Document:

<PAGE>

                                                                     EXHIBIT 4.2

                     SPIEGEL CREDIT CARD MASTER NOTE TRUST

                                    Issuer

                                      and

                             THE BANK OF NEW YORK

                               Indenture Trustee

                      SERIES 2000-A INDENTURE SUPPLEMENT

                         Dated as of December 1, 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......................................................................   12
              Section  3.1   Servicing Compensation..............................................   12

ARTICLE IV    Rights of Series 2000-A Noteholdersand Allocation and
              Application of Collections.........................................................   13
              Section  4.1   Collections and Allocations.........................................   13
              Section  4.2   Determination of Monthly Interest...................................   15
              Section  4.3   Determination of Monthly Principal..................................   16
              Section  4.4   Application of Available Finance Charge
                             Collections and Available Principal Collections.....................   16
              Section  4.5   Investor Charge-Offs................................................   19
              Section  4.6   Reallocated Principal Collections...................................   19
              Section  4.7   Excess Finance Charge Collections...................................   19
              Section  4.8   Shared Principal Collections........................................   20
              Section  4.9   Principal Accumulation Account......................................   20
              Section  4.10  Reserve Account.....................................................   22
              Section  4.11  [Reserved]..........................................................   24
              Section  4.12  Determination of LIBOR..............................................   24
              Section  4.13  Investment Instructions.............................................   25
              Section  4.14  Controlled Accumulation Period......................................   25
              Section  4.15  Suspension of Controlled Accumulation Period........................   25
              Section  4.16  Insurance Policies..................................................   27
              Section  4.17  Swap................................................................   28

ARTICLE V     Delivery of Series 2000-A Notes; Distributions; Reports to
              Series 2000-A Noteholders..........................................................   28
              Section  5.1   Delivery and Payment for the Series 2000-A Notes....................   28
              Section  5.2   Distributions.......................................................   29
              Section  5.3   Reports and Statements to Series 2000-A Noteholders.................   29
</TABLE>

                                       i
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<TABLE>
<S>                                                                                                   <C>
ARTICLE VI     Series 2000-A Pay Out Events and Events of Default...................................   30
               Section  6.1     Series 2000-A Pay Out Events........................................   30
               Section  6.2     Series 2000-A Events of Default.....................................   32
               Section  6.3     Declarations of Default.............................................   33

ARTICLE VII    Redemption of Series 2000-A Notes; Final Distributions;
               Series Termination...................................................................   33
               Section  7.1     Optional Redemption of Series 2000-A Notes; Final Distributions.....   33
               Section  7.2     Series Termination..................................................   34

ARTICLE VIII   Miscellaneous Provisions.............................................................   34
               Section  8.1     Ratification of Indenture; Amendments...............................   34
               Section  8.2     Form of Delivery of the Series 2000-A Notes.........................   35
               Section  8.3     Counterparts........................................................   35
               Section  8.4     GOVERNING LAW.......................................................   35
               Section  8.5     Limitation of Liability.............................................   35
               Section  8.6     Rights of the Indenture Trustee.....................................   35
               Section  8.7     Third Party Beneficiary.............................................   35
</TABLE>

                                      ii
<PAGE>

                                    EXHIBITS

EXHIBIT A   FORM OF CLASS A NOTE
EXHIBIT B   FORM OF MONTHLY PAYMENT INSTRUCTIONS AND NOTIFICATION TO THE
            INDENTURE TRUSTEE
EXHIBIT C   FORM OF MONTHLY STATEMENT
EXHIBIT D   FORM OF MONTHLY SERVICER'S CERTIFICATE
EXHIBIT E   FORM OF SWAP
EXHIBIT F   INSURANCE AGREEMENT DEFINITIONS
EXHIBIT G   SECTION 2.05 OF INSURANCE AGREEMENT (SPREAD ACCOUNT)
EXHIBIT H   SECTION 5.01 OF INSURANCE AGREEMENT (INSURANCE AGREEMENT PAY OUT
            EVENTS)

                                      iii
<PAGE>

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

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

                                  ARTICLE I

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

          Section  1.1ab  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 a single Class,
     ------------
     known as the "Class A 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. The definitions of all capitalized terms defined herein by
     reference to the respective definitions of those terms in the Insurance
     Agreement can be found in Exhibit F. Each capitalized term defined herein
                               ---------
     shall relate only to the Series 2000-A Notes and no other Series of Notes
     issued by the Issuer.

                                       1
<PAGE>

                                  ARTICLE II

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

          Section  2.1ab  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 4.14.
           --------------------------                ---------------

          "Accumulation Shortfall" means: (a) for the first Monthly Period
           ----------------------
     during the Controlled Accumulation Period, zero; and (b) thereafter, 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 Excess Interest" is defined in Section 4.2.
           --------------------------                -----------

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

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

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

                     (i) for Principal Collections during the Revolving Period
               and for Finance Charge Collections and Default Amounts at any
               time, at the end of the last day of the prior Monthly Period (or,
               in the case of the monthly Period in which the Closing Date
               occurs, on the Closing Date); provided, however, that if the
                                             --------  -------
               Rapid Amortization Period is extended past the Series 2000-A
               Final Maturity Date as a result of there being amounts owed to
               the Insurer or the Counterparty, then

                                       2
<PAGE>

               during that extended period the numerator for Finance Charge
               Collections and Default Amounts shall equal the numerator in
               effect for the last Monthly Period prior to the Series 2000-A
               Final Maturity Date;

                    (ii) for Principal Collections during the Rapid Amortization
               Period and the Controlled Accumulation Period, on the last day of
               the Revolving Period; provided, however, that if Series 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 Indenture Trustee, the Servicer and the Rating
               Agency, but only after satisfying the Rating Agency Condition,
               designate a different numerator for such fraction, which
               numerator shall not be less than the Collateral Amount as of the
               last day of the Revolving Period for the Paired Series; and

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

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

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

          "Available Reserve Account Amount" means, for any Distribution Date,
           --------------------------------
     the lesser of (a) the amount on deposit in the Reserve Account on such date
     (after taking

                                       3
<PAGE>

     into account any interest and earnings retained in the Reserve Account
     pursuant to subsection 4.10(b) on such date, but before giving effect to
                 ------------------
     any deposit made or to be made pursuant to subsection 4.4(a)(vi) to the
                                                ---------------------
     Reserve Account on such date) and (b) the Required Reserve Account Amount.

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

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

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

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

          "Closing Date" means December 19, 2000.
           ------------

          "Collateral Amount" means, as of any date of determination, an amount
           -----------------
     equal to the result of (a) the Initial Collateral Amount, minus (b) the
     amount of principal previously paid to the Series 2000-A Noteholders, minus
     (c) the balance on deposit in the Principal Accumulation Account, minus (d)
     the aggregate reductions to the Collateral Amount made pursuant to Section
                                                                        -------
     4.4(c) on or prior to such date of determination, minus (e) the excess, if
     ------
     any, of the aggregate amount of Investor Charge-Offs and Reallocated
     Principal Collections over the reimbursements of such amounts pursuant to
     subsection 4.4(a)(iv) prior to such date.
     ---------------------

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

          "Controlled Accumulation Amount" means, for any Distribution Date with
           ------------------------------
     respect to the Controlled Accumulation Period, $50,000,000; provided,
                                                                 --------
     however, that if the Accumulation Period Length is determined to be less
     -------
     than 12 months pursuant to Section 4.14 or 4.15, the Controlled
                                ------------    ----
     Accumulation Amount for each Distribution Date with respect to the
     Controlled Accumulation Period will be equal to (i) the product of (x) the
     aggregate initial principal amount of the Series 2000-A Notes and (y) the
     Accumulation Period Factor for such Monthly Period divided by (ii) the
     Required Accumulation Factor Number.

                                       4
<PAGE>

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

          "Counterparty" means Bank of America, N.A. or the counterparty under
           ------------
     any replacement interest rate swap obtained pursuant to Section 4.17.
                                                             ------------

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

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

          "Default Estimate" means, for any Monthly Period, an amount equal to
           ----------------
     the product of (i) 1.5, multiplied by (ii) the arithmetic mean of the
     Investor Default Amounts for the prior three Monthly Periods. For this
     purpose, the October, November and December 2000 Investor Default Amounts
     shall be deemed to have equaled $6,500,000.

          "Deficiency Amount" means (a) for any Distribution Date other than the
           -----------------
     Series 2000-A Final Maturity Date, the excess of the amounts payable
     pursuant to Sections 4.4(a)(i) and (ii) for such Distribution Date over the
                 ------------------     ----
     Available Finance Charge Collections, Reallocated Principal Collections and
     Available Spread Account Amount that are available to cover such amounts,
     and (b) for the Series 2000-A Final Maturity Date, the sum of (i) the
     amount determined pursuant to clause (a) for the Series 2000-A Final
                                   ----------
     Maturity Date and (ii) the excess of the Note Principal Balance over the
     Available Principal Collections and Available Spread Account Amount that
     are available to cover such amount.

          "Distribution Date" means January 16, 2001 and the 15th day of each
           -----------------
     calendar month thereafter, or if such 15th day is not a Business Day, the
     next succeeding Business Day.

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

                                       5
<PAGE>

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

          "Excess Interest" means, for any Distribution Date falling after the
           ---------------
     Expected Principal Distribution Date, the excess if any of (a) the amount
     of Monthly Interest that would have been payable on that Distribution Date
     if not for the proviso to the definition of "Note Interest Rate" over (b)
     the amount of Monthly Interest actually payable on that Distribution Date.

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

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

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

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

          "Group One" means Series 2000-A, the outstanding Series under the
           ---------
     Pooling and Servicing Agreement (other than Series represented by the
     Collateral Certificate) and each other Series hereafter specified in the
     related Indenture Supplement to be included in Group One.

          "Initial Collateral Amount" means the sum of (a) $670,400,000, which
           -------------------------
     equals the sum of (i) the initial principal amount of the Series 2000-A
     Notes plus (ii) the Initial Excess Collateral Amount (excluding the
     Supplemental Enhancement), plus (b) the Supplemental Enhancement.

          "Initial Excess Collateral Amount" means, at any time, the sum of (a)
           --------------------------------
     $70,400,000, plus (b) the Supplemental Enhancement.

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

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

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

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

                                       6
<PAGE>

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

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

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

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

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

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

     "Investor Uncovered Dilution Amount" means, for any Distribution Date, an
      ----------------------------------
amount equal to the Series Share of shortfalls in Deposit Obligations that is
allocated to Series 2000-A pursuant to Section 8.4(h) of the Indenture.
                                       --------------

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

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

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

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

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

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

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

                                       7
<PAGE>

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

          (a)  the Required Amount; and

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

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

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

     "Net Swap Payment" means any net amount payable by the Issuer under the
      ----------------
Swap as a result of LIBOR being less than the Swap Rate. For the avoidance of
doubt, (i) Net Swap Payments do not include early termination payments or
payment of breakage or other miscellaneous costs, and (ii) for any Distribution
Date, the Monthly Interest, less the Net Swap Receipt, if any, plus, the Net
Swap Payment , if any, will never exceed what Monthly Interest would have been
if the Note Interest Rate were 6.51%.

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

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

     "Note Interest Rate" means a per annum rate of 0.30% in excess of LIBOR as
      ------------------
determined on the LIBOR Determination Date for the applicable Interest Period;
provided that for each Interest Period commencing after the Expected Principal
--------
Distribution Date, the Note Interest Rate shall equal the lesser of (a) the
amount described above and (b) 7.5% per annum.

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

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

     "Policy" means the Financial Guaranty Insurance Policy No.  33927(1) or the
      ------
Financial Guaranty Insurance Policy No. 33927(2), each issued by MBIA Insurance
Corporation pursuant to the Insurance Agreement, and, collectively, referred to
herein as the "Policies."

                                       8
<PAGE>

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

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

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

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

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

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

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

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

     "Rapid Amortization Period" means the period commencing on the Business Day
      -------------------------
immediately preceding the day on which a Pay Out Event with respect to Series
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; provided, that if any amounts are owing to the Insurer under the
               --------
Insurance Agreement or the Counterparty under the Swap at the Series 2000-A
Final Maturity Date, the Rapid Amortization Period shall continue, solely for
purposes of repaying such amounts, but in no event shall the Rapid Amortization
Period continue after the earliest of (x) the date on which no further amounts
are owed to the Insurer under the Insurance Agreement and the Counterparty under
the Swap, (y) the November 2010 Distribution Date and (z) the date on which the
Collateral Amount has been reduced to zero.

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

                                       9
<PAGE>

     "Rating Agency Condition" means, with respect to Series 2000-A, the Rating
      -----------------------
Agency Condition, as defined in the Insurance Agreement.

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

     "Reassignment Amount" means, for any Distribution Date, after giving effect
      -------------------
to any deposits and distributions otherwise to be made on such Distribution
Date, the sum of (i) the outstanding principal balance of the Series 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 or the Counterparty as calculation agent under the
Swap.

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

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

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

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

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

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

                                      10
<PAGE>

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

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

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

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

     "Series 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 Note Principal Balance is paid in full and (b)
the November 2010 Distribution Date.

     "Series 2000-A Note" means a Class A Note.
      ------------------

     "Series 2000-A Noteholder" means a Class A Noteholder.
      ------------------------

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

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

                                      11
<PAGE>

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

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

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

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

     "Swap Rate" means 6.21% per annum.
      ---------

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

     (b)  Each capitalized term defined herein shall relate to the Series 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 Collateral Amount as of the last day of the
Monthly Period preceding such Distribution Date, minus (ii) the product of the
amount, if any, on deposit in the Excess Funding Account as of the last day of
the Monthly Period preceding such Distribution Date and the Allocation
Percentage for Finance Charge Collections with respect to such Monthly Period;
provided, however, that with respect to the first Distribution Date, the Monthly
--------  -------
Servicing Fee shall be equal to $484,178.00.  The remainder of the Servicing Fee
shall be paid by the Holders of the

                                      12
<PAGE>

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 transfer to the Finance
     Charge Subaccount for application as provided herein an amount equal to the
     product of (A) the Allocation Percentage and (B) the aggregate Finance
     Charge Collections deposited in the Collection Account on such Deposit
     Date; provided, however, that with respect to the portion of each Monthly
           --------  -------
     Period falling in the Revolving Period or the Controlled Accumulation
     Period, such allocation shall be transferred to the Finance Charge
     Subaccount only until such time as the amount transferred to the Finance
     Change Subaccount pursuant to this subsection during that Monthly Period
     equals the sum of (1) the Net Interest Obligation for the Distribution Date
     relating to the current Monthly Period, (2) at any time that FCNB is not
     the Servicer, the Monthly Servicing Fee payable on the Distribution Date
     relating to the current Monthly Period and all accrued and unpaid Investor
     Monthly Servicing Fees with respect to any prior Monthly Periods, (3) the
     Default Estimate for that Monthly Period and (4) the Monthly Insurance
     Premium with respect to that Monthly Period; provided further, however,
                                                  -------- -------  -------
     that notwithstanding the foregoing proviso, (1) the entire Allocation
                                        -------
     Percentage of Finance Charge Collections shall be transferred to the
     Finance Charge Subaccount on a daily basis if (x) the Excess Spread
     Percentage for the preceding Monthly Period is less than 3.00%, or (y) the
     Available Spread Account Amount is less than the Required Spread Account
     Amount; and (2) subject to Section 8.4(a) of the Indenture, on each
                                --------------
     Determination Date, the Servicer shall deposit in the

                                      13
<PAGE>

     Finance Charge Subaccount any amounts not retained on a daily basis
     pursuant to the preceding proviso. Any portion of such allocation not
                               -------
     required to be transferred to the Finance Charge Subaccount pursuant to the
     preceding sentence shall be (x) first, deposited in the Excess Funding
     Account to the extent that the Seller Amount is less than the Minimum
     Seller Amount and (y) thereafter paid to the Holders of the Seller
     Interest.

          (ii) Allocations of Principal Collections. The Servicer shall allocate
               ------------------------------------
     to the Series 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 is outstanding and in its amortization period
          or accumulation period, retained in the Collection Account for
          application, to the extent necessary, as Shared Principal Collections
          to other Principal Sharing Series on the related Distribution Date,
          second deposited in the Excess Funding Account to the extent necessary
          so that the Seller Amount is not less than the Minimum Seller Amount
          and third paid to the Holders of the Seller Interest.

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

                                      14
<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 Principal
          Collections deposited in the Collection Account on such Deposit Date,
          shall be allocated to the Series 2000-A Noteholders and transferred to
          the Principal Collections Subaccount until applied as provided herein;
          provided, however, that after the date on which an amount of such
          --------  -------
          Collections equal to the Note Principal Balance plus any amounts owing
          to the Counterparty under the Swap and the Insurer under the Insurance
          Agreement has been deposited into the Collection Account and allocated
          to the Series 2000-A Noteholders, such amount shall be first, if any
          other Principal Sharing Series is outstanding and in its amortization
          period or accumulation period, transferred to the Principal
          Collections Subaccount for application, to the extent necessary, as
          Shared Principal Collections to other Principal Sharing Series on the
          related Distribution Date, second deposited in the Excess Funding
          Account to the extent necessary so that the Seller Amount is not less
          than the Minimum Seller Amount and third paid to the Holders of the
          Seller Interest.

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

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

                                      15
<PAGE>

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

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

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

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

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

                                      16
<PAGE>

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

     (ii)   if neither FCNB nor any affiliate of the Seller is the Servicer, an
amount equal to the Monthly Servicing Fee for such Distribution Date, plus the
amount of any Monthly Servicing Fee previously due but not distributed to the
Servicer on a prior Distribution Date, shall be distributed to the Servicer;

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

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

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

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

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

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

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

                                      17
<PAGE>

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

           (xi)    after the Expected Principal Distribution Date, an amount
     equal to any Excess Interest for such Distribution Date, plus any unpaid
     Excess Interest from prior Distribution Dates, plus any Additional Excess
     Interest shall be distributed to the Paying Agent for payment to Class A
     Noteholders on such Distribution Date;

           (xii)   an amount equal to any early termination payments or other
     miscellaneous payments owed to the Counterparty under the Swap shall be
     paid to the Counterparty;

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

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

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

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

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

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

                                      18
<PAGE>

     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 Principal
Distribution the Indenture Trustee, acting in accordance with instructions from
the Servicer, shall withdraw from the Principal Accumulation Account and
distribute to the Paying Agent for payment to the Class A Noteholders the
amounts deposited into the Principal Accumulation Account pursuant to subsection
                                                                      ----------
4.4(c)(i).
---------

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

     Section  4.6  Reallocated Principal Collections. On each Distribution Date,
                   ---------------------------------
the Servicer shall apply, or shall instruct the Indenture Trustee in writing to
apply, Reallocated Principal Collections with respect to such Distribution Date,
to fund any deficiency pursuant to and in the priority set forth in subsections
                                                                    -----------
4.4(a)(i), (ii), (v), (ix), (x) and (xii); provided that in no event will
---------  ----  ---  ----  ---     -----
Reallocated Principal Collections be applied pursuant to subsections 4.4(a)(v),
                                                         ---------------------
(ix), (x) and (xii) until the Series 2000-A Final Maturity Date. On each
-------------------
Distribution Date, the Collateral Amount shall be reduced by the amount of
Reallocated Principal Collections for such Distribution Date.

     Section  4.7  Excess Finance Charge Collections. Series 2000-A shall be an
                   ---------------------------------
Excess Allocation Series with respect to Group One only. For this purpose, each
outstanding series of certificates issued by Spiegel Master Trust (other than
series represented by the Collateral Certificate) shall be deemed to be a Series
in Group One. Subject to Section 8.6 of the Indenture, Excess Finance Charge
                         -----------
Collections with respect to the Excess Allocation Series in Group One for any
Distribution Date will be allocated to Series 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

                                      19
<PAGE>

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 (xiii) on such Distribution Date over (b) the Available Finance Charge
         -----
Collections with respect to such Distribution Date (excluding any portion
thereof attributable to Excess Finance Charge Collections).

     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.
For this purpose, each outstanding series of certificates issued by Spiegel
Master Trust (other than series represented by the Collateral Certificate) shall
be deemed to be a Principal Sharing Series. The "Principal Shortfall" for Series
                                                 -------------------
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 Note
Principal Balance (less the balance in the Principal Accumulation Account) over
the amount of Available Principal Collections for such Distribution Date
(excluding any portion thereof attributable to Shared Principal Collections).

     Section  4.9   Principal Accumulation Account.
                    ------------------------------
     (a)   The Indenture Trustee shall establish and maintain with an Eligible
Institution, which may be the Indenture Trustee in the name of the Trust, on
behalf of the Trust, for the benefit of the Series 2000-A Noteholders, a non-
interest bearing segregated trust account with the corporate trust department of
such Eligible Institution (the "Principal Accumulation Account"), bearing a
                                ------------------------------
designation clearly indicating that the funds deposited therein are held for the
benefit of the Series 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 in
writing, and the Indenture Trustee upon being notified (or the Servicer on its
behalf) shall, within ten (10) Business Days, establish a new Principal

                                      20
<PAGE>

Accumulation Account meeting the conditions specified above with an Eligible
Institution, and shall transfer any cash or any investments to such new
Principal Accumulation Account. The Indenture Trustee, at the written direction
of the Servicer, shall (i) make withdrawals from the Principal Accumulation
Account from time to time, in the amounts and for the purposes set forth in this
Indenture Supplement, and (ii) on each Distribution Date (from and after the
commencement of the Controlled Accumulation Period) prior to the termination of
the Principal Accumulation Account, make deposits into the Principal
Accumulation Account in the amounts specified in, and otherwise in accordance
with, subsection 4.4(c)(i).
      --------------------

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

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

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

                                      21
<PAGE>

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

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

     (a)   The Indenture Trustee shall establish and maintain with an Eligible
Institution, which may be the Indenture Trustee in the name of the Trust, on
behalf of the Trust, for the benefit of the Series 2000-A Noteholders, a non-
interest bearing segregated trust account with the corporate trust department of
such Eligible Institution (the "Reserve Account"), bearing a designation clearly
                                ---------------
indicating that the funds deposited therein are held for the benefit of the
Series 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 in writing, and the Indenture Trustee upon being notified (or the
Servicer on its behalf) shall, within ten (10) Business Days, establish a new
Reserve Account meeting the conditions specified above with an Eligible
Institution, and shall transfer any cash or any investments to such new Reserve
Account. The Indenture Trustee, at the written direction of the Servicer, shall
(i) make withdrawals from the Reserve Account from time to time in an amount up
to the Available Reserve Account Amount at such time, for the purposes set forth
in this Indenture Supplement, and (ii) on each Distribution Date (from and after
the Reserve Account Funding Date) prior to termination of the Reserve Account,
make a deposit into the Reserve Account in the amount specified in, and
otherwise in accordance with, subsection 4.4(a)(vi).
                              ---------------------

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

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

                                      22
<PAGE>

securities intermediary shall comply with entitlement orders originated by the
Indenture Trustee without the further consent of any other person or entity, (e)
such securities intermediary will not agree with any person or entity other than
the Indenture Trustee to comply with entitlement orders originated by such other
person or entity, (f) such securities accounts and the property credited thereto
shall not be subject to any lien, security interest, or right of set-off in
favor of such securities intermediary or anyone claiming through it (other than
the Indenture Trustee), and (g) such agreement shall be governed by the laws of
the State of New York. Terms used in the preceding sentence that are defined in
the New York UCC and not otherwise defined herein shall have the meaning set
forth in the New York UCC.

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

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

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

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

                                      23
<PAGE>

     (f)   Upon the earliest to occur of (i) the termination of the Trust
pursuant to Article VIII of the Trust Agreement, (ii) the first Distribution
            ------------
Date relating to the Rapid Amortization Period and (iii) the Expected Principal
Distribution Date, the Indenture Trustee, acting in accordance with the
instructions of the Servicer, after the prior payment of all amounts owing to
the Series 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. Funds on deposit in the
Reserve Account at any time that the Controlled Accumulation Period is suspended
pursuant to Section 4.15, shall remain on deposit until applied in accordance
            ------------
with subsection 4.10(d), (e) or (f).
     ------------------------------

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

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

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

     (b)   The Note Interest Rate applicable to the then current and the
immediately preceding Interest Periods may be obtained by telephoning the
Indenture Trustee at its corporate trust office at (312) 827-8500 or such other
telephone number as shall be designated by the Indenture Trustee for such
purpose by prior written notice by the Indenture Trustee to each Series 2000-A
Noteholder from time to time.

                                      24
<PAGE>

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

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

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

     Section 4.15 Suspension of Controlled Accumulation Period. (a) The Issuer
                  --------------------------------------------
may, in its sole discretion, elect to suspend the commencement of the Controlled
Accumulation Period. The commencement of the Controlled Accumulation Period
shall be suspended upon delivery by the Issuer to the Indenture Trustee of (i)
an Officer's Certificate stating that the Issuer has elected to suspend the
commencement of the Controlled Accumulation Period and that all conditions
precedent to such suspension set forth in this Section 4.15 have been satisfied,
                                               ------------
(ii) a copy of an executed Qualified Maturity Agreement and (iii) an Opinion of
Counsel addressed to the Indenture Trustee as to the due authorization,
execution and delivery and the validity and enforceability of such Qualified
Maturity Agreement. The

                                      25
<PAGE>

Issuer does hereby transfer, assign, set-over, and otherwise convey to the
Indenture Trustee for the benefit of the Class A Noteholders, without recourse,
all of its rights under any Qualified Maturity Agreement obtained in accordance
with this Section 4.15 and all proceeds thereof. Such property shall constitute
          ------------
part of the Trust Estate for all purposes of the Indenture. The foregoing
transfer, assignment, set-over and conveyance does not constitute and is not
intended to result in a creation or an assumption by the Indenture Trustee or
any Noteholder of any obligation of the Issuer or any other Person in connection
with a Qualified Maturity Agreement or under any agreement or instrument
relating thereto.

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

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

     (c)  Each Qualified Maturity Agreement shall terminate at the close of
business on the Expected Principal Distribution Date; provided, however, that
                                                      --------  -------
the Issuer may terminate a Qualified Maturity Agreement prior to such
Distribution Date, with notice to each Rating Agency, if (i) the Available
Reserve Account Amount equals the Required Reserve Account Amount and (ii) one
of the following events occurs: (A) the Issuer obtains a substitute Qualified
Maturity Agreement, (B) the provider of the Qualified Maturity Agreement ceases
to qualify as an Eligible Institution and the Issuer is unable to obtain a
substitute Qualified Maturity Agreement or (C) a Pay Out Event occurs. In
addition, the Issuer may terminate a Qualified Maturity Agreement prior to the
later of (i) the date on which the Controlled Accumulation Period was scheduled
to begin, before giving effect to the suspension of the Controlled Accumulation
Period, and (b) the date to which the commencement of the Controlled
Accumulation Period may be postponed pursuant

                                      26
<PAGE>

     to Section 4.15 (as determined on the Determination Date preceding the date
        ------------
     of such termination), in which case the commencement of the Controlled
     Accumulation Period shall be determined as if the Issuer had not elected to
     suspend such commencement. In the event that the provider of a Qualified
     Maturity Agreement ceases to qualify as an Eligible Institution, the Issuer
     shall use its best efforts to obtain a substitute Qualified Maturity
     Agreement.

          (d)  If a Qualified Maturity Agreement is terminated prior to the
     earlier of the Expected Principal Distribution Date and the commencement of
     the Rapid Amortization Period and the Issuer does not obtain a substitute
     Qualified Maturity Agreement, the Controlled Accumulation Period shall
     commence on the latest of (i) November 1, 2004, (ii) at the election of the
     Issuer, the date to which the commencement of the Controlled Accumulation
     Period may be postponed pursuant to Section 4.13 (as determined on the date
                                         ------------
     of such termination) and (iii) the first day of the Monthly Period
     following the date of such termination.

          Section 4.16 Insurance Policies. On the Closing Date, the Issuer shall
                       ------------------
     enter into the Insurance Agreement, pursuant to which the Policies will be
     issued for the benefit of the Series 2000-A Noteholders and the
     Counterparty.

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

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

                                      27
<PAGE>

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

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

          (d)  So long as no Control Transfer Event shall have occurred and be
     continuing, the Insurer shall be deemed to be the sole Holder of the Series
     2000-A Notes for the purpose of exercising voting rights and the giving of
     any consents, approvals, instructions, directions, declarations and notices
     relating to the Series 2000-A Notes. However, for any amendment or waiver
     requiring the consent of all affected Noteholders, the consent of the
     Insurer and all affected Noteholders will be required.

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

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

          (c)  The Servicer may, upon satisfaction of the Rating Agency
     Condition, and, when required under the terms of the existing Swap, shall,
     obtain a replacement Swap.

                                  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 written order of the Trust when so authenticated.

                                      28
<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, including amounts made available as
     a result of any draw on the Policies.

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

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

          (d)  Except as provided in Section 11.2 of the Indenture with respect
                                     ------------
     to a final distribution, distributions to Series 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 by
     wire transfer of 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, the Insurer, the Counterparty and each
     Rating Agency (i) a statement substantially in the form of Exhibit C
                                                                ---------
     prepared by the Servicer and (ii) a certificate of an Authorized Officer
     substantially in the form of Exhibit D; provided that the Servicer may
                                  ---------  --------
     amend the form of Exhibit C and Exhibit D, from time to time, with the
                       ---------     ---------
     prior written consent of the Indenture Trustee.

                                      29
<PAGE>

          (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
     January 31, 2002, the Paying Agent, on behalf of the Indenture Trustee,
     shall furnish or cause to be furnished to each Person who at any time
     during the preceding calendar year was a Series 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 Servicer
     pursuant to any requirements of the Code as from time to time in effect.

                                 ARTICLE VI

              Series 2000-A Pay Out Events and Events of Default
              --------------------------------------------------

          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:

          (a)  failure on the part of the Seller (i) to make any payment or
     deposit required to be made by the Seller 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 in any material respect any other covenants or
     agreements of the Seller 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 forty-five (45) days after the date on which
     written notice of such failure, requiring the same to be remedied, shall
     have been given to the Seller by the Indenture Trustee, or to the Seller
     and the Indenture Trustee by any Holder of the Series 2000-A Notes;

          (b)  any representation or warranty made by the Seller in the Transfer
     and Servicing Agreement or, prior to the SMT Termination Date, the Pooling
     and Servicing Agreement, or any information contained in a computer file or
     microfiche list required to be delivered by the Seller pursuant to Section
     2.1 or subsection 2.6(c) of the Transfer and Servicing Agreement or Section
                                                                         -------
     2.1 or subsection 2.6(c) of the Pooling and Servicing Agreement shall prove
     ---    -----------------
     to have been incorrect in any material respect when made or when delivered,
     which continues to be incorrect in any material respect for a period of
     forty-five (45) days after the date on which written

                                      30
<PAGE>

     notice of such failure, requiring the same to be remedied, shall have been
     given to the Seller by the Indenture Trustee, or to the Seller and the
     Indenture Trustee by any Holder of the Series 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 Seller has accepted reassignment of the
     related Receivable, or all of such Receivables, if applicable, during such
     period in accordance with the provisions of the Transfer and Servicing
     Agreement or the Pooling and Servicing Agreement;

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

          (d)  any Servicer Default shall occur;

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

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

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

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

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

          (j)  the Counterparty shall fail to make any net payment required to
     be made by it under the Swap, and such failure is not cured within five
     Business Days, or the Swap shall terminate (other than in accordance with a
     replacement of the Swap in accordance with Section 4.7(c)) prior to the
                                                --------------
     Expected Principal Distribution Date;

          (k)  without limiting the foregoing, the occurrence of an Event of
     Default with respect to Series 2000-A; or

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

     then, in the case of any event described in subsection (a), (b), (d) or
                                                 --------------  ---  ---
     (i), 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

                                      31
<PAGE>

     aggregate unpaid principal amount of Series 2000-A Notes by notice then
     given in writing to the Seller 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 subsection (c), (e), (f), (g), (h), (j), (k) or (l),
                            --------------  ---  ---  ---  ---  ---  ---    ---
     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.

          Section 6.2 Series 2000-A Events of Default. (a) For so long as no
                      -------------------------------
     Control Transfer Event has occurred, the Events of Default for Series 2000-
     A shall include, in addition to the Events of Default specified in the
     Indenture, any one of the following events (whatever the reason for such
     Event of Default and whether it shall be voluntary or involuntary or be
     effected by operation of law or pursuant to any judgment, decree or order
     of any court or any order, rule or regulation of any administrative or
     governmental body):

               (i)   default in the payment of interest on the Series 2000-A
          Notes when the same becomes due and payable, and such default shall
          continue for a period of twenty-eight (28) days;

               (ii)  default in the observance or performance of any covenant or
          agreement of the Issuer made in the Indenture made in respect of the
          Series 2000-A Notes (other than a covenant or agreement, a default in
          the observance or performance of which is elsewhere in this Section
                                                                      -------
          6.2 or in Section 5.2 of the Indenture specifically dealt with) (all
          ---       -----------
          of such covenants and agreements in the Indenture which are not
          expressly stated to be for the benefit of a particular Series being
          deemed to be in respect of the Notes of Series 2000-A for this
          purpose) in any material respect and such default shall continue or
          not be cured for a period of forty-five (45) days after there shall
          have been given, by registered or certified mail, return receipt
          requested to the Issuer and the Indenture Trustee by the Insurer, a
          written notice specifying such default and requiring it to be remedied
          and stating that such notice is a "Notice of Default" hereunder; or
                                             -----------------

               (iii) any Servicer Default.

          (b)  If an Event of Default for Series 2000-A shall have occurred and
     be continuing and the Series 2000-A Notes have been accelerated pursuant to
     Section 5.3, so long as no Control Transfer Event has occurred, the Insurer
     -----------
     shall have the right, but not the obligation, to (i) exercise the rights of
     the Series 2000-A Noteholders described in Section 5.5 of the Indenture,
                                                -----------
     and (ii) to pay all or any portion of the outstanding principal balance of
     the Series 2000-A Notes prior to the Series 2000-A Final Maturity Date.
     Following the occurrence of an Event of Default for Series 2000-A, the
     Indenture Trustee shall continue to submit claims under the

                                      32
<PAGE>

     Policies as necessary to enable the Issuer to continue to make payments on
     each Distribution Date in accordance with the terms of this Indenture
     Supplement.

          Section 6.3 Declarations of Default. So long as no Control Transfer
                      -----------------------
     Event shall have occurred and be continuing, neither the Indenture Trustee
     nor the Class A Noteholders may declare an Event of Default with respect to
     the Series 2000-A Notes. So long as no Control Transfer Event shall have
     occurred and be continuing, an Event of Default with respect to the Series
     2000-A Notes shall occur only upon delivery by the Insurer to the Indenture
     Trustee of notice of the occurrence of an Event of Default.

                                 ARTICLE VII

  Redemption of Series 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, the Servicer 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; provided that all amounts due and owing to the Insurer
     pursuant to the Insurance Agreement shall have been paid to the Insurer.

          (b)  The Issuer shall give the Servicer and the Indenture Trustee at
     least thirty (30) days prior written notice of the date on which the Issuer
     intends to exercise such optional redemption. Not later than 12:00 noon,
     New York City time, on such day the Issuer shall deposit into the
     Collection Account in immediately available funds the excess of the
     Reassignment Amount over the amount, if any, on deposit in the Principal
     Accumulation Account. Such redemption option is subject to payment in full
     of the Reassignment Amount. Following such deposit into the Collection
     Account in accordance with the foregoing, the Collateral Amount for Series
     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 Seller with respect to Series
     2000-A in connection with a reassignment of Receivables to the Seller
     pursuant to Section 2.4(e) of the Transfer and Servicing Agreement shall
                 --------------
     equal the Reassignment Amount for the first Distribution Date following the
     Monthly Period in which the reassignment obligation arises under the
     Transfer and Servicing Agreement.

                                      33
<PAGE>

          (ii) The amount to be paid by the Seller 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 Note Principal Balance on such Distribution Date will be distributed to
     the Paying Agent for payment to the Class A Noteholders and (y) an amount
     equal to the sum of (A) Monthly Interest for such Distribution Date, (B)
     any Monthly Interest previously due but not distributed to the Class A
     Noteholders on a prior Distribution Date and (C) the amount of Additional
     Interest, if any, for such Distribution Date and any Additional Interest
     previously due but not distributed to the Class A Noteholders on any prior
     Distribution Date, will be distributed to the Paying Agent for payment to
     the Class A Noteholders, (ii) any unpaid Monthly Insurance Premiums,
     Reimbursement Amounts, interest thereon and other amounts payable to the
     Insurer under the Insurance Agreement will be distributed to the Insurer
     (iii) any amounts owed to the Counterparty under the Swap shall be
     distributed to the Counterparty and (iv) any excess shall be released to
     the Issuer.

          (e)  Notwithstanding anything to the contrary in this Indenture
     Supplement, the Indenture or the Transfer and Servicing Agreement, all
     amounts distributed to the Paying Agent pursuant to subsection 7.1(d) for
                                                         -----------------
     payment to the Series 2000-A Noteholders shall be deemed distributed in
     full to the Series 2000-A Noteholders on the date on which such funds are
     distributed to the Paying Agent pursuant to this Section 7.1 and shall be
                                                      -----------
     deemed to be a final distribution pursuant to Section 11.2 of the
                                                   ------------
     Indenture.

          Section 7.2 Series Termination. On the Series 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; Amendments. As supplemented by
                      -------------------------------------
     this Indenture Supplement, the Indenture is in all respects ratified and
     confirmed and the Indenture as so supplemented by this Indenture Supplement
     shall be read, taken and construed as one and the same instrument. This
     Indenture Supplement may be

                                      34
<PAGE>

     amended only by a Supplemental Indenture entered in accordance with the
     terms of Section 10.1 or 10.2 of the Indenture. For purposes of the
              ------------    ----
     application of Section 10.2 to any amendment of this Indenture Supplement,
                    ------------
     only the vote of the Series 2000-A Noteholders shall be required.

          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.

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

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

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

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

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

                           [SIGNATURE PAGES FOLLOW]

                                      35
<PAGE>

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

                                        SPIEGEL CREDIT CARD MASTER NOTE
                                        TRUST, as Issuer

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

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

                                        THE BANK OF NEW YORK,
                                        as Indenture Trustee

                                              /s/ Cassandra Shedd
                                        Name:------------------------------
                                        Title:  Assistant Treasurer

Signature page to
Indenture Supplement

                                      36
<PAGE>

     Acknowledged and Accepted:

     FIRST CONSUMERS NATIONAL BANK,
     as Servicer

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

     Acknowledged and Accepted:

     SPIEGEL CREDIT CORPORATION III,
     as Seller

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

Signature page to
Indenture Supplement

                                      37
<PAGE>

                                                                       EXHIBIT A

                FORM OF CLASS A FLOATING RATE ASSET BACKED NOTE

     UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.

     THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF COVENANTS AND AGREES THAT
IT WILL NOT AT ANY TIME INSTITUTE AGAINST THE ISSUER OR THE SELLER, OR JOIN IN
INSTITUTING AGAINST THE ISSUER OR THE SELLER, ANY BANKRUPTCY, REORGANIZATION,
ARRANGEMENT, INSOLVENCY OR LIQUIDATION PROCEEDINGS, OR OTHER PROCEEDINGS UNDER
ANY UNITED STATES FEDERAL OR STATE BANKRUPTCY OR SIMILAR LAW.

     THE HOLDER OF THIS CLASS A NOTE, BY ACCEPTANCE OF THIS NOTE, AND EACH
HOLDER OF A BENEFICIAL INTEREST THEREIN, AGREE TO TREAT THE CLASS A NOTES AS
INDEBTEDNESS OF THE ISSUER FOR APPLICABLE FEDERAL, STATE, AND LOCAL INCOME AND
FRANCHISE TAX LAW AND FOR PURPOSES OF ANY OTHER TAX IMPOSED ON, OR MEASURED BY,
INCOME.

                             Exhibit A-1 (Page 1)
<PAGE>

INITIAL OUTSTANDING PRINCIPAL BALANCE REGISTERED  $______________*

No. R- ____________________                  CUSIP NO.
                                                     -------------

              SPIEGEL CREDIT CARD MASTER NOTE TRUST SERIES 2000-A

                    CLASS A FLOATING RATE ASSET BACKED NOTE

     Spiegel Credit Card Master Note Trust (herein referred to as the "Issuer"
or the "Trust"), an Illinois common law trust governed by a Trust Agreement
dated as of December 1, 2000, for value received, hereby promises to pay to Cede
& Co., or registered assigns, subject to the following provisions, the principal
sum of __________________________________ DOLLARS, or such greater or lesser
amount as determined in accordance with the Indenture, on the Series 2000-A
Final Maturity Date (which is the earlier to occur of (a) the Distribution Date
on which the Note Principal Balance is paid in full and (b) the ___________
Distribution Date), except as otherwise provided below or in the Indenture.  The
Issuer will pay interest on the unpaid principal amount of this Note at the Note
Interest Rate on each Distribution Date until the principal amount of this Note
is paid in full.  Interest on this Note will accrue for each Distribution Date
from and including the most recent Distribution Date on which interest has been
paid to but excluding such Distribution Date or, for the initial Distribution
Date, from and including the Closing Date to but excluding such Distribution
Date.  Interest will be computed on the basis of a 360-day year and the actual
number of days elapsed.  Principal of this Note shall be paid in the manner
specified on the reverse hereof.

     The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts.

     Reference is made to the further provisions of this Note set forth on the
reverse hereof, which shall have the same effect as though fully set forth on
the face of this Note.

     Unless the certificate of authentication hereon has been executed by or on
behalf of the Indenture Trustee, by manual signature, this Note shall not be
entitled to any benefit under the Indenture or the Indenture Supplement referred
to on the reverse hereof, or be valid for any purpose.

________________________

     *    Denominations of $1,000 and integral multiples of $1,000 in excess
          thereof.

                             Exhibit A-1 (Page 2)
<PAGE>

     IN WITNESS WHEREOF, the Issuer has caused this Class A Note to be duly
executed.

                              SPIEGEL CREDIT CARD MASTER NOTE TRUST,
                              as Issuer

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

                              By: ______________________________________________
                              Name:
                              Title:

Dated:_________,_____

                             Exhibit A-1 (Page 3)
<PAGE>

               INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION

This is one of the Class A Notes described in the within-mentioned Indenture.

                                    The Bank of New York

                                    By:_________________________________________
                                              Authorized Signatory

                             Exhibit A-1 (Page 4)
<PAGE>

              SPIEGEL CREDIT CARD MASTER NOTE TRUST SERIES 2000-A

                    CLASS A FLOATING RATE ASSET BACKED NOTE

                        Summary of Terms and Conditions

     This Class A Note is one of a duly authorized issue of Notes of the Issuer,
designated as Spiegel Credit Card Master Note Trust, Series 2000-A (the "SERIES
2000-A NOTES"), issued under a Master Indenture dated as of December 1, 2000
(the "MASTER INDENTURE"), between the Issuer and The Bank of New York, as
indenture trustee (the "INDENTURE TRUSTEE"), as supplemented by the Indenture
Supplement dated as of December 1, 2000 (the "INDENTURE SUPPLEMENT"), and
representing the right to receive certain payments from the Issuer.  The term
"Indenture," unless the context otherwise requires, refers to the Master
Indenture as supplemented by the Indenture Supplement.  The Notes are subject to
all of the terms of the Indenture.  All terms used in this Note that are defined
in the Indenture shall have the meanings assigned to them in or pursuant to the
Indenture.  In the event of any conflict or inconsistency between the Indenture
and this Note, the Indenture shall control.

     The Noteholder, by its acceptance of this Note, agrees that it will look
solely to the property of the Trust allocated to the payment of this Note for
payment hereunder and that the Indenture Trustee is not liable to the
Noteholders for any amount payable under the Note or the Indenture or, except as
expressly provided in the Indenture, subject to any liability under the
Indenture.

     This Note does not purport to summarize the Indenture and reference is made
to the Indenture for the interests, rights and limitations of rights, benefits,
obligations and duties evidenced thereby, and the rights, duties and immunities
of the Indenture Trustee.

     The Note Initial Principal Balance is $______________. The Note Principal
Balance on any date of determination will be an amount equal to (a) the Note
Initial Principal Balance, minus (b) the aggregate amount of principal payments
made to the Class A Noteholders on or prior to such date.

     The Expected Principal Distribution Date is the ____________ Distribution
Date, but principal with respect to the Class A Notes may be paid earlier or
later under certain circumstances described in the Indenture.  If for one or
more months during the Controlled Accumulation Period there are not sufficient
funds to deposit into the Principal Funding Account the Controlled Deposit
Amount, then to the extent that excess funds are not available on subsequent
Distribution Dates with respect to the Controlled Accumulation Period to make up
for such shortfalls, the final payment of principal of the Notes will occur
later than the Expected Principal Distribution Date.  Payments of principal of
the Notes shall be payable in accordance with the provisions of the Indenture.

     Subject to the terms and conditions of the Indenture, the Seller may, from
time to time, direct the Owner Trustee, on behalf of the Trust, to issue one or
more new Series of Notes.

                             Exhibit A-1 (Page 5)
<PAGE>

     On each Distribution Date, the Paying Agent shall distribute to each Class
A Noteholder of record on the related Record Date (except for the final payment
in respect of this Class A Note) 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 and principal on the Class A Notes pursuant to
the Indenture Supplement. Except as provided in the Indenture with respect to a
final payment, payments to Series 2000-A Noteholders 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 with respect to any Series 2000-A
Notes registered in the name of the nominee of a Clearing Agency, such payment
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. Final
payment of this Class A Note will be made only upon presentation and surrender
of this Class A Note at the office or agency specified in the notice of final
payment delivered by the Indenture Trustee to the Series 2000-A Noteholders in
accordance with the Indenture.

     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 the Series 2000-A Notes, the Servicer
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.

     THIS CLASS A NOTE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
THE SELLER, THE ISSUER, FIRST CONSUMERS NATIONAL BANK, OR ANY AFFILIATE OF ANY
OF THEM AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR INSTRUMENTALITY.

     Each Noteholder, by accepting a Note, hereby covenants and agrees that it
will not at any time institute against the Issuer or the Seller, or join in
instituting against the Issuer or the Seller, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any United States federal or state bankruptcy or similar law.

     Except as otherwise provided in the Indenture Supplement, the Class A Notes
are issuable only in minimum denominations of $1,000 and integral multiples of
$1,000.  The transfer of this Class A Note shall be registered in the Note
Register upon surrender of this Class A Note for registration of transfer at any
office or agency maintained by the Transfer Agent and Registrar accompanied by a
written instrument of transfer, in a form satisfactory to the Indenture Trustee
or the Transfer Agent and Registrar, duly executed by the Class A Noteholder or
such Class A Noteholder's attorney, and duly authorized in writing with such
signature guaranteed, and thereupon one or more new Class A Notes in any
authorized denominations of like aggregate principal amount will be issued to
the designated transferee or transferees.

     As provided in the Indenture and subject to certain limitations therein set
forth, Class A Notes are exchangeable for new Class A Notes in any authorized
denominations and of like

                             Exhibit A-1 (Page 6)
<PAGE>

aggregate principal amount, upon surrender of such Notes to be exchanged at the
office or agency of the Transfer Agent and Registrar. No service charge may be
imposed for any such exchange but the Issuer or Transfer Agent and Registrar may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection therewith.

     The Issuer, the Seller, the Indenture Trustee and any agent of the Issuer,
the Seller or the Indenture Trustee shall treat the person in whose name this
Class A Note is registered as the owner hereof for all purposes, and neither the
Issuer, the Seller, the Indenture Trustee nor any agent of the Issuer, the
Seller or the Indenture Trustee shall be affected by notice to the contrary.

     THIS CLASS A NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF ILLINOIS, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.

                             Exhibit A-1 (Page 7)
<PAGE>

                                  ASSIGNMENT

Social Security or other identifying number of assignee _______________________

     FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto _________________________________ (name and address of assignee) the within
certificate and all rights thereunder, and hereby irrevocably constitutes and
appoints _____________________ attorney, to transfer said certificate on the
books kept for registration thereof, with full power of substitution in the
premises.

Dated:_____________                 _________________________________**
                                    Signature Guaranteed:

_______________________

     **   The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatsoever.

                             Exhibit A-2 (Page 1)
<PAGE>

(Multicurrency--Cross Border)

                                    ISDA(R)

                 International Swap Dealers Association. Inc.

                               MASTER AGREEMENT

                          dated as of December 19, 2000
                                     -------------------

  BANK OF AMERICA, N.A.               and Spiegel Credit Card Master Note Trust

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

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

Accordingly, the parties agree as follows:--

1.   Interpretation

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

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

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

2.   Obligations

(a)  General Conditions.

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

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

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

       Copyright(C)1992 by International Swap Dealers Association, Inc.
<PAGE>

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

(c)  Netting. If on any date amounts would otherwise be payable:--

     (i)   in the same currency; and

     (ii)  in respect of the same Transaction,

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

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

(d)  Deduction or Withholding for Tax.

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

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

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

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

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

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

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

                                       2
<PAGE>

     (ii)  Liability.  If:--

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

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

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

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

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

3.   Representations

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

(a)  Basic Representations.

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

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

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

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

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

                                       3
<PAGE>

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

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

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

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

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

4.   Agreements

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

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

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

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

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

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

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

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

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

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

                                       4
<PAGE>

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

5.   Events of Default and Termination Events

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

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

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

     (iii) Credit Support Default.

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

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

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

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

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

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

                                       5
<PAGE>

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

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

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

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

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

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

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

                                       6
<PAGE>

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

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

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

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

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

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

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

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

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

                                       7
<PAGE>

6.       Early Termination

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

(b)      Right to Terminate Following Termination Event.

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

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

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

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

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

         (iv)  Right to Terminate. If:--

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

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

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

                                       8
<PAGE>

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

(c)      Effect of Designation.

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

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

(d)      Calculations.

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

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

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

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

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

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

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

                                       9
<PAGE>

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

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

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

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

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

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

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

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

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

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

                                       10
<PAGE>

7.     Transfer

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

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

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

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

8.     Contractual Currency

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

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

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

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

                                       11
<PAGE>

9.     Miscellaneous

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

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

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

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

(e)    Counterparts and Confirmations.

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

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

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

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

10.    Offices; Multibranch Parties

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

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

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

11.    Expenses

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

                                       12
<PAGE>

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

12.    Notices

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

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

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

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

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

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

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

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

13.    Governing Law and Jurisdiction

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

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

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

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

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

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

                                       13
<PAGE>

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

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

14.   Definitions

As used in this Agreement:--

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

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

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

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

"Applicable Rate" means:--

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

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

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

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

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

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

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

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

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

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

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

                                       14
<PAGE>

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

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

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

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

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

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

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

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

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

                                       15
<PAGE>

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

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

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

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

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

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

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

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

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

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

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

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

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

                                       16
<PAGE>

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

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

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

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

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

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

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

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

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

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

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

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

                                       17
<PAGE>

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

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

Bank of America, N.A.                     Spiegel Credit Card Master Note Trust
----------------------------------        -------------------------------------
        (Name of Party)                                (Name of Party)
                                          By: Bankers Trust Company, not in its
                                          individual capacity, but solely as
                                          owner trustee

By:                                       By:
   -------------------------------            ---------------------------------
Name:                                     Name:

Title:                                    Title:

Date:                                     Date:

                                       18
<PAGE>

                                                               Execution Version

(Multicurrency--Cross Border)

                                   ISDA (R)
                 International Swap Dealers Association, Inc.

                                   SCHEDULE
                                    to the
                               Master Agreement

                         dated as of December 19, 2000

between   BANK OF AMERICA, N.A.            and    SPIEGEL CREDIT CARD MASTER
                                                  NOTE TRUST
            ("Party A")                             ("Party B")

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

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

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

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

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

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

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

     in relation to Party B for the purpose of:-

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

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

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

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

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

                                       1
<PAGE>

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

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

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

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

     (i)  Market Quotation will apply.

     (ii) The Second Method will apply.

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

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

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

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

             (c)  If a Redemption Event is to occur, an Early Termination Date
             in respect of each Transaction shall be deemed to occur on the
             Distribution Date in respect of such Redemption Event. Any
             Settlement Amount payable in respect of such Redemption Event shall
             be paid, in the case of Party A, on the date of such Early
             Termination Date and, in the case of Party B, on the next
             Distribution Date to the extent provided in the Indenture.

(j)  Unauthorized Amendments. Party B shall deliver to Party A a copy of any
     proposed Supplemental Indenture.

(k)  Downgrade of Party A. If a Ratings Event (as defined below) shall occur and
     be continuing with respect to Party A, then Party A shall, within 5 Local
     Business Days of such Ratings Event, (A) give notice to Party B of the
     occurrence of such Ratings Event, and (B) use reasonable efforts to
     transfer Party A's rights and obligations under the Agreement and all
     Confirmations to another party, subject to satisfaction of the Rating
     Agency Condition (as defined below), and at the cost of Party A. Unless
     such a transfer by Party A has occurred within 20 Local Business Days after
     the occurrence of a Ratings Event, Party B shall demand that Party A post
     Eligible Collateral on a mark-to-market basis, to secure Party B's
     exposure, if any, to Party A, and such Eligible

                                       2
<PAGE>

     Collateral shall be provided in accordance with a Credit Support Annex to
     be attached hereto and made a part hereof within 10 Local Business Days of
     Party B's demand therefor. The Eligible Collateral to be posted and the
     Credit Support Annex to be executed and delivered shall be subject to the
     Rating Agency Condition. Notwithstanding the addition of the Credit Support
     Annex and the posting of Eligible Collateral, Party A shall continue to use
     reasonable efforts to transfer its rights and obligations to an acceptable
     third party; provided, however, that Party A's obligations to find a
     transferee and to post Eligible Collateral under such Credit Support Annex
     shall remain in effect only for so long as a Ratings Event is continuing
     with respect to Party A. For the purpose of this Part 1(k), a "Ratings
     Event" shall occur with respect to Party A if the long-term and short-term
     senior unsecured deposit ratings of Party A cease to be at least A+ and A-1
     by Standard & Poor's Ratings Service or any successor thereto ("S&P"), at
     least A1 and P-1 by Moody's Investors Service, Inc. or any successor
     thereto ("Moody's"), or at least A+ and F-1 by Fitch Ratings, Inc. or any
     successor thereto ("Fitch"), to the extent such obligations are rated by
     S&P, Moody's or Fitch. "Rating Agency Condition" has the meaning specified
     in the Indenture defined in Part 1(a) of this Schedule.

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

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

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

     It is not required by any applicable law, as modified by the practice of
     any relevant governmental revenue authority of any Relevant Jurisdiction to
     make any deduction or withholding for or on account of any Tax from any
     payment (other than interest under Section 2(e), 6(d)(ii) or 6(e) of this
     Agreement) to be made by it to the other party under this Agreement. In
     making this representation, it may rely on (x) the accuracy of any
     representations made by the other party pursuant to Section 3(f) of this
     Agreement, (y) the satisfaction of the agreement contained in Section
     4(a)(i) or 4(a)(iii) of this Agreement and the accuracy and effectiveness
     of any document provided by the other party pursuant to Section 4(a)(i) or
     4(a)(iii) of this Agreement and (z) the satisfaction of the agreement of
     the other party contained in Section 4(d) of this Agreement, provided that
     it shall not be a breach of this representation where reliance is placed on
     clause (y) and the other party does not deliver a form or document under
     Section 4(a)(iii) by reason of material prejudice to its legal or
     commercial position.

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

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

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

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

                                       3
<PAGE>

<TABLE>
<CAPTION>

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

(b)     Other documents to be delivered are:-

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

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

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

                                        4
<PAGE>

<TABLE>
<CAPTION>
    Party           Form/Document/Certificate                        Date by              Covered by
    required to                                                      which to be          Section 3(d)
    deliver                                                          delivered            Representation
    document
   -------------   --------------------------------------           -----------------     ------------------------
<S>                <C>                                              <C>                   <C>
   Party A and     Certified copies of all corporate                  Upon execution and     Yes
   Party B         authorizations and any other documents             delivery of this
                   with respect to the execution, delivery            Agreement
                   and performance of this Agreement and the
                   Indenture; legal opinion from in-house counsel
                   for MBIA with respect to enforceability of Policy
                   and related matters

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

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

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

      Address for notice or communications to Party A:

      Bank of America, N.A.
      Sears Tower
      233 South Wacker Drive, Suite 2800
      Chicago, IL 60606
      Attention:  Swap Operations
      Telex No.:  49663210  Answerback: NATIONSBANK CHA
      Reuters Dealing Code: NBCH

      with a copy to:

      Bank of America, N.A.
      100 N. Tryon St., NC1-007-13-01
      Charlotte, North Carolina  28255
      Attention:  Capital Markets Documentation
      (Telex No.:  9663210;  Answerback: NATIONSBK CHA)
      Facsimile No.: 704-386-4113

      Address for financial statements to Party A:

                                       5
<PAGE>

         Bank of America, N.A.
         231 South LaSalle Street
         Chicago, IL 60604
         Attention: Bridget A. Garavalia
         Telephone No.: 312-828-1259
         Facsimile No.: 312-828-6269

         Address for notice or communications to Party B:

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

         With a copy to:

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

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

         Party A appoints as its Process Agent: Not applicable.

         Party B appoints as its Process Agent: Not applicable.

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

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

         Party A is not a Multibranch Party.

         Party B is not a Multibranch Party.

(e)      Calculation Agent.  The Calculation Agent is Party A.

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

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

         Indenture; Financial Guaranty Insurance Policy No. 33927(2) (the
         "Policy") issued by MBIA Insurance Corporation ("MBIA") on December 19,
         2000, to the Indenture Trustee as beneficiary. The Policy shall be a
         Credit Support Document solely with respect to net Fixed Amounts
         payable

                                       6
<PAGE>

         by Party B, and shall not be available to support, and may not be drawn
         on in respect of, any amounts due from Party B under Section 6(e) or
         any other provision of the Agreement.

         Party B agrees that the security interests in collateral granted to
         Party A under the Indenture in respect of Series 2000-A shall secure
         the obligations of Party B to Party A under this Agreement.

(g)      Credit Support Provider.

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

         Credit Support Provider means in relation to Party B:  MBIA

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

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

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

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

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

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

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

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

                                       7
<PAGE>

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

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

         "(vi)    Eligible Swap Participant. It is an 'eligible swap
                  participant' as defined under the regulations of the Commodity
                  Futures Trading Commission, currently at 17 CFR Section
                  35.1(b)(2)."

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

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

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

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

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

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

(i)      [Reserved.]

(j)      Provisions Relating to MBIA:

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

                                       8
<PAGE>

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

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

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

(k)      Non-Petition. Party A hereby agrees that it will not, prior to the date
         which is one year and one day after all Series 2000-A Notes issued by
         Party B pursuant to the Indenture have been paid in full, acquiesce,
         petition or otherwise invoke or cause Party B to invoke the process of
         any court or governmental authority for the purpose of commencing or
         sustaining a case against Party B under any federal or state
         bankruptcy, insolvency or similar law or for the purpose of appointing
         a receiver, liquidator, assignee, trustee, custodian, sequestrator or
         other similar official for Party B or any substantial part of the
         property of Party B, or for the purpose of ordering the winding up or
         liquidation of the affairs of Party B. Nothing herein shall prevent
         Party A from participating in any such proceeding once commenced.

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

                                       9
<PAGE>

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

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

                                      10
<PAGE>

Accepted and agreed:

BANK OF AMERICA, N.A.                      SPIEGEL CREDIT CARD MASTER NOTE TRUST

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

By: ..............................         By: .............................
    Name: Roger H. Heintzelman                 Name:
    Title: Vice President                      Title:

                                      11
<PAGE>

                  CONFIRMATION FOR U.S. DOLLAR INTEREST RATE SWAP
                           TRANSACTION UNDER 1992 MASTER AGREEMENT

Date:   December 19, 2000                      Our ref: 3222555
To:     Spiegel Credit Card Master Note Trust  From:    Bank of America, N.A.
        c/o Bankers Trust Company                       Sears Tower
        Four Albany Street, 10/th/ Floor                233 South Wacker Drive,
        New York, NY 10006                              Suite 2800
Attn:   Corporate Trust & Agency Services               Chicago, IL  60606
Fax No: 212-250-6439                           Contact: Global Derivative
Tel No: 212-250-6323                                    Operations
                                               Fax No:  (312) 234 3603
                                               Tel No:  (312) 234 2732

Dear Sir/Madam,

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

         The definitions and provisions contained in the 1991 ISDA Definitions,
as amended by the 1998 Supplement thereto (each as published by the
International Swaps and Derivatives Association, Inc., the "Definitions") are
incorporated into this Confirmation. In the event of any inconsistency between
the Definitions and this Confirmation, this Confirmation will govern.
Capitalized terms used herein and not otherwise defined have the meanings set
forth in the Definitions or the Indenture referred to below under "Credit
Support Documents."

1.       This Confirmation supplements, forms part of, and is subject to, the
ISDA Master Agreement (including the Schedule thereto) dated as of December 19,
2000, as amended and supplemented from time to time (the "Agreement"), between
the parties. All provisions contained in the Agreement govern this Confirmation
except as expressly modified below.

         In this Confirmation "Party A" means Bank of America, N.A. and "Party
B" means Spiegel Credit Card Master Note Trust, Series 2000-A.

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

         Notional Amount:           USD600,000,000

         Trade Date:                December 19, 2000

         Effective Date:            December 19, 2000

         Termination Date:          November 15, 2005, subject to adjustment in
                                    accordance with the Modified Following
                                    Business Day Convention, subject to early
                                    termination in accordance with the terms of
                                    the Agreement

                                  Page 1 of 4

                                       30
<PAGE>

         Fixed Amounts:

         Fixed Rate Payer:                Party B

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

         Fixed Rate:                      6.21% per annum

         Fixed Rate Day Count Fraction:   Actual/360

         Floating Amounts:

         Floating Rate Payer:             Party A

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

         Calculation Period:              6.695% per annum

         Floating Rate Option:            USD-LIBOR-BBA

         Designated Maturity:             1 Month

         Spread:                          None

         Floating Rate Day Count          Actual/360
         Fraction:

         Reset Dates:                     First day of each Calculation Period

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

         Calculation Agent:               Party A

3.       Additional Amounts Upon Partial Termination

         On any Payment Date during the Rapid Amortization Period or otherwise,
where as a result of payments of principal on the Series 2000-A Notes on such
Payment Date, the Notional Amount would exceed the Outstanding Amount of the
Series 2000-A Notes (as defined in the Indenture), the parties hereto shall
treat the portion of this Transaction represented by such excess as terminated
on such Payment Date (a "Terminated Transaction"). Party A shall calculate the
Market Quotation for the Terminated Transaction as set forth below.

         "Market Quotation" means, with respect to a Terminated Transaction, an
amount determined on the basis of quotations from Reference Market-makers. Each
quotation will be for an amount, if any, that would be paid to Party A
(expressed as a negative number) or by Party A (expressed as a positive number)
in consideration of an agreement between Party A and the quoting Reference
Market-maker to enter into such Terminated Transaction (with the same fixed and
floating payment

                                  Page 2 of 4

                                       31
<PAGE>

rates and remaining term as this Transaction) on the relevant Payment Date.
Party A will request each Reference Market-maker to provide its quotation to the
extent reasonably practicable as of the same day and time (without regard to
different time zones) on or as soon as reasonably practicable prior to the
relevant Payment Date. The day and time as of which those quotations are to be
obtained will be selected in good faith by Party A. If more than three
quotations are provided, the Market Quotation will be the arithmetic mean of the
quotations, without regard to the quotations having the highest and lowest
values. If exactly three such quotations are provided, the Market Quotation will
be the quotation remaining after disregarding the highest and lowest quotations.
For this purpose, if more than one quotation has the same highest value or
lowest value, then one of such quotations shall be disregarded. If fewer than
three quotations are provided, Party A will determine the Market Quotation in
good faith. Notwithstanding the foregoing, Party A shall be the sole Reference
Market-maker unless: (a) the reduction in the Notional Amount of the Transaction
is equal to or greater than $50 million on such Payment Date, and (b) the
Servicer or the Indenture Trustee requests that quotations from Reference
Market-makers other than Party A are utilized.

         If the amount so determined by Party A in respect of a Terminated
Transaction is positive, Party B shall owe such amount to Party A, which shall
be payable (with interest thereon accruing from such Payment Date and calculated
at the Fixed Rate) on the next Distribution Date to the extent provided in the
Indenture. If such amount is negative, Party A shall owe such amount to Party B,
which shall be payable (with interest accruing from such Payment Date and
calculated at the Floating Rate) on the November 15, 2005 Payment Date, net of
any amounts payable by Party B to Party A.

4.       Credit Support Documents:               With respect to Party B, (a)
                                                 the Indenture, dated as of
                                                 December 1, 2000, as
                                                 supplemented by the
                                                 Supplemental Indenture, dated
                                                 as of December 19, 2000 (as so
                                                 supplemented, the "Indenture"),
                                                 between Party B and The Bank of
                                                 New York, as indenture trustee,
                                                 and (b) solely with respect to
                                                 net Fixed Amounts payable by
                                                 Party B, and not with respect
                                                 to any amount due under Section
                                                 6(e) or any other provision of
                                                 the Agreement, the Financial
                                                 Guaranty Insurance Policy,
                                                 dated as of December 19, 2000,
                                                 issued by MBIA

5.       Account Details:
         Account for payments to Party A:        Name:  Bank of America

                                                 City: New York

                                                 ABA# 026009593

                                                 ATTN: BOFAUS3N

                                                 Name:  Bank of America, NA

                                                 City: Charlotte

                                                 Acct:  6550219386

                                                 Attn:  Rate Derivative
                                                 Settlements

         Account for payments to Party B:        The Bank of New York
                                                 ABA #021000018
                                                 Name:  Spiegel Credit Card
                                                        Master Note Trust
                                                        Collection Account
                                                 Acct:  341802

                                  Page 3 of 4

                                       32
<PAGE>

6.       Offices:

         The Office of Party A for this
         Transaction is:
                                            Charlotte, NC

         The Office of Party B for this
         Transaction is:
                                            New York

         Please confirm that the foregoing correctly sets forth
         the terms and conditions of our agreement by responding
         within three (3) Business Days by returning via
         telecopier an executed copy of this Confirmation to the
         attention of Global Derivative Operations (fax no. (312)
         234 3603).

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

Bank of America, N.A.          Accepted and confirmed as of the date first
                               written:

                               Spiegel Credit Card Master Note Trust,
By:________________________    By Bankers Trust Company, not in its individual
                               capacity, but solely as Owner Trustee

Name:
Title:

                               By:_____________________________

                               Name and Title:

Page 4 of 4

                                       33
<PAGE>

                                                                       EXHIBIT F
                                                                       ---------

                        INSURANCE AGREEMENT DEFINITIONS
                        -------------------------------

         "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.

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

                  For the January 16, 2001 Distribution Date, the Modified
Excess Spread Percentage;

                  For the February 15, 2001 Distribution Date, the sum of the
         Modified Excess Spread Percentage and the Excess Spread Percentage for
         the calendar month of January 2001, divided by two (2);

                  For the March 2001 Distribution Date, the sum of the Modified
         Excess Spread Percentage, the Excess Spread Percentage with respect to
         the calendar month of January 2001 and the Excess Spread Percentage
         with respect to the calendar month of February 2001, divided by three
         (3); and

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

         "Bank" means, on any day, the Eligible Institution holding the Spread
          ----
Account pursuant to Section 2.05 hereof.

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

         "Condition Precedent Documents" means:
          -----------------------------

               (i)    the Insurance Agreement;
<PAGE>

               (ii)   the Transfer and Servicing Agreement

               (iii)  the Master Indenture;

               (iv)   the Series 2000-A Indenture Supplement;

               (v)    the Receivables Purchase Agreement dated September 20,
                      1994 among the Seller, FCNB and Spiegel Acceptance;

               (vi)   the Trust Agreement;

               (vii)  the Administration Agreement;

               (viii) the Pooling and Servicing Agreement;

               (ix)   the Collateral Series Supplement and Exhibit B thereto,
                      the form of Trust Receivables Purchase Agreement;

               (x)    the Underwriting Agreement;

               (xi)   the Indemnification Agreement;

               (xii)  the Premium and Fee Letter;

               (xiii) the Swap; and

               (xiv)  the Spread Account Letter.

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

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

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

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

                                       2
<PAGE>

Default Amount Rate for that calendar month.

         "Indemnification Agreement" means the Indemnification Agreement, dated
          -------------------------
as of December 19, 2000 among the Insurer, the Seller, Spiegel and Banc of
America Securities LLC, as representative (the "Representative") of Deutsche
                                                --------------
Bank Securities Inc., J.P. Morgan Securities Inc., ABN AMRO Incorporated and
HSBC Securities (USA) Inc., as underwriters (together with the Representative,
the "Underwriters").
     ------------

         "Insurance Agreement Event of Default" means an Event of Default
          ------------------------------------
described in Section 6.2 of the Series 2000-A Indenture Supplement.

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

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

         "Modified Excess Spread Percentage" means 8.75%.
          ---------------------------------

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

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

         "Portfolio Yield" means, with respect to any calendar month, the
          ---------------
annualized percentage equivalent of a fraction: (a) the numerator of which is
equal to the amount of (i) Investor Finance Charge Collections with respect to
such calendar month plus (ii) any Net Swap Receipt for the following
Distribution Date, plus (iii) the Principal Accumulation Investment Proceeds
deposited into the Collection Account on the Distribution Date following such
calendar month, plus (iv) the amount of the Reserve Draw Amount (up to the
Available Reserve Account

                                       3
<PAGE>

Amount) plus any amounts of interest and earnings described in Section 4.10 of
the Series 2000-A Indenture Supplement, each deposited into the Collection
Account on the Distribution Date following such calendar month, plus (v) Excess
Finance Charge Collections that are allocated to Series 2000-A with respect to
such calendar month, such sum to be calculated on a cash basis, and (b) the
denominator of which is the Collateral Amount as of the first day of such
calendar month.

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

         "Rating Agency Condition" means with respect to any action or series of
          -----------------------
related actions or proposed transaction or series of related proposed
transactions affecting Series 2000-A, that each Rating Agency shall have
notified Seller and the Indenture Trustee in writing that such action or series
of related actions or the consummation of such proposed transactions or series
of related transactions will not result in a reduction or withdrawal of (i) the
rating of the Series 2000-A Notes or (ii) the Shadow Rating.

         "Required Amount" means, for any Distribution Date, an amount equal to
          ---------------
the excess of the sum of the amounts described in subsections 4.4(a)(i) and
                                                  ---------------------
4.4(a)(ii) of the Series 2000-A Indenture Supplement over the Available Finance
----------
Charge Collections applied to pay such amounts pursuant to subsection 4.4(a) of
                                                           -----------------
the Series 2000-A Indenture Supplement; provided, that if the Rapid Amortization
                                        --------
Period is extended past the Series 2000-A Final Maturity Date as a result of
there being amounts owed to the Insurer under this Agreement or the Series
2000-A Indenture Supplement or the Counterparty under the Swap, then for any
Distribution Date falling on or after the Series 2000-A Final Maturity Date, the
Required Amount shall mean any such amounts owed to the Insurer and/or the
Counterparty that remain outstanding, and such amounts shall also be included in
the Required Amount on the Series 2000-A Final Maturity Date to the extent that
Reallocated Principal Collections remain available to cover such amounts after
all other components of the Required Amount have been paid in full or Available
Spread Account Amount remains for that purpose after the other components of the
Required Amount and the Note Principal Balance have been paid in full.

         "Required Excess Collateral Amount" means, with respect to any
          ---------------------------------
Distribution Date, 10.5% of the Collateral Amount on such Distribution Date;
provided that, (A) except as provided in (C) below, the Required Excess
-------------
Collateral Amount will never be less than 3% of the Initial Collateral Amount;
(B) except as provided in (C) below, the Required Excess Collateral Amount will
not decrease during a Rapid Amortization Period, and (C) the Required Excess
Collateral Amount will never be greater than the Note Principal Balance minus
the Principal Accumulation Account Balance.

         "Required Spread Account Amount" means (a) on the Closing Date, the
          ------------------------------
Spread Account Deposit, (b) on each Distribution Date prior to a Pay Out Event,
an amount equal to the lesser of (x) the product of (i) the Spread Account
Percentage for that Distribution Date and (ii) the Maximum Commitment Amount,
and (y) the Note Principal Balance on such Distribution Date,

                                       4
<PAGE>

minus the Principal Accumulation Account Balance on the relevant determination
date; and (c) on each Distribution Date after a Pay Out Event or on which a Pay
Out Event has occurred, the Note Principal Balance on such Distribution Date.

         "Shadow Rating" means rating of the Notes at BBB/Baa2 by the Rating
          -------------
Agencies, without giving effect to the Policy.

         "Spread Account" means the segregated trust account required to be
          --------------
established pursuant to Section 2.05 hereof.

         "Spread Account Deposit" means 1% of the Note Initial Principal
          ----------------------
Balance.

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

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

         "Spread Account Percentage" means on each Distribution Date:
          -------------------------

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

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

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

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

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

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

                                       5
<PAGE>

Date.

         "Subsidiary" means as to any Person, a corporation or entity of which
          ----------
shares of stock or other equity interests having ordinary voting power (other
than stock or other equity interests having such power only by reason of the
happening of a contingency) to elect a majority of the board of directors or
other managers of such corporation or entity are (a) at the time owned, or (b)
the management of which is otherwise controlled, directly or indirectly, through
one or more intermediaries, by such Person.

         "Supplemental Enhancement" means, with respect to any Distribution
          ------------------------
Date, the product of the Supplemental Enhancement Percentage and the Collateral
Amount on such Distribution Date.

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

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

                                       6
<PAGE>

                                                                       EXHIBIT G
                                                                       ---------

              SECTION 2.05 OF INSURANCE AGREEMENT (SPREAD ACCOUNT)
              ----------------------------------------------------

     SECTION 2.05   The Spread Account.
                    ------------------

          (a)  On or prior to the Closing Date, the Servicer shall cause to be
established in the name of the Noteholders and the Insurer an account (the
"Spread Account") at an Eligible Institution.  Unless the Insurer otherwise
agrees, the Spread Account shall be a fully segregated trust account at the
corporate trust department of the Eligible Institution.  The Insurer hereby
gives its consent to permit the Spread Account to be maintained as a trust
account at the Indenture Trustee.  The Spread Account will be in the name of the
Insurer and under the control of the Insurer. The Spread Account will be
entitled "MBIA Insurance Corporation pursuant to the Insurance and Reimbursement
Agreement among MBIA Insurance Corporation, Spiegel Credit Corporation III,
First Consumers National Bank, Spiegel, Inc., Spiegel Acceptance Corporation,
Spiegel Credit  Card Master Note Trust and The Bank of New York, as Indenture
Trustee, dated as of December 19, 2000".  The Issuer hereby irrevocably
instructs the Bank to pay amounts on deposit in the Spread Account as provided
in Sections 2.05(d), (e) and (j) hereof.

          (b)  The Insurer hereby revocably appoints the Servicer, which
appointment the Servicer hereby accepts, to act on behalf of the Insurer for
investing all cash at any time on deposit in the Spread Account.  The Insurer
hereby directs the Indenture Trustee, at the direction of the Servicer, to
invest all cash at any time on deposit in the Spread Account in Permitted
Investments that mature not later than the Business Day preceding the next
Distribution Date. Each such instruction shall designate specific investments
and shall certify that the investments so specified constitute Permitted
Investments, mature at the time required and are otherwise permitted hereby.
All such investments shall be made in the name of the Bank as agent for the
Insurer and the Series 2000-A Noteholders, and held by the Bank, or its nominee,
for the benefit of the Insurer and the Series 2000-A Noteholders.  The Bank
shall not be liable for any loss incurred in connection with any investment in
the Spread Account, except for losses with respect to investments in any
investment issued or guaranteed by the Bank.  In the event the Bank ceases to be
an Eligible Institution, the Insurer shall direct the Servicer to establish a
new Spread Account (and transfer any balance and investments then in the Spread
Account to such new Spread Account) within three days of such direction at an
Eligible Institution specified by the Insurer.

          (c)  On each Distribution Date (but subject to subsections 2.05(d) and
2.05(e)), the Investment Earnings, if any, accrued since the preceding
Distribution Date on funds on deposit in the Spread Account shall be paid to the
holders of the Seller Interest by the Indenture Trustee upon written direction
of the Servicer.  For purposes of determining the availability of funds or the
balance in the Spread Account for any reason under this Insurance Agreement or
the Series 2000-A Indenture Supplement (subject to subsections 2.05(d) and
2.05(e)), all Investment Earnings shall be deemed not to be available or on
deposit; provided that after the maturity of the
<PAGE>

Series 2000-A Notes has been accelerated as a result of an Event of Default, all
Investment Earnings shall be added to the balance on deposit in the Spread
Account and treated like the rest of the Available Spread Account Amount.
Spiegel Acceptance will report for federal, state and local income tax purposes
the income, if any, represented by the Spread Account and may not assign,
transfer or otherwise convey its rights under this Insurance Agreement to
receive any amounts from the Spread Account, except that Investment Earnings and
excess funds will be paid to Spiegel Acceptance as set forth in this subsection
2.05(c) and subsection 2.05(j).

          (d)  If, on any Distribution Date, the sum of the Available Finance
Charge Collections and the Reallocated Principal Collections is less than the
Required Amount, the Indenture Trustee, at the written direction of the
Servicer, shall withdraw from the Spread Account the amount of such deficiency
up to the Available Spread Account Amount and, if the Available Spread Account
Amount is less than such deficiency, Investment Earnings credited to the Spread
Account, and deposit such amount in the Collection Account for application to
the unpaid components of the Required Amount in the priority in which such items
are listed in Section 4.4(a) of the Series 2000-A Indenture Supplement.

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

          (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) of the Series 2000-A Indenture Supplement
up to the amount of the Spread Account Deficiency.

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

                                       2
<PAGE>

deliver to the Bank such documentation as such institution may reasonably deem
necessary to effectuate the terms of this Section 2.05(e).

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

          (i)  The Indenture Trustee shall hold such of the Permitted
Investments as consist of instruments, deposit accounts, negotiable documents,
money, goods, letters of credit, and advices of credit in the State of New York.
The Indenture Trustee shall hold such of the Permitted Investments as
constitutes investment property through a securities intermediary, which
securities intermediary shall agree with the Indenture Trustee that (a) such
investment property shall at all times be credited to a securities account of
the Indenture Trustee, (b) such securities intermediary shall treat the
Indenture Trustee as entitled to exercise the rights that comprise each
financial asset credited to such securities account, (c) all property credited
to such securities account shall be treated as a financial asset, (d) such
securities intermediary shall comply with entitlement orders originated by the
Indenture Trustee without the further consent of any other person or entity, (e)
such securities intermediary will not agree with any person or entity other than
the Indenture Trustee to comply with entitlement orders originated by such other
person or entity, (f) such securities accounts and the property credited thereto
shall not be

                                       3
<PAGE>

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.

          (j)  Ninety days after (A) the payment in full to the Noteholders of
all amounts payable with respect to the Notes, or (B) the date of funding  under
any Qualified Maturity Agreement, and the payment in full of the Reimbursement
Amount and all other amounts payable to the Insurer or the Counterparty, the
Insurer shall direct that any amounts remaining in the Spread Account shall be
released to Spiegel Acceptance; provided, however, that, if any Insolvency Event
occurs with respect to any of the Issuer, the Seller, FCNB or any material
Subsidiary of Spiegel (collectively, the "Potential Preference Parties") during
the period described above, then all funds shall remain on deposit in the Spread
Account until the date that all applicable limitation periods with respect to
all applicable preferential transfer or other payment avoidance statutes
relating to any of the Potential Preference Parties have expired and if no
proceeding at law or in equity is commenced during any such period based upon
any such statute, all such amounts remaining on deposit in the Spread Account
shall be released at the end of all such periods to the Seller; provided,
further, however, that if any such proceeding is commenced during any applicable
limitation period, all funds on deposit in the Spread Account shall remain on
deposit therein until the date on which there is a final determination by a
court of competent jurisdiction as to whether any payment or payments made
pursuant to the Transfer and Servicing Agreement, the Series 2000-A Indenture
Supplement, the Indemnification Agreement or this Insurance Agreement is
recoverable from either the Insurer or the Noteholders.  If such a court
determines that a payment is so recoverable, all funds on deposit in the Spread
Account shall remain on deposit in the Spread Account and shall be applied to
the payment of any and all such claims that the Insurer may be required to pay.
If such a court determines that such payment is not recoverable, all funds on
deposit in the Spread Account shall be released to Spiegel Acceptance.  The
foregoing notwithstanding, if (i) amounts payable with respect to the Notes have
been fully paid to the Noteholders and (ii) the Reimbursement Amount and all
other amounts payable to the Insurer under this Insurance Agreement and all
amounts payable to the Counterparty have been paid in full, (iii) no Insolvency
Event has occurred with respect to the Potential Preference Parties, and (iv)
(A) FCNB is rated at least BBB and Baa2 by S&P and Moody's, respectively, (B)
the Insurer shall have received a favorable opinion or opinions, satisfactory in
form and substance to the Insurer, from counsel to the Seller, the Servicer and
FCNB, to the effect that in the event that an Insolvency Event were to occur
with respect to the Potential Preference Parties, no payment pursuant to the
Transfer and Servicing Agreement, the Series 2000-A Indenture Supplement, the
Indemnification Agreement or this Insurance Agreement would be recoverable from
either the Insurer, or the Noteholders, and such other matters as the Insurer
may reasonably request; or (C) the Insurer, in its sole discretion, elects to
pay the contents of the Spread Account to Spiegel Acceptance, then, and in any
such event, the Insurer shall pay or cause to be paid all remaining amounts in
the Spread Account to Spiegel Acceptance.

                                       4
<PAGE>

                                                                       EXHIBIT H
                                                                       ---------

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

     SECTION 5.0      Insurance Agreement Pay Out Events.  The occurrence of any
one of the following shall constitute an Insurance Agreement Pay Out Event:

          (a)  the occurrence of a Pay Out Event as defined in Section 6.1 of
the Series 2000-A Indenture Supplement or Section 5.1 of the Indenture;

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

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

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

               (iii)  the Servicer shall (i) become insolvent, (ii) fail to pay
its debts generally as they become due, (iii) voluntarily seek, consent to, or
acquiesce in the benefit or benefits of any Debtor Relief Law, or (iv) become a
party to (or be made the subject of ) any proceeding provided for by any Debtor
Relief Law, other than as a creditor or claimant, and, in the event such
proceeding is involuntary, the petition instituting same is not dismissed within
45 days after its filing; or

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

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

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

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

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

               (ii)  failure by the Seller to comply with Section 4.02(g)(i)
shall be remedied within ten (10) days of the Seller receiving notice from the
Insurer requiring such remedy;

          (f)  the Dilution Rate exceeds 8.5%;

          (g)  the Servicer fails to remain "Well Capitalized", as defined by 12
U.S.C. 1831 and the regulations of the Federal Deposit Insurance Corporation
adopted thereunder, provided that Servicer does not cure such default within
thirty (30) days following the earlier of (a) the date on which any officer of
the Servicer has knowledge of such failure to remain Well Capitalized and (b)
the date the Servicer is notified by (i) any Governmental Authority of its
failure to remain Well Capitalized, so long as the Servicer demonstrates to the
Insurer, at the Insurer's sole discretion, that the Servicer can reasonably cure
such violation within thirty (30) days or (ii) any Governmental Authority,
including the Federal Deposit Insurance Corporation or any other Governmental
Authority with regulatory powers over the Servicer, shall take any mandatory or
discretionary supervisory action against the Servicer, including, without
limitation, by cease and desist order, memorandum of understanding, capital
directive or directive to take prompt corrective action, which action in the
reasonable opinion of MBIA could have a material
<PAGE>

adverse effect on (A) the business, operations, property, financial conditions
or prospects of the Servicer or (B) the ability of the Servicer to perform its
obligations under any Condition Precedent Documents to which it is a party;

          (h)  the occurrence of an Insurance Agreement Event of Default.<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 December 1, 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.      Daily Allocation of Collections....................................  2

ARTICLE II

CONVEYANCE OF RECEIVABLES.....................................................................  2
         Section 2.1.      Conveyance of Receivables..........................................  2
         Section 2.2.      Acceptance by Issuer...............................................  3
         Section 2.3.      Representations and Warranties of Seller Relating
                           to Seller..........................................................  4
         Section 2.4.      Representations and Warranties of Seller Relating to this
                           Agreement and the Receivables......................................  5
         Section 2.5.      Covenants of Seller................................................  9
         Section 2.6.      Addition of Accounts............................................... 13
         Section 2.7.      Removal of Accounts................................................ 16
         Section 2.8.      Discount Option.................................................... 17

ARTICLE III

ADMINISTRATION AND SERVICING OF RECEIVABLES................................................... 18
         Section 3.1.      Acceptance of Appointment and Other Matters Relating to the
                           Servicer........................................................... 18
         Section 3.2.      Servicing Compensation............................................. 19
         Section 3.3.      Representations; Warranties and Covenants of the Servicer.......... 20
         Section 3.4.      Reports and Records for the Indenture Trustee; Bank Account
                           Statements......................................................... 22
         Section 3.5.      Annual Servicer's Certificate...................................... 22
         Section 3.6.      Annual Independent Public Accountants' Servicing Report............ 22
         Section 3.7.      Tax Treatment...................................................... 23
         Section 3.8.      Merchant Fees...................................................... 23
         Section 3.9.      Reports to the Commission.......................................... 24

ARTICLE IV

OTHER MATTERS RELATING TO SELLER.............................................................. 24
         Section 4.1.      Liability of Seller................................................ 24
         Section 4.2.      Merger or Consolidation of, or Assumption of the Obligations
                           of, Seller etc..................................................... 24
         Section 4.3.      Limitation on Liability of Seller.................................. 25
</TABLE>
<PAGE>

<TABLE>
<S>                                                                                            <C>
ARTICLE V

OTHER MATTERS RELATING TO THE SERVICER........................................................ 25
         Section 5.1.      Liability of the Servicer.......................................... 25
         Section 5.2.      Merger or Consolidation of, or Assumption of the Obligations
                           of, the Servicer................................................... 25
         Section 5.3.      Limitation on Liability of the Servicer and Others................. 26
         Section 5.4.      Indemnification of the Issuer and the Owner Trustee................ 27
         Section 5.5.      The Servicer Not to Resign......................................... 27
         Section 5.6.      Access to Certain Documentation and Information Regarding
                           the Receivables.................................................... 28
         Section 5.7.      Delegation of Duties............................................... 28
         Section 5.8.      Examination of Records............................................. 28

ARTICLE VI

INSOLVENCY EVENTS............................................................................. 28
         Section 6.1.      Rights upon the Occurrence of an Insolvency Event.................. 28

ARTICLE VII

SERVICER DEFAULTS............................................................................. 29
         Section 7.1.      Servicer Defaults.................................................. 29
         Section 7.2.      Indenture Trustee to Act; Appointment of Successor................. 31
         Section 7.3.      Notification to Noteholders........................................ 33

ARTICLE VIII

TERMINATION................................................................................... 33
         Section 8.1.      Termination of Agreement........................................... 33

ARTICLE IX

MISCELLANEOUS PROVISIONS                    .................................................. 33
         Section 9.1.      Amendment; Waiver of Past Defaults................................. 33
         Section 9.2.      Protection of Right, Title and Interest to Issuer.................. 35
         Section 9.3.      Governing Law...................................................... 36
         Section 9.4.      Notices; Payments.................................................. 36
         Section 9.5.      Severability of Provisions......................................... 37
         Section 9.6.      Further Assurances................................................. 37
         Section 9.7.      No Waiver; Cumulative Remedies..................................... 37
         Section 9.8.      Counterparts....................................................... 37
         Section 9.9.      Third-Party Beneficiaries.......................................... 38
         Section 9.10.     Actions by Noteholders............................................. 38
         Section 9.11.     Rule 144A Information.............................................. 38
         Section 9.12.     Merger and Integration............................................. 38
         Section 9.13.     No Bankruptcy Petition............................................. 38
</TABLE>

                                      ii
<PAGE>

<TABLE>
<S>                                                                                            <C>
         Section 9.14.     Rights of Indenture Trustee.....................................    39
         Section 9.15.     Rights of the Owner Trustee.....................................    39

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 Monthly Servicer's Certificate.........................................   C-1
EXHIBIT D   Form of Annual Servicer's Certificate..........................................   D-1
EXHIBIT E   Form of Annual Independent Public Accountants' Servicing
            Report ........................................................................   E-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 December 1, 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 The
Bank of New York.

         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
defined 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.
<PAGE>

         Section 1.3. Daily Allocation of Collections. 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 and the division of
the Collections on the Accounts between Finance Charge Collections and Principal
Collections.

                                  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 Collections 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 and Insurance Proceeds relating thereto. 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,
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 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 Initial 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 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 SMT Termination 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

                                       2
<PAGE>

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)), 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) 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 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 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

                                       3
<PAGE>

or (iv) to bona fide creditors or potential creditors of the 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.

         (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

                                       4
<PAGE>

instrumentality (i) asserting the invalidity of this Agreement or the
Receivables Purchase Agreement, (ii) seeking to prevent the consummation of any
of the transactions contemplated by this Agreement or the Receivables Purchase
Agreement, (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 or the
Receivables Purchase Agreement 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 then existing 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, the
performance of the transactions contemplated by this Agreement, and the
fulfillment of or terms hereof, have been obtained.

         (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. 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. 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.
-----------

         Section 2.4  Representations and Warranties of Seller Relating to this
                      ---------------------------------------------------------
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 after the Initial Closing Date,
unless otherwise stated in the related Indenture Supplement, as of the Closing
Date for such Series:

                                       5
<PAGE>

          (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 Seller Interest 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
     then existing Receivables, 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 statements 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 Pooling 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.

                                       6
<PAGE>

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 Seller Interest 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 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. 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 any representation or
               ---------------------------
warranty contained in Section 2.4(b) or Section 2.6(c)(v) 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 Seller or receipt by Seller of written notice thereof given by the
Owner Trustee, the Indenture Trustee or the Servicer, then 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 any Receivable having been conveyed to the Issuer 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, the Indenture 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

                                       7
<PAGE>

     Amount and the various Allocation Percentages. If the exclusion of an
     Ineligible Receivable from the calculation of the Seller Amount would cause
     the Seller Amount to be less than the Minimum Seller Amount, then Seller
     shall, on the date of retransfer of such Ineligible Receivable, make a
     deposit in the Excess Funding Account (for allocation pursuant to the
     Indenture) in immediately available funds in an amount equal to the
     Shortfall Amount. The amounts so deposited are to be treated for all
     purposes hereof as Collections on such Ineligible Receivables.

          Upon reassignment of any Ineligible Receivable, the Issuer shall
     automatically and without further action be deemed to transfer, assign, set
     over and otherwise convey to 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, unless expressly stated in the
     related Series Enhancement, 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 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
     --------------
     Seller that states that all conditions set forth in this Section 2.5 have
                                                              -----------
     been satisfied.

          (e)  Reassignment of Issuer Portfolio. If 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 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 Seller and the Servicer (and to the Owner Trustee and
     Indenture Trustee if given by the Noteholders), may direct Seller to accept
     a reassignment of the Receivables conveyed to the Issuer by 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 Seller shall be obligated to accept such reassignment on the
     terms set forth below; provided, however, that the Receivables will not be
                            --------  -------
     reassigned to 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) 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.

                                       8
<PAGE>

          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
     Distribution 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 Distribution Date in accordance with the terms of each
     Indenture Supplement. If the Owner Trustee, the Indenture Trustee or the
     Noteholders give notice directing the Seller to accept a reassignment of
     the Receivables as provided above, the obligation of 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, unless expressly stated in the related Series Enhancement, any Series
     Enhancer. Upon reassignment of the Receivables on such Distribution Date,
     the Issuer shall automatically and without further action be deemed to
     sell, transfer, assign, set-over and otherwise convey to the Seller,
     without recourse, representation or warranty, all the right, title and
     interest of the Issuer in and to the Receivables 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 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
     Interest.

                                       9
<PAGE>

          (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 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.

          (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)  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 (ii) 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.

          (f)  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 or under
     the Transaction Documents. Subject to the foregoing and subject to the
     restrictions set forth in Section 2.5(e), 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.

                                      10
<PAGE>

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

          (h)  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 the
     Transaction Documents or which is otherwise a Permitted Transaction.

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

          (j)  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.

          (k)  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.

          (l)  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 Event of Default or Pay Out Event has occurred and is continuing
     and no Event of Default or Pay Out Event would occur as a result thereof or
     after giving effect thereto, Seller may declare and pay dividends on its
     capital stock.

          (m)  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.

                                      11
<PAGE>

          (n)  Receivables Purchase Agreement. Seller shall not give any consent
               ------------------------------
     to FCNB under the Receivables Purchase Agreement unless the Rating Agency
     Condition is satisfied with respect thereto.

          (o)  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.

               (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.

                                      12
<PAGE>

          (p)  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.

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

          (a)  If, on any day after the SMT Termination Date, the Aggregate
     Principal Balance is less than the Minimum Aggregate Principal Balance,
     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 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 the Aggregate
     Principal Balance on such day would have, if the Receivables from such
     Additional Accounts had been transferred to the Issuer on or prior to such
     day, at least equaled the Minimum Aggregate Principal Balance.

          (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 Receivables, by outstanding balance, will
     be 30 or more days delinquent (and for this purpose, Receivables in an
     Account shall be considered delinquent if less than 100% of a required
     payment was received).

          (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) 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 Account Additions after giving effect
               to

                                      13
<PAGE>

               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 Account Additions after giving
               effect to such addition plus the related Base Amount divided by
               (y) the related Base Amount to exceed 1.15;

          in either case, deliver a letter from each Rating Agency to the
          Indenture Trustee by the Addition Date confirming that the Rating
          Agency Condition has been satisfied with respect to the addition of
          such Additional Accounts;

               (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 the aggregate amount of the
          Receivables and the aggregate amount of Principal Receivables in such
          Additional Accounts, 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;

               (v)    Seller shall be deemed to represent and warrant that, as
          of the Addition Date, the Assignment Agreement constitutes either (x)
          a valid

                                      14
<PAGE>

          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 (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 Seller Interest 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 Seller Interest 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 F-2, and which
                                                     -----------
          shall be reasonably acceptable to the Rating Agencies.

          (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 after the SMT Termination Date, and the Receivables in which are
     purchased by Seller

                                      15
<PAGE>

     pursuant to the Receivables Purchase Agreement, shall automatically be
     included as an Account (and the Receivables arising thereunder
     automatically transferred to the Issuer) effective on the date on which
     such account is created; 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 transfer to 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 the Rating Agency Condition as 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 indicate in its computer files of the receivables that the
     Receivables created in connection with such included Accounts have been
     transferred to the Issuer. 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.

          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.

          (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)    If the Accounts to be removed have outstanding
          Receivables, 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;

                                      16
<PAGE>

               (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 otherwise 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)    After giving effect to such removal, the Aggregate
          Principal Balance 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

               (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.

          (c)  On and after the SMT Termination Date, on the date on which an
     Account becomes a Defaulted Account, the Trust shall automatically and
     without further action or consideration be deemed to transfer, set over,
     and otherwise convey to the Seller, without recourse, representation or
     warranty, all the right, title and interest of the Trust in and to the
     Receivables in such Defaulted Account, all monies due or to become due with
     respect thereto, all proceeds of such Receivables allocable to the Trust
     with respect to such Receivable, excluding Recoveries relating thereto,
     which shall remain a part of the Trust Assets.

                                      17
<PAGE>

          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

          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

                                      18
<PAGE>

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. 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 Indenture Trustee on account of the occurrence of a Servicer Default
pursuant to Section 7.1, to instruct the Indenture 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 Indenture Trustee on account of the occurrence of a Servicer Default
pursuant to Section 7.1, to instruct the Indenture Trustee in writing as
            -----------
provided herein, and (iv) unless such power and authority is revoked by the
Indenture 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 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.

     (c)  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), the Servicer agrees to allocate and
pay to the Issuer, after such date, all Collections as contemplated by Section
                                                                       -------
2.5(c).
------

     (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 (the "Monthly
                                                                       -------
Servicing Fee"). The share of the Monthly Servicing Fee allocable to each Series
-------------
of Notes with

                                      19
<PAGE>

respect to any Monthly Period (or portion thereof) shall be payable on the
related Distribution Date and, with respect to each Series, shall be equal to
the amount specified in the related Indenture Supplement (the "Investor Monthly
                                                               ----------------
Servicing Fee"). The share of the Monthly Servicing Fee allocable to the Holder
-------------
of the Seller Interest with respect to any Monthly Period (or portion thereof)
shall be equal to one-twelfth of the product of (A) Seller Amount minus the sum
of the Excess Funding Amount and the balance on deposit in the Principal
Collections Subaccount, and (B) the weighted average of the 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
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 Monthly Seller Servicing Fee and, unless otherwise provided
in an Indenture Supplement, each Investor Monthly Servicing Fee, shall be
calculated on the basis of a 360-day year consisting of twelve 30-day months.

     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

                                      20
<PAGE>

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 the 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).

     (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 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

                                      21
<PAGE>

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 Indenture 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 Indenture
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 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 Excess Funding Amount 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 Indenture Trustee, the Paying Agent, any Rating
Agency and any Enhancement Provider a certificate of a Servicing Officer
substantially in the form of Exhibit C.
                             ---------

     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 repaid during the prior calendar year, the Servicer will deliver to the
Indenture 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 D 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 April 30, 2001, 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. A copy of such
certificate may be obtained by any Noteholder by a request in writing to the
Indenture Trustee addressed to the Corporate Trust Office.

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

                                      22
<PAGE>

     (a)  Unless the Servicer has been relieved of all of its obligations under
this Agreement because the final Series has been repaid during the prior
calendar year, on or before April 30 of each calendar year after the year which
the SMT Termination Date occurs, 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 (and Pooling and Servicing
Agreement, if applicable), compared the information contained in the Servicer's
certificates (excluding Servicer's certificates for any Series that has been
repaid during the prior calendar year) 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) with such documents and records in each case as
specified in Exhibit E 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
Indenture 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,
2002, 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 Indenture 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) 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.

     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

                                      23
<PAGE>

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 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
          -----------

                                      24
<PAGE>

     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, and the Rating Agency
     Condition shall have been satisfied; it being understood that a sale,
     transfer, assignment, participation, pledge or other disposition of the
     Seller Interest or the issuance of a Supplemental Certificate permitted by
     Section 3.4 of the Trust Agreement shall not be deemed to be a conveyance
     -----------
     or transfer of the Seller's property substantially as an entirety for
     purposes of this Section 4.2.
                      -----------
     (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.

                                   ARTICLE V

                    OTHER MATTERS RELATING TO THE SERVICER

                                      25
<PAGE>

     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. Unless otherwise stated
     in the Indenture Supplement for any Series, 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 Indenture 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 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

                                      26
<PAGE>

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, defend and hold harmless the Issuer and the Owner
Trustee and its officers, directors, employees and agents 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 the Transaction Documents, 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, gross negligence or
breach of fiduciary duty by the Owner Trustee; provided further, that the
                                               -------- -------
Servicer shall not indemnify the Issuer, any Noteholders or any Note Owners for
any liabilities, costs or expenses of the Issuer with respect to any action
taken by the Indenture Trustee at the request of such Noteholders; provided
                                                                   --------
further, that the Servicer shall not indemnify the Issuer, any Noteholders or
-------
any Note Owners 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.

     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.

     The Servicer shall indemnify the Indenture Trustee as provided in Section
                                                                       -------
6.7 of the Master Indenture.
---

                                      27
<PAGE>

     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) by an Opinion of Counsel to such
                                  ----------
effect delivered to the Indenture 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. Notice
                                                             -----------
of any resignation by the Servicer shall be given to each Rating Agency by the
resigning Servicer.

     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. The Servicer shall notify each
                                  -----------
Rating Agency of any material delegation of its duties not consistent with its
normal practices as of the date hereof.

     Section 5.8.   Examination of Records. The Servicer shall clearly and
                    ----------------------
unambiguously identify each Account (including any Additional Account designated
pursuant to Section 2.6) 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 party of any receivable held in its custody, examine its
computer and other records to determine that such receivable is not a
Receivable.

                                      28
<PAGE>

                                  ARTICLE VI

                               INSOLVENCY EVENTS

     Section 6.1.   Rights upon the Occurrence of an Insolvency Event. If 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 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 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 (any such act or occurrence with respect to any Person
being an "Insolvency Event"), 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, the Owner Trustee and the
Rating Agencies thereof.

                                  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 required to be made by the Servicer on or before the
     date occurring five Business Days after the date such payment, transfer,
     deposit, withdrawal or drawing, or such instruction or notice is required
     to be made or given by the Servicer, as the case may be, under the terms of
     this Agreement or the Indenture; 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

                                      29
<PAGE>

     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 Indenture Trustee, or
     to the Servicer and the Indenture Trustee by the Noteholders holding not
     less than 10% of the outstanding principal amount of any Series adversely
     affected thereby 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 Indenture Trustee, or to the
     Servicer and the Indenture Trustee by the Noteholders holding not less than
     10% of the outstanding principal amount of any Series adversely affected
     thereby 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 (i) become insolvent, (ii) fail to pay its
     debts generally as they become due, (iii) voluntarily seek, consent to, or
     acquiesce in the benefit or benefits of any Debtor Relief Law, or (iv)
     become a party to (or be made the subject of) any proceeding provided for
     by any Debtor Relief Law, other than as a creditor or claimant, and, in the
     event such proceeding is involuntary, the petition instituting same is not
     dismissed within 60 days after its filing;

     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 Indenture 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 been appointed by the Indenture 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

                                      30
<PAGE>

     acts or things necessary or appropriate to effect the purposes of such
     transfer of servicing rights. The Servicer agrees to cooperate with the
     Indenture 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. Indenture 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 Indenture Trustee in writing or, if no such date is specified
in such Termination Notice or otherwise specified by the Indenture Trustee,
until a date mutually agreed upon by the Servicer and the Indenture Trustee. The
Indenture 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, and with prior
written notice to the Rating Agencies) a successor servicer (the "Successor
                                                                  ---------
Servicer"), and such Successor Servicer shall accept its appointment by a
--------
written assumption in a form acceptable to the Indenture Trustee. The Indenture
Trustee may obtain bids from any potential successor servicer. If the Indenture
Trustee is unable to obtain any bids from any potential successor 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 Baa3 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 Indenture

                                      31
<PAGE>

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 Indenture Trustee without further action shall automatically be
appointed the Successor Servicer. Notwithstanding the above, the Indenture
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 $50,000,000 and whose regular business includes the servicing
of installment sales charge, credit and/or credit card account receivables as
the Successor Servicer hereunder. Notwithstanding anything else herein to the
contrary, in no event shall the Indenture Trustee be liable for any servicing
fee.

          (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. Any sub-servicing agreement shall be assigned to the Successor
Servicer.

         (c) In connection with such appointment and assumption, the Indenture
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 Seller Interest agrees that
                     -----------
if the Servicer is terminated hereunder, it will agree, at the request of the
Indenture 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. The Successor Servicer shall have no liability for any
actions or failure to act on the part of the 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 Trust Agreement 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

                                      32
<PAGE>

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 a
Trust Officer of the Indenture Trustee and the Indenture 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 Indenture 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.

                                 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 Scheduled Trust Termination Date.
             -----------

                                  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, without the consent of any of the Indenture Trustee or
any Noteholder to cure any ambiguity, to correct or supplement any provisions
herein which may be inconsistent with any other provisions herein or to add any
other provisions with respect to matters or questions raised under this
Agreement which shall not be inconsistent with the provisions of this Agreement;
provided, however, that such action shall not adversely affect in any material
--------  -------
respect the interests of any of the Noteholders. Additionally, this Agreement
may be amended from time to time by the Servicer, the Seller and the Issuer by a
written instrument signed by each of them, without the consent of the Indenture
Trustee or any of the

                                      33
<PAGE>

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 Seller.

          (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 66 2/3% 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 Noteholders
of such Series or Class holding more than 66 2/3% 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.

                                      34
<PAGE>

          (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 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 66 2/3% or more 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% or more of the principal amount of the
Outstanding 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.
                       -------------------------------------------------

          (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
Indenture Trustee file-stamped copies of, or filing receipts for, any document
recorded, registered or filed as

                                      35
<PAGE>

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, the Seller shall give 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 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 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 2.6(c)(vii) 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
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS, PROVIDED, HOWEVER,
                                                            --------  -------
THAT THE DUTIES AND OBLIGATIONS OF THE INDENTURE TRUSTEE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS.

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

                                      36
<PAGE>

         (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, with a copy to Spiegel, Inc.,
3500 Lacey Road, Downers Grove, Illinois 60515-5452, 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: Structured Finance Group,
(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, 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

                                      37
<PAGE>

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.

         Section 9.13. No Bankruptcy Petition. (a) Each of Seller and Servicer,
                       ----------------------
severally and not jointly, hereby covenants and agrees that, prior to the date
which is one (1) year and one (1) day after the payment in full of all Notes, it
will not

                                      38
<PAGE>

institute against, or join any other Person in instituting against, the Issuer
or Spiegel Master Trust any bankruptcy, reorganization, arrangement, insolvency
or liquidation proceedings or other similar proceeding under the laws of the
United States or any state of the United States. Nothing in this Section 9.13
                                                                 ------------
shall preclude, or be deemed to estop, any Seller and Servicer from taking (to
the extent such action is otherwise permitted to be taken by such Person
hereunder) or omitting to take any action prior to such date in (i) any case or
proceeding voluntarily filed or commenced by or on behalf of the Issuer under or
pursuant to any such law or (ii) any involuntary case or proceeding pertaining
to the Issuer under or pursuant to any such law.

         (b) Each of Servicer and Issuer, severally and not jointly, hereby
covenants and agrees that, prior to the date which is one (1) year and one (1)
day after the payment in full of all Notes, it will not institute against, or
join any other Person in instituting against, the Seller any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or other
similar proceeding under the laws of the United States or any state of the
United States. Nothing in this Section 9.13 shall preclude, or be deemed to
                               ------------
estop, any Servicer and Issuer from taking (to the extent such action is
otherwise permitted to be taken by such Person hereunder) or omitting to take
any action prior to such date in (i) any case or proceeding voluntarily filed or
commenced by or on behalf of the Seller under or pursuant to any such law or
(ii) any involuntary case or proceeding pertaining to the Seller under or
pursuant to any such law.

         Section 9.14. Rights of Indenture Trustee.  The Indenture Trustee
                       ---------------------------
shall have herein the same rights, protections, indemnities and immunities as
specified in the Indenture.

         Section 9.15. Rights of the Owner Trustee. Each of the parties hereto
                       ---------------------------
acknowledges and agrees that this Agreement is being executed and delivered by
Bankers Trust Company not individually but solely and exclusively in its
capacity as Owner Trustee on behalf of Spiegel Credit Card Master Note Trust for
the purpose and with the intention of binding Spiegel Credit Card Master Note
Trust. No obligations or liabilities hereunder shall run against Bankers Trust
Company in its individual capacity or against its properties or assets.

                                      39
<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

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

                          FIRST CONSUMERS NATIONAL BANK

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

                          SPIEGEL CREDIT CARD MASTER NOTE
                          TRUST, Issuer

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

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

Acknowledged and Accepted:

THE BANK OF NEW YORK,
not in its individual capacity but
solely as Indenture Trustee

Name: /s/ Cassandra Shedd
Title: Assistant Treasurer

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 SPIEGEL 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 December 1, 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 Notice Date, its account number, the aggregate amount outstanding in such
Account

                                  Exhibit A-1
<PAGE>

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 or
clearance systems.

           (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
                 --------------------
     Seller 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 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

                                  Exhibit A-3
<PAGE>

      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 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) all requirements set forth in Section 2.6 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 (ii) 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

                                  Exhibit A-4

<PAGE>

      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 F-2 to the
                                                              -----------
      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.

      9.   Rights of the Owner Trustee. Each of the parties hereto acknowledges
           ---------------------------
and agrees that this Agreement is being executed and delivered by Bankers Trust
Company not individually but solely and exclusively in its capacity as Owner
Trustee on behalf of Spiegel Credit Card Master Note Trust for the purpose and
with the intention of binding Spiegel Credit Card Master Note Trust. No
obligations or liabilities hereunder shall run against Bankers Trust Company in
its individual capacity or against its properties or assets.

                                  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: BANKERS TRUST COMPANY,
                               not in its individual capacity but solely as
                               Owner Trustee on behalf of the Issuer

                               By:____________________________
                               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 SPIEGEL 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 December 1, 2000 (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
Trustee a computer file or microfiche list containing a true and complete
schedule

                                  Exhibit B-1
<PAGE>

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
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

                                  Exhibit B-2
<PAGE>

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 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.

      9.   Rights of the Owner Trustee. Each of the parties hereto acknowledges
           ---------------------------
and agrees that this Agreement is being executed and delivered by Bankers Trust
Company not individually but solely and exclusively in its capacity as Owner
Trustee on behalf of Spiegel Credit Card Master Note Trust for the purpose and
with the intention of binding Spiegel Credit Card Master Note Trust. No
obligations or liabilities hereunder shall run against Bankers Trust Company in
its individual capacity or against its properties or assets.

                                  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: BANKERS TRUST COMPANY,
                                    not in its individual capacity but solely as
                                    Owner Trustee on behalf of the Issuer

                                    By:___________________________
                                    Name:
                                    Title:

                                    FIRST CONSUMERS NATIONAL
                                    BANK, Servicer

                                    By:___________________________
                                    Name:
                                    Title:

                                  Exhibit B-4
<PAGE>

                                  Schedule 1
                           to Reassignment Agreement

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

                                   EXHIBIT C
                                      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 December 1, 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 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 was equal to $ _______________________

8.   The Default Amount for the preceding Monthly Period was equal to $
     _________________

                                  Exhibit C-1
<PAGE>

9.   Net Recoveries for the preceding Monthly Period was equal to $
     ______________

10.  The Portfolio Yield for the preceding Monthly Period for each of the
     following Series was equal to:

     Series ____________  $  ____________
     Series ____________  $  ____________

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

     Series ____________  $  ____________
     Series ____________  $  ____________

12.  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 $_____________

13.  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 $_____________________

14.  The aggregate amount payable to the Investor Noteholders on the succeeding
     Distribution Date in respect of Note interest is equal to $______________

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

                                  Exhibit C-2
<PAGE>

                                   EXHIBIT D
                                      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 December 1, 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 D-1
<PAGE>

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

                                            _______________________________
                                            Name:
                                            Title:

                                  Exhibit D-2
<PAGE>

                                   EXHIBIT E
                                      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

The Bank of New York
2 North LaSalle Street
Suite 1020
Chicago, Illinois 60602

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 December 1, 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-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
<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 2.6(c)(vii) and Section 9.2(d)(ii))
                        -------------------     ------------------

         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 or general intangibles under Article 9 of the
UCC.

         2.   If the Assignment, together with the Agreement, constitutes a
valid assignment of all Seller's right, title and interest in, to and under the
Receivables in Schedule 1 to the Assignment and all of the Seller's rights,
               ----------
remedies, powers, and privileges with respect to such Receivables, then the
Issuer has or will acquire all of Seller's right, title and interest in, to and
under the such Receivables free and clear of any Lien or interest of any person
at the time of transfer (and anytime thereafter with respect to any Lien or
interest arising through or under the Seller except as provided in the
Agreement), except for Liens for municipal or other local taxes permitted under
Section 2.5(b) of the Agreement.

         3.   If the Assignment, together with the Agreement, does not
constitute a valid assignment of all of the Seller's right, title and interest
in, to and under the Receivables in Schedule 1 to the Assignment, then the
                                    ----------
Assignment creates a valid security interest in all the Seller's right, title
and interest in, to and under such Receivable and the proceeds thereof in favor
of the Issuer.

         4.   If the Receivables Purchase Agreement constitutes a valid
assignment of all of the applicable RPA Seller's right, title and interest in,
to and under the Receivables in Schedule 1 to the Assignment and all of its
                                ----------
rights, remedies, powers, and privileges with respect to such Receivables, then
the Seller has or will acquire all the applicable RPA Seller's right, title and
interest in, to and under such Receivables free and clear of any Lien or
interest of any person at the time of transfer (and anytime thereafter with
respect to any Lien or interest arising through or under the applicable RPA
Seller, except as provided in the Agreement), except for Liens for municipal or
other local taxes.

         5.   If the Receivables Purchase Agreement does not constitute a valid
assignment of all the applicable RPA Seller's right, title, and interest in, to
and under the Receivables in Schedule 1 to the Assignment and all of the
                             ----------
applicable RPA Seller's rights, remedies, powers, and privileges with respect to
such Receivables, then the Receivables Purchase Agreement creates a valid
security

                                 Exhibit F-2-1
<PAGE>

interest in all of the applicable RPA Seller's right, title and interest in, to
and under the Receivables and proceeds thereof in favor of the Seller.

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

                                 Exhibit F-2-2
<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.

         1. No filing or other action, other than such filing or other action
described in this opinion letter, is necessary from the date of this opinion
letter through June 30 of the following year to continue the perfected status of
the security interest of the Trust in the Receivables described in the financing
statements referenced in this opinion letter.

         2. No filing or other action, other than such filing or other action
described in this opinion letter, is necessary from the date of this opinion
letter through June 30 of the following year to continue the perfected status of
the security interest of the Indenture Trustee in the Receivables described in
the financing statements referenced in this opinion letter.

         3. No filing or other action, other than such filing or other action
described in this opinion letter, is necessary from the date of this opinion
letter through June 30 of the following year to continue the perfected status of
the security interest of the Seller in the Receivables described in the
financing statements referenced in this opinion letter.

                                 Exhibit F-3-1
<PAGE>

                                  SCHEDULE 1

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

                  [Original list delivered to Owner Trustee]

                                      1-1

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