METRIS RECEIVABLES, INC.,
Transferor
DIRECT MERCHANTS CREDIT CARD BANK, NATIONAL ASSOCIATION,
Servicer
and
U.S. BANK NATIONAL ASSOCIATION,
Trustee
on behalf of Securityholders
of the Metris Master Trust
SECOND AMENDED AND RESTATED
POOLING AND SERVICING AGREEMENT
Dated as of January 22, 2002
SCHEDULES AND EXHIBITS
Schedule 1 Account Schedule
Schedule 2 Tax Returns and Payments
Exhibit A Form of Exchangeable Transferor Security
Exhibit B Form of Daily Report
Exhibit C Form of Settlement Statement
Exhibit D Form of Annual Servicer's Certificate
Exhibit E Form of Annual Opinion of Counsel
Exhibit F Form of Reconveyance
Exhibit G Form of Agreed-Upon Procedures
Exhibit H Form of Assignment of Receivables in Supplemental Accounts
Exhibit I Form of Opinion of Counsel Regarding Supplemental Accounts
Exhibit J Form of Reassignment of Receivables in Removed Accounts
SECOND AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT,
dated as of January 22, 2002 (the "Pooling and Servicing Agreement") by and
among METRIS RECEIVABLES, INC., a corporation organized and existing under the
laws of the State of Delaware, as Transferor (the "Transferor"), DIRECT
MERCHANTS CREDIT CARD BANK, NATIONAL ASSOCIATION, a national banking
organization organized and existing under the laws of the United States of
America, as Servicer (the "Servicer"), and U.S. BANK NATIONAL ASSOCIATION, a
national banking association, as Trustee (the "Trustee").
WHEREAS, the Transferor, the Servicer, and The Bank of New
York (Delaware), as trustee (the "Prior Trustee"), entered into an Amended and
Restated Pooling and Servicing Agreement, dated as of July 30, 1998 (as amended
and supplemented to the date hereof, the "Previous Pooling and Servicing
Agreement");
WHEREAS the Transferor, the Servicer, the Prior Trustee and
the Trustee have entered into that certain Agreement of Resignation, Appointment
and Acceptance, dated as of December 11, 2000, pursuant to which the Trustee
assumed all of the rights and obligations of the Prior Trustee under the terms
of the Previous Pooling and Servicing Agreement;
WHEREAS, the Transferor, the Servicer and the Trustee desire
to amend and restate the Previous Pooling and Servicing Agreement in accordance
with the provisions of subsection 13.1(a) of the Previous Pooling and Servicing
Agreement to read in its entirety as set forth below;
NOW, THEREFORE, pursuant to subsection 13.1(a) of the Previous
Pooling and Servicing Agreement, the parties hereto hereby agree that effective
on and as of the date hereof, the Pooling and Servicing Agreement is hereby
amended to read in its entirety as follows:
In consideration of the mutual agreements herein contained,
each party agrees as follows for the benefit of the other parties and the
Securityholders:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. Whenever used in this Agreement, the following
words and phrases shall have the following meanings:
"Account" shall mean each revolving credit consumer credit
card account established pursuant to a Contract between a Credit Card Originator
and any Person, which is identified on an Account Schedule delivered by the
Transferor to the Trustee on or after the Amendment Cut-Off Date and which on
the Initial Closing Date was an Eligible Account or, with respect to accounts
designated for the Trust after the Initial Closing Date, is an Additional
Account or Supplemental Account. The definition of "Account" shall include each
Transferred Account but shall not include any Accounts containing only
Ineligible Receivables that are reassigned to the Transferor pursuant to Section
2.4. The term "Account" shall refer to an Additional Account or Supplemental
Account only from and after the Addition Date with respect thereto, and the term
"Account" shall refer to any Removed Account only prior to the Removal Date with
respect thereto.
"Account Schedule" shall mean a computer file or microfiche
list containing a true and complete list of Accounts, identified by account
number and setting forth, with respect to each Account, the aggregate amount of
Principal Receivables outstanding in such Account and, except in the case of
clause (a), the aggregate amount outstanding in such Account (a) on the
Amendment Cut-Off Date (for the Account Schedule delivered on or prior to the
Amendment Closing Date), (b) on or prior to the Determination Date immediately
succeeding the related Monthly Period (for any Account Schedule relating to
Additional Accounts designated after the Amendment Closing Date) and (c) on the
Addition Cut-Off Date (for any Account Schedule relating to Supplemental
Accounts designated after the Amendment Closing Date).
"Addition Cut-Off Date" shall mean (a) for Supplemental
Accounts, the date specified in the related Assignment, and (b) for Additional
Accounts, the later of the dates on which such Additional Accounts are
originated or designated pursuant to subsection 2.6(a).
"Addition Date" shall mean (a) for Supplemental Accounts, the
date from and after which such Supplemental Accounts are to be included as
Accounts pursuant to subsections 2.6(c) or (d), and (b) for Additional Accounts,
the later of the dates on which such Additional Accounts are originated or
designated pursuant to subsection 2.6(a).
"Additional Account" shall mean, each revolving credit
consumer credit card account established pursuant to a Contract between a Credit
Card Originator and any Person, which account comes into existence after the
Initial Closing Date, is an Approved Account, is designated pursuant to
subsection 2.6(a) to be included as an Additional Account, and is identified on
or after the Amendment Cut-Off Date on the Account Schedule delivered to the
Trustee by the Transferor.
"Adjustment Payment" shall have the meaning specified in
subsection 3.8(a).
"Affiliate" shall mean, with respect to a particular Person,
any Person that, directly or indirectly, is in control of, is controlled by, or
is under common control with, such Person.
"Aggregate Invested Amount" shall mean, as of any date of
determination, the sum of the Invested Amounts of all Series of Securities
issued and outstanding on such date of determination.
"Aggregate Investor Percentage" with respect to each of
Principal Collections, Finance Charge Collections and Defaulted Receivables, as
the case may be, shall mean, as of any date of determination, the sum of such
Investor Percentages of all Series of Securities issued and outstanding on such
date of determination; provided, however, that the Aggregate Investor Percentage
shall not exceed 100%.
"Aggregate Principal Receivables" shall mean, for any day, the
aggregate amount of Principal Receivables at the end of such day.
"Agreement" shall mean this Pooling and Servicing Agreement
and all amendments hereof and supplements hereto, including any Supplement.
"Amendment Closing Date" shall mean January 22, 2002.
"Amendment Cut-Off Date" shall mean October 18, 2001, but in
the case of Accounts designated in Assignment No. 40 supplementing this
Agreement, November 1, 2001.
"Amortization Period" shall mean, with respect to any Series,
the period following the Revolving Period for such Series, which shall be the
Amortization Period, the Early Amortization Period, or other amortization or
accumulation period, in each case as defined with respect to such Series in the
related Supplement.
"Amortization Period Commencement Date" shall mean with
respect to any Series, the date on which the Amortization Period commences with
respect thereto as set forth in the related Supplement.
"Applicable Tax State" shall mean, as of any date of
determination, each state as to which any of the following is then applicable:
(a) a state in which the Trustee maintains its principal corporate trust office,
(b) a state in which the Transferor maintains its principal executive offices,
and (c) a state in which the Servicer regularly conducts servicing and
collection operations which are not limited to ministerial activities and which
relate to a material portion of the Receivables.
"Applicants" shall have the meaning specified in Section 6.7.
"Appointment Day" shall have the meaning specified in
subsection 9.2(a).
"Approved Account" shall mean (i) each Eligible Account that
is a MasterCard or VISA account or (ii) any other revolving credit consumer
credit card account the inclusion in the Trust of which would not cause a
Ratings Event.
"Assignment" shall have the meaning specified in subsection
2.6(e).
"Authentication Agent" shall have the meaning specified in
Section 6.8.
"Authorized Newspaper" shall mean a newspaper of general
circulation in the Borough of Manhattan, The City of New York printed in the
English language and customarily published on each Business Day, whether or not
published on Saturdays, Sundays and holidays.
"Automatic Addition Suspension Date" shall mean the Business
Day specified as such pursuant to subsection 2.6(b).
"Automatic Addition Termination Date" shall mean the Business
Day specified as such pursuant to subsection 2.6(b).
"Bank Receivables Purchase Agreement" shall mean the Second
Amended and Restated Bank Receivables Purchase Agreement dated as of January 22,
2002 by and between Metris, as purchaser, and DMCCB, as seller, as amended from
time to time.
"Base Rate" shall mean, with respect to any outstanding
Series, the amount which the related Supplement specifies as the "Base Rate".
"Bearer Rules" shall mean the provisions of the Internal
Revenue Code, in effect from time to time, governing the treatment of bearer
obligations, including sections 163(f), 871, 881, 1441, 1442 and 4701, and any
regulations thereunder including, to the extent applicable to any Series,
proposed or temporary regulations of the Internal Revenue Service.
"Bearer Securities" shall have the meaning specified in
Section 6.1.
"Benefit Plan" shall mean (i) an employee benefit plan (as
defined in Section 3(3) of ERISA that is subject to the provisions of Title I of
ERISA, (ii) a plan described in Section 4975(e)(1) of the Code or (iii) any
entity whose underlying assets include plan assets by reason of a plan's
investment in the entity (each, a "Benefit Plan").
"Book-Entry Securities" shall mean Investor Securities that
are registered in the name of the Clearing Agency or a Foreign Clearing Agency,
ownership and transfers of which shall be made through book entries by such
Clearing Agency or Foreign Clearing Agency, as described in Section 6.10;
provided, that after the occurrence of a condition whereupon book-entry
registration and transfer are no longer authorized and Definitive Securities are
to be issued to the Security Owners, such securities shall no longer be
"Book-Entry Securities."
"Business Day" shall mean any day other than a Saturday, a
Sunday or a day on which banking institutions in New York, Minnesota, Arizona,
Oklahoma or Delaware (or, with respect to any Series, any additional city or
state specified in the related Supplement) are authorized or obligated by law or
executive order to be closed.
"Cash Equivalents" shall mean, unless otherwise provided in
the Supplement with respect to any Series, (a) (i) obligations of or fully
guaranteed by the United States of America; (ii) time deposits, promissory
notes, or certificates of deposit of any depositary institution or trust
company; provided, however, that at the time of the Trust's investment or
contractual commitment to invest therein, the certificates of deposit or
short-term deposits of such depositary institution or trust company shall have a
credit rating from Standard & Poor's of A-1+ and from Moody's of P-1; (iii)
commercial paper having, at the time of the Trust's investment or contractual
commitment to invest therein, a rating from Standard & Poor's of A-1+ and from
Moody's of P-1; (iv) bankers acceptances issued by any depositary institution or
trust company described in clause (a)(ii) above; and (v) investments in money
market funds rated AAA-m or AAA-mg by Standard & Poor's and Aaa by Moody's or
otherwise approved in writing by Moody's and Standard & Poor's; (b) time
deposits and demand deposits in the name of the Trust or the Trustee in any
depositary institution or trust company referred to in clause (a)(ii) above; (c)
(x) shares of an open end diversified investment company which is registered
under the Investment Company Act which (i) invests its assets exclusively in
obligations of or guaranteed by the United States of America or any
instrumentality or agency thereof having in each instance a final maturity date
of less than one year from their date of purchase or other Cash Equivalents,
(ii) seeks to maintain a constant net asset value per share, (iii) has aggregate
net assets of not less than $100,000,000 on the date of purchase of such shares
and (iv) which the Rating Agency designates in writing will not result in a
withdrawal or downgrading of its then current rating of any Series rated by it
or (y) Eurodollar time deposits of a depository institution or trust company
that are rated A-1+ by Standard & Poor's and P-1 by Moody's; provided, however,
that at the time of the Trust's investment or contractual commitment to invest
therein, the Eurodollar deposits of such depositary institution or trust company
shall have a credit rating from Standard & Poor's of A-1+ and P-1 by Moody's;
(d) a guaranteed investment contract (guaranteed as to timely payment) which
each Rating Agency designates in writing will not result in a withdrawal or
downgrading of its then current rating of any Series rated by it; (e) repurchase
agreements transacted with either (i) an entity subject to the United States
Bankruptcy Code, provided, however, that (A) the term of the repurchase
agreement is consistent with the requirements with regard to the maturity of
Cash Equivalents specified herein or in the applicable Supplement for the
applicable account or is due on demand, (B) the Trustee or a third party acting
solely as agent for the Trustee has possession of the collateral, (C) the
Trustee on behalf of the Trust has a perfected first priority security interest
in the collateral, (D) the market value of the collateral is maintained at the
requisite collateral percentage of the obligation in accordance with standards
of the Rating Agencies, (E) the failure to maintain the requisite collateral
level will obligate the Trustee to liquidate the collateral as promptly as
practicable upon instructions from the Servicer, (F) the securities subject to
the repurchase agreement are either obligations of, or fully guaranteed as to
principal and interest by, the United States of America or any agency or any
instrumentality or agency thereof, certificates of deposit or bankers
acceptances and (G) the securities subject to the repurchase agreement are free
and clear of any third party lien or claim, or (ii) a financial institution
insured by the FDIC, or any broker-dealer with "retail-customers" that is under
the jurisdiction of the Securities Investors Protection Corp. ("SIPC"),
provided, however, that (A) the market value of the collateral is maintained at
the requisite collateral percentage of the obligation in accordance with the
standards of the Rating Agencies, (B) the Trustee or a third party (with a
rating from Moody's and Standard & Poor's of P-1 and A-1+, respectively) acting
solely as agent for the Trustee has possession of the collateral, (C) the
collateral is free and clear of third party liens and, in the case of an SIPC
broker, was not acquired pursuant to a repurchase or reverse repurchase
agreement and (D) the failure to maintain the requisite collateral percentage
will obligate the Trustee to liquidate the collateral upon instructions from the
Servicer; provided, however, that at the time of the Trust's investment or
contractual commitment to invest in any repurchase agreement the short-term
deposits or commercial paper rating of such entity or institution in subsections
(i) and (ii) above shall have a credit rating of P-1 or A-1+ or their equivalent
from each Rating Agency; and (f) any other investment if each Rating Agency
confirms in writing that such investment will not adversely affect its then
current rating of the Investor Securities. "Cash Equivalents" shall not at any
time include obligations of DMCCB, Metris, or any of their Affiliates.
"Class" shall mean, with respect to any Series, any one of the
classes of Securities of that Series as specified in the related Supplement.
"Clearing Agency" shall mean an organization registered as a
"clearing agency" pursuant to Section 17A of the Securities Exchange Act of
1934, as amended.
"Clearing Agency Participant" shall mean a broker, dealer,
bank, other financial institution or other Person for whom from time to time a
Clearing Agency or Foreign Clearing Agency effects book-entry transfers and
pledges of securities deposited with the Clearing Agency or Foreign Clearing
Agency.
"Clearstream" shall mean Clearstream Banking, societe anonyme.
"Closing Date" shall mean, with respect to any Series, the
date of issuance of such Series of Securities, as specified in the related
Supplement.
"Collateral" shall have the meaning specified in subsection
2.4(f).
"Collection Account" shall have the meaning specified in
subsection 4.2(a).
"Collections" shall mean all payments received by the Servicer
in respect of the Receivables in the form of cash, checks or any other form of
payment in accordance with the Contract in effect from time to time on any
Receivables, including insurance proceeds allocable to the Receivables.
"Contract" shall mean an agreement between a Credit Card
Originator and another Person for the extension of revolving credit, including
pursuant to a credit card, in the form of a written contract, invoice, or
revolving credit agreement (but shall not include any agreement or plan relating
to the extension of credit on a closed-end basis).
"Corporate Trust Office" shall mean the principal office of
the Trustee at which at any particular time its corporate trust business shall
be administered, which office at the date of the execution of this Agreement is
located at 000 Xxxx Xxxxx Xxxxxx, Xx. Xxxx, Xxxxxxxxx 00000.
"Coupon" shall have the meaning specified in Section 6.1.
"Credit and Collection Policy" shall mean the written policies
and procedures of the applicable Credit Card Originator (i) relating to the
operation of its consumer revolving credit card business, including, without
limitation, the written policies and procedures for determining the
creditworthiness of credit card customers and the extension of credit to credit
card customers, and (ii) relating to the maintenance of credit card accounts and
collection of receivables with respect thereto, as such policies and procedures
may be amended, modified, or otherwise changed from time to time.
"Credit Card Originator" shall mean (i) DMCCB and its
successors or assigns under the Bank Receivables Purchase Agreement and/or any
transferee of the Accounts from DMCCB or (ii) any other originator of revolving
credit consumer credit card accounts which transfers Receivables directly or
indirectly to the Transferor and which has been identified in a prior written
notice to each Rating Agency.
"Daily Report" shall mean a report in the form specified in
subsection 1.2(e) as may be supplemented pursuant to any Supplement.
"Date of Processing" shall mean, with respect to any
transaction, the date on which such transaction is first recorded according to
the Servicer's computer master file of revolving credit accounts (without regard
to the effective date of such recordation).
"Debtor Relief Laws" shall mean (a) the United States
Bankruptcy Code and (b) all other applicable liquidation, conservatorship,
bankruptcy, moratorium, rearrangement, receivership, insolvency, reorganization,
suspension of payments, readjustment of debt, marshalling of assets, assignment
for the benefit of creditors or similar debtor relief laws from time to time in
effect in any jurisdiction affecting the rights of creditors generally or the
rights of creditors of national banks.
"Default Amount" shall mean, (i) on any Business Day other
than the Default Recognition Date, the aggregate amount of Principal Receivables
in Accounts which became Defaulted Accounts on such Business Day and (ii) on any
Default Recognition Date the aggregate amount of Principal Receivables in
Accounts which became Defaulted Accounts during the then current Monthly Period
(other than such Accounts which were included in clause (i)).
"Default Recognition Date" shall mean the last day of each
calendar month; provided, however that with respect to any Monthly Period the
"related Default Recognition Date" shall mean the Default Recognition Date
occurring closest to the last day of such Monthly Period and any amounts
allocated or applied on such Default Recognition Date shall be deemed to apply
to the related Monthly Period.
"Defaulted Account" shall mean each Account with respect to
which, in accordance with the Credit and Collection Policy or the Servicer's
customary and usual servicing procedures, the Servicer has charged off the
Receivables in such Account as uncollectible; an Account shall become a
Defaulted Account on the day on which such Receivables are recorded as charged
off as uncollectible on the Servicer's computer master file of revolving credit
accounts. Notwithstanding any other provision hereof, any Receivables in a
Defaulted Account that are Ineligible Receivables shall be treated as Ineligible
Receivables rather than Receivables in Defaulted Accounts.
"Defeasance Account" shall have the meaning specified in the
applicable Supplement.
"Definitive Security" shall have the meaning specified in
Section 6.10.
"Depositary" shall have the meaning specified in Section 6.10.
"Depositary Agreement" shall mean, with respect to each
Series, the agreement among the Transferor, the Trustee and the applicable
Clearing Agency, or as otherwise provided in the related Supplement.
"Determination Date" shall mean the second Business Day prior
to each Distribution Date.
"Discount Option Receivables" shall mean, on and after the
date on which the Transferor's exercise of its discount option pursuant to
Section 2.8 takes effect, the sum of (a) the aggregate Discount Option
Receivables at the end of the prior Date of Processing (which amount, prior to
the date on which the Transferor's exercise of its discount option takes effect
and with respect to Receivables generated prior to such date, shall be zero)
plus (b) any New Discount Option Receivables created on such Date of Processing
minus (c) any Discount Option Receivables Collections received on such Date of
Processing.
"Discount Option Receivable Collections" shall mean on any
Date of Processing, on and after the date on which the Transferor's exercise of
its discount option pursuant to Section 2.8 takes effect, the product of (a) a
fraction the numerator of which is the amount of Discount Option Receivables and
the denominator of which is the sum of the Principal Receivables and the
Discount Option Receivables in each case (for both numerator and denominator) at
the end of the prior Date of Processing, (b) Collections of Principal
Receivables and Discount Option Receivables received on such Date of Processing
and (c) a fraction the numerator of which is the aggregate amount of Principal
Receivables arising on each Date of Processing falling on or after the date on
which the Transferor exercises its discount option and the denominator of which
is the Aggregate Principal Receivables on such Date of Processing.
"Discount Percentage" shall mean the fixed percentage, if any,
designated by the Transferor pursuant to Section 2.8.
"Disposition" shall have the meaning specified in Section
9.2(a).
"Distribution Account" shall have the meaning specified in
subsection 4.2(c).
"Distribution Date" shall mean, unless otherwise specified in
any Supplement for the related Series, the twentieth day of each month or, if
such twentieth day is not a Business Day, the next succeeding Business Day.
"DMCCB" shall mean Direct Merchants Credit Card Bank, National
Association, a national banking organization organized and existing under the
laws of the United States of America.
"Dollars", "$" or "U.S. $" shall mean United States dollars.
"Eligible Account" shall mean, on the Initial Closing Date
(or, with respect to Additional Accounts and Supplemental Accounts, on the
related Addition Cut-Off Date), a revolving credit consumer credit card account
owned by a Credit Card Originator:
(a) which is payable in Dollars;
(b) the Obligor on which has provided, as its initial
billing address, an address located in the United States
or its territories or possessions or a United States military address;
(c) which has not been identified by the applicable
Credit Card Originator in its computer master file as stolen or
lost;
(d) which is not sold or pledged to any other party
and which does not have Receivables which are sold or pledged to any
other party; and
(e) the Receivables in which the applicable Credit Card
Originator has not charged off (or required to be charged off) in its
customary and usual manner for charging off Receivables in such
Accounts.
"Eligible Receivable" shall mean a Receivable that satisfies
each of the following criteria: (a) it arises under an Eligible Account, (b) it
is not sold or pledged to any other party, (c) it constitutes an "account" or a
"payment intangible" as defined in Article 9 of the UCC as then in effect in the
Relevant UCC State, (d) it is the legal, valid, and binding obligation of, or is
guaranteed by, a Person who is competent to enter into a Contract and incur debt
and is enforceable against such Person in accordance with its terms, (e) it was
created or acquired by the Credit Card Originator in compliance, in all material
respects, with all Requirements of Law applicable to the Credit Card Originator
and pursuant to a Contract that complies, in all material respects, with all
Requirements of Law applicable to the Credit Card Originator (including without
limitation, laws, rules and regulations relating to truth in lending, usury,
fair credit billing, fair credit reporting, equal credit opportunity and fair
debt collection practices), (f) all material consents, licenses, or
authorizations of, or registrations with, any Governmental Authority required to
be obtained or given by the Credit Card Originator in connection with the
creation of such Receivable or the execution, delivery, creation, and
performance of the related Contract by the Credit Card Originator have been duly
obtained or given and are in full force and effect and (g) immediately prior to
giving effect to the sale hereunder, the Transferor has good and marketable
title free and clear of all Liens and security interests arising under or
through the Transferor (other than Permitted Liens).
"Enhancement" shall mean, with respect to any Series, any cash
collateral account, cash collateral guaranty, guaranty, collateral invested
amount, letter of credit, guaranteed rate agreement, maturity guaranty facility,
tax protection agreement, interest rate cap, interest rate swap, currency swap,
subordination of the rights of one Class or one Series to another, or any other
contract, agreement or arrangement for the benefit of the Securityholders of
such Series (or Securityholders of any Class within such Series) as designated
in the applicable Supplement.
"Enhancement Provider" shall mean, with respect to any Series,
the Person, if any, designated as such in the related Supplement.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time.
"Euroclear Operator" shall mean Euroclear Bank S.A./N.V., as
operator of the Euroclear System.
"Excess Funding Account" shall have the meaning specified in
subsection 4.2(d).
"Exchangeable Transferor Security" shall mean, if the
Transferor elects to evidence its interest in the Transferor Interest in
certificated form pursuant to Section 6.1, a certificate executed and delivered
by the Transferor and authenticated by the Trustee substantially in the form of
Exhibit A; provided, that at any time there shall be only one Transferor
Certificate; provided further, that in any Supplement, "Exchangeable Transferor
Certificate" shall mean either a certificate executed and delivered by the
Transferor and authenticated by the Trustee substantially in the form of Exhibit
A or the uncertificated interest in the Transferor Interest.
"Extended Trust Termination Date" shall have the meaning
specified in subsection 12.1(a).
"FDIC" shall mean the Federal Deposit Insurance Corporation,
or any successor thereto.
"Finance Charge Collections" shall mean, with respect to any
Business Day, the sum of (x) Collections received by the Servicer with respect
to Finance Charge Receivables on such Business Day, plus (y) Recoveries, plus
(z) investment earnings on amounts credited to the Excess Funding Account.
"Finance Charge Receivables" shall mean the sum of (y) all
Receivables evidencing amounts billed from time to time to the Obligors on any
Account in respect of (i) Periodic Finance Charges, (ii) overlimit fees, (iii)
late charges, (iv) returned check fees, (v) annual membership fees and annual
service charges, if any, (vi) transaction charges, (vii) cash advance fees,
(viii) fees and charges relating to debt waiver programs administered by a
Credit Card Originator and (ix) other similar fees and charges that are
designated as Finance Charge Receivables, plus (z) Discount Option Receivables,
if any.
"Foreign Clearing Agency" shall mean Clearstream and the
Euroclear Operator.
"Global Security" shall have the meaning specified in Section
6.13.
"Governmental Authority" shall mean the United States of
America, any state or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Holder" or "Securityholder" shall mean the Person in whose
name a Security is registered in the Security Register, and if applicable, the
holder of any Bearer Security or Coupon, as the case may be.
"Holder of the Exchangeable Transferor Security" shall mean
the Holder of the Exchangeable Transferor Security or the Holder of any
uncertificated interest in the Transferor Interest.
"Ineligible Receivable" shall have the meaning specified in
subsection 2.4(d).
"Initial Closing Date" shall mean May 30, 1995.
"Initial Invested Amount" shall mean, with respect to any
Series of Securities, the amount stated in the related Supplement or, if not
stated therein, the initial Invested Amount.
"Insolvency Event" shall have the meaning specified in
subsection 9.2(a).
"Interest Funding Account" shall have the meaning specified in
subsection 4.2(b).
"Internal Revenue Code" shall mean the Internal Revenue Code
of 1986, as amended from time to time.
"Invested Amount" shall have, with respect to any Series of
Securities, the meaning stated in the related Supplement.
"Investment Company Act" shall mean the Investment Company Act
of 1940, as amended from time to time.
"Investor Account" shall mean each of any Interest Funding
Account, any Principal Account, the Excess Funding Account, any Distribution
Account and any Series Account.
"Investor Percentage" shall mean, with respect to Principal
Collections, Finance Charge Collections and Receivables in Defaulted Accounts,
and with respect to any Series of Securities, the percentage specified in the
related Supplement.
"Investor Security" shall mean any one of the securities
(including, without limitation, the Bearer Securities or the Registered
Securities) executed by the Transferor and authenticated by the Trustee
substantially in the form (or forms in the case of a Series with multiple
classes) of the investor security or variable funding security attached to the
related Supplement.
"Investor Securityholder" shall mean the Holder of an Investor
Security.
"Lien" shall mean any lien, security interest or other
encumbrance; provided, however, that any assignment pursuant to Section 7.2
shall not be deemed to constitute a Lien.
"Metris" shall mean Metris Companies Inc., a corporation
organized and existing under the laws of the State of Delaware.
"Minimum Aggregate Principal Receivables" shall mean, as of
any date of determination, the sum of the numerators used in the calculation of
the Investor Percentages for Principal Collections for all outstanding Series on
such date of determination.
"Minimum Retained Interest" shall mean the product of the
weighted average Minimum Retained Percentages for all Series and the sum of the
outstanding principal amounts of all Classes of all Series.
"Minimum Retained Percentage" shall mean, for any Series, the
Minimum Retained Percentage specified in the Supplement for that Series.
"Minimum Transferor Interest" shall mean, as of any date of
determination, the product of (i) the sum of (a) the aggregate Principal
Receivables and (b) the amounts on deposit in the Excess Funding Account and
(ii) the Minimum Transferor Percentage.
"Minimum Transferor Percentage" shall mean the highest Minimum
Transferor Percentage specified in any Supplement.
"Monthly Period" shall mean, unless otherwise defined with
respect to a Series in the related Supplement, the period from and including the
first day of each calendar month of the Transferor to and including the last day
of such calendar month.
"Monthly Servicing Fee" shall mean the Servicing Fee payable
to the Servicer with respect to a Monthly Period.
"Moody's" shall mean Xxxxx'x Investors Service, Inc. or its
successor.
"MRI" shall mean Metris Receivables, Inc., a Delaware
corporation.
"New Discount Option Receivables" shall mean, on any Date of
Processing on and after the date on which the Transferor's exercise of its
discount option pursuant to Section 2.8 takes effect, the product of the amount
of any Principal Receivables created on such Date of Processing (without
reducing the amount of Principal Receivables by the amount of Financial Charge
Receivables which are Discount Option Receivables) and the Discount Percentage.
"New Issuance" shall mean either of the procedures described
in subsection 6.9(b).
"New Issuance Date" shall have the meaning, with respect to
any Series issued pursuant to a New Issuance, specified in subsection 6.9(b).
"New Issuance Notice" shall have the meaning, with respect to
any Series issued pursuant to a New Issuance, specified in subsection 6.9(b).
"Obligor" shall mean a Person obligated to make payments with
respect to a Receivable arising under an Account pursuant to a Contract.
"Officer's Certificate" shall mean a certificate signed by any
Vice President, Treasurer, Assistant Treasurer or more senior officer of the
Transferor or Servicer, as applicable, and delivered to the Trustee.
"Opinion of Counsel" shall mean a written opinion of counsel,
who may be counsel for or an employee of the Person providing the opinion, and
who shall be reasonably acceptable to the Trustee.
"Pay Out Commencement Date" shall mean, with respect to each
Series, the date on which (a) a Trust Pay Out Event is deemed to occur pursuant
to Section 9.1 or (b) a Series Pay Out Event is deemed to occur pursuant to the
Supplement for such Series.
"Pay Out Event" shall mean, with respect to each Series, a
Trust Pay Out Event or a Series Pay Out Event.
"Paying Agent" shall mean any paying agent appointed pursuant
to Section 6.6 and shall initially be the Trustee.
"Periodic Finance Charges" shall have, with respect to any
Account, the meaning specified in the Contract applicable to such Account for
finance charges (due to periodic rate) or any similar term.
"Permitted Activities" shall mean the primary activities of
the Trust, which are:
(a) holding Receivables transferred from the Transferor and
the other assets of the Trust, including passive derivative financial
instruments that pertain to beneficial interests issued or sold to
parties other than the Transferor, its Affiliates or its agents;
(b) issuing Securities and other interests in the Trust
Property;
(c) receiving Collections and making payments on such
Securities and interests in accordance with the terms of the Pooling
and Servicing Agreement and any Supplement; and
(d) engaging in other activities that are necessary or
incidental to accomplish these limited purposes, which activities can
not be contrary to the status of the Trust as a qualified special
purpose entity under existing accounting literature.
"Permitted Lien" shall mean with respect to the Receivables:
(i) Liens in favor of the Transferor created pursuant to the Purchase Agreement
assigned to the Trustee pursuant to this Agreement; (ii) Liens in favor of the
Trustee pursuant to this Agreement; and (iii) Liens that secure the payment of
taxes, assessments and governmental charges or levies, if such taxes are either
(a) not delinquent or (b) being contested in good faith by appropriate legal or
administrative proceedings and as to which adequate reserves in accordance with
generally accepted accounting principles shall have been established.
"Person" shall mean any person or entity, including any
individual, corporation, partnership, limited liability company, joint venture,
association, joint-stock company, trust, unincorporated organization,
governmental entity or other entity of similar nature.
"Pool Factor" shall mean, as of any Record Date, a number
carried out to seven decimals representing the ratio of the applicable Invested
Amount as of such Record Date (determined after taking into account any
reduction in the Invested Amount which will occur on the following Distribution
Date) to the applicable Initial Invested Amount unless otherwise specified with
respect to a Series in the related Supplement.
"Pooling and Servicing Agreement" shall have the meaning
assigned in the preamble hereto.
"Portfolio Yield" shall mean, with respect to any Monthly
Period and any outstanding Series, the amount which the related Supplement
specifies as the "Portfolio Yield" for such Monthly Period.
"Principal Account" shall have the meaning specified in
subsection 4.2(b).
"Principal Collections" shall mean, with respect to any
Business Day, the Collections received with respect to each Principal Receivable
on such Business Day.
"Principal Receivables" shall mean all Receivables other than
Finance Charge Receivables (including Discount Option Receivables) or
Receivables in Defaulted Accounts. In calculating the aggregate amount of
Principal Receivables on any day, the amount of Principal Receivables shall be
reduced by the aggregate amount of credit balances in the Accounts on such day.
"Principal Shortfalls" shall mean, with respect to any
Business Day and any outstanding Series, the amount which the related Supplement
specifies as the "Principal Shortfall" for such Business Day.
"Principal Terms" shall have the meaning, with respect to any
Series issued pursuant to a New Issuance, specified in subsection 6.9(c).
"Prospective Pay Out Event" shall have the meaning specified
in subsection 2.3(m).
"Publication Date" shall have the meaning specified in
subsection 9.2(a).
"Purchase Agreement" shall mean the Second Amended and
Restated Purchase Agreement dated as of January 22, 2002, between the
Transferor, as buyer of receivables, and Metris, as seller of receivables, as
amended from time to time.
"Qualified Institution" shall have the meaning specified in
subsection 4.2(a).
"Rating Agency" shall mean, with respect to each Series, the
rating agency or agencies, if any, specified in the related Supplement.
"Ratings Event" shall mean, with respect to any Class of any
outstanding Series rated by a Rating Agency, a reduction or withdrawal of the
rating of any such Class by a Rating Agency.
"Reassignment Date" shall have the meaning specified in
subsection 2.4(e).
"Receivable" shall mean all of the indebtedness of any Obligor
under an Account, including the right to receive payment of any interest or
finance charges and other obligations of such Obligor with respect thereto, but
only to the extent that such amounts payable have been conveyed to the
Transferor pursuant to the Purchase Agreement. Each Receivable includes, without
limitation, all rights of the Transferor under the applicable Contract. A
Receivable shall be deemed to have been created at the end of the day on the
Date of Processing of such Receivable.
"Record Date" shall mean, with respect to any Distribution
Date, unless otherwise specified in the applicable Supplement, the Business Day
preceding such Distribution Date, except that, with respect to any Definitive
Securities, Record Date shall mean the fifth day of the then current Monthly
Period.
"Recoveries" shall mean all Recoveries as defined in the
Purchase Agreement that are paid to the Transferor as provided in the Purchase
Agreement.
"Registered Securities" shall have the meaning specified in
Section 6.1.
"Related Person" shall mean a Person that is an Affiliate of
Metris, any Investor Securityholder, any Enhancement Provider, or any Person
whose status would violate the conditions for a trustee contained in Section
(4)(i) of Rule 3a-7 under the Investment Company Act of 1940, as amended.
"Relevant UCC State" shall mean the State of Delaware and each
jurisdiction in which the filing of a UCC financing statement is necessary to
perfect the ownership interest and security interest of the Transferor pursuant
to the Purchase Agreement or the ownership or security interest of the Trustee
established under this Agreement.
"Removal Date" shall have the meaning specified in subsection
2.7(b).
"Removal Notice Date" shall mean the day, no later than the
fifth Business Day prior to a Removal Date, on which the Transferor gives notice
to the Trustee pursuant to Section 2.7(a) of its intention to remove Accounts
from the Trust.
"Removed Accounts" shall have the meaning specified in
subsection 2.7(a).
"Requirements of Law" for any Person shall mean the
certificate of incorporation or articles of association and by-laws or other
organizational or governing documents of such Person, and any material law,
treaty, rule or regulation, or determination of an arbitrator or Governmental
Authority, in each case applicable to or binding upon such Person or to which
such Person is subject.
"Responsible Officer" shall mean any officer within the
Corporate Trust Office (or any successor group of the Trustee), including the
President, any Vice President or any other officer of the Trustee customarily
performing functions similar to those performed by any person who at the time
shall be an above-designated officer and who shall have direct responsibility
for the administration of this Agreement.
"Restart Date" shall mean the date specified in the notice
delivered by the Transferor to the Trustee pursuant to subsection 2.6(b).
"Retained Interest" shall mean, on any date of determination,
the sum of the Transferor Interest and the Invested Amount represented by any
Transferor Retained Security.
"Retained Percentage" shall mean, on any date of
determination, the percentage equivalent of a fraction the numerator of which is
the Retained Interest and the denominator of which is the aggregate amount of
Principal Receivables at the end of the day immediately prior to such date of
determination plus all amounts on deposit in the Excess Funding Account (but not
including investment earnings on such amounts).
"Revolving Period" shall have, with respect to each Series,
the meaning specified in the related Supplement.
"Securities Act" shall mean the Securities Act of 1933, as
amended from time to time.
"Security" shall mean any one of the Investor Securities of
any Series or the Exchangeable Transferor Security, if applicable.
"Security Interest" shall mean interest payable in respect of
the Investor Securities of any Series pursuant to Article IV of the Agreement as
supplemented by the Supplement for such Series.
"Security Owner" shall mean, with respect to a Book-Entry
Security, the Person who is the owner of an interest in such Book-Entry
Security, as may be reflected on the books of the Clearing Agency or Foreign
Clearing Agency, or on the books of a Person maintaining an account with such
Clearing Agency (directly or as an indirect participant, in accordance with the
rules of such Clearing Agency).
"Security Principal" shall mean principal payable in respect
of the Investor Securities of any Series pursuant to Article IV of this
Agreement.
"Security Rate" shall mean, with respect to any Series of
Securities (or, for any Series with more than one Class, for each Class of such
Series), the percentage (or formula on the basis of which such rate shall be
determined) stated in the related Supplement.
"Security Register" shall mean the register maintained
pursuant to Section 6.3, providing for the registration of the Securities and
transfers and exchanges thereof.
"Securityholder" or "Holder" shall mean the Person in whose
name a Security is registered in the Security Register and, if applicable, the
holder of any Bearer Security or Coupon, as the case may be and, if used with
respect to the Transferor Interest, a Person in whose name the Exchangeable
Transferor Security is registered in the Security Register or a Person in whose
name ownership of the uncertificated interest in the Transferor Interest is
recorded in the books and records of the Trustee.
"Series" shall mean any series of Investor Securities issued
by the Trust pursuant to a Supplement, which may include within any such Series
a Class or Classes of Investor Securities subordinate to another such Class or
Classes of Investor Securities.
"Series Account" shall mean any account or accounts
established pursuant to a Supplement for the benefit of the related Series.
"Series Charge Off" shall have, with respect to each Series,
the meaning specified in the applicable Supplement.
"Series Default Amount" shall have, with respect to any Series
of Securities, the meaning stated in the related Supplement.
"Series Pay Out Event" shall have, with respect to any Series,
the meaning specified in the related Supplement.
"Series Percentage" shall mean with respect to any Series, on
any date of determination, the percentage equivalent of a fraction the numerator
of which is the Invested Amount of such Series and the denominator of which is
the sum of the Invested Amounts of all Series then outstanding.
"Series Servicing Fee Percentage" shall mean, with respect to
any Series, the amount specified as such in the related Supplement.
"Series Termination Date" shall mean, with respect to any
Series of Securities, the date stated as such in the related Supplement.
"Servicer" shall mean DMCCB in its capacity as Servicer of the
Receivables or any Person appointed as Successor Servicer as herein provided to
service the Receivables.
"Servicer Default" shall have the meaning specified in Section
10.1.
"Servicing Fee" shall have the meaning specified in Section
3.2.
"Settlement Statement" shall mean a report in the form
specified in subsection 1.2(e) as may be supplemented pursuant to any
Supplement.
"Shared Principal Collections" shall mean, with respect to any
Business Day, the aggregate amount of Principal Collections for all outstanding
Series that the related Supplements specify are to be treated as "Shared
Principal Collections" available to be allocated to other Series for such
Business Day.
"Standard & Poor's" shall mean Standard & Poor's Ratings
Services, a Division of The XxXxxx-Xxxx Companies, or its successor.
"Successor Servicer" shall have the meaning specified in
subsection 10.2(a).
"Supplement" shall mean, with respect to any outstanding
Series, a supplement to this Agreement complying with the terms of Section 6.9
of this Agreement, executed in conjunction with any issuance of Securities of
such Series.
"Supplemental Accounts" shall mean each revolving credit
consumer credit card account established pursuant to a Contract between a Credit
Card Originator and any Person, which account is designated pursuant to
subsection 2.6(c) or (d) to be included as a Supplemental Account and is
identified on or after the Amendment Cut-Off Date on the Account Schedule
delivered to the Trustee by the Transferor.
"Supplemental Security" shall have the meaning specified in
subsection 6.9(d).
"Termination Notice" shall have, with respect to any Series,
the meaning specified in Section 10.1.
"Transfer" shall mean transfer, sell, exchange, pledge,
hypothecate, participate, assign or otherwise dispose, in whole or in part.
"Transfer Agent and Registrar" shall have the meaning
specified in Section 6.3(a) and shall initially be U.S. Bank National
Association.
"Transfer Date" shall mean, with respect to any Series, the
Business Day immediately prior to each Distribution Date.
"Transferor" shall mean Metris Receivables, Inc., a
corporation organized and existing under the laws of the State of Delaware,
and any successor thereto.
"Transferor Interest" shall mean, on any date of
determination, the aggregate amount of Principal Receivables at the end of the
day immediately prior to such date of determination plus all amounts on deposit
in the Excess Funding Account (but not including investment earnings on such
amounts) at the end of such immediately preceding day, minus the Aggregate
Invested Amount at the end of such immediately preceding day.
"Transferor Percentage" shall mean, on any date of
determination, when used with respect to Principal Collections, Finance Charge
Collections and Receivables in Defaulted Accounts, a percentage equal to 100%
minus the Aggregate Investor Percentage with respect to such categories of
Collections and Receivables, as applicable.
"Transferor Retained Class" shall mean any Class of Investor
Securities of any Series which the Transferor retained pursuant to the terms of
any Supplement.
"Transferor Retained Securities" shall mean Investor
Securities of any Series which the Transferor is required to retain pursuant to
the terms of any Supplement.
"Transferred Account" shall mean an Account with respect to
which a new credit account number has been issued by the applicable Credit Card
Originator under circumstances resulting from a lost or stolen credit card and
not requiring standard application and credit evaluation procedures under the
Credit and Collection Policy; provided that such Account can be traced or
identified by reference to or by way of the Account Schedule.
"Trigger Event" shall have the meaning specified in subsection
9.2(a).
"Trust" shall mean the trust created by this Agreement, the
corpus of which shall consist of the Trust Property.
"Trust Extension" shall have the meaning specified in
subsection 12.1(a).
"Trust Pay Out Event" shall have, with respect to each Series,
the meaning specified in Section 9.1.
"Trust Property" shall have the meaning specified in Section
2.1.
"Trust Termination Date" shall mean the earliest to occur of
(i) unless a Trust Extension shall have occurred, the day after the Distribution
Date with respect to any Series following the date on which funds shall have
been deposited in the Distribution Account or the applicable Series Account for
the payment of Investor Securityholders of each Series then issued and
outstanding sufficient to pay in full the Aggregate Invested Amount plus
interest accrued at the applicable Security Rate through the end of the day
prior to the Distribution Date with respect to each such Series and certain
other amounts as may be specified in any Series Supplement, (ii) if a Trust
Extension shall have occurred, the Extended Trust Termination Date, and (iii)
the date specified in subsection 12.1(a).
"Trustee" shall mean U.S. Bank National Association, a
national banking association, and its successors and any Person resulting from
or surviving any consolidation or merger to which it or its successors may be a
party and any successor trustee appointed as herein provided.
"UCC" shall mean the Uniform Commercial Code, as amended from
time to time, as in effect in the applicable jurisdiction.
"Undivided Interest" shall mean the undivided interest in the
Trust evidenced by an Investor Security.
"Variable Funding Securities" shall mean a Series of Investor
Securities, issued pursuant to Section 6.9 and a Variable Funding Supplement, in
one or more Classes.
"Variable Funding Supplement" shall mean a Supplement executed
in connection with the issuance of Variable Funding Securities.
Section 1.2 Other Definitional Provisions.
(a) All terms defined in any Supplement or this Agreement shall have the
meanings ascribed to them herein when used in any security, certificate or other
document made or delivered pursuant hereto unless otherwise defined therein.
(b) As used herein and in any security, certificate or other document made or
delivered pursuant hereto or thereto, accounting terms not defined in Section
1.1, and accounting terms partially defined in Section 1.1 to the extent not
defined, shall have the respective meanings given to them under generally
accepted accounting principles. To the extent that the definitions of accounting
terms herein are inconsistent with the meanings of such terms under generally
accepted accounting principles, the definitions contained herein shall control.
(c) The agreements, representations and warranties of DMCCB in this Agreement
and in any Supplement in its capacity as Servicer and of MRI in its capacity as
Transferor shall be deemed to be the agreements, representations and warranties
of DMCCB and MRI solely in each such capacity for so long as either of them acts
in each such capacity under this Agreement.
(d) The words "hereof," "herein" and "hereunder" and words of similar import
when used in this Agreement shall refer to any Supplement or this Agreement as a
whole and not to any particular provision of this Agreement or any Supplement;
and Section, subsection, Schedule and Exhibit references contained in this
Agreement or any Supplement are references to Sections, subsections, Schedules
and Exhibits in or to this Agreement or any Supplement unless otherwise
specified.
The Daily Report and Settlement Statement shall be in
substantially the forms of Exhibits B and C, with such changes as the Servicer
may determine to be necessary or desirable; provided, however, that no such
change shall serve to exclude information required by this Agreement or any
Supplement and each such change shall be reasonably acceptable to the Transferor
and the Trustee. The Servicer shall, upon making such determination and
receiving the consent of the Transferor and the Trustee to such change, deliver
to the Trustee, the Transferor and each Rating Agency an Officer's Certificate
of the Servicer to which shall be annexed the form of the related Exhibit, as so
changed. Upon the delivery of such Officer's Certificate to the Trustee, the
related Exhibit, as so changed, shall for all purposes of this Agreement
constitute such Exhibit. The Trustee may conclusively rely upon such Officer's
Certificate in determining whether the related Exhibit, as changed, conforms to
the requirements of this Agreement.
[End of Article I]
ARTICLE II
CONVEYANCE OF RECEIVABLES;
ISSUANCE OF SECURITIES
Section 2.1 Conveyance of Receivables. The Transferor does hereby transfer,
assign, set-over, and otherwise convey to the Trustee, without recourse, all of
its right, title and interest in, to and under (i) in the case of Receivables
arising in the Accounts designated on the Initial Closing Date (including
Transferred Accounts related to such Accounts), the Receivables existing at the
close of business on the Initial Closing Date and thereafter created from time
to time in such Accounts until the termination of the Trust, (ii) in the case of
Receivables arising in the Additional Accounts and the Supplemental Accounts
(including Transferred Accounts related to such Additional Accounts and
Supplemental Accounts), the Receivables existing at the close of business on the
applicable Addition Cut-Off Date and thereafter created from time to time in
such Accounts until the termination of the Trust, (iii) all monies and
investments due or to become due with respect to all of the foregoing
(including, without limitation, the right to any Finance Charge Receivables, any
Collections, and any Recoveries), (iv) all proceeds of all of the foregoing, (v)
the Purchase Agreement and (vi) the Bank Receivables Purchase Agreement to the
extent that it relates to all of the foregoing. Such property, together with all
monies and investments on deposit, from time to time, in the Collection Account,
the Excess Funding Account, the Series Accounts maintained for the benefit of
the Securityholders of any Series of Securities, any Enhancement and all monies
available under any Enhancement, to be provided for any Series for payment to
the Securityholders of such Series, shall constitute the assets of the Trust
(collectively, the "Trust Property"). The foregoing transfer, assignment,
set-over and conveyance does not constitute and is not intended to result in a
creation or an assumption by the Trust, the Trustee or any Investor
Securityholder of any obligation of the Transferor, the Servicer, the applicable
Credit Card Originator or any other Person in connection with the Accounts or
any agreement or instrument relating thereto, including, without limitation, any
obligation to any Obligors, merchant banks, merchant clearance systems, VISA
USA, Inc., MasterCard International Incorporated or insurers, or in connection
with the Purchase Agreement or the Bank Receivables Purchase Agreement.
In connection with such transfer, assignment, set-over and
conveyance, the Transferor agrees to record and file, at its own expense, one or
more financing statements (including any continuation statements and other
amendments with respect to such financing statements when applicable) with
respect to the Receivables meeting the requirements of applicable state law in
such manner and in such jurisdictions as are necessary to perfect the assignment
of the Receivables to the Trust, and to deliver file-stamped copies of such
financing statements and continuation statements (and other amendments) or other
evidence of such filing (which may, for purposes of this Section 2.1, consist of
telephone or facsimile confirmation of such filing) to the Trustee on or prior
to the date of issuance of the Securities, and in the case of any continuation
statements and other amendments filed pursuant to this Section 2.1, as soon as
practicable after receipt thereof by the Transferor. The foregoing transfer,
assignment, set-over and conveyance to the Trust shall be made to the Trustee,
on behalf of the Trust, and each reference in this Agreement to such transfer,
assignment, set-over and conveyance shall be construed accordingly.
The Transferor further agrees, at its own expense, (i) on or
prior to (A) the Initial Closing Date, in the case of the Accounts designated on
the Initial Closing Date, and (B) the applicable Addition Date, in the case of
Additional Accounts and Supplemental Accounts, to indicate in its books and
records (including the appropriate computer files) that Receivables created in
connection with the Accounts (other than Removed Accounts) and the related Trust
Property have been conveyed to the Trustee pursuant to this Agreement, including
by identifying such Accounts in its master file maintained in its computer files
with the designation portfolio ID 0001 and (ii) on or prior to (A) the Amendment
Closing Date, in the case of the Accounts existing on the Amendment Closing
Date, and (B) the applicable Addition Date, in the case of Additional Accounts
and Supplemental Accounts, to deliver to the Trustee an Account Schedule
(provided that such Account Schedule shall be provided in respect of Additional
Accounts on or prior to the Determination Date immediately succeeding the
related Monthly Period during which their respective Addition Dates occur). Each
Account Schedule, as supplemented from time to time, shall be marked as Schedule
1 to this Agreement and is hereby incorporated into and made a part of this
Agreement. Once the books and records (including the appropriate computer files)
referenced in clause (i) of this paragraph have been indicated with respect to
any Account, the Transferor further agrees not to alter such indication during
the remaining term of this Agreement, other than pursuant to Section 2.7 with
respect to Removed Accounts, unless and until the Transferor shall have
delivered to the Trustee at least twenty (20) days' prior written notice of its
intention to do so and has taken such action as is necessary or advisable to
cause the interest of the Trustee in the Trust Property to continue to be
perfected with the priority required by this Agreement.
The parties hereto intend that each transfer of Receivables
and other property pursuant to this Agreement or any Assignment constitute a
sale, and not a secured borrowing, for accounting purposes. If and to the extent
that the transfer pursuant to this Section 2.1 is not deemed to be a sale, the
Transferor shall be deemed hereunder to have granted and does hereby grant to
the Trustee a first priority perfected security interest in all of the
Transferor's right, title and interest in, to and under the Trust Property, and
this Agreement shall constitute a security agreement under applicable law.
Section 2.2 Acceptance by Trustee.
(a) The Trustee hereby acknowledges its acceptance, on behalf of the Trust, of
all right, title and interest previously held by the Transferor in, to and under
the Trust Property and declares that it shall maintain such right, title and
interest, upon the Trust herein set forth, for the benefit of all
Securityholders. The Trustee acknowledges that, on or before the Amendment
Closing Date, the Transferor delivered to the Trustee the Account Schedule
relating to the Accounts existing on such date.
(b) The Trustee shall have no power to create, assume or incur indebtedness or
other liabilities in the name of the Trust other than as contemplated in this
Agreement.
Section 2.3 Representations and Warranties of the Transferor. The Transferor
hereby represents and warrants to the Trustee, on behalf of the Trust, on the
Initial Closing Date, on the Amendment Closing Date and, with respect to any
Series of Securities, on the date of the related Supplement and the related
Closing Date for such Series:
(a) Organization and Good Standing. The Transferor is a corporation duly
organized and validly existing and in good standing under the laws of the State
of Delaware and has the corporate power and authority and legal right to own its
properties and conduct its business as such properties are presently owned and
such business is presently conducted, and to execute, deliver and perform its
obligations under this Agreement and the Purchase Agreement and to execute and
deliver to the Trustee the Securities pursuant hereto.
(b) Due Qualification. The Transferor is duly qualified to do business and is in
good standing (or is exempt from such requirements) as a foreign corporation in
any state required in order to conduct its business, and has obtained all
necessary licenses and approvals with respect to the Transferor required under
federal and Delaware law; provided, however, that no representation or warranty
is made with respect to any qualifications, licenses or approvals which the
Trustee would have to obtain to do business in any state in which the Trustee
seeks to enforce any Receivable.
(c) Due Authorization. The execution and delivery by the Transferor of this
Agreement and the Purchase Agreement and the consummation by the Transferor of
the transactions provided for herein and therein, have been duly authorized by
the Transferor by all necessary corporate action on its part.
(d) Binding Obligation. Each of this Agreement and the Purchase Agreement, and
the consummation of the transactions provided for herein and therein,
constitutes a legal, valid, and binding obligation of the Transferor,
enforceable against the Transferor in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereinafter in effect,
affecting the enforcement of creditors' rights in general and as such
enforceability may be limited by general principles of equity (whether
considered in a proceeding at law or in equity).
(e) No Conflicts. The execution and delivery by the Transferor of this Agreement
and the Purchase Agreement and the performance by the Transferor of the
transactions contemplated hereby and thereby, do not (i) contravene the
Transferor's charter or bylaws, (ii) violate any material provision of law
applicable to it or require any filing (except for the filings under the UCC),
registration, consent or approval under, any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award presently in effect having
applicability to the Transferor, except for such filings, registrations,
consents or approvals as have already been obtained and are in full force and
effect.
(f) Taxes. Except as specified on Schedule 2, the Transferor has filed all
material tax returns required to be filed by the Transferor and has paid or made
adequate provision for the payment of all material taxes, assessments and other
governmental charges due from the Transferor or is contesting any such tax,
assessment or other governmental charge in good faith through appropriate
proceedings.
(g) No Violation. The execution and delivery by the Transferor of this Agreement
and the Purchase Agreement and the execution and delivery by the Transferor to
the Trustee of the Securities, the performance by the Transferor of the
transactions contemplated by this Agreement and the Purchase Agreement and the
fulfillment by the Transferor of the terms hereof and thereof will not violate
any Requirements of Law applicable to the Transferor, will not violate, result
in any breach of any of the material terms and provisions of, or constitute
(with or without notice or lapse of time or both) a default under any
Requirement of Law applicable to the Transferor or any material indenture,
contract, agreement, mortgage, deed of trust or other material instrument to
which the Transferor is a party or by which it or its properties are bound.
(h) No Proceedings. There are no proceedings or investigations pending or, to
the best knowledge of the Transferor, threatened against the Transferor, before
any Governmental Authority (i) asserting the invalidity of this Agreement and
the Purchase Agreement, (ii) seeking to prevent the consummation of any of the
transactions contemplated hereby or thereby, (iii) seeking any determination or
ruling that would materially and adversely affect the performance by the
Transferor of its obligations thereunder, (iv) seeking any determination or
ruling that would materially and adversely affect the validity or enforceability
thereof or (v) seeking to affect adversely the tax attributes of the Trust.
(i) All Consents Required. All approvals, authorizations, consents, orders or
other actions of any Governmental Authority required in connection with the
execution and delivery by the Transferor of this Agreement, the Purchase
Agreement and the Securities, the performance by the Transferor of the
transactions contemplated by this Agreement and the Purchase Agreement and the
fulfillment by the Transferor of the terms hereof and thereof, have been
obtained.
(j) Bona Fide Receivables. Each Receivable is an account receivable arising out
of the performance by the applicable Credit Card Originator in accordance with
the terms of the Contract giving rise to such Receivable. The Transferor has no
knowledge of any fact which should have led it to expect at the time of the
classification of any Receivable as an Eligible Receivable that such Receivable
would not be paid in full when due, and each Receivable classified as an
Eligible Receivable by the Transferor in any document or report delivered under
this Agreement satisfies the requirements of eligibility contained in the
definition of Eligible Receivable set forth in this Agreement.
(k) Place of Business. The chief executive office of the Transferor is in
Minnetonka, Minnesota.
(l) Use of Proceeds. No proceeds of the issuance of any Security will be
used by the Transferor to purchase or carry any margin security.
(m) Pay Out Event. No Pay Out Event and no condition that with the giving of
notice and/or the passage of time constitutes a Pay Out Event (a "Prospective
Pay Out Event") has occurred and is continuing.
(n) Not an Investment Company. The Transferor is not an "investment
company" within the meaning of the Investment Company Act, or is exempt from
all provisions of such Act.
(o) Solvency. The Transferor is not insolvent and will not be rendered
insolvent upon the transfer of the Receivables to the Trust.
The representations and warranties set forth in this Section
2.3 shall survive the transfer and assignment of the respective Receivables to
the Trust, and termination of the rights and obligations of the Servicer
pursuant to Section 10.1. The Transferor hereby represents and warrants to the
Trust, with respect to any Series of Securities, on its Closing Date, unless
otherwise stated in the related Supplement, that the representations and
warranties of the Transferor set forth in Section 2.3, are true and correct on
such date (and for the purposes of such representations and warranties,
"Securities" shall mean the Securities issued on the related Closing Date) and
that each representation and warranty set forth in this Section 2.3 and in
Section 2.4(a)(i) with respect to the Agreement shall be made at such time with
respect to the applicable Supplement. Upon discovery by the Transferor, the
Servicer or a Responsible Officer of the Trustee of a breach of any of the
foregoing representations and warranties, the party discovering such breach
shall give prompt written notice to the others.
Section 2.4 Representations and Warranties of the Transferor Relating to the
Agreement and the Receivables.
(a) Binding Obligation; Valid Transfer and Assignment. The Transferor hereby
represents and warrants to the Trustee, on behalf of the Trust, that, on the
Initial Closing Date, on the Amendment Closing Date and, with respect to any
Series of Securities, on the date of its related Supplement and Closing Date,
and, with respect to any matters involving Additional Accounts or Supplemental
Accounts, on the applicable Addition Date:
(i) The Purchase Agreement and this Agreement each constitutes the legal,
valid and binding obligation of the Transferor, enforceable against the
Transferor in accordance with its terms, except (A) as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect, affecting the enforcement of creditors' rights in general, and
(B) as such enforceability may be limited by general principles of
equity (whether considered in a suit at law or in equity).
(ii) The transfer of Receivables by the Transferor to the Trustee under this
Agreement constitutes either (A) a valid transfer, assignment, set-over
and conveyance to the Trustee of all right, title and interest of the
Transferor in and to such Receivables, and such Receivables will be
held by the Trustee free and clear of any Lien of any Person claiming
through or under the Transferor, except for (x) Permitted Liens, (y)
the interest of the Transferor as Holder of the Exchangeable Transferor
Security and any other Class of Securities held by the Transferor from
time to time and (z) the Transferor's right, if any, to interest
accruing on, and investment earnings, if any, in respect of any
Interest Funding Account, any Principal Account, the Excess Funding
Account, or any Series Account, as provided in this Agreement or the
related Supplement, or (B) a grant of a first priority perfected
security interest (as defined in the UCC as in effect in the
Relevant UCC State) in, to and under such Receivables, which grant is
enforceable with respect to the existing Receivables and the proceeds
thereof upon execution and delivery of this Agreement, and which will
be enforceable with respect to such Receivables hereafter created and
the proceeds thereof, upon such creation. If this Agreement
constitutes the grant of a security interest to the Trustee in such
property, upon the filing of the financing statement described in
Section 2.1, and in the case of the Receivables hereafter created and
proceeds thereof, upon such creation, the Trustee shall have a first
priority perfected security interest in such property, except for
Permitted Liens. Except as contemplated in this Agreement or any
Supplement, neither the Transferor nor any Person claiming through or
under the Transferor shall have any claim to or interest in the
Collection Account, any Principal Account, any Interest Funding
Account, the Distribution Account, the Excess Funding Account, any
principal funding account for any Series or any other Series Account,
except for the Transferor's rights to receive interest accruing on,
and investment earnings in respect of, any such account as provided in
this Agreement (or, if applicable, any Series Account as provided in
any Supplement) and, if this Agreement constitutes the grant of a
security interest in such property, except for the interest of the
Transferor in such property as a debtor for purposes of the UCC as in
effect in the Relevant UCC State.
(iii) The Transferor is (or, with respect to Receivables arising after the
date hereof, will be upon their creation) the legal and beneficial
owner of all right, title and interest in and to each Receivable and
each Receivable has been or will be transferred to the Trustee free and
clear of any Lien other than Permitted Liens.
(iv) All consents, licenses, approvals or authorizations of or registrations
or declarations with any Governmental Authority required of the
Transferor in connection with the transfer of Trust Property to the
Trust have been obtained.
(v) On the applicable Addition Cut-Off Date, each related Additional
Account or Supplemental Account is an Eligible Account. On the
applicable Addition Cut-Off Date, with respect to the related
Additional Accounts or Supplemental Accounts, each Receivable contained
in such Accounts on such applicable date and conveyed to the Trustee by
the Transferor is an Eligible Receivable.
(vi) Each Receivable then existing has been conveyed
to the Trustee free and clear of any Lien (other than Permitted Liens)
and in compliance, in all material respects, with all Requirements of
Law applicable to the Transferor.
(b) Daily Representations and Warranties. On each day on which any new
Receivable is transferred by the Transferor to the Trustee, the Transferor
represents and warrants to the Trustee that (A) each such Receivable has been
conveyed to the Trustee in compliance, in all material respects, with all
Requirements of Law applicable to the Transferor and free and clear of any Lien
(other than Permitted Liens), (B) with respect to each such Receivable, all
consents, licenses, approvals or authorizations of or registrations or
declarations with, any Governmental Authority required to be obtained, effected
or given by the Transferor in connection with the conveyance of such Receivable
to the Trustee have been duly obtained, effected or given and are in full force
and effect and (C) such Receivable is an Eligible Receivable on such date.
(c) Notice of Breach. The representations and warranties set forth in this
Section 2.4 shall survive the transfer and assignment of the respective
Receivables to the Trust. Upon discovery by the Transferor, the Servicer or a
Responsible Officer of the Trustee of a breach of any of the representations and
warranties set forth in this Section 2.4, the party discovering such breach
shall give prompt written notice to the other parties mentioned above. The
Transferor agrees to cooperate with the Servicer and the Trustee in attempting
to cure any such breach.
(d) Designation of Ineligible Receivables. In the event of a breach with respect
to a Receivable of any representations and warranties set forth in subsection
2.3(j) or subsections 2.4(a)(iii) through (vi) or subsection 2.4(b), such
Receivable shall be designated an "Ineligible Receivable" and shall be assigned
a principal balance of zero for the purpose of determining the aggregate amount
of Principal Receivables on any day; provided, however, that if such
representations and warranties with respect to such Receivable shall
subsequently be true and correct in all material respects as if such Receivable
had been created on such day or such Receivable shall subsequently satisfy the
conditions set forth in the definition of Eligible Receivable, such Receivable
shall be designated an Eligible Receivable, and such Principal Receivables shall
be included in determining the Aggregate Principal Receivables on such day. On
and after the date of its designation as an Ineligible Receivable, each
Ineligible Receivable shall not be given credit in determining the aggregate
amount of Principal Receivables used in the calculation of any Investor
Percentage, the Transferor Percentage or the Transferor Interest. In the event
that on any Business Day the exclusion of an Ineligible Receivable from the
calculation of the Transferor Interest would cause the Transferor Interest to be
reduced below the Minimum Transferor Interest, the Transferor shall immediately
make a deposit in the Excess Funding Account (for allocation as a Principal
Receivable) in immediately available funds prior to the next succeeding Business
Day in an amount equal to the amount by which the Transferor Interest would be
reduced below the Minimum Transferor Interest as a result of the exclusion of
such Ineligible Receivable. The portion of such deposit allocated to the
Investor Securities of each Series shall be distributed to the Investor
Securityholders of each Series in the manner specified in Article IV.
(e) Reassignment of Trust Portfolio. In the event of a breach of any of the
representations and warranties set forth in subsections 2.3(a), (b) and (c) and
2.4(a)(i) and (ii) with respect to any Series, either the Trustee or the Holders
of Investor Securities evidencing Undivided Interests aggregating more than 50%
of the aggregate Invested Amount of such Series, by notice then given in writing
to the Transferor (and to the Trustee and the Servicer, if given by the Investor
Securityholders of such Series), may direct the Transferor to accept
reassignment of an amount of Principal Receivables equal to the face amount of
the Invested Amount to be repurchased (as specified below) within 60 days of
such notice (or within such longer period as may be specified in such notice),
and the Transferor shall be obligated to accept reassignment of such Receivables
on a Distribution Date specified by the Transferor (such Distribution Date, the
"Reassignment Date") occurring within such applicable period on the terms and
conditions set forth below; provided, however, that no such reassignment shall
be required to be made, and no notice of such reassignment may be given, if, at
any time during such applicable period, the representations and warranties
contained in subsections 2.3(a), (b) and (c) and subsections 2.4(a)(i) and (ii)
shall then be true and correct in all material respects. The Transferor shall,
on the Transfer Date (in next day funds) preceding the Reassignment Date,
deposit an amount equal to the reassignment deposit amount for such Series in
the related Distribution Account or Series Account, as provided in the related
Supplement, for distribution to the Investor Securityholders pursuant to Article
XII. The reassignment deposit amount with respect to any Series, unless
otherwise stated in the related Supplement, shall be equal to (i) the Invested
Amount of such Series at the end of the day on the Business Day preceding the
Reassignment Date (provided, however, that with respect to any Series issued
pursuant to a Variable Funding Supplement such amount shall be the Invested
Amount of such Series as of the Reassignment Date, less the amount, if any,
previously allocated for payment of principal to such Securityholders on the
related Reassignment Date, in the Monthly Period in which the Reassignment Date
occurs), plus (ii) an amount equal to all interest accrued but unpaid on the
Investor Securities of such Series at the applicable Security Rate through such
last day, less the amount, if any, previously allocated for payment of interest
to the Securityholders of such Series on the related Distribution Date in the
Monthly Period in which the Reassignment Date occurs plus any other amounts
accrued and owing as specified in the applicable Supplement. Payment of the
reassignment deposit amount with respect to any Series, and all other amounts in
the Distribution Account or the applicable Series Account in respect of the
preceding Monthly Period, shall be considered a prepayment in full of the
Receivables represented by the Investor Securities of such Series. On the
Distribution Date following the Transfer Date on which such amount has been
deposited in full into the Distribution Account or the applicable Series
Account, the Receivables represented by such Investor Securities and all monies
due or to become due with respect thereto and all proceeds of the Receivables
shall be released to the Transferor after payment of all amounts otherwise due
hereunder on or prior to such dates and the Trustee shall execute and deliver
such instruments of transfer or assignment, in each case without recourse,
representation or warranty, as shall be prepared by and as are reasonably
requested by the Transferor to vest in the Transferor, or its designee or
assignee, all right, title and interest of the Trust in and to such Receivables,
all monies due or to become due with respect thereto and all proceeds of such
Receivables. If the Trustee or the Investor Securityholders of any Series give
notice directing the Transferor to accept reassignment as provided above, the
obligation of the Transferor to accept reassignment of the applicable
Receivables and pay the reassignment deposit amount pursuant to this subsection
2.4(e) shall constitute the sole remedy respecting a breach of the
representations and warranties contained in subsections 2.3(a), (b) and (c) and
2.4(a)(i) and (ii) available to the Investor Securityholders of such Series or
the Trustee on behalf of the Investor Securityholders of such Series. The
Trustee shall have no duty to conduct any affirmative investigation as to the
occurrence of any condition requiring the repurchase of any Receivable by the
Transferor pursuant to this Agreement or any Supplement or the eligibility of
any Receivable for purposes of this Agreement or any Supplement.
(f) Additional Representations and Warranties of the Transferor. The Transferor
hereby makes the following representations and warranties. Such representations
and warranties shall survive until the termination of this Agreement. Such
representations and warranties speak as of the date that the Collateral (as
defined below) is transferred to the Trustee but shall not be waived by any of
the parties to this Agreement unless each Rating Agency shall have notified the
Transferor, the Servicer and the Trustee in writing that such waiver will not
result in a reduction or withdrawal of the rating of any outstanding Series or
Class to which it is a Rating Agency.
(i) This Agreement creates a valid and continuing security interest (as
defined in the Delaware UCC) in favor of the Trustee in the Receivables
described in Section 2.1 of this Agreement (the "Collateral"), which
security interest is prior to all other Liens, except for Permitted
Liens, and is enforceable as such as against creditors of and
purchasers from the Transferor.
(ii) The Collateral constitutes "accounts" or "payment intangibles" within
the meaning of the applicable UCC.
(iii) At the time of each transfer and assignment of Collateral to the
Trustee pursuant to this Agreement, the Transferor owned and had good
and marketable title to such Collateral free and clear of any Lien,
claim or encumbrance of any Person, except for Permitted Liens.
(iv) The Transferor caused or will cause, within ten days of the initial
execution of this Agreement, the filing of all appropriate financing
statements in the proper filing office in the appropriate jurisdictions
under applicable law in order to perfect the security interest in the
Collateral granted to the Trustee pursuant to this Agreement.
(v) Other than the transfer and the security interest granted to the
Trustee pursuant to this Agreement, the Transferor has not pledged,
assigned, sold, granted a security interest in, or otherwise conveyed
the Collateral. The Transferor has not authorized the filing of and is
not aware of any financing statements against the Transferor that
include a description of the Collateral other than any financing
statement relating to the security interest granted to the Trustee
pursuant to this Agreement or that has been terminated. The Transferor
is not aware of any judgment or tax lien filings against the
Transferor.
Section 2.5 Covenants of the Transferor. The Transferor hereby covenants
that:
(a) Receivables to be Accounts or Payment Intangibles. The Transferor will
take no action to cause any Receivable to be evidenced by any
instrument or chattel paper (as defined in the UCC as in effect in the
Relevant UCC State), except in connection with the enforcement or
collection of a Receivable. Except in such circumstances, the
Transferor will take no action to cause any Receivable to be anything
other than an "account" or a "payment intangible" (as defined in the
UCC as in effect in the Relevant UCC State).
(b) Security Interests. Except for the conveyances hereunder, the
Transferor will not sell, pledge, assign or transfer to any other
Person, or grant, create, incur, assume or suffer to exist any Lien
(arising through or under the Transferor) on, any Receivable, whether
now existing or hereafter created, or any interest therein; the
Transferor will immediately notify the Trustee of the existence of any
Lien of which it has knowledge on any Receivable; and the Transferor
shall defend the right, title and interest of the Trust in, to and
under the Receivables, whether now existing or hereafter created,
against all claims of third parties claiming through or under the
Transferor; provided, however, that nothing in this subsection 2.5(b)
shall prevent or be deemed to prohibit the Transferor from suffering to
exist upon any of the Receivables any Permitted Lien.
(c) Delivery of Collections. In the event that the Transferor receives
Collections, the Transferor agrees to deposit such Collections into the
Collection Account as soon as practicable after the receipt thereof,
but in no event later than two Business Days after receipt thereof.
(d) Notice of Liens. The Transferor shall notify the Trustee promptly after
becoming aware of any Lien on any Receivable other than Permitted
Liens.
(e) Enforcement of Purchase Agreements. The Transferor agrees to take
all action necessary and appropriate to enforce its rights and
claims under the Purchase Agreement and the Bank Receivables Purchase
Agreement.
(f) Separate Business. The Transferor will not permit its assets to be
commingled with those of either DMCCB or Metris and the Transferor
shall maintain separate corporate records, books of account and
bank accounts from those of either DMCCB or Metris. The Transferor
will not conduct its business in the name of either DMCCB or Metris
and will cause either DMCCB or Metris to conduct its business solely
in its own name so as not to mislead others as to the identity of
the entity with which those others are concerned. The Transferor
will provide for its own operating expenses and liabilities from its
own funds, except that the organizational expenses of the Transferor
may be paid by either DMCCB or Metris. The Transferor will not hold
itself out, or permit itself to be held out, as having agreed to pay,
or as generally being liable for, the debts of either DMCCB or
Metris. The Transferor shall cause either DMCCB or Metris not to
hold itself out, or permit itself to be held out, as having agreed
to pay, or as generally being liable for, the debts of the
Transferor except that the organizational expenses of the
Transferor may be paid by either DMCCB or Metris. The Transferor
will maintain an arm's length relationship with DMCCB and Metris
with respect to any transactions between the Transferor, on the one
hand, and either DMCCB or Metris, on the other.
(g) Purchase Agreement Notices. The Transferor (i) shall promptly give the
Trustee copies of any notices, reports or certificates given or
delivered to the Transferor under the Purchase Agreement, (ii) shall
not, without the consents, approvals and opinions, if any, required by
Section 13.1, as if Section 13.1 related to the Purchase Agreement
rather than this Agreement, enter into any amendment, supplement or
other modification to, or waiver of any provision of, the Purchase
Agreement and (iii) shall not authorize the addition or removal of an
Account or a Receivable to or from the operation of the Purchase
Agreement unless there is a corresponding right or obligation of the
Transferor to add or remove such Account or Receivable to or from the
Trust.
Section 2.6 Addition of Accounts.
(a) By a written assignment supplementing this Agreement (except in the case of
Additional Accounts listed on the Account Schedule delivered on or prior to the
Amendment Closing Date), the Transferor in its sole discretion may designate
Additional Accounts for automatic inclusion in the Trust, and all Receivables in
such Additional Accounts, whether such Receivables are then existing or
thereafter created, shall be transferred automatically to the Trustee pursuant
to Section 2.1 and such assignment.
(b) Notwithstanding the foregoing, the Transferor may elect at any time, or may
be required pursuant to subsection 2.6(g), to suspend the automatic inclusion of
Additional Accounts on any Business Day (the "Automatic Addition Suspension
Date"), or terminate any such inclusion on any Business Day (an "Automatic
Addition Termination Date") until a date (the "Restart Date") to be identified
in writing by the Transferor to the Trustee, the Servicer and each Rating Agency
at least 10 days prior to such Restart Date. Promptly after an Automatic
Addition Suspension Date or any Automatic Addition Termination Date, or a
Restart Date, the Transferor and the Trustee agree to authorize and the
Transferor agrees to record and file at its own expense an amendment to the
financing statements referred to in Section 2.1 hereof (if necessary) to specify
the accounts then subject to this Agreement (which specification may incorporate
a list of accounts by reference) and may, except in connection with any such
filing made after a Restart Date, release any security interest in any accounts
created after the Automatic Addition Suspension Date or any Automatic Addition
Termination Date.
(c) If the Transferor has elected to terminate or suspend the inclusion of
Additional Accounts and (i) on the tenth Business Day prior to any Determination
Date, the Transferor Interest for the related Monthly Period is less than the
Minimum Transferor Interest, the Transferor shall designate Supplemental
Accounts to be included as Accounts in a sufficient amount such that the
Transferor Interest as a percentage of the Aggregate Principal Receivables for
such Monthly Period after giving effect to such addition is at least equal to
the Minimum Transferor Interest, or on any Record Date, the Aggregate Principal
Receivables is less than the Minimum Aggregate Principal Receivables, the
Transferor shall designate Supplemental Accounts to be included as Accounts in a
sufficient amount such that the Aggregate Principal Receivables will be equal to
or greater than the Minimum Aggregate Principal Receivables. Receivables from
such Supplemental Accounts shall be transferred to the Trust on or before the
tenth Business Day following such Record Date.
(d) In addition to its obligation under subsection 2.6(c), the
Transferor may, but shall not be obligated to, subject to the conditions
specified under subsection 2.6(e), designate from time to time Supplemental
Accounts to be included as Accounts.
(e) Unless otherwise specified in a Series Supplement, the
Transferor agrees that any such transfer of Receivables in Supplemental
Accounts, under subsection 2.6(c) or (d), shall satisfy the following conditions
(to the extent provided below):
(i) on or before the fifth Business Day prior to the Addition Date with
respect to additions pursuant to subsection 2.6(c) and on or before the
tenth Business Day prior to the Addition Date with respect to additions
pursuant to subsection 2.6(d) (as applicable, the "Notice Date"), the
Transferor shall give the Trustee, each Rating Agency and the Servicer
written notice that such Supplemental Accounts will be included, which
notice shall specify the approximate aggregate amount of the
Receivables to be transferred;
(ii) on or before the applicable Addition Date, the Transferor and the
Trustee shall have executed a written assignment in substantially the
form of Exhibit H (the "Assignment") and the Transferor shall have
indicated in its computer files that the Receivables created in
connection with the Supplemental Accounts have been transferred to the
Trustee by identifying such Supplemental Accounts in its master file
maintained in its computer files with the designation portfolio ID 0001
and the Transferor shall have delivered to the Trustee an Account
Schedule pursuant to Section 2.1;
(iii) the Transferor shall represent and warrant that (x) no selection
procedure that is materially adverse to the interests of the Investor
Securityholders was utilized in selecting the Supplemental Accounts and
(y) on the applicable Addition Date, the Transferor is not insolvent
and will not be rendered insolvent upon the transfer of Receivables to
the Trust;
(iv) the Transferor shall represent and warrant that, on the Addition
Date, the Assignment constitutes either (x) a valid transfer and
assignment to the Trustee of all right, title and interest of the
Transferor in and to (A) the Receivables then existing and thereafter
created and arising in connection with the Supplemental Accounts and
the proceeds thereof, and such Receivables and all proceeds thereof
will be held by the Trustee free and clear of any Lien of any Person
claiming through or under the Transferor, except for (i) Permitted
Liens, (ii) the interest of the Transferor as Holder of the
Exchangeable Transferor Security and any other Class or Series of
Securities and (iii) the Transferor's right, if any, to receive
interest accruing on, and investment earnings, if any, in respect
of, any Interest Funding Account and any Principal Account, the
Excess Funding Account or any Series Account as provided in this
Agreement and any related Supplement or (y) a grant of a security
interest (as defined in the UCC as in effect in the Relevant UCC State)
in such property to the Trustee, which is enforceable with respect to
then existing Receivables of the Supplemental Accounts and the
proceeds (as defined in the UCC as in effect in the Relevant UCC State)
thereof upon the conveyance of such Receivables to the Trustee,
and which will be enforceable with respect to the Receivables
thereafter created in respect of Supplemental Accounts designated on
such Addition Date and the proceeds (as defined in the UCC as in
effect in the Relevant UCC State) thereof upon such creation; and
(z) if the Assignment constitutes the grant of a security interest to
the Trustee in such property, upon the filing of a financing
statement as described in Section 2.1 with respect to such
Supplemental Accounts and in the case of the Receivables thereafter
created in such Supplemental Accounts and the proceeds (as defined in
the UCC as in effect in the Relevant UCC State) thereof, upon such
creation, the Trustee shall have a first priority perfected security
interest in such property, except for Permitted Liens;
(v) the Transferor shall deliver to the Trustee an Officer's Certificate of
the Transferor substantially in the form of Schedule 2 to Exhibit H
confirming the items set forth in paragraph (ii) above;
(vi) the Transferor shall deliver to the Trustee an Opinion of Counsel with
respect to the Receivables in the Supplemental Accounts (with a copy to
the Rating Agencies) substantially in the form of Exhibit I; and
(vii) unless the Transferor shall have received written notice from each
Rating Agency that the inclusion of such accounts as Supplemental
Accounts pursuant to subsection 2.6(c) or (d), as the case may
be, will not result in the reduction or withdrawal of its then
existing rating of any Class of any Series of Investor Securities
then issued and outstanding and shall have delivered such notice to
the Trustee, the number of Supplemental Accounts the Receivables of
which are designated to be included in the Trust pursuant to
subsection 2.6(c) or (d) since (A) the first day of the eleventh
preceding Monthly Period minus the number of Accounts of the type
described in clause (ii) of the definition of "Approved Account"
which have been added to the Trust since the first day of such eleventh
preceding Monthly Period, shall not exceed 20% of the number of
Accounts on the first day of such eleventh preceding Monthly Period,
and (B) the first day of the second preceding Monthly Period minus the
number of Accounts of the type described in clause (ii) of the
definition of "Approved Account" which have been added to the Trust
since the first day of such second preceding Monthly Period, shall
not exceed 15% of the number of Accounts on the first day of such
second preceding Monthly Period; provided, however, that the
aggregate principal balance in the Supplemental Accounts specified
(y) in clause (A) above shall not exceed the product of (i) 20%
and (ii) the Aggregate Principal Receivables determined as of the
first day of the eleventh preceding Monthly Period and (z) in clause
(B) above shall not exceed the product of (i) 15% and (ii) the
Aggregate Principal Receivables determined as of the first day
of the second preceding Monthly Period; provided further, however,
that the Supplemental Accounts specified in clauses (A) and (B) above
shall not include Accounts not initially originated by DMCCB, its
successors or assigns, or any Affiliate thereof; provided further,
however, that the first and second provisos to this subsection
2.6(e)(vii) may be changed or eliminated at any time if the
Transferor shall have received written notice from each Rating
Agency that such action will not result in the reduction or withdrawal
of its then existing rating of any Class of any Series of Investor
Securities then issued and outstanding and shall have delivered such
notice to the Trustee.
(f) The Transferor shall be permitted to designate Additional
Accounts with respect to any Monthly Period (the "Current Monthly Period") prior
to the last day of the May 1996 Monthly Period pursuant to subsection 2.6(a) of
the Agreement, without limitation, provided, however, that with respect to each
Monthly Period beginning with the September 1995 Monthly Period:
(i) the arithmetic average for the three Monthly Periods preceding the
Current Monthly Period, of the annualized percentage equivalent of a
fraction for each respective Monthly Period, the numerator of which is
equal to the Default Amount for the respective Monthly Period
(provided, however, that the Default Amount with respect to each
Default Recognition Date shall be deemed to apply to the Monthly Period
ending closest to such Default Recognition Date) and the denominator of
which is equal to the average amount of Aggregate Principal Receivables
outstanding on each day during such Monthly Period, is less than 6%;
(ii) the arithmetic average for the three Monthly Periods preceding the
Current Monthly Period, of the percentage (the "Payment Rate
Percentage") equivalent of a fraction for each respective Monthly
Period, the numerator of which is equal to the amount of Collections
received during the respective Monthly Period and the denominator of
which is equal to the Aggregate Principal Receivables as of the first
day of the respective Monthly Period, is greater than or equal to 6%;
(iii) the weighted average of the Portfolio Yields for each Series then
outstanding for the three Monthly Periods preceding the Current Monthly
Period minus the weighted average of the Base Rates for each Series
then outstanding for such three Monthly Periods (the "Excess Spread
Percentage") is greater than or equal to 4%; or
(iv) Standard & Poor's shall not have notified the Transferor that the
continued addition of Additional Accounts pursuant to this subsection
2.6(f) will result in a reduction or withdrawal of the then current
rating of any Class by Standard & Poor's.
In the event that as of any date of determination prior to
last day of the May 1996 Monthly Period any of the conditions in clauses (i)
through (iii) listed above is not met, and with respect to each Monthly Period
after the May 1996 Monthly Period, this subsection 2.6(f) shall no longer apply
and the conditions of subsection 2.6(g) shall apply. On or before the later of
(x) the last day of the September 1995 Monthly Period, the December 1995 Monthly
Period and the March 1996 Monthly Period or (y) in each case the tenth day
following receipt of the settlement statement for the prior Monthly Period,
Standard & Poor's shall determine whether a Ratings Event shall have occurred in
connection with the addition of Additional Accounts during the three consecutive
Monthly Periods ending in August, November and February preceding such date.
Upon the occurrence of a Ratings Event in connection with the addition of
Additional Accounts this subsection 2.6(f) shall no longer apply and the
conditions of subsection 2.6(g) shall apply.
(g) Unless each Rating Agency otherwise consents to the
continued automatic addition of accounts, on and after the beginning of the June
1996 Monthly Period, the Transferor shall be required to cease the automatic
addition of accounts and notify the Trustee, the Servicer and each Rating Agency
of the Automatic Addition Suspension Date in the following circumstances: the
number of Accounts the Receivables of which are designated to be included in the
Trust pursuant to subsection 2.6(a) since (i) the first day of the eleventh
preceding Monthly Period (or, in the case of any date on which Additional
Accounts are to be added to the Trust which occurs on or before the last day of
the May 1997 Monthly Period, June 1, 1996) minus the number of Accounts of the
type described in clause (ii) of the definition of "Approved Account" which have
been added on the initial day of the addition of such type of Account pursuant
to such clause (ii) since the first day of such eleventh preceding Monthly
Period (or June 1, 1996, as the case may be) shall not exceed 20% of number of
Accounts on the first day of such eleventh preceding Monthly Period (or June 1,
1996, as the case may be), and (ii) the first day of the second preceding
Monthly Period (or, in the case of any date on which Additional Accounts are to
be added to the Trust which occurs on or before the last day of the August 1996
Monthly Period, June 1, 1996) minus the number of Accounts of the type described
in clause (ii) of the definition of "Approved Accounts" have been added on the
initial day of the addition of such type of Account pursuant to such clause (ii)
since the first day of such second preceding Monthly Period (or June 1, 1996, as
the case may be) shall not exceed 15% of the number of Accounts on the first day
of such second preceding Monthly Period (or June 1, 1996, as the case may be) ;
provided, however, that the Additional Accounts specified in clauses (i) and
(ii) above shall not include Accounts not initially originated by DMCCB, its
successors or assigns, or any Affiliate thereof; provided further, however, that
the immediately preceding proviso to this subsection 2.6(g) may be changed or
eliminated at any time if the Transferor shall have received written notice from
each Rating Agency that such action will not result in the reduction or
withdrawal of its then existing rating of any Class of any Series of Investor
Securities then issued and outstanding and shall have delivered such notice to
the Trustee.
Section 2.7 Removal of Accounts.
(a) On each Determination Date that the Transferor Interest for the related
Monthly Period exceeds the Minimum Transferor Interest with respect to such
Determination Date, the Trustee shall be deemed to have offered to the
Transferor automatically and without any notice to or action by or on behalf of
the Trustee, as of such Determination Date, the right to remove from the Trust
all of the Trust's right, title and interest in, to and under the Receivables
then existing and thereafter created, all monies then due or to become due and
all amounts thereafter received with respect thereto and all proceeds thereof in
or with respect to those Accounts designated by the Transferor (the "Removed
Accounts") in an aggregate amount not greater than the lesser of (i) the excess
of the Transferor Interest over the Minimum Transferor Interest and (ii) the
excess of Aggregate Principal Receivables over the Minimum Aggregate Principal
Receivables. To accept such offer, the Transferor is required to furnish to the
Trustee and each Rating Agency written notice by the fifth Business Day after
the Determination Date specifying the approximate aggregate amount of Principal
Receivables covered by the offer that the Transferor intends to accept. There
shall be no more than one such removal with respect to any Monthly Period.
(b) In addition to the satisfaction of the conditions set forth in subsection
2.7(a), the Transferor shall be permitted to accept reassignment to it of the
Receivables from Removed Accounts only upon satisfaction of the following
conditions:
(i) On each date specified by the Transferor for removal of the Removed
Accounts (a "Removal Date"), the Transferor and the Trustee shall
execute a written reassignment in substantially the form of Exhibit J
(the "Reassignment") and the Transferor shall deliver to the Trustee a
true and complete Account Schedule reflecting the removal of the
Removed Accounts.
(ii) The Transferor shall represent and warrant on each Removal Notice Date
that no selection procedure was used by the Transferor that is
materially adverse to the interests of the Investor Securityholders in
selecting the Removed Accounts.
(iii) The Transferor shall represent and warrant that the removal of any
Receivables in any Removed Accounts on any Removal Date shall not, in
the reasonable belief of the Transferor, cause, immediately or with the
passage of time, a Pay Out Event to occur.
(iv) The Transferor shall have delivered at least 20 days' (or such lesser
number as any Rating Agency may agree) prior written notice (which may
be given prior to the Removal Date in expectation that the Trustee will
make the offer described in subsection 2.7(a)) of such removal to each
Rating Agency that has rated any outstanding Class of any Series and
the Trustee shall have received written confirmation from each such
Rating Agency that such Rating Agency will not reduce or withdraw its
rating on any outstanding Class of any Series as a result of such
removal.
(v) The Transferor shall have delivered to the Trustee an Officer's
Certificate of the Transferor confirming the Transferor's compliance
with the items set forth in paragraphs (i) through (iv) above. The
Trustee may conclusively rely on such certificate, shall have no duty
to make inquiries with regard to the matters set forth therein and
shall incur no liability in so relying.
(c) In addition to the satisfaction of the conditions set
forth in subsections 2.7(a) and (b), the Transferor's right to require the
reassignment to it of the Receivables in Removed Accounts, shall be subject to
the following restrictions:
(i) Except for Removed Accounts described in
subsection 2.7(c)(ii), the Accounts to be designated as
Removed Accounts shall be selected at random by the
Transferor.
(ii) The Transferor may designate Removed Accounts as
provided in and subject to the terms and conditions contained
in this Section 2.7 without being subject to the restrictions
set forth in subsection 2.7(c)(i) if the Removed Accounts are
designated in response to a third-party action or decision not
to act and not the unilateral action of the Transferor.
(d) Upon satisfaction of the conditions set forth in
subsections 2.7(a), (b) and (c), the Receivables from the Removed Accounts shall
no longer constitute part of the Trust.
Section 2.8 Discount Option.
(a) The Transferor shall have the option to designate a percentage, which may be
a fixed percentage or a variable percentage based on a formula (the "Discount
Percentage"), of Principal Receivables, without giving effect to any discounting
pursuant to this Section 2.8, arising on or after the date of such designation,
to be treated as Finance Charge Receivables. The Transferor shall provide to the
Servicer, the Trustee, any Enhancement Provider and the Rating Agency 15 days'
prior written notice of such designation, and such designation shall become
effective on the date designated therein (i) unless such designation in the
reasonable belief of the Transferor would cause a Pay Out Event to occur, or an
event which, with notice or the lapse of time or both, would constitute a Pay
Out Event and (ii) only if the Rating Agency shall have delivered a letter to
the Transferor and the Trustee confirming that its then current rating of the
Investor Securities of any Series then outstanding will not be reduced or
withdrawn as a result of such designation.
(b) After the date on which the Transferor's exercise of its discount option
takes effect, and with respect to Receivables generated on and after such date,
the Transferor, in accordance with Section 4.3, shall deposit into the
Collection Account in immediately available funds an amount equal to the amount
of the Discount Option Receivable Collections processed on such day. The deposit
made by the Transferor into the Collection Account under the preceding sentence
shall be considered a payment of such Discount Option Receivables and shall be
applied as Finance Charge Receivables in accordance with Article IV.
Section 2.9 Covenants of the Transferor with Respect to the Purchase Agreement.
The Transferor, in its capacity as purchaser of the Receivables from Metris
pursuant to the Purchase Agreement or a Credit Card Originator, hereby covenants
that the Transferor will at all times enforce the covenants and agreements of
Metris and each Credit Card Originator in the Purchase Agreement, the Bank
Receivables Purchase Agreement or any other agreement, including, without
limitation, any covenants to the effect set forth below.
(a) Periodic Finance Charges and Other Fees. Except as otherwise required by any
Requirement of Law, or as is deemed by the applicable Credit Card Originator in
its sole discretion to be necessary in order to maintain its credit card
business on a competitive basis, it shall not at any time reduce the annual
percentage rates of the Periodic Finance Charges assessed on the Receivables or
other fees charged on any of the Accounts if, as a result of any such reduction,
either (i) such Credit Card Originator's reasonable expectation is that such
reduction will cause a Pay Out Event to occur so long as there are Investor
Securities outstanding or (ii) such reduction is not also applied to any
comparable segment of consumer revolving credit card accounts owned by such
Credit Card Originator that have characteristics the same as, or substantially
similar to, such Accounts.
(b) Credit and Collection Policy and Contracts. The applicable Credit Card
Originator shall comply with and perform its obligations under the Contracts
relating to the Accounts and the Credit and Collection Policy except insofar as
any failure so to comply or perform would not materially and adversely affect
the rights of the Trust and the beneficiaries thereof. Subject to compliance
with all Requirements of Law, such Credit Card Originator may change the terms
and provisions of the Contracts or the Credit and Collection Policy with respect
to any of the Accounts in any respect (including the calculation of the amount,
or the timing, of charge-offs and the Periodic Finance Charges and other fees to
be assessed thereon) only if in the reasonable judgment of such Credit Card
Originator (i) (if it owns a comparable segment of receivables) such change is
made applicable to any comparable segment of the consumer revolving credit card
accounts owned by such Credit Card Originator which have characteristics the
same as, or substantially similar to, such Accounts or (ii) (if it does not own
such a comparable segment of receivables) such change will not be made with the
intent to materially benefit the Credit Card Originator over the applicable
purchaser of the Receivables, the Transferor, or the Trust and the beneficiaries
thereof, or to materially adversely affect the applicable purchaser of
Receivables, the Transferor, or the Trust and the beneficiaries thereof, except
as otherwise restricted by an endorsement, sponsorship, or other agreement
between the Credit Card Originator and an unrelated third party or by the terms
of the Contracts.
The Transferor further covenants that the Transferor will not
enter into any amendments to the Bank Receivables Purchase Agreement or the
Purchase Agreement that would cause a Ratings Event to occur so long as there
are Investor Securities outstanding.
Section 2.10 Receivables in Defaulted Accounts. On the date on which an Account
becomes a Defaulted Account, the Trust shall automatically and without further
action or consideration be deemed to transfer, set over, and otherwise convey to
the Transferor, without recourse, representation or warranty, all the right,
title and interest of the Trust in and to the Receivables in such Defaulted
Account, all monies due or to become due with respect thereto, all proceeds of
such Receivables allocable to the Trust with respect to such Receivable,
excluding Recoveries relating thereto, which shall remain a part of the Trust
Property. On each Determination Date, the Servicer shall calculate the aggregate
Series Default Amount for the preceding Monthly Period with respect to each
Series.
[End of Article II]
ARTICLE III
ADMINISTRATION AND SERVICING
OF RECEIVABLES
Section 3.1 Acceptance of Appointment and Other Matters Relating to the
Servicer.
(a) DMCCB agrees to act as the Servicer under this Agreement. The Investor
Securityholders of each Series by their acceptance of the related Securities
consent to DMCCB acting as Servicer. Notwithstanding the foregoing or any other
provisions of this Agreement or any Supplement, the Investor Securityholders
consent to an Affiliate of DMCCB acting as Servicer hereunder, in full
substitution thereof; provided that such Affiliate shall expressly assume in
writing (unless such assumption occurs by operation of law), by an agreement
supplemental hereto, executed by and delivered to the Transferor and the
Trustee, the performance of every covenant and obligation of the Servicer, as
applicable hereunder, and shall in all respects be designated the Servicer under
this Agreement; provided, further, that DMCCB will remain jointly and severally
liable with such Affiliate.
(b) The Servicer shall service and administer the Receivables and shall collect
payments due under the Receivables in accordance with its customary and usual
servicing procedures and the Credit and Collection Policies and shall have full
power and authority, acting alone or through any party properly designated by it
hereunder, to do any and all things in connection with such servicing and
administration that it may deem necessary or desirable. Without limiting the
generality of the foregoing and subject to Section 10.1, the Servicer is hereby
authorized and empowered (i) to make withdrawals from the Collection Account as
set forth in this Agreement, (ii) unless such power and authority is revoked by
the Trustee on account of the occurrence of a Servicer Default pursuant to
Section 10.1, to instruct the Trustee in writing to make withdrawals and
payments, from any Interest Funding Account, the Excess Funding Account, any
Principal Account and any Series Account, in accordance with such instructions
as set forth in this Agreement, (iii) unless such power and authority is revoked
by the Trustee on account of the occurrence of a Servicer Default pursuant to
Section 10.1, to instruct the Trustee in writing to take any action permitted or
required under any Enhancement at such time as set forth in this Agreement and
any Supplement, (iv) to execute and deliver, on behalf of the Trust for the
benefit of the Securityholders, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge, and all other
comparable instruments, with respect to the Receivables and, after the
delinquency of any Receivable and to the extent permitted under and in
compliance with applicable law and regulations, to commence enforcement
proceedings with respect to such Receivables, (v) at the expense of the
Transferor, to make any filings, reports, notices, applications, registrations
with, and to seek any consents or authorizations from, the Securities and
Exchange Commission and any state securities authority on behalf of the Trust as
may be necessary or advisable to comply with any federal or state securities or
reporting requirements (it being understood that any amounts to be paid by the
Transferor pursuant to this clause (v) shall not be payable from the Trust
Property conveyed by the Transferor hereunder) and (vi) to delegate certain of
its service, collection, enforcement and administrative duties hereunder with
respect to the Accounts and the Receivables to any Person who agrees to conduct
such duties in accordance with the Credit and Collection Policies; provided,
however, that the Servicer shall notify the Transferor and the Trustee in
writing of any such delegation; and provided further that the Servicer shall
remain jointly and severally liable with such Person. The Trustee agrees that it
shall promptly follow the instructions of the Servicer or its delegate to
withdraw funds from the Collection Account, any Principal Account, any Interest
Funding Account, the Excess Funding Account, or any Series Account and to take
any action required under any Enhancement at such time as required under this
Agreement. The Trustee shall execute at the Servicer's written request such
documents prepared by the Transferor and acceptable to the Trustee as the
Servicer certifies are necessary or appropriate to enable the Servicer to carry
out its servicing and administrative duties hereunder.
(c) The Servicer shall not be obligated to use separate servicing procedures,
offices or employees for servicing the Receivables from the procedures, offices
and employees used by the Servicer in connection with servicing other credit
card receivables.
Section 3.2 Servicing Compensation. As compensation for its servicing activities
hereunder and reimbursement for its expenses as set forth in the immediately
following paragraph, the Servicer shall be entitled to receive a servicing fee
in respect of each Business Day prior to the termination of the Trust pursuant
to Section 12.1 (the "Servicing Fee"), payable in arrears on each date and in
the manner specified in the applicable Supplement, equal to the product of (i) a
fraction, the numerator of which is the actual number of days from but excluding
the next preceding Business Day to and including such Business Day and the
denominator of which is the actual number of days in the year, (ii) the weighted
average Series Servicing Fee Percentage for all outstanding Series (based upon
the Series Servicing Fee Percentage for each Series and the Invested Amount of
such Series) and (iii) the daily average aggregate balance of all Principal
Receivables over the term of such measuring period. The share of the Servicing
Fee allocable to each Series with respect to any date of payment shall be equal
to the product of (i) a fraction, the numerator of which is the actual number of
days in the measuring period specified in the applicable Supplement and the
denominator of which is the actual number of days in the year, (ii) the
applicable Series Servicing Fee Percentage for such Series and (iii) the
Invested Amount of such Series, as appropriate, as of the date of determination
for such payment as specified in the applicable Supplement. The remainder of the
Servicing Fee (and any Servicing Fee allocable to the Investor Securities but
not paid) shall be paid by the Transferor, or retained by the Servicer as
provided in Article IV, and in no event shall the Trust, the Trustee, any
Enhancement Provider, or the Investor Securityholders be liable for the share of
the Servicing Fee allocable to the Transferor, nor shall any amounts to be paid
by the Transferor pursuant to this Section 3.2 be payable from the Trust
Property conveyed by the Transferor hereunder.
The Servicer shall be responsible for its own expenses, which
shall include the amounts due to the Trustee pursuant to Section 11.5 and the
reasonable fees and disbursements of independent public accountants and all
other expenses incurred by the Servicer in connection with its activities
hereunder; provided, that the Servicer shall not be liable for any liabilities,
costs or expenses of the Trust, the Investor Securityholders or the Security
Owners arising under any tax law, including without limitation any federal,
state or local income or franchise taxes or any other tax imposed on or measured
by income (or any interest, penalties or additions with respect thereto or
arising from a failure to comply therewith). In the event that the Servicer
fails to pay any amounts due to the Trustee pursuant to Section 11.5, the
Trustee shall be entitled to deduct and receive such amounts from the Servicing
Fee prior to the payment thereof to the Servicer and the obligations of the
Trust to pay any such amounts shall thereby be fully satisfied. The Servicer
shall be required to pay such expenses for its own account and shall not be
entitled to any payment therefor other than the Servicing Fee.
Section 3.3 Representations and Warranties of the Servicer. DMCCB, as Servicer,
hereby makes, and any Successor Servicer by its appointment hereunder shall
make, the following representations and warranties on which the Trustee has
relied in accepting the Receivables in trust and in authenticating the
Securities issued on the Initial Closing Date:
(a) Organization and Good Standing. The Servicer is either (i) a national
banking association duly organized, validly existing and in good standing under
the laws of the United States or (ii) a corporation duly organized, validly
existing and in good standing under the laws of its state of incorporation and
has the corporate power, authority and legal right to own its properties and
conduct its business as such properties are presently owned and such business is
presently conducted, and to execute, deliver and perform its obligations under
this Agreement.
(b) Due Qualification. The Servicer is duly qualified to do business and is in
good standing (or is exempt from such requirements) as a foreign corporation in
any state where such qualification is necessary in order to service the
Receivables as required by this Agreement and has obtained all necessary
licenses and approvals as required under Federal and state law in order to
service the Receivables as required by this Agreement, and if the Servicer shall
be required by any Requirement of Law to so qualify or register or obtain such
license or approval, then it shall do so except where the failure to obtain such
license or approval does not materially affect the Servicer's ability to perform
its obligations hereunder or the enforceability of the Receivables.
(c) Due Authorization. The execution and delivery by the Servicer of this
Agreement and the consummation by the Servicer of the transactions provided
for herein, have been duly authorized by the Servicer by all necessary
corporate action on the part of the Servicer.
(d) Binding Obligation. This Agreement and the consummation of the transactions
provided for herein, constitutes a legal, valid and binding obligation of the
Servicer, enforceable against the Servicer in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereinafter in effect,
affecting the enforcement of creditors' rights in general and as such
enforceability may be limited by general principles of equity (whether
considered in a proceeding at law or in equity).
(e) No Violation. The execution and delivery of this Agreement by the Servicer,
and the performance by the Servicer of the transactions contemplated by this
Agreement and the fulfillment by the Servicer of the terms hereof applicable to
the Servicer, will not violate, result in any breach of any of the material
terms and provisions of, or constitute (with or without notice or lapse of time
or both) a default under, any Requirement of Law applicable to the Servicer or
any material indenture, contract, agreement, mortgage, deed of trust or other
material instrument to which the Servicer is a party or by which it is bound.
(f) No Proceedings. There are no proceedings or investigations pending or, to
the best knowledge of the Servicer, threatened against the Servicer before any
Governmental Authority (i) asserting the invalidity of this Agreement, (ii)
seeking to prevent the issuance of the Securities or the consummation of any of
the transactions contemplated by this Agreement, (iii) seeking any determination
or ruling that would materially and adversely affect the performance by the
Servicer of its obligations under this Agreement, (iv) seeking any determination
or ruling that would materially and adversely affect the validity or
enforceability of this Agreement or (v) seeking to affect adversely the tax
attributes of the Trust.
(g) Compliance with Requirements of Law. The Servicer shall duly satisfy all
obligations on its part to be fulfilled under or in connection with each
Receivable and the related Contract, will maintain in effect all qualifications
required under Requirements of Law in order to service properly each Receivable
and the related Contract and will comply in all material respects with all other
Requirements of Law in connection with servicing each Receivable and the related
Contract the failure to comply with which would have a material adverse effect
on the Securityholders or any Enhancement Provider.
(h) Protection of Securityholders' Rights. The Servicer shall take no action
which, nor omit to take any action the omission of which, would impair the
rights of the Trustee in any Receivable or the rights or obligations of any
Enhancement Provider, nor shall it reschedule, revise or defer payments due on
any Receivable except in accordance with the Credit and Collection Policies.
(i) All Consents Required. All approvals, authorizations, consents, orders or
other actions of any Governmental Authority required in connection with the
execution and delivery by the Servicer of this Agreement and the performance by
the Servicer of the transactions contemplated by this Agreement and the
fulfillment by the Servicer of the terms hereof, have been obtained; provided,
however, that the Servicer makes no representation or warranty regarding State
securities or "Blue Sky" laws in connection with the distribution of the
Securities.
(j) Rescission or Cancellation. The Servicer shall not cause any rescission or
cancellation of any Receivable except as ordered by a court of competent
jurisdiction or other Governmental Authority or in accordance with the Credit
and Collection Policy or the normal operating procedures of the Servicer.
(k) Receivables Not To Be Evidenced by Instruments or Chattel Paper. Except in
connection with its enforcement or collection of an Account (in which case any
such instrument or chattel paper would be made in the name of the Trustee), the
Servicer will take no action to cause any Receivable to be evidenced by an
instrument or chattel paper (as defined in the UCC as in effect in the Relevant
UCC State); provided, however, that Receivables evidenced by instruments or
chattel paper taken from Obligors in the ordinary course of the Servicer's
collection efforts and maintained in the possession of the Servicer shall not
result in a breach of this subsection.
(l) Principal Place of Business. The Servicer shall at all times maintain
its principal executive offices within the United States.
In the event any of the representations, warranties or
covenants of the Servicer set forth in this Section 3.3 are breached, the
Transferor, the Trustee and the Trust shall have the remedies set forth in
Section 8.4.
Section 3.4 Reports and Records for the Trustee.
(a) Daily Records. Upon reasonable prior notice by the Transferor or the
Trustee, the Servicer shall make available at an office of the Servicer (or
other location designated by the Servicer if such records are not accessible by
the Servicer at an office of the Servicer) selected by the Servicer for
inspection by the Transferor or the Trustee or, in either case, its agent
(reasonably acceptable to the Servicer) on a Business Day during the Servicer's
normal business hours a record setting forth (i) the Collections on the
Receivables and (ii) the amount of Receivables for the Business Day preceding
the date of the inspection. The Servicer shall, at all times, maintain its
computer files with respect to the Receivables in such a manner so that the
Receivables may be specifically identified and, upon reasonable prior request of
the Transferor or the Trustee, shall make available to the Transferor or the
Trustee, at an office of the Servicer (or other location designated by the
Servicer if such computer files are not located at an office of the Servicer)
selected by the Servicer, on any Business Day of the Servicer during the
Servicer's normal business hours any computer programs necessary to make such
identification.
(b) Daily Report.
(i) On each Business Day the Servicer shall prepare a completed Daily
Report.
(ii) The Servicer shall deliver to the Transferor, the Trustee and the
Paying Agent the Daily Report by 3:00 p.m. (New York City time) on each
Business Day with respect to activity in the Receivables for the prior
Business Day (or, in the case of a Daily Report delivered on the second
Business Day following a Saturday, Sunday or other non-Business Day,
the aggregate activity for the preceding Business Day and such
preceding non-Business Days).
(iii) Upon discovery of any error or receipt of notice of any error in any
Daily Report, the Servicer, the Transferor and the Trustee shall
arrange to confer and shall agree upon any adjustments necessary to
correct any such errors. If any such error is materially adverse to the
interests of the Security Owners, the Servicer or the Trustee, as the
case may be, shall retain all Collections which would otherwise be paid
from the Trust (or such lesser amount as the Transferor, the Trustee
and the Servicer shall agree to be necessary to cover any such error)
in the Collection Account until such material error is corrected.
Unless the Trustee has received written notice of any error or
discrepancy, the Trustee may rely on each Daily Report delivered to it
for all purposes hereunder.
(c) Settlement Statement. On the second Business Day prior to each Distribution
Date, the Servicer shall, prior to 3:00 p.m. (New York City time) on such day,
deliver to the Transferor, the Trustee and the Paying Agent the Settlement
Statement for the related Monthly Period substantially in the form of Exhibit C
hereto, including the following information (which, in the case of clauses
(iii), (iv) and (v) below, will be stated on the basis of an original principal
amount of $1,000 per Security): (i) the aggregate amount of Collections received
in the Collection Account for the Monthly Period preceding such Determination
Date and the aggregate amount of Finance Charge Collections and the aggregate
amount of Principal Collections processed during such Monthly Period; (ii) the
aggregate amount of the applicable Investor Percentage of Principal Collections
during the preceding Monthly Period for each Series of Securities and the
aggregate amount of the applicable Investor Percentage of Finance Charge
Collections during the preceding Monthly Period for each Series of Securities;
(iii) for each Series and for each Class within any such Series, the total
amount to be distributed to Investor Securityholders on the next succeeding
Distribution Date; (iv) for each Series and for each Class within any such
Series, the amount of such distribution allocable to principal; (v) for each
Series and for each Class within any such Series, the amount of such
distribution allocable to interest; (vi) for each Series and each Class within a
Series, the Series Default Amount for the immediately preceding Monthly Period;
(vii) for each Series and each Class within a Series, the amount of the Series
Charge-Offs and the amount of the reimbursements of Series Charge-Offs for such
Distribution Date; (viii) for each Series, the Servicing Fee allocated to and
paid by such Series for such Distribution Date; (ix) for each Series, the
existing deficit controlled amortization amount, if applicable; (x) the
Aggregate Principal Receivables in the Trust at the close of business on the
last day of the Monthly Period preceding such Distribution Date; (xi) for each
Series, the Invested Amount at the close of business on the last day of the
Monthly Period immediately preceding such Distribution Date; (xii) the available
amount of any Enhancement for each Class of each Series, if any; (xiii) for each
Series and each Class within a Series, the Pool Factor as of the end of the
related Monthly Period; (xiv) whether a Pay Out Event or a Prospective Pay Out
Event with respect to any Series shall have occurred during or with respect to
the related Monthly Period; (xv) the aggregate amount of Discount Option
Receivables in the Trust at the close of business on the last day of the Monthly
Period preceding such Distribution Date; (xvi) the aggregate amount of Discount
Option Receivables Collections processed during such Monthly Period; and (xvii)
such other calculations as may be required by any Supplement. The Trustee shall
be under no duty to recalculate, verify or recompute the information supplied to
it under this Section 3.4 or such other matters as are set forth in any
Settlement Statement. The Servicer shall also provide a copy of the Settlement
Statement in a prompt manner to each Rating Agency.
Section 3.5 Annual Servicer's Certificate. The Servicer will deliver, in
accordance with Section 13.5, to the Transferor, the Trustee, any Enhancement
Provider and the Rating Agencies, within 100 days of the end of each fiscal
year, beginning in 1995, an Officer's Certificate of the Servicer substantially
in the form of Exhibit D stating that (a) a review of the activities of the
Servicer during the preceding fiscal year and of its performance under this
Agreement was made under the supervision of the officer signing such certificate
and (b) to such officer's knowledge, based on such review, the Servicer has
fully performed all its obligations under this Agreement throughout such period,
or, if there has been a default in the performance of any such obligation,
specifying each such default known to such officer and the nature and status
thereof. A copy of such certificate may be obtained by any Investor
Securityholder by a request in writing to the Trustee addressed to the Corporate
Trust Office.
Section 3.6 Annual Independent Accountants' Servicing Report.
(a) Within 100 days of the end of each fiscal year, the Servicer shall cause a
firm of nationally recognized independent public accountants (who may also
render other services to the Servicer or the Transferor) to furnish a report
with respect to the prior fiscal year (or, in the case of the first such period,
the period beginning on the Initial Closing Date and ending on the last day of
the related fiscal year) to the Transferor, the Trustee, any Enhancement
Provider and each Rating Agency, to the effect that such firm has applied
certain procedures, agreed upon with the Transferor, the Servicer and the
Trustee and substantially as set forth in Exhibit G hereto, which would
re-perform certain accounting procedures performed by the Servicer pursuant to
certain documents and records relating to the servicing of the Accounts under
this Agreement. In addition, each report shall set forth the agreed upon
procedures performed and the results of such procedures.
(b) Within 100 days of the end of each fiscal year, the Servicer shall cause a
firm of nationally recognized independent certified public accountants (who may
also render other services to the Servicer or the Transferor) to furnish a
report to the Transferor, the Trustee, any Enhancement Provider and the Rating
Agency to the effect that they have compared the amounts and percentages set
forth in four of the monthly certificates forwarded by the Servicer pursuant to
subsection 3.4(c) during the period covered by such report with the computer
reports (which may include personal computer generated reports that summarize
data from the computer reports generated by either the Transferor or Servicer
which are used to prepare the Daily Reports) which were the source of such
amounts and percentages and that on the basis of such comparison, such amounts
and percentages are in agreement except as shall be set forth in such report. A
copy of such report will be sent by the Trustee to each Investor Securityholder.
Section 3.7 Tax Treatment. The Transferor has structured this Agreement and the
Investor Securities with the intention that the Investor Securities will qualify
under applicable federal, state, local and foreign tax law as indebtedness of
the Transferor. Except to the extent expressly specified to the contrary in any
Supplement, the Transferor, the Servicer, the Holder of the Exchangeable
Transferor Security, each Investor Securityholder, Holder of a Variable Funding
Security, and each Security Owner agree to treat and to take no action
inconsistent with the treatment of the Investor Securities (or beneficial
interest therein) as indebtedness for purposes of federal, state, local and
foreign income or franchise taxes and any other tax imposed on or measured by
income. Each Investor Securityholder and Holder of a Variable Funding Security,
by acceptance of its Security; each Holder of the Exchangeable Transferor
Security, by acquisition of its interest in the Transferor Interest; and each
Security Owner, by acquisition of a beneficial interest in a Security, agrees to
be bound by the provisions of this Section 3.7. Each Securityholder agrees that
it will cause any Security Owner acquiring an interest in a Security through it
to comply with this Agreement as to treatment as indebtedness under applicable
tax law, as described in this Section 3.7. Furthermore, subject to Section
11.11, the Trustee shall treat the Trust as a security device only, and shall
not file tax returns or obtain an employer identification number on behalf of
the Trust.
Section 3.8 Adjustments.
(a) If the Servicer adjusts downward the amount of any Receivable because of a
rebate, refund, unauthorized charge or billing error to an Obligor, because such
Receivable was created in respect of merchandise which was refused or returned
by an Obligor, or if the Servicer otherwise adjusts downward the amount of any
Receivable without receiving Collections therefor or without charging off such
amount as uncollectible, then, in any such case (other than cases resulting from
Servicer error, a remedy for which is provided for in Section 3.3 or subsection
3.8(b)), the aggregate amount of the Principal Receivables used to calculate the
Investor Percentages applicable to any Series and the Transferor Interest will
be reduced by the principal amount of any such adjustment. Similarly, the
aggregate amount of the Principal Receivables used to calculate the Investor
Percentages applicable to any Series will be reduced by the amount of any
Principal Receivable which was discovered as having been created through a
fraudulent or counterfeit charge or with respect to which the covenant contained
in subsection 2.5(b) was breached. Any adjustment required pursuant to either of
the two preceding sentences shall be made on or prior to the end of the Monthly
Period in which such adjustment obligation arises. In the event that, following
any such adjustment, the Transferor Interest would be less than the Minimum
Transferor Interest, within two Business Days of the date on which such
adjustment obligation arises, the Transferor shall pay to the Servicer, for
deposit into the Excess Funding Account, in immediately available funds an
amount equal to the amount by which the Transferor Interest would be reduced
below the Minimum Transferor Interest as a result of such adjustment or
exclusion. Any amount deposited into the Excess Funding Account in connection
with the adjustment of a Receivable (an "Adjustment Payment") shall be applied
in accordance with Article IV and the terms of each Supplement.
(b) If (i) the Servicer makes a deposit into the Collection Account in respect
of a Collection of a Receivable and such deposit was in the form of a check
which is not honored for any reason or (ii) the Servicer makes a mistake with
respect to the amount of any Collection and deposits an amount that is less than
or more than the actual amount of such Collection, the Servicer shall
appropriately adjust the amount subsequently deposited into the Collection
Account (or shall be entitled to receive a refund from the Collection Account in
the case of an excess deposit) to reflect such dishonored check or mistake. Any
Receivable in respect of which a dishonored check is received shall be deemed
not to have been paid. Notwithstanding the first two sentences of this
paragraph, any adjustments made pursuant to this paragraph will be reflected in
a current report but will not change any amount of Collections previously
reported pursuant to subsection 3.4(b).
Section 3.9 Notices to DMCCB. In the event that DMCCB or any Affiliate thereof
is no longer acting as Servicer, any Successor Servicer appointed pursuant to
Section 10.2 shall deliver or make available to Metris each certificate and
report required to be prepared, forwarded or delivered thereafter pursuant to
Sections 3.4, 3.5 and 3.6.
[End of Article III]
ARTICLE IV
RIGHTS OF SECURITYHOLDERS AND ALLOCATION
AND APPLICATION OF COLLECTIONS
Section 4.1 Rights of Securityholders. Each Series of Investor Securities shall
represent Undivided Interests in the Trust, including the benefits of any
Enhancement issued with respect to such Series and the right to receive the
Collections and other amounts at the times and in the amounts specified in this
Article IV and the related Supplement to be deposited in the Investor Accounts
or to be paid to the Investor Securityholders of such Series; provided, however,
that the aggregate interest represented by such Securities at any time in the
Principal Receivables shall not exceed an amount equal to the Invested Amount of
such Securities. The Exchangeable Transferor Security or, as the case may be,
the uncertificated interest in the Transferor Interest, shall represent the
remaining undivided interest in the Trust, including the right to receive the
Collections and other amounts with respect to each Series at the times and in
the amounts specified in this Article IV and the related Supplement to be paid
to the Holder of the Exchangeable Transferor Security; provided, however, that
if the Transferor elects to have its interest in the Transferor Interest be
uncertificated as provided in Section 6.1 hereof, then such uncertificated
interest shall represent the Transferor Interest; provided further, that the
aggregate interest represented by such Exchangeable Transferor Security at any
time in the Principal Receivables or, as the case may be, the aggregate
uncertificated interest of the Transferor in the Principal Receivables, shall
not exceed the Transferor Interest at any time and such Exchangeable Transferor
Security or, as the case may be, such uncertificated interest shall not
represent any interest in the Investor Accounts, except as provided in this
Agreement and the Supplements, or the benefits of any Enhancement issued with
respect to any Series.
Section 4.2 Establishment of Accounts.
(a) The Collection Account. The Servicer, for the benefit of the
Securityholders, shall establish in the name of the Trustee, on behalf of the
Trust, a non-interest bearing segregated account (the "Collection Account")
bearing a designation clearly indicating that the funds deposited therein are
held in trust for the benefit of the Securityholders, and shall cause such
Collection Account to be established and maintained, (i) in a segregated trust
account with the corporate trust department of a depositary institution or trust
company (which may include the Trustee but not the Servicer or any Affiliate
thereof) organized under the laws of the United States of America or any one of
the states thereof or the District of Columbia which has a long-term unsecured
debt rating of at least Baa3 by Moody's and whose deposits are insured to the
limits provided by law by the FDIC having corporate trust powers and acting as
trustee for funds deposited therein (provided, however, that such account need
not be maintained as a segregated trust account with the corporate trust
department of such institution if at all times the certificates of deposit,
short-term deposits or commercial paper or the long-term unsecured debt
obligations (other than such obligation whose rating is based on collateral or
on the credit of a Person other than such institution or trust company) of such
depositary institution or trust company shall have a credit rating from Standard
& Poor's of at least A-1+ and P-1 from Moody's in the case of the certificates
of deposit, short-term deposits or commercial paper, or a rating from Standard &
Poor's of AAA and from Moody's of Aaa in the case of the long-term unsecured
debt obligations) or (ii) with a depositary institution, which may include the
Trustee but not the Servicer or any Affiliate thereof, which is acceptable to
the Rating Agency (in the case of (i) and (ii), a "Qualified Institution"). If,
at any time, the institution holding the Collection Account ceases to be a
Qualified Institution, the Transferor shall direct the Servicer to establish
within 10 Business Days a new Collection Account with a Qualified Institution,
transfer any cash and/or any investments to such new Collection Account and from
the date such new Collection Account is established, it shall be the "Collection
Account." The Servicer shall give written notice to the Transferor and the
Trustee of the location and account number of the Collection Account and shall
notify the Transferor and the Trustee in writing prior to any subsequent change
thereof. Pursuant to authority granted to it pursuant to subsection 3.1(b), the
Servicer shall have the power revocable by the Trustee to withdraw funds from
the Collection Account for the purposes of carrying out its duties hereunder.
The Collection Account shall be under the sole dominion and
control of the Trustee and the Trustee shall possess all right, title and
interest in all funds from time to time on deposit in such account.
(b) The Interest Funding and Principal Accounts. The Trustee, for the benefit of
the Investor Securityholders, shall establish and maintain with a Qualified
Institution in the name of the Trustee two segregated trust accounts for each
Series (an "Interest Funding Account" and a "Principal Account," respectively),
each bearing a designation clearly indicating that the funds therein are held
for the benefit of the Investor Securityholders of such Series. Except as
provided in subsection 4.2(e), each Interest Funding Account and each Principal
Account shall be under the sole dominion and control of the Trustee for the
benefit of the Investor Securityholders. Pursuant to authority granted to it
hereunder, the Servicer shall have the revocable power to instruct the Trustee
to withdraw funds from the Interest Funding Account and any Principal Account
for any purpose of carrying out the Servicer's or the Trustee's duties
hereunder. The Trustee at all times shall maintain accurate records reflecting
each transaction in each Principal Account and each Interest Funding Account and
that funds held therein shall at all times be held in trust for the benefit of
the Investor Securityholders of such Series. If, at any time, the institution
holding the Interest Funding Account ceases to be a Qualified Institution, the
Servicer shall direct the Trustee to establish within 10 Business Days a new
Interest Funding Account meeting the conditions specified above with a Qualified
Institution, transfer any cash and/or any investments to such new Interest
Funding Account and from the date such new Interest Funding Account is
established, it shall be the "Interest Funding Account." Similarly, if, at any
time, the institution holding any Principal Account ceases to be a Qualified
Institution, the Servicer shall direct the Trustee to establish within 10
Business Days a new Principal Account meeting the conditions specified above
with a Qualified Institution, transfer any cash and/or any investments to such
new Principal Account and from the date such new Principal Account is
established, it shall be a "Principal Account."
(c) Distribution Accounts. The Trustee, for the benefit of the Investor
Securityholders of each Series, shall cause to be established and maintained in
the name of the Trustee, with an office or branch of a Qualified Institution a
non-interest-bearing segregated demand deposit account for each Series (a
"Distribution Account") bearing a designation clearly indicating that the funds
deposited therein are held in trust for the benefit of the Investor
Securityholders of such Series. Each Distribution Account shall be under the
sole dominion and control of the Trustee for the benefit of the Investor
Securityholders of the related Series. Pursuant to the authority granted to the
Paying Agent herein, the Paying Agent shall have the power, revocable by the
Trustee, to make withdrawals and payments from the Distribution Account for the
purpose of carrying out the Paying Agent's duties hereunder. If, at any time,
the institution holding a Distribution Account ceases to be a Qualified
Institution, the Servicer shall direct the Trustee to establish within 10
Business Days a new Distribution Account meeting the conditions specified above
with a Qualified Institution, transfer any cash and/or any investments to such
new Distribution Account and from the date such new Distribution Account is
established, it shall be a "Distribution Account."
(d) The Excess Funding Account. The Trustee, for the benefit of the
Securityholders, shall cause to be established in the name of the Trustee, on
behalf of the Securityholders, with a Qualified Institution, a segregated trust
account (the "Excess Funding Account") bearing a designation clearly indicating
that the funds deposited therein are held for the benefit of the
Securityholders. Except as provided in subsection 4.3(e), the Excess Funding
Account shall, except as otherwise provided herein, be under the sole dominion
and control of the Trustee for the benefit of the Securityholders. Pursuant to
the authority granted to the Servicer herein, the Servicer shall have the power,
revocable by the Trustee, to make withdrawals and payments from the Excess
Funding Account for the purpose of carrying out the Servicer's or Trustee's
duties hereunder. If, at any time, the institution holding the Excess Funding
Account ceases to be a Qualified Institution, the Servicer shall direct the
Trustee to establish within 10 Business Days a new Excess Funding Account
meeting the conditions specified above with a Qualified Institution, transfer
any cash and/or any investments to such new Excess Funding Account and from the
date such new Excess Funding Account is established, it shall be the "Excess
Funding Account."
(e) Administration of the Principal Accounts and the Interest Funding Accounts.
Funds on deposit in each Principal Account and each Interest Funding Account
shall at all times be invested by the Servicer (or, at the written direction of
the Transferor, by the Trustee) pursuant to this subsection 4.2(e). Any such
investment shall mature and such funds shall be available for withdrawal on the
Transfer Date following the Monthly Period in which such funds were processed
for collection. No such investments shall be liquidated prior to maturity. At
the end of each month, all interest and earnings (net of losses and investment
expenses) on funds on deposit in each Principal Account and each Interest
Funding Account (unless otherwise specified in the applicable Supplement) shall
be deposited by the Trustee in a separate deposit account with a Qualified
Institution in the name of the Transferor, which shall not constitute a part of
the Trust, or shall otherwise be turned over by the Trustee to the Transferor in
accordance with instructions from the Transferor to the Trustee not less
frequently than monthly. Subject to the restrictions set forth above, the
Servicer, or a Person designated in writing by the Transferor, of which the
Trustee shall have received written notification, shall have the authority to
instruct the Trustee with respect to the investment of funds on deposit in any
Principal Account and any Interest Funding Account. Any investment instructions
to the Trustee shall be in writing, shall be given no later than 10:00 a.m. New
York City time on a Business Day that such investment is proposed to be made and
shall include a certification that the proposed investment is a Cash Equivalent
that matures at or prior to the time required by this Agreement. For purposes of
determining the availability of funds or the balances in any Interest Funding
Account and any Principal Account for any reason under this Agreement, all
investment earnings on such funds shall be deemed not to be available or on
deposit.
Each Cash Equivalent (other than investment earnings
distributed to the Transferor pursuant to this subsection 4.2(e)) that
constitutes investment property shall be held by the Trustee through a
securities intermediary, which securities intermediary shall agree with the
Trustee that (i) such investment property at all times shall be credited to a
securities account of the Trustee, (ii) all property credited to such securities
account shall be treated as a financial asset, (iii) such securities
intermediary shall treat the Trustee as entitled to exercise the rights that
comprise each financial asset credited to such securities account, (iv) such
securities intermediary shall comply with entitlement orders originated by the
Trustee without the further consent of any other person or entity, (v) such
securities intermediary shall not agree with any person or entity other than the
Trustee to comply with entitlement orders originated by any person or entity
other than the Trustee, (vi) such securities account and all property credited
thereto shall not be subject to any lien, security interest, right of set-off,
or encumbrance in favor of such securities intermediary or anyone claiming
through such securities intermediary (other than the Trustee), (vii) such
agreement between such securities intermediary and the Trustee shall be governed
by the laws of the State of New York, and (viii) the State of New York shall be
the securities intermediary's jurisdiction for purposes of the UCC. The Trustee
shall maintain possession of each other Cash Equivalent (other than investment
earnings distributed to the Transferor pursuant to this subsection 4.2(e)) in
the State of Minnesota, separate and apart from all other property held by the
Trustee. Notwithstanding any other provision of this Agreement, the Trustee
shall not hold any Cash Equivalent through an agent except as expressly
permitted by this subsection 4.2(e). Each term used in this subsection 4.2(e)
and defined in the New York UCC shall have the meaning set forth in the New York
UCC.
Section 4.3 Collections and Allocations.
(a) Collections. Obligors shall make payments on the Receivables to the Servicer
who shall deposit all such payments in the Collection Account no later than the
second Business Day following the Date of Processing thereof.
The Servicer shall allocate such amounts to each Series of
Investor Securities and to the Holder of the Exchangeable Transferor Security
and shall cause the Trustee to withdraw the required amounts from the Collection
Account or pay such amounts to the Holder of the Exchangeable Transferor
Security in accordance with this Article IV and the related Supplement. The
Servicer shall make such deposits or payments on the date indicated herein by
wire transfer or as otherwise provided in the Supplement for any Series of
Securities with respect to such Series.
Notwithstanding anything in this Agreement to the contrary,
but subject to the terms of any Supplement, for so long as, and only so long as,
DMCCB (or any successors to DMCCB pursuant to Section 8.2) or an Affiliate of
DMCCB shall remain the Servicer hereunder, and (a)(i) DMCCB (or any successors
to DMCCB pursuant to Section 8.2) or an Affiliate of DMCCB, as applicable,
provides to the Transferor and the Trustee a letter of credit or other form of
Enhancement rated at least A-1 by Standard & Poor's and P-1 by Moody's (as
certified to the Transferor and the Trustee by such entity), and (ii) after
notifying each Rating Agency of the proposed use of such letter of credit or
other form of Enhancement the Transferor shall have received a notice from each
Rating Agency that the Servicer making payments monthly rather than daily would
not result in a downgrading or withdrawal of any of such Rating Agency's
then-existing ratings of the Investor Securities, or (b) DMCCB (or any
successors to DMCCB pursuant to Section 8.2) shall have and maintain a
short-term credit rating of at least A-1 by Standard & Poor's and P-1 by Moody's
(as certified to the Transferor and the Trustee by the Servicer), the Servicer
need not deposit Collections from the Collection Account into the Principal
Account or the Interest Funding Account or any Series Account, or make payments
to the Holder of the Exchangeable Transferor Security, prior to the close of
business on the day any Collections are deposited in the Collection Account as
otherwise provided in this Article IV and the related Supplement, but may
instead make such deposits, payments and withdrawals on each Transfer Date in an
amount equal to the net amount of such deposits, payments and withdrawals which
would have been made but for the provisions of this paragraph.
(b) Allocations for the Holder of the Exchangeable Transferor Security.
Throughout the existence of the Trust, unless otherwise stated in any
Supplement, on each Business Day the Servicer shall allocate to the Holder of
the Exchangeable Transferor Security an amount equal to the product of (A) the
Transferor Percentage as of the end of the preceding Business Day and (B) the
aggregate amount of Principal Collections and Finance Charge Collections
available in the Collection Account. The Servicer shall pay such amount to the
Holder of the Exchangeable Transferor Security on each Business Day; provided,
however, that amounts payable to the Holder of the Exchangeable Transferor
Security pursuant to this clause (b) shall instead be deposited in the Excess
Funding Account to the extent necessary to prevent the Transferor Interest from
being less than the Minimum Transferor Interest.
(c) Allocation for Series. On each Business Day, (i) the amount of Finance
Charge Collections available in the Collection Account allocable to each Series,
(ii) the amount of Principal Collections available in the Collection Account
allocable to each Series and (iii) the Receivables in Defaulted Accounts
allocable to each Series shall be determined in accordance with the provisions
of the related Supplement. The Servicer shall, prior to the close of business on
the day any Collections are deposited in the Collection Account, cause the
Trustee to withdraw the required amounts from the Collection Account and cause
the Trustee to deposit such amounts into the applicable Principal Account, the
applicable Interest Funding Account, the Excess Funding Account, or any Series
Account or pay such amounts to the Holder of the Exchangeable Transferor
Security in accordance with the provisions of this Article IV and the
Supplements.
(d) Unallocated Principal Collections; Excess Funding Account. On each Business
Day, Shared Principal Collections shall be allocated to each outstanding Series
pro rata based on the Principal Shortfall, if any, for each such Series, and
then, at the option of the Transferor, any remainder may be applied as principal
with respect to the Variable Funding Securities. The Servicer shall pay any
remaining Shared Principal Collections on such Business Day to the Transferor;
provided, that if the Transferor Interest as determined on such Business Day
does not exceed the Minimum Transferor Interest, then such remaining Shared
Principal Collections shall be deposited in the Excess Funding Account to the
extent necessary to increase the Transferor Interest above the Minimum
Transferor Interest; provided, further, that if an Amortization Period has
commenced and is continuing with respect to more than one outstanding Series,
such remaining Shared Principal Collections shall be allocated to such Series
pro rata based on the Investor Percentage for Principal Receivables applicable
for such Series.
(e) Amounts in Excess Funding Account. Amounts on deposit in the Excess Funding
Account on any Business Day will be invested by the Servicer (or, at the
direction of the Transferor, by the Trustee) pursuant to the second paragraph of
subsection 4.2(e) in Cash Equivalents which shall mature and be available on or
before the next Business Day on which amounts may be released from the Excess
Funding Account. Earnings from such investments received shall be deposited in
the Collection Account and treated as Finance Charge Collections. Any investment
instructions to the Trustee shall be in writing and shall include a
certification that the proposed investment is a Cash Equivalent that matures at
or prior to the date required by this Agreement. If on any Business Day other
than a Business Day on which a Pay Out Event or a Prospective Pay Out Event has
occurred and is continuing, the Transferor Interest is greater than the Minimum
Transferor Interest, amounts on deposit in the Excess Funding Account may, at
the option of the Transferor, be released to the Holder of the Exchangeable
Transferor Security. On the first Business Day of the Amortization Period for
any Series, funds on deposit in the Excess Funding Account will be deposited in
the Principal Account for such Series to the extent of the lesser of (x) the
Invested Amount of such Series and (y) the amount then on deposit in the Excess
Funding Account.
[THE REMAINDER OF ARTICLE IV IS RESERVED AND SHALL
BE SPECIFIED IN ANY SUPPLEMENT WITH RESPECT TO ANY SERIES]
[End of Article IV]
ARTICLE V
[ARTICLE V IS RESERVED AND SHALL BE SPECIFIED IN ANY
SUPPLEMENT WITH RESPECT TO ANY SERIES]
[End of Article V]
ARTICLE VI
THE SECURITIES
Section 6.1 The Securities. Subject to Sections 6.10 and 6.13, the Investor
Securities of each Series and any Class thereof may be issued in bearer form
(the "Bearer Securities") with attached interest coupons and, if applicable, a
special coupon (collectively, the "Coupons") or in fully registered form (the
"Registered Securities"), and shall be substantially in the form of the exhibits
with respect thereto attached to the related Supplement. The Transferor may
elect at any time, by written notice to the Trustee, to have its interest in the
Transferor Interest be (i) an uncertificated interest or (ii) evidenced by an
Exchangeable Transferor Security. If the Transferor elects to have its interest
in the Transferor Interest be uncertificated, it shall deliver to the Trustee
for cancellation any Exchangeable Transferor Security previously issued. If the
Transferor elects to have its interest in the Transferor Interest be evidenced
by an Exchangeable Transferor Security, the Exchangeable Transferor Security
shall be issued pursuant hereto or to Section 6.9 or Section 6.10, substantially
in the form of Exhibit A and shall upon issuance be executed and delivered by
the Transferor to the Trustee for authentication and redelivery as provided in
Sections 2.1 and 6.2. The Investor Securities shall, upon issue pursuant hereto
or to Section 6.9 or Section 6.10, be executed and delivered by the Transferor
to the Trustee for authentication and redelivery as provided in Sections 2.1 and
6.2. Unless otherwise specified in any Supplement, any Investor Security shall
be issuable in a minimum denomination of $1,000 Undivided Interest and integral
multiples thereof, and shall be issued upon original issuance in an original
aggregate principal amount equal to the Initial Invested Amount. The
Exchangeable Transferor Security shall be issued as a single security. Each
Security shall be executed by manual or facsimile signature on behalf of the
Transferor by its President or any Vice President. Securities bearing the manual
or facsimile signature of the individual who was, at the time when such
signature was affixed, authorized to sign on behalf of the Transferor or the
Trustee shall not be rendered invalid, notwithstanding that such individual has
ceased to be so authorized prior to the authentication and delivery of such
Securities or does not hold such office at the date of such Securities. No
Security shall be entitled to any benefit under this Agreement, or be valid for
any purpose, unless there appears on such Security a certificate of
authentication substantially in the form provided for herein, executed by or on
behalf of the Trustee by the manual signature of a duly authorized signatory,
and such certificate upon any Security shall be conclusive evidence, and the
only evidence, that such Security has been validly issued and duly authenticated
and delivered hereunder. All Securities shall be dated the date of their
authentication except Bearer Securities which shall be dated the applicable
Issuance Date as provided in the related Supplement.
Section 6.2 Authentication of Securities. Contemporaneously with the initial
assignment and transfer of the Receivables, whether now existing or hereafter
created (other than Receivables in Supplemental Accounts) and the other
components to the Trust, the Trustee shall authenticate and deliver the initial
Series of Investor Securities (or applicable Classes thereof), upon the written
order of the Transferor. Upon the issuance of such Investor Securities, such
Investor Securities shall be validly issued, fully paid and non-assessable. The
Trustee shall authenticate and deliver the Exchangeable Transferor Security, if
applicable, to the Transferor simultaneously with its delivery of the initial
Series of Investor Securities. Upon a New Issuance as provided in Section 6.9
and the satisfaction of certain other conditions specified therein, the Trustee
shall authenticate and deliver the Investor Securities of additional Series
(with the designation provided in the related Supplement), upon the written
order of the Transferor. Upon the written order of the Transferor, the
Securities of any Series shall be duly authenticated by or on behalf of the
Trustee, in authorized denominations equal to (in the aggregate) the Initial
Invested Amount of such Series of Investor Securities. If specified in the
related Supplement for any Series, the Trustee shall authenticate and deliver
outside the United States the Global Security that is issued upon original
issuance thereof, upon the written order of the Transferor, to the Depositary.
If specified in the related Supplement for any Series, the Trustee shall
authenticate Book-Entry Securities that are issued upon original issuance
thereof, upon the written order of the Transferor, to a Clearing Agency or its
nominee as provided in Section 6.10.
Section 6.3 Registration of Transfer and Exchange of Securities.
(a) The Trustee shall cause to be kept at the office or agency to be maintained
by a transfer agent and registrar (the "Transfer Agent and Registrar") in
accordance with the provisions of Section 11.16, a register (the "Security
Register") in which, subject to such reasonable regulations as it may prescribe,
the Transfer Agent and Registrar shall provide for the registration of the
Investor Securities of each Series (unless otherwise provided in the related
Supplement) and of transfers and exchanges of the Investor Securities as herein
provided. Whenever reference is made in this Agreement to the transfer or
exchange of the Securities by the Trustee, such reference shall be deemed to
include the transfer or exchange on behalf of the Trustee by a Transfer Agent
and Registrar. The Trustee is hereby initially appointed Transfer Agent and
Registrar for the purposes of registering the Investor Securities and transfers
and exchanges of the Investor Securities as herein provided. If any form of
Investor Security is issued as a Global Security, the Trustee may, or if and so
long as any Series of Investor Securities are listed on a stock exchange and
such exchange shall so require, the Trustee shall appoint a co-transfer agent
and co-registrar, which will also be a co-paying agent, in such city as the
Transferor may specify. Any reference in this Agreement to the Transfer Agent
and Registrar shall include any co-transfer agent and co-registrar unless the
context otherwise requires. The Trustee shall be permitted to resign as Transfer
Agent and Registrar upon 30 days' written notice to the Servicer and the
Transferor. In the event that the Trustee shall no longer be the Transfer Agent
and Registrar, the Transferor shall appoint a successor Transfer Agent and
Registrar. If any Series with respect to which Book Entry Securities were
originally issued is no longer issued as Book-Entry Securities, then the
Transferor may appoint a successor Transfer Agent and Registrar.
Unless otherwise provided in the related Supplement, in the
case of any Investor Security with respect to which no Opinion of Counsel to the
effect that such Investor Security (or Class or Series to which such Investor
Security pertains) will be characterized as indebtedness for federal income tax
purposes was delivered, no sale, assignment, participation, pledge,
hypothecation, transfer or other disposition of such Investor Security (or any
interest therein) shall be made unless the Transferor shall have granted prior
consent thereto, which consent may not be unreasonably withheld and, provided
further, that for purposes of this sentence, it shall in all cases be reasonable
for the Transferor to withhold consent to such proposed sale, assignment,
participation, pledge, hypothecation, transfer or other disposition of all or
any part of a Security (or any interest therein) if the transaction would, if
effected, give rise to any adverse tax consequence, as determined in the sole
and absolute discretion of the Transferor.
Upon surrender for registration of transfer of any Security at
any office or agency of the Transfer Agent and Registrar maintained for such
purpose, the Transferor shall execute, subject to the provisions of subsection
6.3(c), and the Trustee shall (unless the Transfer Agent and Registrar is
different than the Trustee, in which case the Transfer Agent and Registrar
shall) authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Securities in authorized denominations of like
aggregate Undivided Interests; provided, that the provisions of this paragraph
shall not apply to Bearer Securities.
At the option of any Holder of Registered Securities,
Registered Securities may be exchanged for other Registered Securities of the
same Series in authorized denominations of like aggregate Undivided Interests in
the Trust, upon surrender of the Registered Securities to be exchanged at any
office or agency of the Transfer Agent and Registrar maintained for such
purpose. At the option of a Bearer Securityholder, subject to applicable laws
and regulations (including without limitation, the Bearer Rules), Bearer
Securities may be exchanged for other Bearer Securities or Registered Securities
of the same Series in authorized denominations of like aggregate Undivided
Interests in the Trust, in the manner specified in the Supplement for such
Series, upon surrender of the Bearer Securities to be exchanged at an office or
agency of the Transfer Agent and Registrar located outside the United States.
Each Bearer Security surrendered pursuant to this Section 6.3 shall have
attached thereto (or be accompanied by) all unmatured Coupons, provided that any
Bearer Security so surrendered after the close of business on the Record Date
preceding the relevant Distribution Date after the related Series Termination
Date need not have attached the Coupons relating to such Distribution Date.
Whenever any Investor Securities of any Series are so
surrendered for exchange, the Transferor shall execute, and the Trustee shall
(unless the Transfer Agent and Registrar is different than the Trustee, in which
case the Transfer Agent and Registrar shall) authenticate and deliver, the
Investor Securities of such Series which the Securityholder making the exchange
is entitled to receive. Every Investor Security presented or surrendered for
registration of transfer or exchange shall be accompanied by a written
instrument of transfer in a form satisfactory to the Trustee and the Transfer
Agent and Registrar duly executed by the Securityholder thereof or his
attorney-in-fact duly authorized in writing.
The preceding provisions of this Section 6.3 notwithstanding,
the Trustee or the Transfer Agent and Registrar, as the case may be, shall not
be required to register the transfer of or exchange any Investor Security of any
Series for the period from the Record Date preceding the due date for any
payment to the Distribution Date with respect to the Investor Securities of such
Series.
Unless otherwise provided in the related Supplement, no
service charge shall be made for any registration of transfer or exchange of
Securities, but the Transfer Agent and Registrar may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Securities.
All Investor Securities (together with any Coupons attached to
Bearer Securities) surrendered for registration of transfer or exchange shall be
canceled by the Transfer Agent and Registrar and disposed of in a manner
satisfactory to the Trustee. The Trustee shall cancel and dispose of any Global
Security upon its exchange in full for Definitive Securities, but shall not be
required to destroy such Global Securities. Such security shall also state that
a security or securities of each Foreign Clearing Agency to the effect referred
to in Section 6.13 was received with respect to each portion of the Global
Security exchanged for Definitive Securities.
The Transferor shall execute and deliver to the Trustee or the
Transfer Agent and Registrar, as applicable, Bearer Securities and Registered
Securities in such amounts and at such times as are necessary to enable the
Trustee to fulfill its responsibilities under this Agreement and the Securities.
(b) Except as provided in Section 6.9 or 7.2 or in any Supplement, in no event
shall the Exchangeable Transferor Security or any interest therein, or, as the
case may be, the uncertificated interest in the Transferor Interest or any
interest therein, be transferred, sold, exchanged, pledged, participated or
otherwise assigned hereunder, in whole or in part, unless the Transferor shall
have consented in writing to such transfer and unless the Trustee shall have
received (1) confirmation in writing from each Rating Agency that such transfer
will not result in a lowering or withdrawal of its then-existing rating of any
Series of Investor Securities and (2) an Opinion of Counsel that such transfer
does not (i) adversely affect the conclusions reached in any of the federal
income tax opinions issued in connection with the original issuance of any
Series of Investor Securities or (ii) result in a taxable event to the holders
of any such Series.
(c) Unless otherwise provided in the related Supplement, registration of
transfer of Registered Securities containing a legend relating to the
restrictions on transfer of such Registered Securities (which legend shall be
set forth in the Supplement relating to such Investor Securities) shall be
effected only if the conditions set forth in such related Supplement are
satisfied.
Whenever a Registered Security containing the legend set forth
in the related Supplement is presented to the Transfer Agent and Registrar for
registration of transfer, the Transfer Agent and Registrar shall promptly seek
instructions from the Servicer regarding such transfer. The Transfer Agent and
Registrar and the Trustee shall be entitled to receive written instructions
signed by an officer of the Servicer prior to registering any such transfer or
authenticating new Registered Securities, as the case may be. The Servicer
hereby agrees to indemnify the Transfer Agent and Registrar and the Trustee and
to hold each of them harmless against any loss, liability or expense incurred
without negligence or bad faith on their part arising out of or in connection
with actions taken or omitted by them in reliance on any such written
instructions furnished pursuant to this subsection 6.3(c).
(d) The Transfer Agent and Registrar will maintain at its expense in the Borough
of Manhattan, The City of New York, an office or offices or an agency or
agencies where Investor Securities of such Series may be surrendered for
registration of transfer or exchange.
(e) Prior to the Transfer of any portion of a Transferor Retained Class, the
Trustee shall have received an Opinion of Counsel to the effect that such
proposed Transfer will not adversely affect the Federal or Applicable Tax State
income tax characterization of any outstanding Series of Investor Securities or
the taxability (or tax characterization) of the Trust under Federal, Minnesota
or Delaware income tax laws. The Transferor shall provide to Moody's notice of
any such Transfer and a copy of the Opinion of Counsel described above.
Section 6.4 Mutilated, Destroyed, Lost or Stolen Securities. If (a) any
mutilated Security (together, in the case of Bearer Securities, with all
unmatured Coupons, if any, appertaining thereto) is surrendered to the Transfer
Agent and Registrar, or the Transfer Agent and Registrar receives evidence to
its satisfaction of the destruction, loss or theft of any Security and (b) in
the case of destruction, loss or theft, there is delivered to the Transfer Agent
and Registrar and the Trustee such security or indemnity as may be required by
them to hold each of them and the Trust harmless, then, in the absence of notice
to the Trustee that such Security has been acquired by a protected purchaser,
the Trustee shall (unless the Transfer Agent and Registrar is different from the
Trustee, in which case the Transfer Agent and Registrar shall) authenticate and
deliver (in compliance with applicable law), in exchange for or in lieu of any
such mutilated, destroyed, lost or stolen Security, a new Security of like tenor
and aggregate Undivided Interest. In connection with the issuance of any new
Security under this Section 6.4, the Trustee or the Transfer Agent and Registrar
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee and the Transfer Agent
and Registrar) connected therewith. Any duplicate Security issued pursuant to
this Section 6.4 shall constitute complete and indefeasible evidence of
ownership in the Trust, as if originally issued, whether or not the lost, stolen
or destroyed Security shall be found at any time.
Section 6.5 Persons Deemed Owners. Prior to due presentation of a Security for
registration of transfer, the Trustee, the Paying Agent, the Transfer Agent and
Registrar and any agent of any of them may treat the Person in whose name any
Security is registered as the owner of such Security for the purpose of
receiving distributions pursuant to Article V (as described in any Supplement)
and Article XII and for all other purposes whatsoever, and neither the Trustee,
the Paying Agent, the Transfer Agent and Registrar nor any agent of any of them
shall be affected by any notice to the contrary; provided, however, that in
determining whether the holders of Investor Securities evidencing the requisite
Undivided Interests have given any request, demand, authorization, direction,
notice, consent or waiver hereunder, Investor Securities owned by the
Transferor, the Servicer or any Affiliate thereof shall be disregarded and
deemed not to be outstanding, except that, in determining whether the Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Investor Securities which a
Responsible Officer in the Corporate Trust Office of the Trustee knows to be so
owned shall be so disregarded. Investor Securities so owned that have been
pledged in good faith shall not be disregarded as outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Investor Securities and that the pledgee is not the
Transferor, the Servicer or an Affiliate thereof.
In the case of a Bearer Security, the Trustee, the Paying
Agent, the Transfer Agent and Registrar and any agent of any of them may treat
the holder of a Bearer Security or Coupon as the owner of such Bearer Security
or Coupon for the purpose of receiving distributions pursuant to Article V (as
described in any Supplement) and Article XII and for all other purposes
whatsoever, and neither the Trustee, the Paying Agent, the Transfer Agent and
Registrar nor any agent of any of them shall be affected by any notice to the
contrary. Securities so owned that have been pledged in good faith shall not be
disregarded and may be regarded as outstanding, if the pledgee establishes to
the satisfaction of the Trustee the pledgee's right so to act with respect to
such Investor Securities and that the pledgee is not the Transferor, the
Servicer or an Affiliate thereof.
Section 6.6 Appointment of Paying Agent.
(a) The Paying Agent shall make distributions to Investor Securityholders from
the appropriate account or accounts maintained for the benefit of
Securityholders as specified in this Agreement or the related Supplement for any
Series pursuant to Articles IV and V hereof. Any Paying Agent shall have the
revocable power to withdraw funds from such appropriate account or accounts for
the purpose of making distributions referred to above. The Trustee (or the
Transferor if the Trustee is the Paying Agent) may revoke such power and remove
the Paying Agent, if the Trustee (or the Transferor if the Trustee is the Paying
Agent) determines in its sole discretion that the Paying Agent shall have failed
to perform its obligations under this Agreement in any material respect or for
other good cause. The Paying Agent, unless the Supplement with respect to any
Series states otherwise, shall initially be the Trustee. The Trustee shall be
permitted to resign as Paying Agent upon 30 days' written notice to the
Transferor and the Servicer. Upon the resignation of the Paying Agent, if the
Paying Agent was not the Trustee, the Trustee shall be the successor Paying
Agent unless and until another successor has been appointed as Paying Agent. In
the event that the Trustee, shall no longer be the Paying Agent, the Transferor
shall appoint a successor to act as Paying Agent (which shall be a bank or trust
company). Any reference in this Agreement to the Paying Agent shall include any
co-paying agent unless the context requires otherwise.
If specified in the related Supplement for any Series, so long
as the Investor Securities of such Series are outstanding and the Paying Agent
is not located in New York City, the Transferor shall maintain a co-paying agent
in New York City (for Registered Securities only) or any other city designated
in such Supplement.
(b) The Trustee shall cause each Paying Agent (other than itself) to execute and
deliver to the Trustee an instrument in which such Paying Agent shall agree with
the Trustee that such Paying Agent will hold all sums, if any, held by it for
payment to the Securityholders in trust for the benefit of the Securityholders
entitled thereto and waive all rights of set off the Paying Agent may have
against any sums held by it until such sums shall be paid to such
Securityholders and shall agree, and if the Trustee is the Paying Agent it
hereby agrees, that it shall comply with all requirements of the Internal
Revenue Code regarding the withholding by the Trustee of payments in respect of
federal income taxes due from Security Owners.
Section 6.7 Access to List of Securityholders' Names and Addresses. The Trustee
will furnish or cause to be furnished by the Transfer Agent and Registrar to the
Transferor, the Servicer or the Paying Agent, within five Business Days after
receipt by the Trustee of a request therefor from the Transferor, the Servicer
or the Paying Agent, respectively, in writing, a list in such form as the
Transferor, the Servicer or the Paying Agent may reasonably require, of the
names and addresses of the Investor Securityholders as of the most recent Record
Date for payment of distributions to Investor Securityholders. Unless otherwise
provided in the related Supplement, holders of Investor Securities evidencing
Undivided Interests aggregating not less than 25% of the Invested Amount of the
Investor Securities of any Series (the "Applicants") may apply in writing to the
Trustee, and if such application states that the Applicants desire to
communicate with other Investor Securityholders of any Series with respect to
their rights under this Agreement or under the Investor Securities and is
accompanied by a copy of the communication which such Applicants propose to
transmit, then the Trustee, after having been adequately indemnified by such
Applicants for its costs and expenses, shall afford or shall cause the Transfer
Agent and Registrar to afford such Applicants access during normal business
hours to the most recent list of Securityholders held by the Trustee and shall
give the Servicer and the Transferor notice that such request has been made,
within five Business Days after the receipt of such application. Such list shall
be as of a date no more than 45 days prior to the date of receipt of such
Applicants' request. Every Securityholder, by receiving and holding a Security,
agrees with the Trustee that neither the Trustee, the Transfer Agent and
Registrar, the Transferor, the Servicer, nor any of their respective agents
shall be held accountable by reason of the disclosure of any such information as
to the names and addresses of the Securityholders hereunder, regardless of the
source from which such information was obtained.
Section 6.8 Authenticating Agent.
(a) The Trustee may appoint one or more authenticating agents (each, an
"Authenticating Agent") with respect to the Securities which shall be authorized
to act on behalf of the Trustee in authenticating the Securities in connection
with the issuance, delivery, registration of transfer, exchange or repayment of
the Securities. The Trustee will appoint any Transfer Agent and Registrar to be
an Authentication Agent. Whenever reference is made in this Agreement to the
authentication of Securities by the Trustee or the Trustee's certificate of
authentication, such reference shall be deemed to include authentication on
behalf of the Trustee by an Authenticating Agent and a certificate of
authentication executed on behalf of the Trustee by an Authenticating Agent.
Each Authenticating Agent must be acceptable to the Transferor. The Trustee
hereby initially appoints U.S. Bank National Association as its Authenticating
Agent.
(b) Any institution succeeding to the corporate agency business of an
Authenticating Agent shall continue to be an Authenticating Agent without the
execution or filing of any paper or any further act on the part of the Trustee
or such Authenticating Agent.
(c) An Authenticating Agent may at any time resign by giving written notice of
resignation to the Trustee and to the Transferor. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving notice of termination
to such Authenticating Agent and to the Transferor. Upon receiving such a notice
of resignation or upon such a termination, or in case at any time an
Authenticating Agent shall cease to be acceptable to the Trustee or the
Transferor, the Trustee promptly may appoint a successor Authenticating Agent.
Any successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless acceptable to the
Trustee and the Transferor.
(d) The Servicer agrees to pay each Authenticating Agent from time to time
reasonable compensation for its services under this Section 6.8.
(e) The provisions of Sections 11.1, 11.2 and 11.3 shall be applicable to
any Authenticating Agent.
(f) Pursuant to an appointment made under this Section 6.8, the Securities may
have endorsed thereon, in lieu of the Trustee's certificate of authentication,
an alternate certificate of authentication in substantially the following form:
Trustee's Certificate of Authentication
This is one of the securities described in the Pooling and
Servicing Agreement.
,
as Authenticating Agent for the Trustee
By:
Authorized Signatory
Dated:
Section 6.9 New Issuances.
(a) Upon the issuance of Investor Securities of a new Series, the Transferor
shall deliver to the Trustee for authentication under Section 6.2, one or more
new Series of Investor Securities. Any such Series of Investor Securities shall
be substantially in the form specified in the related Supplement and shall bear,
upon its face, the designation for such Series to which it belongs, as selected
by the Transferor. Except as specified in any Supplement for a related Series,
all Investor Securities of any Series shall rank pari passu and be equally and
ratably entitled as provided herein to the benefits hereof (except that the
Enhancement provided for any Series shall not be available for any other Series)
without preference, priority or distinction on account of the actual time or
times of authentication and delivery, all in accordance with the terms and
provisions of this Agreement and the related Supplement.
(b) The Holder of the Exchangeable Transferor Security may permit Investor
Securities of one or more new Series to be issued (each, a "New Issuance") by
notifying the Trustee in writing at least five Business Days in advance (a "New
Issuance Notice") of the date upon which the New Issuance is to occur (a "New
Issuance Date"). Any New Issuance Notice shall state the designation of any
Series to be issued on the New Issuance Date and, with respect to each such
Class or Series: (i) its Initial Invested Amount (or the method for calculating
such Initial Invested Amount), (ii) its Security Rate (or the method for
allocating interest payments or other cash flows to such Series), if any, and
(iii) the Enhancement Provider, if any, with respect to such Series. On the New
Issuance Date, the Trustee shall authenticate and deliver any such Class or
Classes of such Series of Investor Securities only upon delivery to it of the
following: (i) a Supplement satisfying the criteria set forth in subsection
6.9(c) and in form reasonably satisfactory to the Trustee executed by the
Transferor and the Servicer and specifying the Principal Terms of such Series,
(ii) the applicable Enhancement, if any, (iii) the agreement, if any, pursuant
to which the Enhancement Provider agrees to provide the Enhancement, if any,
(iv) an Opinion of Counsel to the effect that (A) any Class of the newly issued
Series of Investor Securities sold to third parties will be characterized as
either indebtedness or partnership interests for Federal and applicable state
income tax purposes and (B) that the issuance of the newly issued Series of
Investor Securities will not adversely affect the Federal or Applicable Tax
State income tax characterization of any outstanding Series of Investor
Securities or the taxability of the Trust under Federal or Applicable Tax State
income tax laws, (v) written confirmation from each Rating Agency that the New
Issuance will not result in such Rating Agency's reducing or withdrawing its
rating on any then outstanding Class of any Series as to which it is a Rating
Agency, (vi) an Officer's Certificate of the Transferor, that on the New
Issuance Date after giving effect to such New Issuance (A) the Transferor
Interest would be at least equal to the Minimum Transferor Interest and (B) the
Retained Interest would be at least equal to the Minimum Retained Interest,
(vii) the existing Exchangeable Transferor Security, if any, and (viii) such
other documents, certificates and Opinions of Counsel as may be required by the
applicable Supplement. Upon satisfaction of such conditions, the Trustee shall
cancel the existing Exchangeable Transferor Security, if any, and issue such
Series of Investor Securities and a new Exchangeable Transferor Security, if
applicable, each dated the New Issuance Date, as provided above. There is no
limit to the number of New Issuances that may be performed under this Agreement.
(c) In conjunction with a New Issuance, the parties hereto shall execute a
Supplement, which shall specify the relevant terms with respect to any newly
issued Series of Investor Securities, which may include without limitation: (i)
its name or designation, (ii) the Initial Invested Amount or the method of
calculating the Initial Invested Amount, (iii) the Security Rate (or formula for
the determination thereof), (iv) the Closing Date, (v) the rating agency or
agencies rating such Series, (vi) the name of the Clearing Agency, if any, (vii)
the rights of the Holder of the Exchangeable Transferor Security that have been
transferred to the Holders of such Series pursuant to such New Issuance
(including any rights to allocations of Finance Charge Collections and Principal
Collections), (viii) the interest payment date or dates and the date or dates
from which interest shall accrue, (ix) the method of allocating Principal
Collections for such Series and the method by which the principal amount of
Investor Securities of such Series shall amortize or accrete and the method for
allocating Finance Charge Collections, (x) the names of any accounts to be used
by such Series and the terms governing the operation of any such account, (xi)
the Series Servicing Fee Percentage, (xii) the Minimum Transferor Interest,
(xiii) the Series Termination Date, (xiv) the terms of any Enhancement with
respect to such Series, (xv) the Enhancement Provider, if applicable, (xvi) the
base rate applicable to such Series, (xvii) the terms on which the Securities of
such Series may be repurchased or remarketed to other investors, (xviii) any
deposit into any account provided for such Series, (xix) the number of Classes
of such Series and, if more than one Class, the rights and priorities of each
such Class, (xx) whether any fees will be included in the funds available to be
paid for such Series, (xxi) the subordination of such Series to any other
Series, (xxii) the Pool Factor, (xxiii) the Minimum Aggregate Principal
Receivables, (xxiv) whether such Series will be a part of a group or subject to
being paired with any other Series, (xxv) whether such Series will be
pre-funded, and (xxvi) any other relevant terms of such Series (including
whether or not such Series will be pledged as collateral for an issuance of any
other securities, including commercial paper) (all such terms, the "Principal
Terms" of such Series). The terms of such Supplement may modify or amend the
terms of this Agreement solely as applied to such new Series. If on the date of
the issuance of such Series there is issued and outstanding one or more Series
of Investor Securities and no Series of Investor Securities is currently rated
by a Rating Agency, then as a condition to such New Issuance a nationally
recognized investment banking firm or commercial bank shall also deliver to the
Trustee an officer's certificate stating, in substance, that the New Issuance
will not have an adverse effect on the timing or distribution of payments to
such other Series of Investor Securities then issued and outstanding.
(d) If applicable, the Transferor may surrender the Exchangeable Transferor
Security to the Trustee in exchange for a newly issued Exchangeable Transferor
Security and a second security (a "Supplemental Security"), the terms of which
shall be defined in a supplement to this Agreement (which supplement shall be
subject to Section 13.1 hereof to the extent that it amends any of the terms of
this Agreement), to be delivered to or upon the order of the Transferor (or a
Person designated by the Transferor, in the case of the transfer or exchange
thereof, as provided below), upon satisfaction of the following conditions: (i)
following such exchange, the Transferor Interest (less any interest therein
represented by any Supplemental Securities) would be at least equal to the
Minimum Transferor Interest, (ii) following such exchange the Retained Interest
(less any interest therein represented by any Supplemental Securities) equals or
exceeds the Minimum Retained Interest, and (iii) the Trustee received prior to
such exchange (A) a letter from the Rating Agency stating that the then current
ratings on the Investor Securities of each rated class of each Series then
outstanding will not be reduced or withdrawn because of the issuance of such
Supplemental Security and (B) an Opinion of Counsel to the effect that (i) such
Supplemental Security will be characterized as either indebtedness or a
partnership interest for Federal and applicable state income tax purposes and
(ii) such Supplemental Security will not adversely affect the Federal, Minnesota
or Delaware income tax characterization of any outstanding Series of Investor
Securities or the taxability of the Trust under Federal, Minnesota or Delaware
income tax laws. A Supplemental Security may be transferred or exchanged only
upon satisfaction of the conditions set forth in clause (iii) above.
Section 6.10 Book-Entry Securities. Unless otherwise provided in any related
Supplement, the Investor Securities, upon original issuance, shall be issued in
the form of typewritten Securities representing the Book-Entry Securities, to be
delivered to the depositary specified in such Supplement (the "Depositary")
which shall be the Clearing Agency or Foreign Clearing Agency, by or on behalf
of such Series. The Investor Securities of each Series shall, unless otherwise
provided in the related Supplement, initially be registered on the Security
Register in the name of the nominee of the Clearing Agency or Foreign Clearing
Agency. No Security Owner will receive a definitive security representing such
Security Owner's interest in the related Series of Investor Securities, except
as provided in Section 6.12. Unless and until definitive, fully registered
Investor Securities of any Series ("Definitive Securities") have been issued to
Security Owners pursuant to Section 6.12:
(i) the provisions of this Section 6.10 shall be in full force and effect
with respect to each such Series;
(ii) the Transferor, the Servicer, the Paying Agent, the Transfer Agent and
Registrar and the Trustee may deal with the Clearing Agency and the
Clearing Agency Participants for all purposes (including the making of
distributions on the Investor Securities of each such Series) as the
authorized representatives of the Security Owners;
(iii) to the extent that the provisions of this Section 6.10 conflict with
any other provisions of this Agreement, the provisions of this Section
6.10 shall control with respect to each such Series; and
(iv) the rights of Security Owners of Investor Securities of each such
Series shall be exercised only through the Clearing Agency or Foreign
Clearing Agency and the applicable Clearing Agency Participants and
shall be limited to those established by law and agreements between
such Security Owners and the Clearing Agency or Foreign Clearing Agency
and/or the Clearing Agency Participants. Pursuant to the Depositary
Agreement applicable to a Series, unless and until Definitive
Securities of such Series are issued pursuant to Section 6.12, the
initial Clearing Agency will make book-entry transfers among the
Clearing Agency Participants and receive and transmit distributions of
principal and interest on the Investor Securities to such Clearing
Agency Participants.
Section 6.11 Notices to Clearing Agency. Whenever notice or other communication
to the Securityholders is required under this Agreement, unless and until
Definitive Securities shall have been issued to Security Owners pursuant to
Section 6.12, the Trustee shall give all such notices and communications
specified herein to be given to Holders of the Investor Securities to the
Clearing Agency or Foreign Clearing Agency.
Section 6.12 Definitive Securities. If (i) (A) the Transferor advises the
Trustee in writing that the Clearing Agency or Foreign Clearing Agency is no
longer willing or able to discharge properly its responsibilities under the
applicable Depositary Agreement, and (B) the Transferor is unable to locate a
qualified successor, (ii) the Transferor, at its option, advises the Trustee in
writing that it elects to terminate the book-entry system through the Clearing
Agency or Foreign Clearing Agency with respect to any Series of Securities or
(iii) after the occurrence of a Servicer Default, Security Owners of a Series
representing beneficial interests aggregating not less than 50% of the Invested
Amount of such Series advise the Trustee and the applicable Clearing Agency or
Foreign Clearing Agency through the applicable Clearing Agency Participants in
writing that the continuation of a book-entry system through the applicable
Clearing Agency or Foreign Clearing Agency is no longer in the best interests of
the Security Owners, the Trustee shall notify all Security Owners of such
Series, through the applicable Clearing Agency Participants, of the occurrence
of any such event and of the availability of Definitive Securities to Security
Owners of such Series requesting the same. Upon surrender to the Trustee of the
Investor Securities of such Series by the applicable Clearing Agency or Foreign
Clearing Agency for registration, accompanied by registration instructions from
the applicable Clearing Agency or Foreign Clearing Agency, the Trustee shall
issue the Definitive Securities of such Series. Neither the Transferor nor the
Trustee shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such instructions.
Upon the issuance of Definitive Securities of such Series, all references herein
to obligations imposed upon or to be performed by the applicable Clearing Agency
or Foreign Clearing Agency shall be deemed to be imposed upon and performed by
the Trustee, to the extent applicable with respect to such Definitive
Securities, and the Trustee shall recognize the Holders of the Definitive
Securities of such Series as Securityholders of such Series hereunder.
Section 6.13 Global Security; Euro-Security Exchange Date. If specified in the
related Supplement for any Series, the Investor Securities may be initially
issued in the form of a single temporary Global Security (the "Global Security")
in bearer form, without interest coupons, in the denomination of the Initial
Invested Amount of such Series and substantially in the form attached to the
related Supplement. Unless otherwise specified in the related Supplement, the
provisions of this Section 6.13 shall apply to such Global Security. The Global
Security will be authenticated by the Trustee upon the same conditions, in
substantially the same manner and with the same effect as the Definitive
Securities. The Global Security may be exchanged in the manner described in the
related Supplement for Registered Securities or Bearer Securities in definitive
form.
Section 6.14 Meetings of Securityholders. To the extent provided by the
Supplement for any Series issued in whole or in part in Bearer Securities, the
Transferor or the Trustee may at any time call a meeting of the Securityholders
of such Series, to be held at such time and at such place as the Transferor or
the Trustee, as the case may be, shall determine, for the purpose of approving a
modification of or amendment to, or obtaining a waiver of, any covenant or
condition set forth in this Agreement with respect to such Series or in the
Securities of such Series, subject to Section 13.1 of this Agreement.
[End of Article VI]
ARTICLE VII
OTHER MATTERS RELATING TO THE TRANSFEROR
Section 7.1 Liability of the Transferor. The Transferor shall be liable in
accordance herewith solely to the extent of the obligations specifically
undertaken by the Transferor.
Section 7.2 Merger or Consolidation of, or Assumption of the Obligations of, the
Transferor.
(a) The Transferor shall not consolidate with or merge into any other business
entity or convey or transfer its properties and assets substantially as an
entirety to any Person, unless:
(i) the business entity formed by such consolidation or into which the
Transferor is merged or the Person which acquires by conveyance or
transfer the properties and assets of the Transferor substantially as
an entirety shall be, if the Transferor is not the surviving entity,
(x) a corporation organized and existing under the laws of the United
States of America or any State or the District of Columbia or (y) a
state or national banking association that is not eligible to be a
debtor under the United States Bankruptcy Code, as amended from time
to time, or to any successor statute, and shall expressly assume, by
an agreement supplemental hereto, executed and delivered to the
Trustee, in form satisfactory to the Trustee, the performance of every
covenant and obligation of the Transferor, as applicable hereunder and
shall benefit from all the rights granted to the Transferor, as
applicable hereunder. To the extent that any right, covenant or
obligation of the Transferor, as applicable hereunder, is inapplicable
to the successor entity, such successor entity shall be subject to
such covenant or obligation, or benefit from such right, as would
apply, to the extent practicable, to such successor entity. In
furtherance hereof, in applying this Section 7.2 to a successor
entity, Section 9.2 hereof shall be applied by reference to events of
involuntary liquidation, bankruptcy, receivership or conservatorship
applicable to such successor entity as shall be set forth in the
officer's certificate described in subsection 7.2(a)(ii);
(ii) the Transferor shall have delivered to the Trustee an Officer's
Certificate of the Transferor signed by a Vice President (or any more
senior officer) of the Transferor stating that such consolidation,
merger, conveyance or transfer and such supplemental agreement comply
with this Section 7.2 and that all conditions precedent herein
provided for relating to such transaction have been complied with and
an Opinion of Counsel that such supplemental agreement is legal, valid
and binding and that the entity surviving such consolidation,
conveyance or transfer is organized and existing under the laws of the
United States of America or any State or the District of Columbia and,
in the case of subsection 7.2(a)(i)(x) and subject to customary
limitations and qualifications, such entity will not be substantively
consolidated with the seller under the Purchase Agreement;
(iii)the Transferor shall have delivered notice to the Rating Agency of
such consolidation, merger, conveyance or transfer and the Rating
Agency shall have provided written confirmation that such
consolidation, merger, conveyance or transfer will not result in the
Rating Agency reducing or withdrawing its rating on any then
outstanding Series as to which it is a Rating Agency;
(iv) in the case of subsection 7.2(a)(i)(x), the successor entity
shall be a special purpose bankruptcy remote entity; and
(v) if the Transferor is not the surviving entity, the surviving
entity shall file new UCC financing statements with respect to
the interest of the Trustee in the Receivables.
(b) The obligations of the Transferor hereunder shall not be assignable nor
shall any Person succeed to the obligations of the Transferor hereunder except
for mergers, consolidations, assumptions or transfers in accordance with the
provisions of the foregoing paragraph.
Section 7.3 Limitation on Liability. The directors, officers, employees or
agents of the Transferor shall not be under any liability to the Trust, the
Trustee, the Securityholders, any Enhancement Provider or any other Person
hereunder or pursuant to any document delivered hereunder, it being expressly
understood that all such liability is expressly waived and released as a
condition of, and as consideration for, the execution of this Agreement and any
Supplement and the issuance of the Securities; provided, however, that this
provision shall not protect the officers, directors, employees, or agents of the
Transferor against any liability which would otherwise be imposed upon them by
reason of willful misfeasance, bad faith or gross negligence in the performance
of duties or by reason of reckless disregard of obligations and duties
hereunder. Except as provided in Sections 7.1 and 7.4 with respect to the Trust
and the Trustee and its officers, directors, employees and agents, the
Transferor shall not be under any liability to the Trust, the Trustee, its
officers, directors, employees and agents, the Securityholders, any Enhancement
Provider or any other Person for any action taken or for refraining from the
taking of any action in its capacity as Transferor pursuant to this Agreement or
any Supplement whether arising from express or implied duties under this
Agreement or any Supplement or otherwise; provided, however, that this provision
shall not protect the Transferor against any liability which would otherwise be
imposed upon it by reason of willful misfeasance, bad faith or gross negligence
in the performance of duties or by reason of reckless disregard of obligations
and duties hereunder. The Transferor and any of its directors, officers,
employees or agents may rely in good faith on any document of any kind prima
facie properly executed and submitted by any Person respecting any matters
arising hereunder.
Section 7.4 Liabilities. Notwithstanding Section 7.3, by entering into this
Agreement, the Transferor agrees to be liable, directly to the injured party,
for the entire amount of any losses, claims, damages, penalties or liabilities
(other than those incurred by a Securityholder in the capacity of an investor in
the Investor Securities as a result of the performance of the Receivables,
market fluctuations, a shortfall or failure by the Enhancement Provider to make
payment under any Enhancement or other similar market or investment risks
associated with ownership of the Investor Securities) arising out of or based on
the arrangement created by this Agreement as though this Agreement created a
partnership under the Delaware Uniform Partnership Law, in which the Transferor
is a general partner; provided, however, that the Transferor shall not be liable
for a breach by the Servicer, DMCCB, or Metris, as applicable, of its
representations, warranties, covenants, or obligations under this Agreement, the
Bank Receivables Purchase Agreement, the Purchase Agreement, or any related
document. The Transferor agrees to pay, indemnify and hold harmless each
Investor Securityholder against and from any and all such losses, claims,
damages and liabilities (other than those incurred by a Securityholder in the
capacity of an investor in the Investor Securities as a result of the
performance of the Receivables, market fluctuations, a shortfall or failure by
an Enhancement Provider to make payment under an Enhancement or other similar
market or investment risks) except to the extent that they arise from any action
by such Investor Securityholder. Any amounts to be paid by the Transferor
pursuant to this Section 7.4 shall not be payable from the Trust Property
conveyed by the Transferor hereunder. Subject to Sections 8.3 and 8.4, in the
event of a Service Transfer, the Successor Servicer will indemnify and hold
harmless the Transferor for any losses, claims, damages and liabilities of the
Transferor as described in this Section 7.4 arising from the actions or
omissions of such Successor Servicer.
[End of Article VII]
ARTICLE VIII
OTHER MATTERS RELATING
TO THE SERVICER
Section 8.1 Liability of the Servicer. The Servicer shall be liable in
accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer in such capacity herein.
Section 8.2 Merger or Consolidation of, or Assumption of the Obligations of, the
Servicer. Subject to subsection 3.1(a), the Servicer shall not consolidate with
or merge into any other corporation or convey or transfer its properties and
assets substantially as an entirety to any Person, unless:
(i) the corporation formed by such consolidation or into which the
Servicer is merged or the Person which acquires by conveyance or transfer
the properties and assets of the Servicer substantially as an entirety
shall be (x) a corporation organized and existing under the laws of the
United States of America or any State or the District of Columbia or (y) a
state or national banking association that is not eligible to be a debtor
under the United States Bankruptcy Code, as amended from time to time, or
to any successor statute, and, if the Servicer is not the surviving entity,
shall expressly assume, by an agreement supplemental hereto, executed and
delivered to the Trustee and the Transferor in form satisfactory to the
Trustee and the Transferor, the performance of every covenant and
obligation of the Servicer hereunder (to the extent that any right,
covenant or obligation of the Servicer, as applicable hereunder, is
inapplicable to the successor entity, such successor entity shall be
subject to such covenant or obligation, or benefit from such right, as
would apply, to the extent practicable, to such successor entity);
(ii) the Servicer shall have delivered to the Trustee and the
Transferor an Officer's Certificate of the Servicer that such
consolidation, merger, conveyance or transfer and such supplemental
agreement comply with this Section 8.2 and that all conditions precedent
herein provided for relating to such transaction have been complied with
and an Opinion of Counsel that such supplemental agreement is legal, valid
and binding with respect to the Servicer and that the entity surviving such
consolidation, conveyance or transfer is organized and existing under the
laws of the United States of America or any State or the District of
Columbia; and
(iii) the Servicer shall have delivered notice to the Rating Agency of
such consolidation, merger, conveyance or transfer.
Section 8.3 Limitation on Liability of the Servicer and Others. The directors,
officers, employees or agents of the Servicer shall not be under any liability
to the Trust, the Trustee, the Securityholders, any Enhancement Provider or any
other Person hereunder or pursuant to any document delivered hereunder, it being
expressly understood that all such liability is expressly waived and released as
a condition of, and as consideration for, the execution of this Agreement and
any Supplement and the issuance of the Securities; provided, however, that this
provision shall not protect the directors, officers, employees and agents of the
Servicer against any liability which would otherwise be imposed upon them by
reason of willful misfeasance, bad faith or gross negligence in the performance
of duties or by reason of reckless disregard of obligations and duties
hereunder. Except as provided in Sections 8.1 and 8.4 with respect to the
Trustee, its officers, directors, employees and agents, the Servicer shall not
be under any liability to the Trust, the Trustee, its officers, directors,
employees and agents, the Securityholders, any Enhancement Provider or any other
Person for any action taken or for refraining from the taking of any action in
its capacity as Servicer pursuant to this Agreement or any Supplement; provided,
however, that this provision shall not protect the Servicer against any
liability which would otherwise be imposed upon it by reason of willful
misfeasance, bad faith or gross negligence in the performance of duties or by
reason of its reckless disregard of its obligations and duties hereunder or
under any Supplement. The Servicer may rely in good faith on any document of any
kind prima facie properly executed and submitted by any Person respecting any
matters arising hereunder. The Servicer shall not be under any obligation to
appear in, prosecute or defend any legal action which is not incidental to its
duties to service the Receivables in accordance with this Agreement which in its
reasonable opinion may involve it in any expense or liability.
Section 8.4 Servicer Indemnification of the Transferor, the Trust and the
Trustee. Subject to the limitations on liability set forth in Section 8.3, the
Servicer shall indemnify and hold harmless the Transferor, the Trustee and the
Trust (each, an "Indemnified Party") from and against any loss, liability,
reasonable expense, damage or injury, including, but not limited to, any
judgment, award, settlement, reasonable attorneys' fees and other costs or
expenses incurred in connection with the defense of any actual or threatened
action, proceeding or claim, suffered or sustained by reason of any acts or
omissions or alleged acts or omissions of the Servicer, with respect to
activities of the Trust or the Trustee, in breach of the representations,
warranties, covenants, or obligations of the Servicer under this Agreement;
provided, however, that the Servicer shall not indemnify or hold harmless an
Indemnified Party if such acts, omissions or alleged acts or omissions
constitute or are caused by fraud, gross negligence, or willful misconduct by
such Indemnified Party (or any of such Indemnified Party's officers, directors,
employees or agents) or the Investor Securityholders; provided, further, that
the Servicer shall not indemnify or hold harmless the Transferor, the Trust, the
Investor Securityholders or the Security Owners for any losses, liabilities,
expenses, damages or injuries suffered or sustained by any of them with respect
to any action taken by the Trustee at the request of the Investor
Securityholders; provided further, that the Servicer shall not indemnify or hold
harmless the Transferor, the Trust, the Investor Securityholders or the Security
Owners as to any losses, liabilities, expenses, damages or injuries suffered or
sustained by any of them in their capacities as investors, including without
limitation losses incurred as a result of Receivables in Defaulted Accounts;
provided further, that the Servicer shall not indemnify or hold harmless the
Transferor, the Trust, the Investor Securityholders or the Security Owners for
any losses, liabilities, expenses, damages or injuries suffered or sustained by
the Transferor, the Trust, the Investor Securityholders or the Security Owners
arising under any tax law, including without limitation, any federal, state,
local or foreign income or franchise taxes or any other tax imposed on or
measured by income (or any interest, penalties or additions with respect thereto
or arising from a failure to comply therewith) required to be paid by the
Transferor, the Trust, the Investor Securityholders or the Security Owners in
connection herewith to any taxing authority; and, provided, further, that in no
event will the Servicer be liable, directly or indirectly, for or in respect of
any indebtedness or obligation evidenced or created by any Security, recourse as
to which shall be limited solely to the assets of the Trust allocated for the
payment thereof as provided in this Agreement and any applicable Supplement. Any
such indemnification shall not be payable from the assets of the Trust, but the
Servicer shall be subrogated to the rights of the Trust with respect to the
foregoing matters if and to the extent that the Servicer shall have indemnified
the Trust with respect thereto. The Servicer shall indemnify and hold harmless
the Trustee and its officers, directors, employees or agents from and against
any loss, liability, reasonable expense, damage or injury suffered or sustained
by reason of the acceptance of this Trust by the Trustee, the issuance by the
Trust of the Securities or any of the other matters contemplated herein or in
any Supplement; provided, however, that the Servicer shall not indemnify the
Trustee or its officers, directors, employees or agents for any loss, liability,
expense, damage or injury caused by the fraud, negligence or willful misconduct
of any of them. The provisions of this indemnity shall run directly to and be
enforceable by an injured party subject to the limitations hereof and shall
survive the resignation or removal of the Servicer, the resignation or removal
of the Trustee and/or the termination of the Trust and shall survive the
termination of the Agreement.
Section 8.5 The Servicer Not to Resign. Subject to subsection 3.1(a), the
Servicer shall not resign from the obligations and duties hereby imposed on it
except upon determination that (i) the performance of its duties hereunder is no
longer permissible under applicable law and (ii) there is no reasonable action
that the Servicer could take to make the performance of its duties hereunder
permissible under applicable law. Any such determination permitting the
resignation of the Servicer shall be evidenced as to clause (i) above by an
Opinion of Counsel to such effect delivered to the Trustee. No such resignation
shall become effective until the Trustee or a Successor Servicer shall have
assumed the responsibilities and obligations of the Servicer in accordance with
Section 10.2 hereof. If the Trustee is unable within 120 days of the date of
delivery to it of such Opinion of Counsel to appoint a Successor Servicer, the
Trustee shall serve as Successor Servicer hereunder (but shall have continued
authority to appoint another Person as Successor Servicer).
Section 8.6 Access to Certain Documentation and Information Regarding the
Receivables. The Servicer shall provide to the Transferor and the Trustee, and
their agents (who shall be reasonably acceptable to the Servicer), access to the
documentation regarding the Accounts and the Receivables in such cases where the
Transferor or the Trustee is required in connection with the enforcement of the
rights of the Investor Securityholders, or by applicable statutes or
regulations, to review such documentation, such access being afforded without
charge but only (i) upon reasonable request, (ii) during normal business hours,
(iii) subject to the Servicer's normal security and confidentiality procedures
and (iv) at offices designated by the Servicer. Nothing in this Section 8.6
shall derogate from the obligation of any Credit Card Originator, the
Transferor, the Trustee or the Servicer to observe any applicable law
prohibiting disclosure of information regarding the Obligors and the failure of
the Servicer to provide access as provided in this Section 8.6 as a result of
such obligations shall not constitute a breach of this Section 8.6.
Section 8.7 Delegation of Duties. It is understood and agreed by the parties
hereto that the Servicer may delegate certain of its duties hereunder to First
Data Resources, Inc., a Delaware corporation. In the ordinary course of
business, the Servicer may at any time delegate any duties hereunder to any
Person who agrees to conduct such duties in accordance with the Credit and
Collection Policies. Any such delegations shall not relieve the Servicer of its
liability and responsibility with respect to such duties, and shall not
constitute a resignation within the meaning of Section 8.5 hereof and the
Servicer will remain jointly and severally liable with such Person for any
amounts which would otherwise be payable pursuant to this Article VIII as if the
Servicer had performed such duty; provided, however, that in the case of any
significant delegation to a Person other than First Data Resources, Inc. or an
Affiliate of DMCCB (i) written notice shall be given to the Transferor, the
Trustee and to each Rating Agency of such delegation, (ii) Moody's shall have
notified the Transferor and the Trustee in writing that such delegation will not
result in the lowering or withdrawal of its then existing rating of any Series
or Class of Investor Securities and (iii) the Transferor shall not have received
written notice from Standard & Poor's that such delegation would result in the
lowering or withdrawal of its then existing rating of any Series or Class of
Investor Securities.
[End of Article VIII]
ARTICLE IX
PAY OUT EVENTS
Section 9.1 Pay Out Events. If any one of the following events (each, a
"Trust Pay Out Event") shall occur:
(a) the Transferor, Metris or DMCCB shall consent to the appointment of a
bankruptcy trustee or receiver or liquidator in any bankruptcy proceeding or any
other insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings of or relating to all or substantially all of its property;
or a decree or order of a court or agency or supervisory authority having
jurisdiction in the premises for the appointment of a bankruptcy trustee or
receiver or liquidator in any bankruptcy proceeding or any other insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs, shall have
been entered against the Transferor, Metris or DMCCB; or the Transferor, Metris
or DMCCB shall admit in writing its inability to pay its debts generally as they
become due, file a petition to take advantage of any applicable insolvency or
reorganization statute including the United States Bankruptcy Code, make an
assignment for the benefit of its creditors or voluntarily suspend payment of
its obligations; or the Transferor shall become unable for any reason ,
including the breach by DMCCB of its obligation under the Bank Receivables
Purchase Agreement to transfer to Metris such of those Receivables (as defined
in the Bank Receivables Purchase Agreement) that are required to be conveyed to
the Trustee pursuant to this Agreement and the breach by Metris of its
obligation under the Purchase Agreement to transfer Receivables (as defined in
the Purchase Agreement) to the Transferor, to transfer Receivables to the Trust
in accordance with the provisions of this Agreement; or
(b) the Trust shall become subject to regulation by the Securities and
Exchange Commission as an "investment company" within the meaning of the
Investment Company Act;
then a Pay Out Event with respect to all Series of Securities shall occur
without any notice or other action on the part of the Trustee or the Investor
Securityholders immediately upon the occurrence of such event. The Trustee shall
provide notice of a Pay Out Event in a prompt manner to each Rating Agency.
Section 9.2 Additional Rights Upon the Occurrence of Certain Events.
(a) If (x) the Transferor shall consent to the appointment of a bankruptcy
trustee or receiver or liquidator for the winding-up or liquidation of its
affairs, or a decree or order of a court or agency or supervisory authority
having jurisdiction in the premises for the appointment of a bankruptcy trustee
or receiver or liquidator for the winding-up or liquidation of its affairs shall
have been entered against the Transferor or Metris (an "Insolvency Event"), on
the day of such Insolvency Event (the "Appointment Day") or (y) the Retained
Percentage shall at any time be equal to or less than 2% (a "Trigger Event"),
the following actions shall be taken and processes begun:
(i) If an Insolvency Event shall have occurred, the Transferor shall
immediately cease to transfer Principal Receivables to the Trust and
shall promptly give written notice to the Trustee of such Insolvency
Event. Notwithstanding any cessation of the transfer to the Trust of
additional Principal Receivables, receivables accrued in respect of
Finance Charge Receivables (other than Discount Option Receivables),
whenever created, accrued in respect of Receivables that have been
transferred to the Trust, shall continue to be a part of the Trust, and
Collections with respect thereto shall continue to be allocated and
paid in accordance with Article IV.
(ii) If an Insolvency Event or a Trigger Event shall
have occurred this Agreement and the Trust shall be deemed to have
terminated, subject to the liquidation, winding-up and dissolution
procedures described below; provided, however, that within 15 days of
the date of written notice to the Trustee, the Trustee shall (i)
publish a notice in an Authorized Newspaper that an Insolvency Event or
a Trigger Event has occurred, that the Trust has terminated, and that
the Trustee intends to sell, dispose of or otherwise liquidate the
Receivables pursuant to this Agreement (a "Disposition"), and (ii) send
written notice to the Investor Securityholders describing the
provisions of this Section 9.2 and requesting each Investor
Securityholder to advise the Trustee in writing that it elects one of
the following options: (A) the Investor Securityholder wishes the
Trustee to instruct the Servicer not to effectuate a Disposition, or
(B) the Investor Securityholder refuses to advise the Trustee as to the
specific action the Trustee shall instruct the Servicer to take, or (C)
the Investor Securityholder wishes the Servicer to effect a
Disposition. If after 90 days from the day notice pursuant to clause
(i) above is first published (the "Publication Date"), the Trustee
shall not have received the written instruction described in clause (A)
above from Holders of Investor Securities representing Undivided
Interests aggregating in excess of 50% of the related Invested Amount
of each Series (or, in the case of a Series having more than one Class,
each Class of such Series) and the holders of any Supplemental
Securities or any other interest in the Transferor Interest other than
the Transferor as provided in Section 6.3(b) (for each Series, a
"Holders' Majority"), the Trustee shall instruct the Servicer to
effectuate a Disposition, and the Servicer shall proceed to consummate
a Disposition. If, however, with respect to the portion of the
Receivables allocable to any outstanding Series, a Holders' Majority
instruct the Trustee not to effectuate a Disposition of the portion of
the Receivables allocable to such Series, the Trust shall be
reconstituted and continue with respect to such Series pursuant to the
terms of this Agreement and the applicable Supplement (as amended in
connection with such reconstitution). The portion of the Receivables
allocable to any Series shall be equal to the sum of (1) the product of
(A) the Transferor Percentage, (B) the aggregate outstanding Principal
Receivables and (C) a fraction the numerator of which is the related
Investor Percentage of Finance Charge Collections and the denominator
of which is the sum of all Investor Percentages with respect to Finance
Charge Collections for all Series outstanding and (2) the Invested
Amount of such Series. The Transferor, but none of its Affiliates,
shall be permitted to bid for the Receivables. In addition, the
Transferor, but none of its Affiliates, shall have the right to match
any bid by a third person and be granted the right to purchase the
Receivables at such matched bid price. The Trustee shall use its best
efforts to effectuate a Disposition by the use of competitive bids and
on terms equivalent to the best purchase offer as determined by the
Trustee. The Trustee may obtain a prior determination from any such
bankruptcy trustee, receiver or liquidator that the terms and manner of
any proposed Disposition are commercially reasonable. The provisions of
Sections 9.1 and 9.2 shall not be deemed to be mutually exclusive.
(b) The proceeds from the Disposition pursuant to subsection (a) above shall be
treated as Collections on the Receivables and shall be allocated and deposited
in accordance with the provisions of Article IV; provided, however, that the
proceeds from a Disposition with respect to any Series shall be applied solely
to make payments to such Series; provided further, that the Trustee shall
determine conclusively in its sole discretion the amount of such proceeds that
are allocable to Finance Charge Collections and the amount of such proceeds that
are allocable to Collections of Principal Receivables. Unless the Trustee
receives written instructions from Investor Securityholders of one or more
Series to continue the Trust with respect to such Series as provided in
subsection 9.2(a) above, on the day following the last Distribution Date in the
Monthly Period during which such proceeds are distributed to the Investor
Securityholders of each Series, the Trust shall terminate.
(c) The Trustee may appoint an agent or agents to assist with its
responsibilities pursuant to this Article IX with respect to competitive bids.
[End of Article IX]
ARTICLE X
SERVICER DEFAULTS
Section 10.1 Servicer Defaults. If any one of the following events (a
"Servicer Default") shall occur and be continuing:
(a) any failure by the Servicer to make any payment, transfer or deposit or to
give instructions or notice to the Trustee pursuant to Article IV or to instruct
the Trustee to make any required drawing, withdrawal, or payment under any
Enhancement on or before the date occurring five Business Days after the date
such payment, transfer, deposit, withdrawal or drawing or such instruction or
notice is required to be made or given, as the case may be, under the terms of
this Agreement; provided, however, that any such failure caused by a non-
willful act of the Servicer shall not constitute a Servicer Default if the
Servicer promptly remedies such failure within five Business Days after
receiving notice of such failure or otherwise becoming aware of such failure;
(b) failure on the part of the Servicer duly to observe or perform in any
respect any other covenants or agreements of the Servicer set forth in this
Agreement, which has a material adverse effect on the Investor Securityholders
of any Series and which continues unremedied for a period of 60 days after the
date on which written notice of such failure, requiring the same to be remedied,
shall have been given to the Servicer by the Trustee or the Transferor, or to
the Servicer, the Transferor and the Trustee by the Holders of Investor
Securities evidencing Undivided Interests aggregating not less than 50% of the
Invested Amount of any Series materially adversely affected thereby and
continues to materially adversely affect such Investor Securityholders for such
period; or the Servicer shall delegate its duties under this Agreement, except
as permitted by Section 8.7;
(c) any representation, warranty or certification made by the Servicer in this
Agreement or in any certificate delivered pursuant to this Agreement shall prove
to have been incorrect when made, which has a material adverse effect on the
Investor Securityholders of any Series and which continues to be incorrect in
any material respect for a period of 60 days after the date on which written
notice of such failure, requiring the same to be remedied, shall have been given
to the Servicer by the Trustee or the Transferor, or to the Servicer, the
Transferor and the Trustee by the Holders of Investor Securities evidencing
Undivided Interests aggregating not less than 50% of the Invested Amount of any
Series materially adversely affected thereby and continues to materially
adversely affect such Investor Securityholders for such period; or
(d) the Servicer shall consent to the appointment of a bankruptcy trustee or
receiver or liquidator in any bankruptcy proceeding or any other insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings of or relating to the Servicer or of or relating to all or
substantially all of its property; or a decree or order of a court or agency or
supervisory authority having jurisdiction in the premises for the appointment of
a bankruptcy trustee or receiver or liquidator in any bankruptcy proceeding or
any other insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings, or for the winding-up or liquidation of its
affairs, shall have been entered against the Servicer, and such decree or order
shall have remained in force undischarged or unstayed for a period of 60 days;
or the Servicer shall admit in writing its inability to pay its debts generally
as they become due, file a petition to take advantage of any applicable
insolvency or reorganization statute, make any assignment for the benefit of its
creditors or voluntarily suspend payment of its obligations;
then, so long as such Servicer Default shall not have been remedied, any of the
Transferor (with the consent of the Holders of Investor Securities evidencing
Undivided Interests aggregating more than 50% of the Aggregate Invested Amount),
the Trustee, or the Holders of Investor Securities evidencing Undivided
Interests aggregating more than 50% of the Aggregate Invested Amount, by notice
then given in writing to the Servicer (and to the Trustee and the Transferor if
given by the Investor Securityholders) (a "Termination Notice"), may terminate
all of the rights and obligations of the Servicer as Servicer under this
Agreement. After receipt by the Servicer of such Termination Notice, and on the
date that a Successor Servicer shall have been appointed by the Trustee pursuant
to Section 10.2, all authority and power of the Servicer under this Agreement
shall pass to and be vested in a Successor Servicer; and, without limitation,
the Trustee is hereby authorized and empowered (upon the failure of the Servicer
to cooperate) to execute and deliver, on behalf of the Servicer, as
attorney-in-fact or otherwise, all documents and other instruments upon the
failure of the Servicer to execute or deliver such documents or instruments, and
to do and accomplish all other acts or things necessary or appropriate to effect
the purposes of such transfer of servicing rights and obligations. The Servicer
agrees to cooperate with the Trustee and such Successor Servicer in effecting
the termination of the responsibilities and rights of the Servicer to conduct
servicing hereunder including, without limitation, the transfer to such
Successor Servicer of all authority of the Servicer to service the Receivables
provided for under this Agreement, including, without limitation, all authority
over all Collections which shall on the date of transfer be held by the Servicer
for deposit, or which have been deposited by the Servicer, in the Collection
Account, the Excess Funding Account, the Interest Funding Account or the
Principal Account, and any Series Account, or which shall thereafter be received
with respect to the Receivables. The Servicer shall promptly transfer its
electronic records or electronic copies thereof relating to the Receivables to
the Successor Servicer in such electronic form as the Successor Servicer may
reasonably request and shall promptly transfer to the Successor Servicer all
other records, correspondence and documents necessary for the continued
servicing of the Receivables in the manner and at such times as the Successor
Servicer shall reasonably request. To the extent that compliance with this
Section 10.1 shall require the Servicer to disclose to the Successor Servicer
information of any kind which the Servicer deems to be confidential, the
Successor Servicer shall be required to enter into such customary licensing and
confidentiality agreements as the Servicer shall deem necessary to protect its
interests. The Servicer shall, on the date of any servicing transfer, transfer
all of its rights and obligations under the Enhancement with respect to any
Series to the Successor Servicer. In connection with any service transfer, all
reasonable costs and expenses (including attorneys' fees) incurred in connection
with transferring the records, correspondence and other documents with respect
to the Receivables and the other Trust Property to the Successor Servicer and
amending this Agreement to reflect such succession as Successor Servicer
pursuant to this Section 10.1 and Section 10.2 shall be paid by the Servicer
(unless the Trustee is acting as the Servicer on a temporary basis, in which
case the original Servicer shall be responsible therefor) upon presentation of
reasonable documentation of such costs and expenses.
Notwithstanding the foregoing, a delay in or failure of performance referred to
in subsection 10.1(a) for a period of five Business Days or under subsection
10.1(b) or (c) for a period of 60 days, shall not constitute a Servicer Default
if such delay or failure could not be prevented by the exercise of reasonable
diligence by the Servicer and such delay or failure was caused by an act of God
or the public enemy, acts of declared or undeclared war or terrorism, public
disorder, rebellion, riot or sabotage, epidemics, landslides, lightning, fire,
hurricanes, tornadoes, earthquakes, nuclear disasters or meltdowns, floods,
power outages, bank closings, communications outages, computer failure or
similar causes. The preceding sentence shall not relieve the Servicer from using
its best efforts to perform its obligations in a timely manner in accordance
with the terms of this Agreement and the Servicer shall provide the Trustee, any
Enhancement Provider, the Transferor and the Holders of Investor Securities with
an Officer's Certificate giving prompt notice of such failure or delay by it,
together with a description of the cause of such failure or delay and its
efforts so to perform its obligations.
Section 10.2 Trustee to Act; Appointment of Successor.
(a) On and after the receipt by the Servicer of a Termination Notice pursuant to
Section 10.1, the Servicer shall continue to perform all servicing functions
under this Agreement until the date specified in the Termination Notice or as
otherwise specified by the Trustee in writing or, if no such date is specified
in such Termination Notice, or otherwise specified by the Trustee, until a date
mutually agreed upon by the Servicer and Trustee. The Trustee shall notify each
Rating Agency and the Transferor of such removal of the Servicer. The Trustee
shall, as promptly as possible after the giving of a Termination Notice, appoint
a successor servicer (the "Successor Servicer"), and such Successor Servicer
shall accept its appointment by a written assumption in a form acceptable to the
Trustee. If such Successor Servicer is unable to accept such appointment, the
Trustee may obtain bids from any potential successor servicer. If the Trustee is
unable to obtain any bids from any potential successor servicer and the Servicer
delivers an Officer's Certificate of the Servicer to the effect that it cannot
in good faith cure the Servicer Default which gave rise to a Termination Notice,
and if the Trustee is legally unable to act as Successor Servicer, then the
Trustee, except in the case of a Servicer Default set forth in subsection
10.1(d), shall offer the Transferor the right to accept reassignment of all of
the Receivables for an amount equal to the Aggregate Invested Amount on the date
of such purchase plus all interest accrued but unpaid on all of the outstanding
Investor Securities at the applicable Security Rate through the date of such
purchase; provided, however, that no such purchase by the Transferor shall occur
unless the Transferor shall deliver an Opinion of Counsel reasonably acceptable
to the Trustee that such purchase would not constitute a fraudulent conveyance
of the Transferor. The proceeds of such sale shall be deposited in the
Distribution Account or any Series Account, as provided in the related
Supplement, for distribution to the Investor Securityholders of each outstanding
Series pursuant to Section 12.3 of the Agreement. In the event that a Successor
Servicer has not been appointed and has not accepted its appointment at the time
when the Servicer ceases to act as Servicer, the Trustee without further action
shall automatically be appointed the Successor Servicer (but shall have
continued authority to appoint another Person as Successor Servicer). The
Trustee may delegate any of its servicing obligations to an affiliate or agent
of the Trustee in accordance with Article III hereof. Any such delegations shall
not relieve the Trustee of its liability and responsibility with respect to such
duties. Notwithstanding the above, the Trustee shall, if it is legally unable to
act, petition a court of competent jurisdiction to appoint any established
financial institution having, in the case of an entity that is subject to
risk-based capital adequacy requirements, risk-based capital of at least
$50,000,000 or, in the case of an entity that is not subject to risk-based
capital requirements, having a net worth of not less than $50,000,000 and whose
regular business includes the servicing of credit card receivables similar to
the Receivables as the Successor Servicer hereunder.
(b) Upon its appointment, the Successor Servicer shall be the successor in all
respects to the Servicer with respect to servicing functions under this
Agreement and shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Servicer by the terms and provisions
hereof, and all references in this Agreement to the Servicer shall be deemed to
refer to the Successor Servicer. Any Successor Servicer, by its acceptance of
its appointment, will automatically agree to be bound by the terms and
provisions of each Enhancement.
(c) In connection with such appointment and assumption, the Trustee shall be
entitled to such compensation, or may make such arrangements for the
compensation of the Successor Servicer out of Collections, as it and such
Successor Servicer shall agree; provided, however, that no such compensation
shall be in excess of the Servicing Fee permitted to the Servicer pursuant to
Section 3.2. The Transferor agrees that if the Servicer is terminated hereunder,
it will agree to deposit a portion of the Collections in respect of Finance
Charge Receivables that it is entitled to receive pursuant to Article IV to pay
its ratable share of the compensation of the Successor Servicer.
(d) All authority and power granted to the Servicer under this Agreement shall
automatically cease and terminate upon termination of the Trust pursuant to
Section 12.1 and shall pass to and be vested in the Transferor and, without
limitation, the Transferor is hereby authorized and empowered to execute and
deliver, on behalf of the Servicer, as attorney-in-fact or otherwise, all
documents and other instruments, and to do and accomplish all other acts or
things necessary or appropriate to effect the purposes of such transfer of
servicing rights. The Servicer agrees to cooperate with the Transferor in
effecting the termination of the responsibilities and rights of the Servicer to
conduct servicing on the Receivables. The Servicer shall transfer its electronic
records relating to the Receivables to the Transferor in such electronic form as
the Transferor may reasonably request and shall transfer all other records,
correspondence and documents to the Transferor in the manner and at such times
as the Transferor shall reasonably request. To the extent that compliance with
this Section 10.2 shall require the Servicer to disclose to the Transferor
information of any kind which the Servicer deems to be confidential, the
Transferor shall be required to enter into such customary licensing and
confidentiality agreements as the Servicer shall deem necessary to protect its
interests.
Section 10.3 Notification to Securityholders. Upon the Servicer becoming aware
of any Servicer Default, the Servicer shall give prompt written notice thereof
to the Trustee, the Transferor and any Enhancement Provider and, upon receipt of
such written notice, the Trustee shall give notice to the Investor
Securityholders at their respective addresses appearing in the Security
Register. Upon any termination or appointment of a Successor Servicer pursuant
to this Article X, the Trustee shall give prompt written notice thereof to the
Transferor and to the Investor Securityholders at their respective addresses
appearing in the Security Register.
Section 10.4 Waiver of Past Defaults. The Holders of Investor Securities
evidencing Undivided Interests aggregating not less than 66-2/3% of the Invested
Amount of each Series materially adversely affected by any default by the
Servicer or Transferor may, on behalf of all Securityholders of such Series,
waive any default by the Servicer or Transferor in the performance of their
respective obligations hereunder and its consequences, except a default in the
failure to make any required deposits or payments of interest or principal
relating to such Series pursuant to Article IV, which default does not result
from the failure of the Paying Agent to perform its obligations to make any
required deposits or payments of interest and principal in accordance with
Article IV. Upon any such waiver of a past default, such default shall cease to
exist, and any default arising therefrom shall be deemed to have been remedied
for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereon except to the
extent expressly so waived.
[End of Article X]
ARTICLE XI
THE TRUSTEE
Section 11.1 Duties of Trustee.
(a) The Trustee, prior to the occurrence of any Servicer Default of which a
Responsible Officer of the Trustee has actual knowledge and after the curing of
all Servicer Defaults which may have occurred, undertakes to perform such duties
and only such duties as are specifically set forth in this Agreement, and no
implied covenants or duties shall be read into this Agreement against the
Trustee. If a Responsible Officer has received written notice that a Servicer
Default has occurred (and such Servicer Default has not been cured or waived),
the Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in its exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs; provided, however, that if the Trustee shall assume
the duties of the Servicer pursuant to Section 8.5 or 10.2, the Trustee in
performing such duties shall use the degree of skill and attention customarily
exercised by a servicer with respect to comparable receivables that it services
for itself or others.
(b) The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee that are specifically required to be furnished pursuant to any provision
of this Agreement, shall examine them to determine whether they substantially
conform to the requirements of this Agreement. The Trustee shall retain all such
items for at least one year after receipt and shall make such items available
for inspection by any Investor Securityholder at the Corporate Trust Office,
such inspection to be made during regular business hours and upon reasonable
prior notice to the Trustee.
(c) Subject to subsection 11.1(a), no provision of this Agreement shall be
construed to relieve the Trustee from liability for its own negligent action,
its own negligent failure to act or its own misconduct; provided, however, that:
(i) the Trustee shall not be personally liable for an error of judgment
made in good faith by a Responsible Officer or Responsible Officers of
the Trustee, unless it shall be proved that the Trustee was negligent
in ascertaining the pertinent facts;
(ii) the Trustee shall not be personally liable with respect to any action
taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of the Holders of Investor Securities
evidencing Undivided Interests aggregating more than 50% of the
Invested Amount of any Series relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee with
respect to such Series, or exercising any trust or power conferred upon
the Trustee with respect to such Series, under this Agreement; and
(iii) the Trustee shall not be charged with knowledge of any failure by the
Servicer referred to in clauses (a) and (b) of Section 10.1 or of any
breach by the Servicer contemplated by clause (c) of Section 10.1 or
any Pay Out Event unless a Responsible Officer of the Trustee obtains
actual knowledge of such failure, breach or Pay Out Event or the
Trustee receives written notice of such failure, breach or Pay Out
Event from the Servicer, the Transferor or any Holders of Investor
Securities evidencing Undivided Interests aggregating not less than 10%
of the Invested Amount of any Series adversely affected thereby.
(d) The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of, any
of the obligations of the Servicer under this Agreement except during such time,
if any, as the Trustee shall be the successor to, and be vested with the rights,
duties, powers and privileges of, the Servicer in accordance with the terms of
this Agreement.
(e) Except for actions expressly authorized by this Agreement, the Trustee shall
take no action reasonably likely to impair the interests of the Trust in any
Receivable now existing or hereafter created or to impair the value of any
Receivable now existing or hereafter created.
(f) Except as provided in this Agreement, the Trustee shall have no power
to vary the corpus of the Trust.
(g) If a Responsible Officer of the Trustee has received written notice that the
Paying Agent or the Transfer Agent and Registrar shall fail to perform any
obligation, duty or agreement in the manner or on the day required to be
performed by the Paying Agent or the Transfer Agent and Registrar, as the case
may be, under this Agreement, the Trustee shall be obligated promptly upon its
obtaining knowledge thereof by a Responsible Officer of the Trustee to perform
such obligation, duty or agreement in the manner so required.
(h) If the Transferor has agreed to transfer any of its open-end revolving
credit card receivables (other than the Receivables) to another Person, upon the
written request of the Transferor, the Trustee on behalf of the Trust will enter
into such intercreditor agreements with the transferee of such receivables as
are customary and necessary to identify separately the rights, if any, of the
Trust and such other Person in the Transferor's open-end revolving credit card
receivables; provided, however, that the Trust shall not be required to enter
into any intercreditor agreement that could adversely affect the interests of
the Securityholders or the Trustee and, upon the request of the Trustee, the
Transferor will deliver an Opinion of Counsel on any matters relating to such
intercreditor agreement, reasonably requested by the Trustee.
Section 11.2 Certain Matters Affecting the Trustee. Except as otherwise
provided in Section 11.1:
(a) the Trustee may rely on and shall be protected in acting on, or in
refraining from acting in accordance with, the initial report, the Daily Report,
the Settlement Statement, the annual Servicer's certificate, the monthly payment
instructions and notification to the Trustee, the monthly Securityholder's
statement, any resolution, Officer's Certificate, certificate of auditors or any
other certificate, statement, instrument, opinion, report, notice, request,
consent, order, appraisal, bond or other paper or document believed by it to be
genuine and to have been signed or presented to it pursuant to this Agreement by
the proper party or parties;
(b) the Trustee may consult with counsel, and the advice or any Opinion of
Counsel shall be full and complete authorization and protection in respect of
any action taken or suffered or omitted by it hereunder in good faith and in
accordance with such advice or Opinion of Counsel;
(c) the Trustee shall be under no obligation to exercise any of the rights or
powers vested in it by this Agreement or any Enhancement, or to institute,
conduct or defend any litigation hereunder or in relation hereto, at the
request, order or direction of any of the Securityholders or any Enhancement
Provider, pursuant to the provisions of this Agreement, unless such
Securityholders or Enhancement Provider shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby; nothing contained herein shall,
however, relieve the Trustee of the obligations, upon the occurrence of any
Servicer Default (which has not been cured or waived) of which a Responsible
Officer of the Trustee has knowledge, to exercise such of the rights and powers
vested in it by this Agreement and any Enhancement, and to use the same degree
of care and skill in its exercise as a prudent person would exercise or use
under the circumstances in the conduct of his own affairs;
(d) the Trustee shall not be personally liable for any action taken, suffered or
omitted by it in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Agreement;
(e) the Trustee shall not be bound to make any investigation into the facts of
matters stated in the initial report, the Daily Report, the Settlement
Statement, the annual Servicer's certificate, the monthly payment instructions
and notification to the Trustee, the monthly Securityholders statement, any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, bond or other paper or document, unless
requested in writing so to do by Holders of Investor Securities evidencing
Undivided Interests aggregating more than 50% of the Invested Amount of any
Series which could be adversely affected if the Trustee does not perform such
acts;
(f) subject to subsection 4.2(e), the Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through agents or attorneys or a custodian, and the Trustee shall not be
responsible for any misconduct or negligence on the part of any such agent,
attorney or custodian appointed with due care by it hereunder;
(g) except as may be required by subsection 11.1(a), the Trustee shall not be
required to make any initial or periodic examination of any documents or records
related to the Accounts or the Receivables for the purpose of establishing the
presence or absence of defects, the compliance by the Transferor with its
representations and warranties or for any other purpose;
(h) whenever in the administration of this Agreement the Trustee shall deem it
desirable that a matter be proved or established prior to taking, suffering or
omitting any action hereunder, the Trustee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on its part, rely upon
an Officer's Certificate; and
(i) the right of the Trustee to perform any discretionary act enumerated in this
Agreement or any Supplement or Enhancement shall not be construed as a duty, and
the Trustee shall not be answerable for performance of any such act.
Section 11.3 Trustee Not Liable for Recitals in Securities. The Trustee assumes
no responsibility for the correctness of the recitals contained herein and in
the Securities (other than the certificate of authentication on the Securities).
Except as set forth in Section 11.15, the Trustee makes no representations as to
the validity or sufficiency of this Agreement or of the Securities (other than
the certificate of authentication on the Securities) or of any Receivable or
related document. The Trustee shall not be accountable for the use or
application by the Transferor of any of the Securities or of the proceeds of
such Securities, or for the use or application of any funds paid to the
Transferor in respect of the Receivables or deposited in or withdrawn from the
Collection Account, the Excess Funding Account, the Principal Account or the
Interest Funding Account, or any Series Account or other accounts now or
hereafter established to effectuate the transactions contemplated herein and in
accordance with the terms hereof. The Trustee shall have no responsibility for
filing any financing or continuation statement in any public office at any time
or to otherwise perfect or maintain the perfection of any security interest or
Lien granted to it hereunder (unless the Trustee shall have become the Successor
Servicer) or to prepare or file any Securities and Exchange Commission filing
for the Trust or to record this Agreement or any Supplement.
Section 11.4 [Reserved].
Section 11.5 The Servicer to Pay Trustee's Fees and Expenses. The Servicer
covenants and agrees to pay to the Trustee from time to time, and the Trustee
shall be entitled to receive, reasonable compensation (which shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust) for all services rendered by the Trustee in the execution of the
trust hereby created and in the exercise and performance of any of the powers
and duties hereunder of the Trustee, and, subject to Section 8.4, the Servicer
will pay or reimburse the Trustee (without reimbursement from any Investor
Account, any Series Account or otherwise except from the Servicing Fee) upon its
request for all reasonable expenses, disbursements and advances incurred or made
by the Trustee in accordance with any of the provisions of this Agreement
(including the reasonable fees and expenses of its agents and counsel) except
any such expense, disbursement or advance as may arise from its own negligence
or bad faith and except as provided in the following sentence. If the Trustee is
appointed Successor Servicer pursuant to Section 10.2, the provisions of this
Section 11.5 shall not apply to expenses, disbursements and advances made or
incurred by the Trustee in its capacity as Successor Servicer (which shall be
covered out of the Servicing Fee).
The obligations of the Servicer under this Section 11.5 shall
survive the termination of the Trust and the resignation or removal of the
Trustee.
Section 11.6 Eligibility Requirements for Trustee. The Trustee hereunder shall
at all times (a) be a corporation organized and doing business under the laws of
the United States of America or any state thereof authorized under such laws to
exercise corporate trust powers, having a long-term unsecured debt rating of at
least Baa3 by Moody's, having, in the case of an entity that is subject to
risk-based capital adequacy requirements, risk-based capital of at least
$50,000,000 or, in the case of an entity that is not subject to risk-based
capital adequacy requirements, having a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by federal or state
authority and (b) not be a Related Person. If such corporation publishes reports
of condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purpose of this
Section 11.6, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time the Trustee shall cease to
be eligible in accordance with the provisions of this Section 11.6, the Trustee
shall resign immediately in the manner and with the effect specified in Section
11.7.
Section 11.7 Resignation or Removal of Trustee.
(a) The Trustee may at any time resign and be discharged from the Trust hereby
created by giving written notice thereof to the Servicer and the Transferor.
Upon receiving such notice of resignation, the Transferor shall promptly appoint
a successor trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Trustee and one copy to the
successor trustee. If no successor trustee shall have been so appointed and have
accepted such appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.
(b) If at any time the Trustee shall cease to be eligible in accordance with the
provisions of Section 11.6 hereof and shall fail to resign after written request
therefor by the Transferor, or if at any time the Trustee shall be legally
unable to act, or shall be adjudged bankrupt or insolvent, or a receiver of the
Trustee or of its property shall be appointed, or any public officer shall take
charge or control of the Trustee or of its property or affairs for the purpose
of rehabilitation, conservation or liquidation, then the Transferor may, but
shall not be required to, remove the Trustee and promptly appoint a successor
trustee by written instrument, in duplicate, one copy of which instrument shall
be delivered to the Trustee so removed and one copy to the successor trustee.
(c) If (i) the Trustee shall fail to perform any of its obligations hereunder,
(ii) a Securityholder shall deliver written notice of such failure to the
Trustee, and (iii) the Trustee shall not have corrected such failure for 60 days
thereafter, then the Transferor or the Holders of Investor Securities
representing more than 50% of the Invested Amount (including related commitments
of holders of Variable Funding Securities) shall have the right to remove the
Trustee and (if by the Holders, with the consent of the Transferor, which shall
not be unreasonably withheld) promptly appoint a successor trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
Trustee so removed and one copy to the successor trustee.
(d) Any resignation or removal of the Trustee and appointment of a successor
trustee pursuant to any of the provisions of this Section 11.7 shall not become
effective until acceptance of appointment by the successor trustee as provided
in Section 11.8 hereof and any liability of the Trustee arising hereunder shall
survive such appointment of a successor trustee. Notice of any resignation or
removal of the Trustee and appointment of a successor trustee shall be provided
to Moody's and Standard & Poor's by the Transferor or the Servicer in a prompt
manner.
Section 11.8 Successor Trustee.
(a) Any successor trustee appointed as provided in Section 11.7 hereof shall
execute, acknowledge and deliver to the Transferor, the Servicer and to its
predecessor Trustee an instrument accepting such appointment hereunder, and
thereupon the resignation or removal of the predecessor Trustee shall become
effective and such successor trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with the like effect as if originally
named as Trustee herein. The predecessor Trustee shall deliver to the successor
trustee all funds, property, documents and statements held by it hereunder, and
the Transferor, the Servicer and the predecessor Trustee shall execute and
deliver such instruments and do such other things as may reasonably be required
for fully and certainly vesting and confirming in the successor trustee all such
rights, powers, duties and obligations.
(b) No successor trustee shall accept appointment as provided in this Section
11.8 unless at the time of such acceptance such successor trustee shall be
eligible under the provisions of Section 11.6 hereof.
(c) Upon acceptance of appointment by a successor trustee as provided in this
Section 11.8, such successor trustee shall mail notice of such succession
hereunder to all Securityholders at their addresses as shown in the Security
Register.
Section 11.9 Merger or Consolidation of Trustee. Any Person into which the
Trustee may be merged or converted or with which it may be consolidated, or any
Person resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any Person succeeding to all or substantially all
of the corporate trust business of the Trustee, shall be the successor of the
Trustee hereunder, provided such Person shall be eligible under the provisions
of Section 11.6 hereof, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.
Section 11.10 Appointment of Co-Trustee or Separate Trustee.
(a) Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust may at the time be located, the Trustee shall have the power and
may execute and deliver all instruments to appoint one or more Persons to act as
a co-trustee or co-trustees, or separate trustee or separate trustees, of all or
any part of the Trust, and to vest in such Person or Persons, in such capacity
and for the benefit of the Securityholders, such title to the trust, or any part
thereof, and, subject to the other provisions of this Section 11.10, such
powers, duties, obligations, rights and trusts as the Trustee may consider
necessary or desirable. No co-trustee or separate trustee hereunder shall be
required to meet the terms of eligibility as a successor trustee under Section
11.6 and no notice to Securityholders of the appointment of any co-trustee or
separate trustee shall be required under Section 11.8. The Trustee shall provide
written notice to each Rating Agency of any co-trustee or separate trustee so
appointed.
(b) Every separate trustee and co-trustee shall, to the extent permitted by law,
be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations conferred or imposed
upon the Trustee shall be conferred or imposed upon and exercised or
performed by the Trustee and such separate trustee or co-trustee jointly
(it being understood that such separate trustee or co-trustee is not
authorized to act separately without the Trustee joining in such act),
except to the extent that under any laws of any jurisdiction in which any
particular act or acts are to be performed (whether as Trustee hereunder or
as successor to the Servicer hereunder), the Trustee shall be incompetent
or unqualified to perform such act or acts, in which event such rights,
powers, duties and obligations (including the holding of title to the Trust
or any portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate trustee or co-trustee, but solely at the
direction of the Trustee;
(ii) no trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder; and
(iii) the Trustee may at any time accept the resignation of or remove
any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Trustee shall be deemed to
have been given to each of the then separate trustees and co-trustees, as
effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article XI. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Trustee or separately, as
may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement or Enhancement relating
to the conduct of, affecting the liability of, or affording protection to, the
Trustee. Every such instrument shall be filed with the Trustee and a copy
thereof given to the Servicer and the Transferor.
(d) Any separate trustee or co-trustee may at any time constitute the Trustee as
its agent or attorney-in-fact with full power and authority, to the extent not
prohibited by law, to do any lawful act under or in respect to this Agreement on
its behalf and in its name. If any separate trustee or co-trustee shall die,
become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
Section 11.11 Tax Returns. Consistent with Section 3.7, the Trustee shall not,
except as required by law, file any United States federal income tax returns on
behalf of the Trust; provided, however, that if a class of Securities is issued
that will be characterized (in the sole and absolute discretion of the
Transferor) as equity interests in a partnership for federal income tax
purposes, partnership information returns for the Trust shall be prepared and
signed by the Transferor, as general partner, and the Transferor shall act as
the "Tax Matters Partner" (as defined in Section 6231(a)(7) of the Internal
Revenue Code). In the event the Trust shall be required to file tax returns, the
Servicer shall at the expense of the Transferor prepare or cause to be prepared
any tax returns required to be filed by the Trust and, to the extent possible,
shall remit such returns to the Trustee for signature at least five days before
such returns are due to be filed. The Trustee is hereby authorized to sign any
such return on behalf of the Trust. The Servicer shall prepare or shall cause to
be prepared all tax information required by law to be distributed to
Securityholders and shall deliver such information to the Trustee at least five
days prior to the date it is required by law to be distributed to
Securityholders. The Trustee, upon request, will furnish the Servicer and the
Transferor with all such information known to the Trustee as may be reasonably
required in connection with the preparation of all tax returns of the Trust and
shall, upon request, execute such return. In no event shall the Trustee, the
Transferor, or the Servicer be liable for any liabilities, costs or expenses of
the Trust, the Investor Securityholders or the Security Owners arising under any
tax law, including without limitation federal, state, local or foreign income or
excise taxes or any other tax imposed on or measured by income (or any interest
or penalty or addition with respect thereto or arising from a failure to comply
therewith).
Section 11.12 Trustee May Enforce Claims Without Possession of Securities. All
rights of action and claims under this Agreement or any Series of Securities may
be prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Trustee shall be brought in its own name as
trustee. Any recovery of judgment shall, after provision for the payment of the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, be for the ratable benefit of any Series of
Securityholders in respect of which such judgment has been obtained.
Section 11.13 Suits for Enforcement. If a Servicer Default of which a
Responsible Officer of the Trustee has knowledge shall occur and be continuing,
the Trustee, in its discretion may, subject to the provisions of Section 10.1,
proceed to protect and enforce its rights and the rights of any Series of
Securityholders under this Agreement by a suit, action or proceeding in equity
or at law or otherwise, whether for the specific performance of any covenant or
agreement contained in this Agreement or in aid of the execution of any power
granted in this Agreement or for the enforcement of any other legal, equitable
or other remedy as the Trustee, being advised by counsel, shall deem most
effectual to protect and enforce any of the rights of the Trustee or any Series
of Securityholders.
Section 11.14 Rights of Securityholders to Direct Trustee. Holders of Investor
Securities representing more than 50% of the Aggregate Invested Amount (or, with
respect to any remedy, trust or power that does not relate to all Series, 50% of
the aggregate Invested Amount of the Investor Securities of all Series to which
such remedy, trust or power relates) shall have the right to direct the time,
method, and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred on the Trustee; provided,
however, that Holders of Investor Securities representing more than 50% of the
aggregate Invested Amount of any Class may direct the Trustee to exercise its
rights under Section 8.6; provided, further, that, subject to Section 11.1, the
Trustee shall have the right to decline to follow any such direction if the
Trustee being advised by counsel determines that the action so directed may not
lawfully be taken, or if the Trustee in good faith shall, by a Responsible
Officer or Responsible Officers of the Trustee, determine that the proceedings
so directed would be illegal or involve it in personal liability or be unduly
prejudicial to the rights of Securityholders not parties to such direction; and
provided, further that nothing in this Agreement shall impair the right of the
Trustee to take any action deemed proper by the Trustee and which is not
inconsistent with such direction of such Holders of Investor Securities.
Section 11.15 Representations and Warranties of Trustee. The Trustee
represents and warrants that:
(i) the Trustee is a national banking association, duly organized, validly
existing and in good standing under the laws of the United States of
America;
(ii) the Trustee is an entity that satisfies the eligibility requirements of
Section 11.6;
(iii) the Trustee has full power, authority and right to execute, deliver and
perform this Agreement, and has taken all necessary action to authorize
the execution, delivery and performance by it of this Agreement; and
(iv) this Agreement has been duly executed and delivered by the Trustee.
Section 11.16 Maintenance of Office or Agency. The Trustee will maintain at its
expense an office or offices, or agency or agencies, where notices and demands
to or upon the Trustee in respect of the Securities and this Agreement may be
served. The Trustee initially appoints its Corporate Trust Office as its office
for such purposes. The Trustee will give prompt written notice to the Servicer,
the Transferor and to Securityholders (or in the case of Holders of Bearer
Securities, in the manner provided for in the related Supplement) of any change
in the location of the Security Register or any such office or agency.
[End of Article XI]
ARTICLE XII
TERMINATION
Section 12.1 Termination of Trust.
(a) The respective obligations and responsibilities of the Transferor, the
Servicer and the Trustee created hereby (other than the obligation of the
Trustee to make payments to Securityholders as hereafter set forth) shall
terminate, except with respect to the duties described in Sections 7.4, 8.4 and
11.5 and subsection 12.3(b), on the Trust Termination Date; provided, however,
that the Trust shall not terminate on the date specified in clause (i) of the
definition of "Trust Termination Date" if each of the Transferor and the Holder
of the Exchangeable Transferor Security notify the Trustee and the Servicer in
writing, not later than five Business Days preceding such date, that they desire
that the Trust not terminate on such date, which notice (such notice, a "Trust
Extension") shall specify the date on which the Trust shall terminate (such
date, the "Extended Trust Termination Date"); provided, however, that the
Extended Trust Termination Date shall be not later than May 26, 2095. The
Transferor and the Holder of the Exchangeable Transferor Security may, on any
date following the Trust Extension, so long as no Series of Securities is
outstanding, deliver a notice in writing to the Trustee and the Servicer
changing the Extended Trust Termination Date.
(b) In the event that (i) the Trust has not terminated by the Distribution Date
occurring in the second month preceding the Trust Termination Date, and (ii) the
Invested Amount of any Series, exclusive of any Transferor Retained Class (after
giving effect to all transfers, withdrawals, deposits and drawings to occur on
such date and the payment of principal on any Series of Securities to be made on
the related Distribution Date during such month pursuant to Article IV), would
be greater than zero, the Servicer shall sell within 30 days after such Transfer
Date an amount of Receivables up to the remaining Invested Amount if it can do
so in a commercially reasonable manner. The Servicer shall notify the Transferor
and each Enhancement Provider of the proposed sale of the Receivables and shall
provide each Enhancement Provider an opportunity to bid on the Receivables. The
Transferor shall have the right of first refusal to purchase the Receivables on
terms equivalent to the best purchase offer as determined by the Trustee in its
sole discretion. The proceeds of any such sale shall be treated as Collections
on the Receivables and shall be allocated and deposited in accordance with
Article IV; provided, however, that the Trustee shall determine conclusively in
its sole discretion the amount of such proceeds which are allocable to Finance
Charge Collections and the amount of such proceeds which are allocable to
Principal Collections. During such thirty-day period, the Servicer shall
continue to collect payments on the Receivables and allocate and deposit such
payments in accordance with the provisions of Article IV.
(c) All principal or interest with respect to any Series of Investor Securities
shall be due and payable no later than the Series Termination Date with respect
to such Series. Unless otherwise provided in a Supplement, in the event that the
Invested Amount of any Series of Securities is greater than zero, exclusive of
any Class held by the Transferor, on its Series Termination Date (the "Affected
Series"), after giving effect to all transfers, withdrawals, deposits and
drawings to occur on such date and the payment of principal to be made on such
Series on such date, the Trustee will sell or cause to be sold, and the Trustee
will pay the proceeds to all Securityholders of such Series pro rata in final
payment of all principal of and accrued interest on such Series of Securities
or, if any Class of such Series is subordinated, in order of their respective
seniorities, an amount of Principal Receivables and the related Finance Charge
Receivables (or interests therein) up to 110% of the Invested Amount of such
Series at the close of business on such date (but the amount of such Principal
Receivables not to be more than an amount of Receivables equal to the sum of (1)
the product of (A) the Transferor Percentage, (B) the aggregate outstanding
Principal Receivables and (C) a fraction the numerator of which is the Invested
Amount of such Series on such date and the denominator of which is the sum of
the Invested Amounts of all Series on such Date and (2) the Invested Amount of
such Series). Receivables on which the Obligor has not made the full monthly
payment for the prior months shall be deemed to be in default for purposes of
this Section 12.1(c) to the extent that the cash allocated to any Class of
Transferor Retained Securities of such Series pursuant to a sale under Section
12.1(c) is less than the amount that would have been allocated to the Holder of
the Exchangeable Transferor Security and the Transferor Retained Securities had
the proceeds from such sale been allocated pursuant to Section 4.3. The Servicer
shall notify the Transferor and each Enhancement Provider of the proposed sale
of such Receivables and shall provide each Enhancement Provider an opportunity
to bid on such Receivables. Any proceeds of such sale in excess of such
principal and interest paid shall be paid to the Holder of the Exchangeable
Transferor Security. Upon such Series Termination Date with respect to the
applicable Series of Securities, final payment of all amounts allocable to any
Investor Securities of such Series shall be made in the manner provided in
Section 12.3.
Section 12.2 Optional Termination.
(a) If so provided in any Supplement, the Transferor (so long as the Transferor
is the Servicer or an Affiliate of the Servicer) may, but shall not be obligated
to, cause a final distribution to be made in respect of the related Series of
Securities on a Distribution Date specified in such Supplement by depositing
into the Distribution Account or the applicable Series Account, not later than
the Transfer Date preceding such Distribution Date, for application in
accordance with Section 12.3, the amount specified in such Supplement; provided,
however that if the short-term deposits or long-term unsecured debt obligations
of the Transferor are not rated at the time of such purchase of Receivables at
least P-3 or Baa3, respectively, by Xxxxx'x, no such event shall occur unless
the Transferor shall deliver to the Trustee, with a copy to Xxxxx'x, an
Officer's Certificate of the Transferor which shall have attached to it the
relevant fraudulent conveyance statue, if any, and set forth the factual basis
for a conclusion that such deposit into the Distribution Account or any Series
Account as provided in the related Supplement would not constitute a fraudulent
conveyance of the Transferor.
(b) The amount deposited pursuant to subsection 12.2(a) shall be paid to the
Investor Securityholders of the related Series pursuant to Section 12.3 on the
related Distribution Date following the date of such deposit. All Securities of
a Series with respect to which a final distribution has been made pursuant to
subsection 12.2(a) shall be delivered by the Holder to, and be canceled by, the
Transfer Agent and Registrar and be disposed of in a manner satisfactory to the
Trustee and the Transferor. The Invested Amount of each Series with respect to
which a final distribution has been made pursuant to subsection 12.2(a) shall,
for the purposes of the definition of "Transferor Interest," be deemed to be
equal to zero on the Distribution Date following the making of the deposit, and
the Transferor Interest shall thereupon be deemed to have been increased by the
Invested Amount of such Series.
Section 12.3 Final Payment with Respect to any Series.
(a) Written notice of any termination, specifying the Distribution Date upon
which the Investor Securityholders of any Series may surrender their Securities
for payment of the final distribution with respect to such Series and
cancellation, shall be given (subject to at least four Business Days' prior
notice from the Servicer to the Trustee) by the Trustee to the Transferor and
the Investor Securityholders of such Series mailed not later than the fifth day
of the month of such final distribution (or in the manner provided by the
Supplement relating to such Series) specifying (i) the Distribution Date (which
shall be the Distribution Date in the month (x) in which the deposit is made
pursuant to subsection 2.4(e), 9.2(a), 10.2(a), or 12.2(a) of the Agreement or
such other section as may be specified in the related Supplement, or (y) in
which the related Series Termination Date occurs) upon which final payment of
such Investor Securities will be made upon presentation and surrender of such
Investor Securities at the office or offices therein designated (which, in the
case of Bearer Securities, shall be outside the United States), (ii) the amount
of any such final payment and (iii) that the Record Date otherwise applicable to
such Distribution Date is not applicable, payments being made only upon
presentation and surrender of the Investor Securities at the office or offices
therein specified. The Servicer's notice to the Trustee in accordance with the
preceding sentence shall be accompanied by an Officer's Certificate setting
forth the information specified in Article V of this Agreement covering the
period during the then current calendar year through the date of such notice and
setting forth the date of such final distribution. The Trustee shall give such
notice to the Transfer Agent and Registrar and the Paying Agent at the time such
notice is given to the Transferor and the Investor Securityholders.
(b) Notwithstanding the termination of the Trust pursuant to subsection 12.1(a)
or the occurrence of the Series Termination Date with respect to any Series, all
funds then on deposit in the Excess Funding Account, the Interest Funding
Account, the Principal Account, the Distribution Account or any Series Account
applicable to the related Series shall continue to be held in trust for the
benefit of the Securityholders of the related Series and the Paying Agent or the
Trustee shall pay such funds to the Securityholders of the related Series upon
surrender of their Securities (which surrenders and payments, in the case of
Bearer Securities, shall be made only outside the United States). In the event
that all of the Investor Securityholders of any Series shall not surrender their
Securities for cancellation within six months after the date specified in the
above-mentioned written notice, the Trustee shall give a second written notice
(or, in the case of Bearer Securities, publication notice) to the remaining
Investor Securityholders of such Series upon receipt of the appropriate records
from the Transfer Agent and Registrar to surrender their Securities for
cancellation and receive the final distribution with respect thereto. If within
one and one half years after the second notice with respect to a Series, all the
Investor Securities of such Series shall not have been surrendered for
cancellation, the Trustee may take appropriate steps or may appoint an agent to
take appropriate steps, to contact the remaining Investor Securityholders of
such Series concerning surrender of their Securities, and the cost thereof shall
be paid out of the funds in the Distribution Account or any Series Account held
for the benefit of such Investor Securityholders. The Trustee and the Paying
Agent shall pay to the Transferor upon request any monies held by them for the
payment of principal or interest which remains unclaimed for two years. After
payment to the Transferor, Investor Securityholders entitled to the money must
look to the Transferor for payment as general creditors unless an applicable
abandoned property law designates otherwise.
(c) All Securities surrendered for payment of the final distribution with
respect to such Securities and cancellation shall be canceled by the Transfer
Agent and Registrar and be disposed of in a manner satisfactory to the Trustee
and the Transferor.
Section 12.4 Termination Rights of Holder of the Exchangeable Transferor
Security. Upon the termination of the Trust pursuant to Section 12.1, and after
payment of all amounts due hereunder on or prior to such termination and the
surrender of the Exchangeable Transferor Security, if applicable, the Trustee
shall execute a written reconveyance substantially in the form of Exhibit F
pursuant to which it shall reconvey to the Holder of the Exchangeable Transferor
Security (without recourse, representation or warranty) all right, title and
interest of the Trust in the Receivables, whether then existing or thereafter
created, all moneys due or to become due with respect thereto (including all
accrued interest theretofore posted as Finance Charge Receivables) allocable to
the Trust pursuant to any Supplement, except for amounts held by the Trustee
pursuant to subsection 12.3(b). The Trustee shall execute and deliver such
instruments of transfer and assignment, in each case prepared by the Transferor
and without recourse, representation or warranty (other than a warranty that
such property is conveyed free and clear of any Lien of any Person claiming by
or through the Trustee) as shall be reasonably requested by the Holder of the
Exchangeable Transferor Security to vest in such Holder all right, title and
interest which the Trust had in the Receivables and other Trust Property.
[End of Article XII]
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.1 Amendment.
(a) This Agreement (including any Supplement) may be amended from time to time
by the Servicer, the Transferor and the Trustee, without the consent of any of
the Securityholders, (i) to cure any ambiguity, to revise any exhibits or
Schedules (other than Schedule 2), to correct or supplement any provisions
herein or thereon which may be inconsistent with any other provisions herein or
thereon or (ii) to add any other provisions with respect to matters or questions
raised under this Agreement which shall not be inconsistent with the provisions
of this Agreement; provided, however, that such action shall not, as evidenced
by an Opinion of Counsel, adversely affect in any material respect the interests
of any of the Investor Securityholders; provided further, that such action shall
not effect a significant change in the Permitted Activities of the Trust.
Additionally, this Agreement may be amended from time to time by the Servicer,
the Transferor and the Trustee, without the consent of any of the
Securityholders, to add to or change any of the provisions of this Agreement to
provide that Bearer Securities may be registrable as to principal, to change or
eliminate any restrictions on the payment of principal of (or premium, if any)
or any interest on Bearer Securities to comply with the Bearer Rules, to permit
Bearer Securities to be issued in exchange for Registered Securities (if then
permitted by the Bearer Rules), to permit Bearer Securities to be issued in
exchange for Bearer Securities of other authorized denominations or to permit
the issuance of Securities in uncertificated form.
This Agreement (including any Supplement), and any schedule or
exhibit thereto may also be amended from time to time by the Servicer, the
Transferor and the Trustee, without the consent of any of the Securityholders,
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement, or of modifying in any
manner the rights of the Holders of Securities; provided, however, that (i) the
Transferor shall have provided an Officer's Certificate of the Transferor to the
Trustee to the effect that such amendment will not materially and adversely
affect the interests of the Securityholders, (ii) such amendment shall not, as
evidenced by an Opinion of Counsel, cause the Trust to be characterized for
Federal income tax purposes as an association taxable as a corporation or
otherwise have any material adverse impact on the Federal income taxation of any
outstanding Series of Investor Securities or any Security Owner and (iii) the
Transferor shall have provided at least ten Business Days prior written notice
to each Rating Agency of such amendment and shall have received written
confirmation from each Rating Agency to the effect that the rating of any Series
or any class of any Series will not be reduced or withdrawn as a result of such
amendment; provided further, that such action shall not effect a significant
change in the Permitted Activities of the Trust; provided, further, that such
amendment shall not reduce in any manner the amount of, or delay the timing of,
distributions which are required to be made on any Investor Security of such
Series without the consent of the related Investor Securityholder, change the
definition of or the manner of calculating the interest of any Investor
Securityholder of such Series without the consent of the related Investor
Securityholder or reduce the percentage pursuant to Subsection 13.1(b) required
to consent to any such amendment, in each case without the consent of all such
Investor Securityholders.
(b) This Agreement and any Supplement may also be amended from
time to time by the Servicer, the Transferor and the Trustee (A) in the case of
a significant change in the Permitted Activities of the Trust which is not
materially adverse to Holders of Investor Securities, with the consent of
Holders of Investor Securities evidencing Undivided Interests aggregating not
less than 50% of the Investor Interest of each outstanding Series affected by
such change, and (B) in all other cases with the consent of the Holders of
Investor Securities evidencing Undivided Interests aggregating not less than
66-2/3% of the Invested Amount of each and every Series adversely affected, for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Agreement or of modifying in any manner the rights
of the Investor Securityholders of any Series then issued and outstanding;
provided, however, that no such amendment under this subsection shall (i) reduce
in any manner the amount of, or delay the timing of, distributions which are
required to be made on any Investor Security of such Series without the consent
of all of the related Investor Securityholders; (ii) change the definition of or
the manner of calculating the interest of any Investor Securityholder of such
Series without the consent of the related Investor Securityholder or (iii)
reduce the aforesaid percentage required to consent to any such amendment, in
each case without the consent of all such Investor Securityholders.
(c) Notwithstanding anything in this Section 13.1 to the
contrary, the Supplement with respect to any Series may be amended on the terms
and in accordance with the procedures provided in such Supplement.
(d) Promptly after the execution of any such amendment (other
than an amendment pursuant to paragraph (a)), the Trustee shall furnish
notification of the substance of such amendment to each Investor Securityholder
of each Series adversely affected and ten Business Days prior to the proposed
effective date for such amendment the Servicer shall furnish notification of the
substance of such amendment to each Rating Agency providing a rating for such
Series.
(e) It shall not be necessary to obtain the consent of
Investor Securityholders under this Section 13.1 to approve the particular form
of any proposed amendment, but it shall be sufficient if such consent shall
approve the substance thereof. The manner of obtaining such consents and of
evidencing the authorization of the execution thereof by Investor
Securityholders shall be subject to such reasonable requirements as the Trustee
may prescribe.
(f) Any Supplement executed and delivered pursuant to Section
6.9 and any amendments regarding the addition or removal of Receivables from the
Trust as provided in Sections 2.6 or 2.7, executed in accordance with the
provisions hereof, shall not be considered amendments to this Agreement for the
purpose of subsections 13.1(a) and (b).
(g) In connection with any amendment, the Trustee may request
an Opinion of Counsel from the Transferor to the effect that the amendment
complies with all requirements of this Agreement. The Trustee may, but shall not
be obligated to, enter into any amendment which affects the Trustee's rights,
duties or immunities under this Agreement or otherwise.
Section 13.2 Protection of Right, Title and Interest to Trust.
(a) The Transferor shall cause this Agreement, all amendments hereto and/or all
financing statements, and continuation statements and other amendments thereto,
and any other necessary documents covering the Securityholders and the Trustee's
right, title and interest to the Trust to be promptly recorded, registered and
filed, and at all times to be kept recorded, registered and filed, all in such
manner and in such places as may be required by law fully to preserve and
protect the right, title and interest of the Securityholders or the Trustee, as
the case may be, hereunder to all property comprising the Trust. The Transferor
shall deliver to the Trustee file-stamped copies of, or filing receipts for, any
document recorded, registered or filed as provided above, as soon as available
following such recording, registration or filing. The Transferor shall cooperate
fully with the Servicer in connection with the obligations set forth above and
will execute any and all documents reasonably required to fulfill the intent of
this subsection 13.2(a).
(b) The Transferor shall not change its name or its type or jurisdiction of
organization without previously having delivered to the Trustee an Opinion of
Counsel to the effect that all actions have been taken, and all filings have
been made, as are necessary to continue and maintain the first priority
perfected security interest of the Trustee in the Receivables.
(c) The Transferor and the Servicer each shall give the other and the Trustee
prompt notice of any relocation of its chief executive office or any change in
the jurisdiction under whose laws it is organized. The Transferor and the
Servicer each shall at all times maintain its chief executive office within the
United States and shall at all times be organized under the laws of the United
States or a jurisdiction located within the United States.
(d) The Transferor will deliver to the Trustee on or before March 31 of each
year, beginning with March 31, 1996, an Opinion of Counsel, substantially in the
form of Exhibit E and upon each date that any Supplemental Accounts are to be
included in the Accounts pursuant to subsection 2.6(c) an Opinion of Counsel
substantially in the form of Exhibit I.
Section 13.3 Limitation on Rights of Securityholders.
(a) The death or incapacity of any Investor Securityholder shall not operate to
terminate this Agreement or the Trust, nor shall such death or incapacity
entitle such Securityholder's legal representatives or heirs to claim an
accounting or to take any action or commence any proceeding in any court for a
partition or winding up of the Trust, nor otherwise affect the rights,
obligations and liabilities of the parties hereto or any of them.
(b) No Investor Securityholder shall have any right to vote (except with respect
to the Investor Securityholders as provided in Section 13.1 hereof) or in any
manner otherwise control the operation and management of the Trust, or the
obligations of the parties hereto, nor shall anything herein set forth, or
contained in the terms of the Securities, be construed so as to constitute the
Securityholders from time to time as members of an association; nor shall any
Investor Securityholder be under any liability to any third person by reason of
any action taken by the parties to this Agreement pursuant to any provision
hereof.
(c) No Securityholder shall have any right by virtue of any provisions of this
Agreement to institute any suit, action or proceeding in equity or at law upon
or under or with respect to this Agreement, unless such Securityholder
previously shall have given written notice to the Trustee, and unless the
Holders of Securities evidencing Undivided Interests aggregating more than 50%
of the Invested Amount of any Series which may be adversely affected but for the
institution of such suit, action or proceeding, shall have made written request
upon the Trustee to institute such action, suit or proceeding in its own name as
Trustee hereunder and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be
incurred therein or thereby, and the Trustee, for 60 days after its receipt of
such notice, request and offer of indemnity, shall have neglected or refused to
institute any such action, suit or proceeding; it being understood and intended,
and being expressly covenanted by each Securityholder with every other
Securityholder and the Trustee, that no one or more Securityholders shall have
the right in any manner whatever by virtue or by availing itself or themselves
of any provisions of this Agreement to affect, disturb or prejudice the rights
of the Securityholders of any other of the Securities, or to obtain or seek to
obtain priority over or preference to any other such Securityholder, or to
enforce any right under this Agreement, except in the manner herein provided and
for the equal, ratable and common benefit of all Securityholders. For the
protection and enforcement of the provisions of this Section 13.3, each and
every Securityholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity.
Section 13.4 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF DELAWARE WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. The undersigned hereby declare
that it is their intention that this Agreement shall be regarded as made under
the laws of the State of Delaware and that the laws of said State shall be
applied in interpreting its provisions in all cases where legal interpretation
shall be required. Each of the parties hereto agrees (a) that this Agreement
involves at least $100,000.00, and (b) that this Agreement has been entered into
by the parties hereto in express reliance upon 6 Del. C. ss. 2708. Each of the
parties hereto hereby irrevocably and unconditionally agrees (a) to be subject
to the jurisdiction of the courts of the State of Delaware and of the federal
courts sitting in the State of Delaware, and (b) (1) to the extent such party is
not otherwise subject to service of process in the State of Delaware, to appoint
and maintain an agent in the State of Delaware as such party's agent for
acceptance of legal process, and (2) that, to the fullest extent permitted by
applicable law, service of process may also be made on such party by prepaid
certified mail with a proof of mailing receipt validated by the United States
Postal Service constituting evidence of valid service, and that service made
pursuant to (b) (1) or (2) above shall, to the fullest extent permitted by
applicable law, have the same legal force and effect as if served upon such
party personally within the State of Delaware. For purposes of implementing the
parties' agreement to appoint and maintain an agent for service of process in
the State of Delaware, each such party that has not as of the date hereof
already duly appointed such an agent does hereby appoint RL&F Service Corp., One
Xxxxxx Square, Tenth Floor, Wilmington, New Castle County, Delaware 19801, as
such agent.
Section 13.5 Notices. All demands, notices and communications hereunder shall be
in writing and shall be deemed to have been duly given if personally delivered
at, sent by facsimile to, sent by courier at or mailed by certified mail, return
receipt requested, to (a) in the case of the Transferor to 00000 Xxxxxxx
Xxxxxxxxx, Xxxx 000, Xxxxxxxxxx, Xxxxxxxxx 00000, Attention: Treasurer,
Telephone: (000) 000-0000, Telecopy: (000) 000-0000, (b) in the case of the
Servicer, 00000 Xxxxx Xxxxxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxx 00000, Attention:
Treasurer, Telephone: (000) 000-0000, Telecopy: (000) 000-0000, with a copy to
00000 Xxxxxxx Xxxxxxxxx, Xxxxxxxxxx, Xxxxxxxxx 00000, Attention: General
Counsel, Telephone: (000) 000-0000, Telecopy: (000) 000-0000, (c) in the case of
the Trustee, to the Corporate Trust Office, (d) in the case of the Enhancement
Provider for a particular Series, the address, if any, specified in the
Supplement relating to such Series and (e) in the case of the Rating Agency for
a particular Series, the address, if any, specified in the Supplement relating
to such Series; or, as to each party, at such other address as shall be
designated by such party in a written notice to each other party. Unless
otherwise provided with respect to any Series in the related Supplement any
notice required or permitted to be mailed to a Securityholder shall be given by
first class mail, postage prepaid, at the address of such Securityholder as
shown in the Security Register, or with respect to any notice required or
permitted to be made to the Holders of Bearer Securities, by publication in the
manner provided in the related Supplement. If and so long as any Series or Class
is listed on the Luxembourg Stock Exchange and such exchange shall so require,
any Notice to Investor Securityholders shall be published in an authorized
newspaper of general circulation in Luxembourg within the time period prescribed
in this Agreement. Any notice so mailed within the time prescribed in this
Agreement shall be conclusively presumed to have been duly given, whether or not
the Securityholder receives such notice.
Section 13.6 Severability of Provisions. If any one or more of the covenants,
agreements, provisions or terms of this Agreement shall for any reason
whatsoever be held invalid, then such covenants, agreements, provisions or terms
shall be deemed severable from the remaining covenants, agreements, provisions
or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Securities or
rights of the Securityholders thereof.
Section 13.7 Assignment. Notwithstanding anything to the contrary contained
herein, except as provided in Section 8.2, this Agreement may not be assigned by
the Servicer without the prior consent of Holders of Investor Securities
representing not less than 66 2/3% of the Invested Amount of each Series on a
Series by Series basis. Upon such assignment, the Trustee shall provide notice
to Xxxxx'x in a prompt manner.
Section 13.8 Securities Non-Assessable and Fully Paid. Except to the extent
otherwise expressly provided in Section 7.4 with respect to the Transferor, it
is the intention of the parties to this Agreement that the Investor
Securityholders shall not be personally liable for obligations of the Trust,
that the Undivided Interests represented by the Securities shall be
non-assessable for any losses or expenses of the Trust or for any reason
whatsoever, and that Securities upon authentication thereof by the Trustee
pursuant to Sections 2.1 and 6.2 are and shall be deemed fully paid.
Section 13.9 Further Assurances. The Transferor and the Servicer agree to do and
perform, from time to time, any and all acts and to execute any and all further
instruments required or reasonably requested by the Trustee more fully to effect
the purposes of this Agreement, including, without limitation, the authorization
of any financing statements, or continuation statements and other amendments
thereto, relating to the Receivables and the other Trust Property for filing
under the provisions of the UCC of any applicable jurisdiction.
Section 13.10 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Transferor, the Servicer, the Trustee,
any Enhancement Provider or the Investor Securityholders, any right, remedy,
power or privilege hereunder, shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege. The rights, remedies, powers and privileges
herein provided are cumulative and not exhaustive of any rights, remedies,
powers and privileges provided by law.
Section 13.11 Counterparts. This Agreement may be executed in two or more
counterparts (and by different parties on separate counterparts), each of which
shall be an original, but all of which together shall constitute one and the
same instrument.
Section 13.12 Third-Party Beneficiaries. This Agreement will inure to the
benefit of and be binding upon the parties hereto, the Securityholders and, to
the extent provided in the related Supplement, to the Enhancement Provider named
therein, and their respective successors and permitted assigns. Except as
otherwise provided in this Article XIII, no other Person will have any right or
obligation hereunder.
Section 13.13 Actions by Securityholders.
(a) Wherever in this Agreement a provision is made that an action may be taken
or a notice, demand or instruction given by Investor Securityholders, such
action, notice or instruction may be taken or given by any Investor
Securityholder, unless such provision requires a specific percentage of Investor
Securityholders.
(b) Any request, demand, authorization, direction, notice, consent, waiver or
other act by a Securityholder shall bind such Securityholder and every
subsequent holder of such Security issued upon the registration of transfer
thereof or in exchange therefor or in lieu thereof in respect of anything done
or omitted to be done by the Trustee, the Transferor or the Servicer in reliance
thereon, whether or not notation of such action is made upon such Security.
(c) Any request, demand, authorization, direction, notice, consent, waiver or
other action provided by this Agreement or any Supplement to be given or taken
by Securityholders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Securityholders in person or by
agent duly appointed in writing; and except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
are delivered to the Trustee and, when required, to the Transferor or the
Servicer. Proof of execution of any such instrument or of a writing appointing
any such agent shall be sufficient for any purpose of this Agreement or any
Supplement and conclusive in favor of the Trustee, the Transferor and the
Servicer, if made in the manner provided in this Section.
(d) The fact and date of the execution by any Securityholder of any such
instrument or writing may be proved in any reasonable manner which the Trustee
deems sufficient.
Section 13.14 Rule 144A Information. For so long as any of the Investor
Securities of any Series or any Class are "restricted securities" within the
meaning of Rule 144(a)(3) under the Securities Act, each of the Transferor, the
Servicer, the Trustee and the Enhancement Provider for such Series agree to
cooperate with each other to provide to any Investor Securityholders of such
Series or Class and to any prospective purchaser of Securities designated by
such an Investor Securityholder upon the request of such Investor Securityholder
or prospective purchaser, any information required to be provided to such holder
or prospective purchaser to satisfy the condition set forth in Rule 144A(d)(4)
under the Securities Act.
Section 13.15 Merger and Integration. Except as specifically stated otherwise
herein, this Agreement sets forth the entire understanding of the parties
relating to the subject matter hereof, and all prior understandings, written or
oral, are superseded by this Agreement. This Agreement may not be modified,
amended, waived or supplemented except as provided herein.
Section 13.16 Headings. The headings herein are for purposes of reference
only and shall not otherwise affect the meaning or interpretation of any
provision hereof.
Section 13.17 Nonpetition Covenant. To the fullest extent permitted by
applicable law, notwithstanding any prior termination of this Agreement, neither
the Servicer, the Trustee, the Securityholders nor the Transferor shall, prior
to the date which is one year and one day after the termination of this
Agreement, acquiesce, petition or otherwise invoke or cause the Trust to invoke
the process of any Governmental Authority for the purpose of commencing or
sustaining a case against the Trust under any Debtor Relief Law or appointing a
receiver, conservator, liquidator, assignee, trustee, custodian, sequestrator or
other similar official of the Trust or any substantial part of its property or
ordering the winding-up or liquidation of the affairs of the Trust.
To the fullest extent permitted by applicable law,
notwithstanding any prior termination of this Agreement, neither the Servicer,
the Trustee nor the Securityholders shall institute, or join in instituting a
proceeding against the Transferor under any Debtor Relief Law or other
proceedings under any United States federal or state bankruptcy or similar law.
[End of Article XIII]
IN WITNESS WHEREOF, the Transferor, the Servicer and the
Trustee have caused this Agreement to be duly executed by their respective
officers as of the day and year first above written.
METRIS RECEIVABLES, INC.,
Transferor
By:/s/ Xxxxx X. Than
Name: Xxxxx X. Than
Title: Senior Vice President, Treasurer
DIRECT MERCHANTS CREDIT CARD BANK,
NATIONAL ASSOCIATION, Servicer
By: /s/ Xxxxxxx X. Xxxxxxxxx
Name: Xxxxxxx X. Xxxxxxxxx
Title: Chief Financial Officer
U.S. BANK NATIONAL ASSOCIATION,
Trustee
By:/s/ Xxxxxx Xxxxxxx-Xxxx
Name: Xxxxxx Xxxxxxx-Xxxx
Title: Vice President
[SIGNATURE PAGE TO SECOND AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT]
SCHEDULE 1
Account Schedule
SCHEDULE 2
TAX RETURNS AND PAYMENTS
Metris Companies Inc. ("Metris") and its subsidiaries (including
the Transferor) have filed all applicable federal, state and material local tax
returns and have paid or caused to be paid all associated taxes due and
payable on such returns or on any assessments received by them; except that
Metris and its subsidiaries (including the Transferor) have not filed
certain sales or use tax returns purported to be required or collected or
paid taxes owing relating to such returns because they believe the
requirements are invalid and unenforceable under the commerce clause of the
United States Constitution as interpreted by the Supreme Court in National
Bellas Xxxx v. Department of Revenue of Illinois, 386 U.S. 753 (1967) and the
supporting lines of cases, including Quill Corp. v. North Dakota, 112 S. Ct.
1904 (1992).
In addition, because one of the subsidiaries of Metris, Direct
Merchants Credit Card Bank, National Association ("DMCCB"), is a national
banking entity which derives the majority of its income from Mastercard credit
cards, it may be subject to special financial institution rules in certain
states. Such rules attempt to impute state income tax nexus to a credit card
company if it obtains finance revenue and/or has credit card receivables
generated from customers in that state. Of the states that have adopted such
financial institution rules, Minnesota is the only state where Metris and its
subsidiaries are currently filing income or franchise tax returns. Various other
states currently have rules pursuant to which they may attempt to impose income
tax nexus based upon such credit card activity. DMCCB has not filed in states
other than Minnesota because it believes the above referenced financial
institution rules will not materially affect DMCCB, due to current
interpretations of the enforceability of legislation, prior court decisions and
the volume of business in states that have passed similar legislation.
EXHIBIT A
FORM OF EXCHANGEABLE TRANSFEROR SECURITY
No. 1 One Unit
METRIS MASTER TRUST
ASSET BACKED SECURITY
THIS SECURITY WAS ISSUED PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY
BE SOLD ONLY PURSUANT TO A REGISTRATION STATEMENT EFFECTIVE UNDER THE ACT OR AN
EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE ACT. IN ADDITION, THE TRANSFER
OF THIS SECURITY IS SUBJECT TO RESTRICTIONS SET FORTH IN THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN. A COPY OF THE POOLING AND SERVICING
AGREEMENT WILL BE FURNISHED TO THE HOLDER OF THIS SECURITY BY THE TRUSTEE UPON
WRITTEN REQUEST.
This Security represents an Undivided Interest
in the Metris Master Trust
Evidencing an undivided interest in a trust, the corpus of
which consists of open-end or revolving credit receivables generated from time
to time in the ordinary course of business by Direct Merchants Credit Card Bank,
National Association ("DMCCB" or the "Servicer") and other assets and interests
constituting the Trust under the Pooling and Servicing Agreement described
below.
(Not an interest in or a recourse obligation of
Metris Receivables, Inc.,
Direct Merchants Credit Card Bank, National Association
or any Affiliate of either of them.)
This certifies that METRIS RECEIVABLES, INC. ("MRI," the
"Holder" or the "Transferor," as the context requires) is the registered owner
of a fractional undivided interest in the Metris Master Trust (the "Trust")
issued pursuant to the Second Amended and Restated Pooling and Servicing
Agreement, dated as of January 22, 2002 (the "Pooling and Servicing Agreement";
such term to include any amendment or Supplement thereto) by and among MRI, as
Transferor, DMCCB, as the Servicer, and U.S. Bank National Association, as
Trustee (the "Trustee"), as supplemented by each supplement thereto existing
from time to time. The corpus of the Trust will consist of the Trust Property
(as defined in the Pooling and Servicing Agreement).
To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Pooling and Servicing Agreement. This
Security is issued under and is subject to the terms, provisions and conditions
of the Pooling and Servicing Agreement, to which Pooling and Servicing
Agreement, as amended from time to time, the Holder by virtue of the acceptance
hereof assents and by which the Holder is bound.
This Security has not been registered or qualified under the
Securities Act of 1933, as amended, or any state securities law. No sale,
transfer or other disposition of this Security shall be permitted other than in
accordance with the provisions of Section 6.1, 6.3, 6.9 or 7.2 of the Pooling
and Servicing Agreement.
The Receivables arise generally from revolving credit consumer
credit card accounts.
This Security is the Exchangeable Transferor Security (the
"Security"), which represents an undivided interest in the Trust, including the
right to receive the Collections and other amounts at the times and in the
amounts specified in the Pooling and Servicing Agreement to be paid to the
Holder of the Exchangeable Transferor Security. The aggregate interest
represented by this Security at any time in the Principal Receivables in the
Trust shall not exceed the Transferor Interest at such time. In addition to this
Security, Series of Investor Securities will be issued to investors pursuant to
the Pooling and Servicing Agreement, each of which will represent an Undivided
Interest in the Trust. This Security shall not represent any interest in any
Enhancement, except to the extent provided in the Pooling and Servicing
Agreement. The Transferor Interest on any date of determination will be an
amount equal to the aggregate amount of Principal Receivables at the end of the
day immediately prior to such date of determination plus amounts on deposit in
the Excess Funding Account and Pre-Funding Account (but not including any
investment earnings thereon) minus the Aggregate Invested Amount at the end of
such day.
The Servicer shall deposit all Collections in the Collection
Account as promptly as possible after the Date of Processing of such
Collections. Unless otherwise stated in any Supplement, throughout the existence
of the Trust, the Servicer shall allocate to the Holder of the Exchangeable
Transferor Security an amount equal to the product of (A) the Transferor
Percentage and (B) the aggregate amount of such Principal Collections and
Finance Charge Collections, respectively, in respect of each Monthly Period.
Notwithstanding the first sentence of this paragraph, the Servicer need not
deposit this amount or any other amounts so allocated to the Security pursuant
to the Pooling and Servicing Agreement into the Collection Account and shall pay
such amounts as collected to the Holder of the Exchangeable Transferor Security.
DMCCB or any permitted successor or assignee, as Servicer, is
entitled to receive as servicing compensation a monthly servicing fee. The
portion of the servicing fee which will be allocable to the Holder of the
Exchangeable Transferor Security pursuant to the Pooling and Servicing Agreement
will be payable by the Holder of the Exchangeable Transferor Security and none
of the Trust, the Trustee or the Investor Securityholders will have any
obligation to pay such portion of the servicing fee.
This Security does not represent a recourse obligation of, or
any interest in, the Transferor or the Servicer. This Security is limited in
right of payment to certain Collections respecting the Receivables, all as more
specifically set forth hereinabove and in the Pooling and Servicing Agreement.
Upon the termination of the Trust pursuant to Section 12.1 of
the Pooling and Servicing Agreement, the Trustee shall assign and convey to the
Holder of the Exchangeable Transferor Security (without recourse, representation
or warranty) all right, title and interest of the Trustee in the Receivables,
whether then existing or thereafter created, and all proceeds relating to the
foregoing, and all moneys due or to become due with respect to all of the
foregoing (including all accrued interest theretofore posted as Finance Charge
Receivables) allocable to the Trust pursuant to any Supplement, except for
amounts held by the Trustee pursuant to subsection 12.3(b) of the Pooling and
Servicing Agreement. The Trustee shall execute and deliver such instruments of
transfer and assignment, in each case without recourse, as shall be reasonably
requested by the Holder of the Exchangeable Transferor Security to vest in such
Holder all right, title and interest which the Trustee had in the Receivables
and other Trust Property.
Unless the certificate of authentication hereon has been
executed by or on behalf of the Trustee, by manual signature, this Security
shall not be entitled to any benefit under the Pooling and Servicing Agreement,
or be valid for any purpose.
IN WITNESS WHEREOF, the Transferor has caused this Security to
be duly executed.
METRIS RECEIVABLES, INC.
By:
Name:
Title:
Date:
CERTIFICATE OF AUTHENTICATION
This is the Exchangeable Transferor Security referred to in the within-mentioned
Pooling and Servicing Agreement.
Authenticating Agent
By:
Name:
Title:
Metris Receivables, Inc. Metris Master Trust Series [____-_] Exhibit B
Direct Merchants Credit Card Bank, N.A.
Daily Trust Activity Worksheet
Daily Report
Month/Day/Year
Class A Class B Excess Collateral Series Series Series Series Transferor Trust Totals
Interest
Beginning Receivables Balance
Excess Funding Account Balance
Principal Receivables + Excess
Funding Account
Beginning Invested Amount
(Before PFA withdrawal)
Pre-Funding w/d; CP issue/paydown;
new cert.
Amount Reallocated
Amount Reimbursed
Beginning Invested Amount
Floating Allocation Percentage 100.00000000%
Fixed\Floating Allocation Percentage 100.00000000%
Finance Charge Collections
(Incl. Excess Funding Account
Earnings)
Principal Collections
Total Collections
Period Type
Finance Charge Allocations
Principal Allocations
Default Allocation Recognition % 100.00000000%
Default Recognition Date
Defaults
Recoveries
Dilution
New Receivables
Ending Invested Amount
Exhibit C
Metris Receivables, Inc. Metris Master Trust Series [____-_] Monthly Report
Securityholder's Statement Month-Year
Section 5.2 Class A * Class B Excess Collateral Total
(i)Security Amount
* Based on month-end level.
Security amount varied
during the month.
(ii)Security Principal Distributed
(iii)Security Interest Distributed
(iv)Principal Collections
(v) Finance Charge Collections
Recoveries
Interest Earned on Accounts
Total Finance Charge Collections
Total Collections
(vi)Aggregate Amount of Principal
Receivables
Invested Amount (End of Mth)
Floating Allocation Percentage
Invested Amount (Beg. of Mth)
Average Daily Invested Amount
(vii) Receivable Delinquencies
(As a % of Total Receivables)
Current
30 Days to 59 Days (1 to 29 Days
Contractually Delinquent)
60 Days to 89 Days (30 to 59 Days
Contractually Delinquent)
90 Days and Over (60+ Days
Contractually Delinquent)
Total Receivables
(viii) Aggregate Investor Default Amount
As a % of Average Daily Invested Amount
(Annualized based on 365 days/year)
(ix) Charge-Offs
(x) Servicing Fee
(xi) Pool Factor
(xii) Unreimbursed Redirected Principal Collections
(xiii) Excess Funding Account Balance
Prefunding Account Balance
(xiv) Aggregate Interest Rate Caps
Notional Amount
Deposit to Caps Proceeds Amount
Average Net Portfolio Yield
Minimum Base Rate
EXHIBIT D
FORM OF ANNUAL SERVICER'S CERTIFICATE
METRIS RECEIVABLES, INC.
METRIS MASTER TRUST
The undersigned, a duly authorized representative of Direct
Merchants Credit Card Bank, National Association ("DMCCB"), as Servicer,
pursuant to the Second Amended and Restated Pooling and Servicing Agreement
dated as of January 22, 2002 (the "Pooling and Servicing Agreement") by and
among Metris Receivables, Inc., as Transferor (the "Transferor"), DMCCB, as
Servicer (the "Servicer"), and U.S. Bank National Association, as trustee (the
"Trustee"), does hereby certify that:
1. DMCCB is Servicer under the Pooling and Servicing Agreement.
2. The undersigned is duly authorized pursuant to the Pooling and
Servicing Agreement to execute and deliver this Certificate to
the Trustee.
3. This Certificate is delivered pursuant to Section 3.5 of the
Pooling and Servicing Agreement.
4. A review of the activities of the Servicer during (the period
from the Closing Date until) (the twelve fiscal month period
ended) , 20__ was conducted under our supervision.
5. Based on such review, the Servicer has, to the best of our
knowledge, fully performed all its obligations under the Pooling
and Servicing Agreement throughout such period and no default in
the performance of such obligations has occurred or is continuing
except as set forth in paragraph 6 below.
6. The following is a description of each default in the performance
of the Servicer's obligations under the provisions of the Pooling
and Servicing Agreement, including any Supplement, known to us to
have been made during such period which sets forth in detail (i)
the nature of each such default, (ii) the action taken by the
Servicer, if any, to remedy each such default and (iii) the
current status of each such default:
[If applicable, insert "None."]
IN WITNESS WHEREOF, the undersigned has duly executed this certificate
this day of
DIRECT MERCHANTS CREDIT CARD BANK, NATIONAL ASSOCIATION, as Servicer
By:
Name:
Title:
EXHIBIT E
FORM OF ANNUAL OPINION OF COUNSEL
The opinion set forth below, which is to be delivered pursuant
to subsection 13.2(d)(ii) of the Pooling and Servicing Agreement, may be subject
to certain qualifications, assumptions, limitations and exceptions taken or made
in the opinion of counsel delivered on the Initial Closing Date with respect to
similar matters.
No filing or other action, other than such filing or action
described in such opinion, is necessary from the date of such opinion through of
the following year to continue the perfected status of the interest of the
Trustee in the collateral described in the financing statements referred to in
such opinion.
EXHIBIT F
FORM OF RECONVEYANCE
RECONVEYANCE, dated as of ___________, by and between METRIS
RECEIVABLES, INC. (the "Transferor") and U.S. BANK NATIONAL ASSOCIATION, AS
TRUSTEE (the "Trustee"), pursuant to the Pooling and Servicing Agreement
referred to below.
WITNESSETH:
WHEREAS, the Transferor, the Trustee and Direct Merchants
Credit Card Bank, National Association, as Servicer (the "Servicer"), are
parties to the Second Amended and Restated Pooling and Servicing Agreement,
dated as of January 22, 2002 (hereinafter as such agreement may have been, or
may from time to time be, amended, supplemented or otherwise modified, the
"Pooling and Servicing Agreement");
WHEREAS, the Trust has terminated pursuant to the Pooling and
Servicing Agreement, and all amounts due under the Pooling and Servicing
Agreement have been paid;
WHEREAS, the Transferor wishes to cause the Trustee to
reconvey certain Trust Property to the Transferor, and the Trustee is willing to
make such reconveyance subject to the terms and conditions hereof.
NOW, THEREFORE, the Transferor and the Trustee hereby agree as
follows:
1. Defined Terms. All capitalized terms used herein shall have the meanings
ascribed to them in the Pooling and Servicing Agreement unless otherwise defined
herein.
2. Reconveyance of Trust Property.
(a) The Trustee does hereby reconvey to the Transferor, without recourse, all of
the Trustee's right, title and interest in, to and under, and the Trustee does
hereby release its lien on and security interest in, all Receivables now
existing and hereafter arising in the Accounts, all other Trust Property, and
all proceeds of the foregoing[, except in each case amounts held by the Trustee
pursuant to subsection 12.3(b) of the Pooling and Servicing Agreement].
(b) In connection with the foregoing reconveyance, the Trustee agrees to record
and file one or more termination statements (and financing statements or
amendments) as may be reasonably requested by the Transferor.
3. Counterparts. This Reconveyance may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument.
4. GOVERNING LAW. THIS RECONVEYANCE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. The
undersigned hereby declare that it is their intention that this Reconveyance
shall be regarded as made under the laws of the State of Delaware and that the
laws of said State shall be applied in interpreting its provisions in all cases
where legal interpretation shall be required. Each of the parties hereto agrees
(a) that this Reconveyance, entered into in accordance with the terms and
conditions of the Pooling and Servicing Agreement, involves at least
$100,000.00, and (b) that this Reconveyance has been entered into by the parties
hereto in express reliance upon 6 Del. C. ss. 2708. Each of the parties hereto
hereby irrevocably and unconditionally agrees (a) to be subject to the
jurisdiction of the courts of the State of Delaware and of the federal courts
sitting in the State of Delaware, and (b) (1) to the extent such party is not
otherwise subject to service of process in the State of Delaware, to appoint and
maintain an agent in the State of Delaware as such party's agent for acceptance
of legal process, and (2) that, to the fullest extent permitted by applicable
law, service of process may also be made on such party by prepaid certified mail
with a proof of mailing receipt validated by the United States Postal Service
constituting evidence of valid service, and that service made pursuant to (b)
(1) or (2) above shall, to the fullest extent permitted by applicable law, have
the same legal force and effect as if served upon such party personally within
the State of Delaware. For purposes of implementing the parties' agreement to
appoint and maintain an agent for service of process in the State of Delaware,
each such party that has not as of the date hereof already duly appointed such
an agent does hereby appoint RL&F Service Corp., One Xxxxxx Square, Tenth Floor,
Wilmington, New Castle County, Delaware 19801, as such agent.
[The remainder of this page is left blank intentionally.]
IN WITNESS WHEREOF, the Trustee and the Transferor each has
caused this Reconveyance to be duly executed by their respective officers as of
the day and year first written above.
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:
Name:
Title:
METRIS RECEIVABLES, INC.,
as Transferor
By:
Name:
Title:
Agreed and acknowledged:
DIRECT MERCHANTS CREDIT CARD BANK,
NATIONAL ASSOCIATION,
as Servicer
By:
Name:
Title:
EXHIBIT G
FORM OF AGREED-UPON PROCEDURES
The Servicer and Trustee will engage a firm of nationally
recognized independent public accountants (who may also render other services to
the Servicer or any of its subsidiaries) to perform certain agreed-upon
procedures substantially similar to the following:
1) The accountants will obtain the Master Trust schedules
showing the daily amount of eligible accounts receivable activity
(hereinafter referred to as the "Daily Report") for 5 days within the
period and compare amounts set forth on the Daily Report representing
sales, cash advances, payments, interest income, and charge offs and
miscellaneous charges and adjustments, with the corresponding amounts
set forth in the Servicer's accounts receivable reports and recompute
the mathematical accuracy of amounts and percentages within the Daily
Report.
2) For 5 days within the period, the accountants will compare
the payments appearing on the Servicer's accounts receivable reports to
an entry on the relevant Daily Report. The accountants will compare the
cash transfers indicated on the Daily Reports to entries on the
relevant Master Trust bank statements.
3) The accountants will compare the aggregate customer
balances in the "30-59 day delinquent" and "90-119 day delinquent"
categories as reflected on the monthly Settlement Statement to the
corresponding amounts set forth in the Servicer's accounts receivable
aging reports as of 3 month-ends within the period.
4) For 5 weekly periods, the accountants will compare the
beginning of week and end of week total receivables balances on the
Servicer's accounts receivable reports with the corresponding balances
on the corresponding Daily Report and will verify the amounts of the
calculation of beginning and ending Principal Receivable balances and
beginning and ending Finance Charge Receivables balances on each Daily
Report within each weekly period.
5) For 5 days within the period, the accountants will
recompute the daily allocation of Principal and Finance Charge
Collections to each series based upon information appearing on the
Daily Reports.
6) For one monthly Settlement Statement during the period, the
accountants will compare the amounts and percentages appearing therein
to the information appearing in the corresponding Daily Reports for
such month.
EXHIBIT H
FORM OF ASSIGNMENT OF RECEIVABLES IN SUPPLEMENTAL ACCOUNTS
ASSIGNMENT NO. __ OF RECEIVABLES IN SUPPLEMENTAL ACCOUNTS, dated as of
___________, by and between METRIS RECEIVABLES, INC. (the "Transferor") and U.S.
BANK NATIONAL ASSOCIATION, AS TRUSTEE (the "Trustee"), pursuant to the Pooling
and Servicing Agreement referred to below.
WITNESSETH:
WHEREAS, the Transferor, the Trustee and Direct Merchants
Credit Card Bank, National Association, as Servicer (the "Servicer"), are
parties to the Second Amended and Restated Pooling and Servicing Agreement,
dated as of January 22, 2002 (hereinafter as such agreement may have been, or
may from time to time be, amended, supplemented or otherwise modified, the
"Pooling and Servicing Agreement");
WHEREAS, pursuant to the Pooling and Servicing Agreement, the
Transferor wishes to designate Supplemental Accounts to be included as Accounts,
and the Transferor wishes to convey its right, title and interest in and to the
Receivables of such Supplemental Accounts, whether existing on the Addition
Cut-Off Date or thereafter created, to the Trustee pursuant to this Assignment
and the Pooling and Servicing Agreement; and
WHEREAS, the Trustee is willing to accept such designation and
conveyance subject to the terms and conditions hereof.
NOW, THEREFORE, the Transferor and the Trustee hereby agree as
follows:
1. Defined Terms. All capitalized terms used herein
shall have the meanings ascribed to them in the Pooling and Servicing Agreement
unless otherwise defined herein.
"Addition Cut-Off Date" shall mean, with respect to the
Supplemental Accounts, __________.
"Addition Date" shall mean, with respect to the Supplemental
Accounts, __________.
"Supplemental Accounts" shall mean the Supplemental Accounts,
as defined in the Pooling and Servicing Agreement, that are designated hereby
and listed on Schedule 1 hereto.
"Additional Transferred Assets" shall have the meaning set
forth in subsection 3(a).
2. Designation of Supplemental Accounts. The Transferor
delivers herewith an Account Schedule containing a true and complete list of the
Supplemental Accounts. Such Account Schedule is incorporated into and made part
of this Assignment, shall be Schedule 1 to this Assignment and shall supplement
Schedule 1 to the Pooling and Servicing Agreement.
3. Conveyance of Receivables.
(a) The Transferor does hereby transfer, assign, set over and otherwise convey
to the Trustee, without recourse except as provided in the Pooling and Servicing
Agreement, all of the Transferor's right, title and interest in, to and under
(i) the Receivables existing in the Supplemental Accounts at the close of
business on the Addition Cut-Off Date and thereafter created from time to time
in the Supplemental Accounts until the termination of the Trust, (ii) all monies
and investments due or to become due with respect to all of the foregoing
(including, without limitation, the right to any Finance Charge Receivables, any
Collections and any Recoveries), and (iii) all proceeds of all of the foregoing
(collectively, the "Additional Transferred Assets").
(b) In connection with the foregoing transfer and if necessary, the Transferor
agrees to record and file one or more financing statements (and continuation
statements or other amendments with respect to such financing statements when
applicable) with respect to the Additional Transferred Assets meeting the
requirements of applicable state law in such manner and in such jurisdictions as
are necessary to perfect the transfer of the Additional Transferred Assets to
the Trustee, and to deliver a file-stamped copy of such financing statements and
continuation statements (or other amendments) or other evidence of such filing
to the Trustee.
(c) In connection with the foregoing transfer, the Transferor further agrees, on
or prior to the date of this Assignment, to indicate in its accounting, computer
and other records that the Additional Transferred Assets have been transferred
to the Trustee pursuant to this Assignment, including by identifying the
Supplemental Accounts in its master file maintained in its computer files with
the designation portfolio ID 0001.
(d) The parties hereto intend that the conveyance of the Transferor's right,
title and interest in and to the Additional Transferred Assets shall constitute
a sale, and not a secured borrowing, for accounting purposes. Nevertheless, if
and to the extent that this Assignment is not deemed to be a sale, the
Transferor shall be deemed to have granted, and the Transferor does hereby
grant, to the Trustee a first priority perfected security interest in all of the
Transferor's right, title and interest, whether now owned or hereafter acquired,
in, to and under the Additional Transferred Assets to secure the obligations of
the Transferor hereunder and under the Pooling and Servicing Agreement and
agrees that this Assignment shall constitute a security agreement under
applicable law.
4. Acceptance by the Trustee. The Trustee hereby acknowledges
that, prior to or simultaneously with the execution and delivery of this
Assignment, the Transferor delivered to the Trustee the Account Schedule
described in Section 2 of this Assignment with respect to all Supplemental
Accounts.
5. Representations and Warranties of the Transferor.
The Transferor hereby represents and warrants to the Trustee on the Addition
Date that:
(a) This Assignment constitutes the legal, valid and binding
obligation of the Transferor, enforceable against the Transferor in accordance
with its terms, except (i) as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect, affecting the enforcement of creditors' rights in general,
and (ii) as such enforceability may be limited by general principles of equity
(whether considered in a suit at law or in equity).
(b) All consents, licenses, approvals or authorizations of or
registrations or declarations with any Governmental Authority required of the
Transferor in connection with the transfer of the Additional Transferred Assets
to the Trustee have been obtained.
(c) On the Addition Cut-Off Date, each Supplemental Account is
an Eligible Account. On the Addition Cut-Off Date, each Receivable contained in
the Supplemental Accounts and conveyed to the Trustee by the Transferor is an
Eligible Receivable.
(d) This Assignment creates a valid and continuing security
interest (as defined in the Delaware UCC) in favor of the Trustee in the
Receivables described in subsection 3(a) of this Assignment (the "Collateral"),
which security interest is prior to all other Liens, except for Permitted Liens,
and is enforceable as such as against creditors of and purchasers from the
Transferor.
(e) The Collateral constitutes "accounts" or "payment
intangibles" within the meaning of the applicable UCC.
(f) At the time of each transfer and assignment of Collateral
to the Trustee pursuant to this Assignment, the Transferor owned and had good
and marketable title to such Collateral free and clear of any Lien, claim or
encumbrance of any Person, except for Permitted Liens.
(g) The Transferor caused or will cause, within ten days of
the initial execution of this Assignment, the filing of all appropriate
financing statements in the proper filing office in the appropriate
jurisdictions under applicable law in order to perfect the security interest in
the Collateral granted to the Trustee pursuant to this Assignment.
(h) Other than the transfer and the security interest granted
to the Trustee pursuant to this Assignment and the Pooling and Servicing
Agreement, the Transferor has not pledged, assigned, sold, granted a security
interest in, or otherwise conveyed the Collateral. The Transferor has not
authorized the filing of and is not aware of any financing statements against
the Transferor that include a description of the Collateral other than any
financing statement relating to the security interest granted to the Trustee
pursuant to this Assignment and the Pooling and Servicing Agreement or that has
been terminated. The Transferor is not aware of any judgment or tax lien filings
against the Transferor.
6. Ratification of the Pooling and Servicing Agreement. The
Pooling and Servicing Agreement is hereby ratified, and all references to the
"Pooling and Servicing Agreement," to "this Agreement" and "herein" shall be
deemed from and after the Addition Date to be a reference to the Pooling and
Servicing Agreement as supplemented and amended by this Assignment. Except as
expressly amended hereby, all the representations, warranties, terms, covenants
and conditions of the Pooling and Servicing Agreement shall remain unamended and
shall continue to be, and shall remain, in full force and effect in accordance
with its terms and except as expressly provided herein shall not constitute or
be deemed to constitute a waiver of compliance with or consent to non-compliance
with any term or provision of the Pooling and Servicing Agreement.
7. Counterparts. This Assignment may be executed in
any number of counterparts, all of which taken together shall constitute one
and the same instrument.
8. GOVERNING LAW. THIS ASSIGNMENT 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. The
undersigned hereby declare that it is their intention that this Assignment shall
be regarded as made under the laws of the State of Delaware and that the laws of
said State shall be applied in interpreting its provisions in all cases where
legal interpretation shall be required. Each of the parties hereto agrees (a)
that this Assignment, entered into in accordance with the terms and conditions
of the Pooling and Servicing Agreement, involves at least $100,000.00, and (b)
that this Assignment has been entered into by the parties hereto in express
reliance upon 6 Del. C. ss. 2708. Each of the parties hereto hereby irrevocably
and unconditionally agrees (a) to be subject to the jurisdiction of the courts
of the State of Delaware and of the federal courts sitting in the State of
Delaware, and (b) (1) to the extent such party is not otherwise subject to
service of process in the State of Delaware, to appoint and maintain an agent in
the State of Delaware as such party's agent for acceptance of legal process, and
(2) that, to the fullest extent permitted by applicable law, service of process
may also be made on such party by prepaid certified mail with a proof of mailing
receipt validated by the United States Postal Service constituting evidence of
valid service, and that service made pursuant to (b) (1) or (2) above shall, to
the fullest extent permitted by applicable law, have the same legal force and
effect as if served upon such party personally within the State of Delaware. For
purposes of implementing the parties' agreement to appoint and maintain an agent
for service of process in the State of Delaware, each such party that has not as
of the date hereof already duly appointed such an agent does hereby appoint RL&F
Service Corp., One Xxxxxx Square, Tenth Floor, Wilmington, New Castle County,
Delaware 19801, as such agent.
[The remainder of this page is left blank intentionally.]
IN WITNESS WHEREOF, the Trustee and the Transferor each has
caused this Assignment to be duly executed by their respective officers as of
the day and year first written above.
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:
Name:
Title:
METRIS RECEIVABLES, INC.,
as Transferor
By:
Name:
Title:
Agreed and acknowledged:
DIRECT MERCHANTS CREDIT CARD BANK,
NATIONAL ASSOCIATION,
as Servicer
By:
Name:
Title:
Schedule 1
SCHEDULE OF SUPPLEMENTAL ACCOUNTS
Schedule 2
Metris Receivables, Inc.
Metris Master Trust
Officer's Certificate
The undersigned, a duly authorized officer of Metris
Receivables, Inc., a Delaware corporation (the "Transferor"), hereby certifies
and acknowledges on behalf of the Transferor that to the best of his knowledge
the following statements are true on , , (the "Addition Date"), and acknowledges
on behalf of the Transferor that this Officer's Certificate will be relied upon
by U.S. Bank National Association, as Trustee (the "Trustee") of the Metris
Master Trust, in connection with the Trustee entering into Assignment No. ___ of
Receivables in Supplemental Accounts, dated as of the Addition Date (the
"Assignment"), by and between the Transferor and the Trustee, in connection with
the Second Amended and Restated Pooling and Servicing Agreement, dated as of
January 22, 2002, as heretofore supplemented and amended (the "Pooling and
Servicing Agreement"). The undersigned hereby certifies and acknowledges on
behalf of the Transferor that:
On or prior to the Addition Date, the Transferor has delivered to the Trustee
the Assignment, the Transferor has indicated in its computer files that the
Receivables created in connection with the Supplemental Accounts have been
transferred to the Trustee by identifying such Supplemental Accounts in its
master file maintained in its computer files with the designation portfolio ID
0001, and the Transferor has delivered to the Trustee an Account Schedule (as
defined in the Pooling and Servicing Agreement). Such Account Schedule is hereby
incorporated into and made a part of the Assignment and the Pooling and
Servicing Agreement.
Each of the representations and warranties made by the
Transferor in Paragraph 5 of the Assignment is true and correct in all material
respect on the Addition Date.
Initially capitalized terms used herein and not otherwise
defined are used as defined in the Pooling and Servicing Agreement.
IN WITNESS WHEREOF, I have hereunto set my hand this ,
day of , .
METRIS RECEIVABLES, INC.
By:
Name:
Title:
EXHIBIT I
FORM OF OPINION OF COUNSEL REGARDING SUPPLEMENTAL ACCOUNTS
PROVISIONS TO BE INCLUDED IN OPINION OF COUNSEL
TO BE DELIVERED PURSUANT TO SECTION 2.6(d)(vi)
OF THE POOLING AND SERVICING AGREEMENT
The opinions set forth below may be subject to certain
qualifications, assumptions, limitations and exceptions taken or made in the
opinion of the Transferor's counsel with respect to similar matters delivered on
the Closing Date. Such counsel may rely as to factual matters on certificates of
officers of the Transferor and the Servicer.
(i) The Assignment has been duly authorized, executed and
delivered by the Transferor and constitutes the valid and legally binding
agreement of the Transferor, enforceable against the Transferor in accordance
with its terms, except (x) to the extent that the enforceability thereof may be
limited by (a) bankruptcy, insolvency, receivership, reorganization, moratorium
or other similar laws now or hereafter in effect relating to creditors' rights
generally and the rights of creditors of Delaware chartered banks as the same
may be applied in the event of the bankruptcy, insolvency, receivership,
reorganization, moratorium or other similar event in respect of the Transferor,
and (b) general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity).
(ii) The provisions of the Pooling and Servicing Agreement are
effective to create, in favor of the Trustee, a valid security interest (as such
term is defined in Section 1-201(37) of the Delaware UCC) in all of the
Transferor's right, title and interest in that portion of the Receivables which
constitutes accounts or payment intangibles under the Delaware UCC and proceeds
thereof.
(iii) A Uniform Commercial Code financing statement having
been filed in the appropriate recording offices, the security interest (as such
term is defined in Section 1-201(37) of the Relevant UCC) in favor of the
Trustee in the Receivables and proceeds thereof has been perfected, and under
the Relevant UCC no other security interest of any other creditor of the
Transferor will be equal or prior to the security interest of the Trustee in
such Receivables and the proceeds thereof.
EXHIBIT J
FORM OF REASSIGNMENT OF RECEIVABLES IN REMOVED ACCOUNTS
REASSIGNMENT NO. __ OF RECEIVABLES IN REMOVED ACCOUNTS, dated as of
___________, by and between METRIS RECEIVABLES, INC. (the "Transferor") and U.S.
BANK NATIONAL ASSOCIATION, AS TRUSTEE (the "Trustee"), pursuant to the Pooling
and Servicing Agreement referred to below.
WITNESSETH:
WHEREAS, the Transferor, the Trustee and Direct Merchants
Credit Card Bank, National Association, as Servicer (the "Servicer"), are
parties to the Second Amended and Restated Pooling and Servicing Agreement,
dated as of January 22, 2002 (hereinafter as such agreement may have been, or
may from time to time be, amended, supplemented or otherwise modified, the
"Pooling and Servicing Agreement");
WHEREAS, pursuant to the Pooling and Servicing Agreement, the
Transferor wishes to designate Removed Accounts, and the Transferor wishes to
cause the Trustee to reconvey its right, title and interest in and to the
Receivables of such Removed Accounts, whether existing on the Removal Cut-Off
Date or thereafter created, to the Transferor pursuant to this Reassignment and
the Pooling and Servicing Agreement; and
WHEREAS, the Trustee is willing to make such reconveyance
subject to the terms and conditions hereof.
NOW, THEREFORE, the Transferor and the Trustee hereby agree as
follows:
1. Defined Terms. All capitalized terms used herein shall have
the meanings ascribed to them in the Pooling and Servicing Agreement unless
otherwise defined herein.
"Removal Cut-Off Date" shall mean, with respect to the Removed
Accounts, __________.
"Removal Date" shall mean, with respect to the Removed Accounts,________.
"Removed Accounts" shall mean the Removed Accounts, as defined
in the Pooling and Servicing Agreement, that are designated hereby and listed on
Schedule 1 hereto.
2. Designation of Removed Accounts. The Transferor delivers
herewith an Account Schedule containing a true and complete list of the Removed
Accounts. Such Account Schedule is incorporated into and made part of this
Reassignment, shall be Schedule 1 to this Reassignment and shall supplement
Schedule 1 to the Pooling and Servicing Agreement.
3. Reconveyance of Receivables.
(e) The Trustee does hereby reconvey to the Transferor, without recourse, all of
the Trustee's right, title and interest in, to and under, and the Trustee does
hereby release its lien on and security interest in, (i) the Receivables
existing in the Removed Accounts at the close of business on the Removal Cut-Off
Date and thereafter created from time to time in the Removed Accounts, (ii) all
monies and investments due or to become due with respect to all of the foregoing
(including, without limitation, the right to any Finance Charge Receivables, any
Collections and any Recoveries), and (iii) all proceeds of all of the foregoing.
(f) In connection with the foregoing reconveyance, the Trustee agrees to record
and file one or more termination statements (and financing statements or
amendments) as may be reasonably requested by the Transferor.
4. Representations and Warranties of the Transferor.
The Transferor hereby represents and warrants to the Trustee on the Removal
Date that:
(a) No selection procedure was used by the Transferor that is
materially adverse to the interests of the Investor Securityholders in selecting
the Removed Accounts.
(b) The removal of the Receivables in the Removed Accounts on
the Removal Date will not, in the reasonable belief of the Transferor, cause,
immediately or with the passage of time, a Pay Out Event to occur.
5. Ratification of the Pooling and Servicing Agreement. The
Pooling and Servicing Agreement is hereby ratified, and all references to the
"Pooling and Servicing Agreement," to "this Agreement" and "herein" shall be
deemed from and after the Removal Date to be a reference to the Pooling and
Servicing Agreement as supplemented and amended by this Reassignment. Except as
expressly amended hereby, all the representations, warranties, terms, covenants
and conditions of the Pooling and Servicing Agreement shall remain unamended and
shall continue to be, and shall remain, in full force and effect in accordance
with its terms and except as expressly provided herein shall not constitute or
be deemed to constitute a waiver of compliance with or consent to non-compliance
with any term or provision of the Pooling and Servicing Agreement.
6. Counterparts. This Reassignment may be executed in
any number of counterparts, all of which taken together shall constitute one
and the same instrument.
7. GOVERNING LAW. THIS REASSIGNMENT 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. The
undersigned hereby declare that it is their intention that this Reassignment
shall be regarded as made under the laws of the State of Delaware and that the
laws of said State shall be applied in interpreting its provisions in all cases
where legal interpretation shall be required. Each of the parties hereto agrees
(a) that this Reassignment, entered into in accordance with the terms and
conditions of the Pooling and Servicing Agreement, involves at least
$100,000.00, and (b) that this Reassignment has been entered into by the parties
hereto in express reliance upon 6 Del. C. ss. 2708. Each of the parties hereto
hereby irrevocably and unconditionally agrees (a) to be subject to the
jurisdiction of the courts of the State of Delaware and of the federal courts
sitting in the State of Delaware, and (b) (1) to the extent such party is not
otherwise subject to service of process in the State of Delaware, to appoint and
maintain an agent in the State of Delaware as such party's agent for acceptance
of legal process, and (2) that, to the fullest extent permitted by applicable
law, service of process may also be made on such party by prepaid certified mail
with a proof of mailing receipt validated by the United States Postal Service
constituting evidence of valid service, and that service made pursuant to (b)
(1) or (2) above shall, to the fullest extent permitted by applicable law, have
the same legal force and effect as if served upon such party personally within
the State of Delaware. For purposes of implementing the parties' agreement to
appoint and maintain an agent for service of process in the State of Delaware,
each such party that has not as of the date hereof already duly appointed such
an agent does hereby appoint RL&F Service Corp., One Xxxxxx Square, Tenth Floor,
Wilmington, New Castle County, Delaware 19801, as such agent.
[The remainder of this page is left blank intentionally.]
IN WITNESS WHEREOF, the Trustee and the Transferor each has
caused this Reassignment to be duly executed by their respective officers as of
the day and year first written above.
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:
Name:
Title:
METRIS RECEIVABLES, INC.,
as Transferor
By:
Name:
Title:
Agreed and acknowledged:
DIRECT MERCHANTS CREDIT CARD BANK,
NATIONAL ASSOCIATION,
as Servicer
By:
Name:
Title:
Schedule 1
SCHEDULE OF REMOVED ACCOUNTS
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS.....................................................1
Section 1.1. Definitions.....................................................1
Section 1.2. Other Definitional Provisions..................................19
ARTICLE II CONVEYANCE OF RECEIVABLES; ISSUANCE OF SECURITIES..............21
Section 2.1. Conveyance of Receivables......................................21
Section 2.2. Acceptance by Trustee..........................................22
Section 2.3. Representations and Warranties of the Transferor...............22
Section 2.4. Representations and Warranties of the Transferor Relating to the
Agreement and the Receivables..................................25
Section 2.5. Covenants of the Transferor....................................29
Section 2.6. Addition of Accounts...........................................30
Section 2.7. Removal of Accounts............................................35
Section 2.8. Discount Option................................................36
Section 2.9. Covenants of the Transferor with Respect to the Purchase
Agreement......................................................37
Section 2.10. Receivables in Defaulted Accounts..............................37
ARTICLE III ADMINISTRATION AND SERVICING OF RECEIVABLES....................39
Section 3.1. Acceptance of Appointment and Other Matters Relating
to the Servicer................................................39
Section 3.2. Servicing Compensation.........................................40
Section 3.3. Representations and Warranties of the Servicer.................41
Section 3.4. Reports and Records for the Trustee............................43
Section 3.5. Annual Servicer's Certificate..................................44
Section 3.6. Annual Independent Accountants' Servicing Report...............45
Section 3.7. Tax Treatment..................................................45
Section 3.8. Adjustments....................................................45
Section 3.9. Notices to DMCCB...............................................46
ARTICLE IV RIGHTS OF SECURITYHOLDERS AND ALLOCATION AND APPLICATION
OF COLLECTIONS.................................................47
Section 4.1. Rights of Securityholders......................................47
Section 4.2. Establishment of Accounts......................................47
Section 4.3. Collections and Allocations....................................50
ARTICLE V [ARTICLE V IS RESERVED AND SHALL BE SPECIFIED IN ANY
SUPPLEMENT WITH RESPECT TO ANY SERIES].........................53
ARTICLE VI THE SECURITIES.................................................54
Section 6.1. The Securities.................................................54
Section 6.2. Authentication of Securities...................................54
Section 6.3. Registration of Transfer and Exchange of Securities............55
Section 6.4. Mutilated, Destroyed, Lost or Stolen Securities................58
Section 6.5. Persons Deemed Owners..........................................58
Section 6.6. Appointment of Paying Agent....................................59
Section 6.7. Access to List of Securityholders' Names and Addresses.........59
Section 6.8. Authenticating Agent...........................................60
Section 6.9. New Issuances..................................................61
Section 6.10. Book-Entry Securities..........................................63
Section 6.11. Notices to Clearing Agency.....................................64
Section 6.12. Definitive Securities..........................................64
Section 6.13. Global Security; Euro-Security Exchange Date...................65
Section 6.14. Meetings of Securityholders....................................65
ARTICLE VII OTHER MATTERS RELATING TO THE TRANSFEROR.......................66
Section 7.1. Liability of the Transferor....................................66
Section 7.2. Merger or Consolidation of, or Assumption of the Obligations of,
the Transferor.................................................66
Section 7.3. Limitation on Liability........................................67
Section 7.4. Liabilities....................................................67
ARTICLE VIII OTHER MATTERS RELATING TO THE SERVICER.........................69
Section 8.1. Liability of the Servicer......................................69
Section 8.2. Merger or Consolidation of, or Assumption of the Obligations of,
the Servicer...................................................69
Section 8.3. Limitation on Liability of the Servicer and Others.............69
Section 8.4. Servicer Indemnification of the Transferor, the Trust
and the Trustee................................................70
Section 8.5. The Servicer Not to Resign.....................................71
Section 8.6. Access to Certain Documentation and Information Regarding
the Receivables................................................71
Section 8.7. Delegation of Duties...........................................71
ARTICLE IX PAY OUT EVENTS.................................................73
Section 9.1. Pay Out Events.................................................73
Section 9.2. Additional Rights Upon the Occurrence of Certain Events........73
ARTICLE X SERVICER DEFAULTS..............................................76
Section 10.1. Servicer Defaults..............................................76
Section 10.2. Trustee to Act; Appointment of Successor.......................78
Section 10.3. Notification to Securityholders................................79
Section 10.4. Waiver of Past Defaults........................................80
ARTICLE XI THE TRUSTEE....................................................81
Section 11.1. Duties of Trustee..............................................81
Section 11.2. Certain Matters Affecting the Trustee..........................82
Section 11.3. Trustee Not Liable for Recitals in Securities..................84
Section 11.4. [Reserved].....................................................84
Section 11.5. The Servicer to Pay Trustee's Fees and Expenses................84
Section 11.6. Eligibility Requirements for Trustee...........................85
Section 11.7. Resignation or Removal of Trustee..............................85
Section 11.8. Successor Trustee..............................................86
Section 11.9. Merger or Consolidation of Trustee.............................86
Section 11.10. Appointment of Co-Trustee or Separate Trustee..................86
Section 11.11. Tax Returns....................................................87
Section 11.12. Trustee May Enforce Claims Without Possession of Securities....88
Section 11.13. Suits for Enforcement..........................................88
Section 11.14. Rights of Securityholders to Direct Trustee....................88
Section 11.15. Representations and Warranties of Trustee......................89
Section 11.16. Maintenance of Office or Agency................................89
ARTICLE XII TERMINATION....................................................90
Section 12.1. Termination of Trust...........................................90
Section 12.2. Optional Termination...........................................91
Section 12.3. Final Payment with Respect to any Series.......................92
Section 12.4. Termination Rights of Holder of the Exchangeable Transferor
Security.......................................................93
ARTICLE XIII MISCELLANEOUS PROVISIONS.......................................94
Section 13.1. Amendment......................................................94
Section 13.2. Protection of Right, Title and Interest to Trust...............96
Section 13.3. Limitation on Rights of Securityholders........................96
Section 13.4. Governing Law..................................................97
Section 13.5. Notices........................................................97
Section 13.6. Severability of Provisions.....................................98
Section 13.7. Assignment.....................................................98
Section 13.8. Securities Non-Assessable and Fully Paid.......................98
Section 13.9. Further Assurances.............................................98
Section 13.10. No Waiver; Cumulative Remedies.................................99
Section 13.11. Counterparts...................................................99
Section 13.12. Third-Party Beneficiaries......................................99
Section 13.13. Actions by Securityholders.....................................99
Section 13.14. Rule 144A Information.........................................100
Section 13.15. Merger and Integration........................................100
Section 13.16. Headings......................................................100
Section 13.17. Nonpetition Covenant..........................................100
An extra section break has been inserted above this paragraph. Do not delete
this section break if you plan to add text after the Table of
Contents/Authorities. Deleting this break will cause Table of
Contents/Authorities headers and footers to appear on any pages following the
Table of Contents/Authorities.
