METRIS RECEIVABLES, INC.
Buyer
and
METRIS COMPANIES INC.
Seller
AMENDED AND RESTATED
PURCHASE AGREEMENT
Dated as of July 30, 1998
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Other Definitional Provisions . . . . . . . . . . . . . 2
ARTICLE II
PURCHASE, CONVEYANCE AND SERVICING
OF RECEIVABLES . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.1 Sale . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE III
CONSIDERATION AND PAYMENT . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.1 Purchase Price . . . . . . . . . . . . . . . . . . . . . 6
Section 3.2 Payment of Purchase Price . . . . . . . . . . . . . . . 6
Section 3.3 Daily Reports . . . . . . . . . . . . . . . . . . . . . 6
Section 3.4 Capital Contribution . . . . . . . . . . . . . . . . . . . 6
ARTICLE IV
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . 7
Section 4.1 Seller's Representations and Warranties . . . . . . . . 7
Section 4.2 Seller's Representations and Warranties
Regarding Receivables . . . . . . . . . . . . . . . . . 10
Section 4.3 Representations and Warranties of the Buyer . . . . . . 12
ARTICLE V
COVENANTS OF SELLER AND BUYER . . . . . . . . . . . . . . . . . . . . 15
Section 5.1 Seller Covenants . . . . . . . . . . . . . . . . . . . . 15
Section 5.2 Addition of Accounts . . . . . . . . . . . . . . . . . . 17
Section 5.3 Buyer Covenant Regarding Sale Treatment . . . . . . . . 17
ARTICLE VI
REPURCHASE OBLIGATION . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 6.1 Mandatory Repurchase . . . . . . . . . . . . . . . . . . 18
Section 6.2 Conveyance of Reassigned Receivables . . . . . . . . . . 19
ARTICLE VII
CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 7.1 Conditions to the Buyer's Obligations Regarding
Receivables . . . . . . . . . . . . . . . . . . . . . . 20
Section 7.2 Conditions Precedent to the Seller's Obligations . . . . 20
ARTICLE VIII
TERM AND TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 8.1 Termination . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE IX
MISCELLANEOUS PROVISIONS . . . . . . . . . 23
Section 9.1 Amendment . . . . . . . . . . . . . . . . . . . . . . . 23
Section 9.2 Governing Law . . . . . . . . . . . . . . . . . . . . . 23
Section 9.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 9.4 Severability of Provisions . . . . . . . . . . . . . . 24
Section 9.5 Assignment . . . . . . . . . . . . . . . . . . . . . . 24
Section 9.6 Further Assurances . . . . . . . . . . . . . . . . . . 24
Section 9.7 No Waiver; Cumulative Remedies . . . . . . . . . . . . 25
Section 9.8 Counterparts . . . . . . . . . . . . . . . . . . . . . 25
Section 9.9 Binding Effect; Third-Party Beneficiaries . . . . . . . 25
Section 9.10 Merger and Integration. . . . . . . . . . . . . . . . 25
Section 9.11 Headings . . . . . . . . . . . . . . . . . . . . . . . 25
Section 9.12 Schedules and Exhibits . . . . . . . . . . . . . . . . 25
Section 9.13 No Bankruptcy Petition Against the Buyer . . . . . . . 25
Section 9.14 Merger or Consolidation of, or Assumption of
the Obligations of, the Seller . . . . . . . . . . . . 26
Section 9.15 Protection of Right, Title and Interest to
Receivables . . . . . . . . . . . . . . . . . . . . . 27
Exhibit A Form of Daily Report
AMENDED AND RESTATED
PURCHASE AGREEMENT
AMENDED AND RESTATED PURCHASE AGREEMENT, dated as of July 30,
1998 (the "Agreement"), by and between METRIS COMPANIES INC., a Minnesota
corporation ("Metris" or the "Seller"), and METRIS RECEIVABLES, INC., a
Delaware corporation ("MRI" or the "Buyer").
W I T N E S S E T H :
WHEREAS, the Buyer desires to purchase from time to time certain
open-end or revolving credit receivables (including, without limitation,
MasterCard, Visa and private label credit card receivables) generated or
acquired on or before the Initial Closing Date or to be generated or
acquired after the Initial Closing Date by the Seller, the Bank or any
Affiliate thereof in the normal course of its business;
WHEREAS, the Seller desires to sell and assign from time to time
such receivables to the Buyer upon the terms and conditions hereinafter set
forth;
WHEREAS, the Buyer is an Affiliate of the Seller;
WHEREAS, the Buyer and Fingerhut Companies, Inc. ("Fingerhut")
previously entered into that certain Purchase Agreement, dated as of May
26, 1995, as amended prior hereto (the "Previous Purchase Agreement");
WHEREAS, pursuant to the Assignment and Assumption Agreement,
dated as of September 16, 1996, by and among Fingerhut, Metris and MRI,
Fingerhut assigned to Metris all of its rights arising under the Previous
Purchase Agreement and Metris agreed to assume and perform all of
Fingerhut's duties and obligations under the Purchase Agreement;
WHEREAS, the parties hereto desire to amend and restate the
Previous Purchase Agreement in its entirety;
NOW, THEREFORE, it is hereby agreed by and between the Buyer and
the Seller as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. For all purposes of this Agreement,
except as otherwise expressly provided herein or unless the context
otherwise requires, capitalized terms used herein shall have the following
meanings assigned to them:
"Bank" shall mean Direct Merchants Credit Card Bank, National
Association, a national banking association organized and existing under
the laws of the United States of America and the successor by merger to
DMCCB Utah.
"Credit Adjustment" shall have the meaning set forth in Section
3.2(b) hereof.
"Involuntary Case" shall have the meaning set forth in Section
2.1(c) hereof.
"Opinion of Counsel" shall mean a written opinion of counsel
acceptable to the Buyer and the Seller, which counsel may be an employee of
the Seller.
"Pooling and Servicing Agreement" shall mean the Amended and
Restated Pooling and Servicing Agreement, dated as of July 30, 1998, as
amended from time to time, by and among the Bank, as Servicer, MRI, as
Transferor, and the Trustee.
"Purchase Price" shall have the meaning set forth in Section 3.1
hereof.
"Receivable" shall mean all of the indebtedness of any Obligor
under an Account, including the right to receive payment of any interest or
finance charges and other obligations of such Obligors with respect
thereto. Each Receivable includes, without limitation, all rights of the
Seller under the applicable Contract.
"Sale Papers" shall have the meaning set forth in Section 4.1(a)
hereof.
"Secured Obligations" shall have the meaning set forth in Section
2.1(f) hereof.
Section 1.2 Other Definitional Provisions. The words "hereof,"
"herein" and "hereunder" and words of similar import when used in this
Agreement or any Sale Paper shall refer to this Agreement as a whole and
not to any particular provision of this Agreement; and Section, Subsection,
Schedule and Exhibit references contained in this Agreement are references
to Sections, Subsections, Schedules and Exhibits in or to this Agreement
unless otherwise specified. All capitalized terms not otherwise defined
herein are defined in the Pooling and Servicing Agreement. In the event
that any term or provision contained herein shall conflict with or be
inconsistent with any provisions contained in the Pooling and Servicing
Agreement, the terms and provisions contained herein shall govern with
respect to this Agreement.
[END OF ARTICLE I]
ARTICLE II
PURCHASE, CONVEYANCE AND SERVICING
OF RECEIVABLES
Section 2.1 Sale. (a) In consideration for the Purchase Price
and upon the terms and subject to the conditions set forth herein, the
Seller does hereby sell, assign, transfer, set-over, and otherwise convey
to the Buyer, and the Buyer does hereby purchase from the Seller, on the
terms and subject to the conditions specifically set forth herein, all of
the Seller's right, title and interest in, to and under (i) the Receivables
now existing and hereafter created and arising in connection with the
Accounts and any accounts that meet the definition of Additional Accounts,
including, without limitation, all accounts, general intangibles, chattel
paper, contract rights and other obligations of any Obligor with respect to
the Receivables, now or hereafter existing, whether or not arising out of
or in connection with the sale or lease of goods or the rendering of
services, (ii) all monies and investments due or to become due with respect
thereto (including, without limitation, the right to any Finance Charge
Receivables, including any Recoveries), (iii) all proceeds of such
Receivables and (iv) the Bank Receivables Purchase Agreement to the extent
that it relates to the Receivables. The foregoing sale, transfer,
assignment, set-over and conveyance does not constitute and is not intended
to result in a creation or an assumption by the Buyer of any obligation of
the Seller in connection with the Receivables or any agreement or
instrument relating thereto, including, without limitation, any obligation
to any Obligors, merchant banks, merchant clearance systems, VISA USA,
Inc., MasterCard International Incorporated or insurers.
(b) In connection with the foregoing sale, the Seller agrees to
record and file on or prior to the Initial Closing Date, at its own
expense, a financing statement or statements with respect to the
Receivables and the other property described in Section 2.1(a) sold by the
Seller hereunder meeting the requirements of applicable state law in such
manner and in such jurisdictions as are necessary to perfect and protect
the interests of the Buyer created hereby under the applicable UCC against
all creditors of and purchasers from the Seller, and to deliver a file-
stamped copy of such financing statements or other evidence of such filings
to the Buyer within 10 days after the Initial Closing Date.
(c) The Buyer shall not be obligated to continue to pay for
Receivables hereunder if the Seller shall become an involuntary party to
(or be made the subject of) any bankruptcy proceeding or any other
insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings of or relating to the Seller or relating to all or
substantially all of its property (an "Involuntary Case") upon receipt by
the Seller at its head corporate office of notice of such Involuntary Case.
(d) The Buyer shall not be obligated to continue to pay for
Receivables hereunder if the Seller shall admit in writing its inability to
pay its debts as they are due, or the Seller shall commence a voluntary
case under the federal bankruptcy laws, as now or hereafter in effect, or
any present or future federal or state bankruptcy, insolvency or similar
law, or the Seller shall consent to the appointment of or taking possession
by a receiver, liquidator, assignee, trustee, custodian, sequestrator or
other similar official of the Seller or of any substantial part of its
property or the Seller shall make an assignment for the benefit of
creditors or the Seller shall fail generally to pay its debts as such debts
become due or the Seller shall take corporate action in furtherance of any
of the foregoing. In the event the Buyer ceases to pay for new
Receivables, pursuant to subsection 2.1(c) or 2.1(d) hereof, the Buyer
shall release its interest in any Receivables thereafter generated in
Accounts created after the date the Buyer ceases such payments (the
"Cessation Date") but the Buyer shall not release its interest in new
Receivables generated after the Cessation Date in Accounts in existence
prior to the Cessation Date.
(e) In connection with the sale and conveyance hereunder, the
Seller agrees, at its own expense, on or prior to the Initial Closing Date
and on each Business Day thereafter, to indicate or cause to be indicated
clearly and unambiguously in its accounting records and with respect to any
Receivables purchased by the Seller from the Bank to cause the Bank to
indicate clearly and unambiguously in the Bank's accounting records that
such Receivables and the other property described in clauses (i), (ii),
(iii) and (iv) of Section 2.1(a) have been sold to the Buyer pursuant to
this Agreement as of the Initial Closing Date or such Business Day as
applicable.
(f) It is the express intent of the Seller and the Buyer that
the conveyance of the Receivables by the Seller to the Buyer pursuant to
this Agreement be construed as a sale of such Receivables by the Seller to
the Buyer. It is, further, not the intention of the Seller and the Buyer
that such conveyance be deemed a grant of a security interest in the
Receivables by the Seller to the Buyer to secure a debt or other obligation
of the Seller. However, in the event that, notwithstanding the intent of
the parties, the Receivables are held to continue to be property of the
Seller, then (i) this Agreement also shall be deemed to be and hereby is a
security agreement within the meaning of the UCC; and (ii) the conveyance
by the Seller provided for in this Agreement shall be deemed to be and the
Seller hereby grants to the Buyer a security interest in and to all of the
Seller's right, title and interest in (w) the Receivables then existing and
thereafter created and arising in connection with the Accounts that meet
the definition of Additional Accounts, including, without limitation, all
accounts, general intangibles, chattel paper, contract rights and other
obligations of any Obligor with respect to the Receivables, then or
thereafter existing, (x) all monies and investments due or to become due
with respect thereto (including, without limitation, the right to any
Finance Charge Receivables, including any Recoveries), (y) all proceeds of
such Receivables and (z) the Bank Receivables Purchase Agreement to secure
(1) the obligations of the Seller and (2) a loan to the Seller in the
amount of the Purchase Price as set forth in this Agreement (the "Secured
Obligations"). The Seller and the Buyer shall, to the extent consistent
with this Agreement, take such actions as may be necessary to ensure that,
if this Agreement were deemed to create a security interest in the
Receivables, such security interest would be deemed to be a perfected
security interest of first priority in favor of the Buyer under applicable
law and will be maintained as such throughout the term of this Agreement.
The Seller and the Buyer may rely upon an Opinion of Counsel addressed to
them as to what is required to provide the Buyer with such security
interest; and any such Opinion of Counsel shall permit the Trustee, on
behalf of the Securityholders, the Securityholders (in the case of any
Series issued in a placement exempt from the registration requirements of
the Securities Act) and the Rating Agencies to rely on it.
[END OF ARTICLE II]
ARTICLE III
CONSIDERATION AND PAYMENT
Section 3.1 Purchase Price. The Purchase Price for the
Receivables and related property conveyed to the Buyer under this Agreement
shall be a dollar amount equal to, for Receivables sold on any date, the
aggregate amount of all Principal Receivables sold as of such date subject
to adjustment from time to time with respect to new Receivables to reflect
such factors as the Buyer and the Purchaser mutually agree will result in a
Purchase Price determined to approximate the fair market value of such new
Receivables.
Section 3.2 Payment of Purchase Price. (a) The Purchase Price
for Receivables shall be paid or provided for on the Initial Closing Date
with respect to the Receivables existing on the Initial Closing Date and on
each Business Day thereafter on which Receivables are transferred
hereunder, as the case may be, by payment in immediately available funds.
To the extent that the total Purchase Price for Receivables is not paid in
full by the Buyer on the Initial Closing Date or on each Business Day on
which Receivables are purchased hereunder in cash, the Seller shall be
deemed to have contributed Receivables in an aggregate principal amount
equal to such shortfall to the Buyer.
(b) The Purchase Price shall be adjusted on a daily basis (the
"Credit Adjustment") with respect to any Receivable adjusted as provided in
subsection 3.8 of the Pooling and Servicing Agreement in an amount equal to
the amount of such Credit Adjustment specified in subsection 3.8 of the
Pooling and Servicing Agreement. If the Buyer is required thereunder to
deposit amounts into the Excess Funding Account, the Seller shall pay the
amount so adjusted to the Buyer.
Section 3.3 Daily Reports. On each Business Day, the Seller
shall deliver to the Buyer a Daily Report (the "Daily Report") showing the
aggregate Purchase Price of Receivables generated, the aggregate amount, if
any, owing to the Buyer pursuant to Section 6.1 hereof and the aggregate
net amount of cash owing for Receivables generated in each case for the
period from and including the preceding Business Day.
Section 3.4 Initial Capitalization. The Seller has contributed
cash in exchange for 100 shares of common stock of the Buyer, which 100
shares represent all of the outstanding capital stock of the Buyer.
[END OF ARTICLE III]
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 Seller's Representations and Warranties. The Seller
represents and warrants to the Buyer as of the Initial Closing Date, and
shall be deemed to represent and warrant as of the date of any Supplement
and the related Closing Date, that:
(a) Organization and Good Standing. The Seller is a corporation
duly organized and validly existing in good standing under the laws of the
State of Delaware and has the corporate power and authority and legal right
to own its property and conduct its business as such properties are
presently owned and as such business is presently conducted and to execute,
deliver and perform its obligations under this Agreement and each other
document or instrument to be delivered by the Seller hereunder
(collectively, the "Sale Papers").
(b) Due Qualification. The Seller is duly qualified to do
business and is in good standing (or is exempt from such requirements), as
a foreign corporation in any state required in order to conduct business,
and has obtained all necessary licenses and approvals with respect to the
Seller required under applicable law; provided that no representation or
warranty is made with respect to any qualifications, licenses or approvals
which the Buyer would have to obtain to do business in any state in which
the Buyer seeks to enforce any Receivable.
(c) Due Authorization. The execution and delivery of the Sale
Papers, and the consummation of the transactions provided for herein and
therein have been duly authorized by the Seller by all necessary corporate
action on its part.
(d) Binding Obligation. Each of the Sale Papers, and the
consummation of the transactions provided for therein, constitutes a legal,
valid and binding obligation of the Seller, enforceable in accordance with
its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
now or hereinafter in effect, affecting the enforcement of creditors'
rights in general and as such enforceability may be limited by general
principles of equity (whether considered in a proceeding at law or in
equity).
(e) No Conflicts. The execution and delivery of the Sale Papers
and the performance of the transactions contemplated thereby, do not (i)
contravene the Seller's charter or by-laws or (ii) violate any material
provision of law applicable to it or require any filing (except for the
filings under the UCC), registration, consent or approval under, any law,
rule, regulation, order, writ, judgment, injunction, decree, determination
or award presently in effect having applicability to the Seller, except for
such filings, registrations, consents or approvals as have already been
obtained and are in full force and effect.
(f) Taxes. Except as specified on Schedule 1 hereto, the Seller
has filed all material tax returns required to be filed and has paid or
made adequate provision for the payment of all material taxes, assessments
and other governmental charges due from the Seller or is contesting any
such tax, assessment or other governmental charge in good faith through
appropriate proceedings.
(g) No Violation. The execution and delivery of the Sale
Papers, the performance of the transactions contemplated by the Sale Papers
and the fulfillment of the terms thereof, will not violate any Requirements
of Law applicable to the Seller, will not violate, result in any breach of
any of the material terms and provisions of or constitute (with or without
notice or lapse of time or both) a default under any Requirement of Law
applicable to the Seller, or any material indenture, contract, agreement,
mortgage, deed of trust or other material instrument to which the Seller is
a party or by which it or its properties are bound.
(h) No Proceedings. There are no proceedings or investigations
pending or, to the best knowledge of the Seller, threatened against the
Seller before any Governmental Authority (i) asserting the invalidity of
the Sale Papers, (ii) seeking to prevent the consummation of any of the
transactions contemplated thereby, (iii) seeking any determination or
ruling that would materially and adversely affect the performance by the
Seller of its obligations thereunder or (iv) seeking any determination or
ruling that would materially and adversely affect the validity or
enforceability thereof.
(i) All Consents Required. All approvals, authorizations,
consents, orders or other actions of any Governmental Authority required in
connection with the execution and delivery of the Sale Papers, the
performance of the transactions contemplated by the Sale Papers and the
fulfillment of the terms hereof and thereof, have been obtained.
(j) Bona Fide Receivables. The Seller has no knowledge of any
fact which should have led it to expect at the time of the classification
of any Receivable as an Eligible Receivable that such Receivable would not
be paid in full when due, and each Receivable classified as an Eligible
Receivable by the Seller in any document or report delivered under this
Agreement satisfies the requirements of eligibility contained in the
definition of Eligible Receivable set forth in the Pooling and Servicing
Agreement.
(k) Place of Business. The principal executive offices of the
Seller are in St. Louis Park, Minnesota and the offices where the Seller
keeps its records concerning the Receivables and related Accounts are in
Salt Lake City, Utah, Omaha, Nebraska, Hennepin County, Minnesota, Tulsa,
Oklahoma and St. Cloud, Minnesota.
(l) Use of Proceeds. No proceeds of the sale of any Receivable
hereunder received by the Seller will be used by the Seller to purchase or
carry any margin stock.
(m) Pay Out Event. As of the Initial Closing Date, no Pay Out
Event and no condition that with the giving of notice and/or the passage of
time would constitute a Pay Out Event, has occurred and is continuing.
(n) Not an Investment Company. The Seller is not an "investment
company" within the meaning of the Investment Company Act, or is exempt
from all provisions of such Act.
The representations and warranties set forth in this Section 4.1
shall survive the sale of the Receivables to the Buyer. The Seller hereby
represents and warrants to the Buyer, that the representations and
warranties of the Seller set forth in this Section 4.1 are true and correct
as of such date. Upon discovery by the Seller or the Buyer of a material
breach of any of the foregoing representations and warranties, the party
discovering such breach shall give prompt written notice thereof to the
other.
Section 4.2 Seller's Representations and Warranties Regarding
Receivables.
(a) Valid Sale, etc. The Seller (x) hereby represents and
warrants as of the Initial Closing Date, with respect to the Receivables
created on or prior to, and outstanding on, such date and (y) shall be
deemed to represent and warrant as of the date of the creation or
acquisition and transfer to the Buyer of any Receivables with respect to
such Receivables, that:
(i) Each of this Agreement and the Bank Receivables
Purchase Agreement constitutes the legal, valid and binding obligation
of the Seller, enforceable against the Seller in accordance with its
terms, except (A) as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect, affecting the enforcement of
creditors' rights in general, and (B) as such enforceability may be
limited by general principles of equity (whether considered in a suit
at law or in equity).
(ii) The transfer of Receivables by the Seller to the Buyer
under this Agreement constitutes a valid sale, transfer, assignment,
set-over and conveyance to the Buyer of all right, title and interest
of the Seller in and to the Receivables, whether then existing or
thereafter created and arising in connection with the Accounts, and
such Receivables will be held by the Buyer free and clear of any Lien
of any Person claiming through or under the Seller or any of its
Affiliates except for Permitted Liens. This Agreement constitutes a
valid sale, transfer, assignment, set-over and conveyance to the Buyer
of all right, title and interest of the Seller in and to the
Receivables purported to be sold hereunder, whether then existing or
thereafter created and the proceeds thereof.
(iii) The Seller is not insolvent and will not be rendered
insolvent upon sale of the Receivables to the Buyer.
(iv) The Seller is (or, with respect to Receivables arising
after the date hereof, will be) the legal and beneficial owner of all
right, title and interest in and to each Receivable and each
Receivable has been or will be transferred to the Buyer free and clear
of any Lien other than Permitted Liens.
(v) All consents, licenses, approvals or authorizations of
or registrations or declarations with any Governmental Authority
required in connection with the transfer of such Receivables to the
Buyer have been obtained.
(vi) Each Account classified as an "Eligible Account" by
the Seller in any document or report delivered hereunder will satisfy
the requirements contained in the definition of Eligible Account as of
the date of such document or report and each Receivable classified as
an "Eligible Receivable" by the Seller in any document or report
delivered hereunder will satisfy the requirements contained in the
definition of Eligible Receivable as of the time of such document or
report.
(vii) Each Receivable then existing has been conveyed to
the Buyer free and clear of any Lien of any Person claiming through or
under the Seller or any of its Affiliates (other than Permitted Liens)
and in compliance, in all material respects, with all Requirements of
Law applicable to the Seller.
(b) Daily Representations and Warranties. On each day on which
any new Receivable is created or acquired by the Seller, the Seller shall
be deemed to represent and warrant to the Buyer that (A) each Receivable
purchased by the Buyer on such day has been conveyed to the Buyer in
compliance, in all material respects, with all Requirements of Law
applicable to the Seller and free and clear of any Lien of any Person
claiming through or under the Seller or any of its Affiliates (other than
Permitted Liens) and (B) with respect to each such Receivable, all
consents, licenses, approvals or authorizations of or registrations or
declarations with, any Governmental Authority required to be obtained,
effected or given by the Seller in connection with the conveyance of such
Receivable to the Buyer have been duly obtained, effected or given and are
in full force and effect.
(c) Notice of Breach. The representations and warranties set
forth in this Section 4.2 shall survive the sale, transfer and assignment
of the respective Receivables to the Buyer. Upon discovery by the Seller
or the Buyer of a breach of any of the representations and warranties set
forth in this Section 4.2, the party discovering such breach shall give
prompt written notice thereof to the other. The Seller agrees to cooperate
with the Buyer in attempting to cure any such breach.
Section 4.3 Representations and Warranties of the Buyer. The
Buyer hereby represents and warrants and agrees with, as of the date hereof
and as of the Initial Closing Date, the Seller and shall be deemed to
represent and warrant as of the date of the creation of any Receivable sold
to the Buyer hereunder that:
(a) Organization and Good Standing. The Buyer is a corporation
duly organized and validly existing in good standing under the laws of the
State of Delaware and has the corporate power and authority and legal right
to own its property and conduct its business as such properties are
presently owned and such business is presently conducted and to execute,
deliver, and perform its obligations under the Sale Papers.
(b) Due Qualification. The Buyer is duly qualified to do
business and is in good standing (or is exempt from such requirements) as a
foreign corporation in any state required in order to conduct business and
has obtained all necessary licenses and approvals with respect to the Buyer
required under federal and Delaware law.
(c) Due Authorization. The execution and delivery of the Sale
Papers and the consummation of the transactions provided for in the Sale
Papers have been duly authorized by the Buyer by all necessary corporate
action on its part.
(d) No Conflicts. The execution and delivery of the Sale Papers
and the performance of the transactions contemplated thereby do not (i)
contravene the Buyer's certificate of incorporation or by-laws or (ii)
violate any material provision of law applicable to it, or require any
filing (except for the filings under the UCC), registration, consent or
approval under, any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award presently in effect having
applicability to the Buyer, except for such filings, registrations,
consents or approvals as have already been obtained and are in full force
and effect.
(e) No Violation. The execution and delivery of the Sale
Papers, the performance of the transactions contemplated by the Sale
Papers, and the fulfillment of the terms of the Sale Papers will not
violate any Requirements of Law applicable to the Buyer, will not violate,
result in any breach of any of the material terms and provisions of, or
constitute (with or without notice or lapse of time or both) a default
under any Requirement of Law applicable to the Buyer, or any material
indenture, contract, agreement, mortgage, deed of trust or other material
instrument to which the Buyer is a party or by which it or its properties
are bound.
(f) No Proceedings. There are no proceedings or investigations
pending or, to the best knowledge of the Buyer, threatened against the
Buyer, before any Governmental Authority (i) asserting the invalidity of
the Sale Papers, (ii) seeking to prevent the consummation of any of the
transactions contemplated by the Sale Papers, (iii) seeking any
determination or ruling that would materially and adversely affect the
performance by the Buyer of its obligations thereunder or (iv) seeking any
determination or ruling that would materially and adversely affect the
validity or enforceability of the Sale Papers.
(g) All Consents Required. All approvals, authorizations,
consents, orders, or other actions of any Governmental Authority required
in connection with the execution and delivery of the Sale Papers, the
performance of the transactions contemplated by the Sale Papers, and the
fulfillment of the terms of the Sale Papers have been obtained.
(h) Solvency. The Buyer is not insolvent and will not be
rendered insolvent upon the purchase of the Receivables.
The representations and warranties set forth in this Section 4.3
shall survive the sale of the Receivables to the Buyer. The Buyer hereby
represents and warrants to the Seller that the representations and
warranties of the Buyer set forth in Section 4.3 are true and correct as of
such date. Upon discovery by the Buyer or the Seller of a breach of any of
the foregoing representations and warranties, the party discovering such
breach shall give prompt written notice to the other.
[END OF ARTICLE IV]
ARTICLE V
COVENANTS OF SELLER AND BUYER
Section 5.1 Seller Covenants. The Seller hereby covenants that:
(a) Receivables to be Accounts, General Intangibles or Chattel
Paper. The Seller will take no action to cause any Receivable to be
evidenced by any instrument (as defined in the UCC as in effect in the
Relevant UCC State), except in connection with the enforcement or
collection of a Receivable. Except in such circumstances, the Seller will
take no action to cause any Receivable to be anything other than an
"account," a "general intangible" or "chattel paper" (as defined in the UCC
as in effect in the Relevant UCC State).
(b) Security Interests. Except for the conveyances hereunder,
the Seller will not sell, pledge, assign or transfer to any other Person,
or grant, create, incur, assume or suffer to exist any Lien, on any
Receivable, whether now existing or hereafter created, or any interest
therein; the Seller will immediately notify the Buyer of the existence of
any Lien on any Receivable; and the Seller shall defend the right, title
and interest of the Buyer in, to and under the Receivables, whether now
existing or hereafter created, against all claims of third parties claiming
through or under the Seller; provided, however, that nothing in this
subsection 5.1(b) shall prevent or be deemed to prohibit the Seller from
suffering to exist upon any of the Receivables any Permitted Lien.
(c) Periodic Finance Charges and Other Fees. Except as
otherwise required by any Requirement of Law, or as is deemed by the Seller
in its sole discretion to be necessary in order to maintain its credit card
business on a competitive basis, it shall not at any time reduce the annual
percentage rates of the Periodic Finance Charges assessed on the
Receivables or other fees charged on any of the Accounts if, as a result of
any such reduction, either (i) the Seller's reasonable expectation is that
such reduction will cause a Pay Out Event to occur or (ii) such reduction
is not also applied to any comparable segment of consumer revolving credit
card accounts owned by the Seller that have characteristics the same as, or
substantially similar to, such Accounts.
(d) Credit and Collection Policy and Contracts. The Seller
shall comply with and perform its obligations under the Contracts relating
to the Accounts and the Credit and Collection Policy except insofar as any
failure so to comply or perform would not materially and adversely affect
the rights of the Trust or the Securityholders hereunder or under the
Securities. Subject to compliance with all Requirements of Law, the Seller
may change the terms and provisions of the Contracts or the Credit and
Collection Policy with respect to any of the Accounts in any respect
(including the calculation of the amount, or the timing, of charge-offs and
the Periodic Finance Charges and other fees to be assessed thereon) only if
in the reasonable judgment of the Credit Card Originator (i) (if it owns a
comparable segment of receivables) such change is made applicable to any
comparable segment of the consumer revolving credit card accounts owned by
such Credit Card Originator which have characteristics the same as, or
substantially similar to, such Accounts or (ii) (if it does not own a
comparable segment of receivables) such change will not be made with the
intent to materially benefit the Credit Card Originator over the buyer or
to materially adversely affect the buyer, except as otherwise restricted by
an endorsement, sponsorship, or other agreement between the Credit Card
Originator and an unrelated third party or by the terms of the Contracts.
The Seller further covenants that it will not enter into any
amendments to this Agreement that would cause a Ratings Event to occur.
(e) Delivery of Collections. In the event that the Seller
receives Collections, the Seller agrees to deposit such Collections into
the Collection Account as soon as practicable after the receipt thereof,
but in no event later than the second Business Day following the Date of
Processing thereof.
(f) Conveyance of Receivables. Except as provided in Section
9.5, the Seller covenants and agrees that it will not convey, assign,
exchange or otherwise transfer any Receivable, to any Person other than the
Buyer prior to the termination of this Agreement pursuant to Article VIII;
provided, however, that the Seller shall not be prohibited hereby from
conveying, assigning, exchanging or otherwise transferring a Receivable in
connection with a transaction in which the Seller and its successor agree
to comply with provisions substantially similar to those of Section 9.14.
(g) Notice of Liens. The Seller shall notify the Buyer promptly
after becoming aware of any Lien on any Receivable other than Permitted
Liens.
(h) Separate Business. The Seller will not permit its assets to
be commingled with those of the Buyer and shall maintain separate corporate
records and books of account from those of the Buyer. The Seller will not
conduct its business in the name of the Buyer and will cause the Buyer to
conduct its business solely in its own name so as not to mislead others as
to the identity of the entity with which those others are concerned. The
Seller will provide for its own operating expenses and liabilities from its
own funds. The Seller will not hold itself out, or permit itself to be
held out, as having agreed to pay, or as generally being liable for, the
debts of the Buyer, except that the organizational expenses of the Buyer
may be paid by the Seller and that the Seller will contribute to the
Transferor on the Initial Closing Date one or more demand notes. The
Seller shall cause the Buyer not to hold itself out, or permit itself to be
held out, as having agreed to pay, or as being liable for, the debts of the
Seller. The Seller will maintain an arm's length relationship with the
Buyer with respect to any transactions between the Seller, on the one hand,
and the Buyer, on the other.
Section 5.2 Addition of Accounts. Unless the Seller specifies
to the contrary, all Accounts that meet the definition of Additional
Accounts shall be included as Accounts from and after the date upon which
such Additional Accounts are created or acquired and all Receivables in
such Additional Accounts, whether such Receivables are then existing or
thereafter created or acquired, shall be automatically sold to the Buyer.
For the purposes of this Agreement, all receivables of such Additional
Accounts shall be treated as Receivables upon their creation or acquisition
and shall be subject to the eligibility criteria specified in the
definitions of "Eligible Receivable" and "Eligible Account."
Section 5.3 Buyer Covenant Regarding Sale Treatment. The Buyer
agrees to treat this conveyance for all purposes (including, without
limitation, tax and financial accounting purposes) as a sale on all
relevant books, records, tax returns, financial statements and other
applicable documents.
[END OF ARTICLE V]
ARTICLE VI
REPURCHASE OBLIGATION
Section 6.1 Mandatory Repurchase.
(a) Breach of Warranty. In the event of a breach with respect
to a Receivable of any of the representations and warranties set forth in
Section 4.1(j) or subsections 4.2(a)(iii) through (vii) or 4.2(b), or in
the event that a Receivable is not an Eligible Receivable on the date of
its transfer to the Buyer as a result of the failure to satisfy the
conditions set forth in the definition of Eligible Receivable, such
Receivable shall be designated an "Ineligible Receivable" and the Seller
shall pay to the Buyer an amount in cash equal to the purchase price paid
for any such Ineligible Receivable by the Buyer to the Seller. Such
payment must be made by the close of business on the next succeeding
Business Day following the day such Receivable has been designated an
Ineligible Receivable; provided, however, that such amount may be offset
against any amounts due from the Buyer to the Seller with respect to the
Purchase Price for Receivables sold to the Buyer on such day. The
obligation of the Seller set forth in this Section shall constitute the
sole remedy respecting any breach of the representations and warranties set
forth in the above-referenced Sections or failure to meet the conditions
set forth in the definition of Eligible Receivable with respect to such
Receivable available to the Buyer.
(b) Reassignment of the Sold Assets. In the event of a breach
of any of the representations and warranties set forth in Section 4.1(a),
(b), and (c) and 4.2(a)(i) and (ii), the Buyer by notice given in writing
to the Seller may direct the Seller to accept reassignment of the
Receivables at the amount specified below within 60 days of such notice (or
within such longer period as may be specified in such notice), and the
Seller shall be obligated to accept reassignment of the Receivables within
such applicable period on the terms and conditions set forth below;
provided, however, that no such reassignment shall be required to be made
if, at any time during such applicable period, the Seller delivers to the
Buyer an Officer's Certificate stating that the representations and
warranties contained in Section 4.1(a), (b), and (c) and 4.2(a)(i) and (ii)
shall then be true and correct in all material respects as if made on such
day. The Seller shall pay to the Buyer on the day of such reassignment an
amount equal to the aggregate Invested Amount plus accrued and unpaid
interest on the Investor Securities. On the day on which such amount has
been paid, each Receivable shall be sold and reassigned to the Seller, and
the Buyer shall execute and deliver such instruments of sale and
assignment, in each case without recourse, representation or warranty, as
shall be reasonably requested by the Seller to vest in the Seller, or its
designee or assignee, all right, title and interest of the Buyer in and to
each Receivable. The obligation of the Seller to purchase each Receivable
pursuant to this Section shall constitute the sole remedy available to the
Buyer for a breach of the representations and warranties contained in
Section 4.1(a), (b), and (c) and 4.2(a)(i) and (ii).
Section 6.2 Conveyance of Reassigned Receivables. Upon the
request of the Seller, the Buyer shall execute and deliver to the Seller a
reconveyance substantially in such form and upon such terms as shall be
acceptable to the Seller, pursuant to which the Buyer evidences the
conveyance to the Seller of all of the Buyer's right, title, and interest
in any Receivables reconveyed to the Seller pursuant to Section 6.1(b).
The Buyer shall (and shall cause the Trustee to) execute such other
documents or instruments of conveyance or take such other actions as the
Seller may reasonably require to effect any repurchase of Receivables
pursuant to this Article VI.
[END OF ARTICLE VI]
ARTICLE VII
CONDITIONS PRECEDENT
Section 7.1 Conditions to the Buyer's Obligations Regarding
Receivables. The obligations of the Buyer to purchase the Receivables on
any Business Day shall be subject to the satisfaction of the following
conditions:
(a) All representations and warranties of the Seller contained
in this Agreement shall be true and correct on the Initial Closing Date and
on the day of creation of any Receivable created thereafter with the same
effect as though such representations and warranties had been made on such
date;
(b) All information concerning the Receivables provided to the
Buyer shall be true and correct in all material respects as of the Initial
Closing Date, in the case of Receivables sold to the Buyer on the Initial
Closing Date, or the applicable Date of Processing, in the case of
Receivables created after the Initial Closing Date;
(c) At the Initial Closing Date, the Seller shall have
substantially performed all other obligations required to be performed by
the provisions of this Agreement;
(d) With respect to Receivables sold to the Buyer on the Initial
Closing Date, the Seller shall have filed the financing statement(s)
required to be filed pursuant to Section 2.1(b); and
(e) All corporate and legal proceedings and all instruments in
connection with the transactions contemplated by this Agreement shall be
satisfactory in form and substance to the Buyer, and the Buyer shall have
received from the Seller copies of all documents (including, without
limitation, records of corporate proceedings) relevant to the transactions
herein contemplated as the Buyer may reasonably have requested.
Section 7.2 Conditions Precedent to the Seller's Obligations.
The obligations of the Seller to sell Receivables on any Business Day shall
be subject to the satisfaction of the following conditions:
(a) All representations and warranties of the Buyer contained in
this Agreement shall be true and correct with the same effect as though
such representations and warranties had been made on such date;
(b) Payment or provision for payment of the Purchase Price in
accordance with the provisions of Section 3.2 hereof shall have been made;
and
(c) All corporate and legal proceedings and all instruments in
connection with the transactions contemplated by this Agreement shall be
satisfactory in form and substance to the Seller, and the Seller shall have
received from the Buyer copies of all documents (including, without
limitation, records of corporate proceedings) relevant to the transactions
herein contemplated as the Seller may reasonably have requested.
[END OF ARTICLE VII]
ARTICLE VIII
TERM AND TERMINATION
Section 8.1 Termination. Upon the termination of the Trust
pursuant to Section 12.1 of the Pooling and Servicing Agreement and the
surrender of the Exchangeable Transferor Security, the Buyer shall return
to the Seller (without recourse, representation or warranty) all right,
title and interest of the Buyer in the Receivables, whether then existing
or thereafter created, all moneys due or to become due with respect
thereto, and all proceeds thereof except for amounts held by the Trustee
pursuant to subsection 12.3(b) of the Pooling and Servicing Agreement. The
Buyer shall execute and deliver such instruments of transfer and
assignment, in each case without recourse, as shall be reasonably requested
by the Seller to vest in the Seller all right, title and interest which the
Buyer had in the Receivables.
[END OF ARTICLE VIII]
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.1 Amendment. This Agreement and any other Sale Papers
and the rights and obligations of the parties hereunder may not be changed
orally, but only by an instrument in writing signed by the Buyer and the
Seller. The Seller shall provide prompt written notice of any such
amendment to the Rating Agencies.
Section 9.2 Governing Law. THIS AGREEMENT AND THE OTHER SALE
PAPERS 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 9.3 Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given
if personally delivered at or mailed by registered mail, return receipt
requested, to:
(a) in the case of the Buyer, to:
Metris Receivables, Inc.
000 Xxxxx Xxxxxxx 000
Xxxxx 0000
Xx. Xxxxx Xxxx, Xxxxxxxxx 00000
Attention: Treasurer
(000) 000-0000
(b) in the case of the Seller, to:
Metris Companies Inc.
000 Xxxxx Xxxxxxx 000
Xxxxx 0000
Xx. Xxxxx Xxxx, Xxxxxxxxx 00000
Attention: Treasurer
(000) 000-0000
or, as to each party, at such other address as shall be designated by such
party in a written notice to each other party.
Section 9.4 Severability of Provisions. If any one or more of
the covenants, agreements, provisions or terms of the Sale Papers shall for
any reason whatsoever be held invalid, then such covenants, agreements,
provisions, or terms shall be deemed severable from the remaining
covenants, agreements, provisions, or terms of the Sale Papers and shall in
no way affect the validity or enforceability of the other provisions of the
Sale Papers.
Section 9.5 Assignment. Notwithstanding anything to the
contrary contained herein, this Agreement may not be assigned by the Buyer
or the Seller except as contemplated by this Section 9.5 and the Pooling
and Servicing Agreement; provided, however, that simultaneously with the
execution and delivery of this Agreement, the Buyer shall assign all of its
right, title and interest herein to the Trustee for the benefit of the
Investor Securityholders of all Series as provided in Section 2.1 of the
Pooling and Servicing Agreement, to which the Seller hereby expressly
consents; provided, further, that except for the foregoing assignment, no
such assignment shall occur unless the Buyer shall have received
confirmation from the Rating Agencies that such assignment shall not cause
a reduction or withdrawal of the rating of any Series of Securities. The
Seller agrees to perform its obligations hereunder for the benefit of the
Trust and that the Trustee may enforce the provisions of this Agreement,
exercise the rights of the Buyer and enforce the obligations of the Seller
hereunder without the consent of the Buyer.
Section 9.6 Further Assurances. The Buyer and the Seller agree
to do and perform, from time to time, any and all acts and to execute any
and all further instruments required or reasonably requested by the other
party more fully to effect the purposes of the Sale Papers, including,
without limitation, the execution of any financing statements or
continuation statements or equivalent documents relating to the Receivables
for filing under the provisions of the UCC or other laws of any applicable
jurisdiction.
Section 9.7 No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the Buyer or the
Seller, any right, remedy, power or privilege hereunder, shall operate as a
waiver thereof; nor shall any single or partial exercise of any right,
remedy, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative
and not exhaustive of any rights, remedies, powers and privileges provided
by law.
Section 9.8 Counterparts. The Sale Papers may each be executed
in two or more counterparts including telefax transmission thereof (and by
different parties on separate counterparts), each of which shall be an
original, but all of which together shall constitute one and the same
instrument.
Section 9.9 Binding Effect; Third-Party Beneficiaries. The Sale
Papers will inure to the benefit of and be binding upon the parties hereto
and their respective successors and permitted assigns.
Section 9.10 Merger and Integration. Except as specifically
stated otherwise herein, the Sale Papers set forth the entire understanding
of the parties relating to the subject matter hereof, and all prior
understandings, written or oral, are superseded by the Sale Papers. The
Sale Papers may not be modified, amended, waived or supplemented except as
provided herein.
Section 9.11 Headings. The headings herein are for purposes of
reference only and shall not otherwise affect the meaning or interpretation
of any provision hereof.
Section 9.12 Schedules and Exhibits. The schedules and exhibits
attached hereto and referred to herein shall constitute a part of this
Agreement and are incorporated into this Agreement for all purposes.
Section 9.13 No Bankruptcy Petition Against the Buyer. The
Seller hereby covenants and agrees that, prior to the date which is one
year and one day after the payment in full of all Invested Amounts, it will
not institute against or join any other Person in instituting against the
Buyer any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings or other similar proceeding under the laws of the
United States or any state of the United States.
Section 9.14 Merger or Consolidation of, or Assumption of the
Obligations of, the Seller. The Seller shall not consolidate with or merge
into any other corporation or convey or transfer its properties and assets
substantially as an entirety to any Person, unless:
(i) the corporation formed by such consolidation or into
which the Seller is merged or the Person which acquires by conveyance
or transfer the properties and assets of the Seller substantially as
an entirety shall be a corporation organized and existing under the
laws of the United States of America or any State or the District of
Columbia and, if the Seller is not the surviving entity, shall
expressly assume, by an agreement supplemental hereto, executed and
delivered to the Buyer in form satisfactory to the Buyer, the
performance of every covenant and obligation of the Seller hereunder
(to the extent that any right, covenant or obligation of the Seller,
as applicable hereunder, is inapplicable to the successor entity, such
successor entity shall be subject to such covenant or obligation, or
benefit from such right, as would apply, to the extent practicable, to
such successor entity); and
(ii) the Seller shall have delivered to the Buyer an
Officer's Certificate that such consolidation, merger, conveyance or
transfer and such supplemental agreement comply with this Section 9.14
and that all conditions precedent herein provided for relating to such
transaction have been complied with and an Opinion of Counsel that
such supplemental agreement is legal, valid and binding with respect
to the successor entity and that the entity surviving such
consolidation, conveyance or transfer is organized and existing under
the laws of the United States of America or any State or the District
of Columbia. The Rating Agencies shall receive prompt written notice
of such merger or consolidation of the Seller.
Section 9.15 Protection of Right, Title and Interest to
Receivables.
(a) The Seller shall cause this Agreement, all amendments hereto
and/or all financing statements and continuation statements and any other
necessary documents covering the Seller's and the Buyer's right, title and
interest to the Receivables to be promptly recorded, registered and filed,
and at all times to be kept recorded, registered and filed, all in such
manner and in such places as may be required by law fully to preserve and
protect the right, title and interest of the Buyer hereunder to the
Receivables and proceeds thereof. The Seller shall deliver to the Buyer
file-stamped copies of, or filing receipts for, any document recorded,
registered or filed as provided above, as soon as available following such
recording, registration or filing. The Buyer shall cooperate fully with
the Seller in connection with the obligations set forth above and will
execute any and all documents reasonably required to fulfill the intent of
this subsection 9.15(a).
(b) Within 30 days after the Seller makes any change in its
name, identity or corporate structure which would make any financing
statement or continuation statement filed in accordance with paragraph (a)
above materially misleading within the meaning of Section 9-402(7) of the
UCC as in effect in the Relevant UCC State, the Seller shall give the Buyer
written notice of any such change and shall file such financing statements
or amendments as may be necessary to continue the perfection of the Buyer's
security interest in the Receivables and the proceeds thereof.
(c) The Seller will give the Buyer prompt written notice of any
relocation of any office from which it services Receivables or keeps
records concerning the Receivables or of its principal executive office and
whether, as a result of such relocation, the applicable provisions of the
UCC would require the filing of any amendment of any previously filed
financing or continuation statement or of any new financing statement and
shall file such financing statements or amendments as may be necessary to
continue the perfection of the Buyer's security interest in the Receivables
and the proceeds thereof. The Seller will at all times maintain each
office from which it services Receivables and its principal executive
office within the United States of America.
[END OF ARTICLE IX]
IN WITNESS WHEREOF, the Buyer and the Seller each have caused
this Agreement to be duly executed by their respective officers as of the
day and year first above written.
METRIS RECEIVABLES, INC.,
as Buyer
By:________________________
Title:
METRIS COMPANIES INC.,
as Seller,
By:________________________
Title:
EXHIBIT A
FORM OF DAILY REPORT
SCHEDULE 1
TAX RETURNS AND PAYMENTS
Metris and its subsidiaries have filed all applicable federal, state and
material local tax returns and have paid or caused to be paid all
associated taxes due and payable on such returns or on any assessments
received by them; except that because one of Metris's subsidiaries, Direct
Merchants Credit Card Bank, National Association, is a national banking
entity (established in 1995) which derives the majority of its income from
Mastercard credit cards, it may be subject to special financial institution
rules in certain states. Such rules attempt to impute state income tax
nexus to a credit card company it obtains finance revenue and/or has credit
card receivables generated from customers in that state. Of the states
that have adopted such financial institution rules, Minnesota is the only
state where Metris and its subsidiaries are currently filing income or
franchise tax returns. States which currently have rules pursuant to which
they may attempt to impose income tax nexus based upon such credit card
activity include:
Arkansas Minnesota
California New Mexico
Hawaii Tennessee
Indiana West Virginia
Massachusetts
Direct Merchants Credit Card Bank, National Association has not filed in
states other than Minnesota because it believes the above referenced
financial institution rules to be unconstitutional.
