EXHIBIT 4.2
________________________________________________________________________________
SPIEGEL CREDIT CARD MASTER NOTE
TRUST
________________________________________________________________________________
SPIEGEL CREDIT CARD MASTER NOTE TRUST
Issuer
and
BNY MIDWEST TRUST COMPANY
Indenture Trustee
SERIES 2000-A INDENTURE SUPPLEMENT
Dated as of _____ __, 2000
________________________________________________________________________________
Table of Contents
ARTICLE I Creation of the Series 2000-A Notes................................... 1
Section 1.1 Designation........................................... 1
ARTICLE II Definitions........................................................... 2
Section 2.1 Definitions........................................... 2
ARTICLE III Servicing Fee......................................................... 13
Section 3.1 Servicing Compensation................................ 13
ARTICLE IV Rights of Series 2000-A Noteholders and Allocation and
Application of Collections............................................ 14
Section 4.1 Collections and Allocations............................ 14
Section 4.2 Determination of Monthly Interest...................... 16
Section 4.3 Determination of Monthly Principal..................... 17
Section 4.4 Application of Available Finance Charge
Collections and Available Principal Collections........ 18
Section 4.5 Investor Charge-Offs................................... 20
Section 4.6 Reallocated Principal Collections...................... 21
Section 4.7 Excess Finance Charge Collections...................... 21
Section 4.8 Shared Principal Collections........................... 21
Section 4.9 Principal Accumulation Account......................... 21
Section 4.10 Reserve Account........................................ 23
Section 4.11 Spread Account......................................... 25
Section 4.12 Determination of LIBOR................................. 27
Section 4.13 Investment Instructions................................ 28
Section 4.14 Increase of Excess Collateral Amount................... 28
ARTICLE V Delivery of Series 2000-A Notes; Distributions; Reports to
Series 2000-A Noteholders............................................. 29
Section 5.1 Delivery and Payment for the Series 2000-A Notes....... 29
Section 5.2 Distributions.......................................... 29
Section 5.3 Reports and Statements to Series 2000-A
Noteholders............................................ 30
ARTICLE VI Series 2000-A Pay Out Events.......................................... 31
Section 6.1 Series 2000-A Pay Out Events........................... 31
ARTICLE VII Redemption of Series 2000-A Notes; Final Distributions;
Series Termination.................................................... 32
i
Section 7.1 Optional Redemption of Series 2000-A Notes;
Final Distributions .................................... 32
Section 7.2 Series Termination ..................................... 34
ARTICLE VIII Miscellaneous Provisions............................................... 34
Section 8.1 Ratification of Indenture .............................. 34
Section 8.2 Form of Delivery of the Series 2000-A Notes ............ 34
Section 8.3 Counterparts ........................................... 34
Section 8.4 GOVERNING LAW .......................................... 34
Section 8.5 Limitation of Liability ................................ 34
ii
EXHIBITS
EXHIBIT A-1 FORM OF CLASS A NOTE
EXHIBIT A-2 FORM OF CLASS B NOTE
EXHIBIT A-3 FORM OF CLASS C NOTE
EXHIBIT B FORM OF MONTHLY PAYMENT
INSTRUCTIONS AND NOTIFICATION TO
THE INDENTURE TRUSTEE
EXHIBIT C FORM OF MONTHLY STATEMENT
EXHIBIT D FORM OF MONTHLY SERVICER'S
CERTIFICATE
iii
SERIES 2000-A INDENTURE SUPPLEMENT, dated as of ______ __, 2000 (the
"Indenture Supplement"), between SPIEGEL CREDIT CARD MASTER NOTE TRUST, a trust
--------------------
organized and existing under the laws of the State of Illinois (herein, the
"Issuer" or the "Trust"), and BNY MIDWEST TRUST COMPANY, a [banking corporation
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organized and existing under the laws of the State of Illinois], not in its
individual capacity, but solely as indenture trustee (herein, together with its
successors in the trusts thereunder as provided in the Master Indenture referred
to below, the "Indenture Trustee") under the Master Indenture, dated as of
-----------------
_______, 2000 (the "Indenture") between the Issuer and the Indenture Trustee
---------
(the Indenture, together with this Indenture Supplement, the "Agreement").
---------
Pursuant to Section 2.12 of the Indenture, the Transferor may direct the
------------
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 2000-A Notes
-----------------------------------
Section 1.1 Designation.
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(a) There is hereby created and designated a Series of Notes to be issued
pursuant to the Indenture and this Indenture Supplement to be known as "Spiegel
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Credit Card Master Note Trust, Series 2000-A" or the "Series 2000-A Notes." The
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Series 2000-A Notes shall be issued in three Classes, known as the "Class A
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Series 2000-A Floating Rate Asset Backed Notes," the "Class B Series 2000-A
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Floating Rate Asset Backed Notes," and the "Class C Series 2000-A Floating Rate
--------------------------------- -----------------------------------
Asset Backed Notes."
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(b) Series 2000-A shall be included in Group One and shall be a Principal
Sharing Series. Series 2000-A shall be an Excess Allocation Series with respect
to Group One only. Series 2000-A shall not be subordinated to any other Series.
(c) If any term or provision contained herein shall conflict with or be
inconsistent with any term or provision contained in the Indenture, the terms
and provisions of this Indenture Supplement shall be controlling. All
capitalized terms not otherwise defined herein are defined in the Indenture.
Each capitalized term defined herein shall relate only to the Series 2000-A
Notes and no other Series of Notes issued by the Issuer.
ARTICLE II
Definitions
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Section 2.1 Definitions.
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(a) Whenever used in this Indenture Supplement, the following words and
phrases shall have the following meanings, and the definitions of such terms are
applicable to the singular as well as the plural forms of such terms and the
masculine as well as the feminine and neuter genders of such terms.
"Accumulation Period Factor" means, for any Monthly Period, a fraction, the
--------------------------
numerator of which is equal to the sum of the initial Collateral Amounts of all
outstanding Series, and the denominator of which is equal to the sum of (a) the
Initial Collateral Amount, (b) the initial Collateral Amounts of all outstanding
Series (other than Series 2000-A) which are not expected to be in their
revolving periods, and (c) the initial Collateral Amounts of all other
outstanding Series which are not allocating Shared Principal Collections to
other Series and are in their revolving periods; provided, however, that this
definition may be changed at anytime if the Rating Agency Condition is
satisfied.
"Accumulation Period Length" is defined in subsection 4.4(e).
-------------------------- -----------------
"Accumulation Shortfall" shall initially mean zero and shall thereafter
----------------------
mean, for any Monthly Period during the Controlled Accumulation Period, the
excess, if any, of the Controlled Deposit Amount for the previous Monthly Period
over the amount deposited into the Principal Accumulation Account pursuant to
subsection 4.4(c)(i) for the previous Monthly Period.
--------------------
"Additional Interest" means, for any Distribution Date, Class A Additional
-------------------
Interest, Class B Additional Interest and Class C Additional Interest for such
Distribution Date.
"Adjusted Collateral Amount" means, as of any date of determination, an
--------------------------
amount equal to the Collateral Amount as of such date, minus the amount on
deposit in the Principal Accumulation Account on such date.
"Allocation Percentage" shall mean, on any date of determination, the
---------------------
percentage equivalent of a fraction:
(a) the numerator of which shall be the Collateral Amount, determined:
(i) for Finance Charge Collections and Principal Collections
during the Revolving Period and the Controlled Accumulation Period
2
and for Default Amounts at any time, at the end of the last day of the
prior Monthly Period (or, in the case of the monthly Period in which
the Closing Date occurs, on the Closing Date);
(ii) for Finance Charge Collections and Principal Collections
during the Rapid Amortization Period and Principal Collections during
the Controlled Accumulation Period, on the last day of the Revolving
Period, provided, however, (A) that during the Controlled Accumulation
Period, the Allocation Percentage for Principal Collections may be
reset by and at the option of the Servicer (and any such reset
Allocation Percentage will apply in any Rapid Amortization Period
following the Controlled Accumulation Period) for each Monthly Period
to use a numerator which shall not be greater than the numerator
described above and shall not be less than the greater of (x)the
Collateral Amount, determined as of the close of business on the last
day of the preceding Monthly Period (y) a numerator that results in an
Allocation Percentage that when multiplied by the amount of Principal
Collections for the preceding Monthly Period will equal 110% of the
Controlled Accumulation Amount for the Monthly Period to which such
allocation fraction will be applicable, and (B) if Series 2000-A is
paired with a Paired Series and a Rapid Amortization Period commences
for such Paired Series, the Seller may, by written notice to the
Trustee, the Servicer and the Rating Agency, designate a different
numerator for such fraction; and
(b) denominator of which shall be the greater of (x) the Aggregate
Principal Balance at the end of Business Day preceding such date of
determination and (y) the sum of the numerators used to calculate the
Allocation Percentages or Allocation Percentages for allocations with
respect to Finance Charge Collections, Principal Collections or Default
Amounts, as applicable, for all outstanding Series on such date of
determination.
"Available Finance Charge Collections" means, for any Monthly Period, an
------------------------------------
amount equal to the sum of (a) the Investor Finance Charge Collections for such
Monthly Period, plus (b) the Excess Finance Charge Collections allocated to
Series 2000-A for such Monthly Period, plus (c) Principal Funding Investment
Proceeds, if any, with respect to the related Distribution Date and (d) amounts,
if any, to be withdrawn from the Reserve Account which will be deposited into
the Collection Account on the related Distribution Date to be treated as
Available Finance Charge Collections pursuant to subsection 4.10(d).
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"Available Principal Collections" means, for any Monthly Period, an 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
3
Monthly Period which pursuant to Section 4.6 are required to be applied on the
-----------
related Distribution Date, plus (c) any Shared Principal Collections with
respect to other Principal Sharing Series in Group One (including any amounts on
deposit in the Excess Funding Account that are allocated to Series 2000-A
pursuant to the Agreement for application as Shared Principal Collections), plus
(d) the aggregate amount to be treated as Available Principal Collections
pursuant to subsections 4.4(a)(v) and (vi) for the related Distribution Date.
--------------------- ----
"Available Reserve Account Amount" means, for any Distribution Date, the
--------------------------------
lesser of (a) the amount on deposit in the Reserve Account on such date (after
taking into account any interest and earnings retained in the Reserve Account
pursuant to subsection 4.10(b) on such date, but before giving effect to any
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deposit made or to be made pursuant to subsection 4.4(a)(vii) to the Reserve
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Account on such date) and (b) the Required Reserve Account Amount.
"Available Spread Account Amount" means, for any Distribution Date, an
-------------------------------
amount equal to the lesser of (a) the amount on deposit in the Spread Account
(exclusive of Investment Earnings, unless and until the occurrence of an Event
of Default with respect to Series 2000-A and acceleration of the maturity of the
Series 2000-A Notes pursuant to Section 5.3 of the Indenture) on such date
-----------
(before giving effect to any deposit to, or withdrawal from, the Spread Account
made or to be made with respect to such date) and (b) the Required Spread
Account Amount for such Distribution Date.
"Base Rate" means, for any Monthly Period, the annualized percentage
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equivalent of a fraction, the numerator of which is equal to the sum of the
Monthly Interest and the Monthly Servicing Fee, each with respect to the related
Distribution Date, and the denominator of which is the Note Principal Balance as
of the first day of such Monthly Period.
"Class A Additional Interest" is defined in subsection 4.2(a).
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"Class A Interest Shortfall" is defined in subsection 4.2(a).
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"Class A Monthly Interest" is defined in subsection 4.2(a).
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"Class A Note Initial Principal Balance" means $___________.
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"Class A Note Interest Rate" means a per annum rate of ____% [in excess of
--------------------------
LIBOR as determined on the LIBOR Determination Date for the applicable Interest
Period].
"Class A Note Principal Balance" means, on any date of determination, an
------------------------------
amount equal to (a) the Class A Note Initial Principal Balance, minus (b) the
4
aggregate amount of principal payments made to the Class A Noteholders on or
prior to such date.
"Class A Noteholder" means the Person in whose name a Class A Note is
------------------
registered in the Note Register.
"Class A Notes" means any one of the Notes executed by the Issuer and
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authenticated by or on behalf of the Indenture Trustee, substantially in the
form of Exhibit A-1.
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"Class A Required Amount" means, for any Distribution Date, an amount equal
-----------------------
to the excess of the amount described in subsection 4.4(a)(i) over the Available
--------------------
Finance Charge Collections applied to pay such amount pursuant to subsection
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4.4(a).
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"Class B Additional Interest" is defined in subsection 4.2(b).
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"Class B Interest Shortfall" is defined in subsection 4.2(b).
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"Class B Monthly Interest" is defined in subsection 4.2(b).
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"Class B Note Initial Principal Balance" means $___________.
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"Class B Note Interest Rate" means a per annum rate of ____% [in excess of
--------------------------
LIBOR as determined on the LIBOR Determination Date for the applicable Interest
Period].
"Class B Note Principal Balance" means, on any date of determination, an
------------------------------
amount equal to (a) the Class B Note Initial Principal Balance, minus (b) the
aggregate amount of principal payments made to the Class B Noteholders on or
prior to such date.
"Class B Noteholder" means the Person in whose name a Class B Note is
------------------
registered in the Note Register.
"Class B Notes" means any one of the Notes executed by the Issuer and
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authenticated by or on behalf of the Indenture Trustee, substantially in the
form of Exhibit A-2.
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"Class B Required Amount" means, for any Distribution Date, an amount equal
-----------------------
to the excess of the amount described in subsection 4.4(a)(ii) over the
---------------------
Available Finance Charge Collections applied to pay such amount pursuant to
subsection 4.4(a).
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"Class C Additional Interest" is defined in subsection 4.2(c).
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5
"Class C Interest Shortfall" is defined in subsection 4.2(c).
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"Class C Monthly Interest" is defined in subsection 4.2(c).
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"Class C Note Initial Principal Balance" means $___________.
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"Class C Note Interest Rate" means a per annum rate of ____% [in excess of
--------------------------
LIBOR as determined on the LIBOR Determination Date for the applicable Interest
Period].
"Class C Note Principal Balance" means, on any date of determination, an
------------------------------
amount equal to (a) the Class C Note Initial Principal Balance, minus (b) the
aggregate amount of principal payments made to the Class C Noteholders on or
prior to such date.
"Class C Noteholder" means the Person in whose name a Class C Note is
------------------
registered in the Note Register.
"Class C Notes" means any one of the Notes executed by the Issuer and
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authenticated by or on behalf of the Indenture Trustee, substantially in the
form of Exhibit A-3.
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"Class C Required Amount" means, for any Distribution Date, an amount equal
-----------------------
to the excess of the amount described in subsection 4.4(a)(iv) over the
---------------------
Available Finance Charge Collections applied to pay such amount pursuant to
subsection 4.4(a).
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"Closing Date" means [_____ __], 2000.
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"Collateral Amount" means, as of any date of determination, an amount equal
-----------------
to the Initial Collateral Amount plus the cumulative amount of any increases to
the Collateral Amount made pursuant to Section 4.14 on or prior to such date of
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determination minus the amount of principal previously paid to the Series 2000-A
Noteholders, minus the excess, if any, of the aggregate amount of Investor
Charge-Offs and Reallocated Principal Collections over the reimbursements of
such amounts pursuant to subsection 4.4(a)(vi) prior to such date.
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"Controlled Accumulation Amount" means, for any Distribution Date with
------------------------------
respect to the Controlled Accumulation Period, $[___________]; provided,
however, that if the Accumulation Period Length is determined to be less than 12
months pursuant to subsection 4.4(e), the Controlled Accumulation Amount for
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each Distribution Date with respect to the Controlled Accumulation Period will
be equal to (i) the product of (x) the Initial Collateral Amount and (y) the
Accumulation Period Factor for such Monthly Period divided by (ii) the Required
Accumulation Factor Number.
6
"Controlled Accumulation Period" means, unless a Pay Out Event shall have
------------------------------
occurred prior thereto, the period commencing at the close of business on [_____
__, 20__] or such later date as is determined in accordance with subsection
----------
4.4(e), and ending on the first to occur of (a) the commencement of the Rapid
------
Amortization Period, (b) the payment in full of the Note Principal Balance and
(c) the Series 2000-A Final Maturity Date.
"Controlled Deposit Amount" means, for any Distribution Date with respect
-------------------------
to the Controlled Accumulation Period, an amount equal to the sum of the
Controlled Accumulation Amount for such Distribution Date and any existing
Accumulation Shortfall.
"Covered Amount" means an amount, determined as of each Distribution Date
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for any Interest Period, equal to the sum of (a) the product of (i) a fraction,
the numerator of which is the actual number of days in such Interest Period and
the denominator of which is 360, times (ii) the Class A Note Interest Rate in
effect with respect to such Interest Period, times (iii) the aggregate amount on
deposit in the Principal Accumulation Account up to the Class A Note Principal
Balance as of the Record Date preceding such Distribution Date, plus (b) the
product of (i) a fraction, the numerator of which is the actual number of days
in such Interest Period and the denominator of which is 360, times (ii) the
Class B Note Interest Rate in effect with respect to such Interest Period, times
(iii) the aggregate amount on deposit in the Principal Accumulation Account in
excess of the Class A Note Principal Balance as of the Record Date preceding
such Distribution Date up to the Class B Note Principal Balance as of the Record
Date preceding such Distribution Date, plus (c) the product of (i) a fraction,
the numerator of which is the actual number of days in such Interest Period and
the denominator of which is 360, times (ii) the Class C Note Interest Rate in
effect with respect to such Interest Period, times (iii) the aggregate amount on
deposit in the Principal Accumulation Account in excess of the sum of the Class
A Note Principal Balance and the Class B Note Principal Balance as of the Record
Date preceding such Distribution Date.
"Distribution Date" means [_____ __], 2000 and the 15/th/ day of each
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calendar month thereafter, or if such 15th day is not a Business Day, the next
succeeding Business Day.
"Excess Collateral Amount" means, at any time, the excess (if any) of the
------------------------
Collateral Amount over the Note Principal Balance.
"Excess Spread Percentage" means, for any Monthly Period, the amount, if
------------------------
any, by which the Portfolio Yield exceeds the Base Rate.
"Expected Class A Principal Payment Date" means the [____ 20__]
---------------------------------------
Distribution Date.
7
"Expected Class B Principal Payment Date" means the [____ 20__]
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Distribution Date.
"Expected Class C Principal Payment Date" means the [____ 20__]
---------------------------------------
Distribution Date.
"Finance Charge Shortfall" is defined in Section 4.7.
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"Group One" means Series 2000-A and each other Series hereafter specified
---------
in the related Indenture Supplement to be included in Group One.
"Initial Collateral Amount" means $[_________], which equals the initial
-------------------------
principal amount of the Series 2000-A Notes plus the Initial Excess Collateral
Amount.
"Initial Excess Collateral Amount" means $___________.
--------------------------------
"Interest Period" means, for any Distribution Date, the period from and
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including the Distribution Date immediately preceding such Distribution Date
(or, in the case of the first Distribution Date, from and including the Closing
Date) to but excluding such Distribution Date.
"Investment Earnings" means, for any Distribution Date, all interest and
-------------------
earnings on Eligible Investments included in the Spread Account (net of losses
and investment expenses) during the period commencing on and including the
Distribution Date immediately preceding such Distribution Date and ending on but
excluding such Distribution Date.
"Investor Charge-Offs" is defined in Section 4.5.
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"Investor Default Amount" means, for any Distribution Date, an amount equal
-----------------------
to the product of (a) the Defaulted Amount for the related Monthly Period and
(b) the Floating Allocation Percentage for such Monthly Period.
["Investor Finance Charge Collections" means, for any Monthly Period, an
-----------------------------------
amount equal to the aggregate amount retained in the Collection Account for
Series 2000-A pursuant to subsection 4.1(b)(i) for such Monthly Period of
--------------------
Finance Charge Collections (including Net Recoveries treated as Finance Charge
Collections) deposited in the Collection Account for such Monthly Period.]
"Investor Percentage" means, for any Monthly Period, the Allocation
-------------------
Percentage.
8
"Investor Principal Collections" means, for any Monthly Period, the
------------------------------
aggregate amount retained in the Collection Account for Series 2000-A pursuant
to subsection 4.1(b)(ii) for such Monthly Period.
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["LIBOR" means, for any Interest Period, the London interbank offered 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 (i) _____ __, 2000 for the period from
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and including the Closing Date through and including _____ __, 2000 and (ii) the
second London Business Day prior to the commencement of the second and each
subsequent Interest Period.]
"London Business Day" means any Business Day on which dealings in deposits
-------------------
in United States dollars are transacted in the London interbank market.
"Minimum Seller Percentage" means zero, for Series 2000-A.
-------------------------
"Modified Excess Spread Percentage" means, with respect to the first
---------------------------------
Monthly Period an amount equal to the percentage equivalent of a fraction, the
numerator of which is (y) the product of (a) an amount equal to the excess, if
any, of (i) (A) the amount of Finance Charge Collections deposited in the
Collection Account and allocable to the Series 2000-A Noteholders for such first
Monthly Period over (ii) the sum of (A) the product of (I) the Class A Monthly
Interest for the related Interest Period times (II) a fraction (a) the numerator
of which is the actual number of days in such first Monthly Period and (b) the
denominator of which is the actual number of days in the related Interest Period
plus (B) the product of (I) the Class B Monthly Interest for such Interest
Period times (II) a fraction (a) the numerator of which is the actual number of
days in such first Monthly Period and (b) the denominator of which is the actual
number of days in such Interest Period plus (C) the product of (I) the Class C
Monthly Interest for such Interest Period times (II) a fraction (a) the
numerator of which is the actual number of days in such first Monthly Period and
(b) the denominator of which is the actual number of days in such Interest
Period plus (D) the Noteholder Servicing Fee with respect to the Distribution
Date relating to such first Monthly Period, times (b) a fraction, the numerator
of which is 360 and the denominator of which is [__]; and the denominator of
which is (z) the Initial Collateral Amount.
"Monthly Interest" means, for any Distribution Date, the sum of the Class A
----------------
Monthly Interest, the Class B Monthly Interest, and the Class C Monthly Interest
for such Distribution Date.
"Monthly Principal" means the monthly principal distributable in respect of
-----------------
the Notes as calculated in accordance with Section 4.3.
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9
"Monthly Principal Reallocation Amount" means, for any Monthly Period, an
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amount equal to the sum of:
(a) the lower of (i) the Class A Required Amount and (ii) the greater
of (A)(x) the product of (I) [__]% and (II) the Initial Collateral Amount
minus (y) the amount of unreimbursed Investor Charge-Offs (after giving
effect to Investor Charge-Offs for the related Monthly Period) and
unreimbursed Reallocated Principal Collections (as of the previous
Distribution Date) and (B) zero;
(b) the lower of (i) the sum of the Class B Required Amount and the
Servicing Fee Required Amount and (ii) the greater of (A)(x) the product of
(I) [__]% and (II) the Initial Collateral Amount minus (y) the amount of
unreimbursed Investor Charge-Offs (after giving effect to Investor Charge-
Offs for the related Monthly Period) and unreimbursed Reallocated Principal
Collections (as of the previous Distribution Date and as required in clause
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(a) above) and (B) zero; and
---
(c) the lower of (i) the sum of the Class C Required Amount and the
Servicing Fee Required Amount and (ii) the greater of (A)(x) the product of
(I) [__]% and (II) the Initial Collateral Amount minus (y) the amount of
unreimbursed Investor Charge-Offs (after giving effect to Investor Charge-
Offs for the related Monthly Period) and unreimbursed Reallocated Principal
Collections (as of the previous Distribution Date and as required in
clauses (a) and (b) above) and (B) zero.
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"Monthly Servicing Fee" is defined in subsection 3.1(a).
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"Note Principal Balance" means, on any date of determination, an amount
----------------------
equal to the sum of the Class A Note Principal Balance, the Class B Note
Principal Balance and the Class C Note Principal Balance.
"Percentage Allocation" shall have the meaning set forth in subsection
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4.1(c)(ii)(y).
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"Portfolio Adjusted Yield" means, for any Distribution Date, the average of
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the percentages obtained for each of the three preceding Monthly Periods by
subtracting the Base Rate for each such Monthly Period from the Portfolio Yield
for each such Monthly Period.
"Portfolio Yield" means, for any Monthly Period, the annualized percentage
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equivalent of a fraction, (a) the numerator of which is equal to the sum of (i)
Investor Finance Charge Collections with respect to such Monthly Period, plus
(ii) the Principal Funding Investment Proceeds deposited into the Collection
Account on the Distribution Date related to such Monthly Period, plus (iii) the
amount of the
10
Reserve Draw Amount (up to the Available Reserve Account Amount) plus any
amounts of interest and earnings described in Section 4.10, each deposited into
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the Collection Account on the Distribution Date relating to such Monthly Period,
such sum to be calculated on a cash basis after subtracting the Investor Default
Amount for such Monthly Period, and (b) the denominator of which is the Note
Principal Balance as of the first day of such Monthly Period; provided, however,
that Excess Finance Charge Collections that are allocated to Series 2000-A with
respect to such Monthly Period may be added to the numerator if the Transferor
shall have provided ten (10) Business Days prior written notice of such action
to each Rating Agency and the Transferor, the Servicer and the Indenture Trustee
shall have received notification in writing that such action will not result in
Standard & Poor's reducing or withdrawing its then existing rating of the Notes
or any outstanding Series or Class with respect to which it is a Rating Agency.
"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 Funding Investment Proceeds" means, with respect to each
-------------------------------------
Distribution Date, the investment earnings on funds in the Principal
Accumulation Account (net of investment expenses and losses) for the period from
and including the immediately preceding Distribution Date to but excluding such
Distribution Date.
"Principal Shortfall" is defined in subsection 4.8(a).
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"Qualified Maturity Agreement" means an agreement in which a Qualified
----------------------------
Institution agrees to make a deposit into the Principal Accumulation Account on
the [Expected Final Payment Date] in an amount equal to the Note Principal
Balance on such date.
"Quarterly Excess Spread Percentage" means (a) with respect to the [Month
----------------------------------
1] 2000 Distribution Date, the Modified Excess Spread Percentage, (b) with
respect to the [Month 2] 2000 Distribution Date, the percentage equivalent of a
fraction the numerator of which is the sum of (i) the Modified Excess Spread
Percentage for the first Monthly Period and (ii) the Excess Spread Percentage
with respect to the [Month 1] 2000 Monthly Period and the denominator of which
is two, (c) with respect to the [Month 3] 2000 Distribution Date, the percentage
equivalent of a fraction the numerator of which is the sum of (i) the Modified
Excess Spread Percentage for the first Monthly Period, (ii) the Excess Spread
Percentage with respect to the [Month 1] 2000 Monthly Period and (iii) the
Excess Spread Percentage with respect to the [Month 2] 2000 Monthly Period and
the denominator of which is three and (d) with respect to the [Month 4] 2000
Distribution Date and each
11
Distribution Date thereafter, the percentage equivalent of a fraction the
numerator of which is the sum of the Excess Spread Percentages with respect to
the immediately preceding three Monthly Periods and the denominator of which is
three.
"Rapid Amortization Period" means the period commencing on the Business Day
-------------------------
immediately preceding the day on which a Pay Out Event with respect to Series
2000-A is deemed to have occurred, and ending on the first to occur of (i) the
payment in full of the Collateral Amount and (ii) the Series 2000-A Final
Maturity Date.
"Rating Agency" means each of Xxxxx'x and Standard & Poor's.
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"Reallocated Principal Collections" means, for any Distribution Date,
---------------------------------
Investor Principal Collections applied in accordance with Section 4.6 in an
------------
amount not to exceed the Monthly Principal Reallocation Amount for the related
Monthly Period.
"Reassignment Amount" means, for any Distribution Date, after giving effect
-------------------
to any deposits and distributions otherwise to be made on such Distribution
Date, the sum of (i) the outstanding principal balance of the Series 2000-A
Notes on such Distribution Date, plus (ii) Monthly Interest for such
Distribution Date and any Monthly Interest previously due but not distributed to
the Series 2000-A Noteholders, plus (iii) the amount of Additional Interest, if
any, for such Distribution Date and any Additional Interest previously due but
not distributed to the Series 2000-A Noteholders on a prior Distribution Date.
"Reference Banks" means four major banks in the London interbank market
---------------
selected by the Servicer.
"Required Accumulation Factor Number" shall be equal to a fraction, rounded
-----------------------------------
upwards to the nearest whole number, the numerator of which is one and the
denominator of which is equal to the lowest monthly principal payment rate on
the Accounts, expressed as a decimal, for the 12 months preceding the date of
such calculation; provided, however, that this definition may be changed at any
time if the Rating Agency Condition is satisfied.
"Required Excess Collateral Amount" means, at any time, the product of the
---------------------------------
Required Excess Collateral Percentage and the Note Principal Balance; provided
--------
that:
(a) except as provided in clause (c), the Required Excess Collateral
----------
Amount will never be less than 3% of the Initial Collateral Amount;
(b) except as provided in clause (c), the Required Excess Collateral
----------
Amount will not decrease during a Rapid Amortization Period; and
12
(c) the Required Excess Collateral Amount will never be greater than
the Note Principal Balance minus the balance on deposit in the Spread
Account.
"Required 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
Class A Note Principal Balance or (b) any other amount designated by the
Transferor; provided, however, that if such designation is of a lesser amount,
the Transferor 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 Transferor, such designation will not cause a Pay Out
Event or an event that, after the giving of notice or the lapse of time, would
cause a Pay Out Event to occur with respect to Series 2000-A.
"Required Spread Account Amount" means, (a) prior to the occurrence of an
------------------------------
Event of Default with respect to Series 2000-A and acceleration of the maturity
of the Series 2000-A Notes pursuant to Section 5.3 of the Indenture, for any
-----------
date of determination, the product of (i) the Spread Account Percentage in
effect on such date and (ii) the Initial Collateral Amount; provided that the
Required Spread Account Amount shall not exceed the Class C Note Principal
Balance minus the excess, if any, of the Principal Accumulation Account Balance
over the sum of the Class A Note Principal Balance and the Class B Note
Principal Balance on such date of determination and (b) after the occurrence of
an Event of Default with respect to Series 2000-A and acceleration of the
maturity of the Series 2000-A Notes pursuant to Section 5.3 of the Indenture,
-----------
for any Distribution Date, the sum of (i) the amount on deposit in the Spread
Account on such Distribution Date, plus (ii) Available Finance Charge
Collections for such Distribution Date remaining after application of such
amounts pursuant to subsection 4.4(a)(vii), plus (iii) amounts on deposit in the
----------------------
Reserve Account in excess of the Required Reserve Account Amount; provided,
however, that the Required Spread Account Amount shall not exceed Note Principal
Balance.
"Reserve Account" is defined in subsection 4.10(a).
--------------- ------------------
"Reserve Account Funding Date" means the Distribution Date designated by
----------------------------
the Servicer which occurs not later than the earliest of (a) the Distribution
Date with respect to the Monthly Period which commences 3 months prior to the
commencement of the Controlled Accumulation Period; (b) the first Distribution
Date for which the Portfolio Adjusted Yield is less than 2%, but in such event
the Reserve Account Funding Date shall not be required to occur earlier than the
Distribution Date with respect to the Monthly Period which commences 12 months
prior to the commencement of the Controlled Accumulation Period; (c) the first
13
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 Funding Investment Proceeds for such Distribution Date are less than
the Covered Amount determined as of such Distribution Date.
"Revolving Period" means the period beginning on the Closing Date and
----------------
ending on the earlier of the close of business on the day immediately preceding
the day the Controlled Accumulation Period commences or the Rapid Amortization
Period commences.
"Series 2000-A" means the Series of Notes the terms of which are specified
-------------
in this Indenture Supplement.
"Series 2000-A Final Maturity Date" means the earlier to occur of (a) the
---------------------------------
Distribution Date on which the Collateral Amount is paid in full and (b) the
[________ ____] Distribution Date.
"Series 2000-A Note" means a Class A Note, a Class B Note or a Class C
------------------
Note.
"Series 2000-A Noteholder" means a Class A Noteholder, a Class B Noteholder
------------------------
or a Class C Noteholder.
"Series 2000-A Pay Out Event" is defined in Section 6.1.
--------------------------- -----------
"Series Servicing Fee Percentage" means 2% per annum.
-------------------------------
"Servicing Fee Required Amount" means, for any Distribution Date, an amount
-----------------------------
equal to the excess of the amount described in subsection 4.4(a)(iii) over the
----------------------
Available Finance Charge Collections applied to pay such amount pursuant to
subsection 4.4(a).
-----------------
14
"Spread Account" is defined in subsection 4.11(a).
-------------- ------------------
"Spread Account Deficiency" means the excess, if any, of the Required
-------------------------
Spread Account Amount over the Available Spread Account Amount.
"Spread Account Percentage" means, (i) zero, if the Quarterly Excess Spread
-------------------------
Percentage on such Distribution Date is greater than or equal to [___]%, (ii)
[___]%, if the Quarterly Excess Spread Percentage on such Distribution Date is
less than [____]% and greater than or equal to [____]%, (iii) [____]%, if the
Quarterly Excess Spread Percentage on such Distribution Date is less than
[____]% and greater than or equal to [____]%, (iv) [____]%, if the Quarterly
Excess Spread Percentage on such Distribution Date is less than [____]% and
greater than or equal to [____]%, and (v) [____]%, if the Quarterly Excess
Spread Percentage on such Distribution Date is less than [____]%, provided, that
if a Pay Out Event with respect to Series 2000-A has occurred, the Spread
Account Percentage shall be [____]%.
"Surplus Collateral Amount" means, at any time, the excess, if any, of the
-------------------------
Excess Collateral Amount over the Required Excess Collateral Amount.
["Telerate Page 3750" means the display page currently so designated on the
------------------
Bridge Telerate Capital Markets Report (or such other page as may replace that
page in that service for the purpose of displaying comparable rates or prices).]
(b) Each capitalized term defined herein shall relate to the Series 2000-A
Notes and no other Series of Notes issued by the Trust, unless the context
otherwise requires. All capitalized terms used herein and not otherwise defined
herein have the meanings ascribed to them in the Indenture or the Transfer and
Servicing Agreement. In the event that any term or provision contained herein
shall conflict with or be inconsistent with any term or provision contained in
the Indenture or the Transfer and Servicing Agreement, the terms and provisions
of this Indenture Supplement shall govern.
(c) The interpretive rules specified in Section 1.2 of the Master
-----------
Indenture also apply to this Indenture Supplement.
ARTICLE III
Servicing Fee
-------------
Section 3.1 Servicing Compensation. The share of the Servicing Fee
----------------------
allocable to Series 2000-A for any Distribution Date (the "Monthly Servicing
-----------------
Fee") shall be equal to one-twelfth of the product of (a) the Series Servicing
---
Fee Percentage and (b) (i) the Adjusted Collateral Amount as of the last day of
the
15
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 Floating Allocation
Percentage with respect to such Monthly Period; provided, however, that with
respect to the first Distribution Date, the Monthly Servicing Fee shall be equal
to $[________]. The remainder of the Servicing Fee shall be paid by the Holders
of the Seller Interest or the noteholders of other Series (as provided in the
related Indenture Supplements) and in no event shall the Trust, the Indenture
Trustee or the Series 2000-A Noteholders be liable for the share of the
Servicing Fee to be paid by the Holders of the Seller Interest or the
noteholders of any other Series. To the extent that the Monthly Servicing Fee
is not paid in full pursuant to the preceding provisions of this Section 3.1,
-----------
and Section 4.4, it shall be paid by the Holders of the Seller Interest.
-----------
ARTICLE IV
Rights of Series 2000-A Noteholders
and Allocation and Application of Collections
---------------------------------------------
Section 4.1 Collections and Allocations.
---------------------------
(a) Allocations. Finance Charge Collections, Principal Collections and
-----------
Defaulted Receivables allocated to Series 2000-A pursuant to Article VIII of the
------------
Indenture shall be allocated and distributed as set forth in this Article.
(b) Allocations to the Series 2000-A Noteholders. The Servicer shall,
--------------------------------------------
prior to the close of business on any Deposit Date, allocate to the Series 2000-
A Noteholders the following amounts as set forth below:
(i) Allocations of Finance Charge Collections. The Servicer shall
-----------------------------------------
allocate to the Series 2000-A Noteholders and retain in the Collection
Account for application as provided herein an amount equal to the product
of (A) the Allocation Percentage and (B) the aggregate Finance Charge
Collections deposited in the Collection Account on such Deposit Date;
provided, however, that with respect to the portion of each calendar month
-------- -------
falling [after the LIBOR Determination Date and] in the Revolving Period or
the Controlled Accumulation Period, such amount shall be retained in the
Collection Account only until such time as the amount retained in the
Collection Account pursuant to this subsection equals the sum of (1) the
aggregate amount of Monthly Interest with respect to the Distribution Date
in the immediately succeeding calendar month and (2) at any time that FCNB
is not the Servicer, the Monthly Servicing Fee payable on the Distribution
Date in the immediately succeeding calendar month and all accrued and
unpaid Investor Monthly Servicing Fees with respect to prior calendar
months; provided further, however, that notwithstanding the foregoing
-------- ------- -------
16
proviso, the entire Allocation Percentage of Finance Charge Collections
-------
shall be retained in the Collection Account on a daily basis if the [Excess
Spread Percentage] for the preceding Calendar month is less than 3.00%.
(ii) Allocations of Principal Collections. The Servicer shall
------------------------------------
allocate to the Series 2000-A Noteholders the following amounts as set
forth below:
(x) Allocations During the Revolving Period. During the
---------------------------------------
Revolving Period an amount equal to the product of the Allocation
Percentage and the aggregate amount of Principal Collections deposited
in the Collection Account on such Deposit Date, shall be allocated to
the Series 2000-A Noteholders and shall be first, if any other
Principal Sharing Series in Group One 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 Series in Group One 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 Collections of Principal Receivables deposited in the Collection
Account on such Deposit Date (the product for any such date is
hereinafter referred to as a "Percentage Allocation") shall be
---------------------
allocated to the Series 2000-A Noteholders and deposited in the
Principal Accumulation Account until applied as provided herein;
provided, however, that if the sum of such Percentage Allocation and
all preceding Percentage Allocations with respect to the same Monthly
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 in Group One 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 Series in Group
One 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.
17
(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 Collections of
Principal Receivables deposited in the Collection Account on such
Deposit Date, shall be allocated to the Series 2000-A Noteholders and
retained in the Collection Account until applied as provided herein;
provided, however, that after the date on which an amount of such
Collections equal to the Adjusted Collateral Amount has been deposited
into the Collection Account and allocated to the Series 2000-A
Noteholders, such amount shall be first, if any other Principal
Sharing Series in Group One 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 Series in Group One on the related Distribution Date, second
deposited in the Excess Funding Account to the extent necessary so
that the Seller Amount is not less than the Minimum Seller Amount and
third paid to the Holders of the Seller Interest.
Section 4.2 Determination of Monthly Interest.
---------------------------------
(a) The amount of monthly interest ("Class A Monthly Interest")
------------------------
distributable from the Collection Account with respect to the Class A Notes on
any Distribution Date shall be an amount equal to the product of (i) (A) [one-
twelfth] [a fraction, the numerator of which is the actual number of days in the
related Interest Period and the denominator of which is 360], times (B) the
Class A Note Interest Rate [in effect with respect to the related Interest
Period] and (ii) the Class A Note Principal Balance as of the close of business
on the last day of the preceding Monthly Period [(or, with respect to the
initial Distribution Date, the Class A Note Initial Principal Balance)][;
provided, that for the initial Distribution Date, Class A Monthly Interest shall
--------
equal $__________].
On the Determination Date preceding each Distribution Date, the Servicer
shall determine the excess, if any (the "Class A Interest Shortfall"), of (x)
--------------------------
the Class A Monthly Interest for such Distribution Date over (y) the aggregate
amount of funds allocated and available to pay such Class A Monthly Interest on
such Distribution Date. If the Class A Interest Shortfall for any Distribution
Date is greater than zero, on each subsequent Distribution Date until such Class
A Interest Shortfall is fully paid, an additional amount ("Class A Additional
------------------
Interest") equal to the product of (i) (A) [one-twelfth] [a fraction, the
--------
numerator of which is the actual number of days in the related Interest Period
and the denominator of which is 360], times (B) the Class A Note Interest Rate
[in effect with respect to the related Interest Period] and (ii) such Class A
Interest Shortfall (or the portion thereof which has not been paid to the Class
A Noteholders) shall be payable as provided herein with
18
respect to the Class A Notes. Notwithstanding anything to the contrary herein,
Class A Additional Interest shall be payable or distributed to the Class A
Noteholders only to the extent permitted by applicable law.
(b) The amount of monthly interest ("Class B Monthly Interest")
------------------------
distributable from the Collection Account with respect to the Class B Notes on
any Distribution Date shall be an amount equal to the product of (i) (A) [one-
twelfth] [a fraction, the numerator of which is the actual number of days in the
related Interest Period and the denominator of which is 360], times (B) the
Class B Note Interest Rate [in effect with respect to the related Interest
Period] and (ii) the Class B Note Principal Balance as of the close of business
on the last day of the preceding Monthly Period [(or, with respect to the
initial Distribution Date, the Class B Note Initial Principal Balance)] [;
provided, that for the initial Distribution Date, Class B Monthly Interest shall
--------
equal $__________].
On the Determination Date preceding each Distribution Date, the Servicer
shall determine the excess, if any (the "Class B Interest Shortfall"), of (x)
--------------------------
the Class B Monthly Interest for such Distribution Date over (y) the aggregate
amount of funds allocated and available to pay such Class B Monthly Interest on
such Distribution Date. If the Class B Interest Shortfall for any Distribution
Date is greater than zero, on each subsequent Distribution Date until such Class
B Interest Shortfall is fully paid, an additional amount ("Class B Additional
------------------
Interest") equal to the product of (i) (A) [one-twelfth] [a fraction, the
--------
numerator of which is the actual number of days in the related Interest Period
and the denominator of which is 360], times (B) the Class B Note Interest Rate
[in effect with respect to the related Interest Period] and (ii) such Class B
Interest Shortfall (or the portion thereof which has not been paid to the Class
B Noteholders) shall be payable as provided herein with respect to the Class B
Notes. Notwithstanding anything to the contrary herein, Class B Additional
Interest shall be payable or distributed to the Class B Noteholders only to the
extent permitted by applicable law.
(c) The amount of monthly interest ("Class C Monthly Interest")
------------------------
distributable from the Collection Account with respect to the Class C Notes on
any Distribution Date shall be an amount equal to the product of (i) (A) [one-
twelfth] [a fraction, the numerator of which is the actual number of days in the
related Interest Period and the denominator of which is 360], times (B) the
Class C Note Interest Rate [in effect with respect to the related Interest
Period] and (ii) the Class C Note Principal Balance as of the close of business
on the last day of the preceding Monthly Period (or, with respect to the initial
Distribution Date, the Class C Note Initial Principal Balance)][; provided, that
--------
for the initial Distribution Date, Class C Monthly Interest shall equal
$__________].
On the Determination Date preceding each Distribution Date, the Servicer
shall determine an amount (the "Class C Interest Shortfall") equal to (x) the
--------------------------
aggregate Class
19
C Monthly Interest for such Distribution Date minus (y) the aggregate amount of
funds allocated and available to pay such Class C Monthly Interest on such
Distribution Date. If the Class C Interest Shortfall for any Distribution Date
is greater than zero, on each subsequent Distribution Date until such Class C
Interest Shortfall is fully paid, an additional amount ("Class C Additional
------------------
Interest") shall be payable as provided herein with respect to the Class C Notes
--------
equal to the product of (i) (A) [one-twelfth] [a fraction, the numerator of
which is the actual number of days in the related Interest Period and the
denominator of which is 360], times (B) the Class C Note Interest Rate [in
effect with respect to the related Interest Period] and (ii) such Class C
Interest Shortfall (or the portion thereof which has not been paid to the Class
C Noteholders (after giving effect to the application of the proceeds of any
draw made on the Spread Account as provided in subsections 4.4(a)(iv) and
----------------------
4.11(c) for the purpose of paying such amount with respect to such Distribution
-------
Date)). Notwithstanding anything to the contrary herein, Class C Additional
Interest shall be payable or distributed to the Class C Noteholders only to the
extent permitted by applicable law.
Section 4.3 Determination of Monthly Principal. The amount of monthly
----------------------------------
principal distributable from the Collection Account with respect to the Notes on
each Distribution Date (the "Monthly Principal"), beginning with the
-----------------
Distribution Date in the month following the month in which the Controlled
Accumulation Period or, if earlier, the Rapid Amortization Period, begins, shall
be equal to the least of (i) the Available Principal Collections on deposit in
the Collection Account with respect to such Distribution Date, (ii) for each
Distribution Date with respect to the Controlled Accumulation Period, the
Controlled Deposit Amount for such Distribution Date and (iii) the Adjusted
Collateral Amount (after taking into account any adjustments to be made on such
Distribution Date pursuant to Sections 4.5 and 4.6) prior to any deposit into
------------ ---
the Principal Accumulation Account on such Distribution Date.
Section 4.4 Application of Available Finance Charge Collections and
-------------------------------------------------------
Available Principal Collections. The Servicer shall apply, or shall cause the
-------------------------------
Indenture Trustee to apply by written instruction to the Indenture Trustee, on
each Distribution Date, Available Finance Charge Collections and Available
Principal Collections on deposit in the Collection Account with respect to such
Distribution Date to make the following distributions:
(a) On each Distribution Date, an amount equal to the Available Finance
Charge Collections with respect to such Distribution Date will be distributed or
deposited in the following priority:
(i) an amount equal to Class A Monthly Interest for such Distribution
Date, plus the amount of any Class A Monthly Interest previously due but
not distributed to Class A Noteholders on a prior Distribution Date, plus
the amount of any Class A Additional Interest for such Distribution Date,
plus the amount of any Class A Additional Interest previously due but not
distributed
20
to Class A Noteholders on a prior Distribution Date, shall be distributed
to the Paying Agent for payment to Class A Noteholders on such Distribution
Date;
(ii) an amount equal to Class B Monthly Interest for such
Distribution Date, plus the amount of any Class B Monthly Interest
previously due but not distributed to Class B Noteholders on a prior
Distribution Date, plus the amount of any Class B Additional Interest for
such Distribution Date, plus the amount of any Class B Additional Interest
previously due but not distributed to Class B Noteholders on a prior
Distribution Date, shall be distributed to the Paying Agent for payment to
Class B Noteholders on such Distribution Date;
(iii) an amount equal to the Noteholder Servicing Fee for such
Distribution Date, plus the amount of any Noteholder Servicing Fee
previously due but not distributed to the Servicer on a prior Distribution
Date, shall be distributed to the Servicer (unless such amount has been
netted against deposits to the Collection Account in accordance with
Section 8.4 of the Indenture);
-----------
(iv) an amount equal to Class C Monthly Interest for such
Distribution Date, plus the amount of any Class C Monthly Interest
previously due but not distributed to the Class C Noteholders on a prior
Distribution Date, plus the amount of any Class C Additional Interest for
such Distribution Date, plus the amount of any Class C Additional Interest
previously due but not distributed to the Class C Noteholders on a prior
Distribution Date shall be distributed to the Paying Agent for payment to
the Class C Noteholders on such Distribution Date; provided, however, that,
in the event that the sum of Class C Monthly Interest exceeds the amount of
Available Finance Charge Collections available (after giving effect to
subsections 4.4(a)(i) through (iii) above) to fund such Class C Monthly
--------------------- -----
Interest and Class C Additional Interest, a draw will be made from amounts
available for distribution in the Spread Account (at the times and in the
amounts specified in Section 4.11) and shall be distributed to the Paying
------------
Agent for payment to the Class C Noteholders on such Distribution Date in
accordance with this subsection 4.4(a)(iv);
---------------------
(v) an amount equal to the Investor Default Amount, if any, for
such Distribution Date shall be treated as a portion of Available Principal
Collections for such Distribution Date;
(vi) an amount equal to the sum of the aggregate amount of Investor
Charge-Offs and the amount of Reallocated Principal Collections which have
not been previously reimbursed pursuant to this subparagraph (vi) shall be
treated as a portion of Available Principal Collections for such
Distribution Date;
(vii) on each Distribution Date from and after the Reserve Account
Funding Date, but prior to the date on which the Reserve Account terminates
21
as described in subsection 4.10(f), an amount up to the excess, if any, of
------------------
the Required Reserve Account Amount over the Available Reserve Account
Amount shall be deposited into the Reserve Account;
(viii) an amount equal to the amounts required to be deposited in the
Spread Account pursuant to Section 4.11 shall be deposited into the Spread
------------
Account as provided in Section 4.11; and
------------
(ix) the balance, if any, will constitute a portion of Excess
Finance Charge Collections for such Distribution Date and will be available
for allocation to other Series in Group One or to the Holders of the Seller
Interest as described in Section 8.8 of the Indenture and Section 4.1.
----------- -----------
(b) On each Distribution Date with respect to the Revolving Period, an
amount equal to the Available Principal Collections deposited in the Collection
Account for the related Monthly Period shall be treated as Shared Principal
Collections and applied in accordance with Section 8.5 of the Indenture.
-----------
(c) On each Distribution Date with respect to the Controlled Accumulation
Period or the Rapid Amortization Period, an amount equal to the Available
Principal Collections deposited in the Collection Account for the related
Monthly Period shall be distributed or deposited in the following order of
priority:
(i) during the Controlled Accumulation Period, an amount equal to
the Monthly Principal for such Distribution Date shall be deposited into
the Principal Accumulation Account;
(ii) during the Rapid Amortization Period, an amount equal to the
Monthly Principal for such Distribution Date shall be distributed to the
Paying Agent for payment to the Class A Noteholders on such Distribution
Date and on each subsequent Distribution Date until the Class A Note
Principal Balance has been paid in full;
(iii) after giving effect to the distribution referred to in clause
------
(ii) above, during the Rapid Amortization Period, an amount equal to the
----
Monthly Principal remaining, if any, shall be distributed to the Paying
Agent for payment to the Class B Noteholders on such Distribution Date and
on each subsequent Distribution Date until the Class B Note Principal
Balance has been paid in full;
(iv) after giving effect to the distributions referred to in clauses
-------
(ii) and (iii) above, during the Rapid Amortization Period, an amount equal
----
to the Monthly Principal remaining, if any, shall be distributed to the
Paying Agent for payment to the Class C Noteholders on such Distribution
Date and on each subsequent Distribution Date until the Class C Note
Principal Balance has been paid in full; and
22
(v) in the case of each of the Controlled Accumulation Period and the
Rapid Amortization Period, the balance of such Available Principal
Collections remaining after application in accordance with clause (i) or
----------
(iv) above shall be treated as Shared Principal Collections and applied in
----
accordance with Section 8.5 of the Indenture. As of any Distribution Date
-----------
on which any Available Principal Collections are treated as Shared
Principal Collections as provided above, the Collateral Amount shall be
reduced by an amount equal to the lesser of (x) the amount of Available
Principal Collections applied as Shared Principal Collections and (y) the
Surplus Collateral Amount.
(d) On the earlier to occur of (i) the first Distribution Date with
respect to the Rapid Amortization Period and (ii) the Expected Class A Principal
Payment Date, the Indenture Trustee, acting in accordance with instructions from
the Servicer, shall withdraw from the Principal Accumulation Account and
distribute to the Paying Agent for payment to the Class A Noteholders, the Class
B Noteholders and the Class C Noteholders, the amounts deposited into the
Principal Accumulation Account pursuant to subsection 4.4(c)(i).
--------------------
(e) The Controlled Accumulation Period is scheduled to commence at the
close of business on [_____ __, 20__]. However, if the Accumulation Period
Length (determined as described below) is less than 12 months, the date on which
the Controlled Accumulation Period actually commences will be delayed to the
first Business Day of the month that is the number of whole months prior to the
Expected Class A Principal Payment Date at least equal to the Accumulation
Period Length and, as a result, the number of Monthly Periods in the Controlled
Accumulation Period will at least equal the Accumulation Period Length. On the
Determination Date immediately preceding the [_____ ____] Distribution Date, and
each Determination Date thereafter until the Controlled Accumulation Period
begins, the Servicer will determine the "Accumulation Period Length" which will
--------------------------
equal the number of whole months such that the sum of the Accumulation Period
Factors for each month during such period will be equal to or greater than the
Required Accumulation Factor Number; provided, however, that the Accumulation
Period Length will not be determined to be less than one month; provided
further, however, that the determination of the Accumulation Period Length may
be changed at any time if the Rating Agency Condition is satisfied. The
Controlled Accumulation Period shall also be postponed if the Servicer obtains
and provides to the Indenture Trustee a Qualified Maturity Agreement and an
Opinion of Counsel to the effect that the Qualified Maturity Agreement is
enforceable against the provider of that agreement.
Section 4.5 Investor Charge-Offs. On each Determination Date, the
--------------------
Servicer shall calculate the Investor Default Amount, if any, for the related
Distribution Date. If, on any Distribution Date, the Investor Default Amount for
such Distribution Date exceeds the amount of Available Finance Charge
Collections allocated with respect thereto pursuant to subsection 4.4(a)(v) with
--------------------
respect to such Distribution Date, the
23
Collateral Amount (after giving effect to any reductions for any Reallocated
Principal Collections on such Distribution Date) will be reduced by the amount
of such excess, but not by more than the lesser of the Investor Default Amount
and the Collateral Amount (after giving effect to any reductions for any
Reallocated Principal Collections on such Distribution Date) for such
Distribution Date (such reduction, an "Investor Charge-Off").
-------------------
Section 4.6 Reallocated Principal Collections. On each Distribution
---------------------------------
Date, the Servicer shall apply, or shall cause the Indenture Trustee 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) and (iii). On each Distribution Date, the Collateral Amount
--------- ---- -----
shall be reduced by the amount of Reallocated Principal Collections for such
Distribution Date.
Section 4.7 Excess Finance Charge Collections. Series 2000-A shall be an
---------------------------------
Excess Allocation Series with respect to Group One only. Subject to Section 8.8
-----------
of the Indenture, Excess Finance Charge Collections with respect to the Excess
Allocation Series in Group One for any Distribution Date will be allocated to
Series 2000-A in an amount equal to the product of (x) the aggregate amount of
Excess Finance Charge Collections with respect to all the Excess Allocation
Series in Group One for such Distribution Date and (y) a fraction, the numerator
of which is the Finance Charge Shortfall for Series 2000-A for such Distribution
Date and the denominator of which is the aggregate amount of Finance Charge
Shortfalls for all the Excess Allocation Series in Group One for such
Distribution Date. The "Finance Charge Shortfall" for Series 2000-A for any
------------------------
Distribution Date will be equal to the excess, if any, of (a) the full amount
required to be paid, without duplication, pursuant to subsections 4.4(a)(i)
---------------------
through (viii) on such Distribution Date over (b) the Investor Finance Charge
Collections with respect to such Distribution Date.
Section 4.8 Shared Principal Collections. Subject to Section 8.5 of the
---------------------------- -----------
Indenture, Shared Principal Collections for any Distribution Date will be
allocated to Series 2000-A in an amount equal to the product of (x) the
aggregate amount of Shared Principal Collections with respect to all Principal
Sharing Series for such Distribution Date and (y) a fraction, the numerator of
which is the Principal Shortfall for Series 2000-A for such Distribution Date
and the denominator of which is the aggregate amount of Principal Shortfalls for
all the Series which are Principal Sharing Series for such Distribution Date.
The "Principal Shortfall" for Series 2000-A will be equal to (a) for any
-------------------
Distribution Date with respect to the Revolving Period, zero, (b) for any
Distribution Date with respect to the Controlled Accumulation Period, the
excess, if any, of the Controlled Deposit Amount with respect to such
Distribution Date over the amount of Available Principal Collections for such
Distribution Date (excluding any portion thereof attributable to Shared
Principal Collections), and (c) for any Distribution Date with respect to the
Rapid Amortization Period, the excess, if any, of the Adjusted Collateral Amount
over the amount of Available Principal Collections for such
24
Distribution Date (excluding any portion thereof attributable to Shared
Principal Collections).
Section 4.9 Principal Accumulation Account.
------------------------------
(a) The Indenture Trustee shall establish and maintain with an Eligible
Institution, which may be the Indenture Trustee in the name of the Trust, on
behalf of the Trust, for the benefit of the Series 2000-A Noteholders, a
segregated trust account with the corporate trust department of such Eligible
Institution (the "Principal Accumulation Account"), bearing a designation
------------------------------
clearly indicating that the funds deposited therein are held for the benefit of
the Series 2000-A Noteholders. The Indenture Trustee shall possess all right,
title and interest in all funds on deposit from time to time in the Principal
Accumulation Account and in all proceeds thereof. The Principal Accumulation
Account shall be under the sole dominion and control of the Indenture Trustee
for the benefit of the Series 2000-A Noteholders. If at any time the
institution holding the Principal Accumulation Account ceases to be an Eligible
Institution, the Servicer shall notify the Indenture Trustee, 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 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).
--------------------
(b) Funds on deposit in the Principal Accumulation Account shall be
invested at the direction of the Servicer by the Indenture Trustee in Eligible
Investments; provided, however, that, for purposes of the investment of funds on
deposit in the Principal Accumulation Account, references in the definition of
"Eligible Investments" to a rating in the "highest rating category" shall be
modified to require a rating, from any one of the following Rating Agencies, of
at least A-2 by Standard & Poor's, P-2 by Xxxxx'x or (if such investment is
rated by Fitch) F2 by Fitch. Funds on deposit in the Principal Accumulation
Account on any Distribution Date, after giving effect to any withdrawals from
the Principal Accumulation Account on such Distribution Date, shall be invested
in such investments that will mature so that such funds will be available for
withdrawal on or prior to the following Distribution Date.
The Indenture Trustee shall hold such of the Eligible 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 Eligible Investments as constitutes investment
property through a securities
25
intermediary, which securities intermediary shall agree with the Indenture
Trustee that (a) such investment property shall at all times be credited to a
securities account of the Indenture Trustee, (b) such securities intermediary
shall treat the Indenture Trustee as entitled to exercise the rights that
comprise each financial asset credited to such securities account, (c) all
property credited to such securities account shall be treated as a financial
asset, (d) such securities intermediary shall comply with entitlement orders
originated by the Indenture Trustee without the further consent of any other
person or entity, (e) such securities intermediary will not agree with any
person or entity other than the Indenture Trustee to comply with entitlement
orders originated by such other person or entity, (f) such securities accounts
and the property credited thereto shall not be subject to any lien, security
interest or right of set-off in favor of such securities intermediary or anyone
claiming through it (other than the Indenture Trustee), and (g) such agreement
shall be governed by the laws of the State of New York. Terms used in the
preceding sentence that are defined in the New York UCC and not otherwise
defined herein shall have the meaning set forth in the New York UCC.
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 direction given on or
before such Distribution Date, shall transfer from the Principal Accumulation
Account to the Collection Account the Principal Funding Investment Proceeds on
deposit in the Principal Accumulation Account for application as Available
Finance Charge Collections in accordance with Section 4.4.
-----------
Principal Funding 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 2000-A Noteholders, a
segregated trust account with the corporate trust department of such Eligible
Institution (the "Reserve Account"), bearing a designation clearly indicating
---------------
that the funds deposited therein are held for the benefit of the Series 2000-A
Noteholders. The Indenture Trustee shall possess all right, title and interest
in all funds on deposit from time to time in the Reserve Account and in all
proceeds thereof. The Reserve Account shall be under the sole dominion and
control of the Indenture Trustee for the benefit of the Series 2000-A
Noteholders. If at any time the institution holding the Reserve Account ceases
to be an Eligible Institution, the Servicer shall notify the Indenture Trustee,
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.
26
The Indenture Trustee, at the direction of the Servicer, shall (i) make
withdrawals from the Reserve Account from time to time in an amount up to the
Available Reserve Account Amount at such time, for the purposes set forth in
this Indenture Supplement, and (ii) on each Distribution Date (from and after
the Reserve Account Funding Date) prior to termination of the Reserve Account,
make a deposit into the Reserve Account in the amount specified in, and
otherwise in accordance with, subsection 4.4(a)(vii).
----------------------
(b) Funds on deposit in the Reserve Account shall be invested at the
direction of the Servicer by the Indenture Trustee in Eligible Investments;
provided, however, that, for purposes of the investment of funds on deposit in
the Reserve Account, references in the definition of "Eligible Investments" to a
rating in the "highest rating category" shall be modified to require a rating,
from any one of the following Rating Agencies, of at least A-2 by Standard &
Poor's, P-2 by Xxxxx'x or (if such investment is rated by Fitch) F2 by Fitch.
Funds on deposit in the Reserve Account on any Distribution Date, after giving
effect to any withdrawals from the Reserve Account on such Distribution Date,
shall be invested in such investments that will mature so that such funds will
be available for withdrawal on or prior to the following Distribution Date.
The Indenture Trustee shall hold such of the Eligible 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 Eligible Investments as constitutes investment
property through a securities intermediary, which securities intermediary shall
agree with the Indenture Trustee that (a) such investment property shall at all
times be credited to a securities account of the Indenture Trustee, (b) such
securities intermediary shall treat the Indenture Trustee as entitled to
exercise the rights that comprise each financial asset credited to such
securities account, (c) all property credited to such securities account shall
be treated as a financial asset, (d) such securities intermediary shall comply
with entitlement orders originated by the Indenture Trustee without the further
consent of any other person or entity, (e) such securities intermediary will not
agree with any person or entity other than the Indenture Trustee to comply with
entitlement orders originated by such other person or entity, (f) such
securities accounts and the property credited thereto shall not be subject to
any lien, security interest, or right of set-off in favor of such securities
intermediary or anyone claiming through it (other than the Indenture Trustee),
and (g) such agreement shall be governed by the laws of the State of New York.
Terms used in the preceding sentence that are defined in the New York UCC and
not otherwise defined herein shall have the meaning set forth in the New York
UCC.
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
27
included in Available Finance Charge Collections for such Distribution Date. For
purposes of determining the availability of funds or the balance in the Reserve
Account for any reason under this Indenture Supplement, except as otherwise
provided in the preceding sentence, investment earnings on such funds shall be
deemed not to be available or on deposit.
(c) On or before each Distribution Date with respect to the Controlled
Accumulation Period and on or before the first Distribution Date with respect to
the Rapid Amortization Period, the Servicer shall calculate the Reserve Draw
Amount; provided, however, that such amount will be reduced to the extent that
funds otherwise would be available for deposit in the Reserve Account under
Section 4.4(a)(vii) with respect to such Distribution Date.
-------------------
(d) In the event that for any Distribution Date the Reserve Draw Amount is
greater than zero, the Reserve Draw Amount, up to the Available Reserve Account
Amount, shall be withdrawn from the Reserve Account on such Distribution Date by
the Indenture Trustee (acting in accordance with the instructions of the
Servicer) and deposited into the Collection Account for application as Available
Finance Charge Collections for such Distribution Date.
(e) In the event that the Reserve Account Surplus on any Distribution Date,
after giving effect to all deposits to and withdrawals from the Reserve Account
with respect to such Distribution Date, is greater than zero, the Indenture
Trustee, acting in accordance with the 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 Class A
Principal Payment Date, the Indenture Trustee, acting in accordance with the
instructions of the Servicer, after the prior payment of all amounts owing to
the Series 2000-A Noteholders that are payable from the Reserve Account as
provided herein, shall withdraw from the Reserve Account all amounts, if any, on
deposit in the Reserve Account and (i) deposit such amounts in the Spread
Account, to the extent that funds on deposit in the Spread Account are less than
the Required Spread Account Amount, and (ii) distribute any such amounts
remaining after application pursuant to subsection 4.10(f)(i) to the holders of
---------------------
the Seller Interest. The Reserve Account shall thereafter be deemed to have
terminated for purposes of this Indenture Supplement.
28
Section 4.11 Spread Account.
--------------
(a) On or prior to the Closing Date, the Indenture Trustee shall establish
and maintain with an Eligible Institution, which may be the Indenture Trustee in
the name of the Trust, on behalf of the Trust, for the benefit of the Class C
Noteholders and the Transferor, a segregated account with the corporate trust
department of such Eligible Institution (the "Spread Account"), bearing a
--------------
designation clearly indicating that the funds deposited therein are held for the
benefit of the Class C Noteholders and the Transferor. Except as otherwise
provided in this Section 4.11, the Indenture Trustee shall possess all right,
------------
title and interest in all funds on deposit from time to time in the Spread
Account and in all proceeds thereof. The Spread Account shall be under the sole
dominion and control of the Indenture Trustee for the benefit of the Class C
Noteholders and the Servicer. If at any time the institution holding the Spread
Account ceases to be an Eligible Institution, the Servicer shall notify the
Indenture Trustee, and the Indenture Trustee upon being notified (or the
Servicer on its behalf) shall, within ten (10) Business Days (or such longer
period as to which the Rating Agencies may consent) establish a new Spread
Account meeting the conditions specified above with an Eligible Institution and
shall transfer any cash or any investments to such new Spread Account. The
Indenture Trustee, at the direction of the Servicer, shall (i) make withdrawals
from the Spread Account from time to time in an amount up to the Available
Spread Account Amount at such time, for the purposes set forth in this Indenture
Supplement, and (ii) on each Distribution Date prior to termination of the
Spread Account, make a deposit into the Spread Account in the amount specified
in, and otherwise in accordance with, subsection 4.11(e).
------------------
(b) Funds on deposit in the Spread Account shall be invested at the
direction of the Servicer by the Indenture Trustee in Eligible Investments;
provided, however, that, for purposes of the investment of funds on deposit in
the Spread Account, references in the definition of "Eligible Investments" to a
rating in the "highest rating category" shall be modified to require a rating,
from any one of the following Rating Agencies, of at least A-2 by Standard &
Poor's, P-2 by Xxxxx'x or (if such investment is rated by Fitch) F2 by Fitch.
Funds on deposit in the Spread Account on any Distribution Date, after giving
effect to any withdrawals from and deposits to the Spread Account on such
Distribution Date, shall be invested in such investments that will mature so
that such funds will be available for withdrawal on or prior to the following
Distribution Date.
The Indenture Trustee shall hold such of the Eligible 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 Eligible 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
29
entitled to exercise the rights that comprise each financial asset credited to
such securities account, (c) all property credited to such securities account
shall be treated as a financial asset, (d) such securities intermediary shall
comply with entitlement orders originated by the Indenture Trustee without the
further consent of any other person or entity, (e) such securities intermediary
will not agree with any person or entity other than the Indenture Trustee to
comply with entitlement orders originated by such other person or entity, (f)
such securities accounts and the property credited thereto shall not be subject
to any lien, security interest, or right of set-off in favor of such securities
intermediary or anyone claiming through it (other than the Indenture Trustee),
and (g) such agreement shall be governed by the laws of the State of New York.
Terms used in the preceding sentence that are defined in the New York UCC and
not otherwise defined herein shall have the meaning set forth in the New York
UCC. Except as permitted by this subsection 4.11(b), the Indenture Trustee shall
------------------
not hold Eligible Investments through an agent or a nominee.
On each Distribution Date (but subject to subsections 4.11(c) and 4.11(d)),
------------------- -------
the Investment Earnings, if any, accrued since the preceding Distribution Date
on funds on deposit in the Spread Account shall be paid to the Transferor by the
Indenture Trustee. For purposes of determining the availability of funds or the
balance in the Spread Account for any reason under this Indenture Supplement
(subject to subsections 4.11(c) and 4.11(d)), all Investment Earnings shall be
------------------- -------
deemed not to be available or on deposit.
(c) If, on any Distribution Date, the aggregate amount available for
distribution pursuant to subsection 4.4(a)(iv) is less than the aggregate amount
---------------------
required to be distributed pursuant to subsection 4.4(a)(iv) (without giving
---------------------
effect to any limitation based on Available Finance Charge Collections), the
Indenture Trustee, at the direction of the Servicer, shall withdraw from the
Spread Account the amount of such deficiency up to the Available Spread Account
Amount and, if the Available Spread Account Amount is less than such deficiency,
Investment Earnings credited to the Spread Account, and deposit such amount in
the Collection Account for payment to the Class C Noteholders in respect of
interest on the Class C Notes.
(d) On the Series 2000-A Final Maturity Date, the Indenture Trustee at
the direction of the Servicer shall withdraw from the Spread Account an amount
equal to the lesser of (i) the Class C Note Principal Balance (after any
payments to be made pursuant to subsection 4.4(c) on such date) and (ii) the
-----------------
Available Spread Account Amount and, if the Available Spread Account Amount is
not sufficient to reduce the Class C Note Principal Balance to zero, Investment
Earnings credited to the Spread Account up to the amount required to reduce the
Class C Note Principal Balance to zero, and the Indenture Trustee or the
Servicer shall deposit such amounts into the Collection Account for distribution
to the Class C Noteholders in accordance with subsection 5.2(e).
-----------------
30
(e) On any day following the occurrence of an Event of Default with respect
to Series 2000-A and acceleration of the maturity of the Series 2000-A Notes
pursuant to Section 5.3 of the Indenture, the Servicer shall withdraw from the
-----------
Spread Account an amount equal to the Available Spread Account Amount and the
Indenture Trustee or the Servicer shall deposit such amounts into the Collection
Account for distribution to the Class C Noteholders, the Class A Noteholders and
the Class B Noteholders, in that order of priority, in accordance with Section
-------
5.2, to fund any shortfalls in amounts owed to such Noteholders.
---
(f) If on any Distribution Date, after giving effect to all withdrawals
from the Spread Account, the Available Spread Account Amount is less than the
Required Spread Account Amount then in effect, Available Finance Charge
Collections shall be deposited into the Spread Account under the circumstances
set forth in subsection 4.4(a)(viii) up to the amount of the Spread Account
-----------------------
Deficiency.
(g) After the Spread Account Percentage has been increased above zero
pursuant to any of clauses (ii) through (v) of the definition thereof, the
------------ ---
Spread Account Percentage shall remain at that percentage until (a) further
increased to a higher required percentage specified in clauses (ii) through (v)
------------ ---
of the definition thereof or (b) the Distribution Date on which the Quarterly
Excess Spread Percentage has increased to a level above that for the then
current Spread Account Percentage, in which case the Spread Account Percentage
shall be decreased to the appropriate percentage in clauses (ii) through (iv) of
------------ ----
the definition thereof (or, if the Excess Spread Percentage is greater than or
equal to [___]%, the Spread Account Percentage shall be zero and the Required
Spread Account Amount shall be $0). Notwithstanding the foregoing, if a Pay Out
Event with respect to Series 2000-A has occurred, the Spread Account Percentage
shall equal [___]% (as provided in the definition of Spread Account Percentage)
and shall no longer be subject to reduction.
(h) If on any Distribution Date, after giving effect to all withdrawals
from and deposits to the Spread Account, the amount on deposit in the Spread
Account would exceed the Required Spread Account Amount then in effect, the
Indenture Trustee shall, at the written direction of the Servicer, release such
excess to the Transferor. On the date on which the Class C Note Principal
Balance has been paid in full (including amounts to be paid to the Class C
Noteholders pursuant to subsection 4.11(d) above), the Indenture Trustee, at the
------------------
direction of the Servicer, shall withdraw from the Spread Account all amounts
then remaining in the Spread Account and pay such amounts to the Transferor.
Section 4.12 Determination of LIBOR.
----------------------
(a) On each LIBOR Determination Date, the Indenture Trustee shall determine
LIBOR on the basis of the rate for deposits in United States dollars for a one-
month period which appears on Telerate Page 3750 as of 11:00 a.m., London time,
on such date. If such rate does not appear on Telerate Page 3750, the rate for
that LIBOR
31
Determination Date shall be determined on the basis of the rates at which
deposits in United States dollars are offered by the Reference Banks at
approximately 11:00 a.m., London time, on that day to prime banks in the London
interbank market for a one-month period. The Indenture Trustee shall request the
principal London office of each of the Reference Banks to provide a quotation of
its rate. If at least two (2) such quotations are provided, the rate for that
LIBOR Determination Date shall be the arithmetic mean of the quotations. If
fewer than two (2) quotations are provided as requested, the rate for that LIBOR
Determination Date will be the arithmetic mean of the rates quoted by major
banks in New York City, selected by the Servicer, at approximately 11:00 a.m.,
New York City time, on that day for loans in United States dollars to leading
European banks for a one-month period.
(b) The Class A Note Interest Rate, Class B Note Interest Rate and Class C
Note Interest Rate applicable to the then current and the immediately preceding
Interest Periods may be obtained by telephoning the Indenture Trustee at its
corporate trust office at (000) 000-0000 or such other telephone number as shall
be designated by the Indenture Trustee for such purpose by prior written notice
by the Indenture Trustee to each Series 2000-A Noteholder from time to time.
(c) On each LIBOR Determination Date, the Indenture Trustee shall send to
the Transferor by facsimile transmission, notification of LIBOR for the
following Interest Period.
Section 4.13 Investment Instructions. Any investment instructions
-----------------------
required to be given to the Indenture Trustee pursuant to the terms hereof must
be given to the Indenture Trustee no later than 11:00 a.m., New York City time,
on the date such investment is to be made. In the event the Indenture Trustee
receives such investment instruction later than such time, the Indenture Trustee
may, but shall have no obligation to, make such investment. In the event the
Indenture Trustee is unable to make an investment required in an investment
instruction received by the Indenture Trustee after 10:00 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
10:00 a.m., New York City time, on the day such investment is requested to be
made.
Section 4.14 Increase of Excess Collateral Amount. If the Issuer wishes to
------------------------------------
[either (x)] purchase Receivables arising in Additional Accounts in excess of
the amount of Additional Accounts permitted by subsection 2.[6](f)(ii) of the
-----------------------
Transfer and Servicing Agreement, and the Rating Agency Condition has not been
satisfied [or (y) permit a change in the minimum payment under the Accounts that
would otherwise be prohibited by Section of _________], the Issuer shall be
-----------
permitted to do so if, on or prior to the Issuer taking such action, the Issuer
exercises its option under this Section to increase the Collateral Amount by
increasing the Excess Collateral Amount, and after
32
giving effect to that increase the Seller Amount is not less than the Minimum
Seller Amount. The amount of the increase in the Collateral Amount (and the
Excess Collateral Amount) required in order for the Issuer to take [either] such
action shall equal:
[(a) in the case of clause (x) above:] (i) if the Annual Quotient
----------
exceeds 1.20 but is less than or equal to 1.25, an amount equal to W, where
W equals [2]% of the sum of the Collateral Amount (before giving effect to
the increase) plus W; and (ii) if the Annual Quotient is greater than 1.25,
an amount equal to X, where X equals [4]% of the sum of the Collateral
Amount (before giving effect to the increase) plus X; [and
(b) in the case of clause (y) above: (i) if the resulting minimum
----------
payment is less than $15 but greater than or equal to $12.50, an amount
equal to Y, where Y equals [1.5]% of the sum of the Collateral Amount
(before giving effect to the increase) plus Y; and (ii) if the resulting
minimum payment is less than $12.50, an amount equal to Z, where Z equals
[3]% of the sum of the Collateral Amount (before giving effect to the
increase) plus Z.]
To exercise its option under this Section, the Issuer shall notify the Indenture
Trustee and the Servicer of such exercise, and upon such notice, the [Net
Receivables Amount], if greater than zero, shall be reduced by the lesser of the
required increase in the Collateral Amount and the [Net Receivables Amount], and
the Issuer shall make a deposit in the Excess Funding Account in immediately
available funds in an amount equal to the excess of the required increase in the
Collateral Amount and such decrease in the Net Receivables Amount. Concurrently
with the decrease in the [Net Receivables Amount] and any required deposit to
the Excess Funding Account, the Collateral Amount and the Excess Collateral
Amount shall be increased by the aggregate amount of such decrease and of such
deposit.
ARTICLE V
Delivery of Series 2000-A Notes;
Distributions; Reports to Series 2000-A Noteholders
---------------------------------------------------
Section 5.1 Delivery and Payment for the Series 2000-A Notes.
------------------------------------------------
The Issuer shall execute and issue, and the Indenture Trustee shall
authenticate, the Series 2000-A Notes in accordance with Section 2.3 of the
-----------
Indenture. The Indenture Trustee shall deliver the Series 2000-A Notes to or
upon the order of the Trust when so authenticated.
33
Section 5.2 Distributions.
-------------
(a) On each Distribution Date, the Paying Agent shall distribute to each
Class A Noteholder of record on the related Record Date (other than as provided
in Section 11.2 of the Indenture) such Class A Noteholder's pro rata share of
------------
the amounts held by the Paying Agent that are allocated and available on such
Distribution Date to pay interest on the Class A Notes pursuant to this
Indenture Supplement.
(b) On each Distribution Date, the Paying Agent shall distribute to each
Class A Noteholder of record on the related Record Date such Class A
Noteholder's pro rata share of the amounts held by the Paying Agent that are
allocated and available on such Distribution Date to pay principal of the Class
A Notes pursuant to this Indenture Supplement.
(c) On each Distribution Date, the Paying Agent shall distribute to each
Class B Noteholder of record on the related Record Date (other than as provided
in Section 11.2 of the Indenture) such Class B Noteholder's pro rata share of
------------
the amounts held by the Paying Agent that are allocated and available on such
Distribution Date to pay interest on the Class B Notes pursuant to this
Indenture Supplement.
(d) On each Distribution Date, the Paying Agent shall distribute to each
Class B Noteholder of record on the related Record Date such Class B
Noteholder's pro rata share of the amounts held by the Paying Agent that are
allocated and available on such Distribution Date to pay principal of the Class
B Notes pursuant to this Indenture Supplement.
(e) On each Distribution Date, the Paying Agent shall distribute to each
Class C Noteholder of record on the related Record Date (other than as provided
in Section 11.2 of the Indenture) such Class C Noteholder's pro rata share of
------------
the amounts held by the Paying Agent (including amounts held by the Paying Agent
with respect to amounts withdrawn from the Spread Account (at the times and in
the amounts specified in Section 4.11)) that are allocated and available on such
-------------
Distribution Date to pay interest on the Class C Notes pursuant to this
Indenture Supplement.
(f) On each Distribution Date, the Paying Agent shall distribute to each
Class C Noteholder of record on the related Record Date such Class C
Noteholder's pro rata share of the amounts held by the Paying Agent that are
allocated and available on such Distribution Date to pay principal of the Class
C Notes pursuant to this Indenture Supplement.
(g) The distributions to be made pursuant to this Section 5.2 are subject
-----------
to the provisions of Sections 2.6, 6.1 and 7.1 of the Transfer and Servicing
------------ --- ---
Agreement, Section 11.2 of the Indenture and Section 7.1 of this Indenture
------------ -----------
Supplement.
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(h) Except as provided in Section 11.2 of the Indenture with respect to a
------------
final distribution, distributions to Series 2000-A Noteholders hereunder shall
be made by (i) check mailed to each Series 2000-A Noteholder (at such
Noteholder's address as it appears in the Note Register), except that for any
Series 2000-A Notes registered in the name of the nominee of a Clearing Agency,
such distribution shall be made in immediately available funds and (ii) without
presentation or surrender of any Series 2000-A Note or the making of any
notation thereon.
Section 5.3 Reports and Statements to Series 2000-A Noteholders.
---------------------------------------------------
(a) On each Distribution Date, the Paying Agent, on behalf of the Indenture
Trustee, shall forward to each Series 2000-A Noteholder a statement
substantially in the form of Exhibit C prepared by the Servicer.
---------
(b) Not later than the second Business Day preceding each Distribution
Date, the Servicer shall deliver to the Owner Trustee, the Indenture Trustee,
the Paying Agent and each Rating Agency (i) a statement substantially in the
form of Exhibit C prepared by the Servicer and (ii) a certificate of an
---------
Authorized Officer substantially in the form of Exhibit D; provided that the
---------
Servicer may amend the form of Exhibit C and Exhibit D, from time to time, with
--------- ---------
the consent of the Indenture Trustee.
(c) A copy of each statement or certificate provided pursuant to paragraph
(a) or (b) may be obtained by any Series 2000-A Noteholder by a request in
writing to the Servicer.
(d) On or before January 31 of each calendar year, beginning with calendar
year 2001, the Paying Agent, on behalf of the Indenture Trustee, shall furnish
or cause to be furnished to each Person who at any time during the preceding
calendar year was a Series 2000-A Noteholder, a statement prepared by the
Servicer containing the information which is required to be contained in the
statement to Series 2000-A Noteholders, as set forth in paragraph (a) above,
aggregated for such calendar year or the applicable portion thereof during which
such Person was a Series 2000-A Noteholder, together with other information as
is required to be provided by an issuer of indebtedness under the Code. Such
obligation of the Paying Agent shall be deemed to have been satisfied to the
extent that substantially comparable information shall be provided by the Paying
Agent pursuant to any requirements of the Code as from time to time in effect.
ARTICLE VI
Series 2000-A Pay Out Events
----------------------------
Section 6.1 Series 2000-A Pay Out Events. If any one of the following
----------------------------
events shall occur with respect to the Series 2000-A Notes:
35
(a) failure on the part of the Transferor (i) to make any payment or
deposit required to be made by the Transferor by the terms of the Transfer and
Servicing Agreement, the Indenture or this Indenture Supplement on or before the
date occurring five (5) Business Days after the date such payment or deposit is
required to be made therein or herein or (ii) duly to observe or perform any
other covenants or agreements of the Transferor set forth in the Transfer and
Servicing Agreement, the Indenture or this Indenture Supplement, which failure
has a material adverse effect on the Series 2000-A Noteholders and which
continues unremedied for a period of sixty (60) days after the date on which
written notice of such failure, requiring the same to be remedied, shall have
been given to the Transferor by the Indenture Trustee, or to the Transferor and
the Indenture Trustee by any Holder of the Series 2000-A Notes;
(b) any representation or warranty made by the Transferor in the Transfer
and Servicing Agreement, or any information contained in a computer file or
microfiche list required to be delivered by the Transferor pursuant to Section
-------
2.1 or subsection 2.9(h) of the Transfer and Servicing Agreement shall prove to
--- -----------------
have been incorrect in any material respect when made or when delivered, which
continues to be incorrect in any material respect for a period of sixty (60)
days after the date on which written notice of such failure, requiring the same
to be remedied, shall have been given to the Transferor by the Indenture
Trustee, or to the Transferor and the Indenture Trustee by any Holder of the
Series 2000-A Notes and as a result of which the interests of the Series 2000-A
Noteholders are materially and adversely affected for such period; provided,
however, that a Series 2000-A Pay Out Event pursuant to this subsection 6.1(b)
-----------------
shall not be deemed to have occurred hereunder if the Transferor has accepted
reassignment of the related Receivable, or all of such Receivables, if
applicable, during such period in accordance with the provisions of the Transfer
and Servicing Agreement;
(c) a failure by the Transferor to convey Receivables in Additional
Accounts or Participation Interests to the Trust within five (5) Business Days
after the day on which it is required to convey such Receivables or
Participation Interests pursuant to subsection 2.9(a) of the Transfer and
-----------------
Servicing Agreement;
(d) any Servicer Default shall occur;
(e) the average of the Portfolio Yields for any three consecutive Monthly
Periods is reduced to a rate which is less than the average of the Base Rates
for such period;
(f) the Class A Note Principal Balance, the Class B Note Principal Balance
or the Class C Note Principal Balance shall not be paid in full on the Expected
Class A Principal Payment Date, the Expected Class B Principal Payment Date or
the Expected Class C Principal Payment Date; or
36
(g) without limiting the foregoing, the occurrence of an Event of Default
with respect to Series 2000-A and acceleration of the maturity of the Series
2000-A Notes pursuant to Section 5.3 of the Indenture;
-----------
then, in the case of any event described in subparagraph (a), (b) or (d), after
the applicable grace period, if any, set forth in such subparagraphs, either the
Indenture Trustee or the Holders of Series 2000-A Notes evidencing more than 50%
of the aggregate unpaid principal amount of Series 2000-A Notes by notice then
given in writing to the Transferor and the Servicer (and to the Indenture
Trustee if given by the Series 2000-A Noteholders) may declare that a "Series
Pay Out Event" with respect to Series 2000-A (a "Series 2000-A Pay Out Event")
---------------------------
has occurred as of the date of such notice, and, in the case of any event
described in subparagraph (c), (e), (f) or (g), a Series 2000-A Pay Out Event
shall occur without any notice or other action on the part of the Indenture
Trustee or the Series 2000-A Noteholders immediately upon the occurrence of such
event.
ARTICLE VII
Redemption of Series 2000-A Notes; Final Distributions; Series Termination
--------------------------------------------------------------------------
Section 7.1 Optional Redemption of Series 2000-A Notes; Final
-------------------------------------------------
Distributions.
-------------
(a) On any day occurring on or after the date on which the outstanding
principal balance of the Series 2000-A Notes is reduced to 10% or less of the
initial outstanding principal balance of Series 2000-A Notes, as increased by
the principal amount of any notes issued, the Issuer shall have the option to
redeem the Series 2000-A Notes, at a purchase price equal to (i) if such day is
a Distribution Date, the Reassignment Amount for such Distribution Date or (ii)
if such day is not a Distribution Date, the Reassignment Amount for the
Distribution Date following such day.
(b) The Issuer shall give the Servicer and the Indenture Trustee at least
thirty (30) days prior written notice of the date on which the Issuer intends to
exercise such optional redemption. Not later than 12:00 noon, New York City
time, on such day the Issuer shall deposit into the Collection Account in
immediately available funds the excess of the Reassignment Amount over the
amount, if any, on deposit in the Principal Accumulation Account. Such
redemption option is subject to payment in full of the Reassignment Amount.
Following such deposit into the Collection Account in accordance with the
foregoing, the Collateral Amount for Series 2000-A shall be reduced to zero and
the Series 2000-A Noteholders shall have no further security interest in the
Receivables. The Reassignment Amount shall be distributed as set forth in
subsection 7.1(d).
-----------------
(c) (i) The amount to be paid by the Transferor with respect to Series
2000-A in connection with a reassignment of Receivables to the Transferor
pursuant to
37
Section 2.6 of the Transfer and Servicing Agreement shall equal the Reassignment
-----------
Amount for the first Distribution Date following the Monthly Period in which the
reassignment obligation arises under the Transfer and Servicing Agreement.
(ii) The amount to be paid by the Transferor with respect to Series
2000-A in connection with a repurchase of the Notes pursuant to Section 7.1 of
-----------
the Transfer and Servicing Agreement shall equal the Reassignment Amount for the
Distribution Date of such repurchase.
(d) With respect to the Reassignment Amount deposited into the Collection
Account pursuant to Section 7.1, the Indenture Trustee shall, in accordance with
the written direction of the Servicer, not later than 12:00 noon, New York City
time, on the related Distribution Date, make deposits or distributions of the
following amounts (in the priority set forth below and, in each case, after
giving effect to any deposits and distributions otherwise to be made on such
date) in immediately available funds: (i) (x) the Class A Note Principal Balance
on such Distribution Date will be distributed to the Paying Agent for payment to
the Class A Noteholders and (y) an amount equal to the sum of (A) Class A
Monthly Interest for such Distribution Date, (B) any Class A Monthly Interest
previously due but not distributed to the Class A Noteholders on a prior
Distribution Date and (C) the amount of Class A Additional Interest, if any, for
such Distribution Date and any Class A Additional Interest previously due but
not distributed to the Class A Noteholders on any prior Distribution Date, will
be distributed to the Paying Agent for payment to the Class A Noteholders, (ii)
(x) the Class B Note Principal Balance on such Distribution Date will be
distributed to the Paying Agent for payment to the Class B Noteholders and (y)
an amount equal to the sum of (A) Class B Monthly Interest for such Distribution
Date, (B) any Class B Monthly Interest previously due but not distributed to the
Class B Noteholders on a prior Distribution Date and (C) the amount of Class B
Additional Interest, if any, for such Distribution Date and any Class B
Additional Interest previously due but not distributed to the Class B
Noteholders on any prior Distribution Date, will be distributed to the Paying
Agent for payment to the Class B Noteholders, (iii) (x) the Class C Note
Principal Balance on such Distribution Date will be distributed to the Paying
Agent for payment to the Class C Noteholders and (y) an amount equal to the sum
of (A) Class C Monthly Interest for such Distribution Date, (B) any Class C
Monthly Interest previously due but not distributed to the Class C Noteholders
on a prior Distribution Date and (C) the amount of Class C Additional Interest,
if any, for such Distribution Date and any Class C Additional Interest
previously due but not distributed to the Class C Noteholders on any prior
Distribution Date, will be distributed to the Paying Agent for payment to the
Class C Noteholders and (iv) any excess shall be released to the Issuer.
(e) Notwithstanding anything to the contrary in this Indenture Supplement,
the Indenture or the Transfer and Servicing Agreement, all amounts distributed
to the Paying Agent pursuant to subsection 7.1(d) for payment to the Series
-----------------
2000-A Noteholders shall be deemed distributed in full to the Series 2000-A
Noteholders on the
38
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.
----
[(f) Applications after Event of Default.]
Section 7.2 Series Termination.
------------------
On the Series 2000-A Final Maturity Date, the right of the Series 2000-A
Noteholders to receive payments from the Issuer will be limited solely to the
right to receive payments pursuant to Section 5.5 of the Indenture.
-----------
ARTICLE VIII
Miscellaneous Provisions
------------------------
Section 8.1 Ratification of Indenture. As supplemented by this Indenture
-------------------------
Supplement, the Indenture is in all respects ratified and confirmed and the
Indenture as so supplemented by this Indenture Supplement shall be read, taken
and construed as one and the same instrument.
Section 8.2 Form of Delivery of the Series 2000-A Notes. The Series 2000-
-------------------------------------------
A Notes shall be Book-Entry Notes and shall be delivered as Registered Notes as
provided in Section 2.1 of the Indenture.
-----------
Section 8.3 Counterparts. This Indenture Supplement may be executed in
------------
two or more counterparts, and by different parties on separate counterparts,
each of which shall be an original, but all of which shall constitute one and
the same instrument.
39
Section 8.4 GOVERNING LAW. THIS INDENTURE SUPPLEMENT SHALL BE CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 8.5 Limitation of Liability. Notwithstanding any other provision
-----------------------
herein or elsewhere, this Agreement has been executed and delivered by
Wilmington Trust Company, not in its individual capacity, but solely in its
capacity as Owner Trustee of the Trust, in no event shall Wilmington Trust
Company in its individual capacity have any liability in respect of the
representations, warranties, or obligations of the Trust hereunder or under any
other document, as to all of which recourse shall be had solely to the assets of
the Trust, and for all purposes of this Agreement and each other document, the
Owner Trustee (as such or in its individual capacity) shall be subject to, and
entitled to the benefits of, the terms and provisions of the Trust Agreement.
[SIGNATURE PAGE FOLLOWS]
40
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:____________________________________
not in its individual capacity,
but solely as Owner Trustee
By:____________________________________
Name:
Title:
BNY MIDWEST TRUST COMPANY,
as Indenture Trustee
By:____________________________________
Name:
Title:
41
Acknowledged and Accepted:
FIRST CONSUMERS NATIONAL BANK,
as Servicer
By:_______________________________
Name:__________________________
Title:_________________________
Acknowledged and Accepted:
SPIEGEL CREDIT CORPORATION III,
as Transferor
By:_______________________________
Name:__________________________
Title:_________________________
42
