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EXHIBIT 4.2    
    

NEITHER
THIS WARRANT NOR THE SECURITIES THAT MAY BE ACQUIRED UPON THE EXERCISE OF THIS WARRANT: (A) HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
UNDER ANY STATE SECURITIES LAWS; AND (B) MAY BE SOLD, PLEDGED, TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER THE SECURITIES
ACT (INCLUDING ANY RULES OR REGULATIONS THEREUNDER) AND ANY APPLICABLE STATE SECURITIES LAWS. 

 
 

COMPUCREDIT CORPORATION    
    
    WARRANT AGREEMENT    
    

        THIS CERTIFIES that, for value received, MERRILL LYNCH MORTGAGE CAPITAL INC., a Delaware
corporation (the "Holder"), shall be entitled to acquire from COMPUCREDIT CORPORATION, a Georgia corporation (the "Company"), subject to
the terms and conditions contained herein, (i) at any time during the period from 9:00 A.M. (Eastern Time) on January 30, 2004, through 5:00 P.M. (Eastern Time) on
January 30, 2007 (the "Expiration Date"), one million two hundred thousand (1,200,000) shares of "Common Stock" (as hereinafter defined), plus (ii) at any time during the period from
9:00 A.M. (Eastern Time) on the earliest of (a) the Commitment Step-Up Date, (b) the date on which a Change of Control (as defined in the Indenture Supplement) occurs
if prior to the scheduled Commitment Step-Up Date, or (c) an uncured Corporate Finance Event (as defined in the Indenture Supplement and giving effect to the cure provisions
contained therein) (should any such date occur) through the Expiration Date, one million two hundred thousand (1,200,000) shares of Common Stock; (individually, a "Warrant Share" and collectively, the
"Warrant Shares"), at the Exercise Price (as hereinafter defined) (the "Warrant"). For purposes of this Warrant, the term "Common Stock" shall mean the no par value common stock of the Company. 

1.    Exercise of Warrants.  

        1.1    Method of Exercise.    

        (a)    Cash Exercise.    The Warrant evidenced hereby may be exercised by the Holder, in
whole or in part, by the delivery at the principal office of the Company (or at such other office or agency of the Company as it may designate by notice in writing to the Holder), during normal
business hours, of this Warrant and the Form of Exercise attached hereto as Schedule A, duly completed and executed by the Holder, and payment (by wire transfer of
immediately available United States federal funds or by bank certified, treasurer's or cashier's check payable to the order of the Company) of the aggregate Exercise Price for the Warrant Shares
covered by such exercise. 

        (b)    Net Issue Exercise.    At any time after ninety (90) days after the Closing
Date, provided that a registration statement has not been filed and is effective for such shares under the Securities Act and under which the Holder would then be entitled to immediately sell free and
clear of any resale restrictions all of the Warrant Shares issuable upon holder's exercise in full of this Warrant, in lieu of exercising this Warrant pursuant to Section 1.1(a) hereof, the
Holder may elect to receive, without the payment of any additional consideration, a number of Warrant Shares equal to the value (as determined below) of this Warrant (or the portion thereof being
exercised) by surrender of this Warrant at the principal office of the Company together with a duly executed 

 

Form
of Exercise. In such event, the Company shall issue to the Holder the number of Warrant Shares computed using the following formula: 

	 	X =	 	Y (A-B)

A

	

 	

Where X	
 	

=    the number of Warrant Shares to be issued to the Holder.
	

 	

Y	
 	

=	
 	

the number of Warrant Shares subject to this Warrant or, if only a portion of this Warrant is being exercised, the portion of this Warrant being exercised (at the time of such calculation).
	

 	

A	
 	

=	
 	

the Fair Market Value of one Warrant Share (at the date of such calculation).
	

 	

B	
 	

=	
 	

the Exercise Price (as adjusted to the date of such calculation).

        1.2    Partial or Conditional Exercise.    In the event this Warrant is not exercised in
full, the total number of Warrant Shares shall be reduced by the number of Warrant Shares subject to such partial exercise, and the Company shall promptly issue and deliver to the Holder a new Warrant
of like tenor in the name of the Holder, reflecting such adjusted number of Warrant Shares. In the event this Warrant is to be exercised in connection with a registered public offering or the sale of
the Company, the exercise of any portion of this Warrant may, at the election of the Holder, be conditioned upon the consummation of the public offering or sale of the Company in which case such
exercise shall not be deemed to be effective until the consummation of such transaction and may be rescinded if such transaction shall not occur within a reasonable time. 

        1.3    Delivery of Certificates.    

        (a)   The
certificate for the Warrant Shares issued upon exercise of this Warrant by the Holder pursuant to Sections 1.1 or 1.2 shall be delivered to the Holder as soon as
practicable after the exercise of this Warrant. The certificate evidencing the Warrant Shares shall bear a restrictive legend substantially in the form set forth below: 

"THE
SECURITIES REPRESENTED BY THIS CERTIFICATE: (A) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER ANY STATE SECURITIES LAWS; AND
(B) MAY NOT BE SOLD, PLEDGED, TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER THE SECURITIES
ACT (INCLUDING ANY RULES OR REGULATIONS THEREUNDER) AND ANY APPLICABLE STATE SECURITIES LAWS." 

        (b)    Removal of Legend.    Upon request of a Holder of a certificate with the legend
required by Section 1.3(a) hereof, the Company shall issue to such holder a new certificate therefor free of any transfer legend, if, with such request, the Company shall have received an
opinion of counsel (either external counsel or counsel employed by Holder or its affiliate) reasonably satisfactory to the Company in form and substance to the effect that any transfer by such holder
of the shares evidenced by such certificate will not violate the Securities Act or any applicable state securities laws. 

        1.4    No Fractional Shares.    No fractional shares of Common Stock will be issued in
connection with any exercise hereunder. Any fraction of a share resulting from any calculation will be rounded up to the next whole share. 

        1.5    Stock Fully Paid; Reservation of Shares.    All of the shares of Common Stock
issuable upon the exercise of the rights represented by this Warrant will, upon issuance and receipt of the Exercise Price therefor, be fully paid and nonassessable, and free from all preemptive
rights, rights of first refusal or first offer, taxes, liens and charges of whatever nature. During the period within which the 

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rights
represented by this Warrant may be exercised, the Company shall at all times have authorized and reserved for issuance a sufficient number of shares of its Common Stock to provide for the full
exercise of the rights represented by this Warrant. The Company shall take all steps necessary to amend its certificate of incorporation and other organizational documents to provide sufficient
reserves of shares of Common Stock issuable upon full exercise of this Warrant. The Company hereby agrees that its issuance of this Warrant shall constitute full authority to its officers who are
charged with the duty of executing stock certificates to execute and issue the proper certificates for Shares upon the full or each partial exercise of this Warrant. 

2.    Adjustments to Exercise Price and Warrant Shares.    The Exercise Price and the number of Warrant
Shares issuable upon the exercise of the Warrant are subject to adjustment from time to time upon the occurrence of the events enumerated in this Section 2. 

        2.1   In
case the Company shall at any time after the date hereof (i) declare a dividend or make a distribution on Common Stock payable in Common Stock,
(ii) subdivide or split the outstanding Common Stock, (iii) combine or reclassify the outstanding Common Stock into a smaller number of shares, or (iv) consolidate with, or merge
with or into, any other Person, or engage in any reorganization, reclassification or recapitalization which, in the case of any such transaction is effected in such a manner that the holders of Common
Stock are entitled to receive stock, securities, cash or other assets with respect to or in exchange for Common Stock, then the Exercise Price and the kind and amount of stock, securities, cash or
other assets issuable upon exercise at the time of the record date for such dividend or distribution or the time of the effective date of such subdivision, split, combination, consolidation, merger,
reorganization, reclassification or recapitalization shall be adjusted as indicated in Sections 2.1 (a) through 2.1 (d) below. The foregoing adjustments shall be made successively
whenever any event listed above shall occur. 

        (a)    Adjustments for Dividends in Common Stock or Other Securities or Property.    If
while this Warrant, or any portion hereof, remains outstanding and unexpired, the holders of any class of securities as to which purchase rights under this Warrant exist at the time shall have
received, or, on or after the record date fixed for the determination of eligible stockholders, shall have become entitled to receive, without payment therefor, other or additional Common Stock or
other securities or property (other than cash) of the Company by way of dividend, then and in each case, this Warrant shall represent the right to acquire, in addition to the number of shares of such
class of securities receivable upon exercise of this Warrant, and without payment of any additional consideration therefor, the amount of such other or additional stock or other securities or property
(other than cash) of the Company that such Holder would hold on the date of such exercise had it been the holder of record of the class of security receivable upon exercise of this Warrant on the date
hereof and had thereafter, during the period from the date hereof to and including the date of such exercise, retained such Warrant Shares and/or all other additional Common Stock available to it as
aforesaid during said period, giving effect to all adjustments called for during such period by the provisions of this Section 2. 

        (b)    Adjustments for Cash Dividends.    If while this Warrant, or any portion hereof,
remains outstanding and unexpired, the holders of any class of securities as to which purchase rights under this Warrant exist at the time shall have received, or, on or after the record date fixed
for the determination of eligible stockholders, shall have become entitled to receive cash distributions from the Company by way of cash dividend, then and in each case, the Exercise Price to be in
effect after such dividend distribution shall represent the Exercise Price immediately prior to the dividend distribution date reduced by the amount of cash dividend attributable to each Common Share. 

        (c)    Adjustments for Split, Subdivision or Combination of Shares.    If the Company at
any time while this Warrant, or any portion hereof, remains outstanding and unexpired shall split or 

3

 

subdivide
any class of securities as to which purchase rights under this Warrant exist into a different number of securities of the same class, the number of securities of such class issuable upon
exercise of this Warrant immediately prior to such split or subdivision shall be proportionately increased and the Exercise Price for such securities of such class shall be proportionately decreased.
If the Company at any time while this Warrant, or any portion hereof, remains outstanding and unexpired shall combine any class of securities as to which purchase rights under this Warrant exist into
a different number of securities of the same class, the number of securities of such class issuable upon exercise of this Warrant immediately prior to such combination shall be proportionately
decreased and the Exercise Price for such class of securities shall be proportionately increased. 

        (d)    Adjustment for Reclassification, Consolidation or Merger.    If while this
Warrant, or any portion hereof, remains outstanding and unexpired there shall be (i) a reorganization, including without limitation any conversion of the Company's Common Stock into shares of
Common Stock (other than a combination, reclassification, exchange or subdivision of shares otherwise provided for herein), (ii) a merger or consolidation of the Company with or into another
person in which the Company is not the surviving entity, or a reverse merger in which the Company is the surviving entity but the shares of the Company's Common Stock outstanding immediately prior to
the merger are converted by virtue of the merger into other property, whether in the form of securities, cash, or otherwise, or (iii) a sale or transfer of the Company's properties and assets
as, or substantially as, an entirety to any other person in one transaction or a series of related transactions, then, as a part of such reorganization, merger, consolidation, sale or transfer, all
necessary or appropriate lawful provisions shall be made so that the Holder shall thereafter be entitled to receive upon exercise of this Warrant, during the period specified herein and upon payment
of the Exercise Price then in effect, the greatest number of shares of Common Stock or other securities or property that a holder of Warrant Shares would have been entitled to receive in such
reorganization, consolidation, merger, sale or transfer if this Warrant had been exercised immediately prior to such reorganization, merger, consolidation, sale or transfer, all subject to further
adjustment as provided in this Section 2. If the per share consideration payable to the Holder for Shares in connection with any such transaction is in a form other than cash or marketable
securities, then the value of such consideration shall be determined in good faith by the Company's Board of Directors, provided that if the Holder
shall object to any such determination, the Board of Directors shall retain an independent appraiser reasonably satisfactory to the Holder to determine such fair market value. The Holder shall be
notified promptly of any consideration other than cash or marketable securities received by the Company and furnished with a description of the consideration and the fair market value thereof, as
determined by the Board of Directors. The foregoing provisions of this paragraph shall similarly apply to successive reorganizations, consolidations, mergers, sales and transfers and to the stock or
securities of any other corporation that are at the time receivable upon the exercise of this Warrant. In all events, appropriate adjustment shall be made in the application of the provisions of this
Warrant (including adjustment of the Exercise Price and number of Warrant Shares purchaseable pursuant to the terms and conditions of this Warrant) with respect to the rights and interests of the
Holder after the transaction, to the end that the provisions of this Warrant shall be applicable after that event, as near as reasonably may be, in relation to any shares of Common Stock or other
property deliverable or issuable after such reorganization, merger, consolidation, sale or transfer upon exercise of this Warrant. 

        2.2   In
case the Company shall issue or sell any Common Stock (other than Common Stock issued (i) other than to David G. Hanna, Frank J, Hanna III, or their
affiliates, pursuant to any compensation plan or arrangement for employees, directors and/or consultants of the Company, provided that the compensation
plan (x) is consistent with industry practice and (y) was approved by the Company's Board of Directors, (ii) upon exercise or conversion of any security the issuance of which
caused an 

4

 

adjustment
under Sections 2.3 or 2.4 hereof, or (iii) in a transaction which results in an adjustment pursuant to Section 2.1 above) without consideration or for a consideration per
share less than the Exercise Price on the date of such issuance, the Exercise Price to be in effect after such issuance or sale shall be equal to the value of a fraction, the numerator of which shall
be the sum of (a) the Aggregate Exercise Price for the Warrant immediately prior to the issue or sale of Common Stock contemplated in this Section 2.2 plus (b) the aggregate
consideration paid for the Common Stock being issued or sold, and the denominator of which shall be the sum of (x) the number of Warrant Shares for which the Warrant could then be exercised, on
the basis of the Exercise Price in effect prior to such issuance or sale and (y) the number of shares of Common Stock being issued or sold. 

        For
the purposes of any adjustment of the Exercise Price and the number of Warrant Shares pursuant to this Section 2.2, the following provisions shall be applicable: 

	(A)
	In
the case of the issuance of Common Stock for cash, the consideration shall be deemed to be the amount of cash paid therefor before deducting therefrom any discounts, commissions or
other expenses allowed, paid or incurred by the Corporation for any underwriting or otherwise in connection with the issuance and sale thereof.

	(B)
	In
case any portion of the consideration to be received by the Company shall be in a form other than cash, the fair market value of such noncash consideration shall be utilized in the
foregoing computation. Such fair market value shall be determined by the Board of Directors of the Company; provided that if the Holder shall object to
any such determination, the Board of Directors shall retain an independent appraiser reasonably satisfactory to the Holder to determine such fair market value. The Holder shall be notified promptly of
any consideration other than cash received by the Company and furnished with a description of the consideration and the fair market value thereof, as determined by the Board of Directors.

	(C)
	In
the case of the issuance of Common Stock without consideration, the consideration shall be deemed to be $0.00 per share. 

        2.3   In
case the Company shall fix a record date for the issuance of any Equity-Linked Securities (other than Common Stock to be issued in a transaction which results in an
adjustment pursuant to Section 2.1 above) to the holders of its Common Stock or other securities entitling such holders to subscribe for or purchase shares of Common Stock (or securities
convertible into or exchangeable for shares of Common Stock) for a consideration per share of Common Stock (or having a conversion price or exchange price per share of Common Stock, if it is a
security convertible into or exchangeable for shares of Common Stock) less than the Exercise Price on such record date, the maximum number of shares of Common Stock issuable upon exercise, conversion
or exchange of such Equity-Linked Securities shall be deemed to have been issued and outstanding as of such record date and the Exercise Price shall be adjusted pursuant to Section 2.2 hereof,
as though such maximum number of shares of Common Stock had been so issued for an aggregate consideration payable by the holders of such Equity-Linked Securities as a condition to their receipt of
such shares of Common Stock. In case any portion of such consideration shall be in a form other than cash, the fair market value of such noncash consideration shall be determined as set forth in
Section 2.2 hereof. Such adjustment shall be made successively whenever a record date for the issuance of such Equity-Linked Securities is fixed; and in the event (x) that such
Equity-Linked Securities are not so issued or expire unexercised, or (y) of a change in the number of shares of Common Stock to which the holders of such Equity-Linked Securities are entitled
(other than pursuant to adjustment provisions therein comparable to those contained in this Section 2), the Exercise Price shall again be adjusted to be the Exercise Price which would then be
in effect in the case of clause (x), if such record date had not been fixed, or in the case of clause (y), if such holder had initially been entitled to such changed number of shares of
Common Stock. 

5

 

        2.4   In
case the Company shall sell or issue any Equity-Linked Securities (other than options or other securities issued pursuant to a compensation plan or arrangement
described in Section 2.2), and the consideration per share of Common Stock implied by such Equity-Linked Securities (including, if applicable, the price per share of Common Stock at which they
may be exercised, converted or exchanged) is less than the Exercise Price on the date of such sale or issuance, the maximum number of shares of Common Stock issuable upon exercise, conversion or
exchange of such Equity-Linked Securities shall be deemed to have been issued and outstanding as of the date of such sale or issuance and the Exercise Price shall be adjusted pursuant to
Section 2.2 hereof, as though such maximum number of shares of Common Stock had been so issued for an aggregate consideration equal to the aggregate consideration paid for such Equity-Linked
Securities and the aggregate consideration payable by the holders of such Equity-Linked Securities as a condition to their receipt of such shares of Common Stock. In case any portion of such
consideration shall be in a form other than cash, the fair market value of such noncash consideration shall be determined as set forth in Section 2.2 hereof. Such adjustment shall be made
successively whenever such Equity-Linked Securities are issued; and in the event (x) that such Equity-Linked Securities expire unexercised, or (y) of a change in the number of shares of
Common Stock to which the holders of such Equity-Linked Securities are entitled (other than pursuant to adjustment provisions therein comparable to those contained in this Section 2 as they may
be amended pursuant to Section 2.7), the Exercise Price shall again be adjusted to be the Exercise Price which would then be in effect in the case of clause (x), if such Equity-Linked
Securities had not been issued, or in the case of clause (y), if such holders had initially been entitled to such changed number of shares of Common Stock. No adjustment of the Exercise Price
shall be made pursuant to this Section 2.4 to the extent that the Exercise Price shall have been adjusted pursuant to Section 2.3 upon the setting of any record date relating to such
Equity-Linked Securities and such adjustment fully reflects the number of shares of Common Stock to which the holders of such Equity-Linked Securities are entitled and the price payable therefor. 

        2.5   No
adjustment in the Exercise Price shall be required unless such adjustment would require an increase or decrease of at least one percent in such price;  provided that any adjustments which by reason of
this Section 2.5 are not required to be made shall be carried forward and taken into account at
such time when such adjustments would in the aggregate require an increase or decrease of at least one percent in such price. All calculations under this Section shall be made to the nearest four
decimal points. 

        2.6   In
the event that, at any time as a result of the provisions of this Section, the Holder upon subsequent exercise shall become entitled to receive any shares of capital
stock of the Company other than Common Stock, the number of such other shares so receivable upon exercise shall thereafter be subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions contained herein. 

        2.7   Notwithstanding
any other provision of this Section 2, under no circumstances shall the Warrant be exercisable to purchase in excess of nineteen and nine tenths
percent (19.9%) of the outstanding Common Stock. 

        2.8    Notices to Holder.    

        (a)   Upon
any adjustment of this Warrant pursuant to this Section 2, the Company shall promptly thereafter (i) cause a certificate to be executed by the Company
setting forth the Exercise Price after such adjustment and setting forth in reasonable detail the method of calculation and the facts upon which such calculations are based and setting forth the
number of Warrant Shares issuable after such adjustment in the Exercise Price, upon exercise of the Warrant in full and payment of the adjusted Exercise Price, and (ii) notify the Holder of
such adjustments by sending it a copy of the certificate referenced in the preceding clause (i). Where appropriate, such notice may be given in advance. 

6

 

        (b)   The
failure to give the notice required by this Section 2.5 or any defect therein shall not affect the legality or validity of the transaction to which it
relates. 

3.    Payment of Taxes.    The Company shall pay all documentary stamp taxes, if any, attributable to
the initial issuance of Warrant Shares upon exercise of the Warrant. The Company shall not, however, be required to pay any tax or taxes which may be payable in respect of any transfer involved in the
issuance and delivery of this Warrant, or any supplemental or replacement Warrant, or any certificate for Warrant Shares or other securities, and the Company shall not be required to issue or deliver
any such supplemental or replacement Warrants or certificates unless and until the Person(s) requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid. 

4.    Certain Covenants. 

        4.1   The
Company shall at all times reserve and keep available, free from preemptive rights, out of the aggregate of its authorized but unissued Common Stock or its
authorized and issued Common Stock held in its treasury, for the purpose of enabling it to satisfy any obligation to issue Warrant Shares upon exercise of this Warrant, the maximum number of Warrant
Shares which may then be deliverable upon the exercise in full of this Warrant. 

        4.2   The
Company shall (i) use commercially reasonable efforts to comply with the current public information requirements of Rule 144 ("Rule 144") under
the Securities Act and (ii) at all times Rule 144 is available for use by Holder, furnish the Holder upon request with all information within the possession of the Company, required for
the preparation and filing of Form 144. As soon as reasonably practicable after the date hereof, or at such time as the Warrant Shares otherwise become exercisable pursuant to the terms hereof,
the Company shall, to the extent required by the rules of the NASDAQ, file with the NASDAQ a listing application or other notice as may be required with respect to the Warrant Shares and use
commercially reasonable efforts to obtain approval for the listing of such shares. 

        4.3   The
Company shall not close its books against the transfer of this Warrant or any Warrant Shares issued or issuable upon the exercise of this Warrant in any manner which
interferes with the timely exercise of this Warrant. 

5.    Representations and Warranties.  

        5.1    The Company hereby represents and warrants to the Holder as follows: 

        (a)    This
Warrant has been duly authorized by all necessary corporate action on the part of the Company and has been duly executed by a duly authorized officer of the Company
and constitutes a valid and binding obligation of the Company. 

        (b)    Neither
the execution and delivery of this Warrant, nor the consummation of the transactions contemplated hereby, will violate or result in any violation of or be in
conflict with or constitute a default under or require any consent, approval, filing or notice under any term of the charter or bylaws of the Company or of any agreement, instrument, judgment, decree,
order, statute, rule or governmental regulation applicable to the Company. 

        (c)    All
Warrant Shares which may be issued upon the exercise of this Warrant, when issued in accordance with the terms hereof, shall be duly authorized, validly issued,
fully paid and nonassessable. 

        (d)    The
Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Georgia and is in good standing as a foreign
corporation in each jurisdiction in which the nature of its business makes such qualification necessary. The Company 

7

 

has
all requisite corporate power and authority to carry out its business as presently conducted and as proposed to be conducted and to enter into and discharge its obligations under this Warrant. 

        (e)    There
are no actions, suits, audits, investigations or proceedings pending or, to the knowledge of the Company, threatened, against the Company in any court or before
any governmental commission, board or authority which, if adversely determined, would have a material adverse effect on the ability of the Company to perform its obligations under this Warrant. 

        5.2    The
Holder hereby represents and warrants to the Company (which shall be affirmed by the Holder on the date of the exercise of this Warrant) that (a) this Warrant
and the Warrant Shares issuable upon exercise of this Warrant (collectively, the "CompuCredit Securities") are being acquired for the Holder's own account, for investment purposes only, and not with a
view to any distribution or resale thereof in violation of the Securities Act; and (b) the Holder is a sophisticated investor with knowledge and experience in financial matters, is capable of
evaluating the merits and risks of an investment in the CompuCredit Securities, has the capacity to protect its own interests in connection with the transactions contemplated by this Agreement, is
able to bear the economic risk of its investment in the CompuCredit Securities, is presently able to afford the complete loss of such investment, and is an "accredited investor" (as defined in
Rule 501 of Regulation D promulgated under the Securities Act). 

6.    Holder; No Rights as Shareholder.    The Holder shall be deemed the owner of this Warrant for all
purposes. The Holder shall not be entitled by virtue of ownership of this Warrant to any rights whatsoever as a shareholder of the Company with respect to the Common Stock issuable upon exercise of
this Warrant, either at law or in equity, including, without limitation, the right to vote and to receive dividends and other distributions. 

7.    Transfers of Warrant.    Subject to compliance with applicable federal and state securities laws
and the requirements set forth on the legend on the face of this Warrant, this Warrant and all rights hereunder are transferable in whole or in part by the Holder to any person upon written notice to
the Company. The transfer shall be recorded on the books of the Company upon the surrender of this Warrant, properly endorsed, to the Company at its principal offices, and the payment to the Company
of all transfer taxes and other governmental charges imposed on such transfer. In the event of a partial transfer, the Company shall issue to the holders one or more appropriate new Warrants. 

8.    Piggyback Registration Rights.    The Holder shall be entitled to the "piggyback" registration
rights with respect to the Warrant Shares as described in the Registration Agreement dated as of January 30, 2004, as amended, among the Company, the Holder and the other parties thereto. 

9.    Lost Warrant.    Upon receipt by the Company at its principal office of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant, and in the case of any such loss, theft, or destruction, upon delivery of indemnity reasonably satisfactory
to the Company or, in case of any such mutilation, upon surrender and cancellation of this Warrant, the Company will issue a new Warrant of like tenor in lieu of this Warrant. 

10.    Expiration.    This Warrant, in all events, shall be wholly void and have no effect after
5:00 P.M. (Eastern Time) on the Expiration Date. 

8

 

11.    Notices.    All notices, consents or other communications required or permitted to be given
under this Agreement shall be in writing and shall be deemed to have been duly given (a) when delivered personally, or (b) one business day after being sent by a reputable overnight
delivery service, postage or delivery charges prepaid (provided that confirmation of delivery is obtained from such service), to the parties at their respective addresses set forth below: 

If
to the Company: 

CompuCredit
Corporation

245 Perimeter Center Parkway

Suite 600

Atlanta, Georgia 30346

Attention: General Counsel 

If
to the Holder: 

Merrill
Lynch Mortgage Capital Inc.

4 World Financial Center, 10th Floor

New York, New York 10080

Attention: Andrew J. Coon 

        Notices
may also be given by prepaid telegram or facsimile and shall be effective on the date transmitted if confirmed within twenty-four (24) hours thereafter by a
signed original sent in the manner provided above. Any party may change its address for notice and the address to which copies must be sent by giving notice of the new addresses to the other parties
in accordance with this Section 11, except that any such change of address notice shall not be effective unless and until received. 

12.    Severability.    In the event that one or more of the provisions of this Warrant shall for any
reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Warrant, but this Warrant shall be
construed as if such invalid, illegal or unenforceable provision had never been contained herein. 

13.    Governing Law.    This Warrant shall be governed by and construed in accordance with the laws of
the State of Georgia applicable to agreements made and to be entirely performed within such State without giving effect to principles of conflicts of laws. 

14.    Definitions.    As used in this Agreement: 

        (a)    "Affiliate"
means any Person that directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the Person
specified. The terms "control," "controlled by" and "under common control with" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, as general partner, as a limited partner with a right to receive fifty percent (50%) or more of the income or assets of a
limited partnership, by contract or otherwise. 

        (b)    "Aggregate
Exercise Price" means the product of (A) the number of unexpired and unexercised Warrant Shares, and (B) the Exercise Price in effect at the
time of calculation. 

        (c)    "Closing
Date" means January 30, 2004. 

        (d)    "Commitment
Step-Up Date" means the first anniversary of the date hereof, conditioned upon the certain conditions set forth in the Note Purchase Agreement,
dated as of January 30, 2004, by and among CompuCredit Credit Card Master Note Business Trust, the Company, CompuCredit Funding Corp. and the Holder. 

9

 

        (e)    "Exercise
Price" means $[22.45], as adjusted pursuant to Section 2. 

        (f)    "Equity-Linked
Securities" means any rights, options, warrants or other securities convertible into or exercisable for shares of Common Stock. 

        (g)    "Fair
Market Value" means, for purposes of Section 1.1(b), and for one Warrant Share, an amount equal to: 

        (1)    the
average of the closing sale prices of the Common Stock quoted on Nasdaq or in the Over-The-Counter Market Summary or the closing price quoted
on any national securities exchange on which such securities are listed, whichever is applicable, as published in the Eastern Edition of The Wall Street Journal for the
ten consecutive trading days immediately prior
to the date of determination of Fair Market Value (or, if no sales take place on any such trading day, the average of the closing bid and asked prices on such trading day); or 

        (2)    if
the Common Stock is not traded on Nasdaq or Over-The-Counter or on a national securities exchange, the Fair Market Value shall be equal to the
value per share as determined by such nationally recognized independent appraiser or investment banker as is selected by the Holder and is reasonably acceptable to the Company. 

        (h)    "Indenture
Supplement" means that certain Series 2004-One Indenture Supplement, dated as of January 30, 2004, to the Master Indenture dated as
of July 14, 2000, as amended from time to time, by and among CompuCredit Credit Card Master Note Business Trust, the Company and The Bank of New York. 

        (i)    "NASDAQ"
means the Nasdaq Stock Market. 

        (j)    "Person"
means any individual, sole proprietorship, joint venture, partnership, corporation, association, cooperative, trust, estate, governmental body, administrative
agency, regulatory authority or other entity of any nature. 

        (k)    "Transfer"
means to dispose of or part with all or any portion of an interest (legal or equitable) by any means, direct or indirect, absolute or conditional, voluntary
or involuntary, including, but not limited to, by sale, assignment, disposition, court order, operation of law, dissolution, merger, consolidation, division, spin-off, dividend,
distribution, equitable or other distribution after divorce or separation, settlement, exchange, waiver, abandonment, gift, alienation, bequest, pledge, hypothecation, encumbrance or disposal. 

14.    Neutral Construction.    The parties have negotiated this Warrant and all of the terms and
conditions contained in this Warrant in good faith and at arms' length, and each party has been represented by counsel during such negotiations. No term, condition, or provision contained in this
Agreement shall be construed against any party or in favor of any party because such party or such party's counsel drafted such term, condition, or provision. Furthermore, all terms, conditions, and
provisions contained in this Warrant shall be construed and interpreted in a manner which is consistent with all other terms, conditions, and provisions contained in this Warrant. 

15.    Counterparts.    This Warrant may be executed in one or more counterparts, each of which shall
be deemed an original, but all of which shall constitute one and the same instrument. 

[SIGNATURES
ON FOLLOWING PAGE] 

10

 

        IN WITNESS WHEREOF, the Company and the Holder have caused this Warrant to be signed by a duly authorized officer and dated as of
                        , 2004. 

	 	 	"Company"
	

 	
 	

COMPUCREDIT CORPORATION
	

 	
 	

By:	

	

 	
 	

Name:	

	

 	
 	

Title:	

	

 	
 	

"Holder"
	

 	
 	

MERRILL LYNCH & MORTAGE CAPITAL INC.
	

 	
 	

By:	

	

 	
 	

Name:	

	

 	
 	

Title:	

11

   SCHEDULE A  

 FORM OF EXERCISE  

(To
be executed by the Holder) 

        1.     The
undersigned hereby elects to purchase                        (leave blank if you choose Alternative No. 2 below) shares of
Common Stock of CompuCredit Corporation
(the "Company") pursuant to the terms of the Warrant Agreement dated as of January 30, 2004, issued by the Company (the "Warrant), and
tenders herewith payment of the purchase price of such shares in full. (Initial here if the undersigned elects this alternative). 

        2.     In
lieu of exercising the Warrant for cash or check, the undersigned hereby elects to effect the net issuance provision of Section 1.1(b) of the Warrant and
receive                        (leave blank if you choose Alternative No. 1 above) shares of Common Stock of the Company
pursuant to the terms of the Warrant. (Initial here if the undersigned elects
this alternative). 

        3.     Please
issue a certificate or certificates representing said shares of Common Stock in the name of the undersigned or in such other name as is specified below: 

	

	(Name)
	

	

	(Address)

        4.     The
Holder hereby affirms that the representations and warranties set forth in Section 5.2 of the attached Warrant are true and correct on the date hereof as if
made on and as of the date hereof. 

	Dated:	 	
	 	

	 	 	 	 	Signature of Holder

	

Social Security or Employer Identification	
 	

 
	Number of Holder:	 	  
	 	 

12

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EXHIBIT 4.2

COMPUCREDIT CORPORATION WARRANT AGREEMENTQuickLinks
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Exhibit 10.2(b)  

 
 

CompuCredit Corporation
  
  2003 STOCK OPTION PLAN    
    

ARTICLE I

Purpose of the Plan and Definitions  

        1.1   Purpose. The purpose of this Stock Option Plan is to maximize the long-term success of CompuCredit
Corporation (the "Company"), and its affiliates, to ensure a balanced emphasis on both current and long-term performance and to enhance participants' identification with growth in
shareholder value by providing financial incentives to selected members of its and its affiliates' boards of directors, employees, consultants and advisers who are in positions to make significant
contributions toward that success. It is intended that the Company will, through the grant of nonqualified stock options to purchase its common stock, attract and retain (and allow its affiliates to
attract and retain) highly qualified and competent employees and directors and motivate such employees and directors to exert their best efforts on behalf of the Company and its affiliates. 

        1.2   Definitions. Unless the context clearly indicates otherwise, for purposes of this Plan: 

        (a)   "Board
of Directors" means the Board of Directors of the Company. 

        (b)   "Code"
means the Internal Revenue Code of 1986, as amended. 

        (c)   "Committee"
means the Compensation Committee of the Board of Directors, which shall be composed solely of two or more "outside directors" within the meaning of Code
Section 162(m)(4)(C)(i). 

        (d)   "Common
Stock" means the Common Stock of the Company, no par value per share, or such other class of shares or other securities to which the provisions of the Plan may
be applicable by reason of the operation of Section 3.1 hereof. 

        (e)   "Company"
means the Company and any affiliates of the Company, including affiliates of the Company which become such after adoption of this Plan. 

        (f)    "Fair
Market Value" of a share of Common Stock on a specified date means: 

          (i)  if
the Common Stock is then traded on a national securities exchange, the closing price on such date of a share of the Common Stock as traded on the largest securities
exchange on which it is then traded; or 

         (ii)  if
the Common Stock is not then traded on a national securities exchange, the average of the high and low prices for the Common Stock, as quoted on the NASDAQ National
Market System (A) on such date, or (B) if no high and low prices are quoted on such date, then on the next preceding date on which such prices are quoted; or 

        (iii)  if
the Common Stock is not then traded on a national securities exchange or quoted on the NASDAQ National Market System, the value determined in good faith by the
Committee. 

        (g)   "Grant
Date," as used with respect to a particular Option, means the date as of which the Option is granted by the Committee pursuant to the Plan. 

        (h)   "Grantee"
means the person to whom an Option is granted by the Committee pursuant to the Plan. 

        (i)    "Option"
means an Option granted by the Committee pursuant to Article II to purchase shares of Common Stock, each of which shall be designated at the time of
grant as a nonqualified 

stock
option, as provided in Section 2.1 hereof. No Option granted under the Plan is intended to qualify as an "incentive stock option" as that term is described in Code Section 422(b). 

        (j)    "Option
Agreement" means the agreement between the Company and a Grantee under which the Grantee is granted an Option pursuant to the Plan. Option Agreements need not be
identical with other Option Agreements, either in form or substance, and need only conform to the terms and conditions of this Plan. 

        (k)   "Option
Period" means, with respect to any Option granted hereunder, the period beginning on the Grant Date and ending at such time not later than the tenth anniversary
of the Grant Date as the Committee in its sole discretion shall determine and during which the Option may be exercised, subject to extensions of the Option Period set forth in the Option Agreement in
accordance with Section 2.2(c). 

        (l)    "Plan"
means the CompuCredit Corporation 2003 Stock Option Plan, as set forth herein and as amended from time to time. 

        1.3   Limitations on Shares Subject to Plan. 

        (a)   The
maximum number of shares of Common Stock with respect to which Options may be granted shall not exceed a total of 1,200,000 shares in the aggregate, subject to
possible adjustment in accordance with Section 3.1. 

        (b)   The
maximum number of shares of Common Stock with respect to which Options may be granted to any one individual shall be 500,000 shares during any calendar year. 

        (c)   Any
shares of Common Stock to be delivered by the Company upon the exercise of Options shall, at the discretion of the Board of Directors, be issued from the Company's
authorized but unissued shares of Common Stock or transferred from any available Common Stock held in treasury. 

        (d)   The
Committee may grant new Options hereunder with respect to any shares for which an Option expires or otherwise terminates prior to being exercised. 

        1.4   Administration of the Plan. 

        (a)   The
Plan shall be administered by the Committee, which shall have the authority: 

          (i)  To
determine the directors, employees, consultants and advisers of the Company to whom, and the times at which, Options shall be granted, and the number of shares of
Common Stock to be subject to each such Option, taking into consideration the nature of the services rendered by the particular Grantee, the Grantee's potential contribution to the
long-term success of the Company and such other factors as the Committee in its discretion may deem relevant; 

         (ii)  To
interpret and construe the provisions of the Plan and to establish rules and regulations relating to it; 

        (iii)  To
prescribe the terms and conditions of the Option Agreements for the grant of Options (which need not be identical for all Grantees) in accordance and consistent
with the requirements of the Plan; 

        (iv)  To
make all other determinations necessary or advisable to administer the Plan in a proper and effective manner; and 

         (v)  To
delegate its authority hereunder to a subcommittee or to management to the extent not inconsistent with the terms hereof or applicable law. 

        (b)   All
decisions and determinations of the Committee in the administration of the Plan and on other matters concerning the Plan or any Option shall be final, conclusive and
binding on all persons, including (but not by way of limitation) the Company, the shareholders and directors of the Company, and any persons having any interest in any Options. The Committee shall be 

entitled
to rely in reaching its decisions on the advice of counsel (who may be counsel to the Company). 

        (c)   Except
to the extent prohibited by applicable law or the applicable rules of the NASDAQ National Market System, the Committee may allocate all or any portion of its
responsibilities and powers to any
one or more of its members and may delegate all or any part of its responsibilities and powers to any person or persons selected by it. Any such allocation or delegation may be revoked by the
Committee at any time. 

        1.5   Eligibility for Awards. The Committee shall in accordance with Article II designate from time to time the
directors, employees, consultants and advisers of the Company who are to be granted Options. 

        1.6   Effective Date and Duration of Plan. Subject to the approval of the shareholders of the Company at the Company's 2004
annual meeting of its shareholders, the Plan shall become effective on the date of its adoption by the Board of Directors; provided, however, that to the extent that Options are granted under the Plan
prior to its approval by the shareholders of the Company, the Options shall be contingent on approval by the shareholders at such annual meeting. Unless previously terminated by the Board of
Directors, the Plan (but not any Options then outstanding) shall terminate on the tenth anniversary of its adoption by the Board of Directors. 

ARTICLE II

Stock Options  

        2.1   Grant of Options. 

        (a)   The
Committee may from time to time, subject to the provisions of the Plan, grant Options to directors, employees, consultants and advisers of the Company under
appropriate Option Agreements to purchase shares of Common Stock up to the aggregate number of shares of Common Stock set forth in Section 1.3(a). 

        (b)   The
Committee shall designate each Option granted hereunder as a nonqualified stock option. 

        2.2   Option Requirements. 

        (a)   An
Option shall be evidenced by an Option Agreement specifying the number and class of shares of Common Stock that may be purchased upon its exercise and containing such
other terms and conditions consistent with the Plan as the Committee may determine to be applicable to that Option. 

        (b)   No
Option shall be granted under the Plan on or after the tenth anniversary of the date upon which the Plan was adopted by the Board of Directors. 

        (c)   An
Option shall expire by its terms at the expiration of the Option Period and shall not be exercisable thereafter, provided that the Committee may provide in the Option
Agreement for the extension of the Option Period upon the occurrence of any event specified by the Committee. 

        (d)   The
Committee may provide in the Option Agreement for the expiration or termination of the Option prior to the expiration of the Option Period, upon the occurrence of
any event specified by the Committee. 

        (e)   The
Committee may provide in the Option Agreement for vesting periods which require the passage of time and/or the occurrence of events in order for the Option to become
exercisable. 

        (f)    The
option price per share of Common Stock of an Option shall be equal to the Fair Market Value of a share of Common Stock at the time such Option is granted. 

        (g)   An
Option shall not be transferable other than by will or the laws of descent and distribution, except that any vested portion of Nonqualified Stock Options may be
transferred if 

the
transfer is approved in advance in writing by the Committee or Board of Directors in their sole discretion and if such transfer is, for no consideration, to or for the benefit of the Grantee's
Immediate Family (including, without limitation, to a trust for the benefit of the Grantee's Immediate Family or to a partnership or limited liability company for one or more members of the Grantee's
Immediate Family). For this purpose, "Immediate Family" shall mean the Grantee, and the Grantee's spouse, parents, children, stepchildren, adoptive relationships, sisters, brothers and grandchildren.
Unless transferred with approval as provided in the preceding sentences, during the Grantee's lifetime an Option shall be exercisable only by the Grantee or, if the Grantee is disabled and the Option
remains exercisable, by his or her duly appointed guardian or other legal representative. Upon the Grantee's death, but only to the extent that the Option is otherwise exercisable hereunder, an Option
may be exercised by the Grantee's legal representative or by a person who receives the right to exercise the Option under the Grantee's will or by the applicable laws of descent and distribution. 

        (h)   A
person electing to exercise an Option shall give written notice of election to the Company in such form as the Committee may require, accompanied by payment of the
full purchase price of the shares of Common Stock for which the election is made. Payment of the purchase price shall be made in cash
or in such other form (a note or other evidence of indebtedness or other form of deferred payment) as the Committee may specify in the applicable Option Agreement. 

ARTICLE III

General Provisions  

        3.1   Adjustment Provisions. 

        (a)   In
the event of: 

          (i)  payment
of a stock dividend in respect of Common Stock; or 

         (ii)  any
recapitalization, reclassification, split-up or consolidation of or other change in the Common Stock; or 

        (iii)  any
exchange of the outstanding shares of Common Stock in connection with a merger, consolidation or other reorganization of or involving the Company or a sale by the
Company of all or a portion of its assets, for a different number or class of shares of stock or other securities of the Company or for shares of the stock or other securities of any other
corporation; 

then
the Committee shall, in such manner as it may determine in its sole discretion, appropriately adjust the number and class of shares or other securities which shall be subject to Options and the
purchase price per share which must be paid thereafter upon exercise of any Option. Any such adjustments made by the Committee shall be final, conclusive and binding upon all persons, including (but
not by way of limitation) the Company, the shareholders and directors of the Company, and any persons having any interest in any Options which may be granted under the Plan. 

        (b)   Except
as provided above in subparagraph (a) of this Section 3.1, issuance by the Company of shares of stock of any class or securities convertible into
shares of stock of any class shall not affect the Options. 

        3.2   Additional Conditions. Any shares of Common Stock issued or transferred under any provision of the Plan may be issued or
transferred subject to such conditions, in addition to those specifically provided in the Plan, as the Committee or the Company may impose. 

        3.3   No Rights as Shareholder or to Employment. No Grantee or any other person authorized to purchase Common Stock upon
exercise of an Option shall have any interest in or shareholder rights with respect to any shares of the Common Stock which are subject to any Option until certificates evidencing the shares have been
issued and delivered to the Grantee or any such person upon the 

exercise
of the Option. Furthermore, an Option shall not confer upon any Grantee any rights to employment or any other relationship with the Company, including without limitation any right to continue
in the employ of the Company, nor affect the right of the Company to terminate the employment or other relationship of the Grantee with the Company at any time with or without cause. 

        3.4   Legal Restrictions. If in the opinion of legal counsel for the Company the issuance or sale of any shares of Common Stock
pursuant to the exercise of an Option would not be lawful for any reason, including (but not by way of limitation) the inability or failure of the Company to obtain from any governmental authority or
regulatory body the authority deemed necessary by such counsel for such issuance or sale, the Company shall not be obligated to issue or sell any Common Stock pursuant to the exercise of an Option to
a Grantee or any other authorized person unless the Company receives evidence satisfactory to its legal counsel that the issuance and sale of the shares would not constitute a violation of any
applicable securities laws. The Company shall in no event be obligated to take any action which may be required in order to permit, or to remedy or remove any prohibition or limitation on, the
issuance or sale of such shares to any Grantee or other authorized person. 

        3.5   Rights Unaffected. The existence of the Options shall not affect: the right or power of the Company and its shareholders
to make adjustments, recapitalizations, reorganizations or other changes in the Company's capital structure or its business; any issuance of bonds, debentures, preferred or prior preference stocks
affecting the Common Stock or the rights thereof; the dissolution or liquidation of the Company, or sale or transfer of any part of its assets or business; or any other corporate act, whether of a
similar character or otherwise. 

        3.6   Withholding Taxes. As a condition to exercise of an Option, the Company may in its sole discretion withhold or require
the Grantee to pay or reimburse the Company for any taxes which the Company determines are required to be withheld in connection with the grant or any exercise of an Option. 

        3.7   Choice of Law. The validity, interpretation and administration of the Plan and of any rules, regulations, determinations
or decisions made thereunder, and the rights of any and all persons having or claiming to have any interest therein or thereunder, shall be determined exclusively in accordance with the laws of the
State of Georgia. Without limiting the generality of the foregoing, the period within which any action in connection with the Plan must be commenced shall be governed by the laws of the State of
Georgia, without regard to the place where the act or omission complained of took place, the residence of any party to such action or the place where the action may be brought or maintained. 

        3.8   Amendment, Suspension and Termination of Plan. The Plan may from time to time be terminated, suspended or amended by the
Board of Directors in such respects as it may deem advisable. 

        3.9   Headings. The headings in this Plan are for convenience only and are not to be used in interpreting the meaning or effect
of any provisions hereof. 

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CompuCredit Corporation 2003 STOCK OPTION PLAN

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