EXHIBIT 10.11
EXECUTION COPY
TRANSFER AND SERVICING AGREEMENT
Dated as of October 20, 2000
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COMPUCREDIT
CREDIT CARD MASTER NOTE BUSINESS TRUST II
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among
COMPUCREDIT FUNDING CORP. II,
Transferor,
COMPUCREDIT CORPORATION,
Servicer,
COMPUCREDIT CREDIT CARD MASTER NOTE BUSINESS TRUST II,
Issuer
and
THE BANK OF NEW YORK,
Indenture Trustee
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ARTICLE I
DEFINITIONS
Section 1.01. Definitions....................................................................................1
Section 1.02. Other Definitional Provisions.................................................................15
ARTICLE II
CONVEYANCE OF RECEIVABLES
Section 2.01. Conveyance of Receivables.....................................................................16
Section 2.02. Acceptance by Issuer..........................................................................17
Section 2.03. Representations and Warranties of Each Transferor Relating to Such Transferor.................18
Section 2.04. Representations and Warranties of each Transferor Relating to this Agreement and any
Participation Interest Supplement and the Receivables.........................................20
Section 2.05. Treatment of Ineligible Receivables...........................................................21
Section 2.06. Reassignment of Trust Portfolio...............................................................23
Section 2.07. Covenants of each Transferor..................................................................24
Section 2.08. Covenants of each Transferor with Respect to the Applicable Receivables Purchase Agreements...27
Section 2.09. Addition of Accounts..........................................................................27
Section 2.10. Defaulted Receivables.........................................................................31
Section 2.11. Account Allocations...........................................................................31
Section 2.12. Discount Option...............................................................................32
ARTICLE III
ADMINISTRATION AND SERVICING OF RECEIVABLES
Section 3.01. Acceptance of Appointment and Other Matters Relating to the Servicer..........................33
Section 3.02. Servicing Compensation........................................................................34
Section 3.03. Representations, Warranties and Covenants of the Servicer.....................................34
Section 3.04. Reports and Records for the Owner Trustee and the Indenture Trustee...........................37
Section 3.05. Annual Certificate of Servicer................................................................37
Section 3.06. Annual Servicing Report of Independent Public Accountants; Copies of Reports Available........37
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Section 3.07. Notices to CompuCredit........................................................................38
Section 3.08. Adjustments...................................................................................38
Section 3.09. Reports to the Commission.....................................................................39
ARTICLE IV
COLLECTIONS AND ALLOCATIONS
Section 4.01. Collections and Allocations...................................................................40
Section 4.02. Shared Principal Collections..................................................................41
Section 4.03. Additional Withdrawals from the Collection Account............................................41
Section 4.04. Allocation of Transferred Assets to Series or Groups..........................................41
Section 4.05. Excess Finance Charge Collections.............................................................42
ARTICLE V
OTHER MATTERS RELATING TO EACH TRANSFEROR
Section 5.01. Liability of each Transferor..................................................................43
Section 5.02. Merger or Consolidation of, or Assumption of the Obligations of, a Transferor.................43
Section 5.03. Limitations on Liability of Each Transferor...................................................44
ARTICLE VI
OTHER MATTERS RELATING TO THE SERVICER
Section 6.01. Liability of the Servicer.....................................................................45
Section 6.02. Merger or Consolidation of, or Assumption of the Obligations of, the Servicer.................45
Section 6.03. Limitation on Liability of the Servicer and Others............................................45
Section 6.04. Servicer Indemnification of the Issuer, the Owner Trustee and the Indenture Trustee...........46
Section 6.05. Resignation of the Servicer...................................................................46
Section 6.06. Access to Certain Documentation and Information Regarding the Receivables.....................47
Section 6.07. Delegation of Duties..........................................................................47
Section 6.08. Examination of Records........................................................................47
ARTICLE VII
INSOLVENCY EVENTS
Section 7.01. Rights upon the Occurrence of an Insolvency Event.............................................48
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ARTICLE VIII
SERVICER DEFAULTS
Section 8.01. Servicer Defaults.............................................................................49
Section 8.02. Indenture Trustee To Act; Appointment of Successor............................................51
Section 8.03. Notification to Noteholders...................................................................53
ARTICLE IX
TERMINATION
Section 9.01. Termination of Agreement......................................................................54
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.01. Amendment; Waiver of Past Defaults............................................................55
Section 10.02. Protection of Right, Title and Interest of Issuer.............................................57
Section 10.03. GOVERNING LAW.................................................................................58
Section 10.04. Notices; Payments.............................................................................58
Section 10.05. Severability of Provisions....................................................................59
Section 10.06. Further Assurances............................................................................59
Section 10.07. Nonpetition Covenant..........................................................................59
Section 10.08. No Waiver; Cumulative Remedies................................................................60
Section 10.09. Counterparts..................................................................................60
Section 10.10. Third-Party Beneficiaries.....................................................................60
Section 10.11. Merger and Integration........................................................................60
Section 10.12. Headings......................................................................................60
Section 10.13. Limitation of Liability of Owner Trustee......................................................60
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TRANSFER AND SERVICING AGREEMENT, dated as of October 20,
2000, among COMPUCREDIT FUNDING CORP. II, a Nevada corporation, as Transferor,
COMPUCREDIT CORPORATION, a Georgia corporation, as Servicer, COMPUCREDIT CREDIT
CARD MASTER NOTE BUSINESS TRUST II, a Nevada business trust, as Issuer, and THE
BANK OF NEW YORK, a New York banking corporation, as Indenture Trustee.
In consideration of the mutual agreements herein contained,
each party agrees as follows for the benefit of the other parties, the
Noteholders and any Series Enhancer (as defined below) to the extent provided
herein, in the Indenture and in any Indenture Supplement:
ARTICLE I
DEFINITIONS
Section 1.01. DEFINITIONS. Whenever used in this Agreement,
the following words and phrases shall have the following meanings, and the
definitions of such terms are applicable to the singular as well as the plural
forms of such terms and to the masculine as well as to the feminine and neuter
genders of such terms.
"ACCOUNT" shall mean (a) each Initial Account, (b) each
Additional Account (but only from and after the Addition Date with respect
thereto), (c) each Related Account, (d) each Transferred Account, but shall
exclude, after the applicable removal date any Account all the Receivables in
which are either: (i) Defaulted Receivables and assigned by the Issuer to the
Transferor pursuant to SECTION 2.10, (ii) assigned by the Issuer to the
Transferor pursuant to SECTION 2.05(c) or 2.06 or (iii) assigned by the Issuer
to the Servicer pursuant to SECTION 3.03.
"ACCOUNT OWNER" shall mean Columbus Bank or any other entity
which is the issuer of the credit card relating to an Account pursuant to a
Credit Card Agreement.
"ACCOUNT SCHEDULE" shall mean a computer file or microfiche
list containing a true and complete list of Accounts, identified by bank
identification number and by bank numbers and by account number and setting
forth the aggregate amount of Principal Receivables outstanding in such Accounts
as of (a) the Initial Cut-Off Date (for the Account Schedule delivered on the
Initial Issuance Date), (b) as soon as practicable after the Determination Date
immediately succeeding the related Monthly Period (for any Account Schedule
relating to Automatic Additional Accounts) and (c) the Addition Cut-Off Date
(for any Account Schedule relating to Supplemental Accounts).
"ADDITION CUT-OFF DATE" shall mean (a) for Supplemental
Accounts, the date specified as such in the notice for the Supplemental Accounts
under SECTION 2.09(g) and (b) for Automatic Additional Accounts, the later of
the dates on which such Automatic Additional Accounts are originated or
designated pursuant to SECTION 2.09(a).
"ADDITION DATE" shall mean (a) with respect to Automatic
Additional Accounts, the later of the date on which such accounts are created
and the date on which such accounts are otherwise designated as Automatic
Additional Accounts pursuant to SECTION 2.09(a), (b) with
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respect to Supplemental Accounts, the date from and after which such
Supplemental Accounts are to be included as Accounts pursuant to SECTION 2.09(e)
or (f), and (c) with respect to Participation Interests, the date from and after
which such Participation Interests are to be included as part of the Transferred
Assets pursuant to SECTION 2.09(b).
"ADDITIONAL ACCOUNT" shall mean each Automatic Additional
Account and each Supplemental Account.
"ADDITIONAL TRANSFEROR" shall have the meaning specified in
SECTION 2.09(d).
"ADVERSE EFFECT" shall mean, with respect to any action, that
such action will (a) result in the occurrence of an Early Redemption Event, a
Reinvestment Event, a Default or an Event of Default or (b) materially and
adversely affect the amount or timing of distributions to be made to the
Noteholders or any Series Enhancer of any Series or Class pursuant to this
Agreement, the Indenture or the related Indenture Supplement.
"AFFILIATE" shall mean, with respect to any specified Person,
any other Person controlling or controlled by or under common control with such
specified Person. For the purposes of this definition, "CONTROL" shall mean the
power to direct the management and policies of a Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "CONTROLLING" and "CONTROLLED" have meanings correlative to the
foregoing.
"AFFINITY CARD AGREEMENT" shall mean the Affinity Card
Agreement dated as of January 6, 1997, among Columbus Bank, CompuCredit and
CompuCredit Acquisition Corporation, as amended to the date hereof and as such
agreement may be amended, modified or supplemented from time to time hereafter.
"AGGREGATE ALLOCATION AMOUNT" shall mean, as of any date of
determination, the aggregate sum of the Allocation Amounts of all Series of
Notes issued and outstanding on such date of determination.
"AGREEMENT" shall mean this Transfer and Servicing Agreement,
as the same may be amended, supplemented or otherwise modified from time to
time.
"ALLOCATION AMOUNT" shall mean, with respect to any Series and
for any date, an amount equal to the allocation amount or adjusted allocation
amount, as applicable, specified in the related Indenture Supplement.
"APPOINTMENT DATE" shall have the meaning specified in SECTION
7.01.
"ASSIGNMENT" shall have the meaning specified in SECTION
2.09(h).
"AUTHORIZED NEWSPAPER" shall mean any newspaper or newspapers
of general circulation in the Borough of Manhattan, the City of New York,
printed in the English language (and, with respect to any Series or Class, if
and so long as the Notes of such Series are Bearer Notes, in such place as may
be specified in the applicable Indenture Supplement) and customarily
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published on each business day at such place, whether or not published on
Saturdays, Sundays or holidays.
"AUTOMATIC ADDITIONAL ACCOUNT" shall mean each VISA(R) and
MasterCard(R)(1) consumer revolving credit card account established pursuant to
a Credit Card Agreement between an Account Owner and any Person with respect to
which one or more credit cards are issued to a cardholder, which credit card
account is identified by the bank identification numbers and the bank numbers
specified on SCHEDULE II as SCHEDULE II may be amended from time to time, which
account comes into existence after the Initial Cut-Off Date.
"AUTOMATIC ADDITION SUSPENSION DATE" shall have the meaning
set forth in SECTION 2.09(a).
"AUTOMATIC ADDITION TERMINATION DATE" shall have the meaning
set forth in SECTION 2.09(a).
"AVERAGE PRINCIPAL RECEIVABLES" shall mean, for any period, an
amount equal to (a) the sum of the aggregate amount of Principal Receivables at
the end of each day during such period divided by (b) the number of days in such
period.
"BUSINESS DAY" shall mean any day other than (a) a Saturday or
Sunday or (b) any other day on which national banking associations or state
banking institutions in New York, New York, Atlanta, Georgia, Columbus, Georgia,
Las Vegas, Nevada or any other city in which the principal executive offices of
CompuCredit, the Transferor, the Owner Trustee, the Indenture Trustee, Columbus
Bank or other Account Owner, as the case may be, are located, are authorized or
obligated by law, executive order or governmental decree to be closed or (c) for
purposes of any particular Series, any other day specified in the applicable
Indenture Supplement.
"CASH ADVANCE FEES" shall mean cash advance transaction fees,
if any, as specified in the Credit Card Agreement applicable to each Account.
"CB&T RECEIVABLES PURCHASE AGREEMENT" shall mean (i) the
Receivables Purchase Agreement, dated as of October 20, 2000, between Columbus
Bank and CompuCredit, as amended from time to time in accordance with the terms
thereof and (ii) the Receivables Purchase Agreements, if any, between Columbus
Bank and CompuCredit entered into pursuant to that amendment to the Affinity
Agreement dated September 29, 2000, among CompuCredit, Columbus Bank and
CompuCredit Acquisition Corporation.
"CFC" shall mean CompuCredit Funding Corp. II, a Nevada
corporation, and its successors and permitted assigns.
"CFC RECEIVABLES PURCHASE AGREEMENT" shall mean the
Receivables Purchase Agreement, dated as of October 20, 2000, between
CompuCredit and CFC, as amended from time to time in accordance with the terms
thereof.
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(1) VISA(R) and MasterCard(R) registered trademarks of VISA USA, Inc. and
MasterCard International Incorporated, respectively.
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"COLLECTIONS" shall mean all payments by or on behalf of
Obligors (including Insurance Proceeds) received in respect of the Receivables,
in the form of cash, checks, wire transfers, electronic transfers, ATM transfers
or any other form of payment in accordance with a Credit Card Agreement in
effect from time to time and all other amounts specified by this Agreement, the
Indenture or any Indenture Supplement as constituting Collections; PROVIDED
HOWEVER, that during the period Columbus Bank owns the Accounts pursuant to the
Affinity Card Agreement, Collections shall mean the sum of (i) the "Net Excess
Amount" payable by Columbus Bank to CompuCredit, as defined in the Affinity Card
Agreement, in respect of the Receivables, and (ii) all amounts paid by Columbus
Bank to CompuCredit pursuant to Section 8.1(e)(iii) of the Affinity Card
Agreement in respect of the Receivables. As specified in any Participation
Interest Supplement or Indenture Supplement, Collections shall include amounts
received with respect to Participation Interests. All Recoveries will be treated
as Collections of Finance Charge Receivables. Collections with respect to any
Monthly Period shall include a portion, calculated pursuant to SECTION 2.07(h),
of Interchange paid to the Issuer with respect to such Monthly Period, to be
applied as if such amount were Collections of Finance Charge Receivables for all
purposes.
"COLUMBUS BANK" shall mean Columbus Bank and Trust Company, a
state bank chartered under the laws of the State of Georgia, and its successors
and permitted assigns under the Affinity Card Agreement.
"COMMISSION" shall mean the Securities and Exchange Commission
and its successors in interest.
"COMPUCREDIT" shall mean CompuCredit Corporation, a Georgia
corporation, and its successors and permitted assigns.
"CORPORATE TRUST OFFICE" shall have the meaning (a) when used
in respect of the Owner Trustee, specified in the Trust Agreement and (b) when
used in respect of the Indenture Trustee, specified in the Indenture.
"CREDIT CARD AGREEMENT" shall mean, with respect to a
revolving credit card account, the agreements (including any applicable
truth-in-lending disclosure statements) between an Account Owner and the Obligor
governing the terms and conditions of such account, as such agreements or
statements may be amended, modified or otherwise changed from time to time and
as distributed (including any amendments and revisions thereto) to holders of
such account.
"CREDIT CARD GUIDELINES" shall mean the respective policies
and procedures of the Servicer or the applicable Account Owner, as such policies
and procedures relate to the Accounts and as such may be amended from time to
time, (a) relating to the operation of its credit card business, which generally
are applicable to its portfolio of revolving credit card accounts or, in the
case of an Account Owner that has only a portion of its portfolio subject to a
Receivables Purchase Agreement, applicable to such portion of its portfolio, and
in each case which are consistent with prudent practice, including the policies
and procedures for determining the creditworthiness of credit card customers and
the extension of credit to credit card customers,
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and (b) relating to the maintenance of credit card accounts and collection of
credit card receivables.
"DATE OF PROCESSING" shall mean, with respect to any
transaction or receipt of Collections, the date on which such transaction is
first recorded on the Servicer's computer file of revolving credit card accounts
(without regard to the effective date of such recordation).
"DEFAULTED AMOUNT" shall mean, with respect to any Monthly
Period, an amount (which shall not be less than zero) equal to (a) the amount of
Principal Receivables which became Defaulted Receivables in such Monthly Period,
MINUS (b) the amount of any Defaulted Receivables of which either the Transferor
has the option or became obligated to, or the Servicer became obligated to,
accept reassignment or assignment in accordance with the terms of this Agreement
during such Monthly Period (including, without duplication, Ineligible
Receivables pursuant to SECTION 2.05); PROVIDED, HOWEVER, that if an Insolvency
Event occurs with respect to the Transferor, the amount of such Defaulted
Receivables which are subject to reassignment to the Transferor in accordance
with the terms of this Agreement shall not be added to the sum so subtracted
and, if any of the events described in SECTION 8.01(d) occur with respect to the
Servicer, the amount of such Defaulted Receivables which are subject to
reassignment or assignment to the Servicer in accordance with the terms of this
Agreement shall not be added to the sum so subtracted.
"DEFAULTED RECEIVABLES" shall mean, with respect to any
Monthly Period, all Principal Receivables (i) which are charged off as
uncollectible in such Monthly Period in accordance with the Credit Card
Guidelines or the Servicer's customary and usual servicing procedures for
servicing revolving credit card accounts; (ii) as to which any payment or part
thereof remains unpaid for 180 days or more from the original due date for such
Receivables; (iii) as to which the Obligor thereof is currently the debtor in a
case under the United States Bankruptcy Code; or (iv) as to which the Obligor is
deceased. A Principal Receivable shall become a Defaulted Receivable no later
than on the day on which such Principal Receivable is recorded as charged-off on
the Servicer's computer file of revolving credit card accounts.
"DEPOSIT DATE" shall mean each day on which the Servicer
deposits Collections in the Collection Account.
"DETERMINATION DATE" shall mean, unless otherwise specified in
the Indenture Supplement for a particular Series, either (i) the twelfth (12th)
calendar day of each month (or, if the twelfth calendar day is not a Business
Day, then the next Business Day) or (ii) such earlier date chosen by the
Servicer.
"DISCOUNT OPTION DATE" shall mean each date on which a
Discount Percentage designated by the Transferor pursuant to SECTION 2.12 takes
effect.
"DISCOUNT OPTION RECEIVABLES" shall have the meaning specified
in SECTION 2.12. The aggregate amount of Discount Option Receivables outstanding
on any Date of Processing occurring on or after the Discount Option Date shall
equal the sum of (a) the aggregate Discount Option Receivables at the end of the
prior Date of Processing (which amount, prior to the
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Discount Option Date, shall be zero) PLUS (b) any new Discount Option
Receivables created on such Date of Processing MINUS (c) any Discount
Option Receivables Collections received on such Date of Processing. Discount
Option Receivables created on any Date of Processing shall mean the product of
the amount of any Principal Receivables created on such Date of Processing
(without giving effect to the proviso in the definition of Principal
Receivables) and the Discount Percentage.
"DISCOUNT OPTION RECEIVABLE COLLECTIONS" shall mean on any
Date of Processing occurring in any Monthly Period succeeding the Monthly Period
in which the Discount Option Date occurs, the product of (a) a fraction, the
numerator of which is the Discount Option Receivables and the denominator of
which is the sum of the Principal Receivables and the Discount Option
Receivables, in each case (for both the numerator and the denominator) at the
end of the preceding Monthly Period and (b) Collections of Principal Receivables
on such Date of Processing (without giving effect to the proviso in the
definition of Principal Receivables).
"DISCOUNT PERCENTAGE" shall have the meaning specified in
SECTION 2.12.
"DISTRIBUTION DATE" shall mean, with respect to any Series,
the date specified in the applicable Indenture Supplement.
"DOCUMENT DELIVERY DATE" shall have the meaning specified in
SECTION 2.09(h).
"DOLLARS," "$" or "U.S. $" shall mean United States dollars.
"ELIGIBLE ACCOUNT" shall mean a consumer revolving credit card
account owned by (i) Columbus Bank, in the case of the Initial Accounts, which
as of the Initial Cut-Off Date or (ii) by Columbus Bank or other Account Owner,
in the case of Additional Accounts which, as of the applicable Addition Cut-Off
Date, in each case meets the following requirements:
(a) is a VISA or MasterCard revolving credit card account in
existence and maintained by an Account Owner;
(b) is payable in Dollars;
(c) has an Obligor who has provided, as his or her most recent
billing address, an address located in the United States or its territories or
possessions or a military address;
(d) does not have any Receivables that are Defaulted
Receivables;
(e) does not have any Receivables that have been identified by
the Account Owner, the Servicer or the relevant Obligor as having been incurred
as a result of fraudulent use of any related credit card;
(f) has not been identified as an Account with respect to
which the related card has been lost or stolen; and
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(g) does not have any Receivables that give rise to any claim
against any government agency, including, without limitation, the United States
or any state thereof, or any agency, instrumentality, or department thereof.
"ELIGIBLE RECEIVABLE" shall mean each Receivable:
(a) which has arisen in an Eligible Account;
(b) which was created in compliance in all material respects
with all Requirements of Law applicable to the institution which owned such
Receivable at the time of its creation and pursuant to a Credit Card Agreement
which complies in all material respects with all Requirements of Law applicable
to the Account Owner;
(c) with respect to which all material consents, licenses,
approvals or authorizations of, or registrations or declarations with, any
Governmental Authority required to be obtained, effected or given in connection
with the creation of such Receivable or the execution, delivery and performance
by an Account Owner of the Credit Card Agreement pursuant to which such
Receivable was created, have been duly obtained, effected or given and are in
full force and effect;
(d) as to which at the time of the transfer of such Receivable
to the Issuer, the Transferor or the Issuer will have good and marketable title
thereto and which itself is free and clear of all Liens (other than any Lien for
municipal or other local taxes if such taxes are not then due and payable or if
the Transferor is then contesting the validity thereof in good faith by
appropriate proceedings and has set aside on its books adequate reserves with
respect thereto);
(e) which has been the subject of either a valid transfer and
assignment from the Transferor to the Issuer of all the Transferor's right,
title and interest therein (including any proceeds thereof), or the grant by the
Transferor to the Issuer of a valid first priority perfected security interest
therein (and in the proceeds thereof), effective until the termination of the
Issuer;
(f) which at all times will be the legal, valid and binding
payment obligation of the Obligor thereon enforceable against such Obligor in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws, now or hereafter in effect, affecting the enforcement of creditors' rights
in general and except as such enforceability may be limited by general
principles of equity (whether considered in a suit at law or in equity);
(g) which constitutes either an "account" or a "general
intangible" under and as defined in Article 9 of the UCC as then in effect in
the State of Nevada and any other state where the filing of a financing
statement is required to perfect the Issuer's interest in the Receivables and
the proceeds thereof;
(h) which, at the time of transfer to the Issuer, has not been
waived or modified except as permitted in accordance with the Credit Card
Guidelines and which waiver or modification is reflected in the Servicer's
computer file of revolving credit card accounts;
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(i) which, at the time of transfer to the Issuer, is not
subject to any right of rescission, setoff, counterclaim or any other defense
(including defenses arising out of violations of usury laws) of the Obligor,
other than defenses arising out of applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights in general;
(j) as to which, at the time of transfer to the Issuer, the
Account Owner shall have satisfied all of its obligations required to be
satisfied by such time; and
(k) as to which, at the time of transfer to the Issuer, none
of the Transferor, CompuCredit or the Account Owner, as the case may be, has
taken any action which would impair, or omitted to take any action the omission
of which would impair, the rights of the Issuer, any Series Enhancer or the
Noteholders therein.
"ELIGIBLE SERVICER" shall mean CompuCredit, the Indenture
Trustee or, if neither CompuCredit nor the Indenture Trustee is acting as
Servicer, an entity which, at the time of its appointment as Servicer, (a) is
servicing a portfolio of revolving credit card accounts, (b) is legally
qualified and has the capacity to service the Accounts, (c) has demonstrated the
ability to service professionally and competently a portfolio of similar
accounts in accordance with high standards of skill and care, (d) is qualified
to use the software that is then being used to service the Accounts or obtains
the right to use or has its own software which is adequate to perform its duties
under this Agreement and (e) has a net worth of at least $50,000,000 as of the
end of its most recent fiscal quarter.
"EXCESS FINANCE CHARGE COLLECTIONS" shall have the meaning
specified in SECTION 4.05.
"FACILITIES MANAGEMENT AGREEMENT" shall mean the agreement
dated August 1, 1998 between Columbus Bank and CompuCredit, and all amendments,
modifications and supplements thereto and restatements thereof.
"FDIC" shall mean the Federal Deposit Insurance Corporation or
any successor.
"FINANCE CHARGE RECEIVABLES" shall mean the sum of (A) all
amounts billed to the Obligors on any Account as determined based on either (a)
the actual amounts posted on the system servicing reports provided to the
Servicer by Total Systems Services, Inc. or another provider of such reports, if
available to the Servicer, or (b) if such actual amounts are not available to
the Servicer, the amount of Finance Charge Receivables for the prior Monthly
Period or other reasonable estimation method, in respect of (i) all Periodic
Rate Finance Charges, (ii) Cash Advance Fees, (iii) annual membership fees and
annual service charges, (iv) Late Fees, (v) Overlimit Fees, and (vi) any other
fees with respect to the Accounts designated by the Transferor at any time and
from time to time to be included as Finance Charge Receivables (but any such
amount estimated pursuant to this clause (b) shall be reduced by the amount of
all accrued Finance Charge Receivables on Defaulted Receivables for such Monthly
Period) and (B) Discount Option Receivables, if any, beginning in the Monthly
Period following the Monthly Period in which the Discount Option Date occurs.
Finance Charge Receivables shall also include
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(a) the interest portion of Participation Interests as shall be determined
pursuant to, and only if so provided in, the applicable Participation Interest
Supplement or Indenture Supplement for any Series, (b) Interchange as calculated
pursuant to the Indenture Supplement for any Series, (c) all Recoveries with
respect to Receivables previously charged off as uncollectible, (d) all
Collections in respect of Ineligible Receivables, and (e) all amounts paid by
Columbus Bank to CompuCredit pursuant to Section 8.1(e)(iii) of the Affinity
Card Agreement in respect of the Receivables. For the avoidance of doubt, for so
long as Columbus Bank owns all or any portion of the Accounts pursuant to the
Affinity Card Agreement, Finance Charge Receivables and Collections on all or
such portion of the Accounts shall not include amounts accrued and due to
Columbus Bank in accordance with Exhibit C of the Affinity Card Agreement or
Exhibit A of the Facilities Management Agreement.
"FINANCE CHARGE SHORTFALLS" shall have the meaning specified
in SECTION 4.05.
"FITCH" shall mean Fitch, Inc. or its successors.
"GOVERNMENTAL AUTHORITY" shall mean the United States of
America, any state or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"INDENTURE" shall mean the Master Indenture relating to
CompuCredit Credit Card Master Note Business Trust II to be executed at a future
date in substantially the form of exhibit A attached hereto, among the Issuer,
the Indenture Trustee and the Servicer, as the same may be amended, supplemented
or otherwise modified from time to time.
"INDENTURE TRUSTEE" shall mean The Bank of New York in its
capacity as indenture trustee under the Indenture, its successors in interest
and any successor indenture trustee under the Indenture.
"INDEPENDENT DIRECTOR" shall have the meaning specified in
SECTION 2.07(g)(vii).
"INELIGIBLE RECEIVABLE" shall have the meaning specified in
SECTION 2.05(a).
"INITIAL ACCOUNT" shall mean each VISA consumer revolving
credit card account existing on the Initial Cut-Off Date and established
pursuant to a Credit Card Agreement between an Account Owner and any Person with
respect to which one or more credit cards were issued to a cardholder, which
account is in existence on the Initial Cut-Off Date and is identified by the
bank identification numbers and the bank numbers specified on SCHEDULE II and in
the computer file or microfiche list delivered to the Owner Trustee by the
Transferor pursuant to SECTION 2.01 on the Initial Issuance Date.
"INITIAL CUT-OFF DATE" shall mean the close of business on
October 20, 2000.
"INITIAL ISSUANCE DATE" shall mean the Closing Date of the
first Series of Notes issued to the Holders.
"INSOLVENCY EVENT" shall have the meaning specified in SECTION
7.01.
9
"INSURANCE PROCEEDS" shall mean any amounts received by the
Servicer pursuant to any credit insurance policies covering any Obligor with
respect to Receivables under such Obligor's Account.
"INTERCHANGE" shall mean interchange fees payable to an
Account Owner (net of any interchange fees paid by such Account Owner), in its
capacity as credit card issuer, through VISA or MasterCard in connection with
cardholder charges for goods or services with respect to the Accounts, as
calculated pursuant to the related Indenture Supplement for any Series. Any
reference in this Agreement, the Indenture or any Indenture Supplement to
Interchange shall refer to only the interchange fees that are transferred by
CompuCredit or an Account Owner to a Transferor pursuant to a Receivables
Purchase Agreement.
"ISSUER" shall mean CompuCredit Credit Card Master Note
Business Trust II, a Nevada business trust.
"LATE FEES" shall have the meaning specified in the Credit
Card Agreement applicable to each Account for late fees or similar terms.
"LIEN" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment, deposit arrangement, equity interest, encumbrance,
lien (statutory or other), preference, participation interest, priority or other
security agreement or preferential arrangement of any kind or nature whatsoever,
including any conditional sale or other title retention agreement, any financing
lease having substantially the same economic effect as any of the foregoing and
the filing of any financing statement under the UCC or comparable law of any
jurisdiction to evidence any of the foregoing; PROVIDED, HOWEVER, that any
assignment permitted by Section 3.04(b) of the Trust Agreement or SECTION 5.02
of, and the lien created by, this Agreement and any undivided interest in the
Receivables retained by an Account Owner shall not be deemed to constitute a
Lien; PROVIDED FURTHER, HOWEVER, that each of (i) the lien created in favor of
CompuCredit under the CB&T Receivables Purchase Agreement, (ii) the lien created
in favor of CFC under the CFC Receivables Purchase Agreement and (iii) the lien
created in favor of the Indenture Trustee under the Indenture shall not be
deemed to constitute a Lien.
"MASTERCARD" shall mean MasterCard International Incorporated,
and its successors in interest.
"MONTHLY PERIOD" shall mean, with respect to each Distribution
Date, unless otherwise provided in an Indenture Supplement, the period from and
including the first day of the preceding calendar month to and including the
last day of such calendar month; PROVIDED, HOWEVER, that the initial Monthly
Period with respect to any Series will commence on the Closing Date with respect
to such Series.
"MONTHLY SERVICING FEE" shall have the meaning specified in
SECTION 3.02.
"MOODY'S" shall mean ▇▇▇▇▇'▇ Investors Service, Inc., or its
successor.
"NOTICES" shall have the meaning specified in SECTION 10.04.
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"OBLIGOR" shall mean, with respect to any Account, the Person
or Persons obligated to make payments with respect to such Account, including
any guarantor thereof, but excluding any merchant.
"OFFICER'S CERTIFICATE" shall mean, unless otherwise specified
in this Agreement, a certificate signed by the President, any Vice President,
the Treasurer, Chief Financial Officer, Controller or Member of a Transferor or
the Servicer, as the case may be (or an officer holding an office with
equivalent or more senior responsibilities or, in the case of the Servicer, a
Servicing Officer, and, in the case of the Transferor, any executive of the
Transferor designated in writing by a Vice President or more senior officer of
the Transferor for this purpose), or by the President, any Vice President, the
Chief Financial Officer, Controller or Member of a Successor Servicer.
"OPINION OF COUNSEL" shall mean a written opinion of counsel,
who may be counsel for, or an employee of, the Person providing the opinion and
who shall be reasonably acceptable to the Person to whom the opinion is to be
provided; PROVIDED, HOWEVER, that any Tax Opinion or other opinion relating to
federal income tax matters shall be an opinion of nationally recognized tax
counsel.
"OVERLIMIT FEES" shall have the meaning specified in the
Credit Card Agreement applicable to each Account for overlimit fees or similar
terms if such fees are provided for with respect to such Account.
"OWNER TRUSTEE" shall mean Wilmington Trust FSB, a federal
savings bank, not in its individual capacity but solely as owner trustee under
the Trust Agreement (unless therein specified), and any successor Owner Trustee
thereunder.
"PARTICIPATION INTEREST SUPPLEMENT" shall mean a supplement to
this Agreement entered into pursuant to SECTIONS 2.09(b) and 10.01(a) in
connection with the conveyance of Participation Interests to the Issuer.
"PARTICIPATION INTERESTS" shall have the meaning specified in
SECTION 2.09(b).
"PERIODIC RATE FINANCE CHARGES" shall have the meaning
specified in the Credit Card Agreement applicable to each Account for finance
charges (due to periodic rate) or any similar term.
"PERSON" shall mean any person or entity, including any
individual, corporation, limited liability company, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization,
governmental entity or other entity of any nature.
"PORTFOLIO YIELD" shall have the meaning specified in the
Indenture Supplement.
"PRINCIPAL SHARING SERIES" shall mean a Series that, pursuant
to the Indenture Supplement therefor, is entitled to receive Shared Principal
Collections.
11
"PRINCIPAL RECEIVABLES" shall mean all Receivables other than
Finance Charge Receivables or Defaulted Receivables; PROVIDED, HOWEVER, that
after a Discount Option Date, Principal Receivables at any time thereafter shall
not include the amount of any Discount Option Receivables. Principal Receivables
shall also include the principal portion of Participation Interests as shall be
determined pursuant to, and only if so provided in, the applicable Participation
Interest Supplement or Indenture Supplement for any Series. In calculating the
aggregate amount of Principal Receivables on any day, the amount of Principal
Receivables shall be reduced by the aggregate amount of credit balances in the
Accounts on such day. Any Principal Receivables which the Transferor is unable
to transfer as provided in SECTION 2.11 shall not be included in calculating the
amount of Principal Receivables.
"PRINCIPAL SHORTFALLS" shall have the meaning specified in
SECTION 4.02.
"RECEIVABLES" shall mean all amounts payable by Obligors on
any Account from time to time to the extent such amounts have been transferred
from Columbus Bank to CompuCredit pursuant to the CB&T Receivables Purchase
Agreement, including amounts payable for Principal Receivables and Finance
Charge Receivables. Receivables which become Defaulted Receivables will cease to
be included as Receivables as of the day on which they become Defaulted
Receivables.
"RECEIVABLES PURCHASE AGREEMENT" shall mean, as applicable,
(i) the CB&T Receivables Purchase Agreement, (ii) any future receivables
purchase agreement substantially in the form of the agreement specified in (i)
above, entered into between CompuCredit, CFC or any Transferor and an Account
Owner; PROVIDED, that (A) the Rating Agency Condition is satisfied with respect
to such future receivables purchase agreement and (B) CompuCredit or such
Transferor, as applicable, shall have delivered to the Indenture Trustee an
Officer's Certificate to the effect that such officer reasonably believes that
the execution and delivery of such future receivables purchase agreement will
not have an Adverse Effect, (iii) the CFC Receivables Purchase Agreement and
(iv) any future receivables purchase agreement substantially in the form of the
agreement specified in (iii) above, entered into between CompuCredit and any
Transferor; PROVIDED, that (A) the Rating Agency Condition is satisfied with
respect to such future receivables purchase agreement and (B) CompuCredit or
such Transferor shall have delivered to the Indenture Trustee an Officer's
Certificate to the effect that such officer reasonably believes that the
execution and delivery of such future receivables purchase agreement will not
have an Adverse Effect.
"RECOVERIES" shall mean (i) all amounts received by the
Servicer (net of out-of-pocket costs of collection) including Insurance
Proceeds, with respect to Defaulted Receivables (including any related Finance
Charge Receivables), including the net proceeds of any sale of such Defaulted
Receivables by the Transferor or Servicer and (ii) all amounts withdrawn from
the Special Reserve Account.
"RELATED ACCOUNT" shall mean an Account with respect to which
a new credit account number has been issued by the applicable Account Owner or
Servicer or the applicable Transferor under circumstances resulting from an
error or a lost or stolen credit card and not requiring standard application and
credit evaluation procedures under the Credit Card Guidelines.
12
"REQUIRED DESIGNATION DATE" shall have the meaning specified
in SECTION 2.09(e).
"REQUIREMENTS OF LAW" shall mean any law, treaty, rule or
regulation, or determination of an arbitrator or Governmental Authority, whether
federal, state or local (including usury laws, the Federal Truth in Lending Act
and Regulation B and Regulation Z of the Board of Governors of the Federal
Reserve System), and, when used with respect to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of such
Person.
"RESET DATE" for any Series, shall have the meaning specified
in the applicable Supplement.
"RESTART DATE" shall have the meaning specified in SECTION
2.09(a).
"SERIES ADJUSTED ALLOCATION AMOUNT" shall mean, with respect
to any Series and for any Monthly Period, the Series Allocation Amount for such
Series, after subtracting therefrom the excess, if any, of (a) the cumulative
amount (calculated in accordance with the terms of the related Indenture
Supplement) of reduction amounts, subordination of principal collections and, if
applicable, covering the series default amount for any other Class of Notes of
such Series or another Series allocable to the Allocation Amount for such Series
as of the last day of the immediately preceding Monthly Period over (b) the
aggregate reimbursement of such reduction amounts, subordination of principal
collections and, if applicable, covering the series default amount for any other
Class of Notes of such Series or another Series as of such day, or such other
amount as may be provided in the Indenture Supplement for such Series.
"SERIES ALLOCABLE DEFAULTED AMOUNT" shall mean, with respect
to any Series and for any Monthly Period, the product of the Series Allocation
Percentage and the Defaulted Amount with respect to such Monthly Period.
"SERIES ALLOCABLE FINANCE CHARGE COLLECTIONS" shall mean, with
respect to any Series and for any Monthly Period, the product of the Series
Allocation Percentage and the amount of Collections of Finance Charge
Receivables with respect to such Monthly Period.
"SERIES ALLOCABLE PRINCIPAL COLLECTIONS" shall mean, with
respect to any Series and for any Monthly Period, the product of the Series
Allocation Percentage and the amount of Collections of Principal Receivables
with respect to such Monthly Period.
"SERIES ALLOCATION AMOUNT" shall have, for any Series, the
meaning specified in the related Indenture Supplement.
"SERIES ALLOCATION PERCENTAGE" shall mean, with respect to any
Series and for any Monthly Period, the percentage equivalent of a fraction, the
numerator of which is the Series Adjusted Allocation Amount plus the Series
Required Transferor Amount as of the last day of the immediately preceding
Monthly Period or, if later, the immediately preceding Reset Date, and the
denominator of which is the sum of all Series Adjusted Allocation Amounts plus
the sum of all Series Required Transferor Amounts as of such day.
13
"SERIES REQUIRED TRANSFEROR AMOUNT" shall have the meaning,
with respect to any Series, specified in the related Indenture Supplement.
"SERVICE TRANSFER" shall have the meaning specified in SECTION
8.01.
"SERVICER" shall mean CompuCredit, in its capacity as Servicer
pursuant to this Agreement, and, after any Service Transfer or resignation of
the Servicer pursuant to SECTION 6.05, the Successor Servicer.
"SERVICER DEFAULT" shall have the meaning specified in SECTION
8.01.
"SERVICING FEE" shall have the meaning specified in SECTION
3.02.
"SERVICING FEE RATE" shall mean, with respect to any Series,
the servicing fee rate specified in the related Indenture Supplement.
"SERVICING OFFICER" shall mean any officer of the Servicer or
an attorney in fact of the Servicer who in either case is involved in, or
responsible for, the administration and servicing of the Receivables and whose
name appears on a list of servicing officers furnished to the Owner Trustee and
the Indenture Trustee by the Servicer, as such list may from time to time be
amended.
"SHARED PRINCIPAL COLLECTIONS" shall have the meaning
specified in SECTION 4.02.
"SPECIAL RESERVE ACCOUNT" shall have the meaning specified in
SECTION 4.06.
"SPECIAL RESERVE AMOUNTS" shall mean any and all amounts
deposited in the Special Reserve Account.
"STANDARD & POOR'S" shall mean Standard & Poor's Ratings
Services, or its successor.
"SUCCESSOR SERVICER" shall have the meaning specified in
SECTION 8.02(a).
"SUPPLEMENT" shall mean, with respect to any Series, the
related Indenture Supplement, and, with respect to any Participation Interest,
the related Participation Interest Supplement.
"SUPPLEMENTAL ACCOUNT" shall mean an Account designated
pursuant to SECTION 2.09(e) or (f).
"TERMINATION NOTICE" shall have the meaning specified in
SECTION 8.01.
"TRANSFER DATE" shall mean the Business Day immediately
preceding each Distribution Date.
"TRANSFER RESTRICTION EVENT" shall have the meaning specified
in SECTION 2.11.
14
"TRANSFEROR" shall mean (a) CFC, a wholly owned special
purpose subsidiary of CompuCredit organized in the state of Nevada, or its
successor under this Agreement and (b) any Additional Transferors. References to
"EACH TRANSFEROR" shall refer to each entity mentioned in the preceding sentence
and references to "THE TRANSFEROR" shall refer to either CFC, any Additional
Transferor or all of such entities, as the case may be.
"TRANSFERRED ACCOUNT" shall mean each account (other than a
Related Account) into which an Account shall be transferred; PROVIDED that such
transfer was made in accordance with the Credit Card Guidelines.
"TRANSFERRED ASSETS" shall have the meaning specified in
SECTION 2.01(a).
"TRUST ADJUSTED ALLOCATION AMOUNT" shall mean, with respect to
any Monthly Period, the aggregate Series Adjusted Allocation Amounts for all
outstanding Series for such Monthly Period.
"TRUST AGREEMENT" shall mean the Trust Agreement relating to
the Issuer, dated as of October 20, 2000, between CFC and the Owner Trustee, as
the same may be amended, supplemented or otherwise modified from time to time.
"UCC" shall mean the Uniform Commercial Code, as amended from
time to time, as in effect in any specified jurisdiction.
"VISA" shall mean VISA USA, Inc., and its successors in
interest.
Section 1.02. OTHER DEFINITIONAL PROVISIONS.
(a) All terms used herein and not otherwise defined herein
shall have meanings ascribed to them in the Trust Agreement, the Indenture and,
for any Series, the related Indenture Supplement, as applicable. For purposes of
convenience only, APPENDIX 1 attached hereto contains a list of certain
definitions used and not otherwise defined herein and, in each case, references
the document in which such term is defined.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such certificate or
other document to the extent not defined, shall have the respective meanings
given to them under generally accepted accounting principles or regulatory
accounting principles, as applicable and as in effect on the date of this
Agreement. To the extent that the definitions of accounting terms in this
Agreement or in any such certificate or other document are inconsistent with the
meanings of such terms under generally accepted accounting principles or
regulatory accounting principles in the United States, the definitions contained
in this Agreement or in any such certificate or other document shall control.
15
(d) The agreements, representations and warranties of CFC and
CompuCredit in this Agreement in each of their respective capacities as
Transferor and Servicer shall be deemed to be the agreements, representations
and warranties of CFC and CompuCredit solely in each such capacity for so long
as CFC and CompuCredit act in each such capacity under this Agreement.
(e) Any reference to each Rating Agency shall only apply to
any specific rating agency if such rating agency is then rating any outstanding
Series.
(f) Unless otherwise specified, references to any amount as on
deposit or outstanding on any particular date shall mean such amount at the
close of business on such day.
(g) The words "HEREOF," "HEREIN" and "HEREUNDER" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision or subdivision of this Agreement;
references to any subsection, Section, Schedule or Exhibit are references to
subsections, Sections, Schedules and Exhibits in or to this Agreement unless
otherwise specified; and the term "INCLUDING" means "INCLUDING WITHOUT
LIMITATION."
[END OF ARTICLE I]
16
ARTICLE II
CONVEYANCE OF RECEIVABLES
Section 2.01. CONVEYANCE OF RECEIVABLES. (a) By execution of
this Agreement, for good and valuable consideration the receipt and sufficiency
of which is hereby acknowledged, the Transferor does hereby transfer, assign,
set-over and otherwise convey to the Issuer, without recourse except as provided
herein, all its right, title and interest in, to and under (i) in the case of
Receivables arising in the Initial Accounts (including Transferred Accounts and
Related Accounts related to such Initial Accounts), the Receivables existing at
the close of business on the Initial Cut-Off Date, and thereafter created from
time to time in the Initial Accounts until the termination of the Issuer, (ii)
in the case of Receivables arising in the Additional Accounts (including
Transferred Accounts and Related Accounts related to such Additional Accounts),
the Receivables existing at the close of business on the applicable Addition
Cut-Off Date, and thereafter created from time to time until the termination of
the Issuer; (iii) all Interchange allocable to the Issuer as provided herein and
Recoveries, (iv) all rights to payment and amounts due or to become due with
respect to all of the foregoing, (v) all rights, remedies, powers, privileges
and claims of the Transferor under or with respect to the Receivables Purchase
Agreements (whether arising pursuant to the terms of the Receivables Purchase
Agreements or otherwise available to the Transferor at law or in equity),
including, without limitation, the rights of the Transferor to enforce the
Receivables Purchase Agreements and to give or withhold any and all consents,
requests, notices, directions, approvals, extensions or waivers under or with
respect to the Receivables Purchase Agreements to the same extent as the
Transferor could but for the assignment and security interest granted to the
Issuer, (vi) all amounts received or receivable with respect to any of the
foregoing and (vii) all proceeds (including "proceeds" as defined in the UCC)
thereof (such property, collectively, the "TRANSFERRED ASSETS"). The Transferred
Assets shall include, as applicable, the Participation Interests and any
property conveyed to the Issuer pursuant to any Participation Interest
Supplement. The foregoing does not constitute and is not intended to result in
the creation or assumption by the Issuer, the Owner Trustee (as such or in its
individual capacity), the Indenture Trustee, any Noteholder or any Series
Enhancer of any obligation of Columbus Bank or other Account Owner or the
Transferor, any Additional Transferor, the Servicer or any other Person in
connection with the Accounts, the Receivables or the Participation Interests or
under any agreement or instrument relating thereto, including any obligations
to Obligors, merchant banks, merchants' clearance systems, VISA, MasterCard or
insurers. The Obligors shall not be notified of the transfer, assignment,
set-over and conveyance of the Receivables to the Issuer.
(b) In consideration for the conveyance and transfer of the
Transferred Assets hereunder, the Issuer hereby agrees to pay to the Transferor
the net proceeds received from the issuance of each Series of Notes.
(c) Each Transferor agrees to record and file, at its own
expense, financing statements (and continuation statements when applicable) with
respect to the Receivables and other Transferred Assets conveyed by such
Transferor meeting the requirements of applicable
17
state law in such manner and in such jurisdictions as are necessary to perfect,
and maintain the perfection of, the transfer and assignment of its interest in
such Receivables and the other Transferred Assets to the Issuer, and to deliver
a file stamped copy of each such financing statement or other evidence of such
filing (which can include telephonic confirmation) to the Owner Trustee on or
prior to (A) the Initial Issuance Date, in the case of the Initial Accounts, (B)
the Automatic Addition Termination Date, any Automatic Addition Suspension Date
and any Restart Date, in the case of Automatic Additional Accounts and (C) the
applicable Addition Date, in the case of Supplemental Accounts and, in the case
of continuation statements, as soon as practicable after receipt thereof by the
Transferor. The Owner Trustee shall be under no obligation whatsoever to file
such financing or continuation statements or to make any other filing under the
UCC in connection with such transfer and assignment.
(d) Each Transferor further agrees, at its own expense, (i) on
or prior to the following Dates: (A) the Initial Issuance Date, in the case of
the Initial Accounts, (B) (x) the later of the date of creation of accounts and
designation of accounts as an Automatic Additional Account and (y) the Automatic
Addition Termination Date or any Automatic Addition Suspension Date, on or prior
to a Restart Date, in the case of the Automatic Additional Accounts, and (C) the
applicable Addition Date, in the case of Supplemental Accounts, to indicate in
its books and records (including the appropriate computer files) that
Receivables created in connection with the Accounts have been conveyed to the
Issuer pursuant to this Agreement and (ii) on or prior to each such date
referred to in clause (i), to deliver to the Owner Trustee an Account Schedule
(PROVIDED that such Account Schedule shall be provided in respect of Automatic
Additional Accounts as soon as practicable after the Determination Date
immediately succeeding the related Monthly Period during which their respective
Addition Dates occur), specifying for each such Account as of the Initial
Cut-Off Date, Addition Cut-Off Date, Automatic Addition Termination Date or
Automatic Addition Suspension Date, as applicable, its account number, bank
identification number, bank number, the aggregate amount outstanding in such
Account and the aggregate amount of Principal Receivables outstanding in such
Account. Each Account Schedule, as supplemented, from time to time shall be
marked as Schedule I to this Agreement and is hereby incorporated into and made
a part of this Agreement. Once the books and records (including the appropriate
computer files) referenced in clause (i) of this paragraph have been indicated
with respect to any Account, each Transferor further agrees not to alter such
indication during the remaining term of this Agreement, other than pursuant to
Section 2.10 with respect to Defaulted Receivables, unless and until (x) a
Restart Date has occurred on which the Transferor resumes the inclusion of
Automatic Additional Accounts as Accounts or (y) the Transferor shall have
delivered to the Issuer and the Indenture Trustee at least thirty (30) days'
prior written notice of its intention to do so and has taken such action as is
necessary or advisable to cause the interest of the Issuer in the Receivables to
continue to be perfected with the priority required by this Agreement, and has
delivered to the Owner Trustee and the Indenture Trustee an Opinion of Counsel
to such effect.
(e) The balance of all Receivables included in any Account
which has a bank number other than those bank numbers identified on SCHEDULE II
will be treated for purposes of this Agreement, the Indenture and each Indenture
Supplement as "zero."
18
(f) In the event that it is determined that the transactions
evidenced hereby constitute a loan and not a purchase and sale, this Agreement
shall constitute a security agreement under applicable law, and each Transferor
hereby grants to the Issuer a first priority perfected security interest in all
of such Transferor's right, title and interest, whether owned on the Initial
Issuance Date or thereafter acquired, in, to and under the Receivables and the
other Transferred Assets conveyed by such Transferor, and all money, accounts,
general intangibles, chattel paper, instruments, documents, goods, investment
property, deposit accounts, certificates of deposit, letters of credit and
advices of credit consisting of, arising from or related to the Transferred
Assets, and all proceeds thereof, to secure its obligations hereunder.
Section 2.02. ACCEPTANCE BY ISSUER.
(a) The Issuer acknowledges that, prior to or simultaneously
with the execution and delivery of this Agreement, the Transferor delivered to
the Owner Trustee the Account Schedule relating to the Initial Accounts
described in paragraph (d) of SECTION 2.01.
(b) The Owner Trustee and the Issuer each hereby agrees not to
disclose to any Person any of the account numbers or other information contained
in any Account Schedule delivered to the Owner Trustee or the Issuer, from time
to time, except (i) to a Successor Servicer or as required by a Requirement of
Law applicable to the Owner Trustee, (ii) in connection with the performance of
the Owner Trustee's or the Issuer's duties hereunder, (iii) to the Indenture
Trustee in connection with its duties in enforcing the rights of Noteholders and
Series Enhancers or (iv) to bona fide creditors or potential creditors of any
Account Owner, CompuCredit or any Transferor or the Issuer for the limited
purpose of enabling any such creditor to identify applicable Receivables or
Accounts subject to this Agreement, the Receivables Purchase Agreements or the
Indenture. The Owner Trustee and the Issuer each agrees to take such measures as
shall be reasonably requested by any Transferor to protect and maintain the
security and confidentiality of such information and, in connection therewith,
shall allow each Transferor or its duly authorized representatives to inspect
the Owner Trustee's security and confidentiality arrangements as they
specifically relate to the administration of the Issuer from time to time during
normal business hours upon prior written notice. The Owner Trustee and the
Issuer shall provide the applicable Transferor with notice five (5) Business
Days prior to disclosure of any information of the type described in this
SECTION 2.02(b).
(c) The Owner Trustee shall have no power to create, assume or
incur indebtedness or other liabilities in the name of the Issuer other than as
contemplated in the Trust Agreement, the Administration Agreement, this
Agreement and the Indenture and the Indenture Supplements.
Section 2.03. REPRESENTATIONS AND WARRANTIES OF EACH
TRANSFEROR RELATING TO SUCH TRANSFEROR. Each Transferor hereby severally
represents and warrants to the Issuer (and agrees that the Owner Trustee and the
Indenture Trustee may conclusively rely on each such representation and warranty
in accepting the Receivables and the other Transferred Assets and in accepting
the Trust Estate and authenticating the Notes, as the case may be), as of the
Initial Issuance Date and each subsequent Closing Date (but only if, in either
case, it was a Transferor on such date) that:
19
(a) ORGANIZATION AND GOOD STANDING. Such Transferor is a
corporation or limited liability company validly existing under the laws of the
jurisdiction of its organization or incorporation and has, in all material
respects, full power and authority to own its properties and conduct its
business as presently owned or conducted, and to execute, deliver and perform
its obligations under this Agreement, the Trust Agreement, any Receivables
Purchase Agreement to which it is a party and each applicable Participation
Interest Supplement.
(b) DUE QUALIFICATION. Such Transferor is duly qualified to do
business and is in good standing as a foreign corporation or limited liability
company and has obtained all necessary licenses and approvals, in each
jurisdiction in which failure to so qualify or to obtain such licenses and
approvals would have an Adverse Effect.
(c) DUE AUTHORIZATION. The execution and delivery of this
Agreement, any Receivables Purchase Agreement to which it is a party and each
applicable Participation Interest Supplement by such Transferor and the
consummation by such Transferor of the transactions provided for in this
Agreement, the Trust Agreement, each Receivables Purchase Agreement to which it
is a party and each applicable Participation Interest Supplement have been duly
authorized by such Transferor by all necessary action on the part of such
Transferor.
(d) NO CONFLICT. The execution and delivery by such Transferor
of this Agreement, the Trust Agreement, each Receivables Purchase Agreement to
which it is a party and each applicable Participation Interest Supplement, and
the performance of the transactions contemplated by this Agreement, the Trust
Agreement, any Receivables Purchase Agreement to which it is a party and each
applicable Participation Interest Supplement and the fulfillment of the terms
hereof and thereof applicable to such Transferor, will not conflict with or
violate any Requirements of Law applicable to such Transferor or conflict with,
result in any breach of any of the terms and provisions of, or constitute (with
or without notice or lapse of time or both) a default under, any indenture,
contract, agreement, mortgage, deed of trust or other instrument to which such
Transferor is a party or by which it or its properties are bound.
(e) NO PROCEEDINGS. There are no Proceedings or investigations
pending or, to the best knowledge of such Transferor, threatened, against such
Transferor before any Governmental Authority (i) asserting the invalidity of
this Agreement, the Trust Agreement, any Receivables Purchase Agreement to which
it is a party, or any applicable Participation Interest Supplement, (ii) seeking
to prevent the consummation of any of the transactions contemplated by this
Agreement, the Trust Agreement, any Receivables Purchase Agreement to which it
is a party, or any applicable Participation Interest Supplement, (iii) seeking
any determination or ruling that, in the reasonable judgment of such Transferor,
would materially and adversely affect the performance by such Transferor of its
obligations under this Agreement, the Trust Agreement, any Receivables Purchase
Agreement to which it is a party, or any applicable Participation Interest
Supplement, (iv) seeking any determination or ruling that would materially and
adversely affect the validity or enforceability of this Agreement, the Trust
Agreement, any Receivables Purchase Agreement to which it is a party, or any
applicable Participation Interest Supplement or (v) seeking to affect adversely
the income or franchise tax attributes of the Issuer under the United States
Federal or any state income or franchise tax systems.
20
(f) ALL CONSENTS. All authorizations, consents, orders or
approvals of or registrations or declarations with any Governmental Authority
required to be obtained, effected or given by such Transferor in connection with
the execution and delivery by such Transferor of this Agreement, the Trust
Agreement, any Receivables Purchase Agreement to which it is a party, and each
applicable Participation Interest Supplement and the performance of the
transactions contemplated by this Agreement, the Trust Agreement, any
Receivables Purchase Agreement to which it is a party, and each applicable
Participation Interest Supplement by such Transferor have been duly obtained,
effected or given and are in full force and effect.
Section 2.04. REPRESENTATIONS AND WARRANTIES OF EACH
TRANSFEROR RELATING TO THIS AGREEMENT AND ANY PARTICIPATION INTEREST SUPPLEMENT
AND THE RECEIVABLES.
(a) REPRESENTATIONS AND WARRANTIES. Each Transferor hereby
severally represents and warrants to the Issuer as of the Initial Issuance Date
and each subsequent Closing Date (but only if, in either case, it was a
Transferor on such date) and with respect to clauses (vi) and (vii) below, on
each Addition Date that:
(i) this Agreement, the Trust Agreement, any
Receivables Purchase Agreement to which it is a party, each applicable
Participation Interest Supplement to which it is a party and, in the
case of Supplemental Accounts, the related Assignment, each constitutes
a legal, valid and binding obligation of such Transferor enforceable
against such Transferor in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors'
rights generally from time to time in effect or general principles of
equity;
(ii) if such Transferor were a Transferor on the
Initial Issuance Date, as of the Initial Issuance Date with respect to
the Initial Accounts (and the Receivables arising thereunder), the
portion of SCHEDULE I to this Agreement under such Transferor's name,
as supplemented to such date, is an accurate and complete listing in
all material respects of all the Accounts the Receivables in which were
transferred by such Transferor as of the Initial Issuance Date, and the
information contained therein with respect to the identity of such
Accounts and the Receivables existing thereunder is true and correct in
all material respects as of the Initial Cut-Off Date;
(iii) on the date each Receivable is conveyed to the
Issuer by such Transferor, such Receivable has been conveyed to the
Issuer free and clear of any Lien (other than any Lien for municipal or
other local taxes if such taxes are not then due and payable or if the
Transferor is then contesting the validity thereof in good faith by
appropriate proceedings and has set aside on its books adequate
reserves with respect thereto);
(iv) all authorizations, consents, orders or
approvals of or registrations or declarations with any Governmental
Authority required to be obtained, effected or given by the Transferor
in connection with the conveyance of Receivables to the Issuer have
been duly obtained, effected or given and are in full force and effect;
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(v) either this Agreement or, in the case of
Supplemental Accounts, the related Assignment constitutes a valid sale,
transfer and assignment to the Issuer of all right, title and interest
of such Transferor in the Receivables and Participation Interests
conveyed to the Issuer by such Transferor and the proceeds thereof and
Recoveries and Interchange identified as relating to the Receivables
conveyed to the Issuer by such Transferor or, if this Agreement or, in
the case of Supplemental Accounts, the related Assignment does not
constitute a sale of such property, it constitutes a grant of a first
priority perfected security interest in such property to the Issuer,
which, in the case of existing Receivables and Participation Interests
and the proceeds thereof and Recoveries and Interchange, is enforceable
upon execution and delivery of this Agreement, and which will be
enforceable with respect to such Receivables hereafter created and the
proceeds thereof upon such creation. Upon the filing of the financing
statements and, in the case of Receivables hereafter created and the
proceeds thereof, upon the creation thereof, the Issuer shall have a
first priority perfected security or ownership interest in such
property and proceeds;
(vi) on the Initial Cut-Off Date, with respect to
each Initial Account and on each Addition Cut-Off Date, with respect to
each Additional Account, each such Account is an Eligible Account and,
in the case of each Automatic Additional Account, satisfies the
conditions set forth in SECTION 2.09, as applicable, and, in the case
of each Supplemental Account, satisfies the conditions set forth in
Section 2.09(g);
(vii) on the Initial Cut-Off Date, with respect to
each Initial Account and on the applicable Addition Date with respect
to the Additional Accounts, each Receivable contained in such Account
on such applicable date and conveyed to the Issuer by such Transferor
is an Eligible Receivable;
(viii) as of the date of the creation of any new
Receivable transferred to the Issuer by such Transferor, such
Receivable is an Eligible Receivable; and
(ix) no selection procedures believed by such
Transferor to be materially adverse to the interests of the Issuer or
the Noteholders have been used in selecting such Accounts specified in
a Receivables Purchase Agreement with such Transferor.
(b) NOTICE OF BREACH. The representations and warranties set
forth in SECTION 2.03, this SECTION 2.04 and SECTION 2.09(c) shall survive the
transfers and assignments of the Receivables to the Issuer, the pledge of the
Receivables to the Indenture Trustee pursuant to the Indenture, and the issuance
of the Notes. Upon discovery by any Transferor, the Servicer or the Owner
Trustee of a breach of any of the representations and warranties set forth in
SECTION 2.03, this SECTION 2.04 or SECTION 2.09(c); the party discovering such
breach shall give notice to the other parties and to the Indenture Trustee
within three (3) Business Days following such discovery; PROVIDED that the
failure to give notice within three (3) Business Days does not preclude
subsequent notice.
Section 2.05. TREATMENT OF INELIGIBLE RECEIVABLES.
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(a) REASSIGNMENT OF RECEIVABLES. In the event that (i) any
representation or warranty contained in SECTIONS 2.04(a)(ii), (iv), (vi), (vii),
(viii) or (ix) is not true and correct in any material respect as of the date
specified therein with respect to any Receivable or the related Account and such
breach results in such Receivable in the related Account becoming a Defaulted
Receivable or the Issuer's rights in, to or under the Receivable or its proceeds
becoming impaired or the proceeds of such Receivable not being available for any
other reason to the Issuer free and clear of any Lien, unless cured within sixty
(60) days (or such longer period, not in excess of one hundred twenty (120)
days, as may be agreed in writing to by the Indenture Trustee and the Servicer)
after the earlier to occur of the discovery thereof by the Transferor which
conveyed such Receivables to the Issuer or receipt by such Transferor of written
notice thereof given by the Owner Trustee, Indenture Trustee or the Servicer,
(ii) a Receivable is not an Eligible Receivable because of the failure to
satisfy the conditions set forth in clause (d) or (e) of the definition of
"Eligible Receivable" or (iii) it is so provided in SECTION 2.07(a) with respect
to any Receivables conveyed to the Issuer by such Transferor, then in each such
case such Receivable shall be designated ineligible (as such, an "INELIGIBLE
RECEIVABLE") and (A) shall be assigned a principal balance of zero for the
purpose of determining the aggregate amount of Principal Receivables on any day
and (B) at the option of such Transferor the Issuer's interest in such
Ineligible Receivables shall be reassigned to such Transferor on the terms and
conditions set forth in paragraph (c) below; PROVIDED that such Receivables
pursuant to clause (i) will not be deemed to be Ineligible Receivables but will
be deemed Eligible Receivables and such Principal Receivables shall be included
in determining the aggregate Principal Receivables in the Issuer if, on any day
prior to the end of such sixty-day or longer period, (x) either (1) in the case
of an event described in clause (i), the relevant representation and warranty
shall be true and correct in all material respects as if made on such day or (2)
in the case of an event described in clauses (ii) and (iii), the circumstances
causing such Receivable to become an Ineligible Receivable shall no longer exist
and (y) such Transferor shall have delivered an Officer's Certificate to the
Issuer and the Indenture Trustee describing the nature of such breach and the
manner in which the relevant representation and warranty became true and
correct. The Transferor shall also have delivered an Officer's Certificate to
each Rating Agency describing the nature of such breach and the manner in which
the relevant representation and warranty became true and correct.
(b) MAINTAINING REQUIRED TRANSFEROR AMOUNT. On and after the
date of its designation as an Ineligible Receivable, each Ineligible Receivable
shall not be included in determining the aggregate amount of Principal
Receivables used to calculate the Transferor Amount or the allocation
percentages applicable to any Series. If, immediately following the exclusion of
such Principal Receivables from the calculation of the Transferor Amount, the
Transferor Amount would be less than the Required Transferor Amount, the
applicable Transferor shall pay to the Indenture Trustee for deposit into the
Special Funding Account in immediately available funds prior to the fifth (5th)
succeeding Business Day an amount equal to the amount by which the Transferor
Amount would be less than the Required Transferor Amount (up to the amount of
such excluded Principal Receivables). The payment of such amount in immediately
available funds shall otherwise be considered payment in full of all of the
Ineligible Receivables.
The obligation of a Transferor to make the payments, if any,
required to be made to the Issuer for deposit in the Special Funding Account as
provided in this Section, shall
23
constitute the sole remedy respecting the event giving rise to such obligation
available to the Issuer, the Indenture Trustee on behalf of the Noteholders or
any Series Enhancer.
(c) PRICE OF REASSIGNMENT. Upon a Transferor's written notice
to the Owner Trustee that such Transferor has exercised its option to cause
reassignment of any Ineligible Receivable, the Issuer shall automatically at the
time of receipt of such notice and without further action on the part of the
Issuer or the Owner Trustee be deemed to transfer, assign, set over and
otherwise convey to such Transferor or its designee, without recourse,
representation or warranty, all the right, title and interest of the Issuer in
and to such Ineligible Receivable, all Interchange and Recoveries related
thereto, all monies and amounts due or to become due and all proceeds thereof
and such reassigned Ineligible Receivable shall be treated by the Issuer as
collected in full as of the date on which it was transferred. Notwithstanding
any other provision of this SECTION 2.05(c), a reassignment of an Ineligible
Receivable in excess of the amount that would cause the Transferor Amount to be
less than the Required Transferor Amount shall not occur if the applicable
Transferor fails to make any payment required by SECTION 2.05(b) with respect to
such Ineligible Receivable. The Issuer shall execute such documents and
instruments of transfer or assignment and take such other actions as shall
reasonably be requested and provided by the applicable Transferor to effect the
conveyance of such Ineligible Receivables pursuant to this SECTION 2.05(c), but
only upon receipt of an Officer's Certificate from such Transferor that states
that all conditions set forth in this SECTION 2.05 have been satisfied.
Section 2.06. REASSIGNMENT OF TRUST PORTFOLIO. In the event
any representation or warranty of a Transferor set forth in SECTION 2.03(a) or
(c) or SECTION 2.04(a)(i) or (v) is not true and correct in any material respect
and such breach has a material adverse effect on the Receivables or
Participation Interests conveyed to the Issuer by such Transferor or the
availability of the proceeds thereof to the Issuer, then either the Owner
Trustee or the Indenture Trustee, by notice then given to such Transferor and
the Servicer (and to the Owner Trustee or the Indenture Trustee if given by the
other), may direct such Transferor to accept a reassignment of the Receivables
and any Participation Interests conveyed to the Issuer by such Transferor if
such breach and any material adverse effect caused by such breach are not cured
within sixty (60) days of such notice (or within such longer period, not in
excess of one hundred twenty (120) days, as may be specified in such notice),
and upon those conditions such Transferor shall be obligated to accept such
reassignment on the terms set forth below; PROVIDED, HOWEVER, that such
Receivables and Participation Interests will not be reassigned to such
Transferor if, on any day prior to the end of such sixty-day or longer period
(i) the relevant representation and warranty shall be true and correct in all
material respects as if made on such day and (ii) such Transferor shall have
delivered to the Owner Trustee and the Indenture Trustee an Officer's
Certificate describing the nature of such breach and the manner in which the
relevant representation and warranty has become true and correct.
The applicable Transferor shall pay to the Issuer for deposit
in the Collection Account in immediately available funds not later than 11:00
a.m., New York City time, on the fifth (5th ) Business Day after the day on
which such reassignment obligation arises, in payment for such reassignment, an
amount equal to the sum of the amounts specified therefor with respect to each
outstanding Series in the related Indenture Supplement. If the Owner Trustee or
the Indenture Trustee give notice directing the applicable Transferor to accept
a reassignment of the
24
Receivables and Participation Interests as provided above, the obligation of
such Transferor to accept such reassignment pursuant to this SECTION 2.06 and to
make the payment required to be made to the Issuer for deposit in the Collection
Account as provided in this paragraph shall constitute the sole remedy
respecting an event of the type specified in the first sentence of this SECTION
2.06 available to the Issuer, the Noteholders (or the Owner Trustee or Indenture
Trustee on behalf of the Noteholders) or any Series Enhancer. Upon reassignment
of the Receivables and the Participation Interests on such date, the Issuer
shall automatically and without further action be deemed to transfer, assign,
set-over and otherwise convey to the applicable Transferor, without recourse,
representation or warranty, all the right, title and interest of the Issuer in
and to the applicable Receivables and the applicable Participation Interests,
all related Interchange and Recoveries allocable to the Issuer, and all monies
and amounts due or to become due with respect thereto and all proceeds thereof.
The Issuer shall execute such documents and instruments of transfer or
assignment and take such other actions as shall reasonably be requested by the
applicable Transferor to effect the conveyance of such property pursuant to this
Section, but only upon receipt of an Officer's Certificate from such Transferor
that states that all conditions set forth in this Section have been satisfied.
Section 2.07. COVENANTS OF EACH TRANSFEROR. Each Transferor
hereby severally covenants to the Issuer, that:
(a) RECEIVABLES NOT TO BE EVIDENCED BY PROMISSORY NOTES.
Except in connection with its enforcement or collection of an Account, such
Transferor will take no action to cause any Receivable conveyed by it to the
Issuer to be evidenced by any instrument (as defined in the UCC) and if any such
Receivable is so evidenced as a result of any action of the Transferor it shall
be deemed to be an Ineligible Receivable in accordance with SECTION 2.05(a) and
shall be treated in accordance with SECTION 2.05(b).
(b) SECURITY INTERESTS. Except for the conveyances hereunder,
such Transferor will not sell, pledge, assign or transfer to any other Person,
or grant, create, incur, assume or suffer to exist any Lien (arising through or
under such Transferor) on, any Receivable or Participation Interest conveyed by
it to the Issuer, whether now existing or hereafter created, or any interest
therein, and such Transferor shall defend the right, title and interest of the
Issuer and the Indenture Trustee in, to and under the Receivables and any
Participation Interest, whether now existing or hereafter created, against all
claims of third parties claiming through or under such Transferor.
(c) TRANSFEROR CERTIFICATES. Except for the conveyances
hereunder, and except in connection with any transaction permitted by SECTION
5.02 and as provided in SECTION 2.09(d) of this Agreement or Section 2.10 of the
Indenture or conveyances with respect to which the Rating Agency Condition shall
have been satisfied and a Tax Opinion shall have been delivered, each Transferor
agrees not to transfer, sell, assign, exchange or otherwise convey or pledge,
hypothecate or otherwise grant a security interest in the Transferor's interest
represented by the Transferor Certificates and any such attempted transfer,
assignment, exchange, conveyance, pledge, hypothecation, grant or sale shall be
void.
25
(d) DELIVERY OF COLLECTIONS OR RECOVERIES. In the event that
such Transferor receives Collections or Recoveries, such Transferor agrees to
pay the Servicer all such Collections and Recoveries as soon as practicable
after receipt thereof, but in no event later than two (2) Business Days after
receipt.
(e) NOTICE OF LIENS. Such Transferor shall notify the Owner
Trustee, the Indenture Trustee and each Series Enhancer promptly after becoming
aware of any Lien on any Receivable or Participation Interest conveyed by it to
the Issuer other than the conveyances hereunder and under the applicable
Receivables Purchase Agreements and the Indenture.
(f) AMENDMENT OF THE CERTIFICATE OF INCORPORATION. Such
Transferor will not amend in any material respect its certificate of
incorporation, certificate of formation or other organizational documents
without providing the Rating Agency with notice no later than the fifth (5th)
Business Day prior to such amendment (unless the right to such notice is waived
by the Rating Agency) and satisfying the Rating Agency Condition; PROVIDED,
HOWEVER, that the Rating Agency Condition need not be satisfied if such
Transferor ceases to be a Transferor on or before the date that such amendment
becomes effective.
(g) SEPARATE CORPORATE EXISTENCE. Such Transferor shall:
(i) Maintain in full effect its existence, rights and
franchises as a limited liability company or corporation under the laws
of the state of its organization or incorporation and will obtain and
preserve its qualification to do business in each jurisdiction in which
such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, the Trust Agreement and any
Receivables Purchase Agreement to which it is a party and each other
instrument or agreement necessary or appropriate to proper
administration hereof and to permit and effectuate the transactions
contemplated hereby.
(ii) Except as provided herein, maintain its own
deposit account or accounts, separate from those of any Affiliate of
such Transferor, with commercial banking institutions. The funds of
such Transferor will not be diverted to any other Person or for other
than the corporate use of such Transferor, and, except as may be
expressly permitted by this Agreement or any Receivables Purchase
Agreement to which it is a party, the funds of such Transferor shall
not be commingled with those of any Affiliate of such Transferor or any
other Person.
(iii) Ensure that, to the extent that it shares the
same officers or other employees as any of its partners, members,
managers, stockholders or Affiliates, the salaries of and the expenses
related to providing benefits to such officers and other employees
shall be fairly allocated among such entities, and each such entity
shall bear its fair share of the salary and benefit costs associated
with all such common officers and employees.
(iv) Ensure that, to the extent that it jointly
contracts with any of its partners, members, managers, stockholders or
Affiliates to do business with vendors or
26
service providers or to share overhead expenses, the costs incurred in
so doing shall be allocated fairly among such entities, and each such
entity shall bear its fair share of such costs. To the extent that such
Transferor contracts or does business with vendors or service providers
where the goods and services provided are partially for the benefit of
any other Person, the costs incurred in so doing shall be fairly
allocated to or among such entities for whose benefit the goods and
services are provided, and each such entity shall bear its fair share
of such costs. All material transactions between such Transferor and
any of its partners, members, managers, stockholders or Affiliates
shall be only on an arm's-length basis and shall receive the approval
of such Transferor's Board of Directors, partners, members, managers or
other governing body including at least one Independent Director
(defined below).
(v) Maintain a principal executive and administrative
office through which its business is conducted and a telephone number
separate from those of its members, stockholders and Affiliates. To the
extent that such Transferor and any of its members, stockholders or
Affiliates have offices in contiguous space, there shall be fair and
appropriate allocation of overhead costs (including rent) among them,
and each such entity shall bear its fair share of such expenses.
(vi) Conduct its affairs strictly in accordance with
its certificate of incorporation or other certificate of formation, as
the case may be, and observe all necessary, appropriate and customary
corporate formalities (or such formalities appropriate to the entity),
including, but not limited to, holding all regular and special
stockholders' and directors' or partners', members' or managers', as
the case may be, meetings appropriate to authorize all corporate or
entity action, keeping separate and accurate minutes of such meetings,
passing all resolutions or consents necessary to authorize actions
taken or to be taken, and maintaining accurate and separate books,
records and accounts, including, but not limited to, payroll and
intercompany transaction accounts. Regular stockholders' or other
owners' and directors', partners', members' or managers', as the case
may be, meetings shall be held at least annually.
(vii) Ensure that its board of directors or other
governing body shall at all times include at least one Independent
Director (for purposes hereof, "INDEPENDENT DIRECTOR" shall mean any
member of the board of directors or partner, member or manager, as the
case may be, of such Transferor that is not and has not at any time
been (x) an officer, agent, advisor, consultant, attorney, accountant,
employee or shareholder of any Affiliate of such Transferor which
Affiliate is not a special purpose entity, (y) a director of any
Affiliate of such Transferor other than an independent director of any
Affiliate which is a special purpose entity or (z) a member of the
immediate family of any of the foregoing).
(viii) Ensure that decisions with respect to its
business and daily operations shall be independently made by such
Transferor (although the officer making any particular decision may
also be an officer, partner, member, manager or director of an
Affiliate of such Transferor) and shall not be dictated by an Affiliate
of such Transferor.
27
(ix) Act solely in its own corporate or entity name
and through its own authorized officers, partners, members, managers
and agents, and no Affiliate of such Transferor shall be appointed to
act as agent of such Transferor. Such Transferor shall at all times use
its own stationery and business forms and describe itself as a separate
legal entity.
(x) Ensure that no Affiliate of such Transferor shall
advance funds to such Transferor, and no Affiliate of such Transferor
will otherwise guaranty debts of such Transferor.
(xi) Other than organizational expenses and as
expressly provided herein, pay all expenses, indebtedness and other
obligations incurred by it with its own funds.
(xii) Except as contemplated by the Transaction
Documents, not enter into any guaranty, or otherwise become liable,
with respect to or hold its assets or creditworthiness out as being
available for the payment of any obligation of any Affiliate of such
Transferor or of any other Person nor shall such Transferor make any
loans to, or incur any indebtedness in respect of, any Person.
(xiii) Ensure that any financial reports required of
such Transferor shall comply with generally accepted accounting
principles and shall be issued separately from, but may be consolidated
with, any reports prepared for any of its Affiliates; PROVIDED, that
any such consolidated reports shall indicate that the assets of the
Transferor are not available to the creditors of any Affiliate of the
Transferor.
(xiv) Ensure that at all times it is adequately
capitalized to engage in the transactions contemplated in its
Certificate of Incorporation or other organizational documents.
(h) INTERCHANGE. With respect to any Distribution Date, on or
prior to the immediately preceding Determination Date, the Servicer shall notify
the Transferor of the amount of Interchange (if any) required to be included as
Collections of Finance Charge Receivables with respect to such Monthly Period,
which amount for any Series shall be specified in the related Indenture
Supplement. Not later than 11:00 a.m., New York City time, on the related
Transfer Date, the Servicer shall deposit, or cause to be deposited into the
Collection Account, in immediately available funds, the amount of Interchange to
be so included as Collections of Finance Charge Receivables with respect to such
Monthly Period.
(i) AMENDMENTS TO RECEIVABLES PURCHASE AGREEMENTS. Each
Transferor further covenants that it will not enter into any amendments to a
Receivables Purchase Agreement or enter into a new Receivables Purchase
Agreement, in each case, that would have an Adverse Effect unless the Rating
Agency Condition has been satisfied.
Section 2.08. COVENANTS OF EACH TRANSFEROR WITH RESPECT TO THE
APPLICABLE RECEIVABLES PURCHASE AGREEMENTS. Each Transferor, in its capacity as
purchaser of Receivables
28
pursuant to a Receivables Purchase Agreement, hereby covenants that such
Transferor will at all times enforce the covenants and agreements of the Seller
in such Receivables Purchase Agreement, including covenants to the effect that
covenants will be enforced by the Seller against an Account Owner under the
Receivables Purchase Agreement that the Seller has with such Account Owner
including the covenant that all aspects of such Account Owner's credit card
program, all terms of the relevant Accounts and the applicable Credit Card
Agreements, and all solicitation materials and other related documents,
materials and agreements supplied or communicated in any form to the
cardholders, prospective cardholders or others in connection with such credit
card program comply in all material respects with applicable law and
regulations.
Section 2.09. ADDITION OF ACCOUNTS.
(a) AUTOMATIC ADDITIONAL ACCOUNTS. Automatic Additional
Accounts shall be included as Accounts from and after the later of the date upon
which they are created or otherwise designated as Automatic Additional Accounts,
and all Receivables in Automatic Additional Accounts, whether such Receivables
are then existing or thereafter created, shall be transferred automatically to
the Issuer upon their creation. For all purposes of this Agreement, all
receivables relating to Automatic Additional Accounts shall be treated as
Receivables upon their creation and shall be subject to the eligibility criteria
specified in the definitions of "Eligible Receivable" and "Eligible Account."
The Transferor may elect at any time to terminate the inclusion in Accounts of
new accounts which would otherwise be Automatic Additional Accounts as of any
Business Day (the "AUTOMATIC ADDITION TERMINATION DATE"), or suspend any such
inclusion as of any Business Day (an "AUTOMATIC ADDITION SUSPENSION DATE") until
a date to be notified in writing by the Transferor to the Owner Trustee and
Indenture Trustee (the "RESTART DATE") by delivering to the Owner Trustee, the
Indenture Trustee, the Servicer and each Rating Agency written notice of such
election at least ten (10) days prior to such Automatic Addition Termination
Date, Automatic Addition Suspension Date or Restart Date, as the case may be.
Promptly after any Automatic Addition Termination Date, Automatic Addition
Suspension Date or Restart Date, the Transferor and the Owner Trustee agree to
execute, and the Transferor agrees to record and file at its own expense, an
amendment to the financing statements referred to in SECTION 2.01 to specify the
accounts then subject to this Agreement (which specification may incorporate an
Account Schedule by reference) and, except in connection with any such filing
made after a Restart Date, to release any security interest in any Receivables
or related Transferred Assets in credit card accounts that would otherwise have
been Automatic Additional Accounts created after the Automatic Addition
Termination Date or Automatic Addition Suspension Date.
(b) PARTICIPATION INTERESTS. In lieu of, or in addition to,
causing the designation of the Supplemental Accounts referred to in clauses (e)
and (f) below, the Transferor may (but shall not be required), subject to
paragraph (c) below, convey to the Issuer participations (including 100%
participations) representing undivided interests in a pool of assets primarily
consisting of revolving credit card receivables and any interests in any of the
foregoing, including securities representing or backed by such receivables and
collections, together with all earnings, revenue, dividends, distributions,
income, issues and profits thereon ("PARTICIPATION INTERESTS"). Receivables
shall not be treated as a Participation Interest for purposes of this Agreement.
The
29
conveyance of Participation Interests to the Issuer pursuant to this paragraph
(b) shall be effected by a Participation Interest Supplement, dated the
applicable Addition Date and entered into pursuant to SECTION 10.01(a).
(c) REPRESENTATIONS AND WARRANTIES. Each Transferor conveying
Automatic Additional Accounts or Participation Interests hereby represents and
warrants to the Issuer, the Owner Trustee and the Indenture Trustee as of the
related Addition Date that:
(i) no Insolvency Event with respect to Columbus Bank
or other Account Owner, as applicable, CompuCredit or the
Transferor has occurred nor has the transfer to the Issuer of
the Receivables arising in the Automatic Additional Accounts
or of the Participation Interests been made in contemplation
of the occurrence thereof;
(ii) the transfer to the Issuer of the Receivables
arising in the Automatic Additional Accounts or of the
Participation Interests will not result in an Adverse Effect;
(iii) each Automatic Additional Account has a
required monthly minimum payment of at least 3% of the account
balance;
(iv) each Automatic Additional Account has an annual
percentage rate of interest of not less than 15%;
(v) each Automatic Additional Account had an original
Fair, ▇▇▇▇▇▇ & Co. credit risk score, at the time such account
was established, of no less than 580; and
(vi) each Automatic Additional Account is an Eligible
Account.
The inclusion of any Account identified by the agent numbers
4001-4999, notwithstanding that such Account may or may not meet the criteria in
clauses (iii), (iv) and (v) above, shall not be deemed a breach of the foregoing
representations and warranties or a breach of the representations and warranties
in SECTION 2.04 provided that with respect to such Accounts, the balance of all
Receivables included in such Accounts is treated for purposes of this Agreement,
the Indenture and the Indenture Supplements as "zero," and such Receivables
shall be treated as Ineligible Receivables for purposes of this Agreement, the
Indenture and the Indenture Supplements; PROVIDED that, notwithstanding any
provision in any document to the contrary, CompuCredit shall have no obligation
to repurchase such Receivables.
(d) ADDITIONAL TRANSFERORS. The Transferor may designate
Affiliates of the Transferor to be included as Transferors (each, an "ADDITIONAL
TRANSFEROR") under this Agreement in an amendment hereto pursuant to SECTION
10.01(a) and, in connection with such designation, the Transferor shall
surrender the Transferor Certificate to the Owner Trustee in exchange for a
newly issued Transferor Certificate modified to reflect such Additional
Transferor's interest in the Transferred Assets of the Issuer represented by the
Transferor Certificate as provided in the Trust Agreement; PROVIDED, HOWEVER,
that, if the provisions of
30
Section 3.04 of the Trust Agreement are not otherwise applicable, prior to any
such designation and exchange the conditions set forth in clauses (iii) and (v)
of Section 3.04(b) of the Trust Agreement shall have been satisfied with respect
thereto (as applied with respect to an issuance of a Supplemental Certificate).
(e) REQUIRED SUPPLEMENTAL ADDITIONS. Except as otherwise
provided in SECTION 2.05(b) and SECTION 3.08(a), if, (i) during any period of
thirty consecutive days, the Transferor Amount is less than the Required
Transferor Amount for that period, the Transferor shall cause to be designated
additional Eligible Accounts to be included as Accounts in a sufficient amount
(or such lesser amount as shall represent all Eligible Accounts constituting
open end credit card accounts then available to the Transferor under the
Receivables Purchase Agreements) such that the average of the Transferor Amount
as a percentage of the Average Principal Receivables for such 30-day period,
computed by assuming that the amount of the Principal Receivables of such
additional Accounts shall be deemed to be outstanding in the Trust Estate during
each day of such 30-day period, is at least equal to the Required Transferor
Amount, or (ii) on the last Business Day of any Monthly Period, the aggregate
amount of Principal Receivables is less than the Required Minimum Principal
Balance, the Transferor shall designate additional Eligible Accounts to be
included as Accounts in a sufficient amount (or such lesser amount as shall
represent all Eligible Accounts constituting open end credit card accounts then
available to the Transferor under the Receivables Purchase Agreements) such that
the aggregate amount of Principal Receivables will be equal to or greater than
the Required Minimum Principal Balance. Receivables from such additional
Eligible Accounts shall be transferred to the Issuer on or before the tenth
(10th) Business Day following such 30-day period or the last Business Day of
such Monthly Period, as the case may be.
(f) PERMITTED SUPPLEMENTAL ADDITIONS. Each Transferor may from
time to time, in its sole discretion, subject to the conditions specified in
paragraph (g) below, voluntarily cause the designation of additional Eligible
Accounts to be included as Accounts as of the applicable Addition Date.
(g) CONDITIONS TO ADDITION OF SUPPLEMENTAL ACCOUNTS. On the
Addition Date with respect to any Supplemental Accounts, the Issuer shall
purchase the Receivables in the designated Supplemental Accounts (and such
Supplemental Accounts shall be deemed to be Accounts for purposes of this
Agreement) as of the close of business on the applicable Addition Cut-Off Date,
subject to any prohibitions or limitations specified in any Indenture Supplement
and subject to the satisfaction of the following conditions:
(i) on or before the eighth Business Day immediately
preceding the Addition Date, the applicable Transferor shall have given
the Owner Trustee, the Indenture Trustee, the Servicer and each Rating
Agency notice (unless such notice requirement is otherwise waived) that
the Supplemental Accounts will be included and specifying the
applicable Addition Date and Addition Cut-Off Date;
(ii) all Supplemental Accounts shall be Eligible
Accounts;
31
(iii) such Transferor shall have delivered to the
Indenture Trustee copies of UCC-1 financing statements covering such
Supplemental Accounts, if necessary to perfect the Issuer's interest in
the Receivables arising therein;
(iv) to the extent required by SECTION 4.01, such
Transferor shall have deposited in the Collection Account all
Collections with respect to such Supplemental Accounts since the
Addition Cut-Off Date;
(v) as of each of the Addition Cut-Off Date and the
Addition Date, no Insolvency Event with respect to an Account Owner, a
Seller or such Transferor shall have occurred nor shall the transfer to
the Issuer of the Receivables arising in the Supplemental Accounts have
been made in contemplation of the occurrence thereof;
(vi) the Rating Agency Condition shall have been
satisfied;
(vii) such Transferor shall have delivered to the
Issuer an Officer's Certificate, dated the Addition Date, confirming,
to the extent applicable, the items set forth in clauses (ii) through
(vi) above;
(viii) the transfer to the Issuer of the Receivables
arising in the Supplemental Accounts will not result in an Adverse
Effect and such Transferor shall have delivered to the Indenture
Trustee an Officer's Certificate, dated the Addition Date, stating that
such Transferor reasonably believes that the transfer to the Issuer of
the Receivables arising in the Supplemental Accounts will not have an
Adverse Effect; and
(ix) such Transferor shall have delivered to the
Issuer, the Indenture Trustee and such Rating Agency an Opinion of
Counsel, dated the Addition Date, in accordance with SECTION
10.02(d)(iii).
(h) DELIVERY OF DOCUMENTS. In the case of the designation of
Additional Accounts, the Transferor designating such Accounts shall deliver to
the Owner Trustee (i) the computer file or microfiche list required to be
delivered pursuant to subsection 2.01(d) with respect to such Additional
Accounts on the date such file or list is required to be delivered pursuant to
Section 2.01 (the "DOCUMENT DELIVERY DATE") and (ii) in the case of the
designation of Supplemental Accounts, a duly executed, written Assignment,
substantially in the form of EXHIBIT C (the "ASSIGNMENT"), on the Document
Delivery Date.
Section 2.10. DEFAULTED RECEIVABLES. On the date when any
Receivable in an Account becomes a Defaulted Receivable, the Issuer shall
automatically and without further action or consideration be deemed to transfer,
set over and otherwise convey to the Transferor with respect to such Account,
without recourse, representation or warranty, all right, title and interest of
the Issuer in and to the Defaulted Receivables (including any related Finance
Charge Receivables) in such Account, all monies due or to become due with
respect thereto, all proceeds thereof and any Insurance Proceeds relating
thereto provided that Recoveries of such Account shall remain property of the
Issuer and be applied as provided herein.
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Section 2.11. ACCOUNT ALLOCATIONS. In the event that any
Transferor is unable for any reason to transfer Receivables to the Issuer in
accordance with the provisions of this Agreement, including by reason of the
application of the provisions of SECTION 7.01 or any order of any Governmental
Authority (a "TRANSFER RESTRICTION EVENT"), then, in any such event, (a) such
Transferor and the Servicer agree (except as prohibited by any such order) to
allocate and pay to the Issuer, after the date of such inability, all
Collections, including Collections of Receivables transferred to the Issuer
prior to the occurrence of such event, and all amounts which would have
constituted Collections but for such Transferor's inability to transfer
Receivables (up to an aggregate amount equal to the amount of Receivables
transferred to the Issuer by such Transferor on such date), (b) such Transferor
and the Servicer agree that such amounts will be applied as Collections in
accordance with ARTICLE IV of this Agreement and the terms of each Indenture
Supplement and (c) for so long as the allocation and application of all
Collections and all amounts that would have constituted Collections are made in
accordance with clauses (a) and (b) above, Principal Receivables and all amounts
which would have constituted Principal Receivables but for such Transferor's
inability to transfer Receivables to the Issuer which are written off as
uncollectible in accordance with this Agreement shall continue to be allocated
in accordance with ARTICLE IV of this Agreement and the terms of each Indenture
Supplement. For the purpose of the immediately preceding sentence, such
Transferor and the Servicer shall treat the first received Collections with
respect to the Accounts as allocable to the Issuer until the Issuer shall have
been allocated and paid Collections in an amount equal to the aggregate amount
of Principal Receivables held by the Issuer as of the date of the occurrence of
such event. If such Transferor and the Servicer are unable pursuant to any
Requirements of Law to allocate Collections as described above, such Transferor
and the Servicer agree that, after the occurrence of such event, payments on
each Account with respect to the principal balance of such Account shall be
allocated first to the oldest principal balance of such Account and shall have
such payments applied as Collections in accordance with ARTICLE IV of this
Agreement and the terms of each Indenture Supplement. The parties hereto agree
that Finance Charge Receivables, whenever created, accrued in respect of
Principal Receivables which have been conveyed to the Issuer shall continue to
belong to the Issuer notwithstanding any cessation of the transfer of additional
Principal Receivables to the Issuer and Collections with respect thereto shall
continue to be allocated and paid in accordance with ARTICLE IV of this
Agreement and the terms of each Indenture Supplement.
Section 2.12. DISCOUNT OPTION.
(a) The Transferor shall have the option to designate at any
time and from time to time a percentage or percentages, which may be a fixed
percentage or a variable percentage based on a formula (the "DISCOUNT
PERCENTAGE"), of all or any specified portion of Principal Receivables created
after the Discount Option Date to be treated as Finance Charge Receivables
("DISCOUNT OPTION RECEIVABLES"). The Transferor shall also have the option of
reducing or withdrawing the Discount Percentage, at any time and from time to
time, on and after such Discount Option Date. The Transferor shall provide
thirty (30) days prior written notice of any such change in the Discount
Percentage and the related Discount Option Date to the Servicer, the Owner
Trustee, the Indenture Trustee and any Rating Agency and such change in the
Discount Percentage shall become effective on such Discount Option Date (i)
unless such designation in the reasonable belief of the Transferor would cause
an Early Redemption Event or
33
Reinvestment Event or Event of Default with respect to any Series to occur, or
an event which, with notice or lapse of time or both, would constitute an Early
Redemption Event or Reinvestment Event or Event of Default with respect to any
Series and (ii) only if the Rating Agency Condition shall have been satisfied
with respect to such designation.
(b) After the Discount Option Date, Discount Option Receivable
Collections, if any, shall be treated as Collections of Finance Charge
Receivables.
[END OF ARTICLE II]
34
ARTICLE III
ADMINISTRATION AND SERVICING
OF RECEIVABLES
Section 3.01. ACCEPTANCE OF APPOINTMENT AND OTHER MATTERS
RELATING TO THE SERVICER.
(a) CompuCredit agrees to act as the Servicer under this
Agreement and the Noteholders by their acceptance of Notes consent to
CompuCredit acting as Servicer.
(b) As Servicer, the Servicer shall service and administer the
Receivables and any Participation Interests, shall collect and deposit into the
Collection Account amounts received under the Receivables and any Participation
Interests and shall charge-off as uncollectible Receivables, all in accordance
with its customary and usual servicing procedures for servicing credit card
receivables comparable to the Receivables and in accordance with the Credit Card
Guidelines. As Servicer, the Servicer shall have full power and authority,
acting alone or through any party properly designated by it hereunder, to do any
and all things in connection with such servicing and administration which it may
deem necessary or desirable; PROVIDED, HOWEVER, that subject to the rights of
the Owner Trustee, the Issuer and the Indenture Trustee hereunder, CFC shall
have the absolute right to direct the Servicer with respect to any power
conferred on the Servicer hereunder. Without limiting the generality of the
foregoing and subject to SECTION 8.01, the Servicer or its designee is hereby
authorized and empowered, unless such power is revoked by the Indenture Trustee
on account of the occurrence of a Servicer Default pursuant to SECTION 8.01, (i)
to instruct the Owner Trustee or the Indenture Trustee to make withdrawals and
payments from the Collection Account, the Special Funding Account and any Series
Account, as set forth in this Agreement, the Indenture or any Indenture
Supplement, (ii) to take any action required or permitted under any Series
Enhancement, as set forth in this Agreement, the Indenture or any Indenture
Supplement, (iii) to execute and deliver, on behalf of the Issuer, any and all
instruments of satisfaction or cancellation, or of partial or full release or
discharge, and all other comparable instruments, with respect to the Receivables
and, after the delinquency of any Receivable and to the extent permitted under
and in compliance with applicable Requirements of Law, to commence collection
proceedings with respect to such Receivable and (iv) to make any filings,
reports, notices, applications and registrations with, and to seek any consents
or authorizations from, the Commission and any state securities authority on
behalf of the Issuer as may be necessary or advisable to comply with any federal
or state securities or reporting requirements or other laws or regulations. The
Owner Trustee and the Indenture Trustee upon reasonable request therefor shall
furnish the Servicer with any documents in their possession necessary or
appropriate to enable the Servicer to carry out its servicing and administrative
duties hereunder.
(c) The Servicer shall not, and no Successor Servicer shall,
be obligated to use separate servicing procedures, offices, employees or
accounts for servicing the Receivables from
35
the procedures, offices, employees and accounts used by the Servicer or such
Successor Servicer, as the case may be, in connection with servicing other
credit card receivables.
(d) The Servicer shall comply with and perform its servicing
obligations with respect to the Accounts and Receivables in accordance with the
Credit Card Agreements relating to the Accounts and the Credit Card Guidelines
and all applicable rules and regulations of VISA and MasterCard, except insofar
as any failure to so comply or perform would not have an Adverse Effect.
(e) The Servicer shall pay out of its own funds, without
reimbursement (except as provided in SECTION 3.02), all expenses incurred in
connection with the servicing activities hereunder including expenses related to
enforcement of the Receivables, fees and disbursements of the Owner Trustee (as
such and in its individual capacity), the Administrator and the Indenture
Trustee (including the reasonable fees and expenses of its outside counsel) and
independent accountants and all other fees and expenses, including the costs of
filing UCC continuation statements and the costs and expenses relating to
obtaining and maintaining the listing of any Notes on any stock exchange.
(f) The Transferor shall pay out of its own funds, without
reimbursement, the costs and expenses relating to any stamp, documentary,
excise, property (whether on real, personal or intangible property) or any
similar tax levied on the Issuer or the Issuer's assets that are not expressly
stated in this Agreement to be payable by the Issuer or the Transferor (other
than federal, state, local and foreign income and franchise taxes, if any, or
any interest or penalties with respect thereto, assessed on the Issuer).
Section 3.02. SERVICING COMPENSATION. As full compensation for
its servicing activities hereunder and as reimbursement for any expense incurred
by it in connection therewith, prior to the termination of the Issuer pursuant
to Section 8.01 of the Trust Agreement, the Servicer shall be entitled to
receive a servicing fee (the "SERVICING FEE") with respect to each Monthly
Period, payable monthly on the related Distribution Date, in an amount equal to
one-twelfth of the product of (a) the weighted average of the Servicing Fee
Rates with respect to each outstanding Series (based upon the Servicing Fee Rate
for each Series and the Allocation Amount (or such other amount as specified in
the related Indenture Supplement) of such Series, in each case as of the last
day of the prior Monthly Period) and (b) the amount of Principal Receivables on
the last day of the prior Monthly Period. The share of the Servicing Fee
allocable to the Noteholders of a particular Series with respect to any Monthly
Period (the "MONTHLY SERVICING FEE") will be determined in accordance with the
relevant Indenture Supplement. The portion of the Servicing Fee with respect to
any Monthly Period not so allocated to the Noteholders of any particular Series
shall be paid by the holders of the Transferor Certificates on the related
Distribution Date and in no event shall the Issuer, the Owner Trustee (as such
or in its individual capacity), the Indenture Trustee, the Noteholders of any
Series or any Series Enhancer be liable for the share of the Servicing Fee with
respect to any Monthly Period to be paid by the holders of the Transferor
Certificates.
Section 3.03. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
SERVICER. CompuCredit, as initial Servicer, hereby makes, and any Successor
Servicer by its appointment
36
hereunder shall make, with respect to itself, on each Closing Date (and on the
date of any such appointment), the following representations, warranties and
covenants on which the Issuer shall be deemed to rely in accepting its interest
in the Receivables and the Indenture Trustee shall be deemed to have relied in
accepting the pledge of the Receivables and in entering into the Indenture:
(a) ORGANIZATION AND GOOD STANDING. The Servicer is a
corporation validly existing and in good standing under the applicable law of
the jurisdiction of its incorporation and has, in all material respects, full
power and authority to own its properties and conduct its credit card servicing
business as presently owned or conducted, and to execute, deliver and perform
its obligations under this Agreement, the Indenture and each Indenture
Supplement.
(b) DUE QUALIFICATION. The Servicer is duly qualified to do
business and is in good standing as a foreign limited partnership or corporation
or other foreign entity (or is exempt from such requirements) and has obtained
all necessary licenses and approvals in each jurisdiction in which the servicing
of the Receivables and any Participation Interests as required by this Agreement
requires such qualification except where the failure to so qualify or obtain
licenses or approvals would not have a material adverse effect on its ability to
perform its obligations as Servicer under this Agreement.
(c) DUE AUTHORIZATION. The execution, delivery, and
performance of this Agreement and the other agreements and instruments executed
or to be executed by the Servicer as contemplated hereby, have been duly
authorized by the Servicer by all necessary action on the part of the Servicer.
(d) BINDING OBLIGATION. This Agreement, the Indenture and each
Indenture Supplement each constitutes a legal, valid and binding obligation of
the Servicer, enforceable in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally from time to time in effect or by general principles of equity.
(e) NO CONFLICT. The execution and delivery of this Agreement,
the Indenture and each Indenture Supplement by the Servicer, and the performance
of the transactions contemplated by this Agreement and the fulfillment of the
terms hereof and thereof applicable to the Servicer, will not conflict with,
violate or result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time or both) a default under,
any indenture, contract, agreement, mortgage, deed of trust or other instrument
to which the Servicer is a party or by which it or its properties are bound.
(f) NO VIOLATION. The execution and delivery of this
Agreement, the Indenture and each Indenture Supplement by the Servicer, the
performance of the transactions contemplated by this Agreement and the
fulfillment of the terms hereof and thereof applicable to the Servicer will not
conflict with or violate any Requirements of Law applicable to the Servicer.
(g) NO PROCEEDINGS. There are no Proceedings or investigations
pending or, to the best knowledge of the Servicer, threatened, against the
Servicer before any Governmental
37
Authority seeking to prevent the consummation of any of the transactions
contemplated by this Agreement or seeking any determination or ruling that, in
the reasonable judgment of the Servicer, would materially and adversely affect
the performance by the Servicer of its obligations under this Agreement, the
Indenture and each Indenture Supplement.
(h) COMPLIANCE WITH REQUIREMENTS OF LAW. The Servicer shall
duly satisfy all obligations on its part to be fulfilled under or in connection
with each Receivable and the related Account, if any, will maintain in effect
all qualifications required under Requirements of Law in order to service
properly each Receivable and the related Account, if any, and will comply in all
material respects with all other Requirements of Law in connection with
servicing each Receivable and the related Account the failure to comply with
which would have an Adverse Effect.
(i) NO RESCISSION OR CANCELLATION. The Servicer shall not
permit any rescission or cancellation of any Receivable except in accordance
with the Credit Card Guidelines or as ordered by a court of competent
jurisdiction or other Governmental Authority.
(j) PROTECTION OF RIGHTS. The Servicer shall take no action in
violation of this Agreement which, nor omit to take in violation of this
Agreement any action the omission of which, would impair the rights of the
Issuer or the Indenture Trustee in any Receivable or the related Account, if
any, nor shall it reschedule, revise or defer payments due on any Receivable
except in accordance with the Credit Card Guidelines.
(k) RECEIVABLES NOT TO BE EVIDENCED BY PROMISSORY NOTES.
Except in connection with its enforcement or collection of an Account, the
Servicer will take no action to cause any Receivable to be evidenced by any
instrument (as defined in the UCC) and if any Receivable is so evidenced as a
result of the Servicer's action it shall be reassigned or assigned to the
Servicer as provided in this Section.
(l) ALL CONSENTS. All authorizations, consents, orders or
approvals of or registrations or declarations with any Governmental Authority
required to be obtained, effected or given by the Servicer in connection with
the execution and delivery of this Agreement by the Servicer and the performance
of the transactions contemplated by this Agreement by the Servicer, have been
duly obtained, effected or given and are in full force and effect.
In the event (x) any of the representations, warranties or
covenants of the Servicer contained in paragraphs (h), (i) or (j) of this
SECTION 3.03 with respect to any Receivable or the related Account is breached,
and such breach has a material adverse effect on the Issuer's interest in or the
collectibility of such Receivable and is not cured within sixty (60) days (or
such longer period, not in excess of one hundred twenty (120) days, as may be
agreed to by the Indenture Trustee and the Transferor) of the earlier to occur
of the discovery of such event by the Servicer, or receipt by the Servicer of
notice of such event given by the Owner Trustee, the Indenture Trustee or the
Transferor, or (y) as provided in SECTION 3.03(k) with respect to any
Receivable, all Receivables in the Account or Accounts to which such event
relates shall be assigned and transferred to the Servicer on the terms and
conditions set forth below.
38
The Servicer shall effect such assignment by making a deposit
into the Collection Account in immediately available funds not later than seven
days after such assignment obligation arises in an amount equal to the amount of
such Receivables.
Upon each such reassignment or assignment to the Servicer, the
Issuer shall automatically and without further action be deemed to sell,
transfer, assign, set over and otherwise convey to the Servicer, without
recourse, representation or warranty, all right, title and interest of the
Issuer in and to such Receivables, all Interchange and Recoveries related
thereto, all monies due or to become due and all amounts received or receivable
with respect thereto and all proceeds thereof. The Issuer shall execute such
documents and instruments of transfer or assignment and take such other actions
as shall be reasonably requested by the Servicer to effect the conveyance of any
such Receivables pursuant to this SECTION 3.03 but only upon receipt of an
Officer's Certificate of the Servicer that states that all conditions set forth
in this Section have been satisfied. The obligation of the Servicer to accept
reassignment or assignment of such Receivables, and to make the deposits, if
any, required to be made to the Collection Account as provided in the preceding
paragraph, shall constitute the sole remedy respecting the event giving rise to
such obligation available to the Issuer, the Indenture Trustee or any Series
Enhancer, except as provided in SECTION 6.04.
Section 3.04. REPORTS AND RECORDS FOR THE OWNER TRUSTEE AND
THE INDENTURE TRUSTEE.
(a) DAILY RECORDS. On each Business Day, the Servicer shall
make or cause to be made available at the office of the Servicer for inspection
by the Transferor, the Issuer, the Owner Trustee and the Indenture Trustee upon
request a record setting forth (i) the Collections in respect of Principal
Receivables and in respect of Finance Charge Receivables processed by the
Servicer on the second (2nd) preceding Business Day in respect of each Account
and (ii) the amount of Receivables as of the close of business on the second
(2nd) preceding Business Day in each Account. The Servicer shall, at all times,
maintain its computer files with respect to the Accounts in such a manner so
that the Accounts may be specifically identified and shall make available to the
Transferor, the Issuer, the Owner Trustee and the Indenture Trustee at the
office of the Servicer on any Business Day any computer programs necessary to
make such identification. The Owner Trustee and the Indenture Trustee shall
enter into such reasonable confidentiality agreements as the Servicer shall deem
necessary to protect its interests and as are reasonably acceptable in form and
substance to the Owner Trustee and the Indenture Trustee.
(b) MONTHLY SERVICER'S CERTIFICATE. Not later than the second
(2nd) Business Day preceding each Distribution Date, the Servicer shall, with
respect to each outstanding Series, deliver to the Transferor, the Issuer, the
Owner Trustee, the Indenture Trustee and each Rating Agency a certificate of a
Servicing Officer in substantially the form set forth in the related Indenture
Supplement.
Section 3.05. ANNUAL CERTIFICATE OF SERVICER. The Servicer
shall deliver to the Transferor, the Issuer, the Owner Trustee, the Indenture
Trustee and each Rating Agency on or before June 30th of each calendar year,
beginning with June 30, 2002, an Officer's Certificate substantially in the form
of EXHIBIT A.
39
Section 3.06. ANNUAL SERVICING REPORT OF INDEPENDENT PUBLIC
ACCOUNTANTS; COPIES OF REPORTS AVAILABLE.
(a) On or before June 30th of each calendar year, beginning
with June 30, 2002, the Servicer shall cause a firm of nationally recognized
independent public accountants (who may also render other services to the
Servicer or the Transferor) to furnish a report (addressed to the Indenture
Trustee) to the Issuer, the Transferor, the Indenture Trustee, the Owner
Trustee, the Servicer and each Rating Agency to the effect that they have
applied certain procedures that the accountants are reasonably able to review
and perform under such accounting firm's policies and are agreed upon with the
Servicer and examined certain documents and records relating to the servicing of
Accounts under this Agreement, the Indenture and each Indenture Supplement and
that, on the basis of such agreed-upon procedures, nothing has come to the
attention of such accountants that caused them to believe that the servicing
(including the allocation of Collections) has not been conducted in compliance
with the terms and conditions as set forth in this ARTICLE III and SECTION 6.08
and the applicable provisions of the Indenture and each Indenture Supplement,
except for such exceptions as they believe to be immaterial and such other
exceptions as shall be set forth in such statement. Such report shall set forth
the agreed-upon procedures performed. In the event such firm requires the
Indenture Trustee to agree to the procedures performed by such firm, the
Servicer shall direct the Indenture Trustee in writing to so agree; it being
understood and agreed that the Indenture Trustee will deliver such letter of
agreement in conclusive reliance upon the direction of the Servicer, and the
Indenture Trustee makes no independent inquiry or investigation as to, and shall
have no obligation or liability in respect of, the sufficiency, validity or
correctness of such procedures.
(b) On or before June 30th of each calendar year, beginning
with June 30, 2002 the Servicer shall cause a firm of nationally recognized
independent public accountants (who may also render other services to the
Servicer or Transferor) to furnish a report to the Issuer, the Transferor, the
Owner Trustee, the Indenture Trustee, the Servicer and each Rating Agency to the
effect that they have applied certain procedures that the accountants are
reasonably able to review and perform under such accounting firm's policies and
are agreed upon with the Servicer to compare the mathematical calculations of
certain amounts set forth in the Servicer's certificates delivered pursuant to
SECTION 3.04(b) during the period covered by such report with the Servicer's and
Columbus Bank's computer reports that were the source of such amounts and that
on the basis of such agreed-upon procedures and comparison, such accountants are
of the opinion that such amounts are in agreement, except for such exceptions as
they believe to be immaterial and such other exceptions as shall be set forth in
such statement. Such report shall set forth the agreed-upon procedures
performed.
(c) A copy of each certificate and report provided pursuant to
SECTIONS 3.04(b), 3.05 or 3.06 may be obtained by any Noteholder or beneficial
owner of a Note by a request in writing to the Owner Trustee addressed to the
Corporate Trust Office.
Section 3.07. NOTICES TO COMPUCREDIT. In the event that
CompuCredit is no longer acting as Servicer, any Successor Servicer shall
deliver or make available to CompuCredit each certificate and report required to
be provided thereafter pursuant to SECTIONS 3.04(b), 3.05 and 3.06.
40
Section 3.08. ADJUSTMENTS.
(a) If the Servicer adjusts downward the amount of any
Receivable because of a rebate, refund, unauthorized charge or billing error to
a cardholder, or because such Receivable was created in respect of merchandise
which was refused or returned by a cardholder, or if the Servicer otherwise
adjusts downward the amount of any Receivable without receiving Collections
therefor or charging off such amount as uncollectible, then, in any such case,
the amount of Principal Receivables used to calculate the Transferor Amount, and
(unless otherwise specified) any other amount required herein or in the
Indenture or any Indenture Supplement to be calculated by reference to the
amount of Principal Receivables, will be reduced by the amount of the
adjustment. Similarly, the amount of Principal Receivables used to calculate the
Transferor Amount and (unless otherwise specified) any other amount required
herein or in the Indenture or any Indenture Supplement to be calculated by
reference to the amount of Principal Receivables will be reduced by the
principal amount of any Receivable which was discovered as having been created
through a fraudulent or counterfeit charge or with respect to which the covenant
contained in SECTION 2.07(b) was breached. Any adjustment required pursuant to
either of the two preceding sentences shall be made on or prior to the end of
the Monthly Period in which such adjustment obligation arises. In the event
that, following the exclusion of such Principal Receivables from the calculation
of the Transferor Amount, the Transferor Amount would be less than the Required
Transferor Amount, not later than the close of business on the date of such
adjustment, the Transferor shall make a payment to the Issuer for deposit into
the Special Funding Account in immediately available funds in an amount equal to
the amount by which the Transferor Amount would be less than the Required
Transferor Amount, due to adjustments with respect to Receivables conveyed by
such Transferor (up to the amount of such Principal Receivables); PROVIDED,
HOWEVER, that if the Transferor Amount equals or exceeds the Required Transferor
Amount before such payment is made, the Transferor will not be required to make
such payment.
(b) If (i) the Servicer makes a deposit into the Collection
Account in respect of a Collection of a Receivable and such Collection was
received by the Servicer in the form of a check which is not honored for any
reason or (ii) the Servicer makes a mistake with respect to the amount of any
Collection and deposits an amount that is less than or more than the actual
amount of such Collection, the Servicer shall appropriately adjust the amount
subsequently deposited into the Collection Account to reflect such dishonored
check or mistake. Any Receivable in respect of which a dishonored check is
received shall be deemed not to have been paid. Notwithstanding the first two
sentences of this paragraph, adjustments made pursuant to this SECTION 3.08
shall not require any change in any report previously delivered pursuant to
SECTION 3.04(a).
Section 3.09. REPORTS TO THE COMMISSION. The Servicer shall,
on behalf of the Issuer cause to be filed with the Commission any periodic
reports required to be filed under the provisions of the Exchange Act and the
rules and regulations of the Commission thereunder. The Issuer and the
Transferor shall, at the expense of the Transferor, cooperate in any reasonable
request of the Servicer in connection with such filings.
[END OF ARTICLE III]
41
ARTICLE IV
COLLECTIONS AND ALLOCATIONS
Section 4.01. COLLECTIONS AND ALLOCATIONS.
(a) The Servicer will apply or will instruct the Indenture
Trustee in writing to apply all funds on deposit in the Collection Account as
described in this ARTICLE IV and in each Indenture Supplement. Except as
otherwise provided below, the Servicer shall deposit Collections into the
Collection Account as promptly as possible after the Date of Processing of such
Collections, but in no event later than the second (2nd) Business Day following
the Date of Processing. Subject to the express terms of any Indenture
Supplement, but notwithstanding anything else in this Agreement to the contrary,
for so long as the following conditions are satisfied: (A) (i) CompuCredit
remains the Servicer and maintains a short-term debt rating of not less than A-1
by Standard & Poor's, P-1 by ▇▇▇▇▇'▇ and F1+ by Fitch (if rated by Fitch), and
(ii) no Early Redemption Event, Reinvestment Event or Event of Default shall
have occurred or (B) other arrangements are made such that the Rating Agency
Condition is satisfied with respect thereto, the Servicer need not make the
daily deposits of Collections into the Collection Account as provided in the
preceding sentence, but may make a single deposit in the Collection Account in
immediately available funds not later than 4:00 p.m., New York City time, on the
Transfer Date following the Monthly Period for which such Collections were
processed. Subject to the proviso in SECTION 4.02 and the express terms of any
Indenture Supplement, but notwithstanding anything else in this Agreement to the
contrary, with respect to any Monthly Period, whether the Servicer is required
to make deposits of Collections pursuant to the first or the second preceding
sentence, (i) the Servicer will only be required to deposit Collections into the
Collection Account up to the aggregate amount of Collections required to be
deposited into any Series Account or, without duplication, distributed on or
prior to the related Distribution Date to or for the benefit of Noteholders or
to any Series Enhancer pursuant to the terms of any Indenture Supplement or
Series Enhancement and any excess shall be paid to the Issuer for application in
accordance with the Trust Agreement, and (ii) if at any time prior to such
Distribution Date the amount of Collections deposited in the Collection Account
exceeds the amount required to be deposited pursuant to clause (i) above, the
Servicer will be permitted to withdraw the excess from the Collection Account
and pay it to the Issuer for application in accordance with the Trust Agreement.
The Servicer hereby acknowledges that any payments referenced in the immediately
preceding sentence shall be paid directly to the Transferor pursuant to
subsection 3.04(a) of the Trust Agreement. Subject to the second preceding
sentence, the Servicer may retain its Servicing Fee with respect to a Series and
shall not be required to deposit it in the Collection Account.
(b) Collections of Finance Charge Receivables and Principal
Receivables and Defaulted Receivables will be allocated to each Series on the
basis of the Series Allocable Finance Charge Collections of such Series, Series
Allocable Principal Collections of such Series and Series Allocable Defaulted
Amount of such Series and amounts so allocated to any Series will not, except as
specified in the related Indenture Supplement, be available to the Noteholders
of any other Series. Allocations of the foregoing amounts between the
Noteholders and the Series Enhancers and the Transferor Amount, among the Series
and among the Classes in any Series, shall be set forth in the related Indenture
Supplement or Indenture Supplements.
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Section 4.02. SHARED PRINCIPAL COLLECTIONS.
On each Distribution Date, (a) the Servicer shall allocate
Shared Principal Collections (as defined below) to each Principal Sharing
Series, pro rata, in proportion to the Principal Shortfalls (as defined below),
if any, with respect to each such Series and (b) the Servicer shall withdraw
from the Collection Account and pay to the Issuer for application in accordance
with the Trust Agreement an amount equal to the excess, if any, of (x) the
aggregate amount for all outstanding Series of Collections of Principal
Receivables which the related Indenture Supplements specify are to be treated as
"SHARED PRINCIPAL COLLECTIONS" for such Distribution Date over (y) the aggregate
amount for all outstanding Series which the related Indenture Supplements
specify are "PRINCIPAL SHORTFALLS" for such Series for such Distribution Date;
PROVIDED, HOWEVER, that if the Transferor Amount as of such Distribution Date
(determined after giving effect to the Principal Receivables or Participation
Interests transferred to the Issuer on such date) is less than the Required
Transferor Amount, the Servicer will not distribute to the Issuer any such
amounts that otherwise would be distributed to the Issuer, but shall deposit
such funds in the Special Funding Account. The Issuer may, at its option,
instruct the Indenture Trustee in writing to deposit Shared Principal
Collections which are otherwise payable to the Issuer pursuant to the provisions
set forth above into the Special Funding Account.
Section 4.03. ADDITIONAL WITHDRAWALS FROM THE COLLECTION
ACCOUNT.
On or before the Determination Date with respect to any
Monthly Period, the Servicer shall determine the amounts payable to CompuCredit,
Columbus Bank or any other Account Owner with respect to such Monthly Period
under the applicable Receivables Purchase Agreement in respect of amounts on
deposit in the Collection Account that were not transferred to the Issuer
hereunder, and the Servicer shall withdraw such amounts from the Collection
Account and pay such amount to CompuCredit for distribution to CompuCredit,
Columbus Bank or any other Account Owner, as applicable.
Section 4.04. ALLOCATION OF TRANSFERRED ASSETS TO SERIES OR
GROUPS.
To the extent so provided in the Indenture Supplement for any
Series or in an amendment to this Agreement executed pursuant to SECTION 10.01,
and, if necessary, an amendment to the Indenture, Receivables conveyed to the
Issuer pursuant to SECTION 2.01 and Receivables or Participation Interests
conveyed to the Issuer pursuant to SECTION 2.09 or any Participation Interest
Supplement, and all Collections received with respect thereto may be allocated
or applied in whole or in part to one or more Series or Groups as may be
provided in any such Indenture Supplement or amendment; PROVIDED, HOWEVER, that
any such allocation or application shall be effective only upon satisfaction of
the following conditions:
(a) on or before the fifth (5th) Business Day immediately
preceding such allocation, the Servicer shall have given the Indenture Trustee
and each Rating Agency that has rated any Series or Class of Notes within the
applicable Group written notice of such allocation;
(b) for any Series or Class of Notes within the applicable
Group, the Rating Agency Condition shall have been satisfied with respect to
such allocation; and
43
(c) the Issuer shall have delivered to the Indenture Trustee
an Officer's Certificate, dated the date of such allocation, to the effect that
the Issuer reasonably believes that such allocation will not have an Adverse
Effect.
Any such Indenture Supplement or amendment may provide that
(i) such allocation to one or more particular Series or Groups may terminate
upon the occurrence of certain events specified therein and (ii) that upon the
occurrence of any such event, such assets and any Collections with respect
thereto, shall be reallocated to other Series or Groups or to all Series, all as
shall be provided in such Indenture Supplement or amendment.
Section 4.05. EXCESS FINANCE CHARGE COLLECTIONS. On each
Distribution Date, (a) the Servicer shall allocate Excess Finance Charge
Collections (as defined below) to each Excess Allocation Series PRO RATA, in
proportion to the Finance Charge Shortfalls (as defined below), if any, with
respect to each such Series, and (b) the Servicer shall withdraw from the
Collection Account and pay to the Issuer for application in accordance with the
Trust Agreement an amount equal to the excess, if any, of (x) the aggregate
amount for all outstanding Series of Collections of Finance Charge Receivables
which the related Indenture Supplements specify are to be treated as "EXCESS
FINANCE CHARGE COLLECTIONS" for such Distribution Date over (y) the aggregate
amount for all outstanding Series which the related Indenture Supplements
specify are "FINANCE CHARGE SHORTFALLS" for such Series and such Distribution
Date.
Section 4.06. SPECIAL RESERVE AMOUNTS. The Servicer shall
establish and maintain an Eligible Deposit Account at The Bank of New York (the
"SPECIAL RESERVE ACCOUNT") bearing a designation clearly indicating that the
funds and other property credited thereto are held for the benefit of the
Issuer. Except as may expressly be provided in the Indenture and this Transfer
and Servicing Agreement, the Servicer shall have no right of setoff or banker's
lien against, and no right to otherwise deduct from, any funds and other
property held in the Special Reserve Account for any amount owed to it by the
Indenture Trustee, the Issuer, any Noteholder or any Series Enhancer. If, at any
time, the Special Reserve Account ceases to be an Eligible Deposit Account, the
Servicer shall within ten (10) Business Days (or such longer period, not to
exceed thirty (30) calendar days, as to which each Rating Agency may consent)
establish a new Special Reserve Account meeting the conditions specified above,
transfer any monies, instruments, investment property and other property to such
new Special Reserve Account and from the date such new Special Reserve Account
is established, it shall be the "Special Reserve Account."
Funds on deposit in the Special Reserve Account shall be invested by
the Servicer or, at the written direction of the Servicer, the Indenture
Trustee, in Eligible Investments selected by the Servicer. In the absence of
written directions from the Servicer, all funds shall remain uninvested. Upon
execution of the Indenture, the Special Reserve Account and all such Eligible
Investments shall be held by the Indenture Trustee for the benefit of the
Noteholders pursuant to the terms of SECTION 6.15 of the Indenture. Upon written
direction of the Servicer, funds and other property credited to the Special
Reserve Account on any date will be invested in Eligible Investments that will
mature so that such funds will be available no later than the close of business
on the Transfer Date following such date. No such Eligible Investment shall be
disposed of prior to its maturity; PROVIDED, HOWEVER, that the Servicer, or the
Indenture Trustee at the
44
written direction of the Servicer, may sell, liquidate or dispose of an Eligible
Investment before its maturity if such sale, liquidation or disposal would not
result in a loss of all or part of the principal portion of such Eligible
Investment or if, prior to the maturity of such Eligible Investment, a default
occurs in the payment of principal, interest or any other amount with respect to
such Eligible Investment. Unless directed by the Servicer, funds and other
property credited to the Special Reserve Account on a Transfer Date with respect
to the immediately succeeding Distribution Date are not required to be invested
overnight. On each Distribution Date, the Servicer shall calculate, and withdraw
or direct the Trustee to withdraw, amounts to be withdrawn from the Special
Reserve Account in accordance with Schedule X attached hereto as it may be
amended from time to time (the "Special Withdrawal"). The Special Withdrawal
shall be treated as Recoveries with respect to the related Monthly Period.
[END OF ARTICLE IV]
45
ARTICLE V
OTHER MATTERS RELATING TO EACH TRANSFEROR
Section 5.01. LIABILITY OF EACH TRANSFEROR. Each Transferor
shall be severally, and not jointly, liable for all obligations, covenants,
representations and warranties of such Transferor arising under or related to
this Agreement. Except as provided in the preceding sentence, each Transferor
shall be liable only to the extent of the obligations specifically undertaken by
it in its capacity as a Transferor.
Section 5.02. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, A TRANSFEROR.
(a) No Transferor shall dissolve, liquidate, consolidate with
or merge into any other corporation, limited liability company or other entity
or convey, transfer or sell its properties and assets substantially as an
entirety to any Person unless:
(i) the entity formed by such consolidation or into
which such Transferor is merged or the Person which acquires by
conveyance, transfer or sale the properties and assets of the
Transferor substantially as an entirety shall be, if such Transferor is
not the surviving entity, organized and existing under the laws of the
United States of America or any state or the District of Columbia, and
shall be a savings association, a national banking association, a bank
or other entity which is not eligible to be a debtor in a case under
Title 11 of the United States Code or is a special purpose corporation
or other special purpose entity whose powers and activities are limited
to substantially the same degree as provided in the certificate of
formation or incorporation of CFC and, if such Transferor is not the
surviving entity, shall expressly assume, by an agreement supplemental
hereto, executed and delivered to the Owner Trustee and the Indenture
Trustee, in form reasonably satisfactory to the Owner Trustee and the
Indenture Trustee, the performance of every covenant and obligation of
such Transferor hereunder; and
(ii) such Transferor or the surviving entity, as the
case may be, has delivered to the Owner Trustee and the Indenture
Trustee (with a copy to each Rating Agency) an Officer's Certificate
and an Opinion of Counsel each stating that such consolidation, merger,
conveyance, transfer or sale and such supplemental agreement comply
with this Section, that such supplemental agreement is a valid and
binding obligation of such surviving entity enforceable against such
surviving entity in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors'
rights generally from time to time in effect or general principles of
equity, and that all conditions precedent herein provided for relating
to such transaction have been complied with; and
46
(iii) the Rating Agency Condition shall have been
satisfied with respect to such consolidation, merger, conveyance or
transfer.
(b) Except as permitted by SECTION 2.07(c), the obligations,
rights or any part thereof of each Transferor hereunder shall not be assignable
nor shall any Person succeed to such obligations or rights of any Transferor
hereunder except (i) for conveyances, mergers, consolidations, assumptions,
sales or transfers in accordance with the provisions of the foregoing paragraph
and (ii) for conveyances, mergers, consolidations, assumptions, sales or
transfers to other entities (1) which such Transferor and the Servicer determine
will not result in an Adverse Effect, (2) which meet the requirements of clause
(iii) of the preceding paragraph and (3) for which such purchaser, transferee,
pledgee or entity shall expressly assume, in an agreement supplemental hereto,
executed and delivered to the Owner Trustee and the Indenture Trustee in writing
in form satisfactory to the Owner Trustee and the Indenture Trustee, the
performance of every covenant and obligation of such Transferor thereby
conveyed.
Section 5.03. LIMITATIONS ON LIABILITY OF EACH TRANSFEROR.
Subject to SECTION 5.01, no Transferor nor any of the directors, officers,
employees, incorporators, agents, partners, members or managers of any
Transferor acting in such capacities shall be under any liability to the Issuer,
the Owner Trustee, the Indenture Trustee, the Noteholders, any Series Enhancer
or any other Person for any action taken or for refraining from the taking of
any action in good faith in such capacities pursuant to this Agreement, it being
expressly understood that such liability is expressly waived and released as a
condition of, and consideration for, the execution of this Agreement; PROVIDED,
HOWEVER, that this provision shall not protect any Transferor or any such person
against any liability which would otherwise be imposed by reason of willful
misfeasance, bad faith or gross negligence in the performance of its duties or
by reason of reckless disregard of obligations and its duties hereunder. Each
Transferor and any director, officer, employee, partner, member or manager or
agent of such Transferor may rely in good faith on any document of any kind
prima facie properly executed and submitted by any Person (other than such
Transferor) respecting any matters arising hereunder.
[END OF ARTICLE V]
47
ARTICLE VI
OTHER MATTERS RELATING TO THE SERVICER
Section 6.01. LIABILITY OF THE SERVICER. The Servicer shall be
liable under this ARTICLE VI only to the extent of the obligations specifically
undertaken by the Servicer in its capacity as Servicer.
Section 6.02. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, THE SERVICER. The Servicer shall not consolidate with or merge
into any other corporation, limited partnership, limited liability company or
other entity or convey, transfer or sell its properties and assets substantially
as an entirety to any Person, unless:
(a) (i) the entity formed by such consolidation or into which
the Servicer is merged or the Person which acquires by conveyance,
transfer or sale the properties and assets of the Servicer
substantially as an entirety shall be, if the Servicer is not the
surviving entity, a corporation or other entity organized and existing
under the laws of the United States of America or any state or the
District of Columbia, and, if the Servicer is not the surviving entity,
such corporation or other entity shall expressly assume, by an
agreement supplemental hereto, executed and delivered to the Owner
Trustee, the Indenture Trustee and the Transferor, in form satisfactory
to the Owner Trustee, the Indenture Trustee and the Transferor, the
performance of every covenant and obligation of the Servicer hereunder;
(ii) the Servicer or the surviving entity, as the case may
be, has delivered to the Owner Trustee, the Indenture Trustee and the
Transferor an Officer's Certificate and an Opinion of Counsel each
stating that such consolidation, merger, conveyance, transfer or sale
comply with this SECTION 6.02, that such supplemental agreement is a
valid and binding obligation of such surviving entity enforceable
against such surviving entity in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally from time to time in effect or general
principles of equity, and that all conditions precedent herein provided
for relating to such transaction have been complied with; and
(iii) the Servicer shall have given the Rating Agencies
notice of such consolidation, merger or transfer or assets; and
(b) the corporation or other entity formed by such
consolidation or into which the Servicer is merged or the Person which acquires
by conveyance or transfer the properties and assets of the Servicer
substantially as an entirety shall be an Eligible Servicer.
Section 6.03. LIMITATION ON LIABILITY OF THE SERVICER AND
OTHERS. Except as provided in SECTION 6.04, neither the Servicer nor any of the
directors, officers, partners,
48
members, managers, employees or agents of the Servicer in its capacity as
Servicer shall be under any liability to the Issuer, the Owner Trustee, the
Indenture Trustee, the Noteholders, any Series Enhancer or any other Person for
any action taken or for refraining from the taking of any action in good faith
in its capacity as Servicer pursuant to this Agreement; PROVIDED, HOWEVER, that
this provision shall not protect the Servicer or any such Person against any
liability which would otherwise be imposed by reason of willful misfeasance, bad
faith or negligence in the performance of its duties or by reason of reckless
disregard of its obligations and its duties hereunder. The Servicer and any
director, officer, employee, partner, member or manager or agent of the Servicer
may rely in good faith on any document of any kind prima facie properly executed
and submitted by any Person (other than the Servicer) respecting any matters
arising hereunder. The Servicer shall not be under any obligation to appear in,
prosecute or defend any legal action which is not incidental to its duties as
Servicer in accordance with this Agreement and which in its reasonable judgment
may involve it in any expense or liability. The Servicer may, in its sole
discretion, undertake any such legal action which it may deem necessary or
desirable for the benefit of the Issuer and the Noteholders with respect to this
Agreement and the rights and duties of the parties hereto and the interests of
the Issuer and the Noteholders hereunder.
Section 6.04. SERVICER INDEMNIFICATION OF THE ISSUER, THE
OWNER TRUSTEE AND THE INDENTURE TRUSTEE. Subject to SECTION 6.03, the Servicer
shall indemnify and hold harmless each of the Issuer, the Owner Trustee (as such
and in its individual capacity), the Indenture Trustee and any trustees
predecessor thereto (including the Indenture Trustee in its capacity as Note
Registrar or as Paying Agent) and their respective directors, officers,
employees, partners, members or managers and agents from and against any and all
loss, liability, claim, expense, damage or injury suffered or sustained by
reason of (a) any acts or omissions of the Servicer with respect to the Issuer
in breach of this Agreement or (b) the administration by the Owner Trustee of
the Issuer (in the case of clause (a) or (b), other than such as may arise from
the negligence or willful misconduct of the Owner Trustee or the Indenture
Trustee, as applicable), including any judgment, award, settlement, reasonable
attorneys' fees and other costs or expenses incurred in connection with the
defense of any action, Proceeding or claim. Indemnification pursuant to this
SECTION 6.04 shall not be payable from the Transferred Assets. The Servicer's
obligations under this SECTION 6.04 shall survive the termination of this
Agreement or the Issuer or the earlier removal or resignation of the Owner
Trustee or the Indenture Trustee, as applicable.
Section 6.05. RESIGNATION OF THE SERVICER. The Servicer shall
not resign from the obligations and duties hereby imposed on it except (a) upon
a determination that (i) the performance of its duties hereunder is no longer
permissible under applicable law and (ii) there is no reasonable action which
the Servicer could take to make the performance of its duties hereunder
permissible under applicable law or (b) upon the assumption, by an agreement
supplemental hereto, executed and delivered to the Transferor, the Issuer and
the Indenture Trustee, in form satisfactory to the Transferor, the Issuer and
the Indenture Trustee, of the obligations and duties of the Servicer hereunder
by any of its Affiliates or by any other entity the appointment of which shall
have satisfied the Rating Agency Condition and, in either case, qualifies as an
Eligible Servicer. Any determination permitting the resignation of the Servicer
shall be evidenced as to clause (a) above by an Opinion of Counsel to such
effect delivered to the Owner Trustee and the Indenture Trustee. No resignation
shall become effective until the
49
Indenture Trustee or a Successor Servicer shall have assumed the
responsibilities and obligations of the Servicer in accordance with SECTION 8.02
hereof. If within one hundred twenty (120) days of the date of the determination
that the Servicer may no longer act as Servicer under clause (a) above the
Indenture Trustee is unable to appoint a Successor Servicer, the Indenture
Trustee shall serve as Successor Servicer. Notwithstanding the foregoing, the
Indenture Trustee shall, if it is legally unable so to act, petition a court of
competent jurisdiction to appoint any established institution qualifying as an
Eligible Servicer as the Successor Servicer hereunder. The Issuer shall give
prompt notice to each Rating Agency and each Series Enhancer upon the
appointment of a Successor Servicer. Notwithstanding anything in this Agreement
to the contrary, CompuCredit may assign part or all of its obligations and
duties as Servicer under this Agreement to an Affiliate of CompuCredit so long
as CompuCredit shall have fully guaranteed the performance of such obligations
and duties under this Agreement.
Section 6.06. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION
REGARDING THE RECEIVABLES. The Servicer shall provide to the Owner Trustee or
the Indenture Trustee, as applicable, access to the documentation regarding the
Accounts and the Receivables in such cases where the Owner Trustee or the
Indenture Trustee, as applicable, is required in connection with the enforcement
of the rights of the Issuer or the Noteholders or by applicable statutes or
regulations to review such documentation, such access being afforded without
charge but only (a) upon reasonable request, (b) during normal business hours,
(c) subject to the Servicer's normal security and confidentiality procedures and
(d) at reasonably accessible offices in the continental United States designated
by the Servicer. Nothing in this Section shall derogate from the obligation of
the Transferor, the Owner Trustee, the Issuer, the Indenture Trustee and the
Servicer to observe any applicable law prohibiting disclosure of information
regarding the Obligors and the failure of the Servicer to provide access as
provided in this Section as a result of such obligation shall not constitute a
breach of this Section.
Section 6.07. DELEGATION OF DUTIES. In the ordinary course of
business, the Servicer may at any time delegate its duties hereunder with
respect to the Accounts and the Receivables to any Person that agrees to conduct
such duties in accordance with the Credit Card Guidelines and this Agreement.
Such delegation shall not relieve the Servicer of its liability and
responsibility with respect to such duties, and shall not constitute a
resignation within the meaning of SECTION 6.05.
Section 6.08. EXAMINATION OF RECORDS. Each Transferor and the
Servicer shall indicate generally in their computer files or other records that
the Receivables arising in the Accounts have been conveyed to the Issuer
pursuant to this Agreement. Each Transferor and the Servicer shall, prior to the
sale or transfer to a third party of any receivable held in its custody, examine
its computer records and other records to determine that such receivable is not,
and does not include, a Receivable.
[END OF ARTICLE VI]
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ARTICLE VII
INSOLVENCY EVENTS
Section 7.01. RIGHTS UPON THE OCCURRENCE OF AN INSOLVENCY
EVENT. If any Transferor shall consent or fail to object to the appointment of a
bankruptcy trustee or conservator, receiver or liquidator in any bankruptcy
proceeding or other insolvency, readjustment of debt, marshalling of assets and
liabilities or similar Proceedings of or relating to such Transferor or relating
to all or substantially all of such Transferor's property, or the commencement
of an action seeking a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises for the appointment of a
bankruptcy trustee or conservator, receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
Proceedings, or for the winding-up, insolvency, bankruptcy, reorganization,
conservatorship, receivership or liquidation of such entity's affairs, or
notwithstanding an objection by such Transferor any such action shall have
remained undischarged or unstayed for a period of sixty (60) days or upon entry
of any order or decree providing for such relief; or such Transferor shall admit
in writing its inability to pay its debts generally as they become due, file, or
consent or fail to object (or object without dismissal of any such filing within
sixty (60) days of such filing or the earlier entry of any order providing for
such relief) to the filing of, a petition to take advantage of any applicable
bankruptcy, insolvency or reorganization, receivership or conservatorship
statute, make an assignment for the benefit of its creditors or voluntarily
suspend payment of its obligations (any such act or occurrence with respect to
any Person being an "INSOLVENCY EVENT"), such Transferor shall on the day any
such Insolvency Event occurs (the "APPOINTMENT DATE"), immediately cease to
transfer Principal Receivables to the Issuer and shall promptly give notice to
the Indenture Trustee and the Issuer thereof. Notwithstanding any cessation of
the transfer to the Issuer of additional Principal Receivables, Principal
Receivables transferred to the Issuer prior to the occurrence of such Insolvency
Event, Collections in respect of such Principal Receivables and Finance Charge
Receivables (whenever created) accrued in respect of such Principal Receivables
shall continue to be a part of the Transferred Assets and shall be allocated and
distributed to Noteholders in accordance with the terms of this Agreement, the
Indenture and each Indenture Supplement.
[END OF ARTICLE VII]
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ARTICLE VIII
SERVICER DEFAULTS
Section 8.01. SERVICER DEFAULTS. If any one of the following
events (a "SERVICER DEFAULT") shall occur and be continuing:
(a) any failure by the Servicer to make any payment, transfer
or deposit or to give instructions or to give notice to the Indenture Trustee to
make such payment, transfer or deposit on or before the date occurring five (5)
Business Days after the date such payment, transfer or deposit or such
instruction or notice is required to be made or given, as the case may be, under
the terms of this Agreement, the Indenture or any Indenture Supplement;
(b) failure on the part of the Servicer duly to observe or
perform in any material respect any other covenants or agreements of the
Servicer set forth in this Agreement, the Indenture, any Indenture Supplement,
the Affinity Card Agreement or the Facilities Management Agreement and which
continues unremedied for a period of sixty (60) days after the date on which
notice of such failure, requiring the same to be remedied, shall have been given
to the Servicer by the Owner Trustee or the Indenture Trustee, or to the
Servicer, the Owner Trustee and the Indenture Trustee by Holders of Notes
evidencing not less than 10% of the aggregate unpaid principal amount of all
Notes Outstanding (or, with respect to any such failure that does not relate to
all Series, 10% of the aggregate unpaid principal amount of all Notes
Outstanding of all Series to which such failure relates); or the Servicer shall
assign or delegate its duties under this Agreement, except as permitted by
SECTIONS 6.02 and 6.07;
(c) any representation, warranty or certification made by the
Servicer in this Agreement or in any certificate delivered pursuant to this
Agreement shall prove to have been incorrect when made, which has an Adverse
Effect and which Adverse Effect continues for a period of sixty (60) days after
the date on which notice thereof, requiring the same to be remedied, shall have
been given to the Servicer by the Owner Trustee or the Indenture Trustee, or to
the Servicer, the Owner Trustee and the Indenture Trustee by the Holders of
Notes evidencing not less than 10% of the aggregate unpaid principal amount of
all Notes Outstanding (or, with respect to any such representation, warranty or
certification that does not relate to all Series, 10% of the aggregate unpaid
principal amount of all Notes Outstanding of all Series to which such
representation, warranty or certification relates); or
(d) the Servicer shall consent to the appointment of a
bankruptcy trustee or conservator or receiver or liquidator in any bankruptcy
proceeding or other insolvency, readjustment of debt, marshalling of assets and
liabilities or similar Proceedings of or relating to the Servicer or of or
relating to all or substantially all its property, or an action seeking a decree
or order of a court or agency or supervisory authority having jurisdiction in
the premises for the appointment of a bankruptcy trustee or a conservator or
receiver or liquidator in any bankruptcy, insolvency, readjustment of debt,
marshalling of assets and liabilities or similar Proceedings, or the winding-up
or liquidation of its affairs, shall have been commenced against the Servicer
and
52
such action shall have remained undischarged or unstayed for a period of sixty
(60) days or an order or decree providing for such relief shall have been
entered; or the Servicer shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable bankruptcy, insolvency or reorganization statute, make any assignment
for the benefit of its creditors or voluntarily suspend payment of its
obligations;
then, in the event of any Servicer Default, so long as the Servicer Default
shall not have been remedied, either the Indenture Trustee or the Holders of
Notes evidencing a majority of the aggregate unpaid principal amount of all
Notes Outstanding, by notice then given to the Servicer and the Owner Trustee
(and to the Indenture Trustee if given by the Noteholders) (a "TERMINATION
NOTICE"), may terminate all but not less than all of the rights and obligations
of the Servicer as Servicer under this Agreement, the Indenture and each
Indenture Supplement; PROVIDED, HOWEVER, if within sixty (60) days of receipt of
a Termination Notice the Indenture Trustee does not receive any bids from
Eligible Servicers in accordance with SECTION 8.02(c) to act as a Successor
Servicer and receives an Officer's Certificate of the Servicer to the effect
that the Servicer cannot in good faith cure the Servicer Default which gave rise
to the Termination Notice, the Indenture Trustee shall grant a right of first
refusal to the Transferor which would permit the Transferor at its option to
purchase the Notes on the Distribution Date in the next calendar month. The
Indenture Trustee shall notify each Rating Agency of any Servicer Default of
which a Responsible Officer has actual knowledge and shall provide each Rating
Agency with a copy of any Termination Notice given to the Servicer and the Owner
Trustee pursuant to this SECTION 8.01.
The purchase price for the Notes purchased pursuant to the
preceding paragraph shall be equal to the sum of the amounts specified therefor
with respect to each outstanding Series in the related Indenture Supplement. The
Transferor shall notify the Indenture Trustee prior to the Record Date for the
Distribution Date of the purchase if it is exercising such right of first
refusal. If the Transferor exercises such right of first refusal, the Transferor
shall deposit the purchase price into the Collection Account not later than
11:00 a.m., New York City time, on the Transfer Date preceding such Distribution
Date in immediately available funds. The purchase price shall be allocated and
distributed to Noteholders in accordance with the terms of the Indenture and
each Indenture Supplement.
After receipt by the Servicer of a Termination Notice, and on
the date that a Successor Servicer is appointed by the Indenture Trustee
pursuant to SECTION 8.02, all authority and power of the Servicer under this
Agreement shall pass to and be vested in the Successor Servicer (a "SERVICE
TRANSFER"); and, without limitation, the Indenture Trustee is hereby authorized
and empowered (upon the failure of the Servicer to cooperate) to execute and
deliver, on behalf of the Servicer, as attorney-in-fact or otherwise, all
documents and other instruments upon the failure of the Servicer to execute or
deliver such documents or instruments, and to do and accomplish all other acts
or things necessary or appropriate to effect the purposes of such Service
Transfer. The Servicer agrees to cooperate with the Indenture Trustee and such
Successor Servicer in effecting the termination of the responsibilities and
rights of the Servicer to conduct servicing hereunder, including the transfer to
such Successor Servicer of all authority of the Servicer to service the
Receivables provided for under this Agreement, including all authority over all
Collections which shall on the date of transfer be held by the Servicer for
deposit, or
53
which have been deposited by the Servicer, in the Collection Account, or which
shall thereafter be received with respect to the Receivables, and in assisting
the Successor Servicer. The Servicer shall within twenty (20) Business Days
transfer its electronic records relating to the Receivables to the Successor
Servicer in such electronic form as the Successor Servicer may reasonably
request and shall promptly transfer to the Successor Servicer all other records,
correspondence and documents necessary for the continued servicing of the
Receivables in the manner and at such times as the Successor Servicer shall
reasonably request. The predecessor Servicer shall be responsible for all
expenses incurred in transferring the servicing duties to the Successor
Servicer. To the extent that compliance with this Section shall require the
Servicer to disclose to the Successor Servicer information of any kind which the
Servicer deems to be confidential, the Successor Servicer shall be required to
enter into such customary licensing and confidentiality agreements as the
Servicer shall deem reasonably necessary to protect its interests.
Notwithstanding the foregoing, a delay in or failure of
performance referred to in paragraph (a) above for a period of ten (10) Business
Days after the applicable grace period or under paragraph (b) or (c) above for a
period of sixty (60) Business Days after the applicable grace period, shall not
constitute a Servicer Default if such delay or failure could not be prevented by
the exercise of reasonable diligence by the Servicer and such delay or failure
was caused by an act of God or the public enemy, acts of declared or undeclared
war, public disorder, rebellion or sabotage, epidemics, landslides, lightning,
fire, hurricanes, earthquakes, floods or similar causes. The preceding sentence
shall not relieve the Servicer from using all commercially reasonable efforts to
perform its obligations in a timely manner in accordance with the terms of this
Agreement and the Servicer shall provide the Indenture Trustee, the Issuer, each
Transferor and any Series Enhancer with an Officer's Certificate giving prompt
notice of such failure or delay by it, together with a description of its
efforts so to perform its obligations.
Section 8.02. INDENTURE TRUSTEE TO ACT; APPOINTMENT OF
SUCCESSOR.
(a) On and after the receipt by the Servicer of a Termination
Notice pursuant to SECTION 8.01, the Servicer shall continue to perform all
servicing functions under this Agreement until the date specified in the
Termination Notice or otherwise specified by the Indenture Trustee or until a
date mutually agreed upon by the Servicer and the Indenture Trustee. The
Indenture Trustee shall as promptly as possible after the giving of a
Termination Notice appoint an Eligible Servicer as a successor servicer (the
"SUCCESSOR SERVICER"), and such Successor Servicer shall accept its appointment
by a written assumption in a form acceptable to the Indenture Trustee. In the
event that a Successor Servicer has not been appointed or has not accepted its
appointment at the time when the Servicer ceases to act as Servicer, the
Indenture Trustee without further action shall automatically be appointed the
Successor Servicer. The Indenture Trustee may delegate any of its servicing
obligations to an Affiliate or agent in accordance with SECTION 3.01(b) and
SECTION 6.07. Notwithstanding the foregoing, the Indenture Trustee shall, if it
is legally unable or unwilling so to act, petition a court of competent
jurisdiction to appoint any established institution qualifying as an Eligible
Servicer as the Successor Servicer hereunder. The Indenture Trustee shall give
prompt notice to each Rating Agency and each Series Enhancer upon the
appointment of a Successor Servicer.
54
(b) Upon its appointment, the Successor Servicer shall be the
successor in all respects to the Servicer with respect to servicing functions
under this Agreement and shall be subject to all the responsibilities, duties
and liabilities relating thereto placed on the Servicer by the terms and
provisions hereof, and all references in this Agreement to the Servicer shall be
deemed to refer to the Successor Servicer.
(c) In connection with any Termination Notice, the Indenture
Trustee will review any bids which it obtains from Eligible Servicers and shall
be permitted to appoint any Eligible Servicer submitting such a bid as a
Successor Servicer for servicing compensation not in excess of the aggregate
Servicing Fees for all Series PLUS the sum of the amounts with respect to each
Series and with respect to each Distribution Date equal to any Collections of
Finance Charge Receivables allocable to Noteholders of such Series which are
payable to the Issuer for payment to the holders of the Transferor Certificates
under the Trust Agreement after payment of all amounts owing to the Noteholders
of such Series with respect to such Distribution Date or required to be
deposited in the applicable Series Accounts with respect to such Distribution
Date and any amounts required to be paid to any Series Enhancer for such Series
with respect to such Distribution Date pursuant to the terms of any Series
Enhancement; PROVIDED, HOWEVER, that the holders of the Transferor Certificates
shall be responsible for payment of their portion of such aggregate Servicing
Fees and all other such amounts in excess of such aggregate Servicing Fees, and
the Indenture Trustee shall have no liability in the event the holders of the
Transferor Certificates fail to pay their portion of such aggregate Servicing
Fees. Each holder of any of the Transferor Certificates agrees that, if
CompuCredit (or any Successor Servicer) is terminated as Servicer hereunder, the
portion of the Collections in respect of Finance Charge Receivables that the
Issuer is entitled to receive pursuant to this Agreement, the Indenture or any
Indenture Supplement shall be reduced by an amount sufficient to pay such
holders' share of the compensation of the Successor Servicer.
(d) All authority and power granted to the Servicer under this
Agreement shall automatically cease and terminate upon termination of the Issuer
pursuant to Section 8.01 of the Trust Agreement, and shall pass to and be vested
in the Transferor and, without limitation, the Transferor is hereby authorized
and empowered to execute and deliver, on behalf of the Servicer, as
attorney-in-fact or otherwise, all documents and other instruments, and to do
and accomplish all other acts or things necessary or appropriate to effect the
purposes of such transfer of servicing rights. The Servicer agrees to cooperate
with the Transferor in effecting the termination of the responsibilities and
rights of the Servicer to conduct servicing of the Receivables. The Servicer
shall transfer its electronic records relating to the Receivables to the
applicable Transferor or its designee in such electronic form as it may
reasonably request and shall transfer all other records, correspondence and
documents to it in the manner and at such times as it shall reasonably request.
To the extent that compliance with this SECTION 8.02 shall require the Servicer
to disclose to the Transferor information of any kind which the Servicer deems
to be confidential, the Transferor shall be required to enter into such
customary licensing and confidentiality agreements as the Servicer shall deem
necessary to protect its interests.
Section 8.03. NOTIFICATION TO NOTEHOLDERS. Within five (5)
Business Days after the Servicer becomes aware of any Servicer Default, the
Servicer shall give notice thereof to the Issuer, the Indenture Trustee, each
Rating Agency and each Series Enhancer and the Indenture
55
Trustee shall give notice to the Noteholders. Upon any termination or
appointment of a Successor Servicer pursuant to this ARTICLE VIII, the Indenture
Trustee shall give prompt notice thereof to the Noteholders and each Series
Enhancer.
[END OF ARTICLE VIII]
56
ARTICLE IX
TERMINATION
Section 9.01. TERMINATION OF AGREEMENT. This Agreement and the
respective obligations and responsibilities of the Issuer, the Transferor and
the Servicer under this Agreement shall terminate, except with respect to the
obligations described in SECTION 6.04 and SECTION 10.07, on the date of the
termination of the Issuer.
[END OF ARTICLE IX]
57
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.01. AMENDMENT; WAIVER OF PAST DEFAULTS.
(a) This Agreement may be amended from time to time by the
Servicer, the Transferor, the Issuer and the Indenture Trustee, by a written
instrument signed by each of them, without consent of any of the Noteholders or
the Series Enhancers, (i) to cure any ambiguity, (ii) to correct or supplement
any provisions herein which may be inconsistent with any other provisions
herein, (iii) to add any other provisions with respect to matters or questions
arising under this Agreement which shall not be inconsistent with the provisions
of this Agreement; PROVIDED, HOWEVER, that such action shall not adversely
affect in any material respect the interest of any of the Noteholders or any
Series Enhancer. The Transferor shall provide notice of any such amendment to
each Rating Agency. Additionally, this Agreement may be amended from time to
time (including in connection with the issuance of a Supplemental Certificate,
the conveyance of a Participation Interest, the allocation of assets pursuant to
SECTION 4.04, the designation of an Additional Transferor, or to change the
definition of Monthly Period, Determination Date or Distribution Date) by the
Servicer, the Transferor, the Issuer and the Indenture Trustee, by a written
instrument signed by each of them, without the consent of any of the Series
Enhancers or any of the Noteholders, PROVIDED that (i) the Transferor shall have
delivered to the Indenture Trustee and the Owner Trustee an Officer's
Certificate, dated the date of any such amendment, stating that the Transferor
reasonably believes that such amendment will not have an Adverse Effect and (ii)
the Rating Agency Condition shall have been satisfied with respect to any such
amendment. Notwithstanding anything else to the contrary herein, this agreement
may be amended by the Servicer, the Transferor, the Issuer and the Indenture
Trustee, by a written instrument signed by each of them without the consent of
the Noteholders or the Series Enhancers, upon satisfaction of the Rating Agency
Condition with respect to such amendment (without anything further) as may be
necessary or advisable in order (a) to enable all or a portion of the Issuer to
qualify as, and to permit an election to be made to cause the Issuer to be
treated as, a "financial asset securitization investment trust" as described in
the provisions of Section 860L of the Code (and, in connection with any such
election, to modify or eliminate existing provisions relating to the intended
Federal income tax treatment of the Notes) or (b) to avoid the imposition of
state or local income or franchise taxes imposed on the Issuer's property or its
income; PROVIDED, HOWEVER, the amendments which the Transferor, the Servicer,
the Issuer and the Indenture Trustee may make without the consent of any of the
Noteholders or Series Enhancers pursuant to this sentence may include, without
limitation, the addition of provisions to permit a sale of Receivables in
connection with clauses (a) and (b) above.
(b) This Agreement may also be amended from time to time by
the Servicer, the Transferor, the Issuer and the Indenture Trustee, with the
consent of the Holders of Notes evidencing not less than 66 2/3% of the
aggregate unpaid principal amount of the Notes Outstanding of all affected
Series for which the Transferor has not delivered an Officer's Certificate
stating that there is no Adverse Effect, for the purpose of adding any
provisions to or
58
changing in any manner or eliminating any of the provisions of this Agreement
or of modifying in any manner the rights of the Noteholders; PROVIDED,
HOWEVER, that no such amendment shall (i) reduce in any manner the amount of
or delay the timing of any distributions (changes in Early Redemption Events
or Reinvestment Events that decrease the likelihood of the occurrence thereof
shall not be considered delays in the timing of distributions for purposes of
this clause) to be made to Noteholders or deposits of amounts to be so
distributed or the amount available under any Series Enhancement without the
consent of each affected Noteholder, (ii) change the definition of or the
manner of calculating the interest of any Noteholder without the consent of
each affected Noteholder, (iii) reduce the aforesaid percentage required to
consent to any such amendment without the consent of each Noteholder or (iv)
adversely affect the rating of any Series or Class by each Rating Agency
without the consent of each Noteholder of such Series or Class.
(c) Promptly after the execution of any such amendment or
consent (other than an amendment pursuant to paragraph (a)), the Issuer shall
furnish notification of the substance of such amendment to the Indenture Trustee
and each Noteholder, and the Servicer shall furnish notification of the
substance of such amendment to each Rating Agency and each Series Enhancer.
(d) It shall not be necessary for the consent of Noteholders
under this SECTION 10.01 to approve the particular form of any proposed
amendment, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Noteholders shall be subject to such
reasonable requirements as the Indenture Trustee may prescribe.
(e) Notwithstanding anything in this SECTION 10.01 to the
contrary, no amendment may be made to this Agreement or any Participation
Interest Supplement which would adversely affect in any material respect the
interests of any Series Enhancer without the consent of such Series Enhancer.
(f) The Holders of Notes evidencing more than 66 2/3% of the
aggregate unpaid principal amount of the Notes Outstanding of each Series or,
with respect to any Series with two (2) or more Classes, of each Class (or, with
respect to any default that does not relate to all Series, 66 2/3% of the
aggregate unpaid principal amount of the Notes Outstanding of each Series to
which such default relates or, with respect to any such Series with two or more
Classes, of each Class) may, on behalf of all Noteholders, waive any default by
the Transferor or the Servicer in the performance of their obligations hereunder
and its consequences, except the failure to make any distributions required to
be made to Noteholders or any Series Enhancer or to make any required deposits
of any amounts to be so distributed. Upon any such waiver of a past default,
such default shall cease to exist, and any default arising therefrom shall be
deemed to have been remedied for every purpose of this Agreement. No such waiver
shall extend to any subsequent or other default or impair any right consequent
thereon except to the extent expressly so waived.
(g) The Owner Trustee and the Indenture Trustee may, but shall
not be obligated to, enter into any such amendment which affects the Owner
Trustee's or the Indenture
59
Trustee's rights, duties, benefits, protections, privileges or immunities
under this Agreement or otherwise. In connection with the execution of any
amendment hereunder, each of the Owner Trustee and the Indenture Trustee
shall be entitled to receive the Opinion of Counsel described in SECTION
10.02(d)(i).
Section 10.02. PROTECTION OF RIGHT, TITLE AND INTEREST OF
ISSUER.
(a) The Transferor shall cause this Agreement, all amendments
and supplements hereto and all financing statements and continuation statements
and any other necessary documents covering the Issuer's right, title and
interest to the Transferred Assets to be promptly recorded, registered and
filed, and at all times to be kept recorded, registered and filed, all in such
manner and in such places as may be required by law fully to preserve and
protect the right, title and interest of the Issuer hereunder to all property
comprising the Transferred Assets. The Transferor shall deliver to the Issuer
and Indenture Trustee file-stamped copies of, or filing receipts for, any
document recorded, registered or filed as provided above, as soon as available
following such recording, registration or filing. The Transferor shall cooperate
fully with the Servicer in connection with the obligations set forth above and
will execute any and all documents reasonably required to fulfill the intent of
this paragraph.
(b) Within thirty (30) days after any Transferor makes any
change in its name, identity or corporate structure which would make any
financing statement or continuation statement filed in accordance with paragraph
(a) seriously misleading within the meaning of Section 9-402(7) (or any
comparable provision) of the UCC, such Transferor shall give the Issuer and the
Indenture Trustee notice of any such change and shall file such financing
statements or amendments as may be necessary to continue the perfection of the
Issuer's security interest or ownership interest in the Receivables and the
other Transferred Assets.
(c) Each Transferor shall give the Issuer and the Indenture
Trustee prompt notice of any relocation of its chief executive office or any
change in the jurisdiction under whose laws it is organized and whether, as a
result of such relocation or change, the applicable provisions of the UCC would
require the filing of any amendment of any previously filed financing or
continuation statement or of any new financing statement and shall file such
financing statements or amendments as may be necessary to perfect or to continue
the perfection of the Issuer's security interest in the Receivables and the
other Transferred Assets. Each Transferor shall at all times maintain its chief
executive office within the United States and shall at all times be organized
under the laws of a jurisdiction located within the United States.
(d) The Transferor shall deliver to the Issuer and the
Indenture Trustee (i) upon the execution and delivery of each amendment of this
Agreement, an Opinion of Counsel to the effect specified in EXHIBIT B-1; (ii)
semiannually, with respect to Automatic Additional Accounts included as
Accounts, an Opinion of Counsel substantially in the form of EXHIBIT B-2; (iii)
on each Addition Date on which any Supplemental Accounts or Participation
Interests are to be transferred to the Issuer pursuant to SECTION 2.09, an
Opinion of Counsel covering the same substantive legal issues addressed by
EXHIBIT B-2 but conformed to the extent appropriate to relate to Supplemental
Accounts or Participation Interests; and (iv) on or before
60
January 31 of each year, beginning with January 31, 2002 an Opinion of
Counsel substantially in the form of EXHIBIT B-3.
Section 10.03. GOVERNING LAW. THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED THEREIN.
Section 10.04. NOTICES; PAYMENTS.
All demands, notices, instructions, directions and
communications (collectively, "NOTICES") under this Agreement shall be in
writing and shall be deemed to have been duly given if personally delivered at,
mailed by certified mail, return receipt requested, or sent by facsimile
transmission.
(a) in the case of the Transferor, to:
CompuCredit Funding Corp. II
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇-▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Treasurer
(facsimile no. (▇▇▇) ▇▇▇-▇▇▇▇)
(b) in the case of the Servicer, to:
CompuCredit Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
(facsimile no. (▇▇▇) ▇▇▇-▇▇▇▇)
(c) in the case of the Issuer, to:
CompuCredit Card Master Note Business Trust II
c/o Wilmington Trust FSB
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administration
(facsimile no. (▇▇▇) ▇▇▇-▇▇▇▇)
(d) in the case of the Owner Trustee, to:
Wilmington Trust FSB
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
61
Attention: Corporate Trust Administration
(facsimile no. (▇▇▇) ▇▇▇-▇▇▇▇)
(e) in the case of the Rating Agency for a particular Series,
to the address, if any, specified in the Indenture or any
Indenture Supplement relating to such Series, and
(f) to any other Person as specified in the Indenture or any
Indenture Supplement; or, as to each party, at such other
address or facsimile number as shall be designated by such
party in a written notice to each other party.
Section 10.05. SEVERABILITY OF PROVISIONS. If any one or more
of the covenants, agreements, provisions or terms of this Agreement shall for
any reason whatsoever be held invalid, then such provisions shall be deemed
severable from the remaining provisions of this Agreement and shall in no way
affect the validity or enforceability of the remaining provisions.
Section 10.06. FURTHER ASSURANCES. The Transferor and the
Servicer agree to do and perform, from time to time, any and all acts and to
execute any and all further instruments required or reasonably requested by the
Owner Trustee and the Indenture Trustee more fully to effect the purposes of
this Agreement, including the execution of any financing statements or
continuation statements relating to the Receivables for filing under the
provisions of the UCC of any applicable jurisdiction.
Section 10.07. NONPETITION COVENANT.
(a) Notwithstanding any prior termination of this Agreement,
the Servicer, the Indenture Trustee, the Owner Trustee and the Transferor shall
not, prior to the date which is one year and one day after the termination of
this Agreement, acquiesce, petition or otherwise invoke or cause the Issuer to
invoke the process of any Governmental Authority for the purpose of commencing
or sustaining a case against the Issuer under any Federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Issuer or any
substantial part of its property or ordering the winding-up or liquidation of
the affairs of the Issuer.
(b) Notwithstanding any prior termination of this Agreement,
the Servicer, the Indenture Trustee, the Owner Trustee and the Issuer shall not,
prior to the date which is one year and one day after the termination of this
Agreement, acquiesce, petition or otherwise invoke or cause the Transferor to
invoke the process of any Governmental Authority for the purpose of commencing
or sustaining a case against the Transferor under any Federal or state
bankruptcy, insolvency or similar law or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of the
Transferor or any substantial part of its property or ordering the winding-up or
liquidation of the affairs of the Transferor.
Section 10.08. NO WAIVER; CUMULATIVE REMEDIES. No failure to
exercise and no delay in exercising, on the part of the Issuer, the Transferor,
the Servicer, the Owner Trustee, the Noteholders or the Indenture Trustee, any
right, remedy, power or privilege under this Agreement
62
shall operate as a waiver thereof; nor shall any single or partial exercise
of any right, remedy, power or privilege under this Agreement preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights, remedies, powers and privileges provided
under this Agreement are cumulative and not exhaustive of any rights,
remedies, powers and privileges provided by law.
Section 10.09. COUNTERPARTS. This Agreement may be executed in
two or more counterparts (and by different parties on separate counterparts),
each of which shall be an original, but all of which together shall constitute
one and the same instrument.
Section 10.10. THIRD-PARTY BENEFICIARIES. This Agreement will
inure to the benefit of and be binding upon the parties hereto, the Noteholders,
any holder of a Transferor Certificate, any Series Enhancer, and the Owner
Trustee but only with respect to Sections 3.01(e) and 6.04, and their respective
successors and permitted assigns. Except as otherwise expressly provided in this
Agreement, no other Person will have any right or obligation hereunder.
Section 10.11. MERGER AND INTEGRATION. Except as specifically
stated otherwise herein, this Agreement sets forth the entire understanding of
the parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by this Agreement. This Agreement may not be
modified, amended, waived or supplemented except as provided herein.
Section 10.12. HEADINGS. The headings herein are for purposes
of reference only and shall not otherwise affect the meaning or interpretation
of any provision hereof.
Section 10.13. LIMITATION OF LIABILITY OF OWNER TRUSTEE.
It is expressly understood and agreed by the parties hereto
that (a) this Agreement is executed and delivered by Wilmington Trust FSB, not
individually or personally but solely as owner trustee of the Issuer, in the
exercise of the powers and authority conferred and vested in it under the Trust
Agreement, (b) each of the representations, undertakings and agreements herein
made on the part of the Issuer is made and intended not as personal
representations, undertakings and agreements by Wilmington Trust FSB but is made
and intended for the purpose of binding only the Issuer and (c) under no
circumstances shall Wilmington Trust FSB be personally liable for the payment of
any indebtedness or expenses of the Issuer or be liable for the breach or
failure of any obligation, representation, warranty or covenant made or
undertaken by the Issuer under this Indenture or the other Transaction Documents
to which the Issuer is a party.
[END OF ARTICLE X]
63
IN WITNESS WHEREOF, the Transferor, the Servicer, the Issuer
and the Indenture Trustee have caused this Transfer and Servicing Agreement to
be duly executed by their respective officers as of the day and year first above
written.
COMPUCREDIT FUNDING CORP. II,
as Transferor,
By:
-------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Assistant Secretary
COMPUCREDIT CORPORATION,
as Servicer,
By:
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Treasurer
COMPUCREDIT CREDIT CARD MASTER
NOTE BUSINESS TRUST II,
as Issuer
By: WILMINGTON TRUST FSB,
not in its individual capacity but
solely as Owner Trustee on behalf of
the Issuer,
By:
-------------------------------------
Name:
Title:
THE BANK OF NEW YORK,
not in its individual capacity but
solely as Indenture Trustee,
By:
-------------------------------------
Name:
Title:
SCHEDULE I
LIST OF ACCOUNTS
[Delivered Separately]
I-1
SCHEDULE II
BANK IDENTIFICATION NUMBERS AND BANK NUMBERS
----------------------------------------------- ----------------------------------------------------
BANK IDENTIFICATION NUMBERS BANK NUMBERS
----------------------------------------------- ----------------------------------------------------
413481 3673
----------------------------------------------- ----------------------------------------------------
512070 3672
----------------------------------------------- ----------------------------------------------------
410634 4768
----------------------------------------------- ----------------------------------------------------
410635 4769
----------------------------------------------- ----------------------------------------------------
410632 4766
----------------------------------------------- ----------------------------------------------------
II-1
EXHIBIT A
FORM OF ANNUAL SERVICER'S CERTIFICATE
The undersigned, a duly authorized representative of CompuCredit
Corporation, as Servicer ("CompuCredit"), pursuant to the Transfer and Servicing
Agreement dated as of October 20, 2000 (the "Agreement"), among CompuCredit
Funding Corp. II, as Transferor, CompuCredit Corporation, as Servicer,
CompuCredit Credit Card Master Note Business Trust II, as Issuer, and The Bank
of New York, a New York banking corporation, as Indenture Trustee, does hereby
certify that:
1. CompuCredit is, as of the date hereof, the Servicer under
the Agreement. Capitalized terms used in this Certificate have
their respective meanings set forth in the Agreement.
2. The undersigned is a Servicing Officer who is duly authorized
pursuant to the Agreement to execute and deliver this Certificate
to the Transferor, the Issuer, the Owner Trustee, the Indenture
Trustee and each Rating Agency.
3. A review of the activities of the Servicer during the year
ended December 31, 20__ and of its performance under the Agreement
was conducted under my supervision.
4. Based on such review, the Servicer has, to the best of my
knowledge, performed in all material respects its obligations
under the Agreement throughout such year and no default in the
performance of such obligations has occurred or is continuing
except as set forth in paragraph 5 below.
5. The following is a description of each Default in the
performance of the Servicer's obligations under the provisions of
the Agreement known to me to have been made by the Servicer during
the year ended December 31, 20__ which sets forth in detail (i)
the nature of each such Default, (ii) the action taken by the
Servicer, if any, to remedy each such Default and (iii) the
current status of each such Default: [ if applicable, insert
"None."]
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A-1
IN WITNESS WHEREOF, the undersigned has duly executed this Certificate
this _____ day of ________, 2000.
CompuCredit Corporation,
Servicer
By:
--------------------------------------
Name:
Title:
▇-▇
▇▇▇▇▇▇▇ ▇-▇
FORM OF OPINION OF COUNSEL
WITH RESPECT TO AMENDMENTS
Provisions to be included in
Opinion of Counsel to be delivered pursuant
TO SUBSECTION 10.02(d)(i)
The opinions set forth below may be subject to all the
qualifications, assumptions, limitations and exceptions taken or made in the
Opinions of Counsel delivered on any applicable Closing Date.
(i) The amendment to the Transfer and Servicing
Agreement, attached hereto as Schedule 1 (the "AMENDMENT"),
has been duly authorized, executed and delivered by the
Transferor and constitutes the legal, valid and binding
agreement of the Transferor, enforceable in accordance with
its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium
or other laws from time to time in effect affecting creditors'
rights generally. The enforceability of the Transferor's
obligations is also subject to general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(ii) The Amendment has been entered into in accordance
with the terms and provisions of Section 10.01 of the Transfer
and Servicing Agreement.
B-1-1
EXHIBIT B-2
FORM OF OPINION OF COUNSEL
WITH RESPECT TO ACCOUNTS
Provisions to be included in
Opinion of Counsel to be
DELIVERED PURSUANT TO SUBSECTION 10.02(d)(ii) OR 10.02(d)(iii)
The opinions set forth below may be subject to all the
qualifications, assumptions, limitations and exceptions taken or made in the
Opinions of Counsel delivered on any applicable Closing Date.
1. Except for any Receivable that is evidenced by
an "instrument" or "chattel paper," as defined under
the applicable UCC, the Receivables constitute either
"general intangibles" or "accounts" under the Georgia
UCC and the Nevada UCC.
2. To the extent that Article 9 of the New York
UCC applies to the transfer of Receivables in certain
identified Supplemental Accounts or Automatic
Additional Accounts by CompuCredit to CFC pursuant to
a Supplemental Conveyance or the CFC Receivables
Purchase Agreement, respectively, such Supplemental
Conveyance or the CFC Receivables Purchase Agreement
creates in favor of CFC a security interest in the
rights of CompuCredit in such Receivables.
3. To the extent that the transfer of Receivables
in certain identified Supplemental Accounts or
Automatic Additional Accounts by CFC to the Issuer
pursuant to an Assignment or the Transfer and
Servicing Agreement, respectively, does not
constitute an absolute assignment by CFC to the
Issuer of such Receivables, such Assignment or the
Transfer and Servicing Agreement creates in favor of
the Issuer a security interest in the rights of CFC
in such Receivables.
4. The security interests described in
paragraphs 2 and 3 above are perfected and of first
priority.
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
PROVISIONS TO BE INCLUDED IN
ANNUAL OPINION OF COUNSEL
The opinions set forth below may be subject to all the
qualifications, assumptions, limitations and exceptions taken or made in the
Opinions of Counsel delivered on any applicable Closing Date with respect to
similar matters. Unless otherwise indicated, all capitalized terms used herein
shall have the meanings ascribed to them in the Transfer and Servicing
Agreement.
1. No filing or other action, other than such
filing or other action described in such opinion,
is necessary from the date of such opinion through
January 31 of the following year to continue the
perfected status of the security interest of the
Issuer in the Receivables described in the
financing statements referenced in such opinion.
2. No filing or other action, other than such
filing or other action described in such opinion,
is necessary from the date of such opinion through
January 31 of the following year to continue the
perfected status of the security interest of the
relevant Transferor in the Receivables described
in the financing statements referenced in such
opinion.
3. No filing or other action, other than such
filing or other action described in such opinion,
is necessary from the date of such opinion through
January 31 of the following year to continue the
perfected status of the security interest of
CompuCredit in the Receivables described in the
financing statements referenced in such opinion.
B-3-1
EXHIBIT C
FORM OF ASSIGNMENT OF RECEIVABLES IN SUPPLEMENTAL ACCOUNTS
(AS REQUIRED BY SECTION 2.09 OF
THE TRANSFER AND SERVICING AGREEMENT)
ASSIGNMENT No. __ OF RECEIVABLES IN SUPPLEMENTAL ACCOUNTS,
dated as of _____________,(1) by and among COMPUCREDIT FUNDING CORP. II, a
Nevada corporation, as Transferor (the "TRANSFEROR"), COMPUCREDIT CORPORATION, a
Georgia corporation, as Servicer (the "SERVICER"), and COMPUCREDIT CREDIT CARD
MASTER NOTE BUSINESS TRUST II (the "TRUST"), pursuant to the Transfer and
Servicing Agreement referred to below.
WITNESSETH
WHEREAS, the Transferor, the Servicer and the Trust are
parties to the Transfer and Servicing Agreement, dated as of October 20, 2000
(as amended and supplemented, the "AGREEMENT");
WHEREAS, pursuant to the Agreement, the Transferor wishes to
designate Supplemental Accounts to be included as Accounts and to convey the
Receivables of such Supplemental Accounts (as each such term is defined in the
Agreement), whether now existing or hereafter created, to the Trust; and
WHEREAS, the Trust is willing to accept such designation and
conveyance subject to the terms and conditions hereof;
NOW, THEREFORE, the Transferor, the Servicer and the Trust
hereby agree as follows:
1. DEFINED TERMS. All capitalized terms used herein shall have the
meanings ascribed to them in the Agreement unless otherwise defined
herein.
"ADDITION DATE" shall mean, with respect to the Supplemental
Accounts designated hereby,____________, ____.
"ADDITION CUT-OFF DATE" shall mean, with respect to the
Supplemental Accounts designated hereby, ____________, ____.
2. DESIGNATION OF SUPPLEMENTAL ACCOUNTS. On or before the date hereof, the
Transferor will deliver to the Owner Trustee a computer file or
microfiche list containing a true and complete schedule identifying all
such Supplemental Accounts (the "SUPPLEMENTAL ACCOUNTS") specifying for
each such Supplemental Account, as of the Addition Cut-Off Date, its
account number, the aggregate amount outstanding in such Account and
the
--------
(1) / To be dated as of the applicable Addition Date.
aggregate amount of Principal Receivables outstanding in such Account,
which computer file or microfiche list shall supplement SCHEDULE 1 to
the Agreement.
3. CONVEYANCE OF RECEIVABLES. (a) The Transferor does hereby, transfer,
assign, set over and otherwise convey, without recourse except as set
forth in the Transfer and Servicing Agreement, to the Trust, all its
right, title and interest in, to and under the Receivables of such
Supplemental Accounts existing at the close of business on the Addition
Cut-Off Date and thereafter created from time to time until the
termination of the Trust, all Interchange and Recoveries related
thereto, all monies due or to become due and all amounts received or
receivable with respect thereto and all proceeds (including "proceeds"
as defined in the UCC) thereof. The foregoing does not constitute and
is not intended to result in the creation or assumption by the Trust,
the Owner Trustee (as such or in its individual capacity), the
Indenture Trustee, any Noteholders or any Series Enhancer of any
obligation of the Servicer, the Transferor or any other Person in
connection with the Accounts, the Receivables or under any agreement or
instrument relating thereto, including any obligation to Obligors,
merchant banks, merchants clearance systems, VISA, MasterCard or
insurers.
(b) If necessary, the Transferor agrees to record and file, at
its own expense, financing statements (and continuation statements when
applicable) with respect to the Receivables in Supplemental Accounts existing on
the Addition Cut-Off Date and thereafter created meeting the requirements of
applicable state law in such manner and in such jurisdictions as are necessary
to perfect, and maintain perfection of, the sale and assignment of its interest
in such Receivables to the Trust, and to deliver a file-stamped copy of each
such financing statement or other evidence of such filing to the Owner Trustee
on or prior to the Addition Date. The Owner Trustee shall be under no obligation
whatsoever to file such financing or continuation statements or to make any
other filing under the UCC in connection with such sale and assignment.
(c) In connection with such sale, the Transferor further
agrees, at its own expense, on or prior to the date of this Assignment, to
indicate in the appropriate computer files that Receivables created in
connection with the Supplemental Accounts and designated hereby have been
conveyed to the Trust pursuant to the Agreement and this Assignment.
(d) The Transferor does hereby grant to the Trust a security
interest in all of its right, title and interest, whether now owned or hereafter
acquired, in and to the Receivables in the Supplemental Accounts existing on the
Addition Cut-Off Date and thereafter created, all Interchange and Recoveries
related thereto, all monies due or to become due and all amounts received or
receivable with respect thereto, all money, accounts, general intangibles,
chattel paper, instruments, documents, goods, investment property, deposit
accounts, certificates of deposit, letters of credit, and advices of credit
consisting of, arising from or related to the foregoing, and all "proceeds"
(including "proceeds" as defined in the UCC) thereof. This Assignment
constitutes a security agreement under the UCC.
4. ACCEPTANCE BY TRUST. The Trust hereby acknowledges its acceptance of
all right, title and interest to the property, existing on the Addition
Cut-Off Date and thereafter created,
C-2
conveyed to the Trust pursuant to Section 3(a) of this Assignment.
The Trust further acknowledges that, prior to or simultaneously with
the execution and delivery of this Assignment, the Transferor
delivered to the Owner Trustee the computer file or microfiche list
described in Section 2 of this Assignment.
5. REPRESENTATIONS AND WARRANTIES OF THE TRANSFEROR. The Transferor hereby
represents and warrants to the Trust, as the Addition Date that:
(a) LEGAL, VALID AND BINDING OBLIGATION. This Assignment
constitutes a legal, valid and binding obligation of the Transferor
enforceable against the Transferor in accordance with its terms, except
as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect affecting the enforcement of creditors' rights in
general and except as such enforceability may be limited by general
principles of equity (whether considered in a suit at law or in
equity);
(b) ELIGIBILITY OF ACCOUNTS. As of the Addition Cut-Off Date,
each Supplemental Account designated hereby is an Eligible Account;
(c) INSOLVENCY. As of each of the Addition Cut-Off Date and
the Addition Date, no Insolvency Event with respect to the Transferor
has occurred and the transfer by the Transferor of Receivables arising
in the Supplemental Accounts to the Trust has not been made in
contemplation of the occurrence thereof;
(d) PAY OUT EVENT; EVENT OF DEFAULT. The Transferor reasonably
believes that (A) the transfer of the Receivables arising in the
Supplemental Accounts will not, based on the facts known to the
Transferor, then or thereafter cause a Pay Out Event or Event of
Default to occur with respect to any Series and (B) no selection
procedure was utilized by the Transferor which would result in the
selection of Supplemental Accounts (from among the available Eligible
Accounts available to the Transferor) that would be materially adverse
to the interests of the Noteholders of any Series as of the Addition
Date;
(e) SECURITY INTEREST. This Assignment constitutes a valid
sale, transfer and assignment to the Trust of all right, title and
interest, whether owned on the Addition Cut-Off Date or thereafter
acquired, of the Transferor in the Receivables existing on the Addition
Cut-Off Date or thereafter created in the Supplemental Accounts, all
Interchange and Recoveries related thereto, all monies due or to become
due and all amounts received or receivable with respect thereto and the
"proceeds" (including "proceeds" as defined in the applicable UCC)
thereof, or, if this Assignment does not constitute a sale of such
property, it constitutes a grant of a "security interest" (as defined
in the applicable UCC) in such property to the Trust, which, in the
case of existing Receivables and the proceeds thereof, is enforceable
upon execution and delivery of this Assignment, and which will be
enforceable with respect to such Receivables hereafter created and the
proceeds thereof upon such creation. Upon the filing of the financing
statements described in Section 3 of this Assignment and, in the case
of the Receivables
C-3
hereafter created and the proceeds thereof, upon the creation thereof,
the Trust shall have a first priority perfected security or ownership
interest in such property;
(f) NO CONFLICT. The execution and delivery by the Transferor
of this Assignment, the performance of the transactions contemplated by
this Assignment and the fulfillment of the terms hereof applicable to
the Transferor, will not conflict with or violate any Requirements of
Law applicable to the Transferor or conflict with, result in any breach
of any of the material terms and provisions of, or constitute (with or
without notice or lapse of time or both) a material default under, any
indenture, contract, agreement, mortgage, deed of trust or other
instrument to which the Transferor is a party or by which it or its
properties are bound;
(g) NO PROCEEDINGS. There are no proceedings or
investigations, pending or, to the best knowledge of the Transferor,
threatened against the Transferor before any court, regulatory body,
administrative agency or other tribunal or governmental instrumentality
(i) asserting the invalidity of this Assignment, (ii) seeking to
prevent the consummation of any of the transactions contemplated by
this Assignment, (iii) seeking any determination or ruling that, in the
reasonable judgment of the Transferor, would materially and adversely
affect the performance by the Transferor of its obligations under this
Assignment or (iv) seeking any determination or ruling that would
materially and adversely affect the validity or enforceability of this
Assignment; and
(h) ALL CONSENTS. All authorizations, consents, orders or
approvals of any court or other governmental authority required to be
obtained by the Transferor in connection with the execution and
delivery of this Assignment by the Transferor and the performance of
the transactions contemplated by this Assignment by the Transferor,
have been obtained.
6. RATIFICATION OF AGREEMENT. As supplemented by this Assignment, the
Agreement is in all respects ratified and confirmed and the Agreement
as so supplemented by this Assignment shall be read, taken and
construed as one and the same instrument.
7. COUNTERPARTS. This Assignment may be executed in two or more
counterparts, and by different parties on separate counterparts, each
of which shall be an original, but all of which shall constitute one
and the same instrument.
8. GOVERNING LAW. THIS ASSIGNMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF
LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
9. LIMITATION OF LIABILITY. Notwithstanding any other provision herein or
elsewhere, this Assignment has been executed and delivered by
Wilmington Trust FSB, not in its individual capacity, but solely in its
capacity as Owner Trustee of the Trust, in no event shall Wilmington
Trust FSB in its individual capacity have any liability in respect of
the
C-4
>
representations, warranties, or obligations of the Trust hereunder
or under any other document, as to all of which recourse shall be had
solely to the assets of the Trust, and for all purposes of this
Assignment and each other document, the Owner Trustee (as such or in
its individual capacity) shall be subject to, and entitled to the
benefits of, the terms and provisions of the Trust Agreement.
IN WITNESS WHEREOF, the Transferor, the Servicer and the Trust
have caused this Assignment to be duly executed by their respective officers as
of the day and year first above written.
COMPUCREDIT FUNDING CORP. II,
Transferor
By:
--------------------------------------
Name:
Title:
COMPUCREDIT CORPORATION,
Servicer
By:
--------------------------------------
Name:
Title:
COMPUCREDIT CREDIT CARD MASTER
NOTE BUSINESS TRUST II
By: Wilmington Trust FSB,
not in its individual capacity
but solely as Owner Trustee,
on behalf of the Trust
By:
--------------------------------------
Name:
Title:
C-5
SCHEDULE 1
LIST OF ACCOUNTS
APPENDIX 1
INDEX OF CERTAIN DEFINED TERMS
Bearer Notes Master Indenture
Class Master Indenture
Closing Date Master Indenture
Collection Account Master Indenture
Default Master Indenture
Early Redemption Event Master Indenture
Event of Default Master Indenture
Excess Allocation Series Master Indenture
Exchange Act Master Indenture
Group Master Indenture
Indenture Supplement Master Indenture
Noteholders or Holders Master Indenture
Notes Master Indenture
Outstanding Master Indenture
Proceeding Master Indenture
Rating Agency Master Indenture
Rating Agency Condition Master Indenture
Reinvestment Event Master Indenture
Required Transferor Amount Master Indenture
Seller Master Indenture
Series Master Indenture
Series Enhancer Master Indenture
Special Funding Account Master Indenture
Tax Opinion Master Indenture
Transaction Documents Trust Agreement
Transferor Amount Master Indenture
Transferor Certificate Trust Agreement
Trust Estate Master Indenture
-i-