FORM OF AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT

Exhibit 4.7

 

EXECUTION COPY

 

 

CAPITAL ONE FUNDING, LLC,

 

as Transferor,

 

CAPITAL ONE BANK,

 

as Servicer,

 

and

 

THE BANK OF NEW YORK,

 

as the Trustee

 

CAPITAL ONE MASTER TRUST

 

FORM OF AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT

 

Dated as of September 30, 1993,

As amended and restated as of August 1, 2002 and [•] [•], [•]

 

TABLE OF CONTENTS

 

 

-i-

TABLE OF CONTENTS

(continued)

 

 

-ii-

TABLE OF CONTENTS

(continued)

 

 

-iii-

TABLE OF CONTENTS

(continued)

 

 

-iv-

EXHIBITS

 

 

SCHEDULES

 

 

-v-

FORM OF AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT, dated as of September 30, 1993, as amended and restated as of August 1, 2002 and [•] [•], [•], among CAPITAL ONE BANK, a Virginia banking corporation, as Servicer, CAPITAL ONE FUNDING, LLC, a Virginia limited liability company, as Transferor and THE BANK OF NEW YORK, a New York banking corporation, as the Trustee.

 

WHEREAS this Pooling and Servicing Agreement, dated as of September 30, 1993, was amended and restated on April 9, 2001, and as amended and restated on April 9, 2001, was among Capital One Bank, as a seller, and as Servicer, Capital One, F.S.B., a federal savings bank, as a seller, and the Trustee (the “ Prior PSA ”);

 

WHEREAS this Pooling and Servicing Agreement was further amended and restated on August 1, 2002, and as amended and restated on August 1, 2002, was among Capital One Funding, LLC, as Transferor, Capital One Bank, as Servicer, and the Trustee;

 

WHEREAS, the parties hereto agree to and do hereby amend and restate the Pooling and Servicing Agreement as of [•] [•], [•] to read in its entirety as set forth herein;

 

NOW, THEREFORE in consideration of the mutual agreements herein contained, this Agreement is hereby amended and restated to read in its entirety as follows and each party agrees as follows for the benefit of the other parties, the Certificateholders and any Series Enhancer (to the extent provided herein and in any Supplement):

 

ARTICLE I

 

Definitions

 

Section 1.01. Definitions . Whenever used in this Agreement, the following words and phrases shall have the following meanings.

 

“ Account ” shall mean (a) each Initial Account, (b) each Additional Account, and (c) each Related Account. The term “Account” shall refer to an Additional Account only from and after the Addition Date with respect thereto, and the term “Account” shall refer to any Removed Account only prior to the Removal Date with respect thereto.

 

“ Account Owner ” shall mean Capital One and its successors and assigns under the Capital One Receivables Purchase Agreement, or F.S.B. and its successors and assigns under the F.S.B. Receivables Purchase Agreement, or any other entity which originated an Account pursuant to a Lending Agreement and owns such Account.

 

“ Account Schedule ” shall mean a computer file or microfiche list containing a true and complete list of (i) Accounts, identified by account number, and setting forth, with respect to each Account, the aggregate amount outstanding in such Account, the aggregate amount of Principal Receivables outstanding in such Account and any amount on deposit in and/or credited to any related Deposit Account, each (a) on the Initial Cut-Off Date (for the Account Schedule delivered on the Substitution Date), (b) on or prior to the Determination Date immediately succeeding the related Monthly Period (for any Account Schedule relating to

Automatic Additional Accounts) and (c) on the Additional Cut-Off Date (for any Account Schedule relating to Additional Accounts designated under Section 2.08(a) or (b)), and (ii) Participation Interests, identified with particularity, and setting forth comparable information.

 

“ Accumulation Period ” shall mean, with respect to any Series, the period, if any, specified as such in the related Supplement.

 

“ Act ” shall mean the Securities Act of 1933, as amended.

 

“ Addition ” shall mean the designation of additional Eligible Accounts to be included as Accounts or Participation Interests to be included as Trust Assets pursuant to Section 2.08(a), (b) or (c).

 

“ Addition Date ” shall mean (i) with respect to Additional Accounts designated under Section 2.08(a) or (b), the date from and after which such Additional Accounts are included as Accounts pursuant to such Section, (ii) with respect to Automatic Additional Accounts, the later of the dates on which such Automatic Additional Accounts are originated or designated, and (iii) with respect to Participation Interests, the date from and after which such Participation Interests are to be included as Trust Assets pursuant to Section 2.08(a) or (b).

 

“ Addition Discount Receivables ” shall mean, as of any applicable Addition Date, the amount of Principal Receivables in Additional Accounts designated by the Transferor to be treated as Finance Charge Receivables; provided , however , that the Transferor may not make such designation unless (i) the Transferor shall have received written notice from each Rating Agency that such designation will not have a Ratings Effect and shall have delivered copies of each such written notice to the Servicer and the Trustee and (ii) the Transferor shall have delivered to the Trustee and any Series Enhancer entitled thereto pursuant to the relevant Supplement an Officer’s Certificate of the Transferor, to the effect that the Transferor reasonably believes that the designation will not, based on the facts known to such officer at the time of the certification, then cause a Pay Out Event or any event that, after the giving of notice or the lapse of time, would constitute a Pay Out Event to occur with respect to any Series.

 

“ Additional Account ” shall mean each VISA ^® and MasterCard ^® * revolving credit card account or other revolving credit account established pursuant to a Lending Agreement, which account is designated pursuant to Section 2.08(a), (b) or (c) to be included as an Account and is identified on the Account Schedule delivered to the Trustee by the Transferor.

 

“ Additional Cut-Off Date ” shall mean (i) with respect to Additional Accounts designated under Section 2.08(a) or (b), the date specified as such in the notice delivered with respect thereto, (ii) with respect to Automatic Additional Accounts, the later of the dates on which such Automatic Additional Accounts are originated or designated, and (iii) with respect to Participation Interests, the date specified as such in the notice delivered with respect thereto.

 

“ Additional Transferor ” shall have the meaning specified in Section 2.08(f).

 

*	VISA ® and MasterCard ® are registered trademarks of VISA USA, Inc. and of MasterCard International Incorporated, respectively.

 

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“ Adjustment Payment ” shall have the meaning specified in Section 3.09(a).

 

“ 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” shall have meanings correlative to the foregoing.

 

“ Aggregate Addition Limit ” shall mean the number of accounts designated as Automatic Additional Accounts, without prior Rating Agency consent, and designated as Additional Accounts pursuant to Sections 2.08(a) and 2.08(b), without the prior Rating Agency notice described under Section 2.08(d)(v), which would either (x) with respect to any three (3) consecutive Monthly Periods, commencing with the three (3) Monthly Periods ending December 1993, equal 15% of the number of Accounts at the end of the ninth Monthly Period preceding the commencement of such three (3) Monthly Periods (or, the Trust Cut-Off Date, whichever is later) and (y) with respect to any twelve (12) Monthly Periods, equal 20% of the number of Accounts as of the first day of such twelve (12) Monthly Periods (or, the Trust Cut-Off Date, whichever is later).

 

“ Agreement ” shall mean this Amended and Restated Pooling and Servicing Agreement, and all amendments hereof and supplements hereto, including, with respect to any Series or Class, the related Supplement.

 

“ Applicants ” shall have the meaning specified in Section 6.08.

 

“ Appointment Date ” shall have the meaning specified in Section 9.02(a).

 

“ Assignment ” shall have the meaning specified in Section 2.08(d).

 

“ Assumption Agreement ” shall have the meaning specified in Section 7.05.

 

“ Assuming Entity ” shall have the meaning specified in Section 7.05.

 

“ Authorized Newspaper ” shall mean any newspaper or newspapers of general circulation (including The Bond Buyer or The Wall Street Journal) in the Borough of Manhattan, The City of New York, printed in the English language (and, with respect to any Series or Class, if and so long as the Investor Certificates of such Series or Class are listed on the Luxembourg Stock Exchange and such exchange shall so require, in Luxembourg, printed in any language satisfying the requirements of such exchange) and customarily published on each Business Day at such place, whether or not published on Saturdays, Sundays or holidays.

 

“ Automatic Additional Account ” shall mean each VISA and MasterCard revolving credit card account or other revolving credit account established pursuant to a Lending Agreement, which account is designated pursuant to Section 2.08(c) to be included as an Account and is identified on the Account Schedule delivered to the Trustee by the Transferor.

 

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“ Banks ” shall mean Capital One Bank and Capital One, F.S.B., and their permitted successors and assigns.

 

“ Base Certificate ” shall mean, if the Transferor elects to evidence its interest in the Transferor’s Interest in certificated form pursuant to Section 6.01, a certificate executed by the Transferor and authenticated by or on behalf of the Trustee, substantially in the form of Exhibit A , as the same may be modified in accordance with Section 2.08(f).

 

“ Bearer Certificates ” shall have the meaning specified in Section 6.01.

 

“ Benefit Plan ” shall have the meaning specified in Section 6.04(c).

 

“ Book-Entry Certificates ” shall mean Investor Certificates that are registered in the name of a Clearing Agency or a Foreign Clearing Agency, or the nominee of either such entity, ownership and transfers of which shall be made through book entries by such Clearing Agency or such Foreign Clearing Agency as described in Section 6.10.

 

“ Business Day ” shall mean any day other than (a) a Saturday or Sunday or (b) any other day on which national banking associations or state banking institutions in New York, New York, Richmond, Virginia, Falls Church, Virginia, or, if an Assuming Entity shall be any Additional Transferor designated pursuant to Section 2.08(f), any other State in which the principal executive offices of such Assuming Entity or Additional Transferor are located, are authorized or obligated by law, executive order or governmental decree to be closed.

 

“ Capital One ” shall mean Capital One Bank, a Virginia banking corporation and its permitted successors and assigns.

 

“ Capital One Receivables Purchase Agreement ” shall mean the Receivables Purchase Agreement dated as of August 1, 2002 between Capital One and Funding, and acknowledged and accepted by the Trustee, as amended and supplemented from time to time.

 

“ Cash Advance Fees ” shall mean fees or charges for cash advances, as specified in the Lending Agreement applicable to each Account.

 

“ Certificate ” shall mean any one of the Investor Certificates or the Transferor Certificates.

 

“ Certificate Owner ” shall mean, with respect to a Book-Entry Certificate, the Person who is the owner of a security entitlement with respect to such Book-Entry Certificate, as reflected on the books of the Clearing Agency, or on the books of a Person maintaining an account with such Clearing Agency (directly or as an indirect participant, in accordance with the rules of such Clearing Agency).

 

“ Certificate Rate ” shall mean, with respect to any Series or Class, the certificate rate specified therefor in the related Supplement.

 

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“ Certificate Register ” shall mean the register maintained pursuant to Section 6.04, providing for the registration of the Registered Certificates and the Transferor Certificates and transfers and exchanges thereof.

 

“ Certificateholder ” or “ Holder ” shall mean an Investor Certificateholder, a Person in whose name a Transferor Certificate is registered in the Certificate Register, or any Person recorded as the owner of any part of an interest in the Transferor’s Interest.

 

“ Certificateholders’ Interest ” shall have the meaning specified in Section 4.01.

 

“ Class ” shall mean, with respect to any Series, any one of the classes of Investor Certificates of that Series.

 

“ Clearing Agency ” shall mean an organization registered as a “clearing agency” pursuant to Section 17A of the Securities Exchange Act of 1934, as amended.

 

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

 

“ Clearstream ” shall mean Clearstream Banking, société anonyme , a professional depository incorporated under the laws of Luxembourg, and any successor thereto.

 

“ Closing Date ” shall mean, with respect to any Series, the closing date specified in the related Supplement.

 

“ Code ” shall mean the Internal Revenue Code of 1986, as amended from time to time.

 

“ Collection Account ” shall have the meaning specified in Section 4.02.

 

“ Collections ” shall mean (a) 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 the related Lending Agreement in effect from time to time, (b) amounts, if any, withdrawn from a Deposit Account in accordance with an Assignment and (c) with respect to any Monthly Period, (i) the Interchange received with respect to such Monthly Period, (ii) all Recoveries received during such Monthly Period and (iii) all payments of annual membership fees (including in the case of the first Monthly Period the unamortized portion of annual membership fees relating to the period prior to the Trust Cut-Off Date determined in accordance with Section 3.04(d) hereof) with respect to the Accounts during such Monthly Period.

 

“ Commission ” shall have the meaning specified in Section 3.01(b).

 

“ Controlled Amortization Period ” shall mean, with respect to any Series, the period, if any, specified as such in the related Supplement.

 

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“ Corporate Trust Office ” shall have the meaning specified in Section 11.16.

 

“ Coupon ” shall have the meaning specified in Section 6.01.

 

“ Date of Processing ” shall mean, with respect to any transaction, the date on which such transaction is first recorded under the Servicer’s (or, in the case of the Transferor, the Transferor’s) computer file of revolving credit accounts (without regard to the effective date of such recordation).

 

“ Debtor Relief Laws ” shall mean (a) the United States Bankruptcy Code and (b) all other applicable liquidation, conservatorship, bankruptcy, moratorium, rearrangement, receivership, insolvency, reorganization, suspension of payments, readjustment of debt, marshalling of assets, assignment for the benefit of creditors and similar debtor relief laws from time to time in effect in any jurisdiction affecting the rights of creditors generally or the rights of creditors of banks.

 

“ Defaulted Amount ” shall mean, with respect to any Monthly Period, an amount (which shall not be less than zero) equal to (a) the amount of Principal Receivables which became Defaulted Receivables in such Monthly Period, minus (b) the sum of (i) the amount of any Defaulted Receivables included in any Account the Receivables in which the Transferor or the Servicer became obligated to accept reassignment or assignment in accordance with the terms of this Agreement during such Monthly Period and (ii) the excess, if any, for the immediately preceding Monthly Period of the sum computed pursuant to this clause (b) for such Monthly Period over the amount of Principal Receivables which became Defaulted Receivables in such Monthly Period; provided , however , that, if an Insolvency Event occurs with respect to the Transferor, the amount of such Defaulted Receivables which are subject to reassignment to the Transferor in accordance with the terms of this Agreement shall not be added to the sum so subtracted and, if any of the events described in Section 10.01(d) occur with respect to the Servicer, the amount of such Defaulted Receivables which are subject to reassignment or assignment to the Servicer in accordance with the terms of this Agreement shall not be added to the sum so subtracted.

 

“ Defaulted Receivables ” shall mean, with respect to any Monthly Period, all Principal Receivables in any Account which are charged off as uncollectible in such Monthly Period in accordance with the Lending Guidelines and the Servicer’s customary and usual servicing procedures for servicing revolving credit card and other revolving credit account receivables comparable to the Receivables other than due to any Adjustment Payment. For purposes of this definition, a Principal Receivable in any Account shall become a Defaulted Receivable on the day on which such Principal Receivable is recorded as charged off on the Servicer’s computer master file of revolving credit accounts.

 

“ Defeasance ” shall have the meaning specified in Section 12.04.

 

“ Defeased Series ” shall have the meaning specified in Section 12.04.

 

“ Definitive Certificates ” shall have the meaning specified in Section 6.10.

 

“ Definitive Euro-Certificates ” shall have the meaning specified in Section 6.13.

 

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“ Deposit Account ” shall have the meaning specified in the Receivables Purchase Agreements.

 

“ Deposit Date ” shall mean each day on which the Servicer deposits Collections in the Collection Account.

 

“ Depositaries ” shall mean the Person specified in the applicable Supplement, in its capacity as depositary for the respective accounts of any Clearing Agency or any Foreign Clearing Agencies.

 

“ Depositary Agreement ” shall mean, with respect to any Series or Class, the agreement among the Transferor, the Trustee and the initial Clearing Agency substantially in the form of Exhibit F .

 

“ Depositor ” shall mean the “depositor,” as such term is defined in Regulation AB, with respect to any Securitization Transaction.

 

“ Determination Date ” shall mean the fourth Business Day prior to each Distribution Date.

 

“ Discount Option Receivables ” shall have the meaning specified in Section 2.11.

 

“ Discount Option Receivables Collections ” shall mean on any Date of Processing on and after the date on which the Transferor’s exercise of its discount option pursuant to Section 2.11 takes effect, the product of (a) a fraction the numerator of which is the amount of the Discount Option Receivables and the denominator of which is the sum of the Principal Receivables (other than Discount Option Receivables) and the Discount Option Receivables in each case (for both numerator and denominator) at the end of the prior Monthly Period and (b) Collections of Principal Receivables that arise in the Accounts on such day on or after the date such option is exercised that would otherwise be Principal Receivables.

 

“ Discount Percentage ” shall have the meaning specified in Section 2.11.

 

“ Distribution Date ” shall mean the 15th day of each calendar month during the term hereof, or, if such 15th day is not a Business Day, the next succeeding Business Day.

 

“ Early Amortization Period ” shall mean, with respect to any Series, the period beginning at the close of business on the Business Day immediately preceding the day on which a Pay Out Event is deemed to have occurred with respect to such Series, and ending upon the earlier to occur of (i) the payment in full to the Investor Certificateholders of such Series of the Invested Amount with respect to such Series and the payment in full to any applicable Series Enhancer with respect to such Series of the Enhancement Invested Amount, if any, with respect to such Series and (ii) the Series Termination Date with respect to such Series.

 

“ Eligible Account ” shall mean a MasterCard or VISA revolving credit card account or other revolving credit account owned by an Account Owner which (i) in the case of the Initial Accounts, as of the cut-off date related to its date of designation as an “Account” under the Prior PSA or (ii) in the case of the Additional Accounts, as of the applicable Additional

 

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Cut-Off Date, in each case, meets the following requirements: (a) is in existence and maintained by the Account Owner; (b) is payable in United States dollars; (c) has not been identified by the Account Owner as an account the credit cards or checks, if any, with respect to which have been lost or stolen; (d) the Obligor on which has provided, as his or her most recent billing address, an address located in the United States (or its territories or possessions or a military address); (e) has not been, and does not have any Receivables which have been, sold, pledged, assigned or otherwise conveyed to any Person (except pursuant to the Receivables Purchase Agreements, the Prior PSA or this Agreement); (f) except as provided below, does not have any Receivables which are Defaulted Receivables; (g) does not have any Receivables which have been identified by the Transferor, the Account Owner or the relevant Obligor as having been incurred as a result of the fraudulent use of any related credit card or check; (h) relates to an Obligor who is not identified by the Account Owner or by the Transferor in its computer files as being the subject of a voluntary or involuntary bankruptcy proceeding; and (i) is not an account with respect to which the Obligor has requested discontinuance of responsibility. Eligible Accounts may include accounts, the receivables of which have been written off; provided that (a) the balance of all receivables included in such accounts is reflected on the books and records of the Transferor (and is treated for purposes of this Agreement) as “zero,” and (b) charging privileges with respect to all such accounts have been canceled in accordance with the Lending Guidelines of the Account Owner and will not be reinstated by the Account Owner or the Servicer.

 

“ Eligible Deposit Account ” shall mean either (a) a segregated account with an Eligible Institution (other than any Account Owner) or (b) a segregated trust account with the corporate trust department of a depository institution (other than any Account Owner) organized under the laws of the United States or any one of the states thereof, including the District of Columbia (or any domestic branch of a foreign bank), or a trust company acceptable to each Rating Agency, and acting as a trustee for funds deposited in such account, so long as any of the securities of such depository institution or trust company shall have a credit rating from each Rating Agency in one of its generic credit rating categories which signifies investment grade.

 

“ Eligible Institution ” shall mean (a) a depository institution (which may be the Trustee) organized under the laws of the United States or any one of the states thereof, including the District of Columbia (or any domestic branch of a foreign bank), which at all times (i) has either (x) a long-term unsecured debt rating of A2 or better by Moody’s or (y) a certificate of deposit rating of P-1 by Moody’s, (ii) has either (x) a long-term unsecured debt rating of AAA by Standard & Poor’s or (y) a certificate of deposit rating of A-l+ by Standard & Poor’s, (iii) has either (x) if rated by Fitch, a long-term unsecured debt rating of A- by Fitch or (y) a certificate of deposit rating of F1 by Fitch and (iv) is a member of the FDIC or (b) any other institution that is acceptable to Moody’s, Standard & Poor’s and Fitch.

 

“ Eligible Investments ” shall mean instruments, investment property or other property, other than securities issued by the Banks or any Affiliate thereof, which evidence:

 

(a) direct obligations of, and obligations fully guaranteed as to timely payment of principal and interest by, the United States of America;

 

(b) demand deposits, time deposits or certificates of deposit (having original maturities of no more than 365 days) of depository institutions or trust companies

 

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incorporated under the laws of the United States of America or any one of the states thereof, including the District of Columbia (or any domestic branch of a foreign bank), and subject to supervision and examination by federal or state banking or depository institution authorities; provided that at the time of the Trust’s investment or contractual commitment to invest therein, the short-term debt rating of such depository institution or trust company shall be in the highest ratings investment category of each Rating Agency;

 

(c) commercial paper or other short-term obligations having, at the time of the Trust’s investment or contractual commitment to invest therein, a rating from each Rating Agency in its highest ratings investment category;

 

(d) demand deposits, time deposits and certificates of deposit which are fully insured by the FDIC, with a Person the commercial paper of which has a credit rating from each Rating Agency in its highest ratings investment category;

 

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

 

(f) investments in money market funds rated in the highest ratings investment category by each Rating Agency or otherwise Approved in writing by each Rating Agency;

 

(g) time deposits (having maturities of not more than thirty (30) days), other than as referred to in clause (d) above, with a Person the commercial paper of which has a credit rating from each Rating Agency in its highest ratings investment category; or

 

(h) any other investments approved in writing by each Rating Agency.

 

“ Eligible Receivable ” shall mean each Receivable:

 

(a) which has arisen in an Eligible Account;

 

(b) which was created in compliance in all material aspects with the Lending Guidelines and all Requirements of Law applicable to the Account Owner, the failure to comply with which would have a material adverse effect on Investor Certificateholders, and pursuant to a Lending Agreement which complies with all Requirements of Law applicable to the Account Owner, the failure to comply with which would have a material adverse effect on Investor Certificateholders;

 

(c) with respect to which all material consents, licenses, approvals or authorizations of, or registrations or declarations with, any Governmental Authority required to be obtained, effected or given by the Account Owner or the Transferor in connection with the creation of such Receivable or the execution, delivery and performance by the Account Owner or the Transferor of its obligations, if any, under the related Lending Agreement have been duly obtained, effected or given and are in full force and effect;

 

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(d) as to which, at the time of its transfer to the Trustee, the Transferor or the Trustee will have good and marketable title, free and clear of all Liens (including a prior Lien of the Account Owner but excluding 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 a Transferor to the Trustee 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, subject to Section 2.07(b);

 

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

 

(g) which constitutes an “account” as defined in Article 9 of the New York UCC and the Virginia UCC;

 

(h) which, at the time of its transfer to the Trustee, has not been waived or modified;

 

(i) which, at the time of its transfer to the Trustee, is not subject to any right of rescission, setoff, counterclaim or any other defense of the Obligor (including the defense of usury), other than defenses arising out of applicable Debtor Relief Laws and except as such enforceability may be limited by general principles of equity (whether considered in a suit at law or equity);

 

(j) as to which, at the time of its transfer to the Trustee, the Transferor has satisfied all obligations on its part to be fulfilled; and

 

(k) as to which, at the time of its transfer to the Trustee, the Transferor has not taken any action which, or failed to take any action the omission of which, would, at the time of its transfer to the Trustee, impair in any material respect the rights of the Trust or the Certificateholders therein.

 

“ Eligible Servicer ” shall mean the Trustee, a wholly-owned subsidiary of the Trustee, or an entity which, at the time of its appointment as Servicer, (a) is servicing a portfolio of revolving credit card accounts or other revolving credit accounts, (b) is legally qualified and has the capacity to service the Accounts, (c) is qualified (or licensed) to use the software that the Servicer is then currently using to service the Accounts or obtains the right to use, or has its own, software which is adequate to perform its duties under this Agreement, (d) has, in the reasonable judgment of the Trustee, demonstrated the ability to professionally and competently service a portfolio of similar accounts in accordance with customary standards of skill and care and (e) has a net worth of at least $50,000,000 as of the end of its most recent fiscal quarter.

 

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“ Enhancement Agreement ” shall mean any agreement, instrument or document governing the terms of any Series Enhancement or pursuant to which any Series Enhancement is issued or outstanding.

 

“ Enhancement Invested Amount ,” with respect to any Series, shall have the meaning specified in the related Supplement.

 

“ ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as amended.

 

“ Euroclear Operator ” shall mean Euroclear Bank S.A./N.V., as operator of the Euroclear System, and any successor thereto.

 

“ Excess Finance Charges ” shall have the meaning specified in Section 4.05.

 

“ Excess Funding Account ” shall have the meaning specified in Section 4.02.

 

“ Exchange Act ” shall mean the Securities Act of 1934, as amended.

 

“ Exchange Date ” shall mean, with respect to any Series, any date that is after the related Series Issuance Date, in the case of Definitive Euro-Certificates in registered form, or upon presentation of certification of non-United States beneficial ownership (as described in Section 6.13), in the case of Definitive Euro-Certificates in bearer form.

 

“ Excluded Series ” shall mean any Series designated as such in the relevant Supplement.

 

“ Finance Charge Receivables ” shall mean, with respect to any Monthly Period, all amounts billed to the Obligors on any Account at the beginning of such Monthly Period and in respect of (i) Periodic Rate Finance Charges, (ii) Cash Advance Fees, (iii) Late Charge Fees, (iv) Overlimit Fees, (v) Returned Check Charges, (vi) Discount Option Receivables, if any, and (vii) all other incidental and miscellaneous fees and charges (other than annual membership fees) billed on the Accounts from time to time. Collections of Finance Charge Receivables with respect to any Monthly Period shall include (i) the Interchange received with respect to such Monthly Period, (ii) all Recoveries received during such Monthly Period, (iii) the portion, determined pursuant to Section 3.04(d), of payments of annual membership fees amortized (rather than billed) with respect to the Accounts during such Monthly Period and (iv) the portion, determined pursuant to Section 3.04(e), of payments of Addition Discount Receivables to be deposited into the Collection Account with respect to such Monthly Period.

 

“ Finance Charge Shortfalls ” shall have the meaning specified in Section 4.05.

 

“ Fitch ” shall mean Fitch, Inc., or any successor thereto.

 

“ Floating Allocation Percentage ” shall mean, with respect to any Series, the floating allocation percentage specified in the related Supplement.

 

“ Foreign Clearing Agency ” shall mean Clearstream and the Euroclear Operator.

 

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“ F.S.B. ” shall mean Capital One, F.S.B., a federal savings bank, and its permitted successors and assigns.

 

“ F.S.B. Receivables Purchase Agreement ” shall mean the Receivables Purchase Agreement dated as of August 1, 2002 between F.S.B. and Funding and acknowledged and accepted by the Trustee, as amended and supplemented from time to time.

 

“ Funding ” shall mean Capital One Funding, LLC, a Virginia limited liability company, and its permitted successors and assigns.

 

“ Funds Collateral ” shall mean all Funds Collateral as defined in the Receivables Purchase Agreements that secures a Receivable sold to Funding pursuant to such Receivables Purchase Agreements.

 

“ Global Certificate ” shall have the meaning specified in Section 6.13(a).

 

“ Governmental Authority ” shall mean the United States of America, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and having jurisdiction over the applicable Person.

 

“ Group ” shall mean, with respect to any Series, the group of Series, if any, in which the related Supplement specifies such Series is to be included.

 

“ Ineligible Receivables ” shall have the meaning specified in Section 2.05(a).

 

“ Initial Account ” shall mean each VISA and MasterCard revolving credit card account existing on the Trust Cut-Off Date and established pursuant to a Lending Agreement, which account is identified on the Account Schedule delivered to the Trustee by the Transferor on the Substitution Date.

 

“ Insolvency Event ” shall have the meaning specified in Section 9.01.

 

“ Insolvency Proceeds ” shall have the meaning specified in Section 9.02(c).

 

“ Insurance Proceeds ” shall mean all Insurance Proceeds as defined in the Receivables Purchase Agreements that are paid to the Transferor as provided in the Receivables Purchase Agreements.

 

“ Interchange ” shall mean interchange fees paid to the Transferor pursuant to the Receivables Purchase Agreements.

 

“ Invested Amount ” shall mean, with respect to any Series and for any date, an amount equal to the invested amount specified in the related Supplement.

 

“ Investment Company Act ” shall mean the Investment Company Act of 1940, as amended.

 

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“ Investor Certificateholder ” shall mean, subject to Section 6.06, the Person in whose name a Registered Certificate is registered in the Certificate Register or the bearer of any Bearer Certificate (or the Global Certificate, as the case may be) or Coupon.

 

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

 

“ Late Charge Fees ” shall have the meaning specified in the Lending Agreement applicable to each Account for late payment fees or similar terms with respect to such Account.

 

“ Lending Agreement ” shall mean, with respect to a revolving credit account, the agreements between the Account Owner and the related Obligor governing the terms and conditions of such account, as such agreements may be amended, modified or otherwise changed from time to time in conformance with all Requirements of Law, the failure to comply with which would have a material adverse effect on the interests hereunder of Investor Certificateholders, and as distributed (including any amendments and revisions thereto) to holders of such account.

 

“ Lending Guidelines ” shall mean the Account Owner’s established policies and procedures (a) relating to the operation of its credit card business, which are applicable to its entire portfolio of VISA and MasterCard and other revolving credit accounts and are consistent with reasonably prudent practice, including the established policies and procedures for determining the creditworthiness of credit card or other revolving credit account customers, and the extension of credit to credit card and other revolving credit account customers and (b) relating to the maintenance of credit card and other revolving credit accounts and the collection of receivables with respect thereto, as such policies and procedures may be amended, modified, or otherwise changed from time to time in conformance with all Requirements of Law, the failure to comply with which would have a material adverse effect on the interests hereunder of Investor Certificateholders.

 

“ Lien ” shall mean any security interest, mortgage, deed of trust, pledge, hypothecation, assignment, participation, equity interest, deposit arrangement, encumbrance, lien (statutory or other), preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever, including any conditional sale or other title retention agreement or any financing lease having substantially the same economic effect as any of the foregoing, excluding any lien or filing pursuant to the Receivables Purchase Agreements, the Prior PSA or this Agreement; provided , however , that any assignment or transfer pursuant to Section 6.03(c), Section 7.02 or Section 7.05 shall not be deemed to constitute a Lien.

 

“ Manager ” shall mean the lead manager, manager or co-manager or person performing a similar function with respect to an offering of Definitive Euro-Certificates.

 

“ MasterCard ” shall mean MasterCard International Incorporated or any successor thereto.

 

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“ Miscellaneous Payments ” shall mean, with respect to any Monthly Period, the sum of Adjustment Payments and Transfer Deposit Amounts deposited in the Collection Account with respect to such Monthly Period.

 

“ Monthly Period ” shall mean, with respect to each Distribution Date, a period of approximately thirty (30) days, that (a) contains a full set of processing cycles with respect to the Accounts, (b) commences on the day immediately succeeding the last day of the immediately preceding Monthly Period and (c) ends prior to the Determination Date for such Distribution Date; provided , however , that the initial Monthly Period with respect to any Series will commence on the cut-off date as specified in the related Supplement with respect to such Series.

 

“ Monthly Servicing Fee ” shall have the meaning specified in Section 3.02.

 

“ Moody ’s” shall mean Moody’s Investors Service, Inc., or any successor thereto.

 

“ Non-Code Entity ” shall mean a savings and loan association, a national banking association, a bank or other entity that is not eligible to be a debtor under Title 11 of the United States Code.

 

“ Notices ” shall have the meaning specified in Section 13.05(a).

 

“ 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.

 

“ Officer’s Certificate ” shall mean, unless otherwise specified in this Agreement, a certificate delivered to the Trustee signed by any Vice President or more senior officer of the Transferor or by any Vice President or more senior officer of the Servicer, as the case may be, or, in the case of a Successor Servicer, a certificate signed by any Vice President or more senior officer or the financial controller (or an officer holding an office with equivalent or more senior responsibilities) of such Successor Servicer, and delivered to the Trustee.

 

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

 

“ Overlimit Fees ” shall have the meaning specified in the Lending Agreement applicable to each Account for overlimit fees or similar terms.

 

“ Participation Interests ” shall mean participations representing undivided interests in a pool of assets primarily consisting of receivables in revolving credit card accounts or other revolving credit accounts owned by an Account Owner or any Affiliate thereof and collections thereon.

 

“ Pay Out Event ” shall mean, with respect to any Series, each event specified in Section 9.01 and each additional event, if any, specified in the relevant Supplement as a Pay Out Event with respect to such Series.

 

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“ Paying Agent ” shall mean any paying agent and co-paying agent appointed pursuant to Section 6.07, which shall be, as of the date hereof, The Bank of New York.

 

“ Periodic Rate ” shall mean the periodic rate or rates determined in the manner described in the Lending Agreement applicable to each Account.

 

“ Periodic Rate Finance Charges ” shall mean finance charges based on the Periodic Rate or any similar term specified in the Lending Agreement applicable to each Account.

 

“ Permitted Activities ” means the primary activities of the Trust, which are:

 

(a) holding Receivables and the other Trust Assets, which assets cannot be contrary to the status of the Trust as a qualified special purpose entity under existing accounting literature, including passive derivative financial instruments that pertain to beneficial interests issued or sold to parties other than the Transferor, their affiliates or their agents;

 

(b) issuing Certificates and other interests in the Trust;

 

(c) receiving Collections and making payments on such Certificates and interests in accordance with the terms of this Agreement and any Supplement; and

 

(d) engaging in other activities that are necessary or incidental to accomplish these limited purposes, which activities cannot be contrary to the status of the Trust as a qualified special purpose entity under existing accounting literature.

 

“ Person ” shall mean any person or entity, including any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, Governmental Authority or other entity of similar nature.

 

“ Principal Allocation Percentage ” shall mean, with respect to any Series, the principal allocation percentage specified in the related Supplement.

 

“ Principal Receivables ” shall mean all Receivables other than Finance Charge Receivables, but shall not include Defaulted Receivables or amounts billed as annual membership fees. In calculating the aggregate amount of Principal Receivables on any day, the amount of Principal Receivables shall be reduced by the aggregate amount of credit balances in the Accounts on such day. Any Principal Receivables which the Transferor is unable to transfer as provided in Section 2.10 shall not be included in calculating the aggregate amount of Principal Receivables, except to the extent so provided in Section 2.10.

 

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

 

“ Principal Shortfalls ” shall have the meaning specified in Section 4.04.

 

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“ Principal Terms ” shall mean, with respect to any Series, (i) the name or designation; (ii) the initial principal amount (or method for calculating such amount) and the Invested Amount of such Series; (iii) the Certificate Rate (or method for the determination thereof) and the manner, if any, in which such rate may be adjusted from time to time; (iv) the interest payment date or dates and the manner, if any, in which the interest payment date or dates may be reset from time to time and the date or dates from which interest shall accrue; (v) the method for allocating collections to Certificateholders of such Series; (vi) the designation of any Series Accounts and the terms governing the operation of any such Series Accounts; (vii) the method of calculating the servicing fee with respect thereto; (viii) the provider and the terms of any form of Series Enhancement with respect thereto; (ix) the terms on which the Investor Certificates of such Series may be exchanged for Investor Certificates of another Series, repurchased by the Transferor or remarketed to other investors; (x) the Series Termination Date; (xi) the number of Classes of Investor Certificates of such Series and, if such Series consists of more than one Class, the rights and priorities of each such Class; (xii) the extent to which the Investor Certificates of such Series will be issuable in temporary or permanent global form (and, in such case, the depositary for such Global Certificate or Certificates, the terms and conditions, if any, upon which such Global Certificate may be exchanged, in whole or in part, for Definitive Certificates, and the manner in which any interest payable on a temporary or Global Certificate will be paid); (xiii) whether the Investor Certificates of such Series may be issued as Bearer Certificates and any limitations imposed thereon; (xiv) the priority of such Series with respect to any other Series; (xv) the Rating Agency or Rating Agencies, if any, rating the Series; (xvi) the name of the Clearing Agency, if any; (xvii) the base rate applicable to any Series; (xviii) the minimum amount of Principal Receivables required to be maintained through the designation of Additional Accounts; (xix) any deposit into any account maintained for the benefit of Certificateholders; (xx) the rights of the holders of the Transferor’s Interest that have been transferred to the holders of such Series; (xxi) the Group, if any, to which such Series belongs; (xxii) whether or not such Series is a Principal Sharing Series; and (xxiii) any other terms of such Series.

 

“ Prior PSA ” shall have the meaning specified in the recitals of this Agreement.

 

“ Rating Agency ” shall mean, with respect to any outstanding Series or Class, each statistical rating agency, as specified in the applicable Supplement, selected by the Transferor to rate the Investor Certificates of such Series or Class.

 

“ Ratings Effect ” shall mean, with respect to any action and any Rating Agency, that such action will not result in such Rating Agency reducing or withdrawing its rating of any outstanding Series or Class of Certificates with respect to which it is a Rating Agency.

 

“ Reassignment ” shall have the meaning specified in Section 2.09.

 

“ Receivables ” shall mean all amounts payable by Obligors on any Account, from time to time, including amounts payable for Principal Receivables, Finance Charge Receivables and annual membership fees, but only to the extent that such amounts payable have been conveyed by the applicable Account Owner to the Transferor pursuant to the related Receivables Purchase Agreement; provided , however , that such amounts shall not be included as or deemed Receivables on and after the day on which they become Defaulted Receivables; provided further ,

 

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however , that for purposes of determining the amount of Principal Receivables in the Trust and the deduction of the principal amount of (x) Ineligible Receivables from such total amount of Principal Receivables as required by subsection 2.05(b) and (y) Defaulted Receivables from such total amount of Principal Receivables as required by Section 3.03, the foregoing proviso shall not apply.

 

“ Receivables Purchase Agreements ” shall mean (i) the Capital One Receivables Purchase Agreement, (ii) the F.S.B. Receivable Purchase Agreement and (iii) any future receivables purchase agreement substantially in the form of the agreement specified in (i) and (ii) above, entered into between Funding and an Account Owner; provided , that (A) Funding shall have received written notice from each Rating Agency that the execution and delivery of such future receivables purchase agreement will not have a Ratings Effect and (B) Funding shall have delivered to the Trustee an Officer’s Certificate of Funding to the effect that such officer reasonably believes that the execution and delivery of such future receivables purchase agreement will not have an Adverse Effect.

 

“ Record Date ” shall mean, with respect to any Distribution Date, the last Business Day of the preceding Monthly Period, except as otherwise provided with respect to a Series in the related Supplement.

 

“ Recoveries ” shall mean all Recoveries as defined in the Receivables Purchase Agreements that are paid to the Transferor as provided in the Receivables Purchase Agreements.

 

“ Registered Certificateholder ” shall mean the Holder of a Registered Certificate.

 

“ Registered Certificates ” shall have the meaning specified in Section 6.01.

 

“ Regulation AB ” shall mean Subpart 229.1100 – Asset Backed Securities (Regulation AB), 17 C.F.R. §§229.1100-229.1123, as such may be amended from time to time, and subject to such clarification and interpretation as have been provided by the Commission in the adopting release (Asset-Backed Securities, Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005)) or by the staff of the Commission, or as may be provided by the Commission or its staff from time to time.

 

“ Related Account ” shall mean each VISA and MasterCard revolving credit card account or other revolving credit account which is related to an Account and which (a) was established in compliance with the Lending Guidelines pursuant to a Lending Agreement; (b) the related Obligor or Obligors are the same Person or Persons as the Obligor or Obligors of such Account; (c) is originated (i) as a result of the credit card with respect to such Account being lost or stolen; (ii) as a result of the related Obligor requesting a change in his or her billing cycle; (iii) as a result of the related Obligor requesting the discontinuance of responsibility with respect to such Account; (iv) as a result of the related Obligor requesting a product change; or (v) for any other reasons permitted by the Lending Guidelines; and (d) can be traced or identified by reference to or by way of the Account Schedule and the computer or other records of the Account Owner.

 

“ Removal Date ” shall have the meaning specified in Section 2.09(a).

 

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“ Removal Notice Date ” shall have the meaning specified in Section 2.09(a).

 

“ Removed Accounts ” shall have the meaning specified in Section 2.09.

 

“ Required Designation Date ” shall have the meaning specified in Section 2.08(a).

 

“ Required Principal Balance ” shall mean, as of any date of determination, (a) the sum of the “Initial Invested Amount” (as defined in the relevant Supplement) of the Investor Certificates of each Series outstanding on such date plus, as of such date of determination, the aggregate amounts of any increases in the Invested Amounts of each prefunded Series outstanding (in each case, other than any Series or portion thereof which is designated in the relevant Supplement as then being an Excluded Series) minus (b) the principal amount on deposit in the Excess Funding Account on such date; provided , however , if at any time the only Series outstanding are Excluded Series and a Pay Out Event has occurred with respect to one or more of such Series, the Required Principal Balance shall mean (a) the sum of the “Invested Amount” (as defined in the relevant Supplement) of each such Excluded Series as of the earliest date on which any such Pay Out Event is deemed to have occurred, minus (b) the principal amount on deposit in the Excess Funding Account.

 

“ Required Transferor’s Interest ” shall mean, with respect to any date, an amount equal to the product of the Required Transferor’s Percentage and the aggregate amount of Principal Receivables in the Trust.

 

“ Required Transferor’s Percentage ” shall mean 5%; provided , however , that the Transferor may reduce the Required Transferor’s Percentage upon (w) thirty (30) days prior notice to the Trustee, each Rating Agency and any Series Enhancer entitled to receive such notice pursuant to the relevant Supplement, (x) receipt of written notice by the Transferor from each Rating Agency that such reduction will not have a Ratings Effect, (y) delivery by the Transferor of copies of each such written notice to the Servicer and the Trustee and (z) delivery to the Trustee and each such Series Enhancer of an Officer’s Certificate of the Transferor stating that the Transferor reasonably believes that such reduction will not, based on the facts known to such officer at the time of such certification, then cause a Pay Out Event or any event that, after the giving of notice or the lapse of time, would constitute a Pay Out Event to occur with respect to any Series; provided further that the Required Transferor’s Percentage shall not at any time be less than the Specified Percentage.

 

“ Requirements of Law ” with respect to any Person shall mean the certificate of incorporation, certificate of formation or articles of association and by-laws, limited liability company agreement or other organizational or governing documents of such Person, and any law, treaty, rule or regulation, or determination of an arbitrator or Governmental Authority, in each case applicable to or binding upon such Person or to which such Person is subject, whether federal, state or local (including usury laws, the Federal Truth in Lending Act and Regulation Z and Regulation B of the Board of Governors of the Federal Reserve System).

 

“ Responsible Officer ” shall mean, when used with respect to the Trustee, any officers within the corporate trust administration of the Trustee, including any Vice President, any Assistant Vice President, any Assistant Treasurer, any trust officer, or any other officer of

 

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the Trustee who customarily performs functions similar to those performed by any of the above-designated officers and also, with respect to a particular matter, any other officer to whom such matter is referred because of such officer’s knowledge of and familiarity with the particular subject.

 

“ Revolving Credit Agreement ” shall mean the Revolving Credit Agreement by and between the Bank and Funding, dated as of August 1, 2002, as such agreement may be amended from time to time in accordance therewith, or any substantially similar agreement entered into between any lender and Funding.

 

“ Returned Check Charges ” shall mean the charges specified in the Lending Agreement payable for returned payment checks drawn on an Account.

 

“ Revolving Period ” shall mean, with respect to any Series, the period specified as such in the related Supplement.

 

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

 

“ Secured Account ” shall mean an Account owned by the Account Owner under which the payment obligations of the Obligor are secured by the Funds Collateral.

 

“ Securities Act ” shall mean the Securities Act of 1933, as amended.

 

“ Securitization Transaction ” shall mean any transaction involving a sale or other transfer of Receivables directly or indirectly to an issuing entity in connection with an issuance of publicly offered or privately placed, rated or unrated asset-backed securities.

 

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

 

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

 

“ Series Enhancement ” shall mean the rights and benefits provided to the Investor Certificateholders of any Series or Class pursuant to any letter of credit, surety bond, cash collateral guaranty, cash collateral account, insurance policy, spread account, reserve account, guaranteed rate agreement, maturity liquidity facility, tax protection agreement, interest rate swap agreement, interest rate cap agreement, currency exchange agreement, other derivative securities agreement or other similar arrangement. The subordination of any Class or Series to another Class or Series shall be deemed to be a Series Enhancement.

 

“ Series Enhancer ” shall mean the Person or Persons providing any Series Enhancement, other than the Investor Certificateholders of any Class or Series which is subordinated to another Class or Series.

 

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“ Series Issuance Date ” shall mean, with respect to any Series, the date on which the Investor Certificates of such Series are to be originally issued in accordance with Section 6.03 and the related Supplement.

 

“ Series Termination Date ” shall mean, with respect to any Series, the termination date specified in the related Supplement.

 

“ Service Transfer ” shall have the meaning specified in Section 10.01.

 

“ Servicer ” shall mean Capital One, in its capacity as Servicer pursuant to this Agreement, and, after any Service Transfer, the Successor Servicer.

 

“ Servicer Default ” shall have the meaning specified in Section 10.01.

 

“ Servicing Criteria ” shall mean the “servicing criteria” set forth in Item 1122(d) of Regulation AB, as such may be amended from time to time.

 

“ Servicing Fee ” shall have the meaning specified in Section 3.02.

 

“ Servicing Fee Rate ” shall mean, with respect to any Series, the servicing fee rate specified in the related Supplement.

 

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

 

“ Shared Principal Collections ” shall have the meaning specified in Section 4.04.

 

“ Specified Percentage ” shall mean 2%.

 

“ Standard & Poor’s ” shall mean Standard & Poor’s Ratings Services, or any successor thereto.

 

“ Substitution Date ” shall mean August 1, 2002.

 

“ Successor Servicer ” shall have the meaning specified in Section 10.02(a).

 

“ Supplement ” shall mean, with respect to any Series, a Supplement to this Agreement, executed and delivered in connection with the original issuance of the Investor Certificates of such Series pursuant to Section 6.03, and all amendments thereof and supplements thereto.

 

“ Supplemental Certificate ” shall have the meaning specified in Section 6.03(c).

 

“ Tax Opinion ” shall mean with respect to any action, an Opinion of Counsel to the effect that, for federal and Virginia income and franchise tax purposes (and, if there has been an assumption of the Servicer’s obligations under this Agreement, for income and franchise tax

 

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purposes of the jurisdiction in which the assuming entity engages in its principal servicing activities, if other than Virginia) (a) such action will not affect the tax characterization as debt of Investor Certificates of any outstanding Series or Class that were characterized as debt at the time of their issuance, (b) following such action the Trust will not be deemed to be an association (or publicly traded partnership) taxable as a corporation and (c) such action will not cause a taxable event to any Investor Certificateholders.

 

“ Termination Notice ” shall have the meaning specified in Section 10.01.

 

“ Transfer Agent and Registrar ” shall have the meaning specified in Section 6.04.

 

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

 

“ Transfer Deposit Amount ” shall mean, with respect to any Distribution Date, the amount, if any, deposited into the Collection Account on such Distribution Date in connection with the reassignment of an Ineligible Receivable pursuant to Section 2.05 or 2.07(a) or the reassignment or assignment of a Receivable pursuant to Section 3.03.

 

“ Transfer Restriction Event ” shall have the meaning specified in Section 2.10.

 

“ Transferor ” shall mean Funding and any permitted successors and assigns thereof under this Agreement and any Additional Transferor.

 

“ Transferor Certificates ” shall mean, collectively, the Base Certificate and any outstanding Supplemental Certificates.

 

“ Transferor’s Interest ” shall have the meaning specified in Section 4.01.

 

“ Transferor’s Participation Amount ” shall mean at any time of determination an amount equal to the total amount of Principal Receivables and the principal amount on deposit in the Excess Funding Account and any Principal Funding Account (as defined in any Supplement) in the Trust at such time minus the aggregate Invested Amounts and Enhancement Invested Amounts, if any, for all outstanding Series at such time.

 

“ Trust ” shall mean the Capital One Master Trust heretofore created and continued by this Agreement.

 

“ Trust Assets ” shall have the meaning specified in Section 2.01.

 

“ Trust Cut-Off Date ” shall mean July 26, 2002.

 

“ Trustee ” shall mean The Bank of New York in its capacity as trustee on behalf of the Trust, or its successor in interest, or any successor trustee appointed as herein provided.

 

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“ UCC ” shall mean the Uniform Commercial Code, as amended from time to time, as in effect in the applicable jurisdiction.

 

“ Unallocated Principal Collections ” shall have the meaning specified in Section 4.03(c).

 

“ unamortized annual membership fees ” shall have the meaning specified in Section 3.04(d).

 

“ United States ” shall mean the United States of America (including any one of the states thereof and the District of Columbia), its territories, its possessions and other areas subject to its jurisdiction.

 

“ U.S. Alien ” or “ United States Alien ” shall mean any corporation, partnership, individual or fiduciary that, as to the United States, and for United States income tax purposes, is (i) a foreign corporation, (ii) a foreign partnership one or more of the members of which is, as to the United States, a foreign corporation, a nonresident alien individual or a nonresident alien fiduciary of a foreign estate or trust, (iii) a nonresident alien individual or (iv) a nonresident alien fiduciary of a foreign estate or trust.

 

“ U.S. person ” or “ United States person ” shall mean a citizen or resident of the United States, a corporation, partnership or other entity created or organized in or under the laws of the United States, or an estate or trust the income of which is subject to United States Federal income taxation regardless of its source.

 

“ VISA ” shall mean VISA U.S.A., Inc., or any successor thereto.

 

Section 1.02. Other Definitional Provisions and Rules of Construction .

 

(a) With respect to any Series, all terms used herein and not otherwise defined herein shall have meanings ascribed to them in the related Supplement.

 

(b) All terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein.

 

(c) As used in this Agreement and in any certificate or other document made or delivered pursuant hereto or thereto, accounting terms not defined in this Agreement or in any such certificate or other document, and accounting terms partly defined in this Agreement or in any such certificate or other document to the extent not defined, shall have the respective meanings given to them under generally accepted accounting principles or regulatory accounting principles, as applicable. To the extent that, the definitions of accounting terms in this Agreement or in any such certificate or other document are inconsistent with the meanings of such terms under generally accepted accounting principles or regulatory accounting principles, the definitions contained in this Agreement or in any such certificate or other document shall control.

 

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(d) The agreements, representations and warranties of Funding and any Additional Transferor in this Agreement in its capacity as Transferor shall be deemed to be the agreements, representations and warranties of Funding and any such Additional Transferor solely in such capacity for so long as Funding and any such Additional Transferor act in such capacity under this Agreement; the agreements, representations and warranties of Capital One in this Agreement as Servicer shall be deemed to be the agreements, representations and warranties of Capital One solely in such capacity for so long as Capital One acts in such capacity under this Agreement.

 

(e) The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement; references to any Section, Schedule or Exhibit are references to Sections, Schedules and Exhibits in or to this Agreement unless otherwise specified; and the term “including” means “including without limitation.”

 

(f) All references herein to laws, statutes, acts and regulations shall mean such laws, statutes, acts and regulations as amended or recodified from time to time.

 

(g) All references herein (including the terms defined in Section 1.01) to the singular shall include the plural and vice versa, unless the context requires otherwise.

 

(h) All references herein to the masculine, feminine or neuter gender shall include all other genders.

 

ARTICLE II

 

Transfer of Receivables

 

Section 2.01. Transfer of Receivables . By execution of this Agreement, the Transferor hereby transfers, assigns, sets over and otherwise conveys to the Trustee all of 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 Trust Cut-Off Date, in the case of Receivables arising in the Initial Accounts (including Related Accounts with respect to such Initial Accounts), and at the close of business on the related Additional Cut-Off Date, in the case of Receivables arising in the Additional Accounts (including Related Accounts with respect to such Additional Accounts), and in each case thereafter created from time to time in such Accounts until the termination of the Trust, the Funds Collateral securing such Receivables, all Interchange allocable to the Trust as provided herein, all Recoveries and Insurance Proceeds allocable to all of the foregoing, all Participation Interests and related property conveyed to the Trustee pursuant to an Assignment, all Collections with respect to all of the foregoing, all monies due or to become due and all amounts received or receivable with respect to all of the foregoing and all proceeds (including “proceeds” as defined in the UCC) thereof. The Transferor does hereby further transfer, assign, set over and otherwise convey to the Trustee all of its rights, remedies, powers, privileges and claims under or with respect to the Receivables Purchase Agreements (whether arising pursuant to the terms of the Receivables Purchase Agreements or otherwise available to the Transferor at law or in equity), including the rights of the Transferor to enforce the Receivables Purchase Agreements and to give or withhold any and all consents,

 

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requests, notices, directions, approvals, extensions or waivers under or with respect to the Receivable Purchase Agreements to the same extent as the Transferor could but for the assignment and security interest granted to the Trustee. The property described in the two preceding sentences, together with all monies and other property on deposit in the Collection Account, the Excess Funding Account, the Series Accounts and any Series Enhancement shall constitute the assets of the Trust (the “ Trust Assets ”). The foregoing does not constitute and is not intended to result in the creation or assumption by the Trust, the Trustee, any Investor Certificateholder or any Series Enhancer of any obligation of the Transferor, the Servicer, an Account Owner or any other Person in connection with the Accounts, the Receivables or the Funds Collateral or under any agreement or instrument relating thereto, including any obligation to Obligors, merchant banks, merchants’ clearance systems, VISA, MasterCard or insurers.

 

The Transferor agrees to record and file, at its own expense, financing statements (and amendments thereto when applicable) with respect to the Trust Assets meeting the requirements of applicable state law in such manner and in such jurisdictions as are necessary to perfect, and maintain the perfection of, the assignment of such Trust Assets to the Trustee, and to deliver a file stamped copy of each such financing statement or amendment or other evidence of such filing to the Trustee on or prior to the Substitution Date, in the case of Trust Assets relating to the Initial Accounts, and (if any additional filing is so necessary) on or prior to the applicable Addition Date, in the case of Trust Assets relating to Additional Accounts and Participation Interests. The Trustee shall be under no obligation whatsoever to file such financing statements or amendments thereto or to make any other filing under the UCC in connection with such assignment.

 

The Transferor further agrees, at its own expense, (i) on or prior to (A) the Substitution Date, in the case of the Initial Accounts, and (B) the applicable Addition Date, in the case of the Additional Accounts and the Participation Interests, to indicate in its books and records (including the appropriate computer files) that Receivables created in connection with the Accounts (other than Removed Accounts), the Participation Interests and the related Trust Assets have been conveyed to the Trustee pursuant to this Agreement and (ii) on or prior to each such date referred to in clause (i), to deliver to the Trustee an Account Schedule (provided that such Account Schedule shall be provided in respect of Automatic Additional Accounts on or prior to the Determination Date immediately succeeding the related Monthly Period during which their respective Addition Dates occur). Each Account Schedule, as supplemented from time to time, shall be marked as Schedule 1 to this Agreement and is hereby incorporated into and made a part of this Agreement. Once the books and records (including the appropriate computer files) referenced in clause (i) of this paragraph have been indicated with respect to any Account or Participation Interest, the Transferor further agrees not to alter such indication during the remaining term of this Agreement, other than pursuant to Section 2.09 with respect to Removed Accounts, unless and until the Transferor shall have delivered to the Trustee at least thirty (30) days prior written notice of its intention to do so and has taken such action as is necessary or advisable to cause the interest of the Trustee in the Trust Assets to continue to be perfected with the priority required by this Agreement, and has delivered to the Trustee an Opinion of Counsel to such effect.

 

The parties to this Agreement intend that the conveyance of the Trust Assets pursuant to this Agreement constitute a sale, and not a secured borrowing, for accounting

 

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purposes. Nevertheless, this Agreement also shall constitute a security agreement under applicable law, and the Transferor hereby grants to the Trustee a first priority perfected security interest in all of the Transferor’s right, title and interest, whether now owned or hereafter acquired, in, to and under the Receivables, the Funds Collateral and the other Trust Assets, and all money, accounts, general intangibles, chattel paper, instruments, documents, goods, investment property, deposit accounts, letters of credit, letter-of-credit rights and oil, gas and other minerals consisting of, arising from or related to the Trust Assets, and all proceeds thereof, to secure its obligations hereunder.

 

By executing this Agreement and any Receivables Purchase Agreement, the parties hereto and thereto do not intend to cancel, release or in any way impair the conveyance made by Capital One or F.S.B. in their respective capacities as a “Seller” under the Prior PSA. Without limiting the foregoing, the parties hereto acknowledge and agree as follows:

 

(a) The Trust created by and maintained under the Prior PSA shall continue to exist and be maintained under this Agreement.

 

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

 

(c) All references to the Prior PSA in any other instruments or documents shall be deemed to constitute references to this Agreement. All references in such instruments or documents to Capital One or F.S.B in their respective capacities as a “Seller” of receivables and related assets under the Prior PSA shall be deemed to include reference to Funding in such capacity hereunder.

 

(d) Subject to clause (f) below, Funding hereby agrees to perform all obligations of Capital One and F.S.B., in their respective capacities as a “Seller” (but not, in the case of Capital One, as “Servicer”), under or in connection with the Prior PSA (as amended and restated by this Agreement) and any Supplements to the Prior PSA.

 

(e) To the extent this Agreement requires that certain actions are to be taken as of a date prior to the date of this Agreement, Capital One’s or F.S.B.’s, as applicable, taking of such action under the Prior PSA shall constitute satisfaction of such requirement.

 

All representations, warranties and covenants of Capital One or F.S.B., as applicable, made in Article II in the Prior PSA and in any Assignment of Additional Accounts with respect to receivables and related assets transferred to the Trustee prior to the Substitution Date, shall remain in full force and effect with respect to Capital One or F.S.B., as applicable.

 

Section 2.02. Acceptance by Trustee .

 

(a) The Trustee hereby acknowledges its acceptance of all right, title and interest to the Trust Assets conveyed to the Trustee pursuant to Section 2.01 and declares that it shall maintain such right, title and interest, upon the trust herein set forth, for the benefit of all Certificateholders. The Trustee further acknowledges that, on or prior to the Substitution Date, the Transferor delivered to the Trustee the Account Schedule relating to the Initial Accounts.

 

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(b) The Trustee 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 or otherwise delivered to the Trustee from time to time, except (i) to a Successor Servicer or as required by a Requirement of Law applicable to the Trustee, (ii) in connection with the performance of the Trustee’s duties hereunder, (iii) in enforcing the rights of Certificateholders or (iv) as requested by any Person in connection with the financing statements filed pursuant to this Agreement, the Prior PSA or the Receivables Purchase Agreements. The Trustee agrees to take such measures as shall be reasonably requested by any Account Owner or the Transferor to protect and maintain the security and confidentiality of such information and, in connection therewith, will allow the Account Owner and the Transferor to inspect the Trustee’s security and confidentiality arrangements from time to time during normal business hours. The Trustee shall provide the Account Owner and the Transferor with notice thirty (30) days prior to any disclosure pursuant to this Section 2.02.

 

(c) The Trustee shall have no power to create, assume or incur indebtedness or other liabilities in the name of the Trust other than as contemplated in this Agreement or any Supplement.

 

(d) The Trustee hereby agrees not to use any information it obtains pursuant to this Agreement, including any of the account numbers or other information contained in any Account Schedule delivered by the Transferor to the Trustee, directly or indirectly, to compete or assist any Person in competing with the Transferor or with any Account Owner in its business.

 

Section 2.03. Representations and Warranties of the Transferor Relating to the Transferor . The Transferor hereby represents and warrants to the Trust as of the Substitution Date and as of each Closing Date (but only if it was a Transferor on such date):

 

(a) Organization and Good Standing . The Transferor is a limited liability company, validly existing under the laws of the Commonwealth of Virginia, and has, in all material respects, full power and authority to own its properties and conduct its business as such properties are presently owned and such business is presently conducted, and to execute, deliver and perform its obligations under the Receivables Purchase Agreements and under this Agreement and each Supplement and to execute and deliver to the Trustee the Certificates pursuant hereto.

 

(b) Due Qualification . The Transferor is duly qualified to do business and is in good standing as a foreign company (or is exempt from such requirements), and has obtained all necessary licenses and approvals, in each jurisdiction in which failure to so qualify or to obtain such licenses and approvals would render any Receivable unenforceable by the Transferor, the Servicer or the Trustee or would have a material adverse effect on the interests of the Certificateholders hereunder or under any Supplement; provided , however , that no representation or warranty is made with respect to any qualifications, licenses or approvals which the Trustee has or may be required at any time to obtain, if any, in connection with the transactions contemplated hereby.

 

(c) Due Authorization . The execution, delivery and performance by the Transferor of this Agreement and each Supplement, the execution and delivery by the Transferor

 

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to the Trustee of the Certificates and the consummation by the Transferor of the transactions provided for in this Agreement and each Supplement have been duly authorized by the Transferor by all necessary corporate action on the part of the Transferor.

 

(d) No Conflict . The execution and delivery by the Transferor of this Agreement, each Supplement and the Certificates, the performance by the Transferor of the transactions contemplated by this Agreement and each Supplement and the fulfillment by the Transferor of the terms hereof and thereof applicable to the Transferor will not conflict with or violate the articles of incorporation, articles of association or certificate of formation or by-laws or limited liability company agreement of the Transferor or conflict with, result in any breach of any of the 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 any of its properties are bound.

 

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

 

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

 

(g) All Consents Required . All authorizations, consents, orders or other actions of any Person or of any Governmental Authority required to be obtained by the Transferor in connection with the execution and delivery by the Transferor of this Agreement, each Supplement and the Certificates, the performance by the Transferor of the transactions contemplated by this Agreement and each Supplement and the fulfillment by the Transferor of the terms hereof and thereof, have been obtained, except such as are required by state securities or “Blue Sky” laws in connection with the distribution of the Certificates.

 

(h) Insolvency . No Insolvency Event with respect to the Transferor has occurred and the transfer of the Receivables by the Transferor to the Trustee has not been made in contemplation of the occurrence thereof.

 

The representations and warranties set forth in this Section 2.03 shall survive the transfer and assignment of the Trust Assets to the Trustee. Upon discovery by the Transferor,

 

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the Servicer or the Trustee of a breach of any of the representations and warranties set forth in this Section 2.03, the party discovering such breach shall give prompt written notice to the others and to each Series Enhancer entitled thereto pursuant to the relevant Supplement within three (3) Business Days following such discovery. The Transferor agrees to cooperate with the Servicer and the Trustee in attempting to cure any such breach. For purposes of the representations and warranties set forth in this Section 2.03, each reference to a Supplement shall be deemed to refer only to those Supplements in effect as of the date of the relevant representations or warranties.

 

Section 2.04. Representations and Warranties of the Transferor Relating to the Agreement and Any Supplement and the Receivables .

 

(a) Representations and Warranties . The Transferor hereby represents and warrants to the Trust as of the Substitution Date and each subsequent Closing Date, and with respect to any Additional Accounts, on each related Addition Date occurring after the Substitution Date (but only if it was a Transferor on such date) that:

 

(i) the Receivables Purchase Agreements, this Agreement, each Supplement and, in the case of Additional Accounts, the related Assignment, each 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 Debtor Relief Laws and except as such enforceability may be limited by general principles of equity (whether considered in a suit at law or in equity);

 

(ii) as of the Trust Cut-Off Date, with respect to the Initial Accounts, as of the related Additional Cut-Off Date, with respect to Additional Accounts, and as of the applicable Removal Notice Date, with respect to the Removed Accounts, Schedule 1 to this Agreement and the related Account Schedule, as supplemented to such date, is an accurate and complete listing in all material respects of all the Accounts as of the Trust Cut-Off Date, such Additional Cut-Off Date or such Removal Notice Date, as the case may be, and the information contained therein with respect to the identity of such Accounts and the Receivables existing in such Accounts is true and correct in all material respects as of the Trust Cut-Off Date, such Additional Cut-Off Date or such Removal Notice Date, as the case may be;

 

(iii) each Receivable has been transferred by the Transferor to the Trustee free and clear of any Lien (other than Liens permitted under subsection 2.07(b));

 

(iv) all consents, licenses 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 transfer by the Transferor of Receivables to the Trustee have been duly obtained, effected or given and are in full force and effect;

 

(v) subject, in each case pertaining to proceeds, to Section 9-315 of the UCC, and further subject to any Liens permitted under subsection 2.07(b), each of this Agreement and, in the case of Additional Accounts, the related Assignment constitutes either (x) a valid sale, transfer and assignment to the Trustee of all right, title and interest of the Transferor in the Receivables and the proceeds thereof or (y) a grant of a “security

 

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interest” (as defined in the UCC) in such property to the Trustee, which, in the case of existing Receivables and the proceeds thereof, is enforceable upon execution and delivery of this Agreement, or, with respect to then existing Receivables in Additional Accounts, as of the applicable Addition Date, and which will be enforceable with respect to such Receivables hereafter and thereafter created and the proceeds thereof upon such creation. Upon the filing of the financing statements pursuant to Section 2.01 and, in the case of Receivables hereafter created and the proceeds thereof, upon the creation thereof, the Trustee shall have a first priority perfected security or ownership interest in such Receivables and proceeds except for Liens permitted under Section 2.07(b);

 

(vi) except as otherwise expressly provided in this Agreement or any 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;

 

(vii) on the applicable Additional Cut-Off Date, each related Additional Account is an Eligible Account;

 

(viii) on the applicable Additional Cut-Off Date, each Receivable then existing in each related Additional Account is an Eligible Receivable; and

 

(ix) upon the creation of any new Receivable transferred by the Transferor to the Trustee, such Receivable is an Eligible Receivable.

 

(b) Representations and Warranties of the Transferor Relating to Security Interest . The Transferor hereby makes the following representations and warranties with respect to Receivables transferred by it, and each of the following representations and warranties shall survive until the termination of this Agreement and each shall speak as of the Substitution Date and, with respect to Receivables in Additional Accounts, as of the related Addition Date. None of the following representations and warranties shall be waived by any of the parties to this Agreement unless each Rating Agency shall have notified the Transferor, the Servicer and the Trustee in writing that such waiver will not have a Ratings Effect.

 

(i) This Agreement creates a valid and continuing security interest (as defined in the applicable UCC) in favor of the Trustee in the Receivables, and the Funds Collateral securing such Receivables, described in Section 2.01 (the “ Collateral ”), which security interest is prior to all other Liens except as otherwise permitted hereunder, and is enforceable as such against creditors of and purchasers from the Transferor.

 

(ii) The Receivables transferred by the Transferor constitute “accounts” within the meaning of the applicable UCC.

 

(iii) At the time of its transfer of any item of Collateral to the Trustee pursuant to this Agreement, the Transferor owned and had good and marketable title to such item of Collateral free and clear of any Lien except as otherwise permitted hereunder.

 

(iv) The Transferor has caused or will have caused, within ten (10) days of the execution of this Agreement, the filing of all appropriate financing statements in the proper filing

 

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office in the appropriate jurisdictions under applicable law in order to perfect the security interest in the Receivables granted by the Transferor to the Trustee pursuant to this Agreement.

 

(v) Other than the security interest granted to the Trustee pursuant to this Agreement or an Assignment, the Transferor has not pledged, assigned, sold, granted a security interest in, or otherwise conveyed the Receivables described in Section 2.01 of this Agreement. The Transferor has not authorized the filing of and is not aware of any financing statements against the Transferor that include a description of such Receivables other than any financing statement relating to the transfer of such Receivables to the Trustee pursuant to this Agreement or an Assignment, or that has been terminated. The Transferor is not aware of any judgment or tax lien filings against the Transferor.

 

(c) Notice of Breach . The representations and warranties of the Transferor set forth in this Section 2.04 shall survive the transfer and assignment by the Transferor of Trust Assets to the Trustee. Upon discovery by the Transferor, the Servicer or the Trustee of a breach of any of the representations and warranties by the Transferor set forth in this Section 2.04, the party discovering such breach shall give prompt written notice to the others and to each Series Enhancer entitled thereto pursuant to the relevant Supplement within three (3) Business Days following such discovery. The Transferor agrees to cooperate with the Servicer and the Trustee in attempting to cure any such breach. For purposes of the representations and warranties set forth in this Section 2.04, each reference to a Supplement shall be deemed to refer only to those Supplements in effect as of the date of the relevant representations or warranties.

 

Section 2.05. Reassignment of Ineligible Receivables .

 

(a) Reassignment of Receivables . In the event (i) any representation or warranty of the Transferor contained in Section 2.04(a)(ii), (iii), (iv), (vii), (viii) or (ix) is not true and correct in any material respect as of the date specified therein (individually or together with any other breach or breaches then existing) and such breach has a material adverse effect on the Certificateholders’ Interest of all Series in any Receivables transferred to the Trustee (which determination shall be made without regard to the availability of funds under any Series Enhancement) and remains uncured for sixty (60) days (or such longer period, not in excess of 150 days, as may be agreed to by the Trustee) after the earlier to occur of the discovery thereof by the Transferor or receipt by the Transferor of notice thereof given by the Trustee, or (ii) it is so provided in Section 2.07(a) with respect to any Receivables transferred to the Trustee by the Transferor, then the Transferor shall accept reassignment of all Receivables in the related Account (“ Ineligible Receivables ”) on the terms and conditions set forth in paragraph (b) below; provided , however , that such Receivables will not be deemed to be Ineligible Receivables and will not be reassigned to the Transferor if, on any day prior to the end of such 60-day or longer period, (x) either (A) in the case of an event described in clause (i) above the relevant representation and warranty shall be true and correct in all material respects as if made on such day or (B) in the case of an event described in clause (ii) above the circumstances causing such Receivable to become an Ineligible Receivable shall no longer exist and (y) the Transferor shall have delivered to the Trustee an Officer’s Certificate of the Transferor describing the nature of such breach and the manner in which the relevant representation and warranty became true and correct.

 

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(b) Price of Reassignment . The Servicer shall deduct the portion of such Ineligible Receivables reassigned to the Transferor which are Principal Receivables from the aggregate amount of Principal Receivables used to calculate the Transferor’s Participation Amount, the Transferor’s Interest and the Floating Allocation Percentage and the Principal Allocation Percentage applicable to any Series. In the event that, following the exclusion of such Principal Receivables from the calculation of the Transferor’s Participation Amount, the Transferor’s Participation Amount would be a negative number, not later than 12:00 noon, Richmond, Virginia time, on the first Distribution Date following the Monthly Period in which such reassignment obligation arises, the Transferor shall make a deposit in immediately available funds in an amount equal to the principal portion and the interest portion of the amount by which the Transferor’s Participation Amount would be below zero (up to the amount of such Principal Receivables) into the Excess Funding Account and the Collection Account, respectively. Any amount deposited into the Excess Funding Account and the Collection Account, respectively, in connection with the reassignment of an Ineligible Receivable shall be considered a Transfer Deposit Amount and shall be applied in accordance with Article IV and the terms of each Supplement.

 

Upon the deposit, if any, required to be made to the Excess Funding Account and the Collection Account, respectively, as provided in this Section 2.05 and the reassignment of Ineligible Receivables, the Trustee shall automatically and without further action sell, transfer, assign, set-over and otherwise convey to the Transferor or its designee, without recourse, representation or warranty, all the right, title and interest of the Trustee and the Trust in and to such Ineligible Receivables, the Funds Collateral securing such Ineligible Receivables, all Recoveries and Insurance Proceeds allocable to all of the foregoing, all Collections with respect to all of the foregoing, all monies due or to become due and all proceeds thereof. The Trustee shall execute such documents and instruments of transfer or assignment and take such other actions as shall reasonably be requested by the Transferor to effect the transfer of such Ineligible Receivables pursuant to this Section 2.05. The obligation of the Transferor to accept reassignment of any Ineligible Receivables, and to make the deposits, if any, required to be made to the Excess Funding Account and the Collection Account, respectively, as provided in this Section 2.05, shall constitute the sole remedy respecting the event giving rise to such obligation available to Investor Certificateholders (or the Trustee on behalf of the Investor Certificateholders) or any Series Enhancer.

 

Section 2.06. Reassignment of Receivables in Trust Portfolio . In the event any representation or warranty of the Transferor set forth in Section 2.03 or Section 2.04(a)(i), (v) or (vi) is not true and correct in any material respect and such breach has a material adverse effect on the Certificateholders’ Interest of all Series in the Receivables, then either the Trustee or the Holders of Investor Certificates evidencing not less than 50% of the aggregate unpaid principal amount of all outstanding Investor Certificates, by notice then given to the Transferor, the Servicer (and the Trustee if given by the Investor Certificateholders), may direct the Transferor to accept a reassignment of the Receivables if such breach and any material adverse effect caused by such breach is not cured within sixty (60) days of such notice (or within such longer period, not in excess of 150 days, as may be specified in such notice), and upon those conditions the Transferor shall be obligated to accept such reassignment on the terms set forth below; provided , however , that such Receivables will not be reassigned to the Transferor if, on any day prior to the end of such 60-day or longer period (i) the relevant representation and warranty shall

 

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be true and correct in all material respects as if made on such day and (ii) the Transferor shall have delivered to the Trustee an Officer’s Certificate of the Transferor describing the nature of such breach and the manner in which the relevant representation and warranty became true and correct and the breach of such representation and warranty shall no longer materially adversely affect the interests of the Investor Certificateholders.

 

The Transferor shall deposit in the Collection Account in immediately available funds not later than 12:00 noon, Richmond, Virginia time, on the first Distribution Date following the Monthly Period in which such reassignment obligation arises, in payment for such reassignment, an amount equal to the sum of the amounts specified therefor with respect to each outstanding Series in the related Supplement. Notwithstanding anything to the contrary in this Agreement, such amounts shall be distributed on such Distribution Date in accordance with Article IV and the terms of each Supplement.

 

Upon the deposit, if any, required to be made to the Collection Account as provided in this Section 2.06 and the reassignment of the applicable Receivables, the Trustee shall automatically and without further action sell, transfer, assign, set over and otherwise convey to the Transferor or its designee, without recourse, representation or warranty, all the right, title and interest of the Trustee and the Trust in and to such Receivables, the Funds Collateral securing such Receivables, all Recoveries and Insurance Proceeds allocable to all of the foregoing, all Collections with respect to all of the foregoing, all monies due or to become due and all amounts received with respect thereto and all proceeds thereof. The Trustee shall execute such documents and instruments of transfer or assignment and take such other actions as shall reasonably be requested by the Transferor to effect the conveyance of such Receivables pursuant to this Section 2.06. The obligation of the Transferor to accept reassignment of any Receivables and to make the deposits, if any, required to be made to the Collection Account as provided in this Section 2.06 shall constitute the sole remedy respecting the event giving rise to such obligation available to the Certificateholders (or the Trustee on behalf of the Certificateholders) or any Series Enhancer.

 

Section 2.07. Covenants of the Transferor . The Transferor hereby covenants as follows:

 

(a) Receivables Not to be Evidenced by Instruments or Chattel Paper . The Transferor will take no action to cause or permit any Receivable to be evidenced by any instrument or chattel paper (as defined in the UCC) and, if any such Receivable is so evidenced, except for any action by the Servicer or an Account Owner, it shall be deemed to be an Ineligible Receivable in accordance with Section 2.05(a) and shall be reassigned to the Transferor in accordance with Section 2.05(b); provided , however , that Receivables evidenced by instruments or chattel paper taken from Obligors in the ordinary course of business of the Servicer’s collection efforts shall not be deemed Ineligible Receivables solely as a result thereof.

 

(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, whether now existing or hereafter created, or any interest therein; the Transferor will immediately notify the Trustee of the existence of any Lien on any Receivable of which it has knowledge; and the Transferor shall defend the right, title and

 

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interest of the 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 Section 2.07(b) shall prevent or be deemed to prohibit the Transferor from suffering to exist upon any of the Receivables 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’s Interest . Except for the conveyances hereunder, in connection with any transaction permitted by Section 7.02 or 7.05 and as provided in Sections 2.08(f) and 6.03, the Transferor agrees not to transfer, assign, exchange, convey, pledge, hypothecate or otherwise grant a security interest in the Transferor’s Interest, whether represented by the Base Certificate or any Supplemental Certificate or by any uncertificated interest in the Transferor’s Interest, and any such attempted transfer, assignment, exchange, conveyance, pledge, hypothecation or grant shall be void; provided , however , that nothing in this Section 2.07(c) shall prevent the recorded owner of an interest in the Transferor’s Interest, whether uncertificated or represented by a certificate, from granting to an Affiliate a participation interest or other beneficial interest in the rights to receive cash flows related to the Transferor’s Interest, if (i) such interest does not grant such Affiliate any rights hereunder or delegate to such Affiliate any obligations or duties hereunder, (ii) the transferor of such interest obtains the prior written consent of the Transferor and (iii) after giving effect to such transfer, the aggregate interest in the Transferor’s Interest owned directly by the Transferor represents an undivided ownership interest in two percent (2.0%) or more of the Trust Assets.

 

(d) Delivery of Collections . In the event that the Transferor receives Collections, the Transferor agrees to deliver to the Servicer all such Collections as soon as practicable after receipt thereof but in no event later than two (2) Business Days after the Date of Processing by the Transferor.

 

(e) Notice of Liens . The Transferor shall notify the Trustee and each Series Enhancer entitled to such notice pursuant to the relevant Supplement promptly after becoming aware of any Lien on any Receivable other than the conveyances hereunder or Liens permitted under Section 2.07(b).

 

(f) Enforcement of Receivables Purchase Agreements Covenants . The Transferor shall enforce the covenants and agreements of an Account Owner in the Receivables Purchase Agreements, including the covenants set forth in subsections 5.01(f) and (g).

 

(g) [Reserved].

 

(h) [Reserved].

 

(i) Interchange . On or prior to each Determination Date, the Transferor shall notify the Servicer of the amount of Interchange to be included as Collections of Finance Charge Receivables with respect to the preceding Monthly Period, which shall be equal to the amount of Interchange paid to the Transferor pursuant to the Receivables Purchase Agreements with respect to such Monthly Period.

 

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(j) [Reserved]

 

(k) Separate Corporate Existence . The Transferor shall:

 

(i) Maintain in full effect its existence, rights and franchises as a limited liability company under the laws of the state of its formation and will obtain and preserve its qualification to do business in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of this Agreement and the Receivables Purchase Agreements and each other instrument or agreement necessary or appropriate to proper administration hereof and to permit and effectuate the transactions contemplated hereby.

 

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

 

(iii) Ensure that, to the extent that it shares the same officers or other employees as any of its members or other Affiliates, the salaries of and the expenses related to providing benefits to such officers and other employees shall be fairly allocated among such entities, and each such entity shall bear its fair share of the salary and benefit costs associated with all such common officers and employees.

 

(iv) Ensure that, to the extent that it jointly contracts with any of its members or other Affiliates to do business with vendors or service providers or to share overhead expenses, the costs incurred in so doing shall be allocated fairly among such entities, and each such entity shall bear its fair share of such costs. To the extent that the Transferor contracts or does business with vendors or service providers where the goods and services provided are partially for the benefit of any other Person, the costs incurred in so doing shall be fairly allocated to or among such entities for whose benefit the goods and services are provided, and each such entity shall bear its fair share of such costs.

 

(v) Ensure that all material transactions between the Transferor and any of its Affiliates shall be only on an arm’s-length basis and shall not be on terms more favorable to either party than the terms that would be found in a similar transaction involving unrelated third parties.

 

(vi) Maintain a principal executive and administrative office through which its business is conducted and a telephone number separate from those of its members and other Affiliates. To the extent that the Transferor and any of its members or other Affiliates have offices in contiguous space, there shall be fair and appropriate allocation of overhead costs (including rent) among them, and each such entity shall bear its fair share of such expenses.

 

(vii) Conduct its affairs strictly in accordance with its certificate of formation and limited liability company agreement and observe all necessary, appropriate and customary company formalities, including, but not limited to, holding all regular and special members’ and directors’ meetings appropriate to authorize all action, keeping separate and accurate minutes of

 

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such meetings, passing all resolutions or consents necessary to authorize actions taken or to be taken, and maintaining accurate and separate books, records and accounts, including, but not limited to, intercompany transaction accounts. Regular members’ and directors’ meetings shall be held at least annually.

 

(viii) Ensure that its board of directors shall at all times include at least one Independent Director (for purposes hereof, “Independent Director” shall mean any member of the board of directors of the Transferor that is not and has not at any time been (x) an officer, agent, advisor, consultant, attorney, accountant, employee, member or shareholder of any Affiliate of the Transferor which is not a special purpose entity, (y) a director of any Affiliate of the Transferor other than an independent director of any Affiliate which is a special purpose entity or (z) a member of the immediate family of any of the foregoing).

 

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

 

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

 

(xi) Other than as provided in the Revolving Credit Agreement, ensure that no Affiliate of the Transferor shall advance funds or loan money to the Transferor, and no Affiliate of the Transferor will otherwise guaranty debts of the Transferor.

 

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

 

(xiii) Not enter into any guaranty, or otherwise become liable, with respect to or hold its assets or creditworthiness out as being available for the payment of any obligation of any Affiliate of the Transferor nor shall the Transferor make any loans to any Person.

 

(xiv) Ensure that any financial reports required of the Transferor shall comply with generally accepted accounting principles and shall be issued separately from, but may be consolidated with, any reports prepared for any of its Affiliates so long as such consolidated reports contain footnotes describing the effect of the transactions between the Transferor and such Affiliate and also state that the assets of the Transferor are not available to pay creditors of the Affiliate.

 

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

 

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Section 2.08. Addition of Accounts .

 

(a) Required Additions . (i) If, as of the close of business on the last Business Day of any Monthly Period, (x) the Transferor’s Participation Amount is less than the Required Transferor’s Interest or (y) the aggregate amount of Principal Receivables is less than the Required Principal Balance, each on such date, the Transferor shall on or prior to the close of business on the tenth Business Day following the last Business Day of such Monthly Period (the “ Required Designation Date ”), unless the Transferor’s Participation Amount exceeds the Required Transferor’s Interest as of the close of business on any day after the last Business Day of such Monthly Period and prior to the Required Designation Date, designate additional Eligible Accounts to be included as Accounts as of the Required Designation Date or any earlier date in a sufficient amount such that, after giving effect to such addition, (x) the Transferor’s Participation Amount as of the close of business on the Addition Date is at least equal to the Required Transferor’s Interest and (y) the aggregate amount of Principal Receivables equals or exceeds the Required Principal Balance, each on such date. The failure of any condition set forth in paragraph (c) or (d) below, as the case may be, shall not relieve the Transferor of its obligation pursuant to this paragraph; provided , however , that the failure of the Transferor to transfer Receivables to the Trustee as provided in this paragraph solely as a result of the unavailability of a sufficient amount of Eligible Receivables shall not constitute a breach of this Agreement; provided further that any such failure which has not been timely cured (as specified in the related Supplement) will nevertheless result in the occurrence of a Pay Out Event with respect to each Series for which, pursuant to the Supplement therefor, a failure by the Transferor to convey Receivables in Additional Accounts or Participation Interests to the Trustee by the day on which it is required to convey such Receivables or Participation Interests pursuant to Section 2.08(a) constitutes a “ Pay Out Event ” (as defined in such Supplement).

 

(ii) In lieu of, or in addition to, designating Additional Accounts pursuant to clause (i) above, the Transferor may, subject to the conditions specified in paragraph (d) below, convey to the Trustee Participation Interests. The addition of Participation Interests in the Trust pursuant to this paragraph (a) or paragraph (b) below shall be effected by an amendment hereto, dated the applicable Addition Date, pursuant to Section 13.01(a).

 

(b) Permitted Additions . The Transferor may from time to time, at its sole discretion, subject to the conditions specified in paragraph (c) or (d) below, as the case may be, designate additional Eligible Accounts to be included as Accounts or Participation Interests to be included as Trust Assets, in either case as of the applicable Addition Date.

 

(c) Automatic Additional Accounts . (i) The Transferor may from time to time, at its sole discretion, subject to and in compliance with the limitations specified in clause (ii) below and the applicable conditions specified in paragraph (d) below, designate Eligible Accounts to be included as Accounts as of the applicable Addition Date. For purposes of this paragraph, Eligible Accounts shall be deemed to include only revolving credit card accounts or other revolving credit accounts which are (x) originated by an Account Owner or any Affiliate of an Account Owner and (y) of a type included as Initial Accounts or which have previously been included in any Addition which has been effected in accordance with all of the conditions specified in paragraph (d) below.

 

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(ii) The Transferor shall not be permitted to designate Automatic Additional Accounts pursuant to clause (i) above with respect to any of the three (3) consecutive Monthly Periods commencing in January, April, July and October of each calendar year unless on or before the first Business Day of such three (3) consecutive Monthly Periods, the Transferor shall have requested each Rating Agency to notify, and each Rating Agency shall have notified, the Transferor, the Servicer and the Trustee of the limitations (other than the limitations described in this Agreement), if any, to the right of the Transferor to designate Automatic Additional Accounts during such three (3) consecutive Monthly Periods; provided , however , that on or before twenty (20) days following the last Business Day of such three (3) consecutive Monthly Periods, the Transferor shall have received written confirmation from each Rating Agency that each such designation of Automatic Additional Accounts will not have a Ratings Effect and shall have delivered copies of each such confirmation to the Servicer and the Trustee. Unless Standard & Poor’s otherwise consents, the number of Automatic Additional Accounts plus the number of Accounts added pursuant to Section 2.08(a), without the prior notice of Standard & Poor’s as described under Section 2.08(d)(v), shall not at any time exceed the Aggregate Addition Limit; provided , however , if the Aggregate Addition Limit is exceeded for purposes of Section 2.08(a), the Transferor shall have delivered written notice to Moody’s of any such Addition. Unless Moody’s otherwise consents, the number of Automatic Additional Accounts added pursuant to Section 2.08(c), without prior notice of Moody’s as described under Section 2.08(d)(v), shall not at any time exceed the Aggregate Addition Limit.

 

(iii) On or before March 31, June 30, September 30 and December 31 of each calendar year, commencing on December 31, 2002, the Transferor shall have delivered to the Trustee, each Rating Agency and any Series Enhancer entitled thereto pursuant to the relevant Supplement an Opinion of Counsel in accordance with Section 13.02(d), with respect to the Automatic Additional Accounts included as Accounts during the preceding three-month period confirming the creation and perfection of the security interest granted by the Transferor in the Receivables in such Automatic Additional Accounts; provided , however , if the long-term unsecured debt rating or certificate of deposit rating of the related Account Owner is withdrawn or reduced below BBB- by Standard & Poor’s (and only for so long as the applicable rating is below BBB- by Standard & Poor’s), the Transferor shall have delivered to the Trustee, each Rating Agency and any Series Enhancer entitled thereto pursuant to the relevant Supplement an Opinion of Counsel in accordance with Section 13.02(d) on or before the last Business Day of each calendar month, commencing on the last Business Day of the calendar month immediately following the month in which such withdrawal or reduction occurs, with respect to the Automatic Additional Accounts owned by such Account Owner included as Accounts during the preceding one-month period confirming the creation and perfection of the security interest granted by the Transferor in the Receivables in such Automatic Additional Accounts. Such Opinion of Counsel shall be provided by outside counsel. If such Opinion of Counsel with respect to any Automatic Additional Accounts is not so received, the ability of the Transferor to designate Automatic Additional Accounts will be suspended until such time as each Rating Agency otherwise consents in writing or such accounts are removed from the Trust. If the applicable Transferor is unable to deliver such Opinion of Counsel with respect to the Receivables in any Automatic Additional Account, such inability shall be deemed to be a breach of the representation in Section 2.04(a)(viii) with respect to the Receivables in such Automatic Additional Account for purposes of Section 2.05.

 

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(d) Conditions to Addition . On the Addition Date with respect to any Additional Accounts or Participation Interests, the Trustee shall acquire the Receivables in such Additional Accounts (and such Additional Accounts shall be Accounts for purposes of this Agreement) or shall acquire such Participation Interests, in each case as of the close of business on the applicable Addition Date, subject to the satisfaction of the following conditions ( provided , however , that the conditions set forth in clauses (i), (v), (vi) and (vii) shall not apply to the transfer to the Trustee of Receivables in Automatic Additional Accounts which are governed by Section 2.08(c)):

 

(i) on or before the fifth Business Day immediately preceding the Addition Date, the Transferor shall have given the Trustee, the Servicer, each Rating Agency and any Series Enhancer entitled thereto pursuant to the relevant Supplement written notice that the Additional Accounts or Participation Interests will be included and specifying the applicable Addition Date, the Additional Cut-Off Date, the approximate number of accounts or other assets expected to be added and the approximate aggregate balances expected to be outstanding in the accounts or other assets to be added;

 

(ii) in the case of Additional Accounts, the Transferor shall have delivered to the Trustee copies of UCC financing statements covering such Additional Accounts, if necessary to perfect the Trustee’s interest in the Receivables arising therein;

 

(iii) in the case of Additional Accounts, to the extent required by Section 4.03, the Transferor shall have deposited in the Collection Account, or caused to be deposited into the Collection Account, all Collections with respect to such Additional Accounts since the Additional Cut-Off Date (plus an amount representing unamortized annual membership fees for such Additional Accounts determined as of such Additional Cut-Off Date in accordance with Section 3.04(d));

 

(iv) as of each of the Additional Cut-Off Date and the Addition Date, no Insolvency Event with respect to the Transferor or the applicable Account Owner shall have occurred nor shall the transfer of the Receivables arising in the Additional Accounts or of the Participation Interests to the Trustee have been made in contemplation of the occurrence thereof;

 

(v) (A) except in the case of an Addition pursuant to Section 2.08(a), the Transferor shall have received written notice from each Rating Agency that such Addition will not have a Ratings Effect and shall have delivered copies of each such written notice to the Servicer and the Trustee, and (B) in the case of an Addition pursuant to Section 2.08(a) during any of the three (3) consecutive Monthly Periods commencing in January, April, July and October of each calendar year, if applicable, the Transferor shall have received, to the extent not previously received, not later than 20 days following the last Business Day of the relevant three (3) consecutive Monthly Periods, written notice from each Rating Agency that such Addition will not have a Ratings Effect and shall have delivered copies of each such written notice to the Servicer and the Trustee; provided , however , that in the case of an Addition pursuant to Section 2.08(a) which would exceed the Aggregate Addition Limit, the Transferor shall have provided each Rating Agency with at least 15 days prior written notice of such Addition and at or prior to the end of such 15-day period, each Rating Agency shall have notified the Transferor in writing

 

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that such Addition will not have a Ratings Effect, and the Transferor shall have delivered copies of such written notice to the Servicer and the Trustee;

 

(vi) the Transferor shall have delivered to the Trustee, each Rating Agency and any Series Enhancer entitled thereto pursuant to the relevant Supplement an Opinion of Counsel that for federal and Virginia income and franchise tax purposes (and, if there has been an assumption of the Servicer’s obligations under this Agreement for income and franchise tax purposes of the jurisdiction in which the assuming entity engages in its principal servicing activities, if other than Virginia), such Addition will not cause a taxable event to the holders of the Certificates;

 

(vii) the Transferor shall have delivered to the Trustee, each Rating Agency and any Series Enhancer entitled thereto pursuant to the relevant Supplement an Opinion of Counsel, dated the Addition Date, in accordance with Section 13.02(d);

 

(viii) the Transferor shall have delivered to the Trustee and any Series Enhancer entitled thereto pursuant to the relevant Supplement an Officer’s Certificate of the Transferor, dated the Addition Date, to the effect that (A) the Transferor reasonably believes that such Addition will not, based on the facts known to such officer at the time of such certification, then cause a Pay Out Event or any event that, after the giving of notice or the lapse of time would constitute a Pay Out Event to occur with respect to any Series and (B) in the case of Additional Accounts no selection procedure was utilized by the Transferor that would result in a selection of Additional Accounts (from the Eligible Accounts available to the Transferor) that would be materially adverse to the interests of the Certificateholders of any Series as of the date of the Addition; and

 

(ix) the Transferor shall have delivered to the Trustee a written assignment executed by the Transferor and the Trustee, substantially in the form of Exhibit B (an “ Assignment ”), and an Account Schedule containing a true and complete list of the related Additional Accounts or Participation Interests.

 

(e) Representations and Warranties . The Transferor hereby represents and warrants to the Trustee as of the related Addition Date as to the matters relating to it set forth in paragraph (d)(iv) and (viii) above and that, in the case of Additional Accounts, the related Account Schedule is, as of the applicable Additional Cut-Off Date, true and complete in all material respects.

 

(f) Additional Transferors . The Transferor may designate Affiliates of the Transferor to be included as a Transferor (“ Additional Transferors ”) under this Agreement by an amendment hereto pursuant to Section 13.01(a). Any Additional Transferor may cease to transfer newly arising Receivables to the Trustee so long as each Rating Agency provides written notice that such cessation will not have a Ratings Effect. If any Transferor elects to have all or a portion of its interest in the Transferor’s Interest evidenced by the Base Certificate as provided in Section 6.01 hereof, then in connection with such designation, the Transferor shall surrender the Base Certificate to the Trustee in exchange for a newly issued Base Certificate modified to reflect such Additional Transferor’s Interest. If the Transferor elects to have its interest in the Transferor’s Interest be uncertificated as provided in Section 6.01, the Transferor shall instruct

 

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the Trustee in writing to register the Additional Transferor as the owner of the appropriate interest in the Transferor’s Interest on the books and records of the Trust. Prior to any such designation of an Additional Transferor and, if applicable, exchange of certificates, the conditions set forth in Section 6.03(c) shall have been satisfied.

 

Section 2.09. Removal of Accounts . (a) On any day of any Monthly Period the Transferor shall have the right to require the reassignment to it or its designee of all the Trustee’s right, title and interest in, to and under the Receivables then existing and thereafter created in Accounts designated by the Transferor (the “ Removed Accounts ”), the Funds Collateral securing such Receivables, all Recoveries and Insurance Proceeds allocable to all of the foregoing, all Collections with respect to all of the foregoing, all monies due or to become due and all amounts received or receivable with respect to all of the foregoing and all proceeds thereof, upon satisfaction of the following conditions:

 

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

 

(ii) on the Removal Date, the Transferor shall have amended Schedule 1 by delivering to the Trustee an Account Schedule containing a true and complete list of the Removed Accounts specifying for each such Account, as of the Removal Notice Date, its account number, the aggregate amount outstanding in such Account, the aggregate amount of Principal Receivables outstanding in such Account and, for any Funds Collateral relating to such Account, the account number for, and the amount of funds on deposit in, the applicable Deposit Account;

 

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

 

(iv) the Transferor shall have received written notice from each Rating Agency that such removal will not have a Ratings Effect and shall have delivered copies of each such written notice to the Servicer and the Trustee;

 

(v) the Transferor shall have delivered to the Trustee and any Series Enhancer entitled thereto pursuant to the relevant Supplement an Officer’s Certificate of the Transferor, dated the Removal Date, to the effect that the Transferor reasonably believes that such removal will not based on the facts known to such officer at the time of such certification, then cause a Pay Out Event or any event that, after the giving of notice or the lapse of time, would constitute a Pay Out Event to occur with respect to any Series; and

 

(vi) the aggregate amount of Principal Receivables to be removed shall not equal or exceed 5% of the aggregate amount of Principal Receivables in the Trust.

 

(b) Upon satisfaction of the above conditions, the Transferor and the Trustee shall execute and deliver a written reassignment in substantially the form of Exhibit C (the

 

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“ Reassignment ”), and the Trustee shall, without further action, sell, transfer, assign, set over and otherwise convey to the Transferor or its designee, on the Removal Date, without recourse, representation or warranty, all the right, title and interest of the Trustee in and to the Receivables existing at the close of business on the Removal Notice Date and thereafter created in the Removed Accounts, the Funds Collateral securing such Receivables, all Recoveries and Insurance Proceeds allocable to all of the foregoing, all Collections with respect to all of the foregoing, all monies due or to become due and all amounts received or receivable with respect to all of the foregoing and all proceeds thereof. In addition, the Trustee shall execute such other documents and instruments of transfer or assignment and take such other actions as shall reasonably be requested by the Transferor to effect the conveyance of Receivables pursuant to this Section 2.09.

 

In addition to the foregoing, on the date when any Receivable in an Account becomes a Defaulted Receivable (including any related Finance Charge Receivables), the Trustee shall automatically and without further action or consideration transfer, set over and otherwise convey to the Transferor, without recourse, representation or warranty, all right, title and interest of the Trustee in and to the Defaulted Receivables (including any related Finance Charge Receivables) in such Account, the Funds Collateral securing such Receivables, all Insurance Proceeds allocable to all of the foregoing, all Collections with respect to all of the foregoing, all monies due or to become due and all amounts received or receivable with respect to all of the foregoing and all proceeds thereof; provided that Recoveries of such Defaulted Receivables shall be applied as provided herein. The Trustee 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 Transferor to vest in the Transferor or its designee all right, title and interest that the Trustee had in such Defaulted Receivables (including any related Finance Charge Receivables).

 

In addition to the foregoing, the Transferor may designate Removed Accounts as provided in and subject to the terms and conditions contained in this Section 2.09 if the Removed Accounts are designated in response to a third-party action or decision not to act and not the unilateral action of the Transferor.

 

(c) In addition to the foregoing requirements, except for Removed Accounts described in the second and third paragraphs of Section 2.09(b), there shall be no more than one Removal Date in any Monthly Period; for each Removal Date, the Accounts to be designated as Removed Accounts shall be selected at random by the Transferor and the Removed Accounts shall not, as of the Removal Notice Date, contain Principal Receivables which in the aggregate exceed an amount equal to the positive difference, if any, between the Transferor’s Interest and the Required Transferor’s Interest.

 

Section 2.10. Account Allocations . In the event that any Transferor is unable for any reason to transfer Receivables to the Trustee in accordance with the provisions of this Agreement, including by reason of the application of the provisions of Section 9.02 or any binding order of any Governmental Authority (a “ Transfer Restriction Event ”), then, in any such event, (a) the Transferor agrees (except as prohibited by any such order) to allocate and pay to the Trustee, after the date of such inability, all Collections, including Collections of Receivables transferred to the Trustee prior to the occurrence of such event, and all amounts which would

 

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have constituted Collections but for the Transferor’s inability to transfer Receivables (up to an aggregate amount equal to the amount of Receivables in the Trust on such date), (b) the Transferor agrees that such amounts will be applied as Collections in accordance with Article IV and the terms of each Supplement and (c) for so long as the allocation and application of all Collections and all amounts that would have constituted Collections are made in accordance with clauses (a) and (b) above, Principal Receivables and all amounts which would have constituted Principal Receivables but for the Transferor’s inability to transfer Receivables to the Trustee and Principal Receivables and all amounts which would have constituted Principal Receivables as aforesaid that are written off as uncollectible in accordance with this Agreement shall continue to be allocated in accordance with Article IV and the terms of each Supplement. For the purpose of the immediately preceding sentence, the Transferor shall treat the first received Collections with respect to the Accounts as allocable to the Trustee until the Trustee shall have been allocated and paid Collections in an amount equal to the aggregate amount of Principal Receivables in such Accounts as of the date of the occurrence of such event. If the Transferor is unable pursuant to any Requirements of Law to allocate Collections as described above, the Transferor agrees that, after the occurrence of such event, payments on each Account with respect to the principal balance of such Account shall be allocated first to the oldest principal balance of such Account and shall have such payments applied as Collections in accordance with Article IV and the terms of each Supplement. The parties hereto agree that Finance Charge Receivables, whenever created, accrued in respect of Principal Receivables which have been conveyed to the Trustee shall continue to be a part of the Trust notwithstanding any cessation of the transfer of additional Principal Receivables to the Trustee and Collections with respect thereto shall continue to be allocated and paid in accordance with Article IV and the terms of each Supplement.

 

Section 2.11. Discount Option .

 

(a) The Transferor shall have the option to designate at any time a percentage, which may be a fixed percentage or a variable percentage based on a formula (the “ Discount Percentage ”), of the amount of Receivables arising in the Accounts on or after the date such designation becomes effective that would otherwise constitute Principal Receivables to be treated as Finance Charge Receivables (“ Discount Option Receivables ”). The Transferor shall also have the option of reducing or withdrawing the Discount Percentage, at any time and from time to time, on and after the date such designation becomes effective. The Transferor shall provide to the Servicer, the Trustee, any Series Enhancer and each Rating Agency thirty (30) days prior written notice of such designation (or reduction or withdrawal), and such designation (or reduction or withdrawal) shall become effective on the date designated therein only if (i) the Transferor shall have delivered to the Trustee and each Series Enhancer entitled thereto pursuant to the relevant Supplement an Officer’s Certificate of the Transferor stating that the Transferor reasonably believes that such designation (or reduction or withdrawal) will not, based on the facts known to such officer at the time of such certification, then cause a Pay Out Event or any event that, after the giving of notice or the lapse of time, would constitute a Pay Out Event to occur with respect to any Series, (ii) the Transferor shall have received written notice from each Rating Agency that such designation (or reduction or withdrawal) will not have a Ratings Effect and shall have delivered copies of each such written notice to the Servicer and the Trustee and (iii) in the case of a reduction or withdrawal, the Transferor shall have delivered to the Trustee an Officer’s Certificate of the Transferor to the effect that, in the reasonable belief of the Transferor,

 

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such reduction or withdrawal shall not have adverse regulatory or other accounting implications for the Transferor.

 

(b) On each Date of Processing after the date on which the Transferor’s exercise of its discount option takes effect, the Transferor shall, to the extent required by Section 4.03, (i) deposit into the Collection Account in immediately available funds an amount equal to the product of (a) the aggregate Floating Allocation Percentages with respect to all Series and (b) the aggregate amount of the Discount Option Receivable Collections processed on such day and (ii) pay to the Holders of the Transferor Certificates, and if any owner of an interest in the Transferor’s Interest elects to have such interest be uncertificated as provided in Section 6.01 hereof, then to the recorded owner of such uncertificated interest in the Transferor’s Interest, the balance of such Discount Option Receivables Collections. The deposit made by the Transferor into the Collection Account under the preceding sentence shall be considered a payment of such Discount Option Receivables and shall be applied as Finance Charge Receivables in accordance with Article IV and the terms of each Supplement.

 

ARTICLE III

 

Administration and Servicing of Receivables

 

Section 3.01. Acceptance of Appointment and Other Matters Relating to the Servicer .

 

(a) Capital One agrees to act as the Servicer under this Agreement and the Certificateholders by their acceptance of Certificates consent to Capital One acting as Servicer.

 

(b) The Servicer shall service and administer the Receivables, shall collect payments due under the Receivables and shall charge off as uncollectible Receivables, all in accordance with its customary and usual servicing procedures for servicing revolving credit card and other revolving credit receivables comparable to the Receivables and in accordance with the Lending Guidelines. The Servicer shall have full power and authority, acting alone or through any Person properly designated by it hereunder, to do any and all things in connection with such servicing and administration which it may deem necessary or desirable. Without limiting the generality of the foregoing, subject to Section 10.01, the Servicer is hereby authorized and empowered (i) to make withdrawals and payments or to instruct the Trustee to make withdrawals and payments from the Collection Account and any Series Account, as set forth in this Agreement or any Supplement, and (ii) to take any action required or permitted under any Series Enhancement, as set forth in this Agreement or any Supplement. Without limiting the generality of the foregoing and subject to Section 10.01, the Servicer is hereby authorized and empowered, at the expense of the Transferor, to make any filings, reports, notices, applications and registrations with, and to seek any consents or authorizations from, the Securities and Exchange Commission (the “ Commission ”) and any state securities authority on behalf of the Trust as may be necessary or advisable to comply with any Federal or state securities laws or reporting requirements. The Trustee shall furnish, within a reasonable period of time, the Servicer with any powers of attorney or other documents necessary or appropriate to enable the Servicer to carry out its servicing and administrative duties hereunder.

 

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(c) The Servicer shall not be obligated to use separate servicing procedures, offices, employees or accounts for servicing the Receivables from the procedures, offices, employees and accounts used by the Servicer in connection with servicing other credit card and revolving credit receivables.

 

(d) The Servicer shall comply with and perform its servicing obligations with respect to the Accounts and Receivables in accordance with the Lending Agreements relating to the Accounts and the Lending Guidelines and all applicable rules and regulations of VISA, MasterCard and any other similar entity or organization relating to any other type of revolving credit card accounts included as Accounts, except insofar as any failure to so comply or perform would not materially and adversely affect the Trust or the Investor Certificateholders.

 

(e) The Servicer shall pay out of its own funds, without reimbursement, all expenses incurred in connection with the servicing activities hereunder including expenses related to enforcement of the Receivables, fees and disbursements of the Trustee, any Paying Agent and any Transfer Agent and Registrar (including the reasonable fees and expenses of its counsel) in accordance with Section 11.05 and fees and disbursements of independent accountants for the Servicer.

 

(f) The Transferor will use its best efforts to obtain and maintain the listing of the Investor Certificates of any Series or Class on any specified securities exchange. The Transferor shall give notice to the Trustee on the date on which such Investor Certificates are approved for such listing and within three (3) Business Days following receipt of notice by the Transferor of any actual, proposed or contemplated delisting of such Investor Certificates by any such securities exchange. The Trustee or the Transferor, each in its sole discretion, may terminate any listing on any such securities exchange at any time subject to the notice requirements set forth in the preceding sentence.

 

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, 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 outstanding principal amount of each Series) and (b) the amount of Principal Receivables on the last day of the prior Monthly Period. The share of the Servicing Fee allocable to (i) the Certificateholders’ Interest of a particular Series with respect to any Monthly Period (the “ Monthly Servicing Fee ”) and (ii) the Enhancement Invested Amount, if any, of a particular Series with respect to any Monthly Period will each be determined in accordance with the relevant Supplement. The portion of the Servicing Fee with respect to any Monthly Period not so allocated to the Certificateholders’ Interest or the Enhancement Invested Amount, if any, of a particular Series shall be paid by the Transferor on the related Distribution Date and in no event shall the Trust, the Trustee, the Investor Certificateholders of any Series or any Series Enhancer be liable for the share of the Servicing Fee with respect to any Monthly Period allocable to the Transferor.

 

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Section 3.03. Representations, Warranties and Covenants of the Servicer . Capital One, as Servicer, hereby makes, and any Successor Servicer by its appointment hereunder shall make, on each Closing Date on which it is the Servicer (and on the date of any such appointment), the following representations, warranties and covenants:

 

(a) Organization and Good Standing . The Servicer is a state banking corporation validly existing under the laws of the Commonwealth of Virginia or another state or a state banking association, a national banking association or a corporation validly existing under the laws of its jurisdiction of incorporation and has, in all material respects, full power and authority to execute, deliver and perform its obligations under this Agreement and each Supplement and to own its properties and conduct its servicing business as such properties are presently owned and as such business is presently conducted.

 

(b) Due Qualification . The Servicer is duly qualified to do business and is in good standing as a foreign corporation (or is exempt from such requirements), and has obtained all necessary licenses and approvals, in each jurisdiction in which the servicing of the Receivables as required by the Agreement requires such qualification except where failure to so qualify or to obtain such licenses and approvals would not have a material adverse effect on its ability to perform its obligations hereunder or under any Supplement.

 

(c) Due Authorization . The execution, delivery, and performance by the Servicer of this Agreement, each Supplement and the other agreements and instruments executed or to be executed by the Servicer as contemplated hereby, have been duly authorized by the Servicer by all necessary corporate action on the part of the Servicer and this Agreement and each Supplement will remain, from the time of its execution, an official record of the Servicer.

 

(d) Binding Obligation . This Agreement and each Supplement constitutes a legal, valid and binding obligation of the Servicer, enforceable against the Servicer in accordance with its terms, except as enforceability may be limited by applicable Debtor Relief Laws and general principles of equity.

 

(e) No Conflict and No Violation . The execution and delivery of this Agreement and each Supplement by the Servicer, and the performance by the Servicer of the transactions contemplated by this Agreement and each Supplement and the fulfillment by the Servicer of the terms hereof and thereof applicable to the Servicer, will not conflict with or violate or result in any breach of, or constitute (with or without notice or lapse of time or both) a 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 any of its properties are bound. The execution and delivery of this Agreement by the Servicer, the performance by the Servicer of the transactions contemplated by this Agreement and the fulfillment by the Servicer of the terms hereof applicable to the Servicer will not conflict with or violate any Requirements of Law applicable to the Servicer.

 

(f) No Proceedings . There are no proceedings or investigations pending or, to the best knowledge of the Servicer, threatened against the Servicer before any court, regulatory body, administrative agency or other Governmental Authority seeking to prevent the issuance of the Certificates or the consummation of any of the transactions contemplated by this Agreement

 

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or any Supplement, or seeking any determination or ruling that would materially and adversely affect the performance by the Servicer of its obligations under this Agreement or any Supplement.

 

(g) Compliance with Requirements of Law . The Servicer shall duly satisfy all obligations on its part to be fulfilled under or in connection with the Receivables and the related Accounts, will maintain in effect all qualifications required under Requirements of Law in order to properly service the Receivables and the related Accounts and will comply in all material respects with all other Requirements of Law in connection with servicing the Receivables and the related Accounts, the failure to comply with which would have a material adverse effect on the interests of the Certificateholders.

 

(h) No Rescission or Cancellation . The Servicer shall not authorize any rescission or cancellation of a Receivable except as ordered by a court of competent jurisdiction or other Governmental Authority or in accordance with the Lending Guidelines.

 

(i) 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 Trustee in any Receivable, nor shall it, except in the ordinary course of its business and in accordance with the Lending Guidelines, reschedule, revise or defer Collections due on the Receivables.

 

(j) Receivables Not To Be Evidenced by Instruments or Chattel Paper . The Servicer will take no action to cause any Receivable to be evidenced by any instrument or chattel paper (as defined in the UCC) and, if any Receivable is so evidenced as a result of the Servicer’s action, it shall be deemed to be an Ineligible Receivable and shall be assigned to the Servicer as provided in this Section 3.03; provided , however , that Receivables evidenced by instruments or chattel paper taken from Obligors in the ordinary course of the Servicer’s collection efforts shall not be deemed Ineligible Receivables solely as a result thereof.

 

(k) All Consents . All approvals, authorizations, consents, orders or other actions of any Person or of any Governmental Authority required to be obtained by the Servicer in connection with the execution and delivery by the Servicer of this Agreement and each Supplement, the performance by the Servicer of the transactions contemplated by this Agreement and each Supplement and the fulfillment by the Servicer of the terms hereof and thereof, have been obtained.

 

For purposes of the representations and warranties set forth in this Section 3.03, each reference to a Supplement shall be deemed to refer only to those Supplements in effect as of the relevant Closing Date or the date of appointment of a Successor Servicer, as applicable.

 

In the event any of the representations, warranties or covenants of the Servicer contained in paragraph (g), (h), (i) or (j) with respect to any Receivable or the related Account is breached, and such breach has a material adverse effect on the Trustee’s interest in the Receivables (which determination shall be made without regard to the availability of funds under any Series Enhancement) and remains uncured for sixty (60) days (or such longer period, not in excess of 150 days, as may be agreed to by the Trustee) from the earlier to occur of the discovery of such event by the Servicer, or receipt by the Servicer of written notice of such event given by

 

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the Transferor or the Trustee, all Receivables in the Account or Accounts to which such event relates shall be assigned to the Servicer on the terms and conditions set forth below; provided , however , that such Receivables will not be assigned to the Servicer if, on any day prior to the end of such 60-day or longer period, (i) the relevant representation and warranty shall be true and correct, or the relevant covenant shall have been complied with, in all material respects and (ii) the Servicer shall have delivered to the Transferor and the Trustee a certificate of an authorized officer of the Servicer describing the nature of such breach and the manner in which such breach was cured.

 

The Servicer shall effect such assignment by making a deposit into the Collection Account in immediately available funds on the Transfer Date following the Monthly Period in which such assignment obligation arises in an amount equal to the amount of such Receivables, which deposit shall be considered a Transfer Deposit Amount and shall be applied in accordance with Article IV and the terms of each Supplement.

 

Upon each such assignment to the Servicer, the Trustee shall automatically and without further action sell, transfer, assign, set over and otherwise convey to the Servicer, without recourse, representation or warranty, all right, title and interest of the Trustee in and to such Receivables, the Funds Collateral securing such Receivables, all Recoveries and Insurance Proceeds allocable to all of the foregoing, all Collections with respect to all of the foregoing, all monies due or to become due and all amounts received with respect to all of the foregoing and all proceeds thereof. The Trustee shall execute such documents and instruments of transfer or assignment and take such other actions as shall be reasonably requested by the Servicer to effect the transfer of any such Receivables pursuant to this Section 3.03. The obligation of the Servicer to accept assignment and transfer of any such Receivables, and to make the deposits, if any, required to be made to the Collection Account as provided in the preceding paragraph, shall constitute the sole remedy respecting the event giving rise to such obligation available to Investor Certificateholders (or the Trustee) or any Series Enhancer, except as provided in Section 8.04.

 

Section 3.04. Reports and Records for the Trustee .

 

(a) Daily Records . On each Business Day, the Servicer shall make or cause to be made available at the office of the Servicer during normal business hours for inspection by the Transferor and the 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 Servicer on the second preceding Business Day in respect of the Accounts and (ii) the amount of Receivables as of the close of business on the second preceding Business Day 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 Transferor and the Trustee at the office of the Servicer on any Business Day during normal business hours any computer programs necessary to make such identification.

 

(b) Monthly Servicer’s Certificate . Not later than the third Business Day preceding each Distribution Date, the Servicer shall, with respect to each outstanding Series, deliver to the Trustee, the Transferor, the Paying Agent, each Rating Agency and each Series

 

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Enhancer entitled thereto pursuant to the relevant Supplement a certificate of a Servicing Officer in substantially the form set forth in the related Supplement.

 

(c) Related Accounts . The Servicer covenants and agrees hereby to deliver to the Trustee, within a reasonable time period after it receives notice that a Related Account has been created, but in any event not later than 15 days after the end of the month within which it receives notice that such Related Account has been created, a notice specifying the new account number for such Related Account.

 

(d) Annual Membership Fees . On or prior to each Determination Date, the Servicer shall deliver to the Trustee and the Transferor a certificate of a Servicing Officer setting forth (or shall set forth in the Monthly Servicer’s Certificate) (a) the amount of annual membership fees to be included as Collections of Finance Charge Receivables with respect to the preceding Monthly Period, which shall be equal to the amount of annual membership fees transferred to the Trustee during the preceding 12 Monthly Periods (or during the equivalent monthly periods occurring prior to the first Monthly Period) divided by 12 and (b) the portion of such annual membership fees (“ unamortized annual membership fees ”) which have not been treated as Collections of Finance Charge Receivables with respect to the preceding Monthly Period.

 

(e) Addition Discount Receivables . On or prior to each Determination Date, the Servicer shall deliver to the Trustee and the Transferor a certificate of a Servicing Officer setting forth (or shall set forth in the Monthly Servicer’s Certificate) (a) the amount of Addition Discount Receivables to be included as Collection of Finance Charge Receivables with respect to the preceding Monthly Period, as calculated in accordance with the formula set forth in the applicable Assignment or accretion designation letter delivered by the Transferor to the Trustee and the Servicer and (b) the portion of such Addition Discount Receivables which have not been treated as Collections of Finance Charge Receivables with respect to the preceding Monthly Period.

 

(f) Certain Recoveries . On or prior to each Determination Date, the Servicer shall deliver to the Trustee and the Transferor a certificate of a Servicing Officer setting forth (or shall set forth in the Monthly Servicer’s Certificate) (a) the amount of Recoveries equal to the net proceeds of any sale or initial securitization (excluding any residual payments from such securitization) of Defaulted Receivables (including the related Finance Charge Receivables) to be included as Collections of Finance Charge Receivables with respect to the preceding Monthly Period, which shall be equal to the amount of any such Recoveries received during the preceding three (3) Monthly Periods divided by three (3) and (b) the portion of any such Recoveries (“ unamortized Recoveries ”) which have not been treated as Collections of Finance Charge Receivables with respect to the preceding Monthly Period.

 

Section 3.05. Annual Certificate of Servicer . The Servicer shall deliver to the Trustee, the Transferor, each Rating Agency and each Series Enhancer entitled thereto pursuant to the relevant Supplement, any Credit Enhancement Provider and the Rating Agency, on or before the 90th day following the end of each fiscal year, beginning with the fiscal year ending December 31, 2006, the statement of compliance required under Item 1123 of Regulation AB with respect to such fiscal year, which statement will be in the form of an Officer’s Certificate of

 

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the Servicer (with appropriate insertions) to the effect that (a) a review of the activities of the Servicer during such fiscal year and of its performance under this Agreement was made under the supervision of the officer signing such certificate and (b) to the best of such officer’s knowledge, based on such review, the Servicer has fulfilled all its obligations under this Agreement throughout such fiscal year or, if there has been a failure to fulfill any such obligation in any material respect, specifying each such failure known to such officer and the nature and status thereof; provided , however , that on or before May 31, 2006 the Servicer shall cause to be delivered the Officer’s Certificate of the Servicer (with appropriate insertions) as was required to be delivered pursuant to, and in accordance with, Section 3.05 of the Prior PSA.

 

Section 3.06. Annual Servicing Report of Independent Public Accountants; Copies of Reports Available . On or before the 90th day following the end of each fiscal year, beginning with the fiscal year ended December 31, 2006, the Servicer shall cause a firm of nationally recognized independent public accountants (who may also render other services to the Servicer or the Transferor) to furnish to the Trustee, the Servicer, the Transferor and each Rating Agency each attestation report on assessments of compliance with the Servicing Criteria with respect to the Servicer or any affiliate thereof during the related fiscal year delivered by such accountants pursuant to Rule 13(a)-18 or Rule 15(d)-18 of the Exchange Act and Item 1122 of Regulation AB; provided , however , that on or before May 31, 2006 the Servicer shall cause to be furnished the reports as was required to be delivered pursuant to, and in accordance with, Section 3.06 of the Prior PSA. A copy of such report or reports shall be delivered by the Servicer to each Series Enhancer entitled thereto pursuant to the relevant Supplement.

 

Section 3.07. Tax Treatment . The Transferor has entered into this Agreement, and the Certificates will be issued, with the intention that, for Federal, state and local income and franchise tax purposes only, the Investor Certificates of each Series which are characterized as indebtedness at the time of their issuance will qualify as inde