Document:

<PAGE>
                                                                     EXHIBIT 4.2

________________________________________________________________________________

                       SPIEGEL CREDIT CARD MASTER NOTE
                                     TRUST

________________________________________________________________________________

                     SPIEGEL CREDIT CARD MASTER NOTE TRUST

                                    Issuer

                                      and

                           BNY MIDWEST TRUST COMPANY

                               Indenture Trustee

                      SERIES 2000-A INDENTURE SUPPLEMENT

                          Dated as of _____ __, 2000

________________________________________________________________________________

<PAGE>

                               Table of Contents

<TABLE>
<S>                                                                                    <C>
ARTICLE I      Creation of the Series 2000-A Notes...................................   1
               Section  1.1    Designation...........................................   1

ARTICLE II     Definitions...........................................................   2
               Section  2.1    Definitions...........................................   2

ARTICLE III    Servicing Fee.........................................................  13
               Section  3.1    Servicing Compensation................................  13

ARTICLE IV     Rights of Series 2000-A Noteholders and Allocation and
               Application of Collections............................................  14
               Section  4.1   Collections and Allocations............................  14
               Section  4.2   Determination of Monthly Interest......................  16
               Section  4.3   Determination of Monthly Principal.....................  17
               Section  4.4   Application of Available Finance Charge
                              Collections and Available Principal Collections........  18
               Section  4.5   Investor Charge-Offs...................................  20
               Section  4.6   Reallocated Principal Collections......................  21
               Section  4.7   Excess Finance Charge Collections......................  21
               Section  4.8   Shared Principal Collections...........................  21
               Section  4.9   Principal Accumulation Account.........................  21
               Section  4.10  Reserve Account........................................  23
               Section  4.11  Spread Account.........................................  25
               Section  4.12  Determination of LIBOR.................................  27
               Section  4.13  Investment Instructions................................  28
               Section  4.14  Increase of Excess Collateral Amount...................  28

ARTICLE V      Delivery of Series 2000-A Notes; Distributions; Reports to
               Series 2000-A Noteholders.............................................  29
               Section  5.1   Delivery and Payment for the Series 2000-A Notes.......  29
               Section  5.2   Distributions..........................................  29
               Section  5.3   Reports and Statements to Series 2000-A
                              Noteholders............................................  30

ARTICLE VI     Series 2000-A Pay Out Events..........................................  31
               Section  6.1   Series 2000-A Pay Out Events...........................  31

ARTICLE VII    Redemption of Series 2000-A Notes; Final Distributions;
               Series Termination....................................................  32
</TABLE>

                                       i
<PAGE>

<TABLE>
               <S>                                                                     <C>
               Section  7.1   Optional Redemption of Series 2000-A Notes;
                              Final Distributions .................................... 32
               Section  7.2   Series Termination ..................................... 34
ARTICLE VIII   Miscellaneous Provisions............................................... 34
               Section  8.1   Ratification of Indenture .............................. 34
               Section  8.2   Form of Delivery of the Series 2000-A Notes ............ 34
               Section  8.3   Counterparts ........................................... 34
               Section  8.4   GOVERNING LAW .......................................... 34
               Section  8.5   Limitation of Liability ................................ 34
 </TABLE>

                                      ii
<PAGE>

                                   EXHIBITS

EXHIBIT A-1    FORM OF CLASS A NOTE

EXHIBIT A-2    FORM OF CLASS B NOTE

EXHIBIT A-3    FORM OF CLASS C NOTE

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

EXHIBIT C      FORM OF MONTHLY STATEMENT

EXHIBIT D      FORM OF MONTHLY SERVICER'S
               CERTIFICATE

                                      iii
<PAGE>

     SERIES 2000-A INDENTURE SUPPLEMENT, dated as of ______ __, 2000 (the

"Indenture Supplement"), between SPIEGEL CREDIT CARD MASTER NOTE TRUST, a trust
 --------------------
organized and existing under the laws of the State of Illinois (herein, the

"Issuer" or the "Trust"), and BNY MIDWEST TRUST COMPANY, a [banking corporation
 ------          -----
organized and existing under the laws of the State of Illinois], not in its
individual capacity, but solely as indenture trustee (herein, together with its
successors in the trusts thereunder as provided in the Master Indenture referred
to below, the "Indenture Trustee") under the Master Indenture, dated as of
               -----------------
_______, 2000 (the "Indenture") between the Issuer and the Indenture Trustee
                    ---------
(the Indenture, together with this Indenture Supplement, the "Agreement").
                                                              ---------

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

                                   ARTICLE I

                      Creation of the Series 2000-A Notes
                      -----------------------------------

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

     (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 2000-A" or the "Series 2000-A Notes."  The
--------------------------------------------          -------------------
Series 2000-A Notes shall be issued in three Classes, known as the "Class A
                                                                    -------
Series 2000-A Floating Rate Asset Backed Notes," the "Class B Series 2000-A
-----------------------------------------------       ---------------------
Floating Rate Asset Backed Notes," and the "Class C Series 2000-A Floating Rate
---------------------------------           -----------------------------------
Asset Backed Notes."
------------------

     (b) Series 2000-A shall be included in Group One and shall be a Principal
Sharing Series.  Series 2000-A shall be an Excess Allocation Series with respect
to Group One only.  Series 2000-A shall not be subordinated to any other Series.

     (c) If any term or provision contained herein shall conflict with or be
inconsistent with any term or provision contained in the Indenture, the terms
and provisions of this Indenture Supplement shall be controlling.  All
capitalized terms not otherwise defined herein are defined in the Indenture.
Each capitalized term defined herein shall relate only to the Series 2000-A
Notes and no other Series of Notes issued by the Issuer.
<PAGE>

                                  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, and the denominator of which is equal to the sum of (a) the
Initial Collateral Amount, (b) the initial Collateral Amounts of all outstanding
Series (other than Series 2000-A) which are not expected to be in their
revolving periods, and (c) the initial Collateral Amounts of all other
outstanding Series which are not allocating Shared Principal Collections to
other Series and are in their revolving periods; provided, however, that this
definition may be changed at anytime if the Rating Agency Condition is
satisfied.

     "Accumulation Period Length" is defined in subsection 4.4(e).
      --------------------------                -----------------

     "Accumulation Shortfall" shall initially mean zero and shall thereafter
      ----------------------
mean, for any Monthly Period during the Controlled Accumulation Period, the
excess, if any, of the Controlled Deposit Amount for the previous Monthly Period
over the amount deposited into the Principal Accumulation Account pursuant to
subsection 4.4(c)(i) for the previous Monthly Period.
--------------------

     "Additional Interest" means, for any Distribution Date, Class A Additional
      -------------------
Interest, Class B Additional Interest and Class C Additional Interest for such
Distribution Date.

     "Adjusted Collateral Amount" means, as of any date of determination, an
      --------------------------
amount equal to the Collateral Amount as of such date, minus the amount on
deposit in the Principal Accumulation Account on such date.

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

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

               (i) for Finance Charge Collections and Principal Collections
          during the Revolving Period and the Controlled Accumulation Period

                                       2
<PAGE>

          and for Default Amounts at any time, at the end of the last day of the
          prior Monthly Period (or, in the case of the monthly Period in which
          the Closing Date occurs, on the Closing Date);

               (ii) for Finance Charge Collections and Principal Collections
          during the Rapid Amortization Period and Principal Collections during
          the Controlled Accumulation Period, on the last day of the Revolving
          Period, provided, however, (A) that during the Controlled Accumulation
          Period, the Allocation Percentage for Principal Collections may be
          reset by and at the option of the Servicer (and any such reset
          Allocation Percentage will apply in any Rapid Amortization Period
          following the Controlled Accumulation Period) for each Monthly Period
          to use a numerator which shall not be greater than the numerator
          described above and shall not be less than the greater of (x)the
          Collateral Amount, determined as of the close of business on the last
          day of the preceding Monthly Period (y) a numerator that results in an
          Allocation Percentage that when multiplied by the amount of Principal
          Collections for the preceding Monthly Period will equal 110% of the
          Controlled Accumulation Amount for the Monthly Period to which such
          allocation fraction will be applicable, and (B) if Series 2000-A is
          paired with a Paired Series and a Rapid Amortization Period commences
          for such Paired Series, the Seller may, by written notice to the
          Trustee, the Servicer and the Rating Agency, designate a different
          numerator for such fraction; and

          (b)  denominator of which shall be the greater of (x) the Aggregate
     Principal Balance at the end of Business Day preceding such date of
     determination and (y) the sum of the numerators used to calculate the
     Allocation Percentages or Allocation Percentages for allocations with
     respect to Finance Charge Collections, Principal Collections or Default
     Amounts, as applicable, for all outstanding Series on such date of
     determination.

     "Available Finance Charge Collections" means, for any Monthly Period, an
      ------------------------------------
amount equal to the sum of (a) the Investor Finance Charge Collections for such
Monthly Period, plus (b) the Excess Finance Charge Collections allocated to
Series 2000-A for such Monthly Period, plus (c) Principal Funding Investment
Proceeds, if any, with respect to the related Distribution Date and (d) amounts,
if any, to be withdrawn from the Reserve Account which will be deposited into
the Collection Account on the related Distribution Date to be treated as
Available Finance Charge Collections pursuant to subsection 4.10(d).
                                                 ------------------

     "Available Principal Collections" means, for any Monthly Period, an amount
      -------------------------------
equal to the sum of (a) the Investor Principal Collections for such Monthly
Period minus (b) the amount of Reallocated Principal Collections with respect to
such

                                       3
<PAGE>

Monthly Period which pursuant to Section 4.6 are required to be applied on the
                                 -----------
related Distribution Date, plus (c) any Shared Principal Collections with
respect to other Principal Sharing Series in Group One (including any amounts on
deposit in the Excess Funding Account that are allocated to Series 2000-A
pursuant to the Agreement for application as Shared Principal Collections), plus
(d) the aggregate amount to be treated as Available Principal Collections
pursuant to subsections 4.4(a)(v) and (vi) for the related Distribution Date.
            ---------------------     ----

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

     "Available Spread Account Amount" means, for any Distribution Date, an
      -------------------------------
amount equal to the lesser of (a) the amount on deposit in the Spread Account
(exclusive of Investment Earnings, unless and until the occurrence of an Event
of Default with respect to Series 2000-A and acceleration of the maturity of the
Series 2000-A Notes pursuant to Section 5.3 of the Indenture) on such date
                                -----------
(before giving effect to any deposit to, or withdrawal from, the Spread Account
made or to be made with respect to such date) and (b) the Required Spread
Account Amount for such Distribution Date.

     "Base Rate" means, for any Monthly Period, the annualized percentage
      ---------
equivalent of a fraction, the numerator of which is equal to the sum of the
Monthly Interest and the Monthly Servicing Fee, each with respect to the related
Distribution Date, and the denominator of which is the Note Principal Balance as
of the first day of such Monthly Period.

     "Class A Additional Interest" is defined in subsection 4.2(a).
      ---------------------------                -----------------

     "Class A Interest Shortfall" is defined in subsection 4.2(a).
      --------------------------                -----------------

     "Class A Monthly Interest" is defined in subsection 4.2(a).
      ------------------------                -----------------

     "Class A Note Initial Principal Balance" means $___________.
      --------------------------------------

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

     "Class A Note Principal Balance" means, on any date of determination, an
      ------------------------------
amount equal to (a) the Class A Note Initial Principal Balance, minus (b) the

                                       4
<PAGE>

aggregate amount of principal payments made to the Class A Noteholders on or
prior to such date.

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

     "Class A Notes" means any one of the Notes executed by the Issuer and
      -------------
authenticated by or on behalf of the Indenture Trustee, substantially in the
form of Exhibit A-1.
        -----------

     "Class A Required Amount" means, for any Distribution Date, an amount equal
      -----------------------
to the excess of the amount described in subsection 4.4(a)(i) over the Available
                                         --------------------
Finance Charge Collections applied to pay such amount pursuant to subsection
                                                                  ----------
4.4(a).
------

     "Class B Additional Interest" is defined in subsection 4.2(b).
      ---------------------------                -----------------

     "Class B Interest Shortfall" is defined in subsection 4.2(b).
      --------------------------                -----------------

     "Class B Monthly Interest" is defined in subsection 4.2(b).
      ------------------------                -----------------

     "Class B Note Initial Principal Balance" means $___________.
      --------------------------------------

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

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

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

     "Class B Notes" means any one of the Notes executed by the Issuer and
      -------------
authenticated by or on behalf of the Indenture Trustee, substantially in the
form of Exhibit A-2.
        -----------

     "Class B Required Amount" means, for any Distribution Date, an amount equal
      -----------------------
to the excess of the amount described in subsection 4.4(a)(ii) over the
                                         ---------------------
Available Finance Charge Collections applied to pay such amount pursuant to

subsection 4.4(a).
-----------------

     "Class C Additional Interest" is defined in subsection 4.2(c).
      ---------------------------                -----------------

                                       5
<PAGE>

     "Class C Interest Shortfall" is defined in subsection 4.2(c).
      --------------------------                -----------------

     "Class C Monthly Interest" is defined in subsection 4.2(c).
      ------------------------                -----------------

     "Class C Note Initial Principal Balance" means $___________.
      --------------------------------------

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

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

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

     "Class C Notes" means any one of the Notes executed by the Issuer and
      -------------
authenticated by or on behalf of the Indenture Trustee, substantially in the
form of Exhibit A-3.
        -----------

     "Class C Required Amount" means, for any Distribution Date, an amount equal
      -----------------------
to the excess of the amount described in subsection 4.4(a)(iv) over the
                                         ---------------------
Available Finance Charge Collections applied to pay such amount pursuant to

subsection 4.4(a).
-----------------

     "Closing Date" means [_____ __], 2000.
      ------------

     "Collateral Amount" means, as of any date of determination, an amount equal
      -----------------
to the Initial Collateral Amount plus the cumulative amount of any increases to
the Collateral Amount made pursuant to Section 4.14 on or prior to such date of
                                       ------------
determination minus the amount of principal previously paid to the Series 2000-A
Noteholders, minus the excess, if any, of the aggregate amount of Investor
Charge-Offs and Reallocated Principal Collections over the reimbursements of
such amounts pursuant to subsection 4.4(a)(vi) prior to such date.
                         ---------------------

     "Controlled Accumulation Amount" means, for any Distribution Date with
      ------------------------------
respect to the Controlled Accumulation Period, $[___________]; provided,
however, that if the Accumulation Period Length is determined to be less than 12
months pursuant to subsection 4.4(e), the Controlled Accumulation Amount for
                   -----------------
each Distribution Date with respect to the Controlled Accumulation Period will
be equal to (i) the product of (x) the Initial Collateral Amount and (y) the
Accumulation Period Factor for such Monthly Period divided by (ii) the Required
Accumulation Factor Number.

                                       6
<PAGE>

     "Controlled Accumulation Period" means, unless a Pay Out Event shall have
      ------------------------------
occurred prior thereto, the period commencing at the close of business on [_____
__, 20__] or such later date as is determined in accordance with subsection
                                                                 ----------
4.4(e), and ending on the first to occur of (a) the commencement of the Rapid
------
Amortization Period, (b) the payment in full of the Note Principal Balance and
(c) the Series 2000-A Final Maturity Date.

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

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

     "Distribution Date" means [_____ __], 2000 and the 15/th/ day of each
      -----------------
calendar month thereafter, or if such 15th day is not a Business Day, the next
succeeding Business Day.

     "Excess Collateral Amount" means, at any time, the excess (if any) of the
      ------------------------
Collateral Amount over the Note Principal Balance.

     "Excess Spread Percentage" means, for any Monthly Period, the amount, if
      ------------------------
any, by which the Portfolio Yield exceeds the Base Rate.

     "Expected Class A Principal Payment Date" means the [____ 20__]
      ---------------------------------------
Distribution Date.

                                       7
<PAGE>

     "Expected Class B Principal Payment Date" means the [____ 20__]
      ---------------------------------------
Distribution Date.

     "Expected Class C Principal Payment Date" means the [____ 20__]
      ---------------------------------------
Distribution Date.

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

     "Group One" means Series 2000-A and each other Series hereafter specified
      ---------
in the related Indenture Supplement to be included in Group One.

     "Initial Collateral Amount" means $[_________], which equals the initial
      -------------------------
principal amount of the Series 2000-A Notes plus the Initial Excess Collateral
Amount.

     "Initial Excess Collateral Amount" means $___________.
      --------------------------------

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

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

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

     "Investor Default Amount" means, for any Distribution Date, an amount equal
      -----------------------
to the product of (a) the Defaulted Amount for the related Monthly Period and
(b) the Floating Allocation Percentage for such Monthly Period.

     ["Investor Finance Charge Collections" means, for any Monthly Period, an
       -----------------------------------
amount equal to the aggregate amount retained in the Collection Account for
Series 2000-A pursuant to subsection 4.1(b)(i) for such Monthly Period of
                          --------------------
Finance Charge Collections (including Net Recoveries treated as Finance Charge
Collections) deposited in the Collection Account for such Monthly Period.]

     "Investor Percentage" means, for any Monthly Period, the Allocation
      -------------------
Percentage.

                                       8
<PAGE>

     "Investor Principal Collections" means, for any Monthly Period, the
      ------------------------------
aggregate amount retained in the Collection Account for Series 2000-A pursuant
to subsection 4.1(b)(ii) for such Monthly Period.
   ---------------------

     ["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 (i) _____ __, 2000 for the period from
       ------------------------
and including the Closing Date through and including _____ __, 2000 and (ii) the
second London Business Day prior to the commencement of the second and each
subsequent Interest Period.]

     "London Business Day" means any Business Day on which dealings in deposits
      -------------------
in United States dollars are transacted in the London interbank market.

     "Minimum Seller Percentage" means zero, for Series 2000-A.
      -------------------------

     "Modified Excess Spread Percentage" means, with respect to the first
      ---------------------------------
Monthly Period an amount equal to the percentage equivalent of a fraction, the
numerator of which is (y) the product of (a) an amount equal to the excess, if
any, of (i) (A) the amount of Finance Charge Collections deposited in the
Collection Account and allocable to the Series 2000-A Noteholders for such first
Monthly Period over (ii) the sum of (A) the product of (I) the Class A Monthly
Interest for the related Interest Period times (II) a fraction (a) the numerator
of which is the actual number of days in such first Monthly Period and (b) the
denominator of which is the actual number of days in the related Interest Period
plus (B) the product of (I) the Class B Monthly Interest for such Interest
Period times (II) a fraction (a) the numerator of which is the actual number of
days in such first Monthly Period and (b) the denominator of which is the actual
number of days in such Interest Period plus (C) the product of (I) the Class C
Monthly Interest for such Interest Period times (II) a fraction (a) the
numerator of which is the actual number of days in such first Monthly Period and
(b) the denominator of which is the actual number of days in such Interest
Period plus (D) the Noteholder Servicing Fee with respect to the Distribution
Date relating to such first Monthly Period, times (b) a fraction, the numerator
of which is 360 and the denominator of which is [__]; and the denominator of
which is (z) the Initial Collateral Amount.

     "Monthly Interest" means, for any Distribution Date, the sum of the Class A
      ----------------
Monthly Interest, the Class B Monthly Interest, and the Class C Monthly Interest
for such Distribution Date.

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

                                       9
<PAGE>

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

          (a) the lower of (i) the Class A Required Amount and (ii) the greater
     of (A)(x) the product of (I) [__]% and (II) the Initial Collateral Amount
     minus (y) the amount of unreimbursed Investor Charge-Offs (after giving
     effect to Investor Charge-Offs for the related Monthly Period) and
     unreimbursed Reallocated Principal Collections (as of the previous
     Distribution Date) and (B) zero;

          (b) the lower of (i) the sum of the Class B Required Amount and the
     Servicing Fee Required Amount and (ii) the greater of (A)(x) the product of
     (I) [__]% and (II) the Initial Collateral Amount minus (y) the amount of
     unreimbursed Investor Charge-Offs (after giving effect to Investor Charge-
     Offs for the related Monthly Period) and unreimbursed Reallocated Principal
     Collections (as of the previous Distribution Date and as required in clause
                                                                          ------
     (a) above) and (B) zero; and
     ---

          (c) the lower of (i) the sum of the Class C Required Amount and the
     Servicing Fee Required Amount and (ii) the greater of (A)(x) the product of
     (I) [__]% and (II) the Initial Collateral Amount minus (y) the amount of
     unreimbursed Investor Charge-Offs (after giving effect to Investor Charge-
     Offs for the related Monthly Period) and unreimbursed Reallocated Principal
     Collections (as of the previous Distribution Date and as required in
     clauses (a) and (b) above) and (B) zero.
     -----------     ---

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

     "Note Principal Balance" means, on any date of determination, an amount
      ----------------------
equal to the sum of the Class A Note Principal Balance, the Class B Note
Principal Balance and the Class C Note Principal Balance.

     "Percentage Allocation" shall have the meaning set forth in subsection
      ---------------------                                      ----------
4.1(c)(ii)(y).
-------------

     "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 for each such Monthly Period from the Portfolio Yield
for each such Monthly Period.

     "Portfolio Yield" means, for any Monthly Period, the annualized percentage
      ---------------
equivalent of a fraction, (a) the numerator of which is equal to the sum of (i)
Investor Finance Charge Collections with respect to such Monthly Period, plus
(ii) the Principal Funding Investment Proceeds deposited into the Collection
Account on the Distribution Date related to such Monthly Period, plus (iii) the
amount of the

                                      10
<PAGE>

Reserve Draw Amount (up to the Available Reserve Account Amount) plus any
amounts of interest and earnings described in Section 4.10, each deposited into
                                              ------------
the Collection Account on the Distribution Date relating to such Monthly Period,
such sum to be calculated on a cash basis after subtracting the Investor Default
Amount for such Monthly Period, and (b) the denominator of which is the Note
Principal Balance as of the first day of such Monthly Period; provided, however,
that Excess Finance Charge Collections that are allocated to Series 2000-A with
respect to such Monthly Period may be added to the numerator if the Transferor
shall have provided ten (10) Business Days prior written notice of such action
to each Rating Agency and the Transferor, the Servicer and the Indenture Trustee
shall have received notification in writing that such action will not result in
Standard & Poor's reducing or withdrawing its then existing rating of the Notes
or any outstanding Series or Class with respect to which it is a Rating Agency.

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

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

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

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

     "Qualified Maturity Agreement" means an agreement in which a Qualified
      ----------------------------
Institution agrees to make a deposit into the Principal Accumulation Account on
the [Expected Final Payment Date] in an amount equal to the Note Principal
Balance on such date.

     "Quarterly Excess Spread Percentage" means (a) with respect to the [Month
      ----------------------------------
1] 2000 Distribution Date, the Modified Excess Spread Percentage, (b) with
respect to the [Month 2] 2000 Distribution Date, the percentage equivalent of a
fraction the numerator of which is the sum of (i) the Modified Excess Spread
Percentage for the first Monthly Period and (ii) the Excess Spread Percentage
with respect to the [Month 1] 2000 Monthly Period and the denominator of which
is two, (c) with respect to the [Month 3] 2000 Distribution Date, the percentage
equivalent of a fraction the numerator of which is the sum of (i) the Modified
Excess Spread Percentage for the first Monthly Period, (ii) the Excess Spread
Percentage with respect to the [Month 1] 2000 Monthly Period and (iii) the
Excess Spread Percentage with respect to the [Month 2] 2000 Monthly Period and
the denominator of which is three and (d) with respect to the [Month 4] 2000
Distribution Date and each

                                      11
<PAGE>

Distribution Date thereafter, the percentage equivalent of a fraction the
numerator of which is the sum of the Excess Spread Percentages with respect to
the immediately preceding three Monthly Periods and the denominator of which is
three.

     "Rapid Amortization Period" means the period commencing on the Business Day
      -------------------------
immediately preceding the day on which a Pay Out Event with respect to Series
2000-A is deemed to have occurred, and ending on the first to occur of (i) the
payment in full of the Collateral Amount and (ii) the Series 2000-A Final
Maturity Date.

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

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

     "Reassignment Amount" means, for any Distribution Date, after giving effect
      -------------------
to any deposits and distributions otherwise to be made on such Distribution
Date, the sum of (i) the outstanding principal balance of the Series 2000-A
Notes on such Distribution Date, plus (ii) Monthly Interest for such
Distribution Date and any Monthly Interest previously due but not distributed to
the Series 2000-A Noteholders, plus (iii) the amount of Additional Interest, if
any, for such Distribution Date and any Additional Interest previously due but
not distributed to the Series 2000-A Noteholders on a prior Distribution Date.

     "Reference Banks" means four major banks in the London interbank market
      ---------------
selected by the Servicer.

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

     "Required Excess Collateral Amount" means, at any time, the product of the
      ---------------------------------
Required Excess Collateral Percentage and the Note Principal Balance; provided
                                                                      --------
that:

          (a) except as provided in clause (c), the Required Excess Collateral
                                    ----------
     Amount will never be less than 3% of the Initial Collateral Amount;

          (b) except as provided in clause (c), the Required Excess Collateral
                                    ----------
     Amount will not decrease during a Rapid Amortization Period; and

                                      12
<PAGE>

          (c) the Required Excess Collateral Amount will never be greater than
     the Note Principal Balance minus the balance on deposit in the Spread
     Account.

     "Required Reserve Account Amount" means, for any Distribution Date on or
      -------------------------------
after the Reserve Account Funding Date, an amount equal to (a) [0.5]% of the
Class A Note Principal Balance or (b) any other amount designated by the
Transferor; provided, however, that if such designation is of a lesser amount,
the Transferor shall (i) provide the Servicer and the Indenture Trustee with
evidence that the Rating Agency Condition shall have been satisfied and (ii)
deliver to the Indenture Trustee a certificate of an Authorized Officer to the
effect that, based on the facts known to such officer at such time, in the
reasonable belief of the Transferor, such designation will not cause a Pay Out
Event or an event that, after the giving of notice or the lapse of time, would
cause a Pay Out Event to occur with respect to Series 2000-A.

     "Required Spread Account Amount" means, (a) prior to the occurrence of an
      ------------------------------
Event of Default with respect to Series 2000-A and acceleration of the maturity
of the Series 2000-A Notes pursuant to Section 5.3 of the Indenture, for any
                                       -----------
date of determination, the product of (i) the Spread Account Percentage in
effect on such date and (ii) the Initial Collateral Amount; provided that the
Required Spread Account Amount shall not exceed the Class C Note Principal
Balance minus the excess, if any, of the Principal Accumulation Account Balance
over the sum of the Class A Note Principal Balance and the Class B Note
Principal Balance on such date of determination and (b) after the occurrence of
an Event of Default with respect to Series 2000-A and acceleration of the
maturity of the Series 2000-A Notes pursuant to Section 5.3 of the Indenture,
                                                -----------
for any Distribution Date, the sum of (i) the amount on deposit in the Spread
Account on such Distribution Date, plus (ii) Available Finance Charge
Collections for such Distribution Date remaining after application of such
amounts pursuant to subsection 4.4(a)(vii), plus (iii) amounts on deposit in the
                    ----------------------
Reserve Account in excess of the Required Reserve Account Amount; provided,
however, that the Required Spread Account Amount shall not exceed Note Principal
Balance.

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

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

                                      13
<PAGE>

Distribution Date for which the Portfolio Adjusted Yield is less than 3%, but in
such event the Reserve Account Funding Date shall not be required to occur
earlier than the Distribution Date with respect to the Monthly Period which
commences 6 months prior to the commencement of the Controlled Accumulation
Period; and (d) the first Distribution Date for which the Portfolio Adjusted
Yield is less than 4%, but in such event the Reserve Account Funding Date shall
not be required to occur earlier than the Distribution Date with respect to the
Monthly Period which commences 4 months prior to the commencement of the
Controlled Accumulation Period.

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

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

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

     "Series 2000-A" means the Series of Notes the terms of which are specified
      -------------
in this Indenture Supplement.

     "Series 2000-A Final Maturity Date" means the earlier to occur of (a) the
      ---------------------------------
Distribution Date on which the Collateral Amount is paid in full and (b) the
[________ ____] Distribution Date.

     "Series 2000-A Note" means a Class A Note, a Class B Note or a Class C
      ------------------
Note.

     "Series 2000-A Noteholder" means a Class A Noteholder, a Class B Noteholder
      ------------------------
or a Class C Noteholder.

     "Series 2000-A Pay Out Event" is defined in Section 6.1.
      ---------------------------                -----------

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

     "Servicing Fee Required Amount" means, for any Distribution Date, an amount
      -----------------------------
equal to the excess of the amount described in subsection 4.4(a)(iii) over the
                                               ----------------------
Available Finance Charge Collections applied to pay such amount pursuant to

subsection 4.4(a).
-----------------

                                      14
<PAGE>

     "Spread Account" is defined in subsection 4.11(a).
      --------------                ------------------

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

     "Spread Account Percentage" means, (i) zero, if the Quarterly Excess Spread
      -------------------------
Percentage on such Distribution Date is greater than or equal to [___]%, (ii)
[___]%, if the Quarterly Excess Spread Percentage on such Distribution Date is
less than [____]% and greater than or equal to [____]%, (iii) [____]%, if the
Quarterly Excess Spread Percentage on such Distribution Date is less than
[____]% and greater than or equal to [____]%, (iv) [____]%, if the Quarterly
Excess Spread Percentage on such Distribution Date is less than [____]% and
greater than or equal to [____]%, and (v) [____]%, if the Quarterly Excess
Spread Percentage on such Distribution Date is less than [____]%, provided, that
if a Pay Out Event with respect to Series 2000-A has occurred, the Spread
Account Percentage shall be [____]%.

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

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

     (b)  Each capitalized term defined herein shall relate to the Series 2000-A
Notes and no other Series of Notes issued by the Trust, unless the context
otherwise requires.  All capitalized terms used herein and not otherwise defined
herein have the meanings ascribed to them in the Indenture or the Transfer and
Servicing Agreement. In the event that any term or provision contained herein
shall conflict with or be inconsistent with any term or provision contained in
the Indenture or the Transfer and Servicing Agreement, the terms and provisions
of this Indenture Supplement shall govern.

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

                                  ARTICLE III

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

     Section 3.1    Servicing Compensation. The share of the Servicing Fee
                    ----------------------
allocable to Series 2000-A for any Distribution Date (the "Monthly Servicing
                                                           -----------------
Fee") shall be equal to one-twelfth of the product of (a) the Series Servicing
---
Fee Percentage and (b) (i) the Adjusted Collateral Amount as of the last day of
the

                                      15
<PAGE>

Monthly Period preceding such Distribution Date, minus (ii) the product of the
amount, if any, on deposit in the Excess Funding Account as of the last day of
the Monthly Period preceding such Distribution Date and the Floating Allocation
Percentage with respect to such Monthly Period; provided, however, that with
respect to the first Distribution Date, the Monthly Servicing Fee shall be equal
to $[________].  The remainder of the Servicing Fee shall be paid by the Holders
of the Seller Interest or the noteholders of other Series (as provided in the
related Indenture Supplements) and in no event shall the Trust, the Indenture
Trustee or the Series 2000-A Noteholders be liable for the share of the
Servicing Fee to be paid by the Holders of the Seller Interest or the
noteholders of any other Series.  To the extent that the Monthly Servicing Fee
is not paid in full pursuant to the preceding provisions of this Section 3.1,
                                                                 -----------
and Section 4.4, it shall be paid by the Holders of the Seller Interest.
    -----------

                                  ARTICLE IV

                      Rights of Series 2000-A Noteholders
                 and Allocation and Application of Collections
                 ---------------------------------------------

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

     (a)  Allocations.  Finance Charge Collections, Principal Collections and
          -----------
Defaulted Receivables allocated to Series 2000-A pursuant to Article VIII of the
                                                             ------------
Indenture shall be allocated and distributed as set forth in this Article.

     (b)  Allocations to the Series 2000-A Noteholders.  The Servicer shall,
          --------------------------------------------
prior to the close of business on any Deposit Date, allocate to the Series 2000-
A Noteholders the following amounts as set forth below:

          (i)  Allocations of Finance Charge Collections. The Servicer shall
               -----------------------------------------
     allocate to the Series 2000-A Noteholders and retain in the Collection
     Account for application as provided herein an amount equal to the product
     of (A) the Allocation Percentage and (B) the aggregate Finance Charge
     Collections deposited in the Collection Account on such Deposit Date;
     provided, however, that with respect to the portion of each calendar month
     --------  -------
     falling [after the LIBOR Determination Date and] in the Revolving Period or
     the Controlled Accumulation Period, such amount shall be retained in the
     Collection Account only until such time as the amount retained in the
     Collection Account pursuant to this subsection equals the sum of (1) the
     aggregate amount of Monthly Interest with respect to the Distribution Date
     in the immediately succeeding calendar month and (2) at any time that FCNB
     is not the Servicer, the Monthly Servicing Fee payable on the Distribution
     Date in the immediately succeeding calendar month and all accrued and
     unpaid Investor Monthly Servicing Fees with respect to prior calendar
     months; provided further, however, that notwithstanding the foregoing
             -------- -------  -------

                                      16
<PAGE>

     proviso, the entire Allocation Percentage of Finance Charge Collections
     -------
     shall be retained in the Collection Account on a daily basis if the [Excess
     Spread Percentage] for the preceding Calendar month is less than 3.00%.

          (ii) Allocations of Principal Collections.  The Servicer shall
               ------------------------------------
     allocate to the Series 2000-A Noteholders the following amounts as set
     forth below:

               (x)  Allocations During the Revolving Period. During the
                    ---------------------------------------
          Revolving Period an amount equal to the product of the Allocation
          Percentage and the aggregate amount of Principal Collections deposited
          in the Collection Account on such Deposit Date, shall be allocated to
          the Series 2000-A Noteholders and shall be first, if any other
          Principal Sharing Series in Group One is outstanding and in its
          amortization period or accumulation period, retained in the Collection
          Account for application, to the extent necessary, as Shared Principal
          Collections to other Series in Group One on the related Distribution
          Date, second deposited in the Excess Funding Account to the extent
          necessary so that the Seller Amount is not less than the Minimum
          Seller Amount and third paid to the Holders of the Seller Interest.

               (y)  Allocations During the Controlled Accumulation Period.
                    -----------------------------------------------------
          During the Controlled Accumulation Period an amount equal to the
          product of (I) the Allocation Percentage and (II) the aggregate amount
          of Collections of Principal Receivables deposited in the Collection
          Account on such Deposit Date (the product for any such date is
          hereinafter referred to as a "Percentage Allocation") shall be
                                        ---------------------
          allocated to the Series 2000-A Noteholders and deposited in the
          Principal Accumulation Account until applied as provided herein;
          provided, however, that if the sum of such Percentage Allocation and
          all preceding Percentage Allocations with respect to the same Monthly
          Period exceeds the Controlled Deposit Amount during the Controlled
          Accumulation Period for the related Distribution Date, then such
          excess shall not be treated as a Percentage Allocation and shall be
          first, if any other Principal Sharing Series in Group One is
          outstanding and in its amortization period or accumulation period,
          retained in the Collection Account for application, to the extent
          necessary, as Shared Principal Collections to other Series in Group
          One on the related Distribution Date, second deposited in the Excess
          Funding Account to the extent necessary so that the Seller Amount is
          not less than the Minimum Seller Amount and third paid to the Holders
          of the Seller Interest.

                                      17
<PAGE>

               (z)  Allocations During the Rapid Amortization Period. During the
                    ------------------------------------------------
          Rapid Amortization Period, an amount equal to the product of (I) the
          Allocation Percentage and (II) the aggregate amount of Collections of
          Principal Receivables deposited in the Collection Account on such
          Deposit Date, shall be allocated to the Series 2000-A Noteholders and
          retained in the Collection Account until applied as provided herein;
          provided, however, that after the date on which an amount of such
          Collections equal to the Adjusted Collateral Amount has been deposited
          into the Collection Account and allocated to the Series 2000-A
          Noteholders, such amount shall be first, if any other Principal
          Sharing Series in Group One is outstanding and in its amortization
          period or accumulation period, retained in the Collection Account for
          application, to the extent necessary, as Shared Principal Collections
          to other Series in Group One on the related Distribution Date, second
          deposited in the Excess Funding Account to the extent necessary so
          that the Seller Amount is not less than the Minimum Seller Amount and
          third paid to the Holders of the Seller Interest.

     Section 4.2    Determination of Monthly Interest.
                    ---------------------------------

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

     On the Determination Date preceding each Distribution Date, the Servicer
shall determine the excess, if any (the "Class A Interest Shortfall"), of (x)
                                         --------------------------
the Class A Monthly Interest for such Distribution Date over (y) the aggregate
amount of funds allocated and available to pay such Class A Monthly Interest on
such Distribution Date.  If the Class A Interest Shortfall for any Distribution
Date is greater than zero, on each subsequent Distribution Date until such Class
A Interest Shortfall is fully paid, an additional amount ("Class A Additional
                                                           ------------------
Interest") equal to the product of (i) (A) [one-twelfth] [a fraction, the
--------
numerator of which is the actual number of days in the related Interest Period
and the denominator of which is 360], times (B) the Class A Note Interest Rate
[in effect with respect to the related Interest Period] and (ii) such Class A
Interest Shortfall (or the portion thereof which has not been paid to the Class
A Noteholders) shall be payable as provided herein with

                                      18
<PAGE>

respect to the Class A Notes. Notwithstanding anything to the contrary herein,
Class A Additional Interest shall be payable or distributed to the Class A
Noteholders only to the extent permitted by applicable law.

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

     On the Determination Date preceding each Distribution Date, the Servicer
shall determine the excess, if any (the "Class B Interest Shortfall"), of (x)
                                         --------------------------
the Class B Monthly Interest for such Distribution Date over (y) the aggregate
amount of funds allocated and available to pay such Class B Monthly Interest on
such Distribution Date.  If the Class B Interest Shortfall for any Distribution
Date is greater than zero, on each subsequent Distribution Date until such Class
B Interest Shortfall is fully paid, an additional amount ("Class B Additional
                                                           ------------------
Interest") equal to the product of (i) (A) [one-twelfth] [a fraction, the
--------
numerator of which is the actual number of days in the related Interest Period
and the denominator of which is 360], times (B) the Class B Note Interest Rate
[in effect with respect to the related Interest Period] and (ii) such Class B
Interest Shortfall (or the portion thereof which has not been paid to the Class
B Noteholders) shall be payable as provided herein with respect to the Class B
Notes.  Notwithstanding anything to the contrary herein, Class B Additional
Interest shall be payable or distributed to the Class B Noteholders only to the
extent permitted by applicable law.

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

     On the Determination Date preceding each Distribution Date, the Servicer
shall determine an amount (the "Class C Interest Shortfall") equal to (x) the
                                --------------------------
aggregate Class

                                      19
<PAGE>

C Monthly Interest for such Distribution Date minus (y) the aggregate amount of
funds allocated and available to pay such Class C Monthly Interest on such
Distribution Date. If the Class C Interest Shortfall for any Distribution Date
is greater than zero, on each subsequent Distribution Date until such Class C
Interest Shortfall is fully paid, an additional amount ("Class C Additional
                                                         ------------------
Interest") shall be payable as provided herein with respect to the Class C Notes
--------
equal to the product of (i) (A) [one-twelfth] [a fraction, the numerator of
which is the actual number of days in the related Interest Period and the
denominator of which is 360], times (B) the Class C Note Interest Rate [in
effect with respect to the related Interest Period] and (ii) such Class C
Interest Shortfall (or the portion thereof which has not been paid to the Class
C Noteholders (after giving effect to the application of the proceeds of any
draw made on the Spread Account as provided in subsections 4.4(a)(iv) and
                                               ----------------------
4.11(c) for the purpose of paying such amount with respect to such Distribution
-------
Date)). Notwithstanding anything to the contrary herein, Class C Additional
Interest shall be payable or distributed to the Class C Noteholders only to the
extent permitted by applicable law.

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

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

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

          (i)  an amount equal to Class A Monthly Interest for such Distribution
     Date, plus the amount of any Class A Monthly Interest previously due but
     not distributed to Class A Noteholders on a prior Distribution Date, plus
     the amount of any Class A Additional Interest for such Distribution Date,
     plus the amount of any Class A Additional Interest previously due but not
     distributed

                                      20
<PAGE>

     to Class A Noteholders on a prior Distribution Date, shall be distributed
     to the Paying Agent for payment to Class A Noteholders on such Distribution
     Date;

          (ii)   an amount equal to Class B Monthly Interest for such
     Distribution Date, plus the amount of any Class B Monthly Interest
     previously due but not distributed to Class B Noteholders on a prior
     Distribution Date, plus the amount of any Class B Additional Interest for
     such Distribution Date, plus the amount of any Class B Additional Interest
     previously due but not distributed to Class B Noteholders on a prior
     Distribution Date, shall be distributed to the Paying Agent for payment to
     Class B Noteholders on such Distribution Date;

          (iii)  an amount equal to the Noteholder Servicing Fee for such
     Distribution Date, plus the amount of any Noteholder Servicing Fee
     previously due but not distributed to the Servicer on a prior Distribution
     Date, shall be distributed to the Servicer (unless such amount has been
     netted against deposits to the Collection Account in accordance with
     Section 8.4 of the Indenture);
     -----------

          (iv)   an amount equal to Class C Monthly Interest for such
     Distribution Date, plus the amount of any Class C Monthly Interest
     previously due but not distributed to the Class C Noteholders on a prior
     Distribution Date, plus the amount of any Class C Additional Interest for
     such Distribution Date, plus the amount of any Class C Additional Interest
     previously due but not distributed to the Class C Noteholders on a prior
     Distribution Date shall be distributed to the Paying Agent for payment to
     the Class C Noteholders on such Distribution Date; provided, however, that,
     in the event that the sum of Class C Monthly Interest exceeds the amount of
     Available Finance Charge Collections available (after giving effect to
     subsections 4.4(a)(i) through (iii) above) to fund such Class C Monthly
     ---------------------         -----
     Interest and Class C Additional Interest, a draw will be made from amounts
     available for distribution in the Spread Account (at the times and in the
     amounts specified in Section 4.11) and shall be distributed to the Paying
                          ------------
     Agent for payment to the Class C Noteholders on such Distribution Date in
     accordance with this subsection 4.4(a)(iv);
                          ---------------------

          (v)    an amount equal to the Investor Default Amount, if any, for
     such Distribution Date shall be treated as a portion of Available Principal
     Collections for such Distribution Date;

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

          (vii)  on each Distribution Date from and after the Reserve Account
     Funding Date, but prior to the date on which the Reserve Account terminates

                                      21
<PAGE>

     as described in subsection 4.10(f), an amount up to the excess, if any, of
                     ------------------
     the Required Reserve Account Amount over the Available Reserve Account
     Amount shall be deposited into the Reserve Account;

          (viii)  an amount equal to the amounts required to be deposited in the
     Spread Account pursuant to Section 4.11 shall be deposited into the Spread
                                ------------
     Account as provided in Section 4.11; and
                            ------------

          (ix)    the balance, if any, will constitute a portion of Excess
     Finance Charge Collections for such Distribution Date and will be available
     for allocation to other Series in Group One or to the Holders of the Seller
     Interest as described in Section 8.8 of the Indenture and Section 4.1.
                              -----------                      -----------

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

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

          (i)    during the Controlled Accumulation Period, an amount equal to
     the Monthly Principal for such Distribution Date shall be deposited into
     the Principal Accumulation Account;

          (ii)   during the Rapid Amortization Period, an amount equal to the
     Monthly Principal for such Distribution Date shall be distributed to the
     Paying Agent for payment to the Class A Noteholders on such Distribution
     Date and on each subsequent Distribution Date until the Class A Note
     Principal Balance has been paid in full;

          (iii)  after giving effect to the distribution referred to in clause
                                                                        ------
     (ii) above, during the Rapid Amortization Period, an amount equal to the
     ----
     Monthly Principal remaining, if any, shall be distributed to the Paying
     Agent for payment to the Class B Noteholders on such Distribution Date and
     on each subsequent Distribution Date until the Class B Note Principal
     Balance has been paid in full;

          (iv)   after giving effect to the distributions referred to in clauses
                                                                         -------
     (ii) and (iii) above, during the Rapid Amortization Period, an amount equal
     ----
     to the Monthly Principal remaining, if any, shall be distributed to the
     Paying Agent for payment to the Class C Noteholders on such Distribution
     Date and on each subsequent Distribution Date until the Class C Note
     Principal Balance has been paid in full; and

                                      22
<PAGE>

          (v)  in the case of each of the Controlled Accumulation Period and the
     Rapid Amortization Period, the balance of such Available Principal
     Collections remaining after application in accordance with clause (i) or
                                                                ----------
     (iv) above shall be treated as Shared Principal Collections and applied in
     ----
     accordance with Section 8.5 of the Indenture.  As of any Distribution Date
                     -----------
     on which any Available Principal Collections are treated as Shared
     Principal Collections as provided above, the Collateral Amount shall be
     reduced by an amount equal to the lesser of (x) the amount of Available
     Principal Collections applied as Shared Principal Collections and (y) the
     Surplus Collateral Amount.

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

     (e)  The Controlled Accumulation Period is scheduled to commence at the
close of business on [_____ __, 20__].  However, if the Accumulation Period
Length (determined as described below) is less than 12 months, the date on which
the Controlled Accumulation Period actually commences will be delayed to the
first Business Day of the month that is the number of whole months prior to the
Expected Class A  Principal Payment Date at least equal to the Accumulation
Period Length and, as a result, the number of Monthly Periods in the Controlled
Accumulation Period will at least equal the Accumulation Period Length.  On the
Determination Date immediately preceding the [_____ ____] Distribution Date, and
each Determination Date thereafter until the Controlled Accumulation Period
begins, the Servicer will determine the "Accumulation Period Length" which will
                                         --------------------------
equal the number of whole months such that the sum of the Accumulation Period
Factors for each month during such period will be equal to or greater than the
Required Accumulation Factor Number; provided, however, that the Accumulation
Period Length will not be determined to be less than one month; provided
further, however, that the determination of the Accumulation Period Length may
be changed at any time if the Rating Agency Condition is satisfied.  The
Controlled Accumulation Period shall also be postponed if the Servicer obtains
and provides to the Indenture Trustee a Qualified Maturity Agreement and an
Opinion of Counsel to the effect that the Qualified Maturity Agreement is
enforceable against the provider of that agreement.

     Section 4.5    Investor Charge-Offs. On each Determination Date, the
                    --------------------
Servicer shall calculate the Investor Default Amount, if any, for the related
Distribution Date. If, on any Distribution Date, the Investor Default Amount for
such Distribution Date exceeds the amount of Available Finance Charge
Collections allocated with respect thereto pursuant to subsection 4.4(a)(v) with
                                                       --------------------
respect to such Distribution Date, the

                                      23
<PAGE>

Collateral Amount (after giving effect to any reductions for any Reallocated
Principal Collections on such Distribution Date) will be reduced by the amount
of such excess, but not by more than the lesser of the Investor Default Amount
and the Collateral Amount (after giving effect to any reductions for any
Reallocated Principal Collections on such Distribution Date) for such
Distribution Date (such reduction, an "Investor Charge-Off").
                                       -------------------

     Section 4.6    Reallocated Principal Collections. On each Distribution
                    ---------------------------------
Date, the Servicer shall apply, or shall cause the Indenture Trustee to apply,
Reallocated Principal Collections with respect to such Distribution Date, to
fund any deficiency pursuant to and in the priority set forth in subsections
                                                                 -----------
4.4(a)(i), (ii) and (iii). On each Distribution Date, the Collateral Amount
---------  ----     -----
shall be reduced by the amount of Reallocated Principal Collections for such
Distribution Date.

     Section 4.7    Excess Finance Charge Collections. Series 2000-A shall be an
                    ---------------------------------
Excess Allocation Series with respect to Group One only. Subject to Section 8.8
                                                                    -----------
of the Indenture, Excess Finance Charge Collections with respect to the Excess
Allocation Series in Group One for any Distribution Date will be allocated to
Series 2000-A in an amount equal to the product of (x) the aggregate amount of
Excess Finance Charge Collections with respect to all the Excess Allocation
Series in Group One for such Distribution Date and (y) a fraction, the numerator
of which is the Finance Charge Shortfall for Series 2000-A for such Distribution
Date and the denominator of which is the aggregate amount of Finance Charge
Shortfalls for all the Excess Allocation Series in Group One for such
Distribution Date. The "Finance Charge Shortfall" for Series 2000-A for any
                        ------------------------
Distribution Date will be equal to the excess, if any, of (a) the full amount
required to be paid, without duplication, pursuant to subsections 4.4(a)(i)
                                                      ---------------------
through (viii) on such Distribution Date over (b) the Investor Finance Charge
Collections with respect to such Distribution Date.

     Section 4.8    Shared Principal Collections.  Subject to Section 8.5 of the
                    ----------------------------              -----------
Indenture, Shared Principal Collections for any Distribution Date will be
allocated to Series 2000-A in an amount equal to the product of (x) the
aggregate amount of Shared Principal Collections with respect to all Principal
Sharing Series for such Distribution Date and (y) a fraction, the numerator of
which is the Principal Shortfall for Series 2000-A for such Distribution Date
and the denominator of which is the aggregate amount of Principal Shortfalls for
all the Series which are Principal Sharing Series for such Distribution Date.
The "Principal Shortfall" for Series 2000-A will be equal to (a) for any
     -------------------
Distribution Date with respect to the Revolving Period, zero, (b) for any
Distribution Date with respect to the Controlled Accumulation Period, the
excess, if any, of the Controlled Deposit Amount with respect to such
Distribution Date over the amount of Available Principal Collections for such
Distribution Date (excluding any portion thereof attributable to Shared
Principal Collections), and (c) for any Distribution Date with respect to the
Rapid Amortization Period, the excess, if any, of the Adjusted Collateral Amount
over the amount of Available Principal Collections for such

                                      24
<PAGE>

Distribution Date (excluding any portion thereof attributable to Shared
Principal Collections).

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

     (a)  The Indenture Trustee shall establish and maintain with an Eligible
Institution, which may be the Indenture Trustee in the name of the Trust, on
behalf of the Trust, for the benefit of the Series 2000-A Noteholders, a
segregated trust account with the corporate trust department of such Eligible
Institution (the "Principal Accumulation Account"), bearing a designation
                  ------------------------------
clearly indicating that the funds deposited therein are held for the benefit of
the Series 2000-A Noteholders.  The Indenture Trustee shall possess all right,
title and interest in all funds on deposit from time to time in the Principal
Accumulation Account and in all proceeds thereof.  The Principal Accumulation
Account shall be under the sole dominion and control of the Indenture Trustee
for the benefit of the Series 2000-A Noteholders.  If at any time the
institution holding the Principal Accumulation Account ceases to be an Eligible
Institution, the Servicer shall notify the Indenture Trustee, and the Indenture
Trustee upon being notified (or the Servicer on its behalf) shall, within ten
(10) Business Days, establish a new Principal Accumulation Account meeting the
conditions specified above with an Eligible Institution, and shall transfer any
cash or any investments to such new Principal Accumulation Account.  The
Indenture Trustee, at the direction of the Servicer, shall (i) make withdrawals
from the Principal Accumulation Account from time to time, in the amounts and
for the purposes set forth in this Indenture Supplement, and (ii) on each
Distribution Date (from and after the commencement of the Controlled
Accumulation Period) prior to the termination of the Principal Accumulation
Account, make deposits into the Principal Accumulation Account in the amounts
specified in, and otherwise in accordance with, subsection 4.4(c)(i).
                                                --------------------

     (b)  Funds on deposit in the Principal Accumulation Account shall be
invested at the direction of the Servicer by the Indenture Trustee in Eligible
Investments; provided, however, that, for purposes of the investment of funds on
deposit in the Principal Accumulation Account, references in the definition of
"Eligible Investments" to a rating in the "highest rating category" shall be
modified to require a rating, from any one of the following Rating Agencies, of
at least A-2 by Standard & Poor's, P-2 by Moody's or (if such investment is
rated by Fitch) F2 by Fitch.  Funds on deposit in the Principal Accumulation
Account on any Distribution Date, after giving effect to any withdrawals from
the Principal Accumulation Account on such Distribution Date, shall be invested
in such investments that will mature so that such funds will be available for
withdrawal on or prior to the following Distribution Date.

     The Indenture Trustee shall hold such of the Eligible Investments as
consists of instruments, deposit accounts, negotiable documents, money, goods,
letters of credit, and advices of credit in the State of New York. The Indenture
Trustee shall hold such of the Eligible Investments as constitutes investment
property through a securities

                                      25
<PAGE>

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

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

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

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

     (a)  The Indenture Trustee shall establish and maintain with an Eligible
Institution, which may be the Indenture Trustee in the name of the Trust, on
behalf of the Trust, for the benefit of the Series 2000-A Noteholders, a
segregated trust account with the corporate trust department of such Eligible
Institution (the "Reserve Account"), bearing a designation clearly indicating
                  ---------------
that the funds deposited therein are held for the benefit of the Series 2000-A
Noteholders.  The Indenture Trustee shall possess all right, title and interest
in all funds on deposit from time to time in the Reserve Account and in all
proceeds thereof.  The Reserve Account shall be under the sole dominion and
control of the Indenture Trustee for the benefit of the Series 2000-A
Noteholders.  If at any time the institution holding the Reserve Account ceases
to be an Eligible Institution, the Servicer shall notify the Indenture Trustee,
and the Indenture Trustee upon being notified (or the Servicer on its behalf)
shall, within ten (10) Business Days, establish a new Reserve Account meeting
the conditions specified above with an Eligible Institution, and shall transfer
any cash or any investments to such new Reserve Account.

                                      26
<PAGE>

The Indenture Trustee, at the direction of the Servicer, shall (i) make
withdrawals from the Reserve Account from time to time in an amount up to the
Available Reserve Account Amount at such time, for the purposes set forth in
this Indenture Supplement, and (ii) on each Distribution Date (from and after
the Reserve Account Funding Date) prior to termination of the Reserve Account,
make a deposit into the Reserve Account in the amount specified in, and
otherwise in accordance with, subsection 4.4(a)(vii).
                              ----------------------

     (b)  Funds on deposit in the Reserve Account shall be invested at the
direction of the Servicer by the Indenture Trustee in Eligible Investments;
provided, however, that, for purposes of the investment of funds on deposit in
the Reserve Account, references in the definition of "Eligible Investments" to a
rating in the "highest rating category" shall be modified to require a rating,
from any one of the following Rating Agencies, of at least A-2 by Standard &
Poor's, P-2 by Moody's or (if such investment is rated by Fitch) F2 by Fitch.
Funds on deposit in the Reserve Account on any Distribution Date, after giving
effect to any withdrawals from the Reserve Account on such Distribution Date,
shall be invested in such investments that will mature so that such funds will
be available for withdrawal on or prior to the following Distribution Date.

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

     On each Distribution Date, all interest and earnings (net of losses and
investment expenses) accrued since the preceding Distribution Date on funds on
deposit in the Reserve Account shall be retained in the Reserve Account (to the
extent that the Available Reserve Account Amount is less than the Required
Reserve Account Amount) and the balance, if any, shall be deposited into the
Collection Account and

                                      27
<PAGE>

included in Available Finance Charge Collections for such Distribution Date. For
purposes of determining the availability of funds or the balance in the Reserve
Account for any reason under this Indenture Supplement, except as otherwise
provided in the preceding sentence, investment earnings on such funds shall be
deemed not to be available or on deposit.

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

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

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

     (f) Upon the earliest to occur of (i) the termination of the Trust pursuant
to Article VIII of the Trust Agreement, (ii) the first Distribution Date
   ------------
relating to the Rapid Amortization Period and (iii) the Expected Class A
Principal Payment Date, the Indenture Trustee, acting in accordance with the
instructions of the Servicer, after the prior payment of all amounts owing to
the Series 2000-A Noteholders that are payable from the Reserve Account as
provided herein, shall withdraw from the Reserve Account all amounts, if any, on
deposit in the Reserve Account and (i) deposit such amounts in the Spread
Account, to the extent that funds on deposit in the Spread Account are less than
the Required Spread Account Amount, and (ii) distribute any such amounts
remaining after application pursuant to subsection 4.10(f)(i) to the holders of
                                        ---------------------
the Seller Interest.  The Reserve Account shall thereafter be deemed to have
terminated for purposes of this Indenture Supplement.

                                      28
<PAGE>

     Section 4.11  Spread Account.
                   --------------

     (a) On or prior to the Closing Date, the Indenture Trustee shall establish
and maintain with an Eligible Institution, which may be the Indenture Trustee in
the name of the Trust, on behalf of the Trust, for the benefit of the Class C
Noteholders and the Transferor, a segregated account with the corporate trust
department of such Eligible Institution (the "Spread Account"), bearing a
                                              --------------
designation clearly indicating that the funds deposited therein are held for the
benefit of the Class C Noteholders and the Transferor. Except as otherwise
provided in this Section 4.11, the Indenture Trustee shall possess all right,
                 ------------
title and interest in all funds on deposit from time to time in the Spread
Account and in all proceeds thereof.  The Spread Account shall be under the sole
dominion and control of the Indenture Trustee for the benefit of the Class C
Noteholders and the Servicer.  If at any time the institution holding the Spread
Account ceases to be an Eligible Institution, the Servicer shall notify the
Indenture Trustee, and the Indenture Trustee upon being notified (or the
Servicer on its behalf) shall, within ten (10) Business Days (or such longer
period as to which the Rating Agencies may consent) establish a new Spread
Account meeting the conditions specified above with an Eligible Institution and
shall transfer any cash or any investments to such new Spread Account.  The
Indenture Trustee, at the direction of the Servicer, shall (i) make withdrawals
from the Spread Account from time to time in an amount up to the Available
Spread Account Amount at such time, for the purposes set forth in this Indenture
Supplement, and (ii) on each Distribution Date prior to termination of the
Spread Account, make a deposit into the Spread Account in the amount specified
in, and otherwise in accordance with, subsection 4.11(e).
                                      ------------------

     (b) Funds on deposit in the Spread Account shall be invested at the
direction of the Servicer by the Indenture Trustee in Eligible Investments;
provided, however, that, for purposes of the investment of funds on deposit in
the Spread Account, references in the definition of "Eligible Investments" to a
rating in the "highest rating category" shall be modified to require a rating,
from any one of the following Rating Agencies, of at least A-2 by Standard &
Poor's, P-2 by Moody's or (if such investment is rated by Fitch) F2 by Fitch.
Funds on deposit in the Spread Account on any Distribution Date, after giving
effect to any withdrawals from and deposits to the Spread Account on such
Distribution Date, shall be invested in such investments that will mature so
that such funds will be available for withdrawal on or prior to the following
Distribution Date.

     The Indenture Trustee shall hold such of the Eligible Investments as
consists of instruments, deposit accounts, negotiable documents, money, goods,
letters of credit, and advices of credit in the State of New York. The Indenture
Trustee shall hold such of the Eligible Investments as constitutes investment
property through a securities intermediary, which securities intermediary shall
agree with the Indenture Trustee that (a) such investment property shall at all
times be credited to a securities account of the Indenture Trustee, (b) such
securities intermediary shall treat the Indenture Trustee as

                                      29
<PAGE>

entitled to exercise the rights that comprise each financial asset credited to
such securities account, (c) all property credited to such securities account
shall be treated as a financial asset, (d) such securities intermediary shall
comply with entitlement orders originated by the Indenture Trustee without the
further consent of any other person or entity, (e) such securities intermediary
will not agree with any person or entity other than the Indenture Trustee to
comply with entitlement orders originated by such other person or entity, (f)
such securities accounts and the property credited thereto shall not be subject
to any lien, security interest, or right of set-off in favor of such securities
intermediary or anyone claiming through it (other than the Indenture Trustee),
and (g) such agreement shall be governed by the laws of the State of New York.
Terms used in the preceding sentence that are defined in the New York UCC and
not otherwise defined herein shall have the meaning set forth in the New York
UCC. Except as permitted by this subsection 4.11(b), the Indenture Trustee shall
                                 ------------------
not hold Eligible Investments through an agent or a nominee.

     On each Distribution Date (but subject to subsections 4.11(c) and 4.11(d)),
                                               -------------------     -------
the Investment Earnings, if any, accrued since the preceding Distribution Date
on funds on deposit in the Spread Account shall be paid to the Transferor by the
Indenture Trustee. For purposes of determining the availability of funds or the
balance in the Spread Account for any reason under this Indenture Supplement
(subject to subsections 4.11(c) and 4.11(d)), all Investment Earnings shall be
            -------------------     -------
deemed not to be available or on deposit.

     (c) If, on any Distribution Date, the aggregate amount available for
distribution pursuant to subsection 4.4(a)(iv) is less than the aggregate amount
                         ---------------------
required to be distributed pursuant to subsection 4.4(a)(iv) (without giving
                                       ---------------------
effect to any limitation based on Available Finance Charge Collections), the
Indenture Trustee, at the direction of the Servicer, shall withdraw from the
Spread Account the amount of such deficiency up to the Available Spread Account
Amount and, if the Available Spread Account Amount is less than such deficiency,
Investment Earnings credited to the Spread Account, and deposit such amount in
the Collection Account for payment to the Class C Noteholders in respect of
interest on the Class C Notes.

     (d)  On the Series 2000-A Final Maturity Date, the Indenture Trustee at
the direction of the Servicer shall withdraw from the Spread Account an amount
equal to the lesser of (i) the Class C Note Principal Balance (after any
payments to be made pursuant to subsection 4.4(c) on such date) and (ii) the
                                -----------------
Available Spread Account Amount and, if the Available Spread Account Amount is
not sufficient to reduce the Class C Note Principal Balance to zero, Investment
Earnings credited to the Spread Account up to the amount required to reduce the
Class C Note Principal Balance to zero, and the Indenture Trustee or the
Servicer shall deposit such amounts into the Collection Account for distribution
to the Class C Noteholders in accordance with subsection 5.2(e).
                                              -----------------

                                      30
<PAGE>

     (e) On any day following the occurrence of an Event of Default with respect
to Series 2000-A and acceleration of the maturity of the Series 2000-A Notes
pursuant to Section 5.3 of the Indenture, the Servicer shall withdraw from the
            -----------
Spread Account an amount equal to the Available Spread Account Amount and the
Indenture Trustee or the Servicer shall deposit such amounts into the Collection
Account for distribution to the Class C Noteholders, the Class A Noteholders and
the Class B Noteholders, in that order of priority, in accordance with Section
                                                                       -------
5.2, to fund any shortfalls in amounts owed to such Noteholders.
---

     (f) If on any Distribution Date, after giving effect to all withdrawals
from the Spread Account, the Available Spread Account Amount is less than the
Required Spread Account Amount then in effect, Available Finance Charge
Collections shall be deposited into the Spread Account under the circumstances
set forth in subsection 4.4(a)(viii) up to the amount of the Spread Account
             -----------------------
Deficiency.

     (g) After the Spread Account Percentage has been increased above zero
pursuant to any of clauses (ii) through (v) of the definition thereof, the
                   ------------         ---
Spread Account Percentage shall remain at that percentage until (a) further
increased to a higher required percentage specified in clauses (ii) through (v)
                                                       ------------         ---
of the definition thereof or (b) the Distribution Date on which the Quarterly
Excess Spread Percentage has increased to a level above that for the then
current Spread Account Percentage, in which case the Spread Account Percentage
shall be decreased to the appropriate percentage in clauses (ii) through (iv) of
                                                    ------------         ----
the definition thereof (or, if the Excess Spread Percentage is greater than or
equal to [___]%, the Spread Account Percentage shall be zero and the Required
Spread Account Amount shall be $0).  Notwithstanding the foregoing, if a Pay Out
Event with respect to Series 2000-A has occurred, the Spread Account Percentage
shall equal [___]% (as provided in the definition of Spread Account Percentage)
and shall no longer be subject to reduction.

     (h) If on any Distribution Date, after giving effect to all withdrawals
from and deposits to the Spread Account, the amount on deposit in the Spread
Account would exceed the Required Spread Account Amount then in effect, the
Indenture Trustee shall, at the written direction of the Servicer, release such
excess to the Transferor.  On the date on which the Class C Note Principal
Balance has been paid in full (including amounts to be paid to the Class C
Noteholders pursuant to subsection 4.11(d) above), the Indenture Trustee, at the
                        ------------------
direction of the Servicer, shall withdraw from the Spread Account all amounts
then remaining in the Spread Account and pay such amounts to the Transferor.

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

     (a) On each LIBOR Determination Date, the Indenture Trustee shall determine
LIBOR on the basis of the rate for deposits in United States dollars for a one-
month period which appears on Telerate Page 3750 as of 11:00 a.m., London time,
on such date.  If such rate does not appear on Telerate Page 3750, the rate for
that LIBOR

                                      31
<PAGE>

Determination Date shall be determined on the basis of the rates at which
deposits in United States dollars are offered by the Reference Banks at
approximately 11:00 a.m., London time, on that day to prime banks in the London
interbank market for a one-month period. The Indenture Trustee shall request the
principal London office of each of the Reference Banks to provide a quotation of
its rate. If at least two (2) such quotations are provided, the rate for that
LIBOR Determination Date shall be the arithmetic mean of the quotations. If
fewer than two (2) quotations are provided as requested, the rate for that LIBOR
Determination Date will be the arithmetic mean of the rates quoted by major
banks in New York City, selected by the Servicer, at approximately 11:00 a.m.,
New York City time, on that day for loans in United States dollars to leading
European banks for a one-month period.

     (b) The Class A Note Interest Rate, Class B Note Interest Rate and Class C
Note Interest Rate applicable to the then current and the immediately preceding
Interest Periods may be obtained by telephoning the Indenture Trustee at its
corporate trust office at (212) 815-5738 or such other telephone number as shall
be designated by the Indenture Trustee for such purpose by prior written notice
by the Indenture Trustee to each Series 2000-A Noteholder from time to time.

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

     Section 4.13  Investment Instructions.  Any investment instructions
                   -----------------------
required to be given to the Indenture Trustee pursuant to the terms hereof must
be given to the Indenture Trustee no later than 11:00 a.m., New York City time,
on the date such investment is to be made. In the event the Indenture Trustee
receives such investment instruction later than such time, the Indenture Trustee
may, but shall have no obligation to, make such investment. In the event the
Indenture Trustee is unable to make an investment required in an investment
instruction received by the Indenture Trustee after 10:00 a.m., New York City
time, on such day, such investment shall be made by the Indenture Trustee on the
next succeeding Business Day. In no event shall the Indenture Trustee be liable
for any investment not made pursuant to investment instructions received after
10:00 a.m., New York City time, on the day such investment is requested to be
made.

     Section 4.14  Increase of Excess Collateral Amount. If the Issuer wishes to
                   ------------------------------------
[either (x)] purchase Receivables arising in Additional Accounts in excess of
the amount of Additional Accounts permitted by subsection 2.[6](f)(ii) of the
                                               -----------------------
Transfer and Servicing Agreement, and the Rating Agency Condition has not been
satisfied [or (y) permit a change in the minimum payment under the Accounts that
would otherwise be prohibited by Section     of _________], the Issuer shall be
                                 -----------
permitted to do so if, on or prior to the Issuer taking such action, the Issuer
exercises its option under this Section to increase the Collateral Amount by
increasing the Excess Collateral Amount, and after

                                      32
<PAGE>

giving effect to that increase the Seller Amount is not less than the Minimum
Seller Amount. The amount of the increase in the Collateral Amount (and the
Excess Collateral Amount) required in order for the Issuer to take [either] such
action shall equal:

          [(a)  in the case of clause (x) above:] (i)  if the Annual Quotient
                               ----------
     exceeds 1.20 but is less than or equal to 1.25, an amount equal to W, where
     W equals [2]% of the sum of the Collateral Amount (before giving effect to
     the increase) plus W; and (ii) if the Annual Quotient is greater than 1.25,
     an amount equal to X, where X equals [4]% of the sum of the Collateral
     Amount (before giving effect to the increase) plus X; [and

          (b) in the case of clause (y) above: (i) if the resulting minimum
                             ----------
     payment is less than $15 but greater than or equal to $12.50, an amount
     equal to Y, where Y equals [1.5]% of the sum of the Collateral Amount
     (before giving effect to the increase) plus Y; and (ii) if the resulting
     minimum payment is less than $12.50, an amount equal to Z, where Z equals
     [3]% of the sum of the Collateral Amount (before giving effect to the
     increase) plus Z.]

To exercise its option under this Section, the Issuer shall notify the Indenture
Trustee and the Servicer of such exercise, and upon such notice, the [Net
Receivables Amount], if greater than zero, shall be reduced by the lesser of the
required increase in the Collateral Amount and the [Net Receivables Amount], and
the Issuer shall make a deposit in the Excess Funding Account in immediately
available funds in an amount equal to the excess of the required increase in the
Collateral Amount and such decrease in the Net Receivables Amount. Concurrently
with the decrease in the [Net Receivables Amount] and any required deposit to
the Excess Funding Account, the Collateral Amount and the Excess Collateral
Amount shall be increased by the aggregate amount of such decrease and of such
deposit.

                                   ARTICLE V

                       Delivery of Series 2000-A Notes;
              Distributions; Reports to Series 2000-A Noteholders
              ---------------------------------------------------

     Section 5.1  Delivery and Payment for the Series 2000-A Notes.
                  ------------------------------------------------

     The Issuer shall execute and issue, and the Indenture Trustee shall
authenticate, the Series 2000-A Notes in accordance with Section 2.3 of the
                                                         -----------
Indenture.  The Indenture Trustee shall deliver the Series 2000-A Notes to or
upon the order of the Trust when so authenticated.

                                      33
<PAGE>

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

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

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

     (c) On each Distribution Date, the Paying Agent shall distribute to each
Class B Noteholder of record on the related Record Date (other than as provided
in Section 11.2 of the Indenture) such Class B Noteholder's pro rata share of
   ------------
the amounts held by the Paying Agent that are allocated and available on such
Distribution Date to pay interest on the Class B Notes pursuant to this
Indenture Supplement.

     (d) On each Distribution Date, the Paying Agent shall distribute to each
Class B Noteholder of record on the related Record Date such Class B
Noteholder's pro rata share of the amounts held by the Paying Agent that are
allocated and available on such Distribution Date to pay principal of the Class
B Notes pursuant to this Indenture Supplement.

     (e) On each Distribution Date, the Paying Agent shall distribute to each
Class C Noteholder of record on the related Record Date (other than as provided
in Section 11.2 of the Indenture) such Class C Noteholder's pro rata share of
   ------------
the amounts held by the Paying Agent (including amounts held by the Paying Agent
with respect to amounts withdrawn from the Spread Account (at the times and in
the amounts specified in Section 4.11)) that are allocated and available on such
                         -------------
Distribution Date to pay interest on the Class C Notes pursuant to this
Indenture Supplement.

     (f) On each Distribution Date, the Paying Agent shall distribute to each
Class C Noteholder of record on the related Record Date such Class C
Noteholder's pro rata share of the amounts held by the Paying Agent that are
allocated and available on such Distribution Date to pay principal of the Class
C Notes pursuant to this Indenture Supplement.

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

                                      34
<PAGE>

     (h) Except as provided in Section 11.2 of the Indenture with respect to a
                               ------------
final distribution, distributions to Series 2000-A Noteholders hereunder shall
be made by (i) check mailed to each Series 2000-A Noteholder (at such
Noteholder's address as it appears in the Note Register), except that for any
Series 2000-A Notes registered in the name of the nominee of a Clearing Agency,
such distribution shall be made in immediately available funds and (ii) without
presentation or surrender of any Series 2000-A Note or the making of any
notation thereon.

     Section 5.3  Reports and Statements to Series 2000-A Noteholders.
                  ---------------------------------------------------

     (a) On each Distribution Date, the Paying Agent, on behalf of the Indenture
Trustee, shall forward to each Series 2000-A Noteholder a statement
substantially in the form of Exhibit C prepared by the Servicer.
                             ---------

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

     (c) A copy of each statement or certificate provided pursuant to paragraph
(a) or (b) may be obtained by any Series 2000-A Noteholder by a request in
writing to the Servicer.

     (d) On or before January 31 of each calendar year, beginning with calendar
year 2001, the Paying Agent, on behalf of the Indenture Trustee, shall furnish
or cause to be furnished to each Person who at any time during the preceding
calendar year was a Series 2000-A Noteholder, a statement prepared by the
Servicer containing the information which is required to be contained in the
statement to Series 2000-A Noteholders, as set forth in paragraph (a) above,
aggregated for such calendar year or the applicable portion thereof during which
such Person was a Series 2000-A Noteholder, together with other information as
is required to be provided by an issuer of indebtedness under the Code.  Such
obligation of the Paying Agent shall be deemed to have been satisfied to the
extent that substantially comparable information shall be provided by the Paying
Agent pursuant to any requirements of the Code as from time to time in effect.

                                  ARTICLE VI
                         Series 2000-A Pay Out Events
                         ----------------------------

    Section 6.1   Series 2000-A Pay Out Events.  If any one of the following
                  ----------------------------
events shall occur with respect to the Series 2000-A Notes:

                                      35
<PAGE>

     (a) failure on the part of the Transferor (i) to make any payment or
deposit required to be made by the Transferor by the terms of the Transfer and
Servicing Agreement, the Indenture or this Indenture Supplement on or before the
date occurring five (5) Business Days after the date such payment or deposit is
required to be made therein or herein or (ii) duly to observe or perform any
other covenants or agreements of the Transferor set forth in the Transfer and
Servicing Agreement, the Indenture or this Indenture Supplement, which failure
has a material adverse effect on the Series 2000-A Noteholders and which
continues unremedied for a period of sixty (60) days after the date on which
written notice of such failure, requiring the same to be remedied, shall have
been given to the Transferor by the Indenture Trustee, or to the Transferor and
the Indenture Trustee by any Holder of the Series 2000-A Notes;

     (b) any representation or warranty made by the Transferor in the Transfer
and Servicing Agreement, or any information contained in a computer file or
microfiche list required to be delivered by the Transferor pursuant to Section
                                                                       -------
2.1 or subsection 2.9(h) of the Transfer and Servicing Agreement shall prove to
---    -----------------
have been incorrect in any material respect when made or when delivered, which
continues to be incorrect in any material respect for a period of sixty (60)
days after the date on which written notice of such failure, requiring the same
to be remedied, shall have been given to the Transferor by the Indenture
Trustee, or to the Transferor and the Indenture Trustee by any Holder of the
Series 2000-A Notes and as a result of which the interests of the Series 2000-A
Noteholders are materially and adversely affected for such period; provided,
however, that a Series 2000-A Pay Out Event pursuant to this subsection 6.1(b)
                                                             -----------------
shall not be deemed to have occurred hereunder if the Transferor has accepted
reassignment of the related Receivable, or all of such Receivables, if
applicable, during such period in accordance with the provisions of the Transfer
and Servicing Agreement;

     (c) a failure by the Transferor to convey Receivables in Additional
Accounts or Participation Interests to the Trust within five (5) Business Days
after the day on which it is required to convey such Receivables or
Participation Interests pursuant to subsection 2.9(a) of the Transfer and
                                    -----------------
Servicing Agreement;

     (d) any Servicer Default shall occur;

     (e) the average of the Portfolio Yields for any three consecutive Monthly
 Periods is reduced to a rate which is less than the average of the Base Rates
 for such period;

     (f) the Class A Note Principal Balance, the Class B Note Principal Balance
or the Class C Note Principal Balance shall not be paid in full on the Expected
Class A Principal Payment Date, the Expected Class B Principal Payment Date or
the Expected Class C Principal Payment Date; or

                                      36
<PAGE>

     (g) without limiting the foregoing, the occurrence of an Event of Default
with respect to Series 2000-A and acceleration of the maturity of the Series
2000-A Notes pursuant to Section 5.3 of the Indenture;
                         -----------
then, in the case of any event described in subparagraph (a), (b) or (d), after
the applicable grace period, if any, set forth in such subparagraphs, either the
Indenture Trustee or the Holders of Series 2000-A Notes evidencing more than 50%
of the aggregate unpaid principal amount of Series 2000-A Notes by notice then
given in writing to the Transferor and the Servicer (and to the Indenture
Trustee if given by the Series 2000-A Noteholders) may declare that a "Series
Pay Out Event" with respect to Series 2000-A (a "Series 2000-A Pay Out Event")
                                                 ---------------------------
has occurred as of the date of such notice, and, in the case of any event
described in subparagraph (c), (e), (f) or (g), a Series 2000-A Pay Out Event
shall occur without any notice or other action on the part of the Indenture
Trustee or the Series 2000-A Noteholders immediately upon the occurrence of such
event.

                                  ARTICLE VII
   Redemption of Series 2000-A Notes; Final Distributions; Series Termination
   --------------------------------------------------------------------------

     Section 7.1  Optional Redemption of Series 2000-A Notes; Final
                  -------------------------------------------------
Distributions.
-------------

     (a) On any day occurring on or after the date on which the outstanding
principal balance of the Series 2000-A Notes is reduced to 10% or less of the
initial outstanding principal balance of Series 2000-A Notes, as increased by
the principal amount of any notes issued, the Issuer shall have the option to
redeem the Series 2000-A Notes, at a purchase price equal to (i) if such day is
a Distribution Date, the Reassignment Amount for such Distribution Date or (ii)
if such day is not a Distribution Date, the Reassignment Amount for the
Distribution Date following such day.

     (b) The Issuer shall give the Servicer and the Indenture Trustee at least
thirty (30) days prior written notice of the date on which the Issuer intends to
exercise such optional redemption. Not later than 12:00 noon, New York City
time, on such day the Issuer shall deposit into the Collection Account in
immediately available funds the excess of the Reassignment Amount over the
amount, if any, on deposit in the Principal Accumulation Account. Such
redemption option is subject to payment in full of the Reassignment Amount.
Following such deposit into the Collection Account in accordance with the
foregoing, the Collateral Amount for Series 2000-A shall be reduced to zero and
the Series 2000-A Noteholders shall have no further security interest in the
Receivables. The Reassignment Amount shall be distributed as set forth in
subsection 7.1(d).
-----------------

     (c) (i)  The amount to be paid by the Transferor with respect to Series
2000-A in connection with a reassignment of Receivables to the Transferor
pursuant to

                                      37
<PAGE>

Section 2.6 of the Transfer and Servicing Agreement shall equal the Reassignment
-----------
Amount for the first Distribution Date following the Monthly Period in which the
reassignment obligation arises under the Transfer and Servicing Agreement.

         (ii) The amount to be paid by the Transferor with respect to Series
2000-A in connection with a repurchase of the Notes pursuant to Section 7.1 of
                                                                -----------
the Transfer and Servicing Agreement shall equal the Reassignment Amount for the
Distribution Date of such repurchase.

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

     (e) Notwithstanding anything to the contrary in this Indenture Supplement,
the Indenture or the Transfer and Servicing Agreement, all amounts distributed
to the Paying Agent pursuant to subsection 7.1(d) for payment to the Series
                                -----------------
2000-A Noteholders shall be deemed distributed in full to the Series 2000-A
Noteholders on the

                                      38
<PAGE>

date on which such funds are distributed to the Paying Agent pursuant to this
Section 7.1 and shall be deemed to be a final distribution pursuant to Section
-----------                                                            -------
11.2 of the Indenture.
----

     [(f)  Applications after Event of Default.]

     Section 7.2  Series Termination.
                  ------------------

     On the Series 2000-A Final Maturity Date, the right of the Series 2000-A
Noteholders to receive payments from the Issuer will be limited solely to the
right to receive payments pursuant to Section 5.5 of the Indenture.
                                      -----------

                                 ARTICLE VIII

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

     Section 8.1  Ratification of Indenture.  As supplemented by this Indenture
                  -------------------------
Supplement, the Indenture is in all respects ratified and confirmed and the
Indenture as so supplemented by this Indenture Supplement shall be read, taken
and construed as one and the same instrument.

     Section 8.2  Form of Delivery of the Series 2000-A Notes.  The Series 2000-
                  -------------------------------------------
A Notes shall be Book-Entry Notes and shall be delivered as Registered Notes as
provided in Section 2.1 of the Indenture.
            -----------

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

                                      39
<PAGE>

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

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

                           [SIGNATURE PAGE FOLLOWS]

                                      40
<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:____________________________________
                                          not in its individual capacity,
                                          but solely as Owner Trustee

                                   By:____________________________________
                                      Name:
                                      Title:

                                   BNY MIDWEST TRUST COMPANY,
                                     as Indenture Trustee

                                   By:____________________________________
                                      Name:
                                      Title:

                                      41
<PAGE>

Acknowledged and Accepted:

FIRST CONSUMERS NATIONAL BANK,
 as Servicer

By:_______________________________
   Name:__________________________
   Title:_________________________

Acknowledged and Accepted:

SPIEGEL CREDIT CORPORATION III,
 as Transferor

By:_______________________________
   Name:__________________________
   Title:_________________________

                                      42<PAGE>

                                                                     EXHIBIT 4.3

                       TRANSFER AND SERVICING AGREEMENT

                                     among

                        SPIEGEL CREDIT CORPORATION III,

                                    Seller,

                        FIRST CONSUMERS NATIONAL BANK,

                                   Servicer,

                                      and

                    SPIEGEL CREDIT CARD MASTER NOTE TRUST,

                                    Issuer,

                         Dated as of [__________] 2000

<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>

                                                                                          Page
<S>                                                                                       <C>
ARTICLE I
DEFINITIONS...........................................................................       1
          Section 1.1.   Definitions..................................................       1
          Section 1.2.   Other Definitional Provisions................................       1
          Section 1.3    Monthly Allocation of Finance Charge Receivables.............       2
          Section 1.4    Daily Allocation of Principal Collections....................       2
ARTICLE II
CONVEYANCE OF RECEIVABLES.............................................................       3
          Section 2.1.   Conveyance of Receivables....................................       3
          Section 2.2    Acceptance by Issuer.........................................       5
          Section 2.3.   Representations and Warranties of Seller Relating
                         to such Seller...............................................       5
          Section 2.4    Representations and Warranties of Seller Relating
                         to the Agreement and the Receivables.........................       7
          Section 2.5.   Covenants of Seller..........................................      11
          Section 2.6    Addition of Accounts.........................................      16
          Section 2.7    Removal of Accounts..........................................      19
          Section 2.8    Discount Option..............................................      21
          Section 2.9    Net Worth....................................................      21
ARTICLE III
ADMINISTRATION AND SERVICING OF RECEIVABLES...........................................      22
          Section 3.1    Acceptance of Appointment and Other Matters
                         Relating to the Servicer.....................................      22
          Section 3.2    Servicing Compensation.......................................      23
          Section 3.3    Representations, Warranties and Covenants of the
                         Servicer.....................................................      24
          Section 3.4    Reports and Records for the Owner Trustee....................      26
          Section 3.5    Annual Certificate of Servicer...............................      26
          Section 3.6    Annual Servicing Report of Independent Public
                         Accountants; Copies of Reports Available.....................      27
          Section 3.7    Tax Treatment................................................      27
          Section 3.8    Merchant Fees................................................      28
          Section 3.9    Reports to the Commission....................................      28
ARTICLE IV
OTHER MATTERS RELATING TO Seller......................................................      28
          Section 4.1    Liability of Seller..........................................      28
          Section 4.2    Merger or Consolidation of, or Assumption of the
                         Obligations of, a Seller.....................................      28
          Section 4.3    Limitations on Liability of Seller...........................      29
ARTICLE V
OTHER MATTERS RELATING TO THE SERVICER................................................      30
          Section 5.1    Liability of the Servicer....................................      30
</TABLE>
<PAGE>

<TABLE>
<S>                                                                                         <C>
          Section 5.2.   Merger or Consolidation of, or Assumption of the
                         Obligations of, the Servicer.................................      30
          Section 5.3.   Limitation on Liability of the Servicer and Others...........      30
          Section 5.4.   Servicer Indemnification of the Issuer, the Owner
                         Trustee and the Indenture Trustee............................      31
          Section 5.5.   Servicer Not to Resign.......................................      32
          Section 5.6.   Access to Certain Documentation and Information
                         Regarding the Receivables....................................      32
          Section 5.7.   Delegation of Duties.........................................      32
          Section 5.8.   Examination of Records.......................................      32
ARTICLE VI
INSOLVENCY EVENTS.....................................................................      33
          Section 6.1.   Rights upon the Occurrence of an Insolvency
          Event.......................................................................      33
ARTICLE VII
SERVICER DEFAULTS.....................................................................      33
          Section 7.1.   Servicer Defaults............................................      33
          Section 7.2.   Indenture Trustee To Act; Appointment of
                         Successor....................................................      35
          Section 7.3.   Notification to Noteholders..................................      37
          Section 7.4    Waiver of Past Defaults......................................      37
ARTICLE VIII
TERMINATION...........................................................................      37
          Section 8.1.   Termination of Agreement.....................................      37
ARTICLE IX
MISCELLANEOUS PROVISIONS..............................................................      38
          Section 9.1.   Amendment; Waiver of Past Defaults...........................      38
          Section 9.2.   Protection of Right, Title and Interest to Issuer............      40
          Section 9.3.   GOVERNING LAW................................................      41
          Section 9.4.   Notices; Payments............................................      41
          Section 9.5.   Severability of Provisions...................................      41
          Section 9.6.   Further Assurances...........................................      41
          Section 9.7.   No Waiver; Cumulative Remedies...............................      42
          Section 9.8.   Counterparts.................................................      42
          Section 9.9.   Third-Party Beneficiaries....................................      42
          Section 9.10.  Actions by Noteholders.......................................      42
          Section 9.11.  Rule 144A Information........................................      42
          Section 9.12.  Merger and Integration.......................................      43

EXHIBITS
--------

EXHIBIT A   Form of Assignment of Receivables in Additional Accounts..................     A-1
EXHIBIT B   Form of Reassignment of Receivables in Removed Accounts...................     B-1
EXHIBIT C   Form of Annual Servicer's Certificate.....................................     C-1
EXHIBIT D-1 Form of Opinion of Counsel with Respect to Amendments.....................   D-1-1
EXHIBIT D-2 Form of Opinion of Counsel with Respect to Accounts.......................   D-2-1
</TABLE>

                                      ii
<PAGE>

<TABLE>
<S>                                                                                       <C>
EXHIBIT D-3 Provisions to be Included in Annual Opinion of Counsel....................    D-3-1
EXHIBIT E-1 Form of Annual Servicer's Certificate.....................................    E-1-1
EXHIBIT E-2 Form of Annual Independent Public Accountants' Servicing
Report................................................................................    E-2-1
EXHIBIT F-1 Form of Opinion of Counsel with Respect to Amendments.....................    F-1-1
EXHIBIT F-2 Form of Opinion of Counsel with Respect to Accounts.......................    F-2-1
EXHIBIT F-3 Provisions to be Included in Annual Opinion of Counsel....................    F-3-1

SCHEDULES
---------

SCHEDULE 1 List of Accounts...........................................................      1-1
</TABLE>

                                      iii
<PAGE>

     TRANSFER AND SERVICING AGREEMENT, dated as of [_____], 2000 (this

"Agreement") among SPIEGEL CREDIT CORPORATION III, a Delaware corporation, as
----------
Seller, FIRST CONSUMERS NATIONAL BANK, a national banking association, as
Servicer, and SPIEGEL CREDIT CARD MASTER NOTE TRUST, a trust organized under the
laws of the State of Illinois, as Issuer.

     In consideration of the mutual agreements herein contained, each party
agrees as follows for the benefit of the other parties, the Noteholders and any
Series Enhancer to the extent provided herein, in the Indenture and in any
Indenture Supplement:

                                   ARTICLE I

                                  DEFINITIONS

     Section 1.1.  Definitions. Capitalized terms used herein and not otherwise
                   -----------
defined herein are defined in Annex A to the Master Indenture, dated as of the
                              -------
date hereof, between Spiegel Credit Card Master Note Trust and BNY Midwest Trust
Company.

     Section 1.2.   Other Definitional Provisions. All terms defined directly or
                    ------------------------------
by reference in this Agreement shall have the defined meanings when used in any
certificate or other document delivered pursuant hereto unless otherwise defined
therein. For purposes of this Agreement and all such certificates and other
documents, unless the context otherwise requires: (a) accounting terms not
otherwise defined in this Agreement, and accounting terms partly defined in this
Agreement to the extent not defined, shall have the respective meanings given to
them under generally accepted accounting principles; (b) terms defined in
Article 9 of the UCC as in effect in the State of Illinois and not otherwise
adefined in this Agreement are used as defined in that Article; (c) any
reference to each Rating Agency shall only apply to any specific rating agency
if such rating agency is then rating any outstanding Series; (d) references to
any amount as on deposit or outstanding on any particular date means such amount
at the close of business on such day; (e) the words "hereof," "herein" and
"hereunder" and words of similar import refer to this Agreement (or the
certificate or other document in which they are used) as a whole and not to any
particular provision of this Agreement (or such certificate or document); (f)
references to any Section, Schedule or Exhibit are references to Sections,
Schedules and Exhibits in or to this Agreement (or the certificate or other
document in which the reference is made), and references to any paragraph,
Section, clause or other subdivision within any Section or definition refer to
such paragraph, subsection, clause or other subdivision of such Section or
definition; (g) the term "including" means "including without limitation"; (h)
references to any law or regulation refer to that law or regulation as amended
from time to time and include any successor law or regulation; (i) references to
any Person include that Person's successors and assigns; and (j) headings are
for purposes of reference only and shall not otherwise affect the meaning or
interpretation of any provision hereof.

                                       1
<PAGE>

     Section 1.3.   Monthly Allocation of Finance Charge Receivables. The
                    ------------------------------------------------
amount of Finance Charge Receivables (excluding, in each case where such term is
used in this Section 1.3, Discount Option Receivables) in all Accounts shall be
             -----------
determined as follows:

     (i)    At the close of business on each Cycle Billing Date for any Cycle of
which any Accounts are included in the Receivables Trust, the amount of Finance
Charge Receivables of all Accounts in such Cycle shall be equal to (A) the
amount of Finance Charges charged to all Accounts in such Cycle on such date
plus (B) the Carry-Over Finance Charge Amount for such Cycle.

     (ii)   For each Business Day in each Monthly Period, the amount of
Collections allocated to Finance Charge Receivables for all Accounts in such
Cycle shall be an amount equal to the quotient of the amount of Finance Charges
actually assessed on all Accounts, in accordance with the Charge Account
Guidelines, on the Cycle Billing Date for such Cycle in the immediately
preceding Monthly Period divided by the number of Business Days in such Monthly
Period; provided, however, that the amount of Collections allocated to Finance
        --------  -------
Charge Receivables for all Accounts in a Cycle on the first Business Day of each
Monthly Period shall equal the product of two times such quotient and provided,
                                                                      --------
further, that the amount of Collections allocated to Finance Charge Receivables
-------
for all Accounts in a Cycle on the last Business Day of each Monthly Period
shall equal zero.

     (iii)  If, at the close of business on the last Business Day of any
Monthly Period, the amount of Collections allocated to Finance Charge
Receivables for all Accounts in such Cycle during such Monthly Period is less
than the amount of Finance Charge Receivables for all Accounts in such Cycle on
the Cycle Billing Date for such Cycle next preceding such Monthly Period, then
such deficit shall be the "Carry-Over Finance Charge Amount" for such Cycle and
                           --------------------------------
shall be added to the amount of Finance Charges assessed on such Billing Cycle
Date pursuant to clause (i)(B) above. The Carry-Over Finance Charge Amount with
respect to any Accounts shall be zero as of the Cycle Billing Date next
preceding (A) the Closing Date, in the case of Accounts which are not Additional
Accounts and (B) the applicable Addition Date, in the case of Additional
Accounts.

     Notwithstanding the foregoing, the Servicer may adopt a different method of
determining the amount of Finance Charge Receivables which in the good faith
judgment of the Servicer is designed to more accurately reflect the portions of
Receivables and Collections constituting Finance Charge Receivables.

     Section 1.4.   Daily Allocation of Principal Collections.
                    -----------------------------------------

     (a)    For purposes of allocating Collections on a daily basis during any
Monthly Period, the Servicer may estimate the portion of Collections on the
entire portfolio of FCNB Preferred Charge accounts that is allocable to the
Accounts. Such

                                       2
<PAGE>

estimate shall be made using a fraction the numerator of which is the Principal
Receivables plus the Discount Option Receivables as of the last day of the
preceding Monthly Period and the denominator of which is the aggregate principal
receivables in such entire portfolio as of such last day.

     (b)  On the Determination Date following each Monthly Period during which
such estimation method is used, the Servicer shall make an appropriate true-up
adjustment to the balance on deposit in the Principal Collections Subaccount and
in the Finance Charge Subaccount and to the amount of Principal Receivables
included in the Trust Assets and the amount of Discount Option Receivables
allocable to the Note Interest in respect of the preceding Monthly Period, in
each case to reflect the difference, if any, between the amount that should have
been recorded as collections in respect of Principal Receivables and Discount
Option Receivables if actual Collections allocable to the Accounts had been
known and the amount allocated thereto pursuant to Section 1.4(a).
                                                   --------------

     (c)  Notwithstanding the foregoing, the Servicer may adopt a different
method of estimating the amount of Collections allocable to the Accounts which
in the good faith judgment of the Servicer is designed to more accurately
reflect the actual amounts being collected in respect thereof. The Servicer
shall provide to each Rating Agency and to the Owner Trustee written notice each
time the Servicer adopts a different method of estimating such amounts.

                                  ARTICLE II

                           CONVEYANCE OF RECEIVABLES

     Section 2.1.   Conveyance of Receivables. By execution of this Agreement,
                    -------------------------
Seller does hereby transfer, assign, set over and otherwise convey to the
Issuer, without recourse except as provided herein, all its right, title and
interest in, to and under (a) the Collateral Certificate, and (b) effective on
the SMT Termination Date, the Receivables existing at the opening of business on
the SMT Termination Date, and thereafter created from time to time until the
termination of the Issuer, and Recoveries allocable to the Issuer as provided
herein, in each case together with all monies due or to become due and all
amounts received or receivable with respect thereto and all proceeds thereof.
Such property, together with all monies and other property credited to the
Collection Account, the Series Accounts and the Excess Funding Account
(including any subaccounts of any such account), the rights of the Issuer under
this Agreement and the Trust Agreement and the right to receive Recoveries shall
constitute the assets of the Issuer (the "Trust Assets"). The foregoing does not
                                          ------------
constitute and is not intended to result in the creation or assumption by the
Issuer, the Owner Trustee, the Indenture Trustee or any Noteholder of any
obligation of FCNB or other Account Owner or Seller, the Servicer or any other
Person in connection with the Accounts or the Receivables or under any agreement
or instrument relating thereto, including any obligation to Obligors, merchant
banks, merchants or clearance systems. Effective on the SMT

                                       3
<PAGE>

Termination Date, Seller does hereby further transfer, assign, set over and
otherwise convey to the Issuer all of its right, title and interest in and under
the Receivables Purchase Agreement.

     On or prior to the first Closing Date, Seller shall deliver to the Owner
Trustee a registered certificate representing the Collateral Certificate. On or
prior to the SMT Termination Date, Seller agrees to record and file, at its own
expense, financing statements (and continuation statements when applicable) with
respect to the Receivables conveyed by such Seller existing on the SMT
Termination Date and thereafter created meeting the requirements of applicable
state law in such manner and in such jurisdictions as are necessary to perfect,
and maintain the perfection of, the transfer and assignment of its interest in
such Receivables to the Issuer, and to deliver a file stamped copy of each such
financing statement or other evidence of such filing to the Owner Trustee as
soon as practicable after the Closing Date, and (if any additional filing is so
necessary) as soon as practicable after the applicable Addition Date, in the
case of Receivables arising in Additional Accounts. The Owner Trustee shall be
under no obligation whatsoever to file such financing or continuation statements
or to make any other filing under the UCC in connection with such transfer and
assignment.

     Seller further agrees, at its own expense, on or prior to (x) the SMT
Termination Date, (y) the applicable Addition Date, in the case of Additional
Accounts (other than Additional Accounts added pursuant to Section 2.6(e))
specified in the Receivables Purchase Agreement on or after the SMT Termination
Date, and (z) the applicable Removal Date, in the case of Removed Accounts, (a)
to indicate in the appropriate computer files that Receivables created (or
reassigned, in the case of Removed Accounts) in connection with the Accounts
have been conveyed to the Issuer pursuant to this Agreement (or conveyed to
Seller or its designee in accordance with Section 2.7, in the case of Removed
                                          -----------
Accounts) by including (or deleting in the case of Removed Accounts) in such
computer files the that identifies each such Account and (b) to deliver to the
Owner Trustee a computer file or microfiche list containing a true and complete
list of all such Accounts specifying for each such Account, as of the SMT
Termination Date, the applicable Addition Date in the case of Additional
Accounts, and the applicable Removal Date in the case of Removed Accounts, its
account number and, the aggregate amount outstanding in such Account and the
aggregate amount of Principal Receivables outstanding in such Account. Each such
file or list, as supplemented, from time to time, to reflect Additional Accounts
and Removed Accounts, shall be marked as Schedule 1 to this Agreement and is
                                         ----------
hereby incorporated into and made a part of this Agreement.

     If the arrangements with respect to the Receivables hereunder shall
constitute a loan and not a purchase and sale of such Receivables, it is the
intention of the parties hereto that this Agreement shall constitute a security
agreement under applicable law, and that Seller shall be deemed to have granted
to the Issuer a first priority perfected security interest in all of Seller's
right, title and interest, whether owned on the SMT Termination Date or
thereafter acquired, in, to and under the

                                       4
<PAGE>

Receivables and the other Trust Assets conveyed by Seller, and all money,
accounts, general intangibles, chattel paper, instruments, documents, goods,
investment property, deposit accounts, certificates of deposit, letters of
credit, and advices of credit consisting of, arising from or related to the
Trust Assets, to secure its obligations hereunder.

     Section 2.2.   Acceptance by Issuer.
                    --------------------

     (a)  The Issuer hereby acknowledges its acceptance of all right, title and
interest to the property, now existing and hereafter created, conveyed to the
Issuer pursuant to Section 2.1. The Owner Trustee shall maintain a copy of
                   -----------
Schedule 1, as delivered from time to time, at its Corporate Trust Office.
----------

     (b)  The Owner Trustee and the Issuer each hereby agrees not to disclose to
any Person any of the account numbers or other information contained in the
computer files or microfiche lists marked as Schedule 1 and delivered to the
                                             ----------
Owner Trustee or the Issuer, from time to time, except (i) to a Successor
Servicer or as required by a Requirement of Law applicable to the Owner Trustee,
(ii) in connection with the performance of the Owner Trustee's or the Issuer's
duties hereunder, (iii) to the Indenture Trustee in connection with its duties
in enforcing the rights of Noteholders or (iv) to bona fide creditors or
potential creditors of any Account Owner, Servicer or Seller for the limited
purpose of enabling any such creditor to identify Receivables or Accounts
subject to this Agreement or the Receivables Purchase Agreement. The Owner
Trustee and the Issuer each agrees to take such measures as shall be reasonably
requested by Seller to protect and maintain the security and confidentiality of
such information and, in connection therewith, shall allow Seller or its duly
authorized representatives to inspect the Owner Trustee's security and
confidentiality arrangements as they specifically relate to the administration
of the Issuer from time to time during normal business hours upon prior written
notice. The Owner Trustee and the Issuer shall provide Seller with notice five
(5) Business Days prior to disclosure of any information of the type described
in this Section 2.2(b).
        --------------

      Section 2.3.  Representations and Warranties of Seller Relating to Seller.
                    -----------------------------------------------------------
Seller hereby represents and warrants as of the Closing Date that:

     (a)  Organization and Good Standing. Seller is a corporation duly organized
          ------------------------------
and validly existing in good standing under the laws of the State of Delaware,
and has full corporate power, authority and legal right to own its properties
and conduct its business as such properties are presently owned and such
business is presently conducted, and to execute, deliver and perform its
obligations under this Agreement and the Receivables Purchase Agreement and to
execute and deliver to the Owner Trustee pursuant hereto the Notes.

                                       5
<PAGE>

     (b)  Due Qualification. Seller is not required to qualify to do business as
          -----------------
a foreign corporation in any state or to obtain any licenses or approvals in any
jurisdiction in order to conduct its business.

     (c)  Due Authorization. The execution and delivery of this Agreement and
          -----------------
the Receivables Purchase Agreement and the consummation of the transactions
provided for herein and therein have been duly authorized by Seller by all
necessary corporate action on the part of Seller.

     (d)  No Conflict. The execution and delivery of this Agreement and the
          -----------
Receivables Purchase Agreement, the performance of the transactions contemplated
hereby and thereby and the fulfillment of the terms hereof and thereof will not
conflict with, result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time or both) a default under,
any indenture, contract, agreement, mortgage, deed of trust, or other instrument
to which Seller is a party or by which it or any of its property is bound.

     (e)  No Violation. The execution and delivery of this Agreement and the
          ------------
Receivables Purchase Agreement, the performance of the transactions contemplated
hereby and thereby and the fulfillment of the terms hereof and thereof will not
conflict with or violate any Requirements of Law applicable to Seller.

     (f)  No Proceedings. There are no proceedings or investigations pending or,
          --------------
to the best knowledge of Seller, threatened against Seller, before any court,
regulatory body, administrative agency, or other tribunal or governmental
instrumentality (i) asserting the invalidity of this Agreement, the Receivables
Purchase Agreement or the Notes, (ii) seeking to prevent the issuance of the
Notes or the consummation of any of the transactions contemplated by this
Agreement, the Receivables Purchase Agreement or the Notes, (iii) seeking any
determination or ruling that, in the reasonable judgment of Seller, would
materially and adversely affect the performance by Seller of its obligations
under this Agreement or the Receivables Purchase Agreement, (iv) seeking any
determination or ruling that would materially and adversely affect the validity
or enforceability of this Agreement, the Receivables Purchase Agreement or the
Notes or (v) seeking to impose income taxes on the Issuer (other than as a
wholly-owned subsidiary of Seller).

     (g)  Eligibility of Accounts. As of the Initial SMT Cut-Off Date, each
          -----------------------
Account was an Eligible Account.

     (h)  All Consents Required. All appraisals, authorizations, consents,
          ---------------------
orders or other actions of any Person or of any governmental body or official
required in connection with the execution and delivery of this Agreement, and
the Notes, the performance of the transactions contemplated by this Agreement,
and the fulfillment of or terms hereof, have been obtained.

                                       6
<PAGE>

     (i)  Bulk Sales. The execution, delivery and performance of this Agreement
          ----------
do not require compliance with any "bulk sales" law by Seller.

     (j)  Solvency. The transactions under this Agreement do not and will not
          --------
render Seller insolvent.

     (k)  Selection Procedures. No selection procedures believed by Seller to be
          --------------------
materially adverse to the interests of the Issuer or the Noteholders were
utilized by FCNB in selecting the Accounts.

The representations and warranties set forth in this Section 2.3 shall survive
                                                     -----------
the transfer of the Trust Assets to the Issuer, and termination of the rights
and obligations of the Servicer pursuant to Section 7.1. Upon discovery by
                                            -----------
Seller, the Servicer or the Owner Trustee of a breach of any of the foregoing
representations and warranties, the party discovering such breach shall give
prompt written notice to the others and any Enhancement Provider. For the
purposes of the representations and warranties contained in this Section 2.3 and
                                                                 -----------
made by Seller on the Initial Closing Date, "Notes" shall mean the Notes issued
                                             -----
on the Initial Closing Date. Seller hereby represents and warrants, with respect
to any Series, as of the Closing Date with respect to such Series, unless
otherwise stated in the related Indenture Supplement, that the representations
and warranties of Seller set forth in this Section 2.3 will be true and correct
                                           -----------
as of such date (for the purposes of such representations and warranties,
"Notes" shall mean the Notes issued on such Closing Date).
 -----

     Section 2.4    Representations and Warranties of Seller Relating to the
                    --------------------------------------------------------
Agreement and the Receivables.
-----------------------------

     (a)  Binding Obligation; Valid Transfer and Security Interest. Seller
          --------------------------------------------------------
hereby represents and warrants to the Issuer that, as of the Initial Closing
Date and, with respect to any Series issued on or after the SMT Termination
Date, unless otherwise stated in the related Indenture Supplement, as of the SMT
Termination Date or the Closing Date for such Series, as the case may be:

          (i)  This Agreement constitutes a legal, valid and binding obligation
     of Seller, enforceable against Seller in accordance with its terms, except
     as such enforceability may be limited by Debtor Relief Laws and except as
     such enforceability may be limited by general principles of equity (whether
     considered in a suit at law or in equity).

          (ii) This Agreement constitutes either (A) a valid transfer to the
     Issuer of all right, title and interest of Seller in, to and under the
     Trust Assets, and such property will be held by the Issuer free and clear
     of any Lien of any Person claiming through or under Seller or its
     Affiliates, except for (w) the interests of the SMT Trustee, the Indenture
     Trustee and the Noteholders, (x) Liens permitted under Section 2.5(b), (y)
                                                            --------------
     the interest of Seller as holder of

                                       7
<PAGE>

     the Seller Certificate and (z) Seller's right to receive interest accruing
     on, and investment earnings in respect of, the Collection Account or any
     Series Account as provided in the Transaction Documents or (B) a grant of a
     security interest in such property to the Issuer, which is enforceable with
     respect to (i) upon execution and delivery of this Agreement, the
     Collateral Certificate, all monies due or to become due with respect
     thereto and other proceeds thereof, (ii) upon the SMT Termination Date, the
     existing Receivables in the Accounts, all monies due or to become due with
     respect thereto, the Collections, Recoveries and other proceeds thereof,
     and Insurance Proceeds relating thereto and (iii) thereafter, at the time
     new Receivables arise, with respect to such Receivables, all monies due or
     to become due with respect thereto, and the Collections, Recoveries and
     other proceeds thereof and Insurance Proceeds relating thereto. If this
     Agreement constitutes the grant of a security interest to the Issuer in
     such property, upon the filing of the financing statement described in
     Section 2.1 and in the case of the Receivables hereafter arising in the
     -----------
     Accounts and proceeds thereof and Insurance Proceeds relating to such
     Receivables, as the same arise, the Issuer shall have a first priority
     perfected security interest in such property, except for Liens permitted
     under Section 2.5(b). Neither Seller nor any Person claiming through or
           --------------
     under Seller shall have any claim to or interest in the Collection Account,
     the Excess Funding Account or any Series Account, except for Seller's right
     to receive interest accruing on, and investment earnings in respect of, the
     Collection Account, the Excess Funding Account or any Series Account as
     provided in the Transaction Documents, Seller's right to receive payments
     from the Collection Account or any Series Account in accordance with the
     provisions of the Indenture, and, if this Agreement constitutes the grant
     of a security interest in such property, except for the interest of Seller
     in such property as a debtor for purposes of the UCC as in effect in the
     State of Illinois.

     (b)  Eligibility of Receivables. As of the SMT Termination Date, Seller
          --------------------------
agrees that all representations and warranties made by it with respect to any
Account or Receivable pursuant to Section 2.4 of the Transfer and Servicing
                                  -----------
Agreement shall be deemed for all purposes (including the reassignment
obligations under Section 2.4(e)) to have been made pursuant to this Agreement
                  --------------
as of the day when each was made or deemed made, as if this Agreement had been
in effect on that day. Thereafter, each day on which any new Receivable is
transferred by Seller to the Issuer, Seller shall be deemed to represent and
warrant to the Issuer that (i) each Receivable transferred on such day is an
Eligible Receivable, (ii) each Receivable transferred on such day has been
transferred to the Issuer free and clear of any Lien of any Person (other than
Liens permitted under Section 2.5(b), the interest of Seller as holder of the
                      --------------
Seller Certificate and Seller's right to receive interest accruing on, and
investment earnings in respect of, the Collection Account or any Series Account,
as provided in the Transaction Documents) and in compliance, in all material
respects, with all Requirements of Law applicable to Seller, (iii) with respect
to each

                                       8
<PAGE>

such Receivable, all consents, licenses, approvals or authorizations of or
registrations or declarations with any Governmental Authority required to be
obtained, effected or given by Seller in connection with the transfer of such
Receivable to the Issuer have been duly obtained, effected or given and are in
full force and effect and (iv) the representations and warranties set forth in
Section 2.4(a) are true and correct with respect to each Receivable transferred
--------------
on such day as if made on such day.

     (c)  Notice of Breach. The representations and warranties set forth in this
          ----------------
Section 2.4 shall survive the transfer of the respective Receivables to the
-----------
Issuer, and termination of the rights and obligations of the Servicer pursuant
to Section 7.1. Upon discovery by Seller, the Servicer or the Owner Trustee of a
   -----------
breach of any of the foregoing representations and warranties, the party
discovering such breach shall give prompt written notice to the others and any
Enhancement Provider.

     (d)  Reassignment of Ineligible Receivables.
          --------------------------------------

     (i)  Reassignment of Receivables. In the event (i) any representation or
          ---------------------------
warranty contained in Section 2.4(b) or Section 2.6(c) is not true and correct
                      --------------    --------------
in any material respect as of the date specified therein with respect to any
Receivable or the related Account unless cured within sixty (60) days (or such
longer period, not in excess of 120 days, as may be agreed to by the Indenture
Trustee and the Servicer) after the earlier to occur of the discovery thereof by
the Seller which conveyed such Receivables to the Issuer or receipt by such
Seller of written notice thereof given by the Owner Trustee, the Indenture
Trustee or the Servicer, or (ii) it is so provided in Section 2.5(a) or
                                                      --------------
2.6(c)(vii) with respect to any Receivables conveyed to the Issuer by such
-----------
Seller, then such Seller shall accept reassignment of all Receivables in the
related Account ("Ineligible Receivables") on the terms and conditions set forth
                  ----------------------
in paragraph (ii) below. Notwithstanding anything contained in this Section
                                                                    -------
2.4(d) to the contrary, in the event of breach of any representation and
------
warranty set forth in Section 2.4(b), with respect to (x) each Receivable
                      --------------
existing as of the Closing Date or an Addition Date, as applicable, and (y) each
new Receivable thereafter arising, having been conveyed to the Trust free and
clear of any Lien of any Person claiming through or under Seller and its
Affiliates and in compliance in all material respects, with all Requirements of
Law applicable to Seller, immediately upon the earlier to occur of the discovery
of such breach by Seller or receipt by Seller of written notice of such breach
given by the Owner Trustee or the Servicer, Seller shall repurchase and the
Owner Trustee shall convey, without recourse, representation or warranty, all of
the Owner Trustee's right, title and interest in each Ineligible Receivable.

     (ii) Price of Reassignment. The Servicer shall deduct the portion of such
          ---------------------
Ineligible Receivables reassigned to the Seller which are Principal Receivables
from the aggregate amount of the Principal Receivables used to calculate the
Seller Amount.

     Upon reassignment of any Ineligible Receivable, the Issuer shall
automatically and without further action be deemed to transfer, assign, set over
and

                                       9
<PAGE>

otherwise convey to the applicable Seller or its designee, without recourse,
representation or warranty, all the right, title and interest of the Issuer in
and to such Ineligible Receivable, all Recoveries related thereto, all monies
and amounts due or to become due and all proceeds thereof and such reassigned
Ineligible Receivable shall be treated by the Issuer as collected in full as of
the date on which it was transferred. The obligation of Seller to accept
reassignment of any Ineligible Receivables conveyed to the Issuer by Seller, and
to make the deposits, if any, required to be made to the Excess Funding Account
as provided in this Section, shall constitute the sole remedy respecting the
event giving rise to such obligation available to the Issuer, the Noteholders
(or the Owner Trustee on behalf of the Noteholders) or any Series Enhancer. The
Issuer shall execute such documents and instruments of transfer or assignment
and take such other actions as shall reasonably be requested and provided by the
applicable Seller to effect the conveyance of such Ineligible Receivables
pursuant to this Section 2.4(d), but only upon receipt of an Officer's
                 --------------
Certificate from such Seller that states that all conditions set forth in this
Section 2.5 have been satisfied.
-----------

     (e)  Reassignment of Issuer Portfolio. In the event any representation or
          --------------------------------
warranty of a Seller set forth in Section 2.4(a) is not true and correct in any
                                  --------------
material respect and such breach has a material adverse effect on the
Receivables conveyed to the Issuer by such Seller or the availability of the
proceeds thereof to the Issuer (which determination shall be made without regard
to whether funds are then available pursuant to any Series Enhancement), then
either the Owner Trustee, the Indenture Trustee or the Holders of Notes holding
not less than 50% of the aggregate principal amount of all Outstanding Notes, by
notice then given to such Seller and the Servicer (and to the Owner Trustee and
Indenture Trustee if given by the Noteholders), may direct such Seller to accept
a reassignment of the Receivables conveyed to the Issuer by such Seller if such
breach and any material adverse effect caused by such breach is not cured within
sixty (60) days of such notice (or within such longer period, not in excess of
120 days, as may be specified in such notice), and upon those conditions such
Seller shall be obligated to accept such reassignment on the terms set forth
below; provided, however, that such Receivables will not be reassigned to such
       --------  -------
Seller if, on any day prior to the end of such 60-day or longer period (i) the
relevant representation and warranty shall be true and correct in all material
respects as if made on such day and (ii) such Seller shall have delivered to the
Owner Trustee a certificate of an authorized officer describing the nature of
such breach and the manner in which the relevant representation and warranty has
become true and correct.

     The applicable Seller shall deposit in the Collection Account in
immediately available funds not later than 1:00 p.m., New York City time, on the
first Payment Date following the Monthly Period in which such reassignment
obligation arises, in payment for such reassignment, an amount equal to the sum
of the amounts specified therefor with respect to each outstanding Series in the
related Indenture Supplement. Notwithstanding anything to the contrary in this
Agreement, such amounts shall be distributed to the Noteholders on such Payment
Date in accordance with the terms of each Indenture Supplement. If the Owner
Trustee, the Indenture Trustee or the

                                      10
<PAGE>

Noteholders give notice directing the applicable Seller to accept a reassignment
of the Receivables as provided above, the obligation of such Seller to accept
such reassignment pursuant to this Section 2.4(e) and to make the deposit
                                   --------------
required to be made to the Collection Account as provided in this paragraph
shall constitute the sole remedy respecting an event of the type specified in
the first sentence of this Section 2.4(e) available to the Noteholders (or the
                           --------------
Owner Trustee or Indenture Trustee on behalf of the Noteholders) or any Series
Enhancer. Upon reassignment of the Receivables on such Payment Date, the Issuer
shall automatically and without further action be deemed to sell, transfer,
assign, set-over and otherwise convey to the applicable Seller, without
recourse, representation or warranty, all the right, title and interest of the
Issuer in and to the Receivables, all Interchange and Recoveries allocable to
the Issuer, and all monies and amounts due or to become due with respect thereto
and all proceeds thereof. The Issuer shall execute such documents and
instruments of transfer or assignment and take such other actions as shall
reasonably be requested by the applicable Seller to effect the conveyance of
such property pursuant to this Section.

     Section 2.5.   Covenants of Seller. Seller hereby covenants that:
                    -------------------

     (a) Receivables Not to be Evidenced by Promissory Notes. Seller will take
         ---------------------------------------------------
no action to cause any Receivable to be evidenced by any instrument.

     (b) Security Interests. Except for the transfers hereunder and under the
         ------------------
Transfer and Servicing Agreement, Seller will not sell, pledge, assign or
transfer to any other Person, or grant, create, incur, assume or suffer to exist
any Lien on any Receivable, whether now existing or hereafter transferred to the
Issuer, or any interest therein. Seller will immediately notify the Owner
Trustee of the existence of any Lien on any Receivable; and Seller shall defend
the right, title and interest of the Issuer in, to and under the Receivables,
whether now existing or hereafter transferred to the Issuer, against all claims
of third parties; provided, however, that nothing in this Section 2.5(b) shall
                  --------  -------                       --------------
prevent or be deemed to prohibit Seller from suffering to exist upon any of the
Receivables any Liens for state, municipal or other local taxes if such taxes
shall not at the time be due and payable or if Seller shall currently be
contesting the validity thereof in good faith by appropriate proceedings and
shall have set aside on its books adequate reserves with respect thereto;

provided further, however, that nothing in this Section 2.5(b) shall prevent or
-------- -------  -------                       --------------
be deemed to prohibit Seller from granting a participation interest in the
Seller Certificate or the undivided interests in the Issuer evidenced thereby.

     (c)  Account Allocations.
          -------------------

          (i) If Seller is unable for any reason to transfer Receivables to the
     Issuer in accordance with the provisions of this Agreement (including by
     reason of the occurrence of an Insolvency Event) then, in any such event,
     (A) Seller agrees to instruct the Servicer to allocate and pay to the
     Issuer, after the date of such inability, payments received in respect of
     the Accounts giving

                                      11
<PAGE>

     rise to such Receivables first to the total amount of Principal Receivables
     from such Accounts transferred to the Issuer; and (B) Seller agrees to have
     such amounts applied as Collections in accordance with the Indenture. The
     parties hereto agree that Finance Charge Receivables, whenever created,
     with respect to Principal Receivables which have been transferred to the
     Issuer shall continue to be a part of the Issuer notwithstanding any
     cessation of the transfer of additional Principal Receivables to the Issuer
     and Collections with respect thereto shall continue to be allocated and
     paid in accordance with the Indenture and all amounts which would have
     constituted Principal Receivables but for Seller's inability to transfer
     Receivables to the Issuer shall be deemed to be Principal Receivables for
     the purpose of calculating (i) the applicable Allocation Percentage with
     respect to any Series and (ii) the Aggregate Allocation Percentage
     thereunder. If Seller is unable pursuant to any Requirement of Law to
     allocate Collections as described above, Seller agrees that, solely for
     purposes of payments under this Agreement, it shall in any such event
     allocate, after the occurrence of such event, payments on each Account with
     respect to the principal balance of such Account first to the oldest
     principal balance of such Account (it being understood that the foregoing
     allocation does not affect, with respect to any obligor, the priority of
     application of cardholder payments provided for in the related Charge
     Account Agreement(s)) and to have such payments applied as Collections in
     accordance with the Indenture. The parties hereto agree that Finance Charge
     Receivables, whenever created, accrued in respect of Principal Receivables
     which have been conveyed to the Issuer, or which would have been conveyed
     to the Issuer but for the above described inability to transfer such
     Receivables, shall continue to be a part of the Issuer notwithstanding any
     cessation of the transfer of additional Principal Receivables to the Issuer
     and Collections with respect thereto shall continue to be allocated and
     paid in accordance with the Indenture.

          (ii) If, pursuant to Section 2.4(d), Seller accepts a retransfer of an
                               --------------
     Ineligible Receivable as a result of a breach of the representations and
     warranties in Section 2.4(b) relating to such Receivable, then, in any such
                   --------------
     event, Seller agrees to instruct the Servicer to allocate payments received
     in respect of the Account giving rise to such Receivable first to the total
     amount of Principal Receivables of the appropriate Obligor retained in the
     Issuer and thereafter to the total amount owing by such Obligor on any
     Ineligible Receivable retransferred to Seller.

     (d)  Delivery of Collections. Seller agrees to pay to the Servicer promptly
          -----------------------
(but in no event later than two Business Days after receipt) all Collections
received by Seller in respect of the Receivables.

     (e)  Regulatory Filings. Seller shall make any filings, reports, notices,
          ------------------
applications and registrations with, and seek any consents or authorizations
from, the

                                      12
<PAGE>

Securities and Exchange Commission and any state securities authority on behalf
of the Issuer as may be necessary or advisable to comply with any federal or
state securities or reporting requirements laws.

     (f) Finance Charges and Other Fees. Seller agrees that, except as otherwise
         ------------------------------
required by any Requirement of Law or as is deemed by FCNB to be advisable for
its charge account programs based on a good faith assessment by FCNB of the
various factors relating to its business, FCNB shall not reduce at any time (i)
the Finance Charges assessed in respect of any Accounts, or (y) any other fees
charged on any of the Accounts if, as a result of such reduction, FCNB's
reasonable expectation of the Portfolio Yield as of such date, after giving
effect to such reduction, would be less than the current weighted average Base
Rates for all outstanding Series. Further, Seller agrees that, unless required
by any Requirement of Law, FCNB shall not reduce the annual percentage rate
applicable to the Accounts if, as a result of such reduction, FCNB's reasonable
expectation is that the Portfolio Yield would be less than the highest Note Rate
with respect to any Series then issued and outstanding.

     (g) Charge Account Agreements and Charge Account Guidelines. Seller agrees
         -------------------------------------------------------
to comply with and perform its obligations under the Charge Account Agreements
relating to the Accounts and the Charge Account Guidelines, except insofar as
any failure so to comply or conform would not materially and adversely affect
the rights of the Issuer or the Noteholders hereunder or under the Notes or any
Indenture Supplement. Subject to the foregoing and subject to the restrictions
set forth in Section 2.5(f) and subject to compliance with any applicable Terms
             --------------
Change Condition, and so long as such changes are made applicable to comparable
segments of those charge account accounts serviced by the Servicer which have
characteristics the same as, or substantially similar to, the Accounts which are
subject hereto, FCNB shall be free to change the terms and provisions of such
Charge Account Agreements or the Charge Account Guidelines in any respect. FCNB
shall provide to each Rating Agency written notice of any such change of which
FCNB notifies Obligors.

     (h) Compliance with Law. Seller hereby agrees to comply in all material
         -------------------
respects with all Requirements of Law applicable to Seller.

     (i) Activities of Seller. Seller shall not engage in any business or
         --------------------
activity of any kind or enter into any transaction or indenture, mortgage,
instrument, agreement, contract, lease or other undertaking which is not
directly related to the transactions contemplated and authorized by this
Agreement or the Receivables Purchase Agreement or which is otherwise a
Permitted Transaction.

     (j) Indebtedness. Seller shall not create, incur, assume or suffer to exist
         ------------
any Indebtedness or other liability whatsoever, except (i) obligations incurred
or owing to the Issuer under this Agreement or the Receivables Purchase
Agreement, (ii) liabilities incident to the maintenance of its corporate
existence in good standing

                                      13
<PAGE>

and the ownership of the Receivables or (iii) obligations incident to a
Permitted Transaction.

     (k) Guarantees. Seller shall not become or remain liable, directly or
         ----------
contingently, in connection with any Indebtedness or other liability of any
other Person, whether by guarantee, endorsement (other than endorsements of
negotiable instruments for deposit or collection in the ordinary course of
business), agreement to purchase or repurchase, agreement to supply or advance
funds, or otherwise except incident to a Permitted Transaction.

     (l) Investments. Seller shall not make or suffer to exist any loans or
         -----------
advances to, or extend any credit to, or make any investments (by way of
transfer of property, contributions to capital, purchase of stock or securities
or evidences of indebtedness, acquisition of the business or assets, or
otherwise) in, any Person except (i) for purchases of Receivables pursuant to
the Receivables Purchase Agreement, (ii) for investments in Permitted
Investments in accordance with the terms of this Agreement or (iii) pursuant to
a Permitted Transaction.

     (m) Distributions. Seller shall not declare or pay, directly or indirectly,
         -------------
any dividend or make any other distribution (whether in cash or other property)
with respect to the profits, assets or capital of Seller or any Person's
interest therein, or purchase, redeem or otherwise acquire for value any of its
capital stock now or hereafter outstanding, except that so long as no Pay Out
Event has occurred and is continuing and no Pay Out Event would occur as a
result thereof or after giving effect thereto, Seller may declare and pay
dividends on its capital stock.

     (n) Agreements. Seller shall not become a party to, or permit any of its
         ----------
properties to be bound by, any indenture, mortgage, instrument, contract,
agreement, lease or other undertaking, except the Transaction Documents and
except incidental to a Permitted Transaction or amend or modify the provisions
of its Certificate of Incorporation or issue any power of attorney except to the
Owner Trustee or to the Servicer.

     (o) Receivables Purchase Agreement. Seller shall not give any consent to
         ------------------------------
FCNB or exercise any of its rights under the Receivables Purchase Agreement
unless the Rating Agency Condition is satisfied with respect thereto.

     (p) Separate Corporate Existence. Seller shall:
         ----------------------------

         (i) Maintain its own deposit account or accounts, separate from those
     of any Affiliate, with commercial banking institutions. The funds of Seller
     will not be diverted to any other Person or for other than corporate uses
     of Seller.

                                      14
<PAGE>

          (ii)    Ensure that, to the extent that it shares the same officers or
     other employees as any of its stockholders or Affiliates, the salaries of
     and the expenses related to providing benefits to such officers and other
     employees shall be fairly allocated among such entities, and each such
     entity shall bear its fair share of the salary and benefit costs associated
     with all such common officers and employees.

          (iii)   Ensure that, to the extent that it jointly contracts with any
     of its stockholders or Affiliates to do business with vendors or service
     providers or to share overhead expenses, the costs incurred in so doing
     shall be allocated fairly among such entities, and each such entity shall
     bear its fair share of such costs. To the extent that Seller contracts or
     does business with vendors or service providers where the goods and
     services provided are partially for the benefit of any other Person, the
     costs incurred in so doing shall be fairly allocated to or among such
     entities for whose benefit the goods and services are provided, and each
     such entity shall bear its fair share of such costs. All material
     transactions (other than this Agreement and the Receivables Purchase
     Agreement) between Seller and any of its Affiliates shall be only on an
     arm's length basis.

          (iv)    Maintain a principal executive and administrative office
     through which its business is conducted separate from those of its
     Affiliates. To the extent that Seller and any of its stockholders or
     Affiliates have offices in the same location, there shall be a fair and
     appropriate allocation of overhead costs among them, and each such entity
     shall bear its fair share of such expenses.

          (v)     Conduct its affairs strictly in accordance with its
     Certificate of Incorporation and observe all necessary, appropriate and
     customary corporate formalities, including, but not limited to, holding all
     regular and special stockholders' and directors' meetings appropriate to
     authorize all corporate action, keeping separate and accurate minutes of
     its meetings, passing all resolutions or consents necessary to authorize
     actions taken or to be taken, and maintaining accurate and separate books,
     records and accounts, including, but not limited to, payroll and
     intercompany transaction accounts.

     (q)  Location of Records. Seller (i) shall not move outside the State of
          -------------------
Delaware the location of its chief executive office without 45 days' prior
written notice to the Owner Trustee and (ii) will promptly take all actions
required (including but not limited to all filings and other acts necessary or
advisable under the UCC of each relevant jurisdiction) in order to continue the
first priority perfected ownership interest of the Noteholders in all
Receivables now owned or hereunder created. Seller will give the Owner Trustee
prompt notice of a change within the State of Delaware of the location of its
chief executive office.

                                      15
<PAGE>

      Section 2.6.  Addition of Accounts.
                    --------------------

      (a)  If, during any period of 30 consecutive days ending after the SMT
Termination Date either (i) the average Aggregate Net Principal Receivables is
less than the Minimum Aggregate Principal Receivables averaged for such period
or (ii) the average Seller Amount is less than the Minimum Seller Amount
averaged for such period, either Seller or the Servicer (whichever shall first
become aware of same) promptly shall give the Owner Trustee written notice
thereof, and as soon as practicable (but in no event later than 10 Business Days
thereafter) Seller shall designate additional Eligible Accounts ("Additional
                                                                  ----------
Accounts") to be included as Accounts and shall transfer the Receivables in such
--------
Additional Accounts to the Issuer, in a sufficient amount so that (x) the
average Aggregate Net Principal Receivables would at least equal the Minimum
Aggregate Principal Receivables averaged for such 30-day period and (ii) the
average Seller Amount would at least equal the Minimum Seller Amount averaged
for such 30-day period would have, if the Receivables from such Additional
Accounts had been transferred to the Issuer during such 30-day period.  Each of
the averages referred to in the preceding sentence shall be calculating by
taking the sum of the specified amount at the end of each Business Day falling
in that period and dividing by the number of Business Days falling in that
period.

      (b)  In addition to its obligation under Section 2.6(a), Seller may, but
                                               --------------
shall not be obligated to, from time to time, designate Additional Accounts to
be included as Accounts so long as after giving effect to such addition not more
than 20% of the Principal Receivables, by outstanding balance, will be 30 or
more days delinquent.

      (c)  Seller agrees that any Receivables from Additional Accounts shall be
transferred by Seller to the Issuer under Section 2.6(a), (b) or (e) upon and
                                          --------------  ---    ---
subject to the following conditions:

          (i)  On or before the fifth Business Day (the "Notice Date") prior to
                                                         -----------
      the Addition Date in respect of Additional Accounts added pursuant to
      Section 2.6(a) or (b), Seller shall give the Owner Trustee and the
      -------------     ---
      Servicer written notice that such Additional Accounts will be included and
      specifying the approximate aggregate amount of the Receivables to be
      transferred;

          (ii) Seller (A) shall transfer to the Issuer Receivables only in
      Eligible Accounts, and (B) shall satisfy the applicable condition in
      accordance with Section 2.6(f) if such designation of Additional Accounts
                      --------------
      is made pursuant to Section 2.6(b) or (e) and if the addition of such
                          --------------
      Additional Accounts

               (1)  would cause the quotient (the "Annual Quotient") of (x) the
                                                  ---------------
          sum of the Annual Net Account Additions after giving effect

                                      16
<PAGE>

          to such addition plus the related Base Amount divided by (y) the
          related Base Amount to exceed 1.20, or

                (2)  would cause the quotient (the "Quarterly Quotient") of (x)
                                                    ------------------
          the sum of the Quarterly Net Account Additions after giving effect to
          such addition plus the related Base Amount divided by (y) the related
          Base Amount to exceed 1.15;

          (iii) On or prior to the Addition Date, in respect of Additional
     Accounts added pursuant to Section 2.6(a) or (b), Seller shall have
                                -------------     ---
     delivered to the Owner Trustee a written Assignment Agreement (including an
     acceptance by the Owner Trustee on behalf of the Issuer for the benefit of
     the Noteholders) in substantially the form of Exhibit A (the "Assignment
                                                   ---------       ----------
     Agreement") and shall have indicated in its books and records, including
     ---------
     the computer files of the Receivables, that the Receivables created in
     connection with the Additional Accounts have been transferred by Seller to
     the Issuer; and shall have delivered to the Owner Trustee a computer file
     or microfiche list containing a true and complete list of all Additional
     Accounts identified by account number and by Receivable balance as of the
     Addition Date in respect of Additional Accounts added pursuant to Section
                                                                       -------
     2.6(a) or  (b), which computer file or microfiche list shall be marked as
     ------     ---
     Schedule 1 to the Assignment Agreement, delivered to the Owner Trustee as
     ----------
     confidential and proprietary, shall be as of the date of such Assignment
     Agreement and incorporated into and made a part of such Assignment
     Agreement and this Agreement;

          (iv)  Seller shall be deemed to represent and warrant that (w) as of
     the Addition Date, Schedule 1 to the Assignment Agreement and the computer
                        ----------
     file or microfiche list delivered pursuant to Section 2.6(c) is an accurate
                                                   --------------
     and complete listing in all material respects of all the Additional
     Accounts as of the Addition Date and the information contained therein with
     respect to the identity of such Additional Accounts and the Receivables
     existing thereunder is true and correct in all material respects as of the
     Addition Date, (x) each Additional Account is, as of the Addition Date, an
     Eligible Account, (y) no selection procedures reasonably believed by Seller
     to be materially adverse to the interests of the Noteholders were utilized
     in selecting the Additional Accounts from the available Eligible Accounts,
     and (z) as of the Addition Date, Seller is not insolvent and will not be
     rendered insolvent by adding any such Additional Account to any Cycle;

          (v)   Seller shall be deemed to represent and warrant that, as of the
     Addition Date, the Assignment Agreement constitutes either (x) a valid
     transfer to the Issuer of all right, title and interest of Seller in, to
     and under the Receivables then existing and thereafter arising in respect
     of the Additional Accounts, all monies due or to become due with respect
     thereto

                                      17
<PAGE>

     (including all Finance Charge Receivables), and all proceeds of such
     Receivables and Insurance Proceeds relating thereto, and such property will
     be owned by the Issuer free and clear of any Lien of any Person, except for
     (i) Liens permitted under Section 2.5(b), (ii) the interest of Seller as
                               --------------
     holder of the Seller Certificate and (iii) Seller's right to receive
     interest accruing on, and investment earnings in respect of, the Collection
     Account or any Series Account as provided in this Agreement and any
     Indenture Supplement, or (y) a grant of a security interest in such
     property to the Issuer, which is enforceable with respect to then existing
     Receivables of the Additional Accounts, all monies due or to become due
     with respect thereto, the proceeds thereof and Recoveries and Insurance
     Proceeds relating thereto upon the transfer of such Receivables to the
     Issuer, and which will be enforceable with respect to the Receivables
     thereafter transferred in respect of Additional Accounts, the proceeds
     thereof and Insurance Proceeds relating thereto upon such transfer; and (z)
     if the Assignment Agreement constitutes the grant of a security interest to
     the Issuer in such property, upon the filing of a financing statement as
     described in Section 2.1 with respect to such Additional Accounts and in
                  -----------
     the case of the Receivables of Additional Accounts thereafter transferred
     and the proceeds thereof, and Insurance Proceeds relating to such
     Receivables, upon such transfer, the Issuer shall have a first priority
     perfected security interest in such property, except for Liens permitted
     under Section 2.5(b), the interest of Seller as holder of the Seller
           --------------
     Certificate and Seller's right to receive interest accruing on, and
     investment earnings in respect of, the Collection Account or any Series
     Account, as provided in this Agreement and any Indenture Supplement;

          (vi)  Seller shall, on the Addition Date for Additional Accounts added
     pursuant to Section 2.6(a) or (b), deliver a certificate of a Vice
                 --------------    ---
     President or more senior officer confirming the items set forth in
     paragraphs (ii), (iii), (iv) and (v) above; and
                ----  -----  ----     ---

          (vii) Seller shall, on the Addition Date for Additional Accounts added
     pursuant to Section 2.6(a) or (b), deliver an Opinion of Counsel with
                 --------------    ---
     respect to the Receivables in the Additional Accounts to the Owner Trustee
     substantially in the form of Exhibit C.
                                  ---------

     (d)  Seller shall provide to each Rating Agency and to each Enhancement
Provider prior written notice each time Additional Accounts are added pursuant
to Section 2.6(a) or (b).
   --------------    ---

     (e)  In addition to the occasional designation of Additional Accounts as
required or permitted pursuant to Sections 2.6(a) and (b), Seller agrees that
                                  ---------------     ---
each new Charge Account originated in the normal course of FCNB's business and
assigned to an Included Cycle after the SMT Termination Date, and the
Receivables in which are purchased by Seller pursuant to the Receivables
Purchase Agreement, shall

                                      18
<PAGE>

automatically be included as an Account (and the Receivables arising thereunder
automatically transferred to the Issuer) effective on the tenth Business Day
following the end of the Monthly Period in which such account is assigned to
such billing cycle; provided, however, that such automatic inclusion and
                    --------  -------
transfer shall not occur with respect to any such account if: (i) such account
does not qualify as an Eligible Account, (ii) the inclusion in the Issuer of the
Receivables in such Account, if such Accounts had been designated by Seller
pursuant to Section 2.6(b), would have caused the limitations set forth in
            --------------
Section 2.6(c)(ii) to be exceeded (unless Seller shall have satisfied any
------------------
applicable condition to such addition), or (iii) Seller otherwise designates
such account as an account which is not to be included as an Account pursuant to
this Section 2.6(e). On or before the fifth Business Day of each month next
     -----------
succeeding a calendar month in which Accounts were included pursuant to the
preceding sentence, Seller shall (i) indicate in its books and records,
including the computer files of the receivables, that the Receivables created in
connection with such included Accounts have been transferred to the Issuer, and
(ii) shall deliver to the Owner Trustee a computer file or microfiche list
containing a true and complete list of all such included Accounts identified by
account number and by the Receivables balance as of the end of such calendar
month, which computer file or microfiche list shall be delivered to the Owner
Trustee as confidential and proprietary and incorporated into and made a part of
this Agreement. Seller, at its option, may, by providing written notice to the
Owner Trustee and the Servicer, terminate or suspend the inclusion of Additional
Accounts added pursuant to Section 2.6(e) at any time.

     (f)  (i) The Rating Agency Condition shall be applicable and must be
satisfied whenever the Quarterly Quotient exceeds the amount set forth in

Section 2.6(c)(ii)(B)(2) or whenever the Annual Quotient exceeds 1.30.
------------------------

          (ii) If the Annual Quotient exceeds 1.20 but is less than or equal to
     1.30 Seller may at its option satisfy either the Rating Agency Condition or
     the Additional Accounts Enhancement Increase Condition. If no outstanding
     Series specifies an Additional Accounts Enhancement Increase Condition,
     then this clause (ii) shall not be applicable to the addition of Additional
               -----------
     Accounts.

     Section 2.7.  Removal of Accounts.
                   -------------------

     (a)  Subject to the conditions set forth below, after the SMT Termination
Date, Seller may designate from time to time Accounts no longer to be designated
for inclusion in the Issuer (the "Removed Accounts"); provided, however, that
                                  ----------------    --------  -------
Seller shall not make more than one such designation in any Monthly Period. On
or before the fifth Business Day (the "Removal Notice Date") prior to the date
                                       -------------------
on which Removed Accounts shall be designated (the "Removal Date"), Seller shall
                                                    ------------
give the Owner Trustee, the Servicer and each Enhancement Provider written
notice that the Receivables from such Removed Accounts are to be retransferred
to Seller.

                                      19
<PAGE>

     (b) Seller shall be permitted to designate and require retransfer to it of
the Receivables from Removed Accounts only upon satisfaction of the following
conditions:

          (i)    Seller shall satisfy the Rating Agency Condition with respect
     thereto by such Removal Date;

          (ii)   on each Removal Date, the Owner Trustee shall deliver to Seller
     a written Reassignment Agreement in substantially the form of Exhibit B
                                                                   ---------
     (the "Reassignment Agreement") prepared by Seller, and Seller shall deliver
           ----------------------
     to the Owner Trustee a computer file, microfiche or written list containing
     a true and complete schedule identifying all Removed Accounts specifying
     for each such Removed Account, as of the Removal Notice Date, its account
     number and the Receivable balance thereof. Such computer file, microfiche
     or written list shall be as of the date of such Reassignment Agreement
     incorporated into and made a part of this Agreement;

          (iii)  Seller shall represent and warrant as of each Removal Date that
     (A) the list of Removed Accounts, as of the Removal Notice Date, complies
     in all material respects with the requirements of (ii) above; (B) Accounts
     (or administratively convenient groups of Accounts, such as billing cycles)
     were chosen for removal randomly or at any rate not on a basis intended to
     select particular accounts or groups of accounts for any reason other than
     administrative convenience, and no selection procedure used by Seller which
     is adverse to the interests of the Noteholders was utilized in selecting
     the Removed Accounts; and (C) as of the Removal Notice Date and as of the
     Removal Date, Seller is not insolvent and Seller has no present intention
     of seeking protection under any Debtor Relief Laws;

          (iv)   The removal of any Receivables of any Removed Accounts on any
     Removal Date shall not, in the reasonable belief of Seller, cause a Pay Out
     Event to occur, or an event which with notice or lapse of time or both
     would constitute a Pay Out Event;

          (v)    The Seller Amount shall not be less than 105% of the Minimum
     Seller Amount (or if the Minimum Seller Amount is zero, 5% of the Minimum
     Aggregate Principal Balance) after giving effect to such removal and the
     Aggregate Net Principal Receivables shall not be less than the Minimum
     Aggregate Principal Balance;

          (vi)   Seller shall have delivered to the Owner Trustee and to each
     Enhancement Provider a certificate of an officer of Seller confirming the
     items set forth in (i) through (v) above. The Owner Trustee may
     conclusively rely on such certificate, shall have no duty to make inquiries
     with regard to the matters set forth therein and shall incur no liability
     in so relying; and

                                      20
<PAGE>

          (vii)  such other conditions and restrictions as may at any time be
     specified in an Officer's Certificate of the Seller delivered to the Owner
     Trustee shall have been satisfied, it being understood that (i) no such
     additional conditions or restrictions may conflict with or override any of
     the conditions and restrictions specified above, and (ii) upon delivery of
     such an Officer's Certificate to the Owner Trustee, the additional
     conditions and restrictions specified therein shall be deemed to be
     incorporated by reference into and become a part of this Agreement.

     Upon satisfaction of the above conditions, the Owner Trustee shall execute
and deliver the Reassignment Agreement to Seller, and the Receivables from the
Removed Accounts shall no longer constitute a part of the Issuer.

      Section 2.8.  Discount Option. (a) Seller shall have the option to
                    ---------------
designate at any time and from time to time a percentage or percentages, which
may be a fixed percentage or a variable percentage based on a formula (the

"Discount Percentage"), of all or any specified portion of Principal Receivables
 -------------------
created after the Discount Option Date to be treated as Finance Charge
Receivables ("Discount Option Receivables"). Seller shall also have the option
              ---------------------------
of reducing or withdrawing the Discount Percentage, at any time and from time to
time, on and after such Discount Option Date. Seller shall provide to the
Servicer, the Owner Trustee and any Rating Agency 30 days' prior written notice
of the Discount Option Date, and such designation shall become effective on the
Discount Option Date (i) unless such designation in the reasonable belief of
Seller would cause a Pay Out Event with respect to any series to occur, or an
event which, with notice or lapse of time or both, would constitute a Pay Out
Event with respect to any Series or (ii) unless the Rating Agency Condition
shall not have been satisfied with respect to such designation.

     (b) After the Discount Option Date, Seller shall treat Discount Option
Receivable Collections as Collections of Finance Charge Receivables.

     [Section 2.9.  Net Worth.  The Seller agrees to retain in force and to
                    ---------
enforce in accordance with its terms that certain Demand Note (the "Demand
                                                                    ------
Note") dated as of September 20, 1994, made by Spiegel and payable to the order
----
of the Seller; provided, however, that at such time as the Demand Note shall
become due in accordance with its terms, the Seller may enter into a new demand
note or alternative arrangement (in lieu of receiving or retaining cash payable
under the Demand Note) if it obtains an Opinion of Counsel that such new demand
note or alternate arrangement will not cause the Trust to be classified for
federal income tax purposes as an association taxable as a corporation.]

                                   ARTICLE III

                  ADMINISTRATION AND SERVICING OF RECEIVABLES

                                      21
<PAGE>

     Prior to the SMT Termination Date, the Receivables shall be serviced as
provided in the Transfer and Servicing Agreement, and this Article III will have
                                                           -----------
no effect. On and after the SMT Termination Date:

     Section 3.1.   Acceptance of Appointment and Other Matters Relating to the
                    -----------------------------------------------------------
Servicer.
--------

     (a)  FCNB agrees to act as the Servicer under this Agreement. The
Noteholders by their acceptance of the Notes consent to FCNB's acting as
Servicer.

     (b)  Subject to the provisions of this Agreement, the Servicer shall
service and administer the Receivables and shall collect payments due under the
[Collateral Certificate and] the Receivables in accordance with its customary
and usual servicing procedures for servicing charge account receivables
comparable to the Receivables and in accordance with the Charge Account
Guidelines and shall have full power and authority, acting alone or through any
party properly designated by it hereunder, to do any and all things in
connection with such servicing and administration which it may deem necessary or
desirable; provided, however, if the Servicer changes its policies with respect
           --------  -------
to the treatment of delinquencies or the recognition of charge-offs, the
Servicer shall provide to each Rating Agency written notice of such change in
policy. Without limiting the generality of the foregoing and subject to Section
                                                                        -------
7.1, the Servicer is hereby authorized and empowered (i) unless such power and
---
authority is revoked by the Owner Trustee on account of the occurrence of a
Servicer Default pursuant to Section 7.1, to make withdrawals from the
                             -----------
Collection Account as set forth in this Agreement, (ii) unless such power and
authority is revoked by the Owner Trustee on account of the occurrence of a
Servicer Default pursuant to Section 7.1, to instruct the Owner Trustee to make
                             -----------
withdrawals and payments from the Series Accounts in accordance with such
instructions as set forth in this Agreement, (iii) unless such power and
authority is revoked by the Owner Trustee on account of the occurrence of a
Servicer Default pursuant to Section 7.1, to instruct the Owner Trustee in
                             -----------
writing as provided herein, and (iv) unless such power and authority is revoked
by the Owner Trustee on account of the occurrence of a Servicer Default pursuant
to Section 7.1, to execute and deliver, on behalf of the Issuer for the benefit
   -----------
of the Noteholders, any and all instruments of satisfaction or cancellation, or
of partial or full release or discharge, and all other comparable instruments,
with respect to the Receivables and, after the delinquency of any Receivable and
to the extent permitted under and in compliance with applicable law and
regulations, to commence enforcement proceedings with respect to such
Receivables. The Owner Trustee agrees that it shall promptly follow the
instructions of the Servicer, including those to withdraw funds from the
Collection and any other Series Account. The Owner Trustee shall furnish the
Servicer with any powers of attorney and other documents necessary or
appropriate to enable the Servicer to carry out its servicing and administrative
duties hereunder.

                                      22
<PAGE>

     (c)  (i)  In the event that Seller is unable for any reason to transfer
Receivables to the Issuer in accordance with the provisions of this Agreement
(including by reason of the occurrence of an Insolvency Event) the Servicer
agrees to allocate and pay to the Issuer, after such date, all Collections in
respect of the Accounts giving rise to such Receivables first to the total
amount of Principal Receivables from such Accounts transferred to the Issuer.

          (ii) In the event that pursuant to Section 2.4(d), Seller accepts a
                                             --------------
     retransfer of an Ineligible Receivable as a result of a breach of the
     representations and warranties in Section 2.4(b) relating to such
                                       --------------
     Receivable, the Servicer agrees to allocate payments received in respect of
     the Account giving rise to such Receivable first to the total amount of
     Principal Receivables of the appropriate Obligor retained in the Issuer and
     thereafter to the total amount owing by such Obligor on any Ineligible
     Receivables retransferred to Seller.

     (d)  The Servicer shall not be obligated to use separate servicing
procedures, offices, employees or accounts for servicing the Receivables from
the procedures, offices, employees and accounts used by the Servicer in
connection with servicing other charge account receivables.

     (e)  The Servicer shall maintain fidelity bond coverage insuring against
losses through wrongdoing of its officers and employees who are involved in the
servicing of credit card receivables.

     Section 3.2.  Servicing Compensation. As compensation for its servicing
                   ----------------------
activities hereunder and reimbursement for its expenses as set forth in the
immediately following paragraph, the Servicer shall be entitled to receive a
monthly servicing fee in respect of any Monthly Period (or portion thereof)
prior to the termination of the Issuer pursuant to the Indenture (with respect
to each Monthly Period, the "Monthly Servicing Fee"). The share of the Monthly
                             ---------------------
Servicing Fee allocable to each Series of Notes with respect to any Monthly
Period (or portion thereof) shall be payable on the related Distribution Date
and, with respect to each Series (unless provided in the related Indenture
Supplement), shall be equal to one-twelfth of the product of (A) the applicable
Series Servicing Fee Rate and (B) the outstanding principal amount of such
Series as of the first day of the related Monthly Period, or portion thereof
(the "Investor Monthly Servicing Fee"). The share of the Monthly Servicing Fee
      ------------------------------
allocable to the Holder of the Collateral Certificate with respect to any
Monthly Period (or portion thereof) shall be equal to one-twelfth of the product
of (A) Seller Amount and (B) the weighted average of the Series Servicing Fee
Rates with respect to each Series of Notes then outstanding (the "Monthly Seller
                                                                  --------------
Servicing Fee"). The Monthly Servicing Fee shall equal the sum of (x) the
-------------
aggregate amount of Investor Monthly Servicing Fees with respect to each Series
then outstanding and (y) the Monthly Seller Servicing Fee. The Investor Monthly
Servicing Fee with respect to any Series is payable in arrears on the related

                                      23
<PAGE>

Distribution Date (unless otherwise provided in the related Indenture
Supplement) and the Monthly Seller Servicing Fee is payable in arrears no later
than the last Distribution Date with respect to any Series occurring in a
Monthly Period.

     The Servicer's expenses include the reasonable fees and disbursements of
independent accountants and all other expenses incurred by the Servicer in
connection with its activities hereunder; provided that the Servicer shall not
                                          --------
be liable for any liabilities, costs or expenses of the Issuer, the Noteholders
or the Note Owners arising under any tax law, including any federal, state or
local income or franchise taxes or any other tax imposed on or measured by
income (or any interest or penalties with respect thereto or arising from a
failure to comply therewith). The Servicer shall be required to pay such
expenses for its own account and shall not be entitled to any payment therefor
other than the Monthly Servicing Fee.

     Section 3.3.  Representations; Warranties and Covenants of the Servicer.
                   ---------------------------------------------------------
FCNB, as initial Servicer, hereby makes, and any successor Servicer by its
appointment hereunder shall make, the following representations and warranties
and covenants on which the Owner Trustee has relied in accepting the Receivables
in trust and in authenticating Notes:

     (a)  Organization and Good Standing. The Servicer is duly organized,
          ------------------------------
validly existing and in good standing under the laws of its jurisdiction of
organization, and has full corporate power, authority and right to own its
properties and conduct its business as such properties are presently owned and
such business is presently conducted, and to execute, deliver and perform its
obligations under this Agreement.

     (b)  Due Qualification. The Servicer is qualified as a foreign banking
          -----------------
association or other entity in any state where it is required to be so qualified
to service the Receivables as required by this Agreement and has obtained all
necessary licenses and approvals as required under federal and state law, in
each case, where the failure to be so qualified, licensed or approved, could
reasonably be expected materially and adversely to affect the ability of the
Servicer to comply with the terms of this Agreement.

     (c)  Due Authorization. The execution, delivery, and performance of this
          -----------------
Agreement have been duly authorized by the Servicer by all necessary corporate
action on the part of the Servicer.

     (d)  Binding Obligation. This Agreement constitutes legal, valid and
          ------------------
binding obligations of the Servicer, enforceable in accordance with its terms,
except as enforceability may be limited by Debtor Relief Laws and except as such
enforceability may be limited by general principles of equity (whether
considered in a proceeding at law or in equity).

                                      24
<PAGE>

     (e)  No Violation. The execution and delivery of this Agreement by the
          ------------
Servicer, and the performance of the transactions contemplated by this Agreement
and the fulfillment of the terms hereof applicable to the Servicer, will not
conflict with, violate, result in any breach of any of the terms and provisions
of, or constitute (with or without notice or lapse of time or both) a default
under, any Requirements of Law applicable to the Servicer or any indenture,
contract, agreement, mortgage, deed of trust or other instrument to which the
Servicer is a party or by which it is bound.

     (f)  No Proceedings. There are no proceedings or investigations pending or,
          --------------
to the best knowledge of the Servicer, threatened against the Servicer before
any court, regulatory body, administrative agency or other tribunal or
governmental instrumentality seeking to prevent the issuance of the Notes or the
consummation of any of the transactions contemplated by this Agreement, seeking
any determination or ruling that, in the reasonable judgment of the Servicer,
would materially and adversely affect the performance by the Servicer of its
obligations under this Agreement, or seeking any determination or ruling that
would materially and adversely affect the validity or enforceability of this
Agreement.

     (g)  Rescission and Cancellation. Other than pursuant to and in accordance
          ---------------------------
with the Charge Account Guidelines, the Servicer shall not rescind or cancel any
Receivable unless such rescission or cancellation shall have been ordered or
directed by a Governmental Authority.

     (h)  Other Actions. Other than pursuant to and in accordance with the
          -------------
Charge Account Guidelines and as otherwise specifically permitted by this
Agreement, the Servicer shall not (i) take or fail to take any action if such
action or failure to act would impair the rights of the Issuer in any
Receivable, or (ii) revise or defer any payment due in respect of any
Receivable.

     (i)  Compliance with Requirements of Law. The Servicer shall duly satisfy
          -----------------------------------
all obligations on its part to be fulfilled under or in connection with the
Receivables or Accounts, will maintain in effect all qualifications required
under Requirements of Law in order to properly service the Receivables and the
Accounts and will comply in all material respects with all Requirements of Law
in connection with servicing the Receivables and the Accounts the failure to
comply with which would have a material adverse effect on the Noteholders.

     Section 3.4.  Reports and Records for the Owner Trustee; Bank Account
                   -------------------------------------------------------
Statements.
----------

     (a)  Daily Reports. On each Business Day, the Servicer shall prepare and
          -------------
make available at the office of the Servicer for inspection by the Owner Trustee
a record (the "Daily Report") setting forth (i) the aggregate amount of
               ------------
Collections processed by the Servicer on the preceding Business Day, (ii) the
Aggregate Net

                                      25
<PAGE>

Principal Receivables as of the close of business on the preceding Business Day,
(iii) the amount of Finance Charge Collections for the preceding Business Day,
(iv) the amount on deposit in the Excess Funding Account on the preceding
Business Day and (v) a calculation of the Seller Amount and the Minimum Seller
Amount and the Minimum Aggregate Principal Balance on the preceding Business Day
and a determination of whether the Seller Amount on the preceding Business Day
was greater than the Minimum Seller Amount on such Business Day and whether the
Aggregate Principal Balance on the preceding Business Day was greater than the
Minimum Aggregate Principal Balance on the preceding Business Day and such other
information as may be specified in an Indenture Supplement.

     (b)  Monthly Servicer's Certificate. Unless otherwise stated in the related
          ------------------------------
Indenture Supplement with respect to any Series, on each Determination Date, the
Servicer shall forward to the Owner Trustee, the Paying Agent, any Rating Agency
and any Enhancement Provider a certificate of a Servicing Officer substantially
in the form of Exhibit D setting forth (i) the aggregate amounts for the
               ---------
preceding Monthly Period with respect to each of the items specified in clauses
(i) and (iii) of Section 3.4(a), together with the amount and nature of any
                 --------------
true-up adjustment required by Section 1.4(b), (ii) the Default Amount for the
                               --------------
preceding Monthly Period, (iii) investor Net Recoveries for the preceding
Monthly Period, (iv) a calculation of the Portfolio Yield and Base Rate for each
Series then outstanding, (v) the aggregate amount of Receivables and the balance
on deposit in the Collection Account (or any subaccount thereof) or any Series
Account applicable to any Series then outstanding with respect to Collections
processed as of the end of the last day of the preceding Monthly Period, (vi)
the aggregate amount of Credit Adjustments from the preceding Monthly Period,
(vii) the aggregate amount, if any, of withdrawals, drawings or payments under
any Enhancement with respect to each Series required to be made with respect to
the previous Monthly Period, and (viii) the sum of all amounts payable to the
Noteholders on the succeeding Distribution Date in respect of Note Interest and
Note Principal.

     Section 3.5.  Annual Servicer's Certificate.  Unless the Servicer has been
                   -----------------------------
relieved of all of its obligations under this Agreement because the final Series
has been re-paid during the prior calendar year, the Servicer will deliver to
the Owner Trustee, any Enhancement Provider and any Rating Agency on or before
April 30 of each calendar year, beginning with April 30, 2001, an Officer's
Certificate substantially in the form of Exhibit E-1 stating that (a) a review
                                         -----------
of the activities of the Servicer during the preceding calendar year (or, with
respect to the certificate to be delivered on [___________], since the Issuer's
inception) and of its performance under this Agreement was made under the
supervision of the officer signing such certificate and (b) to the best of such
officer's knowledge, based on such review, the Servicer has fully performed all
its obligations under this Agreement throughout such period, or, if there has
been a default in the performance of any such obligation, specifying each such
default known to such officer and the nature and status thereof.

                                      26
<PAGE>

A copy of such certificate may be obtained by any Noteholder by a request in
writing to the Owner Trustee addressed to the Corporate Trust Office.

     Section 3.6.  Annual Independent Public Accountants' Servicing Report.
                   -------------------------------------------------------

     (a)  Unless the Servicer has been relieved of all of its obligations under
this Agreement because the final Series has been re-paid during the prior
calendar year, on or before April 30 of each calendar year, beginning with April
30, 2001, the Servicer shall cause KPMG Peat Marwick or another firm of
nationally recognized independent public accountants (who may also render other
services to the Servicer or Seller) to furnish a report covering the preceding
annual period to the effect that such accountants have applied certain agreed-
upon procedures to certain documents and records relating to the servicing of
Accounts under this Agreement, compared the information contained in the
Servicer's certificates delivered during the period covered by such report
(which shall be the period from January 1, to and including December 31 of such
calendar year or, with respect to the certificate to be delivered on
[___________], since the Issuer's inception) with such documents and records in
each case as specified in Exhibit E-2 and that no matters came to the attention
                          -----------
of such accountants that caused them to believe that such servicing was not
conducted in compliance with Section 3.2, the Indenture and Section 5.8 of this
                             -----------                    -----------
Agreement, except for such exceptions as such accountants shall believe to be
immaterial and such other exceptions as shall be set forth in such statement. In
addition, each report shall set forth the agreed-upon procedures performed. A
copy of such report may be obtained by any Noteholder by a request in writing to
the Owner Trustee addressed to the Corporate Trust Office. In addition, the
Servicer shall cause such accountants to furnish a copy of such report to each
Rating Agency and to each Enhancement Provider.

     (b)  On or before April 30 of each calendar year, beginning with April 30,
2001, the Servicer shall cause KPMG Peat Marwick or another firm of nationally
recognized independent public accountants (who may also render other services to
the Servicer or Seller) to furnish a report to the Owner Trustee to the effect
that they have compared the mathematical calculations of each amount set forth
in the monthly certificates forwarded by the Servicer pursuant to Section 3.4(b)
                                                                  --------------
during the period covered by such report (which shall be the period from January
1, to and including December 31 of such calendar year or, with respect to the
certificate to be delivered on [___________], since the Issuer's inception) with
the Servicer's computer reports which were the source of such amounts and that
on the basis of such comparison, such accountants are of the opinion that such
amounts are in agreement, except for such exceptions as they believe to be
immaterial and such other exceptions as shall be set forth in such statement. A
copy of such report may be obtained by any Noteholder by a request in writing to
the Owner Trustee addressed to the Corporate Trust Office. In addition, the
Servicer shall cause such accountants to furnish a copy of such report to each
Rating Agency and to each Enhancement Provider.

                                      27
<PAGE>

     Section 3.7.  Tax Treatment. Seller has structured this Agreement and the
                   -------------
Notes to facilitate a secured, credit-enhanced financing on favorable terms with
the intention that the Notes will constitute indebtedness of Seller for federal
income and state and local tax purposes; and Seller and each Noteholder by
acceptance of its Note agrees to recognize and report the Notes as indebtedness
of Seller for purposes of federal, state and local income or franchise taxes and
any other tax imposed on or measured by income, and to report all receipts and
payments relating thereto in a manner that is consistent with such
characterization.

     Section 3.8.  Merchant Fees.  Within 5 days after the end of each Monthly
                   -------------
Period, FCNB shall deposit in the Collection Account an amount equal to the
Merchant Fees received (or deemed received) by it during such Monthly Period;
provided, however, that no such deposit shall be made if the same shall be
prohibited by law or regulation, or if FCNB's regulator(s) shall have requested
that such deposits not be made. All amounts so deposited shall constitute
Finance Charge Collections in respect of such Monthly Period.

      Section 3.9.  Reports to the Commission. The Servicer shall, on behalf of
                    -------------------------
the Issuer, cause to be filed with the Commission any periodic reports required
to be filed under the provisions of the Securities Exchange Act of 1934, and the
rules and regulations of the Commission thereunder. Seller shall, at its own
expense, cooperate in any reasonable request of the Servicer in connection with
such filings. The Issuer agrees to cooperate with the Servicer in connection
with such filings.

                                  ARTICLE IV

                       OTHER MATTERS RELATING TO SELLER

     Section 4.1.  Liability of Seller. Seller shall be liable in accordance
                   -------------------
herewith to the extent, and only to the extent, of the obligations specifically
undertaken by Seller hereunder.

     Section 4.2.  Merger or Consolidation of, or Assumption of the Obligations
                   ------------------------------------------------------------
of, Seller etc.
---------------

     (a)  Seller shall not consolidate with or merge into any other Person or
convey or transfer its properties and assets substantially as an entirety to any
Person, unless:

          (i)  the Person formed by such consolidation or into which Seller is
     merged or the Person which acquires by conveyance or transfer the
     properties and assets of Seller substantially as an entirety shall be, if
     Seller is not the surviving entity, organized and existing under the laws
     of the United States of America or any State or the District of Columbia
     and shall expressly assume, by an agreement supplemental hereto, executed
     and

                                      28
<PAGE>

     delivered to the Owner Trustee, in form satisfactory to the Owner Trustee,
     the performance of every covenant and obligation of Seller, as applicable
     hereunder, and shall benefit from all the rights granted to Seller, as
     applicable hereunder. To the extent that any right, covenant or obligation
     of Seller, as applicable hereunder, is inapplicable to the successor
     entity, such successor entity shall be subject to such covenant or
     obligation, or benefit from such right, as would apply, to the extent
     practicable, to such successor entity. In furtherance hereof, in applying
     this Section 4.2 to a successor entity, Section 6.1 hereof shall be applied
          -----------                        -----------
     by reference to events of involuntary liquidation, receivership or
     conservatorship applicable to such successor entity as such be set forth in
     the officer's certificate described in Section 4.2(a)(ii);
                                            ------------------

          (ii)   Seller shall have delivered to the Owner Trustee and each
     Enhancement Provider an Officer's Certificate of Seller and an Opinion of
     Counsel, each stating that such consolidation, merger, conveyance or
     transfer and such supplemental agreement comply with this Section 4.2 and
                                                               -----------
     that all conditions precedent herein provided for relating to such
     transaction have been complied with and, in the case of the Opinion of
     Counsel, that such supplemental agreement is legal, valid and binding with
     respect to Seller; and

          (iii)  Seller shall have delivered notice of such consolidation,
     merger, conveyance or transfer to each Rating Agency.

     (b)  The obligations of Seller hereunder shall not be assignable nor shall
any Person succeed to the obligations of Seller hereunder except for mergers,
consolidations, assumptions or transfers in accordance with the provisions of
the foregoing paragraph.

     Section 4.3.  Limitation on Liability of Seller. Neither Seller nor any of
                   ---------------------------------
the directors or officers or employees or agents of Seller shall be under any
liability to the Issuer, the Owner Trustee, the Noteholders or any other Person
for any action taken or for refraining from the taking of any action pursuant to
this Agreement whether arising from express or implied duties under this
Agreement; provided, however, that this provision shall not protect Seller or
           --------  -------
any such person against any liability which would otherwise be imposed by reason
of willful misfeasance, bad faith or gross negligence in the performance of
duties or by reason of its willful misconduct hereunder; and provided, further,
                                                             --------  -------
that Seller shall be liable for any actual damages resulting directly from
Seller's material failure to perform any of its obligations under this
Agreement, but only if and to the extent that another remedy is not provided for
and available hereunder. Seller and any director or officer or employee or agent
of Seller may rely in good faith on any document of any kind prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder.

                                      29
<PAGE>

                                   ARTICLE V

                    OTHER MATTERS RELATING TO THE SERVICER

     Section 5.1.  Liability of the Servicer. The Servicer shall be liable in
                   -------------------------
accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer in such capacity herein.

     Section 5.2.  Merger or Consolidation of, or Assumption of the Obligations
                   ------------------------------------------------------------
of, the Servicer. The Servicer shall not consolidate with or merge into any
----------------
other Person or convey or transfer its properties and assets substantially as an
entirety to any Person, unless:

          (a)  the Person formed by such consolidation or into which the
     Servicer is merged or the Person which acquires by conveyance or transfer
     the properties and assets of the Servicer substantially as an entirety
     shall be if the Servicer is not the surviving entity, organized and
     existing under the laws of the United States of America or any State or the
     District of Columbia and shall expressly assume, by an agreement
     supplemental hereto, executed and delivered to the Owner Trustee in form
     satisfactory to the Owner Trustee, the performance of every covenant and
     obligation of the Servicer hereunder, and shall benefit from all the rights
     granted to the Servicer, as applicable hereunder. To the extent that any
     right, covenant or obligation of the Servicer, as applicable hereunder, is
     inapplicable to the successor entity, such successor entity shall be
     subject to such covenant or obligation, or benefit from such right, as
     would apply, to the extent practicable, to such successor entity;

          (b)  the Servicer has delivered to the Owner Trustee and each
     Enhancement Provider an Officer's Certificate and an Opinion of Counsel
     each stating that such consolidation, merger, conveyance or transfer and
     such supplemental agreement comply with this Section 5.2 and that all
                                                  -----------
     conditions precedent herein provided for relating to such transaction have
     been complied with and, in the case of the Opinion of Counsel, that such
     supplemental agreement is legal, valid and binding with respect to the
     Servicer; and

          (c)  the Servicer shall have delivered notice of such consolidation,
     merger, conveyance or transfer to each of the Rating Agencies.

     Section 5.3.  Limitation on Liability of the Servicer and Others. Except
                   --------------------------------------------------
as provided in Section 5.4 with respect to the Issuer and the Owner Trustee,
               -----------
neither the Servicer nor any of the directors or officers or employees or agents
of the Servicer shall be under any liability to the Issuer, the Owner Trustee,
the Indenture Trustee, the Noteholders or any other Person for any action taken
or for refraining from the taking of any action pursuant to this Agreement
whether arising from express or

                                      30
<PAGE>

implied duties under this Agreement; provided, however, that this provision
                                     --------  -------
shall not protect the Servicer or any such person against any liability which
would otherwise be imposed by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties or by reason of its willful misconduct
hereunder; and provided, further, that the Servicer shall be liable for any
               --------  -------
actual damages resulting directly from the Servicer's material failure to
perform any of its obligations under this Agreement, but only if and to the
extent that another remedy is not provided for and available hereunder. The
Servicer and any director or officer or employee or agent of the Servicer may
rely in good faith on any document of any kind prima facie properly executed and
submitted by any Person respecting any matters arising hereunder. The Servicer
shall not be under any obligation to appear in, prosecute or defend any legal
action which does not arise out of its activities in servicing the Receivables
in accordance with this Agreement which in its reasonable opinion may involve it
in any expense or liability.

     Section 5.4.  Indemnification of the Issuer and the Owner Trustee. The
                   ---------------------------------------------------
Servicer shall indemnify and hold harmless the Issuer, the Owner Trustee and the
Indenture Trustee from and against any loss, liability, expense, damage or
injury suffered or sustained by reason of any acts, omissions or alleged acts or
omissions arising out of activities of the Issuer or the Owner Trustee pursuant
to this Agreement, including those arising from acts or omissions of the
Servicer pursuant to this Agreement, including, but not limited to any judgment,
award, settlement, reasonable attorneys' fees and other costs or expenses
incurred in connection with the defense of any actual or threatened action,
proceeding or claim; provided, however, that the Servicer shall not indemnify
                     --------  -------
the Issuer or the Owner Trustee if such acts, omissions or alleged acts
constitute fraud, negligence or breach of fiduciary duty by the Owner Trustee;
provided further, that the Servicer shall not indemnify the Issuer, the Owner
-------- -------
Trustee, any Noteholders or any Note Owners for any liabilities, costs or
expenses of the Issuer with respect to any action taken by the Owner Trustee at
the request of such Noteholders; provided further, that the Servicer shall not
                                 -------- -------
indemnify the Issuer, or any Noteholders as to any losses, claims or damages
incurred by any of them in their capacities as investors, including losses
incurred as a result of defaulted Receivables or Receivables which are written
off as uncollectible; and provided further, that the Servicer shall not
                          -------- -------
indemnify the Issuer, or any Noteholders for any liabilities, costs or expenses
of the Issuer, or such Noteholders arising under any tax law, including any
federal, state or local income or franchise taxes or any other tax imposed on or
measured by income (or any interest or penalties with respect thereto or arising
from a failure to comply therewith) required to be paid by the Issuer, or such
Noteholders in connection herewith to any taxing authority. The provisions of
this indemnity shall run directly to and be enforceable by an injured party
subject to the limitations hereof.

     Any indemnification pursuant to this Section shall not be payable from the
assets of the Issuer.

                                      31
<PAGE>

     The obligations of the Servicer under this Section 5.4 shall survive the
                                                -----------
termination of the Issuer and the resignation or removal of the Owner Trustee.

     Section 5.5.   The Servicer Not to Resign. The Servicer shall not resign
                    --------------------------
from the obligations and duties hereby imposed on it except upon determination
that (i) the performance of its duties hereunder is or becomes impermissible
under applicable law and (ii) there is no reasonable action which the Servicer
could take to make the performance of its duties hereunder permissible under
applicable law. Any such determination permitting the resignation of the
Servicer shall be evidenced as to clause (i) above by an Opinion of Counsel to
such effect delivered to the Owner Trustee. No such resignation shall become
effective until the Indenture Trustee or a Successor Servicer shall have assumed
the responsibilities and obligations of the Servicer in accordance with Section
                                                                        -------
7.2. If the Indenture Trustee is unable within 120 days of the date of such
---
determination to appoint a Successor Servicer, the Indenture Trustee shall serve
as Successor Servicer hereunder subject to the provisions of Section 7.2.
                                                             -----------

     Section 5.6.   Access to Certain Documentation and Information Regarding
                    ---------------------------------------------------------
the Receivables. The Servicer shall provide to the Indenture Trustee access to
---------------
the documentation regarding the Accounts and the Receivables in such cases where
the Indenture Trustee is required in connection with the enforcement of the
rights of the Noteholders, or by applicable statutes or regulations to review
such documentation, such access being afforded without charge but only (i) upon
reasonable request, (ii) during normal business hours, (iii) subject to the
Servicer's normal security and confidentiality procedures and (iv) at offices
designated by the Servicer. Nothing in this Section 5.6 shall derogate from the
                                            -----------
obligation of Seller, the Indenture Trustee or the Servicer to observe any
applicable law prohibiting disclosure of information regarding the Obligors and
the failure of the Servicer to provide access as provided in this Section 5.6 as
                                                                  -----------
a result of such obligation shall not constitute a breach of this Section 5.6.
                                                                  -----------

     Section 5.7.   Delegation of Duties. It is understood and agreed by the
                    --------------------
parties hereto that the Servicer may delegate all or a portion of its duties
hereunder to Spiegel. In addition, in the ordinary course of business, the
Servicer may at any time delegate any duties hereunder to any other Person who
agrees to conduct such duties in accordance with the Charge Account Guidelines.
Any such delegations shall not relieve the Servicer of its liability and
responsibility with respect to such duties, and shall not constitute a
resignation within the meaning of Section 5.5.
                                  -----------

     Section 5.8.   Examination of Records. The Servicer shall clearly and
                    ----------------------
unambiguously identify each Account (including any Additional Account designated
pursuant to Section 2.7) in its computer or other records to reflect that the
            -----------
Receivables arising in such Account have been transferred by Seller to the
Issuer pursuant to this Agreement. The Servicer shall, prior to the sale or
transfer to a third

                                      32
<PAGE>

party of any receivable held in its custody, examine its computer and other
records to determine that such receivable is not a Receivable.

                                  ARTICLE VI

                               INSOLVENCY EVENTS

     Section 6.1.   Rights upon the Occurrence of an Insolvency Event. If the
                    -------------------------------------------------
Seller shall consent or fail to object to the appointment of a bankruptcy
trustee or conservator, receiver or liquidator in any bankruptcy proceeding or
other insolvency, readjustment of debt, marshaling of assets and liabilities or
similar proceedings of or relating to Seller of or relating to all or
substantially all of Seller's property, or the commencement of an action seeking
a decree or order of a court or agency or supervisory authority having
jurisdiction in the premises for the appointment of a bankruptcy trustee or
conservator, receiver or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings, or for the winding-
up, insolvency, bankruptcy, reorganization, conservatorship, receivership or
liquidation of such entity's affairs, or notwithstanding an objection by such
Seller any such action shall have remained undischarged or unstayed for a period
of sixty (60) days or upon entry of any order or decree providing for such
relief; or such Seller shall admit in writing its inability to pay its debts
generally as they become due, file, or consent or fail to object (or object
without dismissal of any such filing within sixty (60) days of such filing) to
the filing of, a petition to take advantage of any Debtor Relief Law, make an
assignment for the benefit of its creditors or voluntarily suspend payment of
its obligations (any such act or occurrence with respect to any Person being an
"Insolvency Event"), such Seller shall on the day any such Insolvency Event
 ----------------
occurs immediately cease to transfer Principal Receivables to the Issuer and
shall promptly give notice to the Indenture Trustee and the Owner Trustee
thereof. Notwithstanding any cessation of the transfer to the Issuer of
additional Principal Receivables, Principal Receivables transferred to the
Issuer prior to the occurrence of such Insolvency Event, Collections in respect
of such Principal Receivables and Finance Charges (whenever created) accrued in
respect of such Principal Receivables shall continue to be a part of the Issuer
Assets and shall be allocated and distributed to Noteholders in accordance with
the terms of the Indenture and each Indenture Supplement.

                                  ARTICLE VII

                               SERVICER DEFAULTS

     Section 7.1.   Servicer Defaults. If any one of the following events (a
                    -----------------
"Servicer Default") shall occur and be continuing after the SMT Termination
-----------------
Date:

            (a)     any failure by the Servicer to make any payment, transfer or
     deposit or to give instructions or notice to the Indenture Trustee pursuant
     to the Indenture or to make any required drawing, withdrawal, or payment
     under any Enhancement on or before the date occurring five Business Days
     after the

                                      33
<PAGE>

     date such payment, transfer, deposit, withdrawal or drawing, or such
     instruction or notice is required to be made or given, as the case may be,
     under the terms of this Agreement; or

          (b) 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 this Agreement which has a material adverse effect on the
     Noteholders, which continues unremedied for a period of 60 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 Owner Trustee, or to
     the Servicer and the Owner Trustee by the Noteholders holding not less than
     50% of the Outstanding principal amount of any Series adversely affected
     thereby and continues to materially adversely affect such Noteholders for
     such period; or the Servicer's delegation of its duties under this
     Agreement except as permitted by Section 5.7; or
                                      -----------

          (c) any representation, warranty or certification made by the Servicer
     in this Agreement or in any certificate delivered pursuant to this
     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 60 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 Owner Trustee, or to the
     Servicer and the Owner Trustee by the Noteholders holding not less than 50%
     of the outstanding principal amount of any Series adversely affected
     thereby and continues to materially adversely affect such Noteholders for
     such period, or if such failure cannot be cured within such 60-day period
     owing to causes beyond the control of the Servicer, if the Servicer shall
     fail to proceed promptly to cure the same and prosecute the curing of such
     failure with diligence and continuity; or

          (d) the Servicer shall (a) become insolvent, (b) fail to pay its debts
     generally as they become due, (c) voluntarily seek, consent to, or
     acquiesce in the benefit or benefits of any Debtor Relief Law, or (d)
     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; then, so long as such Servicer
     Default shall not have been remedied, either the Indenture Trustee, or the
     Noteholders holding more than 50% of the aggregate outstanding principal
     amount of the Notes, by notice then given in writing to the Servicer (and
     to the Owner Trustee if given by the Noteholders) (a "Termination Notice"),
                                                           ------------------
     may terminate all of the rights and obligations of the Servicer as Servicer
     under this Agreement and in and to the Receivables and the proceeds
     thereof. After receipt by the Servicer of such Termination Notice, and on
     the date that a Successor Servicer shall have

                                      34
<PAGE>

     been appointed by the Owner Trustee pursuant to Section 7.2, all authority
                                                     -----------
     and power of the Servicer under this Agreement shall pass to and be vested
     in a Successor Servicer; and the Indenture Trustee is hereby authorized and
     empowered (upon the failure of the Servicer to cooperate) to execute and
     deliver, on behalf of the Servicer, as attorney-in-fact or otherwise, all
     documents and other instruments upon the failure of the Servicer to execute
     or deliver such documents or instruments, and to do and accomplish all
     other acts or things necessary or appropriate to effect the purposes of
     such transfer of servicing rights. The Servicer agrees to cooperate with
     the Owner Trustee and such Successor Servicer in effecting the termination
     of the responsibilities and rights of the Servicer to conduct servicing
     hereunder, including the transfer to such Successor Servicer of all
     authority of the Servicer to service the Receivables provided for under
     this Agreement, including all authority over all Collections which shall on
     the date of transfer be held by the Servicer for deposit, or which have
     been deposited by the Servicer, in any Collection Account or Series
     Account, or which shall thereafter be received with respect to the
     Receivables, and in assisting the Successor Servicer and in enforcing all
     rights to Insurance Proceeds. The Servicer shall promptly transfer its
     electronic records relating to the Receivables to the Successor Servicer in
     such electronic form as the Successor Servicer may reasonably request and
     shall promptly transfer to the Successor Servicer all other records,
     correspondence and documents necessary for the continued servicing of the
     Receivables in the manner and at such times as the Successor Servicer shall
     reasonably request. To the extent that compliance with this Section 7.1
                                                                 -----------
     shall require the Servicer to disclose to the Successor Servicer
     information of any kind which the Servicer reasonably deems to be
     confidential, the Successor Servicer shall be required to enter into such
     customary licensing and confidentiality agreements as the Servicer shall
     deem necessary to protect its interest. The Servicer shall, on the date of
     any servicing transfer, transfer all of its rights and obligations, if any,
     in respect of any Enhancement to the Successor Servicer.

     Section 7.2.   Owner Trustee to Act; Appointment of Successor. (a) On and
                    ----------------------------------------------
after the receipt by the Servicer of a Termination Notice pursuant to Section
                                                                      -------
7.1, the Servicer shall continue to perform all servicing functions under this
---
Agreement until the date specified in the Termination Notice or otherwise
specified by the Owner Trustee in writing or, if no such date is specified in
such Termination Notice or otherwise specified by the Owner Trustee, until a
date mutually agreed upon by the Servicer and the Owner Trustee. The Owner
Trustee shall as promptly as possible after the giving of a Termination Notice
appoint (with the consent of the Noteholders holding greater than 50% of the
Outstanding principal amount of each Series) a successor servicer (the
"Successor Servicer"), and such Successor Servicer shall accept its appointment
-------------------
by a written assumption in a form acceptable to the Owner Trustee. The Owner
Trustee may obtain bids from any potential successor servicer. If the Owner
Trustee is unable to obtain any bids from any potential successor

                                      35
<PAGE>

servicer and the Servicer delivers an Officer's Certificate to the effect that
it cannot in good faith cure the Servicer Default which gave rise to a transfer
of servicing, then the Owner Trustee shall offer Seller the right to accept
retransfer of all the Receivables and Seller may accept retransfer of all the
Receivables, provided, however, that if the long-term unsecured debt obligations
             --------  -------
of Seller are not rated at the time of such purchase at least Baa-3 by Moody's
and BBB- by Standard & Poor's, no such retransfer shall occur unless Seller
shall deliver an Opinion of Counsel reasonably acceptable to the Owner Trustee
that such retransfer would not constitute a fraudulent conveyance of Seller. The
retransfer deposit amount for such a retransfer shall be equal to the higher of
the sum of (i) the outstanding principal balance of the Notes, plus accrued
interest thereon, at the Note Rate, through the date of retransfer and (ii) the
average bid price quoted by two recognized dealers for a similar security rated
in the highest rating category by Moody's and Standard & Poor's and having a
remaining maturity substantially similar to the remaining maturity of the Notes.
In the event that a Successor Servicer has not been appointed and has not
accepted its appointment at the time when the Servicer ceases to act as
Servicer, the Owner Trustee without further action shall automatically be
appointed the Successor Servicer. Notwithstanding the above, the Owner Trustee
shall, if it is legally unable so to act, petition a court of competent
jurisdiction to appoint any established financial institution having a net worth
of not less than $100,000,000 and whose regular business includes the servicing
of installment sales charge, credit and/or credit card account receivables as
the Successor Servicer hereunder.

     (b) Upon its appointment, the Successor Servicer shall be the successor in
all respects to the Servicer with respect to servicing functions under this
Agreement and shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Servicer by the terms and provisions
hereof, and all references in this Agreement to the Servicer shall be deemed to
refer to the Successor Servicer. Any Successor Servicer, by its acceptance of
its appointment, will automatically agree to be bound by the terms and
provisions of any Enhancement to the extent that such terms apply to the
Servicer.

     (c) In connection with such appointment and assumption, the Owner Trustee
shall be entitled to such compensation, or may make such arrangements for the
compensation of the Successor Servicer out of Collections, as it and such
Successor Servicer shall agree; provided, however, that no such compensation
                                --------  -------
shall be in excess of the Monthly Servicing Fees permitted to the Servicer
pursuant to Section 3.2. The Holder of the Collateral Certificate agrees that if
            -----------
the Servicer is terminated hereunder, it will agree, at the request of the Owner
Trustee or any Successor Servicer, to deposit a portion of the Collections in
respect of Finance Charge Receivables that it is entitled to receive pursuant to
the Indenture, to pay its share of the compensation of the Successor Servicer.

     (d) All authority and power granted to the Servicer under this Agreement
shall automatically cease and terminate upon termination of the Issuer pursuant
to the

                                      36
<PAGE>

Indenture and shall pass to and be vested in Seller and, Seller is hereby
authorized and empowered to execute and deliver, on behalf of the Servicer, as
attorney-in-fact or otherwise, all documents and other instruments, and to do
and accomplish all other acts or things necessary or appropriate to effect the
purposes of such transfer of servicing rights. The Servicer agrees to cooperate
with Seller in effecting the termination of the responsibilities and rights of
the Servicer to conduct servicing on the Receivables. The Servicer shall
transfer its electronic records relating to the Receivables to Seller in such
electronic form as Seller may reasonably request and shall transfer all other
records, correspondence and documents to Seller in the manner and at such times
as Seller shall reasonably request. To the extent that compliance with this
Section 7.2 shall require the Servicer to disclose to Seller information of any
-----------
kind which the Servicer deems to be confidential, Seller shall be required to
enter into such customary licensing and confidentiality agreements as the
Servicer shall deem necessary to protect its interests.

     Section 7.3.   Notification to Noteholders. Upon the occurrence of any
                    ---------------------------
Servicer Default, the Servicer shall give prompt written notice thereof to the
Owner Trustee and the Owner Trustee shall give notice to the Noteholders at
their respective addresses appearing in the Note Register. Upon any termination
or appointment of a Successor Servicer pursuant to this Article VII, the Owner
                                                        -----------
Trustee shall give prompt written notice thereof to Noteholders at their
respective addresses appearing in the Note Register. A copy of any notice given
pursuant to this Section 7.3 shall be delivered to each Rating Agency.
                 -----------

     Section 7.4.   Waiver of Past Defaults. The Noteholders holding not less
                    -----------------------
than 50% of the Outstanding principal amount of any Series affected thereby may,
on behalf of all Noteholders, waive any default by the Servicer or Seller in the
performance of its obligations hereunder and its consequences, except a default
in the failure to make any required deposits or payments in accordance with the
Indenture, provided, however, that no such waiver shall affect any rights of, or
           --------  -------
obligations to, any Enhancement Provider hereunder. Upon any such waiver of a
past default, such default shall cease to exist, and any default arising
therefrom shall be deemed to have been remedied for every purpose of this
Agreement. No such waiver shall extend to any subsequent or other default or
impair any right consequent thereon except to the extent expressly so waived.

                                 ARTICLE VIII

                                  TERMINATION

     Section 8.1.  Termination of Agreement. This Agreement and the respective
                   ------------------------
obligations and responsibilities of the Issuer, Seller and the Servicer under
this Agreement shall terminate, except with respect to the duties described in
Section 5.4, on the Trust Termination Date.
-----------

                                      37
<PAGE>

                                  ARTICLE IX

                           MISCELLANEOUS PROVISIONS

     Section 9.1.  Amendment; Waiver of Past Defaults.
                   ----------------------------------

     (a) This Agreement may be amended from time to time by the Servicer, Seller
and the Issuer, by a written instrument signed by each of them, without the
consent of the Indenture Trustee or any of the Noteholders; provided that (i)
                                                            --------
Seller shall have delivered to the Indenture Trustee and the Owner Trustee an
Officer's Certificate, dated the date of any such Amendment, stating that Seller
reasonably believes that such amendment will not have an Adverse Effect and (ii)
the Rating Agency Condition shall have been satisfied with respect to any such
amendment. Additionally, notwithstanding the preceding sentence, this Agreement
will be amended by the Servicer and the Issuer at the direction of Seller
without the consent of the Indenture Trustee or any of the Noteholders or Series
Enhancers to add, modify or eliminate such provisions as may be necessary or
advisable in order to enable all or a portion of the Issuer (1) to qualify as,
and to permit an election to be made to cause the Issuer to be treated as, a
"financial asset securitization investment trust" as described in the provisions
of Section 860L of the Code, and (2) to avoid the imposition of state or local
income or franchise taxes imposed on the Issuer's property or its income;
provided, however, that (A) Seller delivers to the Indenture Trustee and the
--------  -------
Owner Trustee an Officer's Certificate to the effect that the proposed
amendments meet the requirements set forth in this Section, (B) the Rating
Agency Condition has been satisfied, and (C) such amendment does not affect the
rights, duties or obligations of the Indenture Trustee or the Owner Trustee
hereunder. The amendments which Seller may make without the consent of
Noteholders or Series Enhancers pursuant to the preceding sentence may include
the addition of a sale of Receivables.

     (b) This Agreement may also be amended from time to time by the Servicer,
Seller and the Issuer, with the consent of the Noteholders holding more than 50%
of the Outstanding principal amount of the Notes of each Series affected thereby
for which Seller has not delivered an Officer's Certificate stating that there
is no Adverse Effect, for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Noteholders; provided, however, that
                                                       --------  -------
no such amendment shall (i) reduce in any manner the amount of or delay the
timing of any distributions (changes in Pay Out Events or Events of Default that
decrease the likelihood of the occurrence thereof shall not be considered delays
in the timing of distributions for purposes of this clause) to be made to
Noteholders or deposits of amounts to be so distributed or the amount available
under any Series Enhancement without the consent of each affected Noteholder,
(ii) change the definition of or the manner of calculating the interest of any
Noteholder without the consent of each affected Noteholder, (iii) reduce the
aforesaid percentage required to consent to any such amendment without the
consent of each Noteholder or (iv) adversely affect the rating of any Series or
Class by each Rating Agency without the consent of the

                                      38
<PAGE>

Noteholders of such Series or Class holding more than 50% of the Outstanding
principal amount of the Notes of such Series or Class affected thereby.

     (c) Promptly after the execution of any such amendment or consent (other
than an amendment pursuant to paragraph (a)), the Issuer shall furnish
notification of the substance of such amendment to the Indenture Trustee and
each Noteholder, and the Servicer shall furnish notification of the substance of
such amendment to each Rating Agency and each Series Enhancer.

     (d) It shall not be necessary for the consent of Noteholders under this

Section 9.1 to approve the particular form of any proposed amendment, but it
-----------
shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Noteholders shall be subject to such reasonable
requirements as the Indenture Trustee may prescribe.

     (e) Notwithstanding anything in this Section 9.1 to the contrary, no
                                          -----------
amendment may be made to this Agreement which would adversely affect in any
material respect the interests of any Series Enhancer without the consent of
such Series Enhancer.

     (f) Any Indenture Supplement executed in accordance with the provisions of
Article X of the Indenture shall not be considered an amendment of this
---------
Agreement for the purposes of this Section 9.1.
                                   -----------

     (g) The Noteholders holding more than [66-2/3]% of the outstanding
principal amount of the Notes of each Series or, with respect to any Series with
two (2) or more Classes, of each Class (or, with respect to any default that
does not relate to all Series, [66-2/3]% of the outstanding principal amount of
the Notes of each Series to which such default relates or, with respect to any
such Series with two or more Classes, of each Class) may, on behalf of all
Noteholders, waive any default by Seller or the Servicer in the performance of
their obligations hereunder and its consequences, except the failure to make any
distributions required to be made to Noteholders or to make any required
deposits of any amounts to be so distributed. Upon any such waiver of a past
default, such default shall cease to exist, and any default arising therefrom
shall be deemed to have been remedied for every purpose of this Agreement. No
such waiver shall extend to any subsequent or other default or impair any right
consequent thereon except to the extent expressly so waived.

     (h) The Owner Trustee may, but shall not be obligated to, enter into any
such amendment which affects the Owner Trustee's rights, duties or immunities
under this Agreement or otherwise. In connection with the execution of any
amendment hereunder, the Owner Trustee shall be entitled to receive the Opinion
of Counsel described in Section 9.2(d).
                        --------------

     Section 9.2.  Protection of Right, Title and Interest to Issuer.
                   -------------------------------------------------

                                      39
<PAGE>

     (a) Seller shall cause this Agreement, all amendments and supplements
hereto and all financing statements and continuation statements and any other
necessary documents covering the Indenture Trustee's and the Issuer's right,
title and interest to the Issuer to be promptly recorded, registered and filed,
and at all times to be kept recorded, registered and filed, all in such manner
and in such places as may be required by law fully to preserve and protect the
right, title and interest of the Indenture Trustee, Noteholders and the Issuer
hereunder to all property comprising the Issuer. Seller shall deliver to the
Owner Trustee and Indenture Trustee file-stamped copies of, or filing receipts
for, any document recorded, registered or filed as provided above, as soon as
available following such recording, registration or filing. Seller shall
cooperate fully with the Servicer in connection with the obligations set forth
above and will execute any and all documents reasonably required to fulfill the
intent of this paragraph.

     (b) Within thirty (30) days after the Seller makes any change in its name,
identity or corporate structure which would make any financing statement or
continuation statement filed in accordance with paragraph (a) seriously
misleading within the meaning of Section 9-402(7) (or any comparable provision)
of the UCC, such Seller shall give the Owner Trustee and the Indenture Trustee
notice of any such change and shall file such financing statements or amendments
as may be necessary to continue the perfection of the Issuer's security interest
or ownership interest in the Receivables and the proceeds thereof.

     (c) Seller shall give the Owner Trustee and the Indenture Trustee prompt
notice of any relocation of its chief principal executive office or any change
in the jurisdiction under whose laws it is organized and whether, as a result of
such relocation or change, the applicable provisions of the UCC would require
the filing of any amendment of any previously filed financing or continuation
statement or of any new financing statement and shall file such financing
statements or amendments as may be necessary to perfect or to continue the
perfection of the Issuer's security interest in the Receivables and the proceeds
thereof. Seller shall at all times maintain its chief principal executive
offices within the United States and shall at all times be organized under the
laws of a jurisdiction located within the United States.

     (d) Seller shall deliver to the Owner Trustee and the Indenture Trustee (i)
upon the execution and delivery of each amendment of this Agreement, an Opinion
of Counsel to the effect specified in Exhibit F-1; (ii) on each date specified
                                      -----------
in Section 2.7(c)(ix) with respect to Aggregate Additions to be designated as
   ------------------
Accounts, an Opinion of Counsel substantially in the form of Exhibit F-2; and
                                                             -----------
(iii) on or before April 30 of each year, beginning with April 30, 2001, an
Opinion of Counsel substantially in the form of Exhibit F-3.
                                                -----------

     Section 9.3.   GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
                    -------------
ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES

                                      40
<PAGE>

HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

     Section 9.4.  Notices; Payments.
                   -----------------

     (a) All demands, notices, instructions, directions and communications
(collectively, "Notices") under this Agreement shall be in writing and shall be
                -------
deemed to have been duly given if personally delivered at, mailed by registered
mail, return receipt requested, or sent by facsimile transmission (i) in the
case of Seller, to Spiegel Credit Corporation III, 400 West 9th Street, Suite
101B, Wilmington, Delaware 19801, Attn: Treasurer, (ii) in the case of the
Servicer, to First Consumers National Bank, P.O. Box 5280, Portland, Oregon
97208, Attn: President,  (iii) in the case of the Issuer or the Owner Trustee,
to the Corporate Trust Office, Attn: Indenture Trust Division, (iv) in the case
of the Rating Agency for a particular Series, the address, if any, specified in
the Indenture Supplement relating to such Series, and (v) to any other Person as
specified in the Indenture or any Indenture Supplement; or, as to each party, at
such other address or facsimile number as shall be designated by such party in a
written notice to each other party.

     (b) Any Notice required or permitted to be given to a Holder of Registered
Notes shall be given by first-class mail, postage prepaid, at the address of
such Holder as shown in the Note Register. Any Notice so mailed within the time
prescribed in this Agreement shall be conclusively presumed to have been duly
given, whether or not the Noteholder receives such Notice. In addition, in the
case of any Series or Class with respect to which any Notes are outstanding, any
Notice required or permitted to be given to Noteholders of such Series or Class
shall be published in an Authorized Newspaper within the time period prescribed
in this Agreement.

     Section 9.5.  Severability of Provisions. If any one or more of the
                   --------------------------
covenants, agreements, provisions or terms of this Agreement shall for any
reason whatsoever be held invalid, then such provisions shall be deemed
severable from the remaining provisions of this Agreement and shall in no way
affect the validity or enforceability of the remaining provisions or of the
Notes or the rights of the Noteholders.

     Section 9.6.  Further Assurances. Seller and the Servicer agree to do and
                   ------------------
perform, from time to time, any and all acts and to execute any and all further
instruments required or reasonably requested by the Owner Trustee and the
Indenture Trustee more fully to effect the purposes of this Agreement, including
the execution of any financing statements or continuation statements relating to
the Receivables for filing under the provisions of the UCC of any applicable
jurisdiction.

     Section 9.7.  No Waiver; Cumulative Remedies. No failure to exercise and
                   ------------------------------
no delay in exercising, on the part of the Owner Trustee, the Indenture Trustee
or the Noteholders, any right, remedy, power or privilege under this Agreement
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right,

                                      41
<PAGE>

remedy, power or privilege under this Agreement preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges provided under this Agreement are
cumulative and not exhaustive of any rights, remedies, powers and privileges
provided by law.

     Section 9.8.  Counterparts. This Agreement 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 together shall constitute one and the
same instrument.

     Section 9.9.  Third-Party Beneficiaries. This Agreement will inure to the
                   -------------------------
benefit of and be binding upon the parties hereto, the Indenture Trustee, the
Noteholders, and any Series Enhancer. Except as otherwise expressly provided in
this Agreement, no other Person will have any right or obligation hereunder.

     Section 9.10. Actions by Noteholders.
                   ----------------------

     (a) Wherever in this Agreement a provision is made that an action may be
taken or a Notice given by Noteholders, such action or Notice may be taken or
given by any Noteholder, unless such provision requires a specific percentage of
Noteholders.

     (b) Any Notice, request, authorization, direction, consent, waiver or other
act by the Noteholder shall bind such Holder and every subsequent Holder of such
Note and of any Note issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof in respect of anything done or omitted to
be done by the Owner Trustee, Seller or the Servicer in reliance thereon,
whether or not notation of such action is made upon such Note.

     Section 9.11. Rule 144A Information. For so long as any of the Notes of
                   ---------------------
any Series or Class are "restricted securities" within the meaning of Rule
144(a)(3) under the Securities Act, each of Seller, the Owner Trustee, the
Indenture Trustee, the Servicer and any Series Enhancer agree to cooperate with
each other to provide to any Noteholders of such Series or Class and to any
prospective purchaser of Notes designated by such Noteholder, upon the request
of such Noteholder or prospective purchaser, any information required to be
provided to such holder or prospective purchaser to satisfy the condition set
forth in Rule 144A(d)(4) under the Securities Act.

     Section 9.12. Merger and Integration. Except as specifically stated
                   ----------------------
otherwise herein, this Agreement sets forth the entire understanding of the
parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by this Agreement. This Agreement may not be
modified, amended, waived or supplemented except as provided herein.

                                      42
<PAGE>

     IN WITNESS WHEREOF, Seller, the Servicer and the Issuer have caused this
Transfer and Servicing Agreement to be duly executed by their respective
officers as of the day and year first above written.

                                   SPIEGEL CREDIT CORPORATION III,
                                   Seller

                                   By:_________________________________
                                   Name:
                                   Title:

                                   FIRST CONSUMERS NATIONAL BANK,
                                   Servicer

                                   By:_________________________________
                                   Name:
                                   Title:

                                   SPIEGEL CREDIT CARD MASTER
                                   NOTE TRUST, Issuer

                                   By:________________________________,
                                   not in its individual capacity but solely as
                                   Owner Trustee on behalf of the Issuer

                                   By:_________________________________
                                   Name:
                                   Title:

Acknowledged and Accepted:

[__________________________________],
not in its individual capacity but
solely as Indenture Trustee

By:______________________________________
Name:
Title:

             [Signature Page to Transfer and Servicing Agreement]
<PAGE>

                                   EXHIBIT A
                                      to
                       TRANSFER AND SERVICING AGREEMENT

                       FORM OF ASSIGNMENT OF RECEIVABLES
                            IN ADDITIONAL ACCOUNTS

     (As required by Section 2.6 of the Transfer and Servicing Agreement)
                     -----------

     ASSIGNMENT No. __ OF RECEIVABLES IN ADDITIONAL ACCOUNTS dated as of
_____________, by and among SPIEGAL CREDIT CORPORATION III, a Delaware
corporation, as Seller (the "Seller"), FIRST CONSUMERS NATIONAL BANK, a national
                             ------
banking association, as Servicer (the "Servicer") and SPIEGEL CREDIT CARD MASTER
                                       --------
NOTE TRUST (the "Issuer"), pursuant to the Transfer and Servicing Agreement
                 ------
referred to below.

                                  WITNESSETH

     WHEREAS, the Seller, the Servicer and the Issuer are parties to the
Transfer and Servicing Agreement, dated as of ____________ __, 2000 (the
"Agreement");
----------

     WHEREAS, pursuant to the Agreement, the Seller wishes to designate
Additional Accounts to be included as Accounts and to convey the Receivables of
such Additional Accounts (as each such term is defined in the Agreement),
whether now existing or hereafter created, to the Issuer; and

     WHEREAS, the Issuer is willing to accept such designation and conveyance
subject to the terms and conditions hereof;

     NOW, THEREFORE, the Seller, the Servicer and the Issuer hereby agree as
follows:

     1.   Defined Terms. All capitalized terms used herein shall have the
          -------------
meanings ascribed to them in the Agreement unless otherwise defined herein.

     "Addition Date" means, with respect to the Additional Accounts designated
      -------------
hereby, ____________, 200__.

     "Notice Date" means, with respect to the Additional Accounts designated
      -----------
hereby, ____________, ____, (which shall be a date on or prior to the fifth
Business Day prior to the Addition Date).

     2.   Designation of Additional Accounts. On or before the date hereof, the
          ----------------------------------
Seller will deliver to the Owner Trustee a computer file or microfiche list
containing a true and complete schedule identifying all such Additional Accounts
(the "Additional Accounts") specifying for each such Additional Account, as of
      -------------------
the

                                  Exhibit A-1
<PAGE>

Notice Date, its account number, the aggregate amount outstanding in such
Account and the aggregate amount of Principal Receivables outstanding in such
Account, which computer file or microfiche list shall supplement Schedule 1 to
                                                                 ----------
the Agreement.

     3.   Conveyance of Receivables. (a) The Seller does hereby transfer,
          -------------------------
assign, set over and otherwise convey, without recourse except as set forth in
the Transfer and Servicing Agreement, to the Issuer, all its right, title and
interest in, to and under the Receivables of such Additional Accounts existing
at the close of business on the Notice Date and thereafter created from time to
time until the termination of the Issuer, all Recoveries related thereto, all
monies due or to become due and all amounts received or receivable with respect
thereto and all proceeds thereof. The foregoing does not constitute and is not
intended to result in the creation or assumption by the Issuer, the Owner
Trustee, the Indenture Trustee, any Noteholders or any Series Enhancer of any
obligation of the Servicer, the Seller or any other Person in connection with
the Accounts, the Receivables or under any agreement or instrument relating
thereto, including any obligation to Obligors, merchant banks, merchants
clearance systems, or insurers.

          (b)  The Seller agrees to record and file, at its own expense,
financing statements (and continuation statements when applicable) with respect
to the Receivables in Additional Accounts existing on the Notice Date and
thereafter created meeting the requirements of applicable state law in such
manner and in such jurisdictions as are necessary to perfect, and maintain
perfection of, the sale and assignment of its interest in such Receivables to
the Issuer, and to deliver a file-stamped copy of each such financing statement
or other evidence of such filing to the Owner Trustee on or prior to the
Addition Date. The Owner Trustee shall be under no obligation whatsoever to file
such financing or continuation statements or to make any other filing under the
UCC in connection with such sale and assignment.

          (c)  In connection with such sale, the Seller further agrees, at its
own expense, on or prior to the date of this Assignment, to indicate in the
appropriate computer files that Receivables created in connection with the
Additional Accounts and designated hereby have been conveyed to the Issuer
pursuant to the Agreement and this Assignment.

          (d)  The Seller does hereby grant to the Issuer a security interest in
all of its right, title and interest, whether now owned or hereafter acquired,
in and to the Receivables in the Additional Accounts existing on the Notice Date
and thereafter created, all Recoveries related thereto, all monies due or to
become due and all amounts received or receivable with respect thereto, all
money, accounts, general intangibles, chattel paper, instruments, documents,
goods, investment property, deposit accounts, certificates of deposit, letters
of credit, and advices of credit consisting of, arising from or related to the
foregoing, and all proceeds thereof. This Assignment constitutes a security
agreement under the UCC.

                                  Exhibit A-2
<PAGE>

     4.   Acceptance by Issuer. The Issuer hereby acknowledges its acceptance of
          --------------------
all right, title and interest to the property, existing on the Notice Date and
thereafter created, conveyed to the Issuer pursuant to Section 3(a) of this
                                                       ------------
Assignment. The Issuer further acknowledges that, prior to or simultaneously
with the execution and delivery of this Assignment, the Seller delivered to the
Owner Trustee the computer file or microfiche list described in Section 2 of
                                                                ---------
this Assignment.

     5.   Representations and Warranties of the Seller. The Seller hereby
          --------------------------------------------
represents and warrants to the Issuer as of the Addition Date:

          (a)  Legal Valid and Binding Obligation. This Assignment constitutes a
               ----------------------------------
     legal, valid and binding obligation of the Seller enforceable against the
     Seller in accordance with its terms, except as such enforceability may be
     limited by applicable bankruptcy, insolvency, reorganization, moratorium or
     other similar laws now or hereafter in effect affecting the enforcement of
     creditors' rights in general and the rights of creditors of national
     banking associations and except as such enforceability may be limited by
     general principles of equity (whether considered in a suit at law or in
     equity);

          (b)  Schedule 1. Schedule 1 to this Assignment and the computer file
               ----------
     or microfiche list delivered pursuant to Section 2 of this Assignment is an
                                              ---------
     accurate and complete listing in all material respects of all the
     Additional Accounts as of the Addition Date and the information contained
     therein with respect to the identity of such Additional Accounts and the
     Receivables existing thereunder is true and correct in all material
     respects as of the Addition Date;

          (c)  Eligibility of Accounts. Each Additional Account designated
               -----------------------
     hereby is an Eligible Account;

          (d)  Selection Procedures. No selection procedures believed by the
               --------------------
     Transferror to be materially adverse to the interests of the Noteholders
     were utilized in selecting the Additional Accounts designated hereby;

          (e)  Insolvency. The Seller is not insolvent and, after giving effect
               ----------
     to the conveyance set forth in Section 3 of this Assignment, will not be
                                    ---------
     insolvent;

          (f)  Security Interest. This Assignment constitutes (i) a valid
               -----------------
     transfer and assignment to the Issuer of all right, title and interest of
     the Seller in and to Receivables now existing and hereafter created in the
     Additional Accounts designated hereby, and all proceeds (as defined in the
     UCC as in effect in the State of Illinois) of such Receivables and
     Insurance Proceeds relating thereto, and such Receivables and any
     Collections, Recoveries and other proceeds

                                  Exhibit A-3
<PAGE>

     thereof and Insurance Proceeds relating thereto will be held by the Issuer
     free and clear of any Lien of any Person except for (x) Liens permitted
     under Section 2.5(b) of the Transfer and Servicing Agreement, (y) the
           --------------
     interest of the Seller as holder of the Collateral Certificate and (z) the
     Seller's right to receive interest accruing on, and investment earnings in
     respect of, the Collection Subaccount and Series Account as provided in the
     Transfer and Servicing Agreement; and/or (ii) it constitutes a grant of a
     security interest (as defined in the UCC as in effect in the State of
     Illinois) in such property to the Issuer, which is enforceable with respect
     to the existing Receivables in the Additional Accounts designated hereby,
     the Collections, Recoveries and other proceeds (as defined in the UCC as in
     effect in the State of Illinois) thereof and Insurance Proceeds relating
     thereto upon the conveyance of such Receivables to the Issuer, and which
     will be enforceable with respect to the Receivables thereafter created in
     respect of the Additional Accounts designated hereby, the Collections,
     Recoveries and other proceeds (as defined in the UCC as in effect in the
     State of Illinois) thereof and Insurance Proceeds relating thereto, upon
     such creation; and (iii) if this Assignment constitutes the grant of a
     security interest to the Issuer in such property, upon the filing of a
     financing statement described in Section 3 of this Assignment with respect
                                      ---------
     to the Additional Accounts designated hereby and in the case of the
     Receivables of such Additional Accounts thereafter created and the
     Collections, Recoveries and other proceeds (as defined in the UCC as in
     effect in the State of Illinois) thereof, and Insurance Proceeds relating
     to such Receivables, upon such creation, the Issuer shall have a first
     priority perfected security interest in such property, except for Liens
     permitted under Section 2.5(b) of the Transfer and Servicing Agreement, the
                     --------------
     the interest of the Seller as holder of the Collateral Certificate and the
     Seller's right to receive interest accruing on, and investment earnings in
     respect of, the Collection Subaccount and any Series Account as provided in
     the Transfer and Servicing Agreement.

          (g)  Notice has been given to each Rating Agency and to each
     Enhancement Provider as required under Section 2.7(d) of the Transfer and
                                            --------------
     Servicing Agreement.

     6.   Conditions Precedent. The acceptance of the Owner Trustee set forth in
          --------------------
Section 4 above and the amendment of the Transfer and Servicing Agreement set
---------
forth in Section 7 below are subject to the satisfaction, on or prior to the
         ---------
Addition Date, of the following conditions precedent:

          (a)  Officer's Certificate. The Seller shall have delivered to the
               ---------------------
     Owner Trustee a certificate of a Vice President or more senior officer,
     certifying that (i) as of the date of the Addition Date, the aggregate
     amount of Principal Receivables of the Accounts plus the aggregate amount
     of Principal Receivables of the Additional Accounts designated hereby does
     not exceed

                                  Exhibit A-4
<PAGE>

     the aggregate amount of Principal Receivables of the Accounts as of the SMT
     Termination Date; (ii) all requirements set forth in Section 2.7 of the
                                                          -----------
     Transfer and Servicing Agreement for designating Additional Accounts and
     conveying the Principal Receivables of such Accounts, whether now existing
     or hereafter created, have been satisfied and (iii) each of the
     representations and warranties made by the Seller in Section 5 is true and
                                                          ---------
     correct as of the Addition Date. The Owner Trustee may conclusively rely on
     such Officer's Certificate, shall have no duty to make inquiries with
     regard to the matters set forth therein, and shall incur no liability in so
     relying.

          (b)  Opinion of Counsel. The Seller shall have delivered to the Owner
               ------------------
     Trustee an Opinion of Counsel with respect to the Additional Accounts
     designated hereby substantially in the form of Exhibit C to the Transfer
                                                    ---------
     and Servicing Agreement.

          (c)  Additional Information. The Seller shall have delivered to the
               ----------------------
     Owner Trustee such information as was reasonably requested by the Owner
     Trustee to satisfy itself as to the accuracy of the representation and
     warranty set forth in Section 5(d) to this Assignment.
                           ------------

     7.   Amendment of the Transfer and Servicing Agreement. The Transfer and
          -------------------------------------------------
Servicing Agreement is hereby amended to provide that all references therein to
the "Transfer and Servicing Agreement", to "this Agreement" and "herein" shall
be deemed from and after the Addition Date to be a dual reference to the
Transfer and Servicing Agreement as supplemented by this Assignment. Except as
expressly amended hereby, all of the representations, warranties, terms,
covenants and conditions of the Transfer and Servicing Agreement shall remain
unamended and shall continue to be, and shall remain, in full force and effect
in accordance with its terms and except as expressly provided herein shall not
constitute or be deemed to constitute a waiver of compliance with or a consent
to noncompliance with any term or provision of the Transfer and Servicing
Agreement.

     8.   Counterparts. This Assignment 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 together shall constitute one and the
same instrument.

                                  Exhibit A-5
<PAGE>

     IN WITNESS WHEREOF, the undersigned have caused this Assignment of
Receivables in Additional Accounts to be duly executed and delivered by their
respective duly authorized officers on the day and year first above written.

                                   SPIEGEL CREDIT CORPORATION III,
                                   Seller

                                   By:_________________________________________
                                   Name:
                                   Title:

                                   SPIEGEL CREDIT CARD MASTER
                                   NOTE TRUST,
                                   Issuer

                                   By:________________________________________,
                                   as Trustee and not in its individual capacity

                                   Name:
                                   Title:

                                  Exhibit A-6
<PAGE>

                                  Schedule 1
                         to Assignment of Receivables
                            in Additional Accounts

                              ADDITIONAL ACCOUNTS
                              -------------------

                                  Exhibit A-7
<PAGE>

                                   EXHIBIT B
                                      to
                       TRANSFER AND SERVICING AGREEMENT

                      FORM OF REASSIGNMENT OF RECEIVABLES
                              IN REMOVED ACCOUNTS

     (As required by Section 2.7 of the Transfer and Servicing Agreement)
                     -----------

     REASSIGNMENT No. _______ OF RECEIVABLES dated as of _________, by and among
SPIEGAL CREDIT CORPORATION III, a Delaware corporation, as Seller (the

"Seller"), FIRST CONSUMERS NATIONAL BANK, a national banking association, as
 ------
Servicer (the "Servicer") and SPIEGEL CREDIT CARD MASTER NOTE TRUST (the
               --------
"Issuer"), pursuant to the Transfer and Servicing Agreement referred to below.
 ------

                                  WITNESSETH:

     WHEREAS the Seller, the Servicer and the Issuer are parties to the Transfer
and Servicing Agreement, dated as of ___________ __, 20__ (the "Agreement");
                                                                ---------

     WHEREAS pursuant to the Agreement, the Seller wishes to remove from the
Issuer all Receivables owned by the Issuer in certain designated Accounts (the

"Removed Accounts") and to cause the Issuer to reconvey the Receivables of such
-----------------
Removed Accounts, whether now existing or hereafter created, from the Issuer to
the Seller; and

     WHEREAS the Issuer is willing to accept such designation and to reconvey
the Receivables in the Removed Accounts subject to the terms and conditions
hereof;

     NOW, THEREFORE, the Seller and the Issuer hereby agree as follows:

     1.   Defined Terms. All terms defined in the Agreement and used herein
          -------------
shall have such defined meanings when used herein, unless otherwise defined
herein.

     "Removal Date" means, with respect to the Removed Accounts designated
      ------------
hereby, ___________, ____.

     "Removal Notice Date" means, with respect to the Removed Accounts
      -------------------
______________, ____, (which shall be a date on or prior to the fifth Business
Day prior to the Removal Date).

     2.   Designation of Removed Accounts. On or before the date that is ten
          -------------------------------
(10) Business Days after the Removal Date, the Seller will deliver to the Owner
Owner Trustee a computer file or microfiche list containing a true and complete
schedule identifying all Accounts the Receivables of which are being removed
from the Issuer, specifying for each such Account, as of the Removal Notice
Date, its

                                  Exhibit B-1
<PAGE>

account number, the aggregate amount outstanding in such Account and the
aggregate amount of Principal Receivables in such Account, which computer file
or microfiche list shall supplement Schedule 1 to the Agreement.
                                    ----------

     3.   Conveyance of Receivables. (a) The Issuer does hereby transfer,
          -------------------------
assign, set over and otherwise convey to the Seller, without recourse, on and
after the Removal Date, all right, title and interest of the Issuer in, to and
under the Receivables existing at the close of business on the Removal Notice
Date and thereafter created from time to time in the Removed Accounts designated
hereby, all Recoveries related thereto, all monies due or to become due and all
amounts received or receivable with respect thereto and all proceeds thereof.

     (b)  In connection with such transfer, the Issuer agrees to execute and
deliver to the Seller on or prior to the date this Reassignment is delivered,
applicable termination statements prepared by the Seller with respect to the
Receivables existing at the close of business on the Removal Notice Date and
thereafter created from time to time in the Removed Accounts reassigned hereby
and the proceeds thereof evidencing the release by the Issuer of its interest in
the Receivables in the Removed Accounts, and meeting the requirements of
applicable state law, in such manner and such jurisdictions as are necessary to
terminate such interest.

     4.   Representations and Warranties of the Seller. The Seller hereby
          --------------------------------------------
represents and warrants to the Issuer as of the Removal Date:

     (a)  Legal Valid and Binding Obligation. This Reassignment Agreement
          ----------------------------------
constitutes a legal, valid and binding obligation of the Seller enforceable
against the Seller in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect affecting the enforcement of
creditors' rights in general and except as such enforceability may be limited by
general principles of equity (whether considered in a suit at law or in equity);
and

     (b)  Selection Procedures. No selection procedures believed by the Seller
          --------------------
to be materially adverse to the interests of the Noteholders were utilized in
selecting the Removed Accounts designated hereby.

     5.   Condition Precedent. The amendment of the Transfer and Servicing
          -------------------
Agreement set forth in Section 7 hereof is subject to the satisfaction, on or
                       ---------
prior to the Removal Date, of the following condition precedent:

     6.   Officers' Certificate. The Seller shall have delivered to the Owner
          ---------------------
Trustee an Officers' Certificate certifying that (i) as of the Removal Date, all
requirements set forth in Section 2.5 of the Transfer and Servicing Agreement
                          -----------
for designating Removed Accounts and reconveying the Receivables of such Removed
Accounts, whether now existing or hereafter created, have been satisfied, and
(ii) each of the representations and warranties made by the Seller in Section 5
                                                                      ---------
hereof is

                                  Exhibit B-2
<PAGE>

true and correct as of the Removal Date. The Owner Trustee may conclusively rely
on such Officer's Certificate, shall have no duty to make inquiries with regard
to the matters set forth therein and shall incur no liability in so relying.

     7.   Amendment of the Transfer and Servicing Agreement. The Transfer and
          -------------------------------------------------
Servicing Agreement is hereby amended to provide that all references therein to
the "Transfer and Servicing Agreement", to "this Agreement" and "herein" shall
be deemed from and after the Removal Date to be a dual reference to the Transfer
and Servicing Agreement as supplemented by this Reassignment Agreement. Except
as expressly amended hereby, all of the representations, warranties, terms,
covenants and conditions of the Transfer and Servicing Agreement shall remain
unamended and shall continue to be, and shall remain, in full force and effect
in accordance with its terms and except as expressly provided herein shall not
constitute or be deemed to constitute a waiver of compliance with or a consent
to non-compliance with any term or provision of the Transfer and Servicing
Agreement.

     8.   Counterparts. This Reassignment Agreement 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 together shall constitute one and
the same instrument.

                                  Exhibit B-3
<PAGE>

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

                                   SPIEGEL CREDIT CORPORATION
                                   III, Seller

                                   By:________________________________________
                                   Name:
                                   Title:

                                   SPIEGEL CREDIT CARD MASTER
                                   NOTE TRUST, Issuer

                                   By:_______________________________________,
                                   not in its individual capacity but solely as
                                   Owner Trustee on behalf of the Issuer

                                  Exhibit B-4
<PAGE>

                                  Schedule 1
                           to Reassignment Agreement

                               REMOVED ACCOUNTS
                               ----------------
<PAGE>

                                   EXHIBIT C
                                      to
                       TRANSFER AND SERVICING AGREEMENT

 (Provisions to be included in Opinion of Counsel to be delivered pursuant to
         Section 2.7(c)(vii) of the Transfer and Servicing Agreement)
         -------------------

     The opinions set forth below may be subject to certain qualifications,
assumptions, limitations and exceptions taken or made in the opinion of Seller's
counsel with respect to similar matters delivered on the SMT Termination Date.

     (i)   The Assignment has been duly authorized, executed and delivered by
Seller and constitutes the legal, valid and binding agreement of Seller,
enforceable against Seller in accordance with its terms.

     (ii)  If the Assignment constitutes a valid transfer and assignment of the
Receivables in the Additional Accounts, Financing Statements having been filed
in the offices of the Secretaries of State of the States of Delaware, Illinois
and Oregon, the Owner Trustee has acquired (based upon certificates of Seller to
the effect that (a) Seller acquired the Receivables pursuant to the Receivables
Purchase Agreement, (b) Seller has not transferred any interest in the
Receivables other than to the Trustee or caused any lien to be imposed upon the
Receivables, and (c) Seller will acquire pursuant to the Receivables Purchase
Agreement all Receivables subsequently created in the Additional Accounts) free
and clear of any Lien or interest of any Person except for (x) Liens permitted
under Section 2.5(b) of the Transfer and Servicing Agreement, (y) the interest
      --------------
of the Holder of the Collateral Certificate, and (z) Seller's right to receive
interest accruing on, and investment earnings in respect of, the Collection
Subaccounts and the Collection Sub-subaccounts as provided in the Transfer and
Servicing Agreement (the "Transfer and Servicing Agreement")) all right, title
                          --------------------------------
and interest of Seller in the Issuer Property free and clear of any Lien or
interest of any Person, except for (x) Liens permitted under Section 2.5(b) of
                                                             --------------
the Transfer and Servicing Agreement, (y) the interest of the Holder of the
Collateral Certificate, and (z) Seller's right to receive interest accruing on,
and investment earnings in respect of, the Collection Subaccounts and the
Collection Sub-subaccounts as provided in the Transfer and Servicing Agreement.

     (iii) If the Assignment does not constitute a valid transfer and assignment
of the Receivables in the Additional Accounts, the Transfer and Servicing
Agreement as amended by the Assignment creates a valid security interest in
favor of the Owner Trustee for the benefit of the Noteholders in such
Receivables. The Financing Statements having been filed in the Offices of the
Secretaries of State of the States of Delaware, Illinois and Oregon, the Issuer,
for the benefit of the Noteholders has a first priority perfected security
interest in the Receivables now existing and hereafter created in the Additional
Accounts and all monies due or to become due

                                  Exhibit C-1
<PAGE>

with respect thereto, including the proceeds thereof. Such perfection and
priority of the Owner Trustee for the benefit of the Noteholders in such
Receivables, and the proceeds thereof, would not be affected by an increase or
decrease in the relative interests in the Receivables of the Holder of the
Collateral Certificate and of the Noteholders. Such perfection and priority
would be enforceable against Seller notwithstanding the insolvency of Seller,
except that such counsel need express no opinion as to the effect of Section 9-
306(4) of the UCC as in effect in the State of Illinois with respect to Proceeds
held by Seller upon its insolvency.

     (iv) No filings or other action, other than the filing of the financing
statement(s) referred to in such opinion (the "Financing Statements") with
                                               --------------------
respect to the Issuer's security interest in such Receivables and the proceeds
thereof, in the Offices of the Secretaries of State of the States of Delaware,
Illinois and Oregon, are necessary to perfect or continue the perfected status
of the security or other interest of the Issuer in the Receivables of the
Additional Accounts designated by the Assignment, and the proceeds thereof,
against third parties, except that appropriate continuation statements with
respect to the Financing Statements be filed at five-year intervals to continue
the perfection of such security interest.

     (v)  In the course of such counsel's representation of Seller in connection
with this matter, and without independent investigation, such counsel has not
become aware of (a) any type of right, lien or interest of any government or
agency or instrumentality thereof or any lien arising by operation of law which
might be asserted against the Receivables in the Additional Accounts designated
by the Assignment or the proceeds thereof in particular circumstances other than
a tax lien or a lien arising under ERISA, (b) any such right, lien or interest
which has been so asserted, or (c) any lien arising by operation of law or any
attachment or execution lien which has been asserted against the Receivables of
the Additional Accounts designated by the Assignment or the proceeds thereof.

     (vi) Based on certificates of Seller to the effect of the following, to the
best of the knowledge of counsel, (a) Seller acquired the Receivables pursuant
to the Receivables Purchase Agreement, (b) Seller has not transferred any
interest in the Receivables other than to the Owner Trustee or caused any lien
to be imposed upon the Receivables, and (c) Seller will acquire pursuant to the
Receivables Purchase Agreement all Receivables subsequently created in the
Additional Accounts) free and clear of any Lien or interest of any Person except
for (x) Liens permitted under Section 2.5(b) of the Transfer and Servicing
                              --------------
Agreement, (y) the interest of the Holder of the Collateral Certificate, and (z)
Seller's right to receive interest accruing on, and investment earnings in
respect of, the Collection Subaccounts and the Collection Sub-subaccounts as
provided in the Transfer and Servicing Agreement.

                                  EXHIBIT C-2
<PAGE>

                                   EXHIBIT D
                                      to
                       TRANSFER AND SERVICING AGREEMENT

                    FORM OF MONTHLY SERVICER'S CERTIFICATE

     The undersigned, a duly authorized representative of First Consumers
National Bank ("FCNB"), as Servicer pursuant to the Transfer and Servicing
                ----
Agreement dated as of [_________], 2000 (the "Transfer and Servicing Agreement")
                                              --------------------------------
among FCNB, Spiegel Credit Corporation III and Spiegel Credit Card Master Note
Trust, as Issuer, does hereby certify as follows:

1.   Capitalized terms used in this Certificate have their respective meanings
     set forth in the Transfer and Servicing Agreement; provided that the
                                                        --------
     "preceding Monthly Period" shall mean the Monthly Period immediately
      ------------------------
     preceding the calendar month in which this Certificate is delivered. This
     Certificate is delivered pursuant to Section 3.4(b) of the Transfer and
                                          --------------
     Servicing Agreement. References herein to certain sections and subsections
     are references to the respective sections and subsections of the Transfer
     and Servicing Agreement.

2.   FCNB is the Servicer under the Transfer and Servicing Agreement.

3.   The undersigned is a Servicing Officer.

4.   The date of this Certificate is a Determination Date under the Transfer and
     Servicing Agreement.

5.   The aggregate amount of Collections processed
     during the preceding Monthly Period (after giving
     effect to all true-up adjustments for such period)
     was equal to  $________________________

6.   Aggregate Principal Balance as of the end
     of the last day of the preceding Monthly Period
     was equal to  $ _________________________

7.   The aggregate amount of Finance Charge Collections
     during the preceding Monthly Period (after giving
     effect to all true-up adjustments for such period)
     was equal to  $ _________________________

8.   The amount and nature of true-up adjustments
     pursuant to Section 1.4 for the preceding Monthly
                 -----------

                                  Exhibit D-1
<PAGE>

     Period were as follows $ _________________________

9.   The Default Amount for the preceding Monthly
     Period was equal to $ _________________________

10.  Investor Net Recoveries for the preceding Monthly
     Period was equal to $ _________________________

11.  The Portfolio Yield for the preceding Monthly
     Period for each of the following Series was equal to:
     Series __________________$ _________________________
     Series __________________$ _________________________

12.  The Base Rate for the preceding Accrual Period for
     each of the following Series was equal to:

     Series ___________________$ _________________________
     Series ___________________$ _________________________

13.  The aggregate amount of Receivables and the balance
     on deposit in the Collection Account (or any
     Subaccount thereof) and each other Series Account
     with respect to Collections processed as of the end
     of the preceding Monthly Period was equal to $ _________________________

14.  The aggregate amount of Credit Adjustments from
     the preceding Monthly Period was equal to $ _________________________

15.  The aggregate amount, if any, of withdrawals,
     drawings or payments under any Enhancement with
     respect to each Series made with respect to the
     preceding Monthly Period was equal to $ _________________________

16.  The aggregate amount payable to the Investor
     Noteholders on the succeeding Distribution
     Date in respect of Note Interest is equal to $ _________________________

17.  The aggregate amount payable to the
     Noteholders on the succeeding Distribution Date
     in respect of Note Principal is equal to $ _________________________

                                  Exhibit D-2
<PAGE>

                                  EXHIBIT E-1
                                      to
                       TRANSFER AND SERVICING AGREEMENT

                     FORM OF ANNUAL SERVICER'S CERTIFICATE

     The undersigned, a duly authorized representative of First Consumers
National Bank ("FCNB") as Servicer pursuant to the Transfer and Servicing
                ----
Agreement dated as of [________], 2000 (the "Transfer and Servicing Agreement")
                                             --------------------------------
among Spiegel Credit Corporation III, FCNB and Spiegel Credit Card Master Note
Trust, as Issuer, does hereby certify that:

     1.   FCNB is Servicer under the Transfer and Servicing Agreement.

     2.   The undersigned is duly authorized pursuant to the Transfer and
Servicing Agreement to execute and deliver this Certificate to the Owner
Trustee.

     3.   This Certificate is delivered pursuant to Section 3.5 of the Transfer
                                                    -----------
and Servicing Agreement.

     4.   A review of the activities of the Servicer during the calendar year
ended December 31, 200_ was conducted under my supervision.

     5.   Based on such review, the Servicer has, to the best of my knowledge,
fully performed all its obligations under the Transfer and Servicing Agreement
throughout such calendar year and no default in the performance of such
obligations has occurred or is continuing except as set forth in paragraph 6
below.

     6.   The following is a description of each default in the performance of
the Servicer's obligations under the provisions of the Transfer and Servicing
Agreement known to me to have been made during the calendar year ended December
31, 200_, which sets forth in detail the (i) nature of each such default, (ii)
the action taken by the Servicer, if any, to remedy each such default and (iii)
the current status of each such default: [If applicable, insert "None."]

                                 Exhibit E-1-1
<PAGE>

     IN WITNESS WHEREOF, the undersigned has duly executed this Certificate this
day of____________, 200 ___.

                                              _______________________________
                                              Name:
                                              Title:

                                 Exhibit E-1-2
<PAGE>

                                  EXHIBIT E-2
                                      to
                       TRANSFER AND SERVICING AGREEMENT

                FORM OF ANNUAL INDEPENDENT PUBLIC ACCOUNTANTS'
                               SERVICING REPORT

First Consumers National Bank
P.O. Box 5280
Portland, Oregon 97208

Spiegel Credit Corporation III
400 West 9th Street, Suite 101B
Wilmington, Delaware 19801-1504

First Consumers National Bank
111 West Monroe Street
Chicago, Illinois 60690

Gentlemen:

     We have applied certain agreed-upon procedures, as discussed below, to the
accounting records of First Consumers National Bank (the "Servicer") and Spiegel
                                                          --------
Credit Corporation III ("SCCIII") as of December 31, ____, solely to assist the
                         ------
Servicer in its responsibilities as Servicer under the Transfer and Servicing
Agreement dated as of [_____], 2000, among SCCIII, the Servicer and Spiegel
Credit Card Master Note Trust (the "Transfer and Servicing Agreement"). It is
                                    --------------------------------
understood that this report is solely for your information and is not to be
referred to or distributed for any other purpose to anyone who is not a member
of management of the Servicer, SCCIII or the Owner Trustee, or who is not
otherwise specifically defined as a recipient in the Servicing Agreement. Our
procedures and findings are as follows:

     (a)  We compared each of the amounts in the certificates delivered by the
          Servicer pursuant to Section 3.4(b) of the Transfer and Servicing
                               --------------
          Agreement, the statements or reports delivered to the Noteholders of
          each Series pursuant to the Indenture Supplements and the monthly
          payment instructions delivered to the Owner Trustee with respect to
          each Series of Notes pursuant to the Indenture for each of the months
          in the year ended December 31, _____ [the period of ___ months ended
          ______, ____] to the corresponding amounts in schedules prepared by
          the Servicer and found them to be in agreement.

                                 Exhibit E-2-1
<PAGE>

     (b)  We verified the mathematical accuracy of the schedules prepared by the
          Servicer and found no differences.

     (c)  We compared the information in the schedules prepared by the Servicer
          to data extracted from the Servicer's credit accounting system and
          found them to be in agreement.

     (d)  We read the Annual Servicer's Certificate delivered pursuant to

          Section 3.5 of the Servicing Agreement for the year ended December 31,
          -----------
          _____ [for the period of ____months ended, _______, _____] and made
          inquiries of the Servicer's management regarding the Servicer's
          compliance with the guidelines of the Transfer and Servicing
          Agreement.

     Because the above procedures do not constitute an audit made in accordance
with generally accepted auditing standards, we express no opinion on any of the
specified accounts or items referred to above. In connection with the procedures
referred to above, no matters came to our attention that caused us to believe
that the certificates and reports referred to above should be adjusted. Based on
our reading, inquiries and procedures as set forth in paragraphs (a), (b), (c)
and (d) above, nothing came to our attention that caused us to believe that the
servicing of the accounts was not conducted in compliance with the terms and
conditions set forth in the Transfer and Servicing Agreement insofar as they
relate to accounting matters. Had we performed additional procedures, matters
might have come to our attention that would have been reported to you. This
report relates only to the accounts or items specified above and does not extend
to any financial statements of First Consumers National Bank, Spiegel Credit
Corporation III or Spiegel Credit Card Master Note Trust taken as a whole.

Date:

                                 Exhibit E-2-2
<PAGE>

                                  EXHIBIT F-1

                          FORM OF OPINION OF COUNSEL
                          WITH RESPECT TO AMENDMENTS

       (Provisions to be included in Opinion of Counsel to be delivered
                        pursuant to Section 9.2(d)(i))
                                    -----------------

     The opinions set forth below may be subject to all the qualifications,
assumptions, limitations and exceptions taken or made in the Opinions Of Counsel
delivered on any applicable Closing Date.

     (i)  The amendment to the Transfer and Servicing Agreement, attached hereto
as Schedule 1 (the "Amendment" ), has been duly authorized, executed and
   ----------       ---------
delivered by Seller and constitutes the legal, valid and binding agreement of
Seller, enforceable in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other laws from time to time in effect affecting creditors' rights generally.
The enforceability of Seller's obligations is also subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).

     (ii) The Amendment has been entered into in accordance with the terms and
provisions of Section 9.1 of the Transfer and Servicing Agreement.
              -----------

                                 Exhibit F-1-1
<PAGE>

                                  EXHIBIT F-2

                          FORM OF OPINION OF COUNSEL
                           WITH RESPECT TO ACCOUNTS

       (Provisions to be included in Opinion of Counsel to be delivered
                   pursuant to Section 9.2(d)(ii) or (iii))
                               ---------------------------

     The opinions set forth below may be subject to all the qualifications,
assumptions, limitations and exceptions taken or made in the Opinions of Counsel
delivered on any applicable Closing Date.

     1.   Except for any Receivable that is evidenced by an instrument, the
Receivables constitute accounts under Article 9 of the UCC.

     2.   The Assignment creates in favor of the Issuer a security interest in
the rights of Seller in such of the Receivables identified in Schedule 1 to the
                                                              ----------
Assignment as constitute accounts. To the extent that such security interest is
not an interest of a buyer of accounts, then the Assignment creates in favor of
the Issuer a security interest in the rights of Seller in the proceeds of the
Receivables.

     3.   To extent that transactions contemplated by the Assignment do not
constitute a sale by the Assignment Seller to the Issuer of such of the
Receivables as constitute general intangibles or the proceeds thereof, the
Assignment creates in favor of the Issuer a security interest in the rights of
Seller in such of the Receivables as constitute general intangibles and the
proceeds thereof.

     4.   [The applicable Seller Purchase Agreement and related Conveyance
Papers creates in favor of Seller a security interest in the rights of FCNB in
such of the Receivables identified in Schedule 1 to the applicable Seller
                                      ----------
Purchase Agreement and related Conveyance Papers as constitute accounts.]

     5.   [To the extent that transactions contemplated by the applicable Seller
Purchase Agreement and related Conveyance Papers do not constitute a sale by
FCNB to Seller of such of the Receivables as constitute general intangibles or
the proceeds thereof, the applicable Seller Purchase Agreement and related
Conveyance Papers creates in favor of Seller a security interest in the rights
of FCNB in such of the Receivables as constitute general intangibles and the
proceeds thereof.]

     6.   The security interests described in paragraphs 2, 3, 4 and 5 above are
perfected and of first priority.

                                 Exhibit F-2-1
<PAGE>

                                  EXHIBIT F-3

                         PROVISIONS TO BE INCLUDED IN
                           ANNUAL OPINION OF COUNSEL

     The opinions set forth below may be subject to certain qualifications,
assumptions, limitations and exceptions taken or made in the opinion of counsel
to Seller with respect to similar matters delivered on the Initial Closing Date.
Unless otherwise indicated, all capitalized terms used herein shall have the
meanings ascribed to them in the Transfer and Servicing Agreement and in the
Assignment.

     (i)  If the Transfer and Servicing Agreement constitutes a valid transfer
and assignment of the Receivables identified in Schedule 1 to the Transfer and
                                                ----------
Servicing Agreement (the "Trust Property"), the Financing Statements having been
filed in the offices of the Secretaries of State of the States of Delaware,
Illinois and Oregon, the Trustee has acquired (based upon certificates of Seller
to the effect that (a) Seller acquired the Receivables pursuant to the
Receivables Purchase Agreement, (b) Seller has not transferred any interest in
the Receivables other than to the Trustee or caused any lien to be imposed upon
the Receivables, and (c) Seller will acquire pursuant to the Receivables
Purchase Agreement all Receivables subsequently created in the Additional
Accounts free and clear of any Lien or interest of any Person except for (x)
Liens permitted under subsection 2.5(b) of the Transfer and Servicing Agreement,
                      -----------------
(y) the interest of the Holder of the Exchangeable Seller Certificate, and (z)
Seller's right to receive interest accruing on, and investment earnings in
respect of, the Collection Subaccounts and the Collection Sub-subaccounts as
provided in the Transfer and Servicing Agreement) all right, title and interest
of Seller in the Trust Property free and clear of any Lien or interest of any
Person, except for (x) Liens permitted under subsection 2.5(b) of the Transfer
                                             -----------------
and Servicing Agreement, (y) the interest of the Holder of the Exchangeable
Seller Certificate, and (z) Seller's right to receive interest accruing on, and
investment earnings in respect of, the Collection Subaccounts and the Collection
Sub-subaccounts as provided in the Transfer and Servicing Agreement.

     (ii) If the Transfer and Servicing Agreement does not constitute a valid
transfer and assignment of all right, title, and interest in the Trust Property,
the Transfer and Servicing Agreement creates a valid security interest in favor
of the Trustee for the benefit of the Investor Certificateholders in the Trust
Property.  The Financing Statements having been filed in the offices of the
Secretaries of State of the States of Delaware, Illinois and Oregon, the Trust,
for the benefit of the Investor Certificateholders has a first priority
perfected security interest in that portion of the Trust Property that consists
of the Receivables now existing and hereafter created (other than Receivables in
Additional Accounts), and all monies due or to become due with respect thereto,
including the proceeds thereof.  Such perfection and priority of the Trustee for
the benefit of the Investor Certificateholders in such Receivables, and the
proceeds thereof, would not be affected by an increase or decrease in the
relative interests in the Receivables of the Holder of the Exchangeable Seller
Certificate and of the Investor Certificateholders.  Such perfection and
priority would
<PAGE>

be enforceable against Seller notwithstanding the insolvency of Seller except
that such counsel need express no opinion as to the effect of Section 9-306(4)
of the UCC as in effect in the State of Illinois with respect to proceeds held
by Seller upon its insolvency.

     (iii)  No filings or other action, other than the filing of the financing
statement(s) referred to in such opinion (the "Financing Statements") with
respect to the Trust's interest in the Receivables and the proceeds thereof in
the Offices of the Secretaries of State of the States of Delaware, Illinois and
Oregon, are necessary to perfect or continue the perfected status of the
interest of the Trust in the Receivables and the proceeds thereof against third
parties, except that appropriate continuation statements with respect to the
Financing Statement(s) must be filed at five-year intervals.

     (iv)   In the course of such counsel's representation of Seller in
connection with this matter, and without independent investigation, such counsel
has not become aware of (a) any type of right, lien, or interest of any
government or agency or instrumentality thereof or any lien arising by operation
of law which might be asserted against the Receivables or the proceeds arising
under ERISA, (b) any such right, lien or interest which has been so asserted or
(c) any lien arising by operation of law or any attachment or execution lien
which had been asserted against the Receivables or the proceeds thereof.

                                 Exhibit F-3-2
<PAGE>

                                  SCHEDULE 1

                               List of Accounts
                               ----------------

                  [Original list delivered to Owner Trustee]

                                      1-1

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