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EXECUTION VERSION EXHIBIT 10.5
AMENDMENT NO. 1 TO
AMENDED AND RESTATED ACCOUNT ORIGINATION AGREEMENT
This AMENDMENT NO. 1 TO AMENDED AND RESTATED ACCOUNT ORIGINATION
AGREEMENT ("Amendment") is made as of this 15th day of July, 1999, by and among
NEXTCARD, INC., a Delaware corporation ("NextCard"), NEXTCARD FUNDING CORP., a
Delaware corporation ("Funding"), and HERITAGE BANK OF COMMERCE, a California
state-chartered bank (the "Bank").
W I T N E S S E T H:
WHEREAS, NextCard, Funding and the Bank are parties to that certain
Amended and Restated Account Origination Agreement dated as of May 21, 1999 (the
"Agreement") and desire to amend the Agreement as specified herein; and
WHEREAS, NextCard and the Bank are parties to that certain Consumer
Credit Card Program Agreement dated November 25, 1997 (the "Initial Agreement")
and desire to make the receivables and accounts originated under the Initial
Agreement subject to the Agreement;
WHEREAS, NextCard has previously paid to the Bank [*] for the option to
purchase receivables and accounts originated under the Initial Agreement;
WHEREAS, the Bank is a licensed member of Visa, U.S.A., Inc. ("Visa")
and authorized to issue credit cards; and
WHEREAS, each of Barclays Bank PLC and ING Baring (U.S.) Capital Markets
LLC have consented to this Amendment.
NOW, THEREFORE, in consideration of the premises and mutual covenants
included in
"An asterisk [*] indicates that certain information has been omitted from this
agreement pursuant to a request for confidential treatment and has been filed
separately with the Securities and Exchange Commission."
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this Amendment and for other goods and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, NextCard, Funding and the Bank
agree as follows:
SECTION 1. DEFINITIONS
a. The following definitions in the Agreement are amended and
replaced, to read in their entirety as follows:
"ACCOUNT" means an open-end, revolving Visa account opened by the Bank
pursuant to the Program, pursuant to which one or more Credit Cards are issued
to a Cardholder, including any and all rights, remedies, benefits, interests and
entitlements with respect thereto.
"EXTENSION FEE" has the meaning specified in Section 6.4(a).
"PROGRAM" means the credit card program conducted pursuant to the terms
of this Agreement and specifically includes the program conducted pursuant to
the Initial Agreement.
"PURCHASE PRICE" means, as of any day with respect to any Receivables
other than those purchased on the effective date of the Amendment, (a) the sum
of [*] minus (b) any credits and payments to the related Accounts.
b. The definition of "INITIAL TERM" is hereby deleted.
SECTION 2. PURCHASE OF INITIAL AGREEMENT RECEIVABLES
a. Purchase of Outstanding Balance. On the date hereof, Funding
shall purchase from the Bank and the Bank shall sell to Funding all of the
Receivables outstanding as of the preceding Business Day relating to the
Accounts originated under the Initial Agreement, including the right to
recoveries on charged-off Accounts, for a purchase price equal to [*]
"An asterisk [*] indicates that certain information has been omitted from this
agreement pursuant to a request for confidential treatment and has been filed
separately with the Securities and Exchange Commission."
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of the outstanding principal amount thereof, other than any amounts relating to
charged-off Accounts.
b. Subsequent Purchases. After the date hereof, Funding shall
purchase from the Bank and the Bank shall sell to Funding Receivables arising
under the Accounts originated under the Initial Agreement on the terms specified
in the Agreement.
c. Amendment to UCC Financing Statement. The Bank shall execute and
deliver to Funding for filing with the California Secretary of State an
amendment to the UCC-1 financing statement filed in connection with the
execution of the Agreement reflecting the terms of this Amendment.
SECTION 3. NATURE OF ARRANGEMENT
Section 2.12 of the Agreement is amended, to read in its entirety as
follows:
2.12 Nature of Arrangement. During the term of this Agreement
NextCard shall be the exclusive fee-for-origination credit card originator for
the Bank. During the term of this Agreement, NextCard may not enter into other
fee for origination agreements with other financial institutions other than
NextBank, N.A., unless (a) the Bank has notified NextCard pursuant to Section
6.2(e) that it intends to terminate this Agreement or (b) the Bank does not
agree to amend the Credit Card Guidelines as requested by NextCard, in which
case NextCard may enter into origination agreements with any other financial
institutions to originate accounts upon the terms specified in the proposed
amended Credit Card Guidelines that have been rejected by the Bank.
SECTION 4. MINIMUM ACCOUNT ALLOCATION
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Section 2.13 of the Agreement is amended, to read in its entirety as
follows:
2.13 Minimum Account Allocation.
(a) Subject to paragraph (b) below, if between the period from
February 1, 1999 and October 31, 1999 NextCard enters into any origination
agreement with NextBank, N.A., NextCard shall nonetheless ensure that at least
[*] of the Accounts originated on a monthly basis through a NextCard program
during such period are established by the Bank. Subject to paragraphs (b) and
(c) below, for the period from November 1, 1999 through November 30, 1999,
NextCard shall ensure that at least [*] of the Accounts originated on a monthly
basis through a NextCard program during such period are established by the Bank,
and for the period from December 1, 1999 through the termination of this
Agreement, NextCard shall ensure that at least [*] of the Accounts originated on
a monthly basis through a NextCard program during such period are established by
the Bank.
(b) NextCard shall not be required to comply with the provisions of
Section 2.13(a) with respect to the minimum percentage of Accounts to be
originated by the Bank during the last calendar quarter of 1999 if NextCard has
paid to the Bank, either in cash or as origination fee compensation pursuant to
Section 2.10 of the Agreement, or any combination thereof, an aggregate of [*]
at any time during such last calendar quarter of 1999.
(c) The provisions of Section 2.13(a) with respect to the minimum
percentage of Accounts to be originated by the Bank shall not apply to accounts
originated by any financial institution other than NextBank, N.A., if such
financial
"An asterisk [*] indicates that certain information has been omitted from this
agreement pursuant to a request for confidential treatment and has been filed
separately with the Securities and Exchange Commission."
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institution originates accounts in accordance with the terms of any amendments
to the Credit Card Guidelines that have been rejected by the Bank as
contemplated by Section 2.12.
SECTION 5. TIMING OF RECEIVABLES PURCHASES
Pursuant to Section 4.1(a), Funding and the Bank agree that the
Receivables shall be transferred to Funding on the fifth Business Day following
origination by the Bank or on such other mutually agreeable time as may be
agreed to by Funding and the Bank.
SECTION 6. SALE OF ACCOUNTS AND OTHER ASSETS
Section 4.2(b) of the Agreement is amended, to read in its entirety as
follows:
(b) Subject to Section 6.4, at any time or from time to time,
Funding or its assignee shall have the right, exercisable by providing written
notice to the Bank at least thirty (30) business days prior to the settlement
date for such purchase, to purchase all of the Accounts, the Cardholder-Specific
Information relating thereto and the Program Information then owned by the Bank
or to arrange for said purchase by another party. The purchase price for the
Accounts shall be ten cents per Account and the purchase price for the
Cardholder-Specific Information and the Program Information shall be a total of
$50.
SECTION 7. CHANGE IN TERM
Section 6.1 of the Agreement is amended, to read in its entirety as
follows:
6.1 Term. This Agreement shall commence on the date first above
written and shall continue until terminated as provided in Section 6.2 herein.
The termination of this
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Agreement shall not terminate, affect or impair any rights, obligations or
liabilities of any party hereto that may accrue prior to such termination or
that, under the terms of this Agreement, continue after the termination or
otherwise affect the rights and obligations of the parties hereunder except as
provided in this Article VI.
SECTION 8. TERMINATION EVENTS
The following paragraphs (e), (f) and (g) shall be added to the end of
Section 6.2:
(e) Notice by the Bank. This Agreement may be terminated by the Bank
upon six months prior written notice to NextCard and Funding, provided that such
notice is delivered after September 30, 1999.
(f) Notice by NextCard or Funding. This Agreement may be terminated
by NextCard or Funding upon thirty days prior written notice to the Bank;
provided, however, that neither NextCard nor Funding may terminate this
Agreement prior to December 31, 1999 unless NextCard has paid to the Bank,
either in cash or as origination fee compensation pursuant to Section 2.10 of
the Agreement, or any combination thereof, an aggregate of [*] at any time
during the last calendar quarter of 1999.
(g) Purchase of Accounts. If this Agreement is terminated pursuant
to paragraph (e) or (f) above, Funding or its assignee shall purchase all of the
Accounts from the Bank pursuant to Section 4.2(b) within thirty days of such
termination, and any termination notice shall be deemed to constitute the notice
required under Section 4.2(b). This paragraph (g) shall survive the termination
of this Agreement.
SECTION 9. CHANGE TO EXERCISE PERIOD
Section 6.4(a) of the Agreement is amended, to read in its entirety as
follows:
"An asterisk [*] indicates that certain information has been omitted from this
agreement pursuant to a request for confidential treatment and has been filed
separately with the Securities and Exchange Commission."
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(a) NextCard, Funding and their assignees shall have the exclusive
right to purchase all Accounts, Cardholder-Specific Information and Receivables
pursuant to Article IV hereof for a period of one year from the termination of
this Agreement pursuant to Sections 6.1(a), (b) or (c), but not later than
December 31, 2001 (the "Exercise Period"). During the Exercise Period, Funding
shall pay the Bank a fee of [*] per month (the "Extension Fee") for each
calendar month that the Bank continues to fund Receivables pursuant to Section
6.4(b). The Extension Fee shall be payable on the first day of each such month,
and shall be pro-rated for any partial months.
SECTION 10. MISCELLANEOUS
a. Governing Law. This Amendment shall be governed by and construed
in accordance with the laws of the State of California without regard to its
conflict of laws rules.
b. Effect of Amendment; Agreement Continues in Effect. On and after
the date hereof, all references to the Agreement shall mean the Agreement as
amended hereby. Except as specifically amended hereby, the Agreement remains in
full force and effect.
c. Legal Fees. NextCard agrees to reimburse the Bank for reasonable
legal fees not to exceed $15,000 incurred in connection with this Amendment.
"An asterisk [*] indicates that certain information has been omitted from this
agreement pursuant to a request for confidential treatment and has been filed
separately with the Securities and Exchange Commission."
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date set forth above.
HERITAGE BANK OF COMMERCE NEXTCARD, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Executive Vice President Title: Chief Financial Officer
NEXTCARD FUNDING CORP.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Financial Officer
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