EXHIBIT 10.6

WFN CREDIT COMPANY, LLC,

Transferor

WORLD FINANCIAL NETWORK NATIONAL BANK,

Servicer

and

THE CHASE MANHATTAN BANK

Trustee

WORLD FINANCIAL NETWORK CREDIT CARD MASTER TRUST III

AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT

Dated as of January 30, 1998,

and hereby amended and restated as of September 28, 2001

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TABLE OF CONTENTS

 

          Page ARTICLE I            DEFINITIONS    1

SECTION 1.1

   Definitions    1

SECTION 1.2

   Other Interpretive Provisions    22 ARTICLE II          CONVEYANCE OF
RECEIVABLES    23

SECTION 2.1

   Conveyance of Receivables    23

SECTION 2.2

   Acceptance by Trustee    26

SECTION 2.3

   Representations and Warranties of Transferor Relating to Transferor    26

SECTION 2.4

   Representations and Warranties of Transferor Relating to Transaction
Documents and the Receivables    28

SECTION 2.5

   Reassignment of Ineligible Receivables    31

SECTION 2.6

   Reassignment of Receivables in Trust Portfolio    32

SECTION 2.7

   Covenants of Transferor    33

SECTION 2.8

   Addition of Accounts    38

SECTION 2.9

   Removal of Accounts    41

SECTION 2.10

   Discount Option    42

SECTION 2.11

   Additional Transferors    43

SECTION 2.12

   Additional Credit Card Originators    43 ARTICLE III        ADMINISTRATION
AND SERVICING    43

SECTION 3.1

   Acceptance of Appointment and Other Matters Relating to Servicer    43

SECTION 3.2

   Servicing Compensation    44

SECTION 3.3

   Representations, Warranties and Covenants of Servicer    45

SECTION 3.4

   Reports to Trustee    48

SECTION 3.5

   Annual Certificate of Servicer    49

SECTION 3.6

   Annual Servicing Report of Independent Public Accountants; Copies of Reports
Available    49

SECTION 3.7

   Tax Treatment    50

SECTION 3.8

   Notices to Transferor    51

SECTION 3.9

   Adjustments    51

 

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ARTICLE IV          RIGHTS OF HOLDERS; ALLOCATIONS    52

SECTION 4.1

   Rights of Holders    52

SECTION 4.2

   Establishment of Collection Account and Excess Funding Account    52

SECTION 4.3

   Collections and Allocations    54

SECTION 4.4

   Shared Principal Collections    55

SECTION 4.5

   Excess Finance Charge Collections    55 ARTICLE V            DISTRIBUTIONS
AND REPORTS    56 ARTICLE VI          THE CERTIFICATES    56

SECTION 6.1

   The Certificates    56

SECTION 6.2

   Authentication of Certificates    56

SECTION 6.3

   New Issuances    57

SECTION 6.4

   Registration of Transfer and Exchange of Certificates    59

SECTION 6.5

   Mutilated, Destroyed, Lost or Stolen Certificates    63

SECTION 6.6

   Persons Deemed Owners    63

SECTION 6.7

   Appointment of Paying Agent    64

SECTION 6.8

   Access to List of Registered Holders’ Names and Addresses    64

SECTION 6.9

   Authenticating Agent    65

SECTION 6.10

   Book-Entry Certificates    66

SECTION 6.11

   Notices to Clearing Agency    67

SECTION 6.12

   Definitive Certificates    67

SECTION 6.13

   Global Certificate    67

SECTION 6.14

   Uncertificated Classes    68 ARTICLE VII        OTHER MATTERS RELATING TO
TRANSFEROR    68

SECTION 7.1

   Liability of Transferor    68

SECTION 7.2

   Merger or Consolidation of, or Assumption of the Obligations of, Transferor
   68

SECTION 7.3

   Limitations on Liability of Transferor    69

SECTION 7.4

   Liabilities    70

 

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ARTICLE VIII        OTHER MATTERS RELATING TO SERVICER    70

SECTION 8.1

   Liability of Servicer    70

SECTION 8.2

   Merger or Consolidation of, or Assumption of the Obligations of, Servicer   
70

SECTION 8.3

   Limitation on Liability of Servicer and Others    71

SECTION 8.4

   Servicer Indemnification of the Trust and Trustee    72

SECTION 8.5

   Servicer Not to Resign    72

SECTION 8.6

   Access to Certain Documentation and Information Regarding the Receivables   
73

SECTION 8.7

   Delegation of Duties    73 ARTICLE IX          EARLY AMORTIZATION EVENTS   
73

SECTION 9.1

   Early Amortization Events    73

SECTION 9.2

   Additional Rights upon Certain Events    74 ARTICLE X            SERVICER
DEFAULTS    75

SECTION 10.1

   Servicer Defaults    75

SECTION 10.2

   Trustee to Act; Appointment of Successor    77

SECTION 10.3

   Notification to Holders    79

SECTION 10.4

   Waiver of Past Defaults    79 ARTICLE XI          TRUSTEE    79

SECTION 11.1

   Duties of Trustee    79

SECTION 11.2

   Certain Matters Affecting Trustee    81

SECTION 11.3

   Trustee Not Liable for Recitals in Certificates    82

SECTION 11.4

   Trustee Not to Own Certificates    82

SECTION 11.5

   Servicer to Pay Trustee’s Fees and Expenses    83

SECTION 11.6

   Eligibility Requirements for Trustee    83

SECTION 11.7

   Resignation or Removal of Trustee    83

SECTION 11.8

   Successor Trustee    84

SECTION 11.9

   Merger or Consolidation of Trustee    84

SECTION 11.10

   Appointment of Co-Trustee or Separate Trustee    85

SECTION 11.11

   Tax Return    86

SECTION 11.12

   Trustee May Enforce Claims Without Possession of Certificates    86

SECTION 11.13

   Suits for Enforcement    86

 

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SECTION 11.14

     Rights of Holders to Direct Trustee    87

SECTION 11.15

     Representations and Warranties of Trustee    87

SECTION 11.16

     Maintenance of Office or Agency    87

SECTION 11.17

     Confidentiality    88 ARTICLE XII          TERMINATION    88

SECTION 12.1

     Termination of Trust    88

SECTION 12.2

     Final Distribution    88

SECTION 12.3

     Transferor’s Termination Rights    90 ARTICLE XIII        MISCELLANEOUS
PROVISIONS    90

SECTION 13.1

     Amendment; Waiver of Past Defaults    90

SECTION 13.2

     Protection of Right, Title and Interest to Trust    92

SECTION 13.3

     Limitation on Rights of Holders    93

SECTION 13.4

     GOVERNING LAW    94

SECTION 13.5

     Notices, Payments    94

SECTION 13.6

     Rule 144A Information    95

SECTION 13.7

     Severability of Provisions    95

SECTION 13.8

     Certificates Nonassessable and Fully Paid    95

SECTION 13.9

     Further Assurances    95

SECTION 13.10

     Nonpetition Covenant    96

SECTION 13.11

     No Waiver; Cumulative Remedies    96

SECTION 13.12

     Counterparts    96

SECTION 13.13

     Third-Party Beneficiaries    96

SECTION 13.14

     Actions by Holders    96

SECTION 13.15

     Merger and Integration    97

SECTION 13.16

     Subordination    97

 

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AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT, dated as of January 30,
1998 and amended and restated as of September 28, 2001, among WFN CREDIT
COMPANY, LLC, a Delaware limited liability company, as Transferor, WORLD
FINANCIAL NETWORK NATIONAL BANK, a national banking association (“WFN”), as
Servicer, and THE CHASE MANHATTAN BANK, USA, NATIONAL ASSOCIATION, a New York
banking corporation, as Trustee.

WHEREAS, World Financial Network National Bank, as transferor and servicer, and
the Trustee are parties to that certain Pooling and Servicing Agreement, dated
as of January 30, 1998 (the “Existing PSA”);

WHEREAS, the parties desire to amend and restate in its entirety the Existing
PSA in order to, among other things, provide for the substitution of WFN Credit
Company, LLC for World Financial Network National Bank, in its capacity as
Transferor under the Existing PSA;

NOW THEREFORE, in consideration of the mutual agreements herein contained, the
Existing PSA is hereby amended and restated in its entirety as follows and each
party agrees as follows for the benefit of the other parties, the Holders and
any Enhancement Provider to the extent provided herein and in any Supplement:

ARTICLE I DEFINITIONS

SECTION 1.1 Definitions. When used in this Agreement, the following words and
phrases have the following meanings. 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” means each Initial Account, each Initial Restatement Date Portfolio
Account, each Automatic Additional Account and each Supplemental Account, but
excludes any Account all the Receivables in which are either reassigned or
assigned to Transferor or its designee or Servicer in accordance with this
Agreement and any inactive Accounts which in accordance with the Credit Card
Guidelines have been removed from the computer records of the Credit Card
Originator. The term “Account” includes each account into which an Account is
transferred (a “Transferred Account”) so long as (a) such transfer is made in
accordance with the Credit Card Guidelines and (b) such Transferred Account can
be traced or identified, by reference to or by way of the Account Schedule
delivered to Trustee pursuant to Section 2.1 or 2.8(d), as an account into which
an Account has been transferred. The term “Account” includes an Automatic
Additional Account or a Supplemental Account only from and after its Addition
Date and includes any Removed Account only prior to its Removal Date.

“Account Schedule” means a computer file or microfiche list containing a true
and complete list of Accounts, identified by account number and setting forth

 

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the Receivable balance as of (a) the Trust Cut Off Date (for the Account
Schedule delivered on the Initial Closing Date), (b) the end of the related
Monthly Period (for any Account Schedule relating to Automatic Additional
Accounts), (c) September 25, 2001 for the Account Schedule relating to the
Initial Restatement Date Portfolio Accounts or (d) the related Addition Cut Off
Date (for any Account Schedule delivered in connection with any designation of
Supplemental Accounts).

“Acquired Portfolio Receivable” means any receivable acquired by a Credit Card
Originator from an Other Originator in connection with such Credit Card
Originator’s acquisition of a portfolio of revolving credit card accounts from
such Other Originator (prior to the transfer of such receivable to the
Transferor).

“Addition” means the designation of additional Eligible Accounts to be included
as Accounts pursuant to Section 2.8(a), (b) or (c) or of Participation Interests
to be included as Trust Assets pursuant to Section 2.8(b) or (c), as applicable.

“Addition Cut Off Date” means the date as of which any Supplemental Accounts or
Participation Interests are designated for inclusion in the Trust, as specified
in the related Assignment. The “Addition Cut Off Date” for the Initial
Restatement Date Portfolio Accounts is September 25, 2001.

“Addition Date” means (a) as to Supplemental Accounts, the date on which the
Receivables in such Supplemental Accounts are conveyed to the Trust pursuant to
Section 2.8(b) or (c), as applicable, (b) as to Automatic Additional Accounts,
the date on which such accounts are created or otherwise become Automatic
Additional Accounts, (c) as to the Initial Restatement Date Portfolio Accounts,
September 28, 2001 and (d) as to Participation Interests, the date from and
after which such Participation Interests are to be included as Trust Assets
pursuant to Section 2.8(b) or (c).

“Additional Account” means an Automatic Additional Account or a Supplemental
Account.

“Adjusted Invested Amount” is defined, as to any Series, in the related
Supplement.

“Affiliate” means, as to any specified Person, any other Person controlling or
controlled by or under common control with such specified Person. For this
purpose, “control” means 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 “controlling” and “controlled” have
correlative meanings.

“Agreement” means this Amended and Restated Pooling and Servicing Agreement and,
for purposes of any Series, the related Supplement.

 

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“Amortization Period” means, as to any Series or any Class within a Series, any
period specified in the related Supplement during which a share of principal
collections is set aside to repay the principal investment in that Series
(excluding repayments of a Variable Interest during its revolving period).

“Applicants” is defined in Section 6.8.

“Appointment Date” is defined in Section 9.2(a).

“Approved Portfolio” means any Identified Portfolio and any additional portfolio
that is designated as an Approved Portfolio pursuant to Section 2.8(e),
including any portfolio designated as an Approved Portfolio prior to the
Effective Date pursuant to Section 2.8(e) of the Existing PSA.

“Assignment” is defined in Section 2.8(d)(ii).

“Authorized Newspaper” means 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 Addition Suspension Date” is defined in Section 2.8(a).

“Automatic Addition Termination Date” is defined in Section 2.8(a).

“Automatic Additional Account” means each open end credit card account in any
Approved Portfolio that is established pursuant to a Credit Card Agreement
coming into existence after (a) the Trust Cut Off Date (in the case of an
account in the Identified Portfolio) or (b) the Addition Cut Off Date relating
to the first Addition Date on which receivables from accounts in the applicable
portfolio are transferred to the Trust (in the case of an account in any other
Approved Portfolio) and, in either case, prior to the Automatic Addition
Termination Date or an Automatic Addition Suspension Date, or subsequent to a
Restart Date. In addition, accounts in an Approved Portfolio that were in
existence, but were not Eligible Accounts, on (x) the Trust Cut Off Date (in the
case of an account in the Identified Portfolio) or (y) the Addition Cut Off Date
relating to the first Addition Date on which receivables from accounts in the
applicable portfolio are transferred to the Trust (in the case of an account in
any other Approved Portfolio) but which, in either case, become Eligible
Accounts prior to the Automatic Addition Termination Date or an Automatic
Addition Suspension Date, or subsequent to a Restart Date, shall also be
“Automatic Additional Accounts” and shall be deemed, for purposes of the
definition of “Eligible Account” and Section 2.8(a), to have been created on the
first day after the Trust Cut Off Date or applicable Addition Cut Off Date on
which they are Eligible Accounts.

 

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“Banc One” means Banc One, Dayton, N.A., a national banking association.

“Base Rate” is defined, as to any Series, in the related Supplement.

“Bearer Certificate” is defined in Section 6.1.

“Benefit Plan” is defined in Section 6.4(c).

“Book-Entry Certificates” means beneficial interests in the Investor
Certificates, ownership and transfers of which shall be made through book
entries by a Clearing Agency as described in Section 6.10.

“Business Day” means any day other than (a) a Saturday or Sunday, (b) any other
day on which national banking associations or state banking institutions in New
York, New York or Columbus, Ohio 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 related Supplement.

“Certificate” means an Investor Certificate or a certificate representing a
Supplemental Interest.

“Certificate Owner” means, 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 Register” is defined in Section 6.4.

“Class” means any class of Investor Certificates of any Series.

“Clearing Agency” means an organization registered as a “clearing agency”
pursuant to Section 17A of the Exchange Act.

“Clearing Agency Participant” means a broker, dealer, bank, other financial
institution or other Person for whom from time to time a Clearing Agency effects
book-entry transfers and pledges of securities deposited with the Clearing
Agency.

“Closing Date” means, as to any Series, the date on which that Series is issued.

“Co-Branding Agreement” means an agreement entered into by WFN with Service
Merchandise, relating to the origination by WFN of MasterCard and/or VISA credit
card accounts and which includes benefits for the obligors of such accounts
provided by Service Merchandise.

 

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“Collection Account” is defined in Section 4.2.

“Collections” means all payments (including Recoveries of Principal Receivables
or Finance Charge Receivables and Insurance Proceeds, whether or not treated as
Recoveries) received by Servicer with respect to the Receivables, including
In-Store Payments, in the form of cash, checks (to the extent collected), wire
transfers or other form of payment in accordance with the Credit Card Agreement
in effect from time to time on any Receivables. If so specified in any
Supplement, Collections shall also include any payments received by Servicer
with respect to Participation Interests.

“Commission” means the Securities and Exchange Commission.

“Confidential Information” is defined in Section 11.17.

“Corporate Trust Office” is defined in Section 11.16.

“Coupon” is defined in Section 6.1.

“Credit Card Agreement” means, as to any Account, the agreements between the
Credit Card Originator that owns the Account (including WFN as assignee of an
Other Originator) and the related Obligor that govern the Account, as amended or
otherwise modified from time to time.

“Credit Card Guidelines” means the written policies and procedures of the Credit
Card Originator relating to the operation of its consumer revolving lending
business, including written policies and procedures for determining the
creditworthiness of credit card customers, the extension of credit to credit
card customers and the maintenance of credit card accounts and collection of
related receivables, as amended or otherwise modified from time to time.

“Credit Card Originator” means (i) WFN and/or any transferee of the Accounts
from WFN or (ii) any other originator of Accounts which is designated from time
to time pursuant to Section 2.12 and, directly or indirectly, enters into a
receivables purchase agreement with Transferor.

“Credit Card Processing Agreement” means one or more agreements between the
Credit Card Originator (including WFN as assignee of an Other Originator) and a
Merchant pursuant to which the Credit Card Originator agrees to extend open end
credit card accounts to customers of the Merchant and the Merchant agrees to
allow purchases to be made at its retail establishments, or in its catalogue
sales business, under such accounts.

“Daily Report” is defined in Section 3.4(a).

 

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“Date of Processing” means, as to any transaction, the Business Day on which the
transaction is first recorded on Servicer’s computer file of consumer revolving
accounts (without regard to the effective date of such recordation).

“Debtor Relief Laws” means Title 11 of the United States Code and all other
applicable liquidation, conservatorship, bankruptcy, moratorium, rearrangement,
receivership, insolvency, reorganization, suspension of payments, readjustment
of debt, marshalling of assets or similar debtor relief laws of the United
States, any state or any foreign country from time to time in effect, affecting
the rights of creditors generally.

“Defaulted Receivable” means, as to any date of determination, all Principal
Receivables in any Account which are charged off as uncollectible on that date
in accordance with the Credit Card Guidelines and Servicer’s customary and usual
servicing procedures for servicing open end credit card account receivables
comparable to the Receivables. A Principal Receivable in any Account shall
become a Defaulted Receivable on the day on which such Principal Receivable is
recorded as charged off in accordance with the Credit Card Guidelines.

“Deferred Payment Receivables” means any amount owed by any Merchant to Credit
Card Originator in respect of accrued finance charges on any Principal
Receivable incurred in connection with a deferred payment plan.

“Definitive Certificates” is defined in Section 6.10.

“Definitive Euro-Certificates” is defined in Section 6.13.

“Depository Agreement” means, as to any Series or Class, any agreement among
Transferor, Trustee and any applicable Clearing Agency.

“Determination Date” means, unless otherwise specified in any Supplement with
respect to the related Series, the second Business Day preceding each
Distribution Date.

“Discount Option Receivables” means, on any Date of Processing on and after the
date on which Transferor’s exercise of its discount option pursuant to
Section 2.10 takes effect, the sum of (a) the product of the Discount Percentage
and the aggregate Principal Receivables (before subtracting Finance Charge
Receivables which are Discount Option Receivables) at the end of the prior day
(which amount, prior to the date on which Transferor’s exercise of its discount
option takes effect and with respect to Receivables generated prior to such
date, shall be zero), plus (b) any New Discount Option Receivables created on
such day, minus (c) any Discount Option Receivables Collections received on such
Date of Processing.

“Discount Option Receivables Collections” means on any Date of Processing on and
after the date on which Transferor’s exercise of its discount

 

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option pursuant to Section 2.10 takes effect, the product of (a) a fraction the
numerator of which is the amount of the Discount Option Receivables and the
denominator of which is the sum of the Principal Receivables plus the amount of
Discount Option Receivables in each case (for both numerator and denominator) at
the end of the prior Monthly Period and (b) Collections of Principal
Receivables, prior to any reduction for Finance Charge Receivables which are
Discount Option Receivables, received on such Date of Processing.

“Discount Percentage” is defined in Section 2.10.

“Distribution Date” means, with respect to any Series, the date specified in the
related Supplement.

“Early Amortization Event” means, as to any Series, each event specified in
Section 9.1 and each additional event, if any, specified in the relevant
Supplement as an Early Amortization Event for that Series.

“Effective Date” shall mean September 28, 2001.

“Eligible Account” means an open end credit card account in an Approved
Portfolio owned by the Credit Card Originator that, as of the Trust Cut Off Date
(in the case of an Initial Account), the date of creation thereof (in the case
of an Automatic Additional Account) or the related Addition Cut Off Date (in the
case of a Supplemental Account or an Initial Restatement Date Portfolio
Account):

(a) is in existence and is serviced by the Credit Card Originator, any Affiliate
of the Credit Card Originator or an Other Originator;

(b) is payable in United States dollars;

(c) except as provided below, has not been identified as an account (i) the
credit cards for which have been reported to the Credit Card Originator or the
related Other Originator (if any) as lost or stolen or (ii) the Obligor of which
is the subject of a bankruptcy proceeding;

(d) none of the Receivables in which have been, sold, pledged, assigned or
otherwise conveyed to any Person (except by an Other Originator to the Credit
Card Originator or otherwise pursuant to the Receivables Purchase Agreement or
this Agreement), unless any such pledge or assignment is released on or before
the Initial Closing Date or the Addition Date, as applicable;

(e) except as provided below, none of the Receivables in which are Defaulted
Receivables or have been identified by the Credit Card Originator or the related
Other Originator (if any), or by the relevant Obligor to the Credit Card
Originator or the related Other Originator (if any), as having been incurred as
a result of fraudulent use of a credit card; and

 

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(f) has an Obligor who has provided as his or her most recent billing address,
an address located in the United States or a United States military address,
provided that an account shall not fail to be an “Eligible Account” solely due
to the Obligor having provided a billing address not satisfying the foregoing if
as of the Trust Cut Off Date (in the case of an Initial Account), the end of the
most recently ended Monthly Period (in the case of an Automatic Additional
Account) or the related Addition Cut Off Date (in the case of a Supplemental
Account or an Initial Restatement Date Portfolio Account) the aggregate
Principal Receivables in Accounts the most recent billing address for which does
not satisfy the foregoing made up less than 2% (or any higher percentage as to
which the Rating Agency Condition has been satisfied) of the aggregate Principal
Receivables.

Notwithstanding the foregoing, Eligible Accounts may include accounts, the
receivables in which have been written off, or as to which the Credit Card
Originator or related Other Originator (if any) believes the related Obligor is
bankrupt and certain receivables that have been identified by the Obligor as
having been incurred as a result of fraudulent use of credit cards or any credit
cards have been reported to the Credit Card Originator or the related Other
Originator (if any) as lost or stolen, so long as (1) the balance of all
receivables included in such accounts is reflected on the books and records of
the Credit Card Originator (and is treated for purposes of this Agreement) as
“zero” and (2) charging privileges with respect to all such accounts have been
canceled and are not reinstated.

“Eligible Deposit Account” means either (a) a segregated account with an
Eligible Institution or (b) a segregated trust account with the corporate trust
department of a depository institution organized under the laws of the United
States or any one of the states thereof, including the District of Columbia (or
any domestic branch of a foreign bank), and acting as a trustee for funds
deposited in such account, so long as any of the securities of such depository
institution shall have a credit rating from each of Moody’s, S&P and, if rated
by Fitch, Fitch in one of its generic credit rating categories that signifies
investment grade.

“Eligible Institution” means (a) a depository institution (which may be Trustee
or an affiliate) organized under the laws of the United States or any one of the
states thereof (i) that has either (A) a long-term unsecured debt rating of “A2”
or better by Moody’s or (B) a certificate of deposit rating of “P-1” by Moody’s,
(ii) that has either (A) a long-term unsecured debt rating of “AAA” by S&P or
(B) a certificate of deposit rating of at least “A-1” by S&P, (iii) that, if
rated by Fitch, has either (A) a long-term unsecured debt rating of “AAA” by
Fitch or (B) a certificate of deposit rating of at least “F-1” by Fitch and
(iv) the deposits of which are insured by the FDIC or (b) any other institution
that is acceptable to each Rating Agency, Servicer and Trustee.

 

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“Eligible Investments” means book-entry securities, negotiable instruments or
securities represented by instruments in bearer or registered form which
evidence:

(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
of Moody’s and S&P, which in the case of S&P means A-1+, and, if rated by Fitch,
Fitch in its highest investment category;

(c) commercial paper or other short-term obligations having, at the time of the
Trust’s investment or contractual commitment to invest therein, a rating from
each of Moody’s and S&P in its highest investment category, which in the case of
S&P means A-1+, and, if rated by Fitch, Fitch in its highest investment
category;

(d) demand deposits, time deposits and certificates of deposit which are fully
insured by the FDIC, with a Person the commercial paper of which has a credit
rating from each of Moody’s and S&P in its highest investment category, which in
the case of S&P means A-1+, and, if rated by Fitch, Fitch in its highest
investment category;

(e) notes or bankers acceptances (having original maturities of no more than 365
days) issued by any depository institution or trust company referred to in
clause (b);

(f) investments in money market funds (including funds of Trustee or its
affiliates as well as funds for which Trustee and its affiliates may receive
compensation) rated in the highest investment category by each of Moody’s and
S&P, and, if rated by Fitch, Fitch in its highest investment category, or
otherwise approved in writing by each Rating Agency;

(g) time deposits, other than as referred to in clause (d), with a Person the
commercial paper of which has a credit rating in its highest investment
category, from each of Moody’s and S&P, which in the case of S&P means A-1+,
and, if rated by Fitch, Fitch in its highest investment category; or

 

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(h) any other investments approved in writing by each Rating Agency, provided
that making such investments shall not cause the Trust to be required to
register as an investment company within the meaning of the Investment Company
Act.

“Eligible Receivable” means a Receivable:

(a) that has arisen under an Eligible Account;

(b) that was created in compliance with the Credit Card Guidelines and all
Requirements of Law applicable to the Credit Card Originator (or, in the case of
an Acquired Portfolio Receivable, the related Other Originator) the failure to
comply with which would have a material adverse effect on Investor Holders, and
pursuant to a Credit Card Agreement that complies with all Requirements of Law
applicable to the Credit Card Originator (and, in the case of an Acquired
Portfolio Receivable, the related Other Originator during the time prior to the
transfer of such Acquired Portfolio Receivable to the Credit Card Originator),
the failure to comply with which would have a material adverse effect on
Investor Holders;

(c) with respect to which all consents, licenses, approvals or authorizations
of, or registrations with, any Governmental Authority required to be obtained or
made by the Credit Card Originator (and, in the case of an Acquired Portfolio
Receivable, the related Other Originator with respect to such actions prior to
the transfer of such Acquired Portfolio Receivable to the Credit Card
Originator) in connection with the creation of such Receivable or the execution,
delivery and performance by the Credit Card Originator (and, in the case of an
Acquired Portfolio Receivable, the related Other Originator with respect to such
actions prior to the transfer of such Acquired Portfolio Receivable to the
Credit Card Originator) of the related Credit Card Agreement, have been duly
obtained or made and are in full force and effect as of the date of creation of
such Receivable, but failure to comply with this clause (c) shall not cause a
Receivable not to be an Eligible Receivable if, and to the extent that, the
failure to so obtain or make any such consent, license, approval, authorization
or registration would not have a material adverse effect on the Investor
Holders;

(d) as to which, at the time of its transfer to the Trust, Transferor or the
Trust will have good and marketable title free and clear of all Liens (other
than any Lien permitted by Section 2.7(b));

 

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(e) that is the subject of a valid transfer and assignment (or the grant of a
security interest) from Transferor to the Trust of all Transferor’s right, title
and interest therein;

(f) that at and after the time of transfer to the Trust is the legal, valid and
binding payment obligation of the Obligor thereof, legally enforceable against
such Obligor in accordance with its terms, except as enforceability may be
limited by applicable Debtor Relief Laws, and by general principles of equity
(whether considered in a suit at law or in equity);

(g) that constitutes an account;

(h) as to which, at the time of its transfer to the Trust, Transferor has not
taken any action which, or failed to take any action the omission of which,
would, at the time of transfer to the Trust, impair the rights therein of the
Trust or the Holders;

(i) that, at the time of its transfer to the Trust, has not been waived or
modified except as permitted in accordance with Section 3.3(h);

(j) that, 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 Debtor
Relief Laws 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 Servicer makes an adjustment pursuant to Section 3.9; and

(k) as to which, at the time of its transfer to the Trust, the Transferor has
satisfied all obligations to be fulfilled at the time it is transferred to the
Trust.

“Eligible Servicer” means Trustee, a wholly owned subsidiary of Trustee, an
Other Originator or an entity that, at the time of its appointment as Servicer:
(a) is servicing a portfolio of consumer open end credit card accounts or other
consumer open end credit accounts; (b) is legally qualified and has the capacity
to service the Accounts; (c) is qualified (or licensed) 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;
(d) has, in the reasonable judgment of Trustee, the ability to professionally
and competently service a portfolio of similar accounts; and (e) has a net worth
of at least $50,000,000 as of the end of its most recent fiscal quarter.

“Enhancement” means the rights and benefits provided to the Investor Holders of
any Series or Class pursuant to any letter of credit, surety bond, cash
collateral account, guaranty collateral invested amount, spread account,
guaranteed rate agreement, maturity guaranty facility, tax protection agreement,
interest rate swap agreement, interest rate cap agreement or other similar

 

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arrangement. The subordination of any Class to another Class, or a cross support
feature which requires collections on Receivables allocated to one Series to be
paid as principal and/or interest with respect to another Series shall be deemed
to be an Enhancement for the Class or Series benefitting from the subordination
or cross support feature.

“Enhancement Agreement” means any agreement, instrument or document governing
any Enhancement or pursuant to which any Enhancement is issued or outstanding.

“Enhancement Provider” means the Person or Persons providing any Enhancement,
other than the Investor Holders of any Class which is subordinated to another
Class.

“ERISA” means the Employee Retirement Income Security Act of 1974.

“Excess Finance Charge Collections” means all amounts that any Supplement
designates as “Excess Finance Charge Collections.”

“Excess Funding Account” is defined in Section 4.2.

“Exchange Act” means the Securities Exchange Act of 1934.

“Existing PSA” is defined in the recitals hereto.

“FDIC” means the Federal Deposit Insurance Corporation.

“Finance Charge Receivables” means, with respect to any Monthly Period, the sum
of (a) all amounts billed to the Obligors on any Account at the beginning of
such Monthly Period in respect of Periodic Finance Charges, (b) Late Fees,
return check fees and any other fees that may after the Trust Cut Off Date be
charged with respect to any Account, to the extent that Servicer designates such
fees to be treated as Finance Charge Receivables in an Officer’s Certificate
delivered to Trustee, (c) Discount Option Receivables and (d) Deferred Payment
Receivables. Collections of Finance Charge Receivables with respect to any
Monthly Period include the amount of Interchange (if any) allocable to any
Series of Certificates pursuant to the related Supplement with respect to such
Monthly Period (to the extent received by the Trust and deposited into the
Finance Charge Account or any Series Account, as the case may be, on the
Transfer Date following such Monthly Period). Except as otherwise specified in
any Supplement as to the related Series, Recoveries shall be treated as
Collections of Finance Charge Receivables.

“Finance Charge Shortfalls” is defined, as to any Series, in the related
Supplement.

“Fitch” means Fitch, Inc.

 

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“flow-through entity” is defined in Section 6.4(d).

“Global Certificate” is defined in Section 6.13.

“Governmental Authority” means 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” means, with respect to any Series, the group of Series, if any, in which
the related Supplement specifies such Series is to be included.

“Holder” means an Investor Holder or a Person in whose name the Transferor
Interest is registered.

“Identified Portfolio” means any Accounts owned from time to time by WFN and
included in the private label credit card program of Service Merchandise or
issued under a Co-Branding Agreement.

“Ineligible Receivables” is defined in Section 2.5(a).

“Initial Account” means each open end credit card account in the Identified
Portfolio existing on the Trust Cut Off Date and identified in the Account
Schedule delivered on the Initial Closing Date.

“Initial Closing Date” means January 30, 1998.

“Initial Restatement Date Portfolio Accounts” means the open end credit card
accounts in the Restatement Date Portfolios existing on September 25, 2001 and
identified in the Account Schedule delivered on the Effective Date.

“Insolvency Event” means, (a) with respect to the Transferor, that the
Transferor shall consent or fail to object to the appointment of a bankruptcy
trustee or conservator, receiver or liquidator in any bankruptcy proceeding or
other insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings of or relating to the Transferor or relating to all or
substantially all of the Transferor’s property, or the commencement of an action
seeking a decree or order of a court or agency or supervisory authority having
jurisdiction in the premises for the appointment of a bankruptcy trustee or
conservator, receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for the
winding-up, insolvency, bankruptcy, reorganization, conservatorship,
receivership or liquidation of such entity’s affairs, or notwithstanding an
objection by the Transferor any such action shall have remained undischarged or
unstayed for a period of sixty (60) days or upon entry of any order or decree
providing for such relief; or such Person shall admit in writing its inability
to pay its debts generally as they become due, file, or consent or fail to
object (or object without dismissal of any such filing within sixty (60) days of
such filing) to the filing of, a petition

 

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to take advantage of any applicable bankruptcy, insolvency or reorganization,
receivership or conservatorship statute, make an assignment for the benefit of
its creditors or voluntarily suspend payment of its obligations and (b) with
respect to WFN, WFN shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings 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,
marshalling of assets and liabilities or similar proceedings, or for the
winding-up or liquidation of its affairs, shall have been entered against WFN;
or WFN 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 an assignment for the benefit of its creditors or
voluntarily suspend payment of its obligations.

“Insolvency Proceeds” is defined in Section 9.2(b).

“In-Store Payments” is defined in Section 2.1(a).

“Insurance Proceeds” means any amounts recovered by Servicer pursuant to any
credit insurance policies covering any Obligor with respect to Receivables under
such Obligor’s Account.

“Interchange” means interchange fees payable to Transferor or an Other
Originator, in its capacity as credit card issuer, through VISA U.S.A., Inc. and
Mastercard International Inc. in connection with cardholder charges for goods
and services, and cash advances, as calculated pursuant to the related Series
Supplement for any Series.

“Internal Revenue Code” means the Internal Revenue Code of 1986.

“Invested Amount” is defined, as to any Series, in the related Supplement.

“Investment Company Act” means the Investment Company Act of 1940.

“Investor Certificate” means any one of the certificates (including the Bearer
Certificates, the Registered Certificates or any Global Certificate) executed by
Transferor and authenticated by or on behalf of Trustee, substantially in the
form attached to the related Supplement, other than any Certificates
representing the Supplemental Interests, if any.

“Investor Holder” means the Person in whose name a Registered Certificate is
registered in the Certificate Register or the holder of any Bearer Certificate
(or the Global Certificate, as the case may be) or Coupon.

“Investor Interest” is defined in Section 4.1.

 

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“Investor Percentage” is defined, as to any Series, in the related Supplement.

“Investor Servicing Fee” is defined, as to any Series, in the related
Supplement.

“Late Fees” means the fees specified in the Credit Card Agreement applicable to
each Account for late fees with respect to such Account.

“Lien” means 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, excluding any lien or
filing pursuant to this Agreement; provided that any assignment or transfer
pursuant to Section 6.3(c) or (d) or Section 7.2 shall not constitute a Lien.

“Majority Holders” means the Holders of Investor Certificates evidencing more
than 50% of the aggregate unpaid principal amount of all outstanding Investor
Certificates.

“Merchant” means (a) Service Merchandise and (b) any other Person that operates
retail establishments at which, or a catalogue sales business in which, goods or
services may be purchased under an Account.

“Minimum Transferor Amount” means, as of any date of determination, the sum of
(a) the product of (i) the sum of (A) the aggregate Principal Receivables and
(B) the amounts on deposit in the Excess Funding Account and (ii) the Required
Retained Transferor Percentage plus (b) any additional amounts specified in the
Supplement for any outstanding Series.

“Monthly Period” means as to each Distribution Date, the immediately preceding
calendar month, unless otherwise defined in any Supplement.

“Moody’s” means Moody’s Investors Service, Inc.

“New Discount Option Receivables” means, as of any date of determination, the
product of the Discount Percentage and the amount of Principal Receivables
(before subtracting Finance Charge Receivables which are Discount Option
Receivables) arising on such date of determination.

“Notice Date” is defined in Section 2.8(d)(i).

“Notices” is defined in Section 13.5(a).

“Obligor” means, as to any Account, the Person or Persons obligated to make
payments on such Account, including any guarantor.

 

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“Officer’s Certificate” means a certificate delivered to Trustee signed by the
Chairman of the Board, President, any Vice President or the Treasurer or any
Assistant Treasurer of Transferor or Servicer, as the case may be.

“Opinion of Counsel” means a written opinion of counsel, who may be counsel for,
or an employee of, the Person providing the opinion and which counsel shall be
reasonably acceptable to Trustee.

“Other Originator” means Banc One and any other Person designated as an Other
Originator in a Supplement.

“Participation Interests” is defined in Section 2.8(b).

“Paying Agent” means any paying agent and co-paying agent appointed pursuant to
Section 6.7.

“Perfection Representations and Warranties” means the representations and
warranties set forth below:

1. General. This Agreement creates a valid and continuing security interest (as
defined in the applicable UCC) in the Receivables and the proceeds thereof in
favor of the Trust, which (a) in the case of existing Receivables and the
proceeds thereof, is enforceable upon execution of this Agreement against
creditors of and purchasers from Transferor, or with respect to then existing
Receivables in Additional Accounts, as of the applicable Addition Date, and
which will be enforceable with respect to Receivables hereafter and thereafter
created and the proceeds thereof upon such creation, in each case as such
enforceability may be limited by applicable Debtor Relief Laws, now or hereafter
in effect, and by general principles of equity (whether considered in a suit at
law or in equity) and (b) upon filing of the financing statements described in
clause 4 below and, in the case of Receivables hereafter created, upon the
creation thereof, will be prior to all other Liens (other than Liens permitted
pursuant to clause 3 below).

2. General. The Receivables constitute “accounts” within the meaning of UCC
Section 9-102.

3. Creation. Immediately prior to the conveyance of the Receivables pursuant to
this Agreement, Transferor owns and has good and marketable title to the
Receivables free and clear of any Lien, claim or encumbrance of any Person;
provided that nothing in this clause 3 shall prevent or be deemed to prohibit
Transferor from suffering to exist upon any of the Receivables any Liens for any
taxes if such taxes shall not at the time be due and payable or if Transferor or
RPA Seller, as applicable, 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.

 

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4. Perfection. Transferor has caused or will have caused, within ten days of the
Effective Date, the filing of all appropriate financing statements in the proper
filing office in the appropriate jurisdictions under applicable law in order to
perfect the security interest granted by the Transferor to the Trust under this
Agreement in the Receivables arising in the Initial Accounts, Automatic
Additional Accounts included in the Identified Portfolio and the Initial
Restatement Date Portfolio Accounts, and (if any additional filing is so
necessary) within 10 days of the applicable Addition Date, in the case of such
Receivables arising in Supplemental Accounts and related Automatic Additional
Accounts.

5. Priority. Other than the security interest granted to the Trust pursuant to
this Agreement, Transferor has not pledged, assigned, sold, granted a security
interest in, or otherwise conveyed any of the Receivables. Transferor has not
authorized the filing of and is not aware of any financing statements against
Transferor that include a description of collateral covering the Receivables
other than any financing statement (i) relating to the security interest granted
to Trust hereunder or (ii) that has been terminated.

“Periodic Finance Charges” means any finance charges (due to periodic rate)
applicable to any Account.

“Person” means 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.

“Portfolio Yield” is defined, as to any Series, in the related Supplement.

“Principal Receivable” means all Receivables other than Finance Charge
Receivables. In calculating the aggregate amount of Principal Receivables on any
day, the amount of Principal Receivables shall not include Defaulted Receivables
and shall be reduced by the aggregate amount of credit balances in the Accounts
on such day.

“Principal Sharing Series” means a Series that, pursuant to the Supplement
therefor, is entitled to receive Shared Principal Collections.

“Principal Shortfalls” is defined, as to any Series, in the related Supplement.

“Principal Terms” means, with respect to any Series: (a) its name or
designation; (b) its initial principal amount (or method for calculating such
amount) and its invested amount in the Trust; (c) its interest rate (or method
for the determination thereof); (d) the payment date or dates and the date or
dates from which interest shall accrue; (e) the method for allocating
Collections to Holders of such Series; (f) the designation of any Series
Accounts and the terms governing the operation of any such Series Accounts;
(g) the percentage used to calculate the servicing fee with respect thereto;
(h) the provider, if any, and the

 

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terms of any form of Enhancement with respect thereto; (i) the terms on which
the Investor Certificates of such Series may be repurchased by Transferor or any
Affiliate of Transferor or remarketed to other investors; (j) the Series
Termination Date; (k) 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; (l) 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
conditions, if any, upon which such Global Certificates may be exchanged, in
whole or in part, for Definitive Certificates, and the manner in which any
interest payable on a Global Certificate will be paid); (m) whether the Investor
Certificates of such Series may be issued as Bearer Certificates and any
limitation imposed thereon; (n) the priority of such Series with respect to any
other Series; (o) the Group, if any, to which such Series belongs; (p) whether
Interchange or other fees will be included in the funds available to be paid for
such Series; and (q) any other terms of such Series.

“Rating Agency” means, as to each Series, the rating agency or agencies, if any,
specified in the related Supplement.

“Rating Agency Condition” means, with respect to any action, that each Rating
Agency, if any, shall have notified Transferor, Servicer and Trustee in writing
that such action will not result in a reduction or withdrawal of the rating, if
any, of any outstanding Series or Class with respect to which it is a Rating
Agency.

“Reassignment” is defined in Section 2.9(a).

“Receivable” means any amount owing from time to time by an Obligor under an
Account, including amounts owing for purchases of goods and services, and
amounts payable as Finance Charge Receivables. A Receivable shall be deemed to
have been created at the end of the day on the Date of Processing of such
Receivable. Receivables which become Defaulted Receivables shall not be shown on
Servicer’s records as amounts payable (and shall cease to be included as
Receivables) on the day on which they become Defaulted Receivables.

“Receivable Purchase Agreement” means the Receivables Purchase Agreement, dated
as of September 28, 2001 between RPA Seller and Transferor.

“Record Date” means, as to any Distribution Date, the date specified in the
related Supplement.

“Recoveries” means (a) all amounts received by Servicer with respect to
Principal Receivables that have previously become Defaulted Receivables and with
respect to Finance Charge Receivables that have been charged off as
uncollectible (including Insurance Proceeds) and (b) proceeds of any collateral
securing any Receivable, in each case less related collection expenses.

“Registered Certificates” is defined in Section 6.1.

 

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“Registered Holder” means the Holder of a Registered Certificate.

“Removal Date” is defined in Section 2.9(a)(i).

“Removal Notice Date” is defined in Section 2.9(a)(i).

“Removed Accounts” is defined in Section 2.9(a).

“Required Principal Balance” means, as of any date of determination, the sum of
the numerators used at such date to calculate the Investor Percentage with
respect to Principal Receivables for all Series outstanding on such date, less
the amount on deposit in the Excess Funding Account as of the date of
determination.

“Required Retained Transferor Percentage” means, as of any date of
determination, 7% or, if less, the highest of the Required Retained Transferor
Percentages specified in the Supplements for all outstanding Series.

“Requirements of Law” means, as to any Person, 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.

“Responsible Officer” means any officer (a) within the Corporate Trust
Department (or any successor group of Trustee), including any vice president,
assistant vice president, assistant secretary or any other officer or assistant
officer of Trustee customarily performing functions similar to those performed
by the persons who at the time shall be such officers, respectively, or to whom
any corporate trust matter is referred at Trustee’s Corporate Trust Office
because of such officer’s knowledge of and familiarity with the particular
subject and (b) who shall have direct responsibility for this Agreement.

“Restart Date” is defined in Section 2.8(a).

“Restatement Date Portfolios” means any Accounts owned from time to time by WFN
and included in the private label credit card programs of Maurices Inc., Harlem
Furniture Inc. and Valuevision International Inc.

“RPA Seller” means WFN, in its capacity as RPA Seller under the Receivables
Purchase Agreement.

“Rule 144A” means Rule 144A under the Securities Act, as such Rule may be
amended from time to time.

“S&P” means Standard & Poor’s Ratings Service, a division of the McGraw Hill
Companies, Inc.

 

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“S&P Condition” means, with respect to any action, that Standard & Poor’s, a
division of the McGraw Hill Companies, Inc., for so long as S&P shall, at the
request of the Transferor, rate any outstanding series or class of securities
issued by the Transferor or a securitization trust for which the Transferor acts
as depositor, shall have notified Transferor, Servicer and Trustee that such
action will not result in a reduction or withdrawal of the rating, if any, of
any such outstanding series or class of securities rated by S&P.

“Securities Act” means the Securities Act of 1933.

“Series” means any series of Investor Certificates established pursuant to a
Supplement.

“Series Account” means any deposit, trust, escrow or similar account maintained
for the benefit of the Investor Holders of any Series or Class, as specified in
any Supplement.

“Series Servicing Fee Percentage” is defined, as to any Series, in the related
Supplement.

“Series Termination Date” is defined, as to any Series, in the related
Supplement.

“Service Merchandise” means Service Merchandise Company, Inc., a Tennessee
corporation.

“Service Transfer” is defined in Section 10.1.

“Servicer” means WFN, in its capacity as Servicer pursuant to this Agreement,
and, after any Service Transfer, the Successor Servicer.

“Servicer Default” is defined in Section 10.1.

“Servicing Fee” means, as to any Series, the servicing fee specified in
Section 3.2.

“Servicing Officer” means any officer of Servicer involved in, or responsible
for, the administration and servicing of the Receivables whose name appears on a
list of servicing officers furnished to Trustee by Servicer on the Initial
Closing Date, as such list may from time to time be amended.

“Shared Principal Collections” means all amounts that any Supplement designates
as “Shared Principal Collections.”

“Specified Transferor Amount” means, as of any date of determination, 0 or, if
more, the highest amount identified as the “Specified Transferor Amount” in the
Supplement for any outstanding Series.

 

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“Subject Certificate” is defined in Section 6.4(d).

“Successor Servicer” is defined in Section 10.2(a).

“Supplement” means, as 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 6.3, and all amendments thereof
and supplements thereto.

“Supplemental Account” is defined in Section 2.8(b).

“Supplemental Interest” is defined in Section 6.3(c).

“Tax Opinion” means, with respect to any action, an Opinion of Counsel to the
effect that, for Federal income tax purposes, (a) such action will not adversely
affect the tax characterization as debt of Investor Certificates of any
outstanding Series or Class with respect to which an Opinion of Counsel was
delivered at the time of their issuance that such Investor Certificates would be
characterized as debt, (b) such actions will not cause the Trust to be
classified, for federal income tax purposes, as 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
Holder.

“Termination Notice” is defined in Section 10.1.

“Transaction Documents” means, at any time, this Agreement, the Receivables
Purchase Agreement, the Supplement for each outstanding Series, any document
pursuant to which any outstanding purchased interest is sold as permitted by
Section 6.3(b) and any other document designated as a Transaction Document in
any Supplement or any document pursuant to which any outstanding purchased
interest is sold as permitted by Section 6.3(b).

“Transfer Agent and Registrar” is defined in Section 6.4.

“Transfer Date” means the Business Day immediately preceding each Distribution
Date.

“Transferor” means WFN Credit Company, LLC, a Delaware limited liability
company, and additional transferors, if any, designated in accordance with
Section 2.11 or 6.3(d).

“Transferor Amount” means, on any date of determination, the excess, if any, of
(a) the aggregate amount of Principal Receivables on such day, plus the
principal amount on deposit in the Excess Funding Account on such day over
(b) the sum of the Invested Amounts (or, as to any Series that has an Adjusted
Invested Amount, the Adjusted Invested Amount) with respect to all Series then
outstanding, plus the outstanding principal amount of all Supplemental Interests
(and of any purchased interest sold pursuant to Section 6.3(b)).

 

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“Transferor Interest” is defined in Section 4.1.

“Transferor Retained Certificate” means any Certificate in any Class of Investor
Certificates that is designated as a “Transferor Retained Class” in any
Supplement.

“Transferor Percentage” means as to Finance Charge Receivables, Defaulted
Receivables and Principal Receivables, 100% less the sum of the applicable
Investor Percentages for all outstanding Series.

“Transferred Account” is defined in the definition of “Account.”

“Trust” means the Trust created by this Agreement, which shall be known as the
World Financial Network Credit Card Master Trust III.

“Trust Assets” is defined in Section 2.1.

“Trust Cut Off Date” means January 30, 1998.

“Trustee” means The Chase Manhattan Bank, a New York banking corporation, in its
capacity as trustee of the Trust, or any successor trustee appointed as herein
provided.

“UCC” means the Uniform Commercial Code, as in effect in the State of Ohio and
in any other State where the filing of a financing statement is required to
perfect Transferor’s or the Trust’s interest in the Receivables and the proceeds
thereof or in any other specified jurisdiction.

“United States” means the United States of America (including the States and the
District of Columbia), its territories, its possessions and other areas subject
to its jurisdiction.

“Variable Interest” means either of (a) any Investor Certificate that is
designated as a variable funding certificate in the related Supplement and
(b) any purchased interest sold as permitted by Section 6.3(b).

“WFN” is defined in the preamble.

SECTION 1.2 Other Interpretive Provisions. With respect to any Series, all terms
used and not defined herein are used as defined in the related Supplement. All
terms defined in this Agreement shall have the defined meanings when used in any
certificate or other document delivered pursuant hereto unless otherwise defined
therein. For purposes of this Agreement and all such certificates and other
documents, unless the context otherwise requires: (a) accounting terms not
otherwise defined in this Agreement, and accounting terms partly defined in this
Agreement to the extent not defined, shall have the respective meanings given to
them under generally accepted accounting principles; (b) terms defined in
Article 9 of the UCC and not otherwise defined in

 

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this Agreement are used as defined in that Article; (c) any reference to each
Rating Agency shall only apply to any specific rating agency if such rating
agency is then rating any outstanding Series; (d) references to any amount as on
deposit or outstanding on any particular date means such amount at the close of
business on such day; (e) the words “hereof,” “herein” and “hereunder” and words
of similar import refer to this Agreement (or the certificate or other document
in which they are used) as a whole and not to any particular provision of this
Agreement (or such certificate or document); (f) references to any Section,
Schedule or Exhibit are references to Sections, Schedules and Exhibits in or to
this Agreement (or the certificate or other document in which the reference is
made), and references to any paragraph, subsection, clause or other subdivision
within any Section or definition refer to such paragraph, subsection, clause or
other subdivision of such Section or definition; (g) the term “including” means
“including without limitation”; (h) references to any law or regulation refer to
that law or regulation as amended from time to time and include any successor
law or regulation; (i) references to any agreement refer to that agreement as
amended from time to time; (j) references to any Person include that Person’s
permitted successors and assigns; and (k) headings are for purposes of reference
only and shall not otherwise affect the meaning or interpretation of any
provision hereof. The agreements, representations and warranties of WFN in this
Agreement, in its respective capacities as Transferor and Servicer, shall be
deemed to be the separate agreements, representations and warranties of WFN only
so long as it remains a party to this Agreement in such capacity (but the
foregoing shall not impair rights arising during or with respect to the time
that such Person was a party to this Agreement in such capacity).

ARTICLE II CONVEYANCE OF RECEIVABLES

SECTION 2.1 Conveyance of Receivables. (a) By execution of this Agreement,
Transferor transfers, assigns, sets over and otherwise conveys to the Trustee,
for the benefit of the Investor Holders, all of its right, title and interest
in, to and under (i) the Receivables existing at the close of business on the
Trust Cut Off Date and thereafter arising from time to time in the Initial
Accounts and the Receivables existing on each applicable Addition Date and
thereafter arising from time to time in the Initial Restatement Date Portfolio
Accounts and the Additional Accounts, all Recoveries allocable to the Trust as
provided herein, all moneys due or to become due and all amounts received with
respect to, and proceeds of, any of the foregoing, (ii) all of its rights,
remedies, powers and privileges under the Receivables Purchase Agreement and
(iii) without limiting the generality of the foregoing or the following, all of
Transferor’s rights pursuant to the Receivables Purchase Agreement to receive
from RPA Seller Deferred Payment Receivables and payments made by any Merchant
under any Credit Card Processing Agreement on account of amounts received by
such Merchant in payment of Receivables (“In-Store Payments”) and all proceeds
of such rights, and (iv) the right to receive certain amounts paid or payable as
Interchange (if provided for in any Supplement). Such property, together with
all moneys on deposit in the Collection Account, the Excess Funding Account, the
Series Accounts and any

 

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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
assumption by the Trust, Trustee, any Investor Holders or any Enhancement
Provider of any obligation of the Credit Card Originator, Servicer, 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, merchants clearance systems or insurers. The parties
hereto intend that each transfer of Receivables and other property pursuant to
the Agreement or any Assignment constitute a sale, and not a secured borrowing,
for accounting purposes. If the foregoing transfer, assignment, setover and
conveyance is not deemed to be an absolute assignment of the subject property to
the Trustee, for the benefit of the Holders, then it shall be deemed to
constitute a grant of a security interest in such property to the Trustee, for
the benefit of the Investor Holders, and the Transferor Interest shall be deemed
to represent Transferor’s equity in the collateral granted.

(b) 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 in Accounts owned by the Credit
Card Originator and other Trust Assets 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 assignment of such Receivables to the Trust,
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 2.1 consist of
telephone confirmation of such filing promptly followed by delivery to Trustee
of a file-stamped copy) to Trustee on or prior to the Initial Closing Date, in
the case of such Receivables arising in the Initial Accounts and Automatic
Additional Accounts included in the Identified Portfolio, and (if any additional
filing is so necessary) the applicable Addition Date, in the case of such
Receivables arising in Supplemental Accounts and the Initial Restatement Date
Portfolio Accounts and any related Automatic Additional Accounts. Trustee shall
be under no obligation whatsoever to file such financing or continuation
statements or to make any other filing under the UCC in connection with such
assignment.

(c) Transferor further agrees, at its own expense, (i) on or prior to (A) the
Automatic Addition Termination Date or any Automatic Addition Suspension Date,
or subsequent to a Restart Date, in the case of the Initial Accounts and any
Additional Accounts designated pursuant hereto prior to such date, (B) the
applicable Addition Date, in the case of Supplemental Accounts and the Initial
Restatement Date Portfolio Accounts and (C) the applicable Removal Date, in the
case of Removed Accounts, to cause to be indicated in the appropriate computer
files that Receivables created in connection with the Accounts owned by the
Credit Card Originator (other than Removed Accounts) have been conveyed to the
Trust pursuant to this Agreement for the benefit of the Holders (or conveyed to
Transferor or its designee in accordance with Section 2.9, in the case of
Removed Accounts) by including in such computer files the code identifying each
such Account (or, in the case of Removed Accounts, either including such a code

 

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identifying the Removed Accounts only if the removal occurs prior to the
Automatic Addition Termination Date or an Automatic Addition Suspension Date, or
subsequent to a Restart Date, or deleting such code thereafter) and (ii) on or
prior to the date referred to in clauses (i)(A), (B) or (C), as applicable, to
deliver to Trustee an Account Schedule (provided that such Account Schedule
shall be provided in respect of Automatic Additional Accounts on or prior to the
Determination Date relating to the Monthly Period during which their respective
Addition Dates occur), specifying for each such Account, as of the Automatic
Addition Termination Date or Automatic Addition Suspension Date, in the case of
clause (i)(B), the applicable Addition Cut Off Date, in the case of Supplemental
Accounts and Initial Restatement Date Portfolio Accounts, and the Removal 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 Account Schedule shall be supplemented from
time to time to reflect Supplemental Accounts and Removed Accounts. Once the
code referenced in clause (i) of this paragraph has been included with respect
to any Account, Transferor further agrees not to permit such code to be altered
during the remaining term of this Agreement unless and until (x) such Account
becomes a Removed Account, (y) a Restart Date has occurred on which the
Transferor starts including Automatic Additional Accounts as Accounts or
(z) Transferor shall have delivered to Trustee at least 30 days’ prior written
notice of its intention to do so and has taken such action as is necessary or
advisable to cause the interest of Trustee in the Receivables and other Trust
Assets to continue to be perfected with the priority required by this Agreement.

(d) By executing this Agreement and the Receivables Purchase Agreement, the
parties hereto and thereto do not intend to cancel, release or in any way impair
the conveyance made by WFN, in its capacity as “Transferor” under the Existing
PSA. Without limiting the foregoing, the parties hereto acknowledge and agree as
follows:

(i) Any transfer, assignment or other conveyance by the RPA Seller to the
Transferor of assets under the Receivables Purchase Agreement or under any
Transaction Document shall be subject to any rights in such assets granted by
WFN, as “Transferor” under the Existing PSA, to the Trustee pursuant to the
Existing PSA.

(ii) The trust created by and maintained under the Existing PSA shall continue
to exist and be maintained under this Agreement.

(iii) All series of investor certificates issued under the Existing PSA shall
constitute Series issued and outstanding under this Agreement, and any
supplement executed in connection with such series shall constitute a Supplement
executed hereunder.

(iv) All references to the Existing PSA in any other instruments or documents
shall be deemed to constitute references to this Agreement.

 

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All references in such instruments or documents to WFN in its capacity as the
“Transferor” of receivables and related assets under the Existing PSA shall be
deemed to include reference to the Transferor in such capacity hereunder.

(v) The Transferor hereby assumes and agrees to perform all obligations of WFN,
in its capacity as “Transferor” (but not as “Servicer”), under or in connection
with the Existing PSA (as amended and restated by this Agreement) and any
supplements to the Existing PSA.

(vi) To the extent this Agreement requires that certain actions are to be taken
as of the Initial Closing Date or another date prior to the Effective Date,
WFN’s execution of such action under the Existing PSA shall constitute
satisfaction of such requirement.

SECTION 2.2 Acceptance by Trustee. (a) Trustee accepts on behalf of the Trust
all right, title and interest to the property, now existing and hereafter
created, conveyed to the Trust pursuant to Section 2.1 and declares that it
shall maintain such right, title and interest, upon the trust herein set forth,
for the benefit of all Holders.

(b) 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. Trustee, in the name of the Trust, shall have no
power to hold any derivative financial instrument unless such derivative
financial instrument complies with the requirements of paragraph 40 of Statement
of Financial Accounting Standards No. 140 issued by the Financial Accounting
Standards Board, including any interpretations thereof or any successor
regulations issued by the Financial Accounting Standards Board.

SECTION 2.3 Representations and Warranties of Transferor Relating to Transferor.
Transferor represents and warrants to the Trust as of each Closing Date and as
of the Effective Date as follows:

(a) Organization and Good Standing. Transferor is a limited liability company
validly existing in good standing under the laws of the State of Delaware, and
has full power, authority and legal right to own its properties and conduct its
business as presently owned and conducted, to execute, deliver and perform its
obligations under each Transaction Document and to execute and deliver to
Trustee the Certificates.

(b) Due Qualification. Transferor is duly qualified to do business and is in
good standing as a foreign limited liability company (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 render any Credit Card Agreement or any Receivable transferred
to the Trust by Transferor

 

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unenforceable by the Credit Card Originator, Transferor, Servicer or Trustee and
would have a material adverse effect on the interests of the Holders hereunder
or under any Supplement.

(c) Due Authorization. The execution, delivery and performance of this Agreement
and each other Transaction Document by Transferor, the execution and delivery to
Trustee of the Certificates by Transferor and the consummation by Transferor of
the transactions provided for in each Transaction Document have been duly
authorized by Transferor by all necessary limited liability company action on
the part of Transferor.

(d) No Conflict. The execution and delivery by Transferor of each Transaction
Document and the Certificates, the performance by Transferor of the transactions
contemplated by each Transaction Document and the fulfillment by Transferor of
the terms hereof and thereof will not 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 Transferor is a
party or by which it or any of its properties are bound.

(e) No Violation. The execution and delivery by Transferor of each Transaction
Document and the Certificates, the performance by Transferor of the transactions
contemplated by this Agreement and each Supplement and the fulfillment by
Transferor of the terms hereof and thereof will not conflict with or violate any
Requirements of Law applicable to Transferor.

(f) No Proceedings. There are no proceedings or investigations pending or, to
the best knowledge of Transferor, threatened against Transferor, before any
court, regulatory body, administrative agency, or other tribunal or governmental
instrumentality (i) asserting the invalidity of any Transaction Document or the
Certificates, (ii) seeking to prevent the issuance of the Certificates or the
consummation of any of the transactions contemplated by any Transaction Document
or the Certificates, (iii) seeking any determination or ruling that, in the
reasonable judgment of Transferor, would materially and adversely affect the
performance by Transferor of its obligations under any Transaction Document,
(iv) seeking any determination or ruling that would materially and adversely
affect the validity or enforceability of any Transaction Document or the
Certificates or (v) seeking to affect adversely the income tax attributes of the
Trust under the Federal or applicable state income or franchise tax systems.

(g) All Consents Required. All approvals, authorizations, consents, orders or
other actions of any Person or of any governmental

 

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body or official required in connection with the execution and delivery by
Transferor of each Transaction Document and the Certificates, the performance by
Transferor of the transactions contemplated by each Transaction Document and the
fulfillment by Transferor of the terms hereof and thereof, have been obtained.

(h) Insolvency. No Insolvency Event with respect to Transferor has occurred.
Transferor did not (i) execute the Transaction Documents, (ii) grant to the
Trustee the security interests described in Section 2.1, (iii) cause, permit, or
suffer the perfection or attachment of such a security interest, (iv) otherwise
effectuate or consummate any transfer to Trustee pursuant to any Transaction
Document or (v) acquire its interest in the Trust, in each case:

(A) in contemplation of insolvency;

(B) with a view to preferring one creditor over another or to preventing the
application of its assets in the manner required by applicable law or
regulations;

(C) after committing an act of insolvency; or

(D) with any intent to hinder, delay, or defraud itself or its creditors.

(i) Trustee. Trustee is not an insider or Affiliate of Transferor.

The representations and warranties of Transferor set forth in this Section 2.3
shall survive the transfer and assignment by Transferor of the respective
Receivables to the Trust. Upon discovery by Transferor, Servicer or Trustee of a
breach of any of the representations and warranties by Transferor set forth in
this Section 2.3, the party discovering such breach shall give prompt written
notice to the others and to each Enhancement Provider, if any, entitled thereto
pursuant to the relevant Supplement. Transferor agrees to cooperate with
Servicer and Trustee in attempting to cure any such breach. For purposes of the
representations and warranties set forth in this Section 2.3, each reference to
a Supplement shall be deemed to refer only to those Supplements in effect as of
the relevant Closing Date.

SECTION 2.4 Representations and Warranties of Transferor Relating to Transaction
Documents and the Receivables. (a) Representations and Warranties. Transferor
represents and warrants to the Trust as of the Effective Date, each Closing Date
and, with respect to Additional Accounts, the related Addition Date that:

(i) each Transaction Document and, in the case of Supplemental Accounts, the
related Assignment, each constitutes a legal, valid and binding obligation of
Transferor, enforceable against Transferor

 

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in accordance with its terms, except as such enforceability may be limited by
applicable Debtor Relief Laws now or hereafter in effect and by general
principles of equity (whether considered in a suit at law or in equity);

(ii) as of the Automatic Addition Termination Date or any Automatic Addition
Suspension Date and as of each subsequent Addition Date with respect to
Supplemental Accounts and the Initial Restatement Date Portfolio Accounts, and
as of the applicable Removal Date with respect to the Removed Accounts, the
Account Schedule delivered pursuant to this Agreement, as supplemented to such
date, is an accurate and complete listing in all material respects of all the
Accounts as of such Automatic Addition Termination Date, such Automatic Addition
Suspension Date, the related Addition Cut Off Date or such Removal Date, as the
case may be, and the information contained therein with respect to the identity
of such Accounts and the Receivables existing in such Accounts is true and
correct in all material respects as of such specified date;

(iii) Transferor is the legal and beneficial owner of all right, title and
interest in each Receivable and Transferor has the full right to transfer such
Receivables to the Trust, and each Receivable conveyed to the Trust by
Transferor has been conveyed to the Trust free and clear of any Lien of any
Person claiming through or under Transferor or any of its Affiliates (other than
Liens permitted under Section 2.7(b)) and in compliance, in all material
respects, with all Requirements of Law applicable to 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 Transferor in connection with the conveyance by Transferor of
Receivables to the Trust have been duly obtained, effected or given and are in
full force and effect;

(v) this Agreement or, in the case of Supplemental Accounts, the related
Assignment constitutes either a valid transfer and assignment to the Trust of
all right, title and interest of Transferor in the Receivables and other Trust
Assets conveyed to the Trust by Transferor and all monies due or to become due
with respect thereto and the proceeds thereof or a grant of a security interest
in such property to the Trustee, for the benefit of the Investor Holders, 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, in each case
except as such enforceability may be limited by applicable Debtor Relief Laws,
now or hereafter in effect, and by general principles of equity (whether

 

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considered in a suit at law or in equity). Upon the filing of the financing
statements pursuant to Section 2.1 and, in the case of Receivables hereafter
created and the proceeds thereof, upon the creation thereof, the Trust shall
have a first priority security interest in such property and proceeds except for
Liens permitted under Section 2.7(b);

(vi) except as otherwise expressly provided in this Agreement or any Supplement,
neither Transferor nor any Person claiming through or under Transferor has any
claim to or interest in the Collection Account, the Excess Funding Account, any
Series Account or any Enhancement;

(vii) on the Trust Cut Off Date, with respect to each Initial Account, on the
date of its creation or the date it otherwise becomes an Automatic Additional
Account, with respect to each Automatic Additional Account and, on the
applicable Addition Cut Off Date, with respect to each related Supplemental
Account or Initial Restatement Date Portfolio Account, each such Account is an
Eligible Account;

(viii) on the Trust Cut Off Date, each Receivable then existing is an Eligible
Receivable, on the date of creation of each Automatic Additional Account or the
date the related account otherwise becomes an Automatic Additional Account, each
Receivable contained in such Automatic Additional Account is an Eligible
Receivable and, on the applicable Addition Cut Off Date, each Receivable
contained in any related Supplemental Account or related Initial Restatement
Date Portfolio Account is an Eligible Receivable; and

(ix) as of the date of the creation of any new Receivable, such Receivable is an
Eligible Receivable.

(b) Perfection Representations and Warranties. Transferor hereby makes the
Perfection Representations and Warranties to the Trust. The rights and remedies
with respect to any breach of the Perfection Representations and Warranties made
under this Section 2.4(b) shall be continuing and shall survive any termination
of this Agreement. Neither the Trust nor the Trustee shall waive a breach of any
Perfection Representation and Warranty. In order to evidence the interests of
the Transferor and the Trust under this Agreement, the Transferor and Servicer
shall, from time to time take such action, and execute and deliver such
instruments (including, without limitation, such actions or filings as are
requested by the Trustee and financing statements under the UCC as enacted and
then in effect in any other jurisdiction in which the Transferor is organized,
has its principal place of business or maintains any books, records, files, or
other information concerning the Receivables) in order to maintain and perfect,
as a first priority interest, the security interest in the Receivables. The
Transferor hereby authorizes Servicer to file financing statements under the UCC
without the Transferor’s signature where allowed by applicable law.

 

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(c) Notice of Breach. The representations and warranties of Transferor set forth
in this Section 2.4 shall survive the transfer and assignment by Transferor of
Receivables to the Trust. Upon discovery by Transferor, Servicer or Trustee of a
breach of any of the representations and warranties by Transferor set forth in
this Section 2.4, the party discovering such breach shall give prompt written
notice to the others and to each Enhancement Provider, if any, entitled thereto
pursuant to the relevant Supplement. Transferor agrees to cooperate with
Servicer and Trustee in attempting to cure any such breach. For purposes of the
representations and warranties set forth in this Section 2.4, 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.

SECTION 2.5 Reassignment of Ineligible Receivables. (a) Reassignment of
Receivables. If (i) any representation or warranty of Transferor contained in
Section 2.4(a)(ii), (iii), (iv), (vii), (viii) or (ix) is not true and correct
in any material respect as of the date specified therein with respect to any
Receivable transferred to the Trust by Transferor or any Account 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
Trustee) after the earlier to occur of the discovery thereof by Transferor or
receipt by Transferor or a designee of Transferor of notice thereof given by
Trustee, or (ii) it is so provided in Section 2.7(a) with respect to any
Receivables transferred to the Trust by Transferor, then such Receivable shall
be designated an “Ineligible Receivable” and shall be assigned a principal
balance of zero for the purpose of determining the aggregate amount of Principal
Receivables on any day; provided that such Receivables will not be deemed to be
Ineligible Receivables but will be deemed Eligible Receivables and such
Principal Receivables shall be included in determining the aggregate Principal
Receivables in the Trust 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),
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), the circumstances causing such Receivable to become an
Ineligible Receivable shall no longer exist and (y) Transferor shall have
delivered an Officer’s Certificate describing the nature of such breach and the
manner in which the relevant representation and warranty became true and
correct.

(b) Price of Reassignment. On and after the date of its designation as an
Ineligible Receivable, each Ineligible Receivable shall not be given credit in
determining the aggregate amount of Principal Receivables used to calculate the
Transferor Amount or the Investor Percentages applicable to any Series. If,
following the exclusion of such Principal Receivables from the calculation of
the Transferor Amount, the Transferor Amount would be less than the Specified
Transferor Amount, Transferor shall make a deposit into the Excess Funding

 

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Account in immediately available funds prior to the next succeeding Business Day
in an amount equal to the amount by which the Transferor Amount would be less
than the Specified Transferor Amount (up to the amount of such Principal
Receivables). The payment of such deposit amount in immediately available funds
shall otherwise be considered payment in full of all of the Ineligible
Receivables.

The obligation of Transferor 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
Holders (or Trustee on behalf of the Holders) or any Enhancement Provider.

SECTION 2.6 Reassignment of Receivables in Trust Portfolio. If any
representation or warranty of Transferor set forth in Section 2.3(a), (b) or
(c) or Section 2.4(a)(i), (v) or (vi) is not true and correct in any material
respect and such breach has a material adverse effect on the Investor Interest
in the Receivables transferred to the Trust by Transferor, then either Trustee
or the Majority Holders, by notice then given to Transferor and Servicer (and to
Trustee if given by the Investor Holders), may direct Transferor to accept a
reassignment of the Receivables transferred to the Trust by 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 Transferor shall
be obligated to accept such reassignment on the terms set forth below; provided
that such Receivables will not be reassigned to 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) Transferor shall have delivered an Officer’s Certificate describing
the nature of such breach and the manner in which the relevant representation
and warranty became true and correct.

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 each Supplement. The payment of such deposit amount in
immediately available funds shall otherwise be considered payment in full of all
of the Receivables.

Upon the deposit, if any, required to be made to the Collection Account as
provided in this Section or Section 2.5, Trustee, on behalf of the Trust, shall
automatically and without further action be deemed to transfer, assign, set over
and otherwise convey to Transferor or its designee, without recourse,
representation or warranty (except for the warranty that since the date of
transfer

 

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by Transferor, Trustee has not sold, transferred or encumbered any such
Receivables or interest therein), all the right, title and interest of the Trust
in and to the applicable Receivables, all moneys due or to become due and all
amounts received with respect thereto and all proceeds thereof. Trustee shall
execute such documents and instruments of transfer or assignment and take such
other actions as shall reasonably be requested by Transferor to effect the
conveyance of such Receivables pursuant to this Section. The obligation of
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 Holders (or Trustee on behalf of the Holders).

SECTION 2.7 Covenants of Transferor. Transferor covenants as follows:

(a) Receivables to be Accounts. Except in connection with the enforcement or
collection of an Account, Transferor will take no action to cause any Receivable
transferred by it to the Trust to be evidenced by any instrument and, if any
such Receivable is so evidenced (whether or not in connection with the
enforcement or collection of an Account), it shall be deemed to be an Ineligible
Receivable in accordance with Section 2.5(a) and shall be reassigned to
Transferor in accordance with Section 2.5(b).

(b) Security Interests. Except for the conveyances hereunder, Transferor will
not sell, pledge, assign or transfer or otherwise convey to any other Person, or
grant, create, incur, assume or suffer to exist any Lien on any Receivable,
whether now existing or hereafter created, or any interest therein; Transferor
will immediately notify Trustee of the existence of any Lien on any Receivable
of which Transferor has knowledge; and Transferor shall defend the right, title
and interest of the Trust in, to and under the Receivables, whether now existing
or hereafter created, against all claims of third parties claiming through or
under Transferor or RPA Seller; provided that nothing in this Section 2.7(b)
shall prevent or be deemed to prohibit Transferor from suffering to exist upon
any of the Receivables (i) any Liens for taxes if such taxes shall not at the
time be due and payable or if Transferor or RPA Seller, as applicable, 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, or (ii) at any time when accounts subject to any Co-Branding Agreement
are included in the Identified Portfolio, rights of the counterparty to such
Co-Branding Agreement in respect of such accounts and related receivables, which
rights arise pursuant to the terms of such Co-Branding Agreement and do not
constitute a Lien on any Receivables transferred to the Trust hereunder.
Notwithstanding the foregoing, nothing in this Section 2.7(b) shall be construed
to prevent or be deemed to prohibit the transfer of the Transferor Interest and
certain other rights of Transferor in accordance with this Agreement and any
related Supplement.

 

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(c) Transferor Interest. Except as otherwise permitted herein, including in
Sections 2.11, 6.3 and 7.2, Transferor agrees not to transfer, assign, exchange
or otherwise convey or pledge, hypothecate or otherwise grant a security
interest in the Transferor Interest (or any interest therein) or any
Supplemental Interest (or any interest therein) and any such attempted transfer,
assignment, exchange, conveyance, pledge, hypothecation or grant shall be void.

(d) Delivery of Collections or Recoveries. If Transferor receives Collections or
Recoveries, then Transferor agrees to pay Servicer all such Collections and
Recoveries as soon as practicable after receipt thereof but in no event later
than two Business Days after the Date of Processing by Transferor.

(e) Notice of Liens. Transferor shall notify Trustee and each Enhancement
Provider, if any, entitled to such notice pursuant to the relevant Supplement
promptly after becoming aware of any Lien on any Receivable other than the
conveyances hereunder or Liens permitted under Section 2.7(b).

(f) Continuous Perfection. Transferor shall not change its name, identity or
structure in any manner that might cause any financing or continuation statement
filed pursuant to this Agreement to be misleading within the meaning of
Section 9-402(7) of the UCC (or any other then applicable provision of the UCC)
unless Transferor shall have delivered to Trustee at least 30 days prior written
notice thereof and, no later than 30 days after making such change, shall have
taken all action necessary or advisable to amend such financing statement or
continuation statement so that it is not misleading. Transferor shall not change
its chief executive office, jurisdiction of organization or change the location
of its principal records concerning the Receivables, the Trust Assets or the
Collections unless it has delivered to Trustee at least 30 days prior written
notice of its intention to do so and has taken such action as is necessary or
advisable to cause the interest of Trustee in the Receivables and other Trust
Assets to continue to be perfected with the priority required by this Agreement.

(g) Credit Card Agreement and Guidelines. Transferor shall enforce the covenant
in the Receivables Purchase Agreement requiring the Credit Card Originator to
comply with and perform its obligations under the Credit Card Agreements
relating to the Accounts, the Credit Card Guidelines and with respect to
Accounts arising under any Co-Branding Agreement, all applicable rules and
regulations of VISA U.S.A., Inc. and MasterCard International Inc., except
insofar as any failure to comply or perform would not materially or adversely
affect the rights of the Trust or the Holders under any Transaction Document or
the Certificates. Transferor may permit the Credit Card Originator to change the
terms and

 

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provisions of the Credit Card Agreements or the Credit Card Guidelines in any
respect (including the reduction of the required minimum monthly payment, the
calculation of the amount, or the timing, of charge offs and Periodic Finance
Charges and other fees assessed thereon), but only if such change is made
applicable to any comparable segment of the revolving credit card accounts owned
and serviced by the Credit Card Originator which have characteristics the same
as, or substantially similar to, the Accounts that are the subject of such
change, except as otherwise restricted by an endorsement, sponsorship or other
agreement between Transferor and an unrelated third party or by the terms of the
Credit Card Agreements.

(h) Receivables Purchase Agreement. Transferor, in its capacity as purchaser of
Receivables from RPA Seller under the Receivables Purchase Agreement, shall
enforce the covenants and agreement of RPA Seller as set forth in the
Receivables Purchase Agreement if the failure of RPA Seller to comply with such
covenants and agreements would (i) result in the occurrence of an Early
Amortization Event or (ii) materially and adversely effect the amount or timing
of distributions to be made to the Investor Certificateholders of any Series or
Class pursuant to the Transaction Documents.

(i) Official Records. The resolutions of Transferor’s Board of Directors
approving each of the Transaction Documents and all documents relating thereto
are and shall be continuously reflected in the minutes of Transferor’s Board of
Directors. Each of the Transaction Documents and all documents relating thereto
are and shall, continuously from the time of their respective execution by
Transferor, be official records of Transferor.

(j) Amendment of Organizational Documents. Transferor shall not amend in any
material respect its certificate of formation or its limited liability company
agreement without providing the Rating Agencies with notice no later than the
fifth Business Day prior to such amendment (unless the right to such notice is
waived by the Rating Agency) and satisfying the Rating Agency Condition.

(k) Other Indebtedness. Except as contemplated by the Receivables Purchase
Agreement, the Transferor shall not incur any additional debt, unless (i) such
debt is contemplated by the Transaction Documents, (ii) such debt is
contemplated by the Receivables Purchase Agreement dated as of August 1, 2001
between WFN and WFN Credit Company, LLC, executed in connection with World
Financial Credit Card Master Trust and World Financial Credit Card Master Note
Trust or (iii) the Rating Agencies are 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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(l) Separate Corporate Existence. The Transferor shall:

(i) Maintain in full effect its existence, rights and franchises as a limited
liability company under the laws of the state of its organization 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 the Receivables Purchase Agreement and each
other instrument or agreement necessary or appropriate to proper administration
hereof and permit and effectuate the transactions contemplated hereby.

(ii) Except as provided herein, maintain its own deposit, securities and other
account or accounts, separate from those of any Affiliate of the Transferor,
with financial institutions. The funds of the Transferor shall not be diverted
to any other Person or for other than the corporate use of the Transferor, and,
except as may be expressly permitted by this Agreement or the Receivables
Purchase Agreement, the funds of the Transferor shall not be commingled with
those of any other person or entity.

(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 entities, and each such entity shall bear its fair share of such
costs. To the extent that the 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 the Transferor and any of its Affiliates shall be
only on an arm’s-length basis and shall receive the approval of the 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

 

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number separate from those of its stockholders and Affiliates. To the extent
that the Transferor and any of its members or Affiliates have offices in
contiguous space, there shall be fair and appropriate allocation of overhead
costs (including rent) among them, and each such entity shall bear its fair
share of such expenses.

(vi) Conduct its affairs strictly in accordance with its certificate of
formation and observe all necessary, appropriate and customary corporate
formalities including, but not limited to, holding all regular and special
directors’ meetings appropriate to authorize all limited liability company
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, intercompany transaction accounts. Regular directors’ meetings
shall be held at least annually.

(vii) Ensure that decisions with respect to its business and daily operations
shall be independently made by the Transferor (although the officer making any
particular decision may also be an officer or director of an Affiliate of the
Transferor) and shall not be dictated by any Affiliate of the Transferor.

(viii) Act solely in its own legal name and through its own authorized officers
and agents, and, except as contemplated by the Transaction Documents, no
Affiliate of the Transferor shall be appointed to act as agent of the
Transferor. The Transferor shall at all times use its own stationery and
business forms and describe itself as a separate legal entity.

(ix) Except as contemplated by the Receivables Purchase Agreement, ensure that
none of its Affiliates shall advance funds to it, and no Affiliate of the
Transferor will otherwise guaranty its debts.

(x) Other than organizational expenses and as expressly provided herein, pay all
expenses, indebtedness and other obligations incurred by it using its own funds.

(xi) Not enter into any guaranty, or otherwise become liable, with respect to or
hold its assets or creditworthiness out as being available for the payment of
any obligation of any of its Affiliates.

(xii) Ensure that any financial reports required of the Transferor shall comply
with GAAP and shall be issued separately from, but may be consolidated with, any
reports prepared for any

 

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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.

(xiii) Ensure that at all times it is adequately capitalized to engage in the
transactions contemplated in its certificate of formation and limited liability
company agreement.

SECTION 2.8 Addition of Accounts. (a) Automatic Additional Accounts. Subject to
any limitations specified in any Supplement, Automatic Additional Accounts shall
be included as Accounts from and after the date upon which they are created, and
all Receivables in Automatic Additional Accounts, whether such Receivables are
then existing or thereafter created, shall be transferred automatically to the
Trust upon their creation. For all purposes of this Agreement, all receivables
relating to Automatic Additional Accounts shall be treated as Receivables upon
their creation and shall be subject to the eligibility criteria specified in the
definitions of “Eligible Receivable” and “Eligible Account.” Transferor may
elect at any time to terminate the inclusion in Accounts of new accounts which
would otherwise be Automatic Additional Accounts as of any Business Day (the
“Automatic Addition Termination Date”), or suspend any such inclusion as of any
Business Day (an “Automatic Addition Suspension Date”) until a date (the
“Restart Date”) to be notified in writing by Transferor to Trustee by delivering
to Trustee, Servicer and each Rating Agency ten days prior written notice of
such election at least 10 days prior to such Automatic Addition Termination
Date, Automatic Addition Suspension Date or Restart Date, as the case may be.
Promptly after each of an Automatic Addition Termination Date, an Automatic
Addition Suspension Date and a Restart Date, Transferor and Trustee agree to
execute, and Transferor agrees to record and file at its own expense, an
amendment to the financing statements referred to in Section 2.1 to specify the
accounts then subject to this Agreement (which specification may incorporate a
list of accounts by reference) and, except in connection with any such filing
made after a Restart Date, to release any security interest in any accounts
created after the Automatic Addition Termination Date or Automatic Addition
Suspension Date. Notwithstanding the foregoing, no new account arising in the
Valuevision International Inc. portfolio will be treated as an Automatic
Additional Account if, as a result of doing so, the aggregate amount of
Principal Receivables in Accounts in the [Valuevision International Inc.
portfolio would exceed $10,000,000.

(b) Required Additions of Supplemental Accounts. If during any period of thirty
consecutive days, the Transferor Amount averaged over that period is less than
the Minimum Transferor Amount for that period, Transferor shall designate
additional Eligible Accounts (“Supplemental Accounts”) to be included as
Accounts in a sufficient amount such that the average of the Transferor Amount,
computed by assuming that the amount of the Principal Receivables of such
Supplemental Accounts shall be deemed to be outstanding in the Trust during each
day of such 30-day period, is at least equal to the Minimum

 

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Transferor Amount. In addition, if on any Record Date the aggregate amount of
Principal Receivables plus amounts on deposit in the Excess Funding Account is
less than the Required Principal Balance, Transferor shall designate
Supplemental Accounts from any Approved Portfolio to be included as Accounts in
a sufficient amount such that the aggregate amount of Principal Receivables plus
amounts on deposit in the Excess Funding Account will be equal to or greater
than the Required Principal Balance. Receivables from all such Supplemental
Accounts shall be transferred to the Trust on or before the tenth Business Day
following such thirty-day period or Record Date, as the case may be. In lieu of,
or in addition to, designating Supplemental Accounts as required above,
Transferor may convey to the Trust participations or trust certificates
representing undivided legal or beneficial interests in a pool of assets
primarily consisting of receivables arising under revolving credit card accounts
or other revolving credit accounts owned by Credit Card Originator or any of its
Affiliates and collections thereon (“Participation Interests”). Any addition of
Participation Interests to the Trust (whether pursuant to this paragraph (b) or
paragraph (c) below) shall be effected by an amendment hereto, dated the
applicable Addition Date, pursuant to subsection 13.1(a).

(c) Permitted Additions. In addition to its obligation under paragraph (b),
Transferor may, but shall not be obligated to, from time to time designate
Supplemental Accounts or Participation Interests to be included as Trust Assets,
in either case as of the applicable Addition Date.

(d) Certain Conditions for Additions of Supplemental Accounts and Participation
Interests. Transferor agrees that any transfer of Receivables from Supplemental
Accounts or Participation Interests under paragraphs (b) or (c) shall occur only
upon satisfaction of the following conditions (to the extent applicable):

(i) on or before the tenth Business Day prior to the Addition Date (the “Notice
Date”), Transferor shall give Trustee, each Rating Agency and Servicer written
notice that such Supplemental Accounts or Participation Interests will be
included, which notice shall specify the approximate aggregate amount of the
Receivables or Participation Interests to be transferred; and, in the case of
any transfer pursuant to paragraph (c), the Rating Agency Condition shall have
been satisfied;

(ii) on or before the Addition Date, Transferor shall have delivered to Trustee
a written assignment (including an acceptance by Trustee on behalf of the Trust
for the benefit of the Investor Holders) in substantially the form of Exhibit B
(the “Assignment”) and the Credit Card Originator shall have indicated in its
computer files that the Receivables created in connection with the Supplemental
Accounts have been transferred to the Trust and, within five Business Days
thereafter, Transferor shall have delivered to Trustee an Account Schedule
listing such Supplemental Accounts, which as of the date of such Assignment,
shall be deemed incorporated into and made a part of such Assignment and this
Agreement;

 

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(iii) Transferor shall represent and warrant that (x) each Supplemental Account
is, as of the Addition Date, an Eligible Account, and each Receivable in such
Supplemental Account is, as of the Addition Date, an Eligible Receivable, (y) no
selection procedures believed by Transferor to be materially adverse to the
interests of the Investor Holders were utilized in selecting the Additional
Accounts from the available Eligible Accounts in an Approved Portfolio, and
(z) as of the Addition Date, Transferor is not insolvent;

(iv) Transferor shall represent and warrant that, as of the Addition Date, the
Assignment constitutes either (x) a valid transfer and assignment to the Trust
of all right, title and interest of Transferor in and to the Receivables then
existing and thereafter created in the Supplemental Accounts, and all proceeds
of such Receivables and Insurance Proceeds relating thereto and such Receivables
and all proceeds thereof and Insurance Proceeds and Recoveries relating thereto
will be held by the Trust free and clear of any Lien of any Person claiming
through or under Transferor or any of its Affiliates, except for (i) Liens
permitted under Section 2.7(b), (ii) the interest of Transferor as Holder of the
Transferor Interest and (iii) Transferor’s right to receive interest accruing
on, and investment earnings in respect of, the Excess Funding Account, or any
Series Account as provided in this Agreement and any related Supplement or (y) a
grant of a security interest in such property to the Trustee, for the benefit of
the Investor Holders, which is enforceable with respect to then existing
Receivables in the Supplemental Accounts, the proceeds thereof and Insurance
Proceeds and Recoveries relating thereto upon the conveyance of such Receivables
to the Trust, and which will be enforceable with respect to the Receivables
thereafter created in respect of Supplemental Accounts conveyed on such Addition
Date, the proceeds thereof and Insurance Proceeds and Recoveries relating
thereto upon such creation; and (z) if the Assignment constitutes the grant of a
security interest to the Trustee in such property, upon the filing of a
financing statement as described in Section 2.1 with respect to such
Supplemental Accounts and in the case of the Receivables thereafter created in
such Supplemental Accounts and the proceeds thereof, and Insurance Proceeds and
Recoveries relating thereto, upon such creation, the Trust shall have a first
priority perfected security interest in such property (subject to Section 9-306
of the UCC), except for Liens permitted under Section 2.7(b);

(v) Transferor shall deliver an Officer’s Certificate to Trustee confirming the
items set forth in clause (ii); and

 

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(vi) Transferor shall deliver an Opinion of Counsel with respect to the
Receivables in the Supplemental Accounts to Trustee (with a copy to each Rating
Agency) substantially in the form of Exhibit E-2.

(e) Additional Approved Portfolios. As of the Effective Date, each of the
Restatement Date Portfolios is designated as an Approved Portfolio. The
Transferor may also from time to time designate additional portfolios of
accounts as “Approved Portfolios” if all conditions, if any, in each Supplement
for the designation of an Approved Portfolio are satisfied.

SECTION 2.9 Removal of Accounts. (a) On any day of any Monthly Period Transferor
shall have the right 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, all moneys due or to become due and all amounts
received with respect thereto and all proceeds thereof in or with respect to the
Accounts then owned by the Credit Card Originator and designated by Transferor
(the “Removed Accounts”) or Participation Interests (unless otherwise set forth
in the applicable Supplement), upon satisfaction of the following conditions
(provided that the conditions listed in clauses (iv) through (vii) below need
not be satisfied if the Removed Accounts relate to a repurchase pursuant to
Section 2.9(b)):

(i) on or before the tenth Business Day immediately preceding the Removal Date
(the “Removal Notice Date”) Transferor shall have given Trustee, Servicer, each
Rating Agency and any Enhancement Provider entitled thereto pursuant to the
relevant Supplement written notice of such removal and specifying the date for
removal of the Removed Accounts and Participation Interests (the “Removal
Date”);

(ii) with respect to Removed Accounts, on or prior to the date that is 10
Business Days after the Removal Date, Transferor shall have delivered to Trustee
an Account Schedule listing the Removed Accounts and specifying for each such
Account, as of the Removal Notice Date, its account number, the aggregate amount
outstanding, and the aggregate amount of Principal Receivables outstanding in
such Account;

(iii) with respect to Removed Accounts, Transferor shall have represented and
warranted as of the Removal Date that the list of Removed Accounts delivered
pursuant to paragraph (ii), as of the Removal Date, is true and complete in all
material respects;

(iv) the Rating Agency Condition shall have been satisfied with respect to such
removal;

(v) Transferor shall have delivered to Trustee and any Enhancement Provider
entitled thereto pursuant to the relevant Supplement an Officer’s Certificate,
dated as of the Removal Date, to the

 

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effect that Transferor reasonably believes that (A) such removal will not, based
on the facts known to such officer at the time of such certification, then or
thereafter cause an Early Amortization Event to occur with respect to any
Series, (B) no selection procedure believed by Transferor to be materially
adverse to the interests of the Investor Holders has been used in removing
Removed Accounts from among any pool of Accounts or Participation Interests of a
similar type or (C) Accounts (or administratively convenient groups of Accounts,
such as billing cycles) were chosen for removal on a random basis or another
basis that the Transferor believes is consistent with achieving derecognition of
the Receivables under generally accepted accounting principles in the United
States of America in effect from time to time;

(vi) the aggregate Principal Receivables in the Removed Accounts shall not
exceed the excess of the Transferor Amount over the Minimum Transferor Amount,
all measured as of the end of the most recently ended Monthly Period; and

(vii) such removal shall not cause a decrease in the sum of the Invested Amounts
for all outstanding Series.

Upon satisfaction of the above conditions, Trustee shall execute and deliver to
Transferor or its designee a written reassignment in substantially the form of
Exhibit B (the “Reassignment”) and shall, without further action, be deemed to
transfer, assign, set over and otherwise convey to 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 Receivables arising
in the Removed Accounts or the Participation Interests, all moneys due and to
become due and all amounts received with respect thereto and all proceeds
thereof. In addition, Trustee shall execute such other documents and instruments
of transfer or assignment and take such other actions as shall reasonably be
requested by Transferor to effect the conveyance of Receivables pursuant to this
Section.

(b) Transferor may from time to time designate as Removed Accounts any Accounts
designated for repurchase by a Merchant pursuant to the terms of the related
Credit Card Processing Agreement. Any repurchase of the Receivables in Removed
Accounts designated pursuant to this Section 2.9(b) shall be effected in the
manner and at a price determined in accordance with Section 2.5(b), as if the
Receivables being repurchased were Ineligible Receivables. Amounts deposited in
the Collection Account in connection therewith shall be deemed to be Collections
of Principal Receivables and shall be applied in accordance with the terms of
Article IV and each Supplement.

SECTION 2.10 Discount Option. (a) Transferor shall have the option, to designate
at any time a fixed or floating percentage (the “Discount Percentage”), of the
amount of Receivables arising in the Accounts on or after the date such

 

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designation becomes effective that would otherwise constitute Principal
Receivables (prior to subtracting from Principal Receivables, Finance Charge
Receivables that are Discount Option Receivables) to be treated as Finance
Charge Receivables. Transferor may from time to time increase (subject to the
limitations described below), reduce or eliminate the Discount Percentage for
Discount Option Receivables arising in the Accounts on and after the date of
such change. Transferor must provide 30 days’ prior written notice to Servicer,
Trustee and each Rating Agency of any such increase, reduction or elimination,
and such increase, reduction or elimination shall become effective on the date
specified therein only if (i) Transferor has delivered to Trustee an Officer’s
Certificate to the effect that, based on the facts known to such officer at the
time, Transferor reasonably believes that such increase, reduction or
elimination will not at the time of its occurrence cause an Early Amortization
Event, or an event which with notice or the lapse of time would constitute an
Early Amortization Event, to occur with respect to any Series and (ii) in the
case of any increase, the Discount Percentage shall not exceed 3% after giving
effect to that increase.

(b) On each Date of Processing after the date on which the Transferor’s exercise
of its discount option takes effect, the Transferor shall treat Discount Option
Receivables Collections as Collections of Finance Charge Receivables.

SECTION 2.11 Additional Transferors. Transferor may designate additional or
substitute Persons to be included as Transferors under this Agreement by an
amendment to this Agreement (which amendment shall be subject to Section 13.1
and to any applicable restrictions in the Supplement for any outstanding Series)
and, in connection with such designation, the initial Transferor shall surrender
a portion of the Transferor Interest to such additional Transferor reflecting
such additional Transferor’s interest in the Transferor Interest; provided that
prior to any such designation and issuance the conditions set forth in
Section 6.3(d) shall have been satisfied.

SECTION 2.12 Additional Credit Card Originators. Transferor may designate
additional Persons as Credit Card Originators under this Agreement by an
amendment to this Agreement (which amendment shall be subject to Section 13.1
and to any applicable restrictions in the Supplement for any outstanding
Series).

ARTICLE III ADMINISTRATION AND SERVICING

SECTION 3.1 Acceptance of Appointment and Other Matters Relating to Servicer.
(a) WFN is appointed, and agrees to act, as Servicer.

(b) 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 and other consumer open end credit receivables

 

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comparable to the Receivables and in accordance with the Credit Card Guidelines.
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 10.1 and
provided WFN is Servicer, Servicer or its designee (rather than Trustee) is
hereby authorized and empowered (i) to make withdrawals and payments or to
instruct Trustee to make withdrawals and payments from the Collection 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 Enhancement, as set
forth in this Agreement or any Supplement. Without limiting the generality of
the foregoing and subject to Section 10.1, Servicer or its designee is
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. Trustee shall furnish Servicer with any powers of
attorney or other documents necessary or appropriate to enable Servicer to carry
out its servicing and administrative duties hereunder.

(c) 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 Servicer in connection with
servicing other credit card receivables.

(d) Servicer shall comply with and perform its servicing obligations with
respect to the Accounts and Receivables in accordance with the Credit Card
Agreements relating to the Accounts and the Credit Card Guidelines except
insofar as any failure to so comply or perform would not materially and
adversely affect the Trust or the Investor Holders.

(e) Servicer shall be liable for the payment, without reimbursement, of 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 Trustee, any Paying Agent and any Transfer Agent and Registrar
(including the reasonable fees and expenses of its counsel) in accordance with
Section 11.5, fees and disbursements of independent accountants and all other
fees and expenses, including the costs of filing UCC continuation statements and
the costs and expenses relating to obtaining and maintaining the listing of any
Investor Certificates on any stock exchange, that are not expressly stated in
this Agreement to be payable by the Trust, the Investor Holders of a Series or
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).

SECTION 3.2 Servicing Compensation. As full compensation for its servicing
activities hereunder and as reimbursement for any expense incurred by

 

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it in connection therewith, 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 Series Servicing Fee Percentages with
respect to each outstanding Series (based upon the Series Servicing Fee
Percentage 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 the Investor Interest of each Series with respect to any Monthly
Period (the “Investor Servicing Fee”) will be determined in accordance with the
relevant Supplement. The portion of the Servicing Fee with respect to any
Monthly Period not so allocated to the Investor Interest of a particular Series,
or otherwise allocated in any Supplement, shall be paid from Finance Charge
Collections allocable to Transferor on the related Distribution Date. In no
event shall the Trust, Trustee, the Investor Holders of any Series or any
Enhancement Provider be liable for the share of the Servicing Fee with respect
to any Monthly Period to be paid by Transferor.

SECTION 3.3 Representations, Warranties and Covenants of Servicer. WFN, in its
capacity 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 to
the Trust:

(a) Organization and Good Standing. Servicer is a national banking association
(or with respect to such Successor Servicer, such other corporate entity as may
be applicable) duly organized, validly existing and in good standing under the
laws of the United States, and has full corporate power, authority and legal
right to execute, deliver and perform its obligations under this Agreement and
each Supplement and, in all material respects, to own its properties and conduct
its business as such properties are presently owned and as such business is
presently conducted.

(b) Due Qualification. 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
failure to so qualify or to obtain such licenses and approvals would have a
material adverse effect on the interests of the Investor Holders hereunder or
under any Supplement.

(c) Due Authorization. The execution, delivery, and performance of this
Agreement and each Supplement have been duly authorized by Servicer by all
necessary corporate action on the part of Servicer.

 

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(d) Binding Obligation. This Agreement and each Supplement constitutes a legal,
valid and binding obligation of Servicer, enforceable in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereinafter
in effect, affecting the enforcement of creditors’ rights in general (or with
respect to such Successor Servicer, such other corporate entity as may be
applicable) 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 Servicer, the performance of the transactions contemplated by this
Agreement and each Supplement and the fulfillment of the terms hereof and
thereof applicable to 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 material default under, any
Requirement of Law applicable to Servicer or any indenture, contract, agreement,
mortgage, deed of trust or other instrument to which 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 Servicer, threatened against 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 Servicer, would materially and adversely affect the performance by Servicer
of its obligations under this Agreement or any Supplement, or seeking any
determination or ruling that would materially and adversely affect the validity
or enforceability of this Agreement or any Supplement.

(g) Compliance with Requirements of Law. 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 properly service the Receivables
and the related Accounts 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 Investor Holders.

(h) No Rescission or Cancellation. 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

 

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Guidelines. Servicer shall reflect any such rescission or cancellation in its
computer file of revolving credit card accounts. In addition, Servicer may waive
the accrual and/or payment of certain Finance Charge Receivables in respect of
certain past due Accounts, the Obligors of which have enrolled with a consumer
credit counseling service, and the Receivables in such Accounts shall not fail
to be Eligible Receivables solely as a result of such waiver.

(i) Protection of Holders’ Rights. Servicer shall take no action which, nor omit
to take any action the omission of which, would materially impair the rights of
Holders 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 an Account, Servicer will take no action
to cause any Receivable to be evidenced by any instrument, other than an
instrument that, taken together with one or more other writings, constitutes
chattel paper and, if any Receivable is so evidenced (whether or not in
connection with the enforcement or collection of an Account), it shall be
reassigned or assigned to 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 Servicer of this Agreement and
each Supplement, the performance by Servicer of the transactions contemplated by
this Agreement and each Supplement and the fulfillment by Servicer of the terms
hereof and thereof, have been obtained; provided that Servicer makes no
representation or warranty as to state securities or “blue sky” laws.

(l) Maintenance of Records and Books of Account. Servicer shall maintain and
implement administrative and operating procedures (including the ability to
recreate records evidencing the Receivables in the event of the destruction of
the originals thereof), and keep and maintain all documents, books, computer
records and other information, reasonably necessary or advisable for the
collection of all the Receivables. Such documents, books and computer records
shall reflect all facts giving rise to the Receivables, all payments and credits
with respect thereto, and, to the extent required pursuant to Section 2.1, such
documents, books and computer records shall indicate the interests of the Trust
in the Receivables.

For purposes of the representations and warranties set forth in this
Section 3.3, 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.

 

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If any of the representations, warranties or covenants of 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 Receivables in the related Account or the proceeds of such Receivables
are materially 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
Trustee) from the earlier to occur of the discovery of such event by Servicer,
or receipt by Servicer of notice of such event given by Trustee, all Receivables
in the Account or Accounts to which such event relates shall be reassigned or
assigned to Servicer as set forth below; provided that such Receivables will not
be reassigned or assigned to 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) Servicer shall have delivered an Officer’s
Certificate describing the nature of such breach and the manner in which such
breach was cured.

Servicer shall effect such assignment by making a deposit into the Collection
Account in immediately available funds prior to the next succeeding Business Day
in an amount equal to the amount of such Receivables, which deposit shall be
considered a Collection with respect to such Receivables and shall be applied in
accordance with Article IV and each Supplement.

Upon each such assignment to Servicer, Trustee, on behalf of the Trust, shall
automatically and without further action be deemed to transfer, assign, set over
and otherwise convey to Servicer, without recourse, representation or warranty
(except for the warranty that since the date of transfer by Transferor, Trustee
has not sold, transferred or encumbered any such Receivables or interest
therein), all right, title and interest of the Trust in and to such Receivables,
all moneys due or to become due and all amounts received with respect thereto
and all proceeds thereof. Trustee shall execute such documents and instruments
of transfer or assignment and take such other actions as shall be reasonably
requested by Servicer to effect the conveyance of any such Receivables pursuant
to this Section. The obligation of Servicer to accept assignment of such
Receivables, and to make the deposits, if any, required to be made to the Excess
Funding Account or the Collection Account as provided in the preceding
paragraph, shall constitute the sole remedy respecting the event giving rise to
such obligation available to Holders (or Trustee on behalf of Holders) or any
Enhancement Provider.

SECTION 3.4 Reports to Trustee.

(a) Daily Reports. On the second Business Day immediately following each Date of
Processing, Servicer shall prepare and make available at

 

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the office of Servicer for inspection by Trustee a report (the “Daily Report”)
that shall set forth (i) the aggregate amounts of Collections, Collections with
respect to Principal Receivables and Collections with respect to Finance Charge
Receivables processed by Servicer on such Date of Processing, (ii) the aggregate
amount of Defaulted Receivables for such Date of Processing, and (iii) the
aggregate amount of Principal Receivables in the Trust as of such Date of
Processing.

(b) Monthly Servicer’s Certificate. Unless otherwise stated in any Supplement as
to the related Series, on each Determination Date, Servicer shall forward to
Trustee, the Paying Agent, each Rating Agency and each Enhancement Provider, if
any, a certificate of a Servicing Officer setting forth (i) the aggregate
amounts for the preceding Monthly Period with respect to each of the items
specified in clause (i) of Section 3.4(a), (ii) the aggregate Defaulted
Receivables and Recoveries for the preceding Monthly Period, (iii) a calculation
of the Portfolio Yield and Base Rate for each Series then outstanding, (iv) the
aggregate amount of Receivables and the balance on deposit in the Collection
Account (or any subaccount thereof) or any Series Account applicable to any
Series then outstanding with respect to Collections processed as of the end of
the last day of the preceding Monthly Period, (v) the aggregate amount of
adjustments from the preceding Monthly Period, (vi) the aggregate amount, if
any, of withdrawals, drawings or payments under any Enhancement with respect to
each Series required to be made with respect to the previous Monthly Period,
(vii) the sum of all amounts payable to the Investor Holders on the succeeding
Distribution Date in respect of interest and principal payable with respect to
the Investor Certificates and (viii) such other amounts, calculations, and/or
information as may be required by any relevant Supplement.

(c) Transferred Accounts. Servicer covenants and agrees hereby to deliver to
Trustee, on or prior to the Automatic Addition Termination Date or any Automatic
Addition Suspension Date (but in the latter case, prior to a Restart Date)
within a reasonable time period after any Transferred Account is created, but in
any event not later than 15 days after the end of the month within which the
Transferred Account is created, a notice specifying the new account number for
any Transferred Account and the replaced account number.

SECTION 3.5 Annual Certificate of Servicer. Servicer shall deliver to Trustee,
each Rating Agency and each Enhancement Provider, if any, entitled thereto
pursuant to the relevant Supplement, on or before the 90th day following fiscal
year 1998 and each subsequent fiscal year, an Officer’s Certificate (with
appropriate insertions) substantially in the form of Exhibit C.

SECTION 3.6 Annual Servicing Report of Independent Public Accountants; Copies of
Reports Available. (a) On or before the 90th day following the end of its fiscal
year 1998 and each subsequent fiscal year, Servicer shall cause a firm of
nationally recognized independent public accountants (who may also render other
services to Servicer, the Credit Card Originator or Transferor) to furnish a
report (addressed to Trustee) to Trustee, Servicer and

 

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each Rating Agency to the effect that they have applied certain procedures with
Servicer and such firm has examined certain documents and records relating to
the servicing of Accounts under this Agreement and each Supplement, compared the
information contained in Servicer’s certificates delivered pursuant to this
Agreement during the period covered by such report with such documents and
records and that, on the basis of such agreed upon procedures (and assuming the
accuracy of any reports generated by Servicer’s third party agents), such
servicing was conducted in compliance with this Agreement during the period
covered by such report (which shall be the prior fiscal year, or the portion
thereof falling after the Initial Closing Date), except for such exceptions,
errors or irregularities as such firm shall believe to be immaterial and such
other exceptions, errors or irregularities as shall be set forth in such report.
Such report shall set forth the agreed upon procedures performed. A copy of such
report shall be delivered to each Enhancement Provider, if any, entitled thereto
pursuant to the relevant Supplement.

(b) On or before the 90th day following the end of fiscal year 1998 and each
subsequent fiscal year, Servicer shall cause a firm of nationally recognized
independent public accountants (who may also render other services to Servicer,
the Credit Card Originator or Transferor) to furnish a report to Trustee,
Servicer and each Rating Agency to the effect that they have applied certain
procedures agreed upon with Servicer to compare the mathematical calculations of
certain amounts set forth in Servicer’s Certificates delivered pursuant to
Section 3.4(b) during the period covered by such report with Servicer’s computer
reports which were the source of such amounts and that on the basis of such
agreed upon procedures and comparison, such amounts are in agreement, except for
such exceptions as they believe to be immaterial and such other exceptions as
shall be set forth in such statement. A copy of such report shall be delivered
to each Enhancement Provider, if any, entitled thereto pursuant to the relevant
Supplement.

(c) A copy of each certificate and report provided pursuant to Section 3.4(b),
3.5 or 3.6 may be obtained by any Investor Holder or Certificate Owner by a
request to Trustee addressed to the Corporate Trust Office.

SECTION 3.7 Tax Treatment. 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, the Investor Certificates (except
Transferor Retained Certificates which are held by Transferor) of each Series
will qualify as debt secured by the Receivables. Transferor, by entering into
this Agreement, each Holder, by the acceptance of its 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 debt. 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 debt under applicable tax law, as described in this Section 3.7.
Furthermore, subject to Section 11.11, or

 

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unless Transferor shall determine that the filing of returns is appropriate,
Trustee shall treat the Trust solely as a security device and not as an entity
separate from the Transferor and shall not file tax returns or obtain an
employer identification number on behalf of the Trust.

SECTION 3.8 Notices to Transferor. If WFN is no longer acting as Servicer, any
Successor Servicer shall deliver to Transferor each certificate and report
required to be provided thereafter pursuant to Section 3.4(b), 3.5 or 3.6.

SECTION 3.9 Adjustments. (a) If Servicer adjusts downward the amount of any
Receivable because of a rebate, refund, unauthorized charge or billing error to
an accountholder, or because such Receivable was created in respect of
merchandise which was refused or returned by an accountholder, or if Servicer
otherwise adjusts downward the amount of any Receivable without receiving
Collections therefor or charging off such amount as uncollectible, then, in any
such case, the amount of Principal Receivables used to calculate the Transferor
Interest or the Investor Percentages 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 and the Investor Percentages applicable
to any Series will be reduced by the amount of any Principal Receivable which
was discovered as having been created through a fraudulent or counterfeit charge
or with respect to which the covenant of Transferor contained in Section 2.7(b)
has been breached. Any adjustment required pursuant to either of the two
preceding sentences shall be made on or prior to the end of the Monthly Period
in which such adjustment obligation arises. If, following the exclusion of such
Principal Receivables from the calculation of the Transferor Amount, the
Transferor Amount would be less than the Specified Transferor Amount, not later
than 12:00 noon, New York City time, on the Distribution Date following the
Monthly Period in which such adjustment obligation arises, 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 less than the
Specified Transferor Amount (up to the amount of such Principal Receivables).
Any amount deposited into the Excess Funding Account pursuant to the preceding
sentence shall be considered Collections of Principal Receivables and shall be
applied in accordance with Article IV and each Supplement.

(b) If (i) Servicer makes a deposit into the Collection Account in respect of a
Collection of a Receivable and such Collection was received by Servicer in the
form of a check which is not honored for any reason or (ii) 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, Servicer shall
appropriately adjust the amount subsequently deposited into the Collection
Account to reflect such dishonored check or mistake. Any Receivable in respect
of which a dishonored check is received shall be deemed not to have been paid.
Notwithstanding the first two sentences of this paragraph, any adjustments made
pursuant to this paragraph will be reflected in a current report but will not
change any amount of Collections previously reported pursuant to Section 3.4(b).

 

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ARTICLE IV RIGHTS OF HOLDERS; ALLOCATIONS

SECTION 4.1 Rights of Holders. 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 Holders of such Series pursuant to this
Agreement and such Supplement, funds on deposit in the Collection Account
allocable to Holders of such Series pursuant to this Agreement and such
Supplement, funds on deposit in any related Series Account and funds available
pursuant to any related Enhancement (the “Investor Interest”), it being
understood that, unless otherwise specified in the Supplements with respect to
each affected Series, the Investor Certificates of any Series or Class shall not
represent any interest in any Series Account or Enhancement for the benefit of
any other Series or Class. The Transferor shall own the remaining interest in
the Trust Assets not allocated pursuant to this Agreement or any Supplement to
the Investor Interest (the “Transferor 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 on account of the Transferor Interest; provided that (x) the Transferor
Interest shall not represent any interest in the Collection Account, any Series
Account or any Enhancement, except as specifically provided in this Agreement or
any Supplement and (y) if this Agreement or, in the case of Supplemental
Accounts, the related Assignment is deemed to constitute a grant to the Trustee,
for the benefit of the Investor Holders, of a security interest in the
Receivables and other Trust Assets, then the Transferor Interest shall be deemed
to represent Transferor’s equity in the collateral granted.

SECTION 4.2 Establishment of Collection Account and Excess Funding Account.
Servicer, for the benefit of the Holders, shall establish and maintain in the
name of Trustee, on behalf of the Trust, two Eligible Deposit Accounts (the
“Collection Account” and the “Excess Funding Account”), each bearing a
designation clearly indicating that the funds deposited therein are held for the
benefit of the Holders. The Collection Account and the Excess Funding Account
shall initially be established with Trustee. Trustee shall possess all right,
title and interest in all funds on deposit from time to time in the Collection
Account and the Excess Funding Account and in all proceeds thereof for the
benefit of the Holders. The Collection Account and the Excess Funding Account
shall be under the sole dominion and control of Trustee for the benefit of the
Holders. Except as expressly provided in this Agreement, Trustee agrees that it
shall have no right of set-off or banker’s lien against, and no right to
otherwise deduct from, any funds held in the Collection Account or the Excess
Funding Account for any amount owed to it by the Trust, any Holder or any
Enhancement Provider. If at any time

 

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the Collection Account or the Excess Funding Account ceases to be an Eligible
Deposit Account, Trustee (or Servicer on its behalf) shall within 10 Business
Days (or such longer period, not to exceed 30 calendar days, as to which the
Rating Agency Condition is satisfied) establish a new Eligible Deposit Account
meeting the conditions specified above and transfer any cash or any investments
from the affected account to such new account, and from the date such new
account is established, it shall be the “Collection Account” or the “Excess
Funding Account,” as the case may be.

Funds on deposit in the Collection Account and the Excess Funding Account shall,
at the direction of Servicer, be invested by Trustee in Eligible Investments
selected by Servicer, except that funds on deposit in either such account on any
Transfer Date need not be invested through the immediately following
Distribution Date. All such Eligible Investments shall be held by Trustee for
the benefit of the Holders. Trustee shall maintain for the benefit of the
Holders possession of the negotiable instruments or securities, if any,
evidencing such Eligible Investments. Investments of funds representing
Collections collected during any Monthly Period shall be invested in Eligible
Investments that will mature so that all funds will be available at the close of
business on the Transfer Date following such Monthly Period. No Eligible
Investment shall be disposed of prior to its maturity unless Servicer so directs
and either (i) such disposal will not result in a loss of all or part of the
principal portion of such Eligible Investment or (ii) prior to the maturity of
such Eligible Investment, a default occurs in the payment of principal, interest
or any other amount with respect to such Eligible Investment. On each
Distribution Date, all interest and other investment earnings (net of losses and
investment expenses) on funds on deposit in the Collection Account and the
Excess Funding Account shall be treated as Collections of Finance Charge
Receivables with respect to the last day of the related Monthly Period, except
as otherwise specified in any Supplement. For purposes of determining the
availability of funds or the balances in the Collection Account or the Excess
Funding 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.

Unless otherwise directed by Servicer, funds on deposit in the Excess Funding
Account will be withdrawn and paid to Transferor on any day to the extent that
the Transferor Amount exceeds the Specified Transferor Amount on such day. On
any Transfer Date on which one or more Series is in an Amortization Period,
Servicer shall determine the aggregate amounts 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 Servicer shall instruct Trustee to withdraw
such amount from the Excess Funding Account (up to an amount equal to the lesser
of (x) the amount on deposit in the Excess Funding Account after application of
the preceding sentence on that day and (y) the amount, if any, by which the
Transferor Amount would be less than zero if there were no funds on deposit in
the Excess Funding Account on that day) on such Transfer Date and allocate such
amount among each such Series as specified in each related Supplement.

 

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SECTION 4.3 Collections and Allocations. (a) Servicer shall apply, or instruct
Trustee 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,
Servicer shall deposit Collections into the Collection Account no later than the
second Business Day following the Date of Processing of such Collections.
Transferor may permit the Credit Card Originator to net payments owed by any
Merchant with respect to In-Store Payments against amounts owed by the Credit
Card Originator to that Merchant; provided that, during any Amortization Period,
Transferor shall require the Credit Card Originator to deposit into the
Collection Account on each Business Day an amount equal to the aggregate amount
of In-Store Payments netted against amounts owed by the Credit Card Originator
to the various Merchants on that Business Day.

Subject to the express terms of any Supplement, but notwithstanding anything
else in this Agreement to the contrary, if WFN remains Servicer and (x) for so
long as WFN maintains a short term debt rating of A-1 or better by S&P, P-1 or
better by Moody’s and, if rated by any other Rating Agency, the equivalent
rating by that Rating Agency (or such other rating below A-1, P-1 or such
equivalent rating, as the case may be, which is satisfactory to each Rating
Agency, if any), (y) with respect to Collections allocable to any Series, any
other conditions specified in the related Supplement are satisfied or (z) WFN
has provided to Trustee a letter of credit, surety bond or other similar
arrangement covering collection risk of Servicer and in each case acceptable to
each Rating Agency (as evidenced by a letter from each Rating Agency to the
effect that the Rating Agency Condition has been satisfied), if any, Servicer
need not make the daily deposits of Collections into the Collection Account as
provided in the preceding paragraph, but may make a single deposit in the
Collection Account in immediately available funds not later than 12:00 noon, New
York City time, on the related Transfer Date.

(b) On each Date of Processing, Collections of Finance Charge Receivables and of
Principal Receivables shall be allocated to the Investor Interest of each Series
in accordance with the related Supplement. On each Determination Date, Defaulted
Receivables will be allocated to the Investor Interest of each Series in
accordance with the related Supplement.

(c) Throughout the existence of the Trust, unless otherwise stated in any
Supplement, on each Date of Processing Servicer shall allocate to Transferor an
amount equal to the product of (A) the Transferor Percentage and (B) the
aggregate amount of Collections allocated to Principal Receivables and Finance
Charge Receivables, respectively, on that Date of Processing; provided that, if
the Transferor Amount (determined after giving effect to any transfer of
Principal Receivables to the Trust on such date), is less than or equal to the
Specified Transferor Amount, Servicer shall not allocate to Transferor any such
amounts

 

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that otherwise would be allocated to Transferor, but shall instead deposit such
funds in the Excess Funding Account. Unless otherwise stated in any Supplement,
neither Servicer nor Transferor need deposit any amounts allocated to the
Transferor pursuant to the foregoing into the Collection Account and shall pay,
or be deemed to pay, such amounts as collected to Transferor.

The payments to be made to Transferor, pursuant to this Section 4.3(c) do not
apply to deposits to the Collection Account or other amounts that do not
represent Collections, including payment of the purchase price for Receivables
pursuant to Section 2.6 or 10.1, proceeds from the sale, disposition or
liquidation of Receivables pursuant to Section 9.2 or 12.2 or payment of the
purchase price for the Investor Interest of a specific Series pursuant to the
related Supplement.

SECTION 4.4 Shared Principal Collections. On each Business Day, Shared Principal
Collections may, at the option of Transferor, be applied (or held in the
Collection Account for later application) as principal with respect to any
Variable Interest or, so long as either no Series is in an Amortization Period
or no Series that is in an Amortization Period will have a Principal Shortfall
on the related Transfer Date (assuming no Early Amortization Event occurs),
withdrawn from the Collection Account and paid to Transferor; and on each
Transfer Date, (a) Servicer shall allocate Shared Principal Collections not
previously so applied or paid to each applicable Principal Sharing Series, pro
rata, in proportion to the Principal Shortfalls, if any, with respect to each
such Series, and any remainder may, at the option of Transferor, be applied as
principal with respect to any Variable Interest and (b) Servicer shall withdraw
from the Collection Account and pay to Transferor any amounts representing
Shared Principal Collections remaining after the allocations and applications
referred to in clause (a); provided that, if, on any day the Transferor Amount
(determined after giving effect to any transfer of Principal Receivables to the
Trust on such day), is less than or equal to the Specified Transferor Amount,
Servicer shall not distribute to Transferor any Shared Principal Collections
that otherwise would be distributed to Transferor, but shall deposit such funds
in the Excess Funding Account to the extent required so that the Transferor
Amount equals the Specified Transferor Amount.

SECTION 4.5 Excess Finance Charge Collections. On each Transfer Date, (a) for
each Group, Servicer shall allocate the aggregate amount for all outstanding
Series in such Group of the amounts which the related Supplements specify are to
be treated as “Excess Finance Charge Collections” for such Transfer Date to each
Series in such Group, pro rata, in proportion to the Finance Charge Shortfalls,
if any, with respect to each such Series, and (b) Servicer shall on the related
Distribution Date withdraw (or shall instruct Trustee in writing to withdraw)
from the Collection Account and pay to Transferor an amount equal to the excess,
if any, of (x) the aggregate amount for all outstanding Series in a Group of the
amounts 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 in such Group which the related Supplements
specify are “Finance Charge Shortfalls”, for such Distribution Date.

 

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THE REMAINDER OF ARTICLE IV IS RESERVED AND SHALL BE SPECIFIED IN ANY SUPPLEMENT
WITH RESPECT TO ANY SERIES

ARTICLE V DISTRIBUTIONS AND REPORTS

DISTRIBUTIONS SHALL BE MADE TO, AND REPORTS SHALL BE PROVIDED TO, HOLDERS AS SET
FORTH IN THE APPLICABLE SUPPLEMENT.

ARTICLE VI THE CERTIFICATES

SECTION 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. Except as otherwise provided in Section 6.3 or in any Supplement,
Bearer Certificates shall be issued in minimum denominations of $5,000 and
Registered Certificates shall be issued in minimum denominations of $1,000 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. Each
Certificate shall be executed by manual or facsimile signature on behalf of
Transferor by its President, Treasurer 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 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 Trustee by the manual or facsimile signature of a duly authorized
signatory, and such certificate of authentication 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
applicable Closing Date. All Registered Certificates shall be dated the date of
their authentication.

SECTION 6.2 Authentication of Certificates. 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 Transferor against payment to
Transferor of the purchase price therefor. If specified in the related
Supplement for any Series or Class, Trustee shall authenticate and deliver
outside the United States the Global Certificate that is issued upon original
issuance thereof.

 

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SECTION 6.3 New Issuances. (a) Transferor may from time to time direct 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 for any new Series, the parties hereto will
execute and deliver a Supplement specifying the Principal Terms of the new
Series. Such Supplement may modify or amend the terms of this Agreement solely
as applied to the new Series and may grant the Holders of the Investor
Certificates in that Series, or an agent or other representative of such
Holders, notice and consultation rights with respect to any rights or actions of
Trustee. Trustee’s obligation to authenticate the Investor Certificates of a new
Series and to execute and deliver the related Supplement is subject to the
satisfaction of the following conditions (except that the conditions set forth
in clauses (i), (iii), (iv) and (v) shall not be applicable to the issuance of
the first Series):

(i) on or before the fifth Business Day immediately preceding the Closing Date,
Transferor shall have given Trustee, Servicer, each Rating Agency and any
Enhancement Provider entitled thereto pursuant to the relevant Supplement notice
of such issuance and the Closing Date;

(ii) Transferor shall have delivered to Trustee the related Supplement, executed
by each party hereto other than Trustee;

(iii) Transferor shall have delivered to Trustee any related Enhancement
Agreement executed by each of the parties thereto, other than Trustee;

(iv) the Rating Agency Condition and the S&P Condition shall have been satisfied
with respect to such issuance;

(v) Transferor shall have delivered to Trustee and any Enhancement Provider
entitled thereto pursuant to the relevant Supplement an Officer’s Certificate,
dated the applicable Closing Date, to the effect that 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 an Early
Amortization Event to occur with respect to any Series;

(vi) Transferor shall have delivered to Trustee and each Rating Agency a Tax
Opinion, dated the Closing Date, with respect to such issuance; and

 

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(vii) Transferor shall have delivered to Trustee an Officer’s Certificate
stating that the Transferor Amount shall not be less than the Minimum Transferor
Amount as of the Closing Date and after giving effect to such issuance.

Upon satisfaction of the above conditions, Trustee shall execute the Supplement
and authenticate the Investor Certificates of such Series upon execution thereof
by Transferor. Upon satisfaction of the above conditions (mutatis mutandis),
Transferor may also cause Trustee to enter into one or more agreements pursuant
to which Trustee shall sell purchased interests in the Receivables and other
Trust Assets to one or more purchasers. Such agreement(s) shall specify terms
similar to Principal Terms for any such purchased interests and may grant the
purchaser(s) of such interests, or an agent or other representative of such
purchaser(s), notice and consultation rights with respect to any rights or
actions of Trustee. Any such purchased interests shall be treated as a Series of
Investor Certificates for purposes of all voting and allocation provisions, and
calculations of the Transferor Amount and Transferor Percentage, under this
Agreement.

(c) Transferor may from time to time transfer a portion of the Transferor
Interest by causing the issuance of one or more additional interests (each a
“Supplemental Interest”), which may be in certificated or uncertificated form.
The form and terms of any Supplemental Interest shall be defined in a Supplement
(which Supplement shall be subject to Section 13.1(a) to the extent that it
amends any of the terms of this Agreement), to be delivered to or upon the order
of Transferor (or the Holder of a Supplemental Interest, in the case of the
transfer or exchange thereof, as provided below), upon satisfaction of the
following conditions:

(i) Transferor shall have delivered to Trustee an Officer’s Certificate stating
that the Transferor Amount shall not be less than the Minimum Transferor Amount,
as of the date of and after giving effect to, such action;

(ii) the Rating Agency Condition shall have been satisfied with respect to such
action; and

(iii) Transferor shall have delivered to Trustee and each Rating Agency a Tax
Opinion, dated the date of such action, with respect thereto.

Any Supplemental Interest may be transferred or exchanged, and the Transferor
Interest may be pledged, only upon satisfaction of the conditions set forth in
clause (ii).

(d) The Transferor Interest may be transferred in its entirety to a Person which
is a member of the “affiliated group” as defined in Internal Revenue Code
Section 1504(a) of which WFN is a member without the consent or approval of the
Holders of the Investor Certificates, provided that (i) the Rating

 

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Agency Condition shall have been satisfied with respect to such transfer,
(ii) Transferor shall have delivered to Trustee and each Rating Agency Opinions
of Counsel of the type described in Section 6.3(c)(iii), dated the date of such
transfer, with respect thereto and (iii) Transferor shall have delivered to
Trustee an Officer’s Certificate stating that the Transferor Amount shall not be
less than the Minimum Transferor Amount. In connection with any such transfer,
the Person to whom the Transferor Interest is transferred will, by its
acquisition and holding of its interest in the Transferor Interest, assume all
of the rights and obligations of Transferor as described in this Agreement and
in any Supplement or amendment thereto (including the right under this paragraph
(d) with respect to subsequent transfers of the Transferor Interest).

SECTION 6.4 Registration of Transfer and Exchange of Certificates. (a) 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 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 on the Effective Date shall be The Chase Manhattan
Bank and any co-transfer agent and co-registrar chosen by Transferor and
acceptable to 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. So long as any Investor
Certificates are outstanding, Transferor shall maintain a co-transfer agent and
co-registrar in New York City. 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.

Trustee may revoke such appointment and remove any Transfer Agent and Registrar
if 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 Transferor, Trustee and
Servicer; provided 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 Trustee has appointed a successor Transfer Agent and
Registrar reasonably acceptable to Transferor.

Subject to paragraph (c), 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 authorized denominations of like aggregate
fractional undivided interests in the Investor Interest shall be executed,
authenticated and delivered, in the name of the designated transferee or
transferees.

 

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At the option of a Registered Holder, 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
Investor 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 Investor 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 or distribution date after the expected
final payment date need not have attached the Coupon relating to such payment
date or distribution date (in each case, as specified in the applicable
Supplement).

Whenever any Investor Certificates are so surrendered for exchange, Transferor
shall execute, 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 Holder 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 Trustee or the Transfer Agent
and Registrar duly executed by the Investor Holder 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 Trustee. 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 Transferor.
Such certificate shall also state that a certificate or certificates of a
foreign Clearing Agency to the effect required by the applicable Supplement was
received with respect to each portion of the Global Certificate exchanged for
Definitive Euro-Certificates.

Transferor shall execute and deliver to Trustee Bearer Certificates and
Registered Certificates in such amounts and at such times as are necessary to
enable Trustee to fulfill its responsibilities under this Agreement, each
Supplement and the Certificates.

 

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(b) The Transfer Agent and Registrar will maintain at its expense in the City of
New York and, if and so long as any Series or Class is listed on the Luxembourg
Stock Exchange, Luxembourg, 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 (x) a legend
substantially to the effect set forth on Exhibit D-1 shall be effected only if
such transfer is made pursuant to an effective registration statement under the
Securities Act or is exempt from the registration requirements under the
Securities Act and (y) a legend substantially to the effect set forth on Exhibit
D-3 shall be effected only if such transfer is made to a Person that is not
(1) an employee benefit plan or other plan, trust or account (including an
individual retirement account) that is subject to ERISA or Section 4975 of the
Internal Revenue Code or (2) any collective investment fund, insurance company
separate or general account or other entity whose underlying assets include
“plan assets” under ERISA by reason of an employee benefit plan’s or other
plan’s investment in such entity (a “Benefit Plan”). If registration of a
transfer is to be made in reliance upon an exemption from the registration
requirements under the Securities Act, the transferor or the transferee shall
deliver, at its expense, to Transferor, Servicer and Trustee, an investment
letter from the transferee, substantially in the form of the investment
representation letter attached hereto as Exhibit D-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 a legend
referred to above shall also bear such legend unless Transferor, Servicer,
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 a 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 Servicer
regarding such transfer and shall be entitled to receive instructions signed by
a Servicing Officer prior to registering any such transfer. Transferor hereby
agrees to indemnify the Transfer Agent and Registrar and 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 paragraph.

(ii) Registration of transfer of Investor Certificates containing a 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 Holder shall be deemed to have represented

 

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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 Transferor, Trustee will make available to any
prospective purchaser of Investor Certificates who so requests, a copy of a
letter provided to Trustee by or on behalf of Transferor relating to the
transferability of any Series or Class to a Benefit Plan.

(d) Notwithstanding any other provision of this Agreement, any Certificate for
which an Opinion of Counsel has not been issued opining on the treatment of such
Certificates as debt for Federal income tax purposes (each, a “Subject
Certificate”) shall be subject to the following. No transfer (or purported
transfer) of all or any part of a Subject Certificate (or any economic interest
therein), whether to another Certificateholder or to a person who is not a
Certificateholder, shall be effective, and any such transfer (or purported
transfer) shall be void ab initio, and no Person shall otherwise become a Holder
of a Subject Certificate if (i) at the time of such transfer (or purported
transfer) any Subject Certificates are traded on an established securities
market, (ii) after such transfer (or purported transfer) (A) the Trust would
have more than 95 Holders of Subject Certificates and any other interests in the
Trust for which an Opinion of Counsel is not rendered in connection with the
issuance of such interest to the effect that such interest will be characterized
as debt for federal income tax purposes and (B) the Subject Certificates have
been issued in a transaction or transactions that were required to be registered
under the Securities Act, and to the extent such offerings or sales were not
required to be registered under the Securities Act by reason of Regulation S (17
CFR 230.901 through 230.904 or any successor thereto) such offerings or sales
would have been required to be registered under the Securities Act if the
interests so offered or sold had been offered and sold within the United States.
For purposes of clause (i) of the preceding sentence, an established securities
market is a national securities exchange that is either registered under
Section 6 of the Exchange Act or exempt from registration because of the limited
volume of transactions, a foreign securities exchange that, under the law of the
jurisdiction where it is organized, satisfies regulatory requirements that are
analogous to the regulatory requirements of the Exchange Act, a regional or
local exchange, or an interdealer quotation system that regularly disseminates
firm buy or sell quotations by identified brokers or dealers by electronic means
or otherwise. For purposes of determining whether the Trust will have more than
95 Holders of Subject Certificates, each Person indirectly owning an interest in
the Trust through a partnership (including any entity treated as a partnership
for federal income tax purposes), a grantor trust or an S corporation (each such
entity a “flow-through entity”) shall be treated as a Holder of a Subject
Certificate unless Servicer determines in its sole discretion, after consulting
with qualified tax counsel, that less than substantially all of the value of the
beneficial owner’s interest in the flow-through entity is attributable to the
flow-through entity’s interest (direct or indirect) in the Trust.

 

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SECTION 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 Trustee such
security or indemnity as may be required by them to save each of them harmless,
then, in the absence of notice to Trustee that such Certificate has been
acquired by a bona fide purchaser, Transferor shall execute, 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, Trustee or the Transfer
Agent and Registrar may require the payment by the Holder 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 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.

SECTION 6.6 Persons Deemed Owners. Trustee, the Paying Agent, the Transfer Agent
and Registrar and any agent of any of these 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
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 applicable
Supplement and for all other purposes whatsoever; and, in any such case, neither
Trustee, the Paying Agent, the Transfer Agent and Registrar nor any agent of any
of these 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 Transferor, Servicer, any
Holder of the Transferor Interest, Trustee or any Affiliate thereof, shall be
disregarded and deemed not to be outstanding, except that, in determining
whether Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Certificates which
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
Trustee the pledgee’s right so to act with respect to such Certificates and that
the pledgee is not Transferor, Servicer, any other Holder of the Transferor
Interest or any Affiliate thereof.

 

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SECTION 6.7 Appointment of Paying Agent. The Paying Agent shall make
distributions to Investor Holders 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 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. Trustee may revoke such power and remove the Paying Agent if 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 Trustee, and any co-paying agent
chosen by Transferor and acceptable to 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 Trustee. If any Paying Agent shall resign, Trustee shall appoint a successor
to act as Paying Agent. Trustee shall cause each successor or additional Paying
Agent to execute and deliver to Trustee an instrument in which such successor or
additional Paying Agent shall agree with Trustee that it will hold all sums, if
any, held by it for payment to the Investor Holders in trust for the benefit of
the Investor Holders entitled thereto until such sums shall be paid to such
Investor Holders. The Paying Agent shall return all unclaimed funds to Trustee
and upon removal shall also return all funds in its possession to Trustee. The
provisions of Sections 11.1, 11.2, 11.3 and 11.5 shall apply to Trustee also in
its role as Paying Agent, for so long as 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.

SECTION 6.8 Access to List of Registered Holders’ Names and Addresses. Trustee
will furnish or cause to be furnished by the Transfer Agent and Registrar to
Servicer or the Paying Agent, within five Business Days after receipt by Trustee
of a request therefor, a list of the names and addresses of the Registered
Holders. 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 Trustee, and such application
states that the Applicants desire to communicate with other Investor Holders
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 Trustee, after having been adequately
indemnified 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 Holders of such
Series or all outstanding Series, as applicable, held by 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.

 

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Every Registered Holder, by receiving and holding a Registered Certificate,
agrees with Trustee that neither 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 Holders hereunder, regardless of the sources from which such
information was derived.

SECTION 6.9 Authenticating Agent. (a) Trustee may appoint one or more
authenticating agents with respect to the Certificates which shall be authorized
to act on behalf of 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 Trustee or Trustee’s certificate of
authentication, such reference shall be deemed to include authentication on
behalf of Trustee by an authenticating agent and certificate of authentication
executed on behalf of Trustee by an authenticating agent. Each authenticating
agent must be acceptable to Transferor and Servicer.

(b) Any institution succeeding to the corporate agency business of an
authenticating agent shall continue to be an authenticating agent without the
execution or filing of any power or any further act on the part of Trustee or
such authenticating agent. An authenticating agent may at any time resign by
giving notice of resignation to Trustee and to Transferor. Trustee may at any
time terminate the agency of an authenticating agent by giving notice of
termination to such authenticating agent and to 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 Trustee or Transferor,
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 Trustee and
Transferor. Transferor agrees to pay to each authenticating agent from time to
time reasonable compensation for its services under this Section. The provisions
of Sections 11.1, 11.2 and 11.3 shall be applicable to any authenticating agent.

(c) Pursuant to an appointment made under this Section, the Certificates may
have endorsed thereon, in lieu of Trustee’s certificate of authentication, an
alternate certificate of authentication in substantially the following form:

This is one of the Certificates described in the Pooling and Servicing
Agreement.

 

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  as Authenticating Agent   for Trustee, By:  

 

  Authorized Officer

SECTION 6.10 Book-Entry Certificates. Unless otherwise specified in the related
Supplement for any Series or Class, the Investor Certificates, upon original
issuance, shall be issued in the form of one or more typewritten Investor
Certificates representing the Book-Entry Certificates, to be delivered to the
Clearing Agency, by, or on behalf of, 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) Transferor, Servicer and 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 Holders evidencing a

 

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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.

SECTION 6.11 Notices to Clearing Agency. Whenever any notice or other
communication is required to be given to Investor Holders of any Series or 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, Trustee shall give all such notices and communications to the applicable
Clearing Agency.

SECTION 6.12 Definitive Certificates. If Book-Entry Certificates have been
issued with respect to any Series or Class and (a) Transferor advises Trustee
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 Trustee or Transferor is unable to engage a qualified successor,
(b) Transferor, at its option, advises 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 not less than 50% of the aggregate unpaid
principal amount of such Series or Class advise 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 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 Trustee of any such Certificates
by the Clearing Agency, accompanied by registration instructions from the
Clearing Agency for registration, Transferor shall execute and Trustee shall
authenticate and deliver such Definitive Certificates. Neither Transferor nor
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 Trustee, to the extent applicable
with respect to such Definitive Certificates and Trustee shall recognize the
Holders of such Definitive Certificates as Investor Holders hereunder.

SECTION 6.13 Global Certificate. 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 aggregate principal amount of such Series or Class and
substantially in the form set forth in the exhibit with respect thereto attached
to

 

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the related Supplement. The Global Certificate will be executed by Transferor
and authenticated by 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 for Bearer or Registered Certificates in definitive
form (the “Definitive Euro-Certificates”) pursuant to any applicable Supplement.

SECTION 6.14 Uncertificated Classes. Unless otherwise specified in any
Supplement, the provisions of this Article VI and Article XII relating to the
registration, form, execution, authentication, delivery, presentation,
cancellation and surrender of Certificates shall not apply to any uncertificated
Certificates.

ARTICLE VII OTHER MATTERS RELATING TO TRANSFEROR

SECTION 7.1 Liability of Transferor. Transferor shall be liable for its
obligations, covenants, representations and warranties under this Agreement and
any Supplement, but only to the extent of the obligations specifically
undertaken by it in its capacity as Transferor.

SECTION 7.2 Merger or Consolidation of, or Assumption of the Obligations of,
Transferor. (a) Transferor shall not consolidate with or merge into any other
Person or convey or transfer its properties and assets substantially as an
entirety to any Person unless:

(i) the Person formed by such consolidation or into which Transferor is merged
or the Person which acquires by conveyance or transfer the properties and assets
of Transferor substantially as an entirety shall be, if Transferor is not the
surviving entity, an entity organized and existing under the laws of the United
States of America or any State or the District of Columbia, and, if Transferor
is not the surviving entity, such entity shall expressly assume, by an agreement
supplemental hereto, executed and delivered to Trustee, in form reasonably
satisfactory to Trustee, the performance of every covenant and obligation of
Transferor hereunder, including its obligations under Section 7.4;

(ii) Transferor has delivered to Trustee (A) an Officer’s Certificate stating
that such consolidation, merger, conveyance or transfer and such supplemental
agreement comply with this Section and that all conditions precedent herein
provided for relating to such transaction have been complied with, and (B) an
Opinion of Counsel to the effect 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);

 

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(iii) Transferor shall have delivered to Trustee and each Rating Agency a Tax
Opinion, dated the date of such consolidation, merger, conveyance or transfer,
with respect thereto;

(iv) in connection with any merger or consolidation, or any conveyance or
transfer referred to above, the business entity into which Transferor shall
merge or consolidate, or to which such conveyance or transfer is made, shall be
(x) a business entity that may not become a debtor in any case, action or other
proceeding under Title 11 of the United States Code or (y) a special-purpose
entity, the powers and activities of which shall be limited to the performance
of Transferor’s obligations under this Agreement and any Supplement; and

(v) if Transferor is not the surviving entity, the surviving entity shall file
new UCC-1 financing statements with respect to the interest of the Trust in the
Receivables.

(b) This Section 7.2 shall not be construed to prohibit or in any way limit
Transferor’s ability to effectuate any consolidation or merger pursuant to which
Transferor would be the surviving entity.

(c) Transferor shall notify each Rating Agency promptly after any consolidation,
merger, conveyance or transfer effected pursuant to this Section 7.2;

(d) The obligations of Transferor hereunder shall not be assignable nor shall
any Person succeed to the obligations of Transferor hereunder except in each
case in accordance with (i) the provisions of the foregoing paragraphs,
(ii) Sections 2.11 or 6.3(d), or (iii) conveyances, mergers, consolidations,
assumptions, sales or transfers to other entities (1) for which Transferor
delivers an Officer’s Certificate to Trustee indicating that Transferor
reasonably believes that such action will not adversely affect in any material
respect the interests of any Investor Holder, (2) which meet the requirements of
clause (ii) of paragraph (a) and (3) for which such purchaser, transferee,
pledgee or entity shall expressly assume, in an agreement supplemental hereto,
executed and delivered to Trustee in writing in form satisfactory to Trustee,
the performance of every covenant and obligation of Transferor thereby conveyed.

SECTION 7.3 Limitations on Liability of Transferor. Subject to Sections 7.1 and
7.4, neither Transferor, any Holder of the Transferor Interest nor any of their
directors, officers, employees or agents of Transferor acting in such capacities
shall be under any liability to the Trust, Trustee, the Holders, any Enhancement
Provider or any other Person for any action taken or for refraining from the
taking of any action in good faith in their capacities as Transferor pursuant to
this Agreement; provided that this provision shall not protect Transferor, any
Holder of the Transferor Interest or any such Person against any liability which
would otherwise be imposed by reason of willful misfeasance, bad

 

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faith or gross negligence in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder. Transferor and any director,
officer, employee or agent of Transferor may rely in good faith on any document
of any kind prima facie properly executed and submitted by any Person (other
than Transferor) respecting any matters arising hereunder.

SECTION 7.4 Liabilities. Notwithstanding Sections 7.3, 8.3 and 8.4, Transferor
by entering into this Agreement, and any Holder of the Transferor Interest by
its acceptance of an interest therein, agree to be liable, directly to the
injured party, for the entire amount of any losses, claims, damages or
liabilities (other than those that would be incurred by an Investor Holder if
the Investor Certificates were notes secured by the Receivables, for example, as
a result of the performance of the Receivables, market fluctuations, a shortfall
or failure to make payment under any Enhancement or other similar market or
investment risks associated with ownership of the Investor Certificates) arising
out of or based on the arrangement created by this Agreement or the actions of
Servicer taken pursuant hereto (to the extent Trust Assets remaining after the
Investor Holders and Enhancement Providers, if any, have been paid in full are
insufficient to pay any such losses, claims, damages or liabilities) as though
this Agreement created a partnership under the Delaware Revised Uniform
Partnership Act in which Transferor and such Holder of the Transferor Interest
were general partners.

ARTICLE VIII OTHER MATTERS RELATING TO SERVICER

SECTION 8.1 Liability of Servicer. Servicer shall be liable under this Agreement
only to the extent of the obligations specifically undertaken by Servicer in its
capacity as Servicer.

SECTION 8.2 Merger or Consolidation of, or Assumption of the Obligations of,
Servicer. (a) 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:

(i) the corporation formed by such consolidation or into which Servicer is
merged or the Person which acquires by conveyance or transfer the properties and
assets of Servicer substantially as an entirety shall be, if 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
Servicer is not the surviving entity, such corporation shall expressly assume,
by an agreement supplemental hereto, executed and delivered to Trustee, in form
reasonably satisfactory to Trustee, the performance of every covenant and
obligation of Servicer hereunder;

(ii) Servicer has delivered to Trustee (A) an Officer’s Certificate stating that
such consolidation, merger, conveyance or transfer and such supplemental
agreement comply with this Section and that all conditions precedent herein
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been complied with, and (B) an Opinion of Counsel to the effect 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

(iii) either (x) the corporation formed by such consolidation or into which
Servicer is merged or the Person which acquired by conveyance or transfer the
properties and assets of Servicer substantially as an entirety shall be an
Eligible Servicer (taking into account, in making such determination, the
experience and operations of the predecessor Servicer) or (y) upon the
effectiveness of such consolidation, merger, conveyance or transfer, a Successor
Servicer shall have assumed the obligations of Servicer in accordance with this
Agreement.

(b) This Section 8.2 shall not be construed to prohibit or in any way limit
Servicer’s ability to effectuate any consolidation or merger pursuant to which
Servicer would be the surviving entity.

(c) Servicer shall notify each Rating Agency promptly after any consolidation,
merger, conveyance or transfer effected pursuant to this Section 8.2.

SECTION 8.3 Limitation on Liability of Servicer and Others. Except as provided
in Sections 8.4 and 11.5, neither Servicer nor any of the directors, officers,
employees or agents of Servicer in its capacity as Servicer shall be under any
liability to the Trust, Trustee, the Holders, any Enhancement Providers 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 that this provision shall not protect Servicer or any such Person
against any liability which would otherwise be imposed by reason of willful
misfeasance, bad faith or gross negligence in the performance of duties or by
reason of reckless disregard of obligations and duties hereunder. Servicer and
any director, officer, employee or agent of Servicer may rely in good faith on
any document of any kind prima facie properly executed and submitted by any
Person (other than Servicer) respecting any matters arising hereunder. 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. Servicer may, in its sole discretion, undertake any such legal action
which it may deem necessary or desirable for the benefit of the Holders with
respect to this Agreement and the rights and duties of the parties hereto and
the interests of the Holders hereunder.

 

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SECTION 8.4 Servicer Indemnification of the Trust and Trustee. Servicer shall
indemnify and hold harmless the Trust and Trustee and its officers, directors,
employees and agents, from and against any loss, liability, expense, damage or
injury suffered or sustained by reason of any acts or omissions of Servicer with
respect to the Trust pursuant to this Agreement, and shall also hold harmless
Trustee and its officers, directors, employees and agents, from and against any
loss, liability, expense, damage or injury suffered or sustained by reason of
any acts or omissions of Trustee pursuant to this Agreement, in each case
including any judgment, award, settlement, reasonable attorneys’ fees and other
costs or expenses incurred in connection with the defense of any action,
proceeding or claim; provided that (a) Servicer shall not indemnify Trustee if
such acts, omissions or alleged acts or omissions constitute or are caused by
fraud, negligence, or willful misconduct by Trustee, (b) Servicer shall not
indemnify the Trust, the Investor Holders or the Certificate Owners for any
liabilities, costs or expenses of the Trust with respect to any action taken by
Trustee at the request of the Investor Holders, (c) Servicer shall not indemnify
the Trust, the Investor Holders or the Certificate Owners as to any losses,
claims or damages incurred by any of them in their capacities as investors,
including losses with respect to market or investment risks associated with
ownership of the Investor Certificates or losses incurred as a result of
Defaulted Receivables and (d) Servicer shall not indemnify the Trust, the
Investor Holders or the Certificate Owners for any liabilities, costs or
expenses of the Trust, the Investor Holders or the Certificate Owners arising
under any tax law, including 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 Holders 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 an indemnitee subject to the limitations hereof. The
indemnification provisions of this Section 8.2 shall survive any termination of
this Agreement.

SECTION 8.5 Servicer Not to Resign. Servicer shall not resign from the
obligations and duties hereby imposed on it except (x) upon the determination
that (i) the performance of its duties hereunder is no longer permissible under
Requirements of Law (other than the charter and by-laws of Servicer) and
(ii) there is no reasonable action which Servicer could take to make the
performance of its duties hereunder permissible under such Requirements of Law
or (y) as may be required, in connection with Servicer’s consolidation with, or
merger into any other corporation or Servicer’s conveyance or transfer of its
properties and assets substantially as an entirety to any person in each case,
in accordance with Section 8.2. Any determination permitting the resignation of
Servicer pursuant to clause (x) above shall be evidenced by an Opinion of
Counsel to such effect delivered to Trustee. No resignation shall become
effective until Trustee or a Successor Servicer shall have assumed the
responsibilities and obligations of Servicer in accordance with Section 10.2. If
within 120 days of the date of the determination that Servicer may no longer act
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Successor Servicer, Trustee shall serve as Successor Servicer. Notwithstanding
the foregoing, Trustee shall, if it is legally unable so to act, petition a
court of competent jurisdiction to appoint any established institution having a
net worth of not less than $50,000,000 and whose regular business includes the
servicing of credit card accounts as the Successor Servicer hereunder. Trustee
shall give prompt notice to each Rating Agency and each Enhancement Provider, if
any, entitled thereto under the applicable Supplement upon the appointment of a
Successor Servicer.

SECTION 8.6 Access to Certain Documentation and Information Regarding the
Receivables. Servicer shall provide to Trustee access to the documentation
regarding the Accounts and the Receivables in such cases where Trustee is
required in connection with the enforcement of the rights of Holders 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 Servicer’s normal security and
confidentiality procedures and (d) at reasonably accessible offices in the
continental United States designated by Servicer. Nothing in this Section shall
derogate from the obligation of each Credit Card Originator, Transferor, Trustee
and Servicer to observe any applicable law prohibiting disclosure of information
regarding the Obligors, and the failure of Servicer to provide access as
provided in this Section as a result of such obligation shall not constitute a
breach of this Section.

SECTION 8.7 Delegation of Duties. In the ordinary course of business, 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. Any such delegations shall not relieve Servicer of its liability and
responsibility with respect to such duties, and shall not constitute a
resignation within the meaning of Section 8.5, and Servicer shall remain jointly
and severally liable with such Person for any amounts which would otherwise be
payable pursuant to this Article VIII as if Servicer had performed such duty;
provided that in the case of any significant delegation to a Person other than
an Affiliate of WFN, at least 30 days’ prior written notice shall be given to
Trustee, each Rating Agency and each Enhancement Provider, if any, entitled
thereto pursuant to the relevant Supplement, of such delegation to any entity
that is not an Affiliate of Servicer.

ARTICLE IX EARLY AMORTIZATION EVENTS

SECTION 9.1 Early Amortization Events. Each of the following shall constitute an
“Early Amortization Event” with respect to each Series:

(a) the occurrence of an Insolvency Event relating to WFN or Transferor;

 

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(b) the Trust shall become an “investment company” within the meaning of the
Investment Company Act; or

(c) WFN shall become unable for any reason to transfer Receivables to Transferor
pursuant to the Receivables Purchase Agreement or Transferor shall become unable
for any reason to transfer Receivables to the Trust pursuant to this Agreement.

SECTION 9.2 Additional Rights upon Certain Events. (a) If an Insolvency Event
occurs with respect to Transferor or any Holder of the Transferor Interest
(excluding any Supplemental Interest), Transferor shall on the day any such
event occurs (the “Appointment Date”), immediately cease to transfer Principal
Receivables, or interests in Principal Receivables represented by any
Participation Interests to the Trust and shall promptly give notice to Trustee
thereof. Notwithstanding any cessation of the transfer to the Trust of
additional Principal Receivables or any Participation Interests, Principal
Receivables or any Participation Interests transferred to the Trust prior to the
occurrence of such Insolvency Event and Collections in respect of such Principal
Receivables and Participation Interests, and Finance Charge Receivables whenever
created accrued in respect of such Principal Receivables, shall continue to be a
part of the Trust. Upon the Appointment Date, this Agreement and the Trust shall
be deemed to have terminated, subject to the liquidation, winding up and
dissolution procedures described below. Within 15 days of the Appointment Date,
Trustee shall (i) publish a notice in an Authorized Newspaper that an Insolvency
Event has occurred, that the Trust has terminated, and that Trustee intends to
sell, dispose of or otherwise liquidate the Receivables and any Participation
Interests on commercially reasonable terms and in a commercially reasonable
manner and (ii) give notice to Investor Holders and each Enhancement Provider,
if any, or other Person entitled thereto pursuant to the relevant Supplement
describing the provisions of this Section. Trustee shall then promptly sell,
dispose of or otherwise liquidate the Receivables and any Participation
Interests in a commercially reasonable manner and on commercially reasonable
terms, which shall include the solicitation of competitive bids. Trustee may
obtain a prior determination from any conservator, receiver or liquidator that
the terms and manner of any proposed sale, disposition or liquidation are
commercially reasonable. The provisions of Sections 9.1 and 9.2 shall not be
deemed to be mutually exclusive.

(b) The proceeds from the sale, disposition or liquidation of the Receivables
and any Participation Interests pursuant to paragraph (a) (“Insolvency
Proceeds”) shall be immediately deposited in the Collection Account. Insolvency
Proceeds shall be allocated to Finance Charge Receivables and Principal
Receivables in the same proportion such Receivables bore to one another on the
prior Determination Date, although Trustee shall determine conclusively the
amount of the Insolvency Proceeds which are deemed to be Finance Charge
Receivables and Principal Receivables. The Insolvency Proceeds shall be
allocated and distributed to Investor Holders in accordance with Article IV and
each such Supplement.

 

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ARTICLE X SERVICER DEFAULTS

SECTION 10.1 Servicer Defaults. If any one of the following events (a “Servicer
Default”) shall occur and be continuing:

(a) any failure by Servicer to make any payment, transfer or deposit or to give
instructions or notice to Trustee pursuant to 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 this Agreement or any Supplement;

(b) failure on the part of Servicer to duly observe or perform in any material
respect any other covenants or agreements of Servicer set forth in this
Agreement or any Supplement which has a material adverse effect on the interests
hereunder of the Investor Holders of any Series or Class (which determination
shall be made without regard to whether funds are then available pursuant to any
Enhancement) 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 Servicer by Trustee, or to Servicer and Trustee by
Holders of Investor Certificates evidencing not less than 25% of the aggregate
unpaid principal amount of all Investor Certificates (or, with respect to any
such failure that does not relate to all Series, 25% of the aggregate unpaid
principal amount of all Series to which such failure relates); or Servicer shall
delegate its duties under this Agreement, except as permitted by Sections 8.2
and 8.7, a Responsible Officer of 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 Servicer by Trustee, or to Servicer and Trustee by Holders of
Investor Certificates evidencing not less than 25% of the aggregate unpaid
principal amount of all Investor Certificates;

(c) any representation, warranty or certification made by 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 Holders of any
Series or Class (which determination shall be made without regard to whether
funds are then available pursuant to any Enhancement) 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 Servicer by Trustee, or to Servicer and Trustee by the
Holders of Investor

 

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Certificates evidencing not less than 25% of the aggregate unpaid principal
amount of all Investor Certificates (or, with respect to any such
representation, warranty or certification that does not relate to all Series,
25% of the aggregate unpaid principal amount of all Series to which such
representation, warranty or certification relates); or

(d) Servicer shall fail generally to, or admit in writing its inability to, pay
its debts as they become due; or a proceeding shall have been instituted in a
court having jurisdiction in the premises seeking a decree or order for relief
in respect of Servicer in an involuntary case under any Debtor Relief Law, or
for the appointment of a receiver, liquidator, assignee, trustee, custodian,
sequestrator, conservator or other similar official of such Person or for any
substantial part of its property, or for the winding-up or liquidation of its
affairs and, if instituted against Servicer, any such proceeding shall continue
undismissed or unstayed and in effect, for a period of 60 consecutive days, or
any of the actions sought in such proceeding shall occur; or the commencement by
Servicer, of a voluntary case under any Debtor Relief Law, or such Person’s
consent to the entry of an order for relief in an involuntary case under any
Debtor Relief Law, or consent to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian, sequestrator, conservator or
other similar official of such Person or for any substantial part of its
property, or any general assignment for the benefit of creditors; or such Person
or any Subsidiary of such Person shall have taken any corporate action in
furtherance of any of the foregoing actions;

then, in the event of any Servicer Default, so long as the Servicer Default
shall not have been remedied, either Trustee or the Holders of Investor
Certificates evidencing more than 50% of the aggregate unpaid principal amount
of all Investor Certificates, by notice given to Servicer (and to Trustee and
any Enhancement Provider entitled thereto pursuant to the relevant Supplement if
given by the Investor Holders) (a “Termination Notice”), may terminate all but
not less than all the rights and obligations of Servicer, as Servicer, under
this Agreement and in and to the Receivables and the proceeds thereof.

After receipt by Servicer of such Termination Notice, and on the date that a
Successor Servicer shall have been appointed by Trustee pursuant to
Section 10.2, all authority and power of Servicer under this Agreement shall
pass to and be vested in the Successor Servicer (a “Service Transfer”); and,
without limitation, Trustee is hereby authorized and empowered (upon the failure
of Servicer to cooperate) to execute and deliver, on behalf of Servicer, as
attorney-in-fact or otherwise, all documents and other instruments upon the
failure of 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. Servicer agrees to cooperate
with Trustee and the Successor Servicer in effecting the termination of the
responsibilities and rights of Servicer to conduct servicing hereunder including
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Successor Servicer of all authority of Servicer to service the Receivables
provided for under this Agreement, including all authority over all Collections
which shall on the date of transfer be held by Servicer for deposit, or which
have been deposited by 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 and
Interchange (if any) applicable to the Trust. Servicer shall promptly transfer
its electronic records relating to the Receivables to the Successor Servicer in
such electronic form as the Successor Servicer may reasonably request and shall
promptly transfer to the Successor Servicer all other records, correspondence
and documents necessary for the continued servicing of the Receivables in the
manner and at such times as the Successor Servicer shall reasonably request. To
the extent that compliance with this Section 10.1 shall require Servicer to
disclose to the Successor Servicer information of any kind which Servicer
reasonably deems to be confidential, the Successor Servicer shall be required to
enter into such customary licensing and confidentiality agreements as Servicer
shall deem appropriate to protect its interests.

Notwithstanding the foregoing, any delay in or failure of performance under
Section 10.1(a) for a period of five Business Days or under Section 10.1(b) or
(c) for a period of 60 days (in addition to any period provided in
Section 10.1(a), (b) or (c)) shall not constitute a Servicer Default until the
expiration of such additional five Business Days or 60 days, respectively, if
such delay or failure could not be prevented by the exercise of reasonable
diligence by Servicer and such delay or failure was caused by an act of God or
the public enemy, acts of declared or undeclared war, public disorder, rebellion
or sabotage, epidemics, landslides, lightning, fire, hurricanes, earthquakes,
floods or similar causes. The preceding sentence shall not relieve Servicer from
the obligation to use its best efforts to perform its obligations in a timely
manner in accordance with this Agreement and any Supplement and Servicer shall
provide Trustee, each Rating Agency, any Enhancement Provider entitled thereto
pursuant to the relevant Supplement, Transferor and the Investor Holders with an
Officer’s Certificate giving immediate notice of such failure or delay by it,
together with a description of its efforts to so perform its obligations.

SECTION 10.2 Trustee to Act; Appointment of Successor. (a) On and after the
receipt by Servicer of a Termination Notice pursuant to Section 10.1, Servicer
shall continue to perform all servicing functions under this Agreement until the
date specified in the Termination Notice or otherwise specified by Trustee or
until a date mutually agreed upon by Servicer and Trustee. 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 Trustee. If a Successor Servicer has not been appointed or
has not accepted its appointment at the time when Servicer ceases to act as
Servicer, Trustee without further action shall automatically be appointed the
Successor Servicer. Trustee may delegate any of its servicing obligations to an
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Trustee or agent in accordance with Section 3.1(b) and 8.7. Notwithstanding the
foregoing, Trustee shall, if it is legally unable so to act, petition a court of
competent jurisdiction to appoint any established institution having a net worth
of not less than $50,000,000 and whose regular business includes the servicing
of credit card receivables as the Successor Servicer hereunder. Trustee shall
give prompt notice to each Rating Agency and each Enhancement Provider, if any,
entitled thereto pursuant to the applicable Supplement upon the appointment of a
Successor Servicer.

(b) Upon its appointment, the Successor Servicer shall be the successor in all
respects to Servicer with respect to servicing functions under this Agreement
and shall be subject to all the responsibilities, duties and liabilities (except
for liabilities arising during the period of time when the prior Servicer was
performing and acting as Servicer) relating thereto placed on Servicer by the
terms and provisions hereof, and all references in this Agreement to Servicer
shall be deemed to refer to the Successor Servicer.

(c) In connection with any Termination Notice, 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 Holder of the Transferor Interest shall be
responsible for payment of the portion of such aggregate Servicing Fees
allocable to the Holder of the Transferor Interest and that no such monthly
compensation paid out of Collections shall be in excess of such aggregate
Servicing Fees. Each Holder of the Transferor Interest agrees that, if WFN (or
any Successor Servicer) is terminated as Servicer hereunder, the portion of the
Collections in respect of Finance Charge Receivables that Transferor is entitled
to receive pursuant to this Agreement or any Supplement shall be reduced by an
amount sufficient to pay Transferor’s 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 under this
Agreement shall automatically cease and terminate upon termination of the Trust
pursuant to Section 12.1 and shall pass to and be vested in Transferor and,
without limitation, Transferor is hereby authorized and empowered to execute and
deliver, on behalf of the Successor 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 agrees to cooperate with Transferor in
effecting the termination of the responsibilities and rights of the Successor
Servicer to conduct servicing on the Receivables. The Successor Servicer shall
transfer its electronic records relating to the Receivables to Transferor in
such electronic form as Transferor may reasonably request and shall transfer all
other records, correspondence and documents to Transferor in the manner and at
such times as Transferor shall reasonably request. To the extent that compliance
with this Section 10.2 shall require the Successor Servicer to disclose to
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information of any kind which the Successor Servicer deems to be confidential,
Transferor shall be required to enter into such customary licensing and
confidentiality agreements as the Successor Servicer shall deem appropriate to
protect its interests.

SECTION 10.3 Notification to Holders. Within two Business Days after Servicer
becomes aware of any Servicer Default, Servicer shall give notice thereof to
Trustee, each Rating Agency and any Enhancement Provider entitled thereto
pursuant to the relevant Supplement and Trustee shall give notice to the
Investor Holders. Upon any termination or appointment of a Successor Servicer
pursuant to this Article, Trustee shall give prompt notice thereof to the
Investor Holders.

SECTION 10.4 Waiver of Past Defaults. The Holders of Investor Certificates
evidencing undivided interests in the Trust aggregating more than 66- 2/3% of
the Invested Amount of each Series then outstanding affected by any default by
Servicer may, on behalf of all Holders of Certificates of such affected Series,
waive any default by Servicer in the performance of its obligations hereunder
and its consequences, except a default in the failure to make any required
deposits or payments of interest or principal with respect to any Series of
Certificates. Upon any such waiver of a past default, such default shall cease
to exist, and any default arising therefrom shall be deemed to have been
remedied for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereon except to the
extent expressly so waived.

ARTICLE XI TRUSTEE

SECTION 11.1 Duties of Trustee. (a) Trustee, prior to the occurrence of a
Servicer Default and after the curing of all Servicer Defaults which may have
occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement. If a Servicer Default has occurred
(which has not been cured or waived) 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) Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to Trustee
which are specifically required to be furnished pursuant to any provision of
this Agreement, shall examine them to determine whether they conform to the
requirements of this Agreement. Trustee shall give prompt written notice to the
Holders of any material lack of conformity of any such instrument to the
applicable requirements of this Agreement discovered by Trustee which would
entitle a specified percentage of the Holders to take any action pursuant to
this Agreement.

 

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(c) Subject to Section 11.1(a), no provision of this Agreement shall be
construed to relieve Trustee from liability for its own negligent action, its
own negligent failure to act or its own misconduct; provided that:

(i) Trustee shall not be personally liable for an error of judgment made in good
faith by a Responsible Officer or Responsible Officers of Trustee, unless it
shall be proved that Trustee was negligent in ascertaining the pertinent facts;

(ii) 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 relating to the time, method
and place of conducting any proceeding for any remedy available to Trustee, or
exercising any trust or power conferred upon Trustee, under this Agreement;
provided that, such direction is delivered by the Holders of Investor
Certificates evidencing the percentage of the aggregate unpaid principal amount
of Investor Certificates of all Series to which such action relates required for
such action by this Agreement; and

(iii) Trustee shall not be charged with knowledge of (x) any failure by Servicer
referred to in Section 10.1 or (y) any Early Amortization Event unless a
Responsible Officer of Trustee obtains actual knowledge of such failure or Early
Amortization Event or Trustee receives written notice of such failure or Early
Amortization Event from Servicer, any Holders of Investor Certificates
evidencing not less than 25% of the aggregate unpaid principal amount of all
Investor Certificates (or, with respect to any such failure that does not relate
to all Series, 25% of the aggregate unpaid principal amount of all Investor
Certificates of all Series to which such failure relates, or the Enhancement
Providers, if any, for all Series to which such failure relates).

(d) Trustee shall not be required to expend or risk its own funds or otherwise
incur financial liability in the performance of any of its duties hereunder or
in the exercise of any of its rights or powers hereunder or thereunder, 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
Trustee to perform, or be responsible for the manner of performance of, any of
the obligations of Servicer under this Agreement except during such time, if
any, as Trustee shall be the successor to, and be vested with the rights,
duties, powers and privileges of, Servicer in accordance with this Agreement.

(e) Trustee shall have no power to vary the corpus of the Trust, except as
expressly provided in this Agreement.

 

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(f) If 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, Trustee shall be obligated promptly upon
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.

(g) If Credit Card Originator has agreed to transfer any of its receivables
(other than the Receivables) to another Person other than the Transferor, upon
the written request of Credit Card Originator, Trustee will enter into such
intercreditor agreements with the transferee of such receivables as are
customary and necessary to separately identify the rights of the Trust and such
other Person in Credit Card Originator’s receivables; provided that Trustee
shall not be required to enter into any intercreditor agreement which could
adversely affect the interests of the Holders and, upon the request of Trustee,
Credit Card Originator will deliver an Opinion of Counsel relating to such
intercreditor agreement, reasonably requested by Trustee.

SECTION 11.2 Certain Matters Affecting Trustee. Except as otherwise provided in
Section 11.1:

(a) Trustee may rely on and shall be protected in acting on, or in refraining
from acting in accord with, any resolution, Officer’s Certificate, certificate
of auditors or any other certificate, statement, instrument, opinion, report,
notice, request, consent, order, appraisal, bond or other paper or document
reasonably believed by it to be genuine and to have been signed or presented to
it pursuant to this Agreement by the proper party or parties;

(b) Trustee may consult with counsel selected by it, and any advice of such
counsel, 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) 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 thereunder or in relation to this
Agreement or any Enhancement Agreement, at the request, order or direction of
any of the Holders, pursuant to the provisions of this Agreement or any
Enhancement Agreement, unless such Holders shall have offered to Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby; nothing contained herein shall,
however, relieve Trustee of the obligations, upon the occurrence of any Servicer
Default (which has not been cured) to exercise such of the rights and powers
vested in it by this Agreement, and to use the same degree of care and skill in
its exercise, as a prudent person would exercise or use under the circumstances
in the conduct of such person’s own affairs;

 

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(d) 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) Trustee shall not be bound to make any investigation into the facts of
matters stated in any resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, approval, bond or other paper or
document, unless requested in writing to do so by Holders of Investor
Certificates evidencing more than 25% of the aggregate unpaid principal amount
of all Investor Certificates (or, with respect to any such matters that do not
relate to all Series, 25% of the aggregate unpaid principal amount of the
Investor Certificates of all Series to which such matters relate);

(f) 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 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 Section 11.1(a), 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 Transferor with its representations and
warranties or for any other purpose.

SECTION 11.3 Trustee Not Liable for Recitals in Certificates. 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, Trustee makes no representations as to the
validity or sufficiency of this Agreement or any Supplement or of the
Certificates (other than the certificate of authentication on the Certificates)
or of any Receivable or related document. Trustee shall not be accountable for
the use or application by Transferor of any of the Certificates or of the
proceeds of such Certificates, or for the use or application of any funds paid
to Transferor or the Holder of the Transferor Interest in respect of the
Receivables or deposited in or withdrawn from the Collection Account, any Series
Accounts or any other accounts hereafter established to effectuate the
transactions contemplated by this Agreement and in accordance with this
Agreement.

SECTION 11.4 Trustee Not to Own Certificates. Trustee shall not in its
individual capacity, but may in a fiduciary capacity, become the owner or
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of Investor Certificates. If Trustee becomes the owner or pledgee of Investor
Certificates in a fiduciary capacity it shall have the same rights as it would
have if it were not Trustee.

SECTION 11.5 Servicer to Pay Trustee’s Fees and Expenses. Servicer covenants and
agrees to pay to Trustee from time to time, and 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 Trustee,
and Servicer will pay or reimburse Trustee (without reimbursement from the
Collection Account or otherwise) upon its request for all reasonable expenses or
disbursements incurred or made by Trustee in accordance with any of the
provisions of this Agreement or any Enhancement Agreement (including the
reasonable fees and expenses of its agents, any co-trustee and counsel) except
any such expense, disbursement or advance as may arise from its own negligence,
willful misconduct or bad faith and except as provided in the following
sentence. If Trustee is appointed Successor Servicer pursuant to Section 10.2,
the provisions of this Section 11.5 shall not apply to expenses, disbursements
and advances made or incurred by Trustee in its capacity as Successor Servicer.

The obligations of Servicer under Section 8.4 and this Section 11.5 shall
survive the termination of the Trust and the resignation or removal of Trustee.

SECTION 11.6 Eligibility Requirements for Trustee. Trustee shall at all times be
a bank, trust company or a corporation organized and doing business under the
laws of the United States of America or any state thereof authorized under such
laws to exercise corporate trust powers, having a combined capital and surplus
of at least $50,000,000 and subject to supervision or examination by Federal or
state authority and maintain any credit or deposit rating required by any Rating
Agency (as of the date hereof Baa3 for Moody’s). 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 11.6, 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. In case at any time Trustee
shall cease to be eligible in accordance with the provisions of this
Section 11.6, Trustee shall resign immediately in the manner and with the effect
specified in Section 11.7.

SECTION 11.7 Resignation or Removal of Trustee. (a) Trustee may at any time
resign and be discharged from the trust hereby created by giving written notice
thereof to Servicer. Upon receiving such notice of resignation, Transferor 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.

 

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(b) If at any time Trustee shall cease to be eligible in accordance with the
provisions of Section 11.6 and shall fail to resign after written request
therefor by Servicer or Transferor, or if at any time Trustee shall be legally
unable to act, or shall be adjudged a bankrupt or insolvent, or a receiver of
Trustee or of its property shall be appointed, or any public officer shall take
charge or control of Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, in which event Servicer shall
remove Trustee and promptly appoint a successor trustee by written instrument,
in duplicate, one copy of which instrument shall be delivered to Trustee so
removed and one copy to the successor trustee.

(c) Any resignation or removal of Trustee and appointment of a successor trustee
pursuant to any of the provisions of this Section 11.7 shall not become
effective until acceptance of appointment by the successor trustee as provided
in Section 11.8 and any liability of Trustee arising hereunder shall survive
such appointment of a successor trustee.

SECTION 11.8 Successor Trustee. (a) Any successor trustee appointed as provided
in Section 11.7 shall execute, acknowledge and deliver to Transferor, to
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 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 11.8 unless at the time of such acceptance such successor trustee shall
be eligible under Section 11.6.

(c) Upon acceptance of appointment by a successor trustee as provided in this
Section, such successor trustee shall provide notice of such succession
hereunder to all Investor Holders and Servicer shall provide such notice to each
Rating Agency and any Enhancement Provider entitled thereto pursuant to the
relevant Supplement.

SECTION 11.9 Merger or Consolidation of Trustee. Any Person into which Trustee
may be merged or converted or with which it may be consolidated, or any Person
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Trustee shall be a party, or any Person succeeding to the corporate trust
business of Trustee, shall be the successor of Trustee hereunder, provided such
corporation shall be eligible under the provisions of Section 11.6, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding.

SECTION 11.10 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, 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 Holders, 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 Trustee may consider necessary
or desirable; provided, that Trustee shall exercise due care in the appointment
of any co-trustee. No co-trustee or separate trustee hereunder shall be required
to meet the terms of eligibility as a successor trustee under Section 11.6 and
no notice to Holders of the appointment of any co-trustee or separate trustee
shall be required under Section 11.8.

(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 Trustee
shall be conferred or imposed upon and exercised or performed by 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
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 Servicer hereunder) 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 Trustee;

(ii) no trustee hereunder shall be personally liable by reason of any act or
omission of any other trustee hereunder; and

(iii) 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 Trustee shall be deemed to
have been given to each of the then separate trustees and co-trustees, as

 

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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 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, Trustee. Every such
instrument shall be filed with Trustee and a copy thereof given to Servicer.

(d) Any separate trustee or co-trustee may at any time constitute Trustee its
agent or attorney-in-fact with full power and authority, to the extent not
prohibited by law, to do any lawful act under or in respect to this Agreement on
its behalf and in its name. If any separate trustee or co-trustee shall die,
become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.

SECTION 11.11 Tax Return. If the Trust is required to file tax returns, Servicer
shall prepare or shall cause to be prepared any tax returns required to be filed
by the Trust and shall remit such returns to Trustee for signature at least five
days before such returns are due to be filed; Trustee shall promptly sign such
returns and deliver such returns after signature to Servicer and such returns
shall be filed by Servicer. Servicer in accordance with each Supplement shall
also prepare or shall cause to be prepared all tax information required by law
to be distributed to Investor Holders. Trustee upon request, will furnish
Servicer with all such information known to Trustee as may be reasonably
required in connection with the preparation of all tax returns of the Trust. In
no event shall Trustee or Servicer (except as provided in Sections 7.4 or 8.4)
be liable for any liabilities, costs or expenses of the Trust or the Investor
Holders arising under any tax law, including Federal, state, local or foreign
income or excise taxes or any other tax imposed or measured by income (or any
interest or penalty with respect thereto or arising from a failure to comply
therewith).

SECTION 11.12 Trustee May Enforce Claims Without Possession of Certificates. All
rights of action and claims under this Agreement or the Certificates may be
prosecuted and enforced by Trustee without the possession of any of the
Certificates or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by 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 Trustee, its
agents and counsel, be for the ratable benefit of the Holders in respect of
which such judgment has been obtained.

SECTION 11.13 Suits for Enforcement. If a Servicer Default shall occur and be
continuing, Trustee, in its discretion may, subject to the provisions of
Sections 10.1 and 11.14, proceed to protect and enforce its rights and the
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the Holders 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 Trustee, being advised by counsel, shall deem most effectual
to protect and enforce any of the rights of Trustee or the Holders.

SECTION 11.14 Rights of Holders to Direct Trustee. Holders of Investor
Certificates evidencing more than 50% of the aggregate unpaid principal amount
of all Investor Certificates (or, with respect to any remedy, trust or power
that does not relate to all Series, 50% of the aggregate unpaid principal amount
of the Investor Certificates of all Series to which such remedy, trust or power
relates) shall have the right to direct the time, method, and place of
conducting any proceeding for any remedy available to Trustee, or exercising any
trust or power conferred on Trustee relating to such proceeding; provided that,
subject to Section 11.1, Trustee shall have the right to decline to follow any
such direction if Trustee being advised by counsel determines that the action so
directed may not lawfully be taken, or if Trustee in good faith shall, by a
Responsible Officer or Responsible Officers of Trustee, determine that the
proceedings so directed would be illegal or involve it in personal liability or
be unduly prejudicial to the rights of Holders not parties to such direction;
and provided further that nothing in this Agreement shall impair the right of
Trustee to take any action deemed proper by Trustee and which is not
inconsistent with such direction.

SECTION 11.15 Representations and Warranties of Trustee. Trustee represents and
warrants as of each Closing Date that:

(a) Trustee is a New York banking corporation, organized, existing and in good
standing under the laws of the State of New York;

(b) Trustee has full power, authority and right to execute, deliver and perform
this Agreement and has taken all necessary action to authorize the execution,
delivery and performance by it of this Agreement; and

(c) this Agreement has been duly executed and delivered by Trustee and is a
binding obligation of Trustee enforceable against Trustee 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).

SECTION 11.16 Maintenance of Office or Agency. Trustee will maintain at its
expense an office or agency (the “Corporate Trust Office”) where notices and
demands to or upon Trustee in respect of the Certificates and this Agreement

 

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may be served (a) in the City of New York, in the case of Registered
Certificates and Holders thereof, and (b) in London or Luxembourg, in the case
of Bearer Certificates and Holders thereof, if and for so long as any Bearer
Certificates are outstanding. The Corporate Trust Office shall initially be
located at 450 West 33rd Street, 14th Floor, New York, New York, 10001. Trustee
will give prompt notice to Servicer and to Investor Holders of any change in the
location of the Certificate Register or any such office or agency.

SECTION 11.17 Confidentiality. Information provided by the Credit Card
Originator or Transferor to Trustee related to the transaction effected
hereunder, including all information related to the Obligors with respect to the
Receivables, and any computer software provided to Trustee in connection with
the transaction effected hereunder or under any Supplement, in each case whether
in the form of documents, reports, lists, tapes, discs or any other form, shall
be “Confidential Information.” Trustee and its agents, representatives or
employees shall at all times maintain the confidentiality of all Confidential
Information and shall not, without the prior written consent of the Credit Card
Originator or Transferor, as applicable, disclose to third parties (including
Holders) or use such information to compete or assist any other Person in
competing with the Credit Card Originator or Transferor or in any manner
whatsoever, in whole or in part, except as expressly permitted under this
Agreement or under any Supplement or as required to fulfill an obligation of
Trustee under this Agreement or under any Supplement, in which case such
Confidential Information shall be revealed only to the extent expressly
permitted or only to Trustee’s agents, representatives and employees who need to
know such Confidential Information to the extent required for the purpose of
fulfilling an obligation of Trustee under this Agreement or under any
Supplement. Notwithstanding the above, Confidential Information may be disclosed
to the extent required by law or legal process, provided that Trustee gives
prompt written notice to the Credit Card Originator or Transferor, as
applicable, of the nature and scope of such disclosure.

ARTICLE XII TERMINATION

SECTION 12.1 Termination of Trust. The Trust and the respective obligations and
responsibilities of Transferor, Servicer and Trustee created hereby (other than
the obligation of Trustee to make payments to Investor Holders as hereinafter
set forth) shall terminate, except with respect to the duties described in
Sections 7.4, 8.4, 9.2 and 12.2(b), upon the earlier of (i) January 1, 2021,
(ii) the day following the Distribution Date on which the Invested Amount for
each Series is zero (provided that Transferor has delivered a written notice to
Trustee electing to terminate the Trust) and (iii) the date provided in
Section 9.2.

SECTION 12.2 Final Distribution. (a) Servicer shall give Trustee at least 30
days prior notice of the Distribution Date on which the Investor Holders 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 Section 2.6, 9.2
or 10.1, notice

 

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of such Distribution Date promptly after Servicer has determined that a final
distribution will occur, if such determination is made less than 30 days prior
to such Distribution Date). Such notice shall be accompanied by an Officer’s
Certificate setting forth the information specified in Section 3.5 covering the
period during the then current fiscal 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 Holders, Trustee shall provide
notice to Investor Holders 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). Trustee shall
give such notice to the Transfer Agent and Registrar and the Paying Agent at the
time such notice is given to Investor Holders.

(b) Notwithstanding a final distribution to the Investor Holders 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, the Excess
Funding Account and any Series Account allocated to such Investor Holders shall
continue to be held in trust for the benefit of such Investor Holders and the
Paying Agent or Trustee shall pay such funds to such Investor Holders upon
surrender of their Investor Certificates (and any excess shall be paid in
accordance with any relevant Enhancement Agreement). If all such Investor
Holders shall not surrender their Investor Certificates for cancellation within
six months after the date specified in the notice from Trustee described in
paragraph (a), Trustee shall give a second notice to the remaining such Investor
Holders 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, Trustee may take appropriate steps, or may appoint
an agent to take appropriate steps, to contact the remaining such Investor
Holders 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 Holders. Trustee and the Paying
Agent shall pay to Transferor any moneys held by them for the payment of
principal or interest that remains unclaimed for two years. After payment to
Transferor, Investor Holders entitled to the money must look to Transferor for
payment as general creditors unless an applicable abandoned property law
designates another Person.

(c) If 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), Trustee will sell or cause to be sold on such Series

 

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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, if a Tax Opinion is obtained, interests therein)
in an amount up to 110% of the Invested Amount with respect to such Series on
such date (after giving effect to such deposits and distributions; provided that
in no event shall such amount exceed an amount of Principal Receivables (and all
associated Finance Charge Receivables) equal to the sum of (i) the product of
(A) Transferor Percentage, (B) the aggregate outstanding Principal Receivables,
and (C) a fraction the numerator of which is the related Investor Percentage of
Collections of Finance Charge Receivables and the denominator of which is the
sum of all Investor Percentages with respect to Collections of Finance Charge
Receivables of all Series outstanding and (ii) the Invested Amount of such
Series). The proceeds from any such sale shall be allocated and distributed in
accordance with the applicable Supplement.

SECTION 12.3 Transferor’s Termination Rights. Upon the termination of the Trust
pursuant to Section 12.1, Trustee shall assign and convey to the holder of the
Transferor Interest or its designee, without recourse, representation or
warranty, all right, title and interest of the Trust in the Receivables, whether
then existing or thereafter created, all moneys due or to become due and all
amounts received with respect thereto and all proceeds thereof, except for
amounts held by Trustee pursuant to Section 12.2(b). Trustee shall execute and
deliver such instruments of transfer and assignment, in each case without
recourse, as shall be reasonably requested by Transferor to vest in Transferor
or its designee all right, title and interest which the Trust had in the
Receivables and such other related assets.

ARTICLE XIII MISCELLANEOUS PROVISIONS

SECTION 13.1 Amendment; Waiver of Past Defaults. (a) This Agreement or any
Supplement may be amended from time to time (including in connection with
(i) adding covenants, restrictions or conditions of Transferor, such further
covenants, restrictions or conditions as its Board of Directors and Trustee
shall consider to be for the benefit or protection of the Investor Holders, and
to make the occurrence, or the occurrence and continuance, of a default in any
of such additional covenants, restrictions or conditions a default or Early
Amortization Event permitting the enforcement of all or any of the several
remedies provided in this Agreement as herein set forth; provided, however, that
in respect of any such additional covenant, restriction or condition such
amendment may provide for a particular period of grace after default or may
provide for an immediate enforcement upon such default or may limit the remedies
available to Trustee upon such default, (ii) curing any ambiguity or correcting
or supplementing any provision contained herein or in any Supplement which may
be defective or inconsistent with any other provision contained herein or in any
Supplement or to surrender any right or power conferred upon Transferor,
(iii) the issuance of a Supplemental Interest, (iv) the addition of a
Participation Interest or receivables arising in VISA, MasterCard or any other

 

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type of open end revolving credit card account to the Trust, (v) the assumption
by another entity, in accordance with the provisions of this Agreement, of
Transferor’s obligations hereunder, or (vi) the provision of additional
Enhancement for the benefit of Holders of any Series) by Servicer, Transferor
and Trustee without the consent of such Holders as provided for in the
applicable Supplement, provided that (x) Transferor shall have delivered to
Trustee an Officer’s Certificate to the effect that Transferor reasonably
believes that such action shall not adversely affect in any material respect the
interests of any Investor Holder, (y) the Rating Agency Condition shall have
been satisfied with respect to any such amendment and with respect to any
amendment to Section 13.10 or Section 13.16, the S&P Condition shall have been
satisfied and (z) a Tax Opinion is delivered in connection with any such
amendment. The designation of additional or substitute Transferors or additional
Credit Card Originators pursuant to Section 2.11 or 2.12 shall be subject to
this Section 13.1 only to the extent that the supplement to this Agreement
providing for such designation amends any of the terms of this Agreement.

(b) This Agreement or any Supplement may also be amended from time to time by
Servicer, Transferor and Trustee, with the consent of the Holders of Investor
Certificates (acting for themselves or through any designated agents, as
provided for in any applicable Supplement) evidencing not less than 66- 2/3% of
the aggregate unpaid principal 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 Holders;
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
Holders or deposits of amounts to be so distributed or the amount available
under any Enhancement without the consent of each affected Holder (provided that
any amendment of the terms of an Early Amortization Event shall not be deemed to
be within the scope of this clause (i)), (ii) change the definition of or the
manner of calculating the interest of any Investor Holder without the consent of
each affected Investor Holder (acting for themselves or through any designated
agents, as provided for in any applicable Supplement) or (iii) reduce the
aforesaid percentage required to consent to any such amendment without the
consent of each Investor Holder (acting for themselves or through any designated
agents, as provided for in any applicable Supplement); and provided, further, no
amendment may be made to Section 13.10 or Section 13.16 unless the S&P Condition
shall have been satisfied. Any amendment to be effected pursuant to this
paragraph shall be deemed to adversely affect all outstanding Series, other than
any Series with respect to which such action shall not, as evidenced by an
Opinion of Counsel for Transferor, addressed and delivered to Trustee, adversely
affect in any material respect the interests of any Investor Holder of such
Series. Trustee may, but shall not be obligated to, enter into any such
amendment which affects Trustee’s rights, duties or immunities under this
Agreement or otherwise.

 

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(c) Promptly after the execution of any such amendment or consent (other than an
amendment pursuant to paragraph (a)), Trustee shall furnish notification of the
substance of such amendment to each Investor Holder; and Servicer shall furnish
prior notification of the substance of such amendment to (i) each Rating Agency
and (ii) each Enhancement Provider, if any, entitled thereto pursuant to the
relevant Supplement.

(d) It shall not be necessary for the consent of Investor Holders 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 Holders shall be subject to such reasonable requirements as
Trustee may prescribe.

(e) Any Supplement executed in accordance with the provisions of Section 6.3
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 unpaid principal 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 unpaid principal 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 Holders, waive any default by
Transferor or Servicer in the performance of their obligations hereunder and its
consequences, except the failure to make any distributions required to be made
to Investor Holders or to make any required deposits of any amounts to be so
distributed. Upon any such waiver of a past default, such default shall cease to
exist, and any default arising therefrom shall be deemed to have been remedied
for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereon except to the
extent expressly so waived.

SECTION 13.2 Protection of Right, Title and Interest to Trust. (a) Transferor
shall cause this Agreement, all amendments and supplements hereto and all
financing statements and continuation statements and any other necessary
documents covering the Holders, and 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 Holders and Trustee hereunder to all property comprising the Trust Assets.
Transferor shall deliver to Trustee file-stamped copies of, or filing receipts
for, any document recorded, registered or filed as provided above, as soon as
available following such recording, registration or filing.

 

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(b) Within 30 days after 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, Transferor
shall give 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) Transferor and Servicer will give Trustee prompt notice of any relocation of
any office from which it services Receivables or keeps records concerning the
Receivables or of its principal executive office and whether, as a result of
such relocation, the applicable provisions of the UCC would require the filing
of any amendment of any previously filed financing or continuation statement or
of any new financing statement and shall file such financing statements or
amendments as may be necessary to perfect or to continue the perfection of the
Trust’s security interest in the Receivables and the proceeds thereof.
Transferor and Servicer will at all times maintain each office from which it
services Receivables and its principal executive offices within the United
States.

(d) Transferor will deliver to Trustee and any Enhancement Provider entitled
thereto pursuant to the relevant Supplement: (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 E-1; (ii) on each Addition Date on which any
Supplemental Accounts are to be designated as Accounts pursuant to
Section 2.8(a) or (b), an Opinion of Counsel to the effect specified in Exhibit
E-2, and on each Addition Date on which any Participation Interests are to be
included in the Trust pursuant to Section 2.8(a) or (b), an Opinion of Counsel
covering the same substantive legal issues addressed by Exhibit E-2 but
conformed to the extent appropriate to relate to Participation Interests; and
(iii) on or before March 31 of each year, beginning with March 31, 1998, an
Opinion of Counsel to the effect specified in Exhibit E-2.

SECTION 13.3 Limitation on Rights of Holders. (a) The death or incapacity of any
Holder shall not operate to terminate this Agreement or the Trust, nor shall
such death or incapacity entitle such Holders’ 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 Holder 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 Holders from time to time as partners
or members of an association, nor shall any Investor Holder be under any
liability to any third person by reason of any action by the parties to this
Agreement pursuant to any provision hereof.

 

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(c) No Investor Holder shall have any right by virtue of any provisions of this
Agreement to institute any suit, action or proceeding in equity or at law upon
or under or with respect to this Agreement, unless such Investor Holder
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 which such action, suit or proceeding
relates) shall have made written request to Trustee to institute such action,
suit or proceeding in its own name as Trustee hereunder and shall have offered
to Trustee such reasonable indemnity as it may require against the costs,
expenses and liabilities to be incurred therein or thereby, and Trustee, for 60
days after its receipt of 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 Holder
with every other Investor Holder and Trustee, that no one or more Investor
Holders 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 Holders of any other of the Investor Certificates, or to
obtain or seek to obtain priority over or preference to any other Investor
Holder, 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
Holders except as otherwise expressly provided in this Agreement. For the
protection and enforcement of the provisions of this Section, each and every
Investor Holder and Trustee shall be entitled to such relief as can be given
either at law or in equity.

SECTION 13.4 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF 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.

SECTION 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 Servicer, to WFN, 800 Techcenter
Drive, Gahanna, Ohio 43230, Attention: Dan Groomes (facsimile no. 614/729-4899),
(ii) in the case of Trustee, The Chase Manhattan Bank, 450 West 33rd Street,
14th Floor, New York, New York 10001 (facsimile no. 212-946-8828)), (iii) in the
case of Transferor, to WFN Credit Company, LLC, 200 West Schrock Road,
Westerville, Ohio 43801, (iv) in the case of the Paying Agent or the Transfer
Agent and Registrar, to Trustee at the address above and (v) to any other Person

 

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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 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 Holder receives such Notice. In addition, (i) 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 Holders shall be published in an
Authorized Newspaper of general circulation in Luxembourg within the time period
prescribed in this Agreement and (ii) 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 Holders of such Series or Class shall be
published in an Authorized Newspaper within the time period prescribed in this
Agreement.

SECTION 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 Securities Act, each of Transferor, Trustee,
Servicer and any Enhancement Provider agree to cooperate with each other to
provide to any Investor Holders of such Series or Class and to any prospective
purchaser of Certificates designated by such Investor Holder, upon the request
of such Investor Holder 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 Securities Act.

SECTION 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 Holders.

SECTION 13.8 Certificates Nonassessable and Fully Paid. It is the intention of
the parties to this Agreement that the Holders 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
Trustee pursuant to Section 6.2 are and shall be deemed fully paid.

SECTION 13.9 Further Assurances. Transferor and Servicer agree to do and
perform, from time to time, any and all acts and to execute any and all further
instruments required or reasonably requested by Trustee more fully to effect the

 

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purposes of this Agreement, including the execution of any financing statements
or continuation statements relating to the Receivables for filing under the
provisions of the UCC of any applicable jurisdiction.

SECTION 13.10 Nonpetition Covenant. (a) Notwithstanding any prior termination of
this Agreement, Servicer, Trustee, each Holder and each Enhancement Provider, if
any, and each Holder of a Supplemental Interest and (with respect to the Trust
only) the Transferor shall not any time institute against the Transferor or the
Trust, or solicit or join in or cooperate with or encourage any institution
against the Transferor or the Trust of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any United States Federal or State bankruptcy or similar law in connection with
any obligations relating to this Agreement or any of the Transaction Documents.
The foregoing shall not limit the rights of the Servicer, Trustee, any Holder,
any Enhancement Provider or any Holder of a Supplemental Interest or (with
respect to the Trust only) the Transferor to file any claim in or otherwise take
any action with respect to any insolvency proceeding that was instituted against
the Transferor or the Trust by any Person other than the Servicer, Trustee, the
Holders, any Enhancement Provider or any Holder of a Supplemental Interest.

(b) This covenant shall survive the termination of this Agreement and the
payment of all amounts payable hereunder.

SECTION 13.11 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of Trustee or the Holders, 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.

SECTION 13.12 Counterparts. This Agreement may be executed in two or more
counterparts (and by different parties on separate counterparts), each of which
shall be an original, but all of which together shall constitute one and the
same instrument.

SECTION 13.13 Third-Party Beneficiaries. This Agreement will inure to the
benefit of and be binding upon the parties hereto, the Holders, any Enhancement
Provider (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 (including Section 7.4), no other Person
will have any right or obligation hereunder.

SECTION 13.14 Actions by Holders. (a) Wherever in this Agreement a provision is
made that an action may be taken or a Notice given by Holders, such action or
Notice may be taken or given by any Holder, unless such provision requires a
specific percentage of Holders.

 

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(b) 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 Trustee or Servicer in reliance thereon,
whether or not notation of such action is made upon such Certificate.

SECTION 13.15 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.

SECTION 13.16 Subordination. (a) Each of Servicer, Trustee, each Holder and each
Enhancement Provider acknowledges and agrees that the obligations of the
Transferor under or relating to this Agreement or any of the Transaction
Documents represent obligations or indebtedness of the Transferor and do not
represent an interest in any assets (other than the Trust Assets) of any other
entity (including by virtue of any deficiency claim in respect of obligations
not paid or otherwise satisfied from the Trust Assets. In furtherance of and not
in derogation of the foregoing, to the extent the Transferor enters into other
securitization transactions, each of Servicer, Trustee, each Holder, each
Enhancement Provider and each Holder of a Supplemental Interest acknowledges and
agrees that it shall have no right, title or interest in or to any assets (or
interests therein) (other than the Trust Assets) conveyed or purported to be
conveyed by the Transferor to another securitization trust or other Person or
Person(s) in connection therewith (whether by way of a sale, capital
contribution or by virtue of the granting of a lien) (“Other Assets”). To the
extent that, notwithstanding the agreements and provisions contained in the
preceding sentences of this Section, any of Servicer, Trustee, the Holders, the
Enhancement Providers or any Holder of a Supplemental Interest either
(i) asserts an interest or claim to, or benefit from, Other Assets, whether
asserted against or through Transferor or any other Person owned by Transferor,
or (ii) is deemed to have any such interest, claim or benefit in or from Other
Assets, whether by operation of law, legal process, pursuant to applicable
provisions of insolvency laws or otherwise (including by virtue of
Section 1111(b) of the federal Bankruptcy Code or any successor provision having
similar effect under the Bankruptcy Code), and whether deemed asserted against
or through Transferor or any other Person owned by Transferor, then each of
Servicer, Trustee, each Holder, each Enhancement Provider and each Holder of a
Supplemental Interest further acknowledges and agrees that any such interest,
claim or benefit in or from Other Assets is and shall be expressly subordinated
to the indefeasible payment in full of all obligations and liabilities of
Transferor which, under the terms of the relevant documents relating to the
securitization of such Other Assets, are entitled to be paid from, entitled to
the benefits of, or otherwise secured by such Other

 

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Assets (whether or not any such entitlement or security interest is legally
perfected or otherwise entitled to a priority of distribution or application
under applicable law, including insolvency laws, and whether asserted against
Transferor or any other Person owned by Transferor), including, the payment of
post-petition interest on such other obligations and liabilities. This
subordination agreement shall be deemed a subordination agreement within the
meaning of Section 510(a) of the Bankruptcy Code. Each of Servicer, Trustee, the
Holders, the Enhancement Providers and any Holders of the Supplemental Interests
agrees that no adequate remedy at law exists for a breach of this Section 13.16
and the terms of this Section 13.16 may be enforced by an action for specific
performance.

(b) The provisions of this Section 13.16 shall be for the third party benefit of
those entitled to rely thereon and shall survive the termination of this
Agreement.

 

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IN WITNESS WHEREOF, Transferor, Servicer and Trustee have caused this Agreement
to be duly executed by their respective officers as of the day and year first
above written.

 

WFN CREDIT COMPANY, LLC, as Transferor By  

/s/ Robert P. Armiak

Name:  

Robert P. Armiak

Title:  

Vice President and Treasurer

WORLD FINANCIAL NETWORK NATIONAL BANK, as Servicer By  

/s/ Robert P. Armiak

Name:  

Robert Armiak

Title:  

Treasurer

THE CHASE MANHATTAN BANK, as Trustee By  

/s/ Craig M. Kantor

Name:   Craig M. Kantor Title:  

Vice President

 

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EXHIBITS

 

Exhibit A    Form of Assignment of Receivables in Supplemental Accounts
Exhibit B    Form of Reassignment of Receivables in Removed Accounts Exhibit C
   Form of Annual Servicer’s Certificate Exhibit D-1    Private Placement Legend
Exhibit D-2    Form of Undertaking Letter Exhibit D-3    ERISA Legend
Exhibit E-1    Form of Opinion of Counsel with respect to Amendments Exhibit E-2
   Form of Opinion of Counsel with respect to Addition of Supplemental Accounts

 

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