SERIES 1997-1 SUPPLEMENT, dated as of May 8, 1997 (this
"Series Supplement") by and among METRIS RECEIVABLES, INC., a
corporation organized and existing under the laws of the State of
Delaware, as Transferor (the "Transferor"), DIRECT MERCHANTS CREDIT
CARD BANK, NATIONAL ASSOCIATION, a national banking association
organized under the laws of the United States, as Servicer (the
"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 (together with its successors in trust
thereunder as provided in the Agreement referred to below, the
"Trustee"), under the Pooling and Servicing Agreement dated as of
May 26, 1995 as amended, supplemented or otherwise modified from
time to time (the "Agreement") among the Transferor, the Servicer
and the Trustee.
Section 6.9 of the Agreement provides, among other
things, that the Transferor and the Trustee may at any time and
from time to time enter into a supplement to the Agreement for the
purpose of authorizing the issuance by the Trustee to the
Transferor, for execution and redelivery to the Trustee for
authentication, of one or more Series of Certificates.
Pursuant to this Series Supplement, the Transferor and
the Trustee shall create a new Series of Investor Certificates and
shall specify the Principal Terms thereof.
SECTION 1. Designation. There is hereby created a
Series of Investor Certificates to be issued pursuant to the
Agreement and this Series Supplement to be known generally as the
"Series 1997-1 Certificates." The Series 1997-1 Certificates shall
be issued in four Classes, which shall be designated generally as
the 6.87% Asset Backed Certificates, Series 1997-1, Class A (the
"Class A Certificates"), the 7.11% Asset Backed Certificates,
Series 1997-1, Class B (the "Class B Certificates"), the Floating
Rate Asset Backed Certificates, Series 1997-1, Class C (the "Class
C Certificates") and the 0% Asset Backed Certificates, Series 1997-
1, Class D (the "Class D Certificates").
SECTION 2. Definitions. In the event that any term or
provision contained herein shall conflict with or be inconsistent
with any provision contained in the Agreement, the terms and
provisions of this Series Supplement shall govern with respect to
the Series 1997-1 Certificates. All Article, Section or subsection
references herein shall mean Articles, Sections or subsections of
the Agreement, as amended or supplemented by this Series
Supplement, except as otherwise provided herein. All capitalized
terms not otherwise defined herein are defined in the Agreement.
Each capitalized term defined herein shall relate only to the
Series 19971 Certificates and no other Series of Certificates
issued by the Trust.
"ABC Adjusted Invested Amount" shall mean as of any
Business Day the sum of the Class A Invested Amount, the Class B
Invested Amount and the Class C Invested Amount minus the amount
then on deposit in the Principal Funding Account.
"Accumulation Period" shall mean, unless a Pay
Out Event shall have occurred prior thereto, the period commencing
at the close of business on the last day of the March 2001 Monthly
Period or such later date as is determined in accordance with
Section 4.21 of the Agreement and ending on the first to occur of
(a) the commencement of the Early Amortization Period and (b) the
Series 1997-1 Termination Date.
"Accumulation Period Factor" shall mean, for any Monthly
Period, a fraction, the numerator of which is equal to the sum of
the numerators with respect to all Classes of all Series then
outstanding used to calculate the allocation percentages applicable
for Principal Collections, and the denominator of which is equal to
the sum of (a) the sum of the Class A Invested Amount, Class B
Invested Amount and Class C Invested Amount, (b) the sum of the
numerators with respect to all Classes of all Series then
outstanding used to calculate the allocation percentages applicable
for Principal Collections (other than Series 1997-1 and any Class
of any such Series retained by the Transferor) which are not
expected to be in their revolving periods during such Monthly
Period, and (c) the sum of the numerators used to calculate the
allocation percentages applicable for Principal Collections of all
Classes of other outstanding Series which are not allocating Shared
Principal Collections and are expected to be in their revolving
periods during such Monthly Period.
"Accumulation Period Length" shall have the meaning
assigned such term in Section 4.21 of the Agreement.
"Accumulation Period Reserve Account" shall have the
meaning specified in Section 4.20(a) of the Agreement.
"Accumulation Shortfall" shall initially mean zero and
thereafter shall mean, with respect to any Monthly Period during
the Accumulation Period, the excess, if any, of the Controlled
Deposit Amount for the previous Monthly Period over the amount
deposited into the Principal Funding Account pursuant to Section
4.12 of the Agreement with respect to the Series 1997-1
Certificates for the previous Monthly Period.
"Additional Interest" shall mean, at any time of
determination, the sum of the Class A Additional Interest, Class B
Additional Interest and Class C Additional Interest.
"Adjusted Invested Amount" shall mean as of any Business
Day the Invested Amount minus the sum of the amount then on deposit
in the Principal Funding Account and the Series Allocation
Percentage of the amount then on deposit in the Excess Funding
Account.
"Amortization Period" shall mean the Accumulation Period
or the Early Amortization Period.
"Amortization Period Commencement Date" shall
mean the earlier of the first day of the Accumulation Period and
the Pay Out Commencement Date.
"Available Investor Principal Collections" shall mean,
with respect to any Monthly Period, an amount equal to the sum of
(i) an amount equal to the Fixed/
Floating Allocation Percentage of all Principal Collections (less
the amount of Reallocated Principal Collections) received during
such Monthly Period, (ii) any amount on deposit in the Excess
Funding Account allocated to the Series 1997-1 Certificates
pursuant to subsection 4.9(d) of the Agreement with respect to such
Monthly Period and, on and after the Pay Out Commencement Date, any
amount on deposit in the Pre-Funding Account, (iii) the aggregate
amount allocated with respect to the Investor Default Amount and
the Series Allocation Percentage of any Adjustment Payments paid
pursuant to subsections 4.9(a)(v) and 4.9(a)(vi) of the Agreement
with respect to such Monthly Period, any reimbursements of
unreimbursed Investor Charge-Offs pursuant to subsections
4.9(a)(vii), (x), (xi) and (xii) of the Agreement with respect to
such Monthly Period and further in each case, pursuant to
subsections 4.10(a) and (b), 4.16(a), (b) and (c), 4.19(b) and
4.20(b), (c) and (d) of the Agreement, and (iv) the aggregate
Shared Principal Collections allocated to the Series 1997-1
Certificates pursuant to Section 4.8 of the Agreement with respect
to such Monthly Period.
"Available Reserve Account Amount" shall mean, with
respect to any Transfer Date, the lesser of (a) the amount on
deposit in the Accumulation Period Reserve Account as of such date
(before giving effect to any withdrawal made or to be made pursuant
to subsection 4.20(c) of the Agreement from the Accumulation Period
Reserve Account on such Transfer Date) and (b) the Required Reserve
Account Amount for such Transfer Date.
"Available Series 1997-1 Finance Charge
Collections" shall have the meaning specified in subsection 4.9(a)
of the Agreement.
"Base Rate" shall mean, with respect to any Monthly
Period, the sum of (i) the weighted average of the Class A
Certificate Rate, the Class B Certificate Rate and the Class C
Certificate Rate as of the last day of such Monthly Period
(weighted based on the Class A Invested Amount, the Class B
Invested Amount and the Class C Invested Amount, respectively, as
of the last day of such Monthly Period) plus (ii) the product of
2.00% per annum and the percentage equivalent of a fraction the
numerator of which is the Adjusted Invested Amount and the
denominator of which is the Invested Amount, each as of the last
day of such Monthly Period.
"Carryover Class A Interest" shall mean with respect to
any Business Day (a) any Class A Interest due but not paid on any
previous Distribution Date plus (b) any Class A Additional Interest
due on the next
succeeding Distribution Date "Carryover Class B Interest"
shall mean with respect to any Business Day (a) any Class B
Interest due but not paid on any previous Distribution Date plus
(b)
any Class B Additional Interest due on the next
succeeding Distribution Date.
"Carryover Class C Interest" shall mean with
respect to any Business Day (a) any Class C Interest
due but not paid on any previous Distribution Date
plus (b) any Class C Additional Interest due on the
next succeeding Distribution Date.
"Class A Additional Interest" shall have the
meaning specified in subsection 4.6(a) of the Agreement.
"Class A Adjusted Invested Amount" shall mean, for any
date of determination, an amount not less than zero equal to the
then current Class A Invested Amount minus the Principal Funding
Account Balance on such date.
"Class A Certificateholder" shall mean the Person in
whose name a Class A Certificate is registered in the
Certificate Register.
"Class A Certificateholders' Interest" shall mean the
portion of the Series 1997-1 Certificateholders' Interest
evidenced by the Class A Certificate.
"Class A Certificate" shall mean any of the
certificates executed by the Transferor and authenticated by or
on behalf of the Trustee, substantially in the form of Exhibit X-
0 hereto.
"Class A Certificate Rate" shall mean 6.87% per annum.
"Class A Floating Allocation Percentage" shall mean,
with respect to any Business Day, the percentage equivalent of a
fraction, the numerator of which is the Class A Adjusted
Invested Amount as of the end of the preceding Business Day and
the denominator of which is the greater of (a) the sum of the
aggregate amount of Principal Receivables in the Trust and the
amounts on deposit in the Excess Funding Account as of the end
of the preceding Business Day and (b) the sum of the numerators
with respect to all Classes of all Series then outstanding used
to calculate the applicable allocation percentage.
"Class A Initial Invested Amount" shall mean the
aggregate initial principal amount of the Class A Certificates,
which is $616,250,000.
"Class A Interest" shall mean the interest
distributable in respect of the Class A Certificates as
calculated in accordance with subsection 4.6(a) of the
Agreement.
"Class A Interest Shortfall" shall have the meaning
specified in subsection 4.6(a) of the Agreement.
"Class A Invested Amount" shall mean, when used
with respect to any Business Day, the greater of (x) zero and
(y) an amount equal to (a) the Class A Initial
Invested Amount less the Class A Percentage of the initial
deposit to the Pre-Funding Account plus the Class A
Percentage of any withdrawals from the Pre-Funding Account
(i) during the Funding Period in connection with the addition
of Receivables to the Trust or (ii) at the end of the Funding
Period for deposit into the Excess Funding Account, minus (b)
the aggregate amount of principal payments (except principal
payments made from the Pre-Funding Account) made to Class A
Certificateholders through and including such Business Day,
minus (c) the aggregate amount of Class A Investor Charge-
Offs for all prior Distribution Dates, plus (d) the sum of
the aggregate amount allocated with respect to Class A
Investor Charge-Offs and available on all prior Distribution
Dates pursuant to subsection 4.9(a)(vii) of
the Agreement and, with respect to such subsection, pursuant
to subsections 4.10(a) and (b), 4.16(a), (b) and (c), 4.19(b)
and 4.20(b), (c) and (d) of the Agreement, for the purpose of
reinstating amounts reduced pursuant to the foregoing clause
(c).
"Class A Investor Charge-Offs" shall have the
meaning specified in subsection 4.13(d) of the Agreement.
"Class A Outstanding Principal Amount" shall mean
with respect to the Class A Certificates, when used with
respect to any Business Day, an amount equal to (a) the Class
A Initial Invested Amount minus (b) the aggregate amount of
principal payments (including principal payments made from
the Pre-Funding Account) made to the Class A
Certificateholders on or prior to such Business Day.
"Class A Percentage" shall mean a fraction the
numerator of which is the Class A Initial Invested Amount and
the denominator of which is the sum of the Class A Initial
Invested Amount, the Class B Initial Invested Amount and the
Class C Initial Invested Amount.
"Class A Pool Factor" shall mean, with respect to
any Record Date, a number carried out to seven decimal places
representing the ratio of the sum of the Class A Invested
Amount and the Class A Percentage of funds on deposit in the
Pre-Funding Account as of such Record Date (determined after
taking into account any increases or decreases in the Class A
Invested Amount which will occur, and the amount of funds
which will be on deposit in the Pre-Funding Account, on the
following Distribution Date) to the Class A Initial Invested
Amount.
"Class A Pre-Funded Amount" shall mean the product
of the Pre-Funded Amount and the Class A Percentage.
"Class A Principal" shall mean the principal
distributable in respect of the Class A Certificates as
calculated in accordance with subsection 4.7(a) of the
Agreement.
"Class A Required Amount" shall mean the amount
determined by the Servicer on each Business Day equal to
the excess, if any, of (x) the sum of (i) Class A Interest
for the then current Monthly Period, (ii) any
Carryover Class A Interest, (iii) if DMCCB or an Affiliate of
DMCCB is no longer the Servicer, the Class A Floating
Allocation Percentage of the Servicing Fee for the then
current Monthly Period, (iv) the Class A Floating Allocation
Percentage of the Default Amount, if any, for such Business
Day and, to the extent not previously paid, for any previous
Business Day in such Monthly Period, (v) the Class A
Percentage of the Series Allocation Percentage of the
Adjustment Payment required to be made by the Transferor but
not made on the related Transfer Date and (vi) the
unreimbursed amount by which the Class A Invested Amount has
been reduced on prior Business Days pursuant to clause (c) of
the definition of Class A Invested Amount over (y) the
Available Series 1997-1 Finance Charge Collections plus any
Excess Finance Charge Collections from other Series and any
Transferor Finance Charge Collections allocated with respect
to the amounts described in clauses (x)(i) through (vi)
above.
"Class B Additional Interest" shall have the
meaning specified in subsection 4.6(b) of the Agreement.
"Class B Adjusted Invested Amount" shall mean, for
any date of determination, an amount not less than zero equal
to the then current Class B Invested Amount minus the excess,
if any, of the Principal Funding Account Balance over the
Class A Invested Amount on such date of determination.
"Class B Certificateholder" shall mean the Person
in whose name a Class B Certificate is registered in the
Certificate Register.
"Class B Certificateholders' Interest" shall mean
the portion of the Series 1997-1 Certificateholders' Interest
evidenced by the Class B Certificates.
"Class B Certificate Rate" shall mean 7.11% per
annum.
"Class B Certificates" shall mean any of the
certificates executed by the Transferor and authenticated by
or on behalf of the Trustee, substantially in the form of
Exhibit A-2 hereto.
"Class B Fixed/Floating Allocation Percentage"
shall mean for any Business Day the percentage equivalent of
a fraction, the numerator of which is the Class B Invested
Amount at the end of the last day of the Revolving Period and
the denominator of which is the greater of (a) the sum of the
aggregate amount of Principal Receivables and the amount on
deposit in the Excess Funding Account at the end of the
preceding Business Day and (b) the sum of the numerators with
respect to all Classes of all series then outstanding used to
calculate the applicable allocation percentage.
"Class B Floating Allocation Percentage" shall
mean, with respect to any Business Day, the percentage
equivalent of a fraction, the numerator of which is the Class
B Adjusted Invested Amount as of the end of the preceding
Business Day and the denominator of which is the greater of
(a) the sum of the aggregate amount of Principal Receivables
in the Trust and the amount on deposit in the Excess Funding
Account as of the end of the preceding Business Day and (b)
the sum of the numerators with respect to all Classes of all
Series then outstanding used to calculate the applicable
allocation percentage.
"Class B Initial Invested Amount" shall mean the
aggregate initial principal amount of the Class B
Certificates, which is $106,250,000.
"Class B Interest" shall mean the interest
distributable in respect of the Class B Certificates as
calculated in accordance with subsection 4.6(b) of the
Agreement.
"Class B Interest Shortfall" shall have the meaning
specified in subsection 4.6(b) of the Agreement.
"Class B Invested Amount" shall mean, when used
with respect to any Business Day, the greater of (x) zero
and (y) an amount equal to (a) the Class B Initial Invested
Amount less the Class B Percentage of the initial deposit to
the Pre-Funding Account plus the Class B Percentage of any
withdrawals from the Pre-Funding Account (i) during the
Funding Period in connection with the addition of Receivables
to the Trust or (ii) at the end of the Funding Period for
deposit into the Excess Funding Account, minus (b) the
aggregate amount of principal payments (except principal
payments made from the Pre-Funding Account) made to Class B
Certificateholders through and including such Business Day,
minus (c) the aggregate amount of Class B Investor Charge-
Offs for all prior Distribution Dates, minus (d) the
aggregate amount of Reallocated Class B Principal Collections
for which neither the Class D Invested Amount nor the Class C
Invested Amount has been reduced for all prior Business Days,
and plus (e) the sum of the aggregate amount allocated and
available on all prior Business Days pursuant to subsection
4.9(a)(x) of the Agreement and, with respect to such
subsection, pursuant to subsections 4.10(a) and (b), 4.16(a)
and (b), 4.19(b) and 4.20(b), (c) and (d) of the Agreement,
for the purpose of reinstating amounts reduced pursuant to
the foregoing clauses (c) and (d).
"Class B Investor Charge-Offs" shall have the
meaning specified in subsection 4.13(c) of the Agreement.
"Class B Outstanding Principal Amount" shall mean
with respect to the Class B Certificates, when used with
respect to any Business Day, an amount equal to (a) the Class
B Initial Invested Amount minus (b) the aggregate amount of
principal payments (including principal payments made from
the Pre-Funding Account) made to the Class B
Certificateholders on or prior to such Business Day.
"Class B Percentage" shall mean a fraction the
numerator of which is the Class B Initial Invested Amount
and the denominator of which is the sum of the Class A
Initial Invested Amount, the Class B Initial Invested
Amount and the Class C Initial Invested Amount.
"Class B Pool Factor" shall mean, with respect to
any Record Date, a number carried out to seven decimal places
representing the ratio of the sum of the Class B Invested
Amount and the Class B Percentage of funds on deposit in the
Pre-Funding Account as of the last day of the related Monthly
Period (determined after taking into account any increases or
decreases in the Class B Invested Amount which will occur, and
the amount of funds which will be on deposit in the Pre-
Funding Account, on the following Distribution Date) to the
Class B Initial Invested Amount.
"Class B Pre-Funded Amount" shall mean the product
of the Pre-Funded Amount and the Class B Percentage.
"Class B Principal" shall mean the principal
distributable in respect of the Class B Certificates as
calculated in accordance with subsection 4.7(b) of the
Agreement.
"Class B Principal Payment Commencement Date" shall
mean the earlier of (a) (i) with respect to the
Accumulation Period, the Expected Final Payment Date or (ii)
during the Early Amortization Period, the first Distribution
Date on which the Class A Invested Amount is paid in full or,
if there are no Principal Collections allocable to the Series
1997-1 Certificates remaining after payments have been made to
the Class A Certificates on such Distribution Date, the
Distribution Date following the first Distribution Date on
which the Class A Invested Amount is paid in full and (b) the
Distribution Date following a sale or repurchase of the
Receivables as set forth in Section 2.4(e), 9.2, 10.2(a), 12.1
or 12.2 of the Agreement or Section 3 of this Series
Supplement.
"Class B Required Amount" shall mean the amount
determined by the Servicer on each Business Day equal to the
excess, if any, of (x) the sum of (i) the Class B Interest for
the then current Monthly Period, (ii) any Carryover Class B
Interest, (iii) if DMCCB or an Affiliate of DMCCB is no longer
the Servicer, the Class B Floating Allocation Percentage of
the Servicing Fee for the then current Monthly Period, (iv)
the Class B Floating Allocation Percentage of the Default
Amount, if any, for such Business Day and, to the extent not
previously paid, for any previous Business Day in such Monthly
Period, (v) the Class B Percentage of the Series Allocation
Percentage of the Adjustment Payment required to be made by
the Transferor but not made on the related Transfer Date and
(vi) the unreimbursed amount by which the Class B Invested
Amount has been reduced on prior Business Days pursuant to
clauses (c) and (d) of the definition of Class B Invested
Amount over (y) the Available Series 1997-1 Finance Charge
Collections plus any Excess Finance Charge Collections from
other Series and any Transferor Finance Charge Collections
allocated with respect to the amounts described in clauses
(x)(i)
through (vi) above. "Class C Additional Interest" shall have
the meaning specified in subsection 4.6(c) of the Agreement.
"Class C Adjusted Invested Amount" shall mean,
for any date of determination, an amount not less than
zero equal to the then current Class C Invested Amount minus the excess,
if any, of the Principal Funding Account Balance over the Class A
Invested Amount and Class B Invested Amount on such date of
determination.
"Class C Certificateholder" shall mean the Person in whose
name a Class C Certificate is registered in the Certificate Register.
"Class C Certificateholders' Interest" shall mean the portion
of the Series 1997-1 Certificateholders' Interest evidenced by the Class
C Certificates.
"Class C Certificate Rate" shall mean the rate specified in
the Class C Reserve Account Agreement.
"Class C Certificates" shall mean any of the certificates
executed by the Transferor and authenticated by or on behalf of the
Trustee, substantially in the form of Exhibit A-3 hereto.
"Class C Fixed/Floating Allocation Percentage" shall mean for
any Business Day the percentage equivalent of a fraction, the numerator
of which is the Class C Invested Amount at the end of the last day of
the
Revolving Period and the denominator of which is the greater of (a) the
sum of the aggregate amount of Principal Receivables and the amount on
deposit in the Excess Funding Account at the end of the preceding
Business Day and (b) the sum of the numerators with respect to all
Classes of all Series then outstanding used to calculate the applicable
allocation percentage.
"Class C Floating Allocation Percentage" shall mean, with
respect to any Business Day, the percentage equivalent of a fraction,
the numerator of which is the Class C Adjusted Invested Amount as of the
end of the preceding Business Day and the denominator of which is the
greater of (a) the total amount of Principal Receivables in the Trust
and the amount on deposit in the Excess Funding Account as of the end of
the preceding Business Day and (b) the sum of the numerators with
respect to all Classes of all Series then outstanding used to calculate
the applicable allocation percentage.
"Class C Initial Invested Amount" shall mean the aggregate
initial principal amount of the Class C Certificates, which is
$72,250,000.
"Class C Interest" shall mean the interest distributable in
respect of the Class C Certificates as calculated in accordance with
subsection 4.6(c) of the Agreement.
"Class C Interest Shortfall" shall have the
meaning specified in subsection 4.6(c) of the Agreement. "Class C Invested
Amount" shall mean, when used with respect to any Business Day, the greater
of (x) zero and (y) an amount equal to (a) the Class C Initial
Invested Amount less the Class C Percentage of the initial
deposit to the Pre-Funding Account plus the Class C Percentage
of any withdrawals from the Pre-Funding Account (i) during the
Funding Period in connection with the addition of Receivables to
the Trust or (ii) at the end of the Funding Period for deposit
into the Excess Funding Account, minus (b) the aggregate amount
of principal payments (except principal payments made from the
Pre-Funding Account) made to Class C Certificateholders through
and including such Business Day, minus (c) the aggregate amount
of Class C Investor Charge-Offs for all prior Distribution
Dates, minus (d) the aggregate amount of Reallocated Class B
Principal Collections and Reallocated Class C Principal
Collections for which the Class D Invested Amount has not been
reduced for all prior Business Days, and plus (e) the sum of the
aggregate amount allocated and available on all prior Business
Days pursuant to subsection 4.9(a)(xi) of the Agreement and,
with respect to such subsection, pursuant to subsections 4.10(a)
and (b), 4.16(a), 4.19(b) and 4.20(b), (c) and (d) of the
Agreement, for the purpose of reinstating amounts reduced
pursuant to the foregoing clauses (c) and (d).
"Class C Investor Charge-Offs" shall have the meaning
specified in subsection 4.13(b) of the Agreement.
"Class C Outstanding Principal Amount" shall mean,
when used with respect to any Business Day, an amount equal to
(a) the Class C Initial Invested Amount minus (b) the aggregate
amount of principal payments (including principal payments made
from the Pre-Funding Account) made to Class C Certificateholders
prior to such
Business Day.
"Class C Percentage" shall mean a fraction the
numerator of which is the Class C Initial Invested Amount and
the denominator of which is the sum of the Class A Initial
Invested Amount, the Class B Initial Invested Amount and the
Class C Initial Invested Amount.
"Class C Pool Factor" shall mean, with respect to any
Record Date, a number carried out to seven decimal places
representing the ratio of the sum of the Class C Invested Amount
and the Class C Percentage of funds on deposit in the Pre-
Funding Account as of such Record Date (determined after taking
into account any increases or decreases in the Class C Invested
Amount which will occur, and the amount of funds on deposit in
the PreFunding Account, on the following Distribution Date) to
the Class C Initial Invested Amount.
"Class C Principal" shall mean the principal
distributable in respect of the Class C Certificates as
calculated in accordance with subsection 4.7(c) of the
Agreement.
"Class C Principal Payment Commencement Date" shall
mean the earlier of (a) (i) with respect to the
Accumulation Period, the Expected Final Payment Date or (ii)
during the Early Amortization Period, the first Distribution
Date on which the Class B Invested Amount is paid in full or,
if there are no Principal Collections allocable to the Series 1997-
1 Certificates remaining after payments have been made to the
Class B Certificates on such Distribution Date, the Distribution
Date following the first Distribution Date on which the Class
B Invested Amount is paid in full and (b) the
Distribution Date following a sale or repurchase of the
Receivables as set forth in Section 2.4(e), 9.2, 10.2(a), 12.1
or 12.2 of the Agreement or Section 3 of this Series
Supplement.
"Class C Required Amount" shall mean the amount
determined by the Servicer on each Business Day equal to the
excess, if any, of (x) the sum of (i) Class C Interest for the
then current Monthly Period, (ii) any Carryover Class C
Interest, (iii) if DMCCB or an Affiliate of DMCCB is no longer
the Servicer, the Class C Floating Allocation Percentage of
the Servicing Fee for the then current Monthly Period, (iv)
the Class C Floating Allocation Percentage of the Default
Amount, if any, for such Business Day and, to the extent not
previously paid, for any previous Business Day in such Monthly
Period, (v) the Class C Percentage of the Series Allocation
Percentage of the Adjustment Payment required to be made by
the Transferor but not made on the related Transfer Date and
(vi) the unreimbursed amount by which the Class C Invested
Amount has been reduced on prior Business Days pursuant to
clauses (c) and (d) of the definition of Class C Invested
Amount over (y) the Available Series 1997-1 Finance Charge
Collections plus any Excess Finance Charge Collections from
other Series and any Transferor Finance Charge Collections
allocated with respect to the amounts described in clauses
(x)(i) through (vi) above.
"Class C Reserve Account" shall have the meaning
specified in the Class C Reserve Account Agreement.
"Class C Reserve Account Agreement" shall mean the
Class C Reserve Account Agreement dated as of
May 8, 1997 among the Transferor, the Servicer and the Trustee
as amended and supplemented from time to time.
"Class C Trigger Event" shall have the meaning
specified in the Class C Reserve Account Agreement.
"Class D Certificateholder" shall mean the Person in
whose name a Class D Certificate is registered in the
Certificate Register.
"Class D Certificateholders' Interest" shall mean
the portion of the Series 1997-1 Certificateholders' Interest
evidenced by the Class D Certificate.
"Class D Certificates" shall mean any of the
certificates executed by the Transferor and authenticated by
or on behalf of the Trustee, substantially in the form
of Exhibit A-4 hereto. "Class D Excess Amounts" shall mean
with respect to any Business Day, the excess of the Class D
Invested Amount over the Stated Class D Amount on such day after
taking into account all adjustments of the ABC Adjusted Invested
Amount on such day.
"Class D Fixed/Floating Allocation Percentage" shall mean
for any Business Day the percentage equivalent of a fraction, the
numerator of which is the Class D Invested Amount at the end of the
last day of the Revolving Period and the denominator of which is the
greater of (a) the sum of the aggregate amount of Principal
Receivables and the amount on deposit in the Excess Funding Account
as of the end of the preceding Business Day and (b) the sum of the
numerators with respect to all Classes of all Series then
outstanding used to calculate the applicable allocation percentage.
"Class D Floating Allocation Percentage" shall mean with
respect to any Business Day the percentage equivalent of a fraction,
the numerator of which is the Class D Invested Amount on such day
after taking into account all adjustments of the Class D Invested
Amount on such day and the denominator of which is the greater of
(a) the sum of the aggregate amount of Principal Receivables and the
amount on deposit in the Excess Funding Account at the end of the
preceding Business Day and (b) the sum of the numerators with
respect to all Classes of all Series then outstanding used to
calculate the applicable allocation percentage.
"Class D Initial Invested Amount" shall mean the aggregate
initial principal amount of the Class D Certificates, which is
$55,250,000.
"Class D Interest Shortfall" shall have the meaning
specified in subsection 4.6(d) of the Agreement.
"Class D Invested Amount" shall mean, when used with
respect to any Business Day, the greater of (x) zero and (y) an
amount equal to (a) the initial principal balance of the Class D
Certificates, minus (b) the aggregate amount of principal payments
made to Class D Certificateholders through and including such
Business Day, minus (c) the aggregate amounts by which the
Transferor has reduced the Class D Invested Amount
pursuant to subsection 4.12(d) of the Agreement, minus (d) the
aggregate amount of Class D Investor Charge-Offs for all prior
Distribution Dates, minus (e) the aggregate amount of Reallocated
Principal Collections for all prior Business Days, plus (f) the sum
of the aggregate amount allocated and available on all prior
Business Days pursuant to subsection 4.9(a)(xii) of the Agreement
and, with respect to such subsection, pursuant to subsections
4.10(a) and (b), 4.19(b) and 4.20(b), (c) and (d) of the Agreement,
for the purpose of reinstating amounts reduced pursuant to the
foregoing clauses (d) and (e).
"Class D Investor Charge-Offs" shall have the meaning
specified in subsection 4.13(a) of the Agreement.
"Class D Outstanding Principal Amount" shall
mean, when used with respect to any Business Day, an amount equal to
(a) the Class D Initial Invested Amount minus (b) the aggregate
amount of principal payments made to Class D Certificateholders
prior to such Business Day.
"Class D Pool Factor" shall mean, with respect
to any Record Date, a number carried out to seven decimal
places representing the ratio of the Class D Invested
Amount as of such Record Date (determined after taking into
account any increases or decreases in the Class D Invested
Amount which will occur, and the amount of funds on deposit
in the Pre-Funding Account, on the following Distribution
Date) to the Class D Initial Invested Amount.
"Class D Principal" shall mean the principal
distributable in respect of the Class D Certificate as
specified in subsection 4.7(d) of the Agreement.
"Class D Principal Payment Commencement Date"
shall mean the earlier of (a) during the Amortization
Period, the first Distribution Date on which the Class C
Invested Amount is paid in full or, if there are no
Principal Collections allocable to the Series 1997-1
Certificates remaining after payments have been made to the
Class C Certificates on such Distribution Date, the
Distribution Date following the first Distribution Date on
which the Class C Invested Amount is paid in full and (b)
the Distribution Date following a sale or repurchase of the
Receivables as set forth in Section 2.4(e), 9.2, 10.2(a),
12.1 or 12.2 of the Agreement or Section 3 of this Series
Supplement.
"Closing Date" shall mean May 8, 1997.
"Controlled Accumulation Amount" shall mean, for
any Transfer Date with respect to the Accumulation Period
prior to the payment in full of the sum of the Class A
Invested Amount, the Class B Invested Amount and the Class C
Invested Amount, $66,229,167; provided, however, that if the
Accumulation Period Length is determined to be less than 12
months pursuant to subsection 4.21 of the Agreement, the
Controlled Accumulation Amount for each Transfer Date with
respect to the Accumulation Period prior to the payment in
full of the sum of the Class A Invested Amount, the Class B
Invested Amount and the Class C Invested Amount, will be
equal to (i) the product of (x) the sum of the Class A
Initial Invested Amount, the Class B Initial Invested Amount
and the Class C Initial Invested Amount and (y)
the Accumulation Period Factor for the Monthly Period
preceding such Transfer Date divided by (ii) the Required
Accumulation Factor Number.
"Controlled Deposit Amount" shall mean, with
respect to any Transfer Date, the sum of (a) the Controlled
Accumulation Amount for such Transfer Date and (b) any
existing Accumulation Shortfall.
"Covered Amount" shall mean, with respect to any
Interest Accrual Period during the Accumulation Period prior
to the payment in full of the sum of the Class A Invested
Amount, Class B Invested Amount and the
Class C Invested Amount, one-twelfth of the product of(a)
the weighted average of the Class A Certificate Rate,
the Class B Certificate Rate and the Class C Certificate
Rate, each in effect with respect to such Interest
Accrual Period, and (b) the Principal Funding Account Balance (up
to the sum of the Class A Invested Amount, the Class B Invested
Amount and the Class C Invested Amount) as of the last day of the
Monthly Period preceding the Monthly Period in which such Interest
Accrual Period ends.
"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 Allocation Percentage" shall mean,
with respect to each Default Recognition Date, the percentage
equivalent of a fraction, the numerator of which is the Weighted
Average Invested Amount for the related Monthly Period and the
denominator of which is the Weighted Average Principal Receivables
in the Trust for the related Monthly Period.
"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.
"Distribution Date" shall mean June 20, 1997, and the
twentieth day of each month thereafter, or if such day is not a
Business Day, the next succeeding Business Day.
"Early Amortization Period" shall mean the period
beginning on the earlier of (a) the day on which a Pay Out Event
occurs or is deemed to have occurred and (b) the Expected Final
Payment Date if the Class A Invested Amount, the Class B Invested
Amount and the Class C Invested Amount have not been paid in full
on such date, and ending on the earlier of (i) the date on which
the Class A Invested Amount, the Class B Invested Amount, the Class
C Invested Amount and the Class D Invested Amount have been paid in
full and (ii) the
Scheduled Series 1997-1 Termination Date.
"Enhancement" shall mean, with respect to the Class A
Certificates, the subordination of the Class B Invested Amount, the
Class C Invested Amount, and the Class D Invested Amount, with
respect to the Class B Certificates, the subordination of the Class
C Invested Amount and the Class D Invested Amount, and with respect
to the Class C Certificates, the subordination of the Class D
Invested Amount and the amount, if any, on deposit from time to
time in the Class C Reserve Account.
"Excess Finance Charge Collections" shall mean,
with respect to any Business Day, as the context requires, either
(x) the amount described in subsection 4.9(a)(xvii) of the
Agreement allocated to the Series 1997-1 Certificates but available
to cover shortfalls in amounts paid from Finance Charge Collections
for other Series, if any, or (y) the aggregate amount of Finance
Charge Collections allocable to other Series in excess of the
amounts necessary to make required payments with respect to such
Series, if any, and available to cover shortfalls with respect to
the Series 1997-1 Certificates.
"Expected Final Payment Date" shall mean the April 2002
Distribution Date.
"FASIT" shall have the meaning specified in Section 18 of
this Series Supplement.
"Fixed/Floating Allocation Percentage" shall mean for any
Business Day the percentage equivalent of a fraction, the numerator
of which is the Invested Amount at the end of the last day of the
Revolving Period and the denominator of which is the greater of (a)
the sum of the aggregate amount of Principal Receivables and the
amount on deposit in the Excess Funding Account as of the end of
the preceding Business Day and (b) the sum of the numerators with
respect to all Classes of all Series then outstanding used to
calculate the applicable allocation percentage.
"Floating Allocation Percentage" shall mean for any
Business Day the sum of the applicable Class A Floating Allocation
Percentage, Class B Floating Allocation Percentage, Class C
Floating Allocation Percentage, and Class D Floating Allocation
Percentage for such Business Day.
"Full Invested Amount" shall mean $850,000,000.
"Funding Period" shall mean the period from and including
the Closing Date to but excluding the earlier of (x) the first day
for which the Invested Amount equals the Full Invested Amount; (y)
the first day on which a Pay Out Event is deemed to occur; and (z)
the first day of the September 1997 Monthly Period.
"Initial Invested Amount" shall mean an amount equal to
the sum of (i) the Class A Initial Invested Amount less the Class A
Percentage of the Initial PreFunded Amount, plus the Class A
Percentage of any withdrawals from the Pre-Funding Account during
the Funding Period in connection with the addition of Receivables
to the Trust; (ii) the Class B Initial Invested Amount less the
Class B Percentage of the
Initial Pre-Funded Amount, plus the Class B Percentage of any
withdrawals from the Pre-Funding Account during the Funding Period
in connection with the addition of Receivables to the Trust; (iii)
the Class C Initial Invested Amount less the Class C Percentage of
the Initial Pre-Funded Amount, plus the Class C Percentage of any
withdrawals from the Pre-Funding Account during the
Funding Period in connection with the addition of Receivables to
the Trust; and (iv) the Class D Initial Invested Amount.
"Initial Pre-Funded Amount" shall mean
$82,000,000.
"Interest Accrual Period" shall mean, with
respect to a Distribution Date, the period from and
including the preceding Distribution Date to but
excluding such Distribution Date; provided, however,
that the initial Interest Accrual Period shall be the
period from the Closing Date to but excluding the
initial Distribution Date.
"Invested Amount" shall mean, when used with
respect to any Business Day, an amount equal to the sum
of (a) the Class A Invested Amount as of such Business
Day, (b) the Class B Invested Amount as of such
Business Day, (c) the Class C Invested Amount as of
such Business Day and (d) the Class D Invested Amount
as of such Business Day.
"Investor Certificateholder" shall mean the
Holder of record of an Investor Certificate of Series
1997-1.
"Investor Certificates" shall mean the Class
A Certificates, the Class B Certificates, the Class C
Certificates and the Class D Certificate.
"Investor Charge-Offs" shall mean the sum of
Class A Investor Charge-Offs, Class B Investor Charge
Offs, Class C Investor Charge-Offs and Class D Investor
Charge-Offs.
"Investor Default Amount" shall mean, with
respect to each Business Day, an amount equal to the
product of the Default Amount identified since the
prior reporting date and the Floating Allocation
Percentage applicable for such Business Day.
"Investor Percentage" shall mean, for any
Business Day, (a) with respect to Finance Charge
Collections prior to the Pay Out Commencement Date,
Receivables in Defaulted Accounts at any time and
Principal Collections during the Revolving Period, the
Floating Allocation Percentage and (b) with respect to
Finance Charge Collections on and after the Pay Out
Commencement Date and Principal Collections during the
Amortization Period, the Fixed/Floating Allocation
Percentage.
"LIBOR" shall mean, as of any LIBOR
Determination Date, the London interbank offered
quotations for one-month Dollar deposits determined by
the Trustee for each Interest Accrual Period in
accordance with the provisions of Section 4.17 of the
Agreement.
"LIBOR Determination Date" shall mean the second Business
Day prior to the commencement of each Interest Accrual Period;
provided, however, that with
respect to the period from the Closing Date through May 19, 1997,
LIBOR Determination Date shall mean May 6,1997, and for the period
from May 20, 1997 through June 19, 1997, LIBOR Determination Date
shall mean May 16,1997. For purposes of this definition, a
Business Day is any day on which banks in London and New York are
open
for the transaction of international business.
"Minimum Retained Percentage" shall mean 2%.
"Minimum Transferor Percentage" shall mean 0%;
provided, however, that in certain circumstances such
percentage may be increased.
"Monthly Period" shall have the meaning
specified in the Agreement, except that the first
Monthly Period with respect to the Series 1997-1
Certificates shall begin on and include the Closing Date
and shall end on and include May 31, 1997.
"Negative Carry Amount" shall have the meaning
specified in subsection 4.10(a) of the Agreement.
"Paired Series" shall have the meaning
specified in Section 19 of this Series Supplement.
"Paying Agent" shall mean, for the Series 1996-
1 Certificates, The Bank of New York.
"Payment Reserve Account" shall have the
meaning specified in subsection 4.18 of the Agreement.
"Pay Out Commencement Date" shall mean the
date on which a Trust Pay Out Event is deemed to occur
pursuant to Section 9.1 of the Agreement or a Series
1997-1 Pay Out Event is deemed to occur pursuant to
Section 8 of this Series Supplement.
"Portfolio Adjusted Yield" shall mean, with
respect to any Monthly Period, the average of the
percentages obtained for each of the three preceding
Monthly Periods by subtracting the Base Rate for such
Monthly Period from the Portfolio Yield for such Monthly
Period.
"Portfolio Yield" shall mean for the Series
1997-1 Certificates, with respect to any Monthly Period,
the annualized percentage equivalent of a fraction, the
numerator of which is an amount equal to the sum of the
aggregate amount of Available Series 1997-1 Finance
Charge Collections for such Monthly Period (not
including the amounts on deposit in the Payment Reserve
Account and Adjustment Payments made by the Transferor
with respect to Adjustment Payments required to be made
but not made in prior Monthly Periods, if any) plus the
Principal Funding Account Investment Proceeds,
investment earnings on amounts on deposit in the Pre-
Funding Account deposited into the Collection Account
pursuant to subsection 4.14(b) of the Agreement on the
related Transfer Date and amounts withdrawn from the
Accumulation Period Reserve Account, if any, with
respect to such Monthly Period calculated on a cash
basis, minus the aggregate Investor Default Amount for
such Monthly Period and the Series Allocation Percentage
of any Adjustment
Payments which the Transferor is required but fails to
make pursuant to the Pooling and Servicing Agreement for
such Monthly Period, and the denominator of which is the
average daily Invested Amount plus the Pre-Funded Amount
during the preceding Monthly Period; provided, however,
that Excess Finance Charge Collections applied for the
benefit of the Certificateholders may be added to the
numerator if a Ratings Event with respect to the Series
1997-1 Certificates would not occur as a result thereof.
"Pre-Funded Amount" shall mean (a) the Initial
Pre-Funded Amount, minus (b) the amount of any increases
in the Invested Amount during the Funding Period
pursuant to Section 4.15 of the Agreement, minus (c) the
amount of any principal losses on funds on deposit in
the PreFunding Account and minus (d) the amount
withdrawn from the Pre-Funding Account and deposited in
the Excess Funding Account.
"Pre-Funding Account" shall mean the account
established and maintained pursuant to subsection
4.14(a) of the Agreement.
"Principal Funding Account" shall have the
meaning set forth in subsection 4.19 of the Agreement.
"Principal Funding Account Balance" shall
mean, with respect to any date of determination during
the Accumulation Period, the principal amount, if any,
on deposit in the Principal Funding Account on such date
of determination.
"Principal Funding Account Investment
Proceeds" shall mean, with respect to each Interest
Accrual Period during the Accumulation Period, the
investment earnings on funds on deposit in the Principal
Funding Account (net of investment losses and expenses)
for such Interest Accrual Period.
"Principal Shortfalls" shall mean on any
Business Day (x) for Series 1997-1, (i) during the
Accumulation Period, the amount, if any, by which the
Controlled Deposit Amount for the Transfer Date
immediately following the then current Monthly Period
exceeds the total of the amounts described in clauses
(v), (w), (x) and (y) of subsection 4.9(c)(i), and (ii)
at all other times, the Invested Amount of the class
then receiving principal payments after the application
of Principal Collections on such Business Day or (y) for
any other Series the amounts specified as such in the
Supplement for such other Series.
"QIB" shall mean a "qualified institutional
buyer" within the meaning of Rule 144A under the
Securities Act.
"Rating Agency" shall mean Standard & Poor's,
a Division of the XxXxxx-Xxxx Companies, and Xxxxx'x
Investors Service, Inc.
"Reallocated Class B Principal Collections"
shall have the meaning specified in subsection 4.16(c)
of
the Agreement. "Reallocated Class C Principal
Collections" shall have the meaning specified in
subsection 4.16(b) of the Agreement.
"Reallocated Class D Principal Collections" shall have
the meaning specified in subsection 4.16(a) of the Agreement.
"Reallocated Principal Collections" shall mean the sum
of Reallocated Class B Principal Collections, Reallocated Class C
Principal Collections and Reallocated Class D Principal
Collections.
"Reference Banks" shall mean four major banks in the
London interbank market selected by the Trustee.
"Required Accumulation Factor Number" shall be equal to
a fraction, rounded upwards to the nearest whole number, the
numerator of which is one and the denominator of which is equal
to the lowest monthly principal payment rate on the Receivables,
expressed as a decimal, for the 12 months preceding the date of
such calculation.
"Required Amount" shall have the meaning specified in
subsection 4.10(b) of the Agreement.
"Required Reserve Account Amount" shall mean, with
respect to any Transfer Date on or after the Reserve Account
Funding Date, an amount equal to (a) 0.50% of the sum of the
Class A Invested Amount, the Class B Invested Amount and the
Class C Invested Amount or (b) any other amount designated by the
Transferor; provided, however, that if such designation is of a
lesser amount, the Transferor shall have (i) provided the
Servicer and the Trustee with evidence that the Rating Agency
Condition has been satisfied and (ii) delivered to the Trustee a
certificate of an authorized officer to the effect that, based on
the facts known to such officer at such time, in the reasonable
belief of the Transferor, such designation will not cause a Pay
Out Event or an event that, after the giving of notice or the
lapse of time, would cause a Pay Out Event to occur with respect
to Series 1997-1.
"Reserve Account Funding Date" shall mean the earliest
of (a) the first day of the third Monthly Period preceding the
first full day of the Accumulation Period; (b) the Determination
Date occurring in the first Monthly Period for which the
Portfolio Adjusted Yield is less than 2.0%, but in such event the
Reserve Account Funding Date shall not be required to occur
earlier than the first day of the Monthly Period which commences
12 months prior to the first full day of the Accumulation Period;
(c) the Determination Date occurring in the first Monthly Period
for which the Portfolio Adjusted Yield is less than 3.0%, but in
such event the Reserve Account Funding Date shall not be required
to occur earlier than the first day of the Monthly Period which
commences 6 months prior to the first full day of the
Accumulation Period; or (d) the Determination Date occurring in
the first Monthly Period for which the Portfolio Adjusted Yield
is less than 3.5%, but in such event the Reserve Account Funding
Date shall not be required to occur earlier than
the first day of the Monthly Period which commences 4 months
prior to the first full day of the Accumulation Period.
"Revolving Period" shall mean the period from
and including the Closing Date to, but not including, the
Amortization Period Commencement Date.
"Scheduled Series 1997-1 Termination Date"
shall mean the October 2005 Distribution Date.
"Series 1997-1" shall mean the Series of the Metris
Master Trust represented by the Series 1997-1 Certificates.
"Series 1997-1 Allocation Percentage" shall mean, on
any date of determination, the percentage equivalent of a
fraction the numerator of which is the Invested Amount and the
denominator of which is the sum of the Invested Amounts relating
to all other Series then outstanding.
"Series 1997-1 Certificates" shall mean the Class A
Certificates, the Class B Certificates, the Class C Certificates
and the Class D Certificate.
"Series 1997-1 Certificateholder" shall mean the holder
of record of any Series 1997-1 Certificate.
"Series 1997-1 Certificateholders' Interest" shall have
the meaning specified in Section 4.4 of the Agreement.
"Series 1997-1 Pay Out Event" shall have the meaning
specified in Section 8 of this Series Supplement.
"Series 1997-1 Termination Date" shall mean the earlier
to occur of (i) the day after the Distribution Date on which the
Series 1997-1 Certificates are paid in full, or (ii) the
Scheduled Series 1997-1 Termination Date.
"Series Servicing Fee Percentage" shall mean 2.00% per
annum.
"Servicing Fee" shall mean for any Monthly Period, an
amount equal to the product of (i) a fraction the numerator of
which is the actual number of days in such Monthly Period and the
denominator of which is 365 or 366, (ii) the applicable Series
Servicing Fee Percentage and (iii) the Adjusted Invested Amount
as of the beginning of the day on the first day of such Monthly
Period, or, in the case of the Funding Period, the Initial
Invested Amount as of the beginning of the day on the first day
of such Monthly Period.
"Shared Principal Collections" shall mean, as the
context requires, either (a) the amount allocated to the Series
1997-1 Certificates which, in accordance with subsections 4.9(b)
and 4.9(c)(v) of the Agreement, may be applied in accordance with
Section 4.3(d) of the Agreement or (b) the amounts allocated to
the investor certificates of other Series which the applicable
Series
Supplements for such Series specify are to be treated as "Shared
Principal Collections" and which may be applied to cover
Principal Shortfalls with respect to the Series 1997-1
Certificates.
"Stated Class D Amount" shall mean the greater
of (i) zero and (ii) a number rounded to the nearest
Dollar equal to the product of 6.952 percent and the ABC
Adjusted Invested Amount; provided, however, that in no event
shall the Stated Class D Amount be less than $23,842,500, except
that if the ABC Adjusted Invested Amount is equal to zero, the
Stated Class D Amount shall be zero; and provided further that
during any Early
Amortization Period the Stated Class D Amount shall be equal to
the Stated Class D Amount immediately preceding the commencement
of the Early Amortization Period.
"Targeted Holder" shall mean (i) each holder of a
right to receive interest or principal with respect to the Class
C Certificates (or other interests in the Trust), other than
certificates (or other such interests) with respect to which an
opinion is rendered that such certificates (or other such
interests) will be treated as debt for Federal income tax
purposes, and (ii) any holder of a right to receive any amount
in respect of the Transferor Interest; provided, that any Person
holding more than one interest each of which would cause such
Person to be a Targeted Holder shall be treated as a single
Targeted Holder.
"Termination Payment Date" shall mean the earlier of
the first Distribution Date following the liquidation or sale of
the Receivables as a result of an Insolvency Event or a Class C
Trigger Event and the occurrence of the Scheduled Series 1997-1
Termination Date.
"Transfer" shall have the meaning specified in
subsection 10(a) of this Series Supplement.
"Transferor Finance Charge Collections" shall mean on
any Business Day the product of (a) the Finance Charge
Collections for such Business Day, (b) the Transferor Percentage
and (c) the Series Allocation Percentage.
"Transferor Retained Certificates" shall mean investor
certificates of any Series, which may include the Class D
Certificate, which the Transferor retains, but only to the
extent that and for so long as the Transferor is the Holder of
such Certificates.
"Transferor Retained Finance Charge Collections" shall
mean with respect to each Business Day other than a Default
Recognition Date, the amount specified in subsection
4.9(a)(xvii) of the Agreement.
"Weighted Average Invested Amount" shall mean with
respect to any Monthly Period the weighted average Adjusted
Invested Amount based on the Adjusted Invested Amount
outstanding on each Business Day after giving effect to all
transactions on such Business Day from but
excluding the Default Recognition Date related to the preceding
Monthly Period to and including the Default Recognition Date
with respect to such Monthly Period.
"Weighted Average Principal Receivables" shall
mean with respect to any Monthly Period the weighted
average sum of the total amount of Principal Receivables and the
amount on deposit in the Excess Funding Account on each Business
Day after giving effect to all transactions on such Business Day
from but excluding the Default Recognition Date related to the
preceding Monthly Period to and including the Default Recognition
Date with respect to such Monthly Period.
"Withholding Event" shall have the meaning specified in
subsection 10(b) of this Series Supplement.
"Withholding Tax" shall have the meaning specified in
subsection 10(b) of this Series Supplement.
SECTION 3. Reassignment Terms. The Series 1997-1
Certificates shall be subject to termination by the Transferor at
its option, in accordance with the terms specified in subsection
12.2(a) of the Agreement, on any Distribution Date on or after
the Distribution Date on which the sum of the Class A Invested
Amount, the Class B Invested Amount and the Class C Invested
Amount would be reduced to an amount less than or equal to 10% of
the sum of the highest Class A Invested Amount, the highest Class
B Invested Amount and the highest Class C Invested Amount during
the Revolving Period. The deposit required in connection with
any such termination and final distribution shall be equal to the
sum of the unpaid Class A Invested Amount, the unpaid Class B
Invested Amount and the unpaid Class C Invested Amount plus
accrued and unpaid interest on the Class A Certificates, Class B
Certificates and Class C Certificates through the day prior to
the Distribution Date on which the final distribution occurs, in
each case after giving effect to any payments on such date.
SECTION 4. Delivery and Payment for the Series 1997-1
Certificates. The Transferor shall execute and deliver the
Series 1997-1 Certificates to the Trustee for authentication in
accordance with Section 6.1 of the Agreement. The Trustee shall
deliver the Series 1997-1 Certificates to or upon the order of
the Transferor when authenticated in accordance with Section 6.2
of the Agreement.
SECTION 5. Form of Delivery of Series 1997-1
Certificates; Denominations. (a) The Class A Certificates and
the Class B Certificates shall be delivered as Book-Entry
Certificates as provided in Sections 6.1 and 6.10 of the
Agreement and shall be
issued in minimum denominations of $1,000 and integral multiples
thereof. The Class C Certificates shall be delivered as
Registered Certificates as provided in Section 6.1 of the
Agreement and shall be issued in minimum denominations of
$1,000,000 and integral multiples of $1,000 in excess thereof.
The Class D Certificates shall be delivered as Registered
Certificates as provided in Section 6.1 of the Agreement.
(b) The Depositary for Series 1997-1 shall
be The Depository Trust Company and the Class A Certificates and
Class B Certificates shall be initially registered in the name of
Cede & Co., its nominee.
SECTION 6. Article IV of Agreement. Sections 4.1, 4.2
and 4.3 of the Agreement shall read in their entirety as provided
in the Agreement. Article IV of the Agreement (except for
Sections 4.1, 4.2 and 4.3 thereof) shall read in its entirety as
follows and shall be applicable only to the Series 1997-1
Certificates:
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS
SECTION 4.4 Rights of Certificateholders. The Series
1997-1 Certificates shall represent undivided interests in the
Trust, including the right to receive,
to the extent necessary to make the required payments with
respect to such Series 1997-1 Certificates at the times and in
the amounts specified in this Agreement, (a) the Floating
Allocation Percentage and the Fixed/Floating Allocation
Percentage (as applicable from time to time) of Collections
(including Finance Charge Collections) available in the
Collection Account, (b) funds allocable to the Series 1997-1
Certificates on deposit in the Excess Funding Account and (c)
funds on deposit in the Interest Funding Account, the Principal
Account, the Principal Funding Account, the Accumulation Period
Reserve Account, the Distribution Account, the Payment Reserve
Account and the Pre-Funding Account (for such Series, the "Series
1997-1 Certificateholders' Interest"). The Class B Invested
Amount, the Class C Invested Amount and the Class D Invested
Amount shall be subordinated to the Class A Certificates; the
Class C Invested Amount and the Class D Invested Amount shall be
subordinated to the Class B Certificates; and the Class D
Invested Amount shall be subordinated to the Class C
Certificates, in each case to the extent provided in this Article
IV. The Class B Certificates will not have the right to receive
payments of principal until the Class A Invested Amount has been
paid in full. The Class C Certificates will not have the right
to receive payments of principal until the Class A Invested
Amount and the Class B Invested Amount have been paid in full.
The Class D Certificates will not have the right to receive
payments of principal, other than to the extent of Class D Excess
Amounts, until the Class A Invested Amount, the Class B Invested
Amount and the Class C Invested Amount have been paid in full.
SECTION 4.5 Collections and Allocation; Payments on
Exchangeable Transferor Certificate.
(a) Collections and Allocations. The Servicer
will apply or will instruct the Trustee to apply all funds on
deposit in the Collection Account and the Excess Funding Account
allocable to the Series 1997-1 Certificates, and all funds on
deposit in the Interest
Funding Account, the Principal Account, the Principal Funding
Account, the Accumulation Period Reserve Account, the
Distribution Account, the Payment Reserve Account and the Pre-
Funding Account maintained for this Series, as described in this
Article IV.
On each Business Day, (i) the amount of Finance Charge
Collections available in the Collection Account allocable to
Series 1997-1 Certificates shall be determined by multiplying the
aggregate amount of such Finance Charge Collections by (x) prior to
the Pay Out Commencement Date, the Floating Allocation Percentage
and (y) on and after the Pay Out Commencement Date, the
Fixed/Floating Allocation Percentage, (ii) the amount of Principal
Collections available in the Collection Account allocable to the
Series 1997-1 Certificates shall be determined by multiplying the
aggregate amount of such Principal Collections by (x) during the
Revolving Period, the Floating Allocation Percentage and (y) during
any Amortization Period, the Fixed/Floating Allocation Percentage,
and (iii) the Receivables in Defaulted Accounts allocable to the
Series 1997-1 Certificates shall be determined by multiplying the
aggregate amount of such Receivables in Defaulted Accounts by the
Floating Allocation Percentage. In addition, on the Closing Date
the Transferor shall make a deposit to the Interest Funding Account
in the amount of $3,000,000 to be
allocated to the Series 1997-1 Certificates and applied as Available
Series 1997-1 Finance Charge Collections in accordance with
subsection 4.9(a) of the Agreement.
(b) Payments to the Holder of the Exchangeable
Transferor Certificate. On each Business Day, the Servicer shall
allocate and pay Collections in accordance with the Daily Report
with respect to such Business Day to the Holder of the Exchangeable
Transferor Certificate in accordance with subsection 4.3(b) of the
Agreement.
Notwithstanding the foregoing, amounts payable to the
Transferor pursuant to this subsection 4.5(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.
SECTION 4.6 Determination of Interest for the Series 1997-
1 Certificates. (a) The amount of monthly interest (the "Class A
Interest") allocable to the Class A Certificates with respect to any
Interest Accrual Period shall be an amount equal to one-twelfth of
the product of (i) the Class A Certificate Rate and (ii) the Class A
Outstanding Principal Amount as of the close of business on the
first day of such Interest Accrual Period, provided that, in the
case of the initial Interest Accrual Period, Class A Interest shall
be an amount equal to $4,939,243.75.
On the Determination Date preceding each Distribution
Date, the Servicer shall determine an amount (the "Class A Interest
Shortfall") equal to the excess, if any, of (x) the Class A Interest
for the Interest Accrual Period applicable to the Distribution Date
over (y) the amount available to be paid to the Class A
Certificateholders in respect of interest on such Distribution Date.
If there is a Class A Interest Shortfall with respect to any
Distribution Date, an additional amount ("Class A Additional
Interest") shall be payable as provided herein with respect to the
Class A Certificates on each Distribution Date following such
Distribution Date, to and including the Distribution Date
on which such Class A Interest Shortfall is paid to Class A
Certificateholders, equal to one-twelfth of the product of (i) the
Class A Certificate Rate and (ii) such Class A Interest Shortfall
remaining unpaid. Notwithstanding anything to the contrary herein,
Class A Additional Interest shall be payable or distributed to Class
A Certificateholders only to the extent permitted by applicable law.
(b) The amount of monthly interest (the "Class B
Interest") allocable to the Class B Certificates with respect to any
Interest Accrual Period shall be an amount equal to one-twelfth of
the product of (i) the Class B Certificate Rate and (ii) the Class B
Invested Amount as of the close of business on the first day of such
Interest Accrual Period (or in the case of the initial Distribution
Date the Class B Initial Invested Amount); provided, however, that
with respect to any Distribution Date related to the Funding Period
the amount described in clause (ii) shall be the Class B Outstanding
Principal Amount at the close of business on the first day of such
Interest Accrual Period; and provided further that, in the case of
the initial
Interest Accrual Period, Class B Interest shall be an amount equal
to $881,343.75.
On the Determination Date preceding each Distribution
Date, the Servicer shall determine an amount (the "Class B Interest
Shortfall") equal to the excess, if any, of (x) the aggregate Class
B Interest for the Interest Accrual Period applicable to the
Distribution Date over (y) the amount available to be paid to the
Class B Certificateholders in respect of interest on such
Distribution Date. If there is a Class B Interest Shortfall with
respect to any Distribution Date, an additional amount ("Class B
Additional Interest") shall be payable as provided herein with
respect to the Class B Certificates on each Distribution Date
following such Distribution Date, to and including the Distribution
Date on which such Class B Interest Shortfall is paid to Class B
Certificateholders, equal to one-twelfth of the product of (i) the
Class B Certificate Rate and (ii) such Class B Interest Shortfall
remaining unpaid. Notwithstanding anything to the contrary herein,
Class B Additional Interest shall be payable or distributed to Class
B Certificateholders only to the extent permitted by applicable law.
(c) The amount of monthly interest (for the Series 1997-
1 Certificates, the "Class C Interest") allocable to the Class C
Certificates of the Series 19971 Certificates with respect to any
Interest Accrual Period shall be an amount equal to the product of
(i) the Class C Certificate Rate, (ii) a fraction the numerator of
which is the actual number of days in the related Interest Accrual
Period and the denominator of which is
360 and (iii) the Class C Invested Amount as of the close of
business on the first day of such Interest Accrual Period (or in the
case of the initial Distribution Date, an amount equal to the sum of
(I) the product of (u) the Class C Initial Invested Amount, (v) 12
divided
by 360, and (w) the Class C Certificate Rate determined on May
6, 1997, plus (II) the product of (x) the Class C Initial
Invested Amount, (y) 31 divided by 360, and (z) the Class C
Certificate Rate determined on May 16, 1997); provided, however,
that with respect to any Distribution Date related to the
Funding Period the amount described in clause (iii) shall be the
Class C Outstanding Principal Amount at the close of business on
the first day of such Interest Accrual Period.
On the Determination Date preceding each Distribution
Date, the Servicer shall determine an amount (the "Class C
Interest Shortfall") equal to the excess, if any, of (x) the
aggregate Class C Interest for the Interest Accrual Period
applicable to the Distribution Date over (y) the amount
available to be paid to the Class C Certificateholders in
respect of interest on such Distribution Date. If there is a
Class C Interest Shortfall with respect to any Distribution
Date, an additional amount ("Class C Additional Interest") shall
be payable as provided herein with respect to the Class C
Certificates on each Distribution Date following such
Distribution Date, to and including the Distribution Date on
which such Class C Interest Shortfall is paid to Class C
Certificateholders, equal to the product of (i) the Class C
Certificate Rate, (ii) such Class C Interest Shortfall remaining
unpaid and (iii) a fraction the numerator of which is the actual
number of days in the related Interest Accrual Period and the
denominator of
which is 360. Notwithstanding anything to the contrary herein,
Class C Additional Interest shall be payable or distributed to
Class C Certificateholders only to the extent permitted by
applicable law.
SECTION 4.7 Determination of Principal Amounts. (a)
The amount of principal (the "Class A Principal") distributable
from the Distribution Account or available for deposit into the
Principal Funding Account with respect to the Class A
Certificates for each Distribution Date with respect to the
Amortization Period shall be equal to the least of (i) the
Available Investor Principal Collections on deposit in the
Principal Account with respect to the related Transfer Date,
(ii) for each Distribution Date with respect the Accumulation
Period, prior to the payment in full of the Class A Invested
Amount and on or prior to the Expected Final Payment Date, the
applicable Controlled Deposit Amount for such Transfer Date and
(iii) the Class A Adjusted Invested Amount on such Transfer
Date.
(b) The amount of principal (the "Class B Principal")
distributable from the Distribution Account or available for
deposit into the Principal Funding Account with respect to the
Class B Certificates for each Distribution Date, beginning with
the Class B Principal Payment Commencement Date, shall be equal
to the least of (i) the Available Investor Principal Collections
remaining on deposit in the Principal Account with
respect to the related Transfer Date after application thereof
to Class A Principal, if any, (ii) for each Distribution Date
with respect to the Accumulation Period, on or prior to the
Expected Final Payment Date,
the applicable Controlled Deposit Amount for such
Transfer Date (minus the Class A Principal with respect to such Transfer
Date) and (iii) the Class B Adjusted Invested Amount on such Transfer
Date.
(c) The amount of principal (the "Class C Principal")
distributable from the Distribution Account or available for deposit
into the Principal Funding Account with respect to the Class C
Certificates for each Distribution Date, beginning with the Class C
Principal Payment Commencement Date, shall be equal to the least of (i)
the Available Investor Principal Collections remaining on deposit in the
Principal Account with respect to the related Transfer Date after
application thereof to Class A Principal and Class B Principal, if any,
(ii) for each Distribution Date with respect to the Accumulation Period,
on or prior to the Expected Final Payment Date, the applicable
Controlled Deposit Amount for such Transfer Date (minus the Class A
Principal and the Class B Principal with respect to such Transfer Date)
and (iii) the Class C Adjusted Invested Amount on such Transfer Date.
(d) The amount of principal (the "Class D Principal")
distributable from the Distribution Account with respect to the Class D
Certificates for each Distribution Date, beginning with the Class D
Principal Payment Commencement Date, or, in the case of distributions of
Class D Excess Amounts, on each Distribution Date during the
Accumulation Period, shall be equal to the lesser of (i) the Available
Investor Principal Collections remaining on deposit in the Principal
Account with respect to the related Transfer
Date after application thereof to Class A Principal, Class B Principal
and Class C Principal, if any, (ii) the Class D Invested Amount on such
Transfer Date and (iii) in the case of distributions of Class D Excess
Amounts, the Class D Excess Amount.
SECTION 4.8 Shared Principal Collections. Shared Principal
Collections allocated to Available Investor Principal Collections for
the Series 1997-1 Certificates and to be applied to Class A Principal,
Class B Principal, Class C Principal and Class D Principal pursuant to
subsection 4.9(c)(i)(z) of the Agreement for any Business Day with
respect to the Amortization Period shall mean an amount equal to the
product of (x) Shared Principal Collections for all Series for such
Business Day and (y) a fraction, the numerator of which is the Principal
Shortfall for the Series 1997-1 Certificates for such Business Day and
the denominator of which is the aggregate amount of Principal Shortfalls
for all Series for such Business Day. For any Business Day with respect
to the Revolving Period, Shared Principal Collections allocated to
Available Investor Principal Collections for the Series 1997-1
Certificates shall be zero.
SECTION 4.9 Application of Funds on Deposit in
the Collection Account for the Certificates. (a) On each Business Day,
the Servicer shall deliver to the Trustee a Daily Report in which it shall
instruct the Trustee to withdraw, and the Trustee, acting in
accordance with such instructions, shall withdraw, to
the extent of the sum of (x) prior to the Pay Out
Commencement Date, the Floating Allocation Percentage
of the sum of Finance Charge Collections and the amount
of Adjustment Payments made by the Transferor with
respect to Adjustment Payments required to be made but
not made in a prior Monthly Period, available in the
Collection Account or, on and after the Pay Out
Commencement Date, the Fixed/Floating Allocation
Percentage of the sum of Finance Charge Collections and
the amount of Adjustment Payments made by the
Transferor with respect to Adjustment Payments required
to be made by not made in a prior Monthly Period,
available in the Collection Account, and (y) amounts
on deposit in the Payment Reserve Account, if any, if
and to the extent the Transferor designates that such
amounts are to be so applied (the "Available Series
1997-1 Finance Charge Collections"; provided, that with
respect to the Closing Date the amount deposited by the
Transferor into the Interest Funding Account pursuant
to subsection 4.5(a) of the Agreement shall also
constitute Available Series 1997-1 Finance Charge
Collections) the amounts required to be withdrawn from
the Collection Account pursuant to subsections
4.9(a)(i) through 4.9(a)(xvii) of the Agreement.
(i) Class A Interest. On each Business
Day during a Monthly Period, the Trustee, acting
in accordance with instructions from the Servicer,
shall withdraw from the Collection Account and
deposit into the Interest Funding Account for
distribution on the next Distribution Date to the
Class A Certificateholders, to the extent of the
Available Series 1997-1 Finance Charge Collections
for such Business Day, an amount equal to the
lesser of (x) the Available Series 1997-1 Finance
Charge Collections and (y) the excess of (1) the
sum of
Class A Interest and Carryover Class A Interest over (2) any amounts
with respect thereto previously deposited into the Interest Funding
Account on any prior Business Day during such Monthly Period.
Notwithstanding anything to the contrary herein, the portion of
Carryover Class A Interest that constitutes Class A Additional
Interest shall be payable or distributable to Class A
Certificateholders only to the extent permitted by applicable law.
(ii) Class B Interest. On each Business Day during a
Monthly Period, the Trustee, acting in accordance with instructions
from the Servicer, shall withdraw from the Collection Account and
deposit into the Interest Funding Account for distribution on the next
Distribution Date to the Class B Certificateholders, to the extent of
any Available Series 1997-1 Finance Charge Collections remaining after
giving effect to the withdrawal pursuant to subsection 4.9(a)(i) of
the Agreement, an amount equal to the lesser of (x) any such
remaining Available Series 1997-1 Finance Charge Collections and (y) the
excess of (1) the sum of Class B Interest and Carryover Class B Interest over
(2) any amounts with respect thereto previously deposited into the
Interest Funding Account on any prior Business Day during such Monthly
Period. Notwithstanding anything to the contrary herein, the portion
of Carryover Class B Interest that constitutes Class B Additional
Interest shall be payable or distributable to Class B
Certificateholders only to the extent permitted by applicable law.
(iii) Class C Interest. On each Business Day during a
Monthly Period, the Trustee, acting in accordance with instructions
from the Servicer, shall withdraw from the Collection Account and
deposit into the Interest Funding Account for distribution on the next
Distribution Date to the Class C Certificateholders, to the extent of
any Available Series 1997-1 Finance Charge Collections remaining after
giving effect to the withdrawal pursuant to subsections 4.9(a)(i) and
(ii) of the Agreement, an amount equal to the lesser of (x) any such
remaining Available Series 1997-1 Finance Charge Collections and (y)
the excess of (1) the sum of Class C Interest and Carryover Class C
Interest over (2) any amounts with respect thereto previously
deposited into the Interest Funding Account on any prior Business Day
during such Monthly Period. Notwithstanding anything to the contrary
herein, the portion of Carryover Class C Monthly Interest that
constitutes Class C Additional Interest shall be payable or
distributable to Class C Certificateholders only to the extent
permitted by applicable law.
(iv) Investor Servicing Fee. On each Business Day, the
Trustee, acting in accordance with instructions from the Servicer,
shall withdraw from the Collection Account and distribute to the
Servicer, to the extent of any Available Series 1997-1 Finance Charge
Collections remaining after giving effect to the withdrawals pursuant
to subsections 4.9(a)(i) through (iii) of the
Agreement, an amount equal to the lesser of (x) any such remaining
Available Series 1997-1 Finance Charge Collections and (y) the excess
of (i) the Servicing Fee for such Monthly Period plus any unpaid
Servicing Fees from prior Monthly Periods over (ii) any amounts with
respect thereto previously distributed to the Servicer during such
Monthly Period.
(v) Investor Default Amount. On each Business Day, first
if such day is the Default Recognition Date for the related Monthly
Period, the Transferor will deposit (as described below) Transferor
Retained Finance Charge Collections for each prior day in the Current
Monthly Period and second the Trustee, acting in accordance with
instructions from the Servicer, shall withdraw to the extent of any
Available Series 1997-1 Finance
Charge Collections remaining after giving effect to the withdrawals pursuant
to subsections 4.9(a)(i) through (iv) of the Agreement, an amount equal to
the lesser of (x) any such remaining Available Series 1997-1 Finance
Charge Collections and, if such day is the related Default Recognition
Date for such Monthly Period, an amount equal to the aggregate
Transferor Retained Finance Charge Collections for each prior day
during the related Monthly Period and (y) the sum of (1) the aggregate
Investor Default Amount for such Business Day plus (2) the unpaid
Investor Default Amount for each previous Business Day during such
Monthly Period, such amount to be (A) treated as Shared Principal
Collections during the Revolving Period, and (B) to be treated as
Available Investor Principal Collections during the Amortization
Period.
(vi) Adjustment Payment Shortfalls. On each Business Day,
the Trustee, acting in accordance with instructions from the Servicer,
shall withdraw from the Collection Account, to the extent of any
Available Series 1997-1 Finance Charge Collections remaining after
giving effect to the withdrawals pursuant to subsections 4.9(a)(i)
through (v) of the Agreement, an amount equal to the lesser of (x) any
such remaining Available Series 1997-1 Finance Charge Collections and
(y) an amount equal to the Series Allocation Percentage of any
Adjustment Payment which the Transferor is required but fails to make
pursuant to subsection 3.8(a) of the Agreement, such amount, (i)
during the Revolving Period, to be treated as Shared Principal
Collections, and (ii) during the Amortization Period, to be treated as
Available Investor Principal Collections.
(vii) Reimbursement of Class A Investor Charge-Offs. On
each Business Day, the Trustee, acting in accordance with instructions
from the Servicer, shall withdraw from the Collection Account, to the
extent of any Available Series 19971 Finance Charge Collections
remaining after giving effect to the withdrawals pursuant to
subsections 4.9(a)(i) through (vi) of the Agreement, an amount equal
to the lesser of (x) any such remaining Available Series 1997-1
Finance Charge Collections and (y) the unreimbursed Class A Investor
ChargeOffs, if any, will be applied to reimburse Class A
Investor Charge-Offs, such amount during the Revolving Period, to be
treated as Shared Principal Collections, and during the Amortization
Period, to be treated as Available Investor Principal Collections.
(viii) Unpaid Class B Interest. On each Business Day, the
Trustee, acting in accordance with the instructions from the Servicer,
shall withdraw from the Collection Account and deposit in the Interest
Funding Account for distribution to the Class B Certificateholders on
the next Distribution Date, to the extent of any Available Series 1997-
1 Finance Charge Collections remaining after giving
effect to the withdrawals pursuant to subsections 4.9(a)(i) through (vii) of
the Agreement, an amount equal to the lesser of (x) any such remaining
Available Series 1997-1 Finance Charge Collections
and (y) the sum of (1) the amount of interest which
has accrued with respect to the Class B Outstanding
Principal Amount at the Class B Certificate Rate but
which has not been deposited into the Interest
Funding Account or paid to the Class B
Certificateholders and (2) any additional interest
(to the extent permitted by applicable law) at the
Class B Certificate Rate for interest that has
accrued on interest that was due during a prior
Monthly Period pursuant to this subsection but was
not deposited in the Interest Funding Account or paid
to the Class B Certificateholders.
(ix) Unpaid Class C Interest. On each
Business Day, the Trustee, acting in accordance with
the instructions from the Servicer, shall withdraw
from the Collection Account and deposit in the
Interest Funding Account for distribution to the
Class C Certificateholders on the next Distribution
Date, to the extent of any Available Series 1997-1
Finance Charge Collections remaining after giving
effect to the withdrawals pursuant to subsections
4.9(a)(i) through (viii) of the Agreement, an amount
equal to the lesser of (x) any such remaining
Available Series 1997-1 Finance Charge Collections
and (y) the sum of (1) the amount of interest which
has accrued with respect to the Class C Outstanding
Principal Amount at the Class C Certificate Rate but
which has not been deposited into the Interest
Funding Account or paid to the Class C
Certificateholders and (2) any additional interest
(to the extent permitted by applicable law) at the
Class C Certificate Rate for interest that has
accrued on interest that was due during a prior
Monthly Period pursuant to this subsection but was
not deposited in the Interest Funding Account or paid
to the Class C Certificateholders.
(x) Reimbursement of Class B Investor
Charge-Offs. On each Business Day, the Trustee,
acting in accordance with instructions from the
Servicer, shall withdraw from the Collection Account,
to the extent of any Available Series 19971 Finance
Charge Collections remaining after giving effect to
the withdrawals pursuant to subsections 4.9(a)(i)
through (ix) of the Agreement, an amount equal to the
lesser of (x) any such remaining Available Series
1997-1 Finance Charge Collections and (y) the
unreimbursed amount by which the Class B
Invested Amount has been reduced on prior Business Days pursuant to
clauses (c) and (d) of the definition of Class B Invested Amount, if
any, such amount, (i) during the Revolving Period, to be treated as
Shared Principal Collections, and (ii) during the Amortization Period,
to be treated as Available Investor Principal Collections.
(xi) Reimbursement of Class C Investor
Charge-Offs. On each Business Day, the Trustee, acting in accordance with
instructions from the Servicer, shall withdraw from the Collection
Account, to the extent of any Available Series 19971
Finance Charge Collections remaining after giving
effect to the withdrawals pursuant to subsections
4.9(a)(i) through (x) of the Agreement, an amount
equal to the lesser of (x) any such remaining
Available Series 1997-1 Finance Charge Collections
and (y) the unreimbursed amount by which the Class C
Invested Amount has been reduced on prior Business
Days pursuant to clauses (c) and (d) of the
definition of Class C Invested Amount, if any, such
amount, (i) during the Revolving Period, to be
treated as Shared Principal Collections, and (ii)
during the Amortization Period, to be treated as
Available Investor Principal Collections.
(xii) Reimbursement of Class D Investor
Charge-Offs. On each Business Day, the Trustee,
acting in accordance with instructions from the
Servicer, shall withdraw from the Collection Account,
to the extent of any Available Series 19971 Finance
Charge Collections remaining after giving effect to
the withdrawals pursuant to subsections 4.9(a)(i)
through (xi) of the Agreement, an amount equal to the
lesser of (x) any such remaining Available Series
1997-1 Finance Charge Collections and (y) the
unreimbursed amount by which the Class D Invested
Amount has been reduced on prior Business Days
pursuant to clauses (c) and (d) of the definition of
Class D Invested Amount, if any, such amount, (i)
during the Revolving Period, to be treated as Shared
Principal Collections, and (ii) during the
Amortization Period, to be treated as Available
Investor Principal Collections.
(xiii) Class C Reserve Account. On each
Business Day, the Trustee, acting in accordance with
instructions from the Transferor, shall withdraw from
the Collection Account and distribute to the
Servicer, to the extent of any Available Series 1997-
1 Finance Charge Collections remaining after giving
effect to the withdrawals pursuant to subsections
4.9(a)(i) through (xii) of the Agreement, an amount
equal to the lesser of (x) any such remaining
Available Series 1997-1 Finance Charge Collections
and (y) the amount specified to be deposited in the
Class C Reserve Account pursuant to the Class C
Reserve Account Agreement and the Servicer shall
deposit such amount, if any, in the Class C Reserve
Account.
(xiv) Accumulation Period Reserve Account.
On each Business Day on and after the Reserve
Account Funding Date, but prior to the date on which
the Accumulation Period Reserve Account terminates
pursuant to subsection 4.20(d) of the Agreement, the
Trustee, acting in accordance with instructions from the Servicer,
shall withdraw from the Collection Account and distribute to the
Servicer, to the extent of any Available Series 1997-1 Finance Charge
Collections remaining after giving effect to the
withdrawals pursuant to subsections 4.9(a)(i)through (xiii) of the Agreement, an
amount equal to the lesser of (x) any such remaining Available Series 1997-1
Finance Charge Collections and (y) the excess, if any, of the Required
Reserve Account Amount over the Available Reserve Account Amount and
the Servicer shall deposit such amount, if any, in
the Accumulation Period Reserve Account.
(xv) Payment Reserve Account. On each
Business Day, the Trustee, acting in accordance with
instructions from the Transferor, shall withdraw from
the Collection Account and distribute to the
Servicer, to the extent of any Available Series 1997-
1 Finance Charge Collections remaining after giving
effect to the withdrawals pursuant to subsections
4.9(a)(i) through (xiv) of the Agreement, an amount
equal to the lesser of (x) any such remaining
Available Series 1997-1 Finance Charge Collections
and (y) the amount designated by the Transferor in
writing (which includes facsimile transmission) in
its instructions to the Trustee on such Business Day
and the Servicer shall deposit such amount, if any,
in the Payment Reserve Account.
(xvi) Excess Finance Charge Collections.
Any amounts remaining in the Collection Account to
the extent of any Available Series 1997-1 Finance
Charge Collections remaining after giving effect to
the withdrawals pursuant to subsection 4.9(a)(i)
through (xv) of the Agreement, shall be treated as
Excess Finance Charge Collections, and the Servicer
shall direct the Trustee in writing on each Business
Day to withdraw such amounts from the Collection
Account and to first make such amounts available to
pay to Certificateholders of other Series to the
extent of shortfalls, if any, in amounts payable to
such certificateholders from Finance Charge
Collections allocated to such other Series, then to
pay any unpaid commercially reasonable costs and
expenses of a Successor Servicer, if any, and then on
each Business Day other than the Default Recognition
Date, to pay to the Transferor to be treated as
"Transferor Retained Finance Charge Collections,"
and, on each Default Recognition Date, to pay any
remaining Excess Finance Charge Collections to the
Transferor.
(b) For each Business Day with respect to the
Revolving Period, the funds on deposit in the Collection
Account to the extent of the product of (i) the Floating
Allocation Percentage and (ii) Principal Collections with
respect to such Business Day (less the amount of
Reallocated Principal Collections on such Business Day)
will be treated as Shared Principal Collections and
applied, pursuant to the written direction of the Servicer
in the Daily Report for such Business Day, as provided in
Section 4.3(d) of the Agreement.
(c) For each Business Day on and after the
Amortization Period Commencement Date, the amount of funds
on deposit in the Collection Account, the Excess
Funding Account or the Pre-Funding Account and other
accounts as described below will be distributed, pursuant to the
written direction of the Servicer in the Daily
Report for such Business Day in the following priority:
(i) an amount (not in excess of the
Invested Amount) equal to the sum of (v) the product
of the Fixed/Floating Allocation Percentage and
Principal Collections in the Collection Account at the end of the
preceding Business Day (less the amount thereof applied as Reallocated
Principal Collections on such Business Day), (w) any amount on deposit
in the Excess Funding Account allocated to the Series 1997-1
Certificates on such Business Day pursuant to subsection 4.9(d) of the
Agreement, (x) amounts to be paid pursuant to subsections 4.9(a)(v),
(vi), (vii), (x), (xi) and (xii) of the Agreement from Available
Series 1997-1 Finance Charge Collections and from amounts available
pursuant to subsections 4.10(a) and (b), 4.16(a), (b) and (c), 4.19(b)
and 4.20(b), (c) and (d) of the Agreement on such Business Day, (y) on
and after the Pay Out Commencement Date, any amount on deposit in the
Pre-Funding Account on such Business Day (less investment earnings
thereon) and (z) the amount of Shared Principal Collections allocated
to the Series 1997-1 Certificates in accordance with Section 4.8 of
the Agreement on such Business Day, will be deposited into the
Principal Account; provided, however that with respect to any Monthly
Period during the Controlled Accumulation Period, the aggregate amount
required to be deposited in the Principal Account pursuant to this
subsection 4.9(c)(i) shall not exceed the sum of the Controlled
Deposit Amount and, at the option of the Transferor, the Class D
Excess Amount.
(ii) an amount equal to the excess, if any, of (A) the sum
of the amounts described in clauses (i)(v) and (x) above over (B) the
sum of Class A Principal, Class B Principal and Class C Principal will
be treated as Shared Principal Collections and applied as provided in
subsection 4.3(d) of the Agreement; and
(iii) on the Class C Principal Payment Commencement Date,
the amount, if any, allocated with respect to Class C Investor Charge-
Offs pursuant to clause (ii) of the second sentence of Section 3.2 of
the Class C Reserve Account Agreement will be deposited into the
Principal Account.
(d) On the first Business Day of the
Amortization Period funds on deposit in the Excess Funding Account will be
deposited in the Principal Account to the extent of the lesser of (x) the
Invested Amount and (y) the product of (i) the amount on deposit in the
Excess Funding Account at the beginning of the Amortization Period and (ii)
a fraction, the numerator of which is equal to the Invested Amount and the
denominator of which is equal to the sum of the invested amounts of all
Series in amortization periods on such day.
SECTION 4.10 Coverage of Required Amount for
the Series 1997-1 Certificates. (a) To the extent that any amounts are
on deposit in the Excess Funding Account
or the Pre-Funding Account on any Business Day, the
Servicer shall apply, in the manner specified for
application of Available Series 1997-1 Finance Charge Collections in
subsections 4.9(a)(i) through (xiv) of the Agreement, Transferor Finance
Charge Collections in an amount (the "Negative Carry Amount") equal to the
excess of (x) the product of (a) the Base Rate, (b) the amounts on deposit
in the Excess Funding Account and the PreFunding Account and (c) the number
of days elapsed since the previous Business Day divided by the actual
number of days in such year over (y) the aggregate amount of all earnings
since the previous Business Day available from the Cash Equivalents in
which funds on deposit in the Excess Funding Account and Pre-Funding
Account are invested.
(b) To the extent that on any Business Day payments are being
made pursuant to any of subsections 4.9(a)(i) through (xiv) of the
Agreement, respectively, and the full amount to be paid pursuant to any
such subsection receiving payments on such Business Day is not paid in full
on such Business Day, the Servicer shall apply, in the manner specified for
application of Available Series 1997-1 Finance Charge Collections in
subsections 4.9(a)(i) through (xiv) of the Agreement, all or a portion of
the Excess Finance Charge Collections from other Series with respect to
such Business Day allocable to the Series 1997-1 Certificates in an amount
equal to the excess of the full amount to be allocated or paid pursuant to
the applicable subsection over the amount applied with respect thereto from
Available Series 1997-1 Finance Charge Collections and Transferor Finance
Charge Collections on such Business Day (the "Required Amount"). Excess
Finance Charge Collections allocated to the Series 1997-1 Certificates for
any Business Day shall mean an amount equal to the product of (x) Excess
Finance Charge Collections available from all other Series for such
Business Day and (y) a fraction, the numerator of which is the Required
Amount for such Business Day and the denominator of which is the aggregate
amount of shortfalls in required amounts or other amounts to be paid from
Finance Charge Collections for all Series for such Business Day.
SECTION 4.11 Payment of Certificate Interest. On each Transfer
Date, the Trustee, acting in accordance with instructions from the Servicer
set forth in the Daily Report for such day, shall withdraw the amount on
deposit in the Interest Funding Account with respect to the preceding
Monthly Period allocable to the Series 1997-1 Certificates and deposit such
amount in the Distribution Account. On each Distribution Date, the Paying
Agent shall pay in accordance with Section 5.1 of the Agreement to (w) the
Class A Certificateholders from the Distribution Account such amount
deposited into the Distribution Account on the related Transfer Date
allocable thereto pursuant to subsection 4.9(a)(i) of the Agreement, (x)
the Class B Certificateholders from the Distribution Account the amount
deposited into the Distribution Account on the related Transfer Date
allocable thereto pursuant to subsections 4.9(a)(ii) and
(viii) of the Agreement, (y) the Class C Certificateholders from the
Distribution Account the amount deposited into the Distribution Account on the
related Transfer Date allocable thereto pursuant to subsections 4.9(a)(iii)
and (ix) of the Agreement, and (z) the Class D Certificateholders from the
Distribution Account the amount deposited into the Distribution Account on
the related Transfer Date allocable thereto
pursuant to subsection 4.9(a)(xv) of the Agreement.
SECTION 4.12 Payment of Certificate Principal.
(a) On the Transfer Date preceding each Distribution Date with
respect to the Amortization Period, the Trustee, acting in accordance with
instructions from the Servicer set forth in the Daily Report for such day,
shall withdraw from the Principal Account and deposit into the Distribution
Account with respect to the Early Amortization Period, or the Principal
Funding Account with respect to the Accumulation Period, to the extent of
funds available, an amount equal to the Class A Principal for such
Distribution Date. On each Distribution Date with respect to the Early
Amortization Period until the Class A Invested Amount is paid in full, or
on the Expected Final Payment Date with respect to the Accumulation Period
following any deposit to the Distribution Account pursuant to subsection
4.12(f), the Paying Agent shall pay in accordance with Section 5.1 of the
Agreement to the Class A Certificateholders from the Distribution Account
such amounts deposited with respect to Class A Principal into the
Distribution Account on the related Transfer Date.
(b) On the Transfer Date preceding the Class B Principal Payment
Commencement Date and each Transfer Date thereafter, the Trustee, acting in
accordance with instructions from the Servicer set forth in the Daily
Report for such day, shall withdraw from the Principal Account and deposit
in the Distribution Account with respect to the Early Amortization Period,
or the Principal Funding Account with respect to the Accumulation Period,
to the extent of funds available, an amount equal to the Class B Principal
for the related Distribution Date. On and after the Class B Principal
Payment Commencement Date, on each Distribution Date with respect to the
Early Amortization Period until the Class B Invested Amount is paid in full
or on the Expected Final Payment Date with respect to the Accumulation
Period following any deposit to the Distribution Account pursuant to
subsection 4.12(f), the Paying Agent shall pay in accordance with Section
5.1 of the Agreement to the Class B Certificateholders from the
Distribution Account such amounts deposited with respect to Class B
Principal into the Distribution Account on the related Transfer Date.
(c) On the Transfer Date preceding the Class C Principal Payment
Commencement Date and each Transfer Date thereafter, the Trustee, acting in
accordance with instructions from the Servicer set forth in the Daily
Report for such day, shall withdraw from the Principal Account and deposit
in the Distribution Account with respect to the Early Amortization Period,
or the Principal Funding Account with respect to the
Accumulation Period, to the extent of funds available, an
amount equal to the Class C Principal for the related Distribution Date.
On and after the Class C Principal Payment Commencement Date, on each
Distribution Date with respect to the Early Amortization Period until the
Class C Invested Amount is paid in full or on the Expected Final Payment
Date with respect to the Accumulation Period following any deposit to the
Distribution Account pursuant to subsection 4.12(f), the Paying Agent shall
pay in accordance with Section 5.1 of the Agreement to
the Class C Certificateholders from the Distribution Account such amounts
deposited with respect to Class C Principal into the Distribution Account
on the related Transfer Date.
(d) On the Transfer Date preceding the Class D Principal Payment
Commencement Date and each Transfer Date thereafter, or, in the case of
distributions of Class D Excess Amounts, on each Transfer Date during the
Accumulation Period preceding a Distribution Date on which a distribution
shall be made with respect to Class D Excess Amounts, the Trustee, acting
in accordance with instructions from the Servicer set forth in the Daily
Report for such day, shall withdraw from the Principal Account and deposit
in the Distribution Account, to the extent of funds available, an amount
equal to the Class D Principal for the related Distribution Date. On the
Class D Principal Payment Commencement Date after the payment of any
principal amounts to the Class A Certificates, the Class B Certificates and
the Class C Certificates on such day, and on each Distribution Date
thereafter until the Class D Invested Amount is paid in full and on each
Distribution Date during the Accumulation Period on which amounts are to be
distributed with respect to Class D Excess Amounts, the Paying Agent shall
pay in accordance with Section 5.1 of the Agreement to the Class D
Certificateholder from the Distribution Account such amounts deposited with
respect to Class D Principal into the Distribution Account on the related
Transfer Date; provided, however, that, if so designated in writing by the
Transferor with respect to any such Transfer Date, any such payment of
Class D Principal shall not be made to the Class D Certificateholder and
such amount shall be subtracted from the Class D Invested Amount and added
to the Transferor Interest.
(e) Any amounts remaining in the Principal Account and allocable
to the Series 1997-1 Certificates, after the Class D Invested Amount has
been paid in full, will be treated as Shared Principal Collections and
applied in accordance with Section 4.3(d) of the Agreement.
(f) On the earlier to occur of (i) the first Transfer Date with
respect to the Early Amortization Period and (ii) the Transfer Date
immediately preceding the Expected Final Payment Date, the Trustee, acting
in accordance with instructions from the Servicer, shall withdraw from the
Principal Funding Account and deposit in the Distribution Account the
amount on deposit in the Principal Funding Account for distribution first
to Class A Certificateholders up to an amount equal to the Class A
Invested Amount, second to Class B Certificateholders up
to an amount equal to the Class B Invested Amount, and
third to Class C Certificateholders up to an amount equal
to the Class C Invested Amount.
SECTION 4.13 Investor Charge-Offs. (a) If, on
any Determination Date, the aggregate Investor
Default Amount and the Series Allocation Percentage of unpaid Adjustment
Payments, if any, for each Business Day in the preceding Monthly Period
exceeded the Available Series 1997-1 Finance Charge Collections applied to
the payment thereof pursuant to subsections 4.9(a)(v) and (vi) of the
Agreement, the amount of Transferor Finance Charge Collections and Excess
Finance
Charge Collections allocated thereto pursuant to Section 4.10 of the
Agreement, the amount of Reallocated Principal Collections applied with
respect thereto pursuant to Section 4.16 of the Agreement, the amount of
Principal Funding Account Investment Proceeds applied with respect thereto
pursuant to subsection 4.19(b), the amount of Pre-Funding Account
investment proceeds applied with respect thereto pursuant to Section
4.14(c), amounts withdrawn from the Accumulation Period Reserve Account and
applied with respect to the Investor Default Amount pursuant to subsection
4.20(c) and the Series Allocation Percentage of unpaid Adjustment Payments
with respect to such Monthly Period, the Class D Invested Amount will be
reduced by the amount by which the remaining aggregate Investor Default
Amount and Series Allocation Percentage of unpaid Adjustment Payments
exceed the amount applied with respect thereto during such preceding
Monthly Period (a "Class D Investor Charge-Off").
(b) In the event that any such reduction of the Class D Invested
Amount would cause the Class D Invested Amount to be a negative number, the
Class D Invested Amount will be reduced to zero, and, the Class C Invested
Amount will be reduced by the amount by which the Class D Invested Amount
would have been reduced below zero, but not more than the aggregate
Investor Default Amount and Series Allocation Percentage of unpaid
Adjustment Payments for such Monthly Period (a "Class C Investor Charge-
Off").
(c) In the event that any such reduction of the Class C Invested
Amount would cause the Class C Invested Amount to be a negative number, the
Class C Invested Amount will be reduced to zero, and, the Class B Invested
Amount will be reduced by the amount by which the Class C Invested Amount
would have been reduced below zero, but not more than the remaining
aggregate Investor Default Amount and Series Allocation Percentage of
unpaid Adjustment Payments for such Monthly Period (a "Class B Investor
Charge-Off").
(d) In the event that any such reduction of the Class B Invested
Amount would cause the Class B Invested Amount to be a negative number, the
Class B Invested Amount will be reduced to zero, and the Class A Invested
Amount will be reduced by the amount by which the Class B Invested Amount
would have been reduced below zero, but not more than the remaining aggregate
Investor Default Amount and Series Allocation Percentage
of unpaid Adjustment Payments for such Monthly Period (a "Class A Investor
Charge-Off").
SECTION 4.14. Pre-Funding Account. (a) Establishment of the Pre-
Funding Account. The Transferor hereby directs the Servicer, for the
benefit of the Series 1997-1 Certificateholders, to establish and maintain
or cause to be established and maintained in the name of the Trustee, on
behalf of the Series 1997-1 Certificateholders, with a Qualified
Institution (which initially shall be The Bank of New York) a segregated
trust account (the "Pre-Funding Account"), bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Series 1997-1 Certificateholders. The Transferor does hereby transfer,
assign, set over and otherwise convey to the Trust for the benefit of the
Series 1997-1
Certificateholders, without recourse, all of its right, title and interest
in, to and under the Pre-Funding Account, any Cash Equivalent on deposit
therein and any proceeds of the foregoing, including the investment
earnings. The Pre-Funding Account shall be under the sole dominion and
control of the Trustee for the benefit of the Series 1997-1
Certificateholders. If, at any time, the institution holding the Pre-
Funding Account ceases to be a Qualified Institution, the Transferor shall
direct the Servicer to establish within 10 Business Days a new Pre-Funding
Account meeting the conditions specified above with a Qualified
Institution, transfer any cash and/or any investments to such new Pre-
Funding Account and from the date such new PreFunding Account is
established, it shall be the "PreFunding Account." In addition, after five
days notice to the Trustee, the Transferor may direct the Servicer to
establish a new Pre-Funding Account meeting the conditions specified above
with a different Qualified Institution, transfer any cash and/or
investments to such new Pre-Funding Account and from the date such new Pre-
Funding Account is established, it shall be, for the Series 1997-1
Certificates, the "Pre-Funding Account." Pursuant to the authority granted
to the Servicer in subsection 3.1(b) of the Agreement, the Servicer shall
have the power, revocable by the Trustee, to make withdrawals and payments
or to instruct the Trustee to make withdrawals and payments from the Pre-
Funding Account for the purposes of carrying out the Servicer's or
Trustee's duties hereunder.
(b) Administration of Pre-Funding Account. The Transferor shall
on the Closing Date deposit in the Pre-Funding Account the Initial Pre-
Funded Amount. On the Business Day preceding each Transfer Date, the
Servicer shall withdraw from the Pre-Funding Account and deposit in the
Collection Account all interest and other investment income on the Pre-
Funded Amount. Interest (including reinvested interest) and other
investment income on funds on deposit in the Pre-Funded Account shall not
be considered part of the Pre-Funded Amount for purposes of this Agreement.
Funds on deposit in the
Pre-Funding Account shall be withdrawn by the Servicer and paid to the
Transferor to the extent of any increases in the Invested Amount pursuant
to Section 4.15 of the Agreement. If the Pay Out Commencement Date
occurs during the Funding Period, the remaining PreFunded
Amount will be applied to make principal payments with
respect to the Certificates in accordance with subsection
4.9(c) of the Agreement. The Servicer shall withdraw the
remaining Pre-Funded Amount, if any, on deposit in the Pre-
Funding Account on the first Business Day of the September
1997 Monthly Period and deposit such amount into the
Excess Funding Account.
(c) Investment of Funds in Pre-Funding
Account. Funds on deposit in the Pre-Funding Account
shall be invested in Cash Equivalents by the Trustee (or,
at the direction of the Trustee, by the Servicer on
behalf of the Trustee) at the direction of the Servicer.
Funds on deposit in the Pre-Funding Account on any
Distribution Date, after giving effect to any
withdrawals from the Pre-Funding Account, shall be invested in Cash
Equivalents that will mature so that such funds will be available for
withdrawal on or prior to the following Transfer Date. The proceeds of any
such investments shall be invested in Cash Equivalents
that will mature so that such funds will be available for withdrawal on or
prior to the following Transfer Date and, on such Transfer Date, such
proceeds shall be applied as if they were Available Series 1997-1 Finance
Charge Collections available to be applied pursuant to Subsection 4.9(a) on
the last Business Day of the preceding Monthly Period.
SECTION 4.15 Increases in Invested Amount. The Transferor may at
any time during the Funding Period determine to increase the Invested
Amount up to the Full Invested Amount to the extent there are sufficient
Principal Receivables in the Trust to permit such increase in the Invested
Amount without causing a Pay Out Event to occur with respect to any
outstanding Series. Upon determining to increase the Invested Amount
pursuant to this Section 4.15, the Transferor shall deliver to the
Servicer, the Trustee and each Rating Agency an Officers' Certificate
specifying the amount of the increase in the Invested Amount the Transferor
has determined to make and certifying that no Pay Out Event with respect to
any outstanding Series will occur as a result of or in connection with such
increase in the Invested Amount. Upon receipt of such Officer's
Certificate by the Trustee, the Class A Invested Amount, the Class B
Invested Amount and the Class C Invested Amount shall be increased pro rata
by the amount specified in such Officers' Certificate, whereupon the
Trustee shall instruct the Servicer to withdraw from the Pre-Funding
Account and pay to the Transferor an amount equal to the amount of such
increase in the Class A Invested Amount, the Class B Invested Amount and
the Class C Invested Amount.
Upon the withdrawal of the remaining PreFunded Amount, if any, on
deposit in the Pre-Funding Account on the first Business Day of the
September 1997 Monthly Period and the deposit of such amount in the
Excess Funding Account, the Class A Invested Amount, the Class B Invested
Amount and the Class C Invested Amount shall be increased pro rata by such
amount.
SECTION 4.16 Reallocated Principal
Collections for the Series 1997-1 Certificates. (a) On each Business Day,
the Servicer will determine an amount equal to the least of (i) the Class D
Invested Amount, (ii) the product of (x)(I) during the Revolving Period,
the Class D Floating Allocation Percentage or (II) during an Amortization
Period, the Class D Fixed/Floating Allocation Percentage and (y) the amount
of Principal Collections with respect to such Business Day and (iii) an
amount equal to the sum of (a) the Class A Required Amount for such
Business Day, (b) the Class B Required Amount for such Business Day and (c)
the Class C Required Amount for such Business Day (such amount called
"Reallocated Class D Principal Collections") and shall apply Principal
Collections in an amount equal to such amount first to the components of
the Class A Required Amount, then to the components of the Class B Required
Amount and then to the components of the Class C Required Amount in the
same priority as amounts are applied to such components from Available
Series 1997-1 Finance Charge Collections pursuant to subsection 4.9(a) of
the Agreement.
(b) On each Business Day, the Servicer will determine an amount
equal to the least of (i) the Class
C Invested Amount, (ii) the product of (x)(I) during the Revolving Period,
the Class C Floating Allocation Percentage or (II) during an Amortization
Period, the Class C Fixed/Floating Allocation Percentage and (y) the amount
of Principal Collections for such Business Day and (iii) an amount equal to
the sum of (a) the excess, if any, of the Class A Required Amount for such
Business Day over the amount of Reallocated Class D Principal Collections
applied with respect thereto for such Business Day and (b) the excess, if
any, of the Class B Required Amount for such Business Day over the amount
of Reallocated Class D Principal Collections applied with respect thereto
for such Business Day (such amount called "Reallocated Class C Principal
Collections") and shall apply Principal Collections in an amount equal to
such amount first to the remaining components of the Class A Required
Amount and then to the remaining components of the Class B Required Amount
in the same priority as amounts are applied to such components from
Available Series 1997-1 Finance Charge Collections pursuant to subsection
4.9(a) of the Agreement.
(c) On each Business Day, the Servicer will determine an amount
equal to the least of (i) the Class B Invested Amount, (ii) the product of
(x)(I) during the Revolving Period, the Class B Floating Allocation
Percentage or (II) during an Amortization Period, the Class B
Fixed/Floating Allocation Percentage and (y) the amount of Principal
Collections for such Business Day and (iii) an amount equal to the excess,
if any, of the Class A Required Amount for such Business Day over the sum
of the amount of Reallocated Class D Principal Collections and Reallocated
Class C Principal Collections applied with respect thereto for such
Business Day (such amount called "Reallocated Class B Principal Collections")
and shall apply Principal Collections equal to such amount to the remaining
components of the Class A Required Amount in the same priority as amounts
are applied to such components from Available Series 1997-1 Finance Charge
Collections pursuant to subsection 4.9(a) of the Agreement.
SECTION 4.17 Determination of LIBOR. (a) "LIBOR" shall mean, as
of any LIBOR Determination Date, the rate for deposits in United States
dollars for one month (commencing on the first day of the relevant interest
period) which appears on Telerate Page 3750 as of 11:00 A.M., London time,
on the LIBOR Determination Date for such interest period. If such rate
does not appear on Telerate Page 3750, the rate for such LIBOR
Determination Date will be determined on the basis of the rates at which
deposits in the United States dollars are offered by the Reference Banks at
approximately 11:00 a.m., London time, on such LIBOR Determination Date to
prime banks in the London interbank market for a period equal to one month
(commencing on the first day of the relevant interest period). The Trustee
will request the principal London office of each such bank to provide a
quotation of its rate. If at least two such quotations are provided, the
rate for such LIBOR Determination Date will be the arithmetic mean of the
quotations. If fewer than two quotations are provided as requested, the
rate for such LIBOR Determination Date will be the arithmetic mean of the
rates quoted by four major banks in New York City, selected by the Trustee,
at approximately 11:00 a.m., New York City time, on the LIBOR Determination
Date for loans in United States
dollars to leading European banks for a period equal to one month
(commencing on the first day of such interest period).
(b) The Class C Certificate Rate applicable to the then current
and the immediately preceding Interest Accrual Periods may be obtained by
any Series 1997-1 Certificateholder by telephoning the Trustee at its
Corporate Trust Office at (000) 000-0000.
(c) On each LIBOR Determination Date, the Trustee shall send to
the Servicer by facsimile notification of LIBOR for such LIBOR
Determination Date.
SECTION 4.18 Payment Reserve Account.
(a) The Servicer shall establish and maintain or cause to be
established and maintained with a Qualified Institution, which may be the
Trustee, in the name of the Trustee, on behalf of the Certificateholders,
the "Payment Reserve Account," which shall be a segregated trust account
with the corporate trust department of such Qualified Institution, bearing
a designation clearly indicating that the funds deposited therein are held
for the benefit of the Certificateholders. The Trustee shall possess all
right, title and interest in all funds on deposit from time to time in the
Payment Reserve Account and in all proceeds thereof. The Payment Reserve
Account shall be under the sole dominion and control of the Trustee for
the benefit of the Certificateholders. If, at any time, the institution
holding the Payment Reserve Account ceases to be a Qualified Institution,
the Trustee shall within 10 Business Days establish a new Payment Reserve
Account meeting the conditions specified above with a Qualified Institution,
and shall transfer any cash or any investments to such new Payment Reserve
Account. From the date such new Payment Reserve Account is established, it
shall be the "Payment Reserve Account."
(b) The Transferor, at its discretion, may on any Business Day
withdraw all or a part of any amounts then on deposit in the Payment
Reserve Account and apply such funds in accordance with Section 4.9(a) of
the Agreement.
(c) Funds on deposit in the Payment Reserve Account shall be
invested in Cash Equivalents by the Trustee (or, at the direction of the
Trustee, by the Servicer on behalf of the Trustee) at the direction of the
Servicer. Funds on deposit in the Payment Reserve Account on any Business
Day, after giving effect to any withdrawals from the Payment Reserve
Account, shall be invested in Cash Equivalents that will mature so that
such funds will be available for withdrawal on or prior to the following
Business Day. The proceeds of any such investments shall be invested in
Cash Equivalents that will mature so that such funds will be available for
withdrawal on or prior to the following Business Day.
SECTION 4.19 Principal Funding Account.
(a) The Servicer shall establish and maintain or cause to be
established and maintained with a Qualified Institution, which may be the
Trustee, in the name of the Trustee, on behalf of the Certificateholders,
the "Principal Funding Account,"
which shall be a segregated trust account with the corporate trust
department of such Qualified Institution, bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Series 1997-1 Certificateholders. The Trustee shall possess all right,
title and interest in all funds on deposit from time to time in the
Principal Funding Account and in all proceeds thereof. The Principal
Funding Account shall be under the sole dominion and control of the Trustee
for the benefit of the Series 1997-1 Certificateholders. If, at any time,
the institution holding the Principal Funding Account ceases to be a
Qualified Institution, the Trustee shall within 10 Business Days establish
a new Principal Funding Account meeting the conditions specified above with
a Qualified Institution, and shall transfer any cash or any investments to
such new Principal Funding Account. From the date such new Principal
Funding Account is established, it shall be the "Principal Funding
Account." The Trustee, at the written direction of the Servicer, shall (i)
make withdrawals from the Principal Funding Account from time to time, in
the amounts and for the purposes set forth in this Series Supplement, and
(ii) on each Transfer Date (from and after the commencement of the
Accumulation Period) prior to termination of the Principal Funding Account
make a deposit into the Principal Funding Account in the amount specified in,
and otherwise in accordance with, subsection 4.12 of the Agreement.
(b) Funds on deposit in the Principal Funding
Account shall be invested by the Trustee at the
direction of the Servicer in Cash Equivalents maturing no
later than the following Transfer Date. On the Transfer
Date occurring in the month following the commencement of
the Accumulation Period and on each Transfer Date
thereafter with respect to the Accumulation Period, the
Trustee, at the Servicer's written direction, shall
transfer from the Principal Funding Account to the
Collection Account the Principal Funding Account
Investment Proceeds on deposit in the Principal Funding
Account, but not in excess of the Covered Amount, and
shall apply such amount as if such amounts were Available
Series 1997-1 Finance Charge Collections available to be
applied pursuant to subsection 4.9(a) on the last
Business Day of the preceding Monthly Period. Principal
Funding Account Investment Proceeds (including reinvested
interest) shall not be considered part of the amounts on
deposit in the Principal Funding Account for purposes of
this Series Supplement.
SECTION 4.20 Accumulation Period Reserve
Account.
(a) The Servicer shall establish and maintain
or cause to be established and maintained with a
Qualified Institution, which may be the Trustee, in the
name of the Trustee, on behalf of the Certificateholders,
the "Accumulation Period Reserve Account," which shall be
a segregated trust account with the corporate trust
department of such Qualified Institution, bearing a
designation clearly indicating that the funds deposited
therein are held for the benefit of the Series 1997-1
Certificateholders. The Trustee shall possess all right,
title and interest in all funds on deposit from time to
time in the
Accumulation Period Reserve Account and in all proceeds
thereof. The Accumulation Period Reserve Account shall be
under the sole dominion and control of the Trustee
for the benefit of the Series 1997-1 Certificateholders.
If, at any time, the institution holding the
Accumulation Period Reserve Account ceases to be a Qualified Institution,
the Trustee shall within 10 Business Days establish a new Accumulation
Period Reserve Account meeting the conditions specified above with a
Qualified Institution, and shall transfer any cash or any investments to
such new Accumulation Period Reserve Account. From the date such new
Accumulation Period Reserve Account is established, it shall be the
"Accumulation Period Reserve Account." The Trustee, at the written
direction of the Servicer, shall (i) make withdrawals from the Accumulation
Period Reserve Account from time to time, in the amounts and for the
purposes set forth in this Series Supplement, and (ii) on each Transfer
Date (from and after the Reserve Account Funding Date) prior to termination
of the Accumulation Period Reserve Account make a deposit into the
Accumulation Period Reserve Account in the amount specified in, and otherwise
in accordance with, subsection 4.9(a)(xiv) of the Agreement.
(b) Funds on deposit in the Accumulation
Period Reserve Account shall be invested by the Trustee
at the direction of the Servicer in Cash Equivalents
maturing no later than the following Transfer Date. The
interest and other investment income (net of investment
expenses and losses) earned on such investments will be
retained in the Accumulation Period Reserve Account (to
the extent the amount on deposit therein is less than the
Required Reserve Account Amount) or applied on each
Transfer Date as if such amount were Available Series 1997-
1 Finance Charge Collections available to be applied
pursuant to subsection 4.9(a) on the last Business Day of
the preceding Monthly Period.
(c) On or before each Transfer Date with
respect to the Accumulation Period and on the first
Transfer Date with respect to the Early Amortization
Period, the Trustee at the direction of the Servicer shall
withdraw from the Accumulation Period Reserve Account, up
to the Available Reserve Account Amount, an amount equal
to the excess of the Covered Amount for the related
Interest Accrual Period over the Principal Funding Account
Investment Proceeds with respect to such Transfer Date,
and the amount of such withdrawal shall be applied as if
such amount were Available Series 19971 Finance Charge
Collections available to be applied pursuant to subsection
4.9(a) on the last Business Day of the preceding Monthly
Period.
(d) The Accumulation Period Reserve Account
shall be terminated following the earliest to occur of (a)
the termination of the Trust pursuant to the Agreement,
(b) the date on which the Invested Amount is paid in full,
(c) if the Accumulation Period has not commenced, the
occurrence of a Pay Out Event with respect to the Series
1997-1 Certificates and (d) if the Accumulation Period has
commenced, the earlier of the first Transfer Date with
respect to the Early
Amortization Period and the Expected Final Payment Date.
Upon the termination of the Accumulation Period Reserve
Account, all amounts on deposit therein (after giving
effect to any withdrawal from the Accumulation Period
Reserve Account on such date as described above) shall be applied as if
they were Available Series 1997-1 Finance Charge Collections available to
be applied pursuant to subsection 4.9(a) on the last Business Day of the
preceding Monthly Period.
SECTION 4.21 Postponement of Accumulation Period. The
Accumulation Period is scheduled to commence at the close of business on
the last day of the March 2001 Monthly Period; provided, however, that, if
the Accumulation Period Length (determined as described below) is less than
12 months, the date on which the Accumulation Period actually commences
may, at the option of the Servicer, upon written notice to the Trustee, be
delayed to the first Business Day of the month that is the number of months
prior to the Expected Final Payment Date at least equal to the Accumulation
Period Length and, as a result, the number of Monthly Periods in the
Accumulation Period will at least equal the Accumulation Period Length.
On each Determination Date until the Accumulation Period begins, the Servicer
will determine the "Accumulation Period Length" which
will equal the number of months such that the sum of the
Accumulation Period Factors for each Monthly Period
during such period will be equal to or greater than the
Required Accumulation Factor Number; provided, however,
that the Accumulation Period Length will not be less than
one month.
SECTION 4.22 Defeasance. On the date that the
following conditions shall have been satisfied: (i) the
Transferor shall have deposited (x) in the Principal
Funding Account, an amount such that the amount on
deposit in the Principal Funding Account following such
deposit is equal to the sum of the Class A Outstanding
Principal Amount, the Class B Outstanding Principal
Amount and the Class C Outstanding Principal Amount, and
(y) in the Accumulation Period Reserve Account, an amount
equal to or greater than the Covered Amount, as estimated
by the Transferor, for the period from the date of such
deposit to the Principal Funding Account through the
Expected Final Payment Date; (ii) the Transferor shall
have delivered to the Trustee (a) an opinion of counsel
to the effect that such deposit will not result in the
Trust being required to register as an "investment
company" within the meaning of the Investment Company Act
of 1940, as amended, (b) an opinion of counsel to the
effect that following such deposit none of the Trust, the
Accumulation Period Reserve Account or the Principal
Funding Account will be deemed to be an association (or
publicly traded partnership) taxable as a corporation,
(c) a certificate of an officer of the Transferor stating
that the Transferor reasonably believes that such deposit
will not cause a Pay Out Event or any event that, with
the giving of notice or the lapse of time, would
constitute a Pay Out Event, to occur; and (iv) a Ratings
Event will not occur, the Series 1997-1 Certificates will
no longer be entitled to security interest of the Trust
in the Receivables and, except those set forth in clause
(i) above, other Trust assets and the percentages
applicable to the allocation to the Series 1997-1
Certificateholders of Principal Collections, Finance
Charge Collections and Defaulted Receivables will be
reduced to zero. Upon the satisfaction of the foregoing
conditions, the Class D Invested Amount will be reduced
to zero.
SECTION 7. Article V of the Agreement.
Article V of the Agreement shall read in its entirety as
follows and shall be applicable only to the Series 19971
Certificates:
ARTICLE V
DISTRIBUTIONS AND REPORTS TO INVESTOR
CERTIFICATEHOLDERS
SECTION 5.1 Distributions. (a) On each
Distribution Date, the Paying Agent shall distribute (in accordance with the
Settlement Statement delivered by the Servicer to the Trustee and the Paying
Agent pursuant to subsection 3.4(c)) to each Class A
Certificateholder of record on the preceding Record Date (other than as
provided in subsection 2.4(e) or in Section 12.3 respecting a final
distribution) such
Certificateholder's pro rata share (based on the aggregate Undivided
Interests represented by each Class A Certificate held by such
Certificateholder) of amounts on deposit in the Distribution Account as are
payable to each Class A Certificateholders pursuant to Sections 4.11 and
4.12 of the Agreement by check mailed to each
Class A Certificateholder at such Certificateholder's address as it appears
on the Certificate Register or, in the case of Class A Certificateholders
holding Class A Certificates evidencing Undivided Interests aggregating not
less than 80% of the Invested Amount, by wire transfer, at the expense of
such Class A Certificateholder, to an account or accounts designated by
such Class A Certificateholder by written notice given to the Paying Agent
not less than five days prior to related Distribution Date; provided,
however, that the final payment in retirement of the Class A Certificates
will be made only upon presentation and surrender of the Class A
Certificates at the office or offices specified in the notice of such final
distribution delivered by the Trustee pursuant to Section 12.3.
(b) On each Distribution Date, the Paying Agent shall distribute (in
accordance with the Settlement Statement delivered by the Servicer to the
Trustee and the Paying Agent pursuant to subsection 3.4(c)) to each Class B
Certificateholder of record on the preceding Record Date (other than as
provided in subsection 2.4(e) or in Section 12.3 respecting a final
distribution) such Certificateholder's pro rata share (based on the
aggregate Undivided Interests represented by Class B Certificates held by
such Certificateholder) of amounts on deposit in the Distribution Account
as are payable to the Class B Certificateholders pursuant to Sections 4.11
and 4.12 of the Agreement by check mailed
to each Class B Certificateholder at such Certificateholder's address as it
appears on the Certificate Register or, in the case of Class B
Certificateholders holding Class B Certificates evidencing Undivided
Interest aggregating not less than 80% of the Invested Amount, by wire
transfer, at the expense of such Class B Certificateholder, to an account
or accounts designated by such Class B Certificateholder by written notice
given to the Paying Agent not less than five days prior to the related
Distributed Date; provided, however, that the final payment in retirement
of the Class B Certificates will be made only upon
presentation and surrender of the Class B Certificates at the office or
offices specified in the notice of such final distribution delivered by the
Trustee pursuant to Section 12.3.
(c) On each Distribution Date, the Paying Agent shall distribute
(in accordance with the Settlement Statement delivered by the Servicer to
the Trustee and the Paying Agent pursuant to subsection 3.4(c)) to each Class
C Certificateholder of record on the preceding Record Date (other than as
provided in subsection 2.4(e) or in Section 12.3 respecting a final
distribution) such Certificateholder's pro rata share
(based on the aggregate Undivided Interests represented
by Class C Certificates held by such Certificateholder)
of amounts on deposit in the Distribution Account as are
payable to the Class C Certificateholders pursuant to
Sections 4.11 and 4.12 of the Agreement by wire transfer
to each Class C Certificateholder to an account or
accounts designated by such Class C Certificateholder by
written notice given to the Paying Agent not less than
five days prior to the related Distribution Date;
provided, however, that the final payment in retirement
of the Class C Certificates will be made only upon
presentation and surrender of the Class C Certificates at
the office or offices specified in the notice of such
final distribution delivered by the Trustee pursuant to
Section 12.3.
(d) On each Distribution Date, the Paying Agent shall
distribute (in accordance with the Settlement Statement
delivered by the Servicer to the Trustee and the Paying
Agent pursuant to subsection 3.4(c)) to each Class D
Certificateholder of record on the preceding Record Date
(other than as provided in subsection 2.4(e) or in
Section 12.3 respecting a final distribution) such
Certificateholder's pro rata share (based on the
aggregate Undivided Interests represented by Class D
Certificates held by such Certificateholder) of amounts
on deposit in the Distribution Account as are payable to
the Class D Certificateholders pursuant to Sections
4.11 and 4.12 of the Agreement by wire transfer
to each Class D Certificateholder to an account or
accounts designated by such Class D Certificateholder by
written notice given to the Paying Agent not less than
five days prior to the related Distribution Date;
provided, however, that the final payment in retirement
of the Class D Certificates will be made only upon
presentation and surrender of the Class D Certificates at
the office or offices specified in the notice of such
final distribution delivered by the Trustee pursuant to
Section 12.3.
SECTION 5.2 Certificateholders' Statement.
(a) On the 20th day of each calendar month (or if such
day is not a Business Day the next succeeding Business
Day), the Paying Agent shall forward to each
Certificateholder and the Rating Agencies a statement
substantially in the form of Exhibit B prepared by the
Servicer and delivered to the Trustee and the Paying
Agent on the preceding Determination Date setting forth
the following information (which, in the case of (i),
(ii) and (iii) below, shall be stated on the basis of an
original principal amount of $1,000 per Certificate and,
in the case of (ix) and (x), shall be stated on an
aggregate basis and on the basis of an original principal
amount of $1,000 per Certificate):
(i) the total amount distributed;
(ii) the amount of such distribution allocable to Certificate
Principal;
(iii) the amount of such distribution
allocable to Certificate Interest;
(iv) the amount of Principal Collections
received in the Collection Account during the
preceding Monthly Period and allocated in respect of
the Class A Certificates, the Class B Certificates,
the Class C Certificates and the Class D
Certificates, respectively;
(v) the amount of Finance Charge
Collections processed during the preceding Monthly
Period and allocated in respect of the Class A
Certificates, the Class B Certificates, the Class C
Certificates and the Class D Certificates,
respectively, and the amount of Principal Funding
Account Investment Proceeds and investment earnings
on amounts on deposit in the Accumulation Period
Reserve Account and the Pre-Funding Account;
(vi) the aggregate amount of Principal
Receivables, the Invested Amount, the Class A
Invested Amount, the Class B Invested Amount, the
Class C Invested Amount, the Class D Invested
Amount, the Floating Allocation Percentage and,
during the Amortization Period, the Fixed/Floating
Allocation Percentage, Class B Fixed/Floating
Allocation Percentage, or Class C Fixed/Floating
Allocation Percentage as applicable, as of the end
of the day on the last day of the related Monthly
Period;
(vii) the aggregate outstanding balance
of Receivables which are current, 30-59, 60-89, and
90 days and over delinquent as of the end of the day
on the last day of the related Monthly Period;
(viii) the aggregate Investor Default
Amount for the preceding Monthly Period;
(ix) the aggregate amount of Class A
Investor Charge-Offs, Class B Investor Charge-Offs,
Class C Investor Charge-Offs and Class D Investor
Charge-Offs for the preceding Monthly Period;
(x) the amount of the Servicing Fee for
the preceding Monthly Period;
(xi) the Class A Pool Factor, the Class B
Pool Factor and the Class C Pool Factor as of the
end of the last day of the Monthly Period
immediately preceding the Determination Date;
(xii) the amount of unreimbursed
Reallocated Class B Principal Collections,
Reallocated Class C Principal Collections and
Reallocated Class D Principal Collections for the
related Monthly Period;
(xiii) the aggregate amount of funds in
the Excess Funding Account and the Pre-Funding
Account as of the last day of the Monthly Period
immediately preceding the Distribution Date;
(xiv) the Specified Class C Reserve Amount, the amount then on
deposit in the Class C Reserve Account and whether a Class C Trigger Event
has occurred;
(xv) the number of new Accounts the
Receivables in which have been added to the Trust
during the related Monthly Period;
(xvi) the Portfolio Yield for the related
Monthly Period;
(xvii) the Base Rate for the related
Monthly Period;
(xviii) the Principal Funding Account
Balance on the related Transfer Date;
(xix) the Accumulation Shortfall;
(xx) the scheduled date for the
commencement of the Accumulation Period and the
Accumulation Period Length; and
(xxi) the amount of Principal Funding
Account Investment Proceeds deposited in the
Collection Account on the related Transfer Date, the
Required Reserve Account Amount and the Available
Reserve Account Amount as of the related Transfer
Date, and the Covered Amount for the related
Interest Accrual Period.
(b) Annual Certificateholders' Tax
Statement. On or before January 31 of each calendar
year, beginning with calendar year 1998, the Paying Agent
shall distribute to each Person who at any time during
the preceding calendar year was a Series 1997-1
Certificateholder, a statement prepared by the Servicer
containing the information required to be contained in
the regular report to Series 1997-1 Certificateholders,
as set forth in subclauses (i), (ii) and (iii) above,
aggregated for such calendar year or the applicable
portion thereof during which such Person was a Series
1997-1 Certificateholder, together with, on or before
January 31 of each year, beginning in 1998, such other
customary information (consistent with the treatment of
the Certificates as debt) as the Trustee or the Servicer
deems necessary or desirable to enable the Series 1997-1
Certificateholders to prepare their tax returns. Such
obligations of the Trustee shall be deemed to have been
satisfied to the extent that substantially comparable
information shall be provided by the Trustee pursuant to
any requirements of the Internal Revenue Code as from
time to time in effect.
SECTION 8. Series 1997-1 Pay Out Events.
If any one of the following events shall occur with
respect to the Series 1997-1 Certificates:
(a) failure on the part of the
Transferor (i) to make any payment or deposit required
to be made by the Transferor by the terms of (A) the
Agreement or (B) this Series Supplement, on or before the date occurring five
Business Days after the date such payment or deposit is required to be made
herein,
(ii) to perform in all material respects the
Transferor's covenant not to sell, pledge, assign, or
transfer to any person, or grant any unpermitted lien on, any Receivable;
or (iii) duly to observe or perform in any material respect any covenants
or agreements of the Transferor set forth in the Agreement or this Series
Supplement, which failure has a material adverse effect on the Series 1997-
1 Certificateholders 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 Transferor by the Trustee, or
to the Transferor and the Trustee by the Holders of Series 1997-1
Certificates evidencing Undivided Interests aggregating not less than 50%
of the Invested Amount of this Series 1997-1, and continues to affect
materially and adversely the interests of the Series 1997-1
Certificateholders for such period;
(b) any representation or warranty made by the Transferor
in the Agreement or this Series Supplement, (i) shall prove to have been
incorrect in any material respect when made, 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 Transferor by the Trustee, or to the
Transferor and the Trustee by the Holders of the Series 1997-1 Certificates
evidencing Undivided Interests aggregating more than 50% of the Invested
Amount of this Series 1997-1, and (ii) as a result of which the interests
of the Series 1997-1 Certificateholders are materially and adversely
affected and continue to be materially and adversely affected for such
period; provided, however, that a Series 1997-1 Pay Out Event pursuant to
this subsection 8(b) shall not be deemed to have occurred hereunder if the
Transferor has accepted reassignment of the related Receivable, or all of
such Receivables, if applicable, during such period (or such longer period
as the Trustee may specify) in accordance with the provisions of the
Agreement;
(c) the average of the Portfolio Yields for any three
consecutive Monthly Periods is reduced to a rate which is less than the
weighted average Base Rates for such three consecutive Monthly Periods;
(d) (i) the Transferor Interest shall be less than the
Minimum Transferor Interest, (ii) (A) the sum of the amount on deposit in
the Pre-Funding Account plus the Series Allocation Percentage of the sum of
the total amount of Principal Receivables plus amounts on deposit in the
Excess Funding Account shall be less than (B) the sum of the Class A
Outstanding Principal Amount, the Class B Outstanding Principal Amount, the
Class C Outstanding Principal Amount and the Class D Outstanding Principal
Amount, (iii) the total amount of Principal Receivables and the amounts on
deposit in the Excess Funding Account and the Principal Funding Account
shall be less than the Minimum Aggregate Principal Receivables
or (iv) the Retained Percentage shall be equal to or less than 2%, in each
case as of any Determination Date; or
(e) any Servicer Default shall occur
which would have a material adverse effect on the Series
1997-1 Certificateholders;
then, in the case of any event described in subparagraph
(a), (b) or (e), after the applicable grace period, if any, set forth in
such subparagraphs, the Holders of Series 1997-1 Certificates evidencing
Undivided Interests aggregating more than 50% of the Invested Amount of
this Series 1997-1, by notice then given in writing to the Trustee, the
Transferor and the Servicer may declare that a pay out event (a "Series
1997-1 Pay Out Event") has occurred as of the date of such notice, and in
the case of any event described in subparagraphs (c) or (d), a Series 1997-
1 Pay Out Event shall occur without any notice or other action on the part
of the Trustee or the Series 1997-1 Certificateholders immediately upon the
occurrence of such event.
SECTION 9. Series 1997-1 Termination. The right of the Series
1997-1 Certificateholders to receive payments from the Trust will terminate
on the first Business Day following the Series 1997-1 Termination Date
unless such Series is an Affected Series as specified in Section 12.1(c) of
the Agreement and the sale contemplated therein has not occurred by such
date, in which event the Series 1997-1 Certificateholders shall remain
entitled to receive proceeds of such sale when such sale occurs.
SECTION 10. Legends; Transfer and Exchange; Restrictions on
Transfer of Series 1997-1 Certificates; Tax Treatment.
(a) The Class C Certificates have not been, and will not
be, registered under the Securities Act or any state securities law. No
reoffer, resale, pledge (except as provided in the Pooling and Servicing
Agreement) or other transfer of any Class C Certificate or any interest
therein or participation thereof will be made unless such resale or
transfer is made (i) to the Transferor, (ii) to a limited number of
institutional "accredited investors" (as defined in Rule 501 (a)(1), (2),
(3) or (7) under the Securities Act) in a transaction exempt from the
registration requirements of the Securities Act (upon delivery of the
documentation required by the Pooling and Servicing Agreement and, if the
Trustee so requires, an opinion of counsel satisfactory to the Trustee) or
(iii) pursuant to Rule 144A to a person who the seller of the Class C
Certificates reasonably believes is a QIB purchasing for its own account or
a QIB purchasing for the account of a QIB, whom the holder has informed, in
each case, that the reoffer, resale, pledge or other transfer is being made
in reliance on Rule 144A. Neither the Transferor nor the Trustee is
obligated to register the Class C Certificates under the Securities Act or
to take any otherwise required under the Pooling and Servicing Agreement or
the Series 1997-1 Supplement to permit the
transfer of Class C Certificates without registration. No Class C Certificate
or any interest therein may be sold, traded, conveyed, assigned,
hypothecated, pledged, participated, or otherwise transferred (each, a
"Transfer") except in accordance with this Section 10. Any Transfer of a
Class C Certificate otherwise permitted by this Section 10 will be
permitted only if it consists of a pro rata percentage interest in all
payments made with respect to such Holder's Class C Certificates and no
Transfers of partial interests in a Class C Certificate will be permitted.
No Class C Certificate or any interest therein may be Transferred to any
Person (each, an "Assignee") unless the Assignee
has executed and delivered the certification referred to in subsection
10(e) below and the Transferor has granted prior written consent thereto.
Such consent shall be granted unless the Transferor determines in its sole
and absolute discretion that such Transfer would create more than an
insubstantial risk that the Trust would be classified for Federal or any
applicable state tax purposes as an association or publicly traded
partnership taxable as a corporation; provided, that any attempted Transfer
that would cause the number of Targeted Holders to exceed one hundred shall
be void; and provided, further, that there shall not at any time be more
than 10 Class C Certificateholders or such other number as may be consented
to by the Transferor, which consent may be withheld in its sole and
absolute discretion.
(b) Each initial purchaser of a Class C Certificate or any
interest therein and any Assignee thereof shall certify to the Transferor
and the Trustee that it is either (A)(i) a citizen or resident of the U.S.,
(ii) a corporation, partnership or other entity organized in or under the
laws of the U.S. or any political subdivision thereof or (iii) a person not
described in (i) or (ii) whose ownership of the Class C Certificates is
effectively connected with such person's conduct of a trade or business
within the U.S. (within the meaning of the Internal Revenue Code) and whose
ownership of any interest in a Class C Certificate will not result in any
withholding obligation with respect to any payments with respect to the
Class C Certificates by any person (other than withholding, if any, under
Section 1446 of the Code) or (B) an estate the income of which is
includible in gross income for U.S. Federal income tax purposes or any
trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more United
States fiduciaries have the authority to control all substantial decisions
of the trust. It also agrees that (a) if it is a person described in
clause (A)(i) or (A)(ii) above, it will furnish to the Transferor, the
Servicer and the Trustee, a properly executed U.S. Internal Revenue Service
Form W-9 and a new Form W-9, or any successor applicable form, upon the
expiration or obsolescence of any previously delivered form or (b) if it is
a person described in clause (A)(iii) above, it will furnish to the
Transferor, the Servicer and the Trustee a properly executed U.S. Internal
Revenue Service Form 4224 (or applicable successor form) and a new Form
4224 (or applicable successor form) upon the
expiration or obsolescence of any previously delivered form (and such other
certifications, representations or opinions of counsel as may be requested by
the Transferor, the Servicer or the Trustee). Such person recognizes that if
it is a tax-exempt entity a portion of the payments with respect to the
Certificates may constitute unrelated business taxable income.
If the purchaser is a Person which is
described in clause A(iii) of the preceding paragraph, it will deliver a
properly completed and executed Form 4224 (or applicable successor form)
indicating no taxes will be required to be withheld by any person with
respect to any payments to be made to such purchaser in respect of the
Class C Certificates (other than withholding, if any, under Section 1446 of
the Code) purchased by it, and it will, during the period in which
such Form is effective, report all interest payments received by it in
respect of such Class C Certificates as income effectively connected with
the conduct of a trade or business in the United States and pay all United
States federal income taxes imposed with respect to such income as required
by law. Further, such purchaser will provide the Transferor and the
Trustee a new Form 4224 (or applicable successor form) upon the expiration
or obsolescence of any previously delivered Form and comparable statements
in accordance with applicable U.S. laws and regulations and amendments duly
executed and completed by such purchaser, and it will comply from time to
time with all applicable U.S. laws and regulations with regard to such
withholding tax exemption. Each initial purchaser of a Class C Certificate
or any interest therein and any Assignee thereof must certify to the
Transferor and the Trustee that if it is not created or organized under the
laws of the United States or any State thereof (including the District of
Columbia) it will, upon written notice by the Transferor that the
Transferor intends, pursuant to Section 1446 or other applicable section of
the Code, to withhold U.S. tax (a "Withholding Tax") from amounts paid or
accruing with respect to a Class C Certificate to such purchaser (such
determination being a "Withholding Event"), such purchaser shall for tax
years for which the purchaser has already filed U.S. federal income tax
returns (each a "Prior Tax Year") prior to proper notice of such
Withholding Event, provide (A) a signed officer's certificate of such
purchaser stating that amounts paid or accruing hereunder have been
included in such purchaser's U.S. federal income tax returns for each such
Prior Tax Year, which certificate may be relied on by the Transferor in
asserting to the Internal Revenue Service the applicability of Section 1463
of the Code with respect to any Withholding Tax for each such Prior Tax
Year and (B) provide information to the Transferor or, at the option of
such purchaser, to the Internal Revenue Service in support of the
application of Section 1463 of the Code for each such Prior Tax Year.
(c) Each initial purchaser of a Class C Certificate or any
interest therein and any Assignee thereof shall further certify to the
Transferor and the Trustee that it has neither acquired nor will it
Transfer the Class C Certificates (or any interest therein) or cause the
Class C Certificates to be marketed on or through (i) an "established securities
market" within the meaning of Section 7704(b)(1) of the
Internal Revenue Code and any treasury regulation
thereunder, including, without limitation, an over-the
counter-market or an interdealer quotation system that
regularly disseminates firm buy or sell quotations or
(ii) a "secondary market" within the meaning of Section
7704(b)(2) of the Internal Revenue Code and any treasury
regulation thereunder, including a market wherein the
Class C Certificates (or any interest therein) are
regularly quoted by any Person making a market in such
interests and a market wherein any Person regularly makes
available bid or offer quotes with respect to the Class C
Certificates (or any interest therein) and stands ready
to effect buy or sell transactions at the quoted prices
for itself or on behalf of others. In addition, each
initial purchaser of a Class C Certificate or any
interest therein and any Assignee must certify, prior to
any delivery or Transfer to it of
a Class C Certificate that, for so long as it holds an
interest in a Class C Certificate, it is not and will not
become a partnership, Subchapter S corporation or grantor
trust for U.S. Federal income tax purposes. If an
initial purchaser of an interest in a Class C Certificate
or an Assignee cannot make the certification described in
the preceding sentence, the Transferor may, in its sole
discretion, prohibit a Transfer to such entity; provided,
however, that if the Transferor agrees to permit such a
Transfer, the Transferor, the Servicer or the Trustee may
require additional certifications in order to prevent the
Trust from being treated as a publicly traded
partnership. Each initial purchaser of an interest in a
Class C Certificate and Assignee acknowledges that the
Opinion of Counsel to the effect that the Trust will not
be subject to tax at the entity level is dependent in
part on the accuracy of the certifications described in
this Section 10(c).
(d) Each Class C Certificate will bear
legends substantially in the following form:
EACH PURCHASER REPRESENTS AND WARRANTS
FOR THE BENEFIT OF METRIS RECEIVABLES, INC.
AND THE TRUSTEE THAT SUCH PURCHASER IS NOT (I) AN EMPLOYEE BENEFIT
PLAN (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED ("ERISA")) THAT IS SUBJECT TO THE
PROVISIONS OF TITLE I OF ERISA, (II) A PLAN DESCRIBED IN SECTION
4975(E)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), (III) A GOVERNMENTAL PLAN, AS DEFINED IN SECTION 3(32) OF
ERISA, SUBJECT TO ANY FEDERAL, STATE OR LOCAL LAW WHICH IS, TO A
MATERIAL EXTENT, SIMILAR TO THE PROVISIONS OF SECTION 406 OF ERISA OR
SECTION 4975 OF THE CODE, (IV) AN ENTITY WHOSE UNDERLYING ASSETS
INCLUDE PLAN ASSETS (AS DEFINED IN 29 C.F.R. SECTION 2510.301-1 OR
OTHERWISE UNDER ERISA) BY REASON OF A PLAN'S INVESTMENT IN THE ENTITY
OR (V) A PERSON INVESTING PLAN ASSETS OF ANY SUCH PLAN
(INCLUDING WITHOUT LIMITATION, FOR PURPOSES OF CLAUSE (IV) AND THIS
CLAUSE (V), ANY INSURANCE COMPANY GENERAL ACCOUNT, BUT EXCLUDING ANY
ENTITY REGISTERED UNDER THE INVESTMENT COMPANY
ACT OF 1940, AS AMENDED).
THIS CERTIFICATE MAY NOT BE ACQUIRED, SOLD,
TRADED OR TRANSFERRED BY A PERSON WHO IS NOT EITHER
(A)(I) A CITIZEN OR RESIDENT OF THE UNITED STATES,
(II) A CORPORATION, PARTNERSHIP OR OTHER ENTITY
ORGANIZED IN OR UNDER THE LAWS OF THE UNITED STATES
OR ANY POLITICAL SUBDIVISION THEREOF OR (III) A
PERSON NOT DESCRIBED IN (I) OR (II) WHOSE OWNERSHIP
OF THE CLASS C CERTIFICATES IS EFFECTIVELY CONNECTED
WITH SUCH PERSON'S CONDUCT OF A TRADE OR BUSINESS
WITHIN THE UNITED STATES (WITHIN THE MEANING OF THE
CODE) AND ITS OWNERSHIP OF ANY INTEREST IN A CLASS C
CERTIFICATE WILL NOT RESULT IN ANY WITHHOLDING
OBLIGATION WITH RESPECT TO ANY PAYMENTS WITH RESPECT
TO THE CLASS C CERTIFICATES BY ANY PERSON (OTHER
THAN WITHHOLDING, IF ANY, UNDER SECTION 1446 OF THE
CODE) OR (B) AN ESTATE THE INCOME OF WHICH IS
INCLUDIBLE IN GROSS INCOME FOR UNITED STATES FEDERAL
INCOME TAX PURPOSES OR ANY TRUST IF A COURT WITHIN
THE UNITED STATES IS ABLE TO EXERCISE PRIMARY SUPERVISION OVER THE
ADMINISTRATION OF THE TRUST AND ONE OR MORE UNITED
STATES FIDUCIARIES HAVE THE AUTHORITY TO CONTROL
ALL SUBSTANTIAL DECISIONS OF THE TRUST.
THIS CERTIFICATE MAY NOT BE ACQUIRED,
SOLD, TRADED, TRANSFERRED, ASSIGNED,
PARTICIPATED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED, NOR MAY AN
INTEREST IN THIS CERTIFICATE BE MARKETED, ON OR THROUGH (I) AN
"ESTABLISHED SECURITIES MARKET" WITHIN THE MEANING OF SECTION
7704(B)(1) OF THE CODE AND ANY PROPOSED, TEMPORARY OR FINAL TREASURY
REGULATION THEREUNDER, INCLUDING, WITHOUT LIMITATION, AN OVER-THE-
COUNTER-MARKET OR AN INTERDEALER QUOTATION SYSTEM THAT REGULARLY
DISSEMINATES FIRM BUY OR SELL QUOTATIONS OR (II) A "SECONDARY MARKET"
WITHIN THE MEANING OF SECTION 7704(B)(2) OF THE CODE AND ANY PROPOSED,
TEMPORARY OR FINAL TREASURY REGULATION THEREUNDER, INCLUDING A MARKET
WHEREIN INTERESTS IN THE CLASS C CERTIFICATES ARE REGULARLY QUOTED BY
ANY PERSON MAKING A MARKET IN SUCH INTERESTS AND A MARKET WHEREIN ANY
PERSON REGULARLY MAKES AVAILABLE BID OR OFFER QUOTES WITH RESPECT TO
INTERESTS IN THE CLASS C CERTIFICATES AND STANDS READY TO EFFECT BUY
OR SELL TRANSACTIONS AT THE QUOTED PRICES FOR ITSELF OR ON BEHALF OF
OTHERS.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
STATE SECURITIES LAW. THE HOLDER HEREOF, BY PURCHASING THIS
CERTIFICATE, AGREES THAT THIS CERTIFICATE MAY BE REOFFERED, RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE
SECURITIES ACT AND OTHER
APPLICABLE LAWS AND ONLY (1) TO THE TRANSFEROR, (2) TO A LIMITED NUMBER OF
INSTITUTIONAL "ACCREDITED INVESTORS" (AS
DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE
SECURITIES ACT) AND IN A TRANSACTION EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
(UPON DELIVERY OF THE DOCUMENTATION REQUIRED BY THE
POOLING AND SERVICING AGREEMENT AND, IF THE TRUSTEE
SO REQUIRES, AN OPINION OF COUNSEL SATISFACTORY TO
THE TRUSTEE) OR (3) PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT TO A PERSON THAT THE HOLDER
REASONABLY BELIEVE IS A QUALIFIED INSTITUTIONAL
BUYER WITHIN THE MEANING OF RULE 144A ("QIB")
PURCHASING FOR ITS OWN ACCOUNT OR A QIB PURCHASING
FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER HAS
INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE,
PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE
ON RULE 144A. EACH CERTIFICATE OWNER BY ACCEPTING A
BENEFICIAL INTEREST IN THIS CERTIFICATE IS DEEMED TO
REPRESENT THAT IT IS EITHER A QIB PURCHASING FOR ITS
OWN ACCOUNT, A QIB PURCHASING FOR THE ACCOUNT OF
ANOTHER QIB OR AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR
(7) UNDER THE SECURITIES ACT). THIS CERTIFICATE
WILL NOT BE ACCEPTED FOR REGISTRATION OF TRANSFER
EXCEPT UPON PRESENTATION OF EVIDENCE
SATISFACTORY TO THE TRANSFER AGENT AND
REGISTRAR THAT THE RESTRICTIONS ON TRANSFER SET
FORTH IN THE SERIES 1997-1 SUPPLEMENT HAVE BEEN
COMPLIED WITH. THIS CERTIFICATE MAY NOT BE
REOFFERED, RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED WITHOUT THE PRIOR WRITTEN CONSENT
OF THE TRANSFEROR AND UNLESS AND UNTIL THE
TRUSTEE SHALL HAVE RECEIVED THE CERTIFICATIONS
REQUIRED BY THE SERIES 1997-1 SUPPLEMENT.
(e) Upon surrender for registration of transfer of a Class
C Certificate at the office of the Transfer Agent and Registrar,
accompanied by a certification by the Class C Certificateholder
substantially in the form attached as Exhibit C, executed by the registered
owner, in person or by such Class C Certificate-holder's attorney thereunto
duly authorized in writing, and receipt by the Trustee of the written
consent of the Transferor to such transfer, such Class C Certificate shall
be transferred upon the Certificate Register, and the Transferor shall
execute, and the Trustee shall authenticate and deliver, in the name of the
designated transferees one or more new registered Class C Certificates of
any authorized denominations and of a like aggregate principal amount and
tenor. Such transfers of Class C Certificates shall be subject to the
restrictions set forth in this Section 10, to such other restrictions as
shall be set forth in the text of the Class C Certificates and to such
reasonable regulations as may be prescribed by the Transferor. Successive
registrations and registrations of transfers as aforesaid may be made from
time to time as desired, and each such registration shall be noted on
the Certificate Register. (f) Each Class D Certificate will bear
legends substantially in the following form:
THIS CERTIFICATE WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THIS
CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR ANY
APPLICABLE STATE SECURITIES LAW OF ANY STATE AND MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS REGISTERED PURSUANT TO
OR EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT AND ANY OTHER
APPLICABLE SECURITIES LAW. THE TRANSFEROR SHALL BE PROHIBITED FROM
TRANSFERRING ANY INTEREST IN OR PORTION OF THIS CERTIFICATE.
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE BENEFIT OF METRIS
RECEIVABLES, INC. AND THE TRUSTEE THAT SUCH PURCHASER IS NOT (I) AN
EMPLOYEE BENEFIT PLAN (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA")) THAT IS
SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (II) A PLAN DESCRIBED
IN SECTION 4975(E)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
(THE "CODE"), (III) A GOVERNMENTAL PLAN, AS DEFINED IN SECTION 3(32)
OF ERISA, SUBJECT TO ANY FEDERAL, STATE OR LOCAL LAW WHICH IS, TO A
MATERIAL EXTENT, SIMILAR TO THE PROVISIONS OF SECTION 406 OF ERISA OR
SECTION 4975 OF THE CODE, (IV) AN ENTITY WHOSE UNDERLYING ASSETS
INCLUDE PLAN ASSETS (AS DEFINED IN 29 C.F.R. SECTION 2510.3-101 OR
OTHERWISE UNDER ERISA) BY REASON OF A PLAN'S INVESTMENT IN THE ENTITY
OR (V) A PERSON INVESTING
PLAN ASSETS OF ANY SUCH PLAN (INCLUDING WITHOUT LIMITATION, FOR
PURPOSES OF CLAUSE (IV) AND THIS CLAUSE (V), ANY INSURANCE COMPANY
GENERAL ACCOUNT, BUT EXCLUDING ANY ENTITY REGISTERED UNDER THE
INVESTMENT COMPANY ACT OF 1940, AS AMENDED).
SECTION 11. Compliance with Withholding Requirements.
Notwithstanding any other provision of the Agreement, the Trustee and any
Paying Agent shall comply with all Federal withholding requirements with
respect to payments to the Class C Certificateholders of interest, original
issue discount, or other amounts that the Trustee, any Paying Agent, the
Servicer or the Transferor reasonably believes are applicable under the
Internal Revenue Code. The consent of the Class C Certificateholders shall
not be required for any such withholding. In the event the Trustee or the
Paying Agent withholds any amount from payments made to any Class C
Certificateholder pursuant to federal withholding requirements, the Trustee
or the Paying Agent shall indicate to such Class C Certificateholder the
amount withheld and all such amounts shall be deemed to have been paid to
such Class C Certificateholders and the Class C Certificateholders shall
have no claim therefor.
SECTION 12. Tax Characterization of the Class C Certificates.
It is the intention of the parties hereto that the Class C Certificates be
treated for tax purposes as indebtedness. In the event that the Class C
Certificates are not so treated, it is the intention of
the parties that the Class C Certificates be treated as
an interest in a partnership that owns the Receivables. In the event that
the Class C Certificates are treated as an interest in a partnership, it is
the intention of the parties that interest payable on the Class C
Certificates be treated as guaranteed payment and, if for any reason it is
not so treated, that the holders of the Class C Certificates be specially
allocated gross interest income equal to the interest accrued during each
Interest Accrual Period on the Class C Certificates.
SECTION 13. Ratification of Agreement. (a) As supplemented by
this Series Supplement, the Agreement is in all respects ratified and
confirmed and the Agreement as so supplemented by this Series Supplement
shall be read, taken, and construed as one and the same instrument. The
Transferor hereby confirms the conveyance of the Trust Property to the
Trustee for the benefit of the Series 1997-1 Certificateholders.
(b) For so long as any of the Class C Certificates are
"restricted securities" within the meaning of Rule 144(a)(3) under the
Securities Act and during any period in which the Trust is not subject to
Section 13 or 15(d) of the Exchange Act, each of the Transferor, the
Servicer and the Trustee agree to cooperate with each other to provide to
any Class C Certificateholder, and to any prospective purchaser of Class C
Certificates designated by such Class C Certificateholder upon the request
of such Class C Certificateholder or prospective purchaser, the information
required by Rule 144A(d)(4) under the Securities Act.
SECTION 14. Registration of the Class A
Certificates under the Securities Exchange Act of 1934. The Transferor
shall cause the Class A Certificates to be registered under the Securities
Exchange Act of 1934, as amended, on or before March 31, 1998 and
thereafter maintain such registration until the Class A Invested Amount has
been reduced to zero.
SECTION 15. Counterparts. This Series
Supplement may be executed in any number of counterparts, each of which so
executed shall be deemed to be an original, but all of such counterparts
shall together constitute but one and the same instrument.
SECTION 16. GOVERNING LAW. THIS SERIES SUPPLEMENT 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 17. Instructions in Writing. All instructions or other
communications given by the Servicer or any other person to the Trustee
pursuant to this Series Supplement shall be in writing, and, with respect
to the Servicer, may be included in a Daily
Report or Settlement Statement. SECTION 18. Amendment for FASIT Purposes.
Each Series 1997-1 Certificateholder, by acquiring an
interest in a Series 1997-1 Certificate, is deemed to
consent to any amendment to the Agreement or this Series
Supplement necessary for the Transferor to elect for the
Trust or any portion thereof to be treated as a financial
asset securitization investment trust ("FASIT") within
the meaning of Section 860L of the Internal Revenue Code
(or any successor provision thereto), provided, that such
election may not be made unless the Transferor delivers
an opinion to the Trustee and the Servicer to the effect
that such election will not adversely affect the Federal
or Applicable Tax State income tax characterization of
any outstanding Series of Investor Certificates or the
taxability of the Trust under Federal or Applicable Tax
State income tax laws.
SECTION 19. Paired Series. Subject to
obtaining confirmation by each Rating Agency of the then
existing ratings of each class of Certificates which is
then rated, and prior to the commencement of the Early
Amortization Period, the Certificates may be paired with
one or more other Series (each a "Paired Series"). Each
Paired Series either will be pre-funded with an initial
deposit to a pre-funding account in an amount up to the
initial principal balance of such Paired Series and
primarily from the proceeds of the sale of such Paired
Series or will have a variable principal amount. Any
such pre-funding account will be held for the benefit of
such Paired Series and not for the benefit of the
Certificateholders. As principal is paid with respect to
the Certificates, either (i) in the case of a prefunded
Paired Series, an equal amount of funds on deposit in any
pre-funding account for such pre-funded Paired Series
will be released (which funds will be distributed to the
Transferor) or (ii) in the case of a Paired Series having
a variable principal amount, an interest in such variable
Paired Series in an equal or lesser amount may be sold by
the Trust (and the proceeds thereof will be distributed
to the Transferor) and, in either case, the invested
amount in the Trust of such
Paired Series will increase by up to a corresponding
amount. Upon payment in full of the Certificates,
assuming that there have been no unreimbursed chargeoffs
with respect to any related Paired Series, the aggregate
invested amount of such related Paired Series will have
been increased by an amount up to an aggregate amount
equal to the Invested Amount paid to the
Certificateholders since the issuance of such Paired
Series. The issuance of a Paired Series will be subject
to the conditions described in subsection 6.9(b) of the
Agreement.
IN WITNESS WHEREOF, the Transferor, the
Servicer and the Trustee have caused this Series 1997-1
Supplement 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:
Exhibit A-1
FORM OF CLASS A INVESTOR CERTIFICATE
UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO. HAS AN INTEREST HEREIN.
No. ___ $_________
CUSIP NO. 0000XXX0
METRIS MASTER TRUST
6.87% ASSET BACKED
CERTIFICATE, SERIES 1997-1, CLASS A
Evidencing an undivided interest in a trust, the corpus
of which consists of receivables generated from time to time in
the ordinary course of business from a portfolio of revolving
consumer credit card accounts transferred or to be transferred by
Metris Receivables, Inc. (the "Transferor") and other assets and
interests constituting the Trust under the 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 _________ (the
"Certificateholder") is the registered owner of a fractional
undivided interest in the Metris Master Trust (the "Trust") issued
pursuant to the Pooling and Servicing Agreement, dated as of May
26, 1995 (the "Pooling and Servicing Agreement"; such term to
include any amendment thereto) by and between the Transferor,
Direct Merchants Credit Card Bank, National Association, as
Servicer (the "Servicer"), and The Bank of New York (Delaware) as
Trustee (the "Trustee"), and the Series 1997-1 Supplement, dated
as of May 8, 1997 (the "Series 1997-1 Supplement"), among the
Transferor, the Servicer and the Trustee. The Pooling and
Servicing Agreement, as supplemented by the Series 1997-1
Supplement, is herein referred to as the "Agreement"). The corpus
of the Trust consists of all of the Transferor's right, title and
interest in, to and under the Trust Property
(as defined in the Agreement). This Certificate does not purport
to summarize the Agreement and reference is made
to that Agreement for information with respect to the interests,
rights, benefits, obligations, proceeds, and duties evidenced
hereby and the rights, duties and obligations of the
Trustee. To the extent not defined herein, the capitalized
terms used herein have the meanings ascribed to them in the
Agreement. This Certificate is one of a series of
Certificates entitled "Metris Master Trust 6.87% Asset Backed
Certificates, Series 1997-1, Class A" (the "Class A
Certificates"), each of which represents a fractional
undivided interest in the Trust, and is issued under and is
subject to the terms, provisions and conditions of the
Agreement, to which Agreement, as amended from time to time,
the Certificateholder by virtue of the acceptance hereof
assents and by which the Certificateholder is bound.
The Transferor has structured the Agreement, the
Class A Certificates, the Metris Master Trust 7.11% Asset
Backed Certificates, Series 1997-1, Class B (the "Class B
Certificates" and collectively with the Class A Certificates
the "Offered Certificates") and the Metris Master Trust
Floating Rate Asset Backed Certificates, Series 1997-1, Class
C (the "Class C Certificates") with the intention that the
Offered Certificates and the Class C Certificates will
qualify under applicable tax law as indebtedness, and both
the Transferor and each holder of a Class A Certificate (a
"Class A Certificateholder") or any interest therein by
acceptance of its Certificate or any interest therein, agrees
to treat the Class A Certificates for purposes of federal,
state and local income or franchise taxes and any other tax
imposed on or measured by income, as indebtedness.
No principal will be payable to the Class A
Certificateholders until the earlier of the Expected Final
Payment Date and, upon the occurrence of a Pay Out Event, the
Distribution Date following the Monthly Period in which the
Pay Out Event occurs. No principal will be payable to the
Class B Certificateholders, Class C Certificateholders or
Class D Certificateholders (other than with respect to Class
D Excess Amounts) until all principal payments have been made
to the Class A Certificateholders.
Interest on the Class A Certificates will be
payable on June 20, 1997 and on the 20th day of each month
thereafter or, if such day is not a business day, on the next
succeeding business day (each, a "Distribution Date"), in an
amount equal to one-twelfth of the product of the Class A
Certificate Rate and the outstanding principal balance of the
Class A Certificates as of the close of business on the first
day of such Interest Accrual Period (or in the case of the
initial Distribution Date, the Class A Initial Invested
Amount). Interest for the first Distribution Date will
include accrued interest at the applicable Certificate Rate
(the "Certificate Rates") from the Closing Date through June
19, 1997. Interest will be calculated on the basis of a 360-
day year of twelve
30-day months. Interest payments on the Class A Certificates
on each Distribution Date will be funded from Available
Series 1997-1 Finance Charge Collections with respect to
the preceding Monthly Period (or, with respect to the
first Distribution Date, such collections from and
including the Closing Date to and including May 31, 1997
plus the amount of the initial deposit to the Interest
Funding Account to be made on the Closing Date) and from
certain other funds allocated as set forth in the Pooling
and Servicing Agreement to the respective classes of the
Certificates and deposited on each business day during
such Monthly Period in the Interest Funding Account.
"Class A Invested Amount" shall mean, when used
with respect to any Business Day, the greater of (x) zero
and (y) an amount equal to (a) the Class A Initial
Invested Amount less the Class A Percentage of the
initial deposit to the Pre-Funding Account plus the Class
A Percentage of any withdrawals from the PreFunding
Account (i) during the Funding Period in connection with
the addition of Receivables to the Trust or (ii) at the
end of the Funding Period for deposit into the Excess
Funding Account, minus (b) the aggregate amount of
principal payments (except principal payments made from
the Pre-Funding Account) made to Class A
Certificateholders through and including such Business
Day, minus (c) the aggregate amount of Class A Investor
Charge-Offs for all prior Distribution Dates, plus (d)
the sum of the aggregate amount allocated with respect to
Class A Investor Charge-Offs and available on all prior
Distribution Dates pursuant to subsection 4.9(a)(vii) of
the Agreement and, with respect to such subsection,
pursuant to subsections 4.10(a) and (b),
4.16(a), (b) and (c), 4.19(b) and 4.20(b), (c) and (d) of
the Agreement, for the purpose of reinstating amounts
reduced pursuant to the foregoing clause (c).
During the period from and including the
Closing Date to but excluding the earlier of (x) the
first day for which the Invested Amount equals the Full
Invested Amount; (y) the first day on which a Pay Out
Event is deemed to occur; and (z) the first day of the
September 1997 Monthly Period (the "Funding Period"), the
Pre-Funded Amount will be maintained in a trust account
to be established with The Bank of New York (the "Pre-
Funding Account"). The "Pre-Funded Amount" will equal the
Initial Pre-Funded Amount, minus the amounts of any
increases in the Invested Amount during the Funding
Period pursuant to Section 4.15 of the Agreement, minus
the amount of any principal losses on funds on deposit in
the Pre-Funding Account and minus the amount withdrawn
from the Pre-Funding Account and deposited in the Excess
Funding Account. On the Closing Date a cash deposit will
be made to the Pre-Funding Account such that the amount
of Principal Receivables plus the amount of such cash
deposit on such date will at least equal the sum of the
initial outstanding principal balances of the Class A
Certificates, the Class B Certificates, the Class C
Certificates and the Class D Certificates and the sum of
the then current outstanding principal balance of all
Series (excluding the Series 1997-1 Certificates). Funds
on deposit in the Pre-Funding Account will be invested by
the Trustee at the direction of the Servicer in Cash
Equivalents.
During the Funding Period, funds on deposit in
the Pre-Funding Account will be withdrawn and paid to the
Transferor to the extent of any increases in the Invested
Amount as a result of the increase in the amount of
Receivables in the Trust. In the event of the occurrence
of a Pay Out Event during the Funding Period, the amounts
remaining on deposit in the Pre-Funding Account, will be
payable as principal first to the Class A
Certificateholders until the Class A Invested Amount is
paid in full and then to the Class B Certificateholders
until the Class B Invested Amount is paid in full and
then to the Class C Certificateholders until the Class C
Invested Amount is paid in full. Should the Pre-Funded
Amount be greater than zero on the first Business Day of
the September 1997 Monthly Period, such amount will be
deposited in the Excess Funding Account, and the Class A
Invested Amount, Class B Invested Amount and Class C
Invested Amount shall be increased pro rata in an
aggregate amount equal to the amount of such deposit.
Subject to the Agreement, payments of principal
are limited to the unpaid Class A Invested Amount of the
Class A Certificates, which may be less than the unpaid
balance of the Class A Certificates pursuant to the terms
of the Agreement. All principal on the Class A
Certificates is due and payable no later than the October
2005 Distribution Date (or if such day is not a Business
Day, the next succeeding Business Day) (the "Scheduled
Series 1997-1 Termination Date"). After the earlier to
occur of (i) the Scheduled Series 1997-1 Termination Date
and (ii) the day after the Distribution Date on which the
Series 1997-1 Certificates are paid in full (the "Series
1997-1 Termination Date") neither the
Trust nor the Transferor will have any further obligation
to distribute principal or interest on the Class A
Certificates. In the event that the Class A Invested
Amount is greater than zero on the Series 19971
Termination Date, the Trustee will sell or cause to be
sold, to the extent necessary, an amount of interests in
the Receivables or certain of the Receivables up to 110%
of the Class A Invested Amount, the Class B Invested
Amount, the Class C Invested Amount and the Class D
Invested Amount at the close of business on such date
(but not more than the total amount of Receivables
allocable to the Investor Certificates), and shall pay
the proceeds to the Class A Certificateholders pro rata
in final payment of the Class A Certificates, then to the
Class B Certificateholders pro rata in final payment of
the Class B Certificates, then to the Class C
Certificateholders pro rata in final payment of the Class
C Certificates and finally to the Class D
Certificateholders pro rata in final payment of the Class
D Certificates.
Unless the certificate of authentication hereon
has been executed by or on behalf of the Trustee, by
manual signature, this Certificate shall not be entitled
to any benefit under the Agreement, or be valid for any
purpose.
IN WITNESS WHEREOF, the Transferor has caused
this Certificate to be duly executed under its official
seal.
METRIS RECEIVABLES, INC.
By:_______________________
Name:
Title:
Dated:
CERTIFICATE OF AUTHENTICATION
This is one of the Class A Certificates
referred to in the within-mentioned Pooling and Servicing
Agreement.
THE BANK OF NEW YORK
By:_______________________
Name:
Title:
Exhibit A-2
FORM OF CLASS B INVESTOR CERTIFICATE
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO THE TRUSTEE OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO. HAS AN INTEREST HEREIN.
No. ___ $__________
CUSIP NO. 00000XXX0
METRIS MASTER TRUST
7.11% ASSET BACKED
CERTIFICATE, SERIES 1997-1, CLASS B
Evidencing an undivided interest in a trust, the corpus of
which consists of receivables generated from time to time in the
ordinary course of business from a portfolio of revolving consumer
credit card accounts transferred or to be transferred by Metris
Receivables, Inc. (the "Transferor") and other assets and interests
constituting the Trust under the 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 __________ (the
"Certificateholder") is the registered owner of a fractional
undivided interest in the Metris Master Trust (the "Trust") issued
pursuant to the Pooling and Servicing Agreement, dated as of May 26,
1995 (the "Pooling and Servicing Agreement"; such term to include any
amendment thereto) by and between the Transferor, Direct Merchants
Credit Card Bank, National Association, as the Servicer (the
"Servicer"), and The Bank of New York (Delaware), as Trustee (the
"Trustee"), and the Series 1997-1 Supplement, dated as of May 8, 1997
(the "Series 1997-1 Supplement"), among the Transferor, the Servicer
and the Trustee. The Pooling and Servicing Agreement, as
supplemented by the Series 1997-1 Supplement, is herein referred to
as the "Agreement". The corpus of the Trust consists of all of the
Transferor's right, title and interest in, to and under the Trust
Property (as defined in the Agreement).
This Certificate does not purport to summarize the
Agreement and reference is made to that Agreement for information
with respect to the interests, rights, benefits, obligations,
proceeds, and duties evidenced hereby and the rights, duties and
obligations of the Trustee. To the extent not defined herein, the
capitalized terms used herein have the meanings ascribed to them in
the Agreement. This Certificate is one of a series of Certificates
entitled "Metris Master Trust 7.11% Asset Backed Certificates, Series
1997-1, Class B" (the "Class B Certificates"), each of which
represents a fractional undivided interest in the Trust, and is
issued under and is subject to the terms, provisions and conditions
of the Agreement, to which Agreement, as amended from time to time,
the Certificateholder by virtue of the acceptance hereof assents and
by which the Certificateholder is bound.
The Transferor has structured the Agreement, the Class B
Certificates, the Metris Master Trust 6.87% Asset Backed
Certificates, Series 1997-1, Class A (the "Class A Certificates" and
collectively with the Class B Certificates the "Offered
Certificates") and the Metris Master Trust Floating Rate Asset Backed
Certificates, Series 1997-1, Class C (the "Class C Certificates")
with the intention that the Offered Certificates will qualify under
applicable tax law as indebtedness, and both the Transferor and each
holder of a Class B Certificate (a "Class B Certificateholder") or
any interest therein by acceptance of its Certificate or any interest
therein, agrees to treat the Class B Certificates for purposes of
federal, state and local income or franchise taxes and any other tax
imposed on or measured by income, as indebtedness.
No principal will be payable to the Class B
Certificateholders until the earlier of the Expected Final Payment
Date and, upon the occurrence of a Pay Out Event, the Distribution
Date following the Monthly Period in which the Pay Out Event occurs
but in no event earlier than the Distribution Date either on or
following the Distribution Date on which the Class A Invested Amount
had been paid in full. No principal will be payable to the Class B
Certificateholders until all principal payments have been made to the
Class A Certificateholders. No principal payments will be made to
the Class C Certificateholders or Class D Certificateholders (other
than with respect to Class D Excess Amounts) until the Distribution
Date either on or following the Distribution Date on which the Class
B Invested Amount has been paid in full.
Interest on the Offered Certificates will be payable on
June 20, 1997 and on the 20th day of each month thereafter or, if
such day is not a business day, on the next succeeding business day
(each, a "Distribution Date"), in an amount equal to (i) with respect
to the Class A Certificates, one-twelfth of the product of the Class
A Certificate Rate and the outstanding principal balance of the Class
A Certificates as of the close of business on the first day of such
Interest Accrual Period (or in the case of the initial Distribution
Date, the Class A Initial Invested Amount) and (ii) with respect to
the Class B Certificates, one-twelfth of the product of the Class B
Certificate Rate and the outstanding principal balance of the Class B
Certificates as of the close of business on the first day of such
Interest Accrual Period (or in the case of the initial Distribution
Date, the Class B Initial Invested Amount). Interest for the first
Distribution Date will include accrued interest at the applicable
Certificate Rate (the "Certificate Rates") from the Closing Date
through June 19, 1997. Interest will be calculated on the basis of a
360-day year of twelve 30-day months.
Interest payments on the Class A Certificates on each
Distribution Date will be funded from Available Series 1997-1 Finance
Charge Collections with respect to the preceding Monthly Period (or,
with respect to the first Distribution Date, such collections from
and including the Closing Date to and including May 31, 1997 plus the
amount of the initial deposit to the Interest Funding Account to be
made on the Closing Date) and from certain other funds allocated as
set forth in the Pooling
and Servicing Agreement to the respective classes of the Certificates
and deposited on each business day during such Monthly Period in the
Interest Funding Account.
Subject to the prior payment of interest on the Class A
Certificates, interest payments on the Class B Certificates on each
Distribution Date will be funded from the portion of Available Series
1997-1 Finance Charge Collections with respect to the preceding
Monthly Period and from certain other funds allocated as set forth in
the Pooling and Servicing Agreement to the Class B Certificates and
deposited on each business day during such Monthly Period in the
Interest Funding Account.
"Class B Invested Amount" shall mean, when used with
respect to any Business Day, the greater of (x) zero and (y) an
amount equal to (a) the Class B Initial Invested Amount less the
Class B Percentage of the initial deposit to the Pre-Funding Account
plus the Class B Percentage of any withdrawals from the Pre-Funding
Account (i) during the Funding Period in connection with the addition
of Receivables to the Trust or (ii) at the end of the Funding Period
for deposit into the Excess Funding Account, minus (b) the aggregate
amount of principal payments (except principal payments made from the
Pre-Funding Account) made to Class B Certificateholders through and
including such Business Day, minus (c) the aggregate amount of Class
B Investor Charge-Offs for all prior Distribution Dates, minus (d)
the aggregate amount of Reallocated Class B Principal Collections for
which neither the Class D Invested Amount nor the Class C Invested
Amount has been reduced for all prior Business Days, and plus (e) the
sum of the aggregate amount allocated and available on all prior
Business Days pursuant to subsection 4.9(a)(x) of the Agreement and,
with respect to such subsection, pursuant to subsections 4.10(a) and
(b), 4.16(a) and (b), 4.19(b) and 4.20(b), (c) and (d) of the
Agreement, for the purpose of reinstating amounts reduced pursuant to
the
foregoing clauses (c) and (d). During the period from and including
the Closing Date to but excluding the earlier of (x) the
first day for which the Invested Amount equals the Full
Invested Amount; (y) the first day on which a Pay Out
Event is deemed to occur; and (z) the first day of the
September 1997 Monthly Period (the "Funding Period"), the
Pre-Funded Amount will be maintained in a trust account to
be established with The Bank of New York (the "Pre-Funding
Account"). The "Pre-Funded Amount" will equal the Initial
Pre-Funded Amount, minus the amounts of any increases in
the Invested Amount during the Funding Period pursuant to
Section 4.15 of the Agreement, minus the amount of any
principal losses on funds on deposit in the Pre-Funding
Account and minus the amount withdrawn from the Pre-
Funding Account and deposited in the Excess Funding
Account. On the Closing Date a cash deposit will be made
to the Pre-Funding Account such that the amount of
Principal Receivables plus the amount of such cash deposit
on such date will at least equal the sum of the initial
outstanding principal balances of the Class A
Certificates, the Class B Certificates, the Class C
Certificates and the Class D Certificates and the sum of
the then current outstanding principal balance of all
Series (excluding the Series 1997-1 Certificates). Funds
on deposit in the Pre-Funding Account will be invested by
the Trustee at the direction of the Servicer in Cash
Equivalents.
During the Funding Period, funds on deposit in
the Pre-Funding Account will be withdrawn and paid to the
Transferor to the extent of any increases in the Invested
Amount as a result of the increase in the amount of
Receivables in the Trust. In the event of the occurrence
of a Pay Out Event during the Funding Period, the amounts
remaining on deposit in the Pre-Funding Account, will be
payable as principal first to the Class A
Certificateholders until the Class A Invested Amount is
paid in full and then to the Class B Certificateholders
until the Class B Invested Amount is paid in full and then
to the Class C Certificateholders until the Class C
Invested Amount is paid in full. Should the Pre-Funded
Amount be greater than zero on the first Business Day of
the September 1997 Monthly Period, such amount will be
deposited in the Excess Funding Account, and the Class A
Invested Amount, Class B Invested Amount and Class C
Invested Amount shall be increased pro rata in an
aggregate amount equal to the amount of such deposit.
Subject to the Agreement, payments of principal
are limited to the unpaid Class B Invested Amount of the
Class B Certificates, which may be less than the unpaid
balance of the Class B Certificates pursuant to the terms
of the Agreement. All principal on the Class B
Certificates is due and payable no later than the October
2005 Distribution Date (or if such day is not a Business
Day, the next succeeding Business Day) (the "Scheduled
Series 1997-1 Termination Date"). After the earlier to
occur of (i) the Scheduled Series 1997-1 Termination Date
and (ii) the day after the Distribution Date on which the
Series 1997-1 Certificates are paid in full (the "Series
1997-1 Termination Date") neither the Trust nor the
Transferor will have any further obligation to distribute
principal or interest on the Class B Certificates. In the
event that the Class B Invested Amount is greater than
zero on the Series 1997-1 Termination Date, the Trustee
will sell or cause to be sold, to the extent necessary, an
amount of interests in the Receivables or certain of the
Receivables up to 110% of the Class A Invested Amount, the
Class B Invested Amount, the Class C Invested Amount and
the Class D Invested Amount at the close of business on
such date (but not more than the total amount of
Receivables allocable to the Investor Certificates), and
shall pay the proceeds to the Class A Certificateholders
pro rata - in final payment of the Class A Certificates,
then to the Class B Certificateholders pro rata in final
payment of the Class B Certificates, then to the Class C
Certificateholders pro rata in final payment of the Class
C Certificates and finally to the Class D
Certificateholders pro rata in final payment of the Class
D Certificates.
Unless the certificate of authentication hereon
has been executed by or on behalf of the Trustee, by
manual signature, this Certificate shall not be entitled
to any benefit under the Agreement, or be valid for any
purpose.
IN WITNESS WHEREOF, the Transferor has caused
this Certificate to be duly executed under its official
seal.
METRIS RECEIVABLES, INC.
By:______________________
Name:
Title:
Dated:
CERTIFICATE OF AUTHENTICATION
This is one of the Class A Certificates referred
to in the within-mentioned Pooling and Servicing
Agreement.
THE BANK OF NEW YORK
By:_______________________
Name:
Title:
Exhibit A-3
FORM OF CLASS C INVESTOR CERTIFICATE
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE
BENEFIT OF METRIS RECEIVABLES, INC. AND THE TRUSTEE
THAT SUCH PURCHASER IS NOT (I) AN EMPLOYEE BENEFIT
PLAN (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
("ERISA")) THAT IS SUBJECT TO THE PROVISIONS OF TITLE
I OF ERISA, (II) A PLAN DESCRIBED IN SECTION
4975(E)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED (THE "CODE"), (III) A GOVERNMENTAL PLAN, AS
DEFINED IN SECTION 3(32) OF ERISA, SUBJECT TO ANY
FEDERAL, STATE OR LOCAL LAW WHICH IS, TO A MATERIAL
EXTENT, SIMILAR TO THE PROVISIONS OF SECTION 406 OF
ERISA OR SECTION 4975 OF THE CODE, (IV) AN ENTITY
WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS (AS
DEFINED IN 29 C.F.R. SECTION 2510.301-1 OR OTHERWISE
UNDER ERISA) BY REASON OF A PLAN'S INVESTMENT IN THE
ENTITY OR (V) A PERSON INVESTING PLAN ASSETS OF ANY
SUCH PLAN (INCLUDING WITHOUT LIMITATION, FOR PURPOSES
OF CLAUSE (IV) AND THIS CLAUSE (V), ANY INSURANCE
COMPANY GENERAL ACCOUNT, BUT EXCLUDING ANY ENTITY
REGISTERED UNDER THE INVESTMENT COMPANY ACT OF 1940,
AS AMENDED).
THIS CERTIFICATE MAY NOT BE ACQUIRED, SOLD,
TRADED OR TRANSFERRED BY A PERSON WHO IS NOT EITHER
(A)(I) A CITIZEN OR RESIDENT OF THE UNITED STATES,
(II) A CORPORATION, PARTNERSHIP OR OTHER ENTITY
ORGANIZED IN OR UNDER THE LAWS OF THE UNITED STATES
OR ANY POLITICAL SUBDIVISION THEREOF OR (III) A
PERSON NOT DESCRIBED IN (I) OR (II) WHOSE OWNERSHIP
OF THE CLASS C CERTIFICATES IS EFFECTIVELY CONNECTED
WITH SUCH PERSON'S CONDUCT OF A TRADE OR BUSINESS
WITHIN THE UNITED STATES (WITHIN THE MEANING OF THE
CODE) AND ITS OWNERSHIP OF ANY INTEREST IN A CLASS C
CERTIFICATE WILL NOT RESULT IN ANY WITHHOLDING
OBLIGATION WITH RESPECT TO ANY PAYMENTS WITH RESPECT
TO THE CLASS C CERTIFICATES BY ANY PERSON (OTHER THAN
WITHHOLDING, IF ANY, UNDER SECTION 1446 OF THE CODE)
OR (B) AN ESTATE THE INCOME OF WHICH IS INCLUDIBLE IN
GROSS INCOME FOR UNITED STATES FEDERAL INCOME TAX
PURPOSES OR ANY TRUST IF A COURT WITHIN
THE UNITED STATES IS ABLE TO EXERCISE PRIMARY
SUPERVISION OVER THE ADMINISTRATION OF THE TRUST AND
ONE OR MORE UNITED STATES FIDUCIARIES HAVE THE
AUTHORITY TO CONTROL ALL SUBSTANTIAL DECISIONS OF THE
TRUST.
THIS CERTIFICATE MAY NOT BE ACQUIRED,
SOLD, TRADED, TRANSFERRED, ASSIGNED,
PARTICIPATED, PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED, NOR MAY AN INTEREST IN THIS
CERTIFICATE BE MARKETED, ON OR THROUGH (I) AN
"ESTABLISHED SECURITIES MARKET" WITHIN THE
MEANING OF SECTION 7704(B)(1) OF THE CODE AND
ANY PROPOSED, TEMPORARY OR FINAL TREASURY
REGULATION THEREUNDER, INCLUDING, WITHOUT
LIMITATION, AN OVER-THE-COUNTER-MARKET OR AN
INTERDEALER QUOTATION SYSTEM THAT REGULARLY
DISSEMINATES FIRM BUY OR SELL QUOTATIONS OR (II)
A "SECONDARY MARKET" WITHIN THE MEANING OF
SECTION 7704(B)(2) OF THE CODE AND ANY PROPOSED,
TEMPORARY OR FINAL TREASURY REGULATION
THEREUNDER, INCLUDING A MARKET WHEREIN INTERESTS
IN THE CLASS C CERTIFICATES ARE REGULARLY QUOTED
BY ANY PERSON MAKING A MARKET IN SUCH INTERESTS
AND A MARKET WHEREIN ANY PERSON REGULARLY MAKES
AVAILABLE BID OR OFFER QUOTES WITH RESPECT TO
INTERESTS IN THE CLASS C CERTIFICATES AND STANDS
READY TO EFFECT BUY OR SELL TRANSACTIONS AT THE
QUOTED PRICES FOR ITSELF OR ON BEHALF OF OTHERS.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT
BE REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAW. THE HOLDER HEREOF, BY
PURCHASING THIS CERTIFICATE, AGREES THAT THIS
CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH
THE SECURITIES ACT AND OTHER APPLICABLE LAWS AND
ONLY (1) TO THE TRANSFEROR, (2) TO A LIMITED
NUMBER OF INSTITUTIONAL "ACCREDITED INVESTORS"
(AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7)
UNDER THE SECURITIES ACT) AND IN A TRANSACTION
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (UPON DELIVERY OF THE
DOCUMENTATION REQUIRED BY THE POOLING AND
SERVICING AGREEMENT AND, IF THE TRUSTEE SO
REQUIRES, AN OPINION OF COUNSEL SATISFACTORY TO
THE TRUSTEE) OR (3) PURSUANT TO RULE 144A UNDER
THE SECURITIES ACT TO A PERSON THAT THE HOLDER
REASONABLY BELIEVE IS A QUALIFIED INSTITUTIONAL
BUYER WITHIN THE MEANING OF RULE 144A ("QIB")
PURCHASING FOR ITS OWN ACCOUNT OR A QIB
PURCHASING FOR THE ACCOUNT OF A QIB, WHOM THE
HOLDER HAS INFORMED, IN EACH CASE, THAT THE
REOFFER, RESALE, PLEDGE OR OTHER TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A. EACH
CERTIFICATE OWNER BY ACCEPTING A BENEFICIAL
INTEREST IN THIS CERTIFICATE IS DEEMED TO
REPRESENT THAT IT IS EITHER A QIB PURCHASING FOR
ITS OWN ACCOUNT, A QIB PURCHASING FOR THE
ACCOUNT OF ANOTHER QIB OR AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES
ACT). THIS CERTIFICATE WILL NOT BE ACCEPTED FOR
REGISTRATION OF TRANSFER EXCEPT
UPON PRESENTATION OF EVIDENCE SATISFACTORY TO THE
TRANSFER AGENT AND REGISTRAR THAT THE RESTRICTIONS ON
TRANSFER SET FORTH IN THE SERIES 1997-1 SUPPLEMENT
HAVE BEEN COMPLIED WITH. THIS CERTIFICATE MAY NOT BE
REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED
WITHOUT THE PRIOR WRITTEN CONSENT OF THE TRANSFEROR
AND UNLESS AND UNTIL THE TRUSTEE SHALL HAVE RECEIVED
THE CERTIFICATIONS REQUIRED BY THE SERIES 1997-1
SUPPLEMENT.
No. ___ $_________
METRIS MASTER TRUST
FLOATING RATE ASSET BACKED
CERTIFICATE, SERIES 1997-1, CLASS C
Evidencing an undivided interest in a trust, the
corpus of which consists of receivables generated from
time to time in the ordinary course of business from a
portfolio of revolving consumer credit card accounts
transferred or to be transferred by certain subsidiaries
of Metris Receivables, Inc. (the "Transferor") and other
assets and interests constituting the Trust under the
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 ___________________ (the
"Certificateholder") is the registered owner of a
fractional undivided interest in the Metris Master Trust
(the "Trust") issued pursuant to the Pooling and Servicing
Agreement, dated as of May 26, 1995 (the "Pooling and
Servicing Agreement"; such term to include any amendment
thereto) by and between the Transferor, Direct Merchants
Credit Card Bank, National Association as the Servicer
(the "Servicer"), and The Bank of New York (Delaware), as
Trustee (the "Trustee"), and the Series 1997-1 Supplement,
dated as of May 8, 1997 (the "Series 1997-1 Supplement"),
among the Transferor, the Servicer and the Trustee. The
Pooling and Servicing Agreement, as supplemented by the
Series 1997-1 Supplement, is herein referred to as the
"Agreement." The corpus of the Trust consists of all of
the Transferor's right, title and interest in, to and
under the Trust Property (as defined in the Agreement).
This Certificate does not purport to summarize
the Agreement and reference is made to that Agreement for
information with respect to the interests, rights,
benefits, obligations, proceeds, and duties evidenced
hereby and the rights, duties and obligations of the
Trustee. To the extent not defined herein, the
capitalized terms used herein have the meanings ascribed
to them in the Agreement. This Certificate is one of a
series of Certificates entitled "Metris Master Trust
Floating Rate Asset Backed Certificates, Series 1997-1,
Class C" (the "Class C Certificates"), each of which
represents a fractional undivided interest in the Trust,
and is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which
Agreement, as amended from time to time, the
Certificateholder by virtue of the acceptance hereof
assents and by which the Certificateholder is bound.
The Transferor has structured the Agreement, the
Class C Certificates, the Metris Master Trust 6.87% Asset
Backed Certificates, Series 1997-1, Class A (the "Class A
Certificates") and the Metris Master Trust 7.11% Asset
Backed Certificates, Series 1997-1, Class B (the "Class B
Certificates") with the intention that the
Class A, Class B and Class C Certificates will qualify
under applicable tax law as indebtedness, and both the
Transferor and each holder of a Class C Certificate (a
"Class C Certificateholder") or any interest therein by
acceptance of its Certificate or any interest therein,
agrees to treat the Class C Certificates for purposes of
federal, state and local income or franchise taxes and any
other tax imposed on or measured by income, as
indebtedness.
No principal will be payable to the Class C
Certificateholders until the earlier of the Expected Final
Payment Date and, upon the occurrence of a Pay Out Event,
the Distribution Date following the Monthly Period in
which the Pay Out Event occurs but in no event earlier
than the Distribution Date either on or following the
Distribution Date on which the Class A Invested Amount and
the Class B Invested Amount have been paid in full. No
principal payments will be payable to the Class C
Certificateholders until the Distribution Date either on
or following the Distribution Date on which the Class A
Invested Amount and Class B Invested Amount have been paid
in full.
Interest on the Class C Certificates will be
payable on June 20, 1997 and on each Distribution Date
thereafter, in an amount equal to the product of (i) the
Class C Certificate Rate, (ii) a fraction the numerator of
which is the actual number of days in the related Interest
Accrual Period and the denominator of which is 360 and
(iii) the Class C Invested Amount as of the close of
business on the first day of such Interest Accrual Period
(or in the case of the initial Distribution Date, an
amount equal to the sum of (I) the product of (u) the
Class C Initial Invested Amount, (v) 12 divided by 360,
and (w) the Class C Certificate Rate determined on May 6,
1997, plus (II) the product of (x) the Class C Initial
Invested Amount, (y) 31 divided by 360, and (z) the Class
C Certificate Rate determined on May 16, 1997); provided,
however, that with respect to any Distribution Date
related to the Funding Period the amount described in
clause (iii) shall be the Class C Outstanding Principal
Amount at the close of business on the first day of such
Interest Accrual Period.
Subject to the prior payment of interest on the
Class A Certificates and Class B Certificates, interest
payments on the Class C Certificates on each Distribution
Date will be funded from the portion of Available Series
1997-1 Finance Charge Collections with respect to the
preceding Monthly Period and from certain other funds
allocated as set forth in the Pooling and Servicing
Agreement to the Class C Certificates and deposited on
each business day during such Monthly Period in the
Interest Funding Account.
"Class C Invested Amount" shall mean, when used
with respect to any Business Day, the greater of (x) zero
and (y) an amount equal to (a) the Class C Initial
Invested Amount less the Class C Percentage of the initial
deposit to the Pre-Funding Account plus the Class C
Percentage of any withdrawals from the Pre-Funding Account
(i) during the Funding Period in connection with the
addition of Receivables to the Trust or (ii) at the end of
the Funding Period for deposit into the Excess Funding
Account, minus (b) the aggregate amount of principal
payments (except principal payments made from the Pre-
Funding Account) made to Class C Certificateholders
through and including such Business Day, minus (c) the
aggregate amount of Class C Investor Charge-Offs for all
prior Distribution Dates, minus (d) the aggregate amount
of Reallocated Class B Principal Collections and
Reallocated Class C Principal Collections for which the
Class D Invested Amount has not been reduced for all prior
Business Days, and plus (e) the sum of the aggregate
amount allocated and available on all prior Business Days
pursuant to subsection 4.9(a)(xi) of the Agreement and,
with respect to such subsection, pursuant to subsections
4.10(a) and (b), 4.16(a), 4.19(b) and 4.20(b), (c) and (d)
of the Agreement, for the purpose of reinstating amounts
reduced pursuant to the foregoing clauses (c) and (d).
During the period from and including the Closing
Date to but excluding the earlier of (x) the first day for
which the Invested Amount equals the Full Invested Amount;
(y) the first day on which a Pay Out Event is deemed to
occur; and (z) the first day of the September 1997 Monthly
Period (the "Funding Period"), the Pre-Funded Amount will
be maintained in a trust account to be established with
The Bank of New York (the "Pre-Funding Account"). The
"Pre-Funded Amount" will equal the Initial Pre-Funded
Amount, minus the amounts of any increases in the Invested
Amount during the Funding Period pursuant to Section 4.15
of the Agreement, minus the amount of any principal losses
on funds on deposit in the Pre-Funding Account and minus
the amount withdrawn from the Pre-Funding Account and
deposited in the Excess Funding Account. On the Closing
Date a cash deposit will be made to the Pre-Funding
Account such that the amount of Principal Receivables plus
the amount of such cash deposit on such date will at least
equal the sum of the initial outstanding principal
balances of the Class A Certificates, the Class B
Certificates, the Class C Certificates and the Class D
Certificates and the sum of the then current outstanding
principal balance of all Series (excluding the Series 1997-
1 Certificates). Funds on deposit in the Pre-Funding
Account will be invested by the Trustee at the direction
of the Servicer in Cash Equivalents.
During the Funding Period, funds on deposit in
the Pre-Funding Account will be withdrawn and paid to the
Transferor to the extent of any increases in the Invested
Amount as a result of the increase in the amount of
Receivables in the Trust. In the event of the occurrence
of a Pay Out Event during the Funding Period, the amounts
remaining on deposit in the Pre-Funding Account, will be
payable as principal first to the Class A
Certificateholders until the Class A Invested Amount is
paid in full and then to the Class B Certificateholders
until the Class B Invested Amount is paid in full and then
to the Class C Certificateholders until the Class C
Invested Amount is paid in full. Should the Pre-Funded
Amount be greater than zero on the first Business Day of
the September 1997 Monthly Period, such amount will be
deposited in the Excess Funding Account, and the Class A
Invested Amount, Class B Invested Amount and Class C
Invested Amount shall be increased pro rata in an
aggregate amount equal to the amount of such deposit.
Subject to the Agreement, payments of principal
are limited to the unpaid Class C Invested Amount of the
Class C Certificates, which may be less than the unpaid
balance of the Class C Certificates pursuant to the terms
of the Agreement. All principal on the Class C
Certificates is due and payable no later than the October
2005 Distribution Date (or if such day is not a Business
Day, the next succeeding Business Day) (the "Scheduled
Series 1997-1 Termination Date"). After the earlier to
occur of (i) the Scheduled Series 1997-1 Termination Date
and (ii) the day after the Distribution Date on which the
Series 1997-1 Certificates are paid in full (the "Series
1997-1 Termination Date") neither the Trust nor the
Transferor will have any further obligation to distribute
principal or interest on the Class C Certificates. In the
event that the Class C Invested Amount is greater than
zero on the Series Termination Date, the Trustee will sell
or cause to be sold, to the extent necessary, an amount of
interests in the Receivables or certain of the Receivables
up to 110% of the Class A Invested Amount, the Class B
Invested Amount, the Class C Invested Amount and the Class
D Invested Amount at the close of business on such date
(but not more than the total amount of Receivables
allocable to the Investor Certificates), and shall pay the
proceeds to the Class A Certificateholders pro rata in
final payment of the Class A Certificates, then to the
Class B Certificateholders pro rata in final payment of
the Class B Certificates, then to the Class C
Certificateholders pro rata in final payment of the Class
C Certificates and finally to the Class D
Certificateholders pro rata in final payment of the Class
D Certificates.
Unless the certificate of authentication hereon
has been executed by or on behalf of the Trustee, by
manual signature, this Certificate shall not be entitled
to any benefit under the Agreement, or be valid for any
purpose.
IN WITNESS WHEREOF, the Transferor has caused
this Certificate to be duly executed under its official
seal.
METRIS RECEIVABLES, INC.
By:________________________
Name:
Title:
Dated:
CERTIFICATE OF AUTHENTICATION
This is one of the Class C Certificates referred
to in the within-mentioned Pooling and Servicing
Agreement.
THE BANK OF NEW YORK
By:________________________
Name:
Title:
Exhibit A-4
FORM OF CLASS D INVESTOR CERTIFICATE
THIS CERTIFICATE WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"). THIS CERTIFICATE HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE
SECURITIES LAW OF ANY STATE AND MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS
REGISTERED PURSUANT TO OR EXEMPT FROM REGISTRATION
UNDER THE SECURITIES ACT AND ANY OTHER APPLICABLE
SECURITIES LAW. THE TRANSFEROR SHALL BE PROHIBITED
FROM TRANSFERRING ANY INTEREST IN OR PORTION OF THIS
CERTIFICATE.
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE
BENEFIT OF METRIS RECEIVABLES, INC. AND THE TRUSTEE
THAT SUCH PURCHASER IS NOT (I) AN EMPLOYEE BENEFIT
PLAN (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
("ERISA")) THAT IS SUBJECT TO THE PROVISIONS OF TITLE
I OF ERISA, (II) A PLAN DESCRIBED IN SECTION
4975(E)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED (THE "CODE"), (III) A GOVERNMENTAL PLAN, AS
DEFINED IN SECTION 3(32) OF ERISA, SUBJECT TO ANY
FEDERAL, STATE OR LOCAL LAW WHICH IS, TO A MATERIAL
EXTENT, SIMILAR TO THE PROVISIONS OF SECTION 406 OF
ERISA OR SECTION 4975 OF THE CODE, (IV) AN ENTITY
WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS (AS
DEFINED IN 29 C.F.R. SECTION 2510.3-101 OR OTHERWISE
UNDER ERISA) BY REASON OF A PLAN'S INVESTMENT IN THE
ENTITY OR (V) A PERSON INVESTING PLAN ASSETS OF ANY
SUCH PLAN (INCLUDING WITHOUT LIMITATION, FOR PURPOSES
OF CLAUSE (IV) AND THIS CLAUSE (V), ANY INSURANCE
COMPANY GENERAL ACCOUNT, BUT EXCLUDING ANY ENTITY
REGISTERED UNDER THE INVESTMENT COMPANY ACT OF 1940,
AS AMENDED).
No. ___ $_________
METRIS MASTER TRUST
0% ASSET BACKED
CERTIFICATE, SERIES 1997-1, CLASS D
Evidencing an undivided interest in a trust, the
corpus of which consists of receivables generated from
time to time in the ordinary course of business from a
portfolio of revolving consumer credit card accounts
transferred or to be transferred by Metris Receivables,
Inc. (the "Transferor") and other assets and interests
constituting the Trust under the 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 ______________ (the
"Certificateholder") is the registered owner of a
fractional undivided interest in the Metris Master Trust
(the "Trust") issued pursuant to the Pooling and Servicing
Agreement, dated as of May 26, 1995 (the "Pooling and
Servicing Agreement"; such term to include any amendment
or Supplement thereto) by and between the Transferor,
Direct Merchants Credit Card Bank, National Association as
the Servicer (the "Servicer"), and The Bank of New York
(Delaware), as Trustee (the "Trustee"), and the Series
1997-1 Supplement, dated as of May 8, 1997 (the "Series
1997-1 Supplement"), among the Transferor, the Servicer
and the Trustee. The Pooling and Servicing Agreement, as
supplemented by the Series 1997-1 Supplement, is herein
referred to as the "Agreement." The corpus of the Trust
consists of all of the Transferor's right, title and
interest in, to and under the Trust Property (as defined
in the Agreement).
This Certificate does not purport to summarize
the Agreement and reference is made to that Agreement for
information with respect to the interests, rights,
benefits, obligations, proceeds, and duties evidenced
hereby and the rights, duties and obligations of the
Trustee. To the extent not defined herein, the
capitalized terms used herein have the meanings ascribed
to them in the Agreement. This Certificate is one of a
series of Certificates entitled "Metris Master Trust 0%
Asset Backed Certificates, Series 1997-1, Class D" (the
"Class D Certificates"), each of which represents a
fractional undivided interest in the Trust, and is issued
under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement, as
amended from time to time, the Certificateholder by virtue
of the acceptance hereof assents and by which the
Certificateholder is bound.
Metris Receivables, Inc. shall be prohibited
from Transferring any interest in or portion of the
Class D Certificate.
No principal will be payable to the Class D
Certificateholders (other than with respect to Class D
Excess Amounts) until the earlier of the Expected Final
Payment Date and, upon the occurrence of a Pay Out Event,
the Distribution Date following the Monthly Period in
which the Pay Out Event occurs but in no event earlier
than the Distribution Date either on or following the
Distribution Date on which Class A Invested Amount, Class
B Invested Amount and the Class C Invested Amount have
been paid in full. No principal will be payable to the
Class D Certificateholders until all principal payments
have first been made to the Class A Certificateholders,
Class B Certificateholders and Class C Certificateholders.
"Class D Invested Amount" shall mean, when used
with respect to any Business Day, the greater of (x) zero
and (y) an amount equal to (a) the initial principal
balance of the Class D Certificates, minus (b) the
aggregate amount of principal payments made to Class D
Certificateholders through and including such Business
Day, minus (c) the aggregate amounts by which the
Transferor has reduced the Class D Invested Amount
pursuant to subsection 4.12(d) of the Agreement, minus (d)
the aggregate amount of Class D Investor Charge-Offs
for all prior Distribution Dates, minus (e) the aggregate
amount of Reallocated Principal Collections for all prior
Business Days, plus (f) the sum of the aggregate amount
allocated and available on all prior Business Days
pursuant to subsection 4.9(a)(xii) of the Agreement and,
with respect to such subsection, pursuant to subsections
4.10(a) and (b), 4.19(b) and 4.20(b), (c) and (d) of the
Agreement, for the purpose of reinstating amounts reduced
pursuant to the foregoing clauses (d) and (e).
Subject to the Agreement, payments of principal
are limited to the unpaid Class D Invested Amount of the
Class D Certificates, which may be less than the unpaid
balance of the Class D Certificates pursuant to the terms
of the Agreement. All principal on the Class D
Certificates is due and payable no later than the October
2005 Distribution Date (or if such day is not a Business
Day, the next succeeding Business Day) (the "Scheduled
Series 1997-1 Termination Date"). After the earlier to
occur of (i) the Scheduled Series 1997-1 Termination Date
or (ii) the day after the Distribution Date on which the
Series 1997-1 Certificates are paid in full (the "Series
1997-1 Termination Date") neither the Trust nor the
Transferor will have any further obligation to distribute
principal or interest on the Class D Certificates. In the
event that the Class D Invested Amount is greater than
zero on the Series Termination Date, the Trustee will sell
or cause to be sold, to the extent necessary, an amount of
interests in the Receivables or certain of the Receivables
up to 110% of the Class A Invested Amount, the Class B
Invested Amount, the Class C Invested Amount and the Class
D Invested Amount at the close of business on such date
(but not more than the total amount of Receivables
allocable to the Investor Certificates), and shall pay the
proceeds to the Class A Certificateholders pro rata in
final payment of the Class A Certificates, then to the
Class B Certificateholders pro rata in final payment of
the Class B Certificates, then to the Class C
Certificateholders pro rata in final payment of the Class
C Certificates and finally to the Class D
Certificateholders pro rata in final payment of the Class
D Certificates.
Unless the certificate of authentication hereon
has been executed by or on behalf of the Trustee, by
manual signature, this Certificate shall not be entitled
to any benefit under the Agreement, or be valid for any
purpose.
IN WITNESS WHEREOF, the Transferor has caused
this Certificate to be duly executed under its official
seal.
METRIS RECEIVABLES, INC.
By:________________________
Name:
Title:
Dated:
CERTIFICATE OF AUTHENTICATION
This is one of the Class D Certificates referred
to in the within-mentioned Pooling and Servicing
Agreement.
THE BANK OF NEW YORK
By:________________________
Name:
Title:
EXHIBIT B
[Form of Monthly Certificateholders' Statement]
EXHIBIT C
Metris Receivables, Inc.
0000 Xxxxx Xxxx, Xxxxx X000
Xxxxxxxxxx, Xxxxxxxxx 00000
Direct Merchants Credit Card Bank
0000 Xxxx 0000 Xxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
The Bank of New York (Delaware)
Xxxxx Xxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Re: Metris Master Trust Floating Rate Asset Backed
Certificates, Series 1997-1, Class C
Ladies and Gentlemen:
In connection with our proposed purchase of
$_________ in principal amount of Metris Master Trust
Floating Rate Asset Backed Certificates, Series 1997-1,
Class C (the "Class C Certificates"), we confirm that:
[TO BE INCLUDED IN EACH LETTER TO BE SIGNED BY THE
PURCHASERS FROM THE INITIAL PURCHASER] [1. We have
received a copy of the Private Placement Memorandum dated
May 1, 1997 relating to the Class C Certificates (the
"Private Placement Memorandum") and such other information
and documentation as we deem necessary in order to make
our investment decision. We understand that the Private
Placement Memorandum and any such other information and
documentation speaks only as of its date and that the
information contained in the Private Placement Memorandum
and such other information and documentation may not be
correct or complete as of any time subsequent to such
date.]
2. We agree to be bound by the restrictions and
conditions set forth in the Pooling and Servicing
Agreement, dated as of May 26, 1995, as amended (the
"Pooling and Servicing Agreement") and as supplemented by
the Series 1997-1 Supplement dated as of May 8, 1997 (the
"Series 1997-1 Supplement" and together with the Pooling
and Servicing Agreement, the "Pooling and Servicing
Agreement"), each by and between Metris Receivables,
Inc., as Transferor, Direct Merchants Credit Card Bank,
National Association, as Servicer, and The Bank of New
York (Delaware), as Trustee, relating to the Class C
Certificates and agree to be bound by, and not reoffer,
resell, pledge, participate, hypothecate or otherwise
dispose or transfer (any such act, a "Transfer") the Class
C Certificates except in compliance with, certain
restrictions and conditions including but not limited to
those in Section 10 of the Series 1997-1 Supplement. We
understand that capitalized terms used herein and not
otherwise defined herein have the meanings given to such
terms in the Series 1997-1 Supplement.
3. We understand that the Class C Certificates have
not been and will not be registered under the Securities
Act of 1933, as amended (the "Securities Act") or any
state securities law and agree that the Class C
Certificates may be reoffered, resold, pledged or
otherwise transferred only in compliance with the
Securities Act and other applicable laws and only (i) to
the Transferor, (ii) to a limited number of institutional
"accredited investors" (as defined in Rule 501(a)(1), (2),
(3) or (7) under the Securities Act) and in a transaction
exempt from the registration requirements of the
Securities Act (upon delivery of the documentation
required by the Pooling and Servicing Agreement and, if
the Trustee so requires, an opinion of counsel
satisfactory to the Trustee) or (iii) pursuant to Rule
144A under the Securities Act to a person that we
reasonably believe is a qualified institutional buyer
within the meaning of Rule 144A ("QIB") purchasing for its
own account or a QIB purchasing for the account of a QIB,
whom we have informed, in each case, that the reoffer,
resale, pledge or other transfer is being made in reliance
on Rule 144A.
4. We have neither acquired nor will we Transfer
any Class C Certificate we acquire (or any interest
therein) or cause any Class C Certificate (or any interest
therein) to be marketed on or through (i) an "established
securities market" within the meaning of Section
7704(b)(1) of the Internal Revenue Code of 1986, as
amended (the "Code") and any Treasury regulation
thereunder, including, without limitation, an over-the
counter market or an interdealer quotation system that
regularly disseminates firm buy or sell quotations or (ii)
a "secondary market" within the meaning of Section
7704(b)(2) of the Code and any Treasury regulation
thereunder, including a market wherein the Class C
Certificates (or any interest therein) are regularly
quoted by any person making a market in such interests and
a market wherein any person regularly makes available bid
or offer quotes with respect to the Class C Certificates
(or any interest therein) and stands ready to effect buy
or sell transactions at the quoted prices for itself or on
behalf of others.
5. We are not and will not become, for so long as we
own any interest in the Class C Certificates, a
partnership, Subchapter S corporation or grantor trust for
United States federal income tax purposes. If this
representation cannot be made, the Transferor may, in its
sole discretion, prohibit a Transfer to such entity;
provided, however, that if the Transferor agrees to permit
such a Transfer, the Transferor or the Trustee may require
additional certifications and representations in
order to prevent the Trust from being treated as a
publicly traded partnership.
6. We are a person who is either (A)(i) a citizen or
resident of the United States, (ii) a corporation or other
entity organized in or under the laws of the United States
or any political subdivision thereof or (iii) a person not
described in (i) or (ii) whose ownership of the Class C
Certificates is effectively connected with such person's
conduct of a trade or business within the United States
(within the meaning of the Code) and our ownership of any
interest in a Class C Certificate will not result in any
withholding obligation with respect to any payments with
respect to the Class C Certificates by any person or (B)
an estate the income of which is includible in gross
income for United States federal income tax purposes or
any trust if a court within the United States is able to
exercise primary supervision over the administration of
the trust and one or more United States fiduciaries have
the authority to control all substantial decisions of the
trust. We agree that (a) if we are a person described in
clause (A)(i) or (A)(ii) above, we will furnish to the
person from whom we are acquiring a Class C Certificate,
the Transferor, the Servicer and the Trustee, a properly
executed U.S. Internal Revenue Service Form W-9 and a new
Form W-9, or any successor applicable form, upon the
expiration or obsolescence of any previously delivered
form or (b) if we are a person described in clause
(A)(iii) above, we will furnish to the person from whom we
are acquiring a Class C Certificate, the Transferor, the
Servicer and the Trustee, a properly executed U.S.
Internal Revenue Service Form 4224 and a new Form 4224, or
any successor applicable form, upon the expiration or
obsolescence of any previously delivered form (and, in
each case, such other certifications, representations or
opinions of counsel as may be requested by the Transferor,
the Servicer or the Trustee). We recognize that if we are
a tax-exempt entity, payments with respect to the Class C
Certificates may constitute unrelated business taxable
income.
7. We understand that no subsequent Transfer of a
Class C Certificate is permitted unless the Transferor
consents in writing to the proposed Transfer, which
consent shall be granted (assuming that all other
conditions to such Transfer are satisfied) unless the
Transferor determines in its sole and absolute discretion
that such Transfer would create more than an insubstantial
risk that the Trust would be classified for federal or any
applicable state tax purposes as an association or
publicly traded partnership taxable as a corporation;
provided, that any attempted Transfer that would cause the
number of Targeted Holders to exceed onehundred shall be
void; and provided, further, that there shall not at any
time be more than 10 holders of Class C Certificates of
Series 1997-1 or such other number as may be consented to
by the Transferor, which consent may be withheld in its
sole and absolute discretion.
"Targeted Holder" means (i) each holder of a
right to receive interest or principal with
respect to the Class C Certificates (or other
interests in the Trust), other than
certificates (or other such interests) with
respect to which an opinion is rendered that
such certificates (or other such interests) will be
treated as debt for Federal income tax purposes, and
(ii) any holder of a right to receive any amount in
respect of the Transferor Interest; provided, that any
person holding more than one interest each of which
would cause such person to be a Targeted Holder shall
be treated as a single Targeted Holder.
8. We understand that the opinion of tax counsel
that the Trust will not be subject to tax at the entity
level is dependent in part on the accuracy of the
representations in paragraphs [3, 4, 5 and 6] [4, 5, 6 and
7] and that, if such representations are not accurate, in
addition to our being subject to having our purchase
rescinded, we will be liable for damages.
9. We understand that if we are not created or
organized under the laws of the United States or any State
thereof (including the District of Columbia), we will, upon
written notice by the Transferor that the Transferor
intends, pursuant to Section 1446 or other applicable
section of the Code, to withhold U.S. tax (a "Withholding
Tax") from amounts paid or accruing to us with respect to
our interest in a Class C Certificate (such determination
being a "Withholding Event"), for tax years for which we
have already filed U.S. federal income tax returns (each a
"Prior Tax Year") prior to proper notice of such
Withholding Event, provide (A) a signed officer's
certificate stating that amounts paid or accruing to us
with respect to our interest in a Class C Certificate have
been included in our U.S. federal income tax returns for
each such Prior Tax Year, which certificate may be relied
on by the Transferor in asserting to the Internal Revenue
Service the applicability of Section 1463 of the Code with
respect to any Withholding Tax for each such Prior Tax Year
and (B) provide information to the Transferor or, at our
option, to the Internal Revenue Service in support of the
application of Section 1463 of the Code for each such Prior
Tax Year.
10. We are (a) an institutional "accredited investor"
(as defined in Rule 501(a)(1), (2), (3), or (7) of
Regulation D under the Securities Act) and have such
knowledge and experience in financial and business matters
as to be capable of evaluating the merits and risks of our
investment in the Class C Certificates, and we are
acquiring each of the Class C Certificates purchased by us
for our own account or for a single account (which is an
institutional "accredited investor") as to which we
exercise sole investment discretion and we and any such
account for which we are acting are each able to bear the
economic risk of our or its investment or (b) a "qualified
institutional buyer" (as defined in Rule 144A under the
Securities Act) purchasing for our own account or for the
account of a "qualified institutional buyer" and we
understand that the sale to us is being made in reliance on
Rule 144A under the Securities Act.
11. We are not (i) an employee benefit plan (as
defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") that is subject
to the provisions of Title I of ERISA, (ii) a plan
described in Section 4975(e)(1) of the Code, (iii) a
governmental plan, as defined in Section 3(32) of ERISA,
subject to any federal, state or local law which is, to a
material extent, similar to the provisions of Section 406
of ERISA or Section 4975 of the Code, (iv) an entity whose
underlying assets include plan assets (as defined
in 29 C.F.R. Section 2510.3-101 or otherwise under ERISA)
by reason of a plan's investment in the entity or (v) a
person investing plan assets of any such plan (including,
without limitation, for purposes of clause (iv) or this
clause (v), any insurance company general account, but
excluding any entity registered under the Investment
Company Act of 1940, as amended).
12. We understand that any purported Transfer of
any Class C Certificate in contravention of the
restrictions and conditions in paragraphs 1 through [10]
[11] above (including any violation of the representation
in paragraph [4] [5] by an investor who continues to hold a
Class C Certificate occurring any time after the Transfer
in which it acquired such Class C Certificate) shall be
null and void and the purported transferee shall not be
recognized by the Trust or any other person as a Class C
Certificateholder for any purpose.
13. We further understand that, on any proposed
resale, pledge or transfer of any Class C Certificates,
we will be required to furnish to the Trustee and the
Registrar, such certification and other information as the
Trustee or the Registrar may reasonably require to confirm
that the proposed sale complies with the foregoing
restrictions and with the restrictions and conditions of
the Class C Certificates and the Pooling and Servicing
Agreement pursuant to which the Class C Certificates were
issued and we agree that if we determine to Transfer any
Class C Certificate, we will cause our proposed transferee
to provide the Transferor, the Servicer and the Trustee
with a letter substantially in the form of this letter.
We further understand that Class C Certificates purchased
by us will bear a legend to the foregoing effect.
14. The person signing this letter on behalf of the
ultimate beneficial purchaser of the Class C Certificates
has been duly authorized by such beneficial purchaser of
the Class C Certificates to do so.
15. The Class C Certificates purchased by us should
be registered in the name and issued in the denominations
set forth on Schedule 1 hereto. All payments on the Class
C Certificates held by us should be wired to us in
accordance with the instructions set forth on Schedule 1
hereto unless we otherwise notify the Transferor, the
Servicer and the Trustee in writing.
You are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy
hereof to any interested party in any administrative or
legal proceeding or official inquiry with respect to the
matters covered hereby.
Very truly yours,
[NAME OF TRANSFEREE]
By:________________________
Name:
Title:
Schedule 1
Registration and Payment Instructions
Registration Instructions:
Full Legal Name of Purchaser:__________________________
Number and Denomination of Certificates:________________
Payment Instructions:
Name of Bank:
Address of Bank:
Account Name:
Account Number:
ABA Number:
Reference:
Notice Information:
Address:
Attention:
Telephone:
Telefax:
TABLE OF CONTENTS
SECTION 1. Designation . . . . . . . . . . . . . . . . . 1
SECTION 2. Definitions . . . . . . . . . . . . . . . . . 1
SECTION 3. Reassignment Terms . . . . . . . . . . . . . . 29
SECTION 4. Delivery and Payment for the Series
1997-1 Certificates . . . . . . . . . . . . 29
SECTION 5. Form of Delivery of Series 1997-1
Certificates; Denominations . . . . . . . . 30
SECTION 6. Article IV of Agreement . . . . . . . . . . . 30
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS . . . . 30
SECTION 4.4 Rights of Certificateholders . . . . . . . . . 30
SECTION 4.5 Collections and Allocation;
Payments on Exchangeable
Transferor Certificate . . . . . . . . . . . 31
SECTION 4.6 Determination of Interest for the
Series 1997-1 Certificates . . . . . . . . . 32
SECTION 4.7 Determination of Principal Amounts . . . . . . 35
SECTION 4.8 Shared Principal Collections . . . . . . . . . 36
SECTION 4.9 Application of Funds on Deposit in
the Collection Account for the
Certificates . . . . . . . . . . . . . . . . 36
SECTION 4.10 Coverage of Required Amount for the
Series 1997-1 Certificates . . . . . . . . . 46
SECTION 4.11 Payment of Certificate Interest . . . . . . . 47
SECTION 4.12 Payment of Certificate Principal . . . . . . . 47
SECTION 4.13 Investor Charge-Offs . . . . . . . . . . . . . 50
SECTION 4.14 Pre-Funding Account . . . . . . . . . . . . . 51
SECTION 4.15 Increases in Invested Amount . . . . . . . . . 53
SECTION 4.16 Reallocated Principal Collections
for the Series 1997-1
Certificates . . . . . . . . . . . . . . . . 54
SECTION 4.17 Determination of LIBOR . . . . . . . . . . . . 55
SECTION 4.18 Payment Reserve Account . . . . . . . . . . . 56
SECTION 4.19 Principal Funding Account . . . . . . . . . . 57
SECTION 4.20 Accumulation Period Reserve
Account . . . . . . . . . . . . . . . . . . . 58
SECTION 4.21 Postponement of Accumulation
Period . . . . . . . . . . . . . . . . . . . 60
SECTION 4.22 Defeasance . . . . . . . . . . . . . . . . . . 60
SECTION 7. Article V of the Agreement . . . . . . . . . . 61
ARTICLE V
DISTRIBUTIONS AND REPORTS TO INVESTOR
CERTIFICATEHOLDERS . . . . . . . . . 61
SECTION 5.1 Distributions . . . . . . . . . . . . . . . . 61
SECTION 5.2 Certificateholders' Statement . . . . . . . . 64
SECTION 8. Series 1997-1 Pay Out Events . . . . . . . . . 67
SECTION 9. Series 1997-1 Termination . . . . . . . . . . 69
SECTION 10. Legends; Transfer and Exchange;
Restrictions on Transfer of
Series 1997-1 Certificates; Tax
Treatment . . . . . . . . . . . . . . . . . 69
SECTION 11. Compliance with Withholding
Requirements . . . . . . . . . . . . . . . . 77
SECTION 12. Tax Characterization of the Class C
Certificates . . . . . . . . . . . . . . . . 77
SECTION 13. Ratification of Agreement . . . . . . . . . . 78
SECTION 14. Registration of the Class A
Certificates under the Securities
Exchange Act of 1934. . . . . . . . . . . . 78
SECTION 15. Counterparts . . . . . . . . . . . . . . . . . 78
SECTION 16. GOVERNING LAW . . . . . . . . . . . . . . . . 78
SECTION 17. Instructions in Writing . . . . . . . . . . . 79
SECTION 18. Amendment for FASIT Purposes . . . . . . . . . 79
SECTION 19. Paired Series . . . . . . . . . . . . . . . . 79
EXHIBITS
Exhibit A-1 Form of Class A Investor Certificate
Exhibit A-2 Form of Class B Investor Certificate
Exhibit A-3 Form of Class C Investor Certificate
Exhibit A-4 Form of Class D Investor Certificate
Exhibit B Form of Monthly Certificateholder's Statement
Exhibit C Form of Investment Letter
_________________________________________________________
METRIS RECEIVABLES, INC.
Transferor
DIRECT MERCHANTS CREDIT CARD BANK, NATIONAL ASSOCIATION
Servicer
and
THE BANK OF NEW YORK (DELAWARE)
Trustee
on behalf of the Series 1997-1 Certificateholders
SERIES 1997-1 SUPPLEMENT
Dated as of May 8, 1997
to
POOLING AND SERVICING AGREEMENT Dated
as of May 26, 1995
____________________________________
METRIS MASTER TRUST
$616,250,000 6.87% Asset Backed
Certificates, Series 1997-1, Class A
$106,250,000 7.11% Asset Backed
Certificates, Series 1997-1, Class B
$72,250,000 Floating Rate Asset Backed
Certificates, Series 1997-1, Class C
$55,250,000 0% Asset Backed Certificates,
Series 1997-1, Class D
_________________________________________________________
