EXECUTION COPY
METRIS RECEIVABLES, INC.
Transferor
DIRECT MERCHANTS CREDIT CARD BANK, NATIONAL ASSOCIATION
Servicer
and
U.S. BANK NATIONAL ASSOCIATION
Trustee
on behalf of the Series 2002-3 Securityholders
SERIES 2002-3 SUPPLEMENT
Dated as of June 4, 2002
to
SECOND AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT
Dated as of January 22, 2002
METRIS MASTER TRUST
$900,000,000 Floating Rate Asset Backed
Securities, Series 2002-3, Class A
$94,475,138 Asset Backed
Securities, Series 2002-3, Class B
EXHIBITS
Exhibit A-1 Form of Class A Investor Security
Exhibit A-2 Form of Class B Investor Security
Exhibit B Form of Monthly Securityholder's Statement
SERIES 2002-3 SUPPLEMENT, dated as of June 4, 2002 (this
"Series Supplement"), by and among METRIS RECEIVABLES, INC., a corporation
organized and existing under the laws of the State of Delaware, as Transferor
(the "Transferor"), DIRECT MERCHANTS CREDIT CARD BANK, NATIONAL ASSOCIATION, a
national banking association organized under the laws of the United States, as
Servicer (the "Servicer"), and U.S. BANK NATIONAL ASSOCIATION, a national
banking association organized and existing under the laws of the United States,
as trustee (together with its successors in trust thereunder as provided in the
Agreement referred to below, the "Trustee"), under the Second Amended and
Restated Pooling and Servicing Agreement, dated as of January 22, 2002 (as
amended, supplemented or otherwise modified from time to time, the "Agreement"),
by and 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 delivery
by the Trustee to the Transferor, for execution and redelivery to the Trustee
for authentication, of one or more Series of Securities.
Pursuant to this Series Supplement, the Transferor and the
Trustee shall create a new Series of Investor Securities and shall specify the
Principal Terms thereof.
Section 1. Designation. There is hereby created a Series of Investor
Securities to be issued pursuant to the Agreement and this Series Supplement to
be known generally as the "Series 2002-3 Securities." The Series 2002-3
Securities shall be issued in two Classes, which shall be designated generally
as the Floating Rate Asset Backed Securities, Series 2002-3, Class A (the "Class
A Securities"), and the Asset Backed Securities, Series 2002-3, Class B (the
"Class B Securities").
Section 2. Definitions. In the event that any term or provision contained
herein shall conflict with or be inconsistent with any provision contained in
the Agreement, the terms and provisions of this Series Supplement shall govern
with respect to the Series 2002-3 Securities. All Article, Section or subsection
references herein shall mean Articles, Sections or subsections of the Agreement,
as amended or supplemented by this Series Supplement, except as otherwise
provided herein. All capitalized terms not otherwise defined herein are defined
in the Agreement. Each capitalized term defined herein shall relate only to the
Series 2002-3 Securities and no other Series of Securities issued by the Trust.
"Accumulation Period" shall mean the period commencing at the
close of business on the last day of the April 2004 Monthly Period or such later
date as is determined in accordance with Section 4.19 of the Agreement and
ending on the first to occur of (a) the commencement of the Early Amortization
Period and (b) the Series 2002-3 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 Class A 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 of
all other Series which are not expected to be in their revolving periods during
such Monthly Period, and (c) the sum of the numerators used to calculate the
allocation percentages applicable for Principal Collections of all Classes of
other outstanding Series which are not allocating Shared Principal Collections
and are expected to be in their revolving periods during such Monthly Period.
"Accumulation Period Length" shall have the meaning specified
in Section 4.19 of the Agreement.
"Accumulation Period Reserve Account" shall have the meaning
specified in subsection 4.18(a) of the Agreement.
"Accumulation Shortfall" shall initially mean zero and
thereafter shall mean, with respect to any Monthly Period during the
Accumulation Period, the excess, if any, of the Controlled Deposit Amount for
the previous Monthly Period over the amount deposited into the Principal Funding
Account pursuant to subsection 4.12(a) of the Agreement with respect to the
Series 2002-3 Securities for the previous Monthly Period.
"Additional Interest" shall mean, at any time of
determination, the Class A Additional Interest.
"Adjusted Invested Amount" shall mean as of any Business Day,
(i) the Invested Amount minus (ii) the sum of the amounts then on deposit in the
Principal Account and the Principal Funding Account and the Series 2002-3
Percentage of the amount then on deposit in the Excess Funding Account.
"Aggregate Interest Rate Caps Notional Amount" shall mean with
respect to any date of determination an amount equal to the sum of the notional
amounts or equivalent amounts of all outstanding Cap Agreements, Replacement
Interest Rate Caps and Qualified Substitute Arrangements, each as of such date
of determination.
"Amortization Period" shall mean the period commencing on the
Amortization Period Commencement Date and continuing until the Series 2002-3
Termination Date.
"Amortization Period Commencement Date" shall mean the
earliest of the first day of the Accumulation Period and the Pay Out
Commencement Date.
"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 4.18(c) of the Agreement from the
Accumulation Period Reserve Account on such Transfer Date) and (b) the Required
Reserve Account Amount for such Transfer Date.
"Available Series 2002-3 Finance Charge Collections" shall have the meaning
specified in subsection 4.9(a) of the Agreement.
"Available Series 2002-3 Principal Collections" shall mean,
with respect to any Monthly Period, or portion thereof commencing on the
Amortization Period Commencement Date, an amount equal to the sum of (i) an
amount equal to the Fixed/Floating Percentage of all Principal Collections (less
the amount of Redirected Principal Collections) received during such Monthly
Period, (ii) any amount on deposit in the Excess Funding Account allocated to
the Series 2002-3 Securities pursuant to subsection 4.9(d) of the Agreement with
respect to such period, (iii) the sum of the aggregate amount allocated with
respect to the Series Default Amount with respect to such period and the Series
2002-3 Percentage of any unpaid Adjustment Payments paid pursuant to subsections
4.9(a)(iii) and 4.9(a)(iv) of the Agreement with respect to such period, any
reimbursements of unreimbursed Charge-Offs pursuant to subsections 4.9(a)(v) and
(x) of the Agreement with respect to such period plus in each case, amounts
applied with respect thereto pursuant to subsections 4.10(a) and (b), 4.14,
4.17(b) and 4.18(b), (c) and (d) of the Agreement (iv) the Policy Claim Amount
with respect to Potential Class A Charge-Offs for the related Distribution Date
paid pursuant to subsection 11(b) of this Series Supplement, (v) the aggregate
Shared Principal Collections allocated to the Series 2002-3 Securities pursuant
to Section 4.8 of the Agreement with respect to such period and (vi) the
proceeds of the sale of all or a portion of an Interest Rate Cap with respect to
such Monthly Period.
"Base Rate" shall mean, with respect to any Monthly Period,
the sum of (i) the Class A Interest Rate 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.
"Cap Agreements" shall mean each interest rate cap agreement,
between the Transferor and a Cap Provider, as amended from time to time, with
respect to the Class A Interest Rate and any additional interest rate protection
agreement or agreements, entered into between the Transferor and a Cap Provider,
as the same may from time to time be amended, restated, modified and in effect.
"Cap Proceeds Account" shall have the meaning specified in
subsection 3A(b) of this Series Supplement.
"Cap Provider" shall mean a third party cap provider having a
rating acceptable to the Rating Agencies.
"Cap Receipt Amount" shall mean, with respect to any Business
Day the amount on deposit in the Cap Proceeds Account.
"Cap Settlement Date" shall have the meaning specified in
subsection 3A(b) of this Series Supplement.
"Carryover Class A Interest" shall mean with respect to any
Business Day (a) any Class A Monthly Interest due but not paid on any previous
Distribution Date plus (b) any Class A Additional Interest due on the next
succeeding Distribution Date.
"Charge-Offs" shall mean the sum of Class A Charge-Offs and
Class B Charge-Offs.
"Class A Additional Interest" shall have the meaning specified
in Section 4.6 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 sum of the Principal Funding Account Balance and the
amount then on deposit in the Principal Account for the benefit of the Class A
Securities on such date of determination.
"Class A Charge-Offs" shall have the meaning specified in
subsection 4.13(c) of the Agreement.
"Class A Floating Percentage" shall mean, with respect to any
Business Day, the percentage equivalent of a fraction, the numerator of which is
the Class A Adjusted Invested Amount as of the end of the preceding Business Day
and the denominator of which is the greater of (a) the sum of the aggregate
amount of Principal Receivables in the Trust and the amounts on deposit in the
Excess Funding Account as of the end of the preceding Business Day and (b) the
sum of the numerators with respect to all Classes of all Series then outstanding
used to calculate the applicable allocation percentage.
"Class A Initial Invested Amount" shall mean the aggregate
initial principal amount of the Class A Securities, which is $900,000,000.
"Class A Interest Rate" shall mean 0.30% per annum in excess
of LIBOR as determined on the related LIBOR Determination Date.
"Class A Interest Shortfall" shall have the meaning specified
in Section 4.6 of the Agreement.
"Class A Invested Amount" shall mean, when used with respect
to any Business Day, the greater of (x) zero and (y) an amount equal to (a) the
Class A Initial Invested Amount, minus (b) the aggregate amount of principal
payments made to Class A Securityholders through and including such Business
Day, minus (c) the aggregate amount of Class A Charge-Offs for all prior
Distribution Dates, plus (d) the sum of the aggregate amount reimbursed with
respect to reductions of the Class A Invested Amount through and including such
Business Day pursuant to subsection 4.9(a)(v) of the Agreement plus, with
respect to such subsection, amounts applied thereto pursuant to subsections
4.10(a) and (b), 4.14, 4.17(b) and 4.18(b), (c) and (d) of the Agreement, for
the purpose of reimbursing amounts deducted pursuant to the foregoing clause
(c).
"Class A Monthly Interest" shall mean the interest
distributable in respect of the Class A Securities as calculated in accordance
with Section 4.6 of the Agreement.
"Class A Outstanding Principal Amount" shall mean with respect
to the Class A Securities, when used with respect to any Business Day, an amount
equal to (a) the Class A Initial Invested Amount minus (b) the aggregate amount
of principal payments made to the Class A Securityholders 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
Initial Invested Amount.
"Class A Principal" shall mean the principal distributable in
respect of the Class A Securities as specified in subsection 4.7(a) of the
Agreement.
"Class A Required Amount" shall mean, on any Business Day, the
amount equal to the excess, if any, of (x) the sum of (i) the Class A Monthly
Interest for the Interest Accrual Period beginning in the then current Monthly
Period, (ii) any Carryover Class A Interest, (iii) the Class A Percentage of the
Series Servicing Fee for the then current Monthly Period, (iv) the Class A
Floating 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 and (v) the Class A Percentage of the Series 2002-3 Percentage of any
Adjustment Payment the Transferor is required but fails to make pursuant to
subsection 3.8(a) of the Agreement on such Business Day and on each previous
Business Day during such Monthly Period over (y) the Available Series 2002-3
Finance Charge Collections plus any Excess Finance Charge Collections from other
Series and any Transferor Finance Charge Collections (and, if such day is the
Default Recognition Date for such Monthly Period, any Transferor Retained
Finance Charge Collections) allocated with respect to the amounts described in
clauses (x)(i) through (v) above with respect to such Business Day and all
previous Business Days in such Monthly Period.
"Class A Securities" shall mean any of the securities executed
by the Transferor and authenticated by or on behalf of the Trustee,
substantially in the form of Exhibit A-1 hereto.
"Class A Securityholder" shall mean the Person in whose name a
Class A Security is registered in the Security Register.
"Class B Charge-Offs" shall have the meaning specified in
subsection 4.13(a) of the Agreement.
"Class B Excess Amount" shall mean with respect to any
Business Day, the excess of the Class B Invested Amount over the Stated Class B
Amount on such Business Day after taking into account all adjustments of the
Class A Adjusted Invested Amount on such day.
"Class B Fixed/Floating Percentage" shall mean for any
Business Day the percentage equivalent of a fraction, the numerator of which is
the Class B Invested Amount at the end of the last day of the Revolving Period
and the denominator of which is the greater of (a) the sum of the aggregate
amount of Principal Receivables in the Trust and the amount on deposit in the
Excess Funding Account as of the end of the preceding Business Day and (b) the
sum of the numerators with respect to all Classes of all Series then outstanding
used to calculate the applicable allocation percentage.
"Class B Floating Percentage" shall mean with respect to any
Business Day the percentage equivalent of a fraction, the numerator of which is
the Class B Invested Amount at 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 at the end of the preceding Business Day and (b) the sum of the
numerators with respect to all Classes of all Series then outstanding used to
calculate the applicable allocation percentage.
"Class B Initial Invested Amount" shall mean the aggregate initial
principal amount of the Class B Securities, which is $94,475,138.
"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
initial principal balance of the Class B Securities, minus (b) the aggregate
amount of principal payments made to Class B Securityholders through and
including such Business Day, minus (c) the aggregate amount by which the
Transferor has reduced the Class B Invested Amount pursuant to subsection
4.12(b) of the Agreement, minus (d) the aggregate amount of Class B Charge-Offs
for all prior Distribution Dates, minus (e) the aggregate amount of Redirected
Principal Collections for all prior Distribution Dates plus (f) the sum of the
aggregate amount reimbursed with respect to reductions of the Class B Invested
Amount through and including such Business Day pursuant to subsection 4.9(a)(x)
of the Agreement plus, with respect to such subsection, amounts applied thereto
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 reimbursing amounts deducted pursuant to the
foregoing clauses (d) and (e).
"Class B Outstanding Principal Amount" shall mean, 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 made to the
Class B Securityholders prior to such Business Day.
"Class B Principal" shall mean the principal distributable in
respect of the Class B Securities as specified in subsection 4.7(b) of the
Agreement.
"Class B Principal Payment Commencement Date" shall mean the
earlier of (a) (i) with respect to the Accumulation Period, the Expected Final
Payment Date or (ii) during the Early Amortization Period, the first
Distribution Date on which the Class A Invested Amount is paid in full or, if
there are no Principal Collections allocable to the Series 2002-3 Securities
remaining after payments have been made to the Class A Securities 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 Securities" shall mean any of the securities executed
by the Transferor and authenticated by or on behalf of the Trustee,
substantially in the form of Exhibit A-2 hereto.
"Class B Securityholder" shall mean the Person in whose name a
Class B Security is registered in the Security Register.
"Closing Date" shall mean June 4, 2002.
"Controlled Accumulation Amount" shall mean, for any Transfer
Date with respect to the Accumulation Period prior to the payment in full of the
Class A Invested Amount, $75,000,000; provided, however, that if the
Accumulation Period Length is determined to be less than 12 months pursuant to
Section 4.19 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 Class A Invested Amount will be equal to (i) the product of (x) the
Class A 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 Class A Invested Amount, the product of (a) the Class A Interest Rate in
effect with respect to such Interest Accrual Period, (b) 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 (c) the Principal Funding Account
Balance (up to the Class A Invested Amount) as of the last day of the Monthly
Period preceding the Monthly Period in which such Interest Accrual Period ends.
"Default Amount" shall mean, (i) on any Business Day other
than the Default Recognition Date, the aggregate amount of Principal Receivables
in Accounts which became Defaulted Accounts on such Business Day and (ii) on any
Default Recognition Date the aggregate amount of Principal Receivables in
Accounts which became Defaulted Accounts during the then current Monthly Period
(other than such Accounts which were included in clause (i)).
"Default Recognition Allocation Percentage" shall mean, with
respect to each Default Recognition Date, the percentage equivalent of a
fraction, the numerator of which is the Weighted Average Invested Amount for the
related Monthly Period and the denominator of which is the Weighted Average
Principal Receivables in the Trust for the related Monthly Period.
"Default Recognition Date" shall mean the last day of each
calendar month; provided, however, that with respect to any Monthly Period the
"related Default Recognition Date" shall mean the Default Recognition Date
occurring closest to the last day of such Monthly Period and any amounts
allocated or applied on such Default Recognition Date shall be deemed to apply
to the related Monthly Period.
"Defeasance" shall have the meaning specified in Section 4.20
of the Agreement.
"Distribution Date" shall mean July 22, 2002, and the
twentieth day of each month thereafter, or if such day is not a Business Day,
the next succeeding Business Day.
"DTC" shall mean The Depository Trust Company.
---
"Early Amortization Period" shall mean the period beginning on
the earlier of (a) the day on which a Pay Out Event occurs or is deemed to have
occurred and (b) the Expected Final Payment Date if the Class A Invested Amount
has not been paid in full on such date, and ending on the earlier of (i) the
date on which the Class A Invested Amount and the Class B Invested Amount have
been paid in full and (ii) the Scheduled Series 2002-3 Termination Date.
"Enhancement" shall mean, with respect to the Class A
Securities, the subordination of the Class B Invested Amount, and the benefits
of the Interest Rate Caps and the Policy.
"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)(xiii) of the Agreement allocated to the Series 2002-3
Securities 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 2002-3 Securities.
"Excess Spread Percentage" shall mean with respect to any
Monthly Period the excess of the Portfolio Yield for such Monthly Period over
the Base Rate as determined at the close of business on the Distribution Date in
such Monthly Period.
"Expected Final Payment Date" shall mean May 20, 2005.
"FASIT" shall have the meaning specified in Section 17 of this
Series Supplement.
"Fitch" shall mean Fitch, Inc., or its successor.
"Fixed/Floating 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 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; provided, however, that, on and after the Pay
Out Commencement Date, with respect to the allocations of Collections of Finance
Charge Receivables, the numerator used in the above calculation shall be the
Adjusted Invested Amount as of the day immediately preceding the Pay Out
Commencement Date.
"Floating Percentage" shall mean for any Business Day the sum
of the applicable Class A Floating Percentage and Class B Floating Percentage
for such Business Day.
"Initial Invested Amount" shall mean $994,475,138.
"Insurance Agreement" shall mean the Series 2002-3 Insurance
and Reimbursement Agreement, dated as of June 4, 2002, among the Insurer, the
Trustee, the Servicer, Metris and the Transferor.
"Insurer" shall mean MBIA Insurance Corporation, a New York
domiciled insurance company.
"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.
"Interest and Servicing Fee Deficiency" shall mean, with
respect to any Monthly Period, an amount equal to the excess of (a) the sum of
the Class A Monthly Interest for the Interest Accrual Period beginning in such
Monthly Period, the Carryover Class A Monthly Interest and the Series Servicing
Fee for such Monthly Period over (b) the Available Series 2002-3 Finance Charge
Collections applied to the payment thereof pursuant to subsections 4.9(a)(i) and
(ii) 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 Redirected 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) of the Agreement, and amounts withdrawn from the
Accumulation Period Reserve Account and applied with respect thereto pursuant to
subsections 4.18(b) and (c) of the Agreement.
"Interest Rate Cap Agreement" shall have the meaning specified
in Section 22 of this Series Supplement.
"Interest Rate Caps" shall mean the interest rate caps
provided pursuant to Cap Agreements by one or more Cap Providers to the Trustee
on behalf of any of the Series 2002-3 Securityholders which shall entitle the
Trust to receive monthly payments equal to the product of (i) the positive
difference, if any, between LIBOR in effect for each applicable Interest Accrual
Period and 10.50%, (ii) the notional amount of such interest rate cap and (iii)
the actual number of days in the Interest Accrual Period divided by 360.
"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 and
(b) the Class B Invested Amount, in each case as of such Business Day.
"Investment Earnings" shall mean, with respect to any Business
Day, the investment earnings on amounts on deposit in (i) the Payment Reserve
Account, deposited in the Collection Account pursuant to subsection 4.16(c),
(ii) the Principal Funding Account, deposited in the Collection Account pursuant
to subsection 4.17(b) and (iii) the Accumulation Period Reserve Account,
deposited in the Collection Account pursuant to subsection 4.18(b).
"Investor Percentage" shall mean, for any Business Day, (a)
with respect to Finance Charge Collections prior to the Pay Out Commencement
Date, Receivables in Defaulted Accounts at any time and Principal Collections
during the Revolving Period, the Floating Percentage and (b) with respect to
Finance Charge Collections on and after the Pay Out Commencement Date and
Principal Collections during the Amortization Period, the Fixed/Floating
Percentage.
"Investor Securities" shall mean the Class A Securities and
the Class B Securities.
"Investor Securityholder" shall mean the Holder of record of
an Investor Security of Series 2002-3.
"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 4.15 of the Agreement.
"LIBOR Determination Date" shall mean (i) May 30, 2002 with
respect to the period from the Closing Date through June 19, 2002, (ii) June 18,
2002 with respect to the period from June 20, 2002 through July 21, 2002 and
(iii) the second Business Day prior to the commencement of each Interest Accrual
Period beginning with Interest Accrual Period commencing on July 22, 2002. 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
2002-3 Securities shall begin on and include the Closing Date and shall end on
and include June 30, 2002.
"Order" shall have the meaning specified in subsection 11(b)
of the Agreement.
"Paired Series" shall have the meaning specified in Section 18
of this Series Supplement.
"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 2002-3 Pay Out Event is deemed to occur pursuant to Section 8 of
this Series Supplement
"Paying Agent" shall mean, for the Series 2002-3 Securities,
initially U.S. Bank National Association and, in certain limited circumstances,
Deutsche Bank Luxembourg, S.A.
"Payment Reserve Account" shall have the meaning specified in
subsection 4.16(a) of the Agreement.
"Policy" shall mean the Financial Guaranty Insurance Policy
issued by the Insurer in respect of the Series 2002-3 Securities.
"Policy Claim Amount" shall have the meaning specified in
subsection 11(b) 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 2002-3 Securities,
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 2002-3 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 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 Series Default Amount for such
Monthly Period and the Series 2002-3 Percentage of any Adjustment Payments which
the Transferor is required but fails to make pursuant to the Agreement for such
Monthly Period, and the denominator of which is the average daily Invested
Amount; provided, however, that Excess Finance Charge Collections applied for
the benefit of the Series 2002-3 Securityholders may be added to the numerator
if the Transferor shall have provided ten Business Days prior written notice of
such action to each Rating Agency and the Transferor, the Servicer and the
Trustee shall have received notification in writing that such action will not
result in Standard & Poor's reducing or withdrawing its then existing rating of
the Investor Securities of any outstanding Series or Class with respect to which
it is a Rating Agency (in the case of the Class A Securities, without giving
effect to the Policy).
"Potential Class A Charge-Offs" shall have the meaning
specified in subsection 4.13(b) of the Agreement.
"Preference Amount" shall have the meaning specified in
subsection 11(b) of this Series Supplement.
"Principal Funding Account" shall have the meaning set forth
in subsection 4.17 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 2002-3, (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.
"Qualified Substitute Arrangement" shall have the meaning
specified in subsection 3A(d) of this Series Supplement.
"Rating Agencies" shall mean Standard & Poor's, Xxxxx'x and Fitch.
"Receipt" and "Received" shall have the meanings specified in
subsection 11(b) of this Series Supplement.
"Redirected Principal Collections" shall have the meaning
specified in Section 4.14 of the Agreement.
"Reference Banks" shall mean four major banks in the London
interbank market selected by the Servicer.
"Reimbursement Required Amount" shall have the meaning
specified in subsection 4.10(b) of the Agreement.
"Replacement Event" shall have the meaning specified in
subsection 11(c) of this Series Supplement.
"Replacement Interest Rate Cap" shall mean one or more
Interest Rate Caps, which in combination with all other Interest Rate Caps then
in effect, after giving effect to any planned cancellations of any presently
outstanding Interest Rate Caps satisfies the Transferor's covenant contained in
Section 3A of this Series Supplement to maintain Interest Rate Caps.
"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, for any date on
or after the Reserve Account Funding Date an amount equal to (a) 0.75% of the
Class A Invested Amount or (b) any other amount designated by the Transferor;
provided, that if such designation is of a lesser amount, the Transferor shall
have (i) provided the Servicer and the Trustee with evidence that such
designation will not result in the reduction or withdrawal by any Rating Agency
of the rating of any outstanding Series or Class to which it is a Rating Agency
(in the case of the Class A Securities, without giving effect to the Policy) and
(ii) delivered to the Trustee and the Insurer a certificate of an authorized
officer of the Transferor 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 giving of
notice or the lapse of time, would cause a Pay Out Event to occur with respect
to Series 2002-3.
"Reserve Account Funding Date" shall mean the earliest of (a)
the first day of the third Monthly Period preceding the first full day of the
Accumulation Period; (b) the Determination Date occurring in the first Monthly
Period for which the Portfolio Adjusted Yield is less than 2.0%, but in such
event the Reserve Account Funding Date shall not be required to occur earlier
than the first day of the Monthly Period which commences 12 months prior to the
first full day of the Accumulation Period; (c) the Determination Date occurring
in the first Monthly Period for which the Portfolio Adjusted Yield is less than
3.0%, but in such event the Reserve Account Funding Date shall not be required
to occur earlier than the first day of the Monthly Period which commences 6
months prior to the first full day of the Accumulation Period; or (d) the
Determination Date occurring in the first Monthly Period for which the Portfolio
Adjusted Yield is less than 3.5%, but in such event the Reserve Account Funding
Date shall not be required to occur earlier than the first day of the Monthly
Period which commences 4 months prior to the first full day of the Accumulation
Period.
"Revolving Period" shall mean the period from and including
the Closing Date to, but not including, the Amortization Period Commencement
Date.
"Scheduled Series 2002-3 Termination Date" shall mean the May
2009 Distribution Date.
"Series 2002-3" shall mean the Series of the Metris Master
Trust represented by the Series 2002-3 Securities.
"Series 2002-3 Pay Out Event" shall have the meaning specified
in Section 8 of this Series Supplement.
"Series 2002-3 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 2002-3 Securities" shall mean the Class A Securities
and the Class B Securities.
"Series 2002-3 Securityholder" shall mean the Holder of any
Series 2002-3 Security.
"Series 2002-3 Termination Date" shall mean the earlier to
occur of (i) the day after the Distribution Date on which the Series 2002-3
Securities and amounts owing to the Insurer hereunder are paid in full, or (ii)
the Scheduled Series 2002-3 Termination Date.
"Series Default Amount" shall mean (i) on any Business Day
other than a Default Recognition Date, an amount equal to the product of (a) the
Floating Percentage applicable on such Business Day and (b) the aggregate
Default Amount identified since the prior reporting date and (ii) on any Default
Recognition Date, an amount equal to the product of (a) the Default Recognition
Allocation Percentage applicable on such Default Recognition Date and (b) the
Default Amount with respect to such Default Recognition Date.
"Series 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 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.
"Series Servicing Fee Percentage" shall mean 2.00% per annum.
"Shared Principal Collections" shall mean, as the context
requires, either (a) the amount allocated to the Series 2002-3 Securities which,
in accordance with subsections 4.9(b) and 4.9(c)(ii) of the Agreement, may be
applied in accordance with Section 4.3(d) of the Agreement or (b) the amounts
allocated to the investor securities 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 2002-3 Securities.
"Spread Account" shall have the meaning specified in the
Insurance Agreement.
"Spread Account Maximum" shall have the meaning specified in
the Insurance Agreement.
"Stated Class B Amount" shall mean, for any date of
determination, a number rounded to the nearest Dollar equal to the greater of
(i) 9.89% of the Class A Adjusted Invested Amount and (ii) 3% of the Initial
Invested Amount; provided, however, that if the Class A Adjusted Invested Amount
is equal to zero, the Stated Class B Amount shall be zero; provided further,
however, that during any Early Amortization Period, the Stated Class B Amount
shall be equal to the Stated Class B Amount immediately preceding the
commencement of the Early Amortization Period.
"Transfer" shall have the meaning specified in subsection
10(c) 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 2002-3 Percentage.
"Transferor Retained Securities" shall mean investor
securities of any Series, including the Class B Securities, which the Transferor
retains, but only to the extent that and for so long as the Transferor is the
Holder of such Securities.
"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)(xiii) of the Agreement, which amount shall
be deposited in an account maintained with a Qualified Institution and shall be
invested in Cash Equivalents maturing no later than the next succeeding Default
Recognition Date.
"Weighted Average Invested Amount" shall mean with respect to
any Monthly Period the weighted average Adjusted Invested Amount based on the
Adjusted Invested Amount outstanding on each Business Day after giving effect to
all transactions on such Business Day from but excluding the Default Recognition
Date related to the preceding Monthly Period to and including the Default
Recognition Date with respect to such Monthly Period.
"Weighted Average Principal Receivables" shall mean with
respect to any Monthly Period the weighted average sum of the total amount of
Principal Receivables and the amount on deposit in the Excess Funding Account on
each Business Day after giving effect to all transactions on such Business Day
from but excluding the Default Recognition Date related to the preceding Monthly
Period to and including the Default Recognition Date with respect to such
Monthly Period.
Section 3. Reassignment Terms. The Series 2002-3 Securities shall be
subject to termination by the Transferor (so long as the Transferor is the
Servicer or an affiliate of the Servicer) 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 Class A Invested Amount would be
reduced to an amount less than or equal to 10% of the highest Class A Invested
Amount during the Revolving Period; provided, that all amounts due and owing to
the Insurer and unreimbursed draws on the Policy, together with interest
thereon, have been paid. The deposit required in connection with any such
termination and final distribution shall be equal to the unpaid Invested Amount
plus accrued and unpaid interest on the Class A Securities 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 3A. Conveyance of Interest in Interest Rate Cap; Cap
Proceeds Account. (a) The Transferor hereby covenants and agrees that, on or
prior to the issuance of the Series 2002-3 Securities, it shall obtain and at
all times prior to and including the close of business on the Expected Final
Payment Date maintain one or more Interest Rate Caps whose notional amounts
singly or taken as a group equal or exceed the Class A Outstanding Principal
Amount. On each Distribution Date following the Expected Final Payment Date, the
required notional amounts of the Interest Rate Caps will reduce in an amount
equal to the quotient of (i) the initial notional amount divided by (ii) 48. The
Transferor hereby assigns, sets-over, conveys, pledges and grants a security
interest and lien (free and clear of all other Liens, other than Permitted
Liens) to the Trustee for the benefit of the Series 2002-3 Securityholders, in
and on all of the Transferor's right, title and interest, whether now existing
or hereafter arising, in and to the Cap Agreements and the Interest Rate Caps
arising thereunder, together with the Cap Proceeds Account and all other
proceeds thereof, as collateral security for the benefit of the Series 2002-3
Securityholders. The Transferor hereby further agrees to execute, authorize and
file all such instruments, documents and financing statements and take all such
further action requested by the Trustee to evidence and perfect the assignment
of the Cap Agreements, the Interest Rate Caps and the Cap Proceeds Account
pursuant to this Section 3A. The Transferor agrees that each Interest Rate Cap
shall provide for payments to the Trustee and that the Trust's interest in
respect of such payments shall be deposited into the Cap Proceeds Account.
(b) The Trustee, for the benefit of the Series 2002-3 Securityholders,
shall establish and maintain with a Qualified Institution, which may be the
financial institution serving as Trustee, in the name of the Trustee, on behalf
of the Series 2002-3 Securityholders, a certain segregated trust account (the
"Cap Proceeds Account"). All amounts paid pursuant to the Interest Rate Caps or
any Qualified Substitute Arrangement on any Business Day (a "Cap Settlement
Date") shall be deposited in the Cap Proceeds Account. Any amounts paid pursuant
to the Interest Rate Caps or any Qualified Substitute Arrangement on the
Transfer Date in any Monthly Period shall be treated for all purposes herein,
including application in accordance with subsection 4.9(a) of the Agreement, as
if they had been received on the last Business Day of the preceding Monthly
Period. Funds in the Cap Proceeds Account shall be invested at the direction of
the Servicer, in Cash Equivalents with maturities not later than the next
succeeding Business Day. Any earnings on such invested funds shall be deposited
and held in the Cap Proceeds Account and applied in the same manner and priority
as payments pursuant to the Interest Rate Caps.
(c) In the event that any Cap Provider defaults in its obligation to make a
payment to the Trustee under one or more Cap Agreements on any Cap Settlement
Date, the Trustee shall make a demand on such Cap Provider, or any guarantor, if
applicable, demanding payment by 12:30 p.m., New York time, on such date. The
Trustee shall give notice to the Series 2002-3 Securityholders and the Insurer
upon the continuing failure by any Cap Provider to perform its obligation during
the two Business Days following a demand made by the Trustee on such Cap
Provider, and shall take such action with respect to such continuing failure
directed to be taken by the Series 2002-3 Securityholders.
(d) In the event that any Cap Provider is downgraded below the rating
required by a Rating Agency, then within 30 days after receiving notice of such
decline in the creditworthiness of such Cap Provider as determined by the Rating
Agencies, either (x) such Cap Provider, with the prior written confirmation of
the Rating Agencies that such arrangement will not result in the reduction or
withdrawal of the rating of the Class A Securities (without giving effect to the
Policy) will enter into an arrangement the purpose of which shall be to assure
performance by the Cap Provider of its obligations under the Interest Rate Cap;
or (y) the Transferor shall at its option either (i) with the prior written
confirmation of the Rating Agencies that such action will not result in a
reduction or withdrawal of the rating of the Class A Securities (without giving
effect to the Policy), cause such Cap Provider to pledge securities in the
manner provided by applicable law which shall be held by the Trustee free and
clear of the Lien of any third party, in a manner conferring on the Trustee a
perfected first Lien in such securities securing such Cap Provider's performance
of its obligations under the applicable Interest Rate Cap, or (ii) provided that
a Replacement Interest Rate Cap or Qualified Substitute Arrangement meeting the
requirements of Section 3A(e) has been obtained, (A) provide written notice to
such Cap Provider (with a copy to the Trustee) of its intention to terminate the
applicable Interest Rate Cap within such 30-day period and (B) terminate the
applicable Interest Rate Cap within such 30-day period, request the payment to
it of all amounts due to the Trust under the applicable Interest Rate Cap
through the termination date and deposit any such amounts so received, on the
day of receipt, to the Cap Proceeds Account for the benefit of the Series 2002-3
Securityholders, or (iii) establish any other arrangement (including an
arrangement or arrangements in addition to or in substitution for any prior
arrangement made in accordance with the provisions of this Section 3A(d))
satisfactory to the Rating Agencies such that the Rating Agencies will not
reduce or withdraw the rating of the Class A Securities (without giving effect
to the Policy) (a "Qualified Substitute Arrangement"); provided, however, that
in the event at any time any alternative arrangement established pursuant to
clause (x) or (y)(i) or (y)(iii) above shall cease to be satisfactory to the
Rating Agencies or the Insurer then the provisions of this Section 3A(d) shall
again be applied and in connection therewith the 30-day period referred to above
shall commence on the date the Transferor receives notice of such cessation or
termination, as the case may be.
(e) Unless an alternative arrangement pursuant to clause (x) or (y)(i) of
Section 3A(d) is being established, the Transferor shall use its best efforts to
obtain a Replacement Interest Rate Cap or Qualified Substitute Arrangement
meeting the requirements of this Section 3A(e) during the 30-day period referred
to in Section 3A(d). The Transferor shall not terminate the Interest Rate Cap
unless, prior to the expiration of the 30-day period referred to in said Section
3A(d), the Transferor delivers to the Trustee (i) a Replacement Interest Rate
Cap or Qualified Substitute Arrangement, (ii) to the extent applicable, an
Opinion of Counsel as to the due authorization, execution and delivery and
validity and enforceability of such Replacement Interest Rate Cap or Qualified
Substitute Arrangement, as the case may be, and (iii) a letter from each of the
Rating Agencies confirming that the termination of the Interest Rate Cap and its
replacement with such Replacement Interest Rate Cap or Qualified Substitute
Arrangement will not adversely affect its rating of the Class A Securities
(without giving effect to the Policy).
(f) The Servicer or the Transferor shall notify the Trustee, the Insurer
and the Rating Agencies within five Business Days after obtaining actual
knowledge that the senior unsecured debt rating of the Cap Provider has been
withdrawn or reduced by either of the Rating Agencies.
(g) Notwithstanding the foregoing, the Transferor may at any time obtain a
Replacement Interest Rate Cap, provided that the Transferor delivers to the
Trustee (i) an Opinion of Counsel as to the due authorization, execution and
delivery and validity and enforceability of such Replacement Interest Rate Cap
and (ii) a letter from each of the Rating Agencies confirming that the
termination of the then current Interest Rate Cap and its replacement with such
Replacement Interest Rate Cap will not adversely affect its rating of the Class
A Securities (without giving effect to the Policy).
(h) The Transferor shall not agree to any amendment to any Interest Rate
Cap unless each Rating Agency provides written confirmation that such amendment
will not result in a downgrading or withdrawal of the then current rating on the
Class A Securities by such Rating Agency (without giving effect to the Policy).
(i) The Transferor shall notify the Rating Agencies after obtaining actual
knowledge of the transfer by the related Cap Provider of any Interest Rate Cap,
or any interest or obligation thereunder.
(j) The Trustee, on behalf of the Series 2002-3 Securityholders, upon
notification from the Transferor shall, sell all or a portion of the Interest
Rate Caps subject to the following conditions having been met:
(x) the Aggregate Interest Rate Caps Notional Amount
after giving effect to such sale shall equal or exceed the Class A
Outstanding Principal Amount as of the date of such sale after giving
effect to all payments and allocations made pursuant to this Agreement;
(y) such sale will not result in a downgrading or
withdrawal of the then current rating on the Class A Securities by the
Rating Agencies (without giving effect to the Policy); and
(z) the minimum notional amount denomination of any Interest Rate Cap to be
sold is $1,000,000.
The Transferor shall have the duty of obtaining a fair market
value price for the sale of the Trust's rights under any Interest Rate Cap,
notifying the Trustee of prospective purchasers and bids, and selecting the
purchaser of such Interest Rate Cap. The Trustee upon receipt of the purchase
price in the Collection Account shall execute all documentation necessary to
effect the transfer of the Trust's rights under the Interest Rate Cap and to
release the Lien of the Trustee on the Interest Rate Cap and proceeds thereof.
Funds deposited in the Collection Account in respect of the
sale of all or a portion of an Interest Rate Cap shall be applied as Principal
Collections allocable to Series 2002-3 and shall be applied on the next
Distribution Date in accordance with subsections 4.7(a) and (b) and 4.9(b) and
(c) of the Agreement.
Section 4. Delivery and Payment for the Series 2002-3 Securities. The
Transferor shall execute and deliver the Series 2002-3 Securities to the Trustee
for authentication in accordance with Section 6.1 of the Agreement. The Trustee
shall deliver the Series 2002-3 Securities to or upon the order of the
Transferor when authenticated in accordance with Section 6.2 of the Agreement.
Section 5. Form of Delivery of Series 2002-3 Securities; Denominations. (a)
The Class A Securities, shall be delivered as Book-Entry Securities as provided
in Sections 6.1 and 6.10 of the Agreement. The Class A Securities shall be
issued in minimum denominations of $1,000 and integral multiples thereof. The
Class B Security shall be delivered as a Registered Security as provided in
Section 6.1 of the Agreement.
(b) The Depositary for Series 2002-3 shall be DTC and the Class A
Securities shall be initially registered in the name of Cede & Co., its nominee,
and will initially be held by the Trustee as custodian for DTC.
Section 6. Article IV of the 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 2002-3
Securities:
ARTICLE IV
RIGHTS OF SECURITYHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS
SECTION 4.4. Rights of Securityholders. The Series 2002-3
Securities 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 2002-3 Securities at the times and in the amounts specified in
this Agreement, (a) the Floating Percentage and the Fixed/Floating Percentage
(as applicable from time to time) of Collections (including Finance Charge
Collections) available in the Collection Account, (b) funds allocable to the
Series 2002-3 Securities on deposit in the Excess Funding Account, (c) funds on
deposit in the Interest Funding Account, the Principal Account, the Principal
Funding Account, the Accumulation Period Reserve Account, the Distribution
Account, the Cap Proceeds Account and the Payment Reserve Account and (d) in the
case of Class A Securityholders only, the proceeds of any draws on the Policy.
The Class B Securities shall be subordinated to the Class A Securities. Except
in connection with the payment of Class B Excess Amounts, the Class B Securities
will not have the right to receive payments of principal until the Class A
Invested Amount has been paid in full.
SECTION 4.5. Collections and Allocation; Payments on Exchangeable
Transferor Security.
(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 2002-3 Securities, and all funds
on deposit in the Interest Funding Account, the Principal Account, the Cap
Proceeds Account, the Principal Funding Account, the Accumulation Period Reserve
Account, the Distribution Account and the Payment Reserve Account, as described
in this Article IV. On each Business Day, (i) the amount of Finance Charge
Collections available in the Collection Account allocable to the Series 2002-3
Securities shall be determined by multiplying the aggregate amount of such
Finance Charge Collections by (x) prior to the Pay Out Commencement Date, the
Floating Percentage and (y) on and after the Pay Out Commencement Date, the
Fixed/Floating Percentage, (ii) the amount of Principal Collections available in
the Collection Account allocable to the Series 2002-3 Securities shall be
determined by multiplying the aggregate amount of such Principal Collections by
(x) during the Revolving Period, the Floating Percentage and (y) during the
Amortization Period, the Fixed/Floating Percentage, and (iii) the Receivables in
Defaulted Accounts allocable to the Series 2002-3 Securities shall be determined
by multiplying the Default Amount by the Floating Percentage.
(b) Payments to the Holder of the Exchangeable Transferor Security. 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 Security in accordance with subsection 4.3(b) of the
Agreement; provided, however, that such amounts shall be applied in accordance
with Section 4.10 hereof to the extent specified therein.
Notwithstanding the foregoing and any other provisions of
this Series Supplement, amounts payable to the Transferor 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 2002-3
Securities. The amount of monthly interest (the "Class A Monthly Interest")
which shall accrue for the benefit of the Class A Securities with respect to any
Interest Accrual Period shall be an amount equal to the product of (i) the Class
A Interest Rate in effect with respect to the related Interest Accrual Period,
(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 A Outstanding Principal Amount as of 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 A Interest Shortfall") equal
to the excess, if any, of (x) the Class A Monthly Interest for the Interest
Accrual Period applicable to the Distribution Date over (y) the amount available
to be paid to the Class A Securityholders 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 Securities on each
Distribution Date following such Distribution Date on which there was a Class A
Interest Shortfall, to and including the Distribution Date on which such Class A
Interest Shortfall is paid to the Class A Securityholders, equal to the product
of (i) the Class A Interest Rate for the current Interest Accrual Period, (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) such Class
A Interest Shortfall remaining unpaid. Notwithstanding anything to the contrary
herein, Class A Additional Interest shall be payable or distributed to the Class
A Securityholders only to the extent permitted by applicable law.
SECTION 4.7. Determination of Principal Xxxxxxx. (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 Securities for each Distribution Date with respect
to the Amortization Period shall be equal to the least of (i) the Available
Series 2002-3 Principal Collections on deposit in the Principal Account with
respect to the related Transfer Date, (ii) for each Distribution Date with
respect to 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 the related Transfer Date.
(b) The amount of principal (the "Class B Principal") distributable from
the Distribution Account with respect to the Class B Securities for each
Distribution Date, beginning with the Class B Principal Payment Commencement
Date, or, in the case of distributions of Class B Excess Amounts, on each
Distribution Date during the Accumulation Period, shall be equal to the lesser
of (i) the Available Series 2002-3 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) the Class B Invested
Amount on such Transfer Date and (iii) in the case of distributions of Class B
Excess Amounts, the Class B Excess Amount.
SECTION 4.8. Shared Principal Collections. Shared Principal
Collections allocated to Available Series 2002-3 Principal Collections for the
Series 2002-3 Securities and to be applied to Class A Principal and Class B
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 2002-3 Securities 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 Series 2002-3 Principal Collections for the
Series 2002-3 Securities shall be zero.
SECTION 4.9. Application of Funds. (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 from the Collection Account and the Cap
Proceeds Account, to the extent of the sum of (w) prior to the Pay Out
Commencement Date, the Floating Percentage of the sum of the Finance Charge
Collections and the amount of Adjustment Payments made by the Transferor with
respect to Adjustment Payments required to be made but not made in a prior
Monthly Period, available in the Collection Account or, on and after the Pay Out
Commencement Date, the Fixed/Floating Percentage of the sum of the Finance
Charge Collections and the amount of Adjustment Payments made by the Transferor
with respect to Adjustment Payments required to be made but not made in a prior
Monthly Period, available in the Collection Account, (x) Investment Earnings on
deposit in the Collection Account, (y) amounts on deposit in the Payment Reserve
Account, if any, if and to the extent so designated by the Transferor and (z)
the Cap Receipt Amount, if any, for such Business Day (collectively, the
"Available Series 2002-3 Finance Charge Collections"), the amounts required to
be withdrawn from the Collection Account pursuant to subsections 4.9(a)(i)
through 4.9(a)(xiii) of the Agreement.
(i) Class A Monthly Interest. On each Business Day during a Monthly Period,
the Trustee, acting in accordance with instructions from the Servicer, shall
withdraw first from the Cap Proceeds Account to the extent of the Cap Receipt
Amount and then from the Collection Account and then from the Payment Reserve
Account, and deposit into the Interest Funding Account for distribution on the
next Distribution Date to the Class A Securityholders, to the extent of the
Available Series 2002-3 Finance Charge Collections for such Business Day, an
amount equal to the lesser of (x) the Available Series 2002-3 Finance Charge
Collections and (y) the excess of (1) the sum of Class A Monthly Interest for
the Interest Accrual Period beginning in such Monthly Period and Carryover Class
A Interest over (2) any amounts ---- with respect thereto previously deposited
into the Interest Funding Account on any prior Business Day during such Monthly
Period. Notwithstanding anything to the contrary herein, the portion of
Carryover Class A Interest that constitutes Class A Additional Interest shall be
payable or distributable to Class A Securityholders only to the extent permitted
by applicable law.
(ii) Investor Series Servicing Fee. On each Business Day, the Trustee,
acting in accordance with instructions from the Servicer, shall withdraw first
from the Cap Proceeds Account to the extent of the Cap Receipt Amount and then
from the Collection Account and then from the Payment Reserve Account, and
distribute to the Servicer, to the extent of any Available Series 2002-3 Finance
Charge Collections remaining after giving effect to the withdrawals pursuant to
subsection 4.9(a)(i) of the Agreement, an amount equal to the lesser of (x) any
such remaining Available Series 2002-3 Finance Charge Collections and (y) the
excess of (i) the Series Servicing Fee for such Monthly Period plus any unpaid
Series Servicing Fees from prior Monthly Periods over (ii) any amounts with
respect thereto previously distributed to the Servicer during such Monthly
Period.
(iii) Series Default Amount. On each Business Day, first if such day is the
Default Recognition Date for the related Monthly Period, the Transferor will
apply (as described below) Transferor Retained Finance Charge Collections for
each prior day in the current Monthly Period and second the Trustee, acting in
accordance with instructions from the Servicer, shall withdraw first from the
Cap Proceeds Account to the extent of the Cap Receipt Amount and then from the
Collection Account and then from the Payment Reserve Account, to the extent of
any Available Series 2002-3 Finance Charge Collections remaining after giving
effect to the withdrawals 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 2002-3 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 Series Default
Amount for such Business Day plus (2) the unpaid Series Default Amount for each
previous Business Day during such Monthly Period, such amount to be (A) treated
as Shared Principal Collections during the Revolving Period, and (B) treated as
Available Series 2002-3 Principal Collections during the Amortization Period.
(iv) Adjustment Payment Shortfalls. On each Business Day, the Trustee,
acting in accordance with instructions from the Servicer, shall withdraw first
from the Cap Proceeds Account to the extent of the Cap Receipt Amount and then
from the Collection Account and then from the Payment Reserve Account, to the
extent of any Available Series 2002-3 Finance Charge Collections remaining after
giving effect to the withdrawals pursuant to subsections 4.9(a)(i) through (iii)
of the Agreement, an amount equal to the lesser of (x) any such remaining
Available Series 2002-3 Finance Charge Collections and (y) an amount equal to
the Series 2002-3 Percentage of any Adjustment Payment which the Transferor is
required but fails to make pursuant to subsection 3.8(a) of the Agreement, such
amount, (i) during the Revolving Period, to be treated as Shared Principal
Collections, and (ii) during the Amortization Period, to be treated as Available
Series 2002-3 Principal Collections.
(v) Reimbursement of Class A Charge-Offs. On each Business Day, the
Trustee, acting in accordance with instructions from the Servicer, shall
withdraw first from the Cap Proceeds Account to the extent of the Cap Receipt
Amount and then from the Collection Account and then from the Payment Reserve
Account, to the extent of any Available Series 2002-3 Finance Charge Collections
remaining after giving effect to the withdrawals pursuant to subsections
4.9(a)(i) through (iv) of the Agreement, an amount equal to the lesser of (x)
any such remaining Available Series 2002-3 Finance Charge Collections and (y)
the unreimbursed Class A Charge-Offs, if any, and shall apply such amounts so
withdrawn to reimburse Class A Charge-Offs, 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 Series 2002-3 Principal
Collections.
(vi) Monthly Premium. On each Business Day, the Trustee, acting in
accordance with the instructions from the Servicer, shall withdraw first from
the Cap Proceeds Account to the extent of the Cap Receipt Amount and then from
the Collection Account and then from the Payment Reserve Account, to the extent
of any Available Series 2002-3 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 2002-3 Finance Charge Collections and (y) the portion of the monthly
premium with respect to the Policy due on the Distribution Date in the next
succeeding Monthly Period that has not been previously deposited in the Interest
Funding Account plus any prior monthly premium with respect to the Policy that
was due but not previously deposited in the Interest Funding Account, and
deposit such amount into the Interest Funding Account for distribution on the
next succeeding Distribution Date to the Insurer.
(vii) Reimbursement of Policy Draws. On each Business Day, the Trustee,
acting in accordance with the instructions from the Servicer, shall withdraw
first from the Cap Proceeds Account to the extent of the Cap Receipt Amount and
then from the Collection Account and then from the Payment Reserve Account, to
the extent of any Available Series 2002-3 Finance Charge Collections remaining
after giving effect to the withdrawals pursuant to subsections 4.9(a)(i) through
(vi) of the Agreement, an amount equal to the lesser of (x) any such remaining
Available Series 2002-3 Finance Charge Collections and (y) the portion of the
unreimbursed claims on the Policy, that have not been previously deposited in
the Interest Funding Account, and deposit such amount into the Interest Funding
Account for distribution on the next succeeding Distribution Date to the
Insurer.
(viii) Spread Account. On each Business Day, the Trustee, acting in
accordance with the instructions from the Servicer, shall withdraw first from
the Cap Proceeds Account to the extent of the Cap Receipt Amount and then from
the Collection Account and then from the Payment Reserve Account, to the extent
of any Available Series 2002-3 Finance Charge Collections remaining after giving
effect to the withdrawals pursuant to subsections 4.9(a)(i) through (vii) of the
Agreement, an amount equal to the lesser of (x) any such remaining Available
Series 2002-3 Finance Charge Collections and (y) the excess, if any, of the
Spread Account Maximum over the amount on deposit in such Spread Account, and
deposit such amount into the Spread Account.
(ix) Payment to the Insurer. On each Business Day, the Trustee, acting in
accordance with the instructions from the Servicer, shall withdraw first from
the Cap Proceeds Account to the extent of the Cap Receipt Amount and then from
the Collection Account and then from the Payment Reserve Account, to the extent
of any Available Series 2002-3 Finance Charge Collections remaining after giving
effect to the withdrawals pursuant to subsections 4.9(a)(i) through (viii) of
the Agreement, an amount equal to the lesser of (x) any such remaining Available
Series 2002-3 Finance Charge Collections and (y) the portion of any other
amounts required to be paid to the Insurer pursuant to the Insurance Agreement
which have not been previously deposited in the Interest Funding Account, and
deposit such amount in the Interest Funding Account for distribution on the next
succeeding Distribution Date to the Insurer.
(x) Reimbursement of Class B Charge-Offs. On each Business Day, the
Trustee, acting in accordance with instructions from the Servicer, shall
withdraw first from the Cap Proceeds Account to the extent of the Cap Receipt
Amount and then from the Collection Account and then from the Payment Reserve
Account, to the extent of any Available Series 2002-3 Finance Charge Collections
remaining after giving effect to the withdrawals pursuant to subsections
4.9(a)(i) through (ix) of the Agreement, an amount equal to the lesser of (x)
any such remaining Available Series 2002-3 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 (d) and (e) of the definition of Class B
Invested Amount, if any, and shall apply such amounts so withdrawn to such
reductions to the Class B Invested Amount, 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 Series 2002-3 Principal
Collections.
(xi) Accumulation Period Reserve Account. On each Business Day on and after
the Reserve Account Funding Date, but prior to the date on which the
Accumulation Period Reserve Account terminates pursuant to subsection 4.18(d) of
the Agreement, the Trustee, acting in accordance with instructions from the
Servicer, shall withdraw first from the Cap Proceeds Account to the extent of
the Cap Receipt Amount and then from the Collection Account and then from the
Payment Reserve Account, to the extent of any Available Series 2002-3 Finance
Charge Collections remaining after giving effect to the withdrawals pursuant to
subsections 4.9(a)(i) through (x) of the Agreement, an amount equal to the
lesser of (x) any such remaining Available Series 2002-3 Finance Charge
Collections and (y) the excess, if any, of the Required Reserve Account Amount
over the Available Reserve Account Amount, and deposit such amount, if any, in
the Accumulation Period Reserve Account.
(xii) Payment Reserve Account. On each Business Day, the Trustee, acting in
accordance with instructions from the Servicer, shall withdraw first from the
Cap Proceeds Account to the extent of the Cap Receipt Amount and then from the
Collection Account, to the extent of any Available Series 2002-3 Finance Charge
Collections remaining after giving effect to the withdrawals pursuant to
subsections 4.9(a)(i) through (xi) of the Agreement, an amount equal to the
lesser of (x) any such remaining Available Series 2002-3 Finance Charge
Collections and (y) the amount designated by the Transferor in writing (which
includes facsimile transmission) in its instructions to the Servicer and the
Trustee on such Business Day, and deposit such amount, if any, in the Payment
Reserve Account.
(xiii) Excess Finance Charge Collections. Any amounts remaining in the Cap
Proceeds Account, the Collection Account and the Payment Reserve Account, to the
extent of any Available Series 2002-3 Finance Charge Collections remaining after
giving effect to the withdrawals pursuant to subsection 4.9(a)(i) through (xii)
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 Securityholders of other Series to the extent of shortfalls,
if any, in amounts payable to such Securityholders from Finance Charge
Collections allocated to such other Series, then to pay any unpaid commercially
reasonable costs and expenses of a Successor Servicer, if any, and then on each
Business Day other than the Default Recognition Date, to pay to the Transferor
to be treated as "Transferor Retained Finance Charge Collections," and, on each
Default Recognition Date, to pay any remaining Excess Finance Charge Collections
to the Transferor.
Notwithstanding the foregoing, if on any Default Recognition Date the sum of the
amount of Available Series 2002-3 Finance Charge Collections (including, all
amounts on deposit in the Payment Reserve Account remaining after application
pursuant to subsection 4.9(a)(ii)) and Transferor Retained Finance Charge
Collections is less than the Series Default Amount for such Default Recognition
Date, the Servicer shall apply amounts deposited in the Accumulation Period
Reserve Account pursuant to subsection 4.9(a)(xi) of the Agreement and the
Spread Account pursuant to subsection 4.9(a)(viii) of the Agreement during the
then current Monthly Period in accordance with subsection 4.9(a)(iii) of the
Agreement to the extent of such shortfall.
(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 Percentage and (ii) Principal Collections with respect to such Business
Day (less the amount of Redirected 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 and other accounts as described below will be distributed,
pursuant to the written direction of the Servicer in the Daily Report for such
Business Day in the following priority:
(i) an amount (not in excess of the Adjusted Invested Amount) equal to the
sum of (v) the product of the Fixed/Floating Percentage and Principal
Collections in the Collection Account at the end of the preceding Business Day
(less the amount thereof applied as Redirected Principal Collections on such
Business Day), (w) any amount on deposit in the Excess Funding Account allocated
to the Series 2002-3 Securities on such Business Day pursuant to subsection
4.9(d) of the Agreement, (x) amounts to be paid pursuant to subsections
4.9(a)(iii), (iv), (v) and (x) of the Agreement from Available Series 2002-3
Finance Charge Collections and from amounts available pursuant to subsections
4.10(a) and (b), 4.14, 4.17(b) and 4.18(b), (c) and (d) of the Agreement on such
Business Day, and (y) the amount of Shared Principal Collections allocated to
the Series 2002-3 Securities 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 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 B 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 the Class A
Principal and the Class B Principal will be treated as Shared Principal
Collections and applied as provided in subsection 4.3(d) of the Agreement.
(d) On the first Business Day of the Amortization Period funds on deposit
in the Excess Funding Account will be deposited in the Principal Account to the
extent of the lesser of (x) the Invested Amount and (y) the product of (i) the
amount on deposit in the Excess Funding Account at the beginning of the
Amortization Period and (ii) a fraction, the numerator of which is equal to the
Invested Amount and the denominator of which is equal to the sum of the invested
amounts of all Series in amortization periods on such day.
SECTION 4.10. Coverage of Required Amount for the Series
2002-3 Securities. (a) To the extent that any amounts are on deposit in the
Excess Funding Account on any Business Day, the Servicer shall apply, in the
manner specified for application of Available Series 2002-3 Finance Charge
Collections in subsections 4.9(a)(i) through (xi) of the Agreement, Transferor
Finance Charge Collections in an amount equal to the sum of (i) the excess of
(x) the product of (a) the Base Rate, (b) the amounts on deposit in the Excess
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 are invested
and (ii) the amount of unreimbursed claims on the Policy that have not been
deposited in the Interest Funding Account pursuant to subsection 4.9(a)(vii) of
the Agreement prior to such Business Day.
(b) To the extent that on any Business Day payments are being made pursuant
to any of subsections 4.9(a)(i) through (xi) 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 2002-3
Finance Charge Collections in subsections 4.9(a)(i) through (xi) 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 2002-3
Securities 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 2002-3 Finance Charge Collections and
Transferor Finance Charge Collections on such Business Day (the "Required
Amount").
To the extent that on any Business Day on and after the day on
which the Invested Amount is paid in full but prior to the Series 2002-3
Termination Date there are unreimbursed claims on the Policy, the Servicer shall
apply, in the manner specified for application of Available Series 2002-3
Finance Charge Collections in subsection 4.9(a)(vii) 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 2002-3 Securities 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
Transferor Finance Charge Collections on such Business Day (the "Reimbursement
Required Amount").
Excess Finance Charge Collections allocated to the Series
2002-3 Securities 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 or Reimbursement Required Amount, as applicable, for such Business Day
and the denominator of which is the aggregate amount of shortfalls in required
amounts or other amounts to be paid from Finance Charge Collections for all
Series for such Business Day.
SECTION 4.11. Payment of Interest on Securities and Amounts
Owing to Insurer. (a) 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 2002-3
Securities and deposit such amount in the Distribution Account. On each
Distribution Date, the Paying Agent shall pay from the Distribution Account in
accordance with Section 5.1 of the Agreement to the Class A Securityholders the
amount deposited into the Distribution Account on the related Transfer Date
allocable thereto pursuant to subsection 4.9(a)(i) of the Agreement.
(b) On each Distribution Date, the Paying Agent shall pay from the
Distribution Account in accordance with Section 5.1 of the Agreement to the
Insurer for application in accordance with the Insurance Agreement the amount
deposited into the Distribution Account pursuant to subsection 4.11(a) of the
Agreement on the related Transfer Date allocable thereto pursuant to subsections
4.9(a)(vi), (vii) and (ix) of the Agreement.
SECTION 4.12. Payment of Security 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(d) of the Agreement, the Paying Agent shall pay in accordance
with Section 5.1 of the Agreement to the Class A Securityholders from the
Distribution Account such amounts deposited with respect to Class A Principal
into the Distribution Account on the related Transfer Date.
(b) On the Transfer Date preceding the Class B Principal Payment
Commencement Date and each Transfer Date thereafter, or, in the case of
distributions of Class B 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 B 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 B Principal for the related Distribution Date. On the Class B Principal
Payment Commencement Date after the payment of any principal amounts to the
Class A Securities on such day, and on each Distribution Date thereafter until
the Class B 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 B Excess Amounts, the Paying Agent shall pay in accordance with Section
5.1 of the Agreement to the Class B Securityholder from the Distribution Account
such amounts deposited with respect to Class B 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 B Principal shall not be made to the Class B Securityholder and
such amount shall be subtracted from the Class B Invested Amount and added to
the Transferor Interest.
(c) Any amounts remaining in the Principal Account and allocable to the
Series 2002-3 Securities, after the Class B Invested Amount has been paid in
full, will be treated as Shared Principal Collections and applied in accordance
with subsection 4.3(d) of the Agreement.
(d) 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 to Class A Securityholders up to an
amount equal to the Class A Invested Amount.
SECTION 4.13. Series Charge-Offs. (a) If, on any Determination
Date, the aggregate Series Default Amount and the Series 2002-3 Percentage of
unpaid Adjustment Payments, if any, for each Business Day in the preceding
Monthly Period exceeded the Available Series 2002-3 Finance Charge Collections
applied to the payment thereof pursuant to subsections 4.9(a)(iii) and (iv) 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 Redirected Principal Collections applied with respect
thereto pursuant to Section 4.14 of the Agreement, the amount of Principal
Funding Account Investment Proceeds applied with respect thereto pursuant to
subsection 4.17(b) and amounts withdrawn from the Accumulation Period Reserve
Account pursuant to subsection 4.18(b), (c) and (d) and applied with respect to
the Series Default Amount and the Series 2002-3 Percentage of unpaid Adjustment
Payments with respect to such Monthly Period, the Class B Invested Amount will
be reduced by the amount by which the remaining aggregate Series Default Amount
and Series 2002-3 Percentage of unpaid Adjustment Payments exceed the amount
applied with respect thereto during such preceding Monthly Period (a "Class B
Charge-Off").
(b) 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 Trustee will demand payment on
the Policy in an amount equal to the amount by which the Class B Invested Amount
would have been reduced below zero, but in no case more than the sum of (i) the
remaining aggregate Series Default Amount and (ii) the remaining Series 2002-3
Percentage of unpaid Adjustment Payments for such Monthly Period (a "Potential
Class A Charge-Off").
(c) In the event that the Insurer fails to deliver to the Trustee an amount
equal to the Potential Class A Charge-Off amount as required under the Policy,
the Class A Invested Amount will be reduced by the amount the Insurer has failed
to pay (a "Class A Charge-Off").
SECTION 4.14. Redirected Principal Collections for the Series
2002-3 Securities. 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 Percentage or (II)
during an Amortization Period, the Class B Fixed/Floating Percentage and (y) the
amount of Principal Collections with respect to such Business Day and (iii) an
amount equal to the Class A Required Amount for such Business Day (such amount
called "Redirected Principal Collections") and shall apply Principal Collections
in an amount equal to such amount to the components of the Class A Required
Amount as amounts are applied to such components from Available Series 2002-3
Finance Charge Collections pursuant to subsection 4.9(a) of the Agreement.
SECTION 4.15. Determination of LIBOR. (a) "LIBOR" shall mean,
as of any LIBOR Determination Date, the offered rate for deposits in United
States dollars for one month (commencing on the first day of the relevant
Interest Accrual Period) which appears on Telerate Page 3750 as of 11:00 a.m.,
London time, on the LIBOR Determination Date for such Interest Accrual 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 Accrual 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 Accrual Period).
(b) On each LIBOR Determination Date, the Trustee shall send to the
Servicer by facsimile notification of LIBOR for such LIBOR Determination Date.
SECTION 4.16. 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 Series 2002-3 Securityholders, 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 Series 2002-3
Securityholders. 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 Series 2002-3 Securityholders.
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 cause to be
withdrawn all or a part of any amounts then on deposit in the Payment Reserve
Account and apply such funds as Available Series 2002-3 Finance Charge
Collections in accordance with subsection 4.9(a) of the Agreement.
(c) Funds on deposit in the Payment Reserve Account shall be invested in
Cash Equivalents by the Trustee (or, at the direction of the Trustee, by the
Servicer on behalf of the Trustee) at the direction of the Servicer. Funds on
deposit in the Payment Reserve Account on any Business Day, after giving effect
to any withdrawals from the Payment Reserve Account, shall be invested in Cash
Equivalents that will mature so that such funds will be available for withdrawal
on or prior to the following Business Day. The proceeds of any such investments
shall be invested in Cash Equivalents that will mature so that such funds will
be available for withdrawal on or prior to the following Business Day. On each
Business Day following a deposit of funds to the Payment Reserve Account, the
aggregate proceeds of any such investment shall be deposited in the Collection
Account and treated as Investment Earnings for application as Available Series
2002-3 Finance Charge Collections.
SECTION 4.17. 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 Series 2002-3 Securityholders, 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 2002-3
Securityholders. 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 2002-3 Securityholders.
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(a) of the
Agreement.
(b) Funds on deposit in the Principal Funding Account shall be invested by
the Trustee at the direction of the Servicer in Cash Equivalents maturing no
later than the following Transfer Date. On the Transfer Date occurring in the
month following the commencement of the Accumulation Period and on each Transfer
Date thereafter with respect to the Accumulation Period, the Trustee, at the
Servicer's written direction, shall transfer from the Principal Funding Account
to the Collection Account the Principal Funding Account Investment Proceeds on
deposit in the Principal Funding Account, and shall apply such amount as if such
amounts were Available Series 2002-3 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 4.18. 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 Series 2002-3 Securityholders, 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 2002-3 Securityholders. 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 2002-3 Securityholders. If, at any time, the
institution holding the Accumulation Period Reserve Account ceases to be a
Qualified Institution, the Trustee shall within 10 Business Days establish a new
Accumulation Period Reserve Account meeting the conditions specified above with
a Qualified Institution, and shall transfer any cash or any investments to such
new Accumulation Period Reserve Account. From the date such new Accumulation
Period Reserve Account is established, it shall be the "Accumulation Period
Reserve Account." The Trustee, at the written direction of the Servicer, shall
(i) make withdrawals from the Accumulation Period Reserve Account from time to
time, in the amounts and for the purposes set forth in this Series Supplement,
and (ii) on each Transfer Date (from and after the Reserve Account Funding Date)
prior to termination of the Accumulation Period Reserve Account make a deposit
into the Accumulation Period Reserve Account in the amount specified in, and
otherwise in accordance with, subsection 4.9(a)(xi) 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 else deposited in the Collection Account and treated as Investment
Earnings for application as Available Series 2002-3 Finance Charge Collections
available to be applied pursuant to subsection 4.9(a) on the last Business Day
of the preceding Monthly Period.
(c) On or before each Transfer Date with respect to the Accumulation Period
and on the first Transfer Date with respect to the Early Amortization Period,
the Trustee at the direction of the Servicer shall withdraw from the
Accumulation Period Reserve Account, up to the Available Reserve Account Amount,
an amount equal to the excess of the Covered Amount for the related Interest
Accrual Period over the Principal Funding Account Investment Proceeds with
respect to such Transfer Date, and the amount of such withdrawal shall be
applied as if such amount were Available Series 2002-3 Finance Charge
Collections available to be applied pursuant to subsection 4.9(a) on the last
Business Day of the preceding Monthly Period.
(d) The Accumulation Period Reserve Account shall be terminated following
the earliest to occur of (a) the termination of the Trust pursuant to the
Agreement, (b) the date on which the Invested Amount is paid in full, (c) if the
Accumulation Period has not commenced, the occurrence of a Pay Out Event with
respect to the Series 2002-3 Securities 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
2002-3 Finance Charge Collections available to be applied pursuant to subsection
4.9(a) on the last Business Day of the preceding Monthly Period.
SECTION 4.19. Postponement of Accumulation Period. The
Accumulation Period is scheduled to commence at the close of business on the
last day of the April 2004 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 Transferor, 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
beginning on the January 2004 Determination Date and ending when 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 4.20. Defeasance. On the date that the following
conditions shall have been satisfied: (i) the Transferor shall have deposited
(x) in the Principal Funding Account, an amount such that the amount on deposit
in the Principal Funding Account following such deposit is equal to the Class A
Outstanding Principal Amount, and (y) in the Payment Reserve Account, an amount
sufficient to pay all remaining interest on the Class A Securities scheduled to
accrue 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 Payment Reserve Account or the Principal Funding Account
will be deemed to be an association (or publicly traded partnership) taxable as
a corporation, (c) a certificate of an officer of the Transferor stating that
the Transferor reasonably believes that such deposit will not cause a Pay Out
Event or any event that, with the giving of notice or the lapse of time, or
both, would constitute a Pay Out Event, to occur; and (iv) a Ratings Event will
not occur, the Series 2002-3 Securities will no longer be entitled to the
security interest of the Trust in the Receivables and, except those set forth in
clause (i) above, other Trust Property (a "Defeasance") and the percentages
applicable to the allocation to the Series 2002-3 Securityholders of Principal
Collections, Finance Charge Collections and Defaulted Receivables will be
reduced to zero. Upon satisfaction of the foregoing conditions, the Class B
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
2002-3 Securities:
ARTICLE V
DISTRIBUTIONS AND REPORTS TO INVESTOR
SECURITYHOLDERS
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 Transferor, the Trustee and the Paying Agent
pursuant to subsection 3.4(c)) to each Class A Securityholder 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 Securityholder's pro rata share
(based on the aggregate Undivided Interests represented by each Class A Security
held by such Securityholder) of amounts on deposit in the Distribution Account
as are payable to each Class A Securityholder pursuant to Sections 4.11 and 4.12
of the Agreement by check mailed to each Class A Securityholder at such
Securityholder's address as it appears on the Security Register or, in the case
of Class A Securityholders holding Class A Securities evidencing not less than
80% of the Class A Invested Amount, by wire transfer, at the expense of such
Class A Securityholder, to an account or accounts designated by such Class A
Securityholder 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 A Securities will be made only upon
presentation and surrender of the Class A Securities at the office or offices
specified in the notice of such final distribution delivered by the Trustee
pursuant to Section 12.3 of the Agreement.
(b) On each Distribution Date, the Paying Agent shall distribute (in
accordance with the Settlement Statement delivered by the Servicer to the
Transferor, the Trustee and the Paying Agent pursuant to subsection 3.4(c) of
the Agreement) to the Insurer the amounts on deposit in the Distribution Account
as are payable to the Insurer for application in accordance with the Insurance
Agreement pursuant to subsection 4.11(b) of the Agreement by wire transfer to
the account or accounts designated in the Insurance Agreement or to such other
account or accounts designated by the Insurer by written notice given to the
Paying Agent not less than five days prior to the related Distribution Date.
(c) On each Distribution Date, the Paying Agent shall distribute (in
accordance with the Settlement Statement delivered by the Servicer to the
Transferor, the Trustee and the Paying Agent pursuant to subsection 3.4(c) of
the Agreement) to each Class B Securityholder of record on the preceding Record
Date (other than as provided in subsection 2.4(e) of the Agreement or in Section
12.3 of the Agreement respecting a final distribution) such Securityholder's pro
rata share (based on the aggregate Undivided Interests represented by Class B
Securities held by such Securityholder) of amounts on deposit in the
Distribution Account as are payable to the Class B Securityholders pursuant to
Sections 4.11 and 4.12 of the Agreement by wire transfer to each Class B
Securityholder to an account or accounts designated by such Class B
Securityholder 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 B Securities will be made only upon
presentation and surrender of the Class B Securities at the office or offices
specified in the notice of such final distribution delivered by the Trustee
pursuant to Section 12.3 of the Agreement.
SECTION 5.2. Securityholders' Statement. (a) On the twentieth
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 Series 2002-3
Securityholder and the Rating Agencies a statement substantially in the form of
Exhibit B prepared by the Servicer and delivered to the Transferor, 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 Security 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 Security):
(i) the total amount distributed;
(ii) the amount of such distribution allocable to Class A Principal and
Class B Principal;
(iii) the amount of such distribution allocable to Class A Monthly Interest
and Carryover Class A Monthly Interest;
(iv) the amount of Principal Collections received in the Collection Account
during the preceding Monthly Period and allocated in respect of the Class A
Securities, and the Class B Securities, respectively;
(v) the amount of Finance Charge Collections processed during the preceding
Monthly Period and allocated in respect of the Class A Securities and the Class
B Securities, respectively, and the amount of Principal Funding Account
Investment Proceeds and investment earnings on amounts on deposit in the
Accumulation Period Reserve Account;
(vi) the aggregate amount of Principal Receivables, the Invested Amount,
the Class A Invested Amount, the Class B Invested Amount, the Floating
Percentage and, during the Amortization Period, the Fixed/Floating Percentage,
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 Series Default Amount for the preceding Monthly
Period;
(ix) the aggregate amount of Class A Charge-Offs and Class B Charge-Offs
for the preceding Monthly Period;
(x) the amount of the Series Servicing Fee for the preceding Monthly
Period;
(xi) the amount of unreimbursed Redirected Principal Collections for the
related Monthly Period;
(xii) the aggregate amount of funds in the Excess Funding Account as of the
last day of the Monthly Period immediately preceding the Distribution
Date;
(xiii) the number of new Accounts the Receivables in which have been added
to the Trust during the related Monthly Period;
(xiv) the Portfolio Yield for the related Monthly Period;
(xv) the Base Rate for the related Monthly Period;
(xvi) the Principal Funding Account Balance on the related Transfer Date;
(xvii) the Accumulation Shortfall;
(xviii) the scheduled date for the commencement of the Accumulation Period
and the Accumulation Period Length;
(xix) the amount of Principal Funding Account Investment Proceeds deposited
in the Collection Account on the related Transfer Date, the Required Reserve
Account Amount and the Available Reserve Account Amount as of the related
Transfer Date, and the Covered Amount for the related Interest Accrual Period;
(xx) the Aggregate Interest Rate Caps Notional Amount and the amount
deposited in the Cap Proceeds Account during the related Monthly Period; and
(xxi) the amount of claims, if any, on the Policy on such Distribution
Date.
(b) Annual Securityholders' Tax Statement. On or before January 31 of each
calendar year, beginning with calendar year 2003, the Paying Agent shall
distribute to each Person who at any time during the preceding calendar year was
a Series 2002-3 Securityholder, a statement prepared by the Servicer containing
the information required to be contained in the regular report to Series 2002-3
Securityholders, 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 2002-3 Securityholder, together with, on or before
January 31 of each year, beginning in 2003, such other customary information
(consistent with the treatment of the Series 2002-3 Securities as debt) as the
Trustee, the Transferor or the Servicer deems necessary or desirable to enable
the Series 2002-3 Securityholders to prepare their tax returns. Such obligations
of the Paying Agent shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the Trustee or the
Transferor pursuant to any requirements of the Internal Revenue Code as from
time to time in effect.
Section 8. Series 2002-3 Pay Out Events. If any one of the following events
shall occur with respect to the Series 2002-3 Securities:
(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 the Agreement or
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 2002-3
Securityholders (without regard to the Policy) and which continues unremedied
for a period of sixty 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 2002-3 Securities evidencing Undivided Interests aggregating more than
50% of the Invested Amount and continues to affect materially and adversely the
interests of the Series 2002-3 Securityholders (without regard to the Policy)
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 Series 2002-3 Securities evidencing Undivided Interests aggregating more than
50% of the Invested Amount of this Series 2002-3, and (ii) as a result of which
the interests of the Series 2002-3 Securityholders (without regard to the
Policy) are materially and adversely affected and continue to be materially and
adversely affected (without regard to the Policy) for such period; provided,
however, that a Series 2002-3 Pay Out Event pursuant to this subsection 8(b)
shall not be deemed to have occurred hereunder if the Transferor has accepted
reassignment of the related Receivable, or all of such Receivables, if
applicable, during such period (or such longer period as the Trustee may
specify) in accordance with the provisions of the Agreement;
(c) the average of the Portfolio Yields for any three consecutive Monthly
Periods is reduced to a rate which is less than the average Base Rates for such
three consecutive Monthly Periods;
(d) (i) the Transferor Interest shall be less than the Minimum Transferor
Interest, (ii) the Series 2002-3 Percentage of the sum of the total amount of
Principal Receivables plus amounts on deposit in the Excess Funding Account
shall be less than the sum of the Class A Outstanding Principal Amount and the
Class B Outstanding Principal Amount, (iii) the total amount of Principal
Receivables and the amounts on deposit in the Excess Funding Account, the
Principal 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;
(e) any Servicer Default shall occur which would have a material adverse
effect on the Series 2002-3 Securityholders (without regard to the Policy);
(f) failure of any Cap Provider to make any payment under an Interest Rate
Cap within 30 days of the date such payment was due; or
(g) any claim on the Policy shall occur;
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 2002-3 Securities evidencing Undivided Interests aggregating
more than 50% of the Invested Amount of this Series 2002-3, by notice then given
in writing to the Trustee, the Transferor and the Servicer may declare that a
pay out event (a "Series 2002-3 Pay Out Event") has occurred as of the date of
such notice, and in the case of any event described in subparagraphs (c), (d),
(f) or (g), a Series 2002-3 Pay Out Event shall occur without any notice or
other action on the part of the Trustee or the Series 2002-3 Securityholders
immediately upon the occurrence of such event.
Section 9. Series 2002-3 Termination. The right of the Series 2002-3
Securityholders to receive payments from the Trust will terminate on the first
Business Day following the Series 2002-3 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
2002-3 Securityholders shall remain entitled to receive proceeds of such sale
when such sale occurs.
Section 10. Legends; Transfer and Exchange; Restrictions on Transfer of
Series 2002-3 Securities. (a) Each Class A Security that is a Global Security
deposited with DTC, or a custodian on behalf of DTC, shall bear a legend,
substantially in the following form:
UNLESS THIS SECURITY 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 SECURITY ISSUED IS REGISTERED IN THE NAME
OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH
OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE
& CO., HAS AN INTEREST HEREIN.
(b) Each Class B Security shall bear legends, substantially in the
following form:
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"). THIS SECURITY HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES
LAW OF ANY STATE AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED UNLESS REGISTERED PURSUANT TO OR EXEMPT FROM REGISTRATION
UNDER THE SECURITIES ACT AND ANY OTHER APPLICABLE SECURITIES LAW.
METRIS RECEIVABLES, INC. SHALL BE PROHIBITED FROM TRANSFERRING ANY
INTEREST IN OR PORTION OF THIS SECURITY UNLESS, PRIOR TO SUCH TRANSFER,
IT SHALL HAVE DELIVERED TO THE TRUSTEE AN OPINION OF COUNSEL TO THE
EFFECT THAT SUCH PROPOSED TRANSFER WILL NOT ADVERSELY AFFECT THE
FEDERAL, MINNESOTA OR DELAWARE INCOME TAX CHARACTERIZATION OF ANY
OUTSTANDING SERIES OF INVESTOR SECURITIES OR THE TAXABILITY (OR TAX
CHARACTERIZATION) OF THE TRUST UNDER FEDERAL, MINNESOTA OR DELAWARE
INCOME TAX LAWS. THE TRANSFER OF THIS SECURITY IS SUBJECT TO CERTAIN
CONDITIONS SET FORTH IN THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE BENEFIT OF THE
TRANSFEROR 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") THAT IS SUBJECT TO SECTION 4975 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) AND THIS CLAUSE (V), AS APPLICABLE, AN INSURANCE COMPANY GENERAL
ACCOUNT, BUT EXCLUDING ANY ENTITY REGISTERED UNDER THE INVESTMENT
COMPANY ACT OF 1940, AS AMENDED).
(c) Metris Receivables, Inc. shall be prohibited from
transferring any interest in or portion of the Class B Securities unless, prior
to such sale, assignment, participation, pledge, hypothecation, rehypothecation,
transfer or other disposition (a "Transfer"), it shall have delivered to the
Trustee an Opinion of Counsel to the effect that such proposed Transfer will not
adversely affect the Federal or Applicable Tax State income tax characterization
of any outstanding Series of Investor Securities or the taxability (or tax
characterization) of the Trust under Federal or Applicable Tax State income tax
laws. In no event shall any interest in or portion of the Class B Securities be
transferred to Metris or DMCCB. As a condition to transfer of an interest in or
portion of the Class B Securities the transferee shall be required to agree not
to institute against, or join any other Person in instituting against, the Trust
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding, or other proceeding under any federal or state bankruptcy or similar
law, for one year and one day after all Investor Securities are paid in full.
The Transferor shall provide prompt written notice to the Rating Agencies of any
such transfer.
Section 11. The Policy.
(a) The Transferor hereby represents that (i) it has obtained the Policy in
the name of the Trustee and solely for the benefit of the Series 2002-3
Securityholders, (ii) that it has entered into the Insurance Agreement which
provides for the issuance of the Policy by the Insurer and (iii) that the Policy
permits the Trustee (or the Servicer on its behalf) to draw on the Policy from
time to time for the purposes set forth in this Series Supplement. The Insurer
shall not be entitled to reimbursement for any draws, interest or fees with
respect to the Policy from the corpus of the Trust, except as specifically
provided herein.
(b) Pursuant to the Policy, if on any Determination Date the Servicer
notifies the Trustee that on the related Distribution Date (i) the funds that
will be on deposit in the Interest Funding Account and that will be available
for distribution will be insufficient to pay the Class A Monthly Interest with
respect to such Monthly Period, (ii) the Series Servicing Fee with respect to
such Monthly Period will not be paid in full, or (iii) a Potential Class A
Charge-Off shall occur, then the Trustee shall give notice to the Insurer by
telecopy or other writing by the close of business on the second Business Day
prior to the Distribution Date demanding payment of an amount equal to the
deficiency. In addition, if on the Scheduled Series 2002-3 Termination Date the
outstanding principal amount of the Class A Securities after application of all
amounts to Class A Principal on such date would be greater than zero, the
Trustee shall give notice to the Insurer by telecopy or other writing by the
close of business on the second Business Day prior to the Scheduled Series
2002-3 Termination Date demanding payment of an amount equal to such excess (the
amount demanded pursuant to this sentence and the preceding sentence, the
"Policy Claim Amount"). Following receipt by the Insurer of such notice, the
Insurer will pay the Policy Claim Amount before 12:00 noon on the Business Day
preceding the Distribution Date (i) with respect to funds to be applied to the
payment of Class A Monthly Interest, to the Trustee for deposit in the
Distribution Account, (ii) with respect to funds to be applied to the payment of
the Series Servicing Fee, to the Servicer and (iii) with respect to funds to be
applied with respect to a Potential Class A Charge-Off, to the Trustee to be
treated as Available Series 2002-3 Principal Collections and deposited in the
Distribution Account.
If payment of any amount guaranteed by the Insurer pursuant to
the Policy is avoided as a preference payment (the "Preference Amount") under
applicable bankruptcy, insolvency, receivership or similar law in the event of
an insolvency of the Transferor, the Servicer, Metris Companies Inc. or the
Trust, the Insurer will pay such amount out of its funds on the later of (a) the
date when due to be paid pursuant to the Order referred to below or (b) the
first to occur of (i) the fourth Business Day following Receipt by the Insurer
or the fiscal agent from the Trustee of (A) a certified copy of the order (the
"Order") of the court or other governmental body which exercised jurisdiction to
the effect that the Trustee is required to return the amount of any Policy Claim
Amounts distributed with respect to the Class A Securities during the term of
the Policy because such distributions were avoidable preference payments under
applicable bankruptcy or similar law, (B) a notice for payment in the form
specified by the Policy and (C) an assignment duly executed and delivered by
each Class A Securityholder, in such form as is reasonably required by the
Insurer and provided to such Class A Securityholder by the Insurer, irrevocably
assigning to the Insurer all rights and claims of such Class A Securityholder
relating to or arising under the Class A Securities against the debtor which
made such preference payment or otherwise with respect to such preference
payment or (ii) the date of Receipt by the Insurer or the fiscal agent from the
Trustee of the items referred to in clauses (A), (B) and (C) above if, at least
four Business Days prior to such date of Receipt, the Insurer or the fiscal
agent shall have Received written notice from the Trustee that such items were
to be delivered on such date and such date was specified in such notice. Such
payment shall be disbursed to the receiver, conservator, debtor-in-possession or
trustee in bankruptcy named in the Order and not to the Trustee or Class A
Securityholder directly.
The terms "Receipt" and "Received", with respect to the
Policy, mean actual delivery to the Insurer and to its fiscal agent appointed by
the Insurer at its option, if any, prior to 1:00 p.m., New York City time, on a
Business Day; delivery either on a day that is not a Business Day or after 1:00
p.m., New York City time, shall be deemed to be Received on the next succeeding
Business Day. If any notice or certificate given under the Policy by the Trustee
is not in proper form or is not properly completed, executed or delivered, it
shall be deemed not to have been Received, and the Insurer or the fiscal agent
shall promptly so advise the Trustee and the Trustee may submit an amended
notice.
(c) In the event that the claims paying ability rating of the Insurer is
downgraded and such downgrade would result in a downgrading of the then current
rating of the Class A Securities (a "Replacement Event"), the Transferor, in
accordance with and upon satisfaction of the conditions set forth in the Policy,
including payment in full of all amounts owed to the Insurer, may but shall not
be required to, substitute a new surety bond or surety bonds for the existing
Policy or may arrange for any other form of Enhancement; provided, however, that
in each case the Class A Securities shall be rated no lower than the rating
assigned by each Rating Agency to the Class A Securities prior to such
Replacement Event and the timing and mechanism for drawing on such new credit
enhancement shall be reasonably acceptable to the Trustee. Upon receipt of the
new Enhancement, the Trustee shall surrender the replaced Policy to the Insurer.
(d) So long as the Insurer has not defaulted on its obligations under the
Policy, the Insurer will be entitled to exercise the rights, including all
voting rights, of the Class A Securityholders without the consent of the Class A
Securityholders (including any voting rights with respect to amending the
Agreement or this Series Supplement or terminating a Servicer) and the Class A
Securityholders may only exercise such voting rights with the prior written
consent of the Insurer; provided, however, in the case of any amendment to, or
waiver of, any term of the Agreement or this Series Supplement that would
require the consent of all Series 2002-3 Securityholders, the consent of the
Series 2002-3 Securityholders shall be required in addition to the consent of
the Insurer. In determining whether the required percentage of Series 2002-3
Securityholders have given their approval or consent with respect to an action
requiring the consent of a majority of the Series 2002-3 Securityholders, except
as otherwise specified, the Class A Securityholders will be treated as a single
Series.
Section 12. Ratification of Agreement. 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
2002-3 Securityholders.
Section 13. Registration of the Class A Securities under the Securities
Exchange Act of 1934. The Transferor shall cause the Class A Securities to be
registered under the Securities Exchange Act of 1934, as amended, on or before
April 30, 2003 and thereafter maintain such registration until the Class A
Invested Amount has been reduced to zero.
Section 14. Counterparts. This Series Supplement may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all of such counterparts shall together constitute but one and the
same instrument.
Section 15. GOVERNING LAW. THIS SERIES SUPPLEMENT SHALL BE GOVERNED BY, AND
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 16. 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 17. Amendment for FASIT Purposes. Each Series 2002-3
Securityholder, by acquiring an interest in a Series 2002-3 Security, is deemed
to consent to any amendment to the Agreement or this Series Supplement necessary
for the Transferor to elect for the Trust or any portion thereof to be treated
as a financial asset securitization investment trust ("FASIT") within the
meaning of Section 860L of the Internal Revenue Code (or any successor provision
thereto), provided, that such election may not be made unless the Transferor
delivers an opinion to the Trustee and the Servicer to the effect that such
election will not adversely affect the Federal or Applicable Tax State income
tax characterization of any outstanding Series of Investor Securities or the
taxability of the Trust under Federal or Applicable Tax State income tax laws.
Section 18. Paired Series. Subject to obtaining confirmation by each Rating
Agency of the then existing ratings of each Class of Securities which is then
rated (in the case of the Class A Securities, without giving effect to the
Policy), and prior to the commencement of the Early Amortization Period, the
Series 2002-3 Securities 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 Series 2002-3 Securityholders. As principal is deposited
in the Principal Account or the Principal Funding Account or is paid with
respect to the Series 2002-3 Securities, 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 Series 2002-3 Securities, 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
Series 2002-3 Securityholders 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.
Section 19. Third Party Beneficiaries. The Agreement as supplemented by
this Series Supplement shall inure to the benefit of and be binding upon the
parties hereto, the Series 2002-3 Securityholders, the Insurer and their
respective successors and permitted assigns.
Section 20. Tax Treatment. In addition to the tax treatment described in
Section 3.7 of the Agreement and notwithstanding Section 11.11 of the Agreement,
each of the Transferor, the Servicer, and the Holder of the Exchangeable
Transferor Security agree, covenant and warrant that at all times (i) it will
treat and take no action inconsistent with the treatment of the Transferor (or
its sole member or owner, if the Transferor is treated as a disregarded entity
for relevant tax purposes) as the direct beneficial owner of the Receivables and
the other assets of the Trust for purposes of federal, state, local and foreign
income and franchise taxes and any other tax imposed on or measured by income,
and (ii) it will cause any Affiliate with whom each such Person joins in the
filing of any tax return, or with whom it is liable for any tax, to so treat,
and not to fail to so treat, the Transferor (or its sole member or owner, as
applicable) for such purposes. Each Holder of the Exchangeable Transferor
Security, by acceptance of its Security, agrees to be bound by the provisions of
this Section 20.
Section 21. Investments. The Trustee shall hold each Cash Equivalent that
constitutes investment property through a securities intermediary, which
securities intermediary shall agree with the Trustee that (i) such investment
property at all times shall be credited to a securities account of the Trustee,
(ii) all property credited to such securities account shall be treated as a
financial asset, (iii) such securities intermediary shall treat the Trustee as
entitled to exercise the rights that comprise each financial asset credited to
such securities account, (iv) such securities intermediary shall comply with
entitlement orders originated by the Trustee without the further consent of any
other person or entity, (v) such securities intermediary shall not agree with
any person or entity other than the Trustee to comply with entitlement orders
originated by any person or entity other than the Trustee, (vi) such securities
account and all property credited thereto shall not be subject to any lien,
security interest, right of set-off, or encumbrance in favor of such securities
intermediary or anyone claiming through such securities intermediary (other than
the Trustee), (vii) such agreement between such securities intermediary and the
Trustee shall be governed by the laws of the State of New York, and (viii) the
State of New York shall be such securities intermediary's jurisdiction for
purposes of the UCC. The Trustee shall maintain possession of each other Cash
Equivalent in the State of Minnesota, separate and apart from all other property
held by the Trustee. Notwithstanding any other provision of this Series
Supplement, the Trustee shall not hold any Cash Equivalent through an agent
except as expressly permitted by this Section 21. Each term used in this Section
21 and defined in the New York UCC shall have the meaning set forth in the New
York UCC.
Section 22. Additional Representations and Warranties of the Transferor.
The Transferor hereby makes the following representations and warranties. Such
representations and warranties shall survive until the termination of this
Series Supplement. Such representations and warranties speak of the date that
the Interest Rate Cap Agreement (as defined below) is transferred to the Trustee
but shall not be waived by any of the parties to this Series Supplement unless
each Rating Agency shall have notified the Transferor, the Servicer and the
Trustee in writing that such waiver will not result in a reduction or withdrawal
of the rating of any outstanding Series or Class to which it is a Rating Agency.
(a) The Agreement creates a valid and continuing security
interest (as defined in the applicable UCC) in the Cap Agreement, the Interest
Rate Caps and the Cap Proceeds Account described in Section 3A of this Series
Supplement (collectively, the "Interest Rate Cap Agreement") in favor of the
Trustee, which security interest is prior to all other Liens (other than
Permitted Liens), and is enforceable as such as against creditors of and
purchasers from the Transferor.
(b) The Interest Rate Cap Agreement constitutes either an
"account," a "general intangible," or an "instrument," each within the meaning
of the applicable UCC.
(c) At the time of the transfer and assignment of the Interest
Rate Cap Agreement to the Trustee pursuant to the Agreement, the Transferor
owned and had good and marketable title to the Interest Rate Cap Agreement free
and clear of any Lien, claim or encumbrance of any Person (other than Permitted
Liens).
(d) The Transferor has caused, within ten days of the
execution of this Series Supplement, the filing of all appropriate financing
statements in the proper filing office in the appropriate jurisdictions under
applicable law in order to perfect the security interest in the Interest Rate
Cap Agreement granted to the Trustee pursuant to the Agreement.
(e) Other than the security interest granted to the Trustee
pursuant to the Agreement, the Transferor has not pledged, assigned, sold,
granted a security interest in, or otherwise conveyed the Interest Rate Cap
Agreement. The Transferor has not authorized the filing of and is not aware of
any financing statements against the Transferor that include a description of
collateral covering the Interest Rate Cap Agreement other than any financing
statement relating to the security interest granted to the Trustee pursuant to
the Agreement or any financing statement that has been terminated. The
Transferor is not aware of any judgment or tax lien filings against the
Transferor.
IN WITNESS WHEREOF, the Transferor, the Servicer and the
Trustee have caused this Series 2002-3 Supplement to be duly executed by their
respective officers as of the day and year first above written.
METRIS RECEIVABLES, INC.
Transferor
By: /s/ XXXXX THAN
Name: Xxxxx X. Xxxx
Title: Senior Vice President and Treasurer
DIRECT MERCHANTS CREDIT CARD BANK,
NATIONAL ASSOCIATION
Servicer
By: /s/ XXXXX THAN
Name: Xxxxx X. Xxxx
Title: Senior Vice President, Treasurer and Cashier
U.S. BANK NATIONAL ASSOCIATION
Trustee
By: /s/ XXXXXXX X. XXXXX
Name: Xxxxxxx X. Xxxxx
Title: Assistant Vice President
Exhibit A-1
FORM OF CLASS A INVESTOR SECURITY
UNLESS THIS SECURITY 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 SECURITY ISSUED IS REGISTERED IN THE NAME
OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH
OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE
& CO. HAS AN INTEREST HEREIN.
No. ____ $ ________
CUSIP NO.________
METRIS MASTER TRUST
FLOATING RATE ASSET BACKED
SECURITY, SERIES 2002-3, 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 "Securityholder") is the registered
owner of a fractional undivided interest in the Metris Master Trust (the
"Trust") issued pursuant to the Second Amended and Restated Pooling and
Servicing Agreement, dated as of January 22, 2002 (the "Pooling and Servicing
Agreement"; such term to include any amendment, supplement or other modification
thereto) by and among the Transferor, Direct Merchants Credit Card Bank,
National Association, as Servicer (the "Servicer"), and U.S. Bank National
Association, as Trustee (the "Trustee"), and the Series 2002-3 Supplement, dated
as of June 4, 2002 (the "Series 2002-3 Supplement"), among the Transferor, the
Servicer and the Trustee. The Pooling and Servicing Agreement, as supplemented
by the Series 2002-3 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 Security does not purport to summarize the Agreement and
reference is made to the 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 Security is one of a series of Securities entitled "Metris
Master Trust Floating Rate Asset Backed Securities, Series 2002-3, Class A" (the
"Class A Securities"), 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 Securityholder by virtue of the acceptance hereof assents and by which the
Securityholder is bound.
The Transferor has structured the Agreement, the Class A
Securities, the Metris Master Trust Asset Backed Securities, Series 2002-3,
Class B (the "Class B Securities" and collectively with the Class A Securities,
the "Series 2002-3 Securities") with the intention that the Series 2002-3
Securities will qualify under applicable tax law as indebtedness, and both the
Transferor and each holder of a Class A Security (a "Class A Securityholder") or
any interest therein by acceptance of its Securities or any interest therein,
agrees to treat the Class A Securities 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 Securityholders
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
Securityholders (other than with respect to Class B Excess Amounts) until all
principal payments have been made to the Class A Securityholders.
Interest on the Class A Securities will be payable on July 22,
2002 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 the product of (i) the Class A Interest Rate in effect
with respect to the related Interest Accrual Period, (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 A Outstanding
Principal Amount as of the close of business on the first day of such Interest
Accrual Period.
Interest payments on the Class A Securities on each
Distribution Date will be funded from Available Series 2002-3 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
respective classes of the Series 2002-3 Securities and deposited on each
business day during such Monthly Period in the Interest Funding Account.
"Class A Invested Amount" shall mean, when used with respect
to any Business Day, the greater of (x) zero and (y) an amount equal to (a) the
Class A Initial Invested Amount minus (b) the aggregate amount of principal
payments made to Class A Securityholders through and including such Business
Day, minus (c) the aggregate amount of Class A Charge-Offs for all prior
Distribution Dates, plus (d) the sum of the aggregate amount reimbursed with
respect to reductions of the Class A Invested Amount through and including such
Business Day pursuant to subsection 4.9(a)(v) of the Agreement plus, with
respect to such subsection, amounts applied thereto pursuant to subsections
4.10(a) and (b), 4.14, 4.17(b) and 4.18(b), (c) and (d) of the Agreement, for
the purpose of reimbursing amounts deducted pursuant to the foregoing clause
(c); provided, however that the Class A Invested Amount may not be reduced below
zero.
Subject to the Agreement, payments of principal are limited to
the unpaid Class A Invested Amount of the Class A Securities, which may be less
than the unpaid balance of the Class A Securities pursuant to the terms of the
Agreement. All principal on the Class A Securities is due and payable no later
than the May 2009 Distribution Date (the "Scheduled Series 2002-3 Termination
Date"). After the earlier to occur of (i) the Scheduled Series 2002-3
Termination Date and (ii) the day after the Distribution Date on which the
Series 2002-3 Securities are paid in full (the "Series 2002-3 Termination Date")
neither the Trust nor the Transferor will have any further obligation to
distribute principal or interest on the Class A Securities. In the event that
the Class A Invested Amount is greater than zero on the Series 2002-3
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 and the Class B Invested
Amount at the close of business on such date (but not more than the total amount
of Receivables allocable to the Investor Securities), and shall pay the proceeds
to the Class A Securityholders pro rata in final payment of the Class A
Securities and then to the Class B Securityholders pro rata in final payment of
the Class B Securities.
Unless the certificate of authentication hereon has been
executed by or on behalf of the Trustee, by manual signature, this Security
shall not be entitled to any benefit under the Agreement, or be valid for any
purpose.
This Security shall be construed in accordance with and
governed by the laws of the State of Delaware, without reference to its conflict
of law provisions.
IN WITNESS WHEREOF, the Transferor has caused this Security to
be duly executed.
METRIS RECEIVABLES, INC.
By:
Name:
Title:
Dated:
CERTIFICATE OF AUTHENTICATION
This is one of the Class A Securities referred to in the
within-mentioned Pooling and Servicing Agreement.
U.S. BANK NATIONAL ASSOCIATION,
not in its individual capacity but solely as Trustee
By:
Name:
Title:
Exhibit A-2
FORM OF CLASS B INVESTOR SECURITY
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"). THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAW OF ANY STATE AND MAY NOT
BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS REGISTERED PURSUANT TO
OR EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT AND ANY OTHER APPLICABLE
SECURITIES LAW. METRIS RECEIVABLES, INC. SHALL BE PROHIBITED FROM TRANSFERRING
ANY INTEREST IN OR PORTION OF THIS SECURITY UNLESS, PRIOR TO SUCH TRANSFER, IT
SHALL HAVE DELIVERED TO THE TRUSTEE AN OPINION OF COUNSEL TO THE EFFECT THAT
SUCH PROPOSED TRANSFER WILL NOT ADVERSELY AFFECT THE FEDERAL, MINNESOTA OR
DELAWARE INCOME TAX CHARACTERIZATION OF ANY OUTSTANDING SERIES OF INVESTOR
SECURITIES OR THE TAXABILITY (OR TAX CHARACTERIZATION) OF THE TRUST UNDER
FEDERAL, MINNESOTA OR DELAWARE INCOME TAX LAWS. THE TRANSFER OF THIS SECURITY IS
SUBJECT TO CERTAIN CONDITIONS SET FORTH IN THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN.
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE BENEFIT OF THE
TRANSFEROR 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") THAT IS SUBJECT TO SECTION 4975 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) AND THIS CLAUSE (V), AS APPLICABLE, AN
INSURANCE COMPANY GENERAL ACCOUNT, BUT EXCLUDING ANY ENTITY REGISTERED UNDER THE
INVESTMENT COMPANY ACT OF 1940, AS AMENDED).
No._____ $___________
METRIS MASTER TRUST
ASSET BACKED
SECURITY, SERIES 2002-3, 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 Metris Receivables, Inc. (the
"Securityholder") is the registered owner of a fractional undivided interest in
the Metris Master Trust (the "Trust") issued pursuant to the Second Amended and
Restated Pooling and Servicing Agreement, dated as of January 22, 2002 (the
"Pooling and Servicing Agreement"; such term to include any amendment,
supplement or other modification thereto) by and among the Transferor, Direct
Merchants Credit Card Bank, National Association, as Servicer (the "Servicer"),
and U.S. Bank National Association, as Trustee (the "Trustee"), and the Series
2002-3 Supplement, dated as of June 4, 2002 (the "Series 2002-3 Supplement"),
among the Transferor, the Servicer and the Trustee. The Pooling and Servicing
Agreement, as supplemented by the Series 2002-3 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 Security 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 Security is one of a series of Securities entitled "Metris
Master Trust Asset Backed Securities, Series 2002-3, Class B" (the "Class B
Securities"), 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 Securityholder by virtue of the acceptance hereof assents and by which the
Securityholder is bound.
Metris Receivables, Inc. shall be prohibited from transferring any interest
in or portion of the Class B Securities.
No principal will be payable to the Class B Securityholders
(other than with respect to Class B 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 has been paid in full. No
principal will be payable to the Class B Securityholders until all principal
payments have first been made to the Class A Securityholders.
"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
initial principal balance of the Class B Securities, minus (b) the aggregate
amount of principal payments made to Class B Securityholders through and
including such Business Day, minus (c) the aggregate amounts by which the
Transferor has reduced the Class B Invested Amount pursuant to subsection
4.12(b) of the Agreement, minus (d) the aggregate amount of Class B Charge-Offs
for all prior Distribution Dates, minus (e) the aggregate amount of Redirected
Principal Collections for all prior Distribution Dates plus (f) the sum of the
aggregate amount reimbursed with respect to reductions of the Class B Invested
Amount through and including such Business Day pursuant to subsection 4.9(a)(x)
of the Agreement plus, with respect to such subsection, amounts applied thereto
pursuant to subsections 4.10(a) and (b), 4.17(b) and 4.18(b), (c) and (d) of the
Agreement, for the purpose of reimbursing amounts deducted pursuant to the
foregoing clauses (d) and (e); provided, however that the Class B Invested
Amount may not be reduced below zero.
Subject to the Agreement, payments of principal are limited to
the unpaid Class B Invested Amount of the Class B Securities, which may be less
than the unpaid balance of the Class B Securities pursuant to the terms of the
Agreement. All principal on the Class B Securities is due and payable no later
than the May 2009 Distribution Date (the "Scheduled Series 2002-3 Termination
Date"). After the earlier to occur of (i) the Scheduled Series 2002-3
Termination Date or (ii) the day after the Distribution Date on which the Series
2002-3 Securities are paid in full (the "Series 2002-3 Termination Date")
neither the Trust nor the Transferor will have any further obligation to
distribute principal or interest on the Class B Securities. In the event that
the Class B 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 and the Class B Invested Amount at the close of business
on such date (but not more than the total amount of Receivables allocable to the
Investor Securities), and shall pay the proceeds to the Class A Securityholders
pro rata in final payment of the Class A Securities and then to the Class B
Securityholders pro rata in final payment of the Class B Securities.
Unless the certificate of authentication hereon has been
executed by or on behalf of the Trustee, by manual signature, this Security
shall not be entitled to any benefit under the Agreement, or be valid for any
purpose.
This Security shall be construed in accordance with and
governed by the laws of the State of Delaware, without reference to its conflict
of law provisions.
IN WITNESS WHEREOF, the Transferor has caused this Security to
be duly executed.
METRIS RECEIVABLES, INC.
By:
Name:
Title:
Dated:
CERTIFICATE OF AUTHENTICATION
This is one of the Class B Securities referred to in the
within-mentioned Pooling and Servicing Agreement.
U.S. BANK NATIONAL ASSOCIATION,
not in its individual capacity but solely as Trustee
By:
Name:
Title:
EXHIBIT B
Metris Receivables, Inc. Metris Master Trust
Securityholders' Statement Series 2002-3
Monthly
Report
Section Class Class Month-Year
5.2 A B Total
(i) Outstanding Principal Amount
(ii) Security Principal Distributed
(iii) Security Interest Distributed
(iv) Principal Collections
(v) Finance Charge Collections
Recoveries
Initial Interest Funding Account Deposit
Interest Earned on Accounts
Total Finance Charge Collections
Total Collections
(vi) Aggregate Amount of Principal Receivables
Invested Amount (End of Month)
Floating Allocation Percentage
Fixed/Floating Allocation Percentage
Invested Amount (Beginning of Month)
Average Daily Invested Amount
(vii) Receivable Delinquencies (As a % of Total Receivables)
Current
30 Days to 59 Days (1 to 29 Days
Contractually Delinquent)
60 Days to 89 Days (30 to 59 Days
Contractually Delinquent)
90 Days and Over (60+ Days
Contractually Delinquent)
Total Receivables
(viii) Aggregate Investor Default Amount
As a % of Average Daily Invested Amount
(Annualized based on 365 days/year)
(ix) Charge-Offs
(x) Series Servicing Fee
(xi) Unreimbursed Redirected
Principal Collections
(xii) Excess Funding Account Balance
(xiii) New Accounts Added
(xiv) Average Gross Portfolio Yield
Average Net Portfolio Yield
(xv) Minimum Base Rate
Excess Spread
(xvi) Principal Funding Account Balance
(xvii) Accumulation Shortfall
(xviii) Scheduled date for the commencement
of the Accumulation Period
Accumulation Period Length
(xix) Principal Funding Account
Investment Proceeds Deposit
Required Reserve Account Amount
Available Reserve Account Amount
Covered Amount
(xx) Aggregate Interest Rate Caps
Notional Amount
Deposit to the Caps Proceeds Account
(xxi) Policy Claim Amount
TABLE OF CONTENTS
Page
SECTION 1. Designation.........................................................1
SECTION 2. Definitions.........................................................1
SECTION 3. Reassignment Terms.................................................14
SECTION 3A.Conveyance of Interest in Interest Rate Cap; Cap Proceeds Account..14
SECTION 4. Delivery and Payment for the Series 2002-3 Securities..............17
SECTION 5. Form of Delivery of Series 2002-3 Securities; Denominations........17
SECTION 6. Article IV of the Agreement........................................17
ARTICLE IV
RIGHTS OF SECURITYHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS
SECTION 4.4. Rights of Securityholders.....................................18
SECTION 4.5. Collections and Allocation; Payments on Exchangeable
Transferor Security...........................................18
SECTION 4.6. Determination of Interest for the Series 2002-3 Securities....19
SECTION 4.7. Determination of Principal Amounts............................19
SECTION 4.8. Shared Principal Collections..................................19
SECTION 4.9. Application of Funds..........................................20
SECTION 4.10. Coverage of Required Amount for the Series 2002-3 Securities..25
SECTION 4.11. Payment of Interest on Securities and Amounts Owing to Insurer
to Insurer....................................................26
SECTION 4.12. Payment of Security Principal.................................26
SECTION 4.13. Series Charge-Offs............................................27
SECTION 4.14. Redirected Principal Collections for the Series
2002-3 Securities.............................................27
SECTION 4.15. Determination of LIBOR........................................28
SECTION 4.16. Payment Reserve Account.......................................28
SECTION 4.17. Principal Funding Account.....................................29
SECTION 4.18. Accumulation Period Reserve Account...........................29
SECTION 4.19. Postponement of Accumulation Period...........................30
SECTION 4.20. Defeasance....................................................31
SECTION 7. Article V of the Agreement......................................31
ARTICLE V
DISTRIBUTIONS AND REPORTS TO
INVESTOR SECURITYHOLDERS
SECTION 5.1. Distributions....................................................31
SECTION 5.2. Securityholders' Statement.......................................32
SECTION 8. Series 2002-3 Pay Out Events.....................................34
SECTION 9. Series 2002-3 Termination........................................35
SECTION 10. Legends; Transfer and Exchange; Restrictions on Transfer
of Series 2002-3 Securities......................................36
SECTION 11. The Policy.......................................................37
SECTION 12. Ratification of Agreement........................................39
SECTION 13. Registration of the Class A Securities under the
Securities Exchange Act of 1934..................................39
SECTION 14. Counterparts.....................................................39
SECTION 15. GOVERNING LAW....................................................39
SECTION 16. Instructions in Writing..........................................39
SECTION 17. Amendment for FASIT Purposes.....................................40
SECTION 18. Paired Series....................................................40
SECTION 19. Third Party Beneficiaries........................................40
SECTION 20. Tax Treatment....................................................40
SECTION 21. Investments......................................................41
SECTION 22. Additional Representations and Warranties of the Transferor......41
