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EXHIBIT 4.3
METRIS RECEIVABLES, INC.
Transferor
DIRECT MERCHANTS CREDIT CARD BANK, NATIONAL ASSOCIATION
Servicer
and
U.S. BANK NATIONAL ASSOCIATION
Trustee
on behalf of the Series [-] Securityholders
SERIES [-] SUPPLEMENT
Dated as of [-] [-], [-]
to
AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT
Dated as of July 30, 1998
METRIS MASTER TRUST
$[-] Floating Rate Asset Backed
Securities, Series [-], Class A
$[-] Floating Rate Asset Backed
Securities, Series [-], Class B
$[-] Excess Collateral, Series [-]
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TABLE OF CONTENTS
PAGE
SECTION 1. DESIGNATION........................................................1
SECTION 2. DEFINITIONS........................................................1
SECTION 3. REASSIGNMENT TERMS................................................14
SECTION 4. DELIVERY AND PAYMENT FOR THE CLASS A SECURITIES
AND THE CLASS B SECURITIES........................................15
SECTION 5. FORM OF DELIVERY OF THE CLASS A SECURITIES AND THE
CLASS B SECURITIES; DENOMINATIONS.................................15
SECTION 6. ARTICLE IV OF AGREEMENT...........................................15
SECTION 4.4. Rights of Securityholders..................................15
SECTION 4.5. Collections and Allocation; Payments on Exchangeable
Transferor Security........................................16
SECTION 4.6. Determination of Interest for the Series [-] Securities....16
SECTION 4.7. Determination of Principal Amounts.........................17
SECTION 4.8. Shared Principal Collections...............................18
SECTION 4.9. Application of Funds.......................................18
SECTION 4.10. Coverage of Required Amount for the Series [-] Securities..23
SECTION 4.11. Payment of Interest on Class A Securities and Class B
Securities.................................................23
SECTION 4.12. Payment Of Security Principal..............................23
SECTION 4.13. Series Charge-Offs.........................................24
SECTION 4.14. Redirected Principal Collections for the Series [-]
Securities.................................................25
SECTION 4.15. Determination of Libor.....................................26
SECTION 4.16. Payment Reserve Account....................................26
SECTION 4.17. Principal Funding Account..................................27
SECTION 4.18. Accumulation Period Reserve Account........................27
SECTION 4.19. Postponement of Accumulation Period........................28
SECTION 4.20. Defeasance.................................................28
SECTION 7. ARTICLE V OF THE AGREEMENT........................................29
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TABLE OF CONTENTS
(CONTINUED)
PAGE
SECTION 5.1. Distributions..............................................29
SECTION 5.2. Securityholders' Statement.................................30
SECTION 8. SERIES [-] PAY OUT EVENTS.........................................31
SECTION 9. SERIES [-] TERMINATION............................................33
SECTION 10. LEGENDS; TRANSFER AND EXCHANGE; RESTRICTIONS ON
TRANSFER OF CLASS A SECURITIES AND CLASS B SECURITIES.............33
SECTION 11. TRANSFERS OF THE EXCESS COLLATERAL................................34
SECTION 12. RATIFICATION OF AGREEMENT.........................................35
SECTION 13. [Reserved]........................................................35
SECTION 14. COUNTERPARTS......................................................35
SECTION 15. GOVERNING LAW.....................................................35
SECTION 16. INSTRUCTIONS IN WRITING...........................................35
SECTION 17. AMENDMENT FOR FASIT PURPOSES......................................35
SECTION 18. PAIRED SERIES.....................................................35
SECTION 19. THIRD PARTY BENEFICIARIES.........................................36
SECTION 20. TAX TREATMENT.....................................................36
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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
Exhibit C Form of Excess Collateral Investment Letter
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SERIES [-] SUPPLEMENT, dated as of [-] [-], [-] (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, as trustee (together with its successors in trust
thereunder as provided in the Agreement referred to below, the "Trustee"), under
the Amended and Restated Pooling and Servicing Agreement dated as of July 30,
1998 among the Transferor, the Servicer and the Trustee (as successor to The
Bank of New York (Delaware) (the "Prior Trustee"), as supplemented by the
Agreement of Resignation, Appointment and Acceptance dated as of December 11,
2000 among the Transferor, the Servicer, the Prior Trustee and the Trustee (as
amended supplemented or otherwise modified from time to time, the "Agreement").
Section 6.9 of the Agreement provides, among other things,
that the Transferor and the Trustee may at any time and from time to time enter
into a supplement to the Agreement for the purpose of authorizing the issuance
by the Trustee to the Transferor, for execution and redelivery to the Trustee
for authentication, of one or more Series of 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. (a) 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 [-] Securities." The Series [-]
Securities shall be issued in two Classes, which shall be designated generally
as the Floating Rate Asset Backed Securities, Series [-], Class A (the "Class A
Securities"), and the Floating Rate Asset Backed Securities, Series [-], Class B
(the "Class B Securities"). In addition, there is hereby created a third Class
of an uncertificated interest in the Trust which shall be deemed to be an
"Investor Security" for all purposes under the Agreement and this Series
Supplement, except as expressly provided herein, and which shall be known as the
Excess Collateral, Series [-] (the "Excess Collateral").
(b) The Excess Collateral Holder, as holder of an "Investor
Security" under the Agreement, shall be entitled to the benefits of the
Agreement and this Series Supplement upon payment by the Excess Collateral
Holder of amount owing on the Closing Date as agreed to by the Transferor and
the Excess Collateral Holder. Notwithstanding the foregoing, except as expressly
provided herein, (i) the provisions of Article VI and Article XII of the
Agreement relating to the registration, authentication, delivery, presentation,
cancellation and surrender of the Registered Securities and the provisions of
subsection 6.9(b) of the Agreement with respect to the effect that a newly
issued series of Investor Securities will be treated as debt for Federal income
tax purposes shall not be applicable to the Excess Collateral and (ii) the
provisions of Section 3.7 of the Agreement shall not apply to cause the Excess
Collateral to be treated as debt for federal, state and local income and
franchise tax purposes, but rather the Transferor intends and, together with the
Excess Collateral Holder, agrees to treat the Excess Collateral for federal,
state and local income and franchise tax purposes as representing an equity
interest in the assets of the Trust.
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 [-] Securities. All Article,
Section or subsection references herein shall mean Articles, Sections or
subsections of the
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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 [-] 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 [-] [-] 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 [-] 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 assigned
such term 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 Section 4.12 of the Agreement with respect to the Series [-]
Securities for the previous Monthly Period.
"Additional Interest" shall mean, at any time of
determination, the sum of the Class A Additional Interest and Class B 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 [-]
Percentage of the amount then on deposit in the Excess Funding Account.
"Amortization Period" shall mean the period commencing on the
Amortization Period Commencement Date and continuing until the Series [-]
Termination Date.
"Amortization Period Commencement Date" shall mean the
earliest of the first day of the Accumulation Period and the Pay Out
Commencement Date.
"Assignee" shall have the meaning specified in subsection
11(a).
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"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 [-] Finance Charge Collections" shall have
the meaning specified in subsection 4.9(a) of the Agreement.
"Available Series [-] 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 [-]
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 [-] Percentage
of any unpaid Adjustment Payments paid pursuant to subsections 4.9(a)(v) and
4.9(a)(vi) of the Agreement with respect to such period, any reimbursements of
unreimbursed Charge-Offs pursuant to subsections 4.9(a)(vii), (viii) and (ix) 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(a) and (b),
4.17(b) and 4.18(b), (c) and (d) of the Agreement and (iv) the aggregate Shared
Principal Collections allocated to the Series [-] Securities pursuant to Section
4.8 of the Agreement with respect to such period.
"Base Rate" shall mean, with respect to any Monthly Period,
the sum of (i) the weighted average of the Class A Interest Rate, the Class B
Interest Rate and the Excess Collateral Minimum Rate, in each case as of the
last day of such Monthly Period (weighted based on the Class A Invested Amount,
the Class B Invested Amount and the Excess Collateral Amount, respectively, as
of the last day of such Monthly Period) plus (ii) the product of 2.00% per annum
and the percentage equivalent of a fraction the numerator of which is the
Adjusted Invested Amount and the denominator of which is the Invested Amount,
each as of the last day of such Monthly Period.
"Carryover Class A Interest" shall mean with respect to any
Business Day (a) any Class A 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.
"Carryover Class B Interest" shall mean with respect to any
Business Day (a) any Class B Monthly Interest due but not paid on any previous
Distribution Date plus (b) any Class B Additional Interest due on the next
succeeding Distribution Date.
"Carryover Excess Collateral Minimum Interest" shall mean with
respect to any Business Day any Excess Collateral Minimum Monthly Interest due
but not paid on any previous Distribution Date.
"Charge-Offs" shall mean the sum of Class A Charge-Offs, Class
B Charge-Offs and Excess Collateral Charge-Offs.
"Class A Additional Interest" shall have the meaning specified
in subsection 4.6(a) of the Agreement.
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"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 Expected Final Payment Date" shall mean the [-] [-]
Distribution Date.
"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 $[-].
"Class A Interest Rate" shall mean [-]% per annum in excess of
LIBOR as determined on the related LIBOR Determination Date.
"Class A Interest Shortfall" shall have the meaning specified
in subsection 4.6(a) of the Agreement.
"Class A Invested Amount" shall mean, when used with respect
to any Business Day, the greater of (x) zero and (y) an amount equal to (a) the
Class A Initial Invested Amount, 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)(vii) of the Agreement plus, with
respect to such subsection, amounts applied thereto pursuant to subsections
4.10(a) and (b), 4.14(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 clause (c).
"Class A Monthly Interest" shall mean the interest
distributable in respect of the Class A Securities as calculated in accordance
with subsection 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.
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"Class A Required Amount" shall mean the amount determined by
the Servicer for each Business Day 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 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 Floating Percentage of the Series
[-] 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 [-] Finance Charge Collections plus any Excess Finance Charge Collections
from other Series and any Transferor Finance Charge Collections allocated with
respect to the amounts described in clauses (x)(i) through (v) above with
respect to such Business Days 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 A Securityholders' Interest" shall mean the portion of
the Series [-] Securityholders' Interest evidenced by the Class A Security.
"Class B Additional Interest" shall have the meaning specified
in subsection 4.6(b) of the Agreement.
"Class B Charge-Offs" shall have the meaning specified in
subsection 4.13(b) of the Agreement.
"Class B Expected Final Payment Date" shall mean the [-] [-]
Distribution Date.
"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 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 percentages with respect to Principal
Collections for all Series.
"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 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 $[-].
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"Class B Interest Rate" shall mean [-]% per annum in excess of
LIBOR as determined on the related LIBOR Determination Date.
"Class B Interest Shortfall" shall have the meaning specified
in subsection 4.6(b) of the Agreement.
"Class B Invested Amount" shall mean, when used with respect
to any Business Day, the greater of (x) zero and (y) an amount equal to (a) the
Class B Initial Invested Amount, minus (b) the aggregate amount of principal
payments made to Class B Securityholders through and including such Business
Day, minus (c) the aggregate amount of Class B Charge-Offs for all prior
Distribution Dates, minus (d) the aggregate amount of Redirected Class B
Principal Collections for which the Excess Collateral Amount has not been
reduced for all prior Distribution Dates plus (e) 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)(viii) of
the Agreement plus, with respect to such subsection, amounts applied thereto
pursuant to subsections 4.10(a) and (b), 4.14(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 (c) and (d).
"Class B Monthly Interest" shall mean the interest
distributable in respect of the Class B Securities as calculated in accordance
with subsection 4.6(b) of the Agreement.
"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
Class B Securityholders prior to such Business Day.
"Class B Percentage" shall mean a fraction the numerator of
which is the Class B Initial Invested Amount and the denominator of which is the
Initial Invested Amount.
"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 Required Amount" shall mean the amount determined by
the Servicer on each Business Day equal to the excess, if any, of (x) the sum of
(i) the Class B Monthly Interest for the Interest Accrual Period beginning in
the then current Monthly Period, (ii) any Carryover Class B Interest, (iii) the
Class B Percentage of the Servicing Fee for the then current Monthly Period,
(iv) the Class B 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, (v) the Class B Floating Percentage of the Series
[-] Percentage of the 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 and (vi) the unreimbursed
amount by which the Class B Invested Amount has been reduced on prior Business
Days pursuant to clauses (c) and (d) of the definition of Class B Invested
Amount over (y) the Available Series [-] Finance Charge Collections plus any
Excess Finance Charge Collections from other Series and any Transferor Finance
Charge Collections allocated with respect to the amounts described in clauses
(x)(i) through (vi) above with respect to such Business Days and all previous
Business Days in such Monthly Period.
"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.
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"Class B Securityholder" shall mean the Person in whose name a
Class B Security is registered in the Security Register.
"Class B Securityholders' Interest" shall mean the portion of
the Series [-] Securityholders' Interest evidenced by the Class B Security.
"Closing Date" shall mean [-] [-], [-].
"Controlled Accumulation Amount" shall mean, for any Transfer
Date with respect to the Accumulation Period (a) prior to the payment in full of
the Class A Invested Amount, $[-]; 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 and (b) after payment in full of the Class A Invested Amount, an amount
equal to the sum of the Class B Invested Amount and the Excess Collateral Amount
on such Transfer Date.
"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 as of the last day of the Monthly Period preceding the Monthly Period in
which such Interest Accrual Period ends.
"Default Amount" shall mean, (i) on any Business Day other
than the Default Recognition Date, the aggregate amount of Principal Receivables
in Accounts which became Defaulted Accounts on such Business Day and (ii) on any
Default Recognition Date the aggregate amount of Principal Receivables in
Accounts which became Defaulted Accounts during the then current Monthly Period
(other than such Accounts which were included in clause (i)).
"Default Recognition Allocation Percentage" shall mean, with
respect to each Default Recognition Date, the percentage equivalent of a
fraction, the numerator of which is the Weighted Average Invested Amount for the
related Monthly Period and the denominator of which is the Weighted Average
Principal Receivables in the Trust for the related Monthly Period.
"Default Recognition Date" shall mean the last day of each
calendar month; provided, however, that with respect to any Monthly Period the
"related Default Recognition Date" shall mean the Default Recognition Date
occurring closest to the last day of such Monthly Period and any amounts
allocated or applied on such Default Recognition Date shall be deemed to apply
to the related Monthly Period.
"Distribution Date" shall mean [-] [-], [-] and the twentieth
day of each month thereafter, or if such day is not a Business Day, the next
succeeding Business Day.
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"DTC" shall mean The Depository Trust Company.
"Early Amortization Period" shall mean the period beginning on
the earliest of (a) the day on which a Pay Out Event occurs or is deemed to have
occurred, (b) the Class A Expected Final Payment Date if the Class A Invested
Amount has not been paid in full on such date, (c) the Class B Expected Final
Payment Date if the Class B Invested Amount has not been paid in full on such
date and (d) the Excess Collateral Expected Final Payment Date if the Excess
Collateral 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, the Class B
Invested Amount and the Excess Collateral Amount have been paid in full and (ii)
the Scheduled Series [-] Termination Date.
"Enhancement" shall mean, with respect to the Class A
Securities, the subordination of the Class B Invested Amount and the Excess
Collateral Amount and the benefits of the Interest Rate Caps, with respect to
the Class B Securities, the subordination of the Excess Collateral Amount.
"Excess Collateral" shall mean a fractional undivided interest
in the Trust which shall consist of the right to receive to the extent necessary
to make the required payments to the Excess Collateral Holder under this Series
Supplement, the portion of Collections allocable thereto under the Agreement and
this Series Supplement, funds on deposit in the Collection Account allocable
thereto pursuant to the Agreement and this Series Supplement, and funds on
deposit in any other Series Account (and any investment earnings thereon, net of
investment expenses and losses, if and to the extent specifically provided
herein) allocable thereto pursuant to the Agreement and this Series Supplement.
"Excess Collateral Amount" shall mean, when used with respect
to any Business Day, the greater of (x) zero and (y) an amount equal to (a) the
Excess Collateral Initial Amount minus (b) the aggregate amount of principal
payments made to the Excess Collateral Holder through and including such
Business Day, minus (c) the aggregate amount of Excess Collateral Charge-Offs
for all prior Distribution Dates, minus (d) the aggregate amount of Redirected
Principal Collections for all prior Distribution Dates, plus (e) the sum of the
aggregate amount reimbursed with respect to reductions of the Excess Collateral
Amount through and including such Business Day pursuant to subsection 4.9(ix) of
the Agreement plus, with respect to such subsection, pursuant to subsections
4.10(a) and (b), 4.14(a), 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
(c) and (d).
"Excess Collateral Charge-Offs" shall have the meaning
specified in subsection 4.13(a) of the Agreement.
"Excess Collateral Expected Final Payment Date" shall mean the
[-] [-] Transfer Date.
"Excess Collateral Fixed/Floating Percentage" shall mean for
any Business Day the percentage equivalent of a fraction, the numerator of which
is the Excess Collateral Amount at the end of the last day of the Revolving
Period and the denominator of which is the greater of (a) the sum of the
aggregate amount of Principal Receivables and the amount on deposit in the
Excess Funding Account at the end of the preceding Business Day and (b) the sum
of the numerators with respect to all Classes of all Series then outstanding
used to calculate the applicable allocation percentages with respect to
Principal Collections for all Series.
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"Excess Collateral Floating Percentage" shall mean with
respect to any Business Day the percentage equivalent of a fraction, the
numerator of which is the Excess Collateral 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 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 the calculate the applicable allocation percentage.
"Excess Collateral Holder" shall mean the entity so designated
in writing by the Transferor to the Trustee.
"Excess Collateral Holder's Interest" shall mean the portion
of the Series [-] Securityholders' Interest evidenced by the Excess Collateral.
"Excess Collateral Initial Amount" shall mean the aggregate
initial principal amount of the Excess Collateral, which is $[-].
"Excess Collateral Interest Shortfall" shall have the meaning
specified in subsection 4.6(c) of the Agreement.
"Excess Collateral Minimum Monthly Interest" shall mean the
interest distributable in respect of the Excess Collateral as calculated in
accordance with subsection 4.6(c) of the Agreement.
"Excess Collateral Minimum Rate" shall mean, for any Interest
Accrual Period, the rate per annum specified in the Transfer and Administration
Agreement; provided, however, that the Excess Collateral Minimum Rate shall not
exceed a rate of [-]% per annum in excess of LIBOR as determined on the related
LIBOR Determination Date.
"Excess Collateral Monthly Principal" shall mean the principal
distributable in respect of the Excess Collateral as specified in subsection
4.7(c) of this Agreement.
"Excess Collateral Notional Percentage" shall mean [-]%.
"Excess Collateral Outstanding Principal Amount" shall mean,
when used with respect to any Business Day, and amount equal to (a) the Excess
Collateral Initial Amount minus (b) the aggregate amount of principal payments
made to the Excess Collateral Holder prior to such Business Day.
"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) of the Agreement allocated to the Series [-] 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 [-] Securities.
"FASIT" shall have the meaning specified in Section 17 of this
Series Supplement.
"Fitch" shall mean Fitch, Inc., or its successor.
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"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 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, Class B Floating Percentage and
Excess Collateral Floating Percentage for such Business Day.
"Initial Invested Amount" shall mean $[-].
"Interest Accrual Period" shall mean, with respect to a
Distribution Date, the period from and including the preceding Distribution Date
to but excluding such Distribution Date; provided, however, that the initial
Interest Accrual Period shall be the period from the Closing Date to but
excluding the initial Distribution Date.
"Invested Amount" shall mean, when used with respect to any
Business Day, an amount equal to the sum of (a) the Class A Invested Amount, (b)
the Class B Invested Amount and (c) the Excess Collateral 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).
"Investment Letter" shall have the meaning specified in
subsection 11(a).
"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, the
Class B Securities, and the Excess Collateral.
"Investor Securityholder" shall mean the Holder of record of
an Investor Security of Series [-].
"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.
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"LIBOR Determination Date" shall mean [-] [-], [-] with
respect to the period from the Closing Date through [-] [-], [-] and the second
Business Day prior to the commencement of each Interest Accrual Period beginning
with the Interest Accrual Period commencing on [-] [-], [-]. 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 [-]
Securities shall begin on and include the Closing Date and shall end on and
include [-] [-], [-].
"Negative Carry Amount" shall have the meaning specified in
subsection 4.10(a) of the Agreement.
"Paired Series" shall have the meaning specified in Section 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 [-] Pay Out Event is deemed to occur pursuant to Section 8 of this
Series Supplement.
"Paying Agent" shall mean, for the Series [-] 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.
"Permitted Assignee" shall mean any Person who, if it were the
Excess Collateral Holder or holder of an interest in the Trust, as applicable,
would not cause the Trust to be characterized as a publicly traded partnership
taxable as a corporation for federal income tax purposes.
"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 [-] 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 [-] 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 [-] Percentage of any Adjustment Payments which
the Transferor is required but fails to make pursuant to the Agreement for such
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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 [-] 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.
"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 [-], (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.
"Rating Agencies" shall mean Standard & Poor's, Xxxxx'x and
Fitch.
"Redirected Class B Principal Collections" shall have the
meaning specified in subsection 4.14(b) of the Agreement.
"Redirected Excess Collateral Principal Collections" shall
have the meaning specified in subsection 4.14(a) of the Agreement.
"Redirected Principal Collections" shall mean the sum of
Redirected Class B Principal Collections and Redirect Excess Collateral
Principal Collections.
"Reference Banks" shall mean four major banks in the London
interbank market selected by the Servicer.
"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.
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"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 the Rating
Agency Condition has been satisfied and (ii) delivered to the Trustee a
certificate of an authorized officer to the effect that, based on the facts
known to such officer at such time, in the reasonable belief of the Transferor,
such designation will not cause a Pay Out Event or an event that, after giving
of notice or the lapse of time, would cause a Pay Out Event to occur with
respect to Series [-].
"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 [-] Termination Date" shall mean the [-] [-]
Distribution Date.
"Series [-]" shall mean the Series of the Metris Master Trust
represented by the Series [-] Securities.
"Series [-] Pay Out Event" shall have the meaning specified in
Section 8 of this Series Supplement.
"Series [-] 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 [-] Securities" shall mean the Class A Securities, the
Class B Securities and the Excess Collateral.
"Series [-] Securityholder" shall mean the holder of record of
any Series [-] Security.
"Series [-] Securityholders' Interest" shall have the meaning
specified in Section 4.4 of the Agreement.
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"Series [-] Termination Date" shall mean the earlier to occur
of (i) the day after the Distribution Date on which the Series [-] Securities
are paid in full, or (ii) the Scheduled Series [-] Termination Date.
"Series Default Amount" shall mean, with respect to each
Business Day, an amount equal to the product of the Default Amount identified
since the prior reporting date and the Floating Percentage applicable for such
Business Day.
"Series Servicing Fee Percentage" shall mean 2.00% per annum.
"Servicing Fee" shall mean for any Monthly Period, an amount
equal to the product of (i) a fraction the numerator of which is the actual
number of days in such Monthly Period and the denominator of which is 365 or
366, (ii) the 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.
"Shared Principal Collections" shall mean, as the context
requires, either (a) the amount allocated to the Series [-] 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 [-] Securities.
"Termination Payment Date" shall mean the earlier of the first
Distribution Date following the liquidation or sale of the Receivables as a
result of an Insolvency Event and the occurrence of the Scheduled Series [-]
Termination Date.
"Transfer" shall have the meaning specified in Section 11 of
this Series Supplement.
"Transfer and Administration Agreement" shall mean the
agreement among the Transferor, Metris, as administrator, and the Excess
Collateral Holder, dated as of [-] [-], [-], as amended or modified from time to
time, relating to the transfer of the Excess Collateral.
"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 [-] Percentage.
"Transferor Retained Securities" shall mean investor
securities of any Series which the Transferor is required to retain pursuant to
the terms of any Supplement and with respect to Series [-], the portion of the
Excess Collateral represented by the Owner Certificate in the Metris Secured
Note Trust [-] for so long as the Owner Certificate is retained by the
Transferor.
"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)(v) 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
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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 [-] Securities shall
be subject to termination by the Transferor at its option, in accordance with
the terms specified in subsection 12.2(a) of the Agreement, on any Distribution
Date on or after the Distribution Date on which the Invested Amount would be
reduced to an amount less than or equal to 10% of the highest Invested Amount
during the Revolving Period. 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 Series [-] 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 4. Delivery and Payment for the Class A Securities and
the Class B Securities. The Transferor shall execute and deliver the Class A
Securities and the Class B Securities to the Trustee for authentication in
accordance with Section 6.1 of the Agreement. The Trustee shall deliver the
Class A Securities and the Class B 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 the Class A Securities and the
Class B Securities; Denominations.
(a) The Class A Securities and the Class B Securities, shall
be delivered as Book-Entry Securities as provided in Sections 6.1 and 6.10 of
the Agreement. The Class A Securities and the Class B Securities shall be issued
in minimum denominations of $1,000 and integral multiples thereof.
(b) The Depositary for the Class A Securities and the Class B
Securities shall be DTC and the Class A Securities and the Class B 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 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 [-]
Securities:
ARTICLE IV
RIGHTS OF SECURITYHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS
SECTION 4.4. Rights of Securityholders. The Series [-]
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 [-] Securities at the times and in the amounts specified in this
Agreement, (a) the Floating Percentage and the Fixed/Floating Percentage (as
applicable
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from time to time) of Collections (including Finance Charge Collections)
available in the Collection Account, (b) funds allocable to the Series [-]
Securities on deposit in the Excess Funding Account and (c) funds on deposit in
the Interest Funding Account, the Principal Account, the Principal Funding
Account, the Accumulation Period Reserve Account, the Distribution Account and
the Payment Reserve Account (for such Series, the "Series [-] Securityholders'
Interest"). The Class B Securities and the Excess Collateral shall be
subordinated to the Class A Securities; and the Excess Collateral shall be
subordinated to the Class B Securities. 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. The Excess Collateral will not have the right to receive
payments of principal until the Transfer Date immediately preceding the
Distribution Date on which the Class B Invested Amount will be 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 [-] Securities,
and all funds on deposit in the Interest Funding Account, the Principal Account,
the Principal Funding Account, the Accumulation Period Reserve Account, the
Distribution Account 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 [-] 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 [-] 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 [-] 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
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 [-]
Securities.
(a) 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
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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 Class A Securityholders, equal to the product of
(i) the Class A Interest Rate, (ii) a fraction the numerator of which is the
actual number of days in the related Interest Accrual Period and the denominator
of which is 360 and (iii) such Class A Interest Shortfall remaining unpaid.
Notwithstanding anything to the contrary herein, Class A Additional Interest
shall be payable or distributed to Class A Securityholders only to the extent
permitted by applicable law.
(b) The amount of monthly interest (the "Class B Monthly
Interest") which shall accrue for the benefit of the Class B Securities with
respect to any Interest Accrual Period shall be an amount equal to the product
of (i) the Class B 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 B 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 B Interest Shortfall") equal
to the excess, if any, of (x) the aggregate Class B Interest for the Interest
Accrual Period applicable to the Distribution Date over (y) the amount available
to be paid to the Class B Securityholders in respect of interest on such
Distribution Date. If there is a Class B Interest Shortfall with respect to any
Distribution Date, an additional amount ("Class B Additional Interest") shall be
payable as provided herein with respect to the Class B Securities on each
Distribution Date following such Distribution Date, to and including the
Distribution Date on which such Class B Interest Shortfall is paid to Class B
Securityholders, equal to the product of (i) the Class B Interest Rate, (ii) a
fraction the numerator of which is the actual number of days in the related
Interest Accrual Period and the denominator of which is 360 and (iii) such Class
B Interest Shortfall remaining unpaid. Notwithstanding anything to the contrary
herein, Class B Additional Interest shall be payable or distributed to Class B
Securityholders only to the extent permitted by applicable law.
(c) The amount of monthly interest (the "Excess Collateral
Minimum Monthly Interest") which shall accrue for the benefit of the Excess
Collateral with respect to any Interest Accrual Period shall be an amount equal
to the product of (i) the Excess Collateral Minimum 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 Excess Collateral Outstanding
Principal Amount as of the close of business on the first day of such Interest
Accrual Period.
SECTION 4.7. Determination of Principal Amounts. (a) The
amount of principal (the "Class A Principal") distributable from the
Distribution Account or available for deposit into
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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 [-] Principal Collections on deposit in the
Principal Account with respect to the related Transfer Date, (ii) for each
Distribution Date with respect the Accumulation Period, prior to the payment in
full of the Class A Invested Amount and on or prior to the Class A 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 (x) during the
Accumulation Period, the Distribution Date following the Distribution Date on
which the Class A Invested Amount is paid in full and (y) during the Early
Amortization Period, the Distribution Date on which the Class A Invested Amount
is paid in full, shall be equal to the lesser of (i) the Available Series [-]
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, and (ii) the Class B Invested Amount on such Transfer Date.
(c) The amount of principal (the "Excess Collateral Monthly
Principal") distributable from the Distribution Account with respect to the
Excess Collateral for each Transfer Date, beginning with the Transfer Date
immediately preceding the Distribution Date on which the Class B Invested Amount
will be paid in full, prior to payment in full of the Excess Collateral Amount,
shall be equal to the lesser of (i) the Available Series [-] Principal
Collections remaining on deposit in the Principal Account with respect to the
related Transfer Date after application thereof to Class A Principal and Class B
Principal, if any, and (ii) the Excess Collateral Amount on such Transfer Date.
SECTION 4.8. Shared Principal Collections. Shared Principal
Collections allocated to Available Series [-] Principal Collections for the
Series [-] Securities and to be applied to Class A Principal, Class B Principal
and Excess Collateral Monthly Principal pursuant to subsection 4.9(c)(i)(y) 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 [-] 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 [-] Principal
Collections for the Series [-] 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, to the extent of
the sum of (w) prior to the Pay Out Commencement Date, the Floating Percentage
of the sum of Finance Charge Collections and the amount of Adjustment Payments
made by the Transferor with respect to Adjustment Payments required to be made
but not made in a prior Monthly Period, available in the Collection Account or,
on and after the Pay Out Commencement Date, the Fixed/Floating Percentage of the
sum of Finance Charge Collections and the amount of Adjustment Payments made by
the Transferor with respect to Adjustment Payments required to be made but not
made in a prior Monthly Period, available in the Collection Account, (x)
Investment Earnings on deposit in the Collection Account and (y) amounts on
deposit in the Payment Reserve Account, if any, if and to the extent the
Transferor designates that such amounts are to be so
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applied (the "Available Series [-] Finance Charge Collections") the amounts
required to be withdrawn from the Collection Account pursuant to subsections
4.9(a)(i) through 4.9(a)(xi) 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 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 [-]
Finance Charge Collections for such Business Day, an amount equal to
the lesser of (x) the Available Series [-] 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) Class B Interest. On each Business Day during a Monthly
Period, the Trustee, acting in accordance with instructions from the
Servicer, shall withdraw first 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 B
Securityholders, to the extent of any Available Series [-] Finance
Charge Collections remaining after giving effect to the withdrawal
pursuant to subsection 4.9(a)(i) of the Agreement, an amount equal to
the lesser of (x) any such remaining Available Series [-] Finance
Charge Collections and (y) the excess of (1) the sum of Class B Monthly
Interest for the Interest Accrual Period beginning in such Monthly
Period and Carryover Class B Interest over (2) any amounts with respect
thereto previously deposited into the Interest Funding Account on any
prior Business Day during such Monthly Period. Notwithstanding anything
to the contrary herein, the portion of Carryover Class B Interest that
constitutes Class B Additional Interest shall be payable or
distributable to Class B Securityholders only to the extent permitted
by applicable law.
(iii) Excess Collateral Minimum 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
Collection Account and then from the Payment Reserve Account, and
distribute to the Excess Collateral Holder, on such Business Day, to
the extent of any Available Series [-] 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 [-] Finance Charge
Collections and (y) the excess of (1) the sum of Excess Collateral
Minimum Monthly Interest for the Interest Accrual Period beginning in
such Monthly Period and Carryover Excess Collateral Minimum Interest
over (2) any amounts with respect thereto previously distributed to the
Excess Collateral Holder on any prior Business Day during such Monthly
Period. Notwithstanding anything to the contrary herein, the portion of
Carryover Excess Collateral Minimum Interest that constitutes Excess
Collateral Additional
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Interest shall be payable or distributable to Excess Collateral Holders
only to the extent permitted by applicable law.
(iv) Investor Servicing Fee. On each Business Day, the
Trustee, acting in accordance with instructions from the Servicer,
shall withdraw first from the Collection Account and then from the
Payment Reserve Account, and distribute to the Servicer, to the extent
of any Available Series [-] Finance Charge Collections remaining after
giving effect to the withdrawals pursuant to subsection 4.9(a)(i)
through (iii) of the Agreement, an amount equal to the lesser of (x)
any such remaining Available Series [-] Finance Charge Collections and
(y) the excess of (i) the Servicing Fee for such Monthly Period plus
any unpaid Servicing Fees from prior Monthly Periods over (ii) any
amounts with respect thereto previously distributed to the Servicer
during such Monthly Period.
(v) Series Default Amount. On each Business Day, first if
such day is the Default Recognition Date for the related Monthly
Period, the Transferor will deposit (as described below) an amount
equal to the amount paid to the Transferor pursuant to subsection 3.02
(a)(vii) of the Transfer and Administration Agreement on each Business
Day other than a Default Recognition Date to be treated as "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
Collection Account and then from the Payment Reserve Account, to the
extent of any Available Series [-] 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 [-] 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 [-] Principal
Collections during the Amortization Period.
(vi) Adjustment Payment Shortfalls. On each Business Day, the
Trustee, acting in accordance with instructions from the Servicer,
shall withdraw first from the Collection Account and then from the
Payment Reserve Account, to the extent of any Available Series [-]
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 [-] Finance Charge Collections and (y) an amount equal
to the Series [-] 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 [-] Principal
Collections.
(vii) Reimbursement of Class A Charge-Offs. On each Business
Day, the Trustee, acting in accordance with instructions from the
Servicer, shall
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withdraw first from the Collection Account and then from the Payment
Reserve Account, to the extent of any Available Series [-] 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
[-] Finance Charge Collections and (y) the unreimbursed Class A
Charge-Offs, if any, will be applied to reimburse Class A Charge-Offs,
such amount during the Revolving Period, to be treated as Shared
Principal Collections, and during the Amortization Period, to be
treated as Available Series [-] Principal Collections.
(viii) 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 Collection Account and then
from the Payment Reserve Account, to the extent of any Available Series
[-] 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 [-] Finance Charge Collections and (y) the
unreimbursed amount by which the Class B Invested Amount has been
reduced on prior Business Days pursuant to clauses (c) and (d) of the
definition of Class B Invested Amount, if any, such amount, (i) during
the Revolving Period, to be treated as Shared Principal Collections,
and (ii) during the Amortization Period, to be treated as Available
Series [-] Principal Collections.
(ix) Reimbursement of Excess Collateral Charge-Offs. On each
Business Day, the Trustee, acting in accordance with instructions from
the Servicer, shall withdraw first from the Collection Account and then
from the Payment Reserve Account, to the extent of any Available Series
[-] 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 [-] Finance Charge Collections and (y) the
unreimbursed amount by which the Excess Collateral Amount has been
reduced on prior Business Days pursuant to clauses (c) and (d) of the
definition of Excess Collateral Amount, if any, such amount, (i) during
the Revolving Period, to be treated as Shared Principal Collections,
and (ii) during the Amortization Period, to be treated as Available
Series [-] Principal Collections.
(x) 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 Collection Account and then from the Payment Reserve Account,
and distribute to the Servicer, to the extent of any Available Series
[-] 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 [-] Finance Charge Collections and (y) the excess, if
any, of the Required Reserve Account Amount over the Available Reserve
Account Amount and the Servicer shall deposit such amount, if any, in
the Accumulation Period Reserve Account.
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(xi) Payments to Excess Collateral Holder. Any amounts
remaining in the Collection Account and the Payment Reserve Account, to
the extent of any Available Series [-] Finance Charge Collections
remaining after giving effect to the withdrawals pursuant to
subsections 4.9(a)(i) through (x) of the Agreement, shall be
distributed to the Excess Collateral Holder.
On each Business Day during a Monthly Period, any amount
distributed to the Trustee pursuant to subsection 3.02(a)(v) of the Transfer and
Administration Agreement to be deposited in the Payment Reserve Account shall be
deposited in the Payment Reserve Account.
On each Business Day during a Monthly Period, any amount
distributed to the Trustee pursuant to subsection 3.02(a)(vi) of the Transfer
and Administration Agreement shall be treated as Excess Finance Charge
Collections, and the Servicer shall direct the Trustee in writing on each
Business Day to first make such amounts available to pay 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.
Notwithstanding the foregoing, if on any Default Recognition
Date the sum of the amount of Available Series [-] Finance Charge Collections
(including, all amounts on deposit in the Payment Reserve Account) remaining
after application pursuant to subsection 4.9(a)(iv) and Transferor Retained
Finance Charge Collections is less than the Series Default Amount for such
Default Recognition Date, the Servicer shall apply (i) amounts deposited in the
Accumulation Period Reserve Account pursuant to subsection 4.9(a)(x) of the
Agreement during the then current Monthly Period and (ii) any amount distributed
to the Trustee pursuant to subsection 3.02(a) of the Transfer and Administration
Agreement for application in accordance with the instructions of the Servicer in
respect of such shortfall, in accordance with subsection 4.9(a)(v) 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 [-]
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)(v),
(vi), (vii), (viii) and (ix) of the Agreement from Available Series [-]
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 [-]
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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.
(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, the Class B Principal and the Excess
Collateral Monthly 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 [-]
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 [-] Finance Charge
Collections in subsections 4.9(a)(i) through (xi) of the Agreement, Transferor
Finance Charge Collections in an amount equal to the excess of (x) the product
of (a) the Base Rate, (b) the amounts on deposit in the Excess Funding Account
and (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 (the "Negative
Carry Amount").
(b) To the extent that on any Business Day payments are being
made pursuant to any of subsections 4.9(a)(i) through (x) 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 [-] Finance Charge Collections in subsections 4.9(a)(i) through
(x) 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 [-]
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 [-] Finance Charge Collections and
Transferor Finance Charge Collections on such Business Day (the "Required
Amount").
Excess Finance Charge Collections allocated to the Series [-]
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
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 Class A Securities and
Class B Securities. 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
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Account with respect to the preceding Monthly Period allocable to the Class A
Securities and the Class B Securities and deposit such amount in the
Distribution Account. On each Distribution Date, the Paying Agent shall pay in
accordance with Section 5.1 of the Agreement to (x) the Class A Securityholders
from the Distribution Account such amount deposited into the Distribution
Account on the related Transfer Date allocable thereto pursuant to subsection
4.9(a)(i) of the Agreement and (y) the Class B Securityholders from the
Distribution Account the amount deposited into the Distribution Account on the
related Transfer Date allocable thereto pursuant to subsections 4.9(a)(ii) 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 Class A Expected Final Payment Date with respect to the
Accumulation Period following any deposit to the Distribution Account pursuant
to subsection 4.12(e) 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) (i) During the Accumulation Period, on each Transfer Date
after the Distribution Date on which the Class A Invested Amount is paid in full
and (ii) during the Early Amortization Period on each Transfer Date commencing
with the Transfer Date immediately preceding the Distribution Date on which the
Class A Invested Amount will be paid in full, 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 and after the Class A Invested
Amount has been paid in full, and on each Distribution Date thereafter until the
Class B Invested Amount is paid in full, 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.
(c) On the Transfer Date immediately preceding the
Distribution Date on which the Class B Invested Amount will be paid in full and
on each Transfer Date thereafter, the Trustee, acting in accordance with
instructions from the Servicer set forth in the Daily Report for such day, shall
withdraw from the Principal Account and deposit in the Distribution Account, to
the extent of funds available, an amount equal to the Excess Collateral Monthly
Principal for such Transfer Date. On and after the Transfer Date immediately
preceding the Distribution Date on which the Class B Invested Amount will be
paid in full, and on each Distribution Date thereafter until the Excess
Collateral Amount is paid in full, the Paying Agent shall pay in accordance with
Section 5.1 of the Agreement to the Excess Collateral Holder from the
Distribution Account such amounts deposited with respect to Excess Collateral
Monthly Principal into the Distribution Account on such Transfer Date.
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(d) Any amounts remaining in the Principal Account and
allocable to the Series [-] Securities, after the Excess Collateral Amount has
been paid in full, will be treated as Shared Principal Collections and applied
in accordance with Section 4.3(d) of the Agreement.
(e) 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 Class A 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 the 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 [-] Percentage of
unpaid Adjustment Payments, if any, for each Business Day in the preceding
Monthly Period exceeded the Available Series [-] Finance Charge Collections
applied to the payment thereof pursuant to subsections 4.9(a)(v) and (vi) of the
Agreement, the amount of Transferor Finance Charge Collections and Excess
Finance Charge Collections allocated thereto pursuant to Section 4.10 of the
Agreement, the amount of 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 [-] Percentage of unpaid Adjustment
Payments with respect to such Monthly Period, the Excess Collateral Amount will
be reduced by the amount by which the remaining aggregate Series Default Amount
and Series [-] Percentage of unpaid Adjustment Payments exceed the amount
applied with respect thereto during such preceding Monthly Period (an "Excess
Collateral Charge-Off").
(b) In the event that any such reduction of the Excess
Collateral Amount would cause the Excess Collateral Amount to be a negative
number, the Excess Collateral Amount will be reduced to zero, and the Class B
Invested Amount will be reduced by the amount by which the Excess Collateral
Amount would have been reduced below zero, but not more than the remaining
aggregate Series [-] Default Amount and Series [-] Percentage of unpaid
Adjustment Payments for such Monthly Period (a "Class B Charge-Off").
(c) In the event that any such reduction of the Class B
Invested Amount would cause the Class B Invested Amount to be a negative number,
the Class B Invested Amount will be reduced to zero, and the Class A Invested
Amount will be reduced by the amount by which the Class B Invested Amount would
have been reduced below zero, but not more than the remaining aggregate Series
[-] Default Amount and Series [-] Percentage of unpaid Adjustment Payments for
such Monthly Period (a "Class A Charge-Off").
SECTION 4.14. Redirected Principal Collections for the Series
[-] Securities.
(a) On each Business Day, the Servicer will determine an
amount equal to the least of (i) the Excess Collateral Amount, (ii) the product
of (x)(I) during the Revolving Period, the Excess Collateral Floating Percentage
or (II) during an Amortization Period, the Excess Collateral Fixed/Floating
Percentage and (y) the amount of Principal Collections for such Business Day and
(iii) an amount equal to the sum of (a) the Class A Required Amount for such
Business Day and (b) the Class B Required Amount for such Business Day (such
amount called "Redirected Excess
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Collateral Principal Collections") and shall apply Principal Collections in an
amount equal to such amount first to the components of the Class A Required
Amount and then to the components of the Class B Required Amount in the same
priority as amounts are applied to such components from Available Series [-]
Finance Charge Collections pursuant to subsection 4.9(a) of the Agreement.
(b) On each Business Day, the Servicer will determine an
amount equal to the least of (i) the Class 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 excess, if any, of the Class A Required Amount for such
Business Day over the amount of Redirected Excess Collateral Principal
Collections applied with respect thereto for such Business Day (such amount
called "Redirected Class B 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
[-] 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 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 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 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."
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(b) The Transferor, at its discretion, may on any Business Day
withdraw all or a part of any amounts then on deposit in the Payment Reserve
Account and apply such funds as Available Series [-] Finance Charge Collections
in accordance with Section 4.9(a) of the Agreement.
(c) Funds on deposit in the Payment Reserve Account shall be
invested in Cash Equivalents by the Trustee (or, at the direction of the
Trustee, by the Servicer on behalf of the Trustee) at the direction of the
Servicer. Funds on deposit in the Payment Reserve Account on any Business Day,
after giving effect to any withdrawals from the Payment Reserve Account, shall
be invested in Cash Equivalents that will mature so that such funds will be
available for withdrawal on or prior to the following Business Day. The proceeds
of any such investments shall be invested in Cash Equivalents that will mature
so that such funds will be available for withdrawal on or prior to the following
Business Day. 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 Proceeds for
application as Available Series [-] 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 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 [-] 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 [-] 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, but not in
excess of the Covered Amount, and shall apply such amount as if such amounts
were Available Series [-] 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.
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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 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 [-] 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 [-] 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)(x) 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 deposited in the Collection Account and treated as
Investment Proceeds for application as Available Series [-] 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 [-] 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 Class A 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 [-] 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 Class A 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 [-] Finance Charge Collections
available to be applied pursuant to subsection 4.9(a) on the last Business Day
of the preceding Monthly Period.
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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 [-] [-] Monthly Period; provided, however, that, if the
Accumulation Period Length (determined as described below) is less than [12]
months, the date on which the Accumulation Period actually commences may, at the
option of the Servicer, upon written notice to the Trustee, be delayed to the
first Business Day of the month that is the number of months prior to the
Expected Final Payment Date at least equal to the Accumulation Period Length
and, as a result, the number of Monthly Periods in the Accumulation Period will
at least equal the Accumulation Period Length. On each Determination Date
beginning on the [-] [-] 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, (y) in the Principal Account, an amount equal to
the sum of the Class B Outstanding Principal Balance and Excess Collateral
Outstanding Principal Balance and (z) in the Accumulation Period Reserve
Account, an amount equal to or greater than the accrued and unpaid interest on
the Investor Securities through the day preceding the date on which the
Defeasance occurs; (ii) the Transferor shall have delivered to the Trustee (a)
an Opinion of Counsel to the effect that such deposit will not result in the
Trust being required to register as an "investment company" within the meaning
of the Investment Company Act of 1940, as amended, (b) an Opinion of Counsel to
the effect that following such deposit none of the Trust, the Accumulation
Period Reserve Account or the Principal Funding Account will be deemed to be an
association (or publicly traded partnership) taxable as a corporation, (c) a
certificate of an officer of the Transferor stating that the Transferor
reasonably believes that such deposit will not cause a Pay Out Event or any
event that, with the giving of notice or the lapse of time, or both, would
constitute a Pay Out Event, to occur; and (iii) a Ratings Event will not occur,
the Series [-] 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 assets and the percentages applicable to the allocation to the
Series [-] Securityholders of Principal Collections, Finance Charge Collections
and Defaulted Receivables 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 [-] 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 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
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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 Trustee and the Paying Agent pursuant to subsection 3.4(c) of
the Agreement) to each Class B Securityholder of record other than the
Transferor 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 each Class B Securityholder pursuant to Sections 4.11 and 4.12 of the
Agreement by check mailed to each Class B Securityholder at such
Securityholder's address as it appears on the Security Register or, in the case
of Class B Securityholders holding Class B Securities evidencing Undivided
Interest aggregating not less than 80% of the Invested Amount, by wire transfer,
at the expense of such 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 Securityholder
and the Rating Agencies a statement substantially in the form of Exhibit B
prepared by the Servicer and delivered to the Trustee and the Paying Agent on
the preceding Determination Date setting forth the following information (which,
in the case of (i), (ii) and (iii) below, shall be stated on the basis of an
original principal amount of $1,000 per 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, Class B Principal and Excess Collateral Monthly
Principal;
(iii) the amount of such distribution allocable to
Class A Monthly Interest and Carryover Class A Monthly Interest Class B
Monthly Interest and Carryover Class B Monthly Interest and Excess
Collateral Minimum Monthly Interest and Carryover Excess Collateral
Minimum 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, the Class B Securities
and the Excess Collateral, respectively;
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35
(v) the amount of Finance Charge Collections
processed during the preceding Monthly Period and allocated in respect
of the Class A Securities, the Class B Securities and the Excess
Collateral, 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 Excess Collateral 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,
Class B Charge-Offs and Excess Collateral Charge-Offs for the preceding
Monthly Period;
(x) the amount of the Servicing Fee for the
preceding Monthly Period;
(xi) the amount of unreimbursed Redirected Class B
Principal Collections and Redirected Excess Collateral 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; and
(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
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of the related Transfer Date, and the Covered Amount for the related
Interest Accrual Period.
(b) Annual Securityholders' Tax Statement. On or before
January 31 of each calendar year, beginning with calendar year [-], the Paying
Agent shall distribute to each Person who at any time during the preceding
calendar year was a Series [-] Securityholder, a statement prepared by the
Servicer containing the information required to be contained in the regular
report to Series [-] 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 [-] Securityholder, together with, on or
before January 31 of each year, beginning in 2002, such other customary
information (consistent with the treatment of the Series [-] Securities as debt)
as the Trustee or the Servicer deems necessary or desirable to enable the Series
[-] Securityholders to prepare their tax returns. Such obligations of the
Servicer shall be deemed to have been satisfied to the extent that substantially
comparable information shall be provided by the Trustee pursuant to any
requirements of the Internal Revenue Code as from time to time in effect.
Section 8. Series [-] Pay Out Events. If any one of the
following events shall occur with respect to the Series [-] 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 [-] Securityholders 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 [-] Securities
evidencing Undivided Interests aggregating not less than 50 percent of the
Invested Amount and continues to affect materially and adversely the interests
of the Series [-] Securityholders 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 [-] Securities evidencing Undivided Interests aggregating more than
50% of the Invested Amount of this Series [-], and (ii) as a result of which the
interests of the Series [-] Securityholders are materially and adversely
affected and continue to be materially and adversely affected for such period;
provided, however, that a Series [-] 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;
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37
(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 [-] 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,
the Class B Outstanding Principal Amount and the Excess Collateral 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; or
(e) any Servicer Default shall occur which would have a
material adverse effect on the Series [-] Securityholders;
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 [-] Securities evidencing Undivided Interests aggregating more
than 50% of the Invested Amount of this Series [-], by notice then given in
writing to the Trustee, the Transferor and the Servicer may declare that a pay
out event (a "Series [-] Pay Out Event") has occurred as of the date of such
notice, and in the case of any event described in subparagraphs (c) or (d), a
Series [-] Pay Out Event shall occur without any notice or other action on the
part of the Trustee or the Series [-] Securityholders immediately upon the
occurrence of such event.
Section 9. Series [-] Termination. The right of the Series
[-] Securityholders to receive payments from the Trust will terminate on the
first Business Day following the Series [-] 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 [-] Securityholders shall remain entitled to receive proceeds of such
sale when such sale occurs.
Section 10. Legends; Transfer and Exchange; Restrictions on
Transfer of Class A Securities and Class B Securities. (a) Each Class A Security
and Class B Security that is a Global Security deposited with DTC, or a
custodian on behalf of DTC, shall bear the following 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 ISSUER 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
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38
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
(b) Each Class B Security will bear an additional legend
substantially in the following form:
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE BENEFIT OF
METRIS RECEIVABLES, INC. AND THE TRUSTEE THAT SUCH PURCHASER IS NOT (I)
AN EMPLOYEE BENEFIT PLAN (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA")) THAT IS
SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (II) A PLAN DESCRIBED IN
SECTION 4975(e)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
(THE "CODE") 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).
Section 11. Transfers of the Excess Collateral.
(a) Unless otherwise consented to by the Transferor, no
portion of the Excess Collateral or any interest therein may be sold, conveyed,
assigned, hypothecated, pledged, participated, exchanged or otherwise
transferred (each, a "Transfer") except in accordance with this Section 11 and
only to a Permitted Assignee. Any attempted or purported transfer, assignment,
exchange, conveyance, pledge, hypothecation or grant other than to a Permitted
Assignee shall be void. Unless otherwise consented to by the Transferor, no
portion of the Excess Collateral or any interest therein may be Transferred to
any Person (each such Person acquiring the Excess Collateral or any interest
therein, an "Assignee") unless such Assignee shall have executed and delivered
to the Transferor on or before the effective date of any Transfer a letter
substantially in the form attached hereto as Exhibit C (an "Investment Letter"),
executed by such Assignee, with respect to the related Transfer to such Assignee
of all or a portion of the Excess Collateral.
(b) Each Assignee will certify that the Excess Collateral or
the interest therein purchased by such Assignee will be acquired for investment
only and not with a view to any public distribution thereof, and that such
Assignee will not offer to sell or otherwise dispose of the Excess Collateral or
any interest therein so acquired by it in violation of any of the registration
requirements of the Securities Act, or any applicable state or other securities
laws. Each Assignee will acknowledge and agree that (i) it has no right to
require the Transferor to register under the Securities Act or any other
securities law the Excess Collateral or the interest therein to be acquired
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39
by the Assignee and (ii) the sale of the Excess Collateral is not being made by
means of the Prospectus. Each Assignee will agree with the Transferor that: (a)
such Assignee will deliver to the Transferor on or before the effective date of
any Transfer a letter in the form annexed hereto as Exhibit C (an "Investment
Letter"), executed by such Assignee with respect to the purchase by such
Assignee of all or a portion of the Excess Collateral and (b) all of the
statements made by such Assignee in its Investment Letter shall be true and
correct as of the date made.
(c) No portion of the Excess Collateral or any interest
therein may be Transferred to, and each Assignee will certify that it is not,
(a) 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, (b) 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, (c) 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, (d) 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 (e) a person investing plan assets of any such plan
(including without limitation, for purposes of clause (d) and this clause (e),
as applicable, an insurance company general account, but excluding any entity
registered under the Investment Company Act of 1940, as amended).
(d) This Section 11 shall not apply to the transfer and pledge
of the Excess Collateral on the Closing Date by the Transferor pursuant to the
Transfer and Administration Agreement or by the Metris Secured Note Trust [-] to
the Indenture Trustee (as defined in the Transfer and Administration Agreement)
pursuant to the Indenture (as defined in the Transfer and Administration
Agreement).
(e) The Excess Collateral shall be delivered in uncertificated
form.
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
[-] Securityholders.
SECTION 13. [Reserved].
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
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
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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 [-]
Securityholder, by acquiring an interest in a Series [-] 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, and prior to the commencement of the Early Amortization
Period, the Series [-] 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 Securityholders. As principal is deposited in the
Principal Account or the Principal Funding Account or is paid with respect to
the Series [-] 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 [-] 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
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 Securityholders 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 to omit 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.
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IN WITNESS WHEREOF, the Transferor, the Servicer and the
Trustee have caused this Series [-] Supplement to be duly executed by their
respective officers as of the day and year first above written.
METRIS RECEIVABLES, INC.
Transferor
By:
---------------------------------------
Name:
Title:
DIRECT MERCHANTS CREDIT CARD BANK,
NATIONAL ASSOCIATION
Servicer
By:
---------------------------------------
Name:
Title:
U.S. BANK NATIONAL ASSOCIATION
Trustee
By:
---------------------------------------
Name:
Title:
42
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.
A-1-1
43
No. $
------ ---------
CUSIP NO.
---------
METRIS MASTER TRUST
FLOATING RATE ASSET BACKED
SECURITY, SERIES [-], 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 Amended and Restated Pooling and Servicing
Agreement, dated as of July 30, 1998 (the "Pooling and Servicing Agreement";
such term to include any amendment, supplement or other modification thereto) by
and between the Transferor, Direct Merchants Credit Card Bank, National
Association, as Servicer (the "Servicer"), and U.S. Bank National Association
(as successor to The Bank of New York (Delaware)), as Trustee (the "Trustee"),
and the Series [-] Supplement, dated as of [-] [-], [-] (the "Series [-]
Supplement"), among the Transferor, the Servicer and the Trustee. The Pooling
and Servicing Agreement, as supplemented by the Series [-] 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 Floating Rate Asset Backed Securities, Series [-], 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 Floating Rate Asset Backed Securities,
Series [-], Class B (the "Class B Securities" and collectively with the Class A
Securities, the "Offered Securities") with the intention that the Offered
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.
X-0-0
00
Xx principal will be payable to the Class A Securityholders
until the earlier of the Class A 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 until all principal payments have been made to the Class
A Securityholders.
Interest on the Class A Securities will be payable on [-] [-],
[-] 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 [-] 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 [-] 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)(vii) of the Agreement plus, with
respect to such subsection, amounts applied thereto pursuant to subsections
4.10(a) and (b), 4.14(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 clause (c).
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 [-] [-] Distribution Date (or if such day is not a Business Day, the
next succeeding Business Day) (the "Scheduled Series [-] Termination Date").
After the earlier to occur of (i) the Scheduled Series [-] Termination Date and
(ii) the day after the Distribution Date on which the Series [-] Securities are
paid in full (the "Series [-] 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 [-] Termination Date, the Trustee will sell or
cause to be sold, to the extent necessary, an amount of interests in the
Receivables or certain of the Receivables up to 110% of the Class A Invested
Amount, the Class B Invested Amount and the Excess Collateral 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,
then to the Class B Securityholders pro rata in final payment of the Class B
Securities and then to the Excess Collateral Holder pro rata in final payment of
the Excess Collateral.
A-1-3
45
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.
A-1-4
46
IN WITNESS WHEREOF, the Transferor has caused this Security to
be duly executed.
METRIS RECEIVABLES, INC.
By:
------------------------------
Name:
Title:
Dated: [-] [-], [-]
A-1-5
47
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:
X-0-0
00
XXXXXXX X-0
FORM OF CLASS B 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.
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE BENEFIT OF
METRIS RECEIVABLES, INC. AND THE TRUSTEE THAT SUCH PURCHASER IS NOT (I) AN
EMPLOYEE BENEFIT PLAN (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA")) THAT IS SUBJECT TO THE
PROVISIONS OF TITLE I OF ERISA, (II) A PLAN DESCRIBED IN SECTION 4975(E)(1) OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") 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).
A-2-1
49
No. $
------ ---------
CUSIP NO.
---------
METRIS MASTER TRUST
FLOATING RATE ASSET BACKED
SECURITY, SERIES [-], CLASS B
Evidencing an undivided interest in a trust, the corpus of
which consists of receivables generated from time to time in the ordinary course
of business from a portfolio of revolving consumer credit card accounts
transferred or to be transferred by Metris Receivables, Inc. (the "Transferor")
and other assets and interests constituting the Trust under the Agreement
described below.
(Not an interest in or a recourse obligation of Metris
Receivables, Inc., Direct Merchants Credit Card Bank, National Association or
any affiliate of either of them.)
This certifies that [-] (the "Securityholder") is the
registered owner of a fractional undivided interest in the Metris Master Trust
(the "Trust") issued pursuant to the Amended and Restated Pooling and Servicing
Agreement, dated as of July 30, 1998 (the "Pooling and Servicing Agreement";
such term to include any amendment, supplement or other modification thereto) by
and between the Transferor, Direct Merchants Credit Card Bank, National
Association, as Servicer (the "Servicer"), and U.S. Bank National Association
(as successor to The Bank of New York (Delaware)), as Trustee (the "Trustee"),
and the Series [-] Supplement, dated as of [-] [-], [-] (the "Series [-]
Supplement"), among the Transferor, the Servicer and the Trustee. The Pooling
and Servicing Agreement, as supplemented by the Series [-] 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 Securities is one of a series of Securities entitled "Metris
Master Trust Floating Rate Asset Backed Securities, Series [-], 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.
The Transferor has structured the Agreement, the Class B
Securities, the Metris Master Trust Floating Rate Asset Backed Securities,
Series [-], Class A (the "Class A Securities" and collectively with the Class B
Securities, the "Offered Securities") with the intention that the Offered
Securities will qualify under applicable tax law as indebtedness, and both the
Transferor and each holder of a Class B Security (a "Class B Securityholder") or
any interest therein by acceptance of its Securities or any interest therein,
agrees to treat the Class B Securities for purposes of federal, state and local
income or franchise taxes and any other tax imposed on or measured by income, as
indebtedness.
X-0-0
00
Xx principal will be payable to the Class B Securityholders
until the earlier of the Class B 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.
Interest on the Class B Securities will be payable on [-] [-],
[-] 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 B Interest Rate, (ii) a
fraction the numerator of which is the actual number of days in the related
Interest Accrual Period and the denominator of which is 360 and (iii) the Class
B Outstanding Principal Amount as of the close of business on the first day of
such Interest Accrual Period.
Interest payments on the Class B Securities on each
Distribution Date will be funded from Available Series [-] Finance Charge
Collections with respect to the preceding Monthly Period and from certain other
funds allocated as set forth in the Pooling and Servicing Agreement to the
respective classes of the Series [-] Securities and deposited on each business
day during such Monthly Period in the Interest Funding Account.
"Class B Invested Amount" shall mean, when used with respect
to any Business Day, the greater of (x) zero and (y) an amount equal to (a) the
Class B Initial Invested Amount, minus (b) the aggregate amount of principal
payments made to Class B Securityholders through and including such Business
Day, minus (c) the aggregate amount of Class B Charge-Offs for all prior
Distribution Dates, minus (d) the aggregate amount of Redirected Class B
Principal Collections for which the Excess Collateral Amount has not been
reduced for all prior Distribution Dates plus (e) 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)(viii) 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 (c) and (d).
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 [-] [-] Distribution Date (or if such day is not a Business Day, the
next succeeding Business Day) (the "Scheduled Series [-] Termination Date").
After the earlier to occur of (i) the Scheduled Series [-] Termination Date or
(ii) the day after the Distribution Date on which the Series [-] Securities are
paid in full (the "Series [-] 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, the
Class B Invested Amount and the Excess Collateral 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, then to the
Class B Securityholders pro rata in final payment of the Class B Securities and
then to the Excess Collateral Holder pro rata in final payment of the Excess
Collateral.
A-2-3
51
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.
A-2-4
52
IN WITNESS WHEREOF, the Transferor has caused this Security to
be duly executed.
METRIS RECEIVABLES, INC.
By:
-------------------------------------------
Name:
Title:
Dated: [-] [-], [-]
A-2-5
53
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:
X-0-0
00
XXXXXXX X
----------------------------------------------------------------------------------------------------------------------
MONTHLY REPORT
METRIS RECEIVABLES, INC. METRIS MASTER TRUST MONTH-YEAR
SECTION 5.2 SECURITYHOLDERS' STATEMENT SERIES [-] CLASS A CLASS 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) 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
-------------- ---------------------------------------------- ------------------ ----------------- -------------------
B-1
55
EXHIBIT C
FORM OF INVESTMENT LETTER
[DATE]
Re Metris Master Trust;
Purchases of Series [-] Excess Collateral
Ladies and Gentlemen:
This letter (the "Investment Letter") is delivered by the
undersigned (the "Purchaser") pursuant to Section 11 of the Series [-]
Supplement dated as of [-] [-], [-] (the "Series Supplement") to the Amended and
Restated Pooling and Servicing Agreement dated as of July 30, 1998 (as amended,
supplemented or otherwise modified, the "Agreement"), each among U.S. Bank
National Association (as successor to The Bank of New York (Delaware)), as
Trustee, Direct Merchants Credit Card Bank, National Association, as Servicer
and Metris Receivables, Inc., as Transferor. Capitalized terms used herein
without definition shall have the meanings set forth in the Agreement. The
Purchaser represents to and agrees with the Transferor as follows:
(a) The Purchaser has such knowledge and experience in
financial and business matters as to be capable of evaluating the
merits and risks of its investment in the Excess Collateral and is able
to bear the economic risk of such investment.
(b) The Purchaser is an "accredited investor", as defined in
Rule 501, promulgated by the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the
"Securities Act"), or is a sophisticated institutional investor. The
Purchaser understands that the offering and sale of the Excess
Collateral has not been and will not be registered under the Securities
Act and has not and will not be registered or qualified under any
applicable "Blue Sky" law, and that the offering and sale of the Excess
Collateral has not been reviewed by, passed on or submitted to any
federal or state agency or commission, securities exchange or other
regulatory body.
(c) The Purchaser is acquiring an interest in the Excess
Collateral without a view to any distribution, resale or other transfer
thereof except, with respect to any Excess Collateral or any interest
or participation therein, as contemplated in the following sentence.
The Purchaser will not resell or otherwise transfer any interest or
participation in the Excess Collateral, except in accordance with
Section 11 of the Series Supplement and (i) in a transaction exempt
from the registration requirements of the Securities Act of 1933, as
amended, and applicable state securities or "blue sky" laws; (ii) to
the Transferor or any affiliate of the Transferor; or (iii) to a person
who the Purchaser reasonably believes is a qualified institutional
buyer (within the meaning thereof in Rule 144A under the Securities
Act) that is aware that the resale or other transfer is being made in
reliance upon Rule 144A. In connection therewith, the Purchaser hereby
agrees that it will not resell or otherwise transfer the Excess
Collateral or any interest therein unless the purchaser thereof
provides to the addressee hereof a letter substantially in the form
hereof.
(d) No portion of the Excess Collateral or any interest
therein may be Transferred, and each Assignee will certify that it is
not, (a) 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, (b) a plan
C-1
56
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,
(c) 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, (d) 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 (e) a person investing
plan assets of any such plan (including without limitation, for
purposes of clause (d) and this clause (e), as applicable, an insurance
company general account, but excluding any entity registered under the
Investment Company Act of 1940, as amended).
(e) This Investment Letter has been duly executed and
delivered and constitutes the legal, valid and binding obligation of
the Purchaser, enforceable against the Purchaser in accordance with its
terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws or equitable
principles affecting the enforcement of creditors' rights generally and
general principles of equity.
Very truly yours,
[NAME OF PURCHASER]
By:
--------------------------------------
Name:
Title
AGREED TO AS OF THE DATE
FIRST ABOVE WRITTEN:
METRIS RECEIVABLES, INC.
By:
---------------------------------
Name:
Title:
C-2
