Document:

EXHIBIT 10.3

 

CSGQ TRUST, SERIES 2002-A VARIABLE FUNDING

NOTES

PURCHASE AGREEMENT

 

Dated as of June 25, 2002

 

 

PACCT, LLC

Seller

 

 

PROVIDIAN NATIONAL BANK

in its individual capacity and as Accounts

Owner

 

 

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 FUNDING

NOTES PURCHASE AGREEMENT (as amended, restated, modified or otherwise modified

and in effect, this “Agreement”), dated as of June 25, 2002, by and

among PACCT, LLC, a Delaware limited liability company, as Seller (in such

capacity, and together with any of its successors or permitted assigns, the “Seller”),  Providian National Bank, in its individual

capacity (“Providian”) and as Accounts Owner (in such capacity, the “Accounts

Owner”), CSG, LLC, a Delaware limited liability company, as Purchaser (in

such capacity, the “Purchaser”), MTGLQ Investors, L.P., SB Funding Corp.

and CompuCredit Acquisition Corporation, as Secondary Purchasers (each, a “Secondary

Purchaser” and collectively, with the Purchaser, the “VFN Purchasers”).

 

RECITALS

 

The Seller proposes to sell to the VFN

Purchasers on the terms and subject to the conditions set forth herein, CSGQ

Trust, Series 2002-A Variable Funding Notes (the “Series 2002-A Notes”).  Subject to the terms and conditions set

forth in this Agreement and the Series 2002-A Indenture Supplement (as defined

or referenced herein), the outstanding principal amount of the Series 2002-A

Notes may be decreased and increased from time to time.

 

The Receivables and other Trust Assets (each

as 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 Agreement

dated as of June 25, 2002 (as amended, restated, supplemented or otherwise

modified and in effect, the “Receivables Purchase Agreement”) between

Providian, as seller, and the Transferor. 

Upon purchase, the Transferor will convey the Receivables and other

Trust Assets to CSGQ Trust (the “Trust”), a business trust organized

under the laws of the State of Delaware, pursuant to a Transfer and Servicing

Agreement dated as of June 25, 2002 (as amended, restated, supplemented or

otherwise 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 make

payments on such notes from collections on the Receivables.

 

The Series 2002-1 Notes will be issued

pursuant to the Master Indenture dated as of June 25, 2002 (as amended,

restated, supplemented or otherwise modified and in effect, the “Master

Indenture”), among the Trust, U.S. Bank National Association, as Indenture

Trustee (the “Indenture Trustee”) and Citibank, N.A., as the Note

Administrator (the “Note Administrator”) and pursuant to the CSGQ Trust,

Series 2002-1 Indenture Supplement, Term Notes, dated as of June 25, 2002 (as

amended, restated,

 

 

supplemented or otherwise modified and in

effect, the “Series 2002-1 Indenture Supplement”) among the Trust, the

Indenture Trustee and the Note Administrator. 

The Series 2002-A Notes will be issued pursuant to the Master Indenture

and the CSGQ Trust, Series 2002-A Indenture Supplement, Variable Funding Notes,

dated as of June 25, 2002 (as amended, restated, supplemented or otherwise

modified and in effect, the “Series 2002-A Indenture Supplement”) among

the Trust, the Indenture Trustee and the Note Administrator.

 

Pursuant to an Account Ownership and

Administration Agreement dated as of June 25, 2002 (as amended, restated,

supplemented or otherwise modified and in effect, the “Account Ownership

Agreement”) among the Accounts Owner, the Servicer and the Purchaser, the

Accounts Owner will, during the period specified therein, own the Accounts (as

defined or referenced herein), issue credit cards related to the Accounts and

perform certain services with respect thereto.

 

Pursuant to the Series 2002-1 Indenture

Supplement, the Servicer will, subject to the conditions specified therein,

apply collections from the Receivables toward the purchase of newly created

Receivables that have been conveyed to the Trust.  To the extent collections from the Receivables are insufficient

or unavailable to purchase such newly created Receivables, the Note

Administrator will require the Purchaser to fund such newly created Receivables

in accordance with the terms of the Series 2002-A Indenture Supplement and this

Agreement and will increase the principal balance of the Purchaser’s Series

2002-A Note accordingly.

 

If and to the extent the Purchaser fails to

fund any Net Purchase Requirement due to the failure on the part of any of its

Members to make a required capital contribution, or due to the inability of the

Purchaser to fund a Member’s pro rata share of the Net Purchase Requirement in

accordance with the terms and conditions of the Amended and Restated LLC

Agreement, such Member, in its capacity as Secondary Purchaser, shall fund an

increase in such Member’s Series 2002-A Note in an amount equal to the amount

of such capital contribution, up to such Member’s Commitment Amount and subject

to the other terms and conditions set forth in the Series 2002-A Indenture

Supplement and this Agreement.  Each

Secondary Purchaser has obtained credit support for its obligations hereunder

from 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 Receivables

or by the VFN Purchasers pursuant to this Agreement and the 2002-A Indenture

Supplement initially will be funded by the Accounts Owner, to the extent

provided in the Accounts Ownership Agreement and Related Agreements, and will result

in 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 specified

herein or in the Transfer and Servicing Agreement, the Master Indenture or the

Series 2002-A Indenture Supplement, and shall include in the singular number

the plural and in the plural number the singular and the masculine of such

terms as well as the feminine and neuter of such terms, and the following terms

shall have the following meanings:

 

“Accounts Owner” shall have the

meaning specified in the Introduction.

 

“Account Ownership Agreement” shall

have the meaning specified in the Recitals.

 

“Affected Amount” shall have the

meaning specified in Section 2.3(a).

 

“Affected Member” shall have the

meaning specified in Section 2.3(a).

 

“Aggregate VFN Commitment” for any

Business Day shall mean:

 

(i) if such Business Day does not occur

during the Scheduled Amortization Period or any Rapid Amortization Period, the lesser of:

 

(a) $200

million; and

 

(b) the greater of:

(1) 75% of the aggregate Open to Buy as of the end of the prior Business

Day; 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 the

Scheduled Amortization Period or any Rapid Amortization Period, the lesser of:

 

(a) $200

million; and

 

(b) the greater of:

(1) the product of:

(x) the aggregate Receivables created under Open Accounts;

 

3

 

(y) the greater of the

highest Maximum Payment Rate calculated for each of the last three Monthly

Periods and the highest Maximum Purchase Rate calculated for each of the last

three 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 meaning

specified 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 MTGLQ

Investors, L.P., SB Funding Corp. and CompuCredit Acquisition Corporation.

 

“Cardholder” shall mean an applicant

and/or co-applicant in whose name an Account was established or is maintained

and/or who is obligated to repay the Receivables associated with such Account.

 

“Certificate Purchase Agreement” shall

mean the Pass-Through Amortizing Credit Card Trusts, Series 2002-1 Pass Through

Certificate Purchase Agreement, dated as of June 12, 2002, among Providian,

PACCT, LLC, Goldman, Sachs & Co. and Salomon Smith Barney Inc.

 

“Company” shall have the meaning

specified in the LLC Agreement.

 

“Closing Date” shall mean June 25,

2002.

 

“Commitment Amount” shall mean, with

respect 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 VFN

Commitment as of such Business Day, minus (ii) such Secondary Purchaser’s share

of all Increase Amounts funded since the Closing Date, whether through capital

contributions to the Purchaser, direct purchases by the Secondary Purchaser,

funds provided by any Credit Support Provider on behalf of such Secondary

Purchaser, amounts withdrawn from the Reserve Account that were allocable to

the Secondary Purchaser or distributions that would otherwise have been paid or

allocated to the Secondary Purchaser (including distributions to the Purchaser

or to CSG Funding, LLC for the O/C Invested Amount, the Class B Notes and the

Series 2002-A Notes which are allocable to the Secondary Purchaser) and which have

been 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 to

the Series 2002-A Notes (including principal distributions paid to the

Purchaser pursuant to the Series 2002-A Notes which constitute principal

distributions made on such portions

 

4

 

of the Purchaser’s Series 2002-A Note that

were funded by such Secondary Purchaser in its capacity as a Member of the

Purchaser), in each case as calculated by the Note Administrator based on

information provided by the LLC Administrator as needed to enable the Note

Administrator to perform such calculations.

 

 “Credit

Limit” shall mean, with respect to any Account on any Business Day, the

amount of credit available to the Cardholder pursuant to the terms of the

related 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., Salomon

Smith Barney Holdings Inc. and (iii) with respect to CompuCredit

Acquisition Corporation, CompuCredit Corporation.

 

“GAAP” shall mean generally accepted

accounting principles set forth in the opinions and pronouncements of the

Accounting Principles Board of the American Institute of Certified Public

Accountants and statements and pronouncements of the Financial Accounting

Standards 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 meaning

specified in the LLC Agreement.

 

“Interim Servicing Period” shall mean

the period from the Closing Date to but excluding the date the Servicer has

assumed all servicing responsibilities pursuant to the Interim Subservicing

Agreement.

 

“Interim Subservicing Agreement” shall

mean the Interim Subservicing Agreement dated as of June 25, 2002 by and among

Providian 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 without

independent investigation by any officer of Seller or Providian having a rank

or equivalent rank of at least Executive Vice President or Treasurer.

 

“LLC Administrator” shall mean

CompuCredit Acquisition Corporation pursuant to the Administration Agreement of

CSG, LLC, dated as of April 8, 2002, by and between the Company and CompuCredit

Acquisition Corporation.

 

“LLC Agreement” shall mean the Amended

and Restated Limited Liability Company Agreement of CSG LLC, dated as of June

25, 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 the

meaning specified in the Recitals.

 

5

 

“Maximum Payment Rate” shall mean,

with respect to any Monthly Period, (i) the aggregate amount of Collections

during such Monthly Period divided by (ii) the aggregate Receivables as of the

first day of such Monthly Period.

 

“Maximum Purchase Rate” shall mean,

with respect to any Monthly Period, (i) the aggregate amount of newly created

Receivables during such Monthly Period divided by (ii) the aggregate

Receivables as of the first day of such Monthly Period.

 

 “Member”

shall have the meaning specified in the LLC Agreement.

 

 “New

York Business Day” shall mean each Monday, Tuesday, Wednesday, Thursday and

Friday that is not a day on which banking institutions in New York City are

generally authorized or obligated by law or executive order to close.

 

“Offering Circular” shall mean the

offering circular supplement dated as of June 12, 2002 together with the base

offering circular dated as of June 12, 2002 prepared by the Seller, the

Purchaser and CSG, LLC in connection with the issuance and sale of the

Securities.

 

“Open Account” shall mean, on any

Business Day, an Account for which the Cardholder has charging privileges.

 

“Open to Buy” shall mean, for any Open

Account on any Business Day, the excess of (i) the Credit Limit and (b) the

amount of Receivables in such Account.

 

“Percentage Interest” shall have the

meaning specified in the LLC Agreement.

 

 “Providian”

shall have the meaning specified in the Introduction.

 

“Providian Information” shall have the

meaning specified in Section 4.1(a).

 

“Purchaser” shall have the meaning

specified in the Introduction.

 

“Qualified Transferee” shall mean each

of the Secondary Purchasers and each transferee of an Interest from a Member

the transfer to which was approved by the unanimous consent of all Members of

the LLC and for which the Rating Agency Condition has been met.

 

“Rapid Amortization Period” shall have

the 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 LLC

Administrator, the Issuer, the Note Administrator and the Indenture Trustee in

writing that such action will not result in a reduction or withdrawal of the

then existing ratings of any of the Series 2002-1 Notes.

 

6

 

“Receivables Purchase Agreement” shall

have the meaning specified in the Recitals.

 

“Sale and Purchase Agreement” shall

mean the Sale and Purchase Agreement (as amended, restated, supplemented or

otherwise modified and in effect) dated as of April 11, 2002 by and between the

Accounts Owner and the Purchaser, as amended by the Sale and Purchase Side

Agreement dated as of June 25, 2002 among the Purchaser, the Accounts Owner and

the Seller.

 

“Scheduled Amortization Period” shall

have the meaning specified in the Series 2002-1 Indenture Supplement.

 

“Securities” shall mean the

Pass-Through Certificates, Series 2002-1, to be purchased by Goldman, Sachs

& Co. and Salomon Smith Barney Inc. pursuant to the Certificate Purchase

Agreement.

 

“Secondary Purchaser” shall have the

meaning specified in the Introduction.

 

“Seller” shall have the meaning

specified in the Introduction.

 

“Series 2002-1 Indenture Supplement”

shall have the meaning specified in the Recitals.

 

“Series 2002-1 Notes” shall mean the

notes issued pursuant to the Series 2002-1 Indenture Supplement and the Master

Indenture.

 

“Series 2002-A Indenture Supplement”

shall have the meaning specified in the Recitals.

 

“Series 2002-A Notes” shall have the

meaning specified in the Recitals.

 

“Servicer” shall have the meaning

specified in the Recitals.

 

“Transaction Documents” shall mean,

collectively, this Agreement, the Receivables Purchase Agreement, the Transfer

and 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 of

the other instruments, documents and other agreements executed and delivered in

connection with any of the foregoing, in each case, as the same may have been

or may hereafter be amended, restated, supplemented or otherwise modified from

time to time.

 

“Trust” shall have the meaning

specified in the Recitals.

 

“VFN Commitment Share” shall mean, as

of any date and with respect to any Secondary Purchaser, the sum of (i) such

Secondary Purchaser’s Percentage Interest and (ii) the Percentage Interest of

any transferee or successor transferee of an Interest

 

7

 

previously held by such Secondary Purchaser

to the extent such Interest has not been transferred to, or acquired by, a

transferee or successor transferee which is a Qualified Transferee.

 

“VFN Purchasers” shall have the

meaning specified in the Introduction.

 

Section 1.2             Other

Terms.  All accounting terms not

specifically defined herein shall be construed in accordance with GAAP.  The symbol “$” shall mean the lawful

currency of the United States of America. 

All terms used in Article 9 of the UCC as in effect in the State of New

York, and not specifically defined herein, are used herein as defined in such

Article 9.

 

Section 1.3             Computation

of Time Periods.  Unless otherwise

stated in this Agreement, in the computation of a period of time from a

specified date to a later specified date, the word “from” means “from and

including,” the words “to” and “until” each means “to but excluding,” and the

word “within” means “from and excluding a specified date and to and including a

later specified date.”

 

ARTICLE II

TRANSFER OF THE SERIES 2002-A NOTES

 

Section 2.1             Transfer

of the Series 2002-A Notes.    On

the terms and subject to the conditions set forth in this Agreement, and in

reliance upon the covenants, representations, warranties and agreements herein

set forth, on the Closing Date, the Seller agrees to transfer and deliver to

the VFN Purchasers, and the VFN Purchasers agree to accept, the Series 2002-A

Notes in the form attached as Exhibit A to the Series 2002-A Indenture

Supplement.

 

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

 

(a)           The

Seller will deliver the Series 2002-A Notes to be sold by the Seller to the VFN

Purchasers on the Closing Date. The time and date of such delivery and payment

shall be 10:00 a.m., New York City time, on the Closing Date or such other time

and date as the VFN Purchasers and the Seller may agree upon in writing.

 

(b)           The

documents to be delivered on the Closing Date by or on behalf of the parties

hereto pursuant to Section 3.1 hereof will be delivered at the offices of

Orrick, 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 and

date as each of the parties hereto may agree upon in writing.

 

8

 

Section 2.3             Principal Balance Increases.

 

(a)           Upon

the terms and subject to the conditions set forth herein and in the Series

2002-A Indenture Supplement, the Purchaser shall fund the Net Purchase

Requirement requested by the Servicer with respect to the Purchaser’s Series

2002-A Note in accordance with the procedures described herein.  To the extent the Purchaser fails to fund

the Net Purchase Requirement in full due to the failure or refusal of a Member

of the Purchaser to make a capital contribution as required under the terms of

the Amended and Restated LLC Agreement or the Amended and Restated Capital

Contribution Agreement, or due to the inability of the Purchaser to fund such

Member’s pro rata share of the Net Purchase Requirement (such Member, an “Affected

Member”, and the amount which the Affected Member failed or refused to

contribute, or with respect to which the Purchaser was unable to fund on behalf

of such Affected Member, the “Affected Amount”), the Servicer, acting on

behalf of the Note Administrator, shall demand that the Affected Member fund an

increase in the Series 2002-A Note held by such Affected Member in an amount

equal to the Affected Amount in accordance with the procedures described in

Annex B attached hereto.

 

(b)           Upon

the satisfaction of the conditions precedent set forth in Section 3.2, the

Purchaser shall remit funds in an amount equal to the Net Purchase Requirement

in accordance with the procedures described in Annex B attached hereto.

 

(c)           Upon

the 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 Affected

Amount required to be funded by such Secondary Purchaser, if any, in accordance

with the procedures described in Annex B attached hereto.

 

Section 2.4             Funding Procedures.

 

The parties hereto agree to follow the

funding procedures and timelines set forth in Annex B attached hereto.

 

ARTICLE III

CONDITIONS PRECEDENT

 

Section 3.1             Conditions

Precedent to the Purchase of the Series 2002-A

Notes.  The obligations of the VFN

Purchasers to acquire the Series 2002-A Notes on the Closing Date shall be

subject, in the discretion of each VFN Purchaser, to the condition that all

representations and warranties and other statements of each of the Seller and

Providian herein are, at and as of the Closing Date, true and correct, and to the

following additional conditions:

 

(a)           Each

Transaction Document and all of the other agreements identified or otherwise

contemplated by the Offering Circular and such Transaction Documents shall have

been duly entered into by all of the respective parties;

 

9

 

(b)           The

conditions to closing set forth in Section 6.1 of the Sale and Purchase

Agreement shall have been satisfied on or prior to the Closing Date and the

transactions set forth in Section 2.1 of the Sale and Purchase Agreement shall

have been consummated on or prior to the Closing Date;

 

(c)           Orrick,

Herrington & Sutcliffe LLP shall have furnished to each VFN Purchaser its

written opinions, dated the Closing Date, in form and substance satisfactory to

each VFN Purchaser and counsel for each VFN Purchaser;

 

(d)           Richards,

Layton & Finger, special Delaware counsel to the Seller, shall have

furnished to each VFN Purchaser its written opinions, dated the Closing Date,

in form and substance satisfactory to each VFN Purchaser and counsel for each

VFN Purchaser;

 

(e)           Cravath,

Swaine & Moore, special New York counsel to the Seller and Providian, shall

have furnished to each VFN Purchaser its written opinions, dated the Closing

Date, on FIRREA, non-consolidation, security interest and corporate matters and

other related matters, in form and substance satisfactory to each VFN Purchaser

and counsel for each VFN Purchaser;

 

(f)            Wachtell,

Lipton, Rosen & Katz LLP, special New York counsel to the Seller and

Providian, shall have furnished to each VFN Purchaser its written opinion to be

delivered to each VFN Purchaser pursuant to Section 6.1(k) of the Sale and

Purchase Agreement, in form and substance satisfactory to each VFN Purchaser

and counsel for each VFN Purchaser;

 

(g)           Gallagher,

Callahan and Gartrell, P.A., special New Hampshire counsel to the Seller and

Providian, shall have furnished to each VFN Purchaser its written opinion,

dated the Closing Date, on matters governed by New Hampshire law, in form and

substance satisfactory to each VFN Purchaser and counsel for each VFN

Purchaser;

 

(h)           The

in-house counsel to Providian (who may be the General Counsel or an Associate

General Counsel of Providian) shall have furnished to each VFN Purchaser his or

her written opinion, dated the Closing Date, on matters relating to Providian

in form and substance satisfactory to each VFN Purchaser and counsel for each

VFN Purchaser;

 

(i)            Orrick,

Herrington & Sutcliffe LLP, special New York counsel to each of the VFN

Purchasers, shall have furnished to each VFN Purchaser its written opinion,

dated the Closing Date, on the Offering Circular in form and substance

satisfactory to each VFN Purchaser;

 

(j)            Skadden,

Arps, Slate, Meagher & Flom LLP, special Delaware counsel to the VFN

Purchasers, shall have furnished to each VFN Purchaser its written opinions,

dated the Closing Date, in form and substance satisfactory to each VFN

Purchaser;

 

10

 

(k)          

In-house counsel to CompuCredit Corporation, a Georgia corporation, shall have

furnished to each VFN Purchaser its written opinion, dated the Closing Date, in

form and substance satisfactory to each VFN Purchaser and counsel for each VFN

Purchaser;

 

(l)            Thacher

Proffitt & Wood LLP, counsel for the Indenture Trustee and Note

Administrator, shall have furnished to each VFN Purchaser its written opinion,

dated the Closing Date, in form and substance satisfactory to each VFN

Purchaser and counsel for each VFN Purchaser;

 

(m)          Richards,

Layton & Finger, counsel for the Owner Trustee, shall have furnished to

each VFN Purchaser its written opinion, dated the Closing Date, in form and

substance satisfactory to each VFN Purchaser and counsel for each VFN

Purchaser;

 

(n)           Ernst

& Young LLP, as independent accountants of Providian, shall have furnished

to each VFN Purchaser a letter or letters, dated on the date hereof, and a

letter or letters, dated the Closing Date, respectively, containing statements

and information of the type customarily included in accountants’ “agreed upon

procedures letters” with respect to certain financial information provided by

Providian contained in the Offering Circular;

 

(o)           Each

of the Seller and Providian shall have furnished or caused to be furnished to

each VFN Purchaser on the Closing Date certificates of its officers

satisfactory to each VFN Purchaser as to the accuracy in all material respects

of its representations and warranties herein at and as of the Closing Date, as

to the performance in all material respects of all of its obligations hereunder

to be performed at or prior to the Closing Date, as to the matters set forth in

Sections 3.1(a) in respect of the Seller or Providian, as applicable, and as to

such other matters as each VFN Purchaser may reasonably request;

 

(p)           All

conditions precedent in the Certificate Purchase Agreement shall have been

satisfied; and

 

(q)           All

opinions, certificates and other documents incident to, and all proceedings in

connection with the transactions contemplated by, this Agreement and each of the

other Transaction Documents shall be satisfactory in form and substance to each

VFN Purchaser and its counsel, and each VFN Purchaser and its counsel shall

have received copies of such opinions, certificates and other documents as they

may reasonably request.

 

The delivery of this Agreement on the Closing

Date shall be deemed to be an acknowledgment by each VFN Purchaser and its

counsel that the form and substance of any written opinions required under this

Section 3.1 are satisfactory.

 

Section 3.2             Conditions

Precedent to each Principal Balance Increase.The obligations of any VFN

Purchaser to fund any Net Purchase Requirement,

 

11

 

or any part thereof, are

several and are subject to the satisfaction, as of the applicable Increase

Date, of each of the following conditions:

 

(a)           The

Accounts Owner shall not have ceased, or become unable, for any reason, to

transfer Receivables to the Seller as provided in the Receivables Purchase

Agreement and the Transferor shall not have ceased, or become unable, for any

reason, to transfer Receivables to the Trust as provided in the Transfer and

Servicing Agreement;

 

(b)           The

Accounts Owner shall not have become unable, for any reason, to transfer good

title to the Receivables to the Transferor as provided in the Receivables

Purchase 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 the

Transfer and Servicing Agreement;

 

(c)          

The Accounts Owner shall not have ceased to settle newly generated Receivables

under applicable VISA and MasterCard agreements;

 

(d)           None

of the representations or warranties made by Providian or by the Seller, as

applicable, under Sections 4.1(i) and 4.1(k) of this Agreement shall have been

incorrect in any material respect as of the time when such representation or

warranty was made;

 

(e)           None

of the representations or warranties made by Providian or by the Seller, as

applicable, under Sections 4.1(b), (c), (d), (e), (f) and (h) of this Agreement

shall have been incorrect in any material respect as of the time when such

representation or warranty was made (except to the extent any such

representation or warranty expressly relates to an earlier date, in which case,

such representation or warranty shall be true and correct as of the date

specified), unless the circumstances or conditions in respect of which such

representation or warranty was incorrect shall have been eliminated or

otherwise cured (i) within ten (10) Business Days with respect to the

representations and warranties made under Sections 4.1(b), (c) and (e), and

(ii) within five Business Days with respect to the representations and

warranties made under Sections 4.1(d) or (h), and (iii) within seven Business

Days 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 the

Seller and (2) receipt by Providian of a written notice from any VFN Purchaser,

delivered in accordance with Section 7.3, specifying such incorrect

representation or warranty and requiring it to be remedied;

 

(f)            There

shall not have been any default in the performance or observance of any

obligation by the Seller under any Transaction Document to which it is a party

that would have a material adverse effect on the Noteholders of the Series

2002-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 the

Accounts Owner and (2) receipt by Providian of a written notice from any VFN

Purchaser, delivered in accordance with Section 7.3, specifying such default

and requiring it to be remedied; and

 

12

 

(g)           The

aggregate Increase Amounts of all VFN Purchasers with respect to such Business

Day does not exceed the Net Purchase Requirement for such Business Day.

 

Section 3.3             Conditions

Precedent for Secondary Purchasers.(a)     The

obligation of any Secondary Purchaser to fulfill any Net Purchase Requirement,

or any part thereof, is subject to the following conditions as of the

applicable Increase Date: (i) the satisfaction of each of the conditions set

forth in Section 3.2 and (ii) the Servicer, on behalf of the Note

Administrator, shall have first requested such funding from the Purchaser in

accordance with Section 4.02(a) of the Series 2002-A Indenture Supplement.

 

(b)           Each

Secondary Purchaser shall be obligated only to fund a portion of any Net

Purchase Requirement up to (i) its respective VFN Commitment Share as of such

Increase Date (before giving effect to any Increase Amounts to be funded on

such Increase Date) of such amount and (ii) its respective Commitment Amount as

of such Increase Date.

 

Section 3.4             Waivers of Conditions Precedent.A VFN Purchaser may waive any of the

conditions precedent described in Sections 3.2 and 3.3 above in its sole

discretion; provided, however, that any such waiver (i) shall only be

applicable with respect to the VFN Purchaser waiving such condition and shall

not be binding upon or affect the rights and remedies of any other VFN

Purchaser, and (ii) shall only apply to the specific occurrence upon which the

waiver 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             Representations

and Warranties.Each of Providian and the Seller (in its capacity as Seller

and as Transferor), jointly and severally, represents and warrants to, and agrees

with, each VFN Purchaser that:

 

(a)           The

Providian Information (as defined or referenced herein) set forth in the

Offering Circular and any amendments or supplements thereto, as of the date

thereof and as of the Closing Date, did not contain any untrue statement of a

material fact or omit to state a material fact required to be stated therein or

necessary to make the statements therein, in the light of the circumstances

under which they were made, not misleading. 

“Providian Information” shall mean, (i) for purposes of the

offering circular supplement, the information set forth (A) in paragraphs 1 and

2 of the Executive Summary, (B) under the captions “Summary of Terms—Providian

National Bank,” “—Transferor” (first paragraph only) and “—The Receivables,” “The

Receivables” and “The Master Trust Portfolios” (including each of the tables

with information on the credit card accounts and the related receivables set

forth under “The Receivables” and “The Master Trust Portfolios”), (C) the

information set forth under “Risk Factors—Legal and regulatory proceedings

against Providian could reduce or delay payments on your

 

13

 

Certificates,” (first paragraph only) and

“—Certain regulatory matters involving Providian could reduce or delay payments

on your Certificates” (first and second paragraphs only) and (D) in the disk

containing historical information on the credit card accounts and the related

credit card receivables included in the offering circular supplement and (ii)

for purposes of the base offering circular, the information set forth under the

captions “The Transferor,” “Underwriting Procedures for the Master Trust

Portfolios,” and “Providian National Bank.” It is understood and agreed that

none of the Providian Information shall be considered or deemed to be a

representation or warranty as to (i) the credit quality of the Accounts or the

Receivables (as such terms are defined in the Offering Circular), provided,

that the foregoing reference to credit quality shall not be deemed to limit

Providian’s obligation to include true, accurate and complete FICO scores in

the Providian Information, (ii) the targeting, underwriting or credit criteria

(other than the compliance of such criteria with requirements of law) used in

connection with the Accounts or the Receivables except for such information set

forth under (A) the table entitled “Origination Channel” in each Term Sheet and

(B) “Underwriting Procedures for the Master Trust Portfolios” in the

Preliminary Base Offering Circular and Base Offering Circular or (iii) the

future performance of the Receivables or the Accounts.

 

(b)           As

of the Closing Date and as of each Increase Date, the Seller is duly organized

and is validly existing as a limited liability company in good standing under

the 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 its

business as described in the Offering Circular, and has been duly qualified as

a foreign entity for the transaction of business and is in good standing under

the laws of each other jurisdiction in which it owns or leases property or

conducts any business so as to 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 not reasonably likely to have a material adverse

effect on the Noteholders of the Series 2002-A Notes.

 

(c)           As

of the Closing Date and as of each Increase Date, Providian is duly organized

and is validly existing as a national banking association under the federal

laws of the United States and has all requisite power and authority (corporate

or other) to own its properties and to conduct its business as described in the

Offering Circular, and has been duly qualified as a foreign entity for the

transaction of business and is in good standing under the laws of each other

jurisdiction in which it owns or leases property or conducts any business so as

to 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 not

reasonably likely to have a material adverse effect on the Noteholders of the

Series 2002-A Notes.

 

(d)           As

of the Closing Date, each Transaction Document to which the Seller or Providian

is a party shall have been duly authorized, executed and delivered by the

Seller or Providian, as applicable.

 

(e)           As

of the Closing Date and as of each Increase Date, Providian in its capacity as

Accounts Owner shall have fulfilled all of its obligations under the

 

14

 

Account Ownership Agreement except where

failure to fulfill such obligations would not have a material adverse effect on

the Noteholders of the Series 2002-A Notes.

 

(f)            As

of the Closing Date and as of each Increase Date, (i) the sale of the Series

2002-A Notes by the Seller pursuant to this Agreement, the compliance by each

of the Seller and Providian with all of the provisions of the other Transaction

Documents to which it is a party and any other agreement or document entered

into by the Seller and Providian in connection therewith, and the consummation

of the transactions herein and therein contemplated, will not conflict with or

result in a breach of any of the terms or provisions of, or constitute a

default under, any indenture, mortgage, deed of trust, loan agreement or other

agreement or instrument to which the Seller or Providian is a party or by which

the Seller or Providian is bound or to which any of the property or assets of

the Seller or Providian is subject except where such conflict, breach or

default will not have a material adverse effect on the Noteholders of the

Series 2002-A Notes, nor will such action result in any violation of the

provisions of the organizational documents of the Seller or Providian or any

statute or any order, rule or regulation of any court or governmental agency or

body having jurisdiction over the Seller or Providian or any of its properties

except where such violation will not have a material adverse effect on the

Noteholders of the Series 2002-A Notes; and (ii) no consent, approval,

authorization, order, registration, filing or qualification of or with any such

court or governmental agency or body is required for the issue and sale of the

Series 2002-A Notes by the Seller pursuant to this Agreement or the

consummation by the Seller or Providian of the other transactions contemplated

by the Transaction Documents to which the Seller or Providian is a party and

any other agreement or document entered into by the Seller or Providian in

connection therewith, except as have been obtained and except where failure to

obtain such consent, approval, authorization, order, registration, filing or

qualification would not have a material adverse effect on the Noteholders of

the Series 2002-A Notes.

 

(g)           Other

than as set forth in the Offering Circular, as of the date thereof and as of

the Closing Date, there are no legal or governmental proceedings pending to

which the Seller or Providian or any of their subsidiaries, if any, is a party

or to which any property of the Seller or Providian or any of their respective

subsidiaries, if any, is the subject which could reasonably be expected,

individually or in the aggregate, to have a material adverse effect on the

current or future financial position, equity or results of operations of the

Seller and its subsidiaries, if any, taken as a whole, or Providian and its

subsidiaries, taken as a whole; and, to the best of  the Seller’s and Providian’s knowledge, no such proceedings are

threatened or contemplated by governmental authorities or threatened by others;

except in the case of any such pending, threatened or contemplated proceedings

where such proceedings would not have a material adverse effect on the

Noteholders of the Series 2002-A Notes.

 

(h)           Providian

will, as of the Closing Date and as of the date such Receivables are

transferred to the Seller, own the Receivables to be transferred by Providian

to the Seller on such date pursuant to the Receivables Purchase Agreement, free

and clear of any lien, mortgage, pledge, charge, security interest or other

encumbrance other than liens and other encumbrances permitted under the

Transaction

 

15

 

Documents and other than liens and other

encumbrances that would not have a material adverse effect on the Noteholders

of the Series 2002-A Notes, and, as of the Closing Date and as of the date such

Receivables are transferred to the Seller, Providian will have full power and

authority to sell and deliver such Receivables to be sold to the Seller on such

date under the Receivables Purchase Agreement and as of the Closing Date will

have duly authorized such assignment and delivery to the Seller by all

necessary action, in each case except where failure to have such power and

authorization would not have a material adverse effect on the Noteholders of

the Series 2002-A Notes.

 

(i)            As

of the Closing Date and as of each date that newly created Receivables are

transferred to the Seller, the Seller will have full power and authority to

sell and deliver the Receivables to the Trust under the Transfer and Servicing

Agreement as of such date and as of the Closing Date will have duly authorized

such assignment and delivery to the Trust by all necessary action, in each case

except where failure to have such power and authorization would not have a

material adverse effect on the Noteholders of the Series 2002-A Notes.

 

(j)            Any

taxes, fees and other governmental charges due and payable by Providian or the

Seller in connection with the execution, delivery and performance of the

Transaction Documents to which Providian or the Seller is a party will have

been 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 or

other charges would not have a material adverse effect on the Noteholders of

the Series 2002-A Notes.

 

(k)           As

of the Closing Date and as of each date that newly created Receivables are

transferred to the Seller, the Receivables to be assigned by Providian to the

Seller and by the Seller to the Trust on such date will have been duly and

validly assigned and delivered by Providian to the Seller and by the Seller to the

Trust, in each case except where failure to assign and deliver such Receivables

would not have a material adverse effect on the Noteholders of the Series

2002-A Notes.

 

(l)            The

Seller is not, or after giving effect to the offering and sale of the Series

2002-A Notes to the VFN Purchasers under this Agreement, or the sale of the

Securities under the Certificate Purchase Agreement, or the issuance of the

Series 2002-1 Notes by the Trust will not be, an “investment company,” as such

term is defined in the Investment Company Act of 1940, as amended.

 

Section 4.2             Covenants.  Providian shall not take any action to

prevent the sale of the Receivables to the Seller except in accordance with the

Receivables Purchase Agreement and Section 2.01(b) and Section 2.02 of the

Account Ownership Agreement, and Seller shall not take any action to prevent

the sale of the Receivables to the Trust except in accordance with the

Receivables Purchase Agreement and the Transfer and Servicing Agreement.

 

 

16

 

ARTICLE V

INDEMNIFICATION

 

Providian shall indemnify and hold harmless

each VFN Purchaser and its respective members, officers, directors, employees,

agents and representatives, against any and all losses, claims, damages, liabilities

or expenses (including reasonable legal and accounting fees) (collectively, “Losses”),

as incurred (payable promptly upon written request), for or on account of or

arising from or in connection with or otherwise with respect to any breach of

any representation, warranty or covenant in this Agreement or in any

certificate delivered pursuant hereto of Providian or, as long as Providian is

the Accounts Owner, of the Transferor.

 

ARTICLE VI

 COMMITMENT BY SECONDARY PURCHASER

 

On any Business Day that the Net Purchase

Requirement 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 rata

share of the Net Purchase Requirement, each Affected Member shall, in its

capacity as a Secondary Purchaser hereunder and in accordance with Section

4.02(a) of the Series 2002-A Indenture Supplement and subject to the terms and

conditions set forth herein, and only to the extent of any amounts available

under such Secondary Purchaser’s Commitment Amount, purchase an additional

balance in such Member’s Series 2002-A Notes in an amount equal to the Affected

Amount.

 

ARTICLE VII

MISCELLANEOUS

 

Section 7.1             Waivers;

Remedies.  No failure or delay on

the part of any VFN Purchaser in exercising any power, right or remedy under

this Agreement shall operate as a waiver thereof, nor shall any single or

partial exercise of any such power, right or remedy preclude any other further

exercise thereof or the exercise of any other power, right or remedy.  The rights and remedies herein provided

shall be cumulative and nonexclusive of any rights or remedies provided by law.

 

Section 7.2             Amendments,

Waivers and Consents.  No amendment

to or waiver of any provision of this Agreement, nor any consent to departure

by Seller or any VFN Purchaser therefrom, shall be effective unless the same

shall be in writing and signed by the parties hereto and unless the Rating

Agencies shall have confirmed in writing that such amendment or waiver will not

result in the reduction or withdrawal of the then current ratings of the

Securities or the rated Series 2002-1 Notes; provided, however, that his

Agreement may be amended by the parties hereto without prior notification to,

or confirmation from, the Rating Agencies to cure any ambiguity or to correct

or supplement any provisions in this Agreement that may be inconsistent with

any other provision herein or in the Series 2002-A Indenture Supplement or the

Series 2002-1 Indenture Supplement.

 

17

 

Section 7.3             Notices,

Etc.  Except where instructions or

notices are authorized herein to be given by telephone, all notices, demands,

instructions and other communications required or permitted to be given to or

made upon any party hereto shall be in writing and shall be sent by mail,

overnight delivery service, facsimile transmission (with a printed or telephone

confirmation of the receipt thereof) or email (with a telephone confirmation of

the receipt thereof) and shall be deemed to be given for purposes of this

Agreement upon receipt.  Unless

otherwise specified in a notice sent or delivered in accordance with the

foregoing provisions of this Section 7.3, notices, demands, instructions and

other communications in writing shall be given to or made upon the respective

parties hereto at their respective addresses or facsimile numbers indicated on

the attached Annex A.

 

Section 7.4             Governing

Law; Submission to Jurisdiction.  THIS AGREEMENT SHALL BE GOVERNED BY AND

CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF

NEW YORK.  THE PARTIES HERETO EACH

HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT

COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT

SITTING IN THE CITY OF NEW YORK FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING

OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

Section 7.5             Severability.  Any provisions of this Agreement which are

prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,

be ineffective to the extent of such prohibition or unenforceability without

invalidating the remaining provisions hereof, and any such prohibition or

unenforceability in any jurisdiction shall not invalidate or render unenforceable

such provision in any other jurisdiction.

 

Section 7.6             Counterparts.  This Agreement may be executed in any number

of 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 same

instrument.

 

Section 7.7             Nonpetition

Covenant. Notwithstanding any prior termination of this Agreement,

each VFN Purchaser agrees that it will not, prior to the date which is one year

and one day after the day upon which the Securities and the Series 2002-A Notes

have been paid in full, acquiesce, petition or otherwise invoke or cause the

Seller or the Trust to invoke the process of any Governmental Authority for the

purpose of commencing or sustaining a case against the Seller or the Trust

under any Federal or state bankruptcy, insolvency or similar law or appointing

a receiver, conservator, liquidator, assignee, trustee, custodian, sequestrator

or other similar official of the Seller or the Trust or any substantial part of

its property or ordering the winding-up or liquidation of the affairs of the

Seller or the Trust.

 

Section 7.8             Successors

and Assigns.This Agreement shall be binding on the parties hereto and their

respective successors and permitted assigns; provided, however,

that (i) the Seller may not assign any of its rights or delegate any of its

duties hereunder without the prior written consent of each VFN Purchaser and

each other party

 

18

 

to this Agreement (provided

that the Seller may assign its rights hereunder in connection with the

assignment or termination of Providian’s role as Accounts Owner in accordance

with the Transaction Documents) and (ii) a VFN Purchaser may not assign any of

its obligations hereunder without the prior written consent of the Accounts

Owner, which consent shall not be unreasonably withheld; provided that a

VFN Purchaser may assign its rights and obligations hereunder to any Person as

long as the credit support provided by its Credit Support Providers and

delivered to the Seller on the Closing Date in connection with the transactions

contemplated by this Agreement remain in full force and effect with respect to

such transferee and provided, further, that each Rating Agency

shall have been given prior notice of any assignment by the Transferor or any

VFN Purchaser and each of the Rating Agencies shall have notified the

Transferor, the Accounts Owner, the VFN Purchasers and the Indenture Trustee in

writing that such assignment will not result in a reduction or withdrawal of

the then current rating of the Securities or any of the rated Series 2002-1

Notes.

 

Section

7.9             No Recourse.)       (a)  No recourse under or with respect to any

obligation, covenant or agreement (including, without limitation, the payment of

any fees or any other obligations) of Providian, the Seller or any VFN

Purchaser as contained in this Agreement or any other agreement, instrument or

document entered into by it pursuant hereto or in connection herewith shall be

had against any administrator of any of them or any incorporator, affiliate,

stockholder, officer, employee, member, manager or director of any of them or

of any such administrator, as such, by the enforcement of any assessment or by

any legal or equitable proceeding, by virtue of any statute or otherwise; it

being  expressly  agreed  and  understood that

the agreements of each of Providian, the Seller and the VFN Purchasers

contained in this Agreement and all of the other agreements, instruments and

documents entered into by it pursuant hereto or in connection herewith are, in

each case, solely the corporate or limited liability company obligations of any

such entity; and that no personal liability whatsoever shall attach to or be

incurred by any administrator of Providian, the Seller or any VFN Purchaser or

any incorporator, stockholder, affiliate, officer, employee, member, manager or

director of Providian, Seller or any VFN Purchaser or of any such

administrator, as such, or any of them, under or by reason of any of the

obligations, covenants or agreements of Providian, Seller or any VFN Purchaser,

contained in this Agreement or in any other such instrument, document or

agreement, or which are implied therefrom, and that any and all personal

liability of every such administrator of such Providian, Seller or VFN

Purchaser and each incorporator, stockholder, affiliate, officer, employee,

member, manager or director of Providian, Seller or VFN Purchaser or of any

such administrator, or any of them, for breaches by Providian, Seller or VFN

Purchaser of any such obligations, covenants or agreements, which liability may

arise either at common law or in equity, by statute or constitution, or

otherwise, is hereby expressly waived as a condition of, and in consideration

for, the execution of this Agreement.

 

(b)           The

provisions of this Section 7.9 shall survive the termination of this Agreement.

 

The obligations of the Seller arising under

this Agreement shall be payable solely from amounts available therefor in

accordance with the Series 2002-A Indenture

 

19

 

Supplement and amounts

otherwise released by the Trust to the Transferor as holder of the Transferor

Amount or any other interest in the Trust.

 

Section 7.10           Further Assurances.

 

(a)           Each

of Providian and the Seller agrees to do such further acts and things and to

execute and deliver to each VFN 

Purchaser and Servicer such additional assignments, agreements, powers

and instruments as are reasonably required by such party to carry into effect the

purposes of this Agreement or to better assure and confirm unto such party its

rights, powers and remedies hereunder.

 

(b)           Each

VFN Purchaser each agrees to do such further acts and things and to execute and

deliver to Providian and the Seller such additional assignments, agreements,

powers and instruments as are reasonably required by such party to carry into

effect the purposes of this Agreement or to better assure and confirm unto such

party its rights, powers and remedies hereunder.

 

20

 

IN WITNESS WHEREOF, the parties hereto have

executed and delivered this Series 2002-A Variable Funding Notes Purchase

Agreement 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

 

For

purposes of funding Net Purchase Requirements:

 

If to the Purchaser (LLC):

 

CompuCredit

Corporation

245 Perimeter

Center 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

Rohit

Kirpalani

General

Counsel

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 Broad

Street

New York, New

York 10904

Attn: Peter

Aberg

Telephone:  (212) 902-1828

Fax: (212)

902-1828

Email:  Peter.Aberg@gs.com

 

SB Funding

Corp.

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

 

24

 

CompuCredit

Acquisition Corporation

245 Perimeter

Center 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

Rohit

Kirpalani

General Counsel

Telephone:  (770) 206-6275

Fax:  (770) 206-6187

Email:  rohit.kirpalani@compucredit.com

 

If to the Credit Support Providers:

 

On behalf of

MTGLQ 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 of

CompuCredit 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

 

 

For

all 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 Funding

Notes

 

1)     Pursuant to the Series 2002-1 Indenture

Supplement, during the Reinvestment Period, Special Reinvestment Period and

Partial Reinvestment Period, Collections that will be available on each

Business Day may be remitted to PACCT, LLC to reduce the amount of funding made

by the Accounts Owner.  This Business

Day is referred to as an “Origination Date”.

 

2)     On any Business Day upon which additional funding

is required due to a net increase in the Receivables Balance on the related

Origination Date, the Accounts Owner (or the Servicer after the Interim

Servicing Period) shall submit a Daily Settlement Report on the morning of the

third Business Day following the Business Day of the net increase (this third

Business Day is referred to as the “Increase Date”), evidencing such

insufficiency to the Servicer (if during the Interim Servicing Period), the LLC

Administrator, the Note Administrator and each of the Secondary Purchasers no

later than 7:00 a.m. (New York City time) on such Increase Date.

 

3)     On the Increase Date, if available funds that have

accumulated since the first Business Day in that calendar month in the

Collection Account held by the Note Administrator are not sufficient to fund

the amount requested with respect to the related Origination Date, the Servicer

shall request the Reserve Account Administrator withdraw funds from the Reserve

Account to the extent required in order to purchase a new balance in the

Variable Funding Note (the “VFN”) which is held by the Purchaser.  The Reserve Account will be created pursuant

to a Reserve Account Agreement between the LLC and the Reserve Account

Administrator named therein.

 

4)     As provided in the Series 2002-1 Indenture

Supplement and in the Amended and Restated LLC Agreement, if on any Increase

Date funding is required and to the extent Collections, amounts in the Reserve

Account are insufficient to fund new Receivables for that date, each of the

Members will be notified and will be required to make mandatory capital

contributions as needed that day equal to its VFN Commitment Share of the

amount needed to fund the additional VFN balance and to restore the Reserve

Account balance.

 

5)     To the extent that a Member defaults in making

such contribution or to the extent the LLC is unable to fund such Member’s VFN

Commitment Share of the Net Purchase Requirement (an “Affected Member”),

the Servicer, on behalf of the Note Administrator, will exercise the rights

under the VFN Purchase Agreement to cause the Affected Member in its capacity

as Secondary Purchaser to directly fund a portion of the VFN equal to the

amount that the Affected Member should have contributed to the LLC for such

purpose.

 

30

 

6)     VFN purchases by a Secondary Purchaser will be

limited to the lesser of (i) the available VFN Purchase Commitment applicable

to such Secondary Purchaser and (ii) such Secondary Purchaser’s VFN Commitment

Share (as defined in the VFN Funding Agreement) of the amount requested.  Any purchase by a Secondary Purchaser will

be made directly by such Secondary Purchaser through a VFN held by the

Secondary 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 under

the VFN Purchase Agreement will be guaranteed or otherwise supported by such

Member’s Credit Support Provider.  If a

Secondary Purchaser fails to fund its commitment pursuant to the VFN Funding

Agreement, the Servicer on behalf of PACCT, LLC will notify such Member’s

Credit Support Provider and the non-affected Members and will enforce the

Credit Support Provider’s obligations to fund or to cause such Secondary Member

to fund the  obligations of the

Secondary Member under the VFN Purchase Agreement in accordance with the

applicable credit support agreement.

 

8)     If a Credit Support Provider fails to fulfill such

obligations, the non-affected Member or Members will have the opportunity to

make a loan on behalf of the Affected Member to the applicable LLC to fund such

commitment.  If such loans are not

repaid to the non-affected Member or Members making such loan, Percentage

Interests in the LLC will be adjusted in accordance with the terms of the

Amended and Restated LLC Agreement.

 

9)     Under the VFN Purchase Agreement, each Member’s

available commitment will be reduced from time to time by its share of funds

used to purchase VFNs, whether coming from capital contributions, payments made

under the VFN Purchase Agreement, draws under the applicable credit support

agreements or amounts withdrawn from the Reserve Account.  The commitments will also be subject to

change according to a dynamic formula based on certain minimums and the

aggregate Open To Buy amounts with respect to the Accounts.  The Note Administrator will be responsible

for monitoring such commitment amounts, provided that the Servicer shall

furnish the Note Administrator with all information necessary to monitor such

amounts.

 

10)   To the extent funding does not occur by the end of

such Increase Date, the funding will be deemed to have been made by the holder

of the Transferor Amount.  The Servicer

shall notify the LLC and each of the applicable Members and Credit Support

Providers.  In accordance with the terms

of the Accounts Ownership and Administration Agreement, during the next two

Business Days, the non-affected Members may fund the Affected Member’s share in

accordance with the terms of the Amended and Restated LLC Agreements.  Further, the Accounts Owner and the

Secondary Purchasers may agree to waive certain conditions and allow such

Secondary Purchasers to fund requested amounts after the second Business Day.

 

31

 

Timeline

(each

of the following times is the deadline for such actions on an Increase Date and

is New York City time)

 

•       7:00 a. m.  The Accounts Owner (during the Interim

Servicing Period) or the Servicer (after the Interim Servicing Period) will

issue the Daily Settlement Report with respect to the related Origination Date

to PACCT, the LLC Adminsitrator, the Note Administrator, the Servicer (during

the Interim Servicing Period) and the Members outlining the funding excess or

shortfall for the related Origination Date.

•        11:00 a.m.  The Servicer shall submit a report to the

Note Administrator outlining any shortfall and the report shall:

a)     Determine the amount of funds available in the

Collection Account from Collections on Receivables since the first Business Day

in that calendar month.

b)    If the funds calculated in (a) above are sufficient

to cover the shortfall, then the Servicer will instruct the Note Administrator

to remit such funds to PACCT, LLC and will submit a report to the Indenture

Trustee, the Note Administrator, PACCT, LLC and the Members, with no further

action required.

c)     If the funds calculated in (a) above are not

sufficient to cover the shortfall, then the Servicer, acting on behalf of the

Note Administrator, will determine whether VFN funding is necessary, whether

amounts in the Reserve Account will be adequate for such purpose, whether

additional amounts will be required from the LLC or its Members to purchase the

new balance of the VFN and whether the LLC will be required to make a payment

to the Reserve Account to restore it to its required balance.  The Servicer will submit a report to the

Note Administrator, PACCT, LLC and the Secondary Purchasers outlining these

amounts.

d)    In addition, if the amount in the Reserve Account

is sufficient to cover the required VFN funding, then the Servicer will

instruct the Reserve Account Administrator (in accordance with the notice

requirements of Section 7.3 of the VFN Purchase Agreement) to remit such funds

to PACCT, LLC and shall instruct the Note Administrator to remit any funds

available in the Collection Account from Collections on Receivables since the

first Business Day of the current month (in accordance with the report

submitted from the Servicer by 11:00 a.m.), with no further action required.

•       1:00p.m.  The Members will confirm to the Servicer the

amount of their respective capital contributions to be made on such Day, and

will initiate wires to PACCT, LLC no later than 3:00 p.m.

 

 If, by 1:00

p.m., a Member fails to confirm to the Servicer that it will make its required

capital contribution, it will be deemed an Affected Member. In such event, the

Servicer shall use commercial reasonable efforts to implement the following

steps (the “Further Administrative Steps”):

i.      The Servicer shall

exercise the rights under the VFN Purchase Agreement to cause the Affected

Member in its capacity as Secondary Purchaser to directly fund a portion of the

VFN equal to the amount that the Affected Member should have contributed to the

LLC for such purpose;

 

32

 

ii.    If a Secondary Purchaser

fails to fund its commitment pursuant to the VFN Purchase Agreement, the

Servicer on behalf of PACCT, LLC will notify such Member’s Credit Support

Provider and the non-affected Members and will enforce the Credit Support

Provider’s obligations to fund or to cause such Secondary Member to fund

the  obligations of the Secondary Member

under the VFN Purchase Agreement in accordance with the applicable credit support

agreement; and

iii.   If a Credit Support

Provider fails to fulfill such obligations, the non-affected Member or Members

will have the opportunity to make a loan on behalf of the Affected Member to

the applicable LLC to fund such commitment. 

If such loans are not repaid to the non-affected Member or Members

making such loan, Percentage interests in the LLC will be adjusted in

accordance with the terms of the Amended and Restated LLC Agreement.  The Servicer shall inform the non-affected

Member or Members of this opportunity and will coordinate with such Members to

conduct the fund transfer process.

•         5:30 p.m.  Servicer shall determine the aggregate

amount funded that Business Day with respect to the Net Purchase Requirement

and shall confirm the available Commitment Amounts with the Note Administrator,

and shall notify the Note Administrator and the Accounts Owner of the

respective amounts funded by each holder of a VFN.  The Note Administrator shall increase the applicable VFN Note

Balance on the registry maintained by the Note Administrator, and the Servicer

shall maintain records of the available commitments under the VFN Purchase

Agreement.  The Servicer will submit a

report to the Accounts Owner and to each Secondary Purchaser at the end of each

Increase Date Day outlining the day’s activity.

 

If the Servicer is notified by

the Note Administrator that a wire reported on the 5:30 p.m. report from any

Increase Day was not in fact received, then the Servicer shall use commercially

reasonable 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:

  	

   

  

 

34EXHIBIT 10.4

 

EXECUTION COPY

 

TRANSFER

AND SERVICING AGREEMENT

 

 

among

 

 

PACCT, LLC,

Transferor,

 

 

COMPUCREDIT CORPORATION,

Servicer

 

 

CSG FUNDING, LLC

O/C Holder

 

 

and

 

 

CSGQ,

Issuer

 

 

Dated as of June 25, 2002

 

 

TABLE OF

CONTENTS

 

	

  ARTICLE I

  	

  DEFINITIONS

  
	

   

  	

   

  
	

  Section 1.01.

  	

  Definitions

  
	

   

  	

   

  
	

  Section 1.02.

  	

  Other

  Definitional Provisions

  
	

   

  	

   

  
	

  ARTICLE II

  	

  CONVEYANCE OF

  RECEIVABLES

  
	

   

  	

   

  
	

  Section 2.01.

  	

  Conveyance of

  Receivables

  
	

   

  	

   

  
	

  Section 2.02.

  	

  Acceptance by Trust

  
	

   

  	

   

  
	

  Section 2.03.

  	

  Representations and Warranties of the

  Transferor Relating to the Transferor

  
	

   

  	

   

  
	

  Section 2.04.

  	

  Representations and Warranties of the

  Transferor Relating to this Agreement and the Receivables Purchase Agreements

  and the Receivables

  
	

   

  	

   

  
	

  Section 2.05.

  	

  Reassignment of Ineligible Receivables

  
	

   

  	

   

  
	

  Section 2.06.

  	

  Covenants of the Transferor

  
	

   

  	

   

  
	

  Section 2.07.

  	

  Covenants of the Transferor with Respect

  to Receivables Purchase Agreements

  
	

   

  	

   

  
	

  Section 2.08.

  	

  Removal of Receivables

  
	

   

  	

   

  
	

  ARTICLE

  III

  	

  ADMINISTRATION

  AND SERVICING OF RECEIVABLES

  
	

   

  	

   

  
	

  Section

  3.01.

  	

  Acceptance

  of Appointment and Other Matters Relating to the Servicer

  
	

   

  	

   

  
	

  Section 3.02.

  	

  Servicing Compensation

  
	

   

  	

   

  
	

  Section 3.03.

  	

  Representations, Warranties and Covenants

  of the Servicer

  
	

   

  	

   

  
	

  Section 3.04.

  	

  Reports and Records for the Owner Trustee

  and the Indenture Trustee

  
	

   

  	

   

  
	

  Section 3.05.

  	

  Annual Certificate of Servicer

  
	

   

  	

   

  
	

  Section 3.06.

  	

  Annual Servicing Report of Independent

  Public Accountants; Copies of Reports Available

  
	

   

  	

   

  
	

  Section 3.07.

  	

  Tax Treatment

  
	

   

  	

   

  
	

  Section 3.08.

  	

  Notices to CompuCredit

  
	

   

  	

   

  
	

  Section 3.09.

  	

  Adjustments

  
	

   

  	

   

  
	

  ARTICLE

  IV

  	

  OTHER

  MATTERS RELATING TO THE TRANSFEROR

  
	

   

  	

   

  
	

  Section 4.01.

  	

  Liability of the Transferor

  	 

	

   

  	

   

  	 

	

  Section 4.02.

  	

  Merger or Consolidation of, or Assumption

  of the Obligations of, the Transferor

  	 

	

   

  	

   

  	 

	

  Section 4.03.

  	

  Limitations on Liability of the Transferor

  	 

	

   

  	

   

  	 

	

  ARTICLE

  V

  	

  OTHER

  MATTERS RELATING TO THE SERVICER

  
	

   

  	

   

  
	

  Section 5.01.

  	

  Liability of the Servicer

  	 

						

 

i

 

	

  Section 5.02.

  	

  Merger or Consolidation of, or Assumption

  of the Obligations of, the Servicer

  	 

	

   

  	

   

  	 

	

  Section 5.03.

  	

  Limitation on Liability of the Servicer

  and Others

  	 

	

   

  	

   

  	 

	

  Section 5.04.

  	

  Servicer Indemnification of the Trust

  	 

	

   

  	

   

  	 

	

  Section 5.05.

  	

  Resignation of the Servicer

  	 

	

   

  	

   

  	 

	

  Section 5.06.

  	

  Access to Certain Documentation and

  Information Regarding the Receivables

  	 

	

   

  	

   

  	 

	

  Section 5.07.

  	

  Delegation of Duties

  	 

	

   

  	

   

  	 

	

  Section 5.08.

  	

  Examination of Records

  	 

	

   

  	

   

  	 

	

  Section 5.09.

  	

  Removal of CompuCredit under Credit Card

  Service and Administration Agreement

  	 

	

   

  	

   

  	 

	

  ARTICLE VI

  	

  [Reserved]

  
	

   

  	

   

  
	

  ARTICLE VII

  	

  SERVICER DEFAULTS

  
	

   

  	

   

  
	

  Section 7.01.

  	

  Servicer Defaults

  	 

	

   

  	

   

  	 

	

  Section 7.02.

  	

  Note Administrator To Act; Appointment of

  Successor

  	 

	

   

  	

   

  	 

	

  Section 7.03.

  	

  Notification to Noteholders

  	 

	

   

  	

   

  	 

	

  ARTICLE VIII

  	

  TERMINATION

  
	

   

  	

   

  
	

  Section 8.01.

  	

  Termination of Agreement

  	 

	

   

  	

   

  	 

	

  ARTICLE

  IX

  	

  MISCELLANEOUS

  PROVISIONS

  
	

   

  	

   

  
	

  Section 9.01.

  	

  Amendment; Waiver of Past Defaults

  
	

   

  	

   

  
	

  Section 9.02.

  	

  Protection of Right, Title and Interest to

  Trust Assets

  
	

   

  	

   

  
	

  Section 9.03.

  	

  GOVERNING LAW

  
	

   

  	

   

  
	

  Section 9.04.

  	

  Notices; Payments

  
	

   

  	

   

  
	

  Section 9.05.

  	

  Severability of Provisions

  
	

   

  	

   

  
	

  Section 9.06.

  	

  Further Assurances

  
	

   

  	

   

  
	

  Section 9.07.

  	

  No Waiver; Cumulative Remedies

  
	

   

  	

   

  
	

  Section 9.08.

  	

  Counterparts

  
	

   

  	

   

  
	

  Section 9.09.

  	

  Third-Party Beneficiaries

  
	

   

  	

   

  
	

  Section 9.10.

  	

  Actions by Noteholders

  
	

   

  	

   

  
	

  Section 9.11.

  	

  Rule 144A Information

  
	

   

  	

   

  
	

  Section 9.12.

  	

  Merger and Integration

  
	

   

  	

   

  
	

  Section 9.13.

  	

  Headings

  
	

   

  	

   

  
	

  Section 9.14.

  	

  Assignment

  
						

 

ii

 

	

  Section 9.15.

  	

  Nonpetition Covenant

  
	

   

  	

   

  
	

  Section 9.16.

  	

  Limitation of Liability

  
	

   

  	

   

  
	

  Section 9.17 

  	

  FASB Statement No. 140

  
	

   

  	

   

  
	

  Section 9.18 

  	

  Additional Representations and Warranties

  of the Transferor

  
	

   

  	

   

  
	

  Section 9.19 

  	

  Subordination

  
	

   

  
	

  EXHIBITS

  
	

   

  
	

  EXHIBIT

  A

  	

  Form

  of Annual Servicer’s Certificate

  
	

   

  	

   

  
	

  EXHIBIT

  B

  	

  Form

  of Reassignment

  
	

   

  	

   

  
	

  EXHIBIT C-1

  	

  Form of Opinion of Counsel with Respect to

  Amendments

  
	

   

  	

   

  
	

  EXHIBIT C-2

  	

  Form of Annual Opinion of Counsel with

  Respect to Accounts

  
	

   

  	

   

  
	

  EXHIBIT C-3

  	

  Form of Annual Opinion of Counsel to be

  Delivered to Moody’s Investors Service, Inc.

  
	

   

  	

   

  
	

   

  	

   

  
	

  SCHEDULES

  
	

   

  
	

  SCHEDULE

  1

  	

  List

  of Accounts

  
	

   

  	

   

  
	

  SCHEDULE

  2

  	

  Purchase

  Price

  
	

   

  	

   

  
	

  SCHEDULE

  3

  	

  Bank

  Agent Numbers

  
			

 

iii

 

TRANSFER AND SERVICING AGREEMENT, dated as of June 25,

2002, among PACCT, LLC, a Delaware limited liability company, as Transferor,

COMPUCREDIT CORPORATION, a Georgia corporation, as Servicer, CSG FUNDING, LLC,

a Delaware limited liability company, as O/C Holder, and CSGQ TRUST, a Delaware

business trust, as Issuer.

 

In consideration of the mutual agreements herein

contained, each party agrees as follows for the benefit of the other parties,

the Noteholders and any Series Enhancer (as defined below) to the extent

provided herein, in the Indenture and in any Indenture Supplement:

 

ARTICLE I

 

DEFINITIONS

 

Section 1.01.          Definitions.

Whenever used in this Agreement, the following words and phrases shall have the

following meanings, and the definitions of such terms are applicable to the

singular as well as the plural forms of such terms and to the masculine as well

as to the feminine and neuter genders of such terms.

 

“Account” shall mean (a) each Initial Account,

(b)  each Related Account, and (c) each Transferred Account, but shall

exclude any Account all the Receivables in which are either: (i) on the Removal

Date, removed pursuant to Section 2.08 or (ii) reassigned to an Accounts Owner

pursuant to a Receivables Purchase Agreement.

 

“Accounts Owner” shall mean, with respect to an

Account, Providian, initially, and subsequently shall mean any Person who has

acquired such an Account and has assumed the obligations of the Accounts Owner

under an account ownership and administration agreement or similar agreement.

 

“Accounts Ownership and Administration Agreement”

shall mean the Accounts Ownership and Administration Agreement, dated as of

June 25, 2002, among CSG, LLC, CompuCredit and the Accounts Owner, as amended,

amended and restated, supplemented or otherwise modified from time to time in

accordance with the terms thereof.

 

“Adverse Effect” shall mean, with respect to

any action, that such action will (a) result in the occurrence of a Redemption

Event or an Event of Default or (b) materially and adversely affect the amount

or timing of distributions to be made to the Noteholders of any Series or Class

pursuant to this Agreement, the Indenture or the related Indenture Supplement.

 

“Affiliate” shall mean, with respect to any

specified Person, any other Person controlling or controlled by or under common

control with such specified Person.  For

the purposes of this definition, “control” shall mean the power to direct the

management and policies of a Person, directly or indirectly, whether through

the ownership of voting securities, by contract or otherwise; and the terms

“controlling” and “controlled” have meanings correlative to the foregoing.

 

“Agreement” shall mean this Transfer and

Servicing Agreement, as the same may be amended, supplemented or otherwise

modified from time to time.

 

“Business Day” shall mean any day other than

(a) a Saturday or Sunday or (b) any other day on which banking

institutions in New York, New York or any other State in which the principal

executive offices of the Issuer, the Transferor, the Servicer, the Accounts

Owner, the Owner Trustee, the Indenture Trustee, the Certificate Trustee, the

Certificate Administrator or the Note Administrator are

 

 

located, are authorized or obligated by law, executive order or

governmental decree to be closed or (c) for purposes of any particular Series,

any other day specified in the related Indenture Supplement.

 

“Cash Advance Fees” shall mean cash advance

transaction fees and cash advance late fees, if any, as specified in the Credit

Card Agreement applicable to each Account.

 

“Class” shall have the meaning specified in the

Indenture.

 

“Class Action Settlement” shall mean the

settlement agreement in In re Providian Credit Card Cases, Judicial Council

Coordination Proceeding No. 4085.

 

“Closing Date” shall mean, with respect to any

Series, the closing date specified in the related Indenture Supplement.

 

“Collections” shall mean all payments by or on

behalf of Obligors (including Insurance Proceeds) received in respect of the

Receivables, in the form of cash, checks, wire transfers, electronic transfers,

ATM transfers or any other form of payment in accordance with a Credit Card

Agreement in effect from time to time and all other amounts specified by this

Agreement, the Indenture or any Indenture Supplement as constituting

Collections.  All payments of the

repurchase price with respect to Ineligible Receivables that are repurchased

from the Issuer by the Transferor or the Accounts Owner and all Recoveries with

respect to Receivables previously charged off as uncollectible will be treated

as Collections of Finance Charge Receivables. 

Collections with respect to any Monthly Period shall include

Interchange, calculated pursuant to subsection 3.03(m), paid to the Trust

with respect to such Monthly Period, to be applied as if such amount were

Collections of Finance Charge Receivables for all purposes.  All payments received by the Accounts Owner

with respect to refused and returned merchandise shall, to the extent the

related Principal Receivable has been purchased from the Accounts Owner and

conveyed to the Trust, be treated as Collections of Principal Receivables.

 

 “CompuCredit”

shall mean CompuCredit Corporation, a Georgia corporation.

 

“Contractually Delinquent” with respect to an

Account, shall mean an Account as to which the required minimum payment set forth

on the related billing statement has not been received by the due date thereof.

 

“Corporate Trust Office” shall have the meaning

(a) when used in respect of the Owner Trustee, specified in the Trust Agreement

and (b) when used in respect of the Indenture Trustee or Note Administrator,

specified in the Indenture.

 

“Credit Card Agreement” shall mean, with

respect to a revolving credit card account, the agreement or agreements between

an Accounts Owner (including any predecessor in interest to such Accounts

Owner) and the Obligor governing the terms and conditions of such account, as

such agreements may be amended, modified or otherwise changed from time to time

and as distributed (including any amendments and revisions thereto) to holders

of such account.

 

“Credit Card Guidelines” shall mean the written

policies and procedures of the Servicer for servicing credit card receivables

comparable to the Receivables established in accordance with the Credit Card

Service and Administration Agreement.

 

“Credit Card Service and Administration Agreement”

shall mean that certain Credit Card Service and Administration Agreement, dated

as of April 11, 2002, between CompuCreditand CSG, LLC.

 

2

 

“Cut-Off Date” shall have the meaning specified

in the Indenture.

 

“Cut-Off Time” shall mean 11:59 p.m. on January

31, 2002.

 

“Date of Processing” shall mean, with respect

to any transaction or receipt of Collections, the date on which such

transaction is first recorded on the Servicer’s computer file of revolving

credit card accounts (without regard to the effective date of such recordation

or the date on which any subservicer records such transaction on its computer

file).

 

“Defaulted Amount” shall mean, with respect to

any Monthly Period, an amount (which shall not be less than zero) equal to (a)

the amount of Principal Receivables and Finance Charge Receivables which became

Defaulted Receivables in such Monthly Period (after giving effect to any

adjustments made pursuant to Section 3.09), plus (b) any Receivables which are

identified as not being Eligible Receivables during such Monthly Period, plus

(c) any adjustments with respect to such Monthly Period pursuant to subsection

3.09(a).

 

“Defaulted Receivables” shall mean, with respect

to any Monthly Period, all Principal Receivables and Finance Charge Receivables

which are charged off as uncollectible in such Monthly Period in accordance

with the Credit Card Guidelines and the Servicer’s customary and usual

servicing procedures for servicing consumer revolving credit card and other

revolving credit account receivables comparable to the Receivables.  A Receivable shall become a Defaulted

Receivable on the day on which such Receivable is recorded as charged off on

the Servicer’s computer master file of consumer revolving credit card accounts

but, in any event, shall be deemed a Defaulted Receivable no later than the

month following the day the related Account becomes 180 days Contractually

Delinquent unless the Obligor cures such default by making a partial payment

which satisfies the criteria for curing delinquencies set forth in the

applicable Credit Card Guidelines.

 

“Determination Date” shall have the meaning

specified in the Indenture.

 

“Distribution Date” shall mean, with respect to

any Series, the date specified in the applicable Indenture Supplement.

 

“Dollars,” “$” or “U.S. $” shall

mean United States dollars.

 

“Eligible Account” shall mean, as of the

Cut-Off Time, each MasterCard®(1) or VISA®(2) consumer

revolving credit card account owned by Providian:

 

(a)           which

is in existence and maintained by Providian;

 

(b)           which

is payable in Dollars;

 

(c)           the

Obligor of which has provided, as his or her billing address, an address

located in the United States or the Obligor of which has a military address;

 

(d)           the

Obligor of which has not been identified by Providian or the Servicer in its

computer files as having been declared bankrupt;

 

(e)           which

has not been identified as an account the credit card or cards with respect

 

(1) MasterCard is a registered trademark of MasterCard International

Incorporated

(2) VISA is a registered trademark of VISA USA, Inc.

 

3

 

to which have been reported to Providian as having been lost or stolen

or which has an Obligor who has not been identified as deceased;

 

(f)            which

does not have outstanding Receivables which have been sold or pledged to any

party other than the Transferor pursuant to a Receivables Purchase Agreement,

except to the extent any such pledge or lien has been released;

 

(g)           which does not have any Receivables

that give rise to any claim against any governmental agency, including, without

limitation, the United States of America or any one of the states thereof, or

any agency, instrumentality, or department thereof;

 

(h)           which is not a Secured Account; and

 

(i)            which does not have any Receivables

that have been identified by Providian or the relevant Obligor as having been

incurred as a result of fraudulent use of any related credit card.

 

“Eligible Receivable” shall mean each

Receivable:

 

(a)         which has arisen in an Eligible

Account;

 

(b)         which was created in compliance, in all

material respects, with all Requirements of Law applicable to the institution

which owned such Receivable at the time of its creation and pursuant to a

Credit Card Agreement which complies in all material respects with all

Requirements of Law applicable to Providian or any other Accounts Owner, as

applicable;

 

(c)         with respect to which all material

consents, licenses, approvals or authorizations of, or registrations or

declarations with, any Governmental Authority required to be obtained, effected

or given in connection with the creation of such Receivable or the execution,

delivery and performance by Providian or any other Accounts Owner, as

applicable, of its obligations, if any, under the related Credit Card Agreement

pursuant to which such Receivable was created, have been duly obtained,

effected or given and are in full force and effect;

 

(d)         as to which at the time of its transfer

to the Trust, the Transferor or the Trust will have good and marketable title

thereto, free and clear of all Liens (other than any Lien for municipal or

other local taxes if such taxes are not then due and payable or if the

Transferor is then contesting the validity thereof in good faith by appropriate

proceedings and has set aside on its books adequate reserves with respect

thereto);

 

(e)           which

has been the subject of either a valid transfer and assignment from the

Transferor to the Trust of all of the Transferor’s right, title and interest

therein (including any proceeds thereof), or the grant of a first priority

perfected security interest therein (and in the proceeds thereof), effective

until the termination of the Trust;

 

(f)            which,

at the time of its transfer to the Trust, is the legal, valid and binding

payment obligation of the Obligor thereon enforceable against such Obligor in

accordance with its terms, except as such enforceability may be limited by

applicable bankruptcy, insolvency, reorganization, moratorium or other similar

laws, now or hereafter in effect, affecting the enforcement of creditors’

rights in general and except as such enforceability may be limited by general

principles of equity (whether considered in a suit at law or in equity), and

except as such enforceability may be limited by a right to offset, recoupment,

adjustment or any other claim under 12 CFR § 226.12(c), 12 CFR § 226.13(d) and

the Soldiers’ and Sailors’ Civil Relief Act of 1940, as amended;

 

4

 

(g)           which,

at the time of its transfer to the Trust, has not been waived or modified

except as permitted in accordance with the customary policies and procedures,

as amended from time to time, of Providian or any other Accounts Owner, as

applicable, and then only if such waiver or modification is reflected in the

applicable Accounts Owner’s or the Servicer’s computer file of revolving credit

card accounts or, with respect to terms other than pricing terms, otherwise on

its books and records;

 

(h)           which,

at the time of its transfer to the Trust, is not subject to any right of

rescission, setoff, counterclaim or any other defense (including defenses

arising out of violations of usury laws) of the Obligor, other than defenses

arising out of applicable bankruptcy, insolvency, reorganization, moratorium or

other similar laws affecting the enforcement of creditors’ rights in general

and except as such enforceability may be limited by general principles of

equity (whether considered in a suit at law or equity), and other than under

the Class Action Settlement;

 

(i)          as to which, at the time of its

transfer to the Trust, Providian or any other Accounts Owner, as applicable,

has satisfied all of its obligations under the applicable Credit Card Agreement

to the applicable Obligor required to be satisfied by such time, and other than

under the Class Action Settlement;

 

(j)          as to which, at the time of its

transfer to the Trust, none of the Transferor, the Servicer, or Providian or

any other Accounts Owner, as the case may be, has taken any action which would

impair, or omitted to take any action the omission of which would impair, the

rights of the Trust or the Noteholders therein; and

 

(k)         which constitutes an “account” under

and as defined in Article 9 of the UCC in effect in the States of Delaware, New

York or any other state where the filing of a financing statement is required

to perfect the Trust’s interest in the Receivables and the proceeds thereof.

 

“Eligible Servicer” shall mean the Note

Administrator or, if the Note Administrator is not acting as Servicer, an

entity which, at the time of its appointment as Servicer, (a) is servicing

a portfolio of revolving credit card accounts, (b) is legally qualified

and has the capacity to service the Accounts, (c) has demonstrated the

ability to service professionally and competently a portfolio of similar

accounts in accordance with high standards of skill and care, (d) is

qualified to use the software that is then being used to service the Accounts

or obtains the right to use or has its own software which is adequate to

perform its duties under this Agreement and (e) has a net worth of at

least $50,000,000 as of the end of its most recent fiscal quarter.

 

“Event of Default” shall have the meaning

specified in the Indenture.

 

“Excluded Account” shall mean any account and

its associated receivables that met one of the following criteria as of the

Cut-Off Time:

 

(a)           any

account that has a disputed balance of which Providian has written notice as of

the Cut-Off Time;

 

(b)           any

account (i) with respect to which a filing has been made by the related

cardholder under Title 11 of the United States Code or any other bankruptcy,

insolvency or other similar laws providing for relief of debtors, whether such

filing is voluntary or involuntary or (ii) which has or should have (in

accordance with Providian’s customary policies and procedures) an internal

credit rating to that effect;

 

5

 

(c)           any

account (i) that has been charged-off or (ii) which has or should have (in

accordance with Providian’s customary policies and procedures) an account

status to that effect;

 

(d)           any

account (i) the cardholder of which is deceased or (ii) which has or should

have (in accordance with Providian’s customary policies and procedures) an

account status to that effect;

 

(e)           any

account that is currently under litigation other than accounts that are in

legal collection but have not been charged-off; provided that accounts that are

subject to the Class Action Settlement shall not be Excluded Accounts solely by

reason of being subject thereto;

 

(f)            any

account where the applicable cardholder would have been a member of a class

action lawsuit relating to the business practices of Providian or its

affiliates but for the fact that such cardholder opted out of the applicable

suit or settlement;

 

(g)           any

account (i) with respect to which the related cardholder has notified Providian

involves or is alleged to involve unauthorized use or fraud or a lost or stolen

credit card or (ii) that has been classified, or should have been classified

(in accordance with Providian’s customary policies and procedures) by

Providian, as of the Cut-Off Time, as a Lost/Stolen/Fraud credit rating;

 

(h)           any

closed account with a net credit balance as of the Cut-Off Time;

 

(i)            any

account in the name of an employee, officer or director of Providian;

 

(j)            any

account classified, or that should have been classified (in accordance with

Providian’s customary policies and procedures) by Providian, as of the Cut-Off

Time, as a security account closure or that has an internal credit rating to

that effect;

 

(k)           any

account that is not subject to a valid cardholder agreement that is the legal,

valid and binding obligation of the related cardholder, enforceable in

accordance with its terms, except as such enforcement may be limited by

bankruptcy, insolvency, reorganization, moratorium and other laws relating to

or affecting creditors’ rights generally and by general equity principles or as

otherwise may be limited by a right to offset, recoupment, adjustment or any

other claim under 12 CFR § 226.12(c), 12 CFR § 226.13(d) and the Soldiers’ and

Sailors’ Civil Relief Act of 1940, as amended;

 

(l)            any

account that is a Secured Account;

 

(m)          any

account as to which a corporate entity is the cardholder or which is issued to

a cardholder due to his or her status as an employee of a company having a

commercial credit card account with Providian;

 

(n)           any

account the cardholder of which does not have an address located in the United

States, except for cardholders that have a military address;

 

(o)           any

account which is a merchant account and its associated processing;

 

(p)           any

account that has a zero balance as of the Cut-Off Time;

 

(q)           any

account on which the related cardholder has never made a payment;

 

(r)            any

account that is payable in a currency other than Dollars;

 

6

 

(s)           any

account that is or may potentially be included in a certain class action

litigation against Providian known as the “Alabama Litigation” as defined in

the Sale and Purchase Agreement;

 

(t)            any

account that has been re-aged in a manner not in accordance with Providian’s

customary policies and procedures; and

 

(u)           any

account that has activated credit protection.

 

“FDIC” shall mean the Federal Deposit Insurance

Corporation or any successor.

 

“Finance Charge Receivables” shall mean all

amounts billed to the Obligors on any Account in respect of (a) all

Periodic Rate Finance Charges, (b) Cash Advance Fees, (c) annual

membership fees and annual service charges, (d) Late Fees,

(e) Overlimit Fees and (f) all other fees and charges that are

reflected as fees on the related Processor’s system.  Finance Charge Receivables shall also include Interchange and all

Recoveries with respect to Receivables previously charged off as uncollectible

or which became Ineligible Receivables and are repurchased from the Issuer by

the Transferor or by the Accounts Owner.

 

“Governmental Authority” shall mean the United

States of America, any state or other political subdivision thereof and any

entity exercising executive, legislative, judicial, regulatory or

administrative functions of or pertaining to government.

 

“Indenture” 

shall mean the Master Indenture, dated as of June 25, 2002, among the

Issuer, the Indenture Trustee and the Note Administrator, as the same may be

amended, supplemented or otherwise modified from time to time.

 

“Indenture Collateral” shall have the meaning

specified in Section 2.01.

 

“Indenture Supplement” shall have the meaning

specified in the Indenture.

 

“Indenture Trustee” shall mean U.S. Bank

National Association, in its capacity as trustee under the Indenture, its

successors in interest and any successor indenture trustee under the Indenture.

 

“Ineligible Receivables” shall mean any

Receivable that has been determined to be a Receivable arising from a Covered

Account (as defined in the Receivables Purchase Agreement).

 

“Initial Account” shall mean each MasterCard®

and VISA® consumer revolving credit card account, which account is

in existence at the Cut-Off Time and is identified in the computer file or

microfiche list delivered to the Owner Trustee by the Transferor pursuant to

Section 2.01 on or prior to the Initial Issuance Date.

 

“Initial Issuance Date” shall mean June 25,

2002, the date that the Transferor Certificate is delivered by the Trust to the

Transferor pursuant to the Trust Agreement.

 

“Insolvency Event” shall mean the consent of or

failure of the Transferor 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

 

7

 

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 the Transferor shall admit in writing its inability to pay its

debts generally as they become due, file, or consent or fail to object (or

object without dismissal of any such filing within sixty (60) days of such

filing) to the filing of, a petition to take advantage of any applicable

bankruptcy, insolvency or reorganization, receivership or conservatorship

statute, make an assignment for the benefit of its creditors or voluntarily

suspend payment of its obligations; or any order or decree providing for relief

under any applicable bankruptcy, insolvency or reorganization, receivership or

conservatorship statute shall be entered.

 

“Insurance Proceeds” shall mean any amounts

received pursuant to the payment of benefits under any credit life insurance

policies, credit disability or unemployment insurance policies covering any

Obligor with respect to Receivables under such Obligor’s Account.

 

“Interchange” shall mean the portion allocable

to the Accounts of interchange fees payable to the Accounts Owner through

MasterCard or VISA in connection with cardholder charges for goods, services

and cash advances.

 

“Invested Amount” shall mean, with respect to

any Series and for any date, an amount equal to the invested amount or adjusted

invested amount, as applicable, specified in the related Indenture Supplement.

 

“Issuer” shall mean the Trust.

 

“Knowledge” shall mean, with respect to the

Servicer, what is actually known without independent investigation by any

officer of the Servicer with a title of Vice President or above.

 

“Late Fees” shall have the meaning specified in

the Credit Card Agreement applicable to each Account for late fees or similar

items.

 

“Lien” shall mean any mortgage, deed of trust,

pledge, hypothecation, assignment, deposit arrangement, equity interest,

encumbrance, lien (statutory or other), preference, participation interest,

priority or other security agreement or preferential arrangement of any kind or

nature whatsoever, including any conditional sale or other title retention

agreement, any financing lease having substantially the same economic effect as

any of the foregoing and the filing of any financing statement under the UCC or

comparable law of any jurisdiction to evidence any of the foregoing; provided,

however, that any assignment permitted by subsection 3.06(b) of the

Trust Agreement or Section 4.02 of, and the lien created by, this Agreement

shall not be deemed to constitute a Lien.

 

“MasterCard” shall mean MasterCard

International Incorporated, and its successors in interest.

 

“Monthly Period” shall have the meaning

specified in the Indenture.

 

“Monthly Servicing Fee” shall have the meaning

specified in Section 3.02.

 

“Moody’s” shall mean Moody’s Investors Service,

Inc. and any successors thereto.

 

8

 

“Non-Conforming Terms Change Receivables” shall

mean Receivables with respect to which (a) the Accounts Owner (i) fails to

implement a change requested by CSG, LLC under the Accounts Ownership Agreement

and (ii) fails to present documentation, within ten (10) Business Days after

receiving such request for an Account change, evidencing the rights of such

Accounts Owner to object to, and decline to implement, such change in

accordance with the terms of Section 2.02 of the Accounts Ownership Agreement,

and (b) the Servicer has notified the Purchaser and the Trust that CSG, LLC has

determined to suspend purchases rather than seek injunctive relief with respect

to such failure pursuant to such Section.

 

“Note Administrator” shall mean Citibank, N.A.,

in its capacity as note administrator under the Indenture, its successors in

interest and any successor note administrator under the Indenture.

 

“Note Interest Rate” shall have the meaning

specified in the Indenture.

 

“Note Owner” shall have the meaning specified

in the Indenture.

 

“Note Register” shall have the meaning

specified in the Indenture.

 

“Noteholder” or “Holder” shall have the

meaning specified in the Indenture.

 

“Notices” shall have the meaning specified in

subsection 9.04(a).

 

“O/C Holder” shall mean CSG Funding, LLC.

 

“Obligor” shall mean, with respect to any

Account, the Person or Persons obligated to make payments with respect to such

Account, including any guarantor thereof, but excluding any merchant.

 

“Officer’s Certificate” shall have the meaning

specified in the Indenture.

 

“Opinion of Counsel” shall have the meaning

specified in the Indenture.

 

“Overlimit Fees” shall have the meaning

specified in the Credit Card Agreement applicable to each Account for overlimit

fees or similar items if such fees are provided for with respect to such

Account.

 

“Owner Trustee” shall mean Wilmington Trust

Company, not in individual its capacity, but solely as owner trustee under the

Trust Agreement, its successors in interest and any successor owner trustee

under the Trust Agreement.

 

“Paying Agent” shall have the meaning specified

in the Indenture.

 

“Periodic Rate Finance Charges” shall have the

meaning specified in the Credit Card Agreement applicable to each Account for

finance charges (due to periodic rate) or any similar items.

 

“Person” shall mean any legal person, including

any individual, corporation, limited liability company, partnership, joint

venture, association, joint-stock company, trust, unincorporated organization,

governmental entity or other entity of any nature.

 

“Principal Receivables” shall mean all

Receivables other than Finance Charge Receivables or Defaulted

Receivables.  In calculating the

aggregate amount of Principal Receivables on

 

9

 

any day, the amount of Principal Receivables shall be reduced by the

aggregate amount of credit balances in the Accounts on such day.

 

“Processor” shall mean First Data Resources,

Inc. or Total System Services, Inc.

 

“Providian” shall mean Providian National Bank.

 

“Rating Agency” shall have the meaning

specified in the Indenture.

 

“Rating Agency Condition” shall have the

meaning specified in the Indenture.

 

“Receivables” shall mean all amounts shown on

the Servicer’s records as amounts payable by Obligors on any Account from time

to time, with respect to Principal Receivables and Finance Charge

Receivables.  Receivables which become

Defaulted Receivables will cease to be included as Receivables as of the day on

which they become Defaulted Receivables.

 

“Receivables Purchase Agreement” shall mean any

receivables purchase agreement entered into between an Accounts Owner and the

Transferor whereby Receivables with respect to the Accounts, certain rights to

which were purchased under the Sale and Purchase Agreement, are transferred

from such Accounts Owner to the Transferor, or any other receivables purchase

agreement relating to the Accounts entered into between the Transferor and an

Accounts Owner in the future; provided that before the Transferor shall

enter into any such other receivables purchase agreement, (a) the Rating Agency

Condition is satisfied with respect to such receivables purchase agreement and

(b) the O/C Holder shall have delivered to the Indenture Trustee and the Note

Administrator an Officer’s Certificate to the effect that such officer

reasonably believes that the execution and delivery of such receivables

purchase agreement and the transfer of Receivables to the Transferor will not

have an Adverse Effect.

 

“Recoveries” shall

mean (i) all amounts received (net of out-of-pocket costs of collection, to the

extent such costs can be netted out) including Insurance Proceeds, which are

reasonably estimated by the Servicer to be attributable to Defaulted

Receivables, including the net proceeds of any sale of such Defaulted

Receivables and (ii) all amounts received from the Accounts Owner in respect of

such party’s repurchase of Ineligible Receivables from the Issuer.

 

“Redemption Event” shall have the meaning

specified in the Indenture.

 

“Registered Notes” shall have the meaning

specified in the Indenture.

 

“Related Account” shall mean an Account with

respect to which a new credit account number has been issued by the applicable

Accounts Owner or the Servicer under circumstances resulting from a lost or

stolen credit card and not requiring standard application and credit evaluation

procedures under the Credit Card Guidelines.

 

“Removal Date” shall have the meaning specified

in subsection 2.08(a) or subsection 2.08(b), as applicable.

 

“Removed Receivables” shall have the meaning

specified in subsection 2.08(a) and subsection 2.08(b).

 

“Requirements of Law” shall mean any law,

treaty, rule or regulation, or determination of an arbitrator or Governmental

Authority, whether Federal, state or local (including usury laws, the Federal

Truth in Lending Act and Regulation B and Regulation Z of the Board of

Governors of the

 

10

 

Federal Reserve System), and, when used with respect to any Person, the

certificate of incorporation and by-laws or other organizational or governing

documents of such Person.

 

“Sale and Purchase Agreement” shall mean the

Sale and Purchase Agreement, dated as of April 11, 2002, as amended by the

First Amendment to the Sale and Purchase Agreement, dated as of May 30, 2002,

each between Providian and CSG, LLC, as modified by the Sale and Purchase Side

Agreement, dated as of June 25, 2002, among Providian, CSG, LLC and the

Transferor, as each such agreement may be amended, supplemented or otherwise

modified from time to time.

 

“Secured Account” shall mean any Account for

which the related Obligor has pledged assets or made a cash collateral deposit

as security for payment of the Receivables arising in such Account.

 

“Series” shall have the meaning specified in

the Indenture.

 

“Series Account” shall have the meaning

specified in the Indenture.

 

“Series Enhancement” shall have the meaning

specified in the Indenture.

 

“Series Enhancer” shall have the meaning

specified in the Indenture.

 

“Service Transfer” shall have the meaning

specified in Section 7.01.

 

“Servicer” shall mean CompuCredit and, after

any Service Transfer, the Successor Servicer.

 

“Servicer Default” shall have the meaning

specified in Section 7.01.

 

“Servicing Fee” shall have the meaning

specified in Section 3.02.

 

“Servicing Fee Rate” shall mean, with respect

to any Series, the servicing fee rate specified in the related Indenture

Supplement.

 

“Standard & Poor’s” shall mean Standard

& Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc.,

and any successors thereto.

 

“Successor Servicer” shall have the meaning

specified in subsection 7.02(a).

 

“Tax Opinion” shall have the meaning specified

in the Indenture.

 

“Termination Notice” shall have the meaning

specified in subsection 7.01(d).

 

“Transaction Documents” shall have the meaning

specified in the Indenture.

 

“Transfer Agent and Registrar” shall have the

meaning specified in the Indenture.

 

“Transferor” shall mean PACCT, LLC, or its

successor under this Agreement.

 

“Transferor Amount” shall have the meaning

specified in the Indenture.

 

“Transferor Certificates” shall have the

meaning specified in the Trust Agreement.

 

11

 

“Transferred Account” shall mean each account

into which an Account shall be transferred; provided that (i) such

transfer was made in accordance with the Credit Card Guidelines and (ii) such

account can be traced or identified as an account into which an Account has

been transferred.

 

“Trust” shall mean the CSGQ Trust.

 

“Trust Agreement” shall mean the Trust

Agreement relating to the Trust, dated as of June 24, 2002, among the

Transferor, the O/C Holder and the Owner Trustee, as the same may be amended,

supplemented or otherwise modified from time to time.

 

“Trust Assets” shall have the meaning specified

in Section 2.01.

 

“UCC” shall mean the Uniform Commercial Code,

as amended from time to time, as in effect in any specified jurisdiction.

 

“VISA” shall mean VISA U.S.A., Inc., and its

successors in interest.

 

Section 1.02.          Other

Definitional Provisions.

 

(a)           With

respect to any Series, all terms used herein and not otherwise defined herein

shall have meanings ascribed to them in the Trust Agreement, the Indenture or

the related Indenture Supplement, as applicable.

 

(b)           All

terms defined in this Agreement shall have the defined meanings when used in

any certificate or other document made or delivered pursuant hereto unless

otherwise defined therein.

 

(c)           As

used in this Agreement and in any certificate or other document made or

delivered pursuant hereto or thereto, accounting terms not defined in this

Agreement or in any such certificate or other document, and accounting terms

partly defined in this Agreement or in any such certificate or other document

to the extent not defined, shall have the respective meanings given to them

under GAAP.  To the extent that the

definitions of accounting terms in this Agreement or in any such certificate or

other document are inconsistent with the meanings of such terms under GAAP, the

definitions contained in this Agreement or in any such certificate or other

document shall control.

 

(d)           Any

reference to a Rating Agency shall apply to a specific rating agency only if

such rating agency is then rating any outstanding Series.

 

(e)           Unless

otherwise specified, references to any amount as on deposit or outstanding on

any particular date shall mean such amount at the close of business on such

day.

 

(f)            The

words “hereof,” “herein,” “hereunder” and words of similar import when used in

this Agreement shall refer to this Agreement as a whole and not to any

particular provision of this Agreement; references to any subsection, Section,

Schedule or Exhibit are references to subsections, Sections, Schedules and Exhibits

in or to this Agreement unless otherwise specified; and the term “including”

means “including without limitation.”

 

[END OF ARTICLE I]

 

12

 

ARTICLE II

 

CONVEYANCE OF RECEIVABLES

 

Section 2.01.          Conveyance

of Receivables. 

By execution of this Agreement, PACCT, LLC does hereby transfer, assign,

set over and otherwise convey to the Trust, without recourse except as provided

herein, all its right, title and interest, whether now owned or hereafter

acquired, in, to and under the Receivables existing at the close of business on

the Cut-Off Date and thereafter created from time to time in the Initial

Accounts until the termination of the Trust, all Interchange and Recoveries

allocable to the Trust as provided herein, all its right, title and interest

in, to and under the Receivables Purchase Agreement, all monies due or to

become due and all amounts received or receivable with respect thereto and all

proceeds (including “proceeds” as defined in the UCC) thereof.  The property described in the preceding

sentence, together with all monies and other property credited to the

Collection Account and the Series Accounts (including any subaccounts of any

such account), the rights of the Trust under this Agreement and the Trust

Agreement and the right to receive Recoveries attributed to cardholder charges

for merchandise and services in the Accounts 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, the Owner Trustee (as such or in its

individual capacity), the Indenture Trustee, the Note Administrator, the

Certificate Trustee, the Certificate Administrator or any Noteholder of any

obligation of any Accounts Owner, any Transferor, the Servicer 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, VISA, MasterCard or insurers.  The Obligors shall not be notified in

connection with the creation of the Trust of the transfer, assignment, set-over

and conveyance of the Receivables to the Trust.

 

The Transferor agrees to record and file, at the O/C

Holder’s expense, financing statements (and continuation statements when

applicable) with respect to the Receivables conveyed by the Transferor existing

at the Cut-Off Time and thereafter created meeting the requirements of

applicable state law in such manner and in such jurisdictions as are necessary

to perfect, and maintain the perfection of, the transfer and assignment of its

interest in such Receivables to the Trust, and to deliver a file stamped copy

of each such financing statement or other evidence of such filing to the Owner

Trustee as soon as practicable after the first Closing Date, in the case of

Receivables arising in the Initial Accounts. 

The Owner Trustee shall be under no obligation whatsoever to file such

financing or continuation statements or to make any other filing under the UCC

in connection with such transfer and assignment.

 

The Transferor further agrees, at the O/C Holder’s

expense, on or prior to (x) the first Closing Date, in the case of the Initial

Accounts and (y) the applicable Removal Date, in the case of the Accounts

relating to any Removed Receivables, (a) to cause the Accounts Owner to

indicate in its respective computer files that Receivables created (or

reassigned, in the case of Removed Receivables) in connection with the Accounts

have been conveyed to the Trust pursuant to this Agreement (or conveyed to the

Servicer or its designee in accordance with Section 2.08, in the case of

Removed Receivables) by including in (or deleting from in the case of Removed

Receivables) such computer files the bank agent numbers as indicated on Schedule

3 to this Agreement indicating the Trust’s ownership of the

Receivables, and (b) to deliver to the Trust a computer file or microfiche list

containing a true and complete list of all such Accounts specifying for each

such Account, as of the Cut-Off Date, in the case of the Initial Accounts, and

the applicable Removal Date in the case of Accounts relating to any Removed

Receivables, its account number and the aggregate amount outstanding in such

Account.  Each such file or list, as

supplemented, from time to time, to reflect Removed Receivables, shall be

marked as Schedule 1 to this Agreement and is hereby incorporated

into and made a part of this Agreement. 

The Transferor further agrees not to alter the code referenced in this

paragraph with respect to any Account during the term of this Agreement unless

and until the Receivables in such Account become Removed Receivables.

 

13

 

The parties to this Agreement intend that the

conveyance of the Receivables and other Trust Assets pursuant to this Agreement

constitute a sale, and not a secured borrowing, for accounting purposes.  Notwithstanding such intent, if the

arrangements with respect to the Receivables hereunder shall constitute a loan

and not a purchase and sale of such Receivables, it is the intention of the

parties hereto that this Agreement shall constitute a security agreement under

applicable law, and the Transferor hereby grants to the Trust a first priority

perfected security interest in all of the Transferor’s right, title and

interest, whether owned as of the Cut-Off Date or thereafter acquired, in, to

and under the Trust Assets, and all money, accounts, general intangibles,

chattel paper, instruments, documents, goods, investment property, deposit

accounts, certificates of deposit, letters of credit, and advices of credit

consisting of, arising from or related to the Trust Assets, and all proceeds

thereof, to secure its obligations hereunder.

 

To the extent that the Transferor retains any interest

in the Trust Assets, the Transferor hereby grants to the Indenture Trustee for

the benefit of the Noteholders and the O/C Holder a security interest in all of

the Transferor’s right, title, and interest, whether owned on the Cut-Off Date

or thereafter acquired, in, to, and under the Trust Assets, and all money,

accounts, general intangibles, chattel paper, instruments, documents, goods,

investment property, deposit accounts, certificates of deposit, letters of credit,

and advices of credit consisting of, arising from, or related to the Trust

Assets, and all proceeds thereof (collectively, the “Indenture Collateral”),

to secure its obligations hereunder. With respect to the Indenture Collateral,

the Indenture Trustee shall have all of the rights that it has under the

Indenture and all of the rights of a secured creditor under the UCC.

 

In consideration for the Receivables in the Accounts

at the initial Closing Date and the other Trust Assets transferred to the Trust

on the date of this Agreement, the Trust shall convey to the Transferor the

securities set forth on Schedule 2 hereto.  With respect to the transfer of the

Receivables in the Accounts created after the initial Closing Date, the Trust

shall pay to the Transferor an amount equal to the principal amount of such

Receivables; provided that if so directed by CSG, LLC in accordance with

the terms of Section 2.02 of the Accounts Ownership and Administration

Agreement, the Trust shall not make any payments to the Transferor (but the

Transferor shall remain obligated to transfer such Receivables to the Trust in

accordance with the first paragraph of this Section 2.01) with respect to any

Non-Conforming Terms Change Receivables (as defined in the Receivables Purchase

Agreement).

 

Section 2.02.          Acceptance

by Trust.

 

(a)           The

Trust hereby acknowledges its acceptance of all right, title and interest to

the property, now existing and hereafter created, conveyed to the Trust

pursuant to Section 2.01.  The Trust

further acknowledges that, prior to or simultaneously with the execution and

delivery of this Agreement, the Transferor delivered to the Trust the computer

file or microfiche list relating to the Initial Accounts described in the third

paragraph of Section 2.01.  The Trust

shall maintain a copy of Schedule 1, as delivered from time to

time, with the Administrator.

 

(b)           The

Trust hereby agrees not to disclose to any Person any of the account numbers or

other information contained in the computer files or microfiche lists marked as

Schedule

1 and delivered to the Trust, from time to time, except (i) to a

Successor Servicer or as required by a Requirement of Law, (ii) in connection

with the performance of the Owner Trustee’s or the Trust’s duties hereunder,

(iii) to the Note Administrator and the O/C Holder in connection with its

duties hereunder and under the other Transaction Documents, (iv) to the

Indenture Trustee in connection with its duties in enforcing the rights of

Noteholders or (v) to bona fide creditors or potential creditors of any

Accounts Owner, the Servicer, or the Transferor for the limited purpose of

enabling any such creditor to identify applicable Receivables or Accounts

subject to this Agreement.  The Trust

agrees to take such measures as shall be reasonably requested by the Transferor

or the O/C Holder to protect and maintain the security and

 

14

 

confidentiality of such information and, in connection therewith, shall

allow the Transferor or the O/C Holder or their duly authorized representatives

to inspect the Trust’s security and confidentiality arrangements as they

specifically relate to the administration of the Trust from time to time during

normal business hours upon prior written notice.  The Trust shall provide the Transferor and the O/C Holder with

notice five (5) Business Days prior to disclosure of any information of the

type described in this subsection 2.02(b).

 

Section 2.03.          Representations

and Warranties of the Transferor Relating to the Transferor.  The Transferor hereby represents and

warrants to the Trust (and agrees that the Owner Trustee, the Note

Administrator and the Indenture Trustee may conclusively rely on each such

representation and warranty in accepting the Receivables in trust and the

Indenture Trustee may conclusively rely on each such representation and

warranty in authenticating the Notes) and the Servicer as of each Closing Date

that:

 

(a)           Organization

and Good Standing.  The Transferor

is duly formed, validly existing and in good standing under the laws of the

jurisdiction of its formation and has, in all material respects, full power and

authority to own its properties and conduct its business as presently owned or

conducted, and to execute, deliver and perform its obligations under this

Agreement and any Receivables Purchase Agreement to which it is a party.

 

(b)           Due

Qualification.  The 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 (i) render any Credit

Card Agreement relating to an Account specified in a Receivables Purchase Agreement

with the Transferor or any Receivable conveyed to the Trust unenforceable by

the Transferor or the Trust or (ii) have a material adverse effect on the

Noteholders.

 

(c)           Due

Authorization.  (i) The

execution and delivery of this Agreement and any Receivables Purchase Agreement

to which it is a party and the order to the Owner Trustee to have the Notes

authenticated and delivered and the consummation by the Transferor of the

transactions provided for in this Agreement and any Receivables Purchase Agreement

to which it is a party have been duly authorized by the Transferor by all

necessary limited liability company action on the part of the Transferor and

(ii) this Agreement and each Receivables Purchase Agreement to which it is a

party will remain, from the time of its execution, an official record of the

Transferor.

 

(d)           No

Conflict.  The execution and

delivery by the Transferor of this Agreement and each Receivables Purchase

Agreement to which it is a party, and the performance of the transactions

contemplated by this Agreement and each Receivables Purchase Agreement to which

it is a party and the fulfillment of the terms hereof and thereof applicable to

the Transferor, will not conflict with or violate any Requirements of Law

applicable to the Transferor or conflict with, result in any breach of any of

the material terms and provisions of, or constitute (with or without notice or

lapse of time or both) a material default under, any indenture, contract,

agreement, mortgage, deed of trust or other instrument to which the Transferor

is a party or by which it or its properties are bound.

 

(e)           No

Proceedings.  There are no

proceedings or investigations pending or, to the best knowledge of the

Transferor, threatened against the Transferor before any Governmental Authority

(i) asserting the invalidity of this Agreement and any Receivables Purchase

Agreement to which it is a party, (ii) seeking to prevent the consummation of

any of the transactions contemplated by this Agreement or any Receivables

Purchase Agreement to which it is a party, (iii) seeking any determination or

ruling that, in the reasonable judgment of the Transferor, would materially and

adversely affect the performance by the Transferor of its obligations under

this Agreement or any Receivables Purchase

 

15

 

Agreement to which it is a party, (iv) seeking any determination or

ruling that would materially and adversely affect the validity or

enforceability of this Agreement or any Receivables Purchase Agreement to which

it is a party or (v) seeking to affect adversely the income or franchise tax

attributes of the Trust under the United States Federal or any State income or

franchise tax systems.

 

(f)            All

Consents.  All authorizations,

consents, orders or approvals of or registrations or declarations with any

Governmental Authority required to be obtained, effected or given by the

Transferor in connection with the execution and delivery by the Transferor of

this Agreement or any Receivables Purchase Agreement to which it is a party and

the performance of the transactions contemplated by this Agreement or any

Receivables Purchase Agreement to which it is a party by the Transferor have

been duly obtained, effected or given and are in full force and effect.

 

(g)           Insolvency.  No Insolvency Event with respect to the

Transferor has occurred and the transfer of the Receivables by the Transferor

to the Trust has not been made in contemplation of the occurrence thereof or

with the intent to hinder, delay or defraud the Transferor or the creditors of

the Transferor.

 

The representations and warranties of the Transferor

set forth in this Section 2.03 shall survive the transfer and assignment by the

Transferor of the Receivables to the Trust, the pledge of the Receivables to

the Indenture Trustee pursuant to the Indenture, and the issuance of the

Notes.  Upon discovery by the

Transferor, the Servicer or the Owner Trustee of a breach of any of the

representations and warranties by the Transferor set forth in this Section 2.03,

the party discovering such breach shall give prompt written notice to the other

parties, the O/C Holder and the Indenture Trustee.  The Transferor (or, to the extent appropriate, the O/C Holder)

agrees to cooperate with the Servicer and the Owner Trustee in attempting to

cure any such breach.

 

Section 2.04.          Representations

and Warranties of the Transferor Relating to this Agreement and the Receivables

Purchase Agreements and the Receivables.

 

(a)           Representations

and Warranties.  The Transferor

hereby severally represents and warrants as of the date of this Agreement and

as of each Closing Date, to the Trust and the Servicer that:

 

(i)            each of this Agreement and each

Receivables Purchase Agreement to which it is a party, constitutes a legal,

valid and binding obligation of the Transferor enforceable against the

Transferor in accordance with its terms, except as such enforceability may be

limited by applicable bankruptcy, insolvency, reorganization, moratorium or

other similar laws affecting creditors’ rights generally from time to time in

effect or general principles of equity;

 

(ii)           each Receivable conveyed to the Trust

by the Transferor has been conveyed to the Trust free and clear of any Lien of

any Person claiming through or under the Transferor or any of its Affiliates

(other than Liens permitted under subsection 2.06(b)) and in compliance with

all Requirements of Law applicable to the Transferor;

 

(iii)          all authorizations, consents, orders

or approvals of or registrations or declarations with any Governmental

Authority required to be obtained, effected or given by the Transferor in

connection with the conveyance by the Transferor of Receivables to the Trust

have been duly obtained, effected or given and are in full force and effect;

 

(iv)          this Agreement constitutes an absolute

sale, transfer and assignment to the Trust of all right, title and interest of

the Transferor in the Receivables conveyed to the Trust by the Transferor and

the proceeds thereof and Recoveries and Interchange identified as relating to

the

 

16

 

Receivables conveyed to the Trust by the Transferor

or, if this Agreement does not constitute a sale of such property, it

constitutes a grant of a first priority perfected “security interest” (as

defined in the UCC) in such property to the Trust, which, in the case of

existing Receivables and the proceeds thereof and said Recoveries and

Interchange, is enforceable upon execution and delivery of this Agreement, and

which will be enforceable with respect to such Receivables hereafter and

thereafter created and the proceeds thereof upon such creation.  Upon the filing of the financing statements

and, in the case of Receivables hereafter created and the proceeds thereof,

upon the creation thereof, the Trust shall have a first priority perfected

security or ownership interest in such property and proceeds;

 

(v)           as of the Cut-Off Time, each

Receivable was an Eligible Receivable;

 

(vi)          as of the Cut-Off Time, each Account

in which the Receivables arose was an Eligible Account;

 

(vii)         as of the Cut-Off Time, each Account in

which the Receivables arose was not an Excluded Account;

 

(viii)        as of the time of transfer to the Trust

by the Transferor, each Receivable is an Eligible Receivable; and

 

(ix)           except as otherwise expressly

provided in this Agreement, the Indenture or any Indenture Supplement, neither

the Transferor nor any Person claiming through or under the Transferor has any

claim to or interest in the Collection Account, any Series Account or any Series

Enhancement.

 

(b)           Notice of Breach.  The representations and warranties set forth

in Section 2.03 and this Section 2.04 shall survive the transfers and

assignments of the Receivables to the Trust, the pledge of the Receivables to

the Indenture Trustee pursuant to the Indenture, and the issuance of the

Notes.  Upon discovery by any

Transferor, the Servicer or the Owner Trustee of a breach of any of the

representations and warranties set forth in Section 2.03 or this Section 2.04,

the party discovering such breach shall give notice to the other parties and to

the Indenture Trustee, the Note Administrator and the O/C Holder within three

(3) Business Days following such discovery; provided that the failure to

give notice within three (3) Business Days does not preclude subsequent notice.

 

Section 2.05.          Reassignment

of Ineligible Receivables.  Upon

reassignment of any Ineligible Receivable to an Accounts Owner pursuant to a

Receivables Purchase Agreement or the Sale and Purchase Agreement and payment

to the Trust of the amount required to be paid to it by such Accounts Owner,

the Trust shall automatically and without further action be deemed to transfer,

assign, set over and otherwise convey to the applicable Accounts Owner or its

designee, without recourse, representation or warranty, all the right, title

and interest of the Trust in and to such Ineligible Receivable, all Interchange

and Recoveries related thereto, all monies and amounts due or to become due and

all proceeds thereof.  The Trust shall

execute such documents and instruments of transfer or assignment and take such

other actions as shall reasonably be requested and provided by the applicable

Accounts Owner to effect the conveyance of such Ineligible Receivables.

 

Section 2.06.          Covenants

of the Transferor.  The Transferor

hereby severally covenants that:

 

17

 

(a)           Receivables

Not To Be Evidenced by Promissory Notes. 

Except in connection with its enforcement or collection of any

Receivable, the Transferor will take no action to cause any Receivable conveyed

by it to the Trust to be evidenced by any instrument (as defined in the UCC).

 

(b)           Security

Interests.  Except for the

conveyances hereunder, the Transferor will not sell, pledge, assign or transfer

to any other Person, or grant, create, incur, assume or suffer to exist any

Lien on, any Receivable conveyed by it to the Trust, whether now existing or

hereafter created, or any interest therein, and the Transferor shall defend the

right, title and interest of the Trust and the Indenture Trustee in, to and

under the Receivables, whether now existing or hereafter created, against all

claims of third parties claiming through or under the Transferor; provided,

however, that nothing in this subsection 2.06(b) shall prevent or be

deemed to prohibit the Transferor from suffering to exist upon any of the

Receivables transferred by it to the Trust any Liens for municipal or other

local taxes if such taxes shall not at the time be due and payable or if the

Transferor shall currently be contesting the validity thereof in good faith by

appropriate proceedings and shall have set aside on its books adequate reserves

with respect thereto.

 

(c)           Transferor

Amount.  Except for (i) the

conveyances hereunder, in connection with any transaction permitted by

subsection 4.02(a)(i) and as provided in Section 2.11 of the Indenture or

(ii) conveyances with respect to which the Rating Agency Condition shall

have been satisfied and a Tax Opinion shall have been delivered, the Transferor

agrees not to transfer, sell, assign, exchange or otherwise convey or pledge,

hypothecate or otherwise grant a security interest in the Transferor Amount or

the Transferor Certificate and any such attempted transfer, assignment,

exchange, conveyance, pledge, hypothecation, grant or sale shall be void.

 

(d)           Delivery

of Collections or Recoveries.  In

the event that the Transferor receives Collections or Recoveries, the

Transferor agrees to pay the Servicer all such Collections and Recoveries as

soon as practicable after receipt thereof but in no event later than two

Business Days after the date of receipt thereof.

 

(e)           Notice

of Liens.  The Transferor shall

notify the Owner Trustee, the Indenture Trustee, the O/C Holder and each Series

Enhancer promptly after becoming aware of any Lien on any Receivable (or on the

underlying receivable) other than the conveyances hereunder and under the

Indenture.

 

Section 2.07.          Covenants

of the Transferor with Respect to Receivables Purchase Agreements.  The Transferor hereby covenants that it will

at all times enforce the covenants and agreements of the Accounts Owner under

the terms of the Receivables Purchase Agreements to which it is a party,

including covenants to the effect set forth below:

 

(a)           Credit

Card Agreements and Guidelines. 

Such Accounts Owner shall comply with and perform its obligations under

the Credit Card Agreements relating to the Accounts owned by it and the Credit

Card Guidelines and all applicable rules and regulations of MasterCard and VISA

except insofar as any failure so to comply or perform would not materially and

adversely affect the rights of the Trust or the Noteholders.  Subject to compliance with all Requirements

of Law, such Accounts Owner may change the terms and provisions of the Credit

Card Agreements or the Credit Card Guidelines with respect to any of the

Accounts owned by it in any respect (including the calculation of the amount or

the timing of charge-offs and the Periodic Rate Finance Charges and other fees

to be assessed thereon) only if (i) such change is permitted by the Accounts

Ownership and Administration Agreement or the relevant Receivables Purchase

Agreement or (ii) the Servicer reasonably determines at the time of such action

that such change is reasonably likely to increase aggregate Collections on the

Receivables and that such action, at the time of such action, will not have a

material adverse effect on the Noteholders.

 

18

 

(b)           MasterCard

and VISA.  Such Accounts Owner, to

the extent applicable to Accounts owned or serviced by such Accounts Owner,

shall use its best efforts to remain, either directly or indirectly, a member

in good standing of the MasterCard system, the VISA system and any other

similar entity’s or organization’s system relating to any other type of

consumer revolving credit card accounts included as Accounts.

 

(c)           Amendments.  The Transferor further covenants that it

will not enter into any amendments to any Receivables Purchase Agreement or

enter into a new Receivables Purchase Agreement unless the Rating Agency

Condition has been satisfied.

 

Section 2.08.          Removal

of Receivables.  (a) On any day of

any Monthly Period the Servicer shall have the right to require the assignment

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 Interchange and

Recoveries related thereto after the Removal Date, all monies due or to become

due and all amounts received or receivable with respect thereto, and all

proceeds thereof in or with respect to Receivables relating to closed Accounts

the balances of which have been reduced to zero (such Receivables being

referred to in this subsection as the “Removed Receivables”) (unless otherwise

set forth in the applicable Indenture Supplement), upon satisfaction of the

conditions in clauses (i) through (iv) below:

 

(i)            on or before the fifth Business Day

immediately preceding the Removal Date, the Servicer shall have given written

notice to the Owner Trustee, the Indenture Trustee, the Note Administrator, the

Accounts Owner, the Transferor, the O/C Holder, the Rating Agency and each

Series Enhancer (unless such notice requirement is otherwise waived) of such

removal and specifying the date for removal of the Removed Receivables (such

date referred to in this subsection as the “Removal Date”);

 

(ii)           on or prior to the date that is five

(5) Business Days before the Removal Date, the Servicer shall amend Schedule

1 by delivering to the Owner Trustee a computer file or

microfiche list containing a true and complete list of the Removed Receivables;

 

(iii)          the Servicer shall have represented

and warranted as of the Removal Date that the list of Removed Receivables

delivered pursuant to paragraph (ii) above, as of the Removal Date, is true and

complete in all material respects; and

 

(iv)          the removal of the Removed Receivables

shall not preclude the transfers of Receivables and other Trust Assets pursuant

to this Agreement from being accounted for as sales under GAAP.

 

Upon satisfaction of the above conditions, the Owner

Trustee, on behalf of the Trust, shall execute and deliver to the Transferor,

the O/C Holder and the Servicer a written reassignment in substantially the

form of Exhibit B (the “Reassignment”) and shall, without

further action, transfer, assign, set over and otherwise convey to the Servicer

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 Removed Receivables existing as of the Removal Date and thereafter

created, all Collections allocable or with respect thereto, all monies due or

to become due and all amounts received or receivable with respect thereto, and

all proceeds thereof.  In addition, the

Owner Trustee, on behalf of the Trust, shall execute such other documents and

instruments of transfer or assignment and take such other actions as shall

reasonably be requested by the Transferor or the Servicer to effect the

conveyance of Receivables pursuant to this subsection 2.08(a).

 

(b) On the 10th day of each calendar month (or, if

such day is not a Business Day, the

 

19

 

next Business Day) (such date referred to in this subsection as the “Removal Date”),

the Trust shall automatically and without further action or consideration,

transfer, assign, set over and otherwise convey to the Servicer, without

recourse, representation or warranty, all right, title and interest of the

Trust in, to and under each Receivable relating to Accounts that have been

charged-off with respect to the prior Monthly Period (such Receivables being

referred to in this subsection as the “Removed Receivables”), all Collections

allocable or with respect thereto, all monies and amounts due or to become due

with respect thereto, and all proceeds thereof; provided that Recoveries of

such Removed Receivables shall be treated as Collections of Finance Charge

Receivables.  The Trust shall execute

and deliver such instruments of transfer and assignment (including any UCC

termination statements), in each case without recourse, as shall be reasonably

requested by the Servicer to vest in the Servicer or its designee all right,

title and interest that the Trust had in such Removed Receivables.

 

[END OF ARTICLE II]

 

20

 

ARTICLE III

 

ADMINISTRATION AND

SERVICING

OF RECEIVABLES

 

Section 3.01.          Acceptance

of Appointment and Other Matters Relating to the Servicer.

 

(a)           Beginning

on the Closing Date, CompuCredit agrees to act as the initial Servicer under

this Agreement, and the Noteholders and the O/C Holder by their acceptance of

Notes and the O/C Certificate, respectively, consent to CompuCredit acting as

Servicer.

 

(b)           As

agent for the Transferor and the Trust, the Servicer shall service the

Receivables, shall collect and deposit into the Collection Account amounts

received with respect to the Receivables and shall charge off as uncollectible

Receivables, all in accordance with its customary and usual servicing

procedures for servicing credit card receivables comparable to the Receivables

and in accordance with the Credit Card Guidelines.

 

(c)           As

agent for the Transferor and the Trust, the Servicer shall have full power and

authority, acting alone or through any party properly designated by it

hereunder, to do any and all things in connection with such servicing and

administration which it may deem necessary or desirable.  Without limiting the generality of the foregoing

and subject to Section 7.01, the Servicer or its designee is hereby authorized

and empowered, unless such power is revoked by the Indenture Trustee on account

of the occurrence of a Servicer Default pursuant to Section 7.01, (i) to

instruct the Owner Trustee or the Note Administrator to make withdrawals and

payments from the Collection Account and any Series Account, as set forth in

this Agreement, the Indenture or any Indenture Supplement, (ii) to take any

action required or permitted under any Series Enhancement, as set forth in this

Agreement, the Indenture or any Indenture Supplement, (iii) to execute and

deliver, on behalf of the Trust, any and all instruments of satisfaction or

cancellation, or of partial or full release or discharge, and all other

comparable instruments, with respect to the Receivables and, after the

delinquency of any Receivable and to the extent permitted under and in

compliance with applicable Requirements of Law, to commence collection

proceedings with respect to such Receivable, (iv) to make any filings, reports,

notices, applications and registrations with, and to seek any consents or

authorizations from, the Securities and Exchange 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 or reporting requirements or other

laws or regulations and (v) to enforce on behalf of the Transferor, the Trust,

the Noteholders and the O/C Holder all rights and powers granted to the

Transferor under the Sale and Purchase Agreement or any Receivables Purchase

Agreement, including the institution of appropriate legal proceedings.  The Owner Trustee, the Note Administrator

and the Indenture Trustee upon written request therefor shall furnish the Servicer

with any documents necessary or appropriate to enable the Servicer to carry out

its servicing and administrative duties hereunder.

 

(d)           Neither

the Servicer nor any Successor Servicer shall be obligated to use separate

servicing procedures, offices, employees or accounts for servicing the

Receivables from the procedures, offices, employees and accounts used by the

Servicer or such Successor Servicer, as the case may be, in connection with

servicing other credit card receivables.

 

(e)           The

Servicer shall comply with and perform its servicing obligations with respect

to the Accounts and Receivables in accordance with the Credit Card Agreements

relating to the Accounts and the Credit Card Guidelines and all applicable

rules and regulations of MasterCard and VISA, except insofar as any failure to

so comply or perform would not materially and adversely affect the Trust or the

Noteholders.

 

21

 

Section 3.02.          Servicing

Compensation.

 

As full compensation for its servicing activities

hereunder and as reimbursement for any expense incurred by it in connection

therewith, the Servicer shall be entitled to receive a servicing fee (the “Servicing

Fee”) with respect to each Monthly Period beginning with the

first Monthly Period, payable monthly on the related Distribution Date, in an

amount equal to one-twelfth of the product of (a) the weighted average of the

Servicing Fee Rates with respect to each outstanding Series (based upon the

Servicing Fee Rate for each Series and the Invested Amount (or such other amount

as specified in the related Indenture Supplement) of such Series, in each case

as of the last day of the prior Monthly Period or, in the case of the first

Monthly Period, as of the Closing Date) and (b)(i) the sum of (A) the amount of

Receivables on the first day of the Monthly Period preceding such Distribution

Date (or, in the case of the first Monthly Period, the Closing Date) and (B)

the amount of Receivables on the last day of the Monthly Period preceding such

Distribution Date divided by (ii) two. 

The share of the Servicing Fee allocable to a Series with respect to any

Monthly Period (the “Monthly Servicing Fee”) shall be

determined in accordance with the relevant Indenture Supplement.  The portion of the Servicing Fee with

respect to any Monthly Period not paid pursuant to the preceding sentence shall

be paid by the Holders of the Transferor Certificates on the related

Distribution Date and in no event shall the Trust, the O/C Holder, the Owner

Trustee (as such or in its individual capacity), the Indenture Trustee, the

Note Administrator, the Certificate Administrator, the Certificate Trustee, the

Noteholders of any Series or any Series Enhancer be liable for the share of the

Servicing Fee with respect to any Monthly Period to be paid by the Holders of

the Transferor Certificates.

 

Section 3.03.          Representations,

Warranties and Covenants of the Servicer. 

The Servicer hereby makes, and any Successor Servicer by its appointment

hereunder shall make, with respect to itself, on each Closing Date (and on the

date of any such appointment, in the case of any Successor Servicer), the

following representations, warranties and covenants on which the Trust and the

Indenture Trustee shall be deemed to have relied in accepting the Receivables

in trust and in entering into the Indenture:

 

(a)           Organization

and Good Standing.  The Servicer is

a corporation or limited liability company validly existing and in good

standing under the applicable law of the jurisdiction of its incorporation or

organization, or is a national bank duly organized and validly existing in good

standing under the laws of the United States, and has, in all material

respects, full power and authority to own its properties and conduct its credit

card servicing business as presently owned or conducted, and to execute,

deliver and perform its obligations under this Agreement.

 

(b)           Due

Qualification.  The Servicer is duly

qualified to do business and is in good standing as a foreign corporation or

other foreign entity (or is exempt from such requirements) and has obtained all

necessary licenses and approvals in each jurisdiction in which the servicing of

the Receivables (including the underlying receivables) as required by this

Agreement requires such qualification except where the failure to so qualify or

obtain licenses or approvals would not have a material adverse effect on its

ability to perform its obligations as Servicer under this Agreement.

 

(c)           Due

Authorization.  The execution,

delivery, and performance of this Agreement and the other agreements and

instruments executed or to be executed by the Servicer as contemplated hereby

have been duly authorized by the Servicer by all necessary action on the part

of the Servicer.

 

(d)           Binding

Obligation.  This Agreement

constitutes a legal, valid and binding obligation of the Servicer, enforceable

in accordance with its terms, except as such enforceability may be limited by

applicable bankruptcy, insolvency, reorganization, moratorium or other similar

laws affecting creditors’ rights generally from time to time in effect or by

general principles of equity.

 

22

 

(e)           No

Conflict.  The execution and

delivery of this Agreement by the Servicer, and the performance of the

transactions contemplated by this Agreement and the fulfillment of the terms

hereof applicable to the Servicer will not conflict with, violate or result in

any breach of any of the material terms and provisions of, or constitute (with

or without notice or lapse of time or both) a material default under, any

indenture, contract, agreement, mortgage, deed of trust or other instrument to

which the Servicer is a party or by which it or its properties are bound.

 

(f)            No

Violation.  The execution and

delivery of this Agreement by the Servicer, the performance of the transactions

contemplated by this Agreement and the fulfillment of the terms hereof

applicable to the Servicer will not conflict with or violate any Requirements

of Law applicable to the Servicer in any material respect.

 

(g)           No

Proceedings.  There are no

proceedings or investigations pending or, to the best knowledge of the

Servicer, threatened against the Servicer before any Governmental Authority

seeking to prevent the consummation of any of the transactions contemplated by

this Agreement or seeking any determination or ruling that, in the reasonable

judgment of the Servicer, would materially and adversely affect the performance

by the Servicer of its obligations under this Agreement.

 

(h)           Compliance

with Requirements of Law.  The

Servicer shall duly satisfy all obligations on its part to be fulfilled

hereunder in connection with each Receivable (and the underlying receivable)

and the related Account, if any, and will maintain in effect all qualifications

required under Requirements of Law, and will comply in all material respects

with all other Requirements of Law in connection with servicing each Receivable

and the related Account the failure to comply with which would have an Adverse

Effect.

 

(i)            No

Rescission or Cancellation.  Subject

to Section 3.09, the Servicer shall not permit any rescission or cancellation

of any Receivable (or the underlying receivable) except in accordance with the

Credit Card Guidelines or as ordered by a court of competent jurisdiction or

other Governmental Authority.

 

(j)            Protection

of Rights. The Servicer shall take no action which, nor omit to take any

action the omission of which, would substantially impair the rights of the

Trust, the Indenture Trustee or the Noteholders in any Receivable (or the

underlying receivable) or the related Account, if any, nor shall it reschedule,

revise or defer payments due on any Receivable except in accordance with the

Credit Card Guidelines.

 

(k)           Receivables

Not To Be Evidenced by Promissory Notes. 

Except in connection with its enforcement or collection of an Account,

the Servicer will take no action to cause any Receivable to be evidenced by any

instrument (as defined in the UCC).

 

(l)            All

Consents.  All authorizations,

consents, orders or approvals of or registrations or declarations with any

Governmental Authority required to be obtained, effected or given by the

Servicer in connection with the execution and delivery of this Agreement by the

Servicer and the performance of the transactions contemplated by this Agreement

by the Servicer, have been duly obtained, effected or given and are in full

force and effect.

 

(m)          Interchange.  With respect to any Distribution Date, on or

prior to the immediately preceding Determination Date, the Servicer shall

notify the Transferor, the Note Administrator and the O/C Holder of the

amount of Interchange required to be included as Collections of Finance Charge

Receivables with respect to the related Monthly Period.  Not later than 1:00 p.m., New York City

time, on the related Transfer Date, the Servicer shall deposit, or cause to be

deposited, into the

 

23

 

Collection Account, in immediately available funds, the amount of

Interchange to be so included as Collections of Finance Charge Receivables with

respect to such Monthly Period.

 

Notwithstanding anything in this Agreement to the

contrary, but without limiting its representations, warranties and covenants in

this Section 3.03, the Servicer makes no representation or warranty with

respect to title to any Accounts or the enforceability, collectibility or value

of any Receivable.

 

Section 3.04.          Reports

and Records for the Owner Trustee and the Indenture Trustee.

 

(a)           Daily

Records.  On each Business Day, the

Servicer shall make or cause to be made available at the office of the Servicer

for inspection by the Owner Trustee, the Note Administrator and the Indenture

Trustee upon request a record setting forth (i) the Collections in respect of

Principal Receivables and in respect of Finance Charge Receivables processed by

the Processor and delivered to the Servicer on the second preceding Business

Day in respect of each Account and (ii) the amount of Receivables as of the

close of business on the second preceding Business Day in each Account.  The Servicer shall, at all times, maintain

its computer files with respect to the Accounts in such a manner so that the

Accounts may be specifically identified and shall make available to the Owner

Trustee, the Note Administrator and the Indenture Trustee at the office of the

Servicer on any Business Day any computer programs necessary to make such

identification.  The Owner Trustee, the

Note Administrator and the Indenture Trustee shall enter into such reasonable

confidentiality agreements as the Servicer shall deem necessary to protect its

interests and as are reasonably acceptable in form and substance to the Owner

Trustee, the Note Administrator and the Indenture Trustee.

 

(b)           Statement

to Noteholders.  On each

Distribution Date, the Servicer will provide to the Note Administrator the

information (in electronic format acceptable to the Note Administrator)

necessary for the Note Administrator to prepare, with respect to each

outstanding Series, the Statement to Noteholders setting forth certain

information relating to the Trust and each Series, substantially in the form

set forth in the related Indenture Supplement.

 

Section 3.05.          Annual

Certificate of Servicer.  The

Servicer shall deliver to the Owner Trustee, the Indenture Trustee, the Note

Administrator and each Rating Agency on or before June 30 of each calendar

year, beginning with June 30, 2003, an Officer’s Certificate substantially in

the form of Exhibit A.

 

Section 3.06.          Annual

Servicing Report of Independent Public Accountants; Copies of Reports Available.

 

(a)           On

or before June 30 of each calendar year, beginning with June 30, 2003, the

Servicer shall cause a firm of nationally recognized independent public

accountants (selected by the Servicer and who may also render other services to

the Servicer or the Transferor or any Accounts Owner) to furnish a report

(addressed to the Indenture Trustee) to the Indenture Trustee, the Note

Administrator, the Transferor, the Servicer and each Rating Agency to the

effect that they have applied certain procedures agreed upon with the Servicer

and examined certain documents and records relating to the servicing of the

Receivables under this Agreement, the Indenture and each Indenture Supplement

for the prior calendar year and that, on the basis of such agreed-upon

procedures, nothing has come to the attention of such accountants that caused

them to believe that the servicing (including the allocation of Collections set

forth in Article VIII of the Indenture and in each Indenture Supplement)

has not been conducted in compliance with the terms and conditions set forth in

Article III, Article VIII of the Indenture and the applicable

provisions of each Indenture Supplement, except for such exceptions as they

 

24

 

believe to be immaterial and such other exceptions as shall be set

forth in such statement.  Such report

shall set forth the agreed-upon procedures performed.

 

(b)           On

or before June 30 of each calendar year, beginning with June 30, 2003, the

Servicer shall cause a firm of nationally recognized independent public

accountants (who may also render other services to the Servicer or Transferor)

to furnish a report to the Indenture Trustee, the Note Administrator, the

Transferor, the Servicer and each Rating Agency to the effect that they have

applied certain procedures agreed upon with the Servicer to compare the

mathematical calculations of certain amounts set forth in the Servicer’s

certificates delivered pursuant to subsection 3.04(b) during the period covered

by such report with the Servicer’s computer reports that were the source of

such amounts and that on the basis of such agreed-upon procedures and

comparison, such accountants are of the opinion that such amounts are in

agreement, except for such exceptions as they believe to be immaterial and such

other exceptions as shall be set forth in such statement.  Such report shall set forth the agreed-upon

procedures performed.

 

(c)           A

copy of each certificate and report provided pursuant to subsection 3.04(b), or

Section 3.05 or 3.06, may be obtained by any Noteholder or Note Owner from the

Owner Trustee by a request in writing to the Owner Trustee addressed to the

Corporate Trust Office.

 

Section 3.07.          Tax

Treatment.  Unless otherwise

specified in the Indenture or an Indenture Supplement with respect to a

particular Series, the Issuer has entered into this Agreement, and the Notes

will be issued, with the intention that, for federal, state and local income

and franchise tax purposes, (i) the Notes of each Series which are characterized

as indebtedness at the time of their issuance will qualify as indebtedness

secured by the Receivables and (ii) the Trust shall not be treated as an

association or publicly traded partnership taxable as a corporation.  The Transferor, by entering into this

Agreement, and each Noteholder, by the acceptance of any such Note (and each

Note Owner, by its acceptance of an interest in the applicable Note), agree to

treat such Notes for federal, state and local income and franchise tax purposes

as indebtedness of the Transferor.  Each

Holder of such Note agrees that it will cause any Note Owner acquiring an

interest in a Note through it to comply with this Agreement as to treatment of

such Note as indebtedness under applicable tax law, as described in this

Section 3.07.  The parties hereto agree

that they shall not cause or permit the making, as applicable, of any election

under Treasury Regulation Section 301.7701-3 whereby the Trust or any portion

thereof would be treated as a corporation for federal income tax purposes and,

except as required by Section 6.12 of the Indenture, shall not file tax returns

or obtain any federal employer identification number for the Trust but shall

treat the Trust as a security device for federal income tax purposes.  The provisions of this Agreement shall be

construed in furtherance of the foregoing intended tax treatment.

 

Section 3.08.          Notices

to CompuCredit.  In the event that

CompuCredit is no longer acting as Servicer, any Successor Servicer shall

deliver or make available to CompuCredit each certificate and report required

to be provided thereafter pursuant to subsection 3.04(b) and Sections 3.05 and

3.06.

 

Section 3.09.          Adjustments.

 

(a)           If

the Servicer or the Accounts Owner adjusts downward the amount of any

Receivable because of a rebate, refund, unauthorized charge or billing error to

a cardholder, or because such Receivable was created in respect of merchandise

which was refused or returned by a cardholder, then, in any such case, any

amount required herein or in the Indenture or any Indenture Supplement to be

calculated by reference to the amount of Receivables, will be reduced by the

amount of the adjustment.  Similarly,

the amount of Receivables used to calculate any amount required herein or in

any Indenture Supplement to be calculated by reference to the amount of

Receivables will be reduced by the principal amount of any Receivable which was

discovered as having been created through a fraudulent or

 

25

 

counterfeit charge or with respect to which the covenant contained in

subsection 2.06(b) was breached.  Any

adjustment required pursuant to either of the two preceding sentences shall be

made on or prior to the end of the Monthly Period in which such adjustment

obligation arises.

 

(b)           If

(i) the Servicer makes a deposit into the Collection Account in respect of

a Collection of a Receivable and such Collection was received by the Servicer

in the form of a check which is not honored for any reason or (ii) the

Servicer makes a mistake with respect to the amount of any Collection and

deposits an amount that is less than or more than the actual amount of such

Collection, the Servicer shall appropriately adjust the amount subsequently

deposited into the Collection Account to reflect such dishonored check or

mistake.  Any Receivable in respect of

which a dishonored check is received shall be deemed not to have been

paid.  Notwithstanding the first two

sentences of this paragraph, adjustments made pursuant to this Section 3.09

shall not require any change in any report previously delivered pursuant to

subsection 3.04(a).

 

(c)           Any

payments received by the Accounts Owner with respect to refused or returned

merchandise shall, to the extent the related Principal Receivable has been

purchased from the Accounts Owner and conveyed to the Trust, be paid to the

Servicer and deposited in the Collection Account and treated as Collections of

Principal Receivables.

 

[END OF ARTICLE III]

 

26

 

ARTICLE IV

 

OTHER MATTERS RELATING TO

THE TRANSFEROR

 

Section 4.01.          Liability

of the Transferor.  The Transferor

shall be liable for all obligations, covenants, representations and warranties

of the Transferor arising under or related to this Agreement.  The Transferor shall be liable only to the

extent of the obligations specifically undertaken by it in its capacity as

Transferor.

 

Section 4.02.          Merger

or Consolidation of, or Assumption of the Obligations of, the Transferor.

 

(a)           The

Transferor shall not dissolve, liquidate, consolidate with or merge into any

other corporation or convey, transfer or sell its properties and assets

substantially as an entirety to any Person unless:

 

(i)            (x) the corporation formed by

such consolidation or into which the Transferor is merged or the Person which

acquires by conveyance, transfer or sale the properties and assets of the

Transferor substantially as an entirety shall be, if the Transferor is not the

surviving entity, organized and existing under the laws of the United States of

America or any state or the District of Columbia, and shall be a savings

association, a national banking association, a bank or other entity which is

not eligible to be a debtor in a case under Title 11 of the United States Code

or shall be a special purpose corporation or other special purpose entity whose

powers and activities are limited to substantially the same degree as provided

in the organizational documents of PACCT, LLC and, if the Transferor is not the

surviving entity, shall expressly assume, by an agreement supplemental hereto,

executed and delivered to the Owner Trustee, the Indenture Trustee and the

Servicer, in form reasonably satisfactory to the Owner Trustee, the Indenture

Trustee and the Servicer, the performance of every covenant and obligation of

the Transferor hereunder; and (y) the Transferor or the surviving entity, as

the case may be, has delivered to the Owner Trustee, the Indenture Trustee and

the Servicer (with a copy to each Rating Agency) an Officer’s Certificate and

an Opinion of Counsel each stating that such consolidation, merger, conveyance,

transfer or sale and such supplemental agreement comply with this Section, that

such supplemental agreement is a valid and binding obligation of such surviving

entity enforceable against such surviving entity in accordance with its terms,

except as such enforceability may be limited by applicable bankruptcy,

insolvency, reorganization, moratorium or other similar laws affecting

creditors’ rights generally from time to time in effect or general principles

of equity, and that all conditions precedent herein provided for relating to

such transaction have been complied with;

 

(ii)           the Rating Agency Condition shall

have been satisfied with respect to such consolidation, merger, conveyance or

transfer; and

 

(iii)          the Transferor shall have delivered to

the Owner Trustee, the Indenture Trustee, the Note Administrator and each

Rating Agency a Tax Opinion, dated the date of such consolidation, merger,

conveyance or transfer, with respect thereto.

 

(b)           Except

as permitted by subsection 2.06(c), the obligations, rights or any part thereof

of the Transferor hereunder shall not be assignable nor shall any Person

succeed to such obligations or rights of the Transferor hereunder except

(i) for conveyances, mergers, consolidations, assumptions, sales or

transfers in accordance with the provisions of the foregoing paragraph and

(ii) for conveyances, mergers, consolidations, assumptions, sales or

transfers to other entities (1) which the

 

27

 

Transferor, the O/C Holder and the Servicer determine will not result

in an Adverse Effect, (2) which meet the requirements of clauses (ii) and

(iii) of the preceding paragraph and (3) for which such purchaser,

transferee, pledgee or entity shall expressly assume, in an agreement

supplemental hereto, executed and delivered to the Owner Trustee, the O/C

Holder, the Servicer, the Note Administrator and the Indenture Trustee in

writing in form satisfactory to the Owner Trustee, the O/C Holder, the

Servicer, the Note Administrator and the Indenture Trustee, the performance of

every covenant and obligation of the Transferor thereby conveyed.

 

Section 4.03.          Limitations

on Liability of the Transferor. 

Subject to Section 4.01, neither the Transferor nor any of the

directors, officers, employees, incorporators or agents of the Transferor

acting in such capacities shall be under any liability to the Trust, the Owner

Trustee, the Note Administrator, the Indenture Trustee, the Noteholders, the

O/C Holder, any Series Enhancer or any other Person for any action taken, or

for refraining from the taking of any action, in good faith in such capacities

pursuant to this Agreement, it being expressly understood that such liability

is expressly waived and released as a condition of, and consideration for, the

execution of this Agreement, the Indenture and any Indenture Supplement and the

issuance of the Notes; provided, however, that this provision

shall not protect any Transferor or any such Person against any liability which

would otherwise be imposed by reason of willful misfeasance, bad faith or gross

negligence in the performance of duties or by reason of reckless disregard of

obligations and duties hereunder.  The

Transferor and any director, officer, employee or agent of the Transferor may

rely in good faith on any document of any kind prima facie properly executed

and submitted by any Person (other than the Transferor) respecting any matters

arising hereunder.

 

[END OF ARTICLE IV]

 

28

 

ARTICLE V

 

OTHER MATTERS RELATING TO

THE SERVICER

 

Section 5.01.          Liability

of the Servicer.  The Servicer shall

be liable under this Agreement only to the extent of the obligations

specifically undertaken by the Servicer in its capacity as Servicer.

 

Section 5.02.          Merger

or Consolidation of, or Assumption of the Obligations of, the Servicer.  The Servicer shall not consolidate with or

merge into any other corporation or convey, transfer or sell its properties and

assets substantially as an entirety to any Person, unless:

 

(a)           (i)            the corporation formed by such

consolidation or into which the Servicer is merged or the Person which acquires

by conveyance, transfer or sale the properties and assets of the Servicer

substantially as an entirety shall be, if the Servicer is not the surviving

entity, a corporation or a national banking association organized and existing

under the laws of the United States of America or any state or the District of

Columbia, and, if the Servicer is not the surviving entity, such corporation

shall expressly assume, by an agreement supplemental hereto, executed and

delivered to the Owner Trustee, the Note Administrator and the Indenture

Trustee, in form satisfactory to the Owner Trustee, the Note Administrator and

the Indenture Trustee, the performance of every covenant and obligation of the

Servicer hereunder and under any other Transaction Document to which the

Servicer is a party;

 

(ii)           the Servicer has delivered to the

Owner Trustee, the Note Administrator and the Indenture Trustee an Officer’s

Certificate and an Opinion of Counsel each stating that such consolidation,

merger, conveyance, transfer or sale complies with this Section 5.02 and that

all conditions precedent herein provided for relating to such transaction have

been complied with; and

 

(iii)          the Rating Agency Condition shall have

been satisfied with respect to such consolidation, merger, transfer or sale;

and

 

(b)           the corporation formed by such

consolidation or into which the Servicer is merged or the Person which acquires

by conveyance or transfer the properties and assets of the Servicer

substantially as an entirety shall be an Eligible Servicer.

 

Section 5.03.          Limitation

on Liability of the Servicer and Others. 

Subject to Section 5.04, neither the Servicer nor any of the directors,

officers, employees or agents of the Servicer in its capacity as Servicer shall

be under any liability to the Trust, the Owner Trustee, the Indenture Trustee,

the Certificate Administrator, the Certificate Trustee, the Note Administrator,

the Noteholders, the O/C Holder, any Series Enhancer or any other Person for

any action taken, or for refraining from the taking of any action, in good

faith in its capacity as Servicer pursuant to this Agreement; provided, however,

that this provision shall not protect the Servicer or any such Person against

any liability which would otherwise be imposed by reason of willful

misfeasance, bad faith or gross negligence in the performance of duties or by

reason of reckless disregard of obligations and duties hereunder.  The Servicer and any director, officer,

employee or agent of the Servicer may rely in good faith on any document of any

kind prima facie properly executed and submitted by any Person (other than the

Servicer) respecting any matters arising hereunder.  The Servicer shall not be under any obligation to appear in,

prosecute or defend any legal action which is not incidental to its duties as

Servicer in accordance with this Agreement and which in its reasonable judgment

may involve it in any expense or liability. 

The Servicer may, but shall not be obligated to, undertake any such

legal action which it may deem necessary or desirable for

 

29

 

the benefit of the Noteholders with respect to this Agreement and the

rights and duties of the parties hereto and the interests of the Noteholders

hereunder.

 

Section 5.04.          Servicer

Indemnification of the Trust.  The

Servicer shall indemnify and hold harmless the Trust and its directors,

officers, employees and agents from and against any and all loss, liability,

claim, expense, damage or injury suffered or sustained by reason of the

Servicer’s willful misfeasance, bad faith or negligence in the performance of

its duties under this Agreement, or by reason of reckless disregard of its

obligations and duties under this Agreement, 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,

however, that the Servicer shall not indemnify the Trust, any

Noteholders or the O/C Holder as to any losses, claims or damages incurred by

any of them in their capacities as investors, including without limitation

losses incurred as a result of Defaulted Receivables.  Indemnification pursuant to this Section 5.04 shall not be

payable from the Trust Assets.  The

Servicer’s obligations under this Section 5.04 shall survive the termination of

this Agreement or the Trust or the earlier removal or resignation of the Owner

Trustee or the Indenture Trustee, as applicable.

 

Section 5.05.          Resignation

of the Servicer.  The Servicer shall

not resign from the obligations and duties hereby imposed on it except

(a) upon determination that (i) the performance of its duties

hereunder is no longer permissible under applicable law and (ii) there is

no reasonable action which the Servicer could take to make the performance of

its duties hereunder permissible under applicable law or (b) upon the

assumption, by an agreement supplemental hereto, executed and delivered to the

Owner Trustee, the Note Administrator, the Transferor and the Indenture

Trustee, in form reasonably satisfactory to the Owner Trustee, the Note

Administrator, the Transferor and the Indenture Trustee, of the obligations and

duties of the Servicer hereunder by any of its Affiliates that is a direct or

indirect wholly owned subsidiary of CompuCredit or by any entity the

appointment of which shall have satisfied the Rating Agency Condition and, in

either case, qualifies as an Eligible Servicer; provided, however, the Note

Administrator shall have no obligation whatsoever to assume the obligations and

duties of the Servicer hereunder pursuant to this Section 5.05(b) unless the

Note Administrator expressly agrees in writing to do so.  Any determination permitting the resignation

of the Servicer shall be evidenced as to clause (a) above by an Opinion of

Counsel to such effect delivered to the Owner Trustee, the Note Administrator

and the Indenture Trustee.  No

resignation shall become effective until the Note Administrator or a Successor

Servicer shall have assumed the responsibilities and obligations of the

Servicer in accordance with Section 7.02 hereof.  If within 120 days of the date of the determination that the

Servicer may no longer act as Servicer under clause (a) above the Note

Administrator, on behalf of the Indenture Trustee, is unable to appoint a

Successor Servicer, the Note Administrator shall serve as Successor Servicer.  Notwithstanding the foregoing, if the Note

Administrator is legally unable so to act, the Note Administrator, on behalf of

the Indenture Trustee, shall petition a court of competent jurisdiction to

appoint any established institution qualifying as an Eligible Servicer as the

Successor Servicer hereunder.  The Trust

shall give prompt notice to each Rating Agency and each Series Enhancer upon

the appointment of a Successor Servicer. 

Notwithstanding anything in this Agreement to the contrary, CompuCredit

may assign part or all of its obligations and duties as Servicer under this

Agreement to an Affiliate of CompuCredit so long as CompuCredit shall have

fully guaranteed the performance of such obligations and duties under this

Agreement, subject to Section 5.01 above.

 

Section 5.06.          Access

to Certain Documentation and Information Regarding the Receivables.  The Servicer shall provide to the Owner

Trustee, the Note Administrator and the Indenture Trustee access to the

documentation regarding the Accounts and the Receivables in such cases where

the Owner Trustee or the Indenture Trustee, as applicable, is required in

connection with the enforcement of the rights of Noteholders or by applicable

statutes or regulations to review such documentation, such access being afforded

without charge but only (a) upon reasonable request, (b) during

normal business hours, (c) subject to the Servicer’s normal security and

confidentiality procedures and (d) at reasonably

 

30

 

accessible offices in the continental United States designated by the

Servicer.  Nothing in this Section shall

derogate from the obligation of the Transferor, the Owner Trustee, the

Indenture Trustee, the Note Administrator, the O/C Holder and the Servicer to

observe any applicable law prohibiting disclosure of information regarding the

Obligors and the failure of the Servicer to provide access as provided in this

Section as a result of such obligation shall not constitute a breach of this

Section.

 

Section 5.07.          Delegation

of Duties.  In the ordinary course

of business, the Servicer may at any time delegate its duties hereunder with

respect to the Accounts and the Receivables to any Person that agrees to

conduct such duties in accordance with the Credit Card Guidelines and this

Agreement.  Such delegation shall not

relieve the Servicer of its liability and responsibility with respect to such

duties, and shall not constitute a resignation within the meaning of Section

5.05.

 

Section 5.08.          Examination

of Records.  The Servicer shall

indicate generally in their computer files or other records that the

Receivables arising in the Accounts have been conveyed to the Trust, pursuant

to this Agreement.  The Servicer shall,

prior to the sale or transfer to a third party of any receivable held in its

custody, examine its computer records and other records to determine that such

receivable is not, and does not include, a Receivable.

 

Section 5.09.          Removal

of CompuCredit under Credit Card Service and Administration Agreement.  If CSG, LLC terminates CompuCredit for cause

or following a termination event under the Credit Card Service and

Administration Agreement, CSG, LLC may cause the O/C Holder to remove

CompuCredit as Servicer under this Agreement; provided, however,

that no removal shall become effective until a Successor Servicer shall have

assumed the responsibilities and obligations of CompuCredit as Servicer in

accordance with Section 7.02 hereof. 

Upon the occurrence of a termination event under the Credit Card Service

and Administration Agreement, CSG, LLC shall cause the O/C Holder to provide

written notice of such termination event to the Indenture Trustee, the

Transferor and the Note Administrator.

 

[END OF ARTICLE V]

 

31

 

ARTICLE VI

 

[Reserved].

 

[END OF ARTICLE VI]

 

32

 

ARTICLE VII

 

SERVICER DEFAULTS

 

Section 7.01.          Servicer

Defaults.  If any one of the

following events (a “Servicer Default”) shall occur and be

continuing:

 

(a)           any

failure by the Servicer to make any required payment, transfer or deposit under

the terms of this Agreement, the Indenture or any Indenture Supplement, or to

give instructions or notice to the Note Administrator to make such payment,

transfer or deposit, which failure continues unremedied for a period of five

(5) Business Days following receipt by the Servicer of written notice of such

failure from the Transferor, the O/C Holder, the Note Administrator or the

Indenture Trustee or after the Servicer obtains Knowledge of such failure;

 

(b)           failure

on the part of the Servicer duly to observe or perform in any material respect

any other covenants or agreements of the Servicer set forth in this Agreement

which has an Adverse Effect and which continues unremedied for a period of

sixty (60) days after the date on which notice of such failure, requiring the

same to be remedied, shall have been given to the Servicer by the Owner

Trustee, the Indenture Trustee or the O/C Holder, or to the Servicer, the Owner

Trustee, the Indenture Trustee and the O/C Holder by Holders of Notes

evidencing not less than 10% of the aggregate unpaid principal amount of all

Notes (or, with respect to any such failure that does not relate to all Series,

10% of the aggregate unpaid principal amount of all Series to which such

failure relates);

 

(c)           any

representation, warranty or certification made by the Servicer in this

Agreement or in any certificate delivered pursuant to this Agreement shall

prove to have been incorrect when made, which has an Adverse Effect on the

rights of the Noteholders of any Series (which determination shall be made

without regard to whether funds are then available pursuant to any Series

Enhancement) and which Adverse Effect continues for a period of ninety (90) days

after the date on which notice thereof, requiring the same to be remedied,

shall have been given to the Servicer by the Owner Trustee or the Indenture

Trustee, or to the Servicer, the Owner Trustee and the Indenture Trustee by the

Holders of Notes evidencing not less than 10% of the aggregate unpaid principal

amount of all Notes (or, with respect to any such representation, warranty or

certification that does not relate to all Series, 10% of the aggregate unpaid

principal amount of all Series to which such representation, warranty or

certification relates); or

 

(d)           the

Servicer shall consent to the appointment of a bankruptcy trustee or

conservator or receiver or liquidator in any bankruptcy proceeding or other

insolvency, readjustment of debt, marshalling of assets and liabilities or

similar proceedings of or relating to the Servicer or of or relating to all or

substantially all its property, or a decree or order of a court or agency or

supervisory authority having jurisdiction in the premises for the appointment

of a bankruptcy trustee or a conservator or receiver or liquidator in any

bankruptcy, insolvency, readjustment of debt, marshalling of assets and

liabilities or similar proceedings, or the winding-up or liquidation of its

affairs, shall have been entered against the Servicer and such decree or order

shall have remained in force undischarged or unstayed for a period of ninety

(90) days; or the Servicer shall admit in writing its inability to pay its

debts generally as they become due, file a petition to take advantage of any

applicable bankruptcy, insolvency or reorganization statute, make any

assignment for the benefit of its creditors or voluntarily suspend payment of

its obligations.

 

Then, in the event of any Servicer Default, so long as

the Servicer Default shall not have been remedied, the Indenture Trustee or the

Holders of Notes evidencing more than 50% of the aggregate unpaid principal

amount of all Notes, or, if all the Notes of a Series have been paid in full,

the O/C

 

33

 

Holder, by notice then given to the Servicer, the O/C Holder, the Note

Administrator, the Certificate Trustee, the Certificate Administrator and the

Owner Trustee (and to the Indenture Trustee if given by the Noteholders) (a “Termination

Notice”), may terminate all but not less than all the rights and

obligations of the Servicer as Servicer under this Agreement.

 

After receipt by the Servicer of a Termination Notice,

and on the date that a Successor Servicer is appointed by the Note

Administrator, on behalf of the Indenture Trustee pursuant to Section 7.02, all

authority and power of the Servicer under this Agreement shall pass to and be

vested in the Successor Servicer (a “Service Transfer”); and, without

limitation, the Note Administrator and the Indenture Trustee are hereby

authorized and empowered (upon the failure of the Servicer to cooperate) to

execute and deliver, on behalf of the Servicer, as attorney-in-fact or

otherwise, all documents and other instruments necessary or appropriate to

effect the Service Transfer that are prepared by and at the expense of the

Servicer.  The Servicer agrees to

cooperate with the Indenture Trustee, the Note Administrator and such Successor

Servicer in effecting the termination of the responsibilities and rights of the

Servicer to conduct servicing hereunder, including the transfer to such

Successor Servicer of all authority of the Servicer to service the Receivables

provided for under this Agreement, including all authority over all Collections

which shall on the date of transfer be held by the Servicer for deposit, or

which have been deposited by the Servicer, in the Collection Account, or which

shall thereafter be received with respect to the Receivables, and in assisting

the Successor Servicer.  The Servicer

shall within twenty (20) Business Days transfer its electronic records relating

to the Receivables to the Successor Servicer in such electronic form as the

Successor Servicer may reasonably request and shall promptly transfer to the

Successor Servicer all other records, correspondence and documents necessary

for the continued servicing of the Receivables in the manner and at such times

as the Successor Servicer shall reasonably request.  Any and all costs incurred in connection with the transfer of

servicing shall be included as Program Expenses.  To the extent that compliance with this Section shall require the

Servicer to disclose to the Successor Servicer information of any kind which

the Servicer deems to be confidential, the Successor Servicer shall be required

to enter into such customary licensing and confidentiality agreements as the

Servicer shall deem reasonably necessary to protect its interests.

 

Notwithstanding the foregoing, a delay in or failure

of performance referred to in paragraphs (a), (b) and (c) above after the

applicable grace period, if any, as a consequence of an act of God, fire,

explosion, terrorism, widespread or continued public utility failure, major

accident, flood, embargo, war, nuclear disaster, riot, labor dispute,

termination or interruption of service from third party vendors whose services

are material to the performance by the Servicer of its obligations under this

Agreement, earthquake, severe weather or failures of the Federal Reserve Bank

shall not constitute a Servicer Default during the period of such

disability.  In the event of any such

force majeure occurrence as set forth in this paragraph, the Servicer shall use

commercially reasonable efforts to meet its obligations under this

Agreement.  In the case of any such

occurrence, the Servicer shall promptly and in writing advise the Indenture

Trustee, the Note Administrator, the Certificate Trustee, the Certificate

Administrator, the Owner Trustee, the Transferor, the O/C Holder and any Series

Enhancer if it is unable to perform due to a force majeure event, the expected

duration of such inability to perform and of any developments (or changes

therein) that appear likely to affect the ability of the Servicer to perform

any of its obligations hereunder in whole or in part.

 

Section 7.02.          Note

Administrator To Act; Appointment of Successor.

 

(a)           On

and after the receipt by the Servicer of a Termination Notice pursuant to

Section 7.01, the Servicer shall continue to perform all servicing functions

under this Agreement and shall continue to be paid therefor until the date

specified in the Termination Notice or otherwise specified by the Indenture

Trustee or until a date mutually agreed upon by the Servicer and the Indenture

Trustee.  The Note Administrator, on

behalf of the Indenture Trustee, shall as promptly as possible after the giving

of a

 

34

 

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 reasonably acceptable to the Note

Administrator and the Indenture Trustee. 

In the event that a Successor Servicer has not been appointed or has not

accepted its appointment at the time when the Servicer ceases to act as

Servicer pursuant to Section 5.05(a) or this Section 7.02(a), the Note

Administrator without further action shall automatically be appointed the

Successor Servicer; provided, however, that this shall not be

construed as permitting a Servicer resignation except for the limited reasons

set forth in Section 5.05.  The Note

Administrator may delegate any of its servicing obligations to an Affiliate or

agent in accordance with subsection 3.01(b) and Section 5.07.  Notwithstanding the foregoing, if the Note

Administrator is legally unable to so act, the Note Administrator, on behalf of

the Indenture Trustee, shall petition at the expense of the O/C Holder a court

of competent jurisdiction to appoint any established institution qualifying as

an Eligible Servicer as the Successor Servicer hereunder.  The Note Administrator shall give prompt

notice to each Rating Agency and each Series Enhancer upon the appointment of a

Successor Servicer.

 

(b)           Upon

its appointment, the Successor Servicer shall be the successor in all respects

to the Servicer with respect to servicing functions under this Agreement and

shall be subject to all the responsibilities, duties and liabilities relating

thereto placed on the Servicer by the terms and provisions hereof, all

references in this Agreement to the Servicer shall be deemed to refer to the

Successor Servicer and the outgoing Servicer shall be relieved of any further

obligations hereunder, except for its indemnification obligations, if any, under

Article V.

 

(c)           In

connection with any Termination Notice, the Note Administrator, on behalf of

the Indenture Trustee, will review any bids which it obtains from Eligible

Servicers and shall be permitted to appoint any Eligible Servicer submitting

such a bid as a Successor Servicer for servicing compensation not in excess of

the aggregate Servicing Fees for all Series plus the sum of the amounts with respect

to each Series and with respect to each Distribution Date equal to any

Collections of Finance Charge Receivables allocable to Noteholders of such

Series which are payable to the O/C Holder after payment of all amounts owing

to the Noteholders of such Series with respect to such Distribution Date or

required to be deposited in the applicable Series Accounts with respect to such

Distribution Date and any amounts required to be paid to any Series Enhancer

for such Series with respect to such Distribution Date pursuant to the terms of

any Enhancement Agreement; provided, however, that the Transferor

shall be responsible for any Servicing Fees not otherwise allocable to any

Series.  The Note Administrator will be

entitled to obtain, at the expense of the Master Trust from amounts held in the

Collection Account, and rely on the determination of an investment banking firm

in connection with the solicitation and evaluation of any such bids and the

consummation of such sale.

 

(d)           All

authority and power granted to the Servicer under this Agreement shall

automatically cease and terminate upon termination of the Trust pursuant to

Section 8.01 of the Trust Agreement, and shall pass to and be vested in the O/C

Holder and, without limitation, the O/C Holder is hereby authorized and

empowered to execute and deliver (or cause to be executed and delivered), on

behalf of the Servicer, as attorney-in-fact or otherwise, all documents and

other instruments, and to do and accomplish (or cause to be done and

accomplished) all other acts or things necessary or appropriate to effect the

purposes of such transfer of servicing rights. 

The Servicer agrees to cooperate with the O/C Holder in effecting the

termination of the responsibilities and rights of the Servicer to conduct

servicing of the Receivables.  The

Servicer shall transfer its electronic records relating to the Receivables to

the O/C Holder or its designee in such electronic form as it may reasonably

request and shall transfer all other records, correspondence and documents to

it in the manner and at such times as it shall reasonably request.  To the extent that compliance with this

Section shall require the Servicer to disclose to the O/C Holder or its

designee information of any kind which the Servicer deems to be confidential,

the O/C

 

35

 

Holder and, if applicable, its designee, shall be required to enter

into such customary licensing and confidentiality agreements as the Servicer

shall deem necessary to protect its interests.

 

(e)           The

Successor Servicer will not be responsible for delays attributable to the

Servicer’s failure to deliver information, defects in the information supplied

by the Servicer or other circumstances beyond the control of the Successor

Servicer.

 

The Successor Servicer will make arrangements with the

Servicer for the prompt and safe transfer of, and the Servicer shall provide to

the Successor Servicer, all necessary servicing files and records, including

(as deemed necessary by the Successor Servicer at such time): (i) microfiche

loan documentation, (ii) servicing system tapes, (iii) Receivable payment

history, (iv) collections history and (v) the trial balances, as of the close

of business on the day immediately preceding conversion to the Successor

Servicer, reflecting all applicable Receivable information.

 

The Successor Servicer shall have no responsibility

and shall not be in default hereunder nor incur any liability for any failure,

error, malfunction or any delay in carrying out any of its duties under this

Agreement if any such failure or delay results from the Successor Servicer

acting in accordance with information prepared or supplied by a Person other

than the Successor Servicer or the failure of any such Person to prepare or

provide such information.  The Successor

Servicer shall have no responsibility, shall not be in default and shall incur

no liability (i) for any act or failure to act by any third party, including

the Servicer, the Issuer or the Indenture Trustee or for any inaccuracy or

omission in a notice or communication received by the Successor Servicer from

any third party or (ii) which is due to or results from the invalidity,

unenforceability of any Receivable with applicable law or the breach or the

inaccuracy of any representation or warranty made with respect to any

Receivable.

 

If the Note Administrator or any other Successor Servicer

assumes the role of Successor Servicer hereunder, such Successor Servicer shall

be entitled to the benefits of (and subject to the provisions of) Section 5.07

concerning delegation of duties to subservicers

 

Section 7.03.          Notification

to Noteholders.  Within two (2)

Business Days after the Servicer becomes aware of any Servicer Default, the

Servicer shall give notice thereof to the Owner Trustee, the Indenture Trustee,

the Transferor, the O/C Holder, the Note Administrator, each Rating Agency and

each Series Enhancer and the Indenture Trustee shall give notice to the

Noteholders.  Upon any termination or

appointment of a Successor Servicer pursuant to this Article, the Indenture

Trustee shall give prompt notice thereof to the Noteholders.

 

[END OF ARTICLE VII]

 

36

 

ARTICLE VIII

 

TERMINATION

 

Section 8.01.          Termination

of Agreement.  This Agreement and

the respective obligations and responsibilities of the Trust, the Transferor

and the Servicer under this Agreement shall terminate on the Trust Termination

Date, except for the indemnification, if any, of the Servicer under Article V.

 

[END OF ARTICLE VIII]

 

37

 

ARTICLE IX

 

MISCELLANEOUS PROVISIONS

 

Section 9.01.          Amendment;

Waiver of Past Defaults.

 

(a)           This

Agreement may be amended by the parties hereto from time to time prior to, or

in connection with, the issuance of the first Series of Notes hereunder without

the requirement of any consents or the satisfaction of any conditions set forth

below.  This Agreement may be amended

from time to time by the Servicer, the Transferor, acting on the instruction of

the O/C Holder and the Trust, by a written instrument signed by each of them,

without the consent of the Indenture Trustee, the Note Administrator or any of

the Noteholders; provided that (1) the O/C Holder shall have

delivered to the Indenture Trustee, the Note Administrator and the Owner

Trustee an Officer’s Certificate, dated the date of any such amendment, stating

that such O/C Holder reasonably believes that such amendment will not have an

Adverse Effect and (2) the Rating Agency Condition shall have been

satisfied with respect to any such amendment. 

Additionally, notwithstanding the preceding sentence, this Agreement

will be amended by the Servicer and the Trust at the direction of the

Transferor, acting at the direction of the O/C Holder, without the consent of

the Indenture Trustee, the Note Administrator or any of the Noteholders or

Series Enhancers to add, modify or eliminate such provisions as may be

necessary or advisable in order (i) to enable all or a portion of the Trust

(a) to qualify as, and to permit an election to be made to cause the Trust

to be treated as, a “financial asset securitization investment trust” as

described in the provisions of Section 860L of the Code or (b) to avoid

the imposition of state or local income or franchise taxes imposed on the

Trust’s property or its income or (ii) to allow the transfer of Receivables to

the Trust as contemplated in this Agreement to qualify for sale treatment under

GAAP or to allow the Trust to qualify as a qualified special purpose entity

under FASB Statement No. 140; provided, however, that

(1) the O/C Holder delivers to the Indenture Trustee, the Note

Administrator and the Owner Trustee a Tax Opinion and an Officer’s Certificate

to the effect that the proposed amendments meet the requirements set forth in

this subsection, (2) the Rating Agency Condition shall have been satisfied

with respect to any such amendment and (3) such amendment does not affect

the rights, duties or obligations of the Indenture Trustee, the Note

Administrator or the Owner Trustee hereunder.

 

(b)           This

Agreement may also be amended from time to time by the Servicer, the Transferor,

acting at the direction of the O/C Holder, and the Trust, with the consent of

the Holders of Notes evidencing not less than 50% of the aggregate unpaid

principal amount of the Notes of all affected Series for which the O/C Holder

has not delivered an Officer’s Certificate stating that there is no Adverse

Effect, for the purpose of adding any provisions to or changing in any manner

or eliminating any of the provisions of this Agreement or of modifying in any

manner the rights of the Noteholders; provided, however, that no

such amendment shall (i) reduce in any manner the amount of or delay the timing

of any distributions (changes in Redemption Events or Events of Default that

decrease the likelihood of the occurrence thereof shall not be considered delays

in the timing of distributions for purposes of this clause) to be made to

Noteholders or deposits of amounts to be so distributed or the amount available

under any Series Enhancement without the consent of each affected Noteholder,

(ii) change the definition of or the manner of calculating the interest of any

Noteholder without the consent of each affected Noteholder, (iii) reduce the

aforesaid percentage required to consent to any such amendment without the

consent of each Noteholder or (iv) adversely affect the rating of any Series or

Class by each Rating Agency without the consent of the Holders of Notes of such

Series or Class evidencing not less than 50% of the aggregate unpaid principal

amount of the Notes of such Series or Class.

 

(c)           Promptly

after the execution of any such amendment or consent (other than an amendment

pursuant to paragraph (a)), the Trust shall furnish notification of the

substance of such amendment to the Indenture Trustee, the Note Administrator

and each Noteholder, and the Servicer shall

 

38

 

furnish notification of the substance of such amendment to each Rating

Agency and each Series Enhancer.

 

(d)           It

shall not be necessary for the consent of Noteholders under this Section 9.01 to

approve the particular form of any proposed amendment, but it shall be

sufficient if such consent shall approve the substance thereof.  The manner of obtaining such consents and of

evidencing the authorization of the execution thereof by Noteholders shall be

subject to such reasonable requirements as the Indenture Trustee may prescribe.

 

(e)           Notwithstanding

anything in this Section 9.01 to the contrary, no amendment may be made to this

Agreement which would adversely affect in any material respect the interests of

any Series Enhancer without the consent of such Series Enhancer.

 

(f)            Any

Indenture Supplement executed in accordance with the provisions of

Article X of the Indenture shall not be considered an amendment of this

Agreement for the purposes of this Section 9.01.

 

(g)           The

Holders of Notes evidencing more than 50% of the aggregate unpaid principal

amount of the Notes 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, 50% of the aggregate unpaid principal amount of the Notes of

each Series to which such default relates or, with respect to any such Series

with two or more Classes, of each Class) may, on behalf of all Noteholders,

waive any default by the Transferor or the Servicer in the performance of their

obligations hereunder and its consequences, except the failure to make any

distributions required to be made to Noteholders or 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.  Promptly after any such waiver of a past

default, the Servicer shall furnish notification of the substance of such

waiver to each Rating Agency.

 

(h)           Each

of the Indenture Trustee, the Note Administrator and the Owner Trustee may, but

shall not be obligated to, enter into any amendment which affects their

respective rights, duties, benefits, protections, privileges or immunities

under this Agreement or otherwise.  In

connection with the execution of any amendment hereunder, each of the Owner

Trustee, the Indenture Trustee and the Note Administrator shall be entitled to

receive the Opinion of Counsel described in subsection 9.02(d).

 

(i)            Notes

held by the Transferor or any of its agents or affiliates will not be

considered in the determination of (i) whether the requisite percentage of

Notes Outstanding has been obtained in support of any amendment under this

Section 9.01 and (ii) the amount of Notes Outstanding in connection with the calculation

of such requisite percentage.

 

Section 9.02.          Protection

of Right, Title and Interest to Trust Assets.

 

(a)           The

Transferor, acting at the direction of the O/C Holder, shall cause this

Agreement, all amendments and supplements hereto and all financing statements

and continuation statements and any other necessary documents covering the

Indenture Trustee’s and the Trust’s right, title and interest to the Trust

Assets to be promptly recorded, registered and filed, and at all times to be

kept recorded, registered and filed, all in such manner and in such places as

may be required by law fully to preserve and protect the right, title and

interest of the Indenture Trustee, Noteholders and the Trust hereunder to all

property comprising the Trust Assets. 

The O/C Holder shall deliver to the Owner Trustee and Indenture Trustee

file-stamped copies of, or filing receipts for, any document recorded,

registered or

 

39

 

filed as provided above, as soon as available following such recording,

registration or filing.  The O/C Holder

shall cooperate fully with the Servicer in connection with the obligations set

forth above and will execute any and all documents reasonably required to

fulfill the intent of this paragraph.

 

(b)           Within

thirty (30) days after any Transferor makes any change in its name, identity or

corporate structure which would make any financing statement or continuation

statement filed in accordance with paragraph (a) seriously misleading within

the meaning of Section 9-506 (or any comparable provision) of the UCC, the

Transferor shall give the Owner Trustee, the O/C Holder, the Note Administrator

and the Indenture Trustee notice of any such change and the O/C Holder shall

file such financing statements or amendments as may be necessary to continue

the perfection of the Trust’s security interest or ownership interest in the

Receivables and the proceeds thereof.

 

(c)           The

Transferor shall give the Owner Trustee, the Note Administrator and the

Indenture Trustee prompt notice of any relocation of its chief executive office

or any change in the jurisdiction under whose laws it is organized and whether,

as a result of such relocation or change, the applicable provisions of the UCC

would require the filing of any amendment of any previously filed financing or

continuation statement or of any new financing statement and shall file such

financing statements or amendments as may be necessary to perfect or to

continue the perfection of the Trust’s security interest in the Receivables and

the proceeds thereof.  The Transferor

shall at all times maintain its chief executive offices within the United

States and shall at all times be organized under the laws of a jurisdiction

located within the United States.

 

(d)           The

O/C Holder shall deliver to the Owner Trustee, the Indenture Trustee, the Note

Administrator and each Rating Agency (i) upon the execution and delivery

of each amendment of this Agreement, an Opinion of Counsel to the effect

specified in Exhibit C-1; and (ii)  on or before June 30

of each year, beginning with June 30, 2003, an Opinion of Counsel

substantially in the form of Exhibit C-2.  In addition, the O/C Holder shall deliver to

Moody’s (so long as Moody’s is a Rating Agency) on or before June 30 of each

year, beginning with June 30, 2003, an Opinion of Counsel substantially in the

form of Exhibit C-3.

 

Section 9.03.          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 OBLIGATIONS, RIGHTS AND

REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH

LAWS.

 

Section 9.04.          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, mailed by registered mail, return receipt

requested, or sent by facsimile transmission (i) in the case of the

Transferor, to PACCT, LLC, c/o Providian Financial Corporation, 201 Mission

Street, San Francisco, California 94105, Attention: Chief Financial Officer,

(ii) in the case of the Servicer, to CompuCredit Corporation, 245 Perimeter

Center Parkway, Suite 600, Atlanta, Georgia, 30346,  Attention: General Counsel, (iii) in the case of the Trust

or the Owner Trustee, to Wilmington Trust Company, Rodney Square North, 1100

North Market Street, Wilmington, Delaware 19890-0001, Attention: Corporate

Trust Administration, (iv) in the case of the Rating Agency for a

particular Series, the address, if any, specified in the Indenture Supplement

relating to such Series, and (v) to any other Person as specified in the

Indenture or any Indenture Supplement; or, as to each party, at such other

address or facsimile number as shall be designated by such party in a written

notice to each other party.

 

40

 

(b)           Any

Notice required or permitted to be given to a Holder of Registered Notes shall

be given by first-class mail, postage prepaid, at the address of such Holder as

shown in the Note Register.  Any Notice

so mailed within the time prescribed in this Agreement shall be conclusively

presumed to have been duly given, whether or not the Noteholder receives such

Notice.

 

Section 9.05.          Severability

of Provisions.  If any one or more

of the covenants, agreements, provisions or terms of this Agreement shall for

any reason whatsoever be held invalid, then such provisions shall be deemed

severable from the remaining provisions of this Agreement and shall in no way

affect the validity or enforceability of the remaining provisions or of the

Notes or the rights of the Noteholders.

 

Section 9.06.          Further

Assurances.  The Transferor, the O/C

Holder and the Servicer agree to do and perform, from time to time, any and all

acts and to execute any and all further instruments required or reasonably

requested by the Owner Trustee, the Note Administrator and the Indenture

Trustee more fully to effect the purposes of this Agreement, including the

execution of any financing statements or continuation statements relating to

the Receivables for filing under the provisions of the UCC of any applicable

jurisdiction.

 

Section 9.07.          No

Waiver; Cumulative Remedies.  No

failure to exercise and no delay in exercising, on the part of the Trust, the

Owner Trustee, the Indenture Trustee, the Note Administrator or the

Noteholders, 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 9.08.          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 9.09.          Third-Party

Beneficiaries.  This Agreement will

inure to the benefit of the Owner Trustee and inure to the benefit of and be

binding upon the parties hereto, the Indenture Trustee, the Note Administrator,

the Noteholders, any Series Enhancer and their respective successors and

permitted assigns.  Except as otherwise

expressly provided in this Agreement, no other Person will have any right or

obligation hereunder.

 

Section 9.10.          Actions

by Noteholders.

 

(a)           Wherever

in this Agreement a provision is made that an action may be taken or a Notice

given by Noteholders, such action or Notice may be taken or given by any

Noteholder, unless such provision requires a specific percentage of

Noteholders.

 

(b)           Any

Notice, request, authorization, direction, consent, waiver or other act by the

Holder of a Note shall bind such Holder and every subsequent Holder of such

Note and of any Note issued upon the registration of transfer thereof or in

exchange therefor or in lieu thereof in respect of anything done or omitted to

be done by the Owner Trustee, the Transferor, the O/C Holder or the Servicer in

reliance thereon, whether or not notation of such action is made upon such Note.

 

Section 9.11.          Rule

144A Information.  For so long as

any of the Notes of any Series or Class are “restricted securities” within the

meaning of Rule 144(a)(3) under the Securities Act, each of the Transferor, the

Owner Trustee, the Indenture Trustee, the Note Administrator, the Servicer and

any Series

 

41

 

Enhancer agrees to cooperate with each other to provide to any

Noteholders of such Series or Class and to any prospective purchaser of Notes

designated by such Noteholder, upon the request of such Noteholder 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 9.12.          Merger

and Integration.  Except as

specifically stated otherwise herein, this Agreement sets forth the entire

understanding of the parties relating to the subject matter hereof, and all

prior understandings, written or oral, are superseded by this Agreement.  This Agreement may not be modified, amended,

waived or supplemented except as provided herein.

 

Section 9.13.          Headings.  The headings herein are for purposes of

reference only and shall not otherwise affect the meaning or interpretation of

any provision hereof.

 

Section 9.14.          Assignment.  Notwithstanding anything to the contrary

contained herein, except as provided in Section 5.02, this Agreement may not be

assigned by the Servicer without the prior consent of Holders of Notes

evidencing not less than 50% of the aggregate unpaid principal amount of all

Series of Notes.  The Servicer shall

give the Rating Agencies prior written notice of any such assignment.

 

Section 9.15.          Nonpetition

Covenant.  Notwithstanding any prior

termination of this Agreement, the Servicer, the Owner Trustee, the Indenture

Trustee, the Note Administrator, the O/C Holder and the Transferor shall not,

prior to the date which is one year and one day after the termination of this

Agreement, acquiesce, petition or otherwise invoke or cause the Trust to invoke

the process of any Governmental Authority for the purpose of commencing or

sustaining a case against the Trust under any Federal or state bankruptcy,

insolvency or similar law or appointing a receiver, liquidator, assignee, trustee,

custodian, sequestrator or other similar official of the Trust or any

substantial part of its property or ordering the winding-up or liquidation of

the affairs of the Trust.

 

Section 9.16.          Limitation

of Liability.  Notwithstanding any

other provision herein or elsewhere, this Agreement has been executed and

delivered by Wilmington Trust Company, not in its individual capacity, but

solely in its capacity as Owner Trustee of the Trust.  In no event shall Wilmington Trust Company in its individual

capacity have any liability in respect of the representations, warranties, or

obligations of the Trust hereunder or under any other document, as to all of

which recourse shall be had solely to the assets of the Trust, and for all

purposes of this Agreement and each other document, the Owner Trustee (as such

or in its individual capacity) shall be subject to, and entitled to the

benefits of, the terms and provisions of the Trust Agreement.

 

Section 9.17           FASB

Statement No. 140.  Subject to

subsection 9.01(a), the parties hereto agree to take commercially reasonable

steps to cause the transfer of the Receivables to qualify for sale treatment

under GAAP and to cause the Trust to continue to qualify as a qualified special

purpose entity under FASB Statement No. 140.

 

Section 9.18           Additional

Representations and Warranties of the Transferor. The Transferor hereby

makes the following representations and warranties.  Such representations and warranties shall survive until the

termination of this Agreement.  Such representations

and warranties speak as of the date that the Collateral (as defined below) is

transferred to the Trust but shall not be waived by any of the parties to this

Agreement unless the Rating Agency Condition is satisfied with respect to such

waiver.

 

(a)           This

Agreement creates a valid and continuing security interest (as defined in the

applicable UCC) in favor of the Trust in the Receivables described in Section

2.01 of this Agreement (the 

 

42

 

“Collateral”), which security interest is prior to all

other liens, and is enforceable as such against creditors of and purchasers

from the Transferor.

 

(b)           The

Collateral constitutes “accounts” within the meaning of the applicable UCC.

 

(c)           At

the time of the transfer of the Collateral pursuant to this Agreement, the

Transferor owned and had good and marketable title to the Collateral free and

clear of any lien, claim or encumbrance of any Person.

 

(d)           The

Transferor has caused or will have caused, within ten (10) days of the initial

execution of this Agreement, 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 in the Collateral granted to the

Trust pursuant to this Agreement.

 

(e)           The

Transferor has registered the Trust as the registered owner of the Collateral.

 

(f)            Other

than the security interest granted to the Trust and the Indenture Trustee

pursuant to this Agreement, the Transferor has not pledged, assigned, sold,

granted a security interest in, or otherwise conveyed the Collateral.  The Transferor has not authorized the filing

of and is not aware of any financing statements against it that include a

description of the Collateral other than any financing statement relating to

the security interest granted to the Trust and the Indenture Trustee pursuant

to this Agreement or that has been terminated. 

The Transferor is not aware of any judgment or tax lien filings against

it.

 

Section 9.19           Subordination.

To the extent that any Noteholders or the O/C Holder of the Trust are deemed to

have any interest in any assets of CSGQ Trust that are pledged for the benefit

of other noteholders or the O/C holders of CSGQ Trust, such Noteholders or O/C

Holder agrees that their interest in those assets is subordinate to the claims

or rights of such other noteholders or O/C holders of CSGQ Trust to those

assets.  Further, any Noteholders or O/C

Holders who are deemed to have a subordinate interest in the assets of  CSGQ Trust shall be deemed to agree that the

Agreement constitutes a subordination agreement for purposes of Section 5.10(a)

of Title 11 of the United States Code.

 

[END OF ARTICLE IX]

 

43

 

IN WITNESS WHEREOF, the Transferor, the Servicer, the

O/C Holder and the Issuer have caused this Transfer and Servicing Agreement to

be duly executed by their respective officers as of the day and year first

above written.

 

	

   

  	

  COMPUCREDIT CORPORATION, as Servicer

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

  Name:

  	

   

  
	

   

  	

   

  	

  Title:

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  CSGQ TRUST,

  
	

   

  	

   

  	

  as Issuer

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  By:

  	

  Wilmington Trust Company,

  not in its individual capacity

  but solely as Owner Trustee

  on behalf of the Trust

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  Name:

  
	

   

  	

   

  	

   

  	

  Title:

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  PACCT, LLC,

  	

   

  
	

   

  	

  as Transferor

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

  Name:

  	

   

  
	

   

  	

   

  	

  Title:

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  CSG FUNDING, LLC,

  
	

   

  	

  as O/C Holder

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

  Name:

  	

   

  
	

   

  	

   

  	

  Title:

  	

   

  
									

 

 

	

  Acknowledged and

  Accepted:

  
	

   

  
	

  U.S. BANK NATIONAL

  ASSOCIATION,

  
	

  as Indenture Trustee

  
	

   

  
	

  By:

  	

   

  	

   

  
	

   

  	

  Name:

  
	

   

  	

  Title:

  
	

   

  
	

   

  
	

  CITIBANK, N.A.,

  
	

  as Note Administrator

  
	

   

  
	

  By:

  	

   

  	

   

  
	

   

  	

  Name:

  
	

   

  	

  Title:

  

 

 

EXHIBIT A

 

FORM OF ANNUAL SERVICER’S CERTIFICATE

 

(To be delivered on or

before March 31 of

each calendar year beginning with March 31, 2003,

pursuant to Section 3.05 of the Transfer and

Servicing Agreement referred to below)

 

CSGQ TRUST

 

The undersigned, a duly authorized representative of

CompuCredit Corporation (“CompuCredit”), as Servicer, pursuant to

the Transfer and Servicing Agreement, dated as of June 25, 2002 (as amended and

supplemented, the “Agreement”), among PACCT, LLC, CSGQ

Trust and CompuCredit does hereby certify that:

 

1.    CompuCredit, is, as of the date hereof, the Servicer under the

Agreement.  Capitalized terms used in

this Certificate have their respective meanings as set forth in the Agreement.

 

2.    The undersigned is duly authorized pursuant to the Agreement to

execute and deliver this Certificate to the Trust.

 

3.    A review of the activities of the Servicer during the year ended

December 31,        , and of its performance

under the Agreement was conducted under my supervision.

 

4.    Based on such review, the Servicer has, to the best of my

knowledge, performed in all material respects its obligations under the

Agreement throughout such year and no default in the performance of such

obligations has occurred or is continuing except as set forth in paragraph 5

below.

 

5.    The following is a description of each default in the performance

of the Servicer’s obligations under the provisions of the Agreement known to me

to have been made by the Servicer during the year ended December 31,

       , which sets forth in detail (i) the

nature of each such default, (ii) the action taken by the Servicer, if any, to

remedy each such default and (iii) the current status of each such default: [If

applicable, insert “None.”]

 

IN WITNESS WHEREOF, the undersigned has duly executed

this Certificate this          day of

                      ,

20     .

 

	

   

  	

  COMPUCREDIT CORPORATION,

  
	

   

  	

  Servicer

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  Name:

  
	

   

  	

   

  	

  Title:

  
					

 

 

EXHIBIT

B

 

FORM OF REASSIGNMENT OF RECEIVABLES IN REMOVED RECEIVABLES

(As required by Section 2.08(a) of

the Transfer and Servicing Agreement)

 

REASSIGNMENT No.       

OF RECEIVABLES, dated as of

                    ,

(3) by and between PACCT, LLC, a Delaware limited liability company, as

Transferor (the “Transferor”), COMPUCREDIT CORPORATION,

a Georgia corporation, as Servicer (the “Servicer”), CSGQ TRUST (the “Trust”)

and CSG FUNDING, LLC, as O/C Holder (the “O/C Holder”), pursuant to the Transfer

and Servicing Agreement referred to below.

 

WITNESSETH:

 

WHEREAS the Transferor, the Servicer, the Trust and

the O/C Holder are parties to the Transfer and Servicing Agreement, dated as of

June 25, 2002 (as amended and supplemented, the “Agreement”);

 

WHEREAS pursuant to the Agreement, the Servicer wishes

to remove from the Trust all Receivables owned by the Trust in certain

designated Accounts (the “Removed Receivables”) and to cause the

Trust to reconvey such Removed Receivables, whether now existing or hereafter

created, from the Trust to the Servicer; and

 

WHEREAS the Trust is willing to accept such

designation and to reconvey the Receivables in the Removed Receivables subject

to the terms and conditions hereof;

 

NOW, THEREFORE, the Transferor, the O/C Holder, the

Servicer and the Trust hereby agree as follows:

 

1.             Defined Terms. 

All terms defined in the Agreement and used herein shall have such

defined meanings when used herein, unless otherwise defined herein.

 

“Removal Date” shall mean, with respect

to the Removed Receivables designated hereby,

           ,

    .

 

“Removal Notice Date” shall mean, with

respect to the Removed Receivables

              ,

     

 

2.             Designation of Removed Receivables.  On or before the Removal Date, the Servicer

will deliver to the Owner Trustee a computer file or microfiche list containing

a true and complete schedule identifying all Accounts the Receivables of which

are being removed from the Trust, specifying for each such Account, as of the

Removal Notice Date, its account number and the aggregate amount outstanding in

such Account, which computer file or microfiche list shall supplement Schedule

1 to the Agreement.

 

3.             Conveyance of Receivables.  (a)  The Trust does hereby

transfer, assign, set over and otherwise convey to the Servicer, without recourse,

all right, title and interest of the Trust in, to and under the Receivables

existing at the close of business on the Removal Date and thereafter created

from time to time in the Removed Receivables designated hereby, all Interchange

and Recoveries related

 

(3)  To be dated as of the

Removal Date.

 

D-1-1

 

thereto, all monies due or to become due and all amounts received or

receivable with respect thereto and all proceeds thereof.

 

(b)           In

connection with such transfer, the Trust agrees to execute and deliver to the

Servicer on or prior to the date this Reassignment is delivered, applicable

partial release and/or termination statements prepared by the O/C Holder with

respect to the Removed Receivables reassigned hereby and the proceeds thereof

evidencing the release by the Trust of its interest in the Removed Receivables,

and meeting the requirements of applicable state law, in such manner and such

jurisdictions as are necessary to terminate or release such interest.

 

4.             Representations and Warranties.  The Servicer represents and warrants to the

Trust as of the Removal Date:

 

(a)           Legal

Valid and Binding Obligation.  This

Reassignment constitutes a legal, valid and binding obligation of the Servicer

enforceable against the Servicer, 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); and

 

(b)           Redemption

Event; Event of Default.  The

Servicer reasonably believes that (A) the removal of the Removed Receivables

will not, based on the facts known to the Servicer, then or thereafter cause a

Redemption Event or Event of Default to occur with respect to any Series and

(B) no selection procedure was utilized by the Servicer  which would result in a selection of Removed

Receivables that would be materially adverse to the interests of the

Noteholders of any Series as of the Removal Date.

 

(c)           List

of Removed Accounts.  The list of

Removed Receivables delivered pursuant to subsection 2.08(a)(ii) of the

Agreement, as of the Removal Date, is true and complete in all material

respects.

 

5.             Ratification of Agreement.  As supplemented by this Reassignment, the

Agreement is in all respects ratified and confirmed and the Agreement as so

supplemented by this Reassignment shall be read, taken and construed as one and

the same instrument.

 

6.             Counterparts. 

This Reassignment may be executed in two or more counterparts, and by

different parties on separate counterparts, each of which shall be an original,

but all of which shall constitute one and the same instrument.

 

7.             GOVERNING LAW. 

THIS REASSIGNMENT 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.

 

8.             Limitation of Liability.  Notwithstanding any other provision herein

or elsewhere, this Reassignment has been executed and delivered by Wilmington

Trust Company, not in its individual capacity, but solely in its capacity as

Owner Trustee of the Trust, in no event shall Wilmington Trust Company in its

individual capacity have any liability in respect of the representations,

warranties, or obligations of the Trust hereunder or under any other document,

as to all of which recourse shall be had solely to the assets of the Trust, and

for all purposes of this Reassignment and each other document, the

 

B-2

 

Owner Trustee (as such or in its individual capacity) shall be subject

to, and entitled to the benefits of, the terms and provisions of the Trust

Agreement.

 

B-3

 

IN WITNESS WHEREOF, the Transferor, the Servicer, the

Trust and the O/C Holder have caused this Reassignment to be duly executed by

their respective officers as of the day and year first above written.

 

 

	

   

  	

  COMPUCREDIT CORPORATION, as Servicer

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

  Name:

  	

   

  
	

   

  	

   

  	

  Title:

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  CSGQ TRUST,

  
	

   

  	

   

  	

  as Issuer

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  By:

  	

  Wilmington Trust Company,

  not in its individual capacity

  but solely as Owner Trustee

  on behalf of the Trust

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  Name:

  
	

   

  	

   

  	

   

  	

  Title:

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  PACCT, LLC,

  	

   

  
	

   

  	

  as Transferor

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

  Name:

  	

   

  
	

   

  	

   

  	

  Title:

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  CSG FUNDING, LLC,

  
	

   

  	

  as O/C Holder

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

  Name:

  	

   

  
	

   

  	

   

  	

  Title:

  	

   

  
									

 

B-4

 

EXHIBIT

C-1

 

FORM OF OPINION OF COUNSEL

WITH RESPECT TO AMENDMENTS

 

Provisions to be included

in

Opinion of Counsel to be delivered pursuant

to subsection 9.02(d)(i)

 

The opinions set forth below may be subject to all the

qualifications, assumptions, limitations and exceptions taken or made in the

Opinions Of Counsel delivered on any applicable delivery date.

 

(i)            The amendment to the Transfer and

Servicing Agreement, attached hereto as Schedule 1 (the “Amendment” ), has been

duly authorized, executed and delivered by the Transferor and constitutes the

legal, valid and binding agreement of the Transferor, enforceable in accordance

with its terms, except as such enforceability may be limited by applicable

bankruptcy, insolvency, reorganization, moratorium or other laws from time to

time in effect affecting creditors’ rights generally.  The enforceability of the Transferor’s obligations is also

subject to general principles of equity (regardless of whether such

enforceability is considered in a proceeding in equity or at law)

 

(ii)           The Amendment is authorized and

permitted by the terms and provisions of Section 9.01 of the Transfer and

Servicing Agreement.

 

C-1-1

 

EXHIBIT C-2

 

FORM OF ANNUAL OPINION OF COUNSEL

WITH RESPECT TO ACCOUNTS

 

Provisions to be included

in

Opinion of Counsel to be delivered pursuant

to subsection 9.02(d)(ii)

 

The opinion set forth below may be subject to all the

qualifications, assumptions, limitations and exceptions taken or made in the

Opinions of Counsel delivered on any applicable delivery date with respect to

similar matters.

 

1.             No filing or other action, other than such filing or

other action described in such opinion, is necessary from the date of such

opinion through June 30 of the following year to continue the perfected

status of the security interest of the Trust in the Receivables described in

the financing statements referenced in such opinion.

 

C-2-1

 

EXHIBIT C-3

 

FORM OF ANNUAL OPINION OF COUNSEL

TO BE DELIVERED TO MOODY’S INVESTORS SERVICE, INC.

 

Provisions to be included

in

Opinion of Counsel to be delivered pursuant

to subsection 9.02

 

The opinion set forth below may be subject to all the

qualifications, assumptions, limitations and exceptions taken or made in the

Opinions of Counsel delivered on any applicable delivery date with respect to

similar matters.

 

1.             If

the matter were properly briefed and presented to a court, the court would hold

that the Receivables constitute “accounts,” as defined under Section 9–102

of the UCC.

 

C-3-1

 

SCHEDULE

1

 

List of Accounts

 

[Original list delivered to Trust]

 

S-1

 

SCHEDULE

2

 

Purchase Price

 

Principal Amount of

Securities

 

	

  Class A-1

  Certificates

  	

   

  	

  $

  	

  [                     ]

  
	

   

  	

   

  	

   

  
	

  Class A-2

  Certificates

  	

   

  	

  $

  	

  [                     ]

  
	

   

  	

   

  	

   

  
	

  Class A-3

  Certificates

  	

   

  	

  $

  	

  [                     ]

  
	

   

  	

   

  	

   

  
	

  Class A-4

  Certificates

  	

   

  	

  $

  	

  [                     ]

  
	

   

  	

   

  	

   

  
	

  Class B Notes

  	

   

  	

  $

  	

  [                     ]

  
	

   

  	

   

  	

   

  
	

  O/C Certificate

  	

   

  	

  $

  	

  [                     ]

  
	

   

  	

   

  	

   

  
	

  Variable Funding

  Notes

  	

   

  	

  $

  	

  [                     ]

  

 

S-1

 

SCHEDULE

3

 

BANK AGENT NUMBERS

[Attached]

 

S-1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00042-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00042-of-00352.parquet"}]]