Document:

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                          MBIA INSURANCE CORPORATION

                      FINANCIAL GUARANTY INSURANCE POLICY

                                 July 19, 2001

                                                             Policy No. 35738(2)

Re:                 Spiegel Credit Card Master Note Trust $600,000,000 Class A
                    Series 2001-A Floating Rate Asset Backed Notes ("Notes")
                                                                     -----

Insured Obligation: Obligation of the Spiegel Credit Card Master Note Trust (the
                    "Issuer") to pay the Net Swap Payment under the Swap (as
                     ------
                    such terms are defined below)

Beneficiary:        The Bank of New York, as indenture trustee under the Master
                    Indenture and the Series 2001-A Indenture Supplement as
                    defined below (together with any successor trustee duly
                    appointed and qualified, the "Indenture Trustee")
                                                  -----------------

     MBIA INSURANCE CORPORATION (the "Insurer"), for consideration received,
                                      -------
hereby unconditionally and irrevocably guarantees to the Indenture Trustee on
behalf of Morgan Guaranty Trust Company of New York, as counterparty (the
"Counterparty") under the Swap (as defined in the Series 2001-A Indenture
 ------------
Supplement), subject only to the terms of this Financial Guaranty Insurance
Policy (the "Policy"), payment of the Insured Obligation.  The Insured
             ------
Obligation shall not include any Excluded Amount.  The Insurer agrees to pay to
the Indenture Trustee an amount equal to the sum of  (a) in respect of each
Distribution Date, the amount, if any, by which the Net Swap Payment, if any,
for such Distribution Date exceeds the amount on deposit in the Collection
Account allocable to the Net Swap Payment and available for distribution
pursuant to the Series 2001-A Indenture Supplement and (b) on the date due
hereunder, an amount equal to any Avoided Payment; provided, however, that no
                                                   --------- -------
payment (other than any payment made in respect of an Avoided Payment) under
this Policy with respect to any Distribution Date shall exceed the Policy Amount
for such Distribution Date.  No payment under this Policy with respect to any
Distribution Date will be made in respect of any Excluded Amount.  The Insurer's
obligations under this Policy will be discharged to the extent funds equal to
the amounts described above are received by the Indenture Trustee, whether or
not such funds are properly applied by the Indenture Trustee.
<PAGE>

     Capitalized terms used herein and not otherwise defined herein shall have
the meanings assigned to such terms in the Master Indenture dated as of December
1, 2000 (the "Master Indenture"), as supplemented by the Series 2001-A Indenture
              ----------------
Supplement, dated as of July 19, 2001 (the "Series 2001-A Indenture Supplement")
                                            ----------------------------------
between the Issuer and the Indenture Trustee.

     "Early Termination Payment" means any amount required to be paid by the
      -------------------------
Issuer pursuant to Section 6(e) of the ISDA Master Agreement under which the
Swap, as defined in the Series 2001-A Indenture Supplement, was issued.

     "Excluded Amount" means the sum of (a) shortfalls, if any, in amounts
      ---------------
available to make Net Swap Payments attributable to the liability of the Issuer
or the Servicer for withholding taxes or any interest and penalties in respect
of such liability of the Issuer or Servicer and (b) any Early Termination
Payment due from the Issuer under the Swap.

     "Insolvency Proceeding" means the commencement, after the date hereof, of
      ---------------------
any bankruptcy, insolvency, readjustment of debt, reorganization, marshalling of
assets and liabilities or similar proceedings by or against the Seller, the
Servicer or the Issuer, the commencement, after the date hereof, of any
proceedings by or against the Seller, the Servicer or the Issuer for the winding
up or liquidation of its affairs, or the consent, after the date hereof, to the
appointment of a trustee, conservator, receiver or liquidator in any bankruptcy,
insolvency, readjustment of debt, reorganization, marshalling of assets and
liabilities or similar proceedings of or relating to the Seller, the Servicer or
the Issuer.

     "Policy Amount" means in the case of any Distribution Date, the Net Swap
      -------------
Payment payable on such Distribution Date.

     "Qualified Maturity Agreement" has the meaning assigned to such term in the
      ----------------------------
Series 2001-A Indenture Supplement, provided that (i) it shall be a term of such
agreement that the Eligible Institution will have no access to any cash or
collateral unless and until its obligations are performed in full, and (ii) no
provision of such agreement shall have the effect of reducing the period of time
between the Expected Principal Distribution Date and the Series 2001-A Final
Maturity Date.

     Payment of amounts hereunder shall be made in immediately available funds
on the following basis: with respect to the Net Swap Payment, if any, payable on
a given Distribution Date, to the Indenture Trustee for deposit in the Spread
Account on the later of (x) 12:00 noon, New York City time, on the second
Business Day preceding the Distribution Date and (y) 12:00 noon, New York City
time, on the second Business Day succeeding presentation to State Street Bank &
Trust Company, N.A., in New York, New York, as Fiscal Agent (the "Fiscal Agent")
                                                                  ------------
for the Insurer or any successor fiscal agent appointed by the Insurer (as
hereinafter provided) of a notice for payment in the form of Exhibit A hereto
("Notice for Payment"), appropriately completed and executed by the Indenture
 -------------------
Trustee.  A Notice for Payment under this Policy may be presented to the Fiscal
Agent on any Business Day following the Determination Date in respect of which
the Notice for Payment is being presented by (a) delivery of the original Notice
for Payment to the Fiscal Agent at its address set forth below, or (b) facsimile
transmission of the Notice for Payment to the Fiscal Agent at its facsimile
number set forth below. If presentation is

                                      -2-
<PAGE>

made by facsimile transmission, the Indenture Trustee shall (i) simultaneously
confirm transmission by telephone to the Fiscal Agent at its telephone number
set forth below, and (ii) as soon as reasonably practicable, deliver the
original Notice for Payment to the Fiscal Agent at its address set forth below.
Any Notice for Payment received by the Fiscal Agent after 1:00 p.m., New York
City time, on a Business Day, or on any day that is not a Business Day, will be
deemed to be received by the Fiscal Agent at 9:00 a.m., New York City time, on
the next succeeding Business Day.

     Subject to the foregoing, if the payment of any amount with respect to the
Insured Obligation is voided (a "Preference Event") under any applicable
                                 ----------------
bankruptcy, insolvency, receivership or similar law in an Insolvency Proceeding,
and as a result of such Preference Event, the Counterparty is required to return
such voided payment, or any portion of such voided payment, made in respect of
any Net Swap Payment (an "Avoided Payment"), the Insurer will pay an amount
                          ---------------
equal to such Avoided Payment, irrevocably, absolutely and unconditionally and
without the assertion of any defenses to payment, including fraud in inducement
or fact or any other circumstances that would have the effect of discharging a
surety in law or in equity, upon payment by the Counterparty of such Avoided
Payment and receipt by the Fiscal Agent from the Indenture Trustee on behalf of
the Counterparty of (x) a certified copy of a final order of a court or other
Governmental Authority exercising jurisdiction in such Insolvency Proceeding to
the effect that the Counterparty is required to return any such payment or
portion thereof prior to the Termination Date of this Policy because such
payment was voided under applicable law, with respect to which order the appeal
period has expired without an appeal having been filed (the "Final Order"), (y)
                                                             -----------
an assignment, substantially in the form attached hereto as Exhibit B, properly
completed and executed by the Counterparty irrevocably assigning to the Insurer
all rights and claims of the Counterparty relating to or arising under such
Avoided Payment, and (z) a Notice for Payment in the form of Exhibit A hereto
appropriately completed and executed by the Indenture Trustee.

     The Insurer shall make payments due in respect of Avoided Payments prior to
12:00 noon, New York City time, on the first to occur of (a) the fourth Business
Day following the Fiscal Agent's receipt of the documents required under clauses
(x) through (z) of the preceding paragraph, or (b) on the date of the Fiscal
Agent's receipt of the documents required under clauses (x) through (z),
provided that at least four business days prior to the date of the Fiscal
Agent's receipt of such documents, the Fiscal Agent received written notice,
specifying the date of delivery, that such documents were to be delivered on the
date on which such documents were received by the Fiscal Agent. Any such
documents and/or written notice received by the Fiscal Agent after 1:00 p.m.,
New York City time, on any Business Day or on any day that is not a Business Day
shall be deemed to have been received by the Fiscal Agent prior to 1:00 p.m. on
the next succeeding Business Day. All payments made by the Insurer hereunder on
account of any Avoided Payment shall be made to the receiver or the trustee in
bankruptcy named in the Final Order on behalf of the Counterparty and not to the
Indenture Trustee or the Counterparty directly unless such Counterparty has
returned such Avoided Payment to such receiver or trustee in bankruptcy, in
which case such payment will be disbursed to the Indenture Trustee for the
benefit of the Counterparty entitled to such payment upon proof of such payment
reasonably satisfactory to the Insurer.

                                      -3-
<PAGE>

     If any Notice for Payment received by the Fiscal Agent is not in proper
form, is not properly completed, executed or delivered, or is otherwise
insufficient for the purpose of making a claim hereunder, it shall be deemed not
to have been received by the Fiscal Agent, and the Insurer or the Fiscal Agent,
as the case may be, shall promptly so advise the Indenture Trustee, and the
Indenture Trustee may submit an amended Notice for Payment.

     Payments due hereunder unless otherwise stated herein will be disbursed by
the Fiscal Agent to the Indenture Trustee on behalf of the Counterparty by wire
transfer of immediately available funds in the amount of such payment, less, in
respect of Avoided Payments, any amounts held by the Indenture Trustee for the
payment of such Avoided Payments and legally available therefor.  Upon such
disbursement by wire transfer of the payments due hereunder by the Fiscal Agent
to the Indenture Trustee on behalf of the Counterparty, the Insurer's
obligations under the Policy shall be discharged.

     The Fiscal Agent is the agent of the Insurer only, and the Fiscal Agent
shall in no event be liable to the Counterparty for any acts of the Fiscal Agent
or any failure of the Insurer to deposit or cause to be deposited sufficient
funds to make payments due under this Policy.

     The Insurer shall be subrogated to the rights of the Counterparty to
receive payments under the Series 2001-A Indenture Supplement to the extent of
any payment by the Insurer hereunder.

     The Insurer hereby waives and agrees not to assert any and all rights to
require the Indenture Trustee to make demand on or to proceed against any
person, party or security prior to the Indenture Trustee demanding payment under
this Policy.

     No defenses, set-offs and counterclaims of any kind available to the
Insurer so as to deny payment of any amount due in respect of this Policy will
be valid and the Insurer hereby waives and agrees not to assert any and all such
defenses, set-offs and counterclaims, including, without limitation, any such
rights acquired by subrogation, assignment or otherwise. Any rights of
subrogation acquired by the Insurer as a result of any payment made under this
Policy shall, in all respects, be subordinate and junior in right of payment to
the prior indefeasible payment in full of all amounts due the Indenture Trustee
on account of payments due under the Swap.

     This Policy is neither transferable nor assignable, in whole or in part,
except to a successor trustee duly appointed and qualified under the Indenture.
All notices, presentations, transmissions, deliveries and communications made by
the Indenture Trustee to the Insurer with respect to this Policy shall
specifically refer to the number of this Policy and shall be made to the Insurer
at:

                                      -4-
<PAGE>

          MBIA Insurance Corporation
          113 King Street
          Armonk, New York 10504
          Attention: Insured Portfolio Management, Structured Finance
          Telephone:  (914) 273-4545
          Facsimile:  (914) 765-3163

or such other address, telephone number or facsimile number as the Insurer may
designate to the Indenture Trustee in writing from time to time. Each such
notice, presentation, transmission, delivery and communication shall be
effective only upon actual receipt by the Insurer.

     Any notice hereunder delivered to the Fiscal Agent may be made at the
address listed below for the Fiscal Agent or such other address as the Insurer
shall specify in writing to the Indenture Trustee.

     The notice address of the Fiscal Agent is 61 Broadway, 15/th/ Floor, New
York, New York 10006 Attention: Municipal Registrar and Paying Agency, or such
other address as the Fiscal Agent shall specify to the Indenture Trustee in
writing.

     The obligations of the Insurer under this Policy are irrevocable, primary,
absolute and unconditional (except as expressly provided herein) and neither the
failure of the Seller, the Servicer, the Indenture Trustee or any other person
to perform any covenant or obligation in favor of the Insurer (or otherwise),
nor the failure or omission to make a demand permitted hereunder, nor the
commencement of any bankruptcy, debtor or other insolvency proceeding by or
against the Indenture Trustee, the Seller, the Servicer or any other person
shall in any way affect or limit the Insurer's obligations under this Policy. If
a successful action or proceeding to enforce this Policy is brought by the
Indenture Trustee, the Indenture Trustee shall be entitled to recover from the
Insurer costs and expenses reasonably incurred, including without limitation
reasonable fees and expenses of counsel.

     There shall be no acceleration payment due under this Policy unless such
acceleration is at the sole option of the Insurer.

     This Policy and the obligations of the Insurer hereunder shall terminate on
the date (the "Termination Date") which is the earliest of the following:  (a)
               ----------------
the Series 2001-A Final Maturity Date, (b) the date of funding under any
Qualified Maturity Agreement, or (c) the date on which all Net Swap Payments
required to be paid to the Counterparty pursuant to the Swap have been paid in
full, provided that, this Policy shall not terminate prior to the date on which
      -------------
all amounts payable to the Insurer under the Insurance Agreement shall have been
paid, provided further that, if any Insolvency Proceeding is existing by or
      ---------------------
against the Seller, the Servicer or the Issuer, then this Policy and the
Insurer's obligations hereunder shall terminate on the date of the conclusion or
dismissal of such Insolvency Proceeding without continuing jurisdiction by the
court in such Insolvency Proceeding, and provided further that, and
                                         ---------------------
notwithstanding anything herein to the contrary, this Policy shall not terminate
prior to the date on which the Insurer has made all payments required to be made
under the terms of this Policy in respect of Avoided Payments.

                                      -5-
<PAGE>

     All payments made hereunder by the Insurer shall be made with the Insurer's
own funds. The payment by the Issuer or the Insurer to the Indenture Trustee of
any amount guaranteed by the Insurer under the first paragraph of this Policy,
and the payment by the Insurer of any Avoided Payment after the occurrence of a
Preference Event shall constitute "payments" for all purposes under this Policy.
                                   --------
In no event shall any payment be made under this Policy on account of (a) the
failure of the Indenture Trustee to deliver the proceeds of any such payment to
the Counterparty or (b) the failure of the Counterparty claim any such proceeds
from the Indenture Trustee.

     This Policy is not covered by the property/casualty insurance fund
specified in Article Seventy-Six of the New York State insurance law.

     This Policy sets forth in full the undertaking of the Insurer, and shall
not, except with the prior written consent of the Indenture Trustee and the
Insurer or otherwise in accordance with the express terms hereof, be modified,
altered or affected by any other agreement or instrument, including any
modification or amendment thereto and may not be canceled or revoked by the
Insurer prior to the Termination Date.

     This Policy shall be returned to the Insurer by the Indenture Trustee on
the Termination Date.

     THIS POLICY SHALL BE CONSTRUED, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF
THE PARTIES HEREUNDER SHALL BE DETERMINED, IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES (OTHER THAN
SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATION LAW) OR THE APPLICATION OF THE
LAWS OF ANY OTHER JURISDICTION.

                           [Signature Page Follows]

                                      -6-
<PAGE>

     IN WITNESS WHEREOF, the Insurer has caused this Policy to be executed on
the date first written above.

                                   MBIA INSURANCE CORPORATION

                                   By: /s/ Gary C. Stanton
                                       -------------------
                                       President

                                   By: /s/ Amy R. Gonch
                                       -------------------
                                       Assistant Secretary

                                      -7-
<PAGE>

Exhibit A to Financial Guaranty Insurance Policy, Number 35738(2)
MBIA Insurance Corporation
113 King Street
Armonk, New York 10504
Attention:  Insured Portfolio Management, Structured Finance

                              NOTICE FOR PAYMENT
           UNDER FINANCIAL GUARANTY INSURANCE POLICY NUMBER 35738(2)

     The Bank of New York, as Indenture Trustee (the "Indenture Trustee"),
                                                      -----------------
hereby certifies as follows to MBIA Insurance Corporation (the "Insurer") with
                                                                -------
reference to that certain Financial Guaranty Insurance Policy, Number 35738(2),
dated July 19, 2001 (the "Policy"), issued by the Insurer in favor of the
                          ------
Indenture Trustee, under the Master Indenture, dated as of December 1, 2000 (the
"Master Indenture") between Spiegel Credit Card Master Note Trust (the "Issuer")
 ----------------                                                       ------
and the Indenture Trustee, as supplemented by the Series 2001-A Indenture
Supplement, dated as of July 19, 2001 (the "Series 2001-A Indenture Supplement",
                                            ----------------------------------
and together with the Master Indenture, the "Indenture"), among the Issuer and
                                             ---------
the Indenture Trustee:

     1.   The Indenture Trustee is the Indenture Trustee under the Indenture and
the Beneficiary under the Policy, on behalf of Morgan Guaranty Trust Company of
New York, as counterparty (the "Counterparty") under the Swap (as defined in the
                                ------------
Series 2001-A Indenture Supplement).

     2.   The Indenture Trustee is entitled to make a demand under the Policy
[pursuant to Section 4.16 of the Series 2001-A Indenture Supplement] [as a
result of the occurrence of a Preference Event as defined in the Policy].

     [For a Notice for Payment in respect of a Distribution Date use the
following paragraphs 3, 4 and 5]

     3.   This notice relates to the [insert date] Distribution Date. The Policy
Amount, as specified to the Indenture Trustee by the Servicer, for such
Distribution Date is $______. The amount demanded by this notice does not exceed
such Policy Amount.

     4.   The Indenture Trustee demands payment of $___________ which is an
amount equal to the amount by which the Net Swap Payment (as defined in the
Policy), if any, for such Distribution Date exceeds the amounts on deposit in
the Collection Account and allocable to payment of the Net Swap Payment for such
Distribution Date.

     5.   The amount demanded is to be paid in immediately available funds to
the Collection Account at _______________; account number ________________.

     [For a Notice for Payment in respect of an Avoided Payment use the
following paragraphs 6 and 7.]

     6.   The Indenture Trustee hereby represents and warrants, based upon
information available to it, that (i) the amount entitled to be drawn under the
Policy on the date hereof in

                                      -8-
<PAGE>

respect of Avoided Payments is [$________ ] (the "Avoided Payment Amount"), (ii)
                                                  ----------------------
the Counterparty has paid or simultaneously with such draw on the Policy will
pay its pro rata share of such Avoided Payment, and (iii) the documents required
by the Policy to be delivered in connection with such Avoided Payment and
Avoided Payment Amount have previously been presented to the Insurer or are
attached hereto.

     7.   The amount demanded is to be paid in immediately available funds by
wire transfer to [__________].

     [For a Notice for Payment relating to both an Avoided Payment and a
Distribution Date, use the following paragraphs 8, 9, 10 and 11.]

     8.   This notice relates to the [insert date] Distribution Date. The Policy
Amount, as specified to the Indenture Trustee by the Servicer, for such
Distribution Date is $______. The amount demanded by this notice does not exceed
such Policy Amount.

     9.   The Indenture Trustee demands payment of $___________ which is an
amount equal to the amount by which the Net Swap Payment, (as defined in the
Policy), if any, for such Distribution Date exceeds the amounts on deposit in
the Collection Account and allocable to payment of the Net Swap Payment for such
Distribution Date.

     10.  The Indenture Trustee hereby represents and warrants, based upon
information available to it, that (i) the amount entitled to be drawn under the
Policy on the date hereof in respect of Avoided Payments is [$________ ] (the
"Avoided Payment Amount"), (ii) the Counterparty has paid or simultaneously with
 ----------------------
such draw on the Policy will pay its pro rata share of such Avoided Payment, and
(iii) the documents required by the Policy to be delivered in connection with
such Avoided Payment and Avoided Payment Amount have previously been presented
to the Insurer or are attached hereto.

     11.  The amount demanded is to be paid in immediately available funds by
wire transfer to [_______________].

     Capitalized terms used herein and not otherwise defined herein shall have
the meanings assigned to them in the Master Indenture or the Series 2001-A
Indenture Supplement, as the context may require.

     IN WITNESS WHEREOF, this notice has been executed this ___ day of__________

                                        THE BANK OF NEW YORK, as
                                        Indenture Trustee

                                        By: ___________________________
                                                Authorized Officer

                                      -9-
<PAGE>

Exhibit B to Financial Guaranty Insurance Policy, Number 35738(2)

                              Form of Assignment

Reference is made to the Financial Guaranty Insurance Policy No. 35738(2), dated
July 19, 2001 (the "Policy"), issued by MBIA Insurance Corporation (the
                    ------
"Insurer") relating to the $600,000,000 Spiegel Credit Card Master Note Trust
 -------
Class A Series 2001-A Floating Rate Asset Backed Notes.  Unless otherwise
defined herein, capitalized terms used in this Assignment shall have the
meanings assigned thereto in the Policy or incorporated by reference therein. In
connection with the Avoided Payment of [$______________] paid by the undersigned
(the "Holder") on [_______] and the payment by the Insurer in respect of such
      ------
Avoided Payment pursuant to the Policy, the Holder hereby irrevocably and
unconditionally, without recourse, representation or warranty (except as
provided below), sells, assigns, transfers, conveys and delivers all of such
Holder's right, title and interest in and to any rights or claims, whether
accrued, contingent or otherwise, that the Holder now has or may hereafter
acquire, against any person relating to, arising out of or in connection with
such Avoided Payment. The Holder represents and warrants that such claims and
rights are free and clear of any lien or encumbrance created or incurred by such
Holder./1/

                                        _________________________
                                        Holder of Certificate

___________________
/1/   In the event that the terms of this form of assignment are reasonably
determined to be insufficient solely as a result of a change of law or
applicable rules after the date of the Policy to fully vest all of the Holder's
right, title and interest in such rights and claims, the Holder and MBIA shall
agree on such other form as is reasonably necessary to effect such assignment,
which assignment shall be without recourse, representation or warranty except as
provided above.

                                      -10-
<PAGE>

                                   EXHIBIT F

                        INSURANCE AGREEMENT DEFINITIONS

     General Definitions.  The terms defined in this Article 1 shall have the
meanings provided herein for all purposes of this Insurance Agreement, unless
the context clearly requires otherwise, in both singular and plural form, as
appropriate.  Capitalized terms used herein and not otherwise defined shall have
the meanings assigned to them in the Master Indenture as supplemented by the
Series 2001-A Indenture Supplement.

     "Available Spread Account Amount" means for any Distribution Date, an
amount equal to the lesser of (a) the amount on deposit in the Spread Account
(exclusive of Investment Earnings, unless and until the occurrence of an Event
of Default with respect to Series 2001-A and acceleration of the maturity of the
Series 2001-A Notes pursuant to Section 5.3 of the Indenture) on such date
(before giving effect to any deposit to, or withdrawal from, the Spread Account
made or to be made with respect to such date), and (b) the Required Spread
Account Amount for such Distribution Date.

     "Average Excess Spread Percentage" means, for any Distribution Date, the
percentage determined as follows:

          For the August 15, 2001 Distribution Date, the Modified Excess Spread
     Percentage;

          For the September 17, 2001 Distribution Date, the sum of the Modified
     Excess Spread Percentage and the Excess Spread Percentage for the calendar
     month of August 2001, divided by two (2);

          For the October 15, 2001 Distribution Date, the sum of the Modified
     Excess Spread Percentage, the Excess Spread Percentage with respect to the
     calendar month of August 2001 and the Excess Spread Percentage with respect
     to the calendar month of September 2001, divided by three (3); and

     For each following Distribution Date, the sum of the Excess Spread
Percentages for the three (3) prior calendar months, divided by three (3).

     "Bank" means, on any day, the Eligible Institution holding the Spread
Account pursuant to Section 2.05 of the Insurance Agreement.

     "Base Rate" means with respect to any calendar month, the annualized
percentage equivalent of a fraction the numerator of which is the sum of (a) the
Monthly Interest due on the Notes, (b) the Monthly Servicing Fee for the Notes,
(c) any Net Swap Payment due from the Issuer, and (d) the Premium, each as of
the following Distribution Date; and the denominator of which is the Collateral
Amount as of the first day of that calendar month.

     "Condition Precedent Documents" means the Insurance Agreement, the Transfer
and Servicing Agreement, the Master Indenture, the Series 2001-A Indenture
Supplement, the Receivables Purchase Agreement dated September 20, 1994 among
the Seller, FCNB and Spiegel Acceptance, the Trust Agreement, the Administration
Agreement, the Pooling and Servicing Agreement, the Collateral Series Supplement
and Exhibit B thereto, the form of Trust Receivables Purchase Agreement, the
Underwriting Agreement, the Indemnification Agreement, the Premium and Fee
Letter, the Swap, and the Spread Account Letter.
<PAGE>

     "Credit Agreements" means (i) the 364-Day Revolving Credit Agreement, dated
as of June 30, 2000 (as amended, supplemented, restated or otherwise modified),
among Spiegel, as Borrower, the various financial institutions as are or may
become parties thereto, as Lenders (the "Lenders"), Deutsche Bank Securities Inc
and J.P. Morgan Securities Inc., as Joint Lead Arrangers and Book Runners, J.P.
Morgan Securities Inc., as Syndication Agent and Deutsche Bank AG New York
Branch, as Administrative Agent; and (ii) the Second Amended and Restated
Revolving Credit Agreement, dated as of June 30, 2000 (as amended, supplemented,
amended and restated or otherwise modified) among Spiegel, as Borrower, the
various financial institutions as are or may become parties thereto, as Lenders,
Deutsche Bank Securities Inc and J.P. Morgan Securities Inc., as Joint Lead
Arrangers and Book Runners, J.P. Morgan Securities Inc., as Syndication Agent,
Deutsche Bank AG New York Branch, as Administrative Agent, and The HongKong and
Shanghai Banking Corporation Limited, as Letter of Credit Issuer.

     "Credit Agreements Trigger Event" means the occurrence of a breach of the
financial covenants of Spiegel granted in Section 7.2.6 of each of the Credit
Agreements, provided that such breach has not been waived by the Lenders.  A
Credit Agreements Trigger Event shall be deemed to be continuing until the
Insurer has received a compliance certificate from Spiegel which establishes
that Spiegel has not been in breach of the financial covenants provided in
Section 7.2.6 of each of the Credit Agreements for a period of six months or two
consecutive quarters.

     "Default Amount Rate" means with respect to any calendar month the
annualized percentage equivalent of a fraction, the numerator of which is the
sum of the Investor Default Amount plus the Investor Uncovered Dilution Amount
for that calendar month; and the denominator of which is the Collateral Amount
as of the first day of that calendar month.

     "Dilution" means non-cash adjustments and non-charge off adjustments to the
Receivables made from time to time by the Servicer as a consequence of (but not
limited to) merchandise returns, late charge waivers, and billing adjustments.

     "Dilution Rate" means on any Distribution Date the percentage equivalent of
a fraction (a) the numerator of which is equal to the Dilution for the 3
calendar months preceding such Distribution Date, and (b) the denominator of
which is the sum of the Aggregate Principal Receivables as of the end of each of
those three calendar months.

     "Dilution Trigger Event": a Dilution Trigger Event has occurred if on any
Distribution Date the Dilution Rate exceeds 3.5%. A Dilution Trigger Event shall
be deemed to be continuing until three consecutive subsequent Distribution Dates
have occurred on which the Dilution Rate is less than 3.5%.

     "Excess Spread Percentage" means, for any calendar month, the result of (a)
the Portfolio Yield for that calendar month minus (b) the Base Rate for that
calendar month, minus (c) the Default Amount Rate for that calendar month.

     "Indemnification Agreement" means the Indemnification Agreement, dated as
of July 19, 2001 among the Insurer, the Seller, Spiegel and J.P. Morgan
Securities Inc., as representative (the "Representative") of Banc of America
Securities LLC, Deutsche Bank Alex. Brown Inc. and Dresdner Kleinwort
Wasserstein Securities LLC., as underwriters (together with the Representative,
the "Underwriters").
<PAGE>

     "Investment Earnings" means, for any Distribution Date, all interest and
earnings on Permitted Investments included in the Spread Account (net of losses
and investment expenses) during the period commencing on and including the
Distribution Date immediately proceeding such distribution Date and ending on
but excluding such Distribution Date.

     "Maximum Commitment Amount" means $600,000,000.

     "Modified Excess Spread Percentage" means 6.58%.

     "Otto Interests" means (a) Werner Otto of Hamburg, Germany, his spouse and
any of his lineal descendants and their respective spouses (collectively, the
"Otto Family"), any Subsidiary of any members of the Otto Family, and any
personal representative, trustee or other fiduciary acting in respect of the
estate of any member of the Otto Family, and (b) any trust which is solely for
the benefit of one or more members of the Otto Family (whether or not any member
of the Otto Family is a trustee of such trust) or principally for the benefit of
one or more members of the Otto Family (provided that a member of the Otto
Family is a trustee of such trust); and "Subsidiary" of a Person shall for the
purposes of this definition mean (i) any corporation of which more than 50% of
the outstanding securities having ordinary voting power  shall at the time be
owned or controlled, directly or indirectly, by such Person or by one or more of
its Subsidiaries or by such Person and one or more of its Subsidiaries, or (ii)
any partnership, association, joint venture, limited liability company or
similar business organization of which more than 50% of the ownership interests
having ordinary voting power shall at the time be so owned or controlled.

     "Person" means an individual, a partnership, a corporation, a business
trust, a joint stock company, a trust, an unincorporated association, a joint
venture, a Governmental Authority or another entity of whatever nature.

     "Portfolio Yield" means, with respect to any calendar month, the annualized
percentage equivalent of a fraction:  (a) the numerator of which is equal to the
amount of (i) Investor Finance Charge Collections with respect to such calendar
month plus (ii) any Net Swap Receipt for the following Distribution Date, plus
(iii) the Principal Accumulation Investment Proceeds deposited into the
Collection Account on the Distribution Date following such calendar month, plus
(iv) the amount of the Reserve Draw Amount (up to the Available Reserve Account
Amount) plus any amounts of interest and earnings described in Section 4.10 of
the Series 2001-A Indenture Supplement, each deposited into the Collection
Account on the Distribution Date following such calendar month, plus (v) if the
Rating Agency Condition is satisfied, any Excess Finance Charge Collections that
are allocated to Series 2001-A with respect to such calendar month, such sum to
be calculated on a cash basis, and (b) the denominator of which is the
Collateral Amount as of the first day of such calendar month.

     "Premium" means the premiums, and fees for the Policy due and payable to
the Insurer on each Distribution Date in accordance with the terms and
conditions of the Premium and Fee Letter.

     "Premium and Fee Letter " means the letter dated the Closing Date from the
Insurer to the Seller setting forth the payment arrangement for the premium on
the Policy and certain fees and expenses related to payment arrangements.

     "Rating Agency Condition" means with respect to any action or series of
related actions or proposed transaction or series of related proposed
transactions affecting Series 2001-A,  that
<PAGE>

each Rating Agency shall have notified Seller and the Indenture Trustee in
writing that such action or series of related actions or the consummation of
such proposed transactions or series of related transactions will not result in
a reduction or withdrawal of (i) the rating of the Series 2001-A Notes or (ii)
the Shadow Rating.

     "Reimbursement Amount" has the meaning given to such term in Section
2.04(a) of the Insurance Agreement.

     "Required Amount" means, for any Distribution Date, an amount equal to the
sum of the amounts described in subsections 4.4(a)(i) and 4.4(a)(ii) of the
Series 2001-A Indenture Supplement; provided, 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 under this Agreement or the Series 2001-
A Indenture Supplement or the Counterparty under the Swap, then for any
Distribution Date falling on or after the Series 2001-A Final Maturity Date, the
Required Amount shall mean any such amounts owed to the Insurer and/or the
Counterparty that remain outstanding, and such amounts shall also be included in
the Required Amount on the Series 2001-A Final Maturity Date to the extent that
Reallocated Principal Collections remain available to cover such amounts after
all other components of the Required Amount have been paid in full or Available
Spread Account Amount remains for that purpose after the other components of the
Required Amount and the Note Principal Balance have been paid in full.

     "Required Excess Collateral Amount" means on any Distribution Date 12.5% of
the Collateral Amount (excluding any Supplemental Enhancement); provided that,
(A) except as provided in (C) below, the Required Excess Collateral Amount will
never be less than 3% of the Initial Collateral Amount (excluding any
Supplemental Enhancement); (B) except as provided in (C) below, the Required
Excess Collateral Amount will not decrease during a Rapid Amortization Period,
and (C) the Required Excess Collateral Amount will never be greater than the
Note Principal Balance minus the Principal Accumulation Account Balance; and
provided further that, upon delivery by the Insurer of a Spread Account Partial
Collateral Substitution Notice to the other parties to the Insurance Agreement,
the percentage "12.5%" in the preceding clause (i) shall be deemed to be changed
to "14.0%" with effect from the date of such delivery.

     "Required Spread Account Amount" means (a) on the Closing Date, the Spread
Account Deposit, (b) on each Distribution Date prior to a Pay Out Event, an
amount equal to the lesser of (x) the product of (i) the Spread Account
Percentage for that Distribution Date and (ii) the Maximum Commitment Amount,
and (y) the Note Principal Balance on such Distribution Date, minus the
Principal Accumulation Account Balance on the relevant determination date; and
(c) on each Distribution Date after a Pay Out Event or on which a Pay Out Event
has occurred, the Note Principal Balance on such Distribution Date; provided
that (i) at any time that a Dilution Trigger Event has occurred and is
continuing, the amount calculated pursuant to clause (b)(x) shall be increased
by an amount equal to the product of (A) the amount by which the Dilution Rate
exceeds 3.5% multiplied by (B) the Note Principal Balance, and (ii) at any time
that a Credit Agreements Trigger Event has occurred and is continuing, the
amount calculated pursuant to clause (b)(x) shall be increased by an amount
equal to 3% of the Maximum Commitment Amount.

     "Series 2000-A Average Excess Spread Percentage" means the Average Excess
Spread Percentage as defined in the Series 2000-A Insurance Agreement.
<PAGE>

     "Series 2000-A Insurance Agreement" means the Insurance and Reimbursement
Agreement, dated as of December 19, 2000, among the Insurer, the Seller, the
Servicer, Spiegel, Spiegel Acceptance, the Issuer and the Indenture Trustee.

     "Shadow Rating" means rating of the Notes at investment grade by the Rating
Agencies, without giving effect to the Policy.

     "Spread Account" means the segregated trust account required to be
established pursuant to Section 2.05 of the Insurance Agreement.

     "Spread Account Deposit" means 3.5% of the Note Initial Principal Balance;
provided, that upon delivery to the other parties hereto of the Spread Account
Partial Decrease Notice or the Spread Account Partial Collateral Substitution
Notice by the Insurer, the term "Spread Account Deposit" shall have the meaning
assigned to it in the definition of "Spread Account Deposit" set forth in Annex
A to the Insurance Agreement/1/, which definition shall thereafter for all
purposes supersede this definition as fully as if set forth in this place.

     "Spread Account Deficiency" means the excess, if any, of the Required
Spread Account Amount over the Available Spread Account Amount.

     "Spread Account Letter" means the letter from the Bank addressed to the
Insurer, dated the Closing Date, substantially in the form of Exhibit C to the
Insurance Agreement.

     "Spread Account Partial Collateral Substitution Notice" means the notice,
substantially in the form of Exhibit E to the Insurance Agreement, from the
Insurer to the other parties hereto.

     "Spread Account Partial Decrease Notice" means the notice, substantially in
the form of Exhibit D hereto, from the Insurer to the other parties to the
Insurance Agreement.

     "Spread Account Percentage" means on each Distribution Date:

 .  if the Average Excess Spread Percentage for such Distribution Date is greater
   than 5.5%, 3.5% ("level 1");

 .  if the Average Excess Spread Percentage for such Distribution Date is less
   than or equal to 5.5%, but is greater than 5.0%, 6.0% ("level 2");

 .  if the Average Excess Spread Percentage for such Distribution Date is less
   than or equal to 5.0%, but is greater than 4.5%, 7.0% ("level 3");

 .  if the Average Excess Spread Percentage for such Distribution Date is less
   than or equal to 4.5%, but is greater than 3.5%, 8.5% ("level 4"); and

 .  if the Average Excess Spread Percentage for such Distribution Date is less
   than or equal to 3.5%, 11.5% ("level 5");

   provided, however, that, if the Spread Account Percentage is greater than
   3.5%, the Spread Account Percentage will remain constant until (a) it is
   required to be increased pursuant to (ii) through (v) above, or (b) the
   Average Excess Spread Percentage has

________________________

     /1/ Annex A to the Insurance Agreement is attached to this Exhibit F.
<PAGE>

     exceeded the percentage specified as the upper bound of the range of
     Average Excess Spread Percentages specified for such Spread Account
     Percentage for three consecutive Distribution Dates, in which case the
     Spread Account Percentage will be decreased on the third consecutive
     Distribution Date as required in (i) through (v) above, provided that the
     Spread Account Percentage on any Distribution Date may in no event be
     reduced by more than one level below the Spread Account Percentage on the
     immediately preceding Distribution Date;

     provided further, however, that upon receipt by the other parties hereto
     from the Insurer of a Spread Account Partial Decrease Notice or a Spread
     Account Partial Collateral Substitution Notice, the term "Spread Account
     Percentage" shall have the meaning assigned to it in the definition of
     "Spread Account Percentage" set forth in Annex A to the Insurance
     Agreement/2/, which definition shall thereafter for all purposes supersede
     this definition as fully as if set forth in this place.

     "Supplemental Enhancement" means on any Distribution Date the product of
the Supplemental Enhancement Percentage and the Collateral Amount (disregarding
for the purposes of calculating the Collateral Amount any reference to
Supplemental Enhancement).

     "Supplemental Enhancement Percentage" means on any Distribution Date a
percentage equivalent of a fraction the numerator of which is the aggregate
amount of Receivables aged over 180 days on a contractual delinquency basis as
of the last day of the calendar month preceding such Distribution Date, and the
denominator of which is the aggregate Receivables as of the last day of the
calendar month preceding such Distribution Date.

     "Trust Receivables Purchase Agreement" means the Receivables Purchase
Agreement to be entered into between the Seller, as buyer, and FCNB and Spiegel
Acceptance, as Seller, in the form attached as Exhibit B to the Collateral
Series Supplement.

_________________
     /2/ Annex A to the Insurance Agreement is attached to this Exhibit F.
<PAGE>

                                    ANNEX A
                                    -------

"Spread Account Deposit" means 2.0% of the Note Initial Principal Balance

"Spread Account Percentage" means on each Distribution Date:

     (i)  if the Average Excess Spread Percentage for such Distribution Date is
greater than 5.5%, 2.0% ("level 1");

     (ii)  if the Average Excess Spread Percentage for such Distribution Date is
less than or equal to 5.5%, but is greater than 5.0%, 4.5% ("level 2");

     (iii)  if the Average Excess Spread Percentage for such Distribution Date
is less than or equal to 5.0%, but is greater than 4.5%, 5.5% ("level 3");

     (iv)  if the Average Excess Spread Percentage for such Distribution Date is
less than or equal to 4.5%, but is greater than 3.5%, 7.0% ("level 4"); and

     (v)  if the Average Excess Spread Percentage for such Distribution Date is
less than or equal to 3.5%, 10.0% ("level 5");

     provided, however, that, if the Spread Account Percentage is greater than
     2.0%, the Spread Account Percentage will remain constant until (a) it is
     required to be increased pursuant to (ii) through (v) above, or (b) the
     Average Excess Spread Percentage has exceeded the percentage specified as
     the upper bound of the range of Average Excess Spread Percentages specified
     for such Spread Account Percentage for three consecutive Distribution
     Dates, in which case the Spread Account Percentage will be decreased on the
     third consecutive Distribution Date as required in (i) through (v) above,
     provided that the Spread Account Percentage on any Distribution Date may in
     no event be reduced by more than one level below the Spread Account
     Percentage on the immediately preceding Distribution Date.
<PAGE>

                                   EXHIBIT G

             SECTION 2.05 OF INSURANCE AGREEMENT (SPREAD ACCOUNT)

     The Spread Account.

          (b)  On or prior to the Closing Date, the Servicer shall cause to be
established in the name of the Noteholders and the Insurer an account (the
"Spread Account") at an Eligible Institution. Unless the Insurer otherwise
agrees, the Spread Account shall be a fully segregated trust account at the
corporate trust department of the Eligible Institution. The Insurer hereby gives
its consent to permit the Spread Account to be maintained as a trust account at
the Indenture Trustee. The Spread Account will be in the name of the Insurer and
under the control of the Insurer. The Spread Account will be entitled "MBIA
Insurance Corporation pursuant to the Insurance and Reimbursement Agreement
among MBIA Insurance Corporation, Spiegel Credit Corporation III, First
Consumers National Bank, Spiegel, Inc., Spiegel Acceptance Corporation, Spiegel
Credit Card Master Note Trust and The Bank of New York, as Indenture Trustee,
dated as of July 19, 2001". The Issuer hereby irrevocably instructs the Bank to
pay amounts on deposit in the Spread Account as provided in Sections 2.05(d),
(e), (f) and (j) hereof.

          (c)  The Insurer hereby revocably appoints the Servicer, which
appointment the Servicer hereby accepts, to act on behalf of the Insurer for
investing all cash at any time on deposit in the Spread Account. The Insurer
hereby directs the Indenture Trustee, at the direction of the Servicer, to
invest all cash at any time on deposit in the Spread Account in Permitted
Investments that mature not later than the Business Day preceding the next
Distribution Date. Each such instruction shall designate specific investments
and shall certify that the investments so specified constitute Permitted
Investments, mature at the time required and are otherwise permitted hereby. All
such investments shall be made in the name of the Bank as agent for the Insurer
and the Series 2001-A Noteholders, and held by the Bank, or its nominee, for the
benefit of the Insurer and the Series 2001-A Noteholders. The Bank shall not be
liable for any loss incurred in connection with any investment in the Spread
Account, except for losses with respect to investments in any investment issued
or guaranteed by the Bank. In the event the Bank ceases to be an Eligible
Institution, the Insurer shall direct the Servicer to establish a new Spread
Account (and transfer any balance and investments then in the Spread Account to
such new Spread Account) within three days of such direction at an Eligible
Institution specified by the Insurer.

          (d)  On each Distribution Date (but subject to subsections 2.05(d) and
2.05(e)), the Investment Earnings, if any, accrued since the preceding
Distribution Date on funds on deposit in the Spread Account shall be paid to the
holders of the Seller Interest by the Indenture Trustee upon written direction
of the Servicer. For purposes of determining the availability of funds or the
balance in the Spread Account for any reason under this Insurance Agreement or
the Series 2001-A Indenture Supplement (subject to subsections 2.05(d) and
2.05(e)), all Investment Earnings shall be deemed not to be available or on
deposit; provided that after the maturity of the Series 2001-A Notes has been
accelerated as a result of an Event of Default, all Investment Earnings shall be
added to the balance on deposit in the Spread Account and treated like the rest
of the Available Spread Account Amount. Spiegel Acceptance will report for
federal, state and local income tax purposes the income, if any, represented by
the Spread Account and may not assign, transfer or otherwise convey its rights
under this Insurance Agreement to receive any

<PAGE>

amounts from the Spread Account, except that Investment Earnings and excess
funds will be paid to Spiegel Acceptance as set forth in subsections 2.05(c),
2.05(f) and 2.05(j).

          (e)  If, on any Distribution Date, the sum of the Available Finance
Charge Collections and the Reallocated Principal Collections is less than the
Required Amount, the Indenture Trustee, at the written direction of the
Servicer, shall withdraw from the Spread Account the amount of such deficiency
up to the Available Spread Account Amount and, if the Available Spread Account
Amount is less than such deficiency, Investment Earnings credited to the Spread
Account, and deposit such amount in the Collection Account for application to
the unpaid components of the Required Amount in the priority in which such items
are listed in Section 4.4(a) of the Series 2001-A Indenture Supplement.

          (f)  On the Series 2001-A Final Maturity Date, the Indenture Trustee
at the written direction of the Servicer shall withdraw from the Spread Account
an amount equal to the lesser of (i) the Note Principal Balance (after any
payments to be made pursuant to subsection 4.4(c) of the Series 2001-A Indenture
Supplement) and (ii) the Available Spread Account Amount and, if the Available
Spread Account Amount is not sufficient to reduce the Note Principal Balance to
zero, Investment Earnings credited to the Spread Account up to the amount
required to reduce the Note Principal Balance to zero, and the Indenture Trustee
upon the written direction of the Servicer or the Servicer shall deposit such
amounts into the Collection Account for distribution to the Series 2001-A
Noteholders in accordance with subsection 5.2(e) of the Series 2001-A Indenture
Supplement.

          (g)  If on any Distribution Date, after giving effect to all
withdrawals from the Spread Account, the Available Spread Account Amount is less
than the Required Spread Account Amount then in effect, the Indenture Trustee
shall deposit Available Finance Charge Collections into the Spread Account up to
the amount of the Spread Account Deficiency in accordance with subsection
4.4(a)(vii) of the Series 2001-A Indenture Supplement. Subject to Section
2.05(k), if on any Distribution Date, after giving effect to all withdrawals
from the Spread Account, the Available Spread Account Amount exceeds the
Required Spread Account Amount, the Servicer shall withdraw the amount of such
excess and distribute such amount to the holders of the Seller Interest.

          (h)  Upon delivery of a Notice for Payment under the Policy, the
Indenture Trustee or the Servicer on its behalf shall immediately deliver
written notice, in the form of Exhibit A to the Policy, to the Bank, and the
Bank shall, immediately upon receipt thereof and upon receipt of the required
funds from the Insurer, cause payments required to be made by the Insurer under
such Notice for Payment to be satisfied by depositing the amount into the Spread
Account in accordance with the Policy and by debiting the Spread Account and
crediting the accounts specified in such notice, to the extent of any funds then
on deposit in the Spread Account. Such payment will be made by the Bank without
any further direction or notice from the Insurer. The Indenture Trustee shall
deliver to the Insurer a statement with respect to such payment in the form of
Exhibit B hereto in addition to a Notice for Payment. The Insurer shall deliver
to the Bank such documentation as such institution may reasonably deem necessary
to effectuate the terms of this Section 2.05(g).

          (i)  In the event that, notwithstanding the terms and conditions
hereof and the intention of the parties to the contrary, the Issuer, the
Indenture Trustee, the Seller, the Servicer or Spiegel Acceptance is deemed to
have any rights or interest in or to any funds on deposit in

<PAGE>

the Spread Account, other than the right of Spiegel Acceptance to receive
Investment Earnings and payments of amounts in excess of the applicable Required
Spread Account Amount and amounts pursuant to subsection 2.05(j) hereof, then,
and in any such event, each of the Issuer, the Indenture Trustee, the Seller,
the Servicer and Spiegel Acceptance hereby agrees that this Insurance Agreement
constitutes a grant to the Insurer, as of the date hereof, of a security
interest in the Spread Account, all funds on deposit therein, all investments
made from time to time with the funds so deposited therein, and all proceeds of
such investments to secure any and all rights to payment and reimbursement that
now exist or may hereafter arise in favor of the Insurer under this Insurance
Agreement, the Policy and/or the Indemnification Agreement, and each such Person
hereby pledges, assigns, sets over, and otherwise transfers to the Insurer any
and all of its respective right, title and interest in and to the Spread
Account, any amounts on deposit from time to time therein, all investments made
from time to time with the funds so deposited therein, and all proceeds of such
investments; and each such Person hereby agrees to such pledge and assignment,
and all necessary action on the part of each such Person has been taken as may
be required to perfect the security interest of the Insurer in the Spread
Account, all amounts from time to time on deposit therein as of the date hereof,
all investments made from time to time with the funds so deposited therein, and
all proceeds of such investments. Each of the Issuer, the Indenture Trustee, the
Seller, the Servicer and Spiegel Acceptance agrees to promptly, from time to
time, at the sole expense of the Seller, execute and deliver all instruments and
documents, and at the request of the Insurer, take all action, that may be
reasonably necessary or desirable, in order to perfect and protect the security
interest granted to the Insurer pursuant to this Section 2.05(h) or to enable
the Insurer to exercise and enforce its rights and remedies with respect to the
assets of the Spread Account. The Insurer is hereby authorized to file one or
more financing or continuation statements, and amendments thereto, relating to
all or any part of the assets of the Spread Account.

          (j)  The Indenture Trustee shall hold such of the Permitted
Investments as consist 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.

          (k)  Subject to Section 2.05(k), ninety days after (A) the payment in
full to the Noteholders of all amounts payable with respect to the Notes, or (B)
the date of funding under any Qualified Maturity Agreement, and the payment in
full of the Reimbursement Amount and

<PAGE>

all other amounts payable to the Insurer or the Counterparty, the Insurer shall
direct that any amounts remaining in the Spread Account shall be released to
Spiegel Acceptance; provided, however, that, if any Insolvency Event occurs with
respect to any of the Issuer, the Seller, FCNB or any material Subsidiary of
Spiegel (collectively, the "Potential Preference Parties") during the period
described above, then all funds shall remain on deposit in the Spread Account
until the date that all applicable limitation periods with respect to all
applicable preferential transfer or other payment avoidance statutes relating to
any of the Potential Preference Parties have expired and if no proceeding at law
or in equity is commenced during any such period based upon any such statute,
all such amounts remaining on deposit in the Spread Account shall be released at
the end of all such periods to the Seller; provided, further, however, that if
any such proceeding is commenced during any applicable limitation period, all
funds on deposit in the Spread Account shall remain on deposit therein until the
date on which there is a final determination by a court of competent
jurisdiction as to whether any payment or payments made pursuant to the Transfer
and Servicing Agreement, the Series 2001-A Indenture Supplement, the
Indemnification Agreement or this Insurance Agreement is recoverable from either
the Insurer or the Noteholders. If such a court determines that a payment is so
recoverable, all funds on deposit in the Spread Account shall remain on deposit
in the Spread Account and shall be applied to the payment of any and all such
claims that the Insurer may be required to pay. If such a court determines that
such payment is not recoverable, all funds on deposit in the Spread Account
shall be released to Spiegel Acceptance. The foregoing notwithstanding, if (i)
amounts payable with respect to the Notes have been fully paid to the
Noteholders and (ii) the Reimbursement Amount and all other amounts payable to
the Insurer under this Insurance Agreement and all amounts payable to the
Counterparty have been paid in full, (iii) no Insolvency Event has occurred with
respect to the Potential Preference Parties, and (iv) (A) FCNB is rated at least
BBB and Baa2 by S&P and Moody's, respectively, (B) the Insurer shall have
received a favorable opinion or opinions, satisfactory in form and substance to
the Insurer, from counsel to the Seller, the Servicer and FCNB, to the effect
that in the event that an Insolvency Event were to occur with respect to the
Potential Preference Parties, no payment pursuant to the Transfer and Servicing
Agreement, the Series 2001-A Indenture Supplement, the Indemnification Agreement
or this Insurance Agreement would be recoverable from either the Insurer, or the
Noteholders, and such other matters as the Insurer may reasonably request; or
(C) the Insurer, in its sole discretion, elects to pay the contents of the
Spread Account to Spiegel Acceptance, then, and in any such event, the Insurer
shall pay or cause to be paid all remaining amounts in the Spread Account to
Spiegel Acceptance.

          (l)  If on the earlier of (i) the Expected Principal Distribution Date
and (ii) the date upon which all amounts payable with respect to the Notes are
paid in full , a Series 2000-A Spread Account Support Event occurs or has
occurred and is continuing, the Indenture Trustee shall not release any funds on
deposit in the Spread Account that would otherwise be distributable to the
holders of the Seller Interest and shall instead retain such funds in the Spread
Account until such time as (A) the Series 2000-A Average Excess Spread
Percentage shall have been equal to or greater than 5.5% for three consecutive
months and no Series 2000-A Insurance Agreement Pay Out Event shall have
occurred and be continuing (the "Spread Account Cure Event"), whereupon any
amounts remaining in the Spread Account in excess of the Required Spread Account
Amount shall be released from escrow and distributed by the Indenture Trustee to
the holders of the Seller Interest, or (B) if no Spread Account Cure Event has
occurred, the Series 2000-A Final Maturity Date, whereupon any amounts remaining
in the Spread Account

<PAGE>

after payment of all amounts owed to the Series 2001-A Noteholders shall be
released from escrow and distributed in accordance with the provisions of
Section 2.05 of the Series 2000-A Insurance Agreement. The agreements in this
Section shall survive the termination of the Policy.
<PAGE>

                                   EXHIBIT H

                      SECTION 5.01 OF INSURANCE AGREEMENT

                     (INSURANCE AGREEMENT PAY OUT EVENTS)

     Insurance Agreement Pay Out Events. The occurrence of any one of the
following shall constitute an Insurance Agreement Pay Out Event:

          (a)  the occurrence of a Pay Out Event as defined in Section 6.1 of
the Series 2001-A Indenture Supplement or Section 5.1 of the Indenture;

          (b)  the occurrence of any of the following events:

               (i)  failure on the part of the Servicer duly to observe or
perform in any material respect any other covenants or agreements of the
Servicer set forth in the Transfer and Servicing Agreement which has a material
adverse effect on the Noteholders, which continues unremedied for a period of 45
days after the date on which written notice of such failure requiring the same
to be remedied shall have been given to the Servicer by the Indenture Trustee
and/or the SMT Trustee, or to the Servicer and the Indenture Trustee by the
Noteholders holding not less than 10% of the outstanding principal amount of any
Series adversely affected thereby, or prior to the SMT Termination Date, the
Servicer and the SMT Trustee by Investor Certificateholders of 50% or more of
the then-outstanding principal amount of the Investor Certificates of any
adversely affected Series and continues to materially adversely affect such
Noteholders or such Investor Certificateholders for such period; or the
Servicer's delegation of its duties under this Agreement except as permitted by
Section 5.7 of the Transfer and Servicing Agreement;

          any representation, warranty or certification made by the Servicer in
the Transfer and Servicing Agreement or in any certificate delivered pursuant to
the Transfer and Servicing Agreement shall prove to have been incorrect when
made, which has a material adverse effect on the Noteholders and which continues
to be incorrect in any material respect for a period of 45 days after the date
on which written notice of such failure requiring the same to be remedied shall
have been given to the Servicer by the Indenture Trustee and/or the SMT Trustee,
or to the Servicer and the Indenture Trustee by Noteholders holding not less
than 10% of the outstanding principal amount of any Series adversely affected
thereby, or prior to the SMT Termination Date, the Servicer and the SMT Trustee
by Investor Certificateholders of 50% or more of the then-outstanding principal
amount of the Investor Certificates of any adversely affected Series and
continues to materially adversely affect such Noteholders for such period, or if
such failure cannot be cured within such 45 days period owing to causes beyond
the control of the Servicer, if the Servicer shall failure to proceed promptly
to cure the same and prosecute the curing of such failure with diligence and
continuity;

          the Servicer 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

<PAGE>

creditor or claimant, and, in the event such proceeding is involuntary, the
petition instituting same is not dismissed within 45 days after its filing; or

          the Servicer fails to maintain a sub-servicing agreement with First
Data Resources Inc. in the form of the Service Agreement dated September 9, 1998
between First Data Resources Inc. and Servicer or another sub-servicer
acceptable to the Insurer;

          (c)  the insolvency of a material Subsidiary of Spiegel;

          (d)  failure of the Otto Interests to own, directly or indirectly,
free and clear of all liens at least 67% of the ownership interest in Spiegel;

          (e)  failure on the part of Seller, Servicer or Spiegel to observe or
perform in any material respect any of the covenants or agreements of Seller,
Servicer or Spiegel set forth in the Insurance Agreement or breach of any
representation, warranty or certification made by Seller, Servicer or Spiegel in
the Insurance Agreement which continues unremedied for 45 days or such shorter
period specified herein after the date on which written notice of such failure
or breach requiring the same to be remedied shall have been given to the
Servicer , the Seller or Spiegel (and if to the Seller or Spiegel, also to the
Servicer) by the Insurer, provided that:

               (i)  failure by the Seller or Servicer to pay any amount due to
the Insurer hereunder within five (5) days after such amount was due to be paid
or deposited in accordance with the Insurance Agreement; and

               (ii)  failure by the Seller or Servicer to comply with Sections
4.01(h)(i),(ii), (vi), (xv), or (xvi) and 4.02(g)(i) within ten (10) days of the
Seller or Servicer receiving notice from the Insurer requiring such compliance;

          (f)  the Dilution Rate exceeds 8.5%;

          (g)  (i) the Servicer fails to maintain a risk-based capital ratio of
10%, provided that Servicer does not cure such default within thirty (30) days
following the date on which any officer of the Servicer has knowledge of such
failure; (ii) the Servicer fails to remain "Well Capitalized", as defined by 12
U.S.C. 1831 and the regulations of the Federal Deposit Insurance Corporation
adopted thereunder, provided that Servicer does not cure such default within
thirty (30) days following the date the Servicer receives notice of a final
determination from any Governmental Authority of its failure to remain "Well
Capitalized", unless the Servicer demonstrates to the Insurer, at the Insurer's
sole discretion, that the Servicer can and will increase within sixty (60) days
its capital to the level sufficient so that it would have been considered "Well
Capitalized" by such Governmental Authority; or (iii) the Servicer receives
notice, or any officer of the Servicer has actual knowledge, of a final
determination that any Governmental Authority, including the Federal Deposit
Insurance Corporation or any other Governmental Authority with regulatory powers
over the Servicer, has taken or will take any mandatory or discretionary
supervisory action against the Servicer, including, without limitation, by cease
and desist order, memorandum of understanding, capital directive or directive to
take prompt corrective action, which action in the reasonable opinion of MBIA
could have a material adverse effect on (A) the business, operations, property,
financial conditions or prospects of the Servicer or (B) the ability of the
Servicer to perform its obligations under any Condition Precedent Documents to
which it is a party;

<PAGE>

          the occurrence of an Insurance Agreement Event of Default.<PAGE>

(Multicurrency--Cross Border)

                                    ISDA(R)

                 International Swap Dealers Association. Inc.
                               MASTER AGREEMENT

                        dated as of      July 19, 2001
                                       ----------------

MORGAN GUARANTY TRUST COMPANY        and        SPIEGEL CREDIT CARD MASTER NOTE
OF NEW YORK                                     TRUST

-----------------------------                   --------------------------------

have entered and/or anticipate entering into one or more transactions (each a
"Transaction") that are or will be governed by this Master Agreement, which
includes the schedule (the "Schedule"), and the documents and other confirming
evidence (each a "Confirmation") exchanged between the parties confirming those
Transactions.

Accordingly, the parties agree as follows:--

1.   Interpretation

(a)  Definitions.  The terms defined in Section 14 and in the Schedule will have
the meanings therein specified for the purpose of this Master Agreement.

(b)  Inconsistency. In the event of any inconsistency between the provisions of
the Schedule and the other provisions of this Master Agreement, the Schedule
will prevail. In the event of any inconsistency between the provisions of any
Confirmation and this Master Agreement (including the Schedule), such
Confirmation will prevail for the purpose of the relevant Transaction.

(c)  Single Agreement. All Transactions are entered into in reliance on the fact
that this Master Agreement and all Confirmations form a single agreement between
the parties (collectively referred to as this "Agreement"), and the parties
would not otherwise enter into any Transactions.

2.   Obligations

(a)  General Conditions.

     (i)   Each party will make each payment or delivery specified in each
     Confirmation to be made by it, subject to the other provisions of this
     Agreement.

     (ii)  Payments under this Agreement will be made on the due date for value
     on that date in the place of the account specified in the relevant
     Confirmation or otherwise pursuant to this Agreement, in freely
     transferable funds and in the manner customary for payments in the required
     currency. Where settlement is by delivery (that is, other than by payment),
     such delivery will be made for receipt on the due date in the manner
     customary for the relevant obligation unless otherwise specified in the
     relevant Confirmation or elsewhere in this Agreement.

     (iii) Each obligation of each party under Section 2(a)(i) is subject to (1)
     the condition precedent that no Event of Default or Potential Event of
     Default with respect to the other party has occurred and is continuing, (2)
     the condition precedent that no Early Termination Date in respect of the
     relevant Transaction has occurred or been effectively designated and (3)
     each other applicable condition precedent specified in this Agreement.
<PAGE>

(b)  Change of Account. Either party may change its account for receiving a
payment or delivery by giving notice to the other party at least five Local
Business Days prior to the scheduled date for the payment or delivery to which
such change applies unless such other party gives timely notice of a reasonable
objection to such change.

(c)  Netting.  If on any date amounts would otherwise be payable:--
     (i)  in the same currency; and
     (ii) in respect of the same Transaction,

by each party to the other, then, on such date, each party's obligation to make
payment of any such amount will be automatically satisfied and discharged and,
if the aggregate amount that would otherwise have been payable by one party
exceeds the aggregate amount that would otherwise have been payable by the other
party, replaced by an obligation upon the party by whom the larger aggregate
amount would have been payable to pay to the other party the excess of the
larger aggregate amount over the smaller aggregate amount.

The parties may elect in respect of two or more Transactions that a net amount
will be determined in respect of all amounts payable on the same date in the
same currency in respect of such Transactions, regardless of whether such
amounts are payable in respect of the same Transaction. The election may be made
in the Schedule or a Confirmation by specifying that subparagraph (ii) above
will not apply to the Transactions identified as being subject to the election,
together with the starting date (in which case subparagraph (ii) above will not,
or will cease to, apply to such Transactions from such date). This election may
be made separately for different groups of Transactions and will apply
separately to each pairing of Offices through which the parties make and receive
payments or deliveries.

(d)  Deduction or Withholding for Tax.

     (i) Gross-Up. All payments under this Agreement will be made without any
     deduction or withholding for or on account of any Tax unless such deduction
     or withholding is required by any applicable law, as modified by the
     practice of any relevant governmental revenue authority, then in effect. If
     a party is so required to deduct or withhold, then that party ("X") will:--

          (1)  promptly notify the other party ("Y") of such requirement;

          (2)  pay to the relevant authorities the full amount required to be
          deducted or withheld (including the full amount required to be
          deducted or withheld from any additional amount paid by X to Y under
          this Section 2(d)) promptly upon the earlier of determining that such
          deduction or withholding is required or receiving notice that such
          amount has been assessed against Y;

          (3)  promptly forward to Y an official receipt (or a certified copy),
          or other documentation reasonably acceptable to Y, evidencing such
          payment to such authorities; and

          (4)  if such Tax is an Indemnifiable Tax, pay to Y, in addition to the
          payment to which Y is otherwise entitled under this Agreement, such
          additional amount as is necessary to ensure that the net amount
          actually received by Y (free and clear of Indemnifiable Taxes, whether
          assessed against X or Y) will equal the full amount Y would have
          received had no such deduction or withholding been required. However,
          X will not be required to pay any additional amount to Y to the extent
          that it would not be required to be paid but for:--

               (A) the failure by Y to comply with or perform any agreement
               contained in Section 4(a)(i), 4(a)(iii) or 4(d); or

               (B) the failure of a representation made by Y pursuant to Section
               3(f) to be accurate and true unless such failure would not have
               occurred but for (I) any action taken by a taxing authority, or
               brought in a court of competent jurisdiction, on or after the
               date on which a Transaction is entered into (regardless of
               whether such action is taken or brought with respect to a party
               to this Agreement) or (II) a Change in Tax Law.

                                       2
<PAGE>

     (ii) Liability.  If:--

               (1) X is required by any applicable law, as modified by the
               practice of any relevant governmental revenue authority, to make
               any deduction or withholding in respect of which X would not be
               required to pay an additional amount to Y under Section
               2(d)(i)(4);

               (2)  X does not so deduct or withhold; and

               (3)  a liability resulting from such Tax is assessed directly
                    against X,

     then, except to the extent Y has satisfied or then satisfies the liability
     resulting from such Tax, Y will promptly pay to X the amount of such
     liability (including any related liability for interest, but including any
     related liability for penalties only if Y has failed to comply with or
     perform any agreement contained in Section 4(a)(i), 4(a)(iii) or 4(d)).

(e)  Default Interest; Other Amounts. Prior to the occurrence or effective
designation of an Early Termination Date in respect of the relevant Transaction,
a party that defaults in the performance of any payment obligation will, to the
extent permitted by law and subject to Section 6(c), be required to pay interest
(before as well as after judgment) on the overdue amount to the other party on
demand in the same currency as such overdue amount, for the period from (and
including) the original due date for payment to (but excluding) the date of
actual payment, at the Default Rate. Such interest will be calculated on the
basis of daily compounding and the actual number of days elapsed. If, prior to
the occurrence or effective designation of an Early Termination Date in respect
of the relevant Transaction, a party defaults in the performance of any
obligation required to be settled by delivery, it will compensate the other
party on demand if and to the extent provided for in the relevant Confirmation
or elsewhere in this Agreement.

3.  Representations

Each party represents to the other party (which representations will be deemed
to be repeated by each party on each date on which a Transaction is entered into
and, in the case of the representations in Section 3(f), at all times until the
termination of this Agreement) that:

(a)  Basic Representations.

     (i)   Status.  It is duly organised and validly existing under the laws of
     the jurisdiction of its organisation or incorporation and, if relevant
     under such laws, in good standing;

     (ii)  Powers.  It has the power to execute this Agreement and any other
     documentation relating to this Agreement to which it is a party, to deliver
     this Agreement and any other documentation relating to this Agreement that
     it is required by this Agreement to deliver and to perform its obligations
     under this Agreement and any obligations it has under any Credit Support
     Document to which it is a party and has taken all necessary action to
     authorise such execution, delivery and performance;

     (iii) No Violation or Conflict.  Such execution, delivery and performance
     do not violate or conflict with any law applicable to it, any provision of
     its constitutional documents, any order or judgment of any court or other
     agency of government applicable to it or any of its assets or any
     contractual restriction binding on or affecting it or any of its assets;

     (iv)  Consents.  All governmental and other consents that are required to
     have been obtained by it with respect to this Agreement or any Credit
     Support Document to which it is a party have been obtained and are in full
     force and effect and all conditions of any such consents have been complied
     with; and

     (v)   Obligations Binding.  Its obligations under this Agreement and any
     Credit Support Document to which it is a party constitute its legal, valid
     and binding obligations, enforceable in accordance with their respective
     terms (subject to applicable bankruptcy, reorganisation, insolvency,
     moratorium or similar laws affecting creditors' rights generally and
     subject, as to enforceability, to equitable principles of general
     application (regardless of whether enforcement is sought in a proceeding in
     equity or at law)).

                                       3
<PAGE>

(b)  Absence of Certain Events. No Event of Default or Potential Event of
Default or, to its knowledge, Termination Event with respect to it has occurred
and is continuing and no such event or circumstance would occur as a result of
its entering into or performing its obligations under this Agreement or any
Credit Support Document to which it is a party.

(c)  Absence of Litigation. There is not pending or, to its knowledge,
threatened against it or any of its Affiliates any action, suit or proceeding at
law or in equity or before any court, tribunal, governmental body, agency or
official or any arbitrator that is likely to affect the legality, validity or
enforceability against it of this Agreement or any Credit Support Document to
which it is a party or its ability to perform its obligations under this
Agreement or such Credit Support Document.

(d)  Accuracy of Specified Information. All applicable information that is
furnished in writing by or on behalf of it to the other party and is identified
for the purpose of this Section 3(d) in the Schedule is, as of the date of the
information, true, accurate and complete in every material respect.

(e)  Payer Tax Representation.  Each representation specified in the Schedule as
being made by it for the purpose of this Section 3(e) is accurate and true.

(f)  Payee Tax Representations.  Each representation specified in the Schedule
as being made by it for the purpose of this Section 3(f) is accurate and
true.

4.   Agreements

Each party agrees with the other that, so long as either party has or may have
any obligation under this Agreement or under any Credit Support Document to
which it is a party:--

(a)  Furnish Specified Information. It will deliver to the other party or, in
certain cases under subparagraph (iii) below, to such government or taxing
authority as the other party reasonably directs:--

     (i)   any forms, documents or certificates relating to taxation specified
     in the Schedule or any Confirmation;

     (ii)  any other documents specified in the Schedule or any Confirmation;
     and

     (iii) upon reasonable demand by such other party, any form or document that
     may be required or reasonably requested in writing in order to allow such
     other party or its Credit Support Provider to make a payment under this
     Agreement or any applicable Credit Support Document without any deduction
     or withholding for or on account of any Tax or with such deduction or
     withholding at a reduced rate (so long as the completion, execution or
     submission of such form or document would not materially prejudice the
     legal or commercial position of the party in receipt of such demand), with
     any such form or document to be accurate and completed in a manner
     reasonably satisfactory to such other party and to be executed and to be
     delivered with any reasonably required certification,

in each case by the date specified in the Schedule or such Confirmation or, if
none is specified, as soon as reasonably practicable.

(b)  Maintain Authorisations.  It will use all reasonable efforts to maintain in
full force and effect all consents of any governmental or other authority that
are required to be obtained by it with respect to this Agreement or any Credit
Support Document to which it is a party and will use all reasonable efforts to
obtain any that may become necessary in the future.

(c)  Comply with Laws.  It will comply in all material respects with all
applicable laws and orders to which it may be subject if failure so to comply
would materially impair its ability to perform its obligations under this
Agreement or any Credit Support Document to which it is a party.

(d)  Tax Agreement.  It will give notice of any failure of a representation made
by it under Section 3(f) to be accurate and true promptly upon learning of
such failure.

(e)  Payment of Stamp Tax.  Subject to Section 11, it will pay any Stamp Tax
levied or imposed upon it or in respect of its execution or performance of this
Agreement by a jurisdiction in which it is incorporated,

                                       4
<PAGE>

organised, managed and controlled, or considered to have its seat, or in which a
branch or office through which it is acting for the purpose of this Agreement is
located ("Stamp Tax Jurisdiction") and will indemnify the other party against
any Stamp Tax levied or imposed upon the other party or in respect of the other
party's execution or performance of this Agreement by any such Stamp Tax
Jurisdiction which is not also a Stamp Tax Jurisdiction with respect to the
other party.

5.   Events of Default and Termination Events

(a)  Events of Default. The occurrence at any time with respect to a party or,
if applicable, any Credit Support Provider of such party or any Specified Entity
of such party of any of the following events constitutes an event of default (an
"Event of Default") with respect to such party:--

     (i)   Failure to Pay or Deliver. Failure by the party to make, when due,
     any payment under this Agreement or delivery under Section 2(a)(i) or 2(e)
     required to be made by it if such failure is not remedied on or before the
     third Local Business Day after notice of such failure is given to the
     party;

     (ii)  Breach of Agreement.  Failure by the party to comply with or perform
     any agreement or obligation (other than an obligation to make any payment
     under this Agreement or delivery under Section 2(a)(i) or 2(e) or to give
     notice of a Termination Event or any agreement or obligation under Section
     4(a)(i), 4(a)(iii) or 4(d)) to be complied with or performed by the party
     in accordance with this Agreement if such failure is not remedied on or
     before the thirtieth day after notice of such failure is given to the
     party;

     (iii) Credit Support Default.

           (1)  Failure by the party or any Credit Support Provider of such
           party to comply with or perform any agreement or obligation to be
           complied with or performed by it in accordance with any Credit
           Support Document if such failure is continuing after any applicable
           grace period has elapsed;

           (2)  the expiration or termination of such Credit Support Document or
           the failing or ceasing of such Credit Support Document to be in full
           force and effect for the purpose of this Agreement (in either case
           other than in accordance with its terms) prior to the satisfaction of
           all obligations of such party under each Transaction to which such
           Credit Support Document relates without the written consent of the
           other party; or

           (3)  the party or such Credit Support Provider disaffirms, disclaims,
           repudiates or rejects, in whole or in part, or challenges the
           validity of, such Credit Support Document;

     (iv)  Misrepresentation. A representation (other than a representation
     under Section 3(e) or (f)) made or repeated or deemed to have been made or
     repeated by the party or any Credit Support Provider of such party in this
     Agreement or any Credit Support Document proves to have been incorrect or
     misleading in any material respect when made or repeated or deemed to have
     been made or repeated;

     (v)   Default under Specified Transaction.  The party, any Credit Support
     Provider of such party or any applicable Specified Entity of such party (1)
     defaults under a Specified Transaction and, after giving effect to any
     applicable notice requirement or grace period, there occurs a liquidation
     of, an acceleration of obligations under, or an early termination of, that
     Specified Transaction, (2) defaults, after giving effect to any applicable
     notice requirement or grace period, in making any payment or delivery due
     on the last payment, delivery or exchange date of, or any payment on early
     termination of, a Specified Transaction (or such default continues for at
     least three Local Business Days if there is no applicable notice
     requirement or grace period) or (3) disaffirms, disclaims, repudiates or
     rejects, in whole or in part, a Specified Transaction (or such action is
     taken by any person or entity appointed or empowered to operate it or act
     on its behalf);

     (vi)  Cross Default.  If "Cross Default" is specified in the Schedule as
     applying to the party, the occurrence or existence of (1) a default, event
     of default or other similar condition or event (however

                                       5
<PAGE>

     described) in respect of such party, any Credit Support Provider of such
     party or any applicable Specified Entity of such party under one or more
     agreements or instruments relating to Specified Indebtedness of any of them
     (individually or collectively) in an aggregate amount of not less than the
     applicable Threshold Amount (as specified in the Schedule) which has
     resulted in such Specified Indebtedness becoming, or becoming capable at
     such time of being declared, due and payable under such agreements or
     instruments, before it would otherwise have been due and payable or (2) a
     default by such party, such Credit Support Provider or such Specified
     Entity (individually or collectively) in making one or more payments on the
     due date thereof in an aggregate amount of not less than the applicable
     Threshold Amount under such agreements or instruments (after giving effect
     to any applicable notice requirement or grace period);

     (vii)  Bankruptcy. The party, any Credit Support Provider of such party or
     any applicable Specified Entity of such party:--

            (1) is dissolved (other than pursuant to a consolidation,
            amalgamation or merger); (2) becomes insolvent or is unable to pay
            its debts or fails or admits in writing its inability generally to
            pay its debts as they become due; (3) makes a general assignment,
            arrangement or composition with or for the benefit of its creditors;
            (4) institutes or has instituted against it a proceeding seeking a
            judgment of insolvency or bankruptcy or any other relief under any
            bankruptcy or insolvency law or other similar law affecting
            creditors' rights, or a petition is presented for its winding-up or
            liquidation, and, in the case of any such proceeding or petition
            instituted or presented against it, such proceeding or petition (A)
            results in a judgment of insolvency or bankruptcy or the entry of an
            order for relief or the making of an order for its winding-up or
            liquidation or (B) is not dismissed, discharged, stayed or
            restrained in each case within 30 days of the institution or
            presentation thereof; (5) has a resolution passed for its winding-
            up, official management or liquidation (other than pursuant to a
            consolidation, amalgamation or merger); (6) seeks or becomes subject
            to the appointment of an administrator, provisional liquidator,
            conservator, receiver, trustee, custodian or other similar official
            for it or for all or substantially all its assets; (7) has a secured
            party take possession of all or substantially all its assets or has
            a distress, execution, attachment, sequestration or other legal
            process levied, enforced or sued on or against all or substantially
            all its assets and such secured party maintains possession, or any
            such process is not dismissed, discharged, stayed or restrained, in
            each case within 30 days thereafter; (8) causes or is subject to any
            event with respect to it which, under the applicable laws of any
            jurisdiction, has an analogous effect to any of the events specified
            in clauses (1) to (7) (inclusive); or (9) takes any action in
            furtherance of, or indicating its consent to, approval of, or
            acquiescence in, any of the foregoing acts; or

     (viii) Merger Without Assumption. The party or any Credit Support Provider
     of such party consolidates or amalgamates with, or merges with or into, or
     transfers all or substantially all its assets to, another entity and, at
     the time of such consolidation, amalgamation, merger or transfer:--

            (1)  the resulting, surviving or transferee entity fails to assume
            all the obligations of such party or such Credit Support Provider
            under this Agreement or any Credit Support Document to which it or
            its predecessor was a party by operation of law or pursuant to an
            agreement reasonably satisfactory to the other party to this
            Agreement; or

            (2)  the benefits of any Credit Support Document fail to extend
            (without the consent of the other party) to the performance by such
            resulting, surviving or transferee entity of its obligations under
            this Agreement.

(b)  Termination Events.  The occurrence at any time with respect to a party or,
if applicable, any Credit Support Provider of such party or any Specified Entity
of such party of any event specified below constitutes an Illegality if the
event is specified in (i) below, a Tax Event if the event is specified in (ii)
below or a Tax Event upon Merger if the event is specified in (iii) below, and,
if specified to be applicable, a Credit Event

                                       6
<PAGE>

Upon Merger if the event is specified pursuant to (iv) below or an Additional
Termination Event if the event is specified pursuant to (v) below:--

     (i)   Illegality.  Due to the adoption of, or any change in, any applicable
     law after the date on which a Transaction is entered into, or due to the
     promulgation of, or any change in, the interpretation by any court,
     tribunal or regulatory authority with competent jurisdiction of any
     applicable law after such date, it becomes unlawful (other than as a result
     of a breach by the party of Section 4(b)) for such party (which will be the
     Affected Party):--

           (1) to perform any absolute or contingent obligation to make a
           payment or delivery or to receive a payment or delivery in respect of
           such Transaction or to comply with any other material provision of
           this Agreement relating to such Transaction; or

           (2) to perform, or for any Credit Support Provider of such party to
           perform, any contingent or other obligation which the party (or such
           Credit Support Provider) has under any Credit Support Document
           relating to such Transaction;

     (ii)  Tax Event. Due to (x) any action taken by a taxing authority, or
     brought in a court of competent jurisdiction, on or after the date on which
     a Transaction is entered into (regardless of whether such action is taken
     or brought with respect to a party to this Agreement) or (y) a Change in
     Tax Law, the party (which will be the Affected Party) will, or there is a
     substantial likelihood that it will, on the next succeeding Scheduled
     Payment Date (1) be required to pay to the other party an additional amount
     in respect of an Indemnifiable Tax under Section 2(d)(i)(4) (except in
     respect of interest under Section 2(e), 6(d)(ii) or 6(e)) or (2) receive a
     payment from which an amount is required to be deducted or withheld for or
     on account of a Tax (except in respect of interest under Section 2(e),
     6(d)(ii) or 6(e)) and no additional amount is required to be paid in
     respect of such Tax under Section 2(d)(i)(4) (other than by reason of
     Section 2(d)(i)(4)(A) or (B));

     (iii) Tax Event Upon Merger.  The party (the "Burdened Party") on the next
     succeeding Scheduled Payment Date will either (1) be required to pay an
     additional amount in respect of an Indemnifiable Tax under Section
     2(d)(i)(4) (except in respect of interest under Section 2(e), 6(d)(ii) or
     6(e)) or (2) receive a payment from which an amount has been deducted or
     withheld for or on account of any Indemnifiable Tax in respect of which the
     other party is not required to pay an additional amount (other than by
     reason of Section 2(d)(i)(4)(A) or (B)), in either case as a result of a
     party consolidating or amalgamating with, or merging with or into, or
     transferring all or substantially all its assets to, another entity (which
     will be the Affected Party) where such action does not constitute an event
     described in Section 5(a)(viii);

     (iv)  Credit Event Upon Merger.  If "Credit Event Upon Merger" is specified
     in the Schedule as applying to the party, such party ("X"), any Credit
     Support Provider of X or any applicable Specified Entity of X consolidates
     or amalgamates with, or merges with or into, or transfers all or
     substantially all its assets to, another entity and such action does not
     constitute an event described in Section 5(a)(viii) but the
     creditworthiness of the resulting, surviving or transferee entity is
     materially weaker than that of X, such Credit Support Provider or such
     Specified Entity, as the case may be, immediately prior to such action
     (and, in such event, X or its successor or transferee, as appropriate, will
     be the Affected Party); or

     (v)   Additional Termination Event.  If any "Additional Termination Event"
     is specified in the Schedule or any Confirmation as applying, the
     occurrence of such event (and, in such event, the Affected Party or
     Affected Parties shall be as specified for such Additional Termination
     Event in the Schedule or such Confirmation).

(c)  Event of Default and Illegality.  If an event or circumstance which would
otherwise constitute or give rise to an Event of Default also constitutes an
Illegality, it will be treated as an Illegality and will not constitute an Event
of Default.

                                       7
<PAGE>

6.   Early Termination

(a)  Right to Terminate Following Event of Default. If at any time an Event of
Default with respect to a party (the "Defaulting Party") has occurred and is
then continuing, the other party (the "Non-defaulting Party") may, by not more
than 20 days notice to the Defaulting Party specifying the relevant Event of
Default, designate a day not earlier than the day such notice is effective as an
Early Termination Date in respect of all outstanding Transactions. If, however,
"Automatic Early Termination" is specified in the Schedule as applying to a
party, then an Early Termination Date in respect of all outstanding Transactions
will occur immediately upon the occurrence with respect to such party of an
Event of Default specified in Section 5(a)(vii)(l), (3), (5), (6) or, to the
extent analogous thereto, (8), and as of the time immediately preceding the
institution of the relevant proceeding or the presentation of the relevant
petition upon the occurrence with respect to such party of an Event of Default
specified in Section 5(a)(vii)(4) or, to the extent analogous thereto, (8).

(b)  Right to Terminate Following Termination Event.

     (i)   Notice.  If a Termination Event occurs, an Affected Party will,
     promptly upon becoming aware of it, notify the other party, specifying the
     nature of that Termination Event and each Affected Transaction and will
     also give such other information about that Termination Event as the other
     party may reasonably require.

     (ii)  Transfer to Avoid Termination Event.  If either an Illegality under
     Section 5(b)(i)(l) or a Tax Event occurs and there is only one Affected
     Party, or if a Tax Event Upon Merger occurs and the Burdened Party is the
     Affected Party, the Affected Party will, as a condition to its right to
     designate an Early Termination Date under Section 6(b)(iv), use all
     reasonable efforts (which will not require such party to incur a loss,
     excluding immaterial, incidental expenses) to transfer within 20 days after
     it gives notice under Section 6(b)(i) all its rights and obligations under
     this Agreement in respect of the Affected Transactions to another of its
     Offices or Affiliates so that such Termination Event ceases to exist.

     If the Affected Party is not able to make such a transfer it will give
     notice to the other party to that effect within such 20 day period,
     whereupon the other party may effect such a transfer within 30 days after
     notice is given under Section 6(b)(i).

     Any such transfer by a party under this Section 6(b)(ii) will be subject to
     and conditional upon the prior written consent of the other party, which
     consent will not be withheld if such other party's policies in effect at
     such time would permit it to enter into transactions with the transferee on
     the terms proposed.

     (iii) Two Affected Parties.  If an Illegality under Section 5(b)(i)(1) or
     a Tax Event occurs and there are two Affected Parties, each party will use
     all reasonable efforts to reach agreement within 30 days after notice
     thereof is given under Section 6(b)(i) on action to avoid that Termination
     Event.

     (iv)   Right to Terminate. If:--

            (1)  a transfer under Section 6(b)(ii) or an agreement under Section
            6(b)(iii), as the case may be, has not been effected with respect to
            all Affected Transactions within 30 days after an Affected Party
            gives notice under Section 6(b)(i); or

            (2)  an Illegality under Section 5(b)(i)(2), a Credit Event Upon
            Merger or an Additional Termination Event occurs, or a Tax Event
            Upon Merger occurs and the Burdened Party is not the Affected Party,

     either party in the case of an Illegality, the Burdened Party in the case
     of a Tax Event Upon Merger, any Affected Party in the case of a Tax Event
     or an Additional Termination Event if there is more than one Affected
     Party, or the party which is not the Affected Party in the case of a Credit
     Event Upon Merger or an Additional Termination Event if there is only one
     Affected Party may, by not more than 20 days notice to the other party and
     provided that the relevant Termination Event is then

                                       8
<PAGE>

     continuing, designate a day not earlier than the day such notice is
     effective as an Early Termination Date in respect of all Affected
     Transactions.

(c)  Effect of Designation.

     (i)  If notice designating an Early Termination Date is given under Section
     6(a) or (b), the Early Termination Date will occur on the date so
     designated, whether or not the relevant Event of Default or Termination
     Event is then continuing.

     (ii) Upon the occurrence or effective designation of an Early Termination
     Date, no further payments or deliveries under Section 2(a)(i) or 2(e) in
     respect of the Terminated Transactions will be required to be made, but
     without prejudice to the other provisions of this Agreement. The amount if
     any, payable in respect of an Early Termination Date shall be determined
     pursuant to Section 6(e).

(d)  Calculations.

     (i)  Statement.  On or as soon as reasonably practicable following the
     occurrence of an Early Termination Date, each party will make the
     calculations on its part, if any, contemplated by Section 6(e) and will
     provide to the other party a statement (1) showing, in reasonable detail,
     such calculations (including all relevant quotations and specifying any
     amount payable under Section 6(e)) and (2) giving details of the relevant
     account to which any amount payable to it is to be paid.  In the absence of
     written confirmation from the source of a quotation obtained in determining
     a Market Quotation, the records of the party obtaining such quotation will
     be conclusive evidence of the existence and accuracy of such quotation.

     (ii)  Payment Date.  An amount calculated as being due in respect of any
     Early Termination Date under Section 6(e) will be payable on the day that
     notice of the amount payable is effective (in the case of an Early
     Termination Date which is designated or occurs as a result of an Event of
     Default) and on the day which is two Local Business Days after the day on
     which notice of the amount payable is effective (in the case of an Early
     Termination Date which is designated as a result of a Termination Event).
     Such amount will be paid together with (to the extent permitted under
     applicable law) interest thereon (before as well as after judgment) in the
     Termination Currency, from (and including) the relevant Early Termination
     Date to (but excluding) the date such amount is paid, at the Applicable
     Rate. Such interest will be calculated on the basis of daily compounding
     and the actual number of days elapsed.

(e)  Payments on Early Termination. If an Early Termination Date occurs. the
following provisions shall apply based on the parties' election in the Schedule
of a payment measure, either "Market Quotation" or "Loss", and a payment method,
either the "First Method" or the "Second Method". If the parties fail to
designate a payment measure or payment method in the Schedule, it will be deemed
that "Market Quotation" or the "Second Method", as the case may be, shall apply.
The amount, if any, payable in respect of an Early Termination Date and
determined pursuant to this Section will be subject to any Set-off.

     (i)  Events of Default.  If the Early Termination Date results from an
     Event of Default:--

        (1)  First Method and Market Quotation.  If the First Method and Market
        Quotation apply, the Defaulting Party will pay to the Non-defaulting
        Party the excess, if a positive number, of (A) the sum of the Settlement
        Amount (determined by the Non-defaulting Party) in respect of the
        Terminated Transactions and the Termination Currency Equivalent of the
        Unpaid Amounts  owing to the Non-defaulting Party over (B) the
        Termination Currency Equivalent of the Unpaid Amounts owing to the
        Defaulting Party.

        (2)  First Method and Loss.  If the First Method and Loss apply, the
        Defaulting Party will pay to the Non-defaulting Party, if a positive
        number, the Non-defaulting Party's Loss in respect of this Agreement.

        (3)  Second Method and Market Quotation.  If the Second Method and
        Market Quotation apply, an amount will be payable equal to (A) the sum
        of the Settlement Amount (determined by the

                                       9
<PAGE>

        Non-defaulting Party) in respect of the Terminated Transactions and the
        Termination Currency Equivalent of the Unpaid Amounts owing to the Non-
        defaulting Party less (B) the Termination Currency Equivalent of the
        Unpaid Amounts owing to the Defaulting Party. If that amount is a
        positive number, the Defaulting Party will pay it to the Non-defaulting
        Party; if it is a negative number, the Non-defaulting Party will pay the
        absolute value of that amount to the Defaulting Party.

        (4) Second Method and Loss. If the Second Method and Loss apply, an
        amount will be payable equal to the Non-defaulting Party's Loss in
        respect of this Agreement. If that amount is a positive number, the
        Defaulting Party will pay it to the Non-defaulting Party; if it is a
        negative number, the Non-defaulting Party will pay the absolute value of
        that amount to the Defaulting Party.

     (ii)   Termination Events.  If the Early Termination Date results from a
            Termination Event:--

            (1)  One Affected Party.  If there is one Affected Party, the amount
            payable will be determined in accordance with Section 6(e)(i)(3), if
            Market Quotation applies, or Section 6(e)(i)(4), if Loss applies,
            except that, in either case, references to the Defaulting Party and
            to the Non-defaulting Party will be deemed to be references to the
            Affected Party and the party which is not the Affected Party,
            respectively, and, if Loss applies and fewer than all the
            Transactions are being terminated, Loss shall be calculated in
            respect of all Terminated Transactions.

            (2)  Two Affected Parties. If there are two Affected Parties:--

                 (A)  if Market Quotation applies, each party will determine a
                 Settlement Amount in respect of the Terminated Transactions,
                 and an amount will be payable equal to (I) the sum of (a) one-
                 half of the difference between the Settlement Amount of the
                 party with the higher Settlement Amount ("X") and the
                 Settlement Amount of the party with the lower Settlement Amount
                 ("Y") and (b) the Termination Currency Equivalent of the Unpaid
                 Amounts owing to X less (II) the Termination Currency
                 Equivalent of the Unpaid Amounts owing to Y; and

                 (B)  if Loss applies, each party will determine its Loss in
                 respect of this Agreement (or, if fewer than all the
                 Transactions are being terminated, in respect of all Terminated
                 Transactions) and an amount will be payable equal to one-half
                 of the difference between the Loss of the party with the higher
                 Loss ("X") and the Loss of the party with the lower Loss ("Y").

            If the amount payable is a positive number, Y will pay it to X; if
            it is a negative number, X will pay the absolute value of that
            amount to Y.

     (iii) Adjustment for Bankruptcy.  In circumstances where an Early
     Termination Date occurs because "Automatic Early Termination" applies in
     respect of a party, the amount determined under this Section 6(e) will be
     subject to such adjustments as are appropriate and permitted by law to
     reflect any payments or deliveries made by one party to the other under
     this Agreement (and retained by such other party) during the period from
     the relevant Early Termination Date to the date for payment determined
     under Section 6(d)(ii).

     (iv)  Pre-estimate.  The parties agree that if Market Quotation applies an
     amount recoverable under this Section 6(e) is a reasonable pre-estimate of
     loss and not a penalty. Such amount is payable for the loss of bargain and
     the loss of protection against future risks and except as otherwise
     provided in this Agreement neither party will be entitled to recover any
     additional damages as a consequence of such losses.

                                       10
<PAGE>

7.   Transfer

Subject to Section 6(b)(ii), neither this Agreement nor any interest or
obligation in or under this Agreement may be transferred (whether by way of
security or otherwise) by either party without the prior written consent of the
other party, except that:--

(a)  a party may make such a transfer of this Agreement pursuant to a
consolidation or amalgamation with, or merger with or into, or transfer of all
or substantially all its assets to, another entity (but without prejudice to any
other right or remedy under this Agreement); and

(b)  a party may make such a transfer of all or any part of its interest in any
amount payable to it from a Defaulting Party under Section 6(e).

Any purported transfer that is not in compliance with this Section will be void.

8.   Contractual Currency

(a)  Payment in the Contractual Currency. Each payment under this Agreement will
be made in the relevant currency specified in this Agreement for that payment
(the "Contractual Currency"). To the extent permitted by applicable law, any
obligation to make payments under this Agreement in the Contractual Currency
will not be discharged or satisfied by any tender in any currency other than the
Contractual Currency, except to the extent such tender results in the actual
receipt by the party to which payment is owed, acting in a reasonable manner and
in good faith in converting the currency so tendered into this Contractual
Currency, of the full amount in the Contractual Currency of all amounts payable
in respect of this Agreement. If for any reason the amount in the Contractual
Currency so received falls short of the amount in the Contractual Currency
payable in respect of this Agreement, the party required to make the payment
will, to the extent permitted by applicable law, immediately pay such additional
amount in the Contractual Currency as may be necessary to compensate for the
shortfall. If for any reason the amount in the Contractual Currency so received
exceeds the amount in the Contractual Currency payable in respect of this
Agreement, the party receiving the payment will refund promptly the amount of
such excess.

(b)  Judgments. To the extent permitted by applicable law, if any judgment or
order expressed in a currency other than the Contractual Currency is rendered
(i) for the payment of any amount owing in respect of this Agreement, (ii) for
the payment of any amount relating to any early termination in respect of this
Agreement or (iii) in respect of a judgment or order of another court for the
payment of any amount described in (i) or (ii) above, the party seeking
recovery, after recovery in full of the aggregate amount to which such party is
entitled pursuant to the judgment or order, will be entitled to receive
immediately from the other party the amount of any shortfall of the Contractual
Currency received by such party as a consequence of sums paid in such other
currency and will refund promptly to the other party any excess of the
Contractual Currency received by such party as a consequence of sums paid in
such other currency if such shortfall or such excess arises or results from any
variation between the rate of exchange at which the Contractual Currency is
converted into the currency of the judgment or order for the purposes of such
judgment or order and the rate of exchange at which such party is able, acting
in a reasonable manner and in good faith in converting the currency received
into the Contractual Currency, to purchase the Contractual Currency with the
amount of the currency of the judgment or order actually received by such party.
The term "rate of exchange" includes, without limitation, any premiums and costs
of exchange payable in connection with the purchase of or conversion into the
Contractual Currency.

(c ) Separate Indemnities. To the extent permitted by applicable law, these
indemnities constitute separate and independent obligations from the other
obligations in this Agreement, will be enforceable as separate and independent
causes of action, will apply notwithstanding any indulgence granted by the party
to which any payment is owed and will not be affected by judgment being obtained
or claim or proof being made for any other sums payable in respect of this
Agreement.

(d)  Evidence of loss. For the purpose of this Section 8, it will be sufficient
for a party to demonstrate that it would have suffered a loss had an actual
exchange or purchase been made.

                                       11
<PAGE>

9.   Miscellaneous

(a)  Entire Agreement. This Agreement constitutes the entire agreement and
understanding of the parties with respect to its subject matter and supersedes
all oral communication and prior writings with respect thereto.

(b)  Amendments. No amendment, modification or waiver in respect of this
Agreement will be effective unless in writing (including a writing evidenced by
a facsimile transmission) and executed by each of the parties or confirmed by an
exchange of telexes or electronic messages on an electronic messaging system.

(c)  Survival of Obligations.  Without prejudice to Sections 2(a)(iii) and
6(c)(ii), the obligations of the parties under this Agreement will survive
the termination of any Transaction.

(d)  Remedies Cumulative. Except as provided in this Agreement, the rights,
powers, remedies and privileges provided in this Agreement are cumulative and
not exclusive of any rights, powers, remedies and privileges provided by law.

(e)  Counterparts and Confirmations.

     (i)  This Agreement (and each amendment, modification and waiver in respect
     of it) may be executed and delivered in counterparts (including by
     facsimile transmission), each of which will be deemed an original.

     (ii) The parties intend that they are legally bound by the terms of each
     Transaction from the moment they agree to those terms (whether orally or
     otherwise). A Confirmation shall be entered into as soon as practicable and
     may be executed and delivered in counterparts (including by facsimile
     transmission) or be created by an exchange of telexes or by an exchange of
     electronic messages on an electronic messaging system, which in each case
     will be sufficient for all purposes to evidence a binding supplement to
     this Agreement. The parties will specify therein or through another
     effective means that any such counterpart, telex or electronic message
     constitutes a Confirmation.

(f)  No Waiver of Rights. A failure or delay in exercising any right, power or
privilege in respect of this Agreement will not be presumed to operate as a
waiver, and a single or partial exercise of any right, power or privilege will
not be presumed to preclude any subsequent or further exercise, of that right,
power or privilege or the exercise of any other right, power or privilege.

(g)  Headings. The headings used in this Agreement are for convenience of
reference only and are not to affect the construction of or to be taken into
consideration in interpreting this Agreement.

10.  Offices; Multibranch Parties

(a)  If Section 10(a) is specified in the Schedule as applying, each party that
enters into a Transaction through an Office other than its head or home office
represents to the other party that, notwithstanding the place of booking office
or jurisdiction of incorporation or organisation of such party, the obligations
of such party are the same as if it had entered into the Transaction through its
head or home office. This representation will be deemed to be repeated by such
party on each date on which a Transaction is entered into.

(b)  Neither party may change the Office through which it makes and receives
payments or deliveries for the purpose of a Transaction without the prior
written consent of the other party.

(c)  If a party is specified as a Multibranch Party in the Schedule, such
Multibranch Party may make and receive payments or deliveries under any
Transaction through any Office listed in the Schedule, and the Office through
which it makes and receives payments or deliveries with respect to a Transaction
will be specified in the relevant Confirmation.

11.  Expenses

A Defaulting Party will, on demand, indemnify and hold harmless the other party
for and against all reasonable out-of-pocket expenses, including legal fees and
Stamp Tax, incurred by such other party by reason of the enforcement and
protection of its rights under this Agreement or any Credit Support Document

                                       12
<PAGE>

to which the Defaulting Party is a party or by reason of the early termination
of any Transaction, including, but not limited to, costs of collection.

12.  Notices

(a)  Effectiveness.  Any notice or other communication in respect of this
Agreement may be given in any manner set forth below (except that a notice or
other communication under Section 5 or 6 may not be given by facsimile
transmission or electronic messaging system) to the address or number or in
accordance with the electronic messaging system details provided (see the
Schedule) and will be deemed effective as indicated:--

     (i)  if in writing and delivered in person or by courier, on the date it is
     delivered;

     (ii)  if sent by telex, on the date the recipient's answerback is received;

     (iii) if sent by facsimile transmission, on the date that transmission is
     received by a responsible employee of the recipient in legible form (it
     being agreed that the burden of proving receipt will be on the sender and
     will not be met by a transmission report generated by the sender's
     facsimile machine);

     (iv)  if sent by certified or registered mail (airmail, if overseas) or the
     equivalent (return receipt requested), on the date that mail is delivered
     or its delivery is attempted; or

     (v)   if sent by electronic messaging system, on the date that electronic
     message is received,

unless the date of that delivery (or attempted delivery) or that receipt, as
applicable, is not a Local Business Day or that communication is delivered (or
attempted) or received, as applicable, after the close of business on a Local
Business Day, in which case that communication shall be deemed given and
effective on the first following day that is a Local Business Day.

(b)  Change of Addresses. Either party may by notice to the other change the
address, telex or facsimile number or electronic messaging system details at
which notices or other communications are to be given to it.

13.  Governing Law and Jurisdiction

(a)  Governing Law. This Agreement will be governed by and construed in
accordance with the law specified in the Schedule.

(b)  Jurisdiction.  With respect to any suit, action or proceedings relating to
this Agreement ("Proceedings"), each party irrevocably:--

     (i)  submits to the jurisdiction of the English courts, if this Agreement
     is expressed to be governed by English law, or to the non-exclusive
     jurisdiction of the courts of the State of New York and the United States
     District Court located in the Borough of Manhattan in New York City, if
     this Agreement is expressed to be governed by the laws of the State of New
     York; and

     (ii)  waives any objection which it may have at any time to the laying of
     venue of any Proceedings brought in any such court, waives any claim that
     such Proceedings have been brought in an inconvenient forum and further
     waives the right to object, with respect to such Proceedings, that such
     court does not have any jurisdiction over such party.

Nothing in this Agreement precludes either party from bringing Proceedings in
any other jurisdiction (outside, if this Agreement is expressed to be governed
by English law, the Contracting States, as defined in Section 1(3) of the Civil
Jurisdiction and Judgments Act 1982 or any modification, extension or re-
enactment thereof for the time being in force) nor will the bringing of
Proceedings in any one or more jurisdictions preclude the bringing of
Proceedings in any other jurisdiction.

(c)  Service of Process. Each party irrevocably appoints the Process Agent (if
any) specified opposite its name in the Schedule to receive, for it and on its
behalf, service of process in any Proceedings. If for any

                                       13
<PAGE>

reason any party's Process Agent is unable to act as such, such party will
promptly notify the other party and within 30 days appoint a substitute process
agent acceptable to the other party. The parties irrevocably consent to service
of process given in the manner provided for notices in Section 12. Nothing in
this Agreement will affect the right of either party to serve process in any
other manner permitted by law.

(d)  Waiver of Immunities.  Each party irrevocably waives, to the fullest extent
permitted by applicable law, with respect to itself and its revenues and assets
(irrespective of their use or intended use), all immunity on the grounds of
sovereignty or other similar grounds from (i) suit, (ii) jurisdiction of any
court, (iii) relief by way of injunction, order for specific performance or for
recovery of property, (iv) attachment of its assets (whether before or after
judgment) and (v) execution or enforcement of any judgment to which it or its
revenues or assets might otherwise be entitled in any Proceedings in the courts
of any jurisdiction and irrevocably agrees, to the extent permitted by
applicable law, that it will not claim any such immunity in any Proceedings.

14.  Definitions

As used in this Agreement:--

"Additional Termination Event" has the meaning specified in Section 5(b).

"Affected Party" has the meaning specified in Section 5(b).

"Affected Transactions" means (a) with respect to any Termination Event
consisting of an Illegality, Tax Event or Tax Event Upon Merger, all
Transactions affected by the occurrence of such Termination Event and (b) with
respect to any other Termination Event, all Transactions.

"Affiliate" means, subject to the Schedule, in relation to any person, any
entity controlled, directly or indirectly, by the person, any entity that
controls, directly or indirectly, the person or any entity directly or
indirectly under common control with the person. For this purpose, "control" of
any entity or person means ownership of a majority of the voting power of the
entity or person.

"Applicable Rate" means:--

(a)  in respect of obligations payable or deliverable (or which would have been
but for Section 2(a)(iii)) by a Defaulting Party, the Default Rate;

(b)  in respect of an obligation to pay an amount under Section 6(e) of either
party from and after the date (determined in accordance with Section 6(d)(ii))
on which that amount is payable, the Default Rate;

(c)  in respect of all other obligations payable or deliverable (or which would
have been but for Section 2(a)(iii)) by a Non-defaulting Party, the Non-
default Rate; and

(d)  in all other cases, the Termination Rate.

"Burdened Party" has the meaning specified in Section 5(b).

"Change in Tax Law" means the enactment, promulgation, execution or ratification
of, or any change in or amendment to, any law (or in the application or official
interpretation of any law) that occurs on or after the date on which the
relevant Transaction is entered into.

"Consent" includes a consent, approval, action, authorisation, exemption,
notice, filing, registration or exchange control consent.

"Credit Event Upon Merger" has the meaning specified in Section 5(b).

"Credit Support Document" means any agreement or instrument that is specified as
such in this Agreement.

"Credit Support Provider" has the meaning specified in the Schedule.

"Default Rate" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the relevant payee (as certified by it) if it
were to fund or of funding the relevant amount plus 1% per annum.

                                       14
<PAGE>

"Defaulting Party" has the meaning specified in Section 6(a).

"Early Termination Date" means the date determined in accordance with Section
6(a) or 6(b)(iv).

"Event of Default" has the meaning specified in Section 5(a) and, if applicable,
in the Schedule.

"Illegality" has the meaning specified in Section 5(b).

"Indemnifiable Tax" means any Tax other than a Tax that would not be imposed in
respect of a payment under this Agreement but for a present or former connection
between the jurisdiction of the government or taxation authority imposing such
Tax and the recipient of such payment or a person related to such recipient
(including, without limitation, a connection arising from such recipient or
related person being or having been a citizen or resident of such jurisdiction,
or being or having been organised, present or engaged in a trade or business in
such jurisdiction, or having or having had a permanent establishment or fixed
place of business in such jurisdiction, but excluding a connection arising
solely from such recipient or related person having executed, delivered,
performed its obligations or received a payment under, or enforced, this
Agreement or a Credit Support Document).

"Law" includes any treaty, law, rule or regulation (as modified, in the case of
tax matters, by the practice of any relevant governmental revenue authority) and
"lawful" and "unlawful" will be construed accordingly.

"Local Business Day" means, subject to the Schedule, a day on which commercial
banks are open for  business (including dealings in foreign exchange and foreign
currency deposits) (a) in relation to any obligation under Section 2(a)(i), in
the place(s) specified in the relevant Confirmation or, if not so specified, as
otherwise agreed by the parties in writing or determined pursuant to provisions
contained, or incorporated by reference, in this Agreement, (b) in relation to
any other payment, in the place where the relevant account is located and, if
different, in the principal financial centre, if any, of the currency of such
payment, (c) in relation to any notice or other communication, including notice
contemplated under Section 5(a)(i), in the city specified in the address for
notice provided by the recipient and, in the case of a notice contemplated by
Section 2(b), in the place where the relevant new account is to be located and
(d) in relation to Section 5(a)(v)(2), in the relevant locations for performance
with respect to such Specified Transaction.

"Loss" means, with respect to this Agreement or one or more Terminated
Transactions, as the case may be, and a party, the Termination Currency
Equivalent of an amount that party reasonably determines in good faith to be its
total losses and costs (or gain, in which case expressed as a negative number)
in connection with this Agreement or that Terminated Transaction or group of
Terminated Transactions, as the case may be, including any loss of bargain, cost
of funding or, at the election of such party but without duplication, loss or
cost incurred as a result of its terminating, liquidating, obtaining or
reestablishing any hedge or related trading position (or any gain resulting from
any of them). Loss includes losses and costs (or gains) in respect of any
payment or delivery required to have been made (assuming satisfaction of each
applicable condition precedent) on or before the  relevant Early Termination
Date and not made, except, so as to avoid duplication, if Section 6(e)(i)(1) or
(3) or 6(e)(ii)(2)(A) applies. Loss does not include a party's legal fees and
out-of-pocket expenses referred to under Section 11. A party will determine its
Loss as of the relevant Early Termination Date, or, if that is not reasonably
practicable, as of the earliest date thereafter as is reasonably practicable. A
party may (but need not) determine its Loss by reference to quotations of
relevant rates or prices from one or more leading dealers in the relevant
markets.

"Market Quotation" means, with respect to one or more Terminated Transactions
and a party making the determination, an amount determined on the basis of
quotations from Reference Market-makers. Each quotation will be for an amount,
if any, that would be paid to such party (expressed as a negative number) or by
such party (expressed as a positive number) in consideration of an agreement
between such party (taking into account any existing Credit Support Document
with respect to the obligations of such party) and the quoting Reference Market-
maker to enter into a transaction (the "Replacement Transaction") that would
have the effect of preserving for such party the economic equivalent of any
payment or delivery (whether the underlying obligation was absolute or
contingent and assuming the satisfaction of each applicable condition precedent)
by the parties under Section 2(a)(i) in respect of such Terminated Transaction
or group of Terminated Transactions that would, but for the occurrence of the
relevant Early Termination Date, have

                                       15
<PAGE>

been required after that date. For this purpose, Unpaid Amounts in respect of
the Terminated Transaction or group of Terminated Transactions are to be
excluded but, without limitation, any payment or delivery that would, but for
the relevant Early Termination Date, have been required (assuming satisfaction
of each applicable condition precedent) after that Early Termination Date is to
be included. The Replacement Transaction would be subject to such documentation
as such party and the Reference Market-maker may, in good faith, agree. The
party making the determination (or its agent) will request each Reference
Market-maker to provide its quotation to the extent reasonably practicable as of
the same day and time (without regard to different time zones) on or as soon as
reasonably practicable after the relevant Early Termination Date.  The day and
time as of which those quotations are to be obtained will be selected in good
faith by the party obliged to make a determination under Section 6(e), and, if
each party is so obliged, after consultation with the other. If more than three
quotations are provided, the Market Quotation will be the arithmetic mean of the
quotations, without regard to the quotations having the highest and lowest
values.  If exactly three such quotations are provided, the Market Quotation
will be the quotation remaining after disregarding the highest and lowest
quotations.  For this purpose, if more than one quotation has the same highest
value or lowest value, then one of such quotations shall be disregarded.  If
fewer than three quotations are provided, it will be deemed that the Market
Quotation in respect of such Terminated Transaction or group of Terminated
Transactions cannot be determined.

"Non-default Rate" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the Non-defaulting Party (as certified by it) if
it were to fund the relevant amount.

"Non-defaulting Party" has the meaning specified in Section 6(a).

"Office" means a branch or office of a party, which may be such party's head or
home office.

"Potential Event of Default" means any event which, with the giving of notice or
the lapse of time or both, would constitute an Event of Default.

"Reference Market-makers" means four leading dealers in the relevant market
selected by the party determining a Market Quotation in good faith (a) from
among dealers of the highest credit standing which satisfy all the criteria that
such party applies generally at the time in deciding whether to offer or to make
an extension of credit and (b) to the extent practicable, from among such
dealers having an office in the same city.

"Relevant Jurisdiction" means, with respect to a party, the jurisdictions (a) in
which the party is incorporated, organised, managed and controlled or considered
to have its seat, (b) where an Office through which the party is acting for
purposes of this Agreement is located, (c) in which the party executes this
Agreement and (d) in relation to any payment, from or through which such payment
is made.

"scheduled Payment Date" means a date on which a payment or delivery is to be
made under Section 2(a)(i) with respect to a Transaction.

"Set-Off" means set-off, offset, combination of accounts, right of retention or
withholding or similar right or requirement to which the payer of an amount
under Section 6 is entitled or subject (whether arising under this Agreement,
another contract, applicable law or otherwise) that is exercised by, or imposed
on, such payer.

"Settlement Amount" means, with respect to a party and any Early Termination
Date, the sum of:--

(a)  the Termination Currency Equivalent of the Market Quotations (whether
positive or negative) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation is determined; and

(b)  such party's Loss (whether positive or negative and without reference to
any Unpaid Amounts) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation cannot be determined or would not (in
the reasonable belief of the party making the determination) produce a
commercially reasonable result.

"Specified Entity" has the meaning specified in the Schedule.

                                       16
<PAGE>

"Specified Indebtedness" means, subject to the Schedule, any obligation (whether
present or future, contingent or otherwise, as principal or surety or otherwise)
in respect of borrowed money.

"Specified Transaction" means, subject to the Schedule, (a) any transaction
(including an agreement with respect thereto) now existing or hereafter entered
into between one party to this Agreement (or any Credit Support Provider of such
party or any applicable Specified Entity of such party) and the other party to
this Agreement (or any Credit Support Provider of such other party or any
applicable Specified Entity of such other party) which is a rate swap
transaction, basis swap, forward rate transaction, commodity swap, commodity
option, equity or equity index swap, equity or equity index option, bond option,
interest rate option, foreign exchange transaction, cap transaction, floor
transaction, collar transaction, currency swap transaction, cross-currency rate
swap transaction, currency option or any other similar transaction (including
any option with respect to any of these transactions), (b) any combination of
these transactions and (c) any other transaction identified as a Specified
Transaction in this Agreement or the relevant confirmation.

"Stamp Tax" means any stamp, registration, documentation or similar tax.

"Tax" means any present or future tax, levy, impost, duty, charge, assessment or
fee of any nature (including interest, penalties and additions thereto) that is
imposed by any government or other taxing authority in respect of any payment
under this Agreement other than a stamp, registration, documentation or similar
tax.

"Tax Event" has the meaning specified in Section 5(b).

"TaX Event Upon Merger" has the meaning specified in Section 5(b).

"Terminated Transactions" means with respect to any Early Termination Date (a)
if resulting from a Termination Event, all Affected Transactions and (b) if
resulting from an Event of Default, all Transactions (in either case) in effect
immediately before the effectiveness of the notice designating that Early
Termination Date (or, if "Automatic Early Termination" applies, immediately
before that Early Termination Date).

"Termination Currency" has the meaning specified in the Schedule.

"Termination Currency Equivalent" means, in respect of any amount denominated in
the Termination Currency, such Termination Currency amount and, in respect of
any amount denominated in a currency other than the Termination Currency (the
"Other Currency"), the amount in the Termination Currency determined by the
party making the relevant determination as being required to purchase such
amount of such Other Currency as at the relevant Early Termination Date, or, if
the relevant Market Quotation or Loss (as the case may be), is determined as of
a later date, that later date, with the Termination Currency at the rate equal
to the spot exchange rate of the foreign exchange agent (selected as provided
below) for the purchase of such Other Currency with the Termination Currency at
or about 11:00 a.m. (in the city in which such foreign exchange agent is
located) on such date as would be customary for the determination of such a rate
for the purchase of such Other Currency for value on the relevant Early
Termination Date or that later date.  The foreign exchange agent will, if only
one party is obliged to make a determination under Section 6(e), be selected in
good faith by that party and otherwise will be agreed by the parties.

"Termination Event" means an Illegality, a Tax Event or a Tax Event Upon Merger
or, if specified to be applicable, a Credit Event Upon Merger or an Additional
Termination Event.

"Termination Rate" means a rate per annum equal to the arithmetic mean of the
cost (without proof or evidence of any actual cost) to each party (as certified
by such party) if it were to fund or of funding such amounts.

"Unpaid Amounts" owing to any party means, with respect to an Early Termination
Date, the aggregate of (a) in respect of all Terminated Transactions, the
amounts that became payable (or that would have become payable but for Section
2(a)(iii)) to such party under Section 2(a)(i) on or prior to such Early
Termination Date and which remain unpaid as at such Early Termination Date and
(b) in respect of each Terminated Transaction, for each obligation under Section
2(a)(i) which was (or would have been but for Section 2(a)(iii)) required to be
settled by delivery to such party on or prior to such Early Termination Date and
which has not been so settled as at such Early Termination Date, an amount equal
to the fair market

                                       17
<PAGE>

value of that which was (or would have been) required to be delivered as of the
originally scheduled date for delivery, in each case together with (to the
extent permitted under applicable law) interest, in the currency of such
amounts, from (and including) the date such amounts or obligations were or would
have been required to have been paid or performed to (but excluding) such Early
Termination Date, at the Applicable Rate.  Such amounts of interest will be
calculated on the basis of daily compounding and the actual number of days
elapsed.  The fair market value of any obligation referred to in clause (b)
above shall be reasonably determined by the party obliged to make the
determination under Section 6(e) or, if each party is so obliged, it shall be
the average of the Termination Currency Equivalents of the fair market values
reasonably determined by both parties.

IN WITNESS WHEREOF the parties have executed this document on the respective
dates specified below with effect from the date specified on the first page of
this document.

MORGAN GUARANTY TRUST                     SPIEGEL CREDIT CARD MASTER
COMPANY OF NEW YORK                       NOTE TRUST
---------------------------------         ------------------------------------
       (Name of Party)                            (Name of Party)
                                         By: Bankers Trust Company, not in its
                                         individual capacity, but solely as
                                         owner trustee

By: /s/ James Dwyer                      By: /s/ Eileen M. Hughes
    -----------------------------            ---------------------------------
Name:                                    Name:

Title:  Vice President                   Title:  Vice President

Date:                                    Date:

                                       18
<PAGE>

(Multicurrency--Cross Border)

                                   ISDA (R)
                 International Swap Dealers Association, Inc.

                                   SCHEDULE
                                    to the
                               Master Agreement

                           dated as of July 19, 2001

between     MORGAN GUARANTY TRUST       and      SPIEGEL CREDIT CARD MASTER
            COMPANY OF NEW YORK                  NOTE TRUST
              ("Party A")                         ("Party B")

                        PART 1:  Termination Provisions
                                 ----------------------

(a)  "Indenture" means the Master Indenture dated as of December 1, 2000,
     between Spiegel Credit Card Master Note Trust, as Issuer, and The Bank of
     New York, as Indenture Trustee, as supplemented by the Series 2001-A
     Indenture Supplement dated as of July 19, 2001, between Spiegel Credit Card
     Master Note Trust, as the Issuer or the Trust, and The Bank of New York, as
     the Indenture Trustee, in each case, as amended, modified, supplemented,
     restated or replaced from time to time.

(b)  "Specified Entity" means in relation to Party A for the purpose of:-

     Section 5(a)(v)  (Default under Specified Transaction),  none;

     Section 5(a)(vi) (Cross Default),                        none;

     Section 5(a)(vii) (Bankruptcy),                          none; and

     Section 5(b)(iv) (Credit Event Upon Merger),             none;

     in relation to Party B for the purpose of:-

     Section 5(a)(v) (Default under Specified Transaction)    none;

     Section 5(a)(vi) (Cross Default),                        none;

     Section 5(a)(vii) (Bankruptcy),                          none; and

     Section 5(b)(iv) (Credit Event Upon Merger),             none.

(c)  "Specified Transaction" will have the meaning specified in Section 14.

                                       1
<PAGE>

(d)  The "Breach of Agreement" provisions of Section 5(a)(ii), the
"Misrepresentation" provisions of Section 5(a)(iv), the "Default under Specified
Transactions" provisions of Section 5(a)(v) and the "Cross Default" provisions
of Section 5(a)(vi) will not apply to Party A or Party B.

(e)  Section 5(a)(iii)(1) is hereby amended and restated in its entirety as
follows:

     "(1) Failure by any Credit Support Provider of the party to perform any
     payment obligation to be performed by it in accordance with any Credit
     Support Document (as defined below), if such failure is continuing after
     any applicable grace period has elapsed;".

(f)  The "Illegality" provision of Section 5(b)(i)
               will not apply to Party A
               will not apply to Party B.

(g)  The "Tax Event" provision of Section 5(b)(ii)
               will not apply to Party A
               will not apply to Party B.

(h)  The "Tax Event Upon Merger" provision of Section 5(b)(iii)
               will not apply to Party A
               will not apply to Party B.

(i)  The "Credit Event Upon Merger" provisions of Section 5(b)(iv)
          will not apply to Party A
          will not apply to Party B.

(j)  The "Automatic Early Termination" provision of Section 6(a)
          will not apply to Party A
          will not apply to Party B.

(k)  Payments on Early Termination.  For the purpose of Section 6(e):

     (i)  Market Quotation will apply.

     (ii) The First Method will apply.

(l)  "Termination Currency" means United States Dollars.

(m)  Additional Termination Event; Redemption of the Secured Notes.

          (a)  Party B shall, as provided in the Indenture, direct the Indenture
          Trustee to notify Party A if notice is given pursuant to the Indenture
          of a redemption by Party B of all of the Notes (any such redemption by
          Party B of all of the Notes, a "Redemption Event").

          (b)  If a Redemption Event occurs it shall be an Additional
          Termination Event for which Party B shall be the sole Affected Party
          and each Transaction shall be an Affected Transaction.

          (c)  If a Redemption Event is to occur, the Early Termination Date in
          respect of each Affected Transaction shall be deemed to occur on the
          Distribution Date in respect of

                                       2
<PAGE>

          such Redemption Event. Any Settlement Amount payable in respect of
          such Redemption Event shall be paid, in the case of Party B, on the
          date of such Early Termination Date; provided that no such payments
          shall be made by Party B until the Note Principal Balance (as defined
          in the Indenture Supplement) has been reduced to zero.

(n)  Unauthorized Amendments.  Party B shall deliver to Party A a copy of any
     proposed Supplemental Indenture before such document takes effect.

(o)  Downgrade of Party A. If a Ratings Event (as defined below) shall occur and
     be continuing with respect to Party A, then Party A shall, within 5 Local
     Business Days of such Ratings Event, (A) give notice to Party B of the
     occurrence of such Ratings Event, and (B) use reasonable efforts to
     transfer Party A's rights and obligations under the Agreement and all
     Confirmations to another party, subject to satisfaction of the Rating
     Agency Condition (as defined below), and at the cost of Party A. If such a
     transfer by Party A has not occurred within 20 Local Business Days after
     the occurrence of a Ratings Event, Party B shall demand that Party A
     deliver Eligible Collateral on a mark-to-market basis, to secure Party B's
     exposure, if any, to Party A, and such Eligible Collateral shall be
     delivered in accordance with a Credit Support Annex to be attached hereto
     and made a part hereof within 10 Local Business Days of Party B's demand
     therefor. The Eligible Collateral to be posted and the Credit Support Annex
     to be executed and delivered shall be subject to the Rating Agency
     Condition. Notwithstanding the addition of the Credit Support Annex and the
     posting of Eligible Collateral, Party A shall continue to use reasonable
     efforts to transfer its rights and obligations to an acceptable third
     party; provided, however, that Party A's obligations to find a transferee
     and to post Eligible Collateral under such Credit Support Annex shall
     remain in effect only for so long as a Ratings Event is continuing with
     respect to Party A. For the purpose of this Part 1(k), a "Ratings Event"
     shall occur with respect to Party A if the long-term and short-term senior
     unsecured deposit ratings of Party A cease to be at least A+ and A-1 by
     Standard & Poor's Ratings Service or any successor thereto ("S&P"), or at
     least A1 and P-1 by Moody's Investors Service, Inc. or any successor
     thereto ("Moody's"), or at least A+ and F-1 by Fitch Ratings, Inc. or any
     successor thereto ("Fitch"), to the extent such obligations are rated by
     S&P, Moody's or Fitch. "Rating Agency Condition" has the meaning specified
     in the Indenture defined in Part 1(a) of this Schedule.

     The failure by Party A to post Eligible Collateral in accordance herewith
     shall constitute an Event of Default with Party A as the Defaulting Party.

(p)  Notwithstanding anything to the contrary in Section 6(e) of the Agreement,
     if an Early Termination Date is designated due to the occurrence of a
     Termination Event or an Additional Termination Event and the Settlement
     Amount calculated in respect thereof is a negative number, then the
     Settlement Amount shall be deemed to be zero.

                          PART 2:  Tax Representations
                                   -------------------

(a)  Payer Tax Representations. For the purpose of Section 3(e) of this
     Agreement, Party A and Party B will make the following representation:-

     It is not required by any applicable law, as modified by the practice of
     any relevant governmental revenue authority of any Relevant Jurisdiction to
     make any deduction or withholding for or on account of any Tax from any
     payment (other than interest under Section 2(e), 6(d)(ii) or 6(e) of this
     Agreement) to be made by it to the other party under this Agreement. In
     making this

                                       3
<PAGE>

     representation, it may rely on (x) the accuracy of any representations made
     by the other party pursuant to Section 3(f) of this Agreement, (y) the
     satisfaction of the agreement contained in Section 4(a)(i) or 4(a)(iii) of
     this Agreement and the accuracy and effectiveness of any document provided
     by the other party pursuant to Section 4(a)(i) or 4(a)(iii) of this
     Agreement and (z) the satisfaction of the agreement of the other party
     contained in Section 4(d) of this Agreement, provided that it shall not be
     a breach of this representation where reliance is placed on clause (y) and
     the other party does not deliver a form or document under Section 4(a)(iii)
     by reason of material prejudice to its legal or commercial position.

(b)  Payee Tax Representations. For the purpose of Section 3(f) of this
     Agreement, Party A and Party B will make the following representations
     specified below, if any:- none

                    PART 3:  Agreement to Deliver Documents
                             ------------------------------

For the purpose of Section 4(a)(i) and (ii) of this Agreement, each party agrees
to deliver the following documents:

(a)  Tax forms, documents or certificates to be delivered are:

     Party            Form/Document/Certificate      Date by which
     required to                                     to be delivered
     deliver
     document
     ---------------  -----------------------------  ------------------
     Party A and      Any form, document or          Upon request
     Party B          certificate as may be
                      requested pursuant to Section
                      4(a)(iii) of this Agreement.

     Party B          An executed United States      (i) As soon as
                      Internal Revenue Service Form  reasonably practicable
                      W-9 (or any successor          after execution of this
                      thereto), as applicable.       Agreement, (ii)
                                                     promptly upon
                                                     reasonable demand by
                                                     Party A and (iii)
                                                     promptly upon learning
                                                     that any such form
                                                     previously provided by
                                                     Party B has become
                                                     obsolete or incorrect.

(b)  Other documents to be delivered are:-

    Party             Form/Document/Certificate      Date by      Covered by
    required to                                      which to be  Section 3(d)
    deliver                                          delivered    Representation
    document
    ----------------  ----------------------------   -----------  --------------

                                           4
<PAGE>

<TABLE>
<CAPTION>
 Party                              Form/Document/Certificate                 Date by                  Covered by
 required to                                                                  which to be              Section 3(d)
 deliver                                                                      delivered                Representation
 document
-----------------------             --------------------------                -----------              --------------
<S>                                 <C>                                      <C>                      <C>
 Party B                            Annual Report of Party B and of any       As soon as                Yes
                                    Credit Support Provider thereof           available and in
                                    containing audited financial              any event within
                                    statements certified by independent       120 days after the
                                    certified public accountants and          end of each fiscal
                                    prepared in accordance with               year of Party B
                                    generally accepted accounting             and of the Credit
                                    principles in the country in which        Support Provider
                                    such party and such Credit Support
                                    Provider is organized

 Party B                            Monthly Reports of Party B and            As soon as                Yes
                                    quarterly unaudited financial             available and in
                                    statements of any Credit Support          any event within
                                    Provider thereof containing               30 days after the
                                    financial statements of such              end of each fiscal
                                    party's fiscal quarter prepared in        quarter of Party B
                                    accordance with generally accepted        and of the Credit
                                    accounting principles in the              Support Provider
                                    country in which  such Credit
                                    Support Provider is organized

 Party B                            A duly executed copy of the Credit        At or within              No
                                    Support Document specified in Part        thirty days after
                                    4 of the Schedule or in any               execution hereof
                                    Confirmation

 Party A and                        Certified copies of all corporate         Upon execution and        Yes
 Party B                            authorizations and any other              delivery of this
                                    documents with respect to the             Agreement
                                    execution, delivery and performance
                                    of this Agreement and the
                                    Indenture; legal opinion from
                                    in-house counsel for MBIA with
                                    respect to enforceability of Policy
                                    and related matters.

 Party A and                        Certificate of authority and              Upon execution and        Yes
 Party B                            specimen signatures of individuals        delivery of this
                                    executing this Agreement, any             Agreement and
                                    Credit Support Document and any           thereafter upon
                                    Confirmations                             request of the
                                                                              other party
</TABLE>

                                       5
<PAGE>

<TABLE>
--------------------------------------------------------------------------------------------------------------------------------
<S>                                 <C>                                       <C>                              <C>
Party B                             An opinion of counsel to Party B on       Upon execution and delivery      Yes
                                    the enforceability of the Agreement       of this Agreement
                                    and the Confirmation in respect of
                                    Party B, reasonably satisfactory in
                                    form and substance to Party A.
--------------------------------------------------------------------------------------------------------------------------------
Party A                             An opinion of counsel to Party A on       Upon execution and delivery      Yes
                                    the enforceability of the Agreement       of this Agreement
                                    and the Confirmation in respect of
                                    Party A, reasonably satisfactory in
                                    form and substance to Party B.
--------------------------------------------------------------------------------------------------------------------------------
Party A and                         Such other documents as the other         Promptly upon request            Yes
Party B                             party may reasonably request in
                                    connection with each Transaction.
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                            PART 4:  Miscellaneous
                                     -------------

(a)  Address for Notices.  For the purpose of Section 12(a) of this Agreement:-

     Address for notice or communications to Party A:

          Morgan Guaranty Trust Company of New York
          60 Wall Street
          New York, NY 10260
          Attn.: Global Swap Unit
          Telex No.: WVD 649216
          Answerback: M6T VI
          Facsimile No.: 212-648-5922

     Address for notice or communications to Party B:

          Spiegel Credit Card Master Note Trust
          c/o Bankers Trust Company
          Four Albany Street, 10/th/ Floor
          New York, NY 10006
          Attention: Corporate Trust & Agency Services
          Telephone No.: 212-250-6323
          Facsimile No.: 212-250-6439

                                       6
<PAGE>

          With a copy to:

          John R. Steele, Treasurer
          Spiegel, Inc.
          3500 Lacey Road
          Downers Grove, IL 60515-5432
          Telephone No.: 630-769-3250
          Facsimile No.: 630-769-3750

          And a copy to:

          Attention:  Manager, International Structured Finance Surveillance
          MBIA Insurance Corporation
          113 King Street
          Armonk, New York 10504
          Telephone No.: 914-273-4545
          Facsimile No.: 914-273-3665

   (b)    Process Agent.  For the purpose of Section 13(c):

          Party A appoints as its Process Agent:  Not applicable.

          Party B appoints as its Process Agent:  Not applicable.

   (c)    Offices. The provisions of Section 10(a) will apply to this Agreement.

   (d)    Multibranch Party. For the purpose of Section 10 of this Agreement:-

          Party A is a Multibranch Party and may act through any Office
          specified in the Confirmation for a Transaction.

          Party B is not a Multibranch Party.

   (e)    Calculation Agent. The Calculation Agent is Party A unless otherwise
          agreed to in writing by Party A or unless Party A is the sole
          Defaulting Party with respect to an Event of Default, in which case
          the Calculation Agent shall be appointed by the Indenture Trustee. If
          a party disagrees with a determination of market value made by the
          Calculation Agent, such party shall promptly provide to the
          Calculation Agent the basis for its disagreement. The original
          determination of market value made by the Calculation Agent shall
          remain valid unless the Calculation Agent, on the basis of the
          information provided by the disputing party, determines otherwise.

   (f)    Credit Support Document. Details of any Credit Support Document:

          Each of the following, as amended, supplemented, modified, renewed,
          replaced, consolidated, substituted or extended from time to time, is
          a "Credit Support Document" with respect to Party B:

                                       7
<PAGE>

          Financial Guaranty Insurance Policy No. [ ] (the "Policy") issued by
          MBIA Insurance Corporation ("MBIA") on July 19, 2001, to the Indenture
          Trustee as beneficiary. The Policy shall be a Credit Support Document
          solely with respect to net Fixed Amounts payable by Party B, and shall
          not be available to support, and may not be drawn on in respect of,
          any amounts due from Party B under Section 6(e) or any other provision
          of the Agreement.

          Party B agrees that the security interests in collateral granted to
          the Indenture Trustee on behalf of Party A as an Enhancement Provider
          under the Indenture in respect of Series 2001-A shall secure the
          obligations of Party B to Party A under this Agreement.

   (g)    Credit Support Provider.

          Credit Support Provider means in relation to Party A:  Not applicable.

          Credit Support Provider means in relation to Party B:  MBIA.

   (h)    Governing Law. This Agreement will be governed by and construed in
          accordance with the laws of the State of New York (without reference
          to its conflict of laws doctrine, other than Section 5-1401 of the
          General Obligations Law).

   (i)    Netting of Payments. All amounts payable on the same date, in the same
          currency and in respect of the same Transaction shall be netted in
          accordance with Section 2(c) of this Agreement. The election contained
          in the last paragraph of Section 2(c) of this Agreement shall not
          apply for the purposes of this Agreement.

   (j)    Amendments. Any amendments to the Agreement, Schedule and/or
          Confirmation shall be subject to the Rating Agency Condition.

   (k)    "Affiliate" will have the meaning specified in Section 14 of this
          Agreement.

                           PART 5: Other Provisions
                                   ----------------

   (a)    Additional Agreements. Party A agrees that it shall not enter a
          transaction of the type referred to in 5(a)(viii) (Merger Without
          Assumption) where the resulting, surviving or transferee entity fails
          to assume all of the obligations of Party A hereunder.

   (b)    Delivery of Confirmations. For each Transaction entered into
          hereunder, Party A shall promptly send to Party B a Confirmation via
          facsimile transmission. Party B agrees to respond to such Confirmation
          within two (2) Local Business Days, either confirming agreement
          thereto or requesting a correction of any error(s) contained therein.
          Failure by Party A to send a Confirmation or of Party B to respond
          within such period shall not affect the validity or enforceability of
          such Transaction. Absent manifest error, there shall be a presumption
          that the terms contained in such Confirmation are the terms of the
          Transaction.

   (c)    Recording of Conversations. Each party to this Agreement acknowledges
          and agrees to the tape recording of conversations between trading and
          marketing personnel of the parties to this Agreement whether by one or
          other or both of the parties or their agents, and that any such tape
          recordings may be submitted in evidence in any Proceedings relating to
          the Agreement.

                                       8
<PAGE>

   (d)    Furnishing Specified Information. Section 4(a)(iii) is hereby amended
          by inserting "promptly upon the earlier of (i)" in lieu of the word
          "upon" at the beginning thereof and inserting "or (ii) such party
          learning that the form or document is required" before the word "any"
          on the first line thereof.

   (e)    Notice by Facsimile Transmission. Section 12(a) is hereby amended by
          inserting the words "2(b)," between the word "Section" and the number
          "5" and inserting the words "or 13(c)" between the number "6" and the
          word "may" in the second line thereof.

   (f)    Section 3(a) of this Agreement is amended by (i) deleting the word
          "and" at the end of clause (iv); (ii) deleting the period at the end
          of clause (v) and inserting therein "; and "; and (iii) by inserting
          the following additional representation:

               "(vi)  Eligible Contract Participant. It is an 'eligible contract
                      participant' as defined under the Commodity Exchange Act,
                      Section 1(a)(12)."

   (g)    Section 3 is revised so as to add the following Section (g) at the end
          thereof:

          "(g)   Relationship Between Parties. Each party represents to the
                 other party and will be deemed to represent to the other party
                 on the date on which it enters into a Transaction that (absent
                 a written agreement between the parties that expressly imposes
                 affirmative obligations to the contrary for that Transaction):-

                 (i)      Non-Reliance. It is acting for its own account, and it
                          has made its own independent decisions to enter into
                          that Transaction and as to whether that Transaction is
                          appropriate or proper for it based upon its own
                          judgment and upon advice from such advisors as it has
                          deemed necessary. It is not relying on any
                          communication (written or oral) of the other party as
                          investment advice or as a recommendation to enter into
                          that Transaction; it being understood that information
                          and explanations related to the terms and conditions
                          of a Transaction shall not be considered investment
                          advice or a recommendation to enter into that
                          Transaction. Further, such party has not received from
                          the other party any assurance or guarantee as to the
                          expected results of that Transaction.

                 (ii)     Evaluation and Understanding. It is capable of
                          evaluating and understanding (on its own behalf or
                          through independent professional advice), and
                          understands and accepts, the terms, conditions and
                          risks of that Transaction. It is also capable of
                          assuming, and assumes, the financial and other risks
                          of that Transaction.

                 (iii)    Status of Parties. The other party is not acting as an
                          agent, fiduciary or advisor for it in respect of that
                          Transaction."

   (h)    Waiver of Right to Trial by Jury. EACH PARTY HEREBY IRREVOCABLY WAIVES
          ANY AND ALL RIGHTS TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL
          PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
          TRANSACTION CONTEMPLATED HEREBY.

                                       9
<PAGE>

   (i)    Provisions Relating to MBIA:

          (a)    The parties agree that MBIA shall be a third party beneficiary
          of this Agreement and shall have the right to enforce this Agreement
          against Party A.

          (b)    Any notices required to be given by Party B may be given by or
          at the direction of the Trustee on Party B's behalf. All notices
          required to be given to Party B by Party A shall also be given to the
          Indenture Trustee, as defined in Part 1(a), and MBIA, and any such
          notice not so given to both the Indenture Trustee and MBIA shall be
          ineffective unless receipt of such notice is waived by the party to
          whom it should have been given but was not given. Any requirement
          contained herein for obtaining the consent or agreement of MBIA shall
          not apply so long as a Control Transfer Event (as defined in the
          Indenture) has occurred and is continuing.

          (c)    No action or consent permitted or required to be taken or given
          by Party B under this Agreement (other than the performance by Party B
          of its payment obligations hereunder) shall be effective without the
          prior written consent of MBIA so long as no Control Transfer Event has
          occurred and is continuing. If a Control Transfer Event has occurred
          and is continuing, any provision giving MBIA the right to direct,
          appoint or consent to, approve of, or take any action (or waive any
          right to take action) under this Agreement, shall be inoperative and
          any such consent or approval shall be deemed to have been given for
          the purpose of such provisions.

          (d)    The rights of MBIA under this Part 5(i) shall terminate upon
          the later to occur of (x) the termination date of the Policy and (y)
          the day which is one year and one day after the date on which all
          amounts have been paid to MBIA under the Insurance Agreement.

   (j)    Non-Petition. Party A hereby agrees that it will not, prior to the
          date which is one year and one day after all Series 2001-A Notes
          issued by Party B pursuant to the Indenture have been paid in full,
          acquiesce, petition or otherwise invoke or cause Party B to invoke the
          process of any court or governmental authority for the purpose of
          commencing or sustaining a case against Party B under any federal or
          state bankruptcy, insolvency or similar law or for the purpose of
          appointing a receiver, liquidator, assignee, trustee, custodian,
          sequestrator or other similar official for Party B or any substantial
          part of the property of Party B, or for the purpose of ordering the
          winding up or liquidation of the affairs of Party B. Nothing herein
          shall prevent Party A from participating in any such proceeding once
          commenced.

   (k)    Limited Recourse. The obligations of Party B under this Agreement are
          limited recourse obligations of Party B, payable solely from the Trust
          Estate (as such term is defined in the Indenture), subject to and in
          accordance with the terms of the Indenture, and, following realization
          of the Trust Estate, any claims of Party A against Party B shall be
          extinguished. No recourse shall be had for the payment of any amount
          owing in respect of this Agreement against the trustee, or any
          officer, member, director, employee, security holder or incorporator
          thereof (each, an "Affiliated Person") of Party B or its successors or
          assigns for any amounts payable under this Agreement. It is understood
          that the foregoing provisions shall not (i) prevent recourse to the
          Trust Estate for the sums due or to become due under any security,
          instrument or agreement which is part of the Trust Estate (subject to
          the priority of payments set forth in the Indenture), or (ii)
          constitute a waiver, release or discharge of any obligation of Party B
          arising under this Agreement until the Trust Estate have been realized
          and the proceeds applied in accordance with the Indenture, whereupon
          any outstanding obligation of Party B under this Agreement shall be
          extinguished, or (iii) prevent recourse by the Indenture Trustee on
          behalf of

                                       10
<PAGE>

          Party A to MBIA, as the Credit Support Provider in respect
          of Party B, to the extent set forth in the related Credit Support
          Document.

   (l)    Transfer. Section 7 of the Agreement is supplemented by the additional
          requirement that any transfer or assignment by Party A of its
          obligations under the Agreement (including any Confirmation), and any
          amendments to the Agreement (including any Confirmation), shall be
          subject to the Rating Agency Condition. Party A consents to the pledge
          and assignment by Party B of its rights and obligations hereunder and
          under any Transaction to the Indenture Trustee pursuant to the
          Indenture.

   (m)    Events of Default. (i) Section 5(a)(i) of the Agreement is amended by
          substituting the following therefor: "Failure by the party to make,
          when due, any payment under this Agreement or delivery under Section
          2(a)(i) or 2(e) required to be made by it within five days of the date
          due under this Agreement and, upon at least one Business Days' prior
          notice to the other party."

   (n)    Rating of Party A. Party A represents to Party B that, on the date of
          this Agreement, (i) its long-term unsecured debt is rated at or above
          "A+" by S&P, "A1" by Moody's and "A+" by Fitch, and (ii) its short-
          term unsecured debt is rated at or above "A-1" by S&P, "P-1" by
          Moody's and "F1" by Fitch.

                                       11
<PAGE>

Accepted and agreed:

MORGAN GUARANTY TRUST COMPANY   SPIEGEL CREDIT CARD MASTER NOTE
OF NEW YORK                     TRUST

                                By: Bankers Trust Company, not in its individual
                                capacity, but solely as Owner Trustee

By: /s/ Guiseppe Pagano.
   Name:                        By: /s/ Robert D. Foltz
   Title:  Vice President           Name:
                                    Title:  Authorized Agent

                                       12
<PAGE>

                CONFIRMATION FOR U.S. DOLLAR INTEREST RATE SWAP
                    TRANSACTION UNDER 2001 MASTER AGREEMENT

<TABLE>
<S>       <C>                                        <C>        <C>
Date:     July 19, 2001                              Our ref:   Morgan Reference Number 493227
To:       Spiegel Credit Card Master Note Trust      From:      Morgan Guaranty Trust Company of
          c/o Bankers Trust Company                             New York
          Four Albany Street, 10/th/ Floor                      270 Park Avenue, 8/th/ Floor
          New York, NY  10006                                   New York, NY 10017
Attn:     Corporate Trust & Agency Services          Contact:   Marisol Collazo
Fax No:   212-250-6439                               Fax No:    212-834-6580
Tel No:   212-250-6323                               Tel No:    212-834-5597
</TABLE>

Dear Sir/Madam,

     The purpose of this letter agreement is to confirm the terms and conditions
of the Transaction entered into between Spiegel Credit Card Master Note Trust
and Morgan Guaranty Trust Company of New York (each a "party" and together "the
parties") on the Trade Date specified below (the "Transaction"). This letter
agreement constitutes a "Confirmation" as referred to in the ISDA Master
Agreement specified in paragraph 1 below (the "Agreement").

     The definitions and provisions contained in the 1991 ISDA Definitions, as
amended by the 1998 Supplement thereto (each as published by the International
Swaps and Derivatives Association, Inc., the "Definitions") are incorporated
into this Confirmation. In the event of any inconsistency between the
Definitions and this Confirmation, this Confirmation will govern. Capitalized
terms used herein and not otherwise defined have the meanings set forth in the
Definitions or the Indenture dated as of December 1, 2000, between Party B and
The Bank of New York, as indenture trustee (the "Indenture") as supplemented by
the Series 2001-A Indenture Supplement, dated as of July 19, 2001 (the
"Indenture Supplement" and together with the Indenture, the "Indenture").

1.   This Confirmation supplements, forms part of, and is subject to, the ISDA
Master Agreement (including the Schedule thereto) dated as of July 19, 2001, as
amended and supplemented from time to time (the "Agreement"), between the
parties. All provisions contained in the Agreement govern this Confirmation
except as expressly modified below.

     In this Confirmation "Party A" means Morgan Guaranty Trust Company of New
York and "Party B" means Spiegel Credit Card Master Note Trust.

2.   The terms of the particular Transaction to which this Confirmation relates
are as follows:

      Notional Amount:             Initially, USD600,000,000 and thereafter an
                                   amount equal for each Calculation Period to
                                   the Note Principal Balance (as defined in the
                                   Indenture Supplement) at the end of the first
                                   day of that Calculation Period.

      Trade Date:                  July 19, 2001

      Effective Date:              July 19, 2001
<PAGE>

      Termination Date:            The earlier of (i) March 15, 2010, subject to
                                   adjustment in accordance with the Following
                                   Business Day Convention, and (ii) the date on
                                   which the Note Principal Balance (as defined
                                   in the Indenture Supplement) is reduced to
                                   zero, subject to early termination in
                                   accordance with the terms of the Agreement.
                                   In accordance with the Indenture Supplement,
                                   the Expected Principal Distribution Date is
                                   March 15, 2005, subject to the Following
                                   Business Day Convention.

     Fixed Amounts:

      Fixed Rate Payer:            Party B

      Fixed Rate Payer             The 15/th/ of each month commencing August
      Payment Dates:               15, 2001 and ending on the Termination Date,
                                   subject to adjustment in accordance with the
                                   Following Business Day Convention

      Fixed Rate:                  5.205% per annum

      Fixed Rate Day Count         Actual/360
      Fraction:

      Floating Amounts:

     Floating Rate Payer:          Party A

      Floating Rate Payer          The 15/th/ of each month commencing August
      Payment Dates:               15, 2001 and ending on the Termination Date,
                                   subject to adjustment in accordance with the
                                   Following Business Day Convention.

      Floating Rate for initial
      Calculation Period:          3.82875%

      Floating Rate Option:        USD-LIBOR-BBA

      Designated Maturity:         1 Month, including initial Calculation
                                   Period.

      Spread:                      None

      Floating Rate Day Count      Actual/360

      Fraction:

      Reset Dates:                 First day of each Calculation Period

      Business Days:               New York, Portland, Oregon, and Chicago,
                                   Illinois

      Calculation Agent:           Party A

3.   Additional Amounts Upon Partial Termination

                                  Page 2 of 4
<PAGE>

     On any Payment Date prior to the Expected Principal Distribution Date (as
defined in the Indenture Supplement), where as a result of principal payments on
the Series 2001-A Notes (as defined in the Indenture Supplement), the Notional
Amount would be reduced by the corresponding reduction in the Note Principal
Balance (as defined in the Indenture Supplement), the parties hereto shall treat
the portion of such reduction (without duplication) as terminated on such
Payment Date (a "Terminated Transaction"). Party A shall calculate the Market
Quotation for the Terminated Transaction as set forth below.

     "Market Quotation" means, with respect to a Terminated Transaction, an
amount determined on the basis of quotations from Reference Market-makers. Each
quotation will be for an amount, if any, that would be paid to Party A
(expressed as a negative number) or by Party A (expressed as a positive number)
in consideration of an agreement between Party A and the quoting Reference
Market-maker to enter into such Terminated Transaction (with the same fixed and
floating payment rates and remaining term as this Transaction) on the relevant
Payment Date. Party A will request each Reference Market-maker to provide its
quotation to the extent reasonably practicable as of the same day and time
(without regard to different time zones) on or as soon as reasonably practicable
prior to the relevant Payment Date. The day and time as of which those
quotations are to be obtained will be selected in good faith by Party A. If more
than three quotations are provided, the Market Quotation will be the arithmetic
mean of the quotations, without regard to the quotations having the highest and
lowest values. If exactly three such quotations are provided, the Market
Quotation will be the quotation remaining after disregarding the highest and
lowest quotations. For this purpose, if more than one quotation has the same
highest value or lowest value, then one of such quotations shall be disregarded.
If fewer than three quotations are provided, Party A will determine the Market
Quotation in good faith. Notwithstanding the foregoing, Party A shall be the
sole Reference Market-maker unless: (a) the reduction in the Notional Amount of
the Transaction is equal to or greater than $50 million on such Payment Date,
and (b) the Servicer or the Indenture Trustee requests that quotations from
Reference Market-makers other than Party A are utilized.

     If the amount so determined by Party A in respect of a Terminated
Transaction is positive, Party B shall owe such amount to Party A, which shall
be payable (with interest thereon accruing from such Payment Date and calculated
at the Fixed Rate) on the next Distribution Date to the extent provided in the
Indenture; provided that no such payments shall be made by Party B until the
Note Principal Balance (as defined in the Indenture Supplement) has been reduced
to zero. If such amount is negative, no amounts shall be payable by Party A or
Party B in respect of the Terminated Transaction.

4.   Credit Support Documents:          With respect to Party B and solely with
                                        respect to net Fixed Amounts payable by
                                        Party B, and not with respect to any
                                        amount due under Section 6(e) or any
                                        other provision of the Agreement, the
                                        Financial Guaranty Insurance Policy,
                                        dated as of July 19, 2001, issued by
                                        MBIA.

5.   Account Details:

     Account for payments to Party A:   Name:  Morgan Guaranty Trust Company of
                                        New York

                                        City: New York

                                        ABA#  021-000-239

                                        Ref:  Spiegel Credit Card Master Note
                                        Trust

                                  Page 3 of 4
<PAGE>

                                        Acct:  999-97-979

     Account for payments to Party B:   The Bank of New York
                                        ABA #021000018
                                        Name:  Spiegel Credit Card Master Note
                                               Trust Collection Account
                                        Acct: 341807

6.   Offices:
     The Office of Party A for this     270 Park Avenue, 8/th/ Floor
     Transaction is:
                                        New York, NY 10017

     The Office of Party B for this     Four Albany St., 10/th/ Floor
     Transaction is:
                                        New York, NY 10006

      Please confirm that the foregoing correctly sets forth the terms
      and conditions of our agreement by responding within three (3)
      Business Days by returning via telecopier an executed copy of
      this Confirmation to the attention of Marisol Collaza (fax no.
      212-834-6580).

Failure to respond within such period shall not affect the validity or
enforceability of this Transaction, and shall be deemed to be an affirmation of
the terms and conditions contained herein, absent manifest error.

J.P. MORGAN SECURITIES INC., as      Accepted and confirmed as of the date first
agent for Morgan Guaranty Trust      written:
Company of New York
                                     SPIEGEL CREDIT CARD MASTER NOTE TRUST,
                                     By: Bankers Trust Company, not in its
                                     individual capacity, but solely as Owner
By: /s/ David Greenberg              Trustee
   --------------------
Name:
Title:  Vice President

By:                                  By:    /s/ Eileen M Hughes
                                          -------------------------------------
Name:                                Name and Title:
                                                       Vice President
Title:

                                  Page 4 of 4

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