<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 9, 1998
Sears Credit Account Master Trust II
--------------------------------------------------
(Exact name of registrant as specified in charter)
Illinois 0-24776 Not Applicable
-------- ------- --------------
(State of (Commission (IRS Employer
Organization) File Number) Identification No.)
c/o SRFG, Inc.
3711 Kennett Pike
Greenville, Delaware 19807
- ---------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including area code: (302) 888-3176
--------------
Former name or former address, if changed since last report: Not Applicable
Page 1
The Exhibit Index appears on Page 4
<PAGE> 2
Item 5. Other Events
Series 1998-2. On November 9, 1998, $450,000,000 aggregate
principal amount of 5.25% Class A Master Trust Certificates, Series 1998-2,
$32,000,000 aggregate principal amount of Class B Master Trust Certificates,
Series 1998-2, and $48,000,000 aggregate principal amount of Class C Master
Trust Certificates, Series 1998-2, of the Sears Credit Account Master Trust II
(the "Trust") were issued pursuant to the Pooling and Servicing Agreement, dated
as of July 31, 1994, as amended, among SRFG, Inc. (formerly Sears Receivables
Financing Group, Inc.) as Seller ("SRFG"), Sears, Roebuck and Co. as Servicer
("Sears") and The First National Bank of Chicago as Trustee (the "Trustee"), and
the Series Supplement dated as of November 9, 1998, among SRFG as Seller, Sears
as Servicer and the Trustee.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits
Exhibit No. Description
Exhibit 1.1 Underwriting Agreement among Sears, SRFG and Credit Suisse
First Boston Corporation as Representative of the several
Underwriters for the Class A Master Trust Certificates, dated
May 19, 1998 (incorporated by reference to Exhibit 1.1 of the
Trust's Current Report on Form 8-K dated June 2, 1998).
Exhibit 1.2 Pricing Agreement among Sears, SRFG and Credit Suisse
First Boston Corporation on behalf of the Underwriters for the
Class A Master Trust Certificates, dated October 27, 1998.
Exhibit 4.1 Series 1998-2 Supplement among Sears as Servicer, SRFG as
Seller and the Trustee, dated November 9, 1998, including the
forms of Investor Certificates.
Exhibit 4.2 Letter of Representations among SRFG, the Trustee and The
Depository Trust Company, dated as of November 9, 1998.
Exhibit 5.1 Opinion of Nancy K. Bellis, Assistant General
Counsel--Corporate & Securities and Secretary of Sears, as
counsel to SRFG and Sears.
Page 2
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Sears Credit Account Master Trust II
(Registrant)
By: SRFG, Inc.
(Originator of the Trust)
Date: November 9, 1998 By: /s/ George F. Slook
----------------------------
George F. Slook
President and Chief Executive Officer
Page 3
<PAGE> 4
INDEX TO EXHIBITS
Exhibit No. Description
Exhibit 1.1 Underwriting Agreement among Sears, SRFG and Credit Suisse
First Boston Corporation as Representative of the several
Underwriters for the Class A Master Trust Certificates, dated
May 19, 1998 (incorporated by reference to Exhibit 1.1 of the
Trust's Current Report on Form 8-K dated June 2, 1998).
Exhibit 1.2 Pricing Agreement among Sears, SRFG and Credit Suisse
First Boston Corporation on behalf of the Underwriters for the
Class A Master Trust Certificates, dated October 27, 1998.
Exhibit 4.1 Series 1998-2 Supplement among Sears as Servicer, SRFG as
Seller and the Trustee, dated November 9, 1998, including the
forms of Investor Certificates.
Exhibit 4.2 Letter of Representations among SRFG, the Trustee and The
Depository Trust Company, dated as of November 9, 1998.
Exhibit 5.1 Opinion of Nancy K. Bellis, Assistant General
Counsel--Corporate & Securities and Secretary of Sears, as
counsel to SRFG and Sears.
Page 4
<PAGE> 1
EXHIBIT 1.2
SEARS CREDIT ACCOUNT MASTER TRUST II
MASTER TRUST CERTIFICATES
PRICING AGREEMENT
Dated: October 27, 1998
To: SRFG, Inc., as Seller under the Pooling and Servicing Agreement dated
as of July 31, 1994, as amended.
Re: Underwriting Agreement dated May 19, 1998 (a copy of which is attached
hereto)
Title: Sears Credit Account Master Trust II, $450,000,000 5.25% Class A Master
Trust Certificates, Series 1998-2.
Initial Principal Amount of Certificates:
$450,000,000 Class A Master Trust Certificates, Series 1998-2
Class A Expected Final Payment Date: October 15, 2004
Series and Class Designation of Designated Securities:
5.25% Class A Master Trust Certificates, Series 1998-2 (the "Class A
Certificates")
Series Cut-Off Date: Last day of the Due Period ending in October 1998
Certificate Rating: Class A Certificates: Aaa by Moody's Investors Service,
Inc.
AAA by Standard & Poor's Ratings
Services
Minimum Principal Receivables Balance after giving effect to the issuance of
Series 1998-2: $4,635,005,455
Date of Series Supplement: November 9, 1998.
Certificate Rate: Class A Certificates: 5.25% per annum.
Terms of Sale: The purchase price for the Designated Securities to the
Underwriters will be the percentage of the aggregate initial principal amount of
the Certificates set forth below, plus accrued interest at the applicable
Certificate Rate from November 9, 1998.
Class A Certificates: 98.756422%
1
<PAGE> 2
Initial Public Offering Price: The initial public offering price for the
Designated Securities will be the percentage of the aggregate initial principal
amount of the Certificates set forth below, plus accrued interest at the
applicable Certificate Rate from November 9, 1998.
Class A Certificates: 99.056422%
Closing Location: Latham & Watkins
Sears Tower, 58th Floor
Chicago, Illinois 60606
Time of Delivery: 9:00 A.M., New York Time, on November 9, 1998, or at such
other time as may be agreed upon in writing.
Address of Representative of the Underwriters for notices:
Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, New York 10010-3629
Attention: Jorge Calderon
Facsimile: (212) 325-8261
Additional Agreements
Notwithstanding anything in the Agreement or in this Pricing
Agreement to the contrary, the Agreement and this Pricing Agreement constitute
the entire agreement and understanding among the parties hereto with respect to
the purchase and sale of the Class A Certificates. This Pricing Agreement may be
amended only by written agreement of the parties hereto.
2
<PAGE> 3
The Underwriters named in Schedule 1 hereto agree, severally
and not jointly, subject to the terms and provisions of the Agreement, which is
incorporated by reference herein and made a part hereof, to purchase the
principal amount of the Designated Securities set forth opposite their name in
Schedule 1. It is understood that our execution of this letter on behalf of each
of the Underwriters is pursuant to the authority set forth in a form of
Agreement among Underwriters, the form of which shall be supplied to the Company
upon request. We represent that we are authorized on behalf of ourselves and on
behalf of each of the Underwriters named in Schedule 1 hereto to enter into this
Agreement.
Very truly yours,
CREDIT SUISSE FIRST BOSTON
CORPORATION
By: /s/ Michael Raynes
---------------------------
On behalf of each of the
Accepted: Underwriters
SRFG, INC.
By: /s/ George F. Slook
---------------------------
SEARS, ROEBUCK AND CO.
By: /s/ Larry R. Raymond
----------------------------
3
<PAGE> 4
SCHEDULE I
<TABLE>
<CAPTION>
Principal
Amount of
Class A
Certificates
to be
Underwriter Purchased
- ----------- -----------
<S> <C>
Credit Suisse First Boston Corporation. . . . . . . . . . . . . . . . . . . . $90,000,000
Bear, Stearns & Co. Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . $90,000,000
Goldman, Sachs & Co.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $90,000,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated . . . . . . . . . . . . . . . . . . . . . . . . . $90,000,000
J. P. Morgan Securities Inc. . . . . . . . . . . . . . . . . . . . . . . . . . .$90,000,000
-----------
Total $450,000,000
</TABLE>
4
<PAGE> 1
EXHIBIT 4.1
SEARS, ROEBUCK AND CO.
SERVICER
SRFG, INC.
SELLER
AND
THE FIRST NATIONAL BANK OF CHICAGO
TRUSTEE
ON BEHALF OF THE CERTIFICATEHOLDERS
-------------
SERIES 1998-2 SUPPLEMENT
DATED AS OF NOVEMBER 9, 1998
TO THE
POOLING AND SERVICING AGREEMENT
DATED AS OF JULY 31, 1994
-------
$530,000,000
SEARS CREDIT ACCOUNT MASTER TRUST II
MASTER TRUST CERTIFICATES, SERIES 1998-2
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ANNEX.................................................................................................................1
SECTION 1.Definitions...............................................................................................1
SECTION 2.Subordination............................................................................................23
SECTION 3.Representations and Warranties of the Seller.............................................................24
SECTION 4.Representations and Warranties of the Servicer...........................................................24
SECTION 5.Representations and Warranties of the Trustee............................................................24
SECTION 6.Authentication of Certificates...........................................................................25
SECTION 7.Establishment and Administration of Investor Accounts and the Third Party Credit Enhancement Account.....25
SECTION 8.Allocations of Collections...............................................................................30
SECTION 9.Payments.................................................................................................83
SECTION 10.Third Party Credit Enhancement..........................................................................87
SECTION 11.Calculation of Investor Losses..........................................................................88
SECTION 12.Servicing Compensation..................................................................................88
SECTION 13.Class Coupon Cap Agreement..............................................................................88
SECTION 14.Interest Rate Swaps.....................................................................................90
SECTION 15.Investor Certificateholders' Monthly Statement..........................................................90
SECTION 16.Monthly Servicer Certificate............................................................................90
SECTION 17.Additional Rapid Amortization Events....................................................................90
SECTION 18.Purchase of Investor Certificates and Series Termination................................................92
SECTION 19.Variable Accumulation Period............................................................................92
SECTION 20.Series Yield Factor.....................................................................................93
SECTION 21.Issuance of Additional Investor Certificates............................................................94
SECTION 22.Sale or Transfer of Seller Retained Classes.............................................................95
SECTION 23.Paired Series...........................................................................................95
SECTION 24.Fixed Principal Allocation Adjustment...................................................................95
SECTION 25.Ratification of Pooling and Servicing Agreement.........................................................96
SECTION 26.Counterparts............................................................................................96
SECTION 27.Book-Entry Certificates.................................................................................96
SECTION 28.Governing Law...........................................................................................96
EXHIBITS
EXHIBIT A-1 Form of Class A Certificate
EXHIBIT A-2 Form of Class B Certificate
EXHIBIT A-3 Form of Class C Certificate
EXHIBIT B Form of Investor Certificateholders' Monthly Statement
EXHIBIT C Form of Monthly Servicer Certificate
</TABLE>
<PAGE> 3
SEARS CREDIT ACCOUNT MASTER TRUST II
MASTER TRUST CERTIFICATES, SERIES 1998-2
This Series of Master Trust Certificates is established pursuant to
Section 6.07 of that certain Pooling and Servicing Agreement dated as of July
31, 1994, as amended (the "Pooling and Servicing Agreement"), by and among SRFG,
INC. (formerly Sears Receivables Financing Group, Inc.), a Delaware corporation
("SRFG") as Seller, SEARS, ROEBUCK AND CO., a New York corporation ("Sears") as
Servicer, and THE FIRST NATIONAL BANK OF CHICAGO, a national banking
association, organized and existing under the laws of the United States (the
"Trustee"). This SERIES TERM SHEET and the ANNEX attached hereto, by and among
SRFG, Sears and the Trustee, constitute the SERIES SUPPLEMENT (the "Series
Supplement") and, together with the Pooling and Servicing Agreement, establish
the Series of Master Trust Certificates to be known as SEARS CREDIT ACCOUNT
MASTER TRUST II, MASTER TRUST CERTIFICATES, SERIES 1998-2.
SERIES TERM SHEET
Date of Series Term Sheet November 9, 1998.
Group One.
Series Initial Investor Interest $530,000,000.
Class Initial Investor Interest Class A - $450,000,000.
of each Class of Investor Certificates Class B - $32,000,000.
Class C - $48,000,000.
Seller Retained Class Initially, Class B and Class
C.
Type of Structure Controlled Amortizing
Structure.
Certificate Rates Class A - 5.25% per annum
calculated on the basis of a
360-day year of twelve 30-day
months (or in the case of the
first interest payment,
calculated on the basis of the
number of days elapsed from
and including the Series
Closing Date to but excluding
the 15th day of the calendar
month in which the first
interest payment occurs
(assuming a 30-day month) and
a 360-day year of twelve
30-day months).
Class B - Initially, 0%;
provided, however, that the
Seller may increase the
Certificate Rate pursuant to
Section 22.
i
<PAGE> 4
Class C - Initially, 0%;
provided, however, that the
Seller may increase the
Certificate Rate pursuant to
Section 22.
LIBOR Determination Date Not applicable.
Embedded Coupon Cap Class A - Not applicable.
Class B - Not applicable.
Class C - Not applicable.
Class Coupon Cap Class A - Not applicable.
Class B - Not applicable.
Class C - Not applicable.
Eligible for Interest Rate Swaps No
Swap Counterparty Payment Not applicable.
Swap Rate Not applicable.
Swap Trust Payment Not applicable.
Series Yield Factor Initially zero, but may be
increased pursuant to Section
20.
Date from which Interest for First Series Closing Date.
Interest Payment Date Shall Accrue
Distribution Dates December 15, 1998 and the 15th
day of each calendar month
thereafter, or, if such day is
not a Business Day, the next
succeeding Business Day.
Interest Payment Dates The 15th day of each month
(or, if such day is not a
Business Day, the next
succeeding Business Day),
commencing in December 1998.
Principal Payment Date The 15th day of each month
(or, if such day is not a
Business Day, the next
succeeding Business Day),
commencing in November 2002,
and each Special Payment Date.
ii
<PAGE> 5
Class A Expected Final Payment Date The Distribution Date in
October 2004.
Class B Expected Final Payment Date The Distribution Date in
December 2004.
Class C Expected Final Payment Date The Distribution Date in
January 2005.
Series Cut-Off Date October 1998.
Series Closing Date November 9, 1998.
Revolving Period From but excluding the Series
Cut-Off Date to, but
excluding, the earlier to
occur of (i) the first day of
the Due Period related to the
November 2002 Distribution
Date or (ii) the Rapid
Amortization Commencement
Date.
Controlled Amortization Period Unless a Rapid Amortization
Event shall have occurred
prior thereto, the period
commencing on the first day of
the Due Period related to the
Distribution Date in November
2002 and ending upon the
earliest to occur of (x) the
Rapid Amortization
Commencement Date, (y) the
payment in full of the Series
Invested Amount and (z) the
Series Termination Date.
Class A Controlled Amortization Amount $18,750,000.00.
Class B Controlled Amortization Amount $16,000,000.00.
Class C Controlled Amortization Amount Unless a Rapid Amortization
Event shall have occurred,
$15,900,000.
Type of Credit Enhancement Class A - Subordination.
Class B - Subordination.
Class C - None.
Investor Servicing Fee Percentage 2.0% per annum calculated on
the basis of a 360-day year of
twelve 30-day months.
Series Monthly Servicing Fee Additional Funds Not applicable.
Portion Percentage
Amount of Additional Funds Amount specified in the
Assignment of Additional Funds
dated as of January 30, 1998
between the Seller and the
Trustee, but subject to
iii
<PAGE> 6
being increased pursuant to
Section 4.03(e) of the Pooling
and Servicing Agreement.
Eligible for Finance Charge Collections Yes.
Reallocations to and from other Series
in the Group
Eligible for Principal Collections Reallocations Yes.
to and from other Series in the Group
Paired Series No.
Subject to being part of a Paired Series Yes.
Series Termination Date The day following the October
2008 Distribution Date.
Variable Funded Series No.
Classes, if any, subject to ERISA restrictions
(as set forth in Section 6.06(a)(ii) of the
Pooling and Servicing Agreement) Class B and Class C.
PFA Special Reserve Required Percentage Not applicable.
Series Pre-Funding Account Not applicable.
Series Pre-Funding Amount Not applicable.
Series Pre-Funding Deadline Not applicable.
Pre-Funding Special Reserve Account Not applicable.
Class A Early Termination Premium Not applicable.
Class B Early Termination Premium Not applicable.
Pre-Funding Special Reserve Required Amount Not applicable.
Class A Investor Certificate Any one of the certificates
executed by the Seller and
authenticated by the Trustee,
substantially in the form of
Exhibit A-1.
iv
<PAGE> 7
Class B Investor Certificate Any one of the certificates
executed by the Seller and
authenticated by the Trustee,
substantially in the form of
Exhibit A-2.
Class C Investor Certificate Any one of the certificates
executed by the Seller and
authenticated by the Trustee,
substantially in the form of
Exhibit A-3.
v
<PAGE> 8
IN WITNESS WHEREOF, the Seller, the Servicer and the Trustee have
caused this Series Supplement to be duly executed by their respective officers
as of the day and year first above written.
SRFG, INC.
as Seller
By: /s/ George F. Slook
-------------------------------------
George F. Slook
President and Chief Executive Officer
SEARS, ROEBUCK AND CO.
as Servicer
By: /s/ Larry R. Raymond
-------------------------------------
Larry R. Raymond
Assistant Treasurer
THE FIRST NATIONAL BANK OF CHICAGO
as Trustee
By: /s/ Diane Swanson
-------------------------------------
Diane Swanson
Assistant Vice President
vi
<PAGE> 9
ANNEX
In consideration of the mutual agreements herein contained, each party
agrees as follows for the benefit of the other parties and for the benefit of
the Certificateholders:
SECTION 1. Definitions.
(a) Capitalized terms not otherwise defined in this Series Supplement
(including the Series Term Sheet) shall have the meanings ascribed to them in
the Pooling and Servicing Agreement. Capitalized terms that refer to a Series or
Class refer to the Series or Class of the Series established hereby, as
applicable, unless the context otherwise clearly requires.
(b) The following terms have the definitions set forth below with respect
to the Series established hereby, unless the context otherwise clearly requires:
"Additional Certificate" shall have the meaning specified in Section 21(a).
"Additional Certificate Date" shall have the meaning specified in Section
21(a).
"Additional Funds," if applicable, shall have the meaning set forth in the
Series Term Sheet and in the Pooling and Servicing Agreement.
"Available Expected Principal" for any Determination Date with respect to
each Due Period and the Group to which the Series established hereby belongs
shall be equal to the excess of (a) the Expected Monthly Principal for such Due
Period over (b) the sum of, without duplication, (i) all class controlled
amortization amounts and class controlled accumulation amounts for all
Non-Variable Accumulation Series in the Group to which the Series established
hereby belongs that are not scheduled to be in their revolving periods as of
such Due Period and (ii) the portion of such Expected Monthly Principal
projected by the Servicer to be allocable to any other series in the Group to
which the Series established hereby belongs with respect to which a Rapid
Amortization Event shall have occurred on or prior to such Determination Date.
"Base Rate" for each Distribution Date shall mean the sum of (A) the
weighted average Certificate Rate for all Classes in the Series, (B) the
Investor Servicing Fee Percentage and (C) the annualized percentage equivalent
of a fraction the numerator of which is the sum of the Swap Trust Payments and
the denominator of which is the Series Invested Amount.
"Calculation Period," if applicable, shall have the meaning specified in
the applicable Class Coupon Cap Agreement between the Trustee and the Coupon Cap
Provider.
"Certificate Interest" for any Class shall mean, for any Distribution Date,
the product of (a) the Class Invested Amount for such Class for such
Distribution Date and (b) a fraction the numerator of which is (1) with respect
to each Class that has no Subclasses, the Certificate Rate for such Class or (2)
with respect to each Class that has two or more Subclasses, the Class Weighted
Average Certificate Rate, and the denominator (which may be calculated
separately for each Subclass pursuant to subsection (x) or (y)) of which is (x)
if the relevant Certificate Rate is to be calculated on the basis of the actual
number of
<PAGE> 10
days elapsed and a 360-day year, 360 divided by the actual number of days from
and including the immediately preceding Distribution Date (or, in the
case of the first Distribution Date, 360 divided by the number of days from and
including the Series Closing Date to but excluding such Distribution Date (and
assuming a 30-day month)) to but excluding the current Distribution Date or (y)
if the relevant Certificate Rate is to be calculated on the basis of a 360-day
year of twelve 30-day months, twelve (or, in the case of the first Distribution
Date, 360 divided by the number of days from and including the Series Closing
Date to but excluding such Distribution Date (and assuming a 30-day month)).
"Certificate Principal" shall mean, with respect to each Class, the
principal payable in respect of such Class of Investor Certificates.
"Certificate Rate," with respect to any Class or Subclass, shall mean the
certificate rate set forth in the Series Term Sheet with respect to such Class
or Subclass, as such rate may be adjusted as of the beginning of each Interest
Accrual Period, if applicable; provided, however, that the Certificate Rate for
any Class or Subclass that does not have a fixed Certificate Rate shall not
exceed the Embedded Coupon Cap, if any, for such Class or Subclass.
"Class A Early Termination Premium," if applicable, shall be as set forth
in the Series Term Sheet.
"Class A Early Termination Premium Shortfall," if applicable, for any
Distribution Date, shall mean the positive difference, if any, between (i) the
Class A Early Termination Premium and (ii) the amount deposited with respect to
the Class A Early Termination Premium pursuant to Section 8(b)(17) less amounts
previously deposited with respect to the Class A Early Termination Premium
Shortfall pursuant to Section 8(b)(44), 8(c)(14) or 8(c)(43). The Class A Early
Termination Premium Shortfall initially shall be zero.
"Class Alternative Deficiency Amount" shall mean, with respect to each
Class, on any Payment Date, the Class Deficiency Amount that would have been
calculated for such Class on such Payment Date if the aggregate unreimbursed
Investor Losses on such Payment Date equalled zero.
"Class B Early Termination Premium," if applicable, shall be as set forth
in the Series Term Sheet.
"Class B Early Termination Premium Shortfall," if applicable, for any
Distribution Date, shall mean the positive difference, if any, between (i) the
Class B Early Termination Premium and (ii) the amount deposited pursuant to
Section 8(b)(18) less amounts previously deposited with respect to the Class B
Early Termination Premium Shortfall pursuant to Section 8(b)(45), 8(c)(15) or
8(c)(44). The Class B Early Termination Premium Shortfall initially shall be
zero.
"Class C Fixing Deadline" shall mean the earliest to occur of (i) a Rapid
Amortization Event, (ii) the Seller Retained Class Purchase Date with respect to
Class C, or (iii) the date on which the Class C Invested Amount becomes less
than or equal to 3% of the Series Initial Investor Interest; provided, however,
that such percentage may be decreased without the consent of the
Certificateholders, if the Seller shall have received written notice from the
Rating Agencies that such a decrease will not result in a Ratings Event.
2
<PAGE> 11
"Class C Permitted Controlled Amortization Amount," if applicable, for any
Distribution Date shall mean an amount equal to the sum of (a) the product of
(i) a fraction the numerator of which is the Class C Initial Investor Interest
and the denominator of which is the Series Initial Investor Interest (less the
Class C Initial Investor Interest) and (ii) the Class A Controlled Amortization
Amount or the Class A Controlled Accumulation Amount, as applicable, and (b) the
Class C Permitted Controlled Amortization Amount Shortfall, if any; provided,
however, that the Class C Permitted Controlled Amortization Amount may be
increased without the consent of the Certificateholders, if the Seller shall
have received written notice from the Rating Agencies that such an increase will
not result in a Ratings Event; and provided, further, that the Class C Permitted
Controlled Amortization Amount shall equal zero for all Distribution Dates on or
after the Class C Fixing Deadline.
"Class C Permitted Controlled Amortization Amount Shortfall," if
applicable, with respect to each Distribution Date shall have the meaning set
forth in Sections 8(b)(48) and 8(c)(49). The Class C Permitted Controlled
Amortization Amount Shortfall initially shall be zero.
"Class Controlled Accumulation Amount," if applicable, with respect to such
Class on any Distribution Date with respect to the Controlled Accumulation
Period, shall mean the sum of (i) the amount specified in the Series Term Sheet
with respect to such Class of the Series established hereby (reduced for each
such Distribution Date pro-rata by the aggregate amount paid to such Class
pursuant to Section 9(a)(12)) and (ii) the Class Controlled Accumulation Amount
Shortfall for such Class; provided, however, that if the commencement of the
Controlled Accumulation Period is to be modified pursuant to Section 19, then
the Class Controlled Accumulation Amount shall mean an amount equal to the
product of (i) Available Expected Principal for the related Due Period and (ii)
a fraction the numerator of which is the Series Initial Investor Interest less
the Class Initial Investor Interest for any Seller Retained Class and the
denominator of which is the sum of (a) the Series Initial Investor Interest less
the Class Initial Investor Interest for any Seller Retained Class and (b) the
series initial investor interests less the class initial investor interests for
any seller retained classes of all other Variable Accumulation Series in the
Group to which the Series established hereby belongs that are not scheduled to
be in their revolving periods as of such Due Period; and provided, further,
that, for purposes of this definition, the commencement date of the accumulation
period of each such Variable Accumulation Series shall be deemed to have been
postponed to the latest permissible date determined as of the date of
calculation and determined as if the provisions of Section 19 applied to each
such Variable Accumulation Series with such changes as may be specified with
respect to such Variable Accumulation Series (applying such provisions first to
the Variable Accumulation Series in the Group to which the Series established
hereby belongs with the latest Class Expected Final Payment Date and next to
each additional such Variable Accumulation Series in reverse chronological order
based on the latest Class Expected Final Payment Date of each such Series). The
sum of the aggregate Class Controlled Accumulation Amounts for all Classes of
such Series for all Due Periods during the Controlled Accumulation Period as
modified pursuant to Section 19 shall not be less than the Series Initial
Investor Interest less the Class Initial Investor Interest for any Seller
Retained Class.
"Class Controlled Accumulation Amount Shortfall," if applicable, with
respect to each Class and any Distribution Date shall have the meaning set forth
in Section 8(c)(48), 8(c)(50) or 8(c)(51).
"Class Controlled Amortization Amount," if applicable, with respect to such
Class or any Distribution Date with respect to the Controlled Amortization
Period, shall mean the sum of (i) amount set forth in the Series Term Sheet with
respect to each Class of the Series established hereby (reduced for each such
Distribution Date pro-rata by the aggregate amount paid to such Class pursuant
to Section
3
<PAGE> 12
9(a)(12)) and (ii) any existing Class Controlled Amortization Amount
Shortfalls for such Class; provided, however, that the Class Controlled
Amortization Amount shall not be less than zero and shall not exceed an amount
equal to, with respect to each Class, the Class Invested Amount for such Class.
"Class Controlled Amortization Amount Shortfall," if applicable, with
respect to each Class and any Distribution Date shall have the meaning set forth
in Section 8(c)(48), 8(c)(50) or 8(c)(51).
"Class Coupon Cap," if applicable, shall mean the rate that is specified as
such in the Series Term Sheet and in the Class Coupon Cap Agreement.
"Class Coupon Cap Agreement," if applicable, shall mean the interest rate
cap agreement or other interest rate protection for the benefit of the Investor
Certificateholders of such Class or Subclass, dated on or before the Series
Closing Date, between the Trustee, acting on behalf of the Trust, and the Coupon
Cap Provider, or any Replacement Class Coupon Cap or Qualified Substitute Cap
Arrangement.
"Class Coupon Cap Payment," if applicable, shall mean with respect to any
Interest Payment Date, any payment required to be made on such Interest Payment
Date by the Coupon Cap Provider with respect to the Class Coupon Cap Agreement.
"Class Cumulative Investor Charged-Off Amount" with respect to each Class
for any Distribution Date, shall mean the Class Cumulative Investor Charged-Off
Amount as of the end of the Due Period related to the prior Distribution Date,
plus the Class Investor Charged-Off Amount for such Class for the Due Period
related to such Distribution Date; provided, however, that the Class Cumulative
Investor Charged-Off Amount shall further be adjusted in accordance with the
successive steps set forth in Section 8 on such Distribution Date. The Class
Cumulative Investor Charged-Off Amount with respect to each Class initially
shall be zero.
"Class Deficiency Amount" shall mean, with respect to each Class, on any
Payment Date, the amount, if any, by which (a) the sum of (i) Certificate
Interest for such Class accrued since the immediately preceding Payment Date,
(ii) if, since the immediately preceding Payment Date and prior to the current
Payment Date, a Reimbursed Loss Event has occurred, the sum of (A) the
Reimbursed Loss Interest for such Class for each previous Distribution Date
since the last Distribution Date on which Investor Losses for such Class
equalled zero and (B) the Reimbursed Loss Interest Gross-up Amount for such
Class for each previous Distribution Date since the last Distribution Date on
which the aggregate amount of unreimbursed Investor Losses for such Class
equalled zero, (iii) the Class Deficiency Amount on the immediately preceding
Payment Date, and (iv) the Class Deficiency Amount on the immediately preceding
Payment Date multiplied by the product of (A) a fraction the numerator of which
is the weighted average of the Certificate Rates or of the Class Weighted
Average Certificate Rates, as applicable, for such Class for the relevant Due
Periods and the denominator of which is (x) if the relevant Certificate Rate is
to be calculated on the basis of the actual number of days elapsed and a 360-day
year, 360 divided by the actual number of days from and including the
immediately preceding Distribution Date to but excluding the current
Distribution Date or (y) if the relevant Certificate Rate is to be calculated on
the basis of a 360-day year of twelve 30-day months, twelve, and (B) the number
of Distribution Dates from and including the preceding Payment Date to but
excluding the current Payment Date exceeds (b) the amount deposited since the
immediately preceding Payment Date into the Series Interest Funding Account
pursuant to Section 8 with respect to such Class.
4
<PAGE> 13
"Class Expected Final Payment Date" with respect to each Class, shall mean
the date designated as such in the Series Term Sheet.
"Class Finance Charge Collections" shall mean, with respect to any Class,
with respect to any day or any Distribution Date, an amount equal to the product
of (x) the Class Percentage with respect to Finance Charge Collections for the
related Distribution Date and (y) the amount of Finance Charge Collections for
such day or for the related Due Period, as applicable.
"Class Initial Investor Interest" shall mean, with respect to each Class,
the aggregate face amount of Investor Certificates of such Class initially
authenticated and delivered pursuant to Section 6 as specified in the Series
Term Sheet, plus the aggregate face amount of any Additional Investor
Certificates authenticated and delivered pursuant to Section 21, minus (i) prior
amounts paid to such Class pursuant to Section 9(a)(12) and (ii) the aggregate
face amount of any Investor Certificates cancelled pursuant to Section 6.16 of
the Pooling and Servicing Agreement.
"Class Invested Amount" shall mean, with respect to any Class for any
Distribution Date, an amount equal to the Class Initial Investor Interest minus
the sum of (a) the aggregate amount of Certificate Principal paid to the
Investor Certificateholders of such Class prior to such Distribution Date
(without duplication with respect to any amounts paid to such Class pursuant to
Section 9(a)(12)), (b) the Investor Loss for such Class, if any, at the
beginning of such Distribution Date and (c) the aggregate amount of losses on
investments of principal of funds on deposit for the benefit of such Class in
the Series Principal Funding Account.
"Class Investor Charged-Off Amount" shall mean, with respect to each Class
for any Distribution Date, an amount equal to the product of (a) the Charged-Off
Amount for such Distribution Date and (b) the Class Percentage with respect to
the Charged-Off Amount.
"Class Investor Interest" shall mean, with respect to any Class for any
Distribution Date, an amount equal to the Class Invested Amount for such Class
for such Distribution Date minus, if applicable, the aggregate amount on deposit
in the Series Principal Funding Account for the benefit of such Class in respect
of Principal Collections.
"Class Modified Required Amount" with respect to any Class on any
Distribution Date, shall mean the Class Required Amount for such Distribution
Date minus the sum of all accrued but unpaid Class Monthly Servicing Fees.
"Class Modified Required Amount Shortfall" with respect to any Class on any
Distribution Date, shall mean the positive difference, if any, between (i) the
Class Modified Required Amount and (ii) the sum of the (A) Series Finance Charge
Collections allocable to such Class and (B) Series Additional Allocable Amounts
allocable to such Class for such Distribution Date. The Class Modified Required
Amount Shortfall initially shall be zero.
"Class Monthly Deficiency Amount" with respect to any Class on any
Distribution Date, shall mean the amount set forth in Section 9. The Class
Monthly Deficiency Amount for each Class initially shall be zero.
5
<PAGE> 14
"Class Monthly Servicing Fee" with respect to any Class for any
Distribution Date, shall mean an amount equal to the product of (x) a fraction
the numerator of which shall be the Class Investor Interest and the denominator
of which shall be the Series Investor Interest, in each case on the first day of
the related Due Period (or in the case of the first Distribution Date for the
Series established hereby, the Series Initial Investor Interest) and (y) the
amount of the Investor Servicing Fee for the related Due Period.
"Class Percentage" shall mean, with respect to any Class with respect to
any Distribution Date:
(a) when used with respect to the Charged-Off Amount, the
percentage equivalent of a fraction the numerator of which shall be
the amount of the Class Investor Interest minus the Supplemental Cash
allocable to such Class and the denominator of which shall be the
greater of (i) the amount of Principal Receivables in the Trust and
(ii) the Aggregate Investor Interest minus the sum of the (A) Excess
Funding Amount (General), (B) Excess Funding Amount (SRC) and (C) sum
of the series pre-funding amounts, if any, for all outstanding series,
in each case on the first day of the related Due Period; or
(b) when used with respect to Principal Collections prior to the
occurrence of a Fixed Principal Allocation Event, the percentage
equivalent of a fraction the numerator of which shall be the amount of
the Class Investor Interest minus the Supplemental Cash allocable to
such Class on the first day of the related Due Period and the
denominator of which shall be the greater of (i) the amount of
Principal Receivables in the Trust on the first day of the related Due
Period or (ii) the sum of the numerators used in calculating the
components of the series percentage with respect to Principal
Collections for each series then outstanding (including the Series
established hereby) as of such Distribution Date; or
(c) when used with respect to Principal Collections on and after
the occurrence of a Fixed Principal Allocation Event (unless a Fixed
Principal Allocation Adjustment shall have occurred), the percentage
equivalent of a fraction the numerator of which shall be the amount of
the Class Investor Interest minus the Supplemental Cash allocable to
such Class on the first day of the Due Period prior to the occurrence
of a Fixed Principal Allocation Event and the denominator of which
shall be the greater of (i) the amount of Principal Receivables in the
Trust on the first day of the related Due Period or (ii) the sum of
the numerators used in calculating the components of the Series
Percentage with respect to Principal Collections for each Series then
outstanding (including the Series established hereby) as of such
Distribution Date; provided, however, that because such Class is
subject to being paired with a Class of a Paired Series, if a Rapid
Amortization Event occurs with respect to such Paired Series during
the Controlled Accumulation Period, Controlled Amortization Period or
Rapid Amortization Period with respect to the Series established
hereby, the Seller may, by written notice delivered to the Trustee and
the Servicer, designate a different numerator for the foregoing
fraction, provided that (A) such numerator shall not be less than the
Class Investor Interest minus the Supplemental Cash allocable to such
Class as of the last day of the revolving period for such Paired
Series and (B) the Seller shall have delivered to the Trustee an
Officer's Certificate to the effect that, based on the facts known to
such officer at the time, in the reasonable belief of the Seller, such
numerator designation would not cause a Rapid Amortization Event or an
event that, after the giving of notice or the lapse of time, would
constitute a Rapid Amortization Event to occur with respect to the
Series established hereby; and provided, further, that should a Rapid
Amortization Event with respect to the Series
6
<PAGE> 15
established hereby nonetheless occur, then, on each Distribution
Date beginning with the Distribution Date related to the Due Period in
which the Rapid Amortization Event occurs, such numerator shall not be
less than the Class Investor Interest minus the Supplement Cash
allocable to such Class as of the first day of the Due Period in which
such Rapid Amortization Event occurs; or
(d) when used with respect to Principal Collections on and after
the occurrence of a Fixed Principal Allocation Adjustment, the
percentage equivalent of a fraction (a) the numerator of which shall
be the greater of (i) the amount of Class Investor Interest minus
Supplemental Cash allocable to such Class on the first day of the Due
Period prior to the occurrence of a Fixed Principal Allocation Event
multiplied by the Fixed Principal Allocation Adjustment Factor and
(ii) the amount of the Class Investor Interest minus the Supplemental
Cash allocable to such Class on the first day of the related Due
Period and (b) the denominator of which shall be the greater of (i)
the amount of Principal Receivables in the Trust on the first day of
the related Due Period or (ii) the sum of the numerators used in
calculating the components of the Series Percentage with respect to
Principal Collections for each Series then outstanding (including the
Series established hereby) as of such Distribution Date; provided,
however, that following the occurrence of a Rapid Amortization Event,
then, on each Distribution Date beginning with the Distribution Date
related to the Due Period in which the Rapid Amortization Event
occurs, such numerator shall be the Class Investor Interest minus the
Supplemental Cash allocable to such Class on the first day of the Due
Period in which such Rapid Amortization Event occurs; or
(e) when used with respect to Finance Charge Collections during
the Revolving Period, the Controlled Accumulation Period or the
Controlled Amortization Period, as applicable, the percentage
equivalent of a fraction the numerator of which shall be the amount of
the Class Investor Interest minus the Supplemental Cash allocable to
such Class on the first day of the related Due Period and the
denominator of which shall be the greater of (i) the amount of
Principal Receivables in the Trust on the first day of the related Due
Period and (ii) the sum of the numerators used in calculating the
components of the Series Percentage with respect to Finance Charge
Collections for each series then outstanding (including the Series
established hereby) as of such Distribution Date; or
(f) when used with respect to Finance Charge Collections during
the Rapid Amortization Period, on each Distribution Date beginning
with the Distribution Date related to the Due Period in which such
Rapid Amortization Event occurs, the percentage equivalent of a
fraction the numerator of which shall be the amount of the Class
Investor Interest minus the Supplemental Cash allocable to such Class
on the last day of the Due Period prior to the occurrence of a Rapid
Amortization Event, and the denominator of which shall be the greater
of (i) the amount of Principal Receivables in the Trust on the first
day of the related Due Period or (ii) the sum of the numerators used
in calculating the components of the series percentage with respect to
Finance Charge Collections for each series then outstanding (including
the Series established hereby) as of such Distribution Date.
"Class Principal Collections" shall mean, with respect to any Class with
respect to any day or any Distribution Date, an amount equal to the product of
(x) the Class Percentage with respect to Principal Collections for the related
Distribution Date and (y) the amount of Principal Collections for such day or
for the related Due Period, as applicable.
7
<PAGE> 16
"Class Rapid Amortization Amount," if applicable, with respect to each
Class and any Distribution Date during the Rapid Amortization Period shall mean
the Class Investor Interest.
"Class Rapid Amortization Amount Shortfall," if applicable, with respect to
each Class and any Distribution Date during the Rapid Amortization Period shall
have the meaning set forth in Section 8(d)(47), 8(d)(48) or 8(d)(49).
"Class Required Amount" with respect to any Class on any Distribution Date,
shall mean the sum of (i) Certificate Interest with respect to such Class for
such Distribution Date, (ii) the Class Monthly Deficiency Amount on the
immediately preceding Distribution Date, (iii) the Class Deficiency Amount on
the immediately preceding Payment Date multiplied by a fraction the numerator of
which is the weighted average of the Certificate Rates or of the Class Weighted
Average Certificate Rates, as applicable, for such Class plus two percent per
annum for each Due Period subsequent to the immediately preceding Payment Date
and the denominator of which is (x) if the relevant Certificate Rate is to be
calculated on the basis of the actual number of days elapsed and a 360-day year,
360 divided by the actual number of days from and including the immediately
preceding Distribution Date (or, in the case of the first Distribution Date,
from and including the Series Closing Date) to but excluding the current
Distribution Date or (y) if the relevant Certificate Rate is to be calculated on
the basis of a 360-day year of twelve 30-day months, twelve (or, in the case of
the first Distribution Date, 360 divided by the number of days from and
including the Series Closing Date), (iv) if on the immediately preceding
Distribution Date a Reimbursed Loss Event occurred, the sum of (A) the
Reimbursed Loss Interest for each previous Distribution Date since the last
Distribution Date on which the aggregate amount of unreimbursed Investor Losses
for such Class equalled zero, (B) the Reimbursed Loss Interest Gross-up Amount
for each previous Distribution Date since the last Distribution Date on which
the aggregate amount of unreimbursed Investor Losses for such Class equalled
zero and (C) for any Distribution Date following the Distribution Date
immediately following the Reimbursed Loss Event to and including the next
Payment Date, the Reimbursed Loss Interest Gross-up Amount for such Distribution
Date and (v) the sum of all accrued but unpaid Class Monthly Servicing Fees.
"Class Weighted Average Certificate Rate," if applicable, shall mean, for
any Class composed of two or more Subclasses, for any Distribution Date, the
percentage equivalent of a fraction the numerator of which is the sum of, for
each Subclass of such Class, the product of the Class Invested Amount for such
Subclass and the Certificate Rate for such Subclass for such Distribution Date,
and the denominator of which is the Class Invested Amount for such Class.
"Commercial Paper Determination Date," if applicable, shall have the
meaning set forth in the Series Term Sheet.
"Commercial Paper Rate," if applicable, shall mean, with respect to any
Commercial Paper Determination Date, the rate equal to the Money Market Yield on
such Commercial Paper Determination Date of the rate for commercial paper having
a maturity of 30 days as published by the Board of Governors of the Federal
Reserve System in "Statistical Release H.15 (519), Selected Interest Rates," or
any successor publication, the rate for dealers under the heading "Commercial
Paper." In the event that such rate is not published on such date, then the
Commercial Paper Rate will be the Money Market Yield on such date of the rate
for Commercial Paper having a maturity of 30 days as published by the Federal
Reserve Bank of New York in the daily statistical release "Composite 3:30 p.m.
Quotations for U.S.
8
<PAGE> 17
Government Securities" ("Composite Quotations") under the heading "Commercial
Paper." If on such date the rate for commercial paper is not yet published in
either H.15 (519) or Composite Quotations, the Commercial Paper Rate for such
date shall be calculated by the Trustee and shall be the Money Market Yield of
the arithmetic mean (rounded to the nearest one-hundredth of a percent, with
five hundred one-thousandths of a percent rounded upward) of the offered rates,
as of 11:00 a.m., New York City time, of three leading dealers of commercial
paper in New York City selected by the Trustee on such date, for commercial
paper having a maturity of 30 days placed for an industrial issuer whose bond
rating is "AA" or the equivalent, from either Rating Agency. In the event that
such rates are not available on such date, then the Commercial Paper Rate shall
be the Money Market Yield of the rate for commercial paper so provided in a
comparable source. The Commercial Paper Rate shall be determined by the Trustee.
For purposes of this definition of Commercial Paper Rate, the term "Money Market
Yield" shall mean a yield (expressed as a percentage rounded to the nearest
one-hundredth of a percent, with five hundred one-thousandths of a percent
rounded upwards) calculated in accordance with the following formula:
Money Market Yield = D x 360 x 100
-------------
360 - (D x M)
where "D" refers to the per annum rate for commercial paper quoted on a bank
discount basis and expressed as a decimal, and "M" refers to the actual number
of days in the related Interest Accrual Period.
"Controlled Accumulation Period," if applicable, shall have the meaning set
forth in the Series Term Sheet, subject in the case of any Variable Accumulation
Series to variation in accordance with Section 18 hereof.
"Controlled Accumulation Period Length," if applicable, shall have the
meaning set forth in Section 18.
"Controlled Amortization Period," if applicable, shall have the meaning set
forth in the Series Term Sheet.
"Counterparty," if any, shall mean the counterparty under each Interest
Rate Swap.
"Coupon Cap Provider," if any, shall mean the entity listed as such in the
Series Term Sheet, in its capacity as obligor under the Class Coupon Cap
Agreement, or if any Replacement Class Coupon Cap Agreement or Qualified
Substitute Cap Arrangements are obtained pursuant to Section 13, the obligor
with respect to such Replacement Class Coupon Cap Agreement or Qualified
Substitute Cap Arrangements.
"Credit Enhancement" shall have the meaning set forth in the Series Term
Sheet.
"Determination Date" for any month shall mean the second Business Day
preceding the Distribution Date for such month.
"Distribution Date" shall have the meaning set forth in the Series Term
Sheet.
"Drawing Date" shall mean the first Business Day preceding each
Distribution Date.
9
<PAGE> 18
"Embedded Coupon Cap," if applicable, shall have the meaning set forth in
the Series Term Sheet with respect to any Class or Subclass.
"Excess Funding Amount (General)" for any Distribution Date shall mean the
amount on deposit in the Excess Funding Account (General) less investment
earnings.
"Excess Funding Amount (SRC)" for any Distribution Date shall mean the
amount on deposit in the Excess Funding Account (SRC) less investment earnings.
"Expected Monthly Principal" for the Group to which the Series established
hereby belongs shall be no greater than the product of (i) the lowest of the
monthly principal payment rates (determined by dividing Principal Collections
during a Due Period by the amount of Principal Receivables in the Trust as of
the last day of the preceding Due Period), expressed as a decimal for the 12
calendar months preceding the date of such calculation; provided, however, that
such calculation period may be shortened by the Servicer if payment terms have
been materially changed during such 12 calendar month period with respect to the
Accounts, and (ii) the sum of the Series Invested Amounts for all outstanding
series in the Group to which the Series established hereby belongs, minus the
sum of all Class Invested Amounts for any Seller Retained Classes for all
outstanding series in the Group to which the Series established hereby belongs.
"Fixed Accumulation Series" shall mean each outstanding Series for which
the commencement date of the Controlled Accumulation Period may not be changed
at the option of the Servicer.
"Fixed Principal Allocation Adjustment" shall have the meaning specified in
Section 25.
"Fixed Principal Allocation Adjustment Factor" with respect to any Class
with respect to any Distribution Date shall mean (i) in the case of any Class of
any Variable Accumulation Series, a fraction the numerator of which is the
Controlled Accumulation Period Length (as recalculated solely for the purpose of
determining the Fixed Principal Allocation Adjustment Factor on the first
Determination Date following the day notice is given pursuant to Section 25) and
the denominator of which is the number of months (including the current month)
remaining until the Class Expected Final Payment Date for such Class, and (ii)
in the case of any Class having a Controlled Amortization Amount or any Class of
a Fixed Accumulation Series, a fraction the numerator of which is the Controlled
Amortization Amount or the Controlled Accumulation Amount, as applicable, and
the denominator of which is the sum of (a) the Controlled Amortization Amount or
the Controlled Accumulation Amount, as applicable, and (b) the Group Available
Principal Amount (as adjusted to deduct any portion of the Group Available
Principal Amount used, in the discretion of the Servicer, to determine the Fixed
Principal Allocation Adjustment Factor with respect to any Class of any other
Series in the Group to which the Series established hereby belongs) on such
Distribution Date.
"Fixed Principal Allocation Event" shall mean the earliest of (a) the
beginning of the Due Period immediately following the Due Period related to the
Distribution Date during the Controlled Amortization Period or the Controlled
Accumulation Period, as applicable, with respect to the Series established
hereby on which the Series Available Principal Amount is less than zero; (b) the
date on which a Rapid Amortization Event with respect to the Series established
hereby occurs; or (c) a date selected by the Servicer, if any, provided that the
Servicer provides notification of such date to the Seller, the Trustee, the
10
<PAGE> 19
Third Party Credit Enhancement Provider, if any, and the Rating Agencies no
later than two Business Days prior to such selected date.
"Funded Third Party Credit Enhancement" shall mean any Third Party Credit
Enhancement that consists of funds on deposit in one or more segregated trust
accounts in the corporate trust department of an office or branch of a Qualified
Trust Institution or an Eligible Institution for the benefit of the Investor
Certificateholders and, if so specified, the Third Party Credit Enhancement
Provider, of the Series established hereby, including, without limitation, a
reserve account or a cash collateral account.
"Group Available Principal Amount" shall mean, with respect to each
Distribution Date, (i) the amount remaining on deposit in the Group Principal
Collections Reallocation Account on such Distribution Date after all withdrawals
have been made from such account for the benefit of any Series in the same Group
as the Series established hereby (including the Series established hereby), but
before such amount is withdrawn from the Group Principal Collections
Reallocation Account and paid to the Seller pursuant to Section 8(b)(51),
8(c)(60) or 8(d)(55) minus (ii) (x) the amount deposited in the Group Principal
Collections Reallocation Account pursuant to any provisions similar to Section
8(b)(49) with respect to any series in the Group to which the Series established
hereby is a member from any series that has a controlled amortization period or
controlled accumulation period, as applicable, beginning before the latest Class
Expected Final Payment Date for the Series established hereby, (y) the amount
deposited in the Group Principal Collections Reallocation Account pursuant to
any provisions similar to Section 8(c)(58) with respect to any series in the
Group to which the Series established hereby is a member from any series that
has a controlled amortization period or controlled accumulation period, as
applicable, ending before the latest Class Expected Final Payment Date for the
Series established hereby and (z) the amount deposited in the Group Principal
Collections Reallocation Account pursuant to any provisions similar to Section
8(d)(53).
"Group Excess Funding Amount" shall mean an amount equal to the product of
(i) the Aggregate Excess Funding Amount and (ii) a fraction (a) the numerator of
which is the sum of the numerators used in calculating the class percentage with
respect to the principal collections for all classes of all series (including
the Classes of the Series established hereby) in the Group to which the Series
established hereby belongs and (b) the denominator of which is the sum of the
numerators used in calculating the Class Percentage with respect to the
principal collections for all classes (including the Classes of the Series
established hereby) of all outstanding series.
"Group Finance Charge Collections Reallocation Account" shall have the
meaning specified in Section 7(b).
"Group Pre-Funding Reallocation Account," if applicable, shall have the
meaning specified in Section 7(b).
"Group Principal Collections Reallocation Account" shall have the meaning
specified in Section 7(b).
"Initial Scheduled Controlled Accumulation Period Length," if applicable,
shall have the meaning set forth in the Series Term Sheet.
11
<PAGE> 20
"Interest Accrual Period" shall mean, with respect to any Interest Payment
Date, the period from and including the Interest Payment Date immediately
preceding such Interest Payment Date (or, in the case of the first Interest
Payment Date, from and including the Series Closing Date) to but excluding such
Interest Payment Date.
"Interest Payment Date" shall mean each date designated as such in the
Series Term Sheet.
"Interest Rate Swap," if applicable, shall mean each interest rate swap
agreement between the Trustee and the Counterparty for the benefit of the
Investor Certificateholders and any replacement or successor interest rate swap
agreement.
"Investor Accounts" shall mean, in addition to Investor Accounts
established pursuant to the Pooling and Servicing Agreement, the Series
Collections Account, the Series Principal Collections Account, the Series
Principal Funding Account, the Series Interest Funding Account, the Series
Pre-Funding Account (if applicable), the Pre-Funding Special Reserve Account (if
applicable), the PFA Special Reserve Account, the Series Distribution Account,
the Group Finance Charge Collections Reallocation Account, the Group Principal
Collections Reallocation Account and the Group Pre-Funding Reallocation Account.
"Investor Loss" with respect to each Class, shall mean the amount
determined pursuant to Section 11(b) and, in the event the Receivables are sold
pursuant to Section 12.01(b) of the Pooling and Servicing Agreement, the amount,
if any, by which the Class Investor Interest (determined immediately prior to
such sale) exceeds the net proceeds of such sale payable to such Class.
"Investor Servicing Fee" shall mean, with respect to any Distribution Date,
an amount equal to the product of (i) the Investor Servicing Fee Percentage and
(ii) the Series Investor Interest minus the Supplemental Cash allocable to such
Series on the first day of the related Due Period (or in the case of the first
Distribution Date for the Series established hereby, the Series Initial Investor
Interest less the Series Pre-Funding Amount, if any).
"Investor Servicing Fee Percentage" shall mean the percentage identified as
such in the Series Term Sheet.
"LIBOR," if applicable, shall mean, with respect to any LIBOR Determination
Date, the rate for one-month deposits in United States dollars which appears on
Telerate Page 3750 as of 11:00 a.m., London time, on such day. If such rate does
not appear on Telerate Page 3750, the rate will be determined by the Trustee on
the basis of the rates at which deposits in United States dollars are offered by
four major banks in the London interbank market, selected by the Trustee, at
approximately 11:00 a.m., London time, on such day to prime banks in the London
interbank market for a period equal to the relevant Interest Accrual Period
commencing on that day. The Trustee will request the principal London office of
each such bank to provide a quotation of its rate. If at least two such
quotations are provided, the rate 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 four major banks in New York
City, selected by the Trustee, at approximately 11:00 a.m., New York City time,
on that day for loans in United States dollars to leading European banks for a
period equal to the relevant Interest Accrual Period commencing on that day.
12
<PAGE> 21
"LIBOR Business Day," if applicable, shall mean a day other than a Saturday
or a Sunday or a day on which banking institutions in the City of London,
England, in Chicago, Illinois and in New York, New York are not required or
authorized by law to be closed.
"LIBOR Determination Date," if applicable, shall have the meaning set forth
in the Series Term Sheet.
"Minimum Controlled Accumulation Period Length" shall mean, for any
Variable Accumulation Series, the number of months so specified in the Series
Term Sheet.
"Minimum Seller Interest," for any day or Distribution Date shall mean an
amount equal to the positive difference, if any, between (i) the Minimum
Principal Receivables Balance and (ii) (A) the Aggregate Investor Interest minus
(B) the sum of (x) the series pre-funding amounts, if any, for all outstanding
series, (y) the Excess Funding Amount (General) and (z) the Excess Funding
Amount (SRC), for such day or Distribution Date.
"Net Adjusted Yield" shall mean, with respect to any Distribution Date, the
average of the percentages obtained for each of the three preceding Due Periods
by subtracting the Base Rate from the Net Yield for such Due Period.
"Net Yield" shall mean, with respect to any Due Period or any Distribution
Date, the annualized percentage equivalent of a fraction (a) the numerator of
which is the sum of the (i) Series Finance Charge Collections, (ii) Series
Additional Allocable Amounts, (iii) finance charge collections and additional
allocable amounts, if any, reallocated to the Series established hereby pursuant
to Sections 8(b)(27-34), 8(c)(24-31) and 8(d)(25-32) minus (iv) the Series
Investor Charged-Off Amount, and (b) the denominator of which is the Series
Invested Amount.
"Non-Variable Accumulation Series" shall mean each outstanding Series that
is not a Variable Accumulation Series.
"Paired Series," if applicable, shall have the meaning set forth in Section
23.
"PFA Covered Amount," if applicable, for any Distribution Date with respect
to the Controlled Accumulation Period will be equal to (A) if the Investor
Certificates are fixed rate certificates, one-twelfth of the product of (i) the
Class Weighted Average Certificate Rate and (ii) the amount on deposit in the
Series Principal Funding Account, if any, as of the preceding Distribution Date
or (B) if the Investor Certificates are floating rate certificates, the product
of (i) a fraction, the numerator of which is the actual number of days in the
interest period and the denominator of which is 360, (ii) the Class Weighted
Average Certificate Rate and (iii) the amount on deposit in the Series Principal
Funding Account, if any, as of the preceding Distribution Date.
"PFA Special Reserve Account," if applicable, shall have the meaning set
forth in Section 7(g)(1).
"PFA Special Reserve Account Factor," if applicable, shall mean, with
respect to any Determination Date, the percentage equivalent of a fraction, the
numerator of which is the number of Due Periods scheduled to be included in the
Controlled Accumulation Period as of such date and the
13
<PAGE> 22
denominator of which is the Initial Scheduled Controlled Accumulation Period
Length (which percentage shall never exceed 100%).
"PFA Special Reserve Account Funding Date," if applicable, shall mean the
Distribution Date with respect to the Due Period that commences 12 months prior
to the first Due Period of the Controlled Accumulation Period (as such may be
postponed pursuant to Section 19), provided that, upon notice to the Servicer
and the Trustee, the Seller may delay the PFA Special Reserve Account Funding
Date to the Distribution Date related to the Due Period that occurs not later
than the number of months prior to the scheduled commencement date of the
Controlled Accumulation Period determined in accordance with the following
schedule:
<TABLE>
<CAPTION>
Number of Months
Net Adjusted Yield (rounded up to nearest whole number
- ------------------ ----------------------------------
<S> <C>
Less than 2% The product of (i) the PFA Special Reserve
Required Percentage divided by 1%, (ii) the PFA
Special Reserve Account Factor and (iii) 12
2% or more, but less
than 3% The product of (i) the PFA Special Reserve Required
Percentage divided by 2%, (ii) the PFA Special Reserve
Account Factor and (iii) 12
3% or more, but less
than 4% The product of (i) the PFA Special Reserve Required
Percentage divided by 3%, (ii) the PFA Special Reserve
Account Factor and (iii) 12
4% or more The product of (i) the PFA Special Reserve Required
Percentage divided by 4%, (ii) PFA Special Reserve
Account Factor and (iii) 12
</TABLE>
"PFA Special Reserve Required Amount," if applicable, shall mean, with
respect to any Distribution Date prior to the PFA Special Reserve Account
Funding Date, $0, and on or after the PFA Special Reserve Account Funding Date,
the product of (a) the product of (i) the PFA Special Reserve Required
Percentage and (ii) the Series Invested Amount less the Class Invested Amount of
all Seller Retained Classes as of the preceding Distribution Date (after giving
effect to all changes therein on such date) and (b) the PFA Special Reserve
Account Factor as of such Distribution Date.
"PFA Special Reserve Required Amount Shortfall," if applicable, shall mean
the positive difference, if any, between the PFA Special Reserve Required Amount
and the amount on deposit in the PFA Special Reserve Account.
"PFA Special Reserve Required Percentage," if applicable, shall be the
percentage set forth in the Series Term Sheet.
14
<PAGE> 23
"Pre-Funding Covered Amount," if applicable, with respect to the
Pre-Funding Period will be equal to (A) if the Investor Certificates are fixed
rate certificates, one-twelfth of the product of (i) the Class Weighted Average
Certificate Rate and (ii) the amount on deposit in the Series Pre-Funding
Account, if any, as of the preceding Distribution Date or (B) if the Investor
Certificates are floating rate certificates, the product of (i) a fraction, the
numerator of which is 360 and the denominator of which is the actual number of
days in the interest period, (ii) the Class Weighted Average Certificate Rate
and (iii) the amount on deposit in the Series Pre- Funding Account, if any, as
of the preceding Distribution Date.
"Pre-Funding Period," if applicable, shall have the meaning set forth in
Section 7(h)(3).
"Pre-Funding Special Reserve Account," if applicable, shall have the
meaning set forth in Section 7(h)(1).
"Pre-Funding Special Reserve Amount," if applicable, for any Distribution
Date shall mean the amount on deposit in the Pre-Funding Special Reserve Account
for such Distribution Date.
"Pre-Funding Special Reserve Amount Shortfall," if applicable, shall mean
the positive difference, if any between the Pre-Funding Special Reserve Required
Amount and the Pre- Funding Special Reserve Amount.
"Pre-Funding Special Reserve Required Amount," if applicable, shall have
the meaning set forth in the Series Term Sheet.
"Principal Payment Date," if applicable, shall mean each date designated as
such in the Series Term Sheet.
"Purchased Class" shall have the meaning specified in Section 22.
"Qualified Substitute Cap Arrangement," if applicable, shall have the
meaning specified in Section 13.
"Qualified Third Party Credit Enhancement Provider," if applicable, shall
mean (i) if the Third Party Credit Enhancement is not Funded Third Party Credit
Enhancement, an institution that meets the Qualified Third Party Credit
Enhancement Provider rating requirements set forth in the Series Term Sheet at
the time of the funding of such Third Party Credit Enhancement, or (ii) if the
Third Party Credit Enhancement is a Funded Credit Enhancement, an institution
that meets the Qualified Third Party Credit Enhancement Provider rating
requirements set forth in the Series Term Sheet (or, in either subsection (i) or
(ii) such lesser requirements as the applicable Rating Agency shall allow);
provided, however, that in the event the Servicer elects to obtain Third Party
Credit Enhancement that is not Funded Third Party Credit Enhancement and is
unable after the exercise of its best efforts to obtain from a Qualified Third
Party Credit Enhancement Provider as so defined such Third Party Credit
Enhancement with respect to which the representations set forth in Section 10(a)
shall be true, the term "Qualified Third Party Credit Enhancement Provider"
shall mean a Person who satisfies such requirements except that its long-term
unsecured debt rating by any nationally recognized rating agency may be lower
than that set forth in such requirements, but shall not be lower than the
highest credit rating of any Person who otherwise satisfies said requirements
and from whom the Servicer is able to obtain such a Third Party Credit
Enhancement.
15
<PAGE> 24
"Rapid Amortization Commencement Date" shall mean the earlier of the date
on which a Rapid Amortization Event is deemed to occur pursuant to Section 9.01
of the Pooling and Servicing Agreement or pursuant to Section 17 hereof.
"Rapid Amortization Event" shall mean any event specified in Section 9.01
of the Pooling and Servicing Agreement or in Section 17 hereof.
"Rapid Amortization Period" shall mean the period from, and including, the
Rapid Amortization Commencement Date to, and including, the earlier of (i) the
date of the final distribution to Investor Certificateholders of the Series
established hereby or (ii) the Series Termination Date. The first Distribution
Date of the Rapid Amortization Period shall be the Distribution Date in the
calendar month following the Rapid Amortization Commencement Date.
"Rating Agency" shall mean Moody's or Standard & Poor's. "Rating Agencies"
shall mean both Moody's and Standard & Poor's.
"Reimbursed Loss Event" shall mean, with respect to each Class, any
Distribution Date on which the aggregate amount of unreimbursed Investor Losses
for such Class is reduced to zero in accordance with Section 11(b), provided
that if the Class Invested Amounts for all Classes senior to such Class have
been reduced to zero and such Reimbursed Loss Event occurs on such Class's Final
Expected Payment Date, the Reimbursed Loss Event shall be deemed to occur on the
current Distribution Date for the purposes of calculation of such Class's
Modified Required Amount.
"Reimbursed Loss Interest" shall mean, with respect to each Class for any
Distribution Date, an amount equal to the product of (i) the aggregate amount of
Investor Losses that have not been reimbursed prior to the commencement of the
related Due Period and (ii) a fraction the numerator of which is the Certificate
Rate or the Class Weighted Average Certificate Rate, as applicable, for such
Class for the related Due Period and the denominator of which is (x) if the
relevant Certificate Rate is to be calculated on the basis of the actual number
of days elapsed and a 360-day year, 360 divided by the actual number of days
from and including the immediately preceding Distribution Date to but excluding
the current Distribution Date or (y) if the relevant Certificate Rate is to be
calculated on the basis of a 360-day year of twelve 30-day months, twelve.
"Reimbursed Loss Interest Gross-up Amount" shall mean, with respect to each
Class for any Distribution Date, an amount equal to the product of (i) the
positive difference, if any, between the Class Alternative Deficiency Amount for
the immediately preceding Payment Date and the Class Deficiency Amount for the
immediately preceding Payment Date and (ii) a fraction the numerator of which is
the Certificate Rate or the Class Weighted Average Certificate Rate, as
applicable, for such Class for the related Due Period and the denominator of
which is (x) if the relevant Certificate Rate is to be calculated on the basis
of the actual number of days elapsed and a 360-day year, 360 divided by the
actual number of days from and including the immediately preceding Distribution
Date to but excluding the current Distribution Date or (y) if the relevant
Certificate Rate is to be calculated on the basis of a 360-day year of twelve
30-day months, twelve.
"Replacement Class Coupon Cap Agreement," if any, shall mean an interest
rate cap agreement or other interest rate protection having substantially the
same terms and conditions as the Class Coupon Cap Agreement that it replaces,
and otherwise satisfying the conditions set forth in Section 13.
16
<PAGE> 25
"Required Daily Deposit" for any Business Day shall mean an amount equal
to:
(a) during the Revolving Period, an amount equal to the lesser of (A)
the Series Finance Charge Collections for such Business Day and (B) the
difference between (i) the Class Modified Required Amounts (plus, if Sears
is not the Servicer, the Series Monthly Servicing Fee for each Business
Day) for all Classes of such Series and (ii) amounts previously deposited
in the Collections Account with respect to such amounts with respect to the
current Due Period pursuant to this subsection (a);
(b) during the Controlled Amortization Period or Controlled
Accumulation Period, as applicable, an amount equal to the sum of:
(1) the amount set forth in subsection (a); and
(2) the lesser of (A) the Class Principal Collections for all Classes
of such Series for such Business Day minus any Seller Retained Class
Principal Collections for such Business Day and (B) the positive
difference, if any, between (i) the Class Controlled Amortization Amount or
the Class Controlled Accumulation Amount, as applicable, for each Class and
(ii) amounts previously deposited in the Collections Account with respect
to such amounts with respect to the current Due Period pursuant to this
subsection (b); provided, however, that such amount shall not exceed the
Class Controlled Amortization Amount or Class Controlled Accumulation
Amount, as applicable; and
(c) during the Rapid Amortization Period, an amount equal to the sum
of (i) the Series Finance Charge Collections for such Business Day and (ii)
the Class Principal Collections for each Class of such Series minus (iii)
any Seller Retained Class Principal Collections for such Business Day;
provided, however, that the Series Finance Charge Collections and Series
Principal Collections received each Business Day shall be estimated in
accordance with Section 4.03(b) of the Pooling and Servicing Agreement.
"Revolving Period" shall have the meaning set forth in the Series Term
Sheet.
"Seller Retained Class," as specified in the Series Term Sheet, shall mean
any Class of Investor Certificates owned by the Seller.
"Seller Retained Class Principal Collections" shall mean, with respect to
any day or any Distribution Date, an amount equal to the Class Percentage of a
Seller Retained Class multiplied by the Series Principal Collections for such
day or Distribution Date.
"Seller Retained Class Purchase Date" shall have the meaning set forth in
Section 22.
"Series Additional Allocable Amounts," if any, shall mean, for any
Distribution Date, the sum of the (i) Series Yield Collections, (ii) Series
Investment Income, (iii) Class Coupon Cap Payment, if any, (iv) Series
Additional Investor Funds, (v) amounts withdrawn from the PFA Special Reserve
Account pursuant to Section 7(g)(3), (vi) amounts withdrawn from the Pre-
Funding Special Reserve Account
17
<PAGE> 26
pursuant to Section 7(h)(3) and (vii) the sum of the Swap Counterparty
Payments, if any.
"Series Additional Funds," if applicable, shall mean, for any Distribution
Date, the Additional Funds deposited into the Series Collections Account for the
Series established hereby on such Distribution Date.
"Series Additional Investor Funds," if applicable, shall mean, for any
Distribution Date, the Series Additional Funds, if any, that are not applied to
the payment of the Investor Monthly Servicing Fee pursuant to Section 12.
"Series Aggregate Excess Funding Amount" shall mean an amount equal to (i)
a fraction (a) the numerator of which is the Series Investor Interest and (b)
the denominator of which is the sum of the Series Investor Interests for all
outstanding Series multiplied by (ii) the Group Excess Funding Amount.
"Series Allocable Investment Amount" shall mean, with respect to any
Distribution Date, the sum of (i) the product of (a) the investment income on
funds on deposit in the Collections Account for the related Due Period and (b) a
fraction the numerator of which is the sum of the numerators for all Classes in
this Series used in calculating the Class Percentage with respect to Finance
Charge Collections and the denominator of which is the sum of the numerators
used in calculating the class percentage with respect to Finance Charge
Collections for all classes of all outstanding series and (ii) the product of
(x) the investment income on funds on deposit in the Group Collections Account
for the Group to which the Series established hereby is a member for the related
Due Period and (y) a fraction the numerator of which is the sum of the
numerators for all Classes in the Series established hereby used in calculating
the Class Percentage with respect to Finance Charge Collections and the
denominator of which is the sum of the numerators used in calculating the class
percentage with respect to Finance Charge Collections for all classes of all
series in the Group to which the Series established hereby is a member.
"Series Available Principal Amount" shall mean, for any Distribution Date,
for each series that is a member of the same Group as the Series established
hereby (including the Series established hereby) that is in its Controlled
Amortization Period or Controlled Accumulation Period, as applicable, an amount
calculated as follows: For each such series, seriatim, beginning with the series
with the largest series investor interest as of such Distribution Date (and if
more than one series has the same series investor interest on such Distribution
Date, beginning with whichever of such series has the longest time remaining in
its controlled amortization period or controlled accumulation period, as
applicable (assuming that no rapid amortization event occurs with respect to
such series)), an amount equal to (x) the Group Available Principal Amount less
(y) the difference between the series required principal amount and the amount
of such series' controlled amortization amount or controlled accumulation
amount, as applicable, that was funded on such Distribution Date (including any
portion of such amount that was funded by amounts withdrawn from the Group
Principal Collections Reallocation Account pursuant to Sections 8(c)(52-54)).
For purposes of calculating the series available principal amount for each other
such series, the Group Available Principal Amount shall be reduced by the amount
calculated in clause (y) above for each prior series for which the series
available principal amount was calculated.
"Series Closing Date" shall mean the date designated as such in the Series
Term Sheet.
"Series Collections Account" shall have the meaning specified in Section
7(a).
18
<PAGE> 27
"Series Cut-Off Date" shall mean the last day of the Due Period occurring
in the month specified in the Series Term Sheet.
"Series Distribution Account" shall have the meaning specified in Section
7(a).
"Series Excess Funding Amount (SRC)" shall mean an amount equal to the
product of (i) the Group Excess Funding Amount (SRC) and (ii) a fraction (a) the
numerator of which is the sum of the numerators used in calculating the Class
Percentage with respect to Principal Collections for each Seller Retained Class
and (b) the denominator of which is the sum of the numerators used in
calculating the class percentage with respect to principal collections for all
seller retained classes in the Group (including the Series established hereby)
to which the Series established hereby is a member.
"Series Excess Servicing," for any Distribution Date, shall have the
meaning set forth in Section 8(b)(19), 8(c)(16) or 8(d)(17), as applicable, for
such Distribution Date.
"Series Finance Charge Collections" shall mean, with respect to any day or
any Distribution Date, the sum of the amount of Class Finance Charge Collections
for each Class of such Series for such day or for the related Due Period, as
applicable.
"Series Initial Investor Interest" shall mean an amount equal to the sum of
the Class Initial Investor Interests for all Classes of the Series established
hereby.
"Series Initial Pre-Funding Amount," if applicable, shall mean the amount
specified in the Series Term Sheet.
"Series Interest Funding Account" shall have the meaning specified in
Section 7(d).
"Series Invested Amount" with respect to any Distribution Date, shall mean
the sum of the Class Invested Amounts for each Class of the Series established
hereby on such Distribution Date.
"Series Investment Income" with respect to any Distribution Date, shall
mean the sum of (a) the income from the investment of funds on deposit in (i)
the Series Principal Funding Account, (ii) the Series Interest Funding Account,
(iii) the Pre-Funding Special Reserve Account, if any, (iv) the PFA Special
Reserve Account, if any, and (v) the Series Pre-Funding Account, if any, (b) the
income from the investment of funds with respect to the Series Aggregate Excess
Funding Amount and (c) the Series Allocable Investment Amount.
"Series Investor Charged-Off Amount" shall mean an amount equal to the sum
of the Class Investor Charged-Off Amounts for all Classes of the Series
established hereby.
"Series Investor Interest" with respect to any Distribution Date, shall
mean the sum of the Class Investor Interests for each Class of the Series
established hereby on such Distribution Date.
"Series Minimum Principal Receivables Balance" shall mean, with respect to
the Series established hereby, on any Determination Date, the greater of (i) the
Series Investor Interest minus Supplemental Cash on such Determination Date,
divided by .909, or (ii) if a Fixed Principal Allocation
19
<PAGE> 28
Event has occurred (and a Fixed Principal Allocation Adjustment has not
occurred), the Series Investor Interest minus Supplemental Cash as of the first
day of the Due Period prior to the occurrence of the Fixed Principal Allocation
Event, subject to reduction, in the event that a Rapid Amortization Event occurs
with respect to any series with which this Series is paired, to an amount equal
to the sum of the then applicable numerators for the Class Percentages with
respect to all classes in such series with respect to Principal Collections, or
(iii) if a Fixed Principal Allocation Adjustment has occurred, the Series
Investor Interest minus Supplemental Cash as of the first day of the Due Period
prior to the Fixed Principal Allocation Event multiplied by the Fixed Principal
Allocation Adjustment Factor; provided, however, that following the occurrence
of a Rapid Amortization Event, the amount in clause (iii) shall equal the Series
Investor Interest minus Supplemental Cash as of the first day of the Due Period
prior to the occurrence of such Rapid Amortization Event; and provided, further,
that the Seller may, upon 30 days' prior notice to the Trustee, the Rating
Agencies and the Third Party Credit Enhancement Provider, if any, reduce the
Series Minimum Principal Receivables Balance by increasing the divisors set
forth above, subject to the condition that the Seller shall have been notified
by the Rating Agencies that such reduction would not result in a Ratings Event
for any Series then outstanding; and provided, further, that the divisor used in
the calculation of Series Minimum Principal Receivables Balance may not be
increased to more than .980.
"Series Monthly Servicing Fee" shall mean, with respect to any Distribution
Date, the sum of the Class Monthly Servicing Fees for each Class of the Series
established hereby on such Distribution Date.
"Series Monthly Servicing Fee Additional Funds Portion," if applicable,
shall mean the product of (i) the Series Monthly Servicing Fee Additional Funds
Portion Percentage and (ii) Series Investor Interest minus the Supplemental Cash
allocable to such Series on the first day of the related Due Period (or in the
case of the first Distribution Date for the Series established hereby, the
Series Initial Investor Interest less the Series Pre-Funding Amount, if any).
"Series Monthly Servicing Fee Additional Funds Portion Percentage," if
applicable, shall mean the percentage set forth in the Series Term Sheet.
"Series Monthly Servicing Fee Additional Funds Portion Shortfall," if
applicable, shall have the meaning set forth in Section 8(b)(6), 8(c)(4) or
8(d)(8).
"Series Percentage" shall mean, with respect to any specified category,
with respect to any Distribution Date, the sum of the Class Percentages with
respect to such category for each Class of the Series established hereby on such
Distribution Date.
"Series Pre-Funding Account" shall have the meaning specified in Section
7(f).
"Series Pre-Funding Amount," if applicable, for any Distribution Date shall
mean the principal amount on deposit in the Series Pre-Funding Account for such
Distribution Date.
"Series Pre-Funding Deadline," if applicable, shall mean the date set forth
in the Series Term Sheet.
"Series Principal Collections" shall mean, with respect to any day or any
Distribution Date, the sum of the amount of Class Principal Collections for each
Class of the Series established hereby for such day or for the related Due
Period, as applicable.
20
<PAGE> 29
"Series Principal Collections Account" shall have the meaning specified in
Section 7(a).
"Series Principal Funding Account" shall mean the Series Principal Funding
Account established pursuant to Section 7(c). Amounts "on deposit in" the Series
Principal Funding Account shall be deemed to be on deposit for the benefit of
(i) the Class A Certificateholders for the period up to and including the
earlier of the (a) Class A Expected Final Payment Date or (b) the date on which
the Class A Invested Amount is paid in full, (ii) the Class B Certificateholders
for the period beginning immediately after the date specified in subsection (i)
and ending on the earlier of (a) the Class B Expected Final Payment Date and (b)
the date the Class B Invested Amount is paid in full and (iii) the Class C
Certificateholders for the period beginning immediately after the date specified
in subsection (ii) and ending on the earlier of (a) the Class C Expected Final
Payment Date and (b) the date on which the Class C Invested Amount is paid in
full. Amounts "on deposit in" the Series Principal Funding Account shall be
deemed to include amounts invested in Permitted Investments pursuant to Section
7(c) unless the context clearly requires otherwise.
"Series Required Principal Amount" shall mean, with respect to each
Distribution Date, with respect to each Series that is a member of the same
Group as the Series established hereby (including the Series established hereby)
that is in its controlled amortization period or controlled accumulation period,
as applicable, the product of (x) 1.20 and (y) the Class Controlled Amortization
Amount or the Class Controlled Accumulation Amount, as applicable, for such
series for each such Distribution Date.
"Series Term Sheet" shall mean the Series Term Sheet setting forth the
terms of the Series of Investor Certificates issued hereby, to which this Annex
is attached.
"Series Termination Date" shall mean the date designated as such in the
Series Term Sheet.
"Series Yield Collections" shall mean, with respect to any day or any
Distribution Date, as applicable, an amount equal to the product of the Series
Yield Factor and the amount of Series Principal Collections for such day or the
related Due Period, as applicable.
"Series Yield Factor" shall mean the number identified as such in the
Series Term Sheet, as such number may be changed from time to time pursuant to
Section 20.
"Special Payment Date" shall mean each Distribution Date with respect to
the Rapid Amortization Period, including the Distribution Dates with respect to
each Class Expected Final Payment Date, and all Distribution Dates after any
Class Expected Final Payment Date (in either the Controlled Accumulation Period
or the Rapid Amortization Period) if the Class Invested Amount has not been
reduced to zero on or before such Class Expected Final Payment Date.
"Stated Controlled Accumulation Period Commencement Date" shall mean, for
any Variable Accumulation Series, the date so specified in the Series Term
Sheet.
"Subclass" with respect to any Class shall mean, if applicable, each
portion of such Class that has a different Certificate Rate or method of
calculating its Certificate Rate.
21
<PAGE> 30
"Subordinate Class or Classes" shall mean, with respect to any Class or
Classes, the Class or Classes, if any, identified by the letter or letters of
the alphabet succeeding the letter designating such Class or Classes (e.g., the
Subordinate Classes with respect to Class A are Class B and Class C).
"Subordinate Series" shall mean any Series that is subordinated in right of
payment, in whole or in part, pursuant to the Series Supplement with respect to
such Series, to the Series established hereby.
"Substitute Index," if applicable, shall have the meaning specified in
Section 13.
"Substitute Index Determination Date," if applicable, shall have the
meaning set forth in the Series Term Sheet.
"Supplemental Cash" for any Distribution Date shall mean an amount equal to
the sum of the Series Pre-Funding Amount and the Series Aggregate Excess Funding
Amount for such Distribution Date. For purposes of this Series Supplement,
allocations of Supplemental Cash for any Class shall be made according to the
following calculation: the product of (a) the Supplemental Cash and (b) a
fraction the numerator of which is the Class Investor Interest for such Class
and the denominator of which is the Series Investor Interest.
"Swap Counterparty Payment," if applicable, for any Distribution Date,
shall have the meaning specified in the Series Term Sheet.
"Swap Date," if applicable, shall mean, with respect to any Interest Rate
Swap, the date on which such Interest Rate Swap becomes effective.
"Swap Notional Amount," if applicable, with respect to any Interest Rate
Swap, shall mean the notional amount specified in such Interest Rate Swaps,
provided, however, that the sum of the Swap Notional Amounts for all Interest
Rate Swaps on any Distribution Date shall not exceed the sum of the Class A
Invested Amount and the Class B Invested Amount on such Distribution Date.
"Swap Rate," if applicable, with respect to any Interest Rate Swap, shall
have the meaning specified in the Series Term Sheet.
"Swap Trust Payment," if applicable, for any Distribution Date, shall have
the meaning specified in the Series Term Sheet.
"Swap Trust Payment Shortfall," if applicable, for any Distribution Date,
shall mean the positive difference, if any between (i) the sum of the Swap Trust
Payments and (ii) the sum of (A) the Series Finance Charge Collections allocable
to each Counterparty with respect to each Interest Rate Swap and (B) Series
Additional Allocable Amounts allocable to each Counterparty with respect to each
Interest Rate Swap for such Distribution Date.
"Telerate Page 3750," if applicable, shall mean the display page 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).
22
<PAGE> 31
"Third Party Credit Enhancement," if applicable, shall mean any credit
enhancement obtained by the Servicer in accordance with Section 10.
"Third Party Credit Enhancement Account," if applicable, shall have the
meaning specified in Section 7(e).
"Third Party Credit Enhancement Agreement," if applicable, shall mean the
Agreement among the Seller, the Servicer, the Trustee and the Third Party Credit
Enhancement Provider with respect to the Third Party Credit Enhancement.
"Third Party Credit Enhancement Amount," if applicable, shall mean the
amount on deposit in the Third Party Credit Enhancement Account as set forth in
the Series Term Sheet.
"Third Party Credit Enhancement Drawing," if applicable, shall mean any
drawing made under the Third Party Credit Enhancement.
"Third Party Credit Enhancement Fee," if applicable, shall mean, on any
Distribution Date, the sum of all fees, costs and interest payable to the Third
Party Credit Enhancement Provider or the Trustee as administrator of the Third
Party Credit Enhancement for the related Due Period pursuant to the Third Party
Credit Enhancement Agreement.
"Third Party Credit Enhancement Provider," if applicable, shall have the
meaning set forth in the Series Term Sheet.
"Total Available Third Party Credit Enhancement Amount," if applicable,
shall mean the amount set forth as such in the Third Party Credit Enhancement
Agreement.
"Variable Accumulation Series" shall mean each outstanding Series that is
not a Fixed Accumulation Series.
SECTION 2. Subordination.
(a) Subordination of Certain Classes.
(i) The Holders of each Class B Investor Certificate, by their
acceptance of such Investor Certificate, hereby subordinate, for the
benefit of the Holders of Class A Investor Certificates, to the extent and
in the manner set forth in Section 8, all of such Investor
Certificateholders' right, title and interest in and to future
distributions due on such Holders' Investor Certificates.
(ii) The Holders of each Class C Investor Certificate, by their
acceptance of such Investor Certificate, hereby subordinate, for the
benefit of the Holders of Class A Investor Certificates and the Class B
Investor Certificates, to the extent and in the manner set forth in Section
8, all of such Investor Certificateholders' right, title and interest in
and to future distributions due on such Holders' Investor Certificates.
23
<PAGE> 32
(b) No Subordination of Series. The Investor Certificates of the Series
established hereby shall not be subordinated in right of payment to any other
Series, whether currently outstanding or to be issued in the future. One or more
other Series, however, may be subordinated in right of payment to the Series
established hereby, although the Seller shall have no obligation to issue such a
Subordinate Series. If any Subordinate Series is issued, such Subordinate Series
shall be subordinate in right of payment to the Series established hereby only
to the extent set forth in the Series Supplement with respect to such
Subordinate Series.
SECTION 3. Representations and Warranties of the Seller. The
representations and warranties of the Seller contained in Section 2.04 of the
Pooling and Servicing Agreement and the corresponding sections of any Assignment
are true on and as of the date hereof and/or the date set forth in the Pooling
and Servicing Agreement, as applicable. The Seller also represents and warrants
to the Trust as of the date hereof that the execution, delivery and performance
of this Series Supplement by the Seller have been duly authorized by all
necessary corporate action, do not require any approval or consent of any
governmental agency or authority, do not and will not conflict with any material
provision of the Certificate of Incorporation or By-Laws of the Seller, do not
and will not conflict with, or result in a breach that would constitute a
material default under, any agreement for borrowed money binding upon or
applicable to it or such of its property that is material to it, or, to the best
of the Seller's knowledge, any law or governmental regulation or court decree
applicable to it or such material property, and this Series Supplement is the
valid, binding and enforceable obligation of the Seller, except as the same may
be limited by receivership, insolvency, reorganization, moratorium or similar
laws now or hereafter in effect relating to creditors' rights generally or
general principles of equity (whether considered in a proceeding at law or in
equity) and the discretion of the court before which any proceeding therefor may
be brought.
SECTION 4. Representations and Warranties of the Servicer. The
representations and warranties of the Servicer contained in Section 3.03 of the
Pooling and Servicing Agreement are true on and as of the date hereof. The
Servicer also represents and warrants to the Trust as of the date hereof that
the execution, delivery and performance of this Series Supplement by the
Servicer have been duly authorized by all necessary corporate action, do not
require any approval or consent of any governmental agency or authority, do not
and will not conflict with any material provision of the Certificate of
Incorporation or By-Laws of the Servicer, do not and will not conflict with, or
result in a breach that would constitute a material default under, any agreement
for borrowed money binding upon or applicable to it or such of its property that
is material to it, or, to the best of the Servicer's knowledge, any law or
governmental regulation or court decree applicable to it or such material
property, and this Series Supplement is the valid, binding and enforceable
obligation of the Servicer, except as the same may be limited by receivership,
insolvency, reorganization, moratorium or similar laws now or hereafter in
effect relating to creditors' rights generally or general principles of equity
(whether considered in a proceeding at law or in equity) and the discretion of
the court before which any proceeding therefor may be brought.
24
<PAGE> 33
SECTION 5. Representations and Warranties of the Trustee. The
representations and warranties of the Trustee contained in Section 11.15 of the
Pooling and Servicing Agreement are true on and as of the date hereof. The
Trustee also represents and warrants as of the date hereof that the Trustee has
full power, authority and right to execute, deliver and perform this Series
Supplement, and has taken all necessary action to authorize the execution,
delivery and performance by it of this Series Supplement, and this Series
Supplement has been duly executed and delivered by the Trustee.
SECTION 6. Authentication of Certificates. Pursuant to the request of the
Seller, the Trustee shall cause Investor Certificates in authorized
denominations evidencing the Series established hereby to be duly authenticated
and delivered as of the Series Closing Date to or upon the order of the Seller
pursuant to Section 6.05 of the Pooling and Servicing Agreement.
SECTION 7. Establishment and Administration of Investor Accounts and the
Third Party Credit Enhancement Account.
(a) The Series Distribution Account, the Series Collections Account and the
Series Principal Collections Account. The Trustee, for the benefit of the
Certificateholders of this Series, shall establish or maintain or cause to be
established and maintained in the name of the Trust, either (i) three
non-interest bearing segregated trust accounts with the corporate trust
department of an office or branch of a Qualified Trust Institution or (ii) three
non-interest bearing segregated demand deposit accounts at an Eligible
Institution (the "Series Distribution Account," the "Series Collections Account"
and the "Series Principal Collections Account"), each bearing a designation
clearly indicating that the funds deposited therein are held for the benefit of
the Certificateholders of this Series. The Trust shall possess all right, title
and interest in all funds on deposit in the Series Distribution Account, the
Series Collections Account and the Series Principal Collections Account.
Pursuant to authority granted to it under Section 3.01(b) of the Pooling and
Servicing Agreement, the Servicer shall have the revocable power to instruct the
Trustee to withdraw funds from the Series Distribution Account, the Series
Collections Account and the Series Principal Collections Account for the purpose
of carrying out the duties of the Servicer hereunder. The Servicer at all times
shall maintain accurate records reflecting each transaction in the Series
Distribution Account, the Series Collections Account and the Series Principal
Collections Account. The Paying Agent also shall have the revocable authority to
make withdrawals from the Series Distribution Account.
(b) Reallocation Accounts. The Trustee, for the benefit of the
Certificateholders, shall establish and maintain or cause to be established and
maintained in the name of the Trust, either (i) three non-interest bearing
segregated trust accounts with the corporate trust department of an office or
branch of a Qualified Trust Institution or (ii) three non-interest bearing
segregated demand deposit accounts at an Eligible Institution, for the Group to
which the Series established hereby belongs (the "Group Finance Charge
Collections Reallocation Account," the "Group Principal Collections Reallocation
Account" and the "Group Pre-Funding Reallocation Account," if applicable,
collectively, the "Reallocation Accounts"), each bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Certificateholders. The Trust shall possess all right, title and interest in all
funds on deposit from time to time in the Reallocation Accounts and in all
proceeds thereof. Pursuant to authority granted to it under Section 3.01(b) of
the Pooling and Servicing Agreement, the Servicer shall have the revocable power
to instruct the Trustee to withdraw funds from the Reallocation Accounts for the
purpose of carrying out the
25
<PAGE> 34
duties of the Servicer hereunder. The Servicer at all times shall maintain
accurate records reflecting each transaction in each of the Reallocation
Accounts.
(c) The Series Principal Funding Account.
(1) The Trustee, for the benefit of the Certificateholders of this
Series, shall establish and maintain or cause to be established and maintained
in the name of the Trust, either (i) a non-interest bearing segregated trust
account with the corporate trust department of an office or branch of a
Qualified Trust Institution or (ii) a non-interest bearing segregated demand
deposit account at an Eligible Institution (the "Series Principal Funding
Account"), bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Certificateholders of this Series. The
Trust shall possess all right, title and interest in all funds on deposit from
time to time in the Series Principal Funding Account and in all proceeds
thereof. The Series Principal Funding Account shall be under the sole dominion
and control of the Trustee for the benefit of the Certificateholders of this
Series. Pursuant to authority granted to it under Section 3.01(b) of the Pooling
and Servicing Agreement, the Servicer shall have the revocable power to instruct
the Trustee to withdraw funds from the Series Principal Funding Account for the
purpose of carrying out the duties of the Servicer hereunder. Any funds on
deposit in the Series Principal Funding Account for more than one Business Day
shall be invested in Permitted Investments under Section 4.02(c) of the Pooling
and Servicing Agreement. The Servicer at all times shall maintain accurate
records reflecting each transaction in the Series Principal Funding Account. The
Paying Agent also shall have the revocable authority to make withdrawals from
the Series Principal Funding Account.
(2) On or before each Distribution Date with respect to the Controlled
Accumulation Period and the Rapid Amortization Period, if any, a withdrawal will
be made from the Series Principal Funding Account in an amount equal to the
income from the investment of funds on deposit in the Series Principal Funding
Account. Such amount withdrawn shall be deposited into the Series Collections
Account and shall be treated as a "Series Additional Allocable Amount."
(d) The Series Interest Funding Account. The Trustee, for the benefit of
the Certificateholders of this Series, shall establish and maintain or cause to
be established and maintained in the name of the Trust, either (i) a
non-interest bearing segregated trust account in the corporate trust department
of an office or branch of a Qualified Trust Institution or (ii) a non-interest
bearing segregated demand deposit account at an Eligible Institution (the
"Series Interest Funding Account"), bearing a designation clearly indicating
that the funds deposited therein are held for the benefit of the
Certificateholders of this Series. The Trust shall possess all right, title and
interest in all funds on deposit from time to time in the Series Interest
Funding Account and in all proceeds thereof. Pursuant to authority granted to it
under Section 3.01(b) of the Pooling and Servicing Agreement, the Servicer shall
have the revocable power to instruct the Trustee to withdraw funds from the
Series Interest Funding Account for the purpose of carrying out the duties of
the Servicer hereunder. The Servicer at all times shall maintain accurate
records reflecting each transaction in the Series Interest Funding Account. The
Paying Agent shall also have the revocable authority to make withdrawals from
the Series Interest Funding Account.
26
<PAGE> 35
(e) The Third Party Credit Enhancement Account.
(1) If the Third Party Credit Enhancement is Funded Third Party Credit
Enhancement, the Servicer, for the benefit of the Certificateholders of this
Series and the Third Party Credit Enhancement Provider, shall establish and
maintain or cause to be established and maintained in the name of the Trust,
either (i) a non-interest bearing segregated trust account with the
corporate trust department of an office or branch of a Qualified Trust
Institution or (ii) a non-interest bearing segregated demand deposit account
at an Eligible Institution (the "Third Party Credit Enhancement Account"),
bearing a designation clearly indicating that the funds deposited therein
are held for the benefit of the Certificateholders of this Series and the
Third Party Credit Enhancement Provider. The Trust shall possess all right,
title and interest in all funds on deposit from time to time in the Third
Party Credit Enhancement Account and in all proceeds thereof. The Third
Party Credit Enhancement Account shall be under the sole dominion and
control of the Trustee as the administrator of the Third Party Credit
Enhancement for the benefit of the Certificateholders of this Series and the
Third Party Credit Enhancement Provider. The interest of the Third Party
Credit Enhancement Provider in the Third Party Credit Enhancement Account
shall be subordinated to the interests of the Certificateholders of this
Series to the extent provided herein and in the Third Party Credit
Enhancement Agreement. The Third Party Credit Enhancement Provider shall not
be entitled to reimbursement from the assets of the Trust for any
withdrawals from the Third Party Credit Enhancement Account except as
specifically provided in this Series Supplement. Pursuant to authority
granted to it under Section 3.01(b) of the Pooling and Servicing Agreement,
the Servicer shall have the revocable power to instruct the Trustee to
withdraw funds from the Third Party Credit Enhancement Account for the
purpose of carrying out the duties of the Servicer hereunder. Any funds on
deposit in the Third Party Credit Enhancement Account for more than one
Business Day shall be invested in Permitted Investments under Section
4.02(c) of the Pooling and Servicing Agreement. The Servicer at all times
shall maintain accurate records reflecting each transaction in the Third
Party Credit Enhancement Account. The Paying Agent also shall have the
revocable authority to make withdrawals from the Third Party Credit
Enhancement Account.
(2) On each Distribution Date, all interest and investment earnings
(net of losses and investment expenses) accrued since the preceding
Distribution Date on funds on deposit in the Third Party Credit Enhancement
Account shall be paid to the Trustee as administrator of the Third Party
Credit Enhancement for application in accordance with the provisions of the
Third Party Credit Enhancement Agreement. For purposes of determining the
availability of funds or the balances in the Third Party Credit Enhancement
Account, all such investment earnings on such funds shall be deemed not to
be available or on deposit. If, on any Distribution Date, after giving
effect to all other deposits to and withdrawals from the Third Party Credit
Enhancement Account as of such Distribution Date, the amount on deposit in
the Third Party Credit Enhancement Account is greater than the maximum
credit enhancement amount provided by the related Third Party Credit
Enhancement Agreement, then the excess representing such amount shall be
withdrawn from the Third Party Credit Enhancement Account and paid to the
Trustee as administrator of the Third Party Credit Enhancement for
application in accordance with the provisions of the Third Party Credit
Enhancement Agreement.
(3) Upon the earliest to occur of (i) the termination of the Trust,
(ii) the Series Termination Date or (iii) the day on which the Class
Invested Amount for each Class of the Series
27
<PAGE> 36
established hereby is paid in full, and after payment of all amounts to be
paid on such day from the Third Party Credit Enhancement Account to or for
the benefit of Investor Certificateholders of the Series established hereby,
all amounts remaining on deposit in the Third Party Credit Enhancement
Account shall be withdrawn from such account and paid to the Trustee as
administrator of the Third Party Credit Enhancement for application in
accordance with the provisions of the Third Party Credit Enhancement
Agreement.
(f) The Series Pre-Funding Account. If the Series Term Sheet for the Series
established hereby so provides, the Trustee, for the benefit of the
Certificateholders of this Series, shall establish and maintain or cause to be
established and maintained in the name of the Trust, either (i) a non-interest
bearing segregated trust account in the corporate trust department of an office
or branch of a Qualified Trust Institution or (ii) a non-interest bearing
segregated demand deposit account at an Eligible Institution (the "Series
Pre-Funding Account"), bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Certificateholders of this
Series. The Trust shall possess all right, title and interest in all funds on
deposit from time to time in the Series Pre-Funding Account and in all proceeds
thereof. The Series Pre-Funding Account shall be under the sole dominion and
control of the Trustee for the benefit of the Certificateholders of this Series.
Pursuant to authority granted to it under Section 3.01(b) of the Pooling and
Servicing Agreement, the Servicer shall have the revocable power to instruct the
Trustee to withdraw funds from the Series Pre-Funding Account for the purpose of
carrying out the duties of the Servicer hereunder. Any funds on deposit in the
Series Pre-Funding Account for more than one Business Day shall be invested in
Permitted Investments under Section 4.02(c) of the Pooling and Servicing
Agreement. The Servicer at all times shall maintain accurate records reflecting
each transaction in the Series Pre-Funding Account. The Paying Agent shall also
have the revocable authority to make withdrawals from the Series Pre-Funding
Account. On the Series Closing Date, the Seller shall cause to be deposited into
the Series Pre-Funding Account an amount equal to the Series Initial Pre-Funding
Amount. In connection with such Series Initial Pre-Funding Amount, and on or
before the Series Closing Date, the Servicer shall deliver to the Trustee, the
Seller and the Rating Agencies, a certificate of an officer of the Servicer
stating the size of such Series Pre-Funding Amount, and certifying that the
Servicer reasonably believes that the establishment and funding of the Series
Pre-Funding Amount will not result in any delay in the payment of principal to
the Investor Certificateholders of any Series then outstanding.
(g) The PFA Special Reserve Account.
(1) If the Series Term Sheet for the Series established hereby so
provides, the Trustee, for the benefit of the Certificateholders of this
Series, shall establish and maintain or cause to be established and
maintained in the name of the Trust, either (i) a non-interest bearing
segregated trust account in the corporate trust department of an office or
branch of a Qualified Trust Institution or (ii) a non-interest bearing
segregated demand deposit account at an Eligible Institution (the "PFA
Special Reserve Account"), bearing a designation clearly indicating that the
funds deposited therein are held for the benefit of the Certificateholders
of this Series. The Trust shall possess all right, title and interest in all
funds on deposit from time to time in the PFA Special Reserve Account and in
all proceeds thereof. The PFA Special Reserve Account shall be under the
sole dominion and control of the Trustee for the benefit of the
Certificateholders of this Series. Pursuant to authority granted to it under
Section 3.01(b) of the Pooling and Servicing Agreement, the Servicer shall
have the revocable power to instruct the Trustee to withdraw funds from the
PFA Special Reserve Account for the purpose of carrying out the duties of
the Servicer
28
<PAGE> 37
hereunder. Any funds on deposit in the PFA Special Reserve Account for more
than one Business Day shall be invested in Permitted Investments under
Section 4.02(c) of the Pooling and Servicing Agreement. The Servicer at all
times shall maintain accurate records reflecting each transaction in the PFA
Special Reserve Account. The Paying Agent shall also have the revocable
authority to make withdrawals from the PFA Special Reserve Account.
(2) Upon the earlier to occur of (i) the Series Termination Date or
(ii) the day on which the Series Invested Amount is paid in full, the
Trustee, acting in accordance with the instructions of the Servicer, after
the prior payment of all amounts owing to the Investor Certificateholders
that are payable from the PFA Special Reserve Account as provided herein,
shall withdraw from the PFA Special Reserve Account and pay to or at the
direction of the Seller, all amounts, if any, on deposit in the PFA Special
Reserve Account and the PFA Special Reserve Account shall have terminated
for purposes of this Series Supplement.
(3) On or before each Distribution Date with respect to the Controlled
Accumulation Period, a withdrawal will be made from the PFA Special Reserve
Account in an amount equal to the lesser of (a) the amount on deposit in the
PFA Special Reserve Account with respect to such Distribution Date and (b)
the excess, if any, of the PFA Covered Amount with respect to such
Distribution Date over the amount of investment earnings on the amount on
deposit in the Series Principal Funding Account with respect to such
Distribution Date. Such amount withdrawn shall be deposited into the Series
Collections Account and treated as a "Series Additional Allocable Amount."
(h) The Pre-Funding Special Reserve Account.
(1) If the Series Term Sheet for the Series established hereby so
provides, the Trustee, for the benefit of the Certificateholders of this
Series, shall establish and maintain or cause to be established and
maintained in the name of the Trust, either (i) a non-interest bearing
segregated trust account in the corporate trust department of an office or
branch of a Qualified Trust Institution or (ii) a non-interest bearing
segregated demand deposit account at an Eligible Institution (the
"Pre-Funding Special Reserve Account"), bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Certificateholders of this Series. The Trust shall possess all right, title
and interest in all funds on deposit from time to time in the Pre-Funding
Special Reserve Account and in all proceeds thereof. The Pre-Funding Special
Reserve Account shall be under the sole dominion and control of the Trustee
for the benefit of the Certificateholders of this Series. Pursuant to
authority granted to it under Section 3.01(b) of the Pooling and Servicing
Agreement, the Servicer shall have the revocable power to instruct the
Trustee to withdraw funds from the Pre-Funding Special Reserve Account for
the purpose of carrying out the duties of the Servicer hereunder. Any funds
on deposit in the Pre-Funding Special Reserve Account for more than one
Business Day shall be invested in Permitted Investments under Section
4.02(c) of the Pooling and Servicing Agreement. The Servicer at all times
shall maintain accurate records reflecting each transaction in the
Pre-Funding Special Reserve Account. The Paying Agent shall also have the
revocable authority to make withdrawals from the Pre-Funding Special Reserve
Account.
(2) Upon the earlier to occur of (i) the Series Termination Date or
(ii) the day on which the amount on deposit in the Series Pre-Funding
Account is reduced to zero, the Trustee, acting in
29
<PAGE> 38
accordance with the instructions of the Servicer, after the prior payment of
all amounts owing to the Investor Certificateholders that are payable from
the Pre-Funding Special Reserve Account as provided herein, shall withdraw
from the Pre-Funding Special Reserve Account and pay to or at the direction
of the Seller, all amounts, if any, on deposit in the Pre-Funding Special
Reserve Account and the Pre-Funding Special Reserve Account shall have
terminated for purposes of this Series Supplement.
(3) On or before each Distribution Date with respect to the period
between the Series Closing Date and date that occurs upon the earlier of (i)
the Series Pre-Funding Deadline and (ii) the date upon which there are no
longer funds on deposit in the Series Pre-Funding Account (the "Pre-Funding
Period"), a withdrawal will be made from the Pre-Funding Special Reserve
Account in an amount equal to the lesser of (a) the amount on deposit in the
Pre-Funding Special Reserve Account with respect to such Distribution Date
and (b) the excess, if any, of the Pre-Funding Covered Amount with respect
to such Distribution Date over the amount of investment earnings on the
amount on deposit in the Series Pre-Funding Account with respect to such
Distribution Date. Such amount shall be treated as a "Series Additional
Allocable Amount."
(i) Transfer of Investor Accounts. If, at any time any of the Investor
Accounts established in Sections 7(a) - 7(h) shall be located at an institution
that fails to meet the qualification requirements for an Eligible Institution or
a Qualified Trust Institution, as applicable, the Trustee shall move or cause to
be moved such Investor Account to an institution meeting the requisite
qualifications requirements within ten Business Days of the date the Trustee
becomes aware of such lack of qualification; provided, however, that if (i) such
Account is a Third Party Credit Enhancement Account and (ii) such Account is not
Funded Third Party Credit Enhancement, then the Trustee shall move or cause to
be moved such Account to an institution meeting the requisite qualifications
requirements within thirty Business Days of the date the Trustee becomes aware
of such lack of qualification.
SECTION 8. Allocations of Collections.
(a) Deposits into the Series Collections Account. On or before each
Distribution Date, the Servicer shall direct the Trustee to withdraw from the
Group Collections Account and deposit into the Series Collections Account an
amount equal to (i) the sum of the Series Finance Charge Collections and the
Series Principal Collections and (ii) the Series Excess Funding Amount (SRC),
each for the related Due Period. On or before each Distribution Date, the
Servicer also shall direct the Trustee to deposit the Series Additional
Allocable Amounts, if any, which have not previously been deposited into the
Series Collections Account.
(b) During the Revolving Period. On or before each Distribution Date during
the Revolving Period, the Servicer shall direct the Trustee that funds be paid
or deposited, and the Trustee shall apply such funds in the following amounts,
to the extent such funds are available and in the order of priority specified,
to the account or Person indicated, in each case as set forth below.
(1) Pre-Funding Account. If applicable, on or before the first Distribution
Date following a Series Pre-Funding Deadline, all amounts on deposit in the
Series Pre-Funding Account shall be deposited into the Series Distribution
Account.
30
<PAGE> 39
(2) Pre-Funding Special Reserve Account. If applicable, on or before the
first Distribution Date following a Series Pre-Funding Deadline, an amount equal
to the Pre-Funding Special Reserve Amount shall be withdrawn from the
Pre-Funding Special Reserve Account and shall be deposited into the Series
Collections Account as a "Series Additional Allocable Amount."
(3) Class A Monthly Interest. An amount equal to the lesser of
(A) the Class A Modified Required Amount and
(B) the sum of Series Finance Charge Collections and Series Additional
Allocable Amounts
shall be withdrawn from the Series Collections Account and deposited into the
Series Distribution Account.
(4) Class B Monthly Interest. An amount equal to the lesser of
(A) the Class B Modified Required Amount and
(B) the sum of any remaining Series Finance Charge Collections and any
remaining Series Additional Allocable Amounts
shall be withdrawn from the Series Collections Account and deposited into the
Series Distribution Account.
(5) Class C Monthly Interest. An amount equal to the lesser of
(A) the Class C Modified Required Amount, if any, and
(B) the sum of any remaining Series Finance Charge Collections and any
remaining Series Additional Allocable Amounts
shall be withdrawn from the Series Collections Account and deposited into the
Series Distribution Account.
(6) Series Monthly Servicing Fee Additional Funds Portion. An amount equal
to the lesser of
(A) the Series Monthly Servicing Fee Additional Funds Portion and
(B) Series Additional Funds
shall be withdrawn from the Series Collections Account and deposited into the
Series Distribution Account. The positive difference, if any, between the amount
in (A) and the amount in (B) shall be the "Series Monthly Servicing Fee
Additional Funds Portion Shortfall."
31
<PAGE> 40
(7) Series Monthly Servicing Fee. An amount equal to the lesser of
(A) the sum of the Series Monthly Servicing Fee and all accrued but
unpaid Series Monthly Servicing Fees as of the prior Distribution Date
less the Series Monthly Servicing Fee Additional Funds Portion, if any,
and
(B) the sum of any remaining Series Finance Charge Collections and any
remaining Series Additional Allocable Amounts
shall be withdrawn from the Series Collections Account and deposited into the
Series Distribution Account.
(8) Reimbursement of Class A Cumulative Investor Charged-Off Amounts. An
amount equal to the lesser of
(A) the Class A Cumulative Investor Charged-Off Amount and
(B) the sum of any remaining Series Finance Charge Collections and any
remaining Series Additional Allocable Amounts
shall be withdrawn from the Series Collections Account and deposited into the
Group Principal Collections Reallocation Account. The Class A Cumulative
Investor Charged-Off Amount shall be reduced by the amount of such deposit.
(9) Reimbursement of Class B Cumulative Investor Charged-Off Amounts. An
amount equal to the lesser of
(A) the Class B Cumulative Investor Charged-Off Amount and
(B) the sum of any remaining Series Finance Charge Collections and any
remaining Series Additional Allocable Amounts
shall be withdrawn from the Series Collections Account and deposited into the
Group Principal Collections Reallocation Account. The Class B Cumulative
Investor Charged-Off Amount shall be reduced by the amount of such deposit.
(10) Series Monthly Servicing Fee Additional Funds Portion Shortfall. An
amount equal to the lesser of
(A) the Series Monthly Servicing Fee Additional
Funds Portion Shortfall and
(B) the sum of any remaining Series Finance Charge Collections and any
remaining Series Additional Allocable Amounts
shall be withdrawn from the Series Collections Account and deposited into the
Series Distribution Account.
(11) Swap Trust Payments. An amount equal to the lesser of
32
<PAGE> 41
(A) the sum of the Swap Trust Payments and
(B) the sum of any remaining Series Finance Charge Collections
and any remaining Series Additional Allocable Amounts
shall be withdrawn from the Series Collections Account and deposited in the
Series Distribution Account.
(12) Reimbursement of Class C Cumulative Investor Charged-Off Amounts. An
amount equal to the lesser of
(A) the Class C Cumulative Investor Charged-Off Amount and
(B) the sum of any remaining Series Finance Charge Collections and any
remaining Series Additional Allocable Amounts
shall be withdrawn from the Series Collections Account and deposited into the
Group Principal Collections Reallocation Account. The Class C Cumulative
Investor Charged-Off Amount shall be reduced by the amount of such deposit.
(13) Shortfalls in the Pre-Funding Special Reserve Amount. If applicable, an
amount equal to the lesser of
(A) the Pre-Funding Special Reserve Amount Shortfall and
(B) the sum of any remaining Series Finance Charge Collections and any
remaining Series Additional Allocable Amounts
shall be withdrawn from the Series Collections Account and deposited into the
Pre-Funding Special Reserve Account. The Pre-Funding Special Reserve Amount
Shortfall shall be reduced by the amount of such deposit.
(14) Shortfalls in the PFA Special Reserve Required Amount. If applicable,
an amount equal to the lesser of
(A) the PFA Special Reserve Required Amount Shortfall and
(B) the sum of any remaining Series Finance Charge Collections and any
remaining Series Additional Allocable Amounts
shall be withdrawn from the Series Collections Account and deposited into the
PFA Special Reserve Account. The PFA Special Reserve Required Amount Shortfall
shall be reduced by the amount of such deposit.
(15) Reimbursement of prior Third Party Credit Enhancement Drawings. If
applicable, an amount equal to the lesser of
33
<PAGE> 42
(A) the sum of all unreimbursed Third Party Credit Enhancement Drawings
and
(B) the sum of any remaining Series Finance Charge Collections and any
remaining Series Additional Allocable Amounts
shall be withdrawn from the Series Collections Account and deposited into the
Third Party Credit Enhancement Account. The amount of unreimbursed Third Party
Credit Enhancement Drawings shall be reduced by the amount of such deposit.
(16) Third Party Credit Enhancement Fee. If applicable, an amount equal to
the lesser of
(A) the Third Party Credit Enhancement Fee and
(B) the sum of any remaining Series Finance Charge Collections and any
remaining Series Additional Allocable Amounts
shall be withdrawn from the Series Collections Account and deposited into the
Series Distribution Account.
(17) The Class A Early Termination Premium or the Class A Early Termination
Premium Shortfall, as applicable. If applicable, on or after the Series
Pre-Funding Deadline, an amount equal to the lesser of
(A) the Class A Early Termination Premium or the Class A Early
Termination Premium Shortfall, as applicable, and
(B) the sum of any remaining Series Finance Charge Collections and any
remaining Series Additional Allocable Amounts
shall be withdrawn from the Series Collections Account and deposited into the
Series Distribution Account.
(18) The Class B Early Termination Premium or the Class B Early Termination
Premium Shortfall, as applicable. If applicable, on or after the Series
Pre-Funding Deadline, an amount equal to the lesser of
(A) the Class B Early Termination Premium or the Class B Early
Termination Premium Shortfall, as applicable, and
(B) the sum of any remaining Series Finance Charge Collections and any
remaining Series Additional Allocable Amounts
shall be withdrawn from the Series Collections Account and deposited into the
Series Distribution Account.
(19) Series Excess Servicing. An amount equal to any remaining Series
Finance Charge Collections and any remaining Series Additional Allocable Amounts
(together, "Series Excess Servicing")
34
<PAGE> 43
shall be withdrawn from the Series Collections Account and deposited into the
Group Finance Charge Collections Reallocation Account.
(20) Third Party Credit Enhancement Drawing. If applicable, an amount equal
to the lesser of
(A) the Class C Modified Required Amount Shortfall and
(B) the amount on deposit in the Third Party Credit Enhancement Account
shall be withdrawn from the Third Party Credit Enhancement Account and deposited
into the Series Distribution Account. The Class C Modified Required Amount
Shortfall and the Third Party Credit Enhancement both shall be reduced by the
amount of such deposit.
(21) Payment of the Class A Modified Required Amount Shortfall from a
Subordinate Series. If applicable, an amount equal to the lesser of
(A) the Class A Modified Required Amount Shortfall and
(B) funds, if any, available to pay such Class A Modified Required
Amount Shortfall from funds initially allocated to any Subordinate
Series
shall be deposited into the Series Distribution Account. The Class A Modified
Required Amount Shortfall shall be reduced by the amount of such deposit.
(22) Payment of the Class B Modified Required Amount Shortfall from a
Subordinate Series. If applicable, an amount equal to the lesser of
(A) the Class B Modified Required Amount Shortfall and
(B) funds, if any, available to pay such Class B Modified Required
Amount Shortfall from funds initially allocated to any Subordinate
Series
shall be deposited into the Series Distribution Account. The Class B Modified
Required Amount Shortfall shall be reduced by the amount of such deposit.
(23) Payment of the Class C Modified Required Amount Shortfall from a
Subordinate Series. If applicable, an amount equal to the lesser of
(A) the Class C Modified Required Amount Shortfall and
(B) funds, if any, available to pay such Class C Modified Required
Amount Shortfall from funds initially allocated to any Subordinate
Series
shall be deposited into the Series Distribution Account. The Class C Modified
Required Amount Shortfall shall be reduced by the amount of such deposit.
35
<PAGE> 44
(24) Reimbursement of the Class A Cumulative Investor Charged-Off Amount
from a Subordinate Series. If applicable, an amount equal to the lesser of
(A) the Class A Cumulative Investor Charged-Off Amount and
(B) funds, if any, available to pay such Class A Cumulative Investor
Charged-Off Amount from funds initially allocated to any Subordinate
Series
shall be deposited into the Group Principal Collections Reallocation Account.
The Class A Cumulative Investor Charged-Off Amount shall be reduced by the
amount of such deposit.
(25) Reimbursement of the Class B Cumulative Investor Charged-Off Amount
from a Subordinate Series. If applicable, an amount equal to the lesser of
(A) the Class B Cumulative Investor Charged-Off Amount and
(B) funds, if any, available to pay such Class B Cumulative Investor
Charged-Off Amount from funds initially allocated to any Subordinate
Series
shall be deposited into the Group Principal Collections Reallocation Account.
The Class B Cumulative Investor Charged-Off Amount shall be reduced by the
amount of such deposit.
(26) Reimbursement of the Class C Cumulative Investor Charged-Off Amount
from a Subordinate Series. If applicable, an amount equal to the lesser of
(A) the Class C Cumulative Investor Charged-Off Amount and
(B) funds, if any, available to pay such Class C Cumulative Investor
Charged-Off Amount from funds initially allocated to any Subordinate
Series
shall be deposited into the Group Principal Collections Reallocation Account.
The Class C Cumulative Investor Charged-Off Amount shall be reduced by the
amount of such deposit.
(27) Reallocations for the Class A Modified Required Amount Shortfall from
the Group Finance Charge Collections Reallocation Account. An amount equal to
the lesser of
(A) the Class A Modified Required Amount Shortfall and
(B) the product of
(x) a fraction the numerator of which is the Class A Modified
Required Amount Shortfall and the denominator of which is the sum
of the class modified required amount shortfalls for all classes
with the same alphabetical designation for all series in the Group
to which the Series established hereby belongs (after giving
36
<PAGE> 45
effect to provisions in the applicable Series Supplements
substantially similar to the clauses preceding this clause (27))
and
(y) the amount on deposit in the Group Finance Charge Collections
Reallocation Account before any withdrawals therefrom with respect
to any other series pursuant to a comparable clause in the
applicable Series Supplements
shall be withdrawn from the Group Finance Charge Collections Reallocation
Account and deposited into the Series Distribution Account. The Class A Modified
Required Amount Shortfall shall be reduced by the amount of such deposit.
(28) Reallocations for the Class B Modified Required Amount Shortfall from
the Group Finance Charge Collections Reallocation Account. An amount equal to
the lesser of
(A) the Class B Modified Required Amount Shortfall and
(B) the product of
(x) a fraction the numerator of which is the Class B Modified
Required Amount Shortfall and the denominator of which is the sum
of the class modified required amount shortfalls for all classes
with the same alphabetical designation for all series in the Group
to which the Series established hereby belongs (after giving
effect to provisions in the applicable Series Supplements
substantially similar to the clauses preceding this clause (28))
and
(y) the amount on deposit in the Group Finance Charge Collections
Reallocation Account before any withdrawals therefrom with respect
to any other series pursuant to a comparable clause for any class
with the same alphabetical designation and after any withdrawals
therefrom for the benefit of all classes designated by higher
letters of the alphabet of such other series in the applicable
Series Supplements
shall be withdrawn from the Group Finance Charge Collections Reallocation
Account and deposited into the Series Distribution Account. The Class B Modified
Required Amount Shortfall shall be reduced by the amount of such deposit.
(29) Reallocations for the Class C Modified Required Amount Shortfall from
the Group Finance Charge Collections Reallocation Account. An amount equal to
the lesser of
(A) the Class C Modified Required Amount Shortfall and
(B) the product of
(x) a fraction the numerator of which is the Class C Modified
Required Amount Shortfall and the denominator of which is the sum
of the class modified required amount shortfalls for all classes
not initially rated by the Rating Agencies for all series in the
Group to which the Series established hereby belongs (after giving
37
<PAGE> 46
effect to provisions in the applicable Series Supplements
substantially similar to the clauses preceding this clause (29));
provided, however, that if any other series (or multiple other
series) shall have more than one unrated class, the class modified
required amount shortfall to be used in the denominator for each
such other series shall be the class modified required amount
shortfall for the most senior unrated class for such series for
which the class modified required amount shortfall is greater than
zero and
(y) the amount on deposit in the Group Finance Charge Collections
Reallocation Account before any withdrawals therefrom with respect
to any other series pursuant to a comparable clause for any class
with the same alphabetical designation and after any withdrawals
therefrom for the benefit of all classes designated by higher
letters of the alphabet of such other series in the applicable
Series Supplements
shall be withdrawn from the Group Finance Charge Collections Reallocation
Account and deposited into the Series Distribution Account. The Class C Modified
Required Amount Shortfall shall be reduced by the amount of such deposit.
(30) Reallocations for the Class A Cumulative Investor Charged-Off Amount
from the Group Finance Charge Collections Reallocation Account. An amount equal
to the lesser of
(A) the Class A Cumulative Investor Charged-Off Amount and
(B) the product of
(x) a fraction the numerator of which is the Class A Cumulative
Investor Charged-Off Amount and the denominator of which is the
sum of the class cumulative investor charged-off amounts for all
classes with the same alphabetical designation for all series in
the Group to which the Series established hereby belongs (after
giving effect to provisions in the applicable Series Supplements
substantially similar to the clauses preceding this clause (30))
and
(y) the amount on deposit in the Group Finance Charge Collections
Reallocation Account before any withdrawals therefrom with respect
to any other series pursuant to a comparable clause in the
applicable Series Supplements
shall be withdrawn from the Group Finance Charge Collections Reallocation
Account and deposited into the Group Principal Collections Reallocation Account.
The Class A Cumulative Investor Charged-Off Amount shall be reduced by the
amount of such deposit.
(31) Reallocations for the Class B Cumulative Investor Charged-Off Amount
from the Group Finance Charge Collections Reallocation Account. An amount equal
to the lesser of
(A) the Class B Cumulative Investor Charged-Off Amount and
(B) the product of
38
<PAGE> 47
(x) a fraction the numerator of which is the Class B Cumulative
Investor Charged-Off Amount and the denominator of which is the
sum of the class cumulative investor charged-off amounts for all
classes with the same alphabetical designation for all series in
the Group to which the Series established hereby belongs (after
giving effect to provisions in the applicable Series Supplements
substantially similar to the clauses preceding this clause (31))
and
(y) the amount on deposit in the Group Finance Charge Collections
Reallocation Account before any withdrawals therefrom with respect
to any other series pursuant to a comparable clause for any class
with the same alphabetical designation and after any withdrawals
therefrom for the benefit of all classes designated by higher
letters of the alphabet of such other series in the applicable
Series Supplements
shall be withdrawn from the Group Finance Charge Collections Reallocation
Account and deposited into the Group Principal Collections Reallocation Account.
The Class B Cumulative Investor Charged-Off Amount shall be reduced by the
amount of such deposit.
(32) Allocations from the Group Finance Charge Collections Reallocation
Account for the payment of accrued Series Monthly Servicing Fees. An amount
equal to the lesser of
(A) all accrued but unpaid Series Monthly Servicing Fees and
(B) the product of
(x) a fraction the numerator of which is all accrued but unpaid
Series Monthly Servicing Fees and the denominator of which is the
sum of all accrued but unpaid monthly servicing fees for all
series in the Group to which the Series established hereby belongs
(after giving effect to provisions in the applicable Series
Supplements substantially similar to the clauses preceding this
clause (32)) and
(y) the amount on deposit in the Group Finance Charge Collections
Reallocation Account before any withdrawals therefrom with respect
to any other series pursuant to a comparable clause in the
applicable Series Supplements
shall be withdrawn from the Group Finance Charge Collections Reallocation
Account and deposited into the Series Distribution Account.
(33) Reallocations for the Class C Cumulative Investor Charged-Off Amount
from the Group Finance Charge Collections Reallocation Account. An amount equal
to the lesser of
(A) the Class C Cumulative Investor Charged-Off Amount and
(B) the product of
39
<PAGE> 48
(x) a fraction the numerator of which is the Class C Cumulative
Investor Charged-Off Amount and the denominator of which is the
sum of the class cumulative investor charged-off amounts for all
classes unrated by the Rating Agencies for all series in the Group
to which the Series established hereby belongs (after giving
effect to provisions in the applicable Series Supplements
substantially similar to the clauses preceding this clause (33));
provided, however, that if any other series (or multiple other
series) shall have more than one unrated class, the class
cumulative investor charged-off amount to be used in the
denominator for each such other series shall be the class
cumulative investor charged-off amount for the most senior unrated
class for such series for which the class cumulative investor
charged-off amount is greater than zero and
(y) the amount on deposit in the Group Finance Charge Collections
Reallocation Account before any withdrawals therefrom with respect
to any other series pursuant to a comparable clause for any class
with the same alphabetical designation and after any withdrawals
therefrom for the benefit of all classes designated by higher
letters of the alphabet of such other series in the applicable
Series Supplements
shall be withdrawn from the Group Finance Charge Collections Reallocation
Account and deposited into the Group Principal Collections Reallocation Account.
The Class C Cumulative Investor Charged-Off Amount shall be reduced by the
amount of such deposit.
(34) Swap Trust Payment Shortfalls. An amount equal to the lesser of
(A) the Swap Trust Payment Shortfall and
(B) the product of
(x) a fraction, the numerator of which is the Swap Trust Payment
Shortfall and the denominator of which is the sum of the swap
trust payment shortfalls for all series in the Group to which the
Series established hereby belongs and
(y) the amount on deposit in the Group Finance Charge Collections
Reallocation Account before any withdrawals therefrom with respect
to other series pursuant to a clause in the applicable Series
Supplement for the purpose of covering swap trust payment
shortfalls and after any withdrawals therefrom with respect to
other series pursuant to a clause in the applicable Series
Supplement for the purpose of covering any payment shortfall for
such series intended to be of a higher priority than swap trust
payment shortfalls
shall be withdrawn from the Group Finance Charge Collections Reallocation
Account and deposited in the Series Distribution Account.
(35) Payment of the Class A Modified Required Amount Shortfall from Class C
Principal Collections. An amount equal to the lesser of
40
<PAGE> 49
(A) the Class A Modified Required Amount Shortfall and
(B) the sum of the Series Excess Funding Amount (SRC) and Class C
Principal Collections less Series Yield Collections allocable to the
Class C Investor Interest
shall be withdrawn from the Series Collections Account and deposited into the
Series Distribution Account. The Class A Modified Required Amount Shortfall
shall be reduced by the amount of such deposit, and the Class C Cumulative
Investor Charged-Off Amount shall be increased by the amount of such deposit.
(36) Payment of the Class A Modified Required Amount Shortfall from Class B
Principal Collections. An amount equal to the lesser of
(A) the Class A Modified Required Amount Shortfall and
(B) the Class B Principal Collections less Series Yield Collections
allocable to the Class B Investor Interest
shall be withdrawn from the Series Collections Account and deposited into the
Series Distribution Account. The Class A Modified Required Amount Shortfall
shall be reduced by the amount of such deposit, and the Class B Cumulative
Investor Charged-Off Amount shall be increased by the amount of such deposit.
(37) Payment of the Class B Modified Required Amount Shortfall from Class C
Principal Collections. An amount equal to the lesser of
(A) the Class B Modified Required Amount Shortfall and
(B) the sum of any remaining Series Excess Funding Amounts (SRC) and
any remaining Class C Principal Collections less Series Yield
Collections allocable to the Class C Investor Interest
shall be withdrawn from the Series Collections Account and deposited into the
Series Distribution Account. The Class B Modified Required Amount Shortfall
shall be reduced by the amount of such deposit, and the Class C Cumulative
Investor Charged-Off Amount shall be increased by the amount of such deposit.
(38) Reimbursement of the Class A Cumulative Investor Charged-Off Amount
from Class C Principal Collections. An amount equal to the lesser of
(A) the Class A Cumulative Investor Charged-Off Amount and
(B) the sum of any remaining Series Excess Funding Amounts (SRC) and
any remaining Class C Principal Collections less Series Yield
Collections allocable to the Class C Investor Interest
41
<PAGE> 50
shall be withdrawn from the Series Collections Account and deposited into the
Group Principal Collections Reallocation Account. The Class A Cumulative
Investor Charged-Off Amount shall be reduced by the amount of such deposit, and
the Class C Cumulative Investor Charged-Off Amount shall be increased by the
amount of such deposit.
(39) Reallocation of the Class C Investor Interest to reimburse the Class A
Cumulative Investor Charged-Off Amount. The Class A Cumulative Investor
Charged-Off Amount shall be reduced by an amount equal to the lesser of
(A) the Class A Cumulative Investor Charged-Off Amount and
(B) the Class C Investor Interest
and the Class C Cumulative Investor Charged-Off Amount shall be increased by
such amount; provided, however, that the Class C Cumulative Investor Charged-Off
Amount would not, as a result, exceed the Class C Initial Investor Interest.
(40) Reimbursement of the Class A Cumulative Investor Charged-Off Amount
from Class B Principal Collections. An amount equal to the lesser of
(A) the Class A Cumulative Investor Charged-Off Amount and
(B) any remaining Class B Principal Collections less Series Yield
Collections allocable to the Class B Investor Interest
shall be withdrawn from the Series Collections Account and deposited into the
Group Principal Collections Reallocation Account. The Class A Cumulative
Investor Charged-Off Amount shall be reduced by the amount of such deposit, and
the Class B Cumulative Investor Charged-Off Amount shall be increased by the
amount of such deposit.
(41) Reallocation of the Class B Investor Interest to reimburse the Class A
Cumulative Investor Charged-Off Amount. The Class A Cumulative Investor
Charged-Off Amount shall be reduced by an amount equal to the lesser of
(A) the Class A Cumulative Investor Charged-Off Amount and
(B) the Class B Investor Interest
and the Class B Cumulative Investor Charged-Off Amount shall be increased by
such amount; provided, however, that the Class B Cumulative Investor Charged-Off
Amount would not, as a result, exceed the Class B Initial Investor Interest.
(42) Reimbursement of the Class B Cumulative Investor Charged-Off Amount
from Class C Principal Collections. An amount equal to the lesser of
(A) the Class B Cumulative Investor Charged-Off Amount and
42
<PAGE> 51
(B) the sum of any remaining Series Excess Funding Amounts (SRC) and
any remaining Class C Principal Collections less Series Yield
Collections allocable to the Class C Investor Interest
shall be withdrawn from the Series Collections Account and deposited into the
Group Principal Collections Reallocation Account. The Class B Cumulative
Investor Charged-Off Amount shall be reduced by the amount of such deposit, and
the Class C Cumulative Investor Charged-Off Amount shall be increased by the
amount of such deposit.
(43) Reallocation of the Class C Investor Interest to reimburse the Class B
Cumulative Investor Charged-Off Amount. The Class B Cumulative Investor
Charged-Off Amount shall be reduced by an amount equal to the lesser of
(A) the Class B Cumulative Investor Charged-Off Amount and
(B) the Class C Investor Interest
and the Class C Cumulative Investor Charged-Off Amount shall be increased by
such amount; provided, however, that the Class C Cumulative Investor Charged-Off
Amount would not, as a result, exceed the Class C Initial Investor Interest.
(44) Reallocations for the Class A Early Termination Premium Shortfall from
the Group Finance Charge Collections Reallocation Account. If applicable, an
amount equal to the lesser of
(A) the Class A Early Termination Premium Shortfall and
(B) the product of
(x) a fraction the numerator of which is the Class A Early
Termination Premium Shortfall and the denominator of which is the
sum of all class early termination premium shortfalls with the
same alphabetical designation for all series in the Group to which
the Series established hereby belongs (after giving effect to
provisions in the applicable Series Supplements substantially
similar to the clauses preceding this clause (44)) and
(y) the amount on deposit in the Group Finance Charge Collections
Reallocation Account before any withdrawals therefrom with respect
to any other series pursuant to a comparable clause in the
applicable Series Supplements
shall be withdrawn from the Group Finance Charge Collections Reallocation
Account and deposited into the Series Distribution Account.
(45) Reallocations for the Class B Early Termination Premium Shortfall from
the Group Finance Charge Collections Reallocation Account. If applicable, an
amount equal to the lesser of
(A) the Class B Early Termination Premium Shortfall and
43
<PAGE> 52
(B) the product of
(x) a fraction the numerator of which is the Class B Early
Termination Premium Shortfall and the denominator of which is the
sum of all class early termination premium shortfalls with the
same alphabetical designation for all series in the Group to which
the Series established hereby belongs (after giving effect to
provisions in the applicable Series Supplements substantially
similar to the clauses preceding this clause (45)) and
(y) the amount on deposit in the Group Finance Charge Collections
Reallocation Account before any withdrawals therefrom with respect
to any other series pursuant to a comparable clause for any class
with the same alphabetical designation and after any withdrawals
therefrom for the benefit of all classes designated by higher
letters of the alphabet of such other series in the applicable
Series Supplements
shall be withdrawn from the Group Finance Charge Collections Reallocation
Account and deposited into the Series Distribution Account.
(46) Allocations of remaining amounts from the Group Finance Charge
Collections Reallocation Account to the Seller. An amount equal to all remaining
amounts on deposit in the Group Finance Charge Collections Reallocation Account,
after all other allocations from such Account pursuant to the Series Supplements
for any series in the Group to which the Series established hereby belongs,
shall be withdrawn from the Group Finance Charge Collections Reallocation
Account and paid to the Seller.
(47) Allocations from the Excess Funding Account (General) to the Group
Principal Collections Reallocation Account. If no series is in its Rapid
Amortization Period, or if amounts remain on deposit in the Excess Funding
Account (General) after all allocations to any other series that are in their
Rapid Amortization Periods, an amount equal to the product of
(A) a fraction the numerator of which is the sum of the series investor
interests less the sum of class investor interests with respect to
seller retained classes for all series in the Group to which the Series
established hereby belongs and the denominator of which is the
Aggregate Investor Interest less the sum of all class investor
interests with respect to seller retained classes for all outstanding
series (after giving effect to provisions in the applicable Series
Supplements substantially similar to the clauses preceding this clause
(47)) and
(B) the amount on deposit in the Excess Funding Account (General)
before any withdrawals therefrom with respect to any other series
pursuant to a comparable clause in the applicable Series Supplements
shall be withdrawn from the Excess Funding Account (General) and deposited into
the Group Principal Collections Reallocation Account.
(48) Class C Permitted Controlled Amortization Amount. An amount equal to
the lesser of
44
<PAGE> 53
(A) the Class C Permitted Controlled Amortization Amount and
(B) remaining amounts on deposit in the Series Collections Account
shall be withdrawn from the Series Collections Account and deposited into the
Series Distribution Account. The amount by which the Class C Permitted
Controlled Amortization Amount exceeds such deposit shall be the "Class C
Permitted Controlled Amortization Amount Shortfall."
(49) Allocations of Series Principal Collections. An amount equal to the
remaining Series Principal Collections minus the (i) Series Yield Collections,
if any, and (ii) remaining Seller Retained Class Principal Collections shall be
withdrawn from the Series Collections Account and deposited into the Group
Principal Collections Reallocation Account.
(50) Payment to the Seller. An amount equal to the lesser of
(A) the positive difference, if any, between the amount of the Seller
Interest (determined as described below) and the Minimum Seller
Interest (after giving effect to all similar provisions in other Series
Supplements, beginning with the series (including the Series
established hereby) having the earliest series closing date and
continuing seriatim) and
(B) any remaining amounts on deposit in the Series Collections Account
shall be withdrawn from the Series Collections Account and paid to the Seller.
If after such payment, amounts remain on deposit in the Series Collections
Account, such amounts shall be deposited into the Excess Funding Account (SRC).
For purposes of this provision, the Seller Interest shall be deemed to include
(i) all amounts remaining on deposit in the Series Collections Account after
giving effect to clause (49); (ii) all amounts on deposit in all Group Principal
Collections Reallocation Accounts after giving effect to clause (49) and all
provisions similar to clause (49) in other Series Supplements; and (iii) all
amounts deposited into the Excess Funding Account (SRC) and the Excess Funding
Account (General) on such Distribution Date pursuant to the provisions of any
other Series Supplement.
(51) Additional payment to the Seller. An amount equal to the lesser of
(A) the positive difference, if any, between the amount of the Seller
Interest (determined as described below) and the Minimum Seller
Interest and
(B) the product of (i) any remaining amounts on deposit in the Group
Principal Collections Reallocation Account and (ii) a fraction the
numerator of which is the remaining amounts on deposit in the Group
Principal Collections Reallocation Account and the denominator of which
is the sum of the remaining amounts on deposit in all group principal
collections reallocation accounts (including the Group Principal
Collections Reallocation Account for the Group to which the Series
established hereby belongs)
shall be withdrawn from the Group Principal Collections Reallocation Account and
paid to the Seller. If after such payment, amounts remain on deposit in the
Group Principal Collections Reallocation Account, such amounts shall be
deposited into the Excess Funding Account (General). For purposes of this
45
<PAGE> 54
provision, the Seller Interest shall be deemed to include (i) all amounts on
deposit in all Group Principal Collections Reallocation Accounts after giving
effect to clause (49) and all provisions similar to clause (49) in other Series
Supplements, and (ii) all amounts deposited into the Excess Funding Account
(SRC) and the Excess Funding Account (General) on such Distribution Date
pursuant to the provisions of any other Series Supplements. This provision shall
be applied before similar provisions for any previously issued Series.
(52) Allocations from the Series Pre-Funding Account to the Group
Pre-Funding Reallocation Account. If applicable, an amount equal to the amount
on deposit in the Series Pre-Funding Account shall be withdrawn from the Series
Pre-Funding Account and deposited into the Group Pre-Funding Reallocation
Account; provided, however, that such amount shall be used only to fund
principal shortfalls for other series in their controlled accumulation or
controlled amortization periods, as applicable, in the Group to which the Series
established hereby belongs.
(53) Further payment to the Seller. An amount equal to the lesser of
(A) the positive difference, if any, between the amount of the Seller
Interest and the Minimum Seller Interest and
(B) the product of (i) any remaining amounts on deposit in the Group
Pre-Funding Reallocation Account and (ii) a fraction the numerator of
which is the amount on deposit the Group Pre-Funding Reallocation
Account and the denominator of which is the sum of all amounts on
deposit in all group pre-funding reallocation accounts (after giving
effect to provisions in the applicable Series Supplements substantially
similar to Sections 8(c)(55), 8(c)(56) and 8(c)(57), and including the
Group Pre-Funding Reallocation Account to which the Series established
hereby is a member).
shall be withdrawn from the Group Pre-Funding Reallocation Account and paid to
the Seller. Any remaining amounts on deposit in the Group Pre-Funding
Reallocation Account shall be allocated to each Series in the Group based on a
fraction, the numerator of which is the amount deposited pursuant to Section
8(b)(52) and the denominator of which is the sum of all such deposits pursuant
to similar provisions in the series supplements for the Group to which the
Series established hereby belongs. Such amounts reallocated to the Series
established hereby pursuant to the prior sentence shall be deposited into the
Series Pre-Funding Account.
(c) Deposits During the Controlled Accumulation Period or Controlled
Amortization Period, if applicable. On or before each Distribution Date during
the Controlled Accumulation Period or Controlled Amortization Period, as
applicable, the Servicer shall direct the Trustee that funds be paid or
deposited, and the Trustee shall apply such funds in the following amounts, to
the extent such funds are available and in the order of priority specified, to
the account or Person indicated, in each case as set forth below.
(1) Class A Monthly Interest. An amount equal to the lesser of
(A) the Class A Modified Required Amount and
46
<PAGE> 55
(B) the sum of Series Finance Charge Collections and Series Additional
Allocable Amounts
shall be withdrawn from the Series Collections Account and deposited into the
Series Distribution Account.
(2) Class B Monthly Interest. An amount equal to the lesser of
(A) the Class B Modified Required Amount and
(B) the sum of any remaining Series Finance Charge Collections and any
remaining Series Additional Allocable Amounts
shall be withdrawn from the Series Collections Account and deposited into the
Series Distribution Account.
(3) Class C Monthly Interest. An amount equal to the lesser of
(A) the Class C Modified Required Amount, if any, and
(B) the sum of any remaining Series Finance Charge Collections and any
remaining Series Additional Allocable Amounts
shall be withdrawn from the Series Collections Account and deposited into the
Series Distribution Account.
(4) Series Monthly Servicing Fee Additional Funds Portion. An amount equal
to the lesser of
(A) the Series Monthly Servicing Fee Additional Funds Portion and
(B) Series Additional Funds
shall be withdrawn from the Series Collections Account and deposited into the
Series Distribution Account. The positive difference, if any, between the amount
in (A) and the amount in (B) shall be the "Series Monthly Servicing Fee
Additional Funds Portion Shortfall."
(5) Series Monthly Servicing Fee. An amount equal to the lesser of
(A) the sum of the Series Monthly Servicing Fee and all accrued but
unpaid Series Monthly Servicing Fees as of the prior Distribution Date
less the Series Monthly Servicing Fee Additional Funds Portion, if
any, and
(B) the sum of any remaining Series Finance Charge Collections and any
remaining Series Additional Allocable Amounts
shall be withdrawn from the Series Collections Account and deposited into the
Series Distribution Account.
47
<PAGE> 56
(6) Reimbursement of Class A Cumulative Investor Charged-Off Amounts. An
amount equal to the lesser of
(A) the Class A Cumulative Investor Charged-Off Amount and
(B) the sum of any remaining Series Finance Charge Collections and any
remaining Series Additional Allocable Amounts
shall be withdrawn from the Series Collections Account and deposited into the
Series Principal Collections Account. The Class A Cumulative Investor
Charged-Off Amount shall be reduced by the amount of such deposit.
(7) Reimbursement of Class B Cumulative Investor Charged-Off Amounts. An
amount equal to the lesser of
(A) the Class B Cumulative Investor Charged-Off Amount and
(B) the sum of any remaining Series Finance Charge Collections and any
remaining Series Additional Allocable Amounts
shall be withdrawn from the Series Collections Account and deposited into the
Series Principal Collections Account. The Class B Cumulative Investor
Charged-Off Amount shall be reduced by the amount of such deposit.
(8) Series Monthly Servicing Fee Additional Funds Portion Shortfall. An
amount equal to the lesser of
(A) the Series Monthly Servicing Fee Additional
Funds Portion Shortfall and
(B) the sum of any remaining Series Finance Charge Collections and any
remaining Series Additional Allocable Amounts
shall be withdrawn from the Series Collections Account and deposited into the
Series Distribution Account.
(9) Swap Trust Payments. An amount equal to the lesser of
(A) the sum of the Swap Trust Payments and
(B) the sum of any remaining Series Finance Charge Collections and any
remaining Series Additional Allocable Amounts
shall be withdrawn from the Series Collections Account and deposited in the
Series Distribution Account.
48
<PAGE> 57
(10) Reimbursement of Class C Cumulative Investor Charged-Off Amounts. An
amount equal to the lesser of
(A) the Class C Cumulative Investor Charged-Off Amount and
(B) the sum of any remaining Series Finance Charge Collections and any
remaining Series Additional Allocable Amounts.
shall be withdrawn from the Series Collections Account and deposited into the
Series Principal Collections Account. The Class C Cumulative Investor
Charged-Off Amount shall be reduced by the amount of such deposit.
(11) Shortfalls in the PFA Special Reserve Required Amount. If
applicable, an amount equal to the lesser of
(A) the PFA Special Reserve Required Amount Shortfall and
(B) the sum of any remaining Series Finance Charge Collections and any
remaining Series Additional Allocable Amounts
shall be withdrawn from the Series Collections Account and deposited into the
PFA Special Reserve Account. The PFA Special Reserve Required Amount Shortfall
shall be reduced by the amount of such deposit.
(12) Reimbursement of prior Third Party Credit Enhancement Drawings. If
applicable, an amount equal to the lesser of
(A) the sum of all unreimbursed Third Party Credit Enhancement
Drawings and
(B) the sum of any remaining Series Finance Charge Collections and any
remaining Series Additional Allocable Amounts
shall be withdrawn from the Series Collections Account and deposited into the
Third Party Credit Enhancement Account. The amount of unreimbursed Third Party
Credit Enhancement Drawings shall be reduced by the amount of such deposit.
(13) Third Party Credit Enhancement Fee. If applicable, an amount equal to
the lesser of
(A) the Third Party Credit Enhancement Fee and
(B) the sum of any remaining Series Finance Charge Collections and any
remaining Series Additional Allocable Amounts
shall be withdrawn from the Series Collections Account and deposited into the
Series Distribution Account.
49
<PAGE> 58
(14) The Class A Early Termination Premium Shortfall. If applicable, an
amount equal to the lesser of
(A) the Class A Early Termination Premium Shortfall and
(B) the sum of any remaining Series Finance Charge Collections and any
remaining Series Additional Allocable Amounts
shall be withdrawn from the Series Collections Account and deposited into the
Series Distribution Account.
(15) The Class B Early Termination Premium Shortfall. If applicable, an
amount equal to the lesser of
(A) the Class B Early Termination Premium Shortfall and
(B) the sum of any remaining Series Finance Charge Collections and any
remaining Series Additional Allocable Amounts
shall be withdrawn from the Series Collections Account and deposited into the
Series Distribution Account.
(16) Series Excess Servicing. An amount equal to any remaining Series
Finance Charge Collections and any remaining Series Additional Allocable Amounts
(together, "Series Excess Servicing") shall be withdrawn from the Series
Collections Account and deposited into the Group Finance Charge Collections
Reallocation Account.
(17) Third Party Credit Enhancement Drawing. If applicable, an amount equal
to the lesser of
(A) the Class C Modified Required Amount Shortfall and
(B) the amount on deposit in the Third Party Credit Enhancement
Account
shall be withdrawn from the Third Party Credit Enhancement Account and deposited
into the Series Distribution Account. The Class C Modified Required Amount
Shortfall and the Third Party Credit Enhancement Amount both shall be reduced by
the amount of such deposit.
(18) Payment of the Class A Modified Required Amount Shortfall from a
Subordinate Series. If applicable, an amount equal to the lesser of
(A) the Class A Modified Required Amount Shortfall and
(B) funds, if any, available to pay such Class A Modified Required
Amount Shortfall from funds initially allocated to any Subordinate
Series
shall be deposited into the Series Distribution Account. The Class A Modified
Required Amount Shortfall shall be reduced by the amount of such deposit.
50
<PAGE> 59
(19) Payment of the Class B Modified Required Amount Shortfall from a
Subordinate Series. If applicable, an amount equal to the lesser of
(A) the Class B Modified Required Amount Shortfall and
(B) funds, if any, available to pay such Class B Modified Required
Amount Shortfall from funds initially allocated to any Subordinate
Series
shall be deposited into the Series Distribution Account. The Class B Modified
Required Amount Shortfall shall be reduced by the amount of such deposit.
(20) Payment of the Class C Modified Required Amount Shortfall from a
Subordinate Series. If applicable, an amount equal to the lesser of
(A) the Class C Modified Required Amount Shortfall and
(B) funds, if any, available to pay such Class C Modified Required
Amount Shortfall from funds initially allocated to any Subordinate
Series
shall be deposited into the Series Distribution Account. The Class C Modified
Required Amount Shortfall shall be reduced by the amount of such deposit.
(21) Reimbursement of the Class A Cumulative Investor Charged-Off Amount
from a Subordinate Series. If applicable, an amount equal to the lesser of
(A) the Class A Cumulative Investor Charged-Off Amount and
(B) funds, if any, available to pay such Class A Cumulative Investor
Charged-Off Amount from funds initially allocated to any Subordinate
Series
shall be deposited into the Series Principal Collections Account. The Class A
Cumulative Investor Charged-Off Amount shall be reduced by the amount of such
deposit.
(22) Reimbursement of the Class B Cumulative Investor Charged-Off Amount
from a Subordinate Series. If applicable, an amount equal to the lesser of
(A) the Class B Cumulative Investor Charged-Off Amount and
(B) funds, if any, available to pay such Class B Cumulative Investor
Charged-Off Amount from funds initially allocated to any Subordinate
Series
shall be deposited into the Series Principal Collections Account. The Class B
Cumulative Investor Charged-Off Amount shall be reduced by the amount of such
deposit.
(23) Reimbursement of the Class C Cumulative Investor Charged-Off Amount
from a Subordinate Series. If applicable, an amount equal to the lesser of
51
<PAGE> 60
(A) the Class C Cumulative Investor Charged-Off Amount and
(B) funds, if any, available to pay such Class C Cumulative Investor
Charged-Off Amount from funds initially allocated to any Subordinate
Series
shall be deposited into the Series Principal Collections Account. The Class C
Cumulative Investor Charged-Off Amount shall be reduced by the amount of such
deposit.
(24) Reallocations for the Class A Modified Required Amount Shortfall from
the Group Finance Charge Collections Reallocation Account. An amount equal to
the lesser of
(A) the Class A Modified Required Amount Shortfall and
(B) the product of
(x) a fraction the numerator of which is the Class A Modified
Required Amount Shortfall and the denominator of which is the sum
of the class modified required amount shortfalls for all classes
with the same alphabetical designation for all series in the
Group to which the Series established hereby belongs (after
giving effect to provisions in the applicable Series Supplements
substantially similar to the clauses preceding this clause (24))
and
(y) the amount on deposit in the Group Finance Charge Collections
Reallocation Account before any withdrawals therefrom with
respect to any other series pursuant to a comparable clause in
the applicable Series Supplements
shall be withdrawn from the Group Finance Charge Collections Reallocation
Account and deposited into the Series Distribution Account. The Class A Modified
Required Amount Shortfall shall be reduced by the amount of such deposit.
(25) Reallocations for the Class B Modified Required Amount Shortfall from
the Group Finance Charge Collections Reallocation Account. An amount equal to
the lesser of
(A) the Class B Modified Required Amount Shortfall and
(B) the product of
(x) a fraction the numerator of which is the Class B Modified
Required Amount Shortfall and the denominator of which is the sum
of the class modified required amount shortfalls for all classes
with the same alphabetical designation for all series in the
Group to which the Series established hereby belongs (after
giving effect to provisions in the applicable Series Supplements
substantially similar to the clauses preceding this clause (25))
and
(y) the amount on deposit in the Group Finance Charge Collections
Reallocation Account before any withdrawals therefrom with
respect to any other series
52
<PAGE> 61
pursuant to a comparable clause for any class with the same
alphabetical designation and after any withdrawals therefrom for
the benefit of all classes designated by higher letters of the
alphabet of such other series in the applicable Series
Supplements
shall be withdrawn from the Group Finance Charge Collections Reallocation
Account and deposited into the Series Distribution Account. The Class B Modified
Required Amount Shortfall shall be reduced by the amount of such deposit.
(26) Reallocations for the Class C Modified Required Amount Shortfall from
the Group Finance Charge Collections Reallocation Account. An amount equal to
the lesser of
(A) the Class C Modified Required Amount Shortfall and
(B) the product of
(x) a fraction the numerator of which is the Class C Modified
Required Amount Shortfall and the denominator of which is the sum
of the class modified required amount shortfalls for all classes
not initially rated by the Rating Agencies for all series in the
Group to which the Series established hereby belongs (after
giving effect to provisions in the applicable Series Supplements
substantially similar to the clauses preceding this clause (26));
provided, however, that if any other series (or multiple other
series) shall have more than one unrated class, the class
modified required amount shortfall to be used in the denominator
for each such other series shall be the class modified required
amount shortfall for the most senior unrated class for such
series for which the class modified required amount shortfall is
greater than zero and
(y) the amount on deposit in the Group Finance Charge Collections
Reallocation Account before any withdrawals therefrom with
respect to any other series pursuant to a comparable clause for
any class with the same alphabetical designation and after any
withdrawals therefrom for the benefit of all classes designated
by higher letters of the alphabet of such other series in the
applicable Series Supplements
shall be withdrawn from the Group Finance Charge Collections Reallocation
Account and deposited into the Series Distribution Account. The Class C Modified
Required Amount Shortfall shall be reduced by the amount of such deposit.
(27) Reallocations for the Class A Cumulative Investor Charged-Off Amount
from the Group Finance Charge Collections Reallocation Account. An amount equal
to the lesser of
(A) the Class A Cumulative Investor Charged-Off Amount and
(B) the product of
53
<PAGE> 62
(x) a fraction the numerator of which is the Class A Cumulative
Investor Charged-Off Amount and the denominator of which is the
sum of the class cumulative investor charged-off amounts for all
classes with the same alphabetical designation for all series in
the Group to which the Series established hereby belongs (after
giving effect to provisions in the applicable Series Supplements
substantially similar to the clauses preceding this clause (27))
and
(y) the amount on deposit in the Group Finance Charge Collections
Reallocation Account before any withdrawals therefrom with
respect to any other series pursuant to a comparable clause in
the applicable Series Supplements
shall be withdrawn from the Group Finance Charge Collections Reallocation
Account and deposited into the Series Principal Collections Account. The Class A
Cumulative Investor Charged-Off Amount shall be reduced by the amount of such
deposit.
(28) Reallocations for the Class B Cumulative Investor Charged-Off Amount
from the Group Finance Charge Collections Reallocation Account. An amount equal
to the lesser of
(A) the Class B Cumulative Investor Charged-Off Amount and
(B) the product of
(x) a fraction the numerator of which is the Class B Cumulative
Investor Charged-Off Amount and the denominator of which is the
sum of the class cumulative investor charged-off amounts for all
classes with the same alphabetical designation for all series in
the Group to which the Series established hereby belongs (after
giving effect to provisions in the applicable Series Supplements
substantially similar to the clauses preceding this clause (28))
and
(y) the amount on deposit in the Group Finance Charge Collections
Reallocation Account before any withdrawals therefrom with
respect to any other series pursuant to a comparable clause for
any class with the same alphabetical designation and after any
withdrawals therefrom for the benefit of all classes designated
by higher letters of the alphabet of such other series in the
applicable Series Supplements
shall be withdrawn from the Group Finance Charge Collections Reallocation
Account and deposited into the Series Principal Collections Account. The Class B
Cumulative Investor Charged-Off Amount shall be reduced by the amount of such
deposit.
(29) Allocations from the Group Finance Charge Collections Reallocation
Account for the payment of accrued Series Monthly Servicing Fees. An amount
equal to the lesser of
(A) all accrued but unpaid Series Monthly Servicing Fees and
(B) the product of
54
<PAGE> 63
(x) a fraction the numerator of which is all accrued but unpaid
Series Monthly Servicing Fees and the denominator of which is the
sum of all accrued but unpaid monthly servicing fees for all
series in the Group to which the Series established hereby
belongs (after giving effect to provisions in the applicable
Series Supplements substantially similar to the clauses preceding
this clause (29)) and
(y) the amount on deposit in the Group Finance Charge Collections
Reallocation Account before any withdrawals therefrom with
respect to any other series pursuant to a comparable clause in
the applicable Series Supplements
shall be withdrawn from the Group Finance Charge Collections Reallocation
Account and deposited into the Series Distribution Account.
(30) Reallocations for the Class C Cumulative Investor Charged-Off Amount
from the Group Finance Charge Collections Reallocation Account. An amount equal
to the lesser of
(A) the Class C Cumulative Investor Charged-Off Amount and
(B) the product of
(x) a fraction the numerator of which is the Class C Cumulative
Investor Charged-Off Amount and the denominator of which is the
sum of the class cumulative investor charged-off amounts for all
classes unrated by the Rating Agencies for all series in the
Group to which the Series established hereby belongs (after
giving effect to provisions in the applicable Series Supplements
substantially similar to the clauses preceding this clause (30));
provided, however, that if any other series (or multiple other
series) shall have more than one unrated class, the class
cumulative investor charged-off amount to be used in the
denominator for each such other series shall be the class
cumulative investor charged-off amount for the most senior
unrated class for such series for which the class cumulative
investor charged-off amount is greater than zero and
(y) the amount on deposit in the Group Finance Charge Collections
Reallocation Account before any withdrawals therefrom with
respect to any other series pursuant to a comparable clause for
any class with the same alphabetical designation and after any
withdrawals therefrom for the benefit of all classes designated
by higher letters of the alphabet of such other series in the
applicable Series Supplements
shall be withdrawn from the Group Finance Charge Collections Reallocation
Account and deposited into the Series Principal Collections Account. The Class C
Cumulative Investor Charged-Off Amount shall be reduced by the amount of such
deposit.
(31) Swap Trust Payment Shortfalls. An amount equal to the lesser of
(A) the Swap Trust Payment Shortfall and
55
<PAGE> 64
(B) the product of
(x) a fraction, the numerator of which is the Swap Trust Payment
Shortfall and the denominator of which is the sum of the swap
trust payment shortfalls for all series in the Group to which the
Series established hereby belongs and
(y) the amount on deposit in the Group Finance Charge Collections
Reallocation Account before any withdrawals therefrom with
respect to other series pursuant to a clause in the applicable
Series Supplement for the purpose of covering swap trust payment
shortfalls and after any withdrawals therefrom with respect to
other series pursuant to a clause in the applicable Series
Supplement for the purpose of covering any payment shortfall for
such series intended to be of a higher priority than swap trust
payment shortfalls
shall be withdrawn from the Group Finance Charge Collections Reallocation
Account and deposited in the Series Distribution Account.
(32) Payment of the Class A Modified Required Amount Shortfall from Class C
Principal Collections. An amount equal to the lesser of
(A) the Class A Modified Required Amount Shortfall and
(B) the sum of the Series Excess Funding Amount (SRC) and Class C
Principal Collections less Series Yield Collections allocable to the
Class C Investor Interest
shall be withdrawn from the Series Collections Account and deposited into the
Series Distribution Account. The Class A Modified Required Amount Shortfall
shall be reduced by the amount of such deposit, and the Class C Cumulative
Investor Charged-Off Amount shall be increased by the amount of such deposit.
(33) Payment of the Class A Modified Required Amount Shortfall from Class B
Principal Collections. An amount equal to the lesser of
(A) the Class A Modified Required Amount Shortfall and
(B) the Class B Principal Collections less Series Yield Collections
allocable to the Class B Investor Interest
shall be withdrawn from the Series Collections Account and deposited into the
Series Distribution Account. The Class A Modified Required Amount Shortfall
shall be reduced by the amount of such deposit, and the Class B Cumulative
Investor Charged-Off Amount shall be increased by the amount of such deposit.
(34) Payment of the Class B Modified Required Amount Shortfall from Class C
Principal Collections. An amount equal to the lesser of
(A) the Class B Modified Required Amount Shortfall and
56
<PAGE> 65
(B) the sum of any remaining Series Excess Funding Amounts (SRC) and
any remaining Class C Principal Collections less Series Yield
Collections allocable to the Class C Investor Interest
shall be withdrawn from the Series Collections Account and deposited into the
Series Distribution Account. The Class B Modified Required Amount Shortfall
shall be reduced by the amount of such deposit, and the Class C Cumulative
Investor Charged-Off Amount shall be increased by the amount of such deposit.
(35) Reimbursement of the Class A Cumulative Investor Charged-Off Amount
from Class C Principal Collections. An amount equal to the lesser of
(A) the Class A Cumulative Investor Charged-Off Amount and
(B) the sum of any remaining Series Excess Funding Amounts (SRC) and
any remaining Class C Principal Collections less Series Yield
Collections allocable to the Class C Investor Interest
shall be withdrawn from the Series Collections Account and deposited into the
Series Principal Collections Account. The Class A Cumulative Investor
Charged-Off Amount shall be reduced by the amount of such deposit, and the Class
C Cumulative Investor Charged-Off Amount shall be increased by the amount of
such deposit.
(36) Reallocation of the Class C Investor Interest to reimburse the Class A
Cumulative Investor Charged-Off Amount. The Class A Cumulative Investor
Charged-Off Amount shall be reduced by an amount equal to the lesser of
(A) the Class A Cumulative Investor Charged-Off Amount and
(B) the Class C Investor Interest
and the Class C Cumulative Investor Charged-Off Amount shall be increased by
such amount; provided, however, that the Class C Cumulative Investor Charged-Off
Amount would not, as a result, exceed the Class C Initial Investor Interest less
principal payments made in respect of such Class prior to such Distribution
Date.
(37) Reimbursement of the Class A Cumulative Investor Charged-Off Amount
from Class B Principal Collections. An amount equal to the lesser of
(A) the Class A Cumulative Investor Charged-Off Amount and
(B) any remaining Class B Principal Collections less Series Yield
Collections allocable to the Class B Investor Interest
shall be withdrawn from the Series Collections Account and deposited into the
Series Principal Collections Account. The Class A Cumulative Investor
Charged-Off Amount shall be reduced by the amount of such
57
<PAGE> 66
deposit, and the Class B Cumulative Investor Charged-Off Amount shall be
increased by the amount of such deposit.
(38) Reallocation of the Class B Investor Interest to reimburse the Class A
Cumulative Investor Charged-Off Amount. The Class A Cumulative Investor
Charged-Off Amount shall be reduced by an amount equal to the lesser of
(A) the Class A Cumulative Investor Charged-Off Amount and
(B) the Class B Investor Interest
and the Class B Cumulative Investor Charged-Off Amount shall be increased by
such amount; provided, however, that the Class B Cumulative Investor Charged-Off
Amount would not, as a result, exceed the Class B Initial Investor Interest.
(39) Reimbursement of the Class B Cumulative Investor Charged-Off Amount
from Class C Principal Collections. An amount equal to the lesser of
(A) the Class B Cumulative Investor Charged-Off Amount and
(B) the sum of any remaining Series Excess Funding Amounts (SRC) and
any remaining Class C Principal Collections less Series Yield
Collections allocable to the Class C Investor Interest
shall be withdrawn from the Series Collections Account and deposited into the
Series Principal Collections Account. The Class B Cumulative Investor
Charged-Off Amount shall be reduced by the amount of such deposit, and the Class
C Cumulative Investor Charged-Off Amount shall be increased by the amount of
such deposit.
(40) Reallocation of the Class C Investor Interest to reimburse the Class B
Cumulative Investor Charged-Off Amount. The Class B Cumulative Investor
Charged-Off Amount shall be reduced by an amount equal to the lesser of
(A) the Class B Cumulative Investor Charged-Off Amount and
(B) the Class C Investor Interest
and the Class C Cumulative Investor Charged-Off Amount shall be increased by
such amount; provided, however, that the Class C Cumulative Investor Charged-Off
Amount would not, as a result, exceed the Class C Initial Investor Interest less
principal payments made in respect of such Class prior to such Distribution
Date.
(41) Reinstatement of Class C Investor Interest from the Third Party Credit
Enhancement Account. On the Distribution Date in which the Class A Invested
Amount and Class B Invested Amounts have been reduced to zero, if applicable, an
amount equal to the lesser of
(A) the Class C Cumulative Investor Charged-Off Amount and
58
<PAGE> 67
(B) the amount on deposit in the Third Party Credit Enhancement
Account
shall be withdrawn from the Third Party Credit Enhancement Account and deposited
into the Series Principal Collections Account by the Third Party Credit
Enhancement Provider. The Class C Cumulative Investor Charged-Off Amount and the
Third Party Credit Enhancement Amount shall both be reduced by the amount of
such deposit.
(42) Special Third Party Credit Enhancement Drawing. On the Distribution
Date in which the Class A Invested Amount and Class B Invested Amounts have been
reduced to zero, if applicable, an amount equal to the lesser of
(A) the Class C Modified Required Amount Shortfall and
(B) the amount on deposit in the Third Party Credit Enhancement
Account
shall be withdrawn from the Third Party Credit Enhancement Account and deposited
into the Series Distribution Account. The Class C Modified Required Amount
Shortfall and the Third Party Credit Enhancement Amount shall be reduced by the
amount of such deposit.
(43) Reallocations for the Class A Early Termination Premium Shortfall from
the Group Finance Charge Collections Reallocation Account. If applicable, an
amount equal to the lesser of
(A) the Class A Early Termination Premium Shortfall and
(B) the product of
(x) a fraction the numerator of which is the Class A Early
Termination Premium Shortfall and the denominator of which is the
sum of all class early termination premium shortfalls with the
same alphabetical designation for all series in the Group to
which the Series established hereby belongs (after giving effect
to provisions in the applicable Series Supplements substantially
similar to the clauses preceding this clause (43)) and
(y) the amount on deposit in the Group Finance Charge Collections
Reallocation Account before any withdrawals therefrom with
respect to any other series pursuant to a comparable clause in
the applicable Series Supplements
shall be withdrawn from the Group Finance Charge Collections Reallocation
Account and deposited into the Series Distribution Account.
(44) Reallocations for the Class B Early Termination Premium Shortfall from
the Group Finance Charge Collections Reallocation Account. If applicable, an
amount equal to the lesser of
(A) the Class B Early Termination Premium Shortfall and
(B) the product of
59
<PAGE> 68
(x) a fraction the numerator of which is the Class B Early
Termination Premium Shortfall and the denominator of which is the
sum of all class early termination premium shortfalls with the
same alphabetical designation for all series in the Group to
which the Series established hereby belongs (after giving effect
to provisions in the applicable Series Supplements substantially
similar to the clauses preceding this clause (44)) and
(y) the amount on deposit in the Group Finance Charge Collections
Reallocation Account before any withdrawals therefrom with
respect to any other series pursuant to a comparable clause for
any class with the same alphabetical designation and after any
withdrawals therefrom for the benefit of all classes designated
by higher letters of the alphabet of such other series in the
applicable Series Supplements
shall be withdrawn from the Group Finance Charge Collections Reallocation
Account and deposited into the Series Distribution Account.
(45) Allocations of remaining amounts from the Group Finance Charge
Collections Reallocation Account to the Seller. An amount equal to all remaining
amounts on deposit in the Group Finance Charge Collections Reallocation Account,
after all other allocations from such Account pursuant to the Series Supplements
for any series in the Group to which the Series established hereby belongs,
shall be withdrawn from the Group Finance Charge Collections Reallocation
Account and paid to the Seller.
(46) Allocations from the Excess Funding Account (General) to the Group
Principal Collections Reallocation Account. If no series is in its Rapid
Amortization Period, or if amounts remain on deposit in the Excess Funding
Account (General) after all allocations to any other series that are in their
Rapid Amortization Period, an amount equal to the product of
(A) a fraction the numerator of which is the sum of the series
investor interests less the sum of class investor interests with
respect to seller retained classes for all series in the Group to
which the Series established hereby belongs and the denominator of
which is the Aggregate Investor Interest less the sum of all class
investor interests with respect to seller retained classes for all
outstanding series (after giving effect to provisions in the
applicable Series Supplements substantially similar to the clauses
preceding this clause (46)) and
(B) the amount on deposit in the Excess Funding Account (General)
before any withdrawals therefrom with respect to any other series
pursuant to a comparable clause in the applicable Series Supplements
shall be withdrawn from the Excess Funding Account (General) and deposited into
the Group Principal Collections Reallocation Account.
(47) Allocations of Series Principal Collections. An amount equal to the
remaining Series Principal Collections minus the (i) Series Yield Collections,
if any and (ii) remaining Seller Retained Class
60
<PAGE> 69
Principal Collections shall be withdrawn from the Series Collections Account and
deposited into the Series Principal Collections Account.
(48) Class A Controlled Accumulation Amount or the Class A Controlled
Amortization Amount, as applicable. An amount equal to the lesser of
(A) the Class A Controlled Accumulation Amount or the Class A
Controlled Amortization Amount, as applicable, and
(B) Amounts on deposit in the Series Principal Collections Account
shall be withdrawn from the Series Principal Collections Account and deposited
into the Series Principal Funding Account or Series Distribution Account, as
applicable. The amount by which the Class A Controlled Accumulation Amount or
Class A Controlled Amortization Amount exceeds such deposit shall be the "Class
A Controlled Accumulation Amount Shortfall" or the "Class A Controlled
Amortization Shortfall," respectively.
(49) Class C Permitted Controlled Amortization Amount. An amount equal to
the lesser of
(A) the Class C Permitted Controlled Amortization Amount and
(B) remaining amounts on deposit in the Series Collections Account
shall be withdrawn from the Series Collections Account and deposited into the
Series Distribution Account. The amount by which the Class C Permitted
Controlled Amortization Amount exceeds such deposit shall be the "Class C
Permitted Controlled Amortization Amount Shortfall."
(50) Class B Controlled Accumulation Amount or the Class B Controlled
Amortization Amount, as applicable. On the Distribution Date following the Class
A Expected Final Payment Date if the Class A Invested Amount has been paid in
full, or on and after the Distribution Date on which the Class A Invested Amount
has been paid in full if such Distribution Date is after the Class A Expected
Final Payment Date, an amount equal to the lesser of
(A) the Class B Controlled Accumulation Amount or the Class B
Controlled Amortization Amount, as applicable, and
(B) remaining amounts on deposit in the Series Principal Collections
Account (or, if Class B is a Seller Retained Class, in the Series
Collections Account)
shall be withdrawn from the Series Principal Collections Account (or, if Class B
is a Seller Retained Class, from the Series Collections Account) and deposited
into the Series Principal Funding Account or Series Distribution Account, as
applicable. The amount by which the Class B Controlled Accumulation Amount or
Class B Controlled Amortization Amount exceeds such deposit shall be the "Class
B Controlled Accumulation Amount Shortfall" or the "Class B Controlled
Amortization Amount Shortfall," respectively.
61
<PAGE> 70
(51) Class C Controlled Accumulation Amount or the Class C Controlled
Amortization Amount, as applicable. On each Distribution Date after the
Distribution Date on which the Class A and Class B Invested Amounts are paid in
full, an amount equal to the lesser of
(A) the Class C Controlled Accumulation Amount or the Class C
Controlled Amortization Amount, as applicable, and
(B) remaining amounts on deposit in the Series Collections Account
shall be withdrawn from the Series Collections Account and deposited into the
Series Principal Funding Account or Series Distribution Account, as applicable.
The amount by which the Class C Controlled Accumulation Amount or Class
Controlled Amortization Amount exceeds such deposit shall be the "Class C
Controlled Accumulation Amount Shortfall" or the "Class C Controlled
Amortization Amount Shortfall."
(52) Allocations from the Group Principal Collections Reallocation Account
for the payment of the Class A Controlled Accumulation Amount Shortfall or the
Class A Controlled Amortization Amount Shortfall, as applicable. An amount equal
to the lesser of
(A) the Class A Controlled Accumulation Amount Shortfall or the Class
A Controlled Amortization Amount Shortfall, as applicable and
(B) the product of
(x) a fraction the numerator of which is the Class A Controlled
Accumulation Amount Shortfall or the Class A Controlled
Amortization Amount Shortfall, as applicable, and the denominator
of which is the sum of the class controlled accumulation amount
shortfalls or class controlled amortization amount shortfalls, as
applicable, for all classes with the same alphabetical
designation for all series in the Group to which the Series
established hereby belongs (after giving effect to provisions in
the applicable Series Supplements substantially similar to the
clauses preceding this clause (52)) and
(y) the amount on deposit in the Group Principal Collections
Reallocation Account before any withdrawals therefrom with
respect to any other series pursuant to a comparable clause in
the applicable Series Supplements
shall be withdrawn from the Group Principal Collections Reallocation Account and
deposited in the Series Principal Funding Account or Series Distribution
Account, as applicable. The Class A Controlled Accumulation Amount Shortfall or
the Class A Controlled Amortization Amount Shortfall, as applicable, shall be
reduced by the amount of such deposit.
(53) Allocations from the Group Principal Collections Reallocation Account
for the payment of the Class B Controlled Accumulation Amount Shortfall or the
Class B Controlled Amortization Amount Shortfall, as applicable. An amount equal
to the lesser of
62
<PAGE> 71
(A) the Class B Controlled Accumulation Amount Shortfall or the Class
B Controlled Amortization Amount Shortfall, as applicable and
(B) the product of
(x) a fraction the numerator of which is the Class B Controlled
Accumulation Amount Shortfall or the Class B Controlled
Amortization Amount Shortfall, as applicable, and the denominator
of which is the sum of the class controlled accumulation amount
shortfalls or class controlled amortization amount shortfalls, as
applicable, for all classes with the same alphabetical
designation for all series in the Group to which the Series
established hereby belongs (after giving effect to provisions in
the applicable Series Supplements substantially similar to the
clauses preceding this clause (53)) and
(y) the amount on deposit in the Group Principal Collections
Reallocation Account before any withdrawals therefrom with
respect to any other series pursuant to a comparable clause for
any class with the same alphabetical designation and after any
withdrawals therefrom for the benefit of all classes designated
by higher letters of the alphabet of such other series in the
applicable Series Supplements
shall be withdrawn from the Group Principal Collections Reallocation Account and
deposited in the Series Principal Funding Account or Series Distribution
Account, as applicable. The Class B Controlled Accumulation Amount Shortfall or
the Class B Controlled Amortization Amount Shortfall, as applicable, shall be
reduced by the amount of such deposit.
(54) Allocations from the Group Principal Collections Reallocation Account
for the payment of the Class C Controlled Accumulation Amount Shortfall or the
Class C Controlled Amortization Amount Shortfall, as applicable. An amount equal
to the lesser of
(A) the Class C Controlled Accumulation Amount Shortfall or the Class
C Controlled Amortization Amount Shortfall, as applicable and
(B) the product of
(x) a fraction the numerator of which is the Class C Controlled
Accumulation Amount Shortfall or the Class C Controlled
Amortization Amount Shortfall, as applicable, and the denominator
of which is the sum of the class controlled accumulation amount
shortfalls or class controlled amortization amount shortfalls, as
applicable, for all classes with the same alphabetical
designation for all series in the Group to which the Series
established hereby belongs (after giving effect to provisions in
the applicable Series Supplements substantially similar to the
clauses preceding this clause (54)); provided, however, that if
any other series (or multiple other series) shall have more than
one unrated class, the class controlled accumulation amount
shortfall or class controlled amortization amount shortfall, as
applicable, to be used in the denominator for each such other
series shall be the class controlled accumulation amount
shortfall or class controlled amortization
63
<PAGE> 72
amount shortfall, as applicable, for the most senior unrated
class for such series for which the class controlled accumulation
amount shortfall or class controlled amortization amount
shortfall, as applicable, is greater than zero and
(y) the amount on deposit in the Group Principal Collections
Reallocation Account before any withdrawals therefrom with
respect to any other series pursuant to a comparable clause for
any class with the same alphabetical designation and after any
withdrawals therefrom for the benefit of all classes designated
by higher letters of the alphabet of such other series in the
applicable Series Supplements
shall be withdrawn from the Group Principal Collections Reallocation Account and
deposited in the Series Principal Funding Account or Series Distribution
Account, as applicable. The Class C Controlled Accumulation Amount Shortfall or
the Class C Controlled Amortization Amount Shortfall, as applicable, shall be
reduced by the amount of such deposit.
(55) Allocations from the Group Pre-Funding Reallocation Account for the
payment of the Class A Controlled Accumulation Amount Shortfall or Class A
Controlled Amortization Amount Shortfall, as applicable. An amount equal to the
lesser of
(A) the Class A Controlled Accumulation Amount Shortfall or Class A
Controlled Amortization Amount Shortfall, as applicable, and
(B) the product of
(x) a fraction the numerator of which is the Class A Controlled
Accumulation Amount Shortfall or Class A Controlled Amortization
Amount Shortfall, as applicable, and the denominator of which is
the sum of the class controlled accumulation amount shortfalls or
class controlled amortization amount shortfalls, as applicable,
for all classes with the same alphabetical designation for all
series not in their Rapid Amortization Periods in the Group to
which the Series established hereby belongs (after giving effect
to provisions in the applicable Series Supplements substantially
similar to the clauses preceding this clause (55)) and
(y) the amount on deposit in the Group Pre-Funding Reallocation
Account before any withdrawals therefrom with respect to any
other series pursuant to a comparable clause in the applicable
Series Supplements
shall be withdrawn from the Group Pre-Funding Reallocation Account and deposited
in the Series Principal Funding Account or Series Distribution Account, as
applicable. The Class A Controlled Accumulation Amount Shortfall or the Class A
Controlled Amortization Amount Shortfall, as applicable, will be reduced by the
amount of such deposit.
(56) Allocations from the Group Pre-Funding Reallocation Account for the
payment of the Class B Controlled Accumulation Amount Shortfall or Class B
Controlled Amortization Amount Shortfall, as applicable. An amount equal to the
lesser of
64
<PAGE> 73
(A) the Class B Controlled Accumulation Amount Shortfall or Class B
Controlled Amortization Amount Shortfall, as applicable, and
(B) the product of
(x) a fraction the numerator of which is the Class B Controlled
Accumulation Amount Shortfall or Class B Controlled Amortization
Amount Shortfall, as applicable, and the denominator of which is
the sum of the class controlled accumulation amount shortfalls or
class controlled amortization amount shortfalls, as applicable,
for all classes with the same alphabetical designation for all
series not in their Rapid Amortization Periods in the Group to
which the Series established hereby belongs (after giving effect
to provisions in the applicable Series Supplements substantially
similar to the clauses preceding this clause (56)) and
(y) the amount on deposit in the Group Pre-Funding Reallocation
Account before any withdrawals therefrom with respect to any
other series pursuant to a comparable clause for any class with
the same alphabetical designation and after any withdrawals
therefrom for the benefit of all classes designated by higher
letters of the alphabet of such other series in the applicable
Series Supplements
shall be withdrawn from the Group Pre-Funding Reallocation Account and deposited
in the Series Principal Funding Account or Series Distribution Account, as
applicable. The Class B Controlled Accumulation Amount Shortfall or the Class B
Controlled Amortization Amount Shortfall, as applicable, will be reduced by the
amount of such deposit.
(57) Allocations from the Group Pre-Funding Reallocation Account for the
payment of the Class C Controlled Accumulation Amount Shortfall or Class C
Controlled Amortization Amount Shortfall, as applicable. An amount equal to the
lesser of
(A) the Class C Controlled Accumulation Amount Shortfall or Class C
Controlled Amortization Amount Shortfall, as applicable, and
(B) the product of
(x) a fraction the numerator of which is the Class C Controlled
Accumulation Amount Shortfall or Class C Controlled Amortization
Amount Shortfall, as applicable, and the denominator of which is
the sum of the class controlled accumulation amount shortfalls or
class controlled amortization amount shortfalls, as applicable,
for all classes with the same alphabetical designation for all
series not in their Rapid Amortization Periods in the Group to
which the Series established hereby belongs (after giving effect
to provisions in the applicable Series Supplements substantially
similar to the clauses preceding this clause (57)) and
65
<PAGE> 74
(y) the amount on deposit in the Group Pre-Funding Reallocation
Account before any withdrawals therefrom with respect to any
other series pursuant to a comparable clause for any class with
the same alphabetical designation and after any withdrawals
therefrom for the benefit of all classes designated by higher
letters of the alphabet of such other series in the applicable
Series Supplements
shall be withdrawn from the Group Pre-Funding Reallocation Account and deposited
in the Series Principal Funding Account or Series Distribution Account, as
applicable. The Class C Controlled Accumulation Amount Shortfall or the Class C
Controlled Amortization Amount Shortfall, as applicable, will be reduced by the
amount of such deposit.
(58) Allocations of remaining Series Principal Collections. An amount equal
to all remaining amounts on deposit in the Series Principal Collections Account
shall be withdrawn from the Series Principal Collections Account and deposited
into the Group Principal Collections Reallocation Account.
(59) Payment to the Seller. An amount equal to the lesser of
(A) the positive difference, if any, between the amount of the Seller
Interest (determined as described below) and the Minimum Seller
Interest (after giving effect to all similar provisions in other
Series Supplements, beginning with the series (including the Series
established hereby) having the earliest series closing date and
continuing seriatim) and
(B) any remaining amounts on deposit in the Series Collections Account
shall be withdrawn from the Series Collections Account and paid to the Seller.
If after such payment, amounts remain on deposit in the Series Collections
Account, such amounts shall be deposited into the Excess Funding Account (SRC).
For purposes of this provision, the Seller Interest shall be deemed to include
(i) all amounts remaining on deposit in the Series Collections Account after
giving effect to clause (58); (ii) all amounts on deposit in all Group Principal
Collections Reallocation Accounts after giving effect to clause (58) and all
provisions similar to clause (58) in other Series Supplements; and (iii) all
amounts deposited into the Excess Funding Account (SRC) and the Excess Funding
Account (General) on such Distribution Date pursuant to the provisions of any
other Series Supplement.
(60) Additional payment to the Seller. An amount equal to the lesser of
(A) the positive difference, if any, between the amount of the Seller
Interest (determined as described below) and the Minimum Seller
Interest and
(B) the product of (i) any remaining amounts on deposit in the Group
Principal Collections Reallocation Account and (ii) a fraction the
numerator of which is the remaining amounts on deposit in the Group
Principal Collections Reallocation Account and the denominator of
which is the sum of the remaining amounts on deposit in all group
principal collections reallocation accounts (including the Group
Principal Collections Reallocation Account for the Group to which the
Series established hereby belongs)
shall be withdrawn from the Group Principal Collections Reallocation Account and
paid to the Seller. If after such payment, amounts remain on deposit in the
Group Principal Collections Reallocation Account,
66
<PAGE> 75
such amounts shall be deposited into the Excess Funding Account (General). For
purposes of this provision, the Seller Interest shall be deemed to include (i)
all amounts on deposit in all Group Principal Collections Reallocation Accounts
after giving effect to clause (58) and all provisions similar to clause (58) in
other Series Supplements, and (ii) all amounts deposited into the Excess Funding
Account (SRC) and the Excess Funding Account (General) on such Distribution Date
pursuant to the provisions of any other Series Supplements. This provision shall
be applied before similar provisions for any previously issued Series.
(d) Deposits During the Rapid Amortization Period. On or before each
Distribution Date during the Rapid Amortization Period, the Servicer shall
direct the Trustee that funds be paid or deposited, and the Trustee shall apply
such funds in the following amounts, to the extent such funds are available and
in the order of priority specified, to the account or Person indicated, in each
case as set forth below.
(1) Deposits from the Series Principal Funding Account into the Series
Principal Collections Account. All amounts on deposit in the Series Principal
Funding Account shall be deposited into the Series Principal Collections
Account.
(2) Deposits from the Series Pre-Funding Account into the Series Principal
Collections Account. If applicable, all amounts on deposit in the Series
Pre-Funding Account shall be deposited into the Series Principal Collections
Account.
(3) Deposits from the PFA Special Reserve Account into the Series
Collections Account. If applicable, all amounts on deposit in the PFA Special
Reserve Account shall be deemed to be Series Finance Charge Collections and
shall be deposited into the Series Collections Account.
(4) Deposits from the Series Pre-Funding Special Reserve Account into the
Series Collections Account. If applicable, all amounts on deposit in the Series
Pre-Funding Special Reserve Account shall be deemed to be Series Finance Charge
Collections and shall be deposited into the Series Collections Account.
(5) Class A Monthly Interest. An amount equal to the lesser of
(A) the Class A Modified Required Amount and
(B) the sum of Series Finance Charge Collections and Series Additional
Allocable Amounts
shall be withdrawn from the Series Collections Account and deposited into the
Series Distribution Account.
(6) Class B Monthly Interest. An amount equal to the lesser of
(A) the Class B Modified Required Amount and
(B) the sum of any remaining Series Finance Charge Collections and any
remaining Series Additional Allocable Amounts
67
<PAGE> 76
shall be withdrawn from the Series Collections Account and deposited into the
Series Distribution Account.
(7) Class C Monthly Interest. An amount equal to the lesser of
(A) the Class C Modified Required Amount, if any, and
(B) the sum of any remaining Series Finance Charge Collections and any
remaining Series Additional Allocable Amounts
shall be withdrawn from the Series Collections Account and deposited into the
Series Distribution Account.
(8) Series Monthly Servicing Fee Additional Funds Portion. An amount equal
to the lesser of
(A) the Series Monthly Servicing Fee Additional Funds Portion
and
(B) Series Additional Funds
shall be withdrawn from the Series Collections Account and deposited into the
Series Distribution Account. The positive difference, if any, between the amount
in (A) and the amount in (B) shall be the "Series Monthly Servicing Fee
Additional Funds Portion Shortfall."
(9) Series Monthly Servicing Fee. An amount equal to the lesser of
(A) the sum of the Series Monthly Servicing Fee and all accrued but
unpaid Series Monthly Servicing Fees as of the prior Distribution Date
less the Series Monthly Servicing Fee Additional Funds Portion, if any,
and
(B) the sum of any remaining Series Finance Charge Collections and any
remaining Series Additional Allocable Amounts
shall be withdrawn from the Series Collections Account and deposited into the
Series Distribution Account.
(10) Reimbursement of Class A Cumulative Investor Charged-Off Amounts. An
amount equal to the lesser of
(A) the Class A Cumulative Investor Charged-Off Amount and
(B) the sum of any remaining Series Finance Charge Collections and any
remaining Series Additional Allocable Amounts
shall be withdrawn from the Series Collections Account and deposited into the
Series Principal Collections Account. The Class A Cumulative Investor
Charged-Off Amount shall be reduced by the amount of such deposit.
68
<PAGE> 77
(11) Reimbursement of Class B Cumulative Investor Charged-Off Amounts. An
amount equal to the lesser of
(A) the Class B Cumulative Investor Charged-Off Amount and
(B) the sum of any remaining Series Finance Charge Collections and any
remaining Series Additional Allocable Amounts
shall be withdrawn from the Series Collections Account and deposited into the
Series Principal Collections Account. The Class B Cumulative Investor
Charged-Off Amount shall be reduced by the amount of such deposit.
(12) Series Monthly Servicing Fee Additional Funds Portion Shortfall. An
amount equal to the lesser of
(A) the Series Monthly Servicing Fee Additional
Funds Portion Shortfall and
(B) the sum of any remaining Series Finance Charge Collections and any
remaining Series Additional Allocable Amounts
shall be withdrawn from the Series Collections Account and deposited into the
Series Distribution Account.
(13) Swap Trust Payments. An amount equal to the lesser of
(A) the sum of the Swap Trust Payments and
(B) the sum of any remaining Series Finance Charge Collections and any
remaining Series Additional Allocable Amounts
shall be withdrawn from the Series Collections Account and deposited in the
Series Distribution Account.
(14) Reimbursement of Class C Cumulative Investor Charged-Off Amounts. An
amount equal to the lesser of
(A) the Class C Cumulative Investor Charged-Off Amount and
(B) the sum of any remaining Series Finance Charge Collections and any
remaining Series Additional Allocable Amounts.
shall be withdrawn from the Series Collections Account and deposited into the
Series Principal Collections Account. The Class C Cumulative Investor
Charged-Off Amount shall be reduced by the amount of such deposit.
(15) Reimbursement of prior Third Party Credit Enhancement Drawings. On and
after each Distribution Date after the Class A Invested Amount and Class B
Invested Amount have been reduced to zero, if applicable, an amount equal to the
lesser of
69
<PAGE> 78
(A) the sum of all unreimbursed Third Party Credit Enhancement Drawings
and
(B) the sum of any remaining Series Finance Charge Collections and any
remaining Series Additional Allocable Amounts
shall be withdrawn from the Series Collections Account and deposited into the
Third Party Credit Enhancement Account. The amount of unreimbursed Third Party
Credit Enhancement Drawings shall be reduced by the amount of such deposit.
(16) Third Party Credit Enhancement Fee. If applicable, an amount equal to
the lesser of
(A) the Third Party Credit Enhancement Fee and
(B) the sum of any remaining Series Finance Charge Collections and any
remaining Series Additional Allocable Amounts
shall be withdrawn from the Series Collections Account and deposited into the
Series Distribution Account.
(17) Series Excess Servicing. An amount equal to any remaining Series
Finance Charge Collections and any remaining Series Additional Allocable Amounts
(together, "Series Excess Servicing") shall be withdrawn from the Series
Collections Account and deposited into the Group Finance Charge Collections
Reallocation Account.
(18) Third Party Credit Enhancement Drawing. If applicable, an amount equal
to the lesser of
(A) the Class C Modified Required Amount Shortfall and
(B) the amount on deposit in the Third Party Credit Enhancement Account
shall be withdrawn from the Third Party Credit Enhancement Account and deposited
into the Series Distribution Account. The Class C Modified Required Amount
Shortfall and the Third Party Credit Enhancement shall be reduced by the amount
of such deposit.
(19) Payment of the Class A Modified Required Amount Shortfall from a
Subordinate Series. If applicable, an amount equal to the lesser of
(A) the Class A Modified Required Amount Shortfall and
(B) funds, if any, available to pay such Class A Modified Required
Amount Shortfall from funds initially allocated to any Subordinate
Series
shall be deposited into the Series Distribution Account. The Class A Modified
Required Amount Shortfall shall be reduced by the amount of such deposit.
(20) Payment of the Class B Modified Required Amount Shortfall from a
Subordinate Series. If applicable, an amount equal to the lesser of
70
<PAGE> 79
(A) the Class B Modified Required Amount Shortfall and
(B) funds, if any, available to pay such Class B Modified Required
Amount Shortfall from funds initially allocated to any Subordinate
Series
shall be deposited into the Series Distribution Account. The Class B Modified
Required Amount Shortfall shall be reduced by the amount of such deposit.
(21) Payment of the Class C Modified Required Amount Shortfall from a
Subordinate Series. If applicable, an amount equal to the lesser of
(A) the Class C Modified Required Amount Shortfall and
(B) funds, if any, available to pay such Class C Modified Required
Amount Shortfall from funds initially allocated to any Subordinate
Series
shall be deposited into the Series Distribution Account. The Class C Modified
Required Amount Shortfall shall be reduced by the amount of such deposit.
(22) Reimbursement of the Class A Cumulative Investor Charged-Off Amount
from a Subordinate Series. If applicable, an amount equal to the lesser of
(A) the Class A Cumulative Investor Charged-Off Amount and
(B) funds, if any, available to pay such Class A Cumulative Investor
Charged-Off Amount from funds initially allocated to any Subordinate
Series
shall be deposited into the Series Principal Collections Account. The Class A
Cumulative Investor Charged-Off Amount shall be reduced by the amount of such
deposit.
(23) Reimbursement of the Class B Cumulative Investor Charged-Off Amount
from a Subordinate Series. If applicable, an amount equal to the lesser of
(A) the Class B Cumulative Investor Charged-Off Amount and
(B) funds, if any, available to pay such Class B Cumulative Investor
Charged-Off Amount from funds initially allocated to any Subordinate
Series
shall be deposited into the Series Principal Collections Account. The Class B
Cumulative Investor Charged-Off Amount shall be reduced by the amount of such
deposit.
(24) Reimbursement of the Class C Cumulative Investor Charged-Off Amount
from a Subordinate Series. If applicable, an amount equal to the lesser of
(A) the Class C Cumulative Investor Charged-Off Amount and
71
<PAGE> 80
(B) funds, if any, available to pay such Class C Cumulative Investor
Charged-Off Amount from funds initially allocated to any Subordinate
Series
shall be deposited into the Series Principal Collections Account. The Class C
Cumulative Investor Charged-Off Amount shall be reduced by the amount of such
deposit.
(25) Reallocations for the Class A Modified Required Amount Shortfall
from the Group Finance Charge Collections Reallocation Account. An amount equal
to the lesser of
(A) the Class A Modified Required Amount Shortfall and
(B) the product of
(x) a fraction the numerator of which is the Class A Modified
Required Amount Shortfall and the denominator of which is the sum
of the class modified required amount shortfalls for all classes
with the same alphabetical designation for all series in the Group
to which the Series established hereby belongs (after giving
effect to provisions in the applicable Series Supplements
substantially similar to the clauses preceding this clause (25))
and
(y) the amount on deposit in the Group Finance Charge Collections
Reallocation Account before any withdrawals therefrom with respect
to any other series pursuant to a comparable clause in the
applicable Series Supplements
shall be withdrawn from the Group Finance Charge Collections Reallocation
Account and deposited into the Series Distribution Account. The Class A Modified
Required Amount Shortfall shall be reduced by the amount of such deposit.
(26) Reallocations for the Class B Modified Required Amount Shortfall from
the Group Finance Charge Collections Reallocation Account. An amount equal to
the lesser of
(A) the Class B Modified Required Amount Shortfall and
(B) the product of
(x) a fraction the numerator of which is the Class B Modified
Required Amount Shortfall and the denominator of which is the sum
of the class modified required amount shortfalls for all classes
with the same alphabetical designation for all series in the Group
to which the Series established hereby belongs (after giving
effect to provisions in the applicable Series Supplements
substantially similar to the clauses preceding this clause (26))
and
(y) the amount on deposit in the Group Finance Charge Collections
Reallocation Account before any withdrawals therefrom with respect
to any other series pursuant to a comparable clause for any class
with the same alphabetical designation and after any withdrawals
therefrom for the benefit of all classes
72
<PAGE> 81
designated by higher letters of the alphabet of such other series
in the applicable Series Supplements
shall be withdrawn from the Group Finance Charge Collections Reallocation
Account and deposited into the Series Distribution Account. The Class B Modified
Required Amount Shortfall shall be reduced by the amount of such deposit.
(27) Reallocations for the Class C Modified Required Amount Shortfall from
the Group Finance Charge Collections Reallocation Account. An amount equal to
the lesser of
(A) the Class C Modified Required Amount Shortfall and
(B) the product of
(x) a fraction the numerator of which is the Class C Modified
Required Amount Shortfall and the denominator of which is the sum
of the class modified required amount shortfalls for all classes
not initially rated by the Rating Agencies for all series in the
Group to which the Series established hereby belongs (after giving
effect to provisions in the applicable Series Supplements
substantially similar to the clauses preceding this clause (27));
provided, however, that if any other series (or multiple other
series) shall have more than one unrated class, the class modified
required amount shortfall to be used in the denominator for each
such other series shall be the class modified required amount
shortfall for the most senior unrated class for such series for
which the class modified required amount shortfall is greater than
zero and
(y) the amount on deposit in the Group Finance Charge Collections
Reallocation Account before any withdrawals therefrom with respect
to any other series pursuant to a comparable clause for any class
with the same alphabetical designation and after any withdrawals
therefrom for the benefit of all classes designated by higher
letters of the alphabet of such other series in the applicable
Series Supplements
shall be withdrawn from the Group Finance Charge Collections Reallocation
Account and deposited into the Series Distribution Account. The Class C Modified
Required Amount Shortfall shall be reduced by the amount of such deposit.
(28) Reallocations for the Class A Cumulative Investor Charged-Off Amount
from the Group Finance Charge Collections Reallocation Account. An amount equal
to the lesser of
(A) the Class A Cumulative Investor Charged-Off Amount and
(B) the product of
(x) a fraction the numerator of which is the Class A Cumulative
Investor Charged-Off Amount and the denominator of which is the
sum of the class cumulative investor charged-off amounts for all
classes with the same alphabetical
73
<PAGE> 82
designation for all series in the Group to which the Series
established hereby belongs (after giving effect to provisions in
the applicable Series Supplements substantially similar to the
clauses preceding this clause (28)) and
(y) the amount on deposit in the Group Finance Charge Collections
Reallocation Account before any withdrawals therefrom with respect
to any other series pursuant to a comparable clause in the
applicable Series Supplements
shall be withdrawn from the Group Finance Charge Collections Reallocation
Account and deposited into the Series Principal Collections Account. The Class A
Cumulative Investor Charged-Off Amount shall be reduced by the amount of such
deposit.
(29) Reallocations for the Class B Cumulative Investor Charged-Off Amount
from the Group Finance Charge Collections Reallocation Account. An amount equal
to the lesser of
(A) the Class B Cumulative Investor Charged-Off Amount and
(B) the product of
(x) a fraction the numerator of which is the Class B Cumulative
Investor Charged-Off Amount and the denominator of which is the
sum of the class cumulative investor charged-off amounts for all
classes with the same alphabetical designation for all series in
the Group to which the Series established hereby belongs (after
giving effect to provisions in the applicable Series Supplements
substantially similar to the clauses preceding this clause (29))
and
(y) the amount on deposit in the Group Finance Charge Collections
Reallocation Account before any withdrawals therefrom with respect
to any other series pursuant to a comparable clause for any class
with the same alphabetical designation and after any withdrawals
therefrom for the benefit of all classes designated by higher
letters of the alphabet of such other series in the applicable
Series Supplements
shall be withdrawn from the Group Finance Charge Collections Reallocation
Account and deposited into the Series Principal Collections Account. The Class B
Cumulative Investor Charged-Off Amount shall be reduced by the amount of such
deposit.
(30) Allocations from the Group Finance Charge Collections Reallocation
Account for the payment of accrued Series Monthly Servicing Fees. An amount
equal to the lesser of
(A) all accrued but unpaid Series Monthly Servicing Fees and
(B) the product of
(x) a fraction the numerator of which is all accrued but unpaid
Series Monthly Servicing Fees and the denominator of which is the
sum of all accrued but unpaid monthly servicing fees for all
series in the Group to which the Series established
74
<PAGE> 83
hereby belongs (after giving effect to provisions in the
applicable Series Supplements substantially similar to the clauses
preceding this clause (30)) and
(y) the amount on deposit in the Group Finance Charge Collections
Reallocation Account before any withdrawals therefrom with respect
to any other series pursuant to a comparable clause in the
applicable Series Supplements
shall be withdrawn from the Group Finance Charge Collections Reallocation
Account and deposited into the Series Distribution Account.
(31) Reallocations for the Class C Cumulative Investor Charged-Off Amount
from the Group Finance Charge Collections Reallocation Account. An amount equal
to the lesser of
(A) the Class C Cumulative Investor Charged-Off Amount and
(B) the product of
(x) a fraction the numerator of which is the Class C Cumulative
Investor Charged-Off Amount and the denominator of which is the
sum of the class cumulative investor charged-off amounts for all
classes unrated by the Rating Agencies for all series in the Group
to which the Series established hereby belongs (after giving
effect to provisions in the applicable Series Supplements
substantially similar to the clauses preceding this clause (31));
provided, however, that if any other series (or multiple other
series) shall have more than one unrated class, the class
cumulative investor charged-off amount to be used in the
denominator for each such other series shall be the class
cumulative investor charged-off amount for the most senior unrated
class for such series for which the class cumulative investor
charged-off amount is greater than zero and
(y) the amount on deposit in the Group Finance Charge Collections
Reallocation Account before any withdrawals therefrom with respect
to any other series pursuant to a comparable clause for any class
with the same alphabetical designation and after any withdrawals
therefrom for the benefit of all classes designated by higher
letters of the alphabet of such other series in the applicable
Series Supplements
shall be withdrawn from the Group Finance Charge Collections Reallocation
Account and deposited into the Series Principal Collections Account. The Class C
Cumulative Investor Charged-Off Amount shall be reduced by the amount of such
deposit.
(32) Swap Trust Payment Shortfalls. An amount equal to the lesser of
(A) the Swap Trust Payment Shortfall and
(B) the product of
75
<PAGE> 84
(x) a fraction, the numerator of which is the Swap Trust Payment
Shortfall and the denominator of which is the sum of the swap
trust payment shortfalls for all series in the Group to which the
Series established hereby belongs and
(y) the amount on deposit in the Group Finance Charge Collections
Reallocation Account before any withdrawals therefrom with respect
to other series pursuant to a clause in the applicable Series
Supplement for the purpose of covering swap trust payment
shortfalls and after any withdrawals therefrom with respect to
other series pursuant to a clause in the applicable Series
Supplement for the purpose of covering any payment shortfall for
such series intended to be of a higher priority than swap trust
payment shortfalls
shall be withdrawn from the Group Finance Charge Collections Reallocation
Account and deposited in the Series Distribution Account.
(33) Payment of the Class A Modified Required Amount Shortfall from Class C
Principal Collections. An amount equal to the lesser of
(A) the Class A Modified Required Amount Shortfall and
(B) the sum of the Series Excess Funding Amount (SRC) and Class C
Principal Collections less Series Yield Collections allocable to the
Class C Investor Interest
shall be withdrawn from the Series Collections Account and deposited into the
Series Distribution Account. The Class A Modified Required Amount Shortfall
shall be reduced by the amount of such deposit, and the Class C Cumulative
Investor Charged-Off Amount shall be increased by the amount of such deposit.
(34) Payment of the Class A Modified Required Amount Shortfall from Class B
Principal Collections. An amount equal to the lesser of
(A) the Class A Modified Required Amount Shortfall and
(B) the Class B Principal Collections less Series Yield Collections
allocable to the Class B Investor Interest
shall be withdrawn from the Series Collections Account and deposited into the
Series Distribution Account. The Class A Modified Required Amount Shortfall
shall be reduced by the amount of such deposit, and the Class B Cumulative
Investor Charged-Off Amount shall be increased by the amount of such deposit.
(35) Payment of the Class B Modified Required Amount Shortfall from Class C
Principal Collections. An amount equal to the lesser of
(A) the Class B Modified Required Amount Shortfall and
76
<PAGE> 85
(B) the sum of any remaining Series Excess Funding Amounts (SRC) and
any remaining Class C Principal Collections less Series Yield
Collections allocable to the Class C Investor Interest
shall be withdrawn from the Series Collections Account and deposited into the
Series Distribution Account. The Class B Modified Required Amount Shortfall
shall be reduced by the amount of such deposit, and the Class C Cumulative
Investor Charged-Off Amount shall be increased by the amount of such deposit.
(36) Reimbursement of the Class A Cumulative Investor Charged-Off
Amount from Class C Principal Collections. An amount equal to the lesser of
(A) the Class A Cumulative Investor Charged-Off Amount and
(B) the sum of any remaining Series Excess Funding Amounts (SRC) and
any remaining Class C Principal Collections less Series Yield
Collections allocable to the Class C Investor Interest
shall be withdrawn from the Series Collections Account and deposited into the
Series Principal Collections Account. The Class A Cumulative Investor
Charged-Off Amount shall be reduced by the amount of such deposit, and the Class
C Cumulative Investor Charged-Off Amount shall be increased by the amount of
such deposit.
(37) Reallocation of the Class C Investor Interest to reimburse the Class A
Cumulative Investor Charged-Off Amount. The Class A Cumulative Investor
Charged-Off Amount shall be reduced by an amount equal to the lesser of
(A) the Class A Cumulative Investor Charged-Off Amount and
(B) the Class C Investor Interest
and the Class C Cumulative Investor Charged-Off Amount shall be increased by
such amount; provided, however, that the Class C Cumulative Investor Charged Off
Amount would not, as a result exceed the Class C Initial Investor Interest less
principal payments made in respect of such Class prior to such Distribution
Date.
(38) Reimbursement of the Class A Cumulative Investor Charged-Off Amount
from Class B Principal Collections. An amount equal to the lesser of
(A) the Class A Cumulative Investor Charged-Off Amount and
(B) any remaining Class B Principal Collections less Series Yield
Collections allocable to the Class B Investor Interest
shall be withdrawn from the Series Collections Account and deposited into the
Series Principal Collections Account. The Class A Cumulative Investor
Charged-Off Amount shall be reduced by the amount of such
77
<PAGE> 86
deposit, and the Class B Cumulative Investor Charged-Off Amount shall be
increased by the amount of such deposit.
(39) Reallocation of the Class B Investor Interest to reimburse the Class A
Cumulative Investor Charged-Off Amount. The Class A Cumulative Investor
Charged-Off Amount shall be reduced by an amount equal to the lesser of
(A) the Class A Cumulative Investor Charged-Off Amount and
(B) the Class B Investor Interest
and the Class B Cumulative Investor Charged-Off Amount shall be increased by
such amount; provided, however, that the Class B Cumulative Investor Charged-Off
Amount would not, as a result, exceed the Class B Initial Investor Interest less
principal payments made in respect of such Class prior to such Distribution
Date.
(40) Reimbursement of the Class B Cumulative Investor Charged-Off Amount
from Class C Principal Collections. An amount equal to the lesser of
(A) the Class B Cumulative Investor Charged-Off Amount and
(B) the sum of any remaining Series Excess Funding Amounts (SRC) and
any remaining Class C Principal Collections less Series Yield
Collections allocable to the Class C Investor Interest
shall be withdrawn from the Series Collections Account and deposited into the
Series Principal Collections Account. The Class B Cumulative Investor
Charged-Off Amount shall be reduced by the amount of such deposit, and the Class
C Cumulative Investor Charged-Off Amount shall be increased by the amount of
such deposit.
(41) Reallocation of the Class C Investor Interest to reimburse the Class B
Cumulative Investor Charged-Off Amount. The Class B Cumulative Investor
Charged-Off Amount shall be reduced by an amount equal to the lesser of
(A) the Class B Cumulative Investor Charged-Off Amount and
(B) the Class C Investor Interest
and the Class C Cumulative Investor Charged-Off Amount shall be increased by
such amount; provided, however, that the Class C Cumulative Investor Charged Off
Amount would not, as a result exceed the Class C Initial Investor Interest less
principal payments made in respect of such Class prior to such Distribution
Date.
(42) Reinstatement of Class C Investor Interest from the Third Party Credit
Enhancement Account. On the Distribution Date in which the Class A Invested
Amount and Class B Invested Amounts have been reduced to zero, if applicable, an
amount equal to the lesser of
78
<PAGE> 87
(A) the Class C Cumulative Investor Charged-Off Amount and
(B) the Third Party Credit Enhancement Amount
shall be withdrawn from the Third Party Credit Enhancement Account and deposited
into the Series Principal Collections Account by the Third Party Credit
Enhancement Provider. The Class C Cumulative Investor Charged-Off Amount and the
Third Party Credit Enhancement Amount shall both be reduced by the amount of
such deposit.
(43) Special Third Party Credit Enhancement Drawing. On the Distribution
Date in which the Class A Invested Amount and Class B Invested Amounts have been
reduced to zero, if applicable, an amount equal to the lesser of
(A) the Class C Modified Required Amount Shortfall and
(B) the amount on deposit in the Third Party Credit Enhancement Account
shall be withdrawn from the Third Party Credit Enhancement Account and deposited
into the Series Distribution Account. The Class C Modified Required Amount
Shortfall and the Third Party Credit Enhancement Amount shall be reduced by the
amount of such deposit.
(44) Allocations of remaining amounts from the Group Finance Charge
Collections Reallocation Account to the Seller. An amount equal to all remaining
amounts on deposit in the Group Finance Charge Collections Reallocation Account,
after all other allocations from such Account pursuant to the Series Supplements
for any series in the Group to which the Series established hereby belongs,
shall be withdrawn from the Group Finance Charge Collections Reallocation
Account and paid to the Seller.
(45) Allocations from the Excess Funding Account (General) to the Series
Principal Collections Account. An amount equal to the product of
(A) a fraction the numerator of which is the Series Investor Interest
less the Class Investor Interest with respect to a Seller Retained
Class and the denominator of which is the sum of the series investor
interests less class investor interests with respect to seller retained
classes for all outstanding series in rapid amortization (after giving
effect to provisions in the applicable Series Supplements substantially
similar to the clauses preceding this clause (45)) and
(B) the amount on deposit in the Excess Funding Account (General)
before any withdrawals therefrom with respect to any other series
pursuant to a comparable clause in the applicable Series Supplements
shall be withdrawn from the Excess Funding Account (General) and deposited into
the Series Principal Collections Account.
(46) Allocations of Series Principal Collections. An amount equal to the
remaining Series Principal Collections minus the (i) Series Yield Collections,
if any and (ii) remaining Seller Retained Class
79
<PAGE> 88
Principal Collections shall be withdrawn from the Series Collections Account and
deposited into the Series Principal Collections Account.
(47) Class A Rapid Amortization Amount. An amount equal to the lesser of
(A) the Class A Rapid Amortization Amount and
(B) amounts on deposit in the Series Principal Collections Account
shall be withdrawn from the Series Principal Collections Account and deposited
into the Series Distribution Account. The amount by which the Class A Rapid
Amortization Amount exceeds such deposit shall be the "Class A Rapid
Amortization Amount Shortfall."
(48) Class B Rapid Amortization Amount. On each Distribution Date after the
Distribution Date on which the Class A Invested Amount is paid in full, an
amount equal to the lesser of
(A) the Class B Rapid Amortization Amount and
(B) amounts on deposit in the Series Principal Collections Account (or,
if Class B is a Seller Retained Class, in the Series Collections
Account)
shall be withdrawn from the Series Principal Collections Account (or, if Class B
is a Seller Retained Class, from the Series Collections Account)and deposited
into the Series Distribution Account. The amount by which the Class B Rapid
Amortization Amount exceeds such deposit shall be the "Class B Rapid
Amortization Amount Shortfall."
(49) Class C Rapid Amortization Amount. On each Distribution Date after the
Distribution Date on which the Class A and Class B Invested Amounts are paid in
full, an amount equal to the lesser of
(A) the Class C Rapid Amortization Amount and
(B) amounts on deposit in the Series Collections Account
shall be withdrawn from the Series Collections Account and deposited into the
Series Distribution Account. The amount by which the Class C Rapid Amortization
Amount exceeds such deposit shall be the "Class C Rapid Amortization Amount
Shortfall."
(50) Allocations from the Group Principal Collections Reallocation Account
for the payment of the Class A Rapid Amortization Amount Shortfall. An amount
equal to the lesser of
(A) the Class A Rapid Amortization Amount Shortfall and
(B) the product of
(x) a fraction the numerator of which is the Class A Rapid
Amortization Amount Shortfall and the denominator of which is the
sum of the class rapid amortization amount shortfalls for all
classes with the same alphabetical designation for all
80
<PAGE> 89
series in rapid amortization in the Group to which the Series
established hereby belongs (after giving effect to provisions in
the applicable Series Supplements substantially similar to the
clauses preceding this clause (50)) and
(y) the amount on deposit in the Group Principal Collections
Reallocation Account before any withdrawals therefrom with respect
to any other series pursuant to a comparable clause in the
applicable Series Supplements
shall be withdrawn from the Group Principal Collections Reallocation Account and
deposited in the Series Distribution Account. The Class A Rapid Amortization
Amount Shortfall will be reduced by the amount of such deposit.
(51) Allocations from the Group Principal Collections Reallocation Account
for the payment of the Class B Rapid Amortization Amount Shortfall. An amount
equal to the lesser of
(A) the Class B Rapid Amortization Amount Shortfall and
(B) the product of
(x) a fraction the numerator of which is the Class B Rapid
Amortization Amount Shortfall and the denominator of which is the
sum of the class rapid amortization amount shortfalls for all
classes with the same alphabetical designation for all series in
rapid amortization in the Group to which the Series established
hereby belongs (after giving effect to provisions in the
applicable Series Supplements substantially similar to the clauses
preceding this clause (51)) and
(y) the amount on deposit in the Group Principal Collections
Reallocation Account before any withdrawals therefrom with respect
to any other series pursuant to a comparable clause for any class
with the same alphabetical designation and after any withdrawals
therefrom for the benefit of all classes designated by higher
letters of the alphabet of such other series in the applicable
Series Supplements
shall be withdrawn from the Group Principal Collections Reallocation Account and
deposited in the Series Distribution Account. The Class B Rapid Amortization
Amount Shortfall will be reduced by the amount of such deposit.
(52) Allocations from the Group Principal Collections Reallocation Account
for the payment of the Class C Rapid Amortization Amount Shortfall. An amount
equal to the lesser of
(A) the Class C Rapid Amortization Amount Shortfall and
(B) the product of
(x) a fraction the numerator of which is the Class C Rapid
Amortization Amount Shortfall and the denominator of which is the
sum of the class rapid amortization amount shortfalls for all
classes with the same alphabetical designation for all
81
<PAGE> 90
series in rapid amortization in the Group to which the Series
established hereby belongs (after giving effect to provisions in
the applicable Series Supplements substantially similar to the
clauses preceding this clause (52)); provided, however, that if
any other series (or multiple other series) shall have more than
one unrated class, the class rapid amortization amount shortfall
to be used in the denominator for each such other series shall be
the class rapid amortization amount shortfall for the most senior
unrated class for such series for which the class rapid
amortization shortfall is greater than zero and
(y) the amount on deposit in the Group Principal Collections
Reallocation Account before any withdrawals therefrom with respect
to any other series pursuant to a comparable clause for any class
with the same alphabetical designation and after any withdrawals
therefrom for the benefit of all classes designated by higher
letters of the alphabet of such other series in the applicable
Series Supplements
shall be withdrawn from the Group Principal Collections Reallocation Account and
deposited in the Series Distribution Account. The Class C Rapid Amortization
Amount Shortfall will be reduced by the amount of such deposit.
(53) Allocations of remaining Series Principal Collections. An amount equal
to all remaining amounts on deposit in the Series Principal Collections Account
shall be withdrawn from the Series Principal Collections Account and deposited
into the Group Principal Collections Reallocation Account.
(54) Payment to the Seller. An amount equal to the lesser of
(A) the positive difference, if any, between the amount of the Seller
Interest (determined as described below) and the Minimum Seller
Interest (after giving effect to all similar provisions in other Series
Supplements, beginning with the series (including the Series
established hereby) having the earliest series closing date and
continuing seriatim) and
(B) any remaining amounts on deposit in the Series Collections Account
shall be withdrawn from the Series Collections Account and paid to the Seller.
If after such payment, amounts remain on deposit in the Series Collections
Account, such amounts shall be deposited into the Excess Funding Account (SRC).
For purposes of this provision, the Seller Interest shall be deemed to include
(i) all amounts remaining on deposit in the Series Collections Account after
giving effect to clause (53); (ii) all amounts on deposit in all Group Principal
Collections Reallocation Accounts after giving effect to clause (53) and all
provisions similar to clause (53) in other Series Supplements; and (iii) all
amounts deposited into the Excess Funding Account (SRC) and the Excess Funding
Account (General) on such Distribution Date pursuant to the provisions of any
other Series Supplement.
(55) Additional payment to the Seller. An amount equal to the lesser of
(A) the positive difference, if any, between the amount of the Seller
Interest (determined as described below) and the Minimum Seller
Interest and
82
<PAGE> 91
(B) the product of (i) any remaining amounts on deposit in the Group
Principal Collections Reallocation Account and (ii) a fraction the
numerator of which is the remaining amounts on deposit in the Group
Principal Collections Reallocation Account and the denominator of which
is the sum of the remaining amounts on deposit in all group principal
collections reallocation accounts (including the Group Principal
Collections Reallocation Account for the Group to which the Series
established hereby belongs)
shall be withdrawn from the Group Principal Collections Reallocation Account and
paid to the Seller. If after such payment, amounts remain on deposit in the
Group Principal Collections Reallocation Account, such amounts shall be
deposited into the Excess Funding Account (General). For purposes of this
provision, the Seller Interest shall be deemed to include (i) all amounts on
deposit in all Group Principal Collections Reallocation Accounts after giving
effect to clause (53) and all provisions similar to clause (53) in other Series
Supplements, and (ii) all amounts deposited into the Excess Funding Account
(SRC) and the Excess Funding Account (General) on such Distribution Date
pursuant to the provisions of any other Series Supplements. This provision shall
be applied before similar provisions for any previously issued Series.
SECTION 9. Payments.
(a) Payments to the Investor Certificateholders. On each Distribution Date,
after giving effect to deposits and allocations made pursuant to Section 8, the
Servicer shall direct the Trustee to make the following additional deposits and
withdrawals and to cause the Paying Agent to pay funds from the applicable
Investor Account to or for the benefit of each Class of Investor
Certificateholders as set forth below
(1) Deposits of the Class A Modified Required Amount into the Series
Interest Funding Account. An amount equal to the lesser of
(A) the Class A Modified Required Amount and
(B) the amount deposited in respect of the Class A Modified Required
Amount into the Series Distribution Account on such Distribution Date
pursuant to Section 8
shall be withdrawn from the Series Distribution Account and deposited into the
Series Interest Funding Account. The positive difference, if any, between the
Class A Modified Required Amount and the amount of such deposit shall be the
"Class A Monthly Deficiency Amount."
(2) Deposits of the Class B Modified Required Amount into the Series
Interest Funding Account. An amount equal to the lesser of
(A) the Class B Modified Required Amount and
(B) the amount deposited in respect of the Class B Modified Required
Amount into the Series Distribution Account on such Distribution Date
pursuant to Section 8
83
<PAGE> 92
shall be withdrawn from the Series Distribution Account and deposited into the
Series Interest Funding Account. The positive difference, if any, between the
Class B Modified Required Amount and the amount of such deposit shall be the
"Class B Monthly Deficiency Amount."
(3) Deposits of the Swap Trust Payments. An amount equal to the lesser of
(A) the sum of the Swap Trust Payments and
(B) the amount deposited in respect of the Interest Rate Swaps into the
Series Distribution Account on such Distribution Date pursuant to
Section 8
shall be withdrawn from the Series Distribution Account and deposited into the
Series Interest Funding Account.
(4) Deposits of the Class C Modified Required Amount into the Series
Interest Funding Account. An amount equal to the lesser of
(A) the Class C Modified Required Amount and
(B) the amount deposited in respect of the Class C Modified Required
Amount into the Series Distribution Account on such Distribution Date
pursuant to Section 8
shall be withdrawn from the Series Distribution Account and deposited into the
Series Interest Funding Account. The positive difference, if any, between the
Class C Modified Required Amount and the amount of such deposit shall be the
"Class C Monthly Deficiency Amount."
(5) Payment of Series Interest. On each Interest Payment Date and Special
Payment Date, the Servicer shall direct the Trustee to withdraw and cause the
Paying Agent to pay the amount deposited into the Series Interest Funding
Account with respect to each Class or Subclass since the preceding Interest
Payment Date to the Investor Certificateholders of such Class or Subclass in
accordance with Section 5.01 of the Pooling and Servicing Agreement.
(6) Swap Trust Payments. On each Interest Payment Date and each Special
Payment Date, the Servicer shall direct the Trustee to withdraw all amounts on
deposit in the Series Interest Funding Account with respect to the Interest Rate
Swaps and to pay such amounts to each Counterparty in accordance with the amount
of the Swap Trust Payment payable to each Counterparty; provided, however, that
if the amount on deposit in the Series Interest Funding Account with respect to
the Interest Rate Swaps is less than the sum of the Swap Trust Payments on such
Distribution Date, the Servicer shall direct the Trustee to pay each
Counterparty an amount equal to the product of such amount on deposit in the
Series Interest Funding Account with respect to the Interest Rate Swaps and a
fraction the numerator of which is the Swap Trust Payment due to such
Counterparty and the denominator of which is the sum of the Swap Trust Payments
due on such Distribution Date.
(7) Payment of the Class A Early Termination Premium or Class A Early
Termination Premium Shortfall, as applicable. If applicable, an amount equal to
the lesser of
84
<PAGE> 93
(A) the Class A Early Termination Premium or the Class A Early
Termination Premium Shortfall, as applicable, and
(B) the amount on deposit in respect of the Class A Early Termination
Premium or the Class A Early Termination Premium Shortfall, as
applicable, on such Distribution Date pursuant to Section 8
shall be withdrawn from the Series Distribution Account and paid to the Class A
Investor Certificateholders.
(8) Payment of the Class B Early Termination Premium or Class B Early
Termination Premium Shortfall, as applicable. If applicable, an amount equal to
the lesser of
(A) the Class B Early Termination Premium or the Class B Early
Termination Premium Shortfall, as applicable, and
(B) the amount on deposit in respect of the Class B Early Termination
Premium or the Class B Early Termination Premium Shortfall, as
applicable, on such Distribution Date pursuant to Section 8
shall be withdrawn from the Series Distribution Account and paid to the Class B
Investor Certificateholders.
(9) Payment of Series Monthly Servicing Fee. An amount equal to the lesser
of
(A) the sum of the Series Monthly Servicing Fee and all accrued but
unpaid Series Monthly Servicing Fees as of the prior Distribution Date
and
(B) the amount on deposit in respect of the Series Monthly Servicing
Fee in the Series Distribution Account on such Distribution Date
pursuant to Section 8
shall be withdrawn from the Series Distribution Account and paid to the
Servicer.
(10) Payment of the Series Monthly Servicing Fee Additional Funds Portion
and the Series Monthly Servicing Fee Additional Funds Portion Shortfall, if
applicable. If applicable, an amount equal to the lesser of
(A) the sum of the Series Monthly Servicing Fee Additional Funds
Portion and the Series Monthly Servicing Fee Additional Funds Portion
Shortfall, if applicable, and
(B) the amount on deposit in respect of the Series Monthly Servicing
Fee Additional Funds Portion and the Series Monthly Servicing Fee
Additional Funds Portion Shortfall, if applicable, in the Series
Distribution Account on such Distribution Date pursuant to Section 8
shall be withdrawn from the Series Distribution Account and paid to the
Servicer.
85
<PAGE> 94
(11) Payment of the Third Party Credit Enhancement Fee. An amount equal to
the lesser of
(A) the Third Party Credit Enhancement Fee and
(B) the amount on deposit in respect of the Third Party Enhancement Fee
in the Series Distribution Account on such Distribution Date pursuant
to Section 8
shall be withdrawn from the Series Distribution Account and paid to the Trustee
as administrator of the Third Party Credit Enhancement for application in
accordance with the provisions of the Third Party Credit Enhancement Agreement.
(12) Payment of the Series Pre-Funding Amount, if applicable. An amount
equal to the amount on deposit in respect of the Series Pre-Funding Amount in
the Series Distribution Account pursuant to Section 8 shall be withdrawn from
the Series Distribution Account and paid to each Class, seriatim, in accordance
with the following calculation: an amount equal to the product of (i) a fraction
the numerator of which is the Class Investor Interest and the denominator of
which is the Series Investor Interest and (ii) such amount on deposit.
(13) Payment of Series Principal.
(A) On each Principal Payment Date, an amount equal to the lesser of
(x) the Class Controlled Amortization Amount and the Class C
Permitted Controlled Amortization Amount, if any, and
(y) the remaining amount on deposit in the Series Distribution
Account on such Distribution Date pursuant to Section 8
shall be withdrawn from the Series Distribution Account and shall be paid to (i)
prior to the Class C Fixing Deadline, the Class A Certificateholders and Class C
Certificateholders, as applicable, and (ii) after the Class C Fixing Deadline,
to each outstanding Class of Investor Certificateholders, seriatim, beginning
with the most senior Class, pursuant to Section 5.01 of the Pooling and
Servicing Agreement.
(B) On each Special Payment Date, an amount equal to the remaining
amount on deposit in the Series Distribution Account or the Series
Principal Funding Account, as applicable, as of such Date pursuant to
Section 8 shall be withdrawn from the Series Distribution Account or
the Series Principal Funding Account, as applicable, and shall be paid
to the Investor Certificateholders pursuant to Section 5.01 of the
Pooling and Servicing Agreement.
(C) On each Class Expected Final Payment Date, an amount equal to the
lesser of
(x) the Class Invested Amount and
(y) the amount deposited into the Series Principal Funding Account
on such Distribution Date pursuant to Section 8
86
<PAGE> 95
shall be withdrawn from the Series Principal Funding Account and shall be paid
to the Investor Certificateholders pursuant to Section 5.01 of the Pooling and
Servicing Agreement.
All amounts set forth in subsections (A)-(C) above shall be paid to the Class A
Investor Certificateholders until the Class A Invested Amount is reduced to
zero; thereafter, such amounts shall be paid to the Class B Investor
Certificateholders until the Class B Invested Amount is reduced to zero;
thereafter, such amounts shall be paid to the Class C Investor
Certificateholders until the Class C Invested Amount is reduced to zero, unless
the Series Termination Date occurs prior to such date; provided, however, that
nothing contained in this section shall prohibit the payment of the Class C
Permitted Controlled Amortization Amount. In no event shall any amounts be paid
with respect to any Class of Investor Certificates pursuant to this clause (13)
in excess of the Class Invested Amount for such Class. Any amounts remaining on
deposit in any of the Investor Accounts established for this Series after the
Class Invested Amount for each Class has been reduced to zero shall be paid to
the Seller.
(b) Payments to the Seller and/or the Servicer. Notwithstanding the other
provisions in Section 8 and this Section 9, any amounts payable to the Seller or
to the Servicer on any Distribution Date pursuant to Section 8 and this Section
9 may be paid prior to such Distribution Date pursuant to Section 4.03(d) of the
Pooling and Servicing Agreement.
SECTION 10. Third Party Credit Enhancement.
(a) Initial Third Party Credit Enhancement. If applicable, the Servicer
hereby represents with respect to the Initial Third Party Credit Enhancement and
shall be deemed to represent with respect to any successor Third Party Credit
Enhancement that (i) the Servicer has provided for the Third Party Credit
Enhancement for the account of the Trustee and for the benefit of the
Certificateholders, (ii) the Servicer has entered into a Third Party Credit
Enhancement Agreement, (iii) the Third Party Credit Enhancement permits the
Trustee or the Servicer, acting as the Trustee's attorney-in-fact or otherwise,
to make Third Party Credit Enhancement Drawings from time to time in an amount
up to the Total Available Third Party Credit Enhancement Amount at such time,
for the purposes set forth in this Agreement and (iv) the Third Party Credit
Enhancement and the respective Third Party Credit Enhancement Agreement may be
terminated by the Trustee without penalty if the Servicer elects to obtain a
successor Third Party Credit Enhancement and such election does not cause a
Ratings Event.
(b) Successor Third Party Credit Enhancement.
(i) If the provider of the Third Party Credit Enhancement ceases
to be a Qualified Third Party Credit Enhancement Provider, the Servicer
shall exercise its best efforts to obtain a successor Third Party Credit
Enhancement (a) which will be issued by a Qualified Third Party Credit
Enhancement Provider and (b) with respect to which the representations set
forth in Section 10(a) will be satisfied; provided, however, that the
Servicer shall not be required to continue efforts to obtain a successor
Third Party Credit Enhancement if the then existing Third Party Credit
Enhancement Provider again becomes a Qualified Third Party Credit
Enhancement Provider and remains such; and provided, further, that unless
otherwise agreed to by the Rating Agencies, the Third Party Credit
Enhancement and Third Party Credit Enhancement Agreement will not be
terminated and no successor Third Party Credit Enhancement Provider shall
be selected if the successor Third Party Credit Enhancement, the successor
Third Party Credit
87
<PAGE> 96
Enhancement Agreement, or the selection of such successor Third Party
Credit Enhancement Provider would cause a Ratings Event. The Servicer, the
Trustee and the Seller shall promptly enter into any such successor Third
Party Credit Enhancement Agreement, and the Servicer shall use its best
efforts to secure the signature of any other required party to such
agreement.
(ii) The Servicer may elect, at any time, to obtain a successor
Third Party Credit Enhancement, provided that such successor Third Party
Credit Enhancement does not cause a Ratings Event.
(iii) In any case, subject to the foregoing, any successor Third
Party Credit Enhancement obtained by the Servicer need not consist of the
same type of Third Party Credit Enhancement as the Initial Third Party
Credit Enhancement, but may consist of a different type of facility,
including, but not limited to, a reserve account, a cash collateral
account, an irrevocable standby letter of credit, a surety bond or a
combination of any of the above. Upon issuance of, or other provision for,
any such successor Third Party Credit Enhancement, the Trustee may
terminate the prior Third Party Credit Enhancement and the Third Party
Credit Enhancement Agreement.
SECTION 11. Calculation of Investor Losses.
(a) For each Distribution Date, the Servicer shall calculate the Class
Investor Charged-Off Amount with respect to each Class, as of the end of the
related Due Period.
(b) On each Distribution Date, after giving effect to all allocations and
deposits pursuant to Section 8, the Investor Loss shall equal the Class
Cumulative Investor Charged-Off Amount with respect to any Class as of such
Distribution Date.
SECTION 12. Servicing Compensation. As compensation for its servicing
activities hereunder and under the Pooling and Servicing Agreement and
reimbursement of its expenses as set forth in Section 3.02 of the Pooling and
Servicing Agreement, the Servicer shall be entitled to receive a monthly
servicing fee with respect to the Series established hereby in respect of any
Due Period (or portion thereof) prior to the earlier of (i) the date on which
the Series Investor Interest is reduced to zero or (ii) the Series Termination
Date. The Series Monthly Servicing Fee and the Series Monthly Servicing Fee
Additional Funds Portion, if any, shall be paid to the Servicer on or before
each Distribution Date pursuant to Section 8.
SECTION 13. Class Coupon Cap Agreement.
(a) The Servicer may obtain Class Coupon Cap Agreements in favor of the
Trustee for the benefit of each Class or Subclass that does not have a fixed
Certificate Rate or Embedded Coupon Cap. If applicable, each such Class Coupon
Cap Agreement shall provide that (i) the Trust shall not be required to make any
payments thereunder and (ii) the Trust shall be entitled to receive payments
(determined in accordance with such Class Coupon Cap Agreement) from the Coupon
Cap Provider on an Interest Payment Date if LIBOR or the Commercial Paper Rate
(or such other index as determined by the
88
<PAGE> 97
Servicer, a "Substitute Index"), as applicable, for the related Calculation
Period exceeds the Class Coupon Cap for the applicable Class or Subclass. Any
Class Coupon Payment shall be made in accordance with Sections 8 and 9.
(b) In the event that the commercial paper or certificate of deposit
rating of the Coupon Cap Provider is withdrawn or reduced below the ratings
specified in the Class Coupon Cap Agreement (or, in either case, such lower
rating as will not cause a Ratings Event), then within 30 days after receiving
notice of such decline in the creditworthiness of the Coupon Cap Provider as
determined by either Rating Agency, either (x) the Coupon Cap Provider, with the
prior confirmation of the Rating Agencies that such arrangement will not result
in a Ratings Event, will enter into an arrangement the purpose of which shall be
to assure performance by the Coupon Cap Provider of its obligations under the
Class Coupon Cap Agreement; or (y) the Servicer shall at its option either (i)
with the prior confirmation of the Rating Agencies that such action will not
result in a Ratings Event, (A) cause the Coupon Cap Provider to pledge
securities in the manner provided by applicable law or (B) itself pledge or
cause to be pledged securities, which shall be held by the Trustee or its agent
free and clear of the Lien of any third party, in a manner conferring on the
Trustee a perfected first Lien in such securities securing the Coupon Cap
Provider's performance of its obligations under the Class Coupon Cap Agreement,
or (ii) establish any other arrangement (including an arrangement or
arrangements in addition to or in substitution for any prior arrangement made in
accordance with the provisions of this Section 13(b)) satisfactory to the Rating
Agencies such that such other arrangement will not cause a Ratings Event (a
"Qualified Substitute Cap Arrangement"); provided, however, that in the event at
any time any alternative arrangement established pursuant to clause (x) or
(y)(i) or (y)(ii) above shall cease to be satisfactory to the Rating Agencies
then the provisions of this Section 13(b) shall again be applied and in
connection therewith the 30-day period referred to above shall commence on the
date the Servicer receives notice of such cessation.
(c) Unless an alternative arrangement pursuant to clause (x), (y)(i) or
(y)(ii) of Section 13(b) is being established, the Servicer shall use its best
efforts to obtain a Replacement Class Coupon Cap Agreement or Qualified
Substitute Cap Arrangements meeting the requirements of this Section 13(c)
during the 30-day period referred to in Section 13(b). The Trustee shall not
terminate the Class Coupon Cap Agreement unless, prior to the expiration of the
30-day period referred to in Section 13(b), the Servicer delivers to the Trustee
(i) a Replacement Class Coupon Cap Agreement or Qualified Substitute Cap
Arrangements, (ii) to the extent applicable, an Opinion of Counsel as to the due
authorization, execution and delivery and validity and enforceability of each
such Replacement Class Coupon Cap Agreement or Qualified Substitute Cap
Arrangement, as the case may be, and (iii) confirmation from each Rating Agency
that the termination of the Class Coupon Cap Agreement and their replacement
with such Replacement Class Coupon Cap Agreement or Qualified Substitute Cap
Arrangements will not cause a Ratings Event.
(d) The Servicer shall notify the Trustee, the Rating Agencies and the
Third Party Credit Enhancement Provider within five Business Days after
obtaining knowledge that the commercial paper or certificate of deposit rating
of the Coupon Cap Provider has been withdrawn or reduced by either Rating
Agency.
(e) Notwithstanding the foregoing, the Servicer may at any time obtain a
Replacement Class Coupon Cap Agreement, provided that the Servicer delivers to
the Trustee (i) an Opinion of Counsel as to the due authorization, execution and
delivery and validity and enforceability of such Replacement Class Coupon Cap
Agreement and (ii) confirmation from the Rating Agencies that the termination of
the then
89
<PAGE> 98
current Class Coupon Cap Agreement and its replacement with such Replacement
Class Coupon Cap Agreement will not cause a Ratings Event. After a Replacement
Class Coupon Cap Agreement or Qualified Substitute Cap Arrangement has been
obtained, the Seller may direct the Trustee to terminate or otherwise transfer
or assign the replaced Class Coupon Cap Agreement, and direct the Trustee to pay
any proceeds from such termination or transfer to the Servicer. In addition,
notwithstanding the foregoing, the Seller may at any time direct the Trustee to
terminate or otherwise transfer or assign its rights relating to any portion of
the Class Coupon Cap Agreement. The Seller may direct the Trustee to pay any
proceeds from such partial termination to the Servicer.
(f) The Trustee hereby appoints the Servicer to perform the duties of the
calculation agent under the Class Coupon Cap Agreement and the Servicer accepts
such appointment.
SECTION 14. Interest Rate Swaps. The Servicer may obtain Interest Rate
Swaps in a form approved by the Servicer to be entered into by the Trustee not
in its personal capacity but solely for the benefit of the Investor
Certificateholders; provided that the sum of the Swap Notional Amounts for such
Interest Rate Swaps shall not exceed the Class A and Class B Invested Amount for
this Series and the Swap Rate shall not exceed the maximum Swap Rate set forth
in the Series Term Sheet. Pursuant to the terms of the Interest Rate Swap, the
Trustee is to receive payment from the Swap Counterparty prior to 10:00 a.m.
Chicago time on any Distribution Date of the amount of any Swap Counterparty
Payment to be paid by the Swap Counterparty on such Distribution Date. If the
Trustee does not receive such payment by 10:00 a.m. Chicago time on such
Distribution Date, the Trustee shall attempt to determine from the Swap
Counterparty the reasons therefore and whether such payment is to be made by the
Swap Counterparty on such Distribution Date. If the Interest Rate Swap has not
been terminated and the Trustee has not received any Swap Counterparty Payment
due on the related Distribution Date prior to 4:00 p.m. Chicago time on such
Distribution Date, (i) the Trustee shall notify the Servicer of such fact prior
to 4:15 p.m. Chicago time on such Distribution Date, and (ii) the Trustee shall
revise the Investors Monthly Certificateholders Statement required by Section 15
hereof to reflect that the Swap Counterparty Payment was not received by the
Trustee for such Distribution Date.
SECTION 15. Investor Certificateholders' Monthly Statement. On each
Distribution Date, the Paying Agent shall forward to each Certificateholder of
the Series established hereby a statement substantially in the form of Exhibit B
prepared by the Trustee (based on information provided by the Servicer) setting
forth the information listed thereon.
SECTION 16. Monthly Servicer Certificate. On or before the second Business
Day preceding each Distribution Date, the Servicer shall forward to the Seller,
the Trustee and the Paying Agent a certificate of a Servicing Officer
substantially in the form of Exhibit C setting forth the information listed
thereon.
SECTION 17. Additional Rapid Amortization Events. If any one of the
following events shall occur:
(a) failure on the part of the Seller (i) to make any payment or deposit
required by the terms of this Agreement or the Pooling and Servicing Agreement
on or before the date occurring five Business
90
<PAGE> 99
Days after the date such payment or deposit is required to be made or (ii) duly
to observe or perform in any material respect any other material covenants or
agreements of the Seller set forth in this Agreement or the Pooling and
Servicing Agreement, which continues unremedied for a period of 60 days after
the date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Seller by the Trustee, or to the Seller
and the Trustee by the Investor Certificateholders evidencing Fractional
Undivided Interests aggregating not less than 25% of the Class Invested Amount
of any Class of any Series materially adversely affected thereby;
(b) any representation or warranty made by the Seller in this Agreement or
the Pooling and Servicing Agreement or any information contained in Schedule 1
of the Pooling and Servicing Agreement shall prove to have been incorrect in any
material respect when made or when delivered, which representation, warranty or
Schedule 1 continues to be incorrect in any material respect for a period of 60
days after the date on which written notice of such failure, requiring the same
to be remedied, shall have been given to the Seller by the Trustee, or to the
Seller and the Trustee by the Holders of Investor Certificates evidencing
Fractional Undivided Interests aggregating not less than 25% of the Class
Invested Amount of any Class of any Series materially adversely affected
thereby;
(c) the Seller shall become unable for any reason to transfer Receivables
to the Trust in accordance with the provisions of the Pooling and Servicing
Agreement and such inability shall continue for five Business Days;
(d) any Servicer Termination Event shall occur that would have a material
adverse effect on the Investor Certificateholders;
(e) the Trust shall become an "investment company" within the meaning of
the Investment Company Act of 1940, as amended;
(f) the amount of Principal Receivables in the Trust at the end of any Due
Period shall be less than the Minimum Principal Receivables Balance and the
Seller shall have failed to assign Principal Receivables in Additional Accounts
or Participation Interests to the Trust on behalf of the Seller in at least the
amount of such deficiency by the Distribution Date related to the second
subsequent Due Period (for purposes of this clause (f) the amount of Principal
Receivables in Additional Accounts shall be determined as of the last day of the
Due Period preceding the assignment of such Principal Receivables to the Trust);
(g) if applicable, following the withdrawal or reduction of the commercial
paper or certificate of deposit rating of any Coupon Cap Provider to below the
ratings specified in the Series Term Sheet (or, in either case, such lower
rating as the applicable Rating Agency has permitted), the Servicer shall fail,
within the applicable time period specified in Section 13, to (x) obtain
Replacement Class Coupon Cap Agreement or Qualified Substitute Cap Arrangements
or (y) cause the Coupon Cap Provider to pledge securities as collateral securing
the obligations of the Coupon Cap Provider as provided in Section 13, in each
case in a manner satisfactory to the Trustee and the Rating Agencies (such that
neither Rating Agency will reduce or withdraw the ratings of the Investor
Certificates of the Series established hereby); or
(h) there shall have been three Distribution Dates on which the Net Yield
is less than the Base Rate since the later of the Series Closing Date or the
last Distribution Date on which the Investor Loss for each Class of the Series
equalled zero;
91
<PAGE> 100
then
(x) in the case of any event described in subparagraphs (a), (b) or
(d) after any applicable grace period set forth in such subparagraphs, either
the Trustee or the Holders of Investors Certificates evidencing Fractional
Undivided Interests aggregating not less than 51% of the Series Investor
Interest by notice then given in writing to the Seller and the Servicer (and to
the Trustee if given by the Investor Certificateholders) may declare that an
amortization event (a "Rapid Amortization Event") has occurred with respect to
the Series established hereby as of the date of such notice;
(y) in the case of any event described in subparagraph (c), (e) or
(f), a Rapid Amortization Event shall occur with respect to all Series of
Investor Certificates, immediately upon the occurrence of such event; and
(z) in the case of any event described in subparagraphs (g) and
(h), a Rapid Amortization Event shall occur with respect to the Investor
Certificates of the Series established hereby, immediately upon the occurrence
of such event.
SECTION 18. Purchase of Investor Certificates and Series Termination. If
the Servicer determines that, as of any Distribution Date during the Rapid
Amortization Period, or after the Class B Expected Final Payment Date (after
giving effect to any allocations or deposits calculated pursuant to Section 8
made on such Distribution Date) the Series Investor Interest less (i) the Class
Investor Interest with respect to any Seller Retained Class and (ii) the
Supplemental Cash allocable to the Class A Investor Interest or Class B Investor
Interest of the Series established hereby, will be less than or equal to 10% of
the Series Initial Investor Interest minus the Class Initial Investor Interest
with respect to any Seller Retained Class, the Seller may purchase and cancel
the Investor Certificates of the Series established hereby by depositing into
the Series Distribution Account, on such Distribution Date, an amount equal to
the Series Investor Interest (plus all accrued but unpaid Certificate Interest
and all funds on deposit in the Series Principal Funding Account) as of the last
day of the Due Period related to such immediately succeeding Distribution Date;
provided, however, that the Seller may not purchase and cancel any Investor
Certificates representing a Seller Retained Class (except as otherwise provided
in Section 8) until all Classes of Investor Certificates senior to such Seller
Retained Class have been purchased and cancelled. The amount deposited pursuant
to this Section 18 that is allocable to the Investor Certificateholders shall be
paid to the Investor Certificateholders pursuant to Section 12.02 of the Pooling
and Servicing Agreement on the Distribution Date related to such deposit. All
Investor Certificates of the Series established hereby that are purchased by the
Seller pursuant to this Section 18 shall be delivered upon such purchase by the
Seller to, and shall be cancelled by, the Transfer Agent and shall be disposed
of in a manner satisfactory to the Trustee and the Seller.
SECTION 19. Variable Accumulation Period. The Controlled Accumulation
Period is scheduled to commence on the Stated Controlled Accumulation Period
Commencement Date; provided, however, that if the Controlled Accumulation Period
Length (determined as described below) on any Determination Date is different
from the Initial Scheduled Controlled Accumulation Period Length, the Servicer,
at its option on any Determination Date prior to the commencement of the
Controlled Accumulation Period, may elect to modify the date on which the
Controlled Accumulation Period actually
92
<PAGE> 101
commences to the last Business Day of any Due Period that precedes the Due
Period that is the number of Due Periods prior to the Expected Final Payment
Date equal to the Controlled Accumulation Period Length. Such election will be
set forth in the Monthly Servicer Certificate. If the Servicer elects to modify
the date on which the Controlled Accumulation Period commences pursuant to this
Section 19, then on each Determination Date thereafter until the date on which
the Controlled Accumulation Period commences the Servicer will recalculate the
Controlled Accumulation Period Length; provided, however, that (i) the length of
the Controlled Accumulation Period will not be less than the Minimum Controlled
Accumulation Period Length and (ii) notwithstanding any other provision of this
Series Supplement to the contrary, no election to postpone the commencement of
the Controlled Accumulation Period shall be made after a Rapid Amortization
Event (as described herein or in the applicable Series Supplement) shall have
occurred for so long as it is continuing with respect to any Series in the Group
to which the Series established hereby belongs. On each Determination Date, the
Servicer will determine the "Controlled Accumulation Period Length" that will
equal the number of Due Periods such that the Class Controlled Accumulation
Amount for the Due Period related to the Class Expected Final Payment Date, when
aggregated with the Class Controlled Accumulation Amounts for each preceding Due
Period, will equal or exceed the Series Initial Investor Interest. Any notice by
the Servicer electing to modify the commencement of the Controlled Accumulation
Period pursuant to this Section 19 shall specify the following as determined on
such Determination Date: (i) the Controlled Accumulation Period Length; (ii) the
commencement date of the Controlled Accumulation Period; and (iii) the Class
Controlled Accumulation Amount with respect to each class of such Series with
respect to each Due Period. If the Controlled Accumulation Period Length as
recalculated on any such Determination Date exceeds the number of full Due
Periods following such Determination Date and preceding the Class A Expected
Final Payment Date, the commencement date of the Controlled Accumulation Period
will be such Determination Date.
SECTION 20. Series Yield Factor. The Series Yield Factor for the Series
established hereby initially shall be the Series Yield Factor set forth in the
Series Term Sheet. The Servicer may change the Series Yield Factor upon 20 days
prior written notice to the Trustee, the Seller, the Third Party Credit
Enhancement Provider and the Rating Agencies, provided that the following
conditions are satisfied: (i) the Series Yield Factor may not be reduced below
the initial Series Yield Factor; (ii) the Servicer shall have delivered to the
Trustee a certificate to the effect that the Servicer reasonably believes that
the change in the Series Yield Factor would not (x) result in any delay in the
payment of principal to the Investor Certificateholders of any Series then
outstanding, or (y) cause a Rapid Amortization Event to occur with respect to
any Series then outstanding; and (iii) the Rating Agencies shall have advised
the Servicer and the Seller that such change in the Series Yield Factor would
not cause a Ratings Event. Any such change shall be effective as of the first
day of the Due Period specified in the notice of the Servicer. Series Yield
Collections, if any, shall be treated as a "Series Additional Allocable Amount."
93
<PAGE> 102
SECTION 21. Issuance of Additional Investor Certificates.
(a) During the Revolving Period, the Seller may, in its discretion and
subject to the terms of subsection (b) below, request the Trustee to issue
additional investor certificates of each Class (each such additional
certificates, the "Additional Certificates") for the Series established hereby
in an amount and on the date (the "Additional Certificate Date") determined by
the Seller. Upon issuance, the Additional Certificates will be identical in all
respects (except that the principal amount of such Additional Certificates may
be different) to the Investor Certificates currently outstanding and will be
equally and ratably entitled to the benefits of this Series Supplement and the
Pooling and Servicing Agreement. The outstanding principal amounts of all
Classes of the outstanding Series and the size of the Series Third Party Credit
Enhancement, if any, shall be increased pro rata. The percentage of the Series
Third Party Credit Enhancement for each outstanding Class of such Series shall
not change upon the issuance of the Additional Certificates. The Class
Controlled Accumulation Amount or Class Controlled Amortization Amount, as
applicable, for each Class of such Series shall be increased proportionally to
reflect the additional amount of Class A, Class B and Class C Certificates for
such Series represented by the Additional Certificates.
(b) Additional Certificates shall only be issued upon satisfaction of all
of the following conditions:
(i) On or before the fifth Business Day immediately preceding the
date on which the Additional Certificates are to be issued, the Seller
shall give notice to the Trustee, the Servicer and the Rating Agencies of
such issuance and the date upon which it is to occur;
(ii) After giving effect to the addition of the Additional
Certificates to the Series, the total amount of Principal Receivables in
the Trust shall be greater than or equal to the Minimum Principal
Receivables Balance;
(iii) The Seller shall have delivered evidence of the proportional
increase in the Series Third Party Credit Enhancement to the Trustee and
the Rating Agencies;
(iv) On or before the Additional Certificate Date, the Trustee shall
have been advised in writing by the Rating Agencies that the issuance of
the Additional Certificates will not cause a Ratings Event;
(v) The Seller shall have delivered to the Trustee an Officer's
Certificate dated as of the Additional Certificate Date, stating that the
Seller reasonably believes that the issuance of such Additional
Certificates will not have a material adverse effect on any outstanding
Class of the Series affected by such issuance;
(vi) As of the Additional Certificate Date, the amount of Investor
Loss for all Classes of such Series shall be zero; and
(vii) The Seller shall have delivered to the Trustee a Tax Opinion
with respect to such issuance.
94
2
<PAGE> 103
SECTION 22. Sale or Transfer of Seller Retained Classes. On any date that
is at least two months prior to the start of the Controlled Accumulation or
Controlled Amortization Period, as applicable, the Seller may, in its discretion
and subject to the terms of this Section 22, sell or transfer any Seller
Retained Class of Investor Certificates (the "Purchased Class") of the Series
established hereby (the "Seller Retained Class Purchase Date"), and increase the
Certificate Rate for such Purchased Class in connection with such sale or
transfer, upon satisfaction of the following conditions:
(i) On or before the fifth Business Day immediately preceding the
Seller Retained Class Purchase Date, the Seller shall give notice to the
Trustee, the Servicer and the Rating Agencies of such sale or transfer, the
Seller Retained Class Purchase Date, and the increase in the Certificate
Rate for such Purchased Class, if any;
(ii) On or before the Seller Retained Class Purchase Date, the
Trustee shall have been advised in writing by the Rating Agencies that the
sale or transfer of the Purchased Class and the increase in the Certificate
Rate for such Purchased Class, if any, will not cause a Ratings Event;
(iii) On or before the Seller Retained Class Purchase Date, the Seller
shall have delivered to the Trustee an Officer's Certificate dated as of
the Seller Retained Class Purchase Date, stating that the Seller reasonably
believes that the sale of such Seller Retained Class will not have a
material adverse effect on any other outstanding Class of the Series;
(iv) As of the Seller Retained Class Transfer Date, the amount of
Class Investor Loss for all Classes of this Series shall be zero;
(v) The Holders of the Purchased Class shall have agreed that they
shall not be entitled to principal payments with respect to such Purchased
Class until the Class Investor Interest for all Classes senior to such
Purchased Class have been reduced to zero;
(vi) No Rapid Amortization Event with respect to this Series shall
have occurred; and
(vii) The Seller shall have delivered to the Trustee a Tax Opinion
with respect to the Purchased Class.
Any such Seller Retained Class sold pursuant to this Section 22 shall no longer
be considered a Seller Retained Class.
SECTION 23. Paired Series. If the Series Term Sheet for the Series
established hereby so provides, the Seller may issue a subsequent series of
investor certificates (the "Paired Series") that is linked with the Series
established hereby. Under certain circumstances, a Paired Series may affect the
timing and amount of principal collections available for the Series established
hereby.
SECTION 24. Fixed Principal Allocation Adjustment. Upon the issuance of
each new series of Investor Certificates in the Group to which the Series
established hereby belongs, provided that (i) a Rapid Amortization Event has not
occurred and (ii) a Fixed Principal Allocation Event has occurred, the
95
3
<PAGE> 104
Servicer may, at its option on or before any Determination Date, elect to cause
a readjustment of the Class Percentage with respect to Principal Collections by
taking into account principal collections available to the Series established
hereby from the newly issued series (a "Fixed Principal Allocation Adjustment").
Notice of such election will be set forth in the Monthly Servicer Certificate.
SECTION 25. Ratification of Pooling and Servicing Agreement. As
supplemented and amended by this Series Supplement, the Pooling and Servicing
Agreement is in all respects ratified and confirmed and the Pooling and
Servicing Agreement as so supplemented by this Series Supplement shall be read,
taken, and construed as one and the same instrument.
SECTION 26. Counterparts. This Series Supplement may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all of such counterparts shall together constitute but one and the
same instrument.
SECTION 27. Book-Entry Certificates. The Class C Investor Certificate shall
not be issued as book-entry certificates pursuant to Section 6.02 of the Pooling
and Servicing Agreement unless (i) the Class C Certificate shall be sold or
transferred pursuant to Section 22 and (ii) the Seller shall so elect.
SECTION 28. GOVERNING LAW. THIS SERIES SUPPLEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO
ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
96
<PAGE> 105
EXHIBIT A-1
FORM OF CLASS A CERTIFICATE
[FORM OF THE FACE OF THE CLASS A CERTIFICATES]
UNLESS THIS CLASS A CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CLASS A CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND
ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
NO. $__________________
CUSIP NO. 81234CBE0
5.25% CLASS A MASTER TRUST CERTIFICATE, SERIES 1998-2
SEARS CREDIT ACCOUNT MASTER TRUST II
SRFG, INC.
SELLER
SEARS, ROEBUCK AND CO.
SERVICER
(NOT AN INTEREST IN OR OBLIGATION OF SRFG, INC., SEARS NATIONAL BANK OR SEARS,
ROEBUCK AND CO.)
This certifies that CEDE & CO. (the "Class A Certificateholder") is the
registered owner of a Fractional Undivided Interest in Sears Credit Account
Master Trust II (the "Trust"), the corpus of which consists of a portfolio of
receivables (the "Receivables") existing as of the Cut-Off Date (or, with
respect to Receivables in Additional Accounts, as of the applicable Additional
Account Cut-Off Date) or thereafter created under certain open-end retail charge
plans for specified Persons (the "Accounts") originated by Sears, Roebuck and
Co., a New York corporation ("Sears") or its affiliates, and transferred to
SRFG, Inc., a Delaware corporation ("SRFG"), all monies due or to become due
with respect thereto, all Participation Interests, if any, all benefits under
any Credit Enhancement with respect to any series of investor certificates
issued from time to time, to the extent applicable, all proceeds (as defined in
Article 9 of the Uniform Commercial Code as in effect in the State of New York)
of such Receivables, and Insurance Proceeds, if any, relating thereto, pursuant
to a Pooling and Servicing Agreement, dated as of July 31, 1994, as amended (the
"Pooling and Servicing Agreement"), by and among Sears as Servicer, SRFG as
Seller and The First National Bank of Chicago, as trustee (the "Trustee"), a
summary of certain of the pertinent provisions of which is set forth below.
Reference is hereby made to the further provisions
A-1-1
<PAGE> 106
of this Class A Certificate set forth on the reverse hereof, and such further
provisions shall for all purposes have the same effect as if set forth at this
place.
This Class A Certificate shall not be entitled to any benefit under the
Pooling and Servicing Agreement or any amendment thereto, or the Series
Supplement, dated as of November 9, 1998 (the "Series Supplement"), by and among
the Trustee, Sears and SRFG or any amendment thereto, or become vested or
obligatory for any purpose until the certificate of authentication hereon shall
have been signed by or on behalf of the Trustee under the Pooling and Servicing
Agreement.
IN WITNESS WHEREOF, SRFG has caused this Class A Certificate to be duly
executed and authenticated.
SRFG, INC.
By:___________________________________________
Name:
Title:
A-1-2
<PAGE> 107
[FORM OF THE REVERSE OF THE CLASS A CERTIFICATES]
[For an Amortizing Structure]
It is the intent of SRFG and the Investor Certificateholders that, for
federal, state and local income and franchise tax purposes only, the Investor
Certificates will be evidence of indebtedness. SRFG and the Class A
Certificateholder, by the acceptance of this Class A Certificate, agree to treat
this Class A Certificate for federal, state and local income and franchise tax
purposes as indebtedness secured by the Receivables and other assets held in the
Trust.
To the extent not defined herein, the capitalized terms used herein have
the meanings assigned in the Pooling and Servicing Agreement or the Series
Supplement. This Class A Certificate is issued under and is subject to the
terms, provisions and conditions of the Pooling and Servicing Agreement and the
Series Supplement, to which Pooling and Servicing Agreement and Series
Supplement, as each may be amended from time to time, the Class A
Certificateholder by virtue of the acceptance hereof assents and by which the
Class A Certificateholder is bound.
This Class A Certificate is one of a series of Certificates entitled "5.25%
Class A Master Trust Certificates, Series 1998-2" (the "Class A Certificates"),
each of which represents a Fractional Undivided Interest in the Trust, including
the right to receive the Collections and other amounts at the times and in the
amounts specified in the Pooling and Servicing Agreement and the Series
Supplement to be deposited in the Investor Accounts with respect to Sears Credit
Account Master Trust II, Series 1998-2 or paid to the Class A
Certificateholders. Also issued under the Pooling and Servicing Agreement and
the Series Supplement are Investor Certificates designated as "Class B Master
Trust Certificates, Series 1998-2" (the "Class B Certificates") and "Class C
Master Trust Certificates, Series 1998-2" (the "Class C Certificates"). The
Class A Certificates, the Class B Certificates and the Class C Certificates are
collectively referred to herein as the Investor Certificates.
The aggregate interest represented by the Class A Certificates at any time
in the assets of the Trust shall not exceed an amount equal to the Class A
Investor Interest at such time, plus accrued but unpaid Certificate Interest for
the Class A Certificates and any interest thereon. The Class Initial Investor
Interest of the Class A Certificates is $450,000,000. The Class A Invested
Amount on any Distribution Date will be an amount equal to the Class A Initial
Investor Interest minus the sum of (a) the aggregate amount of payments of
Certificate Principal paid to the Class A Certificateholders prior to such
Distribution Date and (b) the Investor Loss for such Class, if any, at the
beginning of such Distribution Date. In addition to the Investor Certificates, a
Seller Certificate has been issued pursuant to the Pooling and Servicing
Agreement which represents, at any time, the undivided interest in the Trust not
represented by the Investor Certificates or the investor certificates of any
other series of investor certificates then outstanding. Subject to the terms and
conditions of the Pooling and Servicing Agreement, the Seller may from time to
time direct the Trustee, on behalf of the Trust, to issue one or more new series
of investor certificates, which will represent Fractional Undivided Interests in
the Trust.
During the Revolving Period, which begins on the day following the Series
Cut-Off Date, Certificate Interest will be distributed on the 15th day of each
calendar month with respect to interest accrued during the preceding Interest
Accrual Period, commencing in December 1998, or if such 15th day is not a
Business Day, on the next succeeding Business Day (each, a "Distribution Date"),
to the Class A Certificateholders of record as of the last day of the month
preceding the related Distribution Date. During the Controlled Amortization
Period, which will begin on the first day of the Due Period related to the
Distribution Date in November 2002 unless a Rapid Amortization Event occurs
prior to such date, and during the Rapid Amortization Period, if any,
Certificate Interest and Certificate Principal collected by the
A-1-3
<PAGE> 108
Servicer will be distributed to the Class A Certificateholders on the
Distribution Date of each calendar month, commencing in the month following the
commencement of the earlier of the Controlled Amortization Period or the Rapid
Amortization Period. In any event, the final payment of principal will be made
no later than the day following the Distribution Date in October 2008 (the
"Series Termination Date").
The amount to be distributed on each Distribution Date to the holder of
this Class A Certificate will be equal to the product of (a) the percentage
equivalent of a fraction, the numerator of which is the portion of the Class A
Initial Investor Interest evidenced by this Class A Certificate and the
denominator of which is the Class A Initial Investor Interest and (b) the
aggregate of all payments to be made to the Class A Certificateholders on such
Distribution Date. Distributions with respect to this Class A Certificate will
be made by the Paying Agent by check mailed to the address of the Class A
Certificateholder of record appearing in the Certificate Register (except for
the final distribution in respect of this Class A Certificate) without the
presentation or surrender of this Class A Certificate or the making of any
notation thereon, except that with respect to Class A Certificates registered in
the name of CEDE & CO., the nominee registrant for The Depository Trust Company,
distributions will be made in the form of immediately available funds.
This Class A Certificate does not represent an obligation of, or an
interest in, SRFG or the Servicer. This Class A Certificate is limited in right
of payment to certain Collections respecting the Receivables, all as more
specifically set forth hereinabove and in the Pooling and Servicing Agreement
and the Series Supplement.
The Pooling and Servicing Agreement permits, with certain exceptions, the
amendment and modification of the rights and obligations of the Servicer, and
the rights of Investor Certificateholders under the Pooling and Servicing
Agreement and Series Supplement, at any time by the Servicer, the Seller and the
Trustee in certain cases (some of which require written confirmation from the
Rating Agencies that such amendment will not cause a Ratings Event) without the
consent of the Investor Certificateholders, and in all other cases with the
consent of the Investor Certificateholders owning Fractional Undivided Interests
aggregating not less than 66-2/3% of the Class Invested Amount of each such
affected Class (and with written confirmation from the Rating Agencies that such
amendment will not cause a Ratings Event); provided, however, that no such
amendment shall (a) increase or reduce in any manner the amount of, or delay the
timing of, distributions which are required to be made on any Investor
Certificate without the consent of the affected Investor Certificateholders or
(b) reduce the aforesaid percentage required to consent to any such amendment,
without the consent of each Investor Certificateholder of each affected Class
then of record. Any such amendment and any such consent by the Class A
Certificateholder shall be conclusive and binding on such Class A
Certificateholder and upon all future Holders of this Class A Certificate and of
any Class A Certificate issued in exchange hereof or in lieu hereof whether or
not notation thereof is made upon this Class A Certificate.
The transfer of this Class A Certificate shall be registered in the
Certificate Register upon surrender of this Investor Certificate for
registration of transfer at any office or agency maintained by the Transfer
Agent and Registrar accompanied by a written instrument of transfer in a form
satisfactory to the Trustee and the Transfer Agent and Registrar duly executed
by the Class A Certificateholder or such Class A Certificateholder's attorney
duly authorized in writing, and thereupon one or more new Class A Certificates
of authorized denominations and for the same aggregate Fractional Undivided
Interest will be issued to the designated transferee or transferees.
A-1-4
<PAGE> 109
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A Certificates are exchangeable for new
Class A Certificates evidencing like aggregate Fractional Undivided Interests,
as requested by the Class A Certificateholder surrendering such Class A
Certificates. No service charge may be imposed for any such exchange but the
Servicer or Transfer Agent and Registrar may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
therewith.
The Servicer, the Trustee, the Paying Agent and the Transfer Agent, and any
agent of any of them, may treat the person in whose name this Class A
Certificate is registered as the owner hereof for all purposes, and neither the
Servicer, the Trust nor the Trustee, the Paying Agent, the Transfer Agent, nor
any agent of any of them or any such agent shall be affected by notice to the
contrary except in certain circumstances described in the Pooling and Servicing
Agreement.
Subject to certain conditions in the Pooling and Servicing Agreement and
the Series Supplement, if the principal of the Investor Certificates has not
been paid in full prior to the Series Termination Date, the obligations created
by the Pooling and Servicing Agreement and the Series Supplement with respect to
the Investor Certificates shall terminate on the Series Termination Date.
A-1-5
<PAGE> 110
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Class A Certificates referred to in the within mentioned
Pooling and Servicing Agreement and Series Supplement.
THE FIRST NATIONAL BANK OF CHICAGO
as Trustee
By:_______________________________________
Authorized Officer
A-1-6
<PAGE> 111
EXHIBIT A-2
FORM OF CLASS B CERTIFICATE
[FORM OF THE FACE OF THE CLASS B CERTIFICATES]
THIS CLASS B CERTIFICATE MAY NOT BE TRANSFERRED TO AN EMPLOYEE BENEFIT
PLAN, TRUST OR ACCOUNT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED, OR DESCRIBED IN SECTION 4975(e)(1) OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED.
THIS CLASS B CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A
CERTIFICATES AND TO THE RIGHTS OF THE SERVICER AS DESCRIBED IN THE POOLING AND
SERVICING AGREEMENT AND SERIES SUPPLEMENT REFERRED TO HEREIN.
THIS CLASS B CERTIFICATE MAY NOT BE TRANSFERRED, ASSIGNED, EXCHANGED OR
OTHERWISE CONVEYED WITHOUT SATISFACTION OF CERTAIN CONDITIONS SET FORTH IN THE
SERIES SUPPLEMENT REFERRED TO HEREIN.
THE SECURITIES REPRESENTED BY THIS CLASS B CERTIFICATE HAVE NOT BEEN
REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED OR
SOLD UNLESS PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AN OPINION OF
COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED AND THE SATISFACTION OF CERTAIN
OTHER REQUIREMENTS SPECIFIED IN THE POOLING AND SERVICING AGREEMENT AND SERIES
SUPPLEMENT REFERRED TO HEREIN.
NO. $___________________
CLASS B MASTER TRUST CERTIFICATE, SERIES 1998-2
SEARS CREDIT ACCOUNT MASTER TRUST II
SRFG, INC.
SELLER
SEARS, ROEBUCK AND CO.
SERVICER
(NOT AN INTEREST IN OR OBLIGATION OF SRFG, INC., SEARS NATIONAL BANK OR SEARS,
ROEBUCK AND CO.)
This certifies that SRFG, Inc., a Delaware corporation ("SRFG"), is the
registered owner of a Fractional Undivided Interest in Sears Credit Account
Master Trust II (the "Trust"), the corpus of which consists of a portfolio of
receivables (the "Receivables") existing as of the Cut-Off Date (or, with
respect to Receivables in Additional Accounts, as of the applicable Additional
Account Cut-Off Date)
A-2-1
<PAGE> 112
or thereafter created under certain open-end retail charge plans for specified
Persons (the "Accounts") originated by Sears, Roebuck and Co., a New York
corporation ("Sears"), or its affiliates, and transferred to SRFG, all monies
due or to become due with respect thereto, all Participation Interests, if any,
all benefits under any Credit Enhancement with respect to any series of investor
certificates issued from time to time, to the extent applicable, all proceeds
(as defined in Article 9 of the Uniform Commercial Code as in effect in the
State of New York) of such Receivables, and Insurance Proceeds, if any, relating
thereto, pursuant to a Pooling and Servicing Agreement, dated as of July 31,
1994, as amended (the "Pooling and Servicing Agreement"), by and among Sears as
Servicer, SRFG as Seller and The First National Bank of Chicago, as trustee (the
"Trustee"), a summary of certain of the pertinent provisions of which is set
forth below. Reference is hereby made to the further provisions of this Class B
Certificate set forth on the reverse hereof, and such further provisions shall
for all purposes have the same effect as if set forth at this place.
This Class B Certificate shall not be entitled to any benefit under the
Pooling and Servicing Agreement or any amendment thereto, or the Series
Supplement, dated as of November 9, 1998 (the "Series Supplement"), by and among
the Trustee, Sears and SRFG or any amendment thereto, or become vested or
obligatory for any purpose until the certificate of authentication hereon shall
have been signed by or on behalf of the Trustee under the Pooling and Servicing
Agreement.
IN WITNESS WHEREOF, SRFG has caused this Class B Certificate to be duly
executed and authenticated.
SRFG, INC.
By:___________________________________________
Name:
Title:
A-2-2
<PAGE> 113
[FORM OF THE REVERSE OF THE CLASS B CERTIFICATES]
[For an Amortizing Structure]
It is the intent of SRFG and the Investor Certificateholders that, for
federal, state and local income and franchise tax purposes only, the Investor
Certificates will be evidence of indebtedness. SRFG, by the acceptance of this
Class B Certificate, agrees to treat this Class B Certificate for federal, state
and local income and franchise tax purposes as indebtedness secured by the
Receivables and other assets held in the Trust.
To the extent not defined herein, the capitalized terms used herein have
the meanings assigned in the Pooling and Servicing Agreement or the Series
Supplement. This Class B Certificate is issued under and is subject to the
terms, provisions and conditions of the Pooling and Servicing Agreement and the
Series Supplement, to which Pooling and Servicing Agreement and Series
Supplement, as each may be amended from time to time, SRFG by virtue of the
acceptance hereof assents and by which SRFG is bound.
This Class B Certificate is one of a series of Certificates entitled "Class
B Master Trust Certificates, Series 1998-2" (the "Class B Certificates"), each
of which represents a Fractional Undivided Interest in the Trust, including the
right to receive the Collections and other amounts at the times and in the
amounts specified in the Pooling and Servicing Agreement and the Series
Supplement to be deposited in the Investor Accounts with respect to Sears Credit
Account Master Trust II, Series 1998-2 or paid to the Class B
Certificateholders. Also issued under the Pooling and Servicing Agreement and
the Series Supplement are Investor Certificates designated as "5.25% Class A
Master Trust Certificates, Series 1998-2" (the "Class A Certificates") and
"Class C Master Trust Certificates, Series 1998-2" (the "Class C Certificates").
The Class A Certificates, the Class B Certificates and the Class C Certificates
are collectively referred to herein as the Investor Certificates.
The aggregate interest represented by the Class B Certificates at any time
in the assets of the Trust shall not exceed an amount equal to the Class B
Investor Interest at such time, plus accrued but unpaid Certificate Interest for
the Class B Certificates and any interest thereon. The Class Initial Investor
Interest of the Class B Certificates is $32,000,000. The Class B Invested Amount
on any Distribution Date will be an amount equal to the Class B Initial Investor
Interest minus the sum of (a) the aggregate amount of payments of Certificate
Principal paid to SRFG prior to such Distribution Date and (b) the Investor Loss
for such Class, if any, at the beginning of such Distribution Date. In addition
to the Investor Certificates, a Seller Certificate has been issued pursuant to
the Pooling and Servicing Agreement which represents, at any time, the undivided
interest in the Trust not represented by the Investor Certificates or the
investor certificates of any other series of investor certificates then
outstanding. Subject to the terms and conditions of the Pooling and Servicing
Agreement, the Seller may from time to time direct the Trustee, on behalf of the
Trust, to issue one or more new series of investor certificates, which will
represent Fractional Undivided Interests in the Trust.
During the Revolving Period, which begins on the day following the Series
Cut-Off Date, Certificate Interest will be distributed on the 15th day of each
calendar month with respect to interest accrued during the preceding Interest
Accrual Period, commencing in December 1998, or if such 15th day is not a
Business Day, on the next succeeding Business Day (each, a "Distribution Date"),
to SRFG. During the Controlled Amortization Period, which will begin on the
first day of the Due Period related to the Distribution Date in November 2002
unless a Rapid Amortization Event occurs prior to such date, and during the
Rapid Amortization Period, if any, Certificate Interest and Certificate
Principal collected by the Servicer will be distributed to SRFG on the
Distribution Date of each
A-2-3
<PAGE> 114
calendar month, commencing in the month following the commencement of the
earlier of the Controlled Amortization Period or the Rapid Amortization Period;
provided, however, that, except as otherwise set forth in the Series Supplement,
no Certificate Principal will be distributed to SRFG until the Class A Investor
Interest has been reduced to zero. The rights of SRFG to receive distributions
to which it would otherwise be entitled on the Receivables will be subordinated
to the rights of the Class A Certificateholders and the Servicer to the extent
described in the Pooling and Servicing Agreement and Series Supplement. In any
event, the final payment of principal will be made no later than the day
following the Distribution Date in October 2008 (the "Series Termination Date").
The amount to be distributed on each Distribution Date to the holder of
this Class B Certificate will be equal to the product of (a) the percentage
equivalent of a fraction, the numerator of which is the portion of the Class B
Initial Investor Interest evidenced by this Class B Certificate and the
denominator of which is the Class B Initial Investor Interest and (b) the
aggregate of all payments to be made to SRFG on such Distribution Date.
Distributions with respect to this Class B Certificate will be made by the
Paying Agent by check mailed to the address of SRFG (except for the final
distribution in respect of this Class B Certificate) without the presentation or
surrender of this Class B Certificate or the making of any notation thereon.
This Class B Certificate does not represent an obligation of, or an
interest in, SRFG or the Servicer. This Class B Certificate is limited in right
of payment to certain Collections respecting the Receivables, all as more
specifically set forth hereinabove and in the Pooling and Servicing Agreement
and the Series Supplement.
The Pooling and Servicing Agreement permits, with certain exceptions, the
amendment and modification of the rights and obligations of the Servicer, and
the rights of Investor Certificateholders under the Pooling and Servicing
Agreement and Series Supplement, at any time by the Servicer, the Seller and the
Trustee in certain cases (some of which require written confirmation from the
Rating Agencies that such amendment will not cause a Ratings Event) without the
consent of the Investor Certificateholders, and in all other cases with the
consent of the Investor Certificateholders owning Fractional Undivided Interests
aggregating not less than 66-2/3% of the Class Invested Amount of each such
affected Class (and with written confirmation from the Rating Agencies that such
amendment will not cause a Ratings Event); provided, however, that no such
amendment shall (a) increase or reduce in any manner the amount of, or delay the
timing of, distributions which are required to be made on any Investor
Certificate without the consent of the affected Investor Certificateholders or
(b) reduce the aforesaid percentage required to consent to any such amendment,
without the consent of each Investor Certificateholder of each affected Class
then of record. Any such amendment and any such consent by SRFG shall be
conclusive and binding on such Class B Certificateholder and upon all future
Holders of this Class B Certificate and of any Class B Certificate issued in
exchange hereof or in lieu hereof whether or not notation thereof is made upon
this Class B Certificate.
The transfer of this Class B Certificate shall be registered in the
Certificate Register upon surrender of this Investor Certificate for
registration of transfer at any office or agency maintained by the Transfer
Agent and Registrar accompanied by a written instrument of transfer in a form
satisfactory to the Trustee and the Transfer Agent and Registrar duly executed
by SRFG or such Class B Certificateholder's attorney duly authorized in writing,
and thereupon one or more new Class B Certificates of authorized denominations
and for the same aggregate Fractional Undivided Interest will be issued to the
designated transferee or transferees.
A-2-4
<PAGE> 115
The transfer of this Class B Certificate is subject to certain restrictions
set forth in the Pooling and Servicing Agreement. In no event shall this Class B
Certificate, or any interest herein, be transferred to an employee benefit plan,
trust or account subject to the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), or described in Section 4975(e)(1) of the Internal Revenue
Code. Any Holder of this Class B Certificate, by its acceptance hereof, shall be
deemed to represent and warrant that it is not (i) an employee benefit plan (as
defined in Section 3(3) of ERISA), that is subject to Title I of ERISA, (ii) a
plan described in Section 4975(e)(1) of the Internal Revenue Code, and not
excepted under Section 4975(g), or (iii) an entity using assets to purchase such
Certificate which constitute plan assets by reason of a plan's investment in
such Holder.
The transfer of this Class B Certificate is subject to certain further
restrictions and the fulfillment of certain conditions as set forth in the
Series Supplement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class B Certificates are exchangeable for new
Class B Certificates evidencing like aggregate Fractional Undivided Interests,
as requested by SRFG. No service charge may be imposed for any such exchange but
the Servicer or Transfer Agent and Registrar may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection therewith.
The Servicer, the Trustee, the Paying Agent and the Transfer Agent, and any
agent of any of them, may treat the person in whose name this Class B
Certificate is registered as the owner hereof for all purposes, and neither the
Servicer, the Trust nor the Trustee, the Paying Agent, the Transfer Agent, nor
any agent of any of them or any such agent shall be affected by notice to the
contrary except in certain circumstances described in the Pooling and Servicing
Agreement.
Subject to certain conditions in the Pooling and Servicing Agreement and
the Series Supplement, if the principal of the Investor Certificates has not
been paid in full prior to the Series Termination Date, the obligations created
by the Pooling and Servicing Agreement and the Series Supplement with respect to
the Investor Certificates shall terminate on the Series Termination Date.
A-2-5
<PAGE> 116
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Class B Certificates referred to in the within mentioned
Pooling and Servicing Agreement and Series Supplement.
THE FIRST NATIONAL BANK OF CHICAGO
as Trustee
By:_______________________________________
Authorized Officer
A-2-6
<PAGE> 117
EXHIBIT A-3
FORM OF CLASS C CERTIFICATE
[FORM OF THE FACE OF THE CLASS C CERTIFICATE]
THIS CLASS C CERTIFICATE MAY NOT BE TRANSFERRED TO AN EMPLOYEE BENEFIT
PLAN, TRUST OR ACCOUNT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED, OR DESCRIBED IN SECTION 4975(e)(1) OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED.
THIS CLASS C CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A
CERTIFICATES, THE CLASS B CERTIFICATES AND TO THE RIGHTS OF THE SERVICER AS
DESCRIBED IN THE POOLING AND SERVICING AGREEMENT AND SERIES SUPPLEMENT REFERRED
TO HEREIN.
THIS CLASS C CERTIFICATE MAY NOT BE TRANSFERRED, ASSIGNED, EXCHANGED OR
OTHERWISE CONVEYED WITHOUT SATISFACTION OF CERTAIN CONDITIONS SET FORTH IN THE
SERIES SUPPLEMENT REFERRED TO HEREIN.
THE SECURITIES REPRESENTED BY THIS CLASS C CERTIFICATE HAVE NOT BEEN
REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED OR
SOLD UNLESS PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AN OPINION OF
COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED AND THE SATISFACTION OF CERTAIN
OTHER REQUIREMENTS SPECIFIED IN THE POOLING AND SERVICING AGREEMENT AND SERIES
SUPPLEMENT REFERRED TO HEREIN.
NO. $____________________
CLASS C MASTER TRUST CERTIFICATE, SERIES 1998-2
SEARS CREDIT ACCOUNT MASTER TRUST II
SRFG, INC.
SELLER
SEARS, ROEBUCK AND CO.
SERVICER
(NOT AN INTEREST IN OR OBLIGATION OF SRFG, INC., SEARS NATIONAL BANK OR SEARS,
ROEBUCK AND CO.)
This certifies that SRFG, Inc., a Delaware corporation ("SRFG"), is the
registered owner of a Fractional Undivided Interest in Sears Credit Account
Master Trust II (the "Trust"), the corpus of which consists of a portfolio of
receivables (the "Receivables") existing as of the Cut-Off Date (or, with
respect to Receivables in Additional Accounts, as of the applicable Additional
Account Cut-Off Date) or thereafter created under certain open-end retail charge
plans for specified Persons (the "Accounts")
A-3-1
<PAGE> 118
originated by Sears, Roebuck and Co., a New York corporation ("Sears") or its
affiliates, and transferred to SRFG, all monies due or to become due with
respect thereto, all Participation Interests, if any, all benefits under any
Credit Enhancement with respect to any series of investor certificates issued
from time to time, to the extent applicable, all proceeds (as defined in Article
9 of the Uniform Commercial Code as in effect in the State of New York) of such
Receivables, and Insurance Proceeds, if any, relating thereto, pursuant to a
Pooling and Servicing Agreement, dated as of July 31, 1994, as amended (the
"Pooling and Servicing Agreement"), by and among Sears as Servicer, SRFG as
Seller and The First National Bank of Chicago, as trustee (the "Trustee"), a
summary of certain of the pertinent provisions of which is set forth below.
Reference is hereby made to the further provisions of this Class C Certificate
set forth on the reverse hereof, and such further provisions shall for all
purposes have the same effect as if set forth at this place.
This Class C Certificate shall not be entitled to any benefit under the
Pooling and Servicing Agreement or any amendment thereto, or the Series
Supplement, dated as of November 9, 1998 (the "Series Supplement"), by and among
the Trustee, Sears and SRFG or any amendment thereto, or become vested or
obligatory for any purpose until the certificate of authentication hereon shall
have been signed by or on behalf of the Trustee under the Pooling and Servicing
Agreement.
IN WITNESS WHEREOF, SRFG has caused this Class C Certificate to be duly
executed and authenticated.
SRFG, INC.
By:__________________________________________
Name:
Title:
A-3-2
<PAGE> 119
[FORM OF THE REVERSE OF THE CLASS C CERTIFICATES]
[For an Amortizing Structure]
It is the intent of SRFG and the Investor Certificateholders that, for
federal, state and local income and franchise tax purposes only, the Investor
Certificates will be evidence of indebtedness. SRFG, by the acceptance of this
Class C Certificate, agrees to treat this Class C Certificate for federal, state
and local income and franchise tax purposes as indebtedness secured by the
Receivables and other assets held in the Trust.
To the extent not defined herein, the capitalized terms used herein have
the meanings assigned in the Pooling and Servicing Agreement or the Series
Supplement. This Class C Certificate is issued under and is subject to the
terms, provisions and conditions of the Pooling and Servicing Agreement and the
Series Supplement, to which Pooling and Servicing Agreement and Series
Supplement, as each may be amended from time to time, SRFG by virtue of the
acceptance hereof assents and by which SRFG is bound.
This Class C Certificate is one of a series of Certificates entitled "Class
C Master Trust Certificates, Series 1998-2" (the "Class C Certificates"), each
of which represents a Fractional Undivided Interest in the Trust, including the
right to receive the Collections and other amounts at the times and in the
amounts specified in the Pooling and Servicing Agreement and the Series
Supplement to be deposited in the Investor Accounts with respect to Sears Credit
Account Master Trust II, Series 1998-2 or paid to SRFG. Also issued under the
Pooling and Servicing Agreement and the Series Supplement are Investor
Certificates designated as "5.25% Class A Master Trust Certificates, Series
1998-2" (the "Class A Certificates") and "Class B Master Trust Certificates,
Series 1998-2" (the "Class B Certificates"). The Class A Certificates, the Class
B Certificates and the Class C Certificates are collectively referred to herein
as the Investor Certificates.
The aggregate interest represented by the Class C Certificates at any time
in the assets of the Trust shall not exceed an amount equal to the Class C
Investor Interest at such time, plus accrued but unpaid Certificate Interest for
the Class C Certificates and any interest thereon. The Class Initial Investor
Interest of the Class C Certificates is $48,000,000. The Class C Invested Amount
on any Distribution Date will be an amount equal to the Class C Initial Investor
Interest minus the sum of (a) the aggregate amount of payments of Certificate
Principal paid to SRFG prior to such Distribution Date and (b) the Investor Loss
for such Class, if any, at the beginning of such Distribution Date. In addition
to the Investor Certificates, a Seller Certificate has been issued pursuant to
the Pooling and Servicing Agreement which represents, at any time, the undivided
interest in the Trust not represented by the Investor Certificates or the
investor certificates of any other series of investor certificates then
outstanding. Subject to the terms and conditions of the Pooling and Servicing
Agreement, the Seller may from time to time direct the Trustee, on behalf of the
Trust, to issue one or more new series of investor certificates, which will
represent Fractional Undivided Interests in the Trust.
During the Revolving Period, which begins on the day following the Series
Cut-Off Date, Certificate Interest will be distributed on the 15th day of each
calendar month with respect to interest accrued during the preceding Interest
Accrual Period, commencing in December 1998, or if such 15th day is not a
Business Day, on the next succeeding Business Day (each, a "Distribution Date"),
to SRFG. During the Controlled Amortization Period, which will begin on the
first day of the Due Period related to the Distribution Date in November 2002
unless a Rapid Amortization Event occurs prior to such date, and during the
Rapid Amortization Period, if any, Certificate Interest and Certificate
Principal collected by the Servicer will be distributed to SRFG on the
Distribution Date of each
A-3-3
<PAGE> 120
calendar month, commencing in the month following the commencement of the
earlier of the Controlled Amortization Period or the Rapid Amortization Period;
provided, however, that, except as otherwise set forth in the Series Supplement,
no Certificate Principal will be distributed to SRFG in respect of this Class C
Certificate (except Certificate Principal distributed to SRFG in respect of the
Class C Permitted Controlled Amortization Amount, if any) until the Class A
Investor Interest and the Class B Investor Interest have been reduced to zero.
The rights of SRFG to receive distributions to which it would otherwise be
entitled on the Receivables will be subordinated to the rights of the Class A
Certificateholders, the Class B Certificateholders and the Servicer to the
extent described in the Pooling and Servicing Agreement and Series Supplement.
In any event, the final payment of principal will be made no later than the day
following the Distribution Date in October 2008 (the "Series Termination Date").
The amount to be distributed on each Distribution Date to the holder of
this Class C Certificate will be equal to the product of (a) the percentage
equivalent of a fraction, the numerator of which is the portion of the Class C
Initial Investor Interest evidenced by this Class C Certificate and the
denominator of which is the Class C Initial Investor Interest and (b) the
aggregate of all payments to be made to SRFG on such Distribution Date.
Distributions with respect to this Class C Certificate will be made by the
Paying Agent by check mailed to the address of SRFG (except for the final
distribution in respect of this Class C Certificate) without the presentation or
surrender of this Class C Certificate or the making of any notation thereon.
This Class C Certificate does not represent an obligation of, or an
interest in, SRFG or the Servicer. This Class C Certificate is limited in right
of payment to certain Collections respecting the Receivables, all as more
specifically set forth hereinabove and in the Pooling and Servicing Agreement
and the Series Supplement.
The Pooling and Servicing Agreement permits, with certain exceptions, the
amendment and modification of the rights and obligations of the Servicer, and
the rights of Investor Certificateholders under the Pooling and Servicing
Agreement and Series Supplement, at any time by the Servicer, the Seller and the
Trustee in certain cases (some of which require written confirmation from the
Rating Agencies that such amendment will not cause a Ratings Event) without the
consent of the Investor Certificateholders, and in all other cases with the
consent of the Investor Certificateholders owning Fractional Undivided Interests
aggregating not less than 66-2/3% of the Class Invested Amount of each such
affected Class (and with written confirmation from the Rating Agencies that such
amendment will not cause a Ratings Event); provided, however, that no such
amendment shall (a) increase or reduce in any manner the amount of, or delay the
timing of, distributions which are required to be made on any Investor
Certificate without the consent of the affected Investor Certificateholders or
(b) reduce the aforesaid percentage required to consent to any such amendment,
without the consent of each Investor Certificateholder of each affected Class
then of record. Any such amendment and any such consent by SRFG shall be
conclusive and binding on such Class C Certificateholder and upon all future
Holders of this Class C Certificate and of any Class C Certificate issued in
exchange hereof or in lieu hereof whether or not notation thereof is made upon
this Class C Certificate.
The transfer of this Class C Certificate shall be registered in the
Certificate Register upon surrender of this Investor Certificate for
registration of transfer at any office or agency maintained by the Transfer
Agent and Registrar accompanied by a written instrument of transfer in a form
satisfactory to the Trustee and the Transfer Agent and Registrar duly executed
by SRFG or such Class C Certificateholder's attorney duly authorized in writing,
and thereupon one or more new Class C
A-3-4
<PAGE> 121
Certificates of authorized denominations and for the same aggregate Fractional
Undivided Interest will be issued to the designated transferee or transferees.
The transfer of this Class C Certificate is subject to certain restrictions
set forth in the Pooling and Servicing Agreement. In no event shall this Class C
Certificate, or any interest therein, be transferred to an employee benefit
plan, trust or account subject to the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or described in Section 4975(e)(1) of the Internal
Revenue Code. Any Holder of this Class C Certificate, by its acceptance hereof,
shall be deemed to represent and warrant that it is not (i) an employee benefit
plan (as defined in Section 3(3) of ERISA), that is subject to Title I of ERISA,
(ii) a plan described in Section 4975(e)(1) of the Internal Revenue Code, and
not excepted under Section 4975(g), or (iii) an entity using assets to purchase
such Certificate which constitute plan assets by reason of a plan's investment
in such Holder.
The transfer of this Class C Certificate is subject to certain further
restrictions and the fulfillment of certain conditions as set forth in the
Series Supplement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class C Certificates are exchangeable for new
Class C Certificates evidencing like aggregate Fractional Undivided Interests,
as requested by SRFG. No service charge may be imposed for any such exchange but
the Servicer or Transfer Agent and Registrar may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection therewith.
The Servicer, the Trustee, the Paying Agent and the Transfer Agent, and any
agent of any of them, may treat the person in whose name this Class C
Certificate is registered as the owner hereof for all purposes, and neither the
Servicer, the Trust nor the Trustee, the Paying Agent, the Transfer Agent, nor
any agent of any of them or any such agent shall be affected by notice to the
contrary except in certain circumstances described in the Pooling and Servicing
Agreement.
Subject to certain conditions in the Pooling and Servicing Agreement and
the Series Supplement, if the principal of the Investor Certificates has not
been paid in full prior to the Series Termination Date, the obligations created
by the Pooling and Servicing Agreement and the Series Supplement with respect to
the Investor Certificates shall terminate on the Series Termination Date.
A-3-5
<PAGE> 122
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Class C Certificates referred to in the within mentioned
Pooling and Servicing Agreement and Series Supplement.
THE FIRST NATIONAL BANK OF CHICAGO
as Trustee
By:_______________________________________
Authorized Officer
A-3-6
<PAGE> 123
EXHIBIT B
Form of Investor Certificateholders' Monthly Statement
Sears Credit Account Master Trust II
Series 1998-2 Monthly Statement
Distribution Date: __________ __, ____ Due Period Ending: __________ __, ____
Under the Series Supplements relating to the Pooling and Servicing Agreement
dated as of July 31, 1994, as amended, by and among Sears, Roebuck and Co.,
SRFG, Inc. (formerly Sears Receivables Financing Group, Inc.) and The First
National Bank of Chicago as Trustee, the Trustee is required to prepare certain
information each month regarding current distributions to Certificateholders and
the performance of the Trust. The information for the Due Period and the
Distribution Date listed above is set forth below.
1. PAYMENTS OR ALLOCATIONS TO SERIES 1998-2 INVESTORS THIS DUE PERIOD
<TABLE>
<CAPTION>
Total Interest Principal
Series 1998-2
<S> <C> <C> <C>
Class A $____________ $____________ $____________
Class B $____________ $____________ $____________
Class C $____________ $____________ $____________
</TABLE>
2. PRINCIPAL RECEIVABLES AT THE END OF THE DUE PERIOD
<TABLE>
<CAPTION>
<S> <C>
(a) TOTAL PRINCIPAL RECEIVABLES IN TRUST $____________
Aggregate Investor Interest $____________
Seller Interest $____________
(b) INVESTOR INTEREST BY GROUPS
Group One Investor Interest $____________
(c) INVESTOR INTEREST BY SERIES
Series 1994-1 Investor Interest $____________
Series 1995-1 Investor Interest $____________
Series 1995-2 Investor Interest $____________
Series 1995-3 Investor Interest $____________
Series 1995-4 Investor Interest $____________
Series 1995-5 Investor Interest $____________
Series 1996-1 Investor Interest $____________
Series 1996-2 Investor Interest $____________
Series 1996-3 Investor Interest $____________
Series 1996-4 Investor Interest $____________
Series 1996-5 Investor Interest $____________
Series 1997-1 Investor Interest $____________
Series 1998-1 Investor Interest $____________
Series 1998-2 Investor Interest $____________
</TABLE>
B-1
<PAGE> 124
<TABLE>
<CAPTION>
<S> <C>
(d) INVESTOR INTEREST BY CLASS (SERIES 1998-2)
Class A Investor Interest $____________
Class B Investor Interest $____________
Class C Investor Interest $____________
TOTAL CLASS INVESTOR INTEREST $____________
3. ALLOCATION OF COLLECTIONS DURING THE DUE PERIOD
(a) TOTAL COLLECTIONS $____________
Principal Receivables Collected $____________
Finance Charge Receivables Collected $____________
Recovered Amounts added as Additional Funds $____________
</TABLE>
<TABLE>
<CAPTION>
Additional
Finance Charge Principal Allocable
Collections Collections Amounts
<S> <C> <C> <C>
(b) ALLOCATION OF COLLECTIONS WITH
RESPECT TO THE INVESTOR INTEREST
AND THE SELLER INTEREST
Aggregate Investor Allocation (Aggregate
Investor Percentage multiplied by total
Collections received during the Due Period) $____________ $___________ $___________
Seller Allocation (Seller Percentage multiplied
by total Collections received during the Due
Period) $____________ $___________ $___________
(c) Group One Allocation $____________ $___________ $___________
(d) Series 1998-2 Allocation $____________ $___________ $___________
(e) Reallocations of Collections to Series 1998-2 from other
series in Group One and application
of charge-off reimbursements to principal payment $____________ $___________ $___________
</TABLE>
4. INFORMATION CONCERNING CONTROLLED AMORTIZATION AMOUNT
<TABLE>
<CAPTION>
Amount Distributed Total Distributions
this Due Period through this Due Period
SERIES 1998-2 BY CLASS
<S> <C> <C>
(a) Class A $____________ $___________
(b) Class B $____________ $___________
(c) Class C $____________ $___________
</TABLE>
B-2
<PAGE> 125
<TABLE>
<CAPTION>
5. INVESTOR CHARGED-OFF AMOUNTS
This Due Period
<S> <C>
(a) Group One (the sum of Series Investor Charged-Off Amounts for
all Series in Group One) $___________
(b) Series 1998-2 (the sum of the Class Investor Charged-Off Amounts
for all Classes in Series 1998-2) $___________
(c) Series 1998-2 by Class:
Class A (Class A Percentage multiplied by the
Charged-Off Amount) $___________
Class B (Class B Percentage multiplied by the
Charged-Off Amount) $___________
Class C (Class C Percentage multiplied by the
Charged-Off Amount) $___________
6. INVESTOR LOSSES
Total
(a) Group One $___________
(b) Series 1998-2 $___________
(c) Series 1998-2 by Class
Class A $___________
Class B $___________
Class C $___________
7. MONTHLY SERVICING FEE PAYABLE THIS DUE PERIOD
SELLER SERVICING FEE $___________
INVESTOR SERVICING FEE
(a) Group One $___________
(b) Series 1998-2 $___________
8. PERFORMANCE ANALYSIS
(a) Portfolio Yield (Finance Charge Collections during the Due
Period divided by Principal Receivables in the Trust as of the
first day of the Due Period) ___________%
(b) Charge-Offs (Charged-Off Amounts during the Due Period divided
by Principal Receivables in the Trust as of the first day of
the Due Period) ___________%
(c) Recoveries (Recovered Amounts added as Additional Funds on the
Distribution Date divided by Aggregate Investor Interest in
the Trust as of the first day of the Due Period) ___________%
(d) Investor Servicing Fee Percentage (weighted average of Investor
Servicing Fees for Series 1998-2) ___________%
(e) Weighted Average Certificate Rate (weighted average
certificate rates for all classes of Series 1998-2) ___________%
</TABLE>
B-3
<PAGE> 126
<TABLE>
<CAPTION>
<S> <C> <C>
(f) Series Excess Servicing Percentage (Portfolio Yield and Recoveries
minus the sum of Charge-Offs, the Investor Servicing Fee Percentage
and the Weighted Average Certificate Rate) ___________%
(f) Total Payment Rate (Aggregate Collections during the Due
Period divided by the aggregate amount of Receivables in the
Trust as of the first day of the Due Period) ___________%
</TABLE>
9. SUMMARY DELINQUENCY AGING INFORMATION
The aging of delinquent receivables is summarized as follows
(1):
[month/year]
Delinquencies as a % of balances
60-89 days past due.................... __________%
90-119 days past due................... __________%
120 days or more past due............ __________%
Total Delinquencies __________%
(1) [An account is considered delinquent when its cumulative
past due balance is three or more times the scheduled
minimum monthly payment. Delinquencies as of the end of
each month are divided by balances at the beginning of
each such month. Excludes accounts from Puerto Rico,
which were not included in the Accounts.] [Footnote as
appropriate regarding aging methodology.]
THE FIRST NATIONAL BANK OF CHICAGO
as Trustee
By:_______________________________________
B-4
<PAGE> 127
EXHIBIT C
Sears Credit Account Master Trust II
Monthly Servicer Certificate
CREDIT ACCOUNT
MASTER TRUST CERTIFICATES
The undersigned, a duly authorized representative of Sears, Roebuck and
Co. ("Sears"), as Servicer pursuant to the Pooling and Servicing Agreement dated
as of July 31, 1994, as amended (the "Pooling and Servicing Agreement") by and
among Sears, SRFG, Inc. (formerly Sears Receivables Financing Group, Inc.) and
The First National Bank of Chicago, as Trustee, does hereby certify as follows
with respect to the Series outstanding for the Distribution Date occurring on
_______________:
1. Sears is Servicer under the Pooling and Servicing Agreement.
2. The undersigned is a Servicing Officer of Sears as Servicer.
<TABLE>
<CAPTION>
SECTION 1: TOTAL TRUST INFORMATION
<S> <C>
3. The aggregate amount of Principal Collections processed during the related
Due period is equal to.................................................................... $______
4. The aggregate amount of Finance Charge Collections processed during the
related Due Period is equal to............................................................ $______
5. The aggregate amount of Total Collections processed during the related Due
Period is equal to........................................................................ $______
6. The aggregate amount of Principal Receivables in the Trust as of the last
day of the related Due Period is equal to................................................. $______
7. The aggregate amount of Finance Charge Receivables in the Trust as of the
last day of the related Due Period is equal to............................................ $______
8. The aggregate amount of Total Receivables in the Trust as of the last day of
the related Due Period is equal to........................................................ $______
9. The aggregate amount of Additional Funds to be added to the Trust on or before the
Distribution Date is equal to............................................................. $______
SECTION 2: SERIES 1994-1
10. The aggregate amount of Series Additional Allocable Amounts during the
related Due Period is equal to............................................................ $______
11. The amount of interest payable to the Class A Certificateholders on the
</TABLE>
C1
<PAGE> 128
<TABLE>
<CAPTION>
<S> <C>
current Distribution Date is equal to..................................................... $______
12. The amount of principal payable to the Class A Certificateholders on the
current Distribution Date is equal to..................................................... $______
13. The amount of interest payable to the Class B Certificateholders on the current
Distribution Date is equal to............................................................. $______
14. The amount of principal payable to the Class B Certificateholders on the
current Distribution Date is equal to..................................................... $______
15. The amount of interest payable to the Class C Certificateholders on the current
Distribution Date is equal to............................................................. $______
16. The amount of principal payable to the Class C Certificateholders on the
current Distribution Date is equal to..................................................... $______
17. The aggregate amount of Reallocated Class B Principal Collectionsduring the
related Due Period is equal to............................................................ $______
18. The aggregate amount of Reallocated Class C Principal Collections during the
related Due Period is equal to ........................................................... $______
SECTION 3: SERIES 1995-1
19. The aggregate amount of Series Additional Allocable Amounts duringthe
related Due Period is equal to............................................................ $______
20. The amount of interest payable to the Class A Certificateholders on the
current Distribution Date is equal to..................................................... $______
21. The amount of principal payable to the Class A Certificateholders on the
current Distribution Date is equal to..................................................... $______
22. The amount of interest payable to the Class B Certificateholders on the
current Distribution Date is equal to..................................................... $______
23. The amount of principal payable to the Class B Certificateholders on the
current Distribution Date is equal to..................................................... $______
24. The amount of interest payable to the Class C Certificateholders on the
current Distribution Date is equal to..................................................... $______
25. The amount of principal payable to the Class C Certificateholders on the
current Distribution Date is equal to..................................................... $______
26. The aggregate amount of Reallocated Class B Principal Collections during
the related Due Period is equal to........................................................ $______
</TABLE>
C2
<PAGE> 129
<TABLE>
<CAPTION>
<S> <C>
27. The aggregate amount of Reallocated Class C Principal Collections during
the related Due Period is equal to........................................................ $______
SECTION 4: SERIES 1995-2
28. The aggregate amount of Series Additional Allocable Amounts during
the related Due Period is equal to........................................................ $______
29. The amount of interest payable to the Class A Certificateholders on the
current Distribution Date is equal to..................................................... $______
30. The amount of principal payable to the Class A Certificateholders on the
current Distribution Date is equal to..................................................... $______
31. The amount of interest payable to the Class B Certificateholders on the
current Distribution Date is equal to..................................................... $______
32. The amount of principal payable to the Class B Certificateholders on the
current Distribution Date is equal to..................................................... $______
33. The amount of interest payable to the Class C Certificateholders on the
current Distribution Date is equal to..................................................... $______
34. The amount of principal payable to the Class C Certificateholders on the
current Distribution Date is equal to..................................................... $______
35. The aggregate amount of Reallocated Class B Principal Collections during
the related Due Period is equal to........................................................ $______
36. The aggregate amount of Reallocated Class C Principal Collections during
the related Due Period is equal to........................................................ $______
SECTION 5: SERIES 1995-3
37. The aggregate amount of Series Additional Allocable Amounts during the
related Due Period is equal to............................................................ $______
38. The amount of interest payable to the Class A Certificateholders on the
current Distribution Date is equal to..................................................... $______
39. The amount of principal payable to the Class A Certificateholders on the
current Distribution Date is equal to..................................................... $______
40. The amount of interest payable to the Class B Certificateholders on the
current Distribution Date is equal to..................................................... $______
41. The amount of principal payable to the Class B Certificateholders on the
current Distribution Date is equal to..................................................... $______
</TABLE>
C3
<PAGE> 130
<TABLE>
<CAPTION>
<S> <C>
42. The amount of interest payable to the Class C Certificateholders on the
current Distribution Date is equal to..................................................... $______
43. The amount of principal payable to the Class C Certificateholders on the
current Distribution Date is equal to..................................................... $______
44. The aggregate amount of Reallocated Class B Principal Collections during
the related Due Period is equal to........................................................ $______
45. The aggregate amount of Reallocated Class C Principal Collections during
the related Due Period is equal to........................................................ $______
SECTION 6: SERIES 1995-4
46. The aggregate amount of Series Additional Allocable Amounts during the
related Due Period is equal to............................................................ $______
47. The amount of interest payable to the Class A Certificateholders on the
current Distribution Date is equal to..................................................... $______
48. The amount of principal payable to the Class A Certificateholders on the
current Distribution Date is equal to..................................................... $______
49. The amount of interest payable to the Class B Certificateholders on the
current Distribution Date is equal to..................................................... $______
50. The amount of principal payable to the Class B Certificateholders on the
current Distribution Date is equal to..................................................... $______
51. The amount of interest payable to the Class C Certificateholders on the
current Distribution Date is equal to..................................................... $______
52. The amount of principal payable to the Class C Certificateholders on the
current Distribution Date is equal to..................................................... $______
53. The aggregate amount of Reallocated Class B Principal Collections during
the related Due Period is equal to........................................................ $______
54. The aggregate amount of Reallocated Class C Principal Collections during
the related Due Period is equal to........................................................ $______
SECTION 7: SERIES 1995-5
55. The aggregate amount of Series Additional Allocable Amounts during the
related Due Period is equal to............................................................ $______
56. The amount of interest payable to the Class A Certificateholders on the
current Distribution Date is equal to..................................................... $______
</TABLE>
C4
<PAGE> 131
<TABLE>
<CAPTION>
<S> <C>
57. The amount of principal payable to the Class A Certificateholders on the
current Distribution Date is equal to..................................................... $______
58. The amount of interest payable to the Class B Certificateholders on the
current Distribution Date is equal to..................................................... $______
59. The amount of principal payable to the Class B Certificateholders on the
current Distribution Date is equal to..................................................... $______
60. The amount of interest payable to the Class C Certificateholders on the
current Distribution Date is equal to..................................................... $______
61. The amount of principal payable to the Class C Certificateholders on the
current Distribution Date is equal to..................................................... $______
62. The aggregate amount of Reallocated Class B Principal Collections during
the related Due Period is equal to........................................................ $______
63. The aggregate amount of Reallocated Class C Principal Collections during
the related Due Period is equal to........................................................ $______
SECTION 8: SERIES 1996-1
64. The aggregate amount of Series Additional Allocable Amounts during the
related Due Period is equal to............................................................ $______
65. The amount of interest payable to the Class A Certificateholders on the
current Distribution Date is equal to..................................................... $______
66. The amount of principal payable to the Class A Certificateholders on the
current Distribution Date is equal to..................................................... $______
67. The amount of interest payable to the Class B Certificateholders on the
current Distribution Date is equal to..................................................... $______
68. The amount of principal payable to the Class B Certificateholders on the
current Distribution Date is equal to..................................................... $______
69. The amount of interest payable to the Class C Certificateholders on the
current Distribution Date is equal to..................................................... $______
70. The amount of principal payable to the Class C Certificateholders on the
current Distribution Date is equal to..................................................... $______
71. The aggregate amount of Reallocated Class B Principal Collections during
the related Due Period is equal to........................................................ $______
72. The aggregate amount of Reallocated Class C Principal Collections during
the related Due Period is equal to........................................................ $______
</TABLE>
C5
<PAGE> 132
<TABLE>
<CAPTION>
SECTION 9: SERIES 1996-2
<S> <C>
73. The aggregate amount of Series Additional Allocable Amounts during the
related Due Period is equal to............................................................ $______
74. The amount of interest payable to the Class A Certificateholders on the
current Distribution Date is equal to..................................................... $______
75. The amount of principal payable to the Class A Certificateholders on the
current Distribution Date is equal to..................................................... $______
76. The amount of interest payable to the Class B Certificateholders on the
current Distribution Date is equal to..................................................... $______
77. The amount of principal payable to the Class B Certificateholders on the
current Distribution Date is equal to..................................................... $______
78. The amount of interest payable to the Class C Certificateholders on the
current Distribution Date is equal to..................................................... $______
79. The amount of principal payable to the Class C Certificateholders on the
current Distribution Date is equal to..................................................... $______
80. The aggregate amount of Reallocated Class B Principal Collections during
the related Due Period is equal to........................................................ $______
81. The aggregate amount of Reallocated Class C Principal Collections during
the related Due Period is equal to........................................................ $______
SECTION 10: SERIES 1996-3
82. The aggregate amount of Series Additional Allocable Amounts during the
related Due Period is equal to............................................................ $______
83. The amount of interest payable to the Class A Certificateholders on the
current Distribution Date is equal to..................................................... $______
84. The amount of principal payable to the Class A Certificateholders on the
current Distribution Date is equal to..................................................... $______
85. The amount of interest payable to the Class B Certificateholders on the
current Distribution Date is equal to..................................................... $______
86. The amount of principal payable to the Class B Certificateholders on the
current Distribution Date is equal to..................................................... $______
87. The amount of interest payable to the Class C Certificateholders on the
current Distribution Date is equal to..................................................... $______
</TABLE>
C6
<PAGE> 133
<TABLE>
<CAPTION>
<S> <C>
88. The amount of principal payable to the Class C Certificateholders on the
current Distribution Date is equal to..................................................... $______
89. The aggregate amount of Reallocated Class B Principal Collections during
the related Due Period is equal to........................................................ $______
90. The aggregate amount of Reallocated Class C Principal Collections during
the related Due Period is equal to........................................................ $______
SECTION 11: SERIES 1996-4
91. The aggregate amount of Series Additional Allocable Amounts during the
related Due Period is equal to............................................................ $______
92. The amount of interest payable to the Class A Certificateholders on the
current Distribution Date is equal to..................................................... $______
93. The amount of principal payable to the Class A Certificateholders on the
current Distribution Date is equal to..................................................... $______
94. The amount of interest payable to the Class B Certificateholders on the
current Distribution Date is equal to..................................................... $______
95. The amount of principal payable to the Class B Certificateholders on the
current Distribution Date is equal to..................................................... $______
96. The amount of interest payable to the Class C Certificateholders on the
current Distribution Date is equal to..................................................... $______
97. The amount of principal payable to the Class C Certificateholders on the
current Distribution Date is equal to..................................................... $______
98. The aggregate amount of Reallocated Class B Principal Collections during
the related Due Period is equal to........................................................ $______
99. The aggregate amount of Reallocated Class C Principal Collections during
the related Due Period is equal to........................................................ $______
SECTION 12: SERIES 1996-5
100. The aggregate amount of Series Additional Allocable Amounts during the
related Due Period is equal to............................................................ $______
101. The amount of interest payable to the Class A Certificateholders on the
current Distribution Date is equal to..................................................... $______
102. The amount of principal payable to the Class A Certificateholders on the
current Distribution Date is equal to..................................................... $______
</TABLE>
C7
<PAGE> 134
<TABLE>
<CAPTION>
<S> <C>
103. The amount of interest payable to the Class B Certificateholders on the
current Distribution Date is equal to..................................................... $______
104. The amount of principal payable to the Class B Certificateholders on the
current Distribution Date is equal to..................................................... $______
105. The amount of interest payable to the Class C Certificateholders on the
current Distribution Date is equal to..................................................... $______
106. The amount of principal payable to the Class C Certificateholders on the
current Distribution Date is equal to..................................................... $______
107. The aggregate amount of Reallocated Class B Principal Collections during
the related Due Period is equal to........................................................ $______
108. The aggregate amount of Reallocated Class C Principal Collections during
the related Due Period is equal to........................................................ $______
SECTION 13: SERIES 1997-1
109. The aggregate amount of Series Additional Allocable Amounts during the
related Due Period is equal to............................................................ $______
110. The amount of interest payable to the Class A Certificateholders on the
current Distribution Date is equal to..................................................... $______
111. The amount of principal payable to the Class A Certificateholders on the
current Distribution Date is equal to..................................................... $______
112. The amount of interest payable to the Class B Certificateholders on the
current Distribution Date is equal to..................................................... $______
113. The amount of principal payable to the Class B Certificateholders on the
current Distribution Date is equal to..................................................... $______
114. The amount of interest payable to the Class C Certificateholders on the
current Distribution Date is equal to..................................................... $______
115. The amount of principal payable to the Class C Certificateholders on the
current Distribution Date is equal to..................................................... $______
116. The aggregate amount of Reallocated Class B Principal Collections during
the related Due Period is equal to........................................................ $______
117. The aggregate amount of Reallocated Class C Principal Collections during
the related Due Period is equal to........................................................ $______
</TABLE>
C8
<PAGE> 135
<TABLE>
<CAPTION>
SECTION 14: SERIES 1998-1
<S> <C>
118. The aggregate amount of Series Additional Allocable Amounts during the
related Due Period is equal to............................................................ $______
119. The amount of interest payable to the Class A Certificateholders on the
current Distribution Date is equal to..................................................... $______
120. The amount of principal payable to the Class A Certificateholders on the
current Distribution Date is equal to..................................................... $______
121. The amount of interest payable to the Class B Certificateholders on the
current Distribution Date is equal to..................................................... $______
122. The amount of principal payable to the Class B Certificateholders on the
current Distribution Date is equal to..................................................... $______
123. The amount of interest payable to the Class C Certificateholders on the
current Distribution Date is equal to..................................................... $______
124. The amount of principal payable to the Class C Certificateholders on the
current Distribution Date is equal to..................................................... $______
125. The aggregate amount of Reallocated Class B Principal Collections during
the related Due Period is equal to........................................................ $______
126. The aggregate amount of Reallocated Class C Principal Collections during
the related Due Period is equal to........................................................ $______
SECTION 15: SERIES 1998-2
127. The aggregate amount of Series Additional Allocable Amounts during the
related Due Period is equal to............................................................ $______
128. The amount of interest payable to the Class A Certificateholders on the
current Distribution Date is equal to..................................................... $______
129. The amount of principal payable to the Class A Certificateholders on the
current Distribution Date is equal to..................................................... $______
130. The amount of interest payable to the Class B Certificateholders on the
current Distribution Date is equal to..................................................... $______
131. The amount of principal payable to the Class B Certificateholders on the
current Distribution Date is equal to..................................................... $______
132. The amount of interest payable to the Class C Certificateholders on the
current Distribution Date is equal to..................................................... $______
</TABLE>
C9
<PAGE> 136
<TABLE>
<CAPTION>
<S> <C>
133. The amount of principal payable to the Class C Certificateholders on the
current Distribution Date is equal to..................................................... $______
134. The aggregate amount of Reallocated Class B Principal Collections during
the related Due Period is equal to........................................................ $______
135. The aggregate amount of Reallocated Class C Principal Collections during
the related Due Period is equal to........................................................ $______
136. Attached hereto is a true copy of the statement required to be
delivered by the Servicer on the date of this Certificate to
the Trustee pursuant to the Series Supplements.
</TABLE>
IN WITNESS WHEREOF, the undersigned has duly executed and delivered
this certificate this ____day of ____________, 19__.
SEARS, ROEBUCK AND CO.,
as Servicer
By:________________________________________
Name:
Title:
C-10
<PAGE> 1
EXHIBIT 4.2
BOOK-ENTRY-ONLY COLLATERALIZED MORTGAGE OBLIGATIONS (CMOs)
(WITHOUT OWNER OPTION TO REDEEM)/
OTHER ASSET-BACKED SECURITIES/AND PASS-THROUGH CERTIFICATES
Letter of Representations
(To be Completed by Issuer and Agent)
SRFG, Inc. on behalf of Sears Credit Account Master Trust II
------------------------------------------------------------
(Name of Issuer)
The First National Bank of Chicago
----------------------------------
(Name of Agent)
November 9, 1998
----------------
(Date)
Attention: General Counsel's Office
The Depository Trust Company
55 Water Street; 49th Floor
New York, NY 10041-0099
Re: 5.25% Class A Master Trust Certificates, Series 1998-2
------------------------------------------------------------------
------------------------------------------------------------------
------------------------------------------------------------------
(Issue Description)
Ladies and Gentlemen:
This letter sets forth our understanding with respect to certain matters
relating to the above-referenced issue (the "Securities"). Agent will act as
trustee, paying agent, fiscal agent, or other such agent of Issuer with respect
to the Securities pursuant to a trust indenture, trust agreement, or other such
document dated as of July 31, 1994 (the "Document"), see below** ______________
("Underwriter")
is distributing the Securities through The Depository Trust Company ("DTC").
To induce DTC to accept the Securities as eligible for deposit at DTC, and
to act in accordance with its Rules with respect to the Securities, Issuer and
Agent make the following representations to DTC:
1. Prior to closing on the Securities on November 9, 1998, there shall be
deposited with DTC one Security certificate registered in the name of DTC's
nominee, Cede & Co., for each
**Credit Suisse First Boston Corporation; Bear, Stearns & Co. Inc.; Goldman,
Sachs & Co.; Merrill Lynch, Pierce, Fenner & Smith Incorporated; J.P. Morgan
Securities Inc.
<PAGE> 2
stated maturity of the Securities in the face amounts set forth on Schedule A
hereto, the total of which represents 100% of the principal amount of such
Securities. If, however, the aggregate principal amount of any maturity exceeds
$200 million, one certificate will be issued with respect to each $200 million
of principal amount and an additional certificate will be issued with respect
to any remaining principal amount. Each Security certificate shall bear the
following legend:
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to Issuer or
its agent for registration of transfer, exchange, or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other
name as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as
the registered owner hereof, Cede & Co., has an interest herein.
2. Issuer: (a) understands that DTC has no obligation to, and will not,
communicate to its Participants or to any person having an interest in the
Securities any information contained in the Security certificate(s); and (b)
acknowledges that neither DTC's Participants nor any person having an interest
in the Securities shall be deemed to have notice of the provisions of the
Security certificates by virtue of submission of such certificate(s) to DTC.
3. In the event of any solicitation of consents from or voting by holders
of the Securities, Issuer or Agent shall establish a record date for such
purposes (with no provision for revocation of consents or votes by subsequent
holders) and shall, to the extent possible, send notice of such record date to
DTC not less than 15 calendar days in advance of such record date. Notices to
DTC pursuant to this Paragraph by telecopy shall be sent to DTC's
Reorganization Department at (212) 709-6896 or (212) 709-6897, and receipt of
such notices shall be confirmed by telephoning (212) 709-6870. Notices to DTC
pursuant to this Paragraph by mail or by any other means shall be sent to DTC's
Reorganization Department as indicated in Paragraph 5.
4. In the event of a full or partial redemption, Issuer or Agent shall
send a notice to DTC specifying: (a) the amount of the redemption or refunding;
(b) in the case of a refunding, the maturity date(s) established under the
refunding; and (c) the date such notice is to be mailed to Security holders or
published (the "Publication Date"). Such notice shall be sent to DTC by a
secure means (e.g., legible telecopy, registered or certified mail, overnight
delivery) in a timely manner designed to assure that such notice is in DTC's
possession no later than the close of business on the business day before or,
if possible, two business days before the Publication Date. Issuer or Agent
shall forward such notice either in a separate secure transmission for each
CUSIP number or in a secure transmission for multiple CUSIP numbers (if
applicable) which includes a manifest or list of each CUSIP number submitted in
that transmission. (The party sending such notice shall have a method to verify
subsequently the use of such means and the timeliness of such notice.) The
Publication Date shall be not less than 10 days nor more than 60 days prior to
the redemption date or, in the case of an advance refunding, the date that the
proceeds are deposited in escrow. Notices to DTC pursuant to this Paragraph by
telecopy shall be sent to DTC's Call Notification Department at (516) 227-4039
or (516) 227-4190. If the party sending the notice does not receive a telecopy
receipt from DTC confirming that the notice has been received, such party shall
telephone (516) 227-4070. Notices to DTC pursuant to this Paragraph by mail or
by any other means shall be sent to:
Manager; Call Notification Department
The Depository Trust Company
711 Stewart Avenue
Garden City, NY 11530-4719
-2-
<PAGE> 3
5. In the event of an invitation to tender the Securities (including
mandatory tenders, exchanges, and capital changes), notice by Issuer or Agent
to Security holders specifying the terms of the tender and the Publication Date
of such notice* shall be sent to DTC by a secure means in the manner set forth
in the preceding Paragraph. Notices to DTC pursuant to this Paragraph and
notices of other corporate actions by telecopy shall be sent to DTC's
Reorganization Department at (212) 709-1093 or (212) 709-1094, and receipt of
such notices shall be confirmed by telephoning (212) 709-6884. Notices to DTC
pursuant to the above by mail or by any other means shall be sent to:
Manager, Reorganization Department
Reorganization Window
The Depository Trust Company
7 Hanover Square, 23rd Floor
New York, NY 10004-2695
6. All notices and payment advices sent to DTC shall contain the CUSIP
number of the Securities.
7. Issuer or Agent shall send DTC written notice with respect to the
dollar amount per $1,000 original face value (or other minimum authorized
denomination if less than $1,000 face value) payable on each payment date
allocated as to the interest and principal portions thereof preferably 5, but
not less than 2, business days prior to such payment date. Such notices, which
shall also contain the current pool factor, any special adjustments to
principal/interest rates (e.g., adjustments due to deferred interest or
shortfall), and Agent contact's name and telephone number, shall be sent by
telecopy to DTC's Dividend Department at (212) 709-1723, or if by mail or by
any other means to:
Manager: Announcements
Dividend Department
The Depository Trust Company
7 Hanover Square, 22nd Floor
New York, NY 10004-2695
8. [Note: Issuer must represent one of the following, and cross out the
other:] [The interest accrual period is payment date to payment date.]
9. Issuer or Agent shall provide a written notice of interest payment
information to a standard interest announcement service subscribed to by DTC as
soon as the information is available. In the unlikely event that no such service
exists, Issuer or Agent shall provide such notice directly to DTC
electronically, as previously arranged by Issuer or Agent and DTC, as soon as
the information is available. If electronic transmission is not available,
absent any other arrangements between Issuer or Agent and DTC, such information
should be sent by telecopy to DTC's Dividend Department at (212) 709-1723 or
(212) 709-1686, and receipt of such notices shall be confirmed by telephoning
(212) 709-1270. Notices to DTC pursuant to the above by mail or by any other
means shall be sent to:
Manager, Announcements
Dividend Department
The Depository Trust Company
7 Hanover Square; 22nd Floor
New York, NY 10004-2695
* Such notice shall be sent to DTC no later than 8:00 a.m. on the Publication
Date.
-3-
<PAGE> 4
10. Issuer or Agent shall provide CUSIP numbers for each issue for which
payment is being sent, as well as the dollar and cent amount of the payment for
each issue to DTC, no later than noon (Eastern Time) on the payment date.
11. Interest payments and principal payments that are part of periodic
principal-and-interest payments shall be received by Cede & Co., as nominee of
DTC, or its registered assigns, in same-day funds no later than 2:30 p.m.
(Eastern Time) on each payment date. Absent any other arrangements between
Issuer or Agent and DTC, such funds shall be wired as follows:
The Chase Manhattan Bank
ABA # 021 000 021
For credit to a/c Cede & Co.
c/o The Depository Trust Company
Dividend Deposit Account # 066-026776
12. Maturity and redemption payments allocated with respect to each CUSIP
number shall be received by Cede & Co., as nominee of DTC, or its registered
assigns, in same-day funds no later than 2:30 p.m. (Eastern Time) on the payment
date. Absent any other arrangements between Issuer or Agent and DTC, such funds
shall be wired as follows:
The Chase Manhattan Bank
ABA # 021 000 021
For credit to a/c Cede & Co.
c/o The Depository Trust Company
Redemption Deposit Account # 066-027306
13. Principal payments (plus accrued interest, if any) as the result of
optional tenders for purchase effected by means of DTC's Repayment Option
Procedures shall be received by Cede & Co., as nominee of DTC, or its registered
assigns, in same-day funds no later than 2:30 p.m. (Eastern Time) on the first
payment date. Absent any other arrangements between Issuer or Agent and DTC,
such funds shall be wired as follows:
The Chase Manhattan Bank
ABA # 021 000 021
For credit to a/c Cede & Co.
c/o The Depository Trust Company
Reorganization Deposit Account # 066-027608
14. DTC may direct Issuer or Agent to use any other number or address as
the number or address to which notices or payments of interest or principal may
be sent.
15. There will be no partial redemption of the Securities.
16. In the event that Issuer determines that beneficial owners of
Securities shall be able to obtain certificated Securities, Issuer or Agent
shall notify DTC of the availability of certificates. In
-4-
<PAGE> 5
such event, Issuer or Agent shall issue, transfer, and exchange certificates in
appropriate amounts, as required by DTC and others.
17. DTC may discontinue providing its services as securities depository
with respect to the Securities at any time by giving reasonable notice to
Issuer or Agent (at which time DTC will confirm with Issuer or Agent the
aggregate principal amount of Securities outstanding). Under such
circumstances, at DTC's request Issuer and Agent shall cooperate fully with DTC
by taking appropriate action to make available one or more separate
certificates evidencing Securities to any DTC Participant having Securities
credited to its DTC accounts.
18. Nothing herein shall be deemed to require Agent to advance funds on
behalf of Issuer.
19. This Letter of Representations may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original,
but all such counterparts together shall constitute but one and the same
instrument.
20. This Letter of Representations is governed by, and shall be construed
in accordance with, the laws of the State of New York.
21. The following riders, attached hereto, are hereby incorporated into
this Letter of Representations:
(1) Addendum; (2) Schedule A; (3) Schedule B; and (4) Rider
Amending DTC Letter of Representations
Notes:
A. If there is an Agent (as defined in this Letter of Representations), Agent
as well as Issuer must sign this Letter. If there is no Agent, in signing this
Letter Issuer itself undertakes to perform all of the obligations set forth
herein.
B. Schedule B contains statements that DTC believes accurately describe DTC,
the method of effecting book-entry transfers of securities distributed through
DTC, and certain related matters.
Very truly yours,
SRFG, Inc.
-------------------------------------------
(Issuer)
By: /s/ George F. Slook
-------------------------------------------
(Authorized Officer's Signature)
The First National Bank of Chicago
-------------------------------------------
(Agent)
By: /s/ Steven M. Wagner
-------------------------------------------
(Authorized Officer's Signature)
Received and Accepted:
THE DEPOSITORY TRUST COMPANY
By: /s/ Richard B. Neeson
--------------------------
cc: Underwriter
Underwriter's Counsel
<PAGE> 6
ADDENDUM
TO
LETTER OF REPRESENTATIONS DATED NOVEMBER 9, 1998
SEARS CREDIT ACCOUNT MASTER TRUST II
General: For purposes of this Letter of Representations:
"Document" shall mean the Pooling and Servicing Agreement dated
as of July 31, 1994, as amended and as supplemented by the Series
Supplement dated as of November 9, 1998, each by and among Sears,
Roebuck and Co. as Servicer, SRFG, Inc. (formerly Sears
Receivables Financing Group, Inc.) as Seller and The First
National Bank of Chicago as the Trustee.
Paragraph 1: The following is hereby added after the third sentence of
Paragraph 1:
"Each certificate shall remain in the Agent's custody subject to
the provisions of the Fast Balance Certificate Agreement
currently in effect between the Agent and DTC."
Paragraph 3: The following sentence is added at the end of Paragraph 4:
"Failure to provide timely notice shall not be a breach under
this Letter if Issuer shall become obligated less than 10 days
prior to such redemption date under the Document to redeem the
Securities."
Paragraph 5: The following is hereby added after the first sentence of
Paragraph 6:
"Issuer or Trustee will forward such notice either in a separate
secure transmission for each CUSIP number or in a secure
transmission for multiple CUSIP numbers (if applicable) which
includes a manifest or list of each CUSIP submitted in that
transmission."
Paragraph 14: The following is hereby inserted after the word "Agent" in
line 1 of paragraph 14.
", and if requested, shall confirm such direction in writing."
<PAGE> 7
SCHEDULE A
Sears Credit Account Master Trust II
Master Trust Certificates, Series 1998-2
CLASS A CERTIFICATES CUSIP NO. 81234CBE0
<TABLE>
<CAPTION>
Certificate Number Principal Amount Maturity Date(1) Interest Rate
- ------------------ ---------------- ---------------- -------------
<S> <C> <C> <C>
1 $200,000,000 October 16, 2008 5.25%
2 $200,000,000 October 16, 2008 5.25%
3 $50,000,000 October 16, 2008 5.25%
</TABLE>
- ----------------
(1) Last possible Distribution Date.
<PAGE> 8
SCHEDULE B
SAMPLE OFFICIAL STATEMENT LANGUAGE
DESCRIBING BOOK-ENTRY-ONLY ISSUANCE
(Prepared by DTC-bracketed material may be applicable only to certain issues)
1. The Depository Trust Company ("DTC"), New York, NY, will act as securities
depository for the securities (the "Securities"). The Securities will be issued
as fully-registered securities registered in the name of Cede & Co. (DTC's
partnership nominee). One fully-registered Security certificate will be issued
for [each issue of] the Securities, [each] in the aggregate principal amount of
such issue, and will be deposited with DTC. [If, however, the aggregate
principal amount of [any] issue exceeds $200 million, one certificate will be
issued with respect to each $200 million of principal amount and an additional
certificate will be issued with respect to any remaining principal amount of
such issue.]
2. DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934. DTC holds securities that its participants ("Participants")
deposit with DTC. DTC also facilitates the settlement among Participants of
securities transactions, such as transfers and pledges, in deposited securities
through electronic computerized book-entry changes in Participants' accounts,
thereby eliminating the need for physical movement of securities certificates.
Direct Participants include securities brokers and dealers, banks, trust
companies, clearing corporations, and certain other organizations. DTC is owned
by a number of its Direct Participants and by the New York Stock Exchange,
Inc., the American Stock Exchange, Inc., and the National Association of
Securities Dealers, Inc. Access to the DTC system is also available to others
such as securities brokers and dealers, banks, and trust companies that clear
through or maintain a custodial relationship with a Direct Participant, either
directly or indirectly ("Indirect Participants"). The Rules applicable to DTC
and its Participants are on file with the Securities and Exchange Commission.
3. Purchases of Securities under the DTC system must be made by or through
Direct Participants, which will receive a credit for the Securities on DTC's
records. The ownership interest of each actual purchaser of each Security
("Beneficial Owner") is in turn to be recorded on the Direct and Indirect
Participants' records. Beneficial Owners will not receive written confirmation
from DTC of their purchase, but Beneficial Owners are expected to receive
written confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the Direct or Indirect Participant through
which the Beneficial Owner entered into the transaction. Transfers of ownership
interest in the Securities are to be accomplished by entries made on the books
of Participants acting on behalf of Beneficial Owners. Beneficial Owners will
not receive certificates representing their ownership interests in Securities,
except in the event that use of the book-entry system for the Securities is
discontinued.
4. To facilitate subsequent transfers, all Securities deposited by Participants
with DTC are registered in the name of DTC's partnership nominee, Cede & Co.
The deposit of Securities with DTC and their registration in the name of Cede &
Co. effect no change in beneficial ownership. DTC has no knowledge of the actual
Beneficial Owners of the Securities; DTC's records reflect only the identity of
the Direct Participants to whose accounts such Securities are credited, which
may or may not be the Beneficial Owners. The Participants will remain
responsible for keeping account of their holdings on behalf of the customers.
5. Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
[6. Redemption notices shall be sent to DTC. If less than all of the
Securities within an issue are being redeemed, DTC's practice is to determine
by lot the amount of the interest of each Direct Participant in such issue to
be redeemed.]
<PAGE> 9
7. Neither DTC nor Cede & Co. will consent or vote with respect to
Securities. Under its usual procedures, DTC mails an Omnibus Proxy to Issuer as
soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s
consenting or voting rights to those Direct Participants to whose accounts the
Securities are credited on the record date (identified in a listing attached to
the Omnibus Proxy).
8. Principal and interest payments on the Securities will be made to Cede
& Co., as nominee of DTC. DTC's practice is to credit Direct Participants'
accounts, upon DTC's receipt of funds and corresponding detail information from
Issuer or Agent, on payable date in accordance with their respective holdings
shown on DTC's records. Payments by Participants to Beneficial Owners will be
governed by standing instructions and customary practices, as is the case with
securities held for the accounts of customers in bearer form or registered in
"street name," and will be the responsibility of such Participant and not of
DTC, Agent, or Issuer, subject to any statutory or regulatory requirements as
may be in effect from time to time. Payment of principal and interest to Cede &
Co. is the responsibility of Issuer or Agent, disbursement of such payments to
Direct Participants shall be the responsibility of DTC, and disbursement of
such payments to the Beneficial Owners shall be the responsibility of Direct
and Indirect Participants.
[9. A Beneficial Owner shall give notice to elect to have its Securities
purchased or tendered, through its Participant, to Agent [or Tender/Remarketing
Agent], and shall effect delivery of such Securities by causing the Direct
Participant to transfer the Participant's interest in the Securities, on DTC's
records, to Agent [or Tender/Remarketing Agent]. The requirement for physical
delivery of Securities in connection with an optional tender or a mandatory
purchase will be deemed satisfied when the ownership rights in the Securities
are transferred by Direct Participants on DTC's records and followed by a
book-entry credit of tendered Securities to Agent [or Tender/Remarketing
Agent's] DTC account.]
10. DTC may discontinue providing its service as securities depository with
respect to the Securities at any time by giving reasonable notice to Issuer or
Agent. Under such circumstances, in the event that a successor securities
depository is not obtained, Security certificates are required to be printed
and delivered.
11. Issuer may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depository). In that event,
Security certificates will be printed and delivered.
12. The information in this section concerning DTC and DTC's book-entry
system has been obtained from sources that Issuer believes to be reliable, but
Issuer takes no responsibility for the accuracy thereof.
<PAGE> 10
[DTC LOGO]
RIDER AMENDING DTC LETTER OF REPRESENTATIONS - BEO COLLATERALIZED MORTGAGE
OBLIGATIONS (CMO) WITHOUT OWNER OPTION TO REDEEM/OTHER ASSET-BACKED SECURITIES
/AND PASS-THROUGH CERTIFICATES
DTC's Reorganization and Dividend Departments have relocated to 55 Water
Street. Following are revisions to the Letter of Representations, including
current addresses, telephone numbers, and telecopy numbers.
Paragraph 3 of the Letter of Representations:
Old Telecopier Numbers: Current Telecopier Numbers:
(212) 709-6896 and (212) 709-6897 (212) 855-5181 and (212) 855-5182
The confirmation number (formerly (212) 709-6870) is now (212) 855-5202.
Paragraph 5 of the Letter of Representations:
Old Telecopier Numbers: Current Telecopier Number:
(212) 709-1093 and (212) 709-1094 (212) 855-5278
The confirmation number (formerly (212) 709-6884) is now (212) 855-5280.
The current address is: Manager; Reorganization Department
Reorganization Window
The Depository Trust Company
55 Water Street 50th Floor
New York, NY 10041-0099
Paragraph 7 of the Letter of Representations:
Old Telecopier Number: Current Telecopier Number:
(212) 709-1723 (212) 855-4555
The current address is: Manager; Announcements
Dividend Department
The Depository Trust Company
55 Water Street 25th Floor
New York, NY 10041-0099
Paragraph 9 of the Letter of Representations:
Old Telecopier Numbers: Current Telecopier Numbers:
(212) 709-1723 and (212) 709-1686 (212) 855-4555 and (212) 855-4556
The confirmation number (formerly (212) 709-1270) is now (212) 855-4550.
The current address for Paragraph 9 is the same as that listed above for
Paragraph 7.
<PAGE> 11
The following additional text relates to Paragraph 10 of the Letter of
Representations:
Such information shall be conveyed by automated notification. If the
circumstances prevent the funds being paid to Cede & Co., as nominee of DTC, by
2:30 p.m. ET from equaling the dollar amount associated with detail payments by
12:00 noon ET, Issuer or Agent must provide CUSIP-level reconciliation to DTC
no later than 2:30 p.m. ET. Reconciliation may be provided by automated means
or in written format.
The following additional text relates to Paragraph 11 of the Letter of
Representations:
Issuer must remit fee funds to Agent by 1:00 p.m. ET on each payment date, or
at such earlier time as required by Agent to guarantee timely credit to the
Dividend Deposit Account of Cede & Co.
The following additional text relates to Paragraph 12 of the Letter of
Representations:
Issuer must remit free funds to Agent by 1:00 p.m. ET on each payment date, or
at such earlier time as required by Agent to guarantee timely credit to the
Redemption Deposit Account of Cede & Co. Issuer or Agent shall deliver
CUSIP-level detail regarding such payments to DTC no later than 2:30 p.m. ET on
each payment date.
The following additional text relates to Paragraph 13 of the Letter of
Representations:
Issuer must remit free funds to Agent by 1:00 p.m. ET on each payment date, or
at such earlier time as required by Agent to guarantee timely credit to the
Reorganization Deposit Account of Cede & Co. Issuer or Agent shall deliver
CUSIP-level detail regarding such payments to DTC no later than 2:30 p.m. ET
on each payment date.
<PAGE> 12
[DTC LOGO]
REPRESENTATIONS FOR ERISA-RESTRICTED SECURITIES
TO BE INCLUDED IN DTC LETTER OF REPRESENTATIONS
Issuer and Agent recognize that DTC does not in any way undertake to, and
shall not have any responsibility to, monitor or ascertain whether a transfer
of Securities could give rise to a transaction prohibited or not otherwise
permissible under the Employee Retirement Income Security Act of 1974 or under
Section 4975 of the Internal Revenue Code of 1986. Issuer and Agent acknowledge
that: a) so long as Cede & Co. is the sole record owner of the Securities, it
shall be entitled to all voting rights in respect thereof and to receive the
full amount of all principal, premium, if any, and interest payable with
respect thereto; and b) DTC shall treat any DTC Participant having Securities
credited to its DTC accounts as entitled to the full benefits of ownership of
such Securities even if the crediting of such Securities to the DTC accounts of
such Participant results from transfers or failures to transfer in violation of
such laws. (The treatment by DTC of the effects of the crediting by it of
Securities to the accounts of DTC Participants shall not affect the rights of
Issuer or purchasers, sellers, or holders of Securities against any DTC
Participant.)
<PAGE> 1
EXHIBIT 5.1
[SEARS, ROEBUCK AND CO. LETTERHEAD]
November 9, 1998
Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, New York 10010-3629
As Representative of the several Underwriters named in Schedule 1 to
the Pricing Agreement dated October 27, 1998 among SRFG, Inc., Sears,
Roebuck and Co. and such Underwriters with respect to the Class A
Certificates.
Ladies and Gentlemen:
I am an Assistant General Counsel of Sears, Roebuck and Co. ("Sears"). The
Corporate and Securities Section of the Sears Law Department, under my
supervision, has acted as counsel to SRFG, Inc. (the "Company") and Sears in
connection with the registration under the Securities Act of 1933, as amended
(the "Act"), and the public offering of $450,000,000 aggregate principal amount
of 5.25% Class A Master Trust Certificates, Series 1998-2 (the "Offered
Certificates") of the Sears Credit Account Master Trust II (the "Trust") issued
pursuant to the Pooling and Servicing Agreement among Sears as Servicer, the
Company as Seller and The First National Bank of Chicago as Trustee (the
"Trustee"), dated as of July 31, 1994, as amended (the "Pooling and Servicing
Agreement") and the Series Supplement among Sears as Servicer, the Company as
Seller and The First National Bank of Chicago as Trustee, dated as of November
9, 1998 (the "Series Supplement"), and to be sold to the public in accordance
with the terms of, (i) the Pricing Agreement, dated October 27, 1998, among
Sears, the Company and Credit Suisse First Boston Corporation, on behalf of each
of the Underwriters named in Schedule 1 thereto (the "Pricing Agreement"), and
(ii) the related Underwriting Agreement, dated May 19, 1998 among the Company,
Sears and Credit Suisse First Boston Corporation as Representative of the
several Underwriters (the "Underwriting Agreement"). The Trust also will issue
$32,000,000 aggregate principal amount of Class B Master Trust Certificates,
Series 1998-2 (the "Class B Certificates") and $48,000,000 aggregate principal
amount of Class C Master Trust Certificates, Series 1998-2 (the "Class C
Certificates," and together with the Offered Certificates and the Class B
Certificates, the "Investor Certificates"). This opinion is furnished to you
pursuant to Section 7(c) of the Underwriting Agreement. All terms not otherwise
defined herein have the meanings given to them in the Underwriting Agreement.
I have made such legal and factual examinations and inquiries,
including an examination of originals or copies certified or otherwise
identified to my satisfaction of such documents, corporate records and other
instruments, as I have deemed necessary or appropriate for the purposes of this
opinion.
<PAGE> 2
I have obtained and relied upon, to the extent I deem appropriate,
certificates of officers and executives of the Company, Sears and its
subsidiaries, and of public officials as to factual matters and opinions of
other counsel. I call to your attention the fact that, in rendering my opinion,
I am expressing my views only as to the laws of the State of Illinois and the
federal laws of the United States of America (except as to the matters below
which are governed in part by the general corporate laws of the State of
Delaware and the State of New York, relating to the due incorporation, valid
existence and good standing of the Company and Sears, respectively, the due
authorization, execution and delivery by the Company and Sears, respectively, of
certain documents, and the absence of any violation of the provisions of the
Certificate of Incorporation or By-Laws of the Company and Sears, and except to
the extent that the opinions expressed herein are given in reliance upon the
opinion of Latham & Watkins of even date herewith, a copy of which is being
delivered to you contemporaneously herewith).
On the basis of the foregoing and in reliance thereon, I am of the
opinion that, as of the date hereof:
(i) The Company and Sears have been duly incorporated and are
validly existing as corporations in good standing under the
laws of their respective states of incorporation;
(ii) Each of the Underwriting Agreement and the Pricing Agreement
has been duly authorized, executed and delivered on the part
of the Company and Sears;
(iii) The issue and sale of the Investor Certificates and the
compliance by the Company with all of the provisions of the
Investor Certificates, the Underwriting Agreement, the Pricing
Agreement, the Purchase Agreement, the Contribution Agreement,
the Receivables Warehouse Agreement, the Assignment of
Additional Funds, the Pooling and Servicing Agreement and the
Series Supplement will not (a) conflict with or result in any
breach which would constitute a material default under, or,
except as contemplated by the Pooling and Servicing Agreement
or the Series Supplement, result in the creation or imposition
of any lien, charge or encumbrance upon any of the property or
assets of the Company, material to the Company, pursuant to
the terms of, any indenture, loan agreement or other agreement
or instrument for borrowed money known to me to which the
Company is a party or by which the Company may be bound or to
which any of the property or assets of the Company, material
to the Company, is subject, (b) result in any violation of the
provisions of the Certificate of Incorporation, as amended, or
the By-Laws of the Company, or (c) to the best of my
knowledge, result in any material violation of any statute or
any order, rule or regulation applicable to the Company of any
court or any federal, state or other regulatory authority or
other governmental body having jurisdiction over the Company,
provided, however, that except to the extent discussed in
paragraphs (vi)(c), (ix), (x), (xi), (xii) and the paragraph
immediately following paragraph (xii), I express no opinion as
to the Act, the Exchange Act, the Trust Indenture Act and the
Investment Company Act and provided, further, that I express
no opinion as to the securities laws of the various states or
other jurisdictions which are applicable to the issue and sale
of the Investor Certificates and I express no opinion as to
state laws pertaining to the perfection of security interests;
(iv) To the best of my knowledge, no consent, approval,
authorization or other order of, or filing with, any court or
any federal, state or other regulatory authority or other
governmental body having jurisdiction over Sears or the
Company is required for the consummation by Sears and the
Company, as applicable, of the transactions contemplated by
the Bank Assignment Agreement, the Purchase Agreement, the
Page 2
<PAGE> 3
Contribution Agreement, the Assignment of Additional Funds and
the Receivables Warehouse Agreement or for the issue and sale of
the Investor Certificates except as may be required under the
Act, the Exchange Act, the Trust Indenture Act and the Investment
Company Act and the securities laws of the various states or
other jurisdictions which are applicable to the issue and sale of
the Investor Certificates and except for the filing of any
financing or continuation statements required to perfect the
Trust's, the Company's and Sears respective interests in the
Receivables;
(v) The compliance by Sears with all of the provisions of the
Underwriting Agreement, the Bank Assignment Agreement, the Pricing
Agreement, the Purchase Agreement, the Contribution Agreement, the
Receivables Warehouse Agreement, the Pooling and Servicing
Agreement and the Series Supplement will not (a) conflict with or
result in any breach which would constitute a material default
under, or, except as contemplated by the Bank Assignment Agreement,
the Pooling and Servicing Agreement, the Series Supplement, the
Purchase Agreement, the Contribution Agreement or the Receivables
Warehouse Agreement, result in the creation or imposition of any
lien, charge or encumbrance upon any of the property or assets of
Sears or any subsidiary thereof, material to Sears and its
subsidiaries (whether or not consolidated) considered as a whole,
pursuant to the terms of, any indenture, loan agreement or other
agreement or instrument for borrowed money known to me to which
Sears, the Company, Sears Roebuck Acceptance Corp., Sears DC Corp.,
Sears National Bank or Sears Overseas Finance N.V. is a party or by
which Sears or any of the foregoing subsidiaries may be bound or to
which any of the property or assets of Sears or of the foregoing
subsidiaries, material to Sears and its subsidiaries (whether or
not consolidated) considered as a whole, is subject, (b) result in
any violation of the provisions of the Restated Certificate of
Incorporation or the By-Laws of Sears or (c) to the best of my
knowledge, result in any material violation of any statute or any
order, rule or regulation applicable to Sears of any court or any
federal, state or other regulatory authority or other governmental
body having jurisdiction over Sears, provided, however, that except
to the extent discussed in paragraphs (vi)(c), (ix), (x), (xi),
(xii) and the paragraph immediately following paragraph (xii), I
express no opinion as to the Act, the Exchange Act, the Trust
Indenture Act and the Investment Company Act and the rules and
regulations under each such act; and provided, further, that I
express no opinion as to the securities laws of the various states
or other jurisdictions which are applicable to the issue and sale
of the Investor Certificates and I express no opinion as to the
state laws pertaining to the perfection of security interests;
(vi) (a) Each of the Pooling and Servicing Agreement, the Series
Supplement, the Purchase Agreement, the Contribution
Agreement and the Receivables Warehouse Agreement has been
duly authorized, executed and delivered on the part of the
Company and Sears and, as to each of the Company and Sears,
is a valid and binding instrument enforceable in accordance
with its terms, except as the foregoing may be limited by
bankruptcy, insolvency, reorganization, moratorium or
similar laws now or hereafter in effect relating to
creditors' rights generally, general principles of equity
(whether considered in a proceeding at law or in equity) or
the discretion of the court before which any proceeding
therefor may be brought;
(b) The Investor Certificates have been duly authorized and
(assuming their due authentication by the Trustee) have been
duly executed, issued and delivered and constitute valid and
binding obligations of the Trust in accordance with their
terms, entitled to the benefits of the Pooling and Servicing
Agreement and the Series Supplement, except as the foregoing
may be limited by bankruptcy, insolvency, reorganization,
moratorium or
Page 3
<PAGE> 4
similar laws now or hereafter in effect relating to
creditors' rights generally, general principles of equity
(whether considered in a proceeding at law or in equity) or
the discretion of the court before which any proceeding
therefor may be brought;
(c) The Pooling and Servicing Agreement is not required to be
qualified under the Trust Indenture Act; and the Trust is
not required to be registered under the Investment Company
Act;
(vii) The Bank Assignment Agreement has been duly authorized,
executed and delivered by Sears and, as to Sears, is a valid
and binding instrument enforceable in accordance with its
terms, except as the foregoing may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws now or
hereafter in effect relating to creditors' rights generally,
general principles of equity (whether considered in a
proceeding at law or in equity) or the discretion of the court
before which any proceeding therefor may be brought;
(viii) The Assignment of Additional Funds has been duly authorized,
executed and delivered by the Company and, as to the Company,
is a valid and binding instrument enforceable in accordance
with its terms, except as the foregoing may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar
laws now or hereafter in effect relating to creditors' rights
generally, general principles of equity (whether considered in
a proceeding at law or in equity) or the discretion of the
court before which any proceeding therefor may be brought;
(ix) I do not know of any pending legal or governmental proceedings
required to be described in the Prospectus which are not
described as required;
(x) The documents incorporated by reference in the Prospectus as
amended or supplemented (other than financial, statistical and
accounting data therein, as to which I express no opinion),
when they became effective or were filed with the Commission,
as the case may be, complied as to form in all material
respects with the requirements of the Act or the Exchange Act,
as applicable, and the rules and regulations thereunder;
(xi) The Registration Statement and the Prospectus as amended or
supplemented (excluding the documents incorporated therein)
(other than financial, statistical and accounting data therein
as to which I express no opinion) comply as to form in all
material respects with the requirements of the Act and the
rules and regulations of the Commission thereunder; and
(xii) I do not know of any contract or other document to which the
Company or Sears is a party required to be filed as an exhibit
to the Registration Statement or required to be incorporated
in the Prospectus as amended or supplemented, or required to
be described in the Prospectus as amended or supplemented,
which has not been so filed or described.
With respect to the statements of belief set forth below, I have not
independently verified the accuracy, completeness or fairness of the statements
contained in the Registration Statement or the Prospectus and the limitations
inherent in the examination made by me and the knowledge available to me are
such that I am unable to assume, and I do not assume, any responsibility for the
accuracy, completeness or fairness of any of the statements contained therein. I
confirm, however, that as a result of (1) the examinations made by me, as
described above, and (2) my participation in conferences with representatives of
Sears, the Company and you and your counsel, at which conferences the contents
of the Registration Statement, the Underwriting Agreement and
Page 4
<PAGE> 5
related matters were discussed, nothing has come to my attention which has
caused me to believe that (a) any of the documents referred to in subdivision
(x) above (other than financial, statistical and accounting data therein, as to
which I express no belief), in each case after excluding any statement in any
such document which does not constitute part of the Registration Statement or
the Prospectus as amended or supplemented pursuant to Rule 412 of Regulation C
under the Act and after substituting therefor any statement modifying or
superseding such excluded statement, when they became effective or were filed,
as the case may be, contained, in the case of documents which became effective
under the Act, an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and, in the case of documents which were filed under the
Exchange Act with the Commission, an untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading or (b) the Registration Statement or the Prospectus, as amended or
supplemented (other than financial, statistical and accounting data therein, as
to which I express no belief) contains an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading.
In rendering my opinion, I have assumed that the Bank Assignment
Agreement, the Assignment of Additional Funds, the Pooling and Servicing
Agreement and the Series Supplement have been duly authorized, executed and
delivered by the parties thereto other than the Company and Sears and that the
signatures (other than those on behalf of the Company and Sears) on all
documents examined by me are genuine, assumptions which I have not independently
verified.
This opinion is furnished by me as counsel for the Company and
Sears to Credit Suisse First Boston Corporation as Representative of the several
Underwriters, and is solely for the benefit of the Underwriters, and is not to
be otherwise used, circulated or relied upon without my express written consent,
except that Standard & Poor's, Moody's Investors Service, Inc., Fitch IBCA,
Inc., Duff & Phelps Credit Rating Company and The First National Bank of Chicago
may rely upon each of the foregoing opinions as if such opinions were addressed
to them.
Very truly yours,
/s/ Nancy K. Bellis
--------------------
Nancy K. Bellis
Page 5
