Exhibit 10.36
SPIEGEL CREDIT CARD MASTER NOTE TRUST
Issuer,
and
THE BANK OF NEW YORK
Indenture Trustee
SERIES 2001-A INDENTURE SUPPLEMENT
Dated as of July 19, 2001
TABLE OF CONTENTS
ARTICLE I Creation of the Series 2001-A Notes.............................1
Section 1.1 Designation.....................................1
ARTICLE II Definitions.....................................................1
Section 2.1 Definitions.....................................1
ARTICLE III Servicing Fee..................................................12
Section 3.1 Servicing Compensation.........................12
ARTICLE IV Rights of Series 2001-A Noteholders and Allocation and
Application of Collections.....................................13
Section 4.1 Collections and Allocations....................13
Section 4.2 Determination of Monthly Interest..............15
Section 4.3 Determination of Monthly Principal.............16
Section 4.4 Application of Available Finance Charge
Collections and Available Principal
Collections....................................16
Section 4.5 Investor Charge-Offs...........................18
Section 4.6 Reallocated Principal Collections..............19
Section 4.7 Excess Finance Charge Collections..............19
Section 4.8 Shared Principal Collections...................19
Section 4.9 Principal Accumulation Account.................20
Section 4.10 Reserve Account................................21
Section 4.11 [Reserved].....................................23
Section 4.12 Determination of LIBOR.........................24
Section 4.13 Investment Instructions........................24
Section 4.14 Controlled Accumulation Period.................24
Section 4.15 Suspension of Controlled Accumulation
Period.........................................25
Section 4.16 Insurance Policies.............................27
Section 4.17 Swap...........................................27
ARTICLE V Delivery of Series 2001-A Notes; Distributions; Reports to
Series 2001-A Noteholders......................................28
Section 5.1 Delivery and Payment for the Series 2001-A
Notes..........................................28
Section 5.2 Distributions..................................28
Section 5.3 Reports and Statements to Series 2001-A
Noteholders....................................29
i
ARTICLE VI Series 2001-A Pay Out Events and Events of Default.............30
Section 6.1 Series 2001-A Pay Out Events...................30
Section 6.2 Series 2001-A Events of Default................31
Section 6.3 Declarations of Default........................32
ARTICLE VII Redemption of Series 2001-A Notes; Final Distributions;
Series Termination.............................................33
Section 7.1 Optional Redemption of Series 2001-A
Notes; Final Distributions.....................33
Section 7.2 Series Termination.............................34
ARTICLE VIII Miscellaneous Provisions.......................................34
Section 8.1 Ratification of Indenture; Amendments..........34
Section 8.2 Form of Delivery of the Series 2001-A
Notes..........................................34
Section 8.3 Counterparts...................................34
Section 8.4 GOVERNING LAW..................................35
Section 8.5 Limitation of Liability........................35
Section 8.6 Rights of the Indenture Trustee................35
Section 8.7 Third Party Beneficiary........................35
Section 8.8 Inconsistency..................................35
Section 8.9 Collateral Series Supplement...................35
Section 8.10 Increase of Collateral Amount..................35
Section 8.11 Additional Representations and Warranties......36
ii
EXHIBITS
EXHIBIT A FORM OF CLASS A 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
EXHIBIT E FORM OF SWAP
EXHIBIT F INSURANCE AGREEMENT DEFINITIONS
EXHIBIT G SECTION 2.05 OF INSURANCE AGREEMENT (SPREAD
ACCOUNT)
EXHIBIT H SECTION 5.01 OF INSURANCE AGREEMENT
(INSURANCE AGREEMENT PAY OUT EVENTS)
SCHEDULES
SCHEDULE I PERFECTION REPRESENTATIONS, WARRANTIES AND
COVENANTS
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SERIES 2001-A INDENTURE SUPPLEMENT, dated as of July 19, 2001 (the
"Indenture Supplement"), between SPIEGEL CREDIT CARD MASTER NOTE TRUST, a
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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
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corporation 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
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Master Indenture, dated as of December 1, 2000 (the "Indenture") between
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the Issuer and the Indenture Trustee (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
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Issuer 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 2001-A Notes
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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 Credit Card Master Note Trust, Series 2001-A" or the "Series
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2001-A Notes." The Series 2001-A Notes shall be issued in a single Class,
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known as the "Class A Series 2001-A Floating Rate Asset Backed Notes."
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(b) Series 2001-A shall be included in Group One and shall be a
Principal Sharing Series. Series 2001-A shall be an Excess Allocation
Series with respect to Group One only. Series 2001-A shall not be
subordinated to any other Series.
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
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fraction, the numerator of which is equal to the sum of the Initial
Collateral Amounts of all outstanding Series designated as Principal
Sharing Series, and the denominator of which is equal to the sum of (a) the
Initial Collateral Amount and (b) the Initial
1
Collateral Amounts of all outstanding Series designated as Principal
Sharing Series (other than Series 2001-A) which are not expected to be in
their revolving periods; provided, however, that this definition may be
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changed at any time if the Rating Agency Condition is satisfied.
"Accumulation Period Length" is defined in subsection 4.14.
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"Accumulation Shortfall" means: (a) for the first Distribution Date
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during the Controlled Accumulation Period, zero; and (b) thereafter, for
any Distribution Date during the Controlled Accumulation Period, the
excess, if any, of the Controlled Deposit Amount for the previous
Distribution Date over the amount deposited into the Principal Accumulation
Account pursuant to subsection 4.4(c)(i) for the previous Distribution
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Date.
"Additional Interest" is defined in Section 4.2.
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"Allocation Percentage" means, on any date of determination, the
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percentage equivalent of a fraction:
(a) the numerator of which shall be the Collateral Amount,
determined:
(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); provided, however, that if the
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Rapid Amortization Period is extended past the Series 2001-A
Final Maturity Date as a result of there being amounts owed to
the Insurer or the Counterparty, then during that extended period
the numerator for Finance Charge Collections and Default Amounts
shall equal the numerator in effect for the last Monthly Period
prior to the Series 2001-A Final Maturity 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 2001-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
Agencies, but only after satisfying the Rating Agency Condition,
designate a different numerator for such fraction, which
numerator shall not be less than the Collateral Amount as of the
last day of the Revolving Period for the Paired Series; and
(b) the denominator of which shall be the greater of (x) the sum
of the Aggregate Principal Receivables and the amount on deposit in
the Excess
2
Funding Account (exclusive of any investment earnings on such amount)
in each case as of the end of the Business Day preceding such date of
determination and (y) the sum of the numerators used to calculate the
Allocation Percentages for allocations with respect to Finance Charge
Collections, Principal Collections or Default Amounts, as applicable,
for all outstanding Series or "Series" under (and as defined in) the
Pooling and Servicing Agreement (other than Series represented by the
Collateral Certificate) 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) any Net Swap Receipts for the related
Distribution Date, plus (c) the Excess Finance Charge Collections allocated
to Series 2001-A for such Monthly Period, plus (d) Principal Accumulation
Investment Proceeds, if any, with respect to the related Distribution Date,
plus (e) 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
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required to be 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 2001-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)(iii),
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(iv) and (viii) for the related Distribution Date.
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"Available Reserve Account Amount" means, for any Distribution Date,
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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
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giving effect to any deposit made or to be made pursuant to subsection
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4.4(a)(vi) to the Reserve Account on such date) and (b) the Required
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Reserve Account Amount.
"Available Spread Account Amount" is defined in the Insurance
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Agreement.
"Base Rate" is defined in the Insurance Agreement.
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"Class A Noteholder" means the Person in whose name a Class A Note is
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registered in the Note Register.
3
"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.
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"Closing Date" means July 19, 2001.
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"Collateral Amount" means, as of any date of determination, an amount
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equal to the result of (a) the Initial Collateral Amount, minus (b) the
amount of principal previously paid to the Series 2001-A Noteholders, minus
(c) the balance on deposit in the Principal Accumulation Account, minus (d)
the aggregate reductions to the Collateral Amount made pursuant to Section
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4.4(c) on or prior to such date of determination, minus (e) the excess, if
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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)(iv) prior to such date, plus (f) any additional amount
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designated by the Seller pursuant to Section 8.10.
"Control Transfer Event" means either of the following events: (a) the
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Insurer shall fail to timely make any payment required to be made by it
pursuant to any Policy or otherwise default in any of its obligations under
the Insurance Agreement; or (b) the Insurer shall (i) become insolvent,
(ii) fail to pay its debts generally as they become due, (iii) voluntarily
seek, consent to, or acquiesce in the benefit or benefits of any Debtor
Relief Law, or (iv) become a party to (or be made the subject of) any
proceeding provided for by any Debtor Relief Law, other than as a creditor
or claimant, and, in the event such proceeding is involuntary, the petition
instituting same is not dismissed within 60 days after its filing.
"Controlled Accumulation Amount" means, for any Distribution Date with
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respect to the Controlled Accumulation Period, $50,000,000; provided,
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however, that if the Accumulation Period Length is determined to be less
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than 12 months pursuant to Section 4.14 or 4.15, the Controlled
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Accumulation Amount for 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 2001-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
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have occurred prior thereto, the period commencing at the opening of
business on March 1, 2004 or such later date as is determined in accordance
with Section 4.14 and 4.15, and ending on the first to occur of (a) the
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commencement of the Rapid Amortization Period, (b) the payment in full of
the Note Principal Balance and (c) the Series 2001-A Final Maturity Date.
"Controlled Deposit Amount" means, for any Distribution Date with
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respect to the Controlled Accumulation Period, an amount equal to the sum
of the Controlled Accumulation Amount for such Distribution Date and any
existing Accumulation Shortfall.
4
"Counterparty" means Xxxxxx Guaranty Trust Company of New York or the
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counterparty under any replacement interest rate swap obtained pursuant to
Section 4.17.
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"Covered Amount" means an amount, determined as of each Distribution
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Date 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 Note
Interest Rate in effect with respect to such Interest Period, times (iii)
the aggregate amount on deposit in the Principal Accumulation Account as of
the Record Date preceding such Distribution Date.
"Default Amount Rate" is defined in the Insurance Agreement.
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"Default Estimate" means, for any Monthly Period, an amount equal to
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the product of (i) 1.5, multiplied by (ii) the arithmetic mean of the
Investor Default Amounts for the prior three Monthly Periods. For this
purpose, the April, May, June and July Investor Default Amounts shall be
deemed to have equaled $9,300,000.
"Deficiency Amount" means (a) for any Distribution Date other than the
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Series 2001-A Final Maturity Date, the excess of the amounts payable
pursuant to Sections 4.4(a)(i) and (ii) for such Distribution Date over the
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Available Finance Charge Collections, Reallocated Principal Collections and
Available Spread Account Amount that are available to cover such amounts,
and (b) for the Series 2001-A Final Maturity Date, the sum of (i) the
amount determined pursuant to clause (a) for the Series 2001-A Final
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Maturity Date and (ii) the excess of the Note Principal Balance over the
Available Principal Collections and Available Spread Account Amount that
are available to cover such amount.
"Distribution Date" means August 15, 2001 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.
"Enhancement Provider" means each of the Insurer and the Counterparty.
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"Excess Collateral Amount" means, at any time, the result of the
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Collateral Amount, plus the Principal Accumulation Account Balance, minus
the Note Principal Balance.
"Excess Spread Percentage" is defined in the Insurance Agreement.
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"Expected Principal Distribution Date" means the March 2005
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Distribution Date.
"Finance Charge Shortfall" is defined in Section 4.7.
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5
"Group One" means Series 2001-A, the outstanding Series under (and as
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defined in) the Pooling and Servicing Agreement (other than Series
represented by the Collateral Certificate) and each other Series hereafter
specified in the related Indenture Supplement to be included in Group One.
"Initial Collateral Amount" means the sum of (a) $685,800,000, which
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equals the sum of (i) the initial principal amount of the Series 2001-A
Notes plus (ii) the Initial Excess Collateral Amount (excluding the
Supplemental Enhancement), plus (b) the Supplemental Enhancement.
"Initial Excess Collateral Amount" means, at any time, the sum of (a)
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$85,800,000, plus (b) the Supplemental Enhancement.
"Insurance Agreement" means the Insurance and Reimbursement Agreement
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dated as of the Closing Date between the Seller, the Servicer, Spiegel,
Spiegel Acceptance Corporation, the Issuer, the Indenture Trustee and the
Insurer.
"Insured Obligation" means, with respect to any Policy, the "Insured
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Obligation" as defined in such Policy.
"Insurer" means MBIA Insurance Corporation, a New York stock insurance
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corporation.
"Interest Period" means, for any Distribution Date, the period from
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and 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.
"Interest Shortfall" is defined in Section 4.2.
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"Investor Charge-Offs" is defined in Section 4.5.
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"Investor Default Amount" means, for any Distribution Date, an amount
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equal to the product of (a) the Default Amount for the related Monthly
Period and (b) the daily average Allocation Percentage for such Monthly
Period; provided that the Investor Default Amount for the August 15, 2001
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Distribution Date shall be equal to the product of (a) the Default Amount
for the calendar month of July 2001, (b) the daily average Allocation
Percentage for the first Monthly Period and (c) a fraction equal to the
number of days in the first Monthly Period, divided by 31.
"Investor Finance Charge Collections" means, for any Monthly Period,
-----------------------------------
an amount equal to the aggregate amount of Finance Charge Collections
(including Net Recoveries treated as Finance Charge Collections) retained
or deposited in the Finance Charge Subaccount for Series 2001-A pursuant to
subsection 4.1(b)(i) for such Monthly Period.
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6
"Investor Principal Collections" means, for any Monthly Period, the
------------------------------
aggregate amount of Principal Collections retained or deposited in the
Principal Collections Subaccount for Series 2001-A pursuant to subsection
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4.1(b)(ii) for such Monthly Period.
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"Investor Uncovered Dilution Amount" means, for any Distribution Date,
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an amount equal to the Series Share of shortfalls in Deposit Obligations
that is allocated to Series 2001-A pursuant to Section 8.4(h) of the
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Indenture.
"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 4.12.
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"LIBOR Determination Date" means the second London Banking Day prior
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to the commencement of each Interest Period.
"London Banking Day" means any day on which commercial banks are open
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for general business (including dealings in foreign exchange and foreign
currency deposits) in London, England.
"Minimum Seller Percentage" means zero for Series 2001-A.
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"Modified Excess Spread Percentage" is defined in the Insurance
---------------------------------
Agreement.
"Monthly Insurance Premium" means the Premium (as defined in the
-------------------------
Premium and Fee Letter) for any Monthly Period.
"Monthly Interest" is defined in Section 4.2.
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"Monthly Period" means the period from and including the first day of
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the calendar month preceding a related Determination Date to and including
the last day of such calendar month; provided that the first Monthly Period
shall begin on and include the Closing Date and end on and include July 31,
2001.
"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 lower of:
(a) the excess of the Required Amount, over the amount of
Available Finance Charge Collections applied to pay the Required
Amount pursuant to subsection 4.4(a); and
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(b) the Excess Collateral Amount (after giving effect to Investor
Charge-Offs for the related Monthly Period).
7
"Monthly Servicing Fee" is defined in subsection 3.1(a).
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"Net Interest Obligation" means, for any Distribution Date: (a) if
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there is a Net Swap Payment due on that Distribution Date, the sum of the
Net Swap Payment and the Monthly Interest for that Distribution Date; (b)
if there is a Net Swap Receipt due on that Distribution Date, the result of
the Monthly Interest for that Distribution Date minus the Net Swap Receipt;
and (c) if the Swap has terminated for any reason, the Monthly Interest for
that Distribution Date.
"Net Swap Payment" means any net amount payable by the Issuer under
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the Swap as a result of LIBOR being less than the Swap Rate. For the
avoidance of doubt, (i) Net Swap Payments do not include early termination
payments or payment of breakage or other miscellaneous costs, and (ii) for
any Distribution Date, the Monthly Interest, less the Net Swap Receipt, if
any, plus, the Net Swap Payment, if any, will never exceed what Monthly
Interest would have been if the Note Interest Rate were 5.485%.
"Net Swap Receipt" means any net amount payable by the Counterparty as
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a result of LIBOR being greater than the Swap Rate. For the avoidance of
doubt, Net Swap Receipts do not include early termination payments.
"Note Initial Principal Balance" means $600,000,000.
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"Note Interest Rate" means a per annum rate of 0.28% in excess of
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LIBOR as determined on the LIBOR Determination Date for the applicable
Interest Period.
"Note Principal Balance" means, on any date of determination, an
----------------------
amount equal to (a) the Note Initial Principal Balance, minus (b) the
aggregate amount of principal payments made to the Class A Noteholders on
or prior to such date.
"Percentage Allocation" is defined in subsection 4.1(b)(ii)(y).
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"Policy" means the Financial Guaranty Insurance Policy No. 35738(1) or
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the Financial Guaranty Insurance Policy No. 35738(2), each issued by MBIA
Insurance Corporation pursuant to the Insurance Agreement, and,
collectively, referred to herein as the "Policies."
"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 and the Default Amount Rate for each
such Monthly Period from the Portfolio Yield for each such Monthly Period.
"Portfolio Yield" is defined in the Insurance Agreement.
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"Premium and Fee Letter" is defined in the Insurance Agreement.
----------------------
8
"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 Payment Rate" means, for any Monthly Period, (a) the
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aggregate amount of Principal Collections deposited in the Collection
Account during that Monthly Period, divided by (b) the Aggregate Principal
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Receivables as of the close of business on the last day of the prior
Monthly Period.
"Principal Shortfall" is defined in subsection 4.8(a).
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"Qualified Maturity Agreement" means an agreement, meeting the
----------------------------
requirements described in the definition of "Qualified Maturity Agreement"
set forth in the Policies, whereby 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; provided that for purposes of this definition, references in the
definition of "Eligible Institution" to ratings of "A-1+" and "AAA" by
Standard & Poor's shall be modified to require ratings of "A-1" and "A+"
from Standard & Poor's.
"Rapid Amortization Period" means the period commencing on the
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Business Day immediately preceding the day on which a Pay Out Event with
respect to Series 2001-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 2001-A Final Maturity Date; provided, that if any amounts are
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owing to the Insurer under the Insurance Agreement or the Counterparty
under the Swap at the Series 2001-A Final Maturity Date, the Rapid
Amortization Period shall continue, solely for purposes of repaying such
amounts, but in no event shall the Rapid Amortization Period continue after
the earliest of (x) the date on which no further amounts are owed to the
Insurer under the Insurance Agreement and the Counterparty under the Swap,
(y) the March 2010 Distribution Date and (z) the date on which the
Collateral Amount has been reduced to zero; provided, further, that if the
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Rapid Amortization Period is extended in accordance with the immediately
preceding proviso, for purposes of calculating the Minimum Aggregate
Principal Balance, for so long as the Rapid Amortization Period is so
extended, (i) Series 2001-A shall be deemed to be outstanding, (ii) the
Collateral Amount shall be included in the sum of the collateral amounts of
all outstanding series for purposes of clause (a) of the definition of
Minimum Aggregate Principal Balance and (iii) the numerator used for
purposes of the Allocation
9
Percentage with respect to Principal Collections for Series 2001-A shall be
included in the calculation described in clause (b) of the definition of
Minimum Aggregate Principal Balance..
"Rating Agency" means each of Fitch, Xxxxx'x and Standard & Poor's.
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"Rating Agency Condition" means, with respect to Series 2001-A, the
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Rating Agency Condition, as defined in the Insurance Agreement.
"Reallocated Principal Collections" means, for any Distribution Date,
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Investor Principal Collections applied in accordance with Section 4.6 in an
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amount not to exceed the Monthly Principal Reallocation Amount for the
related Monthly Period.
"Reassignment Amount" means, for any Distribution Date, after giving
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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 2001-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 2001-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 2001-A
Noteholders on a prior Distribution Date.
"Reference Banks" means four major banks in the London interbank
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market selected by the Servicer or the Counterparty as calculation agent
under the Swap.
"Reimbursement Amounts" is defined in the Insurance Agreement.
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"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
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definition may be changed at any time if the Rating Agency Condition is
satisfied.
"Required Amount" is defined in the Insurance Agreement.
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"Required Excess Collateral Amount" is defined in the Insurance
---------------------------------
Agreement.
"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,
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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
10
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 2001-A.
"Reserve Account" is defined in subsection 4.10(a).
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"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 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 2001-A" means the Series of Notes the terms of which are
--------------
specified in this Indenture Supplement.
"Series 2001-A Final Maturity Date" means the earlier to occur of (a)
---------------------------------
the Distribution Date on which the Note Principal Balance is paid in full
and (b) the March 2010 Distribution Date.
"Series 2001-A Note" means a Class A Note.
------------------
"Series 2001-A Noteholder" means a Class A Noteholder.
------------------------
11
"Series 2001-A Pay Out Event" is defined in Section 6.1.
--------------------------- -----------
"Series Servicing Fee Percentage" means 2% per annum.
-------------------------------
"Spread Account" means the segregated trust account required to be
--------------
established pursuant to Section 2.05 of the Insurance Agreement, which
section is set forth in its entirety in Exhibit G.
---------
"Supplemental Enhancement" is defined in the Insurance Agreement.
------------------------
"Surplus Collateral Amount" means, at any time, the excess, if any, of
-------------------------
the Excess Collateral Amount over the sum of the Required Excess Collateral
Amount and the Supplemental Enhancement.
"Swap" means an interest rate swap agreement between the Owner
----
Trustee, on behalf of the Trust, and the Counterparty substantially in the
form of Exhibit E to this Indenture Supplement, or such other form as shall
---------
have satisfied the Rating Agency Condition.
"Swap Rate" means 5.205% per annum.
---------
"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
2001-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.
(d) The definitions of all capitalized terms defined herein by
reference to the respective definitions of those terms in the Insurance
Agreement can be found in Exhibit F.
---------
ARTICLE III
Servicing Fee
-------------
Section 3.1 Servicing Compensation. The share of the Servicing Fee
----------------------
allocable to Series 2001-A for any Distribution Date (the "Monthly
-------
Servicing Fee")
-------------
12
shall be equal to one-twelfth of the product of (a) the Series Servicing
Fee Percentage and (b) (i) the 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 $495,300.
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 2001-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 2001-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 2001-A pursuant to Article VIII
------------
of the Indenture shall be allocated and distributed as set forth in this
Article.
(b) Allocations to the Series 2001-A Noteholders. The Servicer shall,
--------------------------------------------
prior to the close of business on any Deposit Date, allocate to the Series
2001-A Noteholders the following amounts as set forth below:
(i) Allocations of Finance Charge Collections. The Servicer shall
-----------------------------------------
allocate to the Series 2001-A Noteholders and transfer to the Finance
Charge Subaccount 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 Monthly Period falling in the Revolving Period or the Controlled
Accumulation Period, such allocation shall be transferred to the
Finance Charge Subaccount only until such time as the amount
transferred to the Finance Charge Subaccount pursuant to this
subsection during that Monthly Period equals the sum of (1) the Net
Interest Obligation with respect to the Distribution Date relating to
that Monthly Period, (2) at any time that FCNB is not the Servicer,
the Monthly Servicing Fee payable on the Distribution Date relating to
that Monthly Period and all accrued and unpaid Investor Monthly
Servicing Fees with respect to any prior Monthly Periods, (3) the
Default Estimate for that
13
Monthly Period and (4) the Monthly Insurance Premium with respect to
that Monthly Period; provided further, however, that notwithstanding
-------- ------- -------
the foregoing proviso, (1) the entire Allocation Percentage of Finance
-------
Charge Collections shall be transferred to the Finance Charge
Subaccount on a daily basis if (x) the Excess Spread Percentage for
the preceding Monthly Period is less than 3.00%, or (y) 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 Finance Charge
Subaccount any amounts not retained on a daily basis pursuant to the
preceding proviso. Any portion of such allocation not required to be
-------
transferred to the Finance Charge Subaccount pursuant to the preceding
sentence shall be (x) first, deposited in the Excess Funding Account
to the extent that the Seller Amount is less than the Minimum Seller
Amount and (y) thereafter paid to the Holders of the Seller Interest.
(ii) Allocations of Principal Collections. The Servicer shall
------------------------------------
allocate to the Series 2001-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 2001-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 2001-A Noteholders and transferred to the
Principal Collections Subaccount 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 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
14
amortization period or accumulation period, transferred to the
Principal Collections Subaccount 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 2001-A Noteholders
and transferred to the Principal Collections Subaccount until
applied as provided herein; provided, however, that after the
-------- -------
date on which an amount of such Collections equal to the Note
Principal Balance plus any amounts owing to the Counterparty
under the Swap and the Insurer under the Insurance Agreement has
been deposited into the Collection Account and allocated to the
Series 2001-A Noteholders, such amount shall be first, if any
other Principal Sharing Series is outstanding and in its
amortization period or accumulation period, transferred to the
Principal Collections Subaccount 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. The amount of monthly
---------------------------------
interest (" 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) 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 Note Interest Rate in effect
with respect to the related Interest Period and (ii) the 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 Note
Initial Principal Balance).
On the Determination Date preceding each Distribution Date, the
Servicer shall determine the excess, if any (the "Interest Shortfall"), of
------------------
(x) the Monthly Interest for such Distribution Date over (y) the aggregate
amount of funds allocated and available to pay such Monthly Interest on
such Distribution Date. If the Interest Shortfall for any Distribution Date
is greater than zero and the Insurer fails to pay such Interest Shortfall
in accordance with the terms of the related Policy, on each subsequent
Distribution Date until such Interest Shortfall is fully paid, an
additional
15
amount ("Additional Interest") equal to the product of (i) (A) 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 Note Interest
Rate in effect with respect to the related Interest Period and (ii) such
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 contrary herein,
Additional Interest shall be payable or distributed to the Class A
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, (iii) the Note Principal Balance, minus any amount
already on deposit in the Principal Accumulation Account on such
Distribution Date and (iv) the Collateral Amount (after taking into account
any adjustments to be made 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 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) on a pari passu basis (A) an amount equal to Monthly Interest
for such Distribution Date, plus the amount of any Monthly Interest
previously due but not distributed to Class A Noteholders on a prior
Distribution Date, plus the amount of any Additional Interest for such
Distribution Date, plus the amount of any 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 and (B) any
Net Swap Payment for that Distribution Date shall be distributed to
the Counterparty;
(ii) if neither FCNB nor any affiliate of the Seller is the
Servicer, an amount equal to the Monthly Servicing Fee for such
Distribution Date,
16
plus the amount of any Monthly Servicing Fee previously due but not
distributed to the Servicer on a prior Distribution Date, shall be
distributed to the Servicer;
(iii) 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;
(iv) 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 (iv) shall be treated as a portion of Available Principal
---------------
Collections for such Distribution Date;
(v) an amount equal to the Monthly Insurance Premium for the
related Monthly Period and any unpaid Monthly Insurance Premiums for
prior Monthly Periods shall be paid to the Insurer;
(vi) 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;
(vii) an amount equal to the amounts required to be deposited in
the Spread Account pursuant to Section 2.05(f) of the Insurance
Agreement shall be deposited into the Spread Account as provided in
Section 2.05(f) of the Insurance Agreement;
(viii) during the Rapid Amortization Period, any amount remaining
shall be applied as Available Principal Collections for such
Distribution Date to the extent that the other Available Principal
Collections (excluding any amounts drawn under the Policies) are not
sufficient to repay the Class A Notes in full;
(ix) an amount equal to any Reimbursement Amounts and interest
thereon owed under the Insurance Agreement shall be paid to the
Insurer;
(x) an amount equal to any other amounts owing to the Insurer
under the Insurance Agreement shall be paid to the Insurer;
(xi) if the Rapid Amortization Period is extended past the
Distribution Date on which the Note Principal Balance is paid in full
as a result of there being amounts owed to the Counterparty, on each
Distribution Date after the Note Principal Balance is paid in full, an
amount equal to any
17
partial or early termination payments or other additional payments
owed to the Counterparty under the Swap shall be paid to the
Counterparty;
(xii) any Monthly Servicing Fee for such Distribution Date or
prior Distribution Dates not paid pursuant to subsection 4.4(a)(ii)
---------------------
(unless such amount has been netted against deposits to the Collection
Account in accordance with Section 8.4 of the Indenture) shall be
-----------
distributed to the Servicer; and
(xiii) the balance, if any, will constitute a portion of Excess
Finance Charge Collections for such Distribution Date and first will
be available for allocation to other Series in Group One, 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 as described in
Section 8.6 of the Indenture.
-----------
(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, and any remaining Available
Principal Collections shall be treated as Shared Principal Collections
and applied in accordance with Section 8.5 of the Indenture; and
-----------
(ii) during the Rapid Amortization Period, an amount equal to the
Monthly Principal for such Distribution Date shall be distributed to
the Paying Agent for payment to the Class A Noteholders on such
Distribution Date until the Note Principal Balance has been paid in
full, and any remaining Available Principal Collections 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.
18
(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 amounts deposited into the Principal Accumulation
Account pursuant to subsection 4.4(c)(i).
--------------------
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)(iii) 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), (v), (ix), (x) and (xi); provided
--------------------- ---- --- ---- --- ----
that in no event will Reallocated Principal Collections be applied pursuant
to subsections 4.4(a)(v), (ix), (x) and (xi) until the Series 2001-A Final
--------------------- ---- --- ----
Maturity Date. 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 2001-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 8.6 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 2001-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
2001-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 2001-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 (xii) on such
--------------------- -----
Distribution Date over (b) the Available Finance Charge Collections with
respect to such Distribution Date (excluding any portion thereof
attributable to Excess Finance Charge Collections).
19
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 2001-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) a fraction, the
numerator of which is the Principal Shortfall for Series 2001-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 2001-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 Note Principal Balance (less the balance in the Principal Accumulation
Account) 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 2001-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 2001-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 2001-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).
---------
20
(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. 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.
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 2001-A
Noteholders, a non-interest bearing
21
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 2001-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 2001-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)(vi).
---------------------
(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. 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 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
22
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)(vi) with respect to such Distribution
------------------
Date.
(d) If 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) If 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 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 2001-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
23
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. Funds on deposit in the Reserve Account at any time
that the Controlled Accumulation Period is suspended pursuant to Section
-------
4.15, shall remain on deposit until applied in accordance with subsection
---- ----------
4.10(d), (e) or (f).
------- --- ---
Section 4.11 [Reserved].
----------
Section 1.14 Determination of LIBOR.
----------------------
(a) On each LIBOR Determination Date in respect of an Interest Period,
the Indenture Trustee, utilizing the services of the Counterparty as
calculation agent under the Swap (or the Servicer if the Swap is
terminated), 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 Interest Period 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
Interest Period shall be the arithmetic mean of the quotations. If fewer
than two (2) quotations are provided as requested, the rate for that
Interest Period will be the arithmetic mean of the rates quoted by major
banks in New York City, selected by the Counterparty or, if the Swap is
terminated, 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 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 2001-A Noteholder from time to time.
(c) On each LIBOR Determination Date, the Indenture Trustee shall send
to the Servicer 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
24
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 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 Controlled Accumulation Period. The Controlled
------------------------------
Accumulation Period is scheduled to commence at the opening of business
March 1, 2004. 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 February 2004
Distribution Date, and each Determination Date thereafter until the
Controlled Accumulation Period begins, the Servicer will determine the
"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.
Section 4.15 Suspension of Controlled Accumulation Period. (a) The
--------------------------------------------
Issuer may, in its sole discretion, elect to suspend the commencement of
the Controlled Accumulation Period with prior notice to the Rating
Agencies. The commencement of the Controlled Accumulation Period shall be
suspended upon delivery by the Issuer to the Indenture Trustee of (i) an
Officer's Certificate stating that the Issuer has elected to suspend the
commencement of the Controlled Accumulation Period and that all conditions
precedent to such suspension set forth in this Section 4.15 have been
------------
satisfied, (ii) a copy of an executed Qualified Maturity Agreement and
(iii) an Opinion of Counsel addressed to the Indenture Trustee as to the
due authorization, execution and delivery and the validity and
enforceability of such Qualified Maturity Agreement. The Issuer does hereby
transfer, assign, set-over, and otherwise convey to the Indenture Trustee
for the benefit of the Class A Noteholders, without recourse, all of its
rights under any Qualified Maturity Agreement obtained in accordance with
this Section 4.15 and all proceeds thereof. Such property shall constitute
------------
part of the Trust Estate for all purposes of the Indenture. The foregoing
transfer, assignment, set-over and conveyance does not constitute and is
not intended to result in a creation or an assumption by the Indenture
Trustee or any Noteholder of any obligation of the Issuer or any other
25
Person in connection with a Qualified Maturity Agreement or under any
agreement or instrument relating thereto.
The Indenture Trustee hereby acknowledges its acceptance, to the
extent validly transferred, assigned, set-over or otherwise conveyed to the
Indenture Trustee, for the benefit of the Class A Noteholders, of all of
the rights previously held by the Issuer under any Qualified Maturity
Agreement obtained by the Issuer and all proceeds thereof, and declares
that it shall hold such rights upon the trust set forth herein and in the
Agreement, and subject to the terms hereof and thereof, for the benefit of
the Class A Noteholders.
(b) The Issuer shall cause the provider of each Qualified Maturity
Agreement to deposit into the Principal Accumulation Account on or before
the Expected Principal Distribution Date an amount equal to the aggregate
outstanding principal balance of the Class A Notes on such Distribution
Date; provided, however, that the Issuer may instead elect to fund all or a
-------- -------
portion of such deposit with the proceeds of the issuance of a new Series
or with the Available Principal Collections with respect to such
Distribution Date; and provided, further, that the Issuer shall in no event
-------- -------
cause or permit the provider of any Qualified Maturity Agreement to fund
under such Qualified Maturity Agreement unless there are sufficient funds
on deposit in the Collection Account allocated to make required payments
pursuant to Sections 4.4(a)(i) and (ii) for any Distribution Date falling
------------------ ----
on or after the funding under such Qualified Maturity Agreement. The amount
deposited shall be applied on the Expected Principal Distribution Date
pursuant to Section 4.4(d) as if the commencement of the Controlled
--------------
Accumulation Period had not been suspended.
(c) Each Qualified Maturity Agreement shall terminate at the close of
business on the Expected Principal Distribution Date; provided, however,
-------- -------
that the Issuer may terminate a Qualified Maturity Agreement prior to such
Distribution Date, with notice to each Rating Agency, if (i) the Available
Reserve Account Amount equals the Required Reserve Account Amount and (ii)
one of the following events occurs: (A) the Issuer obtains a substitute
Qualified Maturity Agreement, (B) the provider of the Qualified Maturity
Agreement ceases to qualify as an Eligible Institution and the Issuer is
unable to obtain a substitute Qualified Maturity Agreement or (C) a Pay Out
Event occurs. In addition, the Issuer may terminate a Qualified Maturity
Agreement prior to the later of (i) the date on which the Controlled
Accumulation Period was scheduled to begin, before giving effect to the
suspension of the Controlled Accumulation Period, and (b) the date to which
the commencement of the Controlled Accumulation Period may be postponed
pursuant to Section 4.15 (as determined on the Determination Date preceding
------------
the date of such termination), in which case the commencement of the
Controlled Accumulation Period shall be determined as if the Issuer had not
elected to suspend such commencement. In the event that the provider of a
Qualified Maturity Agreement ceases to qualify as an Eligible Institution,
the Issuer shall use its best efforts to obtain a substitute Qualified
Maturity Agreement.
26
(d) If a Qualified Maturity Agreement is terminated prior to the
earlier of the Expected Principal Distribution Date and the commencement of
the Rapid Amortization Period and the Issuer does not obtain a substitute
Qualified Maturity Agreement, the Controlled Accumulation Period shall
commence on the latest of (i) March 1, 2004, (ii) at the election of the
Issuer, the date to which the commencement of the Controlled Accumulation
Period may be postponed pursuant to Section 4.14 (as determined on the date
------------
of such termination) and (iii) the first day of the Monthly Period
following the date of such termination.
Section 4.16 Insurance Policies. (a) On the Closing Date, the Issuer
------------------
shall enter into the Insurance Agreement, pursuant to which the Policies
will be issued for the benefit of the Series 2001-A Noteholders and the
Counterparty.
(b) Prior to 12:00 noon, New York City time, on the third Business Day
preceding each Distribution Date, the Servicer shall determine whether
there will be a Deficiency Amount on the following Distribution Date. If
the Servicer determines that there will be a Deficiency Amount on the
following Distribution Date, the Servicer shall complete the notice in the
form set forth as an exhibit to the related Policy (the "Notice") and
submit such Notice in accordance with the related Policy to the Insurer no
later than 3:00 p.m., New York time, on such Business Day, as a claim for
an Insured Obligation in an amount equal to such Deficiency Amount. The
Insurer shall remit or cause to be remitted to the Trustee such Deficiency
Amount in accordance with the terms of the related Policy.
(c) The Indenture Trustee shall (i) receive as attorney-in-fact of the
applicable owners an Insured Obligation from the Insurer and (ii)
distribute the same to (a) the Class A Noteholders as provided in
subsections 5.2(a) and (b) to the extent that such amounts relate to
------------------ ---
Monthly Interest or principal of the Class A Notes, respectively, and (b)
the Counterparty or the Servicer to the extent that such amounts relate to
Net Swap Payments or Monthly Servicing Fees, respectively. Any and all
Insured Obligations disbursed by the Indenture Trustee from claims made
under the Policies shall not be considered payment by the Issuer with
respect to the Class A Notes or other applicable obligations, nor shall
such payments discharge the obligation of the Issuer with respect to the
Class A Notes or other obligations, and the Insurer shall become the owner
of such unpaid amounts due from the Issuer in respect of Insured
Obligations.
If on any Distribution Date, the Indenture Trustee or the Servicer
determines that the Insurer has paid more under any Policy than is required
by the terms hereof, the Indenture Trustee shall promptly return such
excess to the Insurer.
The Indenture Trustee shall keep a complete and accurate record of the
amount of the Insured Obligations paid. The Insurer shall have the right to
inspect such record during normal business hours upon prior notice to the
Indenture Trustee.
27
(d) So long as no Control Transfer Event shall have occurred and be
continuing, the Insurer shall be deemed to be the sole Holder of the Series
2001-A Notes for the purpose of exercising voting rights and the giving of
any consents, approvals, instructions, directions, declarations and notices
relating to the Series 2001-A Notes. However, for any amendment or waiver
requiring the consent of all affected Noteholders, the consent of the
Insurer and all affected Noteholders will be required.
Section 4.17 Swap. (a) On or prior to the Closing Date, the Owner
----
Trustee shall, on behalf of the Issuer, enter into the Swap with the
Counterparty for the benefit of the Noteholders. The aggregate notional
amount under the Swap shall, at any time, be equal to the Note Principal
Balance at such time. Net Swap Receipts and early termination payments
payable by the Counterparty shall be deposited by the Indenture Trustee in
the Collection Account on the day received and treated as Available Finance
Charge Collections. On any Distribution Date when there shall be a Net Swap
Payment, such Net Swap Payments shall be paid as provided in Section
-------
4.4(a)(i). On any Distribution Date when there shall be an early
---------
termination payment or any other miscellaneous payment payable by the
Issuer to the Counterparty, such amount shall be paid as provided in
Section 4.4(a)(xi).
------------------
(b) Each Swap shall be in substantially the same form as the initial
Swap attached hereto as Exhibit E.
---------
(c) The Servicer may, upon (i) satisfaction of the Rating Agency
Condition and, (ii) unless a Control Transfer Event has occurred, receipt
of written consent from the Insurer (which consent shall not be
unreasonably withheld), and, when required under the terms of the existing
Swap, shall, obtain a replacement Swap.
ARTICLE V
Delivery of Series 2001-A Notes;
Distributions; Reports to Series 2001-A Noteholders
---------------------------------------------------
Section 5.1 Delivery and Payment for the Series 2001-A Notes.
------------------------------------------------
The Issuer shall execute and issue, and the Indenture Trustee shall
authenticate, the Series 2001-A Notes in accordance with Section 2.3 of the
-----------
Indenture. The Indenture Trustee shall deliver the Series 2001-A Notes to
or upon the written order of the Trust when so authenticated.
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
28
Distribution Date to pay interest on the Class A Notes pursuant to this
Indenture Supplement, including amounts made available as a result of any
draw on the Policies.
(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, including amounts
made available as a result of any draw on the Policies.
(c) 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.
(d) Except as provided in Section 11.2 of the Indenture with respect
------------
to a final distribution, distributions to Series 2001-A Noteholders
hereunder shall be made by (i) check mailed to each Series 2001-A
Noteholder (at such Noteholder's address as it appears in the Note
Register), except that for any Series 2001-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 2001-A Note or the making of any notation
thereon.
Section 5.3 Reports and Statements to Series 2001-A Noteholders.
---------------------------------------------------
(a) On each Distribution Date, the Paying Agent, on behalf of the
Indenture Trustee, shall forward to each Series 2001-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, the Insurer, the Counterparty 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 2001-A Noteholder by a
request in writing to the Servicer.
(d) On or before January 31 of each calendar year, beginning with
January 31, 2002, 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 2001-A Noteholder, a
statement prepared by the Servicer
29
containing the information which is required to be contained in the
statement to Series 2001-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 2001-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 2001-A Pay Out Events and Events of Default
--------------------------------------------------
Section 6.1 Series 2001-A Pay Out Events. If any one of the following
----------------------------
events shall occur with respect to the Series 2001-A Notes:
(a) failure on the part of the Seller or the "Seller" under the
Pooling and Servicing Agreement (i) to make any payment or deposit required
to be made by the Seller by the terms of the Transfer and Servicing
Agreement, the Pooling 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 in any material respect any other
covenants or agreements of the Seller set forth in the Transfer and
Servicing Agreement, the Pooling and Servicing Agreement, the Indenture or
this Indenture Supplement, which failure has a material adverse effect on
the Series 2001-A Noteholders and which continues unremedied for a period
of forty-five (45) 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 2001-A Notes;
(b) any representation or warranty made by the Seller in the Transfer
and Servicing Agreement or, prior to the SMT Termination Date, by the
"Seller" under the Pooling and Servicing Agreement in the Pooling 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 2.6(c) of the Transfer and Servicing Agreement or Section
-------
2.1 or subsection 2.6(c) of the Pooling 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
forty-five (45) 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 2001-A Notes and as a result of which the
interests of the Series 2001-A Noteholders are materially and adversely
affected for such period; provided, however, that a Series 2001-A Pay Out
-------- -------
Event pursuant to this subsection 6.1(b) shall
-----------------
30
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 or the Pooling and Servicing Agreement;
(c) a failure by the Seller or the "Seller" under the Pooling and
Servicing Agreement to convey Receivables in Additional Accounts to the
Trust within ten (10) 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 or subsection 2.6(a) of the Pooling 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 sum of the
average of the Base Rates for such period and the average of the Default
Amount Rates for such period; it being understood that, for purposes of
such calculation, the result of the Portfolio Yield for the first Monthly
Period, minus the sum of the Base Rate and the Default Amount Rate for the
first Monthly Period shall be equal to the Modified Excess Spread
Percentage for the first Monthly Period;
(f) the Note Principal Balance shall not be paid in full on the
Expected Principal Distribution Date;
(g) prior to the SMT Termination Date, a Trust Pay Out Event shall
occur under (and as defined in) the Pooling and Servicing Agreement;
(h) any draw shall be made on any Policy in accordance with the terms
thereof;
(i) Insurer shall by notice to the Seller, the Servicer and the
Indenture Trustee declare a Pay Out Event in accordance with Section 5.01
------------
of the Insurance Agreement (which section is set forth in its entirety in
Exhibit H) at any time prior to a Control Transfer Event;
---------
(j) the Counterparty shall fail to make any net payment required to be
made by it under the Swap, and such failure is not cured within five
Business Days, or the Swap shall terminate prior to the Series 2001-A Final
Maturity Date and the Issuer shall fail to enter into a replacement Swap in
accordance with subsection 4.17(c);
------------------
(k) without limiting the foregoing, the occurrence of an Event of
Default with respect to Series 2001-A; or
(l) the occurrence of an Insolvency Event relating to the Insurer;
31
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 2001-A Notes
evidencing more than 50% of the aggregate unpaid principal amount of Series
2001-A Notes by notice then given in writing to the Seller and the Servicer
(and to the Indenture Trustee if given by the Series 2001-A Noteholders)
may declare that a "Series Pay Out Event" with respect to Series 2001-A (a
"Series 2001-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), (g),
------------- --- --- ---
(h), (i), (j), (k) or (l), a Series 2001-A Pay Out Event shall occur
--- --- --- --- ---
without any notice or other action on the part of the Indenture Trustee or
the Series 2001-A Noteholders immediately upon the occurrence of such
event.
Section 6.2 Series 2001-A Events of Default. (a) For so long as no
-------------------------------
Control Transfer Event has occurred, the Events of Default for Series
2001-A shall include, in addition to the Events of Default specified in the
Indenture, any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body):
(i) default in the payment of interest on the Series 2001-A Notes
when the same becomes due and payable, and such default shall continue
for a period of twenty-eight (28) days;
(ii) default in the observance or performance of any covenant or
agreement of the Issuer made in the Indenture made in respect of the
Series 2001-A Notes (other than a covenant or agreement, a default in
the observance or performance of which is elsewhere in this Section
-------
6.2 or in Section 5.2 of the Indenture specifically dealt with) (all
--- -----------
of such covenants and agreements in the Indenture which are not
expressly stated to be for the benefit of a particular Series being
deemed to be in respect of the Notes of Series 2001-A for this
purpose) in any material respect and such default shall continue or
not be cured for a period of forty-five (45) days after there shall
have been given, by registered or certified mail, return receipt
requested to the Issuer and the Indenture Trustee by the Insurer, a
written notice specifying such default and requiring it to be remedied
and stating that such notice is a "Notice of Default" hereunder; or
-----------------
(iii) any Servicer Default.
(b) If an Event of Default for Series 2001-A shall have occurred and
be continuing and the Series 2001-A Notes have been accelerated pursuant to
Section 5.3, so long as no Control Transfer Event has occurred, the Insurer
-----------
shall have the right, but not the obligation, to (i) exercise the rights of
the Series 2001-A Noteholders described in Section 5.5 of the Indenture,
-----------
and (ii) to pay all or any portion of the outstanding principal balance of
the Series 2001-A Notes prior to the
32
Series 2001-A Final Maturity Date. Following the occurrence of an Event of
Default for Series 2001-A, the Indenture Trustee shall continue to submit
claims under the Policies as necessary to enable the Issuer to continue to
make payments on each Distribution Date in accordance with the terms of
this Indenture Supplement.
Section 6.3 Declarations of Default. So long as no Control Transfer
-----------------------
Event shall have occurred and be continuing, neither the Indenture Trustee
nor the Class A Noteholders may declare an Event of Default with respect to
the Series 2001-A Notes. So long as no Control Transfer Event shall have
occurred and be continuing, an Event of Default with respect to the Series
2001-A Notes shall occur only upon delivery by the Insurer to the Indenture
Trustee of notice of the occurrence of an Event of Default.
ARTICLE VII
Redemption of Series 2001-A Notes; Final Distributions; Series Termination
--------------------------------------------------------------------------
Section 7.1 Optional Redemption of Series 2001-A Notes; Final
-------------------------------------------------
Distributions.
-------------
(a) On any day occurring on or after the date on which the outstanding
principal balance of the Series 2001-A Notes is reduced to 10% or less of
the initial outstanding principal balance of Series 2001-A Notes, the
Servicer shall have the option to redeem the Series 2001-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; provided that all amounts due and owing to the Insurer
pursuant to the Insurance Agreement shall have been paid to the Insurer.
(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
2001-A shall be reduced to zero and the Series 2001-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
2001-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
33
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
2001-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 distributions
otherwise to be made on such date) in immediately available funds: (i) (x)
the 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) Monthly Interest for such Distribution Date, (B)
any Monthly Interest previously due but not distributed to the Class A
Noteholders on a prior Distribution Date and (C) the amount of Additional
Interest, if any, for such Distribution Date and any 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) any unpaid Monthly Insurance Premiums,
Reimbursement Amounts, interest thereon and other amounts payable to the
Insurer under the Insurance Agreement will be distributed to the Insurer
(iii) any amounts owed to the Counterparty under the Swap shall be
distributed to the Counterparty 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 2001-A Noteholders shall be deemed distributed in
full to the Series 2001-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 2001-A Final Maturity
------------------
Date, the right of the Series 2001-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.
-----------
34
ARTICLE VIII
Miscellaneous Provisions
------------------------
Section 8.1 Ratification of Indenture; Amendments. 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. This
Indenture Supplement may be amended only by a Supplemental Indenture
entered in accordance with the terms of Section 10.1 or 10.2 of the
------------ ----
Indenture. For purposes of the application of Section 10.2 to any amendment
------------
of this Indenture Supplement, only the vote of the Series 2001-A
Noteholders shall be required. The Issuer and Indenture Trustee shall not
enter into any amendment to this Indenture Supplement to provide for the
termination of the Swap, any Policy or any Qualified Maturity Agreement
unless the Rating Agency Condition is satisfied with respect to such
amendment; it being understood that (i) the Servicer may obtain a
-------------------
replacement Swap in accordance with Section 4.17 and (ii) the Issuer may
------------
terminate a Qualified Maturity Agreement in accordance with Section 4.15,
------------
so long as such replacement or termination is not affected through the
amendment of this Indenture Supplement.
Section 8.2 Form of Delivery of the Series 2001-A Notes. The Series
-------------------------------------------
2001-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, PROVIDED, HOWEVER, THAT THE DUTIES AND OBLIGATIONS OF THE
INDENTURE TRUSTEE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS.
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
35
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 Master Indenture.
Section 8.7 Third Party Beneficiary. This Indenture Supplement and the
-----------------------
Indenture will inure to the benefit of the Insurer.
Section 8.8 Inconsistency. In the event of any inconsistency between
-------------
(a) the provisions of the Insurance Agreement set forth in Exhibits F, G
---------- -
and H and (b) the Insurance Agreement, the provisions of the Insurance
-
Agreement shall prevail.
Section 8.9 Collateral Series Supplement. Section 10(h) of the
---------------------------- -------------
Collateral Series Supplement, dated as of December 1, 2000 (the "Collateral
----------
Series Supplement"), to the Pooling and Servicing Agreement shall not apply
-----------------
to the Collateral Series (as defined in the Collateral Series Supplement)
related to the Series 2001-A Notes.
Section 8.10 Increase of Collateral Amount. The Seller may, in its
-----------------------------
sole discretion, increase the Collateral Amount to cure any breach set
forth in Section 4.02(g)(i) of the Insurance Agreement; provided that,
--------
after giving effect to any such increase, the Aggregate Principal Balance
shall not be less than the Minimum Aggregate Principal Balance; and
provided, further that the Servicer may, at the direction of the Seller,
-------- -------
retain Principal Collections otherwise distributable to the holders of the
Seller Interest in the Excess Funding Account for the purpose of increasing
the Aggregate Principal Balance so that the Aggregate Principal Balance
shall at least equal the Minimum Aggregate Principal Balance after giving
effect to such increase; and provided further that the Seller may, in its
-------- -------
sole discretion, decrease the Collateral Amount if such decrease would not
cause a breach of the covenant set forth in Section 4.02(g)(i) of the
Insurance Agreement.
Section 8.11 Perfection Representations and Warranties. The parties
-----------------------------------------
hereto agree that the representations, warranties and covenants set forth
in Schedule I shall be a part of this Indenture Supplement for all
purposes.
[SIGNATURE PAGES FOLLOW]
36
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
Name: /s/ Xxxxxx X. Xxxxxx
--------------------------
Title: Vice President
THE BANK OF NEW YORK,
as Indenture Trustee
Name: /s/ Xxxxxx X. Xxxxx
--------------------------
Title: Agent
Signature page to
Indenture Supplement
37
Acknowledged and Accepted:
FIRST CONSUMERS NATIONAL BANK,
as Servicer
Name: /s/ Xxxx X. Xxxxxx
--------------------------
Title:
Acknowledged and Accepted:
SPIEGEL CREDIT CORPORATION III,
as Seller
Name: /s/ Xxxx X. Xxxxxx
--------------------------
Title:
Signature page to
Indenture Supplement
38
