_________________________________________________________
METRIS RECEIVABLES, INC.
Transferor
DIRECT MERCHANTS CREDIT CARD BANK, NATIONAL ASSOCIATION
Servicer
and
THE BANK OF NEW YORK (DELAWARE)
Trustee
on behalf of the Series 1997-1 Certificateholders
SERIES 1997-1 SUPPLEMENT
Dated as of May __, 1997
to
POOLING AND SERVICING AGREEMENT
Dated as of May 26, 1995
____________________________________
METRIS MASTER TRUST
$616,250,000 ____% Asset Backed
Certificates, Series 1997-1, Class A
$106,250,000 ____% Asset Backed
Certificates, Series 1997-1, Class B
$72,250,000 Floating Rate Asset Backed
Certificates, Series 1997-1, Class C
$55,250,000 0% Asset Backed Certificates,
Series 1997-1, Class D
_________________________________________________________
TABLE OF CONTENTS
SECTION 1. Designation ........................................... 1
SECTION 2. Definitions ........................................... 1
SECTION 3. Reassignment Terms .................................... 29
SECTION 4. Delivery and Payment for the Series
1997-1 Certificates ................................. 29
SECTION 5. Form of Delivery of Series 1997-1
Certificates; Denominations ......................... 29
SECTION 6. Article IV of Agreement ............................... 30
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS .............. 30
SECTION 4.4 Rights of Certificateholders .......................... 30
SECTION 4.5 Collections and Allocation; Pay-
ments on Exchangeable Transferor
Certificate ......................................... 31
SECTION 4.6 Determination of Interest for the
Series 1997-1 Certificates .......................... 32
SECTION 4.7 Determination of Principal Amounts .................... 35
SECTION 4.8 Shared Principal Collections .......................... 36
SECTION 4.9 Application of Funds on Deposit in
the Collection Account for the
Certificates ........................................ 36
SECTION 4.10 Coverage of Required Amount for the
Series 1997-1 Certificates .......................... 46
SECTION 4.11 Payment of Certificate Interest ....................... 47
SECTION 4.12 Payment of Certificate Principal ...................... 47
SECTION 4.13 Investor Charge-Offs .................................. 50
i
PAGE
SECTION 4.14 Pre-Funding Account ................................... 51
SECTION 4.15 Increases in Invested Amount .......................... 53
SECTION 4.16 Reallocated Principal Collections
for the Series 1997-1 Certifi-
xxxxx ............................................... 54
SECTION 4.17 Determination of LIBOR ................................ 55
SECTION 4.18 Payment Reserve Account ............................... 56
SECTION 4.19 Principal Funding Account ............................. 57
SECTION 4.20 Accumulation Period Reserve Ac-
count ................................................. 58
SECTION 4.21 Postponement of Accumulation Peri-
od .................................................... 60
SECTION 4.22 Defeasance ............................................ 60
SECTION 7 Article V of the Agreement ............................ 61
ARTICLE V
DISTRIBUTIONS AND REPORTS TO INVESTOR
CERTIFICATEHOLDERS ........................ 61
SECTION 5.1 Distributions ......................................... 61
SECTION 5.2 Certificateholders' Statement ......................... 64
SECTION 8. Series 1997-1 Pay Out Events .......................... 67
SECTION 9. Series 1997-1 Termination ............................. 69
SECTION 10. Legends; Transfer and Exchange;
Restrictions on Transfer of Se-
xxxx 1997-1 Certificates; Tax
Treatment ........................................... 69
SECTION 11. Compliance with Withholding Re-
quirements .......................................... 74
ii
PAGE
SECTION 12. Tax Characterization of the Class C
Certificates ........................................ 74
SECTION 13. Ratification of Agreement ............................. 75
SECTION 14. Registration of the Class A Cer-
tificates under the Securities
Exchange Act of 1934 ................................ 75
SECTION 15. Counterparts .......................................... 75
SECTION 16. GOVERNING LAW ......................................... 76
SECTION 17. Instructions in Writing ............................... 76
SECTION 18. Amendment for FASIT Purposes .......................... 76
SECTION 19. Paired Series ......................................... 76
EXHIBITS
Exhibit A-1 Form of Class A Investor Certificate
Exhibit A-2 Form of Class B Investor Certificate
Exhibit A-3 Form of Class C Investor Certificate
Exhibit A-4 Form of Class D Investor Certificate
Exhibit B Form of Monthly Certificateholder's Statement
Exhibit C Form of Investment Letter
iii
SERIES 1997-1 SUPPLEMENT, dated as of May __,
1997 (this "Series Supplement") by and among METRIS RE-
CEIVABLES, INC., a corporation organized and existing
under the laws of the State of Delaware, as Transferor
(the "Transferor"), DIRECT MERCHANTS CREDIT CARD BANK,
NATIONAL ASSOCIATION, a national banking association
organized under the laws of the United States, as Ser-
vicer (the "Servicer"), and THE BANK OF NEW YORK (DELA-
WARE), a Delaware banking corporation organized and
existing under the laws of the State of Delaware as
trustee (together with its successors in trust thereunder
as provided in the Agreement referred to below, the
"Trustee"), under the Pooling and Servicing Agreement
dated as of May 26, 1995 as amended, supplemented or
otherwise modified from time to time (the "Agreement")
among the Transferor, the Servicer and the Trustee.
Section 6.9 of the Agreement provides, among
other things, that the Transferor and the Trustee may at
any time and from time to time enter into a supplement to
the Agreement for the purpose of authorizing the issuance
by the Trustee to the Transferor, for execution and
redelivery to the Trustee for authentication, of one or
more Series of Certificates.
Pursuant to this Series Supplement, the Trans-
feror and the Trustee shall create a new Series of Inves-
tor Certificates and shall specify the Principal Terms
thereof.
SECTION 1. Designation. There is hereby
created a Series of Investor Certificates to be issued
pursuant to the Agreement and this Series Supplement to
be known generally as the "Series 1997-1 Certificates."
The Series 1997-1 Certificates shall be issued in four
Classes, which shall be designated generally as the %
Asset Backed Certificates, Series 1997-1, Class A (the
"Class A Certificates"), the % Asset Backed Certifi-
xxxxx, Series 1997-1, Class B (the "Class B Certifi-
xxxxx"), the Floating Rate Asset Backed Certificates,
Series 1997-1, Class C (the "Class C Certificates") and
the 0% Asset Backed Certificates, Series 1997-1, Class D
(the "Class D Certificates").
SECTION 2. Definitions. In the event that any
term or provision contained herein shall conflict with or
be inconsistent with any provision contained in the
Agreement, the terms and provisions of this Series Sup-
plement shall govern with respect to the Series 1997-1
Certificates. All Article, Section or subsection refer-
ences herein shall mean Articles, Sections or subsections
of the Agreement, as amended or supplemented by this
Series Supplement, except as otherwise provided herein.
All capitalized terms not otherwise defined herein are
defined in the Agreement. Each capitalized term defined
herein shall relate only to the Series 1997-1 Certifi-
xxxxx and no other Series of Certificates issued by the
Trust.
"ABC Adjusted Invested Amount" shall mean as of
any Business Day the sum of the Class A Invested Amount,
the Class B Invested Amount and the Class C Invested
Amount minus the amount then on deposit in the Principal
Funding Account.
"Accumulation Period" shall mean, unless a Pay
Out Event shall have occurred prior thereto, the period
commencing at the close of business on the last day of
the March 2001 Monthly Period or such later date as is
determined in accordance with Section 4.21 of the Agree-
ment and ending on the first to occur of (a) the com-
mencement of the Early Amortization Period and (b) the
Series 1997-1 Termination Date.
"Accumulation Period Factor" shall mean, for
any Monthly Period, a fraction, the numerator of which is
equal to the sum of the numerators with respect to all
Classes of all Series then outstanding used to calculate
the allocation percentages applicable for Principal
Collections, and the denominator of which is equal to the
sum of (a) the sum of the Class A Invested Amount, Class
B Invested Amount and Class C Invested Amount, (b) the
sum of the numerators with respect to all Classes of all
Series then outstanding used to calculate the allocation
percentages applicable for Principal Collections (other
than Series 1997-1 and any Class of any such Series
retained by the Transferor) which are not expected to be
in their revolving periods during such Monthly Period,
and (c) the sum of the numerators used to calculate the
allocation percentages applicable for Principal Collec-
tions of all Classes of other outstanding Series which
are not allocating Shared Principal Collections and are
expected to be in their revolving periods during such
Monthly Period.
2
"Accumulation Period Length" shall have the
meaning assigned such term in Section 4.21 of the Agree-
ment.
"Accumulation Period Reserve Account" shall
have the meaning specified in Section 4.20(a) of the
Agreement.
"Accumulation Shortfall" shall initially mean
zero and thereafter shall mean, with respect to any
Monthly Period during the Accumulation Period, the ex-
cess, if any, of the Controlled Deposit Amount for the
previous Monthly Period over the amount deposited into
the Principal Funding Account pursuant to Section 4.12 of
the Agreement with respect to the Series 1997-1 Certifi-
xxxxx for the previous Monthly Period.
"Additional Interest" shall mean, at any time
of determination, the sum of the Class A Additional
Interest, Class B Additional Interest and Class C Addi-
tional Interest.
"Adjusted Invested Amount" shall mean as of any
Business Day the Invested Amount minus the sum of the
amount then on deposit in the Principal Funding Account
and the Series Allocation Percentage of the amount then
on deposit in the Excess Funding Account.
"Amortization Period" shall mean the Accumula-
tion Period or the Early Amortization Period.
"Amortization Period Commencement Date" shall
mean the earlier of the first day of the Accumulation
Period and the Pay Out Commencement Date.
"Available Investor Principal Collections"
shall mean, with respect to any Monthly Period, an amount
equal to the sum of (i) an amount equal to the Fixed/
Floating Allocation Percentage of all Principal Collec-
tions (less the amount of Reallocated Principal Collec-
tions) received during such Monthly Period, (ii) any
amount on deposit in the Excess Funding Account allocated
to the Series 1997-1 Certificates pursuant to subsection
4.9(d) of the Agreement with respect to such Monthly
3
Period and, on and after the Pay Out Commencement Date,
any amount on deposit in the Pre-Funding Account, (iii)
the aggregate amount allocated with respect to the Inves-
tor Default Amount and the Series Allocation Percentage
of any Adjustment Payments paid pursuant to subsections
4.9(a)(v) and 4.9(a)(vi) of the Agreement with respect to
such Monthly Period, any reimbursements of unreimbursed
Investor Charge-Offs pursuant to subsections 4.9(a)(vii),
(x), (xi) and (xii) of the Agreement with respect to such
Monthly Period and further in each case, pursuant to sub-
sections 4.10(a) and (b), 4.16(a), (b) and (c), 4.19(b)
and 4.20(b), (c) and (d) of the Agreement, and (iv) the
aggregate Shared Principal Collections allocated to the
Series 1997-1 Certificates pursuant to Section 4.8 of the
Agreement with respect to such Monthly Period.
"Available Reserve Account Amount" shall mean,
with respect to any Transfer Date, the lesser of (a) the
amount on deposit in the Accumulation Period Reserve
Account as of such date (before giving effect to any
withdrawal made or to be made pursuant to subsection
4.20(c) of the Agreement from the Accumulation Period Re-
serve Account on such Transfer Date) and (b) the Required
Reserve Account Amount for such Transfer Date.
"Available Series 1997-1 Finance Charge Collec-
tions" shall have the meaning specified in subsection
4.9(a) of the Agreement.
"Base Rate" shall mean, with respect to any
Monthly Period, the sum of (i) the weighted average of
the Class A Certificate Rate, the Class B Certificate
Rate and the Class C Certificate Rate as of the last day
of such Monthly Period (weighted based on the Class A
Invested Amount, the Class B Invested Amount and the
Class C Invested Amount, respectively, as of the last day
of such Monthly Period) plus (ii) the product of 2.00%
per annum and the percentage equivalent of a fraction the
numerator of which is the Adjusted Invested Amount and
the denominator of which is the Invested Amount, each as
of the last day of such Monthly Period.
"Carryover Class A Interest" shall mean with
respect to any Business Day (a) any Class A Interest due
but not paid on any previous Distribution Date plus (b)
any Class A Additional Interest due on the next succeed-
ing Distribution Date.
4
"Carryover Class B Interest" shall mean with
respect to any Business Day (a) any Class B Interest due
but not paid on any previous Distribution Date plus (b)
any Class B Additional Interest due on the next succeed-
ing Distribution Date.
"Carryover Class C Interest" shall mean with
respect to any Business Day (a) any Class C Interest due
but not paid on any previous Distribution Date plus (b)
any Class C Additional Interest due on the next succeed-
ing Distribution Date.
"Class A Additional Interest" shall have the
meaning specified in subsection 4.6(a) of the Agreement.
"Class A Adjusted Invested Amount" shall mean,
for any date of determination, an amount not less than
zero equal to the then current Class A Invested Amount
minus the Principal Funding Account Balance on such date.
"Class A Certificateholder" shall mean the
Person in whose name a Class A Certificate is registered
in the Certificate Register.
"Class A Certificateholders' Interest" shall
mean the portion of the Series 1997-1 Certificateholders'
Interest evidenced by the Class A Certificate.
"Class A Certificate" shall mean any of the
certificates executed by the Transferor and authenticated
by or on behalf of the Trustee, substantially in the form
of Exhibit A-1 hereto.
"Class A Certificate Rate" shall mean % per
annum.
"Class A Floating Allocation Percentage" shall
mean, with respect to any Business Day, the percentage
equivalent of a fraction, the numerator of which is the
Class A Adjusted Invested Amount as of the end of the
preceding Business Day and the denominator of which is
the greater of (a) the sum of the aggregate amount of
Principal Receivables in the Trust and the amounts on
deposit in the Excess Funding Account as of the end of
the preceding Business Day and (b) the sum of the numera-
tors with respect to all Classes of all Series then
5
outstanding used to calculate the applicable allocation
percentage.
"Class A Initial Invested Amount" shall mean
the aggregate initial principal amount of the Class A
Certificates, which is $616,250,000.
"Class A Interest" shall mean the interest
distributable in respect of the Class A Certificates as
calculated in accordance with subsection 4.6(a) of the
Agreement.
"Class A Interest Shortfall" shall have the
meaning specified in subsection 4.6(a) of the Agreement.
"Class A Invested Amount" shall mean, when used
with respect to any Business Day, the greater of (x) zero
and (y) an amount equal to (a) the Class A Initial In-
vested Amount less the Class A Percentage of the initial
deposit to the Pre-Funding Account plus the Class A
Percentage of any withdrawals from the Pre-Funding Ac-
count (i) during the Funding Period in connection with
the addition of Receivables to the Trust or (ii) at the
end of the Funding Period for deposit into the Excess
Funding Account, minus (b) the aggregate amount of prin-
cipal payments (except principal payments made from the
Pre-Funding Account) made to Class A Certificateholders
through and including such Business Day, minus (c) the
aggregate amount of Class A Investor Charge-Offs for all
prior Distribution Dates, plus (d) the sum of the aggre-
gate amount allocated with respect to Class A Investor
Charge-Offs and available on all prior Distribution Dates
pursuant to subsection 4.9(a)(vii) of the Agreement and,
with respect to such subsection, pursuant to subsections
4.10(a) and (b), 4.16(a), (b) and (c), 4.19(b) and
4.20(b), (c) and (d) of the Agreement, for the purpose of
reinstating amounts reduced pursuant to the foregoing
clause (c).
"Class A Investor Charge-Offs" shall have the
meaning specified in subsection 4.13(d) of the Agreement.
"Class A Outstanding Principal Amount" shall
mean with respect to the Class A Certificates, when used
with respect to any Business Day, an amount equal to (a)
the Class A Initial Invested Amount minus (b) the aggre-
gate amount of principal payments (including principal
6
payments made from the Pre-Funding Account) made to the
Class A Certificateholders on or prior to such Business
Day.
"Class A Percentage" shall mean a fraction the
numerator of which is the Class A Initial Invested Amount
and the denominator of which is the sum of the Class A
Initial Invested Amount, the Class B Initial Invested
Amount and the Class C Initial Invested Amount.
"Class A Pool Factor" shall mean, with respect
to any Record Date, a number carried out to seven decimal
places representing the ratio of the sum of the Class A
Invested Amount and the Class A Percentage of funds on
deposit in the Pre-Funding Account as of such Record Date
(determined after taking into account any increases or
decreases in the Class A Invested Amount which will
occur, and the amount of funds which will be on deposit
in the Pre-Funding Account, on the following Distribution
Date) to the Class A Initial Invested Amount.
"Class A Pre-Funded Amount" shall mean the
product of the Pre-Funded Amount and the Class A Percent-
age.
"Class A Principal" shall mean the principal
distributable in respect of the Class A Certificates as
calculated in accordance with subsection 4.7(a) of the
Agreement.
"Class A Required Amount" shall mean the amount
determined by the Servicer on each Business Day equal to
the excess, if any, of (x) the sum of (i) Class A Inter-
est for the then current Monthly Period, (ii) any Carry-
over Class A Interest, (iii) if DMCCB or an Affiliate of
DMCCB is no longer the Servicer, the Class A Floating
Allocation Percentage of the Servicing Fee for the then
current Monthly Period, (iv) the Class A Floating Alloca-
tion Percentage of the Default Amount, if any, for such
Business Day and, to the extent not previously paid, for
any previous Business Day in such Monthly Period, (v) the
Class A Percentage of the Series Allocation Percentage of
the Adjustment Payment required to be made by the Trans-
feror but not made on the related Transfer Date and (vi)
the unreimbursed amount by which the Class A Invested
Amount has been reduced on prior Business Days pursuant
to clause (c) of the definition of Class A Invested
7
Amount over (y) the Available Series 1997-1 Finance
Charge Collections plus any Excess Finance Charge Collec-
tions from other Series and any Transferor Finance Charge
Collections allocated with respect to the amounts de-
scribed in clauses (x)(i) through (vi) above.
"Class B Additional Interest" shall have the
meaning specified in subsection 4.6(b) of the Agreement.
"Class B Adjusted Invested Amount" shall mean,
for any date of determination, an amount not less than
zero equal to the then current Class B Invested Amount
minus the excess, if any, of the Principal Funding Ac-
count Balance over the Class A Invested Amount on such
date of determination.
"Class B Certificateholder" shall mean the
Person in whose name a Class B Certificate is registered
in the Certificate Register.
"Class B Certificateholders' Interest" shall
mean the portion of the Series 1997-1 Certificateholders'
Interest evidenced by the Class B Certificates.
"Class B Certificate Rate" shall mean % per
annum.
"Class B Certificates" shall mean any of the
certificates executed by the Transferor and authenticated
by or on behalf of the Trustee, substantially in the form
of Exhibit A-2 hereto.
"Class B Fixed/Floating Allocation Percentage"
shall mean for any Business Day the percentage equivalent
of a fraction, the numerator of which is the Class B
Invested Amount at the end of the last day of the Revolv-
ing Period and the denominator of which is the greater of
(a) the sum of the aggregate amount of Principal Receiv-
xxxxx and the amount on deposit in the Excess Funding
Account at the end of the preceding Business Day and (b)
the sum of the numerators with respect to all Classes of
all series then outstanding used to calculate the appli-
cable allocation percentage.
"Class B Floating Allocation Percentage" shall
mean, with respect to any Business Day, the percentage equivalent of a
fraction, the numerator of which is the
8
Class B Adjusted Invested Amount as of the end of the preceding Business Day
and the denominator of which is the greater of (a) the sum of the aggregate
amount of Principal Receivables in the Trust and the amount on deposit in the
Excess Funding Account as of the end of the preceding Business Day and (b) the
sum of the numerators with respect to all Classes of all Series then out-
standing used to calculate the applicable allocation percentage.
"Class B Initial Invested Amount" shall mean
the aggregate initial principal amount of the Class B
Certificates, which is $106,250,000.
"Class B Interest" shall mean the interest
distributable in respect of the Class B Certificates as
calculated in accordance with subsection 4.6(b) of the
Agreement.
"Class B Interest Shortfall" shall have the
meaning specified in subsection 4.6(b) of the Agreement.
"Class B Invested Amount" shall mean, when used
with respect to any Business Day, the greater of (x) zero and (y) an amount
equal to (a) the Class B Initial Invested Amount less the Class B Percentage
of the initial deposit to the Pre-Funding Account plus the Class B Percentage
of any withdrawals from the Pre-Funding Account (i) during the Funding
Period in connection with the addition of Receivables to the Trust or (ii) at
the end of the Funding Period for deposit into the Excess Funding Account,
minus (b) the aggregate amount of principal payments (except principal
payments made from the Pre-Funding Account) made to Class B Certificateholders
through and including such Business Day, minus (c) the aggregate amount of
Class B Investor Charge-Offs for all prior Distribution Dates, minus (d) the
aggregate amount of Reallocated Class B Principal Collections for which
neither the Class D Invested Amount nor the Class C Invested Amount has been
reduced for all prior Business Days, and plus (e) the sum of the aggregate
amount allocated and available on all prior Business Days pursuant to
subsection 4.9(a)(x) of the Agreement and, with respect to such subsection,
pursuant to subsections 4.10(a) and (b), 4.16(a) and (b), 4.19(b) and 4.20(b),
(c) and (d) of the Agreement, for the purpose of reinstating
9
amounts reduced pursuant to the foregoing clauses (c) and (d).
"Class B Investor Charge-Offs" shall have the meaning
specified in subsection 4.13(c) of the Agreement.
"Class B Outstanding Principal Amount" shall mean with
respect to the Class B Certificates, when used with respect to any Business
Day, an amount equal to (a) the Class B Initial Invested Amount minus (b) the
aggregate amount of principal payments (including principal payments made
from the Pre-Funding Account) made to the Class B Certificateholders on or
prior to such Business Day.
"Class B Percentage" shall mean a fraction the numerator of
which is the Class B Initial Invested Amount and the denominator of which is
the sum of the Class A Initial Invested Amount, the Class B Initial Invested
Amount and the Class C Initial Invested Amount.
"Class B Pool Factor" shall mean, with respect to any Record
Date, a number carried out to seven decimal places representing the ratio of
the sum of the Class B Invested Amount and the Class B Percentage of funds on
deposit in the Pre-Funding Account as of the last day of the related Monthly
Period (determined after taking into account any increases or decreases in the
Class B Invested Amount which will occur, and the amount of funds which will
be on deposit in the Pre-Funding Account, on the following Distribution Date)
to the Class B Initial Invested Amount.
"Class B Pre-Funded Amount" shall mean the product of the
Pre-Funded Amount and the Class B Percentage.
"Class B Principal" shall mean the principal distributable
in respect of the Class B Certificates as calculated in accordance with
subsection 4.7(b) of the Agreement.
"Class B Principal Payment Commencement Date" shall mean the
earlier of (a) (i) with respect to the Accumulation Period, the Expected Final
Payment Date or (ii) during the Early Amortization Period, the first Dis-
tribution Date on which the Class A Invested Amount is
10
paid in full or, if there are no Principal Collections allocable to the Series
1997-1 Certificates remaining after payments have been made to the Class A
Certificates on such Distribution Date, the Distribution Date following the
first Distribution Date on which the Class A Invested Amount is paid in full
and (b) the Distribution Date following a sale or repurchase of the
Receivables as set forth in Section 2.4(e), 9.2, 10.2(a), 12.1 or 12.2 of the
Agreement or Section 3 of this Series Supplement.
"Class B Required Amount" shall mean the amount determined
by the Servicer on each Business Day equal to the excess, if any, of (x) the
sum of (i) the Class B Interest for the then current Monthly Period, (ii) any
Carryover Class B Interest, (iii) if DMCCB or an Affiliate of DMCCB is no
longer the Servicer, the Class B Floating Allocation Percentage of the
Servicing Fee for the then current Monthly Period, (iv) the Class B Floating
Allocation Percentage of the Default Amount, if any, for such Business Day
and, to the extent not previously paid, for any previous Business Day in such
Monthly Period, (v) the Class B Percentage of the Series Allocation
Percentage of the Adjustment Payment required to be made by the Transferor but
not made on the related Transfer Date and (vi) the unreimbursed amount by
which the Class B Invested Amount has been reduced on prior Business Days
pursuant to clauses (c) and (d) of the definition of Class B Invested Amount
over (y) the Available Series 1997-1 Finance Charge Collections plus any
Excess Finance Charge Collections from other Series and any Transferor Finance
Charge Collections allocated with respect to the amounts described in clauses
(x)(i) through (vi) above.
"Class C Additional Interest" shall have the meaning
specified in subsection 4.6(c) of the Agreement.
"Class C Adjusted Invested Amount" shall mean, for any date
of determination, an amount not less than zero equal to the then current Class
C Invested Amount minus the excess, if any, of the Principal Funding Account
Balance over the Class A Invested Amount and Class B Invested Amount on such
date of determination.
"Class C Certificateholder" shall mean the Person in whose
name a Class C Certificate is registered in the Certificate Register.
11
"Class C Certificateholders' Interest" shall mean the
portion of the Series 1997-1 Certificateholders' Interest evidenced by the
Class C Certificates.
"Class C Certificate Rate" shall mean % per annum from the
Closing Date through and including May 19, 1997 and from May 20, 1997 through
and including June 19, 1997 and with respect to each Interest Period
thereafter, a per annum rate % in excess of LIBOR as determined on the
related LIBOR Determination Date.
"Class C Certificates" shall mean any of the certificates
executed by the Transferor and authenticated by or on behalf of the Trustee,
substantially in the form of Exhibit A-3 hereto.
"Class C Fixed/Floating Allocation Percentage" shall mean
for any Business Day the percentage equivalent of a fraction, the numerator of
which is the Class C Invested Amount at the end of the last day of the Revolv-
ing Period and the denominator of which is the greater of (a) the sum of the
aggregate amount of Principal Receivables and the amount on deposit in the
Excess Funding Account at the end of the preceding Business Day and (b) the
sum of the numerators with respect to all Classes of all Series then
outstanding used to calculate the applicable allocation percentage.
"Class C Floating Allocation Percentage" shall mean, with
respect to any Business Day, the percentage equivalent of a fraction, the
numerator of which is the Class C Adjusted Invested Amount as of the end of
the preceding Business Day and the denominator of which is the greater of (a)
the total amount of Principal Receivables in the Trust and the amount on
deposit in the Excess Funding Account as of the end of the preceding Business
Day and (b) the sum of the numerators with respect to all Classes of all
Series then outstanding used to calculate the applicable allocation
percentage.
"Class C Initial Invested Amount" shall mean the aggregate
initial principal amount of the Class C Certificates, which is $72,250,000.
"Class C Interest" shall mean the interest distributable in
respect of the Class C Certificates as
12
calculated in accordance with subsection 4.6(c) of the
Agreement.
"Class C Interest Shortfall" shall have the meaning
specified in subsection 4.6(c) of the Agreement.
"Class C Invested Amount" shall mean, when used with respect
to any Business Day, the greater of (x) zero and (y) an amount equal to (a)
the Class C Initial Invested Amount less the Class C Percentage of the
initial deposit to the Pre-Funding Account plus the Class C Percentage of any
withdrawals from the Pre-Funding Account (i) during the Funding Period in
connection with the addition of Receivables to the Trust or (ii) at the end of
the Funding Period for deposit into the Excess Funding Account, minus (b) the
aggregate amount of principal payments (except principal payments made from
the Pre-Funding Account) made to Class C Certificateholders through and
including such Business Day, minus (c) the aggregate amount of Class C
Investor Charge-Offs for all prior Distribution Dates, minus (d) the aggregate
amount of Reallocated Class B Principal Collections and Reallocated Class C
Principal Collections for which the Class D Invested Amount has not been
reduced for all prior Business Days, and plus (e) the sum of the aggregate
amount allocated and available on all prior Business Days pursuant to
subsection 4.9(a)(xi) of the Agreement and, with respect to such subsection,
pursuant to subsections 4.10(a) and (b), 4.16(a), 4.19(b) and 4.20(b), (c) and
(d) of the Agreement, for the purpose of reinstating amounts reduced pursuant
to the foregoing clauses (c) and (d).
"Class C Investor Charge-Offs" shall have the meaning
specified in subsection 4.13(b) of the Agreement.
"Class C Outstanding Principal Amount" shall mean, when used
with respect to any Business Day, an amount equal to (a) the Class C Initial
Invested Amount minus (b) the aggregate amount of principal payments
(including principal payments made from the Pre-Funding Account) made to Class
C Certificateholders prior to such Business Day.
"Class C Percentage" shall mean a fraction the numerator of
which is the Class C Initial Invested Amount and the denominator of which is
the sum of the Class A
13
Initial Invested Amount, the Class B Initial Invested
Amount and the Class C Initial Invested Amount.
"Class C Pool Factor" shall mean, with respect to any Record
Date, a number carried out to seven decimal places representing the ratio of
the sum of the Class C Invested Amount and the Class C Percentage of funds on
deposit in the Pre-Funding Account as of such Record Date (determined after
taking into account any increases or decreases in the Class C Invested Amount
which will occur, and the amount of funds on deposit in the PreFunding
Account, on the following Distribution Date) to the Class C Initial Invested
Amount.
"Class C Principal" shall mean the principal distributable
in respect of the Class C Certificates as calculated in accordance with
subsection 4.7(c) of the Agreement.
"Class C Principal Payment Commencement Date" shall mean the
earlier of (a) (i) with respect to the Accumulation Period, the Expected Final
Payment Date or (ii) during the Early Amortization Period, the first Dis-
tribution Date on which the Class B Invested Amount is paid in full or, if
there are no Principal Collections allocable to the Series 1997-1 Certificates
remaining after payments have been made to the Class B Certificates on such
Distribution Date, the Distribution Date following the first Distribution
Date on which the Class B Invested Amount is paid in full and (b) the
Distribution Date following a sale or repurchase of the Receivables as set
forth in Section 2.4(e), 9.2, 10.2(a), 12.1 or 12.2 of the Agreement or
Section 3 of this Series Supplement.
"Class C Required Amount" shall mean the amount determined
by the Servicer on each Business Day equal to the excess, if any, of (x) the
sum of (i) Class C Interest for the then current Monthly Period, (ii) any
Carryover Class C Interest, (iii) if DMCCB or an Affiliate of DMCCB is no
longer the Servicer, the Class C Floating Allocation Percentage of the
Servicing Fee for the then current Monthly Period, (iv) the Class C Floating
Allocation Percentage of the Default Amount, if any, for such Business Day
and, to the extent not previously paid, for any previous Business Day in such
Monthly Period, (v) the Class C Percentage of the Series Allocation Percentage
of the Adjustment Payment required to be made by the Trans-
14
feror but not made on the related Transfer Date and (vi) the unreimbursed
amount by which the Class C Invested Amount has been reduced on prior Business
Days pursuant to clauses (c) and (d) of the definition of Class C Invested
Amount over (y) the Available Series 1997-1 Finance Charge Collections plus
any Excess Finance Charge Collections from other Series and any Transferor
Finance Charge Collections allocated with respect to the amounts described in
clauses (x)(i) through (vi) above.
"Class C Reserve Account" shall have the meaning specified
in the Class C Reserve Account Agreement.
"Class C Reserve Account Agreement" shall mean the Class C
Reserve Account Agreement dated as of May , 1997 among the Transferor, the
Servicer and the Trustee as amended and supplemented from time to time.
"Class C Trigger Event" shall have the meaning specified in
the Class C Reserve Account Agreement.
"Class D Certificateholder" shall mean the Person in whose
name a Class D Certificate is registered in the Certificate Register.
"Class D Certificateholders' Interest" shall mean the
portion of the Series 1997-1 Certificateholders' Interest evidenced by the
Class D Certificate.
"Class D Certificates" shall mean any of the certificates
executed by the Transferor and authenticated by or on behalf of the Trustee,
substantially in the form of Exhibit A-4 hereto.
"Class D Excess Amounts" shall mean with respect to any
Business Day, the excess of the Class D Invested Amount over the Stated Class
D Amount on such day after taking into account all adjustments of the ABC
Adjusted Invested Amount on such day.
"Class D Fixed/Floating Allocation Percentage" shall mean
for any Business Day the percentage equivalent of a fraction, the numerator of
which is the Class D Invested Amount at the end of the last day of the Revolv-
ing Period and the denominator of which is the greater of (a) the sum of the
aggregate amount of Principal Receivables and the amount on deposit in the
Excess Funding
15
Account as of the end of the preceding Business Day and (b) the sum of the
numerators with respect to all Classes of all Series then outstanding used to
calculate the applicable allocation percentage.
"Class D Floating Allocation Percentage" shall mean with
respect to any Business Day the percentage equivalent of a fraction, the
numerator of which is the Class D Invested Amount on such day after taking
into account all adjustments of the Class D Invested Amount on such day and
the denominator of which is the greater of (a) the sum of the aggregate amount
of Principal Receivables and the amount on deposit in the Excess Funding
Account at the end of the preceding Business Day and (b) the sum of the
numerators with respect to all Classes of all Series then outstanding used to
calculate the applicable allocation percentage.
"Class D Initial Invested Amount" shall mean the aggregate
initial principal amount of the Class D Certificates, which is $55,250,000.
"Class D Interest Shortfall" shall have the meaning
specified in subsection 4.6(d) of the Agreement.
"Class D Invested Amount" shall mean, when used with respect
to any Business Day, the greater of (x) zero and (y) an amount equal to (a)
the initial principal balance of the Class D Certificates, minus (b) the
aggregate amount of principal payments made to Class D Certificate holders
through and including such Business Day, minus (c) the aggregate amounts by
which the Transferor has reduced the Class D Invested Amount pursuant to
subsection 4.12(d) of the Agreement, minus (d) the aggregate amount of Class
D Investor Charge-Offs for all prior Distribution Dates, minus (e) the
aggregate amount of Reallocated Principal Collections for all prior Business
Days, plus (f) the sum of the aggregate amount allocated and available on all
prior Business Days pursuant to subsection 4.9(a)(xii) of the Agreement and,
with respect to such subsection, pursuant to subsections 4.10(a) and (b),
4.19(b) and 4.20(b), (c) and (d) of the Agreement, for the purpose of
reinstating amounts reduced pursuant to the foregoing clauses (d) and (e).
"Class D Investor Charge-Offs" shall have the meaning
specified in subsection 4.13(a) of the Agreement.
16
"Class D Outstanding Principal Amount" shall mean, when used
with respect to any Business Day, an amount equal to (a) the Class D Initial
Invested Amount minus (b) the aggregate amount of principal payments made to
Class D Certificateholders prior to such Business Day.
"Class D Pool Factor" shall mean, with respect to any Record
Date, a number carried out to seven decimal places representing the ratio of
the Class D Invested Amount as of such Record Date (determined after taking
into account any increases or decreases in the Class D Invested Amount which
will occur, and the amount of funds on deposit in the Pre-Funding Account, on
the following Distribution Date) to the Class D Initial Invested Amount.
"Class D Principal" shall mean the principal distributable
in respect of the Class D Certificate as specified in subsection 4.7(d) of the
Agreement.
"Class D Principal Payment Commencement Date" shall mean the
earlier of (a) during the Amortization Period, the first Distribution Date on
which the Class C Invested Amount is paid in full or, if there are no Prin-
cipal Collections allocable to the Series 1997-1 Certificates remaining
after payments have been made to the Class C Certificates on such Distribution
Date, the Distribution Date following the first Distribution Date on which
the Class C Invested Amount is paid in full and (b) the Distribution Date
following a sale or repurchase of the Receivables as set forth in Section
2.4(e), 9.2, 10.2(a), 12.1 or 12.2 of the Agreement or Section 3 of this
Series Supplement.
"Closing Date" shall mean May , 1997.
"Controlled Accumulation Amount" shall mean, for any
Transfer Date with respect to the Accumulation Period prior to the payment in
full of the sum of the Class A Invested Amount, the Class B Invested Amount
and the Class C Invested Amount, $66,229,167; provided, however, that if the
Accumulation Period Length is determined to be less than 12 months pursuant
to subsection 4.21 of the Agreement, the Controlled Accumulation Amount for
each Transfer Date with respect to the Accumulation Period prior to the
payment in full of the sum of the Class A Invested Amount, the Class B
Invested Amount
17
and the Class C Invested Amount, will be equal to (i) the product of (x) the
sum of the Class A Initial Invested Amount, the Class B Initial Invested
Amount and the Class C Initial Invested Amount and (y) the Accumulation Period
Factor for the Monthly Period preceding such Transfer Date divided by (ii) the
Required Accumulation Factor Number.
"Controlled Deposit Amount" shall mean, with respect to any
Transfer Date, the sum of (a) the Controlled Accumulation Amount for such
Transfer Date and (b) any existing Accumulation Shortfall.
"Covered Amount" shall mean, with respect to any Interest
Accrual Period during the Accumulation Period prior to the payment in full of
the sum of the Class A Invested Amount, Class B Invested Amount and the Class
C Invested Amount, one-twelfth of the product of (a) the weighted average of
the Class A Certificate Rate, the Class B Certificate Rate and the Class C
Certificate Rate, each in effect with respect to such Interest Accrual
Period, and (b) the Principal Funding Account Balance (up to the sum of the
Class A Invested Amount, the Class B Invested Amount and the Class C Invested
Amount) as of the last day of the Monthly Period preceding the Monthly Period
in which such Interest Accrual Period ends.
"Default Amount" shall mean, (i) on any Business Day other
than the Default Recognition Date, the aggregate amount of Principal
Receivables in Accounts which became Defaulted Accounts on such Business Day
and (ii) on any Default Recognition Date the aggregate amount of Principal
Receivables in Accounts which became Defaulted Accounts during the then
current Monthly Period (other than such Accounts which were included in clause
(i)).
"Default Recognition Allocation Percentage" shall mean, with
respect to each Default Recognition Date, the percentage equivalent of a
fraction, the numerator of which is the Weighted Average Invested Amount for
the related Monthly Period and the denominator of which is the Weighted
Average Principal Receivables in the Trust for the related Monthly Period.
"Default Recognition Date" shall mean the last day of each
calendar month; provided, however, that with
18
respect to any Monthly Period the "related Default Recognition Date" shall
mean the Default Recognition Date occurring closest to the last day of such
Monthly Period and any amounts allocated or applied on such Default
Recognition Date shall be deemed to apply to the related Monthly Period.
"Distribution Date" shall mean June 20, 1997, and the
twentieth day of each month thereafter, or if such day is not a Business Day,
the next succeeding Business Day.
"Early Amortization Period" shall mean the period beginning
on the earlier of (a) the day on which a Pay Out Event occurs or is deemed to
have occurred and (b) the Expected Final Payment Date if the Class A In-
vested Amount, the Class B Invested Amount and the Class C Invested Amount
have not been paid in full on such date, and ending on the earlier of (i) the
date on which the Class A Invested Amount, the Class B Invested Amount, the
Class C Invested Amount and the Class D Invested Amount have been paid in full
and (ii) the Scheduled Series 1997-1 Termination Date.
"Enhancement" shall mean, with respect to the Class A
Certificates, the subordination of the Class B Invested Amount, the Class C
Invested Amount, and the Class D Invested Amount, with respect to the Class B
Certificates, the subordination of the Class C Invested Amount and the Class
D Invested Amount, and with respect to the Class C Certificates, the
subordination of the Class D Invested Amount and the amount, if any, on depos-
it from time to time in the Class C Reserve Account.
"Excess Finance Charge Collections" shall mean, with respect
to any Business Day, as the context requires, either (x) the amount
described in subsection 4.9(a)(xvii) of the Agreement allocated to the Series
1997-1 Certificates but available to cover shortfalls in amounts paid from
Finance Charge Collections for other Series, if any, or (y) the aggregate
amount of Finance Charge Collections allocable to other Series in excess of
the amounts necessary to make required payments with respect to such Series,
if any, and available to cover shortfalls with respect to the Series 1997-1
Certificates.
19
"Expected Final Payment Date" shall mean the
April 2002 Distribution Date.
"FASIT" shall have the meaning specified in Section 18 of
this Series Supplement.
"Fixed/Floating Allocation Percentage" shall mean for any
Business Day the percentage equivalent of a fraction, the numerator of which
is the Invested Amount at the end of the last day of the Revolving Period and
the denominator of which is the greater of (a) the sum of the aggregate amount
of Principal Receivables and the amount on deposit in the Excess Funding
Account as of the end of the preceding Business Day and (b) the sum of the
numerators with respect to all Classes of all Series then outstanding used to
calculate the applicable allocation percentage.
"Floating Allocation Percentage" shall mean for any Business
Day the sum of the applicable Class A Floating Allocation Percentage, Class
B Floating Allocation Percentage, Class C Floating Allocation Percentage, and
Class D Floating Allocation Percentage for such Business Day.
"Full Invested Amount" shall mean $850,000,000.
"Funding Period" shall mean the period from and including
the Closing Date to but excluding the earlier of (x) the first day for which
the Invested Amount equals the Full Invested Amount; (y) the first day on
which a Pay Out Event is deemed to occur; and (z) the first day of the
September 1997 Monthly Period.
"Initial Invested Amount" shall mean an amount equal to the
sum of (i) the Class A Initial Invested Amount less the Class A Percentage of
the Initial PreFunded Amount, plus the Class A Percentage of any with-
drawals from the Pre-Funding Account during the Funding Period in connection
with the addition of Receivables to the Trust; (ii) the Class B Initial
Invested Amount less the Class B Percentage of the Initial Pre-Funded Amount,
plus the Class B Percentage of any withdrawals from the Pre-Funding Account
during the Funding Period in connection with the addition of Receivables to
the Trust; (iii) the Class C Initial Invested Amount less the Class C
Percentage of the Initial Pre-Funded Amount, plus the
20
Class C Percentage of any withdrawals from the Pre-Funding Account during
the Funding Period in connection with the addition of Receivables to the
Trust; and (iv) the Class D Initial Invested Amount.
"Initial Pre-Funded Amount" shall mean $
.
"Interest Accrual Period" shall mean, with respect to a
Distribution Date, the period from and including the preceding Distribution
Date to but excluding such Distribution Date; provided, however, that the
initial Interest Accrual Period shall be the period from the Closing Date to
but excluding the initial Distribution Date.
"Invested Amount" shall mean, when used with respect to any
Business Day, an amount equal to the sum of (a) the Class A Invested Amount as
of such Business Day, (b) the Class B Invested Amount as of such Business Day,
(c) the Class C Invested Amount as of such Business Day and (d) the Class D
Invested Amount as of such Business Day.
"Investor Certificateholder" shall mean the Holder of record
of an Investor Certificate of Series 1997-1.
"Investor Certificates" shall mean the Class A Certificates,
the Class B Certificates, the Class C Certificates and the Class D
Certificate.
"Investor Charge-Offs" shall mean the sum of Class A
Investor Charge-Offs, Class B Investor ChargeOffs, Class C Investor
Charge-Offs and Class D Investor Charge-Offs.
"Investor Default Amount" shall mean, with respect to each
Business Day, an amount equal to the product of the Default Amount identified
since the prior reporting date and the Floating Allocation Percentage
applicable for such Business Day.
"Investor Percentage" shall mean, for any Business Day,
(a) with respect to Finance Charge Collections prior to the Pay Out
Commencement Date, Receivables in Defaulted Accounts at any time and Principal
Collections
21
during the Revolving Period, the Floating Allocation Per-
centage and (b) with respect to Finance Charge Collec-
tions on and after the Pay Out Commencement Date and
Principal Collections during the Amortization Period, the
Fixed/Floating Allocation Percentage.
"LIBOR" shall mean, as of any LIBOR Determination Date,
the London interbank offered quotations for one-month Dollar deposits
determined by the Trustee for each Interest Accrual Period in accordance with
the provisions of Section 4.17 of the Agreement.
"LIBOR Determination Date" shall mean the second Business
Day prior to the commencement of each Interest Accrual Period; provided,
however, that with respect to the period from the Closing Date through May 19,
1997, LIBOR Determination Date shall mean May ___, 1997, and for the period
from May 20, 1997 through June 19, 1997, LIBOR Determination Date shall mean
May 16, 1997. For purposes of this definition, a Business Day is any day on
which banks in London and New York are open for the transaction of
international business.
"Minimum Retained Percentage" shall mean
2%.
"Minimum Transferor Percentage" shall mean 0%; provided,
however, that in certain circumstances such percentage may be increased.
"Monthly Period" shall have the meaning specified in the
Agreement, except that the first Monthly Period with respect to the Series
1997-1 Certificates shall begin on and include the Closing Date and shall end
on and include May 31, 1997.
"Negative Carry Amount" shall have the meaning specified in
subsection 4.10(a) of the Agreement.
"Paired Series" shall have the meaning specified in Section
19 of this Series Supplement.
"Paying Agent" shall mean, for the Series 1996-1
Certificates, The Bank of New York.
"Payment Reserve Account" shall have the meaning specified
in subsection 4.18 of the Agreement.
22
"Pay Out Commencement Date" shall mean the date on which a
Trust Pay Out Event is deemed to occur pursuant to Section 9.1 of the
Agreement or a Series 1997-1 Pay Out Event is deemed to occur pursuant to
Section 8 of this Series Supplement.
"Portfolio Adjusted Yield" shall mean, with respect to any
Monthly Period, the average of the percentages obtained for each of the
three preceding Monthly Periods by subtracting the Base Rate for such Monthly
Period from the Portfolio Yield for such Monthly Period.
"Portfolio Yield" shall mean for the Series 1997-1
Certificates, with respect to any Monthly Period, the annualized percentage
equivalent of a fraction, the numerator of which is an amount equal to the sum
of the aggregate amount of Available Series 1997-1 Finance Charge Collections
for such Monthly Period (not including the amounts on deposit in the Payment
Reserve Account and Adjustment Payments made by the Transferor with respect to
Adjustment Payments required to be made but not made in prior Monthly Periods,
if any) plus the Principal Funding Account Investment Proceeds, investment
earnings on amounts on deposit in the Pre-Funding Account deposited into the
Collection Account pursuant to subsection 4.14(b) of the Agreement and amounts
withdrawn from the Accumulation Period Reserve Account, if any, with respect
to such Monthly Period calculated on a cash basis, minus the aggregate
Investor Default Amount for such Monthly Period and the Series Allocation
Percentage of any Adjustment Payments which the Transferor is required but
fails to make pursuant to the Pooling and Servicing Agreement for such Monthly
Period, and the denominator of which is the average daily Invested Amount plus
the Pre-Funded Amount during the preceding Monthly Period; provided,
however, that Excess Finance Charge Collections applied for the benefit of the
Certificateholders may be added to the numerator if a Ratings Event with
respect to the Series 1997-1 Certificates would not occur as a result thereof.
"Pre-Funded Amount" shall mean (a) the Initial Pre-Funded
Amount, minus (b) the amount of any increases in the Invested Amount during
the Funding Period pursuant to Section 4.15 of the Agreement, minus (c) the
amount of any principal losses on funds on deposit in the Pre-Funding Account
and minus (d) the amount withdrawn from
23
the Pre-Funding Account and deposited in the Excess Funding Account.
"Pre-Funding Account" shall mean the account established and
maintained pursuant to subsection 4.14(a) of the Agreement.
"Principal Funding Account" shall have the meaning set forth
in subsection 4.19 of the Agreement.
"Principal Funding Account Balance" shall mean, with respect
to any date of determination during the Accumulation Period, the principal
amount, if any, on deposit in the Principal Funding Account on such date of
determination.
"Principal Funding Account Investment Proceeds" shall mean,
with respect to each Interest Accrual Period during the Accumulation Period,
the investment earnings on funds on deposit in the Principal Funding Account
(net of investment losses and expenses) for such Interest Accrual Period.
"Principal Shortfalls" shall mean on any Business Day (x)
for Series 1997-1, (i) during the Accumulation Period, the amount, if any,
by which the Controlled Deposit Amount for the Transfer Date immediately
following the then current Monthly Period exceeds the total of the amounts
described in clauses (v), (w), (x) and (y) of subsection 4.9(c)(i), and (ii)
at all other times, the Invested Amount of the class then receiving principal
payments after the application of Principal Collections on such Business Day
or (y) for any other Series the amounts specified as such in the Supplement
for such other Series.
"QIB" shall mean a "qualified institutional buyer" within
the meaning of Rule 144A under the Securities Act.
"Rating Agency" shall mean Standard & Poor's, a Division of
the XxXxxx-Xxxx Companies, and Xxxxx'x Investors Service, Inc.
"Reallocated Class B Principal Collections" shall have the
meaning specified in subsection 4.16(c) of the Agreement.
24
"Reallocated Class C Principal Collections" shall have the
meaning specified in subsection 4.16(b) of the Agreement.
"Reallocated Class D Principal Collections" shall have the
meaning specified in subsection 4.16(a) of the Agreement.
"Reallocated Principal Collections" shall mean the sum of
Reallocated Class B Principal Collections, Reallocated Class C Principal
Collections and Reallocated Class D Principal Collections.
"Reference Banks" shall mean four major banks in the London
interbank market selected by the Trustee.
"Required Accumulation Factor Number" shall be equal to a
fraction, rounded upwards to the nearest whole number, the numerator of which
is one and the denominator of which is equal to the lowest monthly principal
payment rate on the Receivables, expressed as a decimal, for the 12 months
preceding the date of such calculation.
"Required Amount" shall have the meaning specified in
subsection 4.10(b) of the Agreement.
"Required Reserve Account Amount" shall mean, with respect
to any Transfer Date on or after the Reserve Account Funding Date, an amount
equal to (a) 0.50% of the sum of the Class A Invested Amount, the Class B
Invested Amount and the Class C Invested Amount or (b) any other amount
designated by the Transferor; provided, however, that if such designation is
of a lesser amount, the Transferor shall have (i) provided the Servicer and
the Trustee with evidence that the Rating Agency Condition has been satisfied
and (ii) delivered to the Trustee a certificate of an authorized officer to
the effect that, based on the facts known to such officer at such time, in the
reasonable belief of the Transferor, such designation will not cause a Pay Out
Event or an event that, after the giving of notice or the lapse of time, would
cause a Pay Out Event to occur with respect to Series 1997-1.
"Reserve Account Funding Date" shall mean the earliest of
(a) the first day of the third Monthly Period preceding the first full day of
the Accumulation Period; (b) the Determination Date occurring in the first
Monthly
25
Period for which the Portfolio Adjusted Yield is less than 2.0%, but in such
event the Reserve Account Funding Date shall not be required to occur earlier
than the first day of the Monthly Period which commences 12 months prior to
the first full day of the Accumulation Period; (c) the Determination Date
occurring in the first Monthly Period for which the Portfolio Adjusted Yield
is less than 3.0%, but in such event the Reserve Account Funding Date shall
not be required to occur earlier than the first day of the Monthly Period
which commences 6 months prior to the first full day of the Accumulation
Period; or (d) the Determination Date occurring in the first Monthly Period
for which the Portfolio Adjusted Yield is less than 3.5%, but in such event
the Reserve Account Funding Date shall not be required to occur earlier than
the first day of the Monthly Period which commences 4 months prior to the
first full day of the Accumulation Period.
"Revolving Period" shall mean the period from and including
the Closing Date to, but not including, the Amortization Period Commencement
Date.
"Scheduled Series 1997-1 Termination Date" shall mean the
October 2005 Distribution Date.
"Series 1997-1" shall mean the Series of the Metris Master
Trust represented by the Series 1997-1 Certificates.
"Series 1997-1 Allocation Percentage" shall mean, on any
date of determination, the percentage equivalent of a fraction the numerator
of which is the Invested Amount and the denominator of which is the sum of
the Invested Amounts relating to all other Series then outstanding.
"Series 1997-1 Certificates" shall mean the Class A
Certificates, the Class B Certificates, the Class C Certificates and the Class
D Certificate.
"Series 1997-1 Certificateholder" shall mean the holder of
record of any Series 1997-1 Certificate.
"Series 1997-1 Certificateholders' Interest" shall have the
meaning specified in Section 4.4 of the Agreement.
26
"Series 1997-1 Pay Out Event" shall have the meaning
specified in Section 8 of this Series Supplement.
"Series 1997-1 Termination Date" shall mean the earlier to
occur of (i) the day after the Distribution Date on which the Series 1997-1
Certificates are paid in full, or (ii) the Scheduled Series 1997-1 Termination
Date.
"Series Servicing Fee Percentage" shall mean 2.00% per
annum.
"Servicing Fee" shall mean for any Monthly Period, an amount
equal to the product of (i) a fraction the numerator of which is the actual
number of days in such Monthly Period and the denominator of which is 365 or
366, (ii) the applicable Series Servicing Fee Percentage and (iii) the
Adjusted Invested Amount as of the beginning of the day on the first day of
such Monthly Period, or, in the case of the Funding Period, the Initial
Invested Amount as of the beginning of the day on the first day of such
Monthly Period.
"Shared Principal Collections" shall mean, as the context
requires, either (a) the amount allocated to the Series 1997-1 Certificates
which, in accordance with subsections 4.9(b) and 4.9(c)(v) of the Agreement,
may be applied in accordance with Section 4.3(d) of the Agreement or (b) the
amounts allocated to the investor certificates of other Series which the
applicable Series Supplements for such Series specify are to be treated as
"Shared Principal Collections" and which may be applied to cover Principal
Shortfalls with respect to the Series 1997-1 Certificates.
"Stated Class D Amount" shall mean the greater of (i) zero
and (ii) a number rounded to the nearest Dollar equal to the product of 6.952
percent and the ABC Adjusted Invested Amount; provided, however, that in no
event shall the Stated Class D Amount be less than $23,842,500, except that if
the ABC Adjusted Invested Amount is equal to zero, the Stated Class D Amount
shall be zero; and provided further that during any Early Amortization
Period the Stated Class D Amount shall be equal to the Stated Class D Amount
immediately preceding the commencement of the Early Amortization Period.
27
"Targeted Holder" shall mean (i) each holder of a right to
receive interest or principal with respect to the Class C Certificates (or
other interests in the Trust), other than certificates (or other such
interests) with respect to which an opinion is rendered that such certificates
(or other such interests) will be treated as debt for Federal income tax
purposes, and (ii) any holder of a right to receive any amount in respect of
the Transferor Interest; provided, that any Person holding more than one
interest each of which would cause such Person to be a Targeted Holder shall
be treated as a single Targeted Holder.
"Termination Payment Date" shall mean the earlier of the
first Distribution Date following the liquidation or sale of the Receivables
as a result of an Insolvency Event or a Class C Trigger Event and the
occurrence of the Scheduled Series 1997-1 Termination Date.
"Transfer" shall have the meaning specified in subsection
10(b) of this Series Supplement.
"Transferor Finance Charge Collections" shall mean on any
Business Day the product of (a) the Finance Charge Collections for such
Business Day, (b) the Transferor Percentage and (c) the Series Allocation
Percentage.
"Transferor Retained Certificates" shall mean investor
certificates of any Series, which may include the Class D Certificate, which
the Transferor retains, but only to the extent that and for so long as the
Transferor is the Holder of such Certificates.
"Transferor Retained Finance Charge Collections" shall
mean with respect to each Business Day other than a Default Recognition Date,
the amount specified in subsection 4.9(a)(xvii) of the Agreement.
"Weighted Average Invested Amount" shall mean with respect
to any Monthly Period the weighted average Adjusted Invested Amount based on
the Adjusted Invested Amount outstanding on each Business Day after giving
effect to all transactions on such Business Day from but excluding the Default
Recognition Date related to the
28
preceding Monthly Period to and including the Default Recognition Date with
respect to such Monthly Period.
"Weighted Average Principal Receivables" shall mean with
respect to any Monthly Period the weighted average sum of the total amount of
Principal Receivables and the amount on deposit in the Excess Funding Account
on each Business Day after giving effect to all transactions on such
Business Day from but excluding the Default Recognition Date related to the
preceding Monthly Period to and including the Default Recognition Date with
respect to such Monthly Period.
"Withholding Event" shall have the meaning specified in
subsection 10(e) of this Series Supplement.
"Withholding Tax" shall have the meaning specified in
subsection 10(e) of this Series Supplement.
SECTION 3. Reassignment Terms. The Series 1997-1
Certificates shall be subject to termination by the Transferor at its option,
in accordance with the terms specified in subsection 12.2(a) of the Agreement,
on any Distribution Date on or after the Distribution Date on which the sum of
the Class A Invested Amount, the Class B Invested Amount and the Class C
Invested Amount would be reduced to an amount less than or equal to 10% of the
sum of the highest Class A Invested Amount, the highest Class B Invested
Amount and the highest Class C Invested Amount during the Revolving Period.
The deposit required in connection with any such termination and final
distribution shall be equal to the sum of the unpaid Class A Invested Amount,
the unpaid Class B Invested Amount and the unpaid Class C Invested Amount
plus accrued and unpaid interest on the Class A Certificates, Class B
Certificates and Class C Certificates through the day prior to the
Distribution Date on which the final distribution occurs, in each case after
giving effect to any payments on such date.
SECTION 4. Delivery and Payment for the Series 1997-1
Certificates. The Transferor shall execute and deliver the Series 1997-1
Certificates to the Trustee for authentication in accordance with Section 6.1
of the Agreement. The Trustee shall deliver the Series 1997-1 Certificates to
or upon the order of the Transferor when
29
authenticated in accordance with Section 6.2 of the Agreement.
SECTION 5. Form of Delivery of Series 1997-1 Certificates;
Denominations. (a) The Class A Certificates and the Class B Certificates
shall be delivered as Book-Entry Certificates as provided in Sections 6.1 and
6.10 of the Agreement and shall be issued in minimum denominations of $1,000
and integral multiples thereof. The Class C Certificates shall be delivered as
Registered Certificates as provided in Section 6.1 of the Agreement and shall
be issued in minimum denominations of $1,000,000 and integral multiples of
$1,000 in excess thereof. The Class D Certificates shall be delivered as
Registered Certificates as provided in Section 6.1 of the Agreement.
(b) The Depositary for Series 1997-1 shall be The
Depository Trust Company and the Class A Certificates and Class B
Certificates shall be initially registered in the name of Cede & Co., its
nominee.
SECTION 6. Article IV of Agreement. Sections 4.1, 4.2 and
4.3 of the Agreement shall read in their entirety as provided in the
Agreement. Article IV of the Agreement (except for Sections 4.1, 4.2 and 4.3
thereof) shall read in its entirety as follows and shall be applicable only
to the Series 1997-1 Certificates:
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS
SECTION 4.4 Rights of Certificateholders. The Series 1997-1
Certificates shall represent undivided interests in the Trust, including the
right to receive, to the extent necessary to make the required payments with
respect to such Series 1997-1 Certificates at the times and in the amounts
specified in this Agreement, (a) the Floating Allocation Percentage and the
Fixed/Floating Allocation Percentage (as applicable from time to time) of
Collections (including Finance Charge Collections) available in the Collection
Account, (b) funds allocable to the Series 1997-1 Certificates on deposit in
the Excess Funding Account and (c) funds on deposit in the Interest Funding
Account, the Principal Account, the Principal Funding Account, the Accumulation
Period Re-
30
serve Account, the Distribution Account, the Payment Reserve Account and the
Pre-Funding Account (for such Series, the "Series 1997-1 Certificateholders'
Interest"). The Class B Invested Amount, the Class C Invested Amount and the
Class D Invested Amount shall be subordinated to the Class A Certificates; the
Class C Invested Amount and the Class D Invested Amount shall be subordinated
to the Class B Certificates; and the Class D Invested Amount shall be
subordinated to the Class C Certificates, in each case to the extent provided
in this Article IV. The Class B Certificates will not have the right to
receive payments of principal until the Class A Invested Amount has been paid
in full. The Class C Certificates will not have the right to receive payments
of principal until the Class A Invested Amount and the Class B Invested Amount
have been paid in full. The Class D Certificates will not have the right to
receive payments of principal, other than to the extent of Class D Excess
Amounts, until the Class A Invested Amount, the Class B Invested Amount and the
Class C Invested Amount have been paid in full.
SECTION 4.5 Collections and Allocation; Payments on
Exchangeable Transferor Certificate.
(a) Collections and Allocations. The Servicer will
apply or will instruct the Trustee to apply all funds on deposit in the
Collection Account and the Excess Funding Account allocable to the Series
1997-1 Certificates, and all funds on deposit in the Interest Funding Account,
the Principal Account, the Principal Funding Account, the Accumulation Period
Reserve Account, the Distribution Account, the Payment Reserve Account and the
Pre-Funding Account maintained for this Series, as described in this Article
IV. On each Business Day, (i) the amount of Finance Charge Collections
available in the Collection Account allocable to Series 1997-1 Certificates
shall be determined by multiplying the aggregate amount of such Finance Charge
Collections by (x) prior to the Pay Out Commencement Date, the Floating
Allocation Percentage and (y) on and after the Pay Out Commencement Date, the
Fixed/Floating Allocation Percentage, (ii) the amount of Principal Collections
available in the Collection Account allocable to the Series 1997-1
Certificates shall be determined by multiplying the aggregate amount of such
Principal Collections by (x) during the Revolving Period, the Floating
Allocation Percentage and (y) during any Amortization Period, the Fixed/
Floating Allocation
31
Percentage, and (iii) the Receivables in Defaulted Accounts allocable to the
Series 1997-1 Certificates shall be determined by multiplying the aggregate
amount of such Receivables in Defaulted Accounts by the Floating Allocation
Percentage. In addition, on the Closing Date the Transferor shall make a
deposit to the Interest Funding Account in the amount of $__________ to be
allocated to the Series 1997-1 Certificates and applied as Available Series
1997-1 Finance Charge Collections in accordance with subsection 4.9(a) of the
Agreement.
(b) Payments to the Holder of the Exchangeable
Transferor Certificate. On each Business Day, the Servicer shall allocate and
pay Collections in accordance with the Daily Report with respect to such
Business Day to the Holder of the Exchangeable Transferor Certificate in
accordance with subsection 4.3(b) of the Agreement.
Notwithstanding the foregoing, amounts payable to the
Transferor pursuant to this subsection 4.5(b) shall instead be deposited in
the Excess Funding Account to the extent necessary to prevent the Transferor
Interest from being less than the Minimum Transferor Interest.
SECTION 4.6 Determination of Interest for the Series 1997-1
Certificates. (a) The amount of monthly interest (the "Class A Interest")
allocable to the Class A Certificates with respect to any Interest Accrual
Period shall be an amount equal to one-twelfth of the product of (i) the Class
A Certificate Rate and (ii) the Class A Outstanding Principal Amount as of the
close of business on the first day of such Interest Accrual Period (or in the
case of the initial Distribution Date the Class A Initial Invested Amount).
On the Determination Date preceding each Distribution
Date, the Servicer shall determine an amount (the "Class A Interest
Shortfall") equal to the excess, if any, of (x) the Class A Interest for the
Interest Accrual Period applicable to the Distribution Date over (y) the
amount available to be paid to the Class A Certificateholders in respect of
interest on such Distribution Date. If there is a Class A Interest Shortfall
with respect to any Distribution Date, an additional amount ("Class A
Additional Interest") shall be payable as provided herein with respect to the
Class A Certificates
32
on each Distribution Date following such Distribution Date, to and including
the Distribution Date on which such Class A Interest Shortfall is paid to Class
A Certificateholders, equal to one-twelfth of the product of (i) the Class A
Certificate Rate and (ii) such Class A Interest Shortfall remaining unpaid.
Notwithstanding anything to the contrary herein, Class A Additional Interest
shall be payable or distributed to Class A Certificateholders only to the
extent permitted by applicable law.
(b) The amount of monthly interest (the "Class B
Interest") allocable to the Class B Certificates with respect to any Interest
Accrual Period shall be an amount equal to one-twelfth of the product of (i)
the Class B Certificate Rate and (ii) the Class B Invested Amount as of the
close of business on the first day of such Interest Accrual Period (or in the
case of the initial Distribution Date the Class B Initial Invested Amount);
provided, however, that with respect to any Distribution Date related to the
Funding Period the amount described in clause (ii) shall be the Class B
Outstanding Principal Amount at the close of business on the first day of such
Interest Accrual Period.
On the Determination Date preceding each Distribution
Date, the Servicer shall determine an amount (the "Class B Interest
Shortfall") equal to the excess, if any, of (x) the aggregate Class B Interest
for the Interest Accrual Period applicable to the Distribution Date over (y)
the amount available to be paid to the Class B Certificateholders in respect
of interest on such Distribution Date. If there is a Class B Interest Short-
fall with respect to any Distribution Date, an additional amount ("Class B
Additional Interest") shall be payable as provided herein with respect to the
Class B Certificates on each Distribution Date following such Distribution
Date, to and including the Distribution Date on which such Class B Interest
Shortfall is paid to Class B Certificateholders, equal to one-twelfth of the
product of (i) the Class B Certificate Rate and (ii) such Class B Interest
Shortfall remaining unpaid. Notwithstanding anything to the contrary herein,
Class B Additional Interest shall be payable or distributed to Class B Cer-
tificateholders only to the extent permitted by applicable law.
33
(c) The amount of monthly interest (for the Series 1997-1
Certificates, the "Class C Interest") allocable to the Class C Certificates
of the Series 1997-1 Certificates with respect to any Interest Accrual Period
shall be an amount equal to the product of (i) the Class C Certificate Rate,
(ii) a fraction the numerator of which is the actual number of days in the
related Interest Accrual Period and the denominator of which is 360 and
(iii) the Class C Invested Amount as of the close of business on the first day
of such Interest Accrual Period (or in the case of the initial Distribution
Date, an amount equal to the sum of (I) the product of (u) the Class C Initial
Invested Amount, (v) ___ divided by 360, and (w) the Class C Certificate Rate
determined on ______ ___, 1997, plus (II) the product of (x) the Class C
Initial Invested Amount, (y) ___ divided by 360, and (z) the Class C
Certificate Rate determined on May 16, 1997); provided, however, that with
respect to any Distribution Date related to the Funding Period the amount
described in clause (iii) shall be the Class C Outstanding Principal Amount
at the close of business on the first day of such Interest Accrual Period.
On the Determination Date preceding each Distribution
Date, the Servicer shall determine an amount (the "Class C Interest
Shortfall") equal to the excess, if any, of (x) the aggregate Class C Interest
for the Interest Accrual Period applicable to the Distribution Date over (y)
the amount available to be paid to the Class C Certificateholders in respect
of interest on such Distribution Date. If there is a Class C Interest Short-
fall with respect to any Distribution Date, an additional amount ("Class C
Additional Interest") shall be payable as provided herein with respect to the
Class C Certificates on each Distribution Date following such Distribution
Date, to and including the Distribution Date on which such Class C Interest
Shortfall is paid to Class C Certificateholders, equal to the product of (i)
the Class C Certificate Rate, (ii) such Class C Interest Shortfall remaining
unpaid and (iii) a fraction the numerator of which is the actual number of
days in the related Interest Accrual Period and the denominator of which is
360. Notwithstanding anything to the contrary herein, Class C Additional
Interest shall be payable or distributed to Class C Certificateholders only to
the extent permitted by applicable law.
34
SECTION 4.7 Determination of Principal Amounts. (a) The
amount of principal (the "Class A Principal") distributable from the
Distribution Account or available for deposit into the Principal Funding
Account with respect to the Class A Certificates for each Distribution Date
with respect to the Amortization Period shall be equal to the least of (i) the
Available Investor Principal Collections on deposit in the Principal Account
with respect to the related Transfer Date, (ii) for each Distribution Date
with respect the Accumulation Period, prior to the payment in full of the
Class A Invested Amount and on or prior to the Expected Final Payment Date,
the applicable Controlled Deposit Amount for such Transfer Date and (iii) the
Class A Adjusted Invested Amount on such Transfer Date.
(b) The amount of principal (the "Class B Principal")
distributable from the Distribution Account or available for deposit into the
Principal Funding Account with respect to the Class B Certificates for each
Distribution Date, beginning with the Class B Principal Payment Commencement
Date, shall be equal to the least of (i) the Available Investor Principal
Collections remaining on deposit in the Principal Account with respect to
the related Transfer Date after application thereof to Class A Principal, if
any, (ii) for each Distribution Date with respect to the Accumulation Period,
on or prior to the Expected Final Payment Date, the applicable Controlled
Deposit Amount for such Transfer Date (minus the Class A Principal with
respect to such Transfer Date) and (iii) the Class B Adjusted Invested Amount
on such Transfer Date.
(c) The amount of principal (the "Class C Principal")
distributable from the Distribution Account or available for deposit into the
Principal Funding Account with respect to the Class C Certificates for each
Distribution Date, beginning with the Class C Principal Payment Commencement
Date, shall be equal to the least of (i) the Available Investor Principal
Collections remaining on deposit in the Principal Account with respect to
the related Transfer Date after application thereof to Class A Principal and
Class B Principal, if any, (ii) for each Distribution Date with respect to the
Accumulation Period, on or prior to the Expected Final Payment Date, the
applicable Controlled Deposit Amount for such Transfer Date (minus the Class
A Principal and the Class B
35
Principal with respect to such Transfer Date) and (iii) the Class C Adjusted
Invested Amount on such Transfer Date.
(d) The amount of principal (the "Class D Principal")
distributable from the Distribution Account with respect to the Class D
Certificates for each Distribution Date, beginning with the Class D
Principal Payment Commencement Date, or, in the case of distributions of Class
D Excess Amounts, on each Distribution Date during the Accumulation Period,
shall be equal to the lesser of (i) the Available Investor Principal
Collections remaining on deposit in the Principal Account with respect to
the related Transfer Date after application thereof to Class A Principal,
Class B Principal and Class C Principal, if any, (ii) the Class D Invested
Amount on such Transfer Date and (iii) in the case of distributions of Class D
Excess Amounts, the Class D Excess Amount.
SECTION 4.8 Shared Principal Collections. Shared Principal
Collections allocated to Available Investor Principal Collections for the
Series 1997-1 Certificates and to be applied to Class A Principal, Class B
Principal, Class C Principal and Class D Principal pursuant to subsection
4.9(c)(i)(z) of the Agreement for any Business Day with respect to the
Amortization Period shall mean an amount equal to the product of (x) Shared
Principal Collections for all Series for such Business Day and (y) a fraction,
the numerator of which is the Principal Shortfall for the Series 1997-1
Certificates for such Business Day and the denominator of which is the
aggregate amount of Principal Shortfalls for all Series for such Business Day.
For any Business Day with respect to the Revolving Period, Shared Principal
Collections allocated to Available Investor Principal Collections for the
Series 1997-1 Certificates shall be zero.
SECTION 4.9 Application of Funds on Deposit in the
Collection Account for the Certificates. (a) On each Business Day, the
Servicer shall deliver to the Trustee a Daily Report in which it shall
instruct the Trustee to withdraw, and the Trustee, acting in accordance with
such instructions, shall withdraw, to the extent of the sum of (x) prior to
the Pay Out Commencement Date, the Floating Allocation Percentage of the sum
of Finance Charge Collections and the amount of Adjustment Payments made by
the Transferor with respect to
36
Adjustment Payments required to be made but not made in a
prior Monthly Period, available in the Collection Account
or, on and after the Pay Out Commencement Date, the
Fixed/Floating Allocation Percentage of the sum of Fi-
xxxxx Charge Collections and the amount of Adjustment
Payments made by the Transferor with respect to Adjust-
ment Payments required to be made by not made in a prior
Monthly Period, available in the Collection Account, and
(y) amounts on deposit in the Payment Reserve Account, if
any, if and to the extent the Transferor designates that
such amounts are to be so applied (the "Available Series
1997-1 Finance Charge Collections"; provided, that with
respect to the Closing Date the amount deposited by the
Transferor into the Interest Funding Account pursuant to
subsection 4.5(a) of the Agreement shall also constitute
Available Series 1997-1 Finance Charge Collections) the
amounts required to be withdrawn from the Collection
Account pursuant to subsections 4.9(a)(i) through
4.9(a)(xvii) of the Agreement.
(i) Class A Interest. On each Business
Day during a Monthly Period, the Trustee, acting in
accordance with instructions from the Servicer,
shall withdraw from the Collection Account and
deposit into the Interest Funding Account for dis-
tribution on the next Distribution Date to the Class
A Certificateholders, to the extent of the Available
Series 1997-1 Finance Charge Collections for such
Business Day, an amount equal to the lesser of (x)
the Available Series 1997-1 Finance Charge Collect-
ions and (y) the excess of (1) the sum of Class A
Interest and Carryover Class A Interest over (2) any
amounts with respect thereto previously deposited
into the Interest Funding Account on any prior
Business Day during such Monthly Period. Notwith-
standing anything to the contrary herein, the por-
tion of Carryover Class A Interest that constitutes
Class A Additional Interest shall be payable or dis-
tributable to Class A Certificateholders only to the
extent permitted by applicable law.
(ii) Class B Interest. On each Business
Day during a Monthly Period, the Trustee, acting in
accordance with instructions from the Servicer,
shall withdraw from the Collection Account and
deposit into the Interest Funding Account for dis-
tribution on the next Distribution Date to the Class
37
B Certificateholders, to the extent of any Available
Series 1997-1 Finance Charge Collections remaining
after giving effect to the withdrawal pursuant to
subsection 4.9(a)(i) of the Agreement, an amount
equal to the lesser of (x) any such remaining Avail-
able Series 1997-1 Finance Charge Collections and
(y) the excess of (1) the sum of Class B Interest
and Carryover Class B Interest over (2) any amounts
with respect thereto previously deposited into the
Interest Funding Account on any prior Business Day
during such Monthly Period. Notwithstanding any-
thing to the contrary herein, the portion of Carry-
over Class B Interest that constitutes Class B
Additional Interest shall be payable or distribut-
able to Class B Certificateholders only to the
extent permitted by applicable law.
(iii) Class C Interest. On each Business
Day during a Monthly Period, the Trustee, acting in
accordance with instructions from the Servicer,
shall withdraw from the Collection Account and
deposit into the Interest Funding Account for dis-
tribution on the next Distribution Date to the Class
C Certificateholders, to the extent of any Available
Series 1997-1 Finance Charge Collections remaining
after giving effect to the withdrawal pursuant to
subsections 4.9(a)(i) and (ii) of the Agreement, an
amount equal to the lesser of (x) any such remaining
Available Series 1997-1 Finance Charge Collections
and (y) the excess of (1) the sum of Class C Inter-
est and Carryover Class C Interest over (2) any
amounts with respect thereto previously deposited
into the Interest Funding Account on any prior
Business Day during such Monthly Period. Notwith-
standing anything to the contrary herein, the por-
tion of Carryover Class C Monthly Interest that
constitutes Class C Additional Interest shall be
payable or distributable to Class C Certificatehold-
ers only to the extent permitted by applicable law.
(iv) Investor Servicing Fee. On each
Business Day, the Trustee, acting in accordance with
instructions from the Servicer, shall withdraw from
the Collection Account and distribute to the
Servicer, to the extent of any Available Series
1997-1 Finance Charge Collections remaining after
giving effect to the withdrawals pursuant to subsections
38
4.9(a)(i) through (iii) of the Agreement, an
amount equal to the lesser of (x) any such remaining
Available Series 1997-1 Finance Charge Collections
and (y) the excess of (i) the Servicing Fee for such
Monthly Period plus any unpaid Servicing Fees from
prior Monthly Periods over (ii) any amounts with re-
spect thereto previously distributed to the Servicer
during such Monthly Period.
(v) Investor Default Amount. On each
Business Day, first if such day is the Default
Recognition Date for the related Monthly Period, the
Transferor will deposit (as described below) Trans-
feror Retained Finance Charge Collections for each
prior day in the Current Monthly Period and second
the Trustee, acting in accordance with instructions
from the Servicer, shall withdraw to the extent of
any Available Series 1997-1 Finance Charge Collec-
tions remaining after giving effect to the with-
drawals pursuant to subsections 4.9(a)(i) through
(iv) of the Agreement, an amount equal to the lesser
of (x) any such remaining Available Series 1997-1
Finance Charge Collections and, if such day is the
related Default Recognition Date for such Monthly
Period, an amount equal to the aggregate Transferor
Retained Finance Charge Collections for each prior
day during the related Monthly Period and (y) the
sum of (1) the aggregate Investor Default Amount for
such Business Day plus (2) the unpaid Investor De-
fault Amount for each previous Business Day during
such Monthly Period, such amount to be (A) treated
as Shared Principal Collections during the Revolving
Period, and (B) to be treated as Available Investor
Principal Collections during the Amortization Peri-
od.
(vi) Adjustment Payment Shortfalls. On
each Business Day, the Trustee, acting in accordance
with instructions from the Servicer, shall withdraw
from the Collection Account, to the extent of any
Available Series 1997-1 Finance Charge Collections
remaining after giving effect to the withdrawals
pursuant to subsections 4.9(a)(i) through (v) of the
Agreement, an amount equal to the lesser of (x) any
such remaining Available Series 1997-1 Finance
Charge Collections and (y) an amount equal to the
Series Allocation Percentage of any Adjustment
39
Payment which the Transferor is required but fails
to make pursuant to subsection 3.8(a) of the Agree-
ment, such amount, (i) during the Revolving Period,
to be treated as Shared Principal Collections, and
(ii) during the Amortization Period, to be treated
as Available Investor Principal Collections.
(vii) Reimbursement of Class A Investor
Charge-Offs. On each Business Day, the Trustee,
acting in accordance with instructions from the
Servicer, shall withdraw from the Collection Ac-
count, to the extent of any Available Series 1997-1
Finance Charge Collections remaining after giving
effect to the withdrawals pursuant to subsections
4.9(a)(i) through (vi) of the Agreement, an amount
equal to the lesser of (x) any such remaining Avail-
able Series 1997-1 Finance Charge Collections and
(y) the unreimbursed Class A Investor Charge-Offs,
if any, will be applied to reimburse Class A Inves-
tor Charge-Offs, such amount during the Revolving
Period, to be treated as Shared Principal Collec-
tions, and during the Amortization Period, to be
treated as Available Investor Principal Collections.
(viii) Unpaid Class B Interest. On each
Business Day, the Trustee, acting in accordance with
the instructions from the Servicer, shall withdraw
from the Collection Account and deposit in the
Interest Funding Account for distribution to the
Class B Certificateholders on the next Distribution
Date, to the extent of any Available Series 1997-1
Finance Charge Collections remaining after giving
effect to the withdrawals pursuant to subsections
4.9(a)(i) through (vii) of the Agreement, an amount
equal to the lesser of (x) any such remaining Avail-
able Series 1997-1 Finance Charge Collections and
(y) the sum of (1) the amount of interest which has
accrued with respect to the Class B Outstanding
Principal Amount at the Class B Certificate Rate but
which has not been deposited into the Interest
Funding Account or paid to the Class B Certificate-
holders and (2) any additional interest (to the
extent permitted by applicable law) at the Class B
Certificate Rate for interest that has accrued on
interest that was due during a prior Monthly Period
pursuant to this subsection but was not deposited in
40
the Interest Funding Account or paid to the Class B
Certificateholders.
(ix) Unpaid Class C Interest. On each
Business Day, the Trustee, acting in accordance with
the instructions from the Servicer, shall withdraw
from the Collection Account and deposit in the
Interest Funding Account for distribution to the
Class C Certificateholders on the next Distribution
Date, to the extent of any Available Series 1997-1
Finance Charge Collections remaining after giving
effect to the withdrawals pursuant to subsections
4.9(a)(i) through (viii) of the Agreement, an amount
equal to the lesser of (x) any such remaining Avail-
able Series 1997-1 Finance Charge Collections and
(y) the sum of (1) the amount of interest which has
accrued with respect to the Class C Outstanding
Principal Amount at the Class C Certificate Rate but
which has not been deposited into the Interest
Funding Account or paid to the Class C Certificate-
holders and (2) any additional interest (to the
extent permitted by applicable law) at the Class C
Certificate Rate for interest that has accrued on
interest that was due during a prior Monthly Period
pursuant to this subsection but was not deposited in
the Interest Funding Account or paid to the Class C
Certificateholders.
(x) Reimbursement of Class B Investor
Charge-Offs. On each Business Day, the Trustee,
acting in accordance with instructions from the
Servicer, shall withdraw from the Collection Ac-
count, to the extent of any Available Series 1997-1
Finance Charge Collections remaining after giving
effect to the withdrawals pursuant to subsections
4.9(a)(i) through (ix) of the Agreement, an amount
equal to the lesser of (x) any such remaining Avail-
able Series 1997-1 Finance Charge Collections and
(y) the unreimbursed amount by which the Class B
Invested Amount has been reduced on prior Business
Days pursuant to clauses (c) and (d) of the defini-
tion of Class B Invested Amount, if any, such
amount, (i) during the Revolving Period, to be
treated as Shared Principal Collections, and (ii)
during the Amortization Period, to be treated as
Available Investor Principal Collections.
41
(xi) Reimbursement of Class C Investor
Charge-Offs. On each Business Day, the Trustee,
acting in accordance with instructions from the
Servicer, shall withdraw from the Collection Ac-
count, to the extent of any Available Series 1997-1
Finance Charge Collections remaining after giving
effect to the withdrawals pursuant to subsections
4.9(a)(i) through (x) of the Agreement, an amount
equal to the lesser of (x) any such remaining Avail-
able Series 1997-1 Finance Charge Collections and
(y) the unreimbursed amount by which the Class C
Invested Amount has been reduced on prior Business
Days pursuant to clauses (c) and (d) of the defini-
tion of Class C Invested Amount, if any, such
amount, (i) during the Revolving Period, to be
treated as Shared Principal Collections, and (ii)
during the Amortization Period, to be treated as
Available Investor Principal Collections.
(xii) Reimbursement of Class D Investor
Charge-Offs. On each Business Day, the Trustee,
acting in accordance with instructions from the
Servicer, shall withdraw from the Collection Ac-
count, to the extent of any Available Series 1997-1
Finance Charge Collections remaining after giving
effect to the withdrawals pursuant to subsections
4.9(a)(i) through (xi) of the Agreement, an amount
equal to the lesser of (x) any such remaining Avail-
able Series 1997-1 Finance Charge Collections and
(y) the unreimbursed amount by which the Class D
Invested Amount has been reduced on prior Business
Days pursuant to clauses (c) and (d) of the defini-
tion of Class D Invested Amount, if any, such
amount, (i) during the Revolving Period, to be
treated as Shared Principal Collections, and (ii)
during the Amortization Period, to be treated as
Available Investor Principal Collections.
(xiii) Class C Reserve Account. On each
Business Day, the Trustee, acting in accordance with
instructions from the Transferor, shall withdraw
from the Collection Account and distribute to the
Servicer, to the extent of any Available Series
1997-1 Finance Charge Collections remaining after
giving effect to the withdrawals pursuant to subsec-
tions 4.9(a)(i) through (xii) of the Agreement, an
42
amount equal to the lesser of (x) any such remaining
Available Series 1997-1 Finance Charge Collections
and (y) the amount specified to be deposited in the
Class C Reserve Account pursuant to the Class C
Reserve Account Agreement and the Servicer shall
deposit such amount, if any, in the Class C Reserve
Account.
(xiv) Accumulation Period Reserve Account.
On each Business Day on and after the Reserve Ac-
count Funding Date, but prior to the date on which
the Accumulation Period Reserve Account terminates
pursuant to subsection 4.20(d) of the Agreement, the
Trustee, acting in accordance with instructions from
the Servicer, shall withdraw from the Collection
Account and distribute to the Servicer, to the
extent of any Available Series 1997-1 Finance Charge
Collections remaining after giving effect to the
withdrawals pursuant to subsections 4.9(a)(i)
through (xiii) of the Agreement, an amount equal to
the lesser of (x) any such remaining Available
Series Finance Charge Collections and (y) the ex-
cess, if any, of the Required Reserve Account Amount
over the Available Reserve Account Amount and the
Servicer shall deposit such amount, if any, in the
Accumulation Period Reserve Account.
(xv) Payment Reserve Account. On each
Business Day, the Trustee, acting in accordance with
instructions from the Transferor, shall withdraw
from the Collection Account and distribute to the
Servicer, to the extent of any Available Series
1997-1 Finance Charge Collections remaining after
giving effect to the withdrawals pursuant to subsec-
tions 4.9(a)(i) through (xiv) of the Agreement, an
amount equal to the lesser of (x) any such remaining
Available Series 1997-1 Finance Charge Collections
and (y) the amount designated by the Transferor in
writing (which includes facsimile transmission) in
its instructions to the Trustee on such Business Day
and the Servicer shall deposit such amount, if any,
in the Payment Reserve Account.
(xvi) Excess Finance Charge Collections.
Any amounts remaining in the Collection Account to
the extent of any Available Series 1997-1 Finance
Charge Collections remaining after giving effect to
43
the withdrawals pursuant to subsection 4.9(a)(i)
through (xv) of the Agreement, shall be treated as
Excess Finance Charge Collections, and the Servicer
shall direct the Trustee in writing on each Business
Day to withdraw such amounts from the Collection
Account and to first make such amounts available to
pay to Certificateholders of other Series to the
extent of shortfalls, if any, in amounts payable to
such certificateholders from Finance Charge Collect-
ions allocated to such other Series, then to pay any
unpaid commercially reasonable costs and expenses of
a Successor Servicer, if any, and then on each Busi-
ness Day other than the Default Recognition Date, to
pay to the Transferor to be treated as "Transferor
Retained Finance Charge Collections," and, on each
Default Recognition Date, to pay any remaining
Excess Finance Charge Collections to the Transferor.
(b) For each Business Day with respect to the Revolving
Period, the funds on deposit in the Collection Account to the extent of the
product of (i) the Floating Allocation Percentage and (ii) Principal
Collections with respect to such Business Day (less the amount of Reallo-
cated Principal Collections on such Business Day) will be treated as Shared
Principal Collections and applied, pursuant to the written direction of the
Servicer in the Daily Report for such Business Day, as provided in Section
4.3(d) of the Agreement.
(c) For each Business Day on and after the Amortization
Period Commencement Date, the amount of funds on deposit in the Collection
Account, the Excess Funding Account or the Pre-Funding Account and other ac-
counts as described below will be distributed, pursuant to the written
direction of the Servicer in the Daily Report for such Business Day in the
following priority:
(i) an amount (not in excess of the In-
vested Amount) equal to the sum of (v) the product
of the Fixed/Floating Allocation Percentage and
Principal Collections in the Collection Account at
the end of the preceding Business Day (less the
amount thereof applied as Reallocated Principal
Collections on such Business Day), (w) any amount on
deposit in the Excess Funding Account allocated to
the Series 1997-1 Certificates on such Business Day
pursuant to subsection 4.9(d) of the Agreement, (x)
44
amounts to be paid pursuant to subsections
4.9(a)(v), (vi), (vii), (x), (xi) and (xii) of the
Agreement from Available Series Finance Charge
Collections and from amounts available pursuant to
subsections 4.10(a) and (b), 4.16(a), (b) and (c),
4.19(b) and 4.20(b), (c) and (d) of the Agreement on
such Business Day, (y) on and after the Pay Out
Commencement Date, any amount on deposit in the Pre-
Funding Account on such Business Day (less invest-
ment earnings thereon) and (z) the amount of Shared
Principal Collections allocated to the Series 1997-1
Certificates in accordance with Section 4.8 of the
Agreement on such Business Day, will be deposited
into the Principal Account; provided, however that
with respect to any Monthly Period during the Con-
trolled Accumulation Period, the aggregate amount
required to be deposited in the Principal Account
pursuant to this subsection 4.9(c)(i) shall not
exceed the sum of the Controlled Deposit Amount and,
at the option of the Transferor, the Class D Excess
Amount.
(ii) an amount equal to the excess, if
any, of (A) the sum of the amounts described in
clauses (i)(v) and (x) above over (B) the sum of
Class A Principal, Class B Principal and Class C
Principal will be treated as Shared Principal Col-
lections and applied as provided in subsection
4.3(d) of the Agreement; and
(iii) on the Class C Principal Payment
Commencement Date, the amount, if any, allocated
with respect to Class C Investor Charge-Offs pursu-
ant to clause (ii) of the second sentence of Section
3.2 of the Class C Reserve Account Agreement will be
deposited into the Principal Account.
(d) On the first Business Day of the Amortization Period
funds on deposit in the Excess Funding Account will be deposited in the
Principal Account to the extent of the lesser of (x) the Invested Amount and
(y) the product of (i) the amount on deposit in the Excess Funding Account at
the beginning of the Amortization Period and (ii) a fraction, the numerator of
which is equal to the Invested Amount and the denominator of which is equal to
the sum of the invested amounts of all Series in amortization periods on such
day.
45
SECTION 4.10 Coverage of Required Amount for the Series
1997-1 Certificates. (a) To the extent that any amounts are on deposit in the
Excess Funding Account or the Pre-Funding Account on any Business Day, the
Servicer shall apply, in the manner specified for application of Available
Series 1997-1 Finance Charge Collections in subsections 4.9(a)(i) through
(xiv) of the Agreement, Transferor Finance Charge Collections in an amount
(the "Negative Carry Amount") equal to the excess of (x) the product of (a)
the Base Rate, (b) the amounts on deposit in the Excess Funding Account and
the Pre-Funding Account and (c) the number of days elapsed since the previous
Business Day divided by the actual number of days in such year over (y) the
aggregate amount of all earnings since the previous Business Day available
from the Cash Equivalents in which funds on deposit in the Excess Funding
Account and Pre-Funding Account are invested.
(b) To the extent that on any Business Day payments are
being made pursuant to any of subsections 4.9(a)(i) through (xiv) of the
Agreement, respectively, and the full amount to be paid pursuant to any such
subsection receiving payments on such Business Day is not paid in full on such
Business Day, the Servicer shall apply, in the manner specified for
application of Available Series 1997-1 Finance Charge Collections in subsec-
tions 4.9(a)(i) through (xiv) of the Agreement, all or a portion of the Excess
Finance Charge Collections from other Series with respect to such Business Day
allocable to the Series 1997-1 Certificates in an amount equal to the excess
of the full amount to be allocated or paid pursuant to the applicable
subsection over the amount applied with respect thereto from Available Series
1997-1 Finance Charge Collections and Transferor Finance Charge Collections on
such Business Day (the "Required Amount"). Excess Finance Charge Collections
allocated to the Series 1997-1 Certificates for any Business Day shall mean an
amount equal to the product of (x) Excess Finance Charge Collections available
from all other Series for such Business Day and (y) a fraction, the numerator
of which is the Required Amount for such Business Day and the denominator of
which is the aggregate amount of shortfalls in required amounts or other
amounts to be paid from Finance Charge Collections for all Series for such
Business Day.
46
SECTION 4.11 Payment of Certificate Interest. On each
Transfer Date, the Trustee, acting in accordance with instructions from the
Servicer set forth in the Daily Report for such day, shall withdraw the amount
on deposit in the Interest Funding Account with respect to the preceding
Monthly Period allocable to the Series 1997-1 Certificates and deposit such
amount in the Distribution Account. On each Distribution Date, the Paying
Agent shall pay in accordance with Section 5.1 of the Agreement to (w) the
Class A Certificateholders from the Distribution Account such amount deposited
into the Distribution Account on the related Transfer Date allocable thereto
pursuant to subsection 4.9(a)(i) of the Agreement, (x) the Class B
Certificateholders from the Distribution Account the amount deposited into the
Distribution Account on the related Transfer Date allocable thereto pursuant
to subsections 4.9(a)(ii) and (viii) of the Agreement, (y) the Class C
Certificateholders from the Distribution Account the amount deposited into the
Distribution Account on the related Transfer Date allocable thereto pursuant
to subsections 4.9(a)(iii) and (ix) of the Agreement, and (z) the Class D
Certificateholders from the Distribution Account the amount deposited into the
Distribution Account on the related Transfer Date allocable thereto pursuant
to subsection 4.9(a)(xv) of the Agreement.
SECTION 4.12 Payment of Certificate Principal.
(a) On the Transfer Date preceding each Distribution Date
with respect to the Amortization Period, the Trustee, acting in accordance
with instructions from the Servicer set forth in the Daily Report for such
day, shall withdraw from the Principal Account and deposit into the
Distribution Account with respect to the Early Amortization Period, or the
Principal Funding Account with respect to the Accumulation Period, to the
extent of funds available, an amount equal to the Class A Principal for such
Distribution Date. On each Distribution Date with respect to the Early
Amortization Period until the Class A Invested Amount is paid in full, or on
the Expected Final Payment Date with respect to the Accumulation Period
following any deposit to the Distribution Account pursuant to subsection
4.12(f), the Paying Agent shall pay in accordance with Section 5.1 of the
Agreement to the Class A Certificateholders from the Distribution Account such
amounts deposited with respect to Class A
47
Principal into the Distribution Account on the related
Transfer Date.
(b) On the Transfer Date preceding the Class B Principal
Payment Commencement Date and each Transfer Date thereafter, the Trustee,
acting in accordance with instructions from the Servicer set forth in the
Daily Report for such day, shall withdraw from the Principal Account and
deposit in the Distribution Account with respect to the Early Amortization
Period, or the Principal Funding Account with respect to the Accumulation
Period, to the extent of funds available, an amount equal to the Class B
Principal for the related Distribution Date. On and after the Class B
Principal Payment Commencement Date, on each Distribution Date with respect
to the Early Amortization Period until the Class B Invested Amount is paid in
full or on the Expected Final Payment Date with respect to the Accumulation
Period following any deposit to the Distribution Account pursuant to
subsection 4.12(f), the Paying Agent shall pay in accordance with Section
5.1 of the Agreement to the Class B Certificateholders from the Distribution
Account such amounts deposited with respect to Class B Principal into the
Distribution Account on the related Transfer Date.
(c) On the Transfer Date preceding the Class C Principal
Payment Commencement Date and each Transfer Date thereafter, the Trustee,
acting in accordance with instructions from the Servicer set forth in the
Daily Report for such day, shall withdraw from the Principal Account and
deposit in the Distribution Account with respect to the Early Amortization
Period, or the Principal Funding Account with respect to the Accumulation
Period, to the extent of funds available, an amount equal to the Class C
Principal for the related Distribution Date. On and after the Class C
Principal Payment Commencement Date, on each Distribution Date with respect
to the Early Amortization Period until the Class C Invested Amount is paid in
full or on the Expected Final Payment Date with respect to the Accumulation
Period following any deposit to the Distribution Account pursuant to
subsection 4.12(f), the Paying Agent shall pay in accordance with Section
5.1 of the Agreement to the Class C Certificateholders from the Distribution
Account such amounts deposited with respect to Class C Principal into the
Distribution Account on the related Transfer Date.
48
(d) On the Transfer Date preceding the Class D Principal
Payment Commencement Date and each Transfer Date thereafter, or, in the case
of distributions of Class D Excess Amounts, on each Transfer Date during the
Accumulation Period preceding a Distribution Date on which a distribution
shall be made with respect to Class D Excess Amounts, the Trustee, acting in
accordance with instructions from the Servicer set forth in the Daily Report
for such day, shall withdraw from the Principal Account and deposit in the
Distribution Account, to the extent of funds available, an amount equal to the
Class D Principal for the related Distribution Date. On the Class D Principal
Payment Commencement Date after the payment of any principal amounts to the
Class A Certificates, the Class B Certificates and the Class C Certifi-
xxxxx on such day, and on each Distribution Date thereafter until the Class
D Invested Amount is paid in full and on each Distribution Date during the
Accumulation Period on which amounts are to be distributed with respect to
Class D Excess Amounts, the Paying Agent shall pay in accordance with Section
5.1 of the Agreement to the Class D Certificateholder from the Distribution
Account such amounts deposited with respect to Class D Principal into the
Distribution Account on the related Transfer Date; provided, however, that, if
so designated in writing by the Transferor with respect to any such Transfer
Date, any such payment of Class D Principal shall not be made to the Class D
Certificateholder and such amount shall be subtracted from the Class D
Invested Amount and added to the Transferor Interest.
(e) Any amounts remaining in the Principal Account and
allocable to the Series 1997-1 Certificates, after the Class D Invested Amount
has been paid in full, will be treated as Shared Principal Collections and
applied in accordance with Section 4.3(d) of the Agreement.
(f) On the earlier to occur of (i) the first Transfer Date
with respect to the Early Amortization Period and (ii) the Transfer Date
immediately preceding the Expected Final Payment Date, the Trustee, acting in
accordance with instructions from the Servicer, shall withdraw from the
Principal Funding Account and deposit in the Distribution Account the amount
on deposit in the Principal Funding Account for distribution first to Class A
Certificateholders up to an amount equal to the Class A
49
Invested Amount, second to Class B Certificateholders up to an amount equal to
the Class B Invested Amount, and third to Class C Certificateholders up to an
amount equal to the Class C Invested Amount.
SECTION 4.13 Investor Charge-Offs. (a) If, on any
Determination Date, the aggregate Investor Default Amount and the Series
Allocation Percentage of unpaid Adjustment Payments, if any, for each Business
Day in the preceding Monthly Period exceeded the Available Series 1997-1
Finance Charge Collections applied to the payment thereof pursuant to
subsections 4.9(a)(v) and (vi) of the Agreement, the amount of Transferor
Finance Charge Collections and Excess Finance Charge Collections allocated
thereto pursuant to Section 4.10 of the Agreement, the amount of Reallocated
Principal Collections applied with respect thereto pursuant to Section 4.16 of
the Agreement, the Amount of Principal Funding Account Investment Proceeds
applied with respect thereto pursuant to subsection 4.19(b), the Amount of
Pre-Funding Account investment proceeds applied with respect thereto pursuant
to Section 4.14(c), amounts withdrawn from the Accumulation Period Reserve
Account and applied with respect to the Investor Default Amount pursuant to
subsection 4.20(c) and the Series Allocation Percentage of unpaid Adjustment
Payments with respect to such Monthly Period, the Class D Invested Amount will
be reduced by the amount by which the remaining aggregate Investor Default
Amount and Series Allocation Percentage of unpaid Adjustment Payments exceed
the amount applied with respect thereto during such preceding Monthly Period
(a "Class D Investor Charge-Off").
(b) In the event that any such reduction of the Class D
Invested Amount would cause the Class D Invested Amount to be a negative
number, the Class D Invested Amount will be reduced to zero, and, the Class
C Invested Amount will be reduced by the amount by which the Class D Invested
Amount would have been reduced below zero, but not more than the aggregate
Investor Default Amount and Series Allocation Percentage of unpaid
Adjustment Payments for such Monthly Period (a "Class C Investor Charge-Off").
(c) In the event that any such reduction of the Class C
Invested Amount would cause the Class C Invested Amount to be a negative
number, the Class C In-
50
vested Amount will be reduced to zero, and, the Class B Invested Amount will
be reduced by the amount by which the Class C Invested Amount would have been
reduced below zero, but not more than the remaining aggregate Investor Default
Amount and Series Allocation Percentage of unpaid Adjustment Payments for such
Monthly Period (a "Class B Investor Charge-Off").
(d) In the event that any such reduction of the Class B
Invested Amount would cause the Class B Invested Amount to be a negative
number, the Class B Invested Amount will be reduced to zero, and the Class A
Invested Amount will be reduced by the amount by which the Class B Invested
Amount would have been reduced below zero, but not more than the remaining
aggregate Investor Default Amount and Series Allocation Percentage of unpaid
Adjustment Payments for such Monthly Period (a "Class A Investor Charge-Off").
SECTION 4.14. Pre-Funding Account. (a) Establishment of the
Pre-Funding Account. The Transferor hereby directs the Servicer, for the
benefit of the Series 1997-1 Certificateholders, to establish and maintain
or cause to be established and maintained in the name of the Trustee, on
behalf of the Series 1997-1 Certificateholders, with a Qualified Institution
(which initially shall be The Bank of New York) a segregated trust account
(the "Pre-Funding Account"), bearing a designation clearly indicating that the
funds deposited therein are held for the benefit of the Series 1997-1
Certificateholders. The Transferor does hereby transfer, assign, set over
and otherwise convey to the Trust for the benefit of the Series 1997-1
Certificateholders, without recourse, all of its right, title and interest in,
to and under the Pre-Funding Account, any Cash Equivalent on deposit therein
and any proceeds of the foregoing, including the investment earnings. The Pre-
Funding Account shall be under the sole dominion and control of the Trustee
for the benefit of the Series 1997-1 Certificateholders. If, at any time, the
institution holding the Pre-Funding Account ceases to be a Qualified
Institution, the Transferor shall direct the Servicer to establish within 10
Business Days a new Pre-Funding Account meeting the conditions specified
above with a Qualified Institution, transfer any cash and/or any investments
to such new Pre-Funding Account and from
51
the date such new Pre-Funding Account is established, it shall be the
"Pre-Funding Account." In addition, after five days notice to the Trustee, the
Transferor may direct the Servicer to establish a new Pre-Funding Account
meeting the conditions specified above with a different Qualified Institution,
transfer any cash and/or investments to such new Pre-Funding Account and from
the date such new Pre-Funding Account is established, it shall be, for the
Series 1997-1 Certificates, the "Pre-Funding Account." Pursuant to the
authority granted to the Servicer in subsection 3.1(b) of the Agreement, the
Servicer shall have the power, revocable by the Trustee, to make withdrawals
and payments or to instruct the Trustee to make withdrawals and payments from
the Pre-Funding Account for the purposes of carrying out the Servicer's or
Trustee's duties hereunder.
(b) Administration of Pre-Funding Account. The Transferor
shall on the Closing Date deposit in the Pre-Funding Account the Initial
Pre-Funded Amount. On the Business Day preceding each Transfer Date, the Ser-
vicer shall withdraw from the Pre-Funding Account and deposit in the
Collection Account all interest and other investment income on the Pre-Funded
Amount. Interest (including reinvested interest) and other investment income
on funds on deposit in the Pre-Funded Account shall not be considered part of
the Pre-Funded Amount for purposes of this Agreement. Funds on deposit in the
Pre-Funding Account shall be withdrawn by the Servicer and paid to the
Transferor to the extent of any increases in the Invested Amount pursuant to
Section 4.15 of the Agreement. If the Pay Out Commencement Date occurs during
the Funding Period, the remaining Pre-Funded Amount will be applied to make
principal payments with respect to the Certificates in accordance with subsec-
tion 4.9(c) of the Agreement. The Servicer shall withdraw the remaining
Pre-Funded Amount, if any, on deposit in the Pre-Funding Account on the first
Business Day of the September 1997 Monthly Period and deposit such amount into
the Excess Funding Account.
(c) Investment of Funds in Pre-Funding Account. Funds on
deposit in the Pre-Funding Account shall be invested in Cash Equivalents by
the Trustee (or, at the direction of the Trustee, by the Servicer on behalf of
the Trustee) at the direction of the Servicer. Funds on deposit in the
Pre-Funding Account on any Dis-
52
tribution Date, after giving effect to any withdrawals from the Pre-Funding
Account, shall be invested in Cash Equivalents that will mature so that such
funds will be available for withdrawal on or prior to the following Transfer
Date. The proceeds of any such investments shall be invested in Cash
Equivalents that will mature so that such funds will be available for
withdrawal on or prior to the following Transfer Date and, on such Transfer
Date, such proceeds shall be applied as if they were Available Series 1997-1
Finance Charge Collections available to be applied pursuant to Subsection
4.9(a) on the last Business Day of the preceding Monthly Period.
SECTION 4.15 Increases in Invested Amount. The Transferor
may at any time during the Funding Period determine to increase the Invested
Amount up to the Full Invested Amount to the extent there are sufficient Prin-
cipal Receivables in the Trust to permit such increase in the Invested Amount
without causing a Pay Out Event to occur with respect to any outstanding
Series. Upon determining to increase the Invested Amount pursuant to this
Section 4.15, the Transferor shall deliver to the Servicer, the Trustee and
each Rating Agency an Officers' Certificate specifying the amount of the in-
crease in the Invested Amount the Transferor has determined to make and
certifying that no Pay Out Event with respect to any outstanding Series will
occur as a result of or in connection with such increase in the Invested
Amount. Upon receipt of such Officer's Certificate by the Trustee, the Class A
Invested Amount, the Class B Invested Amount and the Class C Invested Amount
shall be increased pro rata by the amount specified in such Officers'
Certificate, whereupon the Trustee shall instruct the Servicer to withdraw
from the Pre-Funding Account and pay to the Transferor an amount equal to the
amount of such increase in the Class A Invested Amount, the Class B Invested
Amount and the Class C Invested Amount.
Upon the withdrawal of the remaining Pre-Funded Amount, if
any, on deposit in the Pre-Funding Account on the first Business Day of the
September 1997 Monthly Period and the deposit of such amount in the Excess
Funding Account, the Class A Invested Amount, the Class B Invested Amount and
the Class C Invested Amount shall be increased pro rata by such amount.
53
SECTION 4.16 Reallocated Principal Collections for the
Series 1997-1 Certificates. (a) On each Business Day, the Servicer will
determine an amount equal to the least of (i) the Class D Invested Amount,
(ii) the product of (x)(I) during the Revolving Period, the Class D Floating
Allocation Percentage or (II) during an Amortization Period, the Class D
Fixed/Floating Allocation Percentage and (y) the amount of Principal
Collections with respect to such Business Day and (iii) an amount equal to the
sum of (a) the Class A Required Amount for such Business Day, (b) the Class B
Required Amount for such Business Day and (c) the Class C Required Amount
for such Business Day (such amount called "Reallocated Class D Principal
Collections") and shall apply Principal Collections in an amount equal to such
amount first to the components of the Class A Required Amount, then to the
components of the Class B Required Amount and then to the components of the
Class C Required Amount in the same priority as amounts are applied to
such components from Available Series 1997-1 Finance Charge Collections
pursuant to subsection 4.9(a) of the Agreement.
(b) On each Business Day, the Servicer will determine an
amount equal to the least of (i) the Class C Invested Amount, (ii) the product
of (x)(I) during the Revolving Period, the Class C Floating Allocation Per-
centage or (II) during an Amortization Period, the Class C Fixed/Floating
Allocation Percentage and (y) the amount of Principal Collections for such
Business Day and (iii) an amount equal to the sum of (a) the excess, if any,
of the Class A Required Amount for such Business Day over the amount of
Reallocated Class D Principal Collections applied with respect thereto for
such Business Day and (b) the excess, if any, of the Class B Required
Amount for such Business Day over the amount of Reallocated Class D Principal
Collections applied with respect thereto for such Business Day (such amount
called "Reallocated Class C Principal Collections") and shall apply Principal
Collections in an amount equal to such amount first to the remaining
components of the Class A Required Amount and then to the remaining compo-
nents of the Class B Required Amount in the same priority as amounts are
applied to such components from Available Series 1997-1 Finance Charge
Collections pursuant to subsection 4.9(a) of the Agreement.
54
(c) On each Business Day, the Servicer will determine an
amount equal to the least of (i) the Class B Invested Amount, (ii) the product
of (x)(I) during the Revolving Period, the Class B Floating Allocation Per-
centage or (II) during an Amortization Period, the Class B Fixed/Floating
Allocation Percentage and (y) the amount of Principal Collections for such
Business Day and (iii) an amount equal to the excess, if any, of the Class A
Required Amount for such Business Day over the sum of the amount of
Reallocated Class D Principal Collections and Reallocated Class C Principal
Collections applied with respect thereto for such Business Day (such amount
called "Reallocated Class B Principal Collections") and shall apply
Principal Collections equal to such amount to the remaining components of the
Class A Required Amount in the same priority as amounts are applied to such
components from Available Series 1997-1 Finance Charge Collections pursuant to
subsection 4.9(a) of the Agreement.
SECTION 4.17 Determination of LIBOR. (a) "LIBOR" shall mean,
as of any LIBOR Determination Date, the rate for deposits in United States
dollars for one month (commencing on the first day of the relevant interest
period) which appears on Telerate Page 3750 as of 11:00 A.M., London time, on
the LIBOR Determination Date for such interest period. If such rate does not
appear on Telerate Page 3750, the rate for such LIBOR Determination Date
will be determined on the basis of the rates at which deposits in the United
States dollars are offered by the Reference Banks at approximately 11:00
a.m., London time, on such LIBOR Determination Date to prime banks in the
London interbank market for a period equal to one month (commencing on the
first day of the relevant interest period). The Trustee will request the
principal London office of each such bank to provide a quotation of its rate.
If at least two such quotations are provided, the rate for such LIBOR
Determination Date will be the arithmetic mean of the quotations. If fewer
than two quotations are provided as requested, the rate for such LIBOR
Determination Date will be the arithmetic mean of the rates quoted by four
major banks in New York City, selected by the Trustee, at approximately 11:00
a.m., New York City time, on the LIBOR Determination Date for loans in United
States dollars to leading European banks for a period equal to one month
(commencing on the first day of such interest period).
55
(b) The Class C Certificate Rate applicable to the then
current and the immediately preceding Interest Accrual Periods may be
obtained by any Series 1997-1 Certificateholder by telephoning the Trustee at
its Corporate Trust Office at (000) 000-0000.
(c) On each LIBOR Determination Date, the Trustee shall send
to the Servicer by facsimile notification of LIBOR for such LIBOR
Determination Date.
SECTION 4.18 Payment Reserve Account.
(a) The Servicer shall establish and maintain or cause to be
established and maintained with a Qualified Institution, which may be the
Trustee, in the name of the Trustee, on behalf of the Certificateholders, the
"Payment Reserve Account," which shall be a segregated trust account with the
corporate trust department of such Qualified Institution, bearing a
designation clearly indicating that the funds deposited therein are held for
the benefit of the Certificateholders. The Trustee shall possess all right,
title and interest in all funds on deposit from time to time in the Payment
Reserve Account and in all proceeds thereof. The Payment Reserve Account
shall be under the sole dominion and control of the Trustee for the benefit
of the Certificate holders. If, at any time, the institution holding the
Payment Reserve Account ceases to be a Qualified Institution, the Trustee
shall within 10 Business Days establish a new Payment Reserve Account
meeting the conditions specified above with a Qualified Institution, and
shall transfer any cash or any investments to such new Payment Reserve
Account. From the date such new Payment Reserve Account is established, it
shall be the "Payment Reserve Account."
(b) The Transferor, at its discretion, may on any Business
Day withdraw all or a part of any amounts then on deposit in the Payment
Reserve Account and apply such funds in accordance with Section 4.9(a) of the
Agreement.
(c) Funds on deposit in the Payment Reserve Account shall be
invested in Cash Equivalents by the Trustee (or, at the direction of the
Trustee, by the Servicer on behalf of the Trustee) at the direction of the
Servicer. Funds on deposit in the Payment Reserve
56
Account on any Business Day, after giving effect to any withdrawals from the
Payment Reserve Account, shall be invested in Cash Equivalents that will
mature so that such funds will be available for withdrawal on or prior to the
following Business Day. The proceeds of any such investments shall be invested
in Cash Equivalents that will mature so that such funds will be available for
withdrawal on or prior to the following Business Day.
SECTION 4.19 Principal Funding Account.
(a) The Servicer shall establish and maintain or cause to be
established and maintained with a Qualified Institution, which may be the
Trustee, in the name of the Trustee, on behalf of the Certificateholders, the
"Principal Funding Account," which shall be a segregated trust account with
the corporate trust department of such Qualified Institution, bearing a
designation clearly indicating that the funds deposited therein are held for
the benefit of the Series 1997-1 Certificateholders. The Trustee shall possess
all right, title and interest in all funds on deposit from time to time in the
Principal Funding Account and in all proceeds thereof. The Principal Funding
Account shall be under the sole dominion and control of the Trustee for the
benefit of the Series 1997-1 Certificateholders. If, at any time, the
institution holding the Principal Funding Account ceases to be a Qualified
Institution, the Trustee shall within 10 Business Days establish a new
Principal Funding Account meeting the conditions specified above with a
Qualified Institution, and shall transfer any cash or any investments to such
new Principal Funding Account. From the date such new Principal Funding
Account is established, it shall be the "Principal Funding Account." The
Trustee, at the written direction of the Servicer, shall (i) make withdrawals
from the Principal Funding Account from time to time, in the amounts and for
the purposes set forth in this Series Supplement, and (ii) on each Transfer
Date (from and after the commencement of the Accumulation Period) prior to
termination of the Principal Funding Account make a deposit into the
Principal Funding Account in the amount specified in, and otherwise in
accordance with, subsection 4.12 of the Agreement.
57
(b) Funds on deposit in the Principal Funding Account shall
be invested by the Trustee at the direction of the Servicer in Cash
Equivalents maturing no later than the following Transfer Date. On the
Transfer Date occurring in the month following the commencement of the
Accumulation Period and on each Transfer Date thereafter with respect to the
Accumulation Period, the Trustee, at the Servicer's written direction, shall
transfer from the Principal Funding Account to the Collection Account the
Principal Funding Account Investment Proceeds on deposit in the Principal
Funding Account, but not in excess of the Covered Amount, and shall apply such
amount as if such amounts were Available Series 1997-1 Finance Charge
Collections available to be applied pursuant to subsection 4.9(a) on the
last Business Day of the preceding Monthly Period. Principal Funding Account
Investment Proceeds (including reinvested interest) shall not be considered
part of the amounts on deposit in the Principal Funding Account for purposes
of this Series Supplement.
SECTION 4.20 Accumulation Period Reserve Account.
(a) The Servicer shall establish and maintain or cause to be
established and maintained with a Qualified Institution, which may be the
Trustee, in the name of the Trustee, on behalf of the Certificateholders, the
"Accumulation Period Reserve Account," which shall be a segregated trust
account with the corporate trust department of such Qualified Institution,
bearing a designation clearly indicating that the funds deposited therein
are held for the benefit of the Series 1997-1 Certificateholders. The Trustee
shall possess all right, title and interest in all funds on deposit from time
to time in the Accumulation Period Reserve Account and in all proceeds
thereof. The Accumulation Period Reserve Account shall be under the sole
dominion and control of the Trustee for the benefit of the Series 1997-1
Certificateholders. If, at any time, the institution holding the
Accumulation Period Reserve Account ceases to be a Qualified Institution, the
Trustee shall within 10 Business Days establish a new Accumulation Period
Reserve Account meeting the conditions specified above with a Qualified
Institution, and shall transfer any cash or any investments to such new
Accumulation Period Reserve Account. From the date such new Accumulation Period
58
Reserve Account is established, it shall be the "Accumulation
Period Reserve Account." The Trustee, at the written direction of the
Servicer, shall (i) make withdrawals from the Accumulation Period Reserve
Account from time to time, in the amounts and for the purposes set forth in
this Series Supplement, and (ii) on each Transfer Date (from and after the
Reserve Account Funding Date) prior to termination of the Accumulation
Period Reserve Account make a deposit into the Accumulation Period Reserve
Account in the amount specified in, and otherwise in accordance with,
subsection 4.9(a)(xiv) of the Agreement.
(b) Funds on deposit in the Accumulation Period Reserve
Account shall be invested by the Trustee at the direction of the Servicer in
Cash Equivalents maturing no later than the following Transfer Date. The
interest and other investment income (net of investment expenses and losses)
earned on such investments will be retained in the Accumulation Period Reserve
Account (to the extent the amount on deposit therein is less than the Required
Reserve Account Amount) or applied on each Transfer Date as if such amount
were Available Series 1997-1 Finance Charge Collections available to be ap-
plied pursuant to subsection 4.9(a) on the last Business Day of the preceding
Monthly Period.
(c) On or before each Transfer Date with respect to the
Accumulation Period and on the first Transfer Date with respect to the Early
Amortization Period, the Trustee at the direction of the Servicer shall with-
draw from the Accumulation Period Reserve Account, up to the Available Reserve
Account Amount, an amount equal to the excess of the Covered Amount for the
related Interest Accrual Period over the Principal Funding Account
Investment Proceeds with respect to such Transfer Date, and the amount of such
withdrawal shall be applied as if such amount were Available Series 1997-1
Finance Charge Collections available to be applied pursuant to subsection
4.9(a) on the last Business Day of the preceding Monthly Period.
(d) The Accumulation Period Reserve Account shall be
terminated following the earliest to occur of (a) the termination of the Trust
pursuant to the Agreement, (b) the date on which the Invested Amount is paid
in full, (c) if the Accumulation Period has not com-
59
menced, the occurrence of a Pay Out Event with respect to the Series 1997-1
Certificates and (d) if the Accumulation Period has commenced, the earlier
of the first Transfer Date with respect to the Early Amortization Period and
the Expected Final Payment Date. Upon the termination of the Accumulation
Period Reserve Account, all amounts on deposit therein (after giving effect to
any withdrawal from the Accumulation Period Reserve Account on such date as
described above) shall be applied as if they were Available Series 1997-1
Finance Charge Collections available to be applied pursuant to subsection
4.9(a) on the last Business Day of the preceding Monthly Period.
SECTION 4.21 Postponement of Accumulation Period. The
Accumulation Period is scheduled to commence at the close of business on the
last day of the March 2001 Monthly Period; provided, however, that, if the
Accumulation Period Length (determined as described below) is less than 12
months, the date on which the Accumulation Period actually commences may, at
the option of the Servicer, upon written notice to the Trustee, be delayed
to the first Business Day of the month that is the number of months prior to
the Expected Final Payment Date at least equal to the Accumulation Period
Length and, as a result, the number of Monthly Periods in the Accumulation
Period will at least equal the Accumulation Period Length. On each
Determination Date until the Accumulation Period begins, the Servicer will
determine the "Accumulation Period Length" which will equal the number of
months such that the sum of the Accumulation Period Factors for each Monthly
Period during such period will be equal to or greater than the Required
Accumulation Factor Number; provided, however, that the Accumulation Period
Length will not be less than one month.
SECTION 4.22 Defeasance. On the date that the following
conditions shall have been satisfied: (i) the Transferor shall have deposited
(x) in the Principal Funding Account, an amount such that the amount on de-
posit in the Principal Funding Account following such deposit is equal to the
sum of the Class A Outstanding Principal Amount, the Class B Outstanding
Principal Amount and the Class C Outstanding Principal Amount, and (y) in the
Accumulation Period Reserve Account, an amount equal to or greater than the
Covered Amount, as
60
estimated by the Transferor, for the period from the date of such deposit to
the Principal Funding Account through the Expected Final Payment Date; (ii)
the Transferor shall have delivered to the Trustee (a) an opinion of counsel
to the effect that such deposit will not result in the Trust being required to
register as an "investment company" within the meaning of the Investment
Company Act of 1940, as amended, (b) an opinion of counsel to the effect that
following such deposit none of the Trust, the Accumulation Period Reserve
Account or the Principal Funding Account will be deemed to be an association
(or publicly traded partnership) taxable as a corporation, (c) a certificate
of an officer of the Transferor stating that the Transferor reasonably be-
lieves that such deposit will not cause a Pay Out Event or any event that,
with the giving of notice or the lapse of time, would constitute a Pay Out
Event, to occur; and (iv) a Ratings Event will not occur, the Series 1997-1
Certificates will no longer be entitled to security interest of the Trust in
the Receivables and, except those set forth in clause (i) above, other Trust
assets and the percentages applicable to the allocation to the Series 1997-1
Certificateholders of Principal Collections, Finance Charge Collections and
Defaulted Receivables will be reduced to zero. Upon the satisfaction of the
foregoing conditions, the Class D Invested Amount will be reduced to zero.
SECTION 7. Article V of the Agreement. Article V of the
Agreement shall read in its entirety as follows and shall be applicable only
to the Series 1997-1 Certificates:
ARTICLE V
DISTRIBUTIONS AND REPORTS TO INVESTOR
CERTIFICATEHOLDERS
SECTION 5.1 Distributions. (a) On each Distribution Date,
the Paying Agent shall distribute (in accordance with the Settlement Statement
delivered by the Servicer to the Trustee and the Paying Agent pursuant to
subsection 3.4(c)) to each Class A Certificate holder of record on the
preceding Record Date (other than as provided in subsection 2.4(e) or in
Section 12.3 respecting a final distribution) such Certificate-
61
holder's pro rata share (based on the aggregate Undivided Interests
represented by each Class A Certificate held by such Certificateholder) of
amounts on deposit in the Distribution Account as are payable to each Class A
Certificateholders pursuant to Sections 4.11 and 4.12 of the Agreement by
check mailed to each Class A Certificateholder at such Certificateholder's
address as it appears on the Certificate Register or, in the case of Class A
Certificateholders holding Class A Certificates evidencing Undivided Interests
aggregating not less than 80% of the Invested Amount, by wire transfer, at the
expense of such Class A Certificateholder, to an account or accounts
designated by such Class A Certificateholder by written notice given to the
Paying Agent not less than five days prior to related Distribution Date; pro-
vided, however, that the final payment in retirement of the Class A
Certificates will be made only upon presentation and surrender of the Class
A Certificates at the office or offices specified in the notice of such final
distribution delivered by the Trustee pursuant to Section 12.3.
(b) On each Distribution Date, the Paying Agent shall
distribute (in accordance with the Settlement Statement delivered by the
Servicer to the Trustee and the Paying Agent pursuant to subsection 3.4(c)) to
each Class B Certificateholder of record on the preceding Record Date (other
than as provided in subsection 2.4(e) or in Section 12.3 respecting a final
distribution) such Certificateholder's pro rata share (based on the
aggregate Undivided Interests represented by Class B Certificates held by such
Certificateholder) of amounts on deposit in the Distribution Account as are
payable to the Class B Certificateholders pursuant to Sections 4.11 and 4.12
of the Agreement by check mailed to each Class B Certificateholder at such
Certificateholder's address as it appears on the Certificate Register or, in
the case of Class B Certificateholders holding Class B Certificates
evidencing Undivided Interest aggregating not less than 80% of the Invested
Amount, by wire transfer, at the expense of such Class B Certificateholder, to
an account or accounts designated by such Class B Certificateholder by
written notice given to the Paying Agent not less than five days prior to the
related Distributed Date; provided, however, that the final payment in re-
tirement of the Class B Certificates will be made only upon presentation and
surrender of the Class B Certifi-
62
xxxxx at the office or offices specified in the notice of such final
distribution delivered by the Trustee pursuant to Section 12.3.
(c) On each Distribution Date, the Paying Agent shall
distribute (in accordance with the Settlement Statement delivered by the
Servicer to the Trustee and the Paying Agent pursuant to subsection 3.4(c)) to
each Class C Certificateholder of record on the preceding Record Date (other
than as provided in subsection 2.4(e) or in Section 12.3 respecting a final
distribution) such Certificateholder's pro rata share (based on the
aggregate Undivided Interests represented by Class C Certificates held by such
Certificateholder) of amounts on deposit in the Distribution Account as are
payable to the Class C Certificateholders pursuant to Sections 4.11 and 4.12
of the Agreement by wire transfer to each Class C Certificateholder to an
account or accounts designated by such Class C Certificateholder by written
notice given to the Paying Agent not less than five days prior to the related
Distribution Date; provided, however, that the final payment in retirement of
the Class C Certificates will be made only upon presentation and surrender of
the Class C Certificates at the office or offices specified in the notice of
such final distribution delivered by the Trustee pursuant to Section 12.3.
(d) On each Distribution Date, the Paying Agent shall
distribute (in accordance with the Settlement Statement delivered by the
Servicer to the Trustee and the Paying Agent pursuant to subsection 3.4(c)) to
each Class D Certificateholder of record on the preceding Record Date (other
than as provided in subsection 2.4(e) or in Section 12.3 respecting a final
distribution) such Certificateholder's pro rata share (based on the
aggregate Undivided Interests represented by Class D Certificates held by such
Certificateholder) of amounts on deposit in the Distribution Account as are
payable to the Class D Certificateholders pursuant to Sections 4.11 and 4.12
of the Agreement by wire transfer to each Class D Certificateholder to an
account or accounts designated by such Class D Certificateholder by written
notice given to the Paying Agent not less than five days prior to the related
Distribution Date; provided, however, that the final payment in retirement of
the Class D Certificates will be made only upon presentation and surrender of
the Class D Certificates at the office or
63
offices specified in the notice of such final distribution delivered by the
Trustee pursuant to Section 12.3.
SECTION 5.2 Certificateholders' Statement. (a) On the 20th
day of each calendar month (or if such day is not a Business Day the next
succeeding Business Day), the Paying Agent shall forward to each Certifi-
cateholder and the Rating Agencies a statement substantially in the form of
Exhibit B prepared by the Servicer and delivered to the Trustee and the Paying
Agent on the preceding Determination Date setting forth the following
information (which, in the case of (i), (ii) and (iii) below, shall be stated
on the basis of an original principal amount of $1,000 per Certificate and,
in the case of (ix) and (x), shall be stated on an aggregate basis and on the
basis of an original principal amount of $1,000 per Certificate):
(i) the total amount distributed;
(ii) the amount of such distribution
allocable to Certificate Principal;
(iii) the amount of such distribution
allocable to Certificate Interest;
(iv) the amount of Principal Collections
received in the Collection Account during the pre-
ceding Monthly Period and allocated in respect of
the Class A Certificates, the Class B Certificates,
the Class C Certificates and the Class D Certifi-
xxxxx, respectively;
(v) the amount of Finance Charge Collec-
tions processed during the preceding Monthly Period
and allocated in respect of the Class A Certifi-
xxxxx, the Class B Certificates, the Class C Cer-
tificates and the Class D Certificates, respective-
ly, and the amount of Principal Funding Account
Investment Proceeds and investment earnings on
amounts on deposit in the Accumulation Period Re-
serve Account and the Pre-Funding Account;
(vi) the aggregate amount of Principal
Receivables, the Invested Amount, the Class A In-
vested Amount, the Class B Invested Amount, the
Class C Invested Amount, the Class D Invested
64
Amount, the Floating Allocation Percentage and,
during the Amortization Period, the Fixed/Floating
Allocation Percentage, Class B Fixed/Floating Allo-
cation Percentage, or Class C Fixed/Floating Allo-
cation Percentage as applicable, as of the end of
the day on the last day of the related Monthly
Period;
(vii) the aggregate outstanding balance
of Receivables which are current, 30-59, 60-89, and
90 days and over delinquent as of the end of the
day on the last day of the related Monthly Period;
(viii) the aggregate Investor Default
Amount for the preceding Monthly Period;
(ix) the aggregate amount of Class A
Investor Charge-Offs, Class B Investor Charge-Offs,
Class C Investor Charge-Offs and Class D Investor
Charge-Offs for the preceding Monthly Period;
(x) the amount of the Servicing Fee for
the preceding Monthly Period;
(xi) the Class A Pool Factor, the Class
B Pool Factor and the Class C Pool Factor as of the
end of the last day of the Monthly Period immedi-
ately preceding the Determination Date;
(xii) the amount of unreimbursed Reallo-
cated Class B Principal Collections, Reallocated
Class C Principal Collections and Reallocated Class
D Principal Collections for the related Monthly
Period;
(xiii) the aggregate amount of funds in
the Excess Funding Account and the Pre-Funding
Account as of the last day of the Monthly Period
immediately preceding the Distribution Date;
(xiv) the Specified Class C Reserve
Amount, the amount then on deposit in the Class C
Reserve Account and whether a Class C Trigger Event
has occurred;
65
(xv) the number of new Accounts the
Receivables in which have been added to the Trust
during the related Monthly Period;
(xvi) the Portfolio Yield for the relat-
ed Monthly Period;
(xvii) the Base Rate for the related
Monthly Period;
(xviii) the Principal Funding Account
Balance on the related Transfer Date;
(xix) the Accumulation Shortfall;
(xx) the scheduled date for the com-
mencement of the Accumulation Period and the Accu-
mulation Period Length; and
(xxi) the amount of Principal Funding
Account Investment Proceeds deposited in the Col-
lection Account on the related Transfer Date, the
Required Reserve Account Amount and the Available
Reserve Account Amount as of the related Transfer
Date, and the Covered Amount for the related Inter-
est Accrual Period.
(b) Annual Certificateholders' Tax Statement. On or
before January 31 of each calendar year, beginning with calendar year 1998,
the Paying Agent shall distribute to each Person who at any time during the
preceding calendar year was a Series 1997-1 Certificateholder, a statement
prepared by the Servicer containing the information required to be contained
in the regular report to Series 1997-1 Certificateholders, as set forth in
subclauses (i), (ii) and (iii) above, aggregated for such calendar year or the
applicable portion thereof during which such Person was a Series 1997-1
Certificateholder, together with, on or before January 31 of each year,
beginning in 1998, such other customary information (consistent with the
treatment of the Certificates as debt) as the Trustee or the Servicer deems
necessary or desirable to enable the Series 1997-1 Certificateholders to
prepare their tax returns. Such obligations of the Trustee shall be deemed to
have been satisfied to the extent that substantially comparable information
shall be provided by the Trustee pursuant to
66
any requirements of the Internal Revenue Code as from time to time in effect.
SECTION 8. Series 1997-1 Pay Out Events. If any one
of the following events shall occur with respect to the Series 1997-1
Certificates:
(a) failure on the part of the Transferor (i) to
make any payment or deposit required to be made by the Transferor by the terms
of (A) the Agreement or (B) this Series Supplement, on or before the date
occurring five Business Days after the date such payment or deposit is
required to be made herein, (ii) to perform in all material respects the
Transferor's covenant not to sell, pledge, assign, or transfer to any person,
or grant any unpermitted lien on, any Receivable; or (iii) duly to observe or
perform in any material respect any covenants or agreements of the Transferor
set forth in the Agreement or this Series Supplement, which failure has a
material adverse effect on the Series 1997-1 Certificateholders and which
continues unremedied for a period of 60 days after the date on which written
notice of such failure, requiring the same to be remedied, shall have been
given to the Transferor by the Trustee, or to the Transferor and the Trustee
by the Holders of Series 1997-1 Certificates evidencing Undivided Interests
aggregating not less than 50% of the Invested Amount of this Series 1997-1,
and continues to affect materially and adversely the interests of the Series
1997-1 Certificateholders for such period;
(b) any representation or warranty made by the
Transferor in the Agreement or this Series Supplement, (i) shall prove to
have been incorrect in any material respect when made, which continues to be
incorrect in any material respect for a period of 60 days after the date on
which written notice of such failure, requiring the same to be remedied, shall
have been given to the Transferor by the Trustee, or to the Transferor and the
Trustee by the Holders of the Series 1997-1 Certificates evidencing Undivided
Interests aggregating more than 50% of the Invested Amount of this Series
1997-1, and (ii) as a result of which the interests of the Series 1997-1
Certificateholders are materially and adversely affected and continue to be
materially and adversely affected for such period; provided, however, that a
Series 1997-1 Pay Out Event pursuant to this
67
subsection 8(b) shall not be deemed to have occurred hereunder if the
Transferor has accepted reassignment of the related Receivable, or all of such
Receivables, if applicable, during such period (or such longer period as the
Trustee may specify) in accordance with the provisions of the Agreement;
(c) the average of the Portfolio Yields for any
three consecutive Monthly Periods is reduced to a rate which is less than the
weighted average Base Rates for such three consecutive Monthly Periods;
(d) (i) the Transferor Interest shall be less than
the Minimum Transferor Interest, (ii) (A) the sum of the amount on deposit in
the Pre-Funding Account plus the Series Allocation Percentage of the sum of
the total amount of Principal Receivables plus amounts on deposit in the
Excess Funding Account shall be less than (B) the sum of the Class A
Outstanding Principal Amount, the Class B Outstanding Principal Amount, the
Class C Outstanding Principal Amount and the Class D Outstanding Principal
Amount, (iii) the total amount of Principal Receivables and the amounts on
deposit in the Excess Funding Account and the Principal Funding Account shall
be less than the Minimum Aggregate Principal Receivables or (iv) the Retained
Percentage shall be equal to or less than 2%, in each case as of any
Determination Date; or
(e) any Servicer Default shall occur which would
have a material adverse effect on the Series 1997-1 Certificateholders;
then, in the case of any event described in subparagraph (a), (b) or (e),
after the applicable grace period, if any, set forth in such subparagraphs,
the Holders of Series 1997-1 Certificates evidencing Undivided Interests
aggregating more than 50% of the Invested Amount of this Series 1997-1, by
notice then given in writing to the Trustee, the Transferor and the Servicer
may declare that a pay out event (a "Series 1997-1 Pay Out Event") has
occurred as of the date of such notice, and in the case of any event described
in subparagraphs (c) or (d), a Series 1997-1 Pay Out Event shall occur without
any notice or other action on the part of the Trustee or the Series 1997-1
Certificateholders immediately upon the occurrence of such event.
68
SECTION 9. Series 1997-1 Termination. The right of the
Series 1997-1 Certificateholders to receive payments from the Trust will
terminate on the first Business Day following the Series 1997-1 Termination
Date unless such Series is an Affected Series as specified in Section
12.1(c) of the Agreement and the sale contemplated therein has not occurred by
such date, in which event the Series 1997-1 Certificateholders shall remain
entitled to receive proceeds of such sale when such sale occurs.
SECTION 10. Legends; Transfer and Exchange; Restrictions on
Transfer of Series 1997-1 Certificates; Tax Treatment.
(a) Each Class B Certificate will bear a legend or
legends substantially in the following form:
EACH PURCHASER REPRESENTS AND WARRANTS
FOR THE BENEFIT OF METRIS RECEIVABLES, INC.
AND THE TRUSTEE THAT SUCH PURCHASER IS NOT (I)
AN EMPLOYEE BENEFIT PLAN (AS DEFINED IN SEC-
TION 3(3) OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED ("ERISA"))
THAT IS SUBJECT TO THE PROVISIONS OF TITLE I
OF ERISA, (II) A PLAN DESCRIBED IN SECTION
4975(E)(1) OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE"), (III) A GOVERN-
MENTAL PLAN, AS DEFINED IN SECTION 3(32) OF
ERISA, SUBJECT TO ANY FEDERAL, STATE OR LOCAL
LAW WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO
THE PROVISIONS OF SECTION 406 OF ERISA OR SEC-
TION 4975 OF THE CODE, (IV) AN ENTITY WHOSE
UNDERLYING ASSETS INCLUDE PLAN ASSETS (AS DE-
FINED IN 29 C.F.R. SECTION 2510.3-101 OR OTH-
ERWISE UNDER ERISA) BY REASON OF A PLAN'S IN-
VESTMENT IN THE ENTITY OR (V) A PERSON INVEST-
ING PLAN ASSETS OF ANY SUCH PLAN (INCLUDING
WITHOUT LIMITATION, FOR PURPOSES OF CLAUSE
(IV) AND THIS CLAUSE (V), ANY INSURANCE COMPA-
NY GENERAL ACCOUNT, BUT EXCLUDING ANY ENTITY
REGISTERED UNDER THE INVESTMENT COMPANY ACT OF
1940, AS AMENDED).
(b) The Class C Certificates have not been, and
will not be, registered under the Securities Act or any state securities law.
No reoffer, resale,
69
pledge (except as provided in the Pooling and Servicing Agreement) or other
transfer of any Class C Certificate or any interest therein or participation
thereof will be made unless such resale or transfer is made (i) to the
Transferor, (ii) to a limited number of institutional "accredited investors"
(as defined in Rule 501 (a)(1), (2), (3) or (7) under the Securities Act) in a
transaction exempt from the registration requirements of the Securities Act
(upon delivery of the documentation required by the Pooling and Servicing
Agreement and, if the Trustee so requires, an opinion of counsel satisfac-
tory to the Trustee) or (iii) pursuant to Rule 144A to a person who the seller
of the Class C Certificates reasonably believes is a QIB purchasing for its
own account or a QIB purchasing for the account of a QIB, whom the holder has
informed, in each case, that the reoffer, resale, pledge or other transfer is
being made in reliance on Rule 144A. Neither the Transferor nor the Trustee
is obligated to register the Class C Certificates under the Securities Act
or to take any otherwise required under the Pooling and Servicing Agreement or
the Series 1997-1 Supplement to permit the transfer of Class C Certificates
without registration. No Class C Certificate or any interest therein may be
sold, traded, conveyed, assigned, hypothecated, pledged, participated, or
otherwise transferred (each, a "Transfer") except in accordance with this
Section 10. Any Transfer of a Class C Certificate otherwise permitted by this
Section 10 will be permitted only if it consists of a pro rata percentage
interest in all payments made with respect to such Holder's Class C
Certificates and no Transfers of partial interests in a Class C Certificate
will be permitted. No Class C Certificate or any interest therein may be
Transferred to any Person (each, an "Assignee") unless the Assignee has
executed and delivered the certification referred to in subsection 10(d)
below and the Transferor has granted prior written consent thereto. Such
consent shall be granted unless the Transferor determines in its sole and
absolute discretion that such Transfer would create more than an insubstantial
risk that the Trust would be classified for Federal or any applicable state
tax purposes as an association or publicly traded partnership taxable as a
corporation; provided, that any attempted Transfer that would cause the
number of Targeted Holders to exceed one hundred shall be void; and provided,
further, that there shall not at any time be more than 10 Class C
Certificateholders or
70
such other number as may be consented to by the Transferor, which consent
may be withheld in its sole and absolute discretion.
(c) Each initial purchaser of a Class C Certificate
or any interest therein and any Assignee thereof shall certify to the
Transferor and the Trustee that it is either (A)(i) a citizen or resident of
the U.S., (ii) a corporation, partnership or other entity organized in or
under the laws of the U.S. or any political subdivision thereof or (iii) a
person not described in (i) or (ii) whose ownership of the Class C Certifi-
xxxxx is effectively connected with such person's conduct of a trade or
business within the U.S. (within the meaning of the Internal Revenue Code) and
whose ownership of any interest in a Class C Certificate will not result in
any withholding obligation with respect to any payments with respect to the
Class C Certificates by any person (other than withholding, if any, under
Section 1446 of the Code) or (B) an estate the income of which is includible
in gross income for U.S. Federal income tax purposes or any trust if a court
within the United States is able to exercise primary supervision over the
administration of the trust and one or more United States fiduciaries have the
authority to control all substantial decisions of the trust. It also agrees
that (a) if it is a person described in clause (A)(i) or (A)(ii) above, it
will furnish to the Transferor, the Servicer and the Trustee, a properly
executed U.S. Internal Revenue Service Form W-9 and a new Form W-9, or any
successor applicable form, upon the expiration or obsolescence of any
previously delivered form or (b) if it is a person described in clause
(A)(iii) above, it will furnish to the Transferor, the Servicer and the
Trustee a properly executed U.S. Internal Revenue Service Form 4224 (or
applicable successor form) and a new Form 4224 (or applicable successor form)
upon the expiration or obsolescence of any previously delivered form (and
such other certifications, representations or opinions of counsel as may be
requested by the Transferor, the Servicer or the Trustee). Such person
recognizes that if it is a tax-exempt entity a portion of the payments with
respect to the Certificates may constitute unrelated business taxable income.
If the purchaser is a Person which is described in clause
A(iii) of the preceding paragraph, it
71
will deliver a properly completed and executed Form 4224 (or applicable
successor form) indicating no taxes will be required to be withheld by any
person with respect to any payments to be made to such purchaser in respect of
the Class C Certificates (other than withholding, if any, under Section 1446
of the Code) purchased by it, and it will, during the period in which such
Form is effective, report all interest payments received by it in respect of
such Class C Certificates as income effectively connected with the conduct
of a trade or business in the United States and pay all United States federal
income taxes imposed with respect to such income as required by law. Further,
such purchaser will provide the Transferor and the Trustee a new Form 4224 (or
applicable successor form) upon the expiration or obsolescence of any
previously delivered Form and comparable statements in accordance with
applicable U.S. laws and regulations and amendments duly executed and
completed by such purchaser, and it will comply from time to time with all
applicable U.S. laws and regulations with regard to such withholding tax
exemption. Each initial purchaser of a Class C Certificate or any interest
therein and any Assignee thereof must certify to the Transferor and the
Trustee that if it is not created or organized under the laws of the United
States or any State thereof (including the District of Columbia) it will, upon
written notice by the Transferor that the Transferor intends, pursuant to
Section 1446 or other applicable section of the Code, to withhold U.S. tax (a
"Withholding Tax") from amounts paid or accruing with respect to a Class C
Certificate to such purchaser (such determination being a "Withholding
Event"), such purchaser shall for tax years for which the purchaser has
already filed U.S. federal income tax returns (each a "Prior Tax Year") prior
to proper notice of such Withholding Event, provide (A) a signed officer's
certificate of such purchaser stating that amounts paid or accruing
hereunder have been included in such purchaser's U.S. federal income tax
returns for each such Prior Tax Year, which certificate may be relied on by
the Transferor in asserting to the Internal Revenue Service the applicability
of Section 1463 of the Code with respect to any Withholding Tax for each such
Prior Tax Year and (B) provide information to the Transferor or, at the option
of such purchaser, to the Internal Revenue Service in support of the
application of Section 1463 of the Code for each such Prior Tax Year.
72
(d) Each initial purchaser of a Class C Certificate
or any interest therein and any Assignee thereof shall further certify to the
Transferor and the Trustee that it has neither acquired nor will it Transfer
the Class C Certificates (or any interest therein) or cause the Class C
Certificates to be marketed on or through (i) an "established securities
market" within the meaning of Section 7704(b)(1) of the Internal Revenue
Code and any treasury regulation thereunder, including, without limitation,
an over-the-counter-market or an interdealer quotation system that regularly
disseminates firm buy or sell quotations or (ii) a "secondary market" within
the meaning of Section 7704(b)(2) of the Internal Revenue Code and any
treasury regulation thereunder, including a market wherein the Class C
Certificates (or any interest therein) are regularly quoted by any Person
making a market in such interests and a market wherein any Person regularly
makes available bid or offer quotes with respect to the Class C Certificates
(or any interest therein) and stands ready to effect buy or sell transactions
at the quoted prices for itself or on behalf of others. In addition, each
initial purchaser of a Class C Certificate or any interest therein and any
Assignee must certify, prior to any delivery or Transfer to it of a Class C
Certificate that, for so long as it holds an interest in a Class C
Certificate, it is not and will not become a partnership, Subchapter S
corporation or grantor trust for U.S. Federal income tax purposes. If an
initial purchaser of an interest in a Class C Certificate or an Assignee
cannot make the certification described in the preceding sentence, the
Transferor may, in its sole discretion, prohibit a Transfer to such entity;
provided, however, that if the Transferor agrees to permit such a Transfer,
the Transferor, the Servicer or the Trustee may require additional
certifications in order to prevent the Trust from being treated as a publicly
traded partnership. Each initial purchaser of an interest in a Class C
Certificate and Assignee acknowledges that the Opinion of Counsel to the
effect that the Trust will not be treated as a publicly traded partnership
taxable as a corporation is dependent in part on the accuracy of the
certifications described in this Section 10(d).
(e) Each Class C Certificate will bear legends
substantially in the following form:
73
EACH PURCHASER REPRESENTS AND WARRANTS
FOR THE BENEFIT OF METRIS RECEIVABLES, INC.
AND THE TRUSTEE THAT SUCH PURCHASER IS NOT (I)
AN EMPLOYEE BENEFIT PLAN (AS DEFINED IN SEC-
TION 3(3) OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED ("ERISA"))
THAT IS SUBJECT TO THE PROVISIONS OF TITLE I
OF ERISA, (II) A PLAN DESCRIBED IN SECTION
4975(E)(1) OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE"), (III) A GOVERN-
MENTAL PLAN, AS DEFINED IN SECTION 3(32) OF
ERISA, SUBJECT TO ANY FEDERAL, STATE OR LOCAL
LAW WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO
THE PROVISIONS OF SECTION 406 OF ERISA OR SEC-
TION 4975 OF THE CODE, (IV) AN ENTITY WHOSE
UNDERLYING ASSETS INCLUDE PLAN ASSETS (AS DE-
FINED IN 29 C.F.R. SECTION 2510.301-1 OR OTH-
ERWISE UNDER ERISA) BY REASON OF A PLAN'S IN-
VESTMENT IN THE ENTITY OR (V) A PERSON INVEST-
ING PLAN ASSETS OF ANY SUCH PLAN (INCLUDING
WITHOUT LIMITATION, FOR PURPOSES OF CLAUSE
(IV) AND THIS CLAUSE (V), ANY INSURANCE COMPA-
NY GENERAL ACCOUNT, BUT EXCLUDING ANY ENTITY
REGISTERED UNDER THE INVESTMENT COMPANY ACT OF
1940, AS AMENDED).
THIS CERTIFICATE MAY NOT BE ACQUIRED, SOLD,
TRADED OR TRANSFERRED BY A PERSON WHO IS NOT EITHER
(A)(I) A CITIZEN OR RESIDENT OF THE UNITED STATES,
(II) A CORPORATION, PARTNERSHIP OR OTHER ENTITY
ORGANIZED IN OR UNDER THE LAWS OF THE UNITED STATES
OR ANY POLITICAL SUBDIVISION THEREOF OR (III) A
PERSON NOT DESCRIBED IN (I) OR (II) WHOSE OWNERSHIP
OF THE CLASS C CERTIFICATES IS EFFECTIVELY CONNECT-
ED WITH SUCH PERSON'S CONDUCT OF A TRADE OR BUSI-
NESS WITHIN THE UNITED STATES (WITHIN THE MEANING
OF THE CODE) AND ITS OWNERSHIP OF ANY INTEREST IN A
CLASS C CERTIFICATE WILL NOT RESULT IN ANY WITH-
HOLDING OBLIGATION WITH RESPECT TO ANY PAYMENTS
WITH RESPECT TO THE CLASS C CERTIFICATES BY ANY
PERSON (OTHER THAN WITHHOLDING, IF ANY, UNDER SEC-
TION 1446 OF THE CODE) OR (B) AN ESTATE THE INCOME
OF WHICH IS INCLUDIBLE IN GROSS INCOME FOR UNITED
STATES FEDERAL INCOME TAX PURPOSES OR ANY TRUST IF
A COURT WITHIN THE UNITED STATES IS ABLE TO EXER-
CISE PRIMARY SUPERVISION OVER THE ADMINISTRATION OF
THE TRUST AND ONE OR MORE UNITED STATES FIDUCIARIES
74
HAVE THE AUTHORITY TO CONTROL ALL SUBSTANTIAL DECI-
SIONS OF THE TRUST.
THIS CERTIFICATE MAY NOT BE ACQUIRED,
SOLD, TRADED, TRANSFERRED, ASSIGNED, PARTICI-
PATED, PLEDGED, HYPOTHECATED OR OTHERWISE DIS-
POSED, NOR MAY AN INTEREST IN THIS CERTIFICATE
BE MARKETED, ON OR THROUGH (I) AN "ESTABLISHED
SECURITIES MARKET" WITHIN THE MEANING OF SEC-
TION 7704(b)(1) OF THE CODE AND ANY PROPOSED,
TEMPORARY OR FINAL TREASURY REGULATION THERE-
UNDER, INCLUDING, WITHOUT LIMITATION, AN OVER-
THE-COUNTER-MARKET OR AN INTERDEALER QUOTATION
SYSTEM THAT REGULARLY DISSEMINATES FIRM BUY OR
SELL QUOTATIONS OR (II) A "SECONDARY MARKET"
WITHIN THE MEANING OF SECTION 7704(b)(2) OF
THE CODE AND ANY PROPOSED, TEMPORARY OR FINAL
TREASURY REGULATION THEREUNDER, INCLUDING A
MARKET WHEREIN INTERESTS IN THE CLASS C CER-
TIFICATES ARE REGULARLY QUOTED BY ANY PERSON
MAKING A MARKET IN SUCH INTERESTS AND A MARKET
WHEREIN ANY PERSON REGULARLY MAKES AVAILABLE
BID OR OFFER QUOTES WITH RESPECT TO INTERESTS
IN THE CLASS C CERTIFICATES AND STANDS READY
TO EFFECT BUY OR SELL TRANSACTIONS AT THE
QUOTED PRICES FOR ITSELF OR ON BEHALF OF OTH-
ERS.
THIS CERTIFICATE HAS NOT BEEN AND WILL
NOT BE REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR
ANY STATE SECURITIES LAW. THE HOLDER HEREOF,
BY PURCHASING THIS CERTIFICATE, AGREES THAT
THIS CERTIFICATE MAY BE REOFFERED, RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED ONLY IN COM-
PLIANCE WITH THE SECURITIES ACT AND OTHER AP-
PLICABLE LAWS AND ONLY (1) TO THE TRANSFEROR,
(2) TO A LIMITED NUMBER OF INSTITUTIONAL "AC-
CREDITED INVESTORS" (AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) UNDER THE SECURI-
TIES ACT) AND IN A TRANSACTION EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT (UPON DELIVERY OF THE DOCUMENTATION RE-
QUIRED BY THE POOLING AND SERVICING AGREEMENT
AND, IF THE TRUSTEE SO REQUIRES, AN OPINION OF
COUNSEL SATISFACTORY TO THE TRUSTEE) OR (3)
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT
75
TO A PERSON THAT THE HOLDER REASONABLY BELIEVE
IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE 144A ("QIB") PURCHASING FOR
ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE
ACCOUNT OF A QIB, WHOM THE HOLDER HAS IN-
FORMED, IN EACH CASE, THAT THE REOFFER, RE-
SALE, PLEDGE OR OTHER TRANSFER IS BEING MADE
IN RELIANCE ON RULE 144A. EACH CERTIFICATE
OWNER BY ACCEPTING A BENEFICIAL INTEREST IN
THIS CERTIFICATE IS DEEMED TO REPRESENT THAT
IT IS EITHER A QIB PURCHASING FOR ITS OWN AC-
COUNT, A QIB PURCHASING FOR THE ACCOUNT OF
ANOTHER QIB OR AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2),
(3) OR (7) UNDER THE SECURITIES ACT). THIS
CERTIFICATE WILL NOT BE ACCEPTED FOR REGISTRA-
TION OF TRANSFER EXCEPT UPON PRESENTATION OF
EVIDENCE SATISFACTORY TO THE TRANSFER AGENT
AND REGISTRAR THAT THE RESTRICTIONS ON TRANS-
FER SET FORTH IN THE SERIES 1997-1 SUPPLEMENT
HAVE BEEN COMPLIED WITH. THIS CERTIFICATE MAY
NOT BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED WITHOUT THE PRIOR WRITTEN CONSENT
OF THE TRANSFEROR AND UNLESS AND UNTIL THE
TRUSTEE SHALL HAVE RECEIVED THE CERTIFICATIONS
REQUIRED BY THE SERIES 1997-1 SUPPLEMENT.
(f) Upon surrender for registration of transfer of a Class C Certificate at
the office of the Transfer Agent and Registrar, accompanied by a certifi-
cation by the Class C Certificateholder substantially in the form attached as
Exhibit C, executed by the registered owner, in person or by such Class C
Certificateholder's attorney thereunto duly authorized in writing, and
receipt by the Trustee of the written consent of the Transferor to such
transfer, such Class C Certificate shall be transferred upon the Certificate
Register, and the Transferor shall execute, and the Trustee shall authenticate
and deliver, in the name of the designated transferees one or more new
registered Class C Certificates of any authorized denominations and of a
like aggregate principal amount and tenor. Such transfers of Class C
Certificates shall be subject to the restrictions set forth in this Section
10, to such other restrictions as shall be set forth in the text of the
Class C Certificates and to such reasonable regulations as may be prescribed
by the Transferor. Successive registrations and registrations of transfers as
afore-
76
said may be made from time to time as desired, and each such registration shall
be noted on the Certificate Register.
(g) Each Class D Certificate will bear legends
substantially in the following form:
THIS CERTIFICATE WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"). THIS CERTIFICATE HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE
SECURITIES LAW OF ANY STATE AND MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS REG-
ISTERED PURSUANT TO OR EXEMPT FROM REGISTRATION
UNDER THE SECURITIES ACT AND ANY OTHER APPLICABLE
SECURITIES LAW. THE TRANSFEROR SHALL BE PROHIB-
ITED FROM TRANSFERRING ANY INTEREST IN OR PORTION
OF THIS CERTIFICATE.
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE
BENEFIT OF METRIS RECEIVABLES, INC. AND THE TRUSTEE
THAT SUCH PURCHASER IS NOT (I) AN EMPLOYEE BENEFIT
PLAN (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
("ERISA")) THAT IS SUBJECT TO THE PROVISIONS OF
TITLE I OF ERISA, (II) A PLAN DESCRIBED IN SECTION
4975(E)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED (THE "CODE"), (III) A GOVERNMENTAL PLAN, AS
DEFINED IN SECTION 3(32) OF ERISA, SUBJECT TO ANY
FEDERAL, STATE OR LOCAL LAW WHICH IS, TO A MATERIAL
EXTENT, SIMILAR TO THE PROVISIONS OF SECTION 406 OF
ERISA OR SECTION 4975 OF THE CODE, (IV) AN ENTITY
WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS (AS DE-
FINED IN 29 C.F.R. SECTION 2510.3-101 OR OTHERWISE
UNDER ERISA) BY REASON OF A PLAN'S INVESTMENT IN
THE ENTITY OR (V) A PERSON INVESTING PLAN ASSETS OF
ANY SUCH PLAN (INCLUDING WITHOUT LIMITATION, FOR
PURPOSES OF CLAUSE (IV) AND THIS CLAUSE (V), ANY
INSURANCE COMPANY GENERAL ACCOUNT, BUT EXCLUDING
ANY ENTITY REGISTERED UNDER THE INVESTMENT COMPANY
ACT OF 1940, AS AMENDED).
SECTION 11. Compliance with Withholding Requirements. Notwithstanding any
other provision of the Agreement, the Trustee and any Paying Agent shall
comply with all Federal withholding requirements with respect
77
to payments to the Class C Certificateholders of interest, original issue
discount, or other amounts that the Trustee, any Paying Agent, the Servicer or
the Transfer or reasonably believes are applicable under the Internal Revenue
Code. The consent of the Class C Certificate holders shall not be required
for any such withholding. In the event the Trustee or the Paying Agent
withholds any amount from payments made to any Class C Certificateholder
pursuant to federal withholding requirements, the Trustee or the Paying Agent
shall indicate to such Class C Certificateholder the amount withheld and all
such amounts shall be deemed to have been paid to such Class C
Certificateholders and the Class C Certificate holders shall have no claim
therefor.
SECTION 12. Tax Characterization of the Class C
Certificates. It is the intention of the parties hereto that the Class C
Certificates be treated for tax purposes as indebtedness. In the event that
the Class C Certificates are not so treated, it is the intention of the
parties that the Class C Certificates be treated as an interest in a
partnership that owns the Receivables. In the event that the Class C
Certificates are treated as an interest in a partnership, it is the intention
of the parties that interest payable on the Class C Certificates be treated
as guaranteed payment and, if for any reason it is not so treated, that the
holders of the Class C Certificates be specially allocated gross interest
income equal to the interest accrued during each Interest Accrual Period on
the Class C Certificates.
SECTION 13. Ratification of Agreement. (a) As supplemented
by this Series Supplement, the Agreement is in all respects ratified and
confirmed and the Agreement as so supplemented by this Series Supplement
shall be read, taken, and construed as one and the same instrument. The
Transferor hereby confirms the conveyance of the Trust Property to the Trustee
for the benefit of the Series 1997-1 Certificateholders.
(b) For so long as any of the Class C Certificates are
"restricted securities" within the meaning of Rule 144(a)(3) under the
Securities Act and during any period in which the Trust is not subject to
Section 13 or 15(d) of the Exchange Act, each of the Transferor, the Servicer
and the Trustee agree to cooperate with each other to provide to any Class C
Certifi-
78
cateholder, and to any prospective purchaser of Class C Certificates designated
by such Class C Certificateholder upon the request of such Class C \
Certificateholder or prospective purchaser, the information required by Rule
144A(d)(4) under the Securities Act.
SECTION 14. Registration of the Class A Certificates under
the Securities Exchange Act of 1934. The Transferor shall cause the Class A
Certificates to be registered under the Securities Exchange Act of 1934, as
amended, on or before March 31, 1998 and thereafter maintain such registration
until the Class A Invested Amount has been reduced to zero.
SECTION 15. Counterparts. This Series Supplement may be
executed in any number of counterparts, each of which so executed shall be
deemed to be an original, but all of such counterparts shall together con-
stitute but one and the same instrument.
SECTION 16. GOVERNING LAW. THIS SERIES SUPPLEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
SECTION 17. Instructions in Writing. All instructions or
other communications given by the Servicer or any other person to the Trustee
pursuant to this Series Supplement shall be in writing, and, with respect to
the Servicer, may be included in a Daily Report or Settlement Statement.
SECTION 18. Amendment for FASIT Purposes. Each Series 1997-1
Certificateholder, by acquiring an interest in a Series 1997-1 Certificate, is
deemed to consent to any amendment to the Agreement or this Series Supplement
necessary for the Transferor to elect for the Trust or any portion thereof to
be treated as a financial asset securitization investment trust ("FASIT")
within the meaning of Section 860L of the Internal Revenue Code (or any
successor provision thereto), provided, that such election may not be made
unless the Transferor delivers an opinion to the Trustee and the Servicer to
the effect that such election will not adversely affect the Federal or
Applicable Tax State income tax charac-
79
terization of any outstanding Series of Investor Certificates or the taxability
of the Trust under Federal or Applicable Tax State income tax laws.
SECTION 19. Paired Series. Subject to obtaining
confirmation by each Rating Agency of the then existing ratings of each class
of Certificates which is then rated, and prior to the commencement of the
Early Amortization Period, the Certificates may be paired with one or more
other Series (each a "Paired Series"). Each Paired Series either will be
pre-funded with an initial deposit to a pre-funding account in an amount up to
the initial principal balance of such Paired Series and primarily from the
proceeds of the sale of such Paired Series or will have a variable principal
amount. Any such pre-funding account will be held for the benefit of such
Paired Series and not for the benefit of the Certificateholders. As
principal is paid with respect to the Certificates, either (i) in the case of
a pre-funded Paired Series, an equal amount of funds on deposit in any
pre-funding account for such pre-funded Paired Series will be released
(which funds will be distributed to the Transferor) or (ii) in the case of a
Paired Series having a variable principal amount, an interest in such
variable Paired Series in an equal or lesser amount may be sold by the Trust
(and the proceeds thereof will be distributed to the Transferor) and, in
either case, the invested amount in the Trust of such Paired Series will
increase by up to a corresponding amount. Upon payment in full of the
Certificates, assuming that there have been no unreimbursed charge-offs with
respect to any related Paired Series, the aggregate invested amount of such
related Paired Series will have been increased by an amount up to an aggregate
amount equal to the Invested Amount paid to the Certificateholders since the
issuance of such Paired Series. The issuance of a Paired Series will be
subject to the conditions described in subsection 6.9(b) of the Agreement.
80
IN WITNESS WHEREOF, the Transferor, the Servicer and the
Trustee have caused this Series 1997-1 Supplement to be duly executed by their
respective officers as of the day and year first above written.
METRIS RECEIVABLES, INC.
Transferor
By:_______________________
Name:
Title:
DIRECT MERCHANTS CREDIT CARD BANK,
NATIONAL ASSOCIATION
Servicer
By:_________________________
Name:
Title:
THE BANK OF NEW YORK (DELAWARE)
Trustee
By:_________________________
Name:
Title:
Exhibit A-1
FORM OF CLASS A INVESTOR CERTIFICATE
UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRE-
SENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE &
CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO. HAS AN INTEREST
HEREIN.
No. ___ $_________
CUSIP NO. _________
METRIS MASTER TRUST
___% ASSET BACKED
CERTIFICATE, SERIES 1997-1, CLASS A
Evidencing an undivided interest in a trust, the corpus of which consists of
receivables generated from time to time in the ordinary course of business
from a portfolio of revolving consumer credit card accounts transferred or
to be transferred by Metris Receivables, Inc. (the "Transferor") and other
assets and interests constituting the Trust under the Agreement described
below.
(Not an interest in or a recourse obligation of Metris
Receivables, Inc., Direct Merchants Credit Card Bank, National Association or
any affiliate of either of them.)
This certifies that _________ (the "Certificateholder") is
the registered owner of a fractional
A-1-1
undivided interest in the Metris Master Trust (the "Trust") issued pursuant to
the Pooling and Servicing Agreement, dated as of May 26, 1995 (the "Pooling
and Servicing Agreement"; such term to include any amendment thereto) by and
between the Transferor, Direct Merchants Credit Card Bank, National
Association, as Servicer (the "Servicer"), and The Bank of New York (Delaware)
as Trustee (the "Trustee"), and the Series 1997-1 Supplement, dated as of
May __, 1997 (the "Series 1997-1 Supplement"), among the Transferor, the
Servicer and the Trustee. The Pooling and Servicing Agreement, as sup-
plemented by the Series 1997-1 Supplement, is herein referred to as the
"Agreement"). The corpus of the Trust consists of all of the Transferor's
right, title and interest in, to and under the Trust Property (as defined in
the Agreement).
This Certificate does not purport to summarize the Agreement and reference is
made to that Agreement for information with respect to the interests, rights,
benefits, obligations, proceeds, and duties evidenced hereby and the rights,
duties and obligations of the Trustee. To the extent not defined herein, the
capitalized terms used herein have the meanings ascribed to them in the
Agreement. This Certificate is one of a series of Certificates entitled
"Metris Master Trust ___% Asset Backed Certificates, Series 1997-1, Class A"
(the "Class A Certificates"), each of which represents a fractional undivided
interest in the Trust, and is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement, as amended
from time to time, the Certificateholder by virtue of the acceptance hereof
assents and by which the Certificateholder is bound.
The Transferor has structured the Agreement, the Class A Certificates, the
Metris Master Trust ___% Asset Backed Certificates, Series 1997-1, Class B
(the "Class B Certificates" and collectively with the Class A Certificates the
"Offered Certificates") and the Metris Master Trust Floating Rate Asset Backed
Certificates, Series 1997-1, Class C (the "Class C Certificates") with the
intention that the Offered Certificates and the Class C Certificates will
qualify under applicable tax law as indebtedness, and both the Transferor and
each holder of a Class A Certificate (a "Class A Certificateholder") or any
interest therein by acceptance of its
A-1-2
Certificate or any interest therein, agrees to treat the Class A Certificates
for purposes of federal, state and local income or franchise taxes and any
other tax imposed on or measured by income, as indebtedness.
No principal will be payable to the Class A
Certificateholders until the earlier of the Expected Final Payment Date and,
upon the occurrence of a Pay Out Event, the Distribution Date following the
Monthly Period in which the Pay Out Event occurs. No principal will be
payable to the Class B Certificateholders, Class C Certificateholders or Class
D Certificateholders (other than with respect to Class D Excess Amounts) until
all principal payments have been made to the Class A Certificateholders.
Interest on the Class A Certificates will be payable on June
20, 1997 and on the 20th day of each month thereafter or, if such day is not a
business day, on the next succeeding business day (each, a "Distribution
Date"), in an amount equal to one-twelfth of the product of the Class A
Certificate Rate and the outstanding principal balance of the Class A
Certificates as of the close of business on the first day of such Interest
Accrual Period (or in the case of the initial Distribution Date, the Class A
Initial Invested Amount). Interest for the first Distribution Date will
include accrued interest at the applicable Certificate Rate (the "Certificate
Rates") from the Closing Date through June 19, 1997. Interest will be
calculated on the basis of a 360-day year of twelve 30-day months.
Interest payments on the Class A Certificates
on each Distribution Date will be funded from Available
Series Finance Charge Collections with respect to the
preceding Monthly Period (or, with respect to the first
Distribution Date, such collections from and including
the Closing Date to and including May 31, 1997 plus the
amount of the initial deposit to the Interest Funding
Account to be made on the Closing Date) and from certain
other funds allocated as set forth in the Pooling and
Servicing Agreement to the respective classes of the
Certificates and deposited on each business day during
such Monthly Period in the Interest Funding Account.
"Class A Invested Amount" shall mean, when used with respect
to any Business Day, the greater of
A-1-3
(x) zero and (y) an amount equal to (a) the Class A Initial Invested Amount
less the Class A Percentage of the initial deposit to the Pre-Funding Account
plus the Class A Percentage of any withdrawals from the Pre-Funding Account
(i) during the Funding Period in connection with the addition of Receivables
to the Trust or (ii) at the end of the Funding Period for deposit into the Ex-
cess Funding Account, minus (b) the aggregate amount of principal payments
(except principal payments made from the Pre-Funding Account) made to Class A
Certificateholders through and including such Business Day, minus (c) the
aggregate amount of Class A Investor Charge-Offs for all prior Distribution
Dates, plus (d) the sum of the aggregate amount allocated with respect to
Class A Investor Charge-Offs and available on all prior Distribution Dates
pursuant to subsection 4.9(a)(vii) of the Agreement and, with respect to such
subsection, pursuant to subsections 4.10(a) and (b), 4.16(a), (b) and (c),
4.19(b) and 4.20(b), (c) and (d) of the Agreement, for the purpose of
reinstating amounts reduced pursuant to the foregoing clause (c).
During the period from and including the Closing Date to but excluding the
earlier of (x) the first day for which the Invested Amount equals the Full In-
vested Amount; (y) the first day on which a Pay Out Event is deemed to occur;
and (z) the first day of the September 1997 Monthly Period (the "Funding
Period"), the Pre-Funded Amount will be maintained in a trust account to be
established with The Bank of New York (the "Pre-Funding Account"). The
"Pre-Funded Amount" will equal the Initial Pre-Funded Amount, minus the
amounts of any increases in the Invested Amount during the Funding Period
pursuant to Section 4.15 of the Agreement, minus the amount of any principal
losses on funds on deposit in the Pre-Funding Account and minus the amount
withdrawn from the Pre-Funding Account and deposited in the Excess Funding
Account. On the Closing Date a cash deposit will be made to the Pre-Funding
Account such that the amount of Principal Receivables plus the amount of such
cash deposit on such date will at least equal the sum of the initial
outstanding principal balances of the Class A Certificates, the Class B
Certificates, the Class C Certificates and the Class D Certificates and the
sum of the then current outstanding principal balance of all Series
(excluding the Series 1997-1 Certifi-
A-1-4
xxxxx). Funds on deposit in the Pre-Funding Account will be invested by the
Trustee at the direction of the Servicer in Cash Equivalents.
During the Funding Period, funds on deposit in the
Pre-Funding Account will be withdrawn and paid to the Transferor to the extent
of any increases in the Invested Amount as a result of the increase in the
amount of Receivables in the Trust. In the event of the occurrence of a Pay
Out Event during the Funding Period, the amounts remaining on deposit in the
Pre-Funding Account, will be payable as principal first to the Class A
Certificateholders until the Class A Invested Amount is paid in full and then
to the Class B Certificateholders until the Class B Invested Amount is paid
in full and then to the Class C Certificateholders until the Class C Invested
Amount is paid in full. Should the Pre-Funded Amount be greater than zero on
the first Business Day of the September 1997 Monthly Period, such amount will
be deposited in the Excess Funding Account, and the Class A Invested Amount,
Class B Invested Amount and Class C Invested Amount shall be increased pro
rata by such amount.
Subject to the Agreement, payments of principal are
limited to the unpaid Class A Invested Amount of the Class A Certificates,
which may be less than the unpaid balance of the Class A Certificates pursuant
to the terms of the Agreement. All principal on the Class A Certificates is
due and payable no later than the October 2005 Distribution Date (or if such
day is not a Business Day, the next succeeding Business Day) (the "Scheduled
Series 1997-1 Termination Date"). After the earlier to occur of (i) the
Scheduled Series 1997-1 Termination Date or (ii) the day after the
Distribution Date on which the Series 1997-1 Certificates are paid in full
(the "Series 1997-1 Termination Date") neither the Trust nor the Transferor
will have any further obligation to distribute principal or interest on the
Class A Certificates. In the event that the Class A Invested Amount is greater
than zero on the Series 1997-1 Termination Date, the Trustee will sell or
cause to be sold, to the extent necessary, an amount of interests in the
Receivables or certain of the Receivables up to 110% of the Class A Invested
Amount, the Class B Invested Amount, the Class C Invested Amount and the Class
D Invested Amount at the close of business on such date
A-1-5
(but not more than the total amount of Receivables allocable to the Investor
Certificates), and shall pay the proceeds to the Class A Certificateholders
pro rata in final payment of the Class A Certificates, then to the Class B
Certificateholders pro rata in final payment of the Class B Certificates, then
to the Class C Certificateholders pro rata in final payment of the Class C
Certificates and finally to the Class D Certificateholders pro rata in final
payment of the Class D Certificates.
Unless the certificate of authentication hereon has been
executed by or on behalf of the Trustee, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement, or be valid for any
purpose.
A-1-6
IN WITNESS WHEREOF, the Transferor has caused this Certificate to be duly
executed under its official seal.
METRIS RECEIVABLES, INC.
By:_____________________________
Name:
Title:
Dated:
CERTIFICATE OF AUTHENTICATION
This is one of the Class A Certificates referred to in the
within-mentioned Pooling and Servicing Agreement.
THE BANK OF NEW YORK
By: _______________________
Name:
Title:
X-0-0
Xxxxxxx X-0
FORM OF CLASS B INVESTOR CERTIFICATE
UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRE-
SENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE &
CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO. HAS AN INTEREST
HEREIN.
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE
BENEFIT OF METRIS RECEIVABLES, INC. THAT UNLESS SUCH
PURCHASER, AT ITS EXPENSE, DELIVERS TO THE TRUSTEE,
THE SERVICER AND THE TRANSFEROR AN OPINION OF COUN-
SEL SATISFACTORY TO THEM TO THE EFFECT THAT THE
PURCHASE OR HOLDING OF THIS CERTIFICATE BY SUCH
PURCHASER WILL NOT RESULT IN THE ASSETS OF THE TRUST
BEING DEEMED TO BE "ASSETS OF THE BENEFIT PLAN" OR
SUBJECT TO THE PROHIBITED TRANSACTION PROVISIONS OF
ERISA AND THE CODE AND WILL NOT SUBJECT THE TRUSTEE,
THE TRANSFEROR OR THE SERVICER TO ANY OBLIGATION IN
ADDITION TO THOSE UNDERTAKEN IN THE POOLING AND
SERVICING AGREEMENT, SUCH PURCHASER IS NOT (I) AN
EMPLOYEE BENEFIT PLAN (AS DEFINED IN SECTION 3(3) OF
THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974,
AS AMENDED ("ERISA")) THAT IS SUBJECT TO THE PROVI-
SIONS OF TITLE I OF ERISA, (II) A PLAN DESCRIBED IN
SECTION 4975(e)(1) OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE"), (III) A GOVERNMENTAL
PLAN, AS DEFINED IN SECTION 3(32) OF ERISA, SUBJECT
TO ANY FEDERAL, STATE OR LOCAL LAW WHICH IS, TO A
MATERIAL EXTENT, SIMILAR TO THE PROVISIONS OF SEC-
TION 406 OF ERISA OR SECTION 4975 OF THE CODE, (IV)
AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN
ASSETS (AS DEFINED IN 29 C.F.R. SECTION 2510.3-101
OR OTHERWISE UNDER ERISA) BY REASON OF APLAN'S
INVESTMENT IN THE ENTITY OR (V) A PERSON INVESTING
PLAN ASSETS OF ANY SUCH PLAN (INCLUDING FOR PURPOSES
OF CLAUSE (IV) AND THIS CLAUSE (V) ANY INSURANCE
COMPANY GENERAL ACCOUNT, BUT EXCLUDING ANY ENTITY
A-2-1
REGISTERED UNDER THE INVESTMENT COMPANY ACT OF 1940,
AS AMENDED).
No. ___ $__________
CUSIP NO.
METRIS MASTER TRUST
___% ASSET BACKED
CERTIFICATE, SERIES 1997-1, CLASS B
Evidencing an undivided interest in a trust, the corpus of
which consists of receivables generated from time to time in the ordinary
course of business from a portfolio of revolving consumer credit card accounts
transferred or to be transferred by Metris Receivables, Inc. (the
"Transferor") and other assets and interests constituting the Trust under the
Agreement described below.
(Not an interest in or a recourse obligation of Metris
Receivables, Inc., Direct Merchants Credit Card Bank, National Association or
any affiliate of either of them.)
This certifies that __________ (the "Certificateholder")
is the registered owner of a fractional undivided interest in the Metris
Master Trust (the "Trust") issued pursuant to the Pooling and Servicing
Agreement, dated as of May 26, 1995 (the "Pooling and Servicing Agreement";
such term to include any amendment thereto) by and between the Transferor,
Direct Merchants Credit Card Bank, National Association, as the Servicer (the
"Servicer"), and The Bank of New York (Delaware), as Trustee (the "Trustee"),
and the Series 1997-1 Supplement, dated as of May __, 1997 (the "Series
1997-1 Supplement"), among the Transferor, the Servicer and the Trustee. The
Pooling and Servicing Agreement, as supplemented by the Series 1997-1
Supplement, is herein referred to as the "Agreement". The corpus of the
Trust consists of all of the Transferor's right, title and interest in, to and
under the Trust Property (as defined in the Agreement).
This Certificate does not purport to summarize the Agreement
and reference is made to that Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds, and duties evidenced
hereby and the rights, duties and obligations of the Trustee. To the extent
not defined herein, the capitalized terms used herein have the meanings
ascribed to them in the Agreement. This Certificate is one of a series of Cer-
A-2-2
tificates entitled "Metris Master Trust ___% Asset Backed Certificates, Series
1997-1, Class B" (the "Class B Certificates"), each of which represents a
fractional undivided interest in the Trust, and is issued under and is subject
to the terms, provisions and conditions of the Agreement, to which Agreement,
as amended from time to time, the Certificateholder by virtue of the
acceptance hereof assents and by which the Certificateholder is bound.
The Transferor has structured the Agreement, the Class B
Certificates, the Metris Master Trust ___% Asset Backed Certificates, Series
1997-1, Class A (the "Class A Certificates" and collectively with the Class B
Certificates the "Offered Certificates") and the Metris Master Trust Floating
Rate Asset Backed Certificates, Series 1997-1, Class C (the "Class C
Certificates") with the intention that the Offered Certificates will qualify
under applicable tax law as indebtedness, and both the Transferor and each
holder of a Class B Certificate (a "Class B Certificateholder") or any
interest therein by acceptance of its Certificate or any interest therein,
agrees to treat the Class B Certificates for purposes of federal, state and
local income or franchise taxes and any other tax imposed on or measured by
income, as indebtedness.
No principal will be payable to the Class B
Certificateholders until the earlier of the Expected Final Payment Date and,
upon the occurrence of a Pay Out Event, the Distribution Date following the
Monthly Period in which the Pay Out Event occurs but in no event earlier than
the Distribution Date either on or following the Distribution Date on which
the Class A Invested Amount had been paid in full. No principal will be
payable to the Class B Certificateholders until all principal payments have
been made to the Class A Certificateholders. No principal payments will be
made to the Class C Certificateholders or Class D Certificateholders (other
than with respect to Class D Excess Amounts) until the Distribution Date
either on or following the Distribution Date on which the Class B Invested
Amount has been paid in full.
Interest on the Offered Certificates will be payable on June
20, 1997 and on the 20th day of each month thereafter or, if such day is not a
business day,
A-2-3
on the next succeeding business day (each, a "Distribution Date"), in an
amount equal to (i) with respect to the Class A Certificates, one-twelfth of
the product of the Class A Certificate Rate and the outstanding principal
balance of the Class A Certificates as of the close of business on the first
day of such Interest Accrual Period (or in the case of the initial
Distribution Date, the Class A Initial Invested Amount) and (ii) with re-
spect to the Class B Certificates, one-twelfth of the product of the Class B
Certificate Rate and the outstanding principal balance of the Class B
Certificates as of the close of business on the first day of such Interest
Accrual Period (or in the case of the initial Distribution Date, the Class B
Initial Invested Amount). Interest for the first Distribution Date will
include accrued interest at the applicable Certificate Rate (the "Certif-
icate Rates") from the Closing Date through June 19, 1997. Interest will be
calculated on the basis of a 360-day year of twelve 30-day months.
Interest payments on the Class A Certificates on each
Distribution Date will be funded from Available Series Finance Charge
Collections with respect to the preceding Monthly Period (or, with respect to
the first Distribution Date, such collections from and including the Closing
Date to and including May 31, 1997 plus the amount of the initial deposit to
the Interest Funding Account to be made on the Closing Date) and from certain
other funds allocated as set forth in the Pooling and Servicing Agreement to
the respective classes of the Certificates and deposited on each business day
during such Monthly Period in the Interest Funding Account.
Subject to the prior payment of interest on the Class A
Certificates, interest payments on the Class B Certificates on each
Distribution Date will be funded from the portion of Available Series Finance
Charge Collections with respect to the preceding Monthly Period and from
certain other funds allocated as set forth in the Pooling and Servicing
Agreement to the Class B Certificates and deposited on each business day
during such Monthly Period in the Interest Funding Account.
"Class B Invested Amount" shall mean, when used with respect
to any Business Day, the greater of (x) zero and (y) an amount equal to (a)
the Class B Initial Invested Amount less the Class B Percentage of the
initial
A-2-4
deposit to the Pre-Funding Account plus the Class B Percentage of any
withdrawals from the Pre-Funding Account (i) during the Funding Period in
connection with the addition of Receivables to the Trust or (ii) at the end of
the Funding Period for deposit into the Excess Funding Account, minus (b) the
aggregate amount of principal payments (except principal payments made from
the Pre-Funding Account) made to Class B Certificateholders through and
including such Business Day, minus (c) the aggregate amount of Class B
Investor Charge-Offs for all prior Distribution Dates, minus (d) the aggregate
amount of Reallocated Class B Principal Collections for which neither the
Class D Invested Amount nor the Class C Invested Amount has been reduced for
all prior Business Days, and plus (e) the sum of the aggregate amount allo-
cated and available on all prior Business Days pursuant to subsection
4.9(a)(x) of the Agreement and, with respect to such subsection, pursuant to
subsections 4.10(a) and (b), 4.16(a) and (b), 4.19(b) and 4.20(b), (c) and (d)
of the Agreement, for the purpose of reinstating amounts reduced pursuant to
the foregoing clauses (c) and (d).
During the period from and including the Closing Date to
but excluding the earlier of (x) the first day for which the Invested Amount
equals the Full Invested Amount; (y) the first day on which a Pay Out Event
is deemed to occur; and (z) the first day of the September 1997 Monthly Period
(the "Funding Period"), the Pre-Funded Amount will be maintained in a trust
account to be established with The Bank of New York (the "Pre-Funding
Account"). The "Pre-Funded Amount" will equal the Initial Pre-Funded Amount,
minus the amounts of any increases in the Invested Amount during the Funding
Period pursuant to Section 4.15 of the Agreement, minus the amount of any
principal losses on funds on deposit in the Pre-Funding Account and minus the
amount withdrawn from the Pre-Funding Account and deposited in the Excess
Funding Account. On the Closing Date a cash deposit will be made to the
Pre-Funding Account such that the amount of Principal Receivables plus the
amount of such cash deposit on such date will at least equal the sum of the
initial outstanding principal balances of the Class A Certificates, the Class
B Certificates, the Class C Certificates and the Class D Certificates and the
sum of the then current outstanding principal balance of all Series (excluding
the Series 1997-1 Certificates). Funds
A-2-5
on deposit in the Pre-Funding Account will be invested by the Trustee at the
direction of the Servicer in Cash Equivalents.
During the Funding Period, funds on deposit in the
Pre-Funding Account will be withdrawn and paid to the Transferor to the extent
of any increases in the Invested Amount as a result of the increase in the
amount of Receivables in the Trust. In the event of the occurrence of a Pay
Out Event during the Funding Period, the amounts remaining on deposit in the
Pre-Funding Account, will be payable as principal first to the Class A
Certificateholders until the Class A Invested Amount is paid in full and
then to the Class B Certificateholders until the Class B Invested Amount is
paid in full and then to the Class C Certificateholders until the Class C
Invested Amount is paid in full. Should the Pre-Funded Amount be greater than
zero on the first Business Day of the September 1997 Monthly Period, such
amount will be deposited in the Excess Funding Account, and the Class A
Invested Amount, Class B Invested Amount and Class C Invested Amount shall be
increased pro rata by such amount.
Subject to the Agreement, payments of principal are limited
to the unpaid Class B Invested Amount of the Class B Certificates, which may
be less than the unpaid balance of the Class B Certificates pursuant to the
terms of the Agreement. All principal on the Class B Certificates is due and
payable no later than the October 2005 Distribution Date (or if such day is
not a Business Day, the next succeeding Business Day) (the "Scheduled Series
1997-1 Termination Date"). After the earlier to occur of (i) the Scheduled
Series 1997-1 Termination Date or (ii) the day after the Distribution Date on
which the Series 1997-1 Certificates are paid in full (the "Series 1997-1
Termination Date") neither the Trust nor the Transferor will have any further
obligation to distribute principal or interest on the Class B Certificates. In
the event that the Class B Invested Amount is greater than zero on the Series
1997-1 Termination Date, the Trustee will sell or cause to be sold, to the
extent necessary, an amount of interests in the Receivables or certain of the
Receiv-xxxxx up to 110% of the Class A Invested Amount, the Class B Invested
Amount, the Class C Invested Amount and the Class D Invested Amount at the
close of business on such date (but not more than the total amount of Receiv-
xxxxx allocable to the Investor Certificates), and shall
A-2-6
pay the proceeds to the Class A Certificateholders pro rata in final payment
of the Class A Certificates, then to the Class B Certificateholders pro rata
in final payment of the Class B Certificates, then to the Class C
Certificateholders pro rata in final payment of the Class C Certificates and
finally to the Class D Certificateholders pro rata in final payment of the
Class D Certificates.
Unless the certificate of authentication hereon has been
executed by or on behalf of the Trustee, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement, or be valid for any
purpose.
A-2-7
IN WITNESS WHEREOF, the Transferor has caused this
Certificate to be duly executed under its official seal.
METRIS RECEIVABLES, INC.
By:_______________________
Name:
Title:
Dated:
CERTIFICATE OF AUTHENTICATION
This is one of the Class B Certificates referred to in the
within-mentioned Pooling and Servicing Agreement.
THE BANK OF NEW YORK
By:______________________
Name:
Title:
X-0-0
Xxxxxxx X-0
FORM OF CLASS C INVESTOR CERTIFICATE
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE
BENEFIT OF METRIS RECEIVABLES, INC. AND THE TRUSTEE
THAT SUCH PURCHASER IS NOT (I) AN EMPLOYEE BENEFIT
PLAN (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
("ERISA")) THAT IS SUBJECT TO THE PROVISIONS OF
TITLE I OF ERISA, (II) A PLAN DESCRIBED IN SECTION
4975(E)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED (THE "CODE"), (III) A GOVERNMENTAL PLAN, AS
DEFINED IN SECTION 3(32) OF ERISA, SUBJECT TO ANY
FEDERAL, STATE OR LOCAL LAW WHICH IS, TO A MATERIAL
EXTENT, SIMILAR TO THE PROVISIONS OF SECTION 406 OF
ERISA OR SECTION 4975 OF THE CODE, (IV) AN ENTITY
WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS (AS DE-
FINED IN 29 C.F.R. SECTION 2510.301-1 OR OTHERWISE
UNDER ERISA) BY REASON OF A PLAN'S INVESTMENT IN THE
ENTITY OR (V) A PERSON INVESTING PLAN ASSETS OF ANY
SUCH PLAN (INCLUDING WITHOUT LIMITATION, FOR PUR-
POSES OF CLAUSE (IV) AND THIS CLAUSE (V), ANY INSUR-
ANCE COMPANY GENERAL ACCOUNT, BUT EXCLUDING ANY EN-
TITY REGISTERED UNDER THE INVESTMENT COMPANY ACT OF
1940, AS AMENDED).
THIS CERTIFICATE MAY NOT BE ACQUIRED, SOLD,
TRADED OR TRANSFERRED BY A PERSON WHO IS NOT EITHER
(A)(I) A CITIZEN OR RESIDENT OF THE UNITED STATES,
(II) A CORPORATION, PARTNERSHIP OR OTHER ENTITY
ORGANIZED IN OR UNDER THE LAWS OF THE UNITED STATES
OR ANY POLITICAL SUBDIVISION THEREOF OR (III) A PER-
SON NOT DESCRIBED IN (I) OR (II) WHOSE OWNERSHIP OF
THE CLASS C CERTIFICATES IS EFFECTIVELY CONNECTED
WITH SUCH PERSON'S CONDUCT OF A TRADE OR BUSINESS
WITHIN THE UNITED STATES (WITHIN THE MEANING OF THE
CODE) AND ITS OWNERSHIP OF ANY INTEREST IN A CLASS C
CERTIFICATE WILL NOT RESULT IN ANY WITHHOLDING OBLI-
GATION WITH RESPECT TO ANY PAYMENTS WITH RESPECT TO
THE CLASS C CERTIFICATES BY ANY PERSON (OTHER THAN
WITHHOLDING, IF ANY, UNDER SECTION 1446 OF THE CODE)
OR (B) AN ESTATE THE INCOME OF WHICH IS INCLUDIBLE
IN GROSS INCOME FOR UNITED STATES FEDERAL INCOME TAX
PURPOSES OR ANY TRUST IF A COURT WITHIN THE UNITED
STATES IS ABLE TO EXERCISE PRIMARY SUPERVISION OVER
A-3-1
THE ADMINISTRATION OF THE TRUST AND ONE OR MORE
UNITED STATES FIDUCIARIES HAVE THE AUTHORITY TO
CONTROL ALL SUBSTANTIAL DECISIONS OF THE TRUST.
THIS CERTIFICATE MAY NOT BE ACQUIRED,
SOLD, TRADED, TRANSFERRED, ASSIGNED, PARTICI-
PATED, PLEDGED, HYPOTHECATED OR OTHERWISE DIS-
POSED, NOR MAY AN INTEREST IN THIS CERTIFICATE
BE MARKETED, ON OR THROUGH (I) AN "ESTABLISHED
SECURITIES MARKET" WITHIN THE MEANING OF SEC-
TION 7704(b)(1) OF THE CODE AND ANY PROPOSED,
TEMPORARY OR FINAL TREASURY REGULATION THEREUN-
DER, INCLUDING, WITHOUT LIMITATION, AN OVER-
THE-COUNTER-MARKET OR AN INTERDEALER QUOTATION
SYSTEM THAT REGULARLY DISSEMINATES FIRM BUY OR
SELL QUOTATIONS OR (II) A "SECONDARY MARKET"
WITHIN THE MEANING OF SECTION 7704(b)(2) OF THE
CODE AND ANY PROPOSED, TEMPORARY OR FINAL TREA-
SURY REGULATION THEREUNDER, INCLUDING A MARKET
WHEREIN INTERESTS IN THE CLASS C CERTIFICATES
ARE REGULARLY QUOTED BY ANY PERSON MAKING A
MARKET IN SUCH INTERESTS AND A MARKET WHEREIN
ANY PERSON REGULARLY MAKES AVAILABLE BID OR
OFFER QUOTES WITH RESPECT TO INTERESTS IN THE
CLASS C CERTIFICATES AND STANDS READY TO EFFECT
BUY OR SELL TRANSACTIONS AT THE QUOTED PRICES
FOR ITSELF OR ON BEHALF OF OTHERS.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT
BE REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAW. THE HOLDER HEREOF, BY PURCHAS-
ING THIS CERTIFICATE, AGREES THAT THIS CERTIFI-
CATE MAY BE REOFFERED, RESOLD, PLEDGED OR OTH-
ERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE
SECURITIES ACT AND OTHER APPLICABLE LAWS AND
ONLY (1) TO THE TRANSFEROR, (2) TO A LIMITED
NUMBER OF INSTITUTIONAL "ACCREDITED INVESTORS"
(AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7)
UNDER THE SECURITIES ACT) AND IN A TRANSACTION
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT (UPON DELIVERY OF THE DOCU-
MENTATION REQUIRED BY THE POOLING AND SERVICING
AGREEMENT AND, IF THE TRUSTEE SO REQUIRES, AN
OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE)
OR (3) PURSUANT TO RULE 144A UNDER THE SECURI-
TIES ACT TO A PERSON THAT THE HOLDER REASONABLY
A-3-2
BELIEVE IS A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A ("QIB") PUR-
CHASING FOR ITS OWN ACCOUNT OR A QIB PURCHASING
FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER HAS
INFORMED, IN EACH CASE, THAT THE REOFFER, RE-
SALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A. EACH CERTIFICATE OWNER
BY ACCEPTING A BENEFICIAL INTEREST IN THIS
CERTIFICATE IS DEEMED TO REPRESENT THAT IT IS
EITHER A QIB PURCHASING FOR ITS OWN ACCOUNT, A
QIB PURCHASING FOR THE ACCOUNT OF ANOTHER QIB
OR AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7)
UNDER THE SECURITIES ACT). THIS CERTIFICATE
WILL NOT BE ACCEPTED FOR REGISTRATION OF TRANS-
FER EXCEPT UPON PRESENTATION OF EVIDENCE SATIS-
FACTORY TO THE TRANSFER AGENT AND REGISTRAR
THAT THE RESTRICTIONS ON TRANSFER SET FORTH IN
THE SERIES 1997-1 SUPPLEMENT HAVE BEEN COMPLIED
WITH. THIS CERTIFICATE MAY NOT BE REOFFERED,
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED WITH-
OUT THE PRIOR WRITTEN CONSENT OF THE TRANSFEROR
AND UNLESS AND UNTIL THE TRUSTEE SHALL HAVE RE-
CEIVED THE CERTIFICATIONS REQUIRED BY THE SE-
XXXX 1997-1 SUPPLEMENT.
No. ___ $_________
METRIS MASTER TRUST
FLOATING RATE ASSET BACKED
CERTIFICATE, SERIES 1997-1, CLASS C
Evidencing an undivided interest in a trust, the corpus of
which consists of receivables generated from time to time in the ordinary
course of business from a portfolio of revolving consumer credit card accounts
transferred or to be transferred by certain subsidiaries of Metris
Receivables, Inc. (the "Transferor") and other assets and interests
constituting the Trust under the Agreement described below.
(Not an interest in or a recourse obligation of Metris
Receivables, Inc., Direct Merchants Credit Card Bank, National Association or
any affiliate of either of them.)
A-3-3
This certifies that ___________________ (the
"Certificateholder") is the registered owner of a fractional undivided
interest in the Metris Master Trust (the "Trust") issued pursuant to the
Pooling and Servicing Agreement, dated as of May 26, 1995 (the "Pooling and
Servicing Agreement"; such term to include any amendment thereto) by and
between the Transferor, Direct Merchants Credit Card Bank, National
Association as the Servicer (the "Servicer"), and The Bank of New York
(Delaware), as Trustee (the "Trustee"), and the Series 1997-1 Supplement,
dated as of May __, 1997 (the "Series 1997-1 Supplement"), among the
Transferor, the Servicer and the Trustee. The Pooling and Servicing Agreement,
as supplemented by the Series 1997-1 Supplement, is herein referred to as
the "Agreement." The corpus of the Trust consists of all of the Transferor's
right, title and interest in, to and under the Trust Property (as defined in
the Agreement).
This Certificate does not purport to summarize the Agreement
and reference is made to that Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds, and duties evidenced
hereby and the rights, duties and obligations of the Trustee. To the extent
not defined herein, the capitalized terms used herein have the meanings
ascribed to them in the Agreement. This Certificate is one of a series of Cer-
tificates entitled "Metris Master Trust Floating Rate Asset Backed
Certificates, Series 1997-1, Class C" (the "Class C Certificates"), each of
which represents a fractional undivided interest in the Trust, and is issued
under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement, as amended from time to time, the
Certificateholder by virtue of the acceptance hereof assents and by which the
Certificateholder is bound.
The Transferor has structured the Agreement, the Class C
Certificates, the Metris Master Trust ___% Asset Backed Certificates, Series
1997-1, Class A (the "Class A Certificates") and the Metris Master Trust ___%
Asset Backed Certificates, Series 1997-1, Class B (the "Class B Certificates")
with the intention that the Class A, Class B and Class C Certificates will
qualify under applicable tax law as indebtedness, and both the Transferor and
each holder of a Class C Certificate (a "Class C Certificateholder") or any
interest therein by
A-3-4
acceptance of its Certificate or any interest therein, agrees to treat the
Class C Certificates for purposes of federal, state and local income or
franchise taxes and any other tax imposed on or measured by income, as in-
debtedness.
No principal will be payable to the Class C
Certificateholders until the earlier of the Expected Final Payment Date and,
upon the occurrence of a Pay Out Event, the Distribution Date following the
Monthly Period in which the Pay Out Event occurs but in no event earlier than
the Distribution Date either on or following the Distribution Date on which
the Class A Invested Amount and the Class B Invested Amount have been paid in
full. No principal payments will be payable to the Class C Cer-
tificateholders until the Distribution Date either on or following the
Distribution Date on which the Class A Invested Amount and Class B Invested
Amount have been paid in full.
Interest on the Class C Certificates will be payable on June
20, 1997 and on each Distribution Date thereafter, in an amount equal to the
product of (i) the Class C Certificate Rate, (ii) a fraction the numerator of
which is the actual number of days in the related Interest Accrual Period and
the denominator of which is 360 and (iii) the Class C Invested Amount as of
the close of business on the first day of such Interest Accrual Period (or in
the case of the initial Distribution Date, an amount equal to the sum of (I)
the product of (u) the Class C Initial Invested Amount, (v) ___ divided by
360, and (w) the Class C Certificate Rate determined on ______ ___, 1997, plus
(II) the product of (x) the Class C Initial Invested Amount, (y) ___ divided
by 360, and (z) the Class C Certificate Rate determined on May 16, 1997);
provided, however, that with respect to any Distribution Date related to the
Funding Period the amount described in clause (iii) shall be the Class C
Outstanding Principal Amount at the close of business on the first day of
such Interest Accrual Period.
Subject to the prior payment of interest on the Class A
Certificates and Class B Certificates, interest payments on the Class C
Certificates on each Distribution Date will be funded from the portion of
Available Series Finance Charge Collections with respect to the preceding
Monthly Period and from certain other funds allocated as
A-3-5
set forth in the Pooling and Servicing Agreement to the Class C Certificates
and deposited on each business day during such Monthly Period in the Interest
Funding Account.
"Class C Invested Amount" shall mean, when used with respect
to any Business Day, the greater of (x) zero and (y) an amount equal to (a)
the Class C Initial Invested Amount less the Class C Percentage of the
initial deposit to the Pre-Funding Account plus the Class C Percentage of any
withdrawals from the Pre-Funding Account (i) during the Funding Period in
connection with the addition of Receivables to the Trust or (ii) at the end of
the Funding Period for deposit into the Excess Funding Account, minus (b) the
aggregate amount of principal payments (except principal payments made from
the Pre-Funding Account) made to Class C Certificateholders through and
including such Business Day, minus (c) the aggregate amount of Class C
Investor Charge-Offs for all prior Distribution Dates, minus (d) the aggregate
amount of Reallocated Class B Principal Collections and Reallocated Class C
Principal Collections for which the Class D Invested Amount has not been
reduced for all prior Business Days, and plus (e) the sum of the aggregate
amount allocated and available on all prior Business Days pursuant to
subsection 4.9(a)(xi) of the Agreement and, with respect to such subsection,
pursuant to subsections 4.10(a) and (b), 4.16(a), 4.19(b) and 4.20(b), (c) and
(d) of the Agreement, for the purpose of reinstating amounts reduced pursuant
to the foregoing clauses (c) and (d).
During the period from and including the Closing Date to
but excluding the earlier of (x) the first day for which the Invested Amount
equals the Full Invested Amount; (y) the first day on which a Pay Out Event
is deemed to occur; and (z) the first day of the September 1997 Monthly Period
(the "Funding Period"), the Pre-Funded Amount will be maintained in a trust
account to be established with The Bank of New York (the "Pre-Funding
Account"). The "Pre-Funded Amount" will equal the Initial Pre-Funded Amount,
minus the amounts of any increases in the Invested Amount during the Funding
Period pursuant to Section 4.15 of the Agreement, minus the amount of any
principal losses on funds on deposit in the Pre-Funding Account and minus the
amount withdrawn from the Pre-Funding Account and deposited in the Excess
A-3-6
Funding Account. On the Closing Date a cash deposit will be made to the
Pre-Funding Account such that the amount of Principal Receivables plus the
amount of such cash deposit on such date will at least equal the sum of the
initial outstanding principal balances of the Class A Certificates, the Class
B Certificates, the Class C Certificates and the Class D Certificates and the
sum of the then current outstanding principal balance of all Series (excluding
the Series 1997-1 Certificates). Funds on deposit in the Pre-Funding Account
will be invested by the Trustee at the direction of the Servicer in Cash
Equivalents.
During the Funding Period, funds on deposit in the
Pre-Funding Account will be withdrawn and paid to the Transferor to the extent
of any increases in the Invested Amount as a result of the increase in the
amount of Receivables in the Trust. In the event of the occurrence of a Pay
Out Event during the Funding Period, the amounts remaining on deposit in the
Pre-Funding Account, will be payable as principal first to the Class A
Certificateholders until the Class A Invested Amount is paid in full and
then to the Class B Certificateholders until the Class B Invested Amount is
paid in full and then to the Class C Certificateholders until the Class C
Invested Amount is paid in full. Should the Pre-Funded Amount be greater than
zero on the first Business Day of the September 1997 Monthly Period, such
amount will be deposited in the Excess Funding Account, and the Class A
Invested Amount, Class B Invested Amount and Class C Invested Amount shall be
increased pro rata by such amount.
Subject to the Agreement, payments of principal are limited
to the unpaid Class C Invested Amount of the Class C Certificates, which may
be less than the unpaid balance of the Class C Certificates pursuant to the
terms of the Agreement. All principal on the Class C Certificates is due and
payable no later than the October 2005 Distribution Date (or if such day is
not a Business Day, the next succeeding Business Day) (the "Scheduled Series
1997-1 Termination Date"). After the earlier to occur of (i) the Scheduled
Series 1997-1 Termination Date or (ii) the day after the Distribution Date on
which the Series 1997-1 Certificates are paid in full (the "Series 1997-1
Termination Date") neither the Trust nor the Transferor will have any further
obligation to distribute principal or interest on the Class C Certificates. In
the event
A-3-7
that the Class C Invested Amount is greater than zero on the Series
Termination Date, the Trustee will sell or cause to be sold, to the extent
necessary, an amount of interests in the Receivables or certain of the Receiv-
xxxxx up to 110% of the Class A Invested Amount, the Class B Invested Amount,
the Class C Invested Amount and the Class D Invested Amount at the close of
business on such date (but not more than the total amount of Receivables
allocable to the Investor Certificates), and shall pay the proceeds to the
Class A Certificateholders pro rata in final payment of the Class A
Certificates, then to the Class B Certificateholders pro rata in final payment
of the Class B Certificates, then to the Class C Certificateholders pro rata
in final payment of the Class C Certificates and finally to the Class D
Certificateholders pro rata in final payment of the Class D Certificates.
Unless the certificate of authentication hereon has been
executed by or on behalf of the Trustee, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement, or be valid for any
purpose.
A-3-8
IN WITNESS WHEREOF, the Transferor has caused this
Certificate to be duly executed under its official seal.
METRIS RECEIVABLES, INC.
By:________________________
Name:
Title:
Dated:
CERTIFICATE OF AUTHENTICATION
This is one of the Class C Certificates referred to in the
within-mentioned Pooling and Servicing Agreement.
THE BANK OF NEW YORK
By:_______________________
Name:
Title:
X-0-0
Xxxxxxx X-0
FORM OF CLASS D INVESTOR CERTIFICATE
THIS CERTIFICATE WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"). THIS CERTIFICATE HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE
SECURITIES LAW OF ANY STATE AND MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS REGIS-
TERED PURSUANT TO OR EXEMPT FROM REGISTRATION UNDER
THE SECURITIES ACT AND ANY OTHER APPLICABLE SECURI-
TIES LAW. T HE TRANSFEROR SHALL BE PROHIBITED FROM
TRANSFERRING ANY INTEREST IN OR PORTION OF THIS
CERTIFICATE.
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE
BENEFIT OF METRIS RECEIVABLES, INC. AND THE TRUSTEE
THAT SUCH PURCHASER IS NOT (I) AN EMPLOYEE BENEFIT
PLAN (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
("ERISA")) THAT IS SUBJECT TO THE PROVISIONS OF
TITLE I OF ERISA, (II) A PLAN DESCRIBED IN SECTION
4975(E)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED (THE "CODE"), (III) A GOVERNMENTAL PLAN, AS
DEFINED IN SECTION 3(32) OF ERISA, SUBJECT TO ANY
FEDERAL, STATE OR LOCAL LAW WHICH IS, TO A MATERIAL
EXTENT, SIMILAR TO THE PROVISIONS OF SECTION 406 OF
ERISA OR SECTION 4975 OF THE CODE, (IV) AN ENTITY
WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS (AS DE-
FINED IN 29 C.F.R. SECTION 2510.3-101 OR OTHERWISE
UNDER ERISA) BY REASON OF A PLAN'S INVESTMENT IN THE
ENTITY OR (V) A PERSON INVESTING PLAN ASSETS OF ANY
SUCH PLAN (INCLUDING WITHOUT LIMITATION, FOR PUR-
POSES OF CLAUSE (IV) AND THIS CLAUSE (V), ANY INSUR-
ANCE COMPANY GENERAL ACCOUNT, BUT EXCLUDING ANY
ENTITY REGISTERED UNDER THE INVESTMENT COMPANY ACT
OF 1940, AS AMENDED).
No. ___ $_________
METRIS MASTER TRUST
0% ASSET BACKED
A-4-1
CERTIFICATE, SERIES 1997-1, CLASS D
Evidencing an undivided interest in a trust, the corpus of
which consists of receivables generated from time to time in the ordinary
course of business from a portfolio of revolving consumer credit card accounts
transferred or to be transferred by Metris Receivables, Inc. (the
"Transferor") and other assets and interests constituting the Trust under the
Agreement described below.
(Not an interest in or a recourse obligation of Metris
Receivables, Inc., Direct Merchants Credit Card Bank, National Association or
any affiliate of either of them.)
This certifies that ______________ (the "Cer-
tificateholder") is the registered owner of a fractional undivided interest in
the Metris Master Trust (the "Trust") issued pursuant to the Pooling and
Servicing Agreement, dated as of May 26, 1995 (the "Pooling and Servicing
Agreement"; such term to include any amendment or Supplement thereto) by and
between the Transferor, Direct Merchants Credit Card Bank, National
Association as the Servicer (the "Servicer"), and The Bank of New York
(Delaware), as Trustee (the "Trustee"), and the Series 1997-1 Supplement,
dated as of May __, 1997 (the "Series 1997-1 Supplement"), among the
Transferor, the Servicer and the Trustee. The Pooling and Servicing Agreement,
as supplemented by the Series 1997-1 Supplement, is herein referred to as
the "Agreement." The corpus of the Trust consists of all of the Transferor's
right, title and interest in, to and under the Trust Property (as defined in
the Agreement).
This Certificate does not purport to summarize the Agreement
and reference is made to that Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds, and duties evidenced
hereby and the rights, duties and obligations of the Trustee. To the extent
not defined herein, the capitalized terms used herein have the meanings
ascribed to them in the Agreement. This Certificate is one of a series of Cer-
tificates entitled "Metris Master Trust 0% Asset Backed Certificates, Series
1997-1, Class D" (the "Class D Certificates"), each of which represents a
fractional undivided interest in the Trust, and is issued under and is
A-4-2
subject to the terms, provisions and conditions of the Agreement, to which
Agreement, as amended from time to time, the Certificateholder by virtue of
the acceptance hereof assents and by which the Certificateholder is bound.
Metris Receivables, Inc. shall be prohibited from
Transferring any interest in or portion of the Class D Certificate.
No principal will be payable to the Class D
Certificateholders (other than with respect to Class D Excess Amounts) until
the earlier of the Expected Final Payment Date and, upon the occurrence of a
Pay Out Event, the Distribution Date following the Monthly Period in which the
Pay Out Event occurs but in no event earlier than the Distribution Date either
on or following the Distribution Date on which Class A Invested Amount, Class
B Invested Amount and the Class C Invested Amount have been paid in full. No
principal will be payable to the Class D Certificateholders until all
principal payments have first been made to the Class A Certificateholders,
Class B Certificateholders and Class C Certificateholders.
"Class D Invested Amount" shall mean, when used with respect
to any Business Day, the greater of (x) zero and (y) an amount equal to (a)
the initial principal balance of the Class D Certificates, minus (b) the
aggregate amount of principal payments made to Class D Certificateholders
through and including such Business Day, minus (c) the aggregate amounts by
which the Transferor has reduced the Class D Invested Amount pursuant to
subsection 4.12(d) of the Agreement, minus (d) the aggregate amount of Class
D Investor Charge-Offs for all prior Distribution Dates, minus (e) the
aggregate amount of Reallocated Principal Collections for all prior Business
Days, plus (f) the sum of the aggregate amount allocated and available on all
prior Business Days pursuant to subsection 4.9(a)(xii) of the Agreement and,
with respect to such subsection, pursuant to subsections 4.10(a) and (b),
4.19(b) and 4.20(b), (c) and (d) of the Agreement, for the purpose of
reinstating amounts reduced pursuant to the foregoing clauses (d) and (e).
Subject to the Agreement, payments of principal are limited
to the unpaid Class D Invested Amount of the
A-4-3
Class D Certificates, which may be less than the unpaid balance of the Class D
Certificates pursuant to the terms of the Agreement. All principal on the
Class D Certificates is due and payable no later than the October 2005
Distribution Date (or if such day is not a Business Day, the next succeeding
Business Day) (the "Scheduled Series 1997-1 Termination Date"). After the
earlier to occur of (i) the Scheduled Series 1997-1 Termination Date or (ii)
the day after the Distribution Date on which the Series 1997-1 Certificates
are paid in full (the "Series 1997-1 Termination Date") neither the Trust nor
the Transferor will have any further obligation to distribute principal or
interest on the Class D Certificates. In the event that the Class D Invested
Amount is greater than zero on the Series Termination Date, the Trustee will
sell or cause to be sold, to the extent necessary, an amount of interests in
the Receivables or certain of the Receivables up to 110% of the Class A
Invested Amount, the Class B Invested Amount, the Class C Invested Amount and
the Class D Invested Amount at the close of business on such date (but not
more than the total amount of Receivables allocable to the Investor
Certificates), and shall pay the proceeds to the Class A Certificateholders
pro rata in final payment of the Class A Certificates, then to the Class B
Certificateholders pro rata in final payment of the Class B Certificates, then
to the Class C Certificateholders pro rata in final payment of the Class C
Certificates and finally to the Class D Certificateholders pro rata in final
payment of the Class D Certificates.
Unless the certificate of authentication hereon has been
executed by or on behalf of the Trustee, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement, or be valid for any
purpose.
A-4-4
IN WITNESS WHEREOF, the Transferor has caused this
Certificate to be duly executed under its official seal.
METRIS RECEIVABLES, INC.
By:________________________
Name:
Title:
Dated:
CERTIFICATE OF AUTHENTICATION
This is one of the Class D Certificates referred to in the
within-mentioned Pooling and Servicing Agreement.
THE BANK OF NEW YORK
By:________________________
Name:
Title:
A-4-5
EXHIBIT B
[Form of Monthly Certificateholders' Statement]
B-1
EXHIBIT C
Metris Receivables, Inc.
0000 Xxxxx Xxxx, Xxxxx X000
Xxxxxxxxxx, Xxxxxxxxx 00000
The Bank of New York (Delaware)
Xxxxx Xxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Re: Metris Master Trust Floating Rate Asset Backed Cer-
tificates, Series 1997-1, Class C
Ladies and Gentlemen:
In connection with our proposed purchase of $_________ in principal
amount of Metris Master Trust Floating Rate Asset Backed Certificates, Series
1997-1, Class C (the "Class C Certificates"), we confirm that:
[To be included in each letter to be signed by the initial purchasers
from Bear, Xxxxxxx & Co. Inc.] [1. We have received a copy of the Private
Placement Memorandum dated April __, 1997 relating to the Class C Certif-
icates (the "Private Placement Memorandum") and such other information and
documentation as we deem necessary in order to make our investment decision.
We understand that the Private Placement Memorandum and any such other
information and documentation speaks only as of its date and that the
information contained in the Private Placement Memorandum and such other
information and documentation may not be correct or complete as of any time
subsequent to such date.]
2. We agree to be bound by the restrictions and conditions set forth
in the Pooling and Servicing Agreement, dated as of May 26, 1995, as amended
(the "Pooling and Servicing Agreement") and as supplemented by the Series
1997-1 Supplement dated as of May __, 1997 (the "Series 1997-1 Supplement" and
together with the Pooling and Servicing Agreement, the "Pooling and Servicing
Agreement"), each by and between Metris Receivables, Inc., as Transferor,
Direct Merchants Credit Card Bank, National Association, as Servicer, and The
Bank of New York (Delaware), as Trustee, relating to the Class C Certificates
and agree to be bound by, and not reoffer,
C-1
resell, pledge, participate, hypothecate or otherwise dispose or transfer (any
such act, a "Transfer") the Class C Certificates except in compliance with,
certain restrictions and conditions including but not limited to those in
Section 10 of the Series 1997-1 Supplement. We understand that capitalized
terms used herein and not otherwise defined herein have the meanings given to
such terms in the Series 1997-1 Supplement.
3. We understand that the Class C Certificates have not been and will
not be registered under the Securities Act of 1933, as amended (the
"Securities Act") or any state securities law and agree that the Class C
Certificates may be reoffered, resold, pledged or otherwise transferred only
in compliance with the Securities Act and other applicable laws and only (i)
to the Transferor, (ii) to a limited number of institutional "accredited
investors" (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act) and in a transaction exempt from the registration requirements of the
Securities Act (upon delivery of the documentation required by the Pooling and
Servicing Agreement and, if the Trustee so requires, an opinion of counsel
satisfactory to the Trustee) or (iii) pursuant to Rule 144A under the Securi-
ties Act to a person that we reasonably believe is a qualified institutional
buyer within the meaning of Rule 144A ("QIB") purchasing for its own account
or a QIB purchasing for the account of a QIB, whom we have informed, in each
case, that the reoffer, resale, pledge or other transfer is being made in
reliance on Rule 144A.
4. We have neither acquired nor will we Transfer any Class C
Certificate we acquire (or any interest therein) or cause any Class C
Certificate (or any interest therein) to be marketed on or through (i) an
"established securities market" within the meaning of Section 7704(b)(1) of
the Internal Revenue Code of 1986, as amended (the "Code") and any Treasury
regulation thereunder, including, without limitation, an over-the-counter
market or an interdealer quotation system that regularly disseminates firm buy
or sell quotations or (ii) a "secondary market" within the meaning of
Section 7704(b)(2) of the Code and any Treasury regulation thereunder,
including a market wherein the Class C Certificates (or any interest therein)
are regularly quoted by any person making a market in such interests and a
market wherein any person regularly makes available bid or offer quotes
C-2
with respect to the Class C Certificates (or any interest therein) and stands
ready to effect buy or sell transactions at the quoted prices for itself or
on behalf of others.
5. We are not and will not become, for so long as we own any interest
in the Class C Certificates, a partnership, Subchapter S corporation or
grantor trust for United States federal income tax purposes. If this
representation cannot be made, the Transferor may, in its sole discretion,
prohibit a Transfer to such entity; provided, however, that if the Transferor
agrees to permit such a Transfer, the Transferor or the Trustee may require
additional certifications and representations in order to prevent the Trust
from being treated as a publicly traded partnership.
6. We are a person who is either (A)(i) a citizen or resident of the
United States, (ii) a corporation or other entity organized in or under the
laws of the United States or any political subdivision thereof or (iii) a
person not described in (i) or (ii) whose ownership of the Class C
Certificates is effectively connected with such person's conduct of a trade or
business within the United States (within the meaning of the Code) and our
ownership of any interest in a Class C Certificate will not result in any
withholding obligation with respect to any payments with respect to the Class
C Certificates by any person or (B) an estate the income of which is
includible in gross income for United States federal income tax purposes or
any trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more United States
fiduciaries have the authority to control all substantial decisions of the
trust. We agree that (a) if we are a person described in clause (A)(i) or
(A)(ii) above, we will furnish to the person from whom we are acquiring a
Class C Certificate, the Transferor, the Servicer and the Trustee, a properly
executed U.S. Internal Revenue Service Form W-9 and a new Form W-9, or any
successor applicable form, upon the expiration or obsolescence of any
previously delivered form or (b) if we are a person described in clause
(A)(iii) above, we will furnish to the person from whom we are acquiring a
Class C Certificate, the Transferor, the Servicer and the Trustee, a properly
executed U.S. Internal Revenue Service Form 4224 and a new Form 4224, or any
successor applicable form, upon the
C-3
expiration or obsolescence of any previously delivered form (and, in each case,
such other certifications, representations or opinions of counsel as may be
requested by the Transferor, the Servicer or the Trustee). We recognize that if
we are a tax-exempt entity, payments with respect to the Class C Certificates
may constitute unrelated business taxable income.
7. We understand that no subsequent Transfer of a Class C Certificate
is permitted unless the Transferor and the Servicer each consent in writing to
the proposed Transfer, which consent shall be granted (assuming that all other
conditions to such Transfer are satisfied) unless either the Transferor or the
Servicer determines in its sole and absolute discretion that such Transfer
would create more than an insubstantial risk that the Trust would be
classified for federal or any applicable state tax purposes as an association
or publicly traded partnership taxable as a corporation; provided, that any
attempted Transfer that would cause the number of Targeted Holders to exceed
one-hundred shall be void; and provided, further, that there shall not at
any time be more than 10 holders of Class C Certificates of Series 1997-1 or
such other number as may be consented to by the Transferor, which consent
may be withheld in its sole and absolute discretion.
"Targeted Holder" means (i) each holder of a
right to receive interest or principal with
respect to the Class C Certificates (or other
interests in the Trust), other than certifi-
xxxxx (or other such interests) with respect to
which an opinion is rendered that such certif-
icates (or other such interests) will be treat-
ed as debt for Federal income tax purposes, and
(ii) any holder of a right to receive any
amount in respect of the Transferor Interest;
provided, that any person holding more than one
interest each of which would cause such person
to be a Targeted Holder shall be treated as a
single Targeted Holder.
8. We understand that the opinion of tax counsel that the Trust will
not be subject to tax at the entity level is dependent in part on the accuracy
of the representations in paragraphs 4, 5, 6 and 7 and that, if such
representations are not accurate, in addition to our
C-4
being subject to having our purchase rescinded, we will be liable for damages.
9. We understand that if we are not created or organized under the
laws of the United States or any State thereof (including the District of
Columbia), we will, upon written notice by the Transferor that the Transferor
intends, pursuant to Section 1446 or other applicable section of the Code, to
withhold U.S. tax (a "Withholding Tax") from amounts paid or accruing to us
with respect to our interest in a Class C Certificate (such determination
being a "Withholding Event"), for tax years for which we have already filed
U.S. federal income tax returns (each a "Prior Tax Year") prior to proper no-
xxxx of such Withholding Event, provide (A) a signed officer's certificate
stating that amounts paid or accruing to us with respect to our interest in
a Class C Certificate have been included in our U.S. federal income tax
returns for each such Prior Tax Year, which certificate may be relied on by
the Transferor in asserting to the Internal Revenue Service the applicability
of Section 1463 of the Code with respect to any Withholding Tax for each such
Prior Tax Year and (B) provide information to the Transferor or, at our
option, to the Internal Revenue Service in support of the application of
Section 1463 of the Code for each such Prior Tax Year.
10. We are (a) an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3), or (7) of Regulation D under the Securities Act)
and have such knowledge and experience in financial and business matters as
to be capable of evaluating the merits and risks of our investment in the
Class C Certificates, and we are acquiring each of the Class C Certificates
purchased by us for our own account or for a single account (which is an
institutional "accredited investor") as to which we exercise sole investment
discretion and we and any such account for which we are acting are each able
to bear the economic risk of our or its investment or (b) a "qualified
institutional buyer" (as defined in Rule 144A under the Securities Act)
purchasing for our own account or for the account of a "qualified
institutional buyer" and we understand that the sale to us is being made in
reliance on Rule 144A under the Securities Act.
11. We are not (i) an employee benefit plan (as defined in Section
3(3) of the Employee Retirement Income
C-5
Security Act of 1974, as amended ("ERISA") that is subject to the provisions
of Title I of ERISA, (ii) a plan described in Section 4975(e)(1) of the Code, (
iii) a governmental plan, as defined in Section 3(32) of ERISA, subject to any
federal, state or local law which is, to a material extent, similar to the
provisions of Section 406 of ERISA or Section 4975 of the Code, (iv) an entity
whose underlying assets include plan assets (as defined in 29 C.F.R. Section
2510.3-101 or otherwise under ERISA) by reason of a plan's investment in the
entity or (v) a person investing plan assets of any such plan (including,
without limitation, for purposes of clause (iv) or this clause (v), any
insurance company general account, but excluding any entity registered under
the Investment Company Act of 1940, as amended).
12. We understand that any purported Transfer of any Class C
Certificate in contravention of the restrictions and conditions in
paragraphs 1 through 12 above (including any violation of the representation
in paragraph 5 by an investor who continues to hold a Class C Certificate
occurring any time after the Transfer in which it acquired such Class C
Certificate) shall be null and void and the purported transferee shall not be
recognized by the Trust or any other person as a Class C Certificateholder
for any purpose.
13. We further understand that, on any proposed resale, pledge or
transfer of any Class C Certificates, we will be required to furnish to the
Trustee and the Registrar, such certification and other information as the
Trustee or the Registrar may reasonably require to confirm that the proposed
sale complies with the foregoing restrictions and with the restrictions and
conditions of the Class C Certificates and the Pooling and Servicing Agreement
pursuant to which the Class C Certificates were issued and we agree that if we
determine to Transfer any Class C Certificate, we will cause our proposed
transferee to provide the Transferor, the Servicer and the Trustee with a
letter substantially in the form of this letter. We further understand that
Class C Certificates purchased by us will bear a legend to the foregoing
effect.
14. The person signing this letter on behalf of the ultimate
beneficial purchaser of the Class C Certificates
C-6
has been duly authorized by such beneficial purchaser of the Class C
Certificates to do so.
15. The Class C Certificates purchased by us should be registered in
the name and issued in the denominations set forth on Schedule 1 hereto. All
payments on the Class C Certificates held by us should be wired to us in
accordance with the instructions set forth on Schedule 1 hereto unless we
otherwise notify the Transferor, the Servicer and the Trustee in writing.
You are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal proceeding or official inquiry with respect to the
matters covered hereby.
Very truly yours,
[NAME OF TRANSFEREE]
By:________________________
Name:
Title:
C-7
