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EXHIBIT 10.1
[EXECUTION COPY]
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NEXTCARD FUNDING CORP.,
as Transferor,
NEXTCARD, INC.,
as Servicer,
and
THE BANK OF NEW YORK,
as Trustee
NEXTCARD MASTER TRUST I
AMENDED AND RESTATED
POOLING AND SERVICING AGREEMENT
Dated as of May 21, 1999
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TABLE OF CONTENTS
ARTICLE I Definitions...............................................................1
Section 1.01. Definitions........................................................1
Section 1.02. Other Definitional Provisions.....................................20
ARTICLE II Conveyance of Receivables................................................22
Section 2.01. Conveyance of Receivables.........................................22
Section 2.02. Acceptance by Trustee.............................................23
Section 2.03. Representations and Warranties of Each Transferor Relating
to Such Transferor................................................24
Section 2.04. Representations and Warranties of Each Transferor Relating
to the Agreement, the Receivables Transfer Agreements and
Any Supplement and the Receivables................................26
Section 2.05. Reassignment of Ineligible Receivables............................28
Section 2.06. Reassignment of Receivables in Trust Portfolio....................29
Section 2.07. Covenants of the Transferor.......................................30
Section 2.08. Covenants of Each Transferor with Respect to Receivables
Transfer Agreements...............................................33
Section 2.09. Addition of Accounts..............................................34
Section 2.10. Removal of Accounts and Participation Interests...................37
Section 2.11. Account Allocations...............................................38
Section 2.12. Discount Option...................................................39
ARTICLE III Administration and Servicing of Receivables..............................40
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TABLE OF CONTENTS
(CONTINUED)
Section 3.01. Acceptance of Appointment and Other Matters Relating to the
Servicer..........................................................40
Section 3.02. Servicing Compensation............................................41
Section 3.03. Representations, Warranties and Covenants of the Servicer.........41
Section 3.04. Reports and Records for the Trustee...............................44
Section 3.05. Annual Certificate of Servicer....................................44
Section 3.06. Annual Servicing Report of Independent Public Accountants;
Copies of Reports Available.......................................45
Section 3.07. Tax Treatment.....................................................45
Section 3.08. Notices to NextCard, Inc..........................................46
Section 3.09. Adjustments.......................................................46
Section 3.10. Reports to the Commission.........................................47
Section 3.11. Reports to Rating Agencies........................................47
ARTICLE IV Rights of Certificateholders and Allocation and Application of
Collections..............................................................48
Section 4.01. Rights of Certificateholders......................................48
Section 4.02. Establishment of Collection Account and Excess Funding
Account; Appointment of Securities Intermediary...................48
Section 4.03. Collections and Allocations.......................................51
Section 4.04. Shared Collections................................................52
Section 4.05. Additional Withdrawals from the Collection Account................52
Section 4.06. Allocation of Trust Assets to Series or Groups....................53
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TABLE OF CONTENTS
(CONTINUED)
ARTICLE V Distributions and Reports to Certificateholders..........................54
ARTICLE VI The Certificates.........................................................55
Section 6.01. The Certificates..................................................55
Section 6.02. Authentication of Certificates....................................55
Section 6.03. New Issuances.....................................................55
Section 6.04. Registration of Transfer and Exchange of Certificates.............57
Section 6.05. Mutilated, Destroyed, Lost or Stolen Certificates.................60
Section 6.06. Persons Deemed Owners.............................................60
Section 6.07. Appointment of Paying Agent.......................................61
Section 6.08. Access to List of Registered Certificateholders' Names and
Addresses.........................................................61
Section 6.09. Authenticating Agent..............................................62
Section 6.10. Book-Entry Certificates...........................................63
Section 6.11. Notices to Clearing Agency........................................63
Section 6.12. Definitive Certificates...........................................64
Section 6.13. Global Certificate; Exchange Date.................................64
Section 6.14. Meetings of Certificateholders....................................65
Section 6.15. Uncertificated Classes............................................67
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TABLE OF CONTENTS
(CONTINUED)
ARTICLE VII Other Matters Relating to the Transferor.................................68
Section 7.01. Liability of the Transferor.......................................68
Section 7.02. Merger or Consolidation of, or Assumption of the Obligations
of, the Transferor................................................68
Section 7.03. Limitations on Liability of the Transferor........................69
ARTICLE VIII Other Matters Relating to the Servicer...................................70
Section 8.01. Liability of the Servicer.........................................70
Section 8.02. Merger or Consolidation of, or Assumption of the Obligations
of, the Servicer..................................................70
Section 8.03. Limitation on Liability of the Servicer and Others................70
Section 8.04. Servicer Indemnification of the Trust and the Trustee.............71
Section 8.05. Resignation of the Servicer.......................................71
Section 8.06. Access to Certain Documentation and Information Regarding
the Receivables...................................................72
Section 8.07. Delegation of Duties..............................................72
Section 8.08. Examination of Records............................................72
ARTICLE IX Pay Out Events...........................................................73
Section 9.01. Trust Pay Out Events..............................................73
Section 9.02. Rights Upon the Occurrence of an Insolvency Event.................73
ARTICLE X Servicer Defaults........................................................74
Section 10.01. Servicer Defaults.................................................74
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TABLE OF CONTENTS
(CONTINUED)
Section 10.02. Trustee To Act, Appointment of Successor..........................76
Section 10.03. Notification to Certificateholders................................77
ARTICLE XI The Trustee..............................................................78
Section 11.01. Duties of Trustee.................................................78
Section 11.02. Certain Matters Affecting the Trustee.............................79
Section 11.03. Trustee Not Liable for Recitals in Certificates...................80
Section 11.04. Trustee May Own Certificates......................................80
Section 11.05. Servicer To Pay Trustee's Fees and Expenses.......................81
Section 11.06. Eligibility Requirements for Trustee..............................81
Section 11.07. Resignation or Removal of Trustee.................................81
Section 11.08. Successor Trustee.................................................82
Section 11.09. Merger or Consolidation of Trustee................................82
Section 11.10. Appointment of Co-Trustee or Separate Trustee.....................83
Section 11.11. Tax Returns.......................................................84
Section 11.12. Trustee May Enforce Claims Without Possession of Certificates.....84
Section 11.13. Suits for Enforcement.............................................84
Section 11.14. Rights of Certificateholders To Direct Trustee....................85
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TABLE OF CONTENTS
(CONTINUED)
Section 11.15. Representations and Warranties of Trustee.........................85
Section 11.16. Maintenance of Office or Agency...................................85
ARTICLE XII Termination..............................................................86
Section 12.01. Termination of Trust..............................................86
Section 12.02. Final Distribution................................................86
Section 12.03. Transferor's Termination Rights...................................87
Section 12.04. Defeasance........................................................87
Section 12.05. Optional Purchase.................................................89
ARTICLE XIII Miscellaneous Provisions.................................................90
Section 13.01. Amendment; Waiver of Past Defaults................................90
Section 13.02. Protection of Right, Title and Interest to Trust..................91
Section 13.03. Limitation on Rights of Certificateholders........................92
SECTION 13.04. GOVERNING LAW.....................................................93
Section 13.05. Notices; Payments.................................................93
Section 13.06. Rule 144A Information.............................................94
Section 13.07. Severability of Provisions........................................94
Section 13.08. Assignment........................................................94
Section 13.09. Certificates Nonassessable and Fully Paid.........................94
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TABLE OF CONTENTS
(CONTINUED)
Section 13.10. Further Assurances................................................94
Section 13.11. Nonpetition Covenant..............................................94
Section 13.12. No Waiver; Cumulative Remedies....................................95
Section 13.13. Counterparts......................................................95
Section 13.14. Third-Party Beneficiaries.........................................95
Section 13.15. Actions by Certificateholders.....................................95
Section 13.16. Merger and Integration............................................95
Section 13.17. Headings..........................................................95
Section 13.18. Construction of Agreement.........................................95
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This AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT dated
as of May 21, 1999, among NEXTCARD FUNDING CORP., a Delaware corporation, as
Transferor, NEXTCARD, INC., a Delaware corporation, as Servicer, and THE BANK OF
NEW YORK, a New York banking corporation, as Trustee, amends and restates that
certain Pooling and Servicing Agreement dated as of December 1, 1998, among
NextCard Funding Corp., as Transferor, NextCard, Inc.(as successor to NextCard,
Inc., a California corporation), as Servicer, and The Bank of New York, as
Trustee, as supplemented by Supplement No. 1 thereto dated as of December 1,
1998 among NextCard Funding Corp., as Transferor, NextCard, Inc. (as successor
to NextCard, Inc., a California corporation), as Servicer, and The Bank of New
York, as Trustee and Securities Intermediary.
In consideration of the mutual agreements herein contained, each
party agrees as follows for the benefit of the other parties, the
Certificateholders and any Series Enhancer (to the extent provided herein and in
any Supplement):
ARTICLE I
Definitions
1.1 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 each Initial Account and each Additional
Account, but shall exclude any Account in which all the Receivables are either
reassigned or assigned to the Transferor or its designee or the Servicer in
accordance with the terms of this Agreement. The definition of Account shall
include each account into which an Account is transferred (a "Transferred
Account"); provided that (i) such transfer is made in accordance with the Credit
Card Guidelines and (ii) such Transferred Account can be traced or identified,
by reference to or by way of the computer files or microfiche lists delivered to
the Trustee pursuant to Section 2.01 or 2.09, as an account into which an
Account has been transferred. The term "Account" shall be deemed to refer to an
Additional Account only from and after the Addition Date with respect thereto,
and the term "Account" shall be deemed to refer to any Removed Account only
prior to the Removal Date with respect thereto.
"Account Originator" shall mean Heritage Bank of Commerce or any
other entity which is the issuer of the credit card relating to an Account
pursuant to a Cardholder Agreement.
"Account Owner" shall mean the Account Originator relating to an
Account or any Person who has acquired such Account and has sold the related
Receivables to the Transferor pursuant to a Receivables Purchase Agreement.
"Accumulation Period" shall mean, with respect to any Series, or
any Class within a Series, a period following the Revolving Period, which shall
be the accumulation or other period, including any controlled accumulation
period or rapid accumulation period, in which
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Collections of Principal Receivables are accumulated in an account for the
benefit of the Investor Certificateholders of such Series, or a Class within
such Series, in each case as defined for such Series in the related Supplement.
"Act" shall mean the Securities Act of 1933, as amended.
"Addition" shall mean the designation of (i) additional Eligible
Accounts to be included as Accounts or (ii) Participation Interests to be
included as Trust Assets pursuant to subsection 2.09(a), (b) or (d).
"Addition Cut-Off Date" shall mean, with respect to any
Additional Accounts or Participation Interests to be included in the Trust, the
date specified in the related Assignment.
"Addition Date" shall mean (i) with respect to Additional
Accounts, the date on which the Receivables in such Additional Accounts are
conveyed to the Trust pursuant to subsection 2.09(a), (b) or (d) and (ii) with
respect to Participation Interests, the date from and after which such
Participation Interests are to be included as Trust Assets pursuant to
subsection 2.09(a) or (b).
"Additional Account" shall mean each consumer revolving credit
card account established pursuant to a Cardholder Agreement, which account is
designated pursuant to subsection 2.09(a), (b) or (d) to be included as an
Account and is identified in a computer file or microfiche list delivered to the
Trustee by the Transferor pursuant to Sections 2.01 and 2.09.
"Additional Transferors" shall have the meaning specified in
subsection 2.09(e).
"Adverse Effect" shall mean, with respect to any action, that
such action will (a) result in the occurrence of a Pay Out Event or Reinvestment
Event with respect to any Series or (b) materially adversely affect the amount
or timing of distributions to be made to the Investor Certificateholders of any
Series or Class pursuant to this Agreement and the related 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.
"Aggregate Invested Amount" shall mean, as of any date of
determination, the sum of (i) the aggregate Invested Amounts of all Series of
Certificates issued and outstanding on such date of determination plus (ii) the
sum of the Enhancement Investor Amounts, if any, for all outstanding Series on
such date of determination.
"Aggregate Series Percentage" shall mean, with respect to
Principal Receivables, Defaulted Receivables and Finance Charge Receivables as
of any date of determination, the sum of the Series Percentages for such
categories of Receivables for all outstanding Series on such
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date of determination; provided, however, that the Aggregate Series Percentage
shall not exceed 100%.
"Agreement" shall mean this Amended and Restated Pooling and
Servicing Agreement and all amendments hereof and supplements hereto, including,
with respect to any Series or Class, the related Supplement.
"Amortization Period" shall mean, with respect to any Series, or
any Class within a Series, a period following the Revolving Period, which shall
be the controlled amortization period, controlled accumulation period, the
principal amortization period, the rapid amortization period, the rapid
accumulation period, the optional amortization period, the limited amortization
period or other amortization period or accumulation period, in each case as
defined with respect to such Series in the related Supplement.
"Applicants" shall have the meaning specified in Section 6.08.
"Assignment" shall have the meaning specified in subsection
2.09(c)(vii).
"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 Investor Certificates of such Series or Class are listed on the
Luxembourg Stock Exchange and such exchange shall so require, in Luxembourg,
printed in any language satisfying the requirements of such exchange) and
customarily published on each business day at such place, whether or not
published on Saturdays, Sundays or holidays.
"Automatic Additional Account" shall have the meaning specified
in subsection 2.09(d)(i).
"Bearer Certificates" shall have the meaning specified in
Section 6.01.
"Benefit Plan" shall have the meaning specified in subsection
6.04(c) .
"Book-Entry Certificates" shall mean beneficial interests in the
Investor Certificates (including security entitlements relating thereto),
ownership and transfers of which shall be made through book entries by a
Clearing Agency as described in Section 6.10.
"Business Day" shall mean any day other than (a) a Saturday or
Sunday, (b) any other day on which banking institutions in New York, New York
(or, with respect to any Series, any additional city specified in the related
Supplement) or any other State in which the principal executive offices of the
Transferor or any Additional Transferor or the Trustee 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 Series Supplement.
"Cardholder Agreement" shall mean, with respect to a consumer
revolving credit card account, the agreements between an Account Owner, and the
related Obligor governing the
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terms and conditions of such account, as such agreements 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.
"Cash Advance Fees" shall have the meaning specified in the
Cardholder Agreement applicable to an Account for cash advance fees or similar
terms.
"Cedel" shall mean Cedelbank, societe anonyme, a professional
depository incorporated under the laws of Luxembourg, and its successors.
"Certificate" shall mean any one of the Investor Certificates or
the Transferor Certificates.
"Certificateholder" or "Holder" shall mean an Investor
Certificateholder or a Person in whose name any one of the Transferor
Certificates is registered.
"Certificateholders' Interest" shall have the meaning specified
in Section 4.01.
"Certificate Owner" shall mean, with respect to a Book-Entry
Certificate, the Person who is the owner of such Book-Entry Certificate, as
reflected on the books of the Clearing Agency, or on the books of a Person
maintaining an account with such Clearing Agency (directly or as an indirect
participant, in accordance with the rules of such Clearing Agency).
"Certificate Rate" shall mean, with respect to any Series or
Class, the certificate rate specified therefor in the related Supplement.
"Certificate Register" shall mean the register maintained
pursuant to Section 6.04, providing for the registration of the Registered
Certificates and the Transferor Certificates and transfers and exchanges
thereof.
"Class" shall mean, with respect to any Series, any one of the
classes of Investor Certificates of that Series.
"Clearing Agency" shall mean an organization registered as a
"clearing agency" pursuant to Section 17A of the Securities Exchange Act of
1934, as amended, and serving as a clearing agency for a Series or Class of
Book-Entry Certificates.
"Clearing Agency Participant" shall mean a broker, dealer, bank,
other financial institution or other Person for whom from time to time a
Clearing Agency effects book-entry transfers of securities deposited with the
Clearing Agency.
"Closing Date" shall mean, with respect to any Series, the
closing date specified in the related Supplement.
"Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
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"Collection Account" shall have the meaning specified in Section
4.02.
"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 (to the extent collected), wire transfers,
electronic transfers, ATM transfers or other form of payment in accordance with
the Cardholder Agreement in effect from time to time. As specified in any
Participation Interest Supplement or Supplement, Collections shall include
amounts received with respect to Participation Interests. All Recoveries with
respect to Receivables previously charged-off as uncollectible will be treated
as Collections of Finance Charge Receivables. Collections with respect to any
Monthly Period shall include Interchange, calculated pursuant to subsection
2.07(h), paid to the Trust with respect to such Monthly Period, to be applied as
if such amount were Collections of Finance Charge Receivables for all purposes.
"Commission" shall mean the United States Securities and
Exchange Commission.
"Companion Series" shall mean (i) each Series which has been
paired with another Series (which Series may be prefunded or partially
prefunded), such that the reduction of the Invested Amount of such Series
results in the increase of the Invested Amount of such other Series, as
described in the related Supplements, and (ii) such other Series.
"Contractually Delinquent" with respect to an Account, shall
mean an Account as to which the required minimum payment set forth on the
related billing statement has not been received by the due date thereof.
"Corporate Trust Office" shall mean the principal office of the
Trustee at which at any particular time its corporate trust business shall be
administered, which office at the date of the execution of this Agreement is
located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
"Coupon" shall have the meaning specified in Section 6.01.
"Credit Card Guidelines" shall mean the written policies and
procedures of the Servicer, Heritage Bank of Commerce or any other Account
Owner, as the case may be, relating to the operation of its consumer revolving
lending business, which are consistent with prudent practice, including, without
limitation, the written policies and procedures for determining the
creditworthiness of credit card account customers, the extension of credit to
credit card account customers and relating to the maintenance of credit card
accounts and collection of receivables with respect thereto, as such policies
and procedures may be amended, modified, or otherwise changed from time to time.
"Date of Processing" shall mean, with respect to any transaction
or receipt of Collections, the Business Day such transaction or receipt of
Collections is first recorded on the Servicer's computer file of consumer
revolving credit card accounts (without regard to the effective date of such
recordation).
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"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 included in any Account the
Receivables of which the related Transferor or the Servicer became obligated to
accept reassignment or assignment in accordance with the terms of this Agreement
during such Monthly Period; 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 subsection 10.01(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 which are charged off as uncollectible in such
Monthly Period in accordance with the Credit Card Guidelines and the Servicer's
customary and usual servicing procedures for servicing consumer revolving credit
card and other revolving credit account receivables comparable to the
Receivables. A Principal Receivable shall become a Defaulted Receivable on the
day on which such Principal Receivable is recorded as charged off on the
Servicer's computer master file of consumer revolving credit card accounts but,
in any event, shall be deemed a Defaulted Receivable no later than the month
following the day the related Account becomes 180 days Contractually Delinquent
unless the Obligor cures such default by making a partial payment which
satisfies the criteria for curing delinquencies set forth in the applicable
Credit Card Guidelines.
"Defeasance" shall have the meaning specified in subsection
12.04(a).
"Defeased Series" shall have the meaning specified in subsection
12.04(a).
"Definitive Certificates" shall have the meaning specified in
Section 6.10.
"Definitive Euro-Certificates" shall have the meaning specified
in Section 6.13.
"Deposit Date" shall mean each day on which the Servicer
deposits Collections in the Collection Account.
"Depositaries" shall mean the Person specified in the applicable
Supplement, in its capacity as depositary for the respective accounts of any
Clearing Agency or any Foreign Clearing Agencies.
"Depository Agreement" shall mean, if applicable with respect to
any Series or Class, the depository agreement among the Transferor, the Trustee
and a Clearing Agency, or as otherwise provided in the related Supplement.
"Determination Date" shall mean, unless otherwise specified in
the related Supplement, with respect to any Distribution Date, the third
Business Day preceding such
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Distribution Date.
"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 subsection 2.12(a). The aggregate amount of Discount Option Receivables
outstanding on any Date of Processing occurring on or after the Discount Option
Date shall equal the sum of (a) the aggregate Discount Option Receivables at the
end of the prior Date of Processing (which amount, prior to the Discount Option
Date, shall be zero) plus (b) any new Discount Option Receivables created on
such Date of Processing minus (c) any Discount Option Receivables Collections
received on such Date of Processing. Discount Option Receivables created on any
Date of Processing shall mean the product of the amount of any 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 mean the percentages, if any,
designated by the Transferor pursuant to subsection 2.12(a).
"Distribution Date" shall mean, unless otherwise defined in a
Supplement with respect to a Series, the fifteenth day of each calendar month
or, if such fifteenth day is not a Business Day, the next succeeding Business
Day.
"Dollars," "$" or "U.S. $" shall mean United States Dollars.
"Eligible Account" shall mean a consumer revolving credit card
account owned by Heritage Bank of Commerce, in the case of the Initial Accounts,
or Heritage Bank of Commerce or other Account Owner, in the case of Additional
Accounts, which accounts are identified by the relevant Account Owner as of the
Initial Cut-Off Date or Addition Cut-Off Date, as applicable, as having the
following characteristics:
(a) is in existence and maintained by Heritage Bank of
Commerce, in the case of the Initial Accounts, or Heritage Bank of Commerce or
other Account Owner in the case of Additional Accounts;
(b) is payable in Dollars;
(c) except as provided below, has not been identified as an
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account the credit card or cards with respect to which have been reported to the
applicable Account Owner as having been lost or stolen or has an Obligor who has
not been identified as deceased;
(d) the Obligor of which has provided, as his or her billing
address, an address located in the United States (or its territories or
possessions or military address);
(e) except as provided below, does not have any Receivables
which are Defaulted Receivables;
(f) except as provided below, does not have any Receivables
which have been identified by the applicable Account Owner or the relevant
Obligor as having been incurred as a result of fraudulent use of any related
credit card;
(g) was created in accordance with the Credit Card
Guidelines of the applicable Account Originator at the time of creation of such
Account; and
(h) does not have outstanding Receivables which have been
sold or pledged by the related Account Owner to any party other than the
Transferor pursuant to a Receivables Purchase Agreement.
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Eligible Accounts may include Accounts, the Receivables of which
have been written off, or with respect to which the Transferor believes the
related Obligor is bankrupt, or as to which certain Receivables have been
identified by the Obligor as having been incurred as a result of fraudulent use
of any credit cards, or as to which any credit cards have been reported to the
Account Owner or the Servicer as lost or stolen, in each case as of the Initial
Cut-Off Date, with respect to the Initial Accounts, and as of the related
Addition Cut-Off Date, with respect to Additional Accounts; provided that (a)
the balance of all Receivables included in such Accounts is reflected on the
books and records of the Account Owner (and is treated for purposes of this
Agreement) as "zero," and (b) charging privileges with respect to all such
Accounts have been canceled in accordance with the relevant Credit Card
Guidelines.
"Eligible Institution" shall mean a depository institution
(which may be the Trustee) organized under the laws of the United States or any
one of the states thereof, including the District of Columbia (or any domestic
branch of a foreign bank) which depository institution at all times (a) has
either (i) a long-term unsecured debt rating of A2 or better by Moody's or (ii)
a certificate of deposit rating of P-1 by Moody's, (b) has either (i) a
long-term unsecured debt rating of A by Standard & Poor's or (ii) a certificate
of deposit rating of A-1+ by Standard & Poor's and (c) is a member of the FDIC.
Notwithstanding the previous sentence, any institution the appointment of which
satisfies the Rating Agency Condition shall be considered an Eligible
Institution. If so qualified, the Trustee may be considered an Eligible
Institution for the purposes of this definition.
"Eligible Investments" shall mean securities, instruments,
securities entitlements or other investment property with respect to:
(a) direct obligations of, and obligations fully guaranteed
as to timely payment of principal and interest by, the United States of America;
(b) demand deposits, time deposits or certificates of
deposit (having original maturities of no more than 365 days) of depository
institutions or trust companies incorporated under the laws of the United States
of America or any state thereof (or domestic branches of foreign banks) and
subject to supervision and examination by federal or state banking or depository
institution authorities; provided, that at the time of the Trust's investment or
contractual commitment to invest therein, the short-term debt rating of such
depository institution or trust company shall be in the highest investment
category of each Rating Agency;
(c) commercial paper or other short-term obligations having
initial maturities of no more than 270 days, and having, at the time of the
Trust's investment or contractual commitment to invest therein, a rating from
each Rating Agency in its highest investment category;
(d) notes or bankers' acceptances (having original
maturities of no more than 365 days) issued by any depository institution or
trust company referred to in (b) above;
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(e) investments in money market funds rated in the highest
investment category by each Rating Agency or otherwise approved in writing by
each Rating Agency;
(f) time deposits, other than as referred to in clause (e)
above, with a Person the commercial paper of which has a credit rating from each
Rating Agency in its highest investment category; or
(g) any other investments approved in writing by each Rating
Agency.
"Eligible Receivable" shall mean each Receivable:
(a) which has arisen under an Eligible Account;
(b) which was created in compliance with all Requirements of
Law applicable to the related Account Originator and any institution which owned
the Receivable at the time of its creation, the failure to comply with which
would have a material adverse effect on Investor Certificateholders, and
pursuant to a Cardholder Agreement which complies in all material respects with
all Requirements of Law applicable to the related Account Originator and Account
Owner, the failure to comply with which would have a material adverse effect on
Investor Certificateholders;
(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 or given by the applicable
Account Originator and any subsequent Account Owner, in connection with the
creation of such Receivable or the execution, delivery and performance by the
applicable Account Originator and any subsequent Account Owner of its
obligations, if any, under the related Cardholder Agreement have been duly
obtained or given and are in full force and effect as of such date of creation
of such Receivable;
(d) as to which, at the time of the transfer of such
Receivable to the Trust, the Transferor or the Trust will have good and
marketable title thereto, 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 Trust of all the Transferor's right,
title and interest therein or the grant of a first priority perfected security
interest therein (and in the proceeds thereof), effective until the termination
of the Trust;
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(f) which at and after the time of transfer to the Trust is
the legal, valid and binding payment obligation of the Obligor thereon, legally
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;
(h) which, at the time of its transfer to the Trust, 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;
(i) which, at the time of its transfer to the Trust, is not
subject to any right of rescission, setoff, counterclaim or any other defense of
the Obligor (including the defense of usury), other than defenses arising out of
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws 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 equity) or as to which the Servicer is required
by Section 3.09 to make an adjustment;
(j) as to which, at the time of its transfer to the Trust,
the relevant Account Originator and any subsequent Account Owner has satisfied
all its obligations required to be satisfied by such time; and
(k) as to which, at the time of its transfer to the Trust,
none of the Transferor, the Servicer, Heritage Bank of Commerce or any other
Account Owner, as the case may be, has taken any action which, or failed to take
any action the omission of which, would, at the time of its transfer to the
Trust, impair the rights of the Trust or the Certificateholders therein.
"Eligible Servicer" shall mean the Trustee, or if the Trustee is
not 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 (including, if
applicable, the ability to service VISA(R)1 credit card accounts), (c) 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 (d) has demonstrated the ability to
professionally and competently service a portfolio of similar accounts in
accordance with high standards of skill and care.
--------
1 VISA is a registered trademark of VISA USA, Inc.
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"Enhancement Agreement" shall mean any agreement, instrument or
document governing the terms of any Series Enhancement or pursuant to which any
Series Enhancement is issued or outstanding.
"Enhancement Investor Amount" shall have the meaning, if
applicable with respect to any Series, specified in the related Supplement.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"Euroclear Operator" shall mean ▇▇▇▇▇▇ Guaranty Trust Company of
New York, Brussels office, as operator of the Euroclear System.
"Excess Allocation Series" shall mean a Series that, pursuant to
the Supplement therefor, is entitled to receive Excess Finance Charge
Collections, as more specifically set forth in the Supplement. If so specified
in the Supplement for a Group of Series, such Series may be Excess Allocation
Series only for the Series in such Group.
"Excess Finance Charge Collections" shall have the meaning
specified in subsection 4.04(b).
"Excess Funding Account" shall have the meaning specified in
Section 4.02.
"Excess Funding Amount" shall mean the amount on deposit in the
Excess Funding Account.
"Excess Spread" with respect to each Series shall have the
meaning specified in the applicable Supplement.
"Exchange Date" shall mean, with respect to any Series, any date
that is after the related Closing Date, in the case of Definitive
Euro-Certificates in registered form, or upon presentation of certification of
non-United States beneficial ownership (as described in Section 6.13), in the
case of Definitive Euro-Certificates in bearer form.
"FDIC" shall mean the Federal Deposit Insurance Corporation or
any successor.
"Finance Charge Receivables" shall mean all amounts billed to
the Obligors on any Account in respect of (i) Periodic Finance Charges, (ii)
annual membership fees and annual service charges, (iii) Late Fees, (iv)
Overlimit Fees, (v) Cash Advance Fees, (vi) Discount Option Receivables, if any,
and (vii) all other fees and charges with respect to the Accounts designated by
the Transferor to be included as Finance Charge Receivables. Finance Charge
Receivables shall also include (i) the interest portion of Participation
Interests as shall be determined pursuant to the applicable Participation
Interest Supplement or Supplement, (ii) Interchange and (iii) all Recoveries
with respect to Receivables previously charged off as uncollectible.
"Finance Charge Shortfall" shall have the meaning specified in
subsection 4.04(b).
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"FIRREA" shall mean the Financial Institutions Reform, Recovery
and Enforcement Act of 1989, as amended.
"Fitch" shall mean Fitch IBCA, Inc. or its successors.
"Foreign Clearing Agency" shall mean Cedel and the Euroclear
Operator.
"Global Certificate" shall have the meaning specified in
subsection 6.13(a).
"Governmental Authority" shall mean the United States of
America, any state or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Group" shall mean, with respect to any Series, the group of
Series, if any, in which the related Supplement specifies such Series is to be
included.
"Heritage Bank of Commerce" shall mean Heritage Bank of
Commerce, a California state chartered bank, and its successors and assigns.
"Ineligible Receivables" shall have the meaning specified in
subsection 2.05(a).
"Initial Account" shall mean each VISA account established
pursuant to a Cardholder Agreement between Heritage Bank of Commerce and any
Person, and identified by account number and by the Receivable balance in a
computer file or microfiche list delivered to the Trustee by the Transferor on
or prior to the Initial Closing Date pursuant to Section 2.01.
"Initial Closing Date" shall mean December 29, 1998.
"Initial Cut-Off Date" shall mean December 1, 1998.
"Insolvency Event" shall have the meaning specified in
subsection 9.01(a)(i).
"Insurance Proceeds" shall mean any amounts recovered by the
Servicer pursuant to any credit insurance policies covering any Obligor with
respect to Receivables under such Obligor's Account.
"Interchange" shall mean the portion allocable to the Accounts
of interchange fees payable to any Account Owner, in its capacity as credit card
issuer, through VISA in connection with cardholder charges for goods, services
and cash advances. Any reference in this Agreement or any Supplement to
Interchange shall refer only to the portion of such interchange fees for any
Monthly Period equal to the product of (i) the total amount of interchange fees
paid or payable to the Transferor with respect to such Monthly Period, (ii) a
fraction the numerator of which is the aggregate amount of cardholder charges
for goods and services in the Accounts with respect to such Monthly Period and
the denominator of which is the aggregate amount of cardholder charges for goods
and services in all VISA consumer revolving credit card accounts owned by the
Transferor with respect to such Monthly Period.
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"Invested Amount" shall mean, with respect to any Series and for
any date, an amount equal to the Invested Amount specified in the related
Supplement.
"Investment Company Act" shall mean the Investment Company Act
of 1940, as amended from time to time.
"Investor Certificateholder" shall mean the Person in whose name
a Registered Certificate is registered in the Certificate Register or the bearer
of any Bearer Certificate (or the Global Certificate, as the case may be) or
Coupon.
"Investor Certificates" shall mean any certificated or
uncertificated interest in the Trust designated as, or deemed to be, an
"Investor Certificate" in the related Supplement.
"Late Fees" shall have the meaning specified in the Cardholder
Agreement applicable to each Account for late fees or similar terms.
"Lien" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment, participation or equity interest, deposit
arrangement, encumbrance, lien (statutory or other), preference, 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 (other than
any such financing statement filed for informational purposes only) or
comparable law of any jurisdiction to evidence any of the foregoing, excluding
any lien or filing pursuant to this Agreement; provided, however, that any
assignment or transfer pursuant to subsection 6.03(c) or (d) or Section 7.02
shall not be deemed to constitute a Lien.
"Manager" shall mean the lead manager, manager or co-manager or
Person performing a similar function with respect to an offering of Definitive
Euro-Certificates.
"Monthly Period" shall mean, with respect to each Distribution
Date, unless otherwise provided in a 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 be as designated in the related Supplement.
"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 subsection
13.05(a).
"NextCard, Inc." shall mean NextCard, Inc., a Delaware
corporation, and its successors and assigns.
"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
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excluding any merchant.
"Officer's Certificate" shall mean, unless otherwise specified
in this Agreement, a certificate delivered to the Trustee signed by the Chairman
of the Board, President, any Vice President or the Treasurer of the Transferor
or the Servicer, as the case may be.
"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 Trustee.
"Overlimit Fees" shall have the meaning specified in the
Cardholder Agreement applicable to each Account for overlimit fees or similar
terms if such fees are provided for with respect to such Account.
"Participation Interests" shall have the meaning specified in
subsection 2.09(a)(ii).
"Participation Interest Supplement" shall mean a Supplement
entered into pursuant to subsections 2.09(a)(ii) and 13.01(a) in connection with
the conveyance of Participation Interests to the Trust.
"Participating Transferor" shall have the meaning specified in
subsection 2.09(c)(i).
"Paying Agent" shall mean any paying agent and co-paying agent
appointed pursuant to Section 6.07 and shall initially be the Trustee; provided,
that if the Supplement for a Series so provides, a Paying Agent may be appointed
with respect to such Series.
"Pay Out Event" shall mean, with respect to each Series, a Trust
Pay Out Event or a Series Pay Out Event.
"Periodic Finance Charges" shall have the meaning specified in
the Cardholder Agreement applicable to each Account for finance charges (due to
periodic rate) or any similar term.
"Person" shall mean any legal person, including any individual,
corporation, partnership, limited liability company, joint venture, association,
joint-stock company, trust, unincorporated organization, governmental entity or
other entity of similar nature.
"Principal Receivables" shall mean all amounts charged by
Obligors for merchandise and services, cash advances and check advances, but
shall not include Finance Charge Receivables or Defaulted Receivables; provided,
however, that after the Discount Option Date, Principal Receivables on any Date
of Processing thereafter shall mean Principal Receivables as otherwise
determined pursuant to this definition minus the amount of any Discount Option
Receivables. Principal Receivables shall also include the principal portion of
Participation Interests as shall be determined pursuant to the applicable
Participation Interest Supplement or Supplement. In calculating the aggregate
amount of Principal Receivables on any
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day, the amount of Principal Receivables shall be reduced by the aggregate
amount of credit balances in the Accounts on such day. Any Receivables which the
related Transferor is unable to transfer as provided in Section 2.11 shall not
be included in calculating the aggregate amount of Principal Receivables, except
to the extent so provided in Section 2.11.
"Principal Sharing Series" shall mean a Series that, pursuant to
the Supplement therefor, is entitled to receive Shared Principal Collections. If
so specified in the Supplement for a Group of Series, such Series may be a
Principal Sharing Series only for the Series in such Group.
"Principal Shortfalls" shall have the meaning specified in
subsection 4.04(a).
"Principal Terms" shall mean, with respect to any Series, (i)
the name or designation; (ii) the initial principal amount and the Invested
Amount (or method for calculating such amount); (iii) the Certificate Rate (or
method for the determination thereof); (iv) the payment date or dates and the
date or dates from which interest shall accrue; (v) the method for allocating
Collections to Certificateholders of such Series; (vi) the designation of any
Series Accounts and the terms governing the operation of any such Series
Accounts; (vii) the method of calculating the servicing fee with respect
thereto; (viii) the terms of any form of Series Enhancement with respect
thereto; (ix) the terms on which the Investor Certificates of such Series may be
exchanged for Investor Certificates of another Series, repurchased by the
Transferor or remarketed to other investors; (x) the Series Termination Date;
(xi) the number of Classes of Investor Certificates of such Series and, if such
Series consists of more than one Class, the rights and priorities of each such
Class; (xii) the extent to which the Investor Certificates of such Series will
be issuable in temporary or permanent global form (and, in such case, the
depositary for such Global Certificate or Certificates, the terms and
conditions, if any, upon which such Global Certificate may be exchanged, in
whole or in part, for Definitive Certificates, and the manner in which any
interest payable on a temporary or Global Certificate will be paid); (xiii)
whether the Investor Certificates of such Series may be issued as Bearer
Certificates and any limitations imposed thereon; (xiv) the priority of such
Series with respect to any other Series; (xv) the Group, if any, to which such
Series belongs; (xvi) whether or not such Series is a Principal Sharing Series,
whether such Series is an Excess Allocation Series, and (xvii) any other terms
of such Series.
"Qualified Account" shall mean either (a) a segregated trust
account established with the corporate trust department of a Securities
Intermediary or (b) a segregated account with a Securities Intermediary that is
an Eligible Institution.
"Rating Agency" shall mean, with respect to any outstanding
Series or Class, each statistical rating agency, if any, selected by the
Transferor to rate the Investor Certificates of such Series or Class, as
specified in the related Supplement.
"Rating Agency Condition" shall mean, with respect to any
action, that each Rating Agency, if any, shall have notified the Transferor in
writing that such action will not result in a reduction or withdrawal of the
rating of any outstanding Series or Class with respect to which it is a Rating
Agency.
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"Reassignment" shall have the meaning specified in Section 2.10.
"Receivable" shall mean all amounts shown on the Servicer's
records as amounts payable by Obligors on any Account from time to time,
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 Transfer Agreements" shall mean (i) the Amended and
Restated Account Origination Agreement by and between the Servicer, the
Transferor and Heritage Bank of Commerce dated as of May 21, 1999, as amended
from time to time in accordance with the terms thereof, and (ii) any receivables
transfer agreement entered into between the Servicer, the Transferor and an
Account Owner in the future; provided, that before the Transferor shall enter
into any additional receivables transfer agreement as described in (ii) of this
definition, (a) the Rating Agency Condition is satisfied with respect to such
receivables transfer agreement and (b) the Transferor shall have delivered to
the Trustee an Officer's Certificate to the effect that such officer reasonably
believes that the execution and delivery of such receivables transfer agreement
and the purchase of Receivables from the Account Owner named therein will not
have an Adverse Effect.
"Record Date" shall mean, with respect to any Distribution Date,
the last Business Day of the preceding Monthly Period, except as otherwise
provided with respect to a Series in the related Supplement.
"Recoveries" shall mean amounts, excluding Insurance Proceeds,
received by the Servicer with respect to Receivables which have previously
become Defaulted Receivables.
"Registered Certificateholder" shall mean the Holder of a
Registered Certificate.
"Registered Certificates" shall have the meaning specified in
Section 6.01.
"Reinvestment Event" shall mean, with respect to any Series,
such event or events, if any, specified in the Supplement as an event resulting
in a rapid accumulation period with respect to such Series, which may include
events designated herein as Trust Pay Out Events.
"Removal Cut-Off Date" shall have the meaning specified in
subsection 2.10(b).
"Removal Date" shall have the meaning specified in subsection
2.10(a).
"Removal Notice Date" shall have the meaning specified in
subsection 2.10(a).
"Removed Accounts" shall have the meaning specified in Section
2.10.
"Required Designation Date" shall have the meaning specified in
subsection 2.09(a).
"Required Principal Balance" shall mean, as of any date of
determination, an
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amount equal to the difference between (a) the sum of the Invested Amounts for
each Series outstanding on such date, minus (b) the Excess Funding Amount.
"Required Transferor Amount" shall mean, with respect to any
date, an amount equal to (i) the product of the Required Transferor Percentage
and (ii) the sum of the Invested Amounts for each Series outstanding on such
date.
"Required Transferor Percentage" shall mean [*]; provided,
however, that the Transferor may reduce the Required Transferor Percentage upon
(x) 30 days' prior notice to the Trustee and each Rating Agency, (y)
satisfaction of the Rating Agency Condition with respect thereto and (z)
delivery to the Trustee of a certificate of a Vice President or more senior
officer of the Transferor stating that the Transferor reasonably believes that
such reduction will not, based on the facts known to such officer at the time of
such certification, then or thereafter have an Adverse Effect; provided further,
that the Required Transferor Percentage shall not at any time be less than [*].
"Requirements of Law" with respect to any Person shall mean the
certificate of incorporation or articles of association and by-laws or other
organizational or governing documents of such Person, and any law, treaty, rule
or regulation, or determination of an arbitrator or Governmental Authority, in
each case applicable to or binding upon such Person or to which such Person is
subject, whether Federal, state or local (including, without limitation, usury
laws, the Federal Truth in Lending Act and Regulation Z and Regulation B of the
Board of Governors of the Federal Reserve System).
"Responsible Officer" shall mean any officer within the
Corporate Trust Office (or any successor group of the Trustee) including any
Vice President, any Assistant Secretary, any Assistant Treasurer, or any other
officer of the Trustee customarily performing functions similar to those
performed by any of the above-designated officers who has direct responsibility
for the administration of this Agreement and also, with respect to a particular
matter, any other officer to whom such matter is referred because of such
officer's knowledge of and familiarity with the particular subject.
"Revolving Period" shall mean, with respect to any Series, the
period specified as such in the related Supplement.
"Rule 144A" shall mean Rule 144A under the Act, as such Rule may
be amended from time to time.
"Securities Intermediary" shall mean The Bank of New York, a New
York banking corporation, or any other entity that is a depository institution
that in the ordinary course of its business maintains securities accounts for
others and is acting in that capacity and which is organized under the laws of
the United States or any one of the states thereof, including the District of
Columbia (or any domestic branch of a foreign bank) which has a credit rating
from each Rating Agency in one of its generic credit rating categories which
signifies investment grade.
"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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"Series" shall mean any series of Investor Certificates
established pursuant to a Supplement.
"Series Account" shall mean any deposit, trust, escrow or
similar account maintained for the benefit of any Series or Class, as specified
in any Supplement.
"Series Enhancement" shall mean the rights and benefits provided
to the Investor Certificateholders of any Series or Class pursuant to any letter
of credit, surety bond, cash collateral account, cash collateral guaranty,
spread account, guaranteed rate agreement, maturity liquidity facility, tax
protection agreement, interest rate swap agreement, interest rate cap agreement
or other similar arrangement. The subordination of any Series or Class to
another Series or Class shall be deemed to be a Series Enhancement.
"Series Enhancer" shall mean the Person or Persons providing any
Series Enhancement, other than the Investor Certificateholders of any Series or
Class which is subordinated to another Series or Class.
"Series Pay Out Event" shall mean, with respect to any Series,
each event, if any, specified in the Supplement as a Series Pay Out Event with
respect to such Series.
"Series Percentage" shall have, with respect to Principal
Receivables, Finance Charge Receivables and Defaulted Receivables, and any
Series of Certificates, the meaning stated in the related Supplement.
"Series Termination Date" shall mean, with respect to any
Series, the termination date for such Series specified in the related
Supplement.
"Servicer" shall mean initially NextCard, Inc. and its permitted
successors and assigns, in its capacity as Servicer pursuant to this Agreement,
and thereafter any Person appointed Successor Servicer as herein provided.
"Servicer Default" shall have the meaning specified in Section
10.01.
"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 Supplement.
"Servicing Officer" shall mean any officer of the Servicer, or
any attorney-in-fact of the Servicer, involved in, or responsible for, the
administration and servicing of the Receivables whose name appears on a list of
servicing officers furnished to the Trustee by the Servicer, as such list may
from time to time be amended.
"Shared Principal Collections" shall have the meaning specified
in subsection 4.04(a).
"Standard & Poor's" shall mean Standard & Poor's, a division of
The McGraw-
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Hill Companies, or its successor.
"Successor Servicer" shall have the meaning specified in
subsection 10.02(a).
"Supplement" shall mean, with respect to any Series, a
Supplement to this Agreement, executed and delivered in connection with the
original issuance of the Investor
Certificates of such Series pursuant to Section 6.03, and all
amendments thereof and supplements thereto.
"Supplemental Certificate" shall have the meaning specified in
subsection 6.03(c).
"Tax Opinion" shall mean, with respect to any action, an Opinion
of Counsel (which for this purpose shall not include any employee of the
Transferor or any Affiliate thereof) to the effect that, (a) for Federal income
tax purposes, such action will not adversely affect the tax characterization of
Investor Certificates of any outstanding Series or Class that were characterized
as debt at the time of their issuance, (b) such action will not cause the Trust
to be deemed to be an association (or publicly traded partnership) taxable as a
corporation and (c) such action will not cause or constitute an event in which
gain or loss would be recognized by any Investor Certificateholder.
"Termination Notice" shall have the meaning specified in Section
10.01.
"Transfer Agent and Registrar" shall have the meaning specified
in Section 6.04.
"Transfer Date" shall mean the Business Day immediately
preceding each Distribution Date.
"Transfer Restriction Event" shall have the meaning specified in
Section 2.11
"Transferor" shall mean (a) NextCard Funding Corp., a
wholly-owned special purpose subsidiary of NextCard, Inc. and incorporated in
the State of Delaware, or its successor under this Agreement and (b) any
Additional Transferor or Transferors. References to "each Transferor" shall
refer to each entity mentioned in the preceding sentence and references to "the
Transferor" shall refer to all such entities.
"Transferor Amount" shall mean, on any date of determination, an
amount equal to (i) the sum of (a) an amount equal to the aggregate amount of
Principal Receivables at the end of the day immediately prior to such date of
determination plus (b) the Excess Funding Amount at the end of the day
immediately prior to such date of determination, minus (ii) the sum of the
Invested Amounts for each Series outstanding on such date at the end of such
day.
"Transferor Certificate" shall mean the certificate executed by
the Transferor and authenticated by or on behalf of the Trustee, substantially
in the form of Exhibit A, as the same may be modified in accordance with
subsection 2.09(e).
"Transferor Certificates" shall mean, collectively, the
Transferor Certificate and any outstanding Supplemental Certificates.
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"Transferor Percentage" shall mean, on any date of
determination, when used with respect to Principal Receivables, Finance Charge
Receivables and Defaulted Receivables, a percentage equal to 100% minus the
Aggregate Series Percentage with respect to such categories of Receivables.
"Transferor's Interest" shall have the meaning specified in
Section 4.01.
"Transferred Account" shall have the meaning set forth in the
definition of "Account."
"Trust" shall mean the NextCard Master Trust I created by this
Agreement.
"Trust Assets" shall have the meaning specified in Section 2.01.
"Trust Invested Amount" shall mean the aggregate Invested
Amounts for all outstanding Series of Certificates.
"Trustee" shall mean The Bank of New York, a New York banking
corporation, in its capacity as trustee on behalf of the Trust, or its successor
in interest, or any successor trustee appointed as herein provided.
"Trust Pay Out Event" shall mean each event specified in
subsection 9.01; provided, however, that with respect to any Series, if so
specified in the related Supplement, a Trust Pay Out Event may instead be a
Reinvestment Event.
"UCC" shall mean the Uniform Commercial Code, as amended from
time to time, as in effect in the State of California or any other state or
states where the filing of a financing statement is required to perfect the
Trust's interest in the Receivables and the proceeds thereof or in any other
specified jurisdiction.
"United States" shall mean the United States of America
(including the States and the District of Columbia), its territories, its
possessions and other areas subject to its jurisdiction.
"Vice President" when used with respect to the Transferor or the
Servicer shall mean any vice president thereof whether or not designated by a
number or word or words added before or after the title "vice president."
"VISA" shall mean VISA USA, Inc.
1.2 Other Definitional Provisions.
(a) With respect to any Series, all terms used herein and
not otherwise defined herein shall have meanings ascribed to them in the related
Supplement.
(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.
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(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. 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, the definitions
contained in this Agreement or in any such certificate or other document shall
control.
(d) The agreements, representations and warranties of
NextCard Funding Corp. and NextCard, Inc. in this Agreement in each of their
respective capacities as Transferor and as Servicer, shall be deemed to be the
agreements, representations and warranties of NextCard Funding Corp. and
NextCard, Inc. solely in each such capacity for so long as NextCard Funding
Corp. and NextCard, Inc. act in each such capacity under this Agreement.
(e) 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 of this Agreement; references to any
Section, Schedule or Exhibit are references to Sections, Schedules and Exhibits
in or to this Agreement unless otherwise specified; and the term "including"
means "including without limitation."
(f) Unless otherwise specifically provided herein, the
failure of this Agreement to specify the meaning of a term or the applicability
of a provision to any Series shall not preclude the meaning of such term or the
applicability of such provision with respect to such Series being set forth in
the Supplement therefor.
ARTICLE II
Conveyance of Receivables
2.1. Conveyance of Receivables. By execution of this
Agreement, NextCard Funding Corp., as Transferor, does hereby transfer, assign,
set over and otherwise convey to the Trustee, on behalf of the Trust, for the
benefit of the Certificateholders, all its right, title and interest in, to and
under the Receivables existing at the close of business on the Initial Cut-Off
Date, in the case of Receivables arising in the Initial Accounts, and on each
Addition Cut-Off Date, in the case of Receivables arising in the Additional
Accounts, and in each case thereafter created from time to time until the
termination of the Trust, all monies due or to become due and all amounts
received with respect thereto (including any and all Recoveries) and all
proceeds (including "proceeds" as defined in the UCC) thereof and any other
Trust Assets (as hereinafter defined). Such property, together with all monies
and other property on deposit in or credited to or held in the Collection
Account, the Excess Funding Account, the Series Accounts and any Series
Enhancement shall constitute the assets of the Trust (the "Trust Assets"). The
foregoing does not constitute and is not intended to result in the creation or
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assumption by the Trust, the Trustee, any Investor Certificateholder or any
Series Enhancer of any obligation of Heritage Bank of Commerce or other Account
Owner, or the Servicer, the Transferor, any Additional Transferor or any other
Person in connection with the Accounts or the Receivables or under any agreement
or instrument relating thereto, including any obligation to Obligors, merchant
banks, merchant clearance systems, VISA or insurers. Any transfer, assignment,
set over and conveyance that this Agreement provides is to be made to the Trust
shall be made to the Trustee, on behalf of the Trust and for the benefit of the
Certificateholders, and each reference in this Agreement to any such transfer,
assignment set over and conveyance shall be construed accordingly.
The Transferor agrees to record and file, at its own expense,
financing statements (and continuation statements when applicable) with respect
to the Receivables now existing and hereafter created meeting the requirements
of applicable state law in such manner and in such jurisdictions as are
necessary to perfect, and maintain the perfection of, the transfer and
assignment of its interest in the Receivables to the Trustee, and to deliver a
file stamped copy of each such financing statement or other evidence of such
filing (which may, for purposes of this Section 2.01, consist of telephone
confirmation of such filing) to the Trustee on or prior to the Initial Closing
Date, in the case of Receivables arising in the Initial Accounts, and (if any
additional filing is so necessary) the applicable Addition Date, in the case of
Receivables arising in Additional Accounts.
The Transferor further agrees, at its own expense, (a) on or
prior to (x) the Initial Closing Date, in the case of the Initial Accounts, (y)
the applicable Addition Date, in the case of Additional Accounts, and (z) the
applicable Removal Date, in the case of Removed Accounts, to cause each Account
Owner to indicate in its respective computer files and the Transferor will
indicate in its records that Receivables created in connection with the Accounts
(other than Removed Accounts) have been conveyed to the Trustee pursuant to this
Agreement for the benefit of the Certificateholders (or conveyed to the
Transferor or its designee in the case of Removed Accounts) by including (or
deleting in the case of Removed Accounts) in such computer files a clearly
specified code correctly indicating the ownership of the Receivables, and (b) on
or prior to the Initial Closing Date, each Addition Date and each Removal Date,
as applicable, to deliver to the Trustee a computer file or microfiche list
containing a true and complete list of all such Accounts specifying for each
such Account, as of the Initial Cut-Off Date, in the case of the Initial
Accounts, the applicable Addition Cut-Off Date, in the case of Additional
Accounts, and the applicable Removal Cut-Off Date, in the case of Removed
Accounts, its account number, the aggregate amount outstanding in such Account
and the aggregate amount of Principal Receivables outstanding in such Account.
Such file or list, as supplemented from time to time to reflect Additional
Accounts and Removed Accounts, shall be marked as Schedule 1 to this Agreement
and is hereby incorporated into and made a part of this Agreement. The
Transferor agrees not to alter the code or field referenced in clause (a) above
with respect to any Account during the term of this Agreement unless and until
such Accounts become Removed Accounts or unless and until (i) the Transferor
shall give written notice of any such alteration to the Trustee, such written
notice to be as of the date of its receipt by the Trustee incorporated into and
made part of this Agreement, and (ii) the Trustee and the Transferor shall
execute and file any UCC financing statement or amendment thereof necessitated
by such
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alteration.
2.2. Acceptance by Trustee.
(a) The Trustee hereby acknowledges its acceptance on behalf
of the Trust of all right, title and interest to the property, now existing and
hereafter created, conveyed to the Trustee pursuant to Section 2.01 and declares
that it shall maintain such right, title and interest, upon the trust herein set
forth, for the benefit of all Certificateholders.
(b) The Trustee hereby agrees not to disclose to any Person
(or to any other department or operating division of the Trustee, other than the
corporate trust department of the Trustee or, if the Trustee shall be appointed
the Successor Servicer, such other departments or operating divisions of the
Trustee as shall be necessary to fulfill its duties as Servicer), any of the
account numbers or other information contained in the computer files or
microfiche lists marked as Schedule 1 or otherwise delivered to the Trustee from
time to time, except (i) to a Successor Servicer or as required by a Requirement
of Law applicable to the Trustee, (ii) in connection with the performance of the
Trustee's duties hereunder, (iii) in enforcing the rights of Certificateholders,
(iv) to bona fide creditors or potential creditors of any Account Owner, the
Servicer or any Transferor for the limited purpose of enabling any such creditor
to identify Receivables or Accounts subject to this Agreement or the Receivables
Transfer Agreements or (v) after consultation with the Transferor, as requested
by any Person in connection with the financing statements filed pursuant to this
Agreement. The Trustee also agrees not to use any of the foregoing information
for any purpose other than for the purposes provided for in this Agreement. The
Trustee agrees to take such measures as shall be reasonably requested by the
Transferor to protect and maintain the security and confidentiality of such
information and, in connection therewith, will allow the Transferor to inspect
the Trustee's security and confidentiality arrangements from time to time during
normal business hours. The Trustee shall provide the Transferor with notice five
Business Days prior to any disclosure pursuant to this subsection 2.02(b).
(c) The Trustee shall have no power to create, assume or
incur indebtedness or other liabilities in the name of the Trust other than as
contemplated in this Agreement or any Supplement.
2.3. Representations and Warranties of Each Transferor
Relating to Such Transferor. Each Transferor hereby represents and warrants to
the Trust as of each Closing Date (but only if it was a Transferor on such date)
that:
(a) Organization and Good Standing. Such Transferor is a
corporation duly organized and validly existing in good standing under the laws
of the jurisdiction of its organization or incorporation, and has in all
material respects, full corporate power and authority to own or lease its
properties and conduct its business as such properties are presently owned or
leased and such business is presently conducted, to execute, deliver and perform
its obligations under this Agreement, any Receivables Transfer Agreement to
which it is a party and each applicable Supplement and to execute and deliver to
the Trustee the Certificates pursuant hereto.
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(b) Due Qualification. Such Transferor is duly qualified to
do business and is in good standing as a foreign corporation (or is exempt from
such requirements), 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 (i) render any Cardholder Agreement relating to an Account
specified in a Receivables Transfer Agreement with such Transferor or any
Receivable transferred to the Trustee by such Transferor unenforceable by such
Transferor, the Servicer or the Trustee or (ii) would have a material adverse
effect on the interests of the Certificateholders hereunder or under any
Supplement; provided, however, that no representation or warranty is made with
respect to any qualification, licenses or approvals which the Trustee has or may
be required at any time to obtain, if any, in connection with the transactions
contemplated hereby.
(c) Due Authorization. (i) The execution, delivery and
performance of this Agreement, each Receivables Transfer Agreement to which it
is a party and each Supplement by such Transferor and the execution and delivery
to the Trustee of the Certificates and the consummation by such Transferor of
the transactions provided for in this Agreement, each Receivables Transfer
Agreement to which it is a party and each Supplement have been duly authorized
by such Transferor by all necessary corporate action on the part of such
Transferor and (ii) this Agreement, each Receivables Transfer Agreement to which
it is a party and each Supplement will remain, from the time of its execution,
an official record of such Transferor.
(d) No Conflict. The execution and delivery by such
Transferor of this Agreement, each Receivables Transfer Agreement to which it is
a party, each Supplement and the Certificates, the performance by such
Transferor of the transactions contemplated by this Agreement, each Receivables
Transfer Agreement to which it is a party and each Supplement and the
fulfillment by such Transferor of the terms hereof and thereof applicable to
such Transferor will not conflict with or violate any Requirement of Law
applicable to such 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 such Transferor
is a party or by which it or any of 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 court, regulatory body, administrative
agency, or other tribunal or governmental instrumentality (i) asserting the
invalidity of this Agreement, any Receivables Transfer Agreement to which it is
a party, any Supplement or the Certificates, (ii) seeking to prevent the
issuance of the Certificates or the consummation of any of the transactions
contemplated by this Agreement, any Receivables Transfer Agreement to which it
is a party, any Supplement or the Certificates, (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, any Receivables Transfer Agreement to which it is a party, or
any Supplement, (iv) seeking any determination or ruling that, in the reasonable
judgment of such Transferor, materially and adversely affect the validity or
enforceability of this Agreement,
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any Receivables Transfer Agreement to which it is a party, any Supplement or the
Certificates or (v) seeking to affect adversely the income tax attributes of the
Trust or any Certificates under the United States Federal or any State income or
franchise tax systems.
(f) All Consents Required. All approvals, authorizations,
consents, orders or other actions of any Person or of any governmental body or
official required to be obtained, effected or given by such Transferor in
connection with the execution and delivery by such Transferor of this Agreement,
any Receivables Transfer Agreement to which it is a party, each Supplement and
the Certificates, the performance by such Transferor of the transactions
contemplated by this Agreement, each Receivables Transfer Agreement to which it
is a party and each Supplement and the fulfillment by such Transferor of the
terms hereof and thereof, have been duly obtained, effected or given and are in
full force and effect except for approvals, authorizations, consents, orders or
other actions which if not obtained will not individually or in the aggregate
have any material adverse effect upon the ability of the Transferor to perform
its obligations hereunder; and provided, however, that such Transferor makes no
representation or warranty regarding state securities or "blue sky" laws in
connection with the distribution of the Certificates.
(g) Insolvency. No Insolvency Event with respect to such
Transferor has occurred and the transfer of the Receivables by such Transferor
to the Trust has not been made in contemplation of the occurrence thereof.
The representations and warranties of each Transferor set forth
in this Section 2.03 shall survive the transfer and assignment by such
Transferor of the respective Receivables to the Trust. Upon discovery by such
Transferor, the Servicer or the Trustee of a breach of any of the
representations and warranties by such Transferor set forth in this Section
2.03, the party discovering such breach shall give prompt written notice to the
others. Such Transferor agrees to cooperate with the Servicer and the Trustee in
attempting to cure any such breach. For purposes of the representations and
warranties set forth in this Section 2.03, each reference to a Supplement shall
be deemed to refer only to those Supplements in effect as of the relevant
Closing Date.
2.4. Representations and Warranties of Each Transferor
Relating to the Agreement, the Receivables Transfer Agreements and Any
Supplement and the Receivables.
(a) Representations and Warranties. Each Transferor hereby
represents and warrants to the Trust as of each Closing Date and, with respect
to Additional Accounts the Receivables in which are being transferred by such
Transferor to the Trust, as of the related Addition Date (but only if, in either
case, it was a Transferor on such date) that:
(i) this Agreement, any Receivables Transfer
Agreement to which it is a party, each Supplement and, in the
case of Additional 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
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limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect
affecting the enforcement of creditors' rights generally from
time to time in effect or general principles of equity (whether
considered in a suit at law or in equity);
(ii) as of the Initial Cut-Off Date and as of
the related Addition Date with respect to Additional Accounts,
the portion of Schedule 1 to this Agreement under such
Transferor's name, as supplemented on such date, is an accurate
and complete listing of all the Accounts the Receivables in
which were transferred by such Transferor as of the Initial
Cut-Off Date or such Addition Cut-Off Date, as the case may be,
and the information contained therein with respect to the
identity of such Accounts and the Receivables existing
thereunder is true and correct as of the Initial Cut-Off Date or
such Addition Cut-Off Date, as the case may be;
(iii) each Receivable conveyed to the Trustee
by such Transferor has been conveyed to the Trust free and clear
of any Lien of any Person claiming through or under such
Transferor or any of its Affiliates (other than Liens permitted
under subsection 2.07(b)) and in compliance with all
Requirements of Law applicable to such Transferor;
(iv) 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 conveyance by
such Transferor of Receivables to the Trust have been duly
obtained, effected or given and are in full force and effect;
(v) either this Agreement or, in the case of
Additional Accounts, the related Assignment constitutes an
absolute sale, transfer and assignment to the Trustee of all
right, title and interest of such Transferor in the Receivables
conveyed to the Trustee by such Transferor and the proceeds
thereof or, if this Agreement or, in the case of Additional
Accounts, the related Assignment does not constitute an absolute
sale of such property, it constitutes a grant by such Transferor
of a "security interest" (as defined in the UCC) in such
property to the Trustee, which, in the case of existing
Receivables and the proceeds thereof, is enforceable upon
execution and delivery of this Agreement or, with respect to
then-existing Receivables in Additional Accounts, as of the
applicable Addition Date, and which will be enforceable with
respect to such Receivables hereafter and thereafter created and
the proceeds thereof upon such creation. Upon the filing of the
financing statements pursuant to Sections 2.01 and 2.09 and, in
the case of Receivables hereafter created and the proceeds
thereof, upon the creation thereof, the Trustee shall have a
first priority perfected security or ownership interest in such
property and proceeds except for (x) Liens permitted under
subsection 2.07(b), (y) the interests of the Transferor as
Holder of the Transferor Certificate or any Supplemental
Certificate, and (z) the
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Transferor's right, if any, to interest accruing on and
investment earnings, if any, in respect of the Collection
Account or any Series Account, as provided in this Agreement or
the related Supplement; provided, however, that such Transferor
makes no representation or warranty with respect to the effect
of Section 9-306 of the UCC on the rights of the Trustee to
proceeds held by such Transferor;
(vi) except as otherwise expressly provided
in this Agreement or any Supplement, neither such Transferor nor
any Person claiming through or under such Transferor has any
claim to or interest in the Collection Account, the Excess
Funding Account, any Series Account or any Series Enhancement;
(vii) on the Initial Cut-Off Date, each
Initial Account specified in Schedule 1 with respect to such
Transferor is an Eligible Account and, on the applicable
Addition Cut-Off Date, each related Additional Account specified
in Schedule 1 with respect to such Transferor is an Eligible
Account;
(viii) on the Initial Cut-Off Date, each
Receivable then existing and conveyed to the Trustee by such
Transferor is an Eligible Receivable and, on the applicable
Addition Cut-Off Date, each Receivable contained in any related
Additional Account and conveyed to the Trustee by such
Transferor is an Eligible Receivable;
(ix) as of the date of the creation of any
new Receivable in an Account specified in a Receivables Transfer
Agreement with such Transferor, such Receivable is an Eligible
Receivable; and
(x) no selection procedures believed by such
Transferor to be materially adverse to the interests of the
Investor Certificateholders have been used in selecting the
Initial Accounts or Additional Accounts.
(b) Notice of Breach. The representations and warranties of
each Transferor set forth in this Section 2.04 shall survive the transfer and
assignment by such Transferor of Receivables to the Trustee. Upon discovery by
such Transferor, the Servicer or the Trustee of a breach of any of the
representations and warranties by such Transferor set forth in this Section
2.04, the party discovering such breach shall give prompt written notice to the
others. Such Transferor agrees to cooperate with the Servicer and the Trustee in
attempting to cure any such breach. For purposes of the representations and
warranties set forth in this Section 2.04, each reference to a Supplement shall
be deemed to refer only to those Supplements in effect as of the date of the
relevant representations or warranties.
2.5. Reassignment of Ineligible Receivables.
(a) Reassignment of Receivables. In the event (i) any
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representation or warranty contained in subsection 2.04(a)(ii), (iii), (iv),
(vii), (viii), (ix) or (x) is not true and correct in any material respect as of
the date specified in the applicable subsection with respect to any Account or
the related Receivables transferred to the Trust by such Transferor and as a
result of such breach any Receivables in the related Account become Defaulted
Receivables or the Trust's rights in, to or under such Receivables or the
proceeds of such Receivables are impaired or such proceeds are not available for
any reason to the Trust free and clear of any Lien, unless cured within 60 days
(or such longer period, not in excess of 150 days, as may be agreed to by the
Trustee) after the earlier to occur of the discovery thereof by such Transferor
or receipt by such Transferor of notice thereof given by the Trustee, or (ii) it
is so provided in subsection 2.07(a) with respect to any Receivables transferred
to the Trust by such Transferor, then such Transferor shall accept reassignment
of all Receivables in the related Account ("Ineligible Receivables") on the
terms and conditions set forth in paragraph (b) below; provided, however, that
such Receivables will not be deemed to be Ineligible Receivables and will not be
reassigned to such Transferor if, on any day prior to the end of such 60-day or
longer period, (x) either (a) in the case of an event described in clause (i)
above the relevant representation and warranty shall be true and correct in all
material respects as if made on such day or (b) in the case of an event
described in clause (ii) above the circumstances causing such Receivable to
become an Ineligible Receivable shall no longer exist and (y) such Transferor
shall have delivered to the Trustee an Officer's Certificate describing the
nature of such breach and the manner in which the relevant representation and
warranty became true and correct. The Transferor will notify the Rating Agencies
of any such breach that is not cured within the time periods specified above.
(b) Price of Reassignment. The Servicer shall deduct the
portion of the Ineligible Receivables reassigned to each Transferor which are
Principal Receivables from the aggregate amount of Principal Receivables used to
calculate the Transferor Amount, the Series Percentages and any other percentage
used to allocate within or among Series that is applicable to any Series. 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 12:00 noon, New York City time,
on the first Distribution Date following the Monthly Period in which such
reassignment obligation arises, the relevant Transferor shall make a deposit
into the Excess Funding Account in immediately available funds in an amount
equal to the amount by which the Transferor Amount would be reduced below the
Required Transferor Amount (up to the amount of such Principal Receivables).
Upon the deposit, if any, required to be made to the Excess
Funding Account as provided in this Section and the reassignment of Ineligible
Receivables, the Trustee, on behalf of the Trust, shall automatically and
without further action be deemed to transfer, assign, set over and otherwise
convey to the relevant Transferor or its designee, without recourse,
representation or warranty, all the right, title and interest of the Trust in
and to such Ineligible Receivables, all monies due or to become due and all
amounts received with respect thereto and all proceeds thereof. The Trustee
shall execute such documents and instruments of transfer or assignment and take
such other actions as shall reasonably be requested by the relevant Transferor
to effect the conveyance of Ineligible Receivables pursuant to this Section. The
obligation of each Transferor
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to accept reassignment of any Ineligible Receivables, and to make the deposits,
if any, required to be made to the Excess Funding Account as provided in this
Section, shall constitute the sole remedy respecting the event giving rise to
such obligation available to Certificateholders (or the Trustee on behalf of the
Certificateholders).
2.6. Reassignment of Receivables in Trust Portfolio. In the
event any representation or warranty of a Transferor set forth in subsection
2.03(a) or (c) or subsection 2.04(a)(i), (v) or (vi) is not true and correct in
any material respect and such breach has a material adverse effect on the
Certificateholders' Interest in the Receivables transferred to the Trust by such
Transferor, then either the Trustee or the Holders of Investor Certificates
evidencing more than 50% of the Aggregate Invested Amount, by notice then given
to such Transferor and the Servicer (and to the Trustee if given by the Investor
Certificateholders), may direct such Transferor to accept a reassignment of the
Receivables transferred to the Trust by such Transferor if such breach and any
material adverse effect caused by such breach is not cured within 60 days of
such notice (or within such longer period, not in excess of 150 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 will not be reassigned to such Transferor if, on
any day prior to the end of such 60-day or longer period (i) the relevant
representation and warranty shall be true and correct in all material respects
as if made on such day and (ii) such Transferor shall have delivered to the
Trustee a certificate of an authorized officer describing the nature of such
breach and the manner in which the relevant representation and warranty became
true and correct. The Transferor will notify the Rating Agencies of any such
breach that is not cured within the time periods specified above.
The relevant Transferor shall deposit in the Collection Account
in immediately available funds not later than 12:00 noon, New York City time, on
the first Distribution Date following the Monthly Period in which such
reassignment obligation arises, in payment for such reassignment, an amount
equal to the sum of the amounts specified therefor with respect to each
outstanding Series in the related Supplement. Notwithstanding anything to the
contrary in this Agreement, such amounts shall be distributed on such
Distribution Date in accordance with Article IV and the terms of each
Supplement.
Upon the deposit, if any, required to be made to the Collection
Account as provided in this Section and the reassignment of the Receivables, the
Trustee, on behalf of the Trust, shall automatically and without further action
be deemed to transfer, assign, set over and otherwise convey to the relevant
Transferor or its designee, without recourse, representation or warranty, all
the right, title and interest of the Trust in and to such Receivables, all
monies due or to become due and all amounts received with respect thereto and
all proceeds thereof. The Trustee shall execute such documents and instruments
of transfer or assignment and take such other actions as shall reasonably be
requested by the relevant Transferor to effect the conveyance of such
Receivables pursuant to this Section. The obligation of each Transferor to
accept reassignment of any Receivables, and to make the deposits, if any,
required to be made to the Collection Account as provided in this section, shall
constitute the sole remedy respecting the event giving rise to such obligation
available to Certificateholders (or the Trustee on behalf of the
Certificateholders) or any Series Enhancer.
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2.7. Covenants of the Transferor. Each Transferor hereby
covenants as follows:
(a) Receivables to be Accounts or General Intangibles.
Except in connection with the enforcement or collection of a Receivable, such
Transferor will take no action to cause any Receivable transferred by it to the
Trust to be evidenced by any instrument or chattel paper (as defined in the UCC)
and, if any such Receivable is so evidenced, it shall be deemed to be an
Ineligible Receivable in accordance with subsection 2.05(a) and shall be
reassigned to such Transferor in accordance with subsection 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 on any
Receivable transferred by it to the Trust, whether now existing or hereafter
created, or any interest therein; such Transferor will immediately notify the
Trustee of the existence of any Lien on any such Receivable; and such Transferor
shall defend the right, title and interest of the Trust in, to and under such
Receivables, whether now existing or hereafter created, against all claims of
third parties claiming through or under such Transferor; provided, however, that
nothing in this subsection 2.07(b) shall prevent or be deemed to prohibit such
Transferor from suffering to exist upon any of the Receivables transferred by it
to the Trust any Liens for municipal or other local taxes if such taxes shall
not at the time be due and payable or if such Transferor shall currently be
contesting the validity thereof in good faith by appropriate proceedings and
shall have set aside on its books adequate reserves with respect thereto.
(c) Transferor's Interest. Except for the conveyances
hereunder, in connection with any transaction permitted by Section 7.02 and as
provided in Sections 2.09(e) and 6.03, such Transferor agrees not to transfer,
assign, exchange or otherwise convey or pledge, hypothecate or otherwise grant a
security interest in the Transferor's Interest represented by the Transferor
Certificate or any Supplemental Certificate and any such attempted transfer,
assignment, exchange, conveyance, pledge, hypothecation or grant shall be void.
(d) Delivery of Collections. In the event that such
Transferor receives Collections, such Transferor agrees to pay the Servicer all
such Collections as soon as practicable after receipt thereof but in no event
later than two Business Days after the Date of Processing by the Transferor.
(e) Notice of Liens. Such Transferor shall notify the
Trustee promptly after becoming aware of any Lien on any Receivable other than
the conveyances hereunder and under the Receivables Transfer Agreements or Liens
permitted under subsection 2.07(b).
(f) Other Indebtedness. Such Transferor shall not incur any
additional debt, unless the Rating Agency is provided with notice no later than
the fifth Business Day prior to the incurrence of such additional debt (unless
the right to such notice is waived by the Rating Agency) and the Rating Agency
Condition is satisfied with respect to the incurrence of such debt.
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(g) Separate Corporate Existence. Such Transferor shall:
(i) Maintain in full effect its existence,
rights and franchises as a corporation under the laws of the
state of its 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 and any Receivables
Transfer Agreement to which it is a party and each other
instrument or agreement necessary or appropriate to proper
administration hereof and permit and effectuate the transactions
contemplated hereby.
(ii) Maintain its own bank or securities
account or accounts, separate from those of any Affiliate of
such Transferor, with commercial financial institutions. The
funds and other property 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 Transfer Agreement to which it is a
party, the funds and other property of such Transferor shall not
be commingled with those of any Affiliate of such Transferor.
(iii) Ensure that, to the extent that it
shares the same officers or other employees as any of its
stockholders or Affiliates, the salaries of and the expenses
related to providing benefits to such officers and other
employees shall be fairly allocated among such entities, and
each such entity shall bear its fair share of the salary and
benefit costs associated with all such common officers and
employees.
(iv) Ensure that, to the extent that it
jointly contracts with any of its stockholders or Affiliates to
do business with vendors or service providers or to share
overhead expenses, the costs incurred in so doing shall be
allocated fairly among such entities, and each such entity shall
bear its fair share of such costs. To the extent that 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 Affiliates
shall be only on an arm's-length basis and shall receive the
approval of such Transferor's Board of Directors 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 stockholders
and Affiliates. To the extent that such Transferor and any of
its stockholders or Affiliates have offices in
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contiguous space, there shall be fair and appropriate allocation
of overhead costs 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 and observe all
necessary, appropriate and customary corporate formalities,
including, but not limited to, holding all regular and special
stockholders' and directors' meetings appropriate to authorize
all corporate action, keeping separate and accurate minutes of
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' and directors' meetings shall be held at
least annually.
(vii) Ensure that its Board of Directors shall
at all times include at least one Independent Director (for
purposes hereof, "Independent Director" shall mean a duly
appointed director of such Transferor who shall not have been,
at the time of such appointment or at any time in the preceding
five years, (i) a direct or indirect legal or beneficial owner
(beyond a nominal amount) of such Transferor or more than 5% of
the outstanding voting stock of any of its Affiliates, (ii) a
creditor, supplier, employee, officer, director, family member,
manager or contractor of such Transferor or any of its
Affiliates, or (iii) a person who controls (whether directly,
indirectly or otherwise) such Transferor or any of its
Affiliates or any creditor, supplier, employee, officer,
director, manager or contractor of such Transferor or any of its
Affiliates).
(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 or director of an Affiliate of
such Transferor) and shall not be dictated by an Affiliate of
such Transferor.
(ix) Act solely in its own corporate name and
through its own authorized officers and agents, and no Affiliate
of such Transferor shall be appointed to act as agent of such
Transferor, except as expressly contemplated by this Agreement
or any Receivables Transfer Agreement to which it is a party.
The Transferor shall at all times use its own stationery.
(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.
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(xi) Other than organizational expenses and
as expressly provided herein, pay all expenses, indebtedness and
other obligations incurred by it.
(xii) Not enter into any guaranty, or
otherwise become liable, with respect to any obligation of any
Affiliate of such Transferor nor shall such Transferor make any
loans to any Person.
(xiii) Ensure that any financial reports
required of such Transferor shall be issued separately from, but
may be consolidated with, any reports prepared for any of its
Affiliates so long as such consolidated reports contain
footnotes describing the effect of the transactions between the
Transferor and such Affiliate and also state that the assets of
the Transferor are not available to pay creditors of the
Affiliate.
(xiv) Ensure that at all times it is
adequately capitalized to engage in the transactions
contemplated in its Certificate of Incorporation.
(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 required to be included as
Collections of Finance Charge Receivables with respect to such Monthly Period.
Not later than 3:00 p.m., New York City time, on the related Transfer Date, the
Transferor shall deposit 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.
2.8. Covenants of Each Transferor with Respect to
Receivables Transfer Agreements. Each Transferor hereby covenants that it will
at all times enforce the covenants and agreements of the Account Owners under
the terms of the Receivables Transfer Agreements to which it is a party,
including covenants to the effect set forth below:
(a) Periodic Finance Charges and Other Fees. (i) Except (x)
as otherwise required by any Requirements of Law, or (y) as is deemed by the
Account Owner to be necessary in order for it to maintain its credit card
business on a competitive basis based on a good faith assessment by it of the
nature of its competition in the credit card business, it shall not at any time
reduce the annual percentage rate of the Periodic Finance Charges assessed on
the Receivables transferred by it to the Transferor or other fees charged on any
of the Accounts owned by it if, as a result of any such reduction, either (i)
such Account Owner's reasonable expectation is that such reduction will cause a
Pay Out Event or Reinvestment Event to occur or (ii) such reduction is not also
applied to any comparable segments of consumer revolving credit card accounts
owned by such Account Owner which have characteristics the same as, or
substantially similar to, such Accounts.
(b) Cardholder Agreements and Credit Card Guidelines. Such
Account Owner shall comply with and perform its obligations under the Cardholder
Agreements relating to the Accounts owned by it and the Credit Card Guidelines
and all applicable rules and regulations of VISA except insofar as any failure
so to comply or perform would not materially and adversely affect the rights of
the Trust or the Certificateholders hereunder. Subject to compliance with all
Requirements of Law and paragraph (a) above, such Account Owner may
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change the terms and provisions of the Cardholder Agreements or the Credit Card
Guidelines with respect to any of the Accounts owned by it in any respect
(including the calculation of the amount or the timing of charge-offs and the
Periodic Finance Charges and other fees to be assessed thereon) only if in the
reasonable judgment of such Account Owner such change is made applicable to any
comparable segment of the consumer revolving credit card accounts owned by such
Account Owner which have characteristics the same as, or substantially similar
to, such Accounts. Notwithstanding the above, unless required by Requirements of
Law or as permitted by Section 2.08(a), no Account Owner will take any action
with respect to the applicable Credit Card Agreements or the applicable Credit
Card Guidelines, which, at the time of such action, the Account Owner reasonably
believes will have a material adverse effect on the Investor Certificateholders.
(c) VISA. Such Account Owner, to the extent applicable to
Accounts owned or serviced by such Account Owner, shall use its best efforts to
remain, either directly or indirectly, a member in good standing of the VISA
system and any other similar entity's or organization's system relating to any
other type of consumer revolving credit card accounts included as Accounts.
Each Transferor further covenants that it will not enter into
any amendments to a Receivables Transfer Agreement or enter into a new
Receivables Transfer Agreement unless the Rating Agency Condition has been
satisfied.
2.9. Addition of Accounts.
(a) Additional Accounts.
(i) Required Additions. If on any
Determination Date, as of the close of business on the last
Business Day of the preceding Monthly Period, the Transferor
Amount is less than the Required Transferor Amount, the
Transferor shall on or prior to the close of business on the
10th Business Day following such Determination Date (the
"Required Designation Date"), unless the Transferor Amount
exceeds the Required Transferor Amount as of the close of
business on any day after the last Business Day of such Monthly
Period and prior to the Required Designation Date, cause to be
designated additional Eligible Accounts to be included as
Accounts as of the Required Designation Date or any earlier date
in a sufficient amount such that, after giving effect to such
addition, the Transferor Amount as of the close of business on
the applicable Addition Date is at least equal to the Required
Transferor Amount on such date. The failure of any condition set
forth in paragraph (c) below, as the case may be, shall not
relieve the Transferor of its obligation pursuant to this
paragraph; provided, however, that the failure of the Transferor
to transfer Receivables to the Trust as provided in this clause
(i) solely as a result of the unavailability of a sufficient
amount of Eligible Receivables shall not constitute a breach of
this Agreement; provided further, that any such failure which
has not been timely cured may nevertheless result in the
occurrence
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of a Pay Out Event or Reimbursement Event.
(ii) Optional Participation Interests. In
lieu of, or in addition to, designating Additional Accounts
pursuant to clause (i) above, the Transferor may, subject to the
conditions specified in paragraph (c) below, convey to the Trust
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 thereon ("Participation
Interests"). The addition of Participation Interests in the
Trust pursuant to this paragraph (a) or paragraph (b) below
shall be effected by a Participation Interest Supplement, dated
the applicable Addition Date and entered into pursuant to
subsection 13.01(a).
(b) Restricted Additions. Each Transferor may from time to
time, at its sole discretion, subject to the conditions specified below,
designate additional Eligible Accounts to be included as Accounts or
Participation Interests to be included as Trust Assets, in either case as of the
applicable Addition Date.
(c) Conditions to Required Additions, Optional Participation
Interests and Restricted Additions. On the Addition Date with respect to any
Additional Accounts or Participation Interests designated pursuant to subsection
2.09(a) or (b), the Transferor shall transfer the Receivables in such Additional
Accounts (and such Additional Accounts shall be deemed to be Accounts for
purposes of this Agreement) or shall transfer such Participation Interests, in
each case as of the close of business on the applicable Addition Date, subject
to the satisfaction of the following conditions:
(i) on or before the tenth Business Day
immediately preceding the Addition Date, each Transferor which
owns any such Additional Account or is transferring any such
Participation Interest to the Trust (a "Participating
Transferor") shall have given the Trustee and each Rating Agency
written notice that the Additional Accounts or Participation
Interests will be included and specifying the applicable
Addition Date, the Addition Cut-Off Date, and the approximate
number of accounts expected to be added and the approximate
aggregate balances expected to be outstanding in the accounts to
be added (in the case of Additional Accounts);
(ii) in the case of Additional Accounts, the
Participating Transferor shall have delivered to the Trustee
copies of UCC-1 financing statements covering such Additional
Accounts, if necessary to perfect the Trust's interest in the
Receivables arising therein;
(iii) as of each of the Addition Cut-Off Date
and the Addition Date, no Insolvency Event with respect to the
Participating Transferor or the Account Owner of the Additional
Accounts shall have occurred nor shall the transfer of the
Receivables arising in the Additional
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Accounts or of the Participation Interests to the Trust have
been made in contemplation of the occurrence thereof;
(iv) except in the case of an Addition
pursuant to subsection 2.09(a)(i), the Rating Agency Condition
shall have been satisfied;
(v) each Participating Transferor shall have
delivered to the Trustee an Officer's Certificate, dated the
Addition Date, stating that (x) in the case of Additional
Accounts, as of the applicable Addition Cut-Off Date, the
Additional Accounts are all Eligible Accounts, (y) to the extent
applicable, the conditions set forth in clauses (ii) through
(iv) above and (viii) below have been satisfied and (z) such
Participating Transferor reasonably believes that the addition
by such Participating Transferor of the Receivables arising in
the Additional Accounts or of the Participation Interests to the
Trust will not, based on the facts known to such officer at the
time of such addition, then or thereafter result in an Adverse
Effect with respect to any Series;
(vi) the Participating Transferors shall have
delivered to the Trustee and each Rating Agency an Opinion of
Counsel, dated the Addition Date, in accordance with subsection
13.02(d);
(vii) in the case of designation of Additional
Accounts, Participating Transferors shall have delivered to the
Trustee (x) the computer file or microfiche list required to be
delivered pursuant to Section 2.01 with respect to such
Additional Accounts and (y) a duly executed, written assignment
(including an acceptance by the Trustee for the benefit of the
Certificateholders), substantially in the form of Exhibit B (the
"Assignment"); and
(viii) to the extent required by Section 4.03,
the Servicer shall have deposited in the Collection Account all
Collections with respect to such Automatic Additional Accounts
since the Addition Cut-off Date.
(d) Automatic Account Additions.
(i) Each Transferor may from time to time,
at its sole discretion, subject to and in compliance with the
limitations specified below, designate Eligible Accounts
("Automatic Additional Accounts") to be included as Accounts as
of the applicable Addition Date. For purposes of this paragraph,
Eligible Accounts shall be deemed to include only consumer
revolving credit card accounts of the same nature as those
included as Initial Accounts.
(ii) Within 30 days after the Addition Date
with respect to any Automatic Additional Accounts, the relevant
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Transferor shall have delivered to the Trustee and each Rating
Agency an Opinion of Counsel in accordance with subsection
13.02(d), with respect to the Automatic Additional Accounts
included as Accounts on such Addition Date, confirming the
validity and perfection of the transfer of such Automatic
Additional Accounts. If such Opinion of Counsel with respect to
any Automatic Additional Accounts is not so received, the
ability of such Transferor to designate Automatic Additional
Accounts will be suspended until such time as each Rating Agency
otherwise consents in writing. If such Transferor is unable to
deliver an Opinion of Counsel with respect to any Automatic
Additional Account, such inability shall be deemed to be a
breach of the representation in subsection 2.04(a)(viii) with
respect to the Receivables in such Automatic Additional Account
for purposes of Section 2.05; provided, that the cure period for
such breach shall not exceed 30 days.
(iii) Each Participating Transferor shall have
delivered to the Trustee copies of UCC-1 financing statements
covering such Automatic Additional Accounts, if necessary to
perfect the Trust's interest in the Receivables arising therein.
(iv) As of each of the Addition Cut-Off Date
and the Addition Date, no Insolvency Event with respect to any
Participating Transferor or the Account Owner of the Additional
Accounts shall have occurred nor shall the transfer of the
Receivables arising in the Automatic Additional Accounts to the
Trust have been made in contemplation of the occurrence thereof.
(v) Each Participating Transferor shall have
delivered to the Trustee an Officer's Certificate, dated the
Addition Date, stating that (x) as of the applicable Addition
Cut-Off Date, such Automatic Additional Accounts are all
Eligible Accounts, (y) to the extent applicable, the conditions
set forth in clauses (ii) through (v) above have been satisfied
and (z) such Participating Transferor reasonably believes that
the addition by such Participating Transferor of the Receivables
arising in such Automatic Additional Accounts will not, based on
the facts known to such officer at the time of such addition,
then or thereafter result in an Adverse Effect with respect to
any Series.
(vi) The Participating Transferor shall have
delivered to the Trustee (x) the computer file or microfiche
list required to be delivered pursuant to Section 2.01 with
respect to such Automatic Additional Accounts and (y) a duly
executed Assignment.
(e) Additional Transferors. The Transferor may designate
Affiliates of NextCard, Inc. to be included as Transferors ("Additional
Transferors") under this Agreement by an amendment hereto pursuant to subsection
13.01(a) and, in connection with such designation, the Transferor shall
surrender the Transferor Certificate to the Trustee in exchange for a newly
issued Transferor Certificate modified to reflect such Additional
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Transferor's interest in the Transferor's Interest; provided, however, that
prior to any such designation and exchange the conditions set forth in
subsection 6.03(c) or 6.03(d), as applicable, shall have been satisfied with
respect thereto.
2.10. Removal of Accounts and Participation Interests. On any
day of any Monthly Period each Transferor shall have the right to designate
certain Accounts to be removed as Accounts and to require the reassignment to it
or its designee of all the Trust's right, title and interest in, to and under
the Receivables then existing and thereafter created in such Removed Accounts,
all monies due or to become due and all amounts received with respect thereto
and all proceeds thereof in or with respect to such Accounts or Participation
Interests conveyed to the Trust by a Transferor. The removal of Accounts
specified for removal (the "Removed Accounts") and Participation Interests
specified for removal ("Removed Participation Interests") are subject to the
satisfaction of the following conditions:
(a) on or before the fifth Business Day immediately
preceding the Removal Date (the "Removal Notice Date"), such Transferor shall
have given the Trustee, the Servicer, each Rating Agency and any Series Enhancer
written notice of such removal, specifying the date for removal of the Removed
Accounts or Participation Interests (the "Removal Date");
(b) with respect to Removed Accounts, on or prior to the
Removal Date, such Transferor shall have amended Schedule 1 by delivering to the
Trustee a computer file or microfiche list containing a true and complete list
of the Removed Accounts specifying for each such Account, as of the last day of
the Monthly Period preceding the Removal Notice Date (the "Removal Cut-Off
Date"), its account number, the aggregate amount outstanding in such Account and
the aggregate amount of Principal Receivables outstanding in such Account;
(c) with respect to Removed Accounts, such Transferor shall
have represented and warranted as of the Removal Date that the list of Removed
Accounts delivered pursuant to paragraph (b) above, as of the Removal Cut-Off
Date, is true and complete in all material respects;
(d) the Rating Agency Condition shall have been satisfied
with respect to such removal;
(e) such Transferor shall have delivered to the Trustee an
Officer's Certificate, dated the Removal Date, to the effect that such
Transferor reasonably believes that (i) such removal will not, based on the
facts known to such officer at the time of such certification, then or
thereafter cause an Adverse Effect to occur with respect to any Series, (ii) no
selection procedure believed by such Transferor to be materially adverse to the
interests of the Investor Certificateholders of any Series as of the Removal
Date have been used in selecting the Removed Accounts or Participation
Interests, (iii) to the extent applicable, the conditions set forth in
subsections (c), (d) and (f) of this Section 2.10 have been satisfied and (iv)
no selection procedure was used which was intended to include a
disproportionately higher level of Defaulted Receivables in the Removed Accounts
than exist in the Accounts and the removal of such Accounts is not for the
intended purpose of mitigating losses to the Trust; and
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(f) as of the Removal Cut-Off Date, no more than 10% of the
Receivables outstanding are more than thirty days Contractually Delinquent.
Upon satisfaction of the above conditions, the Trustee shall
execute and deliver to the relevant Transferor or its designee a written
reassignment in substantially the form of Exhibit C (the "Reassignment") and
shall, without further action, be deemed to transfer, assign, set over and
otherwise convey to such Transferor or its designee, effective as of the Removal
Date, without recourse, representation or warranty, all the right, title and
interest of the Trust in and to the Participation Interests or Receivables
arising in the Removed Accounts, all monies due and to become due and all
amounts received with respect thereto and all proceeds thereof. In addition, the
Trustee shall execute such other documents and instruments of transfer or
assignment and take such other actions as shall reasonably be requested by the
relevant Transferor to effect the conveyance of Participation Interests or
Receivables pursuant to this Section 2.10.
2.11. Account Allocations. In the event that any Transferor
is unable for any reason to transfer Receivables to the Trust in accordance with
the provisions of this Agreement, including by reason of the application of the
provisions of Section 9.02 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 Trust, after the date of such inability, all Collections of Receivables
transferred to the Trust by such Transferor, including Collections of
Receivables transferred to the Trust by such Transferor 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 Trust by such Transferor
in the Trust on such date), (b) such Transferor and the Servicer agree that such
amounts will be applied as Collections in accordance with Article IV and the
terms of each 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 Trust which are written
off as uncollectible in accordance with this Agreement shall continue to be
allocated in accordance with Article IV and the terms of each 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 Trust until the Trust shall have been allocated and paid
Collections in an amount equal to the aggregate amount of Principal Receivables
in the Trust as of the date of the occurrence of such event. If such Transferor
or the Servicer is 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 and the terms of each Supplement. The
parties hereto agree that Finance Charge Receivables, whenever created, accrued
in respect of Principal Receivables which have been conveyed to the Trust shall
continue to be a part of the Trust notwithstanding any cessation of the transfer
of additional Principal Receivables to the Trust and Collections with respect
thereto shall continue to be allocated and paid in accordance with Article IV
and the
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terms of each Supplement.
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
increasing, 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 to the Servicer, the Trustee and any Rating Agency 30 days' prior
written notice of the Discount Option Date, and such designation shall become
effective on the Discount Option Date (i) unless such designation in the
reasonable belief of the Transferor would cause a Pay Out Event or Reinvestment
Event with respect to any Series to occur, or an event which, with notice or
lapse of time or both, would constitute a Pay Out Event or Reinvestment Event
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 shall be treated as Collections of Finance Charge
Receivables.
ARTICLE III
Administration and Servicing
of Receivables
3.1. Acceptance of Appointment and Other Matters Relating to
the Servicer.
(a) NextCard, Inc. agrees to act as the Servicer under this
Agreement and the Certificateholders by their acceptance of Certificates consent
to NextCard, Inc. acting as Servicer.
(b) The Servicer shall service and administer the
Receivables, shall collect payments due under the Receivables 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. 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. Without
limiting the generality of the foregoing, subject to Section 10.01 and provided
NextCard, Inc. is the Servicer, the Servicer or its designee is hereby
authorized and empowered (i) unless such power and authority is revoked by the
Trustee as a result of the occurrence of a Servicer Default, to make withdrawals
and payments or to instruct the Trustee in writing to make withdrawals and
payments from the Collection Account, the Excess Funding Account and any Series
Account, as set forth in this Agreement or any Supplement, and (ii) to take any
action required or permitted under any Series
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Enhancement, as set forth in this Agreement or any Supplement. Without limiting
the generality of the foregoing and subject to Section 10.01, the Servicer or
its designee is hereby authorized and empowered 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 Trust as may be necessary or advisable to comply with any Federal or
state securities laws or reporting requirements. The Trustee shall furnish the
Servicer with any powers of attorney or other documents necessary or appropriate
to enable the Servicer to carry out its servicing and administrative duties
hereunder.
(c) The Servicer shall not be obligated to use separate
servicing procedures, offices, employees or accounts for servicing the
Receivables from the procedures, offices, employees and accounts used by the
Servicer in connection with servicing other 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
Cardholder Agreements relating to the Accounts and the Credit Card Guidelines
and all applicable rules and regulations of VISA and any other similar entity or
organization relating to any other type of consumer revolving credit card
accounts included as Accounts, except insofar as any failure to so comply or
perform would not materially and adversely affect the Trust or the Investor
Certificateholders.
(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 Trust and the servicing activities hereunder including
expenses related to enforcement of the Receivables, fees and disbursements of
the Trustee, any Paying Agent and any Transfer Agent and Registrar and
independent accountants and all other fees and expenses, including the costs of
filing UCC financing and continuation statements, any stamp, documentary,
excise, property (whether on real, personal or intangible property) or any
similar tax levied on the Trust or the Trust's assets that are not expressly
stated in this Agreement to be payable by the Trust or the Transferor (other
than Federal, state, local and foreign income, franchise and other taxes, if
any, or any interest or penalties with respect thereto, assessed on the Trust).
(f) The Servicer agrees that upon a request by the
Transferor it will use its reasonable best efforts to obtain and maintain the
listing of the Investor Certificates of any Series or Class on any specified
security exchange. If any such request is made, the Servicer shall give notice
to the Transferor and the Trustee on the date on which such Investor
Certificates are approved for such listing and within three Business Days
following receipt of notice by the Servicer of any actual, proposed or
contemplated delisting of such Investor Certificates by any such securities
exchange. The Trustee or the Servicer, each in its sole discretion, may
terminate any listing on any such securities exchange at any time subject to the
notice requirements set forth in the preceding sentence.
3.2. Servicing Compensation. As full compensation for its
servicing activities hereunder and as reimbursement for any expense incurred by
it in
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connection therewith, 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
Invested Amount (or such other amount as specified in the related 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 (i) the Certificateholders'
Interest of a particular Series with respect to any Monthly Period (the "Monthly
Servicing Fee") and (ii) the Enhancement Investor Amount, if any, of a
particular Series with respect to any Monthly Period will each be determined in
accordance with the relevant Supplement. The portion of the Servicing Fee with
respect to any Monthly Period not so paid by the Certificateholders' Interest or
the Enhancement Investor Amount, if any, of a particular Series shall be paid by
the Holders of the Transferor Certificates on the related Distribution Date and
in no event shall the Trust, the Trustee, the Investor Certificateholders 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.
3.3. Representations, Warranties and Covenants of the
Servicer. NextCard, Inc., as initial Servicer, hereby makes, and any Successor
Servicer by its appointment hereunder shall make, on each Closing Date (and on
the date of any such appointment), the following representations, warranties and
covenants:
(a) Organization and Good Standing. The Servicer is duly
organized, validly existing and in good standing under the laws of the
jurisdiction governing its creation, and has full corporate power and authority
to execute, deliver and perform its obligations under this Agreement and each
Supplement and, in all material respects, to own or lease its properties and
conduct its business as such properties are presently owned or leased and as
such business is presently conducted.
(b) Due Qualification. The Servicer is duly qualified to do
business and is in good standing as a foreign corporation (or is exempt from
such requirements), and has obtained all necessary licenses and approvals in
each jurisdiction in which the performance of its obligations pursuant to this
Agreement or under any Supplement requires such licenses and approvals and shall
maintain such licenses and approvals except to the extent that such failure
would not have a material adverse effect on the interests of the Investor
Certificateholders hereunder or under any Supplement.
(c) Due Authorization. The execution, delivery and
performance of this Agreement and each Supplement, 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 corporate action on
the part of the Servicer and this Agreement and each Supplement will remain,
from the time of its execution, an official record of the Servicer.
(d) Binding Obligation. This Agreement and each Supplement
constitutes a legal, valid and binding obligation of the Servicer, enforceable
in accordance with
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its terms, except as 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).
(e) No Violation. The execution and delivery of this
Agreement and each Supplement by the Servicer, the performance of the
transactions contemplated by this Agreement and each Supplement and the
fulfillment of the terms hereof and thereof applicable to the Servicer will not
conflict with, violate, 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
default under, any Requirement of Law applicable to the Servicer or any
indenture, contract, agreement, mortgage, deed of trust or other instrument to
which the Servicer is a party or by which it or any of its properties are bound.
(f) No Proceedings. There are no proceedings or
investigations pending or, to the best knowledge of the Servicer, threatened
against the Servicer before any court, regulatory body, administrative agency or
other tribunal or governmental instrumentality seeking to prevent the issuance
of the Certificates or the consummation of any of the transactions contemplated
by this Agreement or any Supplement, seeking any determination or ruling that,
in the reasonable judgment of the Servicer, would materially and adversely
affect the performance by the Servicer of its obligations under this Agreement
or any Supplement, or seeking any determination or ruling that, in the
reasonable judgment of the Servicer, would materially and adversely affect the
validity or enforceability of this Agreement or any Supplement.
(g) Compliance with Requirements of Law. The Servicer shall
duly satisfy all obligations on its part to be fulfilled under or in connection
with the Receivables and the related Accounts, will maintain in effect all
qualifications required under Requirements of Law in order to service the
Receivables and the related Accounts properly and will comply in all material
respects with all other Requirements of Law in connection with servicing the
Receivables and the related Accounts, the failure to comply with which would
have a material adverse effect on the interests of the Certificateholders.
(h) No Rescission or Cancellation. Subject to Section 3.09,
the Servicer shall not permit any rescission or cancellation of a Receivable
except as ordered by a court of competent jurisdiction or other Governmental
Authority or in the ordinary course of its business and in accordance with the
Credit Card Guidelines.
(i) Protection of Certificateholders' Rights. The Servicer
shall take no action which, nor omit to take any action the omission of which,
would substantially impair the rights of Certificateholders in any Receivable or
Account, nor shall it, except in the ordinary course of its business and in
accordance with the Credit Card Guidelines, reschedule, revise or defer
Collections due on the Receivables.
(j) Receivables Not To Be Evidenced by Promissory Notes.
Except in connection with its enforcement or collection of a Receivable, the
Servicer will take no action to cause any Receivable to be evidenced by any
instrument (as defined in the UCC) and, if
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any Receivable is so evidenced as a result of the actions of the Servicer, it
shall be reassigned or assigned to the Servicer as provided in this Section.
(k) All Consents Required. All approvals, authorizations,
consents, orders or other actions of any Person or of any governmental body or
official required in connection with the execution and delivery by the Servicer
of this Agreement and each Supplement, the performance by the Servicer of the
transactions contemplated by this Agreement and each Supplement and the
fulfillment by the Servicer of the terms hereof and thereof, have been obtained,
except such approvals, authorizations, consents, orders or other actions which
if not obtained, effected or given will not, individually or in the aggregate,
have any material adverse effect upon the execution and delivery by the Servicer
of this Agreement or any Supplement or the performance by the Servicer of the
transactions contemplated by this Agreement and each Supplement and the
fulfillment by the Servicer of the terms hereof and thereof; and provided,
however, that the Servicer makes no representation or warranty regarding state
securities or "blue sky" laws in connection with the distribution of the
Certificates.
For purposes of the representations and warranties set forth in
this Section 3.03, each reference to a Supplement shall be deemed to refer only
to those Supplements in effect as of the relevant Closing Date or the date of
appointment of a Successor Servicer, as applicable.
In the event any of the representations, warranties or covenants
of the Servicer contained in paragraph (g), (h), (i) or (j) with respect to any
Receivable or the related Account is breached, and as a result of such breach
the Trust's rights in, to or under any Receivable in the related Account or the
proceeds of such Receivable are impaired or such proceeds are not available for
any reason to the Trust free and clear of any Lien, then no later than the
expiration of 60 days (or such longer period, not in excess of 150 days, as may
be agreed to by the Trustee) from 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 Trustee, all Receivables in the Account or Accounts to which such event
relates shall be reassigned or assigned to the Servicer on the terms and
conditions set forth below; provided, however, that such Receivables will not be
reassigned or assigned to the Servicer if, on any day prior to the end of such
60-day or longer period, (i) the relevant representation and warranty shall be
true and correct, or the relevant covenant shall have been complied with, in all
material respects and (ii) the Servicer shall have delivered to the Trustee a
certificate of an authorized officer describing the nature of such breach and
the manner in which such breach was cured.
The Servicer shall effect such assignment by making a deposit
into the Collection Account in immediately available funds on the Transfer Date
following the Monthly Period in which such assignment obligation arises in an
amount equal to the amount of such Receivables, which deposit shall be
considered a Collection of Principal Receivables and shall be applied in
accordance with Article IV and the terms of each Supplement.
Upon each such reassignment or assignment to the Servicer, the
Trustee, on behalf of the Trust, 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,
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title and interest of the Trust in and to such Receivables, all monies due or to
become due and all amounts received with respect thereto and all proceeds
thereof. The Trustee 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. 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
Certificateholders (or the Trustee on behalf of Certificateholders) or any
Series Enhancer.
3.4. Reports and Records for the Trustee.
(a) Daily Records. On each Business Day, the Servicer, upon
prior written notice by the Trustee, shall make or cause to be made available at
the office of the Servicer on any Business Day during normal business hours for
inspection by the Trustee 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 preceding Business Day in respect of the Accounts
and (ii) the amount of Receivables as of the close of business on the second
preceding Business Day. 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.
(b) Monthly Servicer's Certificate. Not later than the
Determination Date immediately preceding each Distribution Date, the Servicer
shall, with respect to each outstanding Series, deliver to the Trustee, the
Paying Agent and each Rating Agency a certificate of a Servicing Officer in
substantially the form set forth in the related Supplement.
3.5. Annual Certificate of Servicer. The Servicer shall
deliver to the Trustee and each Rating Agency, on or before March 31, of each
calendar year, beginning with March 31, 2000, an Officer's Certificate (with
appropriate insertions) substantially in the form of Exhibit D.
3.6. Annual Servicing Report of Independent Public
Accountants; Copies of Reports Available.
(a) On or before March 31, of each calendar year, beginning
with March 31, 2000, the Servicer shall cause a firm of nationally recognized
independent public accountants (who may also render other services to the
Servicer or the Transferor or any Account Owner) to furnish a report (addressed
to the Trustee) to the Trustee, the Servicer and each Rating Agency to the
effect that they have applied certain procedures agreed upon with the Servicer
and examined certain documents and records relating to the servicing of the
Receivables under this Agreement and each Supplement for the prior calendar year
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 set forth in Articles III and IV and Section 8.08
of this Agreement and the applicable provisions of each Supplement, except for
such exceptions as they
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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.
(b) On or before March 31, of each calendar year, beginning
with March 31, 2000, the Servicer shall cause a firm of nationally recognized
independent public accountants (who may also render other services to the
Servicer or the Transferor or any Account Owner) to furnish a report (addressed
to the Trustee) to the Trustee, the Servicer and each Rating Agency to the
effect that they have applied certain procedures agreed upon with the Servicer
to compare the mathematical calculations of certain amounts set forth in the
Servicer's certificates delivered pursuant to subsection 3.04(b) during the
period covered by such report with the Servicer's computer reports which 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.
(c) A copy of each certificate and report provided pursuant
to subsection 3.04(b), 3.05 or 3.06 may be obtained by any Investor
Certificateholder or Certificate Owner by a request to the Trustee addressed to
the Corporate Trust Office.
3.7. Tax Treatment. Unless otherwise specified in a
Supplement with respect to a particular Series, the Transferor has entered into
this Agreement, and the Certificates will be issued, with the intention that,
for Federal, state and local income and franchise tax purposes (i) the Investor
Certificates of each Series which are characterized as indebtedness at the time
of their issuance will qualify as indebtedness secured by the Receivables and
(ii) the Trust shall not be treated as an association or publicly traded
partnership taxable as a corporation. The Transferor, by entering into this
Agreement, and each Certificateholder, by the acceptance of any such Certificate
(and each Certificate Owner, by its acceptance of an interest in the applicable
Certificate), agree to treat such Investor Certificates for Federal, state and
local income and franchise tax purposes as indebtedness of the Transferor. Each
Holder of such Investor Certificate agrees that it will cause any Certificate
Owner acquiring an interest in a Certificate through it to comply with this
Agreement as to treatment as indebtedness under applicable tax law, as described
in this Section 3.07. The parties hereto agree that they shall not cause or
permit the making, as applicable, of any election under Treasury Regulation
Section 301.7701-3 whereby the Trust or any portion thereof would be treated as
a corporation for federal income tax purposes and, except as required by Section
11.11, shall not file tax returns or obtain any federal employer identification
number for the Trust but shall treat the Trust as a security device for such
purposes. The provisions of this Agreement shall be construed in furtherance of
the foregoing intended tax treatment.
3.8. Notices to NextCard, Inc. In the event that NextCard,
Inc. is no longer acting as Servicer, any Successor Servicer shall deliver to
NextCard, Inc. each certificate and report required to be provided thereafter
pursuant to subsection 3.04(b), 3.05 or 3.06.
3.9. Adjustments.
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(a) If the Servicer adjusts downward the amount of any
Receivable because of a rebate, refund, unauthorized charge or billing error to
an account holder, or because such Receivable was created in respect of
merchandise which was refused or returned by an account holder, or if the
Servicer otherwise adjusts downward the amount of any Receivable without
receiving Collections therefor or charging off such amount as uncollectible or
for other reasons relating to the financial condition of the Obligor thereof,
then, in any such case, the amount of Principal Receivables used to calculate
the Transferor Amount, the Series Percentages and any other percentage used to
allocate within or among Series applicable to any Series will be reduced by the
amount of the adjustment. Similarly, the amount of Principal Receivables used to
calculate the Transferor Amount, the Series Percentages and any other percentage
used to allocate within or among Series applicable to any Series will be reduced
by the amount of any Receivable which was discovered as having been created
through a fraudulent or counterfeit charge. 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 12:00 noon, New York City time, on the third
Business Day following the Monthly Period in which such adjustment obligation
arises, the Transferor which transferred such Principal Receivables to the Trust
shall make a deposit into the Excess Funding Account in immediately available
funds in an amount equal to the amount by which the Transferor Amount would be
below the Required Transferor Amount (up to the amount of such Principal
Receivables).
(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.
3.10. Reports to the Commission.. The Servicer shall, on
behalf of the Trust, cause to be filed with the Commission any periodic reports
required to be filed under the provisions of the Securities Exchange Act of
1934, as amended, and the rules and regulations of the Commission thereunder.
The Transferor shall cooperate in any reasonable request of the Servicer in
connection with such filings.
3.11. Reports to Rating Agencies. The Servicer agrees to
deliver the following to each Rating Agency (unless one or more of such Rating
Agencies agrees in writing to waive receipt of such reports, in which case, the
reports need not be delivered to the Rating Agency or Rating Agencies which
waived the requirement):
(a) Within 30 days after the Addition Date with respect to
any Automatic Additional Accounts (as defined in subsection 2.09(d) of this
Agreement), unless the
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Rating Agency Condition has been satisfied with respect to the designation of
such Automatic Additional Accounts, the Servicer shall deliver to each Rating
Agency a written report which shall contain (i) the aggregate number of
Automatic Additional Accounts designated to the Trust during the three
consecutive Monthly Periods ending with the Monthly Period in which such
Addition Date occurred and the aggregate amount of Principal Receivables
contained in such Automatic Additional Accounts; (ii) the aggregate number of
Automatic Additional Accounts designated to the Trust during the 12 consecutive
Monthly Periods ending with the Monthly Period in which such Addition Date
occurred and the aggregate amount of Principal Receivables contained in such
Automatic Additional Accounts; (iii) the number of Accounts and the amount of
Principal Receivables in the Trust as of the first day of the three consecutive
Monthly Periods described in (i) above occurred; (iv) the number of Accounts and
the amount of Principal Receivables in the Trust as of the first day of the 12
consecutive Monthly Periods described in (ii) above; (v) the percentage which
the number of Automatic Additional Accounts described in (i) above is of the
number of Accounts described in (iii) above; (vi) the percentage which the
amount of Principal Receivables described in (i) above is of the amount of
Principal Receivables described in (iii) above; (vii) the percentage which the
number of Automatic Additional Accounts described in (ii) above is of the number
of Accounts described in (iv) above; and (viii) the percentage which the amount
of Principal Receivables described in (ii) above is of the amount of Principal
Receivables described in (iv) above.
(b) Not later than the Determination Date in each month, the
Servicer shall deliver to each Rating Agency a written report setting forth, as
of the last day of the immediately preceding Monthly Period, the number of
Accounts which had addresses located in the territories or possessions of the
United States or which were military addresses not located in the United States
and the amount of Principal Receivables in such Accounts; provided that the
report described in this provision (b) shall not be required if the number of
such Accounts is less than 1% of all Accounts as of the end of such Monthly
Period and the amount of Principal Receivables in such Accounts is less than 1%
of all Principal Receivables as of the end of such Monthly Period.
ARTICLE IV
Rights of Certificateholders and
Allocation and Application of Collections
4.1. Rights of Certificateholders. The Investor Certificates
shall represent fractional undivided interests in the Trust which, with respect
to each Series, shall consist of the right to receive, to the extent necessary
to make the required payments with respect to the Investor Certificates of such
Series at the times and in the amounts specified in the related Supplement, the
portion of Collections allocable to Investor Certificateholders of such Series
pursuant to this Agreement and such Supplement, funds on deposit in the
Collection Account and the Excess Funding Account allocable to
Certificateholders of such Series pursuant to this Agreement and such
Supplement, funds on deposit in any related Series Account and
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funds available pursuant to any related Series Enhancement (collectively, with
respect to all Series, the "Certificateholders' Interest"), it being understood
that the Investor Certificates of any Series or Class shall not represent any
interest in any Series Account or Series Enhancement for the benefit of any
other Series or Class. The Transferor Certificates shall represent the ownership
interest in the remainder of the Trust Assets not allocated pursuant to this
Agreement or any Supplement to the Certificateholders' Interest, including the
right to receive Collections with respect to the Receivables and other amounts
at the times and in the amounts specified in this Agreement or any Supplement to
be paid to the Holders of the Transferor Certificates (the "Transferor's
Interest"); provided, however, that the Transferor Certificates shall not
represent any interest in the Collection Account, the Excess Funding Account,
any Series Account or any Series Enhancement, except as specifically provided in
this Agreement or any Supplement; provided further, that the foregoing shall not
be construed to limit the Trustee's obligations to make payments to the Holders
of the Transferor Certificates, the Transferor and the Servicer as and when
required under this Agreement and any Supplement.
4.2. Establishment of Collection Account and Excess Funding
Account; Appointment of Securities Intermediary. The Servicer, for the benefit
of the Certificateholders, shall cause to be established and maintained in the
name of the Trustee, on behalf of the Trust, a Qualified Account with a
Securities Intermediary bearing a designation clearly indicating that the funds
and other property credited thereto are held for the benefit of the
Certificateholders (the "Collection Account"). The Collection Account shall
consist of two segregated subaccounts: (1) the "Collection Account Investment
Subaccount," to which financial assets credited to the Collection Account shall
be credited, and as to which financial assets the Securities Intermediary
undertakes to treat the Trustee as entitled to exercise the rights that comprise
such financial assets; and (2) the "Collection Account Cash Subaccount," to
which money or instruments deposited in the Collection Account shall be
credited. The Trustee shall possess all right, title and interest in all funds
and other property on deposit from time to time in or credited to the Collection
Account including the subaccounts therein and all proceeds thereof. The
Collection Account including the subaccounts therein shall be under the sole
dominion and control of the Trustee for the benefit of the Certificateholders.
Except as expressly provided in this Agreement, the Servicer agrees that it
shall have no right of setoff against, and no right to otherwise deduct from,
any funds held in the Collection Account and the subaccounts therein for any
amount owed to it by the Trustee, the Trust, any Certificateholder or any Series
Enhancer. If, at any time, the Collection Account or any subaccount therein
ceases to be a Qualified Account, the Trustee (or the Servicer on its behalf)
shall within ten Business Days (or such longer period, not to exceed 30 calendar
days, as to which each Rating Agency may consent) establish a new Collection
Account meeting the conditions specified above, transfer any cash or any
investments to such new Collection Account and from the date such new Collection
Account is established, it shall be the "Collection Account."
Funds on deposit in the Collection Account (other than amounts
deposited pursuant to Section 2.06, 10.01 or 12.02) shall be invested by the
Trustee in Eligible Investments in accordance with written instructions of the
Servicer. All such Eligible Investments shall be held by the Trustee or its
nominee for the benefit of the
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Certificateholders in the Collection Account Investment Subaccount. The Trustee
shall maintain for the benefit of the Certificateholders possession of the
instruments or securities, if any, evidencing such Eligible Investments.
Delivery of any Eligible Investment to the Trustee, and custody of the same by
the Trustee, may be through the Securities Intermediary. Investments of funds
representing Collections collected during any Monthly Period shall be invested
in Eligible Investments that will mature so that funds will be available at the
close of business on the Transfer Date following such Monthly Period. Unless
directed by the Servicer in writing, funds deposited in the Collection Account
on a Transfer Date with respect to the next following Distribution Date are not
required to be invested overnight. For purposes of determining the availability
of funds or the balances in the Collection Account for any reason under this
Agreement, all investment earnings net of investment expenses and losses on such
funds shall be deemed not to be available or on deposit.
The Servicer, for the benefit of the Certificateholders, shall
cause to be established and maintained in the name of the Trustee, on behalf of
the Trust, a Qualified Account with a Securities Intermediary bearing a
designation clearly indicating that the funds and other property deposited
therein or credited thereto are held for the benefit of the Certificateholders
(the "Excess Funding Account"). The Excess Funding Account shall consist of two
segregated subaccounts: (i) the "Excess Funding Investment Subaccount," to which
financial assets credited to the Excess Funding Account shall be credited, and
as to which financial assets the Securities Intermediary undertakes to treat the
Trustee as entitled to exercise the rights that comprise such financial assets;
and (ii) the "Excess Funding Account Cash Subaccount," to which money or
instruments deposited in the Excess Funding Account shall be credited. The
Trustee shall possess all right, title and interest in all funds and other
property on deposit from time to time in or credited to the Excess Funding
Account including the subaccounts therein and all proceeds thereof. The Excess
Funding Account including any subaccounts therein shall be under the sole
dominion and control of the Trustee for the benefit of the Certificateholders.
Except as expressly provided in this Agreement, the Servicer agrees that it
shall have no right of setoff against, and no right to otherwise deduct from,
any funds held in the Excess Funding Account and the subaccounts therein for any
amount owed to it by the Trustee, the Trust, any Certificateholder or any Series
Enhancer. If, at any time, the Excess Funding Account or any subaccount therein
cease to be a Qualified Account, the Trustee (or the Servicer on its behalf)
shall within 10 Business Days (or such longer period, not to exceed 30 calendar
days, as to which each Rating Agency may consent) establish a new Excess Funding
Account meeting the conditions specified above, transfer any cash or any
investments to such new Excess Funding Account and from the date such new Excess
Funding Account is established, it shall be the "Excess Funding Account."
Funds on deposit in the Excess Funding Account shall be invested
by the Trustee in Eligible Investments in accordance with written instructions
of the Servicer. All such Eligible Investments shall be held by the Trustee or
its nominee for the benefit of the Certificateholders in the Excess Funding
Investment Subaccount. Delivery of any Eligible Investment to the Trustee, and
custody of the same by the Trustee, may be through the Securities Intermediary.
The Trustee shall maintain for the benefit of the Certificateholders possession
of the instruments or securities, if any, evidencing such Eligible Investments.
Funds on deposit in the Excess Funding Account on any date (after giving effect
to any withdrawals from the Excess Funding Account on such date) will be
invested in Eligible Investments that will mature so that funds will be
available at
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the close of business on the Transfer Date following such date. Unless directed
by the Servicer in writing, funds deposited in the Excess Funding Account on a
Transfer Date with respect to the next following Distribution Date are not
required to be invested overnight. On each Transfer Date, the Servicer shall
instruct the Trustee to withdraw on the related Distribution Date from the
Excess Funding Account and deposit in the Collection Account all interest and
other investment earnings (net of losses and investment expenses) on funds and
other property on deposit in or credited to the Excess Funding Account, for
application as Collections of Finance Charge Receivables with respect to the
prior Monthly Period. Interest (including reinvested interest) and other
investment income and earnings on funds and other property on deposit in or
credited to the Excess Funding Account shall not be considered part of the
Excess Funding Amount for purposes of this Agreement. On each Business Day on
which funds are on deposit in the Excess Funding Account, the Servicer shall
determine the lesser of (x) the amount by which the Transferor Amount exceeds
the Required Transferor Amount on such date and (y) the amount by which the
aggregate amount of Principal Receivables exceeds the Required Principal Balance
and shall instruct the Trustee to withdraw such lesser amount, if any, from the
Excess Funding Account (to the extent of funds on deposit therein on such date)
and pay such amount to the Holders of the Transferor Certificates. On any
Transfer Date on which one or more Series is in an Accumulation Period or
Amortization Period, the Servicer shall determine the aggregate amount of
Principal Shortfalls, if any, with respect to each such Series that is a
Principal Sharing Series (after giving effect to the allocation and payment
provisions in the Supplement with respect to each such Series), and the Servicer
shall instruct the Trustee to withdraw such amount (up to the Excess Funding
Amount) from the Excess Funding Account on the succeeding Distribution Date and
allocate such amount among each such Series as Shared Principal Collections as
specified herein and in each related Supplement.
The Bank of New York is hereby appointed as the initial
Securities Intermediary hereunder and The Bank of New York hereby accepts such
appointment.
The Securities Intermediary shall be, and The Bank of New York
as initial Securities Intermediary hereunder hereby represents that it is, as of
the date hereof and shall be for so long as it is the Securities Intermediary
hereunder a corporation or national bank that it is a securities intermediary as
defined in the UCC. The Securities Intermediary shall agree and The Bank of New
York, as Securities Intermediary does hereby agree with the parties hereto that
each of the Collection Account Investment Subaccount and the Excess Funding
Account Investment Subaccount shall be an account to which financial assets may
be credited and shall undertake to treat the Trustee as entitled to exercise
rights that comprise such financial assets. The Securities Intermediary shall
acknowledge and The Bank of New York does hereby acknowledge that the
"securities intermediary's jurisdiction" as defined in the UCC as in effect in
the State of New York with respect to the Eligible Investments, shall be the
State of New York. The Securities Intermediary shall represent and covenant and
The Bank of New York does hereby represent and covenant that it is not and will
not be (as long as it is the Securities Intermediary hereunder) a party to any
agreement that is inconsistent with the provisions of this Agreement. The
Securities Intermediary shall covenant and The Bank of New York does hereby
covenant that it will not take any action inconsistent with the provisions of
this Agreement applicable to it.
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It is the intent of the Trustee, the Servicer and the Transferor
that each of the Collection Account Subaccount and the Excess Funding Account
Investment Subaccount shall be a securities account of the Trustee and not an
account of the Transferor or the Servicer. Nonetheless, (i) the Securities
Intermediary shall agree to comply with entitlement orders originated by the
Trustee without further consent by the Transferor or the Servicer, (ii) The Bank
of New York as initial Security Intermediary agrees that for so long as it is
the Securities Intermediary hereunder, it will comply with entitlement orders
originated by the Trustee without further consent by the Transferor or the
Servicer; and (iii) the Securities Intermediary covenants that it will not agree
with any person other than the Trustee to comply with entitlement orders
originated by such other person, and The Bank of New York as initial Securities
Intermediary covenants that, for so long as it is the Securities Intermediary,
it will not agree with any person other than the Trustee to comply with
entitlement orders originated by such other person.
4.3. Collections and Allocations.
(a) The Servicer will apply or will instruct the Trustee in
writing to apply all funds on deposit in the Collection Account as described in
this Article IV and in each Supplement. Except as otherwise provided below or as
expressly provided in any Supplement with respect to Collections allocated to
the related Series, the Servicer shall deposit Collections into the Collection
Account no later than the second Business Day following the Date of Processing
of such Collections. Subject to the first proviso in Section 4.04, but
notwithstanding anything else in this Agreement to the contrary, with respect to
any Monthly Period, (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
Investor Certificateholders or to any Series Enhancer pursuant to the terms of
any Supplement or Enhancement 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 them to the Holders of the Transferor Certificate. Subject to the
immediately 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) Allocations for the Transferor Certificates. Throughout
the existence of the Trust, unless otherwise stated in any Supplement, the
Servicer shall allocate to the Holders of the Transferor Certificates an amount
equal to the product of (a) the Transferor Percentage and (b) the aggregate
amount of such Collections allocated to Principal Receivables and Finance Charge
Receivables, respectively, in respect of each Monthly Period. Notwithstanding
anything in this Agreement to the contrary, unless otherwise stated in any
Supplement, the Servicer need not deposit this amount or any other amounts so
allocated to the Transferor Certificates pursuant to any Supplement into the
Collection Account and shall pay such amounts as collected to the Holders of the
Transferor Certificates.
The payments to be made to the Holders of the Transferor
Certificates pursuant to this subsection 4.03(b) do not apply to deposits to the
Collection Account or other amounts that
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do not represent Collections, including payment of the acquisition price for
Receivables pursuant to Section 2.06 or 10.01, proceeds from the sale,
disposition or liquidation of Receivables pursuant to Section 12.02 or payment
of the acquisition price for the Certificateholders' Interest of a specific
Series pursuant to the related Supplement.
4.4. Shared Collections.
(a) On each Distribution Date, (i) the Servicer shall
allocate Shared Principal Collections to each Principal Sharing Series, pro
rata, in proportion to the Principal Shortfalls, if any, with respect to each
such Series and (ii) the Servicer shall withdraw from the Collection Account and
pay to the Holders of the Transferor Certificates 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 Supplements or this Agreement specify
are to be treated as "Shared Principal Collections" for such Distribution Date
over (y) the aggregate amount for all outstanding Principal Sharing Series which
the related Supplements specify are "Principal Shortfalls" for such Distribution
Date; provided, however, that if, on any Distribution Date the Transferor Amount
is less than or equal to the Required Transferor Amount, the Servicer will not
distribute to the Holders of the Transferor Certificates any Shared Principal
Collections that otherwise would be distributed to the Holders of the Transferor
Certificates but shall deposit such funds in the Excess Funding Account.
Notwithstanding the foregoing, a Group of Series may specify in their related
Supplement that Shared Principal Collections from such Series shall be allocated
as provided above but only among the Series in such Group.
(b) On each Distribution Date, (i) the Servicer shall
allocate Excess Finance Charge Collections (as described below) to each Excess
Allocation Series pro rata, in proportion to the Finance Charge Shortfalls (as
described below), if any, with respect to each such Series and (ii) the Servicer
shall withdraw from the Collection Account and pay to the Holders of the
Transferor Certificates 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 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 Supplements specify are
"Finance Charge Shortfalls" for such Series and such Distribution Date. A Group
of Series may specify in their related Supplement that Excess Finance Charge
Collections from such Series shall be allocated as provided above but only among
the Series in such Group.
4.5. 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 Heritage Bank of Commerce or any
other Account Owner with respect to such Monthly Period under the applicable
Receivables Transfer Agreement in respect of amounts on deposit in the
Collection Account, if any, that were not transferred to the Transferor under
such Receivables Transfer Agreement, and the Servicer shall withdraw such
amounts from the Collection Account and pay such amount to Heritage Bank of
Commerce or other Account Owner, as applicable.
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4.6. Allocation of Trust Assets to Series or Groups. To the
extent so provided in the Supplement for any Series or in an amendment to this
Agreement executed pursuant to subsection 13.01(a), Receivables conveyed to the
Trust pursuant to Section 2.01 and Receivables or Participation Interests
conveyed to the Trust pursuant to Section 2.09 or any Participation Interest
Supplement, and all Collections received with respect to such Receivables or
Participation Interests, may be allocated in whole or in part to one or more
Series or Groups as may be provided in such Supplement or amendment, provided,
however, that any such allocation shall be effective only upon satisfaction of
the following conditions:
(i) on or before the fifth Business Day
immediately preceding such allocation, the Servicer shall have
given the Trustee and each Rating Agency written notice of such
allocation;
(ii) the Rating Agency Condition shall have
been satisfied with respect to such allocation; and
(iii) the Transferor shall have delivered to
the Trustee an Officer's Certificate, dated the date of such
allocation, to the effect that the Transferor reasonably
believes that such allocation will not have an Adverse Effect.
Any such 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 Supplement or amendment.
ARTICLE V
Distributions and Reports to
Certificateholders
Distributions shall be made to, and reports shall be provided
to, Certificateholders as set forth in the applicable Supplement.
ARTICLE VI
The Certificates
6.1. The Certificates. The Investor Certificates of any
Series or Class may be issued in bearer form ("Bearer Certificates") with
attached interest coupons and any other applicable coupon (collectively, the
"Coupons") or in fully registered form ("Registered Certificates") and shall be
substantially in the form of the exhibits with respect thereto attached to the
applicable Supplement. The Transferor Certificate will be issued in registered
form, substantially in the form of Exhibit A, and shall upon issuance be
executed and delivered by the Transferor to the Trustee for authentication and
redelivery as provided in
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Section 6.02. Except as otherwise provided in Section 6.03 or in any Supplement,
Bearer Certificates and Registered Certificates shall be issued in minimum
denominations of $100,000 and in integral multiples of $1,000 in excess thereof.
If specified in any Supplement, the Investor Certificates of any Series or Class
shall be issued upon initial issuance as a single certificate evidencing the
aggregate original principal amount of such Series or Class as described in
Section 6.13. The Transferor Certificate shall be a single certificate and shall
initially represent the entire Transferor's Interest. Each Certificate shall be
executed by manual or facsimile signature on behalf of the Transferor by its
respective President or any Vice President. Certificates bearing the manual or
facsimile signature of an individual who was, at the time when such signature
was affixed, authorized to sign on behalf of the Transferor shall not be
rendered invalid, notwithstanding that such individual ceased to be so
authorized prior to the authentication and delivery of such Certificates or does
not hold such office at the date of such Certificates. No Certificates shall be
entitled to any benefit under this Agreement, or be valid for any purpose,
unless there appears on such Certificate a certificate of authentication
substantially in the form provided for herein executed by or on behalf of the
Trustee by the manual signature of a duly authorized signatory, and such
certificate upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated and delivered
hereunder. Bearer Certificates shall be dated the related Closing Date. All
Registered Certificates and Transferor Certificates shall be dated the date of
their authentication.
6.2. Authentication of Certificates. The Trustee shall
authenticate and deliver the Investor Certificates of each Series and Class that
are issued upon original issuance to or upon the order of the Transferor against
payment to the Transferor of the purchase price therefor. The Trustee shall
authenticate and deliver the Transferor Certificate to the Transferor
simultaneously with its delivery of the Investor Certificates of the first
Series to be issued hereunder. If specified in the related Supplement for any
Series or Class, the Trustee shall authenticate and deliver outside the United
States the Global Certificate that is issued upon original issuance thereof.
6.3. New Issuances.
(a) The Transferor may from time to time direct the Trustee,
on behalf of the Trust, to authenticate one or more new Series of Investor
Certificates. The Investor Certificates of all outstanding Series shall be
equally and ratably entitled as provided herein to the benefits of this
Agreement without preference, priority or distinction, all in accordance with
the terms and provisions of this Agreement and the applicable Supplement except,
with respect to any Series or Class, as provided in the related Supplement.
(b) On or before the Closing Date relating to any new
Series, the parties hereto will execute and deliver a Supplement which will
specify the Principal Terms of such new Series. The terms of such Supplement may
modify or amend any of the terms of this Agreement solely as applied to such new
Series. The obligation of the Trustee to authenticate the Investor Certificates
of such new Series and to execute and deliver the related Supplement is subject
to the satisfaction of the following conditions:
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(i) on or before the fifth day immediately
preceding the Closing Date, the Transferor shall have given the
Trustee and the Servicer notice of such issuance and the Closing
Date; and on or before the tenth day immediately preceding the
Closing Date, the Transferor shall have given each Rating Agency
notice of such issuance;
(ii) the Transferor shall have delivered to
the Trustee the related Supplement, in form satisfactory to the
Trustee, executed by each party thereto other than the Trustee;
(iii) the Transferor shall have delivered to
the Trustee any related Enhancement Agreement executed by each
of the parties thereto, other than the Trustee;
(iv) the Rating Agency Condition shall have
been satisfied with respect to such issuance;
(v) the Transferor shall have delivered to
the Trustee an Officer's Certificate, dated the Closing Date, to
the effect that the Transferor reasonably believes that such
issuance will not, based on the facts known to such officer at
the time of such certification, then or thereafter cause a Pay
Out Event or a Reinvestment Event to occur with respect to any
Series; and
(vi) the Transferor shall have delivered to
the Trustee and each Rating Agency a Tax Opinion, dated the
Closing Date, with respect to such issuance.
Upon satisfaction of the above conditions, the Trustee shall
execute the Supplement and authenticate the Investor Certificates of such Series
upon execution thereof by the Transferor.
(c) The Transferor may surrender the Transferor Certificate
to the Trustee in exchange for a newly issued Transferor Certificate and one or
more additional certificates (each a "Supplemental Certificate"), the terms of
which shall be defined in a supplement to this Agreement (which supplement shall
be subject to subsection 13.01(a) only to the extent that it amends any of the
terms of this Agreement), to be delivered to or upon the order of the Transferor
(or the Holder of a Supplemental Certificate, in the case of the transfer or
exchange thereof, as provided below), upon satisfaction of the following
conditions:
(i) The Transferor shall have given written
notice to each Rating Agency of such exchange and the Rating
Agency Condition shall have been satisfied with respect to such
exchange;
(ii) the Transferor Amount (excluding the
interest represented by any Supplemental Certificate) shall not
be
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less than [*] of the total amount of Principal Receivables as of
the date of, and after giving effect to, such exchange; and
(iii) if any Series of Investor Certificates
are outstanding that were characterized as debt at the time of
their issuance, the Transferor shall have delivered to the
Trustee and each Rating Agency a Tax Opinion, dated the date of
such exchange (or transfer or exchange as provided below), with
respect thereto.
Any Supplemental Certificate may be transferred or exchanged only upon
satisfaction of the conditions set forth in clauses (ii) and (iii) above.
(d) The Transferor Certificate (or any interest therein) may
be transferred to a Person which is a member of the "affiliated group" of which
NextCard, Inc. is the "common parent" (as such terms are defined in Section
1504(a) of the Code); provided that if any Series of Investor Certificates are
outstanding that were characterized as debt at the time of their issuance, the
Transferor shall have delivered to the Trustee and each Rating Agency a Tax
Opinion, dated the date of such transfer, with respect thereto.
6.4. Registration of Transfer and Exchange of Certificates.
(a) The Trustee shall cause to be kept at the office or
agency to be maintained in accordance with the provisions of Section 11.16 a
register (the "Certificate Register") in which, subject to such reasonable
regulations as it may prescribe, a transfer agent and registrar (which may be
the Trustee) (the "Transfer Agent and Registrar") shall provide for the
registration of the Registered Certificates and of transfers and exchanges of
the Registered Certificates as herein provided. The Transfer Agent and Registrar
shall initially be the Trustee and any co-transfer agent and co-registrar chosen
by the Transferor and acceptable to the Trustee, including, if and so long as
any Series or Class is listed on the Luxembourg Stock Exchange and such exchange
shall so require, a co-transfer agent and co-registrar in Luxembourg. Any
reference in this Agreement to the Transfer Agent and Registrar shall include
any co-transfer agent and co-registrar unless the context requires otherwise.
The Trustee may revoke such appointment and remove any Transfer
Agent and Registrar if the Trustee determines in its sole discretion that such
Transfer Agent and Registrar failed to perform its obligations under this
Agreement in any material respect. Any Transfer Agent and Registrar shall be
permitted to resign as Transfer Agent and Registrar upon 30 days' notice to the
Transferor, the Trustee and the Servicer; provided, however, that such
resignation shall not be effective and such Transfer Agent and Registrar shall
continue to perform its duties as Transfer Agent and Registrar until the Trustee
has appointed a successor Transfer Agent and Registrar reasonably acceptable to
the Transferor.
Subject to paragraph (c) below, upon surrender for registration
of transfer of any Registered Certificate at any office or agency of the
Transfer Agent and Registrar maintained for such purpose, one or more new
Registered Certificates (of the same Series and Class) 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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authorized denominations of like aggregate fractional undivided interests in the
Certificateholders' Interest shall be executed, authenticated and delivered, in
the name of the designated transferee or transferees.
At the option of a Registered Certificateholder, Registered
Certificates (of the same Series and Class) may be exchanged for other
Registered Certificates of authorized denominations of like aggregate fractional
undivided interests in the Certificateholders' Interest, upon surrender of the
Registered Certificates to be exchanged at any such office or agency; Registered
Certificates, including Registered Certificates received in exchange for Bearer
Certificates, may not be exchanged for Bearer Certificates. At the option of the
Holder of a Bearer Certificate, subject to applicable laws and regulations,
Bearer Certificates may be exchanged for other Bearer Certificates or Registered
Certificates (of the same Series and Class) of authorized denominations of like
aggregate fractional undivided interests in the Certificateholders' Interest,
upon surrender of the Bearer Certificates to be exchanged at an office or agency
of the Transfer Agent and Registrar located outside the United States. Each
Bearer Certificate surrendered pursuant to this Section shall have attached
thereto all unmatured Coupons; provided that any Bearer Certificate so
surrendered after the close of business on the Record Date preceding the
relevant payment date after the expected final payment date need not have
attached the Coupon relating to such payment date (in each case, as specified in
the applicable Supplement).
Whenever any Investor Certificates are so surrendered for
exchange, the Transferor shall execute, the Trustee shall authenticate and the
Transfer Agent and Registrar shall deliver (in the case of Bearer Certificates,
outside the United States) the Investor Certificates which the Investor
Certificateholder making the exchange is entitled to receive. Every Investor
Certificate presented or surrendered for registration of transfer or exchange
shall be accompanied by a written instrument of transfer in a form satisfactory
to the Trustee or the Transfer Agent and Registrar duly executed by the Investor
Certificateholder or the attorney-in-fact thereof duly authorized in writing.
No service charge shall be made for any registration of transfer
or exchange of Investor Certificates, but the Transfer Agent and Registrar may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any such transfer or exchange.
All Investor Certificates (together with any Coupons)
surrendered for registration of transfer and exchange or for payment shall be
canceled and disposed of in a manner satisfactory to the Trustee. The Trustee
shall cancel and destroy any Global Certificate upon its exchange in full for
Definitive Euro-Certificates and shall deliver a certificate of destruction to
the Transferor. Such certificate shall also state that a certificate or
certificates of a Foreign Clearing Agency to the effect referred to in Section
6.13 was received with respect to each portion of the Global Certificate
exchanged for Definitive Euro-Certificates.
The Transferor shall execute and deliver to the Trustee Bearer
Certificates and Registered Certificates in such amounts and at such times as
are necessary to enable the Trustee
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to fulfill its responsibilities under this Agreement, each Supplement and the
Certificates.
(b) The Transfer Agent and Registrar shall maintain at its
expense in the Borough of Manhattan, the City of New York, and, if and so long
as any Series or Class is listed on the Luxembourg Stock Exchange, Luxembourg,
the co-transfer agent and co-registrar appointed pursuant to Section 6.04(a)
shall maintain at its expense, subject to reimbursement by the Servicer in
accordance with the terms of any fee letter with the Servicer relating to such
Series or Class, an office or agency where Investor Certificates may be
surrendered for registration of transfer or exchange (except that Bearer
Certificates may not be surrendered for exchange at any such office or agency in
the United States).
(c) (i) Registration of transfer of Investor Certificates
containing a legend substantially to the effect set forth on Exhibit E-1 shall
be effected only if such transfer (x) is made pursuant to an effective
registration statement under the Act, or is exempt from the registration
requirements under the Act, and (y) is made to a Person which is not an employee
benefit plan, trust or account, including an individual retirement account, that
is subject to ERISA or that is described in Section 4975(e)(1) of the Code or an
entity whose underlying assets include plan assets by reason of a plan's
investment in such entity (a "Benefit Plan"). In the event that registration of
a transfer is to be made in reliance upon an exemption from the registration
requirements under the Act, the transferor or the transferee shall deliver, at
its expense, to the Transferor, the Servicer and the Trustee, an investment
letter from the transferee, substantially in the form of the investment and
ERISA representation letter attached hereto as Exhibit E-2, and no registration
of transfer shall be made until such letter is so delivered.
Investor Certificates issued upon registration
or transfer of, or Investor Certificates issued in exchange for,
Investor Certificates bearing the legend referred to above shall
also bear such legend unless the Transferor, the Servicer, the
Trustee and the Transfer Agent and Registrar receive an Opinion
of Counsel, satisfactory to each of them, to the effect that
such legend may be removed.
Whenever an Investor Certificate containing the
legend referred to above is presented to the Transfer Agent and
Registrar for registration of transfer, the Transfer Agent and
Registrar shall promptly seek instructions from the Servicer
regarding such transfer and shall be entitled to receive
instructions signed by a Servicing Officer prior to registering
any such transfer. The Transferor hereby agrees to indemnify the
Transfer Agent and Registrar and the Trustee and to hold each of
them harmless against any loss, liability or expense incurred
without negligence or bad faith on their part arising out of or
in connection with actions taken or omitted by them in relation
to any such instructions furnished pursuant to this clause (i).
(ii) Registration of transfer of Investor
Certificates containing a
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legend to the effect set forth on Exhibit E-3 shall be effected
only if such transfer is made to a Person which is not a Benefit
Plan. By accepting and holding any such Investor Certificate, an
Investor Certificateholder shall be deemed to have represented
and warranted that it is not a Benefit Plan. By acquiring any
interest in a Book-Entry Certificate which contains such legend,
a Certificate Owner shall be deemed to have represented and
warranted that it is not a Benefit Plan.
(iii) If so requested by the Transferor, the
Trustee will make available to any prospective purchaser of
Investor Certificates who so requests, a copy of a letter
provided to the Trustee by or on behalf of the Transferor
relating to the transferability of any Series or Class to a
Benefit Plan.
6.5. Mutilated, Destroyed, Lost or Stolen Certificates. If
(a) any mutilated Certificate (together, in the case of Bearer Certificates,
with all unmatured Coupons (if any) appertaining thereto) is surrendered to the
Transfer Agent and Registrar, or the Transfer Agent and Registrar receives
evidence to its satisfaction of the destruction, loss or theft of any
Certificate and (b) there is delivered to the Transfer Agent and Registrar and
the Trustee such security or indemnity as may be required by them to save each
of them harmless, then, in the absence of notice to the Trustee that such
Certificate has been acquired by a protected purchaser, the Transferor shall
execute, the Trustee shall authenticate and the Transfer Agent and Registrar
shall deliver (in the case of Bearer Certificates, outside the United States),
in exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like tenor and aggregate fractional undivided
interest. In connection with the issuance of any new Certificate under this
Section, the Trustee or the Transfer Agent and Registrar may require the payment
by the Certificateholder of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee and Transfer Agent and
Registrar) connected therewith. Any duplicate Certificate issued pursuant to
this Section shall constitute complete and indefeasible evidence of ownership in
the Trust, as if originally issued, whether or not the lost, stolen or destroyed
Certificate shall be found at any time.
6.6. Persons Deemed Owners. The Trustee, the Paying Agent,
the Transfer Agent and Registrar and any agent of any of them may (a) prior to
due presentation of a Registered Certificate for registration of transfer, treat
the Person in whose name any Registered Certificate is registered as the owner
of such Registered Certificate for the purpose of receiving distributions
pursuant to the terms of the applicable Supplement and for all other purposes
whatsoever, and (b) treat the bearer of a Bearer Certificate or Coupon as the
owner of such Bearer Certificate or Coupon for the purpose of receiving
distributions pursuant to the terms of the applicable Supplement and for all
other purposes whatsoever; and, in any such case, neither the Trustee, the
Paying Agent, the Transfer Agent and Registrar nor any agent of any of them
shall be affected by any notice to the contrary. Notwithstanding the foregoing,
in determining whether the Holders of the requisite Investor Certificates have
given any request, demand, authorization, direction, notice, consent or waiver
hereunder, Certificates owned by any of the Transferor, any Account Owner, the
Servicer, any other Holder of a Transferor Certificate, the Trustee or any
Affiliate thereof, shall be disregarded and deemed not to be outstanding,
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except that, in determining whether the Trustee shall be protected in relying
upon any such request, demand, authorization, direction, notice, consent or
waiver, only Certificates which the Trustee actually knows to be so owned shall
be so disregarded. Certificates so owned which have been pledged in good faith
shall not be disregarded and may be regarded as outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right to so act
with respect to such Certificates and that the pledgee is not the Transferor,
the Servicer, any other Holder of a Transferor Certificate or any Affiliate
thereof.
6.7. Appointment of Paying Agent. The Paying Agent shall make
distributions to Investor Certificateholders from the Collection Account or any
applicable Series Account pursuant to the provisions of the applicable
Supplement and shall report the amounts of such distributions to the Trustee.
Any Paying Agent shall have the revocable power to withdraw funds from the
Collection Account or any applicable Series Account for the purpose of making
the distributions referred to above. The Trustee may revoke such power and
remove the Paying Agent if the Trustee determines in its sole discretion that
the Paying Agent shall have failed to perform its obligations under this
Agreement or any Supplement in any material respect. The Paying Agent shall
initially be the Trustee and any co-paying agent chosen by the Transferor and
acceptable to the Trustee, including, if and so long as any Series or Class is
listed on the Luxembourg Stock Exchange and such exchange so requires, a
co-paying agent in Luxembourg or another western European city. Any Paying Agent
shall be permitted to resign as Paying Agent upon 30 days' notice to the
Trustee. In the event that any Paying Agent shall resign, the Trustee shall
appoint a successor to act as Paying Agent. The Trustee shall cause each
successor or additional Paying Agent to execute and deliver to the Trustee an
instrument in which such successor or additional Paying Agent shall agree with
the Trustee that it will hold all sums, if any, held by it for payment to the
Investor Certificateholders in trust for the benefit of the Investor
Certificateholders entitled thereto until such sums shall be paid to such
Investor Certificateholders. The Paying Agent shall return all unclaimed funds
to the Trustee and upon removal shall also return all funds in its possession to
the Trustee. The provisions of Sections 11.01, 11.02, 11.03 and 11.05 shall
apply to the Trustee also in its role as Paying Agent, for so long as the
Trustee shall act as Paying Agent. Any reference in this Agreement to the Paying
Agent shall include any co-paying agent unless the context requires otherwise.
6.8. Access to List of Registered Certificateholders' Names
and Addresses. The Trustee will furnish or cause to be furnished by the Transfer
Agent and Registrar to the Servicer, the Transferor or the Paying Agent, within
five Business Days after receipt by the Trustee of a request therefor, a list in
such form as the Servicer, the Transferor or the Paying Agent may reasonably
require, of the names and addresses of the Registered Certificateholders. If any
Holder or group of Holders of Investor Certificates of any Series or all
outstanding Series, as the case may be, evidencing not less than 10% of the
aggregate unpaid principal amount of such Series or all outstanding Series, as
applicable (the "Applicants"), apply to the Trustee, and such application states
that the Applicants desire to communicate with other Investor Certificateholders
with respect to their rights under this Agreement or any Supplement or under the
Investor Certificates and is accompanied by a copy of the communication which
such Applicants propose to transmit, then the Trustee, after having been
adequately indemnified
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by such Applicants for its costs and expenses, shall afford or shall cause the
Transfer Agent and Registrar to afford such Applicants access during normal
business hours to the most recent list of Registered Certificateholders of such
Series or all outstanding Series, as applicable, held by the Trustee, within
five Business Days after the receipt of such application. Such list shall be as
of a date no more than 45 days prior to the date of receipt of such Applicants'
request.
Every Registered Certificateholder, by receiving and holding a
Registered Certificate, agrees with the Trustee that none of the Transferor, the
Servicer, the Trustee, the Transfer Agent and Registrar, nor any of their
respective agents, shall be held accountable by reason of the disclosure of any
such information as to the names and addresses of the Registered
Certificateholders hereunder, regardless of the sources from which such
information was derived.
6.9. Authenticating Agent. (a) The Trustee may appoint one or
more authenticating agents with respect to the Certificates which shall be
authorized to act on behalf of the Trustee in authenticating the Certificates in
connection with the issuance, delivery, registration of transfer, exchange or
repayment of the Certificates. Whenever reference is made in this Agreement to
the authentication of Certificates by the Trustee or the Trustee's certificate
of authentication, such reference shall be deemed to include authentication on
behalf of the Trustee by an authenticating agent and certificate of
authentication executed on behalf of the Trustee by an authenticating agent.
Each authenticating agent must be acceptable to the Transferor and the Servicer.
(a) Any institution succeeding to the corporate agency
business of an authenticating agent shall continue to be an authenticating agent
without the execution or filing of any power or any further act on the part of
the Trustee or such authenticating agent. An authenticating agent may at any
time resign by giving notice of resignation to the Trustee and to the
Transferor. The Trustee may at any time terminate the agency of an
authenticating agent by giving notice of termination to such authenticating
agent and to the Transferor. Upon receiving such a notice of resignation or upon
such a termination, or in case at any time an authenticating agent shall cease
to be acceptable to the Trustee or the Transferor, the Trustee promptly may
appoint a successor authenticating agent. Any successor authenticating agent
upon acceptance of its appointment hereunder shall become vested with all the
rights, powers and duties of its predecessor hereunder, with like effect as if
originally named as an authenticating agent. No successor authenticating agent
shall be appointed unless acceptable to the Trustee and the Transferor. The
Transferor agrees to pay to each authenticating agent from time to time
reasonable compensation for its services under this Section. The provisions of
Sections 11.01, 11.02 and 11.03 shall be applicable to any authenticating agent.
(b) Pursuant to an appointment made under this Section, the
Certificates may have endorsed thereon, in lieu of the Trustee's certificate of
authentication, an alternate certificate of authentication in substantially the
following form:
This is one of the Certificates described in the Amended and
Restated Pooling and Servicing Agreement.
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as Authenticating Agent for the Trustee,
by
Authorized Officer
6.10. Book-Entry Certificates. If so specified in the related
Supplement for any Series or Class, the Investor Certificates, upon original
issuance, may be issued in the form of one or more typewritten or
word-processing system produced Investor Certificates representing the
Book-Entry Certificates, to be delivered to the Clearing Agency, by, or on
behalf of, the Transferor. The Investor Certificates shall initially be
registered on the Certificate Register in the name of the Clearing Agency or its
nominee, and no Certificate Owner will receive a definitive certificate
representing such Certificate Owner's interest in the Investor Certificates,
except as provided in Section 6.12. Unless and until definitive, fully
registered Investor Certificates ("Definitive Certificates") have been issued to
the applicable Certificate Owners pursuant to Section 6.12 or as otherwise
specified in any such Supplement:
(a) the provisions of this Section shall be in full force
and effect;
(b) the Transferor, the Servicer and the Trustee may deal
with the Clearing Agency and the Clearing Agency Participants for all purposes
(including the making of distributions) as the authorized representatives of the
respective Certificate Owners;
(c) to the extent that the provisions of this Section
conflict with any other provisions of this Agreement, the provisions of this
Section shall control; and
(d) the rights of the respective Certificate Owners shall be
exercised only through the Clearing Agency and the Clearing Agency Participants
and shall be limited to those established by law and agreements between such
Certificate Owners and the Clearing Agency or the Clearing Agency Participants.
Pursuant to the Depository Agreement, unless and until Definitive Certificates
are issued pursuant to Section 6.12, the Clearing Agency will make book-entry
transfers among the Clearing Agency Participants and receive and transmit
distributions of principal and interest on the related Investor Certificates to
such Clearing Agency Participants.
For purposes of any provision of this Agreement requiring or
permitting actions with the consent of, or at the direction of, Investor
Certificateholders evidencing a specified percentage of the aggregate unpaid
principal amount of Investor Certificates, such direction or consent may be
given by Certificate Owners (acting through the Clearing Agency and the Clearing
Agency Participants) owning Investor Certificates evidencing the requisite
percentage of principal amount of Investor Certificates.
6.11. Notices to Clearing Agency. Whenever any notice or other
communication is required to be given to Investor Certificateholders of any
Series or
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Class with respect to which Book-Entry Certificates have been issued, unless and
until Definitive Certificates shall have been issued to the related Certificate
Owners, the Trustee shall give all such notices and communications to the
applicable Clearing Agency.
6.12. Definitive Certificates. If Book-Entry Certificates have
been issued with respect to any Series or Class and (a) the Transferor advises
the Trustee in writing that the Clearing Agency is no longer willing or able to
discharge properly its responsibilities under the Depository Agreement with
respect to such Series or Class and the Trustee or the Transferor are unable to
locate a qualified successor, (b) the Transferor, at its option, advises the
Trustee that it elects to terminate the book-entry system with respect to such
Series or Class through the Clearing Agency or (c) after the occurrence of a
Servicer Default, Certificate Owners of such Series or Class evidencing more
than 50% of the aggregate unpaid principal amount of such Series or Class advise
the Trustee and the Clearing Agency through the Clearing Agency Participants
that the continuation of a book-entry system with respect to the Investor
Certificates of such Series or Class through the Clearing Agency is no longer in
the best interests of the Certificate Owners with respect to such Certificates,
then the Trustee shall notify all Certificate Owners of such Certificates,
through the Clearing Agency, of the occurrence of any such event and of the
availability of Definitive Certificates to Certificate Owners requesting the
same. Upon surrender to the Trustee of any such Certificates by the Clearing
Agency, accompanied by registration instructions from the Clearing Agency for
registration, the Transferor shall execute and the Trustee shall authenticate
and deliver such Definitive Certificates. Neither the Transferor nor the Trustee
shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such instructions.
Upon the issuance of such Definitive Certificates, all references herein to
obligations imposed upon or to be performed by the Clearing Agency shall be
deemed to be imposed upon and performed by the Trustee, to the extent applicable
with respect to such Definitive Certificates, and the Trustee shall recognize
the Holders of such Definitive Certificates as Investor Certificateholders
hereunder.
6.13. Global Certificate; Exchange Date.
(a) If specified in the related Supplement for any Series or
Class, the Investor Certificates for such Series or Class will initially be
issued in the form of a single temporary global Certificate (the "Global
Certificate") in bearer form, without interest coupons, in the denomination of
the entire aggregate principal amount of such Series or Class and substantially
in the form set forth in the exhibit with respect thereto attached to the
related Supplement. The Global Certificate will be executed by the Transferor
and authenticated by the Trustee upon the same conditions, in substantially the
same manner and with the same effect as the Definitive Certificates. The Global
Certificate may be exchanged as described below for Bearer or Registered
Certificates in definitive form (the "Definitive Euro-Certificates").
(b) The Manager shall, upon its determination of the date of
completion of the distribution of the Investor Certificates of such Series or
Class, so advise the Trustee, the Transferor, the Depositaries, and each Foreign
Clearing Agency forthwith. Without unnecessary delay, but in any event not prior
to the Exchange Date, the Transferor will execute
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and deliver to the Trustee at its London office or its designated agent outside
the United States definitive Bearer Certificates in an aggregate principal
amount equal to the entire aggregate principal amount of such Series or Class.
All Bearer Certificates so issued and delivered will have Coupons attached. The
Global Certificate may be exchanged for an equal aggregate principal amount of
Definitive Euro-Certificates only on or after the Exchange Date. An
institutional investor that is a U.S. Person may exchange the portion of the
Global Certificate beneficially owned by it only for an equal aggregate
principal amount of Registered Certificates bearing the applicable legend set
forth in the form of Registered Certificates attached to the related Supplement
and having a minimum denomination of $500,000, which may be in temporary form if
the Transferor so elects. The Transferor may waive the $500,000 minimum
denomination requirement if it so elects. Upon any demand for exchange for
Definitive Euro-Certificates in accordance with this paragraph, the Transferor
shall cause the Trustee to authenticate and deliver the Definitive
Euro-Certificates to the Holder (x) outside the United States, in the case of
Bearer Certificates, and (y) according to the instructions of the Holder, in the
case of Registered Certificates, but in either case only upon presentation to
the Trustee of a written statement substantially in the form of Exhibit F-1 with
respect to the Global Certificate or portion thereof being exchanged, signed by
a Foreign Clearing Agency and dated on the Exchange Date or a subsequent date,
to the effect that it has received in writing or by tested telex a certification
substantially in the form of (i) in the case of beneficial ownership of the
Global Certificate or a portion thereof being exchanged by a United States
institutional investor pursuant to the second preceding sentence, the
certificate in the form of Exhibit F-2 signed by the Manager which sold the
relevant Certificates or (ii) in all other cases, the certificate in the form of
Exhibit F-3, the certificate referred to in this clause (ii) being dated on the
earlier of the first actual payment of interest in respect of such Certificates
and the date of the delivery of such Certificate in definitive form. Upon
receipt of such certification, the Trustee shall cause the Global Certificate to
be endorsed in accordance with paragraph (d) below. Any exchange as provided in
this Section shall be made free of charge to the Holders and the beneficial
owners of the Global Certificate and to the beneficial owners of the Definitive
Euro-Certificates issued in exchange, except that a person receiving Definitive
Euro-Certificates must bear the cost of insurance, postage, transportation and
the like in the event that such person does not receive such Definitive
Euro-Certificates in person at the offices of a Foreign Clearing Agency.
(c) The delivery to the Trustee by a Foreign Clearing Agency
of any written statement referred to above may be relied upon by the Transferor
and the Trustee as conclusive evidence that a corresponding certification or
certifications has or have been delivered to such Foreign Clearing Agency
pursuant to the terms of this Agreement.
(d) Upon any such exchange of all or a portion of the Global
Certificate for a Definitive Euro-Certificate or Certificates, such Global
Certificate shall be endorsed by or on behalf of the Trustee to reflect the
reduction of its principal amount by an amount equal to the aggregate principal
amount of such Definitive Euro-Certificate or Certificates. Until so exchanged
in full, such Global Certificate shall in all respects be entitled to the same
benefits under this Agreement as Definitive Euro-Certificates authenticated and
delivered hereunder except that the beneficial owners of such Global Certificate
shall not be entitled to receive payments of interest on the Certificates until
they have exchanged their
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beneficial interests in such Global Certificate for Definitive
Euro-Certificates.
6.14. Meetings of Certificateholders.
(a) If at the time any Bearer Certificates are issued and
outstanding with respect to any Series or Class to which any meeting described
below relates, the Transferor, the Servicer or the Trustee may at any time call
a meeting of Investor Certificateholders of any Series or Class or of all
Series, to be held at such time and at such place as the Transferor, the
Servicer or the Trustee, as the case may be, shall determine, for the purpose of
approving a modification of or amendment to, or obtaining a waiver of any
covenant or condition set forth in, this Agreement, any Supplement or the
Investor Certificates or of taking any other action permitted to be taken by
Investor Certificateholders hereunder or under any Supplement. Notice of any
meeting of Investor Certificateholders, setting forth the time and place of such
meeting and in general terms the action proposed to be taken at such meeting,
shall be given in accordance with Section 13.05, the first mailing and
publication to be not less than 20 nor more than 180 days prior to the date
fixed for the meeting. To be entitled to vote at any meeting of Investor
Certificateholders a person shall be (i) a Holder of one or more Investor
Certificates of the applicable Series or Class or (ii) a person appointed by an
instrument in writing as proxy by the Holder of one or more such Investor
Certificates. The only persons who shall be entitled to be present or to speak
at any meeting of Investor Certificateholders shall be the persons entitled to
vote at such meeting and their counsel and any representatives of the
Transferor, the Servicer and the Trustee and their respective counsel.
(b) At a meeting of Investor Certificateholders, persons
entitled to vote Investor Certificates evidencing a majority of the aggregate
unpaid principal amount of the applicable Series or Class or all outstanding
Series, as the case may be, shall constitute a quorum. No business shall be
transacted in the absence of a quorum, unless a quorum is present when the
meeting is called to order. In the absence of a quorum at any such meeting, the
meeting may be adjourned for a period of not less than 10 days; in the absence
of a quorum at any such meeting, such adjourned meeting may be further adjourned
for a period of not less than 10 days; at the reconvening of any meeting further
adjourned for lack of a quorum, the persons entitled to vote Investor
Certificates evidencing at least 25% of the aggregate unpaid principal amount of
the applicable Series or Class or all outstanding Series, as the case may be,
shall constitute a quorum for the taking of any action set forth in the notice
of the original meeting. Notice of the reconvening of any adjourned meeting
shall be given as provided above except that such notice must be given not less
than five days prior to the date on which the meeting is scheduled to be
reconvened. Notice of the reconvening of an adjourned meeting shall state
expressly the percentage of the aggregate principal amount of the outstanding
applicable Investor Certificates which shall constitute a quorum.
(c) Any Investor Certificateholder who has executed an
instrument in writing appointing a person as proxy shall be deemed to be present
for the purposes of determining a quorum and be deemed to have voted; provided
that such Investor Certificateholder shall be considered as present or voting
only with respect to the matters covered by such instrument in writing. Subject
to the provisions of Section 13.01, any resolution passed
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or decision taken at any meeting of Investor Certificateholders duly held in
accordance with this Section shall be binding on all Investor Certificateholders
whether or not present or represented at the meeting.
(d) The holding of Bearer Certificates shall be proved by
the production of such Bearer Certificates or by a certificate, satisfactory to
the Servicer, executed by any bank, trust company or recognized securities
dealer, wherever situated, satisfactory to the Servicer. Each such certificate
shall be dated and shall state that on the date thereof a Bearer Certificate
bearing a specified serial number was deposited with or exhibited to such bank,
trust company or recognized securities dealer by the Person named in such
certificate. Any such certificate may be issued in respect of one or more Bearer
Certificates specified therein. The holding by the Person named in any such
certificate of any Bearer Certificate specified therein shall be presumed to
continue for a period of one year from the date of such certificate unless at
the time of any determination of such holding (i) another certificate bearing a
later date issued in respect of the same Bearer Certificate shall be produced,
(ii) the Bearer Certificate specified in such certificate shall be produced by
some other Person or (iii) the Bearer Certificate specified in such certificate
shall have ceased to be outstanding. The appointment of any proxy shall be
proved by having the signature of the Person executing the proxy guaranteed by
any bank, trust company or recognized securities dealer satisfactory to the
Trustee.
(e) The Trustee shall appoint a temporary chairman of the
meeting. A permanent chairman and a permanent secretary of the meeting shall be
elected by vote of the Holders of Investor Certificates evidencing a majority of
the aggregate unpaid principal amount of Investor Certificates of the applicable
Series or Class or all outstanding Series, as the case may be, represented at
the meeting. No vote shall be cast or counted at any meeting in respect of any
Investor Certificate challenged as not outstanding and ruled by the chairman of
the meeting to be not outstanding. The chairman of the meeting shall have no
right to vote except as an Investor Certificateholder or proxy. Any meeting of
Investor Certificateholders duly called at which a quorum is present may be
adjourned from time to time, and the meeting may be held as so adjourned without
further notice.
(f) The vote upon any resolution submitted to any meeting of
Investor Certificateholders shall be by written ballot on which shall be
subscribed the signatures of Investor Certificateholders or proxies and on which
shall be inscribed the serial number or numbers of the Investor Certificates
held or represented by them. The permanent chairman of the meeting shall appoint
two inspectors of votes who shall count all votes cast at the meeting for or
against any resolution and who shall make and file with the secretary of the
meeting their verified written reports in duplicate of all votes cast at the
meeting. A record in duplicate of the proceedings of each meeting of Investor
Certificateholders shall be prepared by the secretary of the meeting and there
shall be attached to said record the original reports of the inspectors of votes
on any vote by ballot taken thereat and affidavits by one or more persons having
knowledge of the facts setting forth a copy of the notice of the meeting and
showing that said notice was published as provided above. The record shall be
signed and verified by the permanent chairman and secretary of the meeting and
one of the duplicates shall be delivered to the Servicer and the other to the
Trustee to be preserved by the Trustee, the latter to have
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attached thereto the ballots voted at the meeting. Any record so signed and
verified shall be conclusive evidence of the matters therein stated.
6.15. Uncertificated Classes. Notwithstanding anything to the
contrary contained in this Article VI or in Article XII, unless otherwise
specified in any Supplement, any provisions contained in this Article VI and in
Article XII relating to the registration, form, execution, authentication,
delivery, presentation, cancellation and surrender of Certificates shall not be
applicable to any uncertificated Certificates.
ARTICLE VII
Other Matters Relating to the Transferor
7.1. Liability of the Transferor. Each Transferor (including
any Additional Transferors) shall be severally and not jointly liable for the
obligations, covenants, representations and warranties of such Transferor
arising under or related to this Agreement or any Supplement. Each Transferor
shall be liable only to the extent of the obligations specifically undertaken by
it in its capacity as a Transferor.
7.2. Merger or Consolidation of, or Assumption of the
Obligations of, the Transferor.
(a) No Transferor shall dissolve, liquidate, consolidate
with or merge into any other corporation or convey or transfer its properties
and assets substantially as an entirety to any Person unless:
(i) (x) the corporation 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 such 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 subject to Title 11 of the
United States Code or is a special purpose corporation whose
powers and activities are limited to substantially the same
degree as provided in the Certificate of Incorporation of
NextCard Funding Corp. and, if such Transferor is not the
surviving entity, shall expressly assume, by an agreement
supplemental hereto, executed and delivered to the Trustee, in
form satisfactory to the Trustee, the performance of every
covenant and obligation of such Transferor hereunder; and (y)
such Transferor or the surviving entity as the case may be has
delivered to the Trustee (with a copy to each Rating Agency) an
Officer's Certificate and an Opinion of Counsel each stating
that such consolidation, merger, conveyance or transfer and such
supplemental agreement comply with this Section, that such
supplemental agreement is a valid and binding obligation of such
surviving entity enforceable against such surviving entity in
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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 (whether considered in a suit at law or in equity), and
that all conditions precedent herein provided for relating to
such transaction have been complied with;
(ii) the Rating Agency Condition shall have
been satisfied with respect to such consolidation, merger,
conveyance or transfer; and
(iii) the relevant Transferor shall have
delivered to the Trustee and each Rating Agency a Tax Opinion,
dated the date of such consolidation, merger, conveyance or
transfer, with respect thereto.
(b) Except as permitted by subsection 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 clauses (ii) and (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 Trustee in
writing in form satisfactory to the Trustee, the performance of every covenant
and obligation of such Transferor thereby conveyed.
7.3. Limitations on Liability of the Transferor. Subject to
Section 7.01, neither the Transferor nor any of its directors, officers,
employees, incorporators or agents acting in such capacities shall be under any
liability to the Trust, the Trustee, the Certificateholders, the Certificate
Owners, any Series Enhancer, any other Transferor 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 and any Supplement and the
issuance of the Certificates; 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 duties or by reason of reckless disregard of
obligations and duties hereunder. Each Transferor and any director, officer,
employee 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.
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ARTICLE VIII
Other Matters Relating to the Servicer
8.1. Liability of the Servicer. The Servicer shall be liable
under this Article only to the extent of the obligations specifically undertaken
by the Servicer in its capacity as Servicer.
8.2. Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer. The Servicer shall not consolidate with or merge
into any other corporation or convey or transfer its properties and assets
substantially as an entirety to any Person, unless:
(a) (i) the corporation formed by such consolidation or into
which the Servicer is merged or the Person which acquires by conveyance or
transfer the properties and assets of the Servicer substantially as an entirety
shall be, if the Servicer is not the surviving entity, a corporation 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 shall expressly assume, by an agreement supplemental hereto,
executed and delivered to the Trustee, in form satisfactory to the Trustee, the
performance of every covenant and obligation of the Servicer hereunder;
(ii) the Servicer has delivered to the
Trustee an Officer's Certificate and an Opinion of Counsel each
stating that such consolidation, merger, conveyance or transfer
and such supplemental agreement comply with this Section, 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 and except as such
enforceability may be limited by general principles of equity
(whether considered in a suit at law or in equity), and that all
conditions precedent herein provided for relating to such
transaction have been complied with;
(b) the Rating Agency Condition shall have been satisfied
with respect to such assignment and succession; and
(c) the corporation 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.
8.3. Limitation on Liability of the Servicer and Others.
Except as provided in Section 8.04, neither the Servicer nor any of the
directors, officers, employees or agents of the Servicer in its capacity as
Servicer shall be under any liability to the Trust, the Trustee, the
Certificateholders, 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
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or any such Person against any liability which would otherwise be imposed by
reason of willful misfeasance, bad faith or gross negligence in the performance
of duties or by reason of reckless disregard of obligations and duties
hereunder. The Servicer and any director, officer, employee or agent of the
Servicer may rely in good faith on any document of any kind prima facie properly
executed and submitted by any Person (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 Certificateholders with respect to this
Agreement and the rights and duties of the parties hereto and the interests of
the Certificateholders hereunder.
8.4. Servicer Indemnification of the Trust and the Trustee.
The Servicer shall indemnify and hold harmless the Trust and the Trustee from
and against any loss, liability, expense, damage or injury suffered or sustained
by reason of (a) any acts or omissions of the Servicer with respect to the Trust
pursuant to this Agreement or (b) the administration by the Trustee of the
Trust, including any judgment, award, settlement, reasonable attorneys' fees and
expenses and other costs or expenses incurred in connection with the defense of
any action, proceeding or claim; provided, however, that the Servicer shall not
indemnify the Trustee if such acts, omissions or alleged acts or omissions
constitute or are caused by fraud, negligence, or willful misconduct by the
Trustee; provided further, that the Servicer shall not indemnify the Trust, the
Investor Certificateholders or the Certificate Owners for any liabilities, costs
or expenses of the Trust with respect to any action taken by the Trustee at the
request of the Investor Certificateholders; provided further, that the Servicer
shall not indemnify the Trust, the Investor Certificateholders or the
Certificate Owners as to any losses, claims or damages incurred by any of them
in their capacities as investors, including without limitation losses incurred
as a result of Defaulted Receivables; and provided further, that the Servicer
shall not indemnify the Trust, the Investor Certificateholders or the
Certificate Owners for any liabilities, costs or expenses of the Trust, the
Investor Certificateholders or the Certificate Owners arising under any tax law,
including without limitation, any Federal, state, local or foreign income or
franchise taxes or any other tax imposed on or measured by income (or any
interest or penalties with respect thereto or arising from a failure to comply
therewith) required to be paid by the Trust, the Investor Certificateholders or
the Certificate Owners in connection herewith to any taxing authority.
Indemnification pursuant to this Section shall not be payable from the Trust
Assets. The provisions of this indemnity shall run directly to and be
enforceable by the Trust or the Trustee subject to the limitations hereof and
shall survive the termination of this Agreement or the Trust or the earlier
removal or resignation of the Trustee.
8.5. Resignation of the Servicer. The Servicer shall not
resign from the obligations and duties hereby imposed on it except (a) upon
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 Trustee, in form satisfactory
to the Trustee, of the obligations and duties of the Servicer hereunder by any
of its Affiliates that is a direct or
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indirect wholly owned subsidiary of NextCard, Inc. 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 Trustee. No resignation shall
become effective until the Trustee or a Successor Servicer shall have assumed
the responsibilities and obligations of the Servicer in accordance with Section
10.02. If within 120 days of the date of the determination that the Servicer may
no longer act as Servicer under clause (a) above the Trustee is unable to
appoint a Successor Servicer, the Trustee shall serve as Successor Servicer;
provided, however, that the Trustee shall have continued authority to appoint
another Eligible Servicer. Notwithstanding the foregoing, the 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 Trustee shall give prompt notice to each
Rating Agency upon the appointment of a Successor Servicer. Notwithstanding
anything in this Agreement to the contrary, NextCard, Inc. may assign part or
all of its obligations and duties as Servicer under this Agreement to an
Affiliate of NextCard, Inc. so long as NextCard, Inc. shall have fully
guaranteed the performance of such obligations and duties under this Agreement.
8.6. Access to Certain Documentation and Information
Regarding the Receivables. The Servicer shall provide to the Trustee access to
the documentation regarding the Accounts and the Receivables in such cases where
the Trustee is required in connection with the enforcement of the rights of
Certificateholders 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 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.
8.7. Delegation of Duties. In the ordinary course of
business, the Servicer may at any time delegate any duties hereunder to any
Person who agrees to conduct such duties in accordance with the Credit Card
Guidelines and this Agreement; provided, however, in the case of significant
delegation to a Person other than to an Account Owner or any Affiliate of an
Account Owner, (i) at least 30 days prior written notice shall be given to the
Trustee and each Rating Agency of such delegation and (ii) at or prior to the
end of such 30-day period the Servicer shall have determined that the Rating
Agency Condition has been met. Any such delegations shall not relieve the
Servicer of its liability and responsibility with respect to such duties, and
shall not constitute a resignation within the meaning of Section 8.05. The fees
and expenses of any such Person will not be the responsibility of the Trustee or
the Certificateholders.
8.8. Examination of Records. The Servicer shall clearly and
unambiguously indicate in its computer files or other records that the
Receivables arising in
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the Accounts have been conveyed to the Trustee, on behalf of the Trust, pursuant
to this Agreement for the benefit of the Certificateholders. The Servicer shall,
prior to the sale or transfer to a third party of any receivable held in its
custody, examine its computer and other records to determine that such
receivable is not a Receivable.
ARTICLE IX
Pay Out Events
9.1. Trust Pay Out Events. If any one of the following
events shall occur with respect to the Trust ("Trust Pay Out Events"):
(i) any Transferor or any of the Account
Owners shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings of
or relating to such Transferor or Account Owner or of or
relating to all or substantially all of its property, or a
decree or order of a court or agency or supervisory authority
having jurisdiction in the premises for the appointment of a
conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshaling of assets and liabilities or
similar proceedings, or for the winding-up or liquidation of its
affairs, shall have been entered against such Transferor or
Account Owner; or any Transferor or Account Owner shall admit in
writing its inability to pay its debts generally as they become
due, file a petition to take advantage of any applicable
insolvency or reorganization statute, make any assignment for
the benefit of its creditors or voluntarily suspend payment of
its obligations (any such event, an "Insolvency Event");
(ii) the Trust shall become subject to
regulation by the Commission as an "investment company" within
the meaning of the Investment Company Act; or
(iii) a Transfer Restriction Event shall
occur;
then, a Trust Pay Out Event shall occur with respect to each Series without any
notice or other action on the part of the Trustee or the Investor
Certificateholders, immediately upon the occurrence of such event.
9.2. Rights Upon the Occurrence of an Insolvency Event. If
the Transferor causes an Insolvency Event to occur with respect to the
Transferor or an Account Owner or if an Insolvency Event otherwise occurs with
respect to the Transferor or an Account Owner, the Transferor shall on the day
any such Insolvency Event occurs immediately cease to transfer Principal
Receivables to the Trust and shall promptly give notice to the Trustee thereof.
Notwithstanding any cessation of the transfer to the Trust of additional
Principal Receivables, Principal Receivables transferred to the Trust prior to
the occurrence of such
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Insolvency Event and 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 Trust Assets.
ARTICLE X
Servicer Defaults
10.1. Servicer Defaults. If any one of the following events
(a "Servicer Default") shall occur and be continuing:
(a) any failure by the Servicer to make any payment,
transfer or deposit or to give instructions or notice to the Trustee pursuant to
the terms of this Agreement or any Supplement on or before the date occurring
five 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 or any 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 or any Supplement which has a material
adverse effect on the interests hereunder of the Investor Certificateholders of
any Series or Class and which continues unremedied for a period of 60 days after
the date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Servicer by the Trustee, or to the
Servicer and the Trustee by Holders of Investor Certificates evidencing more
than 50% of the Aggregate Invested Amount (or, with respect to any such failure
that does not relate to all Series, 50% of the aggregate Invested Amount of all
Series to which such failure relates); or the Servicer shall delegate its duties
under this Agreement, except as permitted by Sections 8.02 or 8.07, a
Responsible Officer of the Trustee has actual knowledge of such delegation and
such delegation continues unremedied for 15 days after the date on which written
notice thereof, requiring the same to be remedied, shall have been given to the
Servicer by the Trustee, or to the Servicer and the Trustee by Holders of
Investor Certificates evidencing more than 50% of the Aggregate Invested Amount;
(c) any representation, warranty or certification made by
the Servicer in this Agreement or any Supplement or in any certificate delivered
pursuant to this Agreement or any Supplement shall prove to have been incorrect
when made, which has a material adverse effect on the rights of the Investor
Certificateholders of any Series or Class and which continues to be incorrect in
any material respect for a period of 60 days after the date on which written
notice of such failure, requiring the same to be remedied, shall have been given
to the Servicer by the Trustee, or to the Servicer and the Trustee by the
Holders of Investor Certificates evidencing more than 50% of the Aggregate
Invested Amount (or, with respect to any such representation, warranty or
certification that does not relate to all Series, 50% of the Aggregate Invested
Amount of all Series to which such representation, warranty or certification
relates); or
(d) the Servicer shall consent to the appointment of a
conservator
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or receiver or liquidator in any insolvency, readjustment of debt, marshaling of
assets and liabilities or similar proceedings of or relating to the Servicer or
of or relating to all or substantially all of its property, or a decree or order
of a court or agency or supervisory authority having jurisdiction in the
premises for the appointment of a conservator or receiver or liquidator in any
insolvency, readjustment of debt, marshaling of assets and liabilities or
similar proceedings, or for the winding-up or liquidation of its affairs, shall
have been entered against the Servicer, and such decree or order shall have
remained in force undischarged or unstayed for a period of 60 days; 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 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 Trustee or the Holders
of Investor Certificates evidencing more than 50% of the Aggregate Invested
Amount, by notice then given to the Servicer (and to the Trustee if given by the
Investor Certificateholders) (a "Termination Notice"), may terminate all but not
less than all the rights and obligations of the Servicer as Servicer under this
Agreement; provided, however, if within 60 days of receipt of a Termination
Notice the Trustee does not receive any bids from Eligible Servicers in
accordance with subsection 10.02(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 Trustee shall offer the Transferor the right at its option to
purchase the Certificateholders' Interest on the Distribution Date next
succeeding 60 days after the receipt by the Servicer of a Termination Notice.
The purchase price for the Certificateholders' Interest shall be
equal to the sum of the amounts specified therefor with respect to each
outstanding Series in the related Supplement. The Transferor shall notify the
Trustee in writing prior to the Record Date for the Distribution Date of the
purchase if it is exercising such option. If the Transferor exercises such
option, the Transferor shall deposit the purchase price into the Collection
Account not later than 12:00 noon, New York City time, on such Distribution Date
in immediately available funds. The purchase price shall be allocated and
distributed to Investor Certificateholders in accordance with Article IV and the
terms of each Supplement.
After receipt by the Servicer of such Termination Notice, and on
the date that a Successor Servicer shall have been appointed by the Trustee
pursuant to Section 10.02, all authority and power of the Servicer under this
Agreement shall pass to and be vested in a Successor Servicer; and, without
limitation, the Trustee is hereby authorized and empowered (upon the failure of
the Servicer to cooperate) to execute and deliver, on behalf of the Servicer, as
attorney-in-fact or otherwise, all documents and other instruments upon the
failure of the Servicer to execute or deliver such documents or instruments, and
to do and accomplish all other acts or things necessary or appropriate to effect
the purposes of such transfer of servicing rights. The Servicer agrees to
cooperate with the Trustee and such Successor Servicer in effecting the
termination of the responsibilities and rights of the Servicer to conduct
servicing hereunder including, without limitation, the transfer to such
Successor Servicer of all authority of the
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Servicer to service the Receivables provided for under this Agreement,
including, without limitation, all authority over all Collections which shall on
the date of transfer be held by the Servicer for deposit, or which have been
deposited by the Servicer, in the Collection Account, or which shall thereafter
be received with respect to the Receivables, and in assisting the Successor
Servicer and in enforcing all rights to Insurance Proceeds. The Servicer shall
promptly transfer its electronic records relating to the Receivables to the
Successor Servicer in such electronic form as the Successor Servicer may
reasonably request and shall promptly transfer to the Successor Servicer all
other records, correspondence and documents necessary for the continued
servicing of the Receivables in the manner and at such times as the Successor
Servicer shall reasonably request. To the extent that compliance with this
Section 10.01 shall require the Servicer to disclose to the Successor Servicer
information of any kind which the Servicer reasonably deems to be confidential,
the Successor Servicer shall be required to enter into such customary licensing
and confidentiality agreements as the Servicer shall deem necessary to protect
its interests.
Notwithstanding the foregoing, any delay in or failure of
performance under subsection 10.01(a) for a period of 5 Business Days or under
subsections 10.01(b) or (c) for a period of 60 days (in addition to any period
provided in subsections 10.01(a), (b) or (c)) shall not constitute a Servicer
Default until the expiration of such additional 5 Business Days or 60 days,
respectively, 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, terrorism,
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 its best efforts to perform its respective
obligations in a timely manner in accordance with the terms of this Agreement
and any Supplement and the Servicer shall provide the Trustee, each Rating
Agency, the Holders of the Transferor Certificates and the Investor
Certificateholders with an Officer's Certificate giving prompt notice of such
failure or delay by it, together with a description of its efforts to so perform
its obligations.
10.2. Trustee To Act, Appointment of Successor.
(a) On and after the receipt by the Servicer of a
Termination Notice pursuant to Section 10.01, 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 Trustee or until a date
mutually agreed upon by the Servicer and Trustee. The 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 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 Trustee without further action shall
automatically be appointed the Successor Servicer; provided, however, that the
Trustee shall have continued authority to appoint another Eligible Servicer. The
Trustee may delegate any of its servicing obligations to an Affiliate of the
Trustee or agent in accordance with Sections 3.01(b) and 8.07. Notwithstanding
the foregoing, the Trustee shall, if it is unable so to act, petition a court of
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'competent jurisdiction to appoint any established institution qualifying as an
Eligible Servicer as the Successor Servicer hereunder. The Trustee shall give
prompt notice to each Rating Agency upon the appointment of a Successor
Servicer.
(b) Upon its appointment, the Successor Servicer shall be
the successor 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 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; provided, however, that the Holders of the Transferor
Certificates shall be responsible for payment of the Transferor's portion of
such aggregate Servicing Fees and that no such monthly compensation paid out of
Collections shall be in excess of such aggregate Servicing Fees. Each Holder of
a Transferor Certificate agrees that, if NextCard, Inc. (or any Successor
Servicer) is terminated as Servicer hereunder, the portion of the Collections in
respect of Finance Charge Receivables that such Holders are entitled to receive
pursuant to this Agreement or any Supplement shall be reduced by an amount
sufficient to pay such Holders' share (determined by reference to the
Supplements with respect to any outstanding Series) of the compensation of the
Successor Servicer.
(d) All authority and power granted to the Successor
Servicer or the Servicer under this Agreement shall automatically cease and
terminate upon termination of the Trust pursuant to Section 12.01 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
Successor Servicer or 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 Successor Servicer and the Servicer agree to cooperate
with the Transferor in effecting the termination of the responsibilities and
rights of the Successor Servicer or the Servicer to conduct servicing on the
Receivables. The Successor Servicer or the Servicer shall transfer its
electronic records relating to the Receivables to the Transferor in such
electronic form as the Transferor may reasonably request and shall transfer all
other records, correspondence and documents to the Transferor in the manner and
at such times as the Transferor shall reasonably request. To the extent that
compliance with this Section 10.02 shall require the Successor Servicer or the
Servicer to disclose to the Transferor information of any kind which the
Successor Servicer or the Servicer deems to be confidential, the Transferor
shall be required to enter into such customary licensing and confidentiality
agreements as the Successor Servicer or the Servicer shall deem necessary to
protect its interests.
10.3. Notification to Certificateholders. Within two
Business Days after the Servicer becomes aware of any Servicer Default, the
Servicer shall give notice thereof to the Trustee and each Rating Agency and the
Trustee shall give notice to the Investor Certificateholders. Upon any
termination or appointment of a Successor Servicer
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pursuant to this Article, the Trustee shall give prompt notice thereof to the
Investor Certificateholders.
ARTICLE XI
The Trustee
11.1. Duties of Trustee.
(a) The Trustee, prior to the occurrence of a Servicer
Default and after the curing of all Servicer Defaults which may have occurred,
undertakes to perform such duties and only such duties as are specifically set
forth in this Agreement. If a Responsible Officer has received written notice
that a Servicer Default has occurred (which has not been cured or waived) the
Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in its exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
(b) The Trustee, upon receipt of all resolutions,
certificates, statements, opinions, reports, documents, orders or other
instruments furnished to the Trustee that are specifically required to be
furnished pursuant to any provision of this Agreement, shall examine them to
determine whether they substantially conform to the requirements of this
Agreement.
(c) Subject to subsection 11.01(a), no provision of this
Agreement shall be construed to relieve the Trustee from liability for its own
negligent action, its own negligent failure to act or its own misconduct;
provided, however, that:
(i) the Trustee shall not be personally
liable for an error of judgment made in good faith by a
Responsible Officer or Responsible Officers of the Trustee,
unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts;
(ii) the Trustee shall not be personally
liable with respect to any action taken, suffered or omitted to
be taken by it in good faith in accordance with the direction of
the Holders of Investor Certificates evidencing more than 50% of
the Invested Amount of any Series relating to the time, method
and place of conducting any proceeding for any remedy available
to the Trustee, or exercising any trust or power conferred upon
the Trustee in relation to such Series, under this Agreement;
and
(iii) the Trustee shall not be charged with
knowledge of any failure by the Servicer referred to in clauses
(a) and (b) of Section 10.01 unless a Responsible Officer of the
Trustee obtains actual knowledge of such failure or the Trustee
receives written notice of such failure from the Servicer or any
Holders of Investor Certificates evidencing not less than 10% of
the Invested Amount of any Series adversely affected thereby.
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(d) The Trustee shall not be required to expend or risk its
own funds or otherwise incur financial liability in the performance of any of
its duties hereunder including, without limitation, its duties as Successor
Servicer, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of, any
of the obligations of the Servicer under this Agreement except during such time,
if any, as the Trustee shall be the successor to, and be vested with the rights,
duties, powers and privileges of, the Servicer in accordance with the terms of
this Agreement.
(e) Except for actions expressly authorized by this
Agreement, the Trustee shall take no action reasonably likely to (i) impair the
interests of the Trust in any Receivable now existing or hereafter created or
(ii) impair the value of any Receivable now existing or hereafter created.
(f) The Trustee shall have no power to vary the corpus of
the Trust, except as expressly provided in this Agreement.
(g) In the event that the Paying Agent or the Transfer Agent
and Registrar shall fail to perform any obligation, duty or agreement in the
manner or on the day required to be performed by the Paying Agent or the
Transfer Agent and Registrar, as the case may be, under this Agreement, the
Trustee shall be obligated as soon as possible upon actual knowledge of a
Responsible Officer thereof and receipt of appropriate records, if any, to
perform such obligation, duty or agreement in the manner so required.
(h) If the Transferor has agreed to transfer any of its
consumer revolving credit card receivables (other than the Receivables) to
another Person, upon the written request of the Transferor, the Trustee will
enter into such intercreditor agreements with the transferee of such receivables
as are customary and necessary to separately identify the rights, if any, of the
Trust and such other Person in the Transferor's consumer revolving credit card
receivables; provided, that the Trustee shall not be required to enter into any
intercreditor agreement which could adversely affect the interests of the
Certificateholders and, upon the request of the Trustee, the Transferor will
deliver an Opinion of Counsel on any matters relating to such intercreditor
agreement, reasonably requested by the Trustee.
11.2. Certain Matters Affecting the Trustee. Except as
otherwise provided in Section 11.01:
(a) The Trustee may conclusively rely on and shall be
protected in acting on, or in refraining from acting in accord with, any
Assignment, the initial report, the annual Servicer's certificate, the monthly
payment instructions and notification to the Trustee, the monthly
Certificateholder's statement, any resolution, Officer's Certificate,
certificate of auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal, bond or other paper
or document believed by it to be genuine and to have been signed or presented to
it pursuant to this Agreement by the proper party or parties;
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(b) the Trustee may consult with counsel of its selection,
and any advice or Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken or suffered or omitted by it
hereunder in good faith and in accordance with such advice or Opinion of
Counsel;
(c) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Agreement or any Enhancement
Agreement, or to institute, conduct or defend any litigation hereunder or in
relation hereto, at the request, order or direction of any of the
Certificateholders, or any Enhancement Provider, pursuant to the provisions of
this Agreement or any Enhancement Agreement, unless such Certificateholders or
any Enhancement Provider shall have offered to the Trustee reasonable security
or indemnity against the costs, expenses and liabilities which may be incurred
therein or thereby; nothing contained herein shall, however, relieve the Trustee
of the obligations, upon the occurrence of any Servicer Default (which has not
been cured), to exercise such of the rights and powers vested in it by this
Agreement and any Series Enhancement, and to use the same degree of care and
skill in its exercise as a prudent person would exercise or use under the
circumstances in the conduct of person's own affairs;
(d) the Trustee shall not be personally liable for any
action taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon it by
this Agreement;
(e) the Trustee shall not be bound to make any investigation
into the facts of matters stated in any Assignment, the initial report, the
annual Servicer's certificate, the monthly payment instructions and notification
to the Trustee, the monthly Certificateholder's statement, any resolution,
certificate, statement, instrument, opinion, report, notice, request, consent,
order, approval, bond or other paper or document, unless requested in writing so
to do by Holders of Investor Certificates evidencing more than 50% of the
Invested Amount of any Series which could be adversely affected if the Trustee
does not perform such acts;
(f) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys or a custodian, and the Trustee shall not be responsible for
any misconduct or negligence on the part of any such agent, attorney or
custodian appointed with due care by it hereunder; and
(g) except as may be required by subsection 11.01(a) hereof,
the Trustee shall not be required to make any initial or periodic examination of
any documents or records related to the Receivables or the Accounts for the
purpose of establishing the presence or absence of defects, the compliance by
the Transferor with its representations and warranties or for any other purpose.
11.3. Trustee Not Liable for Recitals in Certificates. The
Trustee assumes no responsibility for the correctness of the recitals contained
herein and in the certificates (other than the certificate of authentication on
the Certificates). Except as set forth in Section 11.15, the Trustee makes no
representations as to the validity or sufficiency of this Agreement or any
Supplement or of the Certificates (other than the certificate of authentication
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on the Certificates) or of any Receivable or related document. The Trustee shall
not be accountable for the use or application by the Transferor of any of the
Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Transferor or the Holders of the Transferor
Certificates in respect of the Receivables or deposited in or withdrawn from the
Collection Account, the Excess Funding Account or any Series Account by the
Servicer.
11.4. Trustee May Own Certificates. Subject to Section 6.06,
the Trustee in its individual or any other capacity may become the owner or
pledgee of Investor Certificates or Supplemental Certificates with the same
rights as it would have if it were not the Trustee.
11.5. Servicer To Pay Trustee's Fees and Expenses. The
Servicer covenants and agrees to pay to the Trustee from time to time, and the
Trustee shall be entitled to receive, reasonable compensation (which shall not
be limited by any provision of law in regard to the compensation of a trustee of
an express trust) for all services rendered by it in the execution of the trust
hereby created and in the exercise and performance of any of the powers and
duties hereunder of the Trustee, and the Servicer will pay or reimburse the
Trustee (without reimbursement from the Collection Account or otherwise, except
as provided in Section 3.02) upon its request for all reasonable expenses and
disbursements incurred or made by the Trustee (including the fees and expenses
of Trustee's counsel) in accordance with any of the provisions of this Agreement
except any such expense or disbursement as may arise from its own negligence or
bad faith and except as provided in the following sentence. If the Trustee is
appointed Successor Servicer pursuant to Section 10.02, the provisions of this
Section 11.05 shall not apply to expenses or disbursements made or incurred by
the Trustee in its capacity as Successor Servicer. The obligations of the
Transferor under this Section 11.05 shall survive the termination of the Trust
and the resignation or removal of the Trustee.
11.6. Eligibility Requirements for Trustee. The Trustee
hereunder shall at all times be a bank or a corporation organized and doing
business under the laws of the United States of America or any state thereof and
subject to supervision or examination by Federal or state authority and
authorized under such laws to exercise corporate trust powers that either (x)
has a long-term unsecured debt rating of at least Baa3 by Moody's and BBB- by
Standard & Poor's and, in the case of an entity that is subject to risk-based
capital adequacy requirements, risk-based capital of at least $50,000,000 or, in
the case of an entity that is not subject to risk-based capital adequacy
requirements, a combined capital and surplus of at least $50,000,000 or (y)
shall otherwise be acceptable to each Rating Agency. If such bank or corporation
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purpose of this Section 11.06, the combined capital and surplus of such bank or
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. The Trustee shall not be an
Affiliate of the Transferor. In case at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section 11.06, the Trustee
shall resign immediately in the manner and with the effect specified in Section
11.07.
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11.7. Resignation or Removal of Trustee.
(a) The Trustee may at any time resign and be discharged
from the trust hereby created by giving written notice thereof to the Servicer.
Upon receiving such notice of resignation, the Servicer shall promptly appoint a
successor trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Trustee and one copy to the
successor trustee. If no successor trustee shall have been so appointed and have
accepted within 30 days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor trustee.
(b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 11.06 and shall fail to resign after
written request therefor by the Servicer or the Transferor, or if at any time
the Trustee shall be legally unable to act, or shall be adjudged a bankrupt or
insolvent, or a receiver of the Trustee or of its property shall be appointed,
or any public officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Servicer or Transferor may, but shall not be required to,
remove the Trustee and promptly appoint a successor trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
Trustee so removed and one copy to the successor trustee.
(c) Any resignation or removal of the Trustee and
appointment of a successor trustee pursuant to any of the provisions of this
Section 11.07 shall not become effective until acceptance of appointment by the
successor trustee as provided in Section 11.08 and any liability of the Trustee
arising hereunder shall survive such appointment of a successor trustee.
11.8. Successor Trustee.
(a) Any successor trustee appointed as provided in Section
11.07 shall execute, acknowledge and deliver to the Transferor, to the Servicer
and to its predecessor Trustee an instrument accepting such appointment
hereunder, and thereupon the resignation or removal of the predecessor Trustee
shall become effective and such successor trustee, without any further act, deed
or conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with the like effect as if originally
named as Trustee herein. The predecessor Trustee shall deliver to the successor
trustee all documents and statements held by it hereunder, and the Transferor
and the predecessor Trustee shall execute and deliver such instruments and do
such other things as may reasonably be required for fully and certainly vesting
and confirming in the successor trustee all such rights, powers, duties and
obligations.
(b) No successor trustee shall accept appointment as
provided in this Section 11.08 unless at the time of such acceptance such
successor trustee shall be eligible under the provisions of Section 11.06.
(c) Upon acceptance of appointment by a successor trustee as
provided in this Section 11.08, such successor trustee shall provide notice of
such succession
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hereunder to all Investor Certificateholders and the Servicer shall provide such
notice to each Rating Agency and any Series Enhancer entitled thereto pursuant
to the relevant Supplement.
11.9. Merger or Consolidation of Trustee. Any Person into
which the Trustee may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any Person succeeding to
the corporate trust business of the Trustee, shall be the successor of the
Trustee hereunder, provided such corporation shall be eligible under the
provisions of Section 11.06, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.
11.10. Appointment of Co-Trustee or Separate Trustee.
(a) Notwithstanding any other provisions of this Agreement,
at any time, for the purpose of meeting any legal requirements of any
jurisdiction in which any part of the Trust may at the time be located, the
Trustee shall have the power and may execute and deliver all instruments to
appoint one or more Persons to act as a co-trustee or co-trustees, or separate
trustee or separate trustees, of all or any part of the Trust, and to vest in
such Person or Persons, in such capacity and for the benefit of the
Certificateholders, such title to the Trust, or any part thereof, and, subject
to the other provisions of this Section 11.10, such powers, duties, obligations,
rights and trusts as the Trustee may consider necessary or desirable; provided,
however, that the Trustee shall exercise due care in the appointment of any
co-trustee. The Trustee shall notify the Rating Agencies of any such appointment
of any such co-trustee. No co-trustee or separate trustee hereunder shall be
required to meet the terms of eligibility as a successor trustee under Section
11.06 and no notice to Certificateholders of the appointment of any co-trustee
or separate trustee shall be required under Section 11.08.
(b) Every separate trustee and co-trustee shall, to the
extent permitted by law, be appointed and act subject to the following
provisions and conditions:
(i) all rights, powers, duties and
obligations conferred or imposed upon the Trustee shall be
conferred or imposed upon and exercised or performed by the
Trustee and such separate trustee or co-trustee jointly (it
being understood that such separate trustee or co-trustee is not
authorized to act separately without the Trustee joining in such
act) except to the extent that under any laws of any
jurisdiction in which any particular act or acts are to be
performed (whether as Trustee hereunder or as successor to the
Servicer hereunder) the Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such
rights, powers, duties and obligations (including the holding of
title to the Trust or any portion thereof in any such
jurisdiction) shall be exercised and performed singly by such
separate trustee or co-trustee, but solely at the direction of
the Trustee;
(ii) no trustee hereunder shall be personally
liable by reason of any act or omission of any other trustee
hereunder; and
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\ (iii) the Trustee may at any time accept the
resignation of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the
Trustee shall be deemed to have been given to each of the then-separate trustees
and co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article XI. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the provisions
of this Agreement, specifically including every provision of this Agreement
relating to the conduct of, affecting the liability of, or affording protection
to, the Trustee. Every such instrument shall be filed with the Trustee and a
copy thereof given to the Servicer.
(d) Any separate trustee or co-trustee may at any time
constitute the Trustee as its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect to this Agreement on its behalf and in its name. If any separate trustee
or co-trustee shall die, become incapable of acting, resign or be removed, all
of its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
11.11. Tax Returns. In the event the Trust shall be required
to file tax returns, the Servicer, as soon as practicable after it is made aware
of such requirement, shall prepare or cause to be prepared any tax returns
required to be filed by the Trust and, to the extent possible, shall file such
returns at least five days before such returns are due to be filed. The Trustee
is hereby authorized to sign any such return on behalf of the Trust. The
Servicer shall prepare or shall cause to be prepared all tax information
required by law to be distributed to Certificateholders and shall deliver such
information to the Trustee at least five days prior to the date it is required
by law to be distributed to Certificateholders. The Servicer, upon request, will
furnish the Trustee with all such information known to the Servicer as may be
reasonably required in connection with the preparation of all tax returns of the
Trust. In no event shall the Trustee, the Transferor or the Servicer be liable
for any liabilities, costs or expenses of the Trust, the Investor
Certificateholders or the Certificate Owners arising under any tax law,
including without limitation federal, state, local or foreign income or excise
taxes or any other tax imposed on or measured by income (or any interest or
penalty with respect thereto or arising from a failure to comply therewith).
11.12. Trustee May Enforce Claims Without Possession of
Certificates. All rights of action and claims under this Agreement or any Series
of Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name as trustee. Any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of any Series of
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Certificates in respect of which such judgment has been obtained.
11.13. Suits for Enforcement.
(a) If a Servicer Default shall occur and be continuing, the
Trustee, in its discretion may, subject to the provisions of Sections 10.01 and
11.14, proceed to protect and enforce its rights and the rights of any Series of
Certificates under this Agreement by a suit, action or proceeding in equity or
at law or otherwise, whether for the specific performance of any covenant or
agreement contained in this Agreement or in aid of the execution of any power
granted in this Agreement or for the enforcement of any other legal, equitable
or other remedy as the Trustee, being advised by counsel, shall deem most
effectual to protect and enforce any of the rights of the Trustee or any Series
of Certificates.
(b) Nothing herein contained shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on behalf of any
Certificateholder any plan of reorganization, arrangement, adjustment or
composition affecting the Certificates or the rights of any Holder thereof, or
to authorize the Trustee to vote in respect of the claim of any
Certificateholder in any such proceeding.
11.14. Rights of Certificateholders To Direct Trustee.
Holders of Investor Certificates evidencing more than 50% of the Aggregate
Invested Amount (or, with respect to any remedy, trust or power that does not
relate to all Series, 50% of the aggregate Invested Amount of all Series to
which such remedy, trust or power relates) shall have the right to direct the
time, method, and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred on the Trustee;
provided, however, that, subject to Section 11.01, the Trustee shall have the
right to decline to follow any such direction if the Trustee being advised by
counsel determines that the action so directed may not lawfully be taken, or if
the Trustee in good faith shall, by a Responsible Officer or Responsible
Officers of the Trustee, determine that the proceedings so directed would be
illegal or involve it in personal liability or be unduly prejudicial to the
rights of Certificateholders not parties to such direction; and provided
further, that nothing in this Agreement shall impair the right of the Trustee to
take any action deemed proper by the Trustee and which is not inconsistent with
such direction of such Holders of Investor Certificates.
11.15. Representations and Warranties of Trustee. The Trustee
represents and warrants as of each Closing Date that:
(a) the Trustee is a banking corporation organized, existing
and authorized to engage in the business of banking under the laws of the State
of New York;
(b) the Trustee has full power, authority and right to
execute, deliver and perform this Agreement and each Supplement, and has taken
all necessary action to authorize the execution, delivery and performance by it
of this Agreement and each Supplement; and
(c) this Agreement and each Supplement has been duly
executed
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and delivered by the Trustee.
11.16. Maintenance of Office or Agency. The Trustee will
maintain at its expense an office or agency (the "Corporate Trust Office") where
notices and demands to or upon the Trustee in respect of the Certificates and
this Agreement may be served in the Borough of Manhattan, the City of New York,
in the case of Registered Certificates and Holders thereof. The Corporate Trust
Office shall initially be located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇. The Trustee will give prompt notice to the Servicer and to
Investor Certificateholders of any change in the location of the Certificate
Register or any such office or agency.
ARTICLE XII
Termination
12.1. Termination of Trust. The Trust and the respective
obligations and responsibilities of the Transferor, the Servicer and the Trustee
created hereby (other than the obligation of the Trustee to make payments to
Investor Certificateholders as hereinafter set forth) shall terminate, except
with respect to the duties described in Sections 8.04 and 12.02(b), upon the
earliest of (i) January 1, 2050 and (ii) the day following the payment date on
which the Aggregate Invested Amount and the Enhancement Investor Amount, if any,
for each Series is zero (provided that the Transferor has delivered a written
notice to the Trustee electing to terminate the Trust).
12.2. Final Distribution.
(a) The Servicer shall give the Trustee at least 30 days'
prior notice of the payment date on which the Investor Certificateholders of any
Series or Class may surrender their Investor Certificates for payment of the
final distribution on and cancellation of such Investor Certificates (or, in the
event of a final distribution resulting from the application of Sections 2.06,
9.02 or 10.01, notice of such payment date promptly after the Servicer has
determined that a final distribution will occur, if such determination is made
less than 30 days prior to such payment date). Such notice shall be accompanied
by an Officer's Certificate setting forth the information specified in Section
3.05 covering the period during the then-current calendar year through the date
of such notice. Not later than the fifth day of the month in which the final
distribution in respect of such Series or Class is payable to Investor
Certificateholders, the Trustee shall provide notice to Investor
Certificateholders of such Series or Class specifying (i) the date upon which
final payment of such Series or Class will be made upon presentation and
surrender of Investor Certificates of such Series or Class at the office or
offices therein designated, (ii) the amount of any such final payment and (iii)
that the Record Date otherwise applicable to such payment date is not
applicable, payments being made only upon presentation and surrender of such
Investor Certificates at the office or offices therein specified (which, in the
case of Bearer Certificates, shall be outside the United States). The Trustee
shall give such notice to the Transfer Agent and Registrar and the Paying Agent
at the time such notice is given to Investor Certificateholders.
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(b) Notwithstanding a final distribution to the Investor
Certificateholders of any Series or Class (or the termination of the Trust),
except as otherwise provided in this paragraph, all funds then on deposit in the
Collection Account and any Series Account allocated to such Investor
Certificateholders shall continue to be held in trust for the benefit of such
Investor Certificateholders and the Paying Agent or the Trustee shall pay such
funds to such Investor Certificateholders upon surrender of their Investor
Certificates (and any excess shall be paid to the Holder of the Transferor
Certificate). In the event that all such Investor Certificateholders shall not
surrender their Investor Certificates for cancellation within six months after
the date specified in the notice from the Trustee described in paragraph (a),
the Trustee shall give a second notice to the remaining such Investor
Certificateholders to surrender their Investor Certificates for cancellation and
receive the final distribution with respect thereto (which surrender and
payment, in the case of Bearer Certificates, shall be outside the United
States). If within one year after the second notice all such Investor
Certificates shall not have been surrendered for cancellation, the Trustee may
take appropriate steps, or may appoint an agent to take appropriate steps, to
contact the remaining such Investor Certificateholders concerning surrender of
their Investor Certificates, and the cost thereof shall be paid out of the funds
in the Collection Account or any Series Account held for the benefit of such
Investor Certificateholders. The Trustee and the Paying Agent shall pay to the
Transferor any monies held by them for the payment of principal or interest that
remains unclaimed for two years. After payment to the Transferor, Investor
Certificateholders entitled to the money must look to the Transferor for payment
as general creditors unless an applicable abandoned property law designates
another Person.
(c) In the event that the Invested Amount with respect to
any Series is greater than zero on its Series Termination Date or such earlier
date as is specified in the related Supplement (after giving effect to deposits
and distributions otherwise to be made on such date), the Trustee will sell or
cause to be sold on such Series Termination Date, in accordance with the
procedures and subject to the conditions described in such Supplement, Principal
Receivables and the related Finance Charge Receivables (or interests therein) in
an amount equal to 100% of the Invested Amount and accrued and unpaid interest
thereon with respect to such Series on such date (after giving effect to such
deposits and distributions; provided, however, that in no event shall such
amount exceed such Series' Percentages of Receivables on such Series Termination
Date). The proceeds from any such sale shall be allocated and distributed in
accordance with the terms of the applicable Supplement.
11.3. Transferor's Termination Rights. Upon the termination
of the Trust pursuant to Section 12.01 and the surrender of the Transferor
Certificates, the Trustee shall assign and convey to the Holders of the
Transferor Certificates or their designee, without recourse, representation or
warranty, all right, title and interest of the Trust in the Receivables, whether
then existing or thereafter created, all monies due or to become due and all
amounts received with respect thereto and all proceeds thereof, except for
amounts held by the Trustee pursuant to subsection 12.02(b). The Trustee shall
execute and deliver such instruments of transfer and assignment, in each case
without recourse, as shall be reasonably requested by the Transferor to vest in
the Holders of the Transferor Certificates or any of their designees all right,
title and interest which the Trust had in the Receivables and such other
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related assets.
12.4. Defeasance. Notwithstanding anything to the contrary
in this Agreement or any Supplement:
(a) The Transferor may at its option be discharged from its
obligations hereunder with respect to any Series or all outstanding Series (the
"Defeased Series") on the date the applicable conditions set forth in subsection
12.04(c) are satisfied (a "Defeasance"); provided, however, that the following
rights, obligations, powers, duties and immunities shall survive with respect to
the Defeased Series until otherwise terminated or discharged hereunder: (i) the
rights of the Holders of Investor Certificates of the Defeased Series to
receive, solely from the trust fund provided for in subsection 12.04(c),
payments in respect of principal of and interest on such Investor Certificates
when such payments are due; (ii) the Transferor's obligations with respect to
such Certificates under Sections 6.04 and 6.05; (iii) the rights, powers,
trusts, duties, and immunities of the Trustee, the Paying Agent and the
Registrar hereunder; and (iv) this Section 12.04.
(b) Subject to subsection 12.04(c), the Transferor at its
option may cause Collections allocated to the Defeased Series and available to
purchase additional Receivables to be applied to purchase Eligible Investments
rather than additional Receivables.
(c) The following shall be the conditions to Defeasance
under subsection 12.04(a):
(i) the Transferor irrevocably shall have
deposited or caused to be deposited with the Trustee (such
deposit to be made from other than the Transferor's or any
Affiliate of the Transferor's funds), under the terms of an
irrevocable trust agreement in form and substance satisfactory
to the Trustee, as trust funds in trust for making the payments
described below, (a) Dollars in an amount, or (b) Eligible
Investments which through the scheduled payment of principal and
interest in respect thereof will provide, not later than the due
date of payment thereon, money in an amount, or (c) a
combination thereof, in each case sufficient to pay and
discharge (without relying on income or gain from reinvestment
of such amount), and which shall be applied by the Trustee to
pay and discharge, all remaining scheduled interest and
principal payments on all outstanding Investor Certificates of
the Defeased Series on the dates scheduled for such payments in
this Agreement and the applicable Supplements and all amounts
owing to the Series Enhancers with respect to the Defeased
Series;
(ii) a statement from a firm of nationally
recognized independent public accountants (who may also render
other services to the Transferor) to the effect that such
deposit is sufficient to pay the amounts specified in clause (i)
above;
(iii) prior to its first exercise of its
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right pursuant to this Section 12.04 with respect to a Defeased
Series to substitute money or Eligible Investments for
Receivables, if any Series of Investor Certificates are
outstanding that were characterized as debt at the time of their
issuance, the Transferor shall have delivered to the Trustee an
Opinion of Counsel to the effect that such deposit and
termination of obligations will not cause the Trust to be an
association or publicly traded partnership taxable as a
corporation, and (in any case) an Opinion of Counsel to the
effect that such deposit and termination of obligations will not
result in the Trust being required to register as an "investment
company" within the meaning of the Investment Company Act;
(iv) the Transferor shall have delivered to
the Trustee an Officer's Certificate of the Transferor stating
the Transferor reasonably believes that such deposit and
termination of obligations will not, based on the facts known to
such officer at the time of such certification, then cause a Pay
Out Event or Reinvestment Event with respect to any Series or
any event that, with the giving of notice or the lapse of time,
would result in the occurrence of a Pay Out Event with respect
to any Series; and
(v) the Rating Agency Condition shall have
been satisfied and the Transferor shall have delivered copies of
such written notice to the Servicer and the Trustee.
12.5. Optional Purchase.
(a) If so provided in any Supplement, the Transferor may,
but shall not be obligated to, cause a final distribution to be made in respect
of the related Series of Investor Certificates on a specified Distribution Date
or when the Invested Amount reaches a specified level or under any circumstances
specified in such Supplement by depositing into the Collection Account or the
applicable Series Account, not later than the Transfer Date preceding such
Distribution Date, for application in accordance with Section 12.02, the amount
specified in such Supplement.
(b) The amount deposited pursuant to subsection 12.05(a)
shall be paid to the Investor Certificateholders of the related Series pursuant
to Section 12.02 on the related Distribution Date following the date of such
deposit. All Certificates of a Series which are purchased by the Transferor
pursuant to subsection 12.05(a) shall be delivered by the Transferor upon such
purchase to, and be cancelled by, the Transfer Agent and Registrar and be
disposed of in a manner satisfactory to the Trustee and the Transferor. The
Invested Amount of each Series which is purchased by the Transferor pursuant to
subsection 12.05(a) shall, for the purposes of the definitions of "Invested
Amount" and "Transferor Amount," be deemed to be equal to zero on the
Distribution Date following the making of the deposit, and the Transferor Amount
shall thereupon be deemed to have been increased by the Invested Amount of such
Series.
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ARTICLE XIII
Miscellaneous Provisions
13.1. Amendment; Waiver of Past Defaults.
(a) This Agreement or any Supplement may be amended from
time to time (including in connection with (x) the provision of additional
Series Enhancement for the benefit of the Certificateholders of any Series (or
the reduction of such Series Enhancement), (y) the addition of a Participation
Interest to the Trust or (z) the designation of an Additional Transferor) by the
Servicer, the Transferor (including, if applicable, any Additional Transferor
being designated) and the Trustee without the consent of any of the
Certificateholders, provided that (i) the Transferor shall have delivered to the
Trustee an Officer's Certificate to the effect that the Transferor reasonably
believes that such action will not have an Adverse Effect and (ii) the Rating
Agency Condition shall have been satisfied with respect to any such amendment.
Additionally, notwithstanding the preceding sentence, this Agreement and any
Supplement may be amended by the Servicer and the Trustee at the direction of
the Transferor without the consent of any of the Certificateholders or Series
Enhancers to add, modify or eliminate such provisions as may be necessary or
advisable in order to enable all or a portion of the Trust (i) to qualify as,
and to permit an election to be made to cause the Trust to be treated as, a
"financial asset securitization investment trust" as described in the provisions
of Section 860L of the Code, and (ii) to avoid the imposition of state or local
income or franchise taxes imposed on the Trust's property or its income;
provided, however, that (i) the Transferor delivers to the Trustee an Officer's
Certificate to the effect that the proposed amendments meet the requirements set
forth in this subsection, (ii) the Rating Agency Condition shall have been
satisfied with respect to any such amendment and (iii) such amendment does not
affect the rights, duties or obligations of the Trustee hereunder. The
amendments which the Transferor may make without the consent of
Certificateholders or Series Enhancers pursuant to the preceding sentence may
include, without limitation, the addition of a sale of Receivables and
termination of the Trust upon the occurrence of an Insolvency Event pursuant to
Section 9.01 hereof.
(b) This Agreement or any Supplement may also be amended
from time to time by the Servicer, the Transferor and the Trustee, with the
consent of the Holders of Investor Certificates evidencing not less than 66-2/3%
of the aggregate Invested Amount of the Investor Certificates of all adversely
affected Series, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement or any Supplement
or of modifying in any manner the rights of the Certificateholders; provided,
however, that no such amendment shall (i) reduce in any manner the amount of or
delay the timing of any distributions to be made to Investor Certificateholders
or deposits of amounts to be so distributed or the amount available under any
Series Enhancement without the consent of each affected Certificateholder, (ii)
change the definition of or the manner of calculating the interest of any
Investor Certificateholder without the consent of each affected Investor
Certificateholder, (iii) reduce the aforesaid percentage required to consent to
any such amendment without the consent of each Investor Certificateholder or
(iv) adversely affect the rating of any Series or Class by each Rating Agency
without the consent of the Holders of Investor Certificates of such
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Series or Class evidencing not less than 66-2/3% of the aggregate Invested
Amount of the Investor Certificates of such Series or Class. Any amendment to be
effected pursuant to this paragraph shall be deemed not to adversely affect any
outstanding Series with respect to which the Transferor shall deliver an Opinion
of Counsel, addressed and delivered to the Trustee, that such action will not,
in such counsel's reasonable opinion, have an Adverse Effect with respect to
such Series. The Trustee may, but shall not be obligated to, enter into any such
amendment which affects the Trustee's rights, duties or immunities under this
Agreement or otherwise.
(c) Promptly after the execution of any such amendment or
consent (other than an amendment pursuant to paragraph (a)), the Trustee shall
furnish notification of the substance of such amendment to each Investor
Certificateholder, and the Servicer shall furnish notification of the substance
of such amendment to each Rating Agency.
(d) It shall not be necessary for the consent of Investor
Certificateholders under this Section to approve the particular form of any
proposed amendment, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Investor Certificateholders shall be
subject to such reasonable requirements as the Trustee may prescribe.
(e) Any Supplement executed in accordance with the
provisions of subsection 6.03(b) shall not be considered an amendment to this
Agreement for the purposes of this Section.
(f) The Holders of Investor Certificates evidencing more
than 66-2/3% of the aggregate Invested Amount of the Investor Certificates of
each Series, or with respect to any Series with two 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 Invested Amount of the Investor Certificates 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 Certificateholders,
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 Investor Certificateholders 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 thereto except to the extent expressly so waived.
13.2. Protection of Right, Title and Interest to Trust.
(a) The Servicer shall cause this Agreement, all amendments
and supplements hereto and all financing statements and continuation statements
and any other necessary documents covering the Certificateholders' and the
Trustee's right, title and interest to the Trust to be promptly recorded,
registered and filed, and at all times to be kept recorded, registered and
filed, all in such manner and in such places as may be required by law fully to
preserve and protect the right, title and interest of the Certificateholders and
the Trustee hereunder to all property comprising the Trust. The Servicer shall
deliver to the Trustee file-
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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 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 Trustee notice of any such
change and shall file such financing statements or amendments as may be
necessary to continue the perfection of the Trust's security interest in the
Receivables and the proceeds thereof.
(c) Each Transferor and the Servicer will at all times
maintain each office from which it services Receivables and its principal
executive offices within the United States.
(d) The Transferor will deliver to the Trustee: (i) upon the
execution and delivery of each amendment of this Agreement or any Supplement, an
Opinion of Counsel to the effect specified in Exhibit G-1; and (ii) on each
Addition Date on which any Additional Accounts (other than Automatic Additional
Accounts) are to be designated as Accounts pursuant to subsections 2.09(a) or
(b) and on each date specified in subsection 2.09(d)(iii) with respect to the
designation of Automatic Additional Accounts as Accounts, an Opinion of Counsel
substantially in the form of Exhibit G-2, and on each Addition Date on which any
Participation Interests are to be included in the Trust pursuant to subsections
2.09(a) or (b), an Opinion of Counsel covering the same substantive legal issues
addressed by Exhibit G-2 but conformed to the extent appropriate to relate to
Participation Interests.
13.3. Limitation on Rights of Certificateholders.
(a) The death or incapacity of any Certificateholder shall
not operate to terminate this Agreement or the Trust, nor shall such death or
incapacity entitle such Certificateholders' legal representatives or heirs to
claim an accounting or to take any action or commence any proceeding in any
court for a partition or winding up of the Trust, nor otherwise affect the
rights, obligations and liabilities of the parties hereto or any of them.
(b) No Investor Certificateholder shall have any right to
vote (except as expressly provided in this Agreement) or in any manner otherwise
control the operation and management of the Trust, or the obligations of the
parties hereto, nor shall anything herein set forth, or contained in the terms
of the Certificates, be construed so as to constitute the Investor
Certificateholders from time to time as partners or members of an association,
nor shall any Investor Certificateholder be under any liability to any third
person by reason of any action taken by the parties to this Agreement pursuant
to any provision hereof.
(c) No Investor Certificateholder shall have any right by
virtue of any provisions of this Agreement to institute any suit, action or
proceeding in equity or at law
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upon or under or with respect to this Agreement, unless such Investor
Certificateholder previously shall have made, and unless the Holders of Investor
Certificates evidencing more than 50% of the aggregate unpaid principal amount
of all Investor Certificates (or, with respect to any such action, suit or
proceeding that does not relate to all Series, 50% of the aggregate unpaid
principal amount of the Investor Certificates of all Series to which such
action, suit or proceeding relates) shall have made, a request to the Trustee to
institute such action, suit or proceeding in its own name as Trustee hereunder
and shall have offered to the Trustee such reasonable indemnity as it may
require against the costs, expenses and liabilities to be incurred therein or
thereby, and the Trustee, for 60 days after such request and offer of indemnity,
shall have neglected or refused to institute any such action, suit or
proceeding; it being understood and intended, and being expressly covenanted by
each Investor Certificateholder with every other Investor Certificateholder and
the Trustee, that no one or more Investor Certificateholders shall have any
right in any manner whatever by virtue or by availing itself or themselves of
any provisions of this Agreement to affect, disturb or prejudice the rights of
the Holders of any other of the Investor Certificates, or to obtain or seek to
obtain priority over or preference to any other such Investor Certificateholder,
or to enforce any right under this Agreement, except in the manner herein
provided and for the equal, ratable and common benefit of all Investor
Certificateholders except as otherwise expressly provided in this Agreement. For
the protection and enforcement of the provisions of this Section, each and every
Investor Certificateholder and the Trustee shall be entitled to such relief as
can be given either at law or in equity.
13.4. GOVERNING LAW. THIS AGREEMENT 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.
13.5. Notices; Payments.
(a) All demands, notices, instructions, directions and
communications (collectively, "Notices") under this Agreement shall be in
writing and shall be deemed to have been duly given if personally delivered at,
mailed by registered mail, return receipt requested, or sent by facsimile
transmission (i) in the case of the Transferor, to NextCard Funding Corp., ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attn: Chief
Financial Officer, (ii) in the case of the Servicer, to NextCard, Inc., ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attn: Chief Financial
Officer (facsimile no. 415-836-9701), (iii) in the case of the Paying Agent or
the Trustee, Transfer Agent and Registrar, to ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, Attention: Corporate Trust Administration
(facsimile no. (▇▇▇) ▇▇▇-▇▇▇▇), (iv) in the case of Moody's, to ▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attn: ABS Monitoring Department, 4th Floor
(facsimile no. 212-553-4600), (v) in the case of Standard & Poor's, to ▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attn: Asset Backed Group, 15th Floor
(facsimile no. 212-412-0323), (vi) in the case of Fitch, to ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, Attention: Structured Finance Department (facsimile
no. (▇▇▇) ▇▇▇-▇▇▇▇), and (vii) to any other Person as specified in any
Supplement; or, as to each party, at such other address or facsimile number as
shall be designated by such party in
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a written notice to each other party.
(b) Any Notice required or permitted to be given to a Holder
of Registered Certificates shall be given by first-class mail, postage prepaid,
at the address of such Holder as shown in the Certificate Register. No Notice
shall be required to be mailed to a Holder of Bearer Certificates or Coupons but
shall be given as provided below. Any Notice so mailed within the time
prescribed in this Agreement shall be conclusively presumed to have been duly
given, whether or not the Investor Certificateholder receives such Notice. In
addition, (a) if and so long as any Series or Class is listed on the Luxembourg
Stock Exchange and such Exchange shall so require, any Notice to Investor
Certificateholders shall be published in an Authorized Newspaper of general
circulation in Luxembourg within the time period prescribed in this Agreement
and (b) in the case of any Series or Class with respect to which any Bearer
Certificates are outstanding, any Notice required or permitted to be given to
Investor Certificateholders of such Series or Class shall be published in an
Authorized Newspaper within the time period prescribed in this Agreement.
13.6. Rule 144A Information. For so long as any of the
Investor Certificates of any Series or Class are "restricted securities" within
the meaning of Rule 144(a)(3) under the Act, each of the Transferor, the
Trustee, the Servicer and any Series Enhancer agree to cooperate with each other
to provide to any Investor Certificateholders of such Series or Class and to any
prospective purchaser of Certificates designated by such an Investor
Certificateholder, upon the request of such Investor Certificateholder or
prospective purchaser, any information required to be provided to such holder or
prospective purchaser to satisfy the condition set forth in Rule 144A(d)(4)
under the Act.
13.7. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall for any
reason whatsoever be held invalid, then such provisions shall be deemed
severable from the remaining provisions of this Agreement and shall in no way
affect the validity or enforceability of the remaining provisions or of the
Certificates or the rights of the Certificateholders.
13.8. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Section 8.02, this Agreement may not be
assigned by the Servicer without the prior consent of Holders of Investor
Certificates evidencing not less than 66-2/3% of the Aggregate Invested Amount.
The Servicer shall give the Rating Agencies prior written notice of any such
assignment.
13.9. Certificates Nonassessable and Fully Paid. It is the
intention of the parties to this Agreement that the Certificateholders shall not
be personally liable for obligations of the Trust, that the interests in the
Trust represented by the Certificates shall be nonassessable for any losses or
expenses of the Trust or for any reason whatsoever and that Certificates upon
authentication thereof by the Trustee pursuant to Section 6.02 are and shall be
deemed fully paid.
13.10. 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
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further instruments required or reasonably requested by the 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.
13.11. Nonpetition Covenant. Notwithstanding any prior
termination of this Agreement, the Servicer, the Trustee, each Transferor, each
Series Enhancer and each Holder of a Certificate shall not, prior to the date
which is one year and one day after the termination of this Agreement with
respect to the Trust, acquiesce, petition or otherwise invoke or cause the Trust
or the Transferor to invoke the process of any Governmental Authority for the
purpose of commencing or sustaining a case against the Trust or 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 Trust or the Transferor or any substantial part of its
property or ordering the winding-up or liquidation of the affairs of the Trust
or the Transferor.
13.12. No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the Trustee or the
Certificateholders, any right, remedy, power or privilege under this Agreement
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege under this Agreement preclude any other or
further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges provided under this
Agreement are cumulative and not exhaustive of any rights, remedies, powers and
privileges provided by law.
13.13. 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.
13.14. Third-Party Beneficiaries. This Agreement will inure to
the benefit of and be binding upon the parties hereto, the Certificateholders,
any Series Enhancer (to the extent provided in this Agreement and the related
Supplement) 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.
13.15. Actions by Certificateholders. (a) Wherever in this
Agreement a provision is made that an action may be taken or a Notice given by
Certificateholders, such action or Notice may be taken or given by any
Certificateholder, unless such provision requires a specific percentage of
Certificateholders.
(a) Any Notice, request, authorization, direction, consent,
waiver or other act by the Holder of a Certificate shall bind such Holder and
every subsequent Holder of such Certificate and of any Certificate issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done or omitted to be done by the Trustee, the Transferor
or the Servicer in reliance thereon, whether or not notation of such action is
made upon such Certificate.
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13.16. 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.
13.17. Headings. The headings herein are for purposes of
reference only and shall not otherwise affect the meaning or interpretation of
any provision hereof.
13.18. Construction of Agreement. It is the express intent of
the parties hereto that the transfer of the Receivables to the Trustee pursuant
to this Agreement to be, and be construed as, an absolute assignment to the
Trustee, and not a borrowing by the Transferor secured by the Receivables. It
is, further, not the intention of the parties that such transfer be deemed a
pledge of the Receivables by the Transferor to the Trustee to secure a debt of
the Transferor. However, if it should be determined that, notwithstanding the
intent of the parties, the Receivables are held to be property of the
Transferor, or if for any reason this Agreement is held or deemed to create a
security interest, then (a) this Agreement shall be deemed to be a security
agreement within the meaning of the applicable Uniform Commercial Code, and (b)
the transfer provided for in this Agreement shall be the grant of a security
interest to the Trustee on behalf of the Trust, for the benefit of the
Certificateholders in all of the Transferor's right, title and interest, whether
now owned or hereafter acquired, in, to and under the Receivables existing at
the close of business on the Initial Cut-Off Date, in the case of Receivables
arising in the Initial Accounts, and on each Addition Cut-Off Date, in the case
of Receivables arising in the Additional Accounts, and in each case thereafter
created from time to time until the termination of the Trust, all monies due or
to become due and all amounts received with respect thereto (including any and
all Recoveries) and all proceeds (including "proceeds" as defined in the UCC)
thereof and any other Trust Assets. This Agreement shall constitute a security
agreement under applicable law.
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IN WITNESS WHEREOF, the Transferor, the Servicer and the Trustee
have caused this Agreement to be duly executed by their respective officers as
of the day and year first above written.
NextCard Funding Corp.,
Transferor,
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Financial Officer
NextCard, Inc.,
Servicer,
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Financial Officer
THE BANK OF NEW YORK,
as Trustee and as Securities Intermediary under
Section 4.02 of this Agreement
By /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Assistant Treasurer
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