AMENDMENT NO. 2, dated as of September 16, 1996 (this
"Agreement"), by and among METRIS RECEIVABLES, INC. (formerly Fingerhut
Financial Services Receivables, Inc.), a corporation organized and
existing under the laws of the State of Delaware, as Transferor, DIRECT
MERCHANTS CREDIT CARD BANK, NATIONAL ASSOCIATION, a national banking
organization organized and existing under the laws of the United States
of America, as Servicer, and THE BANK OF NEW YORK (DELAWARE), a Delaware
banking corporation organized and existing under the laws of the State of
Delaware, as Trustee, to the POOLING AND SERVICING AGREEMENT, dated as
of May 26, 1995 (as heretofore amended, the "Pooling and Servicing
Agreement"), by and among the Transferor, the Servicer and the Trustee.
W I T N E S S E T H:
WHEREAS, the Transferor, the Servicer and the Trustee
entered into Amendment No. 1 to the Pooling and Servicing Agreement dated
as of June 10, 1996;
WHEREAS, the Transferor, the Servicer and the Trustee
desire to amend the Pooling and Servicing Agreement pursuant to Section
13.1(a) therein in order to provide for the terms contained herein;
WHEREAS, in connection with a business realignment of
FCI's subsidiaries, FCI has assigned to Metris Companies Inc., a Delaware
corporation ("Metris"), all of its rights arising under the Bank
Receivables Purchase Agreement and the Purchase Agreement and Metris has
assumed all of FCI's obligations thereunder pursuant to that certain
Assignment and Assumption Agreement, dated as of September 16, 1996, by
and among FCI, Metris and DMCCB, and that certain Assignment and
Assumption Agreement, dated as of September 16, 1996, by and among FCI,
Metris and the Transferor, respectively;
NOW, THEREFORE, in consideration of the mutual agreements
herein contained, each party agrees as follows for the benefit of the
other parties and the Certificate-holders:
Section 1. Definitions. Except as provided herein, all
capitalized terms used in this Agreement but not defined herein shall
have their respective meanings in the Pooling and Servicing Agreement.
Section 2. Name of Trust. The name of the Trust shall be
"Metris Master Trust."
Section 3. Amendments to Section 1.1. (a) Section 1.1 of
the Pooling and Servicing Agreement shall be amended by adding the
following defined terms in appropriate alphabetical order:
"Automatic Addition Suspension Date" shall mean the Business Day
specified in Section 2.6(a) hereof.
"Automatic Addition Termination Date" shall mean the Business Day
specified by the Transferor pursuant to Section 2.6(a) hereof as
of which new open end credit card accounts designated by the
Transferor shall cease to become Additional Accounts.
"Bank Receivables Purchase Agreement Assignment" shall mean the
Assignment and Assumption Agreement dated as of September 16,
1996 by and among FCI as assignor, Metris as assignee, and DMCCB.
"Metris" shall mean Metris Companies Inc., a corporation
organized and existing under the laws of the State of Delaware.
"Metris Receivables" shall mean Metris Receivables, Inc., a
corporation organized and existing under the laws of the State of
Delaware.
"Purchase Agreement Assignment" shall mean the Assignment and
Assumption Agreement dated as of September 16, 1996 by and among
FCI as assignor, Metris as assignee, and the Transferor.
"Restart Date" shall mean the date specified in the notice
delivered by the Transferor to the Trustee pursuant to Section
2.6(a) hereof.
(b) Section 1.1 of the Pooling and Servicing Agreement
shall be amended by deleting the definition of "Transferor" in its
entirety and replacing it with the following:
"Transferor" shall mean Metris Receivables, Inc., a corporation
organized and existing under the laws of the State of Delaware,
and any successor thereto.
(c) Section 1.1 of the Pooling and Servicing Agreement
shall be amended by deleting the definition of "Bank Receivables Purchase
Agreement" in its entirety and replacing it with the following:
"Bank Receivables Purchase Agreement" shall mean the amended and
restated receivables purchase agreement dated as of May 26, 1995
between FCI, as buyer of receivables, and DMCCB, as seller of
receivables, as amended from time to time and as assigned by FCI
to Metris pursuant to the Bank Receivables Purchase Agreement
Assignment, and any other receivables purchase agreement between
Metris, as purchaser of receivables, and a Credit Card
Originator, as seller of receivables.
(d) Section 1.1 of the Pooling and Servicing Agreement
shall be amended by deleting the definition of "Purchase Agreement" in
its entirety and replacing it with the following:
"Purchase Agreement" shall mean the purchase agreement dated as
of May 26, 1995 between the Transferor, as buyer of
receivables, and FCI, as seller of receivables, as amended from
time to time and as assigned by FCI to Metris pursuant to the
Purchase Agreement Assignment.
Section 4. References to FCI. (a) Except for the
definition of "FCI" in Section 1.1 of the Pooling and Servicing Agreement
and as otherwise provided by Section 3 and by Section 4(b), (c), and (d)
hereof, the Pooling and Servicing Agreement shall be amended by replacing
all references to "FCI" with "Metris."
(b) Section 3.9 of the Pooling and Servicing Agreement
shall be amended by deleting the reference to "FCI" therein and replacing
it with "Metris and, for so long as FCI owns any common stock of Metris,
FCI."
(c) Section 9.2(a) of the Pooling and Servicing
Agreement shall be amended by deleting (i) the phrase "or FCI" therein,
and (ii) the following at the end of the third sentence of Section
9.2(a)(ii):
"; provided, however, that in the event the Insolvency Event at
issue shall have occurred with respect to FCI, the Trust shall
not be reconstituted unless the Trustee shall have first received
an Opinion of Counsel to the effect that the Trust, as
reconstituted, shall not be subject to Federal or any Applicable
Tax State income tax on its income."
(d) Schedule 1 to the Pooling and Servicing Agreement
entitled "Tax Returns and Payments" shall be amended by deleting all
references to "FCI" therein and replacing them with "FCI, for so long as
FCI owns 80% or more of the common stock of Metris," and such schedule
may be replaced in its entirety at such time as FCI owns less than 80% of
the common stock of Metris. Schedule 1 to the Pooling and Servicing
Agreement shall be further amended to (i) add to the list of states in
the second sentence thereof the states of Oklahoma, South Dakota and
Utah, (ii) add to the list of states in the third sentence thereof the
states of Indiana, New Jersey, Pennsylvania and Virginia and (iii) add
the following language at the end:
In addition, because one of the subsidiaries of Metris,
Direct Merchants Credit Card Bank, National Association, is a national
banking entity (established in 1995) which derives the majority of its
income from Mastercard credit cards, it may be subject to special
financial institution rules in certain states. Such rules attempt to
impute state income tax nexus to a credit card company if it obtains
finance revenue and/or has credit card receivables generated from
customers in that state. Of the states that have adopted such financial
institution rules, Minnesota is the only state where Metris and its
subsidiaries are currently filing income or franchise tax returns. States
which currently have rules pursuant to which they may attempt to impose
income tax nexus based upon such credit card activity include:
Arkansas Minnesota
California New Mexico
Hawaii Tennessee
Indiana
Massachusetts
Direct Merchants Credit Card Bank, National Association has not filed in
states other than Minnesota because it believes the above referenced
financial institution rules to be unconstitutional.
Section 5. Amendment to Section 2.6(a). Section 2.6(a) of
the Pooling and Servicing Agreement shall be amended to read as follows:
"(a) Unless otherwise specified in any Supplement,
all accounts which meet the definition of Additional Accounts
shall be included as Accounts from and after the date upon which
such Additional Accounts are created and all Receivables in such
Additional Accounts, whether such Receivables are then existing
or thereafter created, shall be transferred automatically to
the Trust upon purchase by the Transferor. For all purposes of
this Agreement, all receivables of such Additional Accounts shall
be treated as Receivables upon their creation and shall be
subject to the eligibility criteria specified in the definitions
of "Eligible Receivable" and "Eligible Account."
Notwithstanding the foregoing, the Transferor may elect at any
time, or may be required pursuant to Section 2.6(f), to suspend
the automatic inclusion in Accounts of new accounts which would
otherwise be Additional Accounts as of any Business Day (the
"Automatic Addition Suspension Date"), or terminate any such
inclusion as of any Business Day (an "Automatic Addition
Termination Date") until a date (the "Restart Date") to be
identified in writing by the Transferor to the Trustee, the
Servicer and each Rating Agency at least 10 days prior to such
Restart Date. Promptly after an Automatic Addition Suspension
Date or any Automatic Addition Termination Date, or a Restart
Date, the Transferor and the Trustee agree to execute and the
Transferor agrees to record and file at its own expense an
amendment to the financing statements referred to in Section 2.1
hereof to specify the accounts then subject to this Agreement
(which specification may incorporate a list of accounts by
reference) and may, except in connection with any such filing
made after a Restart Date, release any security interest in any
accounts created after the Automatic Addition Suspension Date or
any Automatic Addition Termination Date."
Section 6. Conditions to Effectiveness. This Agreement
shall become effective upon the satisfaction of the following conditions:
(i) the Servicer shall have provided an Officer's Certificate to
the Trustee to the effect that this Agreement will not materially
and adversely affect the interests of the Certificateholders;
(ii) the receipt by the Trustee of an Opinion of Counsel pursuant
to clause (ii) of the second paragraph of Section 13.1(a) of
the Pooling and Servicing Agreement;
(iii) the Servicer shall have provided at least ten Business Days
prior written notice to each Rating Agency of this Agreement and
shall have received written confirmation from each Rating Agency
to the effect that the rating of any Series or any class of any
Series will not be reduced or withdrawn as a result of this
Agreement; and
(iv) the execution of this Agreement by each of the parties
hereto.
Section 7. Governing Law. THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE
WITH SUCH LAWS.
Section 8. Counterparts. This Agreement may be executed in
two or more counterparts (and by different parties on separate
counterparts), each of which shall be an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Transferor, the Servicer and the
Trustee have caused this Agreement to be duly executed by their
respective officers as of the day and year first above written.
METRIS RECEIVABLES, INC.,
as Transferor
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: President
DIRECT MERCHANTS CREDIT CARD
BANK, NATIONAL ASSOCIATION,
as Servicer
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Vice President and
Treasurer
THE BANK OF NEW YORK (DELAWARE),
as Trustee
By:/s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: President & COO
