Document:

<PAGE>

                     SPIEGEL CREDIT CARD MASTER NOTE TRUST

                                    Issuer,

                                      and

                             THE BANK OF NEW YORK

                               Indenture Trustee

                      SERIES 2001-A INDENTURE SUPPLEMENT

                           Dated as of July 19, 2001
<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<S>                                                                                                           <C>
ARTICLE I     Creation of the Series 2001-A Notes..........................................................     1
              Section 1.1    Designation...................................................................     1

ARTICLE II    Definitions..................................................................................     1
              Section 2.1    Definitions...................................................................     1

ARTICLE III   Servicing Fee................................................................................    12
              Section 3.1    Servicing Compensation........................................................    12

ARTICLE IV    Rights of Series 2001-A Noteholders and Allocation and Application of Collections............    13
              Section 4.1    Collections and Allocations...................................................    13
              Section 4.2    Determination of Monthly Interest.............................................    15
              Section 4.3    Determination of Monthly Principal............................................    16
              Section 4.4    Application of Available Finance Charge Collections and Available Principal
                             Collections...................................................................    16
              Section 4.5    Investor Charge-Offs..........................................................    18
              Section 4.6    Reallocated Principal Collections.............................................    19
              Section 4.7    Excess Finance Charge Collections.............................................    19
              Section 4.8    Shared Principal Collections..................................................    19
              Section 4.9    Principal Accumulation Account................................................    20
              Section 4.10   Reserve Account...............................................................    21
              Section 4.11   [Reserved]....................................................................    23
              Section 4.12   Determination of LIBOR........................................................    24
              Section 4.13   Investment Instructions.......................................................    24
              Section 4.14   Controlled Accumulation Period................................................    24
              Section 4.15   Suspension of Controlled Accumulation Period..................................    25
              Section 4.16   Insurance Policies............................................................    27
              Section 4.17   Swap..........................................................................    27

ARTICLE V     Delivery of Series 2001-A Notes; Distributions; Reports to Series 2001-A Noteholders.........    28
              Section 5.1    Delivery and Payment for the Series 2001-A Notes..............................    28
              Section 5.2    Distributions.................................................................    28
              Section 5.3    Reports and Statements to Series 2001-A Noteholders...........................    29
</TABLE>

                                       i

<PAGE>

<TABLE>
<S>                                                                                                      <C>
ARTICLE VI    Series 2001-A Pay Out Events and Events of Default......................................    30
              Section 6.1    Series 2001-A Pay Out Events.............................................    30
              Section 6.2    Series 2001-A Events of Default..........................................    31
              Section 6.3    Declarations of Default..................................................    32

ARTICLE VII   Redemption of Series 2001-A Notes; Final Distributions; Series Termination..............    33
              Section 7.1    Optional Redemption of Series 2001-A Notes; Final Distributions..........    33
              Section 7.2    Series Termination.......................................................    34

ARTICLE VIII  Miscellaneous Provisions................................................................    34
              Section 8.1    Ratification of Indenture; Amendments....................................    34
              Section 8.2    Form of Delivery of the Series 2001-A Notes..............................    34
              Section 8.3    Counterparts.............................................................    34
              Section 8.4    GOVERNING LAW............................................................    35
              Section 8.5    Limitation of Liability..................................................    35
              Section 8.6    Rights of the Indenture Trustee..........................................    35
              Section 8.7    Third Party Beneficiary..................................................    35
              Section 8.8    Inconsistency............................................................    35
              Section 8.9    Collateral Series Supplement.............................................    35
              Section 8.10   Increase of Collateral Amount............................................    35
              Section 8.11   Additional Representations and Warranties................................    36
</TABLE>

                                      ii

<PAGE>

                                   EXHIBITS

EXHIBIT A      FORM OF CLASS A NOTE

EXHIBIT B      FORM OF MONTHLY PAYMENT INSTRUCTIONS AND NOTIFICATION TO THE
               INDENTURE TRUSTEE

EXHIBIT C      FORM OF MONTHLY STATEMENT

EXHIBIT D      FORM OF MONTHLY SERVICER'S CERTIFICATE

EXHIBIT E      FORM OF SWAP

EXHIBIT F      INSURANCE AGREEMENT DEFINITIONS

EXHIBIT G      SECTION 2.05 OF INSURANCE AGREEMENT (SPREAD ACCOUNT)

EXHIBIT H      SECTION 5.01 OF INSURANCE AGREEMENT (INSURANCE AGREEMENT PAY OUT
               EVENTS)

                                   SCHEDULES

SCHEDULE I     PERFECTION REPRESENTATIONS, WARRANTIES AND COVENANTS

                                      iii
<PAGE>

     SERIES 2001-A INDENTURE SUPPLEMENT, dated as of July 19, 2001 (the
"Indenture Supplement"), between SPIEGEL CREDIT CARD MASTER NOTE TRUST, a trust
 --------------------
organized and existing under the laws of the State of Illinois
(herein, the "Issuer" or the "Trust"), and THE BANK OF NEW YORK, a banking
              ------          -----
corporation organized and existing under the laws of the State of New York, not
in its individual capacity, but solely as indenture trustee (herein, together
with its successors in the trusts thereunder as provided in the Master Indenture
referred to below, the "Indenture Trustee") under the Master Indenture, dated
                        -----------------
as of December 1, 2000 (the "Indenture") between the Issuer and the Indenture
                             ---------
Trustee (the Indenture, together with this Indenture Supplement, the
"Agreement").
 ---------

     Pursuant to Section 2.12 of the Indenture, the Seller may direct the
                 ------------
Issuer to issue one or more Series of Notes. The Principal Terms of this
Series are set forth in this Indenture Supplement to the Indenture.

                                   ARTICLE I

                      Creation of the Series 2001-A Notes
                      -----------------------------------

     Section 1.1 Designation.
                 ------------

     (a)  There is hereby created and designated a Series of Notes to be issued
pursuant to the Indenture and this Indenture Supplement to be known as "Spiegel
                                                                        -------
Credit Card Master Note Trust, Series 2001-A" or the "Series 2001-A Notes."
--------------------------------------------          -------------------
The Series 2001-A Notes shall be issued in a single Class, known as the "Class A
                                                                         -------
Series 2001-A Floating Rate Asset Backed Notes."
----------------------------------------------

     (b)  Series 2001-A shall be included in Group One and shall be a Principal
Sharing Series. Series 2001-A shall be an Excess Allocation Series with respect
to Group One only. Series 2001-A shall not be subordinated to any other Series.

                                  ARTICLE II

                                  Definitions
                                  -----------

     Section 2.1 Definitions.
                 -----------

     (a)  Whenever used in this Indenture Supplement, the following words and
phrases shall have the following meanings, and the definitions of such terms are
applicable to the singular as well as the plural forms of such terms and the
masculine as well as the feminine and neuter genders of such terms.

     "Accumulation Period Factor" means, for any Monthly Period, a fraction, the
      --------------------------
numerator of which is equal to the sum of the Initial Collateral Amounts of all
outstanding Series designated as Principal Sharing Series, and the denominator
of which is equal to the sum of (a) the Initial Collateral Amount and (b) the
Initial

                                       1
<PAGE>

Collateral Amounts of all outstanding Series designated as Principal Sharing
Series (other than Series 2001-A) which are not expected to be in their
revolving periods; provided, however, that this definition may be
                   --------  -------
changed at any time if the Rating Agency Condition is satisfied.

     "Accumulation Period Length" is defined in subsection 4.14.
      --------------------------                ---------------

     "Accumulation Shortfall" means: (a) for the first Distribution Date during
      ----------------------
the Controlled Accumulation Period, zero; and (b) thereafter, for any
Distribution Date during the Controlled Accumulation Period, the excess, if any,
of the Controlled Deposit Amount for the previous Distribution Date over the
amount deposited into the Principal Accumulation Account pursuant to subsection
                                                                     ----------
4.4(c)(i) for the previous Distribution Date.
---------

     "Additional Interest" is defined in Section 4.2.
      -------------------                -----------

     "Allocation Percentage" means, on any date of determination, the percentage
      ---------------------
equivalent of a fraction:

          (a) the numerator of which shall be the Collateral Amount, determined:

                 (i)  for Principal Collections during the Revolving Period and
          for Finance Charge Collections and Default Amounts at any time, at the
          end of the last day of the prior Monthly Period (or, in the case of
          the Monthly Period in which the Closing Date occurs, on the Closing
          Date); provided, however, that if the Rapid Amortization Period is
                 --------  -------
          extended past the Series 2001-A Final Maturity Date as a result of
          there being amounts owed to the Insurer or the Counterparty, then
          during that extended period the numerator for Finance Charge
          Collections and Default Amounts shall equal the numerator in effect
          for the last Monthly Period prior to the Series 2001-A Final Maturity
          Date;

                 (ii) for Principal Collections during the Rapid Amortization
          Period and the Controlled Accumulation Period, on the last day of the
          Revolving Period; provided, however, that if Series 2001-A is
                            --------  -------
          paired with a Paired Series and a Rapid Amortization Period commences
          for such Paired Series, the Seller may, by written notice to the
          Indenture Trustee, the Servicer and the Rating Agencies, but only
          after satisfying the Rating Agency Condition, designate a different
          numerator for such fraction, which numerator shall not be less than
          the Collateral Amount as of the last day of the Revolving Period for
          the Paired Series; and

          (b) the denominator of which shall be the greater of (x) the sum
     of the Aggregate Principal Receivables and the amount on deposit in the
     Excess

                                       2
<PAGE>

     Funding Account (exclusive of any investment earnings on such amount) in
     each case as of the end of the Business Day preceding such date of
     determination and (y) the sum of the numerators used to calculate the
     Allocation Percentages for allocations with respect to Finance Charge
     Collections, Principal Collections or Default Amounts, as applicable, for
     all outstanding Series or "Series" under (and as defined in) the Pooling
     and Servicing Agreement (other than Series represented by the Collateral
     Certificate) on such date of determination.

     "Available Finance Charge Collections" means, for any Monthly Period,
      ------------------------------------
an amount equal to the sum of (a) the Investor Finance Charge Collections for
such Monthly Period, plus (b) any Net Swap Receipts for the related Distribution
Date, plus (c) the Excess Finance Charge Collections allocated to Series 2001-A
for such Monthly Period, plus (d) Principal Accumulation Investment Proceeds, if
any, with respect to the related Distribution Date, plus (e) amounts, if any, to
be withdrawn from the Reserve Account which will be deposited into the
Collection Account on the related Distribution Date to be treated as Available
Finance Charge Collections pursuant to subsection 4.10(d).
                                       ------------------

     "Available Principal Collections" means, for any Monthly Period, an amount
      -------------------------------
equal to the sum of (a) the Investor Principal Collections for such Monthly
Period minus (b) the amount of Reallocated Principal Collections with respect to
such Monthly Period which pursuant to Section 4.6 are required to be applied on
                                      -----------
the related Distribution Date, plus (c) any Shared Principal Collections with
respect to other Principal Sharing Series (including any amounts on deposit in
the Excess Funding Account that are allocated to Series 2001-A pursuant to the
Agreement for application as Shared Principal Collections), plus (d) the
aggregate amount to be treated as Available Principal Collections pursuant to
subsections 4.4(a)(iii), (iv) and (viii) for the related Distribution Date.
-----------------------  ----     ------

     "Available Reserve Account Amount" means, for any Distribution Date, the
      --------------------------------
lesser of (a) the amount on deposit in the Reserve Account on such date (after
taking into account any interest and earnings retained in the Reserve Account
pursuant to subsection 4.10(b) on such date, but before giving effect to any
            ------------------
deposit made or to be made pursuant to subsection 4.4(a)(vi) to the Reserve
                                       ---------------------
Account on such date) and (b) the Required Reserve Account Amount.

     "Available Spread Account Amount" is defined in the Insurance
      -------------------------------
Agreement.

     "Base Rate" is defined in the Insurance Agreement.
      ---------

     "Class A Noteholder" means the Person in whose name a Class A Note is
      ------------------
registered in the Note Register.

                                       3
<PAGE>

     "Class A Notes" means any one of the Notes executed by the Issuer and
      -------------
authenticated by or on behalf of the Indenture Trustee, substantially in the
form of Exhibit A.
        ---------

     "Closing Date" means July 19, 2001.
      ------------

     "Collateral Amount" means, as of any date of determination, an amount
      -----------------
equal to the result of (a) the Initial Collateral Amount, minus (b) the amount
of principal previously paid to the Series 2001-A Noteholders, minus (c) the
balance on deposit in the Principal Accumulation Account, minus (d) the
aggregate reductions to the Collateral Amount made pursuant to Section 4.4(c) on
                                                               --------------
or prior to such date of determination, minus (e) the excess, if any, of the
aggregate amount of Investor Charge-Offs and Reallocated Principal Collections
over the reimbursements of such amounts pursuant to subsection 4.4(a)(iv) prior
                                                    ---------------------
to such date, plus (f) any additional amount designated by the Seller pursuant
to Section 8.10.

     "Control Transfer Event" means either of the following events: (a) the
      ----------------------
Insurer shall fail to timely make any payment required to be made by it pursuant
to any Policy or otherwise default in any of its obligations under the Insurance
Agreement; or (b) the Insurer shall (i) become insolvent, (ii) fail to pay its
debts generally as they become due, (iii) voluntarily seek, consent to, or
acquiesce in the benefit or benefits of any Debtor Relief Law, or (iv) become a
party to (or be made the subject of) any proceeding provided for by any Debtor
Relief Law, other than as a creditor or claimant, and, in the event such
proceeding is involuntary, the petition instituting same is not dismissed within
60 days after its filing.

     "Controlled Accumulation Amount" means, for any Distribution Date with
      ------------------------------
respect to the Controlled Accumulation Period, $50,000,000; provided, however,
                                                            --------  -------
that if the Accumulation Period Length is determined to be less than 12 months
pursuant to Section 4.14 or 4.15, the Controlled Accumulation Amount for each
            ------------    ----
Distribution Date with respect to the Controlled Accumulation Period will be
equal to (i) the product of (x) the aggregate initial principal amount of the
Series 2001-A Notes and (y) the Accumulation Period Factor for such Monthly
Period divided by (ii) the Required Accumulation Factor Number.

     "Controlled Accumulation Period" means, unless a Pay Out Event shall have
      ------------------------------
occurred prior thereto, the period commencing at the opening of business on
March 1, 2004 or such later date as is determined in accordance with Section
                                                                     -------
4.14 and 4.15, and ending on the first to occur of (a) the commencement of the
----     ----
Rapid Amortization Period, (b) the payment in full of the Note Principal Balance
and (c) the Series 2001-A Final Maturity Date.

     "Controlled Deposit Amount" means, for any Distribution Date with respect
      -------------------------
to the Controlled Accumulation Period, an amount equal to the sum of the
Controlled Accumulation Amount for such Distribution Date and any existing
Accumulation Shortfall.

                                       4
<PAGE>

     "Counterparty" means Morgan Guaranty Trust Company of New York or the
      ------------
counterparty under any replacement interest rate swap obtained pursuant to
Section 4.17.
------------

     "Covered Amount" means an amount, determined as of each Distribution Date
for any Interest Period, equal to the sum of (a) the product of (i) a fraction,
the numerator of which is the actual number of days in such Interest Period and
the denominator of which is 360, times (ii) the Note Interest Rate in effect
with respect to such Interest Period, times (iii) the aggregate amount on
deposit in the Principal Accumulation Account as of the Record Date preceding
such Distribution Date.

     "Default Amount Rate" is defined in the Insurance Agreement.
      -------------------

     "Default Estimate" means, for any Monthly Period, an amount equal to the
      ----------------
product of (i) 1.5, multiplied by (ii) the arithmetic mean of the Investor
Default Amounts for the prior three Monthly Periods. For this purpose, the
April, May, June and July Investor Default Amounts shall be deemed to have
equaled $9,300,000.

     "Deficiency Amount" means (a) for any Distribution Date other than the
      -----------------
Series 2001-A Final Maturity Date, the excess of the amounts payable pursuant to
Sections 4.4(a)(i) and (ii) for such Distribution Date over the Available
------------------     ----
Finance Charge Collections, Reallocated Principal Collections and Available
Spread Account Amount that are available to cover such amounts, and (b) for the
Series 2001-A Final Maturity Date, the sum of (i) the amount determined pursuant
to clause (a) for the Series 2001-A Final   Maturity Date and (ii) the excess of
   ----------
the Note Principal Balance over the Available Principal Collections and
Available Spread Account Amount that are available to cover such amount.

     "Distribution Date" means August 15, 2001 and the 15/th/ day of each
      -----------------
calendar month thereafter, or if such 15th day is not a Business Day, the next
succeeding Business Day.

     "Enhancement Provider" means each of the Insurer and the Counterparty.
      --------------------

     "Excess Collateral Amount" means, at any time, the result of the Collateral
      ------------------------
Amount, plus the Principal Accumulation Account Balance, minus the Note
Principal Balance.

     "Excess Spread Percentage" is defined in the Insurance Agreement.
      ------------------------

     "Expected Principal Distribution Date" means the March 2005 Distribution
      ------------------------------------
Date.

     "Finance Charge Shortfall" is defined in Section 4.7.
      ------------------------                -----------

                                       5
<PAGE>

     "Group One" means Series 2001-A, the outstanding Series under (and as
      ---------
defined in) the Pooling and Servicing Agreement (other than Series represented
by the Collateral Certificate) and each other Series hereafter specified in the
related Indenture Supplement to be included in Group One.

     "Initial Collateral Amount" means the sum of (a) $685,800,000, which equals
      -------------------------
the sum of (i) the initial principal amount of the Series 2001-A Notes plus (ii)
the Initial Excess Collateral Amount (excluding the Supplemental Enhancement),
plus (b) the Supplemental Enhancement.

     "Initial Excess Collateral Amount" means, at any time, the sum of (a)
      --------------------------------
$85,800,000, plus (b) the Supplemental Enhancement.

     "Insurance Agreement" means the Insurance and Reimbursement Agreement dated
      -------------------
as of the Closing Date between the Seller, the Servicer, Spiegel, Spiegel
Acceptance Corporation, the Issuer, the Indenture Trustee and the Insurer.

     "Insured Obligation" means, with respect to any Policy, the "Insured
      ------------------
Obligation" as defined in such Policy.

     "Insurer" means MBIA Insurance Corporation, a New York stock insurance
      -------
corporation.

     "Interest Period" means, for any Distribution Date, the period from and
      ---------------
including the Distribution Date immediately preceding such Distribution Date
(or, in the case of the first Distribution Date, from and including the Closing
Date) to but excluding such Distribution Date.

     "Interest Shortfall" is defined in Section 4.2.
      ------------------                -----------

     "Investor Charge-Offs" is defined in Section 4.5.
      --------------------                -----------

     "Investor Default Amount" means, for any Distribution Date, an amount equal
      -----------------------
to the product of (a) the Default Amount for the related Monthly Period and (b)
the daily average Allocation Percentage for such Monthly Period; provided that
                                                                 --------
the Investor Default Amount for the August 15, 2001 Distribution Date shall be
equal to the product of (a) the Default Amount for the calendar month of July
2001,  (b) the daily average Allocation Percentage for the first Monthly Period
and (c) a fraction equal to the number of days in the first Monthly Period,
divided by 31.

     "Investor Finance Charge Collections" means, for any Monthly Period, an
      -----------------------------------
amount equal to the aggregate amount of Finance Charge Collections (including
Net Recoveries treated as Finance Charge Collections) retained or deposited in
the Finance Charge Subaccount for Series 2001-A pursuant to subsection 4.1(b)(i)
                                                            --------------------
for such Monthly Period.

                                       6
<PAGE>

     "Investor Principal Collections" means, for any Monthly Period, the
      ------------------------------
aggregate amount of Principal Collections retained or deposited in the Principal
Collections Subaccount for Series 2001-A pursuant to subsection 4.1(b)(ii) for
                                                     ---------------------
such Monthly Period.

     "Investor Uncovered Dilution Amount" means, for any Distribution Date, an
      ----------------------------------
amount equal to the Series Share of shortfalls in Deposit Obligations that is
allocated to Series 2001-A pursuant to Section 8.4(h) of the Indenture.
                                       --------------

     "LIBOR" means, for any Interest Period, the London interbank offered rate
      -----
for one-month United States dollar deposits determined by the Indenture Trustee
for each Interest Period in accordance with the provisions of Section 4.12.
                                                              ------------

     "LIBOR Determination Date" means the second London Banking Day prior to the
      ------------------------
commencement of each Interest Period.

     "London Banking Day" means any day on which commercial banks are open for
      ------------------
general business (including dealings in foreign exchange and foreign currency
deposits) in London, England.

     "Minimum Seller Percentage" means zero for Series 2001-A.
      -------------------------

     "Modified Excess Spread Percentage" is defined in the Insurance Agreement.
      ---------------------------------

     "Monthly Insurance Premium" means the Premium (as defined in the Premium
      -------------------------
and Fee Letter) for any Monthly Period.

     "Monthly Interest" is defined in Section 4.2.
      ----------------                -----------

     "Monthly Period" means the period from and including the first day of the
      --------------
calendar month preceding a related Determination Date to and including the last
day of such calendar month; provided that the first Monthly Period shall begin
on and include the Closing Date and end on and include July 31, 2001.

     "Monthly Principal" means the monthly principal distributable in respect of
      -----------------
the Notes as calculated in accordance with Section 4.3.
                                           -----------

     "Monthly Principal Reallocation Amount" means, for any Monthly Period, an
      -------------------------------------
amount equal to the lower of:

          (a)  the excess of the Required Amount, over the amount of Available
     Finance Charge Collections applied to pay the Required Amount pursuant to
     subsection 4.4(a); and
     -----------------

          (b)  the Excess Collateral Amount (after giving effect to Investor
     Charge-Offs for the related Monthly Period).

                                       7
<PAGE>

     "Monthly Servicing Fee" is defined in subsection 3.1(a).
      ---------------------                -----------------

     "Net Interest Obligation" means, for any Distribution Date: (a) if there is
      -----------------------
a Net Swap Payment due on that Distribution Date, the sum of the Net Swap
Payment and the Monthly Interest for that Distribution Date; (b) if there is a
Net Swap Receipt due on that Distribution Date, the result of the Monthly
Interest for that Distribution Date minus the Net Swap Receipt; and (c) if the
Swap has terminated for any reason, the Monthly Interest for that Distribution
Date.

     "Net Swap Payment" means any net amount payable by the Issuer under the
      ----------------
Swap as a result of LIBOR being less than the Swap Rate.  For the avoidance of
doubt, (i) Net Swap Payments do not include early termination payments or
payment of breakage or other miscellaneous costs, and (ii) for any Distribution
Date, the Monthly Interest, less the Net Swap Receipt, if any, plus, the Net
Swap Payment, if any, will never exceed what Monthly Interest would have been if
the Note Interest Rate were 5.485%.

     "Net Swap Receipt" means any net amount payable by the Counterparty as a
      ----------------
result of LIBOR being greater than the Swap Rate.  For the avoidance of doubt,
Net Swap Receipts do not include early termination payments.

     "Note Initial Principal Balance" means $600,000,000.
      ------------------------------

     "Note Interest Rate" means a per annum rate of 0.28% in excess of LIBOR as
      ------------------
determined on the LIBOR Determination Date for the applicable Interest Period.

     "Note Principal Balance" means, on any date of determination, an amount
      ----------------------
equal to (a) the Note Initial Principal Balance, minus (b) the aggregate amount
of principal payments made to the Class A Noteholders on or prior to such date.

     "Percentage Allocation" is defined in subsection 4.1(b)(ii)(y).
      ---------------------                ------------------------

     "Policy" means the Financial Guaranty Insurance Policy No.  35738(1)  or
      ------
the Financial Guaranty Insurance Policy No.  35738(2), each issued by MBIA
Insurance Corporation pursuant to the Insurance Agreement, and, collectively,
referred to herein as the "Policies."

     "Portfolio Adjusted Yield" means, for any Distribution Date, the average of
      ------------------------
the percentages obtained for each of the three preceding Monthly Periods by
subtracting the Base Rate and the Default Amount Rate for each such Monthly
Period from the Portfolio Yield for each such Monthly Period.

     "Portfolio Yield" is defined in the Insurance Agreement.
      ---------------

     "Premium and Fee Letter" is defined in the Insurance Agreement.
      ----------------------

                                       8
<PAGE>

     "Principal Accumulation Account" shall have the meaning set forth in
      ------------------------------
subsection 4.9(a).
-----------------

     "Principal Accumulation Account Balance" means, for any date of
      --------------------------------------
determination, the principal amount, if any, on deposit in the Principal
Accumulation Account on such date of determination.

     "Principal Accumulation Investment Proceeds" means, with respect to each
      ------------------------------------------
Distribution Date, the investment earnings on funds in the Principal
Accumulation Account (net of investment expenses and losses) for the period from
and including the immediately preceding Distribution Date to but excluding such
Distribution Date.

     "Principal Payment Rate" means, for any Monthly Period, (a) the aggregate
      ----------------------
amount of Principal Collections deposited in the Collection Account during that
Monthly Period, divided by (b) the Aggregate Principal Receivables as of the
                ------- --
close of business on the last day of the prior Monthly Period.

     "Principal Shortfall" is defined in subsection 4.8(a).
      -------------------                -----------------

     "Qualified Maturity Agreement" means an agreement, meeting the requirements
      ----------------------------
described in the definition of "Qualified Maturity Agreement" set forth in the
Policies, whereby an Eligible Institution agrees to make a deposit into the
Principal Accumulation Account on the Expected Principal Distribution Date in an
amount equal to the Note Principal Balance on such date; provided that for
purposes of this definition, references in the definition of "Eligible
Institution" to ratings of "A-1+" and "AAA" by Standard & Poor's shall be
modified to require ratings of "A-1" and "A+" from Standard & Poor's.

     "Rapid Amortization Period" means the period commencing on the Business Day
      -------------------------
immediately preceding the day on which a Pay Out Event with respect to Series
2001-A is deemed to have occurred, and ending on the first to occur of (i) the
payment in full of the Collateral Amount and (ii) the Series 2001-A Final
Maturity Date; provided, that if any amounts are owing to the Insurer under the
               --------
Insurance Agreement or the Counterparty under the Swap at the Series 2001-A
Final Maturity Date, the Rapid Amortization Period shall continue, solely for
purposes of repaying such amounts, but in no event shall the Rapid Amortization
Period continue after the earliest of (x) the date on which no further amounts
are owed to the Insurer under the Insurance Agreement and the Counterparty under
the Swap, (y) the March 2010 Distribution Date and (z) the date on which the
Collateral Amount has been reduced to zero; provided, further, that if the Rapid
                                            --------  -------
Amortization Period is extended in accordance with the immediately preceding
proviso, for purposes of calculating the Minimum Aggregate Principal Balance,
for so long as the Rapid Amortization Period is so extended, (i) Series 2001-A
shall be deemed to be outstanding, (ii) the Collateral Amount shall be included
in the sum of the collateral amounts of all outstanding series for purposes of
clause (a) of the definition of Minimum Aggregate Principal Balance and (iii)
the numerator used for purposes of the Allocation

                                       9
<PAGE>

Percentage with respect to Principal Collections for Series 2001-A shall be
included in the calculation described in clause (b) of the definition of Minimum
Aggregate Principal Balance.

     "Rating Agency" means each of Fitch, Moody's and Standard & Poor's.
      -------------

     "Rating Agency Condition" means, with respect to Series 2001-A, the Rating
      -----------------------
Agency Condition, as defined in the Insurance Agreement.

     "Reallocated Principal Collections" means, for any Distribution Date,
      ---------------------------------
Investor Principal Collections applied in accordance with Section 4.6 in an
                                                          -----------
amount not to exceed the Monthly Principal Reallocation Amount for the related
Monthly Period.

     "Reassignment Amount" means, for any Distribution Date, after giving effect
      -------------------
to any deposits and distributions otherwise to be made on such Distribution
Date, the sum of (i) the outstanding principal balance of the Series 2001-A
Notes on such Distribution Date, plus (ii) Monthly Interest for such
Distribution Date and any Monthly Interest previously due but not distributed to
the Series 2001-A Noteholders, plus (iii) the amount of Additional Interest, if
any, for such Distribution Date and any Additional Interest previously due but
not distributed to the Series 2001-A Noteholders on a prior Distribution Date.

     "Reference Banks" means four major banks in the London interbank market
      ---------------
selected by the Servicer or the Counterparty as calculation agent under the
Swap.

     "Reimbursement Amounts" is defined in the Insurance Agreement.
      ---------------------

     "Required Accumulation Factor Number" shall be equal to a fraction, rounded
      -----------------------------------
upwards to the nearest whole number, the numerator of which is one and the
denominator of which is equal to the lowest monthly Principal Payment Rate on
the Accounts, expressed as a decimal, for the 12 months preceding the date of
such calculation; provided, however, that this definition may be changed at any
                  --------  -------
time if the Rating Agency Condition is satisfied.

     "Required Amount" is defined in the Insurance Agreement.
      ---------------

     "Required Excess Collateral Amount" is defined in the Insurance Agreement.
      ---------------------------------

     "Required Reserve Account Amount" means, for any Distribution Date on or
      -------------------------------
after the Reserve Account Funding Date, an amount equal to (a) 0.5% of the Note
Principal Balance or (b) any other amount designated by the Seller; provided,
                                                                    --------
however, that if such designation is of a lesser amount, the Seller shall (i)
-------
provide the Servicer and the Indenture Trustee with evidence that the Rating
Agency Condition shall have been satisfied and (ii) deliver to the Indenture
Trustee a certificate of an Authorized Officer to the effect that, based on the
facts known to such officer at such time, in the reasonable belief of the
Seller, such designation will not cause a Pay Out

                                      10
<PAGE>

Event or an event that, after the giving of notice or the lapse of time, would
cause a Pay Out Event to occur with respect to Series 2001-A.

     "Reserve Account" is defined in subsection 4.10(a).
      ---------------                ------------------

     "Reserve Account Funding Date" means the Distribution Date designated by
      ----------------------------
the Servicer which occurs not later than the earliest of (a) the Distribution
Date with respect to the Monthly Period which commences 3 months prior to the
commencement of the Controlled Accumulation Period; (b) the first Distribution
Date for which the Portfolio Adjusted Yield is less than 2%, but in such event
the Reserve Account Funding Date shall not be required to occur earlier than the
Distribution Date with respect to the Monthly Period which commences 12 months
prior to the commencement of the Controlled Accumulation Period; (c) the first
Distribution Date for which the Portfolio Adjusted Yield is less than 3%, but in
such event the Reserve Account Funding Date shall not be required to occur
earlier than the Distribution Date with respect to the Monthly Period which
commences 6 months prior to the commencement of the Controlled Accumulation
Period; and (d) the first Distribution Date for which the Portfolio Adjusted
Yield is less than 4%, but in such event the Reserve Account Funding Date shall
not be required to occur earlier than the Distribution Date with respect to the
Monthly Period which commences 4 months prior to the commencement of the
Controlled Accumulation Period.

     "Reserve Account Surplus" means, as of any Distribution Date following the
      -----------------------
Reserve Account Funding Date, the amount, if any, by which the amount on deposit
in the Reserve Account exceeds the Required Reserve Account Amount.

     "Reserve Draw Amount" means, with respect to each Distribution Date
      -------------------
relating to the Controlled Accumulation Period or the first Distribution Date
relating to the Rapid Amortization Period, the amount, if any, by which the
Principal Accumulation Investment Proceeds for such Distribution Date are less
than the Covered Amount determined as of such Distribution Date.

     "Revolving Period" means the period beginning on the Closing Date and
      ----------------
ending on the earlier of the close of business on the day immediately preceding
the day the Controlled Accumulation Period commences or the Rapid Amortization
Period commences.

     "Series 2001-A" means the Series of Notes the terms of which are specified
      -------------
in this Indenture Supplement.

     "Series 2001-A Final Maturity Date" means the earlier to occur of (a) the
      ---------------------------------
Distribution Date on which the Note Principal Balance is paid in full and (b)
the March 2010 Distribution Date.

     "Series 2001-A Note" means a Class A Note.
      ------------------

     "Series 2001-A Noteholder" means a Class A Noteholder.
      ------------------------

                                      11
<PAGE>

     "Series 2001-A Pay Out Event" is defined in Section 6.1.
      ---------------------------                -----------

     "Series Servicing Fee Percentage" means 2% per annum.
      -------------------------------

     "Spread Account" means the segregated trust account required to be
      --------------
established pursuant to Section 2.05 of the Insurance Agreement, which section
is set forth in its entirety in Exhibit G.
                                ---------

     "Supplemental Enhancement" is defined in the Insurance Agreement.
      ------------------------

     "Surplus Collateral Amount" means, at any time, the excess, if any, of the
      -------------------------
Excess Collateral Amount over the sum of the Required Excess Collateral Amount
and the Supplemental Enhancement.

     "Swap" means an interest rate swap agreement between the Owner Trustee, on
      ----
behalf of the Trust, and the Counterparty substantially in the form of Exhibit E
                                                                       ---------
to this Indenture Supplement, or such other form as shall have satisfied the
Rating Agency Condition.

     "Swap Rate" means 5.205% per annum.
      ---------

     "Telerate Page 3750" means the display page currently so designated on the
      ------------------
Bridge Telerate Capital Markets Report (or such other page as may replace that
page in that service for the purpose of displaying comparable rates or prices).

     (b)  Each capitalized term defined herein shall relate to the Series 2001-A
Notes and no other Series of Notes issued by the Trust, unless the context
otherwise requires.  All capitalized terms used herein and not otherwise defined
herein have the meanings ascribed to them in the Indenture or the Transfer and
Servicing Agreement. In the event that any term or provision contained herein
shall conflict with or be inconsistent with any term or provision contained in
the Indenture or the Transfer and Servicing Agreement, the terms and provisions
of this Indenture Supplement shall govern.

     (c)  The interpretive rules specified in Section 1.2 of the Master
                                              -----------
Indenture also apply to this Indenture Supplement.

     (d)  The definitions of all capitalized terms defined herein by reference
to the respective definitions of those terms in the Insurance Agreement can be
found in Exhibit F.
         ---------

                                  ARTICLE III

                                 Servicing Fee
                                 -------------

     Section 3.1  Servicing Compensation.  The share of the Servicing Fee
                  ----------------------
allocable to Series 2001-A for any Distribution Date (the "Monthly Servicing
                                                           -----------------
Fee")
---

                                      12
<PAGE>

shall be equal to one-twelfth of the product of (a) the Series Servicing Fee
Percentage and (b) (i) the Collateral Amount as of the last day of the Monthly
Period preceding such Distribution Date, minus (ii) the product of the amount,
if any, on deposit in the Excess Funding Account as of the last day of the
Monthly Period preceding such Distribution Date and the Allocation Percentage
for Finance Charge Collections with respect to such Monthly Period; provided,
                                                                    --------
however, that with respect to the first Distribution Date, the Monthly Servicing
-------
Fee shall be equal to $495,300.  The remainder of the Servicing Fee shall be
paid by the holders of the Seller Interest or the noteholders of other Series
(as provided in the related Indenture Supplements) and in no event shall the
Trust, the Indenture Trustee or the Series 2001-A Noteholders be liable for the
share of the Servicing Fee to be paid by the holders of the Seller Interest or
the noteholders of any other Series.  To the extent that the Monthly Servicing
Fee is not paid in full pursuant to the preceding provisions of this Section 3.1
                                                                     -----------
and Section 4.4, it shall be paid by the holders of the Seller Interest.
    -----------

                                  ARTICLE IV

                      Rights of Series 2001-A Noteholders
                      -----------------------------------
                 and Allocation and Application of Collections
                 ---------------------------------------------

     Section 4.1  Collections and Allocations.
                  ---------------------------

     (a)  Allocations.  Finance Charge Collections, Principal Collections and
          -----------
Defaulted Receivables allocated to Series 2001-A pursuant to Article VIII of the
                                                             ------------
Indenture shall be allocated and distributed as set forth in this Article.

     (b)  Allocations to the Series 2001-A Noteholders.  The Servicer shall,
          --------------------------------------------
prior to the close of business on any Deposit Date, allocate to the Series 2001-
A Noteholders the following amounts as set forth below:

          (i)  Allocations of Finance Charge Collections. The Servicer shall
               -----------------------------------------
     allocate to the Series 2001-A Noteholders and transfer to the Finance
     Charge Subaccount for application as provided herein an amount equal to the
     product of (A) the Allocation Percentage and (B) the aggregate Finance
     Charge Collections deposited in the Collection Account on such Deposit
     Date; provided, however, that with respect to the portion of each Monthly
           --------  -------
     Period falling in the Revolving Period or the Controlled Accumulation
     Period, such allocation shall be transferred to the Finance Charge
     Subaccount only until such time as the amount transferred to the Finance
     Charge Subaccount pursuant to this subsection during that Monthly Period
     equals the sum of (1) the Net Interest Obligation with respect to the
     Distribution Date relating to that Monthly Period, (2) at any time that
     FCNB is not the Servicer, the Monthly Servicing Fee payable on the
     Distribution Date relating to that Monthly Period and all accrued and
     unpaid Investor Monthly Servicing Fees with respect to any prior Monthly
     Periods, (3) the Default Estimate for that

                                      13
<PAGE>

     Monthly Period and (4) the Monthly Insurance Premium with respect to that
     Monthly Period; provided further, however, that notwithstanding the
                     -------- -------  -------
     foregoing proviso, (1) the entire Allocation Percentage of Finance Charge
               -------
     Collections shall be transferred to the Finance Charge Subaccount on a
     daily basis if (x) the Excess Spread Percentage for the preceding Monthly
     Period is less than 3.00%, or (y) the Available Spread Account Amount is
     less than the Required Spread Account Amount; and (2) subject to Section
                                                                      -------
     8.4(a) of the Indenture, on each Determination Date, the Servicer shall
     ------
     deposit in the Finance Charge Subaccount any amounts not retained on a
     daily basis pursuant to the preceding proviso. Any portion of such
                                           -------
     allocation not required to be transferred to the Finance Charge Subaccount
     pursuant to the preceding sentence shall be (x) first, deposited in the
     Excess Funding Account to the extent that the Seller Amount is less than
     the Minimum Seller Amount and (y) thereafter paid to the Holders of the
     Seller Interest.

          (ii)  Allocations of Principal Collections.  The Servicer shall
                ------------------------------------
     allocate to the Series 2001-A Noteholders the following amounts as set
     forth below:

                (x)  Allocations During the Revolving Period. During the
                     ---------------------------------------
          Revolving Period an amount equal to the product of the Allocation
          Percentage and the aggregate amount of Principal Collections deposited
          in the Collection Account on such Deposit Date, shall be allocated to
          the Series 2001-A Noteholders and shall be first, if any other
          Principal Sharing Series is outstanding and in its amortization period
          or accumulation period, retained in the Collection Account for
          application, to the extent necessary, as Shared Principal Collections
          to other Principal Sharing Series on the related Distribution Date,
          second deposited in the Excess Funding Account to the extent necessary
          so that the Seller Amount is not less than the Minimum Seller Amount
          and third paid to the holders of the Seller Interest.

                (y)  Allocations During the Controlled Accumulation Period.
                     -----------------------------------------------------
          During the Controlled Accumulation Period an amount equal to the
          product of (I) the Allocation Percentage and (II) the aggregate amount
          of Principal Collections deposited in the Collection Account on such
          Deposit Date (the product for any such date is hereinafter referred to
          as a "Percentage Allocation") shall be allocated to the Series 2001-A
                ---------------------
          Noteholders and transferred to the Principal Collections Subaccount
          until applied as provided herein; provided, however, that if the sum
                                            --------  -------
          of such Percentage Allocation and all preceding Percentage Allocations
          with respect to the same Monthly Period exceeds the Controlled Deposit
          Amount during the Controlled Accumulation Period for the related
          Distribution Date, then such excess shall not be treated as a
          Percentage Allocation and shall be first, if any other Principal
          Sharing Series is outstanding and in its

                                      14
<PAGE>

          amortization period or accumulation period, transferred to the
          Principal Collections Subaccount for application, to the extent
          necessary, as Shared Principal Collections to other Principal Sharing
          Series on the related Distribution Date, second deposited in the
          Excess Funding Account to the extent necessary so that the Seller
          Amount is not less than the Minimum Seller Amount and third paid to
          the holders of the Seller Interest.

               (z)  Allocations During the Rapid Amortization Period. During
                    ------------------------------------------------
          the Rapid Amortization Period, an amount equal to the product of (I)
          the Allocation Percentage and (II) the aggregate amount of Principal
          Collections deposited in the Collection Account on such Deposit Date,
          shall be allocated to the Series 2001-A Noteholders and transferred to
          the Principal Collections Subaccount until applied as provided herein;
          provided, however, that after the date on which an amount of such
          --------  -------
          Collections equal to the Note Principal Balance plus any amounts owing
          to the Counterparty under the Swap and the Insurer under the Insurance
          Agreement has been deposited into the Collection Account and allocated
          to the Series 2001-A Noteholders, such amount shall be first, if any
          other Principal Sharing Series is outstanding and in its amortization
          period or accumulation period, transferred to the Principal
          Collections Subaccount for application, to the extent necessary, as
          Shared Principal Collections to other Principal Sharing Series on the
          related Distribution Date, second deposited in the Excess Funding
          Account to the extent necessary so that the Seller Amount is not less
          than the Minimum Seller Amount and third paid to the holders of the
          Seller Interest.

     Section 4.2  Determination of Monthly Interest.  The amount of monthly
                  ---------------------------------
interest ("Monthly Interest") distributable from the Collection Account with
           ----------------
respect to the Class A Notes on any Distribution Date shall be an amount equal
to the product of (i) (A) a fraction, the numerator of which is the actual
number of days in the related Interest Period and the denominator of which is
360, times (B) the Note Interest Rate in effect with respect to the related
Interest Period and (ii) the Note Principal Balance as of the close of business
on the last day of the preceding Monthly Period (or, with respect to the initial
Distribution Date, the Note Initial Principal Balance).

     On the Determination Date preceding each Distribution Date, the Servicer
shall determine the excess, if any (the "Interest Shortfall"), of (x) the
                                         ------------------
Monthly Interest for such Distribution Date over (y) the aggregate amount of
funds allocated and available to pay such  Monthly Interest on such Distribution
Date.  If the Interest Shortfall for any Distribution Date is greater than zero
and the Insurer fails to pay such Interest Shortfall in accordance with the
terms of the related Policy, on each subsequent Distribution Date until such
Interest Shortfall is fully paid, an additional

                                      15
<PAGE>

amount ("Additional Interest") equal to the product of (i) (A) a fraction,
         -------------------
the numerator of which is the actual number of days in the related Interest
Period and the denominator of which is 360, times (B) the Note Interest Rate in
effect with respect to the related Interest Period and (ii) such Interest
Shortfall (or the portion thereof which has not been paid to the Class A
Noteholders) shall be payable as provided herein with respect to the Class A
Notes. Notwithstanding anything to the contrary herein, Additional Interest
shall be payable or distributed to the Class A Noteholders only to the extent
permitted by applicable law.

     Section 4.3  Determination of Monthly Principal.  The amount of monthly
                  ----------------------------------
principal distributable from the Collection Account with respect to the Notes on
each Distribution Date (the "Monthly Principal"), beginning with the
                             -----------------
Distribution Date in the month following the month in which the Controlled
Accumulation Period or, if earlier, the Rapid Amortization Period, begins, shall
be equal to the least of (i) the Available Principal Collections on deposit in
the Collection Account with respect to such Distribution Date, (ii) for each
Distribution Date with respect to the Controlled Accumulation Period, the
Controlled Deposit Amount for such Distribution Date, (iii) the Note Principal
Balance, minus any amount already on deposit in the Principal Accumulation
Account on such Distribution Date and (iv) the Collateral Amount (after taking
into account any adjustments to be made pursuant to Sections 4.5 and 4.6) prior
                                                    ------------     ---
to any deposit into the Principal Accumulation Account on such Distribution
Date.

     Section 4.4  Application of Available Finance Charge Collections and
                  -------------------------------------------------------
Available Principal Collections.  The Servicer shall apply, or shall cause the
-------------------------------
Indenture Trustee to apply by written instruction to the Indenture Trustee, on
each Distribution Date, Available Finance Charge Collections and Available
Principal Collections on deposit in the Collection Account with respect to such
Distribution Date to make the following distributions:

     (a) On each Distribution Date, an amount equal to the Available Finance
Charge Collections with respect to such Distribution Date will be distributed or
deposited in the following priority:

          (i)   on a pari passu basis (A) an amount equal to Monthly Interest
     for such Distribution Date, plus the amount of any Monthly Interest
     previously due but not distributed to Class A Noteholders on a prior
     Distribution Date, plus the amount of any Additional Interest for such
     Distribution Date, plus the amount of any Additional Interest previously
     due but not distributed to Class A Noteholders on a prior Distribution
     Date, shall be distributed to the Paying Agent for payment to Class A
     Noteholders on such Distribution Date and (B) any Net Swap Payment for that
     Distribution Date shall be distributed to the Counterparty;

          (ii)  if neither FCNB nor any affiliate of the Seller is the Servicer,
     an amount equal to the Monthly Servicing Fee for such Distribution Date,

                                      16
<PAGE>

     plus the amount of any Monthly Servicing Fee previously due but not
     distributed to the Servicer on a prior Distribution Date, shall be
     distributed to the Servicer;

          (iii)  an amount equal to the Investor Default Amount and any Investor
     Uncovered Dilution Amount for such Distribution Date shall be treated as a
     portion of Available Principal Collections for such Distribution Date;

          (iv)   an amount equal to the sum of the aggregate amount of Investor
     Charge-Offs and the amount of Reallocated Principal Collections which have
     not been previously reimbursed pursuant to this subsection (iv) shall be
                                                     ---------------
     treated as a portion of Available Principal Collections for such
     Distribution Date;

          (v)    an amount equal to the Monthly Insurance Premium for the
     related Monthly Period and any unpaid Monthly Insurance Premiums for prior
     Monthly Periods shall be paid to the Insurer;

          (vi)   on each Distribution Date from and after the Reserve Account
     Funding Date, but prior to the date on which the Reserve Account terminates
     as described in subsection 4.10(f), an amount up to the excess, if any, of
                     ------------------
     the Required Reserve Account Amount over the Available Reserve Account
     Amount shall be deposited into the Reserve Account;

          (vii)  an amount equal to the amounts required to be deposited in the
     Spread Account pursuant to Section 2.05(f) of the Insurance Agreement shall
     be deposited into the Spread Account as provided in Section 2.05(f) of the
     Insurance Agreement;

          (viii) during the Rapid Amortization Period, any amount remaining
     shall be applied as Available Principal Collections for such Distribution
     Date to the extent that the other Available Principal Collections
     (excluding any amounts drawn under the Policies) are not sufficient to
     repay the Class A Notes in full;

          (ix)   an amount equal to any Reimbursement Amounts and interest
     thereon owed under the Insurance Agreement shall be paid to the Insurer;

          (x)    an amount equal to any other amounts owing to the Insurer under
     the Insurance Agreement shall be paid to the Insurer;

          (xi)   if the Rapid Amortization Period is extended past the
     Distribution Date on which the Note Principal Balance is paid in full as a
     result of there being amounts owed to the Counterparty, on each
     Distribution Date after the Note Principal Balance is paid in full, an
     amount equal to any

                                      17
<PAGE>

     partial or early termination payments or other additional payments owed to
     the Counterparty under the Swap shall be paid to the Counterparty;

          (xii)  any Monthly Servicing Fee for such Distribution Date or prior
     Distribution Dates not paid pursuant to subsection 4.4(a)(ii) (unless such
                                             ---------------------
     amount has been netted against deposits to the Collection Account in
     accordance with Section 8.4 of the Indenture) shall be distributed to the
                     -----------
     Servicer; and

          (xiii) the balance, if any, will constitute a portion of Excess
     Finance Charge Collections for such Distribution Date and first will be
     available for allocation to other Series in Group One, second deposited in
     the Excess Funding Account to the extent necessary so that the Seller
     Amount is not less than the Minimum Seller Amount and third paid to the
     Holders of the Seller Interest as described in Section 8.6 of the
                                                    -----------
     Indenture.

     (b)  On each Distribution Date with respect to the Revolving Period, an
amount equal to the Available Principal Collections deposited in the Collection
Account for the related Monthly Period shall be treated as Shared Principal
Collections and applied in accordance with Section 8.5 of the Indenture.
                                           -----------

     (c)  On each Distribution Date with respect to the Controlled Accumulation
Period or the Rapid Amortization Period, an amount equal to the Available
Principal Collections deposited in the Collection Account for the related
Monthly Period shall be distributed or deposited in the following order of
priority:

          (i)   during the Controlled Accumulation Period, an amount equal to
     the Monthly Principal for such Distribution Date shall be deposited into
     the Principal Accumulation Account, and any remaining Available Principal
     Collections shall be treated as Shared Principal Collections and applied in
     accordance with Section 8.5 of the Indenture; and
                     -----------

          (ii)  during the Rapid Amortization Period, an amount equal to the
     Monthly Principal for such Distribution Date shall be distributed to the
     Paying Agent for payment to the Class A Noteholders on such Distribution
     Date until the Note Principal Balance has been paid in full, and any
     remaining Available Principal Collections shall be treated as Shared
     Principal Collections and applied in accordance with Section 8.5 of the
                                                          -----------
     Indenture.

     As of any Distribution Date on which any Available Principal Collections
are treated as Shared Principal Collections as provided above, the Collateral
Amount shall be reduced by an amount equal to the lesser of (x) the amount of
Available Principal Collections applied as Shared Principal Collections and (y)
the Surplus Collateral Amount.

                                      18
<PAGE>

     (d)  On the earlier to occur of (i) the first Distribution Date with
respect to the Rapid Amortization Period and (ii) the Expected Principal
Distribution Date, the Indenture Trustee, acting in accordance with instructions
from the Servicer, shall withdraw from the Principal Accumulation Account and
distribute to the Paying Agent for payment to the Class A Noteholders the
amounts deposited into the Principal Accumulation Account pursuant to subsection
                                                                      ----------
4.4(c)(i).
---------

     Section 4.5  Investor Charge-Offs.  On each Determination Date, the
                  --------------------
Servicer shall calculate the Investor Default Amount and any Investor Uncovered
Dilution Amount for the related Distribution Date. If, on any Distribution Date,
the sum of the Investor Default Amount and any Investor Uncovered Dilution
Amount for such Distribution Date exceeds the amount of Available Finance Charge
Collections allocated with respect thereto pursuant to subsection 4.4(a)(iii)
                                                       ----------------------
with respect to such Distribution Date, the Collateral Amount will be reduced
(but not below zero) by the amount of such excess (such reduction, an "Investor
                                                                       --------
Charge-Off").
----------

     Section 4.6  Reallocated Principal Collections.  On each Distribution
                  ---------------------------------
Date, the Servicer shall apply, or shall instruct the Indenture Trustee in
writing to apply, Reallocated Principal Collections with respect to such
Distribution Date, to fund any deficiency pursuant to and in the priority set
forth in subsections 4.4(a)(i), (ii), (v), (ix), (x) and (xi); provided that in
         ---------------------  ----  ---  ----  ---     ----
no event will Reallocated Principal Collections be applied pursuant to
subsections 4.4(a)(v), (ix), (x) and (xi) until the Series 2001-A Final Maturity
---------------------  ----  ---     ----
Date. On each Distribution Date, the Collateral Amount shall be reduced by the
amount of Reallocated Principal Collections for such Distribution Date.

     Section 4.7  Excess Finance Charge Collections.  Series 2001-A shall be
                  ---------------------------------
an Excess Allocation Series with respect to Group One only. For this purpose,
each outstanding series of certificates issued by Spiegel Master Trust (other
than series represented by the Collateral Certificate) shall be deemed to be a
Series in Group One. Subject to Section 8.6 of the Indenture, Excess Finance
                                -----------
Charge Collections with respect to the Excess Allocation Series in Group One for
any Distribution Date will be allocated to Series 2001-A in an amount equal to
the product of (x) the aggregate amount of Excess Finance Charge Collections
with respect to all the Excess Allocation Series in Group One for such
Distribution Date and (y) a fraction, the numerator of which is the Finance
Charge Shortfall for Series 2001-A for such Distribution Date and the
denominator of which is the aggregate amount of Finance Charge Shortfalls for
all the Excess Allocation Series in Group One for such Distribution Date. The
"Finance Charge Shortfall" for Series 2001-A for any Distribution Date will be
 ------------------------
equal to the excess, if any, of (a) the full amount required to be paid, without
duplication, pursuant to subsections 4.4(a)(i) through (xii) on such
                         ---------------------         -----
Distribution Date over (b) the Available Finance Charge Collections with respect
to such Distribution Date (excluding any portion thereof attributable to Excess
Finance Charge Collections).

                                      19
<PAGE>

     Section 4.8  Shared Principal Collections.  Subject to Section 8.5 of the
                  ----------------------------              -----------
Indenture, Shared Principal Collections for any Distribution Date will be
allocated to Series 2001-A in an amount equal to the product of (x) the
aggregate amount of Shared Principal Collections with respect to all Principal
Sharing Series for such Distribution Date and (y) a fraction, the numerator of
which is the Principal Shortfall for Series 2001-A for such Distribution Date
and the denominator of which is the aggregate amount of Principal Shortfalls for
all the Series which are Principal Sharing Series for such Distribution Date.
For this purpose, each outstanding series of certificates issued by Spiegel
Master Trust (other than series represented by the Collateral Certificate) shall
be deemed to be a Principal Sharing Series.  The "Principal Shortfall" for
                                                  -------------------
Series 2001-A will be equal to (a) for any Distribution Date with respect to the
Revolving Period, zero, (b) for any Distribution Date with respect to the
Controlled Accumulation Period, the excess, if any, of the Controlled Deposit
Amount with respect to such Distribution Date over the amount of Available
Principal Collections for such Distribution Date (excluding any portion thereof
attributable to Shared Principal Collections), and (c) for any Distribution Date
with respect to the Rapid Amortization Period, the excess, if any, of the Note
Principal Balance (less the balance in the Principal Accumulation Account) over
the amount of Available Principal Collections for such Distribution Date
(excluding any portion thereof attributable to Shared Principal Collections).

     Section 4.9  Principal Accumulation Account.
                  ------------------------------

     (a)  The Indenture Trustee shall establish and maintain with an Eligible
Institution, which may be the Indenture Trustee in the name of the Trust, on
behalf of the Trust, for the benefit of the Series 2001-A Noteholders, a non-
interest bearing segregated trust account with the corporate trust department of
such Eligible Institution (the "Principal Accumulation Account"), bearing a
                                ------------------------------
designation clearly indicating that the funds deposited therein are held for the
benefit of the Series 2001-A Noteholders.  The Indenture Trustee shall possess
all right, title and interest in all funds on deposit from time to time in the
Principal Accumulation Account and in all proceeds thereof.  The Principal
Accumulation Account shall be under the sole dominion and control of the
Indenture Trustee for the benefit of the Series 2001-A Noteholders.  If at any
time the institution holding the Principal Accumulation Account ceases to be an
Eligible Institution, the Servicer shall notify the Indenture Trustee in
writing, and the Indenture Trustee upon being notified (or the Servicer on its
behalf) shall, within ten (10) Business Days, establish a new Principal
Accumulation Account meeting the conditions specified above with an Eligible
Institution, and shall transfer any cash or any investments to such new
Principal Accumulation Account.  The Indenture Trustee, at the written direction
of the Servicer, shall (i) make withdrawals from the Principal Accumulation
Account from time to time, in the amounts and for the purposes set forth in this
Indenture Supplement, and (ii) on each Distribution Date (from and after the
commencement of the Controlled Accumulation Period) prior to the termination of
the Principal Accumulation Account, make deposits into the Principal
Accumulation Account in the amounts specified in, and otherwise in accordance
with, subsection 4.4(c)(i).
      --------------------

                                      20
<PAGE>

     (b)  Funds on deposit in the Principal Accumulation Account shall be
invested at the written direction of the Servicer by the Indenture Trustee in
Permitted Investments.  Funds on deposit in the Principal Accumulation Account
on any Distribution Date, after giving effect to any withdrawals from the
Principal Accumulation Account on such Distribution Date, shall be invested in
such investments that will mature so that such funds will be available for
withdrawal on or prior to the following Distribution Date.

     The Indenture Trustee shall hold such of the Permitted Investments as
consists of instruments, deposit accounts, negotiable documents, money, goods,
letters of credit, and advices of credit in the State of New York and/or
Illinois. The Indenture Trustee shall hold such of the Permitted Investments as
constitutes investment property through a securities intermediary, which
securities intermediary shall agree with the Indenture Trustee that (a) such
investment property shall at all times be credited to a securities account of
the Indenture Trustee, (b) such securities intermediary shall treat the
Indenture Trustee as entitled to exercise the rights that comprise each
financial asset credited to such securities account, (c) all property credited
to such securities account shall be treated as a financial asset, (d) such
securities intermediary shall comply with entitlement orders originated by the
Indenture Trustee without the further consent of any other person or entity, (e)
such securities intermediary will not agree with any person or entity other than
the Indenture Trustee to comply with entitlement orders originated by such other
person or entity, (f) such securities accounts and the property credited thereto
shall not be subject to any lien, security interest or right of set-off in favor
of such securities intermediary or anyone claiming through it (other than the
Indenture Trustee), and (g) such agreement shall be governed by the laws of the
State of Illinois. Terms used in the preceding sentence that are defined in the
New York UCC and not otherwise defined herein shall have the meaning set forth
in the New York UCC.

     On each Distribution Date with respect to the Controlled Accumulation
Period and on the first Distribution Date with respect to the Rapid Amortization
Period, the Indenture Trustee, acting at the Servicer's written direction given
on or before such Distribution Date, shall transfer from the Principal
Accumulation Account to the Collection Account the Principal Accumulation
Investment Proceeds on deposit in the Principal Accumulation Account for
application as Available Finance Charge Collections in accordance with Section
                                                                       -------
4.4.
---

     Principal Accumulation Investment Proceeds (including reinvested interest)
shall not be considered part of the amounts on deposit in the Principal
Accumulation Account for purposes of this Indenture Supplement.

     Section 4.10  Reserve Account.
                   ---------------

     (a)  The Indenture Trustee shall establish and maintain with an Eligible
Institution, which may be the Indenture Trustee in the name of the Trust, on
behalf of the Trust, for the benefit of the Series 2001-A Noteholders, a non-
interest bearing

                                      21
<PAGE>

segregated trust account with the corporate trust department of such Eligible
Institution (the "Reserve Account"), bearing a designation clearly indicating
                  ---------------
that the funds deposited therein are held for the benefit of the Series 2001-A
Noteholders. The Indenture Trustee shall possess all right, title and interest
in all funds on deposit from time to time in the Reserve Account and in all
proceeds thereof. The Reserve Account shall be under the sole dominion and
control of the Indenture Trustee for the benefit of the Series 2001-A
Noteholders. If at any time the institution holding the Reserve Account ceases
to be an Eligible Institution, the Servicer shall notify the Indenture Trustee
in writing, and the Indenture Trustee upon being notified (or the Servicer on
its behalf) shall, within ten (10) Business Days, establish a new Reserve
Account meeting the conditions specified above with an Eligible Institution, and
shall transfer any cash or any investments to such new Reserve Account. The
Indenture Trustee, at the written direction of the Servicer, shall (i) make
withdrawals from the Reserve Account from time to time in an amount up to the
Available Reserve Account Amount at such time, for the purposes set forth in
this Indenture Supplement, and (ii) on each Distribution Date (from and after
the Reserve Account Funding Date) prior to termination of the Reserve Account,
make a deposit into the Reserve Account in the amount specified in, and
otherwise in accordance with, subsection 4.4(a)(vi).
                              ---------------------

     (b)  Funds on deposit in the Reserve Account shall be invested at the
written direction of the Servicer by the Indenture Trustee in Permitted
Investments. Funds on deposit in the Reserve Account on any Distribution Date,
after giving effect to any withdrawals from the Reserve Account on such
Distribution Date, shall be invested in such investments that will mature so
that such funds will be available for withdrawal on or prior to the following
Distribution Date.

     The Indenture Trustee shall hold such of the Permitted Investments as
consists of instruments, deposit accounts, negotiable documents, money, goods,
letters of credit, and advices of credit in the State of New York. The Indenture
Trustee shall hold such of the Permitted Investments as constitutes investment
property through a securities intermediary, which securities intermediary shall
agree with the Indenture Trustee that (a) such investment property shall at all
times be credited to a securities account of the Indenture Trustee, (b) such
securities intermediary shall treat the Indenture Trustee as entitled to
exercise the rights that comprise each financial asset credited to such
securities account, (c) all property credited to such securities account shall
be treated as a financial asset, (d) such securities intermediary shall comply
with entitlement orders originated by the Indenture Trustee without the further
consent of any other person or entity, (e) such securities intermediary will not
agree with any person or entity other than the Indenture Trustee to comply with
entitlement orders originated by such other person or entity, (f) such
securities accounts and the property credited thereto shall not be subject to
any lien, security interest, or right of set-off in favor of such securities
intermediary or anyone claiming through it (other than the Indenture Trustee),
and (g) such agreement shall be governed by the laws of the State of New York.
Terms

                                      22
<PAGE>

used in the preceding sentence that are defined in the New York UCC and not
otherwise defined herein shall have the meaning set forth in the New York UCC.

     On each Distribution Date, all interest and earnings (net of losses and
investment expenses) accrued since the preceding Distribution Date on funds on
deposit in the Reserve Account shall be retained in the Reserve Account (to the
extent that the Available Reserve Account Amount is less than the Required
Reserve Account Amount) and the balance, if any, shall be deposited into the
Collection Account and included in Available Finance Charge Collections for such
Distribution Date.  For purposes of determining the availability of funds or the
balance in the Reserve Account for any reason under this Indenture Supplement,
except as otherwise provided in the preceding sentence, investment earnings on
such funds shall be deemed not to be available or on deposit.

     (c)  On or before each Distribution Date with respect to the Controlled
Accumulation Period and on or before the first Distribution Date with respect to
the Rapid Amortization Period, the Servicer shall calculate the Reserve Draw
Amount; provided, however, that such amount will be reduced to the extent that
        --------  -------
funds otherwise would be available for deposit in the Reserve Account under
Section 4.4(a)(vi) with respect to such Distribution Date.
------------------

     (d)  If for any Distribution Date the Reserve Draw Amount is greater than
zero, the Reserve Draw Amount, up to the Available Reserve Account Amount, shall
be withdrawn from the Reserve Account on such Distribution Date by the Indenture
Trustee (acting in accordance with the written instructions of the Servicer) and
deposited into the Collection Account for application as Available Finance
Charge Collections for such Distribution Date.

     (e)  If the Reserve Account Surplus on any Distribution Date, after giving
effect to all deposits to and withdrawals from the Reserve Account with respect
to such Distribution Date, is greater than zero, the Indenture Trustee, acting
in accordance with the written instructions of the Servicer, shall withdraw from
the Reserve Account an amount equal to such Reserve Account Surplus and (i)
deposit such amounts in the Spread Account, to the extent that funds on deposit
in the Spread Account are less than the Required Spread Account Amount, and (ii)
distribute any such amounts remaining after application pursuant to subsection
                                                                    ----------
4.10(e)(i) to the holders of the Seller Interest.
----------

     (f)  Upon the earliest to occur of (i) the termination of the Trust
pursuant to Article VIII of the Trust Agreement, (ii) the first Distribution
            ------------
Date relating to the Rapid Amortization Period and (iii) the Expected Principal
Distribution Date, the Indenture Trustee, acting in accordance with the
instructions of the Servicer, after the prior payment of all amounts owing to
the Series 2001-A Noteholders that are payable from the Reserve Account as
provided herein, shall withdraw from the Reserve Account all amounts, if any, on
deposit in the Reserve Account and (i) deposit such amounts in the Spread
Account, to the extent that funds on deposit in

                                      23
<PAGE>

the Spread Account are less than the Required Spread Account Amount, and (ii)
distribute any such amounts remaining after application pursuant to subsection
                                                                    ----------
4.10(f)(i) to the holders of the Seller Interest.  The Reserve Account shall
----------
thereafter be deemed to have terminated for purposes of this Indenture
Supplement. Funds on deposit in the Reserve Account at any time that the
Controlled Accumulation Period is suspended pursuant to Section 4.15, shall
                                                        ------------
remain on deposit until applied in accordance with subsection 4.10(d), (e) or
                                                   ------------------  ---
(f).
---

     Section 4.11  [Reserved].
                   ----------

     Section 4.12  Determination of LIBOR.
                   ----------------------

     (a)  On each LIBOR Determination Date in respect of an Interest Period, the
Indenture Trustee, utilizing the services of the Counterparty as calculation
agent under the Swap (or the Servicer if the Swap is terminated), shall
determine LIBOR on the basis of the rate for deposits in United States dollars
for a one-month period which appears on Telerate Page 3750 as of 11:00 a.m.,
London time, on such date. If such rate does not appear on Telerate Page 3750,
the rate for that Interest Period shall be determined on the basis of the rates
at which deposits in United States dollars are offered by the Reference Banks at
approximately 11:00 a.m., London time, on that day to prime banks in the London
interbank market for a one-month period.  The Indenture Trustee shall request
the principal London office of each of the Reference Banks to provide a
quotation of its rate.  If at least two (2) such quotations are provided, the
rate for that Interest Period shall be the arithmetic mean of the quotations.
If fewer than two (2) quotations are provided as requested, the rate for that
Interest Period will be the arithmetic mean of the rates quoted by major banks
in New York City, selected by the Counterparty or, if the Swap is terminated,
the Servicer, at approximately 11:00 a.m., New York City time, on that day for
loans in United States dollars to leading European banks for a one-month period.

     (b)  The Note Interest Rate applicable to the then current and the
immediately preceding Interest Periods may be obtained by telephoning the
Indenture Trustee at its corporate trust office at (312) 827-8500 or such other
telephone number as shall be designated by the Indenture Trustee for such
purpose by prior written notice by the Indenture Trustee to each Series 2001-A
Noteholder from time to time.

     (c)  On each LIBOR Determination Date, the Indenture Trustee shall send to
the Servicer by facsimile transmission, notification of LIBOR for the following
Interest Period.

     Section 4.13  Investment Instructions.  Any investment instructions
                   -----------------------
required to be given to the Indenture Trustee pursuant to the terms hereof must
be given to the Indenture Trustee no later than 11:00 a.m., New York City time,
on the date such investment is to be made. In the event the Indenture Trustee
receives such investment instruction later than such time, the Indenture Trustee
may, but shall have

                                      24
<PAGE>

no obligation to, make such investment. In the event the Indenture Trustee is
unable to make an investment required in an investment instruction received by
the Indenture Trustee after 11:00 a.m., New York City time, on such day, such
investment shall be made by the Indenture Trustee on the next succeeding
Business Day. In no event shall the Indenture Trustee be liable for any
investment not made pursuant to investment instructions received after 11:00
a.m., New York City time, on the day such investment is requested to be made.

     Section 4.14  Controlled Accumulation Period.  The Controlled Accumulation
                   ------------------------------
Period is scheduled to commence at the opening of business March 1, 2004.
However, if the Accumulation Period Length (determined as described below) is
less than 12 months, the date on which the Controlled Accumulation Period
actually commences will be delayed to the first Business Day of the month that
is the number of whole months prior to the Expected Principal Distribution Date
at least equal to the Accumulation Period Length and, as a result, the number of
Monthly Periods in the Controlled Accumulation Period will at least equal the
Accumulation Period Length. On the Determination Date immediately preceding the
February 2004 Distribution Date, and each Determination Date thereafter until
the Controlled Accumulation Period begins, the Servicer will determine the
Accumulation Period Length" which will equal the number of whole months such
---------------------------
that the sum of the Accumulation Period Factors for each month during such
period will be equal to or greater than the Required Accumulation Factor Number;
provided, however, that the Accumulation Period Length will not be determined to
--------  -------
be less than one month; provided further, however, that the determination of the
                        -------- -------  -------
Accumulation Period Length may be changed at any time if the Rating Agency
Condition is satisfied.

     Section 4.15  Suspension of Controlled Accumulation Period.  (a) The
                   --------------------------------------------
Issuer may, in its sole discretion, elect to suspend the commencement of the
Controlled Accumulation Period with prior notice to the Rating Agencies. The
commencement of the Controlled Accumulation Period shall be suspended upon
delivery by the Issuer to the Indenture Trustee of (i) an Officer's Certificate
stating that the Issuer has elected to suspend the commencement of the
Controlled Accumulation Period and that all conditions precedent to such
suspension set forth in this Section 4.15 have been satisfied, (ii) a copy of an
                             ------------
executed Qualified Maturity Agreement and (iii) an Opinion of Counsel addressed
to the Indenture Trustee as to the due authorization, execution and delivery and
the validity and enforceability of such Qualified Maturity Agreement. The Issuer
does hereby transfer, assign, set-over, and otherwise convey to the Indenture
Trustee for the benefit of the Class A Noteholders, without recourse, all of its
rights under any Qualified Maturity Agreement obtained in accordance with this
Section 4.15 and all proceeds thereof. Such property shall constitute part of
------------
the Trust Estate for all purposes of the Indenture. The foregoing transfer,
assignment, set-over and conveyance does not constitute and is not intended to
result in a creation or an assumption by the Indenture Trustee or any Noteholder
of any obligation of the Issuer or any other

                                      25
<PAGE>

Person in connection with a Qualified Maturity Agreement or under any agreement
or instrument relating thereto.

     The Indenture Trustee hereby acknowledges its acceptance, to the extent
validly transferred, assigned, set-over or otherwise conveyed to the Indenture
Trustee, for the benefit of the Class A Noteholders, of all of the rights
previously held by the Issuer under any Qualified Maturity Agreement obtained by
the Issuer and all proceeds thereof, and declares that it shall hold such rights
upon the trust set forth herein and in the Agreement, and subject to the terms
hereof and thereof, for the benefit of the Class A Noteholders.

     (b)  The Issuer shall cause the provider of each Qualified Maturity
Agreement to deposit into the Principal Accumulation Account on or before the
Expected Principal Distribution Date an amount equal to the aggregate
outstanding principal balance of the Class A Notes on such Distribution Date;
provided, however, that the Issuer may instead elect to fund all or a portion of
--------  -------
such deposit with the proceeds of the issuance of a new Series or with the
Available Principal Collections with respect to such Distribution Date; and
provided, further, that the Issuer shall in no event cause or permit the
--------  -------
provider of any Qualified Maturity Agreement to fund under such Qualified
Maturity Agreement unless there are sufficient funds on deposit in the
Collection Account allocated to make required payments pursuant to Sections
                                                                   --------
4.4(a)(i) and (ii) for any Distribution Date falling on or after the funding
---------     ----
under such Qualified Maturity Agreement.  The amount deposited shall be applied
on the Expected Principal Distribution Date pursuant to Section 4.4(d) as if the
                                                        --------------
commencement of the Controlled Accumulation Period had not been suspended.

     (c)  Each Qualified Maturity Agreement shall terminate at the close of
business on the Expected Principal Distribution Date; provided, however, that
                                                      --------  -------
the Issuer may terminate a Qualified Maturity Agreement prior to such
Distribution Date, with notice to each Rating Agency, if (i) the Available
Reserve Account Amount equals the Required Reserve Account Amount and (ii) one
of the following events occurs: (A) the Issuer obtains a substitute Qualified
Maturity Agreement, (B) the provider of the Qualified Maturity Agreement ceases
to qualify as an Eligible Institution and the Issuer is unable to obtain a
substitute Qualified Maturity Agreement or (C) a Pay Out Event occurs.  In
addition, the Issuer may terminate a Qualified Maturity Agreement prior to the
later of (i) the date on which the Controlled Accumulation Period was scheduled
to begin, before giving effect to the suspension of the Controlled Accumulation
Period, and (b) the date to which the commencement of the Controlled
Accumulation Period may be postponed pursuant to Section 4.15 (as determined on
                                                 ------------
the Determination Date preceding the date of such termination), in which case
the commencement of the Controlled Accumulation Period shall be determined as if
the Issuer had not elected to suspend such commencement.  In the event that the
provider of a Qualified Maturity Agreement ceases to qualify as an Eligible
Institution, the Issuer shall use its best efforts to obtain a substitute
Qualified Maturity Agreement.

                                      26
<PAGE>

     (d)  If a Qualified Maturity Agreement is terminated prior to the earlier
of the Expected Principal Distribution Date and the commencement of the Rapid
Amortization Period and the Issuer does not obtain a substitute Qualified
Maturity Agreement, the Controlled Accumulation Period shall commence on the
latest of (i) March 1, 2004, (ii) at the election of the Issuer, the date to
which the commencement of the Controlled Accumulation Period may be postponed
pursuant to Section 4.14 (as determined on the date of such termination) and
            ------------
(iii) the first day of the Monthly Period following the date of such
termination.

     Section 4.16  Insurance Policies.  (a) On the Closing Date, the Issuer
                   ------------------
shall enter into the Insurance Agreement, pursuant to which the Policies will be
issued for the benefit of the Series 2001-A Noteholders and the Counterparty.

     (b)  Prior to 12:00 noon, New York City time, on the third Business Day
preceding each Distribution Date, the Servicer shall determine whether there
will be a Deficiency Amount on the following Distribution Date.  If the Servicer
determines that there will be a Deficiency Amount on the following Distribution
Date, the Servicer shall complete the notice in the form set forth as an exhibit
to the related Policy (the "Notice") and submit such Notice in accordance with
the related Policy to the Insurer no later than 3:00 p.m., New York time, on
such Business Day, as a claim for an Insured Obligation in an amount equal to
such Deficiency Amount.  The Insurer shall remit or cause to be remitted to the
Trustee such Deficiency Amount in accordance with the terms of the related
Policy.

     (c)  The Indenture Trustee shall (i) receive as attorney-in-fact of the
applicable owners an Insured Obligation from the Insurer and (ii) distribute the
same to (a) the Class A Noteholders as provided in subsections 5.2(a) and (b) to
                                                   ------------------     ---
the extent that such amounts relate to Monthly Interest or principal of the
Class A Notes, respectively, and (b) the Counterparty or the Servicer to the
extent that such amounts relate to Net Swap Payments or Monthly Servicing Fees,
respectively.  Any and all Insured Obligations disbursed by the Indenture
Trustee from claims made under the Policies shall not be considered payment by
the Issuer with respect to the Class A Notes or other applicable obligations,
nor shall such payments discharge the obligation of the Issuer with respect to
the Class A Notes or other obligations, and the Insurer shall become the owner
of such unpaid amounts due from the Issuer in respect of Insured Obligations.

     If on any Distribution Date, the Indenture Trustee or the Servicer
determines that the Insurer has paid more under any Policy than is required by
the terms hereof, the Indenture Trustee shall promptly return such excess to the
Insurer.

     The Indenture Trustee shall keep a complete and accurate record of the
amount of the Insured Obligations paid.  The Insurer shall have the right to
inspect such record during normal business hours upon prior notice to the
Indenture Trustee.

                                      27
<PAGE>

     (d)  So long as no Control Transfer Event shall have occurred and be
continuing, the Insurer shall be deemed to be the sole Holder of the Series
2001-A Notes for the purpose of exercising voting rights and the giving of any
consents, approvals, instructions, directions, declarations and notices relating
to the Series 2001-A Notes.  However, for any amendment or waiver requiring the
consent of all affected Noteholders, the consent of the Insurer and all affected
Noteholders will be required.

     Section 4.17  Swap.  (a) On or prior to the Closing Date, the Owner Trustee
                   ----
shall, on behalf of the Issuer, enter into the Swap with the Counterparty for
the benefit of the Noteholders. The aggregate notional amount under the Swap
shall, at any time, be equal to the Note Principal Balance at such time. Net
Swap Receipts and early termination payments payable by the Counterparty shall
be deposited by the Indenture Trustee in the Collection Account on the day
received and treated as Available Finance Charge Collections. On any
Distribution Date when there shall be a Net Swap Payment, such Net Swap Payments
shall be paid as provided in Section 4.4(a)(i). On any Distribution Date when
                             -----------------
there shall be an early termination payment or any other miscellaneous payment
payable by the Issuer to the Counterparty, such amount shall be paid as provided
in Section 4.4(a)(xi).
   ------------------

     (b)  Each Swap shall be in substantially the same form as the initial Swap
attached hereto as Exhibit E.
                   ---------

     (c)  The Servicer may, upon (i) satisfaction of the Rating Agency Condition
and, (ii) unless a Control Transfer Event has occurred, receipt of written
consent from the Insurer (which consent shall not be unreasonably withheld),
and, when required under the terms of the existing Swap, shall, obtain a
replacement Swap.

                                   ARTICLE V

                       Delivery of Series 2001-A Notes;
              Distributions; Reports to Series 2001-A Noteholders
              ---------------------------------------------------

     Section 5.1  Delivery and Payment for the Series 2001-A Notes.
                  ------------------------------------------------

     The Issuer shall execute and issue, and the Indenture Trustee shall
authenticate, the Series 2001-A Notes in accordance with Section 2.3 of the
                                                         -----------
Indenture.  The Indenture Trustee shall deliver the Series 2001-A Notes to or
upon the written order of the Trust when so authenticated.

     Section 5.2  Distributions.
                  -------------

     (a)  On each Distribution Date, the Paying Agent shall distribute to each
Class A Noteholder of record on the related Record Date (other than as provided
in Section 11.2 of the Indenture) such Class A Noteholder's pro rata share of
   ------------
the amounts held by the Paying Agent that are allocated and available on such

                                      28
<PAGE>

Distribution Date to pay interest on the Class A Notes pursuant to this
Indenture Supplement, including amounts made available as a result of any draw
on the Policies.

     (b)  On each Distribution Date, the Paying Agent shall distribute to each
Class A Noteholder of record on the related Record Date such Class A
Noteholder's pro rata share of the amounts held by the Paying Agent that are
allocated and available on such Distribution Date to pay principal of the Class
A Notes pursuant to this Indenture Supplement, including amounts made available
as a result of any draw on the Policies.

     (c)  The distributions to be made pursuant to this Section 5.2 are subject
                                                        -----------
to the provisions of Sections 2.6, 6.1 and 7.1 of the Transfer and Servicing
                     ------------  ---     ---
Agreement, Section 11.2 of the Indenture and Section 7.1 of this Indenture
           ------------                      -----------
Supplement.

     (d)  Except as provided in Section 11.2 of the Indenture with respect to a
                                ------------
final distribution, distributions to Series 2001-A Noteholders hereunder shall
be made by (i) check mailed to each Series 2001-A Noteholder (at such
Noteholder's address as it appears in the Note Register), except that for any
Series 2001-A Notes registered in the name of the nominee of a Clearing Agency,
such distribution shall be made by wire transfer of immediately available funds
and (ii) without presentation or surrender of any Series 2001-A Note or the
making of any notation thereon.

     Section 5.3  Reports and Statements to Series 2001-A Noteholders.
                  ---------------------------------------------------

     (a)  On each Distribution Date, the Paying Agent, on behalf of the
Indenture Trustee, shall forward to each Series 2001-A Noteholder a statement
substantially in the form of Exhibit C prepared by the Servicer.
                             ---------

     (b)  Not later than the second Business Day preceding each Distribution
Date, the Servicer shall deliver to the Owner Trustee, the Indenture Trustee,
the Paying Agent, the Insurer, the Counterparty and each Rating Agency (i) a
statement substantially in the form of Exhibit C prepared by the Servicer and
                                       ---------
(ii) a certificate of an Authorized Officer substantially in the form of Exhibit
                                                                         -------
D; provided that the Servicer may amend the form of Exhibit C and Exhibit D,
-  --------                                         ---------     ---------
from time to time, with the prior written consent of the Indenture Trustee.

     (c)  A copy of each statement or certificate provided pursuant to paragraph
(a) or (b) may be obtained by any Series 2001-A Noteholder by a request in
writing to the Servicer.

     (d)  On or before January 31 of each calendar year, beginning with January
31, 2002, the Paying Agent, on behalf of the Indenture Trustee, shall furnish or
cause to be furnished to each Person who at any time during the preceding
calendar year was a Series 2001-A Noteholder, a statement prepared by the
Servicer

                                      29
<PAGE>

containing the information which is required to be contained in the statement to
Series 2001-A Noteholders, as set forth in paragraph (a) above, aggregated for
such calendar year or the applicable portion thereof during which such Person
was a Series 2001-A Noteholder, together with other information as is required
to be provided by an issuer of indebtedness under the Code. Such obligation of
the Paying Agent shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the Servicer pursuant
to any requirements of the Code as from time to time in effect.

                                  ARTICLE VI

              Series 2001-A Pay Out Events and Events of Default
              --------------------------------------------------

     Section 6.1  Series 2001-A Pay Out Events.  If any one of the following
                  ----------------------------
events shall occur with respect to the Series 2001-A Notes:

     (a)  failure on the part of the Seller or the "Seller" under the Pooling
and Servicing Agreement (i) to make any payment or deposit required to be made
by the Seller by the terms of the Transfer and Servicing Agreement, the Pooling
and Servicing Agreement, the Indenture or this Indenture Supplement on or before
the date occurring five (5) Business Days after the date such payment or deposit
is required to be made therein or herein or (ii) duly to observe or perform in
any material respect any other covenants or agreements of the Seller set forth
in the Transfer and Servicing Agreement, the Pooling and Servicing Agreement,
the Indenture or this Indenture Supplement, which failure has a material adverse
effect on the Series 2001-A Noteholders and which continues unremedied for a
period of forty-five (45) days after the date on which written notice of such
failure, requiring the same to be remedied, shall have been given to the Seller
by the Indenture Trustee, or to the Seller and the Indenture Trustee by any
Holder of the Series 2001-A Notes;

     (b)  any representation or warranty made by the Seller in the Transfer and
Servicing Agreement or, prior to the SMT Termination Date, by the "Seller" under
the Pooling and Servicing Agreement in the Pooling and Servicing Agreement, or
any information contained in a computer file or microfiche list required to be
delivered by the Seller pursuant to Section 2.1 or subsection 2.6(c) of the
Transfer and Servicing Agreement or Section 2.1 or subsection 2.6(c) of the
                                    -----------    -----------------
Pooling and Servicing Agreement shall prove to have been incorrect in any
material respect when made or when delivered, which continues to be incorrect in
any material respect for a period of forty-five (45) days after the date on
which written notice of such failure, requiring the same to be remedied, shall
have been given to the Seller by the Indenture Trustee, or to the Seller and the
Indenture Trustee by any Holder of the Series 2001-A Notes and as a result of
which the interests of the Series 2001-A Noteholders are materially and
adversely affected for such period; provided, however, that a Series 2001-A Pay
                                    --------  -------
Out Event pursuant to this subsection 6.1(b) shall
                           -----------------

                                      30
<PAGE>

not be deemed to have occurred hereunder if the Seller has accepted reassignment
of the related Receivable, or all of such Receivables, if applicable, during
such period in accordance with the provisions of the Transfer and Servicing
Agreement or the Pooling and Servicing Agreement;

     (c)  a failure by the Seller or the "Seller" under the Pooling and
Servicing Agreement to convey Receivables in Additional Accounts to the Trust
within ten (10) days after the day on which it is required to convey such
Receivables pursuant to subsection 2.6(a) of the Transfer and Servicing
Agreement or subsection 2.6(a) of the Pooling and Servicing Agreement;

     (d)  any Servicer Default shall occur;

     (e)  the average of the Portfolio Yields for any three consecutive Monthly
Periods is reduced to a rate which is less than the sum of the average of the
Base Rates for such period and the average of the Default Amount Rates for such
period;  it being understood that, for purposes of such calculation, the result
of the Portfolio Yield for the first Monthly Period, minus the sum of the Base
Rate and the Default Amount Rate for the first Monthly Period shall be equal to
the Modified Excess Spread Percentage for the first Monthly Period;

     (f)  the Note Principal Balance shall not be paid in full on the Expected
Principal Distribution Date;

     (g)  prior to the SMT Termination Date, a Trust Pay Out Event shall occur
under (and as defined in) the Pooling and Servicing Agreement;

     (h)  any draw shall be made on any Policy in accordance with the terms
thereof;

     (i)  Insurer shall by notice to the Seller, the Servicer and the Indenture
Trustee declare a Pay Out Event in accordance with Section 5.01  of the
                                                   ------------
Insurance Agreement (which section is set forth in its entirety in Exhibit H) at
                                                                   ---------
any time prior to a Control Transfer Event;

     (j)  the Counterparty shall fail to make any net payment required to be
made by it under the Swap, and such failure is not cured within five Business
Days, or the Swap shall terminate prior to the Series 2001-A Final Maturity Date
and the Issuer shall fail to enter into a replacement Swap in accordance with
subsection 4.17(c);
------------------

     (k)  without limiting the foregoing, the occurrence of an Event of Default
with respect to Series 2001-A; or

     (l)  the occurrence of an Insolvency Event relating to the Insurer;

                                      31
<PAGE>

then, in the case of any event described in subsection (a), (b) or (d), after
                                            --------------  ---    ---
the applicable grace period, if any, set forth in such subparagraphs, either the
Indenture Trustee or the Holders of Series 2001-A Notes evidencing more than 50%
of the aggregate unpaid principal amount of Series 2001-A Notes by notice then
given in writing to the Seller and the Servicer (and to the Indenture Trustee if
given by the Series 2001-A Noteholders) may declare that a "Series Pay Out
Event" with respect to Series 2001-A (a "Series 2001-A Pay Out Event") has
                                         ---------------------------
occurred as of the date of such notice, and, in the case of any event described
in subsection (c), (e), (f), (g), (h), (i),  (j), (k) or (l), a Series 2001-A
   --------------  ---  ---  ---  ---  ---   ---  ---    ---
Pay Out Event shall occur without any notice or other action on the part of the
Indenture Trustee or the Series 2001-A Noteholders immediately upon the
occurrence of such event.

     Section 6.2  Series 2001-A Events of Default.  (a) For so long as no
                  -------------------------------
Control Transfer Event has occurred, the Events of Default for Series 2001-A
shall include, in addition to the Events of Default specified in the Indenture,
any one of the following events (whatever the reason for such Event of Default
and whether it shall be voluntary or involuntary or be effected by operation of
law or pursuant to any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body):

          (i)   default in the payment of interest on the Series 2001-A Notes
     when the same becomes due and payable, and such default shall continue for
     a period of twenty-eight (28) days;

          (ii)  default in the observance or performance of any covenant or
     agreement of the Issuer made in the Indenture made in respect of the Series
     2001-A Notes (other than a covenant or agreement, a default in the
     observance or performance of which is elsewhere in this Section 6.2 or in
                                                             -----------
     Section 5.2 of the Indenture specifically dealt with) (all of such
     -----------
     covenants and agreements in the Indenture which are not expressly stated to
     be for the benefit of a particular Series being deemed to be in respect of
     the Notes of Series 2001-A for this purpose) in any material respect and
     such default shall continue or not be cured for a period of forty-five (45)
     days after there shall have been given, by registered or certified mail,
     return receipt requested to the Issuer and the Indenture Trustee by the
     Insurer, a written notice specifying such default and requiring it to be
     remedied and stating that such notice is a "Notice of Default" hereunder;
                                                 -----------------
     or

          (iii) any Servicer Default.

     (b)  If an Event of Default for Series 2001-A shall have occurred and be
continuing and the Series 2001-A Notes have been accelerated pursuant to Section
                                                                         -------
5.3, so long as no Control Transfer Event has occurred, the Insurer shall have
---
the right, but not the obligation, to (i) exercise the rights of the Series
2001-A Noteholders described in Section 5.5 of the Indenture, and (ii) to pay
                                -----------
all or any portion of the outstanding principal balance of the Series 2001-A
Notes prior to the

                                      32
<PAGE>

Series 2001-A Final Maturity Date. Following the occurrence of an Event of
Default for Series 2001-A, the Indenture Trustee shall continue to submit claims
under the Policies as necessary to enable the Issuer to continue to make
payments on each Distribution Date in accordance with the terms of this
Indenture Supplement.

     Section 6.3  Declarations of Default.  So long as no Control Transfer
                  -----------------------
Event shall have occurred and be continuing, neither the Indenture Trustee nor
the Class A Noteholders may declare an Event of Default with respect to the
Series 2001-A Notes. So long as no Control Transfer Event shall have occurred
and be continuing, an Event of Default with respect to the Series 2001-A Notes
shall occur only upon delivery by the Insurer to the Indenture Trustee of notice
of the occurrence of an Event of Default.

                                  ARTICLE VII

   Redemption of Series 2001-A Notes; Final Distributions; Series Termination
   --------------------------------------------------------------------------

     Section 7.1  Optional Redemption of Series 2001-A Notes; Final
                  -------------------------------------------------
Distributions.
-------------

     (a)  On any day occurring on or after the date on which the outstanding
principal balance of the Series 2001-A Notes is reduced to 10% or less of the
initial outstanding principal balance of Series 2001-A Notes, the Servicer shall
have the option to redeem the Series 2001-A Notes, at a purchase price equal to
(i) if such day is a Distribution Date, the Reassignment Amount for such
Distribution Date or (ii) if such day is not a Distribution Date, the
Reassignment Amount for the Distribution Date following such day; provided that
all amounts due and owing to the Insurer pursuant to the Insurance Agreement
shall have been paid to the Insurer.

     (b)  The Issuer shall give the Servicer and the Indenture Trustee at least
thirty (30) days prior written notice of the date on which the Issuer intends to
exercise such optional redemption.  Not later than 12:00 noon, New York City
time, on such day the Issuer shall deposit into the Collection Account in
immediately available funds the excess of the Reassignment Amount over the
amount, if any, on deposit in the Principal Accumulation Account.  Such
redemption option is subject to payment in full of the Reassignment Amount.
Following such deposit into the Collection Account in accordance with the
foregoing, the Collateral Amount for Series 2001-A shall be reduced to zero and
the Series 2001-A Noteholders shall have no further security interest in the
Receivables.  The Reassignment Amount shall be distributed as set forth in
subsection 7.1(d).
-----------------

     (c)  (i)  The amount to be paid by the Seller with respect to Series 2001-A
in connection with a reassignment of Receivables to the Seller pursuant to
Section 2.4(e) of the Transfer and Servicing Agreement shall equal the
--------------
Reassignment

                                      33
<PAGE>

Amount for the first Distribution Date following the Monthly Period in which the
reassignment obligation arises under the Transfer and Servicing Agreement.

          (ii) The amount to be paid by the Seller with respect to Series 2001-A
in connection with a repurchase of the Notes pursuant to Section 7.1 of the
                                                         -----------
Transfer and Servicing Agreement shall equal the Reassignment Amount for the
Distribution Date of such repurchase.

     (d)  With respect to the Reassignment Amount deposited into the Collection
Account pursuant to Section 7.1, the Indenture Trustee shall, in accordance with
                    -----------
the written direction of the Servicer, not later than 12:00 noon, New York City
time, on the related Distribution Date,  make deposits or distributions of the
following amounts (in the priority set forth below and, in each case, after
giving effect to any deposits and distributions otherwise to be made on such
date) in immediately available funds:  (i) (x) the Note Principal Balance on
such Distribution Date will be distributed to the Paying Agent for payment to
the Class A Noteholders and (y) an amount equal to the sum of (A)  Monthly
Interest for such Distribution Date, (B) any  Monthly Interest previously due
but not distributed to the Class A Noteholders on a prior Distribution Date and
(C) the amount of Additional Interest, if any, for such Distribution Date and
any  Additional Interest previously due but not distributed to the Class A
Noteholders on any prior Distribution Date, will be distributed to the Paying
Agent for payment to the Class A Noteholders, (ii) any unpaid Monthly Insurance
Premiums, Reimbursement Amounts, interest thereon and other amounts payable to
the Insurer under the Insurance Agreement will be distributed to the Insurer
(iii) any amounts owed to the Counterparty under the Swap shall be distributed
to the Counterparty and (iv) any excess shall be released to the Issuer.

     (e)  Notwithstanding anything to the contrary in this Indenture Supplement,
the Indenture or the Transfer and Servicing Agreement, all amounts distributed
to the Paying Agent pursuant to subsection 7.1(d) for payment to the Series
                                -----------------
2001-A Noteholders shall be deemed distributed in full to the Series 2001-A
Noteholders on the date on which such funds are distributed to the Paying Agent
pursuant to this Section 7.1 and shall be deemed to be a final distribution
                 -----------
pursuant to Section 11.2 of the Indenture.
            ------------

     Section 7.2  Series Termination.  On the Series 2001-A Final Maturity Date,
                  ------------------
the right of the Series 2001-A Noteholders to receive payments from the Issuer
will be limited solely to the right to receive payments pursuant to Section 5.5
                                                                    -----------
of the Indenture.

                                      34
<PAGE>

                                 ARTICLE VIII

                           Miscellaneous Provisions
                           ------------------------

     Section 8.1  Ratification of Indenture; Amendments.  As supplemented by
                  -------------------------------------
this Indenture Supplement, the Indenture is in all respects ratified and
confirmed and the Indenture as so supplemented by this Indenture Supplement
shall be read, taken and construed as one and the same instrument. This
Indenture Supplement may be amended only by a Supplemental Indenture entered in
accordance with the terms of Section 10.1 or 10.2 of the Indenture. For purposes
                             ------------    ----
of the application of Section 10.2 to any amendment of this Indenture
                      ------------
Supplement, only the vote of the Series 2001-A Noteholders shall be required.
The Issuer and Indenture Trustee shall not enter into any amendment to this
Indenture Supplement to provide for the termination of the Swap, any Policy or
any Qualified Maturity Agreement unless the Rating Agency Condition is satisfied
with respect to such amendment; it being understood that (i) the Servicer may
                                -------------------
obtain a replacement Swap in accordance with Section 4.17 and (ii) the Issuer
                                             ------------
may terminate a Qualified Maturity Agreement in accordance with Section 4.15, so
                                                                ------------
long as such replacement or termination is not affected through the amendment of
this Indenture Supplement.

     Section 8.2  Form of Delivery of the Series 2001-A Notes.  The Series
                  -------------------------------------------
2001-A Notes shall be Book-Entry Notes and shall be delivered as Registered
Notes as provided in Section 2.1 of the Indenture.
                     -----------

     Section 8.3  Counterparts.  This Indenture Supplement may be executed in
                  ------------
two or more counterparts, and by different parties on separate counterparts,
each of which shall be an original, but all of which shall constitute one and
the same instrument.

     Section 8.4  GOVERNING LAW.  THIS INDENTURE SUPPLEMENT SHALL BE CONSTRUED
                  -------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS, PROVIDED,
HOWEVER, THAT THE DUTIES AND OBLIGATIONS OF THE INDENTURE TRUSTEE SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE
TO ITS CONFLICT OF LAW PROVISIONS.

     Section 8.5  Limitation of Liability.  Notwithstanding any other provision
                  -----------------------
herein or elsewhere, this Agreement has been executed and delivered by Bankers
Trust Company, not in its individual capacity, but solely in its capacity as
Owner Trustee of the Trust, in no event shall Bankers Trust Company in its
individual capacity have any liability in respect of the representations,
warranties, or obligations of the Trust hereunder or under any other document,
as to all of which recourse shall be had solely to the assets of the Trust, and
for all purposes of this Agreement and

                                      35
<PAGE>

each other document, the Owner Trustee (as such or in its individual capacity)
shall be subject to, and entitled to the benefits of, the terms and provisions
of the Trust Agreement.

     Section 8.6  Rights of the Indenture Trustee.  The Indenture Trustee shall
                  -------------------------------
have herein the same rights, protections, indemnities and immunities as
specified in the Master Indenture.

     Section 8.7  Third Party Beneficiary.  This Indenture Supplement and the
                  -----------------------
Indenture will inure to the benefit of the Insurer.

     Section 8.8  Inconsistency.  In the event of any inconsistency between (a)
                  -------------
the provisions of the Insurance Agreement set forth in Exhibits F, G and H and
                                                       ----------  -     -
(b) the Insurance Agreement, the provisions of the Insurance Agreement shall
prevail.

     Section 8.9  Collateral Series Supplement.  Section 10(h) of the Collateral
                  ----------------------------   -------------
Series Supplement, dated as of December 1, 2000 (the "Collateral Series
                                                      -----------------
Supplement"), to the Pooling and Servicing Agreement shall not apply to the
----------
Collateral Series (as defined in the Collateral Series Supplement) related to
the Series 2001-A Notes.

     Section 8.10 Increase of Collateral Amount.  The Seller may, in its sole
                  -----------------------------
discretion, increase the Collateral Amount to cure any breach set forth in
Section 4.02(g)(i) of the Insurance Agreement; provided that, after giving
                                               --------
effect to any such increase, the Aggregate Principal Balance shall not be less
than the Minimum Aggregate Principal Balance; and provided, further that the
                                                  --------  -------
Servicer may, at the direction of the Seller, retain Principal Collections
otherwise distributable to the holders of the Seller Interest in the Excess
Funding Account for the purpose of increasing the Aggregate Principal Balance so
that the Aggregate Principal Balance shall at least equal the Minimum Aggregate
Principal Balance after giving effect to such increase; and provided further
                                                            -------- -------
that the Seller may, in its sole discretion, decrease the Collateral Amount if
such decrease would not cause a breach of the covenant set forth in Section
4.02(g)(i) of the Insurance Agreement.

     Section 8.11 Perfection Representations and Warranties.  The parties hereto
                  -----------------------------------------
agree that the representations, warranties and covenants set forth in Schedule I
shall be a part of this Indenture Supplement for all purposes.

                           [SIGNATURE PAGES FOLLOW]

                                      36
<PAGE>

     IN WITNESS WHEREOF, the undersigned have caused this Indenture Supplement
to be duly executed and delivered by their respective duly authorized officers
on the day and year first above written.

                                   SPIEGEL CREDIT CARD MASTER NOTE
                                   TRUST, as Issuer

                                   By: BANKERS TRUST COMPANY,
                                   not in its individual capacity
                                   but solely as Owner Trustee

                                   Name: /s/ Eileen M. Hughes
                                         --------------------
                                   Title: Vice President

                                   THE BANK OF NEW YORK,
                                   as Indenture Trustee

                                   Name: /s/ Robert D. Foltz
                                         -------------------
                                   Title: Authorized Agent

Signature page to
Indenture Supplement

                                      37
<PAGE>

Acknowledged and Accepted:

FIRST CONSUMERS NATIONAL BANK,
as Servicer

Name:  /s/ John R. Steele
       ------------------
Title: Treasurer

Acknowledged and Accepted:

SPIEGEL CREDIT CORPORATION III,
as Seller

Name:  /s/ John R. Steele
       ------------------
Title: Treasurer

Signature page to
Indenture Supplement

                                      38<PAGE>

                          MBIA INSURANCE CORPORATION

                      FINANCIAL GUARANTY INSURANCE POLICY

                                 July 19, 2001

                                                             Policy No. 35738(1)

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

Insured Obligation:  Obligation of the Spiegel Credit Card Master Note Trust
                     (the "Issuer") to pay principal on the Series 2001-A Final
                           ------
                     Maturity Date, interest and the servicing fee on the Notes

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,
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 equal to the sum of (i) the amount, if any, by which the Monthly Interest
to be paid on such Distribution Date exceeds the amount on deposit in the
Collection Account allocable to the Notes, and available for distribution in
payment of Monthly Interest pursuant to the Series 2001-A Indenture Supplement,
and (ii) if the Servicer is not an Affiliate of the Seller, the amount, if any,
by which the Monthly Servicing Fee allocable to the Notes for the preceding
Monthly Period exceeds the amount previously paid to the Servicer with respect
to the Monthly Servicing Fee for such Monthly Period; (b) in respect of the
Series 2001-A Final Maturity Date, an amount equal to the Note Principal Balance
after application of all amounts allocable to the Note Principal Balance
pursuant to the Series 2001-A Indenture Supplement; and (c) 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 or Series 2001-A Final
Maturity Date shall exceed the Policy Amount
<PAGE>

for such Distribution Date or Series 2001-A Final Maturity Date. No payment
under this Policy with respect to any Distribution Date or Series 2001-A Final
Maturity 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.

     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.

     "Excluded Amount" means (a) shortfalls, if any, in amounts available to
      ---------------
make payments on the Notes 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) payment of the Note Principal
Balance prior to the Series 2001-A Final Maturity Date.

     "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 (a) in the case of any Distribution Date, the sum of
      -------------
(i) the Monthly Interest payable on such Distribution Date and (ii) the Monthly
Servicing Fee allocable to the Notes payable on such Distribution Date, provided
that the Servicer is not an Affiliate of the Seller; and (b) in the case of the
Series 2001-A Final Maturity Date, the Note Principal Balance (after giving
effect to all amounts allocable to the Note Principal Balance).

     "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 in 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: (a) with respect to payments of Monthly Interest or
Monthly Servicing Fees 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

                                      -2-
<PAGE>

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; and (b) with respect to payment of the Note Principal
Balance payable on the Series 2001-A Final Maturity 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 Series 2001-A Final
Maturity Date and (y) 12:00 noon, New York City time, on the second Business Day
next succeeding presentation to the Fiscal Agent of a 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, in each case 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 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, any  Noteholder is required to return
such voided payment, or any portion of such voided payment, made in respect of
any Note (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 such Noteholder of such Avoided Payment and
receipt by the Fiscal Agent from the Indenture Trustee on behalf of such
Noteholder 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 Noteholder 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 such Noteholder irrevocably assigning to the Insurer
all rights and claims of such Noteholder 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

                                      -3-
<PAGE>

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 Noteholder and not to the
Indenture Trustee or any Noteholder directly unless such Noteholder 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
Noteholder entitled to such payment upon proof of such payment reasonably
satisfactory to the Insurer.

     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 Noteholders 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 Noteholders, 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 Noteholders 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 each Noteholder 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

                                      -4-
<PAGE>

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 Notes.

     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:

          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

                                      -5-
<PAGE>

all amounts required to be paid to the Noteholders 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.

     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
any Noteholder or the Servicer or (b) the failure of any such Noteholder or the
Servicer to 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(1)
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(1)

     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(1),
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.

     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 sum of (i) Monthly Interest allocable to
the Notes for such Distribution Date (as defined in the Policy) and (ii) the
Monthly Servicing Fee allocable to the Notes (provided that the Servicer is not
an Affiliate of the Seller) for such Distribution Date exceeds Available Finance
Charge Collections, Reallocated Principal Collections and Available Spread
Account Amounts that are available to cover such amounts 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 the Series 2001-A Final Maturity
Date use the following paragraphs 6, 7 and 8]

                                      -8-
<PAGE>

     6.   This notice relates to the Series 2001-A Final Maturity Date.  The
Policy Amount, as specified to the Indenture Trustee by the Servicer, for such
Series 2001-A Final Maturity Date is $______. The amount demanded by this notice
does not exceed such Policy Amount.

     7.   The Indenture Trustee demands payment of $___________ which is an
amount equal to the amount of the Note Principal Balance after application of
all amounts to the Note Principal Balance.

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

     [For a Notice for Payment relating to both a Distribution Date and the
Series 2001-A Final Maturity Date, use the following paragraphs 9, 10, 11, 12,
,13.]

     9.   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.

     10.  The Indenture Trustee demands payment of $___________ which is an
amount equal to the amount by which the sum of (i) Monthly Interest allocable to
the Notes for such Distribution Date (as defined in the Policy) and (ii) the
Monthly Servicing Fee allocable to the Notes (provided that the Servicer is not
an Affiliate of the Seller) for such Distribution Date exceeds Available Finance
Charge Collections, Reallocated Principal Collections and Available Spread
Account Amounts that are available to cover such amounts for such Distribution
Date.

     11.  This notice relates to the Series 2001-A Final Maturity Date. The
Policy Amount, as specified to the Indenture Trustee by the Servicer, for such
Series 2001-A Final Maturity Date is $______. The amount demanded by this notice
does not exceed such Policy Amount.

     12.  The Indenture Trustee demands payment of $___________ which is an
amount equal to the amount of the Note Principal Balance after application of
all amounts to the Note Principal Balance.

     13.  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 14 and 15.]

     14.  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) or each Noteholder with respect to which the
-----------------------
drawing is being made under the Policy, as the case may be, 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

                                      -9-
<PAGE>

with such Avoided Payment and Avoided Payment Amount have previously been
presented to the Insurer or are attached hereto.

     15.  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 16, 17, 18 and 19.]

     16.  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.

     17.  The Indenture Trustee demands payment of $___________ which is an
amount equal to the amount by which the sum of (i) Monthly Interest allocable to
the Notes for such Distribution Date (as defined in the Policy) and (ii) the
Monthly Servicing Fee allocable to the Notes (provided that the Servicer is not
an Affiliate of the Seller) for such Distribution Date exceeds Available Finance
Charge Collections, Reallocated Principal Collections and Available Spread
Account Amounts that are available to cover such amounts for such Distribution
Date.

     18.  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) each Noteholder with respect to which the
 ----------------------
drawing is being made under the Policy, as the case may be, 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.

     19.  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 the
Series 2001-A Final Maturity Date, use the following paragraphs 20, 21, 22 and
23.]

     20.  This notice relates to the Series 2001-A Final Maturity Date. The
Policy Amount, as specified to the Indenture Trustee by the Servicer, for such
Series 2001-A Final Maturity Date is $______. The amount demanded by this notice
does not exceed such Policy Amount.

     21.  The Indenture Trustee demands payment of $___________ which is an
amount equal to the amount of the Note Principal Balance after application of
all amounts to the Note Principal Balance.

     22.  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) each
 ----------------------

                                      -10-
<PAGE>

Noteholder with respect to which the drawing is being made under the Policy, as
the case may be, 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.

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

     [For a Notice for Payment relating to an Avoided Payment, the Series 2001-A
Final Maturity Date and a Distribution Date, use the following paragraphs 24,
25, 26, 27, 28 and 29.]

     24.  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.

     25.  The Indenture Trustee demands payment of $___________ which is an
amount equal to the amount by which the sum of (i) Monthly Interest allocable to
the Notes for such Distribution Date (as defined in the Policy) and (ii) the
Monthly Servicing Fee allocable to the Notes (provided that the Servicer is not
an Affiliate of the Seller) for such Distribution Date exceeds Available Finance
Charge Collections, Reallocated Principal Collections and Available Spread
Account Amounts that are available to cover such amounts for such Distribution
Date.

     26.  This notice relates to the Series 2001-A Final Maturity Date. The
Policy Amount, as specified to the Indenture Trustee by the Servicer, for such
Series 2001-A Final Maturity Date is $______. The amount demanded by this notice
does not exceed such Policy Amount.

     27.  The Indenture Trustee demands payment of $___________ which is an
amount equal to the amount of the Note Principal Balance after application of
all amounts to the Note Principal Balance.

     28.  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) each Noteholder with respect to which the
 ----------------------
drawing is being made under the Policy, as the case may be, 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.

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

                                      -11-
<PAGE>

     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

                                      -12-
<PAGE>

Exhibit B to Financial Guaranty Insurance Policy, Number 35738(1)

                              Form of Assignment

Reference is made to the Financial Guaranty Insurance Policy No. 35738(1), 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.
<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.

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