**EXHIBIT 10.3**

 

CSGQ TRUST, SERIES 2002-A VARIABLE FUNDINGNOTES

PURCHASE AGREEMENT

 

Dated as of June 25, 2002

 

 

PACCT, LLC

Seller

 

 

PROVIDIAN NATIONAL BANK

in its individual capacity and as AccountsOwner

 

 

CSG, LLC

Purchaser

 

 

MTGLQ INVESTORS, L.P.

SB FUNDING CORP.

COMPUCREDIT ACQUISITION CORPORATION

Secondary Purchasers

 

 

CSGQ TRUST

SERIES 2002-A

 

----

 

TABLE OF CONTENTS

 
| ARTICLE I DEFINITIONS                                 |
|-------------------------------------------------------|
| Section 1.1                                           | Definitions. |
| Section 1.2                                           | Other Terms |
| Section 1.3                                           | Computation of Time Periods |
| ARTICLE II TRANSFER OF THE SERIES 2002-A  NOTES       |
| Section 2.1                                           | Transfer of the Series 2002-A Notes |
| Section 2.2                                           | Delivery of the Series 2002-A Notes and Documents. |
| Section 2.3                                           | Principal Balance Increases. |
| Section 2.4                                           | Funding Procedures. |
| ARTICLE III CONDITIONS PRECEDENT                      |
| Section 3.1                                           | Conditions Precedent to the Purchase of the  Series 2002-A Notes |
| Section 3.2                                           | Conditions Precedent to each Principal Balance Increase. |
| Section 3.3                                           | Conditions Precedent for Secondary  Purchasers. |
| Section 3.4                                           | Waivers of Conditions Precedent. |
| ARTICLE IV REPRESENTATIONS, WARRANTIES AND  COVENANTS |
| Section 4.1                                           | Representations and Warranties. |
| Section 4.2                                           | Covenants |
| ARTICLE V INDEMNIFICATION                             |
| ARTICLE VI COMMITMENT BY SECONDARY  PURCHASER         |
| ARTICLE VII MISCELLANEOUS                             |
| Section 7.1                                           | Waivers; Remedies |
| Section 7.2                                           | Amendments, Waivers and Consents |
| Section 7.3                                           | Notices, Etc. |
| Section 7.4                                           | Governing Law; Submission to Jurisdiction |
| Section 7.5                                           | Severability |
| Section 7.6                                           | Counterparts |
| Section 7.7                                           | Nonpetition Covenant. |
| Section 7.8                                           | Successors and Assigns. |
| Section 7.9                                           | No Recourse |
| Section 7.10                                          | Further Assurances. |
|                                                  |   |
| Annex A - Notices                                     |
| Annex B – VFN Funding Procedures                 |

 

i

----

 

INTRODUCTION

 

CSGQ TRUST SERIES 2002-A VARIABLE FUNDINGNOTES PURCHASE AGREEMENT (as amended, restated, modified or otherwise modifiedand in effect, this “Agreement”), dated as of June 25, 2002, by andamong PACCT, LLC, a Delaware limited liability company, as Seller (in suchcapacity, and together with any of its successors or permitted assigns, the “Seller”),  Providian National Bank, in its individualcapacity (“Providian”) and as Accounts Owner (in such capacity, the “AccountsOwner”), CSG, LLC, a Delaware limited liability company, as Purchaser (insuch capacity, the “Purchaser”), MTGLQ Investors, L.P., SB Funding Corp.and CompuCredit Acquisition Corporation, as Secondary Purchasers (each, a “SecondaryPurchaser” and collectively, with the Purchaser, the “VFN Purchasers”).

 

RECITALS

 

The Seller proposes to sell to the VFNPurchasers on the terms and subject to the conditions set forth herein, CSGQTrust, Series 2002-A Variable Funding Notes (the “Series 2002-A Notes”).  Subject to the terms and conditions setforth in this Agreement and the Series 2002-A Indenture Supplement (as definedor referenced herein), the outstanding principal amount of the Series 2002-ANotes may be decreased and increased from time to time.

 

The Receivables and other Trust Assets (eachas defined or referenced herein) will be sold to PACCT, LLC (in such capacity,the “Transferor”) on the Closing Date (as defined or referenced herein)and from time to time thereafter pursuant to a Receivables Purchase Agreementdated as of June 25, 2002 (as amended, restated, supplemented or otherwisemodified and in effect, the “Receivables Purchase Agreement”) betweenProvidian, as seller, and the Transferor. Upon purchase, the Transferor will convey the Receivables and otherTrust Assets to CSGQ Trust (the “Trust”), a business trust organizedunder the laws of the State of Delaware, pursuant to a Transfer and ServicingAgreement dated as of June 25, 2002 (as amended, restated, supplemented orotherwise modified and in effect, the “Transfer and Servicing Agreement”)among the Transferor, CompuCredit Corporation, as Servicer (the “Servicer”),CSG Presidio Funding, LLC, as O/C Holder and the Trust, as Issuer.  The Trust will issue the Series 2002-1 Notes(as defined or referenced herein) and the Series 2002-A Notes and will makepayments on such notes from collections on the Receivables.

 

The Series 2002-1 Notes will be issuedpursuant to the Master Indenture dated as of June 25, 2002 (as amended,restated, supplemented or otherwise modified and in effect, the “MasterIndenture”), among the Trust, U.S. Bank National Association, as IndentureTrustee (the “Indenture Trustee”) and Citibank, N.A., as the NoteAdministrator (the “Note Administrator”) and pursuant to the CSGQ Trust,Series 2002-1 Indenture Supplement, Term Notes, dated as of June 25, 2002 (asamended, restated,

 

----

 

supplemented or otherwise modified and ineffect, the “Series 2002-1 Indenture Supplement”) among the Trust, theIndenture Trustee and the Note Administrator. The Series 2002-A Notes will be issued pursuant to the Master Indentureand the CSGQ Trust, Series 2002-A Indenture Supplement, Variable Funding Notes,dated as of June 25, 2002 (as amended, restated, supplemented or otherwisemodified and in effect, the “Series 2002-A Indenture Supplement”) amongthe Trust, the Indenture Trustee and the Note Administrator.

 

Pursuant to an Account Ownership andAdministration Agreement dated as of June 25, 2002 (as amended, restated,supplemented or otherwise modified and in effect, the “Account OwnershipAgreement”) among the Accounts Owner, the Servicer and the Purchaser, theAccounts Owner will, during the period specified therein, own the Accounts (asdefined or referenced herein), issue credit cards related to the Accounts andperform certain services with respect thereto.

 

Pursuant to the Series 2002-1 IndentureSupplement, the Servicer will, subject to the conditions specified therein,apply collections from the Receivables toward the purchase of newly createdReceivables that have been conveyed to the Trust.  To the extent collections from the Receivables are insufficientor unavailable to purchase such newly created Receivables, the NoteAdministrator will require the Purchaser to fund such newly created Receivablesin accordance with the terms of the Series 2002-A Indenture Supplement and thisAgreement and will increase the principal balance of the Purchaser’s Series2002-A Note accordingly.

 

If and to the extent the Purchaser fails tofund any Net Purchase Requirement due to the failure on the part of any of itsMembers to make a required capital contribution, or due to the inability of thePurchaser to fund a Member’s pro rata share of the Net Purchase Requirement inaccordance with the terms and conditions of the Amended and Restated LLCAgreement, such Member, in its capacity as Secondary Purchaser, shall fund anincrease in such Member’s Series 2002-A Note in an amount equal to the amountof such capital contribution, up to such Member’s Commitment Amount and subjectto the other terms and conditions set forth in the Series 2002-A IndentureSupplement and this Agreement.  EachSecondary Purchaser has obtained credit support for its obligations hereunderfrom a Credit Support Provider in the form of an irrevocable letter of credit,guarantee or other financial instrument. Any newly created Receivables not funded by collections from Receivablesor by the VFN Purchasers pursuant to this Agreement and the 2002-A IndentureSupplement initially will be funded by the Accounts Owner, to the extentprovided in the Accounts Ownership Agreement and Related Agreements, and will resultin the existence of a Transferor Amount.

 

In consideration of the representations,warranties and agreements herein contained, the parties agree as follows:

 

2

----

 

ARTICLE I

DEFINITIONS

 

Section 1.1             Definitions.

 

All capitalized terms used herein shall have the meanings specifiedherein or in the Transfer and Servicing Agreement, the Master Indenture or theSeries 2002-A Indenture Supplement, and shall include in the singular numberthe plural and in the plural number the singular and the masculine of suchterms as well as the feminine and neuter of such terms, and the following termsshall have the following meanings:

 

“Accounts Owner” shall have themeaning specified in the Introduction.

 

“Account Ownership Agreement” shallhave the meaning specified in the Recitals.

 

“Affected Amount” shall have themeaning specified in Section 2.3(a).

 

“Affected Member” shall have themeaning specified in Section 2.3(a).

 

“Aggregate VFN Commitment” for anyBusiness Day shall mean:

 

(i) if such Business Day does not occurduring the Scheduled Amortization Period or any Rapid Amortization Period, the *lesser* of:

 

(a) $200million; and

 

(b) the *greater* of:

(1) 75% of the aggregate Open to Buy as of the end of the prior BusinessDay; and

 

 (2) the *lesser* of:

(x) $25 million; and

(y) the aggregate Open to Buy as of the end of the prior Business Day;and

 

(ii) if such Business Day occurs during theScheduled Amortization Period or any Rapid Amortization Period, the *lesser* of:

 

(a) $200million; and

 

(b) the *greater* of:

(1) the product of:

(x) the aggregate Receivables created under Open Accounts;

 

3

----

 

(y) the *greater* of thehighest Maximum Payment Rate calculated for each of the last three MonthlyPeriods and the highest Maximum Purchase Rate calculated for each of the lastthree Monthly Periods; and

(z)  three; and

 

(2) the *lesser* of

(x) $25 million; and

(y) the aggregate Open to Buy as of the end of the prior Business Day.

 

“Agreement” shall have the meaningspecified in the Introduction.

 

“Amended and Restated LLC Agreement”shall mean the Amended and Restated Limited Liability Company Agreement of CSG,LLC dated as of June 25, 2002 (as amended from time to time) by and among MTGLQInvestors, L.P., SB Funding Corp. and CompuCredit Acquisition Corporation.

 

“Cardholder” shall mean an applicantand/or co-applicant in whose name an Account was established or is maintainedand/or who is obligated to repay the Receivables associated with such Account.

 

“Certificate Purchase Agreement” shallmean the Pass-Through Amortizing Credit Card Trusts, Series 2002-1 Pass ThroughCertificate Purchase Agreement, dated as of June 12, 2002, among Providian,PACCT, LLC, Goldman, Sachs & Co. and Salomon Smith Barney Inc.

 

“Company” shall have the meaningspecified in the LLC Agreement.

 

“Closing Date” shall mean June 25,2002.

 

“Commitment Amount” shall mean, withrespect to any Secondary Purchaser as of any Business Day, (i) the product of(a) such Secondary Purchaser’s VFN Commitment Share and (b) the Aggregate VFNCommitment as of such Business Day, minus (ii) such Secondary Purchaser’s shareof all Increase Amounts funded since the Closing Date, whether through capitalcontributions to the Purchaser, direct purchases by the Secondary Purchaser,funds provided by any Credit Support Provider on behalf of such SecondaryPurchaser, amounts withdrawn from the Reserve Account that were allocable tothe Secondary Purchaser or distributions that would otherwise have been paid orallocated to the Secondary Purchaser (including distributions to the Purchaseror to CSG Funding, LLC for the O/C Invested Amount, the Class B Notes and theSeries 2002-A Notes which are allocable to the Secondary Purchaser) and which havebeen applied by the Note Administrator to the funding of any Increase Amounts,plus (iii) the aggregate amount of all principal distributions paid  to such Secondary Purchaser with respect tothe Series 2002-A Notes (including principal distributions paid to thePurchaser pursuant to the Series 2002-A Notes which constitute principaldistributions made on such portions

 

4

----

 

of the Purchaser’s Series 2002-A Note thatwere funded by such Secondary Purchaser in its capacity as a Member of thePurchaser), in each case as calculated by the Note Administrator based oninformation provided by the LLC Administrator as needed to enable the NoteAdministrator to perform such calculations.

 

 “CreditLimit” shall mean, with respect to any Account on any Business Day, theamount of credit available to the Cardholder pursuant to the terms of therelated Cardholder Agreement.

 

“Credit Support Provider” shall mean(i) with respect to MTGLQ Investors, L.P., The Goldman Sachs Group, Inc., (ii)with respect to SB Funding Corp., SalomonSmith Barney Holdings Inc. and (iii) with respect to CompuCreditAcquisition Corporation, CompuCredit Corporation.

 

“GAAP” shall mean generally acceptedaccounting principles set forth in the opinions and pronouncements of theAccounting Principles Board of the American Institute of Certified PublicAccountants and statements and pronouncements of the Financial AccountingStandards Board or in such other statements by such accounting profession,which are in effect as of the date of this Agreement.

 

“Interest” shall have the meaningspecified in the LLC Agreement.

 

“Interim Servicing Period” shall meanthe period from the Closing Date to but excluding the date the Servicer hasassumed all servicing responsibilities pursuant to the Interim SubservicingAgreement.

 

“Interim Subservicing Agreement” shallmean the Interim Subservicing Agreement dated as of June 25, 2002 by and amongProvidian National Bank, as Interim Subservicer, PACCT, LLC, the Servicer, CSG,LLC and Providian National Bank, as Accounts Owner.

 

 “Knowledge”shall mean, with respect to Seller or Providian, what is actually known withoutindependent investigation by any officer of Seller or Providian having a rankor equivalent rank of at least Executive Vice President or Treasurer.

 

“LLC Administrator” shall meanCompuCredit Acquisition Corporation pursuant to the Administration Agreement ofCSG, LLC, dated as of April 8, 2002, by and between the Company and CompuCreditAcquisition Corporation.

 

“LLC Agreement” shall mean the Amendedand Restated Limited Liability Company Agreement of CSG LLC, dated as of June25, 2002 (as may be amended from time to time), by and among MTGLQ Investors,L.P., SB Funding Corp. and CompuCredit Acquisition Corporation.

 

“Master Indenture” shall have themeaning specified in the Recitals.

 

5

----

 

“Maximum Payment Rate” shall mean,with respect to any Monthly Period, (i) the aggregate amount of Collectionsduring such Monthly Period divided by (ii) the aggregate Receivables as of thefirst day of such Monthly Period.

 

“Maximum Purchase Rate” shall mean,with respect to any Monthly Period, (i) the aggregate amount of newly createdReceivables during such Monthly Period divided by (ii) the aggregateReceivables as of the first day of such Monthly Period.

 

 “Member”shall have the meaning specified in the LLC Agreement.

 

 “NewYork Business Day” shall mean each Monday, Tuesday, Wednesday, Thursday andFriday that is not a day on which banking institutions in New York City aregenerally authorized or obligated by law or executive order to close.

 

“Offering Circular” shall mean theoffering circular supplement dated as of June 12, 2002 together with the baseoffering circular dated as of June 12, 2002 prepared by the Seller, thePurchaser and CSG, LLC in connection with the issuance and sale of theSecurities.

 

“Open Account” shall mean, on anyBusiness Day, an Account for which the Cardholder has charging privileges.

 

“Open to Buy” shall mean, for any OpenAccount on any Business Day, the excess of (i) the Credit Limit and (b) theamount of Receivables in such Account.

 

“Percentage Interest” shall have themeaning specified in the LLC Agreement.

 

 “Providian”shall have the meaning specified in the Introduction.

 

“Providian Information” shall have themeaning specified in Section 4.1(a).

 

“Purchaser” shall have the meaningspecified in the Introduction.

 

“Qualified Transferee” shall mean eachof the Secondary Purchasers and each transferee of an Interest from a Memberthe transfer to which was approved by the unanimous consent of all Members ofthe LLC and for which the Rating Agency Condition has been met.

 

“Rapid Amortization Period” shall havethe meaning specified in the Series 2002-1 Indenture Supplement.

 

“Rating Agency Condition” shall mean,with respect to any action, that each Rating Agency shall have notified the LLCAdministrator, the Issuer, the Note Administrator and the Indenture Trustee inwriting that such action will not result in a reduction or withdrawal of thethen existing ratings of any of the Series 2002-1 Notes.

 

6

----

 

“Receivables Purchase Agreement” shallhave the meaning specified in the Recitals.

 

“Sale and Purchase Agreement” shallmean the Sale and Purchase Agreement (as amended, restated, supplemented orotherwise modified and in effect) dated as of April 11, 2002 by and between theAccounts Owner and the Purchaser, as amended by the Sale and Purchase SideAgreement dated as of June 25, 2002 among the Purchaser, the Accounts Owner andthe Seller.

 

“Scheduled Amortization Period” shallhave the meaning specified in the Series 2002-1 Indenture Supplement.

 

“Securities” shall mean thePass-Through Certificates, Series 2002-1, to be purchased by Goldman, Sachs& Co. and Salomon Smith Barney Inc. pursuant to the Certificate PurchaseAgreement.

 

“Secondary Purchaser” shall have themeaning specified in the Introduction.

 

“Seller” shall have the meaningspecified in the Introduction.

 

“Series 2002-1 Indenture Supplement”shall have the meaning specified in the Recitals.

 

“Series 2002-1 Notes” shall mean thenotes issued pursuant to the Series 2002-1 Indenture Supplement and the MasterIndenture.

 

“Series 2002-A Indenture Supplement”shall have the meaning specified in the Recitals.

 

“Series 2002-A Notes” shall have themeaning specified in the Recitals.

 

“Servicer” shall have the meaningspecified in the Recitals.

 

“Transaction Documents” shall mean,collectively, this Agreement, the Receivables Purchase Agreement, the Transferand Servicing Agreement, the Account Ownership Agreement, the Master Indenture,the Series 2002-1 Indenture Supplement, the Series 2002-A Indenture Supplement,the Certificate Purchase Agreement, the Sale and Purchase Agreement and all ofthe other instruments, documents and other agreements executed and delivered inconnection with any of the foregoing, in each case, as the same may have beenor may hereafter be amended, restated, supplemented or otherwise modified fromtime to time.

 

“Trust” shall have the meaningspecified in the Recitals.

 

“VFN Commitment Share” shall mean, asof any date and with respect to any Secondary Purchaser, the sum of (i) suchSecondary Purchaser’s Percentage Interest and (ii) the Percentage Interest ofany transferee or successor transferee of an Interest

 

7

----

 

previously held by such Secondary Purchaserto the extent such Interest has not been transferred to, or acquired by, atransferee or successor transferee which is a Qualified Transferee.

 

“VFN Purchasers” shall have themeaning specified in the Introduction.

 

Section 1.2             OtherTerms.  All accounting terms notspecifically defined herein shall be construed in accordance with GAAP.  The symbol “$” shall mean the lawfulcurrency of the United States of America. All terms used in Article 9 of the UCC as in effect in the State of NewYork, and not specifically defined herein, are used herein as defined in suchArticle 9.

 

Section 1.3             Computationof Time Periods.  Unless otherwisestated in this Agreement, in the computation of a period of time from aspecified date to a later specified date, the word “from” means “from andincluding,” the words “to” and “until” each means “to but excluding,” and theword “within” means “from and excluding a specified date and to and including alater specified date.”

 

ARTICLE II

TRANSFER OF THE SERIES 2002-A NOTES

 

Section 2.1             Transferof the Series 2002-A Notes.    Onthe terms and subject to the conditions set forth in this Agreement, and inreliance upon the covenants, representations, warranties and agreements hereinset forth, on the Closing Date, the Seller agrees to transfer and deliver tothe VFN Purchasers, and the VFN Purchasers agree to accept, the Series 2002-ANotes in the form attached as Exhibit A to the Series 2002-A IndentureSupplement.

** **

Section 2.2             Delivery of the Series 2002-A Notes and Documents.

 

(a)           TheSeller will deliver the Series 2002-A Notes to be sold by the Seller to the VFNPurchasers on the Closing Date. The time and date of such delivery and paymentshall be 10:00 a.m., New York City time, on the Closing Date or such other timeand date as the VFN Purchasers and the Seller may agree upon in writing.

 

(b)           Thedocuments to be delivered on the Closing Date by or on behalf of the partieshereto pursuant to Section 3.1 hereof will be delivered at the offices ofOrrick, Herrington & Sutcliffe LLP, 666 Fifth Avenue, New York, NY 10103,10:00 a.m., New York City time, on June 25, 2002, or such other time, place anddate as each of the parties hereto may agree upon in writing.

 

8

----

 

Section 2.3             Principal Balance Increases.

 

(a)           Uponthe terms and subject to the conditions set forth herein and in the Series2002-A Indenture Supplement, the Purchaser shall fund the Net PurchaseRequirement requested by the Servicer with respect to the Purchaser’s Series2002-A Note in accordance with the procedures described herein.  To the extent the Purchaser fails to fundthe Net Purchase Requirement in full due to the failure or refusal of a Memberof the Purchaser to make a capital contribution as required under the terms ofthe Amended and Restated LLC Agreement or the Amended and Restated CapitalContribution Agreement, or due to the inability of the Purchaser to fund suchMember’s pro rata share of the Net Purchase Requirement (such Member, an “AffectedMember”, and the amount which the Affected Member failed or refused tocontribute, or with respect to which the Purchaser was unable to fund on behalfof such Affected Member, the “Affected Amount”), the Servicer, acting onbehalf of the Note Administrator, shall demand that the Affected Member fund anincrease in the Series 2002-A Note held by such Affected Member in an amountequal to the Affected Amount in accordance with the procedures described inAnnex B attached hereto.

 

(b)           Uponthe satisfaction of the conditions precedent set forth in Section 3.2, thePurchaser shall remit funds in an amount equal to the Net Purchase Requirementin accordance with the procedures described in Annex B attached hereto.

 

(c)           Uponthe satisfaction of the conditions precedent set forth in Sections 3.2 and 3.3,each Secondary Purchaser shall remit funds in an amount equal to the AffectedAmount required to be funded by such Secondary Purchaser, if any, in accordancewith the procedures described in Annex B attached hereto.

 

Section 2.4             Funding Procedures.

 

The parties hereto agree to follow thefunding procedures and timelines set forth in Annex B attached hereto.

 

ARTICLE III

CONDITIONS PRECEDENT

 

Section 3.1             ConditionsPrecedent to the Purchase of the Series 2002-ANotes.  The obligations of the VFNPurchasers to acquire the Series 2002-A Notes on the Closing Date shall besubject, in the discretion of each VFN Purchaser, to the condition that allrepresentations and warranties and other statements of each of the Seller andProvidian herein are, at and as of the Closing Date, true and correct, and to thefollowing additional conditions:

 

(a)           EachTransaction Document and all of the other agreements identified or otherwisecontemplated by the Offering Circular and such Transaction Documents shall havebeen duly entered into by all of the respective parties;

 

9

----

 

(b)           Theconditions to closing set forth in Section 6.1 of the Sale and PurchaseAgreement shall have been satisfied on or prior to the Closing Date and thetransactions set forth in Section 2.1 of the Sale and Purchase Agreement shallhave been consummated on or prior to the Closing Date;

 

(c)           Orrick,Herrington & Sutcliffe LLP shall have furnished to each VFN Purchaser itswritten opinions, dated the Closing Date, in form and substance satisfactory toeach VFN Purchaser and counsel for each VFN Purchaser;

 

(d)           Richards,Layton & Finger, special Delaware counsel to the Seller, shall havefurnished to each VFN Purchaser its written opinions, dated the Closing Date,in form and substance satisfactory to each VFN Purchaser and counsel for eachVFN Purchaser;

 

(e)           Cravath,Swaine & Moore, special New York counsel to the Seller and Providian, shallhave furnished to each VFN Purchaser its written opinions, dated the ClosingDate, on FIRREA, non-consolidation, security interest and corporate matters andother related matters, in form and substance satisfactory to each VFN Purchaserand counsel for each VFN Purchaser;

 

(f)            Wachtell,Lipton, Rosen & Katz LLP, special New York counsel to the Seller andProvidian, shall have furnished to each VFN Purchaser its written opinion to bedelivered to each VFN Purchaser pursuant to Section 6.1(k) of the Sale andPurchase Agreement, in form and substance satisfactory to each VFN Purchaserand counsel for each VFN Purchaser;

 

(g)           Gallagher,Callahan and Gartrell, P.A., special New Hampshire counsel to the Seller andProvidian, shall have furnished to each VFN Purchaser its written opinion,dated the Closing Date, on matters governed by New Hampshire law, in form andsubstance satisfactory to each VFN Purchaser and counsel for each VFNPurchaser;

 

(h)           Thein-house counsel to Providian (who may be the General Counsel or an AssociateGeneral Counsel of Providian) shall have furnished to each VFN Purchaser his orher written opinion, dated the Closing Date, on matters relating to Providianin form and substance satisfactory to each VFN Purchaser and counsel for eachVFN Purchaser;

 

(i)            Orrick,Herrington & Sutcliffe LLP, special New York counsel to each of the VFNPurchasers, shall have furnished to each VFN Purchaser its written opinion,dated the Closing Date, on the Offering Circular in form and substancesatisfactory to each VFN Purchaser;

 

(j)            Skadden,Arps, Slate, Meagher & Flom LLP, special Delaware counsel to the VFNPurchasers, shall have furnished to each VFN Purchaser its written opinions,dated the Closing Date, in form and substance satisfactory to each VFNPurchaser;

 

10

----

 

(k)          In-house counsel to CompuCredit Corporation, a Georgia corporation, shall havefurnished to each VFN Purchaser its written opinion, dated the Closing Date, inform and substance satisfactory to each VFN Purchaser and counsel for each VFNPurchaser;

 

(l)            ThacherProffitt & Wood LLP, counsel for the Indenture Trustee and NoteAdministrator, shall have furnished to each VFN Purchaser its written opinion,dated the Closing Date, in form and substance satisfactory to each VFNPurchaser and counsel for each VFN Purchaser;

 

(m)          Richards,Layton & Finger, counsel for the Owner Trustee, shall have furnished toeach VFN Purchaser its written opinion, dated the Closing Date, in form andsubstance satisfactory to each VFN Purchaser and counsel for each VFNPurchaser;

 

(n)           Ernst& Young LLP, as independent accountants of Providian, shall have furnishedto each VFN Purchaser a letter or letters, dated on the date hereof, and aletter or letters, dated the Closing Date, respectively, containing statementsand information of the type customarily included in accountants’ “agreed uponprocedures letters” with respect to certain financial information provided byProvidian contained in the Offering Circular;

 

(o)           Eachof the Seller and Providian shall have furnished or caused to be furnished toeach VFN Purchaser on the Closing Date certificates of its officerssatisfactory to each VFN Purchaser as to the accuracy in all material respectsof its representations and warranties herein at and as of the Closing Date, asto the performance in all material respects of all of its obligations hereunderto be performed at or prior to the Closing Date, as to the matters set forth inSections 3.1(a) in respect of the Seller or Providian, as applicable, and as tosuch other matters as each VFN Purchaser may reasonably request;

 

(p)           Allconditions precedent in the Certificate Purchase Agreement shall have beensatisfied; and

 

(q)           Allopinions, certificates and other documents incident to, and all proceedings inconnection with the transactions contemplated by, this Agreement and each of theother Transaction Documents shall be satisfactory in form and substance to eachVFN Purchaser and its counsel, and each VFN Purchaser and its counsel shallhave received copies of such opinions, certificates and other documents as theymay reasonably request.

 

The delivery of this Agreement on the ClosingDate shall be deemed to be an acknowledgment by each VFN Purchaser and itscounsel that the form and substance of any written opinions required under thisSection 3.1 are satisfactory.

 

Section 3.2             ConditionsPrecedent to each Principal Balance Increase.The obligations of any VFNPurchaser to fund any Net Purchase Requirement,

 

11

----

 

or any part thereof, areseveral and are subject to the satisfaction, as of the applicable IncreaseDate, of each of the following conditions:

 

(a)           TheAccounts Owner shall not have ceased, or become unable, for any reason, totransfer Receivables to the Seller as provided in the Receivables PurchaseAgreement and the Transferor shall not have ceased, or become unable, for anyreason, to transfer Receivables to the Trust as provided in the Transfer andServicing Agreement;

 

(b)           TheAccounts Owner shall not have become unable, for any reason, to transfer goodtitle to the Receivables to the Transferor as provided in the ReceivablesPurchase Agreement and the Seller shall not have become unable, for any reason,to transfer good title to the Receivables to the Trust as provided in theTransfer and Servicing Agreement;

 

(c)          The Accounts Owner shall not have ceased to settle newly generated Receivablesunder applicable VISA and MasterCard agreements;

 

(d)           Noneof the representations or warranties made by Providian or by the Seller, asapplicable, under Sections 4.1(i) and 4.1(k) of this Agreement shall have beenincorrect in any material respect as of the time when such representation orwarranty was made;

 

(e)           Noneof the representations or warranties made by Providian or by the Seller, asapplicable, under Sections 4.1(b), (c), (d), (e), (f) and (h) of this Agreementshall have been incorrect in any material respect as of the time when suchrepresentation or warranty was made (except to the extent any suchrepresentation or warranty expressly relates to an earlier date, in which case,such representation or warranty shall be true and correct as of the datespecified), unless the circumstances or conditions in respect of which suchrepresentation or warranty was incorrect shall have been eliminated orotherwise cured (i) within ten (10) Business Days with respect to therepresentations and warranties made under Sections 4.1(b), (c) and (e), and(ii) within five Business Days with respect to the representations andwarranties made under Sections 4.1(d) or (h), and (iii) within seven BusinessDays with respect to the representations and warranties under Section 4.1(f),in each case after the earlier of (1) Knowledge thereof by Providian or theSeller and (2) receipt by Providian of a written notice from any VFN Purchaser,delivered in accordance with Section 7.3, specifying such incorrectrepresentation or warranty and requiring it to be remedied;

 

(f)            Thereshall not have been any default in the performance or observance of anyobligation by the Seller under any Transaction Document to which it is a partythat would have a material adverse effect on the Noteholders of the Series2002-A Notes unless any such default shall have been cured within ten (10)Business Days of the earlier of (1) Knowledge thereof by Providian or theAccounts Owner and (2) receipt by Providian of a written notice from any VFNPurchaser, delivered in accordance with Section 7.3, specifying such defaultand requiring it to be remedied; and

 

12

----

 

(g)           Theaggregate Increase Amounts of all VFN Purchasers with respect to such BusinessDay does not exceed the Net Purchase Requirement for such Business Day.

 

Section 3.3             ConditionsPrecedent for Secondary Purchasers.(a)     Theobligation of any Secondary Purchaser to fulfill any Net Purchase Requirement,or any part thereof, is subject to the following conditions as of theapplicable Increase Date: (i) the satisfaction of each of the conditions setforth in Section 3.2 and (ii) the Servicer, on behalf of the NoteAdministrator, shall have first requested such funding from the Purchaser inaccordance with Section 4.02(a) of the Series 2002-A Indenture Supplement.

 

(b)           EachSecondary Purchaser shall be obligated only to fund a portion of any NetPurchase Requirement up to (i) its respective VFN Commitment Share as of suchIncrease Date (before giving effect to any Increase Amounts to be funded onsuch Increase Date) of such amount and (ii) its respective Commitment Amount asof such Increase Date.

 

Section 3.4             Waivers of Conditions Precedent.A VFN Purchaser may waive any of theconditions precedent described in Sections 3.2 and 3.3 above in its solediscretion; provided, however, that any such waiver (i) shall only beapplicable with respect to the VFN Purchaser waiving such condition and shallnot be binding upon or affect the rights and remedies of any other VFNPurchaser, and (ii) shall only apply to the specific occurrence upon which thewaiver was granted and shall not preclude the exercise of any other power,right or remedy available to the VFN Purchaser.

 

ARTICLE IV

REPRESENTATIONS, WARRANTIES AND COVENANTS

 

Section 4.1             Representationsand Warranties.Each of Providian and the Seller (in its capacity as Sellerand as Transferor), jointly and severally, represents and warrants to, and agreeswith, each VFN Purchaser that:

 

(a)           TheProvidian Information (as defined or referenced herein) set forth in theOffering Circular and any amendments or supplements thereto, as of the datethereof and as of the Closing Date, did not contain any untrue statement of amaterial fact or omit to state a material fact required to be stated therein ornecessary to make the statements therein, in the light of the circumstancesunder which they were made, not misleading. “Providian Information” shall mean, (i) for purposes of theoffering circular supplement, the information set forth (A) in paragraphs 1 and2 of the Executive Summary, (B) under the captions “Summary of Terms—ProvidianNational Bank,” “—Transferor” (first paragraph only) and “—The Receivables,” “TheReceivables” and “The Master Trust Portfolios” (including each of the tableswith information on the credit card accounts and the related receivables setforth under “The Receivables” and “The Master Trust Portfolios”), (C) theinformation set forth under “Risk Factors—Legal and regulatory proceedingsagainst Providian could reduce or delay payments on your

 

13

----

 

Certificates,” (first paragraph only) and“—Certain regulatory matters involving Providian could reduce or delay paymentson your Certificates” (first and second paragraphs only) and (D) in the diskcontaining historical information on the credit card accounts and the relatedcredit card receivables included in the offering circular supplement and (ii)for purposes of the base offering circular, the information set forth under thecaptions “The Transferor,” “Underwriting Procedures for the Master TrustPortfolios,” and “Providian National Bank.” It is understood and agreed thatnone of the Providian Information shall be considered or deemed to be arepresentation or warranty as to (i) the credit quality of the Accounts or theReceivables (as such terms are defined in the Offering Circular), provided,that the foregoing reference to credit quality shall not be deemed to limitProvidian’s obligation to include true, accurate and complete FICO scores inthe Providian Information, (ii) the targeting, underwriting or credit criteria(other than the compliance of such criteria with requirements of law) used inconnection with the Accounts or the Receivables except for such information setforth under (A) the table entitled “Origination Channel” in each Term Sheet and(B) “Underwriting Procedures for the Master Trust Portfolios” in thePreliminary Base Offering Circular and Base Offering Circular or (iii) thefuture performance of the Receivables or the Accounts.

 

(b)           Asof the Closing Date and as of each Increase Date, the Seller is duly organizedand is validly existing as a limited liability company in good standing underthe laws of the State of Delaware and has all requisite power and authority(limited liability company or other) to own its properties and to conduct itsbusiness as described in the Offering Circular, and has been duly qualified asa foreign entity for the transaction of business and is in good standing underthe laws of each other jurisdiction in which it owns or leases property orconducts any business so as to require such qualification, except where thefailure to be in good standing, to have such power or authority, or to be soqualified has not had and is not reasonably likely to have a material adverseeffect on the Noteholders of the Series 2002-A Notes.

 

(c)           Asof the Closing Date and as of each Increase Date, Providian is duly organizedand is validly existing as a national banking association under the federallaws of the United States and has all requisite power and authority (corporateor other) to own its properties and to conduct its business as described in theOffering Circular, and has been duly qualified as a foreign entity for thetransaction of business and is in good standing under the laws of each otherjurisdiction in which it owns or leases property or conducts any business so asto require such qualification, except where the failure to be in good standing,to have such power or authority, or to be so qualified has not had and is notreasonably likely to have a material adverse effect on the Noteholders of theSeries 2002-A Notes.

 

(d)           Asof the Closing Date, each Transaction Document to which the Seller or Providianis a party shall have been duly authorized, executed and delivered by theSeller or Providian, as applicable.

 

(e)           Asof the Closing Date and as of each Increase Date, Providian in its capacity asAccounts Owner shall have fulfilled all of its obligations under the

 

14

----

 

Account Ownership Agreement except wherefailure to fulfill such obligations would not have a material adverse effect onthe Noteholders of the Series 2002-A Notes.

 

(f)            Asof the Closing Date and as of each Increase Date, (i) the sale of the Series2002-A Notes by the Seller pursuant to this Agreement, the compliance by eachof the Seller and Providian with all of the provisions of the other TransactionDocuments to which it is a party and any other agreement or document enteredinto by the Seller and Providian in connection therewith, and the consummationof the transactions herein and therein contemplated, will not conflict with orresult in a breach of any of the terms or provisions of, or constitute adefault under, any indenture, mortgage, deed of trust, loan agreement or otheragreement or instrument to which the Seller or Providian is a party or by whichthe Seller or Providian is bound or to which any of the property or assets ofthe Seller or Providian is subject except where such conflict, breach ordefault will not have a material adverse effect on the Noteholders of theSeries 2002-A Notes, nor will such action result in any violation of theprovisions of the organizational documents of the Seller or Providian or anystatute or any order, rule or regulation of any court or governmental agency orbody having jurisdiction over the Seller or Providian or any of its propertiesexcept where such violation will not have a material adverse effect on theNoteholders of the Series 2002-A Notes; and (ii) no consent, approval,authorization, order, registration, filing or qualification of or with any suchcourt or governmental agency or body is required for the issue and sale of theSeries 2002-A Notes by the Seller pursuant to this Agreement or theconsummation by the Seller or Providian of the other transactions contemplatedby the Transaction Documents to which the Seller or Providian is a party andany other agreement or document entered into by the Seller or Providian inconnection therewith, except as have been obtained and except where failure toobtain such consent, approval, authorization, order, registration, filing orqualification would not have a material adverse effect on the Noteholders ofthe Series 2002-A Notes.

 

(g)           Otherthan as set forth in the Offering Circular, as of the date thereof and as ofthe Closing Date, there are no legal or governmental proceedings pending towhich the Seller or Providian or any of their subsidiaries, if any, is a partyor to which any property of the Seller or Providian or any of their respectivesubsidiaries, if any, is the subject which could reasonably be expected,individually or in the aggregate, to have a material adverse effect on thecurrent or future financial position, equity or results of operations of theSeller and its subsidiaries, if any, taken as a whole, or Providian and itssubsidiaries, taken as a whole; and, to the best of  the Seller’s and Providian’s knowledge, no such proceedings arethreatened or contemplated by governmental authorities or threatened by others;except in the case of any such pending, threatened or contemplated proceedingswhere such proceedings would not have a material adverse effect on theNoteholders of the Series 2002-A Notes.

 

(h)           Providianwill, as of the Closing Date and as of the date such Receivables aretransferred to the Seller, own the Receivables to be transferred by Providianto the Seller on such date pursuant to the Receivables Purchase Agreement, freeand clear of any lien, mortgage, pledge, charge, security interest or otherencumbrance other than liens and other encumbrances permitted under theTransaction

 

15

----

 

Documents and other than liens and otherencumbrances that would not have a material adverse effect on the Noteholdersof the Series 2002-A Notes, and, as of the Closing Date and as of the date suchReceivables are transferred to the Seller, Providian will have full power andauthority to sell and deliver such Receivables to be sold to the Seller on suchdate under the Receivables Purchase Agreement and as of the Closing Date willhave duly authorized such assignment and delivery to the Seller by allnecessary action, in each case except where failure to have such power andauthorization would not have a material adverse effect on the Noteholders ofthe Series 2002-A Notes.

 

(i)            Asof the Closing Date and as of each date that newly created Receivables aretransferred to the Seller, the Seller will have full power and authority tosell and deliver the Receivables to the Trust under the Transfer and ServicingAgreement as of such date and as of the Closing Date will have duly authorizedsuch assignment and delivery to the Trust by all necessary action, in each caseexcept where failure to have such power and authorization would not have amaterial adverse effect on the Noteholders of the Series 2002-A Notes.

 

(j)            Anytaxes, fees and other governmental charges due and payable by Providian or theSeller in connection with the execution, delivery and performance of theTransaction Documents to which Providian or the Seller is a party will havebeen paid at or prior to the Closing Date and on or prior to the Increase Date,as applicable, in each case except where failure to pay such taxes, fees orother charges would not have a material adverse effect on the Noteholders ofthe Series 2002-A Notes.

 

(k)           Asof the Closing Date and as of each date that newly created Receivables aretransferred to the Seller, the Receivables to be assigned by Providian to theSeller and by the Seller to the Trust on such date will have been duly andvalidly assigned and delivered by Providian to the Seller and by the Seller to theTrust, in each case except where failure to assign and deliver such Receivableswould not have a material adverse effect on the Noteholders of the Series2002-A Notes.

 

(l)            TheSeller is not, or after giving effect to the offering and sale of the Series2002-A Notes to the VFN Purchasers under this Agreement, or the sale of theSecurities under the Certificate Purchase Agreement, or the issuance of theSeries 2002-1 Notes by the Trust will not be, an “investment company,” as suchterm is defined in the Investment Company Act of 1940, as amended.

 

Section 4.2             Covenants.  Providian shall not take any action toprevent the sale of the Receivables to the Seller except in accordance with theReceivables Purchase Agreement and Section 2.01(b) and Section 2.02 of theAccount Ownership Agreement, and Seller shall not take any action to preventthe sale of the Receivables to the Trust except in accordance with theReceivables Purchase Agreement and the Transfer and Servicing Agreement.

 

 

16

----

 

ARTICLE V

INDEMNIFICATION

 

Providian shall indemnify and hold harmlesseach VFN Purchaser and its respective members, officers, directors, employees,agents and representatives, against any and all losses, claims, damages, liabilitiesor expenses (including reasonable legal and accounting fees) (collectively, “Losses”),as incurred (payable promptly upon written request), for or on account of orarising from or in connection with or otherwise with respect to any breach ofany representation, warranty or covenant in this Agreement or in anycertificate delivered pursuant hereto of Providian or, as long as Providian isthe Accounts Owner, of the Transferor.

 

ARTICLE VI

 COMMITMENT BY SECONDARY PURCHASER

 

On any Business Day that the Net PurchaseRequirement is not satisfied in full due to a Member being an Affected Member,or due to the inability of the Purchaser to fund the Affected Member’s pro ratashare of the Net Purchase Requirement, each Affected Member shall, in itscapacity as a Secondary Purchaser hereunder and in accordance with Section4.02(a) of the Series 2002-A Indenture Supplement and subject to the terms andconditions set forth herein, and only to the extent of any amounts availableunder such Secondary Purchaser’s Commitment Amount, purchase an additionalbalance in such Member’s Series 2002-A Notes in an amount equal to the AffectedAmount.

 

ARTICLE VII

MISCELLANEOUS

 

Section 7.1             Waivers;Remedies.  No failure or delay onthe part of any VFN Purchaser in exercising any power, right or remedy underthis Agreement shall operate as a waiver thereof, nor shall any single orpartial exercise of any such power, right or remedy preclude any other furtherexercise thereof or the exercise of any other power, right or remedy.  The rights and remedies herein providedshall be cumulative and nonexclusive of any rights or remedies provided by law.

 

Section 7.2             Amendments,Waivers and Consents.  No amendmentto or waiver of any provision of this Agreement, nor any consent to departureby Seller or any VFN Purchaser therefrom, shall be effective unless the sameshall be in writing and signed by the parties hereto and unless the RatingAgencies shall have confirmed in writing that such amendment or waiver will notresult in the reduction or withdrawal of the then current ratings of theSecurities or the rated Series 2002-1 Notes; provided, however, that hisAgreement may be amended by the parties hereto without prior notification to,or confirmation from, the Rating Agencies to cure any ambiguity or to corrector supplement any provisions in this Agreement that may be inconsistent withany other provision herein or in the Series 2002-A Indenture Supplement or theSeries 2002-1 Indenture Supplement.

 

17

----

 

Section 7.3             Notices,Etc.  Except where instructions ornotices are authorized herein to be given by telephone, all notices, demands,instructions and other communications required or permitted to be given to ormade upon any party hereto shall be in writing and shall be sent by mail,overnight delivery service, facsimile transmission (with a printed or telephoneconfirmation of the receipt thereof) or email (with a telephone confirmation ofthe receipt thereof) and shall be deemed to be given for purposes of thisAgreement upon receipt.  Unlessotherwise specified in a notice sent or delivered in accordance with theforegoing provisions of this Section 7.3, notices, demands, instructions andother communications in writing shall be given to or made upon the respectiveparties hereto at their respective addresses or facsimile numbers indicated onthe attached Annex A.

 

Section 7.4             GoverningLaw; Submission to Jurisdiction.  THIS AGREEMENT SHALL BE GOVERNED BY ANDCONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OFNEW YORK.  THE PARTIES HERETO EACHHEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICTCOURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURTSITTING IN THE CITY OF NEW YORK FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISINGOUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

Section 7.5             Severability.  Any provisions of this Agreement which areprohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,be ineffective to the extent of such prohibition or unenforceability withoutinvalidating the remaining provisions hereof, and any such prohibition orunenforceability in any jurisdiction shall not invalidate or render unenforceablesuch provision in any other jurisdiction.

 

Section 7.6             Counterparts.  This Agreement may be executed in any numberof counterparts, each of which so executed shall be deemed to be an original,but all of such counterparts shall together constitute but one and the sameinstrument.

 

Section 7.7             NonpetitionCovenant. Notwithstanding any prior termination of this Agreement,each VFN Purchaser agrees that it will not, prior to the date which is one yearand one day after the day upon which the Securities and the Series 2002-A Noteshave been paid in full, acquiesce, petition or otherwise invoke or cause theSeller or the Trust to invoke the process of any Governmental Authority for thepurpose of commencing or sustaining a case against the Seller or the Trustunder any Federal or state bankruptcy, insolvency or similar law or appointinga receiver, conservator, liquidator, assignee, trustee, custodian, sequestratoror other similar official of the Seller or the Trust or any substantial part ofits property or ordering the winding-up or liquidation of the affairs of theSeller or the Trust.

 

Section 7.8             Successorsand Assigns.This Agreement shall be binding on the parties hereto and theirrespective successors and permitted assigns; provided, however,that (i) the Seller may not assign any of its rights or delegate any of itsduties hereunder without the prior written consent of each VFN Purchaser andeach other party

 

18

----

 

to this Agreement (providedthat the Seller may assign its rights hereunder in connection with theassignment or termination of Providian’s role as Accounts Owner in accordancewith the Transaction Documents) and (ii) a VFN Purchaser may not assign any ofits obligations hereunder without the prior written consent of the AccountsOwner, which consent shall not be unreasonably withheld; provided that aVFN Purchaser may assign its rights and obligations hereunder to any Person aslong as the credit support provided by its Credit Support Providers anddelivered to the Seller on the Closing Date in connection with the transactionscontemplated by this Agreement remain in full force and effect with respect tosuch transferee and provided, further, that each Rating Agencyshall have been given prior notice of any assignment by the Transferor or anyVFN Purchaser and each of the Rating Agencies shall have notified theTransferor, the Accounts Owner, the VFN Purchasers and the Indenture Trustee inwriting that such assignment will not result in a reduction or withdrawal ofthe then current rating of the Securities or any of the rated Series 2002-1Notes.

 

Section7.9             No Recourse.)       (a)  No recourse under or with respect to anyobligation, covenant or agreement (including, without limitation, the payment ofany fees or any other obligations) of Providian, the Seller or any VFNPurchaser as contained in this Agreement or any other agreement, instrument ordocument entered into by it pursuant hereto or in connection herewith shall behad against any administrator of any of them or any incorporator, affiliate,stockholder, officer, employee, member, manager or director of any of them orof any such administrator, as such, by the enforcement of any assessment or byany legal or equitable proceeding, by virtue of any statute or otherwise; itbeingexpresslyagreedandunderstood thatthe agreements of each of Providian, the Seller and the VFN Purchaserscontained in this Agreement and all of the other agreements, instruments anddocuments entered into by it pursuant hereto or in connection herewith are, ineach case, solely the corporate or limited liability company obligations of anysuch entity; and that no personal liability whatsoever shall attach to or beincurred by any administrator of Providian, the Seller or any VFN Purchaser orany incorporator, stockholder, affiliate, officer, employee, member, manager ordirector of Providian, Seller or any VFN Purchaser or of any suchadministrator, as such, or any of them, under or by reason of any of theobligations, covenants or agreements of Providian, Seller or any VFN Purchaser,contained in this Agreement or in any other such instrument, document oragreement, or which are implied therefrom, and that any and all personalliability of every such administrator of such Providian, Seller or VFNPurchaser and each incorporator, stockholder, affiliate, officer, employee,member, manager or director of Providian, Seller or VFN Purchaser or of anysuch administrator, or any of them, for breaches by Providian, Seller or VFNPurchaser of any such obligations, covenants or agreements, which liability mayarise either at common law or in equity, by statute or constitution, orotherwise, is hereby expressly waived as a condition of, and in considerationfor, the execution of this Agreement.

 

(b)           Theprovisions of this Section 7.9 shall survive the termination of this Agreement.

 

The obligations of the Seller arising underthis Agreement shall be payable solely from amounts available therefor inaccordance with the Series 2002-A Indenture

 

19

----

 

Supplement and amountsotherwise released by the Trust to the Transferor as holder of the TransferorAmount or any other interest in the Trust.

 

Section 7.10           Further Assurances.

 

(a)           Eachof Providian and the Seller agrees to do such further acts and things and toexecute and deliver to each VFN Purchaser and Servicer such additional assignments, agreements, powersand instruments as are reasonably required by such party to carry into effect thepurposes of this Agreement or to better assure and confirm unto such party itsrights, powers and remedies hereunder.

 

(b)           EachVFN Purchaser each agrees to do such further acts and things and to execute anddeliver to Providian and the Seller such additional assignments, agreements,powers and instruments as are reasonably required by such party to carry intoeffect the purposes of this Agreement or to better assure and confirm unto suchparty its rights, powers and remedies hereunder.

 

20

----

 

IN WITNESS WHEREOF, the parties hereto haveexecuted and delivered this Series 2002-A Variable Funding Notes PurchaseAgreement as of the date first written above.

 

 
|   | PACCT, LLC,                                       |
|--------|---------------------------------------------------|
|   | as Seller                                         |
|   |                                              |   |
|   | By:                                               |   |
|   |                                              | Name: |
|   |                                              | Title: |
|   |                                              |   |
|   | PROVIDIAN NATIONAL BANK                           |
|   | in its individual capacity and as Accounts  Owner |
|   |                                              |   |
|   | By:                                               |   |
|   |                                              | Name: |
|   |                                              | Title: |

 

 

Acknowledged by the Servicer solely with respect

to the definition of “Commitment Amount” and

Sections 2.3, 3.3(a) and 7.10.

 

 
| By:    |   |   |
|--------|--------|--------|
| Name:  |
| Title: |

 

21

----

 
|   | CSG, LLC                                         |
|--------|--------------------------------------------------|
|   | as Purchaser                                     |
|   |                                             |   |
|   | On behalf of MTGLQ Investors, L.P.               |
|   |                                             |   |
|   |                                             |   |
|   | By:                                              |   |   |
|   |                                             | Name: |
|   |                                             | Title: |
|   |                                             |   |
|   |                                             |   |
|   | On behalf of SB Funding Corp.                    |
|   |                                             |   |
|   |                                             |   |
|   | By:                                              |   |   |
|   |                                             | Name: |
|   |                                             | Title: |
|   |                                             |   |
|   |                                             |   |
|   | On behalf of CompuCredit Acquisition Corporation |
|   |                                             |   |
|   |                                             |   |
|   | By:                                              |   |   |
|   |                                             | Name: |
|   |                                             | Title: |
|        |                                                  |  |  |  |

 

22

----

 
|   | MTGLQ INVESTORS, L.P.               |
|--------|-------------------------------------|
|   | as Secondary Purchaser              |
|   |                                |   |
|   |                                |   |
|   | By:                                 |   |   |
|   |                                | Name: |
|   |                                | Title: |
|   |                                |   |
|   |                                |   |
|   | SB FUNDING CORP.                    |
|   | as Secondary Purchaser              |
|   |                                |   |
|   |                                |   |
|   | By:                                 |   |   |
|   |                                | Name: |
|   |                                | Title: |
|   |                                |   |
|   |                                |   |
|   | COMPUCREDIT ACQUISITION CORPORATION |
|   | as Secondary Purchaser              |
|   |                                |   |
|   |                                |   |
|   | By:                                 |   |   |
|   |                                | Name: |
|   |                                | Title: |
|        |                                     |  |  |  |  |

 

23

----

 

ANNEX A

 

NOTICES

 

**Forpurposes of funding Net Purchase Requirements**:

 

If to the Purchaser (LLC):

 

CompuCreditCorporation

245 PerimeterCenter Pkwy, Suite 600

Atlanta,Georgia  30346

Attn:  John Foster

Telephone:  (770) 206-6289

Email:  John.Foster@compucredit.com

 

With copies to

Ashley L.Johnson

Telephone:  (770) 206-6276

Fax:  (770) 206-6181

Email:  Ashley.Johnson@compucredit.com

 

And to

RohitKirpalani

GeneralCounsel

Telephone:  (770) 206-6275

Fax:  (770) 206-6187

Email:  rohit.kirpalani@compucredit.com

 

If to the Secondary Purchasers:

 

MTGLQ Investors,L.P.

c/o Goldman,Sachs & Co.

85 BroadStreet

New York, NewYork 10904

Attn: PeterAberg

Telephone:  (212) 902-1828

Fax: (212)902-1828

Email:  Peter.Aberg@gs.com

 

SB FundingCorp.

c/o SalomonSmith Barney Inc.

390 GreenwichStreet, 6th Floor

New York, NewYork 10013

Attn: WilliamGrady

Telephone:  (212) 723-9552

Fax Number:(212) 723-8591

Email:  William.Grady@ssmb.com

 

24

----

 

CompuCreditAcquisition Corporation

245 PerimeterCenter Pkwy, Suite 600

Atlanta,Georgia  30346

Attn:  John Foster

Telephone:  (770) 206-6289

Email:  John.Foster@compucredit.com

 

With copies to

Ashley L.Johnson

Telephone:  (770) 206-6276

Fax:  (770) 206-6181

Email:  Ashley.Johnson@compucredit.com

 

And to

RohitKirpalani

General Counsel

Telephone:  (770) 206-6275

Fax:  (770) 206-6187

Email:  rohit.kirpalani@compucredit.com

 

If to the Credit Support Providers:

 

On behalf ofMTGLQ Investors, L.P.

The Goldman Sachs Group Inc.

c/o Goldman, Sachs & Co.

85 Broad Street

New York, New York 10904

Attn: Peter Aberg

Telephone:  (212) 902-1828

Fax: (212) 902-1828

Email:  Peter.Aberg@gs.com

 

On behalf of SB Funding Corp.

Salomon Smith Barney Holdings Inc.

c/o Salomon Smith Barney Inc.

390 Greenwich Street, 6th Floor

New York, New York 10013

Attn: William Grady

Telephone:  (212) 723-9552

Fax Number: (212) 723-8591

Email:  William.Grady@ssmb.com

 

On behalf ofCompuCredit Acquisition Corporation

CompuCredit Corporation

245 Perimeter Center Pkwy, Suite 600

Atlanta, Georgia  30346

Attn:  John Foster

Telephone:  (770) 206-6289

Email: John.Foster@compucredit.com

 

25

----

 

With copies to

Ashley L. Johnson

Telephone:  (770) 206-6276

Fax:  (770)  206-6181

Email: Ashley.Johnson@compucredit.com

 

And to

Rohit Kirpalani

General Counsel

Telephone:  (770) 206-6275

Fax:  (770) 206-6187

Email: rohit.kirpalani@compucredit.com

 

26

----

 

 

**Forall other purposes:**

 

If to PACCT, LLC

PACCT, LLC

c/o Providian Financial Corporation

201 Mission Street

San Francisco, California 94105

Attn: Treasurer

Fax:  415-278-6023

 

With a copy to:

 

Providian Financial Corporation

201 Mission Street

San Francisco, California 94105

Attn: General Counsel

Fax:  415-278-6028

 

If to Providian National

Bank:

Providian National Bank

c/o Providian Financial Corporation

201 Mission Street

San Francisco, California 94105

Attn: Treasurer

Fax:  415-278-6023

 

With a copy to:

 

Providian Financial Corporation

201 Mission Street

San Francisco, California 94105

Attn: General Counsel

Fax:  415-278-6028

 

If to the Purchaser (LLC):

 

CSG, LLC

c/o Salomon Smith Barney Inc.

390 Greenwich Street, 6th Floor

New York, New York 10013

Attn: William Grady

Fax: 212-723-8591

 

and

 

CSG, LLC

c/o Goldman, Sachs & Co.

85 Broad Street

 

27

----

 

New York, New York 10904

Attn: Peter Aberg

Fax: 212-902-1828

 

and

 

CSG, LLC

CompuCredit Corporation

245 Perimeter Center Pkwy, Suite 600

Atlanta, Georgia  30346

Attn:  Rohit Kirpalani

Fax:  (770)  206-6187

 

If to Secondary Purchasers:

 

MTGLQ Investors, L.P.

32 Old Slip, 29th Floor

New York, New York  10005

Attn:  Jay Strauss, Esq.

 

Copy to:

 

Skadden, Arps, Slate, Meagher & Flom LLP

4 Times Square

New York, New York 10036

Attn: Richard Kadlick, Esq.

 

 

SB Funding Corp.

c/o Salomon Smith Barney Inc.

390 Greenwich Street, 6th Floor

New York, New York 10013

Attn: William Grady

 

 

CompuCredit Acquisition Corporation

101 Convention Center Drive

Suite 850-15B

Las Vegas, Nevada  89109

Attn: General Counsel

 

Copy to:

 

CompuCredit Corporation

245 Perimeter Center Parkway

Suite 600

Atlanta, Georgia  30346

Attn: General Counsel

 

and

 

28

----

 

Troutman Sanders LLP

600 Peachtree Street N.E., Suite 5200

Atlanta, Georgia  30308-2216

Attn: Robert W. Grout, Esq.

 

29

----

 

ANNEX B

 

 

**Procedures for Funding the Variable FundingNotes**

 

1)     Pursuant to the Series 2002-1 IndentureSupplement, during the Reinvestment Period, Special Reinvestment Period andPartial Reinvestment Period, Collections that will be available on eachBusiness Day may be remitted to PACCT, LLC to reduce the amount of funding madeby the Accounts Owner.  This BusinessDay is referred to as an “Origination Date”.

 

2)     On any Business Day upon which additional fundingis required due to a net increase in the Receivables Balance on the relatedOrigination Date, the Accounts Owner (or the Servicer after the InterimServicing Period) shall submit a Daily Settlement Report on the morning of thethird Business Day following the Business Day of the net increase (this thirdBusiness Day is referred to as the “Increase Date”), evidencing suchinsufficiency to the Servicer (if during the Interim Servicing Period), the LLCAdministrator, the Note Administrator and each of the Secondary Purchasers nolater than 7:00 a.m. (New York City time) on such Increase Date.

 

3)     On the Increase Date, if available funds that haveaccumulated since the first Business Day in that calendar month in theCollection Account held by the Note Administrator are not sufficient to fundthe amount requested with respect to the related Origination Date, the Servicershall request the Reserve Account Administrator withdraw funds from the ReserveAccount to the extent required in order to purchase a new balance in theVariable Funding Note (the “VFN”) which is held by the Purchaser.  The Reserve Account will be created pursuantto a Reserve Account Agreement between the LLC and the Reserve AccountAdministrator named therein.

 

4)     As provided in the Series 2002-1 IndentureSupplement and in the Amended and Restated LLC Agreement, if on any IncreaseDate funding is required and to the extent Collections, amounts in the ReserveAccount are insufficient to fund new Receivables for that date, each of theMembers will be notified and will be required to make mandatory capitalcontributions as needed that day equal to its VFN Commitment Share of theamount needed to fund the additional VFN balance and to restore the ReserveAccount balance.

 

5)     To the extent that a Member defaults in makingsuch contribution or to the extent the LLC is unable to fund such Member’s VFNCommitment Share of the Net Purchase Requirement (an “Affected Member”),the Servicer, on behalf of the Note Administrator, will exercise the rightsunder the VFN Purchase Agreement to cause the Affected Member in its capacityas Secondary Purchaser to directly fund a portion of the VFN equal to theamount that the Affected Member should have contributed to the LLC for suchpurpose.

 

30

----

 

6)     VFN purchases by a Secondary Purchaser will belimited to the lesser of (i) the available VFN Purchase Commitment applicableto such Secondary Purchaser and (ii) such Secondary Purchaser’s VFN CommitmentShare (as defined in the VFN Funding Agreement) of the amount requested.  Any purchase by a Secondary Purchaser willbe made directly by such Secondary Purchaser through a VFN held by theSecondary Purchaser.  All VFNs(including the VFN held by the LLC) shall be VFNs of the same Series.

 

7)     The performance of a Member’s obligations underthe VFN Purchase Agreement will be guaranteed or otherwise supported by suchMember’s Credit Support Provider.  If aSecondary Purchaser fails to fund its commitment pursuant to the VFN FundingAgreement, the Servicer on behalf of PACCT, LLC will notify such Member’sCredit Support Provider and the non-affected Members and will enforce theCredit Support Provider’s obligations to fund or to cause such Secondary Memberto fund the  obligations of theSecondary Member under the VFN Purchase Agreement in accordance with theapplicable credit support agreement.

 

8)     If a Credit Support Provider fails to fulfill suchobligations, the non-affected Member or Members will have the opportunity tomake a loan on behalf of the Affected Member to the applicable LLC to fund suchcommitment.  If such loans are notrepaid to the non-affected Member or Members making such loan, PercentageInterests in the LLC will be adjusted in accordance with the terms of theAmended and Restated LLC Agreement.

 

9)     Under the VFN Purchase Agreement, each Member’savailable commitment will be reduced from time to time by its share of fundsused to purchase VFNs, whether coming from capital contributions, payments madeunder the VFN Purchase Agreement, draws under the applicable credit supportagreements or amounts withdrawn from the Reserve Account.  The commitments will also be subject tochange according to a dynamic formula based on certain minimums and theaggregate Open To Buy amounts with respect to the Accounts.  The Note Administrator will be responsiblefor monitoring such commitment amounts, provided that the Servicer shallfurnish the Note Administrator with all information necessary to monitor suchamounts.

 

10)   To the extent funding does not occur by the end ofsuch Increase Date, the funding will be deemed to have been made by the holderof the Transferor Amount.  The Servicershall notify the LLC and each of the applicable Members and Credit SupportProviders.  In accordance with the termsof the Accounts Ownership and Administration Agreement, during the next twoBusiness Days, the non-affected Members may fund the Affected Member’s share inaccordance with the terms of the Amended and Restated LLC Agreements.  Further, the Accounts Owner and theSecondary Purchasers may agree to waive certain conditions and allow suchSecondary Purchasers to fund requested amounts after the second Business Day.

 

31

----

 

**Timeline**

**(eachof the following times is the deadline for such actions on an Increase Date andis New York City time)**

 

•       **7:00 a. m.**  The Accounts Owner (during the InterimServicing Period) or the Servicer (after the Interim Servicing Period) willissue the Daily Settlement Report with respect to the related Origination Dateto PACCT, the LLC Adminsitrator, the Note Administrator, the Servicer (duringthe Interim Servicing Period) and the Members outlining the funding excess orshortfall for the related Origination Date.

•       **11:00 a.m.**  The Servicer shall submit a report to theNote Administrator outlining any shortfall and the report shall:

a)     Determine the amount of funds available in theCollection Account from Collections on Receivables since the first Business Dayin that calendar month.

b)    If the funds calculated in (a) above are sufficientto cover the shortfall, then the Servicer will instruct the Note Administratorto remit such funds to PACCT, LLC and will submit a report to the IndentureTrustee, the Note Administrator, PACCT, LLC and the Members, with no furtheraction required.

c)     If the funds calculated in (a) above are notsufficient to cover the shortfall, then the Servicer, acting on behalf of theNote Administrator, will determine whether VFN funding is necessary, whetheramounts in the Reserve Account will be adequate for such purpose, whetheradditional amounts will be required from the LLC or its Members to purchase thenew balance of the VFN and whether the LLC will be required to make a paymentto the Reserve Account to restore it to its required balance.  The Servicer will submit a report to theNote Administrator, PACCT, LLC and the Secondary Purchasers outlining theseamounts.

d)    In addition, if the amount in the Reserve Accountis sufficient to cover the required VFN funding, then the Servicer willinstruct the Reserve Account Administrator (in accordance with the noticerequirements of Section 7.3 of the VFN Purchase Agreement) to remit such fundsto PACCT, LLC and shall instruct the Note Administrator to remit any fundsavailable in the Collection Account from Collections on Receivables since thefirst Business Day of the current month (in accordance with the reportsubmitted from the Servicer by 11:00 a.m.), with no further action required.

•       **1:00p.m.**  The Members will confirm to the Servicer theamount of their respective capital contributions to be made on such Day, andwill initiate wires to PACCT, LLC no later than 3:00 p.m.

 

 **If, by 1:00p.m., a Member fails to confirm to the Servicer that it will make its requiredcapital contribution, it will be deemed an Affected Member. In such event, theServicer shall use commercial reasonable efforts to implement the followingsteps (the “Further Administrative Steps”):**

**i.****     **The Servicer shallexercise the rights under the VFN Purchase Agreement to cause the AffectedMember in its capacity as Secondary Purchaser to directly fund a portion of theVFN equal to the amount that the Affected Member should have contributed to theLLC for such purpose;

 

32

----

 

**ii.****   **If a Secondary Purchaserfails to fund its commitment pursuant to the VFN Purchase Agreement, theServicer on behalf of PACCT, LLC will notify such Member’s Credit SupportProvider and the non-affected Members and will enforce the Credit SupportProvider’s obligations to fund or to cause such Secondary Member to fundthe  obligations of the Secondary Memberunder the VFN Purchase Agreement in accordance with the applicable credit supportagreement; and

**iii.****  **If a Credit SupportProvider fails to fulfill such obligations, the non-affected Member or Memberswill have the opportunity to make a loan on behalf of the Affected Member tothe applicable LLC to fund such commitment. If such loans are not repaid to the non-affected Member or Membersmaking such loan, Percentage interests in the LLC will be adjusted inaccordance with the terms of the Amended and Restated LLC Agreement.  The Servicer shall inform the non-affectedMember or Members of this opportunity and will coordinate with such Members toconduct the fund transfer process.

•         **5:30 p.m.**  Servicer shall determine the aggregateamount funded that Business Day with respect to the Net Purchase Requirementand shall confirm the available Commitment Amounts with the Note Administrator,and shall notify the Note Administrator and the Accounts Owner of therespective amounts funded by each holder of a VFN.  The Note Administrator shall increase the applicable VFN NoteBalance on the registry maintained by the Note Administrator, and the Servicershall maintain records of the available commitments under the VFN PurchaseAgreement.  The Servicer will submit areport to the Accounts Owner and to each Secondary Purchaser at the end of eachIncrease Date Day outlining the day’s activity.

 

If the Servicer is notified bythe Note Administrator that a wire reported on the 5:30 p.m. report from anyIncrease Day was not in fact received, then the Servicer shall use commerciallyreasonable efforts to implement the Further Administrative Steps.

 

33

----

 

 

Procedures acknowledged by:

 

COMPUCREDIT CORPORATION

as Servicer

 

 
| By:                                  |   |   |
|--------------------------------------|--------|--------|
| Name :                               |   |
| Title:                               |   |
|                                 |   |   |
| COMPUCREDIT  ACQUISITION CORPORATION |
| as LLC Administrator                 |
|                                 |   |   |
| By:                                  |   |   |
| Name:                                |   |
| Title:                               |   |
|                                 |   |   |
| CITIBANK, N.A.                       |   |
| as Note Administrator                |   |
|                                 |   |   |
| By:                                  |   |   |
| Name :                               |   |
| Title:                               |   |

 

34

----