Exhibit 10.44
SPIEGEL CREDIT CARD MASTER NOTE TRUST
Issuer,
and
THE BANK OF NEW YORK
Indenture Trustee
SERIES 2001-A INDENTURE SUPPLEMENT
Dated as of July 19, 2001
TABLE OF CONTENTS
ARTICLE I Creation of the Series 2001-A Notes........................... 1
Section 1.1 Designation.................................... 1
ARTICLE II Definitions................................................... 1
Section 2.1 Definitions.................................... 1
ARTICLE III Servicing Fee................................................. 12
Section 3.1 Servicing Compensation......................... 12
ARTICLE IV Rights of Series 2001-A Noteholders and Allocation and
Application of Collections.................................. 13
Section 4.1 Collections and Allocations.................... 13
Section 4.2 Determination of Monthly Interest.............. 15
Section 4.3 Determination of Monthly Principal............. 16
Section 4.4 Application of Available Finance Charge
Collections and Available Principal
Collections.................................. 16
Section 4.5 Investor Charge-Offs........................... 18
Section 4.6 Reallocated Principal Collections.............. 19
Section 4.7 Excess Finance Charge Collections.............. 19
Section 4.8 Shared Principal Collections................... 19
Section 4.9 Principal Accumulation Account................. 20
Section 4.10 Reserve Account................................ 21
Section 4.11 [Reserved]..................................... 23
Section 4.12 Determination of LIBOR......................... 24
Section 4.13 Investment Instructions........................ 24
Section 4.14 Controlled Accumulation Period................. 24
Section 4.15 Suspension of Controlled Accumulation
Period....................................... 25
Section 4.16 Insurance Policies............................. 27
Section 4.17 Swap........................................... 27
ARTICLE V Delivery of Series 2001-A Notes; Distributions; Reports to
Series 2001-A Noteholders................................... 28
Section 5.1 Delivery and Payment for the Series 2001-A
Notes........................................ 28
Section 5.2 Distributions.................................. 28
Section 5.3 Reports and Statements to Series 2001-A
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Noteholders.................................. 29
ARTICLE VI Series 2001-A Pay Out Events and Events of Default............ 30
Section 6.1 Series 2001-A Pay Out Events................... 30
Section 6.2 Series 2001-A Events of Default................ 31
Section 6.3 Declarations of Default........................ 32
ARTICLE VII Redemption of Series 2001-A Notes; Final Distributions;
Series Termination.......................................... 33
Section 7.1 Optional Redemption of Series 2001-A
Notes; Final Distributions................... 33
Section 7.2 Series Termination............................. 34
ARTICLE VIII Miscellaneous Provisions...................................... 34
Section 8.1 Ratification of Indenture; Amendments.......... 34
Section 8.2 Form of Delivery of the Series 2001-A Notes.... 34
Section 8.3 Counterparts................................... 34
Section 8.4 GOVERNING LAW.................................. 35
Section 8.5 Limitation of Liability........................ 35
Section 8.6 Rights of the Indenture Trustee................ 35
Section 8.7 Third Party Beneficiary........................ 35
Section 8.8 Inconsistency.................................. 35
Section 8.9 Collateral Series Supplement................... 35
Section 8.10 Increase of Collateral Amount.................. 35
Section 8.11 Additional Representations and Warranties...... 36
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EXHIBITS
EXHIBIT A FORM OF CLASS A NOTE
EXHIBIT B FORM OF MONTHLY PAYMENT INSTRUCTIONS AND NOTIFICATION TO THE
INDENTURE TRUSTEE
EXHIBIT C FORM OF MONTHLY STATEMENT
EXHIBIT D FORM OF MONTHLY SERVICER'S CERTIFICATE
EXHIBIT E FORM OF SWAP
EXHIBIT F INSURANCE AGREEMENT DEFINITIONS
EXHIBIT G SECTION 2.05 OF INSURANCE AGREEMENT
(SPREAD ACCOUNT)
EXHIBIT H SECTION 5.01 OF INSURANCE AGREEMENT
(INSURANCE AGREEMENT PAY OUT EVENTS)
SCHEDULES
SCHEDULE I PERFECTION REPRESENTATIONS, WARRANTIES AND COVENANTS
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SERIES 2001-A INDENTURE SUPPLEMENT, dated as of July 19, 2001 (the
"Indenture Supplement"), between SPIEGEL CREDIT CARD MASTER NOTE TRUST, a trust
organized and existing under the laws of the State of Illinois (herein, the
"Issuer" or the "Trust"), and THE BANK OF NEW YORK, a banking corporation
organized and existing under the laws of the State of New York, not in its
individual capacity, but solely as indenture trustee (herein, together with its
successors in the trusts thereunder as provided in the Master Indenture referred
to below, the "Indenture Trustee") under the Master Indenture, dated as of
December 1, 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 Seller 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 2001-A Notes
Section 1.1 Designation.
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(1) There is hereby created and designated a Series of Notes to be issued
pursuant to the Indenture and this Indenture Supplement to be known as "Spiegel
Credit Card Master Note Trust, Series 2001-A" or the "Series 2001-A Notes." The
Series 2001-A Notes shall be issued in a single Class, known as the "Class A
Series 2001-A Floating Rate Asset Backed Notes."
(2) Series 2001-A shall be included in Group One and shall be a Principal
Sharing Series. Series 2001-A shall be an Excess Allocation Series with respect
to Group One only. Series 2001-A shall not be subordinated to any other Series.
ARTICLE II
Definitions
Section 1.2 Definitions.
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(1) 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 designated as Principal Sharing Series, and the denominator
of which is equal to the sum of (a) the Initial Collateral Amount and (b) the
Initial Collateral Amounts of all outstanding Series designated as Principal
Sharing Series
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(other than Series 2001-A) which are not expected to be in their revolving
periods; provided, however, that this definition may be changed at any time if
the Rating Agency Condition is satisfied.
"Accumulation Period Length" is defined in subsection 4.14.
"Accumulation Shortfall" means: (a) for the first Distribution Date during
the Controlled Accumulation Period, zero; and (b) thereafter, for any
Distribution Date during the Controlled Accumulation Period, the excess, if any,
of the Controlled Deposit Amount for the previous Distribution Date over the
amount deposited into the Principal Accumulation Account pursuant to subsection
4.4(c)(i) for the previous Distribution Date.
"Additional Interest" is defined in Section 4.2.
"Allocation Percentage" means, on any date of determination, the percentage
equivalent of a fraction:
(a) the numerator of which shall be the Collateral Amount, determined:
(i) for Principal Collections during the Revolving Period
and for Finance Charge Collections and Default Amounts at any
time, at the end of the last day of the prior Monthly Period (or,
in the case of the Monthly Period in which the Closing Date
occurs, on the Closing Date); provided, however, that if the
Rapid Amortization Period is extended past the Series 2001-A
Final Maturity Date as a result of there being amounts owed to
the Insurer or the Counterparty, then during that extended period
the numerator for Finance Charge Collections and Default Amounts
shall equal the numerator in effect for the last Monthly Period
prior to the Series 2001-A Final Maturity Date;
(ii) for Principal Collections during the Rapid Amortization
Period and the Controlled Accumulation Period, on the last day of
the Revolving Period; provided, however, that if Series 2001-A is
paired with a Paired Series and a Rapid Amortization Period
commences for such Paired Series, the Seller may, by written
notice to the Indenture Trustee, the Servicer and the Rating
Agencies, but only after satisfying the Rating Agency Condition,
designate a different numerator for such fraction, which
numerator shall not be less than the Collateral Amount as of the
last day of the Revolving Period for the Paired Series; and
(b) the denominator of which shall be the greater of (x) the sum of
the Aggregate Principal Receivables and the amount on deposit in the Excess
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Funding Account (exclusive of any investment earnings on such amount) in
each case as of the end of the Business Day preceding such date of
determination and (y) the sum of the numerators used to calculate the
Allocation Percentages for allocations with respect to Finance Charge
Collections, Principal Collections or Default Amounts, as applicable, for
all outstanding Series or "Series" under (and as defined in) the Pooling
and Servicing Agreement (other than Series represented by the Collateral
Certificate) on such date of determination.
"Available Finance Charge Collections" means, for any Monthly Period, an
amount equal to the sum of (a) the Investor Finance Charge Collections for such
Monthly Period, plus (b) any Net Swap Receipts for the related Distribution
Date, plus (c) the Excess Finance Charge Collections allocated to Series 2001-A
for such Monthly Period, plus (d) Principal Accumulation Investment Proceeds, if
any, with respect to the related Distribution Date, plus (e) amounts, if any, to
be withdrawn from the Reserve Account which will be deposited into the
Collection Account on the related Distribution Date to be treated as Available
Finance Charge Collections pursuant to subsection 4.10(d).
"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 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 (including any amounts on deposit in
the Excess Funding Account that are allocated to Series 2001-A pursuant to the
Agreement for application as Shared Principal Collections), plus (d) the
aggregate amount to be treated as Available Principal Collections pursuant to
subsections 4.4(a)(iii), (iv) and (viii) 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
deposit made or to be made pursuant to subsection 4.4(a)(vi) to the Reserve
Account on such date) and (b) the Required Reserve Account Amount.
"Available Spread Account Amount" is defined in the Insurance Agreement.
"Base Rate" is defined in the Insurance Agreement.
"Class A Noteholder" means the Person in whose name a Class A Note is
registered in the Note Register.
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"Class A Notes" means any one of the Notes executed by the Issuer and
authenticated by or on behalf of the Indenture Trustee, substantially in the
form of Exhibit A.
"Closing Date" means July 19, 2001.
"Collateral Amount" means, as of any date of determination, an amount
equal to the result of (a) the Initial Collateral Amount, minus (b) the amount
of principal previously paid to the Series 2001-A Noteholders, minus (c) the
balance on deposit in the Principal Accumulation Account, minus (d) the
aggregate reductions to the Collateral Amount made pursuant to Section 4.4(c) on
or prior to such date of determination, minus (e) 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)(iv) prior
to such date, plus (f) any additional amount designated by the Seller pursuant
to Section 8.10.
"Control Transfer Event" means either of the following events: (a) the
Insurer shall fail to timely make any payment required to be made by it pursuant
to any Policy or otherwise default in any of its obligations under the Insurance
Agreement; or (b) the Insurer shall (i) become insolvent, (ii) fail to pay its
debts generally as they become due, (iii) voluntarily seek, consent to, or
acquiesce in the benefit or benefits of any Debtor Relief Law, or (iv) become a
party to (or be made the subject of) any proceeding provided for by any Debtor
Relief Law, other than as a creditor or claimant, and, in the event such
proceeding is involuntary, the petition instituting same is not dismissed within
60 days after its filing.
"Controlled Accumulation Amount" means, for any Distribution Date with
respect to the Controlled Accumulation Period, $50,000,000; provided, however,
that if the Accumulation Period Length is determined to be less than 12 months
pursuant to Section 4.14 or 4.15, the Controlled Accumulation Amount for each
Distribution Date with respect to the Controlled Accumulation Period will be
equal to (i) the product of (x) the aggregate initial principal amount of the
Series 2001-A Notes and (y) the Accumulation Period Factor for such Monthly
Period divided by (ii) the Required Accumulation Factor Number.
"Controlled Accumulation Period" means, unless a Pay Out Event shall
have occurred prior thereto, the period commencing at the opening of business on
March 1, 2004 or such later date as is determined in accordance with Section
4.14 and 4.15, and ending on the first to occur of (a) the commencement of the
Rapid Amortization Period, (b) the payment in full of the Note Principal Balance
and (c) the Series 2001-A Final Maturity Date.
"Controlled Deposit Amount" means, for any Distribution Date with 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.
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"Counterparty" means ▇▇▇▇▇▇ Guaranty Trust Company of New York or the
counterparty under any replacement interest rate swap obtained pursuant to
Section 4.17.
"Covered Amount" means an amount, determined as of each Distribution Date
for any Interest Period, equal to the sum of (a) the product of (i) a fraction,
the numerator of which is the actual number of days in such Interest Period and
the denominator of which is 360, times (ii) the Note Interest Rate in effect
with respect to such Interest Period, times (iii) the aggregate amount on
deposit in the Principal Accumulation Account as of the Record Date preceding
such Distribution Date.
"Default Amount Rate" is defined in the Insurance Agreement.
"Default Estimate" means, for any Monthly Period, an amount equal to the
product of (i) 1.5, multiplied by (ii) the arithmetic mean of the Investor
Default Amounts for the prior three Monthly Periods. For this purpose, the
April, May, June and July Investor Default Amounts shall be deemed to have
equaled $9,300,000.
"Deficiency Amount" means (a) for any Distribution Date other than the
Series 2001-A Final Maturity Date, the excess of the amounts payable pursuant to
Sections 4.4(a)(i) and (ii) for such Distribution Date over the Available
Finance Charge Collections, Reallocated Principal Collections and Available
Spread Account Amount that are available to cover such amounts, and (b) for the
Series 2001-A Final Maturity Date, the sum of (i) the amount determined pursuant
to clause (a) for the Series 2001-A Final Maturity Date and (ii) the excess of
the Note Principal Balance over the Available Principal Collections and
Available Spread Account Amount that are available to cover such amount.
"Distribution Date" means August 15, 2001 and the 15th day of each calendar
month thereafter, or if such 15th day is not a Business Day, the next succeeding
Business Day.
"Enhancement Provider" means each of the Insurer and the Counterparty.
"Excess Collateral Amount" means, at any time, the result of the Collateral
Amount, plus the Principal Accumulation Account Balance, minus the Note
Principal Balance.
"Excess Spread Percentage" is defined in the Insurance Agreement.
"Expected Principal Distribution Date" means the March 2005 Distribution
Date.
"Finance Charge Shortfall" is defined in Section 4.7.
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"Group One" means Series 2001-A, the outstanding Series under (and as
defined in) the Pooling and Servicing Agreement (other than Series represented
by the Collateral Certificate) and each other Series hereafter specified in the
related Indenture Supplement to be included in Group One.
"Initial Collateral Amount" means the sum of (a) $685,800,000, which equals
the sum of (i) the initial principal amount of the Series 2001-A Notes plus (ii)
the Initial Excess Collateral Amount (excluding the Supplemental Enhancement),
plus (b) the Supplemental Enhancement.
"Initial Excess Collateral Amount" means, at any time, the sum of (a)
$85,800,000, plus (b) the Supplemental Enhancement.
"Insurance Agreement" means the Insurance and Reimbursement Agreement dated
as of the Closing Date between the Seller, the Servicer, Spiegel, Spiegel
Acceptance Corporation, the Issuer, the Indenture Trustee and the Insurer.
"Insured Obligation" means, with respect to any Policy, the "Insured
Obligation" as defined in such Policy.
"Insurer" means MBIA Insurance Corporation, a New York stock insurance
corporation.
"Interest Period" means, for any Distribution Date, the period from and
including the Distribution Date immediately preceding such Distribution Date
(or, in the case of the first Distribution Date, from and including the Closing
Date) to but excluding such Distribution Date.
"Interest Shortfall" is defined in Section 4.2.
"Investor Charge-Offs" is defined in Section 4.5.
"Investor Default Amount" means, for any Distribution Date, an amount equal
to the product of (a) the Default Amount for the related Monthly Period and (b)
the daily average Allocation Percentage for such Monthly Period; provided that
the Investor Default Amount for the August 15, 2001 Distribution Date shall be
equal to the product of (a) the Default Amount for the calendar month of July
2001, (b) the daily average Allocation Percentage for the first Monthly Period
and (c) a fraction equal to the number of days in the first Monthly Period,
divided by 31.
"Investor Finance Charge Collections" means, for any Monthly Period, an
amount equal to the aggregate amount of Finance Charge Collections (including
Net Recoveries treated as Finance Charge Collections) retained or deposited in
the Finance Charge Subaccount for Series 2001-A pursuant to subsection 4.1(b)(i)
for such Monthly Period.
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"Investor Principal Collections" means, for any Monthly Period, the
aggregate amount of Principal Collections retained or deposited in the Principal
Collections Subaccount for Series 2001-A pursuant to subsection 4.1(b)(ii) for
such Monthly Period.
"Investor Uncovered Dilution Amount" means, for any Distribution Date, an
amount equal to the Series Share of shortfalls in Deposit Obligations that is
allocated to Series 2001-A pursuant to Section 8.4(h) of the Indenture.
"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.
"LIBOR Determination Date" means the second London Banking Day prior to the
commencement of each Interest Period.
"London Banking Day" means any day on which commercial banks are open for
general business (including dealings in foreign exchange and foreign currency
deposits) in London, England.
"Minimum Seller Percentage" means zero for Series 2001-A.
"Modified Excess Spread Percentage" is defined in the Insurance Agreement.
"Monthly Insurance Premium" means the Premium (as defined in the Premium
and Fee Letter) for any Monthly Period.
"Monthly Interest" is defined in Section 4.2.
"Monthly Period" means the period from and including the first day of the
calendar month preceding a related Determination Date to and including the last
day of such calendar month; provided that the first Monthly Period shall begin
on and include the Closing Date and end on and include July 31, 2001.
"Monthly Principal" means the monthly principal distributable in respect of
the Notes as calculated in accordance with Section 4.3.
"Monthly Principal Reallocation Amount" means, for any Monthly Period,
an amount equal to the lower of:
(a) the excess of the Required Amount, over the amount of Available
Finance Charge Collections applied to pay the Required Amount pursuant to
subsection 4.4(a); and
(b) the Excess Collateral Amount (after giving effect to Investor
Charge-Offs for the related Monthly Period).
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"Monthly Servicing Fee" is defined in subsection 3.1(a).
"Net Interest Obligation" means, for any Distribution Date: (a) if
there is a Net Swap Payment due on that Distribution Date, the sum of the Net
Swap Payment and the Monthly Interest for that Distribution Date; (b) if there
is a Net Swap Receipt due on that Distribution Date, the result of the Monthly
Interest for that Distribution Date minus the Net Swap Receipt; and (c) if the
Swap has terminated for any reason, the Monthly Interest for that Distribution
Date.
"Net Swap Payment" means any net amount payable by the Issuer under the
Swap as a result of LIBOR being less than the Swap Rate. For the avoidance of
doubt, (i) Net Swap Payments do not include early termination payments or
payment of breakage or other miscellaneous costs, and (ii) for any Distribution
Date, the Monthly Interest, less the Net Swap Receipt, if any, plus, the Net
Swap Payment, if any, will never exceed what Monthly Interest would have been if
the Note Interest Rate were 5.485%.
"Net Swap Receipt" means any net amount payable by the Counterparty as a
result of LIBOR being greater than the Swap Rate. For the avoidance of doubt,
Net Swap Receipts do not include early termination payments.
"Note Initial Principal Balance" means $600,000,000.
"Note Interest Rate" means a per annum rate of 0.28% in excess of LIBOR as
determined on the LIBOR Determination Date for the applicable Interest Period.
"Note Principal Balance" means, on any date of determination, an amount
equal to (a) the Note Initial Principal Balance, minus (b) the aggregate amount
of principal payments made to the Class A Noteholders on or prior to such date.
"Percentage Allocation" is defined in subsection 4.1(b)(ii)(y).
"Policy" means the Financial Guaranty Insurance Policy No. 35738(1) or the
Financial Guaranty Insurance Policy No. 35738(2), each issued by MBIA Insurance
Corporation pursuant to the Insurance Agreement, and, collectively, referred to
herein as the "Policies."
"Portfolio Adjusted Yield" means, for any Distribution Date, the average of
the percentages obtained for each of the three preceding Monthly Periods by
subtracting the Base Rate and the Default Amount Rate for each such Monthly
Period from the Portfolio Yield for each such Monthly Period.
"Portfolio Yield" is defined in the Insurance Agreement.
"Premium and Fee Letter" is defined in the Insurance Agreement.
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"Principal Accumulation Account" shall have the meaning set forth in
subsection 4.9(a).
"Principal Accumulation Account Balance" means, for any date of
determination, the principal amount, if any, on deposit in the Principal
Accumulation Account on such date of determination.
"Principal Accumulation Investment Proceeds" means, with respect to each
Distribution Date, the investment earnings on funds in the Principal
Accumulation Account (net of investment expenses and losses) for the period from
and including the immediately preceding Distribution Date to but excluding such
Distribution Date.
"Principal Payment Rate" means, for any Monthly Period, (a) the aggregate
amount of Principal Collections deposited in the Collection Account
during that Monthly Period, divided by (b) the Aggregate Principal Receivables
as of the close of business on the last day of the prior Monthly Period.
"Principal Shortfall" is defined in subsection 4.8(a).
"Qualified Maturity Agreement" means an agreement, meeting the requirements
described in the definition of "Qualified Maturity Agreement" set forth in the
Policies, whereby an Eligible Institution agrees to make a deposit into the
Principal Accumulation Account on the Expected Principal Distribution Date in an
amount equal to the Note Principal Balance on such date; provided that for
purposes of this definition, references in the definition of "Eligible
Institution" to ratings of "A-1+" and "AAA" by Standard & Poor's shall be
modified to require ratings of "A-1" and "A+" from Standard & Poor's.
"Rapid Amortization Period" means the period commencing on the Business Day
immediately preceding the day on which a Pay Out Event with respect to Series
2001-A is deemed to have occurred, and ending on the first to occur of (i) the
payment in full of the Collateral Amount and (ii) the Series 2001-A Final
Maturity Date; provided, that if any amounts are owing to the Insurer under the
Insurance Agreement or the Counterparty under the Swap at the Series 2001-A
Final Maturity Date, the Rapid Amortization Period shall continue, solely for
purposes of repaying such amounts, but in no event shall the Rapid Amortization
Period continue after the earliest of (x) the date on which no further amounts
are owed to the Insurer under the Insurance Agreement and the Counterparty under
the Swap, (y) the March 2010 Distribution Date and (z) the date on which the
Collateral Amount has been reduced to zero; provided, further, that if the Rapid
Amortization Period is extended in accordance with the immediately preceding
proviso, for purposes of calculating the Minimum Aggregate Principal Balance,
for so long as the Rapid Amortization Period is so extended, (i) Series 2001-A
shall be deemed to be outstanding, (ii) the Collateral Amount shall be included
in the sum of the collateral amounts of all outstanding series for purposes of
clause (a) of the definition of Minimum Aggregate Principal Balance and (iii)
the numerator used for purposes of the Allocation Percentage with
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respect to Principal Collections for Series 2001-A shall be included in the
calculation described in clause (b) of the definition of Minimum Aggregate
Principal Balance.
"Rating Agency" means each of Fitch, ▇▇▇▇▇'▇ and Standard & Poor's.
"Rating Agency Condition" means, with respect to Series 2001-A, the Rating
Agency Condition, as defined in the Insurance Agreement.
"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 2001-A
Notes on such Distribution Date, plus (ii) Monthly Interest for such
Distribution Date and any Monthly Interest previously due but not distributed to
the Series 2001-A Noteholders, plus (iii) the amount of Additional Interest, if
any, for such Distribution Date and any Additional Interest previously due but
not distributed to the Series 2001-A Noteholders on a prior Distribution Date.
"Reference Banks" means four major banks in the London interbank market
selected by the Servicer or the Counterparty as calculation agent under the
Swap.
"Reimbursement Amounts" is defined in the Insurance Agreement.
"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 Amount" is defined in the Insurance Agreement.
"Required Excess Collateral Amount" is defined in the Insurance Agreement.
"Required Reserve Account Amount" means, for any Distribution Date on or
after the Reserve Account Funding Date, an amount equal to (a) 0.5% of the Note
Principal Balance or (b) any other amount designated by the Seller; provided,
however, that if such designation is of a lesser amount, the Seller shall (i)
provide the Servicer and the Indenture Trustee with evidence that the Rating
Agency Condition shall have been satisfied and (ii) deliver to the Indenture
Trustee a certificate of an Authorized Officer to the effect that, based on the
facts known to such officer at such time, in the reasonable belief of the
Seller, such designation will not cause a Pay Out
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Event or an event that, after the giving of notice or the lapse of time, would
cause a Pay Out Event to occur with respect to Series 2001-A.
"Reserve Account" is defined in subsection 4.10(a).
"Reserve Account Funding Date" means the Distribution Date designated by
the Servicer which occurs not later than the earliest of (a) the Distribution
Date with respect to the Monthly Period which commences 3 months prior to the
commencement of the Controlled Accumulation Period; (b) the first Distribution
Date for which the Portfolio Adjusted Yield is less than 2%, but in such event
the Reserve Account Funding Date shall not be required to occur earlier than the
Distribution Date with respect to the Monthly Period which commences 12 months
prior to the commencement of the Controlled Accumulation Period; (c) the first
Distribution Date for which the Portfolio Adjusted Yield is less than 3%, but in
such event the Reserve Account Funding Date shall not be required to occur
earlier than the Distribution Date with respect to the Monthly Period which
commences 6 months prior to the commencement of the Controlled Accumulation
Period; and (d) the first Distribution Date for which the Portfolio Adjusted
Yield is less than 4%, but in such event the Reserve Account Funding Date shall
not be required to occur earlier than the Distribution Date with respect to the
Monthly Period which commences 4 months prior to the commencement of the
Controlled Accumulation Period.
"Reserve Account Surplus" means, as of any Distribution Date following the
Reserve Account Funding Date, the amount, if any, by which the amount on deposit
in the Reserve Account exceeds the Required Reserve Account Amount.
"Reserve Draw Amount" means, with respect to each Distribution Date
relating to the Controlled Accumulation Period or the first Distribution Date
relating to the Rapid Amortization Period, the amount, if any, by which the
Principal Accumulation Investment Proceeds for such Distribution Date are less
than the Covered Amount determined as of such Distribution Date.
"Revolving Period" means the period beginning on the Closing Date and
ending on the earlier of the close of business on the day immediately preceding
the day the Controlled Accumulation Period commences or the Rapid Amortization
Period commences.
"Series 2001-A" means the Series of Notes the terms of which are specified
in this Indenture Supplement.
"Series 2001-A Final Maturity Date" means the earlier to occur of (a) the
Distribution Date on which the Note Principal Balance is paid in full and (b)
the March 2010 Distribution Date.
"Series 2001-A Note" means a Class A Note.
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"Series 2001-A Noteholder" means a Class A Noteholder.
"Series 2001-A Pay Out Event" is defined in Section 6.1.
"Series Servicing Fee Percentage" means 2% per annum.
"Spread Account" means the segregated trust account required to be
established pursuant to Section 2.05 of the Insurance Agreement, which section
is set forth in its entirety in Exhibit G.
"Supplemental Enhancement" is defined in the Insurance Agreement.
"Surplus Collateral Amount" means, at any time, the excess, if any, of the
Excess Collateral Amount over the sum of the Required Excess Collateral Amount
and the Supplemental Enhancement.
"Swap" means an interest rate swap agreement between the Owner Trustee, on
behalf of the Trust, and the Counterparty substantially in the form of Exhibit E
to this Indenture Supplement, or such other form as shall have satisfied the
Rating Agency Condition.
"Swap Rate" means 5.205% per annum.
"Telerate Page 3750" means the display page currently so designated on the
Bridge Telerate Capital Markets Report (or such other page as may replace that
page in that service for the purpose of displaying comparable rates or prices).
(2) Each capitalized term defined herein shall relate to the Series 2001-A
Notes and no other Series of Notes issued by the Trust, unless the context
otherwise requires. All capitalized terms used herein and not otherwise defined
herein have the meanings ascribed to them in the Indenture or the Transfer and
Servicing Agreement. In the event that any term or provision contained herein
shall conflict with or be inconsistent with any term or provision contained in
the Indenture or the Transfer and Servicing Agreement, the terms and provisions
of this Indenture Supplement shall govern.
(3) The interpretive rules specified in Section 1.2 of the Master Indenture
also apply to this Indenture Supplement.
(4) The definitions of all capitalized terms defined herein by reference to
the respective definitions of those terms in the Insurance Agreement can be
found in Exhibit F.
ARTICLE III
Servicing Fee
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Section III.0 Servicing Compensation. The share of the Servicing Fee
allocable to Series 2001-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 Collateral Amount as of the last day of the
Monthly Period preceding such Distribution Date, minus (ii) the product of the
amount, if any, on deposit in the Excess Funding Account as of the last day of
the Monthly Period preceding such Distribution Date and the Allocation
Percentage for Finance Charge Collections with respect to such Monthly Period;
provided, however, that with respect to the first Distribution Date, the Monthly
Servicing Fee shall be equal to $495,300. The remainder of the Servicing Fee
shall be paid by the holders of the Seller Interest or the noteholders of other
Series (as provided in the related Indenture Supplements) and in no event shall
the Trust, the Indenture Trustee or the Series 2001-A Noteholders be liable for
the share of the Servicing Fee to be paid by the holders of the Seller Interest
or the noteholders of any other Series. To the extent that the Monthly Servicing
Fee is not paid in full pursuant to the preceding provisions of this Section 3.1
and Section 4.4, it shall be paid by the holders of the Seller Interest.
ARTICLE IV
Rights of Series 2001-A Noteholders and Allocation and Application of
Collections
Section 1.3 Collections and Allocations.
---------------------------
(1) Allocations. Finance Charge Collections, Principal Collections and
Defaulted Receivables allocated to Series 2001-A pursuant to Article VIII of the
Indenture shall be allocated and distributed as set forth in this Article.
(2) Allocations to the Series 2001-A Noteholders. The Servicer shall,
prior to the close of business on any Deposit Date, allocate to the Series
2001-A Noteholders the following amounts as set forth below:
(1) Allocations of Finance Charge Collections. The Servicer shall
allocate to the Series 2001-A Noteholders and transfer to the Finance
Charge Subaccount for application as provided herein an amount equal
to the product of (A) the Allocation Percentage and (B) the aggregate
Finance Charge Collections deposited in the Collection Account on such
Deposit Date; provided, however, that with respect to the portion of
each Monthly Period falling in the Revolving Period or the Controlled
Accumulation Period, such allocation shall be transferred to the
Finance Charge Subaccount only until such time as the amount
transferred to the Finance Charge Subaccount pursuant to this
subsection during that Monthly Period equals the sum of (1) the Net
Interest Obligation with respect to the Distribution Date relating to
that Monthly Period, (2) at any time that FCNB is not the Servicer,
the Monthly Servicing Fee payable on the Distribution Date relating to
that Monthly Period and all accrued and unpaid Investor Monthly
Servicing Fees
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with respect to any prior Monthly Periods, (3) the Default Estimate
for that Monthly Period and (4) the Monthly Insurance Premium with
respect to that Monthly Period; provided further, however, that
notwithstanding the foregoing proviso, (1) the entire Allocation
Percentage of Finance Charge Collections shall be transferred to the
Finance Charge Subaccount on a daily basis if (x) the Excess Spread
Percentage for the preceding Monthly Period is less than 3.00%, or (y)
the Available Spread Account Amount is less than the Required Spread
Account Amount; and (2) subject to Section 8.4(a) of the Indenture, on
each Determination Date, the Servicer shall deposit in the Finance
Charge Subaccount any amounts not retained on a daily basis pursuant
to the preceding proviso. Any portion of such allocation not required
to be transferred to the Finance Charge Subaccount pursuant to the
preceding sentence shall be (x) first, deposited in the Excess Funding
Account to the extent that the Seller Amount is less than the Minimum
Seller Amount and (y) thereafter paid to the Holders of the Seller
Interest.
(2) Allocations of Principal Collections. The Servicer shall
allocate to the Series 2001-A Noteholders the following amounts as set
forth below:
(x) Allocations During the Revolving Period. During the
Revolving Period an amount equal to the product of the Allocation
Percentage and the aggregate amount of Principal Collections
deposited in the Collection Account on such Deposit Date, shall
be allocated to the Series 2001-A Noteholders and shall be first,
if any other Principal Sharing Series is outstanding and in its
amortization period or accumulation period, retained in the
Collection Account for application, to the extent necessary, as
Shared Principal Collections to other Principal Sharing Series on
the related Distribution Date, second deposited in the Excess
Funding Account to the extent necessary so that the Seller Amount
is not less than the Minimum Seller Amount and third paid to the
holders of the Seller Interest.
(y) Allocations During the Controlled Accumulation Period.
During the Controlled Accumulation Period an amount equal to the
product of (I) the Allocation Percentage and (II) the aggregate
amount of Principal Collections deposited in the Collection
Account on such Deposit Date (the product for any such date is
hereinafter referred to as a "Percentage Allocation") shall be
allocated to the Series 2001-A Noteholders and transferred to the
Principal Collections Subaccount until applied as provided
herein; provided, however, that if the sum of such Percentage
Allocation and all preceding Percentage Allocations with respect
to the same Monthly Period exceeds the Controlled Deposit Amount
during the Controlled Accumulation Period for the related
Distribution Date, then such
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excess shall not be treated as a Percentage Allocation and shall be first,
if any other Principal Sharing Series is outstanding and in its
amortization period or accumulation period, transferred to the Principal
Collections Subaccount for application, to the extent necessary, as Shared
Principal Collections to other Principal Sharing Series on the related
Distribution Date, second deposited in the Excess Funding Account to the
extent necessary so that the Seller Amount is not less than the Minimum
Seller Amount and third paid to the holders of the Seller Interest.
(z) Allocations During the Rapid Amortization Period. During the Rapid
Amortization Period, an amount equal to the product of (I) the Allocation
Percentage and (II) the aggregate amount of Principal Collections deposited
in the Collection Account on such Deposit Date, shall be allocated to the
Series 2001-A Noteholders and transferred to the Principal Collections
Subaccount until applied as provided herein; provided, however, that after
the date on which an amount of such Collections equal to the Note Principal
Balance plus any amounts owing to the Counterparty under the Swap and the
Insurer under the Insurance Agreement has been deposited into the
Collection Account and allocated to the Series 2001-A Noteholders, such
amount shall be first, if any other Principal Sharing Series is outstanding
and in its amortization period or accumulation period, transferred to the
Principal Collections Subaccount for application, to the extent necessary,
as Shared Principal Collections to other Principal Sharing Series on the
related Distribution Date, second deposited in the Excess Funding Account
to the extent necessary so that the Seller Amount is not less than the
Minimum Seller Amount and third paid to the holders of the Seller Interest.
Section 1.4 Determination of Monthly Interest. The amount of monthly
interest (" Monthly Interest") distributable from the Collection Account with
respect to the Class A Notes on any Distribution Date shall be an amount equal
to the product of (i) (A) a fraction, the numerator of which is the actual
number of days in the related Interest Period and the denominator of which is
360, times (B) the Note Interest Rate in effect with respect to the related
Interest Period and (ii) the Note Principal Balance as of the close of business
on the last day of the preceding Monthly Period (or, with respect to the initial
Distribution Date, the Note Initial Principal Balance).
Section 1.1 On the Determination Date preceding each Distribution Date, the
Servicer shall determine the excess, if any (the "Interest Shortfall"), of (x)
the Monthly Interest for such Distribution Date over (y) the aggregate amount of
funds allocated and available to pay such Monthly Interest on such Distribution
Date. If the Interest Shortfall for any Distribution Date is greater than zero
and the Insurer fails to pay
15
such Interest Shortfall in accordance with the terms of the related Policy,
on each subsequent Distribution Date until such Interest Shortfall is fully
paid, an additional amount ("Additional Interest") equal to the product of
(i) (A) a fraction, the numerator of which is the actual number of days in
the related Interest Period and the denominator of which is 360, times (B)
the Note Interest Rate in effect with respect to the related Interest
Period and (ii) such Interest Shortfall (or the portion thereof which has
not been paid to the Class A Noteholders) shall be payable as provided
herein with respect to the Class A Notes. Notwithstanding anything to the
contrary herein, Additional Interest shall be payable or distributed to the
Class A Noteholders only to the extent permitted by applicable law.
Section 1.5 Determination of Monthly Principal. The amount of monthly
principal distributable from the Collection Account with respect to the
Notes on each Distribution Date (the "Monthly Principal"), beginning with
the Distribution Date in the month following the month in which the
Controlled Accumulation Period or, if earlier, the Rapid Amortization
Period, begins, shall be equal to the least of (i) the Available Principal
Collections on deposit in the Collection Account with respect to such
Distribution Date, (ii) for each Distribution Date with respect to the
Controlled Accumulation Period, the Controlled Deposit Amount for such
Distribution Date, (iii) the Note Principal Balance, minus any amount
already on deposit in the Principal Accumulation Account on such
Distribution Date and (iv) the Collateral Amount (after taking into account
any adjustments to be made pursuant to Sections 4.5 and 4.6) prior to any
deposit into the Principal Accumulation Account on such Distribution Date.
Section 1.6 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:
(1) 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:
(1) on a pari passu basis (A) an amount equal to Monthly Interest
for such Distribution Date, plus the amount of any Monthly Interest
previously due but not distributed to Class A Noteholders on a prior
Distribution Date, plus the amount of any Additional Interest for such
Distribution Date, plus the amount of any Additional Interest
previously due but not distributed to Class A Noteholders on a prior
Distribution Date, shall be distributed to the Paying Agent for
payment to Class A Noteholders on such Distribution Date and (B) any
Net Swap Payment for that Distribution Date shall be distributed to
the Counterparty;
16
(2) if neither FCNB nor any affiliate of the Seller is the Servicer,
an amount equal to the Monthly Servicing Fee for such Distribution Date,
plus the amount of any Monthly Servicing Fee previously due but not
distributed to the Servicer on a prior Distribution Date, shall be
distributed to the Servicer;
(3) an amount equal to the Investor Default Amount and any Investor
Uncovered Dilution Amount for such Distribution Date shall be treated as a
portion of Available Principal Collections for such Distribution Date;
(4) an amount equal to the sum of the aggregate amount of Investor
Charge-Offs and the amount of Reallocated Principal Collections which have
not been previously reimbursed pursuant to this subsection (iv) shall be
treated as a portion of Available Principal Collections for such
Distribution Date;
(5) an amount equal to the Monthly Insurance Premium for the related
Monthly Period and any unpaid Monthly Insurance Premiums for prior Monthly
Periods shall be paid to the Insurer;
(6) on each Distribution Date from and after the Reserve Account
Funding Date, but prior to the date on which the Reserve Account terminates
as described in subsection 4.10(f), an amount up to the excess, if any, of
the Required Reserve Account Amount over the Available Reserve Account
Amount shall be deposited into the Reserve Account;
(7) an amount equal to the amounts required to be deposited in the
Spread Account pursuant to Section 2.05(f) of the Insurance Agreement shall
be deposited into the Spread Account as provided in Section 2.05(f) of the
Insurance Agreement;
(8) during the Rapid Amortization Period, any amount remaining shall
be applied as Available Principal Collections for such Distribution Date to
the extent that the other Available Principal Collections (excluding any
amounts drawn under the Policies) are not sufficient to repay the Class A
Notes in full;
(9) an amount equal to any Reimbursement Amounts and interest thereon
owed under the Insurance Agreement shall be paid to the Insurer;
(10) an amount equal to any other amounts owing to the Insurer under
the Insurance Agreement shall be paid to the Insurer;
(11) if the Rapid Amortization Period is extended past the
Distribution Date on which the Note Principal Balance is paid in full as a
17
result of there being amounts owed to the Counterparty, on each
Distribution Date after the Note Principal Balance is paid in full, an
amount equal to any partial or early termination payments or other
additional payments owed to the Counterparty under the Swap shall be
paid to the Counterparty;
(12) any Monthly Servicing Fee for such Distribution Date or
prior Distribution Dates not paid pursuant to subsection 4.4(a)(ii)
(unless such amount has been netted against deposits to the Collection
Account in accordance with Section 8.4 of the Indenture) shall be
distributed to the Servicer; and
(13) the balance, if any, will constitute a portion of Excess
Finance Charge Collections for such Distribution Date and first will
be available for allocation to other Series in Group One, second
deposited in the Excess Funding Account to the extent necessary so
that the Seller Amount is not less than the Minimum Seller Amount and
third paid to the Holders of the Seller Interest as described in
Section 8.6 of the Indenture.
(2) 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.
(3) 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:
(1) during the Controlled Accumulation Period, an amount equal to
the Monthly Principal for such Distribution Date shall be deposited
into the Principal Accumulation Account, and any remaining Available
Principal Collections shall be treated as Shared Principal Collections
and applied in accordance with Section 8.5 of the Indenture; and
(2) during the Rapid Amortization Period, an amount equal to the
Monthly Principal for such Distribution Date shall be distributed to
the Paying Agent for payment to the Class A Noteholders on such
Distribution Date until the Note Principal Balance has been paid in
full, and any remaining Available Principal Collections shall be
treated as Shared Principal Collections and applied in accordance with
Section 8.5 of the Indenture.
As of any Distribution Date on which any Available Principal
Collections are treated as Shared Principal Collections as provided above,
the Collateral Amount shall be reduced by an amount equal to the lesser of
(x) the amount of Available Principal Collections applied as Shared
Principal Collections and (y) the Surplus Collateral Amount.
18
(4) On the earlier to occur of (i) the first Distribution Date with respect
to the Rapid Amortization Period and (ii) the Expected Principal Distribution
Date, the Indenture Trustee, acting in accordance with instructions from the
Servicer, shall withdraw from the Principal Accumulation Account and distribute
to the Paying Agent for payment to the Class A Noteholders the amounts deposited
into the Principal Accumulation Account pursuant to subsection 4.4(c)(i).
Section 1.7 Investor Charge-Offs. On each Determination Date, the Servicer
shall calculate the Investor Default Amount and any Investor Uncovered Dilution
Amount for the related Distribution Date. If, on any Distribution Date, the sum
of the Investor Default Amount and any Investor Uncovered Dilution Amount for
such Distribution Date exceeds the amount of Available Finance Charge
Collections allocated with respect thereto pursuant to subsection 4.4(a)(iii)
with respect to such Distribution Date, the Collateral Amount will be reduced
(but not below zero) by the amount of such excess (such reduction, an "Investor
Charge-Off").
Section 1.8 Reallocated Principal Collections. On each Distribution Date,
the Servicer shall apply, or shall instruct the Indenture Trustee in writing to
apply, Reallocated Principal Collections with respect to such Distribution Date,
to fund any deficiency pursuant to and in the priority set forth in subsections
4.4(a)(i), (ii), (v), (ix), (x) and (xi); provided that in no event will
Reallocated Principal Collections be applied pursuant to subsections 4.4(a)(v),
(ix), (x) and (xi) until the Series 2001-A Final Maturity Date. On each
Distribution Date, the Collateral Amount shall be reduced by the amount of
Reallocated Principal Collections for such Distribution Date.
Section 1.9 Excess Finance Charge Collections. Series 2001-A shall be an
Excess Allocation Series with respect to Group One only. For this purpose, each
outstanding series of certificates issued by Spiegel Master Trust (other than
series represented by the Collateral Certificate) shall be deemed to be a Series
in Group One. Subject to Section 8.6 of the Indenture, Excess Finance Charge
Collections with respect to the Excess Allocation Series in Group One for any
Distribution Date will be allocated to Series 2001-A in an amount equal to the
product of (x) the aggregate amount of Excess Finance Charge Collections with
respect to all the Excess Allocation Series in Group One for such Distribution
Date and (y) a fraction, the numerator of which is the Finance Charge Shortfall
for Series 2001-A for such Distribution Date and the denominator of which is the
aggregate amount of Finance Charge Shortfalls for all the Excess Allocation
Series in Group One for such Distribution Date. The "Finance Charge Shortfall"
for Series 2001-A for any Distribution Date will be equal to the excess, if any,
of (a) the full amount required to be paid, without duplication, pursuant to
subsections 4.4(a)(i) through (xii) on such Distribution Date over (b) the
Available Finance Charge Collections with respect to such Distribution Date
(excluding any portion thereof attributable to Excess Finance Charge
Collections).
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Section 1.1 Section 1.10 Shared Principal Collections. Subject to Section
8.5 of the Indenture, Shared Principal Collections for any Distribution Date
will be allocated to Series 2001-A in an amount equal to the product of (x) the
aggregate amount of Shared Principal Collections with respect to all Principal
Sharing Series for such Distribution Date and (y) a fraction, the numerator of
which is the Principal Shortfall for Series 2001-A for such Distribution Date
and the denominator of which is the aggregate amount of Principal Shortfalls for
all the Series which are Principal Sharing Series for such Distribution Date.
For this purpose, each outstanding series of certificates issued by Spiegel
Master Trust (other than series represented by the Collateral Certificate) shall
be deemed to be a Principal Sharing Series. The "Principal Shortfall" for Series
2001-A will be equal to (a) for any Distribution Date with respect to the
Revolving Period, zero, (b) for any Distribution Date with respect to the
Controlled Accumulation Period, the excess, if any, of the Controlled Deposit
Amount with respect to such Distribution Date over the amount of Available
Principal Collections for such Distribution Date (excluding any portion thereof
attributable to Shared Principal Collections), and (c) for any Distribution Date
with respect to the Rapid Amortization Period, the excess, if any, of the Note
Principal Balance (less the balance in the Principal Accumulation Account) over
the amount of Available Principal Collections for such Distribution Date
(excluding any portion thereof attributable to Shared Principal Collections).
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Section 1.11 Principal Accumulation Account.
------------------------------
(1) The Indenture Trustee shall establish and maintain with an Eligible
Institution, which may be the Indenture Trustee in the name of the Trust, on
behalf of the Trust, for the benefit of the Series 2001-A Noteholders, a
non-interest bearing segregated trust account with the corporate trust
department of such Eligible Institution (the "Principal Accumulation Account"),
bearing a designation clearly indicating that the funds deposited therein are
held for the benefit of the Series 2001-A Noteholders. The Indenture Trustee
shall possess all right, title and interest in all funds on deposit from time to
time in the Principal Accumulation Account and in all proceeds thereof. The
Principal Accumulation Account shall be under the sole dominion and control of
the Indenture Trustee for the benefit of the Series 2001-A Noteholders. If at
any time the institution holding the Principal Accumulation Account ceases to be
an Eligible Institution, the Servicer shall notify the Indenture Trustee in
writing, and the Indenture Trustee upon being notified (or the Servicer on its
behalf) shall, within ten (10) Business Days, establish a new Principal
Accumulation Account meeting the conditions specified above with an Eligible
Institution, and shall transfer any cash or any investments to such new
Principal Accumulation Account. The Indenture Trustee, at the written direction
of the Servicer, shall (i) make withdrawals from the Principal Accumulation
Account from time to time, in the amounts and for the purposes set forth in this
Indenture Supplement, and (ii) on each Distribution Date (from and after the
commencement of the Controlled Accumulation Period) prior to the termination of
the Principal Accumulation Account, make deposits into the Principal
Accumulation Account in the amounts specified in, and otherwise in accordance
with, subsection 4.4(c)(i).
(2) Funds on deposit in the Principal Accumulation Account shall be
invested at the written direction of the Servicer by the Indenture Trustee in
Permitted Investments. Funds on deposit in the Principal Accumulation Account on
any Distribution Date, after giving effect to any withdrawals from the Principal
Accumulation Account on such Distribution Date, shall be invested in such
investments that will mature so that such funds will be available for withdrawal
on or prior to the following Distribution Date.
The Indenture Trustee shall hold such of the Permitted Investments as
consists of instruments, deposit accounts, negotiable documents, money, goods,
letters of credit, and advices of credit in the State of New York and/or
Illinois. The Indenture Trustee shall hold such of the Permitted Investments as
constitutes investment property through a securities intermediary, which
securities intermediary shall agree with the Indenture Trustee that (a) such
investment property shall at all times be credited to a securities account of
the Indenture Trustee, (b) such securities intermediary shall treat the
Indenture Trustee as entitled to exercise the rights that comprise each
financial asset credited to such securities account, (c) all property credited
to such securities account shall be treated as a financial asset, (d) such
securities intermediary shall comply with entitlement orders originated by the
21
Indenture Trustee without the further consent of any other person or entity, (e)
such securities intermediary will not agree with any person or entity other than
the Indenture Trustee to comply with entitlement orders originated by such other
person or entity, (f) such securities accounts and the property credited thereto
shall not be subject to any lien, security interest or right of set-off in favor
of such securities intermediary or anyone claiming through it (other than the
Indenture Trustee), and (g) such agreement shall be governed by the laws of the
State of Illinois. Terms used in the preceding sentence that are defined in the
New York UCC and not otherwise defined herein shall have the meaning set forth
in the New York UCC.
On each Distribution Date with respect to the Controlled Accumulation
Period and on the first Distribution Date with respect to the Rapid Amortization
Period, the Indenture Trustee, acting at the Servicer's written direction given
on or before such Distribution Date, shall transfer from the Principal
Accumulation Account to the Collection Account the Principal Accumulation
Investment Proceeds on deposit in the Principal Accumulation Account for
application as Available Finance Charge Collections in accordance with Section
4.4.
Principal Accumulation Investment Proceeds (including reinvested interest)
shall not be considered part of the amounts on deposit in the Principal
Accumulation Account for purposes of this Indenture Supplement.
Section 1.12 Reserve Account.
---------------
(1) The Indenture Trustee shall establish and maintain with an Eligible
Institution, which may be the Indenture Trustee in the name of the Trust, on
behalf of the Trust, for the benefit of the Series 2001-A Noteholders, a
non-interest bearing segregated trust account with the corporate trust
department of such Eligible Institution (the "Reserve Account"), bearing a
designation clearly indicating that the funds deposited therein are held for the
benefit of the Series 2001-A Noteholders. The Indenture Trustee shall possess
all right, title and interest in all funds on deposit from time to time in the
Reserve Account and in all proceeds thereof. The Reserve Account shall be under
the sole dominion and control of the Indenture Trustee for the benefit of the
Series 2001-A Noteholders. If at any time the institution holding the Reserve
Account ceases to be an Eligible Institution, the Servicer shall notify the
Indenture Trustee in writing, and the Indenture Trustee upon being notified (or
the Servicer on its behalf) shall, within ten (10) Business Days, establish a
new Reserve Account meeting the conditions specified above with an Eligible
Institution, and shall transfer any cash or any investments to such new Reserve
Account. The Indenture Trustee, at the written direction of the Servicer, shall
(i) make withdrawals from the Reserve Account from time to time in an amount up
to the Available Reserve Account Amount at such time, for the purposes set forth
in this Indenture Supplement, and (ii) on each Distribution Date (from and after
the Reserve Account Funding Date) prior to termination of the Reserve Account,
make a deposit into the
22
Reserve Account in the amount specified in, and otherwise in accordance with,
subsection 4.4(a)(vi).
(2) Funds on deposit in the Reserve Account shall be invested at the
written direction of the Servicer by the Indenture Trustee in Permitted
Investments. Funds on deposit in the Reserve Account on any Distribution Date,
after giving effect to any withdrawals from the Reserve Account on such
Distribution Date, shall be invested in such investments that will mature so
that such funds will be available for withdrawal on or prior to the following
Distribution Date.
The Indenture Trustee shall hold such of the Permitted Investments as
consists of instruments, deposit accounts, negotiable documents, money, goods,
letters of credit, and advices of credit in the State of New York. The Indenture
Trustee shall hold such of the Permitted Investments as constitutes investment
property through a securities intermediary, which securities intermediary shall
agree with the Indenture Trustee that (a) such investment property shall at all
times be credited to a securities account of the Indenture Trustee, (b) such
securities intermediary shall treat the Indenture Trustee as entitled to
exercise the rights that comprise each financial asset credited to such
securities account, (c) all property credited to such securities account shall
be treated as a financial asset, (d) such securities intermediary shall comply
with entitlement orders originated by the Indenture Trustee without the further
consent of any other person or entity, (e) such securities intermediary will not
agree with any person or entity other than the Indenture Trustee to comply with
entitlement orders originated by such other person or entity, (f) such
securities accounts and the property credited thereto shall not be subject to
any lien, security interest, or right of set-off in favor of such securities
intermediary or anyone claiming through it (other than the Indenture Trustee),
and (g) such agreement shall be governed by the laws of the State of New York.
Terms used in the preceding sentence that are defined in the New York UCC and
not otherwise defined herein shall have the meaning set forth in the New York
UCC.
On each Distribution Date, all interest and earnings (net of losses and
investment expenses) accrued since the preceding Distribution Date on funds on
deposit in the Reserve Account shall be retained in the Reserve Account (to the
extent that the Available Reserve Account Amount is less than the Required
Reserve Account Amount) and the balance, if any, shall be deposited into the
Collection Account and included in Available Finance Charge Collections for such
Distribution Date. For purposes of determining the availability of funds or the
balance in the Reserve Account for any reason under this Indenture Supplement,
except as otherwise provided in the preceding sentence, investment earnings on
such funds shall be deemed not to be available or on deposit.
(3) 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;
23
provided, however, that such amount will be reduced to the extent that funds
otherwise would be available for deposit in the Reserve Account under Section
4.4(a)(vi) with respect to such Distribution Date.
(4) If for any Distribution Date the Reserve Draw Amount is greater than
zero, the Reserve Draw Amount, up to the Available Reserve Account Amount, shall
be withdrawn from the Reserve Account on such Distribution Date by the Indenture
Trustee (acting in accordance with the written instructions of the Servicer) and
deposited into the Collection Account for application as Available Finance
Charge Collections for such Distribution Date.
(5) If the Reserve Account Surplus on any Distribution Date, after giving
effect to all deposits to and withdrawals from the Reserve Account with respect
to such Distribution Date, is greater than zero, the Indenture Trustee, acting
in accordance with the written instructions of the Servicer, shall withdraw from
the Reserve Account an amount equal to such Reserve Account Surplus and (i)
deposit such amounts in the Spread Account, to the extent that funds on deposit
in the Spread Account are less than the Required Spread Account Amount, and (ii)
distribute any such amounts remaining after application pursuant to subsection
4.10(e)(i) to the holders of the Seller Interest.
(6) Upon the earliest to occur of (i) the termination of the Trust pursuant
to Article VIII of the Trust Agreement, (ii) the first Distribution Date
relating to the Rapid Amortization Period and (iii) the Expected Principal
Distribution Date, the Indenture Trustee, acting in accordance with the
instructions of the Servicer, after the prior payment of all amounts owing to
the Series 2001-A Noteholders that are payable from the Reserve Account as
provided herein, shall withdraw from the Reserve Account all amounts, if any, on
deposit in the Reserve Account and (i) deposit such amounts in the Spread
Account, to the extent that funds on deposit in the Spread Account are less than
the Required Spread Account Amount, and (ii) distribute any such amounts
remaining after application pursuant to subsection 4.10(f)(i) to the holders of
the Seller Interest. The Reserve Account shall thereafter be deemed to have
terminated for purposes of this Indenture Supplement. Funds on deposit in the
Reserve Account at any time that the Controlled Accumulation Period is suspended
pursuant to Section 4.15, shall remain on deposit until applied in accordance
with subsection 4.10(d), (e) or (f).
Section 1.13 [Reserved].
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Section 1.14 Determination of LIBOR.
----------------------
(1) On each LIBOR Determination Date in respect of an Interest Period, the
Indenture Trustee, utilizing the services of the Counterparty as calculation
agent under the Swap (or the Servicer if the Swap is terminated), shall
determine LIBOR on the basis of the rate for deposits in United States dollars
for a one-month period which appears on Telerate Page 3750 as of 11:00 a.m.,
London time, on such date. If such rate does not appear on Telerate Page 3750,
the rate for that Interest Period shall be determined on the basis of the rates
at which deposits in United States dollars are offered by the Reference Banks at
approximately 11:00 a.m., London time, on that day to prime banks in the London
interbank market for a one-month period. The Indenture Trustee shall request the
principal London office of each of the Reference Banks to provide a quotation of
its rate. If at least two (2) such quotations are provided, the rate for that
Interest Period shall be the arithmetic mean of the quotations. If fewer than
two (2) quotations are provided as requested, the rate for that Interest Period
will be the arithmetic mean of the rates quoted by major banks in New York City,
selected by the Counterparty or, if the Swap is terminated, the Servicer, at
approximately 11:00 a.m., New York City time, on that day for loans in United
States dollars to leading European banks for a one-month period.
(2) The Note Interest Rate applicable to the then current and the
immediately preceding Interest Periods may be obtained by telephoning the
Indenture Trustee at its corporate trust office at (▇▇▇) ▇▇▇-▇▇▇▇ or such other
telephone number as shall be designated by the Indenture Trustee for such
purpose by prior written notice by the Indenture Trustee to each Series 2001-A
Noteholder from time to time.
(3) On each LIBOR Determination Date, the Indenture Trustee shall send to
the Servicer by facsimile transmission, notification of LIBOR for the following
Interest Period.
Section 1.15 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 11:00 a.m., New York City time, on such
day, such investment shall be made by the Indenture Trustee on the next
succeeding Business Day. In no event shall the Indenture Trustee be liable for
any investment not made pursuant to investment instructions received after 11:00
a.m., New York City time, on the day such investment is requested to be made.
Section 1.16 Controlled Accumulation Period. The Controlled Accumulation
Period is scheduled to commence at the opening of business
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March 1, 2004. However, if the Accumulation Period Length (determined as
described below) is less than 12 months, the date on which the Controlled
Accumulation Period actually commences will be delayed to the first Business Day
of the month that is the number of whole months prior to the Expected Principal
Distribution Date at least equal to the Accumulation Period Length and, as a
result, the number of Monthly Periods in the Controlled Accumulation Period will
at least equal the Accumulation Period Length. On the Determination Date
immediately preceding the February 2004 Distribution Date, and each
Determination Date thereafter until the Controlled Accumulation Period begins,
the Servicer will determine the "Accumulation Period Length" which will equal
the number of whole months such that the sum of the Accumulation Period Factors
for each month during such period will be equal to or greater than the Required
Accumulation Factor Number; provided, however, that the Accumulation Period
Length will not be determined to be less than one month; provided further,
however, that the determination of the Accumulation Period Length may be changed
at any time if the Rating Agency Condition is satisfied.
Section 1.17 Suspension of Controlled Accumulation Period. (a) The Issuer
may, in its sole discretion, elect to suspend the commencement of the Controlled
Accumulation Period with prior notice to the Rating Agencies. The commencement
of the Controlled Accumulation Period shall be suspended upon delivery by the
Issuer to the Indenture Trustee of (i) an Officer's Certificate stating that the
Issuer has elected to suspend the commencement of the Controlled Accumulation
Period and that all conditions precedent to such suspension set forth in this
Section 4.15 have been satisfied, (ii) a copy of an executed Qualified Maturity
Agreement and (iii) an Opinion of Counsel addressed to the Indenture Trustee as
to the due authorization, execution and delivery and the validity and
enforceability of such Qualified Maturity Agreement. The Issuer does hereby
transfer, assign, set-over, and otherwise convey to the Indenture Trustee for
the benefit of the Class A Noteholders, without recourse, all of its rights
under any Qualified Maturity Agreement obtained in accordance with this Section
4.15 and all proceeds thereof. Such property shall constitute part of the Trust
Estate for all purposes of the Indenture. The foregoing transfer, assignment,
set-over and conveyance does not constitute and is not intended to result in a
creation or an assumption by the Indenture Trustee or any Noteholder of any
obligation of the Issuer or any other Person in connection with a Qualified
Maturity Agreement or under any agreement or instrument relating thereto.
The Indenture Trustee hereby acknowledges its acceptance, to the extent
validly transferred, assigned, set-over or otherwise conveyed to the Indenture
Trustee, for the benefit of the Class A Noteholders, of all of the rights
previously held by the Issuer under any Qualified Maturity Agreement obtained by
the Issuer and all proceeds thereof, and declares that it shall hold such rights
upon the trust set forth herein and in the Agreement, and subject to the terms
hereof and thereof, for the benefit of the Class A Noteholders.
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(b) The Issuer shall cause the provider of each Qualified Maturity Agreement
to deposit into the Principal Accumulation Account on or before the Expected
Principal Distribution Date an amount equal to the aggregate outstanding
principal balance of the Class A Notes on such Distribution Date; provided,
however, that the Issuer may instead elect to fund all or a portion of such
deposit with the proceeds of the issuance of a new Series or with the Available
Principal Collections with respect to such Distribution Date; and provided,
further, that the Issuer shall in no event cause or permit the provider of any
Qualified Maturity Agreement to fund under such Qualified Maturity Agreement
unless there are sufficient funds on deposit in the Collection Account allocated
to make required payments pursuant to Sections 4.4(a)(i) and (ii) for any
Distribution Date falling on or after the funding under such Qualified Maturity
Agreement. The amount deposited shall be applied on the Expected Principal
Distribution Date pursuant to Section 4.4(d) as if the commencement of the
Controlled Accumulation Period had not been suspended.
(c) Each Qualified Maturity Agreement shall terminate at the close of
business on the Expected Principal Distribution Date; provided, however, that
the Issuer may terminate a Qualified Maturity Agreement prior to such
Distribution Date, with notice to each Rating Agency, if (i) the Available
Reserve Account Amount equals the Required Reserve Account Amount and (ii) one
of the following events occurs: (A) the Issuer obtains a substitute Qualified
Maturity Agreement, (B) the provider of the Qualified Maturity Agreement ceases
to qualify as an Eligible Institution and the Issuer is unable to obtain a
substitute Qualified Maturity Agreement or (C) a Pay Out Event occurs. In
addition, the Issuer may terminate a Qualified Maturity Agreement prior to the
later of (i) the date on which the Controlled Accumulation Period was scheduled
to begin, before giving effect to the suspension of the Controlled Accumulation
Period, and (b) the date to which the commencement of the Controlled
Accumulation Period may be postponed pursuant to Section 4.15 (as determined on
the Determination Date preceding the date of such termination), in which case
the commencement of the Controlled Accumulation Period shall be determined as if
the Issuer had not elected to suspend such commencement. In the event that the
provider of a Qualified Maturity Agreement ceases to qualify as an Eligible
Institution, the Issuer shall use its best efforts to obtain a substitute
Qualified Maturity Agreement.
(d) If a Qualified Maturity Agreement is terminated prior to the earlier of
the Expected Principal Distribution Date and the commencement of the Rapid
Amortization Period and the Issuer does not obtain a substitute Qualified
Maturity Agreement, the Controlled Accumulation Period shall commence on the
latest of (i) March 1, 2004, (ii) at the election of the Issuer, the date to
which the commencement of the Controlled Accumulation Period may be postponed
pursuant to Section 4.14 (as determined on the date of such termination) and
(iii) the first day of the Monthly Period following the date of such
termination.
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Section 1.18 Insurance Policies. (a) On the Closing Date, the Issuer shall
enter into the Insurance Agreement, pursuant to which the Policies will be
issued for the benefit of the Series 2001-A Noteholders and the Counterparty.
(b) Prior to 12:00 noon, New York City time, on the third Business Day
preceding each Distribution Date, the Servicer shall determine whether there
will be a Deficiency Amount on the following Distribution Date. If the Servicer
determines that there will be a Deficiency Amount on the following Distribution
Date, the Servicer shall complete the notice in the form set forth as an exhibit
to the related Policy (the "Notice") and submit such Notice in accordance with
the related Policy to the Insurer no later than 3:00 p.m., New York time, on
such Business Day, as a claim for an Insured Obligation in an amount equal to
such Deficiency Amount. The Insurer shall remit or cause to be remitted to the
Trustee such Deficiency Amount in accordance with the terms of the related
Policy.
(c) The Indenture Trustee shall (i) receive as attorney-in-fact of the
applicable owners an Insured Obligation from the Insurer and (ii) distribute the
same to (a) the Class A Noteholders as provided in subsections 5.2(a) and (b) to
the extent that such amounts relate to Monthly Interest or principal of the
Class A Notes, respectively, and (b) the Counterparty or the Servicer to the
extent that such amounts relate to Net Swap Payments or Monthly Servicing Fees,
respectively. Any and all Insured Obligations disbursed by the Indenture Trustee
from claims made under the Policies shall not be considered payment by the
Issuer with respect to the Class A Notes or other applicable obligations, nor
shall such payments discharge the obligation of the Issuer with respect to the
Class A Notes or other obligations, and the Insurer shall become the owner of
such unpaid amounts due from the Issuer in respect of Insured Obligations.
If on any Distribution Date, the Indenture Trustee or the Servicer
determines that the Insurer has paid more under any Policy than is required by
the terms hereof, the Indenture Trustee shall promptly return such excess to the
Insurer.
The Indenture Trustee shall keep a complete and accurate record of the
amount of the Insured Obligations paid. The Insurer shall have the right to
inspect such record during normal business hours upon prior notice to the
Indenture Trustee.
(d) So long as no Control Transfer Event shall have occurred and be
continuing, the Insurer shall be deemed to be the sole Holder of the Series
2001-A Notes for the purpose of exercising voting rights and the giving of any
consents, approvals, instructions, directions, declarations and notices relating
to the Series 2001-A Notes. However, for any amendment or waiver requiring the
consent of all affected Noteholders, the consent of the Insurer and all affected
Noteholders will be required.
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Section 1.19 Swap. (a) On or prior to the Closing Date, the Owner Trustee
shall, on behalf of the Issuer, enter into the Swap with the Counterparty for
the benefit of the Noteholders. The aggregate notional amount under the Swap
shall, at any time, be equal to the Note Principal Balance at such time. Net
Swap Receipts and early termination payments payable by the Counterparty shall
be deposited by the Indenture Trustee in the Collection Account on the day
received and treated as Available Finance Charge Collections. On any
Distribution Date when there shall be a Net Swap Payment, such Net Swap Payments
shall be paid as provided in Section 4.4(a)(i). On any Distribution Date when
there shall be an early termination payment or any other miscellaneous payment
payable by the Issuer to the Counterparty, such amount shall be paid as provided
in Section 4.4(a)(xi).
(b) Each Swap shall be in substantially the same form as the initial Swap
attached hereto as Exhibit E.
(c) The Servicer may, upon (i) satisfaction of the Rating Agency Condition
and, (ii) unless a Control Transfer Event has occurred, receipt of written
consent from the Insurer (which consent shall not be unreasonably withheld),
and, when required under the terms of the existing Swap, shall, obtain a
replacement Swap.
ARTICLE V
Delivery of Series 2001-A Notes; Distributions; Reports to Series 2001-A
Noteholders
Section V.1 Delivery and Payment for the Series 2001-A Notes.
The Issuer shall execute and issue, and the Indenture Trustee shall
authenticate, the Series 2001-A Notes in accordance with Section 2.3 of the
Indenture. The Indenture Trustee shall deliver the Series 2001-A Notes to or
upon the written order of the Trust when so authenticated.
Section 1.20 Distributions.
(1) 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, including amounts made available as a result of any draw
on the Policies.
(2) 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
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available on such Distribution Date to pay principal of the Class A Notes
pursuant to this Indenture Supplement, including amounts made available as a
result of any draw on the Policies.
(3) 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.
(4) Except as provided in Section 11.2 of the Indenture with respect to a
final distribution, distributions to Series 2001-A Noteholders hereunder shall
be made by (i) check mailed to each Series 2001-A Noteholder (at such
Noteholder's address as it appears in the Note Register), except that for any
Series 2001-A Notes registered in the name of the nominee of a Clearing Agency,
such distribution shall be made by wire transfer of immediately available funds
and (ii) without presentation or surrender of any Series 2001-A Note or the
making of any notation thereon.
Section 1.21 Reports and Statements to Series 2001-A Noteholders.
(1) On each Distribution Date, the Paying Agent, on behalf of the Indenture
Trustee, shall forward to each Series 2001-A Noteholder a statement
substantially in the form of Exhibit C prepared by the Servicer.
(2) Not later than the second Business Day preceding each Distribution
Date, the Servicer shall deliver to the Owner Trustee, the Indenture Trustee,
the Paying Agent, the Insurer, the Counterparty and each Rating Agency (i) a
statement substantially in the form of Exhibit C prepared by the Servicer and
(ii) a certificate of an Authorized Officer substantially in the form of Exhibit
D; provided that the Servicer may amend the form of Exhibit C and Exhibit D,
from time to time, with the prior written consent of the Indenture Trustee.
(3) A copy of each statement or certificate provided pursuant to paragraph
(a) or (b) may be obtained by any Series 2001-A Noteholder by a request in
writing to the Servicer.
(4) On or before January 31 of each calendar year, beginning with January
31, 2002, the Paying Agent, on behalf of the Indenture Trustee, shall furnish or
cause to be furnished to each Person who at any time during the preceding
calendar year was a Series 2001-A Noteholder, a statement prepared by the
Servicer containing the information which is required to be contained in the
statement to Series 2001-A Noteholders, as set forth in paragraph (a) above,
aggregated for such calendar year or the applicable portion thereof during which
such Person was a Series 2001-A Noteholder, together with other information as
is required to be provided by an issuer of indebtedness under the Code. Such
obligation of the Paying Agent shall be deemed to have been satisfied to the
extent that substantially comparable information shall be provided by the
Servicer pursuant to any requirements of the Code as from time to time in
effect.
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ARTICLE VI
Series 2001-A Pay Out Events and Events of Default
--------------------------------------------------
Section 1.22 Series 2001-A Pay Out Events. If any one of the following
events shall occur with respect to the Series 2001-A Notes:
(1) failure on the part of the Seller or the "Seller" under the Pooling and
Servicing Agreement (i) to make any payment or deposit required to be made by
the Seller by the terms of the Transfer and Servicing Agreement, the Pooling and
Servicing Agreement, the Indenture or this Indenture Supplement on or before the
date occurring five (5) Business Days after the date such payment or deposit is
required to be made therein or herein or (ii) duly to observe or perform in any
material respect any other covenants or agreements of the Seller set forth in
the Transfer and Servicing Agreement, the Pooling and Servicing Agreement, the
Indenture or this Indenture Supplement, which failure has a material adverse
effect on the Series 2001-A Noteholders and which continues unremedied for a
period of forty-five (45) days after the date on which written notice of such
failure, requiring the same to be remedied, shall have been given to the Seller
by the Indenture Trustee, or to the Seller and the Indenture Trustee by any
Holder of the Series 2001-A Notes;
(2) any representation or warranty made by the Seller in the Transfer and
Servicing Agreement or, prior to the SMT Termination Date, by the "Seller" under
the Pooling and Servicing Agreement in the Pooling and Servicing Agreement, or
any information contained in a computer file or microfiche list required to be
delivered by the Seller pursuant to Section 2.1 or subsection 2.6(c) of the
Transfer and Servicing Agreement or Section 2.1 or subsection 2.6(c) of the
Pooling and Servicing Agreement shall prove to have been incorrect in any
material respect when made or when delivered, which continues to be incorrect in
any material respect for a period of forty-five (45) days after the date on
which written notice of such failure, requiring the same to be remedied, shall
have been given to the Seller by the Indenture Trustee, or to the Seller and the
Indenture Trustee by any Holder of the Series 2001-A Notes and as a result of
which the interests of the Series 2001-A Noteholders are materially and
adversely affected for such period; provided, however, that a Series 2001-A Pay
Out Event pursuant to this subsection 6.1(b) shall not be deemed to have
occurred hereunder if the Seller has accepted reassignment of the related
Receivable, or all of such Receivables, if applicable, during such period in
accordance with the provisions of the Transfer and Servicing Agreement or the
Pooling and Servicing Agreement;
(3) a failure by the Seller or the "Seller" under the Pooling and Servicing
Agreement to convey Receivables in Additional Accounts to the Trust within ten
(10) days after the day on which it is required to convey such Receivables
pursuant to subsection 2.6(a) of the Transfer and Servicing Agreement or
subsection 2.6(a) of the Pooling and Servicing Agreement;
(4) any Servicer Default shall occur;
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(5) the average of the Portfolio Yields for any three consecutive Monthly
Periods is reduced to a rate which is less than the sum of the average of the
Base Rates for such period and the average of the Default Amount Rates for such
period; it being understood that, for purposes of such calculation, the result
of the Portfolio Yield for the first Monthly Period, minus the sum of the Base
Rate and the Default Amount Rate for the first Monthly Period shall be equal to
the Modified Excess Spread Percentage for the first Monthly Period;
(6) the Note Principal Balance shall not be paid in full on the Expected
Principal Distribution Date;
(7) prior to the SMT Termination Date, a Trust Pay Out Event shall occur
under (and as defined in) the Pooling and Servicing Agreement;
(8) any draw shall be made on any Policy in accordance with the terms
thereof;
(9) Insurer shall by notice to the Seller, the Servicer and the Indenture
Trustee declare a Pay Out Event in accordance with Section 5.01 of the Insurance
Agreement (which section is set forth in its entirety in Exhibit H) at any time
prior to a Control Transfer Event;
(10) the Counterparty shall fail to make any net payment required to be
made by it under the Swap, and such failure is not cured within five Business
Days, or the Swap shall terminate prior to the Series 2001-A Final Maturity Date
and the Issuer shall fail to enter into a replacement Swap in accordance with
subsection 4.17(c);
(11) without limiting the foregoing, the occurrence of an Event of Default
with respect to Series 2001-A; or
(12) the occurrence of an Insolvency Event relating to the Insurer;
then, in the case of any event described in subsection (a), (b) or (d), after
the applicable grace period, if any, set forth in such subparagraphs, either the
Indenture Trustee or the Holders of Series 2001-A Notes evidencing more than 50%
of the aggregate unpaid principal amount of Series 2001-A Notes by notice then
given in writing to the Seller and the Servicer (and to the Indenture Trustee if
given by the Series 2001-A Noteholders) may declare that a "Series Pay Out
Event" with respect to Series 2001-A (a "Series 2001-A Pay Out Event") has
occurred as of the date of such notice, and, in the case of any event described
in subsection (c), (e), (f), (g), (h), (i), (j), (k) or (l), a Series 2001-A Pay
Out Event shall occur without any notice or other action on the part of the
Indenture Trustee or the Series 2001-A Noteholders immediately upon the
occurrence of such event.
32
Section 1.23 Series 2001-A Events of Default. (a) For so long as no Control
Transfer Event has occurred, the Events of Default for Series 2001-A shall
include, in addition to the Events of Default specified in the Indenture, any
one of the following events (whatever the reason for such Event of Default and
whether it shall be voluntary or involuntary or be effected by operation of law
or pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(i) default in the payment of interest on the Series 2001-A Notes
when the same becomes due and payable, and such default shall continue
for a period of twenty-eight (28) days;
(ii) default in the observance or performance of any covenant or
agreement of the Issuer made in the Indenture made in respect of the
Series 2001-A Notes (other than a covenant or agreement, a default in
the observance or performance of which is elsewhere in this Section
6.2 or in Section 5.2 of the Indenture specifically dealt with) (all
of such covenants and agreements in the Indenture which are not
expressly stated to be for the benefit of a particular Series being
deemed to be in respect of the Notes of Series 2001-A for this
purpose) in any material respect and such default shall continue or
not be cured for a period of forty-five (45) days after there shall
have been given, by registered or certified mail, return receipt
requested to the Issuer and the Indenture Trustee by the Insurer, a
written notice specifying such default and requiring it to be remedied
and stating that such notice is a "Notice of Default" hereunder; or
(iii) any Servicer Default.
(b) If an Event of Default for Series 2001-A shall have occurred and be
continuing and the Series 2001-A Notes have been accelerated pursuant to Section
5.3, so long as no Control Transfer Event has occurred, the Insurer shall have
the right, but not the obligation, to (i) exercise the rights of the Series
2001-A Noteholders described in Section 5.5 of the Indenture, and (ii) to pay
all or any portion of the outstanding principal balance of the Series 2001-A
Notes prior to the Series 2001-A Final Maturity Date. Following the occurrence
of an Event of Default for Series 2001-A, the Indenture Trustee shall continue
to submit claims under the Policies as necessary to enable the Issuer to
continue to make payments on each Distribution Date in accordance with the terms
of this Indenture Supplement.
Section 1.24 Declarations of Default. So long as no Control Transfer Event
shall have occurred and be continuing, neither the Indenture Trustee nor the
Class A Noteholders may declare an Event of Default with respect to the Series
2001-A Notes. So long as no Control Transfer Event shall have occurred and be
continuing, an Event of Default with respect to the Series 2001-A Notes shall
occur only upon
33
delivery by the Insurer to the Indenture Trustee of notice of the occurrence of
an Event of Default.
ARTICLE VII
Redemption of Series 2001-A Notes; Final Distributions; Series Termination
Section 1.25 Optional Redemption of Series 2001-A Notes; Final Distributions.
(1) On any day occurring on or after the date on which the outstanding
principal balance of the Series 2001-A Notes is reduced to 10% or less of the
initial outstanding principal balance of Series 2001-A Notes, the Servicer shall
have the option to redeem the Series 2001-A Notes, at a purchase price equal to
(i) if such day is a Distribution Date, the Reassignment Amount for such
Distribution Date or (ii) if such day is not a Distribution Date, the
Reassignment Amount for the Distribution Date following such day; provided that
all amounts due and owing to the Insurer pursuant to the Insurance Agreement
shall have been paid to the Insurer.
(2) The Issuer shall give the Servicer and the Indenture Trustee at least
thirty (30) days prior written notice of the date on which the Issuer intends to
exercise such optional redemption. Not later than 12:00 noon, New York City
time, on such day the Issuer shall deposit into the Collection Account in
immediately available funds the excess of the Reassignment Amount over the
amount, if any, on deposit in the Principal Accumulation Account. Such
redemption option is subject to payment in full of the Reassignment Amount.
Following such deposit into the Collection Account in accordance with the
foregoing, the Collateral Amount for Series 2001-A shall be reduced to zero and
the Series 2001-A Noteholders shall have no further security interest in the
Receivables. The Reassignment Amount shall be distributed as set forth in
subsection 7.1(d).
(3) (i) The amount to be paid by the Seller with respect to Series 2001-A
in connection with a reassignment of Receivables to the Seller pursuant to
Section 2.4(e) of the Transfer and Servicing Agreement shall equal the
Reassignment Amount for the first Distribution Date following the Monthly Period
in which the reassignment obligation arises under the Transfer and Servicing
Agreement.
(ii) The amount to be paid by the Seller with respect to Series 2001-A
in connection with a repurchase of the Notes pursuant to Section 7.1 of the
Transfer and Servicing Agreement shall equal the Reassignment Amount for the
Distribution Date of such repurchase.
(4) 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
34
the following amounts (in the priority set forth below and, in each case, after
giving effect to any deposits and distributions otherwise to be made on such
date) in immediately available funds: (i) (x) the Note Principal Balance on such
Distribution Date will be distributed to the Paying Agent for payment to the
Class A Noteholders and (y) an amount equal to the sum of (A) Monthly Interest
for such Distribution Date, (B) any Monthly Interest previously due but not
distributed to the Class A Noteholders on a prior Distribution Date and (C) the
amount of Additional Interest, if any, for such Distribution Date and any
Additional Interest previously due but not distributed to the Class A
Noteholders on any prior Distribution Date, will be distributed to the Paying
Agent for payment to the Class A Noteholders, (ii) any unpaid Monthly Insurance
Premiums, Reimbursement Amounts, interest thereon and other amounts payable to
the Insurer under the Insurance Agreement will be distributed to the Insurer
(iii) any amounts owed to the Counterparty under the Swap shall be distributed
to the Counterparty and (iv) any excess shall be released to the Issuer.
(5) Notwithstanding anything to the contrary in this Indenture Supplement,
the Indenture or the Transfer and Servicing Agreement, all amounts distributed
to the Paying Agent pursuant to subsection 7.1(d) for payment to the Series
2001-A Noteholders shall be deemed distributed in full to the Series 2001-A
Noteholders on the date on which such funds are distributed to the Paying Agent
pursuant to this Section 7.1 and shall be deemed to be a final distribution
pursuant to Section 11.2 of the Indenture.
Section 1.26 Series Termination. On the Series 2001-A Final Maturity Date,
the right of the Series 2001-A Noteholders to receive payments from the Issuer
will be limited solely to the right to receive payments pursuant to Section 5.5
of the Indenture.
ARTICLE VIII
Miscellaneous Provisions
------------------------
Section 1.27 Ratification of Indenture; Amendments. As supplemented by this
Indenture Supplement, the Indenture is in all respects ratified and confirmed
and the Indenture as so supplemented by this Indenture Supplement shall be read,
taken and construed as one and the same instrument. This Indenture Supplement
may be amended only by a Supplemental Indenture entered in accordance with the
terms of Section 10.1 or 10.2 of the Indenture. For purposes of the application
of Section 10.2 to any amendment of this Indenture Supplement, only the vote of
the Series 2001-A Noteholders shall be required. The Issuer and Indenture
Trustee shall not enter into any amendment to this Indenture Supplement to
provide for the termination of the Swap, any Policy or any Qualified Maturity
Agreement unless the Rating Agency Condition is satisfied with respect to such
amendment; it being understood that (i) the Servicer may obtain a replacement
Swap in accordance with Section 4.17 and (ii) the Issuer may terminate a
Qualified Maturity Agreement in accordance with Section 4.15, so long as such
replacement or termination is not affected through the amendment of this
Indenture Supplement.
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Section 1.28 Form of Delivery of the Series 2001-A Notes. The Series 2001-A
Notes shall be Book-Entry Notes and shall be delivered as Registered Notes as
provided in Section 2.1 of the Indenture.
Section 1.29 Counterparts. This Indenture Supplement may be executed in two
or more counterparts, and by different parties on separate counterparts, each of
which shall be an original, but all of which shall constitute one and the same
instrument.
Section 1.30 GOVERNING LAW. THIS INDENTURE SUPPLEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS, PROVIDED,
HOWEVER, THAT THE DUTIES AND OBLIGATIONS OF THE INDENTURE TRUSTEE SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE
TO ITS CONFLICT OF LAW PROVISIONS.
Section 1.31 Limitation of Liability. Notwithstanding any other provision
herein or elsewhere, this Agreement has been executed and delivered by Bankers
Trust Company, not in its individual capacity, but solely in its capacity as
Owner Trustee of the Trust, in no event shall Bankers Trust Company in its
individual capacity have any liability in respect of the representations,
warranties, or obligations of the Trust hereunder or under any other document,
as to all of which recourse shall be had solely to the assets of the Trust, and
for all purposes of this Agreement and each other document, the Owner Trustee
(as such or in its individual capacity) shall be subject to, and entitled to the
benefits of, the terms and provisions of the Trust Agreement.
Section 1.32 Rights of the Indenture Trustee. The Indenture Trustee shall
have herein the same rights, protections, indemnities and immunities as
specified in the Master Indenture.
Section 1.33 Third Party Beneficiary. This Indenture Supplement and the
Indenture will inure to the benefit of the Insurer.
Section 1.34 Inconsistency. In the event of any inconsistency between (a)
the provisions of the Insurance Agreement set forth in Exhibits F, G and H and
(b) the Insurance Agreement, the provisions of the Insurance Agreement shall
prevail.
Section 1.35 Collateral Series Supplement. Section 10(h) of the Collateral
Series Supplement, dated as of December 1, 2000 (the "Collateral Series
Supplement"), to the Pooling and Servicing Agreement shall not apply to the
Collateral Series (as defined in the Collateral Series Supplement) related to
the Series 2001-A Notes.
36
Section 1.1 Section 1.36 Increase of Collateral Amount. The Seller may, in
its sole discretion, increase the Collateral Amount to cure any breach set forth
in Section 4.02(g)(i) of the Insurance Agreement; provided that, after giving
effect to any such increase, the Aggregate Principal Balance shall not be less
than the Minimum Aggregate Principal Balance; and provided, further that the
Servicer may, at the direction of the Seller, retain Principal Collections
otherwise distributable to the holders of the Seller Interest in the Excess
Funding Account for the purpose of increasing the Aggregate Principal Balance so
that the Aggregate Principal Balance shall at least equal the Minimum Aggregate
Principal Balance after giving effect to such increase; and provided further
that the Seller may, in its sole discretion, decrease the Collateral Amount if
such decrease would not cause a breach of the covenant set forth in Section
4.02(g)(i) of the Insurance Agreement.
Section 1.37 Perfection Representations and Warranties. The parties hereto
agree that the representations, warranties and covenants set forth in Schedule I
shall be a part of this Indenture Supplement for all purposes.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the undersigned have caused this Indenture Supplement
to be duly executed and delivered by their respective duly authorized officers
on the day and year first above written.
SPIEGEL CREDIT CARD MASTER NOTE TRUST,
as Issuer
By: BANKERS TRUST COMPANY,
not in its individual capacity
but solely as Owner Trustee
Name: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Title: Vice President
--------------------------------
THE BANK OF NEW YORK,
as Indenture Trustee
Name: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
Title: Agent
--------------------------------
Signature page to
Indenture Supplement
38
Acknowledged and Accepted:
FIRST CONSUMERS NATIONAL BANK,
as Servicer
Name: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
Title:
Acknowledged and Accepted:
SPIEGEL CREDIT CORPORATION III,
as Seller
Name: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
Title:
Signature page to
Indenture Supplement
39