4
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
METRIS MASTER TRUST
(Issuer of the Certificates)
METRIS RECEIVABLES, INC.
(Originator of the Metris Master Trust)
(Exact name of registrant as specified in its charter)
Delaware 41-1810301
(State of incorporation or organization) (I.R.S.
Employer Identification No.)
4400 Baker Road, Suite F470,
Minnetonka, Minnesota 55343
(Address of principal executive offices)
Securities to be registered pursuant to Section 12(b) of the Act:
None
If this form relates to the registration of a class of securities
pursuant to Section 12(b) of the Exchange Act and is effective
pursuant to General Instruction A.(c), check the following box.
If this Form relates to the registration of a class of securities
pursuant to Section 12(g) of the Exchange Act and is effective
pursuant to General Instruction A.(d), check the following box.
Securities Act registration statement file numbers to which this
form relates:
33-99514; 333-23045; and 333-36503
Securities to be registered pursuant to Section 12(g) of the Act:
$518,000,000 6.45% Asset Backed Certificates, Series 1996-1,
Class A
(Title of Class)
$ 87,000,000 6.80% Asset Backed Certificates, Series 1996-1,
Class B
(Title of Class)
$616,250,000 6.87% Asset Backed Certificates, Series 1997-1,
Class A
(Title of Class)
$106,250,000 7.11% Asset Backed Certificates, Series 1997-1,
Class B
(Title of Class)
$455,000,000 Floating Rate Asset Backed Certificates, Series 1997-
2, Class A
(Title of Class)
$101,500,000 Floating Rate Asset Backed Certificates, Series 1997-
2, Class B
(Title of Class)
INFORMATION REQUIRED IN REGISTRATION STATEMENT
Item I. Description of Registrant's Securities to be Registered.
The description of the $518,000,000 6.45% Asset Backed
Certificates, Series 1996-1, Class A, and the $87,500,000 6.80%
Asset Backed Certificates, Series 1996-1, Class B, set forth
under the captions "Description of the Offered Certificates,"
"Certain Federal Income Tax Consequences" and "Certain State Tax
Consequences" in the prospectus dated and filed on April 18, 1996
in connection with Registrant's Registration Statement on Form S-
3 (No. 33-99514) is incorporated herein by reference.
The description of the $616,250,000 6.87% Asset Backed
Certificates, Series 1997-1, Class A, and the $106,250,000 7.11%
Asset Backed Certificates, Series 1997-1, Class B, set forth
under the captions "Description of the Offered Certificates,"
"Certain Federal Income Tax Consequences" and "Certain State Tax
Consequences" in the prospectus dated May 1, 1997 and filed on
May 2, 1997 as part of Amendment No. 2 to Registrant's
Registration Statement on Form S-3 (No. 333-23045) is
incorporated herein by reference.
The description of the $455,000,000 Floating Rate Asset
Backed Certificates, Series 1997-2, Class A, and the $101,500,000
Floating Rate Asset Backed Certificates, Series 1997-2 Class B,
set forth under the captions "Description of the Offered
Certificates" in the prospectus dated November 13, 1997 and filed
on November 11, 1997 pursuant to Rule 424(b) under the Securities
Act of 1933, as amended, in connection with the Registrant's
Registration Statement on Form S-3 (No. 333-36503) is
incorporated herein by reference.
Item 2. Exhibits.
List below all exhibits filed as a part of the registration
statement:
Exhibit Description of Exhibit
Number
4(a) Pooling and Servicing Agreement dated as of May 26,
1995 among Fingerhut Financial Services
Receivables, Inc. (now known as Metris Receivables,
Inc.), as transferor, Direct Merchants Credit Card
Bank, National Association, as servicer, and The
Bank of New York (Delaware), as trustee
(Incorporated by reference to Exhibit 10.u to
Fingerhut Companies, Inc.'s Quarterly Report on
Form 10-Q (File No. 1-8668) for the fiscal quarter
ended June 30, 1995).
4(b) Amendment No. 1 dated as of June 10, 1996 to the
Pooling and Servicing Agreement (Incorporated by
reference to Exhibit 4(b) to the Registrant's
Registration Statement on Form S-3 (No. 333-
23045)).
4(c) Amendment No. 2 dated as of September 16, 1996 to
the Pooling and Servicing Agreement (Incorporated
by reference to Exhibit 4(c) to the Registrant's
Registration Statement on Form S-3 (No. 333-
23045)).
4(d) Amendment No. 3 dated as of September 30, 1997 to
the Pooling and Servicing Agreement (Incorporated
by reference to Exhibit 4(d) to Registrant's
Registration Statement on Form S-3 (No. 333-
36503)).
4(e) Series 1996-1 Supplement dated as of April 23, 1996
(Incorporated by reference to Exhibit 10.c(ii) to
Fingerhut Companies, Inc.'s Quarterly Report on
Form 10-Q (File No. 1-8668) for the fiscal quarter
ended March 29, 1996).
4(f) Series 1997-1 Supplement dated as of May 8, 1997
(Incorporated by reference to Exhibit 10.a(v) to
Metris Companies, Inc.'s Quarterly Report on Form
10-Q (File No. 001-12351) for the fiscal quarter
ended June 30, 1997).
4(g) Series 1997-2 Supplement dated as of November 20,
1997
SIGNATURE
Pursuant to the requirements of Section 12 of the
Securities Exchange Act of 1934, the registrant has duly caused
this registration statement to be signed on its behalf by the
undersigned, thereto duly authorized.
Dated: March 27, 1998 METRIS RECEIVABLES, INC.
By____________________________
Robert W. Oberrender
President
<PAGE>
- -------------------------------------------------------------------------------
METRIS RECEIVABLES, INC.
Transferor
DIRECT MERCHANTS CREDIT CARD BANK, NATIONAL ASSOCIATION
Servicer
and
THE BANK OF NEW YORK (DELAWARE)
Trustee
on behalf of the Series 1997-2 Certificateholders
SERIES 1997-2 SUPPLEMENT
Dated as of November 20, 1997
to
POOLING AND SERVICING AGREEMENT
Dated as of May 26, 1995
--------------------------
METRIS MASTER TRUST
$455,000,000 Floating Rate Asset Backed
Certificates, Series 1997-2, Class A
$101,500,000 Floating Rate Asset Backed
Certificates, Series 1997-2, Class B
$98,000,000 Floating Rate Asset Backed
Certificates, Series 1997-2, Class C
$45,500,000 0% Asset Backed Certificates,
Series 1997-2, Class D
- -------------------------------------------------------------------------------
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<TABLE>
TABLE OF CONTENTS
<S> <C> <C>
SECTION 1. Designation . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2. Definitions . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 3. Reassignment Terms. . . . . . . . . . . . . . . . . . . . . 29
SECTION 4. Delivery and Payment for the Series 1997-2 Certificates . . 29
SECTION 5. Form of Delivery of Series 1997-2 Certificates; Denominations 30
SECTION 6. Article IV of Agreement . . . . . . . . . . . . . . . . . . 30
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS. . . . . . 30
SECTION 4.4 Rights of Certificateholders. . . . . . . . . . . . . . . . 30
SECTION 4.5 Collections and Allocation; Payments on
Exchangeable Transferor Certificate . . . . . . . . . . . . 31
SECTION 4.6 Determination of Interest for the Series
1997-2 Certificates . . . . . . . . . . . . . . . . . . . . 32
SECTION 4.7 Determination of Principal Amounts. . . . . . . . . . . . . 35
SECTION 4.8 Shared Principal Collections. . . . . . . . . . . . . . . . 36
SECTION 4.9 Application of Funds on Deposit in the Collection
Account for the Certificates. . . . . . . . . . . . . . . . 36
SECTION 4.10 Coverage of Required Amount for the Series
1997-2 Certificates . . . . . . . . . . . . . . . . . . . . 46
SECTION 4.11 Payment of Certificate Interest . . . . . . . . . . . . . . 47
SECTION 4.12 Payment of Certificate Principal. . . . . . . . . . . . . . 47
SECTION 4.13 Investor Charge-Offs. . . . . . . . . . . . . . . . . . . . 50
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SECTION 4.14 Pre-Funding Account . . . . . . . . . . . . . . . . . . . . 51
SECTION 4.15 Increases in Invested Amount. . . . . . . . . . . . . . . . 53
SECTION 4.16 Reallocated Principal Collections for the
Series 1997-2 Certificates. . . . . . . . . . . . . . . . . 54
SECTION 4.17 Determination of LIBOR. . . . . . . . . . . . . . . . . . . 55
SECTION 4.18 Payment Reserve Account . . . . . . . . . . . . . . . . . . 56
SECTION 4.19 Principal Funding Account . . . . . . . . . . . . . . . . . 57
SECTION 4.20 Accumulation Period Reserve Account . . . . . . . . . . . . 58
SECTION 4.21 Postponement of Accumulation Period . . . . . . . . . . . . 60
SECTION 4.22 Defeasance. . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 7. Article V of the Agreement. . . . . . . . . . . . . . . . . 61
ARTICLE V
DISTRIBUTIONS AND REPORTS TO INVESTOR
CERTIFICATEHOLDERS . . . . . . . . . . . 61
SECTION 5.1 Distributions . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 5.2 Certificateholders' Statement . . . . . . . . . . . . . . . 64
SECTION 8. Series 1997-2 Pay Out Events. . . . . . . . . . . . . . . . 66
SECTION 9. Series 1997-2 Termination . . . . . . . . . . . . . . . . . 68
SECTION 10. Legends; Transfer and Exchange; Restrictions on Transfer of
Series 1997-2 Certificates; Tax Treatment . . . . . . . . . 69
SECTION 11. Compliance with Withholding Requirements. . . . . . . . . . 77
SECTION 12. Tax Characterization of the Class C Certificates. . . . . . 77
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SECTION 13. Ratification of Agreement . . . . . . . . . . . . . . . . . 77
SECTION 14. Registration of the Class A Certificates under the Securities
Exchange Act of 1934. . . . . . . . . . . . . . . . . . . . 78
SECTION 15. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 16. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 17. Instructions in Writing . . . . . . . . . . . . . . . . . . 78
SECTION 18. Certain Amendments. . . . . . . . . . . . . . . . . . . . . 78
SECTION 19. Paired Series . . . . . . . . . . . . . . . . . . . . . . . 79
EXHIBITS
Exhibit A-1 Form of Class A Investor Certificate
Exhibit A-2 Form of Class B Investor Certificate
Exhibit A-3 Form of Class C Investor Certificate
Exhibit A-4 Form of Class D Investor Certificate
Exhibit B Form of Monthly Certificateholder's Statement
Exhibit C Form of Investment Letter
</TABLE>
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<PAGE>
SERIES 1997-2 SUPPLEMENT, dated as of November 20, 1997 (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 THE BANK OF NEW YORK (DELAWARE), a Delaware
banking corporation organized and existing under the laws of the State of
Delaware as trustee (together with its successors in trust thereunder as
provided in the Agreement referred to below, the "TRUSTEE"), under the Pooling
and Servicing Agreement dated as of May 26, 1995 as amended, supplemented or
otherwise modified from time to time (the "AGREEMENT") among the Transferor, the
Servicer and the Trustee.
Section 6.9 of the Agreement provides, among other things, that the
Transferor and the Trustee may at any time and from time to time enter into a
supplement to the Agreement for the purpose of authorizing the issuance by the
Trustee to the Transferor, for execution and redelivery to the Trustee for
authentication, of one or more Series of Certificates.
Pursuant to this Series Supplement, the Transferor and the Trustee
shall create a new Series of Investor Certificates and shall specify the
Principal Terms thereof.
SECTION 1. DESIGNATION. There is hereby created a Series of Investor
Certificates to be issued pursuant to the Agreement and this Series Supplement
to be known generally as the "SERIES 1997-2 CERTIFICATES." The Series 1997-2
Certificates shall be issued in four Classes, which shall be designated
generally as the Floating Rate Asset Backed Certificates, Series 1997-2, Class A
(the "CLASS A CERTIFICATES"), the Floating Rate Asset Backed Certificates,
Series 1997-2, Class B (the "CLASS B CERTIFICATES"), the Floating Rate Asset
Backed Certificates, Series 1997-2, Class C (the "CLASS C CERTIFICATES") and the
0% Asset Backed Certificates, Series 1997-2, Class D (the "CLASS D
CERTIFICATES").
SECTION 2. DEFINITIONS. In the event that any term or provision
contained herein shall conflict with or be inconsistent with any provision
contained in the
<PAGE>
Agreement, the terms and provisions of this Series Supplement shall govern
with respect to the Series 1997-2 Certificates. All Article, Section or
subsection references herein shall mean Articles, Sections or subsections of
the Agreement, as amended or supplemented by this Series Supplement, except
as otherwise provided herein. All capitalized terms not otherwise defined
herein are defined in the Agreement. Each capitalized term defined herein
shall relate only to the Series 1997-2 Certificates and no other Series of
Certificates issued by the Trust.
"ABC ADJUSTED INVESTED AMOUNT" shall mean as of any Business Day the
sum of the Class A Invested Amount, the Class B Invested Amount and the Class C
Invested Amount minus the amount then on deposit in the Principal Funding
Account.
"ACCUMULATION PERIOD" shall mean, unless a Pay Out Event shall have
occurred prior thereto, the period commencing at the close of business on the
last day of the October 2001 Monthly Period or such later date as is determined
in accordance with Section 4.21 of the Agreement and ending on the first to
occur of (a) the commencement of the Early Amortization Period and (b) the
Series 1997-2 Termination Date.
"ACCUMULATION PERIOD FACTOR" shall mean, for any Monthly Period, a
fraction, the numerator of which is equal to the sum of the numerators with
respect to all Classes of all Series then outstanding used to calculate the
allocation percentages applicable for Principal Collections, and the denominator
of which is equal to the sum of (a) the sum of the Class A Invested Amount,
Class B Invested Amount and Class C Invested Amount, (b) the sum of the
numerators with respect to all Classes of all Series then outstanding used to
calculate the allocation percentages applicable for Principal Collections (other
than Series 1997-2 and any Class of any such Series retained by the Transferor)
which are not expected to be in their revolving periods during such Monthly
Period, and (c) the sum of the numerators used to calculate the allocation
percentages applicable for Principal 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.
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<PAGE>
"ACCUMULATION PERIOD LENGTH" shall have the meaning assigned such term
in Section 4.21 of the Agreement.
"ACCUMULATION PERIOD RESERVE ACCOUNT" shall have the meaning specified
in Section 4.20(a) of the Agreement.
"ACCUMULATION SHORTFALL" shall initially mean zero and thereafter
shall mean, with respect to any Monthly Period during the Accumulation Period,
the 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 1997-2 Certificates for
the previous Monthly Period.
"ADDITIONAL INTEREST" shall mean, at any time of determination, the
sum of the Class A Additional Interest, Class B Additional Interest and Class C
Additional Interest.
"ADJUSTED INVESTED AMOUNT" shall mean as of any Business Day the
Invested Amount minus the sum of the amount then on deposit in the Principal
Funding Account and the Series Allocation Percentage of the amount then on
deposit in the Excess Funding Account.
"AMORTIZATION PERIOD" shall mean the Accumulation Period or the Early
Amortization Period.
"AMORTIZATION PERIOD COMMENCEMENT DATE" shall mean the earlier of the
first day of the Accumulation Period and the Pay Out Commencement Date.
"AVAILABLE INVESTOR PRINCIPAL COLLECTIONS" shall mean, with respect to
any Monthly Period, an amount equal to the sum of (i) an amount equal to the
Fixed/ Floating Allocation Percentage of all Principal Collections (less the
amount of Reallocated Principal Collections) received during such Monthly
Period, (ii) any amount on deposit in the Excess Funding Account allocated to
the Series 1997-2 Certificates pursuant to subsection 4.9(d) of the Agreement
with respect to such Monthly Period and, on and after the Pay Out Commencement
Date, any amount on deposit in the Pre-Funding Account, (iii) the aggregate
amount allocated with respect to the Inves-
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tor Default Amount and the Series Allocation Percentage of any Adjustment
Payments paid pursuant to subsections 4.9(a)(v) and 4.9(a)(vi) of the
Agreement with respect to such Monthly Period, any reimbursements of
unreimbursed Investor Charge-Offs pursuant to subsections 4.9(a)(vii), (x),
(xi) and (xii) of the Agreement with respect to such Monthly Period and
further in each case, pursuant to subsections 4.10(a) and (b), 4.16(a), (b)
and (c), 4.19(b) and 4.20(b), (c) and (d) of the Agreement, and (iv) the
aggregate Shared Principal Collections allocated to the Series 1997-2
Certificates pursuant to Section 4.8 of the Agreement with respect to such
Monthly Period.
"AVAILABLE RESERVE ACCOUNT AMOUNT" shall mean, with respect to any
Transfer Date, the lesser of (a) the amount on deposit in the Accumulation
Period Reserve Account as of such date (before giving effect to any withdrawal
made or to be made pursuant to subsection 4.20(c) of the Agreement from the
Accumulation Period Reserve Account on such Transfer Date) and (b) the Required
Reserve Account Amount for such Transfer Date.
"AVAILABLE SERIES 1997-2 FINANCE CHARGE COLLECTIONS" shall have the
meaning specified in subsection 4.9(a) of the Agreement.
"BASE RATE" shall mean, with respect to any Monthly Period, the sum of
(i) the weighted average of the Class A Certificate Rate, the Class B
Certificate Rate and the Class C Certificate Rate as of the last day of such
Monthly Period (weighted based on the Class A Invested Amount, the Class B
Invested Amount and the Class C Invested Amount, respectively, as of the last
day of such Monthly Period) plus (ii) the product of 2.00% per annum and the
percentage equivalent of a fraction the numerator of which is the Adjusted
Invested Amount and the denominator of which is the Invested Amount, each as of
the last day of such Monthly Period.
"CARRYOVER CLASS A INTEREST" shall mean with respect to any
Business Day (a) any Class A Interest due but not paid on any previous
Distribution Date PLUS (b) any Class A Additional Interest due on the next
succeeding Distribution Date.
"CARRYOVER CLASS B INTEREST" shall mean with respect to any Business
Day (a) any Class B Interest due
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but not paid on any previous Distribution Date PLUS (b) any Class B
Additional Interest due on the next succeeding Distribution Date.
"CARRYOVER CLASS C INTEREST" shall mean with respect to any
Business Day (a) any Class C Interest due but not paid on any previous
Distribution Date PLUS (b) any Class C Additional Interest due on the next
succeeding Distribution Date.
"CLASS A ADDITIONAL INTEREST" shall have the meaning specified in
subsection 4.6(a) of the Agreement.
"CLASS A ADJUSTED INVESTED AMOUNT" shall mean, for any date of
determination, an amount not less than zero equal to the then current Class A
Invested Amount minus the Principal Funding Account Balance on such date.
"CLASS A CERTIFICATEHOLDER" shall mean the Person in whose name a
Class A Certificate is registered in the Certificate Register.
"CLASS A CERTIFICATEHOLDERS' INTEREST" shall mean the portion of the
Series 1997-2 Certificateholders' Interest evidenced by the Class A Certificate.
"CLASS A CERTIFICATE" shall mean any of the certificates executed by
the Transferor and authenticated by or on behalf of the Trustee, substantially
in the form of Exhibit A-1 hereto.
"CLASS A CERTIFICATE RATE" shall mean 5.8875% per annum from the
Closing Date through and including December 21, 1997 and with respect to each
Interest Period thereafter, a per annum rate 0.20% in excess of LIBOR as
determined on the related LIBOR Determination Date.
"CLASS A FLOATING ALLOCATION PERCENTAGE" shall mean, with respect to
any Business Day, the percentage equivalent of a fraction, the numerator of
which is the Class A Adjusted Invested Amount as of the end of the preceding
Business Day and the denominator of which is the greater of (a) the sum of the
aggregate amount of Principal Receivables in the Trust and the amounts on
deposit in the Excess Funding Account as of the end of the preceding Business
Day and (b) the sum of the numera-
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tors 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 Certificates, which is $455,000,000.
"CLASS A INTEREST" shall mean the interest distributable in respect of
the Class A Certificates as calculated in accordance with subsection 4.6(a) of
the Agreement.
"CLASS A INTEREST SHORTFALL" shall have the meaning specified in
subsection 4.6(a) of the Agreement.
"CLASS A INVESTED AMOUNT" shall mean, when used with respect to any
Business Day, the greater of (x) zero and (y) an amount equal to (a) the Class A
Initial Invested Amount less the Class A Percentage of the initial deposit to
the Pre-Funding Account plus the Class A Percentage of any withdrawals from the
Pre-Funding Account (i) during the Funding Period in connection with the
addition of Receivables to the Trust or (ii) at the end of the Funding Period
for deposit into the Excess Funding Account, MINUS (b) the aggregate amount of
principal payments (except principal payments made from the Pre-Funding Account)
made to Class A Certificateholders through and including such Business Day,
MINUS (c) the aggregate amount of Class A Investor Charge-Offs for all prior
Distribution Dates, PLUS (d) the sum of the aggregate amount allocated with
respect to Class A Investor Charge-Offs and available on all prior Distribution
Dates pursuant to subsection 4.9(a)(vii) of the Agreement and, with respect to
such subsection, pursuant to subsections 4.10(a) and (b), 4.16(a), (b) and (c),
4.19(b) and 4.20(b), (c) and (d) of the Agreement, for the purpose of
reinstating amounts reduced pursuant to the foregoing clause (c).
"CLASS A INVESTOR CHARGE-OFFS" shall have the meaning specified in
subsection 4.13(d) of the Agreement.
"CLASS A OUTSTANDING PRINCIPAL AMOUNT" shall mean with respect to the
Class A Certificates, when used with respect to any Business Day, an amount
equal to (a) the Class A Initial Invested Amount MINUS (b) the aggre-
6
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gate amount of principal payments (including principal payments made from the
Pre-Funding Account) made to the Class A Certificateholders on or prior to
such Business Day.
"CLASS A PERCENTAGE" shall mean a fraction the numerator of which is
the Class A Initial Invested Amount and the denominator of which is the sum of
the Class A Initial Invested Amount, the Class B Initial Invested Amount and the
Class C Initial Invested Amount.
"CLASS A POOL FACTOR" shall mean, with respect to any Record Date, a
number carried out to seven decimal places representing the ratio of the sum of
the Class A Invested Amount and the Class A Percentage of funds on deposit in
the Pre-Funding Account as of such Record Date (determined after taking into
account any increases or decreases in the Class A Invested Amount which will
occur, and the amount of funds which will be on deposit in the Pre-Funding
Account, on the following Distribution Date) to the Class A Initial Invested
Amount.
"CLASS A PRE-FUNDED AMOUNT" shall mean the product of the Pre-Funded
Amount and the Class A Percentage.
"CLASS A PRINCIPAL" shall mean the principal distributable in respect
of the Class A Certificates as calculated in accordance with subsection 4.7(a)
of the Agreement.
"CLASS A REQUIRED AMOUNT" shall mean the amount determined by the
Servicer on each Business Day equal to the excess, if any, of (x) the sum of (i)
Class A Interest for the then current Monthly Period, (ii) any Carryover Class A
Interest, (iii) if DMCCB or an Affiliate of DMCCB is no longer the Servicer, the
Class A Floating Allocation Percentage of the Servicing Fee for the then current
Monthly Period, (iv) the Class A Floating Allocation Percentage of the Default
Amount, if any, for such Business Day and, to the extent not previously paid,
for any previous Business Day in such Monthly Period, (v) the Class A Percentage
of the Series Allocation Percentage of the Adjustment Payment required to be
made by the Transferor but not made on the related Transfer Date and (vi) the
unreimbursed amount by which the Class A Invested Amount has been reduced on
prior Business Days pursuant
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to clause (c) of the definition of Class A Invested Amount over (y) the
Available Series 1997-2 Finance Charge Collections plus any Excess Finance
Charge Collections from other Series and any Transferor Finance Charge
Collections allocated with respect to the amounts described in clauses (x)(i)
through (vi) above.
"CLASS B ADDITIONAL INTEREST" shall have the meaning specified in
subsection 4.6(b) of the Agreement.
"CLASS B ADJUSTED INVESTED AMOUNT" shall mean, for any date of
determination, an amount not less than zero equal to the then current Class B
Invested Amount minus the excess, if any, of the Principal Funding Account
Balance over the Class A Invested Amount on such date of determination.
"CLASS B CERTIFICATEHOLDER" shall mean the Person in whose name a
Class B Certificate is registered in the Certificate Register.
"CLASS B CERTIFICATEHOLDERS' INTEREST" shall mean the portion of the
Series 1997-2 Certificateholders' Interest evidenced by the Class B
Certificates.
"CLASS B CERTIFICATE RATE" shall mean 6.1175% per annum from the
Closing Date through and including December 21, 1997 and with respect to each
Interest Period thereafter, a per annum rate 0.43% in excess of LIBOR as
determined on the related LIBOR Determination Date.
"CLASS B CERTIFICATES" shall mean any of the certificates executed by
the Transferor and authenticated by or on behalf of the Trustee, substantially
in the form of Exhibit A-2 hereto.
"CLASS B FIXED/FLOATING ALLOCATION PERCENTAGE" shall mean for any
Business Day the percentage equivalent of a fraction, the numerator of which is
the Class B Invested Amount at the end of the last day of the 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
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all series then outstanding used to calculate the applicable allocation
percentage.
"CLASS B FLOATING ALLOCATION PERCENTAGE" shall mean, with respect to
any Business Day, the percentage equivalent of a fraction, the numerator of
which is the Class B Adjusted Invested Amount as of the end of the preceding
Business Day and the denominator of which is the greater of (a) the sum of the
aggregate amount of Principal Receivables in the Trust and the amount on deposit
in the Excess Funding Account as of the end of the preceding Business Day and
(b) the sum of the numerators with respect to all Classes of all Series then
outstanding used to calculate the applicable allocation percentage.
"CLASS B INITIAL INVESTED AMOUNT" shall mean the aggregate initial
principal amount of the Class B Certificates, which is $101,500,000.
"CLASS B INTEREST" shall mean the interest distributable in respect of
the Class B Certificates as calculated in accordance with subsection 4.6(b) of
the Agreement.
"CLASS B INTEREST SHORTFALL" shall have the meaning specified in
subsection 4.6(b) of the Agreement.
"CLASS B INVESTED AMOUNT" shall mean, when used with respect to any
Business Day, the greater of (x) zero and (y) an amount equal to (a) the Class B
Initial Invested Amount less the Class B Percentage of the initial deposit to
the Pre-Funding Account plus the Class B Percentage of any withdrawals from the
Pre-Funding Account (i) during the Funding Period in connection with the
addition of Receivables to the Trust or (ii) at the end of the Funding Period
for deposit into the Excess Funding Account, MINUS (b) the aggregate amount of
principal payments (except principal payments made from the Pre-Funding Account)
made to Class B Certificateholders through and including such Business Day,
MINUS (c) the aggregate amount of Class B Investor Charge-Offs for all prior
Distribution Dates, MINUS (d) the aggregate amount of Reallocated Class B
Principal Collections for which neither the Class D Invested Amount nor the
Class C Invested Amount has been reduced for all prior Business Days, and PLUS
(e) the sum of the aggregate amount allo-
9
<PAGE>
cated and available on all prior Business Days pursuant to subsection
4.9(a)(x) of the Agreement and, with respect to such subsection, pursuant to
subsections 4.10(a) and (b), 4.16(a) and (b), 4.19(b) and 4.20(b), (c) and
(d) of the Agreement, for the purpose of reinstating amounts reduced pursuant
to the foregoing clauses (c) and (d).
"CLASS B INVESTOR CHARGE-OFFS" shall have the meaning specified in
subsection 4.13(c) of the Agreement.
"CLASS B OUTSTANDING PRINCIPAL AMOUNT" shall mean with respect to the
Class B Certificates, when used with respect to any Business Day, an amount
equal to (a) the Class B Initial Invested Amount MINUS (b) the aggregate amount
of principal payments (including principal payments made from the Pre-Funding
Account) made to the Class B Certificateholders on or prior to such Business
Day.
"CLASS B PERCENTAGE" shall mean a fraction the numerator of which is
the Class B Initial Invested Amount and the denominator of which is the sum of
the Class A Initial Invested Amount, the Class B Initial Invested Amount and
the Class C Initial Invested Amount.
"CLASS B POOL FACTOR" shall mean, with respect to any Record Date, a
number carried out to seven decimal places representing the ratio of the sum of
the Class B Invested Amount and the Class B Percentage of funds on deposit in
the Pre-Funding Account as of such Record Date (determined after taking into
account any increases or decreases in the Class B Invested Amount which will
occur, and the amount of funds which will be on deposit in the Pre-Funding
Account, on the following Distribution Date) to the Class B Initial Invested
Amount.
"CLASS B PRE-FUNDED AMOUNT" shall mean the product of the Pre-Funded
Amount and the Class B Percentage.
"CLASS B PRINCIPAL" shall mean the principal distributable in respect
of the Class B Certificates as calculated in accordance with subsection 4.7(b)
of the Agreement.
10
<PAGE>
"CLASS B PRINCIPAL PAYMENT COMMENCEMENT DATE" shall mean the
earlier of (a) (i) with respect to the Accumulation Period, the Expected
Final Payment Date or (ii) during the Early Amortization Period, the first
Distribution Date on which the Class A Invested Amount is paid in full or, if
there are no Principal Collections allocable to the Series 1997-2
Certificates remaining after payments have been made to the Class A
Certificates on such Distribution Date, the Distribution Date following the
first Distribution Date on which the Class A Invested Amount is paid in full
and (b) the Distribution Date following a sale or repurchase of the
Receivables as set forth in Section 2.4(e), 9.2, 10.2(a), 12.1 or 12.2 of the
Agreement or Section 3 of this Series Supplement.
"CLASS B REQUIRED AMOUNT" shall mean the amount determined by the
Servicer on each Business Day equal to the excess, if any, of (x) the sum of
(i) the Class B Interest for the then current Monthly Period, (ii) any
Carryover Class B Interest, (iii) if DMCCB or an Affiliate of DMCCB is no
longer the Servicer, the Class B Floating Allocation Percentage of the
Servicing Fee for the then current Monthly Period, (iv) the Class B Floating
Allocation Percentage of the Default Amount, if any, for such Business Day
and, to the extent not previously paid, for any previous Business Day in such
Monthly Period, (v) the Class B Percentage of the Series Allocation
Percentage of the Adjustment Payment required to be made by the Transferor
but not made on the related Transfer Date and (vi) the unreimbursed amount by
which the Class B Invested Amount has been reduced on prior Business Days
pursuant to clauses (c) and (d) of the definition of Class B Invested Amount
over (y) the Available Series 1997-2 Finance Charge Collections plus any
Excess Finance Charge Collections from other Series and any Transferor
Finance Charge Collections allocated with respect to the amounts described in
clauses (x)(i) through (vi) above.
"CLASS C ADDITIONAL INTEREST" shall have the meaning specified in
subsection 4.6(c) of the Agreement.
"CLASS C ADJUSTED INVESTED AMOUNT" shall mean, for any date of
determination, an amount not less than zero equal to the then current Class C
Invested Amount minus the excess, if any, of the Principal Funding Ac-
11
<PAGE>
count Balance over the Class A Invested Amount and Class B Invested Amount on
such date of determination.
"CLASS C CERTIFICATEHOLDER" shall mean the Person in whose name a
Class C Certificate is registered in the Certificate Register.
"CLASS C CERTIFICATEHOLDERS' INTEREST" shall mean the portion of
the Series 1997-2 Certificateholders' Interest evidenced by the Class C
Certificates.
"CLASS C CERTIFICATE RATE" shall mean the rate specified in the
Class C Reserve Account Agreement.
"CLASS C CERTIFICATES" shall mean any of the certificates executed
by the Transferor and authenticated by or on behalf of the Trustee,
substantially in the form of Exhibit A-3 hereto.
"CLASS C FIXED/FLOATING ALLOCATION PERCENTAGE" shall mean for any
Business Day the percentage equivalent of a fraction, the numerator of which
is the Class C Invested Amount at the end of the last day of the 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 percentage.
"CLASS C FLOATING ALLOCATION PERCENTAGE" shall mean, with respect
to any Business Day, the percentage equivalent of a fraction, the numerator
of which is the Class C Adjusted Invested Amount as of the end of the
preceding Business Day and the denominator of which is the greater of (a) the
total amount of Principal Receivables in the Trust and the amount on deposit
in the Excess Funding Account as of the end of the preceding Business Day and
(b) the sum of the numerators with respect to all Classes of all Series then
outstanding used to calculate the applicable allocation percentage.
"CLASS C INITIAL INVESTED AMOUNT" shall mean the aggregate initial
principal amount of the Class C Certificates, which is $98,000,000.
12
<PAGE>
"CLASS C INTEREST" shall mean the interest distributable in respect
of the Class C Certificates as calculated in accordance with subsection
4.6(c) of the Agreement.
"CLASS C INTEREST SHORTFALL" shall have the meaning specified in
subsection 4.6(c) of the Agreement.
"CLASS C INVESTED AMOUNT" shall mean, when used with respect to any
Business Day, the greater of (x) zero and (y) an amount equal to (a) the
Class C Initial Invested Amount less the Class C Percentage of the initial
deposit to the Pre-Funding Account plus the Class C Percentage of any
withdrawals from the Pre-Funding Account (i) during the Funding Period in
connection with the addition of Receivables to the Trust or (ii) at the end
of the Funding Period for deposit into the Excess Funding Account, MINUS (b)
the aggregate amount of principal payments (except principal payments made
from the Pre-Funding Account) made to Class C Certificateholders through and
including such Business Day, MINUS (c) the aggregate amount of Class C
Investor Charge-Offs for all prior Distribution Dates, MINUS (d) the
aggregate amount of Reallocated Class B Principal Collections and Reallocated
Class C Principal Collections for which the Class D Invested Amount has not
been reduced for all prior Business Days, and PLUS (e) the sum of the
aggregate amount allocated and available on all prior Business Days pursuant
to subsection 4.9(a)(xi) of the Agreement and, with respect to such
subsection, pursuant to subsections 4.10(a) and (b), 4.16(a), 4.19(b) and
4.20(b), (c) and (d) of the Agreement, for the purpose of reinstating amounts
reduced pursuant to the foregoing clauses (c) and (d).
"CLASS C INVESTOR CHARGE-OFFS" shall have the meaning specified in
subsection 4.13(b) of the Agreement.
"CLASS C OUTSTANDING PRINCIPAL AMOUNT" shall mean, when used with
respect to any Business Day, an amount equal to (a) the Class C Initial
Invested Amount MINUS (b) the aggregate amount of principal payments
(including principal payments made from the Pre-Funding Account) made to
Class C Certificateholders prior to such Business Day.
13
<PAGE>
"CLASS C PERCENTAGE" shall mean a fraction the numerator of which
is the Class C Initial Invested Amount and the denominator of which is the
sum of the Class A Initial Invested Amount, the Class B Initial Invested
Amount and the Class C Initial Invested Amount.
"CLASS C POOL FACTOR" shall mean, with respect to any Record Date,
a number carried out to seven decimal places representing the ratio of the
sum of the Class C Invested Amount and the Class C Percentage of funds on
deposit in the Pre-Funding Account as of such Record Date (determined after
taking into account any increases or decreases in the Class C Invested Amount
which will occur, and the amount of funds on deposit in the Pre-Funding
Account, on the following Distribution Date) to the Class C Initial Invested
Amount.
"CLASS C PRINCIPAL" shall mean the principal distributable in
respect of the Class C Certificates as calculated in accordance with
subsection 4.7(c) of the Agreement.
"CLASS C PRINCIPAL PAYMENT COMMENCEMENT DATE" shall mean the
earlier of (a) (i) with respect to the Accumulation Period, the Expected
Final Payment Date or (ii) during the Early Amortization Period, the first
Distribution Date on which the Class B Invested Amount is paid in full or, if
there are no Principal Collections allocable to the Series 1997-2
Certificates remaining after payments have been made to the Class B
Certificates on such Distribution Date, the Distribution Date following the
first Distribution Date on which the Class B Invested Amount is paid in full
and (b) the Distribution Date following a sale or repurchase of the
Receivables as set forth in Section 2.4(e), 9.2, 10.2(a), 12.1 or 12.2 of the
Agreement or Section 3 of this Series Supplement.
"CLASS C REQUIRED AMOUNT" shall mean the amount determined by the
Servicer on each Business Day equal to the excess, if any, of (x) the sum of
(i) Class C Interest for the then current Monthly Period, (ii) any Carryover
Class C Interest, (iii) if DMCCB or an Affiliate of DMCCB is no longer the
Servicer, the Class C Floating Allocation Percentage of the Servicing Fee for
the then current Monthly Period, (iv) the Class C Floating Allocation
Percentage of the Default Amount, if any, for such Business Day and, to the
extent not previously paid, for
14
<PAGE>
any previous Business Day in such Monthly Period, (v) the Class C Percentage
of the Series Allocation Percentage of the Adjustment Payment required to be
made by the Transferor but not made on the related Transfer Date and (vi) the
unreimbursed amount by which the Class C Invested Amount has been reduced on
prior Business Days pursuant to clauses (c) and (d) of the definition of
Class C Invested Amount over (y) the Available Series 1997-2 Finance Charge
Collections plus any Excess Finance Charge Collections from other Series and
any Transferor Finance Charge Collections allocated with respect to the
amounts described in clauses (x)(i) through (vi) above.
"CLASS C RESERVE ACCOUNT" shall have the meaning specified in the
Class C Reserve Account Agreement.
"CLASS C RESERVE ACCOUNT AGREEMENT" shall mean the Class C Reserve
Account Agreement dated as of the Closing Date among the Transferor, the
Servicer and the Trustee as amended and supplemented from time to time.
"CLASS C TRIGGER EVENT" shall have the meaning specified in the
Class C Reserve Account Agreement.
"CLASS D CERTIFICATEHOLDER" shall mean the Person in whose name a
Class D Certificate is registered in the Certificate Register.
"CLASS D CERTIFICATEHOLDERS' INTEREST" shall mean the portion of
the Series 1997-2 Certificateholders' Interest evidenced by the Class D
Certificate.
"CLASS D CERTIFICATES" shall mean any of the certificates executed
by the Transferor and authenticated by or on behalf of the Trustee,
substantially in the form of Exhibit A-4 hereto.
"CLASS D EXCESS AMOUNTS" shall mean with respect to any Business
Day, the excess of the Class D Invested Amount over the Stated Class D Amount
on such day after taking into account all adjustments of the ABC Adjusted
Invested Amount on such day.
"CLASS D FIXED/FLOATING ALLOCATION PERCENTAGE" shall mean for any
Business Day the percentage equivalent of a fraction, the numerator of which
is the Class D
15
<PAGE>
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.
"CLASS D FLOATING ALLOCATION PERCENTAGE" shall mean with respect to
any Business Day the percentage equivalent of a fraction, the numerator of
which is the Class D Invested Amount on such day after taking into account
all adjustments of the Class D Invested Amount on such day and the
denominator of which is the greater of (a) the sum of the aggregate amount of
Principal Receivables and the amount on deposit in the Excess Funding Account
at the end of the preceding Business Day and (b) the sum of the numerators
with respect to all Classes of all Series then outstanding used to calculate
the applicable allocation percentage.
"CLASS D INITIAL INVESTED AMOUNT" shall mean the aggregate initial
principal amount of the Class D Certificates, which is $45,500,000.
"CLASS D INTEREST SHORTFALL" shall have the meaning specified in
subsection 4.6(d) of the Agreement.
"CLASS D INVESTED AMOUNT" shall mean, when used with respect to any
Business Day, the greater of (x) zero and (y) an amount equal to (a) the
initial principal balance of the Class D Certificates, MINUS (b) the
aggregate amount of principal payments made to Class D Certificateholders
through and including such Business Day, MINUS (c) the aggregate amounts by
which the Transferor has reduced the Class D Invested Amount pursuant to
subsection 4.12(d) of the Agreement, MINUS (d) the aggregate amount of Class
D Investor Charge-Offs for all prior Distribution Dates, MINUS (e) the
aggregate amount of Reallocated Principal Collections for all prior Business
Days, PLUS (f) the sum of the aggregate amount allocated and available on all
prior Business Days pursuant to subsection 4.9(a)(xii) of the Agreement and,
with respect to such subsection, pursuant to subsections 4.10(a) and (b),
4.19(b) and 4.20(b), (c) and (d) of the Agreement,
16
<PAGE>
for the purpose of reinstating amounts reduced pursuant to the foregoing
clauses (d) and (e).
"CLASS D INVESTOR CHARGE-OFFS" shall have the meaning specified in
subsection 4.13(a) of the Agreement.
"CLASS D OUTSTANDING PRINCIPAL AMOUNT" shall mean, when used with
respect to any Business Day, an amount equal to (a) the Class D Initial
Invested Amount MINUS (b) the aggregate amount of principal payments made to
Class D Certificateholders prior to such Business Day.
"CLASS D POOL FACTOR" shall mean, with respect to any Record Date,
a number carried out to seven decimal places representing the ratio of the
Class D Invested Amount as of such Record Date (determined after taking into
account any increases or decreases in the Class D Invested Amount which will
occur on the following Distribution Date) to the Class D Initial Invested
Amount.
"CLASS D PRINCIPAL" shall mean the principal distributable in
respect of the Class D Certificate as specified in subsection 4.7(d) of the
Agreement.
"CLASS D PRINCIPAL PAYMENT COMMENCEMENT DATE" shall mean the
earlier of (a) during the Amortization Period, the first Distribution Date on
which the Class C Invested Amount is paid in full or, if there are no
Principal Collections allocable to the Series 1997-2 Certificates remaining
after payments have been made to the Class C Certificates on such
Distribution Date, the Distribution Date following the first Distribution
Date on which the Class C Invested Amount is paid in full and (b) the
Distribution Date following a sale or repurchase of the Receivables as set
forth in Section 2.4(e), 9.2, 10.2(a), 12.1 or 12.2 of the Agreement or
Section 3 of this Series Supplement.
"CLOSING DATE" shall mean November 20, 1997.
"CONTROLLED ACCUMULATION AMOUNT" shall mean, for any Transfer Date
with respect to the Accumulation Period prior to the payment in full of the
sum of the Class A Invested Amount, the Class B Invested Amount and the Class
C Invested Amount, $54,541,666.67; PROVIDED, HOWEVER, that if the
Accumulation Period Length is determined to be less than 12 months pursuant
to subsec-
17
<PAGE>
tion 4.21 of the Agreement, the Controlled Accumulation Amount for each
Transfer Date with respect to the Accumulation Period prior to the payment in
full of the sum of the Class A Invested Amount, the Class B Invested Amount
and the Class C Invested Amount, will be equal to (i) the product of (x) the
sum of the Class A Initial Invested Amount, the Class B Initial Invested
Amount and the Class C Initial Invested Amount and (y) the Accumulation
Period Factor for the Monthly Period preceding such Transfer Date divided by
(ii) the Required Accumulation Factor Number.
"CONTROLLED DEPOSIT AMOUNT" shall mean, with respect to any
Transfer Date, the sum of (a) the Controlled Accumulation Amount for such
Transfer Date and (b) any existing Accumulation Shortfall.
"COVERED AMOUNT" shall mean, with respect to any Interest Accrual
Period during the Accumulation Period prior to the payment in full of the sum
of the Class A Invested Amount, Class B Invested Amount and the Class C
Invested Amount, the product of (a) the weighted average of the Class A
Certificate Rate, the Class B Certificate Rate and the Class C Certificate
Rate, each in effect with respect to such Interest Accrual Period, (b) a
fraction the numerator of which is the actual number of days in the related
Interest Accrual Period and the denominator of which is 360 and (c) the
Principal Funding Account Balance (up to the sum of the Class A Invested
Amount, the Class B Invested Amount and the Class C Invested Amount) as of
the last day of the Monthly Period preceding the Monthly Period in which such
Interest Accrual Period ends.
"DEFAULT AMOUNT" shall mean, (i) on any Business Day other than the
Default Recognition Date, the aggregate amount of Principal Receivables in
Accounts which became Defaulted Accounts on such Business Day and (ii) on any
Default Recognition Date the aggregate amount of Principal Receivables in
Accounts which became Defaulted Accounts during the then current Monthly
Period (other than such Accounts which were included in clause (i)).
"DEFAULT RECOGNITION ALLOCATION PERCENTAGE" shall mean, with
respect to each Default Recognition Date, the percentage equivalent of a
fraction, the numer-
18
<PAGE>
ator 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 December 20, 1997, and the twentieth
day of each month thereafter, or if such day is not a Business Day, the next
succeeding Business Day.
"EARLY AMORTIZATION PERIOD" shall mean the period beginning on the
earlier of (a) the day on which a Pay Out Event occurs or is deemed to have
occurred and (b) the Expected Final Payment Date if the Class A Invested
Amount, the Class B Invested Amount and the Class C Invested Amount have not
been paid in full on such date, and ending on the earlier of (i) the date on
which the Class A Invested Amount, the Class B Invested Amount, the Class C
Invested Amount and the Class D Invested Amount have been paid in full and
(ii) the Scheduled Series 1997-2 Termination Date.
"ENHANCEMENT" shall mean, with respect to the Class A Certificates,
the subordination of the Class B Invested Amount, the Class C Invested
Amount, and the Class D Invested Amount, with respect to the Class B
Certificates, the subordination of the Class C Invested Amount and the Class
D Invested Amount, and with respect to the Class C Certificates, the
subordination of the Class D Invested Amount and the amount, if any, on
deposit from time to time in the Class C Reserve Account.
"EXCESS FINANCE CHARGE COLLECTIONS" shall mean, with respect to any
Business Day, as the context requires, either (x) the amount described in
subsection 4.9(a)(xvii) of the Agreement allocated to the Series 1997-2
Certificates but available to cover shortfalls in amounts paid from Finance
Charge Collections for other
19
<PAGE>
Series, if any, or (y) the aggregate amount of Finance Charge Collections
allocable to other Series in excess of the amounts necessary to make required
payments with respect to such Series, if any, and available to cover
shortfalls with respect to the Series 1997-2 Certificates.
"EXPECTED FINAL PAYMENT DATE" shall mean the November 2002
Distribution Date.
"FASIT" shall have the meaning specified in Section 18 of this
Series Supplement.
"FIXED/FLOATING ALLOCATION PERCENTAGE" shall mean for any Business
Day the percentage equivalent of a fraction, the numerator of which is the
Invested Amount at the end of the last day of the Revolving Period and the
denominator of which is the greater of (a) the sum of the aggregate amount of
Principal Receivables and the amount on deposit in the Excess Funding Account
as of the end of the preceding Business Day and (b) the sum of the numerators
with respect to all Classes of all Series then outstanding used to calculate
the applicable allocation percentage.
"FLOATING ALLOCATION PERCENTAGE" shall mean for any Business Day
the sum of the applicable Class A Floating Allocation Percentage, Class B
Floating Allocation Percentage, Class C Floating Allocation Percentage, and
Class D Floating Allocation Percentage for such Business Day.
"FULL INVESTED AMOUNT" shall mean $700,000,000.
"FUNDING PERIOD" shall mean the period from and including the
Closing Date to but excluding the earlier of (x) the first day for which the
Invested Amount equals the Full Invested Amount; (y) the first day on which a
Pay Out Event is deemed to occur; and (z) the first day of the March 1998
Monthly Period.
"INITIAL INVESTED AMOUNT" shall mean an amount equal to the sum of
(i) the Class A Initial Invested Amount less the Class A Percentage of the
Initial Pre-Funded Amount, plus the Class A Percentage of any withdrawals
from the Pre-Funding Account during the Funding Period in connection with the
addition of Receivables to
20
<PAGE>
the Trust; (ii) the Class B Initial Invested Amount less the Class B
Percentage of the Initial Pre-Funded Amount, plus the Class B Percentage of
any withdrawals from the Pre-Funding Account during the Funding Period in
connection with the addition of Receivables to the Trust; (iii) the Class C
Initial Invested Amount less the Class C Percentage of the Initial Pre-Funded
Amount, plus the Class C Percentage of any withdrawals from the Pre-Funding
Account during the Funding Period in connection with the addition of
Receivables to the Trust; and (iv) the Class D Initial Invested Amount.
"INITIAL PRE-FUNDED AMOUNT" shall mean $140,000,000.
"INTEREST ACCRUAL PERIOD" shall mean, with respect to a
Distribution Date, the period from and including the preceding Distribution
Date to but excluding such Distribution Date; PROVIDED, HOWEVER, that the
initial Interest Accrual Period shall be the period from the Closing Date to
but excluding the initial Distribution Date.
"INVESTED AMOUNT" shall mean, when used with respect to any
Business Day, an amount equal to the sum of (a) the Class A Invested Amount
as of such Business Day, (b) the Class B Invested Amount as of such Business
Day, (c) the Class C Invested Amount as of such Business Day and (d) the
Class D Invested Amount as of such Business Day.
"INVESTOR CERTIFICATEHOLDER" shall mean the Holder of record of an
Investor Certificate of Series 1997-2.
"INVESTOR CERTIFICATES" shall mean the Class A Certificates, the
Class B Certificates, the Class C Certificates and the Class D Certificate.
"INVESTOR CHARGE-OFFS" shall mean the sum of Class A Investor
Charge-Offs, Class B Investor Charge-Offs, Class C Investor Charge-Offs and
Class D Investor Charge-Offs.
"INVESTOR DEFAULT AMOUNT" shall mean, with respect to each Business
Day, an amount equal to the product of the Default Amount identified since
the prior
21
<PAGE>
reporting date and the Floating Allocation Percentage applicable for such
Business Day.
"INVESTOR PERCENTAGE" shall mean, for any Business Day, (a) with
respect to Finance Charge Collections prior to the Pay Out Commencement Date,
Receivables in Defaulted Accounts at any time and Principal Collections
during the Revolving Period, the Floating Allocation 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 Allocation Percentage.
"LIBOR" shall mean, as of any LIBOR Determination Date, the London
interbank offered quotations for one-month Dollar deposits determined by the
Trustee for each Interest Accrual Period in accordance with the provisions of
Section 4.17 of the Agreement.
"LIBOR DETERMINATION DATE" shall mean the second Business Day prior
to the commencement of each Interest Accrual Period; PROVIDED, HOWEVER, that
with respect to the period from the Closing Date through December 21, 1997,
LIBOR Determination Date shall mean November 18, 1997. For purposes of this
definition, a Business Day is any day on which banks in London and New York
are open for the transaction of international business.
"MINIMUM RETAINED PERCENTAGE" shall mean 2%.
"MINIMUM TRANSFEROR PERCENTAGE" shall mean 0%; PROVIDED, HOWEVER,
that in certain circumstances such percentage may be increased.
"MONTHLY PERIOD" shall have the meaning specified in the Agreement,
except that the first Monthly Period with respect to the Series 1997-2
Certificates shall begin on and include the Closing Date and shall end on and
include November 30, 1997.
"NEGATIVE CARRY AMOUNT" shall have the meaning specified in
subsection 4.10(a) of the Agreement.
"PAIRED SERIES" shall have the meaning specified in Section 19 of
this Series Supplement.
22
<PAGE>
"PAYING AGENT" shall mean, for the Series 1997-2 Certificates, The
Bank of New York.
"PAYMENT RESERVE ACCOUNT" shall have the meaning specified in
subsection 4.18 of the Agreement.
"PAY OUT COMMENCEMENT DATE" shall mean the date on which a Trust
Pay Out Event is deemed to occur pursuant to Section 9.1 of the Agreement or
a Series 1997-2 Pay Out Event is deemed to occur pursuant to Section 8 of
this Series Supplement.
"PORTFOLIO ADJUSTED YIELD" shall mean, with respect to any Monthly
Period, the average of the percentages obtained for each of the three
preceding Monthly Periods by subtracting the Base Rate for such Monthly
Period from the Portfolio Yield for such Monthly Period.
"PORTFOLIO YIELD" shall mean for the Series 1997-2 Certificates,
with respect to any Monthly Period, the annualized percentage equivalent of a
fraction, the numerator of which is an amount equal to the sum of the
aggregate amount of Available Series 1997-2 Finance Charge Collections for
such Monthly Period (not including the amounts on deposit in the Payment
Reserve Account and Adjustment Payments made by the Transferor with respect
to Adjustment Payments required to be made but not made in prior Monthly
Periods, if any) plus the Principal Funding Account Investment Proceeds,
investment earnings on amounts on deposit in the Pre-Funding Account
deposited into the Collection Account pursuant to subsection 4.14(b) of the
Agreement on the related Transfer Date and amounts withdrawn from the
Accumulation Period Reserve Account, if any, with respect to such Monthly
Period calculated on a cash basis, MINUS the aggregate Investor Default
Amount for such Monthly Period and the Series Allocation Percentage of any
Adjustment Payments which the Transferor is required but fails to make
pursuant to the Pooling and Servicing Agreement for such Monthly Period, and
the denominator of which is the average daily Invested Amount plus the
Pre-Funded Amount during the preceding Monthly Period; PROVIDED, HOWEVER,
that Excess Finance Charge Collections applied for the benefit of the
Certificateholders may be added to the numerator if a Ratings Event with
respect to the Series 1997-2 Certificates would not occur as a result thereof.
23
<PAGE>
"PRE-FUNDED AMOUNT" shall mean (a) the Initial Pre-Funded Amount,
MINUS (b) the amount of any increases in the Invested Amount during the
Funding Period pursuant to Section 4.15 of the Agreement, MINUS (c) the
amount of any principal losses on funds on deposit in the Pre-Funding Account
and MINUS (d) the amount withdrawn from the Pre-Funding Account and deposited
in the Excess Funding Account.
"PRE-FUNDING ACCOUNT" shall mean the account established and
maintained pursuant to subsection 4.14(a) of the Agreement.
"PRINCIPAL FUNDING ACCOUNT" shall have the meaning set forth in
subsection 4.19 of the Agreement.
"PRINCIPAL FUNDING ACCOUNT BALANCE" shall mean, with respect to any
date of determination during the Accumulation Period, the principal amount,
if any, on deposit in the Principal Funding Account on such date of
determination.
"PRINCIPAL FUNDING ACCOUNT INVESTMENT PROCEEDS" shall mean, with
respect to each Interest Accrual Period during the Accumulation Period, the
investment earnings on funds on deposit in the Principal Funding Account (net
of investment losses and expenses) for such Interest Accrual Period.
"PRINCIPAL SHORTFALLS" shall mean on any Business Day (x) for
Series 1997-2, (i) during the Accumulation Period, the amount, if any, by
which the Controlled Deposit Amount for the Transfer Date immediately
following the then current Monthly Period exceeds the total of the amounts
described in clauses (v), (w), (x) and (y) of subsection 4.9(c)(i), and (ii)
at all other times, the Invested Amount of the class then receiving principal
payments after the application of Principal Collections on such Business Day
or (y) for any other Series the amounts specified as such in the Supplement
for such other Series.
"QIB" shall mean a "qualified institutional buyer" within the
meaning of Rule 144A under the Securities Act.
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"RATING AGENCY" shall mean Standard & Poor's, a Division of the
McGraw-Hill Companies, and Moody's Investors Service, Inc.
"REALLOCATED CLASS B PRINCIPAL COLLECTIONS" shall have the meaning
specified in subsection 4.16(c) of the Agreement.
"REALLOCATED CLASS C PRINCIPAL COLLECTIONS" shall have the meaning
specified in subsection 4.16(b) of the Agreement.
"REALLOCATED CLASS D PRINCIPAL COLLECTIONS" shall have the meaning
specified in subsection 4.16(a) of the Agreement.
"REALLOCATED PRINCIPAL COLLECTIONS" shall mean the sum of
Reallocated Class B Principal Collections, Reallocated Class C Principal
Collections and Reallocated Class D Principal Collections.
"REFERENCE BANKS" shall mean four major banks in the London
interbank market selected by the Trustee.
"REQUIRED ACCUMULATION FACTOR NUMBER" shall be equal to a fraction,
rounded upwards to the nearest whole number, the numerator of which is one
and the denominator of which is equal to the lowest monthly principal payment
rate on the Receivables, expressed as a decimal, for the 12 months preceding
the date of such calculation.
"REQUIRED AMOUNT" shall have the meaning specified in subsection
4.10(b) of the Agreement.
"REQUIRED RESERVE ACCOUNT AMOUNT" shall mean, with respect to any
Transfer Date on or after the Reserve Account Funding Date, an amount equal
to (a) 0.50% of the sum of the Class A Invested Amount, the Class B Invested
Amount and the Class C Invested Amount or (b) any other amount designated by
the Transferor; PROVIDED, HOWEVER, that if such designation is of a lesser
amount, the Transferor shall have (i) provided the Servicer and the Trustee
with evidence that the Rating Agency Condition has been satisfied and (ii)
delivered to the Trustee a certificate of an authorized officer to the effect
that, based on the facts known to such officer at such time, in the
reasonable belief of the Transferor, such designation
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will not cause a Pay Out Event or an event that, after the giving of notice
or the lapse of time, would cause a Pay Out Event to occur with respect to
Series 1997-2.
"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 1997-2 TERMINATION DATE" shall mean the May 2006
Distribution Date.
"SERIES 1997-2" shall mean the Series of the Metris Master Trust
represented by the Series 1997-2 Certificates.
"SERIES 1997-2 ALLOCATION PERCENTAGE" shall mean, on any date of
determination, the percentage equivalent of a fraction the numerator of which
is the Invested Amount and the denominator of which is the sum of the
Invested Amounts relating to all other Series then outstanding.
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"SERIES 1997-2 CERTIFICATES" shall mean the Class A Certificates,
the Class B Certificates, the Class C Certificates and the Class D
Certificate.
"SERIES 1997-2 CERTIFICATEHOLDER" shall mean the holder of record
of any Series 1997-2 Certificate.
"SERIES 1997-2 CERTIFICATEHOLDERS' INTEREST" shall have the meaning
specified in Section 4.4 of the Agreement.
"SERIES 1997-2 PAY OUT EVENT" shall have the meaning specified in
Section 8 of this Series Supplement.
"SERIES 1997-2 TERMINATION DATE" shall mean the earlier to occur of
(i) the day after the Distribution Date on which the Series 1997-2
Certificates are paid in full, or (ii) the Scheduled Series 1997-2
Termination Date.
"SERIES SERVICING FEE PERCENTAGE" shall mean 2.00% per annum.
"SERVICING FEE" shall mean for any Monthly Period, an amount equal
to the product of (i) a fraction the numerator of which is the actual number
of days in such Monthly Period and the denominator of which is 365 or 366,
(ii) the applicable Series Servicing Fee Percentage and (iii) the Adjusted
Invested Amount as of the beginning of the day on the first day of such
Monthly Period, or, in the case of the Funding Period, the Initial Invested
Amount as of the beginning of the day on the first day of such Monthly Period.
"SHARED PRINCIPAL COLLECTIONS" shall mean, as the context requires,
either (a) the amount allocated to the Series 1997-2 Certificates which, in
accordance with subsections 4.9(b) and 4.9(c)(v) of the Agreement, may be
applied in accordance with Section 4.3(d) of the Agreement or (b) the amounts
allocated to the investor certificates of other Series which the applicable
Series Supplements for such Series specify are to be treated as "Shared
Principal Collections" and which may be applied to cover Principal Shortfalls
with respect to the Series 1997-2 Certificates.
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"STATED CLASS D AMOUNT" shall mean the greater of (i) zero and (ii)
a number rounded to the nearest Dollar equal to the product of 6.952% percent
and the ABC Adjusted Invested Amount; PROVIDED, HOWEVER, that in no event
shall the Stated Class D Amount be less than $19,635,000, except that if the
ABC Adjusted Invested Amount is equal to zero, the Stated Class D Amount
shall be zero; and PROVIDED FURTHER that during any Early Amortization Period
the Stated Class D Amount shall be equal to the Stated Class D Amount
immediately preceding the commencement of the Early Amortization Period.
"TARGETED HOLDER" shall mean (i) each holder of a right to receive
interest or principal with respect to the Class C Certificates (or other
interests in the Trust), other than certificates (or other such interests)
with respect to which an opinion is rendered that such certificates (or other
such interests) will be treated as debt for Federal income tax purposes, and
(ii) any holder of a right to receive any amount in respect of the Transferor
Interest; PROVIDED, that any Person holding more than one interest each of
which would cause such Person to be a Targeted Holder shall be treated as a
single Targeted Holder.
"TERMINATION PAYMENT DATE" shall mean the earlier of the first
Distribution Date following the liquidation or sale of the Receivables as a
result of an Insolvency Event or a Class C Trigger Event and the occurrence
of the Scheduled Series 1997-2 Termination Date.
"TRANSFER" shall have the meaning specified in subsection 10(a) of
this Series Supplement.
"TRANSFEROR FINANCE CHARGE COLLECTIONS" shall mean on any Business
Day the product of (a) the Finance Charge Collections for such Business Day,
(b) the Transferor Percentage and (c) the Series Allocation Percentage.
"TRANSFEROR RETAINED CERTIFICATES" shall mean investor certificates
of any Series, which may include the Class D Certificate, which the
Transferor retains, but only to the extent that and for so long as the
Transferor is the Holder of such Certificates.
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"TRANSFEROR RETAINED FINANCE CHARGE COLLECTIONS" shall mean with
respect to each Business Day other than a Default Recognition Date, the
amount specified in subsection 4.9(a)(xvii) of the Agreement.
"WEIGHTED AVERAGE INVESTED AMOUNT" shall mean with respect to any
Monthly Period the weighted average Adjusted Invested Amount based on the
Adjusted Invested Amount outstanding on each Business Day after giving effect
to all transactions on such Business Day from but excluding the Default
Recognition Date related to the preceding Monthly Period to and including the
Default Recognition Date with respect to such Monthly Period.
"WEIGHTED AVERAGE PRINCIPAL RECEIVABLES" shall mean with respect to
any Monthly Period the weighted average sum of the total amount of Principal
Receivables and the amount on deposit in the Excess Funding Account on each
Business Day after giving effect to all transactions on such Business Day
from but excluding the Default Recognition Date related to the preceding
Monthly Period to and including the Default Recognition Date with respect to
such Monthly Period.
"WITHHOLDING EVENT" shall have the meaning specified in subsection
10(b) of this Series Supplement.
"WITHHOLDING TAX" shall have the meaning specified in subsection
10(b) of this Series Supplement.
SECTION 3. REASSIGNMENT TERMS. The Series 1997-2 Certificates
shall be subject to termination by the Transferor at its option, in
accordance with the terms specified in subsection 12.2(a) of the Agreement,
on any Distribution Date on or after the Distribution Date on which the sum
of the Class A Invested Amount, the Class B Invested Amount and the Class C
Invested Amount would be reduced to an amount less than or equal to 10% of
the sum of the highest Class A Invested Amount, the highest Class B Invested
Amount and the highest Class C Invested Amount during the Revolving Period.
The deposit required in connection with any such termination and final
distribution shall be equal to the sum of the unpaid Class A Invested Amount,
the unpaid Class B Invested Amount and the unpaid Class C Invested Amount
plus accrued and unpaid interest on the Class A Certificates, Class B
Certificates and Class C Certificates through the
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day prior to the Distribution Date on which the final distribution occurs, in
each case after giving effect to any payments on such date.
SECTION 4. DELIVERY AND PAYMENT FOR THE SERIES 1997-2
CERTIFICATES. The Transferor shall execute and deliver the Series 1997-2
Certificates to the Trustee for authentication in accordance with Section 6.1
of the Agreement. The Trustee shall deliver the Series 1997-2 Certificates
to or upon the order of the Transferor when authenticated in accordance with
Section 6.2 of the Agreement.
SECTION 5. FORM OF DELIVERY OF SERIES 1997-2 CERTIFICATES;
DENOMINATIONS. (a) The Class A Certificates and the Class B Certificates
shall be delivered as Book-Entry Certificates as provided in Sections 6.1 and
6.10 of the Agreement and shall be issued in minimum denominations of $1,000
and integral multiples thereof. The Class C Certificates shall be delivered
as Registered Certificates as provided in Section 6.1 of the Agreement and
shall be issued in minimum denominations of $1,000,000 and integral multiples
of $1,000 in excess thereof. The Class D Certificates shall be delivered as
Registered Certificates as provided in Section 6.1 of the Agreement.
(b) The Depositary for Series 1997-2 shall be The Depository
Trust Company and the Class A Certificates and Class B Certificates shall be
initially registered in the name of Cede & Co., its nominee.
SECTION 6. ARTICLE IV OF AGREEMENT. Sections 4.1, 4.2 and 4.3 of
the Agreement shall read in their entirety as provided in the Agreement.
Article IV of the Agreement (except for Sections 4.1, 4.2 and 4.3 thereof)
shall read in its entirety as follows and shall be applicable only to the
Series 1997-2 Certificates:
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS
SECTION 4.4 RIGHTS OF CERTIFICATEHOLDERS. The Series 1997-2
Certificates shall represent undivided
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interests in the Trust, including the right to receive, to the extent
necessary to make the required payments with respect to such Series 1997-2
Certificates at the times and in the amounts specified in this Agreement, (a)
the Floating Allocation Percentage and the Fixed/Floating Allocation
Percentage (as applicable from time to time) of Collections (including
Finance Charge Collections) available in the Collection Account, (b) funds
allocable to the Series 1997-2 Certificates on deposit in the Excess Funding
Account and (c) funds on deposit in the Interest Funding Account, the
Principal Account, the Principal Funding Account, the Accumulation Period
Reserve Account, the Distribution Account, the Payment Reserve Account and
the Pre-Funding Account (for such Series, the "Series 1997-2
Certificateholders' Interest"). The Class B Invested Amount, the Class C
Invested Amount and the Class D Invested Amount shall be subordinated to the
Class A Certificates; the Class C Invested Amount and the Class D Invested
Amount shall be subordinated to the Class B Certificates; and the Class D
Invested Amount shall be subordinated to the Class C Certificates, in each
case to the extent provided in this Article IV. The Class B Certificates
will not have the right to receive payments of principal until the Class A
Invested Amount has been paid in full. The Class C Certificates will not
have the right to receive payments of principal until the Class A Invested
Amount and the Class B Invested Amount have been paid in full. The Class D
Certificates will not have the right to receive payments of principal, other
than to the extent of Class D Excess Amounts, until the Class A Invested
Amount, the Class B Invested Amount and the Class C Invested Amount have been
paid in full.
SECTION 4.5 COLLECTIONS AND ALLOCATION; PAYMENTS ON EXCHANGEABLE
TRANSFEROR CERTIFICATE.
(a) COLLECTIONS AND ALLOCATIONS. The Servicer will apply or
will instruct the Trustee to apply all funds on deposit in the Collection
Account and the Excess Funding Account allocable to the Series 1997-2
Certificates, and all funds on deposit in the Interest Funding Account, the
Principal Account, the Principal Funding Account, the Accumulation Period
Reserve Account, the Distribution Account, the Payment Reserve Account and
the Pre-Funding Account maintained for this Series, as described in this
Article IV. On each Business Day, (i)
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the amount of Finance Charge Collections available in the Collection Account
allocable to Series 1997-2 Certificates shall be determined by multiplying
the aggregate amount of such Finance Charge Collections by (x) prior to the
Pay Out Commencement Date, the Floating Allocation Percentage and (y) on and
after the Pay Out Commencement Date, the Fixed/Floating Allocation
Percentage, (ii) the amount of Principal Collections available in the
Collection Account allocable to the Series 1997-2 Certificates shall be
determined by multiplying the aggregate amount of such Principal Collections
by (x) during the Revolving Period, the Floating Allocation Percentage and
(y) during any Amortization Period, the Fixed/Floating Allocation Percentage,
and (iii) the Receivables in Defaulted Accounts allocable to the Series
1997-2 Certificates shall be determined by multiplying the aggregate amount
of such Receivables in Defaulted Accounts by the Floating Allocation
Percentage. In addition, on the Closing Date the Transferor shall make a
deposit to the Interest Funding Account in the amount of $3,520,012.22 to be
allocated to the Series 1997-2 Certificates and applied as Available Series
1997-2 Finance Charge Collections in accordance with subsection 4.9(a) of the
Agreement.
(b) PAYMENTS TO THE HOLDER OF THE EXCHANGEABLE TRANSFEROR
CERTIFICATE. On each Business Day, the Servicer shall allocate and pay
Collections in accordance with the Daily Report with respect to such Business
Day to the Holder of the Exchangeable Transferor Certificate in accordance
with subsection 4.3(b) of the Agreement.
Notwithstanding the foregoing, amounts payable to the Transferor
pursuant to this subsection 4.5(b) shall instead be deposited in the Excess
Funding Account to the extent necessary to prevent the Transferor Interest
from being less than the Minimum Transferor Interest.
SECTION 4.6 DETERMINATION OF INTEREST FOR THE SERIES 1997-2
CERTIFICATES. (a) The amount of monthly interest (the "Class A Interest")
allocable to the Class A Certificates with respect to any Interest Accrual
Period shall be an amount equal to the product of (i) the Class A Certificate
Rate, (ii) a fraction the numerator of which is the actual number of days in
the related Interest Accrual Period and the denominator of which is 360 and
(iii) the Class A Outstanding Principal Amount as
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of the close of business on the first day of such Interest Accrual Period (or
in the case of the initial Distribution Date, an amount equal to the product
of (u) the Class A Initial Invested Amount, (v) 32 divided by 360, and (w)
the Class A Certificate Rate determined on November 18, 1997).
On the Determination Date preceding each Distribution Date, the
Servicer shall determine an amount (the "Class A Interest Shortfall") equal
to the excess, if any, of (x) the Class A Interest for the Interest Accrual
Period applicable to the Distribution Date OVER (y) the amount available to
be paid to the Class A Certificateholders in respect of interest on such
Distribution Date. If there is a Class A Interest Shortfall with respect to
any Distribution Date, an additional amount ("Class A Additional Interest")
shall be payable as provided herein with respect to the Class A Certificates
on each Distribution Date following such Distribution Date, to and including
the Distribution Date on which such Class A Interest Shortfall is paid to
Class A Certificateholders, equal to the product of (i) the Class A
Certificate Rate, (ii) a fraction the numerator of which is the actual number
of days in the related Interest Accrual Period and the denominator of which
is 360 and (iii) such Class A Interest Shortfall remaining unpaid.
Notwithstanding anything to the contrary herein, Class A Additional Interest
shall be payable or distributed to Class A Certificateholders only to the
extent permitted by applicable law.
(b) The amount of monthly interest (the "Class B Interest")
allocable to the Class B Certificates with respect to any Interest Accrual
Period shall be an amount equal to the product of (i) the Class B Certificate
Rate, (ii) a fraction the numerator of which is the actual number of days in
the related Interest Accrual Period and the denominator of which is 360 and
(iii) the Class B Invested Amount as of the close of business on the first
day of such Interest Accrual Period (or in the case of the initial
Distribution Date, an amount equal to the product of (u) the Class B Initial
Invested Amount, (v) 32 divided by 360, and (w) the Class B Certificate Rate
determined on November 18, 1997); PROVIDED, HOWEVER, that with respect to any
Distribution Date related to the Funding Period the amount described in
clause (iii) shall be the Class B Outstanding Principal Amount at the close
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of business on the first day of such Interest Accrual Period.
On the Determination Date preceding each Distribution Date, the
Servicer shall determine an amount (the "Class B Interest Shortfall") equal
to the excess, if any, of (x) the aggregate Class B Interest for the Interest
Accrual Period applicable to the Distribution Date OVER (y) the amount
available to be paid to the Class B Certificateholders in respect of interest
on such Distribution Date. If there is a Class B Interest 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
Certificates on each Distribution Date following such Distribution Date, to
and including the Distribution Date on which such Class B Interest Shortfall
is paid to Class B Certificateholders, equal to the product of (i) the Class
B Certificate Rate, (ii) a fraction the numerator of which is the actual
number of days in the related Interest Accrual Period and the denominator of
which is 360 and (iii) 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 Certificateholders only to the
extent permitted by applicable law.
(c) The amount of monthly interest (for the Series 1997-2
Certificates, the "Class C Interest") allocable to the Class C Certificates
of the Series 1997-2 Certificates with respect to any Interest Accrual Period
shall be an amount equal to the product of (i) the Class C Certificate Rate,
(ii) a fraction the numerator of which is the actual number of days in the
related Interest Accrual Period and the denominator of which is 360 and (iii)
the Class C Invested Amount as of the close of business on the first day of
such Interest Accrual Period (or in the case of the initial Distribution
Date, an amount equal to the product of (u) the Class C Initial Invested
Amount, (v) 32 divided by 360, and (w) the Class C Certificate Rate
determined on November 18, 1997); PROVIDED, HOWEVER, that with respect to any
Distribution Date related to the Funding Period the amount described in
clause (iii) shall be the Class C Outstanding Principal Amount at the close
of business on the first day of such Interest Accrual Period.
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On the Determination Date preceding each Distribution Date, the
Servicer shall determine an amount (the "Class C Interest Shortfall") equal
to the excess, if any, of (x) the aggregate Class C Interest for the Interest
Accrual Period applicable to the Distribution Date OVER (y) the amount
available to be paid to the Class C Certificateholders in respect of interest
on such Distribution Date. If there is a Class C Interest Shortfall with
respect to any Distribution Date, an additional amount ("Class C Additional
Interest") shall be payable as provided herein with respect to the Class C
Certificates on each Distribution Date following such Distribution Date, to
and including the Distribution Date on which such Class C Interest Shortfall
is paid to Class C Certificateholders, equal to the product of (i) the Class
C Certificate Rate, (ii) such Class C Interest Shortfall remaining unpaid and
(iii) a fraction the numerator of which is the actual number of days in the
related Interest Accrual Period and the denominator of which is 360.
Notwithstanding anything to the contrary herein, Class C Additional Interest
shall be payable or distributed to Class C Certificateholders only to the
extent permitted by applicable law.
SECTION 4.7 DETERMINATION OF PRINCIPAL AMOUNTS. (a) The amount
of principal (the "Class A Principal") distributable from the Distribution
Account or available for deposit into the Principal Funding Account with
respect to the Class A Certificates for each Distribution Date with respect
to the Amortization Period shall be equal to the least of (i) the Available
Investor Principal Collections on deposit in the Principal Account with
respect to the related Transfer Date, (ii) for each Distribution Date with
respect the Accumulation Period, prior to the payment in full of the Class A
Invested Amount and on or prior to the Expected Final Payment Date, the
applicable Controlled Deposit Amount for such Transfer Date and (iii) the
Class A Adjusted Invested Amount on such Transfer Date.
(b) The amount of principal (the "Class B Principal")
distributable from the Distribution Account or available for deposit into the
Principal Funding Account with respect to the Class B Certificates for each
Distribution Date, beginning with the Class B Principal Payment Commencement
Date, shall be equal to the least of (i) the Available Investor Principal
Collections remain-
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ing on deposit in the Principal Account with respect to the related Transfer
Date after application thereof to Class A Principal, if any, (ii) for each
Distribution Date with respect to the Accumulation Period, on or prior to the
Expected Final Payment Date, the applicable Controlled Deposit Amount for
such Transfer Date (minus the Class A Principal with respect to such Transfer
Date) and (iii) the Class B Adjusted Invested Amount on such Transfer Date.
(c) The amount of principal (the "Class C Principal")
distributable from the Distribution Account or available for deposit into the
Principal Funding Account with respect to the Class C Certificates for each
Distribution Date, beginning with the Class C Principal Payment Commencement
Date, shall be equal to the least of (i) the Available Investor Principal
Collections remaining on deposit in the Principal Account with respect to the
related Transfer Date after application thereof to Class A Principal and
Class B Principal, if any, (ii) for each Distribution Date with respect to
the Accumulation Period, on or prior to the Expected Final Payment Date, the
applicable Controlled Deposit Amount for such Transfer Date (minus the Class
A Principal and the Class B Principal with respect to such Transfer Date) and
(iii) the Class C Adjusted Invested Amount on such Transfer Date.
(d) The amount of principal (the "Class D Principal")
distributable from the Distribution Account with respect to the Class D
Certificates for each Distribution Date, beginning with the Class D Principal
Payment Commencement Date, or, in the case of distributions of Class D Excess
Amounts, on each Distribution Date during the Accumulation Period, shall be
equal to the lesser of (i) the Available Investor Principal Collections
remaining on deposit in the Principal Account with respect to the related
Transfer Date after application thereof to Class A Principal, Class B
Principal and Class C Principal, if any, (ii) the Class D Invested Amount on
such Transfer Date and (iii) in the case of distributions of Class D Excess
Amounts, the Class D Excess Amount.
SECTION 4.8 SHARED PRINCIPAL COLLECTIONS. Shared Principal
Collections allocated to Available Investor Principal Collections for the
Series 1997-2 Certificates and to be applied to Class A Principal,
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Class B Principal, Class C Principal and Class D Principal pursuant to
subsection 4.9(c)(i)(z) of the Agreement for any Business Day with respect to
the Amortization Period shall mean an amount equal to the product of (x)
Shared Principal Collections for all Series for such Business Day and (y) a
fraction, the numerator of which is the Principal Shortfall for the Series
1997-2 Certificates for such Business Day and the denominator of which is the
aggregate amount of Principal Shortfalls for all Series for such Business
Day. For any Business Day with respect to the Revolving Period, Shared
Principal Collections allocated to Available Investor Principal Collections
for the Series 1997-2 Certificates shall be zero.
SECTION 4.9 APPLICATION OF FUNDS ON DEPOSIT IN THE COLLECTION
ACCOUNT FOR THE CERTIFICATES. (a) On each Business Day, the Servicer shall
deliver to the Trustee a Daily Report in which it shall instruct the Trustee
to withdraw, and the Trustee, acting in accordance with such instructions,
shall withdraw, to the extent of the sum of (x) prior to the Pay Out
Commencement Date, the Floating Allocation Percentage of the sum of Finance
Charge Collections and the amount of Adjustment Payments made by the
Transferor with respect to Adjustment Payments required to be made but not
made in a prior Monthly Period, available in the Collection Account or, on
and after the Pay Out Commencement Date, the Fixed/Floating Allocation
Percentage of the sum of Finance Charge Collections and the amount of
Adjustment Payments made by the Transferor with respect to Adjustment
Payments required to be made by not made in a prior Monthly Period, available
in the Collection Account, and (y) amounts on deposit in the Payment Reserve
Account, if any, if and to the extent the Transferor designates that such
amounts are to be so applied (the "Available Series 1997-2 Finance Charge
Collections"; PROVIDED, that with respect to the Closing Date the amount
deposited by the Transferor into the Interest Funding Account pursuant to
subsection 4.5(a) of the Agreement shall also constitute Available Series
1997-2 Finance Charge Collections) the amounts required to be withdrawn from
the Collection Account pursuant to subsections 4.9(a)(i) through 4.9(a)(xvii)
of the Agreement.
(i) CLASS A INTEREST. On each Business Day during a Monthly
Period, the Trustee, acting in accordance with instructions from the
Servicer,
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shall withdraw from the Collection Account and deposit into the Interest
Funding Account for distribution on the next Distribution Date to the
Class A Certificateholders, to the extent of the Available Series 1997-2
Finance Charge Collections for such Business Day, an amount equal to the
lesser of (x) the Available Series 1997-2 Finance Charge Collections and
(y) the excess of (1) the sum of Class A Interest and Carryover Class A
Interest OVER (2) any amounts with respect thereto previously deposited
into the Interest Funding Account on any prior Business Day during such
Monthly Period. 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
Certificateholders only to the extent permitted by applicable law.
(ii) CLASS B INTEREST. On each Business Day during a Monthly
Period, the Trustee, acting in accordance with instructions from the
Servicer, shall withdraw from the Collection Account and deposit into
the Interest Funding Account for distribution on the next Distribution
Date to the Class B Certificateholders, to the extent of any Available
Series 1997-2 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
1997-2 Finance Charge Collections and (y) the excess of (1) the sum of
Class B Interest and Carryover Class B Interest OVER (2) any amounts
with respect thereto previously deposited into the Interest Funding
Account on any prior Business Day during such Monthly Period.
Notwithstanding 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 Certificateholders only to
the extent permitted by applicable law.
(iii) CLASS C INTEREST. On each Business Day during a Monthly
Period, the Trustee, acting in accordance with instructions from the
Servicer, shall withdraw from the Collection Account and deposit into
the Interest Funding Account for distribution on the next Distribution
Date to the Class
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C Certificateholders, to the extent of any Available Series 1997-2
Finance Charge Collections remaining after giving effect to
the withdrawal pursuant to subsections 4.9(a)(i) and (ii) of the
Agreement, an amount equal to the lesser of (x) any such remaining
Available Series 1997-2 Finance Charge Collections and (y) the excess of
(1) the sum of Class C Interest and Carryover Class C Interest OVER (2)
any amounts with respect thereto previously deposited into the Interest
Funding Account on any prior Business Day during such Monthly Period.
Notwithstanding anything to the contrary herein, the portion of
Carryover Class C Monthly Interest that constitutes Class C Additional
Interest shall be payable or distributable to Class C Certificateholders
only to the extent permitted by applicable law.
(iv) INVESTOR SERVICING FEE. On each Business Day, the Trustee,
acting in accordance with instructions from the Servicer, shall withdraw
from the Collection Account and distribute to the Servicer, to the
extent of any Available Series 1997-2 Finance Charge Collections
remaining after giving effect to the withdrawals pursuant to subsections
4.9(a)(i) through (iii) of the Agreement, an amount equal to the lesser
of (x) any such remaining Available Series 1997-2 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) INVESTOR DEFAULT AMOUNT. On each Business Day, FIRST if such
day is the Default Recognition Date for the related Monthly Period, the
Transferor will deposit (as described below) 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 to the extent of any Available Series 1997-2
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 1997-2 Finance Charge Collections and, if such day is the
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related Default Recognition Date for such Monthly Period, an amount
equal to the aggregate Transferor Retained Finance Charge Collections
for each prior day during the related Monthly Period and (y) the sum of
(1) the aggregate Investor Default Amount for such Business Day PLUS (2)
the unpaid Investor 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) to be treated as
Available Investor 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 from the Collection Account, to the extent of any Available
Series 1997-2 Finance Charge Collections remaining after giving effect
to the withdrawals pursuant to subsections 4.9(a)(i) through (v) of the
Agreement, an amount equal to the lesser of (x) any such remaining
Available Series 1997-2 Finance Charge Collections and (y) an amount
equal to the Series Allocation 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 Investor
Principal Collections.
(vii) REIMBURSEMENT OF CLASS A INVESTOR CHARGE-OFFS. On each
Business Day, the Trustee, acting in accordance with instructions from
the Servicer, shall withdraw from the Collection Account, to the extent
of any Available Series 1997-2 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 1997-2 Finance Charge Collections and
(y) the unreimbursed Class A Investor Charge-Offs, if any, will be
applied to reimburse Class A Investor 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 Investor
Principal Collections.
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(viii) UNPAID CLASS B INTEREST. On each Business Day, the
Trustee, acting in accordance with the instructions from the Servicer,
shall withdraw from the Collection Account and deposit in the Interest
Funding Account for distribution to the Class B Certificateholders on
the next Distribution Date, to the extent of any Available Series 1997-2
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 1997-2 Finance Charge Collections and (y) the sum of
(1) the amount of interest which has accrued with respect to the Class B
Outstanding Principal Amount at the Class B Certificate Rate but which
has not been deposited into the Interest Funding Account or paid to the
Class B Certificateholders and (2) any additional interest (to the
extent permitted by applicable law) at the Class B Certificate Rate for
interest that has accrued on interest that was due during a prior
Monthly Period pursuant to this subsection but was not deposited in the
Interest Funding Account or paid to the Class B Certificateholders.
(ix) UNPAID CLASS C INTEREST. On each Business Day, the Trustee,
acting in accordance with the instructions from the Servicer, shall
withdraw from the Collection Account and deposit in the Interest Funding
Account for distribution to the Class C Certificateholders on the next
Distribution Date, to the extent of any Available Series 1997-2 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
1997-2 Finance Charge Collections and (y) the sum of (1) the amount of
interest which has accrued with respect to the Class C Outstanding
Principal Amount at the Class C Certificate Rate but which has not been
deposited into the Interest Funding Account or paid to the Class C
Certificateholders and (2) any additional interest (to the extent
permitted by applicable law) at the Class C Certificate Rate for
interest that has accrued on interest that was due during a prior
Monthly Period pursuant to this subsection but was not deposited in
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the Interest Funding Account or paid to the Class C Certificateholders.
(x) REIMBURSEMENT OF CLASS B INVESTOR CHARGE-OFFS. On each
Business Day, the Trustee, acting in accordance with instructions from
the Servicer, shall withdraw from the Collection Account, to the extent
of any Available Series 1997-2 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 1997-2 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 Investor Principal Collections.
(xi) REIMBURSEMENT OF CLASS C INVESTOR CHARGE-OFFS. On each
Business Day, the Trustee, acting in accordance with instructions from
the Servicer, shall withdraw from the Collection Account, to the extent
of any Available Series 1997-2 Finance Charge Collections remaining
after giving effect to the withdrawals pursuant to subsections 4.9(a)(i)
through (x) of the Agreement, an amount equal to the lesser of (x) any
such remaining Available Series 1997-2 Finance Charge Collections and
(y) the unreimbursed amount by which the Class C Invested Amount has
been reduced on prior Business Days pursuant to clauses (c) and (d) of
the definition of Class C Invested Amount, if any, such amount, (i)
during the Revolving Period, to be treated as Shared Principal
Collections, and (ii) during the Amortization Period, to be treated as
Available Investor Principal Collections.
(xii) REIMBURSEMENT OF CLASS D INVESTOR CHARGE-OFFS. On each
Business Day, the Trustee, acting in accordance with instructions from
the Servicer, shall withdraw from the Collection Account, to the extent
of any Available Series 1997-2 Finance Charge Collections remaining
after giving
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effect to the withdrawals pursuant to subsections 4.9(a)(i) through (xi)
of the Agreement, an amount equal to the lesser of (x) any such
remaining Available Series 1997-2 Finance Charge Collections and
(y) the unreimbursed amount by which the Class D Invested Amount has
been reduced on prior Business Days pursuant to clauses (c) and (d) of
the definition of Class D Invested Amount, if any, such amount, (i)
during the Revolving Period, to be treated as Shared Principal
Collections, and (ii) during the Amortization Period, to be treated as
Available Investor Principal Collections.
(xiii) CLASS C RESERVE ACCOUNT. On each Business Day, the Trustee,
acting in accordance with instructions from the Transferor, shall
withdraw from the Collection Account and distribute to the Servicer, to
the extent of any Available Series 1997-2 Finance Charge Collections
remaining after giving effect to the withdrawals pursuant to subsections
4.9(a)(i) through (xii) of the Agreement, an amount equal to the lesser
of (x) any such remaining Available Series 1997-2 Finance Charge
Collections and (y) the amount specified to be deposited in the Class C
Reserve Account pursuant to the Class C Reserve Account Agreement and
the Servicer shall deposit such amount, if any, in the Class C Reserve
Account.
(xiv) ACCUMULATION PERIOD RESERVE ACCOUNT. On each Business Day on
and after the Reserve Account Funding Date, but prior to the date on
which the Accumulation Period Reserve Account terminates pursuant to
subsection 4.20(d) of the Agreement, the Trustee, acting in accordance
with instructions from the Servicer, shall withdraw from the Collection
Account and distribute to the Servicer, to the extent of any Available
Series 1997-2 Finance Charge Collections remaining after giving effect
to the withdrawals pursuant to subsections 4.9(a)(i) through (xiii) of
the Agreement, an amount equal to the lesser of (x) any such remaining
Available Series 1997-2 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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(xv) PAYMENT RESERVE ACCOUNT. On each Business Day, the Trustee,
acting in accordance with instructions from the Transferor, shall
withdraw from the Collection Account and distribute to the Servicer, to
the extent of any Available Series 1997-2 Finance Charge Collections
remaining after giving effect to the withdrawals pursuant to subsections
4.9(a)(i) through (xiv) of the Agreement, an amount equal to the lesser
of (x) any such remaining Available Series 1997-2 Finance Charge
Collections and (y) the amount designated by the Transferor in writing
(which includes facsimile transmission) in its instructions to the
Trustee on such Business Day and the Servicer shall deposit such amount,
if any, in the Payment Reserve Account.
(xvi) EXCESS FINANCE CHARGE COLLECTIONS. Any amounts remaining in
the Collection Account to the extent of any Available Series 1997-2
Finance Charge Collections remaining after giving effect to the
withdrawals pursuant to subsection 4.9(a)(i) through (xv) of the
Agreement, shall be treated as Excess Finance Charge Collections, and
the Servicer shall direct the Trustee in writing on each Business Day to
withdraw such amounts from the Collection Account and to first make such
amounts available to pay to Certificateholders of other Series to the
extent of shortfalls, if any, in amounts payable to such
certificateholders from Finance Charge Collections allocated to such
other Series, then to pay any unpaid commercially reasonable costs and
expenses of a Successor Servicer, if any, and then on each Business Day
other than the Default Recognition Date, to pay to the Transferor to be
treated as "Transferor Retained Finance Charge Collections," and, on
each Default Recognition Date, to pay any remaining Excess Finance
Charge Collections to the Transferor.
(b) For each Business Day with respect to the Revolving Period,
the funds on deposit in the Collection Account to the extent of the product
of (i) the Floating Allocation Percentage and (ii) Principal Collections with
respect to such Business Day (less the amount of Reallocated 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
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Daily Report for such Business Day, as provided in Section 4.3(d) of the
Agreement.
(c) For each Business Day on and after the Amortization Period
Commencement Date, the amount of funds on deposit in the Collection Account,
the Excess Funding Account or the Pre-Funding Account and other 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 Invested Amount) equal to
the sum of (v) the product of the Fixed/Floating Allocation Percentage
and Principal Collections in the Collection Account at the end of the
preceding Business Day (less the amount thereof applied as Reallocated
Principal Collections on such Business Day), (w) any amount on deposit
in the Excess Funding Account allocated to the Series 1997-2
Certificates 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), (x), (xi) and (xii) of the Agreement from Available Series
1997-2 Finance Charge Collections and from amounts available pursuant to
subsections 4.10(a) and (b), 4.16(a), (b) and (c), 4.19(b) and 4.20(b),
(c) and (d) of the Agreement on such Business Day, (y) on and after the
Pay Out Commencement Date, any amount on deposit in the Pre-Funding
Account on such Business Day (less investment earnings thereon) and (z)
the amount of Shared Principal Collections allocated to the Series
1997-2 Certificates in accordance with Section 4.8 of the Agreement on
such Business Day, will be deposited into the Principal Account;
PROVIDED, HOWEVER that with respect to any Monthly Period during the
Controlled Accumulation Period, the aggregate amount required to be
deposited in the Principal Account pursuant to this subsection 4.9(c)(i)
shall not exceed the sum of the Controlled Deposit Amount and, at the
option of the Transferor, the Class D Excess Amount.
(ii) an amount equal to the excess, if any, of (A) the sum of the
amounts described in clauses (i)(v) and (x) above over (B) the sum of
Class A Principal, Class B Principal and Class C
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Principal will be treated as Shared Principal Collections and applied as
provided in subsection 4.3(d) of the Agreement; and
(iii) on the Class C Principal Payment Commencement Date, the
amount, if any, allocated with respect to Class C Investor Charge-Offs
pursuant to clause (ii) of the second sentence of Section 3.2 of the
Class C Reserve Account Agreement will be deposited into the Principal
Account.
(d) On the first Business Day of the Amortization Period funds on
deposit in the Excess Funding Account will be deposited in the Principal
Account to the extent of the lesser of (x) the Invested Amount and (y) the
product of (i) the amount on deposit in the Excess Funding Account at the
beginning of the Amortization Period and (ii) a fraction, the numerator of
which is equal to the Invested Amount and the denominator of which is equal
to the sum of the invested amounts of all Series in amortization periods on
such day.
SECTION 4.10 COVERAGE OF REQUIRED AMOUNT FOR THE SERIES 1997-2
CERTIFICATES. (a) To the extent that any amounts are on deposit in the
Excess Funding Account or the Pre-Funding Account on any Business Day, the
Servicer shall apply, in the manner specified for application of Available
Series 1997-2 Finance Charge Collections in subsections 4.9(a)(i) through
(xiv) of the Agreement, Transferor Finance Charge Collections in an amount
(the "Negative Carry Amount") equal to the excess of (x) the product of (a)
the Base Rate, (b) the amounts on deposit in the Excess Funding Account and
the Pre-Funding Account and (c) the number of days elapsed since the previous
Business Day DIVIDED by 360 over (y) the aggregate amount of all earnings
since the previous Business Day available from the Cash Equivalents in which
funds on deposit in the Excess Funding Account and Pre-Funding Account are
invested.
(b) To the extent that on any Business Day payments are being made
pursuant to any of subsections 4.9(a)(i) through (xiv) of the Agreement,
respectively, and the full amount to be paid pursuant to any such subsection
receiving payments on such Business Day is not paid in full on such Business
Day, the Servicer shall apply, in the manner specified for application of
Avail-
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able Series 1997-2 Finance Charge Collections in subsections 4.9(a)(i)
through (xiv) of the Agreement, all or a portion of the Excess Finance Charge
Collections from other Series with respect to such Business Day allocable to
the Series 1997-2 Certificates in an amount equal to the excess of the full
amount to be allocated or paid pursuant to the applicable subsection over the
amount applied with respect thereto from Available Series 1997-2 Finance
Charge Collections and Transferor Finance Charge Collections on such Business
Day (the "Required Amount"). Excess Finance Charge Collections allocated to
the Series 1997-2 Certificates for any Business Day shall mean an amount
equal to the product of (x) Excess Finance Charge Collections available from
all other Series for such Business Day and (y) a fraction, the numerator of
which is the Required Amount for such Business Day and the denominator of
which is the aggregate amount of shortfalls in required amounts or other
amounts to be paid from Finance Charge Collections for all Series for such
Business Day.
SECTION 4.11 PAYMENT OF CERTIFICATE INTEREST. On each Transfer
Date, the Trustee, acting in accordance with instructions from the Servicer
set forth in the Daily Report for such day, shall withdraw the amount on
deposit in the Interest Funding Account with respect to the preceding Monthly
Period allocable to the Series 1997-2 Certificates and deposit such amount in
the Distribution Account. On each Distribution Date, the Paying Agent shall
pay in accordance with Section 5.1 of the Agreement to (w) the Class A
Certificateholders from the Distribution Account such amount deposited into
the Distribution Account on the related Transfer Date allocable thereto
pursuant to subsection 4.9(a)(i) of the Agreement, (x) the Class B
Certificateholders from the Distribution Account the amount deposited into
the Distribution Account on the related Transfer Date allocable thereto
pursuant to subsections 4.9(a)(ii) and (viii) of the Agreement, (y) the Class
C Certificateholders from the Distribution Account the amount deposited into
the Distribution Account on the related Transfer Date allocable thereto
pursuant to subsections 4.9(a)(iii) and (ix) of the Agreement, and (z) the
Class D Certificateholders from the Distribution Account the amount deposited
into the Distribution Account on the related Transfer Date allocable thereto
pursuant to subsection 4.9(a)(xv) of the Agreement.
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SECTION 4.12 PAYMENT OF CERTIFICATE PRINCIPAL.
(a) On the Transfer Date preceding each Distribution Date with
respect to the Amortization Period, the Trustee, acting in accordance with
instructions from the Servicer set forth in the Daily Report for such day, shall
withdraw from the Principal Account and deposit into the Distribution Account
with respect to the Early Amortization Period, or the Principal Funding Account
with respect to the Accumulation Period, to the extent of funds available, an
amount equal to the Class A Principal for such Distribution Date. On each
Distribution Date with respect to the Early Amortization Period until the Class
A Invested Amount is paid in full, or on the Expected Final Payment Date with
respect to the Accumulation Period following any deposit to the Distribution
Account pursuant to subsection 4.12(f), the Paying Agent shall pay in accordance
with Section 5.1 of the Agreement to the Class A Certificateholders from the
Distribution Account such amounts deposited with respect to Class A Principal
into the Distribution Account on the related Transfer Date.
(b) On the Transfer Date preceding the Class B Principal Payment
Commencement Date and each Transfer Date thereafter, the Trustee, acting in
accordance with instructions from the Servicer set forth in the Daily Report for
such day, shall withdraw from the Principal Account and deposit in the
Distribution Account with respect to the Early Amortization Period, or the
Principal Funding Account with respect to the Accumulation Period, to the extent
of funds available, an amount equal to the Class B Principal for the related
Distribution Date. On and after the Class B Principal Payment Commencement
Date, on each Distribution Date with respect to the Early Amortization Period
until the Class B Invested Amount is paid in full or on the Expected Final
Payment Date with respect to the Accumulation Period following any deposit to
the Distribution Account pursuant to subsection 4.12(f), the Paying Agent shall
pay in accordance with Section 5.1 of the Agreement to the Class B
Certificateholders from the Distribution Account such amounts deposited with
respect to Class B Principal into the Distribution Account on the related
Transfer Date.
(c) On the Transfer Date preceding the Class C Principal Payment
Commencement Date and each Transfer
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Date thereafter, the Trustee, acting in accordance with instructions from the
Servicer set forth in the Daily Report for such day, shall withdraw from the
Principal Account and deposit in the Distribution Account with respect to the
Early Amortization Period, or the Principal Funding Account with respect to
the Accumulation Period, to the extent of funds available, an amount equal to
the Class C Principal for the related Distribution Date. On and after the
Class C Principal Payment Commencement Date, on each Distribution Date with
respect to the Early Amortization Period until the Class C Invested Amount is
paid in full or on the Expected Final Payment Date with respect to the
Accumulation Period following any deposit to the Distribution Account
pursuant to subsection 4.12(f), the Paying Agent shall pay in accordance with
Section 5.1 of the Agreement to the Class C Certificateholders from the
Distribution Account such amounts deposited with respect to Class C Principal
into the Distribution Account on the related Transfer Date.
(d) On the Transfer Date preceding the Class D Principal Payment
Commencement Date and each Transfer Date thereafter, or, in the case of
distributions of Class D Excess Amounts, on each Transfer Date during the
Accumulation Period preceding a Distribution Date on which a distribution
shall be made with respect to Class D Excess Amounts, the Trustee, acting in
accordance with instructions from the Servicer set forth in the Daily Report
for such day, shall withdraw from the Principal Account and deposit in the
Distribution Account, to the extent of funds available, an amount equal to
the Class D Principal for the related Distribution Date. On the Class D
Principal Payment Commencement Date after the payment of any principal
amounts to the Class A Certificates, the Class B Certificates and the Class C
Certificates on such day, and on each Distribution Date thereafter until the
Class D Invested Amount is paid in full and on each Distribution Date during
the Accumulation Period on which amounts are to be distributed with respect
to Class D Excess Amounts, the Paying Agent shall pay in accordance with
Section 5.1 of the Agreement to the Class D Certificateholder from the
Distribution Account such amounts deposited with respect to Class D Principal
into the Distribution Account on the related Transfer Date; PROVIDED,
HOWEVER, THAT, if so designated in writing by the Transferor with respect to
any such Transfer Date, any such payment of Class D Principal shall not be
made
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to the Class D Certificateholder and such amount shall be subtracted from the
Class D Invested Amount and added to the Transferor Interest.
(e) Any amounts remaining in the Principal Account and allocable to
the Series 1997-2 Certificates, after the Class D Invested Amount has been paid
in full, will be treated as Shared Principal Collections and applied in
accordance with Section 4.3(d) of the Agreement.
(f) On the earlier to occur of (i) the first Transfer Date with
respect to the Early Amortization Period and (ii) the Transfer Date immediately
preceding the Expected Final Payment Date, the Trustee, acting in accordance
with instructions from the Servicer, shall withdraw from the Principal Funding
Account and deposit in the Distribution Account the amount on deposit in the
Principal Funding Account for distribution first to Class A Certificateholders
up to an amount equal to the Class A Invested Amount, second to Class B
Certificateholders up to an amount equal to the Class B Invested Amount, and
third to Class C Certificateholders up to an amount equal to the Class C
Invested Amount.
SECTION 4.13 INVESTOR CHARGE-OFFS. (a) If, on any Determination
Date, the aggregate Investor Default Amount and the Series Allocation
Percentage of unpaid Adjustment Payments, if any, for each Business Day in
the preceding Monthly Period exceeded the Available Series 1997-2 Finance
Charge Collections applied to the payment thereof pursuant to subsections
4.9(a)(v) and (vi) of the Agreement, the amount of Transferor Finance Charge
Collections and Excess Finance Charge Collections allocated thereto pursuant
to Section 4.10 of the Agreement, the amount of Reallocated Principal
Collections applied with respect thereto pursuant to Section 4.16 of the
Agreement, the amount of Principal Funding Account Investment Proceeds
applied with respect thereto pursuant to subsection 4.19(b), the amount of
Pre-Funding Account investment proceeds applied with respect thereto pursuant
to Section 4.14(c), amounts withdrawn from the Accumulation Period Reserve
Account and applied with respect to the Investor Default Amount pursuant to
subsection 4.20(c) and the Series Allocation Percentage of unpaid Adjustment
Payments with respect to such Monthly Period, the Class D Invested Amount
will be reduced by the amount by which
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the remaining aggregate Investor Default Amount and Series Allocation
Percentage of unpaid Adjustment Payments exceed the amount applied with
respect thereto during such preceding Monthly Period (a "Class D Investor
Charge-Off").
(b) In the event that any such reduction of the Class D Invested
Amount would cause the Class D Invested Amount to be a negative number, the
Class D Invested Amount will be reduced to zero, and, the Class C Invested
Amount will be reduced by the amount by which the Class D Invested Amount
would have been reduced below zero, but not more than the aggregate Investor
Default Amount and Series Allocation Percentage of unpaid Adjustment Payments
for such Monthly Period (a "Class C Investor Charge-Off").
(c) In the event that any such reduction of the Class C Invested
Amount would cause the Class C Invested Amount to be a negative number, the
Class C Invested Amount will be reduced to zero, and, the Class B Invested
Amount will be reduced by the amount by which the Class C Invested Amount
would have been reduced below zero, but not more than the remaining aggregate
Investor Default Amount and Series Allocation Percentage of unpaid Adjustment
Payments for such Monthly Period (a "Class B Investor Charge-Off").
(d) In the event that any such reduction of the Class B Invested
Amount would cause the Class B Invested Amount to be a negative number, the
Class B Invested Amount will be reduced to zero, and the Class A Invested
Amount will be reduced by the amount by which the Class B Invested Amount
would have been reduced below zero, but not more than the remaining aggregate
Investor Default Amount and Series Allocation Percentage of unpaid Adjustment
Payments for such Monthly Period (a "Class A Investor Charge-Off").
SECTION 4.14. PRE-FUNDING ACCOUNT. (a) ESTABLISHMENT OF THE
PRE-FUNDING ACCOUNT. The Transferor hereby directs the Servicer, for the
benefit of the Series 1997-2 Certificateholders, to establish and maintain or
cause to be established and maintained in the name of the Trustee, on behalf
of the Series 1997-2 Certificateholders, with a Qualified Institution (which
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initially shall be The Bank of New York) a segregated trust account (the
"Pre-Funding Account"), bearing a designation clearly indicating that the
funds deposited therein are held for the benefit of the Series 1997-2
Certificateholders. The Transferor does hereby transfer, assign, set over
and otherwise convey to the Trust for the benefit of the Series 1997-2
Certificateholders, without recourse, all of its right, title and interest
in, to and under the Pre-Funding Account, any Cash Equivalent on deposit
therein and any proceeds of the foregoing, including the investment earnings.
The Pre-Funding Account shall be under the sole dominion and control of the
Trustee for the benefit of the Series 1997-2 Certificateholders. If, at any
time, the institution holding the Pre-Funding Account ceases to be a
Qualified Institution, the Transferor shall direct the Servicer to establish
within 10 Business Days a new Pre-Funding Account meeting the conditions
specified above with a Qualified Institution, transfer any cash and/or any
investments to such new Pre-Funding Account and from the date such new
Pre-Funding Account is established, it shall be the "Pre-Funding Account." In
addition, after five days notice to the Trustee, the Transferor may direct
the Servicer to establish a new Pre-Funding Account meeting the conditions
specified above with a different Qualified Institution, transfer any cash
and/or investments to such new Pre-Funding Account and from the date such new
Pre-Funding Account is established, it shall be, for the Series 1997-2
Certificates, the "Pre-Funding Account." Pursuant to the authority granted
to the Servicer in subsection 3.1(b) of the Agreement, the Servicer shall
have the power, revocable by the Trustee, to make withdrawals and payments or
to instruct the Trustee to make withdrawals and payments from the Pre-Funding
Account for the purposes of carrying out the Servicer's or Trustee's duties
hereunder.
(b) ADMINISTRATION OF PRE-FUNDING ACCOUNT. The Transferor shall
on the Closing Date deposit in the Pre-Funding Account the Initial Pre-Funded
Amount. On the Business Day preceding each Transfer Date, the Servicer shall
withdraw from the Pre-Funding Account and deposit in the Collection Account
all interest and other investment income on the Pre-Funded Amount. Interest
(including reinvested interest) and other investment income on funds on
deposit in the Pre-Funded Account shall not be considered part of the
Pre-Funded Amount for
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purposes of this Agreement. Funds on deposit in the Pre-Funding Account
shall be withdrawn by the Servicer and paid to the Transferor to the extent
of any increases in the Invested Amount pursuant to Section 4.15 of the
Agreement. If the Pay Out Commencement Date occurs during the Funding Period,
the remaining Pre-Funded Amount will be applied to make principal payments
with respect to the Certificates in accordance with subsection 4.9(c) of the
Agreement. The Servicer shall withdraw the remaining Pre-Funded Amount, if
any, on deposit in the Pre-Funding Account on the first Business Day of the
March 1998 Monthly Period and deposit such amount into the Excess Funding
Account.
(c) INVESTMENT OF FUNDS IN PRE-FUNDING ACCOUNT. Funds on deposit
in the Pre-Funding Account shall be invested in Cash Equivalents by the
Trustee (or, at the direction of the Trustee, by the Servicer on behalf of
the Trustee) at the direction of the Servicer. Funds on deposit in the
Pre-Funding Account on any Distribution Date, after giving effect to any
withdrawals from the Pre-Funding Account, shall be invested in Cash
Equivalents that will mature so that such funds will be available for
withdrawal on or prior to the following Transfer Date. The proceeds of any
such investments shall be invested in Cash Equivalents that will mature so
that such funds will be available for withdrawal on or prior to the following
Transfer Date and, on such Transfer Date, such proceeds shall be applied as
if they were Available Series 1997-2 Finance Charge Collections available to
be applied pursuant to Subsection 4.9(a) on the last Business Day of the
preceding Monthly Period.
SECTION 4.15 INCREASES IN INVESTED AMOUNT. The Transferor may at
any time during the Funding Period determine to increase the Invested Amount
up to the Full Invested Amount to the extent there are sufficient Principal
Receivables in the Trust to permit such increase in the Invested Amount
without causing a Pay Out Event to occur with respect to any outstanding
Series. Upon determining to increase the Invested Amount pursuant to this
Section 4.15, the Transferor shall deliver to the Servicer, the Trustee and
each Rating Agency an Officers' Certificate specifying the amount of the
increase in the Invested Amount the Transferor has determined to make and
certifying that no Pay Out Event with respect to any outstanding Series will
occur as a result of or in con-
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nection with such increase in the Invested Amount. Upon receipt of such
Officer's Certificate by the Trustee, the Class A Invested Amount, the Class
B Invested Amount and the Class C Invested Amount shall be increased PRO RATA
by the amount specified in such Officers' Certificate, whereupon the Trustee
shall instruct the Servicer to withdraw from the Pre-Funding Account and pay
to the Transferor an amount equal to the amount of such increase in the Class
A Invested Amount, the Class B Invested Amount and the Class C Invested
Amount.
Upon the withdrawal of the remaining Pre-Funded Amount, if any, on
deposit in the Pre-Funding Account on the first Business Day of the March 1998
Monthly Period and the deposit of such amount in the Excess Funding Account, the
Class A Invested Amount, the Class B Invested Amount and the Class C Invested
Amount shall be increased PRO RATA by such amount.
SECTION 4.16 REALLOCATED PRINCIPAL COLLECTIONS FOR THE SERIES
1997-2 CERTIFICATES. (a) On each Business Day, the Servicer will determine
an amount equal to the least of (i) the Class D Invested Amount, (ii) the
product of (x)(I) during the Revolving Period, the Class D Floating
Allocation Percentage or (II) during an Amortization Period, the Class D
Fixed/Floating Allocation Percentage and (y) the amount of Principal
Collections with respect to such Business Day and (iii) an amount equal to
the sum of (a) the Class A Required Amount for such Business Day, (b) the
Class B Required Amount for such Business Day and (c) the Class C Required
Amount for such Business Day (such amount called "Reallocated Class D
Principal Collections") and shall apply Principal Collections in an amount
equal to such amount first to the components of the Class A Required Amount,
then to the components of the Class B Required Amount and then to the
components of the Class C Required Amount in the same priority as amounts are
applied to such components from Available Series 1997-2 Finance Charge
Collections pursuant to subsection 4.9(a) of the Agreement.
(b) On each Business Day, the Servicer will determine an amount
equal to the least of (i) the Class C Invested Amount, (ii) the product of
(x)(I) during the Revolving Period, the Class C Floating Allocation
Percentage or (II) during an Amortization Period, the Class C Fixed/Floating
Allocation Percentage and (y) the amount
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of Principal Collections for such Business Day and (iii) an amount equal to
the sum of (a) the excess, if any, of the Class A Required Amount for such
Business Day over the amount of Reallocated Class D Principal Collections
applied with respect thereto for such Business Day and (b) the excess, if
any, of the Class B Required Amount for such Business Day over the amount of
Reallocated Class D Principal Collections applied with respect thereto for
such Business Day (such amount called "Reallocated Class C Principal
Collections") and shall apply Principal Collections in an amount equal to
such amount first to the remaining components of the Class A Required Amount
and then to the remaining components of the Class B Required Amount in the
same priority as amounts are applied to such components from Available Series
1997-2 Finance Charge Collections pursuant to subsection 4.9(a) of the
Agreement.
(c) On each Business Day, the Servicer will determine an amount
equal to the least of (i) the Class B Invested Amount, (ii) the product of
(x)(I) during the Revolving Period, the Class B Floating Allocation
Percentage or (II) during an Amortization Period, the Class B Fixed/Floating
Allocation Percentage and (y) the amount of Principal Collections for such
Business Day and (iii) an amount equal to the excess, if any, of the Class A
Required Amount for such Business Day over the sum of the amount of
Reallocated Class D Principal Collections and Reallocated Class C Principal
Collections applied with respect thereto for such Business Day (such amount
called "Reallocated Class B Principal Collections") and shall apply Principal
Collections equal to such amount to the remaining components of the Class A
Required Amount in the same priority as amounts are applied to such
components from Available Series 1997-2 Finance Charge Collections pursuant
to subsection 4.9(a) of the Agreement.
SECTION 4.17 DETERMINATION OF LIBOR. (a) "LIBOR" shall mean, as of
any LIBOR Determination Date, the rate for deposits in United States dollars for
one month (commencing on the first day of the relevant interest period) which
appears on Telerate Page 3750 as of 11:00 A.M., London time, on the LIBOR
Determination Date for such interest period. If such rate does not appear on
Telerate Page 3750, the rate for such LIBOR Determination Date will be
determined on the basis of the rates at which deposits in the United States
dollars are offered
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by the Reference Banks at approximately 11:00 a.m., London time, on such
LIBOR Determination Date to prime banks in the London interbank market for a
period equal to one month (commencing on the first day of the relevant
interest period). The Trustee will request the principal London office of
each such bank to provide a quotation of its rate. If at least two such
quotations are provided, the rate for such LIBOR Determination Date will be
the arithmetic mean of the quotations. If fewer than two quotations are
provided as requested, the rate for such LIBOR Determination Date will be the
arithmetic mean of the rates quoted by four major banks in New York City,
selected by the Trustee, at approximately 11:00 a.m., New York City time, on
the LIBOR Determination Date for loans in United States dollars to leading
European banks for a period equal to one month (commencing on the first day
of such interest period).
(b) The Class C Certificate Rate applicable to the then current and
the immediately preceding Interest Accrual Periods may be obtained by any Series
1997-2 Certificateholder by telephoning the Trustee at its Corporate Trust
Office at (212) 815-5737.
(c) On each LIBOR Determination Date, the Trustee shall send to the
Servicer by facsimile notification of LIBOR for such LIBOR Determination Date.
SECTION 4.18 PAYMENT RESERVE ACCOUNT.
(a) The Servicer shall establish and maintain or cause to be
established and maintained with a Qualified Institution, which may be the
Trustee, in the name of the Trustee, on behalf of the Certificateholders, the
"Payment Reserve Account," which shall be a segregated trust account with the
corporate trust department of such Qualified Institution, bearing a
designation clearly indicating that the funds deposited therein are held for
the benefit of the Certificateholders. The Trustee shall possess all right,
title and interest in all funds on deposit from time to time in the Payment
Reserve Account and in all proceeds thereof. The Payment Reserve Account
shall be under the sole dominion and control of the Trustee for the benefit
of the Certificateholders. 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
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Reserve Account meeting the conditions specified above with a Qualified
Institution, and shall transfer any cash or any investments to such new
Payment Reserve Account. From the date such new Payment Reserve Account is
established, it shall be the "Payment Reserve Account."
(b) The Transferor, at its discretion, may on any Business Day
withdraw all or a part of any amounts then on deposit in the Payment Reserve
Account and apply such funds in accordance with Section 4.9(a) of the
Agreement.
(c) Funds on deposit in the Payment Reserve Account shall be
invested in Cash Equivalents by the Trustee (or, at the direction of the
Trustee, by the Servicer on behalf of the Trustee) at the direction of the
Servicer. Funds on deposit in the Payment Reserve Account on any Business
Day, after giving effect to any withdrawals from the Payment Reserve Account,
shall be invested in Cash Equivalents. The proceeds of any such investments
shall be invested in Cash Equivalents.
SECTION 4.19 PRINCIPAL FUNDING ACCOUNT.
(a) The Servicer shall establish and maintain or cause to be
established and maintained with a Qualified Institution, which may be the
Trustee, in the name of the Trustee, on behalf of the Certificateholders, the
"Principal Funding Account," which shall be a segregated trust account with
the corporate trust department of such Qualified Institution, bearing a
designation clearly indicating that the funds deposited therein are held for
the benefit of the Series 1997-2 Certificateholders. The Trustee shall
possess all right, title and interest in all funds on deposit from time to
time in the Principal Funding Account and in all proceeds thereof. The
Principal Funding Account shall be under the sole dominion and control of the
Trustee for the benefit of the Series 1997-2 Certificateholders. If, at any
time, the institution holding the Principal Funding Account ceases to be a
Qualified Institution, the Trustee shall within 10 Business Days establish a
new Principal Funding Account meeting the conditions specified above with a
Qualified Institution, and shall transfer any cash or any investments to such
new Principal Funding Account. From the date such new Principal Funding
Account is established, it shall be the "Principal Funding Account." The
Trust-
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ee, at the written direction of the Servicer, shall (i) make withdrawals from
the Principal Funding Account from time to time, in the amounts and for the
purposes set forth in this Series Supplement, and (ii) on each Transfer Date
(from and after the commencement of the Accumulation Period) prior to
termination of the Principal Funding Account make a deposit into the
Principal Funding Account in the amount specified in, and otherwise in
accordance with, subsection 4.12 of the Agreement.
(b) Funds on deposit in the Principal Funding Account shall be
invested by the Trustee at the direction of the Servicer in Cash Equivalents
maturing no later than the following Transfer Date. On the Transfer Date
occurring in the month following the commencement of the Accumulation Period
and on each Transfer Date thereafter with respect to the Accumulation Period,
the Trustee, at the Servicer's written direction, shall transfer from the
Principal Funding Account to the Collection Account the Principal Funding
Account Investment Proceeds on deposit in the Principal Funding Account, but
not in excess of the Covered Amount, and shall apply such amount as if such
amounts were Available Series 1997-2 Finance Charge Collections available to
be applied pursuant to subsection 4.9(a) on the last Business Day of the
preceding Monthly Period. Principal Funding Account Investment Proceeds
(including reinvested interest) shall not be considered part of the amounts
on deposit in the Principal Funding Account for purposes of this Series
Supplement.
SECTION 4.20 ACCUMULATION PERIOD RESERVE ACCOUNT.
(a) The Servicer shall establish and maintain or cause to be
established and maintained with a Qualified Institution, which may be the
Trustee, in the name of the Trustee, on behalf of the Certificateholders, the
"Accumulation Period Reserve Account," which shall be a segregated trust
account with the corporate trust department of such Qualified Institution,
bearing a designation clearly indicating that the funds deposited therein are
held for the benefit of the Series 1997-2 Certificateholders. The Trustee
shall possess all right, title and interest in all funds on deposit from time
to time in the Accumulation Period Reserve Account and in all proceeds
thereof. The Accumulation Period Reserve Account shall
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be under the sole dominion and control of the Trustee for the benefit of the
Series 1997-2 Certificateholders. If, at any time, the institution holding
the Accumulation Period Reserve Account ceases to be a Qualified Institution,
the Trustee shall within 10 Business Days establish a new Accumulation Period
Reserve Account meeting the conditions specified above with a Qualified
Institution, and shall transfer any cash or any investments to such new
Accumulation Period Reserve Account. From the date such new Accumulation
Period Reserve Account is established, it shall be the "Accumulation Period
Reserve Account." The Trustee, at the written direction of the Servicer,
shall (i) make withdrawals from the Accumulation Period Reserve Account from
time to time, in the amounts and for the purposes set forth in this Series
Supplement, and (ii) on each Transfer Date (from and after the Reserve
Account Funding Date) prior to termination of the Accumulation Period Reserve
Account make a deposit into the Accumulation Period Reserve Account in the
amount specified in, and otherwise in accordance with, subsection 4.9(a)(xiv)
of the Agreement.
(b) Funds on deposit in the Accumulation Period Reserve Account
shall be invested by the Trustee at the direction of the Servicer in Cash
Equivalents maturing no later than the following Transfer Date. The interest
and other investment income (net of investment expenses and losses) earned on
such investments will be retained in the Accumulation Period Reserve Account
(to the extent the amount on deposit therein is less than the Required
Reserve Account Amount) or applied on each Transfer Date as if such amount
were Available Series 1997-2 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
1997-2
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Finance Charge Collections available to be applied pursuant to subsection
4.9(a) on the last Business Day of the preceding Monthly Period.
(d) The Accumulation Period Reserve Account shall be terminated
following the earliest to occur of (a) the termination of the Trust pursuant
to the Agreement, (b) the date on which the Invested Amount is paid in full,
(c) if the Accumulation Period has not commenced, the occurrence of a Pay Out
Event with respect to the Series 1997-2 Certificates and (d) if the
Accumulation Period has commenced, the earlier of the first Transfer Date
with respect to the Early Amortization Period and the Expected Final Payment
Date. Upon the termination of the Accumulation Period Reserve Account, all
amounts on deposit therein (after giving effect to any withdrawal from the
Accumulation Period Reserve Account on such date as described above) shall be
applied as if they were Available Series 1997-2 Finance Charge Collections
available to be applied pursuant to subsection 4.9(a) on the last Business
Day of the preceding Monthly Period.
SECTION 4.21 POSTPONEMENT OF ACCUMULATION PERIOD. The
Accumulation Period is scheduled to commence at the close of business on the
last day of the October 2001 Monthly Period; PROVIDED, HOWEVER, that, if the
Accumulation Period Length (determined as described below) is less than 12
months, the date on which the Accumulation Period actually commences may, at
the option of the Servicer, upon written notice to the Trustee, be delayed to
the first Business Day of the month that is the number of months prior to the
Expected Final Payment Date at least equal to the Accumulation Period Length
and, as a result, the number of Monthly Periods in the Accumulation Period
will at least equal the Accumulation Period Length. On each Determination
Date until the Accumulation Period begins, the Servicer will determine the
"Accumulation Period Length" which will equal the number of months such that
the sum of the Accumulation Period Factors for each Monthly Period during
such period will be equal to or greater than the Required Accumulation Factor
Number; PROVIDED, HOWEVER, that the Accumulation Period Length will not be
less than one month.
SECTION 4.22 DEFEASANCE. On the date that the following
conditions shall have been satisfied: (i) the
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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 sum of the Class A Outstanding
Principal Amount, the Class B Outstanding Principal Amount and the Class C
Outstanding Principal Amount, and (y) in the Accumulation Period Reserve
Account, an amount equal to or greater than the Covered Amount, as estimated
by the Transferor, for the period from the date of such deposit to the
Principal Funding Account through the Expected Final Payment Date; (ii) the
Transferor shall have delivered to the Trustee (a) an opinion of counsel to
the effect that such deposit will not result in the Trust being required to
register as an "investment company" within the meaning of the Investment
Company Act of 1940, as amended, (b) an opinion of counsel to the effect that
following such deposit none of the Trust, the Accumulation Period Reserve
Account or the Principal Funding Account will be deemed to be an association
(or publicly traded partnership) taxable as a corporation, (c) a certificate
of an officer of the Transferor stating that the Transferor reasonably
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, would constitute a Pay Out
Event, to occur; and (iv) a Ratings Event will not occur, the Series 1997-2
Certificates will no longer be entitled to security interest of the Trust in
the Receivables and, except those set forth in clause (i) above, other Trust
assets and the percentages applicable to the allocation to the Series 1997-2
Certificateholders of Principal Collections, Finance Charge Collections and
Defaulted Receivables will be reduced to zero. Upon the satisfaction of the
foregoing conditions, the Class D Invested Amount will be reduced to zero.
SECTION 7. ARTICLE V OF THE AGREEMENT. Article V of the Agreement
shall read in its entirety as follows and shall be applicable only to the
Series 1997-2 Certificates:
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ARTICLE V
DISTRIBUTIONS AND REPORTS TO INVESTOR
CERTIFICATEHOLDERS
SECTION 5.1 DISTRIBUTIONS. (a) On each Distribution Date, the
Paying Agent shall distribute (in accordance with the Settlement Statement
delivered by the Servicer to the Trustee and the Paying Agent pursuant to
subsection 3.4(c)) to each Class A Certificateholder of record on the preceding
Record Date (other than as provided in subsection 2.4(e) or in Section 12.3
respecting a final distribution) such Certificateholder's PRO RATA share (based
on the aggregate Undivided Interests represented by each Class A Certificate
held by such Certificateholder) of amounts on deposit in the Distribution
Account as are payable to each Class A Certificateholders pursuant to Sections
4.11 and 4.12 of the Agreement by check mailed to each Class A Certificateholder
at such Certificateholder's address as it appears on the Certificate Register
or, in the case of Class A Certificateholders holding Class A Certificates
evidencing Undivided Interests aggregating not less than 80% of the Invested
Amount, by wire transfer, at the expense of such Class A Certificateholder, to
an account or accounts designated by such Class A Certificateholder by written
notice given to the Paying Agent not less than five days prior to related
Distribution Date; PROVIDED, HOWEVER, that the final payment in retirement of
the Class A Certificates will be made only upon presentation and surrender of
the Class A Certificates at the office or offices specified in the notice of
such final distribution delivered by the Trustee pursuant to Section 12.3.
(b) On each Distribution Date, the Paying Agent shall distribute (in
accordance with the Settlement Statement delivered by the Servicer to the
Trustee and the Paying Agent pursuant to subsection 3.4(c)) to each Class B
Certificateholder of record on the preceding Record Date (other than as provided
in subsection 2.4(e) or in Section 12.3 respecting a final distribution) such
Certificateholder's PRO RATA share (based on the aggregate Undivided Interests
represented by Class B Certificates held by such Certificateholder) of amounts
on deposit in the Distribution Account as are payable to the Class B
Certificateholders pursuant to Sections 4.11 and 4.12 of the Agreement by check
mailed to each Class B
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Certificateholder at such Certificateholder's address as it appears on the
Certificate Register or, in the case of Class B Certificateholders holding
Class B Certificates evidencing Undivided Interest aggregating not less than
80% of the Invested Amount, by wire transfer, at the expense of such Class B
Certificateholder, to an account or accounts designated by such Class B
Certificateholder by written notice given to the Paying Agent not less than
five days prior to the related Distributed Date; PROVIDED, HOWEVER, that the
final payment in retirement of the Class B Certificates will be made only
upon presentation and surrender of the Class B Certificates at the office or
offices specified in the notice of such final distribution delivered by the
Trustee pursuant to Section 12.3.
(c) On each Distribution Date, the Paying Agent shall distribute (in
accordance with the Settlement Statement delivered by the Servicer to the
Trustee and the Paying Agent pursuant to subsection 3.4(c)) to each Class C
Certificateholder of record on the preceding Record Date (other than as provided
in subsection 2.4(e) or in Section 12.3 respecting a final distribution) such
Certificateholder's PRO RATA share (based on the aggregate Undivided Interests
represented by Class C Certificates held by such Certificateholder) of amounts
on deposit in the Distribution Account as are payable to the Class C
Certificateholders pursuant to Sections 4.11 and 4.12 of the Agreement by wire
transfer to each Class C Certificateholder to an account or accounts designated
by such Class C Certificateholder by written notice given to the Paying Agent
not less than five days prior to the related Distribution Date; PROVIDED,
HOWEVER, that the final payment in retirement of the Class C Certificates will
be made only upon presentation and surrender of the Class C Certificates at the
office or offices specified in the notice of such final distribution delivered
by the Trustee pursuant to Section 12.3.
(d) On each Distribution Date, the Paying Agent shall distribute
(in accordance with the Settlement Statement delivered by the Servicer to the
Trustee and the Paying Agent pursuant to subsection 3.4(c)) to each Class D
Certificateholder of record on the preceding Record Date (other than as
provided in subsection 2.4(e) or in Section 12.3 respecting a final
distribution) such Certificateholder's PRO RATA share (based on the aggregate
Undivided Interests represented by Class D Certifi-
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cates held by such Certificateholder) of amounts on deposit in the
Distribution Account as are payable to the Class D Certificateholders
pursuant to Sections 4.11 and 4.12 of the Agreement by wire transfer to each
Class D Certificateholder to an account or accounts designated by such Class
D Certificateholder by written notice given to the Paying Agent not less than
five days prior to the related Distribution Date; PROVIDED, HOWEVER, that the
final payment in retirement of the Class D Certificates will be made only
upon presentation and surrender of the Class D Certificates at the office or
offices specified in the notice of such final distribution delivered by the
Trustee pursuant to Section 12.3.
SECTION 5.2 CERTIFICATEHOLDERS' STATEMENT. (a) On the 20th day
of each calendar month (or if such day is not a Business Day the next
succeeding Business Day), the Paying Agent shall forward to each
Certificateholder and the Rating Agencies a statement substantially in the
form of Exhibit B prepared by the Servicer and delivered to the Trustee and
the Paying Agent on the preceding Determination Date setting forth the
following information (which, in the case of (i), (ii) and (iii) below, shall
be stated on the basis of an original principal amount of $1,000 per
Certificate and, in the case of (ix) and (x), shall be stated on an aggregate
basis and on the basis of an original principal amount of $1,000 per
Certificate):
(i) the total amount distributed;
(ii) the amount of such distribution allocable to Certificate
Principal;
(iii) the amount of such distribution allocable to Certificate
Interest;
(iv) the amount of Principal Collections received in the
Collection Account during the preceding Monthly Period and allocated in
respect of the Class A Certificates, the Class B Certificates, the Class C
Certificates and the Class D Certificates, respectively;
(v) the amount of Finance Charge Collections processed during
the preceding Monthly Period and allocated in respect of the Class A
Certifi-
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cates, the Class B Certificates, the Class C Certificates and the
Class D Certificates, respectively, and the amount of Principal Funding
Account Investment Proceeds and investment earnings on amounts on deposit
in the Accumulation Period Reserve Account and the Pre-Funding Account;
(vi) the aggregate amount of Principal Receivables, the Invested
Amount, the Class A Invested Amount, the Class B Invested Amount, the Class
C Invested Amount, the Class D Invested Amount, the Floating Allocation
Percentage and, during the Amortization Period, the Fixed/Floating
Allocation Percentage, Class B Fixed/Floating Allocation Percentage, or
Class C Fixed/Floating Allocation Percentage as applicable, as of the end
of the day on the last day of the related Monthly Period;
(vii) the aggregate outstanding balance of Receivables which are
current, 30-59, 60-89, and 90 days and over delinquent as of the end of the
day on the last day of the related Monthly Period;
(viii) the aggregate Investor Default Amount for the preceding
Monthly Period;
(ix) the aggregate amount of Class A Investor Charge-Offs, Class
B Investor Charge-Offs, Class C Investor Charge-Offs and Class D Investor
Charge-Offs for the preceding Monthly Period;
(x) the amount of the Servicing Fee for the preceding Monthly
Period;
(xi) the Class A Pool Factor, the Class B Pool Factor and the
Class C Pool Factor as of the end of the last day of the Monthly Period
immediately preceding the Determination Date;
(xii) the amount of unreimbursed Reallocated Class B Principal
Collections, Reallocated Class C Principal Collections and Reallocated
Class D Principal Collections for the related Monthly Period;
(xiii) the aggregate amount of funds in the Excess Funding
Account and the Pre-Funding
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Account as of the last day of the Monthly Period immediately
preceding the Distribution Date;
(xiv) the Specified Class C Reserve Amount, the amount then on
deposit in the Class C Reserve Account and whether a Class C Trigger Event
has occurred;
(xv) the number of new Accounts the Receivables in which have
been added to the Trust during the related Monthly Period;
(xvi) the Portfolio Yield for the related Monthly Period;
(xvii) the Base Rate for the related Monthly Period;
(xviii) the Principal Funding Account Balance on the related
Transfer Date;
(xix) the Accumulation Shortfall;
(xx) the scheduled date for the commencement of the Accumulation
Period and the Accumulation Period Length; and
(xxi) the amount of Principal Funding Account Investment
Proceeds deposited in the Collection Account on the related Transfer Date,
the Required Reserve Account Amount and the Available Reserve Account
Amount as of the related Transfer Date, and the Covered Amount for the
related Interest Accrual Period.
(b) ANNUAL CERTIFICATEHOLDERS' TAX STATEMENT. On or before
January 31 of each calendar year, beginning with calendar year 1998, the Paying
Agent shall distribute to each Person who at any time during the preceding
calendar year was a Series 1997-2 Certificateholder, a statement prepared by the
Servicer containing the information required to be contained in the regular
report to Series 1997-2 Certificateholders, as set forth in subclauses (i), (ii)
and (iii) above, aggregated for such calendar year or the applicable portion
thereof during which such Person was a Series 1997-2 Certificateholder, together
with, on or before January 31 of each
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year, beginning in 1998, such other customary information (consistent
with the treatment of the Certificates as debt) as the Trustee or the
Servicer deems necessary or desirable to enable the Series 1997-2
Certificateholders to prepare their tax returns. Such obligations of the
Trustee shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the Trustee
pursuant to any requirements of the Internal Revenue Code as from time to
time in effect.
SECTION 8. SERIES 1997-2 PAY OUT EVENTS. If any one of the
following events shall occur with respect to the Series 1997-2 Certificates:
(a) failure on the part of the Transferor (i) to make any
payment or deposit required to be made by the Transferor by the terms of (A) the
Agreement or (B) this Series Supplement, on or before the date occurring five
Business Days after the date such payment or deposit is required to be made
herein, (ii) to perform in all material respects the Transferor's covenant not
to sell, pledge, assign, or transfer to any person, or grant any unpermitted
lien on, any Receivable; or (iii) duly to observe or perform in any material
respect any covenants or agreements of the Transferor set forth in the Agreement
or this Series Supplement, which failure has a material adverse effect on the
Series 1997-2 Certificateholders and which continues unremedied for a period of
60 days after the date on which written notice of such failure, requiring the
same to be remedied, shall have been given to the Transferor by the Trustee, or
to the Transferor and the Trustee by the Holders of Series 1997-2 Certificates
evidencing Undivided Interests aggregating not less than 50% of the Invested
Amount of this Series 1997-2, and continues to affect materially and adversely
the interests of the Series 1997-2 Certificateholders for such period;
(b) any representation or warranty made by the Transferor in the
Agreement or this Series Supplement, (i) shall prove to have been incorrect in
any material respect when made, which continues to be incorrect in any material
respect for a period of 60 days after the date on which written notice of such
failure, requiring the same to be remedied, shall have been given to the
Transferor by the Trustee, or to the Transferor and the Trustee by the Holders
of the Series 1997-2
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Certificates evidencing Undivided Interests aggregating more than 50% of the
Invested Amount of this Series 1997-2, and (ii) as a result of which the
interests of the Series 1997-2 Certificateholders are materially and
adversely affected and continue to be materially and adversely affected for
such period; PROVIDED, HOWEVER, that a Series 1997-2 Pay Out Event pursuant
to this subsection 8(b) shall not be deemed to have occurred hereunder if the
Transferor has accepted reassignment of the related Receivable, or all of
such Receivables, if applicable, during such period (or such longer period as
the Trustee may specify) in accordance with the provisions of the Agreement;
(c) the average of the Portfolio Yields for any three
consecutive Monthly Periods is reduced to a rate which is less than the weighted
average Base Rates for such three consecutive Monthly Periods;
(d) (i) the Transferor Interest shall be less than the
Minimum Transferor Interest, (ii) (A) the sum of the amount on deposit in the
Pre-Funding Account PLUS the Series Allocation Percentage of the sum of the
total amount of Principal Receivables plus amounts on deposit in the Excess
Funding Account shall be less than (B) the sum of the Class A Outstanding
Principal Amount, the Class B Outstanding Principal Amount, the Class C
Outstanding Principal Amount and the Class D Outstanding Principal Amount,
(iii) the total amount of Principal Receivables and the amounts on deposit in
the Excess Funding Account and the Principal Funding Account shall be less
than the Minimum Aggregate Principal Receivables or (iv) the Retained
Percentage shall be equal to or less than 2%, in each case as of any
Determination Date; or
(e) any Servicer Default shall occur which would have a material
adverse effect on the Series 1997-2 Certificateholders;
then, in the case of any event described in subparagraph (a), (b) or (e), after
the applicable grace period, if any, set forth in such subparagraphs, the
Holders of Series 1997-2 Certificates evidencing Undivided Interests aggregating
more than 50% of the Invested Amount of this Series 1997-2, by notice then given
in writing to the Trustee, the Transferor and the Servicer may declare that a
pay out event (a "Series 1997-2 Pay Out Event") has
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occurred as of the date of such notice, and in the case of any event
described in subparagraphs (c) or (d), a Series 1997-2 Pay Out Event shall
occur without any notice or other action on the part of the Trustee or the
Series 1997-2 Certificateholders immediately upon the occurrence of such
event.
SECTION 9. SERIES 1997-2 TERMINATION. The right of the Series 1997-2
Certificateholders to receive payments from the Trust will terminate on the
first Business Day following the Series 1997-2 Termination Date unless such
Series is an Affected Series as specified in Section 12.1(c) of the Agreement
and the sale contemplated therein has not occurred by such date, in which event
the Series 1997-2 Certificateholders shall remain entitled to receive proceeds
of such sale when such sale occurs.
SECTION 10. LEGENDS; TRANSFER AND EXCHANGE; RESTRICTIONS ON TRANSFER
OF SERIES 1997-2 CERTIFICATES; TAX TREATMENT. (a) Each Class B Certificate will
bear a legend or legends in substantially 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 EX-
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CLUDING ANY ENTITY REGISTERED UNDER THE INVESTMENT COMPANY ACT OF
1940, AS AMENDED).
Each Certificate Owner by virtue of its beneficial interest in the
Class B Certificates shall be deemed to have made the representations and
warranties stated in such legend.
(b) The Class C Certificates have not been, and will not be,
registered under the Securities Act or any state securities law. No reoffer,
resale, pledge (except as provided in the Pooling and Servicing Agreement) or
other transfer of any Class C Certificate or any interest therein or
participation thereof will be made unless such resale or transfer is made (i)
to the Transferor, (ii) to a limited number of institutional "accredited
investors" (as defined in Rule 501 (a)(1), (2), (3) or (7) under the
Securities Act) in a transaction exempt from the registration requirements of
the Securities Act (upon delivery of the documentation required by the
Pooling and Servicing Agreement and, if the Trustee so requires, an opinion
of counsel satisfactory to the Trustee) or (iii) pursuant to Rule 144A to a
person who the seller of the Class C Certificates reasonably believes is a
QIB purchasing for its own account or a QIB purchasing for the account of a
QIB, whom the holder has informed, in each case, that the reoffer, resale,
pledge or other transfer is being made in reliance on Rule 144A. Neither the
Transferor nor the Trustee is obligated to register the Class C Certificates
under the Securities Act or to take any otherwise required under the Pooling
and Servicing Agreement or the Series 1997-2 Supplement to permit the
transfer of Class C Certificates without registration. No Class C
Certificate or any interest therein may be sold, traded, conveyed, assigned,
hypothecated, pledged, participated, or otherwise transferred (each, a
"Transfer") except in accordance with this Section 10. Any Transfer of a
Class C Certificate otherwise permitted by this Section 10 will be permitted
only if it consists of a PRO RATA percentage interest in all payments made
with respect to such Holder's Class C Certificates and no Transfers of
partial interests in a Class C Certificate will be permitted. No Class C
Certificate or any interest therein may be Transferred to any Person (each,
an "Assignee") unless the Assignee has executed and delivered the
certification referred to in subsection 10(f) below and the Transferor
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has granted prior written consent thereto. Such consent shall be granted
unless the Transferor determines in its sole and absolute discretion that
such Transfer would create more than an insubstantial risk that the Trust
would be classified for Federal or any applicable state tax purposes as an
association or publicly traded partnership taxable as a corporation;
PROVIDED, that any attempted Transfer that would cause the number of Targeted
Holders to exceed one hundred shall be void; and PROVIDED, FURTHER, that
there shall not at any time be more than 10 Class C Certificateholders or
such other number as may be consented to by the Transferor, which consent may
be withheld in its sole and absolute discretion.
(c) Each initial purchaser of a Class C Certificate or any
interest therein and any Assignee thereof shall certify to the Transferor and
the Trustee that it is either (A)(i) a citizen or resident of the U.S., (ii)
a corporation, partnership or other entity organized in or under the laws of
the U.S. or any political subdivision thereof or (iii) a person not described
in (i) or (ii) whose ownership of the Class C Certificates is effectively
connected with such person's conduct of a trade or business within the U.S.
(within the meaning of the Internal Revenue Code) and whose ownership of any
interest in a Class C Certificate will not result in any withholding
obligation with respect to any payments with respect to the Class C
Certificates by any person (other than withholding, if any, under Section
1446 of the Code) or (B) an estate the income of which is includible in gross
income for U.S. Federal income tax purposes or any trust if a court within
the United States is able to exercise primary supervision over the
administration of the trust and one or more United States fiduciaries have
the authority to control all substantial decisions of the trust. It also
agrees that (a) if it is a person described in clause (A)(i) or (A)(ii)
above, it will furnish to the Transferor, the Servicer and the Trustee, a
properly executed U.S. Internal Revenue Service Form W-9 and a new Form W-9,
or any successor applicable form, upon the expiration or obsolescence of any
previously delivered form or (b) if it is a person described in clause
(A)(iii) above, it will furnish to the Transferor, the Servicer and the
Trustee a properly executed U.S. Internal Revenue Service Form 4224 (or
applicable successor form) and a new Form 4224 (or appli-
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cable successor form) upon the expiration or obsolescence of any previously
delivered form (and such other certifications, representations or opinions of
counsel as may be requested by the Transferor, the Servicer or the Trustee).
Such person recognizes that if it is a tax-exempt entity a portion of the
payments with respect to the Certificates may constitute unrelated business
taxable income.
If the purchaser is a Person which is described in clause A(iii) of
the preceding paragraph, it will deliver a properly completed and executed Form
4224 (or applicable successor form) indicating no taxes will be required to be
withheld by any person with respect to any payments to be made to such purchaser
in respect of the Class C Certificates (other than withholding, if any, under
Section 1446 of the Code) purchased by it, and it will, during the period in
which such Form is effective, report all interest payments received by it in
respect of such Class C Certificates as income effectively connected with the
conduct of a trade or business in the United States and pay all United States
federal income taxes imposed with respect to such income as required by law.
Further, such purchaser will provide the Transferor and the Trustee a new Form
4224 (or applicable successor form) upon the expiration or obsolescence of any
previously delivered Form and comparable statements in accordance with
applicable U.S. laws and regulations and amendments duly executed and completed
by such purchaser, and it will comply from time to time with all applicable U.S.
laws and regulations with regard to such withholding tax exemption. Each
initial purchaser of a Class C Certificate or any interest therein and any
Assignee thereof must certify to the Transferor and the Trustee that if it is
not created or organized under the laws of the United States or any State
thereof (including the District of Columbia) it will, upon written notice by the
Transferor that the Transferor intends, pursuant to Section 1446 or other
applicable section of the Code, to withhold U.S. tax (a "Withholding Tax") from
amounts paid or accruing with respect to a Class C Certificate to such purchaser
(such determination being a "Withholding Event"), such purchaser shall for tax
years for which the purchaser has already filed U.S. federal income tax returns
(each a "Prior Tax Year") prior to proper notice of such Withholding Event,
provide (A) a signed officer's certificate of such purchaser stating that
amounts paid
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or accruing hereunder have been included in such purchaser's U.S.
federal income tax returns for each such Prior Tax Year, which certificate may
be relied on by the Transferor in asserting to the Internal Revenue Service the
applicability of Section 1463 of the Code with respect to any Withholding Tax
for each such Prior Tax Year and (B) provide information to the Transferor or,
at the option of such purchaser, to the Internal Revenue Service in support of
the application of Section 1463 of the Code for each such Prior Tax Year.
(d) Each initial purchaser of a Class C Certificate or any
interest therein and any Assignee thereof shall further certify to the
Transferor and the Trustee that it has neither acquired nor will it Transfer the
Class C Certificates (or any interest therein) or cause the Class C Certificates
to be marketed on or through (i) an "established securities market" within the
meaning of Section 7704(b)(1) of the Internal Revenue Code and any treasury
regulation thereunder, including, without limitation, an over-the-counter-market
or an interdealer quotation system that regularly disseminates firm buy or sell
quotations or (ii) a "secondary market" within the meaning of Section 7704(b)(2)
of the Internal Revenue Code and any treasury regulation thereunder, including a
market wherein the Class C Certificates (or any interest therein) are regularly
quoted by any Person making a market in such interests and a market wherein any
Person regularly makes available bid or offer quotes with respect to the Class C
Certificates (or any interest therein) and stands ready to effect buy or sell
transactions at the quoted prices for itself or on behalf of others. In
addition, each initial purchaser of a Class C Certificate or any interest
therein and any Assignee must certify, prior to any delivery or Transfer to it
of a Class C Certificate that, for so long as it holds an interest in a Class C
Certificate, it is not and will not become a partnership, Subchapter S
corporation or grantor trust for U.S. Federal income tax purposes. If an
initial purchaser of an interest in a Class C Certificate or an Assignee cannot
make the certification described in the preceding sentence, the Transferor may,
in its sole discretion, prohibit a Transfer to such entity; PROVIDED, HOWEVER,
that if the Transferor agrees to permit such a Transfer, the Transferor, the
Servicer or the Trustee may require additional certifications in order to
prevent the Trust from being treated as a publicly traded partner-
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ship. Each initial purchaser of an interest in a Class C Certificate and
Assignee acknowledges that the Opinion of Counsel to the effect that the
Trust will not be subject to tax at the entity level is dependent in part on
the accuracy of the certifications described in this Section 10(c).
(e) Each Class C Certificate will bear legends substantially in
the following form:
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE BENEFIT OF METRIS
RECEIVABLES, INC. AND THE TRUSTEE THAT SUCH PURCHASER EITHER (A) 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")) WHETHER OR
NOT 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") WHETHER OR NOT SUBJECT TO SECTION 4975 OF THE CODE, OR (III) ANY
OTHER 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 INCLUDING WITHOUT LIMITATION, AS
APPLICABLE, AN INSURANCE COMPANY GENERAL ACCOUNT (EACH OF (I), (II) AND
(III), A "BENEFIT PLAN INVESTOR") OR USING THE ASSETS OF ANY BENEFIT PLAN
INVESTOR TO ACQUIRE AND HOLD CLASS C CERTIFICATES OR ANY INTEREST THEREIN,
OR (B) IS AN INSURANCE COMPANY ACTING ON BEHALF OF ITS GENERAL ACCOUNT AND
(I) ON THE DATE IT ACQUIRES THE CLASS C CERTIFICATES, LESS THAN 25% OF THE
ASSETS OF SUCH GENERAL ACCOUNT (AS REASONABLY DETERMINED BY SUCH INSURANCE
COMPANY) CONSTITUTE "PLAN ASSETS" FOR PURPOSES OF TITLE I OF ERISA AND
SECTION 4975 OF THE CODE, AND (II) IF, AFTER THE INITIAL ACQUISITION OF THE
CLASS C CERTIFICATES, AT ANY TIME DURING ANY CALENDAR QUARTER 25% OR MORE
OF THE ASSETS OF SUCH GENERAL ACCOUNT (AS REASONABLY DETERMINED BY SUCH
INSURANCE COMPANY NO LESS FREQUENTLY THAN EACH CALENDAR QUARTER) CONSTITUTE
"PLAN ASSETS" FOR PURPOSES OF TITLE I OF ERISA OR SECTION 4975 OF THE CODE
AND NO EXEMPTION OR EXCEPTION FROM THE PROHIBITED TRANSACTION RULES APPLIES
TO SUCH
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GENERAL ACCOUNT'S CONTINUED HOLDING OF THE CLASS C CERTIFICATES UNDER
SECTION 401(c) OF ERISA AND THE FINAL REGULATIONS THEREUNDER OR UNDER
AN EXEMPTION OR REGULATION ISSUED BY THE UNITED STATES DEPARTMENT OF LABOR
UNDER ERISA, THEN SUCH INSURANCE COMPANY AGREES TO DISPOSE OF ALL OF THE
CLASS C CERTIFICATES THEN HELD IN ITS GENERAL ACCOUNT BY THE END OF THE
NEXT FOLLOWING CALENDAR QUARTER.
THIS CERTIFICATE MAY NOT BE ACQUIRED, SOLD, TRADED OR TRANSFERRED BY A
PERSON WHO IS NOT EITHER (A)(I) A CITIZEN OR RESIDENT OF THE UNITED STATES,
(II) A CORPORATION, PARTNERSHIP OR OTHER ENTITY ORGANIZED IN OR UNDER THE
LAWS OF THE UNITED STATES OR ANY POLITICAL SUBDIVISION THEREOF OR (III) A
PERSON NOT DESCRIBED IN (I) OR (II) WHOSE OWNERSHIP OF THE CLASS C
CERTIFICATES IS EFFECTIVELY CONNECTED WITH SUCH PERSON'S CONDUCT OF A TRADE
OR BUSINESS WITHIN THE UNITED STATES (WITHIN THE MEANING OF THE CODE) AND
ITS OWNERSHIP OF ANY INTEREST IN A CLASS C CERTIFICATE WILL NOT RESULT IN
ANY WITHHOLDING OBLIGATION WITH RESPECT TO ANY PAYMENTS WITH RESPECT TO THE
CLASS C CERTIFICATES BY ANY PERSON (OTHER THAN WITHHOLDING, IF ANY, UNDER
SECTION 1446 OF THE CODE) OR (B) AN ESTATE THE INCOME OF WHICH IS
INCLUDIBLE IN GROSS INCOME FOR UNITED STATES FEDERAL INCOME TAX PURPOSES OR
ANY TRUST IF A COURT WITHIN THE UNITED STATES IS ABLE TO EXERCISE PRIMARY
SUPERVISION OVER THE ADMINISTRATION OF THE TRUST AND ONE OR MORE UNITED
STATES FIDUCIARIES HAVE THE AUTHORITY TO CONTROL ALL SUBSTANTIAL DECISIONS
OF THE TRUST.
THIS CERTIFICATE MAY NOT BE ACQUIRED, SOLD, TRADED, TRANSFERRED,
ASSIGNED, PARTICIPATED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED, NOR
MAY AN INTEREST IN THIS CERTIFICATE BE MARKETED, ON OR THROUGH (I) AN
"ESTABLISHED SECURITIES MARKET" WITHIN THE MEANING OF SECTION 7704(b)(1) OF
THE CODE AND ANY PROPOSED, TEMPORARY OR FINAL TREASURY REGULATION
THEREUNDER, INCLUDING, WITHOUT LIMITATION, AN OVER-THE-COUNTER-MARKET OR AN
INTERDEALER QUOTATION SYSTEM THAT REGULARLY DISSEMINATES FIRM BUY OR SELL
QUOTATIONS OR (II) A "SECONDARY MARKET" WITHIN THE MEANING OF SECTION
7704(b)(2) OF THE CODE AND ANY PROPOSED, TEMPORARY OR FINAL TREA-
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SURY REGULATION THEREUNDER, INCLUDING A MARKET WHEREIN INTERESTS IN THE
CLASS C CERTIFICATES ARE REGULARLY QUOTED BY ANY PERSON MAKING A MARKET IN
SUCH INTERESTS AND A MARKET WHEREIN ANY PERSON REGULARLY MAKES AVAILABLE
BID OR OFFER QUOTES WITH RESPECT TO INTERESTS IN THE CLASS C CERTIFICATES
AND STANDS READY TO EFFECT BUY OR SELL TRANSACTIONS AT THE QUOTED PRICES
FOR ITSELF OR ON BEHALF OF OTHERS.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAW. THE HOLDER HEREOF, BY PURCHASING THIS CERTIFICATE, AGREES
THAT THIS CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE
LAWS AND ONLY (1) TO THE TRANSFEROR, (2) TO A LIMITED NUMBER OF
INSTITUTIONAL "ACCREDITED INVESTORS" (AS DEFINED IN RULE 501(a)(1), (2),
(3) OR (7) UNDER THE SECURITIES ACT) AND IN A TRANSACTION EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (UPON DELIVERY OF THE
DOCUMENTATION REQUIRED BY THE POOLING AND SERVICING AGREEMENT AND, IF THE
TRUSTEE SO REQUIRES, AN OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE) OR
(3) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT TO A PERSON THAT THE
HOLDER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE 144A ("QIB") PURCHASING FOR ITS OWN ACCOUNT OR A QIB
PURCHASING FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER HAS INFORMED, IN EACH
CASE, THAT THE REOFFER, RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A. EACH CERTIFICATE OWNER BY ACCEPTING A BENEFICIAL
INTEREST IN THIS CERTIFICATE IS DEEMED TO REPRESENT THAT IT IS EITHER A QIB
PURCHASING FOR ITS OWN ACCOUNT, A QIB PURCHASING FOR THE ACCOUNT OF ANOTHER
QIB OR AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT). THIS CERTIFICATE
WILL NOT BE ACCEPTED FOR REGISTRATION OF TRANSFER EXCEPT UPON PRESENTATION
OF EVIDENCE SATISFACTORY TO THE TRANSFER AGENT AND REGISTRAR THAT THE
RESTRICTIONS ON TRANSFER SET FORTH IN
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THE SERIES 1997-2 SUPPLEMENT HAVE BEEN COMPLIED WITH. THIS CERTIFICATE
MAY NOT BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT
THE PRIOR WRITTEN CONSENT OF THE TRANSFEROR AND UNLESS AND UNTIL THE
TRUSTEE SHALL HAVE RECEIVED THE CERTIFICATIONS REQUIRED BY THE SERIES
1997-2 SUPPLEMENT.
(f) Upon surrender for registration of transfer of a Class C
Certificate at the office of the Transfer Agent and Registrar, accompanied by a
certification by the Class C Certificateholder substantially in the form
attached as Exhibit C, executed by the registered owner, in person or by such
Class C Certificateholder's attorney thereunto duly authorized in writing, and
receipt by the Trustee of the written consent of the Transferor to such
transfer, such Class C Certificate shall be transferred upon the Certificate
Register, and the Transferor shall execute, and the Trustee shall authenticate
and deliver, in the name of the designated transferees one or more new
registered Class C Certificates of any authorized denominations and of a like
aggregate principal amount and tenor. Such transfers of Class C Certificates
shall be subject to the restrictions set forth in this Section 10, to such other
restrictions as shall be set forth in the text of the Class C Certificates and
to such reasonable regulations as may be prescribed by the Transferor.
Successive registrations and registrations of transfers as aforesaid may be made
from time to time as desired, and each such registration shall be noted on the
Certificate Register.
(g) Each Class D Certificate will bear legends substantially in
the following form:
THIS CERTIFICATE WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"). THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OR ANY APPLICABLE STATE SECURITIES LAW OF ANY STATE AND MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS REGISTERED PURSUANT TO OR
EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT AND ANY OTHER APPLICABLE
SECURITIES LAW. THE TRANSFEROR SHALL BE PROHIBITED FROM TRANSFERRING ANY
INTEREST IN OR PORTION OF THIS CERTIFICATE.
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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. COMPLIANCE WITH WITHHOLDING REQUIREMENTS.
Notwithstanding any other provision of the Agreement, the Trustee and any Paying
Agent shall comply with all Federal withholding requirements with respect to
payments to the Class C Certificateholders of interest, original issue discount,
or other amounts that the Trustee, any Paying Agent, the Servicer or the
Transferor reasonably believes are applicable under the Internal Revenue Code.
The consent of the Class C Certificateholders shall not be required for any such
withholding. In the event the Trustee or the Paying Agent withholds any amount
from payments made to any Class C Certificateholder pursuant to federal
withholding requirements, the Trustee or the Paying Agent shall indicate to such
Class C Certificateholder the amount withheld and all such amounts shall be
deemed to have been paid to such Class C Certificateholders and the Class C
Certificateholders shall have no claim therefor.
SECTION 12. TAX CHARACTERIZATION OF THE CLASS C CERTIFICATES. It is
the intention of the parties hereto that the Class C Certificates be treated for
tax purposes as indebtedness. In the event that the Class C
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Certificates are not so treated, it is the intention of the parties that the
Class C Certificates be treated as an interest in a partnership that owns the
Receivables. In the event that the Class C Certificates are treated as an
interest in a partnership, it is the intention of the parties that interest
payable on the Class C Certificates be treated as guaranteed payment and, if
for any reason it is not so treated, that the holders of the Class C
Certificates be specially allocated gross interest income equal to the
interest accrued during each Interest Accrual Period on the Class C
Certificates.
SECTION 13. RATIFICATION OF AGREEMENT. (a) As supplemented by this
Series Supplement, the Agreement is in all respects ratified and confirmed and
the Agreement as so supplemented by this Series Supplement shall be read, taken,
and construed as one and the same instrument. The Transferor hereby confirms
the conveyance of the Trust Property to the Trustee for the benefit of the
Series 1997-2 Certificateholders.
(b) For so long as any of the Class C Certificates are
"restricted securities" within the meaning of Rule 144(a)(3) under the
Securities Act and during any period in which the Trust is not subject to
Section 13 or 15(d) of the Exchange Act, each of the Transferor, the Servicer
and the Trustee agree to cooperate with each other to provide to any Class C
Certificateholder, and to any prospective purchaser of Class C Certificates
designated by such Class C Certificateholder upon the request of such Class C
Certificateholder or prospective purchaser, the information required by Rule
144A(d)(4) under the Securities Act.
SECTION 14. REGISTRATION OF THE CLASS A CERTIFICATES UNDER THE
SECURITIES EXCHANGE ACT OF 1934. The Transferor shall cause the Class A
Certificates to be registered under the Securities Exchange Act of 1934, as
amended, on or before August 20, 1998 and thereafter maintain such registration
until the Class A Invested Amount has been reduced to zero.
SECTION 15. COUNTERPARTS. This Series Supplement may be executed in
any number of counterparts, each of which so executed shall be deemed to be an
original, but all of such counterparts shall together constitute but one and the
same instrument.
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SECTION 16. GOVERNING LAW. THIS SERIES SUPPLEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 17. INSTRUCTIONS IN WRITING. All instructions or other
communications given by the Servicer or any other person to the Trustee pursuant
to this Series Supplement shall be in writing, and, with respect to the
Servicer, may be included in a Daily Report or Settlement Statement.
SECTION 18. CERTAIN AMENDMENTS. Each Series 1997-2
Certificateholder, by acquiring an interest in a Series 1997-2 Certificate,
is deemed to consent to (i) 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 Certificates or the taxability of the Trust
under Federal or Applicable Tax State income tax laws and (ii) an amendment
to the Trust Pay Out Event specified in subsection 9.1(a) to substitute
Metris Companies Inc. for FCI.
SECTION 19. PAIRED SERIES. Subject to obtaining confirmation by each
Rating Agency of the then existing ratings of each class of Certificates which
is then rated, and prior to the commencement of the Early Amortization Period,
the Certificates may be paired with one or more other Series (each a "Paired
Series"). Each Paired Series either will be pre-funded with an initial deposit
to a pre-funding account in an amount up to the initial principal balance of
such Paired Series and primarily from the proceeds of the sale of such Paired
Series or will have a variable principal amount. Any such pre-funding account
will be held for the benefit of such Paired Series and not for the benefit of
the Certificateholders. As principal is paid with respect to the Cer-
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tificates, either (i) in the case of a pre-funded Paired Series, an equal
amount of funds on deposit in any pre-funding account for such pre-funded
Paired Series will be released (which funds will be distributed to the
Transferor) or (ii) in the case of a Paired Series having a variable
principal amount, an interest in such variable Paired Series in an equal or
lesser amount may be sold by the Trust (and the proceeds thereof will be
distributed to the Transferor) and, in either case, the invested amount in
the Trust of such Paired Series will increase by up to a corresponding
amount. Upon payment in full of the Certificates, assuming that there have
been no unreimbursed charge-offs with respect to any related Paired Series,
the aggregate invested amount of such related Paired Series will have been
increased by an amount up to an aggregate amount equal to the Invested Amount
paid to the Certificateholders since the issuance of such Paired Series. The
issuance of a Paired Series will be subject to the conditions described in
subsection 6.9(b) of the Agreement.
81
<PAGE>
IN WITNESS WHEREOF, the Transferor, the Servicer and the Trustee have
caused this Series 1997-2 Supplement to be duly executed by their respective
officers as of the day and year first above written.
METRIS RECEIVABLES, INC.
Transferor
By: /s/ Robert W. Oberrender
------------------------
Name: Robert W. Oberrender
Title: President and Treasurer
DIRECT MERCHANTS CREDIT CARD BANK,
NATIONAL ASSOCIATION
Servicer
By: /s/ Robert W. Oberrender
------------------------
Name: Robert W. Oberrender
Title: Chief Financial Officer
THE BANK OF NEW YORK (DELAWARE)
Trustee
By: /s/ Todd N. Niemy
---------------------------
Name: Todd N. Niemy
Title: Authorized Sig
<PAGE>
Exhibit A-1
FORM OF CLASS A INVESTOR CERTIFICATE
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND
ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO. HAS AN INTEREST HEREIN.
No. ___ $_________
CUSIP NO. 59159U AD 0
METRIS MASTER TRUST
FLOATING RATE ASSET BACKED
CERTIFICATE, SERIES 1997-2, CLASS A
Evidencing an undivided interest in a trust, the corpus of which
consists of receivables generated from time to time in the ordinary course of
business from a portfolio of revolving consumer credit card accounts transferred
or to be transferred by Metris Receivables, Inc. (the "Transferor") and other
assets and interests constituting the Trust under the Agreement described below.
(Not an interest in or a recourse obligation of Metris Receivables,
Inc., Direct Merchants Credit Card Bank, National Association or any affiliate
of either of them.)
This certifies that _________ (the "Certificateholder") is the
registered owner of a fractional undivided interest in the Metris Master Trust
(the
A-1-1
<PAGE>
"Trust") issued pursuant to the Pooling and Servicing Agreement, dated as of
May 26, 1995 (the "Pooling and Servicing Agreement"; such term to include any
amendment thereto) by and between the Transferor, Direct Merchants Credit
Card Bank, National Association, as Servicer (the "Servicer"), and The Bank
of New York (Delaware) as Trustee (the "Trustee"), and the Series 1997-2
Supplement, dated as of November 20, 1997 (the Series 1997-2 Supplement"),
among the Transferor, the Servicer and the Trustee. The Pooling and
Servicing Agreement, as supplemented by the Series 1997-2 Supplement, is
herein referred to as the "Agreement"). The corpus of the Trust consists of
all of the Transferor's right, title and interest in, to and under the Trust
Property (as defined in the Agreement).
This Certificate does not purport to summarize the Agreement and
reference is made to that Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds, and duties evidenced hereby
and the rights, duties and obligations of the Trustee. To the extent not
defined herein, the capitalized terms used herein have the meanings ascribed to
them in the Agreement. This Certificate is one of a series of Certificates
entitled "Metris Master Trust Floating Rate Asset Backed Certificates, Series
1997-2, Class A" (the "Class A Certificates"), each of which represents a
fractional undivided interest in the Trust, and is issued under and is subject
to the terms, provisions and conditions of the Agreement, to which Agreement, as
amended from time to time, the Certificateholder by virtue of the acceptance
hereof assents and by which the Certificateholder is bound.
The Transferor has structured the Agreement, the Class A Certificates,
the Metris Master Trust Floating Rate Asset Backed Certificates, Series 1997-2,
Class B (the "Class B Certificates" and collectively with the Class A
Certificates, the "Offered Certificates") and the Metris Master Trust Floating
Rate Asset Backed Certificates, Series 1997-2, Class C (the "Class C
Certificates") with the intention that the Offered Certificates and the Class C
Certificates will qualify under applicable tax law as indebtedness, and both the
Transferor and each holder of a Class A Certificate (a "Class A
Certificateholder") or any interest therein by acceptance of its Certificate or
any interest therein, agrees to treat the
A-1-2
<PAGE>
Class A Certificates for purposes of federal, state and local income or
franchise taxes and any other tax imposed on or measured by income, as
indebtedness.
No principal will be payable to the Class A Certificateholders
until the earlier of the Expected Final Payment Date and, upon the occurrence
of a Pay Out Event, the Distribution Date following the Monthly Period in
which the Pay Out Event occurs. No principal will be payable to the Class B
Certificateholders, Class C Certificateholders or Class D Certificateholders
(other than with respect to Class D Excess Amounts) until all principal
payments have been made to the Class A Certificateholders.
Interest on the Class A Certificates will be payable on December 20,
1997 and on the 20th day of each month thereafter or, if such day is not a
business day, on the next succeeding business day (each, a "Distribution Date"),
in an amount equal to the product of (i) the Class A Certificate Rate, (ii) a
fraction the numerator of which is the actual number of days in the related
Interest Accrual Period and the denominator of which is 360 and (iii) the
outstanding principal balance of the Class A Certificates as of the close of
business on the first day of such Interest Accrual Period provided that interest
for the first Distribution Date will be an amount equal to the product of (u)
the Class A Initial Invested Amount, (v) 32 divided by 360, and (w) the Class A
Certificate Rate determined on November 18, 1997.
Interest payments on the Class A Certificates on each Distribution
Date will be funded from Available Series 1997-2 Finance Charge Collections with
respect to the preceding Monthly Period (or, with respect to the first
Distribution Date, such collections from and including the Closing Date to and
including November 30, 1997 plus the amount of the initial deposit to the
Interest Funding Account to be made on the Closing Date) and from certain other
funds allocated as set forth in the Pooling and Servicing Agreement to the
respective classes of the Certificates and deposited on each business day during
such Monthly Period in the Interest Funding Account.
"CLASS A INVESTED AMOUNT" shall mean, when used with respect to any
Business Day, the greater of (x) zero
A-1-3
<PAGE>
and (y) an amount equal to (a) the Class A Initial Invested Amount less the
Class A Percentage of the initial deposit to the Pre-Funding Account plus the
Class A Percentage of any withdrawals from the Pre-Funding Account (i) during
the Funding Period in connection with the addition of Receivables to the
Trust or (ii) at the end of the Funding Period for deposit into the Excess
Funding Account, MINUS (b) the aggregate amount of principal payments (except
principal payments made from the Pre-Funding Account) made to Class A
Certificateholders through and including such Business Day, MINUS (c) the
aggregate amount of Class A Investor Charge-Offs for all prior Distribution
Dates, PLUS (d) the sum of the aggregate amount allocated with respect to
Class A Investor Charge-Offs and available on all prior Distribution Dates
pursuant to subsection 4.9(a)(vii) of the Agreement and, with respect to such
subsection, pursuant to subsections 4.10(a) and (b), 4.16(a), (b) and (c),
4.19(b) and 4.20(b), (c) and (d) of the Agreement, for the purpose of
reinstating amounts reduced pursuant to the foregoing clause (c).
During the period from and including the Closing Date to but excluding
the earlier of (x) the first day for which the Invested Amount equals the Full
Invested Amount; (y) the first day on which a Pay Out Event is deemed to occur;
and (z) the first day of the March 1998 Monthly Period (the "Funding Period"),
the Pre-Funded Amount will be maintained in a trust account to be established
with The Bank of New York (the "Pre-Funding Account"). The "Pre-Funded Amount"
will equal the Initial Pre-Funded Amount, minus the amounts of any increases in
the Invested Amount during the Funding Period pursuant to Section 4.15 of the
Agreement, minus the amount of any principal losses on funds on deposit in the
Pre-Funding Account and minus the amount withdrawn from the Pre-Funding Account
and deposited in the Excess Funding Account. On the Closing Date a cash deposit
will be made to the Pre-Funding Account such that the amount of Principal
Receivables plus the amount of such cash deposit on such date will at least
equal the sum of the initial outstanding principal balances of the Class A
Certificates, the Class B Certificates, the Class C Certificates and the Class D
Certificates and the sum of the then current outstanding principal balance of
all Series (excluding the Series 1997-2 Certificates). Funds on deposit in the
Pre-Funding Account will be invested by
A-1-4
<PAGE>
the Trustee at the direction of the Servicer in Cash Equivalents.
During the Funding Period, funds on deposit in the Pre-Funding Account
will be withdrawn and paid to the Transferor to the extent of any increases in
the Invested Amount as a result of the increase in the amount of Receivables in
the Trust. In the event of the occurrence of a Pay Out Event during the Funding
Period, the amounts remaining on deposit in the Pre-Funding Account, will be
payable as principal first to the Class A Certificateholders until the Class A
Invested Amount is paid in full and then to the Class B Certificateholders until
the Class B Invested Amount is paid in full and then to the Class C
Certificateholders until the Class C Invested Amount is paid in full. Should
the Pre-Funded Amount be greater than zero on the first Business Day of the
March 1998 Monthly Period, such amount will be deposited in the Excess Funding
Account, and the Class A Invested Amount, Class B Invested Amount and Class C
Invested Amount shall be increased PRO RATA in an aggregate amount equal to the
amount of such deposit.
Subject to the Agreement, payments of principal are limited to the
unpaid Class A Invested Amount of the Class A Certificates, which may be less
than the unpaid balance of the Class A Certificates pursuant to the terms of the
Agreement. All principal on the Class A Certificates is due and payable no
later than the May 2006 Distribution Date (or if such day is not a Business Day,
the next succeeding Business Day) (the "Scheduled Series 1997-2 Termination
Date"). After the earlier to occur of (i) the Scheduled Series 1997-2
Termination Date and (ii) the day after the Distribution Date on which the
Series 1997-2 Certificates are paid in full (the "Series 1997-2 Termination
Date") neither the Trust nor the Transferor will have any further obligation to
distribute principal or interest on the Class A Certificates. In the event that
the Class A Invested Amount is greater than zero on the Series 1997-2
Termination Date, the Trustee will sell or cause to be sold, to the extent
necessary, an amount of interests in the Receivables or certain of the
Receivables up to 110% of the Class A Invested Amount, the Class B Invested
Amount, the Class C Invested Amount and the Class D Invested Amount at the close
of business on such date (but not more than the total amount of Receivables
allocable to the Investor Certificates), and shall
A-1-5
<PAGE>
pay the proceeds to the Class A Certificateholders PRO RATA in final payment
of the Class A Certificates, then to the Class B Certificateholders pro rata
in final payment of the Class B Certificates, then to the Class C
Certificateholders pro rata in final payment of the Class C Certificates and
finally to the Class D Certificateholders PRO RATA in final payment of the
Class D Certificates.
Unless the certificate of authentication hereon has been executed by
or on behalf of the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement, or be valid for any purpose.
A-1-6
<PAGE>
IN WITNESS WHEREOF, the Transferor has caused this Certificate to be duly
executed.
METRIS RECEIVABLES, INC.
By:
-----------------------------
Name:
Title:
Dated:
CERTIFICATE OF AUTHENTICATION
This is one of the Class A Certificates referred to in the within-mentioned
Pooling and Servicing Agreement.
THE BANK OF NEW YORK (DELAWARE)
By:
-----------------------------
Name:
Title:
A-1-7
<PAGE>
Exhibit A-2
FORM OF CLASS B INVESTOR CERTIFICATE
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE BENEFIT OF METRIS
RECEIVABLES, INC. AND THE TRUSTEE THAT SUCH PURCHASER IS NOT (I) AN EMPLOYEE
BENEFIT PLAN (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED ("ERISA")) THAT IS SUBJECT TO THE PROVISIONS
OF TITLE I OF ERISA, (II) A PLAN DESCRIBED IN SECTION 4975(e)(1) OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") 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).
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED 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-2-1
<PAGE>
No. ___ $__________
CUSIP NO. 59159U AE 8
METRIS MASTER TRUST
FLOATING RATE ASSET BACKED
CERTIFICATE, SERIES 1997-2, CLASS B
Evidencing an undivided interest in a trust, the corpus of which
consists of receivables generated from time to time in the ordinary course of
business from a portfolio of revolving consumer credit card accounts
transferred or to be transferred by Metris Receivables, Inc. (the
"Transferor") and other assets and interests constituting the Trust under the
Agreement described below.
(Not an interest in or a recourse obligation of Metris Receivables,
Inc., Direct Merchants Credit Card Bank, National Association or any
affiliate of either of them.)
This certifies that __________ (the "Certificateholder") is the
registered owner of a fractional undivided interest in the Metris Master
Trust (the "Trust") issued pursuant to the Pooling and Servicing Agreement,
dated as of May 26, 1995 (the "Pooling and Servicing Agreement"; such term to
include any amendment thereto) by and between the Transferor, Direct
Merchants Credit Card Bank, National Association, as the Servicer (the
"Servicer"), and The Bank of New York (Delaware), as Trustee (the "Trustee"),
and the Series 1997-2 Supplement, dated as of November 20, 1997 (the "Series
1997-2 Supplement"), among the Transferor, the Servicer and the Trustee. The
Pooling and Servicing Agreement, as supplemented by the Series 1997-2
Supplement, is herein referred to as the "Agreement". The corpus of the
Trust consists of all of the Transferor's right, title and interest in, to
and under the Trust Property (as defined in the Agreement).
This Certificate does not purport to summarize the Agreement and
reference is made to that Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds, and duties evidenced
hereby and the rights, duties and obligations of the Trustee. To the extent
not defined herein, the capitalized terms
A-2-2
<PAGE>
used herein have the meanings ascribed to them in the Agreement. This
Certificate is one of a series of Certificates entitled "Metris Master Trust
Floating Rate Asset Backed Certificates, Series 1997-2, Class B" (the "Class
B Certificates"), each of which represents a fractional undivided interest in
the Trust, and is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement, as amended from time to
time, the Certificateholder by virtue of the acceptance hereof assents and by
which the Certificateholder is bound.
The Transferor has structured the Agreement, the Class B
Certificates, the Metris Master Trust Floating Rate Asset Backed
Certificates, Series 1997-2, Class A (the "Class A Certificates" and
collectively with the Class B Certificates the "Offered Certificates") and
the Metris Master Trust Floating Rate Asset Backed Certificates, Series
1997-2, Class C (the "Class C Certificates") with the intention that the
Offered Certificates will qualify under applicable tax law as indebtedness,
and both the Transferor and each holder of a Class B Certificate (a "Class B
Certificateholder") or any interest therein by acceptance of its Certificate
or any interest therein, agrees to treat the Class B Certificates for
purposes of federal, state and local income or franchise taxes and any other
tax imposed on or measured by income, as indebtedness.
No principal will be payable to the Class B Certificateholders
until the earlier of the Expected Final Payment Date and, upon the occurrence
of a Pay Out Event, the Distribution Date following the Monthly Period in
which the Pay Out Event occurs but in no event earlier than the Distribution
Date either on or following the Distribution Date on which the Class A
Invested Amount had been paid in full. No principal will be payable to the
Class B Certificateholders until all principal payments have been made to the
Class A Certificateholders. No principal payments will be made to the Class C
Certificateholders or Class D Certificateholders (other than with respect to
Class D Excess Amounts) until the Distribution Date either on or following
the Distribution Date on which the Class B Invested Amount has been paid in
full.
A-2-3
<PAGE>
Interest on the Offered Certificates will be payable on December
20, 1997 and on the 20th day of each month thereafter or, if such day is not
a business day, on the next succeeding business day (each, a "Distribution
Date"), in an amount equal to (1) with respect to the Class A Certificates an
amount equal to the product of (i) the Class A Certificate Rate, (ii) a
fraction the numerator of which is the actual number of days in the related
Interest Accrual Period and the denominator of which is 360 and (iii) the
outstanding principal balance of the Class A Certificates as of the close of
business on the first day of such Interest Accrual Period and (2) with
respect to the Class B Certificates (a) the product of (i) the Class B
Certificate Rate, (ii) a fraction the numerator of which is the actual number
of days in the related Interest Accrual Period and the denominator of which
is 360 and (iii) the outstanding principal balance of the Class B
Certificates as of the close of business on the first day of such Interest
Accrual Period (or in the case of the initial Distribution Date, an amount
equal to the product of (u) the Class B Initial Invested Amount, (v) 32
divided by 360, and (w) the Class B Certificate Rate determined on November
18, 1997); PROVIDED, HOWEVER, that with respect to any Distribution Date
related to the Funding Period the amount described in clause (iii) shall be
the Class B Outstanding Principal Amount at the close of business on the
first day of such Interest Accrual Period.
Interest payments on the Class A Certificates on each Distribution
Date will be funded from Available Series 1997-2 Finance Charge Collections
with respect to the preceding Monthly Period (or, with respect to the first
Distribution Date, such collections from and including the Closing Date to
and including November 30, 1997 plus the amount of the initial deposit to the
Interest Funding Account to be made on the Closing Date) and from certain
other funds allocated as set forth in the Pooling and Servicing Agreement to
the respective classes of the Certificates and deposited on each business day
during such Monthly Period in the Interest Funding Account.
Subject to the prior payment of interest on the Class A
Certificates, interest payments on the Class B Certificates on each
Distribution Date will be funded from the portion of Available Series 1997-2
Finance
A-2-4
<PAGE>
Charge Collections with respect to the preceding Monthly Period and from
certain other funds allocated as set forth in the Pooling and Servicing
Agreement to the Class B Certificates and deposited on each business day
during such Monthly Period in the Interest Funding Account.
"CLASS B INVESTED AMOUNT" shall mean, when used with respect to any
Business Day, the greater of (x) zero and (y) an amount equal to (a) the
Class B Initial Invested Amount less the Class B Percentage of the initial
deposit to the Pre-Funding Account plus the Class B Percentage of any
withdrawals from the Pre-Funding Account (i) during the Funding Period in
connection with the addition of Receivables to the Trust or (ii) at the end
of the Funding Period for deposit into the Excess Funding Account, MINUS (b)
the aggregate amount of principal payments (except principal payments made
from the Pre-Funding Account) made to Class B Certificateholders through and
including such Business Day, MINUS (c) the aggregate amount of Class B
Investor Charge-Offs for all prior Distribution Dates, MINUS (d) the
aggregate amount of Reallocated Class B Principal Collections for which
neither the Class D Invested Amount nor the Class C Invested Amount has been
reduced for all prior Business Days, and PLUS (e) the sum of the aggregate
amount allocated and available on all prior Business Days pursuant to
subsection 4.9(a)(x) of the Agreement and, with respect to such subsection,
pursuant to subsections 4.10(a) and (b), 4.16(a) and (b), 4.19(b) and
4.20(b), (c) and (d) of the Agreement, for the purpose of reinstating amounts
reduced pursuant to the foregoing clauses (c) and (d).
During the period from and including the Closing Date to but
excluding the earlier of (x) the first day for which the Invested Amount
equals the Full Invested Amount; (y) the first day on which a Pay Out Event
is deemed to occur; and (z) the first day of the March 1998 Monthly Period
(the "Funding Period"), the Pre-Funded Amount will be maintained in a trust
account to be established with The Bank of New York (the "Pre-Funding
Account"). The "Pre-Funded Amount" will equal the Initial Pre-Funded Amount,
minus the amounts of any increases in the Invested Amount during the Funding
Period pursuant to Section 4.15 of the Agreement, minus the amount of any
principal losses on funds on deposit in the Pre-Funding Account and minus the
amount withdrawn from the Pre-
A-2-5
<PAGE>
Funding Account and deposited in the Excess Funding Account. On the Closing
Date a cash deposit will be made to the Pre-Funding Account such that the
amount of Principal Receivables plus the amount of such cash deposit on such
date will at least equal the sum of the initial outstanding principal
balances of the Class A Certificates, the Class B Certificates, the Class C
Certificates and the Class D Certificates and the sum of the then current
outstanding principal balance of all Series (excluding the Series 1997-2
Certificates). Funds on deposit in the Pre-Funding Account will be invested
by the Trustee at the direction of the Servicer in Cash Equivalents.
During the Funding Period, funds on deposit in the Pre-Funding
Account will be withdrawn and paid to the Transferor to the extent of any
increases in the Invested Amount as a result of the increase in the amount of
Receivables in the Trust. In the event of the occurrence of a Pay Out Event
during the Funding Period, the amounts remaining on deposit in the
Pre-Funding Account, will be payable as principal first to the Class A
Certificateholders until the Class A Invested Amount is paid in full and then
to the Class B Certificateholders until the Class B Invested Amount is paid
in full and then to the Class C Certificateholders until the Class C Invested
Amount is paid in full. Should the Pre-Funded Amount be greater than zero on
the first Business Day of the March 1998 Monthly Period, such amount will be
deposited in the Excess Funding Account, and the Class A Invested Amount,
Class B Invested Amount and Class C Invested Amount shall be increased PRO
RATA in an aggregate amount equal to the amount of such deposit.
Subject to the Agreement, payments of principal are limited to the
unpaid Class B Invested Amount of the Class B Certificates, which may be less
than the unpaid balance of the Class B Certificates pursuant to the terms of
the Agreement. All principal on the Class B Certificates is due and payable
no later than the May 2006 Distribution Date (or if such day is not a
Business Day, the next succeeding Business Day) (the "Scheduled Series 1997-2
Termination Date"). After the earlier to occur of (i) the Scheduled Series
1997-2 Termination Date and (ii) the day after the Distribution Date on which
the Series 1997-2 Certificates are paid in full (the "Series 1997-2
Termination Date") neither the Trust nor the Transferor
A-2-6
<PAGE>
will have any further obligation to distribute principal or interest on the
Class B Certificates. In the event that the Class B Invested Amount is
greater than zero on the Series 1997-2 Termination Date, the Trustee will
sell or cause to be sold, to the extent necessary, an amount of interests in
the Receivables or certain of the Receivables up to 110% of the Class A
Invested Amount, the Class B Invested Amount, the Class C Invested Amount and
the Class D Invested Amount at the close of business on such date (but not
more than the total amount of Receivables allocable to the Investor
Certificates), and shall pay the proceeds to the Class A Certificateholders
PRO RATA - in final payment of the Class A Certificates, then to the Class B
Certificateholders PRO RATA in final payment of the Class B Certificates,
then to the Class C Certificateholders pro rata in final payment of the Class
C Certificates and finally to the Class D Certificateholders pro rata in
final payment of the Class D Certificates.
Unless the certificate of authentication hereon has been executed by
or on behalf of the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement, or be valid for any purpose.
A-2-7
<PAGE>
IN WITNESS WHEREOF, the Transferor has caused this Certificate to be
duly executed.
METRIS RECEIVABLES, INC.
By:
---------------------------------------------
Name:
Title:
Dated:
CERTIFICATE OF AUTHENTICATION
This is one of the Class B Certificates referred to in the
within-mentioned Pooling and Servicing Agreement.
THE BANK OF NEW YORK (DELAWARE)
By:
---------------------------------------------
Name:
Title:
A-2-8
<PAGE>
Exhibit A-3
FORM OF CLASS C INVESTOR CERTIFICATE
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE BENEFIT OF METRIS
RECEIVABLES, INC. AND THE TRUSTEE THAT SUCH PURCHASER EITHER (A) 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")) WHETHER OR
NOT 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") WHETHER OR NOT SUBJECT TO SECTION 4975 OF THE CODE, OR (III) ANY
OTHER 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 INCLUDING WITHOUT LIMITATION, AS
APPLICABLE, AN INSURANCE COMPANY GENERAL ACCOUNT (EACH OF (I), (II) AND
(III), A "BENEFIT PLAN INVESTOR") OR USING THE ASSETS OF ANY BENEFIT PLAN
INVESTOR TO ACQUIRE AND HOLD CLASS C CERTIFICATES OR ANY INTEREST THEREIN,
OR (B) IS AN INSURANCE COMPANY ACTING ON BEHALF OF ITS GENERAL ACCOUNT AND
(I) ON THE DATE IT ACQUIRES THE CLASS C CERTIFICATES, LESS THAN 25% OF THE
ASSETS OF SUCH GENERAL ACCOUNT (AS REASONABLY DETERMINED BY SUCH INSURANCE
COMPANY) CONSTITUTE "PLAN ASSETS" FOR PURPOSES OF TITLE I OF ERISA AND
SECTION 4975 OF THE CODE, AND (II) IF, AFTER THE INITIAL ACQUISITION OF THE
CLASS C CERTIFICATES, AT ANY TIME DURING ANY CALENDAR QUARTER 25% OR MORE
OF THE ASSETS OF SUCH GENERAL ACCOUNT (AS REASONABLY DETERMINED BY SUCH
INSURANCE COMPANY NO LESS FREQUENTLY THAN EACH CALENDAR QUARTER) CONSTITUTE
"PLAN ASSETS" FOR PURPOSES OF TITLE I OF ERISA OR SECTION 4975 OF THE CODE
AND NO EXEMPTION OR EXCEPTION FROM THE PROHIBITED TRANSACTION RULES APPLIES
TO SUCH GENERAL ACCOUNT'S CONTINUED HOLDING OF THE CLASS C CERTIFICATES
UNDER SECTION 401(c) OF ERISA AND THE FINAL REGULATIONS THEREUNDER OR UNDER
AN EXEMPTION OR REGULATION ISSUED BY THE UNITED STATES DEPARTMENT OF LABOR
UNDER ERISA, THEN SUCH INSURANCE COMPANY AGREES TO DISPOSE OF ALL OF THE
CLASS C CERTIFICATES THEN HELD IN ITS GENERAL ACCOUNT BY THE END OF THE
NEXT FOLLOWING CALENDAR QUARTER.
A-3-1
<PAGE>
THIS CERTIFICATE MAY NOT BE ACQUIRED, SOLD, TRADED OR TRANSFERRED BY A
PERSON WHO IS NOT EITHER (A)(I) A CITIZEN OR RESIDENT OF THE UNITED STATES,
(II) A CORPORATION, PARTNERSHIP OR OTHER ENTITY ORGANIZED IN OR UNDER THE
LAWS OF THE UNITED STATES OR ANY POLITICAL SUBDIVISION THEREOF OR (III) A
PERSON NOT DESCRIBED IN (I) OR (II) WHOSE OWNERSHIP OF THE CLASS C
CERTIFICATES IS EFFECTIVELY CONNECTED WITH SUCH PERSON'S CONDUCT OF A TRADE
OR BUSINESS WITHIN THE UNITED STATES (WITHIN THE MEANING OF THE CODE) AND
ITS OWNERSHIP OF ANY INTEREST IN A CLASS C CERTIFICATE WILL NOT RESULT IN
ANY WITHHOLDING OBLIGATION WITH RESPECT TO ANY PAYMENTS WITH RESPECT TO THE
CLASS C CERTIFICATES BY ANY PERSON (OTHER THAN WITHHOLDING, IF ANY, UNDER
SECTION 1446 OF THE CODE) OR (B) AN ESTATE THE INCOME OF WHICH IS
INCLUDIBLE IN GROSS INCOME FOR UNITED STATES FEDERAL INCOME TAX PURPOSES OR
ANY TRUST IF A COURT WITHIN THE UNITED STATES IS ABLE TO EXERCISE PRIMARY
SUPERVISION OVER THE ADMINISTRATION OF THE TRUST AND ONE OR MORE UNITED
STATES FIDUCIARIES HAVE THE AUTHORITY TO CONTROL ALL SUBSTANTIAL DECISIONS
OF THE TRUST.
THIS CERTIFICATE MAY NOT BE ACQUIRED, SOLD, TRADED, TRANSFERRED,
ASSIGNED, PARTICIPATED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED, NOR
MAY AN INTEREST IN THIS CERTIFICATE BE MARKETED, ON OR THROUGH (I) AN
"ESTABLISHED SECURITIES MARKET" WITHIN THE MEANING OF SECTION 7704(b)(1)
OF THE CODE AND ANY PROPOSED, TEMPORARY OR FINAL TREASURY REGULATION
THEREUNDER, INCLUDING, WITHOUT LIMITATION, AN OVER-THE-COUNTER-MARKET OR
AN INTERDEALER QUOTATION SYSTEM THAT REGULARLY DISSEMINATES FIRM BUY OR
SELL QUOTATIONS OR (II) A "SECONDARY MARKET" WITHIN THE MEANING OF
SECTION 7704(b)(2) OF THE CODE AND ANY PROPOSED, TEMPORARY OR FINAL
TREASURY REGULATION THEREUNDER, INCLUDING A MARKET WHEREIN INTERESTS IN
THE CLASS C CERTIFICATES ARE REGULARLY QUOTED BY ANY PERSON MAKING A
MARKET IN SUCH INTERESTS AND A MARKET WHEREIN ANY PERSON REGULARLY MAKES
AVAILABLE BID OR OFFER QUOTES WITH RESPECT TO INTERESTS IN THE CLASS C
CERTIFICATES AND STANDS READY TO EFFECT BUY OR SELL TRANSACTIONS AT THE
QUOTED PRICES FOR ITSELF OR ON BEHALF OF OTHERS.
A-3-2
<PAGE>
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
STATE SECURITIES LAW. THE HOLDER HEREOF, BY PURCHASING THIS
CERTIFICATE, AGREES THAT THIS CERTIFICATE MAY BE REOFFERED, RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES
ACT AND OTHER APPLICABLE LAWS AND ONLY (1) TO THE TRANSFEROR, (2) TO A
LIMITED NUMBER OF INSTITUTIONAL "ACCREDITED INVESTORS" (AS DEFINED IN
RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) AND IN A
TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT (UPON DELIVERY OF THE DOCUMENTATION REQUIRED BY THE POOLING AND
SERVICING AGREEMENT AND, IF THE TRUSTEE SO REQUIRES, AN OPINION OF
COUNSEL SATISFACTORY TO THE TRUSTEE) OR (3) PURSUANT TO RULE 144A UNDER
THE SECURITIES ACT TO A PERSON THAT THE HOLDER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A ("QIB")
PURCHASING FOR ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF A
QIB, WHOM THE HOLDER HAS INFORMED, IN EACH CASE, THAT THE REOFFER,
RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A.
EACH CERTIFICATE OWNER BY ACCEPTING A BENEFICIAL INTEREST IN THIS
CERTIFICATE IS DEEMED TO REPRESENT THAT IT IS EITHER A QIB PURCHASING
FOR ITS OWN ACCOUNT, A QIB PURCHASING FOR THE ACCOUNT OF ANOTHER QIB OR
AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1),
(2), (3) OR (7) UNDER THE SECURITIES ACT). THIS CERTIFICATE WILL NOT BE
ACCEPTED FOR REGISTRATION OF TRANSFER EXCEPT UPON PRESENTATION OF
EVIDENCE SATISFACTORY TO THE TRANSFER AGENT AND REGISTRAR THAT THE
RESTRICTIONS ON TRANSFER SET FORTH IN THE SERIES 1997-2 SUPPLEMENT HAVE
BEEN COMPLIED WITH. THIS CERTIFICATE MAY NOT BE REOFFERED, RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED WITHOUT THE PRIOR WRITTEN CONSENT OF
THE TRANSFEROR AND UNLESS AND UNTIL THE TRUSTEE SHALL HAVE RECEIVED THE
CERTIFICATIONS REQUIRED BY THE SERIES 1997-2 SUPPLEMENT.
No. ___ $_________
A-3-3
<PAGE>
METRIS MASTER TRUST
FLOATING RATE ASSET BACKED
CERTIFICATE, SERIES 1997-2, CLASS C
Evidencing an undivided interest in a trust, the corpus of which
consists of receivables generated from time to time in the ordinary course of
business from a portfolio of revolving consumer credit card accounts transferred
or to be transferred by certain subsidiaries of Metris Receivables, Inc. (the
"Transferor") and other assets and interests constituting the Trust under the
Agreement described below.
(Not an interest in or a recourse obligation of Metris Receivables,
Inc., Direct Merchants Credit Card Bank, National Association or any affiliate
of either of them.)
This certifies that ___________________ (the "Certificateholder") is
the registered owner of a fractional undivided interest in the Metris Master
Trust (the "Trust") issued pursuant to the Pooling and Servicing Agreement,
dated as of May 26, 1995 (the "Pooling and Servicing Agreement"; such term to
include any amendment thereto) by and between the Transferor, Direct Merchants
Credit Card Bank, National Association as the Servicer (the "Servicer"), and The
Bank of New York (Delaware), as Trustee (the "Trustee"), and the Series 1997-2
Supplement, dated as of November 20, 1997 (the "Series 1997-2 Supplement"),
among the Transferor, the Servicer and the Trustee. The Pooling and Servicing
Agreement, as supplemented by the Series 1997-2 Supplement, is herein referred
to as the "Agreement." The corpus of the Trust consists of all of the
Transferor's right, title and interest in, to and under the Trust Property (as
defined in the Agreement).
This Certificate does not purport to summarize the Agreement and
reference is made to that Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds, and duties evidenced hereby
and the rights, duties and obligations of the Trustee. To the extent not
defined herein, the capitalized terms used herein have the meanings ascribed to
them in the Agreement. This Certificate is one of a series of Certificates
entitled "Metris Master Trust Floating Rate
A-3-4
<PAGE>
Asset Backed Certificates, Series 1997-2, Class C" (the "Class C
Certificates"), each of which represents a fractional undivided interest in
the Trust, and is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement, as amended from time to
time, the Certificateholder by virtue of the acceptance hereof assents and by
which the Certificateholder is bound.
The Transferor has structured the Agreement, the Class C Certificates,
the Metris Master Trust Floating Rate Asset Backed Certificates, Series 1997-2,
Class A (the "Class A Certificates") and the Metris Master Trust Floating Rate
Asset Backed Certificates, Series 1997-2, Class B (the "Class B Certificates")
with the intention that the Class A, Class B and Class C Certificates will
qualify under applicable tax law as indebtedness, and both the Transferor and
each holder of a Class C Certificate (a "Class C Certificateholder") or any
interest therein by acceptance of its Certificate or any interest therein,
agrees to treat the Class C Certificates for purposes of federal, state and
local income or franchise taxes and any other tax imposed on or measured by
income, as indebtedness.
No principal will be payable to the Class C Certificateholders until
the earlier of the Expected Final Payment Date and, upon the occurrence of a Pay
Out Event, the Distribution Date following the Monthly Period in which the Pay
Out Event occurs but in no event earlier than the Distribution Date either on or
following the Distribution Date on which the Class A Invested Amount and the
Class B Invested Amount have been paid in full. No principal payments will be
payable to the Class C Certificateholders until the Distribution Date either on
or following the Distribution Date on which the Class A Invested Amount and
Class B Invested Amount have been paid in full.
Interest on the Class C Certificates will be payable on December 20,
1997 and on each Distribution Date thereafter, in an amount equal to the product
of (i) the Class C Certificate Rate, (ii) a fraction the numerator of which is
the actual number of days in the related Interest Accrual Period and the
denominator of which is 360 and (iii) the Class C Invested Amount as of the
close of business on the first day of such Interest Accrual
A-3-5
<PAGE>
Period (or in the case of the initial Distribution Date, an amount equal to
the sum of (I) the product of (u) the Class C Initial Invested Amount, (v) 32
divided by 360, and (w) the Class C Certificate Rate determined on November
18, 1997); PROVIDED, HOWEVER, that with respect to any Distribution Date
related to the Funding Period the amount described in clause (iii) shall be
the Class C Outstanding Principal Amount at the close of business on the
first day of such Interest Accrual Period.
Subject to the prior payment of interest on the Class A Certificates
and Class B Certificates, interest payments on the Class C Certificates on each
Distribution Date will be funded from the portion of Available Series 1997-2
Finance Charge Collections with respect to the preceding Monthly Period and
from certain other funds allocated as set forth in the Pooling and Servicing
Agreement to the Class C Certificates and deposited on each business day during
such Monthly Period in the Interest Funding Account.
"CLASS C INVESTED AMOUNT" shall mean, when used with respect to any
Business Day, the greater of (x) zero and (y) an amount equal to (a) the Class C
Initial Invested Amount less the Class C Percentage of the initial deposit to
the Pre-Funding Account plus the Class C Percentage of any withdrawals from the
Pre-Funding Account (i) during the Funding Period in connection with the
addition of Receivables to the Trust or (ii) at the end of the Funding Period
for deposit into the Excess Funding Account, MINUS (b) the aggregate amount of
principal payments (except principal payments made from the Pre-Funding Account)
made to Class C Certificateholders through and including such Business Day,
MINUS (c) the aggregate amount of Class C Investor Charge-Offs for all prior
Distribution Dates, MINUS (d) the aggregate amount of Reallocated Class B
Principal Collections and Reallocated Class C Principal Collections for which
the Class D Invested Amount has not been reduced for all prior Business Days,
and PLUS (e) the sum of the aggregate amount allocated and available on all
prior Business Days pursuant to subsection 4.9(a)(xi) of the Agreement and, with
respect to such subsection, pursuant to subsections 4.10(a) and (b), 4.16(a),
4.19(b) and 4.20(b), (c) and (d) of the Agreement, for the purpose of
reinstating amounts reduced pursuant to the foregoing clauses (c) and (d).
A-3-6
<PAGE>
During the period from and including the Closing Date to but excluding
the earlier of (x) the first day for which the Invested Amount equals the Full
Invested Amount; (y) the first day on which a Pay Out Event is deemed to occur;
and (z) the first day of the March 1998 Monthly Period (the "Funding Period"),
the Pre-Funded Amount will be maintained in a trust account to be established
with The Bank of New York (the "Pre-Funding Account"). The "Pre-Funded Amount"
will equal the Initial Pre-Funded Amount, minus the amounts of any increases in
the Invested Amount during the Funding Period pursuant to Section 4.15 of the
Agreement, minus the amount of any principal losses on funds on deposit in the
Pre-Funding Account and minus the amount withdrawn from the Pre-Funding Account
and deposited in the Excess Funding Account. On the Closing Date a cash deposit
will be made to the Pre-Funding Account such that the amount of Principal
Receivables plus the amount of such cash deposit on such date will at least
equal the sum of the initial outstanding principal balances of the Class A
Certificates, the Class B Certificates, the Class C Certificates and the Class D
Certificates and the sum of the then current outstanding principal balance of
all Series (excluding the Series 1997-2 Certificates). Funds on deposit in the
Pre-Funding Account will be invested by the Trustee at the direction of the
Servicer in Cash Equivalents.
During the Funding Period, funds on deposit in the Pre-Funding Account
will be withdrawn and paid to the Transferor to the extent of any increases in
the Invested Amount as a result of the increase in the amount of Receivables in
the Trust. In the event of the occurrence of a Pay Out Event during the Funding
Period, the amounts remaining on deposit in the Pre-Funding Account, will be
payable as principal first to the Class A Certificateholders until the Class A
Invested Amount is paid in full and then to the Class B Certificateholders until
the Class B Invested Amount is paid in full and then to the Class C
Certificateholders until the Class C Invested Amount is paid in full. Should
the Pre-Funded Amount be greater than zero on the first Business Day of the
March 1998 Monthly Period, such amount will be deposited in the Excess Funding
Account, and the Class A Invested Amount, Class B Invested Amount and Class C
Invested Amount shall be increased PRO RATA in an aggregate amount equal to the
amount of such deposit.
A-3-7
<PAGE>
Subject to the Agreement, payments of principal are limited to the
unpaid Class C Invested Amount of the Class C Certificates, which may be less
than the unpaid balance of the Class C Certificates pursuant to the terms of the
Agreement. All principal on the Class C Certificates is due and payable no
later than the May 2006 Distribution Date (or if such day is not a Business Day,
the next succeeding Business Day) (the "Scheduled Series 1997-2 Termination
Date"). After the earlier to occur of (i) the Scheduled Series 1997-2
Termination Date and (ii) the day after the Distribution Date on which the
Series 1997-2 Certificates are paid in full (the "Series 1997-2 Termination
Date") neither the Trust nor the Transferor will have any further obligation to
distribute principal or interest on the Class C Certificates. In the event that
the Class C Invested Amount is greater than zero on the Series Termination Date,
the Trustee will sell or cause to be sold, to the extent necessary, an amount of
interests in the Receivables or certain of the Receivables up to 110% of the
Class A Invested Amount, the Class B Invested Amount, the Class C Invested
Amount and the Class D Invested Amount at the close of business on such date
(but not more than the total amount of Receivables allocable to the Investor
Certificates), and shall pay the proceeds to the Class A Certificateholders PRO
RATA in final payment of the Class A Certificates, then to the Class B
Certificateholders PRO RATA in final payment of the Class B Certificates, then
to the Class C Certificateholders PRO RATA in final payment of the Class C
Certificates and finally to the Class D Certificateholders pro rata in final
payment of the Class D Certificates.
Unless the certificate of authentication hereon has been executed by
or on behalf of the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement, or be valid for any purpose.
A-3-8
<PAGE>
IN WITNESS WHEREOF, the Transferor has caused this Certificate to be
duly executed.
METRIS RECEIVABLES, INC.
By:
---------------------------
Name:
Title:
Dated:
CERTIFICATE OF AUTHENTICATION
This is one of the Class C Certificates referred to in the
within-mentioned Pooling and Servicing Agreement.
THE BANK OF NEW YORK (DELAWARE)
By:
---------------------------
Name:
Title:
A-3-9
<PAGE>
Exhibit A-4
FORM OF CLASS D INVESTOR CERTIFICATE
THIS CERTIFICATE WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"). THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OR ANY APPLICABLE STATE SECURITIES LAW OF ANY STATE AND MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS REGISTERED PURSUANT TO OR
EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT AND ANY OTHER APPLICABLE
SECURITIES LAW. THE TRANSFEROR SHALL BE PROHIBITED FROM TRANSFERRING ANY
INTEREST IN OR PORTION OF THIS CERTIFICATE.
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE BENEFIT OF METRIS
RECEIVABLES, INC. AND THE TRUSTEE THAT SUCH PURCHASER IS NOT (I) AN
EMPLOYEE BENEFIT PLAN (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA")) THAT IS
SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (II) A PLAN DESCRIBED IN
SECTION 4975(e)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE") THAT IS SUBJECT TO SECTION 4975 OF THE CODE, (III) A GOVERNMENTAL
PLAN, AS DEFINED IN SECTION 3(32) OF ERISA, SUBJECT TO ANY FEDERAL, STATE
OR LOCAL LAW WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO THE PROVISIONS OF
SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE, (IV) AN ENTITY WHOSE
UNDERLYING ASSETS INCLUDE PLAN ASSETS (AS DEFINED IN 29 C.F.R. SECTION
2510.3-101 OR OTHERWISE UNDER ERISA) BY REASON OF A PLAN'S INVESTMENT IN
THE ENTITY OR (V) A PERSON INVESTING PLAN ASSETS OF ANY SUCH PLAN
(INCLUDING WITHOUT LIMITATION, FOR PURPOSES OF CLAUSE (IV) AND THIS CLAUSE
(V), AS APPLICABLE, AN INSURANCE COMPANY GENERAL ACCOUNT, BUT EXCLUDING ANY
ENTITY REGISTERED UNDER THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED).
No. ___ $_________
A-4-1
<PAGE>
METRIS MASTER TRUST
0% ASSET BACKED
CERTIFICATE, SERIES 1997-2, CLASS D
Evidencing an undivided interest in a trust, the corpus of which
consists of receivables generated from time to time in the ordinary course of
business from a portfolio of revolving consumer credit card accounts transferred
or to be transferred by Metris Receivables, Inc. (the "Transferor") and other
assets and interests constituting the Trust under the Agreement described below.
(Not an interest in or a recourse obligation of Metris Receivables,
Inc., Direct Merchants Credit Card Bank, National Association or any affiliate
of either of them.)
This certifies that ______________ (the "Certificateholder") is the
registered owner of a fractional undivided interest in the Metris Master Trust
(the "Trust") issued pursuant to the Pooling and Servicing Agreement, dated as
of May 26, 1995 (the "Pooling and Servicing Agreement"; such term to include any
amendment or Supplement thereto) by and between the Transferor, Direct Merchants
Credit Card Bank, National Association as the Servicer (the "Servicer"), and The
Bank of New York (Delaware), as Trustee (the "Trustee"), and the Series 1997-2
Supplement, dated as of November 20, 1997 (the "Series 1997-2 Supplement"),
among the Transferor, the Servicer and the Trustee. The Pooling and Servicing
Agreement, as supplemented by the Series 1997-2 Supplement, is herein referred
to as the "Agreement." The corpus of the Trust consists of all of the
Transferor's right, title and interest in, to and under the Trust Property (as
defined in the Agreement).
This Certificate does not purport to summarize the Agreement and
reference is made to that Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds, and duties evidenced hereby
and the rights, duties and obligations of the Trustee. To the extent not
defined herein, the capitalized terms used herein have the meanings ascribed to
them in the Agreement. This Certificate is one of a series of Certificates
entitled "Metris Master Trust 0% Asset Backed Certificates, Series 1997-2, Class
D" (the "Class D
A-4-2
<PAGE>
Certificates"), each of which represents a fractional undivided interest in
the Trust, and is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement, as amended from time to
time, the Certificateholder by virtue of the acceptance hereof assents and by
which the Certificateholder is bound.
Metris Receivables, Inc. shall be prohibited from transferring any
interest in or portion of the Class D Certificate.
No principal will be payable to the Class D Certificateholders (other
than with respect to Class D Excess Amounts) until the earlier of the Expected
Final Payment Date and, upon the occurrence of a Pay Out Event, the Distribution
Date following the Monthly Period in which the Pay Out Event occurs but in no
event earlier than the Distribution Date either on or following the Distribution
Date on which Class A Invested Amount, Class B Invested Amount and the Class C
Invested Amount have been paid in full. No principal will be payable to the
Class D Certificateholders until all principal payments have first been made to
the Class A Certificateholders, Class B Certificateholders and Class C
Certificateholders.
"CLASS D INVESTED AMOUNT" shall mean, when used with respect to any
Business Day, the greater of (x) zero and (y) an amount equal to (a) the initial
principal balance of the Class D Certificates, MINUS (b) the aggregate amount of
principal payments made to Class D Certificateholders through and including such
Business Day, MINUS (c) the aggregate amounts by which the Transferor has
reduced the Class D Invested Amount pursuant to subsection 4.12(d) of the
Agreement, MINUS (d) the aggregate amount of Class D Investor Charge-Offs for
all prior Distribution Dates, MINUS (e) the aggregate amount of Reallocated
Principal Collections for all prior Business Days, PLUS (f) the sum of the
aggregate amount allocated and available on all prior Business Days pursuant to
subsection 4.9(a)(xii) of the Agreement and, with respect to such subsection,
pursuant to subsections 4.10(a) and (b), 4.19(b) and 4.20(b), (c) and (d) of the
Agreement, for the purpose of reinstating amounts reduced pursuant to the
foregoing clauses (d) and (e).
A-4-3
<PAGE>
Subject to the Agreement, payments of principal are limited to the
unpaid Class D Invested Amount of the Class D Certificates, which may be less
than the unpaid balance of the Class D Certificates pursuant to the terms of the
Agreement. All principal on the Class D Certificates is due and payable no
later than the May 2006 Distribution Date (or if such day is not a Business Day,
the next succeeding Business Day) (the "Scheduled Series 1997-2 Termination
Date"). After the earlier to occur of (i) the Scheduled Series 1997-2
Termination Date or (ii) the day after the Distribution Date on which the Series
1997-2 Certificates are paid in full (the "Series 1997-2 Termination Date")
neither the Trust nor the Transferor will have any further obligation to
distribute principal or interest on the Class D Certificates. In the event that
the Class D Invested Amount is greater than zero on the Series Termination Date,
the Trustee will sell or cause to be sold, to the extent necessary, an amount of
interests in the Receivables or certain of the Receivables up to 110% of the
Class A Invested Amount, the Class B Invested Amount, the Class C Invested
Amount and the Class D Invested Amount at the close of business on such date
(but not more than the total amount of Receivables allocable to the Investor
Certificates), and shall pay the proceeds to the Class A Certificateholders PRO
RATA in final payment of the Class A Certificates, then to the Class B
Certificateholders PRO RATA in final payment of the Class B Certificates, then
to the Class C Certificateholders PRO RATA in final payment of the Class C
Certificates and finally to the Class D Certificateholders PRO RATA in final
payment of the Class D Certificates.
Unless the certificate of authentication hereon has been executed by
or on behalf of the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement, or be valid for any purpose.
A-4-4
<PAGE>
IN WITNESS WHEREOF, the Transferor has caused this Certificate to be
duly executed.
METRIS RECEIVABLES, INC.
By:
---------------------------
Name:
Title:
Dated:
CERTIFICATE OF AUTHENTICATION
This is one of the Class D Certificates referred to in the
within-mentioned Pooling and Servicing Agreement.
THE BANK OF NEW YORK (DELAWARE)
By:
---------------------------
Name:
Title:
A-4-5
<PAGE>
EXHIBIT B
[Form of Monthly Certificateholders' Statement]
B-1
<PAGE>
EXHIBIT C
Metris Receivables, Inc.
4400 Baker Road, Suite F470
Minnetonka, Minnesota 55343
Direct Merchants Credit Card Bank,
National Association
1455 West 2200 South
Salt Lake City, Utah 84119
The Bank of New York (Delaware)
White Clay Center
Route 273
Newark, Delaware 19711
Re: METRIS MASTER TRUST FLOATING RATE ASSET BACKED CERTIFICATES, SERIES 1997-2,
CLASS C
Ladies and Gentlemen:
In connection with our proposed purchase of $_________ in principal amount
of Metris Master Trust Floating Rate Asset Backed Certificates, Series 1997-2,
Class C (the "Class C Certificates"), we confirm that:
[TO BE INCLUDED IN EACH LETTER TO BE SIGNED BY THE PURCHASERS FROM THE
INITIAL PURCHASER] [1. We have received a copy of the Private Placement
Memorandum dated November 19, 1997 relating to the Class C Certificates (the
"Private Placement Memorandum") and such other information and documentation as
we deem necessary in order to make our investment decision. We understand that
the Private Placement Memorandum and any such other information and
documentation speaks only as of its date and that the information contained in
the Private Placement Memorandum and such other information and documentation
may not be correct or complete as of any time subsequent to such date.]
2. We agree to be bound by the restrictions and conditions set forth in
the Pooling and Servicing Agreement, dated as of May 26, 1995, as amended
(the "Pooling and Servicing Agreement") and as supplemented by the Series
1997-2 Supplement dated as of November 20, 1997 (the "Series 1997-2
Supplement" and together with the Pooling and Servicing Agreement, the
"Pooling and Servicing
C-1
<PAGE>
Agreement"), each by and between Metris Receivables, Inc., as Transferor,
Direct Merchants Credit Card Bank, National Association, as Servicer, and The
Bank of New York (Delaware), as Trustee, relating to the Class C Certificates
and agree to be bound by, and not reoffer, resell, pledge, participate,
hypothecate or otherwise dispose or transfer (any such act, a "Transfer") the
Class C Certificates except in compliance with, certain restrictions and
conditions including but not limited to those in Section 10 of the Series
1997-2 Supplement. We understand that capitalized terms used herein and not
otherwise defined herein have the meanings given to such terms in the Series
1997-2 Supplement.
3. We understand that the Class C Certificates have not been and will
not be registered under the Securities Act of 1933, as amended (the
"Securities Act") or any state securities law and agree that the Class C
Certificates may be reoffered, resold, pledged or otherwise transferred only
in compliance with the Securities Act and other applicable laws and only (i)
to the Transferor, (ii) to a limited number of institutional "accredited
investors" (as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act) and in a transaction exempt from the registration
requirements of the Securities Act (upon delivery of the documentation
required by the Pooling and Servicing Agreement and, if the Trustee so
requires, an opinion of counsel satisfactory to the Trustee) or (iii)
pursuant to Rule 144A under the Securities Act to a person that we reasonably
believe is a qualified institutional buyer within the meaning of Rule 144A
("QIB") purchasing for its own account or a QIB purchasing for the account of
a QIB, whom we have informed, in each case, that the reoffer, resale, pledge
or other transfer is being made in reliance on Rule 144A.
4. We have neither acquired nor will we Transfer any Class C
Certificate we acquire (or any interest therein) or cause any Class C
Certificate (or any interest therein) to be marketed on or through (i) an
"established securities market" within the meaning of Section 7704(b)(1) of
the Internal Revenue Code of 1986, as amended (the "Code") and any Treasury
regulation thereunder, including, without limitation, an over-the-counter
market or an interdealer quotation system that regularly disseminates firm
buy or sell quotations or (ii) a "secondary market" within the meaning of
Section 7704(b)(2)
C-2
<PAGE>
of the Code and any Treasury regulation thereunder, including a market
wherein the Class C Certificates (or any interest therein) are regularly
quoted by any person making a market in such interests and a market wherein
any person regularly makes available bid or offer quotes with respect to the
Class C Certificates (or any interest therein) and stands ready to effect buy
or sell transactions at the quoted prices for itself or on behalf of others.
5. We are not and will not become, for so long as we own any interest
in the Class C Certificates, a partnership, Subchapter S corporation or
grantor trust for United States federal income tax purposes. If this
representation cannot be made, the Transferor may, in its sole discretion,
prohibit a Transfer to such entity; PROVIDED, HOWEVER, that if the Transferor
agrees to permit such a Transfer, the Transferor or the Trustee may require
additional certifications and representations in order to prevent the Trust
from being treated as a publicly traded partnership.
6. We are a person who is either (A)(i) a citizen or resident of the
United States, (ii) a corporation or other entity organized in or under the
laws of the United States or any political subdivision thereof or (iii) a
person not described in (i) or (ii) whose ownership of the Class C
Certificates is effectively connected with such person's conduct of a trade
or business within the United States (within the meaning of the Code) and our
ownership of any interest in a Class C Certificate will not result in any
withholding obligation with respect to any payments with respect to the Class
C Certificates by any person or (B) an estate the income of which is
includible in gross income for United States federal income tax purposes or
any trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more United
States fiduciaries have the authority to control all substantial decisions of
the trust. We agree that (a) if we are a person described in clause (A)(i)
or (A)(ii) above, we will furnish to the person from whom we are acquiring a
Class C Certificate, the Transferor, the Servicer and the Trustee, a properly
executed U.S. Internal Revenue Service Form W-9 and a new Form W-9, or any
successor applicable form, upon the expiration or obsolescence of any
previously delivered form or (b) if we
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are a person described in clause (A)(iii) above, we will furnish to the
person from whom we are acquiring a Class C Certificate, the Transferor, the
Servicer and the Trustee, a properly executed U.S. Internal Revenue Service
Form 4224 (or applicable successor form) and a new Form 4224 (or applicable
successor form), upon the expiration or obsolescence of any previously
delivered form (and, in each case, such other certifications, representations
or opinions of counsel as may be requested by the Transferor, the Servicer or
the Trustee). We recognize that if we are a tax-exempt entity, payments with
respect to the Class C Certificates may constitute unrelated business taxable
income.
7. We understand that no subsequent Transfer of a Class C Certificate
is permitted unless the Transferor consents in writing to the proposed
Transfer, which consent shall be granted (assuming that all other conditions
to such Transfer are satisfied) unless the Transferor determines in its sole
and absolute discretion that such Transfer would create more than an
insubstantial risk that the Trust would be classified for federal or any
applicable state tax purposes as an association or publicly traded
partnership taxable as a corporation; PROVIDED, that any attempted Transfer
that would cause the number of Targeted Holders to exceed one-hundred shall
be void; and PROVIDED, FURTHER, that there shall not at any time be more than
10 holders of Class C Certificates of Series 1997-2 or such other number as
may be consented to by the Transferor, which consent may be withheld in its
sole and absolute discretion.
"TARGETED HOLDER" means (i) each holder of a right to receive interest
or principal with respect to the Class C Certificates (or other
interests in the Trust), other than certificates (or other such
interests) with respect to which an opinion is rendered that such
certificates (or other such interests) will be treated as debt for
Federal income tax purposes, and (ii) any holder of a right to receive
any amount in respect of the Transferor Interest; PROVIDED, that any
person holding more than one interest each of which would cause such
person to be a Targeted Holder shall be treated as a single Targeted
Holder.
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8. We understand that the opinion of tax counsel that the Trust will
not be subject to tax at the entity level is dependent in part on the
accuracy of the representations in paragraphs [3, 4, 5 and 6] [4, 5, 6 and 7]
and that, if such representations are not accurate, in addition to our being
subject to having our purchase rescinded, we will be liable for damages.
9. We understand that if we are not created or organized under the laws
of the United States or any State thereof (including the District of
Columbia), we will, upon written notice by the Transferor that the Transferor
intends, pursuant to Section 1446 or other applicable section of the Code, to
withhold U.S. tax (a "WITHHOLDING TAX") from amounts paid or accruing to us
with respect to our interest in a Class C Certificate (such determination
being a "WITHHOLDING EVENT"), for tax years for which we have already filed
U.S. federal income tax returns (each a "PRIOR TAX YEAR") prior to proper
notice of such Withholding Event, provide (A) a signed officer's certificate
stating that amounts paid or accruing to us with respect to our interest in a
Class C Certificate have been included in our U.S. federal income tax returns
for each such Prior Tax Year, which certificate may be relied on by the
Transferor in asserting to the Internal Revenue Service the applicability of
Section 1463 of the Code with respect to any Withholding Tax for each such
Prior Tax Year and (B) provide information to the Transferor or, at our
option, to the Internal Revenue Service in support of the application of
Section 1463 of the Code for each such Prior Tax Year.
10. We are (a) an institutional "accredited investor" (as defined in
Rule 501(a)(1), (2), (3), or (7) of Regulation D under the Securities Act)
and have such knowledge and experience in financial and business matters as
to be capable of evaluating the merits and risks of our investment in the
Class C Certificates, and we are acquiring each of the Class C Certificates
purchased by us for our own account or for a single account (which is an
institutional "accredited investor") as to which we exercise sole investment
discretion and we and any such account for which we are acting are each able
to bear the economic risk of our or its investment or (b) a "qualified
institutional buyer" (as defined in Rule 144A under the Securities Act)
purchasing for our own account or for the account of a "qualified
institutional buyer" and we
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understand that the sale to us is being made in reliance on Rule 144A under
the Securities Act.
11. We are either (a) not (i) an employee benefit plan (as defined in
section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) whether or not 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") whether or not subject to Section 4975
of the Code, or (iii) any other 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 including without limitation,
as applicable, an insurance company general account (each of (i), (ii) and
(iii), a "Benefit Plan Investor") or using the assets of any Benefit Plan
Investor to acquire and hold Class C Certificates or any interest therein, or
(b) an insurance company acting on behalf of our general account and (i) on
the date hereof less than 25% of the assets of such general account (as
reasonably determined by us) constitute "plan assets" for purposes of Title I
of ERISA and Section 4975 of the code, and (ii) we agree that if, after our
initial acquisition of the Class C Certificates, at any time during any
calendar quarter 25% or more of the assets of such general account (as
reasonably determined by us no less frequently than each calendar quarter)
constitute "plan assets" for purposes of Title I of ERISA or Section 4975 of
the Code and no exemption or exception from the prohibited transaction rules
applies to such general account's continued holding of the Class C
Certificates under Section 401(c) of ERISA and the final regulations
thereunder or under an exemption or regulation issued by the United States
Department of Labor under ERISA, then we agree to dispose of all of the Class
C Certificates then held in our general account by the end of the next
following calendar quarter.
12. We understand that any purported Transfer of any Class C
Certificate in contravention of the restrictions and conditions in paragraphs
1 through [10][11] above (including any violation of the representation in
paragraph [4] [5]by an investor who continues to hold a Class C Certificate
occurring any time after the Transfer in which it acquired such Class C
Certificate) shall be null and void and the purported transferee shall not be
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recognized by the Trust or any other person as a Class C Certificateholder
for any purpose.
13. We further understand that, on any proposed resale, pledge or
transfer of any Class C Certificates, we will be required to furnish to the
Trustee and the Registrar, such certification and other information as the
Trustee or the Registrar may reasonably require to confirm that the proposed
sale complies with the foregoing restrictions and with the restrictions and
conditions of the Class C Certificates and the Pooling and Servicing
Agreement pursuant to which the Class C Certificates were issued and we agree
that if we determine to Transfer any Class C Certificate, we will cause our
proposed transferee to provide the Transferor, the Servicer and the Trustee
with a letter substantially in the form of this letter. We further
understand that Class C Certificates purchased by us will bear a legend to
the foregoing effect.
14. The person signing this letter on behalf of the ultimate beneficial
purchaser of the Class C Certificates has been duly authorized by such
beneficial purchaser of the Class C Certificates to do so.
15. The Class C Certificates purchased by us should be registered in
the name and issued in the denominations set forth on Schedule 1 hereto. All
payments on the Class C Certificates held by us should be wired to us in
accordance with the instructions set forth on Schedule 1 hereto unless we
otherwise notify the Transferor, the Servicer and the Trustee in writing.
You are entitled to rely upon this letter and are irrevocably authorized to
produce this letter or a copy hereof to any interested party in any
administrative or legal proceeding or official inquiry with respect to the
matters covered hereby.
Very truly yours,
[NAME OF TRANSFEREE]
By:
-----------------------------------
Name:
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Title:
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SCHEDULE 1
REGISTRATION AND PAYMENT INSTRUCTIONS
REGISTRATION INSTRUCTIONS:
Full Legal Name of Purchaser:
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Number and Denomination of Certificates:
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- --------------------------
PAYMENT INSTRUCTIONS:
Name of Bank:
Address of Bank:
Account Name:
Account Number:
ABA Number:
--------------------------
Reference
--------------------------
NOTICE INFORMATION:
Address:
--------------------------
--------------------------
--------------------------
Attention:
--------------------------
Telephone:
--------------------------
Telefax:
--------------------------
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