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Exhibit 4.6
________________________________________________________________________________
____________________
SPIEGEL CREDIT CORPORATION III,
as Seller,
FIRST CONSUMERS NATIONAL BANK,
as Servicer,
and
HARRIS TRUST AND SAVINGS BANK,
as Trustee
on behalf of the Certificateholders
of the Spiegel Master Trust
________________________________________________________________________________
____________________
AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT
Dated as of December 13, 1994
________________________________________________________________________________
____________________
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS................................................ 1
Section 1.1 Definitions............................................................................. 1
Section 1.2 Other Definitional Provisions........................................................... 21
Section 1.3 Monthly Allocation of Finance Charge Receivables........................................ 22
Section 1.4 Daily Allocation of Principal Collections............................................... 23
ARTICLE II
TRANSFER OF RECEIVABLES;
ISSUANCE OF CERTIFICATES......................................... 24
Section 2.1 Transfer of Receivables................................................................. 24
Section 2.2 Acceptance by Trustee................................................................... 25
Section 2.3 Representations and Warranties of Seller Relating to Seller............................. 25
Section 2.4 Representations and Warranties of Seller Relating to the
Agreement and the Receivables...................................................... 27
Section 2.5 Covenants of Seller..................................................................... 31
Section 2.6 Addition of Accounts.................................................................... 36
Section 2.7 Removal of Accounts..................................................................... 39
Section 2.8 Discount Option......................................................................... 41
ARTICLE III
ADMINISTRATION AND SERVICING OF
RECEIVABLES.............................................. 41
Section 3.1 Acceptance of Appointment and Other Matters Relating to the Servicer.................... 41
Section 3.2 Servicing Compensation.................................................................. 43
Section 3.3 Representations; Warranties and Covenants of the Servicer............................... 43
Section 3.4 Reports and Records for the Trustee; Bank Account Statements............................ 45
Section 3.5 Annual Servicer's Certificate........................................................... 46
Section 3.6 Annual Independent Public Accountants' Servicing Report................................. 46
Section 3.7 Tax Treatment........................................................................... 47
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ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND ALLOCATION
AND APPLICATION OF COLLECTIONS........................... 47
Section 4.1 Rights of Certificateholders........................................................... 47
Section 4.2 Establishment of Accounts and Allocations with Respect to the
Exchangeable Seller Certificate................................................... 48
Section 4.3 Collections and Allocations............................................................ 49
[THE REMAINDER OF ARTICLE IV IS RESERVED AND SHALL BE
SPECIFIED IN ANY SUPPLEMENT WITH RESPECT TO ANY SERIES]
ARTICLE V
[ARTICLE V IS RESERVED AND SHALL
BE SPECIFIED IN ANY SUPPLEMENT
WITH RESPECT TO ANY SERIES].................................... 52
ARTICLE VI
THE CERTIFICATES........................................... 53
Section 6.1 The Certificates....................................................................... 53
Section 6.2 Authentication of Certificates......................................................... 53
Section 6.3 Registration of Transfer and Exchange of Certificates.................................. 53
Section 6.4 Mutilated, Destroyed, Lost or Stolen Certificates...................................... 55
Section 6.5 Persons Deemed Owners.................................................................. 55
Section 6.6 Appointment of Paying Agent............................................................ 55
Section 6.7 Access to List of Certificateholders' Names and Addresses.............................. 56
Section 6.8 Authenticating Agent................................................................... 56
Section 6.9 Book-Entry Certificates................................................................ 57
Section 6.10 Notices to Clearing Agent............................................................. 58
Section 6.11 Definitive Certificates Initially Issued as Book-Entry
Certificates...................................................................... 58
Section 6.12 Tender of Exchangeable Seller Certificate............................................. 59
ARTICLE VII
OTHER MATTERS RELATING TO SELLER................................. 61
Section 7.1 Liability of Seller.................................................................... 61
Section 7.2 Merger or Consolidation of, or Assumption of the Obligations
of, Seller, etc................................................................... 61
Section 7.3 Limitation on Liability of Seller...................................................... 62
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ARTICLE VIII
OTHER MATTERS RELATING TO THE SERVICER............................... 63
Section 8.1 Liability of the Servicer.............................................................. 63
Section 8.2 Merger or Consolidation of, or Assumption of the Obligations
of, the Servicer.................................................................. 63
Section 8.3 Limitation on Liability of the Servicer and Others..................................... 63
Section 8.4 Indemnification of the Trust and the Trustee........................................... 64
Section 8.5 The Servicer Not to Resign............................................................. 65
Section 8.6 Access to Certain Documentation and Information Regarding the
Receivables....................................................................... 65
Section 8.7 Delegation of Duties................................................................... 65
Section 8.8 Examination of Records................................................................. 65
ARTICLE IX
PAY OUT EVENTS......................................... 66
Section 9.1 Pay Out Events......................................................................... 66
Section 9.2 Additional Rights Upon the Occurrence of Certain Events................................ 66
ARTICLE X
SERVICER DEFAULTS........................................ 67
Section 10.1 Servicer Defaults..................................................................... 67
Section 10.2 Trustee to Act; Appointment of Successor.............................................. 69
Section 10.3 Notification to Certificateholders.................................................... 71
Section 10.4 Waiver of Past Defaults............................................................... 71
ARTICLE XI
THE TRUSTEE.......................................... 71
Section 11.1 Duties of Trustee..................................................................... 71
Section 11.2 Certain Matters Affecting the Trustee................................................. 73
Section 11.3 Trustee Not Liable for Recitals in Certificates....................................... 74
Section 11.4 Trustee May Own Certificates.......................................................... 74
Section 11.5 Seller to pay Trustee's Fees and Expenses............................................. 75
Section 11.6 Eligibility Requirements for Trustee.................................................. 75
Section 11.7 Resignation or Removal of Trustee..................................................... 76
Section 11.8 Successor Trustee..................................................................... 76
Section 11.9 Merger or Consolidation of Trustee.................................................... 77
Section 11.10 Appointment of Co-Trustee or Separate Trustee......................................... 77
Section 11.11 Tax Returns........................................................................... 78
Section 11.12 Trustee May Enforce Claims Without Possession of Certificates......................... 79
Section 11.13 Suits for Enforcement................................................................. 79
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Section 11.14 Rights of Certificateholders to Direct Trustee....................................... 79
Section 11.15 Representations and Warranties of Trustee............................................ 79
Section 11.16 Maintenance of Office or Agency...................................................... 80
Section 11.17 Requests for Agreement............................................................... 80
ARTICLE XII
TERMINATION............................................. 80
Section 12.1 Termination of Trust................................................................. 80
Section 12.2 Optional Purchase and Final Trust Termination Date of Investor
Certificates..................................................................... 80
Section 12.3 Final Distributions.................................................................. 82
Section 12.4 Termination Rights of the Holder of the Exchangeable Seller
Certificate...................................................................... 83
ARTICLE XIII
MISCELLANEOUS PROVISIONS...................................... 83
Section 13.1 Amendment............................................................................ 83
Section 13.2 Protection of Right, Title and Interest to Trust..................................... 84
Section 13.3 Limitation on Rights of Certificateholders........................................... 85
Section 13.4 Governing Law........................................................................ 86
Section 13.5 Notices.............................................................................. 86
Section 13.6 Severability of Provisions........................................................... 86
Section 13.7 Rule 144A Information................................................................ 86
Section 13.8 Certificates Nonassessable and Fully Paid............................................ 87
Section 13.9 Further Assurances................................................................... 87
Section 13.10 No Waiver; Cumulative Remedies....................................................... 87
Section 13.11 Counterparts......................................................................... 87
Section 13.12 Third-Party Beneficiaries............................................................ 87
Section 13.13 Actions by Certificateholders........................................................ 87
Section 13.14 Merger and Integration............................................................... 88
Section 13.15 No Bankruptcy Petition............................................................... 88
Section 13.16 Headings............................................................................. 88
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AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT, dated as of December
13, 1994, among SPIEGEL CREDIT CORPORATION III, a Delaware corporation, as
Seller, FIRST CONSUMERS NATIONAL BANK, a national banking association, as
Servicer, and HARRIS TRUST AND SAVINGS BANK, a banking corporation organized and
existing under the laws of Illinois, as Trustee.
WHEREAS, the Seller, Servicer and Trustee are parties to a Pooling and
Servicing Agreement, dated as of September 20, 1994 (the "Existing Pooling and
Servicing Agreement").
WHEREAS, the Seller, Servicer and Trustee desire and agree to amend and
restate the Existing Pooling and Servicing Agreement to read in its entirety as
follows.
NOW, THEREFORE, in consideration of the mutual agreements herein contained,
each party agrees as follows for the benefit of the other parties and for the
benefit of the Certificateholders:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. Whenever used in this Agreement, the following
-----------
words and phrases shall have the following meanings:
"Account" shall mean each charge account established pursuant to a
Charge Account Agreement, and which is identified in Schedule 1 by account
----------
number and by Receivable balance as of the Cut Off Date, or identified as
of each Addition Date in each computer file or microfiche list delivered to
the Trustee by Seller pursuant to Section 2.6. The term "Account" shall
also be deemed to refer to an Additional Account, but only from and after
the Addition Date with respect thereto, and the term "Account" shall be
deemed to refer to any Removed Account prior to but not after the Removal
Date with respect thereto.
"Addition Date" shall mean, with respect to any Additional Accounts,
either the date five Business Days after the period or date when such
Additional Accounts are required or permitted to be added as Accounts
pursuant to subsections 2.6(a) or (b), or the date on which such Additional
Accounts are automatically added as Accounts pursuant to subsection 2.6(e).
"Additional Accounts" shall mean the Accounts the receivables arising
under which are transferred to the Trust in accordance with the procedures
set forth in Section 2.6.
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"Additional Accounts Enhancement Increase Condition" shall have, with
respect to any Series, the meaning specified in the related Supplement.
"Affiliate" of any specified Person, shall mean any other Person
directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For purposes of this
definition, "control" when used with respect to any specified Person means
the power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Aggregate Investor Amount" shall mean, as of any date of
determination, the sum of the Investor Amounts of all Series issued and
outstanding on such date of determination.
"Aggregate Investor Percentage" with respect to Principal Receivables,
Finance Charge Receivables and Receivables in Defaulted Accounts, as the
case may be, shall mean, as of any date of determination, the sum of such
Investor Percentages of all Series issued and outstanding on such date of
determination; provided, however, that the Aggregate Investor Percentage
shall not exceed 100%.
"Aggregate Principal Receivables" shall mean, as of any date of
determination, the aggregate amount of Principal Receivables as of such
date and the amount on deposit in the Excess Funding Account (exclusive of
any investment earnings on such amount) as of such date.
"Aggregate Net Principal Receivables" shall mean, as of any date of
determination, the aggregate amount of Principal Receivables as of such
date.
"Aging Date" shall mean that date on which an Account is classified by
the Servicer as past due according to a predetermined aging schedule.
"Agreement" shall mean this Amended and Restated Pooling and Servicing
Agreement and all amendments hereof and supplements hereto, including any
Supplement.
"Amortization Period" shall mean, with respect to any Series, the
period following the related Revolving Period, which shall be either the
Controlled Amortization Period or the Rapid Amortization Period or any
other amortization period, in each case as defined with respect to such
Series in the related Supplement.
"Annual Net Account Additions" shall mean on any date of
determination, the number of Accounts the Receivables of which have been
added to the Trust pursuant to subsection 2.6(b) and (e), in the case of
Monthly Periods ending prior to
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December 1, 1995, from and including December 15, 1994 and in the case of
Monthly Periods ending thereafter, from and including the first day of the
eleventh Monthly Period preceding such date of determination plus the
number of Accounts, if any, the Receivables of which have been designated
to be added to the Trust pursuant to subsection 2.6(a), in the case of
Monthly Periods ending prior to December 1, 1995, from and including
December 15, 1994 and in the case of Monthly Periods ending thereafter,
from and including the first day of the eleventh Monthly Period preceding
such date of determination minus any Removed Accounts removed, in the case
of Monthly Periods ending prior to December 1, 1995, from and including
December 15, 1994 and in the case of Monthly Periods ending thereafter,
from and including the first day of the eleventh Monthly Period preceding
such date of determination.
"Annual Quotient" shall have the meaning specified in subsection
2.6(c)(ii).
"Applicants" shall have the meaning specified in Section 6.7.
"Authorized Newspapers" shall mean each newspaper of general
circulation in New York, New York, or in any other place specified by
Seller, printed in the English language and customarily published on each
Business Day, whether or not published on Saturdays, Sundays or holidays.
"Average Aggregate Net Principal Receivables" shall mean, for any
period, an amount equal to (a) the sum of the Aggregate Net Principal
Receivables at the end of each Business Day during such period divided by
(b) the number of Business Days in such period.
"Average Aggregate Principal Receivables" shall mean, for any period,
an amount equal to (a) the sum of the Aggregate Principal Receivables at
the end of each Business Day during such period divided by (b) the number
of Business Days in such period.
"Base Amount" shall mean, at any date of determination, with reference
to Annual Net Account Additions or Quarterly Net Account Additions, the
number of Accounts included in the Trust on the first day of the relevant
measurement period before giving effect to any Accounts added to the Trust
on such first day.
"Base Rate" shall have, with respect to any Series, the meaning
specified in the related Supplement.
"Book-Entry Certificates" shall mean certificates evidencing a
beneficial interest in any Investor Certificates, ownership and transfers
of which shall be made through book entries by a Clearing Agency as
described in Section 6.9; provided, that after the occurrence of a
condition whereupon book-entry registration and transfers are no
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longer permitted and Definitive Certificates are to be issued to the
Certificate Owners, such Certificates shall no longer be "Book-Entry
Certificates".
"Business Day" shall mean each day which is neither a Saturday, a
Sunday nor any other day on which banking institutions in New York, New
York, Portland, Oregon or Chicago, Illinois (or, with respect to any
Series, any additional city specified in the related Supplement) are
authorized or obligated by law or required by executive order to be closed.
"Carry-over Finance Charge Amount" shall have the meaning specified in
Section 1.3.
"Certificate" shall mean any one of the Investor Certificates of any
Series or the Exchangeable Seller Certificate.
"Certificateholder" or "Holder" shall mean the Person in whose name a
Certificate is registered in the Certificate Register.
"Certificate Interest" shall mean interest payable in respect of the
Investor Certificates of any Series pursuant to Article IV as set forth in
the Supplement related to such Series.
"Certificate Owner" shall mean, with respect to a Book-Entry
Certificate, the Person who is the owner of such Book-Entry Certificate, as
reflected on the books of the Clearing Agency, or on the books of a Person
maintaining an account with such Clearing Agency (directly or as an
indirect participant, in accordance with the rules of such Clearing
Agency).
"Certificate Principal" shall mean principal payable in respect of the
Investor Certificates of any Series pursuant to Article IV as set forth in
the Supplement related to such Series.
"Certificate Rate" shall mean, with respect to any Series of
Certificates, the rate (or formula on the basis of which such rate shall be
determined) per annum stated for such Series in the related Supplement,
which rate shall be calculated in each case on the basis set forth in the
related Supplement.
"Certificate Register" shall mean the register maintained pursuant to
Section 6.3, providing for the registration of the Certificates and
transfers and exchanges thereof.
"Charge Account Agreement" shall mean the agreement (and the related
application) for a FCNB Preferred Charge account between any Obligor and
FCNB, as the same may be amended, modified or otherwise changed from time
to time.
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"Charge Account Fees" shall mean, with respect to any Account, any
fees specified in the Charge Account Agreement applicable to such Account,
including without limitation, annual fees, over limit charges, cash advance
fees, late charges, returned check fees, and reinstatement charges.
"Charge Account Guidelines" shall mean FCNB's policies and procedures
relating to the operation of its Preferred Charge account business,
including, without limitation, the FCNB Credit Policy and Operations Manual
or such other of its policies and procedures for determining the
creditworthiness of charge account customers, the extension of credit to
charge account customers, the terms on which repayments are required to be
made, and relating to the maintenance of charge accounts and collection of
charge account receivables, as said manual and such policies and
procedures, as applicable, may be amended from time to time.
"Class" shall mean, with respect to any Series, any one or more of the
classes of Certificates of such Series as specified in the related
Supplement.
"Clearing Agency" shall mean an organization registered as a "clearing
agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended.
"Clearing Agency Participant" shall mean a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited
with the Clearing Agency.
"Closing Date" shall mean, with respect to any Series, the date
specified as such in the related Supplement.
"Collection Account" shall have the meaning specified in subsection
4.2(a).
"Collection Sub-subaccount" shall have the meaning specified in
subsection 4.2(a).
"Collections" shall mean all payments (including Insurance Proceeds
and Recoveries) received by the Servicer or by Seller in respect of the
Receivables, in the form of cash, checks, wire transfers, ATM transfers, or
other form of payment in accordance with the Charge Account Agreement in
effect from time to time on any Receivable. A Collection processed in
respect of an Account (other than a Defaulted Account) in excess of the
aggregate amount of Receivables in such Account as of the Date of
Processing of such Collection shall be deemed to be a payment in respect of
Principal Receivables to the extent of such excess.
"Collections Deposit Day" shall mean each Business Day.
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"Controlled Amortization Amount" for any Series shall have the meaning
specified in the related Supplement.
"Controlled Amortization Period" for any Series shall have the meaning
specified in the related Supplement.
"Controlled Distribution Amount" for any Series shall have the meaning
specified in the related Supplement.
"Corporate Trust Office" shall mean the principal office of the
Trustee at which at any particular time its corporate trust business shall
be administered, which office at the date of the execution of this
Agreement is located at 311 West Monroe Street, 12th Floor, Chicago,
Illinois 60606.
"Credit Adjustment" shall have the meaning specified in subsection
4.3(d).
"Credit Insurance" shall mean life, accident, health, disability,
involuntary unemployment or other insurance of an Obligor to Seller to
insure payment of any amount owing by such Obligor under an Account and
which proceeds of such insurance are payable to Seller upon such Obligor's
death, disability or involuntary unemployment.
"Cut Off Date" shall mean August 31, 1994.
"Cycle" shall mean, with respect to any Account, the monthly billing
cycle for such Account as determined in accordance with the Charge Account
Guidelines as in effect on the date of this Agreement.
"Cycle Billing Date" shall mean, with respect to any Account, each
date on which bills are processed for the Cycle which includes such
Account.
"Daily Report" shall have the meaning specified in subsection 3.4(a).
"Date of Collection" shall mean any date during any Monthly Period
that Collections are processed by the Servicer.
"Date of Processing" shall mean, with respect to any transaction, the
date on which such transaction is first recorded on the Servicer's computer
master file of accounts (without regard to the effective date of such
recordation).
"Debtor Relief Laws" shall mean the Bankruptcy Code of the United
States of America and all other applicable liquidation, conservatorship,
bankruptcy, moratorium, rearrangement, receivership, insolvency,
reorganization, suspension of payments, or
6
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similar debtor relief laws from time to time in effect affecting the rights
of creditors (including creditors of national banking associations)
generally.
"Default Amount" shall mean, with respect to any Monthly Period, the
excess, if any, of (i) the aggregate amount of Receivables in Defaulted
Accounts charged off during such Monthly Period over (ii) Recoveries with
respect to such Monthly Period.
"Defaulted Account" shall mean each Account with respect to which, in
accordance with the Charge Account Guidelines or the Servicer's customary
and usual servicing procedures for servicing charge account receivables
comparable to the Receivables (which shall in any event provide for charge-
off in the event of delinquency of 210 days or more beyond the due date),
the Servicer has charged off the Receivables in such Account as
uncollectible; an Account shall become a Defaulted Account on the day on
which such Receivables are recorded as charged off on the Servicer's
computer master file of accounts (regardless of whether such Receivables
are charged off before or after the Cut Off Date or Addition Date of such
Account, as the case may be).
"Deficit Controlled Amortization Amount" for any Series shall have the
meaning specified in the related Supplement.
"Definitive Certificates" shall have the meaning specified in Section
6.9.
"Deposit Obligation" shall mean the obligation of the Seller to make
any deposit to the Excess Funding Account pursuant to subsection 2.4(d) or
4.3(c), and the obligation of the Servicer to make any payment or transfer
of Collections to the Collection Account pursuant to this Agreement.
"Depository Agreement" shall mean, with respect to any Series, the
agreement (if any) among the Seller, the Trustee and the initial Clearing
Agency (if any) with respect to such Series.
"Determination Date" shall mean with respect to any Monthly Period,
any Business Day occurring in the first ten days of the succeeding calendar
month as selected from time to time by the Servicer.
"Dilution Series" shall mean a Series which is designated as such by
the Seller and which, inter alia, agrees to absorb on behalf of another
Series, any shortfalls of allocated Collections arising from the failure of
the Seller or the Servicer to satisfy any Deposit Obligation.
"Discount Option Date" shall mean each date on which a Discount
Percentage designated by the Seller pursuant to Section 2.8 takes effect.
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"Discount Option Receivables" shall have the meaning specified in
Section 2.8. The aggregate amount of Discount Option Receivables
outstanding on any Date of Processing occurring on or after the Discount
Option Date shall equal the sum of (a) the aggregate Discount Option
Receivables at the end of the prior Date of Processing (which amount, prior
to the Discount Option Date, shall be zero) plus (b) any new Discount
Option Receivables created on such Date of Processing minus (c) any
Discount Option Receivables Collections received on such Date of
Processing. Discount Option Receivables created on any Date of Processing
shall mean the product of the amount of any Original Principal Receivables
created on such Date of Processing and the Discount Percentage.
"Discount Percentage" shall have the meaning specified in Section 2.8.
"Discount Option Receivable Collections" shall mean on any Date of
Processing occurring in any Monthly Period succeeding the Monthly Period in
which the Discount Option Date occurs, the product of (a) a fraction the
numerator of which is the Discount Option Receivables and the denominator
of which is the sum of the Principal Receivables and the Discount Option
Receivables in each case (for both the numerator and the denominator) at
the end of the prior Date of Processing and (b) Collections of Original
Principal Receivables on such Date of Processing.
"Distribution Date" shall mean, unless otherwise specified in the
Supplement for a Series, the fifteenth day of each month or, if such
fifteenth day is not a Business Day, the next succeeding Business Day.
"Eligible Account" shall mean, as of the Cut Off Date (or, with
respect to Additional Accounts, as of the relevant Notice Date in respect
of Additional Accounts added pursuant to subsection 2.6 (a) or (b) or the
fifth Business Day prior to the relevant Addition Date in respect of
Additional Accounts added pursuant to subsection 2.6(e)), each Account:
(a) which is payable in United States dollars;
(b) the Obligor on which has provided, as its initial billing
address, an address which is located in the United States or its
territories or possessions;
(c) which the Servicer has not finally determined to be
counterfeit or fraudulent;
(d) which is not a Defaulted Account as of the Cut Off Date or,
with respect to Additional Accounts, as of the relevant Notice Date or
Addition Date;
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(e) which was originated by FCNB or Spiegel in the ordinary
course of business;
(f) as to which the Seller has good title, and which has not
been sold or pledged to any other party; and
(g) which does not have receivables which have been sold or
pledged to any party other than the Seller pursuant to the Receivables
Purchase Agreement.
"Eligible Deposit Account" shall mean either (a) a segregated account
with a Qualified Institution or (b) a segregated trust account with the
corporate trust department of a depository institution organized under the
laws of the United States or any one of the states thereof, including the
District of Columbia (or any domestic branch of a foreign bank), and acting
as a trustee for funds deposited in such account., so long as any of the
securities of such depository institution shall have a credit rating from
each Rating Agency in one of its short-term credit rating categories which
signifies investment grade.
"Eligible Receivable" shall mean each Receivable:
(a) which has arisen under an Eligible Account;
(b) which was created in compliance, in all material respects,
with all Requirements of Law applicable to Spiegel or FCNB pursuant to
a Charge Account Agreement which complies, in all material respects,
with all Requirements of Law applicable to FCNB;
(c) with respect to which all consents, licenses, approvals or
authorizations of, or registrations or declarations with, any
Governmental Authority required to be obtained, effected or given by
FCNB or Seller in connection with the creation of such Receivable or
the execution, delivery and performance by FCNB of the Charge Account
Agreement pursuant to which such Receivable was created, have been
duly obtained, effected or given and are in full force and effect as
of such date of creation;
(d) as to which, immediately prior to the transfer of same to
the Trust by Seller, Seller had good title thereto free and clear of
all Liens arising under or through FCNB, Seller or their respective
Affiliates (other than Liens permitted pursuant to subsection 2.5(b));
(e) which is the legal, valid and binding payment obligation of
the Obligor thereon, enforceable against such Obligor in accordance
with its terms, except as such enforceability may be limited by
applicable Debtor Relief Laws,
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and except as such enforceability may be limited by general principles
of equity (whether considered in a suit at law or in equity);
(f) which constitutes an "account," a "general intangible" or
"chattel paper" under and as defined in Article 9 of the UCC as then
in effect in the State of Illinois;
(g) which, at the time of transfer to the Trust, has not been
waived or modified except for a Receivable which has been waived or
modified as permitted in accordance with the Charge Account Guidelines
and which waiver or modification is reflected in the Servicer's
computer files;
(h) which, at the time of transfer to the Trust, is not (to the
knowledge of Seller or the Servicer) subject to any right of
rescission, set-off, counterclaim or any other defense (including
defenses arising out of violations or usury laws) of the Obligor,
which requires that such Receivable be charged off in accordance with
the Charge Account Guidelines, other than defenses arising out of
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights in
general; and
(i) as to which, at the time of transfer to the Trust, each of
the Seller and FCNB has satisfied all its obligations required to be
satisfied by such time.
"Enhancement" shall mean, with respect to any Series, the cash
collateral account, letter of credit, guaranteed rate agreement, maturity
guaranty facility, tax protection agreement, interest rate swap or any
other contract, arrangement or agreement for the benefit of the
Certificateholders of such Series (or Certificateholders of a Class within
such Series), as designated in the applicable Supplement.
"Enhancement Increase Condition" shall have, with respect to any
Series, the meaning, if any, specified in the related Supplement.
"Enhancement Provider" shall mean, with respect to any Series, the
Person, if any, designated as such in the related Supplement.
"Excess Funding Account" shall have the meaning specified in
subsection 4.2(b).
"Exchange" shall have the meaning specified in subsection 6.12(b).
"Exchangeable Seller Certificate" shall mean the certificate which
represents the Seller Amount and which has been authenticated by the
Trustee, substantially in
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the form of Exhibit A and exchangeable as provided in Section 6.12;
---------
provided, that at any time there shall be only one Exchangeable Seller
Certificate.
"Exchange Date" shall have the meaning specified in Section 6.12.
"Exchange Notice" shall have the meaning specified in subsection
6.12(b).
"FCNB" shall mean First Consumers National Bank, a national banking
association.
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"Final Trust Termination Date" shall mean December 31, 2044.
"Finance Charge Collections" shall mean, for any period, the amount of
Collections allocated to Finance Charge Receivables during such period in
accordance with subsection 1.3 plus Discount Option Receivables Collections
for such period.
"Finance Charge Receivables" shall mean, with respect to any Monthly
Period, all amounts billed to Obligors on any Account during such Monthly
Period in respect of Finance Charges and Charge Account Fees plus the
aggregate amount of Discount Option Receivables created during such period.
"Finance Charges" shall mean, as of any day, the amount of interest as
determined by the periodic finance charge rate assessed on the Cycle
Billing Date on or next preceding such day pursuant to the Charge Account
Agreements.
"Finance Charge Subaccount" shall have the meaning specified in
subsection 4.2(a).
"Governmental Authority" shall mean the United States of America, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of
or pertaining to government.
"Included Cycle" shall mean Cycles 5, 8, 9 and 10. The term "Included
Cycle" shall also be deemed to refer to any Cycle, all of the Accounts of
which were added as Additional Accounts on an Addition Date but only from
and after such Addition Date, and the term "Cycle" shall be deemed to refer
to any Cycle, all of the Accounts of which are Removed Accounts on a
Removal Date prior to but not after such Removal Date.
"Indebtedness" shall mean, with respect to any Person at any date, (a)
all indebtedness of such Person for borrowed money or for the deferred
purchase price of property or services (other than current liabilities
incurred in the ordinary course of
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business and payable in accordance with customary trade practices) or which
is evidenced by a note, bond, debenture or similar instrument, (b) all
obligations of such Person under capital leases, (c) all obligations of
such Person in respect of acceptances issued or created for the account of
such Person and (d) all liabilities secured by any Lien on any property
owned by such Person even though such Person has not assumed or otherwise
become liable for the payment thereof.
"Ineligible Receivable" shall have the meaning specified in subsection
2.4(d).
"Initial Closing Date" shall mean September 20, 1994.
"Initial Investor Amount" with respect to any Series, shall have the
meaning specified in the related Supplement.
"Insolvency Event" shall have the meaning specified in Section 9.2.
"Insurance Proceeds" shall mean any amounts paid to the Servicer or to
Seller pursuant to any Credit Insurance policies covering any Obligor with
respect to Receivables under such Obligor's Account.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time.
"Investor Amount" shall have, with respect to any Series, the meaning
specified in the related Supplement.
"Investor Certificate" shall mean any one of the certificates executed
and authenticated by the Trustee substantially in the form (or forms, in
the case of a Series with multiple Classes) of the investor certificate
attached to the related Supplement.
"Investor Certificateholder" shall mean the Holder of record of an
Investor Certificate.
"Investor Charge Off" shall have, with respect to any Series, the
meaning specified in the related Supplement.
"Investor Default Amount" shall have, with respect to any Series, the
meaning specified in the related Supplement.
"Investor Exchange" shall have the meaning specified in subsection
6.12(b).
"Investor Monthly Servicing Fee" shall have the meaning specified in
Section 3.2.
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"Investor Net Recoveries" shall mean, for any Monthly Period, an
amount equal to the product of (i) the Net Recoveries for such Monthly
Period and (ii) the sum of the applicable Investor Percentages for each
outstanding Series at the end of the last day of such Monthly Period.
"Investor Percentage" shall have, for any Series, with respect to
Principal Receivables, Finance Charge Receivables and Receivables in
Defaulted Accounts, the meaning specified in the related Supplement.
"Lien" shall mean any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other),
equity interest, participation interest, preference, priority or other
security agreement or preferential arrangement of any kind or nature
whatsoever, including, without limitation, any conditional sale or other
title retention agreement, any financing lease having substantially the
same economic effect as any of the foregoing and the filing of any
financing statement under the UCC (other than any such financing statement
filed for informational purposes only) or comparable law of any
jurisdiction to evidence any of the foregoing; provided, however, that any
assignment pursuant to Section 7.2 shall not be deemed to constitute a
Lien.
"Minimum Aggregate Principal Receivable" shall mean, on any date of
determination, the sum of the numerators used at such date to calculate the
Investor Percentage with respect to Principal Receivables for all Series
outstanding on such date.
"Minimum Average Seller Percentage" shall mean the weighted average
(by Investor Amount) Minimum Seller Percentages for all Series then
outstanding.
"Minimum Seller Amount" shall mean, on any date of determination, the
Aggregate Investor Amount at the end of the day prior to such date of
determination, times the Minimum Average Seller Percentage; provided that
if such percentage is zero, the Minimum Seller Amount shall be zero.
"Minimum Seller Percentage" shall have, for any Series, the meaning
specified in the related Supplement.
"Monthly Period" shall mean the period from and including the first
day of the calendar month preceding a related Determination Date to and
including the last day of such calendar month.
"Monthly Servicing Fee" shall have the meaning specified in Section
3.2.
"Monthly Total Percentage Allocation" shall have, with respect to any
Series, the meaning specified in the related Supplement.
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"Moody's" shall mean Moody's Investors Service, Inc.
"Net Recoveries" shall mean, with respect to any Monthly Period, the
excess, if any, of Recoveries with respect to such Monthly Period over the
aggregate amount of Receivables in Accounts that have become Defaulted
Accounts during such Monthly Period.
"Notice Date" shall have the meaning specified in subsection 2.6(c).
"Obligor" shall mean, with respect to any Account, the Person or
Persons obligated to make payments with respect to such Account, including
any guarantor thereof.
"Officer's Certificate" shall mean a certificate signed by any officer
of Seller or the Servicer and delivered to the Trustee.
"Opinion of Counsel" shall mean a written opinion of counsel, who may
be counsel for Seller or the Servicer and who shall be reasonably
acceptable to the Trustee.
"Optional Repurchase Percentage" shall have, with respect to any
Series, the meaning specified in the related Supplement.
"Original Principal Receivables" shall mean Principal Receivables
determined without giving effect to any reduction thereof attributable to
Discount Option Receivables.
"Paying Agent" shall mean any paying agent appointed pursuant to
Section 6.6 and shall initially be the Corporate Trust Office of the
Trustee.
"Pay Out Commencement Date" shall mean, with respect to each Series,
(a) the date on which a Trust Pay Out Event is deemed to occur pursuant to
Section 9.1, or (b) the date on which a Series Pay Out Event is deemed to
occur pursuant to the Supplement for such Series.
"Pay Out Event" shall mean either a Trust Pay Out Event or a Series
Pay Out Event.
"Permitted Investments" shall mean negotiable instruments or
securities or other investments (a) which, except in the case of demand or
time deposits, investments in money market funds and Repurchase
Obligations, are represented by instruments in bearer or registered form or
ownership of which is represented by book entries by a Clearing Agency or
by a Federal Reserve Bank in favor of depository institutions
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eligible to have an account with such Federal Reserve Bank who hold such
investments on behalf of their customers and (b) which evidence:
(i) direct obligations of, and obligations fully guaranteed as
to full and timely payment by, the United States of America;
(ii) demand deposits, time deposits or certificates of deposit
of depository institutions or trust companies incorporated under the
laws of the United States of America or any state thereof and subject
to supervision and examination by federal or state banking or
depository institution authorities; provided, however, that at the
time of the Trust's investment or contractual commitment to invest
therein, the commercial paper, if any, and short-term unsecured debt
obligations (other than such obligation whose rating is based on the
credit of a Person other than such institution or trust company) of
such depository institution or trust company shall have a credit
rating from the Rating Agency in the highest investment category
granted by such Rating Agency in the case of commercial paper;
(iii) commercial paper having, at the time of the Trust's
investment or contractual commitment to invest therein, a rating in
the highest investment category granted by the Rating Agency;
(iv) bankers' acceptances issued by any depository institution
or trust company referred to in (ii) above;
(v) investments in money market funds having a rating of the
highest investment category from the Rating Agency or otherwise
approved in writing by the Rating Agency;
(vi) time deposits (having maturities of not more than 30 days)
or notes which are payable on demand by an entity the commercial paper
of which has a rating of the highest investment category granted by
the Rating Agency; and
(vii) Repurchase Obligations.
"Permitted Transaction" shall mean any transaction or series of
related transactions pursuant to which the Seller finances an interest in
the Trust Assets or the Exchangeable Seller Certificate pursuant to the
transfer of a Certificate or otherwise and (i) as to which the Rating
Agency Condition is satisfied and (ii) which in the reasonable judgment of
the Seller as evidenced by an Officer's Certificate, will not have a
material adverse effect on the interests of the Investor
Certificateholders.
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"Person" shall mean any legal person, including any individual,
corporation, partnership, joint venture, association, joint-stock company,
trust, unincorporated organization, governmental entity or other entity of
similar nature.
"Pool Factor" with respect to any Series issued in only one Class, as
of any Record Date, shall mean a number rounded to seven decimals
representing the ratio of the Investor Amount of such Series as of such
Record Date (determined after taking into account any reduction in such
Investor Amount which will occur on the following Distribution Date) to the
Initial Investor Amount of such Series, and with respect to any Series
issued in more than one Class, shall have the meaning stated in the related
Series Supplement.
"Portfolio Yield" shall have, with respect to any Series, the meaning
specified in the related Supplement.
"Principal Collections Subaccount" shall have the meaning specified in
subsection 4.2(a).
"Principal Receivable" shall mean each Receivable other than Finance
Charge Receivables and Receivables in Defaulted Accounts. A Principal
Receivable shall be deemed to have been created at the end of the day on
the Date of Processing of such Receivable. In calculating the aggregate
amount of Principal Receivables on any day, the amount of Principal
Receivables shall be reduced by the aggregate amount of credit balances in
the Accounts on such day. Any Principal Receivables which the Seller is
unable to transfer as provided in subsection 2.5(c) shall not be included
in calculating the aggregate amount of Principal Receivables.
"Principal Shortfalls" shall mean, with respect to a Distribution
Date, the aggregate amount for all outstanding Series which the related
Supplements specify are "Principal Shortfalls" for such Distribution Date.
"Principal Terms" shall have the meaning, with respect to any Series
issued pursuant to an Exchange, specified in subsection 6.12(c).
"Publication Date" shall have the meaning specified in Section 9.2.
"Qualified Institution" shall have the meaning specified in Section
4.2(a).
"Quarterly Net Account Additions" shall mean on any date of
determination, the number of Accounts the Receivables of which have been
added to the Trust pursuant to subsection 2.6(b) and (e) during the current
calendar quarter plus the number of Accounts, if any, the Receivables of
which have been designated to be added to the Trust during such calendar
quarter pursuant to subsection 2.6(a) minus any Removed Accounts removed
during such calendar quarter.
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"Quarterly Quotient" shall have the meaning specified in subsection
2.6(c)(ii).
"Rapid Amortization Period" for any Series shall have the meaning
specified in the Supplement for such Series.
"Rating Agency" shall mean, with respect to each Series, the rating
agency or agencies, if any, designated as a "Rating Agency" in the related
Supplement.
"Rating Agency Condition" shall mean, with respect to any action or
series of related actions or proposed transaction or series of related
proposed transactions, that each Rating Agency shall have notified the
Seller and the Trustee in writing that such action or series of related
actions or the consummation of such proposed transaction or series of
related transactions will not result in a reduction or withdrawal of the
rating of any outstanding Series or Class with respect to which it is a
Rating Agency.
"Receivable" shall mean any amount owing by an Obligor under an
Account (including amounts in Defaulted Accounts) from time to time,
including, without limitation, amounts owing for the purchase of goods and
services, Finance Charges, Charge Account Fees, and premiums for Credit
insurance, if any.
"Receivables Purchase Agreement" shall mean the Receivables Purchase
Agreement, dated as of September 20, 1994, among Seller, FCNB and Spiegel
Acceptance Corporation, as amended from time to time.
"Record Date" shall mean with respect to any Series, the date
specified as such in the applicable Supplement.
"Recoveries" shall mean, with respect to any Monthly Period, all
amounts recorded as recoveries by the Servicer during such Monthly Period
with respect to Receivables which have previously been charged off as
uncollectible.
"Removal Date" shall have the meaning specified in Section 2.7.
"Removal Notice Date" shall mean the fifth Business Day prior to a
Removal Date.
"Removed Accounts" shall have the meaning specified in Section 2.7.
"Replacement Series" shall mean a Series which is designated as such
by the Seller and which has a Revolving Period that is scheduled to end
after the Revolving Period of the Series to be replaced by such Series.
"Repurchase Obligations" shall mean repurchase obligations with
respect to any security that is a direct obligation of, or fully guaranteed
by, the United States of
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America or any agency or instrumentality thereof the obligations of which
are backed by the full faith and credit of the United States of America
(collectively, "Eligible Collateral"), in either case entered into with a
depository institution or trust company (acting as principal) described in
clause (b)(ii) of the definition of Permitted
Investments.
"Requirements of Law" for any Person shall mean the certificate of
incorporation or articles of association and by-laws or other
organizational or governing documents of such Person, and any law, treaty,
rule or regulation, or order or determination of an arbitrator or
Governmental Authority, in each case applicable to or binding upon such
Person or to which such Person is subject, whether Federal, state or local
(including, without limitation, usury laws, the Federal Truth in Lending
Act and Regulation Z and Regulation B of the Board of Governors of the
Federal Reserve System).
"Response" shall have the meaning specified in subsection 9.2(a).
"Responsible Officer" shall mean the Chairman or any Vice Chairman of
the Board of Directors or Trustees of the Trustee, the Chairman or Vice
Chairman of the Executive or Standing Committee of the Board of Directors
or Trustees of the Trustee, the President, any Executive Vice President,
Senior Vice President, Vice President, any Assistant Vice President, the
Secretary, any Assistant Secretary, the Treasurer, any Assistant Treasurer,
the Cashier, any Assistant or Deputy Cashier, any Trust Officer or
Assistant Trust Officer, the Controller and any Assistant Controller or any
other officer of the Trustee customarily performing functions similar to
those performed by any of the above-designated officers and also, with
respect to a particular matter, any other officer to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject. The term "Responsible Officer", when used herein with
respect to any Person other than the Trustee, means an officer or employee
of such Person corresponding to any officer or employee described in the
preceding sentence.
"Retransfer Agreement" shall have the meaning specified in subsection
2.7(b)(ii).
"Revolving Period" shall have, with respect to any Series, the meaning
specified in the related Supplement.
"Seller" shall mean Spiegel Credit Corporation III, a Delaware
corporation.
"Seller Amount" shall mean, on any date of determination, the
Aggregate Principal Receivables at the end of the day immediately prior to
such date of determination, minus the Aggregate Investor Amount at the end
of such day. The Seller Amount may be a negative number.
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"Seller Exchange" shall have the meaning specified in subsection
6.12(b).
"Seller Percentage" shall mean, on any date of determination, when
used with respect to Principal Receivables, Finance Charge Receivables and
Receivables in Defaulted Accounts, a percentage equal to 100% minus the
Aggregate Investor Percentage calculated on such date with respect to such
categories of Receivables; provided, however, that the Seller Percentage
shall never be less than zero.
"Series" shall mean any series of Investor Certificates, which may
include within any such Series a Class or Classes of Investor Certificates
subordinate to another such Class or Classes of Investor Certificates.
"Series Account" shall mean, with respect to any Series, any of the
accounts established and designated as such pursuant to the related
Supplement.
"Series Pay Out Event" shall have, with respect to any Series, the
meaning specified in the related Supplement.
"Series Servicing Fee Percentage" shall mean, with respect to any
Series, the amount specified as such in the related Supplement.
"Series Share" shall have the meaning specified in subsection 4.3(i).
"Series Termination Date" shall mean, with respect to any Series, the
date, if any, specified as such in the related Supplement.
"Servicer" shall mean initially FCNB and its permitted successors and
assigns, and thereafter any Person appointed as successor as herein
provided to service the Receivables.
"Servicer Default" shall have the meaning specified in Section 10.1.
"Servicing Officer" shall mean any employee of the Servicer involved
in, or responsible for, the administration and servicing of the Receivables
whose name appears on a list of servicing officers furnished to the Trustee
by the Servicer, as such list may from time to time be amended.
"Shared Finance Charge Collections" shall mean, with respect to any
period, the aggregate amount of Finance Charge Collections allocable to
each Series which the related Supplements specify are to be treated as
"Shared Finance Charge Collections" for such period.
"Shared Principal Collections" shall mean, with respect to a
Distribution Date, the aggregate amount of Collections of Principal
Receivables for all outstanding Series
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which the related Supplements specify are to be treated as "Shared
Principal Collections" for such Distribution Date.
"Shortfall Amount" shall mean, on any date of determination, the
amount, if any, by which the Minimum Seller Amount exceeds the Seller
Amount.
"Special Fees" shall mean Receivables consisting of fees which are not
now but may from time to time be assessed on the Accounts.
"Spiegel" shall mean Spiegel, Inc., a Delaware corporation.
"Standard & Poor's" shall mean Standard & Poor's Ratings Group, a
division of McGraw Hill, Inc.
"Successor Servicer" shall have the meaning specified in Section 10.2.
"Supplement" shall mean, with respect to any Series, a supplement to
this Agreement complying with the terms of Section 6.12, executed in
conjunction with the issuance of any Series (or, in the case of the
issuance of Certificates on the Initial Closing Date, the supplement
executed in connection with the issuance of such Certificates).
"Termination Notice" shall have the meaning specified in Section 10.1.
"Terms Change Condition" shall have, with respect to any Series, the
meaning, if any, specified in the related Supplement.
"Transfer Agent and Registrar" shall have the meaning specified in
Section 6.3 and shall initially be the Trustee's Corporate Trust Office.
"Transfer Agreement" shall have the meaning specified in subsection
2.6(d)(iii).
"Transfer Date" shall mean the Business Day immediately preceding each
Distribution Date.
"Trust" shall mean the trust created by this Agreement and known as
the "Spiegel Master Trust".
"Trust Assets" shall have the meaning specified in Section 2.1.
"Trust Pay Out Event" shall have, with respect to each Series, the
meaning specified in Section 9.1.
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"Trust Termination Date" shall have the meaning specified in
subsection 12.1(a).
"Trustee" shall mean the institution executing this Agreement as
Trustee, or its successor in interest, or any successor trustee appointed
as herein provided.
"UCC" shall mean the Uniform Commercial Code, as amended from time to
time, as in effect in any specified jurisdiction.
"Undivided Interest" shall mean the undivided interest in the Trust
evidenced by a Certificate.
Section 1.2 Other Definitional Provisions.
-----------------------------
(a) All terms defined in this Agreement or in any Supplement shall have
the defined meanings when used in any certificate or other document made or
delivered pursuant hereto or thereto unless otherwise defined therein.
(b) As used in this Agreement or in any Supplement and in any certificate
or other document made or delivered pursuant hereto or thereto, accounting terms
not defined in Section 1.1, and accounting terms partially defined in Section
1.1 to the extent not defined, shall have the meanings given to them under
generally accepted accounting principles. To the extent that the definitions of
accounting terms herein are inconsistent with the meaning of such terms under
generally accepted accounting principles or regulatory accounting principles,
the definitions contained herein shall control.
(c) The agreements, representations and warranties of FCNB in this
Agreement and in any Supplement in its capacity as Servicer shall be deemed to
be the agreements, representations and warranties of FCNB solely in its capacity
as Servicer for so long as it acts in such capacity under this Agreement.
(d) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement or any Supplement shall refer to this
Agreement or any Supplement as a whole and not to any particular provision of
this Agreement or any Supplement; and Section, subsection, Schedule and Exhibit
references contained in this Agreement or any Supplement are references to
Sections, subsections, Schedules and Exhibits in or to this Agreement or any
Supplement unless otherwise specified.
Section 1.3 Monthly Allocation of Finance Charge Receivables.
------------------------------------------------
The amount of Finance Charge Receivables (excluding, in each case where
such term is used in this Section 1.3, Discount Option Receivables) in all
Accounts shall be determined as follows:
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(i) At the close of business on each Cycle Billing Date for any
Cycle of which any Accounts are included in the Trust, the amount of
Finance Charge Receivables of all Accounts in such Cycle shall be equal to
(A) the amount of Finance Charges charged to all Accounts in such Cycle on
such date plus (B) the Carry-Over Finance Charge Amount for such Cycle.
(ii) For each Business Day in each Monthly Period, the amount of
Collections allocated to Finance Charge Receivables for all Accounts in
such Cycle shall be an amount equal to the quotient of the amount of
Finance Charges actually assessed on all Accounts, in accordance with the
Charge Account Guidelines, on the Cycle Billing Date for such Cycle in the
immediately preceding Monthly Period divided by the number of Business Days
in such Monthly Period; provided, however, that the amount of Collections
allocated to Finance Charge Receivables for all Accounts in a Cycle on the
first Business Day of each Monthly Period shall equal the product of two
times such quotient and provided, further, that the amount of Collections
allocated to Finance Charge Receivables for all Accounts in a Cycle on the
last Business Day of each Monthly Period shall equal zero.
(iii) If, at the close of business on the last Business Day of any
Monthly Period, the amount of Collections allocated to Finance Charge
Receivables for all Accounts in such Cycle during such Monthly Period is
less than the amount of Finance Charge Receivables for all Accounts in such
Cycle on the Cycle Billing Date for such Cycle next preceding such Monthly
Period, then such deficit shall be the "Carry-Over Finance Charge Amount"
for such Cycle and shall be added to the amount of Finance Charges assessed
on such Billing Cycle Date pursuant to clause (i)(B) above. The Carry-Over
Finance Charge Amount with respect to any Accounts shall be zero as of the
Cycle Billing Date next preceding (A) the Closing Date, in the case of
Accounts which are not Additional Accounts and (B) the applicable Addition
Date, in the case of Additional Accounts.
Notwithstanding the foregoing, the Servicer may adopt a different method of
determining the amount of Finance Charge Receivables which in the good faith
judgment of the Servicer is designed to more accurately reflect the portions of
Receivables and Collections constituting Finance Charge Receivables.
Section 1.4 Daily Allocation of Principal Collections.
-----------------------------------------
(a) For purposes of allocating Collections on a daily basis during any
Monthly Period, the Servicer may estimate the portion of Collections on the
entire portfolio of FCNB Preferred Charge accounts that is allocable to the
Accounts. Such estimate shall be made using a fraction the numerator of which
is the Principal Receivables plus the Discount Option Receivables as of the last
day of the preceding Monthly Period and the denominator of which is the
aggregate principal receivables in such entire portfolio as of such last day.
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(b) On the Determination Date following each Monthly Period during which
such estimation method is used, the Servicer shall make an appropriate true-up
adjustment to the balance on deposit in the Principal Collections Subaccount and
in the Finance Charge Subaccount and to the amount of Principal Receivables
included in the Trust Assets and the amount of Discount Option Receivables
allocable to the Certificate Interest in respect of the preceding Monthly
Period, in each case to reflect the difference, if any, between the amount that
should have been recorded as collections in respect of Principal Receivables and
Discount Option Receivables if actual Collections allocable to the Accounts had
been known and the amount allocated thereto pursuant to subsection 1.4(a).
(c) Notwithstanding the foregoing, the Servicer may adopt a different
method of estimating the amount of Collections allocable to the Accounts which
in the good faith judgment of the Servicer is designed to more accurately
reflect the actual amounts being collected in respect thereof. The Servicer
shall provide to each Rating Agency and to the Trustee written notice each time
the Servicer adopts a different method of estimating such amounts.
ARTICLE II
TRANSFER OF RECEIVABLES; ISSUANCE OF CERTIFICATES
Section 2.1 Transfer of Receivables. Seller does hereby transfer, assign
-----------------------
and set-over to the Trust for the benefit of the Certificateholders, without
recourse, all right, title and interest of Seller in, to and under (i) the
Receivables now existing and hereafter created and arising in connection with
the Accounts, all monies due or to become due with respect thereto (including
all Finance Charge Receivables), (ii) all Recoveries, Collections and other
proceeds thereof and Insurance Proceeds relating thereto, (iii) all rights to
security for any Receivables, (iv) the right to any Enhancement with respect to
any Series, (v) the Receivables Purchase Agreement and (vi) all proceeds and
products of all of the foregoing. Such property, together with all monies and
investments on deposit, from time to time, in the Collection Account, the Excess
Funding Account, the Series Accounts maintained for the benefit of the
Certificateholders of any Series of Certificates, any Enhancement and all monies
available under any Enhancement, to be provided for any series for payment to
the Certificateholders of such Series, shall constitute the assets of the Trust
(collectively, the "Trust Assets").
In connection with such transfer, assignment and set-over, Seller agrees to
record and file, at its own expense, financing statements (including any
continuation statements with respect to such financing statements when
applicable) with respect to the Receivables now existing and hereafter created
for the transfer of accounts and general intangibles (as defined in Section 9-
106 of the UCC as in effect in the State of Illinois) meeting the requirements
of applicable state law in such manner and in such jurisdictions as are
necessary to perfect the transfer of the Receivables from Seller to the Trust,
and to deliver file-stamped copies of such financing statements or other
evidence of such filings (which may, for purposes of this Section 2.1, consist
of telephone confirmations of such filings with the file-stamped copy to
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be provided to the Trustee as soon as practicable after receipt thereof by the
Seller) to the Trustee on or prior to the date of Initial Closing Date and in
the case of any continuation statements filed pursuant to this Section 2.1, as
soon as practicable after receipt thereof by the Seller.
In connection with such transfer, Seller further agrees, at its own
expense, on or prior to the Initial Closing Date (i) to indicate in its books
and records, including the computer files of the Receivables, that Receivables
created in connection with the Accounts have been transferred to the Trust
pursuant to this Agreement for the benefit of the Certificateholders and (ii) to
deliver to the Trustee a computer file or microfiche list containing a true and
complete list of all such Accounts, identified by account number and by the
Receivable balance as of the Cut Off Date. Such file or list shall be marked as
Schedule 1 to this Agreement, delivered to the Trustee as confidential and
proprietary, and is hereby incorporated into and made a part of this Agreement.
The parties intend that, in the event this Agreement shall not be effective
to transfer, assign and set over to the Trustee the Trust property, Seller shall
be deemed hereunder to have granted to the Trustee a first perfected security
interest in all of the property described in the first paragraph of this Section
2.1, and that this Agreement shall constitute a security agreement under
applicable law.
Section 2.2 Acceptance by Trustee.
---------------------
(a) The Trustee hereby acknowledges its acceptance, on behalf of the
Trust, of the Trust Assets, and declares that it shall maintain such right,
title and interest, upon the trust herein set forth in accordance with the terms
of this Agreement, for the benefit of all Certificateholders. The Trustee
further acknowledges that, prior to or contemporaneously with the execution and
delivery of this Agreement, Seller delivered to the Trustee the computer file or
microfiche list described in the third paragraph of Section 2.1.
(b) The 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 delivered to the Trustee by Seller pursuant to Sections 2.1 and
2.6, except as is required in connection with the performance of its duties
hereunder or in enforcing the rights of the Certificateholders, or to a
Successor Servicer appointed pursuant to Section 10.2. The Trustee 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 to inspect the Trustee's security and
confidentiality arrangements from time to time during normal business hours.
The Trustee shall provide Seller with written notice five days prior to any
disclosure pursuant to this subsection 2.2(b).
(c) The Trustee shall have no power to create, assume or incur
indebtedness or other liabilities in the name of the Trust other than as
contemplated in this Agreement.
24
<PAGE>
Section 2.3 Representations and Warranties of Seller Relating to Seller.
-----------------------------------------------------------
Seller hereby represents and warrants as of the Initial Closing Date that:
(a) Organization and Good Standing. Seller is a corporation duly
------------------------------
organized and validly existing in good standing under the laws of the State
of Delaware, and has full corporate power, authority and legal right to own
its properties and conduct its business as such properties are presently
owned and such business is presently conducted, and to execute, deliver and
perform its obligations under this Agreement and the Receivables Purchase
Agreement and to execute and deliver to the Trustee pursuant hereto the
Certificates.
(b) Due Qualification. The Seller is not required to qualify to do
-----------------
business as a foreign corporation in any state or to obtain any licenses or
approvals in any jurisdiction in order to conduct its business.
(c) Due Authorization. The execution and delivery of this Agreement
-----------------
and the Receivables Purchase Agreement and the consummation of the
transactions provided for herein and therein have been duly authorized by
Seller by all necessary corporate action on the part of Seller.
(d) No Conflict. The execution and delivery of this Agreement and the
-----------
Receivables Purchase Agreement, the performance of the transactions
contemplated hereby and thereby and the fulfillment of the terms hereof and
thereof will not conflict with, result in any breach of any of the terms
and provisions of, or constitute (with or without notice or lapse of time
or both) a default under, any indenture, contract, agreement, mortgage,
deed of trust, or other instrument to which Seller is a party or by which
it or any of its property is bound.
(e) No Violation. The execution and delivery of this Agreement and
------------
the Receivables Purchase Agreement, the performance of the transactions
contemplated hereby and thereby and the fulfillment of the terms hereof and
thereof will not conflict with or violate any Requirements of Law
applicable to Seller.
(f) No Proceedings. There are no proceedings or investigations
--------------
pending or, to the best knowledge of Seller, threatened against Seller,
before any court, regulatory body, administrative agency, or other tribunal
or governmental instrumentality (i) asserting the invalidity of this
Agreement, the Receivables Purchase Agreement or the Certificates, (ii)
seeking to prevent the issuance of the Certificates or the consummation of
any of the transactions contemplated by this Agreement, the Receivables
Purchase Agreement or the Certificates, (iii) seeking any determination or
ruling that, in the reasonable judgment of the Seller, would materially and
adversely affect the performance by the Seller of its obligations under
this Agreement or the Receivables Purchase Agreement, (iv) seeking any
determination or ruling that would materially and adversely affect the
validity or enforceability of this Agreement, the
25
<PAGE>
Receivables Purchase Agreement or the Certificates or (v) seeking to impose
income taxes on the Trust (other than as a wholly-owned subsidiary of the
Seller).
(g) Eligibility of Accounts. As of the Cut Off Date, each Account
-----------------------
was an Eligible Account.
(h) All Consents Required. All appraisals, authorizations, consents,
---------------------
orders or other actions of any Person or of any governmental body or
official required in connection with the execution and delivery of this
Agreement, and the Certificates, 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 Trust or the
Certificateholders 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 Trust, and termination of the rights and
obligations of the Servicer pursuant to Section 10.1. Upon discovery by Seller,
the Servicer or the Trustee of a breach of any of the foregoing representations
and warranties, the party discovering such breach shall give prompt written
notice to the others and any Enhancement Provider. For the purposes of the
representations and warranties contained in this Section 2.3 and made by Seller
on the Initial Closing Date, "Certificates" shall mean the Certificates issued
on the Initial Closing Date. The 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 Supplement, that the representations and
warranties of Seller set forth in this Section 2.3 will be true and correct as
of such date (for the purposes of such representations and warranties,
"Certificates" shall mean the Certificates issued on such Closing Date).
Section 2.4 Representations and Warranties of Seller Relating to the
--------------------------------------------------------
Agreement and the Receivables.
-----------------------------
(a) Binding Obligation; Valid Transfer and Security Interest. Seller
--------------------------------------------------------
hereby represents and warrants to the Trust 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 Supplement, as of the Closing Date for such
Series:
26
<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
Trust of all right, title and interest of Seller in, to and under the Trust
Assets, and such property will be held by the Trust free and clear of any
Lien of any Person claiming through or under Seller or its Affiliates,
except for (w) the interests of the Trustee and the Certificateholders, (x)
Liens permitted under subsection 2.5(b), (y) the interest of Seller as
holder of the Exchangeable Seller Certificate and (z) Seller's right to
receive interest accruing on, and investment earnings in respect of, the
Collection Account or any Series Account as provided in this Agreement and
any Supplement or (B) a grant of a security interest (as defined in the UCC
as in effect in the State of Illinois) in such property to the Trust, which
is enforceable with respect to (i) existing Receivables in the Accounts,
(ii) all monies due or to become due with respect thereto, (iii) the
Collections, Recoveries and other proceeds thereof, and Insurance Proceeds
relating thereto upon execution and delivery of this Agreement, and which
will be enforceable with respect to such Receivables hereafter arising in
the Accounts, (iv) all monies due or to become due with respect thereto,
and (v) the Collections, Recoveries and other proceeds thereof and
Insurance Proceeds relating thereto, at the time such Receivables arise.
If this Agreement constitutes the grant of a security interest to the Trust
in such property, upon the filing of the financing statement described in
Section 2.1 and in the case of the Receivables hereafter arising in the
Accounts and proceeds thereof and Insurance Proceeds relating to such
Receivables, as the same arise, the Trust shall have a first priority
perfected security interest in such property, except for Liens permitted
under subsection 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 this Agreement or any Supplement, Seller's right to receive
payments from the Collection Account or any Series Account in accordance
with the provisions of Article IV, 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. Seller hereby represents and warrants to
--------------------------
the Trust as of the Initial Closing Date that (i) as of the Cut-Off Date,
Schedule 1 to this Agreement and the computer file or microfiche list delivered
pursuant to subsection 2.1 is an accurate and complete listing in all material
respects of all the Accounts as of the Cut-Off Date and the information
contained therein with respect to the identity of such Accounts and the
Receivables existing thereunder is true and correct in all material respects as
of the Cut-Off
27
<PAGE>
Date, (ii) each Receivable then existing is an Eligible Receivable, (iii) each
Receivable then existing has been transferred to the Trust free and clear of any
Lien of any Person (other than Liens permitted under subsection 2.5(b), the
interest of Seller as holder of the Exchangeable Seller Certificate and Seller's
right to receive interest accruing on, and investment earnings in respect of,
the Collection Account or any Series Account as provided in this Agreement and
any Supplement) and in compliance, in all material respects, with all
Requirements of Law applicable to Seller and (iv) with respect to each
Receivable then existing, 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 Trust have been duly obtained, effected or given and are in
full force and effect. On each day on which any new Receivable is transferred by
Seller to the Trust, Seller shall be deemed to represent and warrant to the
Trust that (i) each Receivable transferred on such day is an Eligible
Receivable, (ii) each Receivable transferred on such day has been transferred to
the Trust free and clear of any Lien of any Person (other than Liens permitted
under subsection 2.5(b), the interest of Seller as holder of the Exchangeable
Seller Certificate and Seller's right to receive interest accruing on, and
investment earnings in respect of, the Collection Account or any Series Account,
as provided in this Agreement and any Supplement) 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 Trust have been duly obtained,
effected or given and are in full force and effect and (iv) the representations
and warranties set forth in subsection 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
Trust, and termination of the rights and obligations of the Servicer pursuant to
Section 10.1. Upon discovery by Seller, the Servicer or the 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) Transfer of Ineligible Receivables. In the event of a breach of any
----------------------------------
representation and warranty set forth in subsection 2.4(b) or subsection
2.6(c)(v) within 60 days (or with the prior written consent of a Responsible
Officer of the Trustee, such longer period, not to exceed 120 days, specified in
such consent) of the receipt by Seller of written notice of such breach given by
the Trustee or the Servicer, Seller shall accept a retransfer of each Principal
Receivable to which such breach relates (an "Ineligible Receivable") on the
terms and conditions set forth below; provided, however, that no such retransfer
shall be required to be made with respect to such Ineligible Receivable if, on
any day within such 60-day period (or such longer period as may be specified in
the consent) the representations and warranties in subsection 2.4(b) or
subsection 2.6(c)(v), with respect to such
28
<PAGE>
Ineligible Receivable shall then be true and correct in all material respects
with respect to such Ineligible Receivable as if such Ineligible Receivable had
been transferred to the Trust on such day. Notwithstanding anything contained in
this subsection 2.4(d) to the contrary, in the event of breach of any
representation and warranty set forth in subsection 2.4(b), with respect to (x)
each Receivable existing as of the Closing Date or an Addition Date, as
applicable, and (y) each new Receivable thereafter arising, having been conveyed
to the Trust free and clear of any Lien of any Person claiming through or under
Seller and its Affiliates and in compliance in all material respects, with all
Requirements of Law applicable to Seller, immediately upon the earlier to occur
of the discovery of such breach by Seller or receipt by Seller of written notice
of such breach given by the Trustee or the Servicer, Seller shall repurchase and
the Trustee shall convey, without recourse, representation or warranty, all of
the Trustee's right, title and interest in each Ineligible Receivable. Seller
shall accept a retransfer of each such Ineligible Receivable and there shall be
deducted from the aggregate amount of Principal Receivables used to calculate
the Seller Amount the aggregate amount (as reflected in the records of the
Servicer) of each such Ineligible Receivable. On and after the date of such
retransfer, each Ineligible Receivable so retransferred shall not be included in
the aggregate amount of Principal Receivables used in the calculation of the
Investor Percentage, the Seller Percentage or the Seller Amount or any corollary
term. In the event that 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, Seller shall, on the date of retransfer of such
Ineligible Receivable, make a deposit in the Excess Funding Account (for
allocation pursuant to Article IV) 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. Such deposit
shall be considered a prepayment in full of the Ineligible Receivable and shall
be applied in accordance with Article IV. Upon each retransfer to Seller of such
Ineligible Receivable, the Trust shall automatically and without further action
be deemed to transfer, assign and set-over to Seller, without recourse,
representation or warranty, all the right, title and interest of the Trust in,
to and under such Ineligible Receivable, all monies due or to become due with
respect thereto, all proceeds thereof and Insurance Proceeds relating thereto.
The Trustee shall execute such documents and instruments of transfer and take
such other actions as shall reasonably be requested by Seller to effect the
transfer of such Ineligible Receivable pursuant to this subsection. The
obligation of Seller to accept retransfer of any Ineligible Receivable shall
constitute the sole remedy respecting any breach of the representations and
warranties set forth in subsection 2.4(b) with respect to such Receivable
available to Certificateholders or the Trustee on behalf of Certificateholders.
(e) Retransfer of Trust Portfolio. In the event of a breach of any of the
-----------------------------
representations and warranties set forth in subsection 2.4(a) hereof, either the
Trustee, or the Holders of Investor Certificates evidencing Undivided Interests
aggregating more than 50% of the Aggregate Investor Amount, by notice then given
in writing to Seller (and to the Trustee and the Servicer, if given by the
Investor Certificateholders), may direct Seller to accept retransfer of all of
the Principal Receivables within the period of 60 days after such notice, or
within such longer period (not to exceed 120 days) as may be specified in such
notice, and Seller shall be obligated to accept retransfer of such Receivables
on a Distribution Date
29
<PAGE>
specified by the Seller (such date, the "Retransfer Rate") occurring within such
applicable period on the terms and conditions set forth below; provided,
however, that no such retransfer shall be required to be made if, at any time
during such applicable period the representations and warranties contained in
subsection 2.4(a) hereof shall then be true and correct in all material
respects. The Seller shall deposit on the Transfer Date (in next day funds) for
the Retransfer Date an amount equal to the deposit amount provided in the next
sentence for such Receivables in the Distribution Account for distribution to
the Investor Certificateholders pursuant to Section 12.3. The deposit amount for
such retransfer will be equal to (i) the Aggregate Investor Amount at the end of
the day on the last day of the Monthly Period preceding the Distribution Date on
which the retransfer is scheduled to be made, less the amount, if any,
transferred to the Distribution Account on such Transfer Date for application to
principal payments in respect of Investor Certificates, plus (ii) an amount
equal to all interest accrued but unpaid on the Investor Certificates at the
applicable Certificate Rate through such Distribution Date, less the amount
transferred to the Distribution Account from the Finance Charge Subaccount on
such Transfer Date in respect of Certificate Interest plus (iii) an amount
sufficient to pay all unreimbursed amounts owing to each Enhancement Provider
(to the extent set forth in the applicable Supplement). Payment of the deposit
amount and all other amounts in the Distribution Account in respect of the
preceding Monthly Period shall be considered a prepayment in full of the
Receivables represented by the Investor Certificates. On the Retransfer Date
that is on or immediately following the Transfer Date on which such amount has
been deposited in full into the Distribution Account, the Receivables and all
monies due or to become due with respect thereto and all proceeds of the
Receivables and Insurance Proceeds relating thereto shall be transferred to
Seller, and the Trustee shall execute and deliver such instruments of transfer,
in each case without recourse, representation or warranty, as shall be
reasonably requested by Seller to vest in Seller, or its designee or assignee,
all right, title and interest of the Trust in, to and under the Receivables, all
monies due or to become due with respect thereto (including all Finance Charge
Receivables) and all proceeds thereof and Insurance Proceeds relating thereto.
If the Trustee or the Investor Certificateholders give a notice directing Seller
to accept a retransfer as provided above, the obligation of Seller to accept a
retransfer of the Receivables pursuant to subsection 2.4(e) shall constitute the
sole remedy respecting a breach of the representations and warranties contained
in subsection 2.4(a) available to the Investor Certificateholders or the Trustee
on behalf of the Investor Certificateholders.
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"
(as defined in the UCC as in effect in the State of Illinois).
(b) Security Interests. Except for the transfers hereunder, 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 Trust, or any interest
therein. Seller will immediately notify the
30
<PAGE>
Trustee of the existence of any Lien on any Receivable; and Seller shall
defend the right, title and interest of the Trust in, to and under the
Receivables, whether now existing or hereafter transferred to the Trust,
against all claims of third parties; provided, however, that nothing in
this subsection 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 subsection 2.5(b) shall prevent or be deemed to
prohibit Seller from granting a participation interest in the Exchangeable
Seller Certificate or the Undivided Interests in the Trust evidenced
thereby.
(c) Account Allocations.
-------------------
(i) In the event that Seller is unable for any reason to transfer
Receivables to the Trust in accordance with the provisions of this
Agreement (including, without limitation, by reason of the occurrence of an
Insolvency Event) then, in any such event, (A) Seller agrees to instruct
the Servicer to allocate and pay to the Trust, after the date of such
inability, payments received in respect of the Accounts giving rise to such
Receivables first to the total amount of Principal Receivables from such
Accounts transferred to the Trust; and (B) Seller agrees to have such
amounts applied as Collections in accordance with Article IV. The parties
hereto agree that Finance Charge Receivables, whenever created, with
respect to Principal Receivables which have been transferred to the Trust
shall continue to be a part of the Trust notwithstanding any cessation of
the transfer of additional Principal Receivables to the Trust and
Collections with respect thereto shall continue to be allocated and paid in
accordance with Article IV and all amounts which would have constituted
Principal Receivables but for the Seller's inability to transfer
Receivables to the Trust shall be deemed to be Principal Receivables for
the purpose of calculating (i) the applicable Investor Percentage with
respect to any Series and (ii) the Aggregate Investor Percentage
thereunder. If the Seller is unable pursuant to any Requirement of Law to
allocate Collections as described above, the 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 Article IV. The parties hereto agree that Finance Charge
Receivables, whenever created, accrued in respect of Principal Receivables
which have been conveyed to the Trust, or which would have been conveyed to
the Trust but for the above described inability to transfer such
Receivables, shall continue to be a part of the Trust notwithstanding any
cessation of the transfer of additional Principal
31
<PAGE>
Receivables to the Trust and Collections with respect thereto shall
continue to be allocated and paid in accordance with Article IV.
(ii) In the event that, pursuant to subsection 2.4(d), Seller accepts
a retransfer of an Ineligible Receivable as a result of a breach of the
representations and warranties in subsection 2.4(b) relating to such
Receivable, then, in any such event, Seller agrees to instruct the Servicer
to allocate payments received in respect of the Account giving rise to such
Receivable first to the total amount of Principal Receivables of the
appropriate Obligor retained in the Trust and thereafter to the total
amount owing by such Obligor on any Ineligible Receivable retransferred to
Seller.
(d) Delivery of Collections. Seller agrees to pay to the Servicer
-----------------------
promptly (but in no event later than two Business Days after receipt) all
Collections received by Seller in respect of the Receivables.
(e) Regulatory Filings. Seller shall make any filings, reports,
------------------
notices, applications and registrations with, and seek any consents or
authorizations from, the Securities and Exchange Commission and any state
securities authority on behalf of the Trust as may be necessary or
advisable to comply with any federal or state securities or reporting
requirements laws.
(f) Finance Charges and Other Fees. Seller agrees that, except as
------------------------------
otherwise required by any Requirement of Law or as is deemed by FCNB to be
advisable for its charge account programs based on a good faith assessment
by FCNB of the various factors relating to its business, FCNB shall not
reduce at any time (i) the Finance Charges assessed in respect of any
Accounts, or (y) any other fees charged on any of the Accounts if, as a
result of such reduction, FCNB's reasonable expectation of the Portfolio
Yield as of such date, after giving effect to such reduction, would be less
than the current weighted average Base Rates for all outstanding Series.
Further, the 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 Certificate Rate with
respect to any Series then issued and outstanding.
(g) Charge Account Agreements and Charge Account Guidelines. Seller
-------------------------------------------------------
agrees to comply with and perform its obligations under the Charge Account
Agreements relating to the Accounts and the Charge Account Guidelines,
except insofar as any failure so to comply or conform would not materially
and adversely affect the rights of the Trust or the Certificateholders
hereunder or under the Certificates or any Supplement. Subject to the
foregoing and subject to the restrictions set forth in subsection 2.5(f)
and subject to compliance with any applicable Terms Change Condition, and
so long as such changes are made applicable to comparable segments of those
charge account accounts serviced by the Servicer which have characteristics
the same as, or substantially similar to, the Accounts which are subject
32
<PAGE>
hereto, FCNB shall be free to change the terms and provisions of such
Charge Account Agreements or the Charge Account Guidelines in any respect.
FCNB shall provide to each Rating Agency written notice of any such change
of which FCNB notifies Obligors.
(h) Compliance with Law. Seller hereby agrees to comply in all
-------------------
material respects with all Requirements of Law applicable to Seller.
(i) Activities of Seller. Seller shall not engage in any business or
--------------------
activity of any kind or enter into any transaction or indenture, mortgage,
instrument, agreement, contract, lease or other undertaking which is not
directly related to the transactions contemplated and authorized by this
Agreement or the Receivables Purchase Agreement or which is otherwise a
Permitted Transaction.
(j) Indebtedness. Seller shall not create, incur, assume or suffer to
------------
exist any Indebtedness or other liability whatsoever, except (i)
obligations incurred or owing to the Trust 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.
(k) Guarantees. Seller shall not become or remain liable, directly or
----------
contingently, in connection with any Indebtedness or other liability of any
other Person, whether by guarantee, endorsement (other than endorsements of
negotiable instruments for deposit or collection in the ordinary course of
business), agreement to purchase or repurchase, agreement to supply or
advance funds, or otherwise except incident to a Permitted Transaction.
(l) Investments. Seller shall not make or suffer to exist any loans
-----------
or advances to, or extend any credit to, or make any investments (by way of
transfer of property, contributions to capital, purchase of stock or
securities or evidences of indebtedness, acquisition of the business or
assets, or otherwise) in, any Person except (i) for purchases of
Receivables pursuant to the Receivables Purchase Agreement, (ii) for
investments in Permitted Investments in accordance with the terms of this
Agreement or (iii) pursuant to a Permitted Transaction.
(m) Stock; Merger; Sales. Seller shall not sell any shares of any
--------------------
class of its capital stock to any Person, or enter into any transaction of
merger or consolidation, or liquidate or dissolve itself (or suffer any
liquidation or dissolution), or acquire or be acquired by any Person, or
convey, sell, lease or otherwise dispose of any of its property or
business, except as provided for in this Agreement.
(n) Distributions. Seller shall not declare or pay, directly or
-------------
indirectly, any dividend or make any other distribution (whether in cash or
other property) with
33
<PAGE>
respect to the profits, assets or capital of Seller or any Person's
interest therein, or purchase, redeem or otherwise acquire for value any of
its capital stock now or hereafter outstanding, except that so long as no
Pay Out Event has occurred and is continuing and no Pay Out Event would
occur as a result thereof or after giving effect thereto, Seller may
declare and pay dividends on its capital stock.
(o) 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 this Agreement, the
Receivables Purchase Agreement and the Supplements 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
Trustee or to the Servicer.
(p) Receivables Purchase Agreement. Seller shall not give any consent
------------------------------
to FCNB or SAC or exercise any of its rights under the Receivables Purchase
Agreement unless the Rating Agency Condition is satisfied with respect
thereto.
(q) 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
34
<PAGE>
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.
(r) 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 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 Certificateholders in all
Receivables now owned or hereunder created. Seller will give the 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, during any period of 30 consecutive days, Average Aggregate Net
Principal Receivables is less than the Aggregate Investor Amount averaged for
such period, either Seller or the Servicer (whichever shall first become aware
of same) promptly shall give the Trustee written notice thereof, and as soon as
practicable (but in no event later than 10 Business Days thereafter) Seller
shall designate additional Eligible Accounts ("Additional Accounts") to be
included as Accounts and shall transfer the Receivables in such Additional
Accounts to the Trust, in a sufficient amount so that Average Aggregate Net
Principal Receivables during such 30-day period would have, if the Receivables
from such Additional Accounts had been transferred to the Trust during such 30-
day period, at least equalled the Aggregate Investor Amount averaged for such
period.
(b) in addition to its obligation under subsection 2.6(a), Seller may, but
shall not be obligated to, from time to time, designate Additional Accounts to
be included as Accounts.
(c) Seller agrees that any Receivables from Additional Accounts shall be
transferred by Seller to the Trust under subsection 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
subsection 2.6(a) or (b), Seller shall give the Trustee and the Servicer
written notice that such Additional
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Accounts will be included and specifying the approximate aggregate amount
of the Receivables to be transferred;
(ii) Seller (A) shall transfer to the Trust Receivables only in
Eligible Accounts, and (B) shall satisfy the applicable condition in
accordance with subsection 2.6(f) if such designation of Additional
Accounts is made pursuant to subsection 2.6(b) or (e) and if the addition
of such Additional Accounts
(1) would cause the quotient (the "Annual Quotient") of (x) the sum
of the Annual Net Account Additions after giving effect to such
addition plus the related Base Amount divided by (y) the related Base
Amount to exceed 1.20, or
(2) would cause the quotient (the "Quarterly Quotient") of (x) the
sum of the Quarterly Net Account Additions after giving effect to such
addition plus the related Base Amount divided by (y) the related Base
Amount to exceed 1.15;
(iii) On or prior to the Addition Date, in respect of Additional
Accounts added pursuant to subsection 2.6(a) or (b), Seller shall have
delivered to the Trustee a written transfer agreement (including an
acceptance by the Trustee on behalf of the Trust for the benefit of the
Investor Certificateholders) in substantially the form of Exhibit B (the
---------
"Transfer 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 Trust; and shall have delivered to the Trustee a computer
file or microfiche list containing a true and complete list of all
Additional Accounts identified by account number and by Receivable balance
as of the Addition Date in respect of Additional Accounts added pursuant to
subsection 2.6(a) or (b), which computer file or microfiche list shall be
marked as Schedule I to the Transfer Agreement, delivered to the Trustee as
----------
confidential and proprietary, shall be as of the date of such Transfer
Agreement and incorporated into and made a part of such Transfer Agreement
and this Agreement;
(iv) Seller shall be deemed to represent and warrant that (w) as of
the Addition Date, Schedule 1 to the Transfer Agreement and the computer
file or microfiche list delivered pursuant to subsection 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
Investor Certificateholders were utilized in selecting the Additional
Accounts from the available Eligible Accounts, and (z) as of the Addition
Date, Seller is not insolvent and will not be rendered insolvent by adding
any such Additional Account to any Cycle;
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(v) Seller shall be deemed to represent and warrant that, as of the
Addition Date, the Transfer Agreement constitutes either (x) a valid
transfer to the Trust 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
(including, without limitation, as defined in the UCC as in effect in the
State of Illinois) of such Receivables and Insurance Proceeds relating
thereto, and such property will be owned by the Trust free and clear of any
Lien of any Person, except for (i) Liens permitted under subsection 2.5(b),
(ii) the interest of Seller as holder of the Exchangeable Seller
Certificate and (iii) Seller's right to receive interest accruing on, and
investment earnings in respect of, the Collection Account or any Series
Account as provided in this Agreement and any Supplement, or (y) a grant of
a security interest (as defined in the UCC as in effect in the State of
Illinois) in such property to the Trust, 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 Trust, 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 Transfer Agreement constitutes the grant of a security interest to
the Trust 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 Trust shall have a first priority
perfected security interest in such property, except for Liens permitted
under subsection 2.5(b), the interest of Seller as holder of the
Exchangeable Seller Certificate and Seller's right to receive interest
accruing on, and investment earnings in respect of, the Collection Account
or any Series Account, as provided in this Agreement and any Supplement;
(vi) Seller shall, on the Addition Date for Additional Accounts
added pursuant to subsection 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 subsection 2.6(a) or (b), deliver an Opinion of Counsel with
respect to the Receivables in the Additional Accounts to the Trustee
substantially in the form of Exhibit C.
---------
(d) Seller shall provide to each Rating Agency and to each Enhancement
Provider prior written notice each time Additional Accounts are added pursuant
to subsection 2.6(a) or (b).
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(e) In addition to the occasional designation of Additional Accounts as
required or permitted pursuant to subsections 2.6(a) and (b) above, Seller
agrees that each new Charge Account originated in the normal course of FCNB's
business and assigned to an Included Cycle after the Cut Off Date and purchased
by Seller pursuant to the Receivables Purchase Agreement shall automatically be
included as an Account (and the Receivables arising thereunder automatically
transferred to the Trust) effective on the tenth Business Day following the end
of the monthly Period in which such account is assigned to such billing cycle;
provided, however, that such automatic inclusion and transfer shall not occur
with respect to any such account if: (i) such account does not qualify as an
Eligible Account, (ii) the inclusion in the Trust of the Receivables in such
Account, if such Accounts had been designated by Seller pursuant to subsection
2.6(b), would have caused the limitations set forth in subsection 2.6(c)(ii) to
be exceeded (unless the Seller shall have satisfied any applicable condition to
such addition), or (iii) Seller otherwise designates such account as an account
which is not to be included as an Account pursuant to this subsection 2.6(e).
On or before the fifth Business Day of each month next succeeding a calendar
month in which Accounts were included pursuant to the preceding sentence, Seller
shall (i) indicate in its books and records, including the computer files of the
receivables, that the Receivables created in connection with such included
Accounts have been transferred to the Trust, and (ii) shall deliver to the
Trustee a computer file or microfiche list containing a true and complete list
of all such included Accounts identified by account number and by the
Receivables balance as of the end of such calendar month, which computer file or
microfiche list shall be delivered to the Trustee as confidential and
proprietary and incorporated into and made a part of this Agreement. The
Seller, at its option, may, by providing written notice to the Trustee and the
Servicer, terminate or suspend the inclusion of Automatic Additional Accounts at
any time.
(f) (i) The Rating Agency Condition shall be applicable and must be
satisfied whenever the Quarterly Quotient exceeds the amount set forth in
subsection 2.6(c)(ii)(B)(2) or whenever the Annual Quotient exceeds 1.30.
(ii) If the Annual Quotient exceeds 1.20 but is less than or equal to
1.30 the Seller may at its option satisfy either the Rating Agency Condition or
the Additional Accounts Enhancement Increase Condition. If no outstanding
Series specifies an Additional Accounts Enhancement Increase Condition, then
this clause (ii) shall not be applicable to the addition of Additional Accounts.
Section 2.7 Removal of Accounts.
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(a) Subject to the conditions set forth below, during the Revolving Period
Seller may designate from time to time Accounts no longer to be designated for
inclusion in the Trust (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 Trustee, the Servicer and each Enhancement Provider
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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) Seller shall satisfy the Rating Agency Condition with respect
thereto by such Removal Date;
(ii) on each Removal Date, the Trustee shall deliver to Seller a
written retransfer agreement in substantially the form of Exhibit D (the
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"Retransfer Agreement") prepared by the Seller, and Seller shall deliver to
the 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 Retransfer Agreement incorporated into
and made a part of this Agreement;
(iii) Seller shall represent and warrant as of each Removal Date that
(a) the list of Removed Accounts, as of the Removal Notice Date, complies
in all material respects with the requirements of (ii) above; (b) no
selection procedure used by Seller which is adverse to the interests of the
Investor Certificateholders was utilized in selecting the Removed Accounts;
and (c) as of the Removal Notice Date and as of the Removal Date, Seller is
not insolvent and Seller has no present intention of seeking protection
under any Debtor Relief Laws;
(iv) The removal of any Receivables of any Removed Accounts on any
Removal Date shall not, in the reasonable belief of Seller, cause a Pay Out
Event to occur, or an event which with notice or lapse of time or both
would constitute a Pay Out Event;
(v) The Seller Amount shall not be less than 105% of the Minimum
Seller Amount (or if the Minimum Seller Amount is zero, 5% of the Minimum
Aggregate Principal Receivables) after giving effect to such removal and
the Aggregate Net Principal Receivables shall not be less than the Minimum
Aggregate Principal Receivables; and
(vi) Seller shall have delivered to the Trustee and to each
Enhancement Provider a certificate of an officer of Seller confirming the
items set forth in (i) through (v) above. The 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.
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Upon satisfaction of the above conditions, the Trustee shall execute and
deliver the Retransfer Agreement to Seller, and the Receivables from the Removed
Accounts shall no longer constitute a part of the Trust.
Section 2.8 Discount Option. (a) The 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"). The 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. The Sellers shall provide
to the Servicer, the 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 the
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, the Seller shall treat Discount Option
Receivable Collections as Collections of Finance Charge Receivables.
ARTICLE III
ADMINISTRATION AND SERVICING OF RECEIVABLES
Section 3.1 Acceptance of Appointment and Other Matters Relating to the
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Servicer.
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(a) FCNB agrees to act as the Servicer under this Agreement. The Investor
Certificateholders by their acceptance of the Investor Certificates 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
Receivables in accordance with its customary and usual servicing procedures for
servicing charge account receivables comparable to the Receivables and in
accordance with the Charge Account Guidelines and shall have full power and
authority, acting alone or through any party properly designated by it
hereunder, to do any and all things in connection with such servicing and
administration which it may deem necessary or desirable; provided, however, if
the Servicer changes its policies with respect to the treatment of delinquencies
or the recognition of charge-offs, the Servicer shall provide to each Rating
Agency written notice of such change in policy. Without limiting the generality
of the foregoing and subject to Section 10.1, the Servicer is hereby authorized
and empowered (i) unless such power and authority is revoked by the Trustee on
account of the occurrence of a Servicer Default pursuant to Section 10.1, to
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make withdrawals from the Collection Account as set forth in this Agreement,
(ii) unless such power and authority is revoked by the Trustee on account of the
occurrence of a Servicer Default pursuant to Section 10.1, to instruct the
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 Trustee on account of the occurrence of a
Servicer Default pursuant to Section 10.1, to instruct the Trustee in writing as
provided herein, and (iv) unless such power and authority is revoked by the
Trustee on account of the occurrence of a Servicer Default pursuant to Section
10.1, to execute and deliver, on behalf of the Trust for the benefit of the
Certificateholders, 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 Trustee agrees that it shall promptly follow the instructions
of the Servicer, including those to withdraw funds from the Collection and any
other Series Account. The 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) (i) In the event that Seller is unable for any reason to transfer
Receivables to the Trust in accordance with the provisions of this Agreement
(including, without limitation, by reason of the occurrence of an Insolvency
Event) the Servicer agrees to allocate and pay to the Trust, after such date,
all Collections in respect of the Accounts giving rise to such Receivables first
to the total amount of Principal Receivables from such Accounts transferred to
the Trust.
(ii) In the event that pursuant to subsection 2.4(d), Seller accepts
a retransfer of an Ineligible Receivable as a result of a breach of the
representations and warranties in subsection 2.4(b) relating to such Receivable,
the Servicer agrees to allocate payments received in respect of the Account
giving rise to such Receivable first to the total amount of Principal
Receivables of the appropriate Obligor retained in the Trust and thereafter to
the total amount owing by such Obligor on any Ineligible Receivables
retransferred to Seller.
(d) The Servicer shall not be obligated to use separate servicing
procedures, offices, employees or accounts for servicing the Receivables from
the procedures, offices, employees and accounts used by the Servicer in
connection with servicing other charge account receivables.
(e) The Servicer shall maintain fidelity bond coverage insuring against
losses through wrongdoing of its officers and employees who are involved in the
servicing of credit card receivables.
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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 Trust pursuant to Section 12.1 (with respect to
each Monthly Period, the "Monthly Servicing Fee"). The share of the Monthly
Servicing Fee allocable to each Series of Investor Certificates with respect to
any Monthly Period (or portion thereof) shall be payable on the related
Distribution Date and, with respect to each Series (unless provided in the
related Supplement), shall be equal to one-twelfth of the product of (A) the
applicable Series Servicing Fee Percentage and (B) the investor Amount of such
Series as of the first day of the related Monthly Period, or portion thereof
(the "Investor Monthly Servicing Fee"). The share of the Monthly Servicing Fee
allocable to the Holder of the Exchangeable Seller Certificate with respect to
any Monthly Period (or portion thereof) shall be equal to one-twelfth of the
product of (A) the Seller Amount and (B) the weighted average of the Series
Servicing Fee Percentages with respect to each Series of Investor Certificates
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 Supplement) and the Monthly Seller Servicing Fee is
payable in arrears no later than the last Distribution Date with respect to any
Series occurring in a Monthly Period.
The Servicer's expenses include the reasonable fees and disbursements of
independent accountants and all other expenses incurred by the Servicer in
connection with its activities hereunder; provided that the Servicer shall not
be liable for any liabilities, costs or expenses of the Trust, the Investor
Certificateholders or the Certificate Owners arising under any tax law,
including without limitation 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 Trustee has relied in accepting the Receivables in
trust and in authenticating Certificates:
(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.
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(b) Due Qualification. The Servicer is qualified as a foreign banking
-----------------
association or other entity in any state where it is required to be so
qualified to service the Receivables as required by this Agreement and has
obtained all necessary licenses and approvals as required under federal and
state law, in each case, where the failure to be so qualified, licensed or
approved, could reasonably be expected materially and adversely to affect
the ability of the Servicer to comply with the terms of this Agreement.
(c) Due Authorization. The execution, delivery, and performance of
-----------------
this Agreement have been duly authorized by the Servicer by all necessary
corporate action on the part of the Servicer.
(d) Binding Obligation. This Agreement constitutes legal, valid and
------------------
binding obligations of the Servicer, enforceable in accordance with its
terms, except as enforceability may be limited by Debtor Relief Laws and
except as such enforceability may be limited by general principles of
equity (whether considered in a proceeding at law or in equity).
(e) No Violation. The execution and delivery of this Agreement by the
------------
Servicer, and the performance of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof applicable to the
Servicer, will not conflict with, violate, result in any breach of any of
the terms and provisions of, or constitute (with or without notice or lapse
of time or both) a default under, any Requirements of Law applicable to the
Servicer or any indenture, contract, agreement, mortgage, deed of trust or
other instrument to which the Servicer is a party or by which it is bound.
(f) No Proceedings. There are no proceedings or investigations
--------------
pending or, to the best knowledge of the Servicer, threatened against the
Servicer before any court, regulatory body, administrative agency or other
tribunal or governmental instrumentality seeking to prevent the issuance of
the Certificates or the consummation of any of the transactions
contemplated by this Agreement, seeking any determination or ruling that,
in the reasonable judgment of the Servicer, would materially and adversely
affect the performance by the Servicer of its obligations under this
Agreement, or seeking any determination or ruling that would materially and
adversely affect the validity or enforceability of this Agreement.
(g) Rescission and Cancellation. Other than pursuant to and in
---------------------------
accordance with the Charge Account Guidelines, the Servicer shall not
rescind or cancel any Receivable unless such rescission or cancellation
shall have been ordered or directed by a Governmental Authority.
(h) Other Actions. Other than pursuant to and in accordance with the
-------------
Charge Account Guidelines and as otherwise specifically permitted by this
Agreement, the Servicer shall not (i) take or fail to take any action if
such action or failure to act
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would impair the rights of the Trust in any Receivable, or (ii) revise or
defer any payment due in respect of any Receivable.
(i) Compliance with Requirements of Law. The Servicer shall duly
-----------------------------------
satisfy all obligations on its part to be fulfilled under or in connection
with the Receivables or Accounts, will maintain in effect all
qualifications required under Requirements of Law in order to properly
service the Receivables and the Accounts and will comply in all material
respects with all Requirements of Law in connection with servicing the
Receivables and the Accounts the failure to comply with which would have a
material adverse effect on the Certificateholders.
Section 3.4 Reports and Records for the Trustee; Bank Account Statements.
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(a) Daily Reports. On each Business Day, the Servicer shall prepare and
-------------
make available at the office of the Servicer for inspection by the Trustee a
record (the "Daily Report") setting forth (i) the aggregate amount of
Collections processed by the Servicer on the preceding Business Day, (ii) the
Aggregate Net Principal Receivables as of the close of business on the preceding
Business Day, (iii) the amount of Finance Charge Collections for the preceding
Business Day, (iv) the amount on deposit in the Excess Funding Account on the
preceding Business Day and (v) a calculation of the Seller Amount and the
Minimum Seller Amount and the Minimum Aggregate Principal Receivables 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 Receivables on the preceding
Business Day was greater than the Minimum Aggregate Principal Receivables on the
preceding Business Day and such other information as may be specified in a
Supplement.
(b) Monthly Servicer's Certificate. Unless otherwise stated in the related
Supplement with respect to any Series, on each Determination Date, the Servicer
shall forward to the Trustee, the Paying Agent, any Rating Agency and any
Enhancement Provider a certificate of a Servicing Officer substantially in the
form of Exhibit E setting forth (i) the aggregate amounts for the preceding
---------
Monthly Period with respect to each of the items specified in clauses (i) and
(iii) of subsection 3.4(a), together with the amount and nature of any true-up
adjustment required by subsection 1.4(b), (ii) the Default Amount for the
preceding Monthly Period, (iii) investor Net Recoveries for the preceding
Monthly Period, (iv) a calculation of the Portfolio Yield and Base Rate for each
Series then outstanding, (v) the aggregate amount of Receivables and the balance
on deposit in the Collection Account (or any subaccount thereof) or any Series
Account applicable to any Series then outstanding with respect to Collections
processed as of the end of the last day of the preceding Monthly Period, (vi)
the aggregate amount of Credit Adjustments from the preceding Monthly Period,
(vii) the aggregate amount, if any, of withdrawals, drawings or payments under
any Enhancement with respect to each Series required to be made with respect to
the previous Monthly Period, and (viii) the sum of all amounts payable to the
Investor Certificateholders on the succeeding Distribution Date in respect of
Certificate Interest and Certificate Principal.
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Section 3.5 Annual Servicer's Certificate. The Servicer will deliver to
-----------------------------
the Trustee, any Enhancement Provider and any Rating Agency on or before April
30 of each calendar year, beginning with April 30, 1996, an Officer's
Certificate substantially in the form of Exhibit F-1 stating that (a) a review
-----------
of the activities of the Servicer during the preceding calendar year (or, with
respect to the certificate to be delivered on April 30, 1996, since the Trust'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 investor Certificateholder by a request in
writing to the Trustee addressed to the Corporate Trust Office.
Section 3.6 Annual Independent Public Accountants' Servicing Report.
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(a) On or before April 30 of each calendar year, beginning with April 30,
1996, the Servicer shall cause KPMG Peat Marwick or another firm of nationally
recognized independent public accountants (who may also render other services to
the Servicer or Seller) to furnish a report covering the preceding annual period
to the effect that such accountants have applied certain agreed-upon procedures
to certain documents and records relating to the servicing of Accounts under
this Agreement, compared the information contained in the Servicer's
certificates delivered during the period covered by such report (which shall be
the period from January 1, to and including December 31 of such calendar year
or, with respect to the certificate to be delivered on April 30, 1996, since the
Trust's inception) with such documents and records in each case as specified in
Exhibit F-2 and that no matters came to the attention of such accountants that
-----------
caused them to believe that such servicing was not conducted in compliance with
Section 3.2, Article IV and Section 8.8 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 Investor Certificateholder by a request in writing to the
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,
1996, 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 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 subsection 3.4(b)
during the period covered by such report (which shall be the period from January
1, to and including December 31 of such calendar year or, with respect to the
certificate to be delivered on April 30, 1996, since the Trust's inception) with
the Servicer's computer reports which were the source of such amounts and that
on the basis of
45
<PAGE>
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 Investor Certificateholder by a request in writing to the
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
-------------
Investor Certificates to facilitate a secured, credit-enhanced financing on
favorable terms with the intention that the Investor Certificates will
constitute indebtedness of Seller for federal income and state and local tax
purposes; and Seller and each Investor Certificateholder by acceptance of its
Certificate agrees to recognize and report the Investor Certificates as
indebtedness of Seller for purposes of federal, state and local income or
franchise taxes and any other tax imposed on or measured by income, and to
report all receipts and payments relating thereto in a manner that is consistent
with such characterization.
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND ALLOCATION
AND APPLICATION OF COLLECTIONS
Section 4.1 Rights of Certificateholders. Each Series of Investor
----------------------------
Certificates shall represent Undivided Interests in the Trust, including the
benefits of any Enhancement with respect to such Series and the right to receive
the Collections and other amounts at the times and in the amounts specified in
this Article IV to be deposited in the Collection Account or the Series Accounts
maintained for the benefit of such Investor Certificates or paid to the Investor
Certificateholders of such Series; provided, however, that the aggregate
interest represented by such Series of Certificates at any time in the Principal
Receivables shall not exceed an amount equal to the Investor Amount at such
time. The Exchangeable Seller Certificate shall represent the remaining
Undivided Interest in the Trust not represented by any Series of Investor
Certificates then outstanding, including the right to receive the Collections
and other amounts at the times and in the amounts specified in this Article IV
to be paid to the Holder of the Exchangeable Seller Certificate, provided,
however, that the aggregate interest represented by the Exchangeable Seller
Certificate at any time in the Principal Receivables shall not exceed the Seller
Amount at such time and such Certificate shall not represent any interest in the
Collection Account or any Series Accounts maintained for the benefit of the
Certificateholders of any Series or the benefits of any Enhancement issued with
respect to any Series, except as provided in this Agreement.
Section 4.2 Establishment of Accounts and Allocations with Respect to the
-------------------------------------------------------------
Exchangeable Seller Certificate.
-------------------------------
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(a) The Collection Account. The Servicer, for the benefit of the
----------------------
Certificateholders, shall establish and maintain in the name of the Trustee on
behalf of the Trust, or cause to be established and maintained, with an office
or branch located in the state designated by the Servicer of a depository
institution or trust company (which may include the Trustee) organized under the
laws of the United States of America or any one of the states thereof a non-
interest bearing segregated corporate trust account (the "Collection Account")
bearing a designation clearly indicating that the funds deposited therein are
held in trust for the benefit of the Certificateholders; provided, however, that
at all times the certificates of deposit, short-term deposits or commercial
paper or the long-term unsecured debt obligations (other than such obligation
whose rating is based on collateral or on the credit of a Person other than such
depository institution or trust company) of such depository institution or trust
company shall have a credit rating from the applicable Rating Agency of P-1, A-
1+, as applicable, respectively, in the case of the certificates of deposit,
short-term deposits or commercial paper, or a rating from the applicable Rating
Agency of Aaa or AAA, as applicable, in the case of the long-term unsecured debt
obligations, and which is a member of the FDIC (a "Qualified institution"). For
administrative purposes only, the Collection Account shall be divided into two
subaccounts (each respectively, the "Principal Collections Subaccount" and the
"Finance Charge Subaccount"). The Supplement for a Series may require the
Trustee to establish and maintain, for administrative purposes only, a sub-
subaccount of the Collection Account (such sub-subaccount, a "Collection Sub-
subaccount") and other Series Accounts for such Series bearing a designation
clearly indicating that the funds allocated thereto are held in trust for the
benefit of the Certificateholders of such Series. The Collection Account or any
Collection Subaccount may not be invested except as provided in the related
Supplement. The funds on deposit in such Collection Sub-subaccount may be
invested in the manner provided in the related Supplement, and any earnings
resulting from such investment shall be applied as provided in such Supplement.
Pursuant to authority granted to it pursuant to subsection 3.1(b), the Servicer
shall have the power, revocable by the Trustee, to withdraw funds from the
Collection Account for the purposes of carrying out its duties hereunder.
(b) Establishment of the Excess Funding Account. The Servicer, for the
-------------------------------------------
benefit of the Investor Certificateholders and the holder of the Exchangeable
Seller Certificate, shall establish and maintain or cause to be established and
maintained in the name of the Trustee, on behalf of the Trust, with a Qualified
Institution designated by the Servicer, a segregated trust account within the
corporate trust department of such Qualified Institution (the "Excess Funding
Account"), bearing a designation clearly indicating that the funds deposited
therein are held in trust for the benefit of the Investor Certificateholders and
the holder of the Exchangeable Seller Certificate. The Trustee shall possess all
right, title and interest in all funds on deposit from time to time in the
Excess Funding Account and in all proceeds thereof. Pursuant to the authority
granted to it pursuant to subsection 3.1(b), the Servicer shall have the power,
revocable by the Trustee, to withdraw funds and to instruct the Trustee to
withdraw funds from the Excess Funding Account for the purposes of carrying out
its duties hereunder.
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(c) Failure of Institution to Qualify. If any institution with which any
---------------------------------
of the accounts established pursuant to this Section 4.2 are established ceases
to be a Qualified Institution, the Servicer or the Trustee (as the case may be)
shall within 10 Business Days establish a replacement account at a Qualified
Institution.
(d) Allocations for the Exchangeable Seller Certificate. Throughout the
---------------------------------------------------
existence of the Trust, unless otherwise stated in any Supplement, on each day
on which the Servicer allocates Collections, the Servicer shall allocate to the
Holder of the Exchangeable Seller Certificate an amount equal to the product of
(A) the applicable Seller Percentage determined for such day and (B) the
aggregate amount of such Collections allocated to Principal Receivables and
Finance Charge Receivables on such day. Notwithstanding anything in this
Agreement to the contrary, unless otherwise stated in any Supplement, the
Servicer need not deposit this amount or any other amounts so allocated to the
Exchangeable Seller Certificate pursuant to any Supplement into the Collection
Account and shall pay, or be deemed to pay, such amounts as collected to the
Holder of the Exchangeable Seller Certificate; provided, however, that such
payments shall not be made to the Holder of the Exchangeable Seller Certificate
if and to the extent that the Seller Amount is less than the Minimum Seller
Amount or if and to the extent that such payment would cause the Seller Amount
to be less than the Minimum Seller Amount or to the extent such amounts are
Shared Principal Collections and there are Principal Shortfalls. Amounts not
distributed to the Holder of the Exchangeable Seller Certificate pursuant to
this subsection 4.2(d) shall be allocated as provided in subsection 4.3(g).
Section 4.3 Collections and Allocations.
---------------------------
(a) Collections. The Servicer shall, subject to subsections 4.2(d), 4.3(c)
-----------
and 4.3(f), deposit all Collections in the Collection Account as promptly as
possible after the Date of Processing of such Collections, but in no event later
than the second Business Day following such Date of Processing.
The Servicer shall allocate such amounts to each Series of Investor
Certificates and to the Holder of the Exchangeable Seller Certificate in
accordance with this Article IV and shall withdraw the required amounts from the
Collection Account or pay such amounts to the Holder of the Exchangeable Seller
Certificate or to the other Persons entitled thereto in accordance with this
Article IV. The Servicer shall make such deposits or payments on the date
indicated therein, if applicable, by wire transfer in next day funds or as
otherwise provided in the Supplement for any series with respect to such Series.
(b) Servicer Letter of Credit. Notwithstanding anything in this Agreement
-------------------------
to the contrary, for so long as, and only so long as, FCNB shall remain the
Servicer hereunder and no Servicer Default has occurred and is continuing and
(a)(i) the Servicer provides to the Trustee a letter of credit or other
arrangement covering risk of collection of the Servicer and (ii) the Servicer
shall have satisfied the Rating Agency Condition with respect to such
arrangement or (b) the Servicer (unless the Rating Agency shall have notified
the Servicer
48
<PAGE>
that making monthly deposits will result in the reduction or withdrawal of its
then-existing rating of the Certificates) shall have and maintain a certificate
of deposit or short-term deposit rating of P-1 by Moody's and of at least A-1 by
Standard & Poor's and deposit insurance as required by law and by the FDIC, the
Servicer need not deposit Collections to the Collection Account in the manner
provided in this Article IV or make payments to the Holder of the Exchangeable
Seller Certificate prior to the close of business on the day any Collections are
deposited in the Collection Account as provided in Article IV, but may make such
deposits, payments and withdrawals on the Collections Deposit Day in the Monthly
Period following the Monthly Period in which such amounts were collected in an
amount equal to the net amount of such deposits, payments and withdrawals which
would have been made but for the provisions of this paragraph.
(c) Allocation of Collections Between Finance Charge Receivables and
----------------------------------------------------------------
Principal Receivables. On each Business Day, the Servicer shall allocate
---------------------
Collections processed on the Accounts as Finance Charge Collections in the
manner set forth in Section 1.3 or, in the case of Discount Option Receivables,
Collections as set forth in subsection 2.8(b). Investment earnings with respect
to amounts on deposit in the Excess Funding Account shall be paid to the Seller
on each Transfer Date. In addition all Collections which constitute Investor Net
Recoveries shall be treated as Finance Charge Collections and allocated
accordingly. The balance of the Collections processed on any Business Day shall
be allocated to Principal Receivables.
(d) Allocation of Collections of Recoveries and Defaulted Accounts.
--------------------------------------------------------------
(i) 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.
(ii) on each Determination Date, the Servicer shall calculate the
Investor Default Amount for the preceding Monthly Period with respect to
each Series.
(iii) on each Determination Date, the Servicer shall calculate the
amount of Investor Net Recoveries, if any, for the Monthly Period next
preceding such Determination Date. On or before the Transfer Date next
following such Determination Date, the Servicer shall deposit the amount of
Investor Net Recoveries, if any, in the Collection Account and allocate
such amount to the Finance Charge Subaccount.
(e) Adjustments for Miscellaneous Credits. The Servicer shall be obligated
-------------------------------------
to reduce or adjust, as the case may be, on a net basis, the aggregate amount of
Principal
49
<PAGE>
Receivables used to calculate the Seller Amount as provided in this subsection
4.3(e) (a "Credit Adjustment") with respect to any Principal Receivable (i)
which was created in respect of merchandise refused or returned by the Obligor
thereunder, (ii) which is reduced by the Servicer by any rebate, refund,
chargeback or adjustment, (iii) as to which the Obligor thereunder has asserted
a counterclaim or defense and either (x) the Servicer has agreed such
counterclaim or defense is valid or (y) a final nonappealable judgment or decree
has been entered in favor of such Obligor in respect of such counterclaim or
defense by a court or arbitral body having jurisdiction thereof, or (iv) which
the Servicer has determined was created through a fraudulent or counterfeit
charge, but only if and to the extent such fraudulent or counterfeit charges are
not included as charge-offs under the Charge Account Guidelines.
In the event that the exclusion of the amount of a Credit Adjustment from
the calculation of the Seller Amount would cause the Seller Amount to be less
than the Minimum Seller Amount, Seller shall make a deposit, no later than the
Business Day following the Date of Processing of such Credit Adjustment, in the
Collection Account in immediately available funds, in an amount equal to the
Shortfall Amount, after giving effect to such exclusion. Such deposit shall be
applied in accordance with this Article IV and treated as a Principal Collection
for all purposes hereof.
(f) Net Payments. So long as FCNB is the Servicer and FCNB, as Servicer,
------------
is making deposits to the Collection Account in accordance with subsection
4.3(a), FCNB, acting as Servicer and as agent for the Holder of the Exchangeable
Seller Certificate, may make a net payment to the Collection Account on each
Collections Deposit Day in the amount of all Collections received by the
Servicer since the previous Collections Deposit Day, minus all amounts payable
to the Holder of the Exchangeable Seller Certificate on or before such day in
accordance with this Article IV.
(g) Unallocated Principal Collections; Excess Funding Account. On each
------------------------------------------------- -------
Business Day, Principal Collections allocable to the Exchangeable Seller
Certificate in an amount equal to the Shortfall Amount shall be deposited in the
Excess Funding Account. Thereafter, amounts in the Excess Funding Account shall
be treated as Shared Principal Collections to the extent that, after giving
effect to the application of such amount as Shared Principal Collections to the
extent provided in any Supplement, the Seller Amount would equal or exceed the
minimum Seller Amount. In addition, amounts otherwise allocable to the
Exchangeable Seller Certificate and not required to be deposited in the Excess
Funding Account shall be included as Shared Principal Collections. Shared
Principal Collections shall be allocated to outstanding Series pro rata based on
the Principal Shortfall, if any, for each such Series and the Servicer shall pay
any remaining Shared Principal Collections on such Business Day to the holder of
the Exchangeable Seller Certificate.
(h) Amounts in Excess Funding Account. Amounts on deposit in the Excess
---------------------------------
Funding Account on any Business Day will be invested, at the direction on the
Seller, by the Servicer or the Trustee on behalf of the Seller in Permitted
Investments maturing on the next
50
<PAGE>
Business Day. Earnings from such investments received shall be paid to the
Seller or, if the Seller Amount as determined on such Business Day does not
exceed the Minimum Seller Amount, such earnings shall be deposited in the Excess
Funding Account. If on any Business Day the Seller Amount exceeds the Minimum
Seller Amount, such excess shall be treated as Shared Principal Collections.
(i) Allocation of Deposit Obligations. If the Seller or the Servicer shall
---------------------------------
fail to make any Deposit Obligation, the amount thereof shall first be allocated
to reduce the Seller Amount until the Seller Amount equals the Minimum Seller
Amount. Any remaining shortfall shall be allocated to each Series ratably based
upon a fraction the numerator of which is the Investor Percentage used by such
Series to allocate Finance Charge Collections and the denominator of which is
the sum of all such numerators of all Series outstanding (such allocated amount,
the "Series Share" of such shortfall). The Series Share of each series that
specifies a Minimum Seller Percentage greater than zero shall be allocated to
reduce the Minimum Seller Amount and any Collections otherwise allocable to the
Seller Amount shall be available on a ratable basis to such Series to cover any
shortfalls arising from such failure. The Series Share of each Series that
specifies a Minimum Seller Percentage of zero shall be allocated to such series.
(j) True-up. On each Determination Date the Servicer shall make such
-------
adjustments to the balances in the Excess Funding Account, the Principal
Collections Subaccount and the Finance Charge Subaccount as shall be necessary
or appropriate, in the judgement of the Servicer, to reflect the true-up
adjustments described in subsection 1.4(b).
[THE REMAINDER OF ARTICLE IV IS RESERVED AND
SHALL BE SPECIFIED IN ANY SUPPLEMENT
WITH RESPECT TO ANY SERIES]
ARTICLE V
[ARTICLE V IS RESERVED AND SHALL
BE SPECIFIED IN ANY SUPPLEMENT
WITH RESPECT TO ANY SERIES]
ARTICLE VI
THE CERTIFICATES
Section 6.1 The Certificates. The Investor Certificates of each Series
----------------
and any Class thereof shall be issued in fully registered form and shall be
substantially in the form of the exhibits with respect thereto attached to the
related Supplement. The Exchangeable Seller Certificate shall be substantially
in the form of Exhibit A. The investor Certificates and the Exchangeable Seller
---------
Certificate shall, upon issue, be executed and delivered by the Trustee.
51
<PAGE>
The Investor Certificates shall be issuable in a minimum denomination of $1,000
Undivided Interest and integral multiples thereof, unless otherwise provided in
any Supplement, and the Investor Certificates of each Series shall be issued
upon initial issuance in an aggregate original principal amount equal to the
initial Investor Amount of such Series. The Exchangeable Seller Certificate
shall be issued in one Certificate. Each Certificate shall be executed by manual
or facsimile signature on behalf of the Trustee by an authorized officer of the
Trustee. Certificates bearing the manual or facsimile signature of the
individual who was, at the time when such signature was affixed, authorized to
sign on behalf of the Trustee shall not be rendered invalid, notwithstanding
that such individual has ceased to be so authorized prior to the authentication
and delivery of such Certificates or does not hold such office at the date of
such Certificates. No Certificate shall be entitled to any benefit under this
Agreement, or be valid for any purpose, unless there appears on such Certificate
a certificate of authentication substantially in the form provided for herein
executed by or on behalf of the Trustee by the manual or facsimile signature of
a duly authorized signatory, and such certificate upon any Certificate shall be
conclusive evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder. All Certificates shall be dated the date
of their authentication.
Section 6.2 Authentication of Certificates. Contemporaneously with the
------------------------------
initial transfer of the Receivables, whether now existing or hereafter acquired
(other than Receivables in Additional Accounts) and the other components to the
Trust, the Trustee shall authenticate and deliver the initial Series of Investor
Certificates. The Trustee shall deliver the Exchangeable Seller Certificate to
Seller simultaneously with its delivery to or upon the order of Seller of the
initial Series of Investor Certificates. The Certificates shall be duly
authenticated by or on behalf of the Trustee, and together shall evidence the
entire ownership of the Trust.
Section 6.3 Registration of Transfer and Exchange of Certificates. (a)
-----------------------------------------------------
The Trustee shall cause to be kept at the office or agent to be maintained by a
transfer agent and registrar (the "Transfer Agent and Registrar") in accordance
with the provisions of Section 11.16 a register (the "Certificate Register") in
which, subject to such reasonable regulations as it may prescribe, the Transfer
Agent and Registrar shall provide for the registration of the Investor
Certificates and of transfers and exchanges of the Investor Certificates as
herein provided. The Trustee is hereby initially appointed Transfer Agent and
Registrar for the purpose of registering the Investor Certificates and transfers
and exchanges of the Investor Certificates as herein provided. The Trustee shall
be permitted to resign as Transfer Agent and Registrar upon 30 days' written
notice to Seller. In the event that the Trustee shall no longer be the Transfer
Agent and Registrar, the Trustee shall appoint a successor Transfer Agent and
Registrar.
Upon surrender for registration of transfer of any Investor Certificate of
any Series at any office or agency of the Transfer Agent and Registrar
maintained for such purpose, the Trustee shall execute, authenticate and
deliver, in the name of the designated transferee or
52
<PAGE>
transferees, one or more new Investor Certificates of such Series in authorized
denominations of like aggregate Undivided Interests.
At the option of an Investor Certificateholder, Investor Certificates of
any Series may be exchanged for other Investor Certificates of the same Series
and authorized denominations of like Undivided Interests, upon surrender of the
Investor Certificates to be exchanged at any such office or agency. Whenever any
Investor Certificates are so surrendered for exchange the Trustee shall execute,
authenticate and deliver the Investor Certificates which the Certificateholder
making the exchange is entitled to receive. Every investor Certificate presented
or surrendered for registration of transfer or Exchange shall be accompanied by
a written instrument of transfer in a form satisfactory to the Trustee and the
Transfer Agent and Registrar duly executed by the Certificateholder thereof or
his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Investor Certificates, but the Transfer Agent and Registrar may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer or exchange of Investor
Certificates.
All Investor Certificates surrendered for registration of transfer and
exchange shall be canceled and disposed of in a manner satisfactory to Seller
and the Trustee.
(b) It is the understanding of the parties to this Agreement that FCNB has
particular expertise in performing the functions given by this Agreement to the
Servicer and that the Investor Certificateholders will be purchasing
Certificates relying on its exercising such expertise in performing such
functions. As provided in Sections 8.5 and 8.7, the Servicer is not permitted to
resign, except as otherwise permitted in such sections. Except as provided in
Section 7.2, the Exchangeable Seller Certificate, or any interest therein, shall
not be transferred, assigned, exchanged, or otherwise transferred other than
from Seller to any of its Affiliates.
(c) The Transfer Agent and Registrar will maintain at its expense in the
Borough of Manhattan, The City of New York, an office or offices or agency or
agencies where Investor Certificates may be surrendered for registration of
transfer or exchange.
Section 6.4 Mutilated, Destroyed, Lost or Stolen Certificates. If (a) any
-------------------------------------------------
mutilated Certificate is surrendered to the Transfer Agent and Registrar, and
the Transfer Agent and Registrar receives evidence to its satisfaction of the
destruction, loss or theft of any Certificate and (b) there is delivered to the
Transfer Agent and Registrar and the Trustee such security or indemnity as may
be required by them (which unsecured agreement of indemnity by an institutional
Certificateholder shall be sufficient for such purposes) to save each of them
harmless, then, in the absence of notice to the Trustee that such Certificate
has been acquired by a bona fide purchaser, the Trustee shall execute and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Certificate, a new Certificate of like tenor and
53
<PAGE>
aggregate Undivided Interest. In connection with the issuance of any new
Certificate under this Section 6.4, the Trustee or the Transfer Agent and
Registrar may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee and the Transfer Agent
and Registrar) connected therewith. Any duplicate Certificate issued pursuant to
this Section 6.4 shall constitute compete and indefeasible evidence of ownership
in the Trust, as if originally issued, whether or not the lost, stolen or
destroyed Certificate shall be found at any time.
Section 6.5 Persons Deemed Owners. Prior to due presentation of a
---------------------
Certificate for registration of transfer, the Trustee and the Paying Agent, the
Transfer Agent and Registrar and any agent of any of them may treat the person
in whose name any Certificate is registered as the owner of such Certificate for
the purpose of receiving distributions pursuant to Article V (as described in
any Supplement) and for all other purposes whatsoever, and neither the Trustee
and the Paying Agent, the Transfer Agent and Registrar nor any agent of any of
them shall be affected by any notice to the contrary; provided, however, that in
determining whether the holders of Investor Certificates evidencing the
requisite Undivided Interests have given any request, demand, authorization,
direction, notice, consent or waiver hereunder, Investor Certificates owned by
Seller, the Servicer or any Affiliate thereof shall be disregarded and deemed
not to be outstanding, except that, in determining whether the Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Investor Certificates which a Responsible
Officer in the Corporate Trust Office of the Trustee knows to be so owned shall
be so disregarded. Investor Certificates so owned which have been pledged in
good faith shall not be disregarded and may be regarded as outstanding if the
pledgee establishes to the satisfaction of the Trustee the pledgee's right so to
act with respect to such Investor Certificates and that the pledgee is not
Seller, the Servicer or an Affiliate thereof.
Section 6.6 Appointment of Paying Agent. (a) The Paying Agent shall make
---------------------------
distributions to Investor Certificateholders from the Distribution Account
pursuant to Articles IV and V hereof. Any Paying Agent shall have the revocable
power to withdraw funds from the Distribution Account for the purpose of making
distributions referred to above. The Trustee may revoke such power and remove
the Paying Agent for a particular Series, if the Trustee determines in its sole
discretion that the Paying Agent shall have failed to perform its obligations
under this Agreement in any material respect. The Paying Agent, unless the
Supplement relating to any Series states otherwise, shall initially be the
Trustee. The Trustee shall be permitted to resign as Paying Agent upon 30 days'
written notice to Seller. In the event that the Trustee shall no longer be the
Paying Agent, the Trustee shall appoint a successor. Each Paying Agent must be
acceptable to Seller and the Servicer. The provisions of Sections 11.1, 11.2 and
11.3 shall apply to the Trustee also in its role as Paying Agent, for so long as
the Trustee shall act as Paying Agent.
(b) The Trustee shall cause the Paying Agent (other than itself) to execute
and deliver to the Trustee an instrument in which such Paying Agent shall agree
with the Trustee
54
<PAGE>
that such Paying Agent will hold all sums, if any, held by it for payment to the
Investor Certificateholders in trust for the benefit of the Investor
Certificateholders entitled thereto until such sums shall be paid to such
Certificateholders and shall agree, and if the Trustee is the Paying Agent it
hereby agrees, that it shall comply with all requirements of the Internal
Revenue Code regarding the withholding of payments in respect of federal income
taxes due from Certificate Owners by the Trustee.
Section 6.7 Access to List of Certificateholders' Names and Addresses.
---------------------------------------------------------
The Trustee will furnish or cause to be furnished by the Transfer Agent and
Registrar to the Servicer or the Paying Agent, within five Business Days after
receipt by the Trustee of a request therefor from the Servicer or the Paying
Agent, respectively, in writing, a list in such form as the Servicer or the
Paying Agent may reasonably require, of the names and addresses of the Investor
Certificateholders as of the most recent Record Date for payment of
distributions to Investor Certificateholders. If Holders of Investor
Certificates (the "Applicants") evidencing Undivided Interests aggregating not
less than 10% of the Investor Amount of the Investor Certificates of any Series
apply in writing to the Trustee, and such application states that the Applicants
desire to communicate with other Investor Certificateholders of any Series with
respect to their rights under this Agreement or under the Investor Certificates
and is accompanied by a copy of the communication which such Applicants propose
to transmit, then the Trustee, after having been adequately indemnified by the
Seller for its costs and expenses, shall afford or shall cause the Transfer
Agent and Registrar to afford such Applicants access during normal business
hours to the most recent list of Certificateholders held by the Trustee and
shall give the Servicer notice that such request has been made, within five
Business Days after the receipt of such application. Such list shall be as of a
date no more than 45 days prior to the date of receipt of such Applicants'
request. Every Certificateholder, by receiving and holding a Certificate, agrees
with the Trustee that neither the Trustee, the Transfer Agent and Registrar, nor
any of their respective agents shall be held accountable by reason of the
disclosure of any such information as to the names and addresses of the
Certificateholders hereunder, regardless of the source from which such
information was obtained.
Section 6.8 Authenticating Agent. (a) The Trustee may appoint one or more
--------------------
authenticating agents with respect to the Certificates which shall be authorized
to act on behalf of the Trustee in authenticating the Certificates in connection
with the issuance, delivery, registration of transfer, exchange or repayment of
Certificates. Whenever reference is made in this Agreement to the authentication
of Certificates by the Trustee or the Trustee's certificate of authentication,
such reference shall be deemed to include authentication on behalf of the
Trustee by an authenticating agent and a certificate of authentication executed
on behalf of the Trustee by an authenticating agent. Each authenticating agent
must be acceptable to Seller and the Servicer.
(b) Any institution succeeding to the corporate agency business of an
authenticating agent shall continue to be an authenticating agent without the
execution or filing of any paper or any further act on the part of the Trustee
or such authenticating agent.
55
<PAGE>
(c) An authenticating agent may at any time resign by giving written notice
of resignation to the Trustee and to Seller. The Trustee may at any time
terminate the agency of an authenticating agent by giving notice of termination
to such authenticating agent and to Seller. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time an authenticating
agent shall cease to be acceptable to the Trustee or Seller or the Servicer, the
Trustee promptly may appoint a successor authenticating agent. Any successor
authenticating agent upon acceptance of its appointment hereunder shall become
vested with all the rights, powers and duties of its predecessor hereunder, with
like effect as if originally named as an authenticating agent. No successor
authenticating agent shall be appointed unless acceptable to the Trustee, Seller
and the Servicer.
(d) The Trustee agrees to pay each authenticating agent from time to time
reasonable compensation for its services under this Section 6.8, and the Trustee
shall be entitled to be reimbursed and Seller shall reimburse the Trustee for
such reasonable payments actually made, subject to the provisions of Section
11.5.
(e) The provisions of Sections 11 .1, 11.2 and 11.3 shall be applicable to
any authenticating agent.
(f) Pursuant to an appointment made under this Section 6.8, the
Certificates may have endorsed thereon, in lieu of the Trustee's certificate of
authentication, an alternate certificate of authentication in substantially the
following form:
This is one of the Certificates described in the Pooling and Servicing
Agreement.
_________________________________________
as Authenticating Agent for the Trustee,
By:_______________________________________
Authorized Officer
Section 6.9 Book-Entry Certificates. Unless otherwise provided in any
-----------------------
related Supplement, the Investor Certificates of any Series upon original
issuance, shall be issued in the form of a one or more typewritten Certificates
representing the Book-Entry Certificates, to be delivered to the Clearing Agency
specified in the Supplement for such Series, by, or on behalf of, Seller. The
Investor Certificates of each Series shall, unless otherwise provided in the
related Supplement, initially be registered on the Certificate Register in the
name of the nominee of the Clearing Agency, and no Certificate owner will
receive a definitive certificate representing such Certificate Owner's interest
in the Investor Certificates, except as provided in Section 6.11. Unless and
until definitive, fully registered Investor Certificates of any Series (the
"Definitive Certificates") have been issued to Certificate Owners:
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(i) the provisions of this Section 6.9 shall be in full force and
effect with respect to each such Series;
(ii) Seller, the Servicer, the Paying Agent, the Transfer Agent and
Registrar and the Trustee may deal with the related Clearing Agency and the
related Clearing Agency Participants for all purposes (including the making
of distributions on the Investor Certificates of each such Series) as the
authorized representatives of such Certificate Owners;
(iii) to the extent that the provisions of this Section 6.9 conflict
with any other provisions of this Agreement, the provisions of this Section
6.9 shall control with respect to each such Series; and
(iv) the rights of Certificate Owners of each such Series shall be
exercised only through the Clearing Agency and the applicable Clearing
Agency Participants and shall be limited to those established by law and
agreements between such Certificate Owners and the Clearing Agency and/or
the Clearing Agency Participants. Pursuant to the Depository Agreement
applicable to a Series, unless and until Definitive Certificates are issued
pursuant to Section 6.11, the initial Clearing Agency will make book-entry
transfers among the Clearing Agency Participants and receive and transmit
distributions of principal and interest on the Investor Certificates to
such Clearing Agency Participants.
Section 6.10 Notices to Clearing Agent. Whenever notice or other
-------------------------
communication to the Certificateholders of a Series is required under this
Agreement, unless and until Definitive Certificates shall have been issued to
the Certificate Owners of such Series, the Trustee shall give all such notices
and communications specified herein to be given to Holders of the Investor
Certificates of such Series to the Clearing Agency.
Section 6.11 Definitive Certificates Initially Issued as Book-Entry
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Certificates. If (i) (A) Seller advises the Trustee in writing that the
------------
Clearing Agency is no longer willing or able properly to discharge its
responsibilities under the related Depository Agreement, and (B) the Trustee or
Seller is unable to locate a qualified successor, (ii) Seller, at its option,
advises the Trustee in writing that it elects to terminate the book-entry system
through such Clearing Agency or (iii) after the occurrence of a Servicer
Default, Certificate Owners of a Series representing beneficial interests
aggregating not less than 50% of the Investor Amount of a Series advise the
Trustee and the related Clearing Agency through the related Clearing Agency
Participants in writing that the continuation of a book-entry system through
such Clearing Agency is no longer in the best interests of the Certificate
Owners, the Trustee shall notify all Certificate Owners of such Series through
such Clearing Agency, of the occurrence of any such event and of the
availability of Definitive Certificates to Certificate Owners requesting the
same. Upon surrender to the Trustee of the Investor Certificates of such Series
by the related Clearing Agency, accompanied by registration instructions from
the related Clearing Agency for registration, the Trustee shall issue the
Definitive Certificates of such
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Series. Neither Seller nor the Trustee shall be liable for any delay in delivery
of such instructions and may conclusively rely on, and shall be protected in
relying on, such instructions. Upon the issuance of Definitive Certificates of
such Series all references herein to obligations imposed upon or to be performed
by the Clearing Agency shall be deemed to be imposed upon and performed by the
Trustee, to the extent applicable with respect to such Definitive Certificates
and the Trustee shall recognize the Holders of the Definitive Certificates of
such Series as Certificateholders of such Series hereunder.
Section 6.12 Tender of Exchangeable Seller Certificate.
-----------------------------------------
(a) Upon any Exchange, Seller shall under Section 6.1 deliver to the
Trustee for execution and authentication under Section 6.2, one or more new
Series of Investor Certificates. Any such Series of Investor Certificates shall
be substantially in the form specified in the related Supplement and shall bear,
upon its face, the designation for the Series to which it belongs, as selected
by Seller. Except as specified in any Supplement for a related Series, all
Investor Certificates of any Series shall rank pari passu and be equally and
ratably entitled as provided herein to the benefits hereof (except that the
Enhancement provided for any Series shall not be available for any other Series)
without preference, priority or distinction on delivery, all in accordance with
terms and provisions of this Agreement and the related Supplement.
(b) The Holder of the Exchangeable Seller Certificate may tender the
Exchangeable Seller Certificate to the Trustee in exchange for (i) one or more
newly issued Series of Investor Certificates and (ii) a reissued Exchangeable
Seller Certificate (any such tender, a "Seller Exchange"). In addition, to the
extent permitted for any Series of Investor Certificates as specified in the
related Supplement, the Investor Certificateholders of such Series may tender
their Investor Certificates and the Holder of the Exchangeable Seller
Certificate may tender the Exchangeable Seller Certificate to the Trustee
pursuant to the terms and conditions set forth in such Supplement in exchange
for (i) one or more newly issued Series of Investor Certificates and (ii) a
reissued Exchangeable Seller Certificate (an "Investor Exchange"). The Seller
Exchange and Investor Exchange are referred to collectively herein as an
"Exchange". The Holder of the Exchangeable Seller Certificate may perform an
Exchange by notifying the Trustee in writing at least five days (but in no event
less than three Business Days) in advance (an "Exchange Notice") of the date
upon which the Exchange is to occur (an "Exchange Date"). Any Exchange Notice
shall state the designation of any Series to be issued on the Exchange Date and,
with respect to each such Series: (a) its Initial Investor Amount (or the method
of calculating such Initial Investor Amount), which at any time may not be
greater than the current principal amount of the Exchangeable Seller Certificate
at such time (or in the case of an Investor Exchange, the sum of the Investor
Amount of the Series of Investor Certificates to be exchanged plus the current
principal amount of the Exchangeable Seller Certificate), (b) its Certificate
Rate (or the method of allocating interest payments or other cash flows to such
Series), if any, (c) the Enhancement Provider, if any, with respect to such
Series, and (d) whether such Series is a Replacement Series. On the Exchange
Date, the Trustee shall authenticate and deliver any such Series of Investor
Certificates only upon
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deliver to it of the following: (a) a Supplement in form satisfactory to the
Trustee satisfying the criteria set forth in subsection 6.12(c) executed by
Seller and specifying the Principal Terms of such Series, (b) the applicable
Enhancement, if any, (c) the agreement, if any, pursuant to which the
Enhancement Provider agrees to provide the Enhancement, if any, (d) an Opinion
of Counsel from the Person who issued the federal income tax opinions delivered
on any Closing Date in connection with the original issuance of any Series of
Investor Certificates that such transfer does not adversely affect such opinions
or a new Opinion of Counsel provided by the Holder of the Exchangeable Seller
Certificate that is substantially the same as such original opinion, (e) that
the Rating Agency Condition with respect to the Exchange has been satisfied, (f)
an Officer's Certificate of Seller that on the Exchange Date (i) Seller, after
giving effect to the Exchange, would not be required to add Additional Accounts
pursuant to subsection 2.6(a) and (ii) after giving effect to such Exchange, the
Seller Amount would be at least equal to the Minimum Seller Amount, (g) the
existing Exchangeable Seller Certificate or applicable Investor Certificates, as
the case may be and (h) evidence, satisfactory to the Trustee, of any deposit to
the Distribution Account required in connection with the issuance of a
Replacement Series. Upon satisfaction of such conditions, the existing
Exchangeable Seller Certificate or applicable Investor Certificates, as the case
may be, and issue, as provided above, such Series of Investor Certificates and a
new Exchangeable Seller Certificate, dated the exchange Date. There is no limit
to the number of Exchanges that may be performed under this Agreement.
(c) In conjunction with an Exchange, the parties hereto shall execute a
Supplement, which shall specify the relevant terms with respect to any newly
issued Series of Investor Certificates, which may include without limitation:
(i) its name or designation, (ii) an Initial Investor Amount or the method of
calculating the Initial Investor Amount, (iii) the Certificate Rate (or formula
for the determination thereof), (iv) the Closing Date, (v) the Rating Agency or
Agencies rating such Series, (vi) the name of the Clearing Agency, if any, (vii)
the rights of the Holder of the Exchangeable Seller Certificate that have been
transferred to the Holders of such Series pursuant to such Exchange (including
any rights to allocations of Collections of Finance Charge Receivables and
Principal Receivables), (viii) the interest payment date or dates and the date
or dates from which interest shall accrue, (ix) the method of allocating
Collections with respect to Principal Receivables for such Series and, if
applicable, with respect to other Series and the method by which the principal
amount of Investor Certificates of such Series shall amortize or accrete and the
method for allocating Collections with respect to Finance Charge Receivables and
Receivables in Defaulted Accounts, (x) the names of any accounts to be used by
such Series and the terms governing the operation of any such account, (xi) the
Series Servicing Fee Percentage, (xii) the Minimum Seller Percentage, (xiii) the
Series Termination Date, (xiv) the terms of any Enhancement with respect to such
Series, (xv) the Enhancement Provider, if applicable, (xvi) the Base Rate
applicable to such Series, (xvii) the terms on which the Certificates of such
Series may be repurchased or remarketed to other investors, (xviii) any deposit
into any account provided for such Series, (xix) the number of Classes of such
Series, and if more than one Class, the rights and priorities of each such
Class, (xx) whether Recoveries or other fees will be included in the funds
available to be paid for such Series, (xxi) the priority of any Series with
respect to any other Series, (xxii)
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the rights, if any, of the holders of the Exchangeable Seller Certificate that
have been transferred to the holders of such Series, and (xxiii) any other
relevant terms of such Series (including whether or not such Series will be
pledged as collateral for an issuance of any other securities, including
commercial paper or whether or not such Series is a Replacement Series) (all
such terms, the "Principal Terms" of such Series). The terms of such Supplement
may modify or amend the terms of this Agreement solely as applied to such new
Series. If on the date of the issuance of such Series there is issued and
outstanding one or more Series of Investor Certificates and no Series of
Investor Certificates is currently rated by a Rating Agency, then as a condition
to such Exchange a nationally recognized investment banking firm or commercial
bank shall also deliver to the Trustee an officer's certificate stating, in
substance, that the Exchange will not have an adverse effect on the timing or
distribution of payments to such other Series of Investor Certificates then
issued and outstanding.
ARTICLE VII
OTHER MATTERS RELATING TO SELLER
Section 7.1 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 7.2 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 Trustee, in form satisfactory to the 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 7.2 to a successor entity, Section 9.2 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 subsection 7.2(a)(ii);
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(ii) Seller shall have delivered to the 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 7.2 and that all conditions
precedent herein provided for relating to such transaction have been
complied with and, in the case of the Opinion of Counsel, that such
supplemental agreement is legal, valid and binding with respect to Seller;
and
(iii) Seller shall have delivered notice of such consolidation,
merger, conveyance or transfer to each Rating Agency.
(b) The obligations of Seller hereunder shall not be assignable nor shall
any Person succeed to the obligations of Seller hereunder except for mergers,
consolidations, assumptions or transfers in accordance with the provisions of
the foregoing paragraph.
Section 7.3 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 Trust, the Trustee, the Certificateholders 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 VII
OTHER MATTERS RELATING TO THE SERVICER
Section 8.1 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 8.2 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:
(i) 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
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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 Trustee in form satisfactory to the Trustee, the
performance of every covenant and obligation of the Servicer hereunder, and
shall benefit from all the rights granted to the Servicer, as applicable
hereunder. To the extent that any right, covenant or obligation of the
Servicer, as applicable hereunder, is inapplicable to the successor entity,
such successor entity shall be subject to such covenant or obligation, or
benefit from such right, as would apply, to the extent practicable, to such
successor entity;
(ii) the Servicer has delivered to the 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 8.2 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
(iii) the Servicer shall have delivered notice of such consolidation,
merger, conveyance or transfer to each of the Rating Agencies.
Section 8.3 Limitation on Liability of the Servicer and Others. Except as
-------------------------- ------------ ----------
provided in Section 8.4 with respect to the Trust and the 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 Trust, the Trustee, the
Certificateholders 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 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.
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Section 8.4 Indemnification of the Trust and the Trustee. The Servicer
--------------------------------------------
shall indemnify and hold harmless the Trust and the Trustee from and against any
loss, liability, expense, damage or injury suffered or sustained by reason of
any acts, omissions or alleged acts or omissions arising out of activities of
the Trust or the Trustee pursuant to this Agreement, including those arising
from acts or omissions of the Servicer pursuant to this Agreement, including,
but not limited to any judgment, award, settlement, reasonable attorneys' fees
and other costs or expenses incurred in connection with the defense of any
actual or threatened action, proceeding or claim; provided, however, that the
Servicer shall not indemnify the Trust or the Trustee if such acts, omissions or
alleged acts constitute fraud, negligence or breach of fiduciary duty by the
Trustee; provided further, that the Servicer shall not indemnify the Trust, the
Trustee, any Investor Certificateholders or any Certificate Owners for any
liabilities, costs or expenses of the Trust with respect to any action taken by
the Trustee at the request of such Investor Certificateholders; provided
further, that the Servicer shall not indemnify the Trust, any Investor
Certificateholders or any Certificate Owners as to any losses, claims or damages
incurred by any of them in their capacities as investors, including without
limitation 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 Trust, any Investor Certificateholders or the
Certificate Owners for any liabilities, costs or expenses of the Trust, such
Investor Certificateholders or the Certificate Owners arising under any tax law,
including without limitation 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 Trust, such Investor Certificateholders or such
Certificate Owners 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 Trust.
The obligations of the Servicer under this Section 8.4 shall survive the
termination of the Trust and the resignation or removal of the Trustee.
Section 8.5 The Servicer Not to Resign. The Servicer shall not resign
--------------------------
from the obligations and duties hereby imposed on it except upon determination
that (i) the performance of its duties hereunder is or becomes impermissible
under applicable law and (ii) there is no reasonable action which the Servicer
could take to make the performance of its duties hereunder permissible under
applicable law. Any such determination permitting the resignation of the
Servicer shall be evidenced as to clause (i) above by an Opinion of Counsel to
such effect delivered to the Trustee. No such resignation shall become
effective until the Trustee or a Successor Servicer shall have assumed the
responsibilities and obligations of the Servicer in accordance with Section 10.2
hereof. If the Trustee is unable within 120 days of the date of such
determination to appoint a Successor Servicer, the Trustee shall serve as
Successor Servicer hereunder subject to the provisions of Section 10.2 hereof.
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Section 8.6 Access to Certain Documentation and Information Regarding the
-------------------------------------------------------------
Receivables. The Servicer shall provide to the Trustee access to the
-----------
documentation regarding the Accounts and the Receivables in such cases where the
Trustee is required in connection with the enforcement of the rights of the
Investor Certificateholders, 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 8.6 shall derogate from the
obligation of Seller, the 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 8.6 as a result of
such obligation shall not constitute a breach of this Section 8.6.
Section 8.7 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 8.5 hereof.
Section 8.8 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 Trust
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.
ARTICLE IX
PAY OUT EVENTS
Section 9.1 Pay Out Events. If any one of the following events shall
--------------
occur during either the Revolving Period or the Controlled Amortization Period
with respect to any Series of the Investor Certificates:
(a) Seller or FCNB shall (A) become insolvent, (B) fail to pay its
debts generally as they become due, (C) voluntarily seek, consent to, or
acquiesce in the benefit or benefits of any Debtor Relief Law, (D) become a
party to (or be made the subject of) any proceeding provided for by any
Debtor Relief Law, other than as a creditor or claimant, and, in the event
such proceeding is involuntary, (1) within 10 Business Days after Seller or
FCNB has knowledge of such proceeding or the filing thereof either (a) the
petition instituting same has not been dismissed or (b) an order has not
been entered by the court having jurisdiction which allows continued
transfer
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to the Trust of Principal Receivables with no adverse effect to the Trust
or the Investor Certificateholders or (2) an order as contemplated in
(1)(b) above having previously been entered, is no longer in effect other
than by reason of the termination of such proceeding, or (E) become unable
for any reason to transfer Receivables to the Trust in accordance with the
provisions of this Agreement; or
(b) the Trust or Seller shall become an "investment company" within
the meaning of the Investment Company Act of 1940, as amended;
in the case of any event described in subparagraphs (a) or (b), a Trust Pay Out
Event shall occur without any notice or other action on the part of the Trustee
or the Investor Certificateholders, immediately upon the occurrence of such
event.
Section 9.2 Additional Rights Upon the Occurrence of Certain Events. (a)
-------------------------------------------------------
If Seller voluntarily seeks, consents to or acquiesces in the benefit or
benefits of any Debtor Relief Law or becomes a party to (or is 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, (1)
within 10 business days after Seller has knowledge of such proceeding or the
filing thereof either (x) the petition instituting same has not been dismissed
or (y) an order has not been entered by the court having jurisdiction which
allows continued transfer to the Trust of Principal Receivables, with no adverse
effect to the Trust or the investor Certificateholders or (2) an order as
contemplated in (1)(x) above having previously been entered, is no longer in
effect other than by reason of the termination of such proceeding (each, an
"Insolvency Event"), Seller shall on the date of such Insolvency Event
immediately cease to transfer Principal Receivables to the Trust and shall
promptly give notice to the Trustee of such Insolvency Event. Notwithstanding
any cessation of the transfer to the Trust of additional Principal Receivables,
Finance Charge Receivables, whenever created, accrued in respect of Principal
Receivables which have been transferred to the Trust shall continue to be a part
of the Trust. Within 15 days of the Insolvency Event, the Trustee shall (i)
publish a notice in the Authorized Newspapers that an Insolvency Event has
occurred and that the Trustee intends to sell, dispose of or otherwise liquidate
the Receivables in a commercially reasonable manner and (ii) send written notice
to the Investor Certificateholders describing the provisions of this Section 9.2
and requesting instructions from such Holders. If after 90 days from the day
notice pursuant to clause (i) above is first published (the "Publication Date"),
the Trustee shall not have received written instructions of Holders of Investor
Certificates representing Undivided Interests aggregating in excess of 50% of
the Investor Amount of any Series to the effect that the Trustee shall not
instruct the Servicer to sell, dispose of, or otherwise liquidate the
Receivables, the Trustee, subject to the following proviso, shall proceed to
take such preparatory actions as the Trustee may deem appropriate in order to
sell, dispose of, or otherwise liquidate the Receivables in a commercially
reasonable manner and on commercially reasonable terms, which shall include the
solicitation of competitive bids; provided, however, no such sale, disposition
or liquidation, whether in whole or in part, of the Receivables shall be
consummated until and unless the occurrence of refusal to provide the written
response referred to above (a "Response"). The Trustee may obtain a prior
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determination from such conservator or receiver that the terms and manner of any
proposed sale, disposition or liquidation are commercially reasonable. The
provisions of Sections 9.1 and 9.2 shall not be deemed to be mutually exclusive.
(b) The proceeds from the sale, disposition or liquidation of the
Receivables pursuant to subsection (a) above shall be treated as Collections on
the Receivables and shall be allocated and deposited in accordance with the
provisions of Article IV. On the day following the Distribution Date on which
such proceeds are scheduled to be distributed to the Investor
Certificateholders, the Trust shall terminate.
ARTICLE X
SERVICER DEFAULTS
Section 10.1 Servicer Defaults. If any one of the following events (a
-----------------
"Servicer Default") shall occur and be continuing:
(a) any failure by the Servicer to make any payment, transfer or deposit or
to give instructions or notice to the Trustee pursuant to Article IV or to make
any required drawing, withdrawal, or payment under any Enhancement 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, as the case may be, under the terms of this Agreement; or
(b) failure on the part of the Servicer duly to observe or perform in any
material respect any other covenants or agreements of the Servicer set forth in
this Agreement which has a material adverse effect on the Certificateholders,
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 Trustee, or to the Servicer and the Trustee by the
Holders of Investor Certificates evidencing Undivided Interests aggregating not
less than 50% of the Investor Amount of any Series adversely affected thereby
and continues to materially adversely affect such Investor Certificateholders
for such period; or the Servicer's delegation of its duties under this Agreement
except as permitted by Section 8.7; 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 Certificateholders 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 Trustee, or to the Servicer and the Trustee by the Holders of Investor
Certificates evidencing Undivided Interests aggregating not less than 50% of the
Investor Amount of any Series adversely affected thereby and continues to
materially adversely affect such Investor Certificateholders for such period, or
if such failure cannot be cured within such
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60-day period owing to causes beyond the control of the Servicer, if the
Servicer shall fail to proceed promptly to cure the same and prosecute the
curing of such failure with diligence and continuity; or
(d) the Servicer shall (a) become insolvent, (b) fail to pay its debts
generally as they become due, (c) voluntarily seek, consent to, or acquiesce in
the benefit or benefits of any Debtor Relief Law, or (d) become a party to (or
be made the subject of) any proceeding provided for by any Debtor Relief Law,
other than as a creditor or claimant, and, in the event such proceeding is
involuntary, the petition instituting same is not dismissed within 60 days after
its filing; then, so long as such Servicer Default shall not have been remedied,
either the Trustee, or the Holders of Investor Certificates evidencing Undivided
Interests aggregating more than 50% of the Aggregate Investor Amount, by notice
then given in writing to the Servicer (and to the Trustee if given by the
Investor Certificateholders) (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 Trustee pursuant to Section 10.2, all authority and power
of the Servicer under this Agreement shall pass to and be vested in a Successor
Servicer; and, without limitation, the Trustee is hereby authorized and
empowered (upon the failure of the Servicer to cooperate) to execute and
deliver, on behalf of the Servicer, as attorney-in-fact or otherwise, all
documents and other instruments upon the failure of the Servicer to execute or
deliver such documents or instruments, and to do and accomplish all other acts
or things necessary or appropriate to effect the purposes of such transfer of
servicing rights. The Servicer agrees to cooperate with the Trustee and such
Successor Servicer in effecting the termination of the responsibilities and
rights of the Servicer to conduct servicing hereunder, including without
limitation, the transfer to such Successor Servicer of all authority of the
Servicer to service the Receivables provided for under this Agreement,
including, without limitation, 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 10.1 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.
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Section 10.2 Trustee to Act; Appointment of Successor. (a) On and after the
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receipt by the Servicer of a Termination Notice pursuant to Section 10.1, 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
Trustee in writing or, if no such date is specified in such Termination Notice
or otherwise specified by the Trustee, until a date mutually agreed upon by the
Servicer and the Trustee. The Trustee shall as promptly as possible after the
giving of a Termination Notice appoint (with the consent of the Holders of
Investor Certificates evidencing Undivided Interests aggregating greater than
50% of the Investor Amount of each Series) a successor servicer (the "Successor
Servicer"), and such Successor Servicer shall accept its appointment by a
written assumption in a form acceptable to the Trustee. The Trustee may obtain
bids from any potential successor servicer. If the 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 Trustee
shall offer Seller the right to accept retransfer of all the Receivables and
Seller may accept retransfer of all the Receivables, provided, however, that if
the long-term unsecured debt obligations of Seller are not rated at the time of
such purchase at least Baa-3 by Moody's and BBB- by Standard & Poor's, no such
retransfer shall occur unless Seller shall deliver an Opinion of Counsel
reasonably acceptable to the 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 Investor Certificates, plus accrued interest thereon,
at the Certificate 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 Certificates.
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 Trustee without further action shall automatically be appointed
the Successor Servicer. Notwithstanding the above, the Trustee shall, if it is
legally unable so to act, petition a court of competent jurisdiction to appoint
any established financial institution having a net worth of not less than
$100,000,000 and whose regular business includes the servicing of installment
sales charge, credit and/or credit card account receivables as the Successor
Servicer hereunder.
(b) Upon its appointment, the Successor Servicer shall be the successor in
all respects to the Servicer with respect to servicing functions under this
Agreement and shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Servicer by the terms and provisions
hereof, and all references in this Agreement to the Servicer shall be deemed to
refer to the Successor Servicer. Any Successor Servicer, by its acceptance of
its appointment, will automatically agree to be bound by the terms and
provisions of any Enhancement to the extent that such terms apply to the
Servicer.
(c) In connection with such appointment and assumption, the 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,
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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
Exchangeable Seller Certificate agrees that if the Servicer is terminated
hereunder, it will agree, at the request of the 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 Article IV, to pay its
share of the compensation of the Successor Servicer.
(d) All authority and power granted to the Servicer under this Agreement
shall automatically cease and terminate upon termination of the Trust pursuant
to Section 12.1 and shall pass to and be vested in Seller and, without
limitation, Seller is hereby authorized and empowered to execute and deliver, on
behalf of the Servicer, as attorney-in-fact or otherwise, all documents and
other instruments, and to do and accomplish all other acts or things necessary
or appropriate to effect the purposes of such transfer of servicing rights. The
Servicer agrees to cooperate with Seller in effecting the termination of the
responsibilities and rights of the Servicer to conduct servicing on the
Receivables. The Servicer shall transfer its electronic records relating to the
Receivables to Seller in such electronic form as Seller may reasonably request
and shall transfer all other records, correspondence and documents to Seller in
the manner and at such times as Seller shall reasonably request. To the extent
that compliance with this Section 10.2 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 10.3 Notification to Certificateholders. Upon the occurrence of
----------------------------------
any Servicer Default, the Servicer shall give prompt written notice thereof to
the Trustee and the Trustee shall give notice to the Investor Certificateholders
at their respective addresses appearing in the Certificate Register. Upon any
termination or appointment of a Successor Servicer pursuant to this Article X,
the Trustee shall give prompt written notice thereof to Investor
Certificateholders at their respective addresses appearing in the Certificate
Register. A copy of any notice given pursuant to this Section 10.3 shall be
delivered to each Rating Agency.
Section 10.4 Waiver of Past Defaults. The Holders of Investor Certificates
-----------------------
evidencing Undivided Interests aggregating not less than 50% of the Investor
Amount of any Series affected thereby may, on behalf of all Holders of
Certificates, waive any default by the Servicer or Seller in the performance of
its obligations hereunder and its consequences, except a default in the failure
to make any required deposits or payments in accordance with Article IV,
provided, however, that no such waiver shall affect any rights of, or
obligations to, any Enhancement Provider hereunder. Upon any such waiver of a
past default, such default shall cease to exist, and any default arising
therefrom shall be deemed to have been remedied for every purpose of this
Agreement. No such waiver shall extend to any subsequent or other default or
impair any right consequent thereon except to the extent expressly so waived.
ARTICLE XI
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THE TRUSTEE
Section 11.1 Duties of Trustee.
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(a) The Trustee, prior to the occurrence of a Servicer Default and after
the curing of all Servicer Defaults which may have occurred, undertakes to
perform such duties and only such duties as are specifically set forth in this
Agreement. If a Servicer Default has occurred (which has not been cured or
waived), the Trustee shall exercise such of the rights and powers vested in it
by this Agreement, and use the same degree of care and skill in the exercise of
such rights and powers, as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.
(b) The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement. The Trustee shall give prompt
written notice to the Certificateholders of any material lack of conformity of
any such instrument to the applicable requirements of this Agreement discovered
by the Trustee which would entitle a specified percentage of the
Certificateholders to take any action pursuant to this Agreement.
Notwithstanding the foregoing, prior to the occurrence of a Servicer Default,
the Trustee shall have no obligation to independently verify or confirm any
information received from the Servicer.
(c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own misconduct; provided, however, that:
(i) the Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer or Responsible
Officers of the Trustee, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts;
(ii) the Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of the Holders of Investor Certificates
evidencing Undivided Interests aggregating more than 50% of the Investor
Amount of any Series relating to the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or exercising any
trust or power conferred upon the Trustee, under this Agreement; and
(iii) the Trustee shall not be charged with knowledge of any failure by
the Servicer to comply with the obligations of the Servicer referred to in
clauses (b), (c) and (d) of Section 10.1 unless a Responsible Officer of
the Trustee obtains actual knowledge of such failure or the Trustee
receives written notice of such failure from
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the Servicer or any Holders of Investor Certificates evidencing Undivided
Interests aggregating not less than 10% of the Investor Amount of any
Series.
(d) The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in exercise of any of its rights or powers, if there is reasonable
ground for believing that the repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to it, and none of the
provisions contained in this Agreement shall in any event require the Trustee to
perform, or be responsible for the manner of performance of, any of the
obligations of the Servicer under this Agreement except during such time, if
any, as the Trustee shall be the successor to, and be vested with the rights,
duties, powers and privileges of, the Servicer in accordance with the terms of
this Agreement.
(e) Except for actions expressly authorized by this Agreement, the Trustee
shall take no action reasonably likely to impair the interests of the Trust in
any Receivable now existing or hereafter arising or to impair the value of any
Receivable now existing or hereafter arising.
(f) Except as provided in Section 2.6, the Trustee shall have no power to
vary the corpus of the Trust including, without limitation, the power to (i)
accept any substitute obligation for a Receivable initially assigned to the
Trust under Section 2.1 or 2.6 hereof, (ii) add any other investment, obligation
or security to the Trust or (iii) withdraw from the Trust any Receivables,
except for a withdrawal permitted under subsection 2.4(d) or 2.4(e), Article IV,
or Section 9.2 or 12.1.
(g) In the event that the Paying Agent or the Transfer Agent and Registrar
shall fail to perform any obligation, duty or agreement in the manner or on the
day required to be performed by the Paying Agent or the Transfer Agent and
Registrar, as the case may be, under this Agreement, the Trustee shall be
obligated promptly to perform such obligation, duty or agreement in the manner
so required.
(h) If Seller has agreed to transfer any of its charge account receivables
(other than the Receivables) to another Person, upon the written request of
Seller, the Trustee will enter into such intercreditor agreements with the
transferee of such receivables as are customary and necessary to identify the
rights of the Trust and such other Person, as the case may be, in Seller's
charge account receivables; provided, that the Trust shall not enter into any
intercreditor agreement which could adversely affect the interests of the
Certificateholders and, upon the request of the Trustee, Seller will deliver an
Opinion of Counsel on any matters relating to such intercreditor agreement,
reasonably requested by the Trustee.
Section 11. Certain Matters Affecting the Trustee. Except as otherwise
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provided in Section 11.1:
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(a) the Trustee may rely on and shall be protected in acting on, or in
refraining from acting in accord with, any resolution, Officer's
Certificate, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal,
bond or other paper or document believed by it to be genuine and to have
been signed or presented to it pursuant to this Agreement by the proper
party or parties;
(b) the Trustee may consult with counsel and any Opinion of Counsel
shall be full and complete authorization and protection in respect of any
action taken or suffered or omitted by it hereunder in good faith and in
accordance with such Opinion of Counsel;
(c) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement, or to institute, conduct
or defend any litigation hereunder or in relation hereto, at the request,
order or direction of any of the Certificateholders, pursuant to the
provisions of this Agreement, unless such Certificateholders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which may be incurred therein or thereby;
provided, however, that nothing contained herein shall relieve the Trustee
of the obligations, upon the occurrence of any Servicer Default (which has
not been cured), to exercise such of the rights and powers vested in it by
this Agreement, and to use the same degree of care and skill in their
exercise as a prudent person would exercise or use under the circumstances
in the conduct of such person's own affairs;
(d) the Trustee shall not be liable for any action taken, suffered or
omitted by it in good faith and believed by it to be authorized or within
the discretion or rights or powers conferred upon it by this Agreement;
(e) the Trustee shall not be bound to make any investigation into the
facts of matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond or other paper or document, unless requested in writing so to do by
Holders of Investor Certificates evidencing Undivided Interests aggregating
more than 50% of the Investor Amount of any Series;
(f) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian, and the Trustee shall not be responsible for any
misconduct or negligence on the part of any such agent, attorney or
custodian appointed with due care by it hereunder; and
(g) except as may be required pursuant to subsection 11.1(a) hereof,
the Trustee shall not be required to make any initial or periodic
examination of any documents or records related to the Receivables or the
Accounts for the purpose of
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establishing the presence or absence of defects, the compliance by Seller
with its representations and warranties or for any other purpose.
Section 11.3 Trustee Not Liable for Recitals in Certificates. The Trustee
-----------------------------------------------
assumes no responsibility for the correctness of the recitals contained herein
and in the Certificates (other than the certificate of authentication on the
Certificates). Except as set forth in Section 11.15, the Trustee makes no
representations as to the validity or sufficiency of this Agreement or any
Supplement or of the Certificates (other than the certificate of authentication
on the Certificates) or of any Receivable or related document. The Trustee
shall not be accountable for the use or application by Seller of any of the
Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to Seller in respect of the Receivables or
deposited in the Collection Account, the Excess Funding Account or any other
Series Account, or withdrawn from the Collection Account, by the Servicer.
Section 11.4 Trustee May Own Certificates. The Trustee in its individual or
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any other capacity may become the owner or pledgee of Investor Certificates with
the same rights as it would have if it were not the Trustee.
Section 11.5 Seller to pay Trustee's Fees and Expenses. Seller covenants
-----------------------------------------
and agrees to pay to the Trustee from time to time, and the Trustee shall be
entitled to receive, reasonable compensation (which shall not be limited by any
provision of law in regard to the compensation of a trustee of an express trust)
for all services rendered by it in the execution of the trust hereby created and
in the exercise and performance of any of the powers and duties hereunder of the
Trustee, and, subject to Section 8.4, Seller will pay or reimburse the Trustee
(without reimbursement from any Series Account or otherwise) upon its request
for all reasonable expenses, disbursements and advances incurred or made by the
Trustee in accordance with any of the provisions of this Agreement (including
the reasonable fees and expenses of its agents and counsel) except any such
expense, disbursement or advance as may arise from its negligence or bad faith
and except as provided in the following sentence. If the Trustee is appointed
Successor Servicer pursuant to Section 10.2, the provisions of this Section 11.5
shall not apply to expenses, disbursements and advances made or incurred by the
Trustee in its capacity as Successor Servicer.
The obligations of Seller under this Section 11.5 shall survive the
termination of the Trust and the resignation or removal of the Trustee.
In the case of a sale, disposition or liquidation of the Receivables
pursuant to subsection 9.2(a), the Trustee shall be entitled to retain from any
amounts distributable to the Seller pursuant to any Supplement with respect to
any Series from the proceeds of such sale, disposition or liquidation an amount
equal to the Trustee's expenses in connection with such sale, disposition or
liquidation and the performance by the Trustee of the procedures set forth in
subsection 9.2(a).
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Section 11.6 Eligibility Requirements for Trustee. The Trustee hereunder
------------------------------------
shall at all times be a corporation organized and doing business under the laws
of the United States of America or any state thereof authorized under such laws
to exercise corporate trust powers, having a combined capital and surplus of at
least $100,000,000 and subject to supervision or examination by Federal or state
authority. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising or
examining authority, then for the purpose of this Section 11.6, the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. In addition, no institution shall qualify as a Successor Trustee
hereunder unless its long-term debt obligations are rated at least BBB- and Baa3
by Standard & Poor's and Moody's, respectively. In case at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section
11.6, the Trustee shall resign immediately in the manner and with the effect
specified in Section 11.7.
Section 11.7 Resignation or Removal of Trustee. (a) The Trustee may at any
---------------------------------
time resign and be discharged from the trust hereby created by giving written
notice thereof to Seller and the Servicer. Upon receiving such notice of
resignation, Seller shall (i) promptly appoint a successor trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
resigning Trustee and one copy to the successor trustee and (ii) provide written
notice to each Rating Agency of such resignation. If no successor trustee shall
have been so appointed and have accepted within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.
(b) If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 11.6 hereof and shall fail to resign after
written request therefor by Seller, or if at any time the Trustee shall be
legally unable to act, or shall be adjudged a bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then
Seller may, but shall not be required to, remove the Trustee and promptly
appoint a successor trustee by written instrument, in duplicate, one copy of
which instrument shall be delivered to the Trustee so removed and one copy to
the successor trustee.
(c) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 11.7 shall
not become effective until acceptance of appointment by the successor trustee as
provided in Section 11.8 hereof and any liability of the Trustee arising
hereunder shall survive such appointment of a successor trustee.
Section 11.8 Successor Trustee. (a) Any successor trustee appointed as
-----------------
provided in Section 11.7 hereof shall execute, acknowledge and deliver to Seller
and to its predecessor Trustee an instrument accepting such appointment
hereunder, and thereupon the resignation or removal of the predecessor Trustee
shall become effective and such successor trustee, without any further act, deed
or conveyance, shall become fully vested with all the rights, powers,
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duties and obligations of its predecessor hereunder, with like effect as if
originally named as Trustee herein. The predecessor Trustee shall deliver to the
successor trustee all documents and statements held by it hereunder; and Seller
and the predecessor Trustee shall execute and deliver such instruments and do
such other things as may reasonably be required for fully and certainly vesting
and confirming in the successor trustee all such rights, powers, duties and
obligations.
(b) No successor trustee shall accept appointment as provided in this
Section 11.8 unless at the time of such acceptance such successor trustee shall
be eligible under the provisions of Section 11.6 hereof.
(c) Upon acceptance of appointment by a successor trustee as provided in
this Section 11.8 hereof, such successor trustee shall mail notice of such
succession hereunder to all Certificateholders at their addresses as shown in
the Certificate Register, and also to each Rating Agency.
Section 11.9 Merger or Consolidation of Trustee. Any Person into which the
----------------------------------
Trustee may be merged or converted or with which it may be consolidated, or any
Person resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any Person succeeding to the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be eligible under the provisions of Section 11.6
hereof, without the execution or filing of any paper or any further act on the
part of any of the parties hereto, anything herein to the contrary
notwithstanding.
Section 11.0 Appointment of Co-Trustee or Separate Trustee. (a)
---------------------------------------------
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust may at the time be located, the Trustee shall have the power and
may execute and deliver all instruments to appoint one or more Persons to act as
a co-trustee or co-trustees, or separate trustee or separate trustees, of all or
any part of the Trust, and to vest in such Person or Persons, in such capacity
and for the benefit of the Certificateholders, such title to the Trust, or any
part thereof, and, subject to the other provisions of this Section 11.10, such
powers, duties, obligations, rights and trusts as the Trustee may consider
necessary or desirable. No co-trustee or separate trustee hereunder shall be
required to meet the terms of eligibility as a successor trustee under Section
11.6 and no notice to Certificateholders of the appointment of any co-trustee or
separate trustee shall be required under Section 11.8 hereof.
(b) Every separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations conferred or imposed
upon the Trustee shall be conferred or imposed upon and exercised or
performed by the Trustee and such separate trustee or co-trustee jointly
(it being understood that such separate trustee or co-trustee is not
authorized to act separately without the Trustee joining in
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such act), except to the extent that under any laws of any jurisdiction in
which any particular act or acts are to be performed (whether as Trustee
hereunder or as successor to the Servicer hereunder), the Trustee shall be
incompetent or unqualified to perform such act or acts, in which event such
rights, powers, duties and obligations (including the holding of title to
the Trust or any portion thereof in any such jurisdiction) shall be
exercised and performed singly by such separate trustee or co-trustee, but
solely at the direction of the Trustee;
(ii) no trustee hereunder shall be liable by reason of any act or
omission of any other trustee hereunder; and
(iii) the Trustee may at any time accept the resignation of or remove
any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article XI. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Trustee or separately, as
may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Servicer.
(d) Any separate trustee or co-trustee may at any time constitute the
Trustee its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect to this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
Section 11.11 Tax Returns. In the event the Trust shall be required to
-----------
file tax returns, the Trustee, as soon as practicable after it is made aware of
such requirement, shall prepare or cause to be prepared and is authorized
hereunder to sign any tax returns required to be filed by the Trust and, to the
extent possible, shall file such returns at least five days before such returns
are due to be filed. Seller shall prepare or shall cause to be prepared all tax
information required by law to be distributed to Certificateholders and shall
deliver such information to the Trustee at least five days prior to the date it
is required by law to be distributed to Certificateholders. The Servicer, upon
request, will furnish the Trustee with all such information known to the
Servicer as may be reasonably required in connection with the preparation of all
tax returns of the Trust. In no event shall the Trustee or the Servicer be
liable for any liabilities, costs or expenses of the Trust, the Investor
Certificateholders or the
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Certificate Owners arising under any tax law, including without limitation
federal, state or local income or excise taxes or any other tax imposed on or
measured by income (or any interest or penalty with respect thereto or arising
from a failure to comply therewith). Nothing in this Section 11.11 shall be
construed as inconsistent with the characterization of the Investor Certificates
as indebtedness of Seller for purposes of federal, state and local income or
franchise taxes and any other tax imposed upon or measured by income, as
expressed in Section 3.7 hereof.
Section 11.12 Trustee May Enforce Claims Without Possession of
------------------------------------------------
Certificates. All rights of action and claims under this Agreement or the
------------
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name as trustee. Any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Certificateholders in respect of which such judgment has
been obtained.
Section 11.13 Suits for Enforcement. If a Servicer Default shall occur and
---------------------
be continuing, the Trustee, in its discretion, may, subject to the provisions of
Section 10.1, proceed to protect and enforce its rights and the rights of the
Certificateholders under this Agreement or any Supplement by a suit, action or
proceeding in equity or at law or otherwise, whether for the specific
performance of any covenant or agreement contained in this Agreement or any
Supplement or in aid of the execution of any power granted in this Agreement or
any Supplement or for the enforcement of any other legal, equitable or other
remedy as the Trustee, being advised by counsel, shall deem most effectual to
protect and enforce any of the rights of the Trustee or the Certificateholders.
Section 11.14 Rights of Certificateholders to Direct Trustee. Holders of
----------------------------------------------
Investor Certificates evidencing Undivided Interests aggregating more than 50%
of the Aggregate Investor Amount (or, with respect to any remedy, trust or power
that does not relate to all Series, 50% of the aggregate unpaid principal amount
of the Investor Certificates of all Series to which such remedy, trust or power
relates) shall have the right to direct the time, method, and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee; provided, however, that, subject to
Section 11.1, the Trustee shall have the right to decline to follow any such
direction if the Trustee being advised by counsel determines that the action so
directed may not lawfully be taken, or if the Trustee in good faith shall, by a
Responsible Officer or Responsible Officers of the Trustee, determine that the
proceedings so directed would be illegal or involve it in personal liability or
be unduly prejudicial to the rights of Certificateholders not parties to such
direction; and provided further that nothing in this Agreement shall impair the
right of the Trustee to take any action deemed proper by the Trustee and which
is not inconsistent with such direction.
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Section 11.15 Representations and Warranties of Trustee. The Trustee
-----------------------------------------
represents and warrants that:
(i) The Trustee is a banking corporation organized, existing and
in good standing under the laws of the State of Illinois;
(ii) The Trustee has full power, authority and right to execute,
deliver and perform this Agreement, and has taken all necessary action to
authorize the execution, delivery and performance by it of this Agreement;
and
(iii) This Agreement has been duly executed and delivered by the
Trustee.
Section 11.16 Maintenance of Office or Agency. The Trustee will maintain
-------------------------------
at its expense in the Borough of Manhattan, The City of New York, an office or
offices or agency or agencies where notices and demands to or upon the Trustee
in respect of the Certificates and this Agreement may be served. The Trustee
initially appoints the office of Harris Trust Company of New York, 77 Water
Street, New York, New York as its office for such purposes in New York. The
Trustee will give prompt written notice to the Servicer and to
Certificateholders of any change in the location of the Certificate Register or
any such office or agency.
Section 11.17 Requests for Agreement. A copy of this Agreement may be
----------------------
obtained by any Certificateholder by a request in writing to the Trustee
addressed to the Corporate Trust Office and will be provided at the expense of
Seller.
ARTICLE XII
TERMINATION
Section 12.1 Termination of Trust. The respective obligations and
--------------------
responsibilities of Seller, the Servicer and the Trustee created hereby (other
than the obligation of the Trustee to make payments to Certificateholders as
hereafter set forth) shall terminate, except with respect to the duties
described in subsections 2.4(c) and 12.3(b), upon the earlier of (i) the day, if
any, designated by Seller after the Distribution Date following the date on
which funds shall have been deposited in the Distribution Account sufficient to
pay the Aggregate Adjusted investor Amount plus Certificate Interest accrued
through such Distribution Date in full and (ii) the day on which final payment
is made under the Certificates (any such day under either the preceding clause
(i) or this clause (ii) is referred to as a "Trust Termination Date"); but in no
event later than the Final Trust Termination Date.
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<PAGE>
Section 12.2 Optional Purchase and Final Trust Termination Date of
-----------------------------------------------------
Investor Certificates.
---------------------
(a) If so provided in any Supplement, Seller may, but shall not be
obligated to, repurchase Investor Certificates of the related Series by
depositing into the Distribution Account, on the Transfer Date that is on or
immediately preceding the Distribution Date specified in such Supplement, the
amount so specified therein; provided, however, that if the long-term unsecured
debt obligations of Seller are not rated at least Baa-3 by Moody's and BBB- by
Standard & Poor's at the time of such purchase, such purchase shall not occur
unless Seller shall deliver an opinion of Counsel reasonably acceptable to the
Trustee that such purchase of Investor Certificates would not constitute a
fraudulent conveyance by Seller. On the Distribution Date that is on or
following the Transfer Date on which such deposit is made, Seller shall be
deemed, automatically and without requirement for any act on the part of Seller,
or of any other Person, to have acquired all outstanding Certificates and to
have retired the Certificates, thereby resulting in an increase in the Seller
Amount. If so provided in any Supplement, Seller may replace the Investor
Certificates of such Series with a Replacement Series; provided that Seller
shall follow the procedures set forth in related Supplement.
(b) The entire Aggregate Investor Amount shall be due and payable no later
than the Series Termination Date with respect to any Series. If on the
Determination Date in the second month immediately preceding the month in which
the Final Trust Termination Date occurs (after giving effect to all transfers,
withdrawals, deposits and drawings to occur on the next Transfer Date and the
payment of principal on the Investor Certificates of such Series to be made on
the related Distribution Date pursuant to Article IV), the Investor Amount with
respect to such Series would be greater than zero, the Servicer shall sell,
dispose of, or otherwise liquidate, in a commercially reasonable manner and on
commercially reasonable terms (which shall include the solicitation of
competitive bids from Persons who are not Affiliates of Seller), within 30 days
of such Determination Date, an amount of Receivables equal to (i) 110% of the
Investor Amount with respect to such Series determined as of the date of such
sale, disposition or liquidation provided, however, that the Servicer shall give
Seller at least 10 days advance written notice of such sale, disposition or
other liquidation. Seller shall have the option, exercisable at any time after
the Servicer has obtained an offer from any Person that is not an Affiliate of
Seller and prior to the consummation of such sale, disposition or liquidation by
giving notice of the exercise thereof to the Servicer, to purchase such
Receivables for cash (payable immediately payable funds on the Series
Termination Date) for the lesser of (i) 100% of the amount of such Receivables,
or (ii) the highest price offered therefor pursuant to such proposed sale,
disposition or other liquidation. The proceeds received upon the sale,
disposition or other liquidation of such Receivables in an amount up to (i) the
Investor Amount with respect to such Series on the Series Termination Date, plus
(ii) unpaid interest thereon as of the Series Termination Date with respect to
such Series, less (iii) amounts on deposit on such date in the Series Accounts
with respect to such Series, shall be deposited into the Distribution Account on
the Series Termination Date with respect to such Series, and shall be
distributed to the Holders of the Investor Certificates of such Series
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<PAGE>
in final payment thereof pursuant to the terms of Section 12.3. Proceeds
received in excess of the amount to be deposited as aforesaid shall be treated
as Collections on the Receivables and shall be allocated and deposited in
accordance with the provisions of Article IV; provided that the Servicer shall
determine conclusively the amount of such proceeds which are allocable to
Finance Charge Receivables and the amount of such proceeds which are allocable
to Principal Receivables. In the event that the proceeds received upon the sale,
disposition or other liquidation of such Receivables is less than the sum of (i)
the Investor Amount with respect to any Series on the Series Termination Date
with respect to such Series and (ii) unpaid interest thereon as of such Series
Termination Date, less (iii) amounts on deposit on such date in Series Accounts
with respect to such Series, the Servicer will make a withdrawal or drawing or
take other action permitted by any applicable Enhancement, and shall deposit all
amounts thereby obtained in the Distribution Account on such Series Termination
Date, and the amount so withdrawn shall be distributed to the Holders of
Investor Certificates of such Series in final payment thereof pursuant to the
terms of Section 12.3; provided, that if the Servicer fails to make such
withdrawal or drawing or take such other action, then the Trustee may make such
withdrawal and deposit such amounts into the Distribution Account.
(c) The amount deposited pursuant to subsections 12.2(a) and 12.2(b) shall
be paid to the Investor Certificateholders in the manner provided in Section
12.3.
Section 12.3 Final Distributions. (a) Written notice of any termination,
-------------------
specifying the Distribution Date upon which the Investor Certificateholders may
surrender their Certificates for payment of the final distribution and
cancellation (unless otherwise specified in a Supplement), shall be given
(subject to at least two days' prior notice from the Servicer to the Trustee) by
the Trustee to Investor Certificateholders mailed not later than the fifth day
of the month of such final distribution specifying (a) the Distribution Date
(which shall be the Distribution Date in the month in which the deposit is made
pursuant to subsection 2.4(e), 12.1 or 12.2.(a)) upon which final payment of the
Investor Certificates will be made upon presentation and surrender of Investor
Certificates (unless otherwise specified in a Supplement) at the office or
offices therein designated, (b) the amount of any such final payment and (c)
that the Record Date otherwise applicable to such Distribution Date is not
applicable, payments being made only upon presentation and surrender of the
Investor Certificates at the office or offices therein specified (unless
otherwise specified in a Supplement). The Servicer's notice to the Trustee in
accordance with the preceding sentence shall be accompanied by an Officer's
Certificate setting forth the information specified in Section 3.5 covering the
period during the then current calendar year through the date of such notice.
The Trustee shall give such notice to the Transfer Agent and Registrar and the
Paying Agent at the time such notice is given to Investor Certificateholders.
(b) All funds on deposit in the Distribution Account, in the case of a
final payment, pursuant to Section 12.2 and, in the case of a termination of the
Trust, pursuant to Section 12.1 (and notwithstanding such termination), shall
continue to be held in trust for the benefit of the Certificateholders and the
Paying Agent or the Trustee shall pay such funds to the appropriate
Certificateholders upon surrender of their Certificates (unless otherwise
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<PAGE>
specified in a Supplement). In the event that all of the Investor
Certificateholders shall not surrender their Certificates for cancellation
within six months after the date specified in the above-mentioned written
notice, the Trustee shall give a second written notice to the remaining Investor
Certificateholders to surrender their Certificates for cancellation and receive
the final distribution with respect thereto. If within one year after the second
notice all the Investor Certificates shall not have been surrendered for
cancellation, the Trustee may take appropriate steps, or may appoint an agent to
take appropriate steps, to contact the remaining Investor Certificateholders
concerning surrender of their Certificates, and the cost thereof shall be paid
out of the funds in the Distribution Account held for the benefit of such
Investor Certificateholders.
Section 12.4 Termination Rights of the Holder of the Exchangeable Seller
-----------------------------------------------------------
Certificate. Upon the termination of the Trust pursuant to Section 12.1 and the
-----------
surrender of the Exchangeable Seller Certificate, the Trustee shall return to
the Holder of the Exchangeable Seller Certificate (without recourse,
representation or warranty) all right, title and interest of the Trust in, to
and under the Receivables, whether then existing or thereafter created, and all
monies due or to become due with respect thereto (including all accrued interest
theretofore posted as Finance Charge Receivables), all proceeds thereof and
Insurance Proceeds relating thereto except for amounts held by the Trustee
pursuant to subsection 12.3(b). The Trustee shall execute and deliver such
instruments of transfer, in each case without recourse, as shall be reasonably
requested by the Holder of the Exchangeable Trust Certificate to vest in the
Holder of the Exchangeable Trust Certificate all right, title and interest which
the Trust had in the Receivables.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 13.1 Amendment. (a) This Agreement or any Supplement may be
---------
amended from time to time by the Servicer, Seller and the Trustee, without the
consent of any of the Certificateholders, 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 arising under this Agreement which shall not be inconsistent with the
provisions of this Agreement; provided, however, that such action shall not, as
evidenced by an Opinion of Counsel reasonably acceptable to the Rating Agencies,
adversely affect in any material respect the interests of the
Certificateholders. The Trustee may, but shall not be obligated to, enter into
any such amendment which affects the Trustee's rights, duties or immunities
under this Agreement or otherwise. No Transfer Agreement or Retransfer
Agreement regarding the addition or removal of Receivables from the Trust as
provided in Sections 2.6 and 2.7, respectively, executed in accordance with the
provisions hereof, shall be considered amendments to this Agreement.
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<PAGE>
(b) This Agreement or any Supplement may also be amended from time to time
by the Servicer, Seller and the Trustee with the consent of the Holders of
Investor Certificates evidencing Undivided Interests aggregating more than 50%
of the Investor Amount of each Series adversely affected, for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or any Supplement or modifying in any manner the
rights of the Investor Certificateholders of any Series then issued and
outstanding; provided, however, that no such amendment shall (i) reduce in any
manner the amount of, or delay the timing of, distributions which are required
to be made on any Investor Certificate of such Series without the consent of the
Holder of such Certificate, (ii) change the definition of or the manner of
calculating the Investor Amount, the Investor Percentage or the Investor Default
Amount of such Series without the consent of each Investor Certificateholder
adversely affected thereby, or (iii) reduce the aforesaid percentage required to
consent to any such amendment, without the consent of each Investor
Certificateholder of all Series affected.
(c) Notwithstanding anything in this Section 13.1 to the contrary, the
Supplement with respect to any Series may be amended on the terms and in
accordance with the procedures provided in such Supplement.
(d) Promptly after the execution of any such amendment or consent the
Trustee shall furnish written notification of the substance of such amendment to
each Rating Agency providing a rating for such Series.
(e) It shall not be necessary for the consent of Investor
Certificateholders under this Section 13.1 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 Investor Certificateholders shall be
subject to such reasonable requirements as the Trustee may prescribe.
Section 13.2 Protection of Right, Title and Interest to Trust. (a) The
------------------------------------------------
Servicer shall cause this Agreement, all amendments hereto and/or all financing
statements and continuation statements and any other necessary documents
covering the Certificateholders and the Trustee's right, title and interest to
the Trust 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 Trustee hereunder to all property comprising the Trust. The
Servicer shall deliver to the Trustee file-stamped copies of, or filing receipts
for, any document recorded, registered or filed as provided above, as soon as
available following such recording, registration or filing. Seller shall
cooperate fully with the Servicer in connection with the obligations set forth
above and will execute any and all documents reasonably required to fulfill the
intent of this Section 13.2(a).
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(b) Within 30 days after 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) above seriously misleading
within the meaning of Section 9-402(8) of the UCC as in effect in the state
where such financing statement or continuation statement was filed, Seller shall
give the Trustee and the Rating Agencies notice of any such change and shall
file such financing statements or amendments as may be necessary to continue the
perfection of the Trust's security interest in the Receivables and the proceeds
thereof.
(c) The Servicer will give the Trustee prompt written notice of any
relocation of any office from which it services Receivables or keeps records
concerning the Receivables or of its principal executive office and whether, as
a result of such relocation, 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 continue the perfection of the
Trust's security interest in the Receivables and the proceeds thereof. The
Servicer will at all times maintain each office from which it services
Receivables and its principal executive office within the United States of
America.
(d) The Servicer will deliver to the Trustee: (i) upon the execution and
delivery of each amendment of Articles I, II, III or IV hereto other than
amendments pursuant to subsection 13.1(a) an Opinion of Counsel substantially in
the form of Exhibit G; and (ii) on or before April 15 of each year, beginning
---------
with April 15, 1996 an Opinion of Counsel, dated as of a date during the
preceding 90-day period, substantially in the form of Exhibit H.
---------
Section 13.3 Limitation on Rights of Certificateholders. (a) The death or
------------------------------------------
incapacity of any Certificateholder shall not operate or terminate this
Agreement or the Trust, nor shall such death or incapacity entitle such
Certificateholder's legal representatives or heirs to claim an accounting or to
take any action or commence any proceeding in any court for a partition or
winding up of the Trust, nor otherwise affect the rights, obligations and
liabilities of the parties hereto or any of them.
(b) No Certificateholder shall have any right to vote (except with respect
to the Investor Certificateholders as provided in Section 13.1 hereof) or in any
manner otherwise control the operation and management of the Trust, or the
obligations of the parties hereto, nor shall anything herein set forth, or
contained in the terms of the Certificates, be construed so as to constitute the
Certificateholders from time to time as partners or members of an association;
nor shall any Certificateholder be under any liability to any third person by
reason of any action taken by the parties to this Agreement pursuant to any
provision hereof.
(c) No Certificateholder shall have any right by virtue of any provisions
of this Agreement to institute any suit, action or proceeding in equity or at
law upon or under or with respect to this Agreement, unless such
Certificateholder previously shall have given to the Trustee, and unless the
Holders of Certificates evidencing Undivided Interests aggregating
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<PAGE>
more than 50% of the Investor Amount of any Series affected shall have made
written request upon the Trustee to institute such action, suit or proceeding in
its own name as Trustee hereunder and shall have offered to the Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee, for 60 days
after its receipt of such notice, request and offer of indemnity, shall have
neglected or refused to institute any such action, suit or proceeding; it being
understood and intended, and being expressly covenanted by each
Certificateholder with every other Certificateholder and the Trustee, that no
one or more certificateholders shall have the right in any manner whatever by
virtue or by availing itself or themselves of any provisions of this Agreement
to affect, disturb or prejudice the rights of the Certificateholders of any
other of the Certificates, or to obtain or seek to obtain priority over or
preference to any other such Certificateholder, or to enforce any right under
this Agreement, except in the manner herein provided and for the equal, ratable
and common benefit of all Certificateholders. For the protection and enforcement
of the provisions of this Section 13.3, each and every Certificateholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.
Section 13.4 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 the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
Section 13.5 Notices. All demands, notices and communications hereunder
-------
shall be in writing and shall be deemed to have been duly given if personally
delivered at or mailed by registered mail, return receipt requested, to (a) in
the case of the Servicer, to First Consumers National Bank, P.O. Box 5280,
Portland, Oregon 97208, Attn: President, (b) in the case of Seller, to Spiegel
Credit Corporation III, 400 West 9th Street, Suite 101B, Wilmington, Delaware
19801, Attn: Treasurer, (c) in the case of the Trustee, to the Corporate Trust
Office, Attn: Indenture Trust Division, (d) in the case of the Enhancement
Provider for a particular Series the address, if any, specified in the
Supplement relating to such Series, (e) in the case of Moody's, to Moody's
Investor Services, Inc., 99 Church Street, New York, New York 10007, Attn: ABS
Monitoring Department, 4th Floor, and (f) in the case of Standard & Poor's, to
Standard & Poor's Ratings Group, 25 Broadway, New York, New York 10004,
Attention: Structured Finance Surveillance; or, as to each party, at such other
address as shall be designated by such party in a written notice to each other
party. Any notice required or permitted to be mailed to a Certificateholder
shall be given by first class mail, postage prepaid, at the address of such
Certificateholder as shown in the Certificate 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 Certificateholder receives such notice.
Section 13.6 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 covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no
84
<PAGE>
way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or rights of the Certificateholders thereof or
any Enhancement Provider.
Section 13.7 Rule 144A Information. For so long as any of the Investor
---------------------
Certificates of any Series or any Class are restricted securities within the
meaning of Rule 144(a)(3) under the Securities Act of 1933 each of the Seller,
the Servicer and the Trustee agree to cooperate with each other to provide to
any Investor Certificateholders of such Series or Class and to any prospective
purchaser of Certificates designated by such an Investor Certificateholder upon
the request of such Investor Certificateholder 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 Act.
Section 13.8 Certificates Nonassessable and Fully Paid. It is the
-----------------------------------------
intention of the parties to this Agreement that the Certificateholders shall not
be liable for obligations of the Trust, that the Undivided Interests represented
by the Certificates shall be nonassessable for any losses or expenses of the
Trust or for any reason whatsoever, and that Certificates upon authentication
thereof by the Trustee pursuant to Sections 2.1 and 6.2 are and shall be deemed
fully paid.
Section 13.9 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 Trustee more fully to effect
the purposes of this Agreement, including, without limitation, 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 13.10 No Waiver: Cumulative Remedies. No failure to exercise and
------------------------------
no delay in exercising, on the part of the Trustee or the Investor
Certificateholders, any right, remedy, power or privilege hereunder, shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exhaustive of any rights, remedies, powers and privileges provided by law.
Section 13.11 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 13.12 Third-Party Beneficiaries. This Agreement shall inure to the
-------------------------
benefit of and be binding upon the parties hereto, the Certificateholders and,
to the extent provided in any Supplement, to the Enhancement Provider named
therein, and their respective successors and permitted assigns. Except as
otherwise provided in this Article XIII, no other person will have any right or
obligation hereunder.
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Section 13.13 Actions by Certificateholders. (a) Wherever in this
-----------------------------
Agreement a provision is made that an action may be taken or a notice, demand or
instruction given by Investor Certificateholders, such action, notice or
instruction may be taken or given by any Investor Certificateholder, unless such
provision requires a specific percentage of Investor Certificateholders.
(b) Any request, demand, authorization, direction, notice, consent, waiver
or other act by a Certificateholder shall bind such Certificateholder and every
subsequent holder of such Certificate 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 Trustee, Seller or the Servicer in reliance
thereon, whether or not notation of such action is made upon such Certificate.
Section 13.14 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 13.15 No Bankruptcy Petition. Each of each Certificateholder and
----------------------
the Trustee, 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 Investor Certificates, it will not institute against, or join any other
Person in instituting against, the Seller or the 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 13.15 shall preclude, or be deemed to
estop, any Certificateholder or the Trustee 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 or the Trust under or pursuant
to any such law or (ii) any involuntary case or proceeding pertaining to the
Seller or the Trust under or pursuant to any such law.
Section 13.16 Headings. The headings herein are for purposes of reference
--------
only and shall not otherwise affect the meaning or interpretation of any
provision hereof.
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers as of the day and year first above
written.
SPIEGEL CREDIT CORPORATION III
By:_________________________________
Title:
FIRST CONSUMER NATIONAL BANK
By:_________________________________
Title:
HARRIS TRUST AND SAVINGS BANK
By:_________________________________
Title:
87
<PAGE>
SCHEDULE 1
to
AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT
LIST OF ACCOUNTS
Delivered to Trustee only
As contained on an Appropriately Labeled Computer Record
Delivered Contemporaneously with this Agreement.
Aggregate Receivables as of the Cut Off Date: $_______________
Aggregate Principal Receivables
as of the Cut Off Date: $_______________
<PAGE>
EXHIBIT A
to
AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT
FORM OF EXCHANGEABLE SELLER CERTIFICATE
No. ___ One Unit
SPIEGEL MASTER TRUST
EXCHANGEABLE SELLER CERTIFICATE
This Certificate represents a fractional undivided interest
-----------------------------------------------------------
in the Spiegel Master Trust
---------------------------
Evidencing an undivided interest in a trust, the corpus of which consists of a
portfolio of receivables created under charge accounts originated by First
Consumers National Bank ("FCNB") or Spiegel, Inc. ("Spiegel") and other assets
and interests constituting the trust under the Amended and Restated Pooling and
Servicing Agreement described below.
(Not an interest in or obligation of
FCNB or Spiegel)
This certifies that SPIEGEL CREDIT CORPORATION III ("SCC") is the registered
owner of an undivided interest in a trust (the "Trust"), the corpus of which
consists of a portfolio of receivables (the "Receivables") now existing or
hereafter created under selected charge accounts originated by FCNB or Spiegel
and acquired by SCC from FCNB and Spiegel Acceptance Corporation ("SAC")
pursuant to a Receivables Purchase Agreement, dated as of September 20, 1994,
among SCC, FCNB and SAC and transferred by SCC to the Trust, all monies due or
to become due with respect thereto and the other assets and interest
constituting the Trust pursuant to an Amended and Restated Pooling and Servicing
Agreement, dated as of December 13, 1994 (the "Pooling and Servicing
Agreement"), by and among SCC, FCNB and Harris Trust and Savings Bank, as
trustee.
To the extent not defined herein, the capitalized terms used herein have the
meaning assigned in the Pooling and Servicing Agreement. This Certificate is
issued under and is subject to the terms, provisions and conditions of the
Pooling and Servicing Agreement, to which Pooling and Servicing Agreement, as
amended from time to time, the holder of this Certificate by virtue of the
acceptance hereof assents and by which the holder of this Certificate is bound.
This Certificate is the Exchangeable Seller Certificate, which represents an
undivided interest in the Trust, including the right to receive the Collections
and other amounts at the times and in the amounts specified in the Pooling and
Servicing Agreement to be paid to the Holder of the Exchangeable Seller
Certificate. In addition to this Certificate, Investor Certificates will
1
<PAGE>
be issued to investors pursuant to the Pooling and Servicing Agreement, each of
which will represent an undivided interest in the Trust.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed under its official seal.
HARRIS TRUST AND SAVINGS BANK,
as Trustee
By:______________________________
Vice President
[Seal]
Attested to:
By: ___________________________
Assistant Secretary
Date:
2
<PAGE>
EXHIBIT B
to
AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT
FORM OF TRANSFER AGREEMENT OF
-----------------------------
RECEIVABLES IN ADDITIONAL ACCOUNTS
----------------------------------
ASSIGNMENT No.___ of RECEIVABLES IN ADDITIONAL ACCOUNTS, dated as of
___________, _______ (this "Assignment"), by and between Spiegel Credit
Corporation III, a Delaware corporation (the "Transferor"), to Harris Trust and
Savings Bank, a banking corporation organized and existing under the laws of
Illinois (the "Trustee") pursuant to the Pooling and Servicing Agreement
referred to below.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Transferor and the Trustee are parties to the Amended and
Restated Pooling and Servicing Agreement, dated as of December 13, 1994
(hereinafter as such agreement may have been, or may from time to time be,
amended, supplemented or otherwise modified, the "Pooling and Servicing
Agreement");
WHEREAS, pursuant to the Pooling and Servicing Agreement, the Transferor
wishes to designate Additional Accounts of the Transferor to be included as
Accounts and to convey the Receivables of such Additional Accounts, whether now
existing or hereafter created, to the Trust as part of the corpus of the Trust
(as each such term is defined in the Pooling and Servicing Agreement); and
WHEREAS, the Trustee is willing to accept such designation and conveyance
subject to the terms and conditions hereof;
NOW THEREFORE, the Transferor and the Trustee hereby agree as follows:
1. Defined Terms. All terms defined in the Pooling and Servicing
-------------
Agreement and used herein shall have such defined meanings when used herein,
unless otherwise defined herein.
"Addition Date" shall mean, with respect to the Additional Accounts
designated hereby, _____________, 19__.
"Notice Date" shall mean, 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. The Transferor shall deliver or
----------------------------------
cause to be delivered to the Trustee not later than the Addition Date, a
computer file or microfiche list
1
<PAGE>
containing a true and complete list of each charge account which as of the
Addition Date shall be deemed to be an Additional Account, such accounts being
identified by account number and by Receivable balance as of the close of
business on the Addition Date. Such list shall be marked as Schedule 1 to this
Assignment and, as of the Addition Date, shall be incorporated into and made a
part of this Assignment.
3. Conveyance of Receivables. (a) The Transferor does hereby transfer,
-------------------------
assign, set-over and otherwise convey to the Trust for the benefit of the
Certificateholders, without recourse on and after the Addition Date, all right,
title and interest of the Transferor in and to the Receivables now existing and
hereafter created in the Additional Accounts designated hereby, all monies due
or to become due with respect thereto (including all Finance Charge
Receivables), all Collections, Recoveries and other proceeds of such Receivables
and Insurance Proceeds relating thereto.
(b) In connection with such transfer, unless a financing statement
covering such Receivables has heretofore been filed, the Transferor agrees to
record and file, at its own expense, a financing statement with respect to the
Receivables now existing and hereafter created in the Additional Accounts
designated hereby (which may be a single financing statement with respect to all
such Receivables) for the transfer of accounts as defined in Section 9-106 of
the UCC as in effect in the State of Illinois meeting the requirements of
applicable state law in such manner and such jurisdictions as are necessary to
perfect the assignment of such Receivables to the Trust, and to deliver a file-
stamped copy of such financing statement or other evidence of such filing (which
may, for purposes of this Section 3, consist of telephone confirmation of such
filing) to the Trustee on or prior to the date of this Assignment.
(c) in connection with such transfer, the Transferor further agrees, at
its own expense, on or prior to the date of this Assignment to indicate or cause
to be indicated in its books and records and in the computer files of the
Receivables that Receivables created in connection with the Additional Accounts
designated hereby have been transferred to the Trust pursuant to this Assignment
for the benefit of the Certificateholders.
4. Acceptance by Trustee. The Trustee hereby acknowledges its acceptance
---------------------
on behalf of the Trust of all right, title and interest previously held by the
Transferor in and to the Receivables now existing and hereafter created, and
declares that it shall maintain such right, title and interest, upon the trust
set forth herein and in the Pooling and Servicing Agreement, for the benefit of
all Certificateholders. The Trustee further acknowledges that, prior to or
contemporaneously with the execution and delivery of this Assignment, the
Transferor delivered to the Trustee the computer file or microfiche list
described in Section 2 of this Assignment.
5. Representations and Warranties of the Transferor. The Transferor
------------------------------------------------
hereby represents and warrants to the Trust as of the Addition Date:
2
<PAGE>
(a) Legal Valid and Binding Obligation. This Assignment constitutes
----------------------------------
a legal, valid and binding obligation of the Transferor enforceable against
the Transferor in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect affecting the
enforcement of creditors' rights in general and the rights of creditors of
national banking associations and except as such enforceability may be
limited by general principles of equity (whether considered in a suit at
law or in equity);
(b) Schedule 1. Schedule 1 to this Assignment and the computer file
----------
or microfiche list delivered pursuant to Section 2 of this Assignment is an
accurate and complete listing in all material respects of all the
Additional Accounts as of the Addition Date and the information contained
therein with respect to the identity of such Additional Accounts and the
Receivables existing thereunder is true and correct in all material
respects as of the Addition Date;
(c) Eligibility of Accounts. Each Additional Account designated
-----------------------
hereby is an Eligible Account;
(d) Selection Procedures. No selection procedures believed by the
--------------------
Transferror to be materially adverse to the interests of the Investor
Certificateholders were utilized in selecting the Additional Accounts
designated hereby;
(e) Insolvency. The Transferor 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 Trust of all right, title and interest of
the Transferor 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 Trust free and clear of any Lien of
any Person except for (x) Liens permitted under Section 2.5(b) of the
Pooling and Servicing Agreement, (y) the interest of the Transferor as
holder of the Exchangeable Seller Certificate and (z) the Transferor's
right to receive interest accruing on, and investment earnings in respect
of, the Collection Subaccount and Series Account as provided in the Pooling
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 Trust, 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 Trust, and which
will be enforceable with respect to the Receivables thereafter created in
respect of the
3
<PAGE>
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 Trust 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 Trust shall have a first priority perfected
security interest in such property, except for Liens permitted under
subsection 2.5(b) of the Pooling and Servicing Agreement, the interest of
the Transferor as holder of the Exchangeable Seller Certificate and the
Transferor's right to receive interest accruing on, and investment earnings
in respect of, the Collection Subaccount and any Series Account as provided
in the Pooling and Servicing Agreement.
(g) Notice has been given to each Rating Agency and to each
Enhancement Provider as required under Section 2.6(d) of the Pooling and
Servicing Agreement.
6. Conditions Precedent. The acceptance of the Trustee set forth in
--------------------
Section 4 above and the amendment of the Pooling 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 Transferor shall have delivered to
---------------------
the Trustee a certificate of a Vice President or more senior officer,
certifying that [(i) as of the date of the Addition Date, the aggregate
amount of Principal Receivables of the Accounts plus the aggregate amount
of Principal Receivables of the Additional Accounts designated hereby does
not exceed the aggregate amount of Principal Receivables of the Accounts as
of the Cut Off Date; (ii)] all requirements set forth in Section 2.6 of the
Pooling and Servicing Agreement for designating Additional Accounts and
conveying the Principal Receivables of such Accounts, whether now existing
or hereafter created, have been satisfied and (iii) each of the
representations and warranties made by the Transferor in Section 5 is true
and correct as of the Addition Date. The Trustee may conclusively rely on
such Officer's Certificate, shall have no duty to make inquiries with
regard to the matters set forth therein, and shall incur no liability in so
relying.
(b) Opinion of Counsel. The Transferor shall have delivered to the
------------------
Trustee an Opinion of Counsel with respect to the Additional Accounts
designated hereby substantially in the form of Exhibit C to the Pooling and
Servicing Agreement.
(c) Additional Information. The Transferor shall have delivered to
----------------------
the Trustee such information as was reasonably requested by the Trustee to
satisfy itself as to the
4
<PAGE>
accuracy of the representation and warranty set forth in Section 5(d) to
this Assignment.
7. Amendment of the Pooling and Servicing Agreement. The Pooling and
------------------------------------------------
Servicing Agreement is hereby amended to provide that all references therein to
the "Pooling and Servicing Agreement", to "this Agreement" and "herein" shall be
deemed from and after the Addition Date to be a dual reference to the Pooling
and Servicing Agreement as supplemented by this Assignment. Except as expressly
amended hereby, all of the representations, warranties, terms, covenants and
conditions of the Pooling 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 Pooling 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.
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
By:________________________________
Title:_____________________________
HARRIS TRUST AND SAVINGS BANK,
as Trustee
By:________________________________
Title:_____________________________
<PAGE>
Schedule 1
to Assignment of Receivables
in Additional Accounts
ADDITIONAL ACCOUNTS
-------------------
7
<PAGE>
EXHIBIT C
to
AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT
PROVISIONS TO BE INCLUDED IN
OPINION OF COUNSEL TO BE
DELIVERED PURSUANT TO
SUBSECTION 2.6(c)(vii) OF THE
AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT
The opinions set forth below may be subject to certain qualifications,
assumptions, limitations and exceptions taken or made in the opinion of Seller's
counsel with respect to similar matters delivered on the Initial Closing Date.
(i) The Assignment has been duly authorized, executed and delivered by
Seller and constitutes the legal, valid and binding agreement of Seller,
enforceable against Seller in accordance with its terms.
(ii) If the Assignment constitutes a valid transfer and assignment of the
Receivables in the Additional Accounts, Financing Statements having been filed
in the offices of the Secretaries of State of the States of Delaware, Illinois
and Oregon, the Trustee has acquired (based upon certificates of Seller to the
effect that (a) Seller acquired the Receivables pursuant to the Receivables
Purchase Agreement, (b) Seller has not transferred any interest in the
Receivables other than to the Trustee or caused any lien to be imposed upon the
Receivables, and (c) Seller will acquire pursuant to the Receivables Purchase
Agreement all Receivables subsequently created in the Additional Accounts) free
and clear of any Lien or interest of any Person except for (x) Liens permitted
under subsection 2.5(b) of the Pooling and Servicing Agreement, (y) the interest
of the Holder of the Exchangeable Seller Certificate, and (z) Seller's right to
receive interest accruing on, and investment earnings in respect of, the
Collection Subaccounts and the Collection Sub-subaccounts as provided in the
Amended and Restated Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement")) all right, title and interest of Seller in the Trust Property free
and clear of any Lien or interest of any Person, except for (x) Liens permitted
under subsection 2.5(b) of the Pooling and Servicing Agreement, (y) the interest
of the Holder of the Exchangeable Seller Certificate, and (z) Seller's right to
receive interest accruing on, and investment earnings in respect of, the
Collection Subaccounts and the Collection Sub-subaccounts as provided in the
Pooling and Servicing Agreement.
(iii) If the Assignment does not constitute a valid transfer and assignment
of the Receivables in the Additional Accounts, the Pooling and Servicing
Agreement as amended by the Assignment creates a valid security interest in
favor of the Trustee for the benefit of the Investor Certificateholders in such
Receivables. The Financing Statements having been filed in the Offices of the
Secretaries of State of the States of Delaware, Illinois and Oregon, the
1
<PAGE>
Trust, for the benefit of the Investor Certificateholders has a first priority
perfected security interest in the Receivables now existing and hereafter
created in the Additional Accounts and all monies due or to become due with
respect thereto, including the proceeds thereof. Such perfection and priority of
the Trustee for the benefit of the Investor Certificateholders in such
Receivables, and the proceeds thereof, would not be affected by an increase or
decrease in the relative interests in the Receivables of the Holder of the
Exchangeable Seller Certificate and of the Investor Certificateholders. Such
perfection and priority would be enforceable against Seller notwithstanding the
insolvency of Seller, except that such counsel need express no opinion as to the
effect of Section 9-306(4) of the UCC as in effect in the State of Illinois with
respect to Proceeds held by Seller upon its insolvency.
(iv) No filings or other action, other than the filing of the financing
statement(s) referred to in such opinion (the "Financing Statements") with
respect to the Trust's security interest in such Receivables and the proceeds
thereof, in the Offices of the Secretaries of State of the States of Delaware,
Illinois and Oregon, are necessary to perfect or continue the perfected status
of the security or other interest of the Trust in the Receivables of the
Additional Accounts designated by the Assignment, and the proceeds thereof,
against third parties, except that appropriate continuation statements with
respect to the Financing Statements be filed at five-year intervals to continue
the perfection of such security interest.
(v) In the course of such counsel's representation of Seller in
connection with this matter, and without independent investigation, such counsel
has not become aware of (a) any type of right, lien or interest of any
government or agency or instrumentality thereof or any lien arising by operation
of law which might be asserted against the Receivables in the Additional
Accounts designated by the Assignment or the proceeds thereof in particular
circumstances other than a tax lien or a lien arising under ERISA, (b) any such
right, lien or interest which has been so asserted, or (c) any lien arising by
operation of law or any attachment or execution lien which has been asserted
against the Receivables of the Additional Accounts designated by the Assignment
or the proceeds thereof.
(vi) The transfer of the Receivables in the Additional Accounts to the
Trust would not constitute a fraudulent conveyance of Seller; provided, that
this opinion numbered (vi) need not be delivered if the short-term unsecured
debt obligations of FCNB are rated at the time of such transfer at least P-3 by
Moody's.
(vii) Based on certificates of Seller to the effect of the following, to
the best of the knowledge of counsel, (a) Seller acquired the Receivables
pursuant to the Receivables Purchase Agreement, (b) Seller has not transferred
any interest in the Receivables other than to the Trustee or caused any lien to
be imposed upon the Receivables, and (c) Seller will acquire pursuant to the
Receivables Purchase Agreement all Receivables subsequently created in the
Additional Accounts) free and clear of any Lien or interest of any Person except
for (x) Liens permitted under subsection 2.5(b) of the Pooling and Servicing
Agreement, (y) the interest of the Holder of the Exchangeable Seller
Certificate, and (z) Seller's right to receive
2
<PAGE>
interest accruing on, and investment earnings in respect of, the Collection
Subaccounts and the Collection Sub-subaccounts as provided in the Pooling and
Servicing Agreement.
3
<PAGE>
EXHIBIT D
to
AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT
FORM OF RETRANSFER AGREEMENT
----------------------------
TRANSFER NO. __ OF RECEIVABLES (this "Retransfer Agreement"), dated as of
______, 199_, by and between SPIEGEL CREDIT CORPORATION III, a Delaware
corporation (the "Transferor"), and HARRIS TRUST AND SAVINGS BANK, a banking
corporation organized and existing under the laws of Illinois (the "Trustee"),
pursuant to the Pooling and Servicing Agreement referred to below.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Transferor and the Trustee are parties to the Amended and
Restated Pooling and Servicing Agreement, dated as of December 13, 1994
(hereinafter as such agreement may have been, or may from time to time be,
amended, supplemented or otherwise modified, the "Pooling and Servicing
Agreement");
WHEREAS, pursuant to the Pooling and Servicing Agreement, the Transferor
wishes to remove all Receivables from certain designated Accounts of the
Transferor (the "Removed Accounts") and to cause the Trustee to reconvey the
Receivables of such Removed Accounts, whether now existing or hereafter created,
from the Trust to the Transferor (as each such term is defined in the Pooling
and Servicing Agreement); and
WHEREAS, the Trustee 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 Transferor and the Trustee hereby agree as follows:
1. Defined Terms. All terms defined in the Pooling and Servicing
--------------
Agreement and used herein shall have such defined meanings when used herein,
unless otherwise defined herein.
"Removal Date" shall mean, with respect to the Removed Accounts
designated hereby, 199_.
"Removal Notice Date" shall mean, with respect to the Removed Accounts
designated hereby, _________________ (which shall be a date on or prior to
the fifth Business Day prior to the Removal Date).
1
<PAGE>
2. Designation of Removed Accounts. The Transferor shall deliver to the
-------------------------------
Trustee, not later than three Business Days after the Removal Date, a computer
file or microfiche list containing a true and complete list of each charge
account which as of the Removal Date shall be deemed to be a Removed Account,
such accounts being identified by account number and by Receivable balance as of
the close of business on the Removal Notice Date. Such list shall be marked as
Schedule 1 to this Retransfer Agreement and shall be incorporated into and made
a part of this Retransfer Agreement as of the Removal Date.
3. Conveyance of Receivables. (a) The Trustee does hereby transfer,
-------------------------
assign, set-over and otherwise convey to the Transferor, without recourse on and
after the Removal Date, all right, title and interest of the Trust in and to the
Receivables now existing and hereafter created in the Removed Accounts
designated hereby, all monies due or to become due with respect thereto
(including all Finance Charge Receivables), all Collections, Recoveries and
other proceeds (as defined in Section 9-306 of the UCC as in effect in the State
of Illinois) of such Receivables and Insurance Proceeds relating thereto.
(b) In connection with such transfer, the Trustee agrees to execute and
deliver to the Transferor on or prior to the date of this Retransfer Agreement,
a termination statement with respect to the Receivables now existing and
hereafter created in the Removed Accounts designated hereby (which may be a
single termination statement with respect to all such Receivables) evidencing
the release by the Trust of its lien on the Receivables in the Removed Accounts,
and meeting the requirements of applicable state law, in such manner and such
jurisdictions as are necessary to remove such lien.
4. Acceptance by Trustee. The Trustee hereby acknowledges that, prior to
---------------------
or contemporaneously with the execution and delivery of this Retransfer
Agreement, the Transferor delivered to the Trustee the computer file or
microfiche list described in Section 2 of this Retransfer Agreement.
5. Representations and Warranties of the Transferor. The Transferor
------------------------------------------------
hereby represents and warrants to the Trust as of the Removal Date:
a. Legal Valid and Binding Obligation. This Retransfer Agreement
----------------------------------
constitutes a legal, valid and binding obligation of the
Transferor enforceable against the Transferor 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
--------------------
Transferor to be materially adverse to the interests of the
Investor
2
<PAGE>
Certificateholders were utilized in selecting the Removed
Accounts designated hereby.
6. Condition Precedent. The amendment of the Pooling 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:
7. Officers' Certificate. The Transferor shall have delivered to the
---------------------
Trustee an Officers' Certificate certifying that (i) as of the Removal Date, all
requirements set forth in Section 2.7 of the Pooling and Servicing Agreement for
designating Removed Accounts and reconveying the Receivables of such Removed
Accounts, whether now existing or hereafter created, have been satisfied, and
(ii) each of the representations and warranties made by the Transferor in
Section 5 hereof is true and correct as of the Removal Date. The 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.
8. Amendment of the Pooling and Servicing Agreement. The Pooling and
------------------------------------------------
Servicing Agreement is hereby amended to provide that all references therein to
the "Pooling and Servicing Agreement", to "this Agreement" and "herein" shall be
deemed from and after the Removal Date to be a dual reference to the Pooling and
Servicing Agreement as supplemented by this Retransfer Agreement. Except as
expressly amended hereby, all of the representations, warranties, terms,
covenants and conditions of the Pooling 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 Pooling and Servicing
Agreement.
9. Counterparts. This Retransfer 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.
3
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Retransfer 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
By: ___________________________________
Title: ________________________________
HARRIS TRUST AND SAVINGS BANK, as
Trustee
By: ___________________________________
Title: ________________________________
4
<PAGE>
Schedule 1
to Retransfer Agreement
-----------------------
REMOVED ACCOUNTS
----------------
<PAGE>
EXHIBIT E
to
AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT
FORM OF MONTHLY SERVICER'S CERTIFICATE
SPIEGEL MASTER TRUST
The undersigned, a duly authorized representative of First Consumers
National Bank ("FCNB"), as Servicer pursuant to the Amended and Restated Pooling
and Servicing Agreement dated as of December 13, 1994 (the "Pooling and
Servicing Agreement") among FCNB, Spiegel Credit Corporation III and Harris
Trust and Savings Bank, as Trustee, does hereby certify as follows:
1. Capitalized terms used in this Certificate have their respective
meanings set forth in the Pooling 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 Pooling and Servicing
Agreement. References herein to certain sections and subsections
are references to the respective sections and subsections of the
Pooling and Servicing Agreement.
2. FCNB is Servicer under the Pooling and Servicing Agreement.
3. The undersigned is a Servicing Officer.
4. The date of this Certificate is a Determination Date under the
Pooling and Servicing Agreement.
5. The aggregate amount of Collections processed
during the preceding Monthly Period (after giving
effect to all true-up adjustments for such period)
was equal to ..................................... $ _________
6. Aggregate Principal Receivables as of the end
of the last day of the preceding Monthly Period
was equal to ..................................... $ _________
1
<PAGE>
7. The aggregate amount of Finance Charge Collections
during the preceding Monthly Period (after giving
effect to all true-up adjustments for such period)
was equal to ..................................... $ _________
8. The amount and nature of true-up adjustments
pursuant to Section 1.4 for the preceding Monthly
Period were as follows ........................... $ _________
9. The Default Amount for the preceding Monthly
Period was equal to .............................. $ _________
10. Investor Net Recoveries for the preceding Monthly
Period was equal to .............................. $ _________
11. The Portfolio Yield for the preceding Monthly
Period for each of the following Series was equal to:
Series ________ .................................. $ __________
Series ________ .................................. $ __________
12. The Base Rate for the preceding Accrual Period for
each of the following Series was equal to:
Series ________ .................................. $ __________
Series ________ .................................. $ __________
13. The aggregate amount of Receivables and the balance
on deposit in the Collection Account (or any
Subaccount thereof) and each other Series Account
with respect to Collections processed as of the end
of the preceding Monthly Period was equal to ..... $ __________
14. The aggregate amount of Credit Adjustments from
2
<PAGE>
<TABLE>
<S> <C>
the preceding Monthly Period was equal to................ $ ___________
15. The aggregate amount, if any, of withdrawals,
drawings or payments under any Enhancement with
respect to each Series made with respect to the
preceding Monthly Period was equal to.................... $ ___________
16. The aggregate amount payable to the Investor
Certificateholders on the succeeding Distribution
Date in respect of Certificate Interest is equal to...... $ ___________
17. The aggregate amount payable to the Investor
Certificateholders on the succeeding Distribution Date
in respect of Certificate Principal is equal to.......... $ ___________
</TABLE>
3
<PAGE>
EXHIBIT F-1
to
AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT
FORM OF ANNUAL SERVICER'S CERTIFICATE
-------------------------------------
SPIEGEL MASTER TRUST
The undersigned, a duly authorized representative of First Consumers
National Bank ("FCNB") as Servicer pursuant to the Amended and Restated Pooling
and Servicing Agreement dated as of December 13, 1994 (the "Pooling and
Servicing Agreement") among Spiegel Credit Corporation III, FCNB and Harris
Trust and Savings Bank, as trustee (the "Trustee"), does hereby certify that:
1. FCNB is Servicer under the Pooling and Servicing Agreement.
2. The undersigned is duly authorized pursuant to the Pooling and
Servicing Agreement to execute and deliver this Certificate to the Trustee.
3. This Certificate is delivered pursuant to Section 3.5 of the
Pooling and Servicing Agreement.
4. A review of the activities of the Servicer during the calendar
year ended December 31, 199_ 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 Pooling 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 Pooling and Servicing
Agreement known to me to have been made during the calendar year ended December
31, 199_, 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."]
1
<PAGE>
IN WITNESS WHEREOF, the undersigned has duly executed this Certificate this
day of ___________, 199 ___.
Name: ___________________________________
Title: __________________________________
2
<PAGE>
EXHIBIT F-2
to
AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT
FORM OF ANNUAL INDEPENDENT PUBLIC ACCOUNTANTS'
SERVICING REPORT
----------------
SPIEGEL MASTER TRUST
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
Harris Trust and Savings Bank
111 West Monroe Street
Chicago, Illinois 60690
Gentlemen:
We have applied certain agreed-upon procedures, as discussed below, to the
accounting records of First Consumers National Bank (the "Servicer") and Spiegel
Credit Corporation III ("SCCIII") as of December 31, ____, solely to assist the
Servicer in its responsibilities as Servicer under the Amended and Restated
Pooling and Servicing Agreement dated as of [December 20], 1994, among SCCIII,
the Servicer and Harris Trust and Savings Bank (the "Trustee"), as amended and
supplemented from time to time by supplements thereto (each a "Supplement")
entered into by SCCIII, the Servicer and the Trustee in conjunction with the
issuance of Series of Investor Certificates (the "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 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 Servicing Agreement, the
statements or reports delivered to the Investor Certificateholders of
each Series pursuant to Article V of the Servicing Agreement and the
monthly payment instructions delivered to the Trustee with respect to
each Series of Investor Certificates pursuant to
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Article IV of the Servicing Agreement 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.
(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 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 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 Harris Trust and Savings Bank taken as a whole.
Date:
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EXHIBIT G
to
AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT
PROVISIONS TO BE INCLUDED IN
OPINION OF COUNSEL PURSUANT
TO SUBSECTION 13.2(d)(i)
------------------------
(i) The amendment to the Amended and Restated Pooling and Servicing
Agreement, attached hereto as Exhibit A (the "Amendment"), has been duly
authorized, executed and delivered by Seller and the Servicer and constitutes
the legal, valid and binding agreement of Seller and the Servicer, enforceable
in accordance with its terms.
(ii) The Amendment has been entered into in accordance with the terms and
provisions of Section 13.1 of the Amended and Restated Pooling and Servicing
Agreement and shall not adversely affect in any material respect the interests
of the Certificateholders.
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EXHIBIT H
to
AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT
PROVISIONS TO BE INCLUDED
IN ANNUAL OPINION OF COUNSEL
The opinions set forth below, which are to be delivered pursuant to
subsection 13.2(d) of the Amended and Restated Pooling and Servicing Agreement
(the "Pooling and Servicing Agreement"), 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.
(i) If the Pooling and Servicing Agreement constitutes a valid transfer
and assignment of the Receivables and Insurance Proceeds (the "Trust Property"),
the Financing Statements having been filed in the offices of the Secretaries of
State of the States of Delaware, Illinois and Oregon, the Trustee has acquired
(based upon certificates of Seller to the effect that (a) Seller acquired the
Receivables pursuant to the Receivables Purchase Agreement, (b) Seller has not
transferred any interest in the Receivables other than to the Trustee or caused
any lien to be imposed upon the Receivables, and (c) Seller will acquire
pursuant to the Receivables Purchase Agreement all Receivables subsequently
created in the Additional Accounts free and clear of any Lien or interest of any
Person except for (x) Liens permitted under subsection 2.5(b) of the Pooling and
Servicing Agreement, (y) the interest of the Holder of the Exchangeable Seller
Certificate, and (z) Seller's right to receive interest accruing on, and
investment earnings in respect of, the Collection Subaccounts and the Collection
Sub-subaccounts as provided in the Pooling and Servicing Agreement) all right,
title and interest of Seller in the Trust Property free and clear of any Lien or
interest of any Person, except for (x) Liens permitted under subsection 2.5(b)
of the Pooling and Servicing Agreement, (y) the interest of the Holder of the
Exchangeable Seller Certificate, and (z) Seller's right to receive interest
accruing on, and investment earnings in respect of, the Collection Subaccounts
and the Collection Sub-subaccounts as provided in the Pooling and Servicing
Agreement.
(ii) If the Pooling and Servicing Agreement does not constitute a valid
transfer and assignment of all right, title, and interest in the Trust Property,
the Pooling and Servicing Agreement creates a valid security interest in favor
of the Trustee for the benefit of the Investor Certificateholders in the Trust
Property. The Financing Statements having been filed in the offices of the
Secretaries of State of the States of Delaware, Illinois and Oregon, the Trust,
for the benefit of the Investor Certificateholders has a first priority
perfected security interest in that portion of the Trust Property that consists
of the Receivables now existing and hereafter created (other than Receivables in
Additional Accounts), and all monies due or to become due with respect thereto,
including the proceeds thereof. Such perfection and priority
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of the Trustee for the benefit of the Investor Certificateholders in such
Receivables, and the proceeds thereof, would not be affected by an increase or
decrease in the relative interests in the Receivables of the Holder of the
Exchangeable Seller Certificate and of the Investor Certificateholders. Such
perfection and priority would be enforceable against Seller notwithstanding the
insolvency of Seller except that such counsel need express no opinion as to the
effect of Section 9-306(4) of the UCC as in effect in the State of Illinois with
respect to proceeds held by Seller upon its insolvency.
(iii) No filings or other action, other than the filing of the financing
statement(s) referred to in such opinion (the "Financing Statements") with
respect to the Trust's interest in the Receivables and the proceeds thereof in
the Offices of the Secretaries of State of the States of Delaware, Illinois and
Oregon, are necessary to perfect or continue the perfected status of the
interest of the Trust in the Receivables and the proceeds thereof against third
parties, except that appropriate continuation statements with respect to the
Financing Statement(s) must be filed at five-year intervals.
(iv) In the course of such counsel's representation of Seller in
connection with this matter, and without independent investigation, such counsel
has not become aware of (a) any type of right, lien, or interest of any
government or agency or instrumentality thereof or any lien arising by operation
of law which might be asserted against the Receivables or the proceeds arising
under ERISA, (b) any such right, lien or interest which has been so asserted or
(c) any lien arising by operation of law or any attachment or execution lien
which had been asserted against the Receivables or the proceeds thereof.
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