Exhibit 4.2
SPIEGEL CREDIT CARD MASTER NOTE TRUST
Issuer
and
THE BANK OF NEW YORK
Indenture Trustee
SERIES 2000-A INDENTURE SUPPLEMENT
Dated as of _____ __, 2000
Table of Contents
ARTICLE I Creation of the Series 2000-A Notes.......................... 1
Section 1.1 Designation.................................... 1
ARTICLE II Definitions.................................................. 2
Section 2.1 Definitions.................................... 2
ARTICLE III Servicing Fee................................................ 15
Section 3.1 Servicing Compensation......................... 15
ARTICLE IV Rights of Series 2000-A Noteholders and Allocation and
Application of Collections................................... 16
Section 4.1 Collections and Allocations.................... 16
Section 4.2 Determination of Monthly Interest.............. 18
Section 4.3 Determination of Monthly Principal............. 20
Section 4.4 Application of Available Finance Charge
Collections and Available Principal.......................... 20
Section 4.5 Investor Charge-Offs........................... 23
Section 4.6 Reallocated Principal Collections.............. 24
Section 4.7 Excess Finance Charge Collections.............. 24
Section 4.8 Shared Principal Collections................... 24
Section 4.9 Principal Accumulation Account................. 25
Section 4.10 Reserve Account................................ 26
Section 4.11 Spread Account................................. 29
Section 4.12 Determination of LIBOR......................... 31
Section 4.13 Investment Instructions........................ 32
Section 4.14 Increase of Excess Collateral Amount........... 32
ARTICLE V Delivery of Series 2000-A Notes; Distributions; Reports to
Series 2000-A Noteholders.................................... 33
Section 5.1 Delivery and Payment for the Series 2000-A
Notes........................................................ 33
Section 5.2 Distributions.................................. 33
Section 5.3 Reports and Statements to Series 2000-A
Noteholders.................................................. 34
ARTICLE VI Series 2000-A Pay Out Events................................. 35
Section 6.1 Series 2000-A Pay Out Events................... 35
ARTICLE VII Redemption of Series 2000-A Notes; Final Distributions;
Series Termination........................................... 36
Section 7.1 Optional Redemption of Series 2000-A Notes;
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Final Distributions......................................... 36
Section 7.2 Series Termination............................. 38
ARTICLE VIII Miscellaneous Provisions.................................... 38
Section 8.1 Ratification of Indenture...................... 38
Section 8.2 Form of Delivery of the Series 2000-A Notes.... 38
Section 8.3 Counterparts................................... 39
Section 8.4 GOVERNING LAW.................................. 39
Section 8.5 Limitation of Liability........................ 39
Section 8.6 Rights of the Indenture Trustee................ 39
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EXHIBITS
EXHIBIT A-1 FORM OF CLASS A NOTE
EXHIBIT A-2 FORM OF CLASS B NOTE
EXHIBIT A-3 FORM OF CLASS C NOTE
EXHIBIT B FORM OF MONTHLY PAYMENT INSTRUCTIONS AND NOTIFICATION TO THE
INDENTURE TRUSTEE
EXHIBIT C FORM OF MONTHLY STATEMENT
EXHIBIT D FORM OF MONTHLY SERVICER'S CERTIFICATE
iii
SERIES 2000-A INDENTURE SUPPLEMENT, dated as of ______ __, 2000 (the
"Indenture Supplement"), between SPIEGEL CREDIT CARD MASTER NOTE TRUST, a trust
--------------------
organized and existing under the laws of the State of Illinois (herein, the
"Issuer" or the "Trust"), and THE BANK OF NEW YORK, a banking corporation
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organized and existing under the laws of the State of New York, not in its
individual capacity, but solely as indenture trustee (herein, together with its
successors in the trusts thereunder as provided in the Master Indenture referred
to below, the "Indenture Trustee") under the Master Indenture, dated as of
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_______, 2000 (the "Indenture") between the Issuer and the Indenture Trustee
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(the Indenture, together with this Indenture Supplement, the "Agreement").
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Pursuant to Section 2.12 of the Indenture, the Seller may direct the Issuer
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to issue one or more Series of Notes. The Principal Terms of this Series are set
forth in this Indenture Supplement to the Indenture.
ARTICLE I
Creation of the Series 2000-A Notes
-----------------------------------
Section 1.1 Designation.
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(a) There is hereby created and designated a Series of Notes to be issued
pursuant to the Indenture and this Indenture Supplement to be known as "Spiegel
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Credit Card Master Note Trust, Series 2000-A" or the "Series 2000-A Notes." The
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Series 2000-A Notes shall be issued in three Classes, known as the "Class A
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Series 2000-A [Floating Rate] Asset Backed Notes," the "Class B Series 2000-A
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[Floating Rate] Asset Backed Notes," and the "Class C Series 2000-A [Floating
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Rate] Asset Backed Notes."
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(b) Series 2000-A shall be included in Group One and shall be a Principal
Sharing Series. Series 2000-A shall be an Excess Allocation Series with respect
to Group One only. Series 2000-A shall not be subordinated to any other Series.
(c) If any term or provision contained herein shall conflict with or be
inconsistent with any term or provision contained in the Indenture, the terms
and provisions of this Indenture Supplement shall be controlling. All
capitalized terms not otherwise defined herein are defined in the Indenture.
Each capitalized term defined herein shall relate only to the Series 2000-A
Notes and no other Series of Notes issued by the Issuer.
ARTICLE II
Definitions
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Section 2.1 Definitions.
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(a) Whenever used in this Indenture Supplement, the following words and
phrases shall have the following meanings, and the definitions of such terms are
applicable to the singular as well as the plural forms of such terms and the
masculine as well as the feminine and neuter genders of such terms.
"Accumulation Period Factor" means, for any Monthly Period, a fraction, the
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numerator of which is equal to the sum of the initial Collateral Amounts of all
outstanding Series, and the denominator of which is equal to the sum of (a) the
Initial Collateral Amount, (b) the initial Collateral Amounts of all outstanding
Series (other than Series 2000-A) which are not expected to be in their
revolving periods, and (c) the initial Collateral Amounts of all other
outstanding Series which are not allocating Shared Principal Collections to
other Series and are in their revolving periods; provided, however, that this
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definition may be changed at anytime if the Rating Agency Condition is
satisfied.
"Accumulation Period Length" is defined in subsection 4.4(e).
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"Accumulation Shortfall" means initially zero and shall thereafter mean,
----------------------
for any Monthly Period during the Controlled Accumulation Period, the excess, if
any, of the Controlled Deposit Amount for the previous Monthly Period over the
amount deposited into the Principal Accumulation Account pursuant to subsection
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4.4(c)(i) for the previous Monthly Period.
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"Additional Accounts Enhancement Increase Condition" is defined in Section
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4.14.
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"Additional Interest" means, for any Distribution Date, Class A Additional
-------------------
Interest, Class B Additional Interest and Class C Additional Interest for such
Distribution Date.
"Adjusted Collateral Amount" means, as of any date of determination, an
--------------------------
amount equal to the Collateral Amount as of such date, minus the amount on
deposit in the Principal Accumulation Account on such date.
"Allocation Percentage" means, on any date of determination, the percentage
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equivalent of a fraction:
(a) the numerator of which shall be the Collateral Amount, determined:
2
(i) for Principal Collections during the Revolving Period
and for Finance Charge Collections and Default Amounts at any
time, at the end of the last day of the prior Monthly Period (or,
in the case of the monthly Period in which the Closing Date
occurs, on the Closing Date);
(ii) for Principal Collections during the Rapid Amortization
Period and the Controlled Accumulation Period, on the last day of
the Revolving Period, provided, however, that if Series 2000-A is
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paired with a Paired Series and a Rapid Amortization Period
commences for such Paired Series, the Seller may, by written
notice to the Indenture Trustee, the Servicer and the Rating
Agency, designate a different numerator for such fraction; and
(b) denominator of which shall be the greater of (x) the
Aggregate Principal Balance at the end of Business Day preceding such
date of determination and (y) the sum of the numerators used to
calculate the Allocation Percentages or Allocation Percentages for
allocations with respect to Finance Charge Collections, Principal
Collections or Default Amounts, as applicable, for all outstanding
Series on such date of determination.
"Available Finance Charge Collections" means, for any Monthly Period,
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an amount equal to the sum of (a) the Investor Finance Charge Collections for
such Monthly Period, plus (b) the Excess Finance Charge Collections allocated to
Series 2000-A for such Monthly Period, plus (c) Principal Accumulation
Investment Proceeds, if any, with respect to the related Distribution Date and
(d) amounts, if any, to be withdrawn from the Reserve Account which will be
deposited into the Collection Account on the related Distribution Date to be
treated as Available Finance Charge Collections pursuant to subsection 4.10(d).
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"Available Principal Collections" means, for any Monthly Period, an
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amount equal to the sum of (a) the Investor Principal Collections for such
Monthly Period minus (b) the amount of Reallocated Principal Collections with
respect to such Monthly Period which pursuant to Section 4.6 are required to be
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applied on the related Distribution Date, plus (c) any Shared Principal
Collections with respect to other Principal Sharing Series (including any
amounts on deposit in the Excess Funding Account that are allocated to Series
2000-A pursuant to the Agreement for application as Shared Principal
Collections), plus (d) the aggregate amount to be treated as Available Principal
Collections pursuant to subsections 4.4(a)(v) and (vi) for the related
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Distribution Date.
"Available Reserve Account Amount" means, for any Distribution Date,
--------------------------------
the lesser of (a) the amount on deposit in the Reserve Account on such date
(after taking into account any interest and earnings retained in the Reserve
Account pursuant to subsection 4.10(b) on such date, but before giving effect to
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any deposit made or to
3
be made pursuant to subsection 4.4(a)(vii) to the Reserve Account on such date)
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and (b) the Required Reserve Account Amount.
"Available Spread Account Amount" means, for any Distribution Date, an
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amount equal to the lesser of (a) the amount on deposit in the Spread Account
(exclusive of Investment Earnings, unless and until the occurrence of an Event
of Default with respect to Series 2000-A and acceleration of the maturity of the
Series 2000-A Notes pursuant to Section 5.3 of the Indenture) on such date
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(before giving effect to any deposit to, or withdrawal from, the Spread Account
made or to be made with respect to such date) and (b) the Required Spread
Account Amount for such Distribution Date.
"Base Rate" means, for any Monthly Period, the annualized percentage
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equivalent of a fraction, the numerator of which is equal to the sum of the
Monthly Interest and the Monthly Servicing Fee, each with respect to the related
Distribution Date, and the denominator of which is the Collateral Amount as of
the first day of such Monthly Period.
"Class A Additional Interest" is defined in subsection 4.2(a).
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"Class A Interest Shortfall" is defined in subsection 4.2(a).
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"Class A Monthly Interest" is defined in subsection 4.2(a).
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"Class A Note Initial Principal Balance" means $___________.
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"Class A Note Interest Rate" means a per annum rate of ____% [in excess of
--------------------------
LIBOR as determined on the LIBOR Determination Date for the applicable Interest
Period].
"Class A Note Principal Balance" means, on any date of determination, an
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amount equal to (a) the Class A Note Initial Principal Balance, minus (b) the
aggregate amount of principal payments made to the Class A Noteholders on or
prior to such date.
"Class A Noteholder" means the Person in whose name a Class A Note is
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registered in the Note Register.
"Class A Notes" means any one of the Notes executed by the Issuer and
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authenticated by or on behalf of the Indenture Trustee, substantially in the
form of Exhibit A-1.
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"Class A Required Amount" means, for any Distribution Date, an amount
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equal to the excess of the amount described in subsection 4.4(a)(i) over the
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Available
4
Finance Charge Collections applied to pay such amount pursuant to subsection
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4.4(a).
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"Class B Additional Interest" is defined in subsection 4.2(b).
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"Class B Interest Shortfall" is defined in subsection 4.2(b).
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"Class B Monthly Interest" is defined in subsection 4.2(b).
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"Class B Note Initial Principal Balance" means $___________.
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"Class B Note Interest Rate" means a per annum rate of ____% [in excess of
--------------------------
LIBOR as determined on the LIBOR Determination Date for the applicable Interest
Period].
"Class B Note Principal Balance" means, on any date of determination, an
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amount equal to (a) the Class B Note Initial Principal Balance, minus (b) the
aggregate amount of principal payments made to the Class B Noteholders on or
prior to such date.
"Class B Noteholder" means the Person in whose name a Class B Note is
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registered in the Note Register.
"Class B Notes" means any one of the Notes executed by the Issuer and
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authenticated by or on behalf of the Indenture Trustee, substantially in the
form of Exhibit A-2.
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"Class B Required Amount" means, for any Distribution Date, an amount equal
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to the excess of the amount described in subsection 4.4(a)(ii) over the
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Available Finance Charge Collections applied to pay such amount pursuant to
subsection 4.4(a).
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"Class C Additional Interest" is defined in subsection 4.2(c).
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"Class C Interest Shortfall" is defined in subsection 4.2(c).
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"Class C Monthly Interest" is defined in subsection 4.2(c).
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"Class C Note Initial Principal Balance" means $___________.
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"Class C Note Interest Rate" means a per annum rate of ____% [in excess of
--------------------------
LIBOR as determined on the LIBOR Determination Date for the applicable Interest
Period].
"Class C Note Principal Balance" means, on any date of determination, an
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amount equal to (a) the Class C Note Initial Principal Balance, minus (b) the
5
aggregate amount of principal payments made to the Class C Noteholders on or
prior to such date.
"Class C Noteholder" means the Person in whose name a Class C Note is
------------------
registered in the Note Register.
"Class C Notes" means any one of the Notes executed by the Issuer and
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authenticated by or on behalf of the Indenture Trustee, substantially in the
form of Exhibit A-3.
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"Class C Required Amount" means, for any Distribution Date, an amount equal
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to the excess of the amount described in subsection 4.4(a)(iv) over the
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Available Finance Charge Collections applied to pay such amount pursuant to
subsection 4.4(a).
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"Closing Date" means [_____ __], 2000.
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"Collateral Amount" means, as of any date of determination, an amount equal
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to the Initial Collateral Amount plus the cumulative amount of any increases to
the Collateral Amount made pursuant to Section 4.14 on or prior to such date of
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determination minus the amount of principal previously paid to the Series 2000-A
Noteholders, minus the aggregate reductions to the Collateral Amount made
pursuant to Section 4.4(c)(v) on or prior to such date of determination, minus
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the excess, if any, of the aggregate amount of Investor Charge-Offs and
Reallocated Principal Collections over the reimbursements of such amounts
pursuant to subsection 4.4(a)(vi) prior to such date.
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"Controlled Accumulation Amount" means, for any Distribution Date with
------------------------------
respect to the Controlled Accumulation Period, $[___________]; provided,
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however, that if the Accumulation Period Length is determined to be less than 12
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months pursuant to subsection 4.4(e), the Controlled Accumulation Amount for
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each Distribution Date with respect to the Controlled Accumulation Period will
be equal to (i) the product of (x) the aggregate initial principal amount of the
Series 2000-A Notes and (y) the Accumulation Period Factor for such Monthly
Period divided by (ii) the Required Accumulation Factor Number.
"Controlled Accumulation Period" means, unless a Pay Out Event shall have
------------------------------
occurred prior thereto, the period commencing at the close of business on [_____
__, 20__] or such later date as is determined in accordance with subsection
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4.4(e), and ending on the first to occur of (a) the commencement of the Rapid
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Amortization Period, (b) the payment in full of the Note Principal Balance and
(c) the Series 2000-A Final Maturity Date.
"Controlled Deposit Amount" means, for any Distribution Date with respect
-------------------------
to the Controlled Accumulation Period, an amount equal to the sum of the
Controlled
6
Accumulation Amount for such Distribution Date and any existing Accumulation
Shortfall.
"Covered Amount" means an amount, determined as of each Distribution Date
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for any Interest Period, equal to the sum of (a) the product of (i) a fraction,
the numerator of which is the [actual number of days] in such Interest Period
and the denominator of which is 360, times (ii) the Class A Note Interest Rate
[in effect with respect to such Interest Period], times (iii) the aggregate
amount on deposit in the Principal Accumulation Account up to the Class A Note
Principal Balance as of the Record Date preceding such Distribution Date, plus
(b) the product of (i) a fraction, the numerator of which is the [actual number
of days] in such Interest Period and the denominator of which is 360, times (ii)
the Class B Note Interest Rate [in effect with respect to such Interest Period],
times (iii) the aggregate amount on deposit in the Principal Accumulation
Account in excess of the Class A Note Principal Balance as of the Record Date
preceding such Distribution Date up to the Class B Note Principal Balance as of
the Record Date preceding such Distribution Date, plus (c) the product of (i) a
fraction, the numerator of which is the [actual number of days] in such Interest
Period and the denominator of which is 360, times (ii) the Class C Note Interest
Rate [in effect with respect to such Interest Period], times (iii) the aggregate
amount on deposit in the Principal Accumulation Account in excess of the sum of
the Class A Note Principal Balance and the Class B Note Principal Balance as of
the Record Date preceding such Distribution Date.
"Distribution Date" means [_____ __], 2000 and the 15th day of each
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calendar month thereafter, or if such 15th day is not a Business Day, the next
succeeding Business Day.
"Excess Collateral Amount" means, at any time, the excess (if any) of the
------------------------
Collateral Amount over the Note Principal Balance.
"Excess Spread Percentage" means, for any Monthly Period, the amount, if
------------------------
any, by which the Portfolio Yield exceeds the Base Rate.
"Expected Principal Distribution Date" means the [____ 20__] Distribution
------------------------------------
Date.
"Finance Charge Shortfall" is defined in Section 4.7.
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"Group One" means Series 2000-A and each other Series hereafter specified
---------
in the related Indenture Supplement to be included in Group One.
"Initial Collateral Amount" means $[_________], which equals the initial
-------------------------
principal amount of the Series 2000-A Notes plus the Initial Excess Collateral
Amount.
7
"Initial Excess Collateral Amount" means $___________.
--------------------------------
"Interest Period" means, for any Distribution Date, the period from and
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including the Distribution Date immediately preceding such Distribution Date
(or, in the case of the first Distribution Date, from and including the Closing
Date) to but excluding such Distribution Date.
"Investment Earnings" means, for any Distribution Date, all interest and
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earnings on Permitted Investments included in the Spread Account (net of losses
and investment expenses) during the period commencing on and including the
Distribution Date immediately preceding such Distribution Date and ending on but
excluding such Distribution Date.
"Investor Charge-Offs" is defined in Section 4.5.
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"Investor Default Amount" means, for any Distribution Date, an amount equal
-----------------------
to the product of (a) the Defaulted Amount for the related Monthly Period and
(b) the Floating Allocation Percentage for such Monthly Period.
"Investor Finance Charge Collections" means, for any Monthly Period, an
-----------------------------------
amount equal to the aggregate amount retained or deposited in the Collection
Account for Series 2000-A pursuant to subsection 4.1(b)(i) for such Monthly
--------------------
Period of Finance Charge Collections (including Net Recoveries treated as
Finance Charge Collections) deposited in the Collection Account for such Monthly
Period.
"Investor Percentage" means, for any Monthly Period, the Allocation
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Percentage.
"Investor Principal Collections" means, for any Monthly Period, the
------------------------------
aggregate amount retained in the Collection Account for Series 2000-A pursuant
to subsection 4.1(b)(ii) for such Monthly Period.
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"Investor Uncovered Dilution Amount" means, for any Distribution Date,
----------------------------------
an amount equal to the Series Share of shortfalls in Deposit Obligations that is
allocated to Series 2000-A pursuant to Section 8.4(h) of the Indenture.
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["LIBOR" means, for any Interest Period, the London interbank offered
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rate for one-month United States dollar deposits determined by the Indenture
Trustee for each Interest Period in accordance with the provisions of Section
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4.12.]
----
["LIBOR Determination Date" means (i) _____ __, 2000 for the period
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from and including the Closing Date through and including _____ __, 2000 and
(ii) the second London Business Day prior to the commencement of the second and
each subsequent Interest Period.]
8
"London Business Day" means any Business Day on which dealings in
-------------------
deposits in United States dollars are transacted in the London interbank
market.
"Minimum Seller Percentage" means zero, for Series 2000-A.
-------------------------
"Modified Excess Spread Percentage" means with respect to the first
---------------------------------
Monthly Period an amount equal to [ ]%.
"Monthly Interest" means, for any Distribution Date, the sum of the
----------------
Class A Monthly Interest, the Class B Monthly Interest, and the Class C Monthly
Interest for such Distribution Date.
"Monthly Principal" means the monthly principal distributable in
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respect of the Notes as calculated in accordance with Section 4.3.
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"Monthly Principal Reallocation Amount" means, for any Monthly
-------------------------------------
Period, an amount equal to the sum of:
(a) the lower of (i) the Class A Required Amount and (ii) the
greater of (A)(x) the product of (I) [__]% and (II) the Initial Collateral
Amount minus (y) the amount of unreimbursed Investor Charge-Offs (after
giving effect to Investor Charge-Offs for the related Monthly Period) and
unreimbursed Reallocated Principal Collections (as of the previous
Distribution Date) and (B) zero;
(b) the lower of (i) the sum of the Class B Required Amount and
the Servicing Fee Required Amount and (ii) the greater of (A)(x) the
product of (I) [__]% and (II) the Initial Collateral Amount minus (y) the
amount of unreimbursed Investor Charge-Offs (after giving effect to
Investor Charge-Offs for the related Monthly Period) and unreimbursed
Reallocated Principal Collections (as of the previous Distribution Date and
as required in clause (a) above) and (B) zero; and
(c) the lower of (i) the sum of the Class C Required Amount and
(ii) the greater of (A)(x) the product of (I) [__]% and (II) the Initial
Collateral Amount minus (y) the amount of unreimbursed Investor Charge-Offs
(after giving effect to Investor Charge-Offs for the related Monthly
Period) and unreimbursed Reallocated Principal Collections (as of the
previous Distribution Date and as required in clauses (a) and (b) above)
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and (B) zero.
"Monthly Servicing Fee" is defined in subsection 3.1(a).
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"Note Principal Balance" means, on any date of determination, an amount
----------------------
equal to the sum of the Class A Note Principal Balance, the Class B Note
Principal Balance and the Class C Note Principal Balance.
9
"Percentage Allocation" is defined in subsection 4.1(b)(ii)(y).
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"Portfolio Adjusted Yield" means, for any Distribution Date, the average of
------------------------
the percentages obtained for each of the three preceding Monthly Periods by
subtracting the Base Rate for each such Monthly Period from the Portfolio Yield
for each such Monthly Period.
"Portfolio Yield" means, for any Monthly Period, the annualized percentage
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equivalent of a fraction, (a) the numerator of which is equal to the sum of (i)
Investor Finance Charge Collections with respect to such Monthly Period, plus
(ii) the Principal Accumulation Investment Proceeds deposited into the
Collection Account on the Distribution Date related to such Monthly Period, plus
(iii) the amount of the Reserve Draw Amount (up to the Available Reserve Account
Amount) plus any amounts of interest and earnings described in Section 4.10,
------------
each deposited into the Collection Account on the Distribution Date relating to
such Monthly Period, plus (iv) Excess Finance Charge Collections that are
allocated to Series 2000-A with respect to such Monthly Period, such sum to be
calculated on a cash basis after subtracting the Investor Default Amount for
such Monthly Period, and (b) the denominator of which is the Collateral Amount
as of the first day of such Monthly Period.
"Principal Accumulation Account" shall have the meaning set forth in
------------------------------
subsection 4.9(a).
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"Principal Accumulation Account Balance" means, for any date of
--------------------------------------
determination, the principal amount, if any, on deposit in the Principal
Accumulation Account on such date of determination.
"Principal Accumulation Investment Proceeds" means, with respect to each
------------------------------------------
Distribution Date, the investment earnings on funds in the Principal
Accumulation Account (net of investment expenses and losses) for the period from
and including the immediately preceding Distribution Date to but excluding such
Distribution Date.
"Principal Shortfall" is defined in subsection 4.8(a).
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"Qualified Maturity Agreement" means an agreement in which an Eligible
----------------------------
Institution agrees to make a deposit into the Principal Accumulation Account on
the Expected Principal Distribution Date in an amount equal to the Note
Principal Balance on such date.
"Quarterly Excess Spread Percentage" means (a) with respect to the
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[Month 1] 2000 Distribution Date, the Modified Excess Spread Percentage, (b)
with respect to the [Month 2] 2000 Distribution Date, the percentage equivalent
of a fraction the numerator of which is the sum of (i) the Modified Excess
Spread Percentage for the first Monthly Period and (ii) the Excess Spread
Percentage with respect to the
10
[Month 1] 2000 Monthly Period and the denominator of which is two, (c) with
respect to the [Month 3] 2000 Distribution Date, the percentage equivalent of a
fraction the numerator of which is the sum of (i) the Modified Excess Spread
Percentage for the first Monthly Period, (ii) the Excess Spread Percentage with
respect to the [Month 1] 2000 Monthly Period and (iii) the Excess Spread
Percentage with respect to the [Month 2] 2000 Monthly Period and the denominator
of which is three and (d) with respect to the [Month 4] 2000 Distribution Date
and each Distribution Date thereafter, the percentage equivalent of a fraction
the numerator of which is the sum of the Excess Spread Percentages with respect
to the immediately preceding three Monthly Periods and the denominator of which
is three.
"Rapid Amortization Period" means the period commencing on the Business Day
-------------------------
immediately preceding the day on which a Pay Out Event with respect to Series
2000-A is deemed to have occurred, and ending on the first to occur of (i) the
payment in full of the Collateral Amount and (ii) the Series 2000-A Final
Maturity Date.
"Rating Agency" means each of Fitch, Inc., Xxxxx'x and Standard & Poor's.
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"Reallocated Principal Collections" means, for any Distribution Date,
---------------------------------
Investor Principal Collections applied in accordance with Section 4.6 in an
-----------
amount not to exceed the Monthly Principal Reallocation Amount for the related
Monthly Period.
"Reassignment Amount" means, for any Distribution Date, after giving effect
-------------------
to any deposits and distributions otherwise to be made on such Distribution
Date, the sum of (i) the outstanding principal balance of the Series 2000-A
Notes on such Distribution Date, plus (ii) Monthly Interest for such
Distribution Date and any Monthly Interest previously due but not distributed to
the Series 2000-A Noteholders, plus (iii) the amount of Additional Interest, if
any, for such Distribution Date and any Additional Interest previously due but
not distributed to the Series 2000-A Noteholders on a prior Distribution Date.
"Reference Banks" means four major banks in the London interbank market
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selected by the Servicer.
"Required Accumulation Factor Number" shall be equal to a fraction, rounded
-----------------------------------
upwards to the nearest whole number, the numerator of which is one and the
denominator of which is equal to the lowest monthly principal payment rate on
the Accounts, expressed as a decimal, for the 12 months preceding the date of
such calculation; provided, however, that this definition may be changed at any
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time if the Rating Agency Condition is satisfied.
"Required Excess Collateral Amount" means, at any time, the product of the
---------------------------------
Required Excess Collateral Percentage and the Collateral Amount; provided that:
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(a) except as provided in clause (c), the Required Excess Collateral
----------
Amount will never be less than 3% of the Initial Collateral Amount;
(b) except as provided in clause (c), the Required Excess Collateral
----------
Amount will not decrease during a Rapid Amortization Period; and
(c) the Required Excess Collateral Amount will never be greater than
the Note Principal Balance minus the balance on deposit in the Spread
Account.
"Required Excess Collateral Percentage" means ____%.
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"Required Reserve Account Amount" means, for any Distribution Date on or
-------------------------------
after the Reserve Account Funding Date, an amount equal to (a) 0.5% of the Note
Principal Balance or (b) any other amount designated by the Seller; provided,
however, that if such designation is of a lesser amount, the Seller shall (i)
provide the Servicer and the Indenture Trustee with evidence that the Rating
Agency Condition shall have been satisfied and (ii) deliver to the Indenture
Trustee a certificate of an Authorized Officer to the effect that, based on the
facts known to such officer at such time, in the reasonable belief of the
Seller, such designation will not cause a Pay Out Event or an event that, after
the giving of notice or the lapse of time, would cause a Pay Out Event to occur
with respect to Series 2000-A.
"Required Spread Account Amount" means, (a) prior to the occurrence of an
------------------------------
Event of Default with respect to Series 2000-A and acceleration of the maturity
of the Series 2000-A Notes pursuant to Section 5.3 of the Indenture, for any
-----------
date of determination, the product of (i) the Spread Account Percentage in
effect on such date and (ii) the Initial Collateral Amount; provided that the
--------
Required Spread Account Amount shall not exceed the Class C Note Principal
Balance minus the excess, if any, of the Principal Accumulation Account Balance
over the sum of the Class A Note Principal Balance and the Class B Note
Principal Balance on such date of determination and (b) after the occurrence of
an Event of Default with respect to Series 2000-A and acceleration of the
maturity of the Series 2000-A Notes pursuant to Section 5.3 of the Indenture,
-----------
for any Distribution Date, the Note Principal Balance.
"Reserve Account" is defined in subsection 4.10(a).
--------------- ------------------
"Reserve Account Funding Date" means the Distribution Date designated by
----------------------------
the Servicer which occurs not later than the earliest of (a) the Distribution
Date with respect to the Monthly Period which commences 3 months prior to the
commencement of the Controlled Accumulation Period; (b) the first Distribution
Date for which the Portfolio Adjusted Yield is less than 2%, but in such event
the Reserve Account Funding Date shall not be required to occur earlier than the
Distribution Date with respect to the Monthly Period which commences 12 months
12
prior to the commencement of the Controlled Accumulation Period; (c) the first
Distribution Date for which the Portfolio Adjusted Yield is less than 3%, but in
such event the Reserve Account Funding Date shall not be required to occur
earlier than the Distribution Date with respect to the Monthly Period which
commences 6 months prior to the commencement of the Controlled Accumulation
Period; and (d) the first Distribution Date for which the Portfolio Adjusted
Yield is less than 4%, but in such event the Reserve Account Funding Date shall
not be required to occur earlier than the Distribution Date with respect to the
Monthly Period which commences 4 months prior to the commencement of the
Controlled Accumulation Period.
"Reserve Account Surplus" means, as of any Distribution Date following the
-----------------------
Reserve Account Funding Date, the amount, if any, by which the amount on deposit
in the Reserve Account exceeds the Required Reserve Account Amount.
"Reserve Draw Amount" means, with respect to each Distribution Date
-------------------
relating to the Controlled Accumulation Period or the first Distribution Date
relating to the Rapid Amortization Period, the amount, if any, by which the
Principal Accumulation Investment Proceeds for such Distribution Date are less
than the Covered Amount determined as of such Distribution Date.
"Revolving Period" means the period beginning on the Closing Date and
----------------
ending on the earlier of the close of business on the day immediately preceding
the day the Controlled Accumulation Period commences or the Rapid Amortization
Period commences.
"Series 2000-A" means the Series of Notes the terms of which are specified
-------------
in this Indenture Supplement.
"Series 2000-A Final Maturity Date" means the earlier to occur of (a) the
---------------------------------
Distribution Date on which the Collateral Amount is paid in full and (b) the
[________ ____] Distribution Date.
"Series 2000-A Note" means a Class A Note, a Class B Note or a Class C
------------------
Note.
"Series 2000-A Noteholder" means a Class A Noteholder, a Class B Noteholder
------------------------
or a Class C Noteholder.
"Series 2000-A Pay Out Event" is defined in Section 6.1.
---------------------------
"Series Servicing Fee Percentage" means 2% per annum.
-------------------------------
"Servicing Fee Required Amount" means, for any Distribution Date, an amount
-----------------------------
equal to the excess of the amount described in subsection 4.4(a)(iii) over the
----------------------
13
Available Finance Charge Collections applied to pay such amount pursuant to
subsection 4.4(a).
-----------------
"Spread Account" is defined in subsection 4.11(a).
-------------- ------------------
"Spread Account Deficiency" means the excess, if any, of the Required
-------------------------
Spread Account Amount over the Available Spread Account Amount.
"Spread Account Percentage" means, (i) zero, if the Quarterly Excess Spread
-------------------------
Percentage on such Distribution Date is greater than or equal to 5.0%, (ii)
1.5%, if the Quarterly Excess Spread Percentage on such Distribution Date is
less than 5.0% and greater than or equal to 4.5%, (iii) 2.0%, if the Quarterly
Excess Spread Percentage on such Distribution Date is less than 4.5% and greater
than or equal to 4.0%, (iv) 3.0%, if the Quarterly Excess Spread Percentage on
such Distribution Date is less than 4.0% and greater than or equal to 3.0%, and
(v) 6.0%, if the Quarterly Excess Spread Percentage on such Distribution Date is
less than 3.0%, provided, that if a Pay Out Event with respect to Series 2000-A
has occurred, the Spread Account Percentage shall be [____]%.
"Surplus Collateral Amount" means, at any time, the excess, if any, of
-------------------------
the Excess Collateral Amount over the Required Excess Collateral Amount.
["Telerate Page 3750" means the display page currently so designated
--------------------
on the Bridge Telerate Capital Markets Report (or such other page as may replace
that page in that service for the purpose of displaying comparable rates or
prices).]
(b) Each capitalized term defined herein shall relate to the Series 2000-A
Notes and no other Series of Notes issued by the Trust, unless the context
otherwise requires. All capitalized terms used herein and not otherwise defined
herein have the meanings ascribed to them in the Indenture or the Transfer and
Servicing Agreement. In the event that any term or provision contained herein
shall conflict with or be inconsistent with any term or provision contained in
the Indenture or the Transfer and Servicing Agreement, the terms and provisions
of this Indenture Supplement shall govern.
(c) The interpretive rules specified in Section 1.2 of the Master
-----------
Indenture also apply to this Indenture Supplement.
14
ARTICLE III
Servicing Fee
-------------
Section 3.1 Servicing Compensation. The share of the Servicing Fee
----------------------
allocable to Series 2000-A for any Distribution Date (the "Monthly Servicing
-----------------
Fee") shall be equal to one-twelfth of the product of (a) the Series Servicing
---
Fee Percentage and (b) (i) the Adjusted Collateral Amount as of the last day of
the Monthly Period preceding such Distribution Date, minus (ii) the product of
the amount, if any, on deposit in the Excess Funding Account as of the last day
of the Monthly Period preceding such Distribution Date and the Allocation
Percentage for Finance Charge Collections with respect to such Monthly Period;
provided, however, that with respect to the first Distribution Date, the Monthly
-------- -------
Servicing Fee shall be equal to $[________]. The remainder of the Servicing Fee
shall be paid by the Holders of the Seller Interest or the noteholders of other
Series (as provided in the related Indenture Supplements) and in no event shall
the Trust, the Indenture Trustee or the Series 2000-A Noteholders be liable for
the share of the Servicing Fee to be paid by the Holders of the Seller Interest
or the noteholders of any other Series. To the extent that the Monthly Servicing
Fee is not paid in full pursuant to the preceding provisions of this Section
-------
3.1, and Section 4.4, it shall be paid by the Holders of the Seller Interest.
--- -----------
ARTICLE IV
Rights of Series 2000-A Noteholders
and Allocation and Application of Collections
---------------------------------------------
Section 4.1 Collections and Allocations.
---------------------------
(a) Allocations. Finance Charge Collections, Principal Collections and
-----------
Defaulted Receivables allocated to Series 2000-A pursuant to Article VIII of the
------------
Indenture shall be allocated and distributed as set forth in this Article.
(b) Allocations to the Series 2000-A Noteholders. The Servicer shall, prior
--------------------------------------------
to the close of business on any Deposit Date, allocate to the Series 2000-A
Noteholders the following amounts as set forth below:
(i) Allocations of Finance Charge Collections. The Servicer shall
-----------------------------------------
allocate to the Series 2000-A Noteholders and retain in the Collection
Account for application as provided herein an amount equal to the product
of (A) the Allocation Percentage and (B) the aggregate Finance Charge
Collections deposited in the Collection Account on such Deposit Date;
provided, however, that with respect to the portion of each calendar month
-------- -------
falling [after the LIBOR Determination Date and] in the Revolving Period or
the Controlled Accumulation Period, such amount shall be retained in the
15
Collection Account only until such time as the amount retained in the
Collection Account pursuant to this subsection equals the sum of (1) the
aggregate amount of Monthly Interest with respect to the Distribution Date
in the immediately succeeding calendar month and (2) at any time that FCNB
is not the Servicer, the Monthly Servicing Fee payable on the Distribution
Date in the immediately succeeding calendar month and all accrued and
unpaid Investor Monthly Servicing Fees with respect to prior calendar
months; provided further, however, that notwithstanding the foregoing
-------- ------- -------
proviso, (1) the entire Allocation Percentage of Finance Charge Collections
-------
shall be retained in the Collection Account on a daily basis if (x) the
Excess Spread Percentage for the preceding Calendar month is less than
3.00%, (y) the Seller Amount is less than the Minimum Seller Amount or (z)
the Available Spread Account Amount is less than the Required Spread
Account Amount; and (2) subject to Section 8.4(a) of the Indenture, on each
--------------
Determination Date, the Servicer shall deposit in the Collection Account
any amounts not retained on a daily basis pursuant to the preceding
proviso.
-------
(ii) Allocations of Principal Collections. The Servicer shall allocate
------------------------------------
to the Series 2000-A Noteholders the following amounts as set forth below:
(x) Allocations During the Revolving Period. During the
---------------------------------------
Revolving Period an amount equal to the product of the Allocation
Percentage and the aggregate amount of Principal Collections deposited
in the Collection Account on such Deposit Date, shall be allocated to
the Series 2000-A Noteholders and shall be first, if any other
Principal Sharing Series is outstanding and in its amortization period
or accumulation period, retained in the Collection Account for
application, to the extent necessary, as Shared Principal Collections
to other Principal Sharing Series on the related Distribution Date,
second deposited in the Excess Funding Account to the extent necessary
so that the Seller Amount is not less than the Minimum Seller Amount
and third paid to the Holders of the Seller Interest.
(y) Allocations During the Controlled Accumulation Period.
-----------------------------------------------------
During the Controlled Accumulation Period an amount equal to the
product of (I) the Allocation Percentage and (II) the aggregate amount
of Principal Collections deposited in the Collection Account on such
Deposit Date (the product for any such date is hereinafter referred to
as a "Percentage Allocation") shall be allocated to the Series 2000-A
---------------------
Noteholders and deposited in the Principal Accumulation Account until
applied as provided herein; provided, however, that if the sum of such
-------- -------
Percentage Allocation and all preceding Percentage Allocations with
respect to the same Monthly
16
Period exceeds the Controlled Deposit Amount during the Controlled
Accumulation Period for the related Distribution Date, then such
excess shall not be treated as a Percentage Allocation and shall be
first, if any other Principal Sharing Series is outstanding and in its
amortization period or accumulation period, retained in the Collection
Account for application, to the extent necessary, as Shared Principal
Collections to other Principal Sharing Series on the related
Distribution Date, second deposited in the Excess Funding Account to
the extent necessary so that the Seller Amount is not less than the
Minimum Seller Amount and third paid to the Holders of the Seller
Interest.
(z) Allocations During the Rapid Amortization Period. During the
------------------------------------------------
Rapid Amortization Period, an amount equal to the product of (I) the
Allocation Percentage and (II) the aggregate amount of Principal
Collections deposited in the Collection Account on such Deposit Date,
shall be allocated to the Series 2000-A Noteholders and retained in
the Collection Account until applied as provided herein; provided,
--------
however, that after the date on which an amount of such Collections
-------
equal to the Adjusted Collateral Amount has been deposited into the
Collection Account and allocated to the Series 2000-A Noteholders,
such amount shall be first, if any other Principal Sharing Series is
outstanding and in its amortization period or accumulation period,
retained in the Collection Account for application, to the extent
necessary, as Shared Principal Collections to other Principal Sharing
Series on the related Distribution Date, second deposited in the
Excess Funding Account to the extent necessary so that the Seller
Amount is not less than the Minimum Seller Amount and third paid to
the Holders of the Seller Interest.
Section 4.2 Determination of Monthly Interest.
---------------------------------
(a) The amount of monthly interest ("Class A Monthly Interest")
------------------------
distributable from the Collection Account with respect to the Class A Notes on
any Distribution Date shall be an amount equal to the product of (i) (A) [one-
twelfth] [a fraction, the numerator of which is the actual number of days in the
related Interest Period and the denominator of which is 360], times (B) the
Class A Note Interest Rate [in effect with respect to the related Interest
Period] and (ii) the Class A Note Principal Balance as of the close of business
on the last day of the preceding Monthly Period [(or, with respect to the
initial Distribution Date, the Class A Note Initial Principal Balance)][;
provided, that for the initial Distribution Date, Class A Monthly Interest shall
--------
equal $__________].
17
On the Determination Date preceding each Distribution Date, the
Servicer shall determine the excess, if any (the "Class A Interest
----------------
Shortfall"), of (x) the Class A Monthly Interest for such Distribution Date
---------
over (y) the aggregate amount of funds allocated and available to pay such
Class A Monthly Interest on such Distribution Date. If the Class A Interest
Shortfall for any Distribution Date is greater than zero, on each
subsequent Distribution Date until such Class A Interest Shortfall is fully
paid, an additional amount ("Class A Additional Interest") equal to the
---------------------------
product of (i) (A) [one-twelfth] [a fraction, the numerator of which is the
actual number of days in the related Interest Period and the denominator of
which is 360], times (B) the Class A Note Interest Rate [in effect with
respect to the related Interest Period] and (ii) such Class A Interest
Shortfall (or the portion thereof which has not been paid to the Class A
Noteholders) shall be payable as provided herein with respect to the Class
A Notes. Notwithstanding anything to the 17 contrary herein, Class A
Additional Interest shall be payable or distributed to the Class A
Noteholders only to the extent permitted by applicable law.
(b) The amount of monthly interest ("Class B Monthly Interest")
------------------------
distributable from the Collection Account with respect to the Class B Notes
on any Distribution Date shall be an amount equal to the product of (i) (A)
[one-twelfth] [a fraction, the numerator of which is the actual number of
days in the related Interest Period and the denominator of which is 360],
times (B) the Class B Note Interest Rate [in effect with respect to the
related Interest Period] and (ii) the Class B Note Principal Balance as of
the close of business on the last day of the preceding Monthly Period [(or,
with respect to the initial Distribution Date, the Class B Note Initial
Principal Balance)] [; provided, that for the initial Distribution Date,
--------
Class B Monthly Interest shall equal $__________].
On the Determination Date preceding each Distribution Date, the
Servicer shall determine the excess, if any (the "Class B Interest
----------------
Shortfall"), of (x) the Class B Monthly Interest for such Distribution Date
---------
over (y) the aggregate amount of funds allocated and available to pay such
Class B Monthly Interest on such Distribution Date. If the Class B Interest
Shortfall for any Distribution Date is greater than zero, on each
subsequent Distribution Date until such Class B Interest Shortfall is fully
paid, an additional amount ("Class B Additional Interest") equal to the
---------------------------
product of (i) (A) [one-twelfth] [a fraction, the numerator of which is the
actual number of days in the related Interest Period and the denominator of
which is 360], times (B) the Class B Note Interest Rate [in effect with
respect to the related Interest Period] and (ii) such Class B Interest
Shortfall (or the portion thereof which has not been paid to the Class B
Noteholders) shall be payable as provided herein with respect to the Class
B Notes. Notwithstanding anything to the contrary herein, Class B
Additional Interest shall be payable or distributed to the Class B
Noteholders only to the extent permitted by applicable law.
18
(c) The amount of monthly interest ("Class C Monthly Interest")
------------------------
distributable from the Collection Account with respect to the Class C Notes
on any Distribution Date shall be an amount equal to the product of (i) (A)
[one-twelfth] [a fraction, the numerator of which is the actual number of
days in the related Interest Period and the denominator of which is 360],
times (B) the Class C Note Interest Rate [in effect with respect to the
related Interest Period] and (ii) the Class C Note Principal Balance as of
the close of business on the last day of the preceding Monthly Period (or,
with respect to the initial Distribution Date, the Class C Note Initial
Principal Balance)][; provided, that for the initial Distribution Date,
--------
Class C Monthly Interest shall equal $__________].
On the Determination Date preceding each Distribution Date, the
Servicer shall determine an amount (the "Class C Interest Shortfall") equal
--------------------------
to (x) the aggregate Class C Monthly Interest for such Distribution Date
minus (y) the aggregate amount of funds allocated and available to pay such
Class C Monthly Interest on such Distribution Date. If the Class C Interest
Shortfall for any Distribution Date is greater than zero, on each
subsequent Distribution Date until such Class C Interest Shortfall is fully
paid, an additional amount ("Class C Additional Interest") shall be payable
---------------------------
as provided herein with respect to the Class C Notes equal to the product
of (i) (A) [one-twelfth] [a fraction, the numerator of which is the actual
number of days in the related Interest Period and the denominator of which
is 360], times (B) the Class C Note Interest Rate [in effect with respect
to the related Interest Period] and (ii) such Class C Interest Shortfall
(or the portion thereof which has not been paid to the Class C Noteholders
(after giving effect to the application of the proceeds of any draw made on
the Spread Account as provided in subsections 4.4(a)(iv) and 4.11(c) for
---------------------- -------
the purpose of paying such amount with respect to such Distribution Date)).
Notwithstanding anything to the contrary herein, Class C Additional
Interest shall be payable or distributed to the Class C Noteholders only to
the extent permitted by applicable law.
Section 4.3 Determination of Monthly Principal. The amount of monthly
----------------------------------
principal distributable from the Collection Account with respect to the
Notes on each Distribution Date (the "Monthly Principal"), beginning with
-----------------
the Distribution Date in the month following the month in which the
Controlled Accumulation Period or, if earlier, the Rapid Amortization
Period, begins, shall be equal to the least of (i) the Available Principal
Collections on deposit in the Collection Account with respect to such
Distribution Date, (ii) for each Distribution Date with respect to the
Controlled Accumulation Period, the Controlled Deposit Amount for such
Distribution Date and (iii) the Adjusted Collateral Amount (after taking
into account any adjustments to be made on such Distribution Date pursuant
to Sections 4.5 and 4.6) prior to any deposit into the Principal
------------ ---
Accumulation Account on such Distribution Date.
Section 4.4 Application of Available Finance Charge Collections and
-------------------------------------------------------
Available Principal Collections. The Servicer shall apply, or shall cause
-------------------------------
the Indenture Trustee to apply by written instruction to the Indenture
Trustee, on each Distribution
19
Date, Available Finance Charge Collections and Available Principal
Collections on deposit in the Collection Account with respect to such
Distribution Date to make the following distributions:
(a) On each Distribution Date, an amount equal to the Available
Finance Charge Collections with respect to such Distribution Date will be
distributed or deposited in the following priority:
(i) an amount equal to Class A Monthly Interest for such
Distribution Date, plus the amount of any Class A Monthly Interest
previously due but not distributed to Class A Noteholders on a prior
Distribution Date, plus the amount of any Class A Additional Interest
for such Distribution Date, plus the amount of any Class A Additional
Interest previously due but not distributed to Class A Noteholders on
a prior Distribution Date, shall be distributed to the Paying Agent
for payment to Class A Noteholders on such Distribution Date;
(ii) an amount equal to Class B Monthly Interest for such
Distribution Date, plus the amount of any Class B Monthly Interest
previously due but not distributed to Class B Noteholders on a prior
Distribution Date, plus the amount of any Class B Additional Interest
for such Distribution Date, plus the amount of any Class B Additional
Interest previously due but not distributed to Class B Noteholders on
a prior Distribution Date, shall be distributed to the Paying Agent
for payment to Class B Noteholders on such Distribution Date;
(iii) if neither FCNB nor any of its Affiliates is the Servicer,
an amount equal to the Noteholder Servicing Fee for such Distribution
Date, plus the amount of any Noteholder Servicing Fee previously due
but not distributed to the Servicer on a prior Distribution Date,
shall be distributed to the Servicer;
(iv) an amount equal to Class C Monthly Interest for such
Distribution Date, plus the amount of any Class C Monthly Interest
previously due but not distributed to the Class C Noteholders on a
prior Distribution Date, plus the amount of any Class C Additional
Interest for such Distribution Date, plus the amount of any Class C
Additional Interest previously due but not distributed to the Class C
Noteholders on a prior Distribution Date shall be distributed to the
Paying Agent for payment to the Class C Noteholders on such
Distribution Date; provided, however, that, in the event that the sum
-------- -------
of Class C Monthly Interest exceeds the amount of Available Finance
Charge Collections available (after giving effect to subsections
-----------
4.4(a)(i) through (iii) above) to fund such Class C Monthly Interest
--------- -----
and Class C Additional Interest, a draw will be made from amounts
available for distribution in the Spread Account (at the times and in
the amounts specified in Section 4.11) and shall be distributed to the
------------
Paying Agent for payment to the Class C Noteholders on such
Distribution Date in accordance with this subsection 4.4(a)(iv);
---------------------
20
(v) an amount equal to the Investor Default Amount and any
Investor Uncovered Dilution Amount for such Distribution Date shall be
treated as a portion of Available Principal Collections for such
Distribution Date;
(vi) an amount equal to the sum of the aggregate amount of
Investor Charge-Offs and the amount of Reallocated Principal
Collections which have not been previously reimbursed pursuant to this
subsection (vi) shall be treated as a portion of Available Principal
---------------
Collections for such Distribution Date;
(vii) on each Distribution Date from and after the Reserve
Account Funding Date, but prior to the date on which the Reserve
Account terminates as described in subsection 4.10(f), an amount up to
------------------
the excess, if any, of the Required Reserve Account Amount over the
Available Reserve Account Amount shall be deposited into the Reserve
Account;
(viii) an amount equal to the amounts required to be deposited in
the Spread Account pursuant to Section 4.11 shall be deposited into
------------
the Spread Account as provided in Section 4.11;
------------
(ix) any Noteholder Servicing Fee for such Distribution Date or
prior Distribution Dates not paid pursuant to subsection 4.4(a)(iii)
----------------------
(unless such amount has been netted against deposits to the Collection
Account in accordance with Section 8.4 of the Indenture); and
-----------
(x) the balance, if any, will constitute a portion of Excess
Finance Charge Collections for such Distribution Date and will be
available for allocation to other Series in Group One or to the
Holders of the Seller Interest as described in Section 8.8 of the
-----------
Indenture and Section 4.1.
-----------
(b) On each Distribution Date with respect to the Revolving Period, an
amount equal to the Available Principal Collections deposited in the
Collection Account for the related Monthly Period shall be treated as
Shared Principal Collections and applied in accordance with Section 8.5 of
-----------
the Indenture.
(c) On each Distribution Date with respect to the Controlled
Accumulation Period or the Rapid Amortization Period, an amount equal to
the Available Principal Collections deposited in the Collection Account for
the related Monthly Period shall be distributed or deposited in the
following order of priority:
(i) during the Controlled Accumulation Period, an amount equal to
the Monthly Principal for such Distribution Date shall be deposited
into the Principal Accumulation Account;
(ii) during the Rapid Amortization Period, an amount equal to the
Monthly Principal for such Distribution Date shall be distributed to
the Paying
21
Agent for payment to the Class A Noteholders on such Distribution Date
and on each subsequent Distribution Date until the Class A Note
Principal Balance has been paid in full;
(iii) after giving effect to the distribution referred to in
clause (ii) above, during the Rapid Amortization Period, an amount
-----------
equal to the Monthly Principal remaining, if any, shall be distributed
to the Paying Agent for payment to the Class B Noteholders on such
Distribution Date and on each subsequent Distribution Date until the
Class B Note Principal Balance has been paid in full;
(iv) after giving effect to the distributions referred to in
clauses (ii) and (iii) above, during the Rapid Amortization Period, an
------------
amount equal to the Monthly Principal remaining, if any, shall be
distributed to the Paying Agent for payment to the Class C Noteholders
on such Distribution Date and on each subsequent Distribution Date
until the Class C Note Principal Balance has been paid in full; and
(v) in the case of each of the Controlled Accumulation Period and
the Rapid Amortization Period, the balance of such Available Principal
Collections remaining after application in accordance with clause (i)
----------
or (iv) above shall be treated as Shared Principal Collections and
----
applied in accordance with Section 8.5 of the Indenture. As of any
-----------
Distribution Date on which any Available Principal Collections are
treated as Shared Principal Collections as provided above, the
Collateral Amount shall be reduced by an amount equal to the lesser of
(x) the amount of Available Principal Collections applied as Shared
Principal Collections and (y) the Surplus Collateral Amount.
(d) On the earlier to occur of (i) the first Distribution Date with
respect to the Rapid Amortization Period and (ii) the Expected Principal
Distribution Date, the Indenture Trustee, acting in accordance with
instructions from the Servicer, shall withdraw from the Principal
Accumulation Account and distribute to the Paying Agent for payment to the
Class A Noteholders, the Class B Noteholders and the Class C Noteholders,
the amounts deposited into the Principal Accumulation Account pursuant to
subsection 4.4(c)(i).
--------------------
(e) The Controlled Accumulation Period is scheduled to commence at the
close of business on [_____ __, 20__]. However, if the Accumulation Period
Length (determined as described below) is less than 12 months, the date on
which the Controlled Accumulation Period actually commences will be delayed
to the first Business Day of the month that is the number of whole months
prior to the Expected Principal Distribution Date at least equal to the
Accumulation Period Length and, as a result, the number of Monthly Periods
in the Controlled Accumulation Period will at least equal the Accumulation
Period Length. On the Determination Date immediately preceding the [_____
____] Distribution Date, and each Determination Date thereafter until the
Controlled Accumulation Period begins, the Servicer will determine the
22
"Accumulation Period Length" which will equal the number of whole months
--------------------------
such that the sum of the Accumulation Period Factors for each month during
such period will be equal to or greater than the Required Accumulation
Factor Number; provided, however, that the Accumulation Period Length will
-------- -------
not be determined to be less than one month; provided further, however,
---------------- -------
that the determination of the Accumulation Period Length may be changed at
any time if the Rating Agency Condition is satisfied. The Controlled
Accumulation Period shall also be postponed if the Servicer obtains and
provides to the Indenture Trustee a Qualified Maturity Agreement and an
Opinion of Counsel to the effect that the Qualified Maturity Agreement is
enforceable against the provider of that agreement.
Section 4.5 Investor Charge-Offs. On each Determination Date, the Servicer
--------------------
shall calculate the Investor Default Amount and any Investor Uncovered Dilution
Amount for the related Distribution Date. If, on any Distribution Date, the sum
of the Investor Default Amount and any Investor Uncovered Dilution Amount for
such Distribution Date exceeds the amount of Available Finance Charge
Collections allocated with respect thereto pursuant to subsection 4.4(a)(v) with
--------------------
respect to such Distribution Date, the Collateral Amount will be reduced (but
not below zero) by the amount of such excess (such reduction, an "Investor
--------
Charge-Off").
----------
Section 4.6 Reallocated Principal Collections. On each Distribution Date,
---------------------------------
the Servicer shall apply, or shall instruct the Indenture Trustee in writing to
apply, Reallocated Principal Collections with respect to such Distribution Date,
to fund any deficiency pursuant to and in the priority set forth in subsections
-----------
4.4(a)(i), (ii), (iii), and (iv). On each Distribution Date, the Collateral
---------------------- ----
Amount shall be reduced by the amount of Reallocated Principal Collections for
such Distribution Date.
Section 4.7 Excess Finance Charge Collections. Series 2000-A shall be an
---------------------------------
Excess Allocation Series with respect to Group One only. For this purpose, each
outstanding series of certificates issued by Spiegel Master Trust (other than
series represented by the Collateral Certificate) shall be deemed to be a Series
in Group One. Subject to Section 8.8 of the Indenture, Excess Finance Charge
-----------
Collections with respect to the Excess Allocation Series in Group One for any
Distribution Date will be allocated to Series 2000-A in an amount equal to the
product of (x) the aggregate amount of Excess Finance Charge Collections with
respect to all the Excess Allocation Series in Group One for such Distribution
Date and (y) a fraction, the numerator of which is the Finance Charge Shortfall
for Series 2000-A for such Distribution Date and the denominator of which is the
aggregate amount of Finance Charge Shortfalls for all the Excess Allocation
Series in Group One for such Distribution Date. The "Finance Charge Shortfall"
------------------------
for Series 2000-A for any Distribution Date will be equal to the excess, if any,
of (a) the full amount required to be paid, without duplication, pursuant to
subsections 4.4(a)(i) through (ix) on such Distribution Date over (b) the
--------------------- ----
Investor Finance Charge Collections with respect to such Distribution Date.
23
Section 4.8 Shared Principal Collections. Subject to Section 8.5 of the
---------------------------- -----------
Indenture, Shared Principal Collections for any Distribution Date will be
allocated to Series 2000-A in an amount equal to the product of (x) the
aggregate amount of Shared Principal Collections with respect to all Principal
Sharing Series for such Distribution Date and (y) 23 a fraction, the numerator
of which is the Principal Shortfall for Series 2000-A for such Distribution Date
and the denominator of which is the aggregate amount of Principal Shortfalls for
all the Series which are Principal Sharing Series for such Distribution Date.
For this purpose, each outstanding series of certificates issued by Spiegel
Master Trust (other than series represented by the Collateral Certificate) shall
be deemed to be a Principal Sharing Series. The "Principal Shortfall" for Series
-------------------
2000-A will be equal to (a) for any Distribution Date with respect to the
Revolving Period, zero, (b) for any Distribution Date with respect to the
Controlled Accumulation Period, the excess, if any, of the Controlled Deposit
Amount with respect to such Distribution Date over the amount of Available
Principal Collections for such Distribution Date (excluding any portion thereof
attributable to Shared Principal Collections), and (c) for any Distribution Date
with respect to the Rapid Amortization Period, the excess, if any, of the
Adjusted Collateral Amount over the amount of Available Principal Collections
for such Distribution Date (excluding any portion thereof attributable to Shared
Principal Collections).
Section 4.9 Principal Accumulation Account.
------------------------------
(a) The Indenture Trustee shall establish and maintain with an Eligible
Institution, which may be the Indenture Trustee in the name of the Trust, on
behalf of the Trust, for the benefit of the Series 2000-A Noteholders, a non-
interest bearing segregated trust account with the corporate trust department of
such Eligible Institution (the "Principal Accumulation Account"), bearing a
------------------------------
designation clearly indicating that the funds deposited therein are held for the
benefit of the Series 2000-A Noteholders. The Indenture Trustee shall possess
all right, title and interest in all funds on deposit from time to time in the
Principal Accumulation Account and in all proceeds thereof. The Principal
Accumulation Account shall be under the sole dominion and control of the
Indenture Trustee for the benefit of the Series 2000-A Noteholders. If at any
time the institution holding the Principal Accumulation Account ceases to be an
Eligible Institution, the Servicer shall notify the Indenture Trustee in
writing, and the Indenture Trustee upon being notified (or the Servicer on its
behalf) shall, within ten (10) Business Days, establish a new Principal
Accumulation Account meeting the conditions specified above with an Eligible
Institution, and shall transfer any cash or any investments to such new
Principal Accumulation Account. The Indenture Trustee, at the written direction
of the Servicer, shall (i) make withdrawals from the Principal Accumulation
Account from time to time, in the amounts and for the purposes set forth in this
Indenture Supplement, and (ii) on each Distribution Date (from and after the
commencement of the Controlled Accumulation Period) prior to the termination of
the Principal Accumulation Account, make deposits into the Principal
Accumulation Account in the amounts specified in, and otherwise in accordance
with, subsection 4.4(c)(i).
--------------------
24
(b) Funds on deposit in the Principal Accumulation Account shall be
invested at the written direction of the Servicer by the Indenture Trustee in
Permitted Investments; provided, however, that, for purposes of the investment
-------- -------
of funds on deposit in the Principal Accumulation Account, references in the
definition of "Permitted Investments" to a rating in the "highest rating
category" shall be modified to require a rating, from any one of the following
Rating Agencies, of at least A-2 by Standard & Poor's, P-2 by Xxxxx'x or (if
such investment is rated by Fitch) F2 by Fitch. Funds on deposit in the
Principal Accumulation Account on any Distribution Date, after giving effect to
any withdrawals from the Principal Accumulation Account on such Distribution
Date, shall be invested in such investments that will mature so that such funds
will be available for withdrawal on or prior to the following Distribution Date.
The Indenture Trustee shall hold such of the Permitted Investments as
consists of instruments, deposit accounts, negotiable documents, money, goods,
letters of credit, and advices of credit in the State of New York and/or
Illinois. The Indenture Trustee shall hold such of the Permitted Investments as
constitutes investment property through a securities intermediary, which
securities intermediary shall agree with the Indenture Trustee that (a) such
investment property shall at all times be credited to a securities account of
the Indenture Trustee, (b) such securities intermediary shall treat the
Indenture Trustee as entitled to exercise the rights that comprise each
financial asset credited to such securities account, (c) all property credited
to such securities account shall be treated as a financial asset, (d) such
securities intermediary shall comply with entitlement orders originated by the
Indenture Trustee without the further consent of any other person or entity, (e)
such securities intermediary will not agree with any person or entity other than
the Indenture Trustee to comply with entitlement orders originated by such other
person or entity, (f) such securities accounts and the property credited thereto
shall not be subject to any lien, security interest or right of set-off in favor
of such securities intermediary or anyone claiming through it (other than the
Indenture Trustee), and (g) such agreement shall be governed by the laws of the
State of Illinois. Terms used in the preceding sentence that are defined in the
New York UCC and not otherwise defined herein shall have the meaning set forth
in the New York UCC.
On each Distribution Date with respect to the Controlled Accumulation
Period and on the first Distribution Date with respect to the Rapid Amortization
Period, the Indenture Trustee, acting at the Servicer's written direction given
on or before such Distribution Date, shall transfer from the Principal
Accumulation Account to the Collection Account the Principal Accumulation
Investment Proceeds on deposit in the Principal Accumulation Account for
application as Available Finance Charge Collections in accordance with Section
-------
4.4.
---
Principal Accumulation Investment Proceeds (including reinvested
interest) shall not be considered part of the amounts on deposit in the
Principal Accumulation Account for purposes of this Indenture Supplement.
25
Section 4.10 Reserve Account.
---------------
(a) The Indenture Trustee shall establish and maintain with an Eligible
Institution, which may be the Indenture Trustee in the name of the Trust, on
behalf of the Trust, for the benefit of the Series 2000-A Noteholders, a non-
interest bearing segregated trust account with the corporate trust department of
such Eligible Institution (the "Reserve Account"), bearing a designation clearly
---------------
indicating that the funds deposited therein are held for the benefit of the
Series 2000-A Noteholders. The Indenture Trustee shall possess all right, title
and interest in all funds on deposit from time to time in the Reserve Account
and in all proceeds thereof. The Reserve Account shall be under the sole
dominion and control of the Indenture Trustee for the benefit of the Series
2000-A Noteholders. If at any time the institution holding the Reserve Account
ceases to be an Eligible Institution, the Servicer shall notify the Indenture
Trustee in writing, and the Indenture Trustee upon being notified (or the
Servicer on its behalf) shall, within ten (10) Business Days, establish a new
Reserve Account meeting the conditions specified above with an Eligible
Institution, and shall transfer any cash or any investments to such new Reserve
Account. The Indenture Trustee, at the written direction of the Servicer, shall
(i) make withdrawals from the Reserve Account from time to time in an amount up
to the Available Reserve Account Amount at such time, for the purposes set forth
in this Indenture Supplement, and (ii) on each Distribution Date (from and after
the Reserve Account Funding Date) prior to termination of the Reserve Account,
make a deposit into the Reserve Account in the amount specified in, and
otherwise in accordance with, subsection 4.4(a)(vii).
----------------------
(b) Funds on deposit in the Reserve Account shall be invested at the
written direction of the Servicer by the Indenture Trustee in Permitted
Investments; provided, however, that, for purposes of the investment of funds on
-------- -------
deposit in the Reserve Account, references in the definition of "Permitted
Investments" to a rating in the "highest rating category" shall be modified to
require a rating, from any one of the following Rating Agencies, of at least A-2
by Standard & Poor's, P-2 by Xxxxx'x or (if such investment is rated by Fitch)
F2 by Fitch. Funds on deposit in the Reserve Account on any Distribution Date,
after giving effect to any withdrawals from the Reserve Account on such
Distribution Date, shall be invested in such investments that will mature so
that such funds will be available for withdrawal on or prior to the following
Distribution Date.
The Indenture Trustee shall hold such of the Permitted Investments as
consists of instruments, deposit accounts, negotiable documents, money, goods,
letters of credit, and advices of credit in the State of New York. The Indenture
Trustee shall hold such of the Permitted Investments as constitutes investment
property through a securities intermediary, which securities intermediary shall
agree with the Indenture Trustee that (a) such investment property shall at all
times be credited to a securities account of the Indenture Trustee, (b) such
securities intermediary shall treat the Indenture Trustee as entitled to
exercise the rights that comprise each financial asset credited to such
26
securities account, (c) all property 26 credited to such securities account
shall be treated as a financial asset, (d) such securities intermediary shall
comply with entitlement orders originated by the Indenture Trustee without the
further consent of any other person or entity, (e) such securities intermediary
will not agree with any person or entity other than the Indenture Trustee to
comply with entitlement orders originated by such other person or entity, (f)
such securities accounts and the property credited thereto shall not be subject
to any lien, security interest, or right of set-off in favor of such securities
intermediary or anyone claiming through it (other than the Indenture Trustee),
and (g) such agreement shall be governed by the laws of the State of New York.
Terms used in the preceding sentence that are defined in the New York UCC and
not otherwise defined herein shall have the meaning set forth in the New York
UCC.
On each Distribution Date, all interest and earnings (net of losses
and investment expenses) accrued since the preceding Distribution Date on funds
on deposit in the Reserve Account shall be retained in the Reserve Account (to
the extent that the Available Reserve Account Amount is less than the Required
Reserve Account Amount) and the balance, if any, shall be deposited into the
Collection Account and included in Available Finance Charge Collections for such
Distribution Date. For purposes of determining the availability of funds or the
balance in the Reserve Account for any reason under this Indenture Supplement,
except as otherwise provided in the preceding sentence, investment earnings on
such funds shall be deemed not to be available or on deposit.
(c) On or before each Distribution Date with respect to the Controlled
Accumulation Period and on or before the first Distribution Date with respect to
the Rapid Amortization Period, the Servicer shall calculate the Reserve Draw
Amount; provided, however, that such amount will be reduced to the extent that
-------- -------
funds otherwise would be available for deposit in the Reserve Account under
Section 4.4(a)(vii) with respect to such Distribution Date.
-------------------
(d) In the event that for any Distribution Date the Reserve Draw
Amount is greater than zero, the Reserve Draw Amount, up to the Available
Reserve Account Amount, shall be withdrawn from the Reserve Account on such
Distribution Date by the Indenture Trustee (acting in accordance with the
written instructions of the Servicer) and deposited into the Collection Account
for application as Available Finance Charge Collections for such Distribution
Date.
(e) In the event that the Reserve Account Surplus on any Distribution
Date, after giving effect to all deposits to and withdrawals from the Reserve
Account with respect to such Distribution Date, is greater than zero, the
Indenture Trustee, acting in accordance with the written instructions of the
Servicer, shall withdraw from the Reserve Account an amount equal to such
Reserve Account Surplus and (i) deposit such amounts in the Spread Account, to
the extent that funds on deposit in the Spread Account are less than the
Required Spread Account Amount, and (ii) distribute any such
27
amounts remaining after application pursuant to subsection 4.10(e)(i) to the
---------------------
holders of the Seller Interest.
(f) Upon the earliest to occur of (i) the termination of the Trust
pursuant to Article VIII of the Trust Agreement, (ii) the first Distribution
------------
Date relating to the Rapid Amortization Period and (iii) the Expected Principal
Distribution Date, the Indenture Trustee, acting in accordance with the
instructions of the Servicer, after the prior payment of all amounts owing to
the Series 2000-A Noteholders that are payable from the Reserve Account as
provided herein, shall withdraw from the Reserve Account all amounts, if any, on
deposit in the Reserve Account and (i) deposit such amounts in the Spread
Account, to the extent that funds on deposit in the Spread Account are less than
the Required Spread Account Amount, and (ii) distribute any such amounts
remaining after application pursuant to subsection 4.10(f)(i) to the holders of
---------------------
the Seller Interest. The Reserve Account shall thereafter be deemed to have
terminated for purposes of this Indenture Supplement.
Section 4.11 Spread Account.
--------------
(a) On or prior to the Closing Date, the Indenture Trustee shall establish
and maintain with an Eligible Institution, which may be the Indenture Trustee in
the name of the Trust, on behalf of the Trust, for the benefit of the Class C
Noteholders and the Seller, a non-interest bearing segregated account with the
corporate trust department of such Eligible Institution (the "Spread Account"),
--------------
bearing a designation clearly indicating that the funds deposited therein are
held for the benefit of the Class C Noteholders and the Seller. Except as
otherwise provided in this Section 4.11, the Indenture Trustee shall possess all
------------
right, title and interest in all funds on deposit from time to time in the
Spread Account and in all proceeds thereof. The Spread Account shall be under
the sole dominion and control of the Indenture Trustee for the benefit of the
Class C Noteholders and the Servicer. If at any time the institution holding the
Spread Account ceases to be an Eligible Institution, the Servicer shall notify
the Indenture Trustee in writing, and the Indenture Trustee upon being notified
(or the Servicer on its behalf) shall, within ten (10) Business Days (or such
longer period as to which the Rating Agencies may consent) establish a new
Spread Account meeting the conditions specified above with an Eligible
Institution and shall transfer any cash or any investments to such new Spread
Account. The Indenture Trustee, at the written direction of the Servicer, shall
(i) make withdrawals from the Spread Account from time to time in an amount up
to the Available Spread Account Amount at such time, for the purposes set forth
in this Indenture Supplement, and (ii) on each Distribution Date prior to
termination of the Spread Account, make a deposit into the Spread Account in the
amount specified in, and otherwise in accordance with, subsection 4.11(e).
------------------
(b) Funds on deposit in the Spread Account shall be invested at the
written direction of the Servicer by the Indenture Trustee in Permitted
Investments; provided, however, that, for purposes of the investment of funds on
-------- -------
deposit in the Spread Account,
28
references in the definition of "Permitted Investments" to a rating in the
"highest rating category" shall be modified to require a rating, from any one of
the following Rating Agencies, of at least A-2 by Standard & Poor's, P-2 by
Xxxxx'x or (if such investment is rated by Fitch) F2 by Fitch. Funds on deposit
in the Spread Account on any Distribution Date, after giving effect to any
withdrawals from and deposits to the Spread Account on such Distribution Date,
shall be invested in such investments that will mature so that such funds will
be available for withdrawal on or prior to the following Distribution Date.
The Indenture Trustee shall hold such of the Permitted Investments as
consists of instruments, deposit accounts, negotiable documents, money, goods,
letters of credit, and advices of credit in the State of New York. The Indenture
Trustee shall hold such of the Permitted Investments as constitutes investment
property through a securities intermediary, which securities intermediary shall
agree with the Indenture Trustee that (a) such investment property shall at all
times be credited to a securities account of the Indenture Trustee, (b) such
securities intermediary shall treat the Indenture Trustee as entitled to
exercise the rights that comprise each financial asset credited to such
securities account, (c) all property credited to such securities account shall
be treated as a financial asset, (d) such securities intermediary shall comply
with entitlement orders originated by the Indenture Trustee without the further
consent of any other person or entity, (e) such securities intermediary will not
agree with any person or entity other than the Indenture Trustee to comply with
entitlement orders originated by such other person or entity, (f) such
securities accounts and the property credited thereto shall not be subject to
any lien, security interest, or right of set-off in favor of such securities
intermediary or anyone claiming through it (other than the Indenture Trustee),
and (g) such agreement shall be governed by the laws of the State of New York.
Terms used in the preceding sentence that are defined in the New York UCC and
not otherwise defined herein shall have the meaning set forth in the New York
UCC. Except as permitted by this subsection 4.11(b), the Indenture Trustee shall
------------------
not hold Permitted Investments through an agent or a nominee.
On each Distribution Date (but subject to subsections 4.11(c) and 4.11(d)),
------------------- --------
the Investment Earnings, if any, accrued since the preceding Distribution Date
on funds on deposit in the Spread Account shall be paid to the Seller by the
Indenture Trustee upon written direction of the Servicer. For purposes of
determining the availability of funds or the balance in the Spread Account for
any reason under this Indenture Supplement (subject to subsections 4.11(c) and
-------------------
4.11(d)), all Investment Earnings shall be deemed not to be available or on
--------
deposit.
(c) If, on any Distribution Date, the aggregate amount available for
distribution pursuant to subsection 4.4(a)(iv) is less than the aggregate amount
---------------------
required to be distributed pursuant to subsection 4.4(a)(iv) (without giving
---------------------
effect to any limitation based on Available Finance Charge Collections), the
Indenture Trustee, at the written direction of the Servicer, shall withdraw from
the Spread Account the amount
29
of such deficiency up to the Available Spread Account Amount and, if the
Available Spread Account Amount is less than such deficiency, Investment
Earnings credited to the Spread Account, and deposit such amount in the
Collection Account for payment to the Class C Noteholders in respect of interest
on the Class C Notes.
(d) On the Series 2000-A Final Maturity Date, the Indenture Trustee at the
written direction of the Servicer shall withdraw from the Spread Account an
amount equal to the lesser of (i) the Class C Note Principal Balance (after any
payments to be made pursuant to subsection 4.4(c) on such date) and (ii) the
-----------------
Available Spread Account Amount and, if the Available Spread Account Amount is
not sufficient to reduce the Class C Note Principal Balance to zero, Investment
Earnings credited to the Spread Account up to the amount required to reduce the
Class C Note Principal Balance to zero, and the Indenture Trustee upon the
written direction of the Servicer or the Servicer shall deposit such amounts
into the Collection Account for distribution to the Class C Noteholders in
accordance with subsection 5.2(e).
-----------------
(e) On any day following the occurrence of an Event of Default with
respect to Series 2000-A and acceleration of the maturity of the Series 2000-A
Notes pursuant to Section 5.3 of the Indenture, the Servicer shall withdraw from
-----------
the Spread Account an amount equal to the Available Spread Account Amount and
the Indenture Trustee upon the written direction of the Servicer or the Servicer
shall deposit such amounts into the Collection Account for distribution to the
Class C Noteholders, the Class A Noteholders and the Class B Noteholders, in
that order of priority, in accordance with Section 5.2, to fund any shortfalls
-----------
in amounts owed to such Noteholders.
(f) If on any Distribution Date, after giving effect to all withdrawals
from the Spread Account, the Available Spread Account Amount is less than the
Required Spread Account Amount then in effect, Available Finance Charge
Collections shall be deposited into the Spread Account under the circumstances
set forth in subsection 4.4(a)(viii) up to the amount of the Spread Account
-----------------------
Deficiency.
(g) After the Spread Account Percentage has been increased above zero
pursuant to any of clauses (ii) through (v) of the definition thereof, the
------------ ---
Spread Account Percentage shall remain at that percentage until (a) further
increased to a higher required percentage specified in clauses (ii) through (v)
------------ ---
of the definition thereof or (b) the third consecutive Distribution Date on
which the Quarterly Excess Spread Percentage has increased to a level above that
for the then current Spread Account Percentage, in which case the Spread Account
Percentage shall be decreased to the appropriate percentage in clauses (ii)
------------
through (iv) of the definition thereof (or, if the Excess Spread Percentage is
----
greater than or equal to [___]%, the Spread Account Percentage shall be zero and
the Required Spread Account Amount shall be $0). Notwithstanding the foregoing,
if a Pay Out Event with respect to Series 2000-A has occurred, the Spread
Account Percentage shall equal [___]% (as provided in the definition of Spread
Account Percentage) and shall no longer be subject to reduction.
30
(h) If on any Distribution Date, after giving effect to all withdrawals
from and deposits to the Spread Account, the amount on deposit in the Spread
Account would exceed the Required Spread Account Amount then in effect, the
Indenture Trustee shall, at the written direction of the Servicer, release such
excess to the Seller. On the date on which the Class C Note Principal Balance
has been paid in full (including amounts to be paid to the Class C Noteholders
pursuant to subsection 4.11(d) above), the Indenture Trustee, at the written
------------------
direction of the Servicer, shall withdraw from the Spread Account all amounts
then remaining in the Spread Account and pay such amounts to the Seller.
Section 4.12 [Determination of LIBOR.
----------------------
(a) On each LIBOR Determination Date, the Indenture Trustee shall determine
LIBOR on the basis of the rate for deposits in United States dollars for a one-
month period which appears on Telerate Page 3750 as of 11:00 a.m., London time,
on such date. If such rate does not appear on Telerate Page 3750, the rate for
that LIBOR Determination Date shall be determined on the basis of the rates at
which deposits in United States dollars are offered by the Reference Banks at
approximately 11:00 a.m., London time, on that day to prime banks in the London
interbank market for a one-month period. The Indenture Trustee shall request the
principal London office of each of the Reference Banks to provide a quotation of
its rate. If at least two (2) such quotations are provided, the rate for that
LIBOR Determination Date shall be the arithmetic mean of the quotations. If
fewer than two (2) quotations are provided as requested, the rate for that LIBOR
Determination Date will be the arithmetic mean of the rates quoted by major
banks in New York City, selected by the Servicer, at approximately 11:00 a.m.,
New York City time, on that day for loans in United States dollars to leading
European banks for a one-month period.
(b) The Class A Note Interest Rate, Class B Note Interest Rate and Class C
Note Interest Rate applicable to the then current and the immediately preceding
Interest Periods may be obtained by telephoning the Indenture Trustee at its
corporate trust office at (000) 000-0000 or such other telephone number as shall
be designated by the Indenture Trustee for such purpose by prior written notice
by the Indenture Trustee to each Series 2000-A Noteholder from time to time.
(c) On each LIBOR Determination Date, the Indenture Trustee shall send to
the Seller by facsimile transmission, notification of LIBOR for the following
Interest Period.]
Section 4.13 Investment Instructions. Any investment instructions required
-----------------------
to be given to the Indenture Trustee pursuant to the terms hereof must be given
to the Indenture Trustee no later than 11:00 a.m., New York City time, on the
date such investment is to be made. In the event the Indenture Trustee receives
such investment instruction later than such time, the Indenture Trustee may, but
shall have no obligation to, make such investment. In the event the Indenture
Trustee is unable to make an investment required in an investment instruction
received by the Indenture Trustee after
31
11:00 a.m., New York City time, on such day, such investment shall be made by
the Indenture Trustee on the next succeeding Business Day. In no event shall the
Indenture Trustee be liable for any investment not made pursuant to investment
instructions received after 11:00 a.m., New York City time, on the day such
investment is requested to be made.
Section 4.14 Increase of Excess Collateral Amount. If the Issuer wishes to
------------------------------------
purchase Receivables arising in Additional Accounts in excess of the amount of
Additional Accounts permitted by subsection 2.(6)(f)(ii) of the Transfer and
-----------------------
Servicing Agreement, the Issuer shall be permitted to do so if, on or prior to
the Issuer taking such action, the Issuer exercises its option under this
Section to increase the Collateral Amount by increasing the Excess Collateral
Amount, and after giving effect to that increase the Seller Amount is not less
than the Minimum Seller Amount (the "Additional Accounts Enhancement Increase
----------------------------------------
Condition"). The amount of the increase in the Collateral Amount (and the Excess
---------
Collateral Amount) required in order for the Issuer to take such action shall
equal, if the Annual Quotient exceeds 1.20, an amount equal to W, where W equals
2% of the sum of the Collateral Amount (before giving effect to the increase)
plus W.
To exercise its option under this Section, the Issuer shall notify the
Indenture Trustee in writing and the Servicer of such exercise, and upon such
notice, the Seller Amount, if greater than the Minimum Seller Amount, shall be
reduced by the lesser of the required increase in the Collateral Amount and the
excess of the Seller Amount over the Minimum Seller Amount, and the Issuer shall
make a deposit in the Excess Funding Account in immediately available funds in
an amount equal to the excess of the required increase in the Collateral Amount
and such decrease in the Seller Amount. Concurrently with the decrease in the
Seller Amount and any required deposit to the Excess Funding Account, the
Collateral Amount and the Excess Collateral Amount shall be increased by the
aggregate amount of such decrease and of such deposit.
ARTICLE V
Delivery of Series 2000-A Notes;
Distributions; Reports to Series 2000-A Noteholders
---------------------------------------------------
Section 5.1 Delivery and Payment for the Series 2000-A Notes.
------------------------------------------------
The Issuer shall execute and issue, and the Indenture Trustee shall
authenticate, the Series 2000-A Notes in accordance with Section 2.3 of the
-----------
Indenture. The Indenture Trustee shall deliver the Series 2000-A Notes to or
upon the written order of the Trust when so authenticated.
32
Section 5.2 Distributions.
-------------
(a) On each Distribution Date, the Paying Agent shall distribute to each
Class A Noteholder of record on the related Record Date (other than as provided
in Section 11.2 of the Indenture) such Class A Noteholder's pro rata share of
------------
the amounts held by the Paying Agent that are allocated and available on such
Distribution Date to pay interest on the Class A Notes pursuant to this
Indenture Supplement.
(b) On each Distribution Date, the Paying Agent shall distribute to each
Class A Noteholder of record on the related Record Date such Class A
Noteholder's pro rata share of the amounts held by the Paying Agent that are
allocated and available on such Distribution Date to pay principal of the Class
A Notes pursuant to this Indenture Supplement.
(c) On each Distribution Date, the Paying Agent shall distribute to each
Class B Noteholder of record on the related Record Date (other than as provided
in Section 11.2 of the Indenture) such Class B Noteholder's pro rata share of
------------
the amounts held by the Paying Agent that are allocated and available on such
Distribution Date to pay interest on the Class B Notes pursuant to this
Indenture Supplement.
(d) On each Distribution Date, the Paying Agent shall distribute to each
Class B Noteholder of record on the related Record Date such Class B
Noteholder's pro rata share of the amounts held by the Paying Agent that are
allocated and available on such Distribution Date to pay principal of the Class
B Notes pursuant to this Indenture Supplement.
(e) On each Distribution Date, the Paying Agent shall distribute to each
Class C Noteholder of record on the related Record Date (other than as provided
in Section 11.2 of the Indenture) such Class C Noteholder's pro rata share of
------------
the amounts held by the Paying Agent (including amounts held by the Paying Agent
with respect to amounts withdrawn from the Spread Account (at the times and in
the amounts specified in Section 4.11)) that are allocated and available on
-------------
such Distribution Date to pay interest on the Class C Notes pursuant to this
Indenture Supplement.
(f) On each Distribution Date, the Paying Agent shall distribute to each
Class C Noteholder of record on the related Record Date such Class C
Noteholder's pro rata share of the amounts held by the Paying Agent that are
allocated and available on such Distribution Date to pay principal of the Class
C Notes pursuant to this Indenture Supplement.
(g) The distributions to be made pursuant to this Section 5.2 are subject
-----------
to the provisions of Sections 2.6, 6.1 and 7.1 of the Transfer and Servicing
------------ --- ---
Agreement, Section 11.2 of the Indenture and Section 7.1 of this Indenture
------------ -----------
Supplement.
33
(h) Except as provided in Section 11.2 of the Indenture with respect to a
------------
final distribution, distributions to Series 2000-A Noteholders hereunder shall
be made by (i) check mailed to each Series 2000-A Noteholder (at such
Noteholder's address as it appears in the Note Register), except that for any
Series 2000-A Notes registered in the name of the nominee of a Clearing Agency,
such distribution shall be made by wire transfer of immediately available funds
and (ii) without presentation or surrender of any Series 2000-A Note or the
making of any notation thereon.
Section 5.3 Reports and Statements to Series 2000-A Noteholders.
---------------------------------------------------
(a) On each Distribution Date, the Paying Agent, on behalf of the
Indenture Trustee, shall forward to each Series 2000-A Noteholder a statement
substantially in the form of Exhibit C prepared by the Servicer.
---------
(b) Not later than the second Business Day preceding each Distribution
Date, the Servicer shall deliver to the Owner Trustee, the Indenture Trustee,
the Paying Agent and each Rating Agency (i) a statement substantially in the
form of Exhibit C prepared by the Servicer and (ii) a certificate of an
---------
Authorized Officer substantially in the form of Exhibit D; provided that the
--------- --------
Servicer may amend the form of Exhibit C and Exhibit D, from time to time, with
--------- ---------
the prior written consent of the Indenture Trustee.
(c) A copy of each statement or certificate provided pursuant to paragraph
(a) or (b) may be obtained by any Series 2000-A Noteholder by a request in
writing to the Servicer.
(d) On or before January 31 of each calendar year, beginning with calendar
year 2001, the Paying Agent, on behalf of the Indenture Trustee, shall furnish
or cause to be furnished to each Person who at any time during the preceding
calendar year was a Series 2000-A Noteholder, a statement prepared by the
Servicer containing the information which is required to be contained in the
statement to Series 2000-A Noteholders, as set forth in paragraph (a) above,
aggregated for such calendar year or the applicable portion thereof during which
such Person was a Series 2000-A Noteholder, together with other information as
is required to be provided by an issuer of indebtedness under the Code. Such
obligation of the Paying Agent shall be deemed to have been satisfied to the
extent that substantially comparable information shall be provided by the
Servicer pursuant to any requirements of the Code as from time to time in
effect.
ARTICLE VI
Series 2000-A Pay Out Events
----------------------------
Section 6.1 Series 2000-A Pay Out Events. If any one of the following
----------------------------
events shall occur with respect to the Series 2000-A Notes:
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(a) failure on the part of the Seller (i) to make any payment or deposit
required to be made by the Seller by the terms of the Transfer and Servicing
Agreement, the Indenture or this Indenture Supplement on or before the date
occurring five (5) Business Days after the date such payment or deposit is
required to be made therein or herein or (ii) duly to observe or perform any
other covenants or agreements of the Seller set forth in the Transfer and
Servicing Agreement, the Indenture or this Indenture Supplement, which failure
has a material adverse effect on the Series 2000-A Noteholders and which
continues unremedied for a period of sixty (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 Indenture Trustee, or to the Seller and the
Indenture Trustee by any Holder of the Series 2000-A Notes;
(b) any representation or warranty made by the Seller in the Transfer and
Servicing Agreement, or any information contained in a computer file or
microfiche list required to be delivered by the Seller pursuant to Section 2.1
-----------
or subsection 2.9(h) of the Transfer and Servicing Agreement shall prove to have
-----------------
been incorrect in any material respect when made or when delivered, which
continues to be incorrect in any material respect for a period of sixty (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 Indenture Trustee, or
to the Seller and the Indenture Trustee by any Holder of the Series 2000-A Notes
and as a result of which the interests of the Series 2000-A Noteholders are
materially and adversely affected for such period; provided, however, that a
-------- -------
Series 2000-A Pay Out Event pursuant to this subsection 6.1(b) shall not be
-----------------
deemed to have occurred hereunder if the Seller has accepted reassignment of the
related Receivable, or all of such Receivables, if applicable, during such
period in accordance with the provisions of the Transfer and Servicing
Agreement;
(c) a failure by the Seller to convey Receivables in Additional Accounts
to the Trust within five (5) Business Days after the day on which it is required
to convey such Receivables pursuant to subsection 2.6(a) of the Transfer and
-----------------
Servicing Agreement;
(d) any Servicer Default shall occur;
(e) the average of the Portfolio Yields for any three consecutive Monthly
Periods is reduced to a rate which is less than the average of the Base Rates
for such period;
(f) the Class A Note Principal Balance, the Class B Note Principal Balance
or the Class C Note Principal Balance shall not be paid in full on the Expected
Principal Distribution Date; or
(g) without limiting the foregoing, the occurrence of an Event of Default
with respect to Series 2000-A and acceleration of the maturity of the Series
2000-A Notes pursuant to Section 5.3 of the Indenture;
-----------
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then, in the case of any event described in subsection (a), (b) or (d), after
-------------- --- ---
the applicable grace period, if any, set forth in such subparagraphs, either the
Indenture Trustee or the Holders of Series 2000-A Notes evidencing more than 50%
of the aggregate unpaid principal amount of Series 2000-A Notes by notice then
given in writing to the Seller and the Servicer (and to the Indenture Trustee if
given by the Series 2000-A Noteholders) may declare that a "Series Pay Out
Event" with respect to Series 2000-A (a "Series 2000-A Pay Out Event") has
---------------------------
occurred as of the date of such notice, and, in the case of any event described
in subsection (c), (e), (f) or (g), a Series 2000-A Pay Out Event shall occur
-------------- --- --- ---
without any notice or other action on the part of the Indenture Trustee or the
Series 2000-A Noteholders immediately upon the occurrence of such event.
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ARTICLE VII
Redemption of Series 2000-A Notes; Final Distributions; Series
--------------------------------------------------------------
Termination
-----------
Section 7.1 Optional Redemption of Series 2000-A Notes; Final
-------------------------------------------------
Distributions.
-------------
(a) On any day occurring on or after the date on which the outstanding
principal balance of the Series 2000-A Notes is reduced to 10% or less of the
initial outstanding principal balance of Series 2000-A Notes, as increased by
the principal amount of any notes issued, the Issuer shall have the option to
redeem the Series 2000-A Notes, at a purchase price equal to (i) if such day is
a Distribution Date, the Reassignment Amount for such Distribution Date or (ii)
if such day is not a Distribution Date, the Reassignment Amount for the
Distribution Date following such day.
(b) The Issuer shall give the Servicer and the Indenture Trustee at least
thirty (30) days prior written notice of the date on which the Issuer intends to
exercise such optional redemption. Not later than 12:00 noon, New York City
time, on such day the Issuer shall deposit into the Collection Account in
immediately available funds the excess of the Reassignment Amount over the
amount, if any, on deposit in the Principal Accumulation Account. Such
redemption option is subject to payment in full of the Reassignment Amount.
Following such deposit into the Collection Account in accordance with the
foregoing, the Collateral Amount for Series 2000-A shall be reduced to zero and
the Series 2000-A Noteholders shall have no further security interest in the
Receivables. The Reassignment Amount shall be distributed as set forth in
subsection 7.1(d).
-----------------
(c) (i) The amount to be paid by the Seller with respect to Series
2000-A in connection with a reassignment of Receivables to the Seller pursuant
to Section 2.4(e) of the Transfer and Servicing Agreement shall equal the
--------------
Reassignment Amount for the first Distribution Date following the Monthly Period
in which the reassignment obligation arises under the Transfer and Servicing
Agreement.
(ii) The amount to be paid by the Seller with respect to Series
2000-A in connection with a repurchase of the Notes pursuant to Section 7.1 of
-----------
the Transfer and Servicing Agreement shall equal the Reassignment Amount for the
Distribution Date of such repurchase.
(d) With respect to the Reassignment Amount deposited into the Collection
Account pursuant to Section 7.1, the Indenture Trustee shall, in accordance with
-----------
the written direction of the Servicer, not later than 12:00 noon, New York City
time, on the related Distribution Date, make deposits or distributions of the
following amounts (in the priority set forth below and, in each case, after
giving effect to any deposits and
37
distributions otherwise to be made on such date) in immediately available funds:
(i) (x) the Class A Note Principal Balance on such Distribution Date will be
distributed to the Paying Agent for payment to the Class A Noteholders and (y)
an amount equal to the sum of (A) Class A Monthly Interest for such Distribution
Date, (B) any Class A Monthly Interest previously due but not distributed to the
Class A Noteholders on a prior Distribution Date and (C) the amount of Class A
Additional Interest, if any, for such Distribution Date and any Class A
Additional Interest previously due but not distributed to the Class A
Noteholders on any prior Distribution Date, will be distributed to the Paying
Agent for payment to the Class A Noteholders, (ii) (x) the Class B Note
Principal Balance on such Distribution Date will be distributed to the Paying
Agent for payment to the Class B Noteholders and (y) an amount equal to the sum
of (A) Class B Monthly Interest for such Distribution Date, (B) any Class B
Monthly Interest previously due but not distributed to the Class B Noteholders
on a prior Distribution Date and (C) the amount of Class B Additional Interest,
if any, for such Distribution Date and any Class B Additional Interest
previously due but not distributed to the Class B Noteholders on any prior
Distribution Date, will be distributed to the Paying Agent for payment to the
Class B Noteholders, (iii) (x) the Class C Note Principal Balance on such
Distribution Date will be distributed to the Paying Agent for payment to the
Class C Noteholders and (y) an amount equal to the sum of (A) Class C Monthly
Interest for such Distribution Date, (B) any Class C Monthly Interest previously
due but not distributed to the Class C Noteholders on a prior Distribution Date
and (C) the amount of Class C Additional Interest, if any, for such Distribution
Date and any Class C Additional Interest previously due but not distributed to
the Class C Noteholders on any prior Distribution Date, will be distributed to
the Paying Agent for payment to the Class C Noteholders and (iv) any excess
shall be released to the Issuer.
(e) Notwithstanding anything to the contrary in this Indenture Supplement,
the Indenture or the Transfer and Servicing Agreement, all amounts distributed
to the Paying Agent pursuant to subsection 7.1(d) for payment to the Series
-----------------
2000-A Noteholders shall be deemed distributed in full to the Series 2000-A
Noteholders on the date on which such funds are distributed to the Paying Agent
pursuant to this Section 7.1 and shall be deemed to be a final distribution
-----------
pursuant to Section 11.2 of the Indenture.
------------
Section 7.2 Series Termination.
------------------
On the Series 2000-A Final Maturity Date, the right of the Series 2000-A
Noteholders to receive payments from the Issuer will be limited solely to the
right to receive payments pursuant to Section 5.5 of the Indenture.
-----------
38
ARTICLE VIII
Miscellaneous Provisions
Section 8.1 Ratification of Indenture. As supplemented by this Indenture
-------------------------
Supplement, the Indenture is in all respects ratified and confirmed and the
Indenture as so supplemented by this Indenture Supplement shall be read, taken
and construed as one and the same instrument.
Section 8.2 Form of Delivery of the Series 2000-A Notes. The Series 2000-A
-------------------------------------------
Notes shall be Book-Entry Notes and shall be delivered as Registered Notes as
provided in Section 2.1 of the Indenture.
-----------
Section 8.3 Counterparts. This Indenture Supplement may be executed in two
------------
or more counterparts, and by different parties on separate counterparts, each of
which shall be an original, but all of which shall constitute one and the same
instrument.
Section 8.4 GOVERNING LAW. THIS INDENTURE SUPPLEMENT SHALL BE CONSTRUED IN
-------------
ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS, 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.
Section 8.5 Limitation of Liability. Notwithstanding any other provision
-----------------------
herein or elsewhere, this Agreement has been executed and delivered by Bankers
Trust Company, not in its individual capacity, but solely in its capacity as
Owner Trustee of the Trust, in no event shall Bankers Trust Company in its
individual capacity have any liability in respect of the representations,
warranties, or obligations of the Trust hereunder or under any other document,
as to all of which recourse shall be had solely to the assets of the Trust, and
for all purposes of this Agreement and each other document, the Owner Trustee
(as such or in its individual capacity) shall be subject to, and entitled to the
benefits of, the terms and provisions of the Trust Agreement.
Section 8.6 Rights of the Indenture Trustee. The Indenture Trustee shall
-------------------------------
have herein the same rights, protections, indemnities and immunities as
specified in the Indenture.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the undersigned have caused this Indenture Supplement
to be duly executed and delivered by their respective duly authorized officers
on the day and year first above written.
SPIEGEL CREDIT CARD MASTER NOTE TRUST,
as Issuer
By: BANKERS TRUST COMPANY,
not in its individual capacity,
but solely as Owner Trustee
By: _____________________________________
Name:
Title:
THE BANK OF NEW YORK,
as Indenture Trustee
By: _____________________________________
Name:
Title:
40
Acknowledged and Accepted:
FIRST CONSUMERS NATIONAL BANK,
as Servicer
By:______________________________
Name:_________________________
Title:________________________
Acknowledged and Accepted:
SPIEGEL CREDIT CORPORATION III,
as Seller
By:______________________________
Name:_________________________
Title:________________________
41
