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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): June 2, 1998
Sears Credit Account Master Trust II
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(Exact name of registrant as specified in charter)
Illinois 0-24776 Not Applicable
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(State of (Commission (IRS Employer
Organization) File Number) Identification No.)
c/o SRFG, Inc.
3711 Kennett Pike
Greenville, Delaware 19807
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(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including area code: (302) 888-3176
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Former name or former address, if changed since last report: Not Applicable
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The Exhibit Index appears on Page 4
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Item 5. Other Events
Series 1998-1. On June 2, 1998, $500,000,000 aggregate
principal amount of 5.80% Class A Master Trust Certificates, Series 1998-1,
$35,300,000 aggregate principal amount of 6.00% Class B Master Trust
Certificates, Series 1998-1, and $52,950,000 aggregate principal amount of
Class C Master Trust Certificates, Series 1998-1, of the Sears Credit Account
Master Trust II 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 June 2, 1998, among SRFG as
Seller, Sears as Servicer and the Trustee.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description
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<S> <C>
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
Exhibit 1.2 Underwriting Agreement among Sears, SRFG and Credit Suisse First Boston Corporation as Representative
of the several Underwriters for the Class B Master Trust Certificates, dated May 19, 1998
Exhibit 1.3 Pricing Agreement among Sears, SRFG and Credit Suisse First Boston Corporation on behalf of the
Underwriters for the Class A Master Trust Certificates, dated May 19, 1998.
Exhibit 1.4 Pricing Agreement among Sears, SRFG and Credit Suisse First Boston Corporation on behalf of the
Underwriters for the Class A Master Trust Certificates, dated May 19, 1998.
Exhibit 4.1 Series 1998-1 Supplement among Sears as Servicer, SRFG as Seller and the Trustee, dated June 2, 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 June 2,
1998.
Exhibit 5.1 Opinion of Nancy K. Bellis, Assistant General Counsel--Corporate & Securities and Secretary of Sears,
as counsel to SRFG and Sears
</TABLE>
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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: June 17, 1998 By: /s/ George F. Slook
---------------------------------
George F. Slook
President and CEO
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description
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<S> <C>
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
Exhibit 1.2 Underwriting Agreement among Sears, SRFG and Credit Suisse First Boston Corporation as Representative
of the several Underwriters for the Class B Master Trust Certificates, dated May 19, 1998
Exhibit 1.3 Pricing Agreement among Sears, SRFG and Credit Suisse First Boston Corporation on behalf of the
Underwriters for the Class A Master Trust Certificates, dated May 19, 1998.
Exhibit 1.4 Pricing Agreement among Sears, SRFG and Credit Suisse First Boston Corporation on behalf of the
Underwriters for the Class A Master Trust Certificates, dated May 19, 1998.
Exhibit 4.1 Series 1998-1 Supplement among Sears as Servicer, SRFG as Seller and the Trustee, dated June 2, 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 June 2,
1998.
Exhibit 5.1 Opinion of Nancy K. Bellis, Assistant General Counsel--Corporate & Securities and Secretary of Sears,
as counsel to SRFG and Sears
</TABLE>
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EXHIBIT 1.1
SEARS CREDIT ACCOUNT MASTER TRUST II
Master Trust Certificates
Underwriting Agreement
May 19, 1998
Credit Suisse First Boston Corporation
55 East 52nd Street
New York, New York 10055-0186
As Representative of the several Underwriters
Ladies and Gentlemen:
SRFG, Inc. (formerly known as Sears Receivables Financing Group, Inc.)
(the "Company"), as originator of Sears Credit Account Master Trust II (the
"Trust") and holder of the Seller Certificate, proposes, subject to the terms
and conditions stated herein, to cause to be issued and sold from time to time
certain of the Master Trust Certificates registered under the registration
statement referred to in Section 2(a) (the "Securities"). The Company intends to
enter into one or more Pricing Agreements (each a "Pricing Agreement") in the
form attached hereto, with such additions and deletions as the parties thereto
may determine, and, subject to the terms and conditions stated herein and
therein, to issue and sell to the firms named in Schedule I to the applicable
Pricing Agreement (such firms constituting the "Underwriters" with respect to
such Pricing Agreement and the securities specified therein) the Securities
specified in such Pricing Agreement (with respect to such Pricing Agreement, the
"Designated Securities"). The Designated Securities will be issued by the Trust
pursuant to a Pooling and Servicing Agreement, dated as of July 31, 1994, as
amended (the "Pooling and Servicing Agreement"), as supplemented by a Series
Supplement (the "Series Supplement") relating to the specific series of
Certificates issued thereunder, by and among the Company as Seller, Sears,
Roebuck and Co. ("Sears") as Servicer and The First National Bank of Chicago as
Trustee (the "Trustee"). 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, as the case may be.
1. Particular sales of Designated Securities may be made from time to
time to the Underwriters of such Securities, for whom you will act as
representatives. This Underwriting Agreement shall not be construed as an
obligation of the Company to sell or cause to be sold any of the Securities or
as an obligation of any of the Underwriters to purchase the Securities. The
obligation of the Company to cause to be issued and sold any of the Securities
and the obligation of any of the Underwriters to purchase any of the Securities
shall be evidenced by the Pricing Agreement with respect to the Designated
Securities specified therein. Each Pricing Agreement shall specify the initial
principal amount of such Designated Securities, the public offering price of
such Designated Securities or the method by which the price at which such
Securities will be sold will be determined, the purchase price to the
Underwriters of such Designated Securities, the names of the Underwriters of
such Designated Securities and the principal amount of such
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Designated Securities to be purchased by each Underwriter and shall set forth
the date, time and manner of delivery of such Designated Securities and payment
therefor. The Pricing Agreement shall also describe, in a manner consistent with
the Pooling and Servicing Agreement, the Series Supplement relating to the
Designated Securities, and the registration statement and prospectus with
respect thereto, the principal terms of such Designated Securities. A Pricing
Agreement shall be in the form of an executed writing (which may be in
counterparts), and may be evidenced by an exchange of telegraphic communications
or any other rapid transmission device designed to produce a written record of
communications transmitted. The obligations of the Underwriters under this
Agreement and each Pricing Agreement shall be several and not joint.
2. The Company represents and warrants to, and agrees with, each of the
Underwriters that:
(a) A registration statement in respect of the Securities has been
filed with the Securities and Exchange Commission (the "Commission"); such
registration statement and any post-effective amendment thereto, each in the
form heretofore delivered or to be delivered to you, excluding exhibits to such
registration statement, but including all documents incorporated by reference in
the prospectus included therein, to you for each of the other Underwriters have
been declared effective by the Commission in such form (any preliminary
prospectus included in such registration statement being hereinafter called a
"Preliminary Prospectus"; the various parts of such registration statement,
including all exhibits thereto, each as amended at the time such part became
effective, being hereinafter collectively called the "Registration Statement";
the prospectus relating to the Securities, in the form in which it has most
recently been filed with the Commission on or prior to the date of this
Agreement, being hereinafter called the "Prospectus"; any reference herein to
any Preliminary Prospectus or the Prospectus shall be deemed to include the
documents, if any, incorporated by reference therein pursuant to the applicable
form under the Securities Act of 1933, as amended (the "Act"), as of the date of
such Preliminary Prospectus or Prospectus, as the case may be; any reference to
any amendment or supplement to any Preliminary Prospectus or the Prospectus
shall be deemed to include any documents filed after the date of such
Preliminary Prospectus or Prospectus, as the case may be, under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and so incorporated by
reference; and any reference to the Prospectus as amended or supplemented shall
be deemed to refer to the Prospectus as amended or supplemented in relation to
the applicable Designated Securities in the form in which it is first filed with
the Commission pursuant to Rule 424(b) of Regulation C under the Act, including
any documents incorporated by reference therein as of the date of such filing);
(b) Except for statements in such documents which do not constitute
part of the Registration Statement or the Prospectus pursuant to Rule 412 of
Regulation C under the Act and after substituting therefor any statements
modifying or superseding such excluded statements (i) the documents incorporated
by reference in the Prospectus, when they became effective or were filed with
the Commission, as the case may be, conformed in all material respects to the
requirements of the Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder, and none of such documents, when they
became effective or were so filed, as the case may be, contained, in the case of
documents which became
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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, and (ii) any further documents so filed and incorporated
by reference when they become effective or are filed with the Commission, as the
case may be, will conform in all material respects to the requirements of the
Act or the Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder and will not contain, in the case of documents which
become effective under the Act, an untrue statement of a material fact or omit
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 are filed
under the Exchange Act with the Commission, an untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading; provided, however, that this representation and warranty shall not
apply to any statements or omissions made in reliance upon and in conformity
with information furnished in writing to the Company by an Underwriter of
Designated Securities through you expressly for use therein;
(c) Except for statements in documents incorporated therein by
reference which do not constitute part of the Registration Statement or the
Prospectus pursuant to Rule 412 of Regulation C under the Act and after
substituting therefor any statements modifying or superseding such excluded
statements, the Registration Statement and the Prospectus conformed, and any
amendments or supplements thereto will, when they become effective or are filed
with the Commission, as the case may be, conform, in all material respects to
the requirements of the Act and the rules and regulations of the Commission
thereunder and did not, and will not, as of the applicable effective date as to
the Registration Statement and as of the applicable filing date as to the
Prospectus, contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by an
Underwriter of Designated Securities through you expressly for use in the
Prospectus as amended or supplemented relating to such Securities.
(d) Upon payment therefor as provided herein and in the Pricing
Agreement relating to Designated Securities, such Designated Securities will
have been duly and validly authorized and (assuming their due authentication by
the Trustee) will have been duly and validly issued, and will be entitled to the
benefits of the Pooling and Servicing Agreement and the Series Supplement.
(e) The issue and sale of the Designated Securities pursuant to any
Pricing Agreement and the compliance by the Company with all of the provisions
of the Designated Securities, the Pooling and Servicing Agreement, the Series
Supplement, the First Amended and Restated Purchase Agreement dated as of July
31, 1994, as amended (the "Purchase Agreement"), by and between the Company and
Sears, the First Amended and Restated Contribution Agreement dated as of July
31, 1994 (the "Contribution Agreement"), by and
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between the Company and Sears, the Receivables Warehouse Agreement dated as of
December 21, 1995 (the "Receivables Warehouse Agreement"), by and between the
Company and Sears, this Agreement, the Assignment of Additional Funds, dated as
of January 30, 1998, between the Company and the Trustee (the "Assignment of
Additional Funds") and such Pricing Agreement will not (i) 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 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 may be bound or
to which any of the property or assets of the Company, material to the Company,
is subject, (ii) result in any violation of the provisions of the Certificate of
Incorporation or By-Laws of the Company or, (iii) to the best of the Company's
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.
(f) 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 the Company is required for the issue
and sale of the Securities except as may be required under the Act, the Exchange
Act, and securities laws of the various states and other jurisdictions which are
applicable to the issue and sale of the Designated Securities and except for the
filing of any financing or continuation statement required to perfect or
continue the Trust's and the Company's respective interests in the Receivables.
(g) The compliance by Sears with all of the provisions of the
Pooling and Servicing Agreement, the Series Supplement, the Assignment of
Accounts and Sale of Receivables Agreement, dated as of September 15, 1994, as
amended between Sears National Bank (the "Bank") and Sears (the "Bank Assignment
Agreement"), the Purchase Agreement, the Contribution Agreement, the Receivables
Warehouse Agreement and this Agreement will not (i) conflict with or result in
any breach which would constitute a material default under, or, except as
contemplated by the Pooling and Servicing Agreement, the Series Supplement, the
Bank Assignment Agreement, the Purchase Agreement and the Contribution
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 to which Sears and the
Company, Sears Roebuck Acceptance Corp., Sears DC Corp., Sears National Bank or
Sears Overseas Finance N.V. (collectively, the "Designated Subsidiaries") is a
party or by which Sears or any Designated Subsidiary may be bound or to which
any of the property or assets of Sears or any Designated Subsidiary, material to
Sears and its subsidiaries (whether or not consolidated) considered as a whole,
is subject, (ii) result in any violation of the provisions of the Restated
Certificate of Incorporation, as amended, or the By-Laws of Sears or, (iii) to
the best of the Company's knowledge, result in any material violation of any
statute or any order, rule or regulation
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applicable to Sears of any court or any Federal, State or other regulatory
authority or other governmental body having jurisdiction over Sears;
(h) The Principal Receivables conveyed by the Company to the Trust
under the Pooling and Servicing Agreement had an aggregate outstanding balance
determined as of the date set forth in the Pricing Agreement of not less than
the amount set forth in the Pricing Agreement; and
(i) The Pooling and Servicing Agreement is not required to be
qualified under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"), and the Trust is not required to be registered under the
Investment Company Act of 1940, as amended (the "Investment Company Act").
3. Subject to the terms and conditions herein set forth, the Company
agrees to cause to be issued and sold to each of the Underwriters, and each of
the Underwriters agrees, severally and not jointly, to purchase from the
Company, at the purchase price specified in the Pricing Agreement applicable to
any Designated Securities, the principal amount of Designated Securities set
forth in such Pricing Agreement.
4. (a) Upon the execution of the Pricing Agreement applicable to any
Designated Securities and the authorization by you of the release of the
Designated Securities, the several Underwriters propose to offer the Designated
Securities for sale upon the terms and conditions set forth in the Prospectus as
amended or supplemented.
(b) Each Underwriter represents and agrees that it will not offer or
sell or deliver any of the Securities in any jurisdiction except under
circumstances that will result in compliance with the applicable laws thereof.
(c) Each Underwriter represents and agrees that it will not, at any
time that such Underwriter is acting as an "underwriter" (as defined in Section
2(11) of the Act) with respect to any Designated Securities, transfer, deposit
or otherwise convey any such Designated Securities into a trust or other type of
special purpose vehicle that issues securities or other instruments backed in
whole or in part by, or that represents interests in, such Designated Securities
without the prior written consent of the Company.
5. Unless otherwise specified in the Pricing Agreement, Designated
Securities to be purchased by each Underwriter pursuant to the Pricing Agreement
relating thereto shall be delivered by or on behalf of the Company to you for
the account of such Underwriter, against payment by such Underwriter or on its
behalf of the purchase price thereof by wire transfer to such account as the
Company may designate of federal or other immediately available funds. The
place, time and date of such delivery shall be set forth in the Pricing
Agreement or at such other place, time and date as you and the Company may agree
upon in writing, such time and date being herein called the "Time of Delivery."
Unless otherwise specified in the Pricing Agreement, the Securities shall be
represented by definitive certificates registered in the name of Cede & Co., as
nominee for The Depository Trust Company. Such definitive certificates will be
made available
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for inspection at least twenty-four hours prior to the Time of Delivery at the
office of The First National Bank of Chicago, One North State Street, 9th Floor,
Chicago, Illinois 60602.
6. The Company agrees with each of the Underwriters of Designated
Securities:
(a) Immediately following the execution of each Pricing Agreement,
the Company will prepare a Prospectus Supplement setting forth the amount of
Securities covered thereby and the terms thereof not otherwise specified in the
Prospectus, the price at which such Securities are to be purchased by the
Underwriters from the Company, either the initial public offering price or the
method by which the price at which such Securities are to be sold will be
determined, the selling concessions and allowances, if any, and such other
information as the Company deems appropriate in connection with the offering of
such Securities, and after the date of the Pricing Agreement relating to such
Securities and prior to the Time of Delivery for such Securities the Company
will not make any further amendment or any supplement to the Registration
Statement or Prospectus as amended or supplemented without first having
furnished you with a copy of the proposed form thereof and given you a
reasonable opportunity to review the same; to advise you promptly of any such
amendment or supplement after such Time of Delivery and to furnish you with
copies thereof for so long as the delivery of a prospectus is required in
connection with the offering or sale of such Securities; and during such same
period to advise you, promptly after it receives notice thereof, of the time
when the Registration Statement, or any amendment thereto, or any amended
Registration Statement has become effective or any supplement to the Prospectus
or any amended Prospectus has been filed, of the issuance by the Commission of
any stop order or of any order preventing or suspending the use of any
Prospectus, or the suspension of the qualification of such Securities for
offering or sale in any jurisdiction, or the initiation or threatening of any
proceeding for any such purpose, or of any request by the Commission for the
amending or supplementing of the Registration Statement or Prospectus or for
additional information; and in the event of the issuance of any such stop order
or of any such order preventing or suspending the use of any such Prospectus or
suspending any such qualification, to use promptly its best efforts to obtain
its withdrawal;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Securities for offering and sale under the
securities laws of such jurisdictions as you may request and to comply with such
laws so as to permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the distribution of
such Securities, provided, that in connection therewith the Company shall not be
required to qualify as a foreign corporation or to file a general consent to
service of process in any jurisdiction;
(c) To furnish the Underwriters with copies of the Prospectus as
amended or supplemented in such quantities as you may from time to time
reasonably request and if at any time the delivery of a prospectus is required
by law in connection with the offering or sale of such Securities and if at such
time any event shall have occurred as a result of which the Prospectus as
amended or supplemented would include an untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein, in the light of the
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circumstances under which they were made when such Prospectus is delivered, not
misleading, or, if for any other reason it shall be necessary during such same
period to amend or supplement the Prospectus in order to comply with the Act, to
notify you and to prepare and furnish without charge to each Underwriter and to
any dealer in securities as many copies as you may from time to time reasonably
request of an amended Prospectus or a supplement to the Prospectus which will
correct such statement or omission or effect such compliance and in case any
Underwriter is required to deliver a prospectus in connection with sales of any
Securities at any time nine months or more after the effective date of the
Registration Statement, upon your request but at the expense of such
Underwriter, to prepare and deliver to such Underwriter as many copies as you
may request of an amended or supplemented Prospectus complying with Section
10(a)(3) of the Act;
(d) To cause the Trust to make generally available to holders of the
Securities, in accordance with Rule 158 under the Act or otherwise, as soon as
practicable, but in any event not later than forty-five days after the end of
the fourth full fiscal quarter (ninety days in the case of the last fiscal
quarter in any fiscal year) following the fiscal quarter ending after the
effective date of the Registration Statement, an earning statement of the Trust
(which need not be audited) complying with Section 11(a) of the Act and covering
a period of at least twelve consecutive months beginning after the effective
date of such Registration Statement;
(e) To pay or cause to be paid all expenses incident to the
performance of its obligations hereunder, including the cost of all
qualifications of the Securities under state securities laws (including
reasonable fees of counsel to the Underwriters in connection with such
qualifications and in connection with legal investment surveys) and the cost of
printing this Agreement and any blue sky and legal investment memoranda.
The Company and Sears agree with each of the Underwriters during the
period beginning from the date of the Pricing Agreement and continuing to and
including the earlier of (i) the termination of trading restrictions on the
Designated Securities, of which termination you agree to give the Company prompt
notice confirmed in writing, and (ii) the Time of Delivery, not to offer, sell,
contract to sell or otherwise dispose of any securities of the Company or any
other subsidiary of Sears, or any other trust for which the Company or any other
subsidiary of Sears is depositor, which represent participation interests in
receivables arising under open end credit plans offered by Sears, without your
prior written consent, which consent shall not be unreasonably withheld.
7. The obligations of the several Underwriters hereunder and under the
Pricing Agreement relating to Designated Securities shall be subject, in their
discretion, to the condition that all representations and warranties and other
statements of the Company herein are, at and as of the Time of Delivery for such
Designated Securities, true and correct, the condition that the Company shall
have performed all of its obligations hereunder theretofore to be performed, and
the following additional conditions:
(a) No stop order suspending the effectiveness of the Registration
Statement or any part thereof shall have been issued and no proceeding for that
purpose shall have
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been initiated or threatened by the Commission; and all requests for additional
information on the part of the Commission shall have been complied with to your
reasonable satisfaction;
(b) All corporate proceedings and related matters in connection with
the organization of the Company, the validity of the Bank Assignment 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 and the registration, authorization, issue,
sale and delivery of the Designated Securities shall have been satisfactory to
counsel to the Underwriters, and such counsel shall have been furnished with
such papers and information as they may reasonably have requested to enable them
to pass upon the matters referred to in this subdivision (b);
(c) Counsel to the Company shall have furnished to you such
counsel's written opinion, dated the Time of Delivery, in form and substance
satisfactory to you in your reasonable judgment, to the effect that:
(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) This Agreement and the Pricing Agreement have been duly
authorized, executed and delivered on the part of the Company and Sears;
(iii) The issue and sale of the Designated Securities and the
compliance by the Company with all of the provisions of the Designated
Securities, this 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 such counsel 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 knowledge of
such counsel, 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, other than the Act, the Exchange Act, the
Trust Indenture Act and the Investment Company Act and the rules and
regulations under each such act and other than the securities laws of the
various states or other jurisdictions which are applicable to the issue and
sale of the Securities and other than state laws pertaining to the
perfection of security interests;
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(iv) To the best knowledge of such counsel, 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
Contribution Agreement, the Assignment of Additional Funds and the
Receivables Warehouse Agreement or for the issue and sale of the Securities
except as may be required under the Act, the Exchange Act, the Trust
Indenture Act and the Investment Company Act and securities laws of the
various states or other jurisdictions which are applicable to the issue and
sale of the Securities and except for the filing of any financing or
continuation statement required to perfect the respective interests of the
Trust, the Company and Sears in the Receivables;
(v) The compliance by Sears with all of the provisions of this
Agreement, the Bank Assignment 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 such counsel to which Sears or any Designated Subsidiary is
a party or by which Sears or any Designated Subsidiary may be bound or to
which any of the property or assets of Sears or any Designated Subsidiary,
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 knowledge of such counsel, 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, other than the Act,
the Exchange Act, the Trust Indenture Act and the Investment Company Act
and the rules and regulations under each such act and other than the
securities laws of the various states or other jurisdictions which are
applicable to the issue and sale of the Securities and other than state
laws pertaining to the perfection of security interests;
(vi) 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 or general
principles of equity (whether considered in a proceeding at law or in
equity) and the discretion of the court before
9
<PAGE> 10
which any proceeding therefor may be brought; the Pooling and Servicing
Agreement is not required to be qualified under the Trust Indenture Act;
the Trust is not required to be registered under the Investment Company
Act; and the Securities 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 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;
(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 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;
(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 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;
(ix) Such counsel does 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 such counsel need 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 of
the Commission thereunder;
(xi) The Registration Statement and the Prospectus as amended or
supplemented (excluding the documents incorporated by reference therein)
(other than financial, statistical and accounting data therein as to which
such counsel need express no opinion) comply as to form in all material
respects with the requirements of the Act and the rules and regulations
thereunder; and
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<PAGE> 11
(xii) Such counsel does 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.
In rendering such opinion, such counsel may rely to the extent such
counsel deems appropriate upon certificates of officers or other executives of
the Company or Sears, its business groups and its subsidiaries and of public
officials as to factual matters and upon opinions of other counsel. Such counsel
shall also state that: (a) nothing has come to such counsel's attention which
has caused such counsel to believe that any of the documents referred to in
subdivision (ix) above (other than financial, statistical and accounting data
therein, as to which such counsel need 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, and (b) nothing has come to such counsel's attention which
has caused such counsel to believe that the Registration Statement or the
Prospectus as amended or supplemented (other than financial, statistical and
accounting data therein, as to which such counsel need 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;
(d) Counsel to the Bank shall have furnished to you such counsel's
written opinion, dated the Time of Delivery, in form and substance satisfactory
to you in your reasonable judgment, to the effect that:
(i) The Bank has been duly incorporated and is validly existing
as a national banking association in good standing under the laws of the
United States of America;
(ii) The compliance by the Bank with all of the provisions of
the Bank Assignment Agreement will not (a) conflict with or result in any
breach which would constitute a material default, or except for that
created by the Bank Assignment Agreement, result in the creation or
imposition of any lien, charge or encumbrance upon any of the property or
assets of the Bank, material to the Bank, pursuant to the terms of, any
indenture, loan agreement or other agreement or instrument for borrowed
money known to such counsel to which the Bank is a party, or by which the
Bank may be bound, or to which any of the property or assets of the Bank,
material to the Bank, is subject, (b) result in any violation of the
provisions of the Articles of Association or the By-Laws of
11
<PAGE> 12
the Bank, or (c) to the best knowledge of such counsel, result in any
material violation of any statute or any order, rule or regulation
applicable to the Bank of any court or any Federal, State or other
regulatory authority or other governmental body having jurisdiction over
the Bank;
(iii) To the best knowledge of such counsel, 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 the Bank, which has not already been made or
obtained, is required for the consummation of the transactions contemplated
by the Bank Assignment Agreement, except for the filing of any financing or
continuation statement required to perfect the interest of Sears in the
Receivables; and
(iv) The Bank Assignment Agreement has been duly authorized,
executed and delivered on the part of the Bank and, as to the Bank, 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.
In rendering such opinion, such counsel may rely to the extent such
counsel deems appropriate upon certificates of officers or other executives of
the Company or Sears, its business groups and its subsidiaries and of public
officials as to factual matters and upon opinions of other counsel.
(e) At the Time of Delivery for such Designated Securities, Deloitte
& Touche LLP shall have furnished to you a letter or letters, dated the
respective date of delivery thereof, in form and substance satisfactory to you
as to such matters as you may reasonably request;
(f) (i) Sears and its subsidiaries (whether or not consolidated)
considered as a whole, shall not have sustained, since the date of the latest
audited financial statement previously delivered to you, any material loss or
interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree and (ii) since the date of the Pricing
Agreement there shall not have been any material change in the capital stock
accounts or long-term debt of Sears or any material adverse change in the
general affairs, financial position, shareholders' equity or results of
operations of Sears and its subsidiaries (whether or not consolidated)
considered as a whole, the effect of which in any such case described in clause
(i) or (ii), in your judgment makes it impracticable or inadvisable to proceed
with the public offering or the delivery of the Designated Securities on the
terms and in the manner contemplated in the Prospectus as amended or
supplemented;
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<PAGE> 13
(g) Subsequent to the date of the Pricing Agreement relating to such
Designated Securities, no downgrading shall have occurred in the rating accorded
to Sears senior debt securities by Moody's Investors Service, Inc. ("Moody's")
or Standard & Poor's Ratings Services ("Standard & Poor's"); provided, however,
that this subdivision (g) shall not apply to any such rating agencies which
shall have notified you of the rating of the Designated Securities prior to the
execution of the Pricing Agreement;
(h) Subsequent to the date of the Pricing Agreement relating to such
Designated Securities neither (i) the United States shall have become engaged in
the outbreak or escalation of hostilities involving the United States or there
has been a declaration by the United States of a national emergency or a
declaration of war, (ii) a banking moratorium shall have been declared by either
Federal or New York State authorities, nor (iii) trading in securities generally
on the New York Stock Exchange shall have been suspended or limited or minimum
prices shall have been established by such Exchange, any of which events, in
your judgment, renders it inadvisable to proceed with the public offering or the
delivery of the Designated Securities;
(i) At or prior to the Time of Delivery, the Certificates shall be
assigned the ratings by Moody's and Standard & Poor's set forth in the Pricing
Agreement;
(j) The Company shall have furnished or caused to be furnished to
you at the Time of Delivery for the Designated Securities certificates
satisfactory to you as to the accuracy at and as of such Time of Delivery of the
representations, warranties and agreements of the Company herein and as to the
performance by the Company of all its obligations hereunder to be performed at
or prior to such Time of Delivery and the Company shall have also furnished you
similar certificates satisfactory to you as to the matters set forth in
subdivision (a) of this Section 7; and
(k) Counsel to the Company shall have furnished to the Underwriters
a letter stating that the Underwriters may rely on the opinions of such counsel
to the Company as delivered to Moody's and Standard & Poor's in connection with
the rating of the Securities.
8. (a) The Company and Sears will jointly and severally indemnify and
hold harmless each Underwriter against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement, any prospectus relating to
the Securities or the Prospectus as amended or supplemented, or any amendment or
supplement thereto furnished by the Company, or arise out of or are based upon
the omission or alleged omission to state therein a material fact required to be
stated therein or (in the case of the Registration Statement or the Prospectus
as amended or supplemented, or any amendment or supplement thereto) necessary to
make the statements therein not misleading or (in the case of any Preliminary
Prospectus) necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and will reimburse
each Underwriter for any legal or other expenses reasonably incurred by such
Underwriter in connection with investigating or defending any such
13
<PAGE> 14
action or claim; provided, however, that neither the Company nor Sears shall be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in any Preliminary Prospectus,
the Registration Statement, the Prospectus or the Prospectus as amended or
supplemented or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
of Designated Securities through you expressly for use in the Prospectus as
amended or supplemented relating to such Securities; and provided, further, that
neither the Company nor Sears shall be liable to any Underwriter or any person
controlling such Underwriter under the indemnity agreement in this subdivision
(a) with respect to the Preliminary Prospectus or the Prospectus or the
Prospectus as amended or supplemented, as the case may be, to the extent that
any such loss, claim, damage or liability of such Underwriter or controlling
person results solely from the fact that such Underwriter sold Designated
Securities to a person to whom there was not sent or given, at or prior to the
written confirmation of such sale, a copy of the Prospectus (excluding documents
incorporated by reference) or of the Prospectus as then amended or supplemented
(excluding documents incorporated by reference) if the Company has previously
furnished copies thereof to such Underwriter.
(b) Each Underwriter will indemnify and hold harmless the Company
and Sears against any losses, claims, damages or liabilities to which the
Company or Sears may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement, the Prospectus, or the Prospectus as amended or supplemented, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or (in the case of the Registration Statement or the Prospectus or the
Prospectus as amended or supplemented, or any amendment or supplement thereto)
necessary to make the statements therein not misleading or (in the case of any
Preliminary Prospectus) necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading in each case to
the extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in any Preliminary
Prospectus, the Registration Statement, the Prospectus, or the Prospectus as
amended or supplemented, or any such amendment or supplement in reliance upon
and in conformity with written information furnished to the Company by such
Underwriter through you expressly for use therein; and will reimburse the
Company for any legal or other expenses reasonably incurred by the Company in
connection with investigating or defending any such action or claim.
(c) Within a reasonable period after receipt by an indemnified party
under subdivision (a) or (b) above of notice of the commencement of any action
with respect to which indemnification is sought under such subdivision or
contribution may be sought under subdivision (d) below, such indemnified party
shall notify the indemnifying party in writing of the commencement thereof. In
case any such action shall be brought against any indemnified party, the
indemnifying party shall be entitled to participate in, and, to the extent that
it shall wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel satisfactory to such indemnified party,
and after notice from the indemnifying party to such
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<PAGE> 15
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party for any legal
or other expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation.
(d) If the indemnification provided for in this Section 8 is
unavailable to an indemnified party under subdivision (a) or (b) above in
respect of any losses, claims, damages or liabilities (or actions in respect
thereof) referred to therein, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriters of the Designated Securities on the
other from the offering of the Designated Securities to which such loss, claim,
damage or liability (or actions in respect thereof) relates and also the
relative fault of the Company on the one hand and the Underwriters of the
Designated Securities on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and such Underwriters on the other shall be deemed to be in the same proportion
as the total net proceeds from the offering of such securities (before deducting
expenses) received by the Company bear to the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth on the cover
page of the Prospectus as amended or supplemented. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company on the one hand
or the Underwriters on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission of the Company on the one hand or the Underwriters, directly or through
you, on the other hand. With respect to any Underwriter, such relative fault
shall also be determined by reference to the extent (if any) to which such
losses, claims, damages or liabilities (or actions in respect thereof) with
respect to any Preliminary Prospectus result from the fact that such Underwriter
sold Designated Securities to a person to whom there was not sent or given, at
or prior to the written confirmation of such sale, a copy of the Prospectus
(excluding documents incorporated by reference) or of the Prospectus as then
amended or supplemented (excluding documents incorporated by reference) if the
Company has previously furnished copies thereof to such Underwriter. The
Company, Sears and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this subdivision (d) were determined by
per capita allocation among the indemnifying parties (even if the Underwriters
were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this subdivision (d). The amount paid or payable by an indemnified
party as a result of the losses, claims, damages or liabilities (or actions in
respect thereof) referred to above in this subdivision (d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subdivision (d), no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the applicable Designated Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such Underwriter has
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<PAGE> 16
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The obligations of the Underwriters in this subdivision (d)
to contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) The obligations of the Company and Sears under this Section 8
shall be in addition to any liability which the Company and Sears may otherwise
have and shall extend, upon the same terms and conditions, to each person, if
any, who controls any Underwriter within the meaning of the Act; and the
obligations of the Underwriters under this Section 8 shall be in addition to any
liability which the respective Underwriters may otherwise have and shall extend,
upon the same terms and conditions, to each officer and director of the Company
and to each person, if any, who controls the Company within the meaning of the
Act.
9. (a) If any Underwriter shall default in its obligation to purchase
the Designated Securities which it has agreed to purchase hereunder and under
the Pricing Agreement relating to such Designated Securities, you may in your
discretion arrange for yourselves or another party or other parties to purchase
such Designated Securities on the terms contained herein. If within thirty-six
hours after such default by any Underwriter you do not arrange for the purchase
of such Designated Securities, then the Company shall be entitled to a further
period of thirty-six hours within which to procure another party or other
parties to purchase such Designated Securities on such terms. In the event that,
within the respective prescribed periods, you notify the Company that you have
so arranged for the purchase of such Designated Securities, or the Company
notifies you that it has so arranged for the purchase of such Designated
Securities, you or the Company shall have the right to postpone the Time of
Delivery for such Designated Securities for a period of not more than seven
days, in order to effect whatever changes may thereby be made necessary in the
Registration Statement or the Prospectus as amended or supplemented, or in any
other documents or arrangements, and the Company agrees to file promptly any
amendments or supplements to the Registration Statement or the Prospectus which
may thereby be made necessary. The term "Underwriter" as used in this Agreement
shall include any person substituted under this Section with like effect as if
such person had originally been a party to this Agreement with respect to such
Designated Securities.
(b) If, after giving effect to any arrangements for the purchase of
the Designated Securities of a defaulting Underwriter or Underwriters by you and
the Company as provided in subdivision (a) above, the aggregate principal amount
of such Designated Securities which remains unpurchased does not exceed
one-eleventh of the aggregate principal amount of the Designated Securities,
then the Company shall have the right to require each non-defaulting Underwriter
to purchase the principal amount of Securities which such Underwriter agreed to
purchase hereunder and under the Pricing Agreement relating to such Designated
Securities and, in addition, to require each non-defaulting Underwriter to
purchase its pro rata share (based on the principal amount of the Designated
Securities which such Underwriter agreed to purchase hereunder and under such
Pricing Agreement) of the Designated Securities of such defaulting Underwriter
or Underwriters for which such arrangements have not been made; but nothing
herein shall relieve a defaulting Underwriter from liability for its default.
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<PAGE> 17
(c) If, after giving effect to any arrangements for the purchase of
the Designated Securities of a defaulting Underwriter or Underwriters by you and
the Company as provided in subdivision (a) above, the aggregate principal amount
of Designated Securities which remains unpurchased exceeds one-eleventh of the
aggregate principal amount of the Designated Securities, as referred to in
subdivision (b) above, or if the Company shall not exercise the right described
in subdivision (b) above to require non-defaulting Underwriters to purchase
Designated Securities of a defaulting Underwriter or Underwriters, then the
Pricing Agreement relating to such Designated Securities shall thereupon
terminate, without liability on the part of any non-defaulting Underwriter or
the Company, except for the expenses to be borne by the Company and the
Underwriters as provided in Section 6(e) hereof and the indemnity and
contribution agreements in Section 8 hereof; but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company, Sears and the several Underwriters, as set
forth in this Agreement or made by or on behalf of them, respectively, pursuant
to this Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Underwriter or any controlling person of any Underwriter, or the Company,
or any officer or director or controlling person of the Company, and shall
survive delivery of and payment for the Securities.
Anything herein to the contrary notwithstanding, the indemnity
agreement of the Company and Sears in subdivisions (a) and (e) of Section 8
hereof, the representations and warranties in subdivisions (b) and (c) of
Section 2 hereof and any representation or warranty as to the accuracy of the
Registration Statement or the Prospectus as amended or supplemented contained in
any certificate furnished by the Company pursuant to subdivision (i) of Section
7 hereof, insofar as they may constitute a basis for indemnification for
liabilities (other than payment by the Company and Sears of expenses incurred or
paid in the successful defense of any action, suit or proceeding) arising under
the Act, shall not extend to the extent of any interest therein of an
Underwriter or a controlling person of an Underwriter if a director, officer or
controlling person of the Company when the Registration Statement becomes
effective or a person who, with his consent, is named in the Registration
Statement as being about to become a director of the Company, is a controlling
person of such Underwriter, except in each case to the extent that an interest
of such character shall have been determined by a court of appropriate
jurisdiction as not against public policy as expressed in the Act. Unless in the
opinion of counsel for the Company and Sears the matter has been settled by
controlling precedent, the Company and Sears will, if a claim for such
indemnification is asserted, submit to a court of appropriate jurisdiction the
question whether such interest is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
11. If any Pricing Agreement shall be terminated pursuant to Section 9
hereof, the Company shall not then be under any liability to any Underwriter
with respect to the Designated Securities covered by such Pricing Agreement
except as provided in Section 6(e) and Section 8 hereof; but, if for any other
reason any Designated Securities are not delivered by or on
17
<PAGE> 18
behalf of the Company as provided herein, the Company and Sears will reimburse
the Underwriters through you for all out-of-pocket expenses approved in writing
by you, including fees and disbursements of counsel, reasonably incurred by the
Underwriters in making preparations for the purchase, sale and delivery of such
Designated Securities, but neither the Company nor Sears shall then be under any
further liability to any Underwriter with respect to such Designated Securities
except as provided in Section 6(e) and Section 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Underwriters of Designated Securities, and the parties hereto shall be entitled
to act and rely upon any statement, request, notice or agreement on behalf of
any Underwriter made or given by you.
All statements, requests, notices and agreements hereunder shall be in
writing or by telegram or facsimile transmission if promptly confirmed in
writing and if to the Underwriters shall be sufficient in all respects, if
delivered or sent by registered mail to the representative of the Underwriters
named in the Pricing Agreement at the address named therein; and if to the
Company or Sears shall be sufficient in all respects if delivered or sent by
registered mail to the Company at 3711 Kennett Pike, Greenville, Delaware 19807,
Attention: Secretary.
13. This Agreement and each Pricing Agreement shall be binding upon,
and inure solely to the benefit of, the Underwriters, Sears, the Company and, to
the extent provided in Section 8 and Section 10 hereof, the officers and
directors of the Company and each person who controls the Company or any
Underwriter, and their respective heirs, executors, administrators, successors
and assigns, and no other person shall acquire or have any right under or by
virtue of this Agreement or any such Pricing Agreement. No purchaser of any of
the Securities from any Underwriter shall be deemed a successor or assign by
reason merely of such purchase.
14. Time shall be of the essence of this Agreement and each Pricing
Agreement.
15. This Agreement and each Pricing Agreement shall be construed in
accordance with the laws of the State of New York. In the event of any conflict
between this Agreement and the Pricing Agreement, the Pricing Agreement shall
govern.
16. This Agreement and each Pricing Agreement may be executed by any
one or more of the parties hereto and thereto in any number of counterparts,
each of which shall be deemed to be an original, but all such respective
counterparts shall together constitute one and the same instrument.
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<PAGE> 19
If the foregoing is in accordance with your understanding, please sign
and return ten counterparts hereof and upon the acceptance hereof by you, on
behalf of each of the Underwriters, this letter and such acceptance hereof shall
constitute a binding agreement between each of the Underwriters and the Company.
Very truly yours,
SRFG, INC.
By: /s/ GEORGE F. SLOOK
-------------------------------
SEARS, ROEBUCK AND CO.
By: /s/ ALICE M. PETERSON
-------------------------------
Accepted as of the date hereof:
Credit Suisse First Boston Corporation
/s/ MICHAEL RAYNES
- - ---------------------------------------
Authorized Signatory
As Representative of the several Underwriters
19
<PAGE> 20
SEARS CREDIT ACCOUNT MASTER TRUST II
MASTER TRUST CERTIFICATES
PRICING AGREEMENT
Dated: _____________, 19__
To: SRFG, Inc., as Seller under the Pooling and Servicing Agreement dated
as of July 31, 1994, as amended.
Re: Underwriting Agreement dated _____________, 19__
Title: Sears Credit Account Master Trust II, $______________ _______ Class
____, Master Trust Certificates, Series ____.
Initial Principal Amount of Certificates: $_______________ [State by Class if
more than one Class]
Class A Expected Final Payment Date: __________________
Class B Expected Final Payment Date: __________________
Series and Class Designation Schedule: [insert relevant description of Series
and Classes of Certificates]
Series Cut-Off Date: The last day of the Due Period ending in _______________
Certificate Rating: [" " by Moody's Investors Service, Inc.]
[" " by Standard and Poor's Ratings Services] [State by
Class if more than one Class]
Aggregate outstanding balance of Principal Receivables as of the last day of the
Due Period ending in ________________.
Date of Series Supplement: ____________, 199_.
Certificate Rate: ____% per annum. [State by Class if more than one Class]
Terms of Sale: The purchase price for the Designated Securities to the
Underwriter[s] will be ____% of the aggregate principal amount of the
Certificates as of __________, 19__, plus accrued interest at the Certificate
Rate from ____________, 19__. [State by Class if more than one Class.]
20
<PAGE> 21
Initial Public Offering Price: The initial public offering price for the
Designated Securities will be ___% of the aggregate principal amount of the
Certificates as of ___________, 199_, plus accrued interest at the Certificate
Rate from _______________, 199_ [State by Class if more than one Class.
Closing Location: [Latham & Watkins, Sears Tower, 58th Floor, Chicago, Illinois
60606]
Time of Delivery: __:__ A.M., New York Time, on ___________, 19__, or at such
other time as may be agreed upon in writing.
Address of Representative of the Underwriters for notices:
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 Series ____-_ Certificates. This Pricing Agreement may
be amended only by written agreement of the parties hereto.
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 Designated Securities [set forth opposite their names in
Schedule 1].
Very truly yours,
[UNDERWRITERS]
By:
By:
-------------------------------------
On behalf of each of the Underwriters
Accepted:
SRFG, INC.
By:
----------------------------------
21
<PAGE> 22
SCHEDULE I
<TABLE>
<CAPTION>
Principal Principal
Amount of Amount of
Class _ Class _
Certificates Certificates
to be to be
Underwriter Purchased Purchased
- - ----------- ------------ ------------
<S> <C> <C>
. . . . . . . . . . . . . . . . . . $ $
. . . . . . . . . . . . . . . . . . $ $
. . . . . . . . . . . . . . . . . . $ $
Total $ $
</TABLE>
22
<PAGE> 1
EXHIBIT 1.2
SEARS CREDIT ACCOUNT MASTER TRUST II
Master Trust Certificates
Underwriting Agreement
May 19, 1998
Credit Suisse First Boston Corporation
55 East 52nd Street
New York, New York 10055-0186
Ladies and Gentlemen:
SRFG, Inc. (formerly known as Sears Receivables Financing Group,
Inc.) (the "Company"), as originator of Sears Credit Account Master Trust II
(the "Trust") and holder of the Seller Certificate, proposes, subject to the
terms and conditions stated herein, to cause to be issued and sold from time to
time certain of the Master Trust Certificates registered under the registration
statement referred to in Section 2(a) (the "Securities"). The Company intends to
enter into one or more Pricing Agreements (each a "Pricing Agreement") in the
form attached hereto, with such additions and deletions as the parties thereto
may determine, and, subject to the terms and conditions stated herein and
therein, to issue and sell to the firm or firms named in Schedule I to the
applicable Pricing Agreement (such firm or firms constituting the "Underwriters"
with respect to such Pricing Agreement and the securities specified therein) the
Securities specified in such Pricing Agreement (with respect to such Pricing
Agreement, the "Designated Securities"). The Designated Securities will be
issued by the Trust pursuant to a Pooling and Servicing Agreement, dated as of
July 31, 1994, as amended (the "Pooling and Servicing Agreement"), as
supplemented by a Series Supplement (the "Series Supplement") relating to the
specific series of Certificates issued thereunder, by and among the Company as
Seller, Sears, Roebuck and Co. ("Sears") as Servicer and The First National Bank
of Chicago as Trustee (the "Trustee"). 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, as the case may be.
1. Particular sales of Designated Securities may be made from time to
time to the Underwriters of such Securities, for whom you will act as
representatives. This Underwriting Agreement shall not be construed as an
obligation of the Company to sell or cause to be sold any of the Securities or
as an obligation of any of the Underwriters to purchase the Securities. The
obligation of the Company to cause to be issued and sold any of the Securities
and the obligation of any of the Underwriters to purchase any of the Securities
shall be evidenced by the Pricing Agreement with respect to the Designated
Securities specified therein. Each Pricing Agreement
<PAGE> 2
shall specify the initial principal amount of such Designated Securities, the
public offering price of such Designated Securities or the method by which the
price at which such Securities will be sold will be determined, the purchase
price to the Underwriters of such Designated Securities, the names of the
Underwriters of such Designated Securities and the principal amount of such
Designated Securities to be purchased by each Underwriter and shall set forth
the date, time and manner of delivery of such Designated Securities and payment
therefor. The Pricing Agreement shall also describe, in a manner consistent with
the Pooling and Servicing Agreement, the Series Supplement relating to the
Designated Securities, and the registration statement and prospectus with
respect thereto, the principal terms of such Designated Securities. A Pricing
Agreement shall be in the form of an executed writing (which may be in
counterparts), and may be evidenced by an exchange of telegraphic communications
or any other rapid transmission device designed to produce a written record of
communications transmitted. The obligations of the Underwriters under this
Agreement and each Pricing Agreement shall be several and not joint.
2. The Company represents and warrants to, and agrees with, each of
the Underwriters that:
(a) A registration statement in respect of the Securities has been
filed with the Securities and Exchange Commission (the "Commission"); such
registration statement and any post-effective amendment thereto, each in the
form heretofore delivered or to be delivered to you, excluding exhibits to such
registration statement, but including all documents incorporated by reference in
the prospectus included therein, to you for each of the other Underwriters have
been declared effective by the Commission in such form (any preliminary
prospectus included in such registration statement being hereinafter called a
"Preliminary Prospectus"; the various parts of such registration statement,
including all exhibits thereto, each as amended at the time such part became
effective, being hereinafter collectively called the "Registration Statement";
the prospectus relating to the Securities, in the form in which it has most
recently been filed with the Commission on or prior to the date of this
Agreement, being hereinafter called the "Prospectus"; any reference herein to
any Preliminary Prospectus or the Prospectus shall be deemed to include the
documents, if any, incorporated by reference therein pursuant to the applicable
form under the Securities Act of 1933, as amended (the "Act"), as of the date of
such Preliminary Prospectus or Prospectus, as the case may be; any reference to
any amendment or supplement to any Preliminary Prospectus or the Prospectus
shall be deemed to include any documents filed after the date of such
Preliminary Prospectus or Prospectus, as the case may be, under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and so incorporated by
reference; and any reference to the Prospectus as amended or supplemented shall
be deemed to refer to the Prospectus as amended or supplemented in relation to
the applicable Designated Securities in the form in which it is first filed with
the Commission pursuant to Rule 424(b) of Regulation C under the Act, including
any documents incorporated by reference therein as of the date of such filing);
(b) Except for statements in such documents which do not
constitute part of the Registration Statement or the Prospectus pursuant to Rule
412 of Regulation C under the Act and after substituting therefor any statements
modifying or superseding such excluded statements (i) the documents incorporated
by reference in the Prospectus, when they became
2
<PAGE> 3
effective or were filed with the Commission, as the case may be, conformed in
all material respects to the requirements of the Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission thereunder, and none
of such documents, when they became effective or were so 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, and (ii) any
further documents so filed and incorporated by reference when they become
effective or are filed with the Commission, as the case may be, will conform in
all material respects to the requirements of the Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission thereunder and will
not contain, in the case of documents which become effective under the Act, an
untrue statement of a material fact or omit 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 are filed under the Exchange Act with the
Commission, an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading; provided, however, that
this representation and warranty shall not apply to any statements or omissions
made in reliance upon and in conformity with information furnished in writing to
the Company by an Underwriter of Designated Securities through you expressly for
use therein;
(c) Except for statements in documents incorporated therein by
reference which do not constitute part of the Registration Statement or the
Prospectus pursuant to Rule 412 of Regulation C under the Act and after
substituting therefor any statements modifying or superseding such excluded
statements, the Registration Statement and the Prospectus conformed, and any
amendments or supplements thereto will, when they become effective or are filed
with the Commission, as the case may be, conform, in all material respects to
the requirements of the Act and the rules and regulations of the Commission
thereunder and did not, and will not, as of the applicable effective date as to
the Registration Statement and as of the applicable filing date as to the
Prospectus, contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by an
Underwriter of Designated Securities through you expressly for use in the
Prospectus as amended or supplemented relating to such Securities.
(d) Upon payment therefor as provided herein and in the Pricing
Agreement relating to Designated Securities, such Designated Securities will
have been duly and validly authorized and (assuming their due authentication by
the Trustee) will have been duly and validly issued, and will be entitled to the
benefits of the Pooling and Servicing Agreement and the Series Supplement.
(e) The issue and sale of the Designated Securities pursuant to
any Pricing Agreement and the compliance by the Company with all of the
provisions of the
3
<PAGE> 4
Designated Securities, the Pooling and Servicing Agreement, the Series
Supplement, the First Amended and Restated Purchase Agreement dated as of July
31, 1994, as amended (the "Purchase Agreement"), by and between the Company and
Sears, the First Amended and Restated Contribution Agreement dated as of July
31, 1994 (the "Contribution Agreement"), by and between the Company and Sears,
the Receivables Warehouse Agreement dated as of December 21, 1995 (the
"Receivables Warehouse Agreement"), by and between the Company and Sears, this
Agreement, the Assignment of Additional Funds, dated as of January 30, 1998,
between the Company and the Trustee (the "Assignment of Additional Funds") and
such Pricing Agreement will not (i) 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 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 may be bound or to which any of the
property or assets of the Company, material to the Company, is subject, (ii)
result in any violation of the provisions of the Certificate of Incorporation or
By-Laws of the Company or, (iii) to the best of the Company's 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.
(f) 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 the Company is required for the
issue and sale of the Securities except as may be required under the Act, the
Exchange Act, and securities laws of the various states and other jurisdictions
which are applicable to the issue and sale of the Designated Securities and
except for the filing of any financing or continuation statement required to
perfect or continue the Trust's and the Company's respective interests in the
Receivables.
(g) The compliance by Sears with all of the provisions of the
Pooling and Servicing Agreement, the Series Supplement, the Assignment of
Accounts and Sale of Receivables Agreement, dated as of September 15, 1994, as
amended between Sears National Bank (the "Bank") and Sears (the "Bank Assignment
Agreement"), the Purchase Agreement, the Contribution Agreement, the Receivables
Warehouse Agreement and this Agreement will not (i) conflict with or result in
any breach which would constitute a material default under, or, except as
contemplated by the Pooling and Servicing Agreement, the Series Supplement, the
Bank Assignment Agreement, the Purchase Agreement and the Contribution
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 to which Sears and the
Company, Sears Roebuck Acceptance Corp., Sears DC Corp., Sears National Bank or
Sears Overseas Finance N.V. (collectively, the "Designated Subsidiaries") is a
party or by which Sears or any Designated Subsidiary may be bound or to which
any of the property or assets of Sears or any Designated Subsidiary, material to
Sears and its subsidiaries (whether or not consolidated) considered as a
4
<PAGE> 5
whole, is subject, (ii) result in any violation of the provisions of the
Restated Certificate of Incorporation, as amended, or the By-Laws of Sears or,
(iii) to the best of the Company's 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;
(h) The Principal Receivables conveyed by the Company to the Trust
under the Pooling and Servicing Agreement had an aggregate outstanding balance
determined as of the date set forth in the Pricing Agreement of not less than
the amount set forth in the Pricing Agreement; and
(i) The Pooling and Servicing Agreement is not required to be
qualified under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"), and the Trust is not required to be registered under the
Investment Company Act of 1940, as amended (the "Investment Company Act").
3. Subject to the terms and conditions herein set forth, the Company
agrees to cause to be issued and sold to each of the Underwriters, and each of
the Underwriters agrees, severally and not jointly, to purchase from the
Company, at the purchase price specified in the Pricing Agreement applicable to
any Designated Securities, the principal amount of Designated Securities set
forth in such Pricing Agreement.
4. (a) Upon the execution of the Pricing Agreement applicable to any
Designated Securities and the authorization by you of the release of the
Designated Securities, the several Underwriters propose to offer the Designated
Securities for sale upon the terms and conditions set forth in the Prospectus as
amended or supplemented.
(b) Each Underwriter represents and agrees that it will not offer
or sell or deliver any of the Securities in any jurisdiction except under
circumstances that will result in compliance with the applicable laws thereof.
(c) Each Underwriter represents and agrees that it will not, at
any time that such Underwriter is acting as an "underwriter" (as defined in
Section 2(11) of the Act) with respect to any Designated Securities, transfer,
deposit or otherwise convey any such Designated Securities into a trust or other
type of special purpose vehicle that issues securities or other instruments
backed in whole or in part by, or that represents interests in, such Designated
Securities without the prior written consent of the Company.
5. Unless otherwise specified in the Pricing Agreement, Designated
Securities to be purchased by each Underwriter pursuant to the Pricing Agreement
relating thereto shall be delivered by or on behalf of the Company to you for
the account of such Underwriter, against payment by such Underwriter or on its
behalf of the purchase price thereof by wire transfer to such account as the
Company may designate of federal or other immediately available funds. The
place, time and date of such delivery shall be set forth in the Pricing
Agreement or at such other place, time and date as you and the Company may agree
upon in writing, such time and date being
5
<PAGE> 6
herein called the "Time of Delivery." Unless otherwise specified in the Pricing
Agreement, the Securities shall be represented by definitive certificates
registered in the name of Cede & Co., as nominee for The Depository Trust
Company. Such definitive certificates will be made available for inspection at
least twenty-four hours prior to the Time of Delivery at the office of The First
National Bank of Chicago, One North State Street, 9th Floor, Chicago, Illinois
60602.
6. The Company agrees with each of the Underwriters of Designated
Securities:
(a) Immediately following the execution of each Pricing
Agreement, the Company will prepare a Prospectus Supplement setting forth the
amount of Securities covered thereby and the terms thereof not otherwise
specified in the Prospectus, the price at which such Securities are to be
purchased by the Underwriters from the Company, either the initial public
offering price or the method by which the price at which such Securities are to
be sold will be determined, the selling concessions and allowances, if any, and
such other information as the Company deems appropriate in connection with the
offering of such Securities, and after the date of the Pricing Agreement
relating to such Securities and prior to the Time of Delivery for such
Securities the Company will not make any further amendment or any supplement to
the Registration Statement or Prospectus as amended or supplemented without
first having furnished you with a copy of the proposed form thereof and given
you a reasonable opportunity to review the same; to advise you promptly of any
such amendment or supplement after such Time of Delivery and to furnish you with
copies thereof for so long as the delivery of a prospectus is required in
connection with the offering or sale of such Securities; and during such same
period to advise you, promptly after it receives notice thereof, of the time
when the Registration Statement, or any amendment thereto, or any amended
Registration Statement has become effective or any supplement to the Prospectus
or any amended Prospectus has been filed, of the issuance by the Commission of
any stop order or of any order preventing or suspending the use of any
Prospectus, or the suspension of the qualification of such Securities for
offering or sale in any jurisdiction, or the initiation or threatening of any
proceeding for any such purpose, or of any request by the Commission for the
amending or supplementing of the Registration Statement or Prospectus or for
additional information; and in the event of the issuance of any such stop order
or of any such order preventing or suspending the use of any such Prospectus or
suspending any such qualification, to use promptly its best efforts to obtain
its withdrawal;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Securities for offering and sale under the
securities laws of such jurisdictions as you may request and to comply with such
laws so as to permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the distribution of
such Securities, provided, that in connection therewith the Company shall not be
required to qualify as a foreign corporation or to file a general consent to
service of process in any jurisdiction;
(c) To furnish the Underwriters with copies of the Prospectus as
amended or supplemented in such quantities as you may from time to time
reasonably request and if at any time the delivery of a prospectus is required
by law in connection with the offering or sale
6
<PAGE> 7
of such Securities and if at such time any event shall have occurred as a result
of which the Prospectus as amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made when such Prospectus is delivered, not misleading, or, if
for any other reason it shall be necessary during such same period to amend or
supplement the Prospectus in order to comply with the Act, to notify you and to
prepare and furnish without charge to each Underwriter and to any dealer in
securities as many copies as you may from time to time reasonably request of an
amended Prospectus or a supplement to the Prospectus which will correct such
statement or omission or effect such compliance and in case any Underwriter is
required to deliver a prospectus in connection with sales of any Securities at
any time nine months or more after the effective date of the Registration
Statement, upon your request but at the expense of such Underwriter, to prepare
and deliver to such Underwriter as many copies as you may request of an amended
or supplemented Prospectus complying with Section 10(a)(3) of the Act;
(d) To cause the Trust to make generally available to holders
of the Securities, in accordance with Rule 158 under the Act or otherwise, as
soon as practicable, but in any event not later than forty-five days after the
end of the fourth full fiscal quarter (ninety days in the case of the last
fiscal quarter in any fiscal year) following the fiscal quarter ending after the
effective date of the Registration Statement, an earning statement of the Trust
(which need not be audited) complying with Section 11(a) of the Act and covering
a period of at least twelve consecutive months beginning after the effective
date of such Registration Statement;
(e) To pay or cause to be paid all expenses incident to the
performance of its obligations hereunder, including the cost of all
qualifications of the Securities under state securities laws (including
reasonable fees of counsel to the Underwriters in connection with such
qualifications and in connection with legal investment surveys) and the cost of
printing this Agreement and any blue sky and legal investment memoranda.
The Company and Sears agree with each of the Underwriters during the
period beginning from the date of the Pricing Agreement and continuing to and
including the earlier of (i) the termination of trading restrictions on the
Designated Securities, of which termination you agree to give the Company prompt
notice confirmed in writing, and (ii) the Time of Delivery, not to offer, sell,
contract to sell or otherwise dispose of any securities of the Company or any
other subsidiary of Sears, or any other trust for which the Company or any other
subsidiary of Sears is depositor, which represent participation interests in
receivables arising under open end credit plans offered by Sears, without your
prior written consent, which consent shall not be unreasonably withheld.
7. The obligations of the several Underwriters hereunder and under
the Pricing Agreement relating to Designated Securities shall be subject, in
their discretion, to the condition that all representations and warranties and
other statements of the Company herein are, at and as of the Time of Delivery
for such Designated Securities, true and correct, the condition that the Company
shall have performed all of its obligations hereunder theretofore to be
performed, and the following additional conditions:
7
<PAGE> 8
(a) No stop order suspending the effectiveness of the Registration
Statement or any part thereof shall have been issued and no proceeding for that
purpose shall have been initiated or threatened by the Commission; and all
requests for additional information on the part of the Commission shall have
been complied with to your reasonable satisfaction;
(b) All corporate proceedings and related matters in connection with
the organization of the Company, the validity of the Bank Assignment 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 and the registration, authorization, issue,
sale and delivery of the Designated Securities shall have been satisfactory to
counsel to the Underwriters, and such counsel shall have been furnished with
such papers and information as they may reasonably have requested to enable them
to pass upon the matters referred to in this subdivision (b);
(c) Counsel to the Company shall have furnished to you such
counsel's written opinion, dated the Time of Delivery, in form and substance
satisfactory to you in your reasonable judgment, to the effect that:
(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) This Agreement and the Pricing Agreement have been duly
authorized, executed and delivered on the part of the Company and
Sears;
(iii) The issue and sale of the Designated Securities and the
compliance by the Company with all of the provisions of the Designated
Securities, this 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 such counsel 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 knowledge of such counsel, 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, other than the Act, the Exchange Act, the Trust
Indenture Act and the Investment Company Act and the rules and
regulations under each such act and other than the securities laws of
the various states or other jurisdictions
8
<PAGE> 9
which are applicable to the issue and sale of the Securities and other
than state laws pertaining to the perfection of security interests;
(iv) To the best knowledge of such counsel, 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 Contribution Agreement, the Assignment of
Additional Funds and the Receivables Warehouse Agreement or for the
issue and sale of the Securities except as may be required under the
Act, the Exchange Act, the Trust Indenture Act and the Investment
Company Act and securities laws of the various states or other
jurisdictions which are applicable to the issue and sale of the
Securities and except for the filing of any financing or continuation
statement required to perfect the respective interests of the Trust,
the Company and Sears in the Receivables;
(v) The compliance by Sears with all of the provisions of this
Agreement, the Bank Assignment 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 Receivables Warehouse Agreement or the
Contribution 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 such counsel to which Sears or
any Designated Subsidiary is a party or by which Sears or any
Designated Subsidiary may be bound or to which any of the property or
assets of Sears or any Designated Subsidiary, 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 knowledge of such counsel, 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, other than the Act,
the Exchange Act, the Trust Indenture Act and the Investment Company
Act and the rules and regulations under each such act and other than
the securities laws of the various states or other jurisdictions which
are applicable to the issue and sale of the Securities and other than
state laws pertaining to the perfection of security interests;
(vi) 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
9
<PAGE> 10
by bankruptcy, 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; the Pooling and Servicing Agreement
is not required to be qualified under the Trust Indenture Act; the
Trust is not required to be registered under the Investment Company
Act; and the Securities 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 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;
(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 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;
(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 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; (ix) Such counsel does 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 such counsel need
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 of the Commission thereunder;
(xi) The Registration Statement and the Prospectus as
amended or supplemented (excluding the documents incorporated by
reference therein) (other than financial, statistical and accounting
data therein as to which such counsel need express no
10
<PAGE> 11
opinion) comply as to form in all material respects with the
requirements of the Act and the rules and regulations thereunder; and
(xii) Such counsel does 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.
In rendering such opinion, such counsel may rely to the extent such
counsel deems appropriate upon certificates of officers or other executives of
the Company or Sears, its business groups and its subsidiaries and of public
officials as to factual matters and upon opinions of other counsel. Such counsel
shall also state that: (a) nothing has come to such counsel's attention which
has caused such counsel to believe that any of the documents referred to in
subdivision (ix) above (other than financial, statistical and accounting data
therein, as to which such counsel need 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, and (b) nothing has come to such counsel's attention which
has caused such counsel to believe that the Registration Statement or the
Prospectus as amended or supplemented (other than financial, statistical and
accounting data therein, as to which such counsel need 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;
(d) Counsel to the Bank shall have furnished to you such counsel's
written opinion, dated the Time of Delivery, in form and substance satisfactory
to you in your reasonable judgment, to the effect that:
(i) The Bank has been duly incorporated and is validly
existing as a national banking association in good standing under the
laws of the United States of America;
(ii) The compliance by the Bank with all of the provisions of
the Bank Assignment Agreement will not (a) conflict with or result in
any breach which would constitute a material default, or except for
that created by the Bank Assignment Agreement, result in the creation
or imposition of any lien, charge or encumbrance upon any of the
property or assets of the Bank, material to the Bank, pursuant to the
terms of, any indenture, loan agreement or other agreement or
instrument for borrowed money
11
<PAGE> 12
known to such counsel to which the Bank is a party, or by which the
Bank may be bound, or to which any of the property or assets of the
Bank, material to the Bank, is subject, (b) result in any violation of
the provisions of the Articles of Association or the By-Laws of the
Bank, or (c) to the best knowledge of such counsel, result in any
material violation of any statute or any order, rule or regulation
applicable to the Bank of any court or any Federal, State or other
regulatory authority or other governmental body having jurisdiction
over the Bank;
(iii) To the best knowledge of such counsel, 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 the Bank, which has not already been made
or obtained, is required for the consummation of the transactions
contemplated by the Bank Assignment Agreement, except for the filing of
any financing or continuation statement required to perfect the
interest of Sears in the Receivables; and
(iv) The Bank Assignment Agreement has been duly authorized,
executed and delivered on the part of the Bank and, as to the Bank, 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.
In rendering such opinion, such counsel may rely to the extent such
counsel deems appropriate upon certificates of officers or other executives of
the Company or Sears, its business groups and its subsidiaries and of public
officials as to factual matters and upon opinions of other counsel.
(e) At the Time of Delivery for such Designated Securities,
Deloitte & Touche LLP shall have furnished to you a letter or letters, dated the
respective date of delivery thereof, in form and substance satisfactory to you
as to such matters as you may reasonably request;
(f) (i) Sears and its subsidiaries (whether or not
consolidated) considered as a whole, shall not have sustained, since the date of
the latest audited financial statement previously delivered to you, any material
loss or interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree and (ii) since the date of the
Pricing Agreement there shall not have been any material change in the capital
stock accounts or long-term debt of Sears or any material adverse change in the
general affairs, financial position, shareholders' equity or results of
operations of Sears and its subsidiaries (whether or not consolidated)
considered as a whole, the effect of which in any such case described in clause
(i) or (ii), in your judgment makes it impracticable or inadvisable to proceed
with the public offering or
12
<PAGE> 13
the delivery of the Designated Securities on the terms and in the manner
contemplated in the Prospectus as amended or supplemented;
(g) Subsequent to the date of the Pricing Agreement relating
to such Designated Securities, no downgrading shall have occurred in the rating
accorded to Sears senior debt securities by Moody's Investors Service, Inc.
("Moody's") or Standard & Poor's Ratings Services ("Standard & Poor's");
provided, however, that this subdivision (g) shall not apply to any such rating
agencies which shall have notified you of the rating of the Designated
Securities prior to the execution of the Pricing Agreement;
(h) Subsequent to the date of the Pricing Agreement relating
to such Designated Securities neither (i) the United States shall have become
engaged in the outbreak or escalation of hostilities involving the United States
or there has been a declaration by the United States of a national emergency or
a declaration of war, (ii) a banking moratorium shall have been declared by
either Federal or New York State authorities, nor (iii) trading in securities
generally on the New York Stock Exchange shall have been suspended or limited or
minimum prices shall have been established by such Exchange, any of which
events, in your judgment, renders it inadvisable to proceed with the public
offering or the delivery of the Designated Securities;
(i) At or prior to the Time of Delivery, the Certificates shall
be assigned the ratings by Moody's and Standard & Poor's set forth in the
Pricing Agreement;
(j) The Company shall have furnished or caused to be furnished
to you at the Time of Delivery for the Designated Securities certificates
satisfactory to you as to the accuracy at and as of such Time of Delivery of the
representations, warranties and agreements of the Company herein and as to the
performance by the Company of all its obligations hereunder to be performed at
or prior to such Time of Delivery and the Company shall have also furnished you
similar certificates satisfactory to you as to the matters set forth in
subdivision (a) of this Section 7; and
(k) Counsel to the Company shall have furnished to the
Underwriters a letter stating that the Underwriters may rely on the opinions of
such counsel to the Company as delivered to Moody's and Standard & Poor's in
connection with the rating of the Securities.
8. (a) The Company and Sears will jointly and severally indemnify
and hold harmless each Underwriter against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement, any prospectus relating to
the Securities or the Prospectus as amended or supplemented, or any amendment or
supplement thereto furnished by the Company, or arise out of or are based upon
the omission or alleged omission to state therein a material fact required to be
stated therein or (in the case of the Registration Statement or the Prospectus
as amended or supplemented, or any amendment or supplement thereto) necessary to
make the statements therein not misleading or (in the case of any Preliminary
Prospectus)
13
<PAGE> 14
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and will reimburse each Underwriter
for any legal or other expenses reasonably incurred by such Underwriter in
connection with investigating or defending any such action or claim; provided,
however, that neither the Company nor Sears shall be liable in any such case to
the extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus, the Registration Statement,
the Prospectus or the Prospectus as amended or supplemented or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by any Underwriter of Designated Securities
through you expressly for use in the Prospectus as amended or supplemented
relating to such Securities; and provided, further, that neither the Company nor
Sears shall be liable to any Underwriter or any person controlling such
Underwriter under the indemnity agreement in this subdivision (a) with respect
to the Preliminary Prospectus or the Prospectus or the Prospectus as amended or
supplemented, as the case may be, to the extent that any such loss, claim,
damage or liability of such Underwriter or controlling person results solely
from the fact that such Underwriter sold Designated Securities to a person to
whom there was not sent or given, at or prior to the written confirmation of
such sale, a copy of the Prospectus (excluding documents incorporated by
reference) or of the Prospectus as then amended or supplemented (excluding
documents incorporated by reference) if the Company has previously furnished
copies thereof to such Underwriter.
(b) Each Underwriter will indemnify and hold harmless the
Company and Sears against any losses, claims, damages or liabilities to which
the Company or Sears may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged untrue statement
of a material fact contained in any Preliminary Prospectus, the Registration
Statement, the Prospectus, or the Prospectus as amended or supplemented, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or (in the case of the Registration Statement or the Prospectus or the
Prospectus as amended or supplemented, or any amendment or supplement thereto)
necessary to make the statements therein not misleading or (in the case of any
Preliminary Prospectus) necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading in each case to
the extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in any Preliminary
Prospectus, the Registration Statement, the Prospectus, or the Prospectus as
amended or supplemented, or any such amendment or supplement in reliance upon
and in conformity with written information furnished to the Company by such
Underwriter through you expressly for use therein; and will reimburse the
Company for any legal or other expenses reasonably incurred by the Company in
connection with investigating or defending any such action or claim.
(c) Within a reasonable period after receipt by an indemnified
party under subdivision (a) or (b) above of notice of the commencement of any
action with respect to which indemnification is sought under such subdivision or
contribution may be sought under subdivision (d) below, such indemnified party
shall notify the indemnifying party in writing of the commencement thereof. In
case any such action shall be brought against any indemnified party,
14
<PAGE> 15
the indemnifying party shall be entitled to participate in, and, to the extent
that it shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party for any legal
or other expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation.
(d) If the indemnification provided for in this Section 8 is
unavailable to an indemnified party under subdivision (a) or (b) above in
respect of any losses, claims, damages or liabilities (or actions in respect
thereof) referred to therein, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriters of the Designated Securities on the
other from the offering of the Designated Securities to which such loss, claim,
damage or liability (or actions in respect thereof) relates and also the
relative fault of the Company on the one hand and the Underwriters of the
Designated Securities on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and such Underwriters on the other shall be deemed to be in the same proportion
as the total net proceeds from the offering of such securities (before deducting
expenses) received by the Company bear to the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth on the cover
page of the Prospectus as amended or supplemented. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company on the one hand
or the Underwriters on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission of the Company on the one hand or the Underwriters, directly or through
you, on the other hand. With respect to any Underwriter, such relative fault
shall also be determined by reference to the extent (if any) to which such
losses, claims, damages or liabilities (or actions in respect thereof) with
respect to any Preliminary Prospectus result from the fact that such Underwriter
sold Designated Securities to a person to whom there was not sent or given, at
or prior to the written confirmation of such sale, a copy of the Prospectus
(excluding documents incorporated by reference) or of the Prospectus as then
amended or supplemented (excluding documents incorporated by reference) if the
Company has previously furnished copies thereof to such Underwriter. The
Company, Sears and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this subdivision (d) were determined by
per capita allocation among the indemnifying parties (even if the Underwriters
were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this subdivision (d). The amount paid or payable by an indemnified
party as a result of the losses, claims, damages or liabilities (or actions in
respect thereof) referred to above in this subdivision (d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subdivision (d), no
15
<PAGE> 16
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the applicable Designated Securities
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages which such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
obligations of the Underwriters in this subdivision (d) to contribute are
several in proportion to their respective underwriting obligations and not
joint.
(e) The obligations of the Company and Sears under this
Section 8 shall be in addition to any liability which the Company and Sears may
otherwise have and shall extend, upon the same terms and conditions, to each
person, if any, who controls any Underwriter within the meaning of the Act; and
the obligations of the Underwriters under this Section 8 shall be in addition to
any liability which the respective Underwriters may otherwise have and shall
extend, upon the same terms and conditions, to each officer and director of the
Company and to each person, if any, who controls the Company within the meaning
of the Act.
9. (a) If any Underwriter shall default in its obligation to
purchase the Designated Securities which it has agreed to purchase hereunder and
under the Pricing Agreement relating to such Designated Securities, and the
aggregate principal amount of such Designated Securities which remains
unpurchased does not exceed one-eleventh of the aggregate principal amount of
the Designated Securities, then the Company shall have the right to require each
non-defaulting Underwriter to purchase the principal amount of Securities which
such Underwriter agreed to purchase hereunder and under the Pricing Agreement
relating to such Designated Securities and, in addition, to require each
non-defaulting Underwriter to purchase its pro rata share (based on the
principal amount of the Designated Securities which such Underwriter agreed to
purchase hereunder and under such Pricing Agreement) of the Designated
Securities of such defaulting Underwriter or Underwriters for which such
arrangements have not been made; but nothing herein shall relieve a defaulting
Underwriter from liability for its default.
(b) If the aggregate principal amount of Designated Securities
which remains unpurchased exceeds one-eleventh of the aggregate principal amount
of the Designated Securities as referred to in subdivision (a) above, or if the
Company shall not exercise the right described in subdivision (a) above to
require non-defaulting Underwriters to purchase Designated Securities of a
defaulting Underwriter or Underwriters, then the Pricing Agreement relating to
such Designated Securities shall thereupon terminate, without liability on the
part of any non-defaulting Underwriter or the Company, except for the expenses
to be borne by the Company and the Underwriters as provided in Section 6(e)
hereof and the indemnity and contribution agreements in Section 8 hereof; but
nothing herein shall relieve a defaulting Underwriter from liability for its
default.
10. The respective indemnities, agreements, representations,
warranties and other statements of the Company, Sears and the several
Underwriters, as set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall remain in full force and effect,
regardless of any investigation (or any statement as to the results
16
<PAGE> 17
thereof) made by or on behalf of any Underwriter or any controlling person of
any Underwriter, or the Company, or any officer or director or controlling
person of the Company, and shall survive delivery of and payment for the
Securities.
Anything herein to the contrary notwithstanding, the indemnity
agreement of the Company and Sears in subdivisions (a) and (e) of Section 8
hereof, the representations and warranties in subdivisions (b) and (c) of
Section 2 hereof and any representation or warranty as to the accuracy of the
Registration Statement or the Prospectus as amended or supplemented contained in
any certificate furnished by the Company pursuant to subdivision (i) of Section
7 hereof, insofar as they may constitute a basis for indemnification for
liabilities (other than payment by the Company and Sears of expenses incurred or
paid in the successful defense of any action, suit or proceeding) arising under
the Act, shall not extend to the extent of any interest therein of an
Underwriter or a controlling person of an Underwriter if a director, officer or
controlling person of the Company when the Registration Statement becomes
effective or a person who, with his consent, is named in the Registration
Statement as being about to become a director of the Company, is a controlling
person of such Underwriter, except in each case to the extent that an interest
of such character shall have been determined by a court of appropriate
jurisdiction as not against public policy as expressed in the Act. Unless in the
opinion of counsel for the Company and Sears the matter has been settled by
controlling precedent, the Company and Sears will, if a claim for such
indemnification is asserted, submit to a court of appropriate jurisdiction the
question whether such interest is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
11. If any Pricing Agreement shall be terminated pursuant to Section
9 hereof, the Company shall not then be under any liability to any Underwriter
with respect to the Designated Securities covered by such Pricing Agreement
except as provided in Section 6(e) and Section 8 hereof; but, if for any other
reason any Designated Securities are not delivered by or on behalf of the
Company as provided herein, the Company and Sears will reimburse the
Underwriters through you for all out-of-pocket expenses approved in writing by
you, including fees and disbursements of counsel, reasonably incurred by the
Underwriters in making preparations for the purchase, sale and delivery of such
Designated Securities, but neither the Company nor Sears shall then be under any
further liability to any Underwriter with respect to such Designated Securities
except as provided in Section 6(e) and Section 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of
the Underwriters of Designated Securities, and the parties hereto shall be
entitled to act and rely upon any statement, request, notice or agreement on
behalf of any Underwriter made or given by you.
All statements, requests, notices and agreements hereunder shall be
in writing or by telegram or facsimile transmission if promptly confirmed in
writing and if to the Underwriters shall be sufficient in all respects, if
delivered or sent by registered mail to the representative of the Underwriters
named in the Pricing Agreement at the address named therein; and if to the
Company or Sears shall be sufficient in all respects if delivered or sent by
registered mail to the Company at 3711 Kennett Pike, Greenville, Delaware 19807,
Attention: Secretary.
17
<PAGE> 18
13. This Agreement and each Pricing Agreement shall be binding upon,
and inure solely to the benefit of, the Underwriters, Sears, the Company and, to
the extent provided in Section 8 and Section 10 hereof, the officers and
directors of the Company and each person who controls the Company or any
Underwriter, and their respective heirs, executors, administrators, successors
and assigns, and no other person shall acquire or have any right under or by
virtue of this Agreement or any such Pricing Agreement. No purchaser of any of
the Securities from any Underwriter shall be deemed a successor or assign by
reason merely of such purchase.
14. Time shall be of the essence of this Agreement and each Pricing
Agreement.
15. This Agreement and each Pricing Agreement shall be construed in
accordance with the laws of the State of New York. In the event of any conflict
between this Agreement and the Pricing Agreement, the Pricing Agreement shall
govern.
16. This Agreement and each Pricing Agreement may be executed by any
one or more of the parties hereto and thereto in any number of counterparts,
each of which shall be deemed to be an original, but all such respective
counterparts shall together constitute one and the same instrument.
18
<PAGE> 19
If the foregoing is in accordance with your understanding, please
sign and return ten counterparts hereof and upon the acceptance hereof by you,
on behalf of each of the Underwriters, this letter and such acceptance hereof
shall constitute a binding agreement between each of the Underwriters and the
Company.
Very truly yours,
SRFG, INC.
By: /s/ GEORGE F. SLOOK
-----------------------------
SEARS, ROEBUCK AND CO.
By: /s/ ALICE M. PETERSON
-----------------------------
Accepted as of the date hereof:
Credit Suisse First Boston Corporation
By: /s/ MICHAEL RAYNES
-----------------------------
As Representative of the several Underwriters
19
<PAGE> 20
SEARS CREDIT ACCOUNT MASTER TRUST II
MASTER TRUST CERTIFICATES
PRICING AGREEMENT
Dated: _____________, 19__
To: SRFG, Inc., as Seller under the Pooling and Servicing
Agreement dated as of July 31, 1994, as amended.
Re: Underwriting Agreement dated _____________, 19__
Title: Sears Credit Account Master Trust II, $______________
_______ Class ____, Master Trust Certificates, Series ____.
Initial Principal Amount of Certificates: $_______________ [State by Class if
more than one Class]
Class A Expected Final Payment Date: __________________
Class B Expected Final Payment Date: __________________
Series and Class Designation Schedule: [insert relevant description of Series
and Classes of Certificates]
Series Cut-Off Date: The last day of the Due Period ending in ------------------
Certificate Rating: [" " by Moody's Investors Service, Inc.] [" " by Standard
and Poor's Ratings Services] [State by Class if more than one Class]
Aggregate outstanding balance of Principal Receivables as of the last day of the
Due Period ending in ________________.
Date of Series Supplement: ____________, 199_.
Certificate Rate: ____% per annum. [State by Class if more than one Class]
Terms of Sale: The purchase price for the Designated Securities to the
Underwriter[s] will be ____% of the aggregate principal amount of the
Certificates as of __________, 19__, plus accrued interest at the Certificate
Rate from ____________, 19__. [State by Class if more than one Class.]
20
<PAGE> 21
Initial Public Offering Price: The initial public offering price for the
Designated Securities will be ___% of the aggregate principal amount of the
Certificates as of ___________, 199_, plus accrued interest at the Certificate
Rate from _______________, 199_ [State by Class if more than one Class.]
Closing Location: [Latham & Watkins, Sears Tower, 58th Floor, Chicago, Illinois
60606]
Time of Delivery: __:__ A.M., New York Time, on ___________, 19__, or at such
other time as may be agreed upon in writing.
Address of Representative of the Underwriters for notices:
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 Series ____-_ Certificates. This Pricing Agreement
may be amended only by written agreement of the parties hereto.
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 Designated Securities [set forth opposite their names in
Schedule 1].
Very truly yours,
[UNDERWRITERS]
By:
By:
----------------------------------------
On behalf of each of the Underwriters
Accepted:
SRFG, INC.
By:
------------------------------
21
<PAGE> 22
SCHEDULE I
<TABLE>
<CAPTION>
Principal Principal
Amount of Amount of
Class _ Class _
Certificates Certificates
to be to be
Underwriter Purchased Purchased
- - ----------- ------------ ------------
<S> <C> <C>
...................................... .. $ $
...................................... .. $ $
...................................... .. $ $
...................................... .. $ $
Total $ $
</TABLE>
<PAGE> 1
EXHIBIT 1.3
SEARS CREDIT ACCOUNT MASTER TRUST II
MASTER TRUST CERTIFICATES
PRICING AGREEMENT
Dated: May 19, 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, among the Company, Sears and
Credit Suisse First Boston Corporation as representative of the Class A
Underwriters named in Schedule I hereto (the "Agreement") (a copy of
which is attached hereto)
Title: Sears Credit Account Master Trust II, $500,000,000 5.80% Class A Master
Trust Certificates, Series 1998-1.
Initial Principal Amount of Certificates:
$500,000,000 Class A Master Trust Certificates, Series 1998-1
Class A Expected Final Payment Date: August 15, 2001
Series and Class Designation of Designated Securities:
5.80% Class A Master Trust Certificates, Series 1998-1 (the "Class A
Certificates")
Series Cut-Off Date: Last day of the Due Period ending in May 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 1998-1:
$ 8,372,183,105
Date of Series Supplement: June 2, 1998.
Certificate Rate: Class A Certificates: 5.80% 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 June 2, 1998.
Class A Certificates: 99.347090%
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 June 2, 1998.
Class A Certificates: 99.572090%
Closing Location: Latham & Watkins
Sears Tower, 58th Floor
Chicago, Illinois 60606
Time of Delivery: 10:00 A.M., New York Time, on June 2, 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
(a) 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.
(b) Notwithstanding anything in the Agreement to the contrary, the
Underwriters named in Schedule 1 hereto (the "Class A Underwriters") agree that
the Company and Sears may enter into that certain pricing agreement of even date
herewith (collectively, with the underwriting agreement dated May 19, 1998 among
the Company, Sears and the Class B underwriter, the "Class B Underwriting
Agreement"), with respect to the purchase and sale of the Class B Master Trust
Certificates, Series 1998-1 (the "Class B Certificates") and may consummate the
transactions contemplated thereby. It is a condition to the effectiveness of the
Pricing Agreement and the Agreement (collectively, the "Class A Underwriting
Agreement") that the Class B Underwriting Agreement be duly executed and
delivered by the parties thereto.
(c) If an underwriter under the Class B Underwriting Agreement (a
"Class B Underwriter") shall default in its obligations to purchase the Class B
Certificates and the Class B Underwriting Agreement terminates in accordance
with its terms, the Class A Underwriters shall have the right to purchase the
Class B Certificates on the same terms that the Class B Underwriters were
entitled to purchase such Class B Certificates prior to the expiration of the
2
<PAGE> 3
Class B Underwriting Agreement and in the same proportions that the Class A
Underwriters have agreed to purchase the Class A Certificates hereunder;
provided, however, the Company shall have the right to postpone the Time of
Delivery for the Class A Certificates and the Class B Certificates for a period
of not more than seven days, to effect whatever changes may thereby be made
necessary in the Registration Statement or Prospectus as amended or
supplemented, or in any other documents or arrangements, and the Company agrees
to file promptly any amendments or supplements to the Registration Statement or
the Prospectus which may thereby be necessary.
(d) If (i) a Class B Underwriter shall default in its obligations to
purchase the Class B Certificates, (ii) the Class B Underwriting Agreement
terminates in accordance with its terms and (iii) the Class A Underwriters do
not agree to purchase the Class B Certificates on the terms and in the
proportions described in paragraph (c) above, the Company shall have the right
to postpone the Time of Delivery for the Class A Certificates for a period of
not more than ten days, in order to procure another party or other parties to
purchase such Class B Certificates and to effect whatever changes may thereby be
made necessary in the Registration Statement or Prospectus as amended or
supplemented, or in any other documents or arrangements, and the Company agrees
to file promptly any amendments or supplements to the Registration Statement or
the Prospectus which may thereby be necessary.
(e) The purchase and sale of the Class A Certificates shall occur
concurrently with, and shall be conditioned on, the purchase and sale of the
Class B Certificates. Notwithstanding anything in the Agreement to the contrary,
unless the Class A Underwriters purchase the Class B Certificates as described
in paragraph (c) above, if the Class B Underwriting Agreement terminates because
of the default of a Class B Underwriter, the Company shall not be under any
liability to any Underwriter with respect to the Class A Certificates covered
hereby except as provided in Section 6(e) and Section 8 of the Agreement.
3
<PAGE> 4
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
------------------------------------
Accepted:
SRFG, INC.
By: /s/ GEORGE F. SLOOK
----------------------------
SEARS, ROEBUCK AND CO.
By: /s/ ALICE M. PETERSON
----------------------------
4
<PAGE> 5
SCHEDULE I
<TABLE>
<CAPTION>
Principal
Amount of
Class A
Certificates
to be
Underwriter Purchased
- - ----------- ---------------
<S> <C>
Credit Suisse First Boston Corporation ........... $ 100,000,000
Bear, Stearns & Co. Inc. ......................... $ 100,000,000
Goldman, Sachs & Co. ............................. $ 100,000,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated ........................... $ 100,000,000
J. P. Morgan Securities Inc. ..................... $ 100,000,000
---------------
Total ........................................... $ 500,000,000
</TABLE>
5
<PAGE> 1
EXHIBIT 1.4
SEARS CREDIT ACCOUNT MASTER TRUST II
MASTER TRUST CERTIFICATES
PRICING AGREEMENT
Dated: May 19, 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, among the Company, Sears and
the Class B Underwriter named on Schedule I hereto (the "Agreement") (a
copy of which is attached hereto).
Title: Sears Credit Account Master Trust II, $35,300,000 6.00% Class B Master
Trust Certificates, Series 1998-1.
Initial Principal Amount of Certificates:
$35,300,000 Class B Master Trust Certificates, Series 1998-1
Class B Expected Final Payment Date: October 15, 2001
Series and Class Designation of Designated Securities:
6.00% Class B Master Trust Certificates, Series 1998-1 (the "Class B
Certificates")
Series Cut-Off Date: Last day of the Due Period ending in May 1998
Certificate Rating: Class B Certificates: A1 by Moody's Investors Service,
Inc.
A by Standard & Poor's Ratings
Services
Minimum Principal Receivables Balance after giving effect to the issuance of
Series 1998-1:
$ 8,372,183,105
Date of Series Supplement: June 2, 1998.
Certificate Rate: Class B Certificates: 6.00% 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 June 2, 1998.
Class B Certificates: 99.389096%
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 June 2, 1998.
Class B Certificates: 99.614096%
Closing Location: Latham & Watkins
Sears Tower, 58th Floor
Chicago, Illinois 60606
Time of Delivery: 10:00 A.M., New York Time, on June 2,1998, 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
(a) 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 B Certificates. This Pricing Agreement may be
amended only by written agreement of the parties hereto.
(b) Notwithstanding anything in the Agreement to the contrary, the
Underwriters named in Schedule 1 hereto (the "Class B Underwriters") agree that
the Company and Sears may enter into that certain pricing agreement of even date
herewith (collectively with the underwriting agreement dated May 19, 1998 among
the Company, Sears and the representative of the Class A underwriters, the
"Class A Underwriting Agreement"), with respect to the purchase and sale of the
Class A Master Trust Certificates, Series 1998-1 (the "Class A Certificates")
and may consummate the transactions contemplated thereby. It is a condition to
the effectiveness of the Pricing Agreement and the Agreement (collectively, the
"Class B Underwriting Agreement") that the Class A Underwriting Agreement be
duly executed and delivered by the parties thereto.
(c) If an underwriter under the Class A Underwriting Agreement (a
"Class A Underwriter") shall default in its obligations to purchase the Class A
Certificates, the Company shall have the right to postpone the Time of Delivery
for the Class B Certificates for a period of not more than ten days, in order to
procure another party or other parties to purchase such Class A Certificates and
to effect whatever changes may thereby be made necessary in the Registration
2
<PAGE> 3
Statement or Prospectus as amended or supplemented, or in any other documents or
arrangements, and the Company agrees to file promptly any amendments or
supplements to the Registration Statement or the Prospectus which may thereby be
necessary.
(d) The purchase and sale of the Class B Certificates shall occur
concurrently with, and shall be conditioned on, the purchase and sale of the
Class A Certificates. Notwithstanding anything in the Agreement to the contrary,
if the Class A Underwriting Agreement terminates because of the default of a
Class A Underwriter, the Company shall not be under any liability to any
Underwriter with respect to the Class B Certificates covered hereby except as
provided in Section 6(e) and Section 8 of the Agreement.
3
<PAGE> 4
The Underwriters named in Schedule 1 hereto agree, 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. We represent that we are
authorized to enter into this Agreement.
Very truly yours,
CREDIT SUISSE FIRST BOSTON CORPORATION
By: /s/ MICHAEL RAYNES
--------------------------------------
On behalf of each of the Underwriters
Accepted:
SRFG, INC.
By: /s/ GEORGE F. SLOOK
------------------------------
SEARS, ROEBUCK AND CO.
By: /s/ ALICE M. PETERSON
------------------------------
4
<PAGE> 5
SCHEDULE I
<TABLE>
<CAPTION>
Principal
Amount of
Class B
Certificates
to be
Underwriter Purchased
- - ----------- -------------
<S> <C>
Credit Suisse First Boston Corporation ................. $ 35,300,000
</TABLE>
5
<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 1998-1 SUPPLEMENT
DATED AS OF JUNE 2, 1998
TO THE
POOLING AND SERVICING AGREEMENT
DATED AS OF JULY 31, 1994
_______________________
$588,250,000
SEARS CREDIT ACCOUNT MASTER TRUST II
MASTER TRUST CERTIFICATES, SERIES 1998-1
<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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
SECTION 10. Third Party Credit Enhancement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
SECTION 11. Calculation of Investor Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
SECTION 12. Servicing Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
SECTION 13. Class Coupon Cap Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
SECTION 14. Interest Rate Swaps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
SECTION 15. Investor Certificateholders' Monthly Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
SECTION 16. Monthly Servicer Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
SECTION 17. Additional Rapid Amortization Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
SECTION 18. Purchase of Investor Certificates and Series Termination . . . . . . . . . . . . . . . . . . . . . . . 91
SECTION 19. Variable Accumulation Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
SECTION 20. Series Yield Factor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
SECTION 21. Issuance of Additional Investor Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
SECTION 22. Sale or Transfer of Seller Retained Classes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
SECTION 23. Paired Series. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
SECTION 24. Fixed Principal Allocation Adjustment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
SECTION 25. Ratification of Pooling and Servicing Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
SECTION 26. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
SECTION 27. Book-Entry Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
SECTION 28. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
</TABLE>
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
<PAGE> 3
SEARS CREDIT ACCOUNT MASTER TRUST II
MASTER TRUST CERTIFICATES, SERIES 1998-1
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 1998-1.
SERIES TERM SHEET
Date of Series Term Sheet June 2, 1998.
Group One.
Series Initial Investor Interest $588,250,000.
Class Initial Investor Interest Class A - $500,000,000.
of each Class of Investor Certificates Class B - $35,300,000.
Class C - $52,950,000.
Seller Retained Class Class C.
Type of Structure Controlled Amortizing Structure.
Certificate Rates Class A - 5.80% 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 - 6.00% 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 C - 0%.
i
<PAGE> 4
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 July 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 July 1998.
ii
<PAGE> 5
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 September 2000, and
each Special Payment Date.
Class A Expected Final Payment Date The Distribution Date in August
2001.
Class B Expected Final Payment Date The Distribution Date in October
2001.
Class C Expected Final Payment Date The Distribution Date in November
2001.
Series Cut-Off Date May 1998.
Series Closing Date June 2, 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
September 2000 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 September 2000
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 $41,666,666.67.
Class B Controlled Amortization Amount $17,650,000.00.
Class C Controlled Amortization Amount Unless a Rapid Amortization Event
shall have occurred, $17,647,500.
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.
iii
<PAGE> 6
Series Monthly Servicing Fee Not applicable.
Additional Funds 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
being increased pursuant to Section
4.03(e) of the Pooling and Servicing
Agreement.
Eligible for Finance Charge Yes.
Collections Reallocations to and from
other Series in the Group
Eligible for Principal Collections Yes.
Reallocations 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 August 2005
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.
iv
<PAGE> 7
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.
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/ ALICE M. PETERSON
---------------------------------
Alice M. Peterson
Vice President and Treasurer
THE FIRST NATIONAL BANK OF CHICAGO
as Trustee
By: /s/ STEVEN M. WAGNER
---------------------------------
Steven M. Wagner
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
1
<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.
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<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.
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<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
17
<PAGE> 26
pursuant to Section 7(g)(3), (vi) amounts withdrawn from the Pre-Funding
Special Reserve Account 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 numerator used in calculating the Class
Percentage with respect to Principal Collections for the 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.
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(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.
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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
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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.
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(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
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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
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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
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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.
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(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."
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(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
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(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
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(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")
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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.
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<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
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<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
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<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
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<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
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<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
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<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
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<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
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<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
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<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
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<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 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).
(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 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).
(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
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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
(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
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<PAGE> 55
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.
(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.
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(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.
(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
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(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.
(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
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(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.
(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
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<PAGE> 59
(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
(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
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(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 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
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(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
(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.
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(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
(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
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(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
(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
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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
(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
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(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 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.
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(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
(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
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(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
(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
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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 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
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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
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 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.
(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."
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(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
(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
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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 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.
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(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
(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
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(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
(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
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(A) the positive difference, if any, between the amount of
the Seller Interest 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).
(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 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).
(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
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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
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."
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(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.
(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
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(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
(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.
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(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
(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
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(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
(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
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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
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
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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 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
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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 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
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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
(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
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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
(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.
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(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 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
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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
(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
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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 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
shall be withdrawn from the Series Principal 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."
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(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 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
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(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 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
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(A) the positive difference, if any, between the amount of
the Seller Interest 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).
(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 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).
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."
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(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
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
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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
(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
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(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.
(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.
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(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
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
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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 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.
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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 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
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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 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.
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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 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
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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;
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.
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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
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."
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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.
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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") 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 and of the Seller Retained Class Purchase Date;
(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 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
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
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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.
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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. 81234CBC4
5.80% CLASS A MASTER TRUST CERTIFICATE, SERIES 1998-1
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
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<PAGE> 105
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 June 2, 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:
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<PAGE> 106
[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
"5.80% Class A Master Trust Certificates, Series 1998-1" (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 1998-1 or paid to the Class A
Certificateholders. Also issued under the Pooling and Servicing Agreement and
the Series Supplement are Investor Certificates designated as "6.00% Class B
Master Trust Certificates, Series 1998-1" (the "Class B Certificates") and
"Class C Master Trust Certificates, Series 1998-1" (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 $500,000,000. 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 July 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 September 2000 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
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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 August 2005 (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> 108
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> 109
[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> 110
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.
UNLESS THIS CLASS B 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 B 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.
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.
NO. $_____________
CUSIP NO. 81234CBD2
6.00% CLASS B MASTER TRUST CERTIFICATE, SERIES 1998-1
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 B 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")
A-2-1
<PAGE> 111
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
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 June 2, 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> 112
[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 and the Class B
Certificateholder, by the acceptance of this Class B Certificate, agree 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, the Class B
Certificateholder by virtue of the acceptance hereof assents and by which the
Class B Certificateholder is bound.
This Class B Certificate is one of a series of Certificates entitled
"6.00% Class B Master Trust Certificates, Series 1998-1" (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 1998-1 or paid to the Class B
Certificateholders. Also issued under the Pooling and Servicing Agreement and
the Series Supplement are Investor Certificates designated as "5.80% Class A
Master Trust Certificates, Series 1998-1" (the "Class A Certificates") and
"Class C Master Trust Certificates, Series 1998-1" (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 $35,300,000. 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 the Class B 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 July 1998, or if such 15th day is not a
Business Day, on the next succeeding Business Day (each, a "Distribution
Date"), to the Class B 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 September 2000 unless a Rapid Amortization
Event occurs prior to such
A-2-3
<PAGE> 113
date, and during the Rapid Amortization Period, if any, Certificate Interest
and Certificate Principal collected by the Servicer will be distributed to the
Class B 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; provided,
however, that, except as otherwise set forth in the Series Supplement, no
Certificate Principal will be distributed to the Class B Certificateholders
until the Class A Investor Interest has been reduced to zero. The rights of
the Class B Certificateholders to receive distributions to which they 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 August 2005 (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 the Class B Certificateholders 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 the Class B
Certificateholder of record appearing in the Certificate Register (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, except that with respect to Class B 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 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 the Class B Certificateholder 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
A-2-4
<PAGE> 114
to the Trustee and the Transfer Agent and Registrar duly executed by the Class
B Certificateholder 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.
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.
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 the Class B Certificateholder surrendering such
Class B 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 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> 115
[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> 116
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 1998-1
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> 117
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 June 2, 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> 118
[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 1998-1" (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 1998-1 or paid to SRFG. Also
issued under the Pooling and Servicing Agreement and the Series Supplement are
Investor Certificates designated as "5.80% Class A Master Trust Certificates,
Series 1998-1" (the "Class A Certificates") and "6.00% Class B Master Trust
Certificates, Series 1998-1" (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 $52,950,000. 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 July 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
September 2000 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 calendar month,
A-3-3
<PAGE> 119
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 August 2005 (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> 120
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> 121
[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> 122
EXHIBIT B
Form of Investor Certificateholders' Monthly Statement
Sears Credit Account Master Trust II
Series 1998-1 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 1998-1 INVESTORS THIS DUE PERIOD
<TABLE>
<CAPTION>
Total Interest Principal
----- -------- ---------
<S> <C> <C> <C>
Series 1998-1
Class A $____________ $____________ $____________
Class B $____________ $____________ $____________
Class C $____________ $____________ $____________
</TABLE>
2. PRINCIPAL RECEIVABLES AT THE END OF THE DUE PERIOD
<TABLE>
<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 $____________
</TABLE>
B-1
<PAGE> 123
<TABLE>
<S> <C>
(d) INVESTOR INTEREST BY CLASS (SERIES 1998-1)
Class A Investor Interest $____________
Class B Investor Interest $____________
Class C Investor Interest $____________
TOTAL CLASS INVESTOR INTEREST $____________
</TABLE>
3. ALLOCATION OF COLLECTIONS DURING THE DUE PERIOD
<TABLE>
<S> <C>
(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 1998-1 Allocation $____________ $___________ $__________
(e) Reallocations of Collections to Series 1998-1
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
--------------- -----------------------
<S> <C> <C>
SERIES 1998-1 BY CLASS
(a) Class A $____________ $___________
(b) Class B $____________ $___________
(c) Class C $____________ $___________
</TABLE>
B-2
<PAGE> 124
5. INVESTOR CHARGED-OFF AMOUNTS
<TABLE>
<CAPTION>
This Due Period
---------------
<S> <C> <C>
(a) Group One (the sum of Series Investor Charged-Off Amounts for
all Series in Group One) $___________
(b) Series 1998-1 (the sum of the Class Investor Charged-Off Amounts
for all Classes in Series 1998-1) $___________
(c) Series 1998-1 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 1998-1 $___________
(c) Series 1998-1 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 1998-1 $___________
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 1998-1) ___________%
(e) Weighted Average Certificate Rate (weighted average certificate
rates for all classes of Series 1998-1) ___________%
</TABLE>
B-3
<PAGE> 125
<TABLE>
<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) ___________%
(g) 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):
<TABLE>
<CAPTION>
[month/year]
<S> <C>
Delinquencies as a % of balances
60-89 days past due.................... %
----------
90-119 days past due................... %
----------
120 days or more past due............ %
----------
Total Delinquencies %
==========
</TABLE>
(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> 126
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>
<S> <C> <C>
SECTION 1: TOTAL TRUST INFORMATION
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
current Distribution Date is equal to . . . . . . . . . . . . . . . . . . . . . . . $______
</TABLE>
C1
<PAGE> 127
<TABLE>
<S> <C> <C>
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 Collections during 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 during the
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> 128
<TABLE>
<S> <C> <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> 129
<TABLE>
<S> <C> <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>
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<PAGE> 130
<TABLE>
<S> <C> <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> 131
<TABLE>
<S> <C> <C>
SECTION 9: SERIES 1996-2
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> 132
<TABLE>
<S> <C> <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> 133
<TABLE>
<S> <C> <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> 134
<TABLE>
<S> <C> <C>
SECTION 14: SERIES 1998-1
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 . . . . . . . . . . . . . . . . . . . . . . . . . $______
127. 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:
C9
<PAGE> 1
EXHIBIT 4.2
[DTC LOGO]
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)
June 2, 1998
------------
(Date)
Attention: General Counsel's Office
The Depository Trust Company
55 Water Street; 49th Floor
New York, NY 10041-0099
Re: 5.80% Class A Master Trust Certificates, Series 1998-1; and
-----------------------------------------------------------
6.00% Class B Master Trust Certificates, Series 1998-1 of
-----------------------------------------------------------
Sears Credit Account Master Trust II
-----------------------------------------------------------
(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** is
-----------------------
("Underwriter")
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 June 2, 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; Bear, Stearns & Co. Inc.; Goldman Sachs & Co.;
Merrill Lynch & Co.; J.P. Morgan & Co.
<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. Notice 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 notice
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. Notice 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) ERISA Rider; and (4) Rider
__________________________________________________________________________
Amending DTC Letter of Representations
__________________________________________________________________________
<TABLE>
<S> <C>
Notes: Very Truly yours,
- - ------
A. If there is an Agent(as defined in this Letter of
Representations), Agent as well as Issue must sign
this Letter. If there is no Agent, in signing this SRFG, Inc.
Letter Issuer itself undertakes to perform all of the ---------------------------------------------------------------
obligations set forth herein. (Issuer)
B. Schedule B contains statements that DTC believes
accurately describe DTC, the method of effecting
book-entry transfers of securities distributed By: /s/ George F. Slook
through DTC, and certain related matters. ---------------------------------------------------------------
(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. Nesson
- - ------------------------------------------------------
cc:Underwriter
Underwriter's Counsel
</TABLE>
-5-
<PAGE> 6
ADDENDUM
TO
LETTER OF REPRESENTATIONS DATED JUNE 2, 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 June 2, 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 1998-1
CLASS A CERTIFICATES CUSIP NO. 81234C BC 4
- - --------------------
Certificate Number Principal Amount Maturity Date(1) Interest Rate
- - ------------------ ---------------- ---------------- -------------
1 $200,000,000 August 16, 2005 5.80%
2 $200,000,000 August 16, 2005 5.80%
3 $100,000,000 August 16, 2005 5.80%
CLASS B CERTIFICATES CUSIP NO. 81234C BD 2
- - --------------------
Certificate Number Principal Amount Maturity Date(1) Interest Rate
- - ------------------ ---------------- ------------- -------------
1 $ 35,300,000 August 16, 2005 6.00%
- - -------------------------
(1) Last possible Distribution Date.
<PAGE> 8
[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> 9
[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> 10
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 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
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> 1
EXHIBIT 5.1
June 2, 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 May 19, 1998 among
SRFG, Inc., Sears, Roebuck and Co.
and such Underwriters
with respect to the Class A Certificates,
and as Underwriter of the Class B Certificates
c/o Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, New York 10010-3629
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 $500,000,000 aggregate principal amount
of 5.80% Class A Master Trust Certificates, Series 1998-1 and $35,300,000
aggregate principal amount of 6.00% Class B Master Trust Certificates, Series
1998-1 (together, 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 June 2, 1998 (the "Series Supplement"), and to be sold
to the public in accordance with the terms of, with respect to the Class A
Master Trust Certificates, (i) the Pricing Agreement, dated May 19, 1998, among
Sears, the Company and Credit Suisse First Boston Corporation, on behalf of
each of the Underwriters named in Schedule 1 thereto (the "Class A 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 "Class A Underwriting
Agreement"), and with respect to the Class B Master Trust Certificates, (i) the
Pricing Agreement, dated May 19, 1998, among Sears, the Company and Credit
Suisse First Boston Corporation (the "Class B Pricing Agreement" and,
collectively with the Class A Pricing Agreement, the "Pricing Agreement") and
(ii) the related Underwriting Agreement, dated May 19, 1998, among Sears, the
Company and Credit Suisse First Boston Corporation as Representative of the
several Underwriters (the "Class B Underwriting Agreement" and, collectively
with the Class A Underwriting Agreement, the "Underwriting Agreement"). The
Trust also will issue $52,950,000 aggregate principal amount of Class C Master
Trust Certificates, Series 1998-1 (the "Class C Certificates," and together
with the Offered 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 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 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
<PAGE> 3
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 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;
<PAGE> 4
(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 date 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 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 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
<PAGE> 5
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 of the Class A Certificates and Credit Suisse First Boston
Corporation as Representative of the several Underwriters of the Class B
Certificates, 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 BELLIS
----------------
Nancy K. Bellis
