RECEIVABLES PURCHASE AGREEMENT
RECEIVABLES PURCHASE AGREEMENT, dated as of December 9, 1998
(the "Agreement"), by and between METRIS COMPANIES INC., a Delaware corporation
("Metris" or the "Seller"), and METRIS ASSET FUNDING CO., a Delaware corporation
(the "Buyer").
WITNESSETH:
WHEREAS, pursuant to that certain Amended and Restated Bank
Receivables Purchase Agreement dated as of July 30, 1998 (the "Bank Receivables
Purchase Agreement") between Metris and Direct Merchants Credit Card Bank,
National Association, a national banking association (the "Bank"), the Seller
purchases from time to time revolving credit card receivables (including,
without limitation, MasterCard and Visa credit card receivables); and
WHEREAS, the Buyer wishes to purchase from time to time
revolving credit card receivables acquired by the Seller on or after the Closing
Date in connection with the Accounts; and
WHEREAS, the Seller desires to sell and assign from time to
time such receivables to the Buyer upon the terms and conditions hereinafter set
forth; and
WHEREAS, the Buyer is an Affiliate of the Seller;
NOW, THEREFORE, it is hereby agreed by and between the Buyer
and the Seller as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. For all purposes of this Agreement,
except as otherwise expressly provided herein or unless the context otherwise
requires, capitalized terms used herein shall have the following meanings
assigned to them:
"Conveyed Property" shall have the meaning set forth in Section 2.1(a).
"Credit Adjustment" shall have the meaning set forth in Section 3.2(b).
"Involuntary Case" shall have the meaning set forth in Section 2.1(c).
"Purchase Price" shall have the meaning set forth in Section 3.1.
"Related Security" means all of the Seller's right, title and interest in,
to and under:
(i) all guarantees, indemnities, warranties, insurance (and
proceeds and premium refunds thereof) or other agreements or arrangements of any
kind from time to time supporting or securing payment of a Receivable, whether
pursuant to the Account related to such Receivable or otherwise;
(ii) all Records related to the Receivables;
(iii) all rights and remedies of the Seller under or in
connection with the Receivables Purchase Agreements, including all financing
statements filed in connection therewith, other than those financing statements
filed in connection therewith which name the Purchaser Agents as initial
assignee; and
(iv) all Proceeds of any of the foregoing.
"Relevant UCC State" shall mean each jurisdiction in which the
filing of a UCC financing statement is necessary to perfect the
ownership interest and security interest of the Buyer established under
this Agreement.
"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 Official Body, in each case applicable to or binding upon
such Person or to which such Person is subject.
"Sale Papers" shall have the meaning set forth in Section
4.1(a).
"Secured Obligations" shall have the meaning set forth in
Section 2.1(f).
"Transfer Agreement" means the Transfer and Administration
Agreement dated as of December 9, 1998, as amended, modified or
supplemented from time to time, among the Buyer, the Bank, as
Collection Agent, Enterprise Funding Corporation, as a Purchaser, Park
Avenue Receivables Corporation, as a Purchaser, Sheffield Receivables
Corporation, as a Purchaser, The Chase Manhattan Bank, as a Bank
Investor and as PARCO Agent, Barclays Bank PLC, as a Bank Investor and
as Sheffield Agent, and NationsBank, N.A., as a Bank Investor,
Enterprise Agent, and NationsBank, N.A., as the Administrative Agent
for the Enterprise Agent and the PARCO Agent and the Sheffield Agent.
Section 1.2 Other Definitional Provisions. The words
"hereof,"' "herein" and "hereunder" and words of similar import when used in
this Agreement or any Sale Papers shall refer to this Agreement as a whole and
not to any particular provision of this Agreement; and Section, Subsection,
Schedule and Exhibit references contained in this Agreement are references to
Sections, Subsections, Schedules and Exhibits in or to this Agreement unless
otherwise specified. All capitalized terms not otherwise defined herein are
defined in the Transfer Agreement. In the event that any term or provision
contained herein shall conflict with or be inconsistent with any provisions
contained in the Transfer Agreement, the terms and provisions contained herein
shall govern with respect to this Agreement.
Section 1.3 Computation of Time Periods. Unless otherwise
stated in this Agreement, in the computation of a period of time from a
specified date to a later specified date, the word "from" means "from and
including" and the words "to" and "until" each means "to but excluding."
ARTICLE II
PURCHASE CONVEYANCE AND SERVICING OF RECEIVABLES
Section 2.1 Sale.
(a) Assets Conveyed. In consideration for the Purchase Price
and upon the terms and subject to the conditions set forth herein, the Seller
does hereby sell, assign, transfer, set-over, and otherwise convey to the Buyer,
and the Buyer does hereby purchase from the Seller, all of the Seller's right,
title and interest in, to and under (i) the Receivables now existing and
hereafter created and arising in connection with the Accounts, including,
without limitation, all accounts, general intangibles, contract rights and other
obligations of any Obligor with respect to the Receivables, now or hereafter
existing; (ii) all Collections with respect thereto; (iii) all Proceeds of such
Receivables; and (iv) the Related Security (the "Conveyed Property") immediately
upon the Seller's acquisition of rights in such Conveyed Property. The foregoing
sale, transfer, assignment, set-over and conveyance does not constitute and is
not intended to result in a creation or an assumption by the Buyer of any
obligation of the Seller in connection with the Conveyed Property or any
agreement or instrument relating thereto, including, without limitation, any
obligation to any Obligors, merchant banks, merchant clearance systems, VISA
U.S.A., Inc., MasterCard International Inc. or insurers. Each Account in
existence on the Closing Date shall be listed by account number and by the
outstanding balance as of the Cut-Off Date in an Account Schedule delivered to
the Buyer on the Closing Date.
(b) Financing Statements. In connection with the foregoing
sale, the Seller agrees to record and file promptly following the Closing Date,
at its own expense, a financing statement or statements with respect to the
Conveyed Property meeting the requirements of applicable state law in such
manner and in such jurisdictions as are necessary to perfect and protect the
interests of the Buyer created hereby under the applicable UCC against all
creditors of and purchasers from the Seller, and to deliver a file-stamped copy
of such financing statements or other evidence of such filings to the Buyer
within 10 days after the Closing Date.
(c) Bankruptcy of Seller. The Buyer shall not purchase
Receivables hereunder if the Seller shall become an involuntary party to (or be
made the subject of) any bankruptcy proceeding or any other insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings of or relating to the Seller or relating to all or substantially all
of its property (an "Involuntary Case") upon receipt by the Seller at its head
corporate office of notice of such Involuntary Case.
(d) Insolvency of Seller. The Buyer shall not purchase
Receivables hereunder if the Seller shall admit in writing its inability to pay
its debts as they are due, or the Seller shall commence a voluntary case under
the federal bankruptcy laws, as now or hereafter in effect, or any present or
future federal or state bankruptcy, insolvency or similar law, or the Seller
shall consent to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Seller or of any substantial part of its property or the Seller shall
make an assignment for the benefit of creditors or the Seller shall fail
generally to pay its debts as such debts become due or the Seller shall take
corporate action in furtherance of any of the foregoing.
(e) Marking Records. In connection with the sale and
conveyance hereunder, the Seller agrees, at its own expense, on or prior to the
Closing Date and on each Business Day thereafter, to indicate or cause to be
indicated clearly and unambiguously in its accounting records and with respect
to any Receivables purchased by the Seller from the Bank to cause the Bank to
indicate clearly and unambiguously in the Bank's accounting records that the
Conveyed Property has been sold to the Buyer pursuant to this Agreement as of
the Closing Date or such Business Day as applicable.
(f) Sale Intended; Security Interest. It is the express intent
of the Seller and the Buyer that the conveyance of the Conveyed Property by the
Seller to the Buyer pursuant to this Agreement be construed as a sale thereof by
the Seller to the Buyer. It is, further, not the intention of the Seller and the
Buyer that such conveyance be deemed a grant of a security interest in the
Conveyed Property by the Seller to the Buyer to secure a debt or other
obligation of the Seller. However, if notwithstanding the intent of the parties,
the Conveyed Property is held to continue to be property of the Seller, then (i)
this Agreement also shall be deemed to be and hereby is a security agreement
within the meaning of the UCC; (ii) this Agreement and the Seller's books and
records shall evidence the Buyer's obligation to pay the Purchase Price; and
(iii) the conveyance by the Seller provided for in this Agreement shall be
deemed to be, and the Seller hereby grants to the Buyer a security interest in
and to, all of the Seller's right, title and interest in the Conveyed Property
to secure all obligations now or hereafter arising of the Seller to the Buyer
including without limitation loans to the Seller in the amount of the Purchase
Price as set forth in this Agreement (the "Secured Obligations"). The Seller and
the Buyer shall, to the extent consistent with this Agreement, take such action
as may be necessary to ensure that if this Agreement were deemed to create a
security interest in the Conveyed Property, such security interest would be
deemed to be a perfected security interest of first priority in favor of the
Buyer under applicable law and will be maintained as such throughout the term of
this Agreement. The Seller and the Buyer may rely upon an opinion of counsel
addressed to them as to what is required to provide the Buyer with such security
interest; and any such opinion of counsel shall permit the Administrative Agent,
the Enterprise Agent, the PARCO Agent and the Sheffield Agent, on behalf of
Enterprise, PARCO and Sheffield, respectively, the Bank Investors, and any
rating agencies to rely on it.
ARTICLE III
CONSIDERATION AND PAYMENT
Section 3.1 Purchase Price. The purchase price for the
Conveyed Property (the "Purchase Price") shall be a dollar amount equal to the
aggregate amount of all Principal Receivables sold as of such date subject to
adjustment from time to time with respect to new Receivables to reflect such
factors as Buyer and Seller mutually agree will result in a Purchase Price
determined to approximate the fair market value of such new Receivables.
Section 3.2 Payment of Purchase Price.
(a) The Purchase Price for Receivables shall be paid or
provided for on the Closing Date with respect to the Receivables
existing on the Closing Date and on each Business Day thereafter on
which Receivables are transferred hereunder, as the case may be, by
payment in immediately available funds on the following Business Day.
(b) The Purchase Price shall be adjusted on a daily basis (the
"Credit Adjustment") with respect to any Receivable adjusted as
provided in Section 2.9 of the Transfer Agreement in an amount equal to
the amount of such Credit Adjustment specified in Section 2.9 of the
Transfer Agreement. If the Buyer is required to make payments pursuant
to Section 2.9 of the Transfer Agreement, the Seller shall pay the
amount so adjusted to the Buyer on the last day of the calendar month.
Section 3.3 Daily Reports. On each Business Day, the Seller
shall deliver to the Buyer a Daily Report (the "Daily Report") showing the
aggregate Purchase Price of Receivables generated, the aggregate amount, if any,
owing to the Buyer pursuant to Section 6.1 and the aggregate net amount of cash
owing for Receivables generated in each case for the period from and including
the preceding Business Day.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 Seller's Representations and Warranties.
The Seller represents and warrants to the Buyer, that:
(a) Organization and Good Standing. The Seller is a
corporation duly organized and validly existing in good standing under
the laws of the State of Delaware and has the corporate power and
authority and legal right to own its property and conduct its business
as such properties are presently owned and as such business is
presently conducted and to execute, deliver and perform its obligations
under this Agreement and each other document or instrument to be
delivered by the Seller hereunder (collectively, the "Sale Papers").
(b) Due Qualification. The Seller 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
business, and has obtained all necessary licenses and approvals with
respect to the Seller required under applicable law; provided that no
representation or warranty is made with respect to any qualifications,
licenses or approvals which the Buyer would have to obtain to do
business in any state in which the Buyer seeks to enforce any
Receivable.
(c) Due Authorization. The execution and delivery of the Sale
Papers, and the consummation of the transactions provided for herein
and therein have been duly authorized by the Seller by all necessary
corporate action on its part.
(d) Binding Obligation. Each of the Sale Papers, and the
consummation of the transactions provided for therein, constitutes a
legal, valid and binding obligation of the Seller, enforceable in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereinafter in effect, affecting the enforcement of
creditors' rights in general.
(e) No Conflicts. The execution and delivery of the Sale
Papers and the performance of the transactions contemplated thereby, do
not (i) contravene the Seller's certificate of incorporation or by-laws
or (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 Seller, except for such filings,
registrations, consents or approvals as have already been obtained and
are in full force and effect.
(f) Taxes. The Seller has filed all material tax returns
required to be filed and has paid or made adequate provision for the
payment of all material taxes, assessments and other governmental
charges due from the Seller or is contesting any such tax, assessment
or other governmental charge in good faith through appropriate
proceedings and having set up appropriate reserves.
(g) No Violation. The execution and delivery of the Sale
Papers, the performance of the transactions contemplated by the Sale
Papers and the fulfillment of the terms thereof, will not violate any
Requirements of Law applicable to the Seller, 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 Seller, or any material
indenture, contract, agreement, mortgage, deed of trust or other
material instrument to which the Seller 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 Seller, threatened against the
Seller, before any Official Body (i) asserting the invalidity of the
Sale Papers, (ii) seeking to prevent the consummation of any of the
transactions contemplated thereby, (iii) seeking any determination or
ruling that would materially and adversely affect the performance by
the Seller of its obligations thereunder or (iv) seeking any
determination or ruling that would materially and adversely affect the
validity or enforceability thereof.
(i) All Consents Required. All approvals, authorizations,
consents, orders or other actions of any Official Body required in
connection with the execution and delivery of the Sale Papers, the
performance of the transactions contemplated by the Sale Papers and the
fulfillment of the terms hereof and thereof, have been obtained.
(j) Bona Fide Receivables. The Seller 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 Seller in any document or
report delivered under this Agreement satisfies the requirements of
eligibility contained in the definition of "Eligible Receivable" set
forth in the Transfer Agreement. No adverse selection criteria have
been applied to the Receivables purchased hereunder.
(k) Place of Business. The principal executive offices of the
Seller are in St. Louis Park, Minnesota and the offices where the
Seller keeps its Records concerning the Receivables and related
Accounts are in Nebraska, Minnesota, Oklahoma, and Arizona.
(l) Use of Proceeds. No proceeds of the sale of any Receivable
hereunder received by the Seller will be used by the Seller to acquire
any security in any transaction which is subject to Section 13 or 14 of
the Securities Exchange Act of 1934, as amended.
(m) No Termination Event. No Termination Event, or Potential
Termination Event, has occurred and is continuing.
(n) Not an Investment Company. The Seller is not an
"investment company" within the meaning of the Investment Company Act
of 1940, as amended, or is exempt from all provisions of such Act.
(o) Tradenames, Etc. As of the date hereof; (i) the Seller's
chief executive office is located at the address for notices set forth
in Section 8.3; and (ii) the Seller has, within the last five (5)
years, operated only under its legal name or the tradename "Metris
Companies" and, within the last five (5) years, has not changed its
name, identity or corporate structure, merged with or into or
consolidated with any other corporation or been the subject of any
proceeding under the Bankruptcy Code.
(p) Amount of Receivables. As of the Cut-Off Date, the
aggregate outstanding balance of the Principal Receivables in existence
was at least $[ ].
(q) ERISA. Each of the Seller and its ERISA Affiliates is in
compliance in all material respects with ERISA and no lien exists in
favor of the Pension Benefit Guaranty Corporation on any of the
Receivables.
(r) Bulk Sales. No transaction contemplated by this Agreement
requires compliance with any bulk sales act or similar law.
(s) Preference; Voidability. The Seller warrants that the
conveyance of the applicable Receivables and Collections to the Buyer,
and each such conveyance, shall not have been made for or on account of
an antecedent debt owed by the Seller to the Buyer and no such transfer
is or may bc voidable under any section of the Bankruptcy Code.
(t) No Restriction on Transfer. To the best of Seller's
knowledge, no Account requires the prior written consent of an Obligor
or contains any other restriction relating to the transfer or
assignment of rights of payment under such Account (other than a
consent or waiver of such restriction that has been obtained prior to
the related purchase date).
(u) Accuracy of Information. All information heretofore
furnished by the Seller to the Buyer for purposes of or in connection
with this Agreement or any transaction contemplated hereby is, and all
such information hereafter furnished by the Seller to the Buyer will
be, true and accurate in every material respect, on the date such
information is stated or certified.
The representations and warranties set forth in this Section 4.1 shall survive
the sale of the Receivables to the Buyer. The Seller hereby represents and
warrants to the Buyer, that the representations and warranties of the Seller set
forth in this Section 4.1 are true and correct as of the Closing Date. Upon
discovery by the Seller or the Buyer of a material breach of any of the
foregoing representations and warranties, the party discovering such breach
shall give prompt written notice thereof to the other.
Section 4.2 Seller's Representations and Warranties
Regarding Receivables.
(a) Valid Sale, etc. The Seller (x) hereby represents and
warrants as of the Closing Date, with respect to the Receivables
outstanding on such date, and (y) shall be deemed to represent and
warrant as of the date of the creation or acquisition and sale to the
Buyer of any Receivables after the Closing Date with respect to such
Receivables, that:
(i) Each of this Agreement and the Bank Receivables
Purchase Agreement constitutes the legal, valid and binding
obligation of the Seller, enforceable against the Seller in
accordance with its terms, except as such enforceability may
be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or
hereafter in effect, affecting the enforcement of creditors'
rights in general.
(ii) The transfer of Receivables by the Seller to the
Buyer under this Agreement constitutes a valid sale, transfer,
assignment, set-over and conveyance to the Buyer of all right,
title and interest of the Seller in and to the Receivables,
Collections and Proceeds, whether then existing or thereafter
created and arising in connection with the Accounts, and such
Receivables will be held by the Buyer free and clear of any
Adverse Claim of any Person claiming through or under the
Seller or any of its Affiliates. This Agreement constitutes a
valid sale, transfer, assignment, set-over and conveyance to
the Buyer of all right, title and interest of the Seller in
and to the Receivables purported to be sold hereunder, whether
existing on the Closing Date or thereafter created, and the
proceeds thereof.
(iii) The Seller is not insolvent and will not be
rendered insolvent upon sale of the Receivables to the Buyer.
(iv) Immediately preceding the sale of the
Receivables and related property pursuant to this Agreement,
the Seller is (or, with respect to Receivables arising after
the date hereof, will be) the legal and beneficial owner of
all right, title and interest in and to each Receivable and
each Receivable has been or will be transferred to the Buyer
free and clear of any Adverse Claim.
(v) All consents, licenses, approvals or
authorizations of or registrations or declarations with any
Official Body requested in connection with the transfer of
such Receivables to the Buyer have been obtained.
(vi) Each Account classified as an Eligible Account
by the Seller in any document or report delivered hereunder
will satisfy the requirements contained in the definition of
Eligible Account as of the date of such document or report and
each Receivable classified as an Eligible Receivable by the
Seller in any document or report delivered hereunder will
satisfy the requirements contained in the definition of
"Eligible Receivable" as of the time of such document or
report.
(vii) Each Receivable then existing has been conveyed
to the Buyer free and clear of any Adverse Claim of any Person
claiming through or under the Seller or any of its Affiliates
and in compliance, in all material respects, with all
Requirements of Law applicable to the Seller. (b) Daily
Representations and Warranties. On each day on which any new
Receivable is
created or acquired by the Seller, the Seller shall be deemed to
represent and warrant to the Buyer that all representations and
warranties contained in Section 4.1 and Section 4.2(a) are true and
correct on and as of such date (in addition to the Closing Date) as
though made on and as of such date (except for the representation
contained in Section 4.1(p)).
(c) Notice of Breach. The representations and warranties set
forth in this Section 4.2 shall survive the sale, transfer and
assignment of the respective Receivables to the Buyer. Upon discovery
by the Seller or the Buyer of a breach of any of the representations
and warranties set forth in this Section 4.2, the party discovering
such breach shall give prompt written notice thereof to the other. The
Seller agrees to cooperate with the Buyer in attempting to cure any
such breach.
Section 4.3 Representations and Warranties of the Buyer. The
Buyer hereby represents and warrants as of the Closing Date, and shall be deemed
to represent and warrant as of the date of the creation of any Receivable sold
to the Buyer hereunder, that:
(a) Organization and Good Standing. The Buyer is a corporation
duly organized and validly existing in good standing under the laws of
the State of Delaware and has the corporate power and authority and
legal right to own its property and conduct its business as such
properties are presently owned and such business is presently conducted
and to execute, deliver, and perform its obligation's under the Sale
Papers.
(b) Due Qualification. The Buyer 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
business and has obtained all necessary licenses and approvals with
respect to the Buyer required under federal and Delaware law.
(c) Due Authorization. The execution and delivery of the Sale
Papers and the consummation of the transactions provided for in the
Sale Papers have been duly authorized by the Buyer by all necessary
corporate action on its part.
(d) No Conflicts. The execution and delivery of the Sale
Papers and the performance of the transactions contemplated thereby do
not (i) contravene the Buyer's certificate of incorporation or by-laws
or (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 Buyer, except for such
filings, registrations, consents or approvals as have already been
obtained and are in full force and effect.
(e) No Violation. The execution and delivery of the Sale
Papers, the performance of the transactions contemplated by the Sale
Papers, and the fulfillment of the terms of the Sale Papers will not
violate any Requirements of Law applicable to the Buyer, 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
Buyer, or any material indenture, contract, agreement, mortgage, deed
of trust or other material instrument to which the Buyer is a party or
by which it or its properties are bound.
(f) No Proceedings. There are no proceedings or investigations
pending or, to the best knowledge of the Buyer, threatened against the
Buyer, before any Official Body (i) asserting the invalidity of the
Sale Papers, (ii) seeking to prevent the consummation of any of the
transactions contemplated by the Sale Papers, (iii) seeking any
determination or ruling that would materially and adversely affect the
performance by the Buyer of its obligations thereunder or (iv) seeking
any determination or ruling that would materially and adversely affect
the validity or enforceability or the Sale Papers.
(g) All Consents Required. All approvals, authorizations,
consents, orders, or other actions of any Official Body required in
connection with the execution and delivery of the Sale Papers, the
performance of the transactions contemplated by the Sale Papers, and
the fulfillment of the terms of the Sale Papers have been obtained.
(h) Solvency. The Buyer is not insolvent and will not be
rendered insolvent upon the purchase of the Receivables.
The representations and warranties set forth in this Section 4.3 shall survive
the sale of the Receivables to the Buyer. The Buyer hereby represents and
warrants to the Seller that the representations and warranties of the Buyer set
forth in Section 4.3 are true and correct as of the Closing Date. Upon discovery
by the Buyer or the Seller of a breach of any of the foregoing representations
and warranties, the party discovering such breach shall give prompt written
notice to the other.
ARTICLE V
COVENANTS OF SELLER AND BUYER
Section 5.1 Seller Covenants. The Seller hereby
covenants that:
(a) Receivables to be Accounts or General Intangibles. The
Seller will take no action to cause any Receivable to be evidenced by
any "instrument" or to constitute "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 Seller will take no action to cause any Receivable
to be anything other than an "account" or a "general intangible" (as
defined in the UCC as in effect in the Relevant UCC State).
(b) Security Interests. Except for the conveyances hereunder,
the Seller will not sell, pledge, assign or transfer to any other
Person, or grant, create, incur, assume or suffer to exist any Adverse
Claim, on any Receivable, whether now existing or hereafter created, or
any interest therein; the Seller will immediately notify the Buyer of
the existence of any Adverse Claim on any Receivable; and the Seller
shall defend the right, title and interest of the Buyer in, to and
under the Receivables, whether now existing or hereafter created,
against all claims of third parties claiming through or under the
Seller.
(c) Periodic Finance Charges and Other Fees. Except as
otherwise required by any Requirement of Law, or as is deemed by the
Seller in its sole discretion to be necessary in order to maintain its
credit card business on a competitive basis, it shall not at any time
reduce the annual percentage rates of the periodic finance charges
assessed on the Receivables or other fees charged on any of the
Accounts if, as a result of any such reduction, either (i) the Seller's
reasonable expectation is that such reduction will cause a Termination
Event to occur or (ii) such reduction is not also applied to any
comparable segment of consumer revolving credit card accounts owned by
the Seller that have characteristics the same as, or substantially
similar to, such Accounts.
(d) Credit and Collection Policy and Account Agreements. The
Seller shall comply with the Credit and Collection Policy in regard to
the Receivables and the related Accounts, except insofar as any failure
to so comply could not be reasonably expected to impair the
collectibility of the Receivables, on the whole, or a substantial
amount thereof, or otherwise have a Material Adverse Effect and the
Receivables and related Accounts shall be serviced in all respects in a
manner consistent with and similar to the revolving credit consumer
credit card amounts and receivables conveyed to the Metris Master
Trust.
(e) Delivery of Collections. In the event that the Seller
receives Collections, the Seller agrees to deposit such Collections
into the Collection Account as soon as practicable after the receipt
thereof, but in no event later than the second Business Day following
the Date of Processing thereof.
(f) Conveyance of Receivables. Except as provided in Section
8.5, the Seller covenants and agrees that it will not convey, assign,
exchange or otherwise transfer any Receivable arising in an Account, to
any Person other than the Buyer.
(g) Notice of Adverse Claims. The Seller shall notify the
Buyer promptly after becoming aware of any Adverse Claim on any
Receivable.
(h) Separate Business. The Seller will not permit its assets
to be commingled with those of the Buyer and shall maintain separate
corporate records and books of account from those of the Buyer. The
Seller will not conduct its business in the name of the Buyer and will
cause the Buyer 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 Seller will provide for its own operating
expenses and liabilities from its own funds. The Seller 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 the Buyer, except that
the organizational expenses of the Buyer may be paid by the Seller. The
Seller shall cause the Buyer not to hold itself out, or permit itself
to be held out, as having agreed to pay, or as being liable for, the
debts of the Seller. The Seller will maintain an arm's length
relationship with the Buyer with respect to any transactions between
the Seller, on the one hand, and the Buyer, on the other.
(i) Conduct of Business. The Seller will do, and will cause
each of its Subsidiaries to do, all things necessary to remain duty
incorporated, validly existing and in good standing as a domestic
corporation in its jurisdiction of incorporation and will maintain all
requisite authority to conduct its business in each jurisdiction in
which its business is conducted.
(j) Compliance with Laws. The Seller shall comply with all
laws, rules, regulations, orders, writs, judgments, injunctions,
decrees or awards to which it or its respective properties may be
subject, except where such failure to comply could reasonably be
expected to have, individually or in the aggregate, a Material Adverse
Effect.
(k) Furnishing of Information and Inspection of Records. The
Seller shall furnish to the Buyer from time to time such information
with respect to the Receivables as the Buyer may reasonably request,
including, without limitation, listings identifying the Obligor and the
outstanding principal balance for each Receivable. The Seller shall, at
any time and from time to time during regular business hours and upon
reasonable notice permit the Buyer, or its agents or representatives,
(i) to examine and make copies of and take abstracts from all Records,
to visit the offices and properties of the Seller and to discuss
matters relating to Receivables or the Seller's performance hereunder
and under the other Transaction Documents to which it is a party with
any of the officers, directors, employees or independent public
accountants of the Seller having knowledge of such matters and (ii) to
conduct as many audits of the Receivables during the term of this
Agreement as the Buyer may reasonably request; provided, however, that
the Seller shall only be required to reimburse the Buyer for the cost
of one such audit per year.
(l) Keeping of Records and Books of Account. The Seller will
maintain a system of accounting established and administered in
accordance with generally accepted accounting principles, consistently
applied, and will maintain and implement administrative and operating
procedures (including, without limitation, an ability to recreate
records evidencing Receivables in the event of the destruction of the
originals thereof), and keep and maintain, all documents, books,
records and other information reasonably necessary or advisable for the
collection of all Receivables (including, without limitation, records
adequate to permit the daily identification of each new Receivable and
all Collections of and adjustments to each existing Receivable). The
Seller will give the Administrative Agent notice of any material change
in the administrative and operating procedures of the Seller referred
to in the previous sentence.
(m) Performance and Compliance with Receivables and Accounts.
The Seller at its expense will timely and fully perform and comply with
all material provisions, covenants and other promises required to be
observed by it under the Accounts related to the Receivables.
(n) ERISA. The Seller shall promptly give the Administrative
Agent written notice upon becoming aware that the Seller or any of its
Subsidiaries is not in compliance in all material respects with ERISA
or that any ERISA lien on any of the Receivables exists.
(o) Bank Receivables Purchase Agreement. The Seller will not
amend the Bank Receivables Purchase Agreement in any manner materially
adverse to the interests of the Buyer with respect to the Receivables
without obtaining the prior written consent of the Buyer.
(p) Year 2000 Compliance. The Seller will promptly notify the
Buyer in the event the Seller discovers or determines that any computer
application (including those of its suppliers and vendors) that is
material to its or any of its Subsidiaries' business and operations
will not be Year 2000 compliant on a timely basis, except to the extent
that such failure could not reasonably be expected to have a Material
Adverse Effect.
Section 5.2 Buyer Covenant Regarding Sale Treatment. The Buyer
will not (i) account for or otherwise treat, the transactions contemplated by
this Agreement in any manner other than as a sale of the Conveyed Property by
the Seller to the Buyer or account for (other than for tax purposes) or
otherwise treat the transactions contemplated hereby in any manner other than as
a sale of the Conveyed Property by the Seller to the Buyer and shall disclose
(in a footnote or otherwise) in all of its financial statements (including any
such financial statements consolidated with any other Person's financial
statements) the existence and nature of the transaction contemplated hereby and
the interest of the Buyer in the Affected Assets.
Section 5.3 Indemnification by the Seller. Without limiting
any other rights which the Buyer may have hereunder or under applicable law, the
Seller hereby agrees to indemnify the Buyer and any successors and permitted
assigns and their respective officers, directors and employees (collectively,
"Indemnified Parties") from and against any and all damages, losses, claims,
liabilities, costs and expenses, including, without limitation, reasonable
attorneys' fees and disbursements (all of the foregoing being collectively
referred to as "Indemnified Amounts") awarded against or incurred by any of them
in any action or proceeding between any of the Indemnified Parties and any third
party or otherwise arising out of or as a result of this Agreement or the other
Transaction Documents or any transaction contemplated hereby or thereby,
excluding, however, (i) Indemnified Amounts to the extent resulting from
negligence or willful misconduct on the part of an Indemnified Party or (ii)
recourse (except as otherwise specifically provided in this Agreement) for
uncollectible Receivables. Without limiting the generality of the foregoing, the
Seller shall indemnify each Indemnified Party for Indemnified Amounts relating
to or resulting from:
(a) any representation or warranty made by the Seller or any
officers of the Seller under or in connection with this Agreement, the
Receivable Purchase Agreements, any of the other Transaction Documents,
any Investor Report or any other information or report delivered by the
Seller pursuant hereto, which shall have been false or incorrect in any
material respect when made or deemed made;
(b) the failure by the Seller to comply with any applicable
law, rule or regulation with respect to any Receivable or the related
Account, or the nonconformity of any Receivable or the related Account
with any such applicable law, rule or regulation;
(c) the failure (i) to vest and maintain vested in the Buyer,
an undivided first priority, perfected percentage ownership interest in
the Affected Assets free and clear of any Adverse Claim or (ii) to
create or maintain a valid and perfected first priority security
interest in favor of the Buyer, in the Affected Assets, free and clear
of any Adverse Claim;
(d) the failure to file, or any delay in filing, financing
statements, continuation statements, or other similar instruments or
documents under the UCC of any applicable jurisdiction or other
applicable laws with respect to any of the Affected Assets;
(e) the transfer of an ownership interest in any
Receivable other than an Eligible Receivable;
(f) the failure of the Seller to pay when due any taxes,
including without limitation, sales, excise or personal property taxes
payable in connection with any of the Receivables;
(g) the commingling by the Seller of Collections of
Receivables at any time with other funds;
(h) any failure of the Seller to give reasonably equivalent
value to the Bank, in consideration of the transfer to the Seller from
the Bank, of any Receivable, or any attempt by any Person to void,
rescind or set aside any such transfer under statutory provisions or
common law or equitable action, including, without limitation, any
provision of the Bankruptcy Code; or
(i) any action taken by the Seller in the enforcement or
collection of any Receivable.
ARTICLE VI
REPURCHASE OBLIGATION
Section 6.1 Mandatory Repurchase.
(a) Breach of Warranty. In the event of a breach with respect
to a Receivable of any of the representations and warranties set forth
in Subsections (a), (b), (c), (d), (e) or (j) of Section 4.1 or
Subsections (a) or (b) of Section 4.2, or in the event that a
Receivable is not an Eligible Receivable on the date of its transfer to
the Buyer as a result of the failure to satisfy the conditions set
forth in the definition of "Eligible Receivable", such Receivable shall
be designated an "Ineligible Receivable" and the Seller shall pay to
the Buyer an amount in cash equal to the purchase price paid for any
such Ineligible Receivable by the Buyer to the Seller plus any costs
and expenses of the Buyer associated therewith less any amounts
collected by Buyer on such Receivable. Such payment must be made by the
close of business on the next succeeding Business Day following the day
such Receivable has been designated an Ineligible Receivable; provided,
however, that prior to the Termination Date (except in the case of a
breach of any of the representations listed in the first sentence
above) such amount may be offset against any amounts due from the Buyer
to the Seller with respect to the Purchase Price for Receivables sold
to the Buyer on such day. The obligation of the Seller set forth in
this Section 6.1 shall constitute the sole remedy respecting any breach
of the representations and warranties set forth in the above-referenced
Sections or failure to meet the conditions set forth in the definition
of "Eligible Receivable" with respect to such Receivable available to
the Buyer.
(b) Reassignment of the Sold Assets. In the event of a breach
of any of the representations and warranties set forth in Sections
4.1(a), (b) and (c) and 4.2(a)(i) and (ii), the Buyer by notice given
in writing to the Seller may direct the Seller to accept reassignment
of the Receivables at the amount specified below within 60 days of such
notice (or within such longer period as may be specified in such
notice), and the Seller shall be obligated to accept reassignment of
the Receivables within such applicable period on and conditions set
forth below; provided, however, that no such reassignment shall be
required to be made if, at any time during such applicable period, the
Seller delivers to the Buyer an officer's certificate stating that the
representations and warranties contained in Section 4.1(a), (b) and (c)
and 4.2(a)(i) and (ii) shall then be true and correct in all material
respects as if made on such day. The Seller shall pay to the Buyer on
the day of such reassignment an amount equal to the Aggregate Unpaids
plus the Transferor's Percentage Interest. On the day on which such
amount has been paid, each Receivable shall be sold and reassigned to
the Seller, and the Buyer shall execute and deliver such instruments of
sale and assignment, in each case without recourse, representation or
warranty, as shall be reasonably requested by the Seller to vest in the
Seller, or its designee or assignee, all right, title and interest of
the Buyer in and to each Receivable. The obligation of the Seller to
purchase each Receivable pursuant to this Section 6.1 shall constitute
the sole remedy available to the Buyer for a breach of the
representations and warranties contained in Section 4.1(a), (b) and (c)
and 4.2(a)(i) and (ii).
Section 6.2 Conveyance of Reassigned Receivable. Upon the
request of the Seller, the Buyer shall execute and deliver to the Seller a
reconveyance substantially in such form and upon such terms as shall be
acceptable to the Seller, pursuant to which the Buyer evidences the conveyance
to the Seller of all of the Buyer's right, title, and interest in any
Receivables reconveyed to the Seller pursuant to Section 6.1(b). The Buyer shall
(and shall cause the Administrative Agent and each Purchaser Agent to) execute
such other documents or instruments of conveyance or take such other actions as
the Seller may reasonably require to effect any repurchase of Receivables
pursuant to Section 6.1.
Section 6.3 Sales are Non-Recourse. Other than the obligations
to repurchase Receivables under the limited circumstances set forth in Section
6.1 and to make payments with respect to Credit Adjustments under Section 3.2(b)
and the indemnity provided in Section 5.3, the sales of Receivables under this
Agreement shall be without recourse to the Seller.
ARTICLE VII
CONDITIONS PRECEDENT
Section 7.1 Conditions to the Buyer's Obligations Regarding
Receivables. The obligations of the Buyer to purchase the Receivables on any
Business Day shall be subject to the satisfaction of the following conditions:
(a) All representations and warranties of the Seller contained
in this Agreement shall be true and correct on the Closing Date and
(except for the representation in Section 4.1(p)) on the day of
creation of any Receivable created thereafter with the same effect as
though such representations and warranties had been made on such date;
(b) All information concerning the Receivables provided to the
Buyer shall be true and correct in all material respects as of the
Closing Date, in the case of Receivables sold to the Buyer on the
Closing Date, or the applicable Date of Processing, in the case of
Receivables created after the Closing Date;
(c) At the Closing Date, the Seller shall have substantially
performed all other obligations required to be performed by the
provisions of this Agreement;
(d) All corporate and legal proceedings and all instruments in
connection with the transactions contemplated by this Agreement shall
be satisfactory in form and substance to the Buyer, and the Buyer shall
have received from the Seller copies of all documents (including,
without limitation, records of corporate proceedings) relevant to the
transactions herein contemplated as the Buyer may reasonably have
requested.
Section 7.2 Conditions Precedent to the Seller's Obligations.
The obligations of the Seller to sell Receivables on any Business Day shall be
subject to the satisfaction of the following conditions:
(a) All representations and warranties of the Buyer contained
in this Agreement shall be true and correct with the same effect as
though such representations and warranties had been made on such date;
(b) Payment or provision for payment of the Purchase Price in
accordance with the provisions of Section 3.2 shall have been made; and
(c) All corporate and legal proceedings and all instruments in
connection with the transactions contemplated by this Agreement shall
be satisfactory in form and substance to the Seller, and the Seller
shall have received from the Buyer copies of all documents (including,
without limitation, records of corporate proceedings) relevant to the
transactions herein contemplated as the Seller may reasonably have
requested.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.1 Amendment. This Agreement and any other Sale
Papers and the rights and obligations of the parties hereunder may not be
changed orally, but only by an instrument in writing signed by the Buyer and the
Seller. The Seller shall provide prompt written notice of any such amendment to
the Agent.
Section 8.2 Governing Law. THIS AGREEMENT AND THE OTHER SALE
PAPERS SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MINNESOTA,
WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
Section 8.3 Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered at or mailed by registered mail, return receipt requested,
to:
(a) in the case of the Buyer, to:
Metris Asset Funding Co.
000 Xxxxx Xxxxxxx 000, Xxxxx 000
Xx. Xxxxx Xxxx, Xxxxxxxxx 00000
Attention: Treasurer
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
NationsBank, N.A., Administrative Agent
Corporate Center-10th Floor
000 Xxxxx Xxxxx Xxxxxx
XXX-000-00-00
Xxxxxxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxx (NC 1-007-10-07)
Structured Finance
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
(b) in the case of the Seller, to:
Metris Companies Inc.
000 Xxxxx Xxxxxxx 000, Xxxxx 0000
Xx. Xxxxx Xxxx, Xxxxxxxxx 00000
Attention: Chief Financial Officer
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
or, as to each party, at such other address as shall be designated by such party
in a written notice to each other party.
Section 8.4 Severability of Provisions. If any one or more of
the covenants, agreements, provisions or terms of the Sale Papers 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 the Sale Papers and shall in no way affect the validity
or enforceability of the other provisions of the Sale Papers.
Section 8.5 Assignment. Notwithstanding anything to the
contrary contained herein, this Agreement may not be assigned by the Buyer or
the Seller except as contemplated by this Section 8.5 and the Transfer
Agreement; provided, however, that simultaneously with the execution and
delivery of this Agreement, the Buyer may assign its rights hereunder pursuant
to the Transfer Agreement to the (a) PARCO Agent, for the benefit of PARCO, (b)
to the Enterprise Agent for the benefit of Enterprise, (c) to the Sheffield
Agent for the benefit of Sheffield and (d) to the Bank Investors; and that
PARCO, Enterprise or Sheffield may assign any or all of its rights to any
Liquidity Provider. The Buyer hereby notifies (and the Seller hereby
acknowledges that) the Buyer, pursuant to the Transfer Agreement, has assigned
its rights hereunder to the PARCO Agent and the Enterprise Agent and the
Sheffield Agent. All rights of the Buyer hereunder may be exercised by the PARCO
Agent, the Enterprise Agent or the Sheffield Agent or their respective
assignees, to the extent of their respective rights pursuant to such
assignments.
Section 8.6 Further Assurances. The Buyer and the Seller 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 other party more
fully to effect the purposes of the Sale Papers, including, without limitation,
the execution of any financing statements or continuation statements or
equivalent documents relating to the Receivables for filing under the provisions
of the UCC or other laws of any applicable jurisdiction.
Section 8.7 No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the Buyer or the Seller, 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 8.8 Counterparts. The Sale Papers may each be executed
in two or more counterparts including telecopy transmission thereof (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 8.9 Binding Effect; Third-Party Beneficiaries. The
Sale Papers will inure to the benefit of and be binding upon the parties hereto
and their respective successors and permitted assigns.
Section 8.10 Merger and Integration. Except as specifically
stated otherwise herein, the Sale Papers set forth the entire understanding of
the parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by the Sale Papers.
Section 8.11 Headings. The headings herein are for
purposes of reference only and shall not otherwise affect the meaning or
interpretation of any provision hereof.
Section 8.12 Schedules and Exhibits. The schedules and
exhibits attached hereto and referred to herein shall constitute a part of this
Agreement and are incorporated into this Agreement for all purposes.
Section 8.13 No Bankruptcy Petition Against the Buyer. The
Seller hereby covenants and agrees that, prior to the date which is one year and
one day after the payment in full of all Aggregate Unpaids, it will not
institute against or join any other Person in instituting against the Buyer any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
or other similar proceeding under die laws of the United States or any state of
the United States.
Section 8.14 Merger or Consolidation of, or Assumption of the
Obligations of the Seller. The Seller 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:
(a) the corporation formed by such consolidation or into which
the Seller is merged or the Person which acquires by conveyance or
transfer the properties and assets of the Seller substantially as an
entirety shall be a corporation organized and existing under the laws
of the United States of America or any State or the District of
Columbia and, if the Seller is not the surviving entity, shall
expressly assume, by an agreement supplemental hereto, executed and
delivered to the Buyer in form satisfactory to the Buyer, the
performance of every covenant and obligation of the Seller hereunder
(to the extent that any right, covenant or obligation of the Seller, 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); and
(b) the Seller shall have delivered to the Buyer (i) an
officer's certificate that such consolidation, merger, conveyance or
transfer and such supplemental agreement comply with this Section 8 .14
and that all conditions precedent herein provided for relating to such
transaction have been complied with and (ii) the Company and Bank
Investors shall have received an opinion of legal counsel reasonably
acceptable to them that the Transaction Documents to which Seller is a
party are legal, valid and binding obligations of such successor
corporation, enforceable against such successor corporation in
accordance with their terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance,
fraudulent transfer and other similar laws affecting creditors' rights
generally, and to the application of general principles of equity; and
(c) there shall exist no Termination Event or Potential
Termination Event.
Section 8.15 Protection of Right, Title and Interest to
Receivables.
(a) The Seller shall cause this Agreement, all amendments
hereto and/or all financing statements and continuation statements and
any other necessary documents covering the Seller's and the Buyer's
right, title and interest to the Receivables 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
Buyer hereunder to the Receivables and proceeds thereof. The Seller
shall deliver to the Buyer 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
Buyer shall cooperate fully with the Seller in connection with the
obligations set forth above and will execute any and all documents
reasonably required to fulfill the intent of this Subsection (a).
(b) Within 30 days after the Seller makes any change in its
name, identity or corporate structure which would make any financing
statement or continuation statement filed in accordance with Subsection
(a) materially misleading within the meaning of Section 9-402(7) of the
UCC as in effect in the Relevant UCC State, the Seller shall give the
Buyer written notice of any such change and shall file such financing
statements or amendments as may be necessary to continue the perfection
of the Buyer's security interest in the Receivables and the proceeds
thereof.
(c) The Seller will give the Buyer prompt written notice of
any relocation of any office from which it services Receivables or
keeps records concerning the Receivables or of its principal executive
office and whether, as a result of such relocation, the applicable
provisions of the UCC would require the filing of any amendment of any
previously filed financing or continuation statement or of any new
financing statement and shall file such financing statements or
amendments as may be necessary to continue the perfection of the
Buyer's security interest in the Receivables and the proceeds thereof.
The Seller will at all times maintain each office from which it
services Receivables and its principal executive office within the
United States of America.
The remainder of this page is intentionally left
blank.
IN WITNESS WHEREOF, the Buyer and the Seller each have caused
this Receivables Purchase Agreement to be duly executed by their respective
officers as of the day and year first above written.
METRIS ASSET FUNDING CO., as Buyer
By: /s/ Xxxx Xxxxxx
Its: President and Treasuer
METRIS COMPANIES INC., as Seller,
By: /s/ Xxxx Xxxxxx
Its: Senior Vice President and Treasurer
