METRIS RECEIVABLES, INC.,
Transferor
DIRECT MERCHANTS CREDIT CARD BANK, NATIONAL ASSOCIATION,
Servicer
and
THE BANK OF NEW YORK (DELAWARE),
Trustee
on behalf of Securityholders
of the Metris Master Trust
AMENDED AND RESTATED
POOLING AND SERVICING AGREEMENT
Dated as of July 30, 1998
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . 1
Section 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Other Definitional Provisions . . . . . . . . . . . 21
ARTICLE II
CONVEYANCE OF RECEIVABLES;
ISSUANCE OF SECURITIES . . . . . . . . . . . 22
Section 2.1 Conveyance of Receivables . . . . . . . . . . . . . 23
Section 2.2 Acceptance by Trustee . . . . . . . . . . . . . . . 23
Section 2.3 Representations and Warranties of the Transferor . 24
Section 2.4 Representations and Warranties of the
Transferor Relating to the Agreement and the
Receivables . . . . . . . . . . . . . . . . . . . . 27
Section 2.5 Covenants of the Transferor . . . . . . . . . . . . 31
Section 2.6 Addition of Accounts . . . . . . . . . . . . . . . 32
Section 2.7 Removal of Accounts . . . . . . . . . . . . . . . . 37
Section 2.8 Discount Option . . . . . . . . . . . . . . . . . . 38
Section 2.9 Covenants of the Transferor with Respect to
the Purchase Agreement . . . . . . . . . . . . . . 38
Section 2.10. Receivables in Defaulted Accounts . . . . . . . . . 39
ARTICLE III
ADMINISTRATION AND SERVICING
OF RECEIVABLES . . . . . . . . . . . . . 41
Section 3.1 Acceptance of Appointment and Other Matters
Relating to the Servicer . . . . . . . . . . . . . 41
Section 3.2 Servicing Compensation . . . . . . . . . . . . . . 42
Section 3.3 Representations and Warranties of the Servicer . . 43
Section 3.4 Reports and Records for the Trustee . . . . . . . . 45
Section 3.5 Annual Servicer's Certificate . . . . . . . . . . . 46
Section 3.6 Annual Independent Accountants' Servicing Report . 47
Section 3.7 Tax Treatment . . . . . . . . . . . . . . . . . . . 47
Section 3.8 Adjustments . . . . . . . . . . . . . . . . . . . . 48
Section 3.9 Notices to DMCCB . . . . . . . . . . . . . . . . . 48
ARTICLE IV
RIGHTS OF SECURITYHOLDERS AND ALLOCATION
AND APPLICATION OF COLLECTIONS . . . . . . . . . 50
Section 4.1 Rights of Securityholders . . . . . . . . . . . . . 50
Section 4.2 Establishment of Accounts . . . . . . . . . . . . . 50
Section 4.3 Collections and Allocations . . . . . . . . . . . . 53
ARTICLE V
[ARTICLE V IS RESERVED AND SHALL BE SPECIFIED IN ANY
SUPPLEMENT WITH RESPECT TO ANY SERIES] . . . . . . . 56
ARTICLE VI
THE SECURITIES . . . . . . . . . . . . . 57
Section 6.1 The Securities . . . . . . . . . . . . . . . . . . 57
Section 6.2 Authentication of Securities . . . . . . . . . . . 57
Section 6.3 Registration of Transfer and Exchange of
Securities . . . . . . . . . . . . . . . . . . . . 58
Section 6.4 Mutilated, Destroyed, Lost or Stolen Securities . . 61
Section 6.5 Persons Deemed Owners . . . . . . . . . . . . . . . 61
Section 6.6 Appointment of Paying Agent . . . . . . . . . . . . 62
Section 6.7 Access to List of Securityholders' Names
and Addresses . . . . . . . . . . . . . . . . . . . 63
Section 6.8 Authenticating Agent . . . . . . . . . . . . . . . 63
Section 6.9 Tender of Exchangeable Transferor Security . . . . 64
Section 6.10 Book-Entry Securities . . . . . . . . . . . . . . . 67
Section 6.11 Notices to Clearing Agency . . . . . . . . . . . . 68
Section 6.12 Definitive Securities . . . . . . . . . . . . . . . 68
Section 6.13 Global Security; Euro-Security Exchange Date . . . 69
Section 6.14 Meetings of Securityholders . . . . . . . . . . . . 69
ARTICLE VII
OTHER MATTERS RELATING TO THE TRANSFEROR . . . . . . 70
Section 7.1 Liability of the Transferor . . . . . . . . . . . . 70
Section 7.2 Merger or Consolidation of, or Assumption of
the Obligations of, the Transferor . . . . . . . . 70
Section 7.3 Limitation on Liability . . . . . . . . . . . . . . 71
Section 7.4 Liabilities . . . . . . . . . . . . . . . . . . . . 72
ARTICLE VIII
OTHER MATTERS RELATING
TO THE SERVICER . . . . . . . . . . . . . 73
Section 8.1 Liability of the Servicer . . . . . . . . . . . . . 73
Section 8.2 Merger or Consolidation of, or Assumption of
the Obligations of, the Servicer . . . . . . . . . 73
Section 8.3 Limitation on Liability of the Servicer and
Others . . . . . . . . . . . . . . . . . . . . . . 73
Section 8.4 Servicer Indemnification of the Transferor,
the Trust and the Trustee . . . . . . . . . . . . . 74
Section 8.5 The Servicer Not to Resign . . . . . . . . . . . . 75
Section 8.6 Access to Certain Documentation and
Information Regarding the Receivables . . . . . . . 75
Section 8.7 Delegation of Duties . . . . . . . . . . . . . . . 76
ARTICLE IX
PAY OUT EVENTS . . . . . . . . . . . . . 77
Section 9.1 Pay Out Events . . . . . . . . . . . . . . . . . . 77
Section 9.2 Additional Rights Upon the Occurrence of
Certain Events . . . . . . . . . . . . . . . . . . 77
ARTICLE X
SERVICER DEFAULTS . . . . . . . . . . . . 80
Section 10.1 Servicer Defaults . . . . . . . . . . . . . . . . . 80
Section 10.2 Trustee to Act; Appointment of Successor . . . . . 82
Section 10.3 Notification to Securityholders . . . . . . . . . . 84
Section 10.4 Waiver of Past Defaults . . . . . . . . . . . . . . 84
ARTICLE XI
THE TRUSTEE . . . . . . . . . . . . . . 85
Section 11.1 Duties of Trustee . . . . . . . . . . . . . . . . . 85
Section 11.2 Certain Matters Affecting the Trustee . . . . . . . 87
Section 11.3 Trustee Not Liable for Recitals in Securities . . . 88
Section 11.4 [Reserved] . . . . . . . . . . . . . . . . . . . . 88
Section 11.5 The Servicer to Pay Trustee's Fees and Expenses . . 88
Section 11.6 Eligibility Requirements for Trustee . . . . . . . 89
Section 11.7 Resignation or Removal of Trustee . . . . . . . . . 89
Section 11.8 Successor Trustee . . . . . . . . . . . . . . . . . 90
Section 11.9 Merger or Consolidation of Trustee . . . . . . . . 91
Section 11.10 Appointment of Co-Trustee or Separate Trustee . . . 91
Section 11.11 Tax Returns . . . . . . . . . . . . . . . . . . . . 92
Section 11.12 Trustee May Enforce Claims Without Possession
of Securities . . . . . . . . . . . . . . . . . . 92
Section 11.13 Suits for Enforcement . . . . . . . . . . . . . . . 93
Section 11.14 Rights of Securityholders to Direct Trustee . . . . 93
Section 11.15 Representations and Warranties of Trustee . . . . . 93
Section 11.16 Maintenance of Office or Agency . . . . . . . . . . 94
ARTICLE XII
TERMINATION . . . . . . . . . . . . . . 95
Section 12.1 Termination of Trust . . . . . . . . . . . . . . . 95
Section 12.2 Optional Termination . . . . . . . . . . . . . . . 96
Section 12.3 Final Payment with Respect to any Series . . . . . 97
Section 12.4 Termination Rights of Holder of Exchangeable
Transferor Security . . . . . . . . . . . . . . . 98
ARTICLE XIII
MISCELLANEOUS PROVISIONS . . . . . . . . . . 99
Section 13.1 Amendment . . . . . . . . . . . . . . . . . . . . . 99
Section 13.2 Protection of Right, Title and Interest to
Trust . . . . . . . . . . . . . . . . . . . . . . . 101
Section 13.3 Limitation on Rights of Securityholders . . . . . . 101
Section 13.4 Governing Law . . . . . . . . . . . . . . . . . . . 102
Section 13.5 Notices . . . . . . . . . . . . . . . . . . . . . . 102
Section 13.6 Severability of Provisions . . . . . . . . . . . . 103
Section 13.7 Assignment . . . . . . . . . . . . . . . . . . . . 103
Section 13.8 Securities Non-Assessable and Fully Paid . . . . . 103
Section 13.9 Further Assurances . . . . . . . . . . . . . . . . 103
Section 13.10 No Waiver; Cumulative Remedies . . . . . . . . . . 104
Section 13.11 Counterparts . . . . . . . . . . . . . . . . . . . 104
Section 13.12 Third-Party Beneficiaries . . . . . . . . . . . . . 104
Section 13.13 Actions by Securityholders . . . . . . . . . . . . 104
Section 13.14 Rule 144A Information . . . . . . . . . . . . . . . 105
Section 13.15 Merger and Integration . . . . . . . . . . . . . . 105
Section 13.16 Headings . . . . . . . . . . . . . . . . . . . . . 105
SCHEDULES AND EXHIBITS
Schedule 1 Tax Returns and Payments
Exhibit A Form of Exchangeable Transferor Security
Exhibit B Form of Daily Report
Exhibit C Form of Settlement Statement
Exhibit D Form of Annual Servicer's Certificate
Exhibit E Form of Annual Opinion of Counsel
Exhibit F Form of Reconveyance of Receivables
Exhibit G Form of Agreed-Upon Procedures
Exhibit H Form of Assignment of Receivables in Supplemental Accounts
Exhibit I Form of Opinion of Counsel Regarding Supplemental Accounts
Exhibit J Form of Reassignment
AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT, dated as of
July 30, 1998 (the "Pooling and Servicing Agreement") by and among METRIS
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.
WHEREAS, Direct Merchants Credit Card Bank, National Association,
a national banking association with its principal place of business in
Phoenix, Arizona is the successor by merger to Direct Merchants Credit Card
Bank, National Association, a national banking association with its
principal place of business in Salt Lake City, Utah (the "Predecessor
Servicer").
WHEREAS, Metris Receivables, Inc., as transferor (the
"Transferor"), the Predecessor Servicer, and The Bank of New York
(Delaware), as trustee (the "Trustee"), entered into a Pooling and
Servicing Agreement, dated as of May 26, 1995, as amended to the date
hereof (the "Previous Pooling and Servicing Agreement");
WHEREAS, Direct Merchants Credit Card Bank, National Association,
the Transferor and the Trustee previously entered into the Amendment and
Assumption Agreement (the "Assumption Agreement") dated as of July 13, 1998
(the "Assumption Date") in which the Direct Merchants Credit Card Bank,
National Association assumed all of the rights and obligations of the
Predecessor Servicer hereunder;
WHEREAS, Metris Receivables, Inc., as Transferor, Direct
Merchants Credit Card Bank, National Association, as Servicer and The Bank
of New York (Delaware), as Trustee desire to amend and restate the Pooling
and Servicing Agreement in accordance with the provisions of subsection
13.1(b) of the Pooling and Servicing Agreement to read in its entirety as
set forth below;
NOW, THEREFORE, pursuant to subsection 13.1(b) of the Pooling and
Servicing Agreement, the parties hereto hereby agree that effective on and
as of the date hereof, the Pooling and Servicing Agreement is hereby
amended to read in its entirety as follows:
In consideration of the mutual agreements herein contained, each
party agrees as follows for the benefit of the other parties and the
Securityholders:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. Whenever used in this Agreement, the
following words and phrases shall have the following meanings:
"Account" shall mean each revolving credit consumer credit card
account established pursuant to a Contract between a Credit Card Originator
and any Person, which on the Initial Closing Date was an Eligible Account
or, with respect to accounts transferred to the Trust after the Initial
Closing Date, each Additional Account or Supplemental Account. The
definition of Account shall include each Transferred Account but shall not
include any Accounts containing Ineligible Receivables and reassigned to
the Transferor pursuant to Section 2.4. The term "Account" shall be deemed
to refer to an Additional Account or Supplemental Account only from and
after the Addition Date with respect thereto, and the term "Account" shall
be deemed to refer to any Removed Account only prior to the Removal Date
with respect thereto.
"Addition Date" shall mean each date as of which Receivables
under Additional Accounts or Supplemental Accounts are included in the
Trust as Accounts pursuant to Section 2.6.
"Additional Account" shall mean (a) for the period from the
Initial Closing Date through the day preceding the Amendment Closing Date,
each revolving credit consumer credit card account owned by a Credit Card
Originator coming into existence after the Initial Closing Date which is an
Approved Account that the Transferor has not elected to exclude from the
Trust after June 7, 1996 and prior to the Amendment Closing Date, or (b) on
and after the Amendment Closing Date, each revolving credit consumer credit
card account in which a Credit Card Originator acquires rights that is an
Approved Account and is not an Excluded Account; provided, however, that a
revolving credit consumer credit card account that does not satisfy the
definition of Approved Account on the date of its creation shall be an
Additional Account on the date that it satisfies the definition of Approved
Account. Any election to exclude certain Approved Accounts shall be made
by the Transferor or the Servicer providing to the Trustee a written notice
thereof clearly identifying such excluded accounts.
"Adjustment Payment" shall have the meaning specified in
subsection 3.8(a).
"Affiliate" means, with respect to a particular Person, any
Person that, directly or indirectly, is in control of, is controlled by, or
is under common control with, such Person.
"Aggregate Invested Amount" shall mean, as of any date of
determination, the sum of the Invested Amounts of all Series of Securities
issued and outstanding on such date of determination.
"Aggregate Investor Percentage" with respect to each of Principal
Collections, Finance Charge Collections and Defaulted Receivables, as the
case may be, shall mean, as of any date of determination, the sum of such
Investor Percentages of all Series of Securities issued and outstanding on
such date of determination; provided, however, that the Aggregate Investor
Percentage shall not exceed 100%.
"Aggregate Principal Receivables" shall mean, for any day, the
aggregate amount of Principal Receivables at the end of such day.
"Agreement" shall mean this Pooling and Servicing Agreement and
all amendments hereof and supplements hereto, including any Supplement.
"Amendment Closing Date" shall mean July 30, 1998.
"Amortization Period" shall mean, with respect to any Series, the
period following the Revolving Period for such Series, which shall be the
Amortization Period, the Early Amortization Period, or other amortization
or accumulation period, in each case as defined with respect to such Series
in the related Supplement.
"Amortization Period Commencement Date" shall mean with respect
to any Series, the date on which the Amortization Period commences with
respect thereto as set forth in the related supplement.
"Applicable Tax State" shall mean, as of any date of
determination, each state as to which any of the following is then
applicable: (a) a state in which the Trustee maintains its principal
corporate trust office, (b) a state in which the Transferor maintains its
principal executive offices, and (c) a state in which the Servicer
regularly conducts servicing and collection operations which are not
limited to ministerial activities and which relate to a material portion of
the Receivables.
"Applicants" shall have the meaning specified in Section 6.7.
"Appointment Day" shall have the meaning specified in subsection
9.2(a).
"Approved Account" shall mean each (i) Eligible Account that is a
MasterCard or VISA account or (ii) any other revolving credit consumer
credit card account the inclusion in the Trust of which would not cause a
Ratings Event.
"Authentication Agent" shall have the meaning specified in
Section 6.8.
"Authorized Newspaper" shall mean a newspaper of general
circulation in the Borough of Manhattan, The City of New York printed in
the English language and customarily published on each Business Day,
whether or not published on Saturdays, Sundays and holidays.
"Automatic Addition Suspension Date" shall mean the Business Day
specified in subsection 2.6(b).
"Automatic Addition Termination Date" shall mean the Business Day
specified by the Transferor pursuant to subsection 2.6(b) as of which new
open end credit card accounts designated by the Transferor shall cease to
become Additional Accounts.
"Bank Receivables Purchase Agreement" shall mean the Amended and
Restated Bank Receivables Purchase Agreement dated as of July 30, 1998 by
and among Metris, as purchaser, and DMCCB, as Seller, as amended from time
to time.
"Base Rate" shall mean, with respect to any outstanding Series,
the amount which the related Supplement specifies as the "Base Rate".
"Bearer Securities" shall have the meaning specified in Section
6.1.
"Bearer Rules" shall mean the provisions of the Internal Revenue
Code, in effect from time to time, governing the treatment of bearer
obligations, including sections 163(f), 871, 881, 1441, 1442 and 4701, and
any regulations thereunder including, to the extent applicable to any
Series, proposed or temporary regulations of the Internal Revenue Service.
"Benefit Plan" shall mean (i) an employee benefit plan (as
defined in Section 3(3) of ERISA that is subject to the provisions of Title
I of ERISA, (ii) a plan described in Section 4975(e)(1) of the Code or
(iii) any entity whose underlying assets include plan assets by reason of a
plan's investment in the entity (each, a "Benefit Plan").
"Book-Entry Securities" shall mean securities evidencing a
beneficial interest in the Investor Securities, ownership and transfers of
which shall be made through book entries by a Clearing Agency as described
in Section 6.10; provided, that after the occurrence of a condition
whereupon book-entry registration and transfer are no longer authorized and
Definitive Securities are to be issued to the Security Owners, such
securities shall no longer be "Book-Entry Securities."
"Business Day" shall mean any day other than a Saturday, a Sunday
or a day on which banking institutions in New York, Minnesota, Arizona,
Nebraska, Oklahoma or Delaware (or, with respect to any Series, any
additional city or state specified in the related Supplement) are
authorized or obligated by law or executive order to be closed, and such
other days in each year designated by the Servicer in writing to the
Trustee by the first day of December in the preceding year.
"Cash Equivalents" shall mean, unless otherwise provided in the
Supplement with respect to any Series, (a) negotiable instruments or
securities represented by instruments in bearer or registered form which
evidence (i) obligations of or fully guaranteed by the United States of
America; (ii) time deposits, promissory notes, or certificates of deposit
of any depositary institution or trust company; provided, however, that at
the time of the Trust's investment or contractual commitment to invest
therein, the certificates of deposit or short-term deposits of such
depositary institution or trust company shall have a credit rating from
Standard & Poor's of A-1+ and from Moody's of P-1; (iii) commercial paper
having, at the time of the Trust's investment or contractual commitment to
invest therein, a rating from Standard & Poor's of A-1+ and from Moody's of
P-1; (iv) bankers acceptances issued by any depositary institution or trust
company described in clause (a)(ii) above; and (v) investments in money
market funds rated AAA-m or AAA-mg by Standard & Poor's and Aaa by Moody's
or otherwise approved in writing by Moody's and Standard & Poor's; (b) time
deposits and demand deposits in the name of the Trust or the Trustee in any
depositary institution or trust company referred to in clause (a)(ii)
above; (c) securities not represented by an instrument that are registered
in the name of the Trustee or its nominee (which may not be Metris or an
Affiliate) upon books maintained for that purpose by or on behalf of the
issuer thereof and identified on books maintained for that purpose by the
Trustee as held for the benefit of the Trust or the Securityholders, and
consisting of (x) shares of an open end diversified investment company
which is registered under the Investment Company Act which (i) invests its
assets exclusively in obligations of or guaranteed by the United States of
America or any instrumentality or agency thereof having in each instance a
final maturity date of less than one year from their date of purchase or
other Cash Equivalents, (ii) seeks to maintain a constant net asset value
per share, (iii) has aggregate net assets of not less than $100,000,000 on
the date of purchase of such shares and (iv) which the Rating Agency
designates in writing will not result in a withdrawal or downgrading of its
then current rating of any Series rated by it or (y) Eurodollar time
deposits of a depository institution or trust company that are rated A-1+
by Standard & Poor's and P-1 by Moody's; provided, however, that at the
time of the Trust's investment or contractual commitment to invest therein,
the Eurodollar deposits of such depositary institution or trust company
shall have a credit rating from Standard & Poor's of A-1+ and P-1 by
Moody's; (d) a guaranteed investment contract (guaranteed as to timely
payment) which each Rating Agency designates in writing will not result in
a withdrawal or downgrading of its then current rating of any Series rated
by it; (e) repurchase agreements transacted with either (i) an entity
subject to the United States federal bankruptcy code, provided, however,
that (A) the term of the repurchase agreement is consistent with the
requirements with regard to the maturity of Cash Equivalents specified
herein or in the applicable Supplement for the applicable account or is due
on demand, (B) the Trustee or a third party acting solely as agent for the
Trustee has possession of the collateral, (C) the Trustee on behalf of the
Trust has a perfected first priority security interest in the collateral,
(D) the market value of the collateral is maintained at the requisite
collateral percentage of the obligation in accordance with standards of the
Rating Agencies, (E) the failure to maintain the requisite collateral level
will obligate the Trustee to liquidate the collateral as promptly as
practicable upon instructions from the Servicer, (F) the securities subject
to the repurchase agreement are either obligations of, or fully guaranteed
as to principal and interest by, the United States of America or any agency
or any instrumentality or agency thereof, certificates of deposit or
bankers acceptances and (G) the securities subject to the repurchase
agreement are free and clear of any third party lien or claim, or (ii) a
financial institution insured by the FDIC, or any broker-dealer with
"retail-customers" that is under the jurisdiction of the Securities
Investors Protection Corp. ("SIPC"), provided, however, that (A) the market
value of the collateral is maintained at the requisite collateral
percentage of the obligation in accordance with the standards of the Rating
Agencies, (B) the Trustee or a third party (with a rating from Moody's and
Standard & Poor's of P-1 and A-1+, respectively) acting solely as agent for
the Trustee has possession of the collateral, (C) the collateral is free
and clear of third party liens and, in the case of an SIPC broker, was not
acquired pursuant to a repurchase or reverse repurchase agreement and (D)
the failure to maintain the requisite collateral percentage will obligate
the Trustee to liquidate the collateral upon instructions from the
Servicer; provided, however, that at the time of the Trust's investment or
contractual commitment to invest in any repurchase agreement the short-term
deposits or commercial paper rating of such entity or institution in
subsections (i) and (ii) above shall have a credit rating of P-1 or A-1+ or
their equivalent from each Rating Agency; and (f) any other investment if
each Rating Agency confirms in writing that such investment will not
adversely affect its then current rating of the Investor Securities.
"Cedel" shall mean Cedel Bank, sociEtE anonyme.
"Class" shall mean, with respect to any Series, any one of the
classes of Securities of that Series as specified in the related
Supplement.
"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 or Foreign Clearing Agency effects book-entry transfers and
pledges of securities deposited with the Clearing Agency or Foreign
Clearing Agency.
"Closing Date" shall mean, with respect to any Series, the date
of issuance of such Series of Securities, as specified in the related
Supplement.
"Collection Account" shall have the meaning specified in
subsection 4.2(a).
"Collections" shall mean all payments received by the Servicer in
respect of the Eligible Receivables in the form of cash, checks or any
other form of payment in accordance with the Contract in effect from time
to time on any Eligible Receivables.
"Contract" shall mean an agreement between a Credit Card
Originator and another Person for the extension of revolving credit,
including pursuant to a credit card, in the form of a written contract,
invoice, or revolving credit agreement (but shall not include any agreement
or plan relating to the extension of credit on a closed-end basis).
"Corporate Trust Office" shall mean the principal office of the
Trustee at which at any particular time its corporate trust business shall
be administered, which office at the date of the execution of this
Agreement is located at Xxxxx Xxxx Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx
00000, Attention: Corporate Trust Specialized Agency Services.
"Coupon" shall have the meaning specified in Section 6.1.
"Credit and Collection Policy" means the written policies and
procedures of the applicable Credit Card Originator relating to the
operation of its consumer revolving credit card business, including,
without limitation, the written policies and procedures for determining the
creditworthiness of credit card customers, the extension of credit to
credit card customers and relating to the maintenance of credit card
accounts and collection of receivables with respect thereto, as such
policies and procedures may be amended, modified, or otherwise changed from
time to time.
"Credit Card Originator" shall mean (i) DMCCB Utah and (ii) DMCCB
and its successors or assigns under the Bank Receivables Purchase Agreement
and/or any transferee of the Accounts from DMCCB or (iii) any other
originator of accounts which enters into a receivables purchase agreement
with DMCCB or Metris (to the extent that rights therein are granted to the
Transferor directly or indirectly) or the Transferor in accordance with the
provisions of this Agreement and who has been identified in a prior written
notice to each Rating Agency.
"Daily Report" shall mean a report in the form specified in
subsection 1.2(e) as may be supplemented pursuant to any Supplement.
"Date of Processing" shall mean, with respect to any transaction,
the date on which such transaction is settled according to the Servicer's
(or, in the case of a Credit Card Originator, such Credit Card
Originator's) computer master file of revolving credit accounts.
"Default Amount" shall mean, (i) on any Business Day other than
the Default Recognition Date, the aggregate amount of Principal Receivables
in Accounts which became Defaulted Accounts on such Business Day and (ii)
on any Default Recognition Date the aggregate amount of Principal
Receivables in Accounts which became Defaulted Accounts during the then
current Monthly Period (other than such Accounts which were included in
clause (i)).
"Default Recognition Date" shall mean the last day of each
calendar month; provided, however that with respect to any Monthly Period
the "related Default Recognition Date" shall mean the Default Recognition
Date occurring closest to the last day of such Monthly Period and any
amounts allocated or applied on such Default Recognition Date shall be
deemed to apply to the related Monthly Period.
"Defaulted Account" shall mean each Account with respect to
which, in accordance with the Credit and Collection Policy or the
Servicer's customary and usual servicing procedures, the Servicer has
charged off the Receivables in such Account as uncollectible; an Account
shall become a Defaulted Account on the day on which such Receivables are
recorded as charged off as uncollectible on the Servicer's computer master
file of consumer credit card revolving accounts. Notwithstanding any other
provision hereof, any Receivables in a Defaulted Account that are
Ineligible Receivables shall be treated as Ineligible Receivables rather
than Receivables in Defaulted Accounts.
"Defeasance Account" shall have the meaning specified in the
applicable Supplement.
"Definitive Security" shall have the meaning specified in Section
6.10.
"Depositary" shall have the meaning specified in Section 6.10.
"Depositary Agreement" shall mean, with respect to each Series,
the agreement among the Transferor, the Trustee and the applicable Clearing
Agency, or as otherwise provided in the related Supplement.
"Determination Date" shall mean the second Business Day prior to
each Distribution Date.
"Discount Option Receivables" shall mean, on and after the date
on which the Transferor's exercise of its discount option pursuant to
Section 2.8 takes effect, the sum of (a) the aggregate Discount Option
Receivables at the end of the prior day (which amount, prior to the date
on which the Transferor's exercise of its discount option takes effect and
with respect to Receivables generated prior to such date, shall be zero)
plus (b) any New Discount Option Receivables created on such day minus (c)
any Discount Option Receivables Collections received on such Date of
Processing.
"Discount Option Receivable 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 2.8 takes effect, the product of
(a) a fraction the numerator of which is the amount of Discount Option
Receivables and the denominator of which is the sum of the Principal
Receivables and the Discount Option Receivables in each case (for both
numerator and denominator) at the end of the prior Date of Processing, (b)
Collections of Principal Receivables and Discount Option Receivables
received on such Date of Processing and (c) a fraction the numerator of
which is the aggregate amount of Principal Receivables arising on each Date
of Processing falling on or after the date on which the Transferor
exercises its discount option and the denominator of which is the Aggregate
Principal Receivables on such Date of Processing.
"Discount Percentage" shall mean the fixed percentage, if any,
designated by the Transferor pursuant to Section 2.8.
"Disposition" shall have the meaning specified in Section 9.2(a).
"Distribution Account" shall have the meaning specified in
subsection 4.2(c).
"Distribution Date" shall mean, unless otherwise specified in any
Supplement for the related Series, the twentieth day of each month or, if
such twentieth day is not a Business Day, the next succeeding Business Day.
"DMCCB" shall mean Direct Merchants Credit Card Bank, National
Association, a national banking organization organized and existing under
the laws of the United States of America and the successor by merger to
DMCCB Utah.
"DMCCB Utah" or "Predecessor Servicer" shall mean Direct
Merchants Credit Card Bank, National Association, a national banking
organization organized under the laws of the United States and located in
Salt Lake City, Utah which has been merged into DMCCB.
"Dollars", "$" or "U.S. $" shall mean United States dollars.
"Eligible Account" shall mean, as of the Initial Closing Date
(or, with respect to Additional Accounts, on the date the Credit Card
Originator acquires rights therein, or, with respect to Supplemental
Accounts, as of the date the Receivables arising in such Accounts are
designated for inclusion in the Trust), each revolving credit consumer
credit card account owned by a Credit Card Originator:
(a) which is payable in Dollars;
(b) the Obligor on which has provided, as its initial billing
address, an address located in the United States or its territories or
possessions or a United States military address;
(c) which has not been identified by the applicable Credit Card
Originator or any of its Affiliates in its computer files as stolen or
lost;
(d) which is not at the time of transfer to the Trust sold or
pledged to any other party and which does not have Receivables which, at
the time of transfer to the Trust, are sold or pledged to any other party
(provided that Receivables which were sold or pledged prior to the Closing
Date, but were repurchased free of all Liens or where all Liens were
released prior to the sale hereunder, shall not be disqualified under this
clause (d)); and
(e) the Receivables in which the applicable Credit Card
Originator has not charged off in its customary and usual manner for
charging off Receivables in such Accounts as of the Initial Closing Date
(or, with respect to Additional Accounts, as of the date the Receivables of
such Accounts are first designated for inclusion in the Trust) unless such
Account is subsequently reinstated.
"Eligible Receivable" shall mean each Receivable that satisfies
each of the following criteria: (a) arises under an Account, (b) it is
not sold or pledged to any other party, (c) it constitutes an "account,"
"chattel paper" or a "general intangible" as each are defined in Article 9
of the UCC as then in effect in each Relevant UCC State, (d) it is at the
time of its transfer to the Trust the legal, valid, and binding obligation
of, or is guaranteed by, a Person who is competent to enter into a contract
and incur debt and is enforceable against such person in accordance with
its terms, (e) it was created or acquired in compliance, in all material
respects, with all Requirements of Law applicable to the Credit Card
Originator and pursuant to a Contract that complies, in all material
respects, with all Requirements of Law applicable to the Credit Card
Originator (including without limitation, laws, rules and regulations
relating to truth in lending, usury, fair credit billing, fair credit
reporting, equal credit opportunity and fair debt collection practices),
(f) all material consents, licenses, or authorizations of, or registrations
with, any Governmental Authority required to be obtained or given in
connection with the creation of such Receivable or the execution, delivery,
creation, and performance of the related Contract have been duly obtained
or given and are in full force and effect as of the date of the creation of
such Receivables and (g) immediately prior to giving effect to the sale,
the Transferor or the Trust will have good and marketable title free and
clear of all Liens and security interests arising under or through the
Transferor (other than Permitted Liens).
"Enhancement" shall mean, with respect to any Series, any cash
collateral account, cash collateral guaranty, guaranty, collateral invested
amount, letter of credit, guaranteed rate agreement, maturity guaranty
facility, tax protection agreement, interest rate cap, interest rate swap,
currency swap, subordination of the rights of one Class or one Series to
another, or any other contract, agreement or arrangement for the benefit of
the Securityholders of such Series (or Securityholders of any Class within
such Series) as designated in the applicable Supplement.
"Enhancement Provider" shall mean, with respect to any Series,
the Person, if any, designated as such in the related Supplement.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
"Euroclear Operator" shall mean Xxxxxx Guaranty Trust Company of
New York, Brussels, Belgium office, as operator of the Euroclear System.
"Excess Funding Account" shall have the meaning specified in
subsection 4.2(d).
"Exchange" shall mean either of the procedures described in
Section 6.9(b).
"Exchange Date" shall have the meaning, with respect to any
Series issued pursuant to an Exchange, specified in subsection 6.9(b).
"Exchange Notice" shall have the meaning, with respect to any
Series issued pursuant to an Exchange, specified in subsection 6.9(b).
"Exchangeable Transferor Security" shall mean the security
executed by the Transferor and authenticated by the Trustee, substantially
in the form of Exhibit A and exchangeable as provided in Section 6.9;
provided, that at any time there shall be only one Exchangeable Transferor
Security.
"Excluded Account" shall mean on any date of determination (i)
during any period on and after Restart Date and prior to an Automatic
Addition Suspension Date, any revolving credit consumer credit card account
which has been excluded from addition to the Trust pursuant to subsections
2.6(b) or 2.6(g) and any revolving credit consumer credit card account
which the Transferor has elected to exclude pursuant to subsection 2.6(h)
and (ii) during any period on and after an Automatic Addition Suspension
Date and prior to a Restart Date, all revolving credit consumer credit card
accounts other than accounts that were Accounts on the Automatic Addition
Suspension Date and Supplemental Accounts previously added during such
period.
"Extended Trust Termination Date" shall have the meaning
specified in subsection 12.1(a).
"FDIC" shall mean the Federal Deposit Insurance Corporation, or
any successor thereto.
"Finance Charge Collections" shall mean, with respect to any
Business Day, Collections received by the Servicer with respect to Finance
Charge Receivables on such Business Day.
"Finance Charge Receivables" shall mean the sum of (w) all
amounts billed from time to time to the Obligors on any Account in respect
of (i) Periodic Finance Charges, (ii) overlimit fees, (iii) late charges,
(iv) returned check fees, (v) annual membership fees and annual service
charges, if any, (vi) transaction charges, (vii) cash advance fees and
(viii) similar fees and charges, excluding fees and charges for insurance
and insurance type products, plus (x) Recoveries, (y) investment earnings
on amounts credited to the Excess Funding Account and (z) Discount Option
Receivables, if any.
"Foreign Clearing Agency" shall mean Cedel and the Euroclear
Operator.
"Global Security" shall have the meaning specified in Section
6.13.
"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.
"Holder" or "Securityholder" shall mean the Person in whose name
a Security is registered in the Security Register, and if applicable, the
holder of any Bearer Security or Coupon, as the case may be.
"Ineligible Receivable" shall mean any Receivable that does not
satisfy the definition of Eligible Receivable.
"Initial Closing Date" shall mean May 30, 1995.
"Initial Invested Amount" shall mean, with respect to any Series
of Securities, the amount stated in the related Supplement or, if not
stated therein, the initial Invested Amount.
"Insolvency Event" shall have the meaning specified in subsection
9.2(a).
"Interest Funding Account" shall have the meaning specified in
subsection 4.2(b).
"Internal Revenue Code" shall mean the Internal Revenue Code of
1986, as amended from time to time.
"Invested Amount" shall have, with respect to any Series of
Securities, the meaning stated in the related Supplement.
"Investment Company Act" shall mean the Investment Company Act of
1940, as amended from time to time.
"Investor Account" shall mean each of any Interest Funding
Account, any Principal Account, the Excess Funding Account, any
Distribution Account and any Series Account.
"Investor Exchange" shall have the meaning specified in
subsection 6.9(b).
"Investor Percentage" shall mean, with respect to Principal
Collections, Finance Charge Collections and Receivables in Defaulted
Accounts, and with respect to any Series of Securities, the percentage
specified in the related Supplement.
"Investor Security" shall mean any one of the securities
(including, without limitation, the Bearer Securities or the Registered
Securities) executed by the Transferor and authenticated by the Trustee
substantially in the form (or forms in the case of a Series with multiple
classes) of the investor security or variable funding security attached to
the related Supplement.
"Investor Securityholder" shall mean the Holder of an Investor
Security.
"Lien" shall mean any lien, security interest or other
encumbrance; provided, however, that any assignment pursuant to Section 7.2
shall not be deemed to constitute a Lien.
"Metris" shall mean Metris Companies Inc., a corporation
organized and existing under the laws of the State of Delaware.
"Minimum Aggregate Principal Receivables" shall mean, as of any
date of determination, the sum of the numerators used in the calculation of
the Investor Percentages for Principal Collections for all outstanding
Series on such date of determination.
"Minimum Retained Interest" shall mean the product of the
weighted average Minimum Retained Percentages for all Series and the sum of
the outstanding principal amounts of all Classes of all Series.
"Minimum Retained Percentage" shall mean, for any Series, the
Minimum Retained Percentage specified in the Supplement for that Series.
"Minimum Transferor Interest" shall mean, as of any date of
determination, the product of (i) the sum of (a) the aggregate Principal
Receivables and (b) the amounts on deposit in the Excess Funding Account
and (ii) the Minimum Transferor Percentage.
"Minimum Transferor Percentage" shall mean the highest Minimum
Transferor Percentage specified in any Supplement.
"Monthly Investor Servicing Fee" shall mean the Servicing Fee
payable to the Servicer with respect to a Monthly Period.
"Monthly Period" shall mean, unless otherwise defined with
respect to a Series in the related Supplement, the period from and
including the first day of each fiscal month of the Transferor to and
including the last day of such fiscal month.
"Moody's" shall mean Xxxxx'x Investors Service, Inc. or its
successor.
"MRI" shall mean Metris Receivables, Inc., a Delaware
corporation.
"New Discount Option Receivables" 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 2.8 takes effect, the product of the
amount of any Principal Receivables created on such Date of Processing
(without reducing the amount of Principal Receivables by the amount of
Financial Charge Receivables which are Discount Option Receivables) and the
Discount Percentage.
"Obligor" shall mean a Person obligated to make payments with
respect to a Receivable arising under an Account pursuant to a Contract.
"Officer's Certificate" shall mean a certificate signed by any
Vice President, Treasurer, Assistant Treasurer or more senior officer of
the Transferor or 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.
"Paying Agent" shall mean any paying agent appointed pursuant to
Section 6.6 and shall initially be the Trustee.
"Pay Out Commencement Date" shall mean, with respect to each
Series, the date on which (a) a Trust Pay Out Event is deemed to occur
pursuant to Section 9.1 or (b) a Series Pay Out Event is deemed to occur
pursuant to the Supplement for such Series.
"Pay Out Event" shall mean, with respect to each Series, a Trust
Pay Out Event or a Series Pay Out Event.
"Periodic Finance Charges" shall have, with respect to any
Account, the meaning specified in the Contract applicable to such Account
for finance charges (due to periodic rate) or any similar term.
"Permitted Lien" shall mean with respect to the Receivables: (i)
Liens in favor of the Transferor created pursuant to the Purchase Agreement
assigned to the Trustee pursuant to this Agreement; (ii) Liens in favor of
the Trustee pursuant to this Agreement; and (iii) Liens that secure the
payment of taxes, assessments and governmental charges or levies, if such
taxes are either (a) not delinquent or (b) being contested in good faith by
appropriate legal or administrative proceedings and as to which adequate
reserves in accordance with generally accepted accounting principles shall
have been established.
"Person" shall mean any legal person, including any individual,
corporation, partnership, limited liability company, joint venture,
association, joint-stock company, trust, unincorporated organization,
governmental entity or other entity of similar nature.
"Pool Factor" shall mean, as of any Record Date, a number carried
out to seven decimals representing the ratio of the applicable Invested
Amount as of such Record Date (determined after taking into account any
reduction in the Invested Amount which will occur on the following
Distribution Date) to the applicable Initial Invested Amount unless
otherwise specified with respect to a Series in the related Supplement.
"Pooling and Servicing Agreement" shall have the meaning assigned
in the preamble hereto.
"Portfolio Yield" shall mean, with respect to any Monthly Period
and any outstanding Series, the amount which the related Supplement
specifies as the "Portfolio Yield" for such Monthly Period.
"Principal Account" shall have the meaning specified in
subsection 4.2(b).
"Principal Collections" shall mean, with respect to any Business
Day, the Collections received with respect to each Principal Receivable on
such Business Day.
"Principal Receivables" shall mean amounts shown on the
Servicer's records as amounts payable by Obligors with respect to Eligible
Receivables on any Account other than such amounts that are Finance Charge
Receivables (including Discount Option Receivables) or Receivables in
Defaulted Accounts and shall include, without limitation, amounts payable
for purchases of goods or services or cash advances. A Receivable shall be
deemed to have been created at the end of the day on the Date of Processing
of such Receivable. 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.
"Principal Shortfalls" shall mean, with respect to any Business
Day and any outstanding Series, the amount which the related Supplement
specifies as the "Principal Shortfall" for such Business Day.
"Principal Terms" shall have the meaning, with respect to any
Series issued pursuant to an Exchange, specified in subsection 6.9(c).
"Prospective Pay Out Event" shall have the meaning specified in
subsection 2.3(m).
"Publication Date" shall have the meaning specified in subsection
9.2(a).
"Purchase Agreement" shall mean the amended and restated purchase
agreement dated as of July 30, 1998 between the Transferor, as buyer of
receivables, and Metris, as seller of receivables, as amended from time to
time.
"Qualified Institution" shall have the meaning specified in
subsection 4.2(a).
"Rating Agency" shall mean, with respect to each Series, the
rating agency or agencies, if any, specified in the related Supplement.
"Ratings Event" shall mean, with respect to any Class of any
outstanding Series rated by a Rating Agency, a reduction or withdrawal of
the rating of any such Class by a Rating Agency.
"Reassignment Date" shall have the meaning specified in
subsection 2.4(e).
"Receivable" shall mean all of the indebtedness of any Obligor
under an Account, including the right to receive payment of any interest or
finance charges and other obligations of such Obligors with respect
thereto. Each receivable includes, without limitation, all rights of the
Transferor under the applicable Contract.
"Record Date" shall mean, with respect to any Distribution Date,
unless otherwise specified in the applicable Supplement, the Business Day
preceding such Distribution Date, except that, with respect to any
Definitive Securities, Record Date shall mean the fifth day of the then
current Monthly Period.
"Recoveries" shall mean any amounts received by the Servicer with
respect to Receivables in Accounts that previously became Defaulted
Accounts.
"Registered Securities" shall have the meaning specified in
Section 6.1.
"Related Person" shall mean a Person that is an Affiliate of
Metris, any Investor Securityholder, any Enhancement Provider, or any
Person whose status would violate the conditions for a trustee contained in
Section (4)(i) of Rule 3a-7 under the Investment Company Act of 1940, as
amended.
"Relevant UCC State" shall mean each jurisdiction in which the
filing of a UCC financing statement is necessary to perfect the ownership
interest and security interest of the Transferor pursuant to the Purchase
Agreement or the ownership or security interest of the Trustee established
under this Agreement.
"Removal Date" shall have the meaning specified in subsection
2.7(b).
"Removal Notice Date" shall mean the day, no later than the fifth
Business Day prior to a Removal Date, on which the Transferor gives notice
to the Trustee pursuant to Section 2.7(a) of its intention to remove
Accounts from the Trust.
"Removed Accounts" shall have the meaning specified in subsection
2.7(a).
"Requirements of Law" for any Person shall mean the certificate
of incorporation or articles of association and by-laws or other
organizational or governing documents of such Person, and any material 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.
"Responsible Officer" shall mean any officer within the Corporate
Trust Office (or any successor group of the Trustee), including the
President, any Vice President or any other officer of the Trustee
customarily performing functions similar to those performed by any person
who at the time shall be an above-designated officer and who shall have
direct responsibility for the administration of this Agreement.
"Restart Date" shall mean the date specified in the notice
delivered by the Transferor to the Trustee pursuant to subsection 2.6(b).
"Retained Interest" shall mean, on any date of determination, the
sum of the Transferor Interest and the Invested Amount represented by any
Transferor Retained Security.
"Retained Percentage" shall mean, on any date of determination,
the percentage equivalent of a fraction the numerator of which is the
Retained Interest and the denominator of which is the aggregate amount of
Principal Receivables at the end of the day immediately prior to such date
of determination plus all amounts on deposit in the Excess Funding Account
(but not including investment earnings on such amounts).
"Revolving Period" shall have, with respect to each Series, the
meaning specified in the related Supplement.
"Secured Obligations" shall have the meaning specified in Section
2.1.
"Securities Act" shall mean the Securities Act of 1933, as
amended from time to time.
"Security" shall mean any one of the Investor Securities of any
Series or the Exchangeable Transferor Security.
"Security Interest" shall mean interest payable in respect of the
Investor Securities of any Series pursuant to Article IV of the Agreement
as supplemented by the Supplement for such Series.
"Security Owner" shall mean, with respect to a Book-Entry
Security, the Person who is the beneficial owner of such Book-Entry
Security, as may be 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).
"Security Principal" shall mean principal payable in respect of
the Investor Securities of any Series pursuant to Article IV of this
Agreement.
"Security Rate" shall mean, with respect to any Series of
Securities (or, for any Series with more than one Class, for each Class of
such Series), the percentage (or formula on the basis of which such rate
shall be determined) stated in the related Supplement.
"Security Register" shall mean the register maintained pursuant
to Section 6.3, providing for the registration of the Securities and
transfers and exchanges thereof.
"Securityholder" or "Holder" shall mean the Person in whose name
a Security is registered in the Security Register and, if applicable, the
holder of any Bearer Security or Coupon, as the case may be.
"Series" shall mean any series of Investor Securities issued by
the Trust pursuant to a Supplement, which may include within any such
Series a Class or Classes of Investor Securities subordinate to another
such Class or Classes of Investor Securities.
"Series Account" shall mean any account or accounts established
pursuant to a Supplement for the benefit of the related Series.
"Series Charge Off" shall have, with respect to each Series, the
meaning specified in the applicable Supplement.
"Series Default Amount" shall have, with respect to any Series of
Securities, the meaning stated in the related Supplement.
"Series Pay Out Event" shall have, with respect to any Series,
the meaning specified in the related Supplement.
"Series Percentage" shall mean with respect to any Series, on any
date of determination, the percentage equivalent of a fraction the
numerator of which is the Invested Amount of such Series and the
denominator of which is the sum of the Invested Amounts of all Series then
outstanding.
"Series Servicing Fee Percentage" shall mean, with respect to any
Series, the amount specified as such in the related Supplement.
"Series Termination Date" shall mean, with respect to any Series
of Securities, the date stated as such in the related Supplement.
"Servicer" shall mean DMCCB in its capacity as Servicer of the
Receivables or any Person appointed as Successor Servicer as herein
provided to service the Receivables.
"Servicer Default" shall have the meaning specified in Section
10.1.
"Servicing Fee" shall have the meaning specified in the related
Supplements.
"Settlement Statement" shall mean a report in the form specified
in subsection 1.2(e) as may be supplemented pursuant to any Supplement.
"Shared Principal Collections" shall mean, with respect to any
Business Day, the aggregate amount of Principal Collections for all
outstanding Series that the related Supplements specify are to be treated
as "Shared Principal Collections" available to be allocated to other Series
for such Business Day.
"Standard & Poor's" shall mean Standard & Poor's, a Division of
The XxXxxx-Xxxx Companies, or its successor.
"Successor Servicer" shall have the meaning specified in
subsection 10.2(a).
"Supplement" shall mean, with respect to any outstanding Series,
a supplement to this Agreement complying with the terms of Section 6.9 of
this Agreement, executed in conjunction with any issuance of Securities of
such Series.
"Supplemental Accounts" shall have the meaning specified in
subsection 2.6(c).
"Supplemental Security" shall have the meaning specified in
subsection 6.9(d).
"Termination Notice" shall have, with respect to any Series, the
meaning specified in Section 10.1.
"Transfer" shall mean transfer, sell, exchange, pledge,
hypothecate, participate, assign or otherwise dispose, in whole or in part.
"Transfer Agent and Registrar" shall have the meaning specified
in Section 6.3 (a) and shall initially be The Bank of New York (Delaware).
"Transfer Date" shall mean, with respect to any Series, the
Business Day immediately prior to each Distribution Date.
"Transferor" shall mean Metris Receivables, Inc., a corporation
organized and existing under the laws of the State of Delaware, and any
successor thereto.
"Transferor Exchange" shall have the meaning specified in
subsection 6.9(b).
"Transferor Interest" shall mean, on any date of determination,
the aggregate amount of Principal Receivables at the end of the day
immediately prior to such date of determination plus all amounts on deposit
in the Excess Funding Account (but not including investment earnings on
such amounts) at the end of such immediately preceding day, minus the
Aggregate Invested Amount at the end of such immediately preceding day.
"Transferor Percentage" shall mean, on any date of determination,
when used with respect to Principal Collections, Finance Charge Collections
and Receivables in Defaulted Accounts, a percentage equal to 100% minus the
Aggregate Investor Percentage with respect to such categories of
Receivables.
"Transferor Retained Class" shall mean any Class of Investor
Securities of any Series which the Transferor retained pursuant to the
terms of any Supplement.
"Transferor Retained Securities" shall mean Investor Securities
of any Series which the Transferor is required to retain pursuant to the
terms of any Supplement.
"Transferred Account" shall mean an Account with respect to which
a new credit account number has been issued by the applicable Credit Card
Originator under circumstances resulting from a lost or stolen credit card
and not requiring standard application and credit evaluation procedures
under the Credit and Collection Policy.
"Trigger Event" shall have the meaning specified in subsection
9.2(a).
"Trust" shall mean the trust created by this Agreement, the
corpus of which shall consist of the Trust Property.
"Trust Extension" shall have the meaning specified in subsection
12.1(a).
"Trust Pay Out Event" shall have, with respect to each Series,
the meaning specified in Section 9.1.
"Trust Property" shall have the meaning specified in Section 2.1.
"Trust Termination Date" shall mean the earliest to occur of (i)
unless a Trust Extension shall have occurred, the day after the
Distribution Date with respect to any Series following the date on which
funds shall have been deposited in the Distribution Account or the
applicable Series Account for the payment of Investor Securityholders of
each Series then issued and outstanding sufficient to pay in full the
Aggregate Invested Amount plus interest accrued at the applicable Security
Rate through the end of the day prior to the Distribution Date with respect
to each such Series and certain other amounts as may be specified in any
Series Supplement, (ii) if a Trust Extension shall have occurred, the
Extended Trust Termination Date, and (iii) the date specified in subsection
12.1(a).
"Trustee" shall mean The Bank of New York (Delaware), a banking
corporation organized and existing under the laws of Delaware, and its
successors and any Person resulting from or surviving any consolidation or
merger to which it or its successors may be a party and any successor
trustee appointed as herein provided.
"UCC" shall mean the Uniform Commercial Code, as amended from
time to time, as in effect in the applicable jurisdiction.
"Undivided Interest" shall mean the undivided interest in the
Trust evidenced by an Investor Security.
"Variable Funding Securities" shall mean a Series of Investor
Securities, issued pursuant to Section 6.9 and a Variable Funding
Supplement, in one or more Classes.
"Variable Funding Supplement" shall mean a Supplement executed in
connection with the issuance of Variable Funding Securities.
Section 1.2 Other Definitional Provisions.
(a) All terms defined in any Supplement or this Agreement shall
have the meanings ascribed to them herein when used in any security,
certificate or other document made or delivered pursuant hereto unless
otherwise defined therein.
(b) As used herein and in any security, certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in Section 1.1, and accounting terms partially defined in Section
1.1 to the extent not defined, shall have the respective meanings given to
them under generally accepted accounting principles. To the extent that
the definitions of accounting terms herein are inconsistent with the
meanings of such terms under generally accepted accounting principles, the
definitions contained herein shall control.
(c) The agreements, representations and warranties of DMCCB in
this Agreement and in any Supplement in its capacity as Servicer and of MRI
in its capacity as Transferor shall be deemed to be the agreements,
representations and warranties of DMCCB and MRI solely in each such
capacity for so long as either of them acts in each such capacity under
this Agreement.
(d) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to any Supplement or
this Agreement as a whole and not to any particular provision of this
Agreement or any Supplement; and Section, subsection, Schedule and Exhibit
references contained in this Agreement or any Supplement are references to
Sections, subsections, Schedules and Exhibits in or to this Agreement or
any Supplement unless otherwise specified.
(e) The Daily Report and Settlement Statement shall be in
substantially the forms of Exhibits B and C, with such changes as the
Servicer may determine to be necessary or desirable; provided, however,
that no such change shall serve to exclude information required by this
Agreement or any Supplement and each such change shall be reasonably
acceptable to the Trustee. The Servicer shall, upon making such
determination and receiving the consent of the Trustee to such change,
deliver to the Trustee and each Rating Agency an Officer's Certificate to
which shall be annexed the form of the related Exhibit, as so changed. Upon
the delivery of such Officer's Certificate to the Trustee, the related
Exhibit, as so changed, shall for all purposes of this Agreement constitute
such Exhibit. The Trustee may conclusively rely upon such Officer's
Certificate in determining whether the related Exhibit, as changed,
conforms to the requirements of this Agreement.
[End of Article I]
ARTICLE II
CONVEYANCE OF RECEIVABLES;
ISSUANCE OF SECURITIES
Section 2.1 Conveyance of Receivables. The Transferor does
hereby transfer, assign, set-over, and otherwise convey to the Trust for
the benefit of the Securityholders, without recourse, all of its right,
title and interest in, to and under (i) the Receivables now existing and
hereafter created and arising in connection with the Accounts existing as
of the Initial Closing Date and any Additional Accounts, including without
limitation, all accounts, general intangibles, chattel paper, contract
rights, and other obligations of any Obligor with respect to the
Receivables, now or hereafter existing, (ii) all monies and investments due
or to become due with respect thereto (including, without limitation, the
right to any Finance Charge Receivables, including any Recoveries), (iii)
all proceeds of such Receivables, (iv) the Purchase Agreement and (v) the
Bank Receivables Purchase Agreement to the extent that it relates to the
Receivables. Such property, together with all monies and investments on
deposit, from time to time, in the Collection Account, the Excess Funding
Account, the Series Accounts maintained for the benefit of the
Securityholders of any Series of Securities, any Enhancement and all monies
available under any Enhancement, to be provided for any Series for payment
to the Securityholders of such Series, shall constitute the assets of the
Trust (collectively, the "Trust Property"). The foregoing transfer,
assignment, set-over and conveyance does not constitute and is not intended
to result in a creation or an assumption by the Trust, the Trustee or any
Investor Securityholder of any obligation of the Transferor, the Servicer,
the applicable Credit Card Originator or any other Person in connection
with the Receivables or any agreement or instrument relating thereto,
including, without limitation, any obligation to any Obligors, merchant
banks, merchant clearance systems, VISA USA, Inc., MasterCard International
Incorporated or insurers, or in connection with the Purchase Agreement or
the Bank Receivables Purchase Agreement.
In connection with such transfer, assignment, set-over and
conveyance, the Transferor agrees to record and file, at its own expense,
one or more financing statements (including any continuation statements
with respect to such financing statements when applicable) with respect to
the Receivables now existing and hereafter created for the transfer of
accounts, chattel paper or general intangibles (each as defined in Section
9-106 of the UCC as in effect in the Relevant UCC State) meeting the
requirements of applicable state law in such manner and in such
jurisdictions as are necessary to perfect the assignment of the Receivables
to the Trust, and to deliver file-stamped copies of such financing
statements or continuation statements or other evidence of such filing
(which may, for purposes of this Section 2.1, consist of facsimile
confirmation of such filing) to the Trustee on or prior to the date of
issuance of the Securities, and in the case of any continuation statements
filed pursuant to this Section 2.1, as soon as practicable after receipt
thereof by the Transferor. The foregoing transfer, assignment, set-over
and conveyance to the Trust shall be made to the Trustee, on behalf of the
Trust, and each reference in this Agreement to such transfer, assignment,
set-over and conveyance shall be construed accordingly.
To the extent that the transfer of the Receivables from the
Transferor to the Trust hereunder may be characterized as a pledge rather
than as a sale, the Transferor hereby grants and transfers to the Trustee
for the benefit of the Securityholders a first priority perfected security
interest in all of the Transferor's right, title and interest in, to and
under the Trust Property to secure a loan in an amount equal to the unpaid
principal amount of the Investor Securities issued hereunder or to be
issued pursuant to this Agreement and the interest accrued thereon at the
related Security Rate and to secure all of the Transferor's and Servicer's
obligations hereunder, including, without limitation, the Transferor's
obligation to transfer Receivables hereafter created or acquired to the
Trust (the "Secured Obligations"), and agrees that this Agreement shall
constitute a security agreement under applicable law.
Section 2.2 Acceptance by Trustee.
(a) The Trustee hereby acknowledges its acceptance, on behalf of
the Trust, of all right, title and interest previously held by the
Transferor in, to and under the Trust Property and declares that it shall
maintain such right, title and interest, upon the Trust herein set forth,
for the benefit of all Securityholders.
(b) 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.
Section 2.3 Representations and Warranties of the Transferor.
The Transferor hereby represents and warrants to the Trustee, on behalf of
the Trust, as of the Initial Closing Date, as of the Amendment Closing Date
and, with respect to any Series of Securities, as of the date of the
related Supplement and the related Closing Date for such Series:
(a) Organization and Good Standing. The Transferor is a
corporation duly organized and validly existing and in good standing under
the laws of the State of Delaware and has the corporate power and authority
and legal right 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 this Agreement
and the Purchase Agreement and to execute and deliver to the Trustee the
Securities pursuant hereto.
(b) Due Qualification. The Transferor is duly qualified to do
business and is in good standing (or is exempt from such requirements) as a
foreign corporation in any state required in order to conduct its business,
and has obtained all necessary licenses and approvals with respect to the
Transferor required under federal and Delaware law; provided, however, that
no representation or warranty is made with respect to any qualifications,
licenses or approvals which the Trustee would have to obtain to do business
in any state in which the Trustee seeks to enforce any Receivable.
(c) Due Authorization. The execution and delivery of this
Agreement and the Purchase Agreement and the consummation of the
transactions provided for herein and therein, have been duly authorized by
the Transferor by all necessary corporate action on its part.
(d) Binding Obligation. Each of this Agreement and the Purchase
Agreement, and the consummation of the transactions provided for herein and
therein, constitutes a legal, valid, and binding obligation of the
Transferor, enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereinafter in
effect, affecting the enforcement of creditors' rights in general and as
such enforceability may be limited by general principles of equity (whether
considered in a proceeding at law or in equity).
(e) No Conflicts. The execution and delivery of this Agreement
and the Purchase Agreement and the performance of the transactions
contemplated hereby and thereby, do not (i) contravene the Transferor's
charter or bylaws, (ii) violate any material provision of law applicable to
it or require any filing (except for the filings under the UCC),
registration, consent or approval under, any law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award presently in
effect having applicability to the Transferor, except for such filings,
registrations, consents or approvals as have already been obtained and are
in full force and effect.
(f) Taxes. Except as specified on Schedule 1, the Transferor
and each prior owner of the Receivables has filed all material tax returns
required to be filed and has paid or made adequate provision for the
payment of all material taxes, assessments and other governmental charges
due from the Transferor or such prior owner or is contesting any such tax,
assessment or other governmental charge in good faith through appropriate
proceedings.
(g) No Violation. The execution and delivery of this Agreement
and the Purchase Agreement and the execution and delivery to the Trustee of
the Securities, the performance of the transactions contemplated by this
Agreement and the Purchase Agreement and the fulfillment of the terms
hereof and thereof will not violate any Requirements of Law applicable to
the Transferor, 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 Requirement of Law applicable to
the Transferor or any material indenture, contract, agreement, mortgage,
deed of trust or other material instrument to which the Transferor is a
party or by which it or its properties are bound.
(h) No Proceedings. There are no proceedings or investigations
pending or, to the best knowledge of the Transferor, threatened against the
Transferor, before any Governmental Authority (i) asserting the invalidity
of this Agreement and the Purchase Agreement, (ii) seeking to prevent the
consummation of any of the transactions contemplated hereby or thereby,
(iii) seeking any determination or ruling that would materially and
adversely affect the performance by 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.
(i) All Consents Required. All approvals, authorizations,
consents, orders or other actions of any Governmental Authority required in
connection with the execution and delivery of this Agreement, the Purchase
Agreement and the Securities, the performance of the transactions
contemplated by this Agreement and the Purchase Agreement and the
fulfillment of the terms hereof and thereof, have been obtained.
(j) Bona Fide Receivables. Each Receivable is or will be an
account receivable arising out of the performance by the applicable Credit
Card Originator in accordance with the terms of the Contract giving rise to
such Receivable. The Transferor has no knowledge of any fact which should
have led it to expect at the time of the classification of any Receivable
as an Eligible Receivable that such Receivable would not be paid in full
when due, and each Receivable classified as an Eligible Receivable by the
Transferor in any document or report delivered under this Agreement
satisfies the requirements of eligibility contained in the definition of
Eligible Receivable set forth in this Agreement.
(k) Place of Business. The principal executive offices of the
Transferor are in Minnetonka, Minnesota, and the offices where the
Transferor keeps its records concerning the Receivables and related
Contracts are in Hennepin County, Minnesota and St. Cloud, Minnesota.
(l) Use of Proceeds. No proceeds of the issuance of any
Security will be used by the Transferor to purchase or carry any margin
security.
(m) Pay Out Event. No Pay Out Event and no condition that with
the giving of notice and/or the passage of time constitutes a Pay Out Event
(a "Prospective Pay Out Event") has occurred and is continuing.
(n) Not an Investment Company. The Transferor is not an
"investment company" within the meaning of the Investment Company Act, or
is exempt from all provisions of such Act.
(o) Solvency. The Transferor is not insolvent and will not be
rendered insolvent upon the transfer of the Receivables to the Trust.
The representations and warranties set forth in this Section 2.3
shall survive the transfer and assignment of the respective Receivables to
the Trust, and termination of the rights and obligations of the Servicer
pursuant to Section 10.1. The Transferor hereby represents and warrants to
the Trust, with respect to any Series of Securities, as of its Closing
Date, unless otherwise stated in the related Supplement, that the
representations and warranties of the Transferor set forth in Section 2.3,
are true and correct as of such date (and for the purposes of such
representations and warranties, "Securities" shall mean the Securities
issued on the related Closing Date) and that each representation and
warranty set forth in this Section 2.3 and in Section 2.4(a)(i) with
respect to the Agreement shall be made at such time with respect to the
applicable Supplement. Upon discovery by the Transferor, the Servicer or a
Responsible Officer of the Trustee of a breach of any of the foregoing
representations and warranties, the party discovering such breach shall
give prompt written notice to the others.
Section 2.4 Representations and Warranties of the Transferor
Relating to the Agreement and the Receivables.
(a) Binding Obligation; Valid Transfer and Assignment. The
Transferor hereby represents and warrants to the Trustee, on behalf of the
Trust, that, as of the Initial Closing Date, as of the Amendment Closing
Date and, with respect to any Series of Securities, as of the date of its
related Supplement and Closing Date, and, with respect to any matters
involving Additional Accounts, as of the date the Receivables of such
Accounts are first designated for inclusion in the Trust:
(i) The Purchase Agreement and this Agreement each
constitutes the legal, valid and binding obligation of the Transferor,
enforceable against the Transferor in accordance with its terms,
except (A) as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect, affecting the enforcement of
creditors' rights in general, and (B) as such enforceability may be
limited by general principles of equity (whether considered in a suit
at law or in equity).
(ii) The transfer of Receivables by the Transferor to the
Trust under this Agreement constitutes either (A) a valid transfer,
assignment, set-over and conveyance to the Trust of all right, title
and interest of the Transferor in and to the Trust Property, and such
Trust Property will be held by the Trust free and clear of any Lien of
any Person claiming through or under the Transferor or any of its
Affiliates except for (x) Permitted Liens, (y) the interest of the
Transferor as Holder of the Exchangeable Transferor Security and any
other Class of Securities held by the Transferor from time to time and
(z) the Transferor's right, if any, to interest accruing on, and
investment earnings, if any, in respect of any Interest Funding
Account, any Principal Account, the Excess Funding Account, or any
Series Account, as provided in this Agreement or the related
Supplement, or (B) a grant of a first priority security interest (as
defined in the UCC as in effect in the Relevant UCC State) in, to and
under the Trust Property, which grant is enforceable with respect to
the existing Receivables and any Receivables in Additional Accounts
designated for inclusion in the Trust (other than Receivables in
Supplemental Accounts) and the proceeds thereof upon execution and
delivery of this Agreement, and which will be enforceable with respect
to such Receivables hereafter created and the proceeds thereof, upon
such creation. If this Agreement constitutes the grant of a security
interest to the Trust in such property, upon the filing of the
financing statement described in Section 2.1 and in the case of the
Receivables hereafter created and proceeds thereof, upon such
creation, the Trust shall have a first priority perfected security
interest in such property, except for Permitted Liens. Except as
contemplated in this Agreement or any Supplement, neither the
Transferor nor any Person claiming through or under the Transferor
shall have any claim to or interest in the Collection Account, any
Principal Account, any Interest Funding Account, the Distribution
Account, the Excess Funding Account, any principal funding account for
any Series or any other Series Account, except for the Transferor's
rights to receive interest accruing on, and investment earnings in
respect of, any such account as provided in this Agreement (or, if
applicable, any Series Account as provided in any Supplement) and, if
this Agreement constitutes the grant of a security interest in such
property, except for the interest of the Transferor in such property
as a debtor for purposes of the UCC as in effect in the Relevant UCC
State. The Purchase Agreement constitutes a valid transfer,
assignment, set-over and conveyance to the Transferor of all right,
title and interest of Metris in and to the Receivables purported to be
sold thereunder, whether then existing or thereafter created in the
applicable Accounts and the proceeds thereof.
(iii) The Transferor is (or, with respect to Receivables
arising after the date hereof, will be) the legal and beneficial owner
of all right, title and interest in and to each Receivable and each
Receivable has been or will be transferred to the Trust free and clear
of any Lien other than Permitted Liens.
(iv) All consents, licenses, approvals or authorizations of
or registrations or declarations with any Governmental Authority
required in connection with the transfer of Trust Property to the
Trust have been obtained.
(v) Each Account classified as an "Eligible Account" by the
Transferor in any document or report delivered hereunder will satisfy
the requirements contained in the definition of Eligible Account as of
the time of such document or report and each Receivable classified as
an "Eligible Receivable" by the Transferor in any document or report
delivered hereunder will satisfy the requirements contained in the
definition of Eligible Receivable as of the time of such document or
report.
(vi) Each Receivable then existing has been conveyed to the
Trust free and clear of any Lien of any Person claiming through or
under the Transferor or any of its Affiliates (other than Permitted
Liens) and in compliance, in all material respects, with all
Requirements of Law applicable to the Transferor.
(b) Daily Representations and Warranties. On each day on which
any new Receivable is purchased by the Transferor, the Transferor shall be
deemed to represent and warrant to the Trust that (A) each Receivable
purchased by the Transferor on such day has been conveyed to the Trust in
compliance, in all material respects, with all Requirements of Law
applicable to the Transferor and free and clear of any Lien of any Person
claiming through or under the Transferor or any of its Affiliates (other
than Permitted Liens) and (B) with respect to each such Receivable, all
consents, licenses, approvals or authorizations of or registrations or
declarations with, any Governmental Authority required to be obtained,
effected or given by the Transferor in connection with the conveyance of
such Receivable to the Trust have been duly obtained, effected or given and
are in full force and effect.
(c) Notice of Breach. The representations and warranties set
forth in this Section 2.4 shall survive the transfer and assignment of the
respective Receivables to the Trust. Upon discovery by the Transferor, the
Servicer or a Responsible Officer of the Trustee of a breach of any of the
representations and warranties set forth in this Section 2.4, the party
discovering such breach shall give prompt written notice to the other
parties mentioned above. The Transferor agrees to cooperate with the
Servicer and the Trustee in attempting to cure any such breach.
(d) Designation of Ineligible Receivables. In the event of a
breach with respect to a Receivable of any representations and warranties
set forth in subsection 2.3(j) or subsections 2.4(a)(iii) through (vi) or
subsection 2.4(b), or in the event that a Receivable is not an Eligible
Receivable on the date of its transfer to the Trust as a result of the
failure to satisfy the conditions set forth in the definition of Eligible
Receivable, such Receivable shall be designated an "Ineligible Receivable"
and shall be assigned a principal balance of zero for the purpose of
determining the aggregate amount of Principal Receivables on any day;
provided, however, that if such representations and warranties with respect
to such Receivable shall subsequently be true and correct in all material
respects as if such Receivable had been created on such day or such
Receivable shall subsequently satisfy the conditions set forth in the
definition of Eligible Receivable, such Receivable shall be designated an
Eligible Receivable, and such Principal Receivables shall be included in
determining the Aggregate Principal Receivables on such day. On and after
the date of its designation as an Ineligible Receivable, each Ineligible
Receivable shall not be given credit in determining the aggregate amount of
Principal Receivables used in the calculation of any Investor Percentage,
the Transferor Percentage or the Transferor Interest. In the event that on
any Business Day the exclusion of an Ineligible Receivable from the
calculation of the Transferor Interest would cause the Transferor Interest
to be reduced below the Minimum Transferor Interest, the Transferor shall
immediately make a deposit in the Excess Funding Account (for allocation as
a Principal Receivable) in immediately available funds prior to the next
succeeding Business Day in an amount equal to the amount by which the
Transferor Interest would be reduced below the Minimum Transferor Interest
as a result of the exclusion of such Ineligible Receivable. The portion of
such deposit allocated to the Investor Securities of each Series shall be
distributed to the Investor Securityholders of each Series in the manner
specified in Article IV.
(e) Reassignment of Trust Portfolio. In the event of a breach
of any of the representations and warranties set forth in subsections
2.3(a), (b) and (c) and 2.4(a)(i) and (ii) with respect to any Series,
either the Trustee or the Holders of Investor Securities evidencing
Undivided Interests aggregating more than 50% of the aggregate Invested
Amount of such Series, by notice then given in writing to the Transferor
(and to the Trustee and the Servicer, if given by the Investor
Securityholders of such Series), may direct the Transferor to accept
reassignment of an amount of Principal Receivables equal to the face amount
of the Invested Amount to be repurchased (as specified below) within 60
days of such notice (or within such longer period as may be specified in
such notice), and the Transferor shall be obligated to accept reassignment
of such Receivables on a Distribution Date specified by the Transferor
(such Distribution Date, the "Reassignment Date") occurring within such
applicable period on the terms and conditions set forth below; provided,
however, that no such reassignment shall be required to be made, and no
notice of such reassignment may be given, if, at any time during such
applicable period, the representations and warranties contained in
subsections 2.3(a), (b) and (c) and subsections 2.4(a)(i) and (ii) shall
then be true and correct in all material respects. The Transferor shall,
on the Transfer Date (in next day funds) preceding the Reassignment Date,
deposit an amount equal to the reassignment deposit amount for such Series
in the related Distribution Account or Series Account, as provided in the
related Supplement, for distribution to the Investor Securityholders
pursuant to Article XII. The reassignment deposit amount with respect to
any Series, unless otherwise stated in the related Supplement, shall be
equal to (i) the Invested Amount of such Series at the end of the day on
the Business Day preceding the Reassignment Date (provided, however, that
with respect to any Series issued pursuant to a Variable Funding Supplement
such amount shall be the Invested Amount of such Series as of the
Reassignment Date, less the amount, if any, previously allocated for
payment of principal to such Securityholders on the related Reassignment
Date, in the Monthly Period in which the Reassignment Date occurs), plus
(ii) an amount equal to all interest accrued but unpaid on the Investor
Securities of such Series at the applicable Security Rate through such last
day, less the amount, if any, previously allocated for payment of interest
to the Securityholders of such Series on the related Distribution Date in
the Monthly Period in which the Reassignment Date occurs plus any other
amounts accrued and owing as specified in the applicable Supplement.
Payment of the reassignment deposit amount with respect to any Series, and
all other amounts in the Distribution Account or the applicable Series
Account in respect of the preceding Monthly Period, shall be considered a
prepayment in full of the Receivables represented by the Investor
Securities of such Series. On the Distribution Date following the Transfer
Date on which such amount has been deposited in full into the Distribution
Account or the applicable Series Account, the Receivables and all monies
due or to become due with respect thereto and all proceeds of the
Receivables shall be released to the Transferor after payment of all
amounts otherwise due hereunder on or prior to such dates and the Trustee
shall execute and deliver such instruments of transfer or assignment, in
each case without recourse, representation or warranty, as shall be
prepared by and as are reasonably requested by the Transferor to vest in
the Transferor, or its designee or assignee, all right, title and interest
of the Trust in and to such Receivables, all monies due or to become due
with respect thereto and all proceeds of such Receivables allocated to such
Receivables pursuant to the related Supplement. If the Trustee or the
Investor Securityholders of any Series give notice directing the Transferor
to accept reassignment as provided above, the obligation of the Transferor
to accept reassignment of the applicable Receivables and pay the
reassignment deposit amount pursuant to this subsection 2.4(e) shall
constitute the sole remedy respecting a breach of the representations and
warranties contained in subsections 2.3(a), (b) and (c) and 2.4(a)(i) and
(ii) available to the Investor Securityholders of such Series or the
Trustee on behalf of the Investor Securityholders of such Series. The
Trustee shall have no duty to conduct any affirmative investigation as to
the occurrence of any condition requiring the repurchase of any Receivable
by the Transferor pursuant to this Agreement or any Supplement or the
eligibility of any Receivable for purposes of this Agreement or any
Supplement.
Section 2.5 Covenants of the Transferor. The Transferor hereby
covenants that:
(a) Receivables to be Accounts, Chattel Paper or General
Intangibles. The Transferor will take no action to cause any Receivable to
be evidenced by any instrument (as defined in the UCC as in effect in the
Relevant UCC State), except in connection with the enforcement or
collection of a Receivable. Except in such circumstances, the Transferor
will take no action to cause any Receivable to be anything other than an
"account," "chattel paper" or a "general intangible" (as defined in the UCC
as in effect in the Relevant UCC State).
(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; and the Transferor shall defend
the right, title and interest of the Trust in, to and under the
Receivables, whether now existing or hereafter created, against all claims
of third parties claiming through or under the Transferor; provided,
however, that nothing in this subsection 2.5(b) shall prevent or be deemed
to prohibit the Transferor from suffering to exist upon any of the
Receivables any Permitted Lien.
(c) Delivery of Collections. In the event that the Transferor
receives Collections, the Transferor agrees to deposit such Collections
into the Collection Account as soon as practicable after the receipt
thereof, but in no event later than two Business Days after receipt
thereof.
(d) Notice of Liens. The Transferor shall notify the Trustee
promptly after becoming aware of any Lien on any Receivable other than
Permitted Liens.
(e) Enforcement of Purchase Agreements. The Transferor agrees
to take all action necessary and appropriate to enforce its rights and
claims under the Purchase Agreement and the Bank Receivables Purchase
Agreement.
(f) Separate Business. The Transferor will not permit its
assets to be commingled with those of either DMCCB or Metris and the
Transferor shall maintain separate corporate records, books of account and
bank accounts from those of either DMCCB or Metris. The Transferor will
not conduct its business in the name of either DMCCB or Metris and will
cause either DMCCB or Metris to conduct its business solely in its own name
so as not to mislead others as to the identity of the entity with which
those others are concerned. The Transferor will provide for its own
operating expenses and liabilities from its own funds, except that the
organizational expenses of the Transferor may be paid by either DMCCB or
Metris. The Transferor will not hold itself out, or permit itself to be
held out, as having agreed to pay, or as generally being liable for, the
debts of either DMCCB or Metris. The Transferor shall cause either DMCCB
or Metris not to hold itself out, or permit itself to be held out, as
having agreed to pay, or as generally being liable for, the debts of the
Transferor except that the organizational expenses of the Transferor may be
paid by either DMCCB or Metris and that either DMCCB or Metris will
contribute to the Transferor on the Closing Date a demand note. The
Transferor will maintain an arm's length relationship with either DMCCB or
Metris with respect to any transactions between the Transferor, on the one
hand, and either DMCCB or Metris, on the other.
(g) Purchase Agreement Notices. The Transferor (i) shall
promptly give the Trustee copies of any notices, reports or certificates
given or delivered to the Transferor under the Purchase Agreement, (ii)
shall not, without the consents, approvals and opinions, if any, required
by Section 13.1, as if Section 13.1 related to the Purchase Agreement
rather than this Agreement, enter into any amendment, supplement or other
modification to, or waiver of any provision of, the Purchase Agreement and
(iii) shall not permit the addition or removal of an Account or a
Receivable to or from the operation of the Purchase Agreement unless there
is a corresponding right or obligation of the Transferor to add or remove
such Account or Receivable to or from the Trust.
Section 2.6 Addition of Accounts.
(a) Except for Excluded Accounts, all revolving credit consumer
credit card accounts which meet the definition of Additional Accounts
shall be included as Accounts from and after the date upon which the Credit
Card Originator acquires rights in such Additional Accounts and all
Receivables in such Additional Accounts, whether such Receivables are then
existing or thereafter created, shall be transferred automatically to the
Trust. For all purposes of this Agreement, all receivables of such
Additional Accounts shall be treated as Receivables upon the Credit Card
Originator acquiring rights therein.
(b) Notwithstanding the foregoing, the Transferor may elect
at any time, or may be required pursuant to subsection 2.6(g), 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. In
connection with any Restart Date, the Transferor shall take all actions
necessary to grant the Trust a valid and perfected security interest in all
credit card accounts in which the Transferor acquired rights since the
preceding Automatic Addition Suspension Date.
(c) If the Transferor has elected to terminate or suspend the
inclusion of Additional Accounts and (i) on the tenth Business Day prior to
any Determination Date, the Transferor Interest for the related Monthly
Period is less than the Minimum Transferor Interest, the Transferor shall
designate additional credit card accounts ("Supplemental Accounts") to be
included as Accounts in a sufficient amount such that the Transferor
Interest as a percentage of the Aggregate Principal Receivables for such
Monthly Period after giving effect to such addition is at least equal to
the Minimum Transferor Interest, or on any Record Date, the Aggregate
Principal Receivables is less than the Minimum Aggregate Principal
Receivables, the Transferor shall designate Supplemental Accounts to be
included as Accounts in a sufficient amount such that the Aggregate
Principal Receivables will be equal to or greater than the Minimum
Aggregate Principal Receivables. Receivables from such Supplemental
Accounts shall be transferred to the Trust on or before the tenth Business
Day following such Record Date. On any day on which the Receivables in
Supplemental Accounts are to be transferred to the Trust, the Receivables
in such Accounts shall be included as Eligible Receivables if they satisfy
the requirements of the definition of "Eligible Receivables".
(d) In addition to its obligation under subsection 2.6(c), the
Transferor may, by giving ten Business Days notice to the Trustee and each
Rating Agency, but shall not be obligated to, designate from time to time
Supplemental Accounts of the Transferor to be included as Accounts.
(e) Unless otherwise specified in a Series Supplement, the
Transferor agrees that any such transfer of Receivables from Supplemental
Accounts, under subsection 2.6(c) or (d), shall satisfy the following
conditions (to the extent provided below):
(i) on or before the fifth Business Day prior to the
Addition Date with respect to additions pursuant to subsection 2.6(c)
and on or before the twentieth Business Day prior to the Addition Date
with respect to additions pursuant to subsection 2.6(d) (as
applicable, the "Notice Date"), the Transferor shall give the Trustee,
each Rating Agency and the Servicer written notice that such
Supplemental Accounts will be included, which notice shall specify the
approximate aggregate amount of the Receivables to be transferred;
(ii) on or before the applicable Addition Date, the
Transferor shall have delivered to the Trustee a written assignment
(including an acceptance by the Trustee on behalf of the Trust for the
benefit of the Investor Securityholders) in substantially the form of
Exhibit H (the "Assignment") and the Transferor shall have indicated
in its computer files that the Receivables created in connection with
the Supplemental Accounts have been transferred to the Trust and,
within five Business Days thereafter, the Transferor shall have
delivered to the Trustee or the bailee of the Trustee a computer file
or microfiche list containing a true and complete list of all
Supplemental Accounts, identified by account number and the Principal
Receivables in such Supplemental Accounts, as of the Addition Date,
which computer file or microfiche list shall be as of the date of such
Assignment incorporated into and made a part of such Assignment;
(iii) the Transferor shall represent and warrant that (x)
no selection procedure that is materially adverse to the interests of
the Investor Securityholders was utilized in selecting the
Supplemental Accounts and (y) as of the applicable Addition Date, the
Transferor is not insolvent and will not be rendered insolvent upon
the transfer of Receivables to the Trust;
(iv) the Transferor shall represent and warrant that, as of
the Addition Date, the Assignment constitutes either (x) a valid
transfer and assignment to the Trust of all right, title and interest
of the Transferor in and to (A) the Receivables then existing and
thereafter created and arising in connection with the Accounts and any
accounts that meet the definition of Additional Accounts, including,
without limitation, all accounts, general intangibles, chattel paper,
contract rights, and other obligations of any Obligor with respect to
the Receivables, now or hereafter existing, whether or not arising out
of or in connection with the sale or lease of goods or the rendering
of services, (B) all monies and investments due or to become due with
respect thereto (including, without limitation, the right to any
payment of interest and Finance Charge Receivables, including any
Recoveries), (C) all proceeds (as defined in the UCC as in effect in
the Relevant UCC State) of such Receivables, (D) the Purchase
Agreement and (E) the Bank Receivables Purchase Agreement, and such
Receivables and all proceeds thereof will be held by the Trust free
and clear of any Lien of any Person claiming through or under the
Transferor or any of its Affiliates, except for (i) Permitted Liens,
(ii) the interest of the Transferor as Holder of the Exchangeable
Transferor Security and any other Class or Series of Securities and
(iii) the Transferor's right, if any, to receive interest accruing on,
and investment earnings, if any, in respect of, any Interest Funding
Account and any Principal Account, the Excess Funding Account or any
Series Account as provided in this Agreement and any related
Supplement or (y) a grant of a security interest (as defined in the
UCC as in effect in the Relevant UCC State) in such property to the
Trust, which is enforceable with respect to then existing Receivables
of the Supplemental Accounts, the proceeds (as defined in the UCC as
in effect in the Relevant UCC State) thereof upon the conveyance of
such Receivables to the Trust, and which will be enforceable with
respect to the Receivables thereafter created in respect of
Supplemental Accounts conveyed on such Addition Date and the proceeds
(as defined in the UCC as in effect in the Relevant UCC State) thereof
upon such creation; and (z) if the Assignment constitutes the grant of
a security interest to the Trust in such property, upon the filing of
a financing statement as described in Section 2.1 with respect to such
Supplemental Accounts and in the case of the Receivables thereafter
created in such Supplemental Accounts and the proceeds (as defined in
the UCC as in effect in the Relevant UCC State) thereof, upon such
creation, the Trust shall have a first priority perfected security
interest in such property, except for Permitted Liens;
(v) the Transferor shall deliver to the Trustee an
Officer's Certificate substantially in the form of Schedule 2 to
Exhibit H confirming the items set forth in paragraph (ii) above;
(vi) the Transferor shall deliver to the Trustee an Opinion
of Counsel with respect to the Receivables in the Supplemental
Accounts (with a copy to the Rating Agencies) substantially in the
form of Exhibit I; and
(vii) the Transferor shall have received written notice
from the Rating Agencies that the inclusion of such accounts as
Supplemental Accounts pursuant to subsection 2.6(c) or (d), as the
case may be, will not result in the reduction or withdrawal of its
then existing rating of any Class of any Series of Investor Securities
then issued and outstanding and shall have delivered such notice to
the Trustee.
(f) The Transferor shall be permitted to designate Additional
Accounts with respect to any Monthly Period (the "Current Monthly Period")
prior to the last day of the May 1996 Monthly Period pursuant to subsection
2.6(a) of the Agreement, without limitation, provided, however, that with
respect to each Monthly Period beginning with the September 1995 Monthly
Period:
(i) the arithmetic average for the three Monthly Periods
preceding the Current Monthly Period, of the annualized percentage
equivalent of a fraction for each respective Monthly Period, the
numerator of which is equal to the Default Amount for the respective
Monthly Period (provided, however, that the Default Amount with
respect to each Default Recognition Date shall be deemed to apply to
the Monthly Period ending closest to such Default Recognition Date)
and the denominator of which is equal to the average amount of
Aggregate Principal Receivables outstanding on each day during such
Monthly Period, is less than 6%;
(ii) the arithmetic average for the three Monthly Periods
preceding the Current Monthly Period, of the percentage (the "Payment
Rate Percentage") equivalent of a fraction for each respective Monthly
Period, the numerator of which is equal to the amount of Collections
received during the respective Monthly Period and the denominator of
which is equal to the Aggregate Principal Receivables as of the first
day of the respective Monthly Period, is greater than or equal to 6%;
or
(iii) the weighted average of the Portfolio Yields for each
Series then outstanding for the three Monthly Periods preceding the
Current Monthly Period minus the weighted average of the Base Rates
for each Series then outstanding for such three Monthly Periods (the
"Excess Spread Percentage") is greater than or equal to 4%.
(iv) Standard & Poor's shall not have notified the Transferor
that the continued addition of Additional Accounts pursuant to this
subsection 2.6(e) will result in a reduction or withdrawal of the then
current rating of any Class by Standard & Poor's.
In the event that as of any date of determination prior to last day of the
May 1996 Monthly Period any of the conditions in clauses (i) through (iii)
listed above is not met, and with respect to each Monthly Period after the
May 1996 Monthly Period this subsection 2.6(f) shall no longer apply and
the conditions of subsection 2.6(g) shall apply. On or before the later of
(x) the last day of the September 1995 Monthly Period, the December 1995
Monthly Period and the March 1996 Monthly Period or (y) in each case the
tenth day following receipt of the settlement statement for the prior
Monthly Period, Standard & Poor's shall determine whether a Ratings Event
shall have occurred in connection with the addition of Additional Accounts
during the three consecutive Monthly Periods ending in August, November and
February preceding such date. Upon the occurrence of a Ratings Event in
connection with the addition of Additional Accounts this subsection 2.6(f)
shall no longer apply and the conditions of subsection 2.6(g) shall apply.
(g) Unless each Rating Agency otherwise consents to the
continued automatic addition of accounts, on and after the beginning of the
June 1996 Monthly Period, the Transferor shall be required to cease the
automatic addition of accounts and notify the Trustee, the Servicer and
each Rating Agency of the Automatic Addition Suspension Date in the
following circumstances: the number of Accounts the Receivables of which
are designated to be included in the Trust pursuant to subsection 2.6(a)
since (i) the first day of the eleventh preceding Monthly Period (or, in
the case of any date on which Additional Accounts are to be added to the
Trust which occurs on or before the last day of the May 1997 Monthly
Period, June 1, 1996) minus the number of Accounts of the type described in
clause (ii) of the definition of "Approved Account" which have been added
on the initial day of the addition of such type of Account pursuant to such
clause (ii) since the first day of such eleventh preceding Monthly Period
(or June 1, 1996, as the case may be) shall not exceed 20% of number of
Accounts on the first day of such eleventh preceding Monthly Period (or
June 1, 1996, as the case may be), and (ii) the first day of the second
preceding Monthly Period (or, in the case of any date on which Additional
Accounts are to be added to the Trust which occurs on or before the last
day of the August 1996 Monthly Period, June 1, 1996) minus the number of
Accounts of the type described in clause (ii) of the definition of
"Approved Accounts" have been added on the initial day of the addition of
such type of Account pursuant to such clause (ii) since the first day of
such second preceding Monthly Period (or June 1, 1996, as the case may be)
shall not exceed 15% of the number of Accounts on the first day of such
second preceding Monthly Period (or June 1, 1996, as the case may be).
(h) The Transferor may designate revolving credit consumer
credit card accounts which would otherwise be Additional Accounts as
Excluded Accounts by the Transferor delivering to the Trustee a written
notice clearly identifying such excluded accounts. If such designation is
made after the Trust acquires rights in such Accounts, such designation
shall only occur in accordance with the provisions of Section 2.7 hereof.
Section 2.7 Removal of Accounts.
(a) On each Determination Date that the Transferor Interest for
the related Monthly Period exceeds the Minimum Transferor Interest with
respect to such Determination Date, the Trustee shall be deemed to have
offered to the Transferor automatically and without any notice to or action
by or on behalf of the Trustee, as of such Determination Date, the right to
remove from the Trust all of the Trust's right, title and interest in, to
and under the Receivables then existing and thereafter created, all monies
then due or to become due and all amounts thereafter received with respect
thereto and all proceeds thereof in or with respect to those Accounts
designated by the Transferor (the "Removed Accounts") in an aggregate
amount not greater than the lesser of (i) the excess of the Transferor
Interest over the Minimum Transferor Interest and (ii) the excess of
Aggregate Principal Receivables over the Minimum Aggregate Principal
Receivables. To accept such offer, the Transferor is required to furnish
to the Trustee and each Rating Agency written notice by the fifth Business
Day after the Determination Date specifying the approximate aggregate
amount of Principal Receivables covered by the offer that the Transferor
intends to accept. There shall be no more than one such removal with
respect to any Monthly Period.
(b) In addition to the satisfaction of the conditions set forth
in subsection 2.7(a), the Transferor shall be permitted to accept
reassignment to it of the Receivables from Removed Accounts only upon
satisfaction of the following conditions:
(i) On each date specified by the Transferor for removal of
the Removed Accounts (a "Removal Date"), the Transferor shall prepare
and the Trustee shall execute and deliver to the Transferor a written
reassignment in substantially the form of Exhibit J (the
"Reassignment") and the Transferor shall deliver to the Trustee or the
bailee of the Trustee a computer file or microfiche list containing a
true and complete schedule identifying all Accounts the Receivables in
which remain in the Trust specifying for each such Account, as of the
Removal Notice Date, its account number and the principal balance of
such Account. Such computer file or microfiche list shall be
incorporated into and made part of this Agreement as of the date of
such Reassignment.
(ii) The Transferor shall represent and warrant as of each
Removal Notice Date that (a) the list of the Accounts not removed from
the Trust, as of the Removal Notice Date, complies in all material
respects with the requirements of paragraph (i) above and (b) no
selection procedure used by the Transferor that is materially adverse
to the interests of the Investor Securityholders was utilized in
selecting the Removed Accounts.
(iii) The Transferor shall represent and warrant that the
removal of any Receivables in any Removed Accounts on any Removal Date
shall not, in the reasonable belief of the Transferor, cause,
immediately or with the passage of time, a Pay Out Event to occur.
(iv) The Transferor shall have delivered at least 20 days'
(or such lesser number as any Rating Agency may agree) prior written
notice (which may be given prior to the Removal Date in expectation
that the Trustee will make the offer described in subsection 2.7(a))
of such removal to each Rating Agency that has rated any outstanding
Class of any Series and the Trustee shall have received written
confirmation from each such Rating Agency that such Rating Agency will
not reduce or withdraw its rating on any outstanding Class of any
Series as a result of such removal.
(v) The Transferor shall have delivered to the Trustee an
Officer's Certificate confirming the Transferor's compliance with the
items set forth in paragraphs (i) through (iv) above. The Trustee may
conclusively rely on such certificate, shall have no duty to make
inquiries with regard to the matters set forth therein and shall incur
no liability in so relying.
(c) Upon satisfaction of the conditions set forth in subsections
2.7(a) and (b), the Trustee shall execute and deliver the Reassignment to
the Transferor, and the Receivables from the Removed Accounts shall no
longer constitute a part of the Trust.
Section 2.8 Discount Option. (a) The Transferor shall have the
option to designate a percentage, which may be a fixed percentage or a
variable percentage based on a formula (the "Discount Percentage"), of
Principal Receivables, without giving effect to any discounting pursuant to
this Section 2.8, arising on or after the date of such designation, to be
treated as Finance Charge Receivables. The Transferor shall provide to the
Servicer, the Trustee, any Enhancement Provider and the Rating Agency 15
days' prior written notice of such designation, and such designation shall
become effective on the date designated therein (i) unless such designation
in the reasonable belief of the Transferor would cause a Pay Out Event to
occur, or an event which, with notice or the lapse of time or both, would
constitute a Pay Out Event and (ii) only if the Rating Agency shall have
delivered a letter to the Transferor and the Trustee confirming that its
then current rating of the Investor Securities of any Series then
outstanding will not be reduced or withdrawn as a result of such
designation.
(b) After the date on which the Transferor's exercise of its
discount option takes effect, and with respect to Receivables generated on
and after such date, the Transferor, in accordance with Section 4.3, shall
deposit into the Collection Account in immediately available funds an
amount equal to the amount of the Discount Option Receivable Collections
processed on such day. 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.
Section 2.9 Covenants of the Transferor with Respect to the
Purchase Agreement. The Transferor, in its capacity as purchaser of the
Receivables from Metris or a Credit Card Originator pursuant to the
Purchase Agreement, hereby covenants that the Transferor will at all times
enforce the covenants and agreements of each Credit Card Originator in the
Bank Receivables Purchase Agreement, including, without limitation,
covenants to the effect set forth below.
(a) Periodic Finance Charges and Other Fees. Except as
otherwise required by any Requirement of Law, or as is deemed by the
applicable Credit Card Originator in its sole discretion to be
necessary in order to maintain its credit card business on a
competitive basis, it shall not at any time reduce the annual
percentage rates of the Periodic Finance Charges assessed on the
Receivables or other fees charged on any of the Accounts if, as a
result of any such reduction, either (i) the Transferor's reasonable
expectation is that such reduction will cause a Pay Out Event to occur
or (ii) such reduction is not also applied to any comparable segment
of consumer revolving credit card accounts owned by such Credit Card
Originator that have characteristics the same as, or substantially
similar to, such Accounts.
(b) Credit and Collection Policy and Contracts. Each Credit
Card Originator shall comply with and perform its obligations under
the Contracts relating to the Accounts and the Credit and Collection
Policy except insofar as any failure so to comply or perform would not
materially and adversely affect the rights of the Trust or the
Securityholders hereunder or under the Securities. Subject to
compliance with all Requirements of Law, a Credit Card Originator may
change the terms and provisions of the Contracts or the Credit and
Collection Policy with respect to any of the Accounts in any respect
(including the calculation of the amount, or the timing, of charge-
offs and the Periodic Finance Charges and other fees to be assessed
thereon) only if in the reasonable judgment of the Credit Card
Originator (i) (if it owns a comparable segment of receivables) such
change is made applicable to any comparable segment of the consumer
revolving credit card accounts owned by such Credit Card Originator
which have characteristics the same as, or substantially similar to,
such Accounts or (ii) (if it does not own such a comparable segment of
receivables) will not be made with the intent to materially benefit
the Transferor or the Credit Card Originator over the Investor
Securityholders or to materially adversely affect the Investor
Securityholders, except as otherwise restricted by an endorsement,
sponsorship, or other agreement between the Transferor and an
unrelated third party or by the terms of the Contracts.
The Transferor further covenants that the Transferor will not
enter into any amendments to the Bank Receivables Purchase Agreement or the
Purchase Agreement that would cause a Ratings Event to occur.
Section 2.10. Receivables in Defaulted Accounts. On the date on
which an Account becomes a Defaulted Account, the Trust shall automatically
and without further action or consideration be deemed to transfer, set
over, and otherwise convey to the Transferor, without recourse,
representation or warranty, all the right, title and interest of the Trust
in and to the Receivables in such Defaulted Account, all monies due or to
become due with respect thereto, all proceeds of such Receivables allocable
to the Trust with respect to such Receivable, excluding Recoveries relating
thereto, which shall remain a part of the Trust Property. On each
Determination Date, the Servicer shall calculate the aggregate Series
Default Amount for the preceding Monthly Period with respect to each
Series.
[End of Article II]
ARTICLE III
ADMINISTRATION AND SERVICING
OF RECEIVABLES
Section 3.1 Acceptance of Appointment and Other Matters
Relating to the Servicer.
(a) DMCCB agrees to act as the Servicer under this Agreement.
The Investor Securityholders of each Series by their acceptance of the
related Securities consent to DMCCB acting as Servicer. Notwithstanding
the foregoing or any other provisions of this Agreement or any Supplement,
the Investor Securityholders consent to an Affiliate of DMCCB acting as
Servicer hereunder, in full substitution thereof; provided that such
Affiliate shall expressly assume in writing (unless such assumption occurs
by operation of law), by an agreement supplemental hereto, executed and
delivered to the Trustee, the performance of every covenant and obligation
of the Servicer, as applicable hereunder, and shall in all respects be
designated the Servicer under this Agreement; provided, further, that DMCCB
will remain jointly and severally liable with such Affiliate.
(b) The Servicer shall service and administer the Receivables
and shall collect payments due under the Receivables in accordance with its
customary and usual servicing procedures and the Credit and Collection
Policies and shall have full power and authority, acting alone or through
any party properly designated by it hereunder, to do any and all things in
connection with such servicing and administration that it may deem
necessary or desirable. Without limiting the generality of the foregoing
and subject to Section 10.1, the Servicer is hereby authorized and
empowered (i) to make withdrawals from the Collection Account as set forth
in this Agreement, (ii) unless such power and authority is revoked by the
Trustee on account of the occurrence of a Servicer Default pursuant to
Section 10.1, to instruct the Trustee in writing to make withdrawals and
payments, from any Interest Funding Account, the Excess Funding Account,
any Principal Account and any Series Account, in accordance with such
instructions as set forth in this Agreement, (iii) unless such power and
authority is revoked by the Trustee on account of the occurrence of a
Servicer Default pursuant to Section 10.1, to instruct the Trustee in
writing to take any action permitted or required under any Enhancement at
such time as set forth in this Agreement and any Supplement, (iv) to
execute and deliver, on behalf of the Trust for the benefit of the
Securityholders, any and all instruments of satisfaction or cancellation,
or of partial or full release or discharge, and all other comparable
instruments, with respect to the Receivables and, after the delinquency of
any Receivable and to the extent permitted under and in compliance with
applicable law and regulations, to commence enforcement proceedings with
respect to such Receivables, (v) to make any filings, reports, notices,
applications, registrations with, and to seek any consents or
authorizations from, the Securities and Exchange Commission and any state
securities authority on behalf of the Trust as may be necessary or
advisable to comply with any federal or state securities or reporting
requirements and (vi) to delegate certain of its service, collection,
enforcement and administrative duties hereunder with respect to the
Accounts and the Receivables to any Person who agrees to conduct such
duties in accordance with the Credit and Collection Policies; provided,
however, that the Servicer shall notify the Trustee in writing of any such
delegation; and provided further that the Servicer shall remain jointly and
severally liable with such Person. The Trustee agrees that it shall
promptly follow the instructions of the Servicer or its delegate to
withdraw funds from the Collection Account, any Principal Account, any
Interest Funding Account, the Excess Funding Account, or any Series Account
and to take any action required under any Enhancement at such time as
required under this Agreement. The Trustee shall execute at the Servicer's
written request such documents prepared by the Transferor and acceptable to
the Trustee as the Servicer certifies are necessary or appropriate to
enable the Servicer to carry out its servicing and administrative duties
hereunder.
(c) The Servicer shall not be obligated to use separate
servicing procedures, offices or employees for servicing the Receivables
from the procedures, offices and employees used by the Servicer in
connection with servicing other credit card receivables.
Section 3.2 Servicing Compensation. As compensation for its
servicing activities hereunder and reimbursement for its expenses as set
forth in the immediately following paragraph, the Servicer shall be
entitled to receive a servicing fee in respect of each day prior to the
termination of the Trust pursuant to Section 12.1 (the "Servicing Fee"),
payable in arrears on each date and in the manner specified in the
applicable Supplement, equal to the product of (i) a fraction, the
numerator of which is the actual number of days in the measuring period
specified in the applicable Supplement and the denominator of which is the
actual number of days in the year, (ii) the weighted average Series
Servicing Fee Percentage for all outstanding Series (based upon the Series
Servicing Fee Percentage for each Series and the Invested Amount of such
Series) and (iii) the daily average aggregate balance of all Principal
Receivables over the term of such measuring period. The share of the
Servicing Fee allocable to each Series with respect to any date of payment
shall be equal to the product of (i) a fraction, the numerator of which is
the actual number of days in the measuring period specified in the
applicable Supplement and the denominator of which is the actual number of
days in the year, (ii) the applicable Series Servicing Fee Percentage for
such Series and (iii) the Invested Amount of such Series, as appropriate,
as of the date of determination for such payment as specified in the
applicable Supplement. The remainder of the Servicing Fee shall be paid by
the Transferor, or retained by the Servicer as provided in Article IV, and
in no event shall the Trust, the Trustee, any Enhancement Provider, or the
Investor Securityholders be liable for the share of the Servicing Fee to be
paid by the Transferor.
The Servicer shall be responsible for its own expenses, which
shall include the amounts due to the Trustee pursuant to Section 11.5 and
the reasonable fees and disbursements of independent public accountants and
all other expenses incurred by the Servicer in connection with its
activities hereunder; provided, that the Servicer shall not be liable for
any liabilities, costs or expenses of the Trust, the Investor
Securityholders or the Security Owners arising under any tax law, including
without limitation any federal, state or local income or franchise taxes or
any other tax imposed on or measured by income (or any interest, penalties
or additions with respect thereto or arising from a failure to comply
therewith). In the event that the Servicer fails to pay any amounts due to
the Trustee pursuant to Section 11.5, the Trustee shall be entitled to
deduct and receive such amounts from the Servicing Fee prior to the payment
thereof to the Servicer and the obligations of the Trust to pay any such
amounts shall thereby be fully satisfied. The Servicer shall be required
to pay such expenses for its own account and shall not be entitled to any
payment therefor other than the Servicing Fee.
Section 3.3 Representations and Warranties of the Servicer.
DMCCB, as Servicer, hereby makes, and any Successor Servicer by its
appointment hereunder shall make, the following representations and
warranties on which the Trustee has relied in accepting the Receivables in
trust and in authenticating the Securities issued on the Initial Closing
Date:
(a) Organization and Good Standing. The Servicer is either (i)
a national banking association duly organized, validly existing and in good
standing under the laws of the United States or (ii) a corporation duly
organized, validly existing and in good standing under the laws of its
state of incorporation and has the corporate power, authority and legal
right 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 this Agreement.
(b) Due Qualification. The Servicer is duly qualified to do
business and is in good standing (or is exempt from such requirements) as a
foreign corporation in any state where such qualification is necessary in
order to service the Receivables as required by this Agreement and has
obtained all necessary licenses and approvals as required under Federal and
state law in order to service the Receivables as required by this
Agreement, and if the Servicer shall be required by any Requirement of Law
to so qualify or register or obtain such license or approval, then it shall
do so except where the failure to obtain such license or approval does not
materially affect the Servicer's ability to perform its obligations
hereunder or the enforceability of the Receivables.
(c) Due Authorization. The execution and delivery of this
Agreement and the consummation of the transactions provided for herein,
have been duly authorized by the Servicer by all necessary corporate action
on the part of the Servicer.
(d) Binding Obligation. This Agreement and the consummation of
the transactions provided for herein, constitutes a legal, valid and
binding obligation of the Servicer, enforceable in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereinafter in effect, affecting the enforcement of creditors' rights in
general and as such enforceability may be limited by general principles of
equity (whether considered in a proceeding at law or in equity).
(e) No Violation. The execution and delivery of this Agreement
by the Servicer, and the performance of the transactions contemplated by
this Agreement and the fulfillment of the terms hereof applicable to the
Servicer, will not 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 Requirement of Law applicable to the
Servicer or any material indenture, contract, agreement, mortgage, deed of
trust or other material instrument to which the Servicer is a party or by
which it is bound.
(f) No Proceedings. There are no proceedings or investigations
pending or, to the best knowledge of the Servicer, threatened against the
Servicer before any Governmental Authority (i) asserting the invalidity of
this Agreement, (ii) seeking to prevent the issuance of the Securities or
the consummation of any of the transactions contemplated by this Agreement,
(iii) seeking any determination or ruling that would materially and
adversely affect the performance by the Servicer of its obligations under
this Agreement, (iv) seeking any determination or ruling that would
materially and adversely affect the validity or enforceability of this
Agreement or (v) seeking to affect adversely the tax attributes of the
Trust.
(g) Compliance with Requirements of Law. The Servicer shall
duly satisfy all obligations on its part to be fulfilled under or in
connection with each Receivable and the related Contract, will maintain in
effect all qualifications required under Requirements of Law in order to
service properly each Receivable and the related Contract and will comply
in all material respects with all other Requirements of Law in connection
with servicing each Receivable and the related Contract the failure to
comply with which would have a material adverse effect on the
Securityholders or any Enhancement Provider.
(h) Protection of Securityholders' Rights. The Servicer shall
take no action which, nor omit to take any action the omission of which,
would impair the rights of Securityholders in any Receivable or the related
Account or the rights or obligations of any Enhancement Provider, nor shall
it reschedule, revise or defer payments due on any Receivable except in
accordance with the Credit and Collection Policies.
(i) All Consents Required. All approvals, authorizations,
consents, orders or other actions of any Governmental Authority required in
connection with the execution and delivery of this Agreement and the
performance of the transactions contemplated by this Agreement and the
fulfillment of the terms hereof, have been obtained; provided, however,
that the Servicer makes no representation or warranty regarding State
securities or "Blue Sky" laws in connection with the distribution of the
Securities.
(j) Rescission or Cancellation. The Servicer shall not permit
any rescission or cancellation of any Receivable except as ordered by a
court of competent jurisdiction or other Governmental Authority or in
accordance with the Credit and Collection Policy or the normal operating
procedures of the Servicer.
(k) Receivables Not To Be Evidenced by Promissory Notes. Except
in connection with its enforcement or collection of an Account (in which
case any such promissory note would be made in the name of the Trust on
behalf of the Securityholders), the Servicer will take no action to cause
any Receivable to be evidenced by an instrument (as defined in the UCC as
in effect in the Relevant UCC State).
(l) Principal Place of Business. The Servicer shall at all
times maintain its principal executive offices within the United States.
Section 3.4 Reports and Records for the Trustee.
(a) Daily Records. Upon reasonable prior notice by the Trustee,
the Servicer shall make available at an office of the Servicer (or other
location designated by the Servicer if such records are not accessible by
the Servicer at an office of the Servicer) selected by the Servicer for
inspection by the Trustee or its agent (reasonably acceptable to the
Servicer) on a Business Day during the Servicer's normal business hours a
record setting forth (i) the Collections on the Receivables and (ii) the
amount of Receivables for the Business Day preceding the date of the
inspection. The Servicer shall, at all times, maintain its computer files
with respect to the Receivables in such a manner so that the Receivables
may be specifically identified and, upon reasonable prior request of the
Trustee, shall make available to the Trustee, at an office of the Servicer
(or other location designated by the Servicer if such computer files are
not located at an office of the Servicer) selected by the Servicer, on any
Business Day of the Servicer during the Servicer's normal business hours
any computer programs necessary to make such identification.
(b) Daily Report.
(i) On each Business Day the Servicer shall prepare a
completed Daily Report.
(ii) The Servicer shall deliver to the Trustee and the
Paying Agent the Daily Report by 3:00 p.m. (New York City time) on
each Business Day with respect to activity in the Receivables for the
prior Business Day (or, in the case of a Daily Report delivered on the
second Business Day following a Saturday, Sunday or other non-Business
Day, the aggregate activity for the preceding Business Day and such
preceding non-Business Days).
(iii) Upon discovery of any error or receipt of notice of
any error in any Daily Report, the Servicer, the Transferor and the
Trustee shall arrange to confer and shall agree upon any adjustments
necessary to correct any such errors. If any such error is materially
adverse to the interests of the Security Owners, the Servicer or the
Trustee, as the case may be, shall retain all Collections which would
otherwise be paid from the Trust (or such lesser amount as the Trustee
and the Servicer shall agree to be necessary to cover any such error)
in the Collection Account until such material error is corrected.
Unless the Trustee has received written notice of any error or
discrepancy, the Trustee may rely on each Daily Report delivered to it
for all purposes hereunder.
(c) Settlement Statement. On the second Business Day prior to
each Distribution Date, the Servicer shall, prior to 3:00 p.m. (New York
City time) on such day, deliver to the Trustee and the Paying Agent the
Settlement Statement for the related Monthly Period substantially in the
form of Exhibit C hereto, including the following information (which, in
the case of clauses (iii), (iv) and (v) below, will be stated on the basis
of an original principal amount of $1,000 per Security): (i) the aggregate
amount of Collections received in the Collection Account for the Monthly
Period preceding such Determination Date and the aggregate amount of
Finance Charge Collections and the aggregate amount of Principal
Collections processed during such Monthly Period; (ii) the aggregate
amount of the applicable Investor Percentage of Principal Collections
during the preceding Monthly Period for each Series of Securities and the
aggregate amount of the applicable Investor Percentage of Finance Charge
Collections during the preceding Monthly Period for each Series of
Securities; (iii) for each Series and for each Class within any such
Series, the total amount to be distributed to Investor Securityholders on
the next succeeding Distribution Date; (iv) for each Series and for each
Class within any such Series, the amount of such distribution allocable to
principal; (v) for each Series and for each Class within any such Series,
the amount of such distribution allocable to interest; (vi) for each Series
and each Class within a Series, the Series Default Amount for the
immediately preceding Monthly Period; (vii) for each Series and each Class
within a Series, the amount of the Series Charge-Offs and the amount of the
reimbursements of Series Charge-Offs for such Distribution Date; (viii) for
each Series, the Servicing Fee for such Distribution Date; (ix) for each
Series, the existing deficit controlled amortization amount, if applicable;
(x) the Aggregate Principal Receivables in the Trust at the close of
business on the last day of the Monthly Period preceding such Distribution
Date; (xi) for each Series, the Invested Amount at the close of business on
the last day of the Monthly Period immediately preceding such Distribution
Date; (xii) the available amount of any Enhancement for each Class of each
Series, if any; (xiii) for each Series and each Class within a Series, the
Pool Factor as of the end of the related Monthly Period; (xiv) whether a
Pay Out Event or a Prospective Pay Out Event with respect to any Series
shall have occurred during or with respect to the related Monthly Period;
(xv) the aggregate amount of Discount Option Receivables in the Trust at
the close of business on the last day of the Monthly Period preceding such
Distribution Date; (xvi) the aggregate amount of Discount Option
Receivables Collections processed during such Monthly Period; and (xvii)
such other calculations as may be required by any Supplement. The Trustee
shall be under no duty to recalculate, verify or recompute the information
supplied to it under this Section 3.4 or such other matters as are set
forth in any Settlement Statement. The Servicer shall also provide a copy
of the Settlement Statement in a prompt manner to each Rating Agency.
Section 3.5 Annual Servicer's Certificate. The Servicer will
deliver, in accordance with Section 13.5, to the Trustee, any Enhancement
Provider and the Rating Agencies, within 100 days of the end of each fiscal
year, beginning in 1995, an Officer's Certificate substantially in the form
of Exhibit D stating that (a) a review of the activities of the Servicer
during the preceding fiscal year and of its performance under this
Agreement was made under the supervision of the officer signing such
certificate and (b) to such officer's knowledge, based on such review, the
Servicer has fully performed all its obligations under this Agreement
throughout such period, or, if there has been a default in the performance
of any such obligation, specifying each such default known to such officer
and the nature and status thereof. A copy of such certificate may be
obtained by any Investor Securityholder by a request in writing to the
Trustee addressed to the Corporate Trust Office.
Section 3.6 Annual Independent Accountants' Servicing Report.
(a) Within 100 days of the end of each fiscal year, 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 a report with respect to the prior fiscal year (or, in the case of
the first such period, the period beginning on the Initial Closing Date and
ending on the last day of the related fiscal year) to the Trustee, any
Enhancement Provider and each Rating Agency, to the effect that such firm
has applied certain procedures, agreed upon with the Servicer and the
Trustee and substantially as set forth in Exhibit G hereto, which would re-
perform certain accounting procedures performed by the Servicer pursuant to
certain documents and records relating to the servicing of the Accounts
under this Agreement. In addition, each report shall set forth the agreed
upon procedures performed and the results of such procedures.
(b) Within 100 days of the end of each fiscal year, the Servicer
shall cause a firm of nationally recognized independent certified public
accountants (who may also render other services to the Servicer or the
Transferor) to furnish a report to the Trustee, any Enhancement Provider
and the Rating Agency to the effect that they have compared the amounts and
percentages set forth in four of the monthly certificates forwarded by the
Servicer pursuant to subsection 3.4(c) during the period covered by such
report with the computer reports (which may include personal computer
generated reports that summarize data from the computer reports generated
by either the Transferor or Servicer which are used to prepare the Daily
Reports) which were the source of such amounts and percentages and that on
the basis of such comparison, such amounts and percentages are in agreement
except as shall be set forth in such report. A copy of such report will be
sent by the Trustee to each Investor Securityholder.
Section 3.7 Tax Treatment. The Transferor has structured this
Agreement and the Investor Securities with the intention that the Investor
Securities will qualify under applicable federal, state, local and foreign
tax law as indebtedness. Except to the extent expressly specified to the
contrary in any Supplement, the Transferor, the Servicer, the Holder of the
Exchangeable Transferor Security, each Investor Securityholder, Holder of a
Variable Funding Security, and each Security Owner agree to treat and to
take no action inconsistent with the treatment of the Investor Securities
(or beneficial interest therein) as indebtedness for purposes of federal,
state, local and foreign income or franchise taxes and any other tax
imposed on or measured by income. Each Investor Securityholder, Holder of
a Variable Funding Security and the Holder of the Exchangeable Transferor
Security, by acceptance of its Security and each Security Owner, by
acquisition of a beneficial interest in a Security, agree to be bound by
the provisions of this Section 3.7. Each Securityholder agrees that it
will cause any Security Owner acquiring an interest in a Security through
it to comply with this Agreement as to treatment as indebtedness under
applicable tax law, as described in this Section 3.7. Furthermore, subject
to Section 11.11, the Trustee shall treat the Trust as a security device
only, and shall not file tax returns or obtain an employer identification
number on behalf of the Trust.
Section 3.8 Adjustments. (a) If the Servicer adjusts downward
the amount of any Receivable because of a rebate, refund, unauthorized
charge or billing error to an Obligor, because such Receivable was created
in respect of merchandise which was refused or returned by an Obligor, or
if the Servicer otherwise adjusts downward the amount of any Receivable
without receiving Collections therefor or without charging off such amount
as uncollectible, then, in any such case, the aggregate amount of the
Principal Receivables used to calculate the Investor Percentages applicable
to any Series and the Transferor Interest will be reduced by the principal
amount of any such adjustment. Similarly, the aggregate amount of the
Principal Receivables used to calculate the Investor Percentages applicable
to any Series will be reduced by the amount of any Principal Receivable
which was discovered as having been created through a fraudulent or
counterfeit charge or with respect to which the covenant contained in
subsection 2.5(b) was breached. Any adjustment required pursuant to either
of the two preceding sentences shall be made on or prior to the end of the
Monthly Period in which such adjustment obligation arises. In the event
that, following any such adjustment, the Transferor Interest would be less
than the Minimum Transferor Interest, within two Business Days of the date
on which such adjustment obligation arises, the Transferor shall pay to
the Servicer, for deposit into the Excess Funding Account, in immediately
available funds an amount equal to the amount by which the Transferor
Interest would be reduced below the Minimum Transferor Interest as a result
of such adjustment or exclusion. Any amount deposited into the Excess
Funding Account in connection with the adjustment of a Receivable (an
"Adjustment Payment") shall be applied in accordance with Article IV and
the terms of each Supplement.
(b) If (i) the Servicer makes a deposit into the Collection
Account in respect of a Collection of a Receivable and such deposit was in
the form of a check which is not honored for any reason or (ii) the
Servicer makes a mistake with respect to the amount of any Collection and
deposits an amount that is less than or more than the actual amount of such
Collection, the Servicer shall appropriately adjust the amount subsequently
deposited into the Collection Account (or shall be entitled to receive a
refund from the Collection Account in the case of an excess deposit) to
reflect such dishonored check or mistake. Any Receivable in respect of
which a dishonored check is received shall be deemed not to have been paid.
Notwithstanding the first two sentences of this paragraph, any adjustments
made pursuant to this paragraph will be reflected in a current report but
will not change any amount of Collections previously reported pursuant to
subsection 3.4(b).
Section 3.9 Notices to DMCCB. In the event that DMCCB or any
Affiliate thereof is no longer acting as Servicer, any Successor Servicer
appointed pursuant to Section 10.2 shall deliver or make available to
Metris each certificate and report required to be prepared, forwarded or
delivered thereafter pursuant to Sections 3.4, 3.5 and 3.6.
[End of Article III]
ARTICLE IV
RIGHTS OF SECURITYHOLDERS AND ALLOCATION
AND APPLICATION OF COLLECTIONS
Section 4.1 Rights of Securityholders. Each Series of Investor
Securities shall represent Undivided Interests in the Trust, including the
benefits of any Enhancement issued with respect to such Series and the
right to receive the Collections and other amounts at the times and in the
amounts specified in this Article IV and the related Supplement to be
deposited in the Investor Accounts or to be paid to the Investor
Securityholders of such Series; provided, however, that the aggregate
interest represented by such Securities at any time in the Principal
Receivables shall not exceed an amount equal to the Invested Amount of such
Securities. The Exchangeable Transferor Security shall represent the
remaining undivided interest in the Trust, including the right to receive
the Collections and other amounts with respect to each Series at the times
and in the amounts specified in this Article IV and the related Supplement
to be paid to the Holder of the Exchangeable Transferor Security; provided,
however, that the aggregate interest represented by such Security at any
time in the Principal Receivables shall not exceed the Transferor Interest
at such time and such Security shall not represent any interest in the
Investor Accounts, except as provided in this Agreement and the
Supplements, or the benefits of any Enhancement issued with respect to any
Series.
Section 4.2 Establishment of Accounts.
(a) The Collection Account. The Servicer, for the benefit of
the Securityholders, shall establish in the name of the Trustee, on behalf
of the Trust, a non-interest bearing segregated account (the "Collection
Account") bearing a designation clearly indicating that the funds deposited
therein are held in trust for the benefit of the Securityholders, and shall
cause such Collection Account to be established and maintained, (i) in a
segregated trust account with the corporate trust department of a
depositary institution or trust company (which may include the Trustee)
organized under the laws of the United States of America or any one of the
states thereof or the District of Columbia which has a long-term unsecured
debt rating of at least Baa3 by Moody's and whose deposits are insured to
the limits provided by law by the FDIC having corporate trust powers and
acting as trustee for funds deposited therein (provided, however, that such
account need not be maintained as a segregated trust account with the
corporate trust department of such institution if at all times the
certificates of deposit, short-term deposits or commercial paper or the
long-term unsecured debt obligations (other than such obligation whose
rating is based on collateral or on the credit of a Person other than such
institution or trust company) of such depositary institution or trust
company shall have a credit rating from Standard & Poor's of at least A-1+
and P-1 from Moody's in the case of the certificates of deposit, short-term
deposits or commercial paper, or a rating from Standard & Poor's of AAA and
from Moody's of Aaa in the case of the long-term unsecured debt
obligations) or (ii) with a depositary institution, which may include the
Trustee, which is acceptable to the Rating Agency (in the case of (i) and
(ii), a "Qualified Institution"). If, at any time, the institution holding
the Collection Account ceases to be a Qualified Institution, the Transferor
shall direct the Servicer to establish within 10 Business Days a new
Collection Account with a Qualified Institution, transfer any cash and/or
any investments to such new Collection Account and from the date such new
Collection Account is established, it shall be the "Collection Account."
The Servicer shall give written notice to the Trustee of the location and
account number of the Collection Account and shall notify the Trustee in
writing prior to any subsequent change thereof. Pursuant to authority
granted to it pursuant to subsection 3.1(b), the Servicer shall have the
power revocable by the Trustee to withdraw funds from the Collection
Account for the purposes of carrying out its duties hereunder.
The Collection Account shall be under the sole dominion and
control of the Trustee and the Trustee shall possess all right, title and
interest in all funds from time to time on deposit in such account.
(b) The Interest Funding and Principal Accounts. The Trustee,
for the benefit of the Investor Securityholders, shall establish and
maintain with a Qualified Institution in the name of the Trust two
segregated trust accounts for each Series (an "Interest Funding Account"
and a "Principal Account," respectively), each bearing a designation
clearly indicating that the funds therein are held for the benefit of the
Investor Securityholders of such Series. Except as provided in subsection
4.2(e), each Interest Funding Account and each Principal Account shall be
under the sole dominion and control of the Trustee for the benefit of the
Investor Securityholders. Pursuant to authority granted to it hereunder,
the Servicer shall have the revocable power to instruct the Trustee to
withdraw funds from the Interest Funding Account and any Principal Account
for any purpose of carrying out the Servicer's or the Trustee's duties
hereunder. The Trustee at all times shall maintain accurate records
reflecting each transaction in each Principal Account and each Interest
Funding Account and that funds held therein shall at all times be held in
trust for the benefit of the Investor Securityholders of such Series. If,
at any time, the institution holding the Interest Funding Account ceases to
be a Qualified Institution, the Servicer shall direct the Trustee to
establish within 10 Business Days a new Interest Funding Account meeting
the conditions specified above with a Qualified Institution, transfer any
cash and/or any investments to such new Interest Funding Account and from
the date such new Interest Funding Account is established, it shall be the
"Interest Funding Account." Similarly, if, at any time, the institution
holding any Principal Account ceases to be a Qualified Institution, the
Servicer shall direct the Trustee to establish within 10 Business Days a
new Principal Account meeting the conditions specified above with a
Qualified Institution, transfer any cash and/or any investments to such new
Principal Account and from the date such new Principal Account is
established, it shall be a "Principal Account."
(c) Distribution Accounts. The Trustee, for the benefit of the
Investor Securityholders of each Series, shall cause to be established and
maintained in the name of the Trust, with an office or branch of a
Qualified Institution a non-interest-bearing segregated demand deposit
account for each Series (a "Distribution Account") bearing a designation
clearly indicating that the funds deposited therein are held in trust for
the benefit of the Investor Securityholders of such Series. Each
Distribution Account shall be under the sole dominion and control of the
Trustee for the benefit of the Investor Securityholders of the related
Series. Pursuant to the authority granted to the Paying Agent herein, the
Paying Agent shall have the power, revocable by the Trustee, to make
withdrawals and payments from the Distribution Account for the purpose of
carrying out the Paying Agent's duties hereunder. If, at any time, the
institution holding a Distribution Account ceases to be a Qualified
Institution, the Servicer shall direct the Trustee to establish within 10
Business Days a new Distribution Account meeting the conditions specified
above with a Qualified Institution, transfer any cash and/or any
investments to such new Distribution Account and from the date such new
Distribution Account is established, it shall be a "Distribution Account."
(d) The Excess Funding Account. The Trustee, for the benefit of
the Securityholders, shall cause to be established in the name of the
Trustee, on behalf of the Securityholders, with a Qualified Institution, a
segregated trust account (the "Excess Funding Account") bearing a
designation clearly indicating that the funds deposited therein are held
for the benefit of the Securityholders. Except as provided in subsection
4.3(e), the Excess Funding Account shall, except as otherwise provided
herein, be under the sole dominion and control of the Trustee for the
benefit of the Securityholders. Pursuant to the authority granted to the
Servicer herein, the Servicer shall have the power, revocable by the
Trustee, to make withdrawals and payments from the Excess Funding Account
for the purpose of carrying out the Servicer's or Trustee's duties
hereunder. If, at any time, the institution holding the Excess Funding
Account ceases to be a Qualified Institution, the Servicer shall direct the
Trustee to establish within 10 Business Days a new Excess Funding Account
meeting the conditions specified above with a Qualified Institution,
transfer any cash and/or any investments to such new Excess Funding Account
and from the date such new Excess Funding Account is established, it shall
be the "Excess Funding Account."
(e) Administration of the Principal Accounts and the Interest
Funding Accounts. Funds on deposit in each Principal Account and each
Interest Funding Account shall at all times be invested by the Servicer
(or, at the written direction of the Transferor, by the Trustee) on behalf
of the Transferor in Cash Equivalents. Any such investment shall mature
and such funds shall be available for withdrawal on or before the Transfer
Date following the Monthly Period in which such funds were processed for
collection. No such investments shall be liquidated prior to maturity. At
the end of each month, all interest and earnings (net of losses and
investment expenses) on funds on deposit in each Principal Account and each
Interest Funding Account (unless otherwise specified in the applicable
Supplement) shall be deposited by the Trustee in a separate deposit account
with a Qualified Institution in the name of the Servicer, or a Person
designated in writing by the Servicer, which shall not constitute a part of
the Trust, or shall otherwise be turned over by the Trustee to the Servicer
in accordance with instructions from the Servicer to the Trustee not less
frequently than monthly. Subject to the restrictions set forth above, the
Servicer, or a Person designated in writing by the Servicer, of which the
Trustee shall have received written notification, shall have the authority
to instruct the Trustee with respect to the investment of funds on deposit
in any Principal Account and any Interest Funding Account. Any investment
instructions to the Trustee shall be in writing, shall be given no later
than 10:00 a.m. New York City time on a Business Day that such investment
is proposed to be made and shall include a certification that the proposed
investment is a Cash Equivalent that matures at or prior to the time
required by this Agreement. For purposes of determining the availability
of funds or the balances in any Interest Funding Account and any Principal
Account for any reason under this Agreement, all investment earnings on
such funds shall be deemed not to be available or on deposit.
Section 4.3 Collections and Allocations.
(a) Collections. Obligors shall make payments on the
Receivables to the Servicer who shall deposit all such payments in the
Collection Account no later than the second Business Day following the Date
of Processing thereof.
The Servicer shall allocate such amounts to each Series of
Investor Securities and to the Holder of the Exchangeable Transferor
Security in accordance with this Article IV and the related Supplement and
shall cause the Trustee to withdraw the required amounts from the
Collection Account or pay such amounts to the Holder of the Exchangeable
Transferor Security in accordance with this Article IV and the related
Supplement. The Servicer shall make such deposits or payments on the date
indicated herein by wire transfer or as otherwise provided in the
Supplement for any Series of Securities with respect to such Series.
Notwithstanding anything in this Agreement to the contrary, but
subject to the terms of any Supplement, for so long as, and only so long
as, DMCCB (or any successors to DMCCB pursuant to Section 8.2) or an
Affiliate of DMCCB shall remain the Servicer hereunder, and (a)(i) DMCCB
(or any successors to DMCCB pursuant to Section 8.2) or an Affiliate of
DMCCB provides to the Trustee a letter of credit or other form of
Enhancement rated at least A-1 by Standard & Poor's and P-1 by Moody's (as
certified to the Trustee by the Servicer), and (ii) after notifying each
Rating Agency of the proposed use of such letter of credit or other form of
Enhancement the Transferor shall have received a notice from each Rating
Agency that making payments monthly rather than daily would not result in a
downgrading or withdrawal of any of such Rating Agency's then-existing
ratings of the Investor Securities, or (b) DMCCB (or any successors to
DMCCB pursuant to Section 8.2) shall have and maintain a short-term credit
rating of at least A-1 by Standard & Poor's and P-1 by Moody's (as
certified to the Trustee by the Servicer), the Servicer need not deposit
Collections from the Collection Account into the Principal Account or the
Interest Funding Account or any Series Account, or make payments to the
Holder of the Exchangeable Transferor Security, prior to the close of
business on the day any Collections are deposited in the Collection Account
as otherwise provided in this Article IV and the related Supplement, but
may instead make such deposits, payments and withdrawals on each Transfer
Date in an amount equal to the net amount of such deposits, payments and
withdrawals which would have been made but for the provisions of this
paragraph.
(b) Allocations for the Exchangeable Transferor Security.
Throughout the existence of the Trust, unless otherwise stated in any
Supplement, on each Business Day the Servicer shall allocate to the Holder
of the Exchangeable Transferor Security an amount equal to the product of
(A) the Transferor Percentage as of the end of the preceding Business Day
and (B) the aggregate amount of Principal Collections and Finance Charge
Collections available in the Collection Account. The Servicer shall pay
such amount to the Holder of the Exchangeable Transferor Security on each
Business Day; provided, however, that amounts payable to the Holder of the
Exchangeable Transferor Security pursuant to this clause (b) shall instead
be deposited in the Excess Funding Account to the extent necessary to
prevent the Transferor Interest from being less than the Minimum Transferor
Interest.
(c) Allocation for Series. On each Business Day, (i) the amount
of Finance Charge Collections available in the Collection Account allocable
to each Series, (ii) the amount of Principal Collections available in the
Collection Account allocable to each Series and (iii) the Receivables in
Defaulted Accounts allocable to each Series shall be determined in
accordance with the provisions of the related Supplement. The Servicer
shall, prior to the close of business on the day any Collections are
deposited in the Collection Account, cause the Trustee to withdraw the
required amounts from the Collection Account and cause the Trustee to
deposit such amounts into the applicable Principal Account, the applicable
Interest Funding Account, the Excess Funding Account, or any Series Account
or pay such amounts to the Holder of the Exchangeable Transferor Security
in accordance with the provisions of this Article IV and the Supplements.
(d) Unallocated Principal Collections; Excess Funding Account.
On each Business Day, Shared Principal Collections shall be allocated to
each outstanding Series pro rata based on the Principal Shortfall, if any,
for each such Series, and then, at the option of the Transferor, any
remainder may be applied as principal with respect to the Variable Funding
Securities. The Servicer shall pay any remaining Shared Principal
Collections on such Business Day to the Transferor; provided, that if the
Transferor Interest as determined on such Business Day does not exceed the
Minimum Transferor Interest, then such remaining Shared Principal
Collections shall be deposited in the Excess Funding Account to the extent
necessary to increase the Transferor Interest above the Minimum Transferor
Interest; provided, further, that if an Amortization Period has commenced
and is continuing with respect to more than one outstanding Series, such
remaining Shared Principal Collections shall be allocated to such Series
pro rata based on the Investor Percentage for Principal Receivables
applicable for such Series.
(e) Amounts in Excess Funding Account. Amounts on deposit in the
Excess Funding Account on any Business Day will be invested by the Servicer
(or, at the direction of the Transferor, by the Trustee) on behalf of the
Transferor in Cash Equivalents which shall mature and be available on or
before the next Business Day on which amounts may be released from the
Excess Funding Account. Earnings from such investments received shall be
deposited in the Collection Account and treated as Finance Charge
Collections. Any investment instructions to the Trustee shall be in
writing and shall include a certification that the proposed investment is a
Cash Equivalent that matures at or prior to the date required by this
Agreement. If on any Business Day other than a Business Day on which a Pay
Out Event or a Prospective Pay Out Event has occurred and is continuing,
the Transferor Interest is greater than the Minimum Transferor Interest,
amounts on deposit in the Excess Funding Account may, at the option of the
Transferor, be released to the Holder of the Exchangeable Transferor
Security. On the first Business Day of the Amortization Period for any
Series, funds on deposit in the Excess Funding Account will be deposited in
the Principal Account for such Series to the extent of the lesser of (x)
the Invested Amount of such Series and (y) the amount then on deposit in
the Excess Funding Account.
[THE REMAINDER OF ARTICLE IV IS RESERVED AND SHALL
BE SPECIFIED IN ANY SUPPLEMENT WITH RESPECT TO ANY SERIES]
[End of Article IV]
ARTICLE V
[ARTICLE V IS RESERVED AND SHALL BE SPECIFIED IN ANY
SUPPLEMENT WITH RESPECT TO ANY SERIES]
[End of Article V]
ARTICLE VI
THE SECURITIES
Section 6.1 The Securities. Subject to Sections 6.10 and 6.13,
the Investor Securities of each Series and any Class thereof may be issued
in bearer form (the "Bearer Securities") with attached interest coupons
and, if applicable, a special coupon (collectively, the "Coupons") or in
fully registered form (the "Registered Securities"), and shall be
substantially in the form of the exhibits with respect thereto attached to
the related Supplement. The Exchangeable Transferor Security shall be
substantially in the form of Exhibit A. The Investor Securities and the
Exchangeable Transferor Security shall, upon issue pursuant hereto or to
Section 6.9 or Section 6.10, be executed and delivered by the Transferor to
the Trustee for authentication and redelivery as provided in Sections 2.1
and 6.2. Unless otherwise specified in any Supplement, any Investor
Security shall be issuable in a minimum denomination of $1,000 Undivided
Interest and integral multiples thereof, and shall be issued upon original
issuance in an original aggregate principal amount equal to the Initial
Invested Amount. The Exchangeable Transferor Security shall be issued as a
single security. Each Security shall be executed by manual or facsimile
signature on behalf of the Transferor by its President or any Vice
President. Securities bearing the manual or facsimile signature of the
individual who was, at the time when such signature was affixed, authorized
to sign on behalf of the Transferor or the Trustee shall not be rendered
invalid, notwithstanding that such individual has ceased to be so
authorized prior to the authentication and delivery of such Securities or
does not hold such office at the date of such Securities. No Security
shall be entitled to any benefit under this Agreement, or be valid for any
purpose, unless there appears on such Security a certificate of
authentication substantially in the form provided for herein, executed by
or on behalf of the Trustee by the manual signature of a duly authorized
signatory, and such certificate upon any Security shall be conclusive
evidence, and the only evidence, that such Security has been validly issued
and duly authenticated and delivered hereunder. All Securities shall be
dated the date of their authentication except Bearer Securities which
shall be dated the applicable Issuance Date as provided in the related
Supplement.
Section 6.2 Authentication of Securities. Contemporaneously
with the initial assignment and transfer of the Receivables, whether now
existing or hereafter created (other than Receivables in Supplemental
Accounts) and the other components to the Trust, the Trustee shall
authenticate and deliver the initial Series of Investor Securities (or
applicable Classes thereof), upon the written order of the Transferor.
Upon the issuance of such Investor Securities, such Investor Securities
shall be validly issued, fully paid and non-assessable. The Trustee shall
authenticate and deliver the Exchangeable Transferor Security to the
Transferor simultaneously with its delivery of the initial Series of
Investor Securities. Upon an Exchange as provided in Section 6.9 and the
satisfaction of certain other conditions specified therein, the Trustee
shall authenticate and deliver the Investor Securities of additional Series
(with the designation provided in the related Supplement), upon the written
order of the Transferor. Upon the written order of the Transferor, the
Securities of any Series shall be duly authenticated by or on behalf of the
Trustee, in authorized denominations equal to (in the aggregate) the
Initial Invested Amount of such Series of Investor Securities. If
specified in the related Supplement for any Series, the Trustee shall
authenticate and deliver outside the United States the Global Security that
is issued upon original issuance thereof, upon the written order of the
Transferor, to the Depositary. If specified in the related Supplement for
any Series, the Trustee shall authenticate Book-Entry Securities that are
issued upon original issuance thereof, upon the written order of the
Transferor, to a Clearing Agency or its nominee as provided in Section
6.10.
Section 6.3 Registration of Transfer and Exchange of Securities.
(a) The Trustee shall cause to be kept at the office or agency
to be maintained by a transfer agent and registrar (the "Transfer Agent and
Registrar") in accordance with the provisions of Section 11.16, a register
(the "Security Register") in which, subject to such reasonable regulations
as it may prescribe, the Transfer Agent and Registrar shall provide for the
registration of the Investor Securities of each Series (unless otherwise
provided in the related Supplement) and of transfers and exchanges of the
Investor Securities as herein provided. Whenever reference is made in this
Agreement to the transfer or exchange of the Securities by the Trustee,
such reference shall be deemed to include the transfer or exchange on
behalf of the Trustee by a Transfer Agent and Registrar. The Trustee is
hereby initially appointed Transfer Agent and Registrar for the purposes of
registering the Investor Securities and transfers and exchanges of the
Investor Securities as herein provided. If any form of Investor Security
is issued as a Global Security, the Trustee may, or if and so long as any
Series of Investor Securities are listed on a stock exchange and such
exchange shall so require, the Trustee shall appoint a co-transfer agent
and co-registrar, which will also be a co-paying agent, in such city as the
Transferor may specify. Any reference in this Agreement to the Transfer
Agent and Registrar shall include any co-transfer agent and co-registrar
unless the context otherwise requires. The Trustee shall be permitted to
resign as Transfer Agent and Registrar upon 30 days' written notice to the
Servicer. In the event that the Trustee shall no longer be the Transfer
Agent and Registrar, the Transferor shall appoint a successor Transfer
Agent and Registrar. If any Series with respect to which Book Entry
Securities were originally issued is no longer issued as Book-Entry
Securities, then the Servicer may appoint a successor Transfer Agent and
Registrar.
Unless otherwise provided in the related Supplement, in the case
of any Investor Security with respect to which no Opinion of Counsel to the
effect that such Investor Security (or Class or Series to which such
Investor Security pertains) will be characterized as indebtedness for
federal income tax purposes was delivered, no sale, assignment,
participation, pledge, hypothecation, transfer or other disposition of such
Investor Security (or any interest therein) shall be made unless the
Transferor and the Servicer shall have granted their prior consent thereto,
which consent may not be unreasonably withheld and, provided further, that
for purposes of this sentence, it shall in all cases be reasonable for the
Transferor or the Servicer to withhold consent to such proposed sale,
assignment, participation, pledge, hypothecation, transfer or other
disposition of all or any part of a Security (or any interest therein) if
the transaction would, if effected, give rise to any adverse tax
consequence, as determined in the sole and absolute discretion of the
Transferor or the Servicer.
Upon surrender for registration of transfer of any Security at
any office or agency of the Transfer Agent and Registrar maintained for
such purpose, the Transferor shall execute, subject to the provisions of
subsection 6.3(c), and the Trustee shall (unless the Transfer Agent and
Registrar is different than the Trustee, in which case the Transfer Agent
and Registrar shall) authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Securities in
authorized denominations of like aggregate Undivided Interests; provided,
that the provisions of this paragraph shall not apply to Bearer Securities.
At the option of any Holder of Registered Securities, Registered
Securities may be exchanged for other Registered Securities of the same
Series in authorized denominations of like aggregate Undivided Interests in
the Trust, upon surrender of the Registered Securities to be exchanged at
any office or agency of the Transfer Agent and Registrar maintained for
such purpose. At the option of a Bearer Securityholder, subject to
applicable laws and regulations (including without limitation, the Bearer
Rules), Bearer Securities may be exchanged for other Bearer Securities or
Registered Securities of the same Series in authorized denominations of
like aggregate Undivided Interests in the Trust, in the manner specified in
the Supplement for such Series, upon surrender of the Bearer Securities to
be exchanged at an office or agency of the Transfer Agent and Registrar
located outside the United States. Each Bearer Security surrendered
pursuant to this Section 6.3 shall have attached thereto (or be accompanied
by) all unmatured Coupons, provided that any Bearer Security so surrendered
after the close of business on the Record Date preceding the relevant
Distribution Date after the related Series Termination Date need not have
attached the Coupons relating to such Distribution Date.
Whenever any Investor Securities of any Series are so surrendered
for exchange, the Transferor shall execute, and the Trustee shall (unless
the Transfer Agent and Registrar is different than the Trustee, in which
case the Transfer Agent and Registrar shall) authenticate and deliver, the
Investor Securities of such Series which the Securityholder making the
exchange is entitled to receive. Every Investor Security presented or
surrendered for registration of transfer or exchange shall be accompanied
by a written instrument of transfer in a form satisfactory to the Trustee
and the Transfer Agent and Registrar duly executed by the Securityholder
thereof or his attorney-in-fact duly authorized in writing.
The preceding provisions of this Section 6.3 notwithstanding, the
Trustee or the Transfer Agent and Registrar, as the case may be, shall not
be required to register the transfer of or exchange any Investor Security
of any Series for the period from the Record Date preceding the due date
for any payment to the Distribution Date with respect to the Investor
Securities of such Series.
Unless otherwise provided in the related Supplement, no service
charge shall be made for any registration of transfer or exchange of
Securities, but the Transfer Agent and Registrar may require payment of a
sum sufficient to cover any tax or governmental charge that may be imposed
in connection with any transfer or exchange of Securities.
All Investor Securities (together with any Coupons attached to
Bearer Securities) surrendered for registration of transfer or exchange
shall be canceled by the Transfer Agent and Registrar and disposed of in a
manner satisfactory to the Trustee. The Trustee shall cancel and dispose
of any Global Security upon its exchange in full for Definitive Securities,
but shall not be required to destroy such Global Securities. Such security
shall also state that a security or securities of each Foreign Clearing
Agency to the effect referred to in Section 6.13 was received with respect
to each portion of the Global Security exchanged for Definitive Securities.
The Transferor shall execute and deliver to the Trustee or the
Transfer Agent and Registrar, as applicable, Bearer Securities and
Registered Securities in such amounts and at such times as are necessary to
enable the Trustee to fulfill its responsibilities under this Agreement and
the Securities.
(b) Except as provided in Section 6.9 or 7.2 or in any
Supplement, in no event shall the Exchangeable Transferor Security or any
interest therein be transferred, sold, exchanged, pledged, participated or
otherwise assigned hereunder, in whole or in part, unless the Transferor
shall have consented in writing to such transfer and unless the Trustee
shall have received (1) confirmation in writing from each Rating Agency
that such transfer will not result in a lowering or withdrawal of its then-
existing rating of any Series of Investor Securities and (2) an Opinion of
Counsel that such transfer does not (i) adversely affect the conclusions
reached in any of the federal income tax opinions issued in connection with
the original issuance of any Series of Investor Securities or (ii) result
in a taxable event to the holders of any such Series.
(c) Unless otherwise provided in the related Supplement,
registration of transfer of Registered Securities containing a legend
relating to the restrictions on transfer of such Registered Securities
(which legend shall be set forth in the Supplement relating to such
Investor Securities) shall be effected only if the conditions set forth in
such related Supplement are satisfied.
Whenever a Registered Security containing the legend set forth in
the related Supplement is presented to the Transfer Agent and Registrar for
registration of transfer, the Transfer Agent and Registrar shall promptly
seek instructions from the Servicer regarding such transfer. The Transfer
Agent and Registrar and the Trustee shall be entitled to receive written
instructions signed by an officer of the Trustee prior to registering any
such transfer or authenticating new Registered Securities, as the case may
be. The Servicer hereby agrees to indemnify the Transfer Agent and
Registrar and the Trustee and to hold each of them harmless against any
loss, liability or expense incurred without negligence or bad faith on
their part arising out of or in connection with actions taken or omitted by
them in reliance on any such written instructions furnished pursuant to
this subsection 6.3(c).
(d) The Transfer Agent and Registrar will maintain at its
expense in the Borough of Manhattan, The City of New York, an office or
offices or an agency or agencies where Investor Securities of such Series
may be surrendered for registration of transfer or exchange.
(e) Prior to the Transfer of any portion of a Transferor
Retained Class, the Trustee shall have received an Opinion of Counsel to
the effect that such proposed Transfer will not adversely affect the
Federal or Applicable Tax State income tax characterization of any
outstanding Series of Investor Securities or the taxability (or tax
characterization) of the Trust under Federal, Minnesota or Delaware income
tax laws. The Transferor shall provide to Moody's notice of any such
Transfer and a copy of the Opinion of Counsel described above.
Section 6.4 Mutilated, Destroyed, Lost or Stolen Securities. If
(a) any mutilated Security (together, in the case of Bearer Securities,
with all unmatured Coupons, if any, appertaining thereto) is surrendered to
the Transfer Agent and Registrar, or the Transfer Agent and Registrar
receives evidence to its satisfaction of the destruction, loss or theft of
any Security and (b) there is delivered to the Transfer Agent and Registrar
and the Trustee such security or indemnity as may be required by them to
hold each of them and the Trust harmless, then, in the absence of notice to
the Trustee that such Security has been acquired by a bona fide purchaser,
the Trustee shall (unless the Transfer Agent and Registrar is different
from the Trustee, in which case the Transfer Agent and Registrar shall)
authenticate and deliver (in compliance with applicable law), in exchange
for or in lieu of any such mutilated, destroyed, lost or stolen Security, a
new Security of like tenor and aggregate Undivided Interest. In connection
with the issuance of any new Security under this Section 6.4, the Trustee
or the Transfer Agent and Registrar may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses (including the fees and
expenses of the Trustee and the Transfer Agent and Registrar) connected
therewith. Any duplicate Security issued pursuant to this Section 6.4
shall constitute complete and indefeasible evidence of ownership in the
Trust, as if originally issued, whether or not the lost, stolen or
destroyed Security shall be found at any time.
Section 6.5 Persons Deemed Owners. Prior to due presentation of
a Security for registration of transfer, the Trustee, the Paying Agent, the
Transfer Agent and Registrar and any agent of any of them may treat the
Person in whose name any Security is registered as the owner of such
Security for the purpose of receiving distributions pursuant to Article V
(as described in any Supplement) and Article XII and for all other purposes
whatsoever, and neither the Trustee, the Paying Agent, the Transfer Agent
and Registrar nor any agent of any of them shall be affected by any notice
to the contrary; provided, however, that in determining whether the holders
of Investor Securities evidencing the requisite Undivided Interests have
given any request, demand, authorization, direction, notice, consent or
waiver hereunder, Investor Securities owned by the Transferor, the Servicer
or any Affiliate thereof shall be disregarded and deemed not to be
outstanding, except that, in determining whether the Trustee shall be
protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Investor Securities which a
Responsible Officer in the Corporate Trust Office of the Trustee knows to
be so owned shall be so disregarded. Investor Securities so owned that
have been pledged in good faith shall not be disregarded as outstanding if
the pledgee establishes to the satisfaction of the Trustee the pledgee's
right so to act with respect to such Investor Securities and that the
pledgee is not the Transferor, the Servicer or an Affiliate thereof.
In the case of a Bearer Security, the Trustee, the Paying Agent,
the Transfer Agent and Registrar and any agent of any of them may treat the
holder of a Bearer Security or Coupon as the owner of such Bearer Security
or Coupon for the purpose of receiving distributions pursuant to Article V
(as described in any Supplement) and Article XII and for all other purposes
whatsoever, and neither the Trustee, the Paying Agent, the Transfer Agent
and Registrar nor any agent of any of them shall be affected by any notice
to the contrary. Securities so owned that have been pledged in good faith
shall not be disregarded and may be regarded as outstanding, if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to
act with respect to such Investor Securities and that the pledgee is not
the Transferor, the Servicer or an Affiliate thereof.
Section 6.6 Appointment of Paying Agent.
(a) The Paying Agent shall make distributions to Investor
Securityholders from the appropriate account or accounts maintained for the
benefit of Securityholders as specified in this Agreement or the related
Supplement for any Series pursuant to Articles IV and V hereof. Any Paying
Agent shall have the revocable power to withdraw funds from such
appropriate account or accounts for the purpose of making distributions
referred to above. The Trustee (or the Servicer if the Trustee is the
Paying Agent) may revoke such power and remove the Paying Agent, if the
Trustee (or the Servicer if the Trustee is the Paying Agent) determines in
its sole discretion that the Paying Agent shall have failed to perform its
obligations under this Agreement in any material respect or for other good
cause. The Paying Agent, unless the Supplement with respect to any Series
states otherwise, shall initially be the Trustee. The Trustee shall be
permitted to resign as Paying Agent upon 30 days' written notice to the
Servicer. Upon the resignation of the Paying Agent, if the Paying Agent
was not the Trustee, the Trustee shall be the successor Paying Agent unless
and until another successor has been appointed as Paying Agent. In the
event that the Trustee, shall no longer be the Paying Agent, the Transferor
shall appoint a successor to act as Paying Agent (which shall be a bank or
trust company). Any reference in this Agreement to the Paying Agent shall
include any co-paying agent unless the context requires otherwise.
If specified in the related Supplement for any Series, so long as
the Investor Securities of such Series are outstanding and the Paying Agent
is not located in New York City, the Transferor shall maintain a co-paying
agent in New York City (for Registered Securities only) or any other city
designated in such Supplement.
(b) The Trustee shall cause each Paying Agent (other than
itself) to execute and deliver to the Trustee an instrument in which such
Paying Agent shall agree with the Trustee that such Paying Agent will hold
all sums, if any, held by it for payment to the Securityholders in trust
for the benefit of the Securityholders entitled thereto and waive all
rights of set off the Paying Agent may have against any sums held by it
until such sums shall be paid to such Securityholders and shall agree, and
if the Trustee is the Paying Agent it hereby agrees, that it shall comply
with all requirements of the Internal Revenue Code regarding the
withholding by the Trustee of payments in respect of federal income taxes
due from Security Owners.
Section 6.7 Access to List of Securityholders' Names and
Addresses. The Trustee will furnish or cause to be furnished by the
Transfer Agent and Registrar to the Servicer or the Paying Agent, within
five Business Days after receipt by the Trustee of a request therefor from
the Servicer or the Paying Agent, respectively, in writing, a list in such
form as the Servicer or the Paying Agent may reasonably require, of the
names and addresses of the Investor Securityholders as of the most recent
Record Date for payment of distributions to Investor Securityholders.
Unless otherwise provided in the related Supplement, holders of Investor
Securities evidencing Undivided Interests aggregating not less than 25% of
the Invested Amount of the Investor Securities of any Series (the
"Applicants") may apply in writing to the Trustee, and if such application
states that the Applicants desire to communicate with other Investor
Securityholders of any Series with respect to their rights under this
Agreement or under the Investor Securities and is accompanied by a copy of
the communication which such Applicants propose to transmit, then the
Trustee, after having been adequately indemnified by such Applicants for
its costs and expenses, shall afford or shall cause the Transfer Agent and
Registrar to afford such Applicants access during normal business hours to
the most recent list of Securityholders held by the Trustee and shall give
the Servicer notice that such request has been made, within five Business
Days after the receipt of such application. Such list shall be as of a
date no more than 45 days prior to the date of receipt of such Applicants'
request. Every Securityholder, by receiving and holding a Security, agrees
with the Trustee that neither the Trustee, the Transfer Agent and
Registrar, nor any of their respective agents shall be held accountable by
reason of the disclosure of any such information as to the names and
addresses of the Securityholders hereunder, regardless of the source from
which such information was obtained.
Section 6.8 Authenticating Agent.
(a) The Trustee may appoint one or more authenticating agents
(each, an "Authenticating Agent") with respect to the Securities which
shall be authorized to act on behalf of the Trustee in authenticating the
Securities in connection with the issuance, delivery, registration of
transfer, exchange or repayment of the Securities. The Trustee will
appoint any Transfer Agent and Registrar to be an Authentication Agent.
Whenever reference is made in this Agreement to the authentication of
Securities by the Trustee or the Trustee's certificate of authentication,
such reference shall be deemed to include authentication on behalf of the
Trustee by an Authenticating Agent and a certificate of authentication
executed on behalf of the Trustee by an Authenticating Agent. Each
Authenticating Agent must be acceptable to the Transferor. The Trustee
hereby initially appoints The Bank of New York as its Authenticating Agent.
(b) Any institution succeeding to the corporate agency business
of an Authenticating Agent shall continue to be an Authenticating Agent
without the execution or filing of any paper or any further act on the part
of the Trustee or such Authenticating Agent.
(c) An Authenticating Agent may at any time resign by giving
written notice of resignation to the Trustee and to the Transferor. The
Trustee may at any time terminate the agency of an Authenticating Agent by
giving notice of termination to such Authenticating Agent and to the
Transferor. Upon receiving such a notice of resignation or upon such a
termination, or in case at any time an Authenticating Agent shall cease to
be acceptable to the Trustee or the Transferor, the Trustee promptly may
appoint a successor Authenticating Agent. Any successor Authenticating
Agent upon acceptance of its appointment hereunder shall become vested with
all the rights, powers and duties of its predecessor hereunder, with like
effect as if originally named as an Authenticating Agent. No successor
Authenticating Agent shall be appointed unless acceptable to the Trustee
and the Transferor.
(d) The Servicer agrees to pay each Authenticating Agent from
time to time reasonable compensation for its services under this Section
6.8.
(e) The provisions of Sections 11.1, 11.2 and 11.3 shall be
applicable to any Authenticating Agent.
(f) Pursuant to an appointment made under this Section 6.8, the
Securities may have endorsed thereon, in lieu of the Trustee's certificate
of authentication, an alternate certificate of authentication in
substantially the following form:
Trustee's Certificate of Authentication
This is one of the securities described in the Pooling and
Servicing Agreement.
_______________________________________,
as Authenticating Agent for the Trustee
By:____________________________________
Authorized Signatory
Dated:_________________
Section 6.9 Tender of Exchangeable Transferor Security.
(a) Upon any Exchange, the Transferor shall deliver to the
Trustee for authentication under Section 6.2, one or more new Series of
Investor Securities. Any such Series of Investor Securities shall be
substantially in the form specified in the related Supplement and shall
bear, upon its face, the designation for such Series to which it belongs,
as selected by the Transferor. Except as specified in any Supplement for a
related Series, all Investor Securities of any Series shall rank pari passu
and be equally and ratably entitled as provided herein to the benefits
hereof (except that the Enhancement provided for any Series shall not be
available for any other Series) without preference, priority or distinction
on account of the actual time or times of authentication and delivery, all
in accordance with the terms and provisions of this Agreement and the
related Supplement.
(b) The Holder of the Exchangeable Transferor Security may (i)
tender the Exchangeable Transferor Security to the Trustee in exchange for
(A) one or more newly issued Series of Investor Securities or, with respect
to any pre-funded Series, interests therein and (B) a reissued Exchangeable
Transferor Security, (ii) request the Trustee to issue to it one or more
Classes of any newly issued Series of Investor Securities which upon
payment by the purchaser thereof of the Initial Invested Amount of such
Securities to a Defeasance Account, will represent an interest in the Trust
equal to such Initial Invested Amount (an "Unfunded Security") or (iii)
take a combination of the actions specified in clauses (i) and (ii)
provided that the sum of the amount of Transferor Interest which is
tendered under clause (i) and the amount to be paid to the Defeasance
Account under clause (ii) equals the Initial Invested Amount of the
Investor Securities delivered to the Holder of the Exchangeable Transferor
Security (any such event under clauses (i), (ii) or (iii), a "Transferor
Exchange"). In addition, to the extent permitted for any Series of
Investor Securities as specified in the related Supplement, the Investor
Securityholders of such Series may tender their Investor Securities and the
Holder of the Exchangeable Transferor Security may tender the Exchangeable
Transferor Security to the Trustee pursuant to the terms and conditions set
forth in such Supplement in exchange for (i) one or more newly issued
Series of Investor Securities and (ii) a reissued Exchangeable Transferor
Security (an "Investor Exchange"). Unless otherwise specified in any
Supplement, the Transferor shall not be permitted to deposit money into any
Defeasance Account. The Transferor Exchange and Investor Exchange are
referred to collectively herein as an "Exchange." The Holder of the
Exchangeable Transferor Security may perform an Exchange by notifying the
Trustee, in writing, at least five Business Days in advance (an "Exchange
Notice") of the date upon which the Exchange is to occur (an "Exchange
Date"). Any Exchange Notice shall state the designation of any Series to
be issued on the Exchange Date and, with respect to each such Class or
Series: (a) its Initial Invested Amount (or the method for calculating
such Initial Invested Amount), which at any time may not be greater than
the current principal amount of the Exchangeable Transferor Security at
such time (or in the case of an Investor Exchange, the sum of the Invested
Amount of any Class or Series of Investor Securities to be exchanged plus
the current principal amount of the Exchangeable Transferor Security)
taking into account any Receivables transferred to the Trust simultaneous
with such Exchange, (b) its Security Rate (or the method for allocating
interest payments or other cash flows to such Series), if any, and (c) the
Enhancement Provider, if any, with respect to such Series. On the Exchange
Date, the Trustee shall authenticate and deliver any such Class or Classes
of such Series of Investor Securities only upon delivery to it of the
following: (a) a Supplement satisfying the criteria set forth in
subsection 6.9(c) and in form reasonably satisfactory to the Trustee
executed by the Transferor and the Servicer and specifying the Principal
Terms of such Series, (b) the applicable Enhancement, if any, (c) the
agreement, if any, pursuant to which the Enhancement Provider agrees to
provide the Enhancement, if any, (d) an Opinion of Counsel to the effect
that (i) any Class of the newly issued Series of Investor Securities sold
to third parties will be characterized as either indebtedness or
partnership interests for Federal and applicable state income tax purposes
or (ii) that the issuance of the newly issued Series of Investor Securities
will not adversely affect the Federal or Applicable Tax State income tax
characterization of any outstanding Series of Investor Securities or the
taxability of the Trust under Federal or Applicable Tax State income tax
laws, (e) written confirmation from each Rating Agency that the Exchange
will not result in such Rating Agency's reducing or withdrawing its rating
on any then outstanding Class of any Series as to which it is a Rating
Agency, (f) an Officer's Certificate of the Transferor, that on the
Exchange Date after giving effect to such exchange (i) the Transferor
Interest would be at least equal to the Minimum Transferor Interest and
(ii) the Retained Interest would be at least equal to the Minimum Retained
Interest, (g) the existing Exchangeable Transferor Security or applicable
Investor Securities, as the case may be and (h) such other documents,
certificates and Opinions of Counsel as may be required by the applicable
Supplement. Upon satisfaction of such conditions, the Trustee shall cancel
the existing Exchangeable Transferor Security or applicable Investor
Securities, as the case may be, and issue, as provided above, such Series
of Investor Securities and a new Exchangeable Transferor Security, dated
the Exchange Date. There is no limit to the number of Exchanges that may
be performed under this Agreement.
(c) In conjunction with an Exchange, the parties hereto shall
execute a Supplement, which shall specify the relevant terms with respect
to any newly issued Series of Investor Securities, which may include
without limitation: (i) its name or designation, (ii) the Initial Invested
Amount or the method of calculating the Initial Invested Amount, (iii) the
Security Rate (or formula for the determination thereof), (iv) the Closing
Date, (v) the rating agency or agencies rating such Series, (vi) the name
of the Clearing Agency, if any, (vii) the rights of the Holder of the
Exchangeable Transferor Security that have been transferred to the Holders
of such Series pursuant to such Exchange (including any rights to
allocations of Finance Charge Collections and Principal Collections),
(viii) the interest payment date or dates and the date or dates from which
interest shall accrue, (ix) the method of allocating Principal Collections
for such Series and the method by which the principal amount of Investor
Securities of such Series shall amortize or accrete and the method for
allocating Finance Charge Collections, (x) the names of any accounts to be
used by such Series and the terms governing the operation of any such
account, (xi) the Series Servicing Fee Percentage, (xii) the Minimum
Transferor Interest, (xiii) the Series Termination Date, (xiv) the terms of
any Enhancement with respect to such Series, (xv) the Enhancement Provider,
if applicable, (xvi) the base rate applicable to such Series, (xvii) the
terms on which the Securities of such Series may be repurchased or
remarketed to other investors, (xviii) any deposit into any account
provided for such Series, (xix) the number of Classes of such Series and,
if more than one Class, the rights and priorities of each such Class, (xx)
whether any fees will be included in the funds available to be paid for
such Series, (xxi) the subordination of such Series to any other Series,
(xxii) the Pool Factor, (xxiii) the Minimum Aggregate Principal
Receivables, (xxiv) whether such Series will be a part of a group or
subject to being paired with any other Series, (xxv) whether such Series
will be pre-funded, and (xxvi) any other relevant terms of such Series
(including whether or not such Series will be pledged as collateral for an
issuance of any other securities, including commercial paper) (all such
terms, the "Principal Terms" of such Series). The terms of such Supplement
may modify or amend the terms of this Agreement solely as applied to such
new Series. If on the date of the issuance of such Series there is issued
and outstanding one or more Series of Investor Securities and no Series of
Investor Securities is currently rated by a Rating Agency, then as a
condition to such Exchange a nationally recognized investment banking firm
or commercial bank shall also deliver to the Trustee an officer's
certificate stating, in substance, that the Exchange will not have an
adverse effect on the timing or distribution of payments to such other
Series of Investor Securities then issued and outstanding.
(d) The Transferor may surrender the Exchangeable Transferor
Security to the Trustee in exchange for a newly issued Exchangeable
Transferor Security and a second security (a "Supplemental Security"), the
terms of which shall be defined in a supplement to this Agreement (which
supplement shall be subject to Section 13.1 hereof to the extent that it
amends any of the terms of this Agreement), to be delivered to or upon the
order of the Transferor (or a Person designated by the Transferor, in the
case of the transfer or exchange thereof, as provided below), upon
satisfaction of the following conditions: (i) following such exchange, the
Transferor Interest (less any interest therein represented by any
Supplemental Securities) would be at least equal to the Minimum Transferor
Interest ,(ii) following such exchange the Retained Interest (less any
interest therein represented by any Supplemental Securities) equals or
exceeds the Minimum Retained Interest, and (iii) the Trustee received prior
to such exchange (A) a letter from the Rating Agency stating that the then
current ratings on the Investor Securities of each rated class of each
Series then outstanding will not be reduced or withdrawn because of the
issuance of such Supplemental Security and (B) an Opinion of Counsel to the
effect that (i) such Supplemental Security will be characterized as either
indebtedness or a partnership interest for Federal and applicable state
income tax purposes or (ii) that such Supplemental Security will not
adversely affect the Federal, Minnesota or Delaware income tax
characterization of any outstanding Series of Investor Securities or the
taxability of the Trust under Federal, Minnesota or Delaware income tax
laws, transferred or exchanged only upon satisfaction of the conditions set
forth in clause (iii) above.
Section 6.10 Book-Entry Securities. Unless otherwise provided
in any related Supplement, the Investor Securities, upon original issuance,
shall be issued in the form of typewritten Securities representing the
Book-Entry Securities, to be delivered to the depositary specified in such
Supplement (the "Depositary") which shall be the Clearing Agency or Foreign
Clearing Agency, by or on behalf of such Series. The Investor Securities
of each Series shall, unless otherwise provided in the related Supplement,
initially be registered on the Security Register in the name of the nominee
of the Clearing Agency or Foreign Clearing Agency. No Security Owner will
receive a definitive security representing such Security Owner's interest
in the related Series of Investor Securities, except as provided in Section
6.12. Unless and until definitive, fully registered Investor Securities of
any Series ("Definitive Securities") have been issued to Security Owners
pursuant to Section 6.12:
(i) the provisions of this Section 6.10 shall be in full
force and effect with respect to each such Series;
(ii) the Transferor, the Servicer, the Paying Agent, the
Transfer Agent and Registrar and the Trustee may deal with the
Clearing Agency and the Clearing Agency Participants for all purposes
(including the making of distributions on the Investor Securities of
each such Series) as the authorized representatives of the Security
Owners;
(iii) to the extent that the provisions of this Section
6.10 conflict with any other provisions of this Agreement, the
provisions of this Section 6.10 shall control with respect to each
such Series; and
(iv) the rights of Security Owners of Investor Securities
of each such Series shall be exercised only through the Clearing
Agency or Foreign Clearing Agency and the applicable Clearing Agency
Participants and shall be limited to those established by law and
agreements between such Security Owners and the Clearing Agency or
Foreign Clearing Agency and/or the Clearing Agency Participants.
Pursuant to the Depositary Agreement applicable to a Series, unless
and until Definitive Securities of such Series are issued pursuant to
Section 6.12, the initial Clearing Agency will make book-entry
transfers among the Clearing Agency Participants and receive and
transmit distributions of principal and interest on the Investor
Securities to such Clearing Agency Participants.
Section 6.11 Notices to Clearing Agency. Whenever notice or
other communication to the Securityholders is required under this
Agreement, unless and until Definitive Securities shall have been issued to
Security Owners pursuant to Section 6.12, the Trustee shall give all such
notices and communications specified herein to be given to Holders of the
Investor Securities to the Clearing Agency or Foreign Clearing Agency.
Section 6.12 Definitive Securities. If (i) (A) the Transferor
advises the Trustee in writing that the Clearing Agency or Foreign Clearing
Agency is no longer willing or able to discharge properly its
responsibilities under the applicable Depositary Agreement, and (B) the
Transferor is unable to locate a qualified successor, (ii) the Transferor,
at its option, advises the Trustee in writing that it elects to terminate
the book-entry system through the Clearing Agency or Foreign Clearing
Agency with respect to any Series of Securities or (iii) after the
occurrence of a Servicer Default, Security Owners of a Series representing
beneficial interests aggregating not less than 50% of the Invested Amount
of such Series advise the Trustee and the applicable Clearing Agency or
Foreign Clearing Agency through the applicable Clearing Agency Participants
in writing that the continuation of a book-entry system through the
applicable Clearing Agency or Foreign Clearing Agency is no longer in the
best interests of the Security Owners, the Trustee shall notify all
Security Owners of such Series, through the applicable Clearing Agency
Participants, of the occurrence of any such event and of the availability
of Definitive Securities to Security Owners of such Series requesting the
same. Upon surrender to the Trustee of the Investor Securities of such
Series by the applicable Clearing Agency or Foreign Clearing Agency for
registration, accompanied by registration instructions from the applicable
Clearing Agency or Foreign Clearing Agency, the Trustee shall issue the
Definitive Securities of such Series. Neither the Transferor nor the
Trustee shall be liable for any delay in delivery of such instructions and
may conclusively rely on, and shall be protected in relying on, such
instructions. Upon the issuance of Definitive Securities of such Series,
all references herein to obligations imposed upon or to be performed by the
applicable Clearing Agency or Foreign Clearing Agency shall be deemed to be
imposed upon and performed by the Trustee, to the extent applicable with
respect to such Definitive Securities, and the Trustee shall recognize the
Holders of the Definitive Securities of such Series as Securityholders of
such Series hereunder.
Section 6.13 Global Security; Euro-Security Exchange Date. If
specified in the related Supplement for any Series, the Investor Securities
may be initially issued in the form of a single temporary Global Security
(the "Global Security") in bearer form, without interest coupons, in the
denomination of the Initial Invested Amount of such Series and
substantially in the form attached to the related Supplement. Unless
otherwise specified in the related Supplement, the provisions of this
Section 6.13 shall apply to such Global Security. The Global Security will
be authenticated by the Trustee upon the same conditions, in substantially
the same manner and with the same effect as the Definitive Securities. The
Global Security may be exchanged in the manner described in the related
Supplement for Registered Securities or Bearer Securities in definitive
form.
Section 6.14 Meetings of Securityholders.
To the extent provided by the Supplement for any Series issued in
whole or in part in Bearer Securities, the Servicer or the Trustee may at
any time call a meeting of the Securityholders of such Series, to be held
at such time and at such place as the Servicer or the Trustee, as the case
may be, shall determine, for the purpose of approving a modification of or
amendment to, or obtaining a waiver of, any covenant or condition set forth
in this Agreement with respect to such Series or in the Securities of such
Series, subject to Section 13.1 of this Agreement.
[End of Article VI]
ARTICLE VII
OTHER MATTERS RELATING TO THE TRANSFEROR
Section 7.1 Liability of the Transferor. The Transferor shall
be liable in accordance herewith solely to the extent of the obligations
specifically undertaken by the Transferor.
Section 7.2 Merger or Consolidation of, or Assumption of the
Obligations of, the Transferor.
(a) The Transferor shall not consolidate with or merge into any
other business entity or convey or transfer its properties and assets
substantially as an entirety to any Person, unless:
(i) the business entity formed by such consolidation or
into which the Transferor is merged or the Person which acquires by
conveyance or transfer the properties and assets of the Transferor
substantially as an entirety shall be, if the Transferor is not the
surviving entity, (x) a corporation organized and existing under the
laws of the United States of America or any State or the District of
Columbia or (y) a state or national banking association that is not
subject to the Bankruptcy Code of 1978, as amended from time to time,
or to any successor statute, and shall expressly assume, by an
agreement supplemental hereto, executed and delivered to the Trustee,
in form satisfactory to the Trustee, the performance of every covenant
and obligation of the Transferor, as applicable hereunder and shall
benefit from all the rights granted to the Transferor, as applicable
hereunder. To the extent that any right, covenant or obligation of
the Transferor, as applicable hereunder, is inapplicable to the
successor entity, such successor entity shall be subject to such
covenant or obligation, or benefit from such right, as would apply, to
the extent practicable, to such successor entity. In furtherance
hereof, in applying this Section 7.2 to a successor entity, Section
9.2 hereof shall be applied by reference to events of involuntary
liquidation, receivership or conservatorship applicable to such
successor entity as shall be set forth in the officer's certificate
described in subsection 7.2(a)(ii);
(ii) the Transferor shall have delivered to the Trustee an
Officer's Certificate signed by a Vice President (or any more senior
officer) of the Transferor stating that such consolidation, merger,
conveyance or transfer and such supplemental agreement comply with
this Section 7.2 and that all conditions precedent herein provided for
relating to such transaction have been complied with and an Opinion of
Counsel that such supplemental agreement is legal, valid and binding
and that the entity surviving such consolidation, conveyance or
transfer is organized and existing under the laws of the United States
of America or any State or the District of Columbia and, subject to
customary limitations and qualifications, such entity will not be
substantively consolidated with any Credit Card Originator or the
Servicer;
(iii) the Transferor shall have delivered notice to the
Rating Agency of such consolidation, merger, conveyance or transfer
and the Rating Agency shall have provided written confirmation that
such consolidation, merger, conveyance or transfer will not result in
the Rating Agency reducing or withdrawing its rating on any then
outstanding Series as to which it is a Rating Agency;
(iv) the successor entity shall be a special purpose
bankruptcy remote entity; and
(v) if the Transferor is not the surviving entity, the
surviving entity shall file new UCC-1 financing statements with
respect to the interest of the Trust in the Receivables.
(b) The obligations of the Transferor hereunder shall not be
assignable nor shall any Person succeed to the obligations of the
Transferor hereunder except for mergers, consolidations, assumptions or
transfers in accordance with the provisions of the foregoing paragraph.
Section 7.3 Limitation on Liability. The directors, officers,
employees or agents of the Transferor shall not be under any liability to
the Trust, the Trustee, the Securityholders, any Enhancement Provider or
any other Person hereunder or pursuant to any document delivered hereunder,
it being expressly understood that all such liability is expressly waived
and released as a condition of, and as consideration for, the execution of
this Agreement and any Supplement and the issuance of the Securities;
provided, however, that this provision shall not protect the officers,
directors, employees, or agents of the Transferor against any liability
which would otherwise be imposed upon them by reason of willful
misfeasance, bad faith or gross negligence in the performance of duties or
by reason of reckless disregard of obligations and duties hereunder.
Except as provided in Sections 7.1 and 7.4 with respect to the Trust and
the Trustee and its officers, directors, employees and agents, the
Transferor shall not be under any liability to the Trust, the Trustee, its
officers, directors, employees and agents, the Securityholders, any
Enhancement Provider or any other Person for any action taken or for
refraining from the taking of any action in its capacity as Transferor
pursuant to this Agreement or any Supplement whether arising from express
or implied duties under this Agreement or any Supplement or otherwise;
provided, however, that this provision shall not protect the Transferor
against any liability which would otherwise be imposed upon it by reason of
willful misfeasance, bad faith or gross negligence in the performance of
duties or by reason of reckless disregard of obligations and duties
hereunder. The Transferor and any director, officer, employee or agent may
rely in good faith on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters arising
hereunder.
Section 7.4 Liabilities. Notwithstanding Section 7.3, by
entering into this Agreement, the Transferor agrees to be liable, directly
to the injured party, for the entire amount of any losses, claims, damages,
penalties or liabilities (other than those incurred by a Securityholder in
the capacity of an investor in the Investor Securities as a result of the
performance of the Receivables, market fluctuations, a shortfall or failure
by the Enhancement Provider to make payment under any Enhancement or other
similar market or investment risks associated with ownership of the
Investor Securities) arising out of or based on the arrangement created by
this Agreement and the actions of the Servicer taken pursuant hereto as
though this Agreement created a partnership under the Delaware Uniform
Partnership Law, in which the Transferor is a general partner. The
Transferor agrees to pay, indemnify and hold harmless each Investor
Securityholder against and from any and all such loses, claims, damages and
liabilities (other than those incurred by a Securityholder in the capacity
of an investor in the Investor Securities as a result of the performance of
the Receivables, market fluctuations, a shortfall or failure by an
Enhancement Provider to make payment under an Enhancement or other similar
market or investment risks) except to the extent that they arise from any
action by such Investor Securityholder. Subject to Sections 8.3 and 8.4,
in the event of a Service Transfer, the Successor Servicer will indemnify
and hold harmless the Transferor for any losses, claims, damages and
liabilities of the Transferor as described in this Section 7.4 arising from
the actions or omissions of such Successor Servicer.
[End of Article VII]
ARTICLE VIII
OTHER MATTERS RELATING
TO THE SERVICER
Section 8.1 Liability of the Servicer. The Servicer shall be
liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Servicer in such capacity herein.
Section 8.2 Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer. Subject to subsection 3.1(a), the Servicer
shall not consolidate with or merge into any other corporation or convey or
transfer its properties and assets substantially as an entirety to any
Person, unless:
(i) the corporation formed by such consolidation or into
which the Servicer is merged or the Person which acquires by
conveyance or transfer the properties and assets of the Servicer
substantially as an entirety shall be (x) a corporation organized and
existing under the laws of the United States of America or any State
or the District of Columbia or (y) a state or national banking
association that is not subject to the Bankruptcy Code of 1978, as
amended from time to time, or to any successor statute, and, if the
Servicer is not the surviving entity, shall expressly assume, by an
agreement supplemental hereto, executed and delivered to the Trustee
in form satisfactory to the Trustee, the performance of every covenant
and obligation of the Servicer hereunder (to the extent that any
right, covenant or obligation of the Servicer, as applicable
hereunder, is inapplicable to the successor entity, such successor
entity shall be subject to such covenant or obligation, or benefit
from such right, as would apply, to the extent practicable, to such
successor entity);
(ii) the Servicer shall have delivered to the Trustee an
Officer's Certificate that such consolidation, merger, conveyance or
transfer and such supplemental agreement comply with this Section 8.2
and that all conditions precedent herein provided for relating to such
transaction have been complied with and an Opinion of Counsel that
such supplemental agreement is legal, valid and binding with respect
to the Servicer and that the entity surviving such consolidation,
conveyance or transfer is organized and existing under the laws of the
United States of America or any State or the District of Columbia; and
(iii) the Servicer shall have delivered notice to the
Rating Agency of such consolidation, merger, conveyance or transfer.
Section 8.3 Limitation on Liability of the Servicer and Others.
The directors, officers, employees or agents of the Servicer shall not be
under any liability to the Trust, the Trustee, the Securityholders, any
Enhancement Provider or any other Person hereunder or pursuant to any
document delivered hereunder, it being expressly understood that all such
liability is expressly waived and released as a condition of, and as
consideration for, the execution of this Agreement and any Supplement and
the issuance of the Securities; provided, however, that this provision
shall not protect the directors, officers, employees and agents of the
Servicer against any liability which would otherwise be imposed upon them
by reason of willful misfeasance, bad faith or gross negligence in the
performance of duties or by reason of reckless disregard of obligations and
duties hereunder. Except as provided in Sections 8.1 and 8.4 with respect
to the Trustee, its officers, directors, employees and agents, the Servicer
shall not be under any liability to the Trust, the Trustee, its officers,
directors, employees and agents, the Securityholders, any Enhancement
Provider or any other Person for any action taken or for refraining from
the taking of any action in its capacity as Servicer pursuant to this
Agreement or any Supplement; provided, however, that this provision shall
not protect the Servicer against any liability which would otherwise be
imposed upon it by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties or by reason of its reckless
disregard of its obligations and duties hereunder or under any Supplement.
The Servicer may rely in good faith on any document of any kind prima facie
properly executed and submitted by any Person respecting any matters
arising hereunder. The Servicer shall not be under any obligation to
appear in, prosecute or defend any legal action which is not incidental to
its duties to service the Receivables in accordance with this Agreement
which in its reasonable opinion may involve it in any expense or liability.
Section 8.4 Servicer Indemnification of the Transferor, the
Trust and the Trustee. Subject to the limitations on liability set forth
in Section 8.3, the Servicer shall indemnify and hold harmless the
Transferor, the Trustee and the Trust (each, an "Indemnified Party") from
and against any loss, liability, reasonable expense, damage or injury,
including, but not limited to, any judgment, award, settlement, reasonable
attorneys' fees and other costs or expenses incurred in connection with the
defense of any actual or threatened action, proceeding or claim, suffered
or sustained by reason of any acts or omissions or alleged acts or
omissions of the Servicer with respect to activities of the Trust or the
Trustee for which the Servicer is responsible pursuant to this Agreement;
provided, however, that the Servicer shall not indemnify or hold harmless
an Indemnified Party if such acts, omissions or alleged acts or omissions
constitute or are caused by fraud, gross negligence, or willful misconduct
by such Indemnified Party (or any of such Indemnified Party's officers,
directors, employees or agents) or the Investor Securityholders; provided,
further, that the Servicer shall not indemnify or hold harmless the Trust,
the Investor Securityholders or the Security Owners for any losses,
liabilities, expenses, damages or injuries suffered or sustained by any of
them with respect to any action taken by the Trustee at the request of the
Investor Securityholders; provided further, that the Servicer shall not
indemnify or hold harmless the Trust, the Investor Securityholders or the
Security Owners as to any losses, liabilities, expenses, damages or
injuries suffered or sustained by any of them in their capacities as
investors, including without limitation losses incurred as a result of
Receivables in Defaulted Accounts; provided further, that the Servicer
shall not indemnify or hold harmless the Transferor, the Trust, the
Investor Securityholders or the Security Owners for any losses,
liabilities, expenses, damages or injuries suffered or sustained by the
Trust, the Investor Securityholders or the Security Owners arising under
any tax law, including without limitation, any federal, state, local or
foreign income or franchise taxes or any other tax imposed on or measured
by income (or any interest, penalties or additions with respect thereto or
arising from a failure to comply therewith) required to be paid by the
Trust, the Investor Securityholders or the Security Owners in connection
herewith to any taxing authority; and, provided, further, that in no event
will the Servicer be liable, directly or indirectly, for or in respect of
any indebtedness or obligation evidenced or created by any Security,
recourse as to which shall be limited solely to the assets of the Trust
allocated for the payment thereof as provided in this Agreement and any
applicable Supplement. Any such indemnification shall not be payable from
the assets of the Trust, but the Servicer shall be subrogated to the rights
of the Trust with respect to the foregoing matters if and to the extent
that the Servicer shall have indemnified the Trust with respect thereto.
The Servicer shall indemnify and hold harmless the Trustee and its
officers, directors, employees or agents from and against any loss,
liability, reasonable expense, damage or injury suffered or sustained by
reason of the acceptance of this Trust by the Trustee, the issuance by the
Trust of the Securities or any of the other matters contemplated herein or
in any Supplement; provided, however, that the Servicer shall not indemnify
the Trustee or its officers, directors, employees or agents for any loss,
liability, expense, damage or injury caused by the fraud, negligence or
willful misconduct of any of them. The provisions of this indemnity shall
run directly to and be enforceable by an injured party subject to the
limitations hereof and shall survive the resignation or removal of the
Servicer, the resignation or removal of the Trustee and/or the termination
of the Trust and shall survive the termination of the Agreement.
Section 8.5 The Servicer Not to Resign. Subject to subsection
3.1(a), the Servicer shall not resign from the obligations and duties
hereby imposed on it except upon determination that (i) the performance of
its duties hereunder is no longer permissible under applicable law and (ii)
there is no reasonable action that the Servicer could take to make the
performance of its duties hereunder permissible under applicable law. Any
such determination permitting the resignation of the Servicer shall be
evidenced as to clause (i) above by an Opinion of Counsel to such effect
delivered to the Trustee. No such resignation shall become effective until
the Trustee or a Successor Servicer shall have assumed the responsibilities
and obligations of the Servicer in accordance with Section 10.2 hereof. If
the Trustee is unable within 120 days of the date of delivery to it of such
Opinion of Counsel to appoint a Successor Servicer, the Trustee shall serve
as Successor Servicer hereunder (but shall have continued authority to
appoint another Person as Successor Servicer).
Section 8.6 Access to Certain Documentation and Information
Regarding the Receivables. The Servicer shall provide to the Trustee and
its agents (who shall be reasonably acceptable to the Servicer) access to
the documentation regarding the Accounts and the Receivables in such cases
where the Trustee is required in connection with the enforcement of the
rights of the Investor Securityholders, or by applicable statutes or
regulations, to review such documentation, such access being afforded
without charge but only (i) upon reasonable request, (ii) during normal
business hours, (iii) subject to the Servicer's normal security and
confidentiality procedures and (iv) at offices designated by the Servicer.
Nothing in this Section 8.6 shall derogate from the obligation of any
Credit Card Originator, the Transferor, the Trustee or the Servicer to
observe any applicable law prohibiting disclosure of information regarding
the Obligors and the failure of the Servicer to provide access as provided
in this Section 8.6 as a result of such obligations shall not constitute a
breach of this Section 8.6.
Section 8.7 Delegation of Duties. It is understood and agreed
by the parties hereto that the Servicer may delegate certain of its duties
hereunder to First Data Resources, Inc., a Delaware corporation. In the
ordinary course of business, the Servicer may at any time delegate any
duties hereunder to any Person who agrees to conduct such duties in
accordance with the Credit and Collection Policies. Any such delegations
shall not relieve the Servicer of its liability and responsibility with
respect to such duties, and shall not constitute a resignation within the
meaning of Section 8.5 hereof and the Servicer will remain jointly and
severally liable with such Person for any amounts which would otherwise be
payable pursuant to this Article VIII as if the Servicer had performed such
duty; provided, however, that in the case of any significant delegation to
a Person other than First Data Resources, Inc. or an Affiliate of DMCCB (i)
written notice shall be given to the Trustee and to each Rating Agency of
such delegation, (ii) Moody's shall have notified the Transferor and the
Trustee in writing that such delegation will not result in the lowering or
withdrawal of its then existing rating of any Series or Class of Investor
Securities and (iii) the Transferor shall not have received written notice
from Standard & Poor's that such delegation would result in the lowering or
withdrawal of its then existing rating of any Series or Class of Investor
Securities.
[End of Article VIII]
ARTICLE IX
PAY OUT EVENTS
Section 9.1 Pay Out Events. If any one of the following events
(each, a "Trust Pay Out Event") shall occur:
(a) the Transferor, Metris or DMCCB shall consent to the
appointment of a bankruptcy trustee or receiver or liquidator in any
bankruptcy proceeding or any other insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or relating
to all or substantially all of its property; or a decree or order of a
court or agency or supervisory authority having jurisdiction in the
premises for the appointment of a bankruptcy trustee or receiver or
liquidator in any bankruptcy proceeding or any other insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs, shall
have been entered against the Transferor, Metris or DMCCB; or the
Transferor, Metris or DMCCB shall admit in writing its inability to pay its
debts generally as they become due, file a petition to take advantage of
any applicable insolvency or reorganization statute including the U.S.
bankruptcy code, make an assignment for the benefit of its creditors or
voluntarily suspend payment of its obligations; or the Transferor shall
become unable for any reason to transfer Receivables to the Trust in
accordance with the provisions of this Agreement; or
(b) the Trust shall become subject to regulation by the
Securities and Exchange Commission as an "investment company" within the
meaning of the Investment Company Act;
then a Pay Out Event with respect to all Series of Securities shall occur
without any notice or other action on the part of the Trustee or the
Investor Securityholders immediately upon the occurrence of such event.
The Trustee shall provide notice of a Pay Out Event in a prompt manner to
each Rating Agency.
Section 9.2 Additional Rights Upon the Occurrence of Certain
Events.
(a) If (x) the Transferor shall consent to the appointment of a
bankruptcy trustee or receiver or liquidator for the winding-up or
liquidation of its affairs, or a decree or order of a court or agency or
supervisory authority having jurisdiction in the premises for the
appointment of a bankruptcy trustee or receiver or liquidator for the
winding-up or liquidation of its affairs shall have been entered against
the Transferor or Metris (an "Insolvency Event"), on the day of such
Insolvency Event (the "Appointment Day") or (y) the Retained Percentage
shall at any time be equal to or less than 2% (a "Trigger Event"), the
following actions shall be taken and processes begun:
(i) If an Insolvency Event shall have occurred, the
Transferor shall immediately cease to transfer Principal Receivables
to the Trust and shall promptly give written notice to the Trustee of
such Insolvency Event. Notwithstanding any cessation of the transfer
to the Trust of additional Principal Receivables, receivables accrued
in respect of Finance Charge Receivables (other than Discount Option
Receivables), whenever created, accrued in respect of Receivables that
have been transferred to the Trust, shall continue to be a part of the
Trust, and Collections with respect thereto shall continue to be
allocated and paid in accordance with Article IV.
(ii) If an Insolvency Event or a Trigger Event shall have
occurred this Agreement and the Trust shall be deemed to have
terminated, subject to the liquidation, winding-up and dissolution
procedures described below; provided, however, that within 15 days of
the date of written notice to the Trustee, the Trustee shall (i)
publish a notice in an Authorized Newspaper that an Insolvency Event
or a Trigger Event has occurred, that the Trust has terminated, and
that the Trustee intends to sell, dispose of or otherwise liquidate
the Receivables pursuant to this Agreement in a commercially
reasonable manner and on commercially reasonable terms, which shall
include the solicitation of competitive bids (a "Disposition"), and
(ii) send written notice to the Investor Securityholders describing
the provisions of this Section 9.2 and requesting each Investor
Securityholder to advise the Trustee in writing that it elects one of
the following options: (A) the Investor Securityholder wishes the
Trustee to instruct the Servicer not to effectuate a Disposition, or
(B) the Investor Securityholder refuses to advise the Trustee as to
the specific action the Trustee shall instruct the Servicer to take or
(C) the Investor Securityholder wishes the Servicer to effect a
Disposition. If after 90 days from the day notice pursuant to clause
(i) above is first published (the "Publication Date"), the Trustee
shall not have received the written instruction described in clause
(A) above from Holders of Investor Securities representing Undivided
Interests aggregating in excess of 50% of the related Invested Amount
of each Series (or, in the case of a Series having more than one
Class, each Class of such Series) and the holders of any Supplemental
Securities or any other interest in the Exchangeable Transferor
Security other than the Transferor as provided in Section 6.3(b) for
each Series, a "Holders' Majority"), the Trustee shall instruct the
Servicer to effectuate a Disposition, and the Servicer shall proceed
to consummate a Disposition. If, however, with respect to the portion
of the Receivables allocable to any outstanding Series, a Holders'
Majority instruct the Trustee not to effectuate a Disposition of the
portion of the Receivables allocable to such Series, the Trust shall
be reconstituted and continue with respect to such Series pursuant to
the terms of this Agreement and the applicable Supplement (as amended
in connection with such reconstitution). The portion of the
Receivables allocable to any Series shall be equal to the sum of (1)
the product of (A) the Transferor Percentage, (B) the aggregate
outstanding Principal Receivables and (C) a fraction the numerator of
which is the related Investor Percentage of Finance Charge Collections
and the denominator of which is the sum of all Investor Percentages
with respect to Finance Charge Collections for all Series outstanding
and (2) the Invested Amount of such Series. The Transferor or any of
its Affiliates shall be permitted to bid for the Receivables. In
addition, the Transferor or any of its Affiliates shall have the right
to match any bid by a third person and be granted the right to
purchase the Receivables at such matched bid price. The Trustee may
obtain a prior determination from any such bankruptcy trustee,
receiver or liquidator that the terms and manner of any proposed
Distribution are commercially reasonable. The provisions of Sections
9.1 and 9.2 shall not be deemed to be mutually exclusive.
(b) The proceeds from the Disposition pursuant to subsection (a)
above shall be treated as Collections on the Receivables and shall be
allocated and deposited in accordance with the provisions of Article IV;
provided, however, that the proceeds from a Disposition with respect to any
Series shall be applied solely to make payments to such Series; provided
further, that the Trustee shall determine conclusively in its sole
discretion the amount of such proceeds that are allocable to Finance Charge
Collections and the amount of such proceeds that are allocable to
Collections of Principal Receivables. Unless the Trustee receives written
instructions from Investor Securityholders of one or more Series to
continue the Trust with respect to such Series as provided in subsection
9.2(a) above, on the day following the last Distribution Date in the
Monthly Period during which such proceeds are distributed to the Investor
Securityholders of each Series, the Trust shall terminate.
(c) The Trustee may appoint an agent or agents to assist with
its responsibilities pursuant to this Article IX with respect to
competitive bids.
[End of Article IX]
ARTICLE X
SERVICER DEFAULTS
Section 10.1 Servicer Defaults. If any one of the following
events (a "Servicer Default") shall occur and be continuing:
(a) any failure by the Servicer to make any payment, transfer or
deposit or to give instructions or notice to the Trustee pursuant to
Article IV or to instruct the Trustee to make any required drawing,
withdrawal, or payment under any Enhancement on or before the date
occurring five Business Days after the date such payment, transfer,
deposit, withdrawal or drawing or such instruction or notice is required to
be made or given, as the case may be, under the terms of this Agreement;
provided, however, that any such failure caused by a non- willful act of
the Servicer shall not constitute a Servicer Default if the Servicer
promptly remedies such failure within five Business Days after receiving
notice of such failure or otherwise becoming aware of such failure;
(b) failure on the part of the Servicer duly to observe or
perform in any respect any other covenants or agreements of the Servicer
set forth in this Agreement, which has a material adverse effect on the
Investor Securityholders of any Series and which continues unremedied for a
period of 60 days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Servicer by
the Trustee, or to the Servicer and the Trustee by the Holders of Investor
Securities evidencing Undivided Interests aggregating not less than 50% of
the Invested Amount of any Series materially adversely affected thereby and
continues to materially adversely affect such Investor Securityholders for
such period; or the Servicer shall delegate its duties under this
Agreement, except as permitted by Section 8.7;
(c) any representation, warranty or certification made by the
Servicer in this Agreement or in any security delivered pursuant to this
Agreement shall prove to have been incorrect when made, which has a
material adverse effect on the Investor Securityholders of any Series and
which continues to be incorrect in any material respect for a period of 60
days after the date on which written notice of such failure, requiring the
same to be remedied, shall have been given to the Servicer by the Trustee,
or to the Servicer and the Trustee by the Holders of Investor Securities
evidencing Undivided Interests aggregating not less than 50% of the
Invested Amount of any Series materially adversely affected thereby and
continues to materially adversely affect such Investor Securityholders for
such period; or
(d) the Servicer shall consent to the appointment of a
bankruptcy trustee or receiver or liquidator in any bankruptcy proceeding
or any other insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings of or relating to the Servicer or of or
relating to all or substantially all of its property; or a decree or order
of a court or agency or supervisory authority having jurisdiction in the
premises for the appointment of a bankruptcy trustee or receiver or
liquidator in any bankruptcy proceeding or any other insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs, shall
have been entered against the Servicer, and such decree or order shall have
remained in force undischarged or unstayed for a period of 60 days; or the
Servicer shall admit in writing its inability to pay its debts generally as
they become due, file a petition to take advantage of any applicable
insolvency or reorganization statute, make any assignment for the benefit
of its creditors or voluntarily suspend payment of its obligations;
then, so long as such Servicer Default shall not have been remedied, either
the Trustee, or the Holders of Investor Securities evidencing Undivided
Interests aggregating more than 50% of the Aggregate Invested Amount, by
notice then given in writing to the Servicer (and to the Trustee if given
by the Investor Securityholders) (a "Termination Notice"), may terminate
all of the rights and obligations of the Servicer as Servicer under this
Agreement. After receipt by the Servicer of such Termination Notice, and
on the date that a Successor Servicer shall have been appointed by the
Trustee pursuant to Section 10.2, all authority and power of the Servicer
under this Agreement shall pass to and be vested in a Successor Servicer;
and, without limitation, the Trustee is hereby authorized and empowered
(upon the failure of the Servicer to cooperate) to execute and deliver, on
behalf of the Servicer, as attorney-in-fact or otherwise, all documents and
other instruments upon the failure of the Servicer to execute or deliver
such documents or instruments, and to do and accomplish all other acts or
things necessary or appropriate to effect the purposes of such transfer of
servicing rights and obligations. The Servicer agrees to cooperate with
the Trustee and such Successor Servicer in effecting the termination of the
responsibilities and rights of the Servicer to conduct servicing hereunder
including, without limitation, the transfer to such Successor Servicer of
all authority of the Servicer to service the Receivables provided for under
this Agreement, including, without limitation, all authority over all
Collections which shall on the date of transfer be held by the Servicer for
deposit, or which have been deposited by the Servicer, in the Collection
Account, the Excess Funding Account, the Interest Funding Account or the
Principal Account, and any Series Account, or which shall thereafter be
received with respect to the Receivables. The Servicer shall promptly
transfer its electronic records or electronic copies thereof relating to
the Receivables to the Successor Servicer in such electronic form as the
Successor Servicer may reasonably request and shall promptly transfer to
the Successor Servicer all other records, correspondence and documents
necessary for the continued servicing of the Receivables in the manner and
at such times as the Successor Servicer shall reasonably request. To the
extent that compliance with this Section 10.1 shall require the Servicer to
disclose to the Successor Servicer information of any kind which the
Servicer deems to be confidential, the Successor Servicer shall be required
to enter into such customary licensing and confidentiality agreements as
the Servicer shall deem necessary to protect its interests. The Servicer
shall, on the date of any servicing transfer, transfer all of its rights
and obligations under the Enhancement with respect to any Series to the
Successor Servicer. In connection with any service transfer, all
reasonable costs and expenses (including attorneys' fees) incurred in
connection with transferring the records, correspondence and other
documents with respect to the Receivables and the other Trust Property to
the Successor Servicer and amending this Agreement to reflect such
succession as Successor Servicer pursuant to this Section 10.1 and Section
10.2 shall be paid by the Servicer (unless the Trustee is acting as the
Servicer on a temporary basis, in which case the original Servicer shall be
responsible therefor) upon presentation of reasonable documentation of such
costs and expenses.
Notwithstanding the foregoing, a delay in or failure of
performance referred to in subsection 10.1(a) for a period of five Business
Days or under subsection 10.1(b) or (c) for a period of 60 days, shall not
constitute a Servicer Default if such delay or failure could not be
prevented by the exercise of reasonable diligence by the Servicer and such
delay or failure was caused by an act of God or the public enemy, acts of
declared or undeclared war, public disorder, rebellion, riot or sabotage,
epidemics, landslides, lightning, fire, hurricanes, tornadoes, earthquakes,
nuclear disasters or meltdowns, floods, power outages, bank closings,
communications outages, computer failure or similar causes. The preceding
sentence shall not relieve the Servicer from using its best efforts to
perform its obligations in a timely manner in accordance with the terms of
this Agreement and the Servicer shall provide the Trustee, any Enhancement
Provider, the Transferor and the Holders of Investor Securities with an
Officer's Certificate giving prompt notice of such failure or delay by it,
together with a description of the cause of such failure or delay and its
efforts so to perform its obligations.
Section 10.2 Trustee to Act; Appointment of Successor.
(a) On and after the receipt by the Servicer of a Termination
Notice pursuant to Section 10.1, the Servicer shall continue to perform all
servicing functions under this Agreement until the date specified in the
Termination Notice or as otherwise specified by the Trustee in writing or,
if no such date is specified in such Termination Notice, or otherwise
specified by the Trustee, until a date mutually agreed upon by the Servicer
and Trustee. The Trustee shall notify each Rating Agency of such removal
of the Servicer. The Trustee shall, as promptly as possible after the
giving of a Termination Notice, appoint a successor servicer (the
"Successor Servicer"), and such Successor Servicer shall accept its
appointment by a written assumption in a form acceptable to the Trustee.
If such Successor Servicer is unable to accept such appointment, the
Trustee may obtain bids from any potential successor servicer. If the
Trustee is unable to obtain any bids from any potential successor servicer
and the Servicer delivers an Officer's Certificate to the effect that it
cannot in good faith cure the Servicer Default which gave rise to a
transfer of servicing, and if the Trustee is legally unable to act as
Successor Servicer, then the Trustee shall offer the Transferor the right
to accept reassignment of all of the Receivables for an amount equal to the
Aggregate Invested Amount on the date of such purchase plus all interest
accrued but unpaid on all of the outstanding Investor Securities at the
applicable Security Rate through the date of such purchase; provided,
however, that no such purchase by the Transferor shall occur unless the
Transferor shall deliver an Opinion of Counsel reasonably acceptable to the
Trustee that such purchase would not constitute a fraudulent conveyance of
the Transferor. The proceeds of such sale shall be deposited in the
Distribution Account or any Series Account, as provided in the related
Supplement, for distribution to the Investor Securityholders of each
outstanding Series pursuant to Section 12.3 of the Agreement. In the event
that a Successor Servicer has not been appointed and has not accepted its
appointment at the time when the Servicer ceases to act as Servicer, the
Trustee without further action shall automatically be appointed the
Successor Servicer (but shall have continued authority to appoint another
Person as Successor Servicer). The Trustee may delegate any of its
servicing obligations to an affiliate or agent of the Trustee in accordance
with Article III hereof. Any such delegations shall not relieve the
Trustee of its liability and responsibility with respect to such duties.
Notwithstanding the above, the Trustee shall, if it is legally unable to
act, petition a court of competent jurisdiction to appoint any established
financial institution having, in the case of an entity that is subject to
risk-based capital adequacy requirements, risk-based capital of at least
$50,000,000 or, in the case of an entity that is not subject to risk-based
capital requirements, having a net worth of not less than $50,000,000 and
whose regular business includes the servicing of credit card receivables
similar to the Receivables as the Successor Servicer hereunder.
(b) Upon its appointment, the Successor Servicer shall be the
successor in all respects to the Servicer with respect to servicing
functions under this Agreement and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the
Servicer by the terms and provisions hereof, and all references in this
Agreement to the Servicer shall be deemed to refer to the Successor
Servicer. Any Successor Servicer, by its acceptance of its appointment,
will automatically agree to be bound by the terms and provisions of each
Enhancement.
(c) In connection with such appointment and assumption, the
Trustee shall be entitled to such compensation, or may make such
arrangements for the compensation of the Successor Servicer out of
Collections, as it and such Successor Servicer shall agree; provided,
however, that no such compensation shall be in excess of the Servicing Fee
permitted to the Servicer pursuant to Section 3.2. The Transferor agrees
that if the Servicer is terminated hereunder, it will agree to deposit a
portion of the Collections in respect of Finance Charge Receivables that it
is entitled to receive pursuant to Article IV to pay its ratable share of
the compensation of the Successor Servicer.
(d) All authority and power granted to the Successor Servicer
under this Agreement shall automatically cease and terminate upon
termination of the Trust pursuant to Section 12.1 and shall pass to and be
vested in the Transferor and, without limitation, the Transferor is hereby
authorized and empowered to execute and deliver, on behalf of the Successor
Servicer, as attorney-in-fact or otherwise, all documents and other
instruments, and to do and accomplish all other acts or things necessary or
appropriate to effect the purposes of such transfer of servicing rights.
The Successor Servicer agrees to cooperate with the Transferor in effecting
the termination of the responsibilities and rights of the Successor
Servicer to conduct servicing on the Receivables. The Successor Servicer
shall transfer its electronic records relating to the Receivables to the
Transferor in such electronic form as the Transferor may reasonably request
and shall transfer all other records, correspondence and documents to the
Transferor in the manner and at such times as the Transferor shall
reasonably request. To the extent that compliance with this Section 10.2
shall require the Successor Servicer to disclose to the Transferor
information of any kind which the Successor Servicer deems to be
confidential, the Transferor shall be required to enter into such customary
licensing and confidentiality agreements as the Successor Servicer shall
deem necessary to protect its interests.
Section 10.3 Notification to Securityholders. Upon the Servicer
becoming aware of any Servicer Default, the Servicer shall give prompt
written notice thereof to the Trustee and any Enhancement Provider and,
upon receipt of such written notice, the Trustee shall give notice to the
Investor Securityholders at their respective addresses appearing in the
Security Register. Upon any termination or appointment of a Successor
Servicer pursuant to this Article X, the Trustee shall give prompt written
notice thereof to Investor Securityholders at their respective addresses
appearing in the Security Register.
Section 10.4 Waiver of Past Defaults. The Holders of Investor
Securities evidencing Undivided Interests aggregating not less than 66-2/3%
of the Invested Amount of each Series materially adversely affected by any
default by the Servicer or Transferor may, on behalf of all Securityholders
of such Series, waive any default by the Servicer or Transferor in the
performance of their respective obligations hereunder and its consequences,
except a default in the failure to make any required deposits or payments
of interest or principal relating to such Series pursuant to Article IV,
which default does not result from the failure of the Paying Agent to
perform its obligations to make any required deposits or payments of
interest and principal in accordance with Article IV. Upon any such waiver
of a past default, such default shall cease to exist, and any default
arising therefrom shall be deemed to have been remedied for every purpose
of this Agreement. No such waiver shall extend to any subsequent or other
default or impair any right consequent thereon except to the extent
expressly so waived.
[End of Article X]
ARTICLE XI
THE TRUSTEE
Section 11.1 Duties of Trustee.
(a) The Trustee, prior to the occurrence of any Servicer Default
of which a Responsible Officer of the Trustee has actual knowledge and
after the curing of all Servicer Defaults which may have occurred,
undertakes to perform such duties and only such duties as are specifically
set forth in this Agreement, and no implied covenants or duties shall be
read into this Agreement against the Trustee. If a Responsible Officer has
received written notice that a Servicer Default has occurred (and such
Servicer Default has not been cured or waived), the Trustee shall exercise
such of the rights and powers vested in it by this Agreement, and use the
same degree of care and skill in its exercise, as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs; provided, however, that if the Trustee shall assume the duties of
the Servicer pursuant to Section 8.5 or 10.2, the Trustee in performing
such duties shall use the degree of skill and attention customarily
exercised by a servicer with respect to comparable receivables that it
services for itself or others.
(b) The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments
furnished to the Trustee that are specifically required to be furnished
pursuant to any provision of this Agreement, shall examine them to
determine whether they substantially conform to the requirements of this
Agreement. The Trustee shall retain all such items for at least one year
after receipt and shall make such items available for inspection by any
Investor Securityholder at the Corporate Trust Office, such inspection to
be made during regular business hours and upon reasonable prior notice to
the Trustee.
(c) Subject to subsection 11.1(a), no provision of this
Agreement shall be construed to relieve the Trustee from liability for its
own negligent action, its own negligent failure to act or its own
misconduct; provided, however, that:
(i) the Trustee shall not be personally liable for an error
of judgment made in good faith by a Responsible Officer or Responsible
Officers of the Trustee, unless it shall be proved that the Trustee
was negligent in ascertaining the pertinent facts;
(ii) the Trustee shall not be personally liable with
respect to any action taken, suffered or omitted to be taken by it in
good faith in accordance with the direction of the Holders of Investor
Securities evidencing Undivided Interests aggregating more than 50% of
the Invested Amount of any Series relating to the time, method and
place of conducting any proceeding for any remedy available to the
Trustee with respect to such Series, or exercising any trust or power
conferred upon the Trustee with respect to such Series, under this
Agreement; and
(iii) the Trustee shall not be charged with knowledge of
any failure by the Servicer referred to in clauses (a) and (b) of
Section 10.1 or of any breach by the Servicer contemplated by clause
(c) of Section 10.1 or any Pay Out Event unless a Responsible Officer
of the Trustee obtains actual knowledge of such failure, breach or
Pay-Out Event or the Trustee receives written notice of such failure,
breach or Pay Out Event from the Servicer or any Holders of Investor
Securities evidencing Undivided Interests aggregating not less than
10% of the Invested Amount of any Series adversely affected thereby.
(d) The Trustee shall not be required to expend or risk its own
funds or otherwise incur financial liability in the performance of any of
its duties hereunder, or in the exercise of any of its rights or powers, if
there is reasonable ground for believing that the repayment of such funds
or adequate indemnity against such risk or liability is not reasonably
assured to it, and none of the provisions contained in this Agreement shall
in any event require the Trustee to perform, or be responsible for the
manner of performance of, any of the obligations of the Servicer under this
Agreement except during such time, if any, as the Trustee shall be the
successor to, and be vested with the rights, duties, powers and privileges
of, the Servicer in accordance with the terms of this Agreement.
(e) Except for actions expressly authorized by this Agreement,
the Trustee shall take no action reasonably likely to impair the interests
of the Trust in any Receivable now existing or hereafter created or to
impair the value of any Receivable now existing or hereafter created.
(f) Except as provided in this Agreement, the Trustee shall have
no power to vary the corpus of the Trust.
(g) If a Responsible Officer of the Trustee, has received
written notice that the Paying Agent or the Transfer Agent and Registrar
shall fail to perform any obligation, duty or agreement in the manner or on
the day required to be performed by the Paying Agent or the Transfer Agent
and Registrar, as the case may be, under this Agreement, the Trustee shall
be obligated promptly upon its obtaining knowledge thereof by a Responsible
Officer of the Trustee to perform such obligation, duty or agreement in the
manner so required.
(h) If the Transferor has agreed to transfer any of its open-end
revolving credit card receivables (other than the Receivables) to another
Person, upon the written request of the Transferor, the Trustee on behalf
of the Trust will enter into such intercreditor agreements with the
transferee of such receivables as are customary and necessary to identify
separately the rights, if any, of the Trust and such other Person in the
Transferor's open-end revolving credit card receivables; provided, however,
that the Trust shall not be required to enter into any intercreditor
agreement that could adversely affect the interests of the Securityholders
or the Trustee and, upon the request of the Trustee, the Transferor will
deliver an Opinion of Counsel on any matters relating to such intercreditor
agreement, reasonably requested by the Trustee.
Section 11.2 Certain Matters Affecting the Trustee. Except as
otherwise provided in Section 11.1:
(a) the Trustee may rely on and shall be protected in acting on,
or in refraining from acting in accordance with, the initial report, the
Daily Report, the Settlement Statement, the annual Servicer's certificate,
the monthly payment instructions and notification to the Trustee, the
monthly Securityholder's statement, any resolution, Officer's Certificate,
certificate of auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal, bond or other
paper or document believed by it to be genuine and to have been signed or
presented to it pursuant to this Agreement by the proper party or parties;
(b) the Trustee may consult with counsel, and the advice or any
Opinion of Counsel shall be full and complete authorization and protection
in respect of any action taken or suffered or omitted by it hereunder in
good faith and in accordance with such advice or Opinion of Counsel;
(c) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement or any Enhancement, or
to institute, conduct or defend any litigation hereunder or in relation
hereto, at the request, order or direction of any of the Securityholders or
any Enhancement Provider, pursuant to the provisions of this Agreement,
unless such Securityholders or Enhancement Provider shall have offered to
the Trustee reasonable security or indemnity against the costs, expenses
and liabilities which may be incurred therein or thereby; nothing contained
herein shall, however, relieve the Trustee of the obligations, upon the
occurrence of any Servicer Default (which has not been cured or waived) of
which a Responsible Officer of the Trustee has knowledge, to exercise such
of the rights and powers vested in it by this Agreement and any
Enhancement, and to use the same degree of care and skill in its exercise
as a prudent person would exercise or use under the circumstances in the
conduct of his own affairs;
(d) the Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon it
by this Agreement;
(e) the Trustee shall not be bound to make any investigation
into the facts of matters stated in the initial report, the Daily Report,
the Settlement Statement, the annual Servicer's certificate, the monthly
payment instructions and notification to the Trustee, the monthly
Securityholders statement, any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond or other paper or document, unless requested in writing so to do by
Holders of Investor Securities evidencing Undivided Interests aggregating
more than 50% of the Invested Amount of any Series which could be adversely
affected if the Trustee does not perform such acts;
(f) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys or a custodian, and the Trustee shall not be
responsible for any misconduct or negligence on the part of any such agent,
attorney or custodian appointed with due care by it hereunder;
(g) except as may be required by subsection 11.1(a), the Trustee
shall not be required to make any initial or periodic examination of any
documents or records related to the Accounts or the Receivables for the
purpose of establishing the presence or absence of defects, the compliance
by the Transferor with its representations and warranties or for any other
purpose;
(h) whenever in the administration of this Agreement the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officer's Certificate; and
(i) the right of the Trustee to perform any discretionary act
enumerated in this Agreement or any Supplement or Enhancement shall not be
construed as a duty, and the Trustee shall not be answerable for
performance of any such act.
Section 11.3 Trustee Not Liable for Recitals in Securities. The
Trustee assumes no responsibility for the correctness of the recitals
contained herein and in the Securities (other than the certificate of
authentication on the Securities). Except as set forth in Section 11.15,
the Trustee makes no representations as to the validity or sufficiency of
this Agreement or of the Securities (other than the certificate of
authentication on the Securities) or of any Receivable or related document.
The Trustee shall not be accountable for the use or application by the
Transferor of any of the Securities or of the proceeds of such Securities,
or for the use or application of any funds paid to the Transferor in
respect of the Receivables or deposited in or withdrawn from the Collection
Account, the Excess Funding Account, the Principal Account or the Interest
Funding Account, or any Series Account or other accounts now or hereafter
established to effectuate the transactions contemplated herein and in
accordance with the terms hereof. The Trustee shall have no responsibility
for filing any financing or continuation statement in any public office at
any time or to otherwise perfect or maintain the perfection of any security
interest or Lien granted to it hereunder (unless the Trustee shall have
become the Successor Servicer) or to prepare or file any Securities and
Exchange Commission filing for the Trust or to record this Agreement or any
Supplement.
Section 11.4 [Reserved].
Section 11.5 The Servicer to Pay Trustee's Fees and Expenses.
The Servicer covenants and agrees to pay to the Trustee from time to time,
and the Trustee shall be entitled to receive, reasonable compensation
(which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust) for all services rendered by
the Trustee in the execution of the trust hereby created and in the
exercise and performance of any of the powers and duties hereunder of the
Trustee, and, subject to Section 8.4, the Servicer will pay or reimburse
the Trustee (without reimbursement from any Investor Account, any Series
Account or otherwise) upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance
with any of the provisions of this Agreement (including the reasonable fees
and expenses of its agents and counsel) except any such expense,
disbursement or advance as may arise from its own negligence or bad faith
and except as provided in the following sentence. If the Trustee is
appointed Successor Servicer pursuant to Section 10.2, the provisions of
this Section 11.5 shall not apply to expenses, disbursements and advances
made or incurred by the Trustee in its capacity as Successor Servicer
(which shall be covered out of the Servicing Fee).
The obligations of the Servicer under this Section 11.5 shall
survive the termination of the Trust and the resignation or removal of the
Trustee.
Section 11.6 Eligibility Requirements for Trustee. The Trustee
hereunder shall at all times (a) be a corporation organized and doing
business under the laws of the United States of America or any state
thereof authorized under such laws to exercise corporate trust powers,
having a long-term unsecured debt rating of at least Baa3 by Moody's,
having, in the case of an entity that is subject to risk-based capital
adequacy requirements, risk-based capital of at least $50,000,000 or, in
the case of an entity that is not subject to risk-based capital adequacy
requirements, having a combined capital and surplus of at least $50,000,000
and subject to supervision or examination by federal or state authority and
(b) not be a Related Person. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purpose of this
Section 11.6, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. In case at any time the Trustee
shall cease to be eligible in accordance with the provisions of this
Section 11.6, the Trustee shall resign immediately in the manner and with
the effect specified in Section 11.7.
Section 11.7 Resignation or Removal of Trustee.
(a) The Trustee may at any time resign and be discharged from
the Trust hereby created by giving written notice thereof to the Servicer.
Upon receiving such notice of resignation, the Servicer shall promptly
appoint a successor trustee by written instrument, in duplicate, one copy
of which instrument shall be delivered to the resigning Trustee and one
copy to the successor trustee. If no successor trustee shall have been so
appointed and have accepted such appointment within 30 days after the
giving of such notice of resignation, the resigning Trustee may petition
any court of competent jurisdiction for the appointment of a successor
trustee.
(b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 11.6 hereof and shall fail to
resign after written request therefor by the Transferor, or if at any time
the Trustee shall be legally unable to act, or shall be adjudged bankrupt
or insolvent, or a receiver of the Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then the Transferor may, but shall not be
required to, remove the Trustee and promptly appoint a successor trustee by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the Trustee so removed and one copy to the successor trustee.
(c) If (i) the Trustee shall fail to perform any of its
obligations hereunder, (ii) a Securityholder shall deliver written notice
of such failure to the Trustee, and (iii) the Trustee shall not have
corrected such failure for 60 days thereafter, then the Holders of Investor
Securities representing more than 50% of the Invested Amount (including
related commitments of holders of Variable Funding Securities) shall have
the right to remove the Trustee and (with the consent of the Transferor,
which shall not be unreasonably withheld) promptly appoint a successor
trustee by written instrument, in duplicate, one copy of which instrument
shall be delivered to the Trustee so removed and one copy to the successor
trustee.
(d) Any resignation or removal of the Trustee and appointment of
a successor trustee pursuant to any of the provisions of this Section 11.7
shall not become effective until acceptance of appointment by the successor
trustee as provided in Section 11.8 hereof and any liability of the Trustee
arising hereunder shall survive such appointment of a successor trustee.
Notice of any resignation or removal of the Trustee and appointment of a
successor trustee shall be provided to Moody's and Standard & Poor's by the
Servicer in a prompt manner.
Section 11.8 Successor Trustee.
(a) Any successor trustee appointed as provided in Section 11.7
hereof shall execute, acknowledge and deliver to the Transferor and to its
predecessor Trustee an instrument accepting such appointment hereunder, and
thereupon the resignation or removal of the predecessor Trustee shall
become effective and such successor trustee, without any further act, deed
or conveyance, shall become fully vested with all the rights, powers,
duties and obligations of its predecessor hereunder, with the like effect
as if originally named as Trustee herein. The predecessor Trustee shall
deliver to the successor trustee all documents and statements held by it
hereunder, and the Transferor and the predecessor Trustee shall execute and
deliver such instruments and do such other things as may reasonably be
required for fully and certainly vesting and confirming in the successor
trustee all such rights, powers, duties and obligations.
(b) No successor trustee shall accept appointment as provided in
this Section 11.8 unless at the time of such acceptance such successor
trustee shall be eligible under the provisions of Section 11.6 hereof.
(c) Upon acceptance of appointment by a successor trustee as
provided in this Section 11.8, such successor trustee shall mail notice of
such succession hereunder to all Securityholders at their addresses as
shown in the Security Register.
Section 11.9 Merger or Consolidation of Trustee. Any Person
into which the Trustee may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any Person
succeeding to all or substantially all of the corporate trust business of
the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be eligible under the provisions of Section 11.6 hereof,
without the execution or filing of any paper or any further act on the part
of any of the parties hereto, anything herein to the contrary
notwithstanding.
Section 11.10 Appointment of Co-Trustee or Separate Trustee.
(a) Notwithstanding any other provisions of this Agreement, at
any time, for the purpose of meeting any legal requirements of any
jurisdiction in which any part of the Trust may at the time be located, the
Trustee shall have the power and may execute and deliver all instruments to
appoint one or more Persons to act as a co-trustee or co-trustees, or
separate trustee or separate trustees, of all or any part of the Trust, and
to vest in such Person or Persons, in such capacity and for the benefit of
the Securityholders, such title to the trust, or any part thereof, and,
subject to the other provisions of this Section 11.10, such powers, duties,
obligations, rights and trusts as the Trustee may consider necessary or
desirable. No co-trustee or separate trustee hereunder shall be required
to meet the terms of eligibility as a successor trustee under Section 11.6
and no notice to Securityholders of the appointment of any co-trustee or
separate trustee shall be required under Section 11.8. The Trustee shall
provide written notice to each Rating Agency of any co-trustee or separate
trustee so appointed .
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions
and conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-
trustee jointly (it being understood that such separate trustee or co-
trustee is not authorized to act separately without the Trustee
joining in such act), except to the extent that under any laws of any
jurisdiction in which any particular act or acts are to be performed
(whether as Trustee hereunder or as successor to the Servicer
hereunder), the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Trust or any
portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate trustee or co-trustee, but solely at
the direction of the Trustee;
(ii) no trustee hereunder shall be personally liable by
reason of any act or omission of any other trustee hereunder; and
(iii) the Trustee may at any time accept the resignation of
or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Trustee
shall be deemed to have been given to each of the then separate trustees
and co-trustees, as effectively as if given to each of them. Every
instrument appointing any separate trustee or co-trustee shall refer to
this Agreement and the conditions of this Article XI. Each separate
trustee and co-trustee, upon its acceptance of the trusts conferred, shall
be vested with the estates or property specified in its instrument of
appointment, either jointly with the Trustee or separately, as may be
provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement or Enhancement
relating to the conduct of, affecting the liability of, or affording
protection to, the Trustee. Every such instrument shall be filed with the
Trustee and a copy thereof given to the Servicer.
(d) Any separate trustee or co-trustee may at any time
constitute the Trustee as its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under
or in respect to this Agreement on its behalf and in its name. If any
separate trustee or co-trustee shall die, become incapable of acting,
resign or be removed, all of its estates, properties, rights, remedies and
trusts shall vest in and be exercised by the Trustee, to the extent
permitted by law, without the appointment of a new or successor trustee.
Section 11.11 Tax Returns. Consistent with Section 3.7, the
Trustee shall not, except as required by law, file any United States
federal income tax returns on behalf of the Trust; provided, however, that
if a class of Securities is issued that will be characterized (in the sole
and absolute discretion of the Transferor) as equity interests in a
partnership for federal income tax purposes, partnership information
returns for the Trust shall be prepared and signed by the Transferor, as
general partner, and the Transferor shall act as the "Tax Matters Partner"
(as defined in Section 6231(a)(7) of the Internal Revenue Code). In the
event the Trust shall be required to file tax returns, the Servicer shall
at its expense prepare or cause to be prepared any tax returns required to
be filed by the Trust and, to the extent possible, shall remit such returns
to the Trustee for signature at least five days before such returns are due
to be filed. The Trustee is hereby authorized to sign any such return on
behalf of the Trust. The Servicer shall prepare or shall cause to be
prepared all tax information required by law to be distributed to
Securityholders and shall deliver such information to the Trustee at least
five days prior to the date it is required by law to be distributed to
Securityholders. The Trustee, upon request, will furnish the Servicer with
all such information known to the Trustee as may be reasonably required in
connection with the preparation of all tax returns of the Trust and shall,
upon request, execute such return. In no event shall the Trustee be liable
for any liabilities, costs or expenses of the Trust, the Investor
Securityholders or the Security Owners arising under any tax law, including
without limitation federal, state, local or foreign income or excise taxes
or any other tax imposed on or measured by income (or any interest or
penalty or addition with respect thereto or arising from a failure to
comply therewith).
Section 11.12 Trustee May Enforce Claims Without Possession of
Securities. All rights of action and claims under this Agreement or any
Series of Securities may be prosecuted and enforced by the Trustee without
the possession of any of the Securities or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the
Trustee shall be brought in its own name as trustee. Any recovery of
judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel, be for the ratable benefit of any Series of
Securityholders in respect of which such judgment has been obtained.
Section 11.13 Suits for Enforcement. If a Servicer Default of
which a Responsible Officer of the Trustee has knowledge shall occur and be
continuing, the Trustee, in its discretion may, subject to the provisions
of Section 10.1, proceed to protect and enforce its rights and the rights
of any Series of Securityholders under this Agreement by a suit, action or
proceeding in equity or at law or otherwise, whether for the specific
performance of any covenant or agreement contained in this Agreement or in
aid of the execution of any power granted in this Agreement or for the
enforcement of any other legal, equitable or other remedy as the Trustee,
being advised by counsel, shall deem most effectual to protect and enforce
any of the rights of the Trustee or any Series of Securityholders.
Section 11.14 Rights of Securityholders to Direct Trustee.
Holders of Investor Securities representing more than 50% of the Aggregate
Invested Amount (or, with respect to any remedy, trust or power that does
not relate to all Series, 50% of the aggregate Invested Amount of the
Investor Securities of all Series to which such remedy, trust or power
relates) shall have the right to direct the time, method, and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee; provided, however,
that Holders of Investor Securities representing more than 50% of the
aggregate Invested Amount of any Class may direct the Trustee to exercise
its rights under Section 8.6; provided, further, that, subject to Section
11.1, the Trustee shall have the right to decline to follow any such
direction if the Trustee being advised by counsel determines that the
action so directed may not lawfully be taken, or if the Trustee in good
faith shall, by a Responsible Officer or Responsible Officers of the
Trustee, determine that the proceedings so directed would be illegal or
involve it in personal liability or be unduly prejudicial to the rights of
Securityholders not parties to such direction; and provided, further that
nothing in this Agreement shall impair the right of the Trustee to take any
action deemed proper by the Trustee and which is not inconsistent with such
direction of such Holders of Investor Securities.
Section 11.15 Representations and Warranties of Trustee. The
Trustee represents and warrants that:
(i) the Trustee is a corporation organized, existing and
authorized to engage in the business of banking under the laws of the
State of its incorporation;
(ii) the Trustee is an entity that satisfies the
eligibility requirements of Section 11.6;
(iii) the Trustee has full power, authority and right to
execute, deliver and perform this Agreement, and has taken all
necessary action to authorize the execution, delivery and performance
by it of this Agreement; and
(iv) this Agreement has been duly executed and delivered by
the Trustee.
Section 11.16 Maintenance of Office or Agency. The Trustee will
maintain at its expense an office or offices, or agency or agencies, where
notices and demands to or upon the Trustee in respect of the Securities and
this Agreement may be served. The Trustee initially appoints its Corporate
Trust Office as its office for such purposes. The Trustee will give prompt
written notice to the Servicer and to Securityholders (or in the case of
Holders of Bearer Securities, in the manner provided for in the related
Supplement) of any change in the location of the Security Register or any
such office or agency.
[End of Article XI]
ARTICLE XII
TERMINATION
Section 12.1 Termination of Trust.
(a) The respective obligations and responsibilities of the
Transferor, the Servicer and the Trustee created hereby (other than the
obligation of the Trustee to make payments to Securityholders as hereafter
set forth) shall terminate, except with respect to the duties described in
Sections 7.4, 8.4 and 11.5 and subsection 12.3(b), on the Trust Termination
Date; provided, however, that the Trust shall not terminate on the date
specified in clause (i) of the definition of "Trust Termination Date" if
each of the Servicer and the Holder of the Exchangeable Transferor Security
notify the Trustee in writing, not later than five Business Days preceding
such date, that they desire that the Trust not terminate on such date,
which notice (such notice, a "Trust Extension") shall specify the date on
which the Trust shall terminate (such date, the "Extended Trust Termination
Date"); provided, however, that the Extended Trust Termination Date shall
be not later than May 26, 2095. The Servicer and the Holder of the
Exchangeable Transferor Security may, on any date following the Trust
Extension, so long as no Series of Securities is outstanding, deliver a
notice in writing to the Trustee changing the Extended Trust Termination
Date.
(b) In the event that (i) the Trust has not terminated by the
Distribution Date occurring in the second month preceding the Trust
Termination Date, and (ii) the Invested Amount of any Series, exclusive of
any Transferor Retained Class (after giving effect to all transfers,
withdrawals, deposits and drawings to occur on such date and the payment of
principal on any Series of Securities to be made on the related
Distribution Date during such month pursuant to Article IV), would be
greater than zero, the Servicer shall sell within 30 days after such
Transfer Date an amount of Receivables up to the remaining Invested Amount
if it can do so in a commercially reasonable manner. The Servicer shall
notify each Enhancement Provider of the proposed sale of the Receivables
and shall provide each Enhancement Provider an opportunity to bid on the
Receivables. The Transferor shall have the right of first refusal to
purchase the Receivables on terms equivalent to the best purchase offer as
determined by the Trustee in its sole discretion. The proceeds of any such
sale shall be treated as Collections on the Receivables and shall be
allocated and deposited in accordance with Article IV; provided, however,
that the Trustee shall determine conclusively in its sole discretion the
amount of such proceeds which are allocable to Finance Charge Collections
and the amount of such proceeds which are allocable to Principal
Collections. During such thirty-day period, the Servicer shall continue to
collect payments on the Receivables and allocate and deposit such payments
in accordance with the provisions of Article IV.
(c) All principal or interest with respect to any Series of
Investor Securities shall be due and payable no later than the Series
Termination Date with respect to such Series. Unless otherwise provided in
a Supplement, in the event that the Invested Amount of any Series of
Securities is greater than zero, exclusive of any Class held by the
Transferor, on its Series Termination Date (the "Affected Series"), after
giving effect to all transfers, withdrawals, deposits and drawings to occur
on such date and the payment of principal to be made on such Series on such
date, and the Trustee will sell or cause to be sold, and the Trustee will
pay the proceeds to all Securityholders of such Series pro rata in final
payment of all principal of and accrued interest on such Series of
Securities or, if any Class of such Series is subordinated, in order of
their respective seniorities, an amount of Principal Receivables and the
related Finance Charge Receivables (or interests therein) up to 110% of the
Invested Amount of such Series at the close of business on such date (but
the amount of such Principal Receivables not to be more than an amount of
Receivables equal to the sum of (1) the product of (A) the Transferor
Percentage, (B) the aggregate outstanding Principal Receivables and (C) a
fraction the numerator of which is the Invested Amount of such Series on
such date and the denominator of which is the sum of the Invested Amounts
of all Series on such Date and (2) the Invested Amount of such Series).
Receivables on which the Obligor has not made the full monthly payment for
the prior months shall be deemed to be in default for purposes of this
Section 12.1(c) to the extent that the cash allocated to any Class of
Transferor Retained Securities of such Series pursuant to a sale under
Section 12.1(c) is less than the amount that would have been allocated to
the Exchangeable Transferor Security and the Transferor Retained Securities
had the proceeds from such sale been allocated pursuant to Section 4.3.
The Servicer shall notify each Enhancement Provider of the proposed sale of
such Receivables and shall provide each Enhancement Provider an opportunity
to bid on such Receivables. The Transferor shall be permitted to purchase
such Receivables in such case and shall have a right of first refusal with
respect thereto to the extent of a bona fide offer by an unrelated third
party or to the extent the Receivables represent Defaulted Receivables.
Any proceeds of such sale in excess of such principal and interest paid
shall be paid to the Holder of the Exchangeable Transferor Security. Upon
such Series Termination Date with respect to the applicable Series of
Securities, final payment of all amounts allocable to any Investor
Securities of such Series shall be made in the manner provided in Section
12.3.
Section 12.2 Optional Termination. (a) If so provided in any
Supplement, the Transferor may, but shall not be obligated to, cause a
final distribution to be made in respect of the related Series of
Securities on a Distribution Date specified in such Supplement by
depositing into the Distribution Account or the applicable Series Account,
not later than the Transfer Date preceding such Distribution Date, for
application in accordance with Section 12.3, the amount specified in such
Supplement; provided, however that if the short-term deposits or long-term
unsecured debt obligations of the Transferor are not rated at the time of
such purchase of Receivables at least P-3 or Baa3, respectively, by
Xxxxx'x, no such event shall occur unless the Transferor shall deliver to
the Trustee, with a copy to Xxxxx'x, an Officer's Certificate which shall
have attached to it the relevant fraudulent conveyance statue, if any, and
set forth the factual basis for a conclusion that such deposit into the
Distribution Account or any Series Account as provided in the related
Supplement would not constitute a fraudulent conveyance of the Transferor.
(b) The amount deposited pursuant to subsection 12.2(a) shall be
paid to the Investor Securityholders of the related Series pursuant to
Section 12.3 on the related Distribution Date following the date of such
deposit. All Securities of a Series with respect to which a final
distribution has been made pursuant to subsection 12.2(a) shall be
delivered by the Holder to, and be canceled by, the Transfer Agent and
Registrar and be disposed of in a manner satisfactory to the Trustee and
the Transferor. The Invested Amount of each Series with respect to which a
final distribution has been made pursuant to subsection 12.2(a) shall, for
the purposes of the definition of "Transferor Interest," be deemed to be
equal to zero on the Distribution Date following the making of the deposit,
and the Transferor Interest shall thereupon be deemed to have been
increased by the Invested Amount of such Series.
Section 12.3 Final Payment with Respect to any Series.
(a) Written notice of any termination, specifying the
Distribution Date upon which the Investor Securityholders of any Series may
surrender their Securities for payment of the final distribution with
respect to such Series and cancellation, shall be given (subject to at
least four Business Days' prior notice from the Servicer to the Trustee) by
the Trustee to Investor Securityholders of such Series mailed not later
than the fifth day of the month of such final distribution (or in the
manner provided by the Supplement relating to such Series) specifying (i)
the Distribution Date (which shall be the Distribution Date in the month
(x) in which the deposit is made pursuant to subsection 2.4(e), 9.2(a),
10.2(a), or 12.2(a) of the Agreement or such other section as may be
specified in the related Supplement, or (y) in which the related Series
Termination Date occurs) upon which final payment of such Investor
Securities will be made upon presentation and surrender of such Investor
Securities at the office or offices therein designated (which, in the case
of Bearer Securities, shall be outside the United States), (ii) the amount
of any such final payment and (iii) that the Record Date otherwise
applicable to such Distribution Date is not applicable, payments being made
only upon presentation and surrender of the Investor Securities at the
office or offices therein specified. The Servicer's notice to the Trustee
in accordance with the preceding sentence shall be accompanied by an
Officers' Certificate setting forth the information specified in Article V
of this Agreement covering the period during the then current calendar year
through the date of such notice and setting forth the date of such final
distribution. The Trustee shall give such notice to the Transfer Agent and
Registrar and the Paying Agent at the time such notice is given to such
Investor Securityholders.
(b) Notwithstanding the termination of the Trust pursuant to
subsection 12.1(a) or the occurrence of the Series Termination Date with
respect to any Series, all funds then on deposit in the Excess Funding
Account, the Interest Funding Account, the Principal Account, the
Distribution Account or any Series Account applicable to the related Series
shall continue to be held in trust for the benefit of the Securityholders
of the related Series and the Paying Agent or the Trustee shall pay such
funds to the Securityholders of the related Series upon surrender of their
Securities (which surrenders and payments, in the case of Bearer
Securities, shall be made only outside the United States). In the event
that all of the Investor Securityholders of any Series shall not surrender
their Securities for cancellation within six months after the date
specified in the above-mentioned written notice, the Trustee shall give a
second written notice (or, in the case of Bearer Securities, publication
notice) to the remaining Investor Securityholders of such Series upon
receipt of the appropriate records from the Transfer Agent and Registrar to
surrender their Securities for cancellation and receive the final
distribution with respect thereto. If within one and one half years after
the second notice with respect to a Series, all the Investor Securities of
such Series shall not have been surrendered for cancellation, the Trustee
may take appropriate steps or may appoint an agent to take appropriate
steps, to contact the remaining Investor Securityholders of such Series
concerning surrender of their Securities, and the cost thereof shall be
paid out of the funds in the Distribution Account or any Series Account
held for the benefit of such Investor Securityholders. The Trustee and the
Paying Agent shall pay to the Transferor upon request any monies held by
them for the payment of principal or interest which remains unclaimed for
two years. After payment to the Transferor, Investor Securityholders
entitled to the money must look to the Transferor for payment as general
creditors unless an applicable abandoned property law designates otherwise.
(c) All Securities surrendered for payment of the final
distribution with respect to such Securities and cancellation shall be
canceled by the Transfer Agent and Registrar and be disposed of in a manner
satisfactory to the Trustee and the Transferor.
Section 12.4 Termination Rights of Holder of Exchangeable
Transferor Security. Upon the termination of the Trust pursuant to Section
12.1, and after payment of all amounts due hereunder on or prior to such
termination and the surrender of the Exchangeable Transferor Security, the
Trustee shall execute a written reconveyance substantially in the form of
Exhibit F pursuant to which it shall reconvey to the Holder of the
Exchangeable Transferor Security (without recourse, representation or
warranty) all right, title and interest of the Trust in the Receivables,
whether then existing or thereafter created, all moneys due or to become
due with respect thereto (including all accrued interest theretofore posted
as Finance Charge Receivables) allocable to the Trust pursuant to any
Supplement, except for amounts held by the Trustee pursuant to subsection
12.3(b). The Trustee shall execute and deliver such instruments of
transfer and assignment, in each case prepared by the Transferor and
without recourse, representation or warranty (other than a warranty that
such property is conveyed free and clear of any Lien of any Person claiming
by or through the Trustee) as shall be reasonably requested by the Holder
of the Exchangeable Transferor Security to vest in such Holder all right,
title and interest which the Trust had in the Receivables and other Trust
Property.
[End of Article XII]
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.1 Amendment.
(a) This Agreement (including any Supplement) may be amended
from time to time by the Servicer, the Transferor and the Trustee, without
the consent of any of the Securityholders, (i) to cure any ambiguity, to
revise any exhibits or Schedules (other than Schedule 1), to correct or
supplement any provisions herein or thereon which may be inconsistent with
any other provisions herein or thereon or (ii) to add any other provisions
with respect to matters or questions raised under this Agreement which
shall not be inconsistent with the provisions of this Agreement; provided,
however, that such action shall not, as evidenced by an Opinion of Counsel,
adversely affect in any material respect the interests of any of the
Investor Securityholders. Additionally, this Agreement may be amended from
time to time by the Servicer, the Transferor and the Trustee, without the
consent of any of the Securityholders, to add to or change any of the
provisions of this Agreement to provide that Bearer Securities may be
registrable as to principal, to change or eliminate any restrictions on the
payment of principal of (or premium, if any) or any interest on Bearer
Securities to comply with the Bearer Rules, to permit Bearer Securities
to be issued in exchange for Registered Securities (if then permitted by
the Bearer Rules), to permit Bearer Securities to be issued in exchange
for Bearer Securities of other authorized denominations or to permit the
issuance of Securities in uncertificated form.
This Agreement (including any Supplement), and any schedule or
exhibit thereto may also be amended from time to time by the Servicer, the
Transferor and the Trustee, without the consent of any of the
Securityholders, for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement, or of
modifying in any manner the rights of the Holders of Securities; provided,
however, that (i) the Servicer shall have provided an Officer's Certificate
to the Trustee to the effect that such amendment will not materially and
adversely affect the interests of the Securityholders, (ii) such amendment
shall not, as evidenced by an Opinion of Counsel, cause the Trust to be
characterized for Federal income tax purposes as an association taxable as
a corporation or otherwise have any material adverse impact on the Federal
income taxation of any outstanding Series of Investor Securities or any
Security Owner and (iii) the Servicer shall have provided at least ten
Business Days prior written notice to each Rating Agency of such amendment
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 such amendment; provided, further, that
such amendment shall not reduce in any manner the amount of, or delay the
timing of, distributions which are required to be made on any Investor
Security of such Series without the consent of the related Investor
Securityholder, change the definition of or the manner of calculating the
interest of any Investor Securityholder of such Series without the consent
of the related Investor Securityholder or reduce the percentage pursuant to
Subsection 13.1(b) required to consent to any such amendment, in each case
without the consent of all such Investor Securityholders.
(b) This Agreement and any Supplement may also be amended from
time to time by the Servicer, the Transferor and the Trustee with the
consent of the Holders of Investor Securities evidencing Undivided
Interests aggregating not less than 66-2/3% of the Invested Amount of each
and every Series adversely affected, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of
the Investor Securityholders of any Series then issued and outstanding;
provided, however, that no such amendment under this subsection shall (i)
reduce in any manner the amount of, or delay the timing of, distributions
which are required to be made on any Investor Security of such Series
without the consent of all of the related Investor Securityholders; (ii)
change the definition of or the manner of calculating the interest of any
Investor Securityholder of such Series without the consent of the related
Investor Securityholder or (iii) reduce the aforesaid percentage required
to consent to any such amendment, in each case without the consent of all
such Investor Securityholders.
(c) Notwithstanding anything in this Section 13.1 to the
contrary, the Supplement with respect to any Series may be amended on the
items and in accordance with the procedures provided in such Supplement.
(d) Promptly after the execution of any such amendment (other
than an amendment pursuant to paragraph (a)), the Trustee shall furnish
notification of the substance of such amendment to each Investor
Securityholder of each Series adversely affected and ten Business Days
prior to the proposed effective date for such amendment the Servicer shall
furnish notification of the substance of such amendment to each Rating
Agency providing a rating for such Series.
(e) It shall not be necessary to obtain the consent of Investor
Securityholders under this Section 13.1 to approve the particular form of
any proposed amendment, but it shall be sufficient if such consent shall
approve the substance thereof. The manner of obtaining such consents and
of evidencing the authorization of the execution thereof by Investor
Securityholders shall be subject to such reasonable requirements as the
Trustee may prescribe.
(f) Any Supplement executed and delivered pursuant to Section
6.9 and any amendments regarding the addition or removal of Receivables
from the Trust as provided in Sections 2.6 or 2.7, executed in accordance
with the provisions hereof, shall not be considered amendments to this
Agreement for the purpose of subsections 13.1(a) and (b).
(g) In connection with any amendment, the Trustee may request an
Opinion of Counsel from the Transferor or Servicer to the effect that the
amendment complies with all requirements of this Agreement. The Trustee
may, but shall not be obligated to, enter into any amendment which affects
the Trustee's rights, duties or immunities under this Agreement or
otherwise.
Section 13.2 Protection of Right, Title and Interest to Trust.
(a) The Servicer shall cause this Agreement, all amendments
hereto and/or all financing statements and continuation statements and any
other necessary documents covering the Securityholders and the Trustee's
right, title and interest to the Trust to be promptly recorded, registered
and filed, and at all times to be kept recorded, registered and filed, all
in such manner and in such places as may be required by law fully to
preserve and protect the right, title and interest of the Securityholders
or the Trustee, as the case may be, hereunder to all property comprising
the Trust. The Servicer shall deliver to the Trustee file-stamped copies
of, or filing receipts for, any document recorded, registered or filed as
provided above, as soon as available following such recording, registration
or filing. The Transferor shall cooperate fully with the Servicer in
connection with the obligations set forth above and will execute any and
all documents reasonably required to fulfill the intent of this subsection
13.2(a).
(b) Within 30 days after the Transferor makes any change in its
name, identity or corporate structure which would make any financing
statement or continuation statement filed in accordance with paragraph (a)
above materially misleading within the meaning of Section 9-402(7) of the
UCC as in effect in the Relevant UCC State, the Transferor shall give the
Trustee written notice of any such change and shall file such financing
statements or amendments as may be necessary to continue the perfection of
the Trust's security interest in the Receivables and the proceeds thereof.
(c) Each of the Transferor and the Servicer will give the
Trustee prompt written notice of any relocation of any office from which it
services Receivables or keeps records concerning the Receivables or of its
principal executive office and whether, as a result of such relocation, the
applicable provisions of the UCC would require the filing of any amendment
of any previously filed financing or continuation statement or of any new
financing statement and shall file such financing statements or amendments
as may be necessary to continue the perfection of the Trust's security
interest in the Receivables and the proceeds thereof. Each of the
Transferor and the Servicer will at all times maintain each office from
which it services Receivables and its principal executive office within the
United States of America.
(d) The Servicer will deliver to the Trustee on or before March
31 of each year, beginning with March 31, 1996, an Opinion of Counsel,
substantially in the form of Exhibit E and upon each date that any
Supplemental Accounts are to be included in the Accounts pursuant to
subsection 2.6(c) an Opinion of Counsel substantially in the form of
Exhibit I.
Section 13.3 Limitation on Rights of Securityholders.
(a) The death or incapacity of any Investor Securityholder shall
not operate to terminate this Agreement or the Trust, nor shall such death
or incapacity entitle such Securityholder's legal representatives or heirs
to claim an accounting or to take any action or commence any proceeding in
any court for a partition or winding up of the Trust, nor otherwise affect
the rights, obligations and liabilities of the parties hereto or any of
them.
(b) No Investor Securityholder shall have any right to vote
(except with respect to the Investor Securityholders as provided in Section
13.1 hereof) or in any manner otherwise control the operation and
management of the Trust, or the obligations of the parties hereto, nor
shall anything herein set forth, or contained in the terms of the
Securities, be construed so as to constitute the Securityholders from time
to time as members of an association; nor shall any Investor Securityholder
be under any liability to any third person by reason of any action taken by
the parties to this Agreement pursuant to any provision hereof.
(c) No Securityholder shall have any right by virtue of any
provisions of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless
such Securityholder previously shall have given written notice to the
Trustee, and unless the Holders of Securities evidencing Undivided
Interests aggregating more than 50% of the Invested Amount of any Series
which may be adversely affected but for the institution of such suit,
action or proceeding, shall have made written request upon the Trustee to
institute such action, suit or proceeding in its own name as Trustee
hereunder and shall have offered to the Trustee such reasonable indemnity
as it may require against the costs, expenses and liabilities to be
incurred therein or thereby, and the Trustee, for 60 days after its receipt
of such notice, request and offer of indemnity, shall have neglected or
refused to institute any such action, suit or proceeding; it being
understood and intended, and being expressly covenanted by each
Securityholder with every other Securityholder and the Trustee, that no one
or more Securityholders shall have the right in any manner whatever by
virtue or by availing itself or themselves of any provisions of this
Agreement to affect, disturb or prejudice the rights of the Securityholders
of any other of the Securities, or to obtain or seek to obtain priority
over or preference to any other such Securityholder, or to enforce any
right under this Agreement, except in the manner herein provided and for
the equal, ratable and common benefit of all Securityholders. For the
protection and enforcement of the provisions of this Section 13.3, each and
every Securityholder and the Trustee shall be entitled to such relief as
can be given either at law or in equity.
Section 13.4 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 13.5 Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given
if personally delivered at, sent by facsimile to, sent by courier at or
mailed by registered mail, return receipt requested, to (a) in the case of
the Transferor to 000 Xxxxx Xxxxxxx 000, Xxxxx 000, Xx. Xxxxx Xxxx,
Xxxxxxxxx 00000, Attention: Chief Financial Officer and General Counsel,
with a copy to the Servicer as provided below, (b) in the case of the
Servicer, 0000 Xxxx Xxxxxxxx Xxxxxxx, Xxxxxxxxxx, Xxxxxxx 00000,
Attention: Treasurer with a copy to 000 Xxxxx Xxxxxxx 000, Xxxxx 000, Xx.
Xxxxx Xxxx, Xxxxxxxxx 00000, Attention: Treasurer and General Counsel,
(c) in the case of the Trustee, to the Corporate Trust Office, (d) in the
case of the Enhancement Provider for a particular Series, the address, if
any, specified in the Supplement relating to such Series and (e) in the
case of the Rating Agency for a particular Series, the address, if any,
specified in the Supplement relating to such Series; or, as to each party,
at such other address as shall be designated by such party in a written
notice to each other party. Unless otherwise provided with respect to any
Series in the related Supplement any notice required or permitted to be
mailed to a Securityholder shall be given by first class mail, postage
prepaid, at the address of such Securityholder as shown in the Security
Register, or with respect to any notice required or permitted to be made to
the Holders of Bearer Securities, by publication in the manner provided in
the related Supplement. If and so long as any Series or Class is listed on
the Luxembourg Stock Exchange and such Exchange shall so require, any
Notice to Investor Securityholders shall be published in an authorized
newspaper of general circulation in Luxembourg within the time period
prescribed in this Agreement. Any notice so mailed within the time
prescribed in this Agreement shall be conclusively presumed to have been
duly given, whether or not the Securityholder receives such notice.
Section 13.6 Severability of Provisions. If any one or more of
the covenants, agreements, provisions or terms of this Agreement shall for
any reason whatsoever be held invalid, then such covenants, agreements,
provisions or terms shall be deemed severable from the remaining covenants,
agreements, provisions or terms of this Agreement and shall in no way
affect the validity or enforceability of the other provisions of this
Agreement or of the Securities or rights of the Securityholders thereof.
Section 13.7 Assignment. Notwithstanding anything to the
contrary contained herein, except as provided in Section 8.2, this
Agreement may not be assigned by the Servicer without the prior consent of
Holders of Investor Securities representing not less than 66 2/3% of the
Invested Amount of each Series on a Series by Series basis. Upon such
assignment, the Trustee shall provide notice to Xxxxx'x in a prompt manner.
Section 13.8 Securities Non-Assessable and Fully Paid. Except
to the extent otherwise expressly provided in Section 7.4 with respect to
the Transferor, it is the intention of the parties to this Agreement that
the Investor Securityholders shall not be personally liable for obligations
of the Trust, that the Undivided Interests represented by the Securities
shall be non-assessable for any losses or expenses of the Trust or for any
reason whatsoever, and that Securities upon authentication thereof by the
Trustee pursuant to Sections 2.1 and 6.2 are and shall be deemed fully
paid.
Section 13.9 Further Assurances. The Transferor and the
Servicer agree to do and perform, from time to time, any and all acts and
to execute any and all further instruments required or reasonably requested
by the Trustee more fully to effect the purposes of this Agreement,
including, without limitation, the execution of any financing statements or
continuation statements relating to the Receivables and the other Trust
Property for filing under the provisions of the UCC of any applicable
jurisdiction.
Section 13.10 No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the Trustee, any
Enhancement Provider or the Investor Securityholders, any right, remedy,
power or privilege hereunder, shall operate as a waiver thereof; nor shall
any single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of
any other right, remedy, power or privilege. The rights, remedies, powers
and privileges herein provided are cumulative and not exhaustive of any
rights, remedies, powers and privileges provided by law.
Section 13.11 Counterparts. This Agreement may be executed in
two or more counterparts (and by different parties on separate
counterparts), each of which shall be an original, but all of which
together shall constitute one and the same instrument.
Section 13.12 Third-Party Beneficiaries. This Agreement will
inure to the benefit of and be binding upon the parties hereto, the
Securityholders and, to the extent provided in the related Supplement, to
the Enhancement Provider named therein, and their respective successors and
permitted assigns. Except as otherwise provided in this Article XIII, no
other Person will have any right or obligation hereunder.
Section 13.13 Actions by Securityholders.
(a) Wherever in this Agreement a provision is made that an
action may be taken or a notice, demand or instruction given by Investor
Securityholders, such action, notice or instruction may be taken or given
by any Investor Securityholder, unless such provision requires a specific
percentage of Investor Securityholders.
(b) Any request, demand, authorization, direction, notice,
consent, waiver or other act by a Securityholder shall bind such
Securityholder and every subsequent holder of such Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done or omitted to be done by the Trustee or the
Servicer in reliance thereon, whether or not notation of such action is
made upon such Security.
(c) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Agreement or any
Supplement to be given or taken by Securityholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed
by such Securityholders in person or by agent duly appointed in writing;
and except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee
and, when required, to the Transferor or the Servicer. Proof of execution
of any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Agreement or any Supplement and
conclusive in favor of the Trustee, the Transferor and the Servicer, if
made in the manner provided in this Section.
(d) The fact and date of the execution by any Securityholder of
any such instrument or writing may be proved in any reasonable manner which
the Trustee deems sufficient.
Section 13.14 Rule 144A Information. For so long as any of the
Investor Securities of any Series or any Class are "restricted securities"
within the meaning of Rule 144(a)(3) under the Securities Act, each of the
Transferor, the Servicer, the Trustee and the Enhancement Provider for such
Series agree to cooperate with each other to provide to any Investor
Securityholders of such Series or Class and to any prospective purchaser of
Securities designated by such an Investor Securityholder upon the request
of such Investor Securityholder or prospective purchaser, any information
required to be provided to such holder or prospective purchaser to satisfy
the condition set forth in Rule 144A(d)(4) under the Securities Act.
Section 13.15 Merger and Integration. Except as specifically
stated otherwise herein, this Agreement sets forth the entire understanding
of the parties relating to the subject matter hereof, and all prior
understandings, written or oral, are superseded by this Agreement. This
Agreement may not be modified, amended, waived or supplemented except as
provided herein.
Section 13.16 Headings. The headings herein are for purposes of
reference only and shall not otherwise affect the meaning or interpretation
of any provision hereof.
[End of Article XIII]
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.,
Transferor
By:_________________________________
Name:
Title:
DIRECT MERCHANTS CREDIT CARD BANK,
NATIONAL ASSOCIATION, Servicer
By:_________________________________
Name:
Title:
THE BANK OF NEW YORK (DELAWARE),
Trustee
By:_________________________________
Name:
Title:
SCHEDULE 1
TAX RETURNS AND PAYMENTS
FCI (for so long as FCI owns 80% or more of the common stock of Metris) or
else Metris and its subsidiaries have filed all applicable federal, state
and material local tax returns and have paid or caused to be paid all
associated taxes due and payable on such returns or on any assessments
received by them; except that FCI (for so long as FCI owns 80% or more of
the common stock of Metris) or its subsidiaries have not filed certain tax
returns purported to be required because they believe the requirements are
invalid and unenforceable under the commerce clause of the United States
Constitution as interpreted by the Supreme Court in National Bellas Xxxx v.
Department of Revenue of Illinois, 386 U.S. 753 (1967) and the supporting
lines of cases, including Quill Corp. v. North Dakota, 112 S. Ct. 1904
(1992). The following are the states in which FCI (for so long as FCI owns
80% or more of the common stock of Metris) or its subsidiaries are
currently collecting sales/use taxes:
California Oklahoma
Florida Pennsylvania
Illinois South Carolina
Iowa South Dakota
Minnesota Tennessee
New York Utah
Ohio Wisconsin
Notwithstanding the Supreme Court decisions, the following states, to the
best knowledge of FCI (for so long as FCI owns 80% or more of the common
stock of Metris) or its subsidiaries, currently have legislation in effect
which purports or may purport to require FCI (for so long as FCI owns 80%
or more of the common stock of Metris) or else Metris or its subsidiaries
to collect sales or use taxes:
Alabama Iowa New Jersey Tennessee
Arizona Kansas New Mexico Texas
Arkansas Kentucky New York Utah
California Louisiana North Carolina Vermont
Colorado Massachusetts North Dakota Virginia
Connecticut Michigan Ohio Washington
Florida Minnesota Oklahoma West Virginia]
Georgia Mississippi Pennsylvania
Idaho Missouri Rhode Island
Illinois Nebraska South Carolina
Indiana Nevada South Dakota
In addition, because one of the subsidiaries of Metris, Direct
Merchants Credit Card Bank, National Association, is a national banking
entity 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
California
Hawaii
Indiana
Massachusetts
Minnesota
New Mexico
Tennessee
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.
SCHEDULE 2
NOMENCLATURE LIST
The following is a table listing the terms used in the Pooling and
Servicing Agreement prior to this Amended and Restated Pooling and
Servicing Agreement which have been renamed in this Amended and Restated
Pooling and Servicing Agreement. The terms used in the Pooling and
Servicing Agreement prior to this Amended and Restated Pooling and
Servicing Agreement will keep their meaning with respect to each Series
issued prior to the Amendment Closing Date and outstanding on the date
hereof consistent with this table.
Terms Used in This Amended and
Terms Used in Pooling and Servicing Restated Pooling and Servicing
Agreement Prior to Amendment Agreement
Bearer Certificate Bearer Security
Bearer Certificateholder Bearer Securityholder
Book-Entry Certificates Book-Entry Securities
Certificate Owner Security Owner
Certificate Principal Security Principal
Certificate Rate Security Rate
Certificate Register Security Register
Certificateholders Securityholders
Certificates Securities
Definitive Certificates Definitive Securities
Euro-Certificate Exchange Date Euro-Security Exchange Date
Exchangeable Transferor Certificate Exchangeable Transferor Security
Global Certificate Global Security
Investor Certificateholder Investor Securityholder
Investor Certificates Investor Securities
Investor Charge-Off Series Charge-Off
Investor Default Amount Series Default Amount
Registered Certificates Registered Securities
Supplemental Certificate Supplemental Security
Transferor Retained Transferor Retained
Certificate Security
Unfunded Certificate Unfunded Security
Variable Funding Variable Funding
Certificates Securities
EXHIBIT A
FORM OF EXCHANGEABLE TRANSFEROR SECURITY
No. 1 One Unit
METRIS MASTER TRUST
ASSET BACKED SECURITY
THIS SECURITY WAS ISSUED PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY BE SOLD ONLY
PURSUANT TO A REGISTRATION STATEMENT EFFECTIVE UNDER THE ACT OR AN
EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE ACT. IN ADDITION, THE
TRANSFER OF THIS SECURITY IS SUBJECT TO RESTRICTIONS SET FORTH IN THE
POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN. A COPY OF THE POOLING
AND SERVICING AGREEMENT WILL BE FURNISHED TO THE HOLDER OF THIS SECURITY BY
THE TRUSTEE UPON WRITTEN REQUEST.
This Security represents an Undivided Interest
in the Metris Master Trust
Evidencing an undivided interest in a trust, the corpus of which consists
of open-end or revolving credit receivables generated from time to time in
the ordinary course of business by Direct Merchants Credit Card Bank,
National Association ("DMCCB" or the "Servicer") and other assets and
interests constituting the Trust under the Pooling and Servicing Agreement
described below.
(Not an interest in or a recourse obligation of
Metris Receivables, Inc.,
Direct Merchants Credit Card Bank, National Association
or any Affiliate of either of them.)
This certifies that METRIS RECEIVABLES, INC. ("MRI," the "Holder"
or the "Transferor," as the context requires) is the registered owner of a
fractional undivided interest in the Metris Master Trust (the "Trust")
issued pursuant to the Amended and Restated Pooling and Servicing
Agreement, dated as of July 30, 1998 (the "Pooling and Servicing
Agreement"; such term to include any amendment or Supplement thereto) by
and among MRI, as Transferor, DMCCB, as the Servicer, and The Bank of New
York (Delaware), as Trustee (the "Trustee"), as supplemented by each
supplement thereto existing from time to time. The corpus of the Trust
will include (i) a portfolio of Receivables (the "Receivables") generated
from time to time by DMCCB satisfying certain criteria, (ii) all funds to
be collected from Obligors in respect of the Receivables, (iii) all right,
title, and interest of the Transferor in, to, and under the Purchase
Agreement, (iv) the benefit of funds on deposit in the Excess Funding
Account, (v) Recoveries, (vi) moneys on deposit in the Pre-Funding Account,
(vii) all proceeds of the foregoing, (viii) all monies and investments due
or to become due with respect thereto and all amounts received with respect
to the Receivables in existence on the Closing Date or generated
thereafter, all monies on deposit in the Collection Account, the Interest
Funding Account, the Principal Account, the Distribution Account, the Pre-
Funding Account and the Excess Funding Account (excluding any investment
earnings on such deposited amounts except for such amounts as are on
deposit in the Pre-Funding Account and the Excess Funding Account), and all
other assets and interests constituting the Trust and (ix) all proceeds of
the foregoing.
To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Pooling and Servicing Agreement.
This Security is issued under and is subject to the terms, provisions and
conditions of the Pooling and Servicing Agreement, to which Pooling and
Servicing Agreement, as amended from time to time, the Holder by virtue of
the acceptance hereof assents and by which the Holder is bound.
This Security has not been registered or qualified under the
Securities Act of 1933, as amended, or any state securities law. No sale,
transfer or other disposition of this Security shall be permitted other
than in accordance with the provisions of Section 6.3, 6.9 or 7.2 of the
Pooling and Servicing Agreement.
The Receivables arise generally from revolving consumer credit
card accounts.
This Security is the Exchangeable Transferor Security (the
"Security"), which represents an undivided interest in the Trust, including
the right to receive the Collections and other amounts at the times and in
the amounts specified in the Pooling and Servicing Agreement to be paid to
the Holder of the Exchangeable Transferor Security. The aggregate interest
represented by this Security at any time in the Principal Receivables in
the Trust shall not exceed the Transferor Interest at such time. In
addition to this Security, Series of Investor Securities will be issued to
investors pursuant to the Pooling and Servicing Agreement, each of which
will represent an Undivided Interest in the Trust. This Security shall not
represent any interest in any Enhancement, except to the extent provided in
the Pooling and Servicing Agreement. The Transferor Interest on any date
of determination will be an amount equal to the aggregate amount of
Principal Receivables at the end of the day immediately prior to such date
of determination plus amounts on deposit in the Excess Funding Account and
Pre-Funding Account (but not including any investment earnings thereon)
minus the Aggregate Invested Amount at the end of such day.
The Servicer shall deposit all Collections in the Collection
Account as promptly as possible after the Date of Processing of such
Collections. Unless otherwise stated in any Supplement, throughout the
existence of the Trust, the Servicer shall allocate to the Holder of the
Security an amount equal to the product of (A) the Transferor Percentage
and (B) the aggregate amount of such Principal Collections and Finance
Charge Collections, respectively, in respect of each Monthly Period.
Notwithstanding the first sentence of this paragraph, the Servicer need not
deposit this amount or any other amounts so allocated to the Security
pursuant to the Pooling and Servicing Agreement into the Collection Account
and shall pay, or be deemed to pay, such amounts as collected to the Holder
of the Security.
DMCCB or any permitted successor or assignee, as Servicer, is
entitled to receive as servicing compensation a monthly servicing fee. The
portion of the servicing fee which will be allocable to the Holder of the
Security pursuant to the Pooling and Servicing Agreement will be payable by
the Holder of the Security and neither the Trust nor the Trustee or the
Investor Securityholders will have any obligation to pay such portion of
the servicing fee.
This Security does not represent a recourse obligation of, or any
interest in, the Transferor or the Servicer. This Security is limited in
right of payment to certain Collections respecting the Receivables, all as
more specifically set forth hereinabove and in the Pooling and Servicing
Agreement.
Upon the termination of the Trust pursuant to Section 12.1 of the
Pooling and Servicing Agreement, the Trustee shall assign and convey to the
Holder of the Security (without recourse, representation or warranty) all
right, title and interest of the Trust in the Receivables, whether then
existing or thereafter created, and all proceeds relating thereto. The
Trustee shall execute and deliver such instruments of transfer and
assignment, in each case without recourse, as shall be reasonably requested
by the Holder of the Security to vest in such Holder all right, title and
interest which the Trustee had in the Receivables.
Unless the certificate of authentication hereon has been executed
by or on behalf of the Trustee, by manual signature, this Security shall
not be entitled to any benefit under the Pooling and Servicing Agreement,
or be valid for any purpose.
IN WITNESS WHEREOF, the Transferor has caused this Security to be
duly executed.
METRIS RECEIVABLES, INC.
By:________________________________
Name:
Title:
Date:_________________
CERTIFICATE OF AUTHENTICATION
This is the Exchangeable Transferor Security referred to in the
within-mentioned Pooling and Servicing Agreement.
_______________________________
Authenticating Agent
By:____________________________
Name:
Title:
EXHIBIT B
FORM OF DAILY REPORT
[TO BE SUPPLIED]
EXHIBIT C
FORM OF SETTLEMENT STATEMENT
[TO BE SUPPLIED]
EXHIBIT D
FORM OF ANNUAL SERVICER'S CERTIFICATE
METRIS RECEIVABLES, INC.
METRIS MASTER TRUST
The undersigned, a duly authorized representative of Direct
Merchants Credit Card Bank, National Association ("DMCCB"), as Servicer,
pursuant to the Amended and Restated Pooling and Servicing Agreement dated
as of July 30, 1998 (the "Pooling and Servicing Agreement") by and among
Metris Receivables, Inc. (the "Transferor"), DMCCB, as Servicer and The
Bank of New York (Delaware), as trustee (the "Trustee") does hereby certify
that:
1. DMCCB is Servicer under the Pooling and Servicing
Agreement.
2. The undersigned is duly authorized pursuant to the
Pooling and Servicing Agreement to execute and deliver this
Certificate to the Trustee.
3. This Certificate is delivered pursuant to Section 3.5 of
the Pooling and Servicing Agreement.
4. A review of the activities of the Servicer during (the
period from the Closing Date until) (the twelve fiscal month period
ended) ________, 19__ was conducted under our supervision.
5. Based on such review, the Servicer has, to the best of
our knowledge, fully performed all its obligations under the Pooling
and Servicing Agreement throughout such period and no default in the
performance of such obligations has occurred or is continuing except
as set forth in paragraph 6 below.
6. The following is a description of each default in the
performance of the Servicer's obligations under the provisions of the
Pooling and Servicing Agreement, including any Supplement, known to us
to have been made during such period which sets forth in detail (i)
the nature of each such default, (ii) the action taken by the
Servicer, if any, to remedy each such default and (iii) the current
status of each such default:
[If applicable, insert "None."]
IN WITNESS WHEREOF, the undersigned has duly executed this
certificate this ___ day of ________, ____.
DIRECT MERCHANTS CREDIT CARD BANK, NATIONAL
ASSOCIATION, as Servicer
By:________________________________________
Name:
Title:
EXHIBIT E
FORM OF ANNUAL OPINION OF COUNSEL
The opinion set forth below, which is to be delivered pursuant to
subsection 13.2(d)(ii) of the Pooling and Servicing Agreement, may be
subject to certain qualifications, assumptions, limitations and exceptions
taken or made in the opinion of counsel delivered on the Initial Closing
Date with respect to similar matters.
No filing or other action, other than such filing or action
described in such opinion, is necessary from the date of such opinion
through ________ of the following year to continue the perfected status of
the interest of the Trust in the collateral described in the financing
statements referred to in such opinion.
EXHIBIT F
FORM OF RECONVEYANCE OF RECEIVABLES
RECONVEYANCE OF RECEIVABLES, dated as of _____ __ , 19__ by and
between METRIS RECEIVABLES, INC., a corporation organized and existing
under the laws of the State of Delaware (the "Transferor"), and The Bank of
New York (Delaware), a banking corporation organized and existing under the
laws of the State of Delaware (the "Trustee") pursuant to the Pooling and
Servicing Agreement referred to below.
W I T N E S S E T H:
WHEREAS, the Transferor and the Trustee are parties to the
Amended and Restated Pooling and Servicing Agreement dated as of July 30,
1998 (hereinafter as such agreement may have been, or may from time to time
be, amended, supplemented or otherwise modified, the "Pooling and Servicing
Agreement") by and among the Transferor, Direct Merchants Credit Card Bank,
National Association, as Servicer, and the Trustee;
WHEREAS, pursuant to the Pooling and Servicing Agreement, the
Transferor wishes to cause the Trustee to reconvey all of the Receivables
and proceeds thereof, whether now existing or hereafter created, from the
Trust to the Transferor pursuant to the terms of Section 12.4 of the
Pooling and Servicing Agreement upon termination of the Trust pursuant to
subsection 12.1(a) of the Pooling and Servicing Agreement (as each such
term is defined in the Pooling and Servicing Agreement);
WHEREAS, the Trustee is willing to reconvey the Receivables
subject to the terms and conditions hereof;
NOW THEREFORE, the Transferor and the Trustee hereby agree as
follows:
1. Defined Terms. All terms defined in the Pooling and
Servicing Agreement and used herein shall have such defined meanings when
used herein, unless otherwise defined herein.
"Reconveyance Date" shall mean _____ __, 19__.
2. Return of Lists of Receivables. The Trustee shall deliver
to the Transferor or the bailee of the Transferor, not later than three
Business Days after the Reconveyance Date, each and every computer file or
microfiche list of Receivables delivered to the Trustee pursuant to the
terms of the Pooling and Servicing Agreement.
3. Conveyance of Receivables. (a) The Trustee does hereby
reconvey to the Transferor, without recourse, representation or warranty,
on and after the Reconveyance Date, all right, title and interest of the
Trust in and to each and every Receivable now existing and hereafter
created, all monies due or to become due with respect thereto (including
all Finance Charge Receivables), all proceeds (as defined in Section 9-306
of the UCC as in effect in the Relevant UCC State) of such Receivables,
except for amounts, if any, held by the Trustee pursuant to subsection
12.3(b) of the Pooling and Servicing Agreement.
(b) In connection with such transfer, the Trustee agrees to
execute and deliver to the Transferor on or prior to the date of this
Reconveyance, such UCC termination statements as the Transferor may
reasonably request, evidencing the release by the Trust of its lien on the
Receivables.
4. Counterparts. This Reconveyance 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.
5. Governing Law. THIS RECONVEYANCE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS.
EXHIBIT G
FORM OF AGREED-UPON PROCEDURES
The Servicer and Trustee will engage a firm of nationally recognized
independent public accountants (who may also render other services to the
Servicer or any of its subsidiaries) to perform certain agreed-upon
procedures substantially similar to the following:
1) The accountants will obtain the Master Trust schedules showing the
daily amount of eligible accounts receivable activity (hereinafter
referred to as the "Daily Report") for 5 days within the period and
compare amounts set forth on the Daily Report representing sales, cash
advances, payments, interest income, and charge offs and miscellaneous
charges and adjustments, with the corresponding amounts set forth in
the Servicer's accounts receivable reports and recompute the
mathematical accuracy of amounts and percentages within the Daily
Report.
2) For 5 days within the period, the accountants will compare the
payments appearing on the Servicer's accounts receivable reports to an
entry on the relevant Daily Report. The accountants will compare the
cash transfers indicated on the Daily Reports to entries on the
relevant Master Trust bank statements.
3) The accountants will compare the aggregate customer balances in the
"30-59 day delinquent" and "90-119 day delinquent" categories as
reflected on the monthly Settlement Statement to the corresponding
amounts set forth in the Servicer's accounts receivable aging reports
as of 3 month-ends within the period.
4) For 5 weekly periods, the accountants will compare the beginning of
week and end of week total receivables balances on the Servicer's
accounts receivable reports with the corresponding balances on the
corresponding Daily Report and will verify the amounts of the
calculation of beginning and ending Principal Receivable balances and
beginning and ending Finance Charge Receivables balances on each Daily
Report within each weekly period.
5) For 5 days within the period, the accountants will recompute the daily
allocation of Principal and Finance Charge Collections to each series
based upon information appearing on the Daily Reports.
6) For one monthly Settlement Statement during the period, the
accountants will compare the amounts and percentages appearing therein
to the information appearing in the corresponding Daily Reports for
such month.
EXHIBIT H
FORM OF ASSIGNMENT OF RECEIVABLES IN SUPPLEMENTAL ACCOUNTS
ASSIGNMENT No. __ OF RECEIVABLES IN ADDITIONAL ACCOUNTS, dated as
of ________ __, ____ by and between METRIS RECEIVABLES, INC., a corporation
organized under the laws of the State of Delaware (the "Transferor"), and
The Bank of New York (Delaware), a banking corporation organized and
existing under the laws of the State of Delaware (the "Trustee") pursuant
to the Pooling and Servicing Agreement referred to below.
W I T N E S S E T H:
WHEREAS, the Transferor and the Trustee are parties to the
Amended and Restated Pooling and Servicing Agreement, dated as of July 30,
1998 (hereinafter as such agreement may have been, or may from time to time
be, amended, supplemented or otherwise modified, the "Pooling and Servicing
Agreement");
WHEREAS, pursuant to the Pooling and Servicing Agreement, the
Transferor wishes to designate Supplemental Accounts of the Transferor to
be included as Accounts and to convey the Receivables of such Supplemental
Accounts, whether now existing or hereafter created, to the Trust as part
of the corpus of the Trust (as each such term is defined in the Pooling and
Servicing Agreement); and
WHEREAS, the Trustee is willing to accept such designation and
conveyance subject to the terms and conditions hereof;
NOW, THEREFORE, the Transferor and the Trustee hereby agree as
follows:
(i) Defined Terms. All terms defined in the Pooling and
Servicing Agreement and used herein shall have such defined meanings
when used herein, unless otherwise defined herein.
"Addition Date" shall mean, with respect to the Supplemental
Accounts designated hereby, ____________, ____.
"Notice Date" shall mean, with respect to the Supplemental
Accounts designated hereby, _________, ______ (which shall be a date
on or prior to the fifth Business Day prior to the Addition Date with
respect to additions pursuant to subsection 2.6(a) of the Pooling and
Servicing Agreement and the tenth Business Day prior to the Addition
Date with respect to additions pursuant to subsection 2.6(b) of the
Pooling and Servicing Agreement).
(ii) Designation of Additional Accounts. The Transferor
shall deliver to the Trustee not later than five Business Days after
the Addition Date, a computer file or microfiche list containing a
true and complete list of each MasterCardregistered trademark and
VISAregistered trademark account which as of the Addition Date shall
be deemed to be an Additional Account, such accounts being identified
by account number and by the amount of Receivables in such accounts as
of the close of business on the Addition Date. Such list shall be
delivered five Business Days after the date of this Agreement and
shall be marked as Schedule l to this Assignment and, as of the
Addition Date, shall be incorporated into and made a part of this
Assignment.
(iii) Conveyance of Receivables.
The Transferor does hereby transfer, assign, set-over and
otherwise convey to the Trustee, on behalf of the Trust, for the benefit of
the Securityholders, without recourse on and after the Addition Date, all
right, title and interest of the Transferor in and to the Receivables now
existing and hereafter created in the Additional Accounts designated
hereby, all monies due or to become due with respect thereto (including all
Finance Charge Receivables) and all proceeds of such Receivables.
In connection with such transfer, the Transferor
agrees to record and file, at its own expense, a financing
statement with respect to the Receivables now existing and
hereafter created in the Additional Accounts designated hereby
(which may be a single financing statement with respect to all
such Receivables) for the transfer of accounts as defined in
Section 9 106 of the UCC as in effect in the State of Delaware
meeting the requirements of applicable state law in such manner
and such jurisdictions as are necessary to perfect the assignment
of such Receivables to the Trust, and to deliver a file-stamped
copy of such financing statement or other evidence of such filing
(which may, for purposes of this Section 3, consist of telephone
confirmation of such filing) to the Trustee on or prior to the
date of this Assignment.
In connection with such transfer, the Transferor
further agrees, at its own expense, on or prior to the date of
this Assignment to indicate in its computer files that
Receivables created in connection with the Additional Accounts
designated hereby have been transferred to the Trust pursuant to
this Assignment for the benefit of the Securityholders.
The Transferor hereby grants and transfers to the Trustee,
for the benefit of the Securityholders, a first priority perfected
security interest in all of the Transferor's right, title and interest
in, to and under the Receivables now existing and hereafter created
and arising in connection with the Additional Accounts designated
hereby, all monies due or to become due with respect thereto
(including all Finance Charge Receivables) and all proceeds of such
Receivables, and that this Assignment shall constitute a security
agreement under applicable law.
(iv) Acceptance by Trustee. The Trustee hereby
acknowledges its acceptance on behalf of the Trust for the benefit of
the Securityholders of all right, title and interest previously held
by the Transferor in and to the Receivables now existing and hereafter
created, and declares that it shall maintain such right, title and
interest, upon the trust herein set forth, for the benefit of all
Securityholders.
(v) Representations and Warranties of the Transferor. The
Transferor hereby represents and warrants to the Trust as of the
Addition Date:
Legal Valid and Binding Obligation. This Assignment
constitutes a legal, valid and binding obligation of the
Transferor enforceable against the Transferor in accordance with
its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect affecting the
enforcement of creditors' rights in general and except as such
enforceability may be limited by general principles of equity
(whether considered in a suit at law or in equity).
Eligibility of Accounts and Receivables. Each
Additional Account designated hereby is an Eligible Account and
each Receivable in such Additional Account is an Eligible
Receivable. No selection procedures believed by the Transferor
to be materially adverse to the interests of the Investor
Securityholders were utilized in selecting the Additional
Accounts from the available Eligible Accounts, provided, that,
the selection of newly originated Accounts is deemed not to be
materially adverse to the interests of the Investor
Securityholders.
Insolvency. The Transferor is not insolvent and,
after giving effect to the conveyance set forth in Section 3 of
this Assignment, will not be insolvent.
Security Interest. This Assignment constitutes
either (i) a valid transfer and assignment to the Trust of all
right, title and interest of the Transferor in and to Receivables
now existing and hereafter created in the Additional Accounts
designated hereby, and all proceeds (as defined in the UCC as in
effect in the State of Delaware) of such Receivables, and such
Receivables and any proceeds thereof will be held by the Trust
free and clear of any Lien of any Person claiming through or
under the Transferor or any of its Affiliates except for (x)
Liens permitted under subsection 2.5(b) of the Pooling and
Servicing Agreement, (y) the interest of the Holder of the
Exchangeable Transferor Security and (z) the Transferor's right
to receive interest accruing on, and investment earnings in
respect of, the Finance Charge Account and the Principal Account
as provided in the Pooling and Servicing Agreement; or (ii) a
grant of a security interest (as defined in the UCC as in effect
in the State of Delaware) in such property to the Trust, which is
enforceable with respect to the existing Receivables of the
Additional Accounts designated hereby and the proceeds (as
defined in the UCC as in effect in the State of Delaware) thereof
upon the conveyance of such Receivables to the Trust, and which
will be enforceable with respect to the Receivables thereafter
created in respect of Additional Accounts designated hereby and
the proceeds (as defined in the UCC as in effect in the State of
Delaware) thereof upon such creation; and provided, further, that
if this Assignment constitutes the grant of a security interest
to the Trust in such property pursuant to subsection (ii) above,
upon the filing of a financing statement described in Section 3
of this Assignment with respect to the Additional Accounts
designated hereby and in the case of the Receivables of such
Additional Accounts thereafter created and the proceeds (as
defined in the UCC as in effect in the State of Delaware) thereof
upon such creation, the Trust shall have a first priority
perfected security interest in such property, except for Liens
permitted under subsection 2.5(b) of the Pooling and Servicing
Agreement.
(vi) Conditions Precedent. The acceptance by the Trustee
set forth in Section 4 and the amendment of the Pooling and Servicing
Agreement set forth in Section 7 are subject to the satisfaction, on
or prior to the Addition Date, of the following conditions precedent:
Officer's Certificate. The Transferor shall have
delivered to the Trustee a certificate of a Vice President or
more senior officer substantially in the for: of Schedule 2
hereto, certifying that (i) all requirements set forth in Section
2.6 of the Pooling and Servicing Agreement for designating
Additional Accounts and conveying the Principal Receivables of
such Accounts, whether now existing or hereafter created, have
been satisfied and (ii) each of the representations and
warranties made by the Transferor in Section 5 is true and
correct as of the Addition Date. The Trustee may conclusively
rely on such Officer's Certificate, shall have no duty to make
inquiries with regard to the matters set forth therein, end shall
incur no liability In so relying.
Opinion of Counsel. The Transferor shall have
delivered to the Trustee an Opinion of Counsel with respect to
the Additional Accounts designated hereby substantially in the
form of Exhibit I to the Pooling and Servicing Agreement.
Additional Information. The Transferor shall have
delivered to the Trustee such information as was reasonably
requested by the Trustee to satisfy itself as to the accuracy of
the representation and warranty set forth in subsection 5(d) to
this Agreement.
(vii) Amendment of the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement is hereby amended to provide that
all references therein to the "Pooling and Servicing Agreement," to
"this Agreement" and "herein" shall be deemed from and after the
Addition Date to be a dual reference to the Pooling and Servicing
Agreement as supplemented by this Assignment. Except as expressly
amended hereby, all of the representations, warranties, terms,
covenants and conditions of the Pooling and Servicing Agreement shall
remain unamended and shall continue to be, and shall remain, in full
force and effect in accordance with its terms and except as expressly
provided herein shall not constitute or be deemed to constitute a
waiver of compliance with or a consent to noncompliance with any term
or provision of the Pooling and Servicing Agreement.
(viii) Counterparts. This Assignment 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.
(ix) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE,
WITHOUT REGARD TO ITS CONFLICT OF LAW PROVISIONS.
IN WITNESS WHEREOF, the undersigned have caused this Assignment
of Receivables in Additional Accounts to be duly executed and delivered by
their respective duly authorized officers on the day and year first above
written.
METRIS RECEIVABLES, INC.
By:________________________________
Name:
Title:
THE BANK OF NEW YORK (DELAWARE)
By:_______________________________
Name:
Title:
Schedule 1
to Assignment of
Receivables in
Supplemental Accounts
SUPPLEMENTAL ACCOUNTS
Schedule 2
to Assignment of
Receivables in
Supplemental Accounts
Metris Receivables, Inc.
Metris Master Trust
Officer's Certificate
____________________, a duly authorized officer of Metris
Receivables, Inc., a Delaware corporation (the "Transferor"), hereby
certifies and acknowledges on behalf of the Bank that to the best of his
knowledge the following statements are true on ______, ____, (the "Addition
Date"), and acknowledges on behalf of the Bank that this Officer's
Certificate will be relied upon by The Bank of New York (Delaware) as
Trustee (the "Trustee") of the Metris Master Trust in connection with the
Trustee entering into Assignment No. of Receivables in Supplemental
Accounts, dated as of the Addition Date (the "Assignment"), by and between
the Bank and the Trustee, in connection with the Amended and Restated
Pooling and Servicing Agreement, dated as of July 30, 1998, as heretofore
supplemented and amended (the "Pooling and Servicing Agreement") pursuant
to which the Transferor and the Trustee are parties. The undersigned
hereby certifies and acknowledges on behalf of the Bank that:
On or prior to the Addition Date, the Bank has delivered to the
Trustee the Assignment (including an acceptance by the Trustee on behalf of
the Trust for the benefit of the Investor Securityholders) and the Bank has
indicated in its computer files that the Receivables created in connection
with the Supplemental Accounts have been transferred to the Trust and
within five Business Days after the Addition Date the Bank shall deliver to
the Trustee a [computer file or] microfiche list containing a true and
complete list of all Supplemental Accounts identified by account number and
the aggregate amount of the Receivables in such Supplemental Accounts as of
the Addition Date, which computer file or microfiche list shall be as of
the date of such Assignment, incorporated into and made a part of such
Assignment and the Pooling and Servicing Agreement.
Legal Valid and Binding Obligation. The Assignment constitutes
a legal, valid and binding obligation of the Bank, enforceable against the
Bank in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect affecting the enforcement of
creditors' rights in general except as such enforceability may be limited
by general principles of equity (whether considered in a suit at law or in
equity).
Accounts. Each Supplemental Account designated Pursuant to the
Assignment is an Eligible Account. No selection procedures believed by the
Bank to be materially adverse to the interests of the Investor
Securityholders were utilized in selecting the Additional Accounts from the
available Eligible Accounts, provided, that, the selection of newly
originated Accounts is deemed not to be materially adverse to the interests
of the Investor Securityholders.
Insolvency. The Bank is not insolvent and, after giving effect
to the conveyance set forth in Section 3 of the Assignment, will not be
insolvent.
Security Interest. The Assignment constitutes either (i) a
valid transfer and assignment to the Trust of all right, title and interest
of the Bank in and to Receivables now existing and hereafter created in the
Supplemental Accounts designated pursuant to the Assignment and all
proceeds (as defined in the UCC as in effect in the State of Delaware) of
such Receivables, and such Receivables and any proceeds thereof will be
held by the Trust free and clear of any Lien of any Person claiming through
or under the Transferor or any of its Affiliates except for (x) Liens
permitted under subsection 2.5(b) of the Pooling and Servicing Agreement,
(y) the interest of the Bank as holder of the Exchangeable Transferor
Security and (z) the Bank's right to receive interest accruing on, and
investment earnings in respect of, the Finance Charge Account and the
Principal Account or any Series Account as provided in the Pooling and
Servicing Agreement and any Supplement; or (ii) a grant of a security
interest (as defined in the UCC as in effect in the State of Delaware) in
such property to the Trust, which is enforceable with respect to the
existing Receivables of the Additional Accounts designated pursuant to the
Assignment and the proceeds (as defined in the UCC as in effect in the
State of Delaware) thereof upon the conveyance of such Receivables to the
Trust, and which will be enforceable with respect to the Receivables
thereafter created in respect of Additional Accounts designated pursuant to
the Assignment and the proceeds (as defined in the UCC as in effect in the
State of Delaware) thereof upon such creation; and provided, further, that
if the Assignment constitutes the grant of a security interest to the Trust
in such property pursuant to subsection (ii) above, upon the filing of a
financing statement described in Section 3 of the Assignment with respect
to the Additional Accounts designated pursuant to the Assignment and in the
case of the Receivables of such Additional Accounts thereafter created and
the proceeds (as defined in the UCC as in effect in the State of Delaware)
thereof upon such creation, the Trust shall have a first priority perfected
security Interest in such property, except for Liens permitted under
subsection 2.5(b) of the Pooling and Servicing Agreement.
Requirements of Pooling and Servicing Agreement. All
requirements set forth in Section 2.6 of the Pooling and Servicing
Agreement for designating Additional Accounts and conveying the Principal
Receivables of such Accounts, whether now existing or hereafter created,
have been satisfied.
Initially capitalized terms used herein and not otherwise defined
are used as defined in the Pooling and Servicing Agreement.
IN WITNESS WHEREOF, I have hereunto set my hand this ___________
day of ________ ____.
METRIS RECEIVABLES, INC.
By:_______________________________
Name:
Title:
EXHIBIT I
FORM OF OPINION OF COUNSEL REGARDING SUPPLEMENTAL ACCOUNTS
PROVISIONS TO BE INCLUDED IN OPINION OF COUNSEL
TO BE DELIVERED PURSUANT TO SECTION 2.6(d)(vi)
OF THE POOLING AND SERVICING AGREEMENT
The opinions set forth below may be subject to certain
qualifications, assumptions, limitations and exceptions taken or made in
the opinion of the Transferor's counsel with respect to similar matters
delivered on the Closing Date. Such counsel may rely as to factual matters
on certificates of officers of the Transferor and the Servicer.
(i) The Assignment has been duly authorized, executed and
delivered by the Transferor and constitutes the valid and legally binding
agreement of the Transferor, enforceable against the Transferor in
accordance with its terms, except (x) to the extent that the enforceability
thereof may be limited by (a) bankruptcy, insolvency, receivership,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and the rights of creditors of
Delaware chartered banks as the same may be applied in the event of the
bankruptcy, insolvency, receivership, reorganization, moratorium or other
similar event in respect of the Transferor, and (b) general principles of
equity (regardless of whether enforceability is considered in a proceeding
at law or in equity).
(ii) The provisions of the Pooling and Servicing Agreement are
effective to create, in favor of the Trustee, a valid security interest (as
such term is defined in Section 1-201(37) of the Delaware UCC) in all of
the Transferor's right, title and interest in that portion of the
Receivables which constitutes accounts, general intangibles or chattel
paper under the Delaware UCC and proceeds thereof which security interest
if characterized as a transfer for security will secure all Secured
Obligations and which security interest if characterized as a sale of
accounts will constitute a valid sale of all of the Transferor's right,
title and interest in and to the Receivables and the proceeds thereof.
(iii) A Uniform Commercial Code financing statement having been
filed in the appropriate recording offices, the security interest (as such
term is defined in Section 1-201(37) of the Relevant UCC) in favor of the
Trustee in the Receivables and proceeds thereof has been perfected, and
under the Relevant UCC no other security interest of any other creditor of
the Transferor will be equal or prior to the security interest of the
Trustee in such Receivables and the proceeds thereof.
EXHIBIT J
FORM OF REASSIGNMENT OF RECEIVABLES
REASSIGNMENT NO. OF RECEIVABLES, dated as of ,
, by and between METRIS RECEIVABLES, INC., a corporation organized and
existing under the laws of the States of Delaware (the "Transferor"), and
THE BANK OF NEW YORK (DELAWARE), a banking corporation organized under the
laws of the State of Delaware (the "Trustee") pursuant to the Pooling and
Servicing Agreement referred to below.
W I T N E S S E T H
WHEREAS, the Transferor and the Trustee are parties to the
Amended and Restated Pooling and Servicing Agreement, dated as of July
30,1998 (hereinafter as such agreement may have been, or may from time to
time be, amended, supplemented or otherwise modified, the "Pooling and
Servicing Agreement") by and among the Transferor, Federated Department
Stores, Inc. as Servicer, and the Trustee;
WHEREAS, pursuant to Section 2.7 of the Pooling and Servicing
Agreement, the Transferor wishes to remove all Receivables from certain
designated Accounts (collectively, the "Removed Accounts") and to cause the
Trustee to reconvey the Receivables of such Removed Accounts, whether now
existing or hereafter created, from the Trust to the Transferor (as each
such term is defined in the Pooling and Servicing Agreement); and
WHEREAS, the Trustee is willing to accept such designation and to
reconvey the Receivables in the Removed Accounts subject to the terms and
conditions hereof.
NOW THEREFORE, the Transferor and the Trustee hereby agree as
follows:
(x) Defined Terms. All terms defined in the Pooling and
Servicing Agreement and used herein shall have such defined meanings when
used herein, unless otherwise defined herein.
"Removal Date" shall mean, with respect to the Removed Accounts
designated hereby, , .
"Removal Notice Date" shall mean, with respect to the Removed
Accounts designated hereby, , (which shall be a date on or
prior to the fifth Business Day prior to the Removal Date).
(xi) Designation of Removed Accounts. The Transferor shall
deliver to the Trustee or the bailee of the Trustee, not later than five
Business Days after the Removal Date, a computer file or microfiche list
containing a true and complete list of each revolving consumer credit card
account which as of the Removal Date shall be deemed to be a Removed
Account, such accounts being identified by account number and by the
aggregate amount of Receivables in such accounts as of the close of
business on the Removal Date. Such list shall be marked as Schedule 1 to
this Reassignment and shall be incorporated into and made a part of this
Reassignment as of the Removal Date.
(xii) Conveyance of Receivables
The Trustee does hereby reconvey to the Transferor, without
recourse, representation or warranty, on and after the Removal Date, all
right, title and interest of the Trust in and to the Receivables now
existing and hereafter created in the Removed Accounts designated hereby,
all monies due or to become due with respect thereto (including all Finance
Charge Receivables) and all proceeds (as defined in Section 9-306 of the
UCC as in effect in the [Relevant UCC State]) of such Receivables.
In connection with such transfer, the Trustee agrees to execute
and deliver to the Transferor on or prior to the date of this Reassignment,
a termination statement with respect to the Receivables now existing and
hereafter created in the Removed Accounts designated hereby evidencing the
release by the Trust of its Lien on the Receivables in the Removed
Accounts, and meeting the requirements of applicable state law, in such
manner and such jurisdictions as are necessary to remove such Lien.
(xiii) Representations and Warranties of the Transferor. The
Transferor hereby represents and warrants to the Trust as of the Removal
Date:
Legal, Valid and Binding Obligation. This Reassignment
constitutes a legal, valid and binding obligation of the Transferor
enforceable against the Transferor in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
affecting the enforcement of creditors' rights in general and except as
such enforceability may be limited by general principles of equity (whether
considered in a suit at law or in equity).
Selection Procedures. No selection procedures believed by
the Transferor to be materially adverse to the interests of the Investor
Securityholders were utilized in selecting the Removed Accounts designated
hereby.
(xiv) Conditions Precedent. The amendment of the Pooling and
servicing Agreement set forth in Section 6 hereof is subject to the
satisfaction, on or prior to the Removal Date, of the following condition
precedent:
The Transferor shall have delivered to the Trustee an
Officer's Certificate certifying that (i) as of the Removal Date, all
requirements set forth in Section 2.7 of the Pooling and Servicing
Agreement for designating Removed Accounts and reconveying the Receivables
of such Removed Accounts, whether now existing or hereafter created, have
been satisfied, and (ii) each of the representations and warranties made by
the Transferor in Section 4 hereof is true and correct as of the Removal
Date. The Trustee may conclusively rely on such Officer's Certificate,
shall have no duty to make inquiries with regard to the matters set forth
therein and shall incur no liability in so relying.
(xv) Amendment of the Pooling and Servicing Agreement. The
Pooling and Servicing Agreement is hereby amended to provide that all
references therein to the "Pooling and Servicing Agreement", to "this
Agreement" and "herein" shall be deemed from and after the Removal Date to
be a dual reference to the Pooling and Servicing Agreement as supplemented
by this Reassignment. Except as expressly amended hereby, all of the
representations, warranties, terms, covenants and conditions of the Pooling
and Servicing Agreement shall remain unamended and shall continue to be,
and shall remain, in full force and effect in accordance with its terms and
except as expressly provided herein shall not constitute or be deemed to
constitute a waiver of compliance with or a consent to non-compliance with
any term or provision of the Pooling and Servicing Agreement.
(xvi) Counterparts. This Reassignment may be executed in two or
more counterparts, and by different parties on separate counterparts, each
of which shall be an original, but all of which together shall constitute
one and the same instrument.
(xvii) Governing Law. THIS REASSIGNMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS.
IN WITNESS WHEREOF, the undersigned have caused this Reassignment
of Receivables to be duly executed and delivered by their respective duly
authorized officers on the day and year first above written.
METRIS RECEIVABLES INC.
By:_________________________________
Name:
Title:
THE BANK OF NEW YORK (DELAWARE),
as Trustee
By:________________________________
Name:
Title:
