Series 2000-1 Supplement to Pooling and Servicing Agreement among Gottschalks Credit Receivables Corporation, Gottschalks Inc., and Bankers Trust Company

Summary

This agreement is a supplement to a prior Pooling and Servicing Agreement, involving Gottschalks Credit Receivables Corporation (Depositor), Gottschalks Inc. (Servicer), and Bankers Trust Company (Trustee). It establishes the terms for issuing a new series of investor certificates backed by Gottschalks credit card receivables. The agreement outlines how collections are allocated, servicing fees, rights of certificate holders, and conditions for early repayment or default. It also details the process for issuing, transferring, and repurchasing the certificates, as well as the responsibilities of each party.

EX-10.46 3 0003.txt LA1:901846.8 GOTTSCHALKS CREDIT RECEIVABLES CORPORATION Depositor GOTTSCHALKS INC. Servicer and BANKERS TRUST COMPANY Trustee SERIES 2000-1 SUPPLEMENT Dated as of November 16, 2000 To POOLING AND SERVICING AGREEMENT Dated as of March 1, 1999 GOTTSCHALKS CREDIT CARD MASTER TRUST TABLE OF CONTENTS ARTICLE I CREATION OF THE SERIES 2000-1 CERTIFICATES Section 1.1. Designation......................................... 1 ARTICLE II DEFINITIONS Section 2.1. Definitions......................................... 1 ARTICLE III SERVICING FEE Section 3.1. Servicing Compensation............................. 16 ARTICLE IV RIGHTS OF CERTIFICATEHOLDERS AND ALLOCATION AND APPLICATION OF COLLECTIONS Section 4.1. Allocations........................................ 16 Section 4.2 Distributions...................................... 22 Section 4.3. Determination of VBC Monthly Interest, Commitment Fees and Breakage Fees...................25 Section 4.4. VBC Investor Charge-Offs........................... 26 Section 4.5. Trustee Expenses Associated with Servicing Assumption..........................................27 Section 4.6. Blocked Periods.................................... 27 ARTICLE V DISTRIBUTIONS AND REPORTS Section 5.1. Distributions...................................... 27 Section 5.2. Other Notices to Holders........................... 27 ARTICLE VI THE VARIABLE BASE CERTIFICATES AND EXCHANGEABLE CERTIFICATE Section 6.1. Initial Issuance of Variable Base Certificates, Increases and Decreases of VBC Invested Amount..............................28 Section 6.2. Extension and Repurchase of Variable Base Certificates...................................38 Section 6.3. Transfer Restrictions.............................. 39 Section 6.4. The Exchangeable Certificate....................... 43 ARTICLE VII EARLY AMORTIZATION EVENTS; SERVICER DEFAULTS; MERGER OF SERVICER Section 7.1. Additional Early Amortization Events............... 43 Section 7.2. Waiver............................................. 45 Section 7.3. Additional Servicer Defaults....................... 45 Section 7.4. Merger or Consolidation of, or Assumption of, the Obligations of the Servicer................ 46 ARTICLE VIII OPTIONAL REPURCHASE Section 8.1. Optional Repurchase................................ 46 ARTICLE IX FINAL DISTRIBUTIONS Section 9.1. Final Distributions................................ 47 ARTICLE X MISCELLANEOUS PROVISIONS Section 10.1. Ratification of Agreement......................... 48 Section 10.2. Counterparts...................................... 48 Section 10.3. Governing Law..................................... 48 Section 10.4. Rating Agency Notice.............................. 48 EXHIBITS EXHIBIT A Form of Variable Base Certificate EXHIBIT B Form of Distribution Date Statement EXHIBIT C Form of Rule 144A Transferee Certificate EXHIBIT D Form of Non Rule 144A Representation Letter EXHIBIT E Form of Request for Increase EXHIBIT F Form of Notice of Discretionary Prepayment SCHEDULE SCHEDULE 1 Account Details SERIES 2000-1 SUPPLEMENT dated as of November 16, 2000 (the "Series Supplement"), among GOTTSCHALKS CREDIT RECEIVABLES CORPORATION, a Delaware corporation, as Depositor, GOTTSCHALKS INC., a Delaware corporation, as Servicer, and BANKERS TRUST COMPANY, a New York banking corporation, not in its individual capacity but solely as Trustee. RECITALS Section 6.03 of the Pooling and Servicing Agreement, dated as of March 1, 1999, among the Depositor, the Servicer and the Trustee (as the same has been amended and supplemented through the date hereof, and as the same may be further amended, supplemented or otherwise modified from time to time in accordance with its terms, the "Agreement"), provides, among other things, that the Depositor may from time to time direct the Trustee to authenticate and deliver, on behalf of the Trust, one or more new Series of Investor Certificates representing fractional undivided interests in the Trust and in connection therewith to enter into Series Supplements with the Servicer and the Trustee to provide for the issuance, authentication and delivery of a new Series of Investor Certificates and to specify the Principal Terms thereof. Pursuant to this Series Supplement, the Depositor and the Trustee on behalf of the Trust shall hereby create a new Series of Investor Certificates and specify the Principal Terms thereof. Article I Creation of the Series 2000-1 Certificates Section 1.1. Designation. There is hereby created a Series of Investor Certificates to be issued pursuant to the Agreement and this Series Supplement to be known as the "Gottschalks Credit Card Master Trust, Series 2000-1 Certificates". The Series 2000-1 Certificates will be issued in one certificated Class, which shall be known as the "Variable Base Credit Card Certificates, Series 2000-1" (the "Variable Base Certificates"). In the event that any term or provision contained herein shall conflict with or be inconsistent with any term or provision contained in the Agreement, the terms and provisions of this Series Supplement shall govern. Article II Definitions Section 2.1. Definitions. (a) Whenever used in this Series Supplement, the following words and phrases shall have the following meanings. "Adjusted Invested Amount" means, for Series 2000-1 as of any date of determination, the following: (i) for purposes of calculating the Series 2000-1 Allocation Percentage with respect to allocations of Finance Charge Collections, the sum of (a) the VBC Invested Amount as of such date, plus (b) 10.50% of the VBC Invested Amount as of such date, plus (c) the VBC Notional Amount as of such date; (ii) for purposes of calculating the Series 2000-1 Allocation Percentage with respect to allocations of Default Amounts, the sum of (a) the VBC Invested Amount as of such date, plus (b) 10.50% of the VBC Invested Amount as of such date; (iii)for purposes of calculating the Series 2000-1 Allocation Percentage with respect to allocations of Principal Collections: (a) if no Early Amortization Event has occurred, on each date on or prior to the last day of the last Collection Period that commences during a period that is a Commitment Period for all outstanding Variable Base Certificates, the sum of (1) the VBC Invested Amount as of such date, plus (2) 10.50% of the VBC Invested Amount as of such date; (b) if no Early Amortization Event has occurred, on each date during a Collection Period that commences during a period that is a Commitment Period for some, but not all, outstanding Variable Base Certificates (giving effect to any extensions), the sum of (1) the sum of the portions of the VBC Invested Amount allocable to each non-extended Variable Base Certificate as of the close of the last day of the last Collection Period that commenced during the related Commitment Period, plus (2) the sum of the portions of the VBC Invested Amount on such current date allocable to each extended Variable Base Certificate as of such date, plus (3) 10.50% of the VBC Invested Amount as of such date; (c) if no Early Amortization Event has occurred, on each date during a Collection Period that commences during a period that is not a Commitment Period for any Variable Base Certificates (giving effect to any extensions), the sum of (1) the sum of the portions of the VBC Invested Amount allocable to each outstanding Variable Base Certificate as of the close of the last day of the last Collection Period that commenced during the related Commitment Period, plus (2) 10.50% of the VBC Invested Amount as of the close of the last day of the last Collection Period that commenced during the last Commitment Period to expire; and (d) if an Early Amortization Event has occurred, then on each date thereafter, the sum of (1) the VBC Invested Amount as the day on which such Early Amortization Event occurs, plus (2) 10.50% of the VBC Invested Amount as of the day on which such Early Amortization Event occurs. "Administrative Fee" means the $2,000 fee payable to the Certificate Administrator in connection with a Discretionary Prepayment (provided that the Administrative Fee is payable only if the Discretionary Prepayment is made on a day that is not a Draw Date). "Allocation Day" means each day during a Collection Period that Gottschalks is open for business (which currently excludes only Easter, Thanksgiving and Christmas); provided that Gottschalks will immediately notify the Trustee and each Certificateholder in writing of any change with respect to the days on which Gottschalks is open for business. "Anniversary Month" means, with respect to any date of determination, the calendar month of the prior calendar year corresponding to the calendar month in which such date of determination occurs. "Authorized Officer" means (a) as to the Depositor, any of the President, the Vice President, the Secretary or any Assistant Secretary and (b) as to the Servicer, any of the President, the Vice President or any Assistant Secretary, whose signatures and incumbency shall have been certified in such certificates as may be delivered by the Depositor or the Servicer to the Trustee, as the case may be, from time to time as duly authorized to execute and deliver the applicable instruments, certificates, notices and other documents in connection herewith on behalf of the Depositor or Servicer and to take, from time to time, all other actions on behalf of the Depositor and the Servicer in connection therewith. "Base Rate" means the Prime Rate. "Breakage Fee" means the fee payable with respect to any repayment of principal on a Variable Base Certificate that occurs on any day other than a Draw Date (in addition to the payment of all interest that has accrued through such date at the applicable VBC Interest Rate on the principal amount so repaid) in an amount equal to the amount of interest that (but for the repayment of such repaid principal amount) would have accrued on an "actual/360" basis on the portion of such principal amount so prepaid, for the period commencing on the date of such repayment to, but excluding, the next Distribution Date, at a rate equal to the excess, if any, of (1) the VBC Interest Rate in effect for the Interest Period during which such repayment occurs over (2) one-month LIBOR determined as specified herein (or, if one-month LIBOR cannot be determined as described herein, the applicable Base Rate) in effect for such Interest Period. "Capitalized Interest Account" shall have the meaning specified in Section 6.1(e) hereof. Deposits into and withdrawals from the Capitalized Interest Account shall be made in accordance with the provisions of Section 6.1(e) hereof. "Carryover Commitment, Breakage and Administrative Fees" means, for any Distribution Date, an amount equal to the sum of (a) the amount of any Breakage Fees previously due but not distributed on the Variable Base Certificates on or before the immediately prior Distribution Date plus, (b) the amount of any Commitment Fees and Administrative Fees previously due but not distributed to the Certificate Administrator plus, (c) to the extent permitted under applicable law, unpaid interest on the amount described in clauses (a) and (b) accrued during or prior to the related Interest Period at the applicable VBC Interest Rate plus 0.50% per annum. "Carryover Interest" means, for any Distribution Date, an amount equal to the sum of (i) the amount of any VBC Monthly Interest previously due but not distributed on the Variable Base Certificates on or before the prior Distribution Date, together with (ii) to the extent permitted under applicable law, unpaid interest accrued on the amount described in clause (i) during or prior to the related Interest Period at the applicable VBC Interest Rate plus 0.50% per annum. "Certificate Administrator" means Warehouse Line Advisors, Inc. or any other Person appointed as such by the VBC Holders representing more than 50% of the VBC Invested Amount. "Certificate Purchase Agreement" means that certain Certificate Purchase Agreement by and between the VBC Holder and the Depositor which will govern the manner in which the VBC Holder will purchase the Variable Base Certificate from the Depositor. "Certificates" means the Series 1999- 1 Fixed Base Certificates, Series 1999-1 Subordinated Certificates, Variable Base Certificates or Exchangeable Certificates, or all of them collectively, as indicated by the context. "Certificate Register" shall have the meaning assigned in Section 6.1(b)(i) hereof. "Closing Date" means November 16, 2000. "Commitment Fee" means 0.25% per annum on the average daily VBC Unfunded Amount during the related Interest Period, or portion thereof, that is during the Commitment Period for any Variable Base Certificates payable to the Certificate Administrator. "Commitment Period" means, with respect to any Variable Base Certificate, the period commencing on the Closing Date and ending on the earliest to occur of: (i) the last day of the Revolving Period and (ii) October 31, 2001; provided that, at least 90 days prior to the end of any Commitment Period, the Trust and the related VBC Holder may agree to extend the Commitment Period applicable to such Variable Base Certificate as described herein for up to an additional 364 days (but not beyond July 31, 2003), in which case, the related Commitment Period will end on the last day of the related Commitment Period as so extended. A VBC Holder will be required to advance funds in response to requests for drawings only during the Commitment Period applicable to its Variable Base Certificate(s) and only if all conditions precedent to such drawings are satisfied as of the respective dates on which such advances are to be made. "Commitment Termination Payment" means, with respect to any Distribution Date relating to a Collection Period that commences during the Revolving Period, the payment of principal to VBC Holders holding Variable Base Certificates as to which the related Commitment Period terminated prior to the commencement of the related Collection Period, pursuant to Section 4.2(a)(i) hereof, in an aggregate amount calculated as the sum of the amounts equal to, with respect to each such Variable Base Certificate, the lesser of (1) the related Controlled Amortization Amount and (2) the portion of the related Cumulative Controlled Amortization Amount not already funded through one or more distributions, in respect of such Variable Base Certificate following the end of such Commitment Period and prior to such current Distribution Date, of Mandatory Prepayments, Discretionary Prepayments and Commitment Termination Payments. "Controlled Amortization Amount" means, for any Variable Base Certificate and any Distribution Date, either (a) if the Controlled Amortization Period commences on or prior to August 1, 2003, or the Commitment Period for such Variable Base Certificate (giving effect to any extension thereto) terminates on or prior to July 31, 2003, 1/6th of the portion of the VBC Principal Balance allocable thereto as of the close of the last day of the last Collection Period that commenced during the Commitment Period for such Variable Base Certificate, or (b) if the Controlled Amortization Period for such Variable Base Certificate commences on August 1, 2003, or the Commitment Period for such Variable Base Certificate (giving effect to any extension thereto) terminates on July 31, 2003, 1/12th of the portion of the VBC Principal Balance allocable thereto as of the close of the last day of the last Collection Period that commenced during the Commitment Period for such Variable Base Certificate. "Controlled Amortization Date" means, November 1, 2001, unless the Commitment Period for any Variable Base Certificate is extended, in which case it means the first day of the calendar month following the last calendar month that commences during the related extended or reextended Commitment Period. "Controlled Amortization Period" means, unless an Early Amortization Period shall have commenced prior to such date, the period scheduled to begin on November 1, 2001 (or, if the Revolving Period is extended or reextended, November 1 of the calendar year following such extension, or August 1, 2003 if such extension is through the end of the Series 1999-1 Revolving Period), and ending upon the earliest of (a) the occurrence of an Early Amortization Event, (b) the date on which the VBC Principal Balance shall have been reduced to zero and (c) the Distribution Date in May 2002, or, if the Revolving Period is extended or reextended, the Distribution Date in May of the calendar year following such extension, or, if extended through the scheduled end of Series 1999-1 Revolving Period, the Distribution Date in August 2004. "Cumulative Controlled Amortization Amount" means, for any Variable Base Certificate and any Distribution Date, the sum of the Controlled Amortization Amounts due with respect to such Variable Base Certificate on each Distribution Date to and including such Distribution Date. "Default Amount" means, (i) with respect to any Allocation Day during a Collection Period, the aggregate amount of Receivables recognized by the Servicer as becoming Defaulted Receivables since the beginning of the preceding Allocation Day but prior to the beginning of the current Allocation Day, and (ii) with respect to any Distribution Date or Collection Period, an amount equal to the aggregate of the Default Amounts recognized by the Servicer on each Allocation Day during the related (or, as applicable, such) Collection Period. "Default Rate" with respect to any Collection Period, means the annualized percentage equivalent of a fraction, the numerator of which is the Default Amount for such month and the denominator of which is the Pool Balance as of the first day of such month. "Delinquency Rate" with respect to any Collection Period, means the percentage equivalent of a fraction, the numerator of which is the aggregate of the balances of Eligible Receivables that are 60 or more days Contractually Delinquent as of the last day of such month, and the denominator of which is the Pool Balance as of the last day of such month. "Depositor" means Gottschalks Credit Receivables Corporation, and its successors in interest to the extent permitted hereunder. "Discretionary Prepayment" means, with respect to any Distribution Date or other Business Day specified in the applicable Notice of Discretionary Prepayment as of the date of distribution thereof, the distribution of funds available for such a Discretionary Prepayment, pursuant to the applicable provisions of Section 4.2 or Section 6.1(c) hereof as a payment of principal to the VBC Holders, in the aggregate amount specified in such notice. "Discretionary Prepayment Account" shall have the meaning specified in Section 6.1(f) hereof. Deposits into and withdrawals from the Discretionary Prepayment Account shall be made in accordance with the provisions of Section 6.1(f) hereof. "Distribution Date" means the fifteenth day of each month (or, if such day is not a Business Day, the next succeeding Business Day), commencing December 15, 2000. "Downgrade Period" means the period from and after the date as of which the Rating Agency shall have reduced its rating of the Variable Base Certificates to below A- or withdrawn its rating thereof, to the date on which the Rating Agency shall maintain a rating of the Variable Base Certificates of A- or above. "Draw Account" means the account created and maintained as such by the Trustee pursuant to Section 6.1(d) hereof. "Draw Date" means the date upon which any Increase is to be funded as specified in the related Request for Increase delivered pursuant to Section 6.1, which date (except for the initial Draw Date, which will be on November 17, 2000) must be either the fifteenth day of a calendar month (of if such fifteenth day is not a Business Day, the next succeeding Business Day) or the last Business Day of a calendar month, and in either case must occur during a Commitment Period. "Drawing Fee" means the $2,000 fee payable to the Certificate Administrator on the Draw Date in connection with any Increase in the VBC Invested Amount made pursuant to Section 6.1(b) hereof. "Early Amortization Event" means any Early Amortization Event specified in Section 9.01 of the Agreement, together with any additional Early Amortization Event specified in Section 7.1 hereof. "Early Amortization Period" means the period following the occurrence of an Early Amortization Event. "Eligible Past Due Receivables" means any Receivable that is 120 or more days Contractually Delinquent but has not been classified as a Defaulted Receivable such that, but for the operation of clause (h) of the definition of "Eligible Receivables," it would be classified as an "Eligible Receivable." "Excess Spread" with respect to any Distribution Date or related Collection Period means the annualized percentage equivalent of a fraction, (a) the numerator of which is Investor Finance Charge Collections allocated during the related (or, as applicable, such) Collection Period less (i) the amount of accrued Monthly Servicing Fees for such Collection Period, (ii) interest, Commitment Fees and Breakage Fees accrued during the related Collection Period and (iii) the sum of the Investor Default Amounts allocated during the related Collection Period, and (b) the denominator of which is the average for the related Collection Period of the Adjusted Invested Amount applicable for the allocation of Series Principal Collections to Series 2000- 1 for each day during the related Collection Period. "Exchangeable Amount" means, as of any date of determination, the Exchangeable Holder's Interest as of such date of determination. "Exchangeable Holder's Interest" means as of any date of determination, for purposes of making allocations of Series Finance Charge Collections, Series Principal Collections or Series Default Amounts, the difference (but not less than zero) of the Series Pool Balance minus the Adjusted Invested Amount applicable on such date for the allocation of Series Principal Collections. "Exchangeable Holder's Percentage" as of any date of determination and with respect to the allocation of Series Finance Change Collections, Series Principal Collections or Series Default amounts, as the case maybe, means 100% minus the VBC Allocation Percentage applicable to the allocation of Series Finance Change Collections, Series Principal Collections or Series Default amounts, as the case maybe, as of such date. "Expected Final Distribution Date" means the May, 2002 Distribution Date, except that if the Commitment Period for any Variable Base Certificate is extended or reextended, then for such Variable Base Certificate, the Distribution Date in the month following the last Collection Period of the related extended or reextended Controlled Amortization Period. "Gottschalks" means Gottschalks Inc., a Delaware corporation. "Increase" means any increase (or, as the context may require, the amount of any increase) in the VBC Invested Amount and VBC Principal Balance pursuant to Section 6.1(b) hereof. "Index Rate" means, for any Interest Period, LIBOR calculated as described herein; provided that if LIBOR cannot be calculated as described herein on the related LIBOR Determination Date, then for such Interest Period, the Index Rate shall be the Base Rate. "Initial VBC Invested Amount" means $8,000,000, which is the aggregate amount of the advances to be made by VBC Holders as of the Closing Date. "Interest Period" means, with respect to any Distribution Date, the period from and including each Distribution Date (or, in the case of the first Interest Period, the Closing Date) to but excluding the next following Distribution Date. "Investor Default Amount" means, with respect to any day during a Collection Period, the product of (i) the Series Default Amount for such day and (ii) the VBC Allocation Percentage applicable to the allocation of Series Default Amounts on such day. "Investor Default Holdback Amount" means, with respect to (a) any Collection Period (other than the initial Collection Period), the greater of (A) the Investor Default Amount which the Servicer reasonably anticipates for such Collection Period or (B) the average of the Investor Default Amounts for each of the twelve consecutive Collection Periods preceding such Collection Period (or, for the initial twelve Collection Periods, for as many Collection Periods as have occurred since the Closing Date), and (b) the initial Collection Period, will be $50,000. "Investor Finance Charge Collections" means, with respect to any day during a Collection Period, the product of (i) the Series Finance Charge Collections for such day and (ii) the VBC Allocation Percentage applicable to the allocation of Series Finance Charge Collections on such day. "Investor Investment Proceeds" means, with respect to any Distribution Date, the product of (i) the Series 2000-1 Allocation Percentage applicable to the allocation of Finance Charge Collections as of the related Determination Date and (ii) the amount of interest and other investment earnings (net of losses and investment expenses) on funds held in the Collection Account credited to the Collection Account as of such Determination Date pursuant to Section 4.02 of the Agreement (to the extent that the Depositor has directed the Trustee to retain such amounts rather than releasing them to the Depositor as permitted by Section 4.02 of the Agreement). "Investor Principal Collections" means, with respect to any day during a Collection Period, the product of (i) the Series Principal Collections for such day and (ii) the VBC Allocation Percentage applicable to the allocation of Series Principal Collections on such day. "LIBOR" means, with respect to any Interest Period, the rate specified as such on the Telerate Page 3750, as of 11:00 a.m. (London time) on the related LIBOR Determination Date, for one-month deposits in United States dollars, as quoted by Bloomberg Financial Commodities News Service; provided, however, that if on such LIBOR Determination Date such quotation does not appear on the Telerate Page 3750, LIBOR for such Interest Period will be either (a) the arithmetic mean of the rates, as requested by the Trustee, at which one-month deposits in United States dollars are offered by the principal London office of each of the LIBOR Reference Banks at approximately 11:00 a.m. (London time) on such LIBOR Determination Date to prime banks in the London interbank market and in a principal amount of not less than $10,000,000 that is representative for a single transaction in such market at such time, if at least two such quotations are provided, or (b) if fewer than two quotations are provided as described in the preceding clause (a), the arithmetic mean of the rates, as requested by the Trustee, quoted by three major banks in New York City, selected by the Trustee, at approximately 11:00 a.m., New York City time, on such LIBOR Determination Date, for one-month loans in United States dollars to leading European banks and in a principal amount of not less than $10,000,000 that is representative for a single transaction in such market at such time; provided, however, that if fewer than two such banks selected by the Trustee are providing such quotations, LIBOR will be deemed to not be calculable on such LIBOR Determination Date. Any arithmetic mean calculated for purposes of determining LIBOR will be rounded, if necessary, to the nearest eighth decimal place. All such determinations will be final and not subject to challenge, absent manifest error. "LIBOR Business Day" means any day on which banks in both London, England and New York, New York are open for business. "LIBOR Determination Date" means, for any Interest Period, the second LIBOR Business Day preceding the first day of such Interest Period. "LIBOR Reference Banks" means, initially, Barclays Bank PLC, The Chase Manhattan Bank, Citibank, N.A. and National Westminster Bank PLC. Each Reference Bank must be a leading bank engaged in transactions in Eurodollar deposits in the international Eurocurrency market and must have an established place of business in London. If any such bank fails to meet the qualifications of a Reference Bank, the Trustee will designate (by written notice to the Servicer and the Holders of the Variable Base Certificates) one or more alternative Reference Banks meeting the foregoing criteria. "Mandatory Prepayment" means, with respect to any Distribution Date, the distribution, if any, of funds available for such a Mandatory Prepayment, pursuant to the applicable provisions of Section 4.2 hereof, as a payment of principal to the VBC Holders in an aggregate amount equal to the excess, if any, of the Adjusted Invested Amount applicable for the allocation of Series Principal Collections on such date over the Series Pool Balance on such date. "Monthly Payment Rate" means, with respect to any Collection Period, the percentage equivalent of a fraction, the numerator of which is the aggregate amount of all Collections in respect of Eligible Receivables received during such month, and the denominator of which is the Pool Balance as of the first day of such month. "Monthly Servicing Fee" means, with respect to any Distribution Date, an amount equal to the product of one-twelfth of 3.00% per annum and the average daily VBC Invested Amount during the related Collection Period. "Notice of Discretionary Prepayment" has the meaning assigned in Section 6.1. "Officer's Certificate" means a certificate signed by an Authorized Officer of the Depositor or the Servicer, as the case may be. "Optional Purchase Price" means, with respect to any Distribution Date, after giving effect to any deposits and distributions otherwise to be made on such Distribution Date, the sum of (a) the VBC Invested Amount on such Distribution Date, plus (b) accrued and unpaid VBC Monthly Interest (including any Carryover Interest) and any accrued and unpaid Commitment Fees and Breakage Fees (including any Carryover Commitment, Breakage and Administrative Fees). "Portfolio Yield" means, with respect to any Collection Period, the annualized percentage equivalent of a fraction (a) the numerator of which is Series Finance Charge Collections for such Collection Period less Series Default Amounts for such Collection Period and (b) the denominator of which is the average of the Series Pool Balance as of the open of business on each day during such Collection Period. "Prime Rate" means, with respect to any Interest Period, the rate on the applicable Prime Rate Determination Date published in H.15(519) under the heading "Bank Prime Loan." The following procedures will be followed if the Prime Rate cannot be determined as described above: (i) If the rate referred to above is not so published by 3:00 p.m., New York City time, on the applicable Prime Rate Determination Date, the Prime Rate for the applicable Prime Rate Determination Date will be the rate on the applicable Prime Rate Determination Date published in H.15 Daily Update, or such other recognized electronic source used for the purpose of displaying the applicable rate under the caption "Bank Prime Loan." (ii) If the rate referred to in clause (i) above is not so published by 3:00 p.m., New York City time, on the applicable Prime Rate Determination Date, the Prime Rate for the applicable Prime Rate Determination date will be the rate calculated by the Trustee as the arithmetic mean of the rates of interest publicly announced by the banks that appear on the Reuters Screen US PRIME 1 Page as the particular bank's prime rate or base lending rate as of 11:00 a.m., New York City time, on the applicable Prime Rate Determination Date, so long as at least four rates appear on the page. (iii) If fewer than the four rates described in clause (ii) above appear in Reuters Screen US PRIME 1 by 3:00 p.m., New York City time, on the applicable Prime Rate Determination Date, the Prime Rate for the applicable Prime Rate Determination Date will be the rate calculated by the Trustee as the arithmetic mean of the prime rates or base lending rates quoted on the basis of the actual number of days in the year divided by a 360-day year as of the close of business on the applicable Prime Rate Determination Date by three major banks, which may include the Trustee and its affiliates, in the City of New York selected by the Trustee. (iv) If the banks selected by the Trustee are not quoting as described in clause (iii) above, the Prime Rate for the applicable Prime Rate Determination Date will be the Prime Rate in effect on the preceding Prime Rate Determination Date. "Prime Rate Business Day" means any day on which banks in New York, New York are open for business. "Prime Rate Determination Date" means for any Interest Period, the second Prime Rate Business Day preceding the first day of such Interest Period. "Rating Agency" means Fitch, Inc. or its successors. "Related Collection Period" means, with respect to (a) any Distribution Date or Determination Date, the immediately preceding Collection Period and (b) any Allocation Day, the Collection Period during which such Allocation Day occurs. "Related Distribution Date" means, with respect to any Collection Period or Determination Date or Allocation Day, the Distribution Date following, as applicable, such Collection Period or Determination Date or the calendar month in which such Allocation Day occurs. "Request for Increase" means the notice to be delivered to the Trustee and each VBC Holder in connection with any Increase pursuant to Section 6.1 hereof, substantially in the form attached as Exhibit E hereto. "Required Exchangeable Certificate Amount" for Series 2000-1 means, for any date of determination, the product of (i) the Adjusted Invested Amount as of such date of determination and the greater of (A) 7.00% and (B) the percentage equivalent of a fraction: (1) the numerator of which is the net amount of charge account refunds or return credits that were given to account holders by Gottschalks during the Anniversary Month; and (2) the denominator of which is the aggregate amount of net sales credited to Charge Accounts and recognized by Gottschalks during such Anniversary Month. "Reuters Screen US PRIME 1 Page" means the display designated as the "US PRIME 1" page on the Reuters monitor Money Rates Service or such other page as may replace the US PRIME 1 page on that service or any successor service for the purpose of displaying prime rates or base lending rates of major United States banks. "Revolving Period" means the period commencing on the Closing Date and ending on October 31, 2001, unless terminated sooner by the occurrence of an Early Amortization Event or extended or reextended to not later than October 31 of the succeeding calendar year (but not beyond the last day of the Series 1999-1 Revolving Period) in connection with the extension of any Commitment Period by mutual consent of one or more VBC Holders and the Depositor pursuant to Section 6.2 hereof. "Series 1999-1 Certificates" means the Series 1999-1 Fixed Base Certificates and the Series 1999-1 Subordinated Certificates issued pursuant to the Series 1999-1 Supplement. "Series 1999-1 Closing Date" means March 1, 1999. "Series 1999-1 Fixed Base Certificates" means the 7.664% Fixed Base Credit Card Certificates, Series 1999-1 issued pursuant to the Series 1999-1 Supplement. "Series 1999-1 Revolving Period" means the period that commenced on the Series 1999-1 Closing Date and will end on the earlier of (i) the last day of the Collection Period relating to the Distribution Date in August 2003 and (ii) the close of business on the Business Day immediately preceding the day on which an Early Amortization Period (as such term is defined in the Series 1999-1 Supplement) commences. "Series 1999-1 Subordinated Certificates" means the Subordinated Certificates, Series 1999-1 issued pursuant to the Series 1999-1 Supplement. "Series 1999-1 Supplement" means the Series 1999-1 Supplement to the Pooling and Servicing Agreement dated as of March 1, 1999, as the same may from time to time be amended or modified in accordance with the Agreement. "Series 2000-1" means the Series comprised of the Variable Base Certificates created pursuant to this Series Supplement. "Series 2000-1 Allocation Percentage" shall mean the Series Allocation Percentage for Series 2000-1 as calculated in accordance with the Agreement. "Series 2000-1 Maximum Invested Amount" means $24,000,000. "Series Default Amount" means, for each Allocation Day, an amount equal to the product of (a) the amount of the Default Amounts recognized on such Allocation Day but prior to the beginning of the current Allocation Day and (b) the Series 2000-1 Allocation Percentage applicable to the allocation of Default Amounts as of such Allocation Day. "Series Finance Charge Collections" means, for each Allocation Day, an amount equal to the product of (a) the amount of the Finance Charge Collections received since the beginning of the preceding Allocation Day but prior to the beginning of the current Allocation Day and (b) the Series 2000-1 Allocation Percentage applicable to the allocation of Finance Charge Collections as of such Allocation Day. "Series Issuance Date" means the Closing Date. "Series Pool Balance" means, as of any date of determination, the product of (a) the Pool Balance as of such date and (b) the Series 2000-1 Allocation Percentage applicable to the allocation of Principal Collections as of such date. "Series Principal Collections" means, for each Allocation Day, an amount equal to the product of (a) the amount of the Principal Collections received since the beginning of the preceding Allocation Day but prior to the beginning of the current Allocation Day and (b) the Series 2000-1 Allocation Percentage applicable to the allocation of Series Principal Collections as of such Allocation Day. "Series Termination Date" means the Distribution Date in September 2006. "Servicing Fee Rate" means 3.0% per annum. "Standby Servicer" means Bankers Trust Company or such other party as may be appointed by the Trustee to stand ready to act as a Successor Servicer in the event that Gottschalks is removed as Servicer. "Variable Base Certificates" shall have the meaning specified in Section 1.1 hereof. "VBC Allocation Percentage" means, as of any date of determination, the percentage determined as follows: (i) With respect to Series Finance Charge Collections: (a) if no Early Amortization Event has occurred, the percentage equivalent of (1) the sum of the VBC Invested Amount, plus 10.50% of the VBC Invested Amount, plus the VBC Notional Amount as of such date, divided by (2) the Series Pool Balance as of such date; and (b) if an Early Amortization event has occurred, the percentage equivalent of (1) the sum of the VBC Invested Amount, plus 10.50% of the VBC Invested Amount as of the date on which such Early Amortization Event occurs, divided by (2) the Series Pool Balance as of the date on which such Early Amortization Event occurs; and (ii) With respect to Series Default Amounts, the percentage equivalent of (1) the sum of the VBC Invested Amount, plus 10.50% of the VBC Invested Amount as of such date, divided by (2) the Series Pool Balance as of such date; and (iii)With respect to Series Principal Collections: (a) if no Early Amortization Event has occurred, on each date on or prior to the last day of the last Collection Period that commences during a period that is a Commitment Period for all outstanding Variable Base Certificates, the percentage equivalent of (1) the sum of the VBC Invested Amount, plus 10.50% of the VBC Invested Amount as of such date, divided by (2) the Series Pool Balance as of such date; (b) if no Early Amortization Event has occurred, on each date during a Collection Period that commences during a period that is a Commitment Period for some, but not all, outstanding Variable Base Certificates (giving effect to any extensions), the percentage equivalent of (1) the sum of (A) the sum of the portions of the VBC Invested Amount allocable to each non- extended Variable Base Certificate as of the close of the last day of the last Collection Period that commenced during the related Commitment Period, plus (B) the sum of the portions of the VBC Invested Amount on such current date allocable to each extended Variable Base Certificate as of such date, plus (C) 10.50% of the VBC Invested Amount as of such date, divided by (2) the Series Pool Balance as of such date; (c) if no Early Amortization Event has occurred, on each date during a Collection Period that commences during a period that is not a Commitment Period for any Variable Base Certificates (giving effect to any extensions), the percentage equivalent of (1) the sum of (A) the sum of the portions of the VBC Invested Amount allocable to each outstanding Variable Base Certificate as of the close of the last day of the last Collection Period that commenced during the related Commitment Period, plus (B) 10.50% of the VBC Invested Amount as of the close of the last day of the last Collection Period that commenced during the last Commitment Period to expire, divided by (2) the Series Pool Balance as of the close of the last day of the last Collection Period that commenced during the last Commitment Period to expire; and (d) if an Early Amortization Event has occurred, then on each date thereafter, the percentage equivalent of (1) the sum of (A) the VBC Invested Amount as the day on which such Early Amortization Event occurs, plus (B) 10.50% of the VBC Invested Amount as of the day on which such Early Amortization Event occurs, divided by (2) the Series Pool Balance as of the day on which such Early Amortization Event occurs. "VBC Holder" means, with respect to any Variable Base Certificate on any date, the Person in whose name such Variable Base Certificate is registered on such date. "VBC Interest Rate" means, for any Interest Period, the Index Rate plus 1.50% per annum, plus, for any Interest Period commencing during any Downgrade Period, an additional 0.50% per annum. "VBC Invested Amount" means, as of any date of determination, an amount equal to (i) the Initial VBC Invested Amount, minus (ii) the amount of principal payments made to the VBC Holders in respect of the VBC Invested Amount prior to such date of determination, minus (iii) the aggregate amount of VBC Investor Charge-Offs previously allocated and not reimbursed prior to such date of determination, plus (iv) any Increases in the VBC Invested Amount pursuant to Section 6.1(b) hereof made prior to such date of determination. "VBC Investor Charge-Off" shall have the meaning specified in Section 4.4 hereof. "VBC Monthly Interest" shall have the meaning specified in Section 4.3 hereof. "VBC Notional Amount" means, as of any date of determination, an amount equal to (i) the product of (a) the Pool Balance, (b) the VBC Unfunded Amount and (c) 0.000006944 divided by (ii) the amount of Finance Charge Collections received on the preceding Business Day. "VBC Principal Balance" means, as of any date of determination, an amount equal to (i) the Initial VBC Invested Amount, minus, (ii) the amount of principal payments made to the VBC Holders in respect of the VBC Invested Amount prior to such date of determination, plus (iii) any Increases in the VBC Invested Amount pursuant to Section 6.1(b) hereof made prior to such date of determination. "VBC Unfunded Amount" means, as of any date of determination during the period when any Variable Base Certificates are in their Commitment Periods, the excess of (i) $24,000,000 less the portion of the VBC Invested Amount attributable to Variable Base Certificates whose Commitment Periods have terminated over (ii) the VBC Invested Amount as of such date of determination less the portion thereof allocable to Variable Base Certificates whose Commitment Periods have terminated. As of any date of determination after the Commitment Periods for all Variable Base Certificates have terminated, the "VBC Unfunded Amount" will be zero. (b) Notwithstanding anything to the contrary in this Series Supplement or the Agreement, the term "Rating Agency" means, whenever used in this Series Supplement or the Agreement with respect to the Variable Base Certificates, Fitch, Inc. (c) All capitalized terms used herein and not otherwise defined herein have the meanings ascribed to them in the Agreement. The definitions in this Section 2.1 are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such terms. (d) The words "hereof", "herein" and "hereunder" and words of similar import when used in this Series Supplement shall refer to this Series Supplement as a whole and not to any particular provision of this Series Supplement; references to any Article, Section or Exhibit are references to Articles, Sections and Exhibits in or to this Series Supplement unless otherwise specified; and the term "including" means "including without limitation". (e) References herein to "Collections received" shall be deemed to include Collections received and processed as to principal and finance charges and shall not include unprocessed Collections (i.e., Collections which have been received but for which the Servicer in the ordinary course of its business has not yet identified in its computer records the principal and finance charge components). Article III Servicing Fee Section 3.1. Servicing Compensation. The Monthly Servicing Fee shall be payable to the Servicer, in arrears, on each Distribution Date until the earlier of the first Distribution Date following the Series Termination Date and the first Distribution Date following the termination of the Revolving Period on which the VBC Principal Balance is reduced to zero. In no event shall the Trust, the Trustee or the VBC Holders be liable for any other servicing fee. The Monthly Servicing Fee shall be payable to the Servicer solely to the extent amounts are available for distribution in accordance with the terms of this Series Supplement pursuant to the priorities set forth in Section 4 hereof. Article IV Rights of Certificateholders and Allocation and Application of Collections Section 4.1. Allocations. (a) General. On each Allocation Day, Finance Charge Collections, Principal Collections and Default Amounts will be allocated as between outstanding Series as set forth in the Pooling and Servicing Agreement. Series Finance Charge Collections, Series Principal Collections and Series Default Amounts shall be allocated as between the Variable Base Certificates and the Exchangeable Certificate on each Allocation Day, and shall be distributed as set forth in this Article IV. (b) Daily Distribution of Collections to the Holder of the Exchangeable Certificate. At the beginning of each Allocation Day, the Servicer shall direct the Trustee in writing to withdraw from the Collection Account and distribute to the holder of the Exchangeable Certificate (i) an amount equal to the product of (A) the Exchangeable Holder's Percentage applicable to the allocation of Series Finance Charge Collection on such day and (B) the amount of Finance Charge Collections allocated as Series Finance Charge Collections for such Allocation Day, and (ii) an amount equal to the product of (A) the Exchangeable Holder's Percentage applicable to the allocation of Series Principal Collections on such day and (B) the amount of Principal Collections allocated as Series Principal Collections for such Allocation Day. In addition, at the beginning of each Allocation Day, the Servicer shall allocate to the Holder of the Exchangeable Certificate an amount equal to the product of (A) the Exchangeable Holder's Percentage applicable to the allocation of Series Default Amounts on such day and (B) the amount of Default Amounts allocated as Series Default Amounts for such Allocation Day. (c) Allocation of Series Finance Charge Collections. On each Allocation Day during a Collection Period, the Servicer will allocate Series Finance Charge Collections to the Variable Base Certificates based on the applicable VBC Allocation Percentage. On each Allocation Day the Servicer will allocate Investor Finance Charge Collections in the following amounts and in the following priorities (in each case until the referenced amounts have been so allocated during the related Collection Period): (i) an amount equal to the Monthly Servicing Fee for such Collection Period (based on the assumption as of such day that no reduction of the VBC Invested Amount will occur prior to the last day of such Collection Period and that any Increase that the Servicer has notified the Trustee may be requested on a Business Day later in such Collection Period will in fact be made on such Business Day), plus an amount equal to the amount of any previously accrued and unpaid Monthly Servicing Fee; (ii) an amount equal to the sum of VBC Monthly Interest, Commitment Fees , Breakage Fees and Administrative Fees that will accrue during the related Interest Period (based on the assumption as of such day that no reduction of the VBC Invested Amount will occur prior to the last day of such Interest Period), plus an amount equal to the amount of any Carryover Interest and Carryover Commitment, Breakage and Administrative Fees; (iii)an amount equal to the Investor Default Holdback Amount for the Related Collection Period; (iv) an amount equal to all unreimbursed VBC Investor Charge-Offs previously allocated to the Variable Base Certificates; (v) an amount equal to the amount required to reimburse the Trustee for extraordinary expenses reasonably incurred by it in the performance of its duties, to the extent such expenses are reasonably allocated to Series 2000-1 and notified by written notice delivered to the Servicer prior to such Collection Period, setting forth in reasonable detail the amount and nature of such expenses; (vi) for deposit into the Capitalized Interest Account in accordance with the provisions of Section 6.1(e) hereof, an amount equal to the amount specified in a notice delivered by the Servicer to the Trustee in anticipation of an Increase; (vii)for deposit into the Discretionary Prepayment Account in accordance with the provisions of Section 6.1(f) hereof, an amount equal to the amount of any Discretionary Prepayment to be made on any date after such Allocation Date as specified in a Notice of Discretionary Prepayment delivered to the Trustee and each VBC Holder; and (viii)the balance shall be released on such date to the Depositor for application in accordance with the Receivables Purchase Agreement. (d) Allocation of Series Principal Collections. On each Allocation Day during a Collection Period, the Servicer will allocate Series Principal Collections to the Variable Base Certificates based on the applicable VBC Allocation Percentage. On each Allocation Day the Servicer will allocate Investor Principal Collections in the following amounts and in the following priorities (in each case until the referenced amounts have been so allocated during the related Collection Period): (i) Revolving Period: At the beginning of each Allocation Day during the Revolving Period, the Servicer will allocate Investor Principal Collections in the following amounts and in the following priorities (in each case until the referenced amounts have been so allocated during the related Collection Period): (A) an amount equal to the amount of all unreimbursed VBC Investor Charge-Offs (to the extent not funded from Investor Finance Charge Collections as set forth above); (B) an amount equal to the aggregate amount of Investor Default Amounts allocated to the Variable Base Certificates during the Related Collection Period and prior to such Allocation Day (to the extent such amount exceeds the Investor Default Holdback Amount for such Collection Period, or the portion thereof funded from Investor Finance Charge Collections as set forth above); (C) concurrently, and in the case of any shortfall, pro rata based on the amounts described in the following clauses (1) and (2): (1) an amount equal to the "Mandatory Prepayment" for the related Distribution Date (calculated based on the assumption that no increase or reduction in the Adjusted Invested Amount or Series Pool Balance will occur prior to the last day of such Collection Period other than as a result of Discretionary Prepayments occurring prior to such last day as to which the Servicer has already delivered a Notice of Discretionary Prepayment, which Discretionary Prepayments will be included in such calculation), which amount shall be paid as a payment of principal to all VBC Holders on the related Distribution Date on a pro rata basis; and (2) an amount equal to the Commitment Termination Payment for the related Distribution Date (calculated based on the assumption as of such day that no reduction in the portion of the VBC Principal Balance allocated to the Variable Base Certificates in respect of which such payment will be made will occur prior to the last day of such Collection Period other than as a result of Discretionary Prepayments occurring prior to such last day as to which Servicer has already delivered a Notice of Discretionary Prepayment, which Discretionary Prepayments will be included in such calculation), which amount shall be paid as a payment of principal on the related Distribution Date on a pro rata basis to each VBC Holder as to which the related Commitment Period terminated prior to the commencement of the Related Collection Period; (D) for deposit into the Capitalized Interest Account in accordance with the provisions of Section 6.1(e) hereof, an amount equal to the amount specified in a notice delivered by the Servicer to the Trustee in anticipation of an Increase (to the extent not funded from Investor Finance Charge Collections as described above); (E) for deposit into the Discretionary Prepayment Account in accordance with the provisions of Section 6.1(f) hereof, an amount equal to the amount of any Discretionary Prepayment to be made on any date after such Allocation Date as specified in a Notice of Discretionary Prepayment delivered to the Trustee and each VBC Holder (to the extent not funded from Investor Finance Charge Collections as described above); and (F) the balance shall be paid on such date to the Depositor for application in accordance with the Receivables Purchase Agreement. (ii) Controlled Amortization Period: At the beginning of each Allocation Day during the Controlled Amortization Period, the Servicer will allocate Investor Principal Collections in the following amounts and in the following priorities (in each case until the referenced amounts have been so allocated during the related Collection Period): (A) the sum of an amount, for each Variable Base Certificate, equal to the lesser of (a) the related Controlled Amortization Amount and (b) the portion of the related Cumulative Controlled Amortization Amount not already funded through one or more distributions of Controlled Amortization Amounts, Discretionary Prepayments or Mandatory Prepayments following the end of the related Commitment Period and prior to such current Allocation Date; (B) an amount equal to the amount of any remaining unreimbursed VBC Investor Charge-Offs (to the extent not funded from Investor Finance Charge Collections as set forth above); (C) an amount equal to the aggregate amount of the Investor Default Amounts allocated to the Variable Base Certificates during the Related Collection Period prior to such Allocation Date (to the extent such amount exceeds the Investor Default Holdback Amount, or the portion thereof previously funded from Investor Finance Charge Collections as set forth above); (D) an amount equal to the Mandatory Prepayment for the related Distribution Date (calculated based on the assumption as of such day that no increase or reduction in the Adjusted Invested Amount or Series Pool Balance will occur prior to the last day of such Collection Period other than as a result of Discretionary Prepayments occurring prior to such last day and as to which the Servicer has already delivered a Notice of Discretionary Prepayment, which Discretionary Prepayments will be included in such calculation); (E) for deposit into the Capitalized Interest Account in accordance with the provisions of Section 6.1(e) hereof, an amount equal to the amount specified in a notice delivered by the Servicer to the Trustee in anticipation of an Increase (to the extent not funded from Investor Finance Charge Collections as set forth above); (F) for deposit into the Discretionary Prepayment Account in accordance with the provisions of Section 6.1(f) hereof, an amount equal to the amount of any Discretionary Prepayment to be made on any date after such Allocation Date as specified in a Notice of Discretionary Prepayment delivered to the Trustee and each VBC Holder (to the extent not funded from Investor Finance Charge Collections as set forth above); and (G) the balance shall be paid on such date to the Depositor for application in accordance with the Receivables Purchase Agreement. (iii) Early Amortization Period: At the beginning of each Allocation Day during the Early Amortization Period, the Servicer will allocate Investor Principal Collections in the following amounts and in the following priorities (in each case until the referenced amounts have been so allocated during the related Collection Period): (A) an amount equal to the VBC Principal Balance until the VBC Principal Balance has been reduced to zero; and (B) the balance to the Depositor for application in accordance with the Receivables Purchase Agreement. (e) Allocation of Series Default Amounts. On each Allocation Day during a Collection Period, the Servicer will allocate Series Default Amounts to the Variable Base Certificates based on the applicable VBC Allocation Percentage. (f) Application of Funds Allocated to Fund the Investor Default Amounts. On each Distribution Date the Servicer shall direct the Trustee in writing to apply the Investor Default Holdback Amount, and Investor Principal Collections allocated to fund Investor Default Amounts pursuant to Section 4.1(d)(i)(B) or Section 4.1(d)(ii)(C), retained in the Collection Account during the Related Collection Period, as Investor Principal Collections available for application in accordance with the priorities set forth in Section 4.2. Section 4.2. Distributions. (a) On or before each Determination Date, the Servicer shall provide written directions to the Trustee directing the Trustee to distribute to the VBC Holders or to the Certificate Administrator (in case of the Commitment Fees and Administration Fees) (or, in the case of the distribution of any Commitment Termination Payment pursuant to Section 4.2(a)(i) below, solely to those VBC Holders holding Variable Base Certificates as to which the related Commitment Period terminated prior to the commencement of the related Collection Period) on the following Distribution Date from amounts on deposit in the Collection Account (after payment of the amounts allocated to fund the related Monthly Servicing Fee (and any accrued and unpaid Monthly Servicing Fee for prior periods) as described in Section 4.1(c)(i)): (i) if such Distribution Date relates to a Collection Period that commences prior to the end of the Revolving Period and during which an Early Amortization Event did not occur, in the following order: (A) from Investor Finance Charge Collections and, if those are insufficient, Investor Principal Collections, an amount equal to the sum of the VBC Monthly Interest, Commitment Fees, Breakage Fees, Administrative Fees, Carryover Interest and Carryover Commitment, Breakage and Administrative Fees distributable on such Distribution Date; (B) from remaining Investor Finance Charge Collections, the amount of Investor Default Amounts allocated to the Variable Base Certificates during the Related Collection Period, but not in excess of the aggregate amount, if any, of Discretionary Prepayments, Mandatory Prepayments and Commitment Termination Payments payable on such Distribution Date; (C) from remaining Investor Finance Charge Collections, the amount of unreimbursed Investor Charge-Offs for such Distribution Date, but not in excess of the aggregate amount, if any, of Discretionary Prepayments, Mandatory Prepayments and Commitment Termination Payments payable on such Distribution Date (to the extent not funded from Investor Finance Charge Collections as set forth above); (D) from remaining Investor Finance Charge Collections, the amount of any Mandatory Prepayment payable on such Distribution Date (to the extent not funded from Investor Finance Charge Collections as set forth above); (E) from remaining Investor Finance Charge Collections, the amount of any Commitment Termination Payment payable on such Distribution Date (to the extent not funded from Investor Finance Charge Collections as set forth above) (F) from remaining Investor Finance Charge Collections, the amount of any Discretionary Prepayment payable on such Distribution Date (to the extent not funded from Investor Finance Charge Collections as set forth above) (G) from remaining Investor Principal Collections, the amount of unreimbursed Investor Charge-Offs for such Distribution Date, but not in excess of the aggregate amount, if any, of Discretionary Prepayments, Mandatory Prepayments and Commitment Termination Payments payable on such Distribution Date (to the extent not funded from Investor Finance Charge Collections as set forth above); (H) from remaining Investor Principal Collections, the amount of Investor Default Amounts allocated to the Variable Base Certificates during the Related Collection Period, but not in excess of the aggregate amount, if any, of Discretionary Prepayments, Mandatory Prepayments and Commitment Termination Payments payable on such Distribution Date (to the extent not funded from Investor Finance Charge Collections and Investor Principal Collections as set forth above); (I) from remaining Investor Principal Collections, pro rata, the amount of any Mandatory Prepayment and any Commitment Termination Payment payable on such Distribution Date (to the extent not funded from Investor Finance Charge Collections and Investor Principal Collections as set forth above); and (J) from remaining Investor Principal Collections, the amount of any Discretionary Prepayment payable on such Distribution Date (to the extent not funded from Investor Finance Charge Collections and Investor Principal Collections as set forth above). (ii) if such Distribution Date relates to a Collection Period that commences during the Controlled Amortization Period and during which an Early Amortization Event did not occur, in the following order: (A) from Investor Finance Charge Collections and, if those are insufficient, Investor Principal Collections, an amount equal to the sum of the VBC Monthly Interest, Breakage Fees, Administrative Fees, Carryover Interest and Carryover Commitment, Breakage and Administrative Fees distributable on such Distribution Date; (B) from remaining Investor Finance Charge Collections, the amount of Investor Default Amounts allocated to the Variable Base Certificates during the Related Collection Period, but not in excess of the aggregate amount, if any, of in excess of the aggregate amount included therefor, if any, in Mandatory Prepayments, Discretionary Prepayments and Controlled Amortization Amounts payable on such Distribution Date; (C) from remaining Investor Finance Charge Collections, the amount of unreimbursed Investor Charge-Offs for such Distribution Date, but not in excess of the aggregate amount, if any, of in excess of the aggregate amount included therefor, if any, in Mandatory Prepayments, Discretionary Prepayments and Controlled Amortization Amounts payable on such Distribution Date (to the extent not funded from Investor Finance Charge Collections as set forth above in this Section 4.2(a)(ii)); (D) from remaining Investor Finance Charge Collections, the amount of any Controlled Amortization Amounts payable on such Distribution Date (to the extent not funded from Investor Finance Charge Collections as set forth above in this Section 4.2(a)(ii)); (E) from remaining Investor Finance Charge Collections, the amount of any Mandatory Prepayment payable on such Distribution Date (to the extent not funded from Investor Finance Charge Collections as set forth above); (F) from remaining Investor Finance Charge Collections, the amount of any Discretionary Prepayment payable on such Distribution Date (to the extent not funded from Investor Finance Charge Collections as set forth above in this Section 4.2(a)(ii)); (G) from remaining Investor Principal Collections, the sum of the amounts equal to, with respect to each Variable Base Certificate, the lesser of (a) the related Controlled Amortization Amount for such Variable Base Certificate and (b) the portion of the related Cumulative Controlled Amortization Amount that has not already been funded through one or more distributions of Controlled Amortization Amounts, Discretionary Prepayments or Mandatory Prepayments in respect of such Variable Base Certificate made since the termination of the Revolving Period and prior to such Distribution Date; (H) from remaining Investor Principal Collections, the amount of unreimbursed Investor Charge-Offs for such Distribution Date, but not in excess of the aggregate amount, if any, of in excess of the aggregate amount included therefor, if any, in Discretionary Prepayments, Mandatory Prepayments and payments made in respect of Controlled Amortization Amounts or Cumulative Controlled Amortization Amounts payable on such Distribution Date (to the extent not funded from Investor Finance Charge Collections and Investor Principal Collections as set forth above in this Section 4.2(a)(ii)); (I) from remaining Investor Principal Collections, the amount of Investor Default Amounts allocated to the Variable Base Certificates during the Related Collection Period, but not in excess of the aggregate amount, if any, of in excess of the aggregate amount included therefor, if any, in Discretionary Prepayments, Mandatory Prepayments and payments made in respect of Controlled Amortization Amounts or Cumulative Controlled Amortization Amounts payable on such Distribution Date (to the extent not funded from Investor Finance Charge Collections and Investor Principal Collections as set forth above in this Section 4.2(a)(ii)); (J) from remaining Investor Principal Collections, pro rata, the amount of any Mandatory Prepayment payable on such Distribution Date (to the extent not funded from Investor Finance Charge Collections and Investor Principal Collections as set forth above in this Section 4.2(a)(ii)); and (K) from remaining Investor Principal Collections, the amount of any Discretionary Prepayment payable on such Distribution Date (to the extent not funded from Investor Finance Charge Collections and Investor Principal Collections as set forth above in this Section 4.2(a)(ii))). (iii) if such Distribution Date relates to a Collection Period that commences after the occurrence of an Early Amortization Event or during which an Early Amortization Event occurs, in the following order: (A) from Investor Finance Charge Collections and Investor Principal Collections, an amount equal to the sum of the VBC Monthly Interest, Breakage Fees, Administrative Fees, Carryover Interest and Carryover Commitment, Breakage and Administrative Fees distributable on such Distribution Date; (B) from Investor Finance Charge Collections and Investor Principal Collections, an amount equal to the outstanding VBC Principal Balance on such Distribution Date. (b) On or before each Determination Date, the Servicer shall provide written directions to the Trustee directing the Trustee to distribute to the Servicer on the following Distribution Date the related Monthly Servicing Fee and any accrued and unpaid Monthly Servicing Fee for any prior Collection Period, to the extent amounts have been allocated therefor and retained in the Collection Account and the Discretionary Prepayment Account during the related Collection Period pursuant to Section 4.1(c)(i); provided, however, that so long as Gottschalks is the Servicer, the Trustee shall first deduct from any amount payable to the Servicer pursuant to this paragraph an amount equal to the sum of (i) any accrued but unpaid trustee's fees owed to it pursuant to Section 11.05 of the Agreement and (ii) any accrued but unpaid fees of the Standby Servicer, but in no event in excess of the amounts that have been allocated therefor and retained in the Collection Account during the related Collection Period pursuant to Section 4.1(c)(i). In addition, on each Allocation Day, the Trustee will be entitled to withdraw from the Collection Account an amount equal to the amount, if any, allocated to fund extraordinary expenses of the Trustee pursuant to Section 4.1(c)(v). (c) On each Distribution Date, the Servicer shall provide written instructions to the Trustee directing the Trustee to distribute all amounts retained in the Collection Account pursuant to Section 4.1 and Section 4.2 and not required for any other purpose hereunder to the Depositor for application in accordance with the Receivables Purchase Agreement. (d) Other Amounts. The withdrawals to be made from the Collection Account pursuant to this Section 4.2 do not apply to deposits into the Collection Account that do not represent Collections or Adjustment Payments, which excluded deposits (A) include proceeds from the sale, disposition or liquidation of Receivables or the Investor's Interest pursuant to Section 2.03(b), Section 9.02 or Section 12.02 of the Agreement, (B) exclude Transfer Deposit Amounts, to which this Section 4.2 does apply and (C) shall be distributable pursuant to the priorities set forth in Article IX hereof. Section 4.3. Determination of VBC Monthly Interest, Commitment Fees and Breakage Fees. On each Determination Date, the Servicer will calculate the amount of interest that will have accrued on the Variable Base Certificates during the related Interest Period ("VBC Monthly Interest") by multiplying the outstanding VBC Principal Balance for each day during such Interest Period (calculated based on the assumption as of such Determination Date that no increase or reduction in the VBC Principal Balance will occur prior to the related Distribution Date other than as a result of Discretionary Prepayments occurring prior to such Distribution Date and as to which the Servicer has already delivered a Notice of Discretionary Prepayment, which Discretionary Prepayment will be included in such calculation) by the applicable VBC Interest Rate and dividing each such result by 360, and then summing the results. On each Determination Date, the Servicer will calculate the amount of Commitment Fees that will have accrued on the VBC Unfunded Amount during the related Interest Period by multiplying the VBC Unfunded Amount on each day during the related Interest Period (calculated based on the assumption as of such Determination Date that no increase or reduction in the VBC Unfunded Amount will occur prior to the related Distribution Date other than as a result of Discretionary Prepayments occurring prior to such Distribution Date as to which the Servicer has already delivered a Notice of Discretionary Prepayment, which Discretionary Prepayment will be included in such calculation) by 0.25% and dividing each such result by 365, and then summing the results. On each Determination Date, the Servicer will calculate the amount of Breakage Fees that will have accrued during the related Interest Period based on the definition of "Breakage Fee". On each Determination Date, the Servicer will calculate the amount of Carryover Interest that will have accrued during the related Interest Period based on the definition of "Carryover Interest". On each Determination Date, the Servicer will calculate the amount of Carryover Commitment, Breakage and Administrative Fees that will have accrued during the related Interest Period based on the definition of "Carryover Commitment, Breakage and Administrative Fees". Section 4.4. VBC Investor Charge-Offs. On each Distribution Date, the Trustee will, in accordance with the written directions of the Servicer, apply the Investor Default Holdback Amount and Investor Principal Collections allocated pursuant to Section 4.1(d)(i)(B) or 4.1(d)(ii)(C), retained in the Collection Account such the Related Collection Period, to fund any Investor Default Amount as set forth in Section 4.1(f) and Section 4.2. To the extent such Investor Default Holdback Amount and Investor Principal Collections retained in the Collection Account during such Collection Period are insufficient to fund Investor Default Amounts allocated during the related Collection Period, then, on the related Distribution Date, the VBC Invested Amount will be reduced (but not below zero) by the amount of such unfunded Investor Default Amounts (such reduction to the VBC Invested Amount, a "VBC Investor Charge-Off"). VBC Investor Charge-Offs shall be reimbursed and the VBC Invested Amount shall thereupon be increased during the Revolving Period, the Controlled Amortization Period or any related Distribution Date (but not by an amount in excess of the aggregate VBC Investor Charge-Offs) to the extent Collections are allocated therefor and released to the Depositor pursuant to Sections 4.1 and 4.2. On any Distribution Date following (i) the first Collection Period during the Controlled Amortization Period or (ii) the occurrence of an Early Amortization Event, or on any Distribution Date during the Revolving Period on which date a payment of principal will be made to the VBC Holders, reimbursements of VBC Investor Charge-Offs will be made, entirely or partially, by distributions to the VBC Holders as principal payments and reduction of the VBC Principal Balance without a corresponding reduction in the VBC Invested Amount (but not by an amount in excess of the aggregate VBC Investor Charge-Offs) to the extent Collections are allocated to fund such principal payments pursuant to Sections 4.1 and 4.2. Section 4.5. Trustee Expenses Associated with Servicing Assumption. (a) The Servicer shall maintain the letter of credit or surety bond described in Section 4.10 of the Series 1999-1 Supplement; provided, that the amount of such letter of credit or surety bond is increased to not less than $300,000. (b) In the event of the commencement of an Early Amortization Period or a Servicer Default resulting in the assumption of servicing duties by the Trustee, the Trustee may draw upon the letter of credit or surety bond in order to pay the reasonable costs and expenses of the Trustee in connection with the performance of its duties in connection with such event, and shall provide to the Servicer in writing an itemized report of each cost and expense, the related duty and action undertaken and the name of the recipient of the related payment within three Business Days of each such draw. (c) Amounts drawn upon the letter of credit shall be reimbursed first, from amounts available therefor, if any, pursuant to the Series 1999-1 Supplement, and thereafter from amounts otherwise payable to the Servicer in respect of its accrued Monthly Servicing Fees pursuant to Section 4.2(b). (d) The Servicer may replace any then existing letter of credit or surety bond with either a letter of credit or a surety bond with the written the consent of the Trustee, such consent not to be unreasonably withheld. Section 4.6. Blocked Periods. The Depositor hereby covenants that in connection with any Block Period it will not identify Accounts as Blocked Accounts based on any criteria that is adverse to the interests of the VBC Holders. The Depositor also hereby covenants that in connection with the Removal of any Removed Accounts, it will not identify Accounts as Removed Accounts based on any criteria that is adverse to the interests of the VBC Holders. Article V Distributions and Reports Section 5.1. Distributions. On each Distribution Date, the Trustee shall distribute to each of the VBC Holders (or, in the case of any distribution of Commitment Termination Payments, each of the VBC Holders entitled thereto) of record on the preceding Record Date (other than as provided in Section 12.02 of the Agreement respecting a final distribution) such VBC Holder's pro rata share of the amounts required to be distributed to such VBC Holders pursuant to Article IV hereof and in accordance with the written direction of the Servicer. Except as provided in Section 12.02 of the Agreement with respect to a final distribution, distributions to Certificateholders hereunder shall be made by wire transfer in immediately available funds. Section 5.2. Other Notices to Holders. Notwithstanding any other provision of the Agreement or this Series Supplement to the contrary, the Trustee and the Servicer shall promptly deliver to the initial Holders of the Variable Base Certificates a copy of each notice, statement or other document received or generated by it pursuant to Sections 3.03(b), 3.04(b), 3.05, 3.06, 9.01 or 10.01 of the Agreement; provided, however, that the Trustee shall not be required to deliver to the initial Holders copies of notices, statements or other documents received from the Servicer and for which the Servicer is required to deliver such notices, statements or other documents directly to the Holders and vice versa. Article VI The Variable Base Certificates and Exchangeable Certificate Section 6.1. Initial Issuance of Variable Base Certificates, Increases and Decreases of VBC Invested Amount. (a) The Variable Base Certificates, upon original issuance, will be issued in registered form in the form of one or more definitive typewritten certificates substantially in the form of Exhibit A hereto, to be executed and delivered by, or on behalf of, the Depositor to the Trustee for authentication. The Trustee shall, upon the written request of the Depositor, authenticate and deliver the Variable Base Certificates to the Person or Persons designated in such request, in an aggregate stated principal amount of up to $24,000,000.00 (the "Series 2000-1 Maximum Invested Amount"). The aggregate principal amount of all Variable Base Certificates outstanding may never exceed the Series 2000-1 Maximum Invested Amount. On the Closing Date, the Depositor will issue Variable Base Certificates having aggregate stated principal amounts totaling such Series 2000-1 Maximum Invested Amount, to which are attributable portions of the VBC Invested Amount and the VBC Principal Balance totaling the Initial VBC Invested Amount on the Closing Date. (b) Procedure for Increasing the VBC Invested Amount. (i) Subject to satisfaction of the conditions precedent set forth in Section 6.1(b)(ii), upon not less than three Business Days prior written notice substantially in the form attached as Exhibit E hereto delivered by the Servicer to the Trustee and each VBC Holder (such notice specifying the applicable Draw Date), the VBC Invested Amount and VBC Principal Balance may be increased (each such increase referred to as an "Increase"). Any such Increase shall be in an aggregate amount not less than $100,000 and integral multiples of $100,000 in excess thereof. The Trustee will record in a register (the "Certificate Register") to be maintained by the Trustee for such purposes and for the purposes of recording the names and addresses of registered VBC Holders, and the Servicer will properly record in its books and records relating to the Variable Base Certificates and the determination of the percentages relevant to the allocation of Finance Charge Collections, Principal Collections and Default Amounts, each increase in the VBC Invested Amount and VBC Principal Balance, and the portions thereof attributable to the Variable Base Certificates held by the VBC Holders that fund such Increase, in amounts corresponding to such Increase and the portions thereof funded by such VBC Holders, as the case may be, upon confirmation by the Trustee of its receipt (by deposit into the Draw Account) from the VBC Holders of immediately available funds in the amount of such Increase. All proceeds of such Increase shall be deposited into the Draw Account on the related Draw Date and released by the Trustee to the Depositor (as and when directed in writing by the Servicer) for application in accordance with the Receivables Purchase Agreement. (ii) The VBC Invested Amount may be increased pursuant to Section 6.1(b)(i) only upon satisfaction of each of the following conditions with respect to each proposed Increase as of the related Draw Date (which satisfaction shall be evidenced by certification of the satisfaction thereof by the Servicer in the related Request for Increase): (A) after giving effect to such Increase, the VBC Invested Amount shall not exceed the Series 2000-1 Maximum Invested Amount; (B) no Early Amortization Event has occurred and is continuing, and such Increase will not result in the occurrence of an Early Amortization Event; and (C) taking into consideration the amount of such Increase, Collections received during the related Collection Period and amounts held for such purpose in the Capitalized Interest Account will be sufficient to fund the VBC Monthly Interest, Commitment Fees, Breakage Fees, Administrative Fees, Carryover Interest and Carryover Commitment, Breakage and Administrative Fees distributable on the succeeding Distribution Date. (c) Decreases. (i) Discretionary Prepayments. Upon at least three Business Days' prior irrevocable notice to each VBC Holder and the Trustee in writing substantially in the form attached as Exhibit F hereto (a "Notice of Discretionary Prepayment"), the Servicer may, in its sole discretion, direct the Trustee in writing to make a Discretionary Prepayment of all or a portion of the aggregate outstanding VBC Principal Balance and VBC Invested Amount from amounts on deposit in the Discretionary Prepayment Account and/or on deposit in the Collection Account and available therefor, to the extent that the Servicer has certified such amounts to be in excess of those required to be allocated to fund amounts higher in priority of allocation and distribution than Discretionary Prepayments as set forth in Sections 4.1 and 4.2 hereof. Discretionary Prepayments may only be made (A) on a Draw Date, (B) not more than once per Collection Period on a Business Day that is not a Draw Date in addition to any Discretionary Prepayments made on a Draw Date, and (C) notwithstanding the foregoing clause (B), on any Business Day if such Discretionary Prepayment is made to avoid an Early Amortization Event. Each such Discretionary Prepayment shall be made in a minimum aggregate principal amount of $100,000 and integral multiples of $100,000 in excess thereof, which amounts shall be distributed by the Trustee on the date specified in such Notice of Discretionary Prepayment to the VBC Holders on a pro rata basis, based on the respective portions of the outstanding VBC Principal Balance attributable to the Variable Base Certificates held thereby. No such Discretionary Prepayment may be made unless the Servicer certifies in such Notice of Discretionary Prepayment that such Discretionary Prepayment will not cause an Early Amortization Event. (ii) Repayment Pursuant to Article IV. On each Distribution Date the Trustee will distribute to VBC Holders on a pro rata basis, based on the outstanding portions of the VBC Principal Balance attributable to the Variable Base Certificates held thereby, amounts distributable pursuant to Article IV in respect of Commitment Termination Payments, Controlled Amortization Amounts, Discretionary Prepayments or Mandatory Prepayments, not subject to any limitation as to the increments in which such amounts are payable. (iii) The Trustee will record in the Certificate Register, and the Servicer will properly record in its books and records relating to the servicing of the Receivables and the determination of the percentages relevant to the allocation of Finance Charge Collections, Principal Collections and Default Amounts, decreases in the VBC Invested Amounts and VBC Principal Balances of the Variable Base Certificates held by VBC Holders in amounts corresponding to the amounts distributed to such VBC Holders by the Trustee pursuant to Section 6.1(c)(i) or Section 6.1(c)(ii) on the date of any such distribution. (d) Draw Account. (i) The Servicer, for the benefit of the VBC Holders, shall establish and maintain in the name of the Trustee, on behalf of the Trust, an Eligible Deposit Account (the "Draw Account"), which shall be identified as the "Draw Account for Gottschalks Credit Card Master Trust, Series 2000-1." The Draw Account shall bear a designation clearly indicating that the funds deposited therein are held for the benefit of the VBC Holders. The Trustee will notify the Servicer of deposits made by VBC Holders into the Draw Account in satisfaction of their respective obligations to fund Increases on the related Draw Dates. Unless otherwise instructed by the Servicer pursuant to Section 6.1(d)(ii), on the day received, the Trustee will release the amounts deposited into the Draw Account by the VBC Holders (A) first, to the Certificate Administrator, the related Drawing Fee and (B) second, to the Depositor, remaining amounts in the Draw Account for application in accordance with the Receivables Purchase Agreement in the same manner that the Trustee releases to the Depositor amounts held in the Collection Account and distributable to the Depositor pursuant to Article IV. The Draw Account shall be maintained until all amounts on deposit therein have been applied in accordance with this Section 6.1(d) and the Revolving Period has terminated. (ii) At the written direction of the Servicer delivered to the trustee no later than the day preceding the related Draw Date, funds deposited into the Draw Account (excluding those amounts distributed to the Certificate Administrator) on such Draw Date may be retained therein for a period specified in such direction up to ten Business Days pending release to the Depositor for application in accordance with the Receivables Purchase Agreement. Amounts so retained in the Draw Account will invested by the Trustee in Eligible Investments specified by the Servicer in such written direction that will mature no later than the date on which the Servicer has instructed the Trustee to release such amounts to the Depositor for application in accordance with the Receivables Purchase Agreement. All such Eligible Investments shall be held by the Trustee for the benefit of the VBC Holders. All interest and other investment earnings (net of losses and investment expenses) with respect to funds on deposit in the Draw Account shall be deposited into the Collection Account and shall be treated by the Servicer as Investor Finance Charge Collections. If at any time during which amounts are held in the Draw any Early Amortization Event relating to the insolvency or bankruptcy of the Depositor or Servicer shall occur, all amounts held in the Draw Account promptly will be deposited into the Collection Account and allocated on the date of such deposit as if such amounts constituted Investor Principal Collections to be allocated on such date pursuant to Section 4.1 and shall be distributed on the Distribution Date in the calendar month succeeding that in which such Early Amortization Event occurs pursuant to Section 4.2. In no event shall the Trustee be liable for the selection of investments or for investment losses incurred thereon. The Trustee shall have no liability in respect of losses incurred as a result of the liquidation of any such investment prior to its stated maturity or the failure of the party directing such investment to provide timely written investment direction. The Trustee shall have no obligation to invest or reinvest any amounts held hereunder in the absence of such written investment direction. (iii) The Trustee shall, for the benefit of the Certificateholders, possess all right, title and interest in and to all funds on deposit from time to time in, and all Eligible Investments credited to, the Draw Account and in all proceeds thereof. The Draw Account shall be under the sole dominion and control of the Trustee for the benefit of the VBC Holders. If, at any time, the Draw Account ceases to be an Eligible Deposit Account the Servicer shall within 10 Business Days (or such longer period, not to exceed 30 calendar days, as to which the Rating Agency may consent) instruct the Trustee to establish a new Draw Account meeting the conditions for an Eligible Deposit Account and shall transfer any cash and/or any investments to such new Draw Account. Neither the Depositor, the Servicer nor any person or entity claiming by, through or under the Depositor, the Servicer or any such person or entity shall have any right, title or interest in, or any right to withdraw any amount from, the Draw Account, except by instruction of the Trustee as and to the extent expressly provided herein. Schedule 1 hereto, which is hereby incorporated into and made part of this Series Supplement, identifies the Draw Account by setting forth the account number of such account, the account designation of such account and the name of the institution with which such account has been established. If a substitute Draw Account is established pursuant to this Section 6.1(d)(iii), the Servicer shall provide to the Trustee an amended Schedule 1, setting forth the relevant information for such substitute Draw Account. (iv) Pursuant to the authority granted to the Servicer in Section 3.01(a) of the Agreement, the Servicer shall have the power, revocable by the Trustee following any Servicer Default, to instruct the Trustee to make withdrawals and payments from the Draw Account for the purposes of carrying out the Servicer's or the Trustee's duties hereunder. (v) The Trustee hereby confirms that (i) the Trustee is acting, with respect to the establishment and maintenance of the Draw Account, as a "securities intermediary" as defined in Section 8-102 of the UCC or the corresponding Section of the UCC in the applicable State (in such capacity, the "Securities Intermediary"), (ii) has established the Draw Account as a "securities account" as such term is defined in Section 8-501(a) of the UCC, (iii) the Securities Intermediary shall, subject to the terms of this Agreement, treat the Trustee as entitled to exercise the rights that comprise any financial asset credited to the Draw Account, and (iv) all securities or other property underlying any financial assets credited to the Draw Account shall be registered in the name of the Securities Intermediary, endorsed to the Securities Intermediary or in blank and in no case will any financial asset credited to the Draw Account be registered in the name of any other person, payable to the order of any other person, or specially endorsed to any other person, except to the extent the foregoing have been specially endorsed by the Servicer to the Trustee. (vi) The Trustee hereby agrees that the Draw Account and each item of property (whether investment property, financial asset, security or instrument), other than cash, credited to the Draw Account shall be treated as a "financial asset" within the meaning of Section 8- 102(A)(9) of the UCC or the corresponding Section of the UCC in the applicable State. (vii) If at any time the Securities Intermediary shall receive an "entitlement order" (within the meaning of Section 8-102(A)(8) of the UCC or the corresponding Section of the UCC in the applicable State) issued by the Trustee and relating to the Draw Account, the Securities Intermediary shall comply with such entitlement order without further consent by any other person. The Trustee hereby agrees only to issue entitlement orders at the written direction of the Servicer. The Securities Intermediary shall have no obligation to act, and shall be fully protected in refraining from acting, in respect of the financial assets credited to the Draw Account in the absence of such an entitlement order. (viii) In the event that the Securities Intermediary has or subsequently obtains by agreement, operation of law or otherwise a security interest in the Draw Account, or any security entitlement credited thereto, the Securities Intermediary hereby agrees that such security interest shall be subordinate to the security interest of the Trustee. The financial assets and other items deposited to the Draw Account (or any other securities account maintained in the name of the Securities Intermediary for the benefit of the Trustee) will not be subject to deduction, set-off, banker's lien, or any other right in favor of any person other than the Trustee. (ix) The Trustee, in such capacity, has not entered into and, until termination of this Supplement, will not enter into, any agreement with any other person relating to the Draw Account, or any financial assets credited thereto pursuant to which it has agreed or will agree to comply with entitlement orders (as defined in Section 8-102(a)(8) of the UCC or the corresponding Section of the UCC in the applicable State) of such person. No financial asset credited to the Draw Account or otherwise acquired with funds deposited in the Draw Account will be registered in the name of the Trustee, in such capacity, payable to its order, or specially endorsed to it, except to the extent such financial asset has been endorsed to the Securities Intermediary or in blank. (e) Capitalized Interest Account. (i) The Servicer, for the benefit of the VBC Holders, shall establish and maintain in the name of the Trustee, on behalf of the Trust, an Eligible Deposit Account (the "Capitalized Interest Account"), which shall be identified as the "Capitalized Interest Account for Gottschalks Credit Card Master Trust, Series 2000-1." The Capitalized Interest Account shall bear a designation clearly indicating that the funds deposited therein are held for the benefit of the VBC Holders. (ii) On any Business Day during a Collection Period, in contemplation of or following the Servicer's delivery of a Request for Increase, the Servicer may instruct the Trustee in writing to commence depositing funds into the Capitalized Interest Account to the extent allocable therefor pursuant to Section 4.1(c) and Section 4.1(d) hereof on each Allocation Date following the date of such instruction until the earlier of (i) the date on which the aggregate amount so deposited is the maximum amount to be so deposited as specified in such instruction or (ii) the last Business Day of the Collection Period during which such instruction is delivered or as to which such instruction is effective (as specified in such instruction). (iii) On each Distribution Date, the Trustee will, in accordance with the written instruction of the Servicer (which instruction may be included in the related Distribution Date Statement), withdraw all amounts on deposit in the Capitalized Interest Account and deposit such amounts into the Collection Account for application as if such amounts were Investor Finance Charge Collections available for distribution pursuant to Section 4.2 hereof. Any amounts so withdrawn from the Capitalized Interest Account and deposited into the Collection Account that remain after all of the amounts required to distributed pursuant to Section 4.2 hereof have been so distributed on any Distribution Date, shall be released to the Depositor for application in accordance with the Receivables Purchase Agreement. (iv) Amounts on deposit in the Capitalized Interest Account will be invested by the Trustee in Eligible Investments specified by the Servicer in such written direction that will mature no later than the Distribution Date following the Collection Period during which such instruction is delivered or as to which such instruction is effective (as specified in such instruction). All such Eligible Investments shall be held by the Trustee for the benefit of the VBC Holders. All interest and other investment earnings (net of losses and investment expenses) with respect to funds on deposit in the Capitalized Interest Account shall be deposited in the Collection Account on such succeeding Distribution Date, and shall be treated by the Servicer as Investor Finance Charge Collections. In no event shall the Trustee be liable for the selection of investments or for investment losses incurred thereon. The Trustee shall have no liability in respect of losses incurred as a result of the liquidation of any such investment prior to its stated maturity at the written direction of the Servicer or the failure of the party directing such investment to provide timely written investment direction. The Trustee shall have no obligation to invest or reinvest any amounts held hereunder in the absence of such written investment direction. (v) The Trustee shall, for the benefit of the VBC Holders, possess all right, title and interest in and to all funds on deposit from time to time in, and all Eligible Investments credited to, the Capitalized Interest Account and in all proceeds thereof. The Capitalized Interest Account shall be under the sole dominion and control of the Trustee for the benefit of the VBC Holders. If, at any time, the Capitalized Interest Account ceases to be an Eligible Deposit Account the Servicer shall within 10 Business Days (or such longer period, not to exceed 30 calendar days, as to which the Rating Agency may consent) instruct the Trustee in writing to establish a new Capitalized Interest Account meeting the conditions for an Eligible Deposit Account and shall transfer any cash and/or any investments to such new Capitalized Interest Account. Neither the Depositor, the Servicer nor any person or entity claiming by, through or under the Depositor, the Servicer or any such person or entity shall have any right, title or interest in, or any right to withdraw any amount from, the Capitalized Interest Account, except as expressly provided herein. Schedule 1 hereto, which is hereby incorporated into and made part of this Series Supplement, identifies the Capitalized Interest Account by setting forth the account number of such account, the account designation of such account and the name of the institution with which such account has been established. If a substitute Capitalized Interest Account is established pursuant to this Section 6.1(e)(v), the Servicer shall provide to the Trustee an amended Schedule 1, setting forth the relevant information for such substitute Capitalized Interest Account. (vi) The Trustee hereby confirms that (i) the Trustee is acting, with respect to the establishment and maintenance of the Capitalized Interest Account, as a "securities intermediary" as defined in Section 8-102 of the UCC or the corresponding Section of the UCC in the applicable State (in such capacity, the "Securities Intermediary"), (ii) has established the Capitalized Interest Account as a "securities account" as such term is defined in Section 8-501(a) of the UCC, (iii) the Securities Intermediary shall, subject to the terms of this Agreement, treat the Trustee as entitled to exercise the rights that comprise any financial asset credited to the Capitalized Interest Account, and (iv) all securities or other property underlying any financial assets credited to the Capitalized Interest Account shall be registered in the name of the Securities Intermediary, endorsed to the Securities Intermediary or in blank and in no case will any financial asset credited to the Capitalized Interest Account be registered in the name of any other person, payable to the order of any other person, or specially endorsed to any other person, except to the extent the foregoing have been specially endorsed by the Servicer to the Trustee. (vii) The Trustee hereby agrees that the Capitalized Interest Account and each item of property (whether investment property, financial asset, security or instrument), other than cash, credited to the Capitalized Interest Account shall be treated as a "financial asset" within the meaning of Section 8-102(A)(9) of the UCC or the corresponding Section of the UCC in the applicable State. (viii) If at any time the Securities Intermediary shall receive an "entitlement order" (within the meaning of Section 8-102(A)(8) of the UCC or the corresponding Section of the UCC in the applicable State) issued by the Trustee and relating to the Capitalized Interest Account, the Securities Intermediary shall comply with such entitlement order without further consent by any other person. The Trustee hereby agrees, so long as no early Amortization Event shall have occurred and be continuing, only to issue entitlement orders at the written direction of the Servicer. The Securities Intermediary shall have no obligation to act, and shall be fully protected in refraining from acting, in respect of the financial assets credited to the Capitalized Interest Account in the absence of such an entitlement order. (ix) In the event that the Securities Intermediary has or subsequently obtains by agreement, operation of law or otherwise a security interest in the Securities Accounts, or any security entitlement credited thereto, the Securities Intermediary hereby agrees that such security interest shall be subordinate to the security interest of the Trustee. The financial assets and other items deposited to the Capitalized Interest Account (or any other securities account maintained in the name of the Securities Intermediary for the benefit of the Trustee) will not be subject to deduction, set-off, banker's lien, or any other right in favor of any person other than the Trustee. (x) The Trustee, in such capacity, has not entered into and, until termination of this Supplement, will not enter into, any agreement with any other person relating to the Capitalized Interest Account, or any financial assets credited thereto pursuant to which it has agreed or will agree to comply with entitlement orders (as defined in Section 8-102(a)(8) of the UCC or the corresponding Section of the UCC in the applicable State) of such person. No financial asset will be registered in the name of the Trustee, in such capacity, payable to its order, or specially endorsed to it, except to the extent such financial asset has been endorsed to the Securities Intermediary or in blank. (f) Discretionary Prepayment Account. (i) The Servicer, for the benefit of the VBC Holders, shall establish and maintain in the name of the Trustee, on behalf of the Trust, an Eligible Deposit Account (the "Discretionary Prepayment Account"), which shall be identified as the "Discretionary Prepayment Account for Gottschalks Credit Card Master Trust, Series 2000-1". The Discretionary Prepayment Account shall bear a designation clearly indicating that the funds deposited therein are held for the benefit of the VBC Holders. (ii) On any Business Day during a Collection Period, in contemplation of or following the Servicer's delivery of an instruction to the Trustee to make a Discretionary Prepayment, the Servicer may instruct the Trustee in writing to commence depositing funds into the Discretionary Prepayment Account to the extent allocable therefor pursuant to Section 4.1(c) and Section 4.1(d) hereof on each Allocation Date following the date of such instruction until the earliest of (i) the date on which the aggregate amount so deposited is the maximum amount to be so deposited as specified in such instruction, (ii) the date specified in such instruction as the date on which such Discretionary Prepayment is to be made or (iii) the last Business Day of the Collection Period during which such instruction is delivered or as to which such instruction is effective (as specified in such instruction). (iii) On the date on which the Servicer has directed the Trustee to make a Discretionary Prepayment in accordance with Section 6.1(c)(i) hereof, the Trustee shall withdraw all amounts on deposit in the Discretionary Prepayment Account and (A) distribute such amounts to the VBC Holders and Certificate Administrator, up to the amount of (and in the following order) Administrative Fees payable on the date of such Discretionary Prepayment, if any, interest accrued on the portion of the VBC Invested Amount being prepaid and the specified Discretionary Prepayment, and (B) deposit into the Collection Account all remaining amounts for application as if such amounts were Investor Finance Charge Collections available for distribution pursuant to Section 4.2 hereof. (iv) Amounts on deposit in the Discretionary Prepayment Account will be invested by the Trustee in Eligible Investments specified by the Servicer in such written direction that will mature no later than the date on which the related Discretionary Prepayment is to be made as specified in the instruction delivered pursuant to Section 6.2(b)(ii). All such Eligible Investments shall be held by the Trustee for the benefit of the VBC Holders. In no event shall the Trustee be liable for the selection of investments or for investment losses incurred thereon. The Trustee shall have no liability in respect of losses incurred as a result of the liquidation of any such investment prior to its stated maturity or the failure of the party directing such investment to provide timely written investment direction. The Trustee shall have no obligation to invest or reinvest any amounts held hereunder in the absence of such written investment direction. (v) The Trustee shall for the benefit of the VBC Holders possess all right, title and interest in and to all funds on deposit from time to time in, and all Eligible Investments credited to, the Discretionary Prepayment Account and in all proceeds thereof. The Discretionary Prepayment Account shall be under the sole dominion and control of the Trustee for the benefit of the VBC Holders. If, at any time, the Discretionary Prepayment Account ceases to be an Eligible Deposit Account the Servicer shall within 10 Business Days (or such longer period, not to exceed 30 calendar days, as to which the Rating Agency may consent) instruct the Trustee to establish a new Discretionary Prepayment Account meeting the conditions for an Eligible Deposit Account and shall transfer any cash and/or any investments to such new Discretionary Prepayment Account. Neither the Depositor, the Servicer nor any person or entity claiming by, through or under the Depositor, the Servicer or any such person or entity shall have any right, title or interest in, or any right to withdraw any amount from, the Discretionary Prepayment Account, except as expressly provided herein. Schedule 1 hereto, which is hereby incorporated into and made part of this Series Supplement, identifies the Discretionary Prepayment Account by setting forth the account number of such account, the account designation of such account and the name of the institution with which such account has been established. If a substitute Discretionary Prepayment Account is established pursuant to this Section 6.1(f)(v), the Servicer shall provide to the Trustee an amended Schedule 1, setting forth the relevant information for such substitute Discretionary Prepayment Account. (vi) The Trustee hereby confirms that (i) the Trustee is acting, with respect to the establishment and maintenance of the Discretionary Prepayment Account, as a "securities intermediary" as defined in Section 8-102 of the UCC or the corresponding Section of the UCC in the applicable State (in such capacity, the "Securities Intermediary"), (ii) has established the Discretionary Prepayment Account as a "securities account" as such term is defined in Section 8-501(a) of the UCC, (iii) the Securities Intermediary shall, subject to the terms of this Agreement, treat the Trustee as entitled to exercise the rights that comprise any financial asset credited to the Discretionary Prepayment Account, and (iv) all securities or other property underlying any financial assets credited to the Discretionary Prepayment Account shall be registered in the name of the Securities Intermediary, endorsed to the Securities Intermediary or in blank and in no case will any financial asset credited to the Discretionary Prepayment Account be registered in the name of any other person, payable to the order of any other person, or specially endorsed to any other person, except to the extent the foregoing have been specially endorsed by the Servicer to the Trustee. (vii) The Trustee hereby agrees that the Discretionary Prepayment Account and each item of property (whether investment property, financial asset, security or instrument), other than cash, credited to the Discretionary Prepayment Account shall be treated as a "financial asset" within the meaning of Section 8-102(A)(9) of the UCC or the corresponding Section of the UCC in the applicable State. (viii) If at any time the Securities Intermediary shall receive an "entitlement order" (within the meaning of Section 8-102(A)(8) of the UCC or the corresponding Section of the UCC in the applicable State) issued by the Trustee and relating to the Discretionary Prepayment Account, the Securities Intermediary shall comply with such entitlement order without further consent by any other person. The Trustee hereby agrees, so long as no Early Amortization Event has occurred and is continuing, only to issue entitlement orders at the written direction of the Servicer. The Securities Intermediary shall have no obligation to act, and shall be fully protected in refraining from acting, in respect of the financial assets credited to the Discretionary Prepayment Account in the absence of such an entitlement order. (ix) In the event that the Securities Intermediary has or subsequently obtains by agreement, operation of law or otherwise a security interest in the Securities Accounts, or any security entitlement credited thereto, the Securities Intermediary hereby agrees that such security interest shall be subordinate to the security interest of the Trustee. The financial assets and other items deposited to the Discretionary Prepayment Account (or any other securities account maintained in the name of the Securities Intermediary for the benefit of the Trustee) will not be subject to deduction, set-off, banker's lien, or any other right in favor of any person other than the Trustee. (x) The Trustee, in such capacity, has not entered into and, until termination of this Supplement, will not enter into, any agreement with any other person relating to the Discretionary Prepayment Account, or any financial assets credited thereto pursuant to which it has agreed or will agree to comply with entitlement orders (as defined in Section 8-102(a)(8) of the UCC or the corresponding Section of the UCC in the applicable State) of such person. No financial asset will be registered in the name of the Trustee, in such capacity, payable to its order, or specially endorsed to it, except to the extent such financial asset has been endorsed to the Securities Intermediary or in blank. Section 6.2. Extension and Repurchase of Variable Base Certificates. (a) Not more than 120 days prior to the last day of any Commitment Period, the Depositor will give notice to the Trustee and related VBC Holders as to the termination date of such Commitment Period, indicating whether or not the Trust and such VBC Holders will have the option to extend or reextend such Commitment Period and, if such notice specifies that the Commitment Period may be extended or reextended, specifying the date that will be the last day of such extended or reextended Commitment Period if such Commitment Period is in fact extended or reextended. Following their receipt of such notice indicating that the Trust and the VBC Holders do have the option to extend or reextend such Commitment Period, the Trustee and any VBC Holder may agree to extend or reextend the Commitment Period relating to the Variable Base Certificate held by such VBC Holder. The Trustee will agree to such extension, on behalf of the Trust, if the Trustee receives (i) written instruction to so agree from the Depositor not later than 100 days prior to the last day of such Commitment Period, (ii) the relevant VBC Holder specifies in writing that it wishes to extend such Commitment Period, (ii) the Trustee receives no later than five Business Days prior to the last day of such Commitment Period an Officer's Certificate from the Servicer to the effect that the conditions precedent to the extension or reextension of such Commitment Period specified in Section 6.2(b) have been satisfied and (iv) the Trustee receives no later than five Business Days prior to the last day of such Commitment Period written confirmation that the Rating Agency will not downgrade, withdraw or modify its rating of any other Variable Base Certificates or certificates of any other Series solely because of such extension. Not later than 90 days prior to the end of any Commitment Period that the Depositor has indicated may be extended, each of the Trustee and each relevant VBC Holder will inform the Depositor and, as applicable, the Trustee whether it has agreed to extend such Commitment Period. (b) A Commitment Period may be extended by mutual agreement of the Trust and the related VBC Holder only if the following conditions precedent are satisfied as of the date of such agreement: (i) no Early Amortization Event has occurred and is continuing or will occur as a result of such extension; (ii) the last day of such extended or reextended Commitment Period shall not be later than 364 days after the last day of the Commitment Period being so extended or reextended; (iii) the last day of such extended or reextended Commitment Period shall not be later than July 31, 2003. (c) If the Trust extends to any VBC Holder the right to extend or reextend the Commitment Period relating to the Variable Base Certificate owned by such VBC Holder pursuant to Section 6.2(a) above, and any such VBC Holder does not timely agree to such extension or reextension pursuant to Section 6.2(a) above, the Trustee, at the direction of the Depositor, will either (i) allow such Commitment Period to terminate and to begin making payments of principal thereof (including, if so directed by the Servicer in its sole discretion, one or more Discretionary Prepayments) in accordance with Article IV hereof, or (ii) if the Depositor requests, allow any Person, including any other VBC Holder, to purchase all or any part of such unextended Variable Base Certificate on any Distribution Date prior to the end of the Commitment Period that is not extended or reextended (which purchasing VBC Holder may subsequently agree to extend or reextend such Commitment Period) for an amount equal to the outstanding VBC Principal Balance thereof. With respect to clause (ii) in this subparagraph (c), the VBC Holder, by its acceptance of the Variable Base Certificate, agrees that if it is offered the right to extend or reextend the related Commitment Period and does not agree to any such extension or reextension within the time frame described above, it will sell such unextended Variable Base Certificate to any Person designated by the Depositor at a price not less than the price specified above. Section 6.3. Transfer Restrictions. (a) The Trustee shall not authenticate and deliver to any Person any Variable Base Certificate unless it contains a legend in substantially the following form: "THIS VARIABLE BASE CERTIFICATE HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION IN RELIANCE ON EXEMPTIONS PROVIDED BY THE 1933 ACT AND SUCH STATE OR FOREIGN SECURITIES LAWS. THE VARIABLE BASE CERTIFICATES ARE ELIGIBLE FOR PURCHASE PURSUANT TO RULE 144A UNDER THE 1933 ACT. NO RESALE OR OTHER TRANSFER OF THIS VARIABLE BASE CERTIFICATE SHALL BE MADE UNLESS SUCH RESALE OR TRANSFER (A) IS MADE IN ACCORDANCE WITH SECTION 6.3 OF THE SERIES 2000-1 SUPPLEMENT TO THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN AND (B) IS MADE EITHER (i) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, (ii) IN A TRANSACTION (OTHER THAN A TRANSACTION IN CLAUSE (iv) BELOW) EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND APPLICABLE STATE AND FOREIGN SECURITIES LAWS, (iii) TO GOTTSCHALKS CREDIT RECEIVABLES CORPORATION (THE "DEPOSITOR") OR (iv) TO A PERSON WHO THE TRANSFEROR OF THIS VARIABLE BASE CERTIFICATE REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE 1933 ACT THAT IS AWARE THAT THE RESALE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, OR TO AN INSTITUTIONAL "ACCREDITED INVESTOR" UNDER RULE 501(a)(1), (2), (3) OR (7) UNDER THE 1933 ACT. IN THE EVENT THAT THE TRANSFER OF A VARIABLE BASE CERTIFICATE IS TO BE MADE AS DESCRIBED IN CLAUSE (ii) OF THE PRECEDING SENTENCE, THE PROSPECTIVE INVESTOR IS REQUIRED TO DELIVER AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE TRUSTEE AND THE DEPOSITOR TO THE EFFECT THAT SUCH TRANSFER MAY BE MADE WITHOUT REGISTRATION UNDER THE 1933 ACT OR ANY APPLICABLE STATE OR FOREIGN SECURITIES LAWS. THE PROSPECTIVE TRANSFEREE IN A TRANSFER OF A VARIABLE BASE CERTIFICATE TO BE MADE AS DESCRIBED IN CLAUSES (ii) AND (iv) ABOVE MUST DELIVER TO THE TRUSTEE A REPRESENTATION LETTER REQUIRED BY SECTION 6.3 OF THE SERIES 2000-1 SUPPLEMENT TO THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN. PROSPECTIVE PURCHASERS OF VARIABLE BASE CERTIFICATES ARE HEREBY NOTIFIED THAT THE SELLER OF ANY VARIABLE BASE CERTIFICATE MAY BE RELYING ON THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SECTION 5 OF THE ACT PROVIDED BY RULE 144A UNDER THE ACT. THIS VARIABLE BASE CERTIFICATE, OR A BENEFICIAL INTEREST HEREIN, MAY NOT BE TRANSFERRED UNLESS THE TRUSTEE HAS RECEIVED (I) A CERTIFICATE FROM THE TRANSFEREE TO THE EFFECT THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN, TRUST OR ACCOUNT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SUBJECT TO SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR A GOVERNMENTAL PLAN DEFINED IN SECTION 3(32) OF ERISA OR SECTION 414(d) OF THE CODE SUBJECT TO ANY FEDERAL, STATE OR LOCAL LAW WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO THE FOREGOING PROVISIONS OF ERISA OR THE CODE ("SIMILAR LAW") (EACH, A "BENEFIT PLAN") AND IS NOT AN ENTITY INCLUDING AN INSURANCE COMPANY SEPARATE ACCOUNT OR AN INSURANCE COMPANY GENERAL ACCOUNT IF THE ASSETS IN ANY SUCH ACCOUNTS CONSTITUTE "PLAN ASSETS" FOR PURPOSES OF REGULATION SECTION 2510.3-101 OF ERISA WHOSE UNDERLYING ASSETS INCLUDE BENEFIT PLAN ASSETS BY REASON OF A BENEFIT PLAN'S INVESTMENT IN THE ENTITY (SUCH BENEFIT PLAN OR ENTITY, A "BENEFIT PLAN INVESTOR") AND (II) A CERTIFICATE TO THE EFFECT THAT IF THE TRANSFEREE IS A PARTNERSHIP, GRANTOR TRUST OR S CORPORATION FOR FEDERAL INCOME TAX PURPOSES (A "FLOW-THROUGH ENTITY"), ANY VARIABLE BASE CERTIFICATES OWNED BY SUCH FLOW-THROUGH ENTITY WILL REPRESENT LESS THAN 50% OF THE VALUE OF ALL THE ASSETS OWNED BY SUCH FLOW-THROUGH ENTITY AND NO SPECIAL ALLOCATION OF INCOME, GAIN, LOSS, DEDUCTION OR CREDIT FROM SUCH VARIABLE BASE CERTIFICATES WILL BE MADE AMONG THE BENEFICIAL OWNERS OF SUCH FLOW-THROUGH ENTITY. THIS VARIABLE BASE CERTIFICATE MAY NOT BE TRANSFERRED TO ANY PERSON AS TO WHICH THE TRUSTEE HAS NOT RECEIVED WRITTEN NOTICE FROM THE DEPOSITOR THAT THE DEPOSITOR IS, IN ITS SOLE DISCRETION, SATISFIED THAT SUCH PERSON IS SUFFICIENTLY CAPITALIZED AND OTHERWISE DEMONSTRABLY CAPABLE OF SATISFYING THE OBLIGATIONS OF A VBC HOLDER WITH RESPECT TO ADVANCING FUNDS TO THE TRUST IN CONNECTION WITH ANY "INCREASE" IN THE VBC PRINCIPAL BALANCE AND VBC INVESTED AMOUNT EVIDENCED HEREBY AS AND WHEN REQUIRED PURSUANT TO THE SERIES 2000-1 SUPPLEMENT TO THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN. IN ADDITION, NO RESALE OR OTHER TRANSFER OF THIS CERTIFICATE OR ANY INTEREST THEREIN SHALL BE PERMITTED UNLESS IMMEDIATELY AFTER GIVING EFFECT TO SUCH RESALE OR OTHER TRANSFER, THERE WOULD BE FEWER THAN 100 CERTIFICATEHOLDERS. THE PRINCIPAL OF THIS VARIABLE BASE CERTIFICATE IS PAYABLE, SUBJECT TO THE AVAILABILITY OF FUNDS THEREFOR, PURSUANT TO ARTICLE IV AND ARTICLE VI OF THE SERIES 2000-1 SUPPLEMENT TO THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN. THE PRINCIPAL AMOUNT HEREOF IS SUBJECT TO INCREASE AS INCREASES ARE FUNDED BY THE HOLDER HEREOF PURSUANT TO SECTION 6.1 OF THE SERIES 2000-1 SUPPLEMENT TO THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN. THE MAXIMUM PRINCIPAL AMOUNT HEREOF WILL BE THE AMOUNT SPECIFIED AS THE MAXIMUM PORTION OF THE VBC INVESTED AMOUNT THAT MAY BE REPRESENTED HEREBY ON THE FACE OF THIS VARIABLE BASE CERTIFICATE. THE OUTSTANDING PRINCIPAL AMOUNT OF THIS VARIABLE BASE CERTIFICATE AT ANY TIME MAY BE LESS THAN THE MAXIMUM PRINCIPAL AMOUNT HEREOF, AND THE PORTION OF THE VBC INVESTED AMOUNT REPRESENTED HEREBY (WHICH AMOUNT IS RELEVANT FOR DETERMINING THE AMOUNT OF COLLECTIONS THAT WILL BE ALLOCABLE TO MAKE PAYMENTS OF INTEREST ACCRUED HEREON OR PRINCIPAL HEREOF) MAY AT ANY TIME BE LESS THAN THE PRINCIPAL AMOUNT HEREOF. THIS VARIABLE BASE CERTIFICATE IS NOT AN OBLIGATION OF, AND WILL NOT BE INSURED OR GUARANTEED BY, ANY GOVERNMENTAL AGENCY, GOTTSCHALKS INC., GOTTSCHALKS CREDIT RECEIVABLES CORPORATION, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES. INTEREST ACCRUED ON AND PRINCIPAL OF THIS VARIABLE BASE CERTIFICATE ARE PAYABLE SOLELY FROM AMOUNTS DEPOSITED IN THE COLLECTION ACCOUNT AND ALLOCABLE FOR SUCH PURPOSES IN ACCORDANCE WITH THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN AND THE SERIES 2000-1 SUPPLEMENT THERETO." (b) No transfer of any Variable Base Certificates shall be made unless such resale or transfer is made (i) pursuant to an effective registration statement under the 1933 Act, (ii) in a transaction (other than a transaction in clause (iv) below) exempt from the registration requirements of the 1933 Act and applicable state and foreign securities laws, (iii) to the Depositor or (iv) to a Person who the transferor of such Variable Base Certificate reasonably believes is a qualified institutional buyer within the meaning of Rule 144A under the 1933 Act and that is aware that the resale or other transfer is being made in reliance on Rule 144A or to an institutional "accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the 1933 Act (an "Institutional Accredited Investor"). In the event that a transfer is to be made as described in clause (ii) of the preceding sentence, the prospective transferee shall deliver or cause to be delivered an Opinion of Counsel in form and substance satisfactory to the Trustee and the Depositor to the effect that such transfer may be made without registration under the 1933 Act or any applicable state or foreign securities laws. In the event that a transfer is to be made to an Institutional Accredited Investor as described in clause (iv) or in a transaction as described in clause (ii), the Trustee shall require that the transferee execute a representation letter acceptable to and in form and substance satisfactory to the Trustee (provided that the form attached as Exhibit C or Exhibit D, as applicable, shall be deemed acceptable if it is completed in a manner acceptable to the Trustee) certifying to the Trustee the facts surrounding such transfer, which representation letter shall not be at the expense of the Trustee, the Depositor or the Servicer. In the case of a transfer under either clause (ii) or clause (iv), the Holder of a Variable Base Certificate desiring to effect such transfer shall, and does hereby agree to, indemnify the Trustee, the Depositor and the Servicer against any liability that may result if the transfer is not so exempt or is not made in accordance with the 1933 Act and such state and foreign securities laws. Neither the Depositor, the Servicer nor the Trustee is under any obligation to register any Variable Base Certificates under the 1933 Act or any applicable state or foreign securities laws. Prospective purchasers of Variable Base Certificates are hereby notified that the seller of any Variable Base Certificate may be relying on the exemption from the registration requirements of Section 5 of the Act provided by Rule 144A under the Act. (c) Variable Base Certificates or beneficial interests therein may not be transferred unless the Trustee has received a certificate to the effect that if the transferee is a partnership, grantor trust or S corporation for federal income tax purposes (a "Flow-Through Entity"), any Variable Base Certificates owned by such Flow-Through Entity will represent less than 50% of the value of all the assets owned by such Flow-Through Entity and no special allocation of income, gain, loss, deduction or credit from such Variable Base Certificates will be made among the beneficial owners of such Flow-Through Entity. (d) No Variable Base Certificate or beneficial interest therein may be transferred to a transferee (other than the initial VBC Holder) who is an employee benefit plan, trust or account, subject to ERISA, or subject to Section 4975 of the Code, or a governmental plan defined in Section 3(32) of ERISA or Section 414(d) of the Code subject to any federal, state or local law which is, to a material extent, similar to the foregoing provisions of ERISA or the Code, or to an entity, including an insurance company separate account or an insurance company general account if the assets in any such accounts constitute "Plan Assets" for the purposes of regulation Section 2510-3101 of ERISA whose underlying assets include Benefit Plan assets by reason of a Benefit Plan's investment in the entity. Unless the Trustee shall have received a certificate from the transferee (other than the initial VBC Holder) making the representations with respect to such ERISA matters set forth in Exhibit C hereto, the Trustee shall not permit a transfer of Variable Base Certificates to such transferee. (e) No Variable Base Certificate or beneficial interest therein may be transferred to any person as to which the Trustee has not received written notice from the Depositor that the Depositor is, in its sole discretion, satisfied that such person is sufficiently capitalized and otherwise demonstrably capable of satisfying the obligations of a VBC Holder with respect to advancing funds to the Trust in connection with any Increase as and when required pursuant to this Supplement. (f) The Depositor shall, whenever the Trust is not subject to Section 13 or 15(d) of the Exchange Act, make available, upon request, to any holder of such Variable Base Certificates in connection with any sale thereof and any prospective purchaser of Variable Base Certificates from such holder the information specified in Rule 144A(d)(4) under the 1933 Act. (g) In addition, no resale or other transfer of the Variable Base Certificates or any interest therein shall be permitted unless immediately after giving effect to such resale or other transfer, there would be fewer than 100 VBC Holders. The Trustee will not register the transfer of any Certificate unless it has received an opinion of counsel reasonably satisfactory to it and to the Servicer to the effect that the foregoing condition has been satisfied. (h) Prior to due presentation of a Variable Base Certificate for registration of transfer, the Trustee and any of its agents may treat the Person in whose name any Certificate is registered as the owner of such Certificate for the purpose of receiving distributions and for all other purposes whatsoever, and neither the Trustee, nor any of its agents shall be affected by any notice to the contrary. (i) The Trustee may conclusively rely and shall be fully protected in acting upon any certificate or investment representation letter delivered to it under this Article VI or under Article VI of the Agreement. Section 6.4. The Exchangeable Certificate. In connection with the issuance of the Variable Base Certificates, the Trustee will cancel the Exchangeable Certificate issued on the Series 1999-1 Closing Date and issue a single new Exchangeable Certificate issued in definitive registered form, executed, authenticated and delivered as provided in Section 6.02 of the Agreement, evidencing the entire Depositor Interest as the same has been reduced by the interests evidenced by the Variable Funding Certificates. Article VII Early Amortization Events; Servicer Defaults; Merger of Servicer Section 7.1. Additional Early Amortization Events. If any one or more of the following events shall occur: (a) an Early Amortization Event as defined in the Series 1999- 1 Supplement occurs; or (b) failure on the part of the Depositor (i) to make any payment or deposit required to be made by the Depositor by the terms of (A) the Agreement or (B) this Series Supplement, within five Business Days of Depositor's receipt of written notice of such nonpayment or (ii) duly to observe or perform in any material respect any covenants or agreements of the Depositor set forth in the Agreement or this Series Supplement, which failure to observe or perform has a material adverse effect on the VBC Holders and which continues unremedied for a period of 60 days after the earlier of (A) the date the Depositor has knowledge thereof and (B) the date on which written notice of such failure, requiring the same to be remedied, shall have been given to the Depositor by the Trustee, or to the Depositor and the Trustee by the VBC Holders representing more than 50% of the VBC Invested Amount, and continues to affect materially and adversely the interests of the VBC Holders for such period; or (c) the VBC Invested Amount is not reduced to zero on or before the related Expected Final Distribution Date (as the same has been extended or reextended pursuant to Section 6.2 hereof), or any Controlled Amortization Amount, Commitment Termination Payment or Mandatory Prepayment is not paid in full when due; or (d) any representation or warranty made by the Depositor in the Agreement or this Series Supplement, or any information contained in a computer file or microfiche list or written list required to be delivered by the Depositor pursuant to Section 2.01, 2.06 or 2.08 of the Agreement, (i) shall prove to have been incorrect in any material respect when made or when delivered, which continues to be incorrect in any material respect for a period of 60 days after the earlier of (A) the date the Depositor has knowledge thereof and (B) the date on which written notice of such failure, requiring the same to be remedied, shall have been given to the Depositor by the Trustee, or to the Depositor and the Trustee by the VBC Holders representing more than 50% of the VBC Invested Amount, and (ii) as a result of which the interests of the VBC Holders are materially and adversely affected and continue to be materially and adversely affected for such period; provided, however, that an Early Amortization Event pursuant to this Section 7.1(d) shall not be deemed to have occurred hereunder if such Early Amortization Event related to the breach of a representation or warranty that may be cured by reassignment of the affected Receivables pursuant to Section 2.03 or 2.04 of the Agreement and if the Depositor has accepted reassignment of or repurchased the related Receivables, or all of such Receivables, if applicable, during such period in accordance with the provisions of the Agreement; or (e) the sum of (A) the Exchangeable Holder's Interest plus (B) the Principal Receivables that are Eligible Past Due Receivables is reduced below the Required Exchangeable Certificate Amount; or (f) taken as an average of the relevant calculation for each of the three preceding calendar months: (i) the Portfolio Yield is less than 12.0%; (ii) the Default Rate exceeds 10.0%; (iii) the Excess Spread is less than 1.0%; (iv) the Delinquency Rate exceeds 3.00%; or (v) the Monthly Payment Rate is less than 17.5%; (g) the rating of the Variable Base Certificates is withdrawn or downgraded below BBB. then, in the case of any such event described in this Section 7.1, subject to applicable law, an Early Amortization Event shall occur without any notice or other action on the part of the Trustee or the VBC Holders (except as otherwise provided in any such subsection), immediately upon the occurrence of such event. Section 7.2. Waiver. Notwithstanding the declaration or occurrence of an Early Amortization Period, the VBC Holders representing more than 50% of the VBC Invested Amount may, by written notice to the Trustee, waive such Early Amortization Event. Such waiver shall be binding upon all VBC Holders and the other parties to this Series Supplement. In the case of such a waiver, all parties hereto and all such VBC Holders shall be restored to their former positions and rights hereunder and any such Early Amortization Period shall be deemed not to be continuing; provided, however, this Section 7.2 shall not apply in the case that a Servicer Default described in clause (a) or (d) of Section 7.3 results in an Early Amortization Event of the type described in Section 9.01(c) of the Agreement. Section 7.3. Additional Servicer Defaults. If any one of the following events shall occur and be continuing with respect to the Servicer, it shall be deemed a Servicer Default, subject to the provisions of Section 10.01 of the Agreement: (a) the replacement for any reason of Gottschalks as the Servicer; provided, however, a Servicer Default shall not be deemed to have occurred if (i) such Successor Servicer, immediately after giving effect to such transaction, has a financial condition, taking into account such elements as (1) liquidity, (2) leverage position and (3) net worth, equal to or stronger than Gottschalks, and (ii) such Servicer has been appointed with Consent of Certificateholders, such consent not to be unreasonably withheld in accordance with Section 8.04 of the Agreement; or (b) the Servicer shall have received a qualified opinion from its Independent Certified Public Accountants arising from the discovery of an accounting irregularity. (c) the Servicer's Adjusted Net Worth, determined on any day in accordance with generally accepted accounting principles shall be less than the greater of I) $70 million or (ii) the amount stipulated in the Servicer's line of credit agreement with Congress Financial Corporation, Western (or any replacement line of credit). (d) a final judgment, claim, suit, or fine shall have been entered against, or a nonappealable fine imposed upon, the Servicer which creates a liability of more than $1,000,000 in excess of insured amounts and has not been stayed (by appeal or otherwise), vacated, discharged or otherwise satisfied within 60 calendar days of the entry of such final judgment. (e) Gottschalks fails to maintain a credit facility equal to or greater than the lesser of (i) $80 million or (ii) $95 million less any amounts raised subsequent to the Series 1999-1 Closing Date pursuant to any offerings of equity securities or offerings of subordinated debt whose maturity extends beyond the Distribution Date in August 2004. (f) Jim Famalette (i) has become deceased, (ii) has been rendered unable to work for a period of six consecutive months, (iii) has resigned from Gottschalks or (iv) has otherwise ceased working for Gottschalks and has not been replaced within 150 days (after the initial instance described in (i), (ii), (iii) or (iv) above) with a replacement which is acceptable to the VBC Holders holding more than 50% of the VBC Invested Amount (whose acceptance will not be unreasonably withheld). Section 7.4. Merger or Consolidation of, or Assumption of, the Obligations of the Servicer. The Servicer shall not consolidate with or merge into any other entity or convey or transfer its properties and assets substantially as an entirety to any Person, unless the requirements of Section 8.04 of the Agreement are satisfied and: (a) immediately after giving effect to such transaction, the financial condition of the Servicer, taking into account such elements as (i) liquidity, (ii) leverage position and (iii) net worth shall be equal to or stronger than Gottschalks; and (b) the Servicer shall have obtained the consent of VBC Holders representing more than 50% of the VBC Invested Amount (not to be unreasonably withheld in the event the Rating Agency Condition shall have been satisfied). Article VIII Optional Repurchase Section 8.1. Optional Repurchase. Subject to other provisions of this Section 8.1, on any Distribution Date occurring after the termination of the Revolving Period on or after which the Adjusted Invested Amount of the Variable Base Certificates is reduced to an amount less than or equal to 10% of the Series 2000-1 Maximum Invested Amount, the Servicer shall have the option to purchase the entire amount of, but not less than the entire amount of, the Receivables, at a purchase price equal to the sum of the Optional Purchase Prices specified in each Supplement for such Distribution Date. The Servicer hereby agrees not to exercise its purchase option under this Section 8.1 unless it concurrently exercises each similar purchase option specified in each other outstanding Supplement. In addition, the Servicer will not be entitled to exercise any similar purchase option under any other Supplement unless it concurrently exercises the purchase option under this Section 8.1. The Depositor shall give the Servicer and the Trustee at least ten (10) days' prior written notice of the Distribution Date on which the Depositor intends to exercise such purchase option. Not later than 12:00 noon, New York City time, on such Distribution Date the Servicer shall deposit the Optional Purchase Price into the Collection Account in immediately available funds. Such purchase option is subject to payment in full of the Optional Purchase Price. The portion of the Optional Purchase Price allocable to the Variable Base Certificates shall be distributed as set forth in Article IV hereof. Article IX Final Distributions Section 9.1. Final Distributions. (a) The amount to be deposited into the Collection Account by the Depositor with respect to the purchase of the Variable Base Certificates pursuant to Section 2.03 of the Agreement shall equal the Optional Purchase Price as of the first Distribution Date following the Collection Period in which the obligation arises under the Agreement. The Optional Purchase Price deposited into the Collection Account pursuant to this Section 9.1 or Section 8.1 of this Series Supplement and allocated to Series 2000-1, shall be applied by the Trustee at the written direction of the Servicer (i.e. as set forth in the Distribution Date Statement and below), not later than 2:00 p.m., New York City time, on the Distribution Date on which such amounts are deposited, provided that if such deposit is not made prior to 1:00 p.m., New York City time, the Trustee shall not be required to make such applications until the following Business Day (or, in either case, if such date is not a Distribution Date, on the immediately following Distribution Date). The Optional Purchase Price shall be applied on such Distribution Date to pay the following amounts in the following order of priority: (i) all accrued and unpaid VBC Monthly Interest, Commitment Fees, Breakage Fees and Administrative Fees (together with any Carryover Interest and Carryover Commitment, Breakage and Administrative Fees) and (ii) the VBC Principal Balance on such Distribution Date. (b) Termination Proceeds deposited into the Collection Account pursuant to Section 12.02(c) of the Agreement and allocated to Series 2000-1 and the Certificates, shall be applied by the Trustee at the written direction of the Servicer (i.e. as set forth in the Distribution Date Statement and below), not later than 2:00 p.m., New York City time, on the Distribution Date on which such amounts are deposited, provided that if such deposit is not made prior to 1:00 p.m., New York City time, the Trustee shall not be required to make such applications until the following Business Day (or, in either case, if such date of distribution is not a Distribution Date, on the immediately following Distribution Date). Termination Proceeds shall be applied to pay the following amounts in the following order of priority: (i) all accrued and unpaid VBC Monthly Interest, Commitment Fees, Breakage Fees and Administrative Fees (together with any Carryover Interest and Carryover Commitment, Breakage and Administrative Fees) and (ii) the VBC Principal Balance. (c) Trust Liquidation Proceeds deposited into the Collection Account pursuant to Section 9.02(c) of the Agreement and allocated to Series 2000-1 shall be applied by the Trustee at the written direction of the Servicer (i.e. as set forth in the Distribution Date Statement and below), not later than 2:00 p.m., New York City time, on the Distribution Date on which such amounts are deposited, provided that if such deposit is not made prior to 1:00 p.m., New York City time, the Trustee shall not be required to make such applications until the following Business Day (or, in either case, if such date of distribution is not a Distribution Date, on the immediately following Distribution Date). Trust Liquidation Proceeds shall be applied to pay the following amounts in the following order of priority: (i) all accrued and unpaid VBC Monthly Interest, Commitment Fees, Breakage Fees and Administrative Fees (together with any Carryover Interest and Carryover Commitment, Breakage and Administrative Fees) and (ii) the VBC Principal Balance. (d) Notwithstanding anything to the contrary contained in this Series Supplement or the Agreement, any distribution made pursuant to this Section 9.1 shall be deemed to be a final distribution pursuant to Section 12.02 of the Agreement with respect to the Certificates. Any such final distribution shall be made no later than the Distribution Date in August 2006. (e) Notwithstanding Section 12.02 of the Agreement, no Certificateholder shall be required to surrender its Investor Certificate(s) in order to receive its final distribution under the Agreement and this Series Supplement. Article X Miscellaneous Provisions Section 10.1. Ratification of Agreement. As amended and supplemented by this Series Supplement, the Agreement is ratified and confirmed and the Agreement as so amended and supplemented by this Series Supplement, shall be read, taken and construed as one and the same instrument. Section 10.2. Counterparts. This Series Supplement may be executed in two or more counterparts, each of which when so executed shall be deemed to be an original, but all of which shall together constitute but one and the same instrument. Section 10.3. Governing Law. THIS SERIES SUPPLEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICTS OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. Section 10.4. Rating Agency Notice. No amendment or waiver with respect to any Early Amortization Event shall be effective until such time as the Rating Agency has consented to such waiver. [remainder of page intentionally left blank] IN WITNESS WHEREOF, the Depositor, the Servicer and the Trustee have caused this Series Supplement to be duly executed by their respective officers as of the day and year first above written. GOTTSCHALKS CREDIT RECEIVABLES CORPORATION, as Depositor By: /s/ Michael Geele ----------------------------------------- Title: President/CEO GOTTSCHALKS INC., as Servicer By: /s/ James Famalette ---------------------------------------- Title: President/CEO BANKERS TRUST COMPANY, not in its individual capacity but solely as Trustee By: /s/ Franco B. Talavera --------------------------------------- Title: Assistant Vice President