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FILED PURSUANT TO RULE 424(B)(3)
OF THE SECURITIES ACT OF 1933
REGISTRATION NO. 33-54804-01
ANNUAL APPENDIX
ANNUAL APPENDIX DATED
APRIL 15, 1998 TO
PROSPECTUS DATED OCTOBER 19, 1993, AS
SUPPLEMENTED THROUGH MARCH 17, 1998
Discover(R) Card Master Trust I, Series 1993-1
Floating Rate Class A Credit Card Pass-Through Certificates
5.30% Class B Credit Card Pass-Through Certificates
Greenwood Trust Company
Master Servicer, Servicer and Seller
The following updates the Prospectus dated October 19, 1993, as
supplemented (the "Prospectus"), used by Dean Witter Reynolds Inc. ("DWR"), Dean
Witter International Ltd ("DWIL"), Morgan Stanley & Co. Incorporated
("MS & Co."), and Morgan Stanley International Limited ("MSIL") in connection
with offers and sales of the Class A Certificates and the Class B Certificates
in market-making transactions in which any of DWR, DWIL, MS & Co., or MSIL acts
as principal.
FOR A DISCUSSION OF CERTAIN FACTORS WHICH SHOULD BE CONSIDERED BY
PROSPECTIVE PURCHASERS OF THE INVESTOR CERTIFICATES, SEE "RISK FACTORS" ON
PAGE 8. ALL REFERENCES TO "SPECIAL CONSIDERATIONS" SHALL BE REPLACED WITH
REFERENCES TO "RISK FACTORS."
1. GENERAL
References in the Prospectus to Discover Card Services, Inc. ("DCSI") are
replaced by references to NOVUS Services, Inc. ("NSI").
References in the Prospectus to Trustee will mean U.S. Bank National
Association (formerly First Bank National Association, successor trustee to
Bank of America Illinois, formerly Continental Bank, National Association), its
successors and assigns.
On May 31, 1997, Dean Witter, Discover & Co., and Morgan Stanley Group
Inc. consummated their previously announced merger. Dean Witter, Discover &
Co., the indirect parent of Greenwood Trust Company, is the surviving
corporation in the merger and will continue its corporate existence under the
name "Morgan Stanley Dean Witter & Co." ("MSDW").
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DWR, MS & Co., MSIL and DWIL are wholly-owned subsidiaries of MSDW. The
accompanying Prospectus and Prospectus Supplement may be used by DWR, MS & Co.,
MSIL, DWIL and other affiliates of MSDW in connection with offers and sales of
the securities described therein in the course of their businesses as
broker-dealers. DWR, MS & Co., MSIL, DWIL and such other affiliates may act as
principal or agent in such transactions. Such sales, if any, will be made at
varying prices related to prevailing market prices at the time of sale or
otherwise. None of DWR, MS & Co., MSIL, DWIL or any such other affiliates is
obligated to make a market and each may discontinue any market-making
activities at any time without notice.
Twenty-one series of investor certificates in Group One and one series of
investor certificates in Group Two have been issued by the Trust and are
currently outstanding. See "Annex A -- Other Series" for a summary of the
terms of the other series of investor certificates issued by the Trust and
currently outstanding.
2. REPORTS TO INVESTOR CERTIFICATEHOLDERS
Delete the first sentence under the heading "Reports to Investor
Certificateholders" on page 3 of the Prospectus and replace with the following:
Monthly and annual reports containing information concerning the
Trust and the Series of Investor Certificates offered hereby, prepared by
the Master Servicer, will be made available to Certificate Owners free of
charge upon request by calling 302-323-7130, extension 328.
3. RISK FACTORS
a. Delete the text on pages 8-10 relating to "Consumer Protection Laws and
Regulations" and substitute the following:
Consumer Protection Laws and Regulations. The Accounts and the
Receivables are subject to numerous federal and state consumer protection
laws and regulations that impose requirements on the making and
enforcement of consumer loans. Such laws, as well as any new laws or new
rulings regarding new or existing laws that may be adopted, may adversely
affect the Servicer's ability to collect on the Receivables or maintain
previous levels of monthly periodic finance charges, and failure by the
Servicer to comply with such requirements could adversely affect the
Servicer's ability to collect the Receivables. Greenwood has agreed in
the Pooling and Servicing Agreement that if a Receivable was not created
in compliance in all material respects with all requirements of laws
applicable to it with respect to such Receivable, and if such
noncompliance continues beyond a specified cure period and has a material
adverse effect on the interest of the Trust in all the Receivables,
Greenwood will repurchase all Receivables in the Accounts containing the
Receivables affected by such noncompliance. See "Description of the
Investor Certificates -- Repurchase of Specified Receivables." It is not
anticipated that the Trustee will make any examination of the Receivables
or the records relating thereto for the purpose of establishing the
presence or absence of defects in the Accounts,
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or for any other purpose. See "Certain Legal Matters Relating to the
Receivables -- Consumer Protection Laws and Debtor Relief Laws Applicable
to the Receivables."
Consumer Protection Laws and Regulations; Litigation. Greenwood is
involved from time to time in various legal proceedings that arise in the
ordinary course of its business. Greenwood does not believe that the
resolution of any of these proceedings will have a material adverse
effect on Greenwood's financial condition or on the Receivables. There
can be no assurance, however, regarding any of these effects.
b. Delete the first two full paragraphs on page 10 and substitute the
following:
Legislation. The Competitive Equality Banking Act of 1987 ("CEBA")
contains provisions that limit the ability of nonbanking companies, such
as MSDW and NOVUS, to own banks. However, the legislation permits any
nonbanking company that owned a bank on March 5, 1987 to retain control
of the bank. MSDW and NOVUS are permitted to retain control of Greenwood
under this legislation. CEBA provides that if MSDW, NOVUS or Greenwood
fails to comply with certain statutory restrictions, MSDW and NOVUS will
be required to divest control of Greenwood or to limit its activities
significantly. Greenwood believes, however, that in light of the
programs it has in place, the limitations of CEBA will not have a
material impact on Greenwood's ability to service, or maintain the level
of, the Receivables. In addition, future federal or state legislation,
regulation or interpretation of federal or state legislation or
regulation could adversely affect the business of Greenwood or the
relationship of MSDW or NOVUS with Greenwood. See "The Seller --
Greenwood."
c. Delete the text on pages 10-11 under the heading "Competition in the
Credit Card Industry" and substitute the following:
Competition in the Credit Card Industry. The credit card industry
in which the Discover Card competes is highly competitive. This
competition focuses on features and other financial incentives of credit
cards such as annual fees, finance charges, late payment fees, overlimit
charges, rebates and other enhancement features. The market includes
bank-issued credit cards (including "co-branded" cards issued by banks in
cooperation with industrial, retail or other companies) and charge cards
issued by travel and entertainment companies. The vast majority of the
bank-issued credit cards bear the Visa or MasterCard service mark and are
issued by the many banks that participate in one or both of the national
bank card networks operated by Visa U.S.A. Inc. and MasterCard
International Incorporated. The Visa and MasterCard associations have
been in existence for approximately thirty years. Cards bearing their
service marks have worldwide acceptance by merchants of goods and
services and recognition by consumers and the general public. Co-branded
credit cards, which offer the cardholder certain benefits relating to the
industrial, retail or other business of the bank's co-branding partner
(e.g., credits towards purchases of airline tickets or rebates for the
purchase of an automobile), currently represent a rapidly growing segment
of the bank-issued credit card market. The majority of travel and
entertainment cards are issued by American Express Company, which has
been issuing cards since 1958. Travel and entertainment cards differ in
many
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cases from bank cards in that they generally have no pre-established
credit limits and have limited provisions for repayment in installments.
American Express Company, through a subsidiary bank, also issues cards
with both a pre-established credit limit and provisions for repayment in
installments.
The Discover Card was introduced nationwide in 1986 and competes
with general purpose credit cards issued by other banks and with travel
and entertainment cards. Greenwood currently is the only issuer of the
Discover Card. Greenwood has also issued, and may from time to time
introduce, additional general purpose credit, charge and financial
transaction cards; however, none of the accounts associated with these
cards is included in the Discover Card Portfolio.
Many bank credit card issuers have instituted balance transfer
programs. Generally, under these transfer programs, cardholders are
offered a favorable annual percentage rate or other financial incentives
for a specified length of time on any portion of their account balances
arising from the transfer to their accounts of outstanding account
balances maintained on another credit card. The annual percentage rates
for balance transfers often are more favorable to cardholders than the
annual percentage rates for account balances arising from purchases or
cash advances.
This competition affects Greenwood's ability to obtain applicants
for Discover Card accounts, to encourage usage of the accounts by
cardmembers and to obtain participation in the Discover Card program by
service establishments. A significant adverse change in any of these
factors could result in a decrease in the level of the Receivables, and
of the receivables in the Discover Card Portfolio. If there is a
decrease in the level of Receivables, and if sufficient receivables in
Additional Accounts are not available to be added to the Trust or are not
added, an Amortization Event could result, causing the commencement of
the Amortization Period. See "Risk Factors -- Payments and Maturity" and
"Description of the Investor Certificates -- Amortization Events."
MSDW, the indirect owner of Greenwood, generally has a strategy of
issuing additional card products as appropriate in the marketplace. For
example, Greenwood issues the Private Issue(R) Card, certain co-branded
credit cards, and expects that from time to time additional general
purpose credit card products will be introduced through Greenwood or
other MSDW subsidiaries in order to attract additional consumers. The
introduction of a new general purpose credit card product by any market
competitor poses incremental competition for Discover Card and for other
credit card issuers. Although Greenwood currently does not expect that
the issuance of any new card by Greenwood or another MSDW subsidiary will
have a materially greater impact on the Discover Card program than the
introduction of a comparable product by any other market competitor, no
assurance can be given with respect to the future competitive impact of
such programs on the Discover Card Portfolio.
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d. Delete the text on pages 11-12 under the heading "Ability to Change
Terms of the Accounts" and substitute the following:
Ability of Greenwood to Change Terms of the Accounts. Pursuant to
the Pooling and Servicing Agreement, Greenwood does not transfer Accounts
to the Trust, but only the Receivables arising in the Accounts. As owner
of the Accounts, Greenwood has the right to determine the periodic
finance charges applicable from time to time to the Accounts, to alter
the minimum monthly payment required under the Accounts, to change the
credit limit with respect to the Accounts and to change various other
terms with respect to the Accounts. A decrease in the periodic finance
charges or other fees with respect to an Account could decrease the
Series Finance Charge Collections, which would decrease the effective
yield on the Receivables and could also cause the commencement of the
Amortization Period, as well as decreased protection to Investor
Certificateholders against shortfalls in Certificate Interest and against
charged-off Receivables. In addition, an increase in credit limits could
result in increases in Charged-Off Amounts, which could result in a
decrease in the level of the Receivables, and of the receivables in the
Discover Card Portfolio. If there is a decrease in the level of
Receivables, and if sufficient Receivables in Additional Accounts or
sufficient Participation Interests are not available to be added to the
Trust or are not added, an Amortization Event could result, causing the
commencement of the Amortization Period. See "Description of the Investor
Certificates -- Distributions of Collections and Application of
Collections and Certain Other Amounts" and "-- Amortization Events."
The Pooling and Servicing Agreement provides that the Servicer must
administer, process and enforce the Accounts in accordance with its
customary and usual servicing procedures for servicing credit accounts
comparable to the Accounts and in accordance with its Credit Guidelines.
Each Seller also must agree that the terms governing an Account will not
be changed unless the change is also made to the terms of other accounts
of such Seller of the same general type, obligors of which are resident
in a particular affected state or similar jurisdiction. There can be no
assurance that any such change may not affect the Accounts to a greater
or lesser degree than other such accounts. Except as set forth above,
there are no restrictions on the ability of any Seller to change the
terms of the Accounts or the Receivables.
There can be no assurance that changes in applicable laws, changes
in the marketplace or prudent business practice might not result in a
determination by Greenwood to take actions that would result in other
changes in the terms of some or all of the Greenwood Discover Card
Accounts.
e. Delete the third full paragraph on page 12 and substitute the
following:
Basis Risk. In general, accounts in the Discover Card Portfolio
accrue periodic finance charges at variable rates based upon factors such
as the prevailing prime rate, the amount of a cardmember's annual
purchases and his or her payment status (although certain account
balances may accrue periodic finance charges at fixed rates, in most
instances for specified periods of time). See "The Accounts -- Billing
and Payments."
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As a result, a significant portion of the Receivables currently bear
interest at the prevailing prime rate plus a margin, while the Class A
Certificates bear interest at LIBOR plus 0.27%, but in no event higher
than 12% per annum, and the Class B Certificates bear interest at the
fixed rate of 5.30%. If there is a decline in the prime rate, the amount
of Series Finance Charge Collections may be reduced, which could cause
the commencement of the Amortization Period or result in either
shortfalls of Certificate Interest or losses to the Investor
Certificateholders. In addition, because the Class A Certificates bear
interest at a floating rate, if increases in the Certificate Rate of the
Class A Certificates are not offset by increases in Series Finance Charge
Collections, Series Excess Spread may be reduced, which could cause the
commencement of the Amortization Period, and, in the event that the
Available Class B Credit Enhancement Amount has been reduced to zero,
shortfalls of Certificate Interest or losses to the Investor
Certificateholders may result. See "Description of the Investor
Certificates -- Amortization Events."
4. THE DISCOVER CARD BUSINESS
Delete the text under the heading "The Discover Card Business" on
pages 15-18 and substitute the following:
GENERAL
The Receivables that Greenwood has conveyed to the Trust pursuant to
the Pooling and Servicing Agreement were generated from transactions made
by holders of the Discover(R) Card, a general purpose credit and
financial services card. The Receivables conveyed to the Trust on the
Initial Closing Date and thereafter included only receivables arising
under accounts in the Discover Card Portfolio, although receivables
arising under accounts not included in the Discover Card Portfolio may be
added to the Trust at a later date. See "The Trust -- Addition of
Accounts" in the Prospectus. All references to the Discover Card in this
section entitled "The Discover Card Business" relate exclusively to the
Discover Card issued by Greenwood. With the exception of the small
number of Discover Card Corporate Cards issued by an affiliate of
Greenwood, Greenwood is the sole issuer of credit cards bearing the
DISCOVER service mark. Greenwood has also issued, and may from time to
time introduce, additional general purpose credit cards.
The Discover Card was first issued in regional pilot markets in
September 1985, and national distribution began in March 1986. The
Discover Card issued by Greenwood affords cardmembers access to a
revolving line of credit. The card can be used to purchase merchandise
and services from participating service establishments. The number of
service establishments that accept the Discover Card has continued to
increase. For the 12 months ended November 30, 1997, approximately
405,000 new service establishments were enrolled. The Discover Card can
also be used to obtain cash advances at automated teller machines and at
certain other locations throughout the United States. Cash advances can
also be obtained by means of checks written by cardmembers and drawn
against their accounts. As of November 30, 1997, there were
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34.5 million Discover Card accounts with 43.4 million cardmembers. The
Discover Card issued by Greenwood may only be used for personal, family
or household purposes due to banking statutes applicable to Greenwood.
See "The Seller -- Greenwood" in the Prospectus.
Each Discover Cardmember is subject to account terms and conditions
that are uniform from state to state. See "The Accounts -- Billing and
Payments." In all cases, the agreement governing the terms and
conditions of the account (the "Cardmember Agreement") permits Greenwood
to change the credit terms, including the rate of the periodic finance
charge and the fees imposed on accounts, upon prior notice to
cardmembers. Each Discover Card account is assigned a credit limit when
the account is opened. Thereafter, individual credit limits may be
increased or decreased, at Greenwood's discretion, from time to time. The
credit limits on Discover Card accounts generally range from $1,000 to
$6,000, although on occasion higher or lower limits may be authorized.
Effective March 1, 1998, a cardmember will not be granted cash advances
that exceed, in the aggregate, an amount equal to 50% of such
cardmember's credit limit.
There are additional features and services offered with the Discover
Card accounts. One is the Cashback Bonus(R), in which Greenwood annually
pays cardmembers a percentage of their purchase amounts, ranging up to
one percent, based on their annual purchases. This amount is remitted to
cardmembers in the form of a check or a credit to the cardmember's
account. No such amounts will be paid from the property of the Trust.
Another feature offered with the Discover Card accounts is a variable
rate of periodic finance charges applied to a cardmember's account
balance (except in certain limited circumstances) based on the prevailing
prime rate plus a margin, the amount of such cardmember's purchases and
the cardmember's payment history. See "The Accounts -- Billing and
Payments." Greenwood also offers cardmembers money market deposit
accounts, called Discover Saver's Accounts, and time deposits, called
Discover Card CDs. These deposit products offer competitive rates of
interest and are insured by the FDIC. To differentiate the Discover Card
in the marketplace, Greenwood from time to time tests and implements new
offers, promotions and features of the Discover Card.
Greenwood, either directly, through its processing arrangements with
its affiliate, NSI, or through processing agreements with credit card
processing facilities of unaffiliated third parties, performs all the
functions required to service and operate the Discover Card accounts.
These functions include new account solicitation, application processing,
new account fulfillment, transaction authorization and processing,
cardmember billing, payment processing, cardmember service and collection
of delinquent accounts. There are currently multiple geographically
dispersed operations centers maintained by Greenwood or NSI for servicing
cardmembers. An additional operations center is maintained for
processing accounts that have been charged-off as uncollectible.
NSI has established arrangements with service establishments to
accept the Discover Card and other credit, charge and financial
transaction cards that carry the NOVUS(R) logo for cash advances and as
the means of payment for merchandise and
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services. Greenwood contracts with NSI to have cards issued by Greenwood
(including the Discover Card) accepted at those establishments. The
ability to generate new receivables requires locations where the Discover
Card can be used. NSI employs a national sales and service force to
maintain and increase the size of its service establishment base.
Additional operations centers that currently are maintained by NSI are
devoted primarily to providing customer service to service
establishments. The service establishments that accept the Discover Card
encompass a wide variety of businesses, including local and national
retail establishments and specialty stores of all types, quick service
food establishments, governments, restaurants, medical providers and
warehouse clubs, and many leading airlines, car rental companies, hotels,
petroleum companies and mail order companies.
CREDIT-GRANTING PROCEDURES
Accounts in the Discover Card Portfolio have been solicited by
various techniques and have undergone credit review to establish that the
cardmembers meet standards of stability and ability and willingness to
pay. Principally, the accounts have been solicited (i) via "pre-selected"
direct mail or telemarketing, (ii) by "take-one" applications distributed
in many service establishments that accept the Discover Card and (iii)
with various other programs targeting specific segments of the
population. Solicitations have been supported by general broadcast and
print media advertising. Potential applicants who are sent pre-selected
solicitations have met certain credit criteria relating to their previous
payment patterns and longevity of account relationships with other credit
grantors. Since September 1987, all lists have been pre-screened though
credit bureaus before mailing. Pre-screening is a process by which an
independent credit reporting agency evaluates the lists of names supplied
by Greenwood against credit-worthiness criteria supplied by Greenwood
that are intended to provide a general indication, based on available
information, of the stability and of the willingness and ability of such
persons to repay their obligations; the credit bureaus return to
Greenwood only the names of those persons meeting these criteria.
Applicants who respond to such pre-selected solicitations are subject to
a subsequent screening upon receipt of their completed applications, to
ensure that such individuals continue to meet selection and credit
criteria. Applications that are not pre-selected are evaluated by using
credit-scoring systems (statistical evaluation models that assign point
values to credit information regarding applications). The credit-scoring
systems used by Greenwood are based on the credit-scoring systems
developed by a scoring model vendor. Certain applications not approved
under the credit-scoring systems are reviewed by credit analysts. Any
such application as to which a credit analyst recommends approval is
processed in Greenwood's main office in New Castle, Delaware by senior
bank review analysts and may be approved by them.
As owner of the Greenwood Discover Card Accounts, Greenwood has the
right to change its credit-scoring criteria and credit-worthiness
criteria. Greenwood's application procedures and credit-scoring systems
are regularly reviewed and modified to reflect Greenwood's actual credit
experience with Discover Card account applicants and cardmembers as such
historical information becomes available. Greenwood believes that
refinements of these procedures and systems since the inception of the
Discover Card
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program have helped it to manage and predict its credit losses, although
there can be no assurance that these refinements will not cause increases
in credit losses in the future. Relaxation of credit standards typically
results in increases in Charged-Off Amounts, which, under certain
circumstances, may result in a decrease in the level of the Receivables,
and of the receivables in the Discover Card Portfolio. If there is a
decrease in the level of Receivables, and if sufficient Additional
Accounts or Participation Interests are not available to be added to the
Trust or are not added, an Amortization Event could result, causing the
commencement of the Amortization Period. In addition, an increase in
Charged-Off Amounts without an offsetting increase in Finance Charge
Receivables could result in an Amortization Event, causing the
commencement of the Amortization Period.
COLLECTION EFFORTS
Efforts to collect past-due Discover Card account receivables
currently are made primarily by collections personnel of NSI or
Greenwood. Under current practice, Greenwood includes a request for
payment of past-due amounts on the monthly billing statement of all
accounts with such amounts. Accounts with past-due amounts also receive
a written notice of late fee charges on their statements and an
additional request for payment after any monthly statement which includes
a past-due amount. Collection personnel generally initiate telephone
contact with cardmembers within 30 days after any portion of their
balance becomes past due. In the event that initial telephone contacts
fail to elicit a payment, Greenwood continues to contact the cardmember
by telephone and by mail. Greenwood also may enter into arrangements
with cardmembers to waive finance charges, late fees and principal due,
and extend or otherwise change payment schedules. The current policy of
Greenwood is to recognize losses and to charge off an account at the end
of the sixth full calendar month after a payment amount is first due if
payment of any portion of that amount has not been received by such time,
except in cases of bankruptcy, where an uncollectible balance may be
charged off earlier. In general, after an account has been charged off,
collections personnel of NSI or Greenwood make attempts to collect all or
a portion of the charged-off account for a period of approximately four
months. If those attempts are unsuccessful, the charged-off account is
generally placed with one or more collection agencies for a period of
approximately a year or, alternatively, Greenwood may commence legal
action against the cardmember, including legal action for the attachment
of property or bank accounts of the cardmember or the garnishment of the
cardmember's wages. Greenwood and the Trust may also sell their
respective interests in charged-off accounts and the related receivables
to third parties, either before or after collection efforts have been
attempted. In addition, under special circumstances, a limited number of
Charge-Off Accounts may, subject to Rating Agency Consent, be removed
from the Trust; proceeds from sales of any such Removed Accounts and the
related receivables will not be included in the assets of the Trust.
Under the terms of the Pooling and Servicing Agreement, any
recoveries received on Charged-Off Accounts (including the proceeds of
sales of receivables in Charged-Off Accounts by the Trust, but excluding
any such proceeds with respect to any Removed Accounts) are included in
the assets of the Trust and are treated as Finance Charge
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Collections. Recoveries on Charged-Off Accounts initially are lower than
the level of recoveries for the Discover Card Portfolio because
charged-off accounts were not included as Accounts as of the Account
Selection Date. Greenwood believes that, over time, the level of
recoveries as a percentage of the Receivables in the Trust will increase
to more closely approximate the level of recoveries in the Discover Card
Portfolio, although the extent of such increase cannot be predicted.
There can be no assurance that the level of recoveries for the Trust will
ever equal the level of recoveries for the Discover Card Portfolio.
Similarly, any addition of Additional Accounts to the Trust will cause a
temporary reduction in the level of recoveries as a percentage of the
Receivables in the Trust because no Additional Accounts will be
charged-off accounts at the time of their addition to the Trust.
The credit granting, servicing and charge-off policies and
collection practices of Greenwood may change over time in accordance with
Greenwood's business judgment and applicable law. See "Description of
the Investor Certificates -- Adjustments to Receivables" in the
Prospectus and "The Accounts -- Composition of the Accounts" and
"-- Summary Current Delinquency Information" and "Composition and
Historical Performance of the Discover Card Portfolio -- Composition
of the Discover Card Portfolio."
5. THE ACCOUNTS
a. Add the following as the first paragraph under the subheading
"General" on page 15:
The Receivables in the Accounts as of March 1, 1998 totaled
$20,006,241,003.28. The Accounts had an average balance of $890 and an
average credit limit of $4,675 as of March 1, 1998.
b. Delete the text under the subheading "Billing and Payments" on pages
18-20 and substitute the following:
All Discover Card accounts have the same billing and payment
structure. Monthly billing statements are sent by Greenwood to each
cardmember with an outstanding debit balance. Discover Card accounts are
grouped into multiple billing cycles for operational purposes. Each
billing cycle has a separate monthly billing date at which time the
activity in the related accounts during the period of approximately 28 to
34 days ending on such billing date is processed and billed to
cardmembers. The Accounts include accounts in all billing cycles.
Each Discover cardmember with an outstanding debit balance in his or
her Discover Card account generally must make a minimum payment equal to
1/48th of the new balance on the account at the end of the billing cycle
for the account (prior to February 1996, 1/36th), rounded to the next
higher whole dollar amount, but not less than $10 or the entire balance,
whichever is less, plus any amount that is past due. Under certain
circumstances, the minimum payment is reduced by amounts paid in excess
of the
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minimum payment due during the previous three months and not already so
applied. From time to time, Greenwood has offered and may continue to
offer cardmembers with accounts in good standing the opportunity to skip
the minimum monthly payment, while continuing to accrue periodic finance
charges, without being considered to be past due. Although these
practices are not expected to have a material adverse effect on the
Investor Certificateholders, Collections may be reduced during any period
in which Greenwood offers cardmembers the opportunity to skip the minimum
monthly payment. A cardmember may pay the total amount due at any time.
Greenwood also may enter into arrangements with delinquent cardmembers to
extend or otherwise change payment schedules, and to waive finance
charges, late fees and principal due.
Greenwood imposes periodic finance charges on Discover Card account
balances at fixed and variable annual percentage rates. Periodic finance
charges on purchases, cash advances and balance transfers are calculated
on a daily basis, subject to a grace period that essentially provides
that periodic finance charges are not imposed if the cardmember pays his
or her entire balance each month. In general, periodic finance charges
on purchases, cash advances and balance transfers are based on a prime
rate plus a margin (currently 8.9% to 13.9%), subject to certain minimum
rates currently ranging from 12.9% to 19.8%. The rates imposed on
individual Discover Card accounts are based on purchase activity and
payment status. In addition, in connection with programs for new
cardmembers, for balance transfers, and for other promotional purposes,
certain Discover Card account balances may accrue periodic finance
charges at lower fixed rates for a specified period of time. Balances
remaining from transactions posted to accounts in billing cycles
beginning prior to February 1993 also accrue periodic finance charges at
fixed rates.
In addition to periodic finance charges, Greenwood may impose
certain other charges and fees on Discover Card accounts. Greenwood
currently charges a cash advance transaction fee equal to 2.5% of each
new cash advance, with a minimum fee of $3.00 per transaction. Greenwood
also currently charges a $20 late fee on Discover Card accounts each time
a payment has not been made by the required due date, a $20 fee for
balances exceeding a cardmember's credit limit as of the close of such
cardmember's monthly billing cycle, a $20 fee for any payment check
returned unpaid and a $20 fee for Discover Card cash advance, balance
transfer or other promotional checks that are returned by Greenwood due
to insufficient credit availability. See "Risk Factors -- Consumer
Protection Laws and Regulations," "-- Payments and Maturity" and "--
Ability of the Seller to Change Terms of the Accounts" in the Prospectus.
The yield on the Accounts depends on changes in the prime rate over
time and in cardmember account usage and payment performance, none of
which can be predicted, as well as the extent to which balance transfer
offers and special promotion offers are made and accepted, and the extent
to which Greenwood changes the terms of the Cardmember Agreement.
Reductions in the yield could, if sufficiently large, cause the
commencement of the Amortization Period or result in either shortfalls of
Certificate Interest or losses to the Investor Certificateholders as the
result of charged-off Receivables and there can be no assurance regarding
any of these effects. See "Risk Factors -- Basis Risk."
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c. Delete the text under the heading "Composition of the Accounts" on
pages 20-21 and substitute the following:
COMPOSITION OF THE ACCOUNTS
Information concerning the composition of the Accounts is set forth
below. Information concerning the composition and historical performance
of the accounts in the Discover Card Portfolio is set forth under
"Composition and Historical Performance of the Discover Card Portfolio."
Geographic Distribution. As of March 1, 1998, the five states with
the largest Receivables balances were as follows:
<TABLE>
<CAPTION>
PERCENTAGE OF TOTAL RECEIVABLES
STATE BALANCE IN THE ACCOUNTS
<S> <C>
California.......................................... 11.7%
Texas............................................... 9.3%
New York............................................ 6.8%
Florida............................................. 5.9%
Illinois............................................ 4.8%
</TABLE>
Credit Limit Information. Credit limit information as of March 1,
1998 with respect to the Accounts is summarized as follows:
<TABLE>
<CAPTION>
RECEIVABLES PERCENTAGE OF
OUTSTANDING TOTAL RECEIVABLES
CREDIT LIMIT (000)'S OUTSTANDING
------------ ----------- ------------------
<S> <C> <C>
Less than or equal to $1,000.00........... $ 383,445 1.9%
$1,000.01 to $2,000.00.................... $ 2,908,360 14.5%
$2,000.01 to $3,000.00.................... $ 3,012,781 15.1%
Over $3,000.00............................ $13,701,655 68.5%
----------- -------
Total..................................... $20,006,214 100.0%
===========
</TABLE>
Seasoning. As of March 1, 1998, 84.0% of the Accounts were at least
24 months old. The distribution of the age of Accounts as of March 1,
1998 was as follows:
<TABLE>
<CAPTION>
PERCENTAGE PERCENTAGE
AGE OF ACCOUNTS OF ACCOUNTS OF BALANCES
--------------- ----------- -----------
<S> <C> <C>
Less than 12 Months....................... 4.8% 4.0%
12 to 23 Months........................... 11.2% 11.7%
24 to 35 Months........................... 16.6% 17.5%
36 Months and Greater..................... 67.4% 66.8%
----------- -----------
Total..................................... 100.0% 100.0%
=========== ===========
</TABLE>
12
<PAGE> 13
For a discussion of the potential effects of seasoning on the performance
of the Accounts, see "Risk Factors -- Effects of the Selection Process,
Seasoning and Performance Characteristics."
Summary Current Delinquency Information. Current delinquency
information as of March 1, 1998 with respect to the Accounts is
summarized as follows:
<TABLE>
<CAPTION>
AGGREGATE
BALANCES PERCENTAGE
PAYMENT STATUS (000'S) OF BALANCES
-------------- ----------- -----------
<S> <C> <C>
Current......................................... $17,287,757 86.4%
1 to 29 Days.................................... $ 1,193,271 6.0%
30 to 59 Days................................... $ 561,303 2.8%
60 to 89 Days................................... $ 346,830 1.7%
90 to 119 Days.................................. $ 262,444 1.3%
120 to 149 Days................................. $ 176,252 0.9%
150 to 179 Days................................. $ 178,566 0.9%
----------- -------
Total......................................... $20,006,241 100.0%
=========== =======
</TABLE>
6. COMPOSITION AND HISTORICAL PERFORMANCE OF THE DISCOVER CARD PORTFOLIO
a. Delete the text under the heading "General" on page 21 and substitute
the following:
Except to the extent specifically identified as relating to the
Accounts, all of the information describing the composition and
historical performance of Discover Card accounts reflects the composition
and historical performance of the Discover Card Portfolio, and not that
of the Accounts. A limited number of Discover Card accounts were opened
pursuant to credit scoring criteria materially different from the credit
scoring criteria generally used for Discover Card accounts. These
accounts have been segregated from the rest of the Discover Card
Portfolio and are not reflected in the information contained herein. None
of these accounts is included in the Trust. Greenwood has no statistical
or other basis for determining the effects, if any, of the selection
process, although Greenwood has no reason to believe that the Accounts
will not be representative of the Discover Card Portfolio in any material
respect. There can be no assurance, however, that the Accounts have
performed or will perform similarly to the Discover Card Portfolio. There
also can be no assurance that the historical performance of the Discover
Card Portfolio will be representative of its performance in the future.
See "The Accounts Billing and Payments," "Risk Factors -- Basis Risk"
and "-- Effects of the Selection Process, Seasoning and Performance
Characteristics." For additional discussion of economic factors
affecting the performance of the Discover Card Portfolio, see "Risk
Factors -- Social, Legal and Economic Factors."
13
<PAGE> 14
b. Delete the text under the heading, "Composition of Discover Card
Portfolio" and ending before the heading "Payment of the Investor Certificates"
located on pages 22-24 and substitute the following:
COMPOSITION OF DISCOVER CARD PORTFOLIO
Geographic Distribution. The Discover Card Portfolio is not
concentrated geographically. As of November 30, 1997, the five states
with the largest receivables balances were as follows:
<TABLE>
<CAPTION>
PERCENTAGE OF TOTAL RECEIVABLES
STATE BALANCE IN THE ACCOUNTS
----- -------------------------------
<S> <C>
California................................... 11.3%
Texas........................................ 9.3%
New York..................................... 6.7%
Florida...................................... 5.9%
Illinois..................................... 5.0%
</TABLE>
No other state accounted for more than 5% of the total receivables
balance of the Discover Card Portfolio as of November 30, 1997.
Credit Limit Information. Credit limit information as of November
30, 1997 with respect to the Discover Card Portfolio is summarized as
follows:
<TABLE>
<CAPTION>
RECEIVABLES PERCENTAGE OF
OUTSTANDING TOTAL RECEIVABLES
CREDIT LIMIT (000)'S OUTSTANDING
------------ ----------- -----------------
<S> <C> <C>
Less than or equal to $1,000.00..................... $ 528,792 1.8%
$1,000.01 to $2,000.00.............................. $ 4,088,654 13.7%
$2,000.01 to $3,000.00.............................. $ 3,927,544 13.2%
Over $3,000.00...................................... $21,207,550 71.3%
-----------
Total............................................... $29,752,540 100.0%
===========
</TABLE>
14
<PAGE> 15
Seasoning. As of November 30, 1997, 84.5% of the accounts in the
Discover Card Portfolio were at least 24 months old. The distribution of
the age of accounts in the Discover Card Portfolio as of November 30,
1997 was as follows:
<TABLE>
<CAPTION>
PERCENTAGE PERCENTAGE
AGE OF ACCOUNTS OF ACCOUNTS OF BALANCES
--------------- ----------- -----------
<S> <C> <C>
Less than 12 Months....................................... 6.6% 5.0%
12 to 23 Months........................................... 8.9% 9.3%
24 to 35 Months........................................... 11.7% 12.4%
36 Months and Greater..................................... 72.8% 73.3%
---------- -----------
Total..................................................... 100.0% 100.0%
========== ===========
</TABLE>
Summary Yield Information. The annualized aggregate monthly yield
for the Discover Card Portfolio is summarized as follows:
<TABLE>
<CAPTION>
ELEVEN MONTHS ENDED YEAR ENDED DECEMBER 31,
NOVEMBER 30, ------------------------------
1997 1996 1995 1994
------------------ ---- ---- ----
<S> <C> <C> <C> <C>
Aggregate Monthly Yield(1)..
Excluding Recoveries(2)............ 18.19% 17.72% 16.95% 16.65%
Including Recoveries(3)............ 18.90% 18.20% 17.39% 17.07%
</TABLE>
- -----------------
(1) Monthly Yield is calculated by dividing Monthly Finance Charges billed by
beginning monthly balance. Monthly Finance Charges include periodic
finance charges, cash advance item charges, late fees, and, as of March 1,
1996, overlimit fees, but exclude certain other items such as annual
membership fees, if any, which are included in Finance Charge Receivables.
Aggregate Monthly Yield is the average of Monthly Yields annualized for
each period shown.
(2) Monthly Yield excluding any recoveries received with respect to
charged-off accounts.
(3) Monthly Yield including recoveries received with respect to charged-off
accounts. Recoveries received with respect to Charged-Off Accounts
(including the proceeds of sales of receivables in Charged-Off Accounts by
the Trust, but excluding any such proceeds with respect to any Removed
Accounts) are included in the Trust and are treated as Finance Charge
Collections. However, the level of recoveries for the Trust will
initially be lower than the level of recoveries for the Discover Card
Portfolio because charged-off accounts were not included in the Accounts
selected for inclusion in the Trust. The level of recoveries on
Additional Accounts will also initially be lower than the level of
recoveries for the Discover Card Portfolio because charged-off accounts
will not be included in Additional Accounts selected for inclusion in the
Trust. Greenwood believes that, over time, the level of recoveries on the
Accounts (including on any Additional Accounts), as a percentage of the
Receivables in the Trust will increase to more closely approximate the
level of recoveries in the Discover Card Portfolio, although the extent of
such increase cannot be predicted and may be limited by removals of
Charged-Off Accounts from the Trust and there can be no assurance that the
level of recoveries for the Trust will ever equal the level of recoveries
for the Discover Card Portfolio.
15
<PAGE> 16
Summary Current Delinquency Information. Current delinquency
information as of November 30, 1997 with respect to the Discover Card
Portfolio is summarized as follows:
<TABLE>
<CAPTION>
AGGREGATE
BALANCES PERCENTAGE
PAYMENT STATUS (000'S) OF BALANCES
-------------- ------------- -----------
<S> <C> <C>
Current................................................................... $25,546,310 85.8%
1 to 29 Days.............................................................. $ 2,194,931 7.4%
30 to 59 Days............................................................. $ 658,518 2.2%
60 to 89 Days............................................................. $ 466,870 1.6%
90 to 119 Days............................................................ $ 353,093 1.2%
120 to 149 Days........................................................... $ 294,001 1.0%
150 to 179 Days........................................................... $ 238,817 0.8%
----------- -----------
Total.................................. $29,752,540 100.0%
=========== ===========
</TABLE>
Summary Historical Delinquency Information. Historical delinquency
information with respect to the Discover Card Portfolio is summarized as
follows:
<TABLE>
<CAPTION>
AVERAGE OF ELEVEN MONTHS AVERAGE OF TWELVE MONTHS ENDED DECEMBER 31,
ENDED NOVEMBER 30, ---------------------------------------------------------------------------------
1997 1996 1995 1994
------------------------ ------------------------ ------------------------- -------------------------
DELINQUENT DELINQUENT DELINQUENT DELINQUENT
AMOUNT AMOUNT AMOUNT AMOUNT
(000'S) PERCENTAGE(1) (000'S) PERCENTAGE(1) (000'S) PERCENTAGE(1) (000'S) PERCENTAGE(1)
-------- ------------- --------- ------------- ---------- ------------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
30-59 Days........ $ 743,464 2.6% $ 680,645 2.7% $ 568,382 2.6% $405,942 2.2%
60-89 Days........ $ 432,410 1.5% $ 361,992 1.4% $ 276,821 1.3% $193,582 1.1%
90-179 Days...... $ 803,204 2.8% $ 593,661 2.3% $ 403,134 1.8% $282,080 1.5%
---------- ---- ---------- ---- ---------- ---- -------- ----
Total....... $1,979,078 6.9% $1,636,298 6.4% $1,248,337 5.7% $881,604 4.8%
========== ==== ========== ==== ========== ==== ======== ====
</TABLE>
For a discussion of economic factors affecting the performance of
the Discover Card Portfolio, including delinquencies, see "Risk Factors
-- Social, Legal and Economic Factors."
_______________________
(1) The percentages are the result of dividing Delinquent Amount by Average
Receivables Outstanding for the applicable period. Delinquent Amount is
the average of the monthly ending balances of delinquent accounts during
the periods indicated. Average Receivables Outstanding is the average of
the monthly average amount of receivables outstanding during the periods
indicated.
16
<PAGE> 17
Summary Charge-Off Information. Charge-off information with respect
to the Discover Card Portfolio is summarized as follows:
<TABLE>
<CAPTION>
ELEVEN MONTHS YEAR ENDED DECEMBER 31,
------------- ----------------------
ENDED 1996 1995 1994
---- ---- ----
NOVEMBER 30, 1997 (DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Average Receivables
Outstanding(1)...................... $28,403,076 $25,542,718 $22,031,829 $18,464,611
Gross Charge
Offs................................ $ 1,891,601 $ 1,458,450 $ 923,836 $ 680,487
Gross Charge-Offs as a Percentage of
Average Receivables Outstanding(2)... 7.27% 5.71% 4.19% 3.69%
</TABLE>
For a discussion of economic factors affecting the performance of
the Discover Card Portfolio, including charge-offs, see "Risk Factors --
Social, Legal and Economic Factors."
_________________________
(1) Average Receivables Outstanding is the average of the monthly average
amount of receivables outstanding during the periods indicated.
(2) Recoveries with respect to charged-off Receivables (including the
proceeds of sales of receivables in Charged-Off Accounts by the Trust, but
excluding any such proceeds with respect to any Removed Accounts) are
property of the Trust and are treated as Finance Charge Collections.
Summary Payment Rate Information(1). The monthly rate of payments
in the Discover Card Portfolio is summarized as follows:
<TABLE>
<CAPTION>
ELEVEN MONTHS YEAR ENDED DECEMBER 31,
ENDED -------------------------
NOVEMBER 30, 1997 1996 1995 1994
----------------- ---- ---- ----
<S> <C> <C> <C> <C>
Average Monthly Payment
Rate(2)......................................... 14.51% 15.24% 16.20% 16.65%
High Monthly Payment Rate....................... 16.31% 18.08% 18.97% 17.89%
Low Monthly Payment Rate........................ 12.41% 13.33% 13.67% 15.16%
</TABLE>
_________________________
(1) Monthly Payment Rate is calculated by dividing monthly cardmember
remittances by the cardmember receivable balance outstanding as of the
beginning of the month.
(2) Average Monthly Payment Rate for a period is equal to the sum of
individual monthly payment rates for the period divided by the number of
months in the period.
c. Delete the second paragraph under "Payment of the Investor
Certificates" located on pages 24-25 and substitute the following:
The Accounts' actual yield, charge-off rate and monthly payment
rate, and the amount of outstanding Principal Receivables in the Trust,
will depend on a variety of factors, including, without limitation,
seasonal variations, extensions and other
17
<PAGE> 18
modifications of payment terms, availability of other sources of credit,
general economic conditions and consumer spending and borrowing patterns.
Accordingly, there can be no assurance that the payment of principal
will be sufficient to reduce the Class Invested Amount for each of the
Class A Certificates and the Class B Certificates to zero on the Class A
Expected Final Payment Date and the Class B Expected Final Payment Date,
respectively. The Series Supplement provides that an Amortization Event
will occur on any Distribution Date on which the three-month rolling
average Series Excess Spread is less than zero and the three-month
rolling average Group Excess Spread is less than zero. "Series Excess
Spread" for any Distribution Date equals (a) the sum of Series Finance
Charge Collections, Series Yield Collections, Series Additional Investor
Funds and any Class Investment Income for any Class of the Series minus
(b) the sum of (i) the amount of Certificate Interest for each Class of
such Series, (ii) the Investor Servicing Fee, (iii) the product of the
Series Percentage with respect to the Charged-Off Amount and the
Charged-Off Amount and (iv) the Credit Enhancement Fee, in each case for
the Distribution Date. "Group Excess Spread" for any Distribution Date
is the sum of the Series Excess Spreads for each Series in the Group.
See "Description of the Investor Certificates -- Allocations,
Reallocations and Subordination of Collections" and "-- Amortization
Events."
The three-month rolling average Group Excess Spread Percentage for
Group One has declined from 4.57% for the Distribution Date in March 1997
to 2.86% for the Distribution Date in March 1998, primarily as a result
of increases in the Charged-Off Amount. "Group Excess Spread Percentage"
for any Distribution Date is the product of (a) the Group Excess Spread
for such Distribution Date divided by the sum of the Series Investor
Interests for each Series in Group One and (b) twelve. The three-month
rolling average Series Excess Spread Percentage for Series 1993-1 for the
Distribution Date in March 1998 was 2.88%. "Series Excess Spread
Percentage" for any Distribution Date is the product of (a) the Series
Excess Spread for such Distribution Date divided by the Series Investor
Interest and (b) twelve. If an Amortization Event were to occur because
of further declines in Group Excess Spread, deficiencies in Series Excess
Spread or otherwise, the payment of principal to Investor
Certificateholders may commence earlier than the applicable Class
Expected Final Payment Date and the final principal payment with respect
to the Investor Certificates may be made earlier or later than such Class
Expected Final Payment Date. If deficiencies in Series Excess Spread
cause the Available Subordinated Amount or the Available Shared Credit
Enhancement Amount to be reduced to zero, shortfalls of Certificate
Interest or Investor Losses -- which could cause Investor
Certificateholders to receive principal payments in an aggregate amount
that is less than the Series Initial Investor Interest -- could result.
7. THE TRUST
Delete the second paragraph under "Formation of the Trust" located on page
25 and substitute the following:
The property of the Trust includes the Receivables, all monies due
or to become due thereunder, all proceeds of the Receivables, including
Collections that may be used
18
<PAGE> 19
by Greenwood or any other Servicer for its own benefit prior to each
Distribution Date, all monies on deposit in the Investor Accounts,
Participation Interests included in the Trust, if any, any additional
funds that may be added to the Trust from time to time, any Credit
Enhancement and any interest rate swap, currency swap or interest rate
cap or other interest rate protection agreements with respect to any
outstanding series of investor certificates. Pursuant to the Pooling and
Servicing Agreement, Greenwood has the right, and in some circumstances
the obligation, to designate Additional Accounts, which may be Greenwood
Discover Card accounts or credit accounts originated by Greenwood or an
affiliate of Greenwood, to be included as Accounts, or to add
Participation Interests to the Trust, subject to certain conditions. See
"-- Addition of Accounts." In addition, Greenwood has the right, subject
to certain conditions, to designate Accounts for removal from the Trust.
See "-- Removal of Accounts."
8. DESCRIPTION OF THE INVESTOR CERTIFICATES
a. Delete the first three full sentences in the first paragraph on page 34
under "Reallocation of Series Investor Percentage of Collections Among Series
in Group One" and substitute the following:
Series 1993-1 is included in the "Group One" group of series. In
addition to the series already outstanding, additional series in Group
One or in other Groups are expected to be issued by the Trust from time
to time in the future. Series 1993-1 will be eligible to receive
reallocated Collections from any other Group One series issued by the
Trust that provides for such reallocations. The Master Servicer may from
time to time, subject to certain conditions, move Series 1993-1, and any
other series, from one Group to another Group. See "Description of the
Investor Certificates -- Reallocation of Series Among Groups". Series
that are in their Amortization Periods or Early Accumulation Periods, if
applicable, will not be entitled to receive any reallocated Principal
Collections from other series.
b. Delete Section (37) under "Distribution of Collections and Application
of Collections and Certain Other Amounts" on page 42 and substitute the
following:
(37) If there are one or more other outstanding series included in
Group One that provide for the reallocation of excess Collections, excess
Principal Collections with respect to each such series (i.e., all
Principal Collections during such series' Revolving Period and all
Principal Collections in excess of the amount required to fund or pay
Certificate Principal with respect to such series during such series'
Accumulation Period, Controlled Liquidation Period, Amortization Period
or Early Accumulation Period, as applicable) also will be deposited into
the Group One Principal Collections Reallocation Account. During the
Accumulation Period only, any remaining shortfall in funding the portion
of the Principal Distribution Amount that is allocable to Class A, to an
amount equal to the product of (i) a fraction the numerator of which is
the amount of the remaining shortfall and the denominator of which is the
sum of the portion of such shortfalls allocated to the class designated
by the letter A of all series included in Group One that provided for
such reallocation and that are in their Accumulation Period or
19
<PAGE> 20
Controlled Liquidation Period, as applicable and (ii) the amount on
deposit in the Group One Principal Collections Reallocation Account, will
be withdrawn from such account and deposited into the Series Principal
Funding Account.
9. THE SELLER
a. Delete the text under the heading "Greenwood" on page 64 and substitute
the following:
Greenwood is a wholly-owned subsidiary of NOVUS and an indirect
subsidiary of MSDW. Greenwood was acquired by NOVUS in January 1985.
Greenwood was chartered as a banking corporation under the laws of the
State of Delaware in 1911, and its deposits are insured by the FDIC.
Greenwood is not a member of the Federal Reserve System. The executive
office of Greenwood is located at 12 Read's Way, New Castle, Delaware
19720. In addition to the experience obtained by Greenwood in the bank
card business since 1985, a majority of the senior management of the
credit, operations and data processing functions for the Discover Card at
Greenwood and NSI has had extensive experience in the credit operations
of other credit card issuers. NSI performs sales and marketing
activities, provides operational support for the Discover Card program
and maintains merchant relationships.
By virtue of the enactment of CEBA, there are certain limitations
placed on Greenwood, including a requirement that Greenwood not engage in
activities in which it was not engaged as of March 5, 1987. Since its
acquisition by NOVUS, as a result of these and earlier limitations,
Greenwood has not engaged in the business of making commercial loans.
See "Risk Factors -- Legislation." Greenwood believes that in light of
the programs it has in place, the limitations of CEBA will not have a
material impact on the level of the Receivables or on Greenwood's ability
to service the Receivables.
b. Add at the end of the last sentence of the first paragraph under the
subheading "Insolvency-Related Matters" on page 64:
In addition, the Federal Deposit Insurance Corporation, if appointed
as conservator or receiver for Greenwood, has the power under the Federal
Deposit Insurance Act, as amended, to repudiate contracts, including
contracts of Greenwood such as the Pooling and Servicing Agreement. The
Federal Deposit Insurance Act, as amended, provides that a claim for
damages arising from the repudiation of a contract is limited to "actual
direct compensatory damages." In the event the Federal Deposit Insurance
Corporation were to be appointed as conservator or receiver of Greenwood
and were to repudiate the Pooling and Servicing Agreement, then the
amount payable out of available collateral to the Certificateholders
could be lower than the outstanding principal and accrued interest on the
Certificates. In a 1993 case involving the repudiation by the Resolution
Trust Corporation, which has ceased to exist as of December 31, 1995 (the
Federal Deposit Insurance Corporation has taken over its
responsibilities), of certain secured zero-coupon bonds issued by a
savings association, a United States federal
20
<PAGE> 21
district court held that "actual direct compensatory damages" in the case
of a marketable security meant the market value of the repudiated bonds
as of the date of repudiation.
10. CERTAIN LEGAL MATTERS RELATING TO THE RECEIVABLES
a. Delete the second sentence under the heading "Consumer Protection Laws
and Debtor Relief Laws Applicable to the Receivables" on page 66 and substitute
the following:
Such laws and regulations include the Federal Truth-in-Lending Act
and Fair Credit Billing Act (and the provisions of the Federal Reserve
Board's Regulation Z issued under each of them), Equal Credit Opportunity
Act (and the provisions of the Federal Reserve Board's Regulation B
issued thereunder), Fair Credit Reporting Act and Fair Debt Collection
Practices Act.
b. Delete the first full paragraph on page 67 relating to "Consumer
Protection Laws and Debtor Relief Laws Applicable to the Receivables."
11. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
a. Delete the text under the heading "Certain Federal Income Tax
Consequences" on pages 67-73 and substitute the following:
GENERAL
The following summary of certain anticipated federal income tax
consequences of the purchase, ownership and disposition of the Investor
Certificates is based on the advice of Latham & Watkins ("Tax Counsel")
as counsel to Greenwood. The summary is based upon current provisions of
the Internal Revenue Code of 1986, as amended (the "Code"), currently
applicable Treasury Regulations and judicial and administrative rulings
and decisions ("Current Law"). There can be no assurance that the
Internal Revenue Service (the "IRS") will not take a contrary view, and
no ruling from the IRS has been or will be sought. Legislative, judicial
or administrative changes may be forthcoming that could alter or modify
the statements and conclusions set forth herein. Any legislative,
judicial or administrative changes or interpretations may or may not be
retroactive and could affect tax consequences to Investor
Certificateholders.
The summary does not purport to deal with all aspects of federal
income taxation that may affect particular Investor Certificateholders in
light of their individual circumstances, and, except for certain limited
discussions of particular topics, is not intended for Investor
Certificateholders subject to special treatment under the federal income
tax laws (e.g., life insurance companies, tax-exempt organizations,
financial institutions, broker-dealers and investors that have a
functional currency other than the United States dollar or hold their
Investor Certificates as part of a hedge, straddle or conversion
transaction). PROSPECTIVE INVESTOR CERTIFICATEHOLDERS SHOULD CONSULT
THEIR OWN TAX ADVISORS AS TO THE FEDERAL, STATE, LOCAL, FOREIGN AND ANY
OTHER TAX CONSEQUENCES TO THEM
21
<PAGE> 22
OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF INVESTOR CERTIFICATES.
TAX TREATMENT OF THE INVESTOR CERTIFICATES AS INDEBTEDNESS
Tax Counsel has advised Greenwood that, in their opinion, although
the matter is not free from doubt, under Current Law the Investor
Certificates will be treated as indebtedness of Greenwood for federal
income tax purposes. Such opinion is based, in part, upon (i) the
expressed intent of Greenwood to treat the Investor Certificates for
federal, state and local income and franchise tax purposes as
indebtedness secured by the Receivables and other assets held in the
Trust, (ii) the commitment of each Investor Certificateholder, by the
acceptance of an Investor Certificate, similarly to treat the Investor
Certificates for federal, state and local income and franchise tax
purposes as indebtedness, (iii) Tax Counsel's conclusion that the federal
income tax treatment of the Investor Certificates should be determined
based on the economic substance of the arrangement created by the Pooling
and Servicing Agreement, the Series Supplement and the Credit Enhancement
Agreement and (iv) Tax Counsel's analysis of such economic substance.
There can be no assurance, however, that the IRS or the courts will agree
with the conclusions of Tax Counsel. In that regard, the Pooling and
Servicing Agreement and the Series Supplement generally refer to the
transfer of the Receivables as a "sale," and Greenwood has informed Tax
Counsel (i) that different criteria are used in determining the non-tax
accounting treatment of the transaction and (ii) that, for regulatory and
financial accounting purposes, Greenwood will treat the transfer of the
Receivables under the Pooling and Servicing Agreement and the Series
Supplement as a transfer of an ownership interest in the Receivables and
not as the creation of a debt obligation. Notwithstanding the foregoing,
Greenwood will treat the Investor Certificates as indebtedness for
federal, state and local income and franchise tax purposes and the
Investor Certificateholders, by acceptance of the Investor Certificates,
agree to treat such Investor Certificates as indebtedness of Greenwood
for federal, state and local income and franchise tax purposes.
The above discussion is qualified in its entirety by reference to
the tax opinion that was filed as an exhibit to the Registration
Statement containing the Prospectus to which this Annual Appendix
relates. Except for the discussion in "-- Possible Characterization of
the Investor Certificates," the following discussion of federal income
tax consequences assumes that the Investor Certificates will be treated
as indebtedness of Greenwood for federal income tax purposes.
UNITED STATES INVESTOR CERTIFICATEHOLDERS
The rules set forth below apply to Investor Certificateholders who
are "United States Persons." A "United States Person" is (i) a citizen
or resident of the United States, (ii) a corporation or partnership
created or organized in the United States or under the laws of the United
States or of any state, (iii) an estate the income of which is subject to
United States federal income taxation regardless of its source or (iv) a
trust if a court within the United States is able to exercise primary
supervision over the administration of
22
<PAGE> 23
the trust, and one or more United States persons have the authority to
control all substantial decisions of the trust (or, under certain
circumstances, a trust the income of which is subject to United States
federal income taxation regardless of its source).
Stated Interest on Investor Certificates. Subject to the discussion
below, interest paid on the Investor Certificates will be taxable as
ordinary income when received or accrued by Investor Certificateholders
in accordance with their method of accounting. Generally, interest
received on the Investor Certificates will constitute "investment income"
for purposes of certain limitations of the Code concerning the
deductibility of investment interest expense.
Original Issue Discount. In general, the excess of the stated
redemption price at maturity of the Investor Certificates over their
issue price will constitute original issue discount ("OID") unless such
excess is within a statutorily-defined de minimis exception.
If the Investor Certificates are issued with OID, Investor
Certificateholders generally will be required to include OID in income
for each accrual period in advance of receipt of the cash representing
such OID. A holder of a debt instrument issued with OID is required to
recognize as ordinary income the amount of OID on the debt instrument as
such discount accrues, in accordance with a constant yield method. Under
Section 1272(a)(6) of the Code, special provisions apply to debt
instruments on which payments may be accelerated due to prepayments of
other obligations securing those debt instruments or, to the extent
provided in Treasury Regulations, by reason of other events. Under these
provisions, the computation of OID (and market discount, see "-- Market
Discount") on such debt instruments must be determined by taking into
account both the prepayment assumptions used in pricing the debt
instrument and the actual prepayment experience. As a result, the amount
of OID on such debt instruments that will accrue in any given accrual
period may either increase or decrease depending upon the actual
prepayment rate. Because no Treasury Regulations have been issued
interpreting Section 1272(a)(6), Investor Certificateholders should
consult their own tax advisors regarding the impact of the OID rules in
the event the Investor Certificates are issued with OID.
Market Discount. Investor Certificateholders should be aware that
the resale of an Investor Certificate may be affected by the market
discount provisions of the Code. These rules generally provide that,
subject to a statutorily-defined de minimis exception, if an Investor
Certificateholder acquires an Investor Certificate at a market discount
(i.e., at a price below its stated redemption price at maturity or its
revised issue price if it was issued with OID) and thereafter recognizes
gain upon a disposition of the Investor Certificate (or disposes of it in
certain non-recognition transactions such as a gift), the lesser of such
gain (or appreciation, in the case of an applicable non-recognition
transaction) or the portion of the market discount that accrued while the
Investor Certificate was held by such Investor Certificateholder will be
treated as ordinary interest income at the time of the disposition. The
market discount rules also provide that an Investor Certificateholder who
acquires an Investor Certificate at a market discount may be required to
defer a portion of any interest expense that otherwise may be deductible
on
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<PAGE> 24
any indebtedness incurred or maintained to purchase or carry the Investor
Certificate until the Investor Certificateholder disposes of the Investor
Certificate in a taxable transaction.
Principal payments on the Investor Certificates will be made monthly
during the Amortization Period, if any. An Investor Certificateholder
who acquired an Investor Certificate at a market discount would be
required to treat as ordinary interest income the portion of any
principal payment attributable to accrued market discount on such
Investor Certificate.
An Investor Certificateholder who acquired an Investor Certificate
at a market discount may elect to include market discount in income as
the discount accrues, either on a ratable basis or, if elected, on a
constant interest rate basis. The current inclusion election, once made,
applies to all market discount obligations acquired on or after the first
day of the first taxable year to which the election applies, and may not
be revoked without the consent of the IRS. If an Investor
Certificateholder elects to include market discount in income in
accordance with the preceding sentence, the foregoing rules with respect
to the recognition of ordinary income on sales, principal payments and
certain other dispositions of the Investor Certificates and the deferral
of interest deductions on indebtedness related to the Investor
Certificates will not apply.
Amortizable Bond Premium. Generally, if the price or tax basis of
an Investor Certificate held as a capital asset exceeds the sum of all
amounts payable on the Investor Certificate after the acquisition date
(other than payments of qualified stated interest), such excess may
constitute amortizable bond premium that the Investor Certificateholder
may elect to amortize under the constant interest rate method over the
period from the Investor Certificateholder's acquisition date to the
Investor Certificate's maturity date. Treasury Regulations specifically
exclude debt instruments acquired on or after March 2, 1998 that are
subject to Section 1272(a)(6) of the Code from the amortizable bond
premium rules contained in such Regulations. See discussion of Section
1272(a)(6) in "-- Original Issue Discount." Amortizable bond premium
generally will be treated as an offset to interest income on the Investor
Certificate, rather than as a separate interest deduction item subject to
the investment interest limitations of the Code. An Investor
Certificateholder that elects to amortize bond premium must generally
reduce the tax basis in the related Investor Certificate by the amount of
bond premium used to offset interest income. If an Investor Certificate
purchased at a premium is redeemed in full prior to its maturity, an
Investor Certificateholder who has elected to amortize bond premium
should be entitled to a deduction for any remaining unamortized bond
premium in the taxable year of redemption.
Sales of Investor Certificates. In general, an Investor
Certificateholder will recognize gain or loss upon the sale, exchange,
redemption or other taxable disposition of an Investor Certificate
measured by the difference between (i) the amount of cash and the fair
market value of any property received (other than the amount attributable
to, and taxable as, accrued but unpaid interest) and (ii) the Investor
Certificateholder's tax basis in the Investor Certificate (as increased
by any OID or market discount previously included in income by the
Investor Certificateholder and decreased by any deductions
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<PAGE> 25
previously allowed for amortizable bond premium and by any payments
reflecting principal or OID received with respect to such Investor
Certificate).
Subject to the OID and market discount rules discussed above and to
the one-year holding period requirement for long-term capital gain
treatment, any such gain or loss generally will be long-term capital gain
or loss, provided the Investor Certificate was held as a capital asset.
The maximum federal income tax rate applicable to capital gains and
ordinary income for corporations is 35%. Moreover, capital losses
generally may be used only to offset capital gains. The maximum ordinary
federal income tax rate for individuals, estates and trusts is 36% (for
married individuals filing joint returns with taxable income in excess of
$155,950 ($128,100 for certain unmarried individuals)) whereas the
maximum long-term capital gains rate applicable to the sale of an
Investor Certificate is 20% for such taxpayers who, at the time of such
sale, have held such Investor Certificate for more than 18 months, and
28% for such taxpayers who, at the time of such sale, have held such
Investor Certificate for more than one year but not more than 18 months.
A further 10% surtax will be imposed on ordinary income of individuals
with taxable incomes in excess of $278,450 (for married individuals
filing joint returns and for certain unmarried individuals) and estates
and trusts with taxable incomes in excess of $8,350 (thereby creating a
maximum federal income tax rate for such taxpayers of 39.6%).
FOREIGN INVESTOR CERTIFICATEHOLDERS
Set forth below is a general discussion of the United States federal
income and estate tax consequences of the purchase, ownership, sale or
other disposition of an Investor Certificate by an Investor
Certificateholder that, for United States federal income tax purposes, is
(i) a foreign corporation, (ii) a non-resident alien individual, (iii) a
foreign estate or trust or (iv) a foreign partnership, as such terms are
defined in the Code (a "non-U.S. Holder"). Some non-U.S. Holders
(including certain residents of certain United States possessions or
territories) may be subject to special rules not discussed herein.
Interest (including OID, if any) paid to a non-U.S. Holder of
Investor Certificates will not be subject to a required withholding of
United States federal income tax provided that (i) such interest payments
are effectively connected with the conduct of a trade or business of the
non-U.S. Holder within the United States and such non-U.S. Holder
provides an appropriate statement to such effect, or (ii) (a) the holder
is not (1) a "10 percent shareholder" of Greenwood or (2) a "controlled
foreign corporation" with respect to which Greenwood is a "related
person" within the meaning of the Code and (b) the beneficial owner (and,
if relevant, a financial institution on the beneficial owner's behalf)
provides an appropriate statement, signed under penalty of perjury,
certifying that the beneficial owner of such Investor Certificate is not
a United States Person and providing the beneficial owner's name and
address. The statement generally must be provided in the year a payment
occurs or in either of the two preceding years. For years after 1999,
Treasury Regulations specify that the statement must be made on Form W-8
and provided prior to payment.
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<PAGE> 26
A non-U.S. Holder generally will not be subject to United States
federal income tax on gain realized on the disposition of an Investor
Certificate (other than gain attributable to accrued interest or OID,
which is addressed in the preceding paragraph); provided that (i) the
gain is not effectively connected with the conduct of a trade or business
within the United States by the non-U.S. Holder and (ii) in the case of
an individual holder, (A) the non-U.S. Holder is not present in the
United States for 183 days or more in the taxable year of the sale,
exchange or redemption or (B)(1) the non-U.S. Holder does not have a "tax
home" in the United States and (2) the gain is not attributable to an
office or other fixed place of business maintained in the United States
by the non-U.S. Holder.
If the interest or gain on an Investor Certificate held by a
non-U.S. Holder is effectively connected with the conduct of a trade or
business within the United States by the non-U.S. Holder, then the
non-U.S. Holder (although exempt from the withholding of tax previously
discussed if the non-U.S. Holder provides an appropriate statement)
generally will be subject to United States federal income tax on the
interest (including OID, if any) or gain at regular federal income tax
rates in a similar fashion to a United States Person. See "-- United
States Investor Certificateholders." In addition, if the non-U.S. Holder
is a foreign corporation, it may be subject to a branch profits tax equal
to 30% of its "effectively connected earnings and profits" within the
meaning of the Code for the taxable year, as adjusted for certain items,
unless it qualifies for a lower rate under an applicable tax treaty.
An Investor Certificate held by an individual who at the time of
death is a non-U.S. Holder will not be subject to United States federal
estate tax as a result of such individual's death if, immediately before
death, (i) the individual was not a "10 percent shareholder" of Greenwood
and (ii) interest on such Investor Certificate was not effectively
connected with the conduct of a trade or business within the United
States by the individual.
THE FOREGOING DESCRIPTION OF THE POTENTIAL UNITED STATES FEDERAL
INCOME AND ESTATE TAX CONSEQUENCES TO NON-U.S. HOLDERS IS NECESSARILY
INCOMPLETE. NON-U.S. HOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS
WITH RESPECT TO THE APPLICATION OF THE FOREGOING MATTERS TO THEM.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Information reporting requirements apply to certain payments of
principal of and interest on (and the amount of OID, if any, accrued on)
an obligation, and to proceeds of certain sales of an obligation before
maturity, to certain nonexempt Investor Certificateholders who are United
States Persons. Payments to certain entities, including, but not limited
to, corporations and financial institutions, are exempt from information
reporting. In addition, a backup withholding tax may also apply with
respect to such amounts if such Investor Certificateholders fail to
provide correct taxpayer identification numbers and other information.
The backup withholding tax rate is 31%. Greenwood, or
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<PAGE> 27
a paying agent or a broker, as the case may be, will be required to
withhold from any payment that is subject to backup withholding unless
the Investor Certificateholder has provided the required certification in
the manner prescribed in applicable Treasury Regulations.
In the case of payments of principal of, and interest on (and the
amount of OID, if any, accrued on), Investor Certificates by Greenwood or
its paying agents to non-U.S. Holders, Treasury Regulations provide that
backup withholding and information reporting will not apply to payments
with respect to which either requisite certification has been received or
an exemption has otherwise been established (provided that neither
Greenwood nor its paying agents has actual knowledge that the holder is a
United States Person or that the conditions of any other exemption are
not in fact satisfied). Payments of the proceeds of the sale of an
Investor Certificate to or through a foreign office of a United States
broker or foreign brokers with certain types of relationships to the
United States, however, are subject to certain information reporting
requirements, unless the payee is an exempt recipient or such broker has
evidence in its records that the payee is not a United States Person and
no actual knowledge that such evidence is false and certain other
conditions are met. After 1999, unless exempt from information
reporting, such payments may be subject to backup withholding. Payments
of the proceeds of a sale to or through the United States office of a
broker will be subject to information reporting and backup withholding
unless the payee makes appropriate certifications (and no agent of the
broker who is responsible for receiving or reviewing such statement has
actual knowledge that it is incorrect) or an exemption is otherwise
established.
Any amounts withheld under the backup withholding rules from a
payment to an Investor Certificateholder will be allowed as a refund or a
credit against such Investor Certificateholder's United States federal
income tax.
Recently, the Treasury Department has promulgated final regulations
regarding the withholding and information reporting rules discussed
above. In general, the final regulations do not significantly alter the
substantive withholding and information reporting requirements but unify
current certification procedures and forms and clarify reliance
standards. Special rules apply which permit the shifting of primary
responsibility for withholding to certain financial intermediaries acting
on behalf of beneficial owners. The final regulations are generally
effective for payments made after December 31, 1999, subject to certain
transition rules. Non-U.S. Holders are urged to consult their own tax
advisors with respect to these final regulations.
POSSIBLE CHARACTERIZATION OF THE INVESTOR CERTIFICATES
The foregoing discussion assumes that the Investor Certificates will
be treated as indebtedness of Greenwood for federal income tax purposes.
However, although Tax Counsel has opined to such effect, the matter is
not free from doubt, and there can be no assurance that the IRS or the
courts will agree with Tax Counsel's opinion. If the IRS were to contend
successfully that the Investor Certificates are not indebtedness of
Greenwood for federal income tax purposes, it could find that the
arrangement created by
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<PAGE> 28
the Pooling and Servicing Agreement and the Series Supplement constitutes
a partnership which could be treated as a "publicly traded partnership"
taxable as a corporation.
If the Investor Certificates were treated as interests in a
partnership, the partnership in all likelihood would be treated as a
"publicly traded partnership." If the partnership were nevertheless not
taxable as a corporation (for example, because of an exception for a
"publicly traded partnership" whose income is interest that is not
derived in the conduct of a financial business), such partnership would
not be subject to federal income tax. Rather, the Investor
Certificateholders would be required to include in income their share of
the income and deductions generated by the assets of the Trust, as
determined under partnership tax accounting rules. In such event, the
amount, timing and character of the income required to be recognized by
an Investor Certificateholder could differ materially from the amount,
timing and character thereof if the Investor Certificates were
characterized as indebtedness of Greenwood. It also is possible that
such a partnership could be subject to tax in certain states where the
partnership is considered to be engaged in business, and that the
Investor Certificateholders, as partners in such a partnership, could be
taxed on their share of the partnership's income in such states.
In addition, if such a partnership is considered to be engaged in a
trade or business within the United States, the partnership would be
subject to a withholding tax on distributions to (or, at its election,
income allocable to) non-U.S. Holders, and each such non-U.S. Holder
would be credited for such non-U.S. Holder's share of the withholding tax
paid by the partnership. Moreover, the non-U.S. Holder generally would
be subject to United States federal income tax at regular federal income
tax rates, and possibly a branch profits tax (in the case of a corporate
non-U.S. Holder), as previously described. See "-- Foreign Investor
Certificateholders." Further, even if the partnership is not considered
to be engaged in a trade or business within the United States, it appears
that partnership withholding will be required in the case of any such
non-U.S. Holder that is engaged in a trade or business within the United
States to which the Investor Certificate income is effectively connected.
Alternatively, although there may be arguments to the contrary, it
appears that if such a partnership is not considered to be engaged in a
trade or business within the United States and if income with respect to
an Investor Certificate is not otherwise effectively connected with the
conduct of a trade or business within the United States by a non-U.S.
Holder, the non-U.S. Holder would be subject to United States federal
income tax and withholding at a rate of 30% (unless reduced by an
applicable treaty) on such non-U.S. Holder's distributive share of the
partnership's interest income.
If the Investor Certificates were treated as interests in a
"publicly traded partnership" taxable as a corporation, the income from
the assets of the Trust would be subject to federal income tax and tax
imposed by certain states where the entity would be considered to have
operations at corporate rates, which would reduce the amounts available
for distribution to the Investor Certificateholders. See "Certain State
Tax Consequences." Under such circumstances, the Investor Certificates
may be treated as debt of an entity taxable as a corporation or,
alternatively, as equity of such an entity in
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which latter case interest payments to Investor Certificateholders could
be treated as dividends and, if made to non-U.S. Holders, could be
subject to United States federal income tax and withholding at a rate of
30% (unless reduced by an applicable tax treaty).
Finally, the IRS might contend that even though the Class A
Certificates are properly classified as debt obligations for federal
income tax purposes, the Class B Certificates are not properly classified
as such. Under this approach, the Class B Certificates might be viewed
as equity interests in an entity (such as Greenwood or a joint venture
consisting of Greenwood and the Class B Certificateholders), with the
Class A Certificates treated as debt obligations of such entity. If such
an entity were characterized as a partnership not taxable as a
corporation, the entity would not be subject to federal income tax,
although the Class B Certificateholders would be subject to the tax
consequences previously described with respect to interests in a
partnership that is not taxable as a corporation. Alternatively, if such
an entity were characterized as a "publicly traded partnership" taxable
as a corporation, the tax liability on the income of the entity might, in
certain circumstances, reduce distributions on both the Class A
Certificates and the Class B Certificates, and the Class B
Certificateholders would be subject to the tax consequences previously
described with respect to interests in a "publicly traded partnership"
taxable as a corporation. In addition, any non-U.S. Holder of a Class A
Certificate who is the actual or constructive owner of 10% or more of the
outstanding principal amount of the Class B Certificates may be treated
as a "10 percent shareholder." See "-- Foreign Investor
Certificateholders."
Based on Tax Counsel's advice as to the likely treatment of the
Investor Certificates for federal income tax purposes, Greenwood and the
Trust will not attempt to cause the arrangement created by the Pooling
and Servicing Agreement and the Series Supplement to comply with the
federal or state income tax reporting requirements applicable to
partnerships or corporations. If such arrangement were later held to
constitute a partnership or corporation, the manner of bringing it into
compliance with such requirements is unclear.
Prospective Investor Certificateholders should consult their own tax
advisors as to the risk that the Investor Certificates will not be
treated as indebtedness of Greenwood, and the possible tax consequences
of potential alternative treatments.
12. CERTAIN STATE TAX CONSEQUENCES
Delete the text under the heading "Certain State Tax Consequences" on
pages 73-74 and substitute the following:
The following summary of certain anticipated state tax consequences
with respect to the Investor Certificates is based on the advice of Tax
Counsel as counsel to Greenwood. The summary is based upon currently
applicable statutes, regulations and judicial and administrative rulings
and decisions of certain states. There can be no assurance that the
taxing authorities of such states will not take a contrary view, and no
ruling therefrom has been or will be sought. Legislative, judicial or
administrative
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<PAGE> 30
changes may be forthcoming that could alter or modify the statements and
conclusions set forth herein. Any such changes or interpretations may or
may not be retroactive and could affect the tax consequences to Investor
Certificateholders. Except as set forth below, this discussion of state
tax consequences assumes that the Investor Certificates will be treated
as indebtedness of Greenwood for federal tax purposes.
State tax consequences to each Investor Certificateholder will
depend upon the provisions of the state tax laws to which the Investor
Certificateholder is subject. Most states modify or adjust the
taxpayer's federal taxable income to arrive at the amount of income
potentially subject to state tax. Resident individuals usually pay state
tax on 100% of such state-modified income, while corporations and other
taxpayers generally pay state tax only on that portion of state-modified
income assigned to the taxing state under the state's own apportionment
and allocation rules. Because each state's tax laws vary, it is
impossible to predict the tax consequences to the Investor
Certificateholders in all of the state taxing jurisdictions in which they
are already subject to tax.
Delaware is the location of Greenwood's headquarters, where
Greenwood originates and owns the Accounts and services the Receivables
pursuant to the Pooling and Servicing Agreement. Tax Counsel has advised
Greenwood that, in their opinion, although the matter is not free from
doubt, the Investor Certificates are treated as indebtedness of Greenwood
for purposes of the Delaware income tax. Accordingly, although the
matter is not free from doubt, if the Investor Certificates are treated
as indebtedness of Greenwood in Delaware, Investor Certificateholders not
otherwise subject to taxation in Delaware will not become subject to the
Delaware income tax solely because of their ownership of the Investor
Certificates.
Generally, an Investor Certificateholder is required to pay, in
states in which such an Investor Certificateholder already is subject to
state tax, additional state tax as a result of interest earned on such
Investor Certificateholder's investment in the Investor Certificates.
Moreover, a state could claim that the Trust has undertaken activities
therein and is subject to taxation by that state. Were any state to make
and sustain that claim, the treatment of the Investor Certificates for
purposes of such state's tax laws would be determined thereunder, and
there can be no assurance that the Investor Certificates would be treated
as indebtedness of Greenwood for purposes of such state taxation.
If such Investor Certificates were treated as interests in a
partnership or a corporation, the state tax consequences to the Investor
Certificateholders could be materially different, especially in states
which may be considered to have a business connection with the
Receivables. See "Certain Federal Income Tax Consequences -- Possible
Characterization of the Investor Certificates."
THE FOREGOING DESCRIPTION OF THE POTENTIAL STATE TAX CONSEQUENCES IS
INCOMPLETE. INVESTOR CERTIFICATEHOLDERS ARE URGED TO CONSULT THEIR OWN
TAX ADVISORS WITH RESPECT TO THE APPLICATION OF THE FOREGOING MATTERS TO
THEM.
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13. ERISA CONSIDERATIONS
Delete the last three paragraphs on page 75 and substitute the following:
If the Investor Certificates were deemed to be an extension of
credit for ERISA purposes, the purchase of the Investor Certificates by a
Plan with respect to which Greenwood or one of its affiliates is a "party
in interest" or "disqualified person" might be considered a prohibited
extension of credit under Section 406 of ERISA and Section 4975 of the
Code unless an exemption is applicable. There are at least four
prohibited transaction class exemptions issued by the DOL that might
apply, depending in part on who decided to acquire the Investor
Certificates for the Plan: DOL Prohibited Transaction Exemption ("PTE")
84-14 (Class Exemption for Plan Asset Transactions determined by
Independent Qualified Professional Asset Managers); PTE 91-38 (Class
Exemption for Certain Transactions Involving Bank Collective Investment
Funds); PTE 90-1 (Class Exemption for Certain Transactions Involving
Insurance Company Pooled Separate Accounts); and PTE 96-23 (Class
Exemption for Plan Asset Transactions Determined by In-House Asset
Managers).
Moreover, whether the Investor Certificates are debt or equity for
ERISA purposes, a possible violation of the prohibited transaction rules
could occur if the Investor Certificates were purchased during the
offering with assets of a Plan if Greenwood, the Trustee, any Underwriter
or any of their affiliates were a fiduciary with respect to such Plan.
Under ERISA and the Code, a person is a "fiduciary" with respect to a
Plan to the extent (i) he or she exercises any discretionary authority or
discretionary control respecting management of such Plan or exercises any
authority or control respecting management or disposition of its assets,
(ii) he or she renders investment advice for a fee or other compensation,
direct or indirect, with respect to any moneys or other property of such
Plan, or has any authority or responsibility to do so or (iii) he or she
has any discretionary authority or discretionary responsibility in the
administration of such Plan. Accordingly, the fiduciaries of any Plan
should not purchase the Investor Certificates during the offering with
assets of any Plan if Greenwood, the Trustee, the Underwriters or any of
their affiliates is a fiduciary with respect to the Plan.
In light of the foregoing, fiduciaries of Plans considering the
purchase of the Investor Certificates should consult their own tax or
other appropriate counsel regarding the application of ERISA and the Code
to their purchase of the Investor Certificates.
In particular, insurance companies considering the purchase of
Investor Certificates should consult their own benefits counsel or other
appropriate counsel with respect to the United States Supreme Court's
decision in John Hancock Mutual Life Insurance Co. v. Harris Trust &
Savings Bank, 114 S. Ct. 517 (1993) ("John Hancock"), DOL PTE 95-60
(Class Exemption for Certain Transactions Involving Insurance Company
General Accounts) and Section 401(c) of ERISA. In John Hancock, the
Supreme Court held that the assets held in an insurance company's general
account may be deemed to be "plan assets" under certain circumstances.
Subject to numerous conditions and limitations, PTE 95-60 effectively
reverses this portion of the holding in
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<PAGE> 32
John Hancock. Section 401(c) of ERISA was added by the Small Business
Job Protection Act of 1996 and requires the Secretary of Labor to issue
final regulations by December 31, 1997 which are to provide guidance for
the purpose of determining, in cases where an insurer issues one or more
policies (supported by the assets of the insurer's general account) to or
for the benefit of an employee benefit plan, which assets of such insurer
(other than assets held in a separate account) constitute "plan assets"
for the purposes of the fiduciary responsibility provisions of ERISA and
Section 4975 of the Code. Such regulations shall only apply with respect
to policies which are issued by an insurer on or before December 31,
1998, to or for the benefit of an employee benefit plan which is
supported by the assets of such insurer's general account. With respect
to policies issued on or before December 31, 1998, such regulations shall
take effect at the end of the 18-month period following the date on which
such regulations become final. Section 401(c) of ERISA also provides
that no person will be subject to liability under Section 4975 of the
Code and the fiduciary responsibility provisions of ERISA on the basis of
a claim that the assets of an insurer (other than assets held in a
separate account) are "plan assets," for conduct occurring before the
date which is 18 months following the date the final regulations become
final. On December 22, 1997, the DOL issued proposed regulations under
Section 401(c) of ERISA. 29 CFR 2550.401c-1.
Accordingly, investors should analyze whether John Hancock, PTE
95-60, Section 401(c) of ERISA and any regulations issued pursuant to
Section 401(c) of ERISA may have an impact with respect to their purchase
of Investor Certificates.
14. AVAILABLE INFORMATION
Delete the text under the heading "Available Information" on page 76 of
the Prospectus and substitute the following:
The Trust is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended, and, in accordance
therewith, Greenwood, on behalf of the Trust, will file reports and other
information with the Securities and Exchange Commission (the
"Commission"). Such reports filed by Greenwood on behalf of the Trust
are available for inspection without charge at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Room
1024, Washington, D.C. 20549; 7 World Trade Center, Suite 1300, New York,
New York 10048; and the Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511. Such reports and other
documents may also be obtained from the web site that the Commission
maintains at http://www.sec.gov.
15. GLOSSARY OF TERMS
a. Delete the definition of "Charged-Off Amount" on page 81 of the
Prospectus and substitute the following:
"Charged-Off Amount" will mean, with respect to any Trust
Distribution Date, the aggregate amount of Receivables in Accounts that
become Charged-Off Accounts in the
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<PAGE> 33
related Due Period, less (i) the cumulative, uncollected amount
previously billed by the Servicers to Accounts that became Charged-Off
Accounts during the related Due Period with respect to finance charges,
cash advance fees, annual membership fees, fees for transactions that
exceed the credit limit on the Account, late payment charges and any
other type of charges that the Servicer has designated as "Finance Charge
Receivables" with respect to Accounts that are not Charged-Off Accounts
and (ii) the full amount of any such Receivables that have been
repurchased by Greenwood on behalf of the Holder of the Seller
Certificate.
b. Add the definition "Class Investment Income" on page 83 of the
Prospectus:
"Class Investment Income" will not apply with respect to the Series
offered hereby. With respect to other series issued by the Trust, Class
Investment Income will mean, with respect to any Class, income from the
investment of funds on deposit in the Series Principal Funding Account
for the benefit of such Class less Excess Income.
c. Add the definition of "Early Accumulation Period" on page 86 of
Prospectus:
"Early Accumulation Period" will not apply with respect to the
Series offered hereby. With respect to the other series issued by the
Trust, the Early Accumulation Period, if applicable, will have the
meaning set forth in the applicable Series Supplement.
d. Delete the definition of "Economic Early Amortization Event" on page 86
of the prospectus and substitute the following:
"Economic Early Amortization Event" will mean the event specified in
subparagraph (i) in "Description of the Investor Certificates --
Amortization Events."
e. Delete the definition of "Finance Charge Receivables" on page 87 of the
Prospectus and substitute the following:
"Finance Charge Receivables" with respect to any Account for any Due
Period, will mean the net amount billed by the Servicer during such Due
Period as periodic finance charges on such Account and cash advance fees,
annual membership fees, fees for transactions that exceed the credit
limit on such Account, late payment charges billed during such Due Period
to such Account and any other charges that the Servicer may designate as
"Finance Charge Receivables" from time to time (provided that the
Servicer shall not designate amounts owing for the payment of goods and
services or cash advances as "Finance Charge Receivables"), less, in the
event that such Account becomes a Charged-Off Account during such Due
Period, the cumulative, uncollected amount previously billed by the
Servicer to such Account as periodic finance charges, cash advance fees,
annual membership fees, if any, fees for transactions that exceed the
credit limit on such Account, late payment charges and any other type of
charges that the Servicer has designated as "Finance Charge Receivables"
with respect to Accounts that are not Charged-Off Accounts; provided,
however, that in the event any Account that is included in the Accounts
as of the Cut-Off Date is not selected before the beginning of the Due
Period preceding the Due Period related to the first Trust Distribution
Date, the
33
<PAGE> 34
Servicer may utilize a reasonable method of estimation to determine the
amount of the Finance Charge Receivables with respect to such Account for
the period beginning on the first day of such preceding Due Period and
ending on the date on which such Account is selected.
f. Delete the definition of "Receivable" on page 92 of the Prospectus and
substitute the following:
"Receivable" will mean any amounts owing by the Obligor under an
Account from time to time, including, without limitation, amounts owing
for the payment of goods and services, cash advances, finance charges and
other charges, if any. A Receivable will be deemed to have been created
at the end of the day on the Date of Processing of such Receivable. A
Receivable will not include any amount owing under a Charged-Off Account
or an Account the Receivables in which have been repurchased pursuant to
the Pooling and Servicing Agreement. Reference to a "receivable" will
include any amount owing by an Obligor under a Charged-Off Account or an
Account in which the Receivables have been repurchased pursuant to the
Pooling and Servicing Agreement.
g. Delete the definition of "Recovered Amounts" on page 92 of the
Prospectus and substitute the following:
"Recovered Amounts" will mean all amounts received with respect to
receivables that have previously been charged-off as uncollectible,
including without limitation all proceeds from sales of such receivables
by the Trust to third parties pursuant to the Pooling and Servicing
Agreement.
h. Delete the definition of "Series Available Principal Amount" on page 94
of the prospectus and replace with the following:
"Series Available Principal Amount" will mean, for any Distribution
Date, if a Group Principal Allocation Event has occurred, for each series
that is a member of Group One that is in its Controlled Liquidation
Period or Accumulation Period, as applicable, an amount calculated as
follows: for each such series, seriatim, beginning with the series with
the largest Series Investor Interest for such Distribution Date (and if
more than one series has the same Series Investor Interest on such
Distribution Date, beginning with whichever of such series has the
longest time remaining in its Controlled Liquidation Period or
Accumulation Period, as applicable (assuming that no Amortization Event
or Early Accumulation Event occurs with respect to such series)), an
amount equal to (x) the Group Available Principal Amount less (y) the
Series Required Principal Amount less the amount of such series'
Controlled Liquidation Amount or Controlled Accumulation Amount, as
applicable, that was funded on such Distribution Date (including any
portion of such amount that was funded by amounts withdrawn from the
applicable Group Principal Collections Reallocation Account pursuant to
the provisions of the Series Supplement with respect to such series).
For purposes of calculating the Series Available Principal Amount for
each other such series, the Group Available Principal Amount shall
34
<PAGE> 35
be reduced by the Series Available Principal Amount for the prior series
for which the Series Available Principal Amount was calculated.
16. GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES (ANNEX 1)
a. Delete the last sentence under the subheading "Exemption for non-U.S.
Holders (Form W-8)" on page 100 and substitute the following:
If the beneficial owner becomes a United States citizen or resident
during the period to which the statement relates, or certain other
changes in circumstances occur, such change must be communicated to the
appropriate party within 30 days thereof. Form W-8 is generally
effective for three calendar years, but a new certificate may be required
to be filed by the recipient each time a payment is made.
b. Delete the first and second paragraphs under the subheading "U.S.
Federal Income Tax Reporting Procedure" on page 100 and substitute the
following:
The Certificate Owner of a Global Security or, in the case of a Form
1001 or a Form 4224 filer, his or her agent, files by submitting the
appropriate form to the person through whom the Certificate Owner holds
(the clearing agency, in the case of persons holding directly on the
books of the clearing agency) an Investor Certificate.
Treasury Regulations issued on October 14, 1997, which will be
applicable to payments made after 1999 (with certain transition rules),
provide for the unification and simplification of certain current
certification procedures. Under these regulations, a Form W-8 will
replace Forms 1001 and 4224 and become the only form necessary to obtain
a withholding exemption or reduction for non-U.S. Holders. Further,
pursuant to these new regulations, special rules permit the shifting of
primary responsibility for withholding to certain financial
intermediaries acting on behalf of beneficial owners. Although a
beneficial owner will still be required to submit a Form W-8 to such an
intermediary, such intermediary generally will not be required to forward
the Form W-8 received from such beneficial owner to the withholding
agent. Both U.S. Holders and non-U.S. Holders are urged to consult their
own tax advisors with respect to these new regulations.
The term "U.S. Holder" means (i) a citizen or resident of the United
States, (ii) a corporation or partnership organized in or under the laws
of the United States or any state, (iii) an estate the income of which is
includible in gross income for United States tax purposes, regardless of
its source or (iv) a trust if a court within the United States is able to
exercise primary supervision over the administration of the trust, and
one or more United States persons have the authority to control all
substantial decisions of the trust (or, under certain circumstances, a
trust the income of which is subject to United States federal income
taxation regardless of its source).
35
<PAGE> 36
ANNEX A
OTHER SERIES
The table below sets forth the principal characteristics of the Class A
and Class B Credit Card Pass-Through Certificates of Series 1993-2, Series
1993-3, Series 1994-2, Series 1994-3, Series 1994-A, Series 1995-1, Series
1995-2, Series 1995-3, Series 1996-1, Series 1996-2, Series 1996-3, Series
1996-4, Series 1996-5, Series 1997-1, Series 1997-2, Series 1997-3, Series
1997-4, Series 1998-1, Series 1998-2, 1998-3 and 1998-4 the only series
heretofore issued by the Trust and currently outstanding. For more specific
information with respect to any series, any prospective investor should contact
the Servicer at (813) 288-3418. The Servicer will provide, without charge, to
any prospective purchaser of the Investor Certificates, a copy of the
Prospectus, Prospectus Supplement, if applicable, and Series Supplement
(without exhibits) for any publicly-issued series.
1. CLASS A AND CLASS B CREDIT CARD PASS-THROUGH CERTIFICATES, SERIES 1993-2
<TABLE>
<S> <C>
Group........................................................................One
Class A Initial Investor Interest...................................$800,000,000
Class B Initial Investor Interest...................................$ 33,334,000
Class A Certificate Rate.........................................5.40% per annum
Class B Certificate Rate.........................................5.75% per annum
Type......................................................Controlled Liquidation
Class A Controlled Liquidation Period...................Commencing June 15, 1998
Class B Controlled Liquidation Payment.............................June 15, 1999
Initial Credit Enhancement..........................................$ 29,166,690
Series Closing Date.............................................December 1, 1993
Series Termination Date........................................November 16, 2001
</TABLE>
Series 1993-2 provides for reallocation of Collections to other series in
Group One to the extent provided in the Series Supplements relating to such
other series.
2. CLASS A AND CLASS B CREDIT CARD PASS-THROUGH CERTIFICATES, SERIES 1993-3
<TABLE>
<S> <C>
Group........................................................................One
Class A Initial Investor Interest...................................$350,000,000
Class B Initial Investor Interest...................................$ 16,493,000
Class A Certificate Rate.........................................6.20% per annum
Class B Certificate Rate.........................................6.45% per annum
Type.............................................................Bullet Maturity
Class A Expected Final Payment.................................November 17, 2003
Class B Expected Final Payment................................December 15, 2003
Initial Credit Enhancement..........................................$ 14,659,720
Series Closing Date............................................November 23, 1993
</TABLE>
A-1
<PAGE> 37
<TABLE>
<S> <C>
Series Termination Date.............................................May 16, 2006
</TABLE>
Series 1993-3 provides for reallocation of Collections to other series in
Group One to the extent provided in the Series Supplements relating to such
other series.
3. CLASS A AND CLASS B CREDIT CARD PASS-THROUGH CERTIFICATES, SERIES 1994-2
<TABLE>
<S> <C>
Group........................................................................One
Class A Initial Investor Interest...................................$850,000,000
Class B Initial Investor Interest...................................$.44,737,000
Class A Certificate Rate...........................................Floating Rate
Class B Certificate Rate.........................................8.05% per annum
Type......................................................Controlled Liquidation
Class A Controlled Liquidation Period...................Commencing..May 15, 2001
Class B Controlled Liquidation Payment..............................May 15, 2002
Initial Credit Enhancement..........................................$.44,736,850
Series Closing Date.............................................October 14, 1994
Series Termination Date.........................................October 16, 2004
</TABLE>
Series 1994-2 provides for reallocation of Collections to other series in
Group One to the extent provided in the Series Supplements relating to such
other series.
4. CLASS A AND CLASS B CREDIT CARD PASS-THROUGH CERTIFICATES, SERIES 1994-3
<TABLE>
<S> <C>
Group........................................................................One
Class A Initial Investor Interest...................................$750,000,000
Class B Initial Investor Interest...................................$ 39,474,000
Class A Certificate Rate...........................................Floating Rate
Class B Certificate Rate.........................................7.75% per annum
Type.............................................................Bullet Maturity
Class A Expected Final Payment..................................October 15, 1999
Class B Expected Final Payment.................................October 15, 1999
Initial Credit Enhancement..........................................$ 39,473,700
Series Closing Date.............................................October 20, 1994
Series Termination Date...........................................April 16, 2002
</TABLE>
Series 1994-3 provides for reallocation of Collections to other series in
Group One to the extent provided in the Series Supplements relating to such
other series.
5. CREDIT CARD PASS-THROUGH CERTIFICATES, SERIES 1994-A
<TABLE>
<S> <C>
Group........................................................................Two
Class Investor Interest...........................................$2,550,000,000
Class Certificate Rate.............................................Floating Rate
Type......................................................Controlled Liquidation
Credit Enhancement................................................$ 204,000,000
</TABLE>
A-2
<PAGE> 38
<TABLE>
<S> <C>
Series Closing Date............................................December 20, 1994
Series Termination Date.............................................May 16, 2002
</TABLE>
Series 1994-A provides for reallocation of Collections to other series in
Group Two to the extent provided in the Series Supplements relating to such
other series.
6. CLASS A AND CLASS B CREDIT CARD PASS-THROUGH CERTIFICATES, SERIES 1995-1
<TABLE>
<S> <C>
Group........................................................................One
Class A Initial Investor Interest...................................$600,000,000
Class B Initial Investor Interest...................................$ 31,579,000
Class A Certificate Rate...........................................Floating Rate
Class B Certificate Rate...........................................Floating Rate
Type.............................................................Bullet Maturity
Class A Expected Final Payment...................................August 16, 2004
Class B Expected Final Payment................................September 15, 2004
Initial Credit Enhancement..........................................$ 37,894,740
Series Closing Date...............................................April 19, 1995
Series Termination Date........................................February 16, 2007
</TABLE>
Series 1995-1 provides for reallocation of Collections to other series in
Group One to the extent provided in the Series Supplements relating to such
other series.
7. CLASS A AND CLASS B CREDIT CARD PASS-THROUGH CERTIFICATES, SERIES 1995-2
<TABLE>
<S> <C>
Group........................................................................One
Class A Initial Investor Interest...................................$500,000,000
Class B Initial Investor Interest...................................$ 26,316,000
Class A Certificate Rate...................................................6.55%
Class B Certificate Rate...................................................6.75%
Type.............................................................Bullet Maturity
Class A Expected Final Payment Date..............................August 15, 2000
Class B Expected Final Payment Date...........................September 15, 2000
Initial Credit Enhancement..........................................$ 15,789,480
Series Closing Date...............................................August 1, 1995
Series Termination Date........................................February 18, 2003
</TABLE>
Series 1995-2 provides for reallocation of Collections to other series in
Group One to the extent provided in the Series Supplements relating to such
other series.
8. CLASS A AND CLASS B CREDIT CARD PASS-THROUGH CERTIFICATES, SERIES 1995-3
<TABLE>
<S> <C>
Group........................................................................One
Class A Initial Investor Interest...................................$500,000,000
Class B Initial Investor Interest...................................$ 26,316,000
Class A Certificate Rate...........................................Floating Rate
</TABLE>
A-3
<PAGE> 39
<TABLE>
<S> <C>
Class B Certificate Rate...........................................Floating Rate
Type ............................................................Bullet Maturity
Class A Expected Final Payment Date...........................September 16, 2002
Class B Expected Final Payment Date.............................October 15, 2002
Initial Credit Enhancement..........................................$ 31,578,960
Series Closing Date...........................................September 28, 1995
Series Termination Date...........................................March 16, 2005
</TABLE>
Series 1995-3 provides for reallocation of Collections to other series in
Group One to the extent provided in the Series Supplements relating to such
other series.
9. CLASS AND CLASS B CREDIT CARD PASS-THROUGH CERTIFICATES, SERIES 1996-1
<TABLE>
<S> <C>
Group........................................................................One
Class A Initial Investor Interest.................................$1,000,000,000
Class B Initial Investor Interest.................................$ 52,632,000
Class A Certificate Rate...........................................Floating Rate
Class B Certificate Rate...........................................Floating Rate
Type.............................................................Bullet Maturity
Class A Expected Final Payment Date.............................January 15, 2001
Class B Expected Final Payment Date............................February 15, 2001
Initial Credit Enhancement........................................$ 57,894,760
Series Closing Date.............................................January 18, 1996
Series Termination Date............................................July 16, 2003
</TABLE>
Series 1996-1 provides for reallocation of Collections to other series in
Group One to the extent provided in the Series Supplements relating to such
other series.
10. CLASS A AND CLASS B CREDIT CARD PASS-THROUGH CERTIFICATES, SERIES 1996-2
<TABLE>
<S> <C>
Group........................................................................One
Class A Initial Investor Interest...................................$900,000,000
Class B Initial Investor Interest...................................$ 47,369,000
Class A Certificate Rate...........................................Floating Rate
Class B Certificate Rate...........................................Floating Rate
Type.............................................................Bullet Maturity
Class A Expected Final Payment Date.............................January 15, 2003
Class B Expected Final Payment Date............................February 17, 2003
Initial Credit Enhancement..........................................$ 56,842,140
Series Closing Date..............................................January 29,1996
Series Termination Date............................................July 18, 2005
</TABLE>
Series 1996-2 provides for reallocation of Collections to other series in
Group One to the extent provided in the Series Supplements relating to such
other series.
A-4
<PAGE> 40
11. CLASS A AND CLASS B CREDIT CARD PASS-THROUGH CERTIFICATES, SERIES 1996-3
<TABLE>
<S> <C>
Group........................................................................One
Class A Initial Investor Interest...................................$600,000,000
Class B Initial Investor Interest...................................$ 31,579,000
Class A Certificate Rate...................................................6.05%
Class B Certificate Rate...................................................6.25%
Type.............................................................Bullet Maturity
Class A Expected Final Payment Date............................February 15, 2006
Class B Expected Final Payment Date...............................March 15, 2006
Initial Credit Enhancement..........................................$ 18,947,370
Series Closing Date............................................February 21, 1996
Series Termination Date..........................................August 18, 2008
</TABLE>
Series 1996-3 provides for reallocation of Collections to other series in
Group One to the extent provided in the Series Supplements relating to such
other series.
12. CLASS A AND CLASS B CREDIT CARD PASS-THROUGH CERTIFICATES, SERIES 1996-4
<TABLE>
<S> <C>
Group........................................................................One
Class A Initial Investor Interest.................................$1,000,000,000
Class B Initial Investor Interest.................................$ 52,632,000
Class A Certificate Rate...........................................Floating Rate
Class B Certificate Rate...........................................Floating Rate
Type.............................................................Bullet Maturity
Class A Expected Final Payment Date...............................April 15, 2011
Class B Expected Final Payment Date.................................May 16, 2011
Initial Credit Enhancement........................................$ 63,157,920
Series Closing Date...............................................April 30, 1996
Series Termination Date.........................................October 16, 2013
</TABLE>
Series 1996-4 provides for reallocation of Collections to other series in
Group One to the extent provided in the Series Supplements relating to such
other series.
13. CLASS A AND CLASS B CREDIT CARD PASS-THROUGH CERTIFICATES, SERIES 1996-5
<TABLE>
<S> <C>
Group........................................................................One
Class A Initial Investor Interest................$819,188,676 (DM 1,250,000,000)
Class B Initial Investor Interest....................................$43,116,000
Class A Certificate Rate...........................................Floating Rate
Class B Certificate Rate...........................................Floating Rate
Type.............................................................Bullet Maturity
Class A Expected Final Payment Date................................July 19, 1999
Class B Expected Final Payment Date..............................August 18, 1999
Initial Credit Enhancement...........................................$47,426,758
</TABLE>
A-5
<PAGE> 41
<TABLE>
<S> <C>
Series Closing Date................................................July 24, 1996
Series Termination Date.........................................January 18, 2002
</TABLE>
Series 1996-5 provides for reallocation of Collections to other series in
Group One to the extent provided in the Series Supplements relating to such
other series.
14. CLASS A AND CLASS B CREDIT CARD PASS-THROUGH CERTIFICATES, SERIES 1997-1
<TABLE>
<S> <C>
Group........................................................................One
Class A Initial Investor Interest...................................$750,000,000
Class B Initial Investor Interest...................................$ 39,474,000
Class A Certificate Rate...........................................Floating Rate
Class B Certificate Rate...........................................Floating Rate
Type.............................................................Bullet Maturity
Class A Expected Final Payment Date..............................August 15, 2002
Class B Expected Final Payment Date...........................September 16, 2002
Initial Credit Enhancement..........................................$ 59,210,550
Series Closing Date..............................................August 26, 1997
Series Termination Date........................................February 16, 2005
</TABLE>
Series 1997-1 provides for reallocation of Collections to other series in
Group One to the extent provided in the Series Supplements relating to such
other series.
15. CLASS A AND CLASS B CREDIT CARD PASS-THROUGH CERTIFICATES, SERIES 1997-2
<TABLE>
<S> <C>
Group........................................................................One
Class A Initial Investor Interest...................................$500,000,000
Class B Initial Investor Interest...................................$ 26,316,000
Class A Certificate Rate..................................................6.792%
Class B Certificate Rate...........................................Floating Rate
Type......................................................Controlled Liquidation
Class A Expected Final Payment Date.............................October 15, 2007
Class B Expected Final Payment Date............................November 15, 2007
Initial Credit Enhancement..........................................$ 21,052,640
Series Closing Date.............................................October 15, 1997
Series Termination Date...........................................April 16, 2010
</TABLE>
Series 1997-2 provides for reallocation of Collections to other series in
Group One to the extent provided in the Series Supplements relating to such
other series.
16. CLASS A AND CLASS B CREDIT CARD PASS-THROUGH CERTIFICATES, SERIES 1997-3
<TABLE>
<S> <C>
Group........................................................................One
Class A Initial Investor Interest...................................$650,000,000
Class B Initial Investor Interest...................................$ 34,211,000
Class A Certificate Rate...........................................Floating Rate
</TABLE>
A-6
<PAGE> 42
<TABLE>
<S> <C>
Class B Certificate Rate...........................................Floating Rate
Type.............................................................Bullet Maturity
Class A Expected Final Payment Date.............................October 15, 2004
Class B Expected Final Payment Date............................November 15, 2004
Initial Credit Enhancement..........................................$ 51,315,825
Series Closing Date.............................................October 23, 1997
Series Termination Date...........................................April 17, 2007
</TABLE>
Series 1997-3 provides for reallocation of Collections to other series in
Group One to the extent provided in the Series Supplements relating to such
other series.
17. CLASS A AND CLASS B CREDIT CARD PASS-THROUGH CERTIFICATES, SERIES 1997-4
<TABLE>
<S> <C>
Group........................................................................One
Class A Initial Investor Interest...................................$750,000,000
Class B Initial Investor Interest...................................$ 39,474,000
Class A Certificate Rate...........................................Floating Rate
Class B Certificate Rate...........................................Floating Rate
Type.............................................................Bullet Maturity
Class A Expected Final Payment Date.............................October 15, 2000
Class B Expected Final Payment Date............................November 15, 2000
Initial Credit Enhancement..........................................$ 59,210,550
Series Closing Date.............................................October 31, 1997
Series Termination Date...........................................April 16, 2003
</TABLE>
Series 1997-4 provides for reallocation of Collections to other series in
Group One to the extent provided in the Series Supplements relating to such
other series.
18. CLASS A AND CLASS B CREDIT CARD PASS-THROUGH CERTIFICATES, SERIES 1998-1
<TABLE>
<S> <C>
Group........................................................................One
Class A Initial Investor Interest...................................$350,000,000
Class B Initial Investor Interest...................................$ 18,422,000
Class A Certificate Rate...........................................Floating Rate
Class B Certificate Rate...........................................Floating Rate
Type.............................................................Bullet Maturity
Class A Expected Final Payment Date............................February 15, 2001
Class B Expected Final Payment Date...............................March 15, 2001
Initial Credit Enhancement..........................................$ 27,631,650
Series Closing Date.............................................January 14, 1998
Series Termination Date..........................................August 18, 2003
</TABLE>
Series 1998-1 provides for reallocation of Collections to other series in
Group One to the extent provided in the Series Supplements relating to such
other series.
A-7
<PAGE> 43
19. CLASS A AND CLASS B CREDIT CARD PASS-THROUGH CERTIFICATES, SERIES 1998-2
<TABLE>
<S> <C>
Group........................................................................One
Class A Initial Investor Interest...................................$500,000,000
Class B Initial Investor Interest...................................$ 26,316,000
Class A Certificate Rate...................................................5.80%
Class B Certificate Rate...................................................5.95%
Type.............................................................Bullet Maturity
Class A Expected Final Payment Date...............................March 15, 2001
Class B Expected Final Payment Date...............................April 15, 2001
Initial Credit Enhancement..........................................$ 21,052,640
Series Closing Date................................................March 4, 1998
Series Termination Date.......................................September 16, 2003
</TABLE>
Series 1998-2 provides for reallocation of Collections to other series in
Group One to the extent provided in the Series Supplements relating to such
other series.
20. CLASS A AND CLASS B CREDIT CARD PASS-THROUGH CERTIFICATES, SERIES 1998-3
<TABLE>
<S> <C>
Group........................................................................One
Class A Initial Investor Interest...................................$750,000,000
Class B Initial Investor Interest...................................$ 39,474,000
Class A Certificate Rate...........................................Floating Rate
Class B Certificate Rate...........................................Floating Rate
Type.............................................................Bullet Maturity
Class A Expected Final Payment Date...............................March 15, 2003
Class B Expected Final Payment Date...............................April 15, 2003
Initial Credit Enhancement..........................................$ 59,210,550
Series Closing Date...............................................March 25, 1998
Series Termination Date.......................................September 16, 2005
</TABLE>
Series 1998-3 provides for reallocation of Collections to other series in
Group One to the extent provided in the Series Supplements relating to such
other series.
21. CLASS A AND CLASS B CREDIT CARD PASS-THROUGH CERTIFICATES, SERIES 1998-4
<TABLE>
<S> <C>
Group........................................................................One
Class A Initial Investor Interest...................................$500,000,000
Class B Initial Investor Interest...................................$ 26,316,000
Class A Certificate Rate...................................................5.75%
Class B Certificate Rate...................................................5.90%
Type.............................................................Bullet Maturity
Class A Expected Final Payment Date...............................April 15, 2001
Class B Expected Final Payment Date.................................May 15, 2001
Initial Credit Enhancement..........................................$ 21,052,640
</TABLE>
<FF>
A-8
<PAGE> 44
<TABLE>
<S> <C>
Series Closing Date................................................April 9, 1998
Series Termination Date........................................October 16, 2003
</TABLE>
Series 1998-4 provides for reallocation of Collections to other series in
Group One to the extent provided in the Series Supplements relating to such
other series.
A-9
