<PAGE> 1
PROSPECTUS SUPPLEMENT Filed Pursuant to Rule 424(b)(5)
(TO PROSPECTUS DATED JUNE 20, 1996) Registration No. 333-2878
$930,000,000
AT&T UNIVERSAL CARD MASTER TRUST
$850,000,000 CLASS A SERIES 1996-2 FLOATING RATE ASSET BACKED CERTIFICATES
$80,000,000 CLASS B SERIES 1996-2 FLOATING RATE ASSET BACKED CERTIFICATES
AT&T UNIVERSAL FUNDING CORP.
TRANSFEROR
AT&T UNIVERSAL CARD SERVICES CORP.
SERVICER
---------------------------
The Class A Series 1996-2 Floating Rate Asset Backed Certificates (the
"Class A Certificates") and the Class B Series 1996-2 Floating Rate Asset Backed
Certificates (the "Class B Certificates" and, together with the Class A
Certificates, the "Series 1996-2 Certificates") offered hereby will represent
undivided interests in certain assets of the AT&T Universal Card Master Trust
(the "Trust") created pursuant to a Pooling and Servicing Agreement (the
"Pooling and Servicing Agreement") among AT&T Universal Funding Corp. ("AT&T
Universal Funding"), as transferor (in such capacity, the "Transferor"), AT&T
Universal Card Services Corp. ("UCS"), as servicer (in such capacity, the
"Servicer"), and Bankers Trust Company, as trustee (the "Trustee"). The property
of the Trust includes the Transferor's ownership interest in receivables (such
interest in receivables, the "Receivables") generated from time to time in a
portfolio of MasterCard(R) and VISA(R) revolving credit card accounts (the
"Accounts") owned by Universal Bank, N.A. ("Universal Bank") and Columbus Bank &
Trust Company ("CB&T"), collections thereon and certain other property as more
fully described herein. In addition, the Collateral Interest (as defined herein)
will be issued in the initial amount of $70,000,000 and will be subordinated to
the Series 1996-2 Certificates as described herein. The Transferor initially
will own the remaining undivided interest in the Trust not represented by the
Series 1996-2 Certificates and the other investor certificates or interests
issued by the Trust.
(continued on next page)
THERE CURRENTLY IS NO SECONDARY MARKET FOR THE SERIES 1996-2 CERTIFICATES,
AND THERE IS NO ASSURANCE THAT ONE WILL DEVELOP OR, IF ONE DOES DEVELOP, THAT IT
WILL CONTINUE UNTIL THE SERIES 1996-2 CERTIFICATES ARE PAID IN FULL. POTENTIAL
INVESTORS SHOULD CONSIDER, AMONG OTHER THINGS, THE INFORMATION SET FORTH IN
"RISK FACTORS" COMMENCING ON PAGE S-14 HEREIN AND ON PAGE 17 IN THE PROSPECTUS.
THE SERIES 1996-2 CERTIFICATES REPRESENT BENEFICIAL INTERESTS IN THE TRUST ONLY
AND WILL NOT REPRESENT INTERESTS IN OR OBLIGATIONS OF THE TRANSFEROR,
UNIVERSAL BANK, CB&T, UCS, AT&T CORP., THE SERVICER OR ANY
AFFILIATE OF ANY THEREOF. NEITHER THE SERIES 1996-2
CERTIFICATES NOR THE UNDERLYING ACCOUNTS OR
RECEIVABLES ARE INSURED OR GUARANTEED BY
THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS SUPPLEMENT. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO THE
PUBLIC(1) DISCOUNT TRANSFEROR(1)(2)
------------- ------------- -----------------
<S> <C> <C> <C>
Per Class A Certificate...................................... 100% .225% 99.775%
Per Class B Certificate...................................... 100% .275% 99.725%
Total........................................................ $930,000,000 $2,132,500 $927,867,500
</TABLE>
- ---------------
(1) Plus accrued interest, if any, at the Class A Certificate Rate or Class B
Certificate Rate, as applicable, from June 27, 1996.
(2) Before deduction of expenses payable by the Transferor, estimated to be
$800,000.
The Series 1996-2 Certificates are offered by the Underwriters when, as and
if issued by the Trust and accepted by the Underwriters and subject to the
Underwriters' right to reject orders in whole or in part. It is expected that
the Series 1996-2 Certificates will be delivered in book-entry form on or about
June 27, 1996, through the facilities of The Depository Trust Company, Cedel
Bank, societe anonyme and the Euroclear System.
---------------------------
UNDERWRITERS OF THE CLASS A CERTIFICATES
LEHMAN BROTHERS
BEAR, STEARNS & CO. INC.
MERRILL LYNCH & CO.
MORGAN STANLEY & CO.
INCORPORATED
SALOMON BROTHERS INC
UNDERWRITERS OF THE CLASS B CERTIFICATES
LEHMAN BROTHERS MERRILL LYNCH & CO.
June 24, 1996.
<PAGE> 2
(continued from previous page)
The Transferor has offered and may offer from time to time other series of
certificates that evidence undivided interests in certain assets of the Trust,
which may have terms significantly different from the Series 1996-2 Certificates
and which are not offered hereby. The issuance of additional series of
certificates may impact the timing or amount of payments received by holders of
the Series 1996-2 Certificates.
Interest will accrue on the Class A Certificates from June 27, 1996 (the
"Closing Date") to and excluding October 17, 1996 and with respect to each
Interest Period thereafter at the rate of .07% per annum above the London
interbank offered quotations rate ("LIBOR") for three-month United States dollar
deposits (or, in certain limited circumstances described herein, one-month
United States dollar deposits) prevailing on the related LIBOR Determination
Date (defined herein) determined as described herein (the "Class A Certificate
Rate"). Interest will accrue on the Class B Certificates from the Closing Date
to and excluding October 17, 1996 and with respect to each subsequent Interest
Period at the rate of .21% per annum above LIBOR for three-month United States
dollar deposits (or, in certain limited circumstances described herein,
one-month United States dollar deposits) prevailing on the related LIBOR
Determination Date determined as described herein (the "Class B Certificate
Rate"). Interest with respect to the Series 1996-2 Certificates will be
distributed quarterly on the 17th day of October, January, April and July (or,
if such 17th day is not a business day, the next business day) and on the
Expected Final Payment Date (defined herein) (each, an "Interest Payment Date")
commencing on the October 1996 Distribution Date and ending on the related
maturity date or, under certain limited circumstances described herein and in
the Prospectus, monthly on or about the 17th day of each calendar month.
Principal with respect to the Class A Certificates and the Class B
Certificates is scheduled to be distributed on the June 1999 Distribution Date,
but may be paid earlier or later under certain limited circumstances described
herein. See "Maturity Considerations" and "Series Provisions -- Pay Out Events"
herein and "Description of the Certificates -- Pay Out Events and Reinvestment
Events" in the Prospectus. Principal payments will not be made to Class B
Certificateholders until the final principal payment has been made in respect of
the Class A Certificates. See "Series Provisions -- Principal Payments."
Application will be made to list the Series 1996-2 Certificates on the
Luxembourg Stock Exchange.
------------------------
THE FRACTIONAL UNDIVIDED INTEREST IN THE TRUST REPRESENTED BY THE CLASS B
CERTIFICATES WILL BE SUBORDINATED TO THE EXTENT NECESSARY TO FUND PAYMENTS WITH
RESPECT TO THE CLASS A CERTIFICATES TO THE EXTENT DESCRIBED HEREIN.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES 1996-2
CERTIFICATES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
------------------------
THE SERIES 1996-2 CERTIFICATES OFFERED HEREBY CONSTITUTE A SEPARATE SERIES
OF INVESTOR CERTIFICATES BEING OFFERED BY THE TRUST FROM TIME TO TIME PURSUANT
TO A PROSPECTUS DATED JUNE 20, 1996. THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN
COMPLETE INFORMATION ABOUT THE OFFERING OF THE SERIES 1996-2 CERTIFICATES.
ADDITIONAL INFORMATION IS CONTAINED IN THE PROSPECTUS AND PURCHASERS ARE URGED
TO READ BOTH THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS IN FULL. SALES OF THE
SERIES 1996-2 CERTIFICATES MAY NOT BE CONSUMMATED UNLESS THE PURCHASER HAS
RECEIVED BOTH THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS.
S-2
<PAGE> 3
SUMMARY OF SERIES TERMS
The following is qualified in its entirety by reference to the detailed
information appearing elsewhere in this Prospectus Supplement and the
accompanying Prospectus. Reference is made to the Index of Defined Terms in this
Prospectus Supplement and the Prospectus for the location herein and therein of
the definitions of certain capitalized terms used herein. Certain capitalized
terms used but not defined herein have the meanings assigned to them in the
Prospectus.
TRUST......................... AT&T Universal Card Master Trust (the
"Trust").
TITLE OF SECURITIES........... $850,000,000 Class A Series 1996-2 Floating
Rate Asset Backed Certificates (the "Class A
Certificates") and $80,000,000 Class B Series
1996-2 Floating Rate Asset Backed
Certificates (the "Class B Certificates" and,
together with the Class A Certificates, the
"Series 1996-2 Certificates").
INITIAL INVESTED AMOUNT....... $1,000,000,000 (the "Initial Invested
Amount").
CLASS A INITIAL INVESTED
AMOUNT........................ $850,000,000 (the "Class A Initial Invested
Amount").
CLASS B INITIAL INVESTED
AMOUNT........................ $80,000,000 (the "Class B Initial Invested
Amount").
COLLATERAL INITIAL INVESTED
AMOUNT........................ $70,000,000 (the "Collateral Initial Invested
Amount").
SERIES REQUIRED TRANSFEROR
AMOUNT........................ For any date, 7% of the Invested Amount (the
"Series Required Transferor Amount").
CLASS A CERTIFICATE RATE...... The Class A Certificate Rate for an Interest
Period will be a rate per annum equal to
LIBOR for United States dollar deposits for a
period of three months (or, following the
occurrence of a Pay Out Event, for a period
of one month), determined as of the LIBOR
Determination Date as described herein, plus
.07%.
CLASS B CERTIFICATE RATE...... The Class B Certificate Rate for an Interest
Period will be a rate per annum equal to
LIBOR for United States dollar deposits for a
period of three months (or, following the
occurrence of a Pay Out Event, for a period
of one month), determined as of the LIBOR
Determination Date as described herein, plus
.21%.
INTEREST PAYMENT DATES........ The 17th day of October, January, April and
July (or, if any such day is not a business
day, the next succeeding business day) and on
the Expected Final Payment Date, commencing
on the October 1996 Distribution Date.
CONTROLLED ACCUMULATION
AMOUNT........................ For each Distribution Date with respect to the
Controlled Accumulation Period, $77,500,000;
except that, if the commencement of the
Controlled Accumulation Period is delayed as
described herein under "Series
Provisions -- Principal Payments," the
Controlled Accumulation Amount for each
Distribution Date with respect to the
Controlled Accumulation Period will be
determined as described under "Series
Provisions -- Application of
Collections -- Payments of Principal."
EXPECTED FINAL PAYMENT DATE... The June 1999 Distribution Date.
CLOSING DATE.................. June 27, 1996 (the "Closing Date").
SERIES INVESTED AMOUNT........ The Initial Invested Amount.
S-3
<PAGE> 4
THE SERIES 1996-2
CERTIFICATES;
THE COLLATERAL INTEREST..... Each of the Series 1996-2 Certificates offered
hereby represents an undivided interest in
the Trust. The portion of the Trust Assets
allocated to Series 1996-2 as described under
"The Pooling and Servicing Agreement
Generally -- Allocations" in the Prospectus
will be further allocated among the interest
of the holders of the Class A Certificates
(the "Class A Certificateholders' Interest"),
the interest of the holders of the Class B
Certificates (the "Class B
Certificateholders' Interest") and the
interest of the Collateral Interest Holder
(as defined below), and the interest of the
holders of the Transferor Certificates (the
"Transferor's Interest"), as described below.
The Class A Certificateholders' Interest and
the Class B Certificateholders' Interest are
sometimes collectively referred to herein as
the "Series 1996-2 Certificateholders'
Interest." A specified undivided interest in
the Trust Assets (the "Collateral Interest")
in the initial amount of $70,000,000 (which
amount represents 7% of the sum of the Class
A Initial Invested Amount, the Class B
Initial Invested Amount and the Collateral
Initial Invested Amount) constitutes Credit
Enhancement for the Series 1996-2
Certificates. The provider of such Credit
Enhancement is referred to herein as the
"Collateral Interest Holder." Allocations
will be made to the Collateral Interest and
the Collateral Interest Holder will have
voting and certain other rights as if the
Collateral Interest were a subordinated class
of Series 1996-2 Certificates. For purposes
of this Prospectus Supplement, the
"Collateral Interest" shall be deemed to be
the "Enhancement Invested Amount" for the
Series 1996-2 Certificates for all purposes
under the Prospectus. The Transferor's
Interest will represent the right to the
assets of the Trust not allocated to the
Class A Certificateholders' Interest, the
Class B Certificateholders' Interest, the
Collateral Interest or the holders of other
undivided interests in the Trust. The
principal amount of the Transferor's Interest
will fluctuate as the amount of Receivables
in the Trust changes from time to time.
The aggregate amount of Principal Receivables
allocated to the Series 1996-2
Certificateholders' Interest and the
Collateral Interest (the "Invested Amount")
will be $1,000,000,000 on the Closing Date
(the "Initial Invested Amount").
The aggregate amount of Principal Receivables
allocable to the Class A Certificateholders'
Interest (as more fully defined herein, the
"Class A Invested Amount") will be
$850,000,000 on the Closing Date (the "Class
A Initial Invested Amount"). The aggregate
amount of Principal Receivables allocable to
the Class B Certificateholders' Interest (as
more fully defined herein, the "Class B
Invested Amount") will be $80,000,000 on the
Closing Date (the "Class B Initial Invested
Amount"). The aggregate amount of Principal
Receivables allocable to the Collateral
Interest (as more fully defined herein, the
"Collateral Invested Amount") will be
$70,000,000 on the Closing Date (the
"Collateral Initial Invested Amount"). The
Class B Certificateholders' Interest will
decline in certain circumstances as
S-4
<PAGE> 5
a result of (a) the allocation to the Class B
Certificateholders' Interest of certain
Defaulted Amounts, including such amounts
otherwise allocable to the Class A
Certificateholders' Interest when the
Collateral Interest is zero, and (b) the
reallocation of collections of Principal
Receivables otherwise allocable to the Class
B Certificateholders' Interest to fund
certain payments in respect of the Class A
Certificates. Any such reductions in the
Class B Certificateholders' Interest may be
reimbursed out of Excess Spread, if any,
Excess Finance Charge Collections allocable
to Series 1996-2, if any, and the
reallocation of certain amounts allocable to
the Collateral Interest as described herein.
During the Controlled Accumulation Period,
for the purpose of allocating collections of
Finance Charge Receivables and the Defaulted
Amount with respect to each Monthly Period,
the Class A Certificateholders' Interest will
be further reduced (in an amount not to
exceed the Class A Invested Amount) by the
amount on deposit in the Principal Funding
Account (as so reduced, the "Class A Adjusted
Invested Amount") and the Class B
Certificateholders' Interest will be further
reduced by the amount by which the amount on
deposit in the Principal Funding Account
exceeds the Class A Invested Amount (as so
reduced, the "Class B Adjusted Invested
Amount," and, together with the Class A
Adjusted Invested Amount and the Collateral
Invested Amount, the "Adjusted Invested
Amount"). The principal amount of the
Transferor's Interest will fluctuate as the
amount of Principal Receivables in the Trust,
the adjusted invested amount of each Series
and the amounts on deposit in the Special
Funding Account change from time to time.
The Class A Certificates, the Class B
Certificates and the Collateral Interest will
each include the right to receive (but only
to the extent needed to make payments of
interest on each Interest Payment Date at the
applicable certificate rate and payments of
principal and subject to any reallocation of
such amounts as described herein), varying
percentages of the collections of Finance
Charge Receivables and Principal Receivables
and will be allocated varying percentages of
the Defaulted Amount with respect to each
Monthly Period. Collections of Finance Charge
Receivables and Principal Receivables and the
Defaulted Amount will be allocated to Series
1996-2 based on the Series Allocation
Percentage for Series 1996-2 (subject to
reallocation, in the case of certain Series
Allocable Finance Charge Collections, to
other Series in Group I as described under
"The Pooling and Servicing Agreement
Generally -- Reallocations Among Certificates
of Different Series within a Reallocation
Group" in the Prospectus). Reallocated
Investor Finance Charge Collections and the
Investor Default Amount will be further
allocated to the holders of the Class A
Certificates and the holders of the Class B
Certificates and the Collateral Interest
based on the Class A Floating Percentage and
the Class B Floating Percentage and the
Collateral Floating Percentage, respectively
(each defined herein). The Principal Allo-
S-5
<PAGE> 6
cation Percentage of Series Allocable
Principal Collections will be allocated to
the holders of the Class A Certificates, the
Class B Certificates and the Collateral
Interest based on the Class A Principal
Percentage, the Class B Principal Percentage
and the Collateral Principal Percentage,
respectively (each defined herein).
OTHER SERIES.................. The Series 1996-2 Certificates will be the
seventh Series of investor certificates
issued by the Trust, all of which will be
outstanding on the Closing Date. See "Annex
I -- Other Series" for a summary of the
principal terms of the six outstanding Series
of investor certificates. Additional Series
are expected to be issued from time to time
by the Trust. See "The Pooling and Servicing
Agreement Generally -- New Issuances" and
"-- Reallocations Among Certificates of
Different Series within a Reallocation Group"
in the Prospectus and "Maturity
Considerations" herein.
RECEIVABLES................... The Receivables arise in Accounts that have
been selected from the AT&T Universal
Portfolio, based on criteria provided in the
Pooling and Servicing Agreement as applied on
the Initial Cut-Off Date and as more fully
described herein under "The AT&T Universal
Portfolio." The aggregate amount of
Receivables in the Accounts as of May 31,
1996 was $6,820,465,902, (which amount
includes Receivables in Additional Accounts
conveyed to the Trust on June 20, 1996, but
excludes Calling Card Calls and the Account
Owner Retained Interest) comprised of
$6,733,753,422 of Principal Receivables and
$86,712,480 of Finance Charge Receivables.
DENOMINATIONS................. Beneficial interests in the Series 1996-2
Certificates will be offered for purchase in
denominations of $1,000 and integral
multiples thereof.
REGISTRATION OF SERIES 1996-2
CERTIFICATES................ The Series 1996-2 Certificates initially will
be represented by Series 1996-2 Certificates
registered in the name of Cede, as the
nominee of DTC. No purchaser of a Series
1996-2 Certificate will be entitled to
receive a definitive certificate except under
certain limited circumstances described in
the Prospectus. Purchasers of the Series
1996-2 Certificates may elect to hold their
Series 1996-2 Certificates through DTC (in
the United States) or Cedel or Euroclear (in
Europe). See "Description of the
Certificates -- Definitive Certificates" in
the Prospectus.
SERVICING FEE................. The Servicing Fee Rate for the Series 1996-2
Certificates will be 2.0% per annum. The
Class A Servicing Fee, the Class B Servicing
Fee and the Collateral Interest Servicing Fee
will be paid on each Distribution Date as
described under "Series
Provisions -- Application of
Collections -- Payment of Fees, Interest and
Other Items" and "-- Servicing Compensation
and Payment of Expenses" herein. See
"Description of the Certificates -- Servicing
Compensation and Payment of Expenses" in the
Prospectus.
S-6
<PAGE> 7
REVOLVING PERIOD AND
CONTROLLED
ACCUMULATION PERIOD......... The "Revolving Period" with respect to the
Series 1996-2 Certificates means the period
from and excluding May 31, 1996 (the "Series
1996-2 Cut-Off Date"), to, but not including,
the earlier of (a) the commencement of the
controlled accumulation period with respect
to the Series 1996-2 Certificates (the
"Controlled Accumulation Period") and (b) the
commencement of the Early Amortization
Period. Unless a Pay Out Event has occurred,
the Controlled Accumulation Period will
commence at the close of business on May 31,
1998; provided, that subject to the
conditions set forth under "Series
Provisions -- Principal Payments" herein, the
day on which the Revolving Period ends and
the Controlled Accumulation Period begins may
be delayed to no later than the close of
business on April 30, 1999. The Controlled
Accumulation Period will end on the earliest
of (a) the commencement of the Early
Amortization Period, (b) the payment in full
of the Invested Amount and (c) the Series
Termination Date for Series 1996-2 (the
"Series 1996-2 Termination Date"). No
principal will be payable to Class A
Certificateholders until the June 1999
Distribution Date (the "Expected Final
Payment Date"), or, upon the occurrence of a
Pay Out Event as described herein, the first
Distribution Date with respect to the Early
Amortization Period. No principal will be
payable to the Class B Certificateholders
until the Class A Invested Amount is paid in
full. No principal will be payable to the
Collateral Interest Holder until the Class B
Invested Amount is paid in full; provided,
that during the Revolving Period or the
Controlled Accumulation Period, certain
collections of Principal Receivables
allocable to the Series 1996-2
Certificateholders' Interest and the
Collateral Interest will be paid to the
Collateral Interest Holder to the extent the
Collateral Invested Amount exceeds the
Required Collateral Invested Amount. For the
period beginning on the Closing Date and
ending with the commencement of the
Controlled Accumulation Period or the Early
Amortization Period, collections of Principal
Receivables otherwise allocable to the Series
1996-2 Certificateholders' Interest and the
Collateral Interest (other than collections
of Principal Receivables allocated to the
Class B Certificateholders' Interest and the
Collateral Interest ("Reallocated Principal
Collections") that are used to pay any
deficiency in the Class A Required Amount or
Class B Required Amount) will, subject to
certain limitations, be treated as Shared
Principal Collections and applied to cover
principal payments due to or for the benefit
of Certificateholders of other Principal
Sharing Series, or paid to the holders of the
Transferor Certificates or, in certain
circumstances, deposited in the Special
Funding Account. See "Series
Provisions -- Pay Out Events" herein and
"Description of the Certificates -- Pay Out
Events and Reinvestment Events" in the
Prospectus for a discussion of the events
which might lead to the termination of the
Revolving Period prior to the commencement of
the Controlled Accumulation Period. In
addition, see "Series Provisions -- Principal
Payments" herein and "The Pooling and
S-7
<PAGE> 8
Servicing Agreement Generally -- Shared
Principal Collections" in the Prospectus.
EARLY AMORTIZATION PERIOD..... During the period from the day on which a Pay
Out Event has occurred and ending on the
earlier of (a) the payment of the Invested
Amount in full and (b) the Series 1996-2
Termination Date (the "Early Amortization
Period"), Available Principal Collections (as
defined herein) will be distributed monthly
on each Distribution Date to the holders of
the Class A Certificates and, following
payment in full of the Class A Invested
Amount, to the holders of the Class B
Certificates and, following payment in full
of the Class B Invested Amount, to the
Collateral Interest Holder beginning with the
Distribution Date in the month following the
commencement of the Early Amortization
Period. See "Series Provisions -- Pay Out
Events" herein and "Description of the
Certificates -- Pay Out Events and
Reinvestment Events" in the Prospectus for a
discussion of the events which might lead to
the commencement of the Early Amortization
Period.
SUBORDINATION OF THE CLASS B
CERTIFICATES AND THE
COLLATERAL INTEREST......... The Class B Certificates and the Collateral
Interest will be subordinated, as described
herein, to the extent necessary to fund
payments with respect to the Class A
Certificates as described herein. In
addition, the Collateral Interest will be
subordinated to the extent necessary to fund
certain payments with respect to the Class B
Certificates. If the Collateral Interest is
reduced to zero, holders of the Class B
Certificates will bear directly the credit
and other risks associated with their
interest in the Trust. To the extent the
Class B Invested Amount is reduced, the
percentage of collections of Finance Charge
Receivables allocable to holders of the Class
B Certificates in subsequent Monthly Periods
will be reduced. Moreover, to the extent the
amount of such reduction in the Class B
Invested Amount is not reimbursed, the amount
of principal distributable to holders of the
Class B Certificates will be reduced. Such
reductions of the Class B Invested Amount
will thereafter be reimbursed and the Class B
Invested Amount increased on each
Distribution Date by the amount, if any, of
Excess Spread and Excess Finance Charge
Collections allocable to Series 1996-2 for
such Distribution Date available for that
purpose. See "The Pooling and Servicing
Agreement Generally -- Credit
Enhancement -- Subordination" in the
Prospectus.
ADDITIONAL AMOUNTS AVAILABLE
TO CERTIFICATEHOLDERS......... With respect to any Distribution Date, Excess
Spread and Excess Finance Charge Collections
allocable to Series 1996-2 will be applied to
fund the Class A Required Amount and the
Class B Required Amount, if any, as well as
certain other items. The "Class A Required
Amount" means with respect to any
Distribution Date the amount, if any, by
which the sum of (a) the Class A Monthly
Interest due on such Distribution Date and
S-8
<PAGE> 9
any overdue Class A Monthly Interest and
Class A Additional Interest thereon, (b) if
UCS or an affiliate of UCS is no longer the
Servicer, the Class A Servicing Fee for the
related Monthly Period and any overdue Class
A Servicing Fee and (c) the Class A Investor
Default Amount, if any, for the related
Monthly Period exceeds the Class A Available
Funds for the related Monthly Period. The
"Class B Required Amount" means the amount
equal to the sum of (a) the amount, if any,
by which the sum of (i) Class B Monthly
Interest due on the related Distribution Date
and any overdue Class B Monthly Interest and
Class B Additional Interest thereon and (ii)
if UCS or an affiliate of UCS is no longer
the Servicer, the Class B Servicing Fee for
the related Monthly Period and any overdue
Class B Servicing Fee exceeds the Class B
Available Funds for the related Monthly
Period and (b) the Class B Investor Default
Amount, if any, for the related Monthly
Period. The "Required Amount" for any Monthly
Period shall mean the sum of (a) the Class A
Required Amount and (b) the Class B Required
Amount for such Monthly Period. "Excess
Spread" for any Transfer Date will equal the
sum of (a) the excess of (i) Class A
Available Funds for the related Monthly
Period over (ii) the sum of the amounts
referred to in clauses (a), (b) and (c) in
the definition of "Class A Required Amount"
above and (b) the excess of (i) Class B
Available Funds for the related Monthly
Period over (ii) the sum of the amounts
referred to in clauses (a)(i) and (ii) in the
definition of "Class B Required Amount" above
and (c) Collateral Available Funds (defined
herein) for the related Monthly Period not
used, if UCS or an affiliate of UCS is no
longer the Servicer, to pay the Collateral
Interest Servicing Fee, as described herein.
If, on any Distribution Date, Excess Spread
and Excess Finance Charge Collections
allocable to Series 1996-2 are less than the
Class A Required Amount, Reallocated
Principal Collections allocable first to the
Collateral Interest and then to the Class B
Certificateholders' Interest with respect to
the related Monthly Period will be used to
fund the remaining Class A Required Amount.
If Reallocated Principal Collections with
respect to such Monthly Period are
insufficient to fund the remaining Class A
Required Amount for the related Distribution
Date, then the Collateral Invested Amount
(after giving effect to reductions for any
Collateral Charge-Offs (defined herein) and
Reallocated Principal Collections on such
Distribution Date) will be reduced by the
amount of such deficiency (but not by more
than the Class A Investor Default Amount for
such Monthly Period). In the event that such
reduction would cause the Collateral Invested
Amount to be a negative number, the
Collateral Invested Amount will be reduced to
zero, and the Class B Invested Amount (after
giving effect to reductions for any Class B
Investor Charge-Offs (defined below) and any
Reallocated Class B Principal Collections on
such Distribution Date) will be reduced by
the amount by which the Collateral
S-9
<PAGE> 10
Invested Amount would have been reduced below
zero (but not by more than the excess of the
Class A Investor Default Amount, if any, for
such Monthly Period over the amount of such
reduction, if any, of the Collateral Invested
Amount with respect to such Monthly Period).
In the event that such reduction would cause
the Class B Invested Amount to be a negative
number, the Class B Invested Amount will be
reduced to zero and the Class A Invested
Amount will be reduced by the amount by which
the Class B Invested Amount would have been
reduced below zero (but not by more than the
excess, if any, of the Class A Investor
Default Amount for such Monthly Period over
such reductions in the Collateral Invested
Amount and the Class B Invested Amount with
respect to such Monthly Period) (such
reduction, a "Class A Investor Charge-Off").
If the Collateral Invested Amount and the
Class B Invested Amount are reduced to zero,
the Class A Certificateholders will bear
directly the credit and other risks
associated with their undivided interest in
the Trust. See "Series
Provisions -- Reallocation of Cash Flows" and
"-- Defaulted Receivables; Investor
Charge-Offs."
If, on any Distribution Date, Excess Spread
and Excess Finance Charge Collections
allocated to Series 1996-2 not required to
pay the Class A Required Amount or reimburse
Class A Investor Charge-Offs is less than the
Class B Required Amount, Reallocated
Principal Collections allocable to the
Collateral Interest for the related Monthly
Period not required to pay the Class A
Required Amount will be used to fund the
remaining Class B Required Amount. If such
remaining Reallocated Principal Collections
allocable to the Collateral Interest with
respect to such Monthly Period are
insufficient to fund the remaining Class B
Required Amount for such Distribution Date,
then the Collateral Invested Amount (after
giving effect to reductions for any
Collateral Charge-Offs, Reallocated Principal
Collections and any adjustments made thereto
for the benefit of the Class A
Certificateholders) will be reduced by the
amount of such deficiency (but not by more
than the Class B Investor Default Amount for
such Monthly Period). In the event that such
reduction would cause the Collateral Invested
Amount to be a negative number, the
Collateral Invested Amount will be reduced to
zero, and the Class B Invested Amount will be
reduced by the amount by which the Collateral
Invested Amount would have been reduced below
zero (but not by more than the excess, if
any, of the Class B Investor Default Amount
for such Monthly Period over such reduction
in the Collateral Invested Amount with
respect to such Monthly Period) (such
reduction, a "Class B Investor Charge-Off").
In the event of a reduction of the Class A
Invested Amount, the Class B Invested Amount
or the Collateral Invested Amount, the amount
of principal and interest available to fund
payments with respect to the Class A
Certificates and the Class B Certificates
will be decreased. See "Description of the
Certifi-
S-10
<PAGE> 11
cates -- Reallocation of Cash Flows" and
"-- Defaulted Receivables; Investor
Charge-Offs."
REQUIRED COLLATERAL INVESTED
AMOUNT........................ The "Required Collateral Invested Amount" with
respect to any Distribution Date means (i)
initially $70,000,000 and (ii) thereafter on
each Distribution Date an amount equal to 7%
of the sum of the Class A Adjusted Invested
Amount on such Distribution Date, the Class B
Adjusted Invested Amount on such Distribution
Date (in each case after taking into account
distributions and deposits to be made on such
Distribution Date) and the Collateral
Invested Amount on the prior Distribution
Date (after any adjustments made on such
prior Distribution Date), but not less than
$30,000,000; provided, however, that (1) if
certain reductions in the Collateral Invested
Amount are made or if a Pay Out Event occurs,
the Required Collateral Invested Amount for
such Distribution Date shall equal the
Required Collateral Invested Amount for the
Distribution Date immediately preceding the
occurrence of such reduction or Pay Out
Event, (2) in no event shall the Required
Collateral Invested Amount exceed the unpaid
principal amount of the Series 1996-2
Certificates as of the last day of the
Monthly Period preceding such Distribution
Date and (3) the Required Collateral Invested
Amount may be reduced to a lesser amount at
any time if the Rating Agency Condition is
satisfied.
REALLOCATED INVESTOR
FINANCE CHARGE
COLLECTIONS................. The Series 1996-2 Certificates will be the
fourth Series issued by the Trust in a Group
of Series ("Group I"), constituting a
Reallocation Group, which may be issued by
the Trust from time to time. The Series
1995-1 Certificates, the Series 1995-3
Certificates and the Series 1996-1 are the
other Series issued by the Trust in Group I.
Collections of Finance Charge Receivables
allocable to the investor certificates of
each Series in Group I will be aggregated and
made available for certain required
distributions to all Series in Group I pro
rata based upon the relative amount of such
required distributions for each Series in
Group I as described under "The Pooling and
Servicing Agreement
Generally -- Reallocations Among Certificates
of Different Series within a Reallocation
Group" in the Prospectus. Consequently, any
issuance of a new Series in Group I may have
the effect of reducing or increasing the
amount of collections of Finance Charge
Receivables allocable to the Series 1996-2
Certificates. See "Risk Factors -- Issuance
of New Series" in the Prospectus. In
addition, it has not been determined whether
any Series issued by the Trust in the future
will be included in Group I.
SHARED PRINCIPAL
COLLECTIONS................... Series 1996-2 has been designated as a
Principal Sharing Series. Collections of
Principal Receivables and certain other
amounts otherwise allocable to other
Principal Sharing Series, if any, to the
extent such collections are not needed to
make payments to or deposits for the benefit
of the certificateholders of such other
Series, will be applied to cover principal
payments due to or for the benefit of the
holders of the Series 1996-2 Certificates and
S-11
<PAGE> 12
the Collateral Interest. See "The Pooling and
Servicing Agreement Generally -- Shared
Principal Collections" in the Prospectus.
Every Series issued to date has been a
Principal Sharing Series. There can be no
assurance that any Series issued by the Trust
in the future will be designated a Principal
Sharing Series.
EXCESS FINANCE CHARGE
COLLECTIONS................... Series 1996-2 has been designated as an Excess
Allocation Series. See "The Pooling and
Servicing Agreement Generally -- Sharing of
Excess Finance Charge Collections Among
Excess Allocation Series" in the Prospectus.
Every Series issued to date has been an
Excess Allocation Series.
OPTIONAL REPURCHASE........... The Series 1996-2 Certificateholders' Interest
and the Collateral Interest will be subject
to optional repurchase by the Transferor on
any Distribution Date after the sum of the
Class A Invested Amount, the Class B Invested
Amount and the Collateral Invested Amount, if
any, is reduced to an amount which is not
more than $100,000,000 (10% of the Initial
Invested Amount). The purchase price will be
equal to the sum of the Class A Invested
Amount and the Class B Invested Amount (less
the Principal Funding Account Balance, if
any), the Collateral Invested Amount, if any,
and accrued and unpaid interest on the Series
1996-2 Certificates and the Collateral
Interest (and accrued and unpaid interest
with respect to interest amounts that were
due but not paid on a prior Interest Payment
Date) through (a) if the day on which such
purchase occurs is a Distribution Date, the
day preceding such Distribution Date or (b)
if the day on which such repurchase occurs is
not a Distribution Date, the day preceding
the Distribution Date next following such
day.
SERIES 1996-2 TERMINATION
DATE.......................... The June 2001 Distribution Date. See "Series
Provisions -- Series Termination."
TRUSTEE....................... Bankers Trust Company, in its capacity as
Trustee under the Pooling and Servicing
Agreement.
TAX STATUS.................... Special tax counsel to the Transferor is of
the opinion that under existing law the
Series 1996-2 Certificates will be
characterized as debt for federal income tax
purposes. Under the Pooling and Servicing
Agreement, the Certificate Owners will agree
to treat the Series 1996-2 Certificates as
debt of the Transferor for federal income tax
purposes. See "Tax Matters" in the Prospectus
for additional information concerning the
application of federal income tax laws.
ERISA CONSIDERATIONS.......... Subject to the considerations described below,
the Class A Certificates are eligible for
purchase by employee benefit plan investors.
Under a regulation issued by the Department
of Labor, the Trust's assets would not be
deemed "plan assets" of an employee benefit
plan holding the Class A Certificates if
certain conditions are met, including that
the Class A Certificates must be held, upon
completion of the public offering made
hereby, by at least 100 investors who are
independent of the Transferor and of one
another. The Underwriters expect that the
Class A
S-12
<PAGE> 13
Certificates will be held by at least 100
independent investors at the conclusion of
the offering, although no assurance can be
given, and no monitoring or other measures
will be taken to ensure, that such condition
will be met with respect to the Class A
Certificates. The Transferor anticipates that
the other conditions of the regulation will
be met. If the Trust's assets were deemed to
be "plan assets" of an employee benefit plan
investor (e.g., if the 100 independent
investor criterion is not satisfied),
violations of the "prohibited transaction"
rules of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"),
could result and generate excise tax and
other liabilities under ERISA and section
4975 of the Internal Revenue Code of 1986 as
amended (the "Code"), unless a statutory,
regulatory or administrative exemption is
available. It is uncertain whether existing
exemptions from the "prohibited transaction"
rules of ERISA would apply to all
transactions involving the Trust's assets.
Accordingly, fiduciaries or other persons
contemplating purchasing the Series 1996-2
Certificates on behalf or with "plan assets"
of any employee benefit plan should consult
their counsel before making a purchase. See
"ERISA Considerations" in the Prospectus.
The Underwriters currently do not expect that
the Class B Certificates will be held by at
least 100 such persons and, therefore, do not
expect that such Class B Certificates will
qualify as publicly offered securities under
the regulation referred to in the preceding
paragraph. Accordingly, the Class B
Certificates may not be acquired by (a) any
employee benefit plan that is subject to
ERISA, (b) any plan or other arrangement
(including an individual retirement account
or Keogh plan) that is subject to section
4975 of the Code, or (c) any entity whose
underlying assets include "plan assets" under
the regulation by reason of any such plan's
investment in the entity. By its acceptance
of a Class B Certificate, each Class B
Certificateholder will be deemed to have
represented and warranted that it is not
subject to the foregoing limitation.
CLASS A CERTIFICATE RATING.... It is a condition to the issuance of the Class
A Certificates that they be rated in the
highest rating category by at least one
nationally recognized rating agency. The
rating of the Class A Certificates is based
primarily on the value of the Receivables,
the terms of the Class B Certificates and the
benefits of the Collateral Interest. See
"Risk Factors -- Limited Nature of Rating" in
the Prospectus.
CLASS B CERTIFICATE RATING.... It is a condition to the issuance of the Class
B Certificates that they be rated in one of
the three highest rating categories by at
least one nationally recognized rating
agency. The rating of the Class B
Certificates is based primarily on the value
of the Receivables and the benefits of the
Collateral Interest. See "Risk
Factors -- Limited Nature of Rating" in the
Prospectus.
LISTING....................... Application will be made to list the Series
1996-2 Certificates on the Luxembourg Stock
Exchange.
S-13
<PAGE> 14
RISK FACTORS
Potential investors should consider, among other things, the risk factors
discussed under "Risk Factors" in the Prospectus and the following risk factors
in connection with the purchase of the Series 1996-2 Certificates.
Limited Amounts of Credit Enhancement. Although Credit Enhancement with
respect to the Class A Certificates will be provided by the subordination of the
Class B Certificates to the extent described herein and by the Collateral
Interest, and with respect to the Class B Certificates, will be provided by the
Collateral Interest, the amount available thereunder is limited, may decline
during the Controlled Accumulation Period and will be reduced by payments made
pursuant thereto. If the Collateral Invested Amount has been reduced to zero,
Class B Certificateholders will bear directly the credit and other risks
associated with their undivided interests in the Trust and the Class B Invested
Amount may be reduced. If the Class B Invested Amount is reduced to zero, Class
A Certificateholders will bear directly the credit and other risks associated
with their undivided interest in the Trust. Further, in the event of a reduction
of the Class B Invested Amount or the Collateral Invested Amount, the amount of
principal and interest available to make distributions with respect to the Class
A Certificates and the Class B Certificates may be reduced.
Effect of Subordination of Class B Certificates; Principal Payments. The
Class B Certificates are subordinated in right of payment of principal to the
Class A Certificates. Payments of principal in respect of the Class B
Certificates will not commence until after the final principal payment with
respect to the Class A Certificates has been made as described herein. Moreover,
the Class B Invested Amount is subject to reduction if the Class A Required
Amount for any Monthly Period is greater than zero and is not funded from Excess
Spread and Excess Finance Charge Collections allocated to Series 1996-2,
Reallocated Principal Collections with respect to the Collateral Interest and
reductions in the Collateral Invested Amount, if any. To the extent the Class B
Invested Amount is reduced, the percentage of collections of Finance Charge
Receivables allocable to the Class B Certificateholders' Interest in future
Monthly Periods will be reduced. Moreover, to the extent the amount of such
reduction in the Class B Invested Amount is not reimbursed, the amount of
principal and interest distributable to the Class B Certificateholders will be
reduced. See "Series Provisions -- Allocation Percentages" and "-- Subordination
of the Class B Certificates and the Collateral Interest" herein. If the Class B
Invested Amount is reduced to zero, the holders of the Class A Certificates will
bear directly the credit and other risks associated with their undivided
interest in the Trust.
MATURITY CONSIDERATIONS
The Pooling and Servicing Agreement and the Supplement for Series 1996-2
(the "Series 1996-2 Supplement") provide that the Class A Certificateholders
will not receive payments of principal until the June 1999 Distribution Date
(the "Expected Final Payment Date"), or earlier in the event of a Pay Out Event
which results in the commencement of the Early Amortization Period. Class A
Certificateholders will receive payments of principal on each Distribution Date
following the Monthly Period in which a Pay Out Event occurs (each such
Distribution Date, a "Special Payment Date") until the Class A Invested Amount
has been paid in full or the Series 1996-2 Termination Date has occurred. The
Class B Certificateholders will not begin to receive payments of principal until
the final principal payment on the Class A Certificates has been made.
On each Distribution Date during the Controlled Accumulation Period,
amounts equal to the least of (a) Available Principal Collections (see "Series
Provisions -- Principal Payments") for the related Monthly Period on deposit in
the Collection Account, (b) the Controlled Deposit Amount, which is equal to the
sum of the Controlled Accumulation Amount for such Monthly Period and any
Deficit Controlled Accumulation Amount (both as defined under "Series
Provisions -- Application of Collections -- Payments of Principal") and (c) the
sum of the Class A Adjusted Invested Amount and the Class B Adjusted Invested
Amount will be deposited in the Principal Funding Account for Series 1996-2 held
by the Trustee (the "Principal Funding Account") until the Expected Final
Payment Date or the first Special Payment Date. See "Series
Provisions -- Principal Payments" for a discussion of the circumstances under
which the commencement of the Controlled Accumulation Period may be delayed.
S-14
<PAGE> 15
The Transferor may, at or after the time at which the Controlled
Accumulation Period commences for Series 1996-2, cause the Trust to issue
another Series (or some portion thereof, to the extent that the full principal
amount of such other Series is not otherwise outstanding at such time) as a
Paired Series with respect to Series 1996-2 to be used to finance the increase
in the Transferor Amount caused by the accumulation of principal in the
Principal Funding Account with respect to Series 1996-2. Although no assurances
can be given as to whether such other Series will be issued and, if issued, the
terms thereof, the outstanding principal amount of such Series may vary from
time to time (whether or not a Pay Out Event occurs with respect to the Series
1996-2 Certificates), and the interest rate with respect to certificates of such
other Series may be established on its date of issuance and may be reset
periodically. Further, since the terms of the Series 1996-2 Certificates will
vary from the terms of such other Series, the Pay Out Events or Reinvestment
Events with respect to such other Series will vary from the Pay Out Events with
respect to Series 1996-2 and may include Pay Out Events or Reinvestment Events
which are unrelated to the status of the Transferor or the Servicer or the
Receivables, such as Pay Out Events or Reinvestment Events related to the
continued availability and rating of certain providers of Series Enhancement to
such other Series. If a Pay Out Event or Reinvestment Event does occur with
respect to any such Paired Series prior to the payment in full of the Series
1996-2 Certificates, the final payment of principal to the Series 1996-2
Certificateholders may be delayed.
Should a Pay Out Event occur with respect to the Series 1996-2 Certificates
and the Early Amortization Period commence, any amount on deposit (a) in the
Principal Funding Account will be paid to the Series 1996-2 Certificateholders
on the first Special Payment Date and the Series 1996-2 Certificateholders will
be entitled to receive Available Principal Collections on each Distribution Date
with respect to such Early Amortization Period as described herein until the
Class A Invested Amount and Class B Invested Amount are paid in full or until
the Series 1996-2 Termination Date occurs and (b) in the Special Funding Account
will be released and treated as Shared Principal Collections to the extent
needed to cover principal payments due to or for the benefit of any Series,
including Series 1996-2, entitled to the benefits of Shared Principal
Collections. See "Description of the Certificates -- Pay Out Events and
Reinvestment Events" in the Prospectus and "Series Provisions -- Pay Out Events"
herein.
The ability of the Series 1996-2 Certificateholders to receive payments of
principal on the Expected Final Payment Date depends on the payment rates on the
Receivables, the amount of outstanding Receivables, delinquencies, charge-offs
and new borrowings on the Accounts, the potential issuance by the Trust of
additional Series and the availability of Shared Principal Collections. Monthly
payment rates on the Receivables may vary because, among other things,
cardmembers may fail to make required minimum payments, may only make payments
as low as the minimum required amount or may make payments as high as the entire
outstanding balance. Monthly payment rates may also vary due to seasonal
purchasing and payment habits of cardmembers and to changes in any terms of
rebate programs in which cardmembers participate. See the table entitled
"Cardmember Monthly Payment Rates -- AT&T Universal Portfolio" under "The AT&T
Universal Portfolio -- Payment Rates" herein. The Transferor cannot predict, and
no assurance can be given, as to the cardmember monthly payment rates that will
actually occur in any future period, as to the actual rate of payment of
principal of the Series 1996-2 Certificates or whether the terms of any
subsequently issued Series might have an impact on the amount or timing of any
such payment of principal. See "Risk Factors -- Generation of Additional
Receivables; Dependency on Cardmember Repayments" and "The Pooling and Servicing
Agreement Generally -- Shared Principal Collections" in the Prospectus.
In addition, the amount of outstanding Receivables and the delinquencies,
charge-offs and new borrowings on the Accounts may vary from month to month due
to seasonal variations, the availability of other sources of credit, legal
factors, general economic conditions and spending and borrowing habits of
individual cardmembers. There can be no assurance that collections of Principal
Receivables with respect to the Trust Portfolio, and thus the rate at which
Series 1996-2 Certificateholders could expect to receive payments of principal
on their Series 1996-2 Certificates during the Early Amortization Period or the
rate at which the Principal Funding Account could be funded during the
Controlled Accumulation Period, will be similar to the historical experience set
forth in the table entitled "Cardmember Monthly Payment Rates -- AT&T Universal
Portfolio" under "The AT&T Universal Portfolio -- Payment Rates" herein. As
described under
S-15
<PAGE> 16
"Series Provisions -- Principal Payments," the Transferor may shorten the
Accumulation Period and, in such event, there can be no assurance that there
will be sufficient time to accumulate all amounts necessary to pay the Class A
Invested Amount and the Class B Invested Amount on the Expected Final Payment
Date. In addition, the Trust, as a master trust, may issue additional Series
from time to time, and there can be no assurance that the terms of any such
Series might not have an impact on the timing or amount of payments received by
the Series 1996-2 Certificateholders. Further, if a Pay Out Event occurs, the
average life and maturity of the Class A Certificates and the Class B
Certificates could be significantly reduced.
Due to the reasons set forth above, there can be no assurance that deposits
in the Principal Funding Account will be made on or prior to the Expected Final
Payment Date in an amount equal to the sum of the Class A Invested Amount and
the Class B Invested Amount or that the actual number of months elapsed from the
date of issuance of the Class A Certificates and Class B Certificates to their
respective final Distribution Dates will equal the expected number of months.
See "Risk Factors -- Generation of Additional Receivables; Dependency on
Cardmember Repayments" in the Prospectus.
THE AT&T UNIVERSAL PORTFOLIO
GENERAL
The Transferor has identified a pool of consumer revolving credit card
accounts serviced by UCS (the "AT&T Universal Portfolio"), from which the
Accounts included in the Trust (the "Trust Portfolio") were selected based upon
the eligibility criteria specified in the Pooling and Servicing Agreement
applied as of the Initial Cut-Off Date. See "Risk Factors -- Addition of Trust
Assets" in the Prospectus for a description of those eligibility criteria. Set
forth below is certain information with respect to the AT&T Universal Portfolio.
See "The Credit Card Business of AT&T Universal Card Services Corp." and "The
Accounts" in the Prospectus. There can be no assurance that the yield, loss and
delinquency experience with respect to the Receivables will be comparable to
that set forth below with respect to the entire AT&T Universal Portfolio.
LOSS AND DELINQUENCY EXPERIENCE
The following tables set forth the loss and delinquency experience for the
AT&T Universal Portfolio for each of the periods shown.
LOSS EXPERIENCE FOR THE AT&T UNIVERSAL PORTFOLIO
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
FIVE MONTHS ENDED ---------------------------------------
MAY 31, 1996 1995 1994 1993
------------------ ----------- ---------- ----------
<S> <C> <C> <C> <C>
Average Receivables Outstanding(1).... $ 13,390,654 $12,345,066 $9,972,220 $7,183,038
Total Net Charge-Offs(2)(3)........... 333,217 587,139 323,066 206,187
Total Net Charge-Offs as a Percentage
of Average Receivables
Outstanding......................... 5.97%(4) 4.76% 3.24% 2.87%
</TABLE>
- ---------------
(1) Average Receivables Outstanding ("Average Receivables Outstanding") is
calculated by determining the daily average of outstanding account balances
for each month during the period indicated (excluding estimated average
Calling Card Calls, which is calculated as the average of one-half of the
monthly Calling Card Calls for each month during the period indicated, and
including the aggregate Account Owner Retained Interest representing 0.29%,
0.32%, 0.15% and 0.23% of the Average Receivables Outstanding for the
indicated 1996, 1995, 1994 and 1993 periods, respectively) and then dividing
the sum of such daily averages for such months by the number of months in
such period.
(2) Gross Charge-Offs as a Percentage of Average Receivables Outstanding for the
five months ended May 31, 1996 and for each of the years ended December 31,
1995, 1994 and 1993 were 6.64%, 5.26%, 3.68% and 3.17%, respectively. Gross
Charge-Offs are Total Principal Charge-Offs before recoveries and do not
include the amount of any reductions in Average Receivables Outstanding due
to fraud, returned goods, customer disputes or other miscellaneous credit
adjustments. Net Charge-Offs are Gross Charge-Offs less recoveries.
S-16
<PAGE> 17
(3) Total Net Charge-Offs and Gross Charge-Offs are inclusive of those
attributable to the Universal Bank Account Owner Retained Interest for the
year ended December 31, 1995 and the five months ended May 31, 1996, but
otherwise exclude those attributable to the Account Owner Retained Interest.
Estimated average Calling Card Calls are also excluded from Total Net
Charge-Offs and Gross Charge-Offs.
(4) The percentage reflected for the five months ended May 31, 1996 is an
annualized figure.
During 1993 and 1994, increased numbers of accounts were established with
cardmembers who maintained revolving balances in their accounts, as opposed to
convenience users. This change, combined with the seasoning of the AT&T
Universal Portfolio and certain other factors, resulted in the trends toward
increased total revenues, an increase in losses and a decrease in the payment
rates as reflected in the historical tables included herein. The use of
promotional rate pricing at account acquisitions beginning in the second half of
1995 and certain other factors have reduced the average revenue yield as
reflected in the historical tables included herein.
DELINQUENCIES AS A PERCENTAGE OF THE AT&T UNIVERSAL PORTFOLIO
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------------------------------------------------------
MAY 31, 1996 1995 1994 1993
-------------------------- -------------------------- -------------------------- --------------------------
PERCENTAGE OF PERCENTAGE OF PERCENTAGE OF PERCENTAGE OF
RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES
OUTSTANDING OUTSTANDING OUTSTANDING OUTSTANDING OUTSTANDING OUTSTANDING OUTSTANDING OUTSTANDING
----------- ------------- ----------- ------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Receivables
Outstanding(1) $13,220,573 $14,030,781 $12,232,310 $ 9,043,233
Receivables
Delinquent:(2)
31 -- 60
Days..... $ 187,934 1.42% $ 213,042 1.52% $ 138,028 1.13% $ 78,417 0.87%
61 -- 90
Days..... 82,544 0.62 85,841 0.61 62,992 0.51 42,238 0.46
91 -- 120
Days..... 82,800 0.63 78,572 0.56 53,316 0.44 30,085 0.33
121 Days or
More..... 139,464 1.06 116,827 0.83 72,444 0.59 41,358 0.46
----------- --- ----------- --- ----------- --- ----------- ---
Total... $ 492,742 3.73% $ 494,282 3.52% $ 326,780 2.67% $ 192,098 2.12%
========== ========== ========== ========== ========== ========== ========= ==========
</TABLE>
- ---------------
(1) The Receivables Outstanding in the Accounts consist of all amounts due from
cardmembers as posted to the Accounts, including the aggregate Account Owner
Retained Interest, but excluding estimated average Calling Card Calls.
(2) The Receivables Delinquent include the aggregate Account Owner Retained
Interest, but exclude estimated average Calling Card Calls.
REVENUE EXPERIENCE
The revenues for the AT&T Universal Portfolio from finance charges and fees
billed to cardmembers and Interchange are set forth in the following table for
each of the periods shown.
The historical revenue figures in the tables include interest on purchases
and cash advances and fees accrued during the cycle. Cash collections on the
receivables may not reflect the historical experience in the table. During
periods of increasing delinquencies, billings of finance charges and fees may
exceed cash payments as amounts collected on credit card receivables lag behind
amounts billed to cardmembers. Conversely, as delinquencies decrease, cash
payments may exceed billings of finance charges and fees as amounts collected in
a current period may include amounts billed during prior periods. Revenues from
finance charges and fees on both a billed and a cash basis will be affected by
numerous factors, including the periodic finance charges on the receivables, the
amount of fees paid by cardmembers, the percentage of cardmembers who pay off
their balances in full each month and do not incur periodic finance charges on
purchases and changes in the level of delinquencies on the receivables. See
"Risk Factors" in the Prospectus. See also "-- Loss and Delinquency Experience"
for a description of factors that have affected the revenue experience for the
AT&T Universal Portfolio.
S-17
<PAGE> 18
REVENUE EXPERIENCE FOR THE AT&T UNIVERSAL PORTFOLIO
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
FIVE MONTHS ENDED ---------------------------------------
MAY 31, 1996 1995 1994 1993
----------------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Average Receivables Outstanding(1)..... $13,390,654 $12,345,066 $9,972,220 $7,183,038
Total Finance Charges and Fees 812,033 1,956,894 1,431,712 932,185
Billed(2)(4).........................
Interchange(3)(4)...................... 124,641 323,288 318,725 271,771
----------------- ----------- ---------- ----------
Total Finance Charges and Fees Billed $ 936,674 $ 2,280,182 $1,750,437 $1,203,956
and Interchange......................
Average Revenue Yield(5)............... 16.79%(6) 18.47% 17.55% 16.76%
</TABLE>
- ---------------
(1) Average Receivables Outstanding is calculated by determining the daily
average of outstanding account balances for each month during the period
indicated (excluding estimated average Calling Card Calls and including the
aggregate Account Owner Retained Interest representing 0.29%, 0.32%, 0.15%
and 0.23% of the Average Receivables Outstanding for the indicated 1996,
1995, 1994 and 1993 periods, respectively) and then dividing the sum of such
daily averages for such months by the number of months in such period.
(2) Total Finance Charges and Fees Billed are comprised of periodic finance
charges, cash advance fees, annual membership fees and other charges.
(3) Interchange represents revenue attributable to Interchange received during
the period indicated. The amount of Interchange allocable to each period
indicated above has been estimated.
(4) Total Finance Charges and Fees Billed and Interchange are inclusive of those
attributable to the Universal Bank Account Owner Retained Interest for the
year ended December 31, 1995 and the five months ended May 31, 1996
(representing 0.14%, and 0.11%, respectively, of Total Finance Charges and
Fees Billed and Interchange for those periods), but otherwise exclude those
attributable to the Account Owner Retained Interest for the periods
indicated.
(5) Average Revenue Yield is the result of dividing Total Finance Charges and
Fees Billed and Interchange by the Average Receivables Outstanding during
the period indicated.
(6) The percentage reflected for the five months ended May 31, 1996 is an
annualized figure.
The revenues for the AT&T Universal Portfolio shown in the tables above are
related to finance charges, together with fees, billed to holders of the
accounts and Interchange. The revenues related to finance charges depend in part
upon the collective preference of cardmembers to use their credit cards as
revolving debt instruments for purchases and cash advances and paying off credit
card account balances over several months as opposed to convenience use, where
the cardmembers prefer instead to pay off their entire balance each month,
thereby avoiding finance charges on purchases, and upon other services of which
cardmembers choose to avail themselves and which are paid for by the use of the
card. Revenues related to finance charges and fees also depend on the types of
charges and fees assessed by the Account Owners on the accounts in the AT&T
Universal Portfolio and on whether such accounts are nonpremium or premium
credit card accounts. Accordingly, revenues will be affected by future changes
in the types of charges and fees assessed on the accounts and on the respective
percentages of the receivable balances of nonpremium and premium credit card
accounts. Revenues could be adversely affected by future changes in the charges
and fees assessed by the Account Owners and other factors. See "Certain Legal
Aspects of the Receivables -- Consumer Protection Laws" in the Prospectus.
Neither the Servicer nor any of its affiliates has any basis to predict how any
future changes in the usage of the accounts by cardmembers or in the terms of
accounts may affect the revenue for the AT&T Universal Portfolio.
INTERCHANGE
The Transferor will be required, pursuant to the terms of the Series 1996-2
Supplement, to transfer to the Trust for the benefit of Series 1996-2, a
percentage of the Interchange attributed to cardmember charges for goods and
services in the Accounts. Interchange arising under the Accounts will be
allocated to Series 1996-2 on the basis of the Series Allocation Percentage for
Series 1996-2 of the amount of Interchange attributable to
S-18
<PAGE> 19
the Accounts, as reasonably estimated by the Transferor. MasterCard and VISA may
from time to time change the amount of Interchange reimbursed to banks issuing
their credit cards. Interchange will be treated as a portion of Series Allocable
Finance Charge Collections for the purposes of allocating collections of Finance
Charge Receivables, making required monthly payments, and calculating the
Portfolio Yield. See "The Credit Card Business of AT&T Universal Card Services
Corp. -- Interchange" in the Prospectus.
In the future, subject to certain requirements contained in the Series
1996-2 Supplement and the Pooling and Servicing Agreement, the Transferor may,
in lieu of transferring Interchange to the Trust as set forth above, allocate
Interchange to the Trust and Series 1996-2 by treating a percentage of
collections of the Principal Receivables (whether arising from cardmember
charges for goods and services or cash advances), as collections of Finance
Charge Receivables approximately equivalent to the then current Interchange on
the credit card accounts in the AT&T Universal Portfolio (subject to adjustment
at the option of the Transferor upon the satisfaction of certain conditions as
described in the Prospectus under "The Pooling and Servicing Agreement
Generally -- Discount Option").
PAYMENT RATES
The following table sets forth the highest and lowest cardmember monthly
payment rates for the AT&T Universal Portfolio during any month in the period
shown and the average cardmember monthly payment rates for all months during
each period shown, calculated as the percentage equivalent of a fraction. For
the highest and lowest monthly payment rates, the numerator of the fraction is
equal to all payments from cardmembers as posted to the accounts during the
applicable month, including the aggregate Account Owner Retained Interest, but
excluding estimated Calling Card Calls (based on the prior month's volume of
Calling Card Calls), and the denominator is equal to the Average Receivables
Outstanding for such month. For the monthly average payment rate, the numerator
of the fraction is equal to all payments from cardmembers as posted to the
accounts during the indicated period, including the aggregate Account Owner
Retained Interest, but excluding estimated Calling Card Calls during the period
indicated, divided by the number of months in the period, and the denominator is
equal to the Average Receivables Outstanding. See "-- Loss and Delinquency
Experience" for a description of factors that have affected the payment rates
for the AT&T Universal Portfolio.
CARDMEMBER MONTHLY PAYMENT RATES
AT&T UNIVERSAL PORTFOLIO
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
FIVE MONTHS ENDED -----------------------------------
MAY 31, 1996 1995 1994 1993
----------------- ------ ------ ------
<S> <C> <C> <C> <C>
Lowest Month............................ 16.15% 15.25% 17.70% 21.93%
Highest Month........................... 19.07 20.57 23.44 26.35
Monthly Average......................... 17.04 17.70 19.96 23.14
</TABLE>
THE RECEIVABLES
The Receivables in the Trust Portfolio (including $1,054,583,372 of
Receivables in 1,349,970 Additional Accounts conveyed to the Trust on June 20,
1996), as of May 31, 1996, included $6,733,753,422 of Principal Receivables and
$86,712,480 of Finance Charge Receivables. The following figures in this
paragraph include $1,054,583,372 of Receivables in 1,349,970 Additional Accounts
expected to be conveyed to the Trust sometime during the period from the date of
this Prospectus Supplement through the Closing Date. The Accounts had an average
total receivables balance of $728 and an average credit limit of $5,472. The
percentage of the aggregate total receivables balance to the aggregate total
credit limit was 13.3%. The average age of the Accounts was approximately 45
months. As of May 31, 1996, all of the Accounts in the Trust Portfolio were VISA
or MasterCard credit card accounts, of which 57.7% were non-premium accounts and
42.3% were premium accounts, and the total receivables balances of non-premium
accounts and premium accounts, as a percentage of the total receivables, were
50.2% and 49.8%, respectively. Approximately 13.0%,
S-19
<PAGE> 20
8.2%, 7.3%, 6.0% and 5.5% of the Receivables related to cardmembers having
billing addresses in California, New York, Florida, Texas and New Jersey,
respectively. Not more than 5% of the Receivables related to cardmembers having
billing addresses in any other single state.
The following tables summarize the Trust Portfolio (including
$1,054,583,372 of Receivables in 1,349,970 Additional Accounts conveyed to the
Trust on June 20, 1996) by various criteria as of May 31, 1996. Because the
future composition of the Trust Portfolio may change over time, these tables are
not necessarily indicative of the composition of the Trust Portfolio at any time
subsequent to May 31, 1996. References to "Receivables Outstanding,"
"Receivables" and to "total receivables" in the preceding paragraph and in the
following tables include Finance Charge Receivables, Principal Receivables,
$14,133,409 estimated aggregate Account Owner Retained Interest and $8,684,126
in Calling Card Calls.
COMPOSITION BY ACCOUNT BALANCE
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE PERCENTAGE
OF TOTAL OF TOTAL
NUMBER OF NUMBER OF RECEIVABLES RECEIVABLES
ACCOUNT BALANCE RANGE ACCOUNTS ACCOUNTS OUTSTANDING OUTSTANDING
- ------------------------------------------- --------- --------- -------------- -----------
<S> <C> <C> <C> <C>
Credit Balance............................. 144,905 1.5% $ (9,192,420) (0.1)%
No Balance................................. 4,711,027 50.1 0 0.0
$ 0.01 -- $ 1,500.00................... 2,971,586 31.6 1,241,817,895 18.1
$ 1,500.01 -- $ 5,000.00................... 1,283,858 13.7 3,579,344,845 52.3
$ 5,000.01 -- $10,000.00................... 259,382 2.8 1,730,653,546 25.3
$10,000.01 or More......................... 26,707 0.3 300,659,570 4.4
--------- --------- -------------- -----------
TOTAL............................ 9,397,465 100.0% $6,843,283,436 100.0%
======== ======== ============= =========
</TABLE>
COMPOSITION BY CREDIT LIMIT
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE PERCENTAGE
OF TOTAL OF TOTAL
NUMBER OF NUMBER OF RECEIVABLES RECEIVABLES
CREDIT LIMIT RANGE ACCOUNTS ACCOUNTS OUTSTANDING OUTSTANDING
- ------------------------------------------- --------- --------- -------------- -----------
<S> <C> <C> <C> <C>
$0.00 or less than $1,500.00............... 1,156,696 12.3% $ 278,222,879 4.1%
$ 1,500.01 -- $ 5,000.00................... 3,583,837 38.1 $2,762,754,570 40.4
$ 5,000.01 -- $10,000.00................... 3,788,302 40.3 2,732,954,975 39.9
$10,000.01 or More......................... 868,630 9.3 1,069,351,012 15.6
--------- --------- -------------- -----------
TOTAL............................ 9,397,465 100.0% $6,843,283,436 100.0%
======== ======== ============= =========
</TABLE>
S-20
<PAGE> 21
COMPOSITION BY PERIOD OF DELINQUENCY
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE PERCENTAGE
OF TOTAL OF TOTAL
PERIOD OF DELINQUENCY NUMBER OF NUMBER OF RECEIVABLES RECEIVABLES
(DAYS CONTRACTUALLY DELINQUENT) ACCOUNTS ACCOUNTS OUTSTANDING OUTSTANDING
- -------------------------------------------- --------- ---------- -------------- -----------
<S> <C> <C> <C> <C>
Not Delinquent.............................. 8,829,826 94.0% $6,190,052,080 90.5%
Up to 30 Days............................... 206,123 2.2 392,104,343 5.7
31 -- 60 Days.............................. 60,933 0.6 89,340,633 1.3
61 -- 90 Days.............................. 39,104 0.4 53,520,454 0.8
91 -- 120 Days............................. 31,125 0.3 44,145,502 0.6
121 or More Days............................ 230,354 2.5 74,120,424 1.1
--------- ---------- -------------- -----------
TOTAL............................. 9,397,465 100.0% $6,843,283,436 100.0%
======== ======== ============= ========
</TABLE>
COMPOSITION BY ACCOUNT AGE
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE PERCENTAGE
OF TOTAL OF TOTAL
NUMBER OF NUMBER OF RECEIVABLES RECEIVABLES
ACCOUNT AGE ACCOUNTS ACCOUNTS OUTSTANDING OUTSTANDING
- -------------------------------------------- --------- ---------- -------------- -----------
<S> <C> <C> <C> <C>
Not More than 6 Months...................... 98,987 1.1% $ 56,228,683 0.8%
Over 6 Months to 12 Months.................. 397,372 4.2 430,729,244 6.3
Over 12 Months to 24 Months................. 1,754,646 18.7 1,294,822,073 18.9
Over 24 Months to 36 Months................. 1,515,233 16.1 1,229,866,537 18.0
Over 36 Months to 48 Months................. 1,098,219 11.7 935,631,123 13.7
Over 48 Months.............................. 4,533,008 48.2 2,896,005,776 42.3
--------- ---------- -------------- -----------
TOTAL............................. 9,397,465 100.0% $6,843,283,436 100.0%
======== ======== ============= ========
</TABLE>
USE OF PROCEEDS
The net proceeds from the sale of the Series 1996-2 Certificates will be
paid to the Transferor. The Transferor will use such proceeds primarily for the
repayment of intercompany loans borrowed from UCS to pay to UCS the purchase
price of the Receivables.
THE ACCOUNT OWNERS
In its March 31, 1996 Call Report, Universal Bank reported total deposits
of approximately $14,952,000, total assets of approximately $36,800,000 and
total equity of approximately $5,759,000. In its March 31, 1996 Call Report,
CB&T reported total deposits of approximately $1,130,686,000, total assets of
approximately $1,620,235,000 and total equity of approximately $231,761,000. A
Call Report is required to be prepared in accordance with regulatory accounting
principles, which differ in some respects from generally accepted accounting
principles. See "Universal Bank, N.A." and "Columbus Bank and Trust Company" in
the Prospectus.
THE SERVICER
As of May 31, 1996, UCS had approximately $8,773,013,000 in total assets,
approximately $7,826,600,000 in total liabilities and approximately $946,413,000
in shareholder's equity.
S-21
<PAGE> 22
SERIES PROVISIONS
The Series 1996-2 Certificates will be issued pursuant to the Pooling and
Servicing Agreement and a Supplement specifying the Principal Terms of the
Certificates (the "Series 1996-2 Supplement"), the forms of which have been
filed as exhibits to the Registration Statement of which the Prospectus and this
Prospectus Supplement are a part. The following summary describes certain terms
applicable to the Series 1996-2 Certificates. Reference should be made to the
Prospectus for additional information concerning the Series 1996-2 Certificates
and the Pooling and Servicing Agreement. See "The Pooling and Servicing
Agreement Generally" in the Prospectus.
INTEREST PAYMENTS
Interest on the Class A Certificates and the Class B Certificates will
accrue from the Closing Date on the outstanding principal balance of the Class A
Certificates and the Class B Invested Amount at the Class A Certificate Rate and
Class B Certificate Rate, respectively. Interest will be distributed quarterly
on the 17th day of October, January, April and July (or if any such day is not a
business day, the next succeeding business day) and on the Expected Final
Payment Date, commencing on the October 1996 Distribution Date and ending on the
Expected Final Payment Date and, following the occurrence of a Pay Out Event, on
each Special Payment Date to the Series 1996-1 Certificateholders in whose names
the Series 1996-2 Certificates were registered at the close of business on the
last day of the calendar month preceding the date of such payment (each, a
"Record Date"). Interest for any Interest Payment Date or Special Payment Date
will accrue from and including the preceding Interest Payment Date or Special
Payment Date (or in the case of the first Interest Payment Date, from and
including the Closing Date) to but excluding the next Interest Payment Date or
Special Payment Date.
Interest payments or deposits with respect to the Class A Certificates for
each Distribution Date will be calculated on the outstanding principal balance
of the Class A Certificates as of the preceding Record Date (or in the case of
the initial Distribution Date, on the Class A Initial Invested Amount) based
upon the Class A Certificate Rate. The initial Distribution Date will be August
19, 1996, on which date amounts allocated to Series 1996-2 for the months of
June and July 1996 will be applied as described herein. Interest payments or
deposits with respect to each Distribution Date will be calculated on the basis
of the actual number of days in the period from and including the preceding
Distribution Date (or in the case of the initial Distribution Date, the Closing
Date) to but excluding such Distribution Date and a 360-day year. On each
Distribution Date, Class A Monthly Interest and Class A Monthly Interest
previously due but not deposited in the Interest Funding Account (as defined
below) or paid to the Class A Certificateholders and any Class A Additional
Interest will be (i) paid to the Class A Certificateholders, if such
Distribution Date is an Interest Payment Date or a Special Payment Date, or (ii)
deposited in an Eligible Deposit Account in the name of the Trustee and for the
benefit of the Series 1996-2 Certificateholders (the "Interest Funding
Account"), if such Distribution Date is not an Interest Payment Date or a
Special Payment Date. Payments to the Class A Certificateholders or deposits
into the Interest Funding Account in respect of interest on the Class A
Certificates on any Distribution Date will be funded from Class A Available
Funds for the related Monthly Period. To the extent Class A Available Funds
allocated to the Class A Certificateholders' Interest for such Monthly Periods
are insufficient to pay such interest, Excess Spread and Excess Finance Charge
Collections allocated to Series 1996-2 and Reallocated Principal Collections
allocable first to the Collateral Invested Amount and then the Class B Invested
Amount will be used to make such payments or deposits. "Class A Available Funds"
means, with respect to any Monthly Period, an amount equal to the sum of (i) the
Class A Floating Percentage of Reallocated Investor Finance Charge Collections
allocated to the Series 1996-2 Certificates and the Collateral Interest with
respect to such Monthly Period (including any investment earnings and certain
other amounts that are to be treated as collections of Finance Charge
Receivables allocable to Series 1996-2 in accordance with the Pooling and
Servicing Agreement and the Series 1996-2 Supplement), (ii) if such Monthly
Period relates to a Distribution Date with respect to the Controlled
Accumulation Period, Principal Funding Investment Proceeds, if any, with respect
to the related Distribution Date, and (iii) amounts, if any, to be withdrawn
from the Reserve Account that must be included in Class A Available Funds
pursuant to the Series 1996-2 Supplement with respect to such Distribution Date.
S-22
<PAGE> 23
Interest payments or deposits with respect to the Class B Certificates for
each Distribution Date will be calculated on the Class B Invested Amount as of
the preceding Record Date (or in the case of the initial Distribution Date, on
the Class B Initial Invested Amount) based upon the Class B Certificate Rate and
the actual number of days in the period from and including the previous
Distribution Date (or in the case of the initial Distribution Date, the Closing
Date) to but excluding such Distribution Date and a 360-day year. On each
Distribution Date, Class B Monthly Interest and Class B Monthly Interest
previously due but not deposited in the Interest Funding Account or paid to the
Class B Certificateholders and any Class B Additional Interest will be (i) paid
to the Class B Certificateholders, if such Distribution Date is an Interest
Payment Date or a Special Payment Date, or (ii) deposited in the Interest
Funding Account, if such Distribution Date is not an Interest Payment Date or a
Special Payment Date. Payments to the Class B Certificateholders or deposits
into the Interest Funding Account in respect of interest on the Class B
Certificates on any Distribution Date will be funded from Class B Available
Funds for the related Monthly Period. To the extent Class B Available Funds
allocated to the Class B Certificateholders' Interest for such Monthly Period
are insufficient to pay such interest or make such deposits, as applicable,
Excess Spread and Excess Finance Charge Collections allocated to Series 1996-2
and Reallocated Principal Collections allocable to the Collateral Invested
Amount and not required to pay the Class A Required Amount or reimburse Class A
Investor Charge-Offs will be used to make such payments or deposits. "Class B
Available Funds" means, with respect to any Monthly Period, an amount equal to
the Class B Floating Percentage of Reallocated Investor Finance Charge
Collections allocated to the Series 1996-2 Certificates and the Collateral
Interest with respect to such Monthly Period (including any investment earnings
and certain other amounts that are to be treated as collections of Finance
Charge Receivables in accordance with the Pooling and Servicing Agreement).
Funds on deposit in the Interest Funding Account generally will be invested
in certain Eligible Investments. For purposes of investments of funds in the
Interest Funding Account allocable to (i) Class B Monthly Interest, (ii) Class B
Outstanding Monthly Interest and (iii) Class B Additional Interest, the term
"highest rating" as used in the definition of "Eligible Investments" in the
Prospectus shall include A-1 as well as A-1+, in the case of a short-term rating
by Standard & Poor's. Any earnings (net of losses and investment expenses) on
funds in the Interest Funding Account will be paid to the Transferor. If an
Early Amortization Period commences, then thereafter Class A Monthly Interest
will be distributed to the Class A Certificateholders monthly on each Special
Payment Date and Class B Monthly Interest will be distributed to the Class B
Certificateholders monthly on each Special Payment Date and any amounts on
deposit in the Interest Funding Account will be distributed to the Class A
Certificateholders and the Class B Certificateholders on the first Special
Payment Date.
The Servicer will determine LIBOR (i) for the initial Interest Period on
the second London business day prior to the Closing Date and (ii) for each
Interest Period following the initial Interest Period on the second London
business day prior to the commencement of such Interest Period (each a "LIBOR
Determination Date"). For purposes of calculating LIBOR, a London business day
is any day on which dealings in deposits in United States dollars are transacted
in the London interbank market.
"LIBOR" means, as of any LIBOR Determination Date, the rate for deposits in
United States dollars for a period equal to the relevant Interest Period
(commencing on the first day of such Interest Period) which appears on Telerate
Page 3750 (as defined below) as of 11:00 a.m., London Time, on such date. If
such rate does not appear on Telerate page 3750, the rate for that day will be
determined on the basis of the rates at which deposits in United States dollars
are offered by the Reference Banks (as defined below) at approximately 11:00
a.m., London Time, on that day to prime banks in the London interbank market for
a period equal to the relevant Interest Period (commencing on the first day of
such Interest Period). The Servicer will request the principal London office of
each of the Reference Banks to provide a quotation of its rate. If at least two
such quotations are provided, the rate for the day will be the arithmetic mean
of the quotations. If fewer than two quotations are provided as requested, the
rate for that day will be the arithmetic mean of the rates quoted by major banks
in New York City, selected by the Servicer, at approximately 11:00 a.m., New
York City time, on that day for loans in United States dollars to leading
international banks for a period equal to the relevant Interest Period
(commencing on the first day of such Interest Period). If the
S-23
<PAGE> 24
banks selected by the Servicer are not quoting rates as provided in the
immediately preceding sentence, LIBOR for such Interest Period will be LIBOR in
effect for the immediately preceding Interest Period.
"Telerate Page 3750" means the display page currently so designated on the
Dow Jones Telerate Service (or such other page as may replace that page on that
service for the purpose of displaying comparable rates or prices).
"Reference Banks" means three major banks in the London interbank market
selected by the Servicer.
"Interest Period" means, with respect to any Interest Payment Date or
Special Payment Date, a period from and including the preceding Interest Payment
Date or Special Payment Date, as applicable, to but excluding such Interest
Payment Date or Special Payment Date, as applicable; provided, however, that the
initial Interest Period will commence on the Closing Date.
PRINCIPAL PAYMENTS
During the Revolving Period (which begins on the Series 1996-2 Cut-Off Date
and ends on the day before the commencement of the Controlled Accumulation
Period or, if earlier, the Early Amortization Period), no principal payments
will be made to the Series 1996-2 Certificateholders. During the Controlled
Accumulation Period (on or prior to the Expected Final Payment Date), principal
will be deposited in the Principal Funding Account as described below and on the
Expected Final Payment Date will be distributed to Class A Certificateholders up
to the Class A Invested Amount and then to Class B Certificateholders up to the
Class B Invested Amount. During the Early Amortization Period, which will begin
upon the occurrence of a Pay Out Event, and until the Series 1996-2 Termination
Date occurs, principal will be paid first to the Class A Certificateholders
until the Class A Invested Amount has been paid in full, and then to the Class B
Certificateholders until the Class B Invested Amount has been paid in full.
Unless a reduction in the Required Collateral Invested Amount has occurred, no
principal payments will be made in respect of the Collateral Invested Amount
until the final principal payment has been made to the Class A
Certificateholders and the Class B Certificateholders.
On each Distribution Date with respect to the Controlled Accumulation
Period, the Trustee will deposit in the Principal Funding Account an amount
equal to the least of (a) Available Principal Collections on deposit in the
Collection Account with respect to such Distribution Date, (b) the Controlled
Deposit Amount for such Distribution Date and (c) the sum of the Class A
Adjusted Invested Amount and the Class B Adjusted Invested Amount, until the
Principal Funding Account Balance equals the sum of the Class A Invested Amount
and the Class B Invested Amount. Amounts on deposit in the Principal Funding
Account will be paid to the Class A Certificateholders and, if the amount on
deposit in the Principal Funding Account exceeds the Class A Invested Amount, to
the Class B Certificateholders on the Expected Final Payment Date.
If a Pay Out Event occurs with respect to the Series 1996-2 Certificates
during the Controlled Accumulation Period, the Early Amortization Period will
commence and any amount on deposit in the Principal Funding Account will be paid
first to the Class A Certificateholders on the first Special Payment Date and
then, after the Class A Invested Amount is paid in full, to the Class B
Certificateholders. If, on the Expected Final Payment Date, moneys on deposit in
the Principal Funding Account are insufficient to pay the Class A Invested
Amount and the Class B Invested Amount, a Pay Out Event will occur and the Early
Amortization Period will commence. After payment in full of the Class A Invested
Amount, the Class B Certificateholders will be entitled to receive an amount
equal to the Class B Invested Amount.
"Available Principal Collections" means, with respect to any Monthly
Period, an amount equal to the sum of (1) an amount equal to the Principal
Allocation Percentage of the Series Allocation Percentage of all collections of
Principal Receivables received during such Monthly Period (minus certain
Reallocated Principal Collections used to fund the Required Amount), (2) any
Shared Principal Collections with respect to other Principal Sharing Series that
are allocated to Series 1996-2, and (3) certain other amounts which pursuant to
the Series 1996-2 Supplement are to be treated as Available Principal
Collections with respect to the related Distribution Date.
S-24
<PAGE> 25
The Controlled Accumulation Period is currently expected to commence at the
close of business on May 31, 1998; however, the date on which the Controlled
Accumulation Period actually commences may be delayed if the Controlled
Accumulation Period Length (determined as described below) is less than twelve
months. Beginning on the Determination Date immediately preceding the May 1998
Distribution Date and on each Determination Date thereafter until the Controlled
Accumulation Period actually commences, the Transferor will determine the
"Controlled Accumulation Period Length" based on, among other things, the then
current principal payment rate on the Accounts and the principal amount of
Principal Sharing Series that are entitled to share principal with Series
1996-2; provided, however, that the Controlled Accumulation Period Length will
not be less than one month. If the Controlled Accumulation Period Length is less
than twelve months, the Controlled Accumulation Period will commence later than
the close of business on May 31, 1998, and the number of months in the
Controlled Accumulation Period will be equal to the Controlled Accumulation
Period Length. The effect of the foregoing calculation is to reduce the
Controlled Accumulation Period Length based on the invested amounts of other
Principal Sharing Series that are scheduled to be in their revolving periods and
thus scheduled to create Shared Principal Collections during the Controlled
Accumulation Period. In addition, if the Controlled Accumulation Period Length
shall have been determined to be less than 12 months and, after the date on
which such determination is made, a Pay Out Event or Reinvestment Event (as
those terms are defined in the Supplement for such Series) shall occur with
respect to any outstanding Principal Sharing Series, the Controlled Accumulation
Period will commence on the earlier of (i) the date that such Pay Out Event or
Reinvestment Event shall have occurred with respect to such Series and (ii) the
date on which the Controlled Accumulation Period is then scheduled to commence.
On each Distribution Date with respect to the Early Amortization Period
until the Class A Invested Amount has been paid in full or the Series 1996-2
Termination Date occurs, the holders of the Class A Certificates will be
entitled to receive Available Principal Collections in an amount up to the Class
A Invested Amount. After payment in full of the Class A Invested Amount, the
holders of the Class B Certificates will be entitled to receive, on each
Distribution Date, Available Principal Collections until the earlier of the date
the Class B Invested Amount is paid in full and the Series 1996-2 Termination
Date. After payment in full of the Class B Invested Amount, the Collateral
Interest Holder will be entitled to receive, on each Distribution Date,
Available Principal Collections until the earlier of the date the Collateral
Invested Amount is paid in full and the Series 1996-2 Termination Date.
SUBORDINATION OF THE CLASS B CERTIFICATES AND THE COLLATERAL INTEREST
The Class B Certificateholders' Interest and the Collateral Interest will
be subordinated to the extent necessary to fund certain payments with respect to
the Class A Certificates. In addition, the Collateral Interest will be
subordinated to the extent necessary to fund certain payments with respect to
the Class B Certificates. Certain principal payments otherwise allocable to the
Class B Certificateholders may be reallocated to the Class A Certificateholders
and the Class B Invested Amount may be reduced. Similarly, certain principal
payments otherwise allocable to the Collateral Interest may be reallocated to
the Class A Certificateholders and the Class B Certificateholders and the
Collateral Invested Amount may be reduced. If the Collateral Invested Amount is
reduced to zero, holders of the Class B Certificates will bear directly the
credit and other risks associated with their interest in the Trust. To the
extent the Class B Invested Amount is reduced, the percentage of collections of
Finance Charge Receivables allocated to the Class B Certificateholders in
subsequent Monthly Periods will be reduced. Moreover, to the extent the amount
of such reduction in the Class B Invested Amount is not reimbursed, the amount
of principal distributable to the Class B Certificateholders will be reduced. If
the Class B Invested Amount is reduced to zero, the Class A Certificateholders
will bear directly the credit and other risks associated with their undivided
interest in the Trust. In the event of a reduction in the Class A Invested
Amount, the Class B Invested Amount or the Collateral Invested Amount, the
amount of principal and interest available to fund payments with respect to the
Class A Certificates and the Class B Certificates will be decreased. See
"-- Allocation Percentages," "-- Reallocation of Cash Flows," "-- Application of
Collections -- Excess Spread; Excess Finance Charge Collections" below.
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<PAGE> 26
ALLOCATION PERCENTAGES
Pursuant to the Pooling and Servicing Agreement, the Servicer will allocate
among Series 1996-2 and all other Series outstanding all collections of Finance
Charge Receivables and Principal Receivables and the Defaulted Amount with
respect to such Monthly Period as described under "The Pooling and Servicing
Agreement Generally -- Allocations" in the Prospectus and, with respect to
Series 1996-2 specifically, as described below.
Pursuant to the Pooling and Servicing Agreement, during each Monthly
Period, the Servicer will allocate to Series 1996-2 its Series Allocable Finance
Charge Collections, Series Allocable Principal Collections and Series Allocable
Defaulted Amount.
"Series Allocable Finance Charge Collections," "Series Allocable Principal
Collections" and "Series Allocable Defaulted Amount" mean, with respect to
Series 1996-2 and for any Monthly Period, the product of (a) the Series
Allocation Percentage for Series 1996-2 and (b) the amount of collections of
Finance Charge Receivables deposited in the Collection Account, the amount of
collections of Principal Receivables deposited in the Collection Account and the
amount of all Defaulted Amounts with respect to such Monthly Period,
respectively.
"Series Allocation Percentage" means, with respect to Series 1996-2 and for
any Monthly Period, the percentage equivalent of a fraction, the numerator of
which is the sum of the Series Adjusted Invested Amount for Series 1996-2 as of
the last day of the immediately preceding Monthly Period plus the Series
Required Transferor Amount for Series 1996-2 as of the last day of the
immediately preceding Monthly Period and the denominator of which is the Trust
Adjusted Invested Amount plus the sum of all Series Required Transferor Amounts
as of such last day.
"Series Adjusted Invested Amount" means, with respect to Series 1996-2 and
for any Monthly Period, the Series Invested Amount for Series 1996-2, less the
excess, if any, of all reductions in the Invested Amount (other than any
reductions occasioned by payments of principal to the Series 1996-2
Certificateholders or to the Collateral Interest Holder) as of the last day of
the preceding Monthly Period over the aggregate amount of any reimbursement of
such reductions as of such last day.
The Series Allocable Finance Charge Collections and the Series Allocable
Defaulted Amount for Series 1996-2 with respect to any Monthly Period will be
allocated to the Series 1996-2 Certificates and the Collateral Interest based on
the Floating Allocation Percentage and the remainder of such Series Allocable
Finance Charge Collections and Series Allocable Defaulted Amount will be
allocated to the Transferor's Interest. The "Floating Allocation Percentage"
means, with respect to any Monthly Period, the percentage equivalent (which
percentage shall never exceed 100%) of a fraction, the numerator of which is the
Adjusted Invested Amount as of the last day of the preceding Monthly Period (or
with respect to the first Monthly Period, the Initial Invested Amount) and the
denominator of which is the product of (a) the sum of the total amount of the
Principal Receivables in the Trust as of such day (subject to adjustment to give
effect to designations of Additional Accounts and Removed Accounts) (or with
respect to the first Monthly Period, the total amount of Principal Receivables
in the Trust on the Closing Date) and the principal amount on deposit in the
Special Funding Account as of such day and (b) the Series Allocation Percentage.
Investor Finance Charge Collections (which for any Monthly Period is equal
to the product of the Floating Allocation Percentage and the Series Allocable
Finance Charge Collections) will be reallocated among all Series in Group I as
set forth in "The Pooling and Servicing Agreement Generally -- Reallocations
Among Certificates of Different Series within a Reallocation Group" in the
Prospectus. Reallocated Investor Finance Charge Collections allocated to Series
1996-2 and the Investor Default Amount will be further allocated between the
Class A Certificateholders, the Class B Certificateholders and the Collateral
Interest Holder in accordance with the Class A Floating Percentage, the Class B
Floating Percentage and the Collateral Floating Percentage, respectively. The
"Class A Floating Percentage" means, with respect to any Monthly Period, the
percentage equivalent (which percentage shall never exceed 100%) of a fraction,
the numerator of which is equal to the Class A Adjusted Invested Amount as of
the close of business on the last day of the preceding Monthly Period (or with
respect to the first Monthly Period, as of the Closing Date) and
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<PAGE> 27
the denominator of which is equal to the Adjusted Invested Amount as of the
close of business on such day (or, with respect to the first Monthly Period, the
Initial Invested Amount). The "Class B Floating Percentage" means, with respect
to any Monthly Period, the percentage equivalent (which percentage shall never
exceed 100%) of a fraction, the numerator of which is equal to the Class B
Adjusted Invested Amount as of the close of business on the last day of the
preceding Monthly Period (or with respect to the first Monthly Period, as of the
Closing Date) and the denominator of which is equal to the Adjusted Invested
Amount at the close of business on such day (or with respect to the first
Monthly Period, the Initial Invested Amount). The "Collateral Floating
Percentage" means, with respect to any Monthly Period, the percentage equivalent
(which percentage shall never exceed 100%) of a fraction, the numerator of which
is equal to the Collateral Invested Amount as of the close of business on the
last day of the preceding Monthly Period (or with respect to the first Monthly
Period, as of the Closing Date) and the denominator of which is equal to the
Adjusted Invested Amount as of the close of business on such day (or with
respect to the first Monthly Period, the Initial Invested Amount).
Series Allocable Principal Collections for Series 1996-2 will be allocated
to the Series 1996-2 Certificates and the Collateral Interest based on the
Principal Allocation Percentage and the remainder of such Series Allocable
Principal Collections will be allocated to the Transferor's Interest. The
"Principal Allocation Percentage" means, with respect to any Monthly Period, the
percentage equivalent (which percentage shall never exceed 100%) of a fraction,
the numerator of which is (a) during the Revolving Period, the Series Adjusted
Invested Amount for Series 1996-2 as of the last day of the immediately
preceding Monthly Period (or, in the case of the first Monthly Period, the
Closing Date) and (b) during the Controlled Accumulation Period or the Early
Amortization Period, the Series Adjusted Invested Amount for Series 1996-2 as of
the last day of the Revolving Period and the denominator of which is the product
of (i) the sum of the total amount of Principal Receivables in the Trust as of
the last day of the immediately preceding Monthly Period (subject to adjustment
to give effect to designations of Additional Accounts and Removed Accounts) and
the principal amount on deposit in the Special Funding Account as of such last
day (or, in the case of the first Monthly Period, the Closing Date) and (ii) the
Series Allocation Percentage for Series 1996-2 as of the last day of the
immediately preceding Monthly Period; provided, however, that because the Series
1996-2 Certificates offered hereby are subject to being paired with a future
Series, if a Pay Out Event or a Reinvestment Event (as those terms are defined
in the related Supplement) occurs with respect to a Paired Series during the
Controlled Accumulation Period with respect to Series 1996-2, the Transferor
may, by written notice delivered to the Trustee and the Servicer, designate a
different numerator for the foregoing fraction, provided that such numerator is
not less than the Adjusted Invested Amount as of the last day of the revolving
period for such Paired Series and the Transferor shall have received written
notice from each Rating Agency that such designation will satisfy the Rating
Agency Condition and the Transferor shall have delivered to the Trustee a
certificate of an authorized officer to the effect that, based on the facts
known to such officer at the time, in the reasonable belief of the Transferor,
such designation will not cause a Pay Out Event or an event that, after the
giving of notice or lapse of time, would constitute a Pay Out Event, to occur
with respect to Series 1996-2.
Such amounts so allocated to the Series 1996-2 Certificates and the
Collateral Interest will be further allocated to the Class A Certificateholders,
the Class B Certificateholders and the Collateral Interest Holder based on the
Class A Principal Percentage, the Class B Principal Percentage and the
Collateral Principal Percentage, respectively. The "Class A Principal
Percentage" means, with respect to any Monthly Period (a) during the Revolving
Period, the percentage equivalent (which shall never exceed 100%) of a fraction,
the numerator of which is equal to the Class A Invested Amount as of the last
day of the immediately preceding Monthly Period (or, in the case of the first
Monthly Period, the Class A Initial Invested Amount), and the denominator of
which is equal to the Invested Amount as of such day (or, in the case of the
first Monthly Period, the Initial Invested Amount) and (b) during the Controlled
Accumulation Period or the Early Amortization Period, the percentage equivalent
(which shall never exceed 100%) of a fraction, the numerator of which is the
Class A Invested Amount as of the end of the Revolving Period, and the
denominator of which is the Invested Amount as of such day. The "Class B
Principal Percentage" means, with respect to any Monthly Period, (i) during the
Revolving Period, the percentage equivalent (which percentage shall never exceed
100%) of a fraction, the numerator of which is the Class B Invested Amount as of
the last day of the immediately preceding Monthly Period (or, in the case of the
first Monthly Period, the Class B Initial
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<PAGE> 28
Invested Amount) and the denominator of which is the Invested Amount as of such
day (or, in the case of the first Monthly Period, the Initial Invested Amount)
and (ii) during the Controlled Accumulation Period or the Early Amortization
Period, the percentage equivalent (which percentage shall never exceed 100%) of
a fraction, the numerator of which is the Class B Invested Amount as of the end
of the Revolving Period, and the denominator of which is the Invested Amount as
of such day. The "Collateral Principal Percentage" means, with respect to any
Monthly Period, (i) during the Revolving Period, the percentage equivalent
(which percentage shall never exceed 100%) of a fraction, the numerator of which
is the Collateral Invested Amount as of the last day of the immediately
preceding Monthly Period (or, in the case of the first Monthly Period, the
Collateral Initial Invested Amount) and the denominator of which is the Invested
Amount as of such day (or in the case of the first Monthly Period, the Initial
Invested Amount) and (ii) during the Controlled Accumulation Period or the Early
Accumulation Period, the percentage equivalent (which percentage shall never
exceed 100%) of a fraction, the numerator of which is the Collateral Invested
Amount as of the end of the Revolving Period, and the denominator of which is
the Invested Amount as of such day.
As used herein, the following terms have the meanings indicated:
"Class A Invested Amount" for any date means an amount equal to (i)
the Class A Initial Invested Amount, less (ii) the amount of principal
payments made to holders of the Class A Certificates on or prior to such
date, less (iii) the excess, if any, of the aggregate amount of Class A
Investor Charge-Offs for all prior Distribution Dates over the aggregate
amount of any reimbursements of Class A Investor Charge-Offs for all
Distribution Dates prior to such date.
"Class B Invested Amount" for any date means an amount equal to (i)
the Class B Initial Invested Amount, less (ii) the amount of principal
payments made to holders of the Class B Certificates on or prior to such
date, less (iii) the aggregate amount of Class B Investor Charge-Offs for
all prior Distribution Dates, less (iv) the aggregate amount of Reallocated
Principal Collections for all prior Distribution Dates which have been used
to fund the Required Amount with respect to such Distribution Dates
(excluding any Reallocated Principal Collections that have resulted in a
reduction of the Collateral Invested Amount), less (v) an amount equal to
the amount by which the Class B Invested Amount has been reduced to cover
the Class A Investor Default Amount on all prior Distribution Dates as
described herein under "-- Defaulted Receivables; Investor Charge-Offs,"
plus (vi) the aggregate amount of Excess Spread and Excess Finance Charge
Collections allocated to Series 1996-2 and applied on all prior
Distribution Dates for the purpose of reimbursing amounts deducted pursuant
to the foregoing clauses (iii), (iv) and (v); provided, however, that the
Class B Invested Amount may not be reduced below zero.
"Class A Adjusted Invested Amount" for any date means an amount equal
to the then current Class A Invested Amount less the funds on deposit in
the Principal Funding Account (up to the Class A Invested Amount) on such
date.
"Class B Adjusted Invested Amount" for any date means an amount equal
to the Class B Invested Amount less the funds on deposit in the Principal
Funding Account in excess of the Class A Invested Amount on such date.
"Collateral Invested Amount" for any date means an amount equal to (a)
the Collateral Initial Invested Amount, less (b) the aggregate amount of
principal payments made to the Collateral Interest Holder prior to such
date, less (c) the aggregate amount of Collateral Charge-Offs for all prior
Distribution Dates, less (d) the aggregate amount of Reallocated Principal
Collections for all prior Distribution Dates, less (e) an amount equal to
the aggregate amount by which the Collateral Invested Amount has been
reduced to fund the Class A Investor Default Amount and the Class B
Investor Default Amount on all prior Distribution Dates as described under
"-- Defaulted Receivables; Investor Charge-Offs," and plus (f) the
aggregate amount of Excess Spread and Excess Finance Charge Collections
allocated to Series 1996-2 and applied on all prior Distribution Dates for
the purpose of reimbursing amounts deducted pursuant to the foregoing
clauses (c), (d) and (e); provided, however, that the Collateral Invested
Amount may not be reduced below zero.
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<PAGE> 29
"Invested Amount" for any date means an amount equal to the sum of the
Class A Invested Amount, the Class B Invested Amount and the Collateral
Invested Amount on such date.
PRINCIPAL FUNDING ACCOUNT
The Servicer will establish and maintain in the name of the Trustee, on
behalf of the Trust, the Principal Funding Account as a deposit account meeting
the eligibility requirements specified in the Pooling and Servicing Agreement
(an "Eligible Deposit Account") held for the benefit of the Series 1996-2
Certificateholders. During the Controlled Accumulation Period, the Servicer will
transfer collections in respect of Principal Receivables, Shared Principal
Collections allocated to Series 1996-2 and other amounts described herein to be
treated in the same manner as collections of Principal Receivables from the
Collection Account to the Principal Funding Account as described below under
"-- Application of Collections."
Unless a Pay Out Event has occurred with respect to the Series 1996-2
Certificates, all amounts on deposit in the Principal Funding Account (the
"Principal Funding Account Balance") on any Distribution Date (after giving
effect to any deposits to, or withdrawals from, the Principal Funding Account to
be made on such Distribution Date) will be invested to the following
Distribution Date by the Trustee at the direction of the Servicer in Eligible
Investments. On each Distribution Date with respect to the Controlled
Accumulation Period the interest and other investment income (net of investment
expenses and losses) earned on such investments (the "Principal Funding
Investment Proceeds") will be withdrawn from the Principal Funding Account and
will be treated as a portion of Class A Available Funds. If such investments
with respect to any such Distribution Date yield less than the Class A
Certificate Rate, the Principal Funding Investment Proceeds with respect to such
Distribution Date will be less than the Covered Amount for such Distribution
Date. It is intended that any such shortfall will be funded from other Class A
Available Funds (including a withdrawal from the Reserve Account, if necessary,
as described below under "-- Reserve Account"). The Available Reserve Account
Amount at any time will be limited and there can be no assurance that sufficient
funds will be available to fund any such shortfall. The "Covered Amount" shall
mean for any Distribution Date with respect to the Controlled Accumulation
Period or the first Special Payment Date, if such Special Payment Date occurs
prior to the payment in full of the Class A Invested Amount, an amount equal to
the product of (i) a fraction the numerator of which is the actual number of
days in the related Interest Period and the denominator of which is 360, times
(ii) the Class A Certificate Rate in effect with respect to such Interest
Period, and (iii) the Principal Funding Account Balance, if any, as of the
preceding Distribution Date.
RESERVE ACCOUNT
The Servicer will establish and maintain in the name of the Trustee, on
behalf of the Trust, an Eligible Deposit Account for the benefit of the Class A
Certificateholders and the Collateral Interest Holder (the "Reserve Account").
The Reserve Account is established to assure the subsequent distribution of
interest on the Class A Certificates as provided in this Prospectus Supplement
during the Controlled Accumulation Period. On each Distribution Date from and
after the Reserve Account Funding Date, but prior to the termination of the
Reserve Account, the Trustee, acting pursuant to the Servicer's instructions,
will apply Excess Spread and Excess Finance Charge Collections allocated to
Series 1996-2 (in the order of priority described below under "-- Application of
Collections -- Excess Spread; Excess Finance Charge Collections") to increase
the amount on deposit in the Reserve Account (to the extent such amount is less
than the Required Reserve Account Amount). In addition, on each such
Distribution Date, the Transferor will have the option, but will not be
required, to make a deposit in the Reserve Account to the extent that the amount
on deposit in the Reserve Account, after giving effect to any Excess Spread and
Excess Finance Charge Collections allocated and available to be deposited in the
Reserve Account on such Distribution Date, is less than the Required Reserve
Account Amount. The "Reserve Account Funding Date" will be the Distribution Date
with respect to the Monthly Period that commences three months prior to the
Distribution Date with respect to the first Monthly Period in the Controlled
Accumulation Period, or such earlier date as the Transferor may determine. The
"Required Reserve Account Amount" for any Distribution Date on or after the
Reserve Account Funding Date will be equal to 0.5% of the Class A Invested
Amount as of the preceding
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<PAGE> 30
Distribution Date, or any other amount designated by the Transferor provided
that the Transferor has received written notice from each Rating Agency that
such designation will satisfy the Rating Agency Condition. On each Distribution
Date, after giving effect to any deposit to be made to, and any withdrawal to be
made from, the Reserve Account on such Distribution Date, the Trustee will
withdraw from the Reserve Account an amount equal to the excess, if any, of the
amount on deposit in the Reserve Account over the Required Reserve Account
Amount and shall distribute such excess to the Collateral Interest Holder for
application in accordance with the terms of the Loan Agreement.
Provided that the Reserve Account has not terminated as described below,
all amounts on deposit in the Reserve Account on any Distribution Date (after
giving effect to any deposits to, or withdrawals from, the Reserve Account to be
made on such Distribution Date) will be invested to the following Distribution
Date by the Trustee at the direction of the Servicer in Eligible Investments.
The interest and other investment income (net of investment expenses and losses)
earned on such investments (the "Interest Funding Investment Proceeds") will be
retained in the Reserve Account (to the extent the amount on deposit therein is
less than the Required Reserve Account Amount) or deposited in the Collection
Account and treated as collections of Finance Charge Receivables allocable to
Series 1996-2.
On or before each Distribution Date with respect to the Controlled
Accumulation Period (on or prior to the Expected Final Payment Date) and on the
first Special Payment Date (if such Special Payment Date occurs on or prior to
the Expected Final Payment Date), a withdrawal will be made from the Reserve
Account, and the amount of such withdrawal will be deposited in the Collection
Account and included in Class A Available Funds in an amount equal to the lesser
of (a) the Available Reserve Account Amount with respect to such Distribution
Date or Special Payment Date and (b) the excess, if any, of the Covered Amount
with respect to such Distribution Date or Special Payment Date over the
Principal Funding Investment Proceeds with respect to such Distribution Date or
Special Payment Date; provided that the amount of such withdrawal will be
reduced to the extent that funds otherwise would be available to be deposited in
the Reserve Account on such Distribution Date or Special Payment Date. On each
Distribution Date, the amount available to be withdrawn from the Reserve Account
(the "Available Reserve Account Amount") will be equal to the lesser of the
amount on deposit in the Reserve Account (before giving effect to any deposit to
be made to the Reserve Account on such Distribution Date) and the Required
Reserve Account Amount for such Distribution Date.
The Reserve Account will be terminated following the earlier to occur of
(a) the termination of the Trust pursuant to the Pooling and Servicing
Agreement, (b) the date on which the Series 1996-2 Certificates are paid in full
and (c) if the Controlled Accumulation Period has not commenced, the occurrence
of a Pay Out Event with respect to the Series 1996-2 Certificates or, if the
Controlled Accumulation Period has commenced, the earlier of the first Special
Payment Date and the Expected Final Payment Date. Upon the termination of the
Reserve Account, all amounts on deposit therein (after giving effect to any
withdrawal from the Reserve Account on such date as described above) will be
distributed to the Collateral Interest Holder for application in accordance with
the terms of the Loan Agreement. Any amounts withdrawn from the Reserve Account
and distributed to the Collateral Interest Holder as described above will not be
available for distribution to the Class A Certificateholders.
REALLOCATION OF CASH FLOWS
With respect to each Distribution Date, on each Determination Date, the
Servicer will determine the amount (the "Class A Required Amount"), which will
be equal to the amount, if any, by which (a) the sum of (i) Class A Monthly
Interest for such Distribution Date, (ii) any Class A Outstanding Monthly
Interest, (iii) any Class A Additional Interest, (iv) if UCS or an affiliate of
UCS is no longer the Servicer, the Class A Servicing Fee for such Distribution
Date and any unpaid Class A Servicing Fee and (v) the Class A Investor Default
Amount, if any, for such Distribution Date exceeds the sum of (A) the amount of
Principal Funding Investment Proceeds, if any, with respect to such Distribution
Date, (B) the Class A Floating Percentage of Reallocated Investor Finance Charge
Collections (including any investment earnings treated as collections of Finance
Charge Receivables in accordance with the Pooling and Servicing Agreement) and
(C) the amount of funds, if any, withdrawn from the Reserve Account and
allocated to the Class A Certificates pursuant to the
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<PAGE> 31
Series 1996-2 Supplement. If the Class A Required Amount is greater than zero,
Excess Spread and Excess Finance Charge Collections allocated to Series 1996-2
and available for such purpose will be used to fund the Class A Required Amount
with respect to such Distribution Date. If such Excess Spread and Excess Finance
Charge Collections are insufficient to fund the Class A Required Amount,
collections of Principal Receivables allocable first to the Collateral Invested
Amount and then to the Class B Certificates for the related Monthly Period
("Reallocated Principal Collections") will then be used to fund the remaining
Class A Required Amount. If Reallocated Principal Collections with respect to
the related Monthly Period, together with Excess Spread and Excess Finance
Charge Collections allocated to Series 1996-2, are insufficient to fund the
Class A Required Amount for such related Monthly Period, then the Collateral
Invested Amount will be reduced by the amount of such excess (but not by more
than the Class A Investor Default Amount for such Distribution Date). In the
event that such reduction would cause the Collateral Invested Amount to be a
negative number, the Collateral Invested Amount will be reduced to zero, and the
Class B Invested Amount will be reduced by the amount by which the Collateral
Invested Amount would have been reduced below zero (but not by more than the
excess of the Class A Investor Default amount, if any, for such Distribution
Date over the amount of such reduction, if any, of the Collateral Invested
Amount with respect to such Distribution Date). In the event that such reduction
would cause the Class B Invested Amount to be a negative number, the Class B
Invested Amount will be reduced to zero and the Class A Invested Amount will be
reduced by the amount by which the Class B Invested Amount would have been
reduced below zero, but not by more than the excess, if any, of the Class A
Investor Default Amount for such Distribution Date over the amount of the
reductions, if any, of the Collateral Invested Amount and the Class B Invested
Amount with respect to such Distribution Date as described above. Any such
reduction in the Class A Invested Amount will have the effect of slowing or
reducing the return of principal and interest to the Class A Certificateholders.
In such case, the Class A Certificateholders will bear directly the credit and
other risks associated with their undivided interest in the Trust. See
"-- Defaulted Receivables; Investor Charge-Offs" below.
With respect to each Distribution Date, on each Determination Date, the
Servicer will determine the amount (the "Class B Required Amount"), which will
be equal to the sum of (a) the amount, if any, by which the sum of (i) Class B
Monthly Interest for such Distribution Date, (ii) any Class B Outstanding
Monthly Interest, (iii) any Class B Additional Interest, and (iv) if UCS or an
affiliate of UCS is no longer the Servicer, the Class B Servicing Fee for such
Distribution Date and any unpaid Class B Servicing Fee exceeds the Class B
Floating Percentage of Reallocated Investor Finance Charge Collections
(including any investment earnings treated as collections of Finance Charge
Receivables in accordance with the Pooling and Servicing Agreement) and (b) the
Class B Investor Default Amount. If the Class B Required Amount is greater than
zero, Excess Spread and Excess Finance Charge Collections allocated to Series
1996-2 and not required to pay the Class A Required Amount or reimburse Class A
Investor Charge-Offs will be used to fund the Class B Required Amount with
respect to such Distribution Date. If such Excess Spread and Excess Finance
Charge Collections available with respect to such Distribution Date are less
than the Class B Required Amount, Reallocated Principal Collections allocable to
the Collateral Interest and not required to pay the Class A Required Amount for
the related Monthly Period will then be used to fund the remaining Class B
Required Amount. If such Reallocated Principal Collections allocable to the
Collateral Interest with respect to the related Monthly Period are insufficient
to fund the remaining Class B Required Amount, then the Collateral Invested
Amount will be reduced by the amount of such insufficiency (but not by more than
the Class B Investor Default Amount for such Distribution Date). In the event
that such reduction would cause the Collateral Invested Amount to be a negative
number, the Collateral Invested Amount will be reduced to zero, and the Class B
Invested Amount will be reduced by the amount by which the Collateral Invested
Amount would have been reduced below zero (but not by more than the excess of
the Class B Investor Default Amount for such Distribution Date over the amount
of such reduction of the Collateral Invested Amount), and the Class B
Certificateholders will bear directly the credit and other risks associated with
their undivided interests in the Trust. See "-- Defaulted Receivables; Investor
Charge-Offs" below.
Reductions of the Class A Invested Amount or Class B Invested Amount shall
thereafter be reimbursed and the Class A Invested Amount or Class B Invested
Amount increased on each Distribution Date by the amount, if any, of Excess
Spread and Excess Finance Charge Collections allocable and available to
reimburse such amounts. See "-- Application of Collections -- Excess Spread;
Excess Finance Charge Collections"
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<PAGE> 32
below. When such reductions of the Class A Invested Amount and Class B Invested
Amount have been fully reimbursed, reductions of the Collateral Invested Amount
shall be reimbursed and the Collateral Invested Amount increased up to the
Required Collateral Invested Amount in a similar manner.
APPLICATION OF COLLECTIONS
Payment of Fees, Interest and Other Items. On each Distribution Date, the
Trustee, acting pursuant to the Servicer's instructions, will apply the Class A
Available Funds, Class B Available Funds and Collateral Available Funds (see
"-- Interest Payments" above) on deposit in the Collection Account in the
following priority:
(A) On each Distribution Date, an amount equal to the Class A
Available Funds with respect to such Distribution Date will be distributed
or deposited in the following priority:
(i) an amount equal to Class A Monthly Interest for such
Distribution Date, plus any Class A Outstanding Monthly Interest, plus
additional interest with respect to any such Class A Outstanding Monthly
Interest at a rate equal to the Class A Certificate Rate plus 2% per
annum (the "Class A Additional Interest"), will be (x) distributed to
holders of the Class A Certificates if such Distribution Date is an
Interest Payment Date or a Special Payment Date, or (y) deposited in the
Interest Funding Account, if such Distribution Date is not an Interest
Payment Date or a Special Payment Date, for distribution to holders of
the Class A Certificates on the next Interest Payment Date or Special
Payment Date therefor;
(ii) if UCS or an affiliate of UCS is no longer the Servicer, an
amount equal to the Class A Servicing Fee for such Distribution Date,
plus the amount of any Class A Servicing Fee previously due but not
distributed to the Servicer on a prior Distribution Date, will be
distributed to the Servicer;
(iii) an amount equal to the Class A Investor Default Amount for
such Distribution Date will be treated as a portion of Available
Principal Collections for such Distribution Date; and
(iv) the balance, if any, shall constitute Excess Spread and shall
be allocated and distributed or deposited as described under "-- Excess
Spread; Excess Finance Charge Collections" below.
(B) On each Distribution Date, an amount equal to the Class B
Available Funds with respect to such Distribution Date will be distributed
or deposited in the following priority:
(i) an amount equal to Class B Monthly Interest for such
Distribution Date, plus the amount of any Class B Outstanding Monthly
Interest, plus any additional interest with respect to any such Class B
Outstanding Monthly Interest at a rate equal to the Class B Certificate
Rate plus 2% per annum ("Class B Additional Interest"), will be (x)
distributed to the holders of the Class B Certificates if such
Distribution Date is an Interest Payment Date or a Special Payment Date,
or (y) deposited in the Interest Funding Account, if such Distribution
Date is not an Interest Payment Date or a Special Payment Date, for
distribution to the holders of the Class B Certificates on the next
Interest Payment Date or Special Payment Date therefor;
(ii) if UCS or an affiliate of UCS is no longer the Servicer, an
amount equal to the Class B Servicing Fee for such Distribution Date,
plus the amount of any Class B Servicing Fee previously due but not
distributed to the Servicer on a prior Distribution Date, will be
distributed to the Servicer; and
(iii) the balance, if any, shall constitute Excess Spread and shall
be allocated and distributed or deposited as described under "-- Excess
Spread; Excess Finance Charge Collections" below.
(C) On each Distribution Date, an amount equal to the Collateral
Available Funds with respect to such Distribution Date will be distributed
or deposited in the following priority:
(i) if UCS or an affiliate of UCS is no longer the Servicer, an
amount equal to the Collateral Interest Servicing Fee for such
Distribution Date, plus the amount of any Collateral Interest Servicing
Fee previously due but not distributed to the Servicer on a prior
Distribution Date, will be paid to the Servicer; and
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(ii) the balance, if any, will constitute a portion of Excess
Spread and will be allocated and distributed or deposited as described
under "-- Excess Spread; Excess Finance Charge Collections" below.
"Class A Monthly Interest" means, with respect to any Distribution Date, an
amount equal to the product of (i) (A) a fraction, the numerator of which is the
actual number of days in the period from and including the prior Distribution
Date (or with respect to the initial Distribution Date, the Closing Date) to and
excluding such Distribution Date and the denominator of which is 360, times (B)
the Class A Certificate Rate and (ii) the outstanding principal balance of the
Class A Certificates as of the close of business on the preceding Record Date
(or with respect to the initial Distribution Date, the Closing Date).
"Class A Outstanding Monthly Interest" means, with respect to any
Distribution Date, the amount of Class A Monthly Interest previously due but not
(i) paid to the Class A Certificateholders or (ii) deposited in the Interest
Funding Account, as applicable.
"Class B Monthly Interest" means, with respect to any Distribution Date, an
amount equal to the product of (i) (A) a fraction, the numerator of which is the
actual number of days in the period from and including the prior Distribution
Date (or with respect to the initial Distribution Date, the Closing Date) to and
excluding such Distribution Date and the denominator of which is 360, times (B)
the Class B Certificate Rate and (ii) the Class B Invested Amount as of the
close of business on the last day of the preceding Record Date (or with respect
to the initial Distribution Date, the Closing Date).
"Class B Outstanding Monthly Interest" means, with respect to any
Distribution Date, the amount of Class B Monthly Interest previously due but not
(i) paid to the Class B Certificateholders or (ii) deposited in the Interest
Funding Account, as applicable.
"Collateral Available Funds" means, with respect to any Monthly Period, an
amount equal to the Collateral Floating Percentage of Reallocated Investor
Finance Charge Collections (including any investment earnings and certain other
amounts that are to be treated as collections of Finance Charge Receivables
allocable to Series 1996-2 in accordance with the Pooling and Servicing
Agreement and the Series 1996-2 Supplement).
"Excess Spread" means, with respect to any Distribution Date, an amount
equal to the sum of the amounts described in clause (A)(iv) above, clause
(B)(iii) above and clause (C)(ii) above.
Excess Spread; Excess Finance Charge Collections. On each Distribution
Date, the Trustee, acting pursuant to the Servicer's instructions, will apply
Excess Spread and Excess Finance Charge Collections allocated to Series 1996-2
with respect to the related Monthly Period, to make the following distributions
or deposits in the following priority:
(a) an amount equal to the Class A Required Amount, if any, with
respect to the related Monthly Period will be used to fund any deficiency
pursuant to clauses (A)(i), (ii) and (iii) above under "-- Payment of Fees,
Interest and Other Items" in such order of priority;
(b) an amount equal to the aggregate amount of Class A Investor
Charge-Offs which have not been previously reimbursed will be treated as a
portion of Available Principal Collections for such Distribution Date as
described under "-- Payments of Principal" below;
(c) an amount equal to the Class B Required Amount, if any, with
respect to such Distribution Date will be (I) used to fund any deficiency
pursuant to clauses (B)(i) and (ii) above under "-- Payment of Fees,
Interest and Other Items" in such order of priority and then (II) treated,
up to the Class B Investor Default Amount, as a portion of Available
Principal Collections for such Distribution Date;
(d) an amount equal to the aggregate amount by which the Class B
Invested Amount has been reduced pursuant to clauses (iii), (iv) and (v) of
the definition of "Class B Invested Amount" under "-- Allocation
Percentages" above (but not in excess of the aggregate amount of such
reductions which have not been previously reimbursed) will be treated as a
portion of Available Principal Collections for such Distribution Date;
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(e) an amount equal to Collateral Monthly Interest for such
Distribution Date, plus the amount of any Collateral Monthly Interest
previously due but not distributed to the Collateral Interest Holder on a
prior Distribution Date and any Collateral Additional Interest previously
due but not distributed to the Collateral Interest Holder on a prior
Distribution Date, will be distributed to the Collateral Interest Holder
for application in accordance with the Loan Agreement;
(f) an amount equal to the Monthly Servicing Fee due but not paid to
the Servicer on such Distribution Date or a prior Distribution Date shall
be paid to the Servicer;
(g) an amount equal to the Collateral Default Amount shall be treated
as a portion of Available Principal Collections with respect to such
Distribution Date;
(h) an amount equal to the aggregate amount by which the Collateral
Invested Amount has been reduced pursuant to clauses (c), (d) and (e) of
the definition of "Collateral Invested Amount" under "-- Allocation
Percentages" above (but not in excess of the aggregate amount of such
reductions which have not been previously reimbursed) shall be treated as a
portion of Available Principal Collections for such Distribution Date;
(i) on each Distribution Date from and after the Reserve Account
Funding Date, but prior to the date on which the Reserve Account terminates
as described under "-- Reserve Account" above, an amount up to the excess,
if any, of the Required Reserve Account Amount over the Available Reserve
Account Amount shall be deposited into the Reserve Account;
(j) an amount equal to the aggregate of any other amounts then
required to be applied pursuant to the Loan Agreement among the Transferor,
the Trustee, the Servicer and the Collateral Interest Holder (the "Loan
Agreement") (to the extent such amounts are required to be applied pursuant
to the Loan Agreement out of Excess Spread and Excess Finance Charge
Collections) shall be distributed to the Collateral Interest Holder for
application in accordance with the Loan Agreement; and
(k) the balance, if any, will constitute a portion of Excess Finance
Charge Collections for such Distribution Date and will be available for
allocation to other Excess Allocation Series or to the holders of the
Transferor Certificates as described in "The Pooling and Servicing
Agreement Generally -- Sharing of Excess Finance Charge Collections Among
Excess Allocation Series" in the Prospectus.
"Collateral Monthly Interest" means, with respect to any Distribution Date,
an amount equal to the product of (i)(A) a fraction, the numerator of which is
the actual number of days in the period from and including the preceding
Distribution Date to but excluding such Distribution Date and the denominator of
which is 360, times (B) the Collateral Rate and (ii) the Collateral Invested
Amount as of the preceding Record Date; provided, however, with respect to the
first Distribution Date, Collateral Monthly Interest shall be equal to the
interest accrued on the Collateral Initial Invested Amount at the Collateral
Rate for the period from the Closing Date to but excluding the first
Distribution Date.
"Collateral Rate" means a rate specified in the Loan Agreement not to
exceed one-month LIBOR plus 1% per annum.
"Collateral Additional Interest" means, with respect to any Distribution
Date, additional interest with respect to Collateral Monthly Interest due but
not paid to the Collateral Interest Holder on a prior Distribution Date at a
rate equal to the Collateral Rate.
Payments of Principal. On each Distribution Date, the Trustee, acting
pursuant to the Servicer's instructions, will distribute Available Principal
Collections (see "-- Principal Payments" above) on deposit in the Collection
Account in the following priority:
(i) on each Distribution Date with respect to the Revolving Period,
all such Available Principal Collections will be distributed or deposited
in the following priority:
(A) an amount equal to the excess, if any, of the Collateral
Invested Amount over the Required Collateral Invested Amount will be
paid to the Collateral Interest Holder; and
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(B) the balance will be treated as Shared Principal Collections and
applied as described under "The Pooling and Servicing Agreement
Generally -- Shared Principal Collections" in the Prospectus;
(ii) on each Distribution Date with respect to the Controlled
Accumulation Period, all such Available Principal Collections will be
distributed or deposited in the following priority:
(A) an amount equal to the lesser of (x) the Controlled Deposit
Amount and (y) the sum of the Class A Adjusted Invested Amount and the
Class B Adjusted Invested Amount will be deposited in the Principal
Funding Account;
(B) for each Distribution Date before the Class B Invested Amount
is paid in full, an amount equal to the balance, if any, of such
Available Principal Collections will be paid to the Collateral Interest
Holder, for application in accordance with the Loan Agreement, to the
extent the Collateral Invested Amount is greater than the Required
Collateral Invested Amount;
(C) for each Distribution Date beginning on the Distribution Date
on which the Class B Invested Amount is paid in full, an amount up to
the Collateral Invested Amount will be paid to the Collateral Interest
Holder; and
(D) for each Distribution Date, the balance, if any, of Available
Principal Collections not applied pursuant to paragraphs (A) and (B) or
(C) (as applicable) above will be treated as Shared Principal
Collections and applied as described under "The Pooling and Servicing
Agreement Generally -- Shared Principal Collections" in the Prospectus;
and
(iii) on each Distribution Date with respect to the Early Amortization
Period, all such Available Principal Collections will be distributed as
follows:
(A) an amount up to the Class A Adjusted Invested Amount will be
distributed to the Class A Certificateholders;
(B) for each Distribution Date beginning on the Distribution Date
on which the Class A Invested Amount is paid in full, an amount up to
the Class B Adjusted Invested Amount will be distributed to the Class B
Certificateholders;
(C) for each Distribution Date beginning on the Distribution Date
on which the Class B Invested Amount is paid in full, an amount up to
the Collateral Invested Amount will be paid to the Collateral Interest
Holder; and
(D) for each Distribution Date, after giving effect to paragraphs
(A), (B) and (C) above, an amount equal to the balance, if any, of such
Available Principal Collections will be allocated to Shared Principal
Collections and applied in accordance with the Pooling and Servicing
Agreement.
"Controlled Accumulation Amount" means for any Distribution Date with
respect to the Controlled Accumulation Period, $77,500,000; provided, however,
that, if the commencement of the Controlled Accumulation Period is delayed as
described above under "-- Principal Payments," the Controlled Accumulation
Amount for each Distribution Date with respect to the Controlled Accumulation
Period may be different for each Distribution Date with respect to the
Controlled Accumulation Period and will be determined by the Transferor in
accordance with the Series 1996-2 Supplement based on the principal payment
rates for the Accounts and on the invested amounts of other Principal Sharing
Series that are scheduled to be in their revolving periods and then scheduled to
create Shared Principal Collections during the Controlled Accumulation Period.
"Deficit Controlled Accumulation Amount" means (a) on the first
Distribution Date with respect to the Controlled Accumulation Period, the
excess, if any, of the Controlled Accumulation Amount for such Distribution Date
over the amount deposited in the Principal Funding Account on such Distribution
Date and (b) on each subsequent Distribution Date with respect to the Controlled
Accumulation Period, the excess, if any, of the Controlled Deposit Amount for
such subsequent Distribution Date over the amount deposited in the Principal
Funding Account on such subsequent Distribution Date.
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"Controlled Deposit Amount" shall mean, for any Distribution Date with
respect to the Controlled Accumulation Period, an amount equal to the sum of the
Controlled Accumulation Amount for such Distribution Date and any Deficit
Controlled Accumulation Amount for the immediately preceding Distribution Date.
REQUIRED COLLATERAL INVESTED AMOUNT
The "Required Collateral Invested Amount" with respect to any Distribution
Date means (i) initially $70,000,000 and (ii) thereafter on each Distribution
Date an amount equal to 7% of the sum of the Class A Adjusted Invested Amount on
such Distribution Date, the Class B Adjusted Invested Amount on such
Distribution Date (in each case after taking into account payments to be made on
such Distribution Date) and the Collateral Invested Amount on the prior
Distribution Date after any adjustments made on such Distribution Date, but not
less than $30,000,000; provided, however, that (1) if certain reductions in the
Collateral Invested Amount are made or if a Pay Out Event occurs, the Required
Collateral Invested Amount for such Distribution Date shall equal the Required
Collateral Invested Amount for the Distribution Date immediately preceding the
occurrence of such reduction or Pay Out Event, (2) in no event shall the
Required Collateral Invested Amount exceed the unpaid principal amount of the
Series 1996-2 Certificates as of the last day of the Monthly Period preceding
such Distribution Date after taking into account payments to be made on such
Distribution Date and (3) the Required Collateral Invested Amount may be reduced
to a lesser amount at any time if the Rating Agency Condition is satisfied.
With respect to any Distribution Date, if the Collateral Invested Amount is
less than the Required Collateral Invested Amount, certain Excess Spread and
Excess Finance Charge Collections, if available, will be allocated to increase
the Collateral Invested Amount to the extent of such shortfall.
DEFAULTED RECEIVABLES; INVESTOR CHARGE-OFFS
On each Determination Date, the Servicer will calculate the Investor
Default Amount for the preceding Monthly Period. The term "Investor Default
Amount" means, for any Monthly Period, the product of (i) the Floating
Allocation Percentage with respect to such Monthly Period and (ii) the Series
Allocable Defaulted Amount for such Monthly Period. A portion of the Investor
Default Amount will be allocated to the Class A Certificates (the "Class A
Investor Default Amount") on each Distribution Date in an amount equal to the
product of the Class A Floating Percentage applicable during the related Monthly
Period and the Investor Default Amount for such Monthly Period. A portion of the
Investor Default Amount will be allocated to the Class B Certificates (the
"Class B Investor Default Amount") in an amount equal to the product of the
Class B Floating Percentage applicable during the related Monthly Period and the
Investor Default Amount for such Monthly Period. An amount equal to the Class A
Investor Default Amount for each Monthly Period will be paid from Class A
Available Funds, Excess Spread and Excess Finance Charge Collections allocated
to Series 1996-2 and from Reallocated Principal Collections, if applicable, and
applied as described above in "-- Application of Collections -- Payment of Fees,
Interest and Other Items." An amount equal to the Class B Investor Default
Amount for each Monthly Period will be paid from Excess Spread and Excess
Finance Charge Collections allocated to Series 1996-2 and from Reallocated
Principal Collections allocable to the Collateral Invested Amount, if
applicable, and applied as described above under "-- Application of
Collections -- Excess Spread; Excess Finance Charge Collections."
On each Distribution Date, if the Class A Required Amount for such
Distribution Date exceeds the sum of Excess Spread and Excess Finance Charge
Collections allocable to Series 1996-2 and Reallocated Principal Collections,
the Collateral Invested Amount will be reduced by the amount of such excess, but
not by more than the Class A Investor Default Amount for such Distribution Date.
In the event that such reduction would cause the Collateral Invested Amount to
be a negative number, the Collateral Invested Amount will be reduced to zero,
and the Class B Invested Amount will be reduced by the amount by which the
Collateral Invested Amount would have been reduced below zero, but not by more
than the excess, if any, of the Class A Investor Default Amount for such
Distribution Date over the amount of such reduction, if any, of the Collateral
Invested Amount with respect to such Distribution Date. In the event that such
reduction would cause the Class B Invested Amount to be a negative number, the
Class B Invested Amount will be reduced to zero, and the Class A Invested Amount
will be reduced by the amount by which the Class B Invested Amount
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would have been reduced below zero, but not by more than the excess, if any, of
the Class A Investor Default Amount for such Distribution Date over the amount
of the reductions, if any, of the Collateral Invested Amount and of the Class B
Invested Amount with respect to such Distribution Date as described above (a
"Class A Investor Charge-Off"), which will have the effect of slowing or
reducing the return of principal to the holders of the Class A Certificates. If
the Class A Invested Amount has been reduced by the amount of any Class A
Investor Charge-Offs, it will thereafter be increased on any Distribution Date
(but not by an amount in excess of the aggregate Class A Investor Charge-Offs)
by the amount of Excess Spread and Excess Finance Charge Collections allocable
to Series 1996-2 available for such purpose as described above under
"-- Application of Collections -- Excess Spread; Excess Finance Charge
Collections."
On each Distribution Date, if the Class B Required Amount for such
Distribution Date exceeds the sum of Excess Spread and Excess Finance Charge
Collections allocable to Series 1996-2 and not required to pay the Class A
Required Amount or reimburse Class A Investor Charge-Offs and Reallocated
Principal Collections allocable to the Collateral Interest and not required to
pay the Class A Required Amount, then the Collateral Invested Amount will be
reduced by the amount of such excess, but not by more than the Class B Investor
Default Amount for such Monthly Period. In the event that such reduction would
cause the Collateral Invested Amount to be a negative number, the Collateral
Invested Amount will be reduced to zero, and the Class B Invested Amount will be
reduced by the amount by which the Collateral Invested Amount would have been
reduced below zero, but not by more than the excess, if any, of the Class B
Investor Default Amount for such Distribution Date over the amount of such
reduction, if any, of the Collateral Invested Amount with respect to such
Distribution Date (a "Class B Investor Charge-Off"). The Class B Invested Amount
will also be reduced by the amount of Reallocated Principal Collections in
excess of the Collateral Invested Amount and the amount of any portion of the
Class B Invested Amount allocated to the Class A Certificates to avoid a
reduction in the Class A Invested Amount. The Class B Invested Amount will
thereafter be increased on any Distribution Date (but not by an amount in excess
of the amount of such reductions in the Class B Invested Amount) by the amount
of Excess Spread and Excess Finance Charge Collections allocable to Series
1996-2 available for such purpose as described above under "-- Application of
Collections -- Excess Spread; Excess Finance Charge Collections."
On each Distribution Date, if the Collateral Floating Percentage of the
Investor Default Amount (the "Collateral Default Amount") for such Distribution
Date exceeds the amount of Excess Spread and Excess Finance Charge Collections
allocated to Series 1996-2 which is allocated and available to fund such amount
as described under "-- Application of Collections -- Excess Spread; Excess
Finance Charge Collections," the Collateral Invested Amount will be reduced by
the amount of such excess but not more than the lesser of the Collateral Default
Amount and the Collateral Invested Amount for such Distribution Date (a
"Collateral Charge-Off"). The Collateral Interest will also be reduced by the
amount of Reallocated Principal Collections and the amount of any portion of the
Collateral Invested Amount allocated to the Class A Certificates to avoid a
reduction in the Class A Invested Amount or to the Class B Certificates to avoid
a reduction in the Class B Invested Amount. The Collateral Invested Amount will
thereafter be increased on any Distribution Date (but not by an amount in excess
of the amount of such reductions in the Collateral Invested Amount) by the
amount of Excess Spread and Excess Finance Charge Collections allocated to
Series 1996-2 allocated and available for that purpose as described under
"-- Application of Collections -- Excess Spread; Excess Finance Charge
Collections."
PAIRED SERIES
The Series 1996-2 Certificates may be paired with one or more other Series
(each, a "Paired Series") at or after the commencement of the Controlled
Accumulation Period. As funds are accumulated in the Principal Funding Account,
the invested amount in the Trust of such Paired Series will increase by up to a
corresponding amount. Upon payment in full of the Series 1996-2 Certificates,
assuming that there have been no unreimbursed charge-offs with respect to any
related Paired Series, the aggregate invested amount of such related Paired
Series will have been increased by an amount up to an aggregate amount equal to
the Invested Amount paid to or deposited for the benefit of the Series 1996-2
Certificateholders after the Series 1996-2 Certificates were paired with the
Paired Series. The issuance of a Paired Series will be subject to the conditions
described under "The Pooling and Servicing Agreement Generally -- New Issuances"
in the
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Prospectus. There can be no assurance, however, that the terms of any Paired
Series might not have an impact on the timing or amount of payments received by
the Series 1996-2 Certificateholders. See "Risk Factors -- Issuance of New
Series" and "The Pooling and Servicing Agreement Generally -- Paired Series" in
the Prospectus.
PAY OUT EVENTS
The "Pay Out Events" with respect to the Series 1996-2 Certificates will
include each of the following:
(a) the occurrence of an Insolvency Event relating to the Transferor
or the occurrence of certain events of insolvency with respect to UCS
unless, in the latter case, the Rating Agency Condition is satisfied with
respect to the deletion of UCS from this Pay Out Event;
(b) the Trust becomes an investment company within the meaning of the
Investment Company Act of 1940, as amended;
(c) a failure on the part of the Transferor (i) to make any payment or
deposit required under the Pooling and Servicing Agreement or the Series
1996-2 Supplement within five business days after the day such payment or
deposit is required to be made; or (ii) to observe or perform any other
covenants or agreements of the Transferor set forth in the Pooling and
Servicing Agreement or the Series 1996-2 Supplement, which failure has a
material adverse effect on the Series 1996-2 Certificateholders and which
continues unremedied for a period of 60 days after written notice;
(d) any representation or warranty made by the Transferor in the
Pooling and Servicing Agreement or the Series 1996-2 Supplement or any
information required to be given by the Transferor to the Trustee to
identify the Accounts proves to have been incorrect in any material respect
when made and continues to be incorrect in any material respect for a
period of 60 days after written notice and as a result of which the
interests of the Series 1996-2 Certificateholders are materially and
adversely affected; provided, however, that a Pay Out Event shall not be
deemed to occur thereunder if the Transferor has repurchased the related
Receivables or all such Receivables, if applicable, during such period in
accordance with the provisions of the Pooling and Servicing Agreement;
(e) a failure by the Transferor to make an Addition to the Trust
within five business days after the day on which it is required to make
such Addition pursuant to the Pooling and Servicing Agreement or the Series
1996-2 Supplement;
(f) the occurrence of any Servicer Default;
(g) a reduction of the average Series Adjusted Portfolio Yield for any
three consecutive Monthly Periods to a rate less than the average of the
Base Rates for such three Monthly Periods;
(h) the failure to pay in full the Class A Invested Amount and the
Class B Invested Amount on the Expected Final Payment Date; and
(i) the Transferor is unable for any reason to transfer Receivables to
the Trust in accordance with the Pooling and Servicing Agreement or the
Series 1996-2 Supplement.
Then, in the case of any event described in subparagraph (c), (d) or (f),
after the applicable grace period, if any, set forth in such subparagraphs,
either the Trustee or the holders of Series 1996-2 Certificates evidencing more
than 50% of the aggregate unpaid principal amount of Series 1996-2 Certificates
by notice then given in writing to the Transferor and the Servicer (and to the
Trustee if given by the Series 1996-2 Certificateholders) may declare that a Pay
Out Event has occurred with respect to Series 1996-2 as of the date of such
notice, and, in the case of any event described in subparagraph (a), (b), (e),
(g), (h) or (i), a Pay Out Event shall occur with respect to Series 1996-2
without any notice or other action on the part of the Trustee immediately upon
the occurrence of such event.
For purposes of the Pay Out Event described in clause (g) above, the terms
"Base Rate" and "Series Adjusted Portfolio Yield" will be defined as follows
with respect to the Series 1996-2 Certificates:
"Base Rate" means, with respect to any Monthly Period, the annualized
percentage equivalent of a fraction, the numerator of which is equal to the
sum of Class A Monthly Interest, Class B Monthly Interest, Collateral
Monthly Interest and the Monthly Servicing Fee with respect to the Series
1996-2
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Certificates and the Collateral Interest for the related Distribution Date
and the denominator of which is the Invested Amount as of the last day of
the preceding Monthly Period.
"Series Adjusted Portfolio Yield" means, with respect to any Monthly
Period, the annualized percentage equivalent of a fraction, (A) the
numerator of which is equal to (a) Reallocated Investor Finance Charge
Collections (including any investment earnings and certain other amounts
that are to be treated as collections of Finance Charges Receivables
allocable to Series 1996-2 in accordance with the Pooling and Servicing
Agreement) for such Monthly Period, plus (b) the amount of Principal
Funding Investment Proceeds for the related Distribution Date, plus (c)
provided that each Rating Agency has consented to the inclusion thereof in
calculating the Series Adjusted Portfolio Yield, any Excess Finance Charge
Collections that are allocated to Series 1996-2, plus (d) the amount of
funds withdrawn from the Reserve Account and included in Class A Available
Funds for the Distribution Date with respect to such Monthly Period, and
less (e) the Investor Default Amount for the Distribution Date with respect
to such Monthly Period, and (B) the denominator of which is the Invested
Amount as of the last day of the preceding Monthly Period.
If the proceeds of any sale of the Receivables following the occurrence of
an Insolvency Event with respect to the Transferor, as described in the
Prospectus under "Description of the Certificates -- Pay Out Events and
Reinvestment Events," allocated to the Class A Invested Amount and the proceeds
of any collections on the Receivables in the Collection Account and any amounts
on deposit in the Interest Funding Account are not sufficient to pay in full the
remaining amount due on the Class A Certificates, the Class A Certificateholders
will suffer a corresponding loss and no such proceeds will be available to the
Class B Certificateholders. See "Certain Legal Aspects of the
Receivables -- Certain Matters Relating to Insolvency" in the Prospectus for a
discussion of the impact of recent federal legislation on the Trustee's ability
to liquidate the Receivables.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The share of the Servicing Fee allocable to the Series 1996-2
Certificateholders and the Collateral Interest Holder with respect to any
Distribution Date (the "Monthly Servicing Fee") shall be equal to one-twelfth of
the product of (a) 2.0% (the "Servicing Fee Rate") and (b) (i) the Adjusted
Invested Amount as of the last day of the Monthly Period preceding such
Distribution Date, less (ii) the product of (A) any amount on deposit in the
Special Funding Account as of the last day of the Monthly Period preceding such
Distribution Date and (B) the Series Allocation Percentage for Series 1996-2
with respect to such Monthly Period (the amount calculated pursuant to this
clause (b) is referred to as the "Servicing Base Amount"); provided, however,
with respect to the first Distribution Date, the Monthly Servicing Fee shall be
equal to $1,666,666. The share of the Monthly Servicing Fee allocable to the
Class A Certificateholders with respect to any Distribution Date (the "Class A
Servicing Fee") shall be equal to one-twelfth of the product of (a) the Class A
Floating Percentage, (b) the Servicing Fee Rate and (c) the Servicing Base
Amount; provided, however, that with respect to the first Distribution Date, the
Class A Servicing Fee shall be equal to $1,416,667. The share of the Monthly
Servicing Fee allocable to the Class B Certificateholders with respect to any
Distribution Date (the "Class B Servicing Fee") shall be equal to one-twelfth of
the product of (a) the Class B Floating Percentage, (b) the Servicing Fee Rate
and (c) the Servicing Base Amount; provided, however, that with respect to the
first Distribution Date, the Class B Servicing Fee shall be equal to $133,333.
The share of the Monthly Servicing Fee allocable to the Collateral Interest with
respect to any Distribution Date (the "Collateral Interest Servicing Fee") shall
be equal to one-twelfth of the product of (a) the Collateral Floating
Percentage, (b) the Servicing Fee Rate and (c) the Servicing Base Amount;
provided, however, that with respect to the first Distribution Date, the
Collateral Interest Servicing Fee shall be equal to $116,666. The remainder of
the Servicing Fee shall be paid by the holders of the Transferor Certificates or
the certificateholders of other Series (as provided in the related Supplements)
and in no event will the Trust, the Trustee or the Series 1996-2
Certificateholders be liable for the share of the Servicing Fee to be paid by
the holders of the Transferor Certificates or the certificateholders of any
other Series.
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SERIES TERMINATION
If, on the Distribution Date, which is two months prior to the Series
1996-2 Termination Date, the Invested Amount (after giving effect to all changes
therein on such date) exceeds zero, the Servicer will, within the 40-day period
beginning on such date, solicit bids for the sale of interests in the Principal
Receivables or certain Principal Receivables, together in each case with the
related Finance Charge Receivables, in an amount equal to the Invested Amount at
the close of business on the last day of the Monthly Period preceding the
Termination Date (after giving effect to all distributions required to be made
on the Termination Date other than from the proceeds of the sale). The
Transferor and the Collateral Interest Holder will be entitled to participate
in, and to receive notice of each bid submitted in connection with, such bidding
process. Upon the expiration of such 40-day period, the Trustee will determine
(a) which bid is the highest cash purchase offer (the "Highest Bid") and (b) the
amount (the "Available Final Distribution Amount") which otherwise would be
available in the Collection Account on the Termination Date for distribution to
the Series 1996-2 Certificateholders and the Collateral Interest Holder. The
Servicer will sell such Receivables on the Termination Date to the bidder who
provided the Highest Bid and will deposit the proceeds of such sale in the
Collection Account for allocation (together with the Available Final
Distribution Amount) to the Series 1996-2 Certificateholders' Interest and the
Collateral Interest in the order of priority specified herein.
REPORTS
No later than the third business day prior to each Distribution Date, the
Servicer will forward to the Trustee, the Paying Agent, each Rating Agency and
the Collateral Interest Holder, a statement (the "Monthly Report") prepared by
the Servicer setting forth certain information with respect to the Trust and the
Class A Certificates and the Class B Certificates, including: (a) the aggregate
amount of Principal Receivables and Finance Charge Receivables in the Trust as
of the end of such Monthly Period; (b) the Invested Amount, the Class A Invested
Amount, the Class B Invested Amount and the Collateral Invested Amount at the
close of business on the last day of the preceding Monthly Period; (c) the
Series Allocation Percentage, the Floating Allocation Percentage, the Class A
Floating Percentage, the Class B Floating Percentage and the Collateral Floating
Percentage and the Principal Allocation Percentage, the Class A Principal
Percentage, the Class B Principal Percentage and the Collateral Principal
Percentage; (d) the amount of collections of Principal Receivables and Finance
Charge Receivables processed during the related Monthly Period and the portion
thereof allocated to the Series 1996-2 Certificateholders' Interest; (e) the
aggregate outstanding balance of Accounts that were 31, 61 and 91 days or more
delinquent as of the end of such Monthly Period; (f) the Investor Default
Amount, the Class A Investor Default Amount, the Class B Investor Default Amount
and the Collateral Default Amount and the Defaulted Amount with respect to such
Monthly Period; (g) the aggregate amount, if any, of Class A Investor
Charge-Offs, Class B Investor Charge-Offs, any reductions in the Class B
Invested Amount pursuant to clauses (iv) and (v) of the definition of "Class B
Invested Amount," and the amounts by which the Collateral Invested Amount has
been reduced pursuant to clauses (c), (d) and (e) of the definition of
"Collateral Invested Amount" and any Class A or Class B Investor Charge-Offs
reimbursed on the related Monthly Period, for such Monthly Period; (h) the
Monthly Servicing Fee, Class A Servicing Fee, Class B Servicing Fee and
Collateral Interest Servicing Fee for such Monthly Period; (i) the Series
Adjusted Portfolio Yield for such Monthly Period; (j) the Base Rate for such
Monthly Period; (k) Reallocated Principal Collections; and (l) Shared Principal
Collections.
S-40
<PAGE> 41
UNDERWRITING
Subject to the terms and conditions set forth in the underwriting agreement
(the "Underwriting Agreement") among the Transferor, UCS, the underwriters of
the Class A Certificates named below (the "Class A Underwriters") and the
underwriters of the Class B Certificates named below (the "Class B
Underwriters," and together with the Class A Underwriters, the "Underwriters"),
the Transferor has agreed to cause the Trust to sell to the Underwriters, and
the Underwriters have agreed to purchase, the principal amount of the Class A
Certificates and Class B Certificates set forth opposite their names:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF
UNDERWRITERS OF THE CLASS A CERTIFICATES CLASS A CERTIFICATES
------------------------------------------------------------------- --------------------
<S> <C>
Lehman Brothers Inc. .............................................. $170,000,000
Bear, Stearns & Co. Inc. .......................................... $170,000,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.......................................... $170,000,000
Morgan Stanley & Co. Incorporated.................................. $170,000,000
Salomon Brothers Inc............................................... $170,000,000
--------------------
Total......................................................... $850,000,000
===============
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF
UNDERWRITERS OF THE CLASS B CERTIFICATES CLASS B CERTIFICATES
------------------------------------------------------------------- --------------------
<S> <C>
Lehman Brothers Inc. .............................................. $ 40,000,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.......................................... $ 40,000,000
--------------------
Total......................................................... $ 80,000,000
===============
</TABLE>
The Underwriting Agreement provides that the obligation of the Class A
Underwriters to pay for and accept delivery of the Class A Certificates and the
obligation of the Class B Underwriters to pay for and accept delivery of the
Class B Certificates are subject to the approval of certain legal matters by
their counsel and to certain other conditions. All of the Series 1996-2
Certificates offered hereby will be issued if any are issued.
The Class A Underwriters propose initially to offer the Class A
Certificates to the public at the price set forth on the cover page hereof and
to certain dealers at such price less concessions not in excess of .15% of the
principal amount of the Class A Certificates. The Class A Underwriters may
allow, and such dealers may reallow, concessions not in excess of .075% of the
principal amount of the Class A Certificates to certain brokers and dealers.
After the initial public offering, the public offering price and other selling
terms may be changed by the Class A Underwriters.
The Class B Underwriters propose initially to offer the Class B
Certificates to the public at the price set forth on the cover page hereof and
to certain dealers at such price less concessions not in excess of .175% of the
principal amount of the Class B Certificates. The Class B Underwriters may
allow, and such dealers may reallow, concessions not in excess of .10% of the
principal amount of the Class B Certificates to certain brokers and dealers.
After the initial public offering, the public offering price and other selling
terms may be changed by the Class B Underwriters.
Each Underwriter will represent and agree that:
(a) it has complied and will comply with all applicable provisions of
the Financial Services Act 1986 and the Public Offers of Securities
Regulation 1995 with respect to anything done by it in relation to the
Series 1996-2 Certificates in, from or otherwise involving the United
Kingdom;
(b) it has only issued or passed on and will only issue or pass on in
the United Kingdom any document received by it in connection with the issue
of the Series 1996-2 Certificates to a person who is of a kind described in
Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1995 or is a person to whom such
document may otherwise lawfully be issued or passed on;
(c) if it is an authorized person under Chapter III of Part I of the
Financial Services Act 1986, it has only promoted and will only promote (as
that term is defined in Regulation 1.02(2) of the Financial
S-41
<PAGE> 42
Services (Promotion of Unregulated Schemes) Regulations 1991) to any person
in the United Kingdom the scheme described in this Prospectus Supplement
and the Prospectus if that person is a kind described either in Section
76(2) of the Financial Services Act 1986 or in Regulation 1.04 of the
Financial Services (Promotion of Unregulated Schemes) Regulations 1991; and
(d) it is a person of a kind described in Article 11(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order
1995.
The Transferor and UCS will indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act, or contribute to
payments the Underwriters may be required to make in respect thereof. The
Underwriters have agreed to reimburse the Transferor for certain expenses of the
issuance and distribution of the Series 1996-2 Certificates.
LEGAL MATTERS
Certain legal matters relating to the Series 1996-2 Certificates will be
passed upon for the Transferor and the Trust by Orrick, Herrington & Sutcliffe,
New York, New York. Certain legal matters will be passed upon for the
Underwriters by Cravath, Swaine & Moore, New York, New York. Certain legal
matters relating to the federal tax consequences of the issuance of the Series
1996-2 Certificates and certain other matters relating thereto will be passed
upon for the Transferor by Cravath, Swaine & Moore, New York, New York.
S-42
<PAGE> 43
INDEX OF DEFINED TERMS
Accounts.....................................................................S-1
Adjusted Invested Amount.....................................................S-5
AT&T Universal Funding.......................................................S-1
AT&T Universal Portfolio....................................................S-16
Available Final Distribution Amount.........................................S-40
Available Principal Collections.............................................S-24
Available Reserve Account Amount............................................S-30
Average Receivables Outstanding.............................................S-17
Base Rate...................................................................S-38
CB&T.........................................................................S-1
Class A Additional Interest.................................................S-32
Class A Adjusted Invested Amount.......................................S-5, S-28
Class A Available Funds.....................................................S-22
Class A Certificate Rate.....................................................S-2
Class A Certificateholders' Interest.........................................S-4
Class A Certificates....................................................S-1, S-3
Class A Floating Percentage.................................................S-26
Class A Initial Invested Amount.........................................S-3, S-4
Class A Invested Amount................................................S-4, S-28
Class A Investor Charge-Off...........................................S-10, S-37
Class A Investor Default Amount.............................................S-36
Class A Monthly Interest....................................................S-33
Class A Outstanding Monthly Interest........................................S-33
Class A Principal Percentage................................................S-27
Class A Required Amount................................................S-8, S-30
Class A Servicing Fee.......................................................S-39
Class A Underwriters........................................................S-41
Class B Additional Interest.................................................S-32
Class B Adjusted Invested Amount.......................................S-5, S-28
Class B Available Funds.....................................................S-23
Class B Certificate Rate.....................................................S-2
Class B Certificateholders' Interest.........................................S-4
Class B Certificates....................................................S-1, S-3
Class B Floating Percentage.................................................S-27
Class B Initial Invested Amount.........................................S-3, S-4
Class B Invested Amount................................................S-4, S-28
Class B Investor Charge-Off...........................................S-10, S-37
Class B Investor Default Amount.............................................S-36
Class B Monthly Interest....................................................S-33
Class B Outstanding Monthly Interest........................................S-33
Class B Principal Percentage................................................S-27
Class B Required Amount................................................S-9, S-31
Class B Servicing Fee.......................................................S-39
Class B Underwriters........................................................S-41
Closing Date............................................................S-2, S-3
Code........................................................................S-13
Collateral Additional Interest..............................................S-35
Collateral Available Funds..................................................S-33
Collateral Charge-Off.......................................................S-37
Collateral Default Amount...................................................S-37
Collateral Floating Percentage..............................................S-27
S-43
<PAGE> 44
Collateral Initial Invested Amount...........................................S-3
Collateral Interest..........................................................S-4
Collateral Interest Holder...................................................S-4
Collateral Interest Servicing Fee...........................................S-39
Collateral Invested Amount.......................................S-4, S-28, S-34
Collateral Monthly Interest.................................................S-34
Collateral Principal Percentage.............................................S-28
Collateral Rate.............................................................S-34
Controlled Accumulation Amount..............................................S-35
Controlled Accumulation Period...............................................S-7
Controlled Accumulation Period Length.......................................S-25
Controlled Deposit Amount...................................................S-36
Covered Amount..............................................................S-29
Deficit Controlled Accumulation Amount......................................S-35
Early Amortization Period....................................................S-8
Eligible Deposit Account....................................................S-29
Enhancement Invested Amount..................................................S-4
ERISA.......................................................................S-13
Excess Spread..........................................................S-9, S-33
Expected Final Payment Date............................................S-7, S-14
Floating Allocation Percentage..............................................S-26
Group I.....................................................................S-11
Highest Bid.................................................................S-40
Initial Invested Amount.................................................S-3, S-4
Interest Funding Account....................................................S-22
Interest Funding Investment Proceeds........................................S-30
Interest Payment Date........................................................S-2
Interest Period.............................................................S-24
Invested Amount........................................................S-4, S-29
Investor Default Amount.....................................................S-36
LIBOR.......................................................................S-23
LIBOR Determination Date....................................................S-23
Loan Agreement..............................................................S-34
Monthly Report..............................................................S-40
Monthly Servicing Fee.......................................................S-39
Paired Series...............................................................S-37
Pay Out Events..............................................................S-38
Pooling and Servicing Agreement..............................................S-1
Principal Allocation Percentage.............................................S-27
Principal Funding Account...................................................S-14
Principal Funding Account Balance...........................................S-29
Principal Funding Investment Proceeds.......................................S-29
Reallocated Principal Collections......................................S-7, S-31
Receivables..................................................................S-1
Record Date.................................................................S-22
Reference Banks.............................................................S-24
Regulations.....................................................................
Required Amount..............................................................S-9
Required Collateral Invested Amount...................................S-11, S-36
Required Reserve Account Amount.............................................S-29
Reserve Account.............................................................S-29
Reserve Account Funding Date................................................S-29
Revolving Period.............................................................S-7
S-44
<PAGE> 45
Series 1996-2 Certificateholders' Interest...................................S-4
Series 1996-2 Certificates..............................................S-1, S-3
Series 1996-2 Cut-Off Date...................................................S-7
Series 1996-2 Supplement..............................................S-14, S-22
Series 1996-2 Termination Date...............................................S-7
Series Adjusted Invested Amount.............................................S-26
Series Adjusted Portfolio Yield.......................................S-38, S-39
Series Allocable Defaulted Amount...........................................S-26
Series Allocable Finance Charge Collections.................................S-26
Series Allocable Principal Collections......................................S-26
Series Allocation Percentage................................................S-26
Series Required Transferor Amount............................................S-3
Servicer.....................................................................S-1
Servicing Base Amount.......................................................S-39
Servicing Fee Rate..........................................................S-39
Special Payment Date........................................................S-14
Telerate Page 3750..........................................................S-24
Transferor...................................................................S-1
Transferor's Interest........................................................S-4
Trust........................................................................S-3
Trust Portfolio.............................................................S-16
Trustee......................................................................S-1
UCS..........................................................................S-1
Underwriters................................................................S-41
Underwriting Agreement......................................................S-41
Universal Bank...............................................................S-1
S-45
<PAGE> 46
(This page intentionally left blank)
<PAGE> 47
ANNEX I
OTHER SERIES
The table below sets forth the principal characteristics of Series 1995-1,
Series 1995-2, Series 1995-3, Series 1995-4, Series 1995-5 and Series 1996-1,
the other Series issued by the Trust and currently outstanding. Series 1995-4
and Series 1995-5 were issued in offerings exempt from the registration
requirements of the Securities Act. For more specific information with respect
to any Series, any prospective investor should contact UCS at (904) 954-7500.
UCS will provide, without charge, to any prospective purchaser of the Series
1996-2 Certificates, a copy of the Prospectus Supplement for any publicly-issued
Series.
SERIES 1995-1
Initial Invested Amount...................................$1,000,000,000
Class A Initial Invested Amount.............................$870,000,000
Class A Certificate Rate..........Three-Month LIBOR plus 0.08% per annum
Class B Initial Invested Amount..............................$60,000,000
Class B Certificate Rate..........Three-Month LIBOR plus 0.20% per annum
Controlled Accumulation Amount (subject to adjustment).......$77,500,000
Commencement of Controlled Accumulation Period (subject to
adjustment)..............................................July 31, 1997
Annual Servicing Fee Percentage...........................2.0% per annum
Collateral Initial Invested Amount...........................$70,000,000
Enhancement for the Class A and
Class B Certificates........................Collateral Invested Amount
Other enhancement for the
Class A Certificates.........Subordination of the Class B Certificates
Expected Final Payment Date................August 1998 Distribution Date
Series Issuance Date.....................................August 31, 1995
Group............................................................Group I
SERIES 1995-2
Initial Invested Amount.....................................$750,000,000
Class A Initial Invested Amount.............................$675,000,000
Class A Certificate Rate.................................5.95% per annum
Class B Initial Invested Amount..............................$35,625,000
Class B Certificate Rate.................................6.10% per annum
Controlled Accumulation Amount (subject to adjustment).......$59,218,750
Commencement of Controlled Accumulation Period
(subject to adjustment)..............................September 30, 1999
Annual Servicing Fee Percentage...........................2.0% per annum
Collateral Initial Invested Amount...........................$39,375,000
Enhancement for the Class A and
Class B Certificates........................Collateral Invested Amount
Other enhancement for the
Class A Certificates.........Subordination of the Class B Certificates
Expected Final Payment Date...............October 2000 Distribution Date
Series Issuance Date...................................November 15, 1995
Group...........................................................Group II
A-1
<PAGE> 48
SERIES 1995-3
Initial Invested Amount.....................................$750,000,000
Class A Initial Invested Amount.............................$652,500,000
Class A Certificate Rate..........Three-Month LIBOR plus 0.19% per annum
Class B Initial Invested Amount..............................$45,000,000
Class B Certificate Rate..........Three-Month LIBOR plus 0.30% per annum
Controlled Accumulation Amount (subject to adjustment).......$58,125,000
Commencement of Controlled Accumulation Period
(subject to adjustment).............................September 30, 2001
Annual Servicing Fee Percentage...........................2.0% per annum
Collateral Initial Invested Amount...........................$52,500,000
Enhancement for the Class A
and Class B Certificates....................Collateral Invested Amount
Other enhancement for the
Class A Certificates.........Subordination of the Class B Certificates
Expected Final Payment Date...............October 2002 Distribution Date
Series Issuance Date...................................November 15, 1995
Group............................................................Group I
SERIES 1995-4
Initial Invested Amount.....................................$500,000,000
Class A Initial Invested Amount.............................$465,000,000
Class A Certificate Rate..........................Commercial Paper Index
Annual Servicing Fee Percentage...........................2.0% per annum
Collateral Initial Invested Amount...........................$35,000,000
Enhancement for the Class A Certificates......Collateral Invested Amount
Commencement of Controlled Amortization Period..............May 31, 1998
Expected Final Distribution Date.............June 1999 Distribution Date
Series Issuance Date...................................December 21, 1995
Group..........................................................Group III
SERIES 1995-5
Initial Invested Amount.....................................$500,000,000
Class A Initial Invested Amount.............................$455,000,000
Class A Certificate Rate..........................Commercial Paper Index
Annual Servicing Fee Percentage.............................2% per annum
Collateral Initial Invested Amount...........................$45,000,000
Enhancement for the Class A Certificates......Collateral Invested Amount
Commencement of Controlled Amortization Period..............May 31, 1998
Expected Final Distribution Date.............June 1999 Distribution Date
Series Issuance Date...................................December 21, 1995
Group...........................................................Group IV
A-2
<PAGE> 49
SERIES 1996-1
Initial Invested Amount...................................$1,000,000,000
Class A Initial Invested Amount.............................$850,000,000
Class A Certificate Rate.........Three-Month LIBOR plus 0.125% per annum
Class B Initial Invested Amount..............................$80,000,000
Class B Certificate Rate.........Three-Month LIBOR plus 0.260% per annum
Controlled Accumulation Amount (subject to adjustment).......$77,500,000
Commencement of Controlled Accumulation Period
(subject to adjustment).................................March 31, 2000
Annual Servicing Fee Percentage...........................2.0% per annum
Collateral Initial Invested Amount...........................$70,000,000
Enhancement for the Class A and
Class B Certificates........................Collateral Invested Amount
Other enhancement for the
Class A Certificates.........Subordination of the Class B Certificates
Expected Final Payment Date.................April 2001 Distribution Date
Series Issuance Date......................................April 30, 1996
Group............................................................Group I
A-3
<PAGE> 50
- ------------------------------------------------------
- ------------------------------------------------------
No dealer, salesman or other person has been authorized to give any information
or to make any representations not contained in this Prospectus Supplement or
the accompanying Prospectus and, if given or made, such information or
representations must not be relied upon as having been authorized by the
Transferor. Neither this Prospectus Supplement nor the accompanying Prospectus
constitutes an offer or a solicitation by anyone in any state in which such
offer or solicitation is not qualified or to anyone to whom it is unlawful to
make such offer or solicitation. Neither the delivery of this Prospectus
Supplement or the accompanying Prospectus, nor any sale made hereunder shall,
under any circumstances, create any implication that there has been no change in
the affairs of the Transferor since the date hereof or thereof or that the
information contained or incorporated by reference herein or therein is correct
as of any time subsequent to its date.
---------------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Summary of Series Terms................... S-3
Risk Factors.............................. S-14
Maturity Considerations................... S-14
The AT&T Universal Portfolio.............. S-16
The Receivables........................... S-19
Use of Proceeds........................... S-21
The Account Owners........................ S-21
The Servicer.............................. S-21
Series Provisions......................... S-22
Underwriting.............................. S-41
Legal Matters............................. S-42
Index of Defined Terms.................... S-43
Annex I -- Other Series................... A-1
PROSPECTUS
Prospectus Supplement..................... 2
Reports to Certificateholders............. 2
Available Information..................... 2
Incorporation of Certain Documents by 2
Reference...............................
Prospectus Summary........................ 3
Risk Factors.............................. 17
Use of Proceeds........................... 24
The Trust................................. 24
The Credit Card Business of AT&T Universal 24
Card Services Corp......................
AT&T Universal Card Services Corp......... 30
AT&T Universal Funding Corp............... 30
Universal Bank, N.A....................... 30
Columbus Bank and Trust Company........... 30
The Accounts.............................. 31
Description of the Certificates........... 31
The Pooling and Servicing Agreement 38
Generally...............................
Description of the Purchase Agreements.... 59
Certain Legal Aspects of the 61
Receivables.............................
Tax Matters............................... 65
ERISA Considerations...................... 69
Plan of Distribution...................... 71
For Florida Residents..................... 71
Legal Matters............................. 71
Index of Defined Terms.................... 72
</TABLE>
Until September 22, 1996 (90 days after the date of this Prospectus Supplement),
all dealers effecting transactions in the Series 1996-2 Certificates whether or
not participating in this distribution, may be required to deliver a Prospectus
Supplement and Prospectus. This is in addition to the obligation of dealers to
deliver a Prospectus Supplement and Prospectus when acting as underwriters and
with respect to their unsold allotments or subscriptions.
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
AT&T UNIVERSAL
CARD MASTER TRUST
$850,000,000 CLASS A
SERIES 1996-2 FLOATING RATE
ASSET BACKED CERTIFICATES
$80,000,000 CLASS B
SERIES 1996-2 FLOATING RATE
ASSET BACKED CERTIFICATES
AT&T UNIVERSAL
FUNDING CORP.
TRANSFEROR
AT&T UNIVERSAL
CARD SERVICES CORP.
SERVICER
---------------------------
PROSPECTUS SUPPLEMENT
JUNE 24, 1996
---------------------------
UNDERWRITERS OF THE CLASS A CERTIFICATES
LEHMAN BROTHERS
BEAR STEARNS & CO. INC.
MERRILL LYNCH & CO.
MORGAN STANLEY & CO.
INCORPORATED
SALOMON BROTHERS INC
UNDERWRITERS OF THE CLASS B CERTIFICATES
LEHMAN BROTHERS
MERRILL LYNCH & CO.
- ------------------------------------------------------
- ------------------------------------------------------