Exhibit 1
$
Floating Rate Asset Backed Securities
Series 1998-2, Class A
METRIS MASTER TRUST
UNDERWRITING AGREEMENT
, 1998
Chase Securities Inc.,
as Representative of the
several Underwriters
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Section 1. INTRODUCTORY. Metris Receivables, Inc. (the "Transferor"),
a Delaware corporation, and a wholly owned subsidiary of Metris Companies Inc.
("Metris"), proposes to sell $__________ Floating Rate Asset Backed
Securities, Series 1998-2, Class A (the "Class A Securities" or the "Offered
Securities") of the Metris Master Trust (the "Trust"). Each Offered Security
will represent a fractional undivided interest in the Trust. The assets of the
Trust will include, among other things, a pool of receivables (the
"Receivables") arising under certain MasterCard, VISA or other revolving
consumer credit accounts (the "Accounts") transferred and sold by Direct
Merchants Credit Card Bank, National Association ("Direct Merchants Bank" or,
in its capacity as servicer under the P&S (as hereinafter defined), the
"Servicer") to Metris pursuant to an Amended and Restated Bank Receivables
Purchase Agreement dated as of July 30, 1998 between Metris and Direct
Merchants Bank (as supplemented and amended from time to time, the "Bank
Purchase Agreement"), then subsequently sold by Metris to the Transferor
pursuant to an Amended and Restated Purchase Agreement dated as of July 30,
1998 between Metris and the Transferor (as supplemented and amended from time
to time, the "Purchase Agreement") and then transferred by the Transferor to
the Trust pursuant to an Amended and Restated Pooling and Servicing Agreement
dated July 30, 1998 (as supplemented and amended from time to time, the "P&S")
among the Transferor, the Servicer and The Bank of New York (Delaware), as
trustee, (the "Trustee"). The Offered Securities will be issued pursuant to
the P&S and the Series 1998-2 Supplement to the P&S (the "Supplement") to be
dated the Closing Date (as defined herein), among the Transferor, the Servicer
and the Trustee. The P&S and the Supplement are collectively referred to as
the "Pooling and Servicing Agreement". The $_______ Asset-Backed Securities,
Series 1998-2, Class B (the "Class B Securities") will also be issued pursuant
to the Pooling and Servicing Agreement and, together with the Offered
Securities, are referred to herein as the "Investor Securities." Certain
distributions with respect to the Class A Securities will be insured by MBIA
Insurance Corporation (the "Securities Insurer") pursuant to a financial
guarantee insurance policy (the "Policy") and an insurance and reimbursement
agreement to be dated as of the Closing Date (the "Insurance and Reimbursement
Agreement") among the Transferor, Direct Merchants Bank, the Trustee and the
Securities Insurer. The Bank Purchase Agreement, the Purchase Agreement, the
Insurance and Reimbursement Agreement and the Pooling and Servicing Agreement
are collectively referred to as the "Designated Agreements".
The Transferor has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (No.
333-61343), including the related prospectus, for the registration under the
Securities Act of 1933, as amended (the "Act"), of the Offered Securities, in
the form heretofore delivered to the Underwriters. The registration statement
(including the prospectus constituting a part thereof and all documents
incorporated by reference therein) in the form in which it becomes effective
under the Act (the date on which it becomes effective being the "Effective
Date"), including the exhibits thereto, is referred to herein as the
"Registration Statement", and the prospectus dated __________ __, 1998 in
the form in which it is filed with the Commission (including all documents
incorporated by reference therein) is referred to herein as the "Prospectus",
except that if any revised prospectus shall be provided to you by the
Transferor for use in connection with the offering of the Offered Securities
which differs from the Prospectus on file at the Commission at the time the
Registration Statement becomes effective (whether or not such revised
prospectus is required to be filed) by the Transferor pursuant to Rule 424(b)
of the rules and regulations of the Commission under the Act (the "1933 Act
Regulation"), the term "Prospectus" shall refer to such revised prospectus
from and after the time it is first provided to you for such use.
Capitalized terms used herein and not otherwise defined shall have the
meanings given them in the Pooling and Servicing Agreement.
Section 2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE TRANSFEROR
AND METRIS. Each of the Transferor and Metris, as applicable (the
representations and warranties as to Direct Merchants Bank being given by
Xxxxxx), represents and warrants to, and agrees with, Chase Securities Inc.
("Chase") and any other Underwriters named in Schedule A hereto (collectively,
the "Underwriters", which term shall also include any underwriter substituted as
hereinafter provided in Section 10 hereof), for whom Chase is acting as
representative (in such capacity, Chase shall hereinafter be referred to as the
"Representative"), as of the date hereof that:
(i) On the date hereof and the Effective Date, the Registration
Statement did and will comply, in all material respects, with the
requirements of the Act and the 1933 Act Regulations, and did not and
will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or
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necessary to make the statements therein not misleading. The
Prospectus, at the Effective Date (unless the term "Prospectus" refers
to a prospectus which has been provided to you by the Transferor which
differs from the Prospectus on file at the Commission at the time the
Registration Statement becomes effective, in which case at the time it
is first provided to you for such use) and at the Closing Date, will
not include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided, however, that these representations and warranties shall not
apply to any statement or omission made in reliance upon and in
conformity with information furnished in writing to the Transferor by
any Underwriter through the Representative expressly for use in the
Registration Statement or the Prospectus.
(ii) Metris is a corporation duly incorporated, validly existing and in
good standing under the laws of Delaware, and is duly qualified to
transact business and is in good standing in any state in which the
conduct of its business requires such qualification, except where the
failure to so qualify does not have a material adverse effect on the
financial condition or business of Metris, and Metris has the corporate
power to own and conduct its business as it is currently conducted.
(iii) The Transferor is a corporation duly incorporated, validly
existing and in good standing under the laws of Delaware, and is duly
qualified to transact business and is in good standing in any state in
which the conduct of its business requires such qualification, except
where the failure to so qualify does not have a material adverse effect
on the financial condition or business of the Transferor, and the
Transferor has the corporate power to own and conduct its business as
it is currently conducted.
(iv) Direct Merchants Bank is a national banking association formed
under the laws of the United States of America and is authorized to
conduct the business of a special purpose credit card bank, as
described in the Prospectus, and had at all relevant times and now has
the power, authority and legal right to acquire, own and service the
Accounts and the Receivables;
(v) Each of the Transferor, Metris and Direct Merchants Bank had or has
the requisite power to execute and deliver each Designated Agreement to
which it is a party and, in the case of the Transferor and Metris, this
Agreement and to perform their respective obligations thereunder and
hereunder.
(vi) Each of the Designated Agreements to which it is a party, has been
duly authorized and, as of the Closing Date, will be duly executed and
delivered by the Transferor, Metris and Direct Merchants Bank, as
applicable, and each of the Designated Agreements to which it is a
party shall, as of the Closing Date, constitute the valid, legal and
binding obligation of the Transferor, Metris and Direct Merchants Bank,
as applicable, enforceable against the Transferor, Metris and Direct
Merchants Bank, as applicable, in accordance with its terms, except (A)
as such enforceability may be limited by applicable bankruptcy,
insolvency,
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reorganization, moratorium or other similar laws now or hereafter in
effect, affecting the enforcement of creditors' rights in general, and
(B) as such enforceability may be limited by general principles of
equity (whether considered in a suit at law or in equity).
(vii) This Agreement has been duly authorized, executed and delivered
by the Transferor and Xxxxxx.
(viii) As of the Closing Date referred to below, the Investor
Securities will be duly and validly authorized, and, when duly and
validly executed by the Transferor and authenticated by the Trustee and
delivered to the Transferor in accordance with the Pooling and
Servicing Agreement, and following delivery to and payment therefor by
the Underwriters as provided herein in the case of the Offered
Securities, by the purchasers thereof in the case of the Collateralized
Trust Obligations and delivery to the Transferor in exchange for a
portion of the Exchangeable Transferor Security in the case of the
Class D Securities, will be validly issued and outstanding and entitled
to the benefits of the Pooling and Servicing Agreement.
(ix) The execution and delivery of any Designated Agreement or of this
Agreement and the performance of the transactions contemplated thereby
and hereby do not (i) contravene the Transferor's, Metris' or Direct
Merchants Bank's charter or by-laws, (ii) violate any material
provision of law applicable to the Transferor, Metris or Direct
Merchants Bank or require any filing (except for filings under the UCC)
or registration under, any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award presently in
effect having applicability to the Transferor, Metris or Direct
Merchants Bank, except for such filings or registrations as have
already been made and are in full force and effect. The execution and
delivery of any Designated Agreement or of this Agreement and the
execution and delivery to the Trustee of the Investor Securities, the
performance of the transactions contemplated by this Agreement or any
Designated Agreement and the fulfillment of the terms hereof or thereof
will not violate any Requirement of Law applicable to the Transferor,
Metris or Direct Merchants Bank, will not violate, result in any breach
of any of the material terms and provisions of, or constitute (with or
without notice or lapse of time or both) a default under any material
indenture, contract, agreement, mortgage, deed of trust or other
instrument to which the Transferor, Metris or Direct Merchants Bank, is
a party or by which it is bound.
(x) There are no proceedings or investigations pending or, to the best
knowledge of the Transferor, Metris or Direct Merchants Bank,
threatened, against the Transferor, Metris or Direct Merchants Bank,
before any Governmental Authority (i) asserting the invalidity of any
Designated Agreement or of this Agreement, (ii) seeking to prevent the
consummation of any of the transactions contemplated thereby, (iii)
seeking any determination or ruling that would materially and adversely
affect the performance by the Transferor, Metris or Direct Merchants
Bank of its obligations thereunder, (iv) seeking any determination
or ruling that
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would materially and adversely affect the validity or enforceability
thereof or (v) seeking to affect adversely the tax attributes of the
Trust.
(xi) All approvals, authorizations, consents, orders or other actions
of any Governmental Authority required in connection with the execution
and delivery of any Designated Agreement or of this Agreement and the
Investor Securities, the performance of the transactions contemplated
by any Designated Agreement and by this Agreement and the fulfillment
of the terms hereof, have been obtained.
(xii) Each of the Transferor, Metris and Direct Merchants Bank
possesses all material licenses, certificates, authorities or permits
issued by the appropriate state, federal or foreign regulatory agencies
or bodies necessary to conduct the business now conducted by it and as
described in the Prospectus, except to the extent that the failure to
have such licenses, certificates, authorities or permits does not have
a material adverse effect on the Receivables, the Investor Securities
or the financial condition of the Transferor, Metris or Direct
Merchants Bank, and neither the Transferor, Metris nor Direct Merchants
Bank has received any notice of proceedings relating to the revocation
or modification of any such license, certificate, authority or permit
which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would materially and adversely affect the
Receivables or the conduct of its business, operations or financial
condition.
(xiii) On the Closing Date the Trust will have good and marketable
title to, or a perfected first priority security interest in, the
Receivables, free of Liens other than any Lien permitted under the
Pooling and Servicing Agreement.
(xiv) The businesses of each of the Transferor, Metris and Direct
Merchants Bank conform, in all material respects, to the descriptions
thereof contained in the Prospectus.
Section 3. PURCHASE, SALE AND DELIVERY OF OFFERED SECURITIES. On the
basis of the representations, warranties and agreements herein contained, but
subject to the terms and conditions herein set forth, the Transferor agrees
to sell to each Underwriter, severally and not jointly, and each Underwriter,
severally and not jointly, agrees to purchase from the Transferor, on
__________ __, 1998, or on such other date as shall be mutually agreed upon
by the Transferor and the Representative (the "Closing Date"), the principal
amount, if any, of the Class A Securities set forth in Schedule A opposite
the name of such Underwriter. The Class A Securities shall be purchased at a
purchase price equal to _____% of the principal amount thereof.
(a) Against payment of the purchase price in same day funds drawn to
the order of the Transferor, the Transferor will deliver the Offered Securities
to the Underwriters at the offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP,
at 10:00 a.m. New York City time, on the Closing Date. The Offered Securities to
be so delivered will be initially represented by one or more Offered Securities
registered in the name of Cede & Co., the nominee of The
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Depository Trust Company ("DTC"). The interests of beneficial owners of the
Offered Securities will be represented by book entries on the records of DTC and
participating members thereof.
Section 4. PUBLIC OFFERING OF THE OFFERED SECURITIES. It is understood
by the parties hereto that, after the Registration Statement becomes effective,
the Underwriters propose to offer the Offered Securities for sale to the public
(which may include selected dealers), as set forth in the Prospectus.
Section 5. COVENANTS OF THE TRANSFEROR. The Transferor covenants and
agrees with each Underwriter:
(a) If required, to file the Prospectus with the Commission pursuant to
and in accordance with Rule 424(b) not later than the time specified therein.
The Transferor will advise the Underwriters promptly of any such filing pursuant
to Rule 424(b).
(b) To file no amendment to the Registration Statement and to make no
amendment or any supplement to the Prospectus as amended or supplemented, or,
during such period as a Prospectus is required by law to be delivered in
connection with sales of Offered Securities by any Underwriter or a dealer, to
file no document which, upon filing becomes incorporated by reference in the
Registration Statement other than monthly Form 8-Ks containing the
Securityholders' statement or information regarding the addition of Accounts as
contemplated in the Prospectus, without furnishing the Representative with a
copy of the proposed form thereof and providing the Representative with a
reasonable opportunity to review the same and not to file any such amendment or
supplement to which the Representative shall reasonably object; and to advise
the Representative, promptly after it receives notice thereof, of the time when
any amendment to the Registration Statement has been filed or becomes effective
or any supplement to the Prospectus as amended or supplemented or any amended
Prospectus has been filed or mailed for filing, of the issuance of any stop
order by the Commission, of the suspension of the qualification of the Offered
Securities for offering or sale in any jurisdiction, of the initiation or
threatening of any proceeding for any such purpose, or of any request by the
Commission for the amending or supplementing of the Registration Statement or
the Prospectus as amended or supplemented or for additional information; and, in
the event of the issuance of any such stop order or of any order preventing or
suspending the use of any prospectus relating to the Offered Securities or
suspending any such qualification, promptly to use its best efforts to obtain
its withdrawal.
(c) From time to time to take such action as the Representative may
reasonably request in order to qualify the Offered Securities for offering and
sale under the securities laws of such states as the Representative may request
and to continue such qualifications in effect so long as necessary under such
laws for the distribution of such Offered Securities; provided that in
connection therewith neither the Transferor nor Metris shall be required to
qualify as a foreign corporation or partnership, respectively, to do business,
or to file a general consent to service of process in any jurisdiction.
(d) To furnish the Representative with copies of the Registration
Statement (including exhibits) and copies of the Prospectus as amended or
supplemented in such quantities
6
as the Representative may from time to time reasonably request; and if the
delivery of a prospectus shall be at the time required by law in connection with
sales of any Offered Securities, either (i) any event shall have occurred as a
result of which the Prospectus would include any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or (ii) for any other reason it shall be necessary during
such same period to amend or supplement the Prospectus as amended or
supplemented, to notify the Representative and to prepare and furnish to the
Representative as the Representative may from time to time reasonably request an
amendment or a supplement to the Prospectus which will correct such statement or
omission or effect such compliance.
(e) To make generally available to Securityholders an earnings
statement of the Trust complying with Rule 158 under the Act and covering a
period of at least twelve consecutive months beginning after the Effective Date
of the Registration Statement (as such date is defined in Rule 158(c) under the
Act) as soon as practicable after such period.
(f) To furnish to the Representative a copy of the Registration
Statement (which will be signed and will include all exhibits), each related
preliminary prospectus, the Prospectus and all amendments and supplements to
such documents, in each case as soon as available and in such quantities as such
Underwriter reasonably requests for the purposes contemplated by the Act or the
1933 Act Regulations.
(g) To pay all expenses incident to the performance of the obligations
under this Agreement, including:
(i) the word processing, printing and filing of the Registration
Statement as originally filed and of each amendment thereto;
(ii) the reproduction of this Agreement;
(iii) the preparation, printing, issuance and delivery of the Offered
Securities to the Underwriters;
(iv) the reasonable fees and disbursements of counsel and accountants
for the Transferor;
(v) the qualification of the Offered Securities under state securities
laws in accordance with the provisions of Section 5(c) hereof,
including filing fees and the reasonable fees and disbursements of
counsel for the Underwriters in connection therewith and in connection
with the preparation of the Blue Sky Survey;
(vi) the printing and delivery to the Underwriters of copies of the
Registration Statement as originally filed and of each amendment
thereto, of the preliminary prospectuses, and of the Prospectus and any
amendments or supplements thereto;
(vii) the reproduction and delivery to the Underwriters of copies of
the Blue Sky Survey;
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(viii) the fees of Xxxxx'x Investors Service, Inc. ("Moody's") and
Standard & Poor's Ratings Services, a Division of the McGraw Hill
Companies, Inc. ("S&P") for rating the Offered Securities; and
(ix) the fees and expenses of the Trustee and its counsel.
It is understood, however, that except as provided in this Section, and Sections
7 and 8 hereof or as provided in the next succeeding sentence, each Underwriter
will pay all of its own costs and expenses, including the fees of its counsel,
transfer taxes on resale of any of the Offered Securities by it, and any
advertising expenses connected with any offers it may make. If this Agreement is
terminated by the Representative in accordance with the provisions of Section 6
hereof, the Transferor and Metris, jointly and severally, shall reimburse the
Representative for all of its out-of-pocket expenses, including the reasonable
fees and disbursements of counsel for the Representative.
(h) For a period from the date of this Agreement until the retirement
of the Offered Securities, or until such time as each Underwriter shall cease to
maintain a secondary market in the Offered Securities, whichever occurs first,
to deliver to the Representative the annual statements of compliance, the Annual
Servicer's Certificate and the annual independent certified public accountants'
servicing reports furnished to the Trustee pursuant to Section 3.5 and Section
3.6, respectively, of the P&S and the monthly Distribution Date Statement
pursuant to Section 5.2 of the Series 1998-2 Supplement as soon as such
statements and reports are furnished to the Trustee.
(i) From and after the Closing Date, not to take any action
inconsistent with the Trust's ownership of the Receivables other than as
permitted by the Pooling and Servicing Agreement.
(j) To the extent, if any, that the rating provided with respect to the
Offered Securities by the rating agency or agencies that initially rate the
Offered Securities is conditional upon the furnishing of documents or the taking
of any other actions by the Transferor, to furnish such documents and take any
such other actions.
Section 6. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE UNDERWRITER.
The obligation of the Underwriters to purchase and pay for the Offered
Securities are subject to the accuracy of the representations and warranties on
the part of the Transferor and Metris, to the accuracy of the statements of
officers of the Transferor and Xxxxxx made pursuant to the provisions hereof, to
the performance by the Transferor of its obligations hereunder and to the
following additional conditions precedent:
(a) The Registration Statement shall have become effective not later
than 4:00 p.m., New York time, on the second Business Day following the date of
this Agreement or such later date as shall have been consented to by the
Representative; and prior to the Closing Date no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or, to the knowledge of
the Transferor or Metris, shall be contemplated by the Commission. If the
Transferor has elected to rely upon Rule 430A of the 1933 Act Regulations, the
price of the Offered Securities and any price-related
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information previously omitted from the effective Registration Statement
pursuant to such Rule 430A shall have been transmitted to the Commission for
filing pursuant to Rule 424(b) of the 1933 Act Regulations within the prescribed
time period, and prior to the Closing Date the Company shall have provided
evidence satisfactory to the Representative of such timely filing, or a
post-effective amendment providing such information shall have been promptly
filed and declared effective in accordance with the requirements of Rule 430A of
the 1933 Act Regulations.
(b) Each of the Transferor and Xxxxxx shall have delivered to the
Representative a certificate, dated the Closing Date, signed by its president, a
senior vice president or a vice president to the effect that the signer of such
certificate has carefully examined the Registration Statement, the Prospectus,
each Designated Agreement and this Agreement and that:
(i) (A) the representations and warranties of the Transferor and
Metris, as applicable, in this Agreement are true and correct in all
material respects at and as of the Closing Date with the same effect as
if made on the Closing Date and (B) the representations and warranties
of the Transferor, Metris and Direct Merchants Bank, as applicable, in
each Designated Agreement are true and correct in all material respects
at and as of the Closing Date with the same effect as if made on and as
of the Closing Date except that to the extent that any such
representation or warranty in this clause (B) expressly relates to an
earlier date, such representation or warranty is true and correct in
all material respects at and as of such earlier date;
(ii) the Transferor or Metris, as applicable, has complied in all
material respects with all the agreements and satisfied all the
conditions on its part to be performed or satisfied under this
Agreement at or prior to the Closing Date;
(iii) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
initiated or, to the Transferor's or Metris's knowledge, threatened by
the Commission as of the Closing Date; and
(iv) nothing has come to such person's attention that would lead such
person to believe that the Prospectus contains an untrue statement of a
material fact or omits to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(c) Since the respective dates as of which information is given in the
Prospectus, there shall not have occurred any material adverse change, or any
development involving a prospective material adverse change, in or affecting the
business or assets of the Trust, the Transferor, or Direct Merchants Bank or any
material adverse change in the financial position or results of operations of
the Trust, the Transferor, or Direct Merchants Bank otherwise than as set forth
or contemplated in the Prospectus which in any such case makes it impracticable
or inadvisable in the Representative's good faith judgment to proceed with the
public offering or
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the delivery of the Offered Securities on the terms and in the manner
contemplated in the Prospectus as amended or supplemented.
(d) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred (i) any material adverse change in the financial markets
for asset backed securities in the United States or any outbreak of hostilities
or other calamity or crisis or (ii) the suspension of trading generally by
either the American Stock Exchange or the New York Stock Exchange, or the
establishment of minimum or maximum prices or ranges of prices by either of such
exchanges or by order of the Commission or any other governmental authority, or
any banking moratorium declared by Federal or New York authorities, the effect
of which with respect to clause (i) or (ii) is such as to make it, in the good
faith judgment of the Representative, impracticable to market the Offered
Securities or to enforce contracts for the sale of the Offered Securities.
(e) The Representative shall have received:
(1) The favorable opinion of Xxxx X. Xxxxxxxx, general counsel of
Xxxxxx, dated the Closing Date and addressed to the Underwriters and
satisfactory in form and substance to the Representative and to counsel to
the Representative, to the effect that:
(i) Metris is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware.
(ii) The Transferor is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and is
duly qualified to transact business and is in good standing in each
state in which the conduct of its business requires such qualification
except where the failure to so qualify does not have a material adverse
effect on the financial condition or business of the Transferor.
(iii) Direct Merchants Bank is a national banking association formed
under the laws of the United States of America and is authorized to
conduct the business of a special purpose credit card bank, as
described in the Prospectus, and had at all relevant times and now has
the power, authority and legal right to acquire, own and service the
Accounts and the Receivables;
(iv) Each Designated Agreement to which Metris, Direct Merchants Bank
or the Transferor is a party and this Agreement has been duly and
validly authorized, executed and delivered by each of Metris, Direct
Merchants Bank and the Transferor, as applicable.
(v) The sale of the Investor Securities and the direction by the
Transferor to the Trustee to execute, authenticate and deliver the
Investor Securities have been duly authorized by the Transferor. The
Investor Securities have been duly and validly authorized and executed
by the Transferor.
(vi) The execution and delivery of any Designated Agreement or of the
Underwriting Agreement and the execution and delivery to the Trustee of
the Investor Securities, the performance of the transactions
contemplated by this
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Agreement or any Designated Agreement and the fulfillment of the terms
thereof will not (i) violate any Applicable Laws (assuming compliance
with all applicable state securities and Blue Sky laws, as to which
such counsel expresses no opinion), (ii) require any Governmental
Approval (except for filings under the UCC, compliance with all
applicable state securities and Blue Sky laws, as to which such counsel
expresses no opinion and such filings or registrations as have already
been made and are in full force and effect) or (iii) violate, result in
any breach of any of the material terms and provisions of, or
constitute (with or without notice or lapse of time or both) a default
under any currently existing material indenture, contract, agreement,
mortgage, deed of trust or other instrument which has been attached as
an exhibit to the report on Form 10-K filed by Xxxxxx. For purposes of
this paragraph (vi), "Applicable Laws" means those laws, rules and
regulations of the State of Minnesota and the United States of America
which, in such counsel's experience, are normally applicable to the
ordinary business operations of Metris or the Transferor and
transactions of the type contemplated by the Designated Agreements. For
the purposes of this paragraph (vi), the term "Governmental Approval"
means any consent, approval, license, authorization or validation of,
or filing, recording or registration with, any Governmental Authority
pursuant to Applicable Laws, and the term "Governmental Authority"
means any Minnesota or federal executive, legislative, judicial,
administrative or regulatory body.
(vii) There are no legal or governmental proceedings pending or, to
such counsel's knowledge, threatened that are required to be disclosed
in the Registration Statement, other than those disclosed therein.
There are no proceedings or investigations pending or, to the best of
such counsel's knowledge, threatened against Metris or the Transferor,
before any Governmental Authority (i) asserting the invalidity of any
Designated Agreement or of this Agreement, (ii) seeking to prevent the
consummation of any of the transactions contemplated hereby, (iii)
seeking any determination or ruling that would materially and adversely
affect the performance by Metris or the Transferor of its obligations
thereunder, (iv) seeking any determination or ruling that would
materially and adversely affect the validity or enforceability thereof
or (v) seeking to affect adversely the tax attributes of the Trust or
the Investor Securities.
(viii) No consent, approval, authorization or order of, or
registration, filing (except for filings under the UCC) or declaration
with, any court or governmental agency or body is required in
connection with (i) the execution, delivery and performance by Metris
or the Transferor of any Designated Agreement or of this Agreement or
(ii) the offer, sale or delivery of the Investor Securities, except
such as shall have been obtained or made, as the case may be, or will
be obtained or made, as the case may be, prior to the Closing Date and
except such as may be required under state securities or Blue Sky laws.
(ix) Metris has full corporate power and authority to sell and assign
the Receivables to the Transferor pursuant to the terms of the Purchase
Agreement and has duly authorized such sale and assignment by all
necessary corporate
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action. The Transferor has full corporate power and authority to
transfer the Receivables to the Trust pursuant to the terms of the
Pooling and Servicing Agreement and has duly authorized such transfer
by all necessary corporate action.
(x) Direct Merchants Bank has the power and authority to execute and
deliver the Bank Purchase Agreement and the Pooling and Servicing
Agreement and to consummate the transactions contemplated therein;
(xi) No consent, approval, authorization or order of, or filing with,
any governmental agency or body or any court is required for the
consummation by Direct Merchants Bank of the transactions contemplated
in the Bank Purchase Agreement or the Pooling and Servicing Agreement,
except for such consents, approvals, orders or fillings as may be
required under federal or state securities laws and except for such
fillings as may be required to perfect interests in the Receivables
pursuant to the Bank Purchase Agreement;
(xii) Neither the execution, delivery and performance by Direct
Merchants Bank of its obligations under the Bank Purchase Agreement or
the Pooling and Servicing Agreement, the transfer of the Receivables to
Metris, the issuance and sale of the Investor Securities, nor the
consummation of any other of the transactions contemplated in the Bank
Purchase Agreement or the Pooling and Servicing Agreement will conflict
with, result in a breach of or violation of any of the terms of, or
constitute a default under, the Articles of Association or by-laws of
the Bank, each as amended, or any Applicable Laws or the terms of any
material indenture or other material agreement or instrument known to
such counsel to which Direct Merchants Bank is a party or by which it
or its properties are bound. For purposes of this paragraph (xii),
"Applicable Laws" means those laws, rules and regulations of the United
States of America which, in such counsel's experience, are normally
applicable to the ordinary business operations of Direct Merchants Bank
and transactions of the type contemplated by the Designated Agreements;
and
(xiii) There are no actions, proceedings or investigations pending or,
to the best of such counsel's knowledge, threatened before any court,
administrative agency or other tribunal (x) asserting the invalidity of
the Bank Purchase Agreement or the Pooling and Servicing Agreement or
(y) seeking to prevent the issuance of the Investor Securities or the
consummation of any of the transactions contemplated by the Bank
Purchase Agreement or the Pooling and Servicing Agreement or the
Investor Securities, which might materially and adversely affect the
performance by Direct Merchants Bank of its obligations under, or the
validity or enforceability of, the Bank Purchase Agreement or the
Pooling and Servicing Agreement or the Investor Securities.
(xiv) Metris is duly qualified to transact business and is in good
standing in each state in which the conduct of its business requires
such qualification except where
12
the failure to so qualify does not have a material adverse effect on
the financial condition or business of Metris.
(xv) Each of Metris and the Transferor possesses all material licenses,
certificates, authorities or permits issued by the appropriate state or
federal regulatory agencies or bodies necessary to conduct the business
now conducted by it and as described in the Prospectus, except to the
extent that the failure to have such licenses, certificates,
authorities or permits does not have a material adverse effect on the
Receivables or the Investor Securities or the financial condition of
Metris or the Transferor, and neither Metris nor the Transferor has
received any notice of proceedings relating to the revocation or
modification of any such license, certificate, authority or permit
which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would materially and adversely affect the
conduct of its business, operations or financial condition.
(2) The favorable opinion of Xxxxxxx, Arps, Slate, Xxxxxxx & Xxxx
LLP, special counsel for the Transferor and Xxxxxx, dated the Closing Date
and addressed to the Underwriters and satisfactory in form and substance to
the Representative and counsel to the Representative; to the effect that:
(i) Each of the Designated Agreements (including, with respect to the
Agreement, the allocation provisions thereof) to which any of Metris,
the Transferor, the Bank and the Servicer (the "Companies") is a party,
constitutes a valid and binding obligation of each of them, as
applicable, enforceable against each of Metris, the Transferor and
Direct Merchants Bank, as applicable, in accordance with their
respective terms, except to the extent enforcement thereof may be
limited by (a) bankruptcy, insolvency, reorganization, moratorium,
receivership or other similar laws now or hereafter in effect relating
to creditors' rights generally and, in the case of Direct Merchants
Bank, creditors of national banking associations, (b) general
principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity), and (c) the
qualification that certain remedial provisions of the Designated
Agreements may be unenforceable in whole or in part, but the inclusion
of such provisions does not affect the validity of any such agreement
taken as a whole and each of such agreements, together with applicable
law, contains adequate provisions for the practical realization of the
benefits of the security created by such agreement;
(ii) Neither the execution, delivery or performance by any of the
Companies of any of the Designated Agreements to which it is a party
nor the compliance by any of the companies with the terms and
provisions thereof will contravene any provision of any Applicable
Laws. For purposes of this paragraph (ii) and paragraph (iii) below,
"Applicable Laws" means those laws, rules and regulations of the State
of New York, the United States of America and the Delaware General
Corporation Law which, in such counsel's experience, are normally
applicable to transactions of the type contemplated by the Designated
Agreements but do not include laws applicable due to the regulatory
status or nature of the business of any party thereto other than the
Companies.
13
(iii) No Governmental Approval, which has not been obtained or taken
and is not in full force and effect, is required to authorize or is
required in connection with the execution, delivery or performance of
any of the Designated Agreements and this Agreement, except for (a)
filings of Uniform Commercial Code financing statements with respect to
the transfer of the Receivables from Direct Merchants Bank to Metris
pursuant to the Bank Purchase Agreement, from Metris to the Transferor
pursuant to the Purchase Agreement and with respect to the transfer of
the Receivables from the Transferor to the Trust pursuant to the
Pooling and Servicing Agreement and (b) such Governmental Approvals as
may be required under the securities or blue sky laws of any
jurisdiction. For the purposes of this paragraph (iii), the term
"Governmental Approval" means any consent, approval, license,
authorization or validation of, or filing, recording or registration
with, any Governmental Authority pursuant to Applicable Laws, and the
term "Governmental Authority" means any New York, Delaware or federal
executive, legislative, judicial, administrative or regulatory body.
(iv) The Investor Securities, the Designated Agreements and this
Agreement conform in all material respects to the descriptions thereof
contained in the Registration Statement and the Prospectus;
(v) The Pooling and Servicing Agreement is not required to be qualified
under the Trust Indenture Act of 1939, as amended; neither Metris, the
Transferor or the Trust is required to be registered under the
Investment Company Act of 1940, as amended;
(vi) The statements in the Prospectus under the headings
"Risk Factors -- Transfer of the Receivables; Insolvency Risk
Considerations", "Certain Legal Aspects of the Receivables" and
"Certain Federal Income Tax Consequences", and "Employee Benefit Plan
Considerations" to the extent that they constitute matters of law or
legal conclusions with respect thereto, have been reviewed by such
counsel and are correct in all material respects;
(vii) Each of the Registration Statement, as of its effective date and
the Prospectus, as of its date, appeared on its face to be
appropriately responsive in all material respects to the requirements
of the Act and the General Rules and Regulations under the Act, except
that in each case such counsel need not express any opinion as to the
financial and statistical data included therein or excluded therefrom
or the exhibits to the Registration Statement and, except as and, to
the extent set forth in paragraphs (iv), (vi) and (viii) such counsel
does not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement or
the Prospectus;
(viii) The information in the Prospectus under the heading "Description
of the Offered Securities", insofar as it constitutes a summary of
certain provisions of the Offered Securities and the Pooling and
Servicing Agreement, summarizes fairly such provisions;
14
(ix) When duly and validly executed by the Transferor and authenticated
by the Trustee and delivered to the Transferor in accordance with the
Pooling and Servicing Agreement, and delivered to and paid for by the
Underwriters in accordance with this Agreement in the case of the
Offered Securities and delivered to the Transferor in exchange for a
portion of the Exchangeable Transferor Security in the case of the
Class B Securities, the Investor Securities will be validly issued and
outstanding and entitled to the benefits of the Pooling and Servicing
Agreement; and
(x) The execution and delivery of the Purchase Agreement and Pooling
and Servicing Agreement or this Agreement and the execution and
delivery to the Trustee of the Investor Securities, the performance of
the transactions contemplated thereby and the fulfillment of the terms
thereof will not violate, result in any breach of any of the material
terms and provisions of, or constitute (with or without notice or lapse
of time or both) a default under any currently existing indenture,
contract, agreement, mortgage, deed of trust or other instrument to
which the Transferor is bound and which has been specifically
identified to such counsel in writing by the Transferor as being
material to the Transferor.
With respect to such counsel's opinion set forth in paragraph (iii)
above, such counsel shall consider only such consents, approvals,
authorizations, orders and filings which, in such counsel's experience, are
customarily required for transactions of the type contemplated by the Purchase
Agreement and Pooling and Servicing Agreement.
Such counsel shall have been advised by the Commission that the
Registration Statement was declared effective and, to the best of such counsel's
knowledge, no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceeding for that purpose has been instituted
or threatened by the Commission.
Such counsel also shall state that they have participated in
conferences with officers and representatives of Metris and the
Transferor, counsel for Metris and the Transferor, representatives of
the independent accountants of Metris and the Transferor, and
representatives of the Underwriters, at which the contents of the
Registration Statement, the Prospectus and related matters were
discussed and, although they are not passing upon, and do not assume
any responsibility for, the accuracy, completeness or fairness of the
statements contained in the Registration Statement and the Prospectus
and have made no independent check or verification thereof except as
and to the extent set forth in paragraphs (iv), (vi) and (viii) above,
on the basis of the foregoing, no facts have come to such counsel's
attention that have led such counsel to believe that the Registration
Statement, at the time it became effective, contained an untrue
statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading or the Prospectus, as of its date,
15
contained an untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading,
except that in each case such counsel need express no belief with
respect to financial and statistical data included therein or excluded
therefrom or the exhibits to the Registration Statement, or any of the
information set forth under the headings "Description of MBIA" and
"Description of the Offered Securities -- Interest Rate Cap Providers".
Such counsel shall also deliver to the Underwriters their opinion,
dated the Closing Date and addressed to the Underwriters and
satisfactory in form and substance to the Representative and counsel to
the Representative, to the effect that for federal income tax purposes
(i) the Offered Securities would be treated as debt for federal income
tax purposes and (ii) any entity constituted by the Trust will not be
an association taxable as a corporation or publicly traded partnership
treated as a corporation;
(3) The favorable opinion of Xxxx Xxxxxxx Xxxxx & Xxxxxxxxxx,
counsel to the Securities Insurer, dated the Closing Date and addressed to
the Underwriters and satisfactory in form and substance to the
Representative and to counsel to the Representative, to the effect that:
(i) The Securities Insurer is a stock insurance corporation, duly
incorporated and validly existing under the laws of the State of New
York. The Securities Insurer is validly licensed and authorized to
issue the Policy and perform its obligations under the Policy in
accordance with the terms thereof, under the laws of the State of New
York.
(ii) The execution and delivery by the Securities Insurer of the Policy
are within the corporate power of the Securities Insurer, and each has
been authorized by all necessary corporate action on the part of the
Securities Insurer, the Policy has been duly executed and is the legal,
valid and binding obligation of the Securities Insurer enforceable in
accordance with its terms, except that the enforcement of the Policy
may be limited by laws relating to bankruptcy, insolvency,
reorganization, moratorium, receivership and other similar laws
affecting creditors' rights generally and by general principles of
equity (regardless of whether the enforcement of such remedies is
considered in a proceeding in equity or at law).
(iii) The Securities Insurer is authorized to deliver the Insurance and
Reimbursement Agreement and, assuming due execution by the other
parties thereto, the Insurance and Reimbursement Agreement has been
duly executed and is the valid and binding obligation of the Securities
Insurer enforceable in accordance with its terms, except that the
enforcement of the Insurance and Reimbursement Agreement may be limited
by laws relating to bankruptcy, insolvency, reorganization, moratorium,
receivership and other similar laws affecting creditors' rights
generally and by general principles of
16
equity (regardless of whether the enforcement of such remedies is
considered in a proceeding in equity or at law).
(f) The Representative shall have received an opinion or opinions
of Xxxxxx & Xxxxxxx with respect to Minnesota law, X'Xxxxxx, Xxxxxxxx,
Xxxxxxxx, Xxxxxxxxxxxxx & Xxxxxxxx with respect to Arizona law and Xxxxxxx,
Arps, Slate, Xxxxxxx & Xxxx LLP with respect to federal and New York law,
dated the Closing Date, in form and substance satisfactory to the
Representative and their counsel, with respect to certain matters relating to
the transfers of the Receivables to Metris, the Transferor and the Trust and
the perfection of Metris', the Transferor's and the Trust's interest in the
receivables and certain other matters relating to insolvency considerations
and with respect to other related matters in a form previously approved by
you and your counsel.
(g) The Representative shall have received from each of Xxxxxx &
Xxxxxxx in respect of Minnesota, X'Xxxxxx, Xxxxxxxx, Xxxxxxxx, Xxxxxxxxxxxxx
& Xxxxxxxx in respect of Arizona, Xxxxxxx, Xxxxx, Xxxxx & Xxxxxxxxxxx in
respect of Oklahoma and Xxxxxxx, Arps, Slate, Xxxxxxx & Xxxx in respect of
Delaware, an opinion, dated the Closing Date and satisfactory in form and
substance to the Representative and to counsel to the Underwriters, to the
effect that the Offered Securities will be characterized for such state's
income and franchise tax purposes as indebtedness secured by the Receivables
and Securityholders not otherwise subject to taxation in such state will not
be subject to tax in respect of the Offered Securities.
(h) The Representative shall have received from Skadden, Arps, Slate,
Xxxxxxx & Xxxx LLP, special counsel to the Transferor and Metris, opinions,
dated the Closing Date, addressed to the Underwriters and satisfactory in form
and substance to the Representative and to counsel to the Underwriters, relating
to certain insolvency and bankruptcy matters.
(i) The Representative shall have received from Xxxxxxxx, Xxxxxx &
Finger, Delaware counsel for the Trustee, and Xxxxx, Xxxxxx & Xxxxxx, New York
counsel for the Trustee, as appropriate, opinions, dated the Closing Date and
addressed to the Underwriters, the Transferor and Metris and satisfactory in
form and substance to the Representative and to counsel to the Underwriters.
(j) The Representative shall have received an officer's certificate
dated the Closing Date of the chairman of the board, the president, an executive
vice president or the treasurer of the Trustee in which such officer shall state
that, to the best of his/her knowledge after reasonable investigation, the
representations and warranties of the Trustee contained in the Pooling and
Servicing Agreement are true and correct in all material respects, and that the
Trustee has complied in all material respects with all agreements and satisfied
all conditions on its part to be performed or satisfied under the Pooling and
Servicing Agreement at or prior to the Closing Date.
(k) The Representative shall have received copies of rating
letters confirming that the Class A Securities have been rated in the highest
rating category by S&P and Xxxxx'x and such rating shall not have been
reduced or withdrawn;
17
(l) Counsel to the Transferor and Metris shall have furnished to the
Representative any opinions supplied to the rating agencies relating to certain
matters with respect to the Offered Securities.
(m) On or prior to the date of this Agreement, the Representative shall
have received a copy of a letter, dated the Closing Date and addressed to the
Underwriters, from KPMG Peat Marwick LLP certified public accountants,
substantially in the form heretofore approved by the Underwriters and counsel to
the Underwriters. On the Closing Date, the Representative shall have received
from KPMG Peat Marwick LLP such letter (which may be in a bring-down format)
dated the Closing Date.
(n) The Representative shall have received (i) a copy of the
financing statements on Form UCC-1 filed with the Secretary of State of the
State of Arizona with respect to the transfer of the Receivables by Direct
Merchants Bank to Metris pursuant to the Bank Purchase Agreement, identifying
the Receivables as collateral and naming Direct Merchants Bank as debtor and
Metris as secured party, (ii) a copy of the financing statements on Form
UCC-1 filed with the Secretary of State of the State of Minnesota with
respect to the transfer of the Receivables by Metris to the Transferor
pursuant to the Purchase Agreement, identifying the Receivables as collateral
and naming Metris as debtor and the Transferor as the secured party and (iii)
a copy of the financing statements on Form UCC-1 filed with the Secretary of
State of the State of Minnesota with respect to the transfer of the
Receivables by the Transferor to the Trust pursuant to the Pooling and
Servicing Agreement, identifying the Receivables as collateral and naming the
Transferor as the debtor and the Trust as the secured party.
(o) The Representative shall have received an opinion addressed to the
Underwriters from Xxxxx & Wood LLP, counsel to the Underwriters, dated the
Closing Date, with respect to the validity of the Investor Securities and other
related matters and the Transferor shall have furnished to such counsel such
documents as they may reasonably request for the purpose of enabling them to
render such opinions.
The Transferor will furnish the Representative with such conformed
copies of such certificates, letters and documents as the Representative may
reasonably request.
If any condition specified in this Section shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be terminated
by the Representative by notice to the Seller at any time at or prior to Closing
Time, and such termination shall be without liability of any party to any other
party except as provided in Section 5 hereof.
Section 7. INDEMNIFICATION AND CONTRIBUTION. (a) Each of Metris and the
Transferor shall, jointly and severally, indemnify and hold harmless each
Underwriter and each person who controls any Underwriter within the meaning of
Section 15 of the Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto), or the omission or alleged
omission therefrom of a material fact required to be
18
stated therein or necessary to make the statements therein not
misleading, or arising out of any untrue statement or alleged untrue
statement of a material fact contained in the Prospectus (or any
amendment or supplement thereto), or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, if such settlement is
effected with the written consent of the Transferor and Xxxxxx; and
(iii) against any and all expense whatsoever (including, subject to
Section 7(c) hereof, the fees and disbursements of counsel chosen by
the Representative) reasonably incurred in investigating, preparing or
defending against any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, to the
extent that any such expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Transferor by
any Underwriter through the Representative expressly for use in the Registration
Statement (or any amendment thereto) or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto) and provided, further, that
the foregoing indemnity is subject to the condition that, insofar as it relates
to any untrue statement or omission, or any alleged untrue statement or
omission, made in the preliminary prospectus (as amended or supplemented) but
eliminated, corrected or remedied in the Prospectus (as amended or
supplemented), it shall not inure to the benefit of any Underwriter (or to the
benefit of any person who controls such Underwriter) if a copy of the Prospectus
(as amended or supplemented) was not delivered by such Underwriter to the person
asserting any loss, claim, damage, or liability arising out of or based upon
such untrue statement or omission, or such alleged untrue statement or omission,
at or prior to the time required by the Securities Act.
(b) Each Underwriter severally agrees to indemnify and hold harmless
Metris, the Transferor, each of their respective directors and officers, each of
the Transferor's officers who signed the Registration Statement, and each
person, if any, who controls the Transferor and Metris, respectively, within the
meaning of Section 15 of the Act against any and all loss, liability, claim,
damage and expense described in the indemnity contained in subsection (a) of
this Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto) or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Transferor by such
19
Underwriter through the Representative expressly for use in the Registration
Statement (or any amendment thereto) or such preliminary prospectus or the
Prospectus (or any amendment or supplement thereto).
(c) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
subsection (a) or (b) above, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
under subsection (a) or (b) above unless the indemnifying party has been
materially prejudiced by such failure to notify. In case any such action is
brought against any indemnified party and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party (who shall not, except with the consent
of the indemnified party, be counsel to the indemnifying party), and after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party will not be liable to such
indemnified party under this Section for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation. The indemnifying person
shall not be responsible for the settlement of any proceeding made without its
prior consent.
Section 8. CONTRIBUTION. If the indemnification provided for in Section
7 is unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) of Section 7, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of the losses, claims, damages or liabilities referred to in subsection (a) or
(b) of Section 7 (i) in such proportion as is appropriate to reflect the
relative benefits received by the Transferor and Metris on the one hand and the
Underwriters on the other from the offering of the Offered Securities or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Transferor
and Metris on the one hand and the Underwriters on the other in connection with
the statements or omissions which resulted in such losses, claims, damages or
liabilities as well as any other relevant equitable considerations. The relative
benefits received by the Transferor and Metris on the one hand and the
Underwriters on the other shall be deemed to be in the same proportion as the
total net proceeds from the offering (before deducting expenses) received by the
Transferor bear to the total underwriting discounts and commissions received by
the Underwriters. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Transferor or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The amount paid by an indemnified
party as a result of the losses, claims, damages or liabilities referred to in
the first sentence of this Section shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any action or claim which is the subject of this
Section. Notwithstanding the provisions of this Section, no Underwriter shall be
required to contribute any amount in excess of the underwriting discount or
commission applicable to the Offered Security purchased by it
20
hereunder. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
Section 9. SURVIVAL OF REPRESENTATIONS AND OBLIGATIONS. The respective
indemnities, agreements, representations, warranties and other statements of
each of the Transferor, Metris or its officers and of the Underwriters set forth
in or made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation or statement as to the results thereof, made by
or on behalf of any Underwriter, the Transferor, Metris or any of their
respective representatives, officers or directors of any controlling person, and
will survive delivery of and payment for the Offered Securities.
Section 10. DEFAULT BY ONE OR MORE OF THE UNDERWRITERS. If one or more
of the Underwriters shall fail on the Closing Date to purchase the Offered
Securities which it or they are obligated to purchase under this Agreement (the
"Defaulted Securities"), the Representative shall have the right, within 24
hours thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Defaulted Securities in such amounts as may be agreed upon and upon the
terms herein set forth; if, however, the Representative shall not have completed
such arrangements within such 24-hour period, then:
(a) if the principal amount of Defaulted Securities does not exceed 10%
of the principal amount of Offered Securities, each of the non-defaulting
Underwriters shall be obligated, severally and not jointly, to purchase the full
amount thereof in the proportions that their respective underwriting obligations
hereunder bear to the underwriting obligations of all non-defaulting
Underwriters, or
(b) if the principal amount of Defaulted Securities exceeds 10% of the
principal amount of Offered Securities, this Agreement shall terminate without
liability on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination
of this Agreement, either the Representative or the Transferor shall have the
right to postpone the Closing Date for a period not exceeding seven days in
order to effect any required changes in the Registration Statement or Prospectus
or in any other documents or arrangements.
Section 11. REPRESENTATIONS AND WARRANTIES OF THE UNDERWRITERS. Each
Underwriter represents and warrants to, and agrees with, Xxxxxx and the
Transferor that:
(a) It has only issued or passed on and will only issue or pass on in
the United Kingdom any document received by it in connection with the issue of
the Offered Securities to a person who is of a kind described in Article 11(3)
of the Financial Services Act 1986 (Investment Advertisements) (Exemptions)
Order 1996 or who is a person to whom the document may otherwise lawfully be
issued or passed on.
21
(b) It has complied and will comply with all applicable provisions of
the Financial Services Act 1986 of Great Britain with respect to anything done
by it in relation to the Offered Securities in, from or otherwise involving the
United Kingdom.
(c) If it is an authorized person under the Financial Services Act
1986, it has only promoted and will only promote (as that term is defined in
Regulation 1.02 of the Financial Services (Promotion of Unregulated Schemes)
Regulations 1991) to any person in the United Kingdom the scheme described
herein if that person is of a kind described either in Section 76(2) of the
Financial Services Act 1986 or in Regulation 1.04 of the Financial Services
(Promotion of Unregulated Schemes) Regulations 1991.
Section 12. NOTICES. All communications hereunder will be in writing
and:
(i) if sent to the Underwriters, will be mailed, delivered or sent by
facsimile transmission and confirmed to the Representative at:
Chase Securities Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
(ii) if sent to the Transferor, will be mailed, delivered or sent by
facsimile transmission, and confirmed to it at:
Metris Receivables, Inc.
0000 Xxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: Treasurer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000;
(iii) if sent to Metris, will be mailed, delivered or sent by facsimile
transmission, and confirmed to it at:
Metris Companies Inc.
000 Xxxxx Xxxxxxx 000
Xx. Xxxxx Xxxx, XX 00000
Attention: General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000;
or to such other address as the Transferor, Metris or the Underwriter may
designate in writing to the other parties hereto.
Section 13. SUCCESSORS. This Agreement will inure to the benefit of and
be binding upon the Underwriters, Metris and the Transferor and their respective
successors and the
22
officers and directors and controlling persons referred to in Section 7 hereof,
and no other person will have any right or obligations hereunder.
Section 14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
Section 15. SEVERABILITY OF PROVISIONS. Any covenant, provision,
agreement or term of this Agreement that is prohibited or is held to be void or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof.
Section 16. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement and understanding of the parties hereto with respect to the matters
and transactions contemplated hereby and supersedes all prior agreements and
understandings whatsoever relating to such matters and transactions.
Section 17. AMENDMENT. Neither this Agreement nor any term hereof may
be changed, waived, discharged or terminated orally, but only by an instrument
in writing signed by the party against whom enforcement of the change, waiver,
discharge or termination is sought.
Section 18. HEADINGS. The headings in this Agreement are for the
purposes of reference only and shall not limit or otherwise affect the meaning
hereof.
Section 19. COUNTERPARTS. This Agreement may be executed by each of the
parties hereto in any number of counterparts, and by each of the parties hereto
on separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same instrument.
* * *
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If the foregoing is in accordance with your understanding, please sign
and return to us a counterpart hereof, whereupon this letter and your acceptance
hereof shall constitute a binding agreement between the Underwriters, the
Transferor and Metris.
Very truly yours,
METRIS RECEIVABLES, INC.
By:
-------------------------------
Name: Xxxx X. Xxxxxx
Title: Treasurer
METRIS COMPANIES INC.
By:
----------------------------
Name: Xxxx X. Xxxxxx
Title: Treasurer and Vice President
Accepted in New York, New York,
as of the date hereof:
CHASE SECURITIES INC.
By:
------------------------------
Name:
Title:
For itself and as Representative
of the other Underwriters named in
Schedule A hereto.
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SCHEDULE A
Name of Underwriter Principal Amount of
Class A Securities
---------------------------------------- --------------------------------------
Chase Securities Inc.
Bear, Xxxxxxx & Co. Inc.
Deutsche Bank Securities Inc
NationsBanc Xxxxxxxxxx Securities LLC
Xxxxxxx Xxxxx Xxxxxx Inc.
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