances, earlier, to
the extent of excess Available Investor Principal Collections), Available
Investor Principal Collections, to the extent required, will be distributed to
the Collateral Interest Holder on each Transfer Date until the earlier of the
date the Collateral Interest has been paid in full and the Series 1996-A
Termination Date. Although it is anticipated that collections of Principal
Receivables will be available on each Distribution Date related to a Monthly
Period falling in the Controlled Amortization Period to make a distribution to
the Class A Holders of the applicable Controlled Amortization Amount and that
the Class A Invested Amount will be paid to the Class A Holders by the Class A
Final Scheduled Payment Date and the Class B Invested Amount will be paid to
the Class B Holders on the Class B Scheduled Payment Date, respectively, no
assurance can be given in this regard. If the amount required to pay the Class
A Invested Amount or the Class B Invested Amount in full is not available on
the Class A Final Scheduled Payment Date or the Class B Scheduled Payment
Date, respectively, an Early Amortization Event will occur and the Early
Amortization Period will commence.
Early Amortization Period. If an Early Amortization Event occurs, the Early
Amortization Period will commence and, to the extent that the Class A Invested
Amount has not been paid in full, the Class A Holders will be entitled to
monthly payments of principal equal to the Available Investor Principal
Collections until the earlier of the date on which the Class A Certificates
have been paid in full and the Series 1996-A Termination Date. After the Class
A Certificates have been paid in full and if the Series 1996-A Termination
Date has not occurred, Available Investor Principal Collections will be paid
to the Class B Certificates on each Distribution Date until the earlier of the
date on which the Class B Certificates have been paid in full and the Series
1996-A Termination Date.
Early Amortization Events. An Early Amortization Event occurs, either
automatically or after specified notice, upon (a) the failure of the
Transferor to make certain payments or transfers of funds for the benefit of
the Holders within the time periods stated in the Pooling Agreement, (b)
material breaches of certain representations, warranties or covenants of the
Transferor, (c) certain insolvency events involving the Transferor or The
Limited, (d) a reduction in the average of the Portfolio Yields for any three
consecutive Monthly Periods to a rate that is less than the average of the
Base Rates for such period, (e) the Trust becoming an "investment company"
within the meaning of the Investment Company Act of 1940, as amended, (f) the
failure of the Transferor to convey Receivables arising under Supplemental
Accounts or Participation Interests to the Trust when required by the Pooling
Agreement, (g) the occurrence of a Servicer Default which would have a
material adverse effect on the Holders, (h) insufficient monies in the
Distribution Account to pay the Class A Invested Amount or the Class B
Invested Amount in full on the Class A Scheduled Payment Date or the Class B
Scheduled Payment Date, respectively, or (i) the Transferor becoming unable
for any reason to transfer Receivables to the Trust in accordance with the
provisions of the Pooling Agreement. See "Description of the Certificates--
Early Amortization Events" herein and in the Prospectus. The term "Base Rate"
means, with respect to any Monthly
S-23
<PAGE>
Period, the annualized percentage equivalent of a fraction, the numerator of
which is the sum of the Class A Monthly Interest, the Class B Monthly Interest
and the Collateral Monthly Interest, each for the related Distribution Period,
and the Investor Servicing Fee for such Monthly Period, and the denominator of
which is the Invested Amount as of the close of business on the last day of
such Monthly Period. The term "Portfolio Yield" means, with respect to any
Monthly Period, the annualized percentage equivalent of a fraction, the
numerator of which is the aggregate collections of Finance Charge Receivables
(including investment earnings on the Cash Collateral Account to be treated as
collections of Finance Charge Receivables) required to be deposited (before
giving effect to any netting) into a segregated trust account trust account
established and maintained by the Trustee (the "Finance Charge Account") and
allocable to the Certificates and the Collateral Interest for such Monthly
Period, calculated on a cash basis after subtracting the sum of the Investor
Default Amounts for such Monthly Period, and the denominator of which is the
Invested Amount as of the close of business on the last day of such Monthly
Period. If, because of an Early Amortization Event, the Early Amortization
Period begins earlier than the scheduled commencement of the Controlled
Amortization Period, Holders may receive distributions of principal earlier
than they otherwise would have, which may shorten the average life of the
Certificates. Holders may be unable to reinvest any such distributions of
principal at yields equaling yields on the Certificates.
Paired Series. The Transferor may cause the Trust to issue another Series as
a Paired Series with respect to Series 1996-A. Although no assurance can be
given as to whether such other Series will be issued and, if issued, the
specific terms thereof, the outstanding principal amount of such Series may
vary from time to time whether or not an Early Amortization Event occurs with
respect to Series 1996-A, and the interest rate with respect to certificates
of such other Series will be established on its date of issuance and may be
reset periodically. Further, the Early Amortization Events with respect to
such other Series may vary from the Early Amortization Events with respect to
Series 1996-A and may include Early Amortization Events which are unrelated to
the status of the Transferor, the Servicer or the Receivables, such as events
related to the continued availability and rating of certain Enhancement
Providers to such other Series. If an Early Amortization Event does occur with
respect to any such Paired Series prior to the payment in full of the
Certificates, the final payment of principal to the Holders may be delayed. In
particular, the numerator of the Fixed Allocation Percentage may be changed
upon the occurrence of an Early Amortization Event with respect to a Paired
Series resulting in a possible reduction of the percentage of Collections of
Principal Receivables allocated to the Holders and a possible delay in
payments to such Holders. See "Description of the Certificates--Allocation
Percentages" and "--Paired Series" herein.
Payment Rates. The following table sets forth the highest and lowest
cardholder monthly payment rates for the Identified Portfolio during any month
in the period shown and the average cardholder monthly payment rates for all
months during the periods shown, in each case calculated as a percentage of
total opening monthly account balances during the periods shown. Payment rates
shown in the table are based on amounts which would be deemed payments of
Principal Receivables and Finance Charge Receivables with respect to the
Accounts.
CARDHOLDER MONTHLY PAYMENT RATES
IDENTIFIED PORTFOLIO
<TABLE>
<CAPTION>
FISCAL YEAR(/1/)
---------------------------
1995 1994 1993 1992
------ ------ ------ ------
<S> <C> <C> <C> <C>
Lowest Month........................................ 17.12% 17.74% 17.31% 15.42%
Highest Month....................................... 19.84% 20.28% 19.42% 17.71%
Monthly Average..................................... 18.91% 18.93% 17.99% 16.57%
</TABLE>
- --------
(1) WFN's fiscal year ends on the Saturday closest to January 31 of each
calendar year. A fiscal year is designated by the calendar year in which
it begins.
Currently, cardholders in the programs included in the Trust Portfolio must
make a monthly minimum payment at least equal to 10% of the account balance,
as well as any past due amounts. Such minimum monthly payments are subject to
a $10 minimum payment ($20 for Henri Bendel). The minimum monthly payment may
be changed by WFN from time to time at its discretion and there can be no
assurance that the cardholder monthly payment rates in the future will be
similar to the historical experience set forth above. In addition, the amount
of collections of Receivables may vary from month to month due to seasonal
variations, general economic
S-24
<PAGE>
conditions and payment habits of individual cardholders. There can be no
assurance that collections of Principal Receivables with respect to the Trust
Portfolio will be similar to the historical experience set forth above or that
deposits into the Distribution Account, as applicable, will be made in
accordance with the applicable Controlled Amortization Amount. If an Early
Amortization Event occurs, the average life of the Certificates could be
significantly reduced or increased.
Because there may be a slowdown in the payment rate below the payment rates
used to determine the Controlled Amortization Amounts, or an Early
Amortization Event may occur which would initiate the Early Amortization
Period, there can be no assurance that the actual number of months elapsed
from the date of issuance of the Class A Certificates and the Class B
Certificates to their respective final Distribution Dates will equal the
expected number of months. See "Maturity Considerations" and "Risk Factors--
Payment and Maturity Considerations; Dependency on Cardholder Repayments" in
the Prospectus.
DESCRIPTION OF THE CERTIFICATES
The Certificates will be issued pursuant to the Pooling Agreement. Pursuant
to the Pooling Agreement, the Transferor and the Trustee may execute further
series supplements in order to issue additional Series. The following summary
of the Certificates does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, all of the provisions of the
Pooling Agreement. See "Description of the Certificates" in the Prospectus for
additional information concerning the Certificates and the Pooling Agreement.
GENERAL
The Certificates will represent the right to receive certain payments from
the assets of the Trust, including the right to receive the applicable
allocation percentage of all cardholder payments on the Receivables in the
Trust. Each Class A Certificate represents the right to receive payments of
interest at the Class A Rate for the related Distribution Period and payments
of principal in an amount equal to the Class A Monthly Principal on each
Distribution Date during the Controlled Amortization Period or, to the extent
of the Class A Invested Amount, on each Distribution Date during the Early
Amortization Period, funded from collections of Finance Charge Receivables and
Principal Receivables, respectively, allocated to the Class A Interest and
certain other available amounts. Each Class B Certificate represents the right
to receive payments of interest at the applicable Class B Rate for the related
Distribution Period, and payments of principal on the Class B Scheduled
Payment Date or, to the extent of the Class B Invested Amount, on each
Distribution Date during the Early Amortization Period after the Class A
Certificates have been paid in full, funded from collections of Finance Charge
Receivables and Principal Receivables, respectively, allocated to the Class B
Interest and certain other available amounts. In addition to representing the
right to payment from collections of Finance Charge Receivables and Principal
Receivables, each Class A Certificate also represents the right to receive
payments from Excess Spread, the Cash Collateral Account and certain
investment earnings thereon, Reallocated Principal Collections and Shared
Principal Collections and certain other available amounts (including, under
certain circumstances, amounts on deposit in the Excess Funding Account). In
addition to representing the right to payment from collections of Finance
Charge Receivables and Principal Receivables, each Class B Certificate also
represents the right to receive payments from Excess Spread, the Cash
Collateral Account and certain investment earnings thereon, Reallocated
Collateral Principal Collections and Shared Principal Collections and certain
other available amounts (including, under certain circumstances, amounts on
deposit in the Excess Funding Account). Payments of interest and principal
will be made, to the extent of funds available therefor, on each Distribution
Date on which such amounts are due to Holders in whose names the Certificates
were registered on the last business day of the calendar month preceding such
Distribution Date (each, a "Record Date").
The Class A Certificates and the Class B Certificates initially will be
represented by certificates registered in the name of Cede & Co., as nominee
of DTC. Unless and until Definitive Certificates are issued, all references
herein to actions by Class A Holders and/or Class B Holders will refer to
actions taken by DTC upon instructions from DTC Participants and all
references herein to distributions, notices, reports and statements to Class A
Holders and/or Class B Holders will refer to distributions, notices, reports
and statements to DTC or Cede &
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Co., as the registered holder of the Class A Certificates and the Class B
Certificates, as the case may be, for distribution to Certificate Owners in
accordance with DTC procedures. Holders may hold their Certificates through
DTC (in the United States) or Cedel or Euroclear (in Europe) if they are
participants of such systems, or indirectly through organizations that are
participants in such systems. Cede & Co., as nominee for DTC, will hold the
global Certificates. Cedel and Euroclear will hold omnibus positions on behalf
of the Cedel Participants and the Euroclear Participants, respectively,
through customers' securities accounts in Cedel's and Euroclear's names on the
books of their respective Depositaries which in turn will hold such positions
in customers' securities accounts in the Depositaries' names on the books of
DTC. See "Description of the Certificates--General," "--Book-Entry
Registration" and "--Definitive Certificates" in the Prospectus.
INTEREST PAYMENTS
Interest will accrue on the Class A Certificates at the Class A Rate and on
the Class B Certificates at the Class B Rate from the Closing Date. Interest
will be distributed to Holders on June 17, 1996 and on each Distribution Date
thereafter and will be calculated on the basis of a 360-day year of twelve 30-
day months. Interest payments on the Class A Certificates and the Class B
Certificates on any Distribution Date will be calculated on the outstanding
principal balance of the Class A Certificates and the outstanding principal
balance of the Class B Certificates, as applicable, as of the preceding Record
Date, except that interest for the first Distribution Date will accrue at the
applicable Certificate Rate on the initial outstanding principal balance of
the Class A Certificates and the initial outstanding principal balance of the
Class B Certificates, as applicable, from the Closing Date. Interest due on
the Certificates but not paid on any Distribution Date (such amount with
respect to the Class A Certificates, the "Class A Deficiency Amount," and such
amount with respect to the Class B Certificates, the "Class B Deficiency
Amount") will be payable on the next succeeding Distribution Date together
with additional interest on such amount at the applicable Certificate Rate
plus 2% per annum (such amount with respect to the Class A Certificates, the
"Class A Additional Interest," and such amount with respect to the Class B
Certificates, the "Class B Additional Interest"). Class A Additional Interest
and Class B Additional Interest will accrue on the same basis as interest on
the Certificates, and will accrue from the Distribution Date on which such
overdue interest first became due, to but excluding the Distribution Date on
which such Class A Additional Interest and/or Class B Additional Interest, as
the case may be, is paid. Interest payments on the Class A Certificates on any
Distribution Date will be paid from Class A Available Funds for the related
Monthly Period, and to the extent such Class A Available Funds are
insufficient to pay such interest, from Excess Spread, Required Draw Amounts
and Reallocated Principal Collections (to the extent available) for such
Monthly Period. Interest payments on the Class B Certificates on any
Distribution Date will be paid from Class B Available Funds for the related
Monthly Period, and to the extent such Class B Available Funds are
insufficient to pay such interest, from Excess Spread, Required Draw Amounts
and Reallocated Collateral Principal Collections (to the extent available)
remaining after certain other payments have been made with respect to the
Class A Certificates.
"Class A Available Funds" means, with respect to any Monthly Period, an
amount equal to the Class A Floating Allocation Percentage of collections of
Finance Charge Receivables allocated to the Series Interest with respect to
such Monthly Period and investment earnings on the Cash Collateral Account
treated as collections of Finance Charge Receivables on the related Transfer
Date. "Class B Available Funds" means, with respect to any Monthly Period, an
amount equal to the Class B Floating Allocation Percentage of collections of
Finance Charge Receivables allocated to the Series Interest with respect to
such Monthly Period and investment earnings on the Cash Collateral Account
treated as collections of Finance Charge Receivables on the related Transfer
Date.
PRINCIPAL PAYMENTS
During the Revolving Period (which begins on the Closing Date and ends at
the commencement of the Controlled Amortization Period or, if earlier, the
Early Amortization Period), unless a reduction in the Required Enhancement
Amount has occurred, collections of Principal Receivables allocable to the
Series Interest will, subject to certain limitations, including the allocation
on each Transfer Date 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, be treated as Shared Principal Collections.
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On each Transfer Date relating to the Controlled Amortization Period, the
Trustee will deposit in the Distribution Account for distribution to the Class
A Holders on the related Distribution Date an amount equal to the least of (a)
Available Investor Principal Collections with respect to such Transfer Date,
(b) the applicable Controlled Payment Amount and (c) the Class A Invested
Amount prior to any deposits on such date. After the Class A Invested Amount
has been paid in full, on each Transfer Date during the Controlled
Amortization Period, amounts equal to the lesser of (a) Available Investor
Principal Collections with respect to such Transfer Date and (b) the Class B
Invested Amount will be deposited in the Distribution Account for distribution
to the Class B Holders until the Class B Invested Amount has been paid in
full. On each Transfer Date, if a reduction in the Required Enhancement Amount
has occurred, a portion of collections of Principal Receivables allocable to
the Series Interest may be applied in accordance with the Loan Agreement.
During the Controlled Amortization Period, the portion of Available Investor
Principal Collections not applied to Class A Monthly Principal, Class B
Monthly Principal or Collateral Monthly Principal on a Transfer Date will be
treated as Shared Principal Collections.
"Available Investor Principal Collections" means, with respect to any
Monthly Period, an amount equal to the sum of (a) (i) collections of Principal
Receivables received during such Monthly Period allocable to Series 1996-A and
certain other amounts allocable to Series 1996-A (as described under
"Description of the Certificates--Allocation of Collections"), minus (ii) the
amount of Reallocated Principal Collections with respect to such Monthly
Period used to fund interest on the Certificates or Servicing Fee, plus (b)
any Shared Principal Collections with respect to other Series that are
allocated to Series 1996-A.
On each Distribution Date during the Early Amortization Period, the Class A
Holders will be entitled to receive Available Investor Principal Collections
for the related Monthly Period in an amount up to the Class A Invested Amount
until the earlier of the date the Class A Certificates are paid in full and
the Series 1996-A Termination Date. After payment in full of the Class A
Invested Amount, the Class B Holders will be entitled to receive on each
Distribution Date during the Early Amortization Period, Available Investor
Principal Collections until the earlier of the date the Class B Certificates
are paid in full and the Series 1996-A Termination Date. After payment in full
of the Class B Invested Amount, the Collateral Interest Holder will be
entitled to receive on each Transfer Date (other than the Transfer Date prior
to the Series 1996-A Termination Date, in which case on the Series 1996-A
Termination Date) Available Investor Principal Collections until the earlier
of the date the Collateral Interest is paid in full and the Series 1996-A
Termination Date. See "--Early Amortization Events" below and in the
Prospectus for a discussion of events which might lead to the commencement of
the Early Amortization Period.
SUBORDINATION
The Class B Certificates 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
Holders may be reallocated to cover amounts in respect of the Class A
Certificates and the Class B Invested Amount may be reduced if the Collateral
Interest is equal to zero. Similarly, certain principal payments allocable to
the Collateral Interest may be reallocated to cover amounts in respect of the
Class A Certificates and the Class B Certificates and the Collateral Interest
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 Certificates 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 and interest distributable to the Class B
Holders will be reduced. See "--Allocation Percentages," "--Reallocation of
Cash Flows" and "--Application of Collections--Excess Spread" herein.
Additional Enhancement for the Certificates will be provided in the form of
the Cash Collateral Account. See "--Cash Collateral Account; Required
Enhancement Amount" herein.
ALLOCATION PERCENTAGES
Pursuant to the Pooling Agreement, with respect to each Monthly Period the
Servicer will allocate among the Series Interest, the investor interest for
all other Series issued and outstanding and the Transferor Interest, all
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amounts collected on Finance Charge Receivables, all amounts collected on
Principal Receivables and all Default Amounts with respect to such Monthly
Period.
Collections of Finance Charge Receivables, Default Amounts and Uncovered
Dilution Amounts at all times, and collections of Principal Receivables during
the Revolving Period, will be allocated to the Series Interest based on the
Floating Allocation Percentage. The "Floating Allocation Percentage" means,
with respect to any Monthly Period, the percentage equivalent of a fraction,
the numerator of which is the 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 initial Invested Amount) and the denominator of which is
the greater of (a) the aggregate amount of Principal Receivables as of the
close of business on the last day of the preceding Monthly Period (or with
respect to the first Monthly Period, the aggregate amount of Principal
Receivables as of the close of business on the day immediately preceding the
Closing Date) and (b) the sum of the numerators used to calculate the
allocation percentages for allocations with respect to Finance Charge
Receivables, Default Amounts, Uncovered Dilution Amounts or Principal
Receivables, as applicable, for all outstanding Series on such date of
determination; provided, that if one or more Reset Dates occur in a Monthly
Period, the Floating Allocation Percentage for the portion of the Monthly
Period falling on and after each such Reset Date (the "subject Reset Date")
and on or prior to any subsequent Reset Date will be determined using a
denominator equal to the greater of the amounts specified in clauses (a) and
(b) above determined as of the subject Reset Date.
The amounts so allocated will be further allocated between the Class A
Holders, the Class B Holders and the Collateral Interest Holder based on the
Class A Floating Allocation Percentage, the Class B Floating Allocation
Percentage and the Collateral Floating Allocation Percentage, respectively.
The "Class A Floating Allocation Percentage" means, with respect to any
Monthly Period, the percentage equivalent (which percentage will 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, as of the Closing Date)
and the denominator of which is equal to the Invested Amount as of the close
of business on such last day. The "Class B Floating Allocation Percentage"
means, with respect to any Monthly Period, the percentage equivalent (which
percentage will 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, as of the Closing Date) and the denominator of which is equal to the
Invested Amount as of the close of business on such last day. The "Collateral
Floating Allocation Percentage" means, with respect to any Monthly Period, the
percentage equivalent (which percentage will never exceed 100%) of a fraction,
the numerator of which is equal to the Collateral Interest as of the close of
business on the last day of the preceding Monthly Period (or with respect to
the first Monthly Period, as of the Closing Date) and the denominator of which
is equal to the Invested Amount as of the close of business on such last day.
Collections of Principal Receivables during the Controlled Amortization
Period and Early Amortization Period will be allocated to the Series Interest
based on the Fixed Allocation Percentage. The "Fixed Allocation Percentage"
means, with respect to any Monthly Period, the percentage equivalent of a
fraction, the numerator of which is the Invested Amount as of the close of
business on the last day of the Revolving Period and the denominator of which
is the greater of (a) the aggregate amount of Principal Receivables in the
Trust determined as of the close of business on the last day of the prior
Monthly Period and (b) the sum of the numerators used to calculate the
allocation percentages for allocations with respect to Principal Receivables
for all outstanding Series on such date of determination; provided, that (i)
if Series 1996-A is paired with a Paired Series and an Early Amortization
Event occurs with respect to such Paired Series during the Controlled
Amortization Period, the Transferor may, by written notice delivered to the
Trustee and the Servicer, designate a different numerator (provided that such
numerator is not less than the Invested Amount (less the balance on deposit in
the Principal Account) as of the last day of the revolving period for such
Paired Series) and (ii) if one or more Reset Dates occur in a Monthly Period,
the Fixed Allocation Percentage for the portion of the Monthly Period falling
on and after each such Reset Date (the "subject Reset Date") and prior to any
subsequent Reset Date will be determined using a denominator equal to the
greater of the amounts specified in clauses (a) and (b) above as determined as
of the subject Reset Date.
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<PAGE>
The amounts so allocated will be further allocated between the Class A
Holders, the Class B Holders and the Collateral Interest Holder based on the
Class A Fixed Allocation Percentage, the Class B Fixed Allocation Percentage
and the Collateral Fixed Allocation Percentage, respectively. The "Class A
Fixed Allocation Percentage" means, with respect to any Monthly Period
following the Revolving Period, the percentage equivalent (which percentage
will never exceed 100% or be less than zero) 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 Revolving Period, and the denominator of which is equal to
the numerator used in determining the related Fixed Allocation Percentage;
provided, that if Series 1996-A is paired with a Paired Series and an Early
Amortization Event occurs with respect to such Paired Series during the
Controlled Amortization Period, the Transferor may, by written notice
delivered to the Trustee and the Servicer, designate a different numerator
(provided, that such numerator is not less than the Class A Invested Amount
(less the balance on deposit in the Principal Account) as of the last day of
the revolving period for such Paired Series). The "Class B Fixed Allocation
Percentage" means, with respect to any Monthly Period following the Revolving
Period, the percentage equivalent (which percentage will never exceed 100% or
be less than zero) 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 Revolving
Period and the denominator of which is equal to the numerator used in
determining the related Fixed Allocation Percentage; provided, that if Series
1996-A is paired with a Paired Series and an Early Amortization Event occurs
with respect to such Paired Series during the Controlled Amortization Period,
the Transferor may, by written notice delivered to the Trustee and the
Servicer, designate a different numerator (provided, that such numerator is
not less than the Class B Invested Amount (less, if the Class A Fixed
Allocation Percentage is zero, the balance on deposit in the Principal
Account, to the extent not subtracted in reducing the Class A Fixed Allocation
Percentage to zero) as of the last day of the revolving period for such Paired
Series. The "Collateral Fixed Allocation Percentage" means, with respect to
any Monthly Period following the Revolving Period, the percentage equivalent
(which percentage will never exceed 100% or be less than zero) of a fraction,
the numerator of which is equal to the Collateral Interest as of the close of
business on the last day of the Revolving Period, and the denominator of which
is equal to the numerator used in determining the related Fixed Allocation
Percentage; provided, that if Series 1996-A is paired with a Paired Series and
an Early Amortization Event occurs with respect to such Paired Series during
the Controlled Amortization Period, the Transferor may, by written notice
delivered to the Trustee and the Servicer, designate a different numerator
(provided that such numerator is not less than the Collateral Interest (less,
if the Class B Fixed Allocation Percentage is zero, the balance on deposit in
the Principal Account, to the extent not subtracted in reducing the Class B
Fixed Allocation Percentage to zero) as of on the last day of the revolving
period for such Paired Series.
"Class A Invested Amount" for any date means an amount equal to (a) the
aggregate initial principal amount of the Class A Certificates, minus (b) the
aggregate amount of principal payments made to Class A Holders prior to such
date, minus (c) the excess, if any, of the aggregate amount of Class A
Investor Charge-Offs for all Transfer Dates preceding such date over the
aggregate amount of any reimbursements of Class A Investor Charge-Offs for all
Transfer Dates preceding such date minus (d) the amount of any reduction in
the Class A Invested Amount as a result of the purchase by the Transferor and
subsequent cancellation of Class A Certificates (see "--Purchase of
Certificates by the Transferor" herein); provided, however, the Class A
Invested Amount may not be reduced below zero.
"Class A Investor Allocation Percentage" means, for any Monthly Period, (a)
with respect to Default Amounts, Uncovered Dilution Amounts and Finance Charge
Receivables at any time and Principal Receivables during the Revolving Period,
the Class A Floating Allocation Percentage, and (b) with respect to Principal
Receivables during the Controlled Amortization Period or Early Amortization
Period, the Class A Fixed Allocation Percentage.
"Class B Invested Amount" for any date means an amount equal to (a) the
aggregate initial principal amount of the Class B Certificates, minus (b) the
aggregate amount of principal payments made to Class B Holders prior to such
date, minus (c) the aggregate amount of Class B Investor Charge-Offs for all
prior Transfer Dates, minus (d) the aggregate amount of Reallocated Class B
Principal Collections for all prior Transfer Dates
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<PAGE>
for which the Collateral Interest has not been reduced, minus (e) an amount
equal to the aggregate amount by which the Class B Invested Amount has been
reduced to fund the Class A Reduction Amount on all prior Transfer Dates as
described under "--Defaulted Receivables; Dilution," and plus (f) the
aggregate amount of Excess Spread allocated and available on all prior
Transfer Dates for the purpose of reimbursing amounts deducted pursuant to the
foregoing clauses (c), (d) and (e) minus (g) the amount of any reduction in
the Class B Invested Amount as a result of the purchase by the Transferor and
subsequent cancellation of Class B Certificates (see "--Purchase of
Certificates by the Transferor" herein); provided, however, that the Class B
Invested Amount may not be reduced below zero.
"Class B Investor Allocation Percentage" means, for any Monthly Period, (a)
with respect to Default Amounts, Uncovered Dilution Amounts and Finance Charge
Receivables at any time and Principal Receivables during the Revolving Period,
the Class B Floating Allocation Percentage, and (b) with respect to Principal
Receivables during the Controlled Amortization Period or Early Amortization
Period, the Class B Fixed Allocation Percentage.
"Collateral Interest" for any date means an amount equal to (a) the
Collateral Initial Interest, minus (b) the aggregate amount of principal
payments made to the Collateral Interest Holder prior to such date, minus (c)
the aggregate amount of Collateral Charge-Offs for all prior Transfer Dates,
minus (d) the aggregate amount of Reallocated Principal Collections for all
prior Transfer Dates, minus (e) an amount equal to the aggregate amount by
which the Collateral Interest has been reduced to fund the Class A Reduction
Amount and the Class B Reduction Amount on all prior Transfer Dates as
described under "--Defaulted Receivables; Dilutions," plus (f) the aggregate
amount of Excess Spread allocated and available on all prior Transfer Dates
for the purpose of reimbursing amounts deducted pursuant to the foregoing
clauses (c), (d) and (e); provided, that the Collateral Interest may not be
reduced below zero.
"Collateral Investor Allocation Percentage" means, for any Monthly Period,
(a) with respect to Default Amounts, Uncovered Dilution Amounts and Finance
Charge Receivables at any time and Principal Receivables during the Revolving
Period, the Collateral Floating Allocation Percentage, and (b) with respect to
Principal Receivables during the Controlled Amortization Period or Early
Amortization Period, the Collateral Fixed Allocation Percentage.
"Invested Amount" means, on any date of determination, an amount equal to
the sum of (a) the Class A Invested Amount, (b) the Class B Invested Amount
and (c) the Collateral Interest, each as of such date.
"Reset Date" means each of (a) any date on which Supplemental Accounts are
added to the Trust, (b) a Removal Date on which, if any Series has been paid
in full, Principal Receivables in an aggregate amount approximately equal to
the initial investor interest of such Series are removed from the Trust, (c) a
date on which there is an increase in the Invested Amount of any Variable
Interest issued by the Trust and (d) any date on which a new Series is issued.
"Series Allocation Percentage" means, with respect to any Monthly Period,
the percentage equivalent of a fraction, the numerator of which is the
numerator used in determining the Floating Allocation Percentage for that
Monthly Period and the denominator of which is the sum of the numerators used
to calculate the Investor Percentages for allocations with respect to Finance
Charge Receivables for all outstanding Series on such date of determination;
provided, that with respect to any Monthly Period in which a Reset Date
occurs, the denominator for the portion of the Monthly Period falling on and
after each such Reset Date (the "subject Reset Date") and on or prior to any
subsequent Reset Date will be determined using a denominator which is equal to
the sum of the numerators used to calculate the Investor Percentages for
allocations with respect to Finance Charge Receivables for all outstanding
series as of close of business on the subject Reset Date.
"Variable Interest" means either of (a) any certificate that is designated
as a variable funding certificate in the related Series Supplement and (b) any
Purchased Interest sold as permitted by the Pooling Agreement.
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<PAGE>
REALLOCATION OF CASH FLOWS
With respect to each Transfer Date, the Servicer will determine the amount
(the "Class A Required Amount"), if any, by which the sum of (i) Class A
Monthly Interest for such Transfer Date, plus (ii) the Class Deficiency
Amount, if any, for such Transfer Date, plus (iii) the Class A Additional
Interest, if any, for such Transfer Date, plus (iv) the Class A Servicing Fee
for the prior Monthly Period, plus (v) the Class A Servicing Fee, if any, if
any, due but not paid on any prior Transfer Date, plus (vi) the Class A
Investor Default Amount, if any, for such Transfer Date, plus (vii) the Class
A Uncovered Dilution Amount for the related Monthly Period, exceeds the Class
A Available Funds for the related Monthly Period. If the Class A Required
Amount is greater than zero, Excess Spread (and any Required Draw Amount)
allocated to Series 1996-A and available for such purpose will be used to fund
the Class A Required Amount with respect to such Transfer Date. If such Excess
Spread (and any Required Draw Amount) is insufficient to fund the Class A
Required Amount, first, Reallocated Collateral Principal Collections and,
then, Reallocated Class B Principal Collections will 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 any
Required Draw Amount), are insufficient to fund the remaining Class A Required
Amount for such related Monthly Period, then the Collateral Interest (after
giving effect to reductions for any Collateral Charge-Offs and Reallocated
Principal Collections on such Transfer Date) will be reduced by the amount of
such excess (but not by more than the Class A Reduction Amount for such
Monthly Period). If such reduction would cause the Collateral Interest to be a
negative number, the Collateral Interest will be reduced to zero, and the
Class B Invested Amount (after giving effect to reductions for any Class B
Investor Charge-Offs and any Reallocated Class B Principal Collections for
which the Collateral Interest was not reduced on such Transfer Date) will be
reduced by the amount by which the Collateral Interest would have been reduced
below zero (but not by more than the excess of the Class A Reduction Amount,
if any, for such Monthly Period over the amount of such reduction, if any, of
the Collateral Interest with respect to such Monthly Period). 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 Reduction Amount for such Monthly Period over the amount
of the reductions, if any, of the Collateral Interest and the Class B Invested
Amount with respect to such Monthly Period). 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 Holders. In such case, the Class A
Holders will bear directly the credit and other risks associated with their
interests in the Trust. See "--Defaulted Receivables; Dilutions" herein.
With respect to each Transfer Date, the Servicer will determine the amount
(the "Class B Required Amount"), if any, by which the sum of (a) the amount,
if any, by which the sum of (i) Class B Monthly Interest due on the related
Distribution Date, plus (ii) the Class B Deficiency Amount, if any, for such
Transfer Date, plus (iii) the Class B Additional Interest, if any, for such
Transfer Date, plus (iv) the Class B Servicing Fee for the prior Monthly
Period, plus (v) the Class B Servicing Fee, if any, due but not paid on any
prior Transfer Date, exceeds the Class B Available Funds for the related
Monthly Period plus (b) the sum of (A) the Class B Investor Default Amount, if
any, for such Transfer Date and (B) the Class B Uncovered Dilution Amount, if
any, for the related Monthly Period. If the Class B Required Amount is greater
than zero, Excess Spread (and any Required Draw Amount) allocated to Series
1996-A 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 Transfer Date. If such Excess Spread (and any Required Draw
Amount) are insufficient to fund the Class B Required Amount, Reallocated
Collateral Principal Collections not required to fund the Class A Required
Amount for the related Monthly Period will be used to fund the remaining Class
B Required Amount. If such Reallocated Collateral Principal Collections with
respect to the related Monthly Period are insufficient to fund the remaining
Class B Required Amount, then the Collateral Interest (after giving effect to
reductions for any Collateral Charge-Offs and Reallocated Principal
Collections on such Transfer Date and after any adjustments made thereto for
the benefit of the Class A Holders) will be reduced by the amount of such
deficiency (but not by more than the Class B Reduction Amount for such Monthly
Period). In the event that such a reduction would cause the Collateral
Interest to be a negative number, the Collateral Interest will be reduced to
zero, and the Class B Invested Amount will be reduced by the amount by which
the Collateral Interest would have been
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reduced below zero (but not by more than the excess of the Class B Reduction
Amount for such Monthly Period over the amount of such reduction of the
Collateral Interest), and the Class B Holders will bear directly the credit
and other risks associated with their interests in the Trust. See "--Defaulted
Receivables; Dilutions" herein.
Reductions of the Class A Invested Amount or Class B Invested Amount
described above will be reimbursed by, and the Class A Invested Amount or
Class B Invested Amount increased to the extent of, Excess Spread available
for such purposes on each Transfer Date. See "Description of the
Certificates--Application of Collections--Excess Spread" and "--Cash
Collateral Account; Required Enhancement Amount" herein. When such reductions
of the Class A Invested Amount and Class B Invested Amount have been fully
reimbursed, reductions of the Collateral Interest will be reimbursed until
reimbursed in full in a similar manner.
"Reallocated Class B Principal Collections" for any Monthly Period means
collections of Principal Receivables allocable to the Class B Interest for the
related Monthly Period in an amount not to exceed the amount applied to fund
the Class A Required Amount, if any; provided, however, that such amount will
not exceed the Class B Invested Amount after giving effect to any Class B
Investor Charge-Offs for the related Transfer Date.
"Reallocated Collateral Principal Collections" for any Monthly Period means
collections of Principal Receivables allocable to the Collateral Interest for
the related Monthly Period in an amount not to exceed the amount applied to
fund the Class A Required Amount and the Class B Required Amount, if any;
provided, however, that such amount will not exceed the Collateral Interest
after giving effect to any Collateral Charge-Offs for the related Transfer
Date.
"Reallocated Principal Collections" for any Monthly Period means the sum of
(a) the Reallocated Class B Principal Collections for such Monthly Period, if
any, and (b) the Reallocated Collateral Principal Collections for such Monthly
Period, if any.
APPLICATION OF COLLECTIONS
Allocations. Except as otherwise provided below, the Servicer will deposit
into the Collection Account, no later than the second business day following
the date of processing, any payment collected by the Servicer on the
Receivables. On the same day as any such deposit is made, the Servicer will
make the deposits and payments to the accounts and parties as indicated below;
provided, however, that for as long as WFN remains the Servicer under the
Pooling Agreement and (a) (i) the Servicer provides to the Trustee a letter of
credit covering the risk of collection of the Servicer acceptable to the
Rating Agency and (ii) the Transferor shall not have received a notice from
the Rating Agency that reliance on such letter of credit would result in the
lowering of such Rating Agency's then-existing rating of any Series then
outstanding or (b) the certificate of deposit or unsecured short-term debt
obligations of the Transferor are rated P-1 by Moody's and at least A-1 by
Standard & Poor's and Fitch (or such other rating below A-1, P-1 or such
equivalent rating, as the case may be, which is satisfactory to each Rating
Agency), then the Servicer may make such deposits and payments on the business
day immediately prior to the Distribution Date (the "Transfer Date") in an
amount equal to the net amount of such deposits and payments which would have
been made had the conditions of this proviso not applied.
With respect to the Certificates and any Monthly Period, and notwithstanding
anything in the Pooling Agreement to the contrary, whether the Servicer is
required to make monthly or daily deposits into the Collection Account, the
Finance Charge Account or the segregated trust account established and
maintained by the Trustee primarily for the allocation of Collections of
Principal Receivables and certain other amounts (the "Principal Account"), (i)
the Servicer will only be required to deposit Collections into the Collection
Account, and from the Collection Account into the Finance Charge Account or
the Principal Account, up to the required amount to be distributed on or prior
to the related Distribution Date to Holders or to the Collateral Interest
Holder (or if WFN is not the Servicer, to the Servicer) and (ii) if at any
time prior to such Distribution Date the amount of Collections deposited in
the Collection Account exceeds the amount required to be deposited pursuant to
clause (i) above, the Servicer will be permitted to withdraw the excess from
the Collection Account.
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Payment of Interest, Fees and Other Items. On each Transfer Date, the
Trustee, acting pursuant to the Servicer's instructions, will apply the Class
A Available Funds, Class B Available Funds and Collateral Available Funds in
the Finance Charge Account in the following manner:
(a) On each Transfer Date, an amount equal to the Class A Available Funds
will be distributed in the following priority:
(i) an amount equal to Class A Monthly Interest for the related
Distribution Date, plus any Class A Deficiency Amount, plus any Class A
Additional Interest (in each case for such Transfer Date) will be
deposited into the Distribution Account for distribution to Class A
Holders on such Distribution Date;
(ii) an amount equal to the Class A Servicing Fee for the related
Monthly Period, plus the amount of any overdue Class A Servicing Fee
(less, if WFN is the Servicer, amounts previously retained towards
payment of such fee), will be paid to the Servicer;
(iii) an amount equal to the sum of the Class A Investor Default
Amount and the Class A Uncovered Dilution Amount, if any, for the
preceding Monthly Period will be treated (or be deemed to be treated)
as a portion of Available Investor Principal Collections and, during
the Early Amortization Period, deposited into the Principal Account for
such Transfer Date; and
(iv) the balance, if any, will constitute a portion of Excess Spread
and will be allocated and distributed as described under "--Excess
Spread" herein.
(b) On each Transfer Date, an amount equal to the Class B Available Funds
will be distributed in the following priority:
(i) an amount equal to Class B Monthly Interest, plus any Class B
Deficiency Amount, plus any Class B Additional Interest (in each case
for such Transfer Date) will be deposited into the Distribution Account
for distribution to Class B Holders on such Distribution Date;
(ii) an amount equal to the Class B Servicing Fee for the related
Monthly Period, plus the amount of any overdue Class B Servicing Fee
(less, if WFN is the Servicer, amounts previously retained towards
payment of such fee), will be paid to the Servicer; and
(iii) the balance, if any, will constitute a portion of Excess Spread
and will be allocated and distributed as described under "--Excess
Spread" herein.
(c) On each Transfer Date, an amount equal to the Collateral Available
Funds will be distributed in the following priority:
(i) if neither the Transferor nor any of its affiliates is the
Servicer, an amount equal to the Collateral Interest Servicing Fee for
the related Monthly Period, plus the amount of any overdue Collateral
Interest Servicing Fee, will be paid to the Servicer; and
(ii) the balance, if any, will constitute a portion of Excess Spread
and will be allocated and distributed as described under "--Excess
Spread" herein.
"Class A Monthly Interest" with respect to any Distribution Date will equal
the product of (i) one-twelfth, times (B) the Class A Rate, times (ii) the
outstanding principal balance of the Class A Certificates determined as of the
Record Date preceding the related Transfer Date; provided that Class A Monthly
Interest for the first Distribution Period will be $2,984,850.
"Class B Monthly Interest" with respect to any Distribution Date will equal
the product of (i) one-twelfth, times (B) the Class B Rate, times (ii) the
outstanding principal balance of the Class B Certificates determined as of the
Record Date preceding the related Transfer Date; provided that Class B Monthly
Interest for the first Distribution Period will be $327,250.
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"Collateral Available Funds" means, with respect to any Monthly Period, an
amount equal to the Collateral Floating Allocation Percentage of collections
of Finance Charge Receivables allocated to the Series Interest with respect to
such Monthly Period and investment earnings on the Cash Collateral Account
treated as collections of Finance Charge Receivables on the related Transfer
Date.
"Collateral Monthly Interest" with respect to any Transfer Date will equal
the product of (a) an amount equal to LIBOR plus 1.1% per annum, or such
lesser amount as may be designated in the Loan Agreement (the "Collateral
Rate"), (b) the actual number of days in the related Distribution Period
divided by 360 and (c) the Collateral Interest as of the related Record Date.
"LIBOR" means, for each Distribution Period, the London interbank offered
rate for one-month United States dollar deposits as determined in accordance
with the Loan Agreement (which may include reserve adjustments).
Excess Spread. On each Transfer Date, the Trustee, acting pursuant to the
Servicer's instructions, will apply (or be deemed to apply) Excess Spread 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 Transfer Date will be used to fund the Class A Required Amount and
will be applied in the priority set forth in clause (a) under "--Payment of
Interest, Fees and Other Items" above;
(b) an amount equal to the aggregate amount of Class A Investor Charge-
Offs which have not been previously reimbursed (after giving effect to the
allocation on such Transfer Date of certain other amounts applied for that
purpose) will be deposited into the Principal Account and treated as a
portion of Available Investor Principal Collections for such Transfer Date
as described under "--Payments of Principal" below;
(c) an amount equal to the Class B Required Amount, if any, with respect
to such Transfer Date will be used to fund the Class B Required Amount and
will be applied with the priority set forth in clause (b) under "--Payment
of Interest, Fees and Other Items" above, then any amount remaining, up to
the Class B Reduction Amount, will be deposited into the Principal Account
and treated as a portion of Available Investor Principal Collections for
such Transfer Date as described under "--Payments of Principal" below;
(d) an amount equal to the aggregate amount by which the Class B Invested
Amount has been reduced below the initial Class B Invested Amount for
reasons other than the payment of principal to the Class B Holders (but not
in excess of the aggregate amount of such reductions which have not been
previously reimbursed) will be deposited into the Principal Account and
treated as a portion of Available Investor Principal Collections for such
Transfer Date as described under "--Payments of Principal" below;
(e) an amount equal to the Collateral Monthly Interest for the related
Monthly Period, plus the amount of any Collateral Monthly Interest
previously due but not distributed to the Collateral Interest Holder on a
prior Transfer Date, will be distributed to the Collateral Interest Holder
for distribution in accordance with the Loan Agreement;
(f) if the Transferor or any of its affiliates is the Servicer, an amount
equal to the Collateral Interest Servicing Fee for the related Monthly
Period, plus the amount of any overdue Collateral Interest Servicing Fee,
will be paid to the Servicer;
(g) an amount equal to the Collateral Reduction Amount, if any, for the
related Monthly Period will be deposited into the Principal Account and
treated as a portion of Available Investor Principal Collections for such
Transfer Date as described under "--Payments of Principal" below;
(h) an amount equal to the aggregate amount by which the Collateral
Interest has been reduced for reasons other than the payment of principal
to the Collateral Interest Holder (but not in excess of the aggregate
amount of such reductions which have not been previously reimbursed) will
be treated as a portion of Available Investor Principal Collections and
deposited into the Principal Account on such Transfer Date;
(i) an amount equal up to the excess, if any, of the Required Cash
Collateral Amount over the Available Cash Collateral Amount (without giving
effect to any deposit made on such date) will be deposited into the Cash
Collateral Account;
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(j) an amount equal to all other amounts due under the Loan Agreement
will be distributed in accordance with the Loan Agreement; and
(k) the balance, if any, after giving effect to the payments made
pursuant to subparagraphs (a) through (j) above, will constitute "Excess
Finance Charge Collections" to be applied with respect to other Series in
accordance with the Pooling Agreement as described under "--Sharing of
Excess Finance Charge Collections" herein and in the Prospectus.
Payments of Principal. On each Transfer Date, the Trustee, acting pursuant
to the Servicer's instructions, will distribute Available Investor Principal
Collections (see "--Principal Payments" above) on deposit in the Principal
Account in the following manner:
(a) On each Transfer Date with respect to the Revolving Period, all such
Available Investor Principal Collections will be distributed or deposited
in the following priority:
(i) an amount equal to the Collateral Monthly Principal will be paid
to the Collateral Interest Holder in accordance with the Loan
Agreement; and
(ii) the balance will be treated as Shared Principal Collections and
applied as described under "Description of the Certificates--Shared
Principal Collections" herein and in the Prospectus.
(b) On each Transfer Date with respect to the Controlled Amortization
Period or the Early 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 for such Transfer
Date will be deposited in the Distribution Account;
(ii) after giving effect to the distribution referred to in the
foregoing clause (i), an amount equal to the Class B Monthly Principal
for such Transfer Date will be deposited in the Distribution Account;
(iii) for each Transfer Date (other than the Transfer Date
immediately preceding the Series 1996-A Termination Date) after giving
effect to the distributions referred to in the foregoing clauses (i)
and (ii), an amount equal to the Collateral Monthly Principal will be
distributed to the Collateral Interest Holder in accordance with the
Loan Agreement; and
(iv) after giving effect to the distributions referred to in the
foregoing clauses (i) through (iii), remaining Available Investor
Principal Collections will be treated as Shared Principal Collections
and applied as described under "Description of the Certificates--Shared
Principal Collections" herein and in the Prospectus.
On each Distribution Date relating to a Monthly Period that falls in the
Controlled Amortization Period or Early Amortization Period, the Trustee,
acting pursuant to the Servicer's instructions, will pay amounts on deposit in
the Distribution Account pursuant to the foregoing paragraphs under "--
Payments of Principal" in the following priority:
(i) an amount equal to the lesser of such amount on deposit in the
Distribution Account and the Class A Invested Amount will be paid to the
Class A Holders; and
(ii) for each Distribution Date with respect to the Early Amortization
Period and on or after the Class B Scheduled Payment Date, after giving
effect to the distributions referred to in the foregoing clause (i), an
amount equal to the lesser of such amount on deposit in the Distribution
Account and the Class B Invested Amount will be paid to the Class B
Holders.
"Class A Monthly Principal" with respect to any Transfer Date relating to
the Controlled Amortization Period or the Early Amortization Period, prior to
the payment in full of the Class A Invested Amount, will equal the least of
(i) the Available Investor Principal Collections on deposit in the Principal
Account with respect to such Transfer Date, (ii) for each Transfer Date with
respect to the Controlled Amortization Period, prior to the Class A Scheduled
Payment Date, the applicable Controlled Payment Amount for such Transfer Date
and (iii) the Class A Invested Amount on such Transfer Date.
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"Class B Monthly Principal" with respect to any Transfer Date relating to
the Controlled Amortization Period, beginning with the Transfer Date after the
one on which the Class A Invested Amount is reduced to zero (and for the Early
Amortization Period beginning with the Transfer Date on which the Class A
Invested Amount is reduced to zero, after taking into account payments to be
made on the related Distribution Date), will equal the lesser of (i) the
excess, if any, of (A) Available Investor Principal Collections on such
Transfer Date over (B) any Class A Monthly Principal on such Transfer Date and
(ii) the Class B Invested Amount (after giving effect to reductions for any
Class B Investor Charge-Offs and Class B Reallocated Principal Collections on
such Transfer Date and after giving effect to any adjustments thereto for the
benefit of the Class A Holders and the Class B Holders on such Transfer Date).
"Collateral Monthly Principal" means the amount of monthly principal
distributable from the Principal Account with respect to the Collateral
Interest on each Transfer Date which will be (i) during the Revolving Period
following any reduction of the Required Enhancement Amount or an amount equal
to the lesser of (A) the Enhancement Surplus on such Transfer Date and (B) the
Available Investor Principal Collections on such Transfer Date or (ii) during
the Controlled Accumulation Period or Early Amortization Period an amount
equal to the least of (A) the Enhancement Surplus on such Transfer Date, (B)
the excess, if any, of (1) the Available Investor Principal Collections on
such Transfer Date over (2) the sum of the Class A Monthly Principal and the
Class B Monthly Principal for such Transfer Date and (C) the Collateral
Interest as of such Transfer Date.
"Controlled Amortization Amount" means for any Transfer Date with respect to
the Controlled Amortization Period prior to the payment in full of the Class A
Invested Amount, $89,100,000.
SHARING OF EXCESS FINANCE CHARGE COLLECTIONS
To the extent that collections of Finance Charge Receivables allocated to
the Series Interest (and any other amounts that are to be treated as
collections of Finance Charge Receivables allocated to the Series Interest)
are not needed to make payments in respect of the Series Interest as described
above under "--Application of Collections--Payment of Interest, Fees and Other
Items" and "--Excess Spread," such Excess Finance Charge Collections will be
applied to make payments in respect of other Series entitled to share therein
in accordance with the Pooling Agreement. In addition, Excess Finance Charge
Collections with respect to other Series in Group One, to the extent not
required to make payments in respect of such Series, may be applied to cover
shortfalls in amounts payable from Excess Spread as described above under "--
Application of Collections-- Excess Spread" (as well as shortfalls experienced
by other Series). See "Description of the Certificates--Sharing of Excess
Finance Charge Collections" in the Prospectus.
"Group One" means Series 1996-A and each other Series specified in the
related Series Supplement to be included in Group One. The only other
presently existing Series issued by the Trust is also included in Group One.
See "Description of the Certificates--Sharing of Excess Finance Charge
Collections" in the Prospectus.
SHARED PRINCIPAL COLLECTIONS
Collections of Principal Receivables for any Monthly Period allocated to the
Series Interest will first be used to cover, with respect to any Monthly
Period during the Controlled Amortization Period, payments of the applicable
Controlled Payment Amount to the Class A Holders, and during the Early
Amortization Period, payments to the Holders and then under certain
circumstances payments to the Collateral Interest Holder. The Servicer will
determine the amount of collections of Principal Receivables for any Monthly
Period allocated to the Series Interest remaining after covering required
payments to the Holders and any similar amount remaining for any other Series
in Group One ("Shared Principal Collections"). See "Description of the
Certificates--Application of Collections--Payments of Principal" herein. The
Servicer will allocate the Shared Principal Collections to cover any scheduled
or permitted principal distributions to certificateholders and deposits to
principal funding accounts, if any, for any Series in Group One entitled
thereto which have not been covered out of the Collections of Principal
Receivables allocable to such Series and certain other amounts for such Series
("Principal Shortfalls"). If Principal Shortfalls exceed Shared Principal
Collections for any Monthly Period,
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Shared Principal Collections will be allocated pro rata among the applicable
Series in Group One based on the relative amount of Principal Shortfalls
attributable to each such Series. Any portion of Shared Principal Collections
allocated to Series 1996-A on any Transfer Date will be applied as Available
Investor Principal Collections on such Transfer Date. See "Description of the
Certificates--Principal Payments" herein. To the extent that Shared Principal
Collections exceed Principal Shortfalls, the balance will be paid to the
Transferor or, under certain circumstances, deposited into the Excess Funding
Account. See "Description of the Certificates--Excess Funding Account" in the
Prospectus.
CASH COLLATERAL ACCOUNT; REQUIRED ENHANCEMENT AMOUNT
The Servicer shall establish and maintain with an Eligible Institution,
which may be the Trustee, in the name of the Trustee, on behalf of the Trust,
a segregated trust account (the "Cash Collateral Account") bearing a
designation clearly indicating that the funds deposited therein are held for
the benefit of the Investor Holders. The Trustee shall possess all right,
title and interest in all funds on deposit from time to time in the Cash
Collateral Account and in all proceeds thereof. The Cash Collateral Account
shall be under the sole dominion and control of the Trustee for the benefit of
the Investor Holders. The interest of the Collateral Interest Holder in the
Cash Collateral Account shall be subordinated to the interests of the Series
1996-A Holders as provided herein and in the Loan Agreement. The Trustee, at
the direction of the Servicer, shall make deposits to and withdrawals from the
Cash Collateral Account as provided for in the Pooling Agreement and the Loan
Agreement, as described in this Series Supplement.
On the Closing Date, Transferor shall deposit $13,750,000 in immediately
available funds into the Cash Collateral Account. Funds on deposit in the Cash
Collateral Account shall be invested at the direction of the Servicer by the
Trustee in Eligible Investments. Funds on deposit in the Cash Collateral
Account on any Transfer Date, after giving effect to any withdrawals from the
Cash Collateral Account on such Transfer Date, will generally be invested in
such investments that will mature so that such funds will be available for
withdrawal on or prior to the following Transfer Date. On each Transfer Date,
all interest and earnings (net of losses and investment expenses) accrued
since the preceding Transfer Date on funds on deposit in the Cash Collateral
Account will be treated as collections of Finance Charge Receivables allocable
to the Series Interest. For purposes of determining the availability of funds
or the balances in the Cash Collateral Account, all investment earnings on
such funds shall be deemed not to be available or on deposit.
On each Determination Date, the Servicer shall calculate the amount (the
"Required Draw Amount") by which the sum of the amounts specified in clauses
(a) through (d) under "The Description of the Certificates--Application of
Collections--Excess Spread" with respect to the related Transfer Date exceeds
the amount of Excess Spread allocated with respect to the related Monthly
Period. In the event that for any Distribution Date the Required Draw Amount
is greater than zero, the Servicer shall give written notice to Trustee and
the Collateral Interest Holder of such positive Required Draw Amount on the
related Determination Date. On the related Transfer Date, the Required Draw
Amount, if any, up to the Available Cash Collateral Amount, shall be withdrawn
from the Cash Collateral Account and distributed to fund any deficiency
pursuant to clauses (a) through (d) under "The Description of the
Certificates--Application of Collections--Excess Spread" (in the order of
priority set forth thereunder).
If, after giving effect to all deposits to and withdrawals from the Cash
Collateral Account and adjustments to the Collateral Interest with respect to
any Transfer Date, there is an Enhancement Surplus, the Trustee, acting in
accordance with the instructions of the Servicer, will withdraw from the Cash
Collateral Account, and apply in accordance with the Loan Agreement, an amount
up to such Enhancement Surplus.
"Available Cash Collateral Amount" means with respect to any Transfer Date,
the lesser of (a) the amount on deposit in the Cash Collateral Account on such
date (before giving effect to any deposit to, or withdrawal from the Cash
Collateral Account to be made with respect to such date) and (b) the lesser of
the Required Enhancement Amount as of the preceding Transfer Date and the
Invested Amount as of such date.
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"Available Enhancement Amount" means, as of any date of determination, the
sum of (a) the Collateral Interest and (b) the aggregate amount of funds on
deposit in the Cash Collateral Account, in each case on such date.
"Enhancement Surplus" means, with respect to any Transfer Date, the excess,
if any, of (a) the amount on deposit in the Cash Collateral Account, plus the
Collateral Interest over (b) the Required Enhancement Amount.
"Required Cash Collateral Amount" means, with respect to any date of
determination, the Required Enhancement Amount less the Collateral Interest.
"Required Enhancement Amount" means, an amount equal to the greater of (a)
13% of the Invested Amount on such Transfer Date, after taking into account
payments (including payments on the Collateral Interest) to be made on the
related Distribution Date and (b) $16,500,000; provided, that (x) if, on or
prior to such Transfer Date, there have been any Required Draw Amounts or any
reductions in the Collateral Interest pursuant to clauses (c), (d) or (e) of
the definition of such term, or an Early Amortization Event occurs with
respect to Series 1996-A, then the Required Enhancement Amount for such
Transfer Date shall, subject to clauses (y) and (z), equal the Required
Enhancement Amount on the Transfer Date immediately preceding such reduction,
Required Draw Amount or Early Amortization Event, (y) in no event will the
Required Enhancement Amount exceed the sum of the outstanding principal
amounts of (i) the Class A Certificates and (ii) the Class B Certificates,
each as of the last day of the Monthly Period preceding such Transfer Date
after taking into account the payments to be made on the related Distribution
Date and (z) the Required Enhancement Amount may be reduced or increased at
Transferor's option at any time if the Transferor, the Servicer, the
Collateral Interest Holder and the Trustee have been provided evidence that
the Rating Agency Condition has been satisfied.
"Rating Agency Condition" means the notification in writing by each Rating
Agency to the Transferor, the Servicer and the Trustee that a proposed action
will not result in any Rating Agency reducing or withdrawing its then existing
rating of the Certificates.
With respect to any Transfer Date, if the Collateral Interest is less than
the Required Collateral Interest, certain Excess Spread, if available, will be
allocated to increase the Collateral Interest to the extent of such shortfall.
DEFAULTED RECEIVABLES; DILUTIONS
On or before each Transfer Date, the Servicer will calculate the aggregate
Investor Default Amounts for the preceding Monthly Period (the "Aggregate
Investor Default Amount"). The term "Investor Default Amount" means, with
respect to any Receivable in a Defaulted Account, an amount equal to the
product of (a) the Default Amount and the Floating Allocation Percentage on
the day such Account became a Defaulted Account. A portion of the Aggregate
Investor Default Amount for any Monthly Period will be allocated to the Class
A Holders (the "Class A Investor Default Amount") on each Transfer Date in an
amount equal to the product of the Class A Floating Allocation Percentage
applicable during the related Monthly Period and the Aggregate Investor
Default Amount for such Monthly Period. A portion of the Aggregate Investor
Default Amount for any Monthly Period will be allocated to the Class B Holders
(the "Class B Investor Default Amount") on each Transfer Date in an amount
equal to the product of the Class B Floating Allocation Percentage applicable
during the related Monthly Period and the Aggregate Default Amount for such
Monthly Period. A portion of the Aggregate Investor Default Amount for any
Monthly Period will be allocated to the Collateral Interest Holder (the
"Collateral Default Amount") on each Transfer Date in an amount equal to the
product of the Collateral Floating Allocation Percentage applicable during the
related Monthly Period and the Aggregate Investor Default Amount for such
Monthly Period.
On or before each Transfer Date, the Servicer will calculate the Uncovered
Dilution Amount for the related Monthly Period. A portion of the Uncovered
Dilution Amount for any Monthly Period will be allocated to the Class A
Holders (the "Class A Uncovered Dilution Amount") on each Transfer Date in an
amount equal to the
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product of the Class A Investor Allocation Percentage applicable during the
related Monthly Period and the Uncovered Dilution Amount for such Monthly
Period. A portion of the Uncovered Dilution Amount for any Monthly Period will
be allocated to the Class B Holders (the "Class B Uncovered Dilution Amount")
on each Transfer Date in an amount equal to the product of the Class B
Investor Allocation Percentage applicable during the related Monthly Period
and the Uncovered Dilution Amount for such Monthly Period. A portion of the
Uncovered Dilution Amount for any Monthly Period will be allocated to the
Collateral Interest Holder (the "Collateral Uncovered Dilution Amount") on
each Transfer Date in an amount equal to the product of the Collateral
Investor Allocation Percentage applicable during the related Monthly Period
and the Uncovered Dilution Amount for such Monthly Period.
"Uncovered Dilution Amount" means an amount equal to the product of (x) the
Series Allocation Percentage for the related Monthly Period (determined on a
weighted average basis, if a Reset Date occurs during that Monthly Period),
times (y) the aggregate Dilution occurring during that Monthly Period as to
which any deposit is required to be made to the Excess Funding Account
pursuant to the Pooling Agreement but has not been made; provided, that, if
the Transferor Amount is greater than zero at any time the deposit referred to
in clause (y) is required to be made, the Uncovered Dilution Amount for such
amount to be deposited shall be deemed to be zero. See "Description of the
Certificates--Dilution" in the Prospectus.
On or before each Transfer Date, the Servicer will calculate the sum of the
Class A Investor Default Amount and the Class A Uncovered Dilution Amount
(such sum being the "Class A Reduction Amount"). If on any Transfer Date, the
Class A Reduction Amount for the prior Monthly Period exceeds the amount of
Class A Available Funds, Excess Spread (including any Required Draw Amount
withdrawn for such application) Principal Collections which are allocated and
available to fund such amount, the Collateral Interest (after giving effect to
reductions for any Collateral Charge-Offs and any Reallocated Principal
Collections on such Transfer Date) will be reduced by the amount of such
excess, but not by more than the lesser of the Class A Reduction Amount and
the Collateral Interest (after giving effect to reductions for any Collateral
Charge-Offs and any Reallocated Principal Collections on such Transfer Date)
for such Transfer Date. If such reduction would cause the Collateral Interest
to be a negative number, the Collateral Interest will be reduced to zero, and
the Class B Invested Amount (after giving effect to reductions for any Class B
Investor Charge-Offs and any Reallocated Class B Principal Collections on such
Transfer Date) will be reduced by the amount by which the Collateral Interest
would have been reduced below zero. If 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 Class A Reduction Amount for such Transfer Date (a "Class
A Investor Charge-Off"), which will have the effect of slowing or reducing the
return of principal and interest to the Class A Holders. If the Class A
Invested Amount has been reduced by the amount of any Class A Investor Charge-
Offs, it will be reimbursed on any Transfer Date (but not by an amount in
excess of the aggregate Class A Investor Charge-Offs) by the amount of Excess
Spread allocated and available for such purpose as described under "--
Application of Collections--Excess Spread" herein.
On or before each Transfer Date, the Servicer will calculate the sum of the
Class B Investor Default Amount and the Class B Uncovered Dilution Amount
(such sum being the "Class B Reduction Amount"). If on any Transfer Date, the
Class B Reduction Amount for the prior Monthly Period exceeds the amount of
Excess Spread (including any Required Draw Amount withdrawn for such
application) and Reallocated Collateral Principal Collections which are
allocated and available to fund such amount, the Collateral Interest (after
giving effect to reductions for any Collateral Charge-Offs and any Reallocated
Principal Collections on such Transfer Date and any adjustments with respect
thereto as described in the preceding paragraph) will be reduced by the amount
of such excess but not by more than the lesser of the Class B Reduction Amount
and the Collateral Interest (after giving effect to reductions for any
Collateral Charge-Offs and any Reallocated Principal Collections on such
Transfer Date and any adjustments with respect thereto as described in the
preceding paragraph) for such Transfer Date. If such reduction would cause the
Collateral Interest to be a negative number, the Collateral Interest will be
reduced to zero and the Class B Invested Amount will be reduced by the amount
by which the Collateral Interest would have been reduced below zero, but not
by more than the Class B Reduction Amount
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for such Transfer Date (a "Class B Investor Charge-Off"), which will have the
effect of slowing or reducing the return of principal and interest to the
Class B Holders. The Class B Invested Amount will also be reduced by the
amount of Reallocated Class B Principal Collections in excess of the
Collateral Interest (after giving effect to reductions for any Collateral
Charge-Offs and any Reallocated Collateral Principal Collections on such
Transfer Date) and the amount of any portion of the Class B Invested Amount
allocated to the Class A Certificates to avoid a reduction in the Class A
Invested Amount. The Class B Invested Amount will thereafter be reimbursed
(but not to an amount in excess of the unpaid principal balance of the Class B
Certificates) on any Transfer Date by the amount of Excess Spread allocated
and available for that purpose as described under "--Application of
Collections--Excess Spread" herein.
On or before each Transfer Date, the Servicer will calculate the sum of the
Collateral Default Amount and the Collateral Uncovered Dilution Amount (such
sum being the "Collateral Reduction Amount"). If on any Transfer Date, the
Collateral Reduction Amount for the prior Monthly Period exceeds the amount of
Excess Spread which is allocated and available to fund such amount, the
Collateral Interest will be reduced by the amount of such excess but not by
more than the lesser of the Collateral Reduction Amount and the Collateral
Interest for such Transfer Date (a "Collateral Charge-Off"). The Collateral
Interest will also be reduced by the amount of Reallocated Principal
Collections and the amount of any portion of the Collateral Interest allocated
to the Class A Certificates or the Class B Certificates to avoid a reduction
in the Class A Invested Amount, or the Class B Invested Amount, respectively.
The Collateral Interest will thereafter be reimbursed on any Transfer Date by
the amount of the Excess Spread allocated and available for that purpose as
described under "--Application of Collections--Excess Spread" herein.
The Class A Investor Charge-Offs, Class B Investor Charge-Offs and the
Collateral Interest Charge-Offs are, collectively, the "Investor Charge-Offs."
PAIRED SERIES
The Series 1996-A Certificates may be paired with one or more other Series
(each a "Paired Series"). Each Paired Series either will be prefunded with an
initial deposit to a Pre-Funding Account in an amount up to the initial
principal balance of such Paired Series and primarily from the proceeds of the
sale of such Paired Series or will be a Variable Interest. Any such Pre-
Funding Account will be held for the benefit of such Paired Series and not for
the benefit of the Holders. As principal is paid with respect to the
Certificates, either (i) in the case of a prefunded Paired Series, an equal
amount of funds on deposit in any prefunding account for such prefunded Paired
Series will be released (which funds will be distributed to the Transferor) or
(ii) in the case of a Paired Series having a variable principal amount, an
interest in such variable Paired Series in an equal or lesser amount may be
sold by the Trust (and the proceeds thereof will be distributed to the
Transferor) and, in either case, the invested amount in the Trust of such
Paired Series will increase by up to a corresponding amount. 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 invested
amount of such related Paired Series will have been increased by an amount up
to an aggregate amount equal to the Invested Amount paid to the Holders since
the issuance of such Paired Series. 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, however, that the
terms of any Paired Series might not have an impact on the timing or amount of
payments received by a Holder. In particular, the denominator of the Fixed
Allocation Percentage may be reduced upon the occurrence of an early
amortization event with respect to a Paired Series resulting in a possible
reduction of the percentage of Collections of Principal Receivables allocated
to Series Holders and possible delays in payments to the Holders. See "Risk
Factors--Issuance of Additional Series; Sale of Purchased Interests; Effect on
Timing or Amount of Payments to Holders" in the Prospectus and "Maturity
Considerations" herein and in the Prospectus.
PURCHASE OF CERTIFICATES BY THE TRANSFEROR
The Transferor may, from time to time, but will have no obligation to,
purchase Class A Certificates or Class B Certificates on the secondary market
in accordance with applicable law and may request the Trustee to
S-40
<PAGE>
cancel such Class A Certificates or Class B Certificates and reduce the Class
A Invested Amount or Class B Invested Amount, respectively, by a corresponding
amount.
SERIES 1996-A TERMINATION DATE; CERTAIN DISTRIBUTIONS
If the Invested Amount is greater than zero on the Series 1996-A Termination
Date, the Trustee or the Servicer may be required to sell or cause to be sold
certain Receivables and to pay the net proceeds of such sale and any
collections on the Receivables, to the extent available and in the priorities
set forth herein, in an amount at least equal to the Invested Amount plus
accrued interest thereon.
EARLY AMORTIZATION EVENTS
As described above, the Revolving Period will continue until the beginning
of business on February 1, 2001, unless an Early Amortization Event occurs
prior to such date. An "Early Amortization Event" refers to (i) an Early
Amortization Event as described in the Prospectus under "Description of the
Certificates--Early Amortization Events" and (ii) the occurrence of any of the
following events after the required notice (such notice being described in the
paragraph following clause (g) below):
(a) the failure of the Transferor (i) to make any payments or deposits
required in the Pooling Agreement on or before the date occurring five days
after the date such payment or deposit is required to be made (ii) to duly
observe or perform in any material respect any covenants or agreements of
the Transferor set forth in the Pooling Agreement which have a material
adverse effect on the Holders of the Certificates (which determination will
be made without reference to whether any funds are available under the
Collateral Interest or the Cash Collateral Account) and continues
unremedied for a period of 60 days after the date on which written notice
of such failure, requiring the same to be remedied, will be given to the
Transferor by the Trustee, or to the Transferor and the Trustee by the
Holders of Certificates and/or the Collateral Interest Holder representing
more than 50% of the Series Interest, and which continues to materially and
adversely affect the interests of the Holders of the Certificates (which
determination will be made without reference to whether any funds are
available under the Collateral Interest or the Cash Collateral Account) for
such period;
(b) any representation or warranty made by the Transferor in the Pooling
Agreement, or any information contained in an Account Schedule required to
be delivered by the Transferor pursuant to the Pooling Agreement, (i) shall
prove to have been incorrect in any material respect when made or when
delivered, which continues to be incorrect in any material respect for a
period of 60 days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Transferor
by the Trustee, or to the Transferor and the Trustee by the Holders of
Certificates and/or the Collateral Interest Holder representing more than
50% of the Series Interest, and (ii) as a result of which the interests of
the Holders of the Certificates are materially and adversely affected
(which determination will be made without reference to whether any funds
are available under the Collateral Interest or the Cash Collateral Account)
and continue to be materially and adversely affected for such period;
provided, that an Early Amortization Event pursuant to this clause (b) will
not be deemed to have occurred hereunder if the Transferor has accepted
reassignment of the related Receivable, or all of such Receivables, if
applicable, during such period in accordance with the provisions of the
Pooling Agreement;
(c) the average Portfolio Yield for any three consecutive Monthly Periods
is reduced to a rate which is less than the average Base Rate for such
period;
(d) the Transferor shall fail to convey Receivables arising under
Additional Accounts, or Participation Interests, to the Trust, as required
by the Pooling Agreement; provided, that such failure will not give rise to
an Early Amortization Event if, prior to the date on which such conveyance
was required to be completed, the Transferor causes a reduction in the
invested amount of any Variable Interest to occur, so that, after giving
effect to that reduction (i) the Transferor Amount is not less than the
Minimum Transferor Amount and (ii) the sum of the aggregate amount of
Principal Receivables plus amounts on deposit in the Excess Funding Account
is not less than the Required Principal Balance;
S-41
<PAGE>
(e) any Servicer Default shall occur which would have a material adverse
effect on the Holders of the Certificates;
(f) the Class A Invested Amount shall not be paid in full on the Class A
Scheduled Payment Date or the Class B Invested Amount shall not be paid in
full on the Class B Scheduled Payment Date; or
(g) the occurrence of certain insolvency events relating to The Limited.
In the case of any event described in (a), (b) or (e) above, after the
applicable grace period set forth in such Sections, either the Trustee or
Investor Holders representing more than 50% of the Series Interest of Series
1996-A by notice then given in writing to the Transferor and the Servicer (and
to the Trustee if given by the Investor Holders) may declare that an Early
Amortization Event has occurred as of the date of such notice, and in the case
of any event described in (c), (d), (f) or (g) above, an Early Amortization
Event shall occur without any notice or other action on the part of the
Trustee or the Investor Holders immediately upon the occurrence of such event.
On the date on which an Early Amortization Event is deemed to have occurred,
the Early Amortization Period will commence. In such event, distributions of
principal to the Investor Holders will begin on the first Distribution Date
following the month in which such Early Amortization Event occurred. "Investor
Holders" means, collectively, the Class A Holders, the Class B Holders and the
Collateral Interest Holder.
See "Description of the Certificates--Early Amortization Events" in the
Prospectus for an additional discussion of the consequences of an insolvency,
conservatorship or receivership of the Transferor.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The share of the Servicing Fee allocable to the Series Interest with respect
to any Transfer Date (the "Investor Servicing Fee") will be equal to one-
twelfth of the product of (a) 2.0% and (b) the Invested Amount as of the last
day of the Monthly Period preceding such Transfer Date; provided, however,
with respect to the first Transfer Date, the Investor Servicing Fee will be
equal to $672,222.22. The share of the Servicing Fee allocable to the Class A
Interest (the "Class A Servicing Fee"), the Class B Interest (the "Class B
Servicing Fee") and the Collateral Interest (the "Collateral Interest
Servicing Fee") with respect to any Transfer Date will equal the Class A
Floating Allocation Percentage, Class B Floating Allocation Percentage and
Collateral Floating Allocation Percentage, respectively, of such Investor
Servicing Fee. Except as specifically provided above, the Servicing Fee will
be paid by the cash flows from the Trust allocated to the Transferor or the
certificateholders of other Series (as provided in the related Series
Supplements) and in no event will the Trust, the Trustee, the Investor Holders
be liable therefor. The Class A Servicing Fee and the Class B Servicing Fee
will be payable solely to the extent amounts are available for distribution in
respect thereof as described under "--Application of Collections" herein.
The Servicer will pay from its servicing compensation certain expenses
incurred in connection with servicing the Receivables including, without
limitation, payment of the fees and disbursements of the Trustee and
independent certified public accountants and other fees which are not
expressly stated in the Pooling Agreement to be payable by the Trust or the
Investor Holders other than federal, state and local income and franchise
taxes, if any, of the Trust.
REPORTS TO HOLDERS
On each Transfer Date, the Trustee will forward to each Holder of record, a
statement prepared by the Servicer setting forth the items described in
"Description of the Certificates--Reports to Holders" in the Prospectus. In
addition, such statement will include (a) the Collateral Interest, if any, for
such Transfer Date and (b) the Available Cash Collateral Amount, if any, for
such Transfer Date.
UNDERWRITING
Subject to the terms and conditions set forth in the Class A Underwriting
Agreement (the "Class A Underwriting Agreement") between the Transferor and
the Class A Underwriters named below (the "Class A
S-42
<PAGE>
Underwriters"), and the terms and conditions set forth in the Class B
Underwriting Agreement (the "Class B Underwriting Agreement," and together
with the Class A Underwriting Agreement, the "Underwriting Agreement") between
the Transferor and the Class B Underwriter named below (the "Class B
Underwriter," and together with the Class A Underwriters, the "Underwriters"),
the Transferor has agreed to sell to the Underwriters, and each of the
Underwriters has severally agreed to purchase, the principal amount of the
Certificates set forth opposite its name:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF
CLASS A
CLASS A UNDERWRITERS CERTIFICATES
-------------------- -------------------
<S> <C>
CS First Boston Corporation.......................... $89,100,000
Chase Securities Inc................................. 89,100,000
Citicorp Securities, Inc............................. 89,100,000
Goldman, Sachs & Co.................................. 89,100,000
J.P. Morgan Securities Inc........................... 89,100,000
------------
Total $445,500,000
<CAPTION>
PRINCIPAL AMOUNT OF
CLASS B
CLASS B UNDERWRITER CERTIFICATES
------------------- -------------------
<S> <C>
CS First Boston Corporation.......................... $46,750,000
</TABLE>
In the Class A Underwriting Agreement, the Class A Underwriters have agreed,
subject to the terms and conditions set forth therein, to purchase all of the
Class A Certificates offered hereby if any of the Class A Certificates are
purchased. In the Class B Underwriting Agreement, the Class B Underwriters
have agreed, subject to the terms and conditions set forth therein, to
purchase all of the Class B Certificates offered hereby if any of the Class B
Certificates are purchased. The Underwriters have agreed to reimburse the
Transferor for certain expenses of the issuance and distribution of the
Certificates.
The Class A Underwriters propose initially to offer the Class A Certificates
to the public at the price set forth on the cover page hereof and to certain
dealers at such price less concessions not in excess of 0.200% of the
principal amount of the Class A Certificates. The Class A Underwriters may
allow, and such dealers may reallow, concessions not in excess of 0.125% of
the principal amount of the Class A Certificates to certain brokers and
dealers. After the initial public offering, the public offering price and
other selling terms may be changed by the Class A Underwriters.
The Class B Underwriter proposes initially to offer the Class B Certificates
to the public at the price set forth on the cover page hereof and to certain
dealers at such price less concessions not in excess of 0.300% of the
principal amount of the Class B Certificates. The Class B Underwriter may
allow, and such dealers may reallow, concessions not in excess of 0.200% of
the principal amount of the Class B Certificates to certain brokers and
dealers. After the initial public offering, the public offering price and
other selling terms may be changed by the Class B Underwriter.
Each Underwriter has represented and agreed that (a) it has not offered or
sold, and will not offer or 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 do not
constitute an offer to the public in the United Kingdom for the purposes of
the Public Offers of Securities Regulations 1995, (b) it has complied and will
comply with all applicable provisions of the Financial Services Act 1986 of
Great Britain with respect to anything done by it in relation to the
Certificates in, from or otherwise involving the United Kingdom and (c) it has
only issued or passed on and will only issue or pass on in the United Kingdom
any document in connection with the issue of the Certificates to a person who
is of a kind described in Article 8 of the Financial Services Act 1986
(Investment Advertisements) (Exemptions) (No. 2) Order 1995 of Great Britain
or is a person to whom the document may otherwise lawfully be issued or passed
on.
S-43
<PAGE>
The Transferor will indemnify the Underwriters against liabilities relating
to the adequacy of disclosure to investors, including liabilities under the
Securities Act, or contribute to payments the Underwriters may be required to
make in respect thereof.
In the ordinary course of their respective businesses, certain of the
Underwriters and their respective affiliates have engaged and may in the
future engage in investment banking or commercial banking transactions with
WFN and its affiliates. Without limiting the generality of the foregoing, CS
First Boston Corporation is acting as financial advisor to WFN in connection
with the placement of the Collateral Interest.
S-44
<PAGE>
INDEX OF TERMS FOR PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Accounts........................................................ S-1
Aggregate Investor Default Amount............................... S-38
Automatic Additional Accounts................................... S-19
Available Cash Collateral Amount................................ S-37
Available Enhancement Amount.................................... S-38
Available Investor Principal Collections........................ S-27
Bank............................................................ S-3
Base Rate....................................................... S-23
Cash Collateral Account......................................... S-12, S-37
Certificates.................................................... S-1, S-3
Class A Additional Interest..................................... S-6, S-26
Class A Available Funds......................................... S-26
Class A Certificates............................................ S-1, S-3
Class A Deficiency Amount....................................... S-6, S-26
Class A Final Scheduled Payment Date............................ S-8
Class A Fixed Allocation Percentage............................. S-29
Class A Floating Allocation Percentage.......................... S-28
Class A Holders................................................. S-3
Class A Interest................................................ S-3
Class A Invested Amount......................................... S-29
Class A Investor Allocation Percentage.......................... S-29
Class A Investor Charge-Off..................................... S-11, S-39
Class A Investor Default Amount................................. S-38
Class A Monthly Interest........................................ S-33
Class A Monthly Principal....................................... S-35
Class A Rate.................................................... S-2, S-4
Class A Reduction Amount........................................ S-39
Class A Required Amount......................................... S-9, S-10, S-31
Class A Servicing Fee........................................... S-42
Class A Uncovered Dilution Amount............................... S-38
Class A Underwriters............................................ S-42, S-43
Class A Underwriting Agreement.................................. S-42
Class B Additional Interest..................................... S-6, S-26
Class B Available Funds......................................... S-26
Class B Certificates............................................ S-1, S-3
Class B Deficiency Amount....................................... S-6, S-26
Class B Fixed Allocation Percentage............................. S-29
Class B Floating Allocation Percentage.......................... S-28
Class B Holders................................................. S-3
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Class B Interest..................................................... S-3
Class B Invested Amount.............................................. S-29
Class B Investor Allocation Percentage............................... S-30
Class B Investor Charge-Off.......................................... S-11, S-40
Class B Investor Default Amount...................................... S-38
Class B Monthly Interest............................................. S-33
Class B Monthly Principal............................................ S-36
Class B Rate......................................................... S-2, S-4
Class B Reduction Amount............................................. S-39
Class B Required Amount.............................................. S-10, S-31
Class B Scheduled Payment Date....................................... S-2
Class B Servicing Fee................................................ S-42
Class B Uncovered Dilution Amount.................................... S-39
Class B Underwriter.................................................. S-43
Class B Underwriting Agreement....................................... S-43
Closing Date......................................................... S-2
Code................................................................. S-14
Collateral Available Funds........................................... S-33
Collateral Charge-Off................................................ S-40
Collateral Default Amount............................................ S-38
Collateral Fixed Allocation Percentage............................... S-29
Collateral Floating Allocation Percentage............................ S-28
Collateral Interest.................................................. S-3, S-30
Collateral Interest Holder........................................... S-3
Collateral Interest Servicing Fee.................................... S-42
Collateral Investor Allocation Percentage............................ S-30
Collateral Monthly Interest.......................................... S-34
Collateral Monthly Principal......................................... S-36
Collateral Rate...................................................... S-34
Collateral Reduction Amount.......................................... S-40
Collateral Uncovered Dilution Amount................................. S-39
Controlled Amortization Amount....................................... S-36
Controlled Amortization Period....................................... S-7
Controlled Payment Amount............................................ S-7, S-23
Distribution Date.................................................... S-2, S-6
Distribution Period.................................................. S-6
Early Amortization Event............................................. S-41
Early Amortization Period............................................ S-9
Enhancement Surplus.................................................. S-38
ERISA................................................................ S-14
Excess Finance Charge Collections.................................... S-35
Excess Spread........................................................ S-10
FDIC................................................................. S-1
Finance Charge Account............................................... S-24
</TABLE>
S-45
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Fixed Allocation Percentage.......................................... S-28
Floating Allocation Percentage....................................... S-28
Group One............................................................ S-36
Holders.............................................................. S-3
Identified Portfolio................................................. S-16
Invested Amount...................................................... S-30
Investment company................................................... S-23
Investor Charge-Offs................................................. S-40
Investor Default Amount.............................................. S-38
Investor Holders..................................................... S-42
Investor Servicing Fee............................................... S-42
LIBOR................................................................ S-34
Loan Agreement....................................................... S-13
Monthly Period....................................................... S-4
Paired Series........................................................ S-13, S-40
Pooling Agreement.................................................... S-3
Portfolio Yield...................................................... S-24
Principal Account.................................................... S-32
Principal Shortfalls................................................. S-36
Rating Agency Condition.............................................. S-38
Reallocated Class B Principal Collections............................ S-32
Reallocated Collateral Principal Collections......................... S-32
Reallocated Principal Collections.................................... S-32
Receivables.......................................................... S-1
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Record Date.......................................................... S-25
Required Cash Collateral Amount...................................... S-38
Required Draw Amount................................................. S-37
Required Enhancement Amount.......................................... S-12, S-38
Required Retained Transferor Percentage.............................. S-19
Reset Date........................................................... S-30
Revolving Period..................................................... S-7
Series 1996-A Supplement............................................. S-3
Series 1996-A Termination Date....................................... S-5
Series Allocation Percentage......................................... S-30
Series Interest...................................................... S-3
Shared Principal Collections......................................... S-13, S-36
Supplemental Accounts................................................ S-19
Transfer Date........................................................ S-32
Transferor........................................................... S-3
Transferor Interest.................................................. S-3
Trust................................................................ S-1, S-3
Trust Portfolio...................................................... S-16, S-19
Trustee.............................................................. S-3
Uncovered Dilution Amount............................................ S-39
Underwriters......................................................... S-43
Underwriting Agreement............................................... S-43
Variable Interest.................................................... S-30
WFN.................................................................. S-1, S-3
</TABLE>
S-46
<PAGE>
ANNEX I
ISSUANCES OF OTHER SERIES
The Trust has previously issued one Series, Series 1996-VFC Certificates,
which is a series of variable funding certificates, meaning that the aggregate
outstanding principal amount of Series 1996-VFC Certificates may be increased
or decreased from time to time subject to a maximum amount. Such maximum
amount is $1,075,000,000 on the date of this Prospectus Supplement, but is
expected to be reduced to approximately $500,000,000 on the Closing Date and
may be increased or decreased from time to time thereafter, subject to certain
conditions, including mutual agreement of the Transferor and the holders of
Series 1996-VFC Certificates. Series 1996-VFC is in a revolving period until
January 17, 1997 (unless an early amortization event occurs prior to that
date). That revolving period may be extended by the mutual agreement of the
Transferor and the holders of Series 1996-VFC Certificates. The Series 1996-
VFC Certificates are included in Group One.
On the Closing Date the Trust is issuing another Series, Series 1996-B
Certificates. The table below sets forth principal characteristics of the
Series 1996-B Certificates:
<TABLE>
<S> <C>
Expected Invested Amount at end of Closing Date............. $350,000,000
Class A Rate................................................ 6.95%
Class B Rate................................................ 7.20%
Maximum Collateral Rate..................................... LIBOR +1.1%
Initial Collateral Interest................................. $ 36,750,000
Initial Cash Collateral Account Balance..................... $ 8,750,000
Series Servicing Fee Rate................................... 2.0%
Stated Series 1996-B Termination Date....................... April 2006
Group....................................................... Group One
</TABLE>
A-1
<PAGE>
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED APRIL 9, 1996
$313,250,000
WORLD FINANCIAL NETWORK CREDIT CARD MASTER TRUST
$283,500,000 6.95% Class A Asset-Backed Certificates, Series 1996-B
$29,750,000 7.20% Class B Asset-Backed Certificates, Series 1996-B
WORLD FINANCIAL NETWORK NATIONAL BANK
Transferor and Servicer
-----------
Each 6.95% Class A Asset-Backed Certificate, Series 1996-B (collectively, the
"Class A Certificates") and each 7.20% Class B Asset-Backed Certificate,
Series 1996-B (collectively, the "Class B Certificates" and, together with
the Class A Certificates, the "Certificates") will represent the right to
receive certain payments from the World Financial Network Credit Card
Master Trust (the "Trust"), created pursuant to a Pooling and Servicing
Agreement between World Financial Network National Bank ("WFN"), as
transferor and servicer, and The Bank of New York, as trustee. The
property of the Trust includes receivables (the "Receivables")
generated from time to time in a portfolio of open end credit card
accounts (the "Accounts") and all monies due or to become due in
payment of the Receivables. In addition, the Collateral Interest
(as defined herein) will be issued in the initial amount of
$36,750,000 and will be subordinated to the Certificates as
described herein. Additional enhancement for the Certificates
will be provided in the form of a Cash Collateral Account,
which will initially be funded with a deposit of $8,750,000.
WFN initially will own the remaining undivided interest in the
Trust not represented by the Certificates, the Collateral
Interest and other interests issued by the Trust from time
to time and will service the Receivables. WFN has offered
and may from time to time offer other Series of
certificates that evidence undivided interests in certain
assets of the Trust, which may have terms significantly
different from the Certificates. Certain capitalized
terms used in this Prospectus Supplement are defined
in this Prospectus Supplement on the pages indicated
in the "Index of Terms for Prospectus Supplement" on
page S-49 of this Prospectus Supplement or on the
pages indicated in the""Index of Terms for
Prospectus" on page 72 of the accompanying
Prospectus.
(continued on next page)
THERE CURRENTLY IS NO SECONDARY MARKET FOR THE CERTIFICATES, AND THERE
IS NO ASSURANCE THAT ONE WILL DEVELOP. POTENTIAL INVESTORS SHOULD
CONSIDER, AMONG OTHER THINGS, THE INFORMATION SET FORTH IN
"RISK FACTORS" ON PAGE 19 IN THE PROSPECTUS.
-----------
THE CERTIFICATES WILL REPRESENT INTERESTS IN THE TRUST ONLY AND WILL NOT
REPRESENT INTERESTS IN OR RECOURSE OBLIGATIONS OF THE TRANSFEROR OR THE
SERVICER OR ANY AFFILIATE OF EITHER OF THEM. A CERTIFICATE IS NOT A
DEPOSIT AND NEITHER THE CERTIFICATES NOR THE UNDERLYING AC-
COUNTS ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT IN-
SURANCE CORPORATION (THE "FDIC") OR ANY OTHER GOVERN-
MENTAL AGENCY. THE RECEIVABLES ARE NOT INSURED OR
GUARANTEED BY THE FDIC OR ANY OTHER GOVERNMEN-
TAL AGENCY.
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 OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
<CAPTION>
Price to Underwriting Proceeds to
Public(1) Discount Transferor(1)(2)
--------- ------------ ----------------
<S> <C> <C> <C>
Per Class A Certificate.......... 99.781250% 0.425000% 99.356250%
Per Class B Certificate.......... 99.828125% 0.600000% 99.228125%
Total............................ $312,578,710.94 $1,383,375.00 $311,195,335.94
</TABLE>
- -------
(1) Plus accrued interest, if any, at the Class A Rate or the Class B Rate, as
applicable, from May 9, 1996.
(2) Before deduction of expenses estimated to be $964,553.
-----------
The Certificates are offered by the Underwriters when, as and if issued by
the Trust and accepted by the Underwriters and subject to the Underwriters'
right to reject orders in whole or in part. It is expected that the
Certificates will be delivered in book-entry form on or about May 9, 1996,
through the facilities of The Depository Trust Company, Cedel Bank, societe
anonyme, and the Euroclear System.
Underwriters of the Class A Certificates
CS First Boston
Chase Securities Inc.
Citicorp Securities, Inc.
Goldman, Sachs & Co.
J.P. Morgan &
Co.
Underwriter of the Class B Certificates
CS First Boston
The Date of this Prospectus Supplement is April 30, 1996
<PAGE>
(continued from previous page)
Interest will accrue on the Class A Certificates from May 9, 1996 (the
"Closing Date") through June 14, 1996 and with respect to each Distribution
Period (as defined herein) thereafter, at a fixed rate of 6.95% per annum (the
"Class A Rate"). Interest will accrue on the Class B Certificates from the
Closing Date through June 14, 1996 and with respect to each Distribution
Period thereafter, at a fixed rate of 7.20% per annum (the "Class B Rate").
Interest with respect to the Certificates will be distributed on June 17, 1996
and on the 15th day of each month thereafter (or, if such 15th day is not a
business day, the next succeeding business day) (each, a "Distribution Date")
and will be calculated on the basis of a 360-day year of twelve 30-day months.
Principal on the Class A Certificates is scheduled to be distributed on the
May 2003 Distribution Date (the "Class A Scheduled Payment Date"), but may be
paid earlier or later under the circumstances described herein. Principal on
the Class B Certificates is scheduled to be distributed on the June 2003
Distribution Date (the "Class B Scheduled Payment Date"), but may be paid
earlier or later under the circumstances described herein. See "Maturity
Considerations" herein.
The Class B Certificates will be subordinated to the Class A Certificates,
and the Collateral Interest will be subordinated to the Class A Certificates
and the Class B Certificates, as described herein. Additional Enhancement for
the Certificates will be provided in the form of the Cash Collateral Account.
------------
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 Transferor from time to time pursuant to its Prospectus
dated April 9, 1996. This Prospectus Supplement does not contain complete
information about the offering of the Certificates. Additional information is
contained in the Prospectus, and purchasers 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.
S-2
<PAGE>
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 in this summary are
defined elsewhere in this Prospectus Supplement and the accompanying
Prospectus. A listing of the pages on which some of the terms are defined is
found in the "Index of Terms for Prospectus Supplement" and the "Index of Terms
for Prospectus."
TYPE OF SECURITIES.......... 6.95% Class A Asset-Backed Certificates, Series
1996-B (the "Class A Certificates") and 7.20%
Class B Asset-Backed Certificates, Series 1996-B
(the "Class B Certificates," and together with
the Class A Certificates, the "Certificates").
TRUST....................... The World Financial Network Credit Card Master
Trust (the "Trust") was formed pursuant to a
pooling and servicing agreement, dated as of
January 17, 1996 (the "Pooling Agreement"), be-
tween World Financial Network National Bank
("WFN" or the "Bank"), as transferor (the
"Transferor") and as servicer of the Receiv-
ables, and The Bank of New York, as trustee (the
"Trustee"). As used in this Prospectus Supple-
ment, the term "Holders" refers to holders of
the Certificates, the term "Class A Holders" re-
fers to holders of the Class A Certificates, the
term "Class B Holders" refers to holders of the
Class B Certificates and the term "Pooling
Agreement" (unless the context requires other-
wise) refers to the Pooling Agreement as supple-
mented by the supplement relating to the Certif-
icates (the "Series 1996-B Supplement").
CERTIFICATE INTEREST AND Each of the Certificates offered hereby repre-
PRINCIPAL.................. sents the right to receive certain payments from
the assets of the Trust. The Trust's assets will
be allocated among the Class A Holders (the
"Class A Interest"), the Class B Holders (the
"Class B Interest"), the Collateral Interest
Holder (the "Collateral Interest," and together
with the Class A Interest and the Class B Inter-
est, the "Series Interest"), the interest of the
holders of other undivided interests in the
Trust issued pursuant to the Pooling Agreement
and applicable Series Supplements and the Trans-
feror (the "Transferor Interest"), as described
below. The Collateral Interest in the initial
amount of $36,750,000 (which amount represents
10.5% of the initial Invested Amount) consti-
tutes Enhancement for the Certificates. The pro-
vider of such Enhancement is referred to herein
as the "Collateral Interest Holder." Allocations
will be made to the Collateral Interest, and the
Collateral Interest Holder will have voting and
certain other rights, as if the Collateral In-
terest were a subordinated class of Certifi-
cates. Additional Enhancement for the Certifi-
cates will be provided in the form of the Cash
Collateral Account.
The Class A Certificates will represent the right
to receive from the assets of the Trust allo-
cated to the Class A Certificates funds up to
(but not in excess of) the amounts required to
make (a) payments of interest accruing from the
Closing Date through June 14,
S-3
<PAGE>
1996 and with respect to each Distribution Pe-
riod thereafter, at a fixed rate of 6.95% per
annum (such rate, the "Class A Rate"), and (b)
payments of principal on the Class A Scheduled
Payment Date or, under certain limited circum-
stances, during the Early Amortization Period,
to the extent of the Class A Invested Amount,
which may be less than the unpaid principal bal-
ance of the Class A Certificates in certain cir-
cumstances described herein.
The Class B Certificates will represent the right
to receive, from the assets of the Trust allo-
cated to the Class B Certificates, funds up to
(but not in excess of) the amounts required to
make (a) payments of interest accruing from the
Closing Date through June 14, 1996 and with re-
spect to each Distribution Period thereafter, at
a fixed rate of 7.20% per annum (such rate, the
"Class B Rate") and (b) payments of principal
scheduled to be paid on the Class B Scheduled
Payment Date or, under certain limited circum-
stances, during the Early Amortization Period,
to the extent of the Class B Invested Amount,
which may be less than the unpaid principal bal-
ance of the Class B Certificates in certain cir-
cumstances described herein. No principal will
be paid to the Class B Holders until the Class A
Invested Amount is paid in full.
The Class A Invested Amount and the Class B In-
vested Amount will, except as otherwise provided
herein, remain fixed at $283,500,000 and
$29,750,000, respectively during the Revolving
Period. The Class A Invested Amount will decline
in certain circumstances if the Class A Reduc-
tion Amount allocated to the Class A Certifi-
cates exceeds funds allocable thereto as de-
scribed herein and the Class B Invested Amount,
the Collateral Interest and the Available Cash
Collateral Amount are zero. The Class B Invested
Amount will decline in certain circumstances as
a result of (a) the reallocation of collections
of Principal Receivables otherwise allocable to
the Class B Interest to fund certain payments in
respect of the Class A Certificates and (b) the
allocation to the Class B Interest of the Class
B Reduction Amount, including such amounts oth-
erwise allocable to the Class A Interest when
the Collateral Interest and the Available Cash
Collateral Amount are zero. During the Con-
trolled Accumulation Period, for the sole pur-
pose of allocating collections of Finance Charge
Receivables, Default Amounts and Uncovered Dilu-
tion Amounts with respect to each Monthly Peri-
od, the Class A Invested Amount will be further
reduced by the amount on deposit in the Princi-
pal Funding Account from time to time (as so re-
duced, the "Class A Adjusted Invested Amount"
and together with the Class B Invested Amount
and the Collateral Interest, the "Adjusted In-
vested Amount").
The Class A Certificates, the Class B Certifi-
cates and the Collateral Interest will each in-
clude the right to receive (but only to the ex-
tent needed to make required payments under the
Pooling Agreement) varying percentages of col-
lections of Finance Charge Receivables and Prin-
cipal Receivables and will be allocated vary-
S-4
<PAGE>
ing percentages of Default Amounts and Uncovered
Dilution Amounts during each calendar month (a
"Monthly Period"). Collections of Finance Charge
Receivables, Default Amounts and Uncovered Dilu-
tion Amounts at all times, and collections of
Principal Receivables during the Revolving Peri-
od, will be allocated to the Series Interest
based on the Floating Allocation Percentage and
will be further allocated among the Class A In-
terest, the Class B Interest and the Collateral
Interest based on the Class A Floating Alloca-
tion Percentage, the Class B Floating Allocation
Percentage and the Collateral Floating Alloca-
tion Percentage, respectively, applicable during
the related Monthly Period. Collections of Prin-
cipal Receivables during the Controlled Accumu-
lation Period and the Early Amortization Period
will be allocated to the Series Interest based
on the Fixed Allocation Percentage and will be
further allocated among the Class A Interest,
the Class B Interest and the Collateral Interest
based on the Class A Fixed Allocation Percent-
age, the Class B Fixed Allocation Percentage and
the Collateral Fixed Allocation Percentage, re-
spectively. See "Description of the Certifi-
cates--Allocation Percentages", "--Application
of Collections" and "--Early Amortization
Events" herein and "Description of the Certifi-
cates--Early Amortization Events" in the Pro-
spectus.
The final distribution of principal and interest
on the Certificates will be made no later than
the April 2006 Distribution Date. Each Certifi-
cate will be retired on the day following such
Distribution Date, whether as a result of op-
tional reassignment to the Transferor or other-
wise. Series 1996-B will terminate on the earli-
est to occur of (a) the Distribution Date on
which the Invested Amount is paid in full, (b)
the termination of the Trust pursuant to the
Pooling Agreement and (c) the April 2006 Distri-
bution Date (such earliest to occur, the "Series
1996-B Termination Date"). After the Series
1996-B Termination Date, no further principal or
interest payments will be made on the Certifi-
cates (except as described in "The Description
of the Certificates--Series 1996-B Termination
Date; Certain Distributions" herein).
RECEIVABLES................. The Receivables arise in Eligible Accounts in the
Approved Portfolios. The Receivables consist of
Principal Receivables and Finance Charge Receiv-
ables.
The aggregate amount of Receivables in the Ac-
counts as of the beginning of the day on April
1, 1996 was $1,259,463,052, comprised of
$1,234,074,160 of Principal Receivables and
$25,388,892 of Finance Charge Receivables. The
amount of Finance Charge Receivables will not
affect the Invested Amount or the amount of the
Transferor Interest, all of which are determined
on the basis of the amount of Principal Receiv-
ables in the Trust. The aggregate amount of
Principal Receivables in the Trust evidenced by
the Certificates and the Collateral Interest
will never exceed the amount of the Invested
Amount regardless of the total amount of Princi-
pal Receivables in the Trust at any time.
S-5
<PAGE>
DENOMINATIONS............... Beneficial interests in the Certificates will be
offered for purchase in denominations of $1,000
and integral multiples thereof.
REGISTRATION OF The Certificates initially will be represented by
CERTIFICATES............... Certificates registered in the name of Cede &
Co., as the nominee of DTC. No Certificate Owner
will be entitled to receive a Definitive Certif-
icate, except under the limited circumstances
described herein. Holders may elect to hold
their Certificates through DTC (in the United
States) or Cedel or Euroclear (in Europe).
Transfers will be made in accordance with the
rules and operating procedures described herein.
See "Description of the Certificates--Definitive
Certificates" in the Prospectus.
SERVICING FEE............... The Servicer will receive a monthly fee as ser-
vicing compensation from the Trust on each
Transfer Date. On each Transfer Date, the Class
A Servicing Fee, the Class B Servicing Fee and
the Collateral Interest Servicing Fee will be
paid as described under "Description of the Cer-
tificates Servicing Compensation and Payment of
Expenses" herein. See also "The Pooling and Ser-
vicing Agreement--Servicing Compensation and
Payment of Expenses" in the Prospectus.
INTEREST.................... Interest on the Certificates for each Distribu-
tion Period will be distributed on June 17,
1996, and on the 15th day of each month thereaf-
ter, or if such day is not a business day, on
the next succeeding business day (each, a "Dis-
tribution Date"), in an amount equal to (a) with
respect to the Class A Certificates, the product
of (i) one-twelfth, (ii) the Class A Rate and
(iii) the outstanding principal balance of the
Class A Certificates as of the preceding Record
Date (or in the case of the first Distribution
Date, as of the Closing Date) (provided that the
interest payable to the Class A Certificates for
the first Distribution Date will be $1,970,325)
and (b) with respect to the Class B Certifi-
cates, the product of (i) one-twelfth, (ii) the
Class B Rate and (iii) the outstanding principal
balance of the Class B Certificates as of the
preceding Record Date (or in the case of the
first Distribution Date, as of the Closing Date)
(provided that the interest payable to the Class
B Certificates for the first Distribution Date
will be $214,200). Interest for any Distribution
Date due but not paid on such Distribution Date
(such amount with respect to the Class A Certif-
icates, the "Class A Deficiency Amount," and
such amount with respect to the Class B Certifi-
cates, the "Class B Deficiency Amount") will be
payable on the next succeeding Distribution
Date, together with additional interest on such
amount at the applicable Certificate Rate plus
2% per annum (such amount with respect to the
Class A Certificates, the "Class A Additional
Interest," and such amount with respect to the
Class B Certificates, the "Class B Additional
Interest"). Interest on the Certificates will be
calculated on the basis of a 360-day year of
twelve 30-day months.
The "Distribution Period" with respect to any
Distribution Date will be the period from and
including the previous Distribution
S-6
<PAGE>
Date through the day preceding such Distribution
Date, except the initial Distribution Period
will be the period from and including the Clos-
ing Date through the day preceding the initial
Distribution Date. Interest payments on each
Distribution Date will be funded from the por-
tion of Finance Charge Receivables collected
during the preceding Monthly Period and certain
other available amounts (a) with respect to the
Class A Certificates, allocated to the Class A
Interest, and, if necessary, from Excess Spread,
Available Cash Collateral Amounts and Reallo-
cated Principal Collections (to the extent
available), (b) with respect to the Class B Cer-
tificates, allocated to the Class B Interest
and, if necessary, from Excess Spread, Available
Cash Collateral Amounts and Reallocated Collat-
eral Principal Collections (to the extent avail-
able) and (c) with respect to the Collateral In-
terest, from Excess Spread. See "Description of
the Certificates--Reallocation of Cash Flows"
and
"--Application of Collections--Payment of Inter-
est, Fees and Other Items" herein and "Risk Fac-
tors--Enhancement" in the Prospectus.
REVOLVING PERIOD............ The "Revolving Period" for the Certificates means
the period from and including the Closing Date
to, but not including, the commencement of the
earlier of (a) the Controlled Accumulation Pe-
riod and (b) the Early Amortization Period. Dur-
ing the Revolving Period, Available Investor
Principal Collections otherwise allocable to the
Series Interest will, subject to certain limita-
tions, be treated as Shared Principal Collec-
tions and allocated to the holders of other Se-
ries of certificates issued and outstanding or,
subject to certain limitations, paid to the
Transferor or deposited into the Excess Funding
Account. See "Description of the Certificates--
Principal Payments" herein. See "Description of
the Certificates--Early Amortization Events"
herein and in the Prospectus for a discussion of
the events which might lead to the termination
of the Revolving Period prior to the commence-
ment of the Controlled Accumulation Period.
CONTROLLED ACCUMULATION Unless an Early Amortization Event occurs, the
PERIOD..................... controlled accumulation period for the Certifi-
cates (the "Controlled Accumulation Period") is
scheduled to begin at the beginning of business
on May 1, 2002. Subject to the conditions set
forth under "Description of the Certificates--
Postponement of Controlled Accumulation Period,"
the Servicer may delay the scheduled commence-
ment of the Controlled Accumulation Period. The
Controlled Accumulation Period will end on the
earliest of (i) the commencement of the Early
Amortization Period, (ii) payment of the In-
vested Amount in full and (iii) the Series 1996-
B Termination Date. During the Controlled Accu-
mulation Period, prior to the payment of the
Class A Invested Amount in full, amounts equal
to the least of (a) Available Investor Principal
Collections for the related Monthly Period, (b)
the sum of the Controlled Accumulation Amount
for such Monthly Period and any portion of the
Controlled Accumulation Amount for any prior
Monthly
S-7
<PAGE>
Period that has not yet been deposited (such
sum, the "Controlled Deposit Amount" for such
Monthly Period) and (c) the Class A Adjusted In-
vested Amount on such Transfer Date will be de-
posited monthly in a trust account established
by the Servicer (the "Principal Funding Ac-
count") on each Transfer Date beginning with the
Transfer Date in the month following the com-
mencement of the Controlled Accumulation Period
until the Principal Funding Account Balance is
equal to the Class A Invested Amount. On each
Transfer Date during the Controlled Accumulation
Period after the Distribution Date on which the
Class A Invested Amount has been paid in full,
an amount equal to the lesser of (a) Available
Investor Principal Collections for the related
Monthly Period and (b) the Class B Invested
Amount on such Transfer Date will be deposited
into the Distribution Account for distribution
to the Class B Holders until the Class B In-
vested Amount has been paid in full. If, for any
Monthly Period, the Available Investor Principal
Collections for such Monthly Period exceed the
applicable Controlled Deposit Amount, the amount
of such excess will be first paid to the Collat-
eral Interest Holder to the extent of the Col-
lateral Monthly Principal and then will be
treated as Shared Principal Collections and al-
located to the holders of other Series of cer-
tificates within the same Group issued and out-
standing or, subject to certain limitations,
paid to the Transferor or deposited into the Ex-
cess Funding Account. See "Description of the
Certificates--Application of Collections" here-
in.
Unless an Early Amortization Event occurs, prior
to the payment of the Class A Invested Amount in
full, all funds on deposit in the Principal
Funding Account will be invested at the direc-
tion 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 Controlled Accumulation Period will be used
to pay interest on the Class A Certificates in
an amount up to, for each Transfer Date, the
product of (a) one-twelfth, (b) the Class A Rate
and (c) the Principal Funding Account Balance as
of the Record Date preceding such Transfer Date
(the "Covered Amount"). If, for any Transfer
Date, the Principal Funding Investment Proceeds
are less than the Covered Amount, the amount of
such deficiency (the "Principal Funding Invest-
ment Shortfall") will be paid, to the extent
available, from the Reserve Account. The amount,
if any, by which the Principal Funding Invest-
ment Proceeds exceed the Covered Amount for any
Transfer Date during the Controlled Accumulation
Period will be paid to the Transferor on such
Transfer Date.
Funds on deposit in the Principal Funding Account
will be available to pay the Class A Holders in
respect of the Class A Invested Amount on the
Class A Scheduled Payment Date. If the aggregate
principal amount of deposits made to the Princi-
pal Funding Account is insufficient to pay the
Class A Invested Amount in full
S-8
<PAGE>
on the Class A Scheduled Payment Date, the Early
Amortization Period will commence. Although it
is anticipated that during the Controlled Accu-
mulation Period prior to the payment of the
Class A Invested Amount in full, funds will be
deposited in the Principal Funding Account in an
amount equal to the applicable Controlled De-
posit Amount on each Transfer Date and that
scheduled principal will be available for dis-
tribution to the Class A Holders on the Class A
Scheduled Payment Date, no assurance can be
given in that regard. See "Maturity Considera-
tions" herein.
On the Class B Scheduled Payment Date, provided
that the Class A Invested Amount is paid in full
on the Class A Scheduled Payment Date and the
Early Amortization Period has not commenced,
Available Investor Principal Collections will be
used to pay the Class B Holders in respect of
the Class B Interest as described herein. If the
Available Investor Principal Collections are in-
sufficient to pay the Class B Invested Amount in
full on the Class B Scheduled Payment Date, the
Early Amortization Period will commence. Al-
though it is anticipated that scheduled princi-
pal will be available for distribution to the
Class B Holders on the Class B Scheduled Payment
Date, no assurance can be given in that regard.
See "Maturity Considerations" herein.
If an Early Amortization Event occurs during the
Controlled Accumulation Period, the Early Amor-
tization Period will commence, and any amounts
on deposit in the Principal Funding Account will
be paid to the Class A Holders on the Distribu-
tion Date in the month following the commence-
ment of the Early Amortization Period.
Other Series offered by the Trust may or may not
have amortization or accumulation periods like
the Controlled Accumulation Period for the Cer-
tificates, and such periods may have different
lengths and begin on different dates than such
Controlled Accumulation Period. Thus, certain
Series may be in their revolving periods while
others are in periods during which collections
of Principal Receivables are distributed to or
held for the benefit of certificateholders of
such other Series. In addition, other Series may
allocate Principal Receivables based upon dif-
ferent investor percentages. See "Description of
the Certificates--New Issuances" in the Prospec-
tus for a discussion of the potential terms of
any other Series.
EARLY AMORTIZATION PERIOD... During the period from the day on which an Early
Amortization Event has occurred and ending on
the earlier of (a) the payment of the Invested
Amount in full and (b) the Series 1996-B Termi-
nation Date (the "Early Amortization Period"),
Available Investor Principal Collections will be
distributed monthly on each Distribution Date to
the Class A Holders and, following payment of
the Class A Invested Amount in full, to the
Class B Holders and, following payment of the
Class B Invested Amount in full, to the Collat-
eral Interest Holder beginning with the Distri-
bution
S-9
<PAGE>
Date in the month following the commencement of
the Early Amortization Period. See "Description
of the Certificates--Early Amortization Events"
herein and in the Prospectus for a discussion of
the events which might lead to the commencement
of the Early Amortization Period.
SUBORDINATION OF THE CLASS
B CERTIFICATES AND THE
COLLATERAL INTEREST........
The Class B Certificates and the Collateral In-
terest will be subordinated, as described here-
in, to the extent necessary to fund payments
with respect to the Class A Certificates as de-
scribed herein. In addition, the Collateral In-
terest will be subordinated to the extent neces-
sary to fund certain payments with respect to
the Class B Certificates. Additional Enhancement
for the Certificates will be provided in the
form of the Cash Collateral Account. If the
Class B Invested Amount, the Collateral Interest
and the Available Cash Collateral Amount are re-
duced to zero, the Class A Holders will bear di-
rectly the credit and other risks associated
with their interest in the Trust. If the Collat-
eral Interest and the Available Cash Collateral
Amount are reduced to zero, the Class B Holders
will bear directly the credit and other risks
associated with their interest in the Trust. To
the extent the Class B Invested Amount is re-
duced, the percentage of collections of Finance
Charge Receivables allocable to the Class B
Holders in subsequent Monthly Periods will be
reduced. Such reductions of the Class B Invested
Amount will thereafter be reimbursed and the
Class B Invested Amount increased on each Trans-
fer Date by the amount, if any, of Excess Spread
for such Transfer Date available for that pur-
pose. To the extent the amount of such reduction
in the Class B Invested Amount is not reim-
bursed, the amount of principal and interest
distributable to the Class B Holders will be re-
duced. See "Description of the Certificates--
Subordination" herein.
ADDITIONAL AMOUNTS
AVAILABLE TO HOLDERS.......
With respect to any Transfer Date, Excess Spread
and any Required Draw Amount will be applied to
fund the Class A Required Amount and the Class B
Required Amount, if any. The "Class A Required
Amount" means the amount, if any, by which the
sum of (a) the Class A Monthly Interest for such
Transfer Date, (b) the Class A Deficiency
Amount, if any, for such Transfer Date, (c) the
Class A Additional Interest, if any, for such
Transfer Date, (d) the Class A Servicing Fee for
the prior Monthly Period, (e) the Class A Ser-
vicing Fee, if any, due but not paid on any
prior Transfer Date, (f) the Class A Investor
Default Amount, if any, for such Transfer Date
and (g) the Class A Uncovered Dilution Amount
for the related Monthly Period, exceeds the
Class A Available Funds for the related Monthly
Period. The "Class B Required Amount" means the
amount, if any, equal to the sum of (i) the
amount, if any, by which the sum of (A) the
Class B Monthly Interest for such Transfer Date,
(B) the Class B Defi-
S-10
<PAGE>
ciency Amount, if any, for such Transfer Date,
(C) the Class B Additional Interest, if any, for
such Transfer Date, (D) the Class B Servicing
Fee for the prior Monthly Period and (E) the
Class B Servicing Fee, if any, due but not paid
on any prior Transfer Date, exceeds the Class B
Available Funds for the related Monthly Period
and (ii) the sum of (A) the Class B Investor De-
fault Amount, if any, for such Transfer Date and
(B) the Class B Uncovered Dilution Amount for
the related Monthly Period. "Excess Spread" for
any Transfer Date will equal the sum of (1) the
excess of (A) Class A Available Funds for the
related Monthly Period over (B) the sum of the
amounts referred to in clauses (a) through (g)
in the definition of "Class A Required Amount"
above, (2) the excess of (A) Class B Available
Funds for the related Monthly Period over (B)
the sum of the amounts referred to in clause (i)
in the definition of "Class B Required Amount"
above, (3) Collateral Available Funds for the
related Monthly Period not used, in certain cir-
cumstances, to pay the Collateral Interest Ser-
vicing Fee for the prior monthly period and the
Collateral Interest Servicing Fee, if any, due
but not paid on any prior Transfer Date and (4)
Excess Finance Charge Collections, if any, allo-
cated to the Series Interest pursuant to the
Pooling Agreement as described under "--Sharing
of Excess Finance Charge Collections" herein and
in the Prospectus. For each Transfer Date, to
the extent available, a Required Draw Amount may
be withdrawn from the Cash Collateral Account in
order to cover certain amounts that are not cov-
ered by available Excess Spread for that Trans-
fer Date. See "Description of the Certificates--
Cash Collateral Account; Required Enhancement
Amount" herein.
If, on any Transfer Date, Excess Spread and any
Available Cash Collateral Amount is less than
the Class A Required Amount, then Reallocated
Principal Collections allocable first to the
Collateral Interest and then to the Class B In-
terest with respect to the related Monthly Pe-
riod will be used to fund the remaining Class A
Required Amount. If Reallocated Principal Col-
lections with respect to such Monthly Period are
insufficient to fund the remaining Class A Re-
quired Amount for the related Transfer Date,
then the Collateral Interest (after giving ef-
fect to reductions for any Collateral Charge-
Offs and Reallocated Principal Collections on
such Transfer Date) will be reduced by the
amount of such deficiency (but not by more than
the Class A Reduction Amount for such Monthly
Period). In the event that such reduction would
cause the Collateral Interest to be a negative
number, the Collateral Interest will be reduced
to zero, and the Class B Invested Amount (after
giving effect to reductions for any Class B In-
vestor Charge-Offs and any Reallocated Class B
Principal Collections on such Transfer Date)
will be reduced by the amount by which the Col-
lateral Interest would have been reduced below
zero (but not by more than the Class A Reduction
Amount for such Monthly Period). In the event
that such reduction would cause the Class B In-
vested Amount to be a negative number, the Class
B Invested
S-11
<PAGE>
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 more than the
Class A Reduction Amount for such Monthly Peri-
od) (such reduction, a "Class A Investor Charge-
Off"). If the Collateral Interest and the Class
B Invested Amount are reduced to zero, the Class
A Holders will bear directly the credit and
other risks associated with their undivided in-
terest in the Trust. See "Description of the
Certificates--Reallocation of Cash Flows" and
"--Defaulted Receivables; Dilutions" herein.
If, on any Transfer Date, Excess Spread and any
Available Cash Collateral Amount not required to
pay the Class A Required Amount and to reimburse
Class A Investor Charge-Offs is less than the
Class B Required Amount, Reallocated Principal
Collections allocable to the Collateral Interest
for the related Monthly Period not required to
pay the Class A Required Amount will be allo-
cated to fund the remaining Class B Required
Amount. If such remaining Reallocated Principal
Collections allocable to the Collateral Interest
with respect to such Monthly Period are insuffi-
cient to fund the remaining Class B Required
Amount for the related Transfer Date, then the
Collateral Interest (after giving effect to re-
ductions for any Collateral Charge-Offs, Reallo-
cated Principal Collections and any adjustments
made thereto for the benefit of the Class A
Holders) will be reduced by the amount of such
deficiency (but not by more than the Class B Re-
duction Amount for such Monthly Period). If such
reduction would cause the Collateral Interest to
be a negative number, the Collateral Interest
will be reduced to zero, and the Class B In-
vested Amount will be reduced by the amount by
which the Collateral Interest would have been
reduced below zero (but not by more than the ex-
cess, if any, of the Class B Reduction Amount
for such Monthly Period over such reduction in
the Collateral Interest with respect to such
Monthly Period) (such reduction, a "Class B In-
vestor Charge-Off"). In the event of a reduction
of the Class A Invested Amount, the Class B In-
vested Amount or the Collateral Interest, the
amount of principal and interest available to
fund payments with respect to the Class A Cer-
tificates and the Class B Certificates will be
decreased. See "Description of the Certifi-
cates--Reallocation of Cash Flows" and "--De-
faulted Receivables; Dilutions" herein.
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 Investor Holders.
The Cash Collateral Account will have a begin-
ning balance of $8,750,000 (which amount repre-
sents 2.5% of the initial Invested Amount). See
"Description of the Certificates--Application of
Collections--Excess Spread" and "--Cash Collat-
eral Account; Required Enhancement Amount" here-
in. To the extent set forth herein, withdrawals
will be made from the Cash Collateral Account to
pay, first, the Class A Required Amount and then
to pay the Class B Required Amount. See "De-
scription of the
S-12
<PAGE>
Certificates--Reallocation of Cash Flows" and
"--Defaulted Receivables; Dilutions" herein. If,
for any Transfer Date, there is an Enhancement
Surplus, an amount equal to the excess (if any)
of the amount of such Enhancement Surplus over
the amount of the Collateral Interest will be
withdrawn from the Cash Collateral Account and
applied in accordance with the Loan Agreement.
See "Description of the Certificates--Cash Col-
lateral Account; Required Enhancement Amount"
herein.
REQUIRED ENHANCEMENT The "Required Enhancement Amount" with respect to
AMOUNT..................... any Transfer Date means with respect to each
Transfer Date, the greater of (a) an amount
equal to 13% of the Adjusted Invested Amount on
such Transfer Date, after taking into account
deposits into the Principal Funding Account on
such Transfer Date and payments (including pay-
ments on the Collateral Interest) to be made on
the related Distribution Date and (b)
$10,500,000; provided, that (x) if, on or prior
to such Transfer Date, there have been any Re-
quired Draw Amounts or any reductions in the
Collateral Interest pursuant to clauses (c), (d)
or (e) of the definition of such term, or an
Early Amortization Event occurs with respect to
Series 1996-B, then the Required Enhancement
Amount for such Transfer Date shall, subject to
clauses (y) and (z), equal the Required Enhance-
ment Amount on the Transfer Date immediately
preceding such reduction, Required Draw Amount
or Early Amortization Event, (y) in no event
will the Required Enhancement Amount exceed the
sum of the outstanding principal amounts of (i)
the Class A Certificates and (ii) the Class B
Certificates, each as of the last day of the
Monthly Period preceding such Transfer Date af-
ter taking into account the payments to be made
on the related Distribution Date and (z) the Re-
quired Enhancement Amount may be reduced or in-
creased at Transferor's option at any time if
the Transferor, the Servicer, the Collateral In-
terest Holder and the Trustee have been provided
evidence that the Rating Agency Condition has
been satisfied. See "Description of the Certifi-
cates--Cash Collateral Account; Required En-
hancement Amount" herein.
If on any Transfer Date, the Available Enhance-
ment Amount is less than the Required Enhance-
ment Amount, certain Excess Spread amounts, if
available, will be used to increase the Collat-
eral Interest or the Available Cash Collateral
Amount to the extent of such shortfall. After
such application of those Excess Spread amounts,
any remaining Excess Spread amounts will first
be deposited into the Reserve Account as de-
scribed herein and second, to the extent avail-
able, be applied in accordance with the Loan
Agreement among the Trustee, the Transferor, the
Servicer and the Collateral Interest Holder (the
"Loan Agreement") or paid to the Transferor and
will not be available to the Holders.
SHARING OF EXCESS FINANCE
CHARGE COLLECTIONS.........
To the extent that collections of Finance Charge
Receivables allocated to the Series Interest
(and certain other amounts that are to
S-13
<PAGE>
be treated as collections of Finance Charge Re-
ceivables allocated to the Series Interest) are
not needed to make payments in respect of the
Series Interest as described herein under "De-
scription of the Certificates--Application of
Collections," such Excess Finance Charge Collec-
tions will be applied to make payments with re-
spect to other Series in Group One in accordance
with the Pooling Agreement. In addition, Excess
Finance Charge Collections otherwise allocable
to certain other Series in Group One, to the ex-
tent not required to make payments in respect of
such Series, may be applied to cover shortfalls
in amounts payable from Excess Spread as de-
scribed under "Description of the Certificates--
Application of Collections" herein.
SHARED PRINCIPAL To the extent that collections of Principal Re-
COLLECTIONS................ ceivables allocated to the Series Interest are
not needed to make payments on the Series Inter-
est or to be deposited in the Principal Funding
Account, such collections ("Shared Principal
Collections") will be allocated to cover certain
principal payments due to or for the benefit of
certificateholders of other Series in Group One
or, under certain circumstances, deposited into
the Excess Funding Account. Any such realloca-
tion or deposit will not result in a reduction
in the Invested Amount with respect to Series
1996-B. In addition, collections of Principal
Receivables and certain other amounts otherwise
allocable to other Series in Group One, to the
extent such collections are not needed to make
payments to or deposits for the benefit of the
certificateholders of such other Series, may be
applied to cover principal payments due to or
for the benefit of the holders of the Class A
Certificates and the Class B Certificates or the
Collateral Interest Holder. See "Description of
the Certificates--Shared Principal Collections"
herein.
PAIRED SERIES............... Series 1996-B may be paired with one or more
other Series (each a "Paired Series"). If a
Paired Series is issued with respect to Series
1996-B, following the issuance of such Paired
Series, as the Adjusted Invested Amount is re-
duced, the invested amount of the Paired Series
may increase by an equal amount. This will have
the effect of increasing the invested amount of
the Paired Series by an amount that otherwise
would have increased the Transferor Amount. If
an Early Amortization Event occurs with respect
to any such Paired Series prior to the payment
in full of the Certificates, the allocation per-
centages used to determine the Certificates'
share of principal collections may be reduced,
which may delay the final payment of principal
to the Holders. See "Maturity Considerations--
Paired Series," "Description of the Certifi-
cates--Paired Series" and "Description of the
Certificates--Allocation Percentages" herein.
OPTIONAL REPURCHASE......... The Series Interest will be subject to optional
repurchase by the Transferor on any Distribution
Date on or after the Distribution Date on which
the Invested Amount is reduced to an amount less
than or equal to $17,500,000 (5% of the initial
Invested Amount), if certain conditions set
forth in the Pooling Agreement are met.
S-14
<PAGE>
The repurchase price will be equal to the sum of
the Invested Amount and all accrued and unpaid
interest on the Certificates and the Collateral
Interest through the day preceding the Distribu-
tion Date on which the repurchase occurs. See
"The Pooling and Servicing Agreement--Termina-
tion of the Trust" in the Prospectus.
TAX STATUS.................. Special Tax Counsel will opine on the Closing
Date that under existing law the Certificates
will be characterized as debt for Federal income
tax purposes and the Trust will not be an asso-
ciation or publicly traded partnership taxable
as a corporation. Under the Pooling Agreement,
the Transferor, the Servicer, the Holders and
the Certificate Owners will agree to treat the
Certificates as debt for Federal, state, local
and foreign income and franchise tax purposes.
See "U.S. Federal Income Tax Consequences" in
the Prospectus for additional information con-
cerning the application of Federal income tax
laws.
ERISA CONSIDERATIONS........ Subject to considerations described below, the
Class A Certificates may be eligible for pur-
chase by employee benefit plan investors. Under
a regulation issued by the Department of Labor,
the Trust's assets would not be deemed "plan as-
sets" of an employee benefit plan holding the
Class A Certificates if certain conditions are
met, including that the Class A Certificates
must be held, upon completion of the public of-
fering made hereby, by at least 100 investors
who are independent of the Transferor and of one
another. Based on information provided by any
underwriter, agent or dealer involved in the
distribution of the Class A Certificates offered
hereby, the Transferor will notify the Trustee
as to whether or not the Class A Certificates
will be expected to be held by at least 100 sep-
arately named persons at the conclusion of the
offering. The Transferor anticipates that the
other conditions of the regulation will be met.
If the Trust's assets were deemed to be "plan
assets" of an employee benefit plan investor
(e.g., if the 100 independent investor criterion
is not satisfied), violations of the "prohibited
transaction" rules of the Employee Retirement
Income Security Act of 1974, as amended
("ERISA"), could result and generate excise tax
and other liabilities under ERISA and section
4975 of the Internal Revenue Code of 1986, as
amended (the "Code"), unless a statutory, regu-
latory or administrative exemption is available.
It is uncertain whether existing exemptions from
the "prohibited transaction" rules of ERISA
would apply to all transactions involving the
Trust's assets. Accordingly, fiduciaries or
other persons contemplating purchasing the Cer-
tificates on behalf or with "plan assets" of any
employee benefit plan should consult their coun-
sel before making a purchase. See "ERISA Consid-
erations" in the Prospectus.
The Underwriters currently do not expect that the
Class B Certificates will be held by at least
100 such persons and, therefore, do not expect
that such Class B Certificates will qualify as
publicly-offered securities under the regulation
referred to in the preceding
S-15
<PAGE>
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 re-
tirement 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 accept-
ance of a Class B Certificate or an interest
therein, each Class B Holder and Certificate
Owner will be deemed to have represented and
warranted that it is not subject to the forego-
ing limitation.
CLASS A CERTIFICATE RATING.. 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 Rating Agency.
The rating of the Class A Certificates by a Rat-
ing Agency reflects such Rating Agency's assess-
ment of the likelihood that the Holders of the
Class A Certificates will receive the payments
of interest and principal required to be made
under the Pooling Agreement, which in turn is
based primarily on the value of the Receivables
and the terms of the Class B Certificates, the
Collateral Interest and the Cash Collateral Ac-
count. A rating is not a recommendation to buy,
sell or hold securities and may be subject to
revision or withdrawal at any time by the as-
signing Rating Agency. Each rating should be
evaluated independently of any other rating. See
"Risk Factors--Limited Nature of Rating" in the
Prospectus for a discussion of other limitations
to credit ratings.
CLASS B CERTIFICATE RATING.. 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
Rating Agency. The rating of the Class B Certif-
icates by a Rating Agency reflects such Rating
Agency's assessment of the likelihood that the
Holders of the Class B Certificates will receive
the payments of interest and principal required
to be made under the Pooling Agreement, which in
turn is based primarily on the value of the Re-
ceivables and the terms of the Collateral Inter-
est and the Cash Collateral Account. A rating is
not a recommendation to buy, sell or hold secu-
rities and may be subject to revision or with-
drawal at any time by the assigning Rating Agen-
cy. Each rating should be evaluated indepen-
dently of any other rating. See "Risk Factors--
Limited Nature of Rating" in the Prospectus for
a discussion of other limitations to credit rat-
ings.
S-16
<PAGE>
WFN'S CREDIT CARD PORTFOLIO
GENERAL
The Receivables to be conveyed to the Trust by WFN pursuant to the Pooling
Agreement have been or will be generated from transactions made by holders of
selected credit card accounts included in the Trust Portfolio. A description
of the Bank's credit card business is contained in the Prospectus under the
heading "The WFN Credit Card Business."
The Receivables arise in a portfolio (the "Trust Portfolio") of consumer
open end credit card accounts serviced by WFN. Initially the Trust Portfolio
is made up of Eligibile Accounts included in the private label credit card
programs of Lane Bryant, Inc., Lerner New York, Inc., Express, Inc.,
Structure, Inc., Victoria's Secret Stores, Inc., Victoria's Secret Catalogue,
Inc., Limited Stores, Inc., Abercrombie & Fitch, Inc., Henri Bendel, Inc. and
Brylane L.P. (which includes programs related to the Lane Bryant, Lerner New
York and Roamans catalogues and initially excludes cards related to the
Kingsize and Sue Brett catalogues) and the Limited Fashion Group credit card
program (the "Identified Portfolio"), which make up a substantial majority of
the credit card accounts serviced by WFN.
COMPOSITION BY CREDIT CARD PROGRAM
IDENTIFIED PORTFOLIO
<TABLE>
<CAPTION>
PERCENT OF
RECEIVABLES
OUTSTANDING
-----------
<S> <C>
Express/Limited Fashion Group....................................... 20.81%
Brylane(/1/)........................................................ 18.79%
Lane Bryant......................................................... 17.62%
Lerner.............................................................. 14.90%
Victoria's Secret Stores/Catalogue.................................. 11.80%
Limited............................................................. 9.22%
Structure........................................................... 5.82%
Henri Bendel........................................................ 0.66%
Abercrombie & Fitch................................................. 0.38%
-------
Total........................................................... 100.00%
</TABLE>
- --------
(1) Includes programs related to Lane Bryant, Lerner New York and Roamans
catalogues.
BILLING AND PAYMENTS
WFN generates and mails directly to cardholders monthly statements
summarizing account activity and processes cardholder monthly payments.
Customers receive a grace period of approximately 30 days in order to make
payments in respect of purchases and thus avoid finance charges. Currently,
cardholders in the programs included in the Identified Portfolio must make a
monthly minimum payment at least equal to 10% of the account balance, as well
as any past due amounts. Such minimum monthly payments are subject to a $10
minimum payment ($20 for Henri Bendel). The minimum monthly payment may be
changed by WFN from time to time at its discretion.
Finance charges assessed on the accounts are based on the average daily
balance outstanding on an account during a monthly billing period and are
calculated by multiplying the average daily balance by the applicable periodic
finance charge rate. Finance charges are assessed from the date of purchase
although a grace period of approximately 30 days is available to avoid the
finance charge if the account is paid in full by the due date. Payments are
generally applied in the following order: (i) to fees assessed on the account,
(ii) to finance charges, and (iii) to the unpaid principal balance of
purchases allocated first to the longest outstanding receivable. The annual
finance charge rate is currently 22.8%, with the exception of the Henri Bendel
private label credit card, which carries a 21.6% annual finance charge rate in
order to accommodate the slightly more upscale customer focus. Finance charge
rates may be changed by WFN from time to time at its discretion. WFN offers a
lower prime-based rate to certain Cardholders currently making up a small
percentage of the accounts.
S-17
<PAGE>
WFN generally does not assess annual membership fees on accounts. A limited
number of accounts require payment of annual fees (generally ranging from $20
to $30), although under various marketing programs these fees may be waived or
rebated. For most credit card accounts, WFN also assesses late fees (ranging
from $5 to $10 depending on the past due payment amount) and returned check
charges (generally $10).
DELINQUENCY AND LOSS EXPERIENCE
An account is considered delinquent if the minimum payment due is not
received by the billing due date. At that time, the account is given a status
of 30 days delinquent. Under current policies, a message requesting payment is
printed on a Cardholder's billing statement after a scheduled payment has been
missed. After an account becomes 30 days delinquent, a proprietary collection
scoring system automatically scores the risk of the account becoming more
delinquent and the account is assigned a collection strategy. The key measures
used to score an account are (i) age of account, (ii) number of previous
delinquencies, (iii) outstanding balance, and (iv) previous payment history.
The strategy dictates the contact schedule and collections priority for the
account.
WFN may enter into arrangements with cardholders to extend or otherwise
change payment schedules under plans proposed by various consumer credit
counseling agencies which can include a reduction of monthly minimum payments
and a suspension of finance charge accruals and late fees.
Efforts to collect delinquent receivables are made by the WFN collection
department and, if necessary, by collection agencies and outside attorneys.
The collections departments consist of approximately 506 full-time
equivalents. New collectors undergo training which includes courses in
professional debt collection, the Fair Debt Collection Practices Act and
negotiating skills. These courses are also available on a "refresher" basis
for experienced collectors.
Specific collection actions include dunning letters, telephone calls using
automated dialing equipment, no action and sending the account to the mid-
range collections group. The mid-range collection staff handles the
intermediate to serious collection efforts. Unlike the auto-dial collections
staff, the mid-range collectors are responsible for their own individual
accounts and are reviewed accordingly. The mid-range collections group can
take past due accounts as early as 30 days past due.
Accounts are charged off when they become contractually 180 days past due,
in accordance with the policies set forth by the Office of the Comptroller of
the Currency. Accounts may be re-aged during delinquency if the obligor
demonstrates a willingness and ability to repay by making at least three
consecutive minimum payments and certain other conditions are satisfied.
Charging privileges on accounts of cardholders in bankruptcy are revoked
immediately upon official notification of the bankruptcy and the accounts are
charged off at the first billing date following official notification of the
bankruptcy. Accounts of cardholders may also be charged off prior to the
normal charge-off date upon the occurrence of certain events, such as the
death of the cardholder or if it is determined that charges on the account
were fraudulently made.
S-18
<PAGE>
The following tables set forth the delinquency and loss experience for each
of the periods shown for the Identified Portfolio of credit card accounts. The
Identified Portfolio's delinquency and loss experience is comprised of
segments of credit card accounts which may, when taken individually, have
delinquency and loss characteristics different from those of the overall
Identified Portfolio of credit card accounts. There can be no assurance that
the delinquency and loss experience for the Receivables in the future will be
similar to the historical experience of the Identified Portfolio set forth
below.
DELINQUENCY EXPERIENCE
IDENTIFIED PORTFOLIO(/1/)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
JANUARY 31,
-----------------------------------------------------------------------------------------------
1996 1995 1994 1993
----------------------- ----------------------- ----------------------- -----------------------
PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
OF TOTAL OF TOTAL OF TOTAL OF TOTAL
RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Receivables
Outstanding........... $1,349,658 100.00% $1,286,174 100.00% $1,030,104 100.00% $756,826 100.00%
Receivables Delinquent:
31-60 Days........... 67,308 4.99% 62,920 4.89% 49,997 4.85% 29,258 3.87%
61-90 Days .......... 27,328 2.02% 23,359 1.82% 17,718 1.72% 10,566 1.40%
91 or More Days...... 43,599 3.23% 36,301 2.82% 24,081 2.34% 17,041 2.25%
Total............... $ 138,235 10.24% $ 122,580 9.53% $ 91,796 8.91% $ 56,865 7.51%
</TABLE>
- --------
(1) The Receivables Outstanding (and Receivables Delinquent within each
category) in each account are measured as of the most recent applicable
billing cycle end date on or prior to January 31 in the specified year.
LOSS EXPERIENCE
IDENTIFIED PORTFOLIO
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FISCAL YEAR(/1/)
---------------------------------------
1995 1994 1993 1992
---------- ---------- -------- --------
<S> <C> <C> <C> <C>
Average Receivables Outstanding(/2/)... $1,248,885 $1,085,668 $830,894 $655,645
Total Gross Charge-Offs(/3/)........... 112,645 80,926 55,163 51,363
Recoveries............................. 18,738 14,939 12,022 11,053
Net Charge-Offs........................ 93,907 65,987 43,141 40,310
Net Charge-Offs as a percentage of
Average Receivables Outstanding....... 7.52% 6.08% 5.19% 6.15%
</TABLE>
- --------
(1) WFN's fiscal year ends on the Saturday closest to January 31 of each
calendar year. A fiscal year is designated by the calendar year in which
it begins.
(2) Average Receivables Outstanding is the average of the receivables balances
at the beginning of each month in the period indicated.
(3) Total Gross Charge-Offs includes charge-off of principal, interest and
fees.
S-19
<PAGE>
REVENUE EXPERIENCE
The following table sets forth the total revenues from finance charges and
fees billed with respect to the Identified Portfolio for each of the periods
shown. The figures in the table represent amounts billed to accountholders
before deductions for charge-offs, returned merchandise, and customer disputes
or other expenses and reductions due to fraud.
REVENUE EXPERIENCE
IDENTIFIED PORTFOLIO
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FISCAL YEAR(/1/)
---------------------------------------
1995 1994 1993 1992
---------- ---------- -------- --------
<S> <C> <C> <C> <C>
Average Receivables Outstanding(/2/)... $1,248,885 $1,085,668 $830,894 $655,645
Total Finance Charges and Fees(/3/).... 284,016 243,825 188,165 150,101
Total Finance Charges and Fees as a
percentage of Average Receivables
Outstanding........................... 22.74% 22.46% 22.65% 22.89%
</TABLE>
- --------
(1) WFN's fiscal year ends on the Saturday closest to January 31 of each
calendar year. A fiscal year is designated by the calendar year in which
it begins.
(2) Average Receivables Outstanding is the average of the receivables balances
at the beginning of each month in the period indicated.
(3) Fees include late fees and return check fees (which are, under the terms
of the Pooling Agreement, allocated to the Trust).
THE RECEIVABLES
The Receivables conveyed to the Trust initially arise in all of the Eligible
Accounts in the Identified Portfolio. Pursuant to the Pooling Agreement, the
Transferor has the right, subject to certain limitations and conditions set
forth therein, to designate from time to time Additional Accounts and to
transfer to the Trust all Receivables of such Additional Accounts, whether
such Receivables are then existing or thereafter created. Any Additional
Accounts designated pursuant to the Pooling Agreement must be Eligible
Accounts as of the date the Transferor designates such accounts as Additional
Accounts. Certain accounts ("Automatic Additional Accounts") are automatically
designated to the Trust upon their creation. In addition, the Transferor will
be required to designate certain other accounts ("Supplemental Accounts") to
the extent available. See "Risk Factors--Effects of Additional Trust Assets",
"The Receivables" and "The Pooling and Servicing Agreement--Addition of Trust
Assets" in the Prospectus. The "Required Retained Transferor Percentage" for
purposes of Series 1996-B is 7%. However, during the months of November,
December and January of each year, the Minimum Transferor Amount will be
determined as if the Required Retained Transferor Percentage were 9%.
Furthermore, pursuant to the Pooling Agreement, the Transferor will have the
right (subject to certain limitations and conditions) to designate certain
Removed Accounts and to require the Trustee to reconvey all Receivables in
such Removed Accounts to the Transferor, whether such Receivables are then
existing or thereafter created. See "The Receivables" and "The Pooling and
Servicing Agreement--Removal of Accounts" in the Prospectus. Throughout the
term of the Trust, the Accounts from which the Receivables arise
(collectively, the "Trust Portfolio") will be the Accounts designated by the
Transferor on the Trust Cut Off Date plus any Additional Accounts minus any
Removed Accounts. As of the Trust Cut Off Date and, with respect to
Receivables in Additional Accounts, as of the related date of their conveyance
to the Trust, and on the date any new Receivables are created, the Transferor
has represented and warranted and will represent and warrant to the Trust that
the Receivables meet the eligibility requirements specified in the Pooling
Agreement. See "The Pooling and Servicing Agreement--Representations and
Warranties" in the Prospectus.
As of the beginning of the day on April 1, 1996, the Receivables in the
Trust Portfolio made up approximately 99.4% of the receivables in the
Identified Portfolio. The receivables in the Identified Portfolio, as of the
beginning of such day, included $1,241,274,945 of principal receivables and
$26,271,018 of finance charge receivables. The accounts in the Identified
Portfolio had an average principal receivable balance of $200.65 and an
average credit limit of $678.00. The percentage of the aggregate total
receivable balance to the aggregate total credit limit was 12.6%. The average
age of such accounts was approximately 40 months. As of the beginning of the
day on April 1, 1996, cardholders whose accounts were included in the
Identified Portfolio had billing addresses in all 50 States and the District
of Columbia (and less than 1% had billing addresses outside the United
States).
S-20
<PAGE>
The following tables summarize the Identified Portfolio by various criteria
as of the beginning of the day on April 1, 1996. Because the future
composition of the Identified Portfolio may change over time, these tables are
not necessarily indicative of the composition of the Identified Portfolio at
any subsequent time. In each of these tables, the numbers of accounts and
receivables outstanding in each account are measured as of the most recent
applicable billing cycle end date on or prior to April 1, 1996. These tables
exclude $3,883,351 in receivables that were subject to promotional payment
deferral programs as of the most recent applicable billing cycle end date. In
addition, except as otherwise indicated, these tables exclude accounts that
were flagged by WFN as a bankruptcy, fraud or deceased write-off subsequent to
the applicable billing cycle end date.
COMPOSITION BY ACCOUNT BALANCE
IDENTIFIED PORTFOLIO
<TABLE>
<CAPTION>
PERCENT
OF PERCENT OF
NUMBER OF NUMBER OF RECEIVABLES RECEIVABLES
ACCOUNT BALANCE RANGE ACCOUNTS ACCOUNTS OUTSTANDING OUTSTANDING
- --------------------- ---------- --------- -------------- -----------
<S> <C> <C> <C> <C>
Credit Balance................. 174,560 0.60% $ (5,618,266) -0.45%
No Balance..................... 22,708,193 78.62% 0 0.00%
$.01 - $50.00.................. 1,169,579 4.05% 32,920,255 2.66%
$50.01 - $100.00............... 1,140,998 3.95% 84,613,751 6.83%
$100.01 - $150.00.............. 838,325 2.90% 103,937,073 8.39%
$150.01 - $250.00.............. 1,115,278 3.86% 219,113,380 17.68%
$250.01 - $350.00.............. 679,379 2.35% 201,147,288 16.23%
$350.01 - $500.00.............. 534,275 1.85% 222,284,463 17.94%
$500.01 - $1,000.00............ 467,633 1.62% 310,685,763 25.07%
$1,000.01 - $1,500.00.......... 47,544 0.16% 55,356,454 4.47%
$1,500.01 or more.............. 7,766 0.03% 14,821,035 1.20%
---------- ------- -------------- -------
Total........................ 28,883,530 100.00% $1,239,261,196 100.00%
========== ======= ============== =======
</TABLE>
COMPOSITION BY CREDIT LIMIT
IDENTIFIED PORTFOLIO
<TABLE>
<CAPTION>
PERCENT
OF PERCENT OF
NUMBER OF NUMBER OF RECEIVABLES RECEIVABLES
CREDIT LIMIT BALANCE ACCOUNTS ACCOUNTS OUTSTANDING OUTSTANDING
- -------------------- ---------- --------- -------------- -----------
<S> <C> <C> <C> <C>
$0.............................. 2,432,453 8.42% $ 136,522,446 11.02%
$.01 - $100.00.................. 1,229,182 4.26% 16,740,180 1.35%
$100.01 - $250.00............... 2,542,895 8.80% 66,776,813 5.39%
$250.01 - $350.00............... 2,143,712 7.42% 67,398,298 5.44%
$350.01 - $500.00............... 6,103,322 21.13% 149,063,680 12.03%
$500.01 - $750.00............... 4,430,632 15.34% 194,393,720 15.69%
$750.01 - $1,000,000............ 7,933,356 27.47% 296,169,728 23.90%
$1,000.00 - $1,250.00........... 1,076,016 3.73% 151,383,999 12.22%
$1,250.01 - $1,500.00........... 553,920 1.92% 85,404,571 6.89%
$1,500.01 - $2,000.00........... 347,767 1.20% 63,008,679 5.08%
$2,000.01 - $2,500.00........... 38,949 0.13% 7,776,458 0.63%
$2,500.01 or more............... 51,326 0.18% 4,622,624 0.37%
---------- ------- -------------- -------
Total......................... 28,883,530 100.00% $1,239,261,196 100.00%
========== ======= ============== =======
</TABLE>
S-21
<PAGE>
COMPOSITION BY PERIOD OF DELINQUENCY
IDENTIFIED PORTFOLIO(/1/)
<TABLE>
<CAPTION>
PERCENT
PERIOD OF DELINQUENCY OF PERCENT OF
(DAYS CONTRACTUALLY NUMBER OF NUMBER OF RECEIVABLES RECEIVABLES
DELINQUENT) ACCOUNTS ACCOUNTS OUTSTANDING OUTSTANDING
- --------------------- ---------- --------- -------------- -----------
<S> <C> <C> <C> <C>
Not Delinquent............ 27,336,140 94.52% $ 861,454,939 69.45%
Up to 30 Days............. 1,071,578 3.71% 250,592,150 20.20%
31 to 60 Days............. 273,946 0.95% 64,129,625 5.17%
61 to 90 Days............. 85,483 0.30% 21,122,226 1.70%
91 or more Days........... 154,967 0.54% 43,151,247 3.48%
---------- ------- -------------- -------
Total................... 28,922,114 100.00% $1,240,450,187 100.00%
========== ======= ============== =======
</TABLE>
- --------
(1) Includes accounts that were flagged by WFN as a bankruptcy, fraud or
deceased write-off subsequent to the applicable billing cycle end date.
COMPOSITION BY ACCOUNT AGE
IDENTIFIED PORTFOLIO
<TABLE>
<CAPTION>
PERCENT
OF PERCENT OF
NUMBER OF NUMBER OF RECEIVABLES RECEIVABLES
AGE ACCOUNTS ACCOUNTS OUTSTANDING OUTSTANDING
- --- ---------- --------- -------------- -----------
<S> <C> <C> <C> <C>
Not More than 12 Months......... 5,455,373 18.89% $ 263,380,986 21.25%
Over 12 Months to 24 Months..... 5,970,897 20.67% 285,092,832 23.01%
Over 24 Months to 36 Months..... 4,810,585 16.66% 214,076,445 17.27%
Over 36 Months to 48 Months..... 2,171,119 7.52% 96,230,330 7.77%
Over 48 Months to 60 Months..... 1,351,010 4.68% 66,050,744 5.33%
Over 60 Months.................. 9,124,546 31.59% 314,429,859 25.37%
---------- ------- -------------- -------
Total......................... 28,883,530 100.00% $1,239,261,196 100.00%
========== ======= ============== =======
</TABLE>
S-22
<PAGE>
GEOGRAPHIC DISTRIBUTION OF ACCOUNTS
IDENTIFIED PORTFOLIO
<TABLE>
<CAPTION>
PERCENT
OF PERCENT OF
NUMBER OF NUMBER OF RECEIVABLES RECEIVABLES
STATE ACCOUNTS ACCOUNTS OUTSTANDING OUTSTANDING
- ----- ---------- --------- -------------- -----------
<S> <C> <C> <C> <C>
Alabama......................... 389,552 1.35% $ 22,085,446 1.78%
Alaska.......................... 32,920 0.11% 1,394,721 0.11%
Arizona......................... 366,994 1.27% 14,242,637 1.15%
Arkansas........................ 175,458 0.61% 10,090,040 0.81%
California...................... 2,829,127 9.79% 119,135,974 9.61%
Colorado........................ 348,363 1.21% 11,972,541 0.97%
Connecticut..................... 476,268 1.65% 17,192,042 1.39%
Delaware........................ 83,788 0.29% 4,162,526 0.34%
Florida......................... 1,790,780 6.20% 77,442,433 6.25%
Georgia......................... 689,700 2.39% 37,025,869 2.99%
Hawaii.......................... 45,746 0.16% 1,622,105 0.13%
Idaho........................... 86,989 0.30% 2,691,813 0.22%
Illinois........................ 1,518,611 5.26% 61,652,701 4.97%
Indiana......................... 549,072 1.90% 21,988,747 1.77%
Iowa............................ 250,910 0.87% 8,007,357 0.65%
Kansas.......................... 238,825 0.83% 9,125,706 0.74%
Kentucky........................ 324,314 1.12% 14,097,760 1.14%
Louisiana....................... 500,782 1.73% 26,725,375 2.16%
Maine........................... 100,911 0.35% 3,592,228 0.29%
Maryland........................ 660,368 2.29% 30,241,198 2.44%
Massachusetts................... 938,964 3.25% 32,698,427 2.64%
Michigan........................ 1,017,999 3.52% 42,198,587 3.41%
Minnesota....................... 497,287 1.72% 15,108,563 1.22%
Mississippi..................... 224,393 0.78% 13,467,950 1.09%
Missouri........................ 540,861 1.87% 21,797,560 1.76%
Montana......................... 41,334 0.14% 1,119,787 0.09%
Nebraska........................ 162,183 0.56% 5,830,873 0.47%
Nevada.......................... 119,132 0.41% 5,928,661 0.48%
New Hampshire................... 116,999 0.41% 3,903,533 0.31%
New Jersey...................... 1,147,409 3.97% 46,901,725 3.78%
New Mexico...................... 117,493 0.41% 4,899,673 0.40%
New York........................ 2,735,521 9.47% 123,322,915 9.95%
North Carolina.................. 698,441 2.42% 37,180,816 3.00%
North Dakota.................... 54,681 0.19% 1,519,764 0.12%
Ohio............................ 1,591,468 5.51% 63,088,707 5.09%
Oklahoma........................ 280,068 0.97% 11,931,173 0.96%
Oregon.......................... 250,206 0.87% 7,903,552 0.64%
Pennsylvania.................... 1,597,167 5.53% 67,897,006 5.48%
Rhode Island.................... 174,216 0.60% 6,725,118 0.54%
South Carolina.................. 341,442 1.18% 18,327,796 1.48%
South Dakota.................... 55,003 0.19% 1,584,344 0.13%
Tennessee....................... 493,146 1.71% 24,267,832 1.96%
Texas........................... 1,736,413 6.01% 92,538,372 7.47%
Utah............................ 173,517 0.60% 5,829,514 0.47%
Vermont......................... 47,122 0.16% 1,609,298 0.13%
Virginia........................ 802,143 2.78% 36,598,636 2.95%
Washington...................... 419,375 1.45% 15,102,253 1.22%
West Virginia................... 195,525 0.68% 7,681,319 0.62%
Wisconsin....................... 475,213 1.65% 13,912,554 1.12%
Wyoming......................... 32,883 0.11% 1,086,045 0.09%
District of Columbia............ 91,410 0.32% 5,344,931 0.43%
Guam............................ 5,237 0.02% 278,829 0.02%
Foreign......................... 249,801 0.86% 7,185,864 0.58%
---------- ------- -------------- -------
Total......................... 28,883,530 100.00% $1,239,261,196 100.00%
========== ======= ============== =======
</TABLE>
S-23
<PAGE>
MATURITY CONSIDERATIONS
The Pooling Agreement provides that Class A Holders will not receive
payments of principal until the Class A Scheduled Payment Date, or earlier in
the event of an Early Amortization Event which results in the commencement of
the Early Amortization Period. The Class B Holders will not begin to receive
payments of principal until the final principal payment on the Class A
Certificates has been made.
Controlled Accumulation Period. On each Transfer Date during the Controlled
Accumulation Period prior to the payment of the Class A Invested Amount in
full, an amount equal to, for each Monthly Period, the least of (a) the
Available Investor Principal Collections, (b) the "Controlled Deposit Amount"
for such Monthly Period (which equals the sum of the Controlled Accumulation
Amount for such Monthly Period and any portion of the Controlled Accumulation
Amount for any prior Monthly Period that was not deposited in the Principal
Funding Account) and (c) the Class A Adjusted Invested Amount prior to any
deposits on such day, will be deposited in the Principal Funding Account until
the principal amount on deposit in the Principal Funding Account (the
"Principal Funding Account Balance") equals the Class A Invested Amount. After
the Class A Invested Amount has been paid in full, Available Investor
Principal Collections, to the extent required, will be distributed to the
Class B Holders on each Distribution Date until the earlier of the date the
Class B Invested Amount has been paid in full and the Series 1996-B
Termination Date. After the Class A Invested Amount and the Class B Invested
Amount have each been paid in full, Available Investor Principal Collections,
to the extent required, will be distributed to the Collateral Interest Holder
on each Transfer Date until the earlier of the date the Collateral Interest
has been paid in full and the Series 1996-B Termination Date. Amounts in the
Principal Funding Account are expected to be available to pay the Class A
Invested Amount on the Class A Scheduled Payment Date. After the payment of
the Class A Invested Amount in full, Available Investor Principal Collections
are expected to be available to pay the Class B Invested Amount on the Class B
Scheduled Payment Date. Although it is anticipated that collections of
Principal Receivables will be available on each Transfer Date during the
Controlled Accumulation Period to make a deposit of the applicable Controlled
Deposit Amount and that the Class A Invested Amount will be paid to the Class
A Holders on the Class A Scheduled Payment Date and the Class B Invested
Amount will be paid to the Class B Holders on the Class B Scheduled Payment
Date, respectively, no assurance can be given in this regard. If the amount
required to pay the Class A Invested Amount or the Class B Invested Amount in
full is not available on the Class A Scheduled Payment Date or the Class B
Scheduled Payment Date, respectively, an Early Amortization Event will occur
and the Early Amortization Period will commence.
Early Amortization Period. If an Early Amortization Event occurs, the Early
Amortization Period will commence and any amount on deposit in the Principal
Funding Account will be paid to the Class A Holders on the Distribution Date
in the month following the commencement of the Early Amortization Period. In
addition, to the extent that the Class A Invested Amount has not been paid in
full, the Class A Holders will be entitled to monthly payments of principal
equal to the Available Investor Principal Collections until the earlier of the
date on which the Class A Certificates have been paid in full and the Series
1996-B Termination Date. After the Class A Certificates have been paid in full
and if the Series 1996-B Termination Date has not occurred, Available Investor
Principal Collections will be paid to the Class B Certificates on each
Distribution Date until the earlier of the date on which the Class B
Certificates have been paid in full and the Series 1996-B Termination Date.
Early Amortization Events. An Early Amortization Event occurs, either
automatically or after specified notice, upon (a) the failure of the
Transferor to make certain payments or transfers of funds for the benefit of
the Holders within the time periods stated in the Pooling Agreement, (b)
material breaches of certain representations, warranties or covenants of the
Transferor, (c) certain insolvency events involving the Transferor or The
Limited, (d) a reduction in the average of the Portfolio Yields for any three
consecutive Monthly Periods to a rate that is less than the average of the
Base Rates for such period, (e) the Trust becoming an "investment company"
within the meaning of the Investment Company Act of 1940, as amended, (f) the
failure of the Transferor to convey Receivables arising under Supplemental
Accounts or Participation Interests to the Trust when required by the Pooling
Agreement, (g) the occurrence of a Servicer Default which would have a
material adverse effect on the
S-24
<PAGE>
Holders, (h) insufficient monies in the Distribution Account to pay the Class
A Invested Amount or the Class B Invested Amount in full on the Class A
Scheduled Payment Date or the Class B Scheduled Payment Date, respectively, or
(i) the Transferor becoming unable for any reason to transfer Receivables to
the Trust in accordance with the provisions of the Pooling Agreement. See
"Description of the Certificates--Early Amortization Events" herein and in the
Prospectus. The term "Base Rate" means, with respect to any Monthly Period,
the annualized percentage equivalent of a fraction, the numerator of which is
the sum of the Class A Monthly Interest, the Class B Monthly Interest and the
Collateral Monthly Interest, each for the related Distribution Period, and the
Investor Servicing Fee for such Monthly Period, and the denominator of which
is the Invested Amount as of the close of business on the last day of such
Monthly Period. The term "Portfolio Yield" means, with respect to any Monthly
Period, the annualized percentage equivalent of a fraction, the numerator of
which is the sum of collections of Finance Charge Receivables (including
investment earnings on the Cash Collateral Account to be treated as
collections of Finance Charge Receivables), Principal Funding Investment
Proceeds and amounts withdrawn from the Reserve Account deposited (before
giving effect to any netting) into a segregated trust account trust account
established and maintained by the Trustee (the "Finance Charge Account") and
allocable to the Certificates and the Collateral Interest for such Monthly
Period, calculated on a cash basis after subtracting the sum of the Investor
Default Amounts for such Monthly Period, and the denominator of which is the
Invested Amount as of the close of business on the last day of such Monthly
Period. If an Early Amortization Period occurs, Holders may receive
distributions of principal earlier than they otherwise would have, which may
shorten the average life of the Certificates. Holders may be unable to
reinvest any such distributions of principal at yields equaling yields on the
Certificates.
Paired Series. The Transferor may cause the Trust to issue another Series as
a Paired Series with respect to Series 1996-B. Although no assurance can be
given as to whether such other Series will be issued and, if issued, the
specific terms thereof, the outstanding principal amount of such Series may
vary from time to time whether or not an Early Amortization Event occurs with
respect to Series 1996-B, and the interest rate with respect to certificates
of such other Series will be established on its date of issuance and may be
reset periodically. Further, the Early Amortization Events with respect to
such other Series may vary from the Early Amortization Events with respect to
Series 1996-B and may include Early Amortization Events which are unrelated to
the status of the Transferor, the Servicer or the Receivables, such as events
related to the continued availability and rating of certain Enhancement
Providers to such other Series. If an Early Amortization Event does occur with
respect to any such Paired Series prior to the payment in full of the
Certificates, the final payment of principal to the Holders may be delayed. In
particular, the numerator of the Fixed Allocation Percentage may be changed
upon the occurrence of an Early Amortization Event with respect to a Paired
Series resulting in a possible reduction of the percentage of Collections of
Principal Receivables allocated to the Holders and a possible delay in
payments to such Holders. See "Description of the Certificates--Allocation
Percentages" and "--Paired Series" herein.
Payment Rates. The following table sets forth the highest and lowest
cardholder monthly payment rates for the Identified Portfolio during any month
in the period shown and the average cardholder monthly payment rates for all
months during the periods shown, in each case calculated as a percentage of
total opening monthly account balances during the periods shown. Payment rates
shown in the table are based on amounts which would be deemed payments of
Principal Receivables and Finance Charge Receivables with respect to the
Accounts.
CARDHOLDER MONTHLY PAYMENT RATES
IDENTIFIED PORTFOLIO
<TABLE>
<CAPTION>
FISCAL YEAR(/1/)
---------------------------
1995 1994 1993 1992
------ ------ ------ ------
<S> <C> <C> <C> <C>
Lowest Month........................................ 17.12% 17.74% 17.31% 15.42%
Highest Month....................................... 19.84% 20.28% 19.42% 17.71%
Monthly Average..................................... 18.91% 18.93% 17.99% 16.57%
</TABLE>
- --------
(1) WFN's fiscal year ends on the Saturday closest to January 31 of each
calendar year. A fiscal year is designated by the calendar year in which
it begins.
S-25
<PAGE>
Currently, cardholders in the programs included in the Trust Portfolio must
make a monthly minimum payment at least equal to 10% of the account balance,
as well as any past due amounts. Such minimum monthly payments are subject to
a $10 minimum payment ($20 for Henri Bendel). The minimum monthly payment may
be changed by WFN from time to time at its discretion and there can be no
assurance that the cardholder monthly payment rates in the future will be
similar to the historical experience set forth above. In addition, the amount
of collections of Receivables may vary from month to month due to seasonal
variations, general economic conditions and payment habits of individual
cardholders. There can be no assurance that collections of Principal
Receivables with respect to the Trust Portfolio will be similar to the
historical experience set forth above or that deposits into the Principal
Funding Account or the Distribution Account, as applicable, will be made in
accordance with the applicable Controlled Accumulation Amount. If an Early
Amortization Event occurs, the average life of the Certificates could be
significantly reduced or increased.
Because there may be a slowdown in the payment rate below the payment rates
used to determine the Controlled Accumulation Amounts, or an Early
Amortization Event may occur which would initiate the Early Amortization
Period, there can be no assurance that the actual number of months elapsed
from the date of issuance of the Class A Certificates and the Class B
Certificates to their respective final Distribution Dates will equal the
expected number of months. As described under "Description of the
Certificates--Postponement of Controlled Accumulation Period," the Servicer
may shorten the Controlled Accumulation Period and, in such event, there can
be no assurance that there will be sufficient time to accumulate all amounts
necessary to pay the Class A Invested Amount and the Class B Invested Amount
on the Class A Scheduled Payment Date and the Class B Scheduled Payment Date,
respectively. See "Maturity Considerations" and "Risk Factors--Payment and
Maturity Considerations; Dependency on Cardholder Repayments" in the
Prospectus.
DESCRIPTION OF THE CERTIFICATES
The Certificates will be issued pursuant to the Pooling Agreement. Pursuant
to the Pooling Agreement, the Transferor and the Trustee may execute further
series supplements in order to issue additional Series. The following summary
of the Certificates does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, all of the provisions of the
Pooling Agreement. See "Description of the Certificates" in the Prospectus for
additional information concerning the Certificates and the Pooling Agreement.
GENERAL
The Certificates will represent the right to receive certain payments from
the assets of the Trust, including the right to receive the applicable
allocation percentage of all cardholder payments on the Receivables in the
Trust. Each Class A Certificate represents the right to receive payments of
interest at the Class A Rate for the related Distribution Period and payments
of principal on the Class A Scheduled Payment Date or, to the extent of the
Class A Invested Amount, on each Distribution Date during the Early
Amortization Period, funded from collections of Finance Charge Receivables and
Principal Receivables, respectively, allocated to the Class A Interest and
certain other available amounts. Each Class B Certificate represents the right
to receive payments of interest at the applicable Class B Rate for the related
Distribution Period, and payments of principal on the Class B Scheduled
Payment Date or, to the extent of the Class B Invested Amount, on each
Distribution Date during the Early Amortization Period after the Class A
Certificates have been paid in full, funded from collections of Finance Charge
Receivables and Principal Receivables, respectively, allocated to the Class B
Interest and certain other available amounts. In addition to representing the
right to payment from collections of Finance Charge Receivables and Principal
Receivables, each Class A Certificate also represents the right to receive
payments from Excess Spread, funds on deposit in the Principal Funding Account
and the Reserve Account and certain investment earnings thereon, the Cash
Collateral Account and certain investment earnings thereon, Reallocated
Principal Collections and Shared Principal Collections and certain other
available amounts (including, under certain circumstances, amounts on deposit
in the Excess Funding Account). In addition to representing the right to
payment from collections of Finance Charge Receivables and Principal
Receivables, each Class B Certificate also represents the right to receive
payments from Excess Spread, the Cash Collateral Account and certain
S-26
<PAGE>
investment earnings thereon, Reallocated Collateral Principal Collections and
Shared Principal Collections and certain other available amounts (including,
under certain circumstances, amounts on deposit in the Excess Funding
Account). Payments of interest and principal will be made, to the extent of
funds available therefor, on each Distribution Date on which such amounts are
due to Holders in whose names the Certificates were registered on the last
business day of the calendar month preceding such Distribution Date (each, a
"Record Date").
The Class A Certificates and the Class B Certificates initially will be
represented by certificates registered in the name of Cede & Co., as nominee
of DTC. Unless and until Definitive Certificates are issued, all references
herein to actions by Class A Holders and/or Class B Holders will refer to
actions taken by DTC upon instructions from DTC Participants and all
references herein to distributions, notices, reports and statements to Class A
Holders and/or Class B Holders will refer to distributions, notices, reports
and statements to DTC or Cede & Co., as the registered holder of the Class A
Certificates and the Class B Certificates, as the case may be, for
distribution to Certificate Owners in accordance with DTC procedures. Holders
may hold their Certificates through DTC (in the United States) or Cedel or
Euroclear (in Europe) if they are participants of such systems, or indirectly
through organizations that are participants in such systems. Cede & Co., as
nominee for DTC, will hold the global Certificates. Cedel and Euroclear will
hold omnibus positions on behalf of the Cedel Participants and the Euroclear
Participants, respectively, through customers' securities accounts in Cedel's
and Euroclear's names on the books of their respective Depositaries which in
turn will hold such positions in customers' securities accounts in the
Depositaries' names on the books of DTC. See "Description of the
Certificates--General," "--Book-Entry Registration" and "--Definitive
Certificates" in the Prospectus.
INTEREST PAYMENTS
Interest will accrue on the Class A Certificates at the Class A Rate and on
the Class B Certificates at the Class B Rate from the Closing Date. Interest
will be distributed to Holders on June 17, 1996 and on each Distribution Date
thereafter and will be calculated on the basis of a 360-day year of twelve 30-
day months. Interest payments on the Class A Certificates and the Class B
Certificates on any Distribution Date will be calculated on the outstanding
principal balance of the Class A Certificates and the outstanding principal
balance of the Class B Certificates, as applicable, as of the preceding Record
Date, except that interest for the first Distribution Date will accrue at the
applicable Certificate Rate on the initial outstanding principal balance of
the Class A Certificates and the initial outstanding principal balance of the
Class B Certificates, as applicable, from the Closing Date. Interest due on
the Certificates but not paid on any Distribution Date (such amount with
respect to the Class A Certificates, the "Class A Deficiency Amount," and such
amount with respect to the Class B Certificates, the "Class B Deficiency
Amount") will be payable on the next succeeding Distribution Date together
with additional interest on such amount at the applicable Certificate Rate
plus 2% per annum (such amount with respect to the Class A Certificates, the
"Class A Additional Interest," and such amount with respect to the Class B
Certificates, the "Class B Additional Interest"). Class A Additional Interest
and Class B Additional Interest will accrue on the same basis as interest on
the Certificates, and will accrue from the Distribution Date on which such
overdue interest first became due, to but excluding the Distribution Date on
which such Class A Additional Interest and/or Class B Additional Interest, as
the case may be, is paid. Interest payments on the Class A Certificates on any
Distribution Date will be paid from Class A Available Funds for the related
Monthly Period, and to the extent such Class A Available Funds are
insufficient to pay such interest, from Excess Spread, Required Draw Amounts
and Reallocated Principal Collections (to the extent available) for such
Monthly Period. Interest payments on the Class B Certificates on any
Distribution Date will be paid from Class B Available Funds for the related
Monthly Period, and to the extent such Class B Available Funds are
insufficient to pay such interest, from Excess Spread, Required Draw Amounts
and Reallocated Collateral Principal Collections (to the extent available)
remaining after certain other payments have been made with respect to the
Class A Certificates.
"Class A Available Funds" means, with respect to any Monthly Period, an
amount equal to the Class A Floating Allocation Percentage of collections of
Finance Charge Receivables allocated to the Series Interest with respect to
such Monthly Period and investment earnings on the Cash Collateral Account
treated as collections of
S-27
<PAGE>
Finance Charge Receivables on the related Transfer Date, (b) during the
Controlled Accumulation Period, Principal Funding Investment Proceeds, if any,
with respect to the related Transfer Date and (c) amounts, if any, to be
withdrawn from the Reserve Account which are required to be included in Class
A Available Funds pursuant to the Series 1996-B Supplement with respect to
such Transfer Date. "Class B Available Funds" means, with respect to any
Monthly Period, an amount equal to the Class B Floating Allocation Percentage
of collections of Finance Charge Receivables allocated to the Series Interest
with respect to such Monthly Period and investment earnings on the Cash
Collateral Account treated as collections of Finance Charge Receivables on the
related Transfer Date.
PRINCIPAL PAYMENTS
During the Revolving Period (which begins on the Closing Date and ends at
the commencement of the Controlled Accumulation Period or, if earlier, the
Early Amortization Period), unless a reduction in the Required Enhancement
Amount has occurred, collections of Principal Receivables allocable to the
Series Interest will, subject to certain limitations, including the allocation
on each Transfer Date 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, be treated as Shared Principal Collections.
On each Transfer Date relating to the Controlled Accumulation Period, the
Trustee will deposit in the Principal Funding Account an amount equal to the
least of (a) Available Investor Principal Collections with respect to such
Transfer Date, (b) the applicable Controlled Deposit Amount and (c) the Class
A Adjusted Invested Amount prior to any deposits on such date. Amounts in the
Principal Funding Account will be paid to the Class A Holders on the Class A
Scheduled Payment Date. After the Class A Invested Amount has been paid in
full, on each Transfer Date during the Controlled Accumulation Period, amounts
equal to the lesser of (a) Available Investor Principal Collections with
respect to such Transfer Date and (b) the Class B Invested Amount will be
deposited in the Distribution Account for distribution to the Class B Holders
until the Class B Invested Amount has been paid in full. On each Transfer
Date, if a reduction in the Required Enhancement Amount has occurred, a
portion of collections of Principal Receivables allocable to the Series
Interest will be applied in accordance with the Loan Agreement. During the
Controlled Accumulation Period, the portion of Available Investor Principal
Collections not applied to Class A Monthly Principal, Class B Monthly
Principal or Collateral Monthly Principal on a Transfer Date will be treated
as Shared Principal Collections.
"Available Investor Principal Collections" means, with respect to any
Monthly Period, an amount equal to the sum of (a) (i) collections of Principal
Receivables received during such Monthly Period allocable to Series 1996-B and
certain other amounts allocable to Series 1996-B (as described under
"Description of the Certificates--Allocation of Collections"), minus (ii) the
amount of Reallocated Principal Collections with respect to such Monthly
Period used to fund interest on the Certificates or Servicing Fee, plus (b)
any Shared Principal Collections with respect to other Series that are
allocated to Series 1996-B.
On each Distribution Date during the Early Amortization Period, the Class A
Holders will be entitled to receive Available Investor Principal Collections
for the related Monthly Period in an amount up to the Class A Invested Amount
until the earlier of the date the Class A Certificates are paid in full and
the Series 1996-B Termination Date. After payment in full of the Class A
Invested Amount, the Class B Holders will be entitled to receive on each
Distribution Date during the Early Amortization Period, Available Investor
Principal Collections until the earlier of the date the Class B Certificates
are paid in full and the Series 1996-B Termination Date. After payment in full
of the Class B Invested Amount, the Collateral Interest Holder will be
entitled to receive on each Transfer Date (other than the Transfer Date prior
to the Series 1996-B Termination Date, in which case on the Series 1996-B
Termination Date) Available Investor Principal Collections until the earlier
of the date the Collateral Interest is paid in full and the Series 1996-B
Termination Date. See "--Early Amortization Events" below and in the
Prospectus for a discussion of events which might lead to the commencement of
the Early Amortization Period.
POSTPONEMENT OF CONTROLLED ACCUMULATION PERIOD
Upon written notice to the Trustee, the Transferor and each Rating Agency,
the Servicer may elect to postpone the commencement of the Controlled
Accumulation Period, and extend the length of the Revolving
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Period, subject to certain conditions including those set forth below. The
Servicer may make such election only if the Controlled Accumulation Period
Length (determined as described below) on any Determination Date on or after
the April 2002 Determination Date is less than 12 months. The Servicer may
elect to modify the date on which the Controlled Accumulation Period actually
commences to the first day of the month that is a number of months prior to
the month in which the Class A Scheduled Payment Date occurs at least equal to
the Controlled Accumulation Period Length (so that, as a result of such
election, the number of Monthly Periods in the Controlled Accumulation Period
will at least equal the Controlled Accumulation Period Length); provided, that
(i) the length of the Controlled Accumulation Period will not be less than one
month, (ii) such determination of the Controlled Accumulation Period Length
will be made on each Determination Date on and after the April 2002
Determination Date but prior to the commencement of the Controlled
Accumulation Period, and any election to shorten the Controlled Accumulation
Period will be subject to the subsequent lengthening of the Controlled
Accumulation Period to the Controlled Accumulation Period Length determined on
any subsequent Determination Date, but the Controlled Accumulation Period will
in no event commence prior to May 1, 2002, and (iii) notwithstanding anything
to the contrary herein, no election to postpone the commencement of the
Controlled Accumulation Period will be made after an Early Amortization Event
will have occurred and be continuing with respect to any other Series. The
effect of the foregoing calculation is to permit the reduction of the length
of the Controlled Accumulation Period based on the investor interest of
certain other Series which are scheduled to be in their revolving periods
during the Controlled Accumulation Period and on increases in the principal
payment rate occurring after the Closing Date.
The "Controlled Accumulation Period Length," is a number of months such that
the amount available for distribution of principal on the Class A Certificates
on the Class A Scheduled Payment Date is expected to equal or exceed the Class
A Invested Amount, assuming (a) the expected monthly collections of Principal
Receivables expected to be distributable to the Holders of all Series have a
principal payment rate no greater than the lowest monthly principal payment
rate on the Receivables for the preceding twelve months (or such lower
collection rate as the Servicer may select), (b) the total amount of Principal
Receivables in the Trust (and the principal amount on deposit in the Excess
Funding Account, if any) remains constant at the level on such date of
determination, (c) no Early Amortization Event with respect to any Series will
subsequently occur and (d) no additional Series will be subsequently issued.
SUBORDINATION
The Class B Certificates 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
Holders may be reallocated to cover amounts in respect of the Class A
Certificates and the Class B Invested Amount may be reduced if the Collateral
Interest is equal to zero. Similarly, certain principal payments allocable to
the Collateral Interest may be reallocated to cover amounts in respect of the
Class A Certificates and the Class B Certificates and the Collateral Interest
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 Certificates 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 and interest distributable to the Class B
Holders will be reduced. See "--Allocation Percentages," "--Reallocation of
Cash Flows" and "--Application of Collections--Excess Spread" herein.
Additional Enhancement for the Certificates will be provided in the form of
the Cash Collateral Account. See "--Cash Collateral Account; Required
Enhancement Amount" herein.
ALLOCATION PERCENTAGES
Pursuant to the Pooling Agreement, with respect to each Monthly Period the
Servicer will allocate among the Series Interest, the investor interest for
all other Series issued and outstanding and the Transferor Interest, all
amounts collected on Finance Charge Receivables, all amounts collected on
Principal Receivables and all Default Amounts with respect to such Monthly
Period.
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Collections of Finance Charge Receivables, Default Amounts and Uncovered
Dilution Amounts at all times, and collections of Principal Receivables during
the Revolving Period, will be allocated to the Series Interest based on the
Floating Allocation Percentage. The "Floating Allocation Percentage" means,
with respect to any Monthly Period, the percentage equivalent of a fraction,
the numerator of which is the Adjusted 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 initial Invested Amount) and the denominator of
which is the greater of (a) the aggregate amount of Principal Receivables as
of the close of business on the last day of the preceding Monthly Period (or
with respect to the first Monthly Period, the aggregate amount of Principal
Receivables as of the close of business on the day immediately preceding the
Closing Date) and (b) the sum of the numerators used to calculate the
allocation percentages for allocations with respect to Finance Charge
Receivables, Default Amounts, Uncovered Dilution Amounts or Principal
Receivables, as applicable, for all outstanding Series on such date of
determination; provided, that if one or more Reset Dates occur in a Monthly
Period, the Floating Allocation Percentage for the portion of the Monthly
Period falling on and after each such Reset Date (the "subject Reset Date")
and on or prior to any subsequent Reset Date will be determined using a
denominator equal to the greater of the amounts specified in clauses (a) and
(b) above determined as of the subject Reset Date.
The amounts so allocated will be further allocated between the Class A
Holders, the Class B Holders and the Collateral Interest Holder based on the
Class A Floating Allocation Percentage, the Class B Floating Allocation
Percentage and the Collateral Floating Allocation Percentage, respectively.
The "Class A Floating Allocation Percentage" means, with respect to any
Monthly Period, the percentage equivalent (which percentage will never exceed
100%) of a fraction, the numerator of which is equal to the Class A Adjusted
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, as of the Closing
Date) and the denominator of which is equal to the Adjusted Invested Amount as
of the close of business on such last day. The "Class B Floating Allocation
Percentage" means, with respect to any Monthly Period, the percentage
equivalent (which percentage will 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, as of the Closing Date) and the denominator of which
is equal to the Adjusted Invested Amount as of the close of business on such
last day. The "Collateral Floating Allocation Percentage" means, with respect
to any Monthly Period, the percentage equivalent (which percentage will never
exceed 100%) of a fraction, the numerator of which is equal to the Collateral
Interest as of the close of business on the last day of the preceding Monthly
Period (or with respect to the first Monthly Period, as of the Closing Date)
and the denominator of which is equal to the Adjusted Invested Amount as of
the close of business on such last day.
Collections of Principal Receivables during the Controlled Accumulation
Period and Early Amortization Period will be allocated to the Series Interest
based on the Fixed Allocation Percentage. The "Fixed Allocation Percentage"
means, with respect to any Monthly Period, the percentage equivalent of a
fraction, the numerator of which is the Invested Amount as of the close of
business on the last day of the Revolving Period and the denominator of which
is the greater of (a) the aggregate amount of Principal Receivables in the
Trust determined as of the close of business on the last day of the prior
Monthly Period and (b) the sum of the numerators used to calculate the
allocation percentages for allocations with respect to Principal Receivables
for all outstanding Series on such date of determination; provided, that (i)
if Series 1996-B is paired with a Paired Series and an Early Amortization
Event occurs with respect to such Paired Series during the Controlled
Accumulation Period, the Transferor may, by written notice delivered to the
Trustee and the Servicer, designate a different numerator (provided that such
numerator is not less than the Adjusted Invested Amount (less the balance on
deposit in the Principal Account) as of the last day of the revolving period
for such Paired Series) and (ii) if one or more Reset Dates occur in a Monthly
Period, the Fixed Allocation Percentage for the portion of the Monthly Period
falling on and after each such Reset Date (the "subject Reset Date") and prior
to any subsequent Reset Date will be determined using a denominator equal to
the greater of the amounts specified in clauses (a) and (b) above as
determined as of the subject Reset Date.
The amounts so allocated will be further allocated between the Class A
Holders, the Class B Holders and the Collateral Interest Holder based on the
Class A Fixed Allocation Percentage, the Class B Fixed Allocation
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Percentage and the Collateral Fixed Allocation Percentage, respectively. The
"Class A Fixed Allocation Percentage" means, with respect to any Monthly
Period following the Revolving Period, the percentage equivalent (which
percentage will never exceed 100% or be less than zero) 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 Revolving Period, and the denominator of which
is equal to the numerator used in determining the related Fixed Allocation
Percentage; provided, that if Series 1996-B is paired with a Paired Series and
an Early Amortization Event occurs with respect to such Paired Series during
the Controlled Accumulation Period, the Transferor may, by written notice
delivered to the Trustee and the Servicer, designate a different numerator
(provided, that such numerator is not less than the Class A Adjusted Invested
Amount (less the balance on deposit in the Principal Account) as of the last
day of the revolving period for such Paired Series). The "Class B Fixed
Allocation Percentage" means, with respect to any Monthly Period following the
Revolving Period, the percentage equivalent (which percentage will never
exceed 100% or be less than zero) 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 Revolving Period and the denominator of which is equal to the
numerator used in determining the related Fixed Allocation Percentage;
provided, that if Series 1996-B is paired with a Paired Series and an Early
Amortization Event occurs with respect to such Paired Series during the
Controlled Accumulation Period, the Transferor may, by written notice
delivered to the Trustee and the Servicer, designate a different numerator
(provided, that such numerator is not less than the Class B Invested Amount
(less, if the Class A Fixed Allocation Percentage is zero, the balance on
deposit in the Principal Account and the Principal Funding Account, in each
case to the extent not subtracted in reducing the Class A Fixed Allocation
Percentage to zero) as of the last day of the revolving period for such Paired
Series. The "Collateral Fixed Allocation Percentage" means, with respect to
any Monthly Period following the Revolving Period, the percentage equivalent
(which percentage will never exceed 100% or be less than zero) of a fraction,
the numerator of which is equal to the Collateral Interest as of the close of
business on the last day of the Revolving Period, and the denominator of which
is equal to the numerator used in determining the related Fixed Allocation
Percentage; provided, that if Series 1996-B is paired with a Paired Series and
an Early Amortization Event occurs with respect to such Paired Series during
the Controlled Accumulation Period, the Transferor may, by written notice
delivered to the Trustee and the Servicer, designate a different numerator
(provided that such numerator is not less than the Collateral Interest (less,
if the Class B Fixed Allocation Percentage is zero, the balance on deposit in
the Principal Account, to the extent not subtracted in reducing the Class B
Fixed Allocation Percentage to zero) as of on the last day of the revolving
period for such Paired Series.
"Class A Adjusted Invested Amount" for any date of determination, means an
amount equal to the then current Class A Invested Amount, minus the Principal
Funding Account Balance on such date.
"Class A Invested Amount" for any date means an amount equal to (a) the
aggregate initial principal amount of the Class A Certificates, minus (b) the
aggregate amount of principal payments made to Class A Holders prior to such
date, minus (c) the excess, if any, of the aggregate amount of Class A
Investor Charge-Offs for all Transfer Dates preceding such date over the
aggregate amount of any reimbursements of Class A Investor Charge-Offs for all
Transfer Dates preceding such date minus (d) the amount of any reduction in
the Class A Invested Amount as a result of the purchase by the Transferor and
subsequent cancellation of Class A Certificates (see "--Purchase of
Certificates by the Transferor" herein); provided, however, the Class A
Invested Amount may not be reduced below zero.
"Class A Investor Allocation Percentage" means, for any Monthly Period, (a)
with respect to Default Amounts, Uncovered Dilution Amounts and Finance Charge
Receivables at any time and Principal Receivables during the Revolving Period,
the Class A Floating Allocation Percentage, and (b) with respect to Principal
Receivables during the Controlled Accumulation Period or Early Amortization
Period, the Class A Fixed Allocation Percentage.
"Class B Invested Amount" for any date means an amount equal to (a) the
aggregate initial principal amount of the Class B Certificates, minus (b) the
aggregate amount of principal payments made to Class B Holders prior to such
date, minus (c) the aggregate amount of Class B Investor Charge-Offs for all
prior Transfer Dates, minus (d) the aggregate amount of Reallocated Class B
Principal Collections for all prior Transfer Dates
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for which the Collateral Interest has not been reduced, minus (e) an amount
equal to the aggregate amount by which the Class B Invested Amount has been
reduced to fund the Class A Reduction Amount on all prior Transfer Dates as
described under "--Defaulted Receivables; Dilution," and plus (f) the
aggregate amount of Excess Spread allocated and available on all prior
Transfer Dates for the purpose of reimbursing amounts deducted pursuant to the
foregoing clauses (c), (d) and (e) minus (g) the amount of any reduction in
the Class B Invested Amount as a result of the purchase by the Transferor and
subsequent cancellation of Class B Certificates (see "--Purchase of
Certificates by the Transferor" herein); provided, however, that the Class B
Invested Amount may not be reduced below zero.
"Class B Investor Allocation Percentage" means, for any Monthly Period, (a)
with respect to Default Amounts, Uncovered Dilution Amounts and Finance Charge
Receivables at any time and Principal Receivables during the Revolving Period,
the Class B Floating Allocation Percentage, and (b) with respect to Principal
Receivables during the Controlled Accumulation Period or Early Amortization
Period, the Class B Fixed Allocation Percentage.
"Collateral Interest" for any date means an amount equal to (a) the
Collateral Initial Interest, minus (b) the aggregate amount of principal
payments made to the Collateral Interest Holder prior to such date, minus (c)
the aggregate amount of Collateral Charge-Offs for all prior Transfer Dates,
minus (d) the aggregate amount of Reallocated Principal Collections for all
prior Transfer Dates, minus (e) an amount equal to the aggregate amount by
which the Collateral Interest has been reduced to fund the Class A Reduction
Amount and the Class B Reduction Amount on all prior Transfer Dates as
described under "--Defaulted Receivables; Dilutions," plus (f) the aggregate
amount of Excess Spread allocated and available on all prior Transfer Dates
for the purpose of reimbursing amounts deducted pursuant to the foregoing
clauses (c), (d) and (e); provided, that the Collateral Interest may not be
reduced below zero.
"Collateral Investor Allocation Percentage" means, for any Monthly Period,
(a) with respect to Default Amounts, Uncovered Dilution Amounts and Finance
Charge Receivables at any time and Principal Receivables during the Revolving
Period, the Collateral Floating Allocation Percentage, and (b) with respect to
Principal Receivables during the Controlled Accumulation Period or Early
Amortization Period, the Collateral Fixed Allocation Percentage.
"Invested Amount" means, on any date of determination, an amount equal to
the sum of (a) the Class A Invested Amount, (b) the Class B Invested Amount
and (c) the Collateral Interest, each as of such date.
"Reset Date" means each of (a) any date on which Supplemental Accounts are
added to the Trust, (b) a Removal Date on which, if any Series has been paid
in full, Principal Receivables in an aggregate amount approximately equal to
the initial investor interest of such Series are removed from the Trust, (c) a
date on which there is an increase in the Invested Amount of any Variable
Interest issued by the Trust and (d) any date on which a new Series is issued.
"Series Allocation Percentage" means, with respect to any Monthly Period,
the percentage equivalent of a fraction, the numerator of which is the
numerator used in determining the Floating Allocation Percentage for that
Monthly Period and the denominator of which is the sum of the numerators used
to calculate the Investor Percentages for allocations with respect to Finance
Charge Receivables for all outstanding Series on such date of determination;
provided, that with respect to any Monthly Period in which a Reset Date
occurs, the denominator for the portion of the Monthly Period falling on and
after each such Reset Date (the "subject Reset Date") and on or prior to any
subsequent Reset Date will be determined using a denominator which is equal to
the sum of the numerators used to calculate the Investor Percentages for
allocations with respect to Finance Charge Receivables for all outstanding
series as of close of business on the subject Reset Date.
"Variable Interest" means either of (a) any certificate that is designated
as a variable funding certificate in the related Series Supplement and (b) any
Purchased Interest sold as permitted by the Pooling Agreement.
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REALLOCATION OF CASH FLOWS
With respect to each Transfer Date, the Servicer will determine the amount
(the "Class A Required Amount"), if any, by which the sum of (i) Class A
Monthly Interest for such Transfer Date, plus (ii) the Class Deficiency
Amount, if any, for such Transfer Date, plus (iii) the Class A Additional
Interest, if any, for such Transfer Date, plus (iv) the Class A Servicing Fee
for the prior Monthly Period, plus (v) the Class A Servicing Fee, if any, if
any, due but not paid on any prior Transfer Date, plus (vi) the Class A
Investor Default Amount, if any, for such Transfer Date, plus (vii) the Class
A Uncovered Dilution Amount for the related Monthly Period, exceeds the Class
A Available Funds for the related Monthly Period. If the Class A Required
Amount is greater than zero, Excess Spread (and any Required Draw Amount)
allocated to Series 1996-B and available for such purpose will be used to fund
the Class A Required Amount with respect to such Transfer Date. If such Excess
Spread (and any Required Draw Amount) is insufficient to fund the Class A
Required Amount, first, Reallocated Collateral Principal Collections and,
then, Reallocated Class B Principal Collections will 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 any
Required Draw Amount), are insufficient to fund the remaining Class A Required
Amount for such related Monthly Period, then the Collateral Interest (after
giving effect to reductions for any Collateral Charge-Offs and Reallocated
Principal Collections on such Transfer Date) will be reduced by the amount of
such excess (but not by more than the Class A Reduction Amount for such
Monthly Period). If such reduction would cause the Collateral Interest to be a
negative number, the Collateral Interest will be reduced to zero, and the
Class B Invested Amount (after giving effect to reductions for any Class B
Investor Charge-Offs and any Reallocated Class B Principal Collections for
which the Collateral Interest was not reduced on such Transfer Date) will be
reduced by the amount by which the Collateral Interest would have been reduced
below zero (but not by more than the excess of the Class A Reduction Amount,
if any, for such Monthly Period over the amount of such reduction, if any, of
the Collateral Interest with respect to such Monthly Period). 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 Reduction Amount for such Monthly Period over the amount
of the reductions, if any, of the Collateral Interest and the Class B Invested
Amount with respect to such Monthly Period). 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 Holders. In such case, the Class A
Holders will bear directly the credit and other risks associated with their
interests in the Trust. See "--Defaulted Receivables; Dilutions" herein.
With respect to each Transfer Date, the Servicer will determine the amount
(the "Class B Required Amount"), if any, by which the sum of (a) the amount,
if any, by which the sum of (i) Class B Monthly Interest due on the related
Distribution Date, plus (ii) the Class B Deficiency Amount, if any, for such
Transfer Date, plus (iii) the Class B Additional Interest, if any, for such
Transfer Date, plus (iv) the Class B Servicing Fee for the prior Monthly
Period, plus (v) the Class B Servicing Fee, if any, due but not paid on any
prior Transfer Date, exceeds the Class B Available Funds for the related
Monthly Period plus (b) the sum of (A) the Class B Investor Default Amount, if
any, for such Transfer Date and (B) the Class B Uncovered Dilution Amount, if
any, for the related Monthly Period. If the Class B Required Amount is greater
than zero, Excess Spread (and any Required Draw Amount) allocated to Series
1996-B 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 Transfer Date. If such Excess Spread (and any Required Draw
Amount) are insufficient to fund the Class B Required Amount, Reallocated
Collateral Principal Collections not required to fund the Class A Required
Amount for the related Monthly Period will be used to fund the remaining Class
B Required Amount. If such Reallocated Collateral Principal Collections with
respect to the related Monthly Period are insufficient to fund the remaining
Class B Required Amount, then the Collateral Interest (after giving effect to
reductions for any Collateral Charge-Offs and Reallocated Principal
Collections on such Transfer Date and after any adjustments made thereto for
the benefit of the Class A Holders) will be reduced by the amount of such
deficiency (but not by more than the Class B Reduction Amount for such Monthly
Period). In the event that such a reduction would cause the Collateral
Interest to be a negative number, the Collateral Interest will be reduced to
zero, and the Class B Invested Amount will be reduced by the amount by which
the Collateral Interest would have been
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reduced below zero (but not by more than the excess of the Class B Reduction
Amount for such Monthly Period over the amount of such reduction of the
Collateral Interest), and the Class B Holders will bear directly the credit
and other risks associated with their interests in the Trust. See "--Defaulted
Receivables; Dilutions" herein.
Reductions of the Class A Invested Amount or Class B Invested Amount
described above will be reimbursed by, and the Class A Invested Amount or
Class B Invested Amount increased to the extent of, Excess Spread available
for such purposes on each Transfer Date. See "Description of the
Certificates--Application of Collections--Excess Spread" and "--Cash
Collateral Account; Required Enhancement Amount" herein. When such reductions
of the Class A Invested Amount and Class B Invested Amount have been fully
reimbursed, reductions of the Collateral Interest will be reimbursed until
reimbursed in full in a similar manner.
"Reallocated Class B Principal Collections" for any Monthly Period means
collections of Principal Receivables allocable to the Class B Interest for the
related Monthly Period in an amount not to exceed the amount applied to fund
the Class A Required Amount, if any; provided, however, that such amount will
not exceed the Class B Invested Amount after giving effect to any Class B
Investor Charge-Offs for the related Transfer Date.
"Reallocated Collateral Principal Collections" for any Monthly Period means
collections of Principal Receivables allocable to the Collateral Interest for
the related Monthly Period in an amount not to exceed the amount applied to
fund the Class A Required Amount and the Class B Required Amount, if any;
provided, however, that such amount will not exceed the Collateral Interest
after giving effect to any Collateral Charge-Offs for the related Transfer
Date.
"Reallocated Principal Collections" for any Monthly Period means the sum of
(a) the Reallocated Class B Principal Collections for such Monthly Period, if
any, and (b) the Reallocated Collateral Principal Collections for such Monthly
Period, if any.
APPLICATION OF COLLECTIONS
Allocations. Except as otherwise provided below, the Servicer will deposit
into the Collection Account, no later than the second business day following
the date of processing, any payment collected by the Servicer on the
Receivables. On the same day as any such deposit is made, the Servicer will
make the deposits and payments to the accounts and parties as indicated below;
provided, however, that for as long as WFN remains the Servicer under the
Pooling Agreement and (a) (i) the Servicer provides to the Trustee a letter of
credit covering the risk of collection of the Servicer acceptable to the
Rating Agency and (ii) the Transferor shall not have received a notice from
the Rating Agency that reliance on such letter of credit would result in the
lowering of such Rating Agency's then-existing rating of any Series then
outstanding or (b) the certificate of deposit or unsecured short-term debt
obligations of the Transferor are rated P-1 by Moody's and at least A-1 by
Standard & Poor's and Fitch (or such other rating below A-1, P-1 or such
equivalent rating, as the case may be, which is satisfactory to each Rating
Agency), then the Servicer may make such deposits and payments on the business
day immediately prior to the Distribution Date (the "Transfer Date") in an
amount equal to the net amount of such deposits and payments which would have
been made had the conditions of this proviso not applied.
With respect to the Certificates and any Monthly Period, and notwithstanding
anything in the Pooling Agreement to the contrary, whether the Servicer is
required to make monthly or daily deposits into the Collection Account, the
Finance Charge Account or the segregated trust account established and
maintained by the Trustee primarily for the allocation of Collections of
Principal Receivables and certain other amounts (the "Principal Account"), (i)
the Servicer will only be required to deposit Collections into the Collection
Account, and from the Collection Account into the Finance Charge Account or
the Principal Account, up to the required amount to be distributed on or prior
to the related Distribution Date to Holders or to the Collateral Interest
Holder (or, if WFN is not the Servicer, to the Servicer) and (ii) if at any
time prior to such Distribution Date the amount of Collections deposited in
the Collection Account exceeds the amount required to be deposited pursuant to
clause (i) above, the Servicer will be permitted to withdraw the excess from
the Collection Account.
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Payment of Interest, Fees and Other Items. On each Transfer Date, the
Trustee, acting pursuant to the Servicer's instructions, will apply the Class
A Available Funds, Class B Available Funds and Collateral Available Funds in
the Finance Charge Account in the following manner:
(a) On each Transfer Date, an amount equal to the Class A Available Funds
will be distributed in the following priority:
(i) an amount equal to Class A Monthly Interest for the related
Distribution Date, plus any Class A Deficiency Amount, plus any Class A
Additional Interest (in each case for such Transfer Date) will be
deposited into the Distribution Account for distribution to Class A
Holders on such Distribution Date;
(ii) an amount equal to the Class A Servicing Fee for the related
Monthly Period, plus the amount of any overdue Class A Servicing Fee
(less, if WFN is the Servicer, amounts previously retained towards
payment of such fee), will be paid to the Servicer;
(iii) an amount equal to the sum of the Class A Investor Default
Amount and the Class A Uncovered Dilution Amount, if any, for the
preceding Monthly Period will be treated (or be deemed to be treated)
as a portion of Available Investor Principal Collections and, during
the Early Amortization Period, deposited into the Principal Account for
such Transfer Date; and
(iv) the balance, if any, will constitute a portion of Excess Spread
and will be allocated and distributed as described under "--Excess
Spread" herein.
(b) On each Transfer Date, an amount equal to the Class B Available Funds
will be distributed in the following priority:
(i) an amount equal to Class B Monthly Interest, plus any Class B
Deficiency Amount, plus any Class B Additional Interest (in each case
for such Transfer Date) will be deposited into the Distribution Account
for distribution to Class B Holders on such Distribution Date;
(ii) an amount equal to the Class B Servicing Fee for the related
Monthly Period, plus the amount of any overdue Class B Servicing Fee
(less, if WFN is the Servicer, amounts previously retained towards
payment of such fee), will be paid to the Servicer; and
(iii) the balance, if any, will constitute a portion of Excess Spread
and will be allocated and distributed as described under "--Excess
Spread" herein.
(c) On each Transfer Date, an amount equal to the Collateral Available
Funds will be distributed in the following priority:
(i) if neither the Transferor nor any of its affiliates is the
Servicer, an amount equal to the Collateral Interest Servicing Fee for
the related Monthly Period, plus the amount of any overdue Collateral
Interest Servicing Fee, will be paid to the Servicer; and
(ii) the balance, if any, will constitute a portion of Excess Spread
and will be allocated and distributed as described under "--Excess
Spread" herein.
"Class A Monthly Interest" with respect to any Distribution Date will equal
the product of (i) one-twelfth, times (B) the Class A Rate, times (ii) the
outstanding principal balance of the Class A Certificates determined as of the
Record Date preceding the related Transfer Date; provided that Class A Monthly
Interest for the first Distribution Period will be $1,970,325.
"Class B Monthly Interest" with respect to any Distribution Date will equal
the product of (i) one-twelfth, times (B) the Class B Rate, times (ii) the
outstanding principal balance of the Class B Certificates determined as of the
Record Date preceding the related Transfer Date; provided that Class B Monthly
Interest for the first Distribution Period will be $214,200.
"Collateral Available Funds" means, with respect to any Monthly Period, an
amount equal to the Collateral Floating Allocation Percentage of collections
of Finance Charge Receivables allocated to the Series Interest with respect to
such Monthly Period and investment earnings on the Cash Collateral Account
treated as collections of Finance Charge Receivables on the related Transfer
Date.
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"Collateral Monthly Interest" with respect to any Transfer Date will equal
the product of (a) an amount equal to LIBOR plus 1.1% per annum, or such
lesser amount as may be designated in the Loan Agreement (the "Collateral
Rate"), (b) the actual number of days in the related Distribution Period
divided by 360 and (c) the Collateral Interest as of the related Record Date.
"LIBOR" means, for each Distribution Period, the London interbank offered
rate for one-month United States dollar deposits as determined in accordance
with the Loan Agreement (which may include reserve adjustments).
Excess Spread. On each Transfer Date, the Trustee, acting pursuant to the
Servicer's instructions, will apply (or be deemed to apply) Excess Spread 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 Transfer Date will be used to fund the Class A Required Amount and
will be applied in the priority set forth in clause (a) under "--Payment of
Interest, Fees and Other Items" above;
(b) an amount equal to the aggregate amount of Class A Investor Charge-
Offs which have not been previously reimbursed (after giving effect to the
allocation on such Transfer Date of certain other amounts applied for that
purpose) will be deposited into the Principal Account and treated as a
portion of Available Investor Principal Collections for such Transfer Date
as described under "--Payments of Principal" below;
(c) an amount equal to the Class B Required Amount, if any, with respect
to such Transfer Date will be used to fund the Class B Required Amount and
will be applied with the priority set forth in clause (b) under "--Payment
of Interest, Fees and Other Items" above, then any amount remaining, up to
the Class B Reduction Amount, will be deposited into the Principal Account
and treated as a portion of Available Investor Principal Collections for
such Transfer Date as described under "--Payments of Principal" below;
(d) an amount equal to the aggregate amount by which the Class B Invested
Amount has been reduced below the initial Class B Invested Amount for
reasons other than the payment of principal to the Class B Holders (but not
in excess of the aggregate amount of such reductions which have not been
previously reimbursed) will be deposited into the Principal Account and
treated as a portion of Available Investor Principal Collections for such
Transfer Date as described under "--Payments of Principal" below;
(e) an amount equal to the Collateral Monthly Interest for the related
Monthly Period, plus the amount of any Collateral Monthly Interest
previously due but not distributed to the Collateral Interest Holder on a
prior Transfer Date, will be distributed to the Collateral Interest Holder
for distribution in accordance with the Loan Agreement;
(f) if the Transferor or any of its affiliates is the Servicer, an amount
equal to the Collateral Interest Servicing Fee for the related Monthly
Period, plus the amount of any overdue Collateral Interest Servicing Fee,
will be paid to the Servicer;
(g) an amount equal to the Collateral Reduction Amount, if any, for the
related Monthly Period will be deposited into the Principal Account and
treated as a portion of Available Investor Principal Collections for such
Transfer Date as described under "--Payments of Principal" below;
(h) an amount equal to the aggregate amount by which the Collateral
Interest has been reduced for reasons other than the payment of principal
to the Collateral Interest Holder (but not in excess of the aggregate
amount of such reductions which have not been previously reimbursed) will
be treated as a portion of Available Investor Principal Collections and
deposited into the Principal Account on such Transfer Date;
(i) an amount equal up to the excess, if any, of the Required Cash
Collateral Amount over the Available Cash Collateral Amount (without giving
effect to any deposit made on such date) will be deposited into the Cash
Collateral Account;
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(j) on each Transfer Date from and after the Reserve Account Funding
Date, but prior to the date on which the Reserve Account terminates (as
described under "--Reserve Account"), an amount up to the excess, if any,
of the Required Reserve Account Amount over the Available Reserve Account
Amount will be deposited into the Reserve Account;
(k) an amount equal to all other amounts due under the Loan Agreement
will be distributed in accordance with the Loan Agreement; and
(l) the balance, if any, after giving effect to the payments made
pursuant to subparagraphs (a) through (k) above, will constitute "Excess
Finance Charge Collections" to be applied with respect to other Series in
accordance with the Pooling Agreement as described under "--Sharing of
Excess Finance Charge Collections" herein and in the Prospectus.
Payments of Principal. On each Transfer Date, the Trustee, acting pursuant
to the Servicer's instructions, will distribute Available Investor Principal
Collections (see "--Principal Payments" above) on deposit in the Principal
Account in the following manner:
(a) On each Transfer Date with respect to the Revolving Period, all such
Available Investor Principal Collections will be distributed or deposited
in the following priority:
(i) an amount equal to the Collateral Monthly Principal will be paid
to the Collateral Interest Holder in accordance with the Loan
Agreement; and
(ii) the balance will be treated as Shared Principal Collections and
applied as described under "Description of the Certificates--Shared
Principal Collections" herein and in the Prospectus.
(b) On each Transfer Date with respect to the Controlled Accumulation
Period or the Early 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 for such Transfer
Date will be deposited in the Principal Funding Account (during the
Controlled Accumulation Period) or deposited in the Distribution
Account (during the Early Amortization Period);
(ii) after giving effect to the distribution referred to in the
foregoing clause (i), an amount equal to the Class B Monthly Principal
for such Transfer Date will be deposited in the Distribution Account;
(iii) for each Transfer Date (other than the Transfer Date
immediately preceding the Series 1996-B Termination Date) after giving
effect to the distributions referred to in the foregoing clauses (i)
and (ii), an amount equal to the Collateral Monthly Principal will be
distributed to the Collateral Interest Holder in accordance with the
Loan Agreement; and
(iv) after giving effect to the distributions referred to in the
foregoing clauses (i) through (iii), remaining Available Investor
Principal Collections will be treated as Shared Principal Collections
and applied as described under "Description of the Certificates--Shared
Principal Collections" herein and in the Prospectus.
On the earlier to occur of (i) the first Transfer Date with respect to the
Early Amortization Period and (ii) the Transfer Date immediately preceding the
Class A Scheduled Payment Date, the Trustee, acting pursuant to the Servicer's
instructions, will withdraw from the Principal Funding Account and deposit in
the Distribution Account the amount on deposit in the Principal Funding
Account.
Notwithstanding the foregoing, on the earlier to occur of (i) the first
Distribution Date with respect to the Early Amortization Period and (ii) the
Class A Scheduled Payment Date and on each Distribution Date thereafter, the
Trustee, acting pursuant to the Servicer's instructions, will pay amounts on
deposit in the Distribution Account pursuant to the foregoing paragraphs under
"--Payments of Principal" in the following priority:
(i) an amount equal to the lesser of such amount on deposit in the
Distribution Account and the Class A Invested Amount will be paid to the
Class A Holders; and
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(ii) for each Distribution Date with respect to the Early Amortization
Period and on or after the Class B Scheduled Payment Date, after giving
effect to the distributions referred to in the foregoing clause (i), an
amount equal to the lesser of such amount on deposit in the Distribution
Account and the Class B Invested Amount will be paid to the Class B
Holders.
"Class A Monthly Principal" with respect to any Transfer Date relating to
the Controlled Accumulation Period or the Early Amortization Period, prior to
the payment in full of the Class A Invested Amount, will equal the least of
(i) the Available Investor Principal Collections on deposit in the Principal
Account with respect to such Transfer Date, (ii) for each Transfer Date with
respect to the Controlled Accumulation Period, prior to the Class A Scheduled
Payment Date, the applicable Controlled Deposit Amount for such Transfer Date
and (iii) the Class A Adjusted Invested Amount on such Transfer Date prior to
any deposit in the Principal Funding Account on such Transfer Date.
"Class B Monthly Principal" with respect to any Transfer Date relating to
the Controlled Accumulation Period, beginning with the Transfer Date after the
one on which the Class A Adjusted Invested Amount is reduced to zero (and for
the Early Amortization Period beginning with the Transfer Date on which the
Class A Invested Amount is reduced to zero, after taking into account payments
to be made on the related Distribution Date), will equal the lesser of (i) the
excess, if any, of (A) Available Investor Principal Collections on such
Transfer Date over (B) any Class A Monthly Principal on such Transfer Date and
(ii) the Class B Invested Amount (after giving effect to reductions for any
Class B Investor Charge-Offs and Class B Reallocated Principal Collections on
such Transfer Date and after giving effect to any adjustments thereto for the
benefit of the Class A Holders and the Class B Holders on such Transfer Date).
"Collateral Monthly Principal" means the amount of monthly principal
distributable from the Principal Account with respect to the Collateral
Interest on each Transfer Date which will be (i) during the Revolving Period
following any reduction of the Required Enhancement Amount, an amount equal to
the lesser of (A) the Enhancement Surplus on such Transfer Date and (B) the
Available Investor Principal Collections on such Transfer Date or (ii) during
the Controlled Accumulation Period or Early Amortization Period an amount
equal to the least of (A) the Enhancement Surplus on such Transfer Date, (B)
the excess, if any, of (1) the Available Investor Principal Collections on
such Transfer Date over (2) the sum of the Class A Monthly Principal and the
Class B Monthly Principal for such Transfer Date and (C) the Collateral
Interest as of such Transfer Date.
"Controlled Accumulation Amount" means for any Transfer Date with respect to
the Controlled Accumulation Period prior to the payment in full of the Class A
Invested Amount, $23,625,000; provided, that if the commencement of the
Controlled Accumulation Period is modified as described under "--Postponement
of Controlled Accumulation Period," (i) the Controlled Accumulation Amount for
each Transfer Date with respect to the Controlled Accumulation Period will
mean the amount determined in accordance as described under""--Postponement of
Controlled Accumulation Period" on the date on which the Controlled
Accumulation Period has most recently been modified and (ii) the sum of the
Controlled Accumulation Amounts for all Transfer Dates with respect to the
modified Controlled Accumulation Period will not be less than the Class A
Invested Amount.
SHARING OF EXCESS FINANCE CHARGE COLLECTIONS
To the extent that collections of Finance Charge Receivables allocated to
the Series Interest (and any other amounts that are to be treated as
collections of Finance Charge Receivables allocated to the Series Interest)
are not needed to make payments in respect of the Series Interest as described
above under "--Application of Collections--Payment of Interest, Fees and Other
Items" and "--Excess Spread," such Excess Finance Charge Collections will be
applied to make payments in respect of other Series entitled to share therein
in accordance with the Pooling Agreement. In addition, Excess Finance Charge
Collections with respect to other Series in Group One, to the extent not
required to make payments in respect of such Series, may be applied to cover
shortfalls in amounts payable from Excess Spread as described above under "--
Application of Collections--
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Excess Spread" (as well as shortfalls experienced by other Series). See
"Description of the Certificates--Sharing of Excess Finance Charge
Collections" in the Prospectus.
"Group One" means Series 1996-B and each other Series specified in the
related Series Supplement to be included in Group One. The only other
presently existing Series issued by the Trust is also included in Group One.
See "Description of the Certificates--Sharing of Excess Finance Charge
Collections" in the Prospectus.
SHARED PRINCIPAL COLLECTIONS
Collections of Principal Receivables for any Monthly Period allocated to the
Series Interest will first be used to cover, with respect to any Monthly
Period during the Controlled Accumulation Period, deposits of the applicable
Controlled Deposit Amount to the Principal Funding Account or the Distribution
Account, and during the Early Amortization Period, payments to the Holders and
then under certain circumstances payments to the Collateral Interest Holder.
The Servicer will determine the amount of collections of Principal Receivables
for any Monthly Period allocated to the Series Interest remaining after
covering required payments to the Holders and any similar amount remaining for
any other Series in Group One ("Shared Principal Collections"). See
"Description of the Certificates--Application of Collections--Payments of
Principal" herein. The Servicer will allocate the Shared Principal Collections
to cover any scheduled or permitted principal distributions to
certificateholders and deposits to principal funding accounts, if any, for any
Series in Group One entitled thereto which have not been covered out of the
Collections of Principal Receivables allocable to such Series and certain
other amounts for such Series ("Principal Shortfalls"). If Principal
Shortfalls exceed Shared Principal Collections for any Monthly Period, Shared
Principal Collections will be allocated pro rata among the applicable Series
in Group One based on the relative amount of Principal Shortfalls attributable
to each such Series. Any portion of Shared Principal Collections allocated to
Series 1996-B on any Transfer Date will be applied as Available Investor
Principal Collections on such Transfer Date. See "Description of the
Certificates--Principal Payments" herein. To the extent that Shared Principal
Collections exceed Principal Shortfalls, the balance will be paid to the
Transferor or, under certain circumstances, deposited into the Excess Funding
Account. See "Description of the Certificates--Excess Funding Account" in the
Prospectus.
CASH COLLATERAL ACCOUNT; REQUIRED ENHANCEMENT AMOUNT
The Servicer shall establish and maintain with an Eligible Institution,
which may be the Trustee, in the name of the Trustee, on behalf of the Trust,
a segregated trust account (the "Cash Collateral Account") bearing a
designation clearly indicating that the funds deposited therein are held for
the benefit of the Investor Holders. The Trustee shall possess all right,
title and interest in all funds on deposit from time to time in the Cash
Collateral Account and in all proceeds thereof. The Cash Collateral Account
shall be under the sole dominion and control of the Trustee for the benefit of
the Investor Holders. The interest of the Collateral Interest Holder in the
Cash Collateral Account shall be subordinated to the interests of the Series
1996-B Holders as provided herein and in the Loan Agreement. The Trustee, at
the direction of the Servicer, shall make deposits to and withdrawals from the
Cash Collateral Account as provided for in the Pooling Agreement and the Loan
Agreement, as described in this Series Supplement.
On the Closing Date, Transferor shall deposit $8,750,000 in immediately
available funds into the Cash Collateral Account. Funds on deposit in the Cash
Collateral Account shall be invested at the direction of the Servicer by the
Trustee in Eligible Investments. Funds on deposit in the Cash Collateral
Account on any Transfer Date, after giving effect to any withdrawals from the
Cash Collateral Account on such Transfer Date, will generally be invested in
such investments that will mature so that such funds will be available for
withdrawal on or prior to the following Transfer Date. On each Transfer Date,
all interest and earnings (net of losses and investment expenses) accrued
since the preceding Transfer Date on funds on deposit in the Cash Collateral
Account will be treated as collections of Finance Charge Receivables allocable
to the Series Interest. For purposes of determining the availability of funds
or the balances in the Cash Collateral Account, all investment earnings on
such funds shall be deemed not to be available or on deposit.
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On each Determination Date, the Servicer shall calculate the amount (the
"Required Draw Amount") by which the sum of the amounts specified in clauses
(a) through (d) under "The Description of the Certificates--Application of
Collections--Excess Spread" with respect to the related Transfer Date exceeds
the amount of Excess Spread allocated with respect to the related Monthly
Period. In the event that for any Distribution Date the Required Draw Amount
is greater than zero, the Servicer shall give written notice to Trustee and
the Collateral Interest Holder of such positive Required Draw Amount on the
related Determination Date. On the related Transfer Date, the Required Draw
Amount, if any, up to the Available Cash Collateral Amount, shall be withdrawn
from the Cash Collateral Account and distributed to fund any deficiency
pursuant to clauses (a) through (d) under "The Description of the
Certificates--Application of Collections--Excess Spread" (in the order of
priority set forth thereunder).
If, after giving effect to all deposits to and withdrawals from the Cash
Collateral Account and adjustments to the Collateral Interest with respect to
any Transfer Date, there is an Enhancement Surplus, the Trustee, acting in
accordance with the instructions of the Servicer, will withdraw from the Cash
Collateral Account, and apply in accordance with the Loan Agreement, an amount
up to such Enhancement Surplus.
"Available Cash Collateral Amount" means with respect to any Transfer Date,
the lesser of (a) the amount on deposit in the Cash Collateral Account on such
date (before giving effect to any deposit to, or withdrawal from the Cash
Collateral Account to be made with respect to such date) and (b) the lesser of
the Required Enhancement Amount as of the preceding Transfer Date and the
Invested Amount as of such date.
"Available Enhancement Amount" means, as of any date of determination, the
sum of (a) the Collateral Interest and (b) the aggregate amount of funds on
deposit in the Cash Collateral Account, in each case on such date.
"Enhancement Surplus" means, with respect to any Transfer Date, the excess,
if any, of (a) the amount on deposit in the Cash Collateral Account, plus the
Collateral Interest over (b) the Required Enhancement Amount.
"Required Cash Collateral Amount" means, with respect to any date of
determination, the Required Enhancement Amount less the Collateral Interest.
"Required Enhancement Amount" means, an amount equal to the greater of (a)
13% of the Adjusted Invested Amount on such Transfer Date, after taking into
account deposits into the Principal Funding Account on such Transfer Date and
payments (including payments on the Collateral Interest) to be made on the
related Distribution Date and (b) $10,500,000; provided, that (x) if, on or
prior to such Transfer Date, there have been any Required Draw Amounts or any
reductions in the Collateral Interest pursuant to clauses (c), (d) or (e) of
the definition of such term, or an Early Amortization Event occurs with
respect to Series 1996-B, then the Required Enhancement Amount for such
Transfer Date shall, subject to clauses (y) and (z), equal the Required
Enhancement Amount on the Transfer Date immediately preceding such reduction,
Required Draw Amount or Early Amortization Event, (y) in no event will the
Required Enhancement Amount exceed the sum of the outstanding principal
amounts of (i) the Class A Certificates and (ii) the Class B Certificates,
each as of the last day of the Monthly Period preceding such Transfer Date
after taking into account the payments to be made on the related Distribution
Date and (z) the Required Enhancement Amount may be reduced or increased at
Transferor's option at any time if the Transferor, the Servicer, the
Collateral Interest Holder and the Trustee have been provided evidence that
the Rating Agency Condition has been satisfied.
"Rating Agency Condition" means the notification in writing by each Rating
Agency to the Transferor, the Servicer and the Trustee that a proposed action
will not result in any Rating Agency reducing or withdrawing its then existing
rating of the Certificates.
With respect to any Transfer Date, if the Collateral Interest is less than
the Required Collateral Interest, certain Excess Spread, if available, will be
allocated to increase the Collateral Interest to the extent of such shortfall.
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DEFAULTED RECEIVABLES; DILUTIONS
On or before each Transfer Date, the Servicer will calculate the aggregate
Investor Default Amounts for the preceding Monthly Period (the "Aggregate
Investor Default Amount"). The term "Investor Default Amount" means, with
respect to any Receivable in a Defaulted Account, an amount equal to the
product of (a) the Default Amount and the Floating Allocation Percentage on
the day such Account became a Defaulted Account. A portion of the Aggregate
Investor Default Amount for any Monthly Period will be allocated to the Class
A Holders (the "Class A Investor Default Amount") on each Transfer Date in an
amount equal to the product of the Class A Floating Allocation Percentage
applicable during the related Monthly Period and the Aggregate Investor
Default Amount for such Monthly Period. A portion of the Aggregate Investor
Default Amount for any Monthly Period will be allocated to the Class B Holders
(the "Class B Investor Default Amount") on each Transfer Date in an amount
equal to the product of the Class B Floating Allocation Percentage applicable
during the related Monthly Period and the Aggregate Default Amount for such
Monthly Period. A portion of the Aggregate Investor Default Amount for any
Monthly Period will be allocated to the Collateral Interest Holder (the
"Collateral Default Amount") on each Transfer Date in an amount equal to the
product of the Collateral Floating Allocation Percentage applicable during the
related Monthly Period and the Aggregate Investor Default Amount for such
Monthly Period.
On or before each Transfer Date, the Servicer will calculate the Uncovered
Dilution Amount for the related Monthly Period. A portion of the Uncovered
Dilution Amount for any Monthly Period will be allocated to the Class A
Holders (the "Class A Uncovered Dilution Amount") on each Transfer Date in an
amount equal to the product of the Class A Investor Allocation Percentage
applicable during the related Monthly Period and the Uncovered Dilution Amount
for such Monthly Period. A portion of the Uncovered Dilution Amount for any
Monthly Period will be allocated to the Class B Holders (the "Class B
Uncovered Dilution Amount") on each Transfer Date in an amount equal to the
product of the Class B Investor Allocation Percentage applicable during the
related Monthly Period and the Uncovered Dilution Amount for such Monthly
Period. A portion of the Uncovered Dilution Amount for any Monthly Period will
be allocated to the Collateral Interest Holder (the "Collateral Uncovered
Dilution Amount") on each Transfer Date in an amount equal to the product of
the Collateral Investor Allocation Percentage applicable during the related
Monthly Period and the Uncovered Dilution Amount for such Monthly Period.
"Uncovered Dilution Amount" means an amount equal to the product of (x) the
Series Allocation Percentage for the related Monthly Period (determined on a
weighted average basis, if a Reset Date occurs during that Monthly Period),
times (y) the aggregate Dilution occurring during that Monthly Period as to
which any deposit is required to be made to the Excess Funding Account
pursuant to the Pooling Agreement but has not been made; provided, that, if
the Transferor Amount is greater than zero at any time the deposit referred to
in clause (y) is required to be made, the Uncovered Dilution Amount for such
amount to be deposited shall be deemed to be zero. See "Description of the
Certificates--Dilution" in the Prospectus.
On or before each Transfer Date, the Servicer will calculate the sum of the
Class A Investor Default Amount and the Class A Uncovered Dilution Amount
(such sum being the "Class A Reduction Amount"). If on any Transfer Date, the
Class A Reduction Amount for the prior Monthly Period exceeds the amount of
Class A Available Funds, Excess Spread (including any Required Draw Amount
withdrawn for such application) Principal Collections which are allocated and
available to fund such amount, the Collateral Interest (after giving effect to
reductions for any Collateral Charge-Offs and any Reallocated Principal
Collections on such Transfer Date) will be reduced by the amount of such
excess, but not by more than the lesser of the Class A Reduction Amount and
the Collateral Interest (after giving effect to reductions for any Collateral
Charge-Offs and any Reallocated Principal Collections on such Transfer Date)
for such Transfer Date. If such reduction would cause the Collateral Interest
to be a negative number, the Collateral Interest will be reduced to zero, and
the Class B Invested Amount (after giving effect to reductions for any Class B
Investor Charge-Offs and any Reallocated Class B Principal Collections on such
Transfer Date) will be reduced by the amount by which the Collateral Interest
would have been reduced below zero. If 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
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be reduced by the amount by which the Class B Invested Amount would have been
reduced below zero, but not by more than the Class A Reduction Amount for such
Transfer Date (a "Class A Investor Charge-Off"), which will have the effect of
slowing or reducing the return of principal and interest to the Class A
Holders. If the Class A Invested Amount has been reduced by the amount of any
Class A Investor Charge-Offs, it will be reimbursed on any Transfer Date (but
not by an amount in excess of the aggregate Class A Investor Charge-Offs) by
the amount of Excess Spread allocated and available for such purpose as
described under "--Application of Collections--Excess Spread" herein.
On or before each Transfer Date, the Servicer will calculate the sum of the
Class B Investor Default Amount and the Class B Uncovered Dilution Amount
(such sum being the "Class B Reduction Amount"). If on any Transfer Date, the
Class B Reduction Amount for the prior Monthly Period exceeds the amount of
Excess Spread (including any Required Draw Amount withdrawn for such
application) and Reallocated Collateral Principal Collections which are
allocated and available to fund such amount, the Collateral Interest (after
giving effect to reductions for any Collateral Charge-Offs and any Reallocated
Principal Collections on such Transfer Date and any adjustments with respect
thereto as described in the preceding paragraph) will be reduced by the amount
of such excess but not by more than the lesser of the Class B Reduction Amount
and the Collateral Interest (after giving effect to reductions for any
Collateral Charge-Offs and any Reallocated Principal Collections on such
Transfer Date and any adjustments with respect thereto as described in the
preceding paragraph) for such Transfer Date. If such reduction would cause the
Collateral Interest to be a negative number, the Collateral Interest will be
reduced to zero and the Class B Invested Amount will be reduced by the amount
by which the Collateral Interest would have been reduced below zero, but not
by more than the Class B Reduction Amount for such Transfer Date (a "Class B
Investor Charge-Off"), which will have the effect of slowing or reducing the
return of principal and interest to the Class B Holders. The Class B Invested
Amount will also be reduced by the amount of Reallocated Class B Principal
Collections in excess of the Collateral Interest (after giving effect to
reductions for any Collateral Charge-Offs and any Reallocated Collateral
Principal Collections on such Transfer Date) and the amount of any portion of
the Class B Invested Amount allocated to the Class A Certificates to avoid a
reduction in the Class A Invested Amount. The Class B Invested Amount will
thereafter be reimbursed (but not to an amount in excess of the unpaid
principal balance of the Class B Certificates) on any Transfer Date by the
amount of Excess Spread allocated and available for that purpose as described
under "--Application of Collections--Excess Spread" herein.
On or before each Transfer Date, the Servicer will calculate the sum of the
Collateral Default Amount and the Collateral Uncovered Dilution Amount (such
sum being the "Collateral Reduction Amount"). If on any Transfer Date, the
Collateral Reduction Amount for the prior Monthly Period exceeds the amount of
Excess Spread which is allocated and available to fund such amount, the
Collateral Interest will be reduced by the amount of such excess but not by
more than the lesser of the Collateral Reduction Amount and the Collateral
Interest for such Transfer Date (a "Collateral Charge-Off"). The Collateral
Interest will also be reduced by the amount of Reallocated Principal
Collections and the amount of any portion of the Collateral Interest allocated
to the Class A Certificates or the Class B Certificates to avoid a reduction
in the Class A Invested Amount, or the Class B Invested Amount, respectively.
The Collateral Interest will thereafter be reimbursed on any Transfer Date by
the amount of the Excess Spread allocated and available for that purpose as
described under "--Application of Collections--Excess Spread" herein.
The Class A Investor Charge-Offs, Class B Investor Charge-Offs and the
Collateral Interest Charge-Offs are, collectively, the "Investor Charge-Offs."
PRINCIPAL FUNDING ACCOUNT
Pursuant to the Series 1996-B Supplement, the Trustee will establish a
segregated trust account held for the benefit of the Holders (the "Principal
Funding Account"). During the Controlled Accumulation Period, the Trustee at
the direction of the Servicer will transfer collections in respect of
Principal Receivables (other than Reallocated Principal Collections) and
Shared Principal Collections from other Series, if any, allocated to Series
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1996-B from the Principal Account to the Principal Funding Account as
described under "--Application of Collections" herein.
Funds on deposit in the Principal Funding Account will be invested to the
following Transfer Date by the Trustee at the direction of the Servicer in
Eligible Investments. On the Transfer Date occurring in the month following
the commencement of the Controlled Accumulation Period and on each Transfer
Date thereafter with respect to the Controlled Accumulation Period, the
Trustee, acting at the Servicer's direction, will transfer from the Principal
Funding Account to the Finance Charge Account investment earnings (net of
investment losses and expenses) on funds on deposit in the Principal Funding
Account (the "Principal Funding Investment Proceeds"), but not in excess of
the Covered Amount, for application as Class A Available Funds. See
"Description of the Certificates--Interest Payments" herein. Any Principal
Funding Investment Proceeds in excess of the Covered Amount will be paid to
the Transferor on the related Transfer Date. If, for any Transfer Date, the
Principal Funding Investment Proceeds are less than the Covered Amount, the
amount of such deficiency (the "Class A Principal Funding Investment
Shortfall") will be withdrawn, to the extent available, from the Reserve
Account and deposited in the Finance Charge Account for application as Class A
Available Funds.
RESERVE ACCOUNT
Pursuant to the Series 1996-B Supplement, the Trustee will establish and
maintain a segregated trust account held for the benefit of the Holders (the
"Reserve Account"). The Reserve Account is established to assist with the
subsequent distribution of interest on the Certificates during the Controlled
Accumulation Period. On each Transfer 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 allocated to the Certificates (to the extent described above under "--
Application of Collections--Excess Spread") 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
Transfer Date with respect to the Monthly Period which commences no later than
three months prior to the commencement of the Controlled Accumulation Period,
or such earlier date as the Servicer may determine. The "Required Reserve
Account Amount" for any Transfer Date on or after the Reserve Account Funding
Date will be equal to (a) 1% of the outstanding principal balance of the Class
A Certificates or (b) any other amount designated by the Transferor; provided,
that if such designation is of a lesser amount, the Transferor will have
provided the Servicer, the Collateral Interest Holder and the Trustee with
evidence that the Rating Agency Condition has been satisfied and the
Transferor will 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 the Transferor, such designation will not
cause an Early Amortization Event or an event that, after the giving of notice
or the lapse of time, would cause an Early Amortization Event to occur with
respect to Series 1996-B.
On or before each Transfer Date with respect to the Controlled Accumulation
Period and on the first Transfer Date with respect to the Early Amortization
Period, a withdrawal will be made from the Reserve Account, and the amount of
such withdrawal will be deposited in the Finance Charge Account and included
in collections of Finance Charge Receivables to be applied Class A Available
Funds for such Transfer Date in an amount equal to the lesser of (a) the
Available Reserve Account Amount with respect to such Transfer Date and (b)
the Principal Funding Investment Shortfall with respect to such Transfer Date.
On each Transfer 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 Transfer Date) and the
Required Reserve Account Amount for such Transfer Date. On each Transfer Date,
after giving effect to any deposit to be made to, and any withdrawal to be
made from, the Reserve Account on such Transfer Date, the Trustee will
withdraw from the Reserve Account an amount equal to the excess, if any, of
the amount on deposit in the Reserve Account over the Required Reserve Account
Amount and distribute such excess to the Collateral Interest Holder for
application in accordance with the terms of the Loan Agreement.
S-43
<PAGE>
Provided that the Reserve Account has not terminated as described below, all
amounts on deposit in the Reserve Account on any Transfer Date (after giving
effect to any deposits to, or withdrawals from, the Reserve Account to be made
on such Transfer Date) will be invested to the following Transfer Date 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 Finance Charge Account and treated as Class A Available
Funds. The Reserve Account will be terminated upon the earlier to occur of (a)
the termination of the Trust pursuant to the Pooling and Servicing Agreement
and (b) if the Controlled Accumulation Period has not commenced, the first
Transfer Date with respect to the Early Amortization Period or, if the
Controlled Accumulation Period has commenced, the earlier to occur of (i) the
first Transfer Date with respect to the Early Amortization Period and (ii) the
Transfer Date immediately preceding the Class A Scheduled Payment 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 terms of 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
Holders.
PAIRED SERIES
The Series 1996-B Certificates may be paired with one or more other Series
(each a "Paired Series"). Each Paired Series either will be prefunded with an
initial deposit to a Pre-Funding Account in an amount up to the initial
principal balance of such Paired Series and primarily from the proceeds of the
sale of such Paired Series or will be a Variable Interest. Any such Pre-
Funding Account will be held for the benefit of such Paired Series and not for
the benefit of the Holders. As principal is paid or deposited into the
Principal Funding Account with respect to the Certificates, either (i) in the
case of a prefunded Paired Series, an equal amount of funds on deposit in any
prefunding account for such prefunded Paired Series will be released (which
funds will be distributed to the Transferor) or (ii) in the case of a Paired
Series having a variable principal amount, an interest in such variable Paired
Series in an equal or lesser amount may be sold by the Trust (and the proceeds
thereof will be distributed to the Transferor) and, in either case, the
invested amount in the Trust of such Paired Series will increase by up to a
corresponding amount. 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 invested amount of such related Paired Series will have
been increased by an amount up to an aggregate amount equal to the Invested
Amount paid to the Holders since the issuance of such Paired Series. 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, however, that the terms of any Paired Series might not have
an impact on the timing or amount of payments received by a Holder. In
particular, the denominator of the Fixed Allocation Percentage may be reduced
upon the occurrence of an early amortization event with respect to a Paired
Series resulting in a possible reduction of the percentage of Collections of
Principal Receivables allocated to Series Holders and possible delays in
payments to the Holders. See "Risk Factors--Issuance of Additional Series;
Sale of Purchased Interests; Effect on Timing or Amount of Payments to
Holders" in the Prospectus and "Maturity Considerations" herein and in the
Prospectus.
PURCHASE OF CERTIFICATES BY THE TRANSFEROR
The Transferor may, from time to time, but will have no obligation to,
purchase Class A Certificates or Class B Certificates on the secondary market
in accordance with applicable law and may request the Trustee to cancel such
Class A Certificates or Class B Certificates and reduce the Class A Invested
Amount or Class B Invested Amount, respectively, by a corresponding amount.
SERIES 1996-B TERMINATION DATE; CERTAIN DISTRIBUTIONS
If the Invested Amount is greater than zero on the Series 1996-B Termination
Date, the Trustee or the Servicer may be required to sell or cause to be sold
certain Receivables and to pay the net proceeds of such sale and any
collections on the Receivables, to the extent available and in the priorities
set forth herein, in an amount at least equal to the Invested Amount plus
accrued interest thereon.
S-44
<PAGE>
EARLY AMORTIZATION EVENTS
As described above, the Revolving Period will continue until the beginning
of business on May 1, 2002 (unless such date is postponed as described under
"--Postponement of Controlled Accumulation Period"), unless an Early
Amortization Event occurs prior to such date. An "Early Amortization Event"
refers to (i) an Early Amortization Event as described in the Prospectus under
"Description of the Certificates--Early Amortization Events" and (ii) the
occurrence of any of the following events after the required notice (such
notice being described in the paragraph following clause (g) below):
(a) the failure of the Transferor (i) to make any payments or deposits
required in the Pooling Agreement on or before the date occurring five days
after the date such payment or deposit is required to be made (ii) to duly
observe or perform in any material respect any covenants or agreements of
the Transferor set forth in the Pooling Agreement which have a material
adverse effect on the Holders of the Certificates (which determination will
be made without reference to whether any funds are available under the
Collateral Interest or the Cash Collateral Account) and continues
unremedied for a period of 60 days after the date on which written notice
of such failure, requiring the same to be remedied, will be given to the
Transferor by the Trustee, or to the Transferor and the Trustee by the
Holders of Certificates and/or the Collateral Interest Holder representing
more than 50% of the Series Interest, and which continues to materially and
adversely affect the interests of the Holders of the Certificates (which
determination will be made without reference to whether any funds are
available under the Collateral Interest or the Cash Collateral Account) for
such period;
(b) any representation or warranty made by the Transferor in the Pooling
Agreement, or any information contained in an Account Schedule required to
be delivered by the Transferor pursuant to the Pooling Agreement, (i) shall
prove to have been incorrect in any material respect when made or when
delivered, which continues to be incorrect in any material respect for a
period of 60 days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Transferor
by the Trustee, or to the Transferor and the Trustee by the Holders of
Certificates and/or the Collateral Interest Holder representing more than
50% of the Series Interest, and (ii) as a result of which the interests of
the Holders of the Certificates are materially and adversely affected
(which determination will be made without reference to whether any funds
are available under the Collateral Interest or the Cash Collateral Account)
and continue to be materially and adversely affected for such period;
provided, that an Early Amortization Event pursuant to this clause (b) will
not be deemed to have occurred hereunder if the Transferor has accepted
reassignment of the related Receivable, or all of such Receivables, if
applicable, during such period in accordance with the provisions of the
Pooling Agreement;
(c) the average Portfolio Yield for any three consecutive Monthly Periods
is reduced to a rate which is less than the average Base Rate for such
period;
(d) the Transferor shall fail to convey Receivables arising under
Additional Accounts, or Participation Interests, to the Trust, as required
by the Pooling Agreement; provided, that such failure will not give rise to
an Early Amortization Event if, prior to the date on which such conveyance
was required to be completed, the Transferor causes a reduction in the
invested amount of any Variable Interest to occur, so that, after giving
effect to that reduction (i) the Transferor Amount is not less than the
Minimum Transferor Amount and (ii) the sum of the aggregate amount of
Principal Receivables plus amounts on deposit in the Excess Funding Account
is not less than the Required Principal Balance;
(e) any Servicer Default shall occur which would have a material adverse
effect on the Holders of the Certificates;
(f) the Class A Invested Amount shall not be paid in full on the Class A
Scheduled Payment Date or the Class B Invested Amount shall not be paid in
full on the Class B Scheduled Payment Date; or
(g) the occurrence of certain insolvency events relating to The Limited.
In the case of any event described in (a), (b) or (e) above, after the
applicable grace period set forth in such Sections, either the Trustee or
Investor Holders representing more than 50% of the Series Interest of Series
1996-B by notice then given in writing to the Transferor and the Servicer (and
to the Trustee if given by the
S-45
<PAGE>
Investor Holders) may declare that an Early Amortization Event has occurred as
of the date of such notice, and in the case of any event described in (c),
(d), (f) or (g) above, an Early Amortization Event shall occur without any
notice or other action on the part of the Trustee or the Investor Holders
immediately upon the occurrence of such event. On the date on which an Early
Amortization Event is deemed to have occurred, the Early Amortization Period
will commence. In such event, distributions of principal to the Investor
Holders will begin on the first Distribution Date following the month in which
such Early Amortization Event occurred. "Investor Holders" means,
collectively, the Class A Holders, the Class B Holders and the Collateral
Interest Holder.
See "Description of the Certificates--Early Amortization Events" in the
Prospectus for an additional discussion of the consequences of an insolvency,
conservatorship or receivership of the Transferor.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The share of the Servicing Fee allocable to the Series Interest with respect
to any Transfer Date (the "Investor Servicing Fee") will be equal to one-
twelfth of the product of (a) 2.0% and (b) the Adjusted Invested Amount as of
the last day of the Monthly Period preceding such Transfer Date; provided,
however, with respect to the first Transfer Date, the Investor Servicing Fee
will be equal to $427,777.78. The share of the Servicing Fee allocable to the
Class A Interest (the "Class A Servicing Fee"), the Class B Interest (the
"Class B Servicing Fee") and the Collateral Interest (the "Collateral Interest
Servicing Fee") with respect to any Transfer Date will equal the Class A
Floating Allocation Percentage, Class B Floating Allocation Percentage and
Collateral Floating Allocation Percentage, respectively, of such Investor
Servicing Fee. Except as specifically provided above, the Servicing Fee will
be paid by the cash flows from the Trust allocated to the Transferor or the
certificateholders of other Series (as provided in the related Series
Supplements) and in no event will the Trust, the Trustee, the Investor Holders
be liable therefor. The Class A Servicing Fee and the Class B Servicing Fee
will be payable solely to the extent amounts are available for distribution in
respect thereof as described under "--Application of Collections" herein.
The Servicer will pay from its servicing compensation certain expenses
incurred in connection with servicing the Receivables including, without
limitation, payment of the fees and disbursements of the Trustee and
independent certified public accountants and other fees which are not
expressly stated in the Pooling Agreement to be payable by the Trust or the
Investor Holders other than federal, state and local income and franchise
taxes, if any, of the Trust.
REPORTS TO HOLDERS
On each Transfer Date, the Trustee will forward to each Holder of record, a
statement prepared by the Servicer setting forth the items described in
"Description of the Certificates--Reports to Holders" in the Prospectus. In
addition, such statement will include (a) the amount, if any, withdrawn from
the Principal Funding Account for such Transfer Date, (b) the Collateral
Interest, if any, for such Transfer Date and (c) the Available Cash Collateral
Amount, if any, for such Transfer Date.
S-46
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in the Class A Underwriting
Agreement (the "Class A Underwriting Agreement") between the Transferor and
the Class A Underwriters named below (the "Class A Underwriters"), and the
terms and conditions set forth in the Class B Underwriting Agreement (the
"Class B Underwriting Agreement," and together with the Class A Underwriting
Agreement, the "Underwriting Agreement") between the Transferor and the Class
B Underwriter named below (the "Class B Underwriter," and together with the
Class A Underwriters, the "Underwriters"), the Transferor has agreed to sell
to the Underwriters, and each of the Underwriters has severally agreed to
purchase, the principal amount of the Certificates set forth opposite its
name:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF
CLASS A
CLASS A UNDERWRITERS CERTIFICATES
-------------------- -------------------
<S> <C>
CS First Boston Corporation.......................... $ 56,700,000
Chase Securities Inc................................. 56,700,000
Citicorp Securities, Inc............................. 56,700,000
Goldman, Sachs & Co.................................. 56,700,000
J.P. Morgan Securities Inc........................... 56,700,000
------------
Total $283,500,000
<CAPTION>
PRINCIPAL AMOUNT OF
CLASS B
CLASS B UNDERWRITER CERTIFICATES
------------------- -------------------
<S> <C>
CS First Boston Corporation.......................... $ 29,750,000
</TABLE>
In the Class A Underwriting Agreement, the Class A Underwriters have agreed,
subject to the terms and conditions set forth therein, to purchase all of the
Class A Certificates offered hereby if any of the Class A Certificates are
purchased. In the Class B Underwriting Agreement, the Class B Underwriters
have agreed, subject to the terms and conditions set forth therein, to
purchase all of the Class B Certificates offered hereby if any of the Class B
Certificates are purchased. The Underwriters have agreed to reimburse the
Transferor for certain expenses of the issuance and distribution of the
Certificates.
The Class A Underwriters propose initially to offer the Class A Certificates
to the public at the price set forth on the cover page hereof and to certain
dealers at such price less concessions not in excess of 0.275% of the
principal amount of the Class A Certificates. The Class A Underwriters may
allow, and such dealers may reallow, concessions not in excess of 0.125% of
the principal amount of the Class A Certificates to certain brokers and
dealers. After the initial public offering, the public offering price and
other selling terms may be changed by the Class A Underwriters.
The Class B Underwriter proposes initially to offer the Class B Certificates
to the public at the price set forth on the cover page hereof and to certain
dealers at such price less concessions not in excess of 0.350% of the
principal amount of the Class B Certificates. The Class B Underwriter may
allow, and such dealers may reallow, concessions not in excess of 0.250% of
the principal amount of the Class B Certificates to certain brokers and
dealers. After the initial public offering, the public offering price and
other selling terms may be changed by the Class B Underwriter.
Each Underwriter has represented and agreed that (a) it has not offered or
sold, and will not offer or 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 do not
constitute an offer to the public in the United Kingdom for the purposes of
the Public Offers of Securities Regulations 1995, (b) it has complied and will
comply with all applicable provisions of the Financial Services Act 1986 of
Great Britain with respect to anything done by it in relation to the
Certificates in, from or otherwise involving the United Kingdom and (c) it has
only issued or passed on and will only issue or pass on in the United Kingdom
any document in connection with the issue of
S-47
<PAGE>
the Certificates to a person who is of a kind described in Article 8 of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions) (No. 2)
Order 1995 of Great Britain or is a person to whom the document may otherwise
lawfully be issued or passed on.
The Transferor will indemnify the Underwriters against liabilities relating
to the adequacy of disclosure to investors, including liabilities under the
Securities Act, or contribute to payments the Underwriters may be required to
make in respect thereof.
In the ordinary course of their respective businesses, certain of the
Underwriters and their respective affiliates have engaged and may in the
future engage in investment banking or commercial banking transactions with
WFN and its affiliates. Without limiting the generality of the foregoing, CS
First Boston Corporation is acting as financial advisor to WFN in connection
with the placement of the Collateral Interest.
S-48
<PAGE>
INDEX OF TERMS FOR PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Accounts....................................................... S-1
Adjusted Invested Amount....................................... S-4
Aggregate Investor Default Amount.............................. S-41
Allocation Percentages......................................... S-29
Automatic Additional Accounts.................................. S-20
Available Cash Collateral Amount............................... S-40
Available Enhancement Amount................................... S-40
Available Investor Principal Collections....................... S-28
Available Reserve Account Amount............................... S-43
Bank........................................................... S-3
Base Rate...................................................... S-25
Cash Collateral Account........................................ S-12, S-39
Certificates................................................... S-1, S-3
Class A Additional Interest.................................... S-6, S-27
Class A Adjusted Invested Amount............................... S-4, S-31
Class A Available Funds........................................ S-27
Class A Certificates........................................... S-1, S-3
Class A Deficiency Amount...................................... S-6, S-27
Class A Fixed Allocation Percentage............................ S-31
Class A Floating Allocation Percentage......................... S-30
Class A Holders................................................ S-3
Class A Interest............................................... S-3
Class A Invested Amount........................................ S-31
Class A Investor Allocation Percentage......................... S-31
Class A Investor Charge-Off.................................... S-12, S-42
Class A Investor Default Amount................................ S-41
Class A Monthly Interest....................................... S-35
Class A Monthly Principal...................................... S-38
Class A Principal Funding Investment Shortfall................. S-43
Class A Rate................................................... S-2, S-4
Class A Reduction Amount....................................... S-41
Class A Required Amount........................................ S-10, S-11, S-33
Class A Scheduled Payment Date................................. S-2
Class A Servicing Fee.......................................... S-46
Class A Uncovered Dilution Amount.............................. S-41
Class A Underwriters........................................... S-47
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Class A Underwriting Agreement................................. S-47
Class B Additional Interest.................................... S-6, S-27
Class B Available Funds........................................ S-28
Class B Rate................................................... S-2, S-4
Class B Certificates........................................... S-1, S-3
Class B Deficiency Amount...................................... S-6, S-27
Class B Fixed Allocation Percentage............................ S-31
Class B Floating Allocation Percentage......................... S-30
Class B Holders................................................ S-3
Class B Interest............................................... S-3
Class B Invested Amount........................................ S-31
Class B Investor Allocation Percentage......................... S-32
Class B Investor Charge-Off.................................... S-12, S-42
Class B Investor Default Amount................................ S-41
Class B Monthly Interest....................................... S-35
Class B Monthly Principal...................................... S-38
Class B Rate................................................... S-2, S-4
Class B Reduction Amount....................................... S-42
Class B Required Amount........................................ S-10, S-11, S-33
Class B Scheduled Payment Date................................. S-2
Class B Servicing Fee.......................................... S-46
Class B Uncovered Dilution Amount.............................. S-41
Class B Underwriter............................................ S-47
Class B Underwriting Agreement................................. S-47
Closing Date................................................... S-2
Code........................................................... S-15
Collateral Available Funds..................................... S-35
Collateral Charge-Off.......................................... S-42
Collateral Default Amount...................................... S-41
Collateral Fixed Allocation Percentage......................... S-31
Collateral Floating Allocation Percentage...................... S-30
Collateral Interest............................................ S-3, S-32
Collateral Interest Holder..................................... S-3
Collateral Interest Servicing Fee.............................. S-46
Collateral Investor Allocation Percentage...................... S-32
Collateral Monthly Interest.................................... S-36
Collateral Monthly Principal................................... S-38
</TABLE>
S-49
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Collateral Rate...................................................... S-36
Collateral Reduction Amount.......................................... S-42
Collateral Uncovered Dilution Amount................................. S-41
Controlled Accumulation Amount....................................... S-38
Controlled Accumulation Period....................................... S-7
Controlled Accumulation Period Length................................ S-29
Controlled Deposit Amount............................................ S-8, S-24
Covered Amount....................................................... S-8
Distribution Date.................................................... S-2, S-6
Distribution Period.................................................. S-6
Early Amortization Event............................................. S-45
Early Amortization Period............................................ S-9
Enhancement Surplus.................................................. S-40
ERISA................................................................ S-15
Excess Finance Charge Collections.................................... S-37
Excess Spread........................................................ S-11
FDIC................................................................. S-1
Finance Charge Account............................................... S-25
Fixed Allocation Percentage.......................................... S-30
Floating Allocation Percentage....................................... S-30
Group One............................................................ S-39
Holders.............................................................. S-3
Identified Portfolio................................................. S-17
Invested Amount...................................................... S-32
Investment company................................................... S-24
Investor Charge-Offs................................................. S-42
Investor Default Amount.............................................. S-41
Investor Holders..................................................... S-46
Investor Servicing Fee............................................... S-46
LIBOR................................................................ S-36
Loan Agreement....................................................... S-13
Monthly Period....................................................... S-5
Paired Series........................................................ S-14, S-44
Pooling Agreement.................................................... S-3
Portfolio Yield...................................................... S-25
Principal Account.................................................... S-34
Principal Funding Account............................................ S-8, S-42
Principal Funding Account Balance.................................... S-24
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Principal Funding Investment Proceeds................................ S-8, S-43
Principal Funding Investment Shortfall............................... S-8
Principal Shortfalls................................................. S-39
Rating Agency Condition.............................................. S-40
Reallocated Class B Principal Collections............................ S-34
Reallocated Collateral Principal Collections......................... S-34
Reallocated Principal Collections.................................... S-34
Receivables.......................................................... S-1
Record Date.......................................................... S-27
Required Cash Collateral Amount...................................... S-40
Required Draw Amount................................................. S-40
Required Enhancement Amount.......................................... S-13, S-40
Required Reserve Account Amount...................................... S-43
Required Retained Transferor Percentage.............................. S-20
Reserve Account...................................................... S-43
Reserve Account Funding Date......................................... S-43
Reset Date........................................................... S-32
Revolving Period..................................................... S-7
Series 1996-B Supplement............................................. S-3
Series 1996-B Termination Date....................................... S-5
Series Allocation Percentage......................................... S-32
Series Interest...................................................... S-3
Shared Principal Collections......................................... S-14, S-39
Supplemental Accounts................................................ S-20
Transfer Date........................................................ S-34
Transferor........................................................... S-3
Transferor Interest.................................................. S-3
Trust................................................................ S-1, S-3
Trust Portfolio...................................................... S-17
Trustee.............................................................. S-3
Uncovered Dilution Amount............................................ S-41
Underwriters......................................................... S-47
Underwriting Agreement............................................... S-47
Variable Interest.................................................... S-32
WFN.................................................................. S-1, S-3
</TABLE>
S-50
<PAGE>
ANNEX I
ISSUANCES OF OTHER SERIES
The Trust has previously issued one Series, Series 1996-VFC Certificates,
which is a series of variable funding certificates, meaning that the aggregate
outstanding principal amount of Series 1996-VFC Certificates may be increased
or decreased from time to time subject to a maximum amount. Such maximum
amount is $1,075,000,000 on the date of this Prospectus Supplement, but is
expected to be reduced to approximately $500,000,000 on the Closing Date and
may be increased or decreased from time to time thereafter, subject to certain
conditions, including mutual agreement of the Transferor and the holders of
Series 1996-VFC Certificates. Series 1996-VFC is in a revolving period until
January 17, 1997 (unless an early amortization event occurs prior to that
date). That revolving period may be extended by the mutual agreement of the
Transferor and the holders of Series 1996-VFC Certificates. The Series 1996-
VFC Certificates are included in Group One.
On the Closing Date the Trust is issuing another Series, Series 1996-A
Certificates. The table below sets forth principal characteristics of the
Series 1996-A Certificates:
<TABLE>
<S> <C>
Expected Invested Amount at end of Closing Date............... $ 550,000,000
Class A Rate.................................................. 6.70%
Class B Rate.................................................. 7.00%
Maximum Collateral Rate....................................... LIBOR +1.1%
Initial Collateral Interest................................... $ 57,750,000
Initial Cash Collateral Account Balance....................... $ 13,750,000
Series Servicing Fee Rate..................................... 2.0%
Stated Series 1996-A Termination Date......................... February 2004
Group......................................................... Group One
</TABLE>
A-1
