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.)
600 South Highway 169, Suite 300
St. Louis Park, MN 55426
(612) 417-5645
(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. [X]
Securities Act registration statement file numbers to which this form relates:
333-61343, 333-63931 and 333-76047
Securities to be registered pursuant to Section 12(g) of the Act:
(Title of Class)
$500,000,000 Floating Rate Asset Backed Securities, Series 1999-1, Class A
(Title of Class)
$500,000,000 Floating Rate Asset Backed Securities, Series 1999-2, Class A
INFORMATION REQUIRED IN REGISTRATION STATEMENT
Item I. Description of Registrants' Securities to be registered.
The description of the $500,000,000 Floating Rate Asset Backed
Securities, Series 1999-1, Class A set forth under "Description of the
Securities" and the tax discussion set forth under "Income Tax Matters" in the
Prospectus dated June 22, 1999 and filed on June 30, 1999 pursuant to Rule
424(b) under the Securities Act of 1933, as amended, in connection with the
Registrants' Registration Statement on Form S-3 (No. 333-61343) are incorporated
herein by reference.
The description of the $500,000,000 Floating Rate Asset Backed
Securities, Series 1999-2, Class A set forth under "Description of the
Securities" and the tax discussion set forth under "Income Tax Matters" in the
Prospectus dated September 14, 1999 and filed on September 20,1999 pursuant to
Rule 424(b) under the Securities Exchange Act of 1933, as amended, in connection
with the Registrants' Registration Statement on Form S-3 (No. 333-63931) are
incorporated by reference.
Item 2. Exhibits.
List below all exhibits filed as a part of the registration statement:
Exhibit Number Description of Exhibit
4(a) Pooling and Servicing Agreement dated as of July 30, 1998
among 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 4(a) to of Registrants' Registration
Statement on Form S-3 (No. 333-63931))
4(b) Series 1999-1 Supplement dated as of June 24, 1999
4(c) Series 1999-2 Supplement dated as of September 14, 1999
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: April 28, 2000
METRIS RECEIVABLES, INC.
By: /s/ Paul Runice
Paul Runice
Sr. Vice President & Treasurer
METRIS MASTER TRUST (Co Registrant)
By: Metris Receivables, Inc.
(Originator of Trust)
By: /s/ Paul Runice
Paul Runice
Sr. Vice President & Treasurer
Exhibit 4(b)
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 1999-1 Securityholders
SERIES 1999-1 SUPPLEMENT
Dated as of July 7, 1999
to
AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT
Dated as of July 30, 1998
METRIS MASTER TRUST
$500,000,000 Floating Rate Asset Backed
Securities, Series 1999-1, Class A
$49,450,550 Asset Backed
Securities, Series 1999-1, Class B
TABLE OF CONTENTS
SECTION 1. Designation.......................................................1
SECTION 2. Definitions.......................................................1
SECTION 3. Reassignment Terms...............................................23
SECTION 3A. Conveyance of Interest in Interest
rate Cap; Cap Proceeds Account...................................23
SECTION 4. Delivery and Payment for the Series
1999-1 Securities................................................27
SECTION 5. Form of Delivery of Series 1999-1
Securities; Denominations........................................28
SECTION 6. Article IV of Agreement..........................................28
ARTICLE IV RIGHTS OF SECURITYHOLDERS AND ALLOCATION
AND APPLICATION OF COLLECTIONS
SECTION 4.4. Rights of Securityholders............................28
SECTION 4.5. Collections and Allocation; Payments
on Exchangeable Transferor Security..................29
SECTION 4.6. Determination of Interest for the
Series 1999-1 Securities.............................30
SECTION 4.7. Determination of Principal Amounts...................31
SECTION 4.8. Shared Principal Collections.........................31
SECTION 4.9. Application of Funds.................................32
SECTION 4.10. Coverage of Required Amount for the
Series 1999-1 Secruities.............................41
SECTION 4.11. Payment of Interest on Securities
and Amounts Owing to Insurer.........................43
SECTION 4.12. Payment of Security Principal........................43
SECTION 4.13. Series Charge-Offs...................................45
SECTION 4.14. Redirected Principal Collections
For the Series 1999-1 Securities.....................46
SECTION 4.15. Determination of LIBOR...............................46
SECTION 4.16. Payment Reserve Account..............................47
SECTION 4.17. Principal Funding Account............................48
SECTION 4.18. Accumulation Period Reserve Account..................50
SECTION 4.19. Postponement of Accumulation Period..................52
SECTION 4.20. Defeasance...........................................52
SECTION 7. Article V of the Agreement.......................................53
ARTICLE V DISTRIBUTIONS AND REPORTS TO INVESTOR SECURITY HOLDERS
SECTION 5.1 Distributions........................................53
SECTION 5.2 Securityholders' Statement...........................55
SECTION 8. Series 1999-1 Pay Out Events.....................................58
SECTION 9. Series 1999-1 Termination .......................................60
SECTION 10. Legends; Transfer and Exchange;
Restrictions on Transfer of Series 1999-1
Securities.......................................................60
SECTION 11. The Policy.......................................................61
SECTION 12. Ratification of Agreement........................................63
SECTION 13. Registration of the Class A Securities
under the Securities Exchange Act of 1934........................64
SECTION 14. Counterparts.....................................................64
SECTION 15. GOVERNING LAW....................................................64
SECTION 16. Instructions in Writing..........................................64
SECTION 17. Amendment for FASIT Purposes.....................................64
SECTION 18. Paired Series....................................................65
SECTION 19. Third party Beneficiaries........................................65
EXHIBITS
EXHIBIT A-1 Form of Class A Investor Security
EXHIBIT A-2 Form of Class B Investor Security
EXHIBIT B Form of Monthly Securityholder's Statement
SERIES 1999-1 SUPPLEMENT, dated as of July 7, 1999 (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 Amended
and Restated Pooling and Servicing Agreement dated as of July 30, 1998 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 Securities.
Pursuant to this Series Supplement, the Transferor and the
Trustee shall create a new Series of Investor Securities and shall specify the
Principal Terms thereof.
SECTION 1. Designation. There is hereby created a Series of Investor Securities
to be issued pursuant to the Agreement and this Series Supplement to be known
generally as the "Series 1999-1 Securities." The Series 1999-1 Securities shall
be issued in two Classes, which shall be designated generally as the Floating
Rate Asset Backed Securities, Series 1999-1, Class A (the "Class A Securities"),
and the Asset Backed Securities, Series 1999-1, Class B (the "Class B
Securities").
SECTION 2. Definitions. In the event that any term or provision contained herein
shall conflict with or be inconsistent with any provision contained in the
Agreement, the terms and provisions of this Series Supplement shall govern with
respect to the Series 1999-1 Securities. All Article, Section or subsection
references herein shall mean Articles, Sections or subsections of the Agreement,
as amended or supplemented by this Series Supplement, except as otherwise
provided herein. All capitalized terms not otherwise defined herein are defined
in the Agreement. Each capitalized term defined herein shall relate only to the
Series 1999-1 Securities and no other Series of Securities issued by the Trust.
"Accumulation Period" shall mean the period commencing at the
close of business on the last day of the May 2003 Monthly Period or such later
date as is determined in accordance with Section 4.19 of the Agreement and
ending on the first to occur of (a) the commencement of the Early Amortization
Period and (b) the Series 1999-1 Termination Date.
"Accumulation Period Factor" shall mean, for any Monthly
Period, a fraction, the numerator of which is equal to the sum of the numerators
with respect to all Classes of all Series then outstanding used to calculate the
allocation percentages applicable for Principal Collections, and the denominator
of which is equal to the sum of (a) the Class A Invested Amount, (b) the sum of
the numerators with respect to all Classes of all Series then outstanding used
to calculate the allocation percentages applicable for Principal Collections of
all other Series which are not expected to be in their revolving periods during
such Monthly Period, and (c) the sum of the numerators used to calculate the
allocation percentages applicable for Principal Collections of all Classes of
other outstanding Series which are not allocating Shared Principal Collections
and are expected to be in their revolving periods during such Monthly Period.
"Accumulation Period Length" shall have the meaning assigned
such term in Section 4.19 of the Agreement.
"Accumulation Period Reserve Account" shall have the meaning
specified in subsection 4.18(a) of the Agreement.
"Accumulation Shortfall" shall initially mean zero and
thereafter shall mean, with respect to any Monthly Period during the
Accumulation Period, the excess, if any, of the Controlled Deposit Amount for
the previous Monthly Period over the amount deposited into the Principal Funding
Account pursuant to subsection 4.12(a) of the Agreement with respect to the
Series 1999-1 Securities for the previous Monthly Period.
"Additional Interest" shall mean, at any time of
determination, the Class A Additional Interest.
"Adjusted Invested Amount" shall mean as of any Business Day,
(i) the Invested Amount minus (ii) the sum of the amounts then on deposit in the
Principal Account and the Principal Funding Account and the Series 1999-1
Percentage of the amount then on deposit in the Excess Funding Account.
"Aggregate Interest Rate Caps Notional Amount" shall mean with
respect to any date of determination an amount equal to the sum of the notional
amounts or equivalent amounts of all outstanding Cap Agreements, Replacement
Interest Rate Caps and Qualified Substitute Arrangements, each as of such date
of determination.
"Amortization Period" shall mean the period commencing on the
Amortization Period Commencement Date and continuing until the Series 1999-1
Termination Date.
"Amortization Period Commencement Date" shall mean the earlier
of the first day of the Accumulation Period and the Pay Out Commencement Date.
"Available Reserve Account Amount" shall mean, with respect to
any Transfer Date, the lesser of (a) the amount on deposit in the Accumulation
Period Reserve Account as of such date (before giving effect to any withdrawal
made or to be made pursuant to subsection 4.18(c) of the Agreement from the
Accumulation Period Reserve Account on such Transfer Date) and (b) the Required
Reserve Account Amount for such Transfer Date.
"Available Series 1999-1 Finance Charge Collections" shall
have the meaning specified in subsection 4.9(a) of the Agreement.
"Available Series 1999-1 Principal Collections" shall mean,
with respect to any Monthly Period, or portion thereof commencing on the
Amortization Period Commencement Date, an amount equal to the sum of (i) an
amount equal to the Fixed/Floating Percentage of all Principal Collections (less
the amount of Redirected Principal Collections) received during such Monthly
Period, (ii) any amount on deposit in the Excess Funding Account allocated to
the Series 1999-1 Securities pursuant to subsection 4.9(d) of the Agreement with
respect to such period, (iii) the sum of the aggregate amount allocated with
respect to the Series Default Amount with respect to such period and the Series
1999-1 Percentage of any unpaid Adjustment Payments paid pursuant to subsections
4.9(a)(iii) and 4.9(a)(iv) of the Agreement with respect to such period, any
reimbursements of unreimbursed Charge-Offs pursuant to subsections 4.9(a)(v) and
(x) of the Agreement with respect to such period plus in each case, amounts
applied with respect thereto pursuant to subsections 4.10(a) and (b), 4.14,
4.17(b), 4.18(b), (c) and (d) of the Agreement, (iv) the Policy Claim Amount
with respect to Potential Class A Charge-Offs for the related Distribution Date
paid pursuant to subsection 11(b) of this Series Supplement, (v) the aggregate
Shared Principal Collections allocated to the Series 1999-1 Securities pursuant
to Section 4.8 of the Agreement with respect to such period and (vi) the
proceeds of the sale of all or a portion of an Interest Rate Cap with respect to
such Monthly Period.
"Base Rate" shall mean, with respect to any Monthly Period,
the sum of (i) the Class A Interest Rate as of the last day of such Monthly
Period, plus (ii) the product of 2.00% per annum and the percentage equivalent
of a fraction the numerator of which is the Adjusted Invested Amount and the
denominator of which is the Invested Amount, each as of the last day of such
Monthly Period.
"Cap Agreements" shall mean each interest rate cap agreement,
between the Transferor, the Trustee and a Cap Provider, as amended from time to
time, with respect to the Class A Interest Rate and any additional interest rate
protection agreement or agreements, entered into between the Transferor, the
Trustee and a Cap Provider, as the same may from time to time be amended,
restated, modified and in effect.
"Cap Proceeds Account" shall have the meaning specified in
subsection 3A(b) of this Series Supplement.
"Cap Provider" shall mean a third party cap provider having a
rating acceptable to the Rating Agencies.
"Cap Receipt Amount" shall mean, with respect to any Business
Day the amount on deposit in the Cap Proceeds Account.
"Cap Settlement Date" shall have the meaning specified in
subsection 3A(b) of this Series Supplement.
"Carryover Class A Interest" shall mean with respect to any
Business Day (a) any Class A Monthly Interest due but not paid on any previous
Distribution Date plus (b) any Class A Additional Interest due on the next
succeeding Distribution Date.
"Charge-Offs" shall mean the sum of Class A Charge-Offs and
Class B Charge-Offs.
"Class A Additional Interest" shall have the meaning specified
in subsection 4.6 of the Agreement.
"Class A Adjusted Invested Amount" shall mean, for any date of
determination, an amount not less than zero equal to the then current Class A
Invested Amount minus the sum of the Principal Funding Account Balance and the
amount then on deposit in the Principal Account for the benefit of the Class A
Securities on such date of determination.
"Class A Charge-Offs" shall have the meaning specified in
subsection 4.13(c) of the Agreement.
"Class A Floating Percentage" shall mean, with respect to any
Business Day, the percentage equivalent of a fraction, the numerator of which is
the Class A Adjusted Invested Amount as of the end of the preceding Business Day
and the denominator of which is the greater of (a) the sum of the aggregate
amount of Principal Receivables in the Trust and the amounts on deposit in the
Excess Funding Account as of the end of the preceding Business Day and (b) the
sum of the numerators with respect to all Classes of all Series then outstanding
used to calculate the applicable allocation percentage.
"Class A Initial Invested Amount" shall mean the aggregate
initial principal amount of the Class A Securities, which is $500,000,000.
"Class A Interest Rate" shall mean 5.53375% per annum from the
Closing Date through and including August 19, 1999 and, with respect to each
Interest Accrual Period thereafter, a per annum rate .35% in excess of LIBOR as
determined on the related LIBOR Determination Date.
"Class A Interest Shortfall" shall have the meaning specified
in subsection 4.6 of the Agreement.
"Class A Invested Amount" shall mean, when used with respect
to any Business Day, the greater of (x) zero and (y) an amount equal to (a) the
Class A Initial Invested Amount, minus (b) the aggregate amount of principal
payments made to Class A Securityholders through and including such Business
Day, minus (c) the aggregate amount of Class A Charge-Offs for all prior
Distribution Dates, plus (d) the sum of the aggregate amount reimbursed with
respect to reductions of the Class A Invested Amount through and including such
Business Day pursuant to subsection 4.9(a)(v) of the Agreement plus, with
respect to such subsection, amounts applied thereto pursuant to subsections
4.10(a) and (b), 4.14, 4.17(b) and 4.18(b), (c) and (d) of the Agreement, for
the purpose of reimbursing amounts deducted pursuant to the foregoing clause
(c); provided, however that the Class A Invested Amount may not be reduced below
zero.
"Class A Monthly Interest" shall mean the interest
distributable in respect of the Class A Securities as calculated in accordance
with subsection 4.6 of the Agreement.
"Class A Outstanding Principal Amount" shall mean with respect
to the Class A Securities, when used with respect to any Business Day, an amount
equal to (a) the Class A Initial Invested Amount minus (b) the aggregate amount
of principal payments made to the Class A Securityholders on or prior to such
Business Day.
"Class A Percentage" shall mean a fraction the numerator of
which is the Class A Initial Invested Amount and the denominator of which is the
Initial Invested Amount.
"Class A Principal" shall mean the principal distributable in
respect of the Class A Securities as calculated in accordance with subsection
4.7(a) of the Agreement.
"Class A Required Amount" shall mean the amount determined by
the Servicer for each Business Day equal to the excess, if any, of (x) the sum
of (i) the Class A Monthly Interest for the Interest Accrual Period beginning in
the then current Monthly Period, (ii) any Carryover Class A Interest, (iii) the
Class A Percentage of the Servicing Fee for the then current Monthly Period,
(iv) the Class A Floating Percentage of the Default Amount, if any, for such
Business Day and, to the extent not previously paid, for any previous Business
Day in such Monthly Period and (v) the Class A Percentage of the Series 1999-1
Percentage of any Adjustment Payment the Transferor is required but fails to
make pursuant to subsection 3.8(a) of the Agreement on such Business Day and on
each previous Business Day during such Monthly Period over (y) the Available
Series 1999-1 Finance Charge Collections plus any Excess Finance Charge
Collections from other Series and any Transferor Finance Charge Collections
allocated with respect to the amounts described in clauses (x)(i) through (v)
above with respect to such Business Days and all previous Business Days in such
Monthly Period.
"Class A Securities" shall mean any of the securities executed
by the Transferor and authenticated by or on behalf of the Trustee,
substantially in the form of Exhibit A-1 hereto.
"Class A Securityholder" shall mean the Person in whose name a
Class A Security is registered in the Security Register.
"Class A Securityholders' Interest" shall mean the portion of
the Series 1999-1 Securityholders' Interest evidenced by the Class A Security.
"Class B Charge-Offs" shall have the meaning specified in
subsection 4.13(a) of the Agreement.
"Class B Excess Amounts" shall mean with respect to any
Business Day, the excess of the Class B Invested Amount over the Stated Class B
Amount on such day after taking into account all adjustments of the Class A
Adjusted Invested Amount on such day.
"Class B Fixed/Floating Percentage" shall mean for any
Business Day the percentage equivalent of a fraction, the numerator of which is
the Class B Invested Amount at the end of the last day of the Revolving Period
and the denominator of which is the greater of (a) the sum of the aggregate
amount of Principal Receivables and the amount on deposit in the Excess Funding
Account as of the end of the preceding Business Day and (b) the sum of the
numerators with respect to all Classes of all Series then outstanding used to
calculate the applicable allocation percentage.
"Class B Floating Percentage" shall mean with respect to any
Business Day the percentage equivalent of a fraction, the numerator of which is
the Class B Invested Amount at the end of the preceding Business Day and the
denominator of which is the greater of (a) the sum of the aggregate amount of
Principal Receivables and the amount on deposit in the Excess Funding Account at
the end of the preceding Business Day and (b) the sum of the numerators with
respect to all Classes of all Series then outstanding used to calculate the
applicable allocation percentage.
"Class B Initial Invested Amount" shall mean the aggregate
initial principal amount of the Class B Securities, which is $49,450,550.
"Class B Interest Shortfall" shall have the meaning specified
in subsection 4.6(d) 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
initial principal balance of the Class B Securities, minus (b) the aggregate
amount of principal payments made to Class B Securityholders through and
including such Business Day, minus (c) the aggregate amounts by which the
Transferor has reduced the Class B Invested Amount pursuant to subsection
4.12(b) of the Agreement, minus (d) the aggregate amount of Class B Charge-Offs
for all prior Distribution Dates, minus (e) the aggregate amount of Redirected
Principal Collections for all prior Distribution Dates plus (f) the sum of the
aggregate amount reimbursed with respect to reductions of the Class B Invested
Amount through and including such Business Day pursuant to subsection 4.9(a)(x)
of the Agreement plus, with respect to such subsection, amounts applied thereto
pursuant to subsections 4.10(a) and (b), 4.17(b) and 4.18(b), (c) and (d) of the
Agreement, for the purpose of reimbursing amounts deducted pursuant to the
foregoing clauses (d) and (e); provided, however that the Class B Invested
Amount may not be reduced below zero.
"Class B Outstanding Principal Amount" shall mean, when used
with respect to any Business Day, an amount equal to (a) the Class B Initial
Invested Amount minus (b) the aggregate amount of principal payments made to
Class B Securityholders prior to such Business Day.
"Class B Principal" shall mean the principal distributable in
respect of the Class B Securities as specified in subsection 4.7(b) of the
Agreement.
"Class B Principal Payment Commencement Date" shall mean the
earlier of (a) (i) with respect to the Accumulation Period, the Expected Final
Payment Date or (ii) during the Early Amortization Period, the first
Distribution Date on which the Class A Invested Amount is paid in full or, if
there are no Principal Collections allocable to the Series 1999-1 Securities
remaining after payments have been made to the Class A Securities on such
Distribution Date, the Distribution Date following the first Distribution Date
on which the Class A Invested Amount is paid in full and (b) the Distribution
Date following a sale or repurchase of the Receivables as set forth in Section
2.4(e), 9.2, 10.2(a), 12.1 or 12.2 of the Agreement or Section 3 of this Series
Supplement.
"Class B Securities" shall mean any of the securities executed
by the Transferor and authenticated by or on behalf of the Trustee,
substantially in the form of Exhibit A-2 hereto.
"Class B Securityholder" shall mean the Person in whose name
Class B Securities is registered in the Security Register.
"Class B Securityholders' Interest" shall mean the portion of
the Series 1999-1 Securityholders' Interest evidenced by the Class B Security.
"Closing Date" shall mean July 7, 1999.
"Controlled Accumulation Amount" shall mean, for any Transfer
Date with respect to the Accumulation Period prior to the payment in full of the
Class A Invested Amount, $41,666,667; provided, however, that if the
Accumulation Period Length is determined to be less than 12 months pursuant to
Section 4.19 of the Agreement, the Controlled Accumulation Amount for each
Transfer Date with respect to the Accumulation Period prior to the payment in
full of the sum of the Class A Invested Amount will be equal to (i) the product
of (x) the Class A Initial Invested Amount and (y) the Accumulation Period
Factor for the Monthly Period preceding such Transfer Date divided by (ii) the
Required Accumulation Factor Number.
"Controlled Deposit Amount" shall mean, with respect to any
Transfer Date, the sum of (a) the Controlled Accumulation Amount for such
Transfer Date and (b) any existing Accumulation Shortfall.
"Covered Amount" shall mean, with respect to any Interest
Accrual Period during the Accumulation Period prior to the payment in full of
the Class A Invested Amount, the product of (a) the Class A Interest Rate in
effect with respect to such Interest Accrual Period, (b) a fraction the
numerator of which is the actual number of days in the related Interest Accrual
Period and the denominator of which is 360 and (c) the Principal Funding Account
Balance (up to the Class A Invested Amount) as of the last day of the Monthly
Period preceding the Monthly Period in which such Interest Accrual Period ends.
"Default Amount" shall mean, (i) on any Business Day other
than the Default Recognition Date, the aggregate amount of Principal Receivables
in Accounts which became Defaulted Accounts on such Business Day and (ii) on any
Default Recognition Date the aggregate amount of Principal Receivables in
Accounts which became Defaulted Accounts during the then current Monthly Period
(other than such Accounts which were included in clause (i)).
"Default Recognition Allocation Percentage" shall mean, with
respect to each Default Recognition Date, the percentage equivalent of a
fraction, the numerator of which is the Weighted Average Invested Amount for the
related Monthly Period and the denominator of which is the Weighted Average
Principal Receivables in the Trust for the related Monthly Period.
"Default Recognition Date" shall mean the last day of each
calendar month; provided, however, that with respect to any Monthly Period the
"related Default Recognition Date" shall mean the Default Recognition Date
occurring closest to the last day of such Monthly Period and any amounts
allocated or applied on such Default Recognition Date shall be deemed to apply
to the related Monthly Period.
"Distribution Date" shall mean August 20, 1999, and the
twentieth day of each month thereafter, or if such day is not a Business Day,
the next succeeding Business Day.
"DTC" shall mean The Depository Trust Company.
"Early Amortization Period" shall mean the period beginning on
the earlier of (a) the day on which a Pay Out Event occurs or is deemed to have
occurred and (b) the Expected Final Payment Date if the Class A Invested Amount
has not been paid in full on such date, and ending on the earlier of (i) the
date on which the Class A Invested Amount and the Class B Invested Amount have
been paid in full and (ii) the Scheduled Series 1999-1 Termination Date.
"Enhancement" shall mean, with respect to the Class A
Securities, the Policy and the Interest Rate Cap for the benefit of the Class A
Securityholders and the subordination of the Class B Invested Amount.
"Excess Finance Charge Collections" shall mean, with respect
to any Business Day, as the context requires, either (x) the amount described in
subsection 4.9(a)(xiii) of the Agreement allocated to the Series 1999-1
Securities but available to cover shortfalls in amounts paid from Finance Charge
Collections for other Series, if any, or (y) the aggregate amount of Finance
Charge Collections allocable to other Series in excess of the amounts necessary
to make required payments with respect to such Series, if any, and available to
cover shortfalls with respect to the Series 1999-1 Securities.
"Excess Spread Percentage" shall mean with respect to any
Monthly Period the excess of the Portfolio Yield for such Monthly Period over
the Base Rate as determined at the close of business on the Distribution Date in
such Monthly Period.
"Expected Final Payment Date" shall mean the June 2004
Distribution Date.
"FASIT" shall have the meaning specified in Section 16 of this
Series Supplement.
"Fixed/Floating Percentage" shall mean for any Business Day
the percentage equivalent of a fraction, the numerator of which is the Invested
Amount at the end of the last day of the Revolving Period and the denominator of
which is the greater of (a) the sum of the aggregate amount of Principal
Receivables and the amount on deposit in the Excess Funding Account as of the
end of the preceding Business Day and (b) the sum of the numerators with respect
to all Classes of all Series then outstanding used to calculate the applicable
allocation percentage; provided, however, that, on and after the Pay Out
Commencement Date, with respect to the allocations of Collections of Finance
Charge Receivables, the numerator used in the above calculation shall be the
Adjusted Invested Amount as of the day immediately preceding the Pay Out
Commencement Date.
"Floating Percentage" shall mean for any Business Day the sum
of the applicable Class A Floating Percentage and Class B Floating Percentage
for such Business Day.
"Initial Invested Amount" shall mean an amount equal to the
sum of (i) the Class A Initial Invested Amount and (ii) the Class B Initial
Invested Amount.
"Insurance Agreement" shall mean the Insurance and
Reimbursement Agreement, dated as of July 7, 1999 among the Insurer, the
Trustee, the Servicer and the Transferor.
"Insurer" shall mean MBIA Insurance Corporation, a New York
domiciled insurance company.
"Interest Accrual Period" shall mean, with respect to a
Distribution Date, the period from and including the preceding Distribution Date
to but excluding such Distribution Date; provided, however, that the initial
Interest Accrual Period shall be the period from the Closing Date to but
excluding the initial Distribution Date.
"Interest and Servicing Fee Deficiency" shall mean, with
respect to any Monthly Period, an amount equal to the excess of (a) the sum of
the Class A Monthly Interest for the Interest Accrual Period beginning in such
Monthly Period, the Carryover Class A Monthly Interest and the Servicing Fee for
such Monthly Period over (b) the Available Series 1999-1 Finance Charge
Collections applied to the payment thereof pursuant to subsections 4.9(a)(i) and
(ii) of the Agreement, the amount of Transferor Finance Charge Collections and
Excess Finance Charge Collections allocated thereto pursuant to Section 4.10 of
the Agreement, the amount of Redirected Principal Collections applied with
respect thereto pursuant to Section 4.14 of the Agreement, the amount of
Principal Funding Account Investment Proceeds applied with respect thereto
pursuant to subsection 4.17(b) of the Agreement and amounts withdrawn from the
Accumulation Period Reserve Account and applied with respect thereto pursuant to
subsections 4.18(b) and (c) of the Agreement.
"Interest Rate Caps" shall mean the interest rate caps
provided pursuant to Cap Agreements by one or more Cap Providers to the Trustee
on behalf of any of the Securityholders which shall entitle the Trust to receive
monthly payments equal to the product of (i) the positive difference, if any,
between LIBOR in effect for each applicable Interest Accrual Period and 9.25%,
(ii) the notional amount of such interest rate cap and (iii) the actual number
of days in the Interest Period divided by 360.
"Invested Amount" shall mean, when used with respect to any
Business Day, an amount equal to the sum of (a) the Class A Invested Amount as
of such Business Day and (b) the Class B Invested Amount as of such Business
Day.
"Investment Earnings" shall mean, with respect to any Business
Day, the investment earnings on amounts on deposit in (i) the Payment Reserve
Account, deposited in the Collection Account pursuant to subsection 4.16(c),
(ii) the Principal Funding Account, deposited in the Collection Account pursuant
to subsection 4.17(b) and (iii) the Accumulation Period Reserve Account,
deposited in the Collection Account pursuant to subsection 4.18(b).
"Investor Securities" shall mean the Class A Securities and
the Class B Security.
"Investor Percentage" shall mean, for any Business Day, (a)
with respect to Finance Charge Collections prior to the Pay Out Commencement
Date, Receivables in Defaulted Accounts at any time and Principal Collections
during the Revolving Period, the Floating Percentage and (b) with respect to
Finance Charge Collections on and after the Pay Out Commencement Date and
Principal Collections during the Amortization Period, the Fixed/Floating
Percentage.
"Investor Securityholder" shall mean the Holder of record of
an Investor Security of Series 1999-1.
"LIBOR" shall mean, as of any LIBOR Determination Date, the
London interbank offered quotations for one-month Dollar deposits determined by
the Trustee for each Interest Accrual Period in accordance with the provisions
of Section 4.15 of the Agreement.
"LIBOR Determination Date" shall mean (i) July 2, 1999 with
respect to the period from the Closing Date through August 19, 1999 and (ii) the
second Business Day prior to the commencement of each Interest Accrual Period
beginning with Interest Accrual Period commencing on August 20, 1999. 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
1999-1 Securities shall begin on and include the Closing Date and shall end on
and include July 31, 1999.
"Negative Carry Amount" shall have the meaning specified in
subsection 4.10(a) of the Agreement.
"Order" shall have the meaning specified in Section 11(b) of
the Agreement.
"Paired Series" shall have the meaning specified in Section 17
of this Series Supplement.
"Pay Out Commencement Date" shall mean the date on which a
Trust Pay Out Event is deemed to occur pursuant to Section 9.1 of the Agreement
or a Series 1999-1 Pay Out Event is deemed to occur pursuant to Section 8 of
this Series Supplement.
"Paying Agent" shall mean, for the Series 1999-1 Securities,
initially The Bank of New York and, in certain limited circumstances, the Banque
Generale du Luxembourg, S.A.
"Payment Reserve Account" shall have the meaning specified in
subsection 4.16(a) of the Agreement.
"Policy" shall mean the Financial Guaranty Insurance Policy
issued by the Insurer.
"Policy Claim Amount" shall have the meaning specified in
subsection 11(b) of this Series Supplement.
"Portfolio Adjusted Yield" shall mean, with respect to any
Monthly Period, the average of the percentages obtained for each of the three
preceding Monthly Periods by subtracting the Base Rate for such Monthly Period
from the Portfolio Yield for such Monthly Period.
"Portfolio Yield" shall mean for the Series 1999-1 Securities,
with respect to any Monthly Period, the annualized percentage equivalent of a
fraction, the numerator of which is an amount equal to the sum of the aggregate
amount of Available Series 1999-1 Finance Charge Collections for such Monthly
Period (not including the amounts on deposit in the Payment Reserve Account and
Adjustment Payments made by the Transferor with respect to Adjustment Payments
required to be made but not made in prior Monthly Periods, if any) plus the
Principal Funding Account Investment Proceeds and amounts withdrawn from the
Accumulation Period Reserve Account, if any, with respect to such Monthly Period
calculated on a cash basis, minus the aggregate Series Default Amount for such
Monthly Period and the Series 1999-1 Percentage of any Adjustment Payments which
the Transferor is required but fails to make pursuant to the Agreement for such
Monthly Period, and the denominator of which is the average daily Invested
Amount; provided, however, that Excess Finance Charge Collections applied for
the benefit of the Series 1999-1 Securityholders may be added to the numerator
if the Transferor shall have provided ten Business Days prior written notice of
such action to each Rating Agency and the Transferor, the Servicer and the
Trustee shall have received notification in writing that such action will not
result in Standard & Poor's reducing or withdrawing its then existing rating of
the Investor Securities (without giving effect to the Policy) of any outstanding
Series or Class with respect to which it is a Rating Agency.
"Potential Class A Charge-Offs" shall have the meaning
specified in subsection 4.13(b) of the Agreement.
"Preference Amount" shall have the meaning specified in
Section 11(b) of this Series Supplement.
"Principal Funding Account" shall have the meaning set forth
in subsection 4.17 of the Agreement.
"Principal Funding Account Balance" shall mean, with respect
to any date of determination during the Accumulation Period, the principal
amount, if any, on deposit in the Principal Funding Account on such date of
determination.
"Principal Funding Account Investment Proceeds" shall mean,
with respect to each Interest Accrual Period during the Accumulation Period, the
investment earnings on funds on deposit in the Principal Funding Account (net of
investment losses and expenses) for such Interest Accrual Period.
"Principal Shortfalls" shall mean on any Business Day (x) for
Series 1999-1, (i) during the Accumulation Period, the amount, if any, by which
the Controlled Deposit Amount for the Transfer Date immediately following the
then current Monthly Period exceeds the total of the amounts described in
clauses (v), (w), (x) and (y) of subsection 4.9(c)(i), and (ii) at all other
times, the Invested Amount of the class then receiving principal payments after
the application of Principal Collections on such Business Day or (y) for any
other Series the amounts specified as such in the Supplement for such other
Series.
"QIB" shall mean a "qualified institutional buyer" within the
meaning of Rule 144A under the Securities Act.
"Qualified Substitute Arrangement" shall mean an arrangement
in addition to or in substitution for any prior interest rate cap arrangement
satisfactory to the Rating Agencies.
"Rating Agencies" shall mean Standard & Poor's and Moody's.
"Receipt" and "Received" shall have the meanings specified in
Section 11(b) of this Series Supplement.
"Redirected Principal Collections" shall have the meaning
specified in Section 4.14 of the Agreement.
"Reference Banks" shall mean four major banks in the London
interbank market selected by the Trustee.
"Reimbursement Required Amount" shall have the meaning
specified in subsection 4.01(b) of the Agreement.
"Replacement Event" shall have the meaning specified in
subsection 11(c) of this Series Supplement.
"Replacement Interest Rate Cap" shall mean one or more
Interest Rate Caps, which in combination with all other Interest Rate Caps then
in effect, after giving effect to any planned cancellations of any presently
outstanding Interest Rate Caps satisfies the Transferor's covenant contained in
Section 3A of this Series Supplement to maintain Interest Rate Caps.
"Required Accumulation Factor Number" shall be equal to a
fraction, rounded upwards to the nearest whole number, the numerator of which is
one and the denominator of which is equal to the lowest monthly principal
payment rate on the Receivables, expressed as a decimal, for the 12 months
preceding the date of such calculation.
"Required Amount" shall have the meaning specified in
subsection 4.10(b) of the Agreement.
"Required Reserve Account Amount" shall mean, for any date on
or after the Reserve Account Funding Date an amount equal to (a) 0.50% of the
Class A Invested Amount or (b) any other amount designated by the Transferor;
provided, that if such designation is of a lesser amount, the Transferor shall
have (i) provided the Servicer and the Trustee with evidence that the Rating
Agency Condition has been satisfied and (ii) the Transferor shall have delivered
to the Trustee a certificate of an authorized officer to the effect that, based
on the facts known to such officer at such time, in the reasonable belief of the
Transferor, such designation will not cause a Pay Out Event or an event that,
after giving of notice or the lapse of time, would cause a Pay Out Event to
occur with respect to Series 1999-1.
"Reserve Account Funding Date" shall mean the earliest of (a)
the first day of the third Monthly Period preceding the first full day of the
Accumulation Period; (b) the Determination Date occurring in the first Monthly
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 1999-1 Termination Date" shall mean the
October 2007 Distribution Date.
"Series 1999-1" shall mean the Series of the Metris Master
Trust represented by the Series 1999-1 Securities.
"Series 1999-1 Pay Out Event" shall have the meaning specified
in Section 8 of this Series Supplement.
"Series 1999-1 Percentage" shall mean, on any date of
determination, the percentage equivalent of a fraction the numerator of which is
the Invested Amount and the denominator of which is the sum of the Invested
Amounts relating to all other Series then outstanding.
"Series 1999-1 Securities" shall mean the Class A Securities
and the Class B Securities.
"Series 1999-1 Securityholder" shall mean the holder of record
of any Series 1999-1 Security.
"Series 1999-1 Securityholders' Interest" shall have the
meaning specified in Section 4.4 of the Agreement.
"Series 1999-1 Termination Date" shall mean the earlier to
occur of (i) the day after the Distribution Date on which the Series 1999-1
Securities and amounts owing to the Insurer hereunder are paid in full, or (ii)
the Scheduled Series 1999-1 Termination Date.
"Series Default Amount" shall mean, with respect to each
Business Day, an amount equal to the product of the Default Amount identified
since the prior reporting date and the Floating Percentage applicable for such
Business Day.
"Series Servicing Fee Percentage" shall mean 2.00% per annum.
"Servicing Fee" shall mean for any Monthly Period, an amount
equal to the product of (i) a fraction the numerator of which is the actual
number of days in such Monthly Period and the denominator of which is 365 or
366, (ii) the Series Servicing Fee Percentage and (iii) the Adjusted Invested
Amount as of the beginning of the day on the first day of such Monthly Period.
"Shared Principal Collections" shall mean, as the context
requires, either (a) the amount allocated to the Series 1999-1 Securities which,
in accordance with subsections 4.9(b) and 4.9(c)(ii) of the Agreement, may be
applied in accordance with Section 4.3(d) of the Agreement or (b) the amounts
allocated to the investor securities of other Series which the applicable Series
Supplements for such Series specify are to be treated as "Shared Principal
Collections" and which may be applied to cover Principal Shortfalls with respect
to the Series 1999-1 Securities.
"Spread Account" shall have the meaning specified in the
Insurance Agreement.
"Spread Account Maximum" shall have the meaning specified in
the Insurance Agreement.
"Stated Class B Amount" shall mean the greater of (i) zero and
(ii) a number rounded to the nearest Dollar equal to the product of 9.89 percent
and the Class A Adjusted Invested Amount; provided, however, that in no event
shall the Stated Class B Amount be less than $16,483,517, except that if the
Class A Adjusted Invested Amount is equal to zero, the Stated Class B Amount
shall be zero; and provided further that during any Early Amortization Period
the Stated Class B Amount shall be equal to the Stated Class B Amount
immediately preceding the commencement of the Early Amortization Period.
"Termination Payment Date" shall mean the earlier of the first
Distribution Date following the liquidation or sale of the Receivables as a
result of an Insolvency Event and the occurrence of the Scheduled Series 1999-1
Termination Date.
"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 1999-1 Percentage.
"Transferor Retained Securities" shall mean investor
securities of any Series, which may include the Class B Securities, which the
Transferor retains, but only to the extent that and for so long as the
Transferor is the Holder of such Securities.
"Transferor Retained Finance Charge Collections" shall mean
with respect to each Business Day other than a Default Recognition Date, the
amount specified in subsection 4.9(a)(xiii) of the Agreement.
"Weighted Average Invested Amount" shall mean with respect to
any Monthly Period the weighted average Adjusted Invested Amount based on the
Adjusted Invested Amount outstanding on each Business Day after giving effect to
all transactions on such Business Day from but excluding the Default Recognition
Date related to the preceding Monthly Period to and including the Default
Recognition Date with respect to such Monthly Period.
"Weighted Average Principal Receivables" shall mean with
respect to any Monthly Period the weighted average sum of the total amount of
Principal Receivables and the amount on deposit in the Excess Funding Account on
each Business Day after giving effect to all transactions on such Business Day
from but excluding the Default Recognition Date related to the preceding Monthly
Period to and including the Default Recognition Date with respect to such
Monthly Period.
SECTION 3. Reassignment Terms. The Series 1999-1 Securities shall be subject to
termination by the Transferor at its option, in accordance with the terms
specified in subsection 12.2(a) of the Agreement, on any Distribution Date on or
after the Distribution Date on which the Class A Invested Amount would be
reduced to an amount less than or equal to 10% of the highest Class A Invested
Amount during the Revolving Period; provided, that all amounts due and owing to
the Insurer and unreimbursed draws on the Policy, together with interest
thereon, have been paid. The deposit required in connection with any such
termination and final distribution shall be equal to the unpaid Class A Invested
Amount plus accrued and unpaid interest on the Class A Securities through the
day prior to the Distribution Date on which the final distribution occurs, in
each case after giving effect to any payments on such date.
SECTION 3A. Conveyance of Interest in Interest Rate Cap; Cap Proceeds
Account. (a) The Transferor hereby covenants and agrees that, on or prior to the
issuance of the Class A Securities, it shall obtain and at all times prior to
the close of business on the Series 1999-1 Termination Date maintain one or more
Interest Rate Caps whose notional amounts singly or taken as a group equal or
exceed the Class A Outstanding Principal Amount. The Transferor hereby assigns,
sets-over, conveys, pledges and grants a security interest and lien (free and
clear of all other Liens) to the Trustee for the benefit of the Series 1999-1
Securityholders, in all of the Transferor's right, title and interest now
existing or hereafter arising in and to the Cap Agreements and the Interest Rate
Caps arising thereunder, together with the Cap Proceeds Account and all other
proceeds thereof, as collateral security for the benefit of the Series 1999-1
Securityholders. The Transferor hereby further agrees to execute all such
instruments, documents and financing statements and take all such further action
requested by the Trustee to evidence and perfect the assignment of the Cap
Agreements and the Interest Rate Caps pursuant to this Section 3A. The
Transferor agrees that each Interest Rate Cap shall provide for payments to the
Trustee and that the Trust's interest in respect of such payments shall be
deposited into the Cap Proceeds Account.
(b) The Trustee, for the benefit of the Series 1999-1 Securityholders, shall
establish and maintain with the Trustee, in the name of the Trustee, on behalf
of the Securityholders, a certain segregated trust account (the "Cap Proceeds
Account"). All amounts paid pursuant to the Interest Rate Caps or any Qualified
Substitute Arrangement on any Business Day (a "Cap Settlement Date") shall be
deposited in the Cap Proceeds Account. Any amounts paid pursuant to the Interest
Rate Caps or any Qualified Substitute Arrangement on the Transfer Date in any
Monthly Period shall be treated for all purposes herein, including application
in accordance with subsection 4.9(a) of the Agreement, as if they had been
received on the last Business Day of the preceding Monthly Period. Funds in the
Cap Proceeds Account shall be invested at the direction of the Servicer, in Cash
Equivalents with maturities not later than the next succeeding Business Day. Any
earnings on such invested funds shall be deposited and held in the Cap Proceeds
Account and applied in the same manner and priority as payments pursuant to the
Interest Rate Caps.
(c) In the event that the Cap Provider defaults in its obligation to make a
payment to the Trustee under one or more Cap Agreements on any Cap Settlement
Date, the Trustee shall make a demand on such Cap Provider, or any guarantor, if
applicable, demanding payment by 12:30 p.m., New York time, on such date. The
Trustee shall give notice to the Securityholders upon the continuing failure by
any Cap Provider to perform its obligation during the two Business Days
following a demand made by the Trustee on such Cap Provider, and shall take such
action with respect to such continuing failure directed to be taken by the
Securityholders.
(d) In the event that the Cap Provider is downgraded below the rating required
by a Rating Agency, then within 30 days after receiving notice of such decline
in the creditworthiness of the Cap Provider as determined by the Rating
Agencies, either (x) the Cap Provider, with the prior written confirmation of
the Rating Agencies that such arrangement will not result in the reduction or
withdrawal of the rating of the Class A Securities (without giving effect to the
Policy) will enter into an arrangement the purpose of which shall be to assure
performance by the Cap Provider of its obligations under the Interest Rate Cap;
or (y) the Servicer shall at its option either (i) with the prior written
confirmation of the Rating Agencies that such action will not result in a
reduction or withdrawal of the rating of the Class A Securities (without giving
effect to the Policy), cause the Cap Provider to pledge securities in the manner
provided by applicable law which shall be held by the Trustee or its agent free
and clear of the Lien of any third party, in a manner conferring on the Trustee
a perfected first Lien in such securities securing the Cap Provider's
performance of its obligations under the applicable Interest Rate Cap, or (ii)
provided that a Replacement Interest Rate Cap or Qualified Substitute
Arrangement meeting the requirements of Section 3A(e) has been obtained, direct
the Trustee (A) to provide written notice to the Cap Provider of its intention
to terminate the applicable Interest Rate Cap within such 30-day period and (B)
to terminate the applicable Interest Rate Cap within such 30-day period, to
request the payment to it of all amounts due to the Trust under the applicable
Interest Rate Cap through the termination date and to deposit any such amounts
so received, on the day of receipt, to the Cap Proceeds Account for the benefit
of the Class A Securityholders, or (iii) establish any other arrangement
(including an arrangement or arrangements in addition to or in substitution for
any prior arrangement made in accordance with the provisions of this Section
3A(d)) satisfactory to the Rating Agencies such that the Rating Agencies will
not reduce or withdraw the rating of the Class A Securities (without giving
effect to the Policy) (a "Qualified Substitute Arrangement"); provided, however,
that in the event at any time any alternative arrangement established pursuant
to clause (x) or (y)(i) or (y)(iii) above shall cease to be satisfactory to the
Rating Agencies then the provisions of this Section 3A(d) shall again be applied
and in connection therewith the 30-day period referred to above shall commence
on the date the Servicer receives notice of such cessation or termination, as
the case may be.
(e) Unless an alternative arrangement pursuant to clause (x) or (y)(i) of
Section 3A(d) is being established, the Servicer shall use its best efforts to
obtain a Replacement Interest Rate Cap or Qualified Substitute Arrangement
meeting the requirements of this Section 3A(e) during the 30-day period referred
to in Section 3A(d). The Trustee shall not terminate the Interest Rate Cap
unless, prior to the expiration of the 30-day period referred to in said Section
3A(d), the Servicer delivers to the Trustee (i) a Replacement Interest Rate Cap
or Qualified Substitute Arrangement, (ii) to the extent applicable, an Opinion
of Counsel as to the due authorization, execution and delivery and validity and
enforceability of such Replacement Interest Rate Cap or Qualified Substitute
Arrangement, as the case may be, and (iii) a letter from each of the Rating
Agencies confirming that the termination of the Interest Rate Cap and its
replacement with such Replacement Interest Rate Cap or Qualified Substitute
Arrangement will not adversely affect its rating of the Class A Securities
(without giving effect to the Policy).
(f) The Servicer shall notify the Trustee and the Rating Agencies within five
Business Days after obtaining knowledge that the senior unsecured debt rating of
the Interest Rate Cap Provider has been withdrawn or reduced by either of the
Rating Agencies.
(g) Notwithstanding the foregoing, the Servicer may at any time obtain a
Replacement Interest Rate Cap, provided that the Servicer delivers to the
Trustee (i) an Opinion of Counsel as to the due authorization, execution and
delivery and validity and enforceability of such Replacement Interest Rate Cap
and (ii) a letter from each of the Rating Agencies confirming that the
termination of the then current Interest Rate Cap and its replacement with such
Replacement Interest Rate Cap will not adversely affect its rating of the Class
A Securities (without giving effect to the Policy).
(h) The Trustee, on behalf of the Securityholders, upon notification from the
Servicer shall, sell all or a portion of the Interest Rate Caps subject to the
following conditions having been met:
(x) the Aggregate Interest Rate Caps Notional Amount
after giving effect to such sale shall equal or exceed the Class A
Outstanding Principal Amount as of the date of such sale after giving
effect to all payments and allocations made pursuant to this Agreement;
(y) such sale will not result in a downgrading or
withdrawal of the then current rating on the Class A Securities by the
Rating Agencies (without giving effect to the Policy); and
(z) the minimum notional amount denomination of any
Interest Rate Cap to be sold is $500,000.
The Servicer shall have the duty of obtaining a fair market
value price for the sale of the Trust's rights under any Interest Rate Cap,
notifying the Trustee of prospective purchasers and bids, and selecting the
purchaser of such Interest Rate Cap. The Trustee upon receipt of the purchase
price in the Collection Account shall execute all documentation necessary to
effect the transfer of the Trust's rights under the Interest Rate Cap and to
release the Lien of the Trustee on the Interest Rate Cap to the extent of such
sale and proceeds thereof.
Funds deposited in the Collection Account in respect of the
sale of all or a portion of an Interest Rate Cap shall be applied as Principal
Collections allocable to Series 1999-1 and shall be applied on the next
Distribution Date in accordance with subsections 4.7(a) and (b) and 4.9(b) and
(c).
SECTION 4. Delivery and Payment for the Series 1999-1 Securities. The Transferor
shall execute and deliver the Series 1999-1 Securities to the Trustee for
authentication in accordance with Section 6.1 of the Agreement. The Trustee
shall deliver the Series 1999-1 Securities to or upon the order of the
Transferor when authenticated in accordance with Section 6.2 of the Agreement.
SECTION 5. Form of Delivery of Series 1999-1 Securities; Denominations. (a) The
Class A Securities, shall be delivered as Book-Entry Securities as provided in
Sections 6.1 and 6.10 of the Agreement. The Class A Securities shall be issued
in minimum denominations of $1,000 and integral multiples thereof. The Class B
Security shall be delivered as a Registered Security as provided in Section 6.1
of the Agreement.
(b) The Depositary for Series 1999-1 shall be DTC and the Class A Securities
shall be initially registered in the name of Cede & Co., its nominee, and will
initially be held by the Trustee as custodian for DTC.
SECTION 6. Article IV of 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 1999-1
Securities:
ARTICLE IV
RIGHTS OF SECURITYHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS
SECTION 4.4. Rights of Securityholders. The Series 1999-1
Securities shall represent undivided interests in the Trust, including the right
to receive, to the extent necessary to make the required payments with respect
to such Series 1999-1 Securities at the times and in the amounts specified in
this Agreement, (a) the Floating Percentage and the Fixed/Floating Percentage
(as applicable from time to time) of Collections (including Finance Charge
Collections) available in the Collection Account, (b) funds allocable to the
Series 1999-1 Securities on deposit in the Excess Funding Account, (c) funds on
deposit in the Interest Funding Account, the Principal Account, the Principal
Funding Account, the Accumulation Period Reserve Account, the Distribution
Account, the Cap Proceeds Account and the Payment Reserve Account and (d) in the
case of Class A Securityholders only, the proceeds of any draws on the Policy
(for such Series, the "Series 1999-1 Securityholders' Interest"). The Class B
Securities shall be subordinated to the Class A Securities. Except in connection
with the payment of Class B Excess Amounts, the Class B Securities will not have
the right to receive payments of principal until the Class A Invested Amount has
been paid in full.
SECTION 4.5. Collections and Allocation; Payments on
Exchangeable Transferor Security.
(a) Collections and Allocations. The Servicer will apply or will instruct the
Trustee to apply all funds on deposit in the Collection Account and the Excess
Funding Account allocable to the Series 1999-1 Securities, and all funds on
deposit in the Interest Funding Account, the Principal Account, the Cap Proceeds
Account, the Principal Funding Account, the Accumulation Period Reserve Account,
the Distribution Account and the Payment Reserve Account, as described in this
Article IV. On each Business Day, (i) the amount of Finance Charge Collections
available in the Collection Account allocable to the Series 1999-1 Securities
shall be determined by multiplying the aggregate amount of such Finance Charge
Collections by (x) prior to the Pay Out Commencement Date, the Floating
Percentage and (y) on and after the Pay Out Commencement Date, the
Fixed/Floating Percentage, (ii) the amount of Principal Collections available in
the Collection Account allocable to the Series 1999-1 Securities shall be
determined by multiplying the aggregate amount of such Principal Collections by
(x) during the Revolving Period, the Floating Percentage and (y) during any
Amortization Period, the Fixed/Floating Percentage, and (iii) the Receivables in
Defaulted Accounts allocable to the Series 1999-1 Securities shall be determined
by multiplying the Default Amount by the Floating Percentage.
(b) Payments to the Holder of the Exchangeable Transferor Security. On each
Business Day, the Servicer shall allocate and pay Collections in accordance with
the Daily Report with respect to such Business Day to the Holder of the
Exchangeable Transferor Security in accordance with subsection 4.3(b) of the
Agreement; provided, however, that such amounts shall be applied in accordance
with Section 4.10 hereof to the extent specified therein.
Notwithstanding the foregoing and any other provisions of this
Supplement, amounts payable to the Transferor shall instead be deposited in the
Excess Funding Account to the extent necessary to prevent the Transferor
Interest from being less than the Minimum Transferor Interest.
SECTION 4.6. Determination of Interest for the Series 1999-1
Securities. The amount of monthly interest (the "Class A Monthly Interest")
which shall accrue for the benefit of the Class A Securities with respect to any
Interest Accrual Period shall be an amount equal to the product of (i) the Class
A Interest Rate, (ii) a fraction the numerator of which is the actual number of
days in the related Interest Accrual Period and the denominator of which is 360
and (iii) the Class A Outstanding Principal Amount as of the close of business
on the first day of such Interest Accrual Period (or in the case of the initial
Distribution Date, an amount equal to the product of (u) the Class A Initial
Invested Amount, (v) 44 divided by 360, and (w) the Class A Interest Rate
determined on July 2, 1999).
On the Determination Date preceding each Distribution Date,
the Servicer shall determine an amount (the "Class A Interest Shortfall") equal
to the excess, if any, of (x) the Class A Monthly Interest for the Interest
Accrual Period applicable to the Distribution Date over (y) the amount available
to be paid to the Class A Securityholders in respect of interest on such
Distribution Date. If there is a Class A Interest Shortfall with respect to any
Distribution Date, an additional amount ("Class A Additional Interest") shall be
payable as provided herein with respect to the Class A Securities on each
Distribution Date following such Distribution Date on which there was a Class A
Interest Shortfall, to and including the Distribution Date on which such Class A
Interest Shortfall is paid to Class A Securityholders, equal to the product of
(i) the Class A Interest Rate, (ii) a fraction the numerator of which is the
actual number of days in the related Interest Accrual Period and the denominator
of which is 360 and (iii) such Class A Interest Shortfall remaining unpaid.
Notwithstanding anything to the contrary herein, Class A Additional Interest
shall be payable or distributed to Class A Securityholders only to the extent
permitted by applicable law.
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 Securities for each Distribution Date with respect
to the Amortization Period shall be equal to the least of (i) the Available
Series 1999-1 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 the related Transfer Date.
(b) The amount of principal (the "Class B Principal") distributable from the
Distribution Account with respect to the Class B Securities for each
Distribution Date, beginning with the Class B Principal Payment Commencement
Date, or, in the case of distributions of Class B Excess Amounts, on each
Distribution Date during the Accumulation Period, shall be equal to the lesser
of (i) the Available Series 1999-1 Principal Collections remaining on deposit in
the Principal Account with respect to the related Transfer Date after
application thereof to Class A Principal, if any, (ii) the Class B Invested
Amount on such Transfer Date and (iii) in the case of distributions of Class B
Excess Amounts, the Class B Excess Amount.
SECTION 4.8. Shared Principal Collections. Shared Principal
Collections allocated to Available Series 1999-1 Principal Collections for the
Series 1999-1 Securities and to be applied to Class A Principal and Class B
Principal pursuant to subsection 4.9(c)(i)(y) of the Agreement for any Business
Day with respect to the Amortization Period shall mean an amount equal to the
product of (x) Shared Principal Collections for all Series for such Business Day
and (y) a fraction, the numerator of which is the Principal Shortfall for the
Series 1999-1 Securities for such Business Day and the denominator of which is
the aggregate amount of Principal Shortfalls for all Series for such Business
Day. For any Business Day with respect to the Revolving Period, Shared Principal
Collections allocated to Available Series 1999-1 Principal Collections for the
Series 1999-1 Securities shall be zero.
SECTION 4.9. Application of Funds. (a) On each Business Day,
the Servicer shall deliver to the Trustee a Daily Report in which it shall
instruct the Trustee to withdraw, and the Trustee, acting in accordance with
such instructions, shall withdraw from the Collection Account and the Cap
Proceeds Account, to the extent of the sum of (w) prior to the Pay Out
Commencement Date, the Floating Percentage of the sum of Finance Charge
Collections and the amount of Adjustment Payments made by the Transferor with
respect to Adjustment Payments required to be made but not made in a prior
Monthly Period, available in the Collection Account or, on and after the Pay Out
Commencement Date, the Fixed/Floating Percentage of the sum of Finance Charge
Collections and the amount of Adjustment Payments made by the Transferor with
respect to Adjustment Payments required to be made by not made in a prior
Monthly Period, available in the Collection Account, (x) Investment Earnings on
deposit in the Collection Account, (y) amounts on deposit in the Payment Reserve
Account, if any, if and to the extent the Transferor designates that such
amounts are to be so applied, and (z) the Cap Receipt Amount, if any, for such
Business Day (the "Available Series 1999-1 Finance Charge Collections") the
amounts required to be withdrawn from the Collection Account pursuant to
subsections 4.9(a)(i) through 4.9(a)(xiii) of the Agreement.
(i) Class A Monthly Interest. On each Business Day during a Monthly Period,
the Trustee, acting in accordance with instructions from the Servicer,
shall withdraw first from the Cap Proceeds Account to the extent of the
Cap Receipt Amount and then from the Collection Account and then from
the Payment Reserve Account, and deposit into the Interest Funding
Account for distribution on the next Distribution Date to the Class A
Securityholders, to the extent of the Available Series 1999-1 Finance
Charge Collections for such Business Day, an amount equal to the lesser
of (x) the Available Series 1999-1 Finance Charge Collections and (y)
the excess of (1) the sum of Class A Monthly Interest for the Interest
Accrual Period beginning in such Monthly Period and Carryover Class A
Interest over (2) any amounts with respect thereto previously deposited
into the Interest Funding Account on any prior Business Day during such
Monthly Period. Notwithstanding anything to the contrary herein, the
portion of Carryover Class A Interest that constitutes Class A
Additional Interest shall be payable or distributable to Class A
Securityholders only to the extent permitted by applicable law.
(ii) Investor Servicing Fee. On each Business Day, the Trustee, acting in
accordance with instructions from the Servicer, shall withdraw first
from the Cap Proceeds Account to the extent of the Cap Receipt Amount
and then from the Collection Account and then from the Payment Reserve
Account, and distribute to the Servicer, to the extent of any Available
Series 1999-1 Finance Charge Collections remaining after giving effect
to the withdrawals pursuant to subsection 4.9(a)(i) of the Agreement,
an amount equal to the lesser of (x) any such remaining Available
Series 1999-1 Finance Charge Collections and (y) the excess of (i) the
Servicing Fee for such Monthly Period plus any unpaid Servicing Fees
from prior Monthly Periods over (ii) any amounts with respect thereto
previously distributed to the Servicer during such Monthly Period.
(iii) Series Default Amount. On each Business Day, first if such day is the
Default Recognition Date for the related Monthly Period, the Transferor
will 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 first from the Cap Proceeds Account to the extent of the
Cap Receipt Amount and then from the Collection Account and then from
the Payment Reserve Account, to the extent of any Available Series
1999-1 Finance Charge Collections remaining after giving effect to the
withdrawals pursuant to subsections 4.9(a)(i) and (ii) of the
Agreement, an amount equal to the lesser of (x) any such remaining
Available Series 1999-1 Finance Charge Collections and, if such day is
the related Default Recognition Date for such Monthly Period, an amount
equal to the aggregate Transferor Retained Finance Charge Collections
for each prior day during the related Monthly Period and (y) the sum of
(1) the aggregate Series Default Amount for such Business Day plus (2)
the unpaid Series Default Amount for each previous Business Day during
such Monthly Period, such amount to be (A) treated as Shared Principal
Collections during the Revolving Period, and (B) treated as Available
Series 1999-1 Principal Collections during the Amortization Period.
(iv) Adjustment Payment Shortfalls. On each Business Day, the Trustee,
acting in accordance with instructions from the Servicer, shall
withdraw first from the Cap Proceeds Account to the extent of the Cap
Receipt Amount and then from the Collection Account and then from the
Payment Reserve Account, to the extent of any Available Series 1999-1
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 1999-1 Finance Charge Collections and (y) an amount
equal to the Series 1999-1 Percentage of any Adjustment Payment which
the Transferor is required but fails to make pursuant to subsection
3.8(a) of the Agreement, such amount, (i) during the Revolving Period,
to be treated as Shared Principal Collections, and (ii) during the
Amortization Period, to be treated as Available Series 1999-1 Principal
Collections.
(v) Reimbursement of Class A Charge-Offs. On each Business Day, the
Trustee, acting in accordance with instructions from the Servicer,
shall withdraw first from the Cap Proceeds Account to the extent of the
Cap Receipt Amount and then from the Collection Account and then from
the Payment Reserve Account, to the extent of any Available Series
1999-1 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 1999-1 Finance Charge Collections and (y) the
unreimbursed Class A Charge-Offs, if any, will be applied to reimburse
Class A Charge-Offs, such amount during the Revolving Period, to be
treated as Shared Principal Collections, and during the Amortization
Period, to be treated as Available Series 1999-1 Principal Collections.
(vi) Monthly Premium. On each Business Day, the Trustee, acting in
accordance with the instructions from the Servicer, shall withdraw
first from the Cap Proceeds Account to the extent of the Cap Receipt
Amount and then from the Collection Account and then from the Payment
Reserve Account, to the extent of any Available Series 1999-1 Finance
Charge Collections remaining after giving effect to the withdrawals
pursuant to subsections 4.9(a)(i) through (v) of the Agreement, an
amount equal to the lesser of (x) any such remaining Available Series
1999-1 Finance Charge Collections and (y) the portion of the monthly
premium with respect to the Policy due on the Distribution Date in the
next succeeding Monthly Period that has not been previously deposited
in the Interest Funding Account plus any prior monthly premium with
respect to the Policy that was due but not previously deposited in the
Interest Funding Account, and deposit such amount into the Interest
Funding Account for distribution on the next succeeding Distribution
Date to the Insurer.
(vii) Reimbursement of Policy Draws. On each Business Day, the Trustee,
acting in accordance with the instructions from the Servicer, shall
withdraw first from the Cap Proceeds Account to the extent of the Cap
Receipt Amount and then from the Collection Account and then from the
Payment Reserve Account, to the extent of any Available Series 1999-1
Finance Charge Collections remaining after giving effect to the
withdrawals pursuant to subsections 4.9(a)(i) through (vi) of the
Agreement, an amount equal to the lesser of (x) any such remaining
Available Series 1999-1 Finance Charge Collections and (y) the portion
of the unreimbursed claims on the Policy, that have not been previously
deposited in the Interest Funding Account, and deposit such amount into
the Interest Funding Account for distribution on the next succeeding
Distribution Date to the Insurer.
(viii) Spread Account. On each Business Day, the Trustee, acting in accordance
with the instructions from the Servicer, shall withdraw first from the
Cap Proceeds Account to the extent of the Cap Receipt Amount and then
from the Collection Account and then from the Payment Reserve Account,
to the extent of any Available Series 1999-1 Finance Charge Collections
remaining after giving effect to the withdrawals pursuant to
subsections 4.9(a)(i) through (vii) of the Agreement, an amount equal
to the lesser of (x) any such remaining Available Series 1999-1 Finance
Charge Collections and (y) the excess, if any, of the Spread Account
Maximum over the amount on deposit in such Spread Account and deposit
such amount into the Spread Account.
(ix) Payment to the Insurer. On each Business Day, the Trustee, acting in
accordance with the instructions from the Servicer, shall withdraw
first from the Cap Proceeds Account to the extent of the Cap Receipt
Amount and then from the Collection Account and then from the Payment
Reserve Account, to the extent of any Available Series 1999-1 Finance
Charge Collections remaining after giving effect to the withdrawals
pursuant to subsections 4.9(a)(i) through (viii) of the Agreement, an
amount equal to the lesser of (x) any such remaining Available Series
1999-1 Finance Charge Collections and (y) the portion of any other
amounts required to be paid to the Insurer pursuant to the Insurance
Agreement which have not been previously deposited in the Interest
Funding Account and deposit such amount in the Interest Funding Account
for distribution on the next succeeding Distribution Date to the
Insurer.
(x) Reimbursement of Class B Charge-Offs. On each Business Day, the
Trustee, acting in accordance with instructions from the Servicer,
shall withdraw first from the Cap Proceeds Account to the extent of the
Cap Receipt Amount and then from the Collection Account and then from
the Payment Reserve Account, to the extent of any Available Series
1999-1 Finance Charge Collections remaining after giving effect to the
withdrawals pursuant to subsections 4.9(a)(i) through (ix) of the
Agreement, an amount equal to the lesser of (x) any such remaining
Available Series 1999-1 Finance Charge Collections and (y) the
unreimbursed amount by which the Class B Invested Amount has been
reduced on prior Business Days pursuant to clauses (d) and (e) of the
definition of Class B Invested Amount, if any, such amount, (i) during
the Revolving Period, to be treated as Shared Principal Collections,
and (ii) during the Amortization Period, to be treated as Available
Series 1999-1 Principal Collections.
(xi) Accumulation Period Reserve Account. On each Business Day on and after
the Reserve Account Funding Date, but prior to the date on which the
Accumulation Period Reserve Account terminates pursuant to subsection
4.18(d) of the Agreement, the Trustee, acting in accordance with
instructions from the Servicer, shall withdraw first from the Cap
Proceeds Account to the extent of the Cap Receipt Amount and then from
the Collection Account and then from the Payment Reserve Account, and
distribute to the Servicer, to the extent of any Available Series
1999-1 Finance Charge Collections remaining after giving effect to the
withdrawals pursuant to subsections 4.9(a)(i) through (x) of the
Agreement, an amount equal to the lesser of (x) any such remaining
Available Series 1999-1 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.
(xii) Payment Reserve Account. On each Business Day, the Trustee, acting in
accordance with instructions from the Transferor, shall withdraw first
from the Cap Proceeds Account to the extent of the Cap Receipt Amount
and then from the Collection Account and then from the Payment Reserve
Account, and distribute to the Servicer, to the extent of any Available
Series 1999-1 Finance Charge Collections remaining after giving effect
to the withdrawals pursuant to subsections 4.9(a)(i) through (xi) of
the Agreement, an amount equal to the lesser of (x) any such remaining
Available Series 1999-1 Finance Charge Collections and (y) the amount
designated by the Transferor in writing (which includes facsimile
transmission) in its instructions to the Trustee on such Business Day
and the Servicer shall deposit such amount, if any, in the Payment
Reserve Account.
(xiii) Excess Finance Charge Collections. Any amounts remaining in the Cap
Proceeds Account, the Collection Account and the Payment Reserve
Account, to the extent of any Available Series 1999-1 Finance Charge
Collections remaining after giving effect to the withdrawals pursuant
to subsection 4.9(a)(i) through (xii) of the Agreement, shall be
treated as Excess Finance Charge Collections, and the Servicer shall
direct the Trustee in writing on each Business Day to withdraw such
amounts from the Collection Account and to first make such amounts
available to pay to Securityholders of other Series to the extent of
shortfalls, if any, in amounts payable to such Securityholders from
Finance Charge Collections allocated to such other Series, then to pay
any unpaid commercially reasonable costs and expenses of a Successor
Servicer, if any, and then on each Business Day other than the Default
Recognition Date, to pay to the Transferor to be treated as "Transferor
Retained Finance Charge Collections," and, on each Default Recognition
Date, to pay any remaining Excess Finance Charge Collections to the
Transferor.
Notwithstanding the foregoing, if on any Default Recognition Date the sum of the
amount of Available Series 1999-1 Finance Charge Collections (including, all
amounts on deposit in the Payment Reserve Account) and Transferor Retained
Finance Charge Collections is less than the Series Default Amount for such
Default Recognition Date, the Servicer shall apply amounts deposited in the
Accumulation Period Reserve Account pursuant to subsection 4.9(a)(xi) of the
Agreement and the Spread Account pursuant to subsection 4.9(a)(viii) of the
Agreement during the then current Monthly Period in accordance with subsection
4.9(a)(iii) of the Agreement to the extent of such shortfall.
(b) For each Business Day with respect to the Revolving Period, the funds on
deposit in the Collection Account to the extent of the product of (i) the
Floating Percentage and (ii) Principal Collections with respect to such Business
Day (less the amount of Redirected Principal Collections on such Business Day)
will be treated as Shared Principal Collections and applied, pursuant to the
written direction of the Servicer in the Daily Report for such Business Day, as
provided in Section 4.3(d) of the Agreement.
(c) For each Business Day on and after the Amortization Period Commencement
Date, the amount of funds on deposit in the Collection Account or the Excess
Funding Account and other accounts as described below will be distributed,
pursuant to the written direction of the Servicer in the Daily Report for such
Business Day in the following priority:
(i) an amount (not in excess of the Adjusted Invested Amount) equal to the
sum of (v) the product of the Fixed/Floating Percentage and Principal
Collections in the Collection Account at the end of the preceding
Business Day (less the amount thereof applied as Redirected Principal
Collections on such Business Day), (w) any amount on deposit in the
Excess Funding Account allocated to the Series 1999-1 Securities on
such Business Day pursuant to subsection 4.9(d) of the Agreement, (x)
amounts to be paid pursuant to subsections 4.9(a)(iii), (iv), (v) and
(x) of the Agreement from Available Series 1999-1 Finance Charge
Collections and from amounts available pursuant to subsections 4.10(a)
and (b), 4.14, 4.17(b) and 4.18(b), (c) and (d) of the Agreement on
such Business Day and (y) the amount of Shared Principal Collections
allocated to the Series 1999-1 Securities in accordance with Section
4.8 of the Agreement on such Business Day, will be deposited into the
Principal Account; provided, however that with respect to any Monthly
Period during the 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 B Excess Amount.
(ii) an amount equal to the excess, if any, of (A) the sum of the amounts
described in clauses (i)(v) and (x) above over (B) the sum of the Class
A Principal and the Class B Principal will be treated as Shared
Principal Collections and applied as provided in subsection 4.3(d) of
the Agreement.
(d) On the first Business Day of the Amortization Period funds on deposit in the
Excess Funding Account will be deposited in the Principal Account to the extent
of the lesser of (x) the Invested Amount and (y) the product of (i) the amount
on deposit in the Excess Funding Account at the beginning of the Amortization
Period and (ii) a fraction, the numerator of which is equal to the Invested
Amount and the denominator of which is equal to the sum of the invested amounts
of all Series in amortization periods on such day.
SECTION 4.10. Coverage of Required Amount for the Series
1999-1 Securities. (a) To the extent that any amounts are on deposit in the
Excess Funding Account on any Business Day, the Servicer shall apply, in the
manner specified for application of Available Series 1999-1 Finance Charge
Collections in subsections 4.9(a)(i) through (xi) of the Agreement, Transferor
Finance Charge Collections in an amount equal to the sum of (i) the excess of
(x) the product of (a) the Base Rate, (b) the amounts on deposit in the Excess
Funding Account and (c) the number of days elapsed since the previous Business
Day divided by the actual number of days in such year over (y) the aggregate
amount of all earnings since the previous Business Day available from the Cash
Equivalents in which funds on deposit in the Excess Funding Account are invested
(the "Negative Carry Amount") and (ii) the amount of unreimbursed claims on the
Policy that have not been deposited in the Interest Funding Account pursuant to
subsection 4.9(a)(vii) of the Agreement prior to such Business Day.
(b) To the extent that on any Business Day payments are being made pursuant to
any of subsections 4.9(a)(i) through (xi) of the Agreement, respectively, and
the full amount to be paid pursuant to any such subsection receiving payments on
such Business Day is not paid in full on such Business Day, the Servicer shall
apply, in the manner specified for application of Available Series 1999-1
Finance Charge Collections in subsections 4.9(a)(i) through (xi) of the
Agreement, all or a portion of the Excess Finance Charge Collections from other
Series with respect to such Business Day allocable to the Series 1999-1
Securities in an amount equal to the excess of the full amount to be allocated
or paid pursuant to the applicable subsection over the amount applied with
respect thereto from Available Series 1999-1 Finance Charge Collections and
Transferor Finance Charge Collections on such Business Day (the "Required
Amount").
To the extent that on any Business Day on and after the day on
which the Invested Amount is paid in full but prior to the Series 1999-1
Termination Date there are unreimbursed claims on the Policy, the Servicer shall
apply, in the manner specified for application of Available Series 1999-1
Finance Charge Collections in subsection 4.9(a)(vii) of the Agreement all or a
portion of the Excess Finance Charge Collections from other Series with respect
to such Business Day allocable to the Series 1999-1 Securities in an amount
equal to the excess of the full amount to be allocated or paid pursuant to the
applicable subsection over the amount applied with respect thereto from
Transferor Finance Charge Collections on such Business Day (the "Reimbursement
Required Amount").
Excess Finance Charge Collections allocated to the Series
1999-1 Securities for any Business Day shall mean an amount equal to the product
of (x) Excess Finance Charge Collections available from all other Series for
such Business Day and (y) a fraction, the numerator of which is the Required
Amount or Reimbursement Required Amount, as applicable, for such Business Day
and the denominator of which is the aggregate amount of shortfalls in required
amounts or other amounts to be paid from Finance Charge Collections for all
Series for such Business Day.
SECTION 4.11. Payment of Interest on Securities and Amounts
Owing to Insurer. (a) On each Transfer Date, the Trustee, acting in accordance
with instructions from the Servicer set forth in the Daily Report for such day,
shall withdraw the amount on deposit in the Interest Funding Account with
respect to the preceding Monthly Period allocable to the Series 1999-1
Securities and deposit such amount in the Distribution Account. On each
Distribution Date, the Paying Agent shall pay in accordance with Section 5.1 of
the Agreement to the Class A Securityholders from the Distribution Account the
amount deposited into the Distribution Account on the related Transfer Date
allocable thereto pursuant to subsection 4.9(a)(i) of the Agreement.
(b) On each Distribution Date, the Paying Agent shall pay in accordance with
Section 5.1 of the Agreement from the Distribution Account to the Insurer for
application in accordance with the Insurance Agreement the amount deposited into
the Distribution Account pursuant to subsection 4.11(a) of the Agreement on the
related Transfer Date allocable thereto pursuant to subsections 4.9(a)(vi),
(vii), (viii) and (ix) of the Agreement.
SECTION 4.12. Payment of Security Principal. (a On the
Transfer Date preceding each Distribution Date with respect to the Amortization
Period, the Trustee, acting in accordance with instructions from the Servicer
set forth in the Daily Report for such day, shall withdraw from the Principal
Account and deposit into the Distribution Account with respect to the Early
Amortization Period, or the Principal Funding Account with respect to the
Accumulation Period, to the extent of funds available, an amount equal to the
Class A Principal for such Distribution Date. On each Distribution Date with
respect to the Early Amortization Period until the Class A Invested Amount is
paid in full, or on the Expected Final Payment Date with respect to the
Accumulation Period following any deposit to the Distribution Account pursuant
to subsection 4.12(e) of the Agreement, the Paying Agent shall pay in accordance
with Section 5.1 of the Agreement to the Class A Securityholders from the
Distribution Account such amounts deposited with respect to Class A Principal
into the Distribution Account on the related Transfer Date.
(b) On the Transfer Date preceding the Class B Principal Payment Commencement
Date and each Transfer Date thereafter, or, in the case of distributions of
Class B Excess Amounts, on each Transfer Date during the Accumulation Period
preceding a Distribution Date on which a distribution shall be made with respect
to Class B Excess Amounts, the Trustee, acting in accordance with instructions
from the Servicer set forth in the Daily Report for such day, shall withdraw
from the Principal Account and deposit in the Distribution Account, to the
extent of funds available, an amount equal to the Class B Principal for the
related Distribution Date. On the Class B Principal Payment Commencement Date
after the payment of any principal amounts to the Class A Securities on such
day, and on each Distribution Date thereafter until the Class B Invested Amount
is paid in full and on each Distribution Date during the Accumulation Period on
which amounts are to be distributed with respect to Class B Excess Amounts, the
Paying Agent shall pay in accordance with Section 5.1 of the Agreement to the
Class B Securityholder from the Distribution Account such amounts deposited with
respect to Class B Principal into the Distribution Account on the related
Transfer Date; provided, however, that, if so designated in writing by the
Transferor with respect to any such Transfer Date, any such payment of Class B
Principal shall not be made to the Class B Securityholder and such amount shall
be subtracted from the Class B Invested Amount and added to the Transferor
Interest.
(c) Any amounts remaining in the Principal Account and allocable to the Series
1999-1 Securities, after the Class B 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.
(d) On the earlier to occur of (i) the first Transfer Date with respect to the
Early Amortization Period and (ii) the Transfer Date immediately preceding the
Expected Final Payment Date, the Trustee, acting in accordance with instructions
from the Servicer, shall withdraw from the Principal Funding Account and deposit
in the Distribution Account the amount on deposit in the Principal Funding
Account for distribution to Class A Securityholders up to an amount equal to the
Class A Invested Amount.
SECTION 4.13. Series Charge-Offs. (a) If, on any Determination
Date, the aggregate Series Default Amount and the Series 1999-1 Percentage of
unpaid Adjustment Payments, if any, for each Business Day in the preceding
Monthly Period exceeded the Available Series 1999-1 Finance Charge Collections
applied to the payment thereof pursuant to subsections 4.9(a)(iii) and (iv) of
the Agreement, the amount of Transferor Finance Charge Collections and Excess
Finance Charge Collections allocated thereto pursuant to Section 4.10 of the
Agreement, the amount of Redirected Principal Collections applied with respect
thereto pursuant to Section 4.14 of the Agreement, the amount of Principal
Funding Account Investment Proceeds applied with respect thereto pursuant to
subsection 4.17(b), and amounts withdrawn from the Accumulation Period Reserve
Account pursuant to subsection 4.18(b), (c) and (d) and applied with respect to
the Series Default Amount and the Series 1999-1 Percentage of unpaid Adjustment
Payments with respect to such Monthly Period, the Class B Invested Amount will
be reduced by the amount by which the remaining aggregate Series Default Amount
and Series 1999-1 Percentage of unpaid Adjustment Payments exceed the amount
applied with respect thereto during such preceding Monthly Period (a "Class B
Charge-Off").
(b) In the event that any such reduction of the Class B Invested Amount would
cause the Class B Invested Amount to be a negative number, the Class B Invested
Amount will be reduced to zero, and the Trustee will demand payment on the
Policy in an amount equal to the amount by which the Class B Invested Amount
would have been reduced below zero, but in no case more than the sum of (i) the
remaining aggregate Series 1999-1 Default Amount and (ii) the remaining Series
1999-1 Percentage of unpaid Adjustment Payments for such Monthly Period (a
"Potential Class A Charge-Off").
(c) In the event that the Insurer fails to deliver to the Trustee an amount
equal to the Potential Class A Charge-Off amount as required under the Policy,
the Class A Invested Amount will be reduced by the amount the Insurer has failed
to pay (a "Class A Charge-Off").
SECTION 4.14. Redirected Principal Collections for the Series
1999-1 Securities. On each Business Day, the Servicer will determine an amount
equal to the least of (i) the Class B Invested Amount, (ii) the product of
(x)(I) during the Revolving Period, the Class B Floating Percentage or (II)
during an Amortization Period, the Class B Fixed/Floating Percentage and (y) the
amount of Principal Collections with respect to such Business Day and (iii) an
amount equal to the Class A Required Amount for such Business Day (such amount
called "Redirected Principal Collections") and shall apply Principal Collections
in an amount equal to such amount to the components of the Class A Required
Amount as amounts are applied to such components from Available Series 1999-1
Finance Charge Collections pursuant to subsection 4.9(a) of the Agreement.
SECTION 4.15. Determination of LIBOR. (a) "LIBOR" shall mean,
as of any LIBOR Determination Date, the rate for deposits in United States
dollars for one month (commencing on the first day of the relevant Interest
Accrual Period) which appears on Telerate Page 3750 as of 11:00 A.M., London
time, on the LIBOR Determination Date for such Interest Accrual Period. If such
rate does not appear on Telerate Page 3750, the rate for such LIBOR
Determination Date will be determined on the basis of the rates at which
deposits in the United States dollars are offered by the Reference Banks at
approximately 11:00 a.m., London time, on such LIBOR Determination Date to prime
banks in the London interbank market for a period equal to one month (commencing
on the first day of the relevant Interest Accrual Period). The Trustee will
request the principal London office of each such bank to provide a quotation of
its rate. If at least two such quotations are provided, the rate for such LIBOR
Determination Date will be the arithmetic mean of the quotations. If fewer than
two quotations are provided as requested, the rate for such LIBOR Determination
Date will be the arithmetic mean of the rates quoted by four major banks in New
York City, selected by the Trustee, at approximately 11:00 a.m., New York City
time, on the LIBOR Determination Date for loans in United States dollars to
leading European banks for a period equal to one month (commencing on the first
day of such Interest Accrual Period).
(b) On each LIBOR Determination Date, the Trustee shall send to the Servicer by
facsimile notification of LIBOR for such LIBOR Determination Date.
SECTION 4.16. Payment Reserve Account. (a The Servicer shall
establish and maintain or cause to be established and maintained with a
Qualified Institution, which may be the Trustee, in the name of the Trustee, on
behalf of the Securityholders, the "Payment Reserve Account," which shall be a
segregated trust account with the corporate trust department of such Qualified
Institution, bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Securityholders. The Trustee shall
possess all right, title and interest in all funds on deposit from time to time
in the Payment Reserve Account and in all proceeds thereof. The Payment Reserve
Account shall be under the sole dominion and control of the Trustee for the
benefit of the Securityholders. If, at any time, the institution holding the
Payment Reserve Account ceases to be a Qualified Institution, the Trustee shall
within 10 Business Days establish a new Payment Reserve Account meeting the
conditions specified above with a Qualified Institution, and shall transfer any
cash or any investments to such new Payment Reserve Account. From the date such
new Payment Reserve Account is established, it shall be the "Payment Reserve
Account."
(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 that will mature so that such funds will be available for withdrawal
on or prior to the following Business Day. The proceeds of any such investments
shall be invested in Cash Equivalents that will mature so that such funds will
be available for withdrawal on or prior to the following Business Day. On each
Business Day following a deposit of funds to the Payment Reserve Account, the
aggregate proceeds of any such investment shall be deposited in the Collection
Account and treated as Investment Proceeds for application as Available Series
1999-1 Finance Charge Collections.
SECTION 4.17. Principal Funding Account. (a The Servicer shall
establish and maintain or cause to be established and maintained with a
Qualified Institution, which may be the Trustee, in the name of the Trustee, on
behalf of the Securityholders, the "Principal Funding Account," which shall be a
segregated trust account with the corporate trust department of such Qualified
Institution, bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Series 1999-1 Securityholders. The
Trustee shall possess all right, title and interest in all funds on deposit from
time to time in the Principal Funding Account and in all proceeds thereof. The
Principal Funding Account shall be under the sole dominion and control of the
Trustee for the benefit of the Series 1999-1 Securityholders. If, at any time,
the institution holding the Principal Funding Account ceases to be a Qualified
Institution, the Trustee shall within 10 Business Days establish a new Principal
Funding Account meeting the conditions specified above with a Qualified
Institution, and shall transfer any cash or any investments to such new
Principal Funding Account. From the date such new Principal Funding Account is
established, it shall be the "Principal Funding Account." The Trustee, at the
written direction of the Servicer, shall (i) make withdrawals from the Principal
Funding Account from time to time, in the amounts and for the purposes set forth
in this Series Supplement, and (ii) on each Transfer Date (from and after the
commencement of the Accumulation Period) prior to termination of the Principal
Funding Account make a deposit into the Principal Funding Account in the amount
specified in, and otherwise in accordance with, subsection 4.12(a) of the
Agreement.
(b) Funds on deposit in the Principal Funding Account shall be invested by the
Trustee at the direction of the Servicer in Cash Equivalents maturing no later
than the following Transfer Date. On the Transfer Date occurring in the month
following the commencement of the Accumulation Period and on each Transfer Date
thereafter with respect to the Accumulation Period, the Trustee, at the
Servicer's written direction, shall transfer from the Principal Funding Account
to the Collection Account the Principal Funding Account Investment Proceeds on
deposit in the Principal Funding Account, but not in excess of the Covered
Amount, and shall apply such amount as if such amounts were Available Series
1999-1 Finance Charge Collections available to be applied pursuant to subsection
4.9(a) on the last Business Day of the preceding Monthly Period. Principal
Funding Account Investment Proceeds (including reinvested interest) shall not be
considered part of the amounts on deposit in the Principal Funding Account for
purposes of this Series Supplement.
SECTION 4.18. Accumulation Period Reserve Account. (a) The
Servicer shall establish and maintain or cause to be established and maintained
with a Qualified Institution, which may be the Trustee, in the name of the
Trustee, on behalf of the Securityholders, the "Accumulation Period Reserve
Account," which shall be a segregated trust account with the corporate trust
department of such Qualified Institution, bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Series 1999-1 Securityholders. The Trustee shall possess all right, title and
interest in all funds on deposit from time to time in the Accumulation Period
Reserve Account and in all proceeds thereof. The Accumulation Period Reserve
Account shall be under the sole dominion and control of the Trustee for the
benefit of the Series 1999-1 Securityholders. If, at any time, the institution
holding the Accumulation Period Reserve Account ceases to be a Qualified
Institution, the Trustee shall within 10 Business Days establish a new
Accumulation Period Reserve Account meeting the conditions specified above with
a Qualified Institution, and shall transfer any cash or any investments to such
new Accumulation Period Reserve Account. From the date such new Accumulation
Period Reserve Account is established, it shall be the "Accumulation Period
Reserve Account." The Trustee, at the written direction of the Servicer, shall
(i) make withdrawals from the Accumulation Period Reserve Account from time to
time, in the amounts and for the purposes set forth in this Series Supplement,
and (ii) on each Transfer Date (from and after the Reserve Account Funding Date)
prior to termination of the Accumulation Period Reserve Account make a deposit
into the Accumulation Period Reserve Account in the amount specified in, and
otherwise in accordance with, subsection 4.9(a)(xi) of the Agreement.
(b) Funds on deposit in the Accumulation Period Reserve Account shall be
invested by the Trustee at the direction of the Servicer in Cash Equivalents
maturing no later than the following Transfer Date. The interest and other
investment income (net of investment expenses and losses) earned on such
investments will be retained in the Accumulation Period Reserve Account (to the
extent the amount on deposit therein is less than the Required Reserve Account
Amount) or deposited in the Collection Account and treated as Investment
Proceeds for application as Available Series 1999-1 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 1999-1 Finance Charge Collections available to
be applied pursuant to subsection 4.9(a) on the last Business Day of the
preceding Monthly Period.
(d) The Accumulation Period Reserve Account shall be terminated following the
earliest to occur of (a) the termination of the Trust pursuant to the Agreement,
(b) the date on which the Invested Amount is paid in full, (c) if the
Accumulation Period has not commenced, the occurrence of a Pay Out Event with
respect to the Series 1999-1 Securities and (d) if the Accumulation Period has
commenced, the earlier of the first Transfer Date with respect to the Early
Amortization Period and the Expected Final Payment Date. Upon the termination of
the Accumulation Period Reserve Account, all amounts on deposit therein (after
giving effect to any withdrawal from the Accumulation Period Reserve Account on
such date as described above) shall be applied as if they were Available Series
1999-1 Finance Charge Collections available to be applied pursuant to subsection
4.9(a) on the last Business Day of the preceding Monthly Period.
SECTION 4.19. Postponement of Accumulation Period. The
Accumulation Period is scheduled to commence at the close of business on the
last day of the May 2003 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 4.20. Defeasance. On the date that the following
conditions shall have been satisfied: (i) the Transferor shall have deposited
(x) in the Principal Funding Account, an amount such that the amount on deposit
in the Principal Funding Account following such deposit is equal to the sum of
the Class A Outstanding Principal Amount and the Class B 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, or both,
would constitute a Pay Out Event, to occur; and (iv) a Ratings Event will not
occur, the Series 1999-1 Securities will no longer be entitled to the security
interest of the Trust in the Receivables and, except those set forth in clause
(i) above, other Trust assets and the percentages applicable to the allocation
to the Series 1999-1 Securityholders of Principal Collections, Finance Charge
Collections and Defaulted Receivables will be reduced to zero. Upon the
satisfaction of the foregoing conditions, the Class B Invested Amount will be
reduced to zero.
SECTION 7. Article V of the Agreement. Article V of the Agreement shall read in
its entirety as follows and shall be applicable only to the Series 1999-1
Securities:
ARTICLE V
DISTRIBUTIONS AND REPORTS TO INVESTOR
SECURITYHOLDERS
SECTION 5.1. Distributions. (a) On each Distribution Date, the
Paying Agent shall distribute (in accordance with the Settlement Statement
delivered by the Servicer to the Trustee and the Paying Agent pursuant to
subsection 3.4(c)) to each Class A Securityholder of record on the preceding
Record Date (other than as provided in subsection 2.4(e) or in Section 12.3
respecting a final distribution) such Securityholder's pro rata share (based on
the aggregate Undivided Interests represented by each Class A Security held by
such Securityholder) of amounts on deposit in the Distribution Account as are
payable to each Class A Securityholders pursuant to Sections 4.11 and 4.12 of
the Agreement by check mailed to each Class A Securityholder at such
Securityholder's address as it appears on the Security Register or, in the case
of Class A Securityholders holding Class A Securities evidencing not less than
80% of the Class A Invested Amount, by wire transfer, at the expense of such
Class A Securityholder, to the Spread Account or to such other account or
accounts designated by such Class A Securityholder by written notice given to
the Paying Agent not less than five days prior to the related Distribution Date;
provided, however, that the final payment in retirement of the Class A
Securities will be made only upon presentation and surrender of the Class A
Securities at the office or offices specified in the notice of such final
distribution delivered by the Trustee pursuant to Section 12.3 of the Agreement.
(b) On each Distribution Date, the Paying Agent shall distribute (in accordance
with the Settlement Statement delivered by the Servicer to the Trustee and the
Paying Agent pursuant to subsection 3.4(c) of the Agreement) to the Insurer the
amounts on deposit in the Distribution Account as are payable to the Insurer for
application in accordance with the Insurance Agreement pursuant to subsection
4.11(b) of the Agreement by wire transfer to the Spread Account or to such other
account or accounts designated by the Insurer by written notice given to the
Paying Agent not less than five days prior to the related Distribution Date.
(c) On each Distribution Date, the Paying Agent shall distribute (in accordance
with the Settlement Statement delivered by the Servicer to the Trustee and the
Paying Agent pursuant to subsection 3.4(c) of the Agreement) to each Class B
Securityholder of record other than the Transferor on the preceding Record Date
(other than as provided in subsection 2.4(e) of the Agreement or in Section 12.3
of the Agreement respecting a final distribution) such Securityholder's pro rata
share (based on the aggregate Undivided Interests represented by Class B
Securities held by such Securityholder) of amounts on deposit in the
Distribution Account as are payable to the Class B Securityholders pursuant to
Sections 4.11 and 4.12 of the Agreement by wire transfer to each Class B
Securityholder to an account or accounts designated by such Class B
Securityholder by written notice given to the Paying Agent not less than five
days prior to the related Distribution Date; provided, however, that the final
payment in retirement of the Class B Securities will be made only upon
presentation and surrender of the Class B Securities at the office or offices
specified in the notice of such final distribution delivered by the Trustee
pursuant to Section 12.3 of the Agreement.
SECTION 5.2. Securityholders' Statement. (a) On the twentieth
day of each calendar month (or if such day is not a Business Day the next
succeeding Business Day), the Paying Agent shall forward to each Securityholder
and the Rating Agencies a statement substantially in the form of Exhibit B
prepared by the Servicer and delivered to the Trustee and the Paying Agent on
the preceding Determination Date setting forth the following information (which,
in the case of (i), (ii) and (iii) below, shall be stated on the basis of an
original principal amount of $1,000 per Security and, in the case of (ix) and
(x), shall be stated on an aggregate basis and on the basis of an original
principal amount of $1,000 per Security):
(i) the total amount distributed;
(ii) the amount of such distribution allocable to Class A Principal and
Class B Principal;
(iii) the amount of such distribution allocable to Class A Monthly Interest
and Carryover Class A Monthly Interest and any amounts payable to the
Class B Securityholders with respect to interest;
(iv) the amount of Principal Collections received in the Collection Account
during the preceding Monthly Period and allocated in respect of the
Class A Securities, and the Class B Securities, respectively;
(v) the amount of Finance Charge Collections processed during the preceding
Monthly Period and allocated in respect of the Class A Securities and
the Class B Securities, respectively, and the amount of Principal
Funding Account Investment Proceeds and investment earnings on amounts
on deposit in the Accumulation Period Reserve Account;
(vi) the aggregate amount of Principal Receivables, the Invested Amount, the
Class A Invested Amount, the Class B Invested Amount, the Floating
Percentage and, during the Amortization Period, the Fixed/Floating
Percentage, as of the end of the day on the last day of the related
Monthly Period;
(vii) the aggregate outstanding balance of Receivables which are current,
30-59, 60-89, and 90 days and over delinquent as of the end of the day
on the last day of the related Monthly Period;
(viii) the aggregate Series Default Amount for the preceding Monthly Period;
(ix) the aggregate amount of Class A Charge-Offs and Class B Charge-Offs for
the preceding Monthly Period;
(x) the amount of the Servicing Fee for the preceding Monthly Period;
(xi) the amount of unreimbursed Redirected Principal Collections for the
related Monthly Period;
(xii) the aggregate amount of funds in the Excess Funding Account as of the
last day of the Monthly Period immediately preceding the Distribution
Date;
(xiii) the number of new Accounts the Receivables in which have been added to
the Trust during the related Monthly Period;
(xiv) the Portfolio Yield for the related Monthly Period;
(xv) the Base Rate for the related Monthly Period;
(xvi) the Principal Funding Account Balance on the related Transfer Date;
(xvii) the Accumulation Shortfall;
(xviii) the scheduled date for the commencement of the Accumulation Period and
the Accumulation Period Length;
(xix) the amount of Principal Funding Account Investment Proceeds deposited
in the Collection Account on the related Transfer Date, the Required
Reserve Account Amount and the Available Reserve Account Amount as of
the related Transfer Date, and the Covered Amount for the related
Interest Accrual Period;
(xx) the Aggregate Interest Rate Caps Notional Amount and the amount
deposited in the Cap Proceeds Account during the related Monthly
Period; and
(xxi) the amount of claims, if any, on the Policy on such Distribution Date.
(b) Annual Securityholders' Tax Statement. On or before January 31 of each
calendar year, beginning with calendar year 2000, the Paying Agent shall
distribute to each Person who at any time during the preceding calendar year was
a Series 1999-1 Securityholder, a statement prepared by the Servicer containing
the information required to be contained in the regular report to Series 1999-1
Securityholders, as set forth in subclauses (i), (ii) and (iii) above,
aggregated for such calendar year or the applicable portion thereof during which
such Person was a Series 1999-1 Securityholder, together with, on or before
January 31 of each year, beginning in 2000, such other customary information
(consistent with the treatment of the Series 1999-1 Securities as debt) as the
Trustee or the Servicer deems necessary or desirable to enable the Series 1999-1
Securityholders 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 1999-1 Pay Out Events. If any one of the following
events shall occur with respect to the Series 1999-1 Securities:
(a) failure on the part of the Transferor (i) to make any payment or deposit
required to be made by the Transferor by the terms of the Agreement or this
Series Supplement, on or before the date occurring five Business Days after the
date such payment or deposit is required to be made herein, (ii) to perform in
all material respects the Transferor's covenant not to sell, pledge, assign, or
transfer to any person, or grant any unpermitted lien on, any Receivable; or
(iii) duly to observe or perform in any material respect any covenants or
agreements of the Transferor set forth in the Agreement or this Series
Supplement, which failure has a material adverse effect on the Series 1999-1
Securityholders or the Insurer and which continues unremedied for a period of
sixty days after the date on which written notice of such failure, requiring the
same to be remedied, shall have been given to the Transferor by the Trustee or
the Insurer, or to the Transferor, the Insurer and the Trustee by the Holders of
Series 1999-1 Securities evidencing Undivided Interests aggregating not less
than 50 percent of the Invested Amount and continues to affect materially and
adversely the interests of the Series 1999-1 Securityholders or the Insurer 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 Insurer or by the
Holders of Series 1999-1 Securities evidencing Undivided Interests aggregating
more than 50% of the Invested Amount of this Series 1999-1, and (ii) as a result
of which the interests of the Series 1999-1 Securityholders are materially and
adversely affected and continue to be materially and adversely affected for such
period; provided, however, that a Series 1999-1 Pay Out Event pursuant to this
subsection 8(b) shall not be deemed to have occurred hereunder if the Transferor
has accepted reassignment of the related Receivable, or all of such Receivables,
if applicable, during such period (or such longer period as the Trustee may
specify) in accordance with the provisions of the Agreement;
(c) the average of the Portfolio Yields for any three consecutive Monthly
Periods is reduced to a rate which is less than the average Base Rates for such
three consecutive Monthly Periods;
(d) (i) the Transferor Interest shall be less than the Minimum Transferor
Interest, (ii) the Series 1999-1 Percentage of the sum of the total amount of
Principal Receivables plus amounts on deposit in the Excess Funding Account
shall be less than the sum of the Class A Outstanding Principal Amount and the
Class B Outstanding Principal Amount, (iii) the total amount of Principal
Receivables and the amounts on deposit in the Excess Funding Account, the
Principal Account and the Principal Funding Account shall be less than the
Minimum Aggregate Principal Receivables or (iv) the Retained Percentage shall be
equal to or less than 2%, in each case as of any Determination Date;
(e) any Servicer Default shall occur which would have a material adverse effect
on the Series 1999-1 Securityholders; or
(f) any claim on the Policy shall occur;
then, in the case of any event described in subparagraph (a), (b) or (e), after
the applicable grace period, if any, set forth in such subparagraphs, the
Holders of Series 1999-1 Securities evidencing Undivided Interests aggregating
more than 50% of the Invested Amount of this Series 1999-1, by notice then given
in writing to the Trustee, the Transferor, any Cap Providers and the Servicer
may declare that a pay out event (a "Series 1999-1 Pay Out Event") has occurred
as of the date of such notice, and in the case of any event described in
subparagraphs (c), (d) or (f), a Series 1999-1 Pay Out Event shall occur without
any notice or other action on the part of the Trustee or the Series 1999-1
Securityholders immediately upon the occurrence of such event.
SECTION 9. Series 1999-1 Termination. The right of the Series 1999-1
Securityholders to receive payments from the Trust will terminate on the first
Business Day following the Series 1999-1 Termination Date unless such Series is
an Affected Series as specified in Section 12.1(c) of the Agreement and the sale
contemplated therein has not occurred by such date, in which event the Series
1999-1 Securityholders shall remain entitled to receive proceeds of such sale
when such sale occurs.
SECTION 10. Legends; Transfer and Exchange; Restrictions on Transfer of
Series 1999-1 Securities. (a) Each Class A Security that is a Global Security
deposited with DTC, or a custodian on behalf of DTC, shall bear the following
legend:
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION
("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME
OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH
OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE
& CO., HAS AN INTEREST HEREIN.
(b) Each Class B Security will bear legends substantially in the following form:
THIS SECURITY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"). THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAW OF ANY STATE AND
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS
REGISTERED PURSUANT TO OR EXEMPT FROM REGISTRATION UNDER THE SECURITIES
ACT AND ANY OTHER APPLICABLE SECURITIES LAW. TRANSFERS OF THIS SECURITY
SHALL BE SUBJECT TO THE RESTRICTIONS SET FORTH IN THE POOLING AND
SERVICING AGREEMENT.
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. The Policy.
(a) The Transferor hereby represents that (i) it has obtained the Policy in the
name of the Trustee and solely for the benefit of the Series 1999-1
Securityholders, (ii) that it has entered into the Insurance Agreement which
provides for the issuance of the Policy by the Insurer and (iii) that the Policy
permits the Trustee (or the Servicer on its behalf) to draw on the Policy from
time to time for the purposes set forth in this Supplement. The Insurer shall
not be entitled to reimbursement for any draws, interest or fees with respect to
the Policy from the corpus of the Trust, except as specifically provided herein.
(b) Pursuant to the Policy, if on any Determination Date the Servicer notifies
the Trustee that on the related Distribution Date (i) the funds that will be on
deposit in the Interest Funding Account available for distribution are
insufficient to pay the Class A Monthly Interest with respect to such Monthly
Period or the Servicing Fee with respect to such Monthly Period will not
otherwise be paid in full, (ii) a Potential Class A Charge-Off shall occur, then
the Trustee shall give notice to the Insurer by telecopy or other writing by the
close of business on the second Business Day prior to the Distribution Date
demanding payment of an amount equal to the deficiency. In addition, if on the
Scheduled Series 1999-1 Termination Date the outstanding principal amount of the
Class A Securities after application of all amounts to Class A Principal on such
date would be greater than zero, the Trustee shall give notice to the Insurer by
telecopy or other writing by the close of business on the second Business Day
prior to the Scheduled Series 1999-1 Termination Date demanding payment of an
amount equal to such excess (the amount demanded pursuant to this sentence and
the preceding sentence, the "Policy Claim Amount"). Following receipt by the
Insurer of such notice, the Insurer will pay the Policy Claim Amount before
12:00 noon on the Business Day preceding the Distribution Date (i) with respect
to funds to be applied to the payment of Class A Monthly Interest, to the
Trustee for deposit in the Distribution Account, (ii) with respect to funds to
be applied to the payment of the Monthly Servicing Fee, to the Servicer and
(iii) with respect to funds to be applied with respect to a Potential Class A
Charge-Off, to the Trustee to be treated as Available Series 1999-1 Principal
Collections and deposited in the Distribution Account.
If payment of any amount guaranteed by the Insurer pursuant to
the Policy is avoided as a preference payment (the "Preference Amount") under
applicable bankruptcy, insolvency, receivership or similar law in the event of
an insolvency of the Transferor, the Servicer, Metris Companies Inc. or the
Trust, the Insurer will pay such amount out of its funds on the later of (a) the
date when due to be paid pursuant to the Order referred to below or (b) the
first to occur of (i) the fourth business day following Receipt by the Insurer
or the fiscal agent from the Trustee of (A) a certified copy of the order (the
"Order") of the court or other governmental body which exercised jurisdiction to
the effect that the Trustee is required to return the amount of any Policy Claim
Amounts distributed with respect to the Class A Securities during the term of
the Policy because such distributions were avoidable preference payments under
applicable bankruptcy law, (B) a notice for payment in the form specified by the
Policy and (C) an assignment duly executed and delivered by the Class A
Securityholder, in such form as is reasonably required by the Insurer and
provided to the Class A Securityholder by the Insurer, irrevocably assigning to
the Insurer all rights and claims of the Class A Securityholder relating to or
arising under the Class A Securities against the debtor which made such
preference payment or otherwise with respect to such preference payment or (ii)
the date of Receipt by the Insurer or the fiscal agent from the Trustee of the
items referred to in clauses (A), (B) and (C) above if, at least four business
days prior to such date of Receipt, the Insurer or the fiscal agent shall have
Received written notice from the Trustee that such items were to be delivered on
such date and such date was specified in such notice. Such payment shall be
disbursed to the receiver, conservator, debtor-in-possession or trustee in
bankruptcy named in the Order and not to the Trustee or Class A Securityholder
directly.
The terms "Receipt" and "Received", with respect to the Policy, mean
actual delivery to the Insurer and to its fiscal agent appointed by the Insurer
at its option, if any, prior to 1:00 p.m., New York City time, on a business
day; delivery either on a day that is not a business day or after 1:00 p.m., New
York City time, shall be deemed to be Received on the next succeeding business
day. If any notice or certificate given under the Policy by the Trustee is not
in proper form or is not properly completed, executed or delivered, it shall be
deemed not to have been Received, and the Insurer or the fiscal agent shall
promptly so advise the Trustee and the Trustee may submit an amended notice.
(c) In the event that the claims paying ability rating of the Insurer is
downgraded and such downgrade would result in a downgrading of the then current
rating of the Class A Securities (a "Replacement Event"), the Transferor, in
accordance with and upon satisfaction of the conditions set forth in the Policy,
including payment in full of all amounts owed to the Insurer, may but shall not
be required to, substitute a new surety bond or surety bonds for the existing
Policy or may arrange for any other form of Enhancement; provided, however, that
in each case the Class A Securities shall be rated no lower than the rating
assigned by each Rating Agency to the Class A Securities prior to such
Replacement Event and the timing and mechanism for drawing on such new credit
enhancement shall be reasonably acceptable to the Trustee. Upon receipt of the
new Enhancement, the Trustee shall surrender the replaced Policy to the Insurer.
(d) So long as the Insurer has not defaulted on its obligations under the
Policy, the Insurer will be entitled to exercise all voting rights of the Series
1999-1 Securityholders without the consent of the Class A Securityholders
(including any voting rights with respect to amending the Agreement or this
Supplement or terminating a Servicer) and the Class A Securityholders may only
exercise such voting rights with the prior written consent of the Insurer. In
determining whether the required percentage of Securityholders have given their
approval or consent with respect to an action requiring the consent of a
majority of the Securityholders, except as otherwise specified, the Class A
Securityholders will be treated as a single Series.
SECTION 12. Ratification of Agreement. As supplemented by this Series
Supplement, the Agreement is in all respects ratified and confirmed and the
Agreement as so supplemented by this Series Supplement shall be read, taken, and
construed as one and the same instrument. The Transferor hereby confirms the
conveyance of the Trust Property to the Trustee for the benefit of the Series
1999-1 Securityholders.
SECTION 13. Registration of the Class A Securities under the Securities Exchange
Act of 1934. The Transferor shall cause the Class A Securities to be registered
under the Securities Exchange Act of 1934, as amended, on or before November 30,
1999 and thereafter maintain such registration until the Class A Invested Amount
has been reduced to zero.
SECTION 14. Counterparts. This Series Supplement may be executed in any number
of counterparts, each of which so executed shall be deemed to be an original,
but all of such counterparts shall together constitute but one and the same
instrument.
SECTION 15. GOVERNING LAW. THIS SERIES SUPPLEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 16. Instructions in Writing. All instructions or other communications
given by the Servicer or any other person to the Trustee pursuant to this Series
Supplement shall be in writing, and, with respect to the Servicer, may be
included in a Daily Report or Settlement Statement.
SECTION 17. Amendment for FASIT Purposes. Each Series 1999-1 Securityholder, by
acquiring an interest in a Series 1999-1 Security, is deemed to consent to any
amendment to the Agreement or this Series Supplement necessary for the
Transferor to elect for the Trust or any portion thereof to be treated as a
financial asset securitization investment trust ("FASIT") within the meaning of
Section 860L of the Internal Revenue Code (or any successor provision thereto),
provided, that such election may not be made unless the Transferor delivers an
opinion to the Trustee and the Servicer to the effect that such election will
not adversely affect the Federal or Applicable Tax State income tax
characterization of any outstanding Series of Investor Securities or the
taxability of the Trust under Federal or Applicable Tax State income tax laws.
SECTION 18. Paired Series. Subject to obtaining confirmation by each Rating
Agency of the then existing ratings of each class of Securities which is then
rated, and prior to the commencement of the Early Amortization Period, the
Series 1999-1 Securities may be paired with one or more other Series (each a
"Paired Series"). Each Paired Series either will be pre-funded with an initial
deposit to a pre-funding account in an amount up to the initial principal
balance of such Paired Series and primarily from the proceeds of the sale of
such Paired Series or will have a variable principal amount. Any such
pre-funding account will be held for the benefit of such Paired Series and not
for the benefit of the Securityholders. As principal is deposited in the
Principal Account or the Principal Funding Account or is paid with respect to
the Series 1999-1 Securities, either (i) in the case of a pre-funded Paired
Series, an equal amount of funds on deposit in any pre-funding account for such
pre-funded Paired Series will be released (which funds will be distributed to
the Transferor) or (ii) in the case of a Paired Series having a variable
principal amount, an interest in such variable Paired Series in an equal or
lesser amount may be sold by the Trust (and the proceeds thereof will be
distributed to the Transferor) and, in either case, the invested amount in the
Trust of such Paired Series will increase by up to a corresponding amount. Upon
payment in full of the Series 1999-1 Securities, assuming that there have been
no unreimbursed charge-offs with respect to any related Paired Series, the
aggregate invested amount of such related Paired Series will have been increased
by an amount up to an aggregate amount equal to the Invested Amount paid to the
Securityholders since the issuance of such Paired Series. The issuance of a
Paired Series will be subject to the conditions described in subsection 6.9(b)
of the Agreement.
SECTION 19. Third Party Beneficiaries. The Agreement as supplemented by this
Series Supplement shall inure to the benefit of and be binding upon the parties
hereto, the Securityholders, the Insurer and their respective successors and
permitted assigns. SECTION 1.
IN WITNESS WHEREOF, the Transferor, the Servicer and the
Trustee have caused this Series 1999-1 Supplement to be duly executed by their
respective officers as of the day and year first above written.
METRIS RECEIVABLES, INC.
Transferor
By: /s/ Paul T. Runice
Name: Paul T. Runice
Title: Senior Vice President and Treasurer
DIRECT MERCHANTS CREDIT CARD BANK,
NATIONAL ASSOCIATION
Servicer
By: /s/ Joseph A. Hoffman
Name: Joseph A. Hoffman
Title: Vice President
THE BANK OF NEW YORK (DELAWARE)
Trustee
By: /s/ Cheryl L. Laser
Name: Cheryl L. Laser
Title: Assistant Vice President
Exhibit A-1
FORM OF CLASS A INVESTOR SECURITY
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION
("DTC"), TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE, OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME
OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH
OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE
& CO. HAS AN INTEREST HEREIN.
No. ___ $_________
CUSIP NO. 59159UAM0
METRIS MASTER TRUST
FLOATING RATE ASSET BACKED
SECURITY, SERIES 1999-1, CLASS A
Evidencing an undivided interest in a trust, the corpus of
which consists of receivables generated from time to time in the ordinary course
of business from a portfolio of revolving consumer credit card accounts
transferred or to be transferred by Metris Receivables, Inc. (the "Transferor")
and other assets and interests constituting the Trust under the Agreement
described below.
(Not an interest in or a recourse obligation of Metris
Receivables, Inc., Direct Merchants Credit Card Bank, National Association or
any affiliate of either of them.)
This certifies that _________ (the "Securityholder") is the
registered owner of a fractional undivided interest in the Metris Master Trust
(the "Trust") issued pursuant to the Amended and Restated Pooling and Servicing
Agreement, dated as of July 30, 1998 (the "Pooling and Servicing Agreement";
such term to include any amendment 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 1999-1 Supplement, dated as of July 7,1999 (the Series 1999-1
Supplement"), among the Transferor, the Servicer and the Trustee. The Pooling
and Servicing Agreement, as supplemented by the Series 1999-1 Supplement, is
herein referred to as the "Agreement"). The corpus of the Trust consists of all
of the Transferor's right, title and interest in, to and under the Trust
Property (as defined in the Agreement).
This Security does not purport to summarize the Agreement and
reference is made to that Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds, and duties evidenced hereby
and the rights, duties and obligations of the Trustee. To the extent not defined
herein, the capitalized terms used herein have the meanings ascribed to them in
the Agreement. This Security is one of a series of Securities entitled "Metris
Master Trust Floating Rate Asset Backed Securities, Series 1999-1, Class A" (the
"Class A Securities"), each of which represents a fractional undivided interest
in the Trust, and is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement, as amended from time to time,
the Securityholder by virtue of the acceptance hereof assents and by which the
Securityholder is bound.
The Transferor has structured the Agreement, the Class A
Securities, the Metris Master Trust Floating Rate Asset Backed Securities,
Series 1999-1, Class B (the "Class B Securities" and collectively with the Class
A Securities, the "Series 1999-1 Securities") with the intention that the Series
1999-1 Securities will qualify under applicable tax law as indebtedness, and
both the Transferor and each holder of a Class A Security (a "Class A
Securityholder") or any interest therein by acceptance of its Securities or any
interest therein, agrees to treat the Class A Securities for purposes of
federal, state and local income or franchise taxes and any other tax imposed on
or measured by income, as indebtedness.
No principal will be payable to the Class A Securityholders
until the earlier of the Expected Final Payment Date and, upon the occurrence of
a Pay Out Event, the Distribution Date following the Monthly Period in which the
Pay Out Event occurs. No principal will be payable to the Class B
Securityholders (other than with respect to Class B Excess Amounts) until all
principal payments have been made to the Class A Securityholders.
Interest on the Class A Securities will be payable on August
20, 1999 and on the 20th day of each month thereafter or, if such day is not a
business day, on the next succeeding business day (each, a "Distribution Date"),
in an amount equal to the product of (i) the Class A Interest Rate, (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 Securities 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) 44 divided by 360, and (w) the Class A
Interest Rate determined on July 2, 1999.
Interest payments on the Class A Securities on each
Distribution Date will be funded from Available Series 1999-1 Finance Charge
Collections with respect to the preceding Monthly Period and from certain other
funds allocated as set forth in the Pooling and Servicing Agreement to the
respective classes of the Series 1999-1 Securities and deposited on each
business day during such Monthly Period in the Interest Funding Account.
"Class A Invested Amount" shall mean, when used with respect
to any Business Day, the greater of (x) zero and (y) an amount equal to (a) the
Class A Initial Invested Amount, minus (b) the aggregate amount of principal
payments made to Class A Securityholders through and including such Business
Day, minus (c) the aggregate amount of Class A Charge-Offs for all prior
Distribution Dates, plus (d) the sum of the aggregate amount reimbursed with
respect to reductions of the Class A Invested Amount through and including such
Business Day pursuant to subsection 4.9(a)(v) of the Agreement plus, with
respect to such subsection, amounts applied thereto pursuant to subsections
4.10(a) and (b), 4.14, 4.17(b) and 4.18(b), (c) and (d) of the Agreement, for
the purpose of reimbursing amounts deducted pursuant to the foregoing clause
(c); provided, however that the Class A Invested Amount may not be reduced below
zero.
Subject to the Agreement, payments of principal are limited to
the unpaid Class A Invested Amount of the Class A Securities, which may be less
than the unpaid balance of the Class A Securities pursuant to the terms of the
Agreement. All principal on the Class A Securities is due and payable no later
than the October 2007 Distribution Date (or if such day is not a Business Day,
the next succeeding Business Day) (the "Scheduled Series 1999-1 Termination
Date"). After the earlier to occur of (i) the Scheduled Series 1999-1
Termination Date and (ii) the day after the Distribution Date on which the
Series 1999-1 Securities are paid in full (the "Series 1999-1 Termination Date")
neither the Trust nor the Transferor will have any further obligation to
distribute principal or interest on the Class A Securities. In the event that
the Class A Invested Amount is greater than zero on the Series 1999-1
Termination Date, the Trustee will sell or cause to be sold, to the extent
necessary, an amount of interests in the Receivables or certain of the
Receivables up to 110% of the Class A Invested Amount and the Class B Invested
Amount at the close of business on such date (but not more than the total amount
of Receivables allocable to the Investor Securities), and shall pay the proceeds
to the Class A Securityholders pro rata in final payment of the Class A
Securities, then to the Class B Securityholders pro rata in final payment of the
Class B Securities.
Unless the certificate of authentication hereon has been
executed by or on behalf of the Trustee, by manual signature, this Security
shall not be entitled to any benefit under the Agreement, or be valid for any
purpose.
IN WITNESS WHEREOF, the Transferor has caused this Security to
be duly executed.
METRIS RECEIVABLES, INC.
By:
Name:
Title:
Dated: __________ , ______
CERTIFICATE OF AUTHENTICATION
This is one of the Class A Securities referred to in the
within-mentioned Pooling and Servicing Agreement.
THE BANK OF NEW YORK
By:
Name:
Title:
Exhibit A-2
FORM OF CLASS B INVESTOR SECURITY
THIS SECURITY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"). THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR ANY
APPLICABLE STATE SECURITIES LAW OF ANY STATE AND MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED UNLESS REGISTERED PURSUANT TO OR EXEMPT FROM
REGISTRATION UNDER THE SECURITIES ACT AND ANY OTHER APPLICABLE SECURITIES LAW.
TRANSFERS OF THIS SECURITY SHALL BE SUBJECT TO THE RESTRICTIONS SET FORTH IN THE
POOLING AND SERVICING AGREEMENT.
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. ___ $_________
METRIS MASTER TRUST
ASSET BACKED
SECURITY, SERIES 1999-1, CLASS B
Evidencing an undivided interest in a trust, the corpus of
which consists of receivables generated from time to time in the ordinary course
of business from a portfolio of revolving consumer credit card accounts
transferred or to be transferred by Metris Receivables, Inc. (the "Transferor")
and other assets and interests constituting the Trust under the Agreement
described below.
(Not an interest in or a recourse obligation of Metris
Receivables, Inc., Direct Merchants Credit Card Bank, National Association or
any affiliate of either of them.)
This certifies that ______________ (the "Securityholder") is
the registered owner of a fractional undivided interest in the Metris Master
Trust (the "Trust") issued pursuant to the Amended and Restated Pooling and
Servicing Agreement, dated as of July 30, 1998 (the "Pooling and Servicing
Agreement"; such term to include any amendment or Supplement 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 1999-1 Supplement, dated as of July 7, 1999(the
"Series 1999-1 Supplement"), among the Transferor, the Servicer and the Trustee.
The Pooling and Servicing Agreement, as supplemented by the Series 1999-1
Supplement, is herein referred to as the "Agreement." The corpus of the Trust
consists of all of the Transferor's right, title and interest in, to and under
the Trust Property (as defined in the Agreement).
This Security does not purport to summarize the Agreement and
reference is made to that Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds, and duties evidenced hereby
and the rights, duties and obligations of the Trustee. To the extent not defined
herein, the capitalized terms used herein have the meanings ascribed to them in
the Agreement. This Securities is one of a series of Securities entitled "Metris
Master Trust Asset Backed Securities, Series 1999-1, Class B" (the "Class B
Securities"), each of which represents a fractional undivided interest in the
Trust, and is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement, as amended from time to time,
the Securityholder by virtue of the acceptance hereof assents and by which the
Securityholder is bound.
Metris Receivables, Inc. shall be prohibited from transferring
any interest in or portion of the Class B Securities.
No principal will be payable to the Class B Securityholders
(other than with respect to Class B Excess Amounts) until the earlier of the
Expected Final Payment Date and, upon the occurrence of a Pay Out Event, the
Distribution Date following the Monthly Period in which the Pay Out Event occurs
but in no event earlier than the Distribution Date either on or following the
Distribution Date on which Class A Invested Amount has been paid in full. No
principal will be payable to the Class B Securityholders until all principal
payments have first been made to the Class A Securityholders.
"Class B Invested Amount" shall mean, when used with respect
to any Business Day, the greater of (x) zero and (y) an amount equal to (a) the
initial principal balance of the Class B Securities, minus (b) the aggregate
amount of principal payments made to Class B Securityholders through and
including such Business Day, minus (c) the aggregate amounts by which the
Transferor has reduced the Class B Invested Amount pursuant to subsection
4.12(b) of the Agreement, minus (d) the aggregate amount of Class B Charge-Offs
for all prior Distribution Dates, minus (e) the aggregate amount of Redirected
Principal Collections for all prior Distribution Dates Plus (f) the sum of the
aggregate amount reimbursed with respect to reductions of the Class B Invested
Amount through and including such Business Day pursuant to subsection 4.9(a) (x)
of the Agreement plus, with respect to such subsection, amounts applied thereto
pursuant to subsections 4.10(a) and (b), 4.17(b) and 4.18(b), (c) and (d) of the
Agreement, for the purpose of reimbursing amounts deducted pursuant to the
foregoing clauses (d) and (e); provided, however that the Class B Invested
Amount may not be reduced below zero.
Subject to the Agreement, payments of principal are limited to
the unpaid Class B Invested Amount of the Class B Securities, which may be less
than the unpaid balance of the Class B Securities pursuant to the terms of the
Agreement. All principal on the Class B Securities is due and payable no later
than the October 2007 Distribution Date (or if such day is not a Business Day,
the next succeeding Business Day) (the "Scheduled Series 1999-1 Termination
Date"). After the earlier to occur of (i) the Scheduled Series 1999-1
Termination Date or (ii) the day after the Distribution Date on which the Series
1999-1 Securities are paid in full (the "Series 1999-1 Termination Date")
neither the Trust nor the Transferor will have any further obligation to
distribute principal or interest on the Class B Securities. In the event that
the Class B Invested Amount is greater than zero on the Series Termination Date,
the Trustee will sell or cause to be sold, to the extent necessary, an amount of
interests in the Receivables or certain of the Receivables up to 110% of the
Class A Invested Amount and the Class B Invested Amount at the close of business
on such date (but not more than the total amount of Receivables allocable to the
Investor Securities), and shall pay the proceeds to the Class A Securityholders
pro rata in final payment of the Class A Securities and then to the Class B
Securityholders pro rata in final payment of the Class B Securities.
Unless the certificate of authentication hereon has been
executed by or on behalf of the Trustee, by manual signature, this Security
shall not be entitled to any benefit under the Agreement, or be valid for any
purpose.
IN WITNESS WHEREOF, the Transferor has caused this Security to
be duly executed.
METRIS RECEIVABLES, INC.
By:
Name:
Title:
Dated: _____________, ______
CERTIFICATE OF AUTHENTICATION
This is one of the Class B Securities referred to in the
within-mentioned Pooling and Servicing Agreement.
THE BANK OF NEW YORK
By:
Name:
Title:
EXHIBIT B
Metris Receivables, Inc. Metris Master Trust Monthly Report
Securityholder's Statement Series 1999-1 Month-Year
Section 5.2 Class A Class B Total
(i) Security Amount
(ii) Security Principal Distributed
(iii) Security Interest Distributed
(iv) Principal Collections
(v) Finance Charge Collections
Recoveries
Initial Interest Funding Account Deposits
Interest Earned on Accounts
Total Finance Charge Collections
Total Collections
(vi) Aggregate Amount of Principal Receivables
Invested Amount (End of Month)
Floating Allocation Percentage
Fixed/Floating Allocation Percentage
Invested Amount (Beginning of Month)
Average Daily Invested Amount
(vii) Receivable Delinquencies (as a % of Total Receivables) Current 30 Days
to 59 Days (1 to 29 Days Contractually Delinquent) 60 Days to 89 Days
(30 to 59 Days Contractually Delinquent) 90 Days and Over (60+ Days
Contractually Delinquent)
Total Receivables
(viii) Aggregate Investor Default Amount
As a % of Average Daily Invested Amount
(Annualized based on 366 days/year) (ix) Charge-Offs (x) Servicing Fee
(xi) Unreimbursed Redirected Principal Collections (xii) Excess Funding Account
Balance (xiii) New Accounts Added (xiv) Average Gross Portfolio Yield
Average Net Portfolio Yield
(xv) Minimum Base Rate
Excess Spread
(xvi) Principal Funding Account Balance (xvii) Accumulation Shortfall (xviii)
Scheduled date for the commencement of the Accumulation Period
Accumulation Period Length
(xix) Principal Funding Account Investment Proceeds Deposit
Required Reserve Account Amount
Available Reserve Account Amount
Covered Amount
(xx) Aggregate Interest Rate Caps Notional Amount
Deposit to the Caps Proceeds Account
(xxi) Policy Claim Amount
Exhibit 4(c)
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 1999-2 Securityholders
SERIES 1999-2 SUPPLEMENT
Dated as of September 22, 1999
to
AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT
Dated as of July 30, 1998
METRIS MASTER TRUST
$500,000,000 Floating Rate Asset Backed
Securities, Series 1999-2, Class A
$49,450,550 Asset Backed
Securities, Series 1999-2, Class B
TABLE OF CONTENTS
SECTION 1. Designation........................................................1
SECTION 2. Definitions........................................................1
SECTION 3. Reassignment Terms................................................21
SECTION 3A.Conveyance of Interest in Interest rate Cap; Cap
Proceeds Account..................................................22
SECTION 4. Delivery and Payment for the Series 1999-2 Securities.............25
SECTION 5. Form of Delivery of Series 1999-2 Securities; Denominations.......25
SECTION 6. Article IV of Agreement...........................................25
ARTICLE IV RIGHTS OF SECURITYHOLDERS AND ALLOCATION AND
APPLICATION OF COLLECTIONS
SECTION 4.4. Rights of Securityholders.............................26
SECTION 4.5. Collections and Allocation; Payments on Exchangeable
Transferor Security...................................26
SECTION 4.6. Determination of Interest for the Series 1999-2
Securities............................................27
SECTION 4.7. Determination of Principal Amounts....................28
SECTION 4.8. Shared Principal Collections..........................28
SECTION 4.9. Application of Funds..................................29
SECTION 4.10. Coverage of Required Amount for the Series 1999-2
Secruities............................................36
SECTION 4.11. Payment of Interest on Securities and Amounts Owing
to Insurer............................................37
SECTION 4.12. Payment of Security Principal.........................38
SECTION 4.13. Series Charge-Offs....................................39
SECTION 4.14. Pre-Funding Account...................................40
SECTION 4.15. Increases in Invested Amount..........................41
SECTION 4.16. Redirected Principal Collections For the Series
1999-2 Securities.....................................42
SECTION 4.17. Determination of LIBOR................................42
SECTION 4.18. Payment Reserve Account...............................43
SECTION 4.19. Principal Funding Account.............................44
SECTION 4.20. Accumulation Period Reserve Account...................45
SECTION 4.21. Postponement of Accumulation Period...................46
SECTION 4.22. Defeasance............................................47
SECTION 7. Article V of the Agreement........................................47
ARTICLE V DISTRIBUTIONS AND REPORTS TO INVESTOR SECURITY HOLDERS
SECTION 5.1 Distributions.........................................47
SECTION 5.2 Securityholders' Statement............................49
SECTION 8. Series 1999-2 Pay Out Events....................................51
SECTION 9.1. Series 1999-2 Termination ......................................53
SECTION 9.2. Principal Payment Period........................................53
SECTION 10. Legends; Transfer and Exchange; Restrictions on Transfer
of Series 1999-2 Securities.....................................54
SECTION 11. The Policy......................................................56
SECTION 12. Ratification of Agreement.......................................58
SECTION 13. Registration of the Class A Securities under the Securities
Exchange Act of 1934............................................58
SECTION 14. Counterparts....................................................58
SECTION 15. GOVERNING LAW...................................................58
SECTION 16. Instructions in Writing.........................................59
SECTION 17. Amendment for FASIT Purposes....................................59
SECTION 18. Paired Series...................................................59
SECTION 19. Third party Beneficiaries.......................................60
SERIES 1999-2 SUPPLEMENT, dated as of September 22, 1999 (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 Amended
and Restated Pooling and Servicing Agreement dated as of July 30, 1998 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 Securities.
Pursuant to this Series Supplement, the Transferor and the
Trustee shall create a new Series of Investor Securities and shall specify the
Principal Terms thereof.
SECTION 1. Designation. There is hereby created a Series of Investor Securities
to be issued pursuant to the Agreement and this Series Supplement to be known
generally as the "Series 1999-2 Securities." The Series 1999-2 Securities shall
be issued in two Classes, which shall be designated generally as the Floating
Rate Asset Backed Securities, Series 1999-2, Class A (the "Class A Securities"),
and the Asset Backed Securities, Series 1999-2, Class B (the "Class B
Securities"). Series 1999-2 shall be a Tier II Series.
SECTION 2. Definitions. In the event that any term or provision contained herein
shall conflict with or be inconsistent with any provision contained in the
Agreement, the terms and provisions of this Series Supplement shall govern with
respect to the Series 1999-2 Securities. All Article, Section or subsection
references herein shall mean Articles, Sections or subsections of the Agreement,
as amended or supplemented by this Series Supplement, except as otherwise
provided herein. All capitalized terms not otherwise defined herein are defined
in the Agreement. Each capitalized term defined herein shall relate only to the
Series 1999-2 Securities and no other Series of Securities issued by the Trust.
"Accumulation Period" shall mean the period commencing at the
close of business on the last day of the June 2005 Monthly Period or such later
date as is determined in accordance with Section 4.21 of the Agreement (unless
the Principal Payment Period has commenced prior to that date) and ending on the
first to occur of (a) the commencement of the Early Amortization Period, (b) the
commencement of the Principal Payment Period and (c) the Series 1999-2
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 Class A Invested Amount, (b) the sum of
the numerators with respect to all Classes of all Series then outstanding used
to calculate the allocation percentages applicable for Principal Collections of
all other Series which are not expected to be in their revolving periods during
such Monthly Period, and (c) the sum of the numerators used to calculate the
allocation percentages applicable for Principal Collections of all Classes of
other outstanding Series which are not allocating Shared Principal Collections
and are expected to be in their revolving periods during such Monthly Period.
"Accumulation Period Length" shall have the meaning assigned
such term in Section 4.21 of the Agreement.
"Accumulation Period Reserve Account" shall have the meaning
specified in subsection 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 subsection 4.12(a) of the Agreement with respect to the
Series 1999-2 Securities for the previous Monthly Period.
"Additional Interest" shall mean, at any time of
determination, the Class A Additional Interest.
"Adjusted Invested Amount" shall mean as of any Business Day,
(i) the Invested Amount minus (ii) the sum of the amounts then on deposit in the
Principal Account and the Principal Funding Account and the Series 1999-2
Percentage of the amount then on deposit in the Excess Funding Account.
"Aggregate Interest Rate Caps Notional Amount" shall mean with
respect to any date of determination an amount equal to the sum of the notional
amounts or equivalent amounts of all outstanding Cap Agreements, Replacement
Interest Rate Caps and Qualified Substitute Arrangements, each as of such date
of determination.
"Amortization Period" shall mean the period commencing on the
Amortization Period Commencement Date and continuing until the Series 1999-2
Termination Date.
"Amortization Period Commencement Date" shall mean the
earliest of (i) the first day of the Accumulation Period, (ii) the first day of
the Principal Payment Period and (iii) the Pay Out Commencement Date.
"Available Reserve Account Amount" shall mean, with respect to
any Transfer Date, the lesser of (a) the amount on deposit in the Accumulation
Period Reserve Account as of such date (before giving effect to any withdrawal
made or to be made pursuant to subsection 4.20(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 1999-2 Finance Charge Collections" shall
have the meaning specified in subsection 4.9(a) of the Agreement.
"Available Series 1999-2 Principal Collections" shall mean,
with respect to any Monthly Period, or portion thereof commencing on the
Amortization Period Commencement Date, an amount equal to the sum of (i) an
amount equal to the Fixed/Floating Percentage of all Principal Collections (less
the amount of Redirected Principal Collections) received during such Monthly
Period, (ii) any amount on deposit in the Excess Funding Account allocated to
the Series 1999-2 Securities pursuant to subsection 4.9(d) of the Agreement with
respect to such period, (iii) the sum of the aggregate amount allocated with
respect to the Series Default Amount with respect to such period and the Series
1999-2 Percentage of any unpaid Adjustment Payments paid pursuant to subsections
4.9(a)(iii) and 4.9(a)(iv) of the Agreement with respect to such period, any
reimbursements of unreimbursed Charge-Offs pursuant to subsections 4.9(a)(v) and
(x) of the Agreement with respect to such period plus in each case, amounts
applied with respect thereto pursuant to subsections 4.10(a) and (b), 4.16,
4.19(b), 4.20(b), (c) and (d) of the Agreement, (iv) the Policy Claim Amount
with respect to Potential Class A Charge-Offs for the related Distribution Date
paid pursuant to subsection 11(b) of this Series Supplement, (v) the aggregate
Shared Principal Collections allocated to the Series 1999-2 Securities pursuant
to Section 4.8 of the Agreement with respect to such period, subject to Section
9.2 of this Series Supplement, and (vi) the proceeds of the sale of all or a
portion of an Interest Rate Cap with respect to such Monthly Period.
"Base Rate" shall mean, with respect to any Monthly Period,
the sum of (i) the Class A Interest Rate as of the last day of such Monthly
Period, plus (ii) the product of 2.00% per annum and the percentage equivalent
of a fraction the numerator of which is the Adjusted Invested Amount and the
denominator of which is the Invested Amount, each as of the last day of such
Monthly Period.
"Cap Agreements" shall mean each interest rate cap agreement,
between the Transferor, the Trustee and a Cap Provider, as amended from time to
time, with respect to the Class A Interest Rate and any additional interest rate
protection agreement or agreements, entered into between the Transferor, the
Trustee and a Cap Provider, as the same may from time to time be amended,
restated, modified and in effect.
"Cap Proceeds Account" shall have the meaning specified in
subsection 3A(b) of this Series Supplement.
"Cap Provider" shall mean a third party cap provider having a
rating acceptable to the Rating Agencies.
"Cap Receipt Amount" shall mean, with respect to any Business
Day the amount on deposit in the Cap Proceeds Account.
"Cap Settlement Date" shall have the meaning specified in
subsection 3A(b) of this Series Supplement.
"Carryover Class A Interest" shall mean with respect to any
Business Day (a) any Class A Monthly Interest due but not paid on any previous
Distribution Date plus (b) any Class A Additional Interest due on the next
succeeding Distribution Date.
"Charge-Offs" shall mean the sum of Class A Charge-Offs and
Class B Charge-Offs.
"Class A Additional Interest" shall have the meaning specified
in subsection 4.6 of the Agreement.
"Class A Adjusted Invested Amount" shall mean, for any date of
determination, an amount not less than zero equal to the then current Class A
Invested Amount minus the sum of the Principal Funding Account Balance and the
amount then on deposit in the Principal Account for the benefit of the Class A
Securities on such date of determination.
"Class A Charge-Offs" shall have the meaning specified in
subsection 4.13(c) of the Agreement.
"Class A Floating Percentage" shall mean, with respect to any
Business Day, the percentage equivalent of a fraction, the numerator of which is
the Class A Adjusted Invested Amount as of the end of the preceding Business Day
and the denominator of which is the greater of (a) the sum of the aggregate
amount of Principal Receivables in the Trust and the amounts on deposit in the
Excess Funding Account as of the end of the preceding Business Day and (b) the
sum of the numerators with respect to all Classes of all Series then outstanding
used to calculate the applicable allocation percentage.
"Class A Initial Invested Amount" shall mean the aggregate
initial principal amount of the Class A Securities, which is $500,000,000.
"Class A Interest Rate" shall mean 0.52% per annum in excess
of LIBOR as determined on the related LIBOR Determination Date.
"Class A Interest Shortfall" shall have the meaning specified
in subsection 4.6 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 Initial Pre-Funded Amount plus the
amount 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 (excluding principal payments
made from the Pre-Funding Account) made to Class A Securityholders through and
including such Business Day, minus (c) the aggregate amount of Class A
Charge-Offs for all prior Distribution Dates, plus (d) the sum of the aggregate
amount reimbursed with respect to reductions of the Class A Invested Amount
through and including such Business Day pursuant to subsection 4.9(a)(v) of the
Agreement plus, with respect to such subsection, amounts applied thereto
pursuant to subsections 4.10(a) and (b), 4.16, 4.19(b) and 4.20(b), (c) and (d)
of the Agreement, for the purpose of reimbursing amounts deducted pursuant to
the foregoing clause (c); provided, however that the Class A Invested Amount may
not be reduced below zero.
"Class A Monthly Interest" shall mean the interest
distributable in respect of the Class A Securities as calculated in accordance
with subsection 4.6 of the Agreement.
"Class A Outstanding Principal Amount" shall mean with respect
to the Class A Securities, when used with respect to any Business Day, an amount
equal to (a) the Class A Initial Invested Amount minus (b) the aggregate amount
of principal payments (including principal payments made from the Pre-Funding
Account) made to the Class A Securityholders on or prior to such Business Day.
"Class A Percentage" shall mean a fraction the numerator of
which is the Class A Initial Invested Amount and the denominator of which is the
Initial Invested Amount.
"Class A Required Amount" shall mean the amount determined by
the Servicer for each Business Day equal to the excess, if any, of (x) the sum
of (i) the Class A Monthly Interest for the Interest Accrual Period beginning in
the then current Monthly Period, (ii) any Carryover Class A Interest, (iii) the
Class A Percentage of the Servicing Fee for the then current Monthly Period,
(iv) the Class A Floating Percentage of the Default Amount, if any, for such
Business Day and, to the extent not previously paid, for any previous Business
Day in such Monthly Period and (v) the Class A Percentage of the Series 1999-2
Percentage of any Adjustment Payment the Transferor is required but fails to
make pursuant to subsection 3.8(a) of the Agreement on such Business Day and on
each previous Business Day during such Monthly Period over (y) the Available
Series 1999-2 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 (v)
above with respect to such Business Days and all previous Business Days in such
Monthly Period.
"Class A Securities" shall mean any of the securities executed
by the Transferor and authenticated by or on behalf of the Trustee,
substantially in the form of Exhibit A-1 hereto.
"Class A Securityholder" shall mean the Person in whose name a
Class A Security is registered in the Security Register.
"Class A Securityholders' Interest" shall mean the portion of
the Series 1999-2 Securityholders' Interest evidenced by the Class A Security.
"Class B Charge-Offs" shall have the meaning specified in
subsection 4.13(a) of the Agreement.
"Class B Excess Amounts" shall mean with respect to any
Business Day, the excess of the Class B Invested Amount over the Stated Class B
Amount on such day after taking into account all adjustments of the Class A
Adjusted Invested Amount on such day.
"Class B Fixed/Floating Percentage" shall mean for any
Business Day the percentage equivalent of a fraction, the numerator of which is
the Class B Invested Amount at the end of the last day of the Revolving Period
and the denominator of which is the greater of (a) the sum of the aggregate
amount of Principal Receivables and the amount on deposit in the Excess Funding
Account as of the end of the preceding Business Day and (b) the sum of the
numerators with respect to all Classes of all Series then outstanding used to
calculate the applicable allocation percentage.
"Class B Floating Percentage" shall mean with respect to any
Business Day the percentage equivalent of a fraction, the numerator of which is
the Class B Invested Amount at the end of the preceding Business Day and the
denominator of which is the greater of (a) the sum of the aggregate amount of
Principal Receivables and the amount on deposit in the Excess Funding Account at
the end of the preceding Business Day and (b) the sum of the numerators with
respect to all Classes of all Series then outstanding used to calculate the
applicable allocation percentage.
"Class B Initial Invested Amount" shall mean the aggregate
initial principal amount of the Class B Securities, which is $49,450,550.
"Class B Interest Shortfall" shall have the meaning specified
in subsection 4.6(d) 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
initial principal balance of the Class B Securities, minus (b) the aggregate
amount of principal payments made to Class B Securityholders through and
including such Business Day, minus (c) the aggregate amounts by which the
Transferor has reduced the Class B Invested Amount pursuant to subsection
4.12(b) of the Agreement, minus (d) the aggregate amount of Class B Charge-Offs
for all prior Distribution Dates, minus (e) the aggregate amount of Redirected
Principal Collections for all prior Distribution Dates plus (f) the sum of the
aggregate amount reimbursed with respect to reductions of the Class B Invested
Amount through and including such Business Day pursuant to subsection 4.9(a)(x)
of the Agreement plus, with respect to such subsection, amounts applied thereto
pursuant to subsections 4.10(a) and (b), 4.19(b) and 4.20(b), (c) and (d) of the
Agreement, for the purpose of reimbursing amounts deducted pursuant to the
foregoing clauses (d) and (e); provided, however that the Class B Invested
Amount may not be reduced below zero.
"Class B Outstanding Principal Amount" shall mean, when used
with respect to any Business Day, an amount equal to (a) the Class B Initial
Invested Amount minus (b) the aggregate amount of principal payments made to
Class B Securityholders prior to such Business Day.
"Class B Principal" shall mean the principal distributable in
respect of the Class B Securities as specified in subsection 4.7(b) of the
Agreement.
"Class B Principal Payment Commencement Date" shall mean the
earlier of (a) (i) with respect to the Accumulation Period, the Scheduled Final
Payment Date or (ii) during the Early Amortization Period or Principal Payment
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 1999-2
Securities remaining after payments have been made to the Class A Securities on
such Distribution Date, the Distribution Date following the first Distribution
Date on which the Class A Invested Amount is paid in full and (b) the
Distribution Date following a sale or repurchase of the Receivables as set forth
in Section 2.4(e), 9.2, 10.2(a), 12.1 or 12.2 of the Agreement or Section 3 of
this Series Supplement.
"Class B Securities" shall mean any of the securities executed
by the Transferor and authenticated by or on behalf of the Trustee,
substantially in the form of Exhibit A-2 hereto.
"Class B Securityholder" shall mean the Person in whose name
Class B Securities is registered in the Security Register.
"Class B Securityholders' Interest" shall mean the portion of
the Series 1999-2 Securityholders' Interest evidenced by the Class B Security.
"Closing Date" shall mean September 22, 1999.
"Controlled Accumulation Amount" shall mean, for any Transfer
Date with respect to the Accumulation Period prior to the payment in full of the
Class A Invested Amount, $41,666,667; provided, however, that if the
Accumulation Period Length is determined to be less than 12 months pursuant to
Section 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 will be equal to (i) the product
of (x) the Class A Initial Invested Amount and (y) the Accumulation Period
Factor for the Monthly Period preceding such Transfer Date divided by (ii) the
Required Accumulation Factor Number.
"Controlled Deposit Amount" shall mean, with respect to any
Transfer Date, the sum of (a) the Controlled Accumulation Amount for such
Transfer Date and (b) any existing Accumulation Shortfall.
"Covered Amount" shall mean, with respect to any Interest
Accrual Period during the Accumulation Period prior to the payment in full of
the Class A Invested Amount, the product of (a) the Class A Interest Rate in
effect with respect to such Interest Accrual Period, (b) a fraction the
numerator of which is the actual number of days in the related Interest Accrual
Period and the denominator of which is 360 and (c) the Principal Funding Account
Balance (up to the Class A Invested Amount) as of the last day of the Monthly
Period preceding the Monthly Period in which such Interest Accrual Period ends.
"Default Amount" shall mean, (i) on any Business Day other
than the Default Recognition Date, the aggregate amount of Principal Receivables
in Accounts which became Defaulted Accounts on such Business Day and (ii) on any
Default Recognition Date the aggregate amount of Principal Receivables in
Accounts which became Defaulted Accounts during the then current Monthly Period
(other than such Accounts which were included in clause (i)).
"Default Recognition Allocation Percentage" shall mean, with
respect to each Default Recognition Date, the percentage equivalent of a
fraction, the numerator of which is the Weighted Average Invested Amount for the
related Monthly Period and the denominator of which is the Weighted Average
Principal Receivables in the Trust for the related Monthly Period.
"Default Recognition Date" shall mean the last day of each
calendar month; provided, however, that with respect to any Monthly Period the
"related Default Recognition Date" shall mean the Default Recognition Date
occurring closest to the last day of such Monthly Period and any amounts
allocated or applied on such Default Recognition Date shall be deemed to apply
to the related Monthly Period.
"Distribution Date" shall mean October 20, 1999, and the
twentieth day of each month thereafter, or if such day is not a Business Day,
the next succeeding Business Day.
"DTC" shall mean The Depository Trust Company.
"Early Amortization Period" shall mean the period beginning on
the earlier of (a) the day on which a Pay Out Event occurs or is deemed to have
occurred and (b) the Scheduled Final Payment Date if the Class A Invested Amount
has not been paid in full on such date, and ending on the earlier of (i) the
date on which the Class A Invested Amount and the Class B Invested Amount have
been paid in full and (ii) the Scheduled Series 1999-2 Termination Date.
"Enhancement" shall mean, with respect to the Class A
Securities, the Policy and the Interest Rate Cap for the benefit of the Class A
Securityholders and the subordination of the Class B Invested Amount.
"Excess Finance Charge Collections" shall mean, with respect
to any Business Day, as the context requires, either (x) the amount described in
subsection 4.9(a)(xiii) of the Agreement allocated to the Series 1999-2
Securities but available to cover shortfalls in amounts paid from Finance Charge
Collections for other Series, if any, or (y) the aggregate amount of Finance
Charge Collections allocable to other Series in excess of the amounts necessary
to make required payments with respect to such Series, if any, and available to
cover shortfalls with respect to the Series 1999-2 Securities.
"Excess Spread Percentage" shall mean with respect to any
Monthly Period the excess of the Portfolio Yield for such Monthly Period over
the Base Rate as determined at the close of business on the Distribution Date in
such Monthly Period; provided, however, that with respect to the September 1999
Monthly Period for purposes of determining the Excess Spread Percentage the
Available Series 1999-2 Finance Charge Collections shall include the initial
deposit of $2,000,000 to the Interest Funding Account made on the Closing Date
pursuant to subsection 4.5(a) of the Agreement.
"FASIT" shall have the meaning specified in Section 16 of this
Series Supplement.
"Fixed/Floating Percentage" shall mean for any Business Day
the percentage equivalent of a fraction, the numerator of which is the Invested
Amount at the end of the last day of the Revolving Period and the denominator of
which is the greater of (a) the sum of the aggregate amount of Principal
Receivables and the amount on deposit in the Excess Funding Account as of the
end of the preceding Business Day and (b) the sum of the numerators with respect
to all Classes of all Series then outstanding used to calculate the applicable
allocation percentage; provided, however, that, on and after the Pay Out
Commencement Date, with respect to the allocations of Collections of Finance
Charge Receivables, the numerator used in the above calculation shall be the
Adjusted Invested Amount as of the day immediately preceding the Pay Out
Commencement Date.
"Floating Percentage" shall mean for any Business Day the sum
of the applicable Class A Floating Percentage and Class B Floating Percentage
for such Business Day.
"Full Initial Invested Amount" shall mean $549,450,550.
"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 (2) the first business day of the January
2000 Monthly Period.
"Initial Invested Amount" shall mean an amount equal to the
sum of (i) the Class A Initial Invested Amount less the Initial Pre-Funded
Amount, plus the amount of any withdrawals from the Pre-Funding Account (a)
during the Funding Period in connection with the addition of receivables to the
Trust or (b) at the end of the Funding Period for deposit into the Excess
Funding Account and (ii) the Class B Initial Invested Amount.
"Initial Pre-Funded Amount" shall mean $75,000,000.
"Initial Principal Payment Date" shall have the meaning
specified in Section 9.2 of this Series Supplement.
"Insurance Agreement" shall mean the Insurance and
Reimbursement Agreement, dated as of September 22, 1999 among the Insurer, the
Trustee, the Servicer and the Transferor.
"Insurer" shall mean MBIA Insurance Corporation, a New York
domiciled insurance company.
"Interest Accrual Period" shall mean, with respect to a
Distribution Date, the period from and including the preceding Distribution Date
to but excluding such Distribution Date; provided, however, that the initial
Interest Accrual Period shall be the period from the Closing Date to but
excluding the initial Distribution Date.
"Interest and Servicing Fee Deficiency" shall mean, with
respect to any Monthly Period, an amount equal to the excess of (a) the sum of
the Class A Monthly Interest for the Interest Accrual Period beginning in such
Monthly Period, the Carryover Class A Monthly Interest and the Servicing Fee for
such Monthly Period over (b) the Available Series 1999-2 Finance Charge
Collections applied to the payment thereof pursuant to subsections 4.9(a)(i) and
(ii) of the Agreement, the amount of Transferor Finance Charge Collections and
Excess Finance Charge Collections allocated thereto pursuant to Section 4.10 of
the Agreement, the amount of Redirected Principal Collections applied with
respect thereto pursuant to Section 4.16 of the Agreement, the amount of
Principal Funding Account Investment Proceeds applied with respect thereto
pursuant to subsection 4.19(b) of the Agreement, the Pre-Funded Amount and
amounts withdrawn from the Accumulation Period Reserve Account and applied with
respect thereto pursuant to subsections 4.20(b) and (c) of the Agreement.
"Interest Rate Caps" shall mean the interest rate caps
provided pursuant to Cap Agreements by one or more Cap Providers to the Trustee
on behalf of any of the Securityholders which shall entitle the Trust to receive
monthly payments equal to the product of (i) the positive difference, if any,
between LIBOR in effect for each applicable Interest Accrual Period and 9.25%,
(ii) the notional amount of such interest rate cap and (iii) the actual number
of days in the Interest Period divided by 360.
"Invested Amount" shall mean, when used with respect to any
Business Day, an amount equal to the sum of (a) the Class A Invested Amount as
of such Business Day and (b) the Class B Invested Amount as of such Business
Day.
"Investment Earnings" shall mean, with respect to any Business
Day, the investment earnings on amounts on deposit in (i) the Payment Reserve
Account, deposited in the Collection Account pursuant to subsection 4.18(c),
(ii) the Principal Funding Account, deposited in the Collection Account pursuant
to subsection 4.19(b) and (iii) the Accumulation Period Reserve Account,
deposited in the Collection Account pursuant to subsection 4.20(b).
"Investor Securities" shall mean the Class A Securities and
the Class B Security.
"Investor Percentage" shall mean, for any Business Day, (a)
with respect to Finance Charge Collections prior to the Pay Out Commencement
Date, Receivables in Defaulted Accounts at any time and Principal Collections
during the Revolving Period, the Floating Percentage and (b) with respect to
Finance Charge Collections on and after the Pay Out Commencement Date and
Principal Collections during the Amortization Period, the Fixed/Floating
Percentage.
"Investor Securityholder" shall mean the Holder of record of
an Investor Security of Series 1999-2.
"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 (i) September 20, 1999
with respect to the period from the Closing Date through October 19, 1999 and
(ii) the second Business Day prior to the commencement of each Interest Accrual
Period beginning with Interest Accrual Period commencing on October 20, 1999.
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
1999-2 Securities shall begin on and include the Closing Date and shall end on
and include September 30, 1999.
"Negative Carry Amount" shall have the meaning specified in
subsection 4.10(a) of the Agreement.
"Order" shall have the meaning specified in Section 11(b) of
the Agreement.
"Paired Series" shall have the meaning specified in Section 17
of this Series Supplement.
"Pay Out Commencement Date" shall mean the date on which a
Trust Pay Out Event is deemed to occur pursuant to Section 9.1 of the Agreement
or a Series 1999-2 Pay Out Event is deemed to occur pursuant to Section 8 of
this Series Supplement
"Paying Agent" shall mean, for the Series 1999-2 Securities,
initially The Bank of New York and, in certain limited circumstances, the Banque
Generale du Luxembourg, S.A.
"Payment Reserve Account" shall have the meaning specified in
subsection 4.18(a) of the Agreement.
"Policy" shall mean the Financial Guaranty Insurance Policy
issued by the Insurer.
"Policy Claim Amount" shall have the meaning specified in
subsection 11(b) of this Series Supplement.
"Portfolio Adjusted Yield" shall mean, with respect to any
Monthly Period, the average of the percentages obtained for each of the three
preceding Monthly Periods by subtracting the Base Rate for such Monthly Period
from the Portfolio Yield for such Monthly Period.
"Portfolio Yield" shall mean for the Series 1999-2 Securities,
with respect to any Monthly Period, the annualized percentage equivalent of a
fraction, the numerator of which is an amount equal to the sum of the aggregate
amount of Available Series 1999-2 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
Series Default Amount for such Monthly Period and the Series 1999-2 Percentage
of any Adjustment Payments which the Transferor is required but fails to make
pursuant to the Agreement for such Monthly Period, and the denominator of which
is the average daily Invested Amount plus the Pre-Funded Amount during the
preceding Monthly Period; provided, however, that Excess Finance Charge
Collections applied for the benefit of the Series 1999-2 Securityholders may be
added to the numerator if the Transferor shall have provided ten Business Days
prior written notice of such action to each Rating Agency and the Transferor,
the Servicer and the Trustee shall have received notification in writing that
such action will not result in Standard & Poor's reducing or withdrawing its
then existing rating of the Investor Securities (without giving effect to the
Policy) of any outstanding Series or Class with respect to which it is a Rating
Agency.
"Potential Class A Charge-Offs" shall have the meaning
specified in subsection 4.13(b) of the Agreement.
"Preference Amount" shall have the meaning specified in
Section 11(b) of this Series Supplement.
"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 Payment Event" shall mean the delivery by the
Servicer of a notice to the Trustee of its election not to extend the Initial
Principal Payment Date in accordance with Section 9.2 of this Supplement.
"Principal Payment Period" shall mean the period beginning on
the Initial Principal Payment Date and ending on the earliest to occur of (i)
the commencement of the Early Amortization Period, (ii) the payment in full of
the Invested Amount and (iii) the Series 1999-2 Termination Date.
"Principal Shortfalls" shall mean on any Business Day (x) for
Series 1999-2, (i) during the Revolving Period, zero (ii) during the Principal
Payment Period prior to the July 2005 Monthly Period, zero; provided, however,
that following allocation of Shared Principal Collections to all other Series
that are not Tier II Series in their Tier II Periods, the "Principal Shortfall"
for Series 1999-2 shall be the Invested Amount of the Class then receiving
principal payments after the application of Principal Collections on such
Business Day; provided, further, that if the Principal Shortfalls for all Tier
II Series in their Tier II Periods exceed the amount of Shared Principal
Collections remaining after application to all Series that are not Tier II
Series in their Tier II Periods, such remaining Shared Principal Collections
shall be allocated to each Tier II Series in its Tier II Period pro rata based
on the Principal Shortfall, if any, for such Tier II Series, (iii) 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 (iv) 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.
"Qualified Substitute Arrangement" shall mean an arrangement
in addition to or in substitution for any prior interest rate cap arrangement
satisfactory to the Rating Agencies.
"Rating Agencies" shall mean Standard & Poor's and Moody's.
"Receipt" and "Received" shall have the meanings specified in
Section 11(b) of this Series Supplement.
"Redirected Principal Collections" shall have the meaning
specified in Section 4.16 of the Agreement.
"Reference Banks" shall mean four major banks in the London
interbank market selected by the Trustee.
"Reimbursement Required Amount" shall have the meaning
specified in subsection 4.01(b) of the Agreement.
"Replacement Event" shall have the meaning specified in
subsection 11(c) of this Series Supplement.
"Replacement Interest Rate Cap" shall mean one or more
Interest Rate Caps, which in combination with all other Interest Rate Caps then
in effect, after giving effect to any planned cancellations of any presently
outstanding Interest Rate Caps satisfies the Transferor's covenant contained in
Section 3A of this Series Supplement to maintain Interest Rate Caps.
"Required Accumulation Factor Number" shall be equal to a
fraction, rounded upwards to the nearest whole number, the numerator of which is
one and the denominator of which is equal to the lowest monthly principal
payment rate on the Receivables, expressed as a decimal, for the 12 months
preceding the date of such calculation.
"Required Amount" shall have the meaning specified in
subsection 4.10(b) of the Agreement.
"Required Reserve Account Amount" shall mean, for any date on
or after the Reserve Account Funding Date an amount equal to (a) 0.50% of the
Class A Invested Amount or (b) any other amount designated by the Transferor;
provided, that if such designation is of a lesser amount, the Transferor shall
have (i) provided the Servicer and the Trustee with evidence that the Rating
Agency Condition has been satisfied and (ii) the Transferor shall have delivered
to the Trustee a certificate of an authorized officer to the effect that, based
on the facts known to such officer at such time, in the reasonable belief of the
Transferor, such designation will not cause a Pay Out Event or an event that,
after giving of notice or the lapse of time, would cause a Pay Out Event to
occur with respect to Series 1999-2.
"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 Final Payment Date" shall mean the July 2006
Distribution Date.
"Scheduled Series 1999-2 Termination Date" shall mean the
January 2010 Distribution Date.
"Series 1999-2" shall mean the Series of the Metris Master
Trust represented by the Series 1999-2 Securities.
"Series 1999-2 Pay Out Event" shall have the meaning specified
in Section 8 of this Series Supplement.
"Series 1999-2 Percentage" shall mean, on any date of
determination, the percentage equivalent of a fraction the numerator of which is
the Invested Amount and the denominator of which is the sum of the Invested
Amounts relating to all other Series then outstanding.
"Series 1999-2 Securities" shall mean the Class A Securities
and the Class B Securities.
"Series 1999-2 Securityholder" shall mean the holder of record
of any Series 1999-2 Security.
"Series 1999-2 Securityholders' Interest" shall have the
meaning specified in Section 4.4 of the Agreement.
"Series 1999-2 Termination Date" shall mean the earlier to
occur of (i) the day after the Distribution Date on which the Series 1999-2
Securities and amounts owing to the Insurer hereunder are paid in full, or (ii)
the Scheduled Series 1999-2 Termination Date.
"Series Default Amount" shall mean, with respect to each
Business Day, an amount equal to the product of the Default Amount identified
since the prior reporting date and the Floating Percentage applicable for such
Business Day.
"Series Servicing Fee Percentage" shall mean 2.00% per annum.
"Servicing Fee" shall mean for any Monthly Period, an amount
equal to the product of (i) a fraction the numerator of which is the actual
number of days in such Monthly Period and the denominator of which is 365 or
366, (ii) the Series Servicing Fee Percentage and (iii) the Adjusted Invested
Amount as of the beginning of the day on the first day of such Monthly Period,
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 1999-2 Securities which,
in accordance with subsections 4.9(b) and 4.9(c)(ii) of the Agreement, may be
applied in accordance with Section 4.3(d) of the Agreement or (b) the amounts
allocated to the investor securities of other Series which the applicable Series
Supplements for such Series specify are to be treated as "Shared Principal
Collections" and which may be applied to cover Principal Shortfalls with respect
to the Series 1999-2 Securities.
"Spread Account" shall have the meaning specified in the
Insurance Agreement.
"Spread Account Maximum" shall have the meaning specified in
the Insurance Agreement.
"Stated Class B Amount" shall mean the greater of (i) zero and
(ii) a number rounded to the nearest Dollar equal to 9.89% of the Class A
Adjusted Invested Amount; provided, however, that in no event shall the Stated
Class B Amount be less than $16,483,517, except that if the Class A Adjusted
Invested Amount is equal to zero, the Stated Class B Amount shall be zero; and
provided further that during any Early Amortization Period or Principal Payment
Period, the Stated Class B Amount shall be equal to the Stated Class B Amount
immediately preceding the commencement of the Early Amortization Period or
Principal Payment Period.
"Tier II Period" shall mean (i) for Series 1999-2, the period
beginning on the first day of the Monthly Period preceding the Initial Principal
Payment Date (if such day is prior to July 1, 2005) and ending on July 1, 2005
and (ii) for each other Tier II Series the period specified in the applicable
Supplement for such Series.
"Tier II Series" shall mean Series 1999-2 and each other
Series designated as such in the Supplement for such Series.
"Termination Payment Date" shall mean the earlier of the first
Distribution Date following the liquidation or sale of the Receivables as a
result of an Insolvency Event and the occurrence of the Scheduled Series 1999-2
Termination Date.
"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 1999-2 Percentage.
"Transferor Retained Securities" shall mean investor
securities of any Series, which may include the Class B Securities, which the
Transferor retains, but only to the extent that and for so long as the
Transferor is the Holder of such Securities.
"Transferor Retained Finance Charge Collections" shall mean
with respect to each Business Day other than a Default Recognition Date, the
amount specified in subsection 4.9(a)(xiii) of the Agreement.
"Weighted Average Invested Amount" shall mean with respect to
any Monthly Period the weighted average Adjusted Invested Amount based on the
Adjusted Invested Amount outstanding on each Business Day after giving effect to
all transactions on such Business Day from but excluding the Default Recognition
Date related to the preceding Monthly Period to and including the Default
Recognition Date with respect to such Monthly Period.
"Weighted Average Principal Receivables" shall mean with
respect to any Monthly Period the weighted average sum of the total amount of
Principal Receivables and the amount on deposit in the Excess Funding Account on
each Business Day after giving effect to all transactions on such Business Day
from but excluding the Default Recognition Date related to the preceding Monthly
Period to and including the Default Recognition Date with respect to such
Monthly Period.
SECTION 3. Reassignment Terms. The Series 1999-2 Securities shall be subject to
termination by the Transferor at its option, in accordance with the terms
specified in subsection 12.2(a) of the Agreement, on any Distribution Date on or
after the Distribution Date on which the Class A Invested Amount would be
reduced to an amount less than or equal to 10% of the highest Class A Invested
Amount during the Revolving Period; provided, that all amounts due and owing to
the Insurer and unreimbursed draws on the Policy, together with interest
thereon, have been paid. The deposit required in connection with any such
termination and final distribution shall be equal to the unpaid Class A Invested
Amount plus accrued and unpaid interest on the Class A Securities through the
day prior to the Distribution Date on which the final distribution occurs, in
each case after giving effect to any payments on such date.
SECTION 3A. Conveyance of Interest in Interest Rate Cap; Cap
Proceeds Account. (a) The Transferor hereby covenants and agrees that, on or
prior to the issuance of the Class A Securities, it shall obtain and at all
times prior to the close of business on the Series 1999-2 Termination Date
maintain one or more Interest Rate Caps whose notional amounts singly or taken
as a group equal or exceed the Class A Outstanding Principal Amount. The
Transferor hereby assigns, sets-over, conveys, pledges and grants a security
interest and lien (free and clear of all other Liens) to the Trustee for the
benefit of the Series 1999-2 Securityholders, in all of the Transferor's right,
title and interest now existing or hereafter arising in and to the Cap
Agreements and the Interest Rate Caps arising thereunder, together with the Cap
Proceeds Account and all other proceeds thereof, as collateral security for the
benefit of the Series 1999-2 Securityholders. The Transferor hereby further
agrees to execute all such instruments, documents and financing statements and
take all such further action requested by the Trustee to evidence and perfect
the assignment of the Cap Agreements and the Interest Rate Caps pursuant to this
Section 3A. The Transferor agrees that each Interest Rate Cap shall provide for
payments to the Trustee and that the Trust's interest in respect of such
payments shall be deposited into the Cap Proceeds Account.
(b) The Trustee, for the benefit of the Series 1999-2 Securityholders, shall
establish and maintain with the Trustee, in the name of the Trustee, on behalf
of the Securityholders, a certain segregated trust account (the "Cap Proceeds
Account"). All amounts paid pursuant to the Interest Rate Caps or any Qualified
Substitute Arrangement on any Business Day (a "Cap Settlement Date") shall be
deposited in the Cap Proceeds Account. Any amounts paid pursuant to the Interest
Rate Caps or any Qualified Substitute Arrangement on the Transfer Date in any
Monthly Period shall be treated for all purposes herein, including application
in accordance with subsection 4.9(a) of the Agreement, as if they had been
received on the last Business Day of the preceding Monthly Period. Funds in the
Cap Proceeds Account shall be invested at the direction of the Servicer, in Cash
Equivalents with maturities not later than the next succeeding Business Day. Any
earnings on such invested funds shall be deposited and held in the Cap Proceeds
Account and applied in the same manner and priority as payments pursuant to the
Interest Rate Caps.
(c) In the event that the Cap Provider defaults in its obligation to make a
payment to the Trustee under one or more Cap Agreements on any Cap Settlement
Date, the Trustee shall make a demand on such Cap Provider, or any guarantor, if
applicable, demanding payment by 12:30 p.m., New York time, on such date. The
Trustee shall give notice to the Securityholders upon the continuing failure by
any Cap Provider to perform its obligation during the two Business Days
following a demand made by the Trustee on such Cap Provider, and shall take such
action with respect to such continuing failure directed to be taken by the
Securityholders.
(d) In the event that the Cap Provider is downgraded below the rating required
by a Rating Agency, then within 30 days after receiving notice of such decline
in the creditworthiness of the Cap Provider as determined by the Rating
Agencies, either (x) the Cap Provider, with the prior written confirmation of
the Rating Agencies that such arrangement will not result in the reduction or
withdrawal of the rating of the Class A Securities (without giving effect to the
Policy) will enter into an arrangement the purpose of which shall be to assure
performance by the Cap Provider of its obligations under the Interest Rate Cap;
or (y) the Servicer shall at its option either (i) with the prior written
confirmation of the Rating Agencies that such action will not result in a
reduction or withdrawal of the rating of the Class A Securities (without giving
effect to the Policy), cause the Cap Provider to pledge securities in the manner
provided by applicable law which shall be held by the Trustee or its agent free
and clear of the Lien of any third party, in a manner conferring on the Trustee
a perfected first Lien in such securities securing the Cap Provider's
performance of its obligations under the applicable Interest Rate Cap, or (ii)
provided that a Replacement Interest Rate Cap or Qualified Substitute
Arrangement meeting the requirements of Section 3A(e) has been obtained, direct
the Trustee (A) to provide written notice to the Cap Provider of its intention
to terminate the applicable Interest Rate Cap within such 30-day period and (B)
to terminate the applicable Interest Rate Cap within such 30-day period, to
request the payment to it of all amounts due to the Trust under the applicable
Interest Rate Cap through the termination date and to deposit any such amounts
so received, on the day of receipt, to the Cap Proceeds Account for the benefit
of the Class A Securityholders, or (iii) establish any other arrangement
(including an arrangement or arrangements in addition to or in substitution for
any prior arrangement made in accordance with the provisions of this Section
3A(d)) satisfactory to the Rating Agencies such that the Rating Agencies will
not reduce or withdraw the rating of the Class A Securities (without giving
effect to the Policy) (a "Qualified Substitute Arrangement"); provided, however,
that in the event at any time any alternative arrangement established pursuant
to clause (x) or (y)(i) or (y)(iii) above shall cease to be satisfactory to the
Rating Agencies then the provisions of this Section 3A(d) shall again be applied
and in connection therewith the 30-day period referred to above shall commence
on the date the Servicer receives notice of such cessation or termination, as
the case may be.
(e) Unless an alternative arrangement pursuant to clause (x) or (y)(i) of
Section 3A(d) is being established, the Servicer shall use its best efforts to
obtain a Replacement Interest Rate Cap or Qualified Substitute Arrangement
meeting the requirements of this Section 3A(e) during the 30-day period referred
to in Section 3A(d). The Trustee shall not terminate the Interest Rate Cap
unless, prior to the expiration of the 30-day period referred to in said Section
3A(d), the Servicer delivers to the Trustee (i) a Replacement Interest Rate Cap
or Qualified Substitute Arrangement, (ii) to the extent applicable, an Opinion
of Counsel as to the due authorization, execution and delivery and validity and
enforceability of such Replacement Interest Rate Cap or Qualified Substitute
Arrangement, as the case may be, and (iii) a letter from each of the Rating
Agencies confirming that the termination of the Interest Rate Cap and its
replacement with such Replacement Interest Rate Cap or Qualified Substitute
Arrangement will not adversely affect its rating of the Class A Securities
(without giving effect to the Policy).
(f) The Servicer shall notify the Trustee and the Rating Agencies within five
Business Days after obtaining knowledge that the senior unsecured debt rating of
the Interest Rate Cap Provider has been withdrawn or reduced by either of the
Rating Agencies.
(g) Notwithstanding the foregoing, the Servicer may at any time obtain a
Replacement Interest Rate Cap, provided that the Servicer delivers to the
Trustee (i) an Opinion of Counsel as to the due authorization, execution and
delivery and validity and enforceability of such Replacement Interest Rate Cap
and (ii) a letter from each of the Rating Agencies confirming that the
termination of the then current Interest Rate Cap and its replacement with such
Replacement Interest Rate Cap will not adversely affect its rating of the Class
A Securities (without giving effect to the Policy).
(h) The Trustee, on behalf of the Securityholders, upon notification from the
Servicer shall, sell all or a portion of the Interest Rate Caps subject to the
following conditions having been met:
(x) the Aggregate Interest Rate Caps Notional Amount
after giving effect to such sale shall equal or exceed the Class A
Outstanding Principal Amount as of the date of such sale after giving
effect to all payments and allocations made pursuant to this Agreement;
(y) such sale will not result in a downgrading or
withdrawal of the then current rating on the Class A Securities by the
Rating Agencies (without giving effect to the Policy); and
(z) the minimum notional amount denomination of any
Interest Rate Cap to be sold is $500,000,000.
The Servicer shall have the duty of obtaining a fair market
value price for the sale of the Trust's rights under any Interest Rate Cap,
notifying the Trustee of prospective purchasers and bids, and selecting the
purchaser of such Interest Rate Cap. The Trustee upon receipt of the purchase
price in the Collection Account shall execute all documentation necessary to
effect the transfer of the Trust's rights under the Interest Rate Cap and to
release the Lien of the Trustee on the Interest Rate Cap to the extent of such
sale and proceeds thereof.
Funds deposited in the Collection Account in respect of the
sale of all or a portion of an Interest Rate Cap shall be applied as Principal
Collections allocable to Series 1999-2 and shall be applied on the next
Distribution Date in accordance with subsections 4.7(a) and (b) and 4.9(b) and
(c).
SECTION 4. Delivery and Payment for the Series 1999-2 Securities. The Transferor
shall execute and deliver the Series 1999-2 Securities to the Trustee for
authentication in accordance with Section 6.1 of the Agreement. The Trustee
shall deliver the Series 1999-2 Securities to or upon the order of the
Transferor when authenticated in accordance with Section 6.2 of the Agreement.
SECTION 5. Form of Delivery of Series 1999-2 Securities; Denominations. (a) The
Class A Securities, shall be delivered as Book-Entry Securities as provided in
Sections 6.1 and 6.10 of the Agreement. The Class A Securities shall be issued
in minimum denominations of $1,000 and integral multiples thereof. The Class B
Security shall be delivered as a Registered Security as provided in Section 6.1
of the Agreement.
(b) The Depositary for Series 1999-2 shall be DTC and the Class A Securities
shall be initially registered in the name of Cede & Co., its nominee, and will
initially be held by the Trustee as custodian for DTC.
SECTION 6. Article IV of 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 1999-2
Securities:
ARTICLE IV
RIGHTS OF SECURITYHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS
SECTION 4.4. Rights of Securityholders. The Series 1999-2
Securities shall represent undivided interests in the Trust, including the right
to receive, to the extent necessary to make the required payments with respect
to such Series 1999-2 Securities at the times and in the amounts specified in
this Agreement, (a) the Floating Percentage and the Fixed/Floating Percentage
(as applicable from time to time) of Collections (including Finance Charge
Collections) available in the Collection Account, (b) funds allocable to the
Series 1999-2 Securities on deposit in the Excess Funding Account, (c) funds on
deposit in the Interest Funding Account, the Principal Account, the Principal
Funding Account, the Accumulation Period Reserve Account, the Distribution
Account, the Cap Proceeds Account, the Payment Reserve Account and the
Pre-Funding Account and (d) in the case of Class A Securityholders only, the
proceeds of any draws on the Policy (for such Series, the "Series 1999-2
Securityholders' Interest"). The Class B Securities shall be subordinated to the
Class A Securities. Except in connection with the payment of Class B Excess
Amounts, the Class B Securities will not have the right to receive payments of
principal until the Class A Invested Amount has been paid in full.
SECTION 4.5. Collections and Allocation; Payments on
Exchangeable Transferor Security.
(a) Collections and Allocations. The Servicer will apply or will instruct the
Trustee to apply all funds on deposit in the Collection Account and the Excess
Funding Account allocable to the Series 1999-2 Securities, and all funds on
deposit in the Interest Funding Account, the Principal Account, the Cap Proceeds
Account, the Principal Funding Account, the Accumulation Period Reserve Account,
the Distribution Account, the Payment Reserve Account and the Pre-Funding
Account, as described in this Article IV. On each Business Day, (i) the amount
of Finance Charge Collections available in the Collection Account allocable to
the Series 1999-2 Securities shall be determined by multiplying the aggregate
amount of such Finance Charge Collections by (x) prior to the Pay Out
Commencement Date, the Floating Percentage and (y) on and after the Pay Out
Commencement Date, the Fixed/Floating Percentage, (ii) the amount of Principal
Collections available in the Collection Account allocable to the Series 1999-2
Securities shall be determined by multiplying the aggregate amount of such
Principal Collections by (x) during the Revolving Period, the Floating
Percentage and (y) during the Amortization Period, the Fixed/Floating
Percentage, and (iii) the Receivables in Defaulted Accounts allocable to the
Series 1999-2 Securities shall be determined by multiplying the Default Amount
by the Floating Percentage. In addition, on the Closing Date, the Transferor
shall make a deposit to the Interest Funding Account in the amount of $2,000,000
to be allocated to the Series 1999-2 Securities and applied as Available Series
1999-2 Finance Charge Collection in accordance with subsection 4.9(a) of the
Agreement.
(b) Payments to the Holder of the Exchangeable Transferor Security. On each
Business Day, the Servicer shall allocate and pay Collections in accordance with
the Daily Report with respect to such Business Day to the Holder of the
Exchangeable Transferor Security in accordance with subsection 4.3(b) of the
Agreement; provided, however, that such amounts shall be applied in accordance
with Section 4.10 hereof to the extent specified therein.
Notwithstanding the foregoing and any other provisions of this
Supplement, amounts payable to the Transferor shall instead be deposited in the
Excess Funding Account to the extent necessary to prevent the Transferor
Interest from being less than the Minimum Transferor Interest.
SECTION 4.6. Determination of Interest for the Series 1999-2
Securities. The amount of monthly interest (the "Class A Monthly Interest")
which shall accrue for the benefit of the Class A Securities with respect to any
Interest Accrual Period shall be an amount equal to the product of (i) the Class
A Interest Rate, (ii) a fraction the numerator of which is the actual number of
days in the related Interest Accrual Period and the denominator of which is 360
and (iii) the Class A Outstanding Principal Amount as of the close of business
on the first day of such Interest Accrual Period (or in the case of the initial
Distribution Date, an amount equal to the product of (u) the Class A Initial
Invested Amount, (v) 28 divided by 360, and (w) the Class A Interest Rate
determined on September 20, 1999).
On the Determination Date preceding each Distribution Date,
the Servicer shall determine an amount (the "Class A Interest Shortfall") equal
to the excess, if any, of (x) the Class A Monthly Interest for the Interest
Accrual Period applicable to the Distribution Date over (y) the amount available
to be paid to the Class A Securityholders in respect of interest on such
Distribution Date. If there is a Class A Interest Shortfall with respect to any
Distribution Date, an additional amount ("Class A Additional Interest") shall be
payable as provided herein with respect to the Class A Securities on each
Distribution Date following such Distribution Date on which there was a Class A
Interest Shortfall, to and including the Distribution Date on which such Class A
Interest Shortfall is paid to Class A Securityholders, equal to the product of
(i) the Class A Interest Rate, (ii) a fraction the numerator of which is the
actual number of days in the related Interest Accrual Period and the denominator
of which is 360 and (iii) such Class A Interest Shortfall remaining unpaid.
Notwithstanding anything to the contrary herein, Class A Additional Interest
shall be payable or distributed to Class A Securityholders only to the extent
permitted by applicable law.
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 Securities for each Distribution Date with respect
to the Amortization Period shall be equal to the least of (i) the Available
Series 1999-2 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 Scheduled Final Payment Date, the
applicable Controlled Deposit Amount for such Transfer Date and (iii) the Class
A Adjusted Invested Amount on the related Transfer Date.
(b) The amount of principal (the "Class B Principal") distributable from the
Distribution Account with respect to the Class B Securities for each
Distribution Date, beginning with the Class B Principal Payment Commencement
Date, or, in the case of distributions of Class B Excess Amounts, on each
Distribution Date during the Accumulation Period, shall be equal to the lesser
of (i) the Available Series 1999-2 Principal Collections remaining on deposit in
the Principal Account with respect to the related Transfer Date after
application thereof to Class A Principal, if any, (ii) the Class B Invested
Amount on such Transfer Date and (iii) in the case of distributions of Class B
Excess Amounts, the Class B Excess Amount.
SECTION 4.8. Shared Principal Collections. Shared Principal
Collections allocated to Available Series 1999-2 Principal Collections for the
Series 1999-2 Securities and to be applied to Class A Principal and Class B
Principal pursuant to subsection 4.9(c)(i)(z) of the Agreement for any Business
Day with respect to the Amortization Period shall mean an amount equal to the
product of (x) Shared Principal Collections for all Series for such Business Day
and (y) a fraction, the numerator of which is the Principal Shortfall for the
Series 1999-2 Securities for such Business Day and the denominator of which is
the aggregate amount of Principal Shortfalls for all Series for such Business
Day. For any Business Day with respect to the Revolving Period, Shared Principal
Collections allocated to Available Series 1999-2 Principal Collections for the
Series 1999-2 Securities shall be zero.
SECTION 4.9. Application of Funds. (a) On each Business Day,
the Servicer shall deliver to the Trustee a Daily Report in which it shall
instruct the Trustee to withdraw, and the Trustee, acting in accordance with
such instructions, shall withdraw from the Collection Account and the Cap
Proceeds Account, to the extent of the sum of (w) prior to the Pay Out
Commencement Date, the Floating Percentage of the sum of Finance Charge
Collections and the amount of Adjustment Payments made by the Transferor with
respect to Adjustment Payments required to be made but not made in a prior
Monthly Period, available in the Collection Account or, on and after the Pay Out
Commencement Date, the Fixed/Floating Percentage of the sum of Finance Charge
Collections and the amount of Adjustment Payments made by the Transferor with
respect to Adjustment Payments required to be made but not made in a prior
Monthly Period, available in the Collection Account, (x) Investment Earnings on
deposit in the Collection Account, (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, and (z) the Cap Receipt Amount, if any, for such
Business Day (the "Available Series 1999-2 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 1999-2 Finance Charge
Collection) the amounts required to be withdrawn from the Collection Account
pursuant to subsections 4.9(a)(i) through 4.9(a)(xiii) of the Agreement.
(i) Class A Monthly Interest. On each Business Day during a Monthly Period,
the Trustee, acting in accordance with instructions from the Servicer,
shall withdraw first from the Cap Proceeds Account to the extent of the
Cap Receipt Amount and then from the Collection Account and then from
the Payment Reserve Account, and deposit into the Interest Funding
Account for distribution on the next Distribution Date to the Class A
Securityholders, to the extent of the Available Series 1999-2 Finance
Charge Collections for such Business Day, an amount equal to the lesser
of (x) the Available Series 1999-2 Finance Charge Collections and (y)
the excess of (1) the sum of Class A Monthly Interest for the Interest
Accrual Period beginning in such Monthly Period and Carryover Class A
Interest over (2) any amounts with respect thereto previously deposited
into the Interest Funding Account on any prior Business Day during such
Monthly Period. Notwithstanding anything to the contrary herein, the
portion of Carryover Class A Interest that constitutes Class A
Additional Interest shall be payable or distributable to Class A
Securityholders only to the extent permitted by applicable law.
(ii) Investor Servicing Fee. On each Business Day, the Trustee, acting in
accordance with instructions from the Servicer, shall withdraw first
from the Cap Proceeds Account to the extent of the Cap Receipt Amount
and then from the Collection Account and then from the Payment Reserve
Account, and distribute to the Servicer, to the extent of any Available
Series 1999-2 Finance Charge Collections remaining after giving effect
to the withdrawals pursuant to subsection 4.9(a)(i) of the Agreement,
an amount equal to the lesser of (x) any such remaining Available
Series 1999-2 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.
(iii) Series Default Amount. On each Business Day, first if such day is the
Default Recognition Date for the related Monthly Period, the Transferor
will 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 first from the Cap Proceeds Account to the extent of the
Cap Receipt Amount and then from the Collection Account and then from
the Payment Reserve Account, to the extent of any Available Series
1999-2 Finance Charge Collections remaining after giving effect to the
withdrawals pursuant to subsections 4.9(a)(i) and (ii) of the
Agreement, an amount equal to the lesser of (x) any such remaining
Available Series 1999-2 Finance Charge Collections and, if such day is
the related Default Recognition Date for such Monthly Period, an amount
equal to the aggregate Transferor Retained Finance Charge Collections
for each prior day during the related Monthly Period and (y) the sum of
(1) the aggregate Series Default Amount for such Business Day plus (2)
the unpaid Series Default Amount for each previous Business Day during
such Monthly Period, such amount to be (A) treated as Shared Principal
Collections during the Revolving Period, and (B) treated as Available
Series 1999-2 Principal Collections during the Amortization Period.
(iv) Adjustment Payment Shortfalls. On each Business Day, the Trustee,
acting in accordance with instructions from the Servicer, shall
withdraw first from the Cap Proceeds Account to the extent of the Cap
Receipt Amount and then from the Collection Account and then from the
Payment Reserve Account, to the extent of any Available Series 1999-2
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 1999-2 Finance Charge Collections and (y) an amount
equal to the Series 1999-2 Percentage of any Adjustment Payment which
the Transferor is required but fails to make pursuant to subsection
3.8(a) of the Agreement, such amount, (i) during the Revolving Period,
to be treated as Shared Principal Collections, and (ii) during the
Amortization Period, to be treated as Available Series 1999-2 Principal
Collections.
(v) Reimbursement of Class A Charge-Offs. On each Business Day, the
Trustee, acting in accordance with instructions from the Servicer,
shall withdraw first from the Cap Proceeds Account to the extent of the
Cap Receipt Amount and then from the Collection Account and then from
the Payment Reserve Account, to the extent of any Available Series
1999-2 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 1999-2 Finance Charge Collections and (y) the
unreimbursed Class A Charge-Offs, if any, will be applied to reimburse
Class A Charge-Offs, such amount during the Revolving Period, to be
treated as Shared Principal Collections, and during the Amortization
Period, to be treated as Available Series 1999-2 Principal Collections.
(vi) Monthly Premium. On each Business Day, the Trustee, acting in
accordance with the instructions from the Servicer, shall withdraw
first from the Cap Proceeds Account to the extent of the Cap Receipt
Amount and then from the Collection Account and then from the Payment
Reserve Account, to the extent of any Available Series 1999-2 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
1999-2 Finance Charge Collections and (y) the portion of the monthly
premium with respect to the Policy due on the Distribution Date in the
next succeeding Monthly Period that has not been previously deposited
in the Interest Funding Account plus any prior monthly premium with
respect to the Policy that was due but not previously deposited in the
Interest Funding Account, and deposit such amount into the Interest
Funding Account for distribution on the next succeeding Distribution
Date to the Insurer.
(vii) Reimbursement of Policy Draws. On each Business Day, the Trustee,
acting in accordance with the instructions from the Servicer, shall
withdraw first from the Cap Proceeds Account to the extent of the Cap
Receipt Amount and then from the Collection Account and then from the
Payment Reserve Account, to the extent of any Available Series 1999-2
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 1999-2 Finance Charge Collections and (y) the portion
of the unreimbursed claims on the Policy, that have not been previously
deposited in the Interest Funding Account, and deposit such amount into
the Interest Funding Account for distribution on the next succeeding
Distribution Date to the Insurer.
(viii) Spread Account. On each Business Day, the Trustee, acting in accordance
with the instructions from the Servicer, shall withdraw first from the
Cap Proceeds Account to the extent of the Cap Receipt Amount and then
from the Collection Account and then from the Payment Reserve Account,
to the extent of any Available Series 1999-2 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 1999-2 Finance
Charge Collections and (y) the excess, if any, of the Spread Account
Maximum over the amount on deposit in such Spread Account and deposit
such amount into the Spread Account.
(ix) Payment to the Insurer. On each Business Day, the Trustee, acting in
accordance with the instructions from the Servicer, shall withdraw
first from the Cap Proceeds Account to the extent of the Cap Receipt
Amount and then from the Collection Account and then from the Payment
Reserve Account, to the extent of any Available Series 1999-2 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
1999-2 Finance Charge Collections and (y) the portion of any other
amounts required to be paid to the Insurer pursuant to the Insurance
Agreement which have not been previously deposited in the Interest
Funding Account and deposit such amount in the Interest Funding Account
for distribution on the next succeeding Distribution Date to the
Insurer.
(x) Reimbursement of Class B Charge-Offs. On each Business Day, the
Trustee, acting in accordance with instructions from the Servicer,
shall withdraw first from the Cap Proceeds Account to the extent of the
Cap Receipt Amount and then from the Collection Account and then from
the Payment Reserve Account, to the extent of any Available Series
1999-2 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 1999-2 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 (d) and (e) of the
definition of Class B Invested Amount, if any, such amount, (i) during
the Revolving Period, to be treated as Shared Principal Collections,
and (ii) during the Amortization Period, to be treated as Available
Series 1999-2 Principal Collections.
(xi) Accumulation Period Reserve Account. On each Business Day on and after
the Reserve Account Funding Date, but prior to the date on which the
Accumulation Period Reserve Account terminates pursuant to subsection
4.18(d) of the Agreement, the Trustee, acting in accordance with
instructions from the Servicer, shall withdraw first from the Cap
Proceeds Account to the extent of the Cap Receipt Amount and then from
the Collection Account and then from the Payment Reserve Account, and
distribute to the Servicer, to the extent of any Available Series
1999-2 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 1999-2 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.
(xii) Payment Reserve Account. On each Business Day, the Trustee, acting in
accordance with instructions from the Transferor, shall withdraw first
from the Cap Proceeds Account to the extent of the Cap Receipt Amount
and then from the Collection Account and then from the Payment Reserve
Account, and distribute to the Servicer, to the extent of any Available
Series 1999-2 Finance Charge Collections remaining after giving effect
to the withdrawals pursuant to subsections 4.9(a)(i) through (xi) of
the Agreement, an amount equal to the lesser of (x) any such remaining
Available Series 1999-2 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.
(xiii) Excess Finance Charge Collections. Any amounts remaining in the Cap
Proceeds Account, the Collection Account and the Payment Reserve
Account, to the extent of any Available Series 1999-2 Finance Charge
Collections remaining after giving effect to the withdrawals pursuant
to subsection 4.9(a)(i) through (xii) of the Agreement, shall be
treated as Excess Finance Charge Collections, and the Servicer shall
direct the Trustee in writing on each Business Day to withdraw such
amounts from the Collection Account and to first make such amounts
available to pay to Securityholders of other Series to the extent of
shortfalls, if any, in amounts payable to such Securityholders from
Finance Charge Collections allocated to such other Series, then to pay
any unpaid commercially reasonable costs and expenses of a Successor
Servicer, if any, and then on each Business Day other than the Default
Recognition Date, to pay to the Transferor to be treated as "Transferor
Retained Finance Charge Collections," and, on each Default Recognition
Date, to pay any remaining Excess Finance Charge Collections to the
Transferor.
Notwithstanding the foregoing, if on any Default Recognition Date the sum of the
amount of Available Series 1999-2 Finance Charge Collections (including, all
amounts on deposit in the Payment Reserve Account) and Transferor Retained
Finance Charge Collections is less than the Series Default Amount for such
Default Recognition Date, the Servicer shall apply amounts deposited in the
Accumulation Period Reserve Account pursuant to subsection 4.9(a)(xi) of the
Agreement and the Spread Account pursuant to subsection 4.9(a)(viii) of the
Agreement during the then current Monthly Period in accordance with subsection
4.9(a)(iii) of the Agreement to the extent of such shortfall.
(b) For each Business Day with respect to the Revolving Period, the funds on
deposit in the Collection Account to the extent of the product of (i) the
Floating Percentage and (ii) Principal Collections with respect to such Business
Day (less the amount of Redirected Principal Collections on such Business Day)
will be treated as Shared Principal Collections and applied, pursuant to the
written direction of the Servicer in the Daily Report for such Business Day, as
provided in Section 4.3(d) of the Agreement.
(c) For each Business Day on and after the Amortization Period Commencement
Date, the amount of funds on deposit in the Collection Account, the Excess
Funding Account 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 Adjusted Invested Amount) equal to the
sum of (v) the product of the Fixed/Floating Percentage and Principal
Collections in the Collection Account at the end of the preceding
Business Day (less the amount thereof applied as Redirected Principal
Collections on such Business Day), (w) any amount on deposit in the
Excess Funding Account allocated to the Series 1999-2 Securities on
such Business Day pursuant to subsection 4.9(d) of the Agreement, (x)
amounts to be paid pursuant to subsections 4.9(a)(iii), (iv), (v) and
(x) of the Agreement from Available Series 1999-2 Finance Charge
Collections and from amounts available pursuant to subsections 4.10(a)
and (b), 4.16, 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 1999-2 Securities in accordance
with Section 4.8 of the Agreement on such Business Day, will be
deposited into the Principal Account; provided, however that with
respect to any Monthly Period during the Accumulation Period, the
aggregate amount required to be deposited in the Principal Account
pursuant to this subsection 4.9(c)(i) shall not exceed the sum of the
Controlled Deposit Amount and, at the option of the Transferor, the
Class B Excess Amount.
(ii) an amount equal to the excess, if any, of (A) the sum of the amounts
described in clauses (i)(v) and (x) above over (B) the sum of the Class
A Principal and the Class B Principal will be treated as Shared
Principal Collections and applied as provided in subsection 4.3(d) of
the Agreement.
(d) On the first Business Day of the Amortization Period funds on deposit in the
Excess Funding Account will be deposited in the Principal Account to the extent
of the lesser of (x) the Invested Amount and (y) the product of (i) the amount
on deposit in the Excess Funding Account at the beginning of the Amortization
Period and (ii) a fraction, the numerator of which is equal to the Invested
Amount and the denominator of which is equal to the sum of the invested amounts
of all Series in amortization periods on such day.
SECTION 4.10. Coverage of Required Amount for the Series
1999-2 Securities. (a) To the extent that any amounts are on deposit in the
Excess Funding Account or Pre-Funding Account on any Business Day, the Servicer
shall apply, in the manner specified for application of Available Series 1999-2
Finance Charge Collections in subsections 4.9(a)(i) through (xi) of the
Agreement, Transferor Finance Charge Collections in an amount equal to the sum
of (i) the excess of (x) the product of (a) the Base Rate, (b) the amounts on
deposit in the Excess Funding Account and the Pre-Funding Account and (c) the
number of days elapsed since the previous Business Day divided by the actual
number of days in such year over (y) the aggregate amount of all earnings since
the previous Business Day available from the Cash Equivalents in which funds on
deposit in the Excess Funding Account and the Pre-Funding Account are invested
(the "Negative Carry Amount") and (ii) the amount of unreimbursed claims on the
Policy that have not been deposited in the Interest Funding Account pursuant to
subsection 4.9(a)(vii) of the Agreement prior to such Business Day.
(b) To the extent that on any Business Day payments are being made pursuant to
any of subsections 4.9(a)(i) through (xi) of the Agreement, respectively, and
the full amount to be paid pursuant to any such subsection receiving payments on
such Business Day is not paid in full on such Business Day, the Servicer shall
apply, in the manner specified for application of Available Series 1999-2
Finance Charge Collections in subsections 4.9(a)(i) through (xi) of the
Agreement, all or a portion of the Excess Finance Charge Collections from other
Series with respect to such Business Day allocable to the Series 1999-2
Securities in an amount equal to the excess of the full amount to be allocated
or paid pursuant to the applicable subsection over the amount applied with
respect thereto from Available Series 1999-2 Finance Charge Collections and
Transferor Finance Charge Collections on such Business Day (the "Required
Amount").
To the extent that on any Business Day on and after the day on
which the Invested Amount is paid in full but prior to the Series 1999-2
Termination Date there are unreimbursed claims on the Policy, the Servicer shall
apply, in the manner specified for application of Available Series 1999-2
Finance Charge Collections in subsection 4.9(a)(vii) of the Agreement all or a
portion of the Excess Finance Charge Collections from other Series with respect
to such Business Day allocable to the Series 1999-2 Securities in an amount
equal to the excess of the full amount to be allocated or paid pursuant to the
applicable subsection over the amount applied with respect thereto from
Transferor Finance Charge Collections on such Business Day (the "Reimbursement
Required Amount").
Excess Finance Charge Collections allocated to the Series
1999-2 Securities for any Business Day shall mean an amount equal to the product
of (x) Excess Finance Charge Collections available from all other Series for
such Business Day and (y) a fraction, the numerator of which is the Required
Amount or Reimbursement Required Amount, as applicable, for such Business Day
and the denominator of which is the aggregate amount of shortfalls in required
amounts or other amounts to be paid from Finance Charge Collections for all
Series for such Business Day.
SECTION 4.11. Payment of Interest on Securities and Amounts
Owing to Insurer. (a) On each Transfer Date, the Trustee, acting in accordance
with instructions from the Servicer set forth in the Daily Report for such day,
shall withdraw the amount on deposit in the Interest Funding Account with
respect to the preceding Monthly Period allocable to the Series 1999-2
Securities and deposit such amount in the Distribution Account. On each
Distribution Date, the Paying Agent shall pay in accordance with Section 5.1 of
the Agreement to the Class A Securityholders from the Distribution Account the
amount deposited into the Distribution Account on the related Transfer Date
allocable thereto pursuant to subsection 4.9(a)(i) of the Agreement.
(b) On each Distribution Date, the Paying Agent shall pay in accordance with
Section 5.1 of the Agreement from the Distribution Account to the Insurer for
application in accordance with the Insurance Agreement the amount deposited into
the Distribution Account pursuant to subsection 4.11(a) of the Agreement on the
related Transfer Date allocable thereto pursuant to subsections 4.9(a)(vi),
(vii), (viii) and (ix) of the Agreement.
SECTION 4.12. Payment of Security Principal. (a) On the
Transfer Date preceding each Distribution Date with respect to the Amortization
Period, the Trustee, acting in accordance with instructions from the Servicer
set forth in the Daily Report for such day, shall withdraw from the Principal
Account and deposit into the Distribution Account with respect to the Early
Amortization Period or the Principal Payment 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 or the
Principal Payment Period until the Class A Invested Amount is paid in full, or
on the Scheduled Final Payment Date with respect to the Accumulation Period
following any deposit to the Distribution Account pursuant to subsection 4.12(d)
of the Agreement, the Paying Agent shall pay in accordance with Section 5.1 of
the Agreement to the Class A Securityholders from the Distribution Account such
amounts deposited with respect to Class A Principal into the Distribution
Account on the related Transfer Date.
(b) On the Transfer Date preceding the Class B Principal Payment Commencement
Date and each Transfer Date thereafter, or, in the case of distributions of
Class B Excess Amounts, on each Transfer Date during the Accumulation Period
preceding a Distribution Date on which a distribution shall be made with respect
to Class B Excess Amounts, the Trustee, acting in accordance with instructions
from the Servicer set forth in the Daily Report for such day, shall withdraw
from the Principal Account and deposit in the Distribution Account, to the
extent of funds available, an amount equal to the Class B Principal for the
related Distribution Date. On the Class B Principal Payment Commencement Date
after the payment of any principal amounts to the Class A Securities on such
day, and on each Distribution Date thereafter until the Class B Invested Amount
is paid in full and on each Distribution Date during the Accumulation Period on
which amounts are to be distributed with respect to Class B Excess Amounts, the
Paying Agent shall pay in accordance with Section 5.1 of the Agreement to the
Class B Securityholder from the Distribution Account such amounts deposited with
respect to Class B Principal into the Distribution Account on the related
Transfer Date; provided, however, that, if so designated in writing by the
Transferor with respect to any such Transfer Date, any such payment of Class B
Principal shall not be made to the Class B Securityholder and such amount shall
be subtracted from the Class B Invested Amount and added to the Transferor
Interest.
(c) Any amounts remaining in the Principal Account and allocable to the Series
1999-2 Securities, after the Class B 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.
(d) On the earlier to occur of (i) the first Transfer Date with respect to the
Early Amortization Period or the Principal Payment Period and (ii) the Transfer
Date immediately preceding the Scheduled Final Payment Date, the Trustee, acting
in accordance with instructions from the Servicer, shall withdraw from the
Principal Funding Account and deposit in the Distribution Account the amount on
deposit in the Principal Funding Account for distribution to Class A
Securityholders up to an amount equal to the Class A Invested Amount.
SECTION 4.13. Series Charge-Offs. (a) If, on any Determination
Date, the aggregate Series Default Amount and the Series 1999-2 Percentage of
unpaid Adjustment Payments, if any, for each Business Day in the preceding
Monthly Period exceeded the Available Series 1999-2 Finance Charge Collections
applied to the payment thereof pursuant to subsections 4.9(a)(iii) and (iv) of
the Agreement, the amount of Transferor Finance Charge Collections and Excess
Finance Charge Collections allocated thereto pursuant to Section 4.10 of the
Agreement, the amount of Redirected Principal Collections applied with respect
thereto pursuant to Section 4.16 of the Agreement, the amount of Principal
Funding Account Investment Proceeds applied with respect thereto pursuant to
subsection 4.17(b), the amount of Pre-Funding Account investment proceeds
applied with respect thereto pursuant to Section 4.14(e) and amounts withdrawn
from the Accumulation Period Reserve Account pursuant to subsection 4.20(b), (c)
and (d) and applied with respect to the Series Default Amount and the Series
1999-2 Percentage of unpaid Adjustment Payments with respect to such Monthly
Period, the Class B Invested Amount will be reduced by the amount by which the
remaining aggregate Series Default Amount and Series 1999-2 Percentage of unpaid
Adjustment Payments exceed the amount applied with respect thereto during such
preceding Monthly Period (a "Class B Charge-Off").
(b) In the event that any such reduction of the Class B Invested Amount would
cause the Class B Invested Amount to be a negative number, the Class B Invested
Amount will be reduced to zero, and the Trustee will demand payment on the
Policy in an amount equal to the amount by which the Class B Invested Amount
would have been reduced below zero, but in no case more than the sum of (i) the
remaining aggregate Series 1999-2 Default Amount and (ii) the remaining Series
1999-2 Percentage of unpaid Adjustment Payments for such Monthly Period (a
"Potential Class A Charge-Off").
(c) In the event that the Insurer fails to deliver to the Trustee an amount
equal to the Potential Class A Charge-Off amount as required under the Policy,
the Class A Invested Amount will be reduced by the amount the Insurer has failed
to pay (a "Class A Charge-Off").
SECTION 4.14. Pre-Funding Account. (a) Establishment of the
Pre-Funding Account. The Transferor hereby directs the Servicer, for the benefit
of the Series 1999-2 Securityholders, to establish and maintain or cause to be
established and maintained in the name of the Trustee, on behalf of the Series
1999-2 Securityholders, with a Qualified Institution (which initially shall be
The Bank of New York) a segregated trust account (the "Pre-Funding Account"),
bearing a designation clearly indicating that the funds deposited therein are
held for the benefit of the Series 1999-2 Securityholders. The Transferor does
hereby transfer, assign, set over and otherwise convey to the Trust for the
benefit of the Series 1999-2 Securityholders, 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 1999-2 Securityholders.
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 1999-2
Securities, 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 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 in accordance with subsection 4.9(c) of the Agreement to
make principal payments with respect to the Class A Securities. 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 January 2000 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 deposited in the Collection Account and treated as Investment Proceeds for
application as Available Series 1999-2 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
connection with such increase in the Invested Amount. Upon receipt of such
Officer's Certificate by the Trustee, the Class A Invested Amount shall be
increased 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.
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
January 2000 Monthly Period and the deposit of such amount in the Excess Funding
Account, the Class A Invested Amount shall be increased by such amount.
SECTION 4.16. Redirected Principal Collections for the Series
1999-2 Securities. On each Business Day, the Servicer will determine an amount
equal to the least of (i) the Class B Invested Amount, (ii) the product of
(x)(I) during the Revolving Period, the Class B Floating Percentage or (II)
during an Amortization Period, the Class B Fixed/Floating Percentage and (y) the
amount of Principal Collections with respect to such Business Day and (iii) an
amount equal to the Class A Required Amount for such Business Day (such amount
called "Redirected Principal Collections") and shall apply Principal Collections
in an amount equal to such amount to the components of the Class A Required
Amount as amounts are applied to such components from Available Series 1999-2
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 offered rate for deposits in United
States dollars for one month (commencing on the first day of the relevant
Interest Accrual Period) which appears on Telerate Page 3750 as of 11:00 A.M.,
London time, on the LIBOR Determination Date for such Interest Accrual Period.
If such rate does not appear on Telerate Page 3750, the rate for such LIBOR
Determination Date will be determined on the basis of the rates at which
deposits in the United States dollars are offered by the Reference Banks at
approximately 11:00 a.m., London time, on such LIBOR Determination Date to prime
banks in the London interbank market for a period equal to one month (commencing
on the first day of the relevant Interest Accrual Period). The Trustee will
request the principal London office of each such bank to provide a quotation of
its rate. If at least two such quotations are provided, the rate for such LIBOR
Determination Date will be the arithmetic mean of the quotations. If fewer than
two quotations are provided as requested, the rate for such LIBOR Determination
Date will be the arithmetic mean of the rates quoted by four major banks in New
York City, selected by the Trustee, at approximately 11:00 a.m., New York City
time, on the LIBOR Determination Date for loans in United States dollars to
leading European banks for a period equal to one month (commencing on the first
day of such Interest Accrual Period).
(b) On each LIBOR Determination Date, the Trustee shall send to the Servicer by
facsimile notification of LIBOR for such LIBOR Determination Date.
SECTION 4.18. 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 Securityholders, the "Payment Reserve Account," which shall be a
segregated trust account with the corporate trust department of such Qualified
Institution, bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Securityholders. The Trustee shall
possess all right, title and interest in all funds on deposit from time to time
in the Payment Reserve Account and in all proceeds thereof. The Payment Reserve
Account shall be under the sole dominion and control of the Trustee for the
benefit of the Securityholders. If, at any time, the institution holding the
Payment Reserve Account ceases to be a Qualified Institution, the Trustee shall
within 10 Business Days establish a new Payment Reserve Account meeting the
conditions specified above with a Qualified Institution, and shall transfer any
cash or any investments to such new Payment Reserve Account. From the date such
new Payment Reserve Account is established, it shall be the "Payment Reserve
Account."
(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 that will mature so that such funds will be available for withdrawal
on or prior to the following Business Day. The proceeds of any such investments
shall be invested in Cash Equivalents that will mature so that such funds will
be available for withdrawal on or prior to the following Business Day. On each
Business Day following a deposit of funds to the Payment Reserve Account, the
aggregate proceeds of any such investment shall be deposited in the Collection
Account and treated as Investment Proceeds for application as Available Series
1999-2 Finance Charge Collections.
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 Securityholders, the "Principal Funding Account," which shall be a
segregated trust account with the corporate trust department of such Qualified
Institution, bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Series 1999-2 Securityholders. The
Trustee shall possess all right, title and interest in all funds on deposit from
time to time in the Principal Funding Account and in all proceeds thereof. The
Principal Funding Account shall be under the sole dominion and control of the
Trustee for the benefit of the Series 1999-2 Securityholders. If, at any time,
the institution holding the Principal Funding Account ceases to be a Qualified
Institution, the Trustee shall within 10 Business Days establish a new Principal
Funding Account meeting the conditions specified above with a Qualified
Institution, and shall transfer any cash or any investments to such new
Principal Funding Account. From the date such new Principal Funding Account is
established, it shall be the "Principal Funding Account." The Trustee, at the
written direction of the Servicer, shall (i) make withdrawals from the Principal
Funding Account from time to time, in the amounts and for the purposes set forth
in this Series Supplement, and (ii) on each Transfer Date (from and after the
commencement of the Accumulation Period) prior to termination of the Principal
Funding Account make a deposit into the Principal Funding Account in the amount
specified in, and otherwise in accordance with, subsection 4.12(a) of the
Agreement.
(b) Funds on deposit in the Principal Funding Account shall be invested by the
Trustee at the direction of the Servicer in Cash Equivalents maturing no later
than the following Transfer Date. On the Transfer Date occurring in the month
following the commencement of the Accumulation Period and on each Transfer Date
thereafter with respect to the Accumulation Period, the Trustee, at the
Servicer's written direction, shall transfer from the Principal Funding Account
to the Collection Account the Principal Funding Account Investment Proceeds on
deposit in the Principal Funding Account, but not in excess of the Covered
Amount, and shall apply such amount as if such amounts were Available Series
1999-2 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 Securityholders, the "Accumulation Period Reserve
Account," which shall be a segregated trust account with the corporate trust
department of such Qualified Institution, bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Series 1999-2 Securityholders. The Trustee shall possess all right, title and
interest in all funds on deposit from time to time in the Accumulation Period
Reserve Account and in all proceeds thereof. The Accumulation Period Reserve
Account shall be under the sole dominion and control of the Trustee for the
benefit of the Series 1999-2 Securityholders. If, at any time, the institution
holding the Accumulation Period Reserve Account ceases to be a Qualified
Institution, the Trustee shall within 10 Business Days establish a new
Accumulation Period Reserve Account meeting the conditions specified above with
a Qualified Institution, and shall transfer any cash or any investments to such
new Accumulation Period Reserve Account. From the date such new Accumulation
Period Reserve Account is established, it shall be the "Accumulation Period
Reserve Account." The Trustee, at the written direction of the Servicer, shall
(i) make withdrawals from the Accumulation Period Reserve Account from time to
time, in the amounts and for the purposes set forth in this Series Supplement,
and (ii) on each Transfer Date (from and after the Reserve Account Funding Date)
prior to termination of the Accumulation Period Reserve Account make a deposit
into the Accumulation Period Reserve Account in the amount specified in, and
otherwise in accordance with, subsection 4.9(a)(xi) of the Agreement.
(b) Funds on deposit in the Accumulation Period Reserve Account shall be
invested by the Trustee at the direction of the Servicer in Cash Equivalents
maturing no later than the following Transfer Date. The interest and other
investment income (net of investment expenses and losses) earned on such
investments will be retained in the Accumulation Period Reserve Account (to the
extent the amount on deposit therein is less than the Required Reserve Account
Amount) or deposited in the Collection Account and treated as Investment
Proceeds for application as Available Series 1999-2 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 or the
Principal Payment 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 1999-2
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 or a
Principal Payment Event with respect to the Series 1999-2 Securities and (d) if
the Accumulation Period has commenced, the earlier of the first Transfer Date
with respect to the Early Amortization Period or the Principal Payment Period
and the Scheduled 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 1999-2
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 June 2005 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
Scheduled Final Payment Date at least equal to the Accumulation Period Length
and, as a result, the number of Monthly Periods in the Accumulation Period will
at least equal the Accumulation Period Length. On each Determination Date until
the Accumulation Period begins, the Servicer will determine the "Accumulation
Period Length" which will equal the number of months such that the sum of the
Accumulation Period Factors for each Monthly Period during such period will be
equal to or greater than the Required Accumulation Factor Number; provided,
however, that the Accumulation Period Length will not be less than one month.
SECTION 4.22. Defeasance. On the date that the following
conditions shall have been satisfied: (i) the Transferor shall have deposited
(x) in the Principal Funding Account, an amount such that the amount on deposit
in the Principal Funding Account following such deposit is equal to the sum of
the Class A Outstanding Principal Amount and the Class B 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 Scheduled 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, or both,
would constitute a Pay Out Event, to occur; and (iv) a Ratings Event will not
occur, the Series 1999-2 Securities will no longer be entitled to the security
interest of the Trust in the Receivables and, except those set forth in clause
(i) above, other Trust assets and the percentages applicable to the allocation
to the Series 1999-2 Securityholders of Principal Collections, Finance Charge
Collections and Defaulted Receivables will be reduced to zero. Upon the
satisfaction of the foregoing conditions, the Class B Invested Amount will be
reduced to zero.
SECTION 7. Article V of the Agreement. Article V of the Agreement shall read in
its entirety as follows and shall be applicable only to the Series 1999-2
Securities:
ARTICLE V
DISTRIBUTIONS AND REPORTS TO INVESTOR
SECURITYHOLDERS
SECTION 5.1. Distributions. (a) On each Distribution Date, the
Paying Agent shall distribute (in accordance with the Settlement Statement
delivered by the Servicer to the Trustee and the Paying Agent pursuant to
subsection 3.4(c)) to each Class A Securityholder of record on the preceding
Record Date (other than as provided in subsection 2.4(e) or in Section 12.3
respecting a final distribution) such Securityholder's pro rata share (based on
the aggregate Undivided Interests represented by each Class A Security held by
such Securityholder) of amounts on deposit in the Distribution Account as are
payable to each Class A Securityholders pursuant to Sections 4.11 and 4.12 of
the Agreement by check mailed to each Class A Securityholder at such
Securityholder's address as it appears on the Security Register or, in the case
of Class A Securityholders holding Class A Securities evidencing not less than
80% of the Class A Invested Amount, by wire transfer, at the expense of such
Class A Securityholder, to the Spread Account or to such other account or
accounts designated by such Class A Securityholder by written notice given to
the Paying Agent not less than five days prior to the related Distribution Date;
provided, however, that the final payment in retirement of the Class A
Securities will be made only upon presentation and surrender of the Class A
Securities at the office or offices specified in the notice of such final
distribution delivered by the Trustee pursuant to Section 12.3 of the Agreement.
(b) On each Distribution Date, the Paying Agent shall distribute (in accordance
with the Settlement Statement delivered by the Servicer to the Trustee and the
Paying Agent pursuant to subsection 3.4(c) of the Agreement) to the Insurer the
amounts on deposit in the Distribution Account as are payable to the Insurer for
application in accordance with the Insurance Agreement pursuant to subsection
4.11(b) of the Agreement by wire transfer to the Spread Account or to such other
account or accounts designated by the Insurer by written notice given to the
Paying Agent not less than five days prior to the related Distribution Date.
(c) On each Distribution Date, the Paying Agent shall distribute (in accordance
with the Settlement Statement delivered by the Servicer to the Trustee and the
Paying Agent pursuant to subsection 3.4(c) of the Agreement) to each Class B
Securityholder of record other than the Transferor on the preceding Record Date
(other than as provided in subsection 2.4(e) of the Agreement or in Section 12.3
of the Agreement respecting a final distribution) such Securityholder's pro rata
share (based on the aggregate Undivided Interests represented by Class B
Securities held by such Securityholder) of amounts on deposit in the
Distribution Account as are payable to the Class B Securityholders pursuant to
Sections 4.11 and 4.12 of the Agreement by wire transfer to each Class B
Securityholder to an account or accounts designated by such Class B
Securityholder by written notice given to the Paying Agent not less than five
days prior to the related Distribution Date; provided, however, that the final
payment in retirement of the Class B Securities will be made only upon
presentation and surrender of the Class B Securities at the office or offices
specified in the notice of such final distribution delivered by the Trustee
pursuant to Section 12.3 of the Agreement.
SECTION 5.2. Securityholders' Statement. (a) On the twentieth
day of each calendar month (or if such day is not a Business Day the next
succeeding Business Day), the Paying Agent shall forward to each Securityholder
and the Rating Agencies a statement substantially in the form of Exhibit B
prepared by the Servicer and delivered to the Trustee and the Paying Agent on
the preceding Determination Date setting forth the following information (which,
in the case of (i), (ii) and (iii) below, shall be stated on the basis of an
original principal amount of $1,000 per Security and, in the case of (ix) and
(x), shall be stated on an aggregate basis and on the basis of an original
principal amount of $1,000 per Security):
(i) the total amount distributed;
(ii) the amount of such distribution allocable to Class A Principal and
Class B Principal;
(iii) the amount of such distribution allocable to Class A Monthly Interest
and Carryover Class A Monthly Interest and any amounts payable to the
Class B Securityholders with respect to interest;
(iv) the amount of Principal Collections received in the Collection Account
during the preceding Monthly Period and allocated in respect of the
Class A Securities, and the Class B Securities, respectively;
(v) the amount of Finance Charge Collections processed during the preceding
Monthly Period and allocated in respect of the Class A Securities and
the Class B Securities, respectively, and the amount of Principal
Funding Account Investment Proceeds and investment earnings on amounts
on deposit in the Accumulation Period Reserve Account 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 Floating
Percentage and, during the Amortization Period, the Fixed/Floating
Percentage, as of the end of the day on the last day of the related
Monthly Period;
(vii) the aggregate outstanding balance of Receivables which are current,
30-59, 60-89, and 90 days and over delinquent as of the end of the day
on the last day of the related Monthly Period;
(viii) the aggregate Series Default Amount for the preceding Monthly Period;
(ix) the aggregate amount of Class A Charge-Offs and Class B Charge-Offs for
the preceding Monthly Period;
(x) the amount of the Servicing Fee for the preceding Monthly Period;
(xi) the amount of unreimbursed Redirected Principal Collections for the
related Monthly Period;
(xii) the aggregate amount of funds in the Excess Funding Account and the
Pre-Funding Account as of the last day of the Monthly Period
immediately preceding the Distribution Date;
(xiii) the number of new Accounts the Receivables in which have been added to
the Trust during the related Monthly Period;
(xiv) the Portfolio Yield for the related Monthly Period;
(xv) the Base Rate for the related Monthly Period;
(xvi) the Principal Funding Account Balance on the related Transfer Date;
(xvii) the Accumulation Shortfall;
(xviii) the scheduled date for the commencement of the Accumulation Period and
the Accumulation Period Length;
(xix) the amount of Principal Funding Account Investment Proceeds deposited
in the Collection Account on the related Transfer Date, the Required
Reserve Account Amount and the Available Reserve Account Amount as of
the related Transfer Date, and the Covered Amount for the related
Interest Accrual Period;
(xx) the Aggregate Interest Rate Caps Notional Amount and the amount
deposited in the Cap Proceeds Account during the related Monthly
Period; and
(xxi) the amount of claims, if any, on the Policy on such Distribution Date.
(b) Annual Securityholders' Tax Statement. On or before January 31 of each
calendar year, beginning with calendar year 2000, the Paying Agent shall
distribute to each Person who at any time during the preceding calendar year was
a Series 1999-2 Securityholder, a statement prepared by the Servicer containing
the information required to be contained in the regular report to Series 1999-2
Securityholders, as set forth in subclauses (i), (ii) and (iii) above,
aggregated for such calendar year or the applicable portion thereof during which
such Person was a Series 1999-2 Securityholder, together with, on or before
January 31 of each year, beginning in 2000, such other customary information
(consistent with the treatment of the Series 1999-2 Securities as debt) as the
Trustee or the Servicer deems necessary or desirable to enable the Series 1999-2
Securityholders 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 1999-2 Pay Out Events. If any one of the following
events shall occur with respect to the Series 1999-2 Securities:
(a) failure on the part of the Transferor (i) to make any payment or deposit
required to be made by the Transferor by the terms of the Agreement or this
Series Supplement, on or before the date occurring five Business Days after the
date such payment or deposit is required to be made herein, (ii) to perform in
all material respects the Transferor's covenant not to sell, pledge, assign, or
transfer to any person, or grant any unpermitted lien on, any Receivable; or
(iii) duly to observe or perform in any material respect any covenants or
agreements of the Transferor set forth in the Agreement or this Series
Supplement, which failure has a material adverse effect on the Series 1999-2
Securityholders or the Insurer and which continues unremedied for a period of
sixty days after the date on which written notice of such failure, requiring the
same to be remedied, shall have been given to the Transferor by the Trustee or
the Insurer, or to the Transferor, the Insurer and the Trustee by the Holders of
Series 1999-2 Securities evidencing Undivided Interests aggregating not less
than 50 percent of the Invested Amount and continues to affect materially and
adversely the interests of the Series 1999-2 Securityholders or the Insurer 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 Insurer or by the
Holders of Series 1999-2 Securities evidencing Undivided Interests aggregating
more than 50% of the Invested Amount of this Series 1999-2, and (ii) as a result
of which the interests of the Series 1999-2 Securityholders are materially and
adversely affected and continue to be materially and adversely affected for such
period; provided, however, that a Series 1999-2 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 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 1999-2 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 and the Class B
Outstanding Principal Amount, (iii) the total amount of Principal Receivables
and the amounts on deposit in the Excess Funding Account, the Principal Account
and the Principal Funding Account shall be less than the Minimum Aggregate
Principal Receivables or (iv) the Retained Percentage shall be equal to or less
than 2%, in each case as of any Determination Date;
(e) any Servicer Default shall occur which would have a material adverse effect
on the Series 1999-2 Securityholders; or
(f) any claim on the Policy shall occur;
then, in the case of any event described in subparagraph (a), (b) or (e), after
the applicable grace period, if any, set forth in such subparagraphs, the
Holders of Series 1999-2 Securities evidencing Undivided Interests aggregating
more than 50% of the Invested Amount of this Series 1999-2, by notice then given
in writing to the Trustee, the Transferor, any Cap Providers and the Servicer
may declare that a pay out event (a "Series 1999-2 Pay Out Event") has occurred
as of the date of such notice, and in the case of any event described in
subparagraphs (c), (d) or (f), a Series 1999-2 Pay Out Event shall occur without
any notice or other action on the part of the Trustee or the Series 1999-2
Securityholders immediately upon the occurrence of such event.
SECTION 9.1. Series 1999-2 Termination. The right of the
Series 1999-2 Securityholders to receive payments from the Trust will terminate
on the first Business Day following the Series 1999-2 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 1999-2 Securityholders shall remain entitled to receive
proceeds of such sale when such sale occurs.
SECTION 9.2. Principal Payment Period. The Principal Payment
Period will begin on the Initial Principal Payment Date, if any. The "Initial
Principal Payment Date" for the Series 1999-2 Securities shall be the October
2004 Distribution Date; provided, however, that the Initial Principal Payment
Date shall automatically be extended to the Distribution Date following the
then-current Initial Principal Payment Date on September 20, 2004 and each
successive Distribution Date thereafter (but not later than the Scheduled Final
Payment Date) unless the Servicer, no later than the Distribution Date prior to
the then-current Initial Principal Payment Date, notifies the Trustee that the
Initial Principal Payment Date shall not be extended, in which case the then
applicable Initial Principal Payment Date shall be fixed as the Initial
Principal Payment Date. The Servicer shall provide notice of such election to
the Trustee no later than the Distribution Date prior to the then-current
Initial Principal Payment Date. Immediately upon receipt of such notice, the
Trustee shall notify the Transferor, the Class A Securityholders, each Rating
Agency and the Insurer of the Servicer's election not to extend the Initial
Principal Payment Date. In addition, if and so long as the Class A Securities
are listed on the Luxembourg Stock Exchange, the Trustee shall publish or cause
to be published in an Authorized Newspaper of general circulation in Luxembourg
a notice to the effect that the Servicer has elected not to extend the Initial
Principal Payment Date.
SECTION 10. Legends; Transfer and Exchange; Restrictions on Transfer of Series
1999-2 Securities. (a) Each Class A Security that is a Global Security deposited
with DTC, or a custodian on behalf of DTC, shall bear the following legend:
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION
("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME
OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH
OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE
& CO., HAS AN INTEREST HEREIN.
(b) Each Class B Security will bear legends substantially in the following form:
THIS SECURITY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"). THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAW OF ANY STATE AND
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS
REGISTERED PURSUANT TO OR EXEMPT FROM REGISTRATION UNDER THE SECURITIES
ACT AND ANY OTHER APPLICABLE SECURITIES LAW. TRANSFERS OF THIS SECURITY
SHALL BE SUBJECT TO THE RESTRICTIONS SET FORTH IN THE POOLING AND
SERVICING AGREEMENT.
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. The Policy.
(a) The Transferor hereby represents that (i) it has obtained the Policy in
the name of the Trustee and solely for the benefit of the Series 1999-2
Securityholders, (ii) that it has entered into the Insurance Agreement which
provides for the issuance of the Policy by the Insurer and (iii) that the Policy
permits the Trustee (or the Servicer on its behalf) to draw on the Policy from
time to time for the purposes set forth in this Supplement. The Insurer shall
not be entitled to reimbursement for any draws, interest or fees with respect to
the Policy from the corpus of the Trust, except as specifically provided herein.
(b) Pursuant to the Policy, if on any Determination Date the Servicer
notifies the Trustee that on the related Distribution Date (i) the funds that
will be on deposit in the Interest Funding Account available for distribution
are insufficient to pay the Class A Monthly Interest with respect to such
Monthly Period or the Servicing Fee with respect to such Monthly Period will not
otherwise be paid in full,(ii) a Potential Class A Charge-Off shall occur, then
the Trustee shall give notice to the Insurer by telecopy or other writing by the
close of business on the second Business Day prior to the Distribution Date
demanding payment of an amount equal to the deficiency. In addition, if on the
Scheduled Series 1999-2 Termination Date the outstanding principal amount of the
Class A Securities after application of all amounts to Class A Principal on such
date would be greater than zero, the Trustee shall give notice to the Insurer by
telecopy or other writing by the close of business on the second Business Day
prior to the Scheduled Series 1999-2 Termination Date demanding payment of an
amount equal to such excess (the amount demanded pursuant to this sentence and
the preceding sentence, the "Policy Claim Amount"). Following receipt by the
Insurer of such notice, the Insurer will pay the Policy Claim Amount before
12:00 noon on the Business Day preceding the Distribution Date (i) with respect
to funds to be applied to the payment of Class A Monthly Interest, to the
Trustee for deposit in the Distribution Account, (ii) with respect to funds to
be applied to the payment of the Monthly Servicing Fee, to the Servicer and
(iii) with respect to funds to be applied with respect to a Potential Class A
Charge-Off, to the Trustee to be treated as Available Series 1999-2 Principal
Collections and deposited in the Distribution Account.
If payment of any amount guaranteed by the Insurer pursuant to the Policy
is avoided as a preference payment (the "Preference Amount") under applicable
bankruptcy, insolvency, receivership or similar law in the event of an
insolvency of the Transferor, the Servicer, Metris Companies Inc. or the Trust,
the Insurer will pay such amount out of its funds on the later of (a) the date
when due to be paid pursuant to the Order referred to below or (b) the first to
occur of (i) the fourth business day following Receipt by the Insurer or the
fiscal agent from the Trustee of (A) a certified copy of the order (the "Order")
of the court or other governmental body which exercised jurisdiction to the
effect that the Trustee is required to return the amount of any Policy Claim
Amounts distributed with respect to the Class A Securities during the term of
the Policy because such distributions were avoidable preference payments under
applicable bankruptcy law, (B) a notice for payment in the form specified by the
Policy and (C) an assignment duly executed and delivered by the Class A
Securityholder, in such form as is reasonably required by the Insurer and
provided to the Class A Securityholder by the Insurer, irrevocably assigning to
the Insurer all rights and claims of the Class A Securityholder relating to or
arising under the Class A Securities against the debtor which made such
preference payment or otherwise with respect to such preference payment or (ii)
the date of Receipt by the Insurer or the fiscal agent from the Trustee of the
items referred to in clauses (A), (B) and (C) above if, at least four business
days prior to such date of Receipt, the Insurer or the fiscal agent shall have
Received written notice from the Trustee that such items were to be delivered on
such date and such date was specified in such notice. Such payment shall be
disbursed to the receiver, conservator, debtor-in-possession or trustee in
bankruptcy named in the Order and not to the Trustee or Class A Securityholder
directly.
The terms "Receipt" and "Received", with respect to the Policy, mean actual
delivery to the Insurer and to its fiscal agent appointed by the Insurer at its
option, if any, prior to 1:00 p.m., New York City time, on a business day;
delivery either on a day that is not a business day or after 1:00 p.m., New York
City time, shall be deemed to be Received on the next succeeding business day.
If any notice or certificate given under the Policy by the Trustee is not in
proper form or is not properly completed, executed or delivered, it shall be
deemed not to have been Received, and the Insurer or the fiscal agent shall
promptly so advise the Trustee and the Trustee may submit an amended notice.
(c) In the event that the claims paying ability rating of the Insurer is
downgraded and such downgrade would result in a downgrading of the then current
rating of the Class A Securities (a "Replacement Event"), the Transferor, in
accordance with and upon satisfaction of the conditions set forth in the Policy,
including payment in full of all amounts owed to the Insurer, may but shall not
be required to, substitute a new surety bond or surety bonds for the existing
Policy or may arrange for any other form of Enhancement; provided, however, that
in each case the Class A Securities shall be rated no lower than the rating
assigned by each Rating Agency to the Class A Securities prior to such
Replacement Event and the timing and mechanism for drawing on such new credit
enhancement shall be reasonably acceptable to the Trustee. Upon receipt of the
new Enhancement, the Trustee shall surrender the replaced Policy to the Insurer.
(d) So long as the Insurer has not defaulted on its obligations under the
Policy, the Insurer will be entitled to exercise all voting rights of the Series
1999-2 Securityholders without the consent of the Class A Securityholders
(including any voting rights with respect to amending the Agreement or this
Supplement or terminating a Servicer) and the Class A Securityholders may only
exercise such voting rights with the prior written consent of the Insurer. In
determining whether the required percentage of Securityholders have given their
approval or consent with respect to an action requiring the consent of a
majority of the Securityholders, except as otherwise specified, the Class A
Securityholders will be treated as a single Series.
SECTION 12. Ratification of Agreement. As supplemented by this Series
Supplement, the Agreement is in all respects ratified and confirmed and the
Agreement as so supplemented by this Series Supplement shall be read, taken, and
construed as one and the same instrument. The Transferor hereby confirms the
conveyance of the Trust Property to the Trustee for the benefit of the Series
1999-2 Securityholders.
SECTION 13. Registration of the Class A Securities under the Securities Exchange
Act of 1934. The Transferor shall cause the Class A Securities to be registered
under the Securities Exchange Act of 1934, as amended, on or before March 1,
2000 and thereafter maintain such registration until the Class A Invested Amount
has been reduced to zero.
SECTION 14. Counterparts. This Series Supplement may be executed in any number
of counterparts, each of which so executed shall be deemed to be an original,
but all of such counterparts shall together constitute but one and the same
instrument.
SECTION 15. GOVERNING LAW. THIS SERIES SUPPLEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 16. Instructions in Writing. All instructions or other communications
given by the Servicer or any other person to the Trustee pursuant to this Series
Supplement shall be in writing, and, with respect to the Servicer, may be
included in a Daily Report or Settlement Statement.
SECTION 17. Amendment for FASIT Purposes. Each Series 1999-2 Securityholder, by
acquiring an interest in a Series 1999-2 Security, is deemed to consent to any
amendment to the Agreement or this Series Supplement necessary for the
Transferor to elect for the Trust or any portion thereof to be treated as a
financial asset securitization investment trust ("FASIT") within the meaning of
Section 860L of the Internal Revenue Code (or any successor provision thereto),
provided, that such election may not be made unless the Transferor delivers an
opinion to the Trustee and the Servicer to the effect that such election will
not adversely affect the Federal or Applicable Tax State income tax
characterization of any outstanding Series of Investor Securities or the
taxability of the Trust under Federal or Applicable Tax State income tax laws.
SECTION 18. Paired Series. Subject to obtaining confirmation by each Rating
Agency of the then existing ratings of each class of Securities which is then
rated, and prior to the commencement of the Early Amortization Period or the
Principal Payment Period, the Series 1999-2 Securities may be paired with one or
more other Series (each a "Paired Series"). Each Paired Series either will be
pre-funded with an initial deposit to a pre-funding account in an amount up to
the initial principal balance of such Paired Series and primarily from the
proceeds of the sale of such Paired Series or will have a variable principal
amount. Any such pre-funding account will be held for the benefit of such Paired
Series and not for the benefit of the Securityholders. As principal is deposited
in the Principal Account or the Principal Funding Account or is paid with
respect to the Series 1999-2 Securities, either (i) in the case of a pre-funded
Paired Series, an equal amount of funds on deposit in any pre-funding account
for such pre-funded Paired Series will be released (which funds will be
distributed to the Transferor) or (ii) in the case of a Paired Series having a
variable principal amount, an interest in such variable Paired Series in an
equal or lesser amount may be sold by the Trust (and the proceeds thereof will
be distributed to the Transferor) and, in either case, the invested amount in
the Trust of such Paired Series will increase by up to a corresponding amount.
Upon payment in full of the Series 1999-2 Securities, assuming that there have
been no unreimbursed charge-offs with respect to any related Paired Series, the
aggregate invested amount of such related Paired Series will have been increased
by an amount up to an aggregate amount equal to the Invested Amount paid to the
Securityholders since the issuance of such Paired Series. The issuance of a
Paired Series will be subject to the conditions described in subsection 6.9(b)
of the Agreement.
SECTION 19. Third Party Beneficiaries. The Agreement as supplemented by this
Series Supplement shall inure to the benefit of and be binding upon the parties
hereto, the Securityholders, the Insurer and their respective successors and
permitted assigns.
IN WITNESS WHEREOF, the Transferor, the Servicer and the
Trustee have caused this Series 1999-2 Supplement to be duly executed by their
respective officers as of the day and year first above written.
METRIS RECEIVABLES, INC.
Transferor
By: /s/ Paul T. Runice
Name: Paul T. Runice
Title: Senior Vice President and Treasurer
DIRECT MERCHANTS CREDIT CARD BANK,
NATIONAL ASSOCIATION
Servicer
By: /s/ Jean C. Benson
Name: Jean C. Benson
Title: Chief Financial Officer, Controller
THE BANK OF NEW YORK (DELAWARE)
Trustee
By: /s/ Betty A. Cocozza
Name: Betty A. Cocozza
Title: Agent
Exhibit A-1
FORM OF CLASS A INVESTOR SECURITY
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION
("DTC"), TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE, OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME
OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH
OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE
& CO. HAS AN INTEREST HEREIN.
No. ___ $_________
CUSIP NO. _________
METRIS MASTER TRUST
FLOATING RATE ASSET BACKED
SECURITY, SERIES 1999-2, 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 "Securityholder") is the
registered owner of a fractional undivided interest in the Metris Master Trust
(the "Trust") issued pursuant to the Amended and Restated Pooling and Servicing
Agreement, dated as of July 30, 1998 (the "Pooling and Servicing Agreement";
such term to include any amendment 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 1999-2 Supplement, dated as of September 22, 1999 (the Series 1999-2
Supplement"), among the Transferor, the Servicer and the Trustee. The Pooling
and Servicing Agreement, as supplemented by the Series 1999-2 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 Security does not purport to summarize the Agreement and
reference is made to that Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds, and duties evidenced hereby
and the rights, duties and obligations of the Trustee. To the extent not defined
herein, the capitalized terms used herein have the meanings ascribed to them in
the Agreement. This Security is one of a series of Securities entitled "Metris
Master Trust Floating Rate Asset Backed Securities, Series 1999-2, Class A" (the
"Class A Securities"), each of which represents a fractional undivided interest
in the Trust, and is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement, as amended from time to time,
the Securityholder by virtue of the acceptance hereof assents and by which the
Securityholder is bound.
The Transferor has structured the Agreement, the Class A
Securities, the Metris Master Trust Floating Rate Asset Backed Securities,
Series 1999-2, Class B (the "Class B Securities" and collectively with the Class
A Securities, the "Series 1999-2 Securities") with the intention that the Series
1999-2 Securities will qualify under applicable tax law as indebtedness, and
both the Transferor and each holder of a Class A Security (a "Class A
Securityholder") or any interest therein by acceptance of its Securities or any
interest therein, agrees to treat the Class A Securities for purposes of
federal, state and local income or franchise taxes and any other tax imposed on
or measured by income, as indebtedness.
No principal will be payable to the Class A Securityholders
until the earlier of the Scheduled Final Payment Date and, upon the occurrence
of a Pay Out Event or Principal Payment Event, the Distribution Date following
the Monthly Period in which the Pay Out Event or Principal Payment Event occurs.
No principal will be payable to the Class B Securityholders (other than with
respect to Class B Excess Amounts) until all principal payments have been made
to the Class A Securityholders.
Interest on the Class A Securities will be payable on October
20, 1999 and on the 20th day of each month thereafter or, if such day is not a
business day, on the next succeeding business day (each, a "Distribution Date"),
in an amount equal to the product of (i) the Class A Interest Rate, (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 Securities 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) 28 divided by 360, and (w) the Class A
Interest Rate determined on September 20, 1999.
Interest payments on the Class A Securities on each
Distribution Date will be funded from Available Series 1999-2 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
respective classes of the Series 1999-2 Securities and deposited on each
business day during such Monthly Period in the Interest Funding Account.
"Class A Invested Amount" shall mean, when used with respect
to any Business Day, the greater of (x) zero and (y) an amount equal to (a) the
Class A Initial Invested Amount less the Initial Pre-Funded Amount plus the
amount 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 (excluding principal payments
made from the Pre-Funding Account) made to Class A Securityholders through and
including such Business Day, minus (c) the aggregate amount of Class A
Charge-Offs for all prior Distribution Dates, plus (d) the sum of the aggregate
amount reimbursed with respect to reductions of the Class A Invested Amount
through and including such Business Day pursuant to subsection 4.9(a)(v) of the
Agreement plus, with respect to such subsection, amounts applied thereto
pursuant to subsections 4.10(a) and (b), 4.16, 4.19(b) and 4.20(b), (c) and (d)
of the Agreement, for the purpose of reimbursing amounts deducted pursuant to
the foregoing clause (c); provided, however that the Class A Invested Amount may
not be reduced below zero.
Unless a Pay Out Event has occurred resulting in the commencement of
the Early Amortization Period, principal with respect to the Class A Securities
is expected to be paid on the Scheduled Final Payment Date, provided that the
Class A Securityholders will receive payments of principal earlier than such
date if the Servicer elects not to extend the Initial Principal Payment Date (a
"Principal Payment Event"). The "Initial Principal Payment Date" will initially
be October 20, 2004, but will automatically be extended to the Distribution Date
following the then-current Initial Principal Payment Date on September 20, 2004
and each successive Distribution Date thereafter unless and until the Servicer,
no later than the Distribution Date prior to the then-current Initial Principal
Date, elects not to cause such extension. In the event that the Servicer elects
not to extend any Initial Principal Payment Date, the Revolving Period or the
Accumulation Period, as applicable, will end, and the Principal Payment Period
will commence. The "Principal Payment Period" means the period beginning on the
Initial Principal Payment Date following the Servicer's election not to extend
such Initial Principal Payment Date and ending on the earliest to occur of (i)
the commencement of the Early Amortization Period, (ii) the payment in full of
the Invested Amount and (iii) the Series 1999-2 Termination Date. During the
Principal Payment Period, interest will be paid monthly on each Distribution
Date, and amounts then on deposit in the Principal Funding Account and Available
Series 1999-2 Principal Collections with respect to each Distribution Date
commencing on the Initial Principal Payment Date will be paid first to the Class
A Securityholders until the earlier of the date on which the Class A Invested
Amount is paid in full or the Series 1999-2 Termination Date and then to the
Class B Securityholders until the earlier of the date on which the Class B
Invested Amount is paid in full or the Series 1999-2 Termination Date.
Subject to the Agreement, payments of principal are limited to
the unpaid Class A Invested Amount of the Class A Securities, which may be less
than the unpaid balance of the Class A Securities pursuant to the terms of the
Agreement. All principal on the Class A Securities is due and payable no later
than the January 2010 Distribution Date (or if such day is not a Business Day,
the next succeeding Business Day) (the "Scheduled Series 1999-2 Termination
Date").After the earlier to occur of (i) the Scheduled Series 1999-2 Termination
Date and (ii) the day after the Distribution Date on which the Series 1999-2
Securities are paid in full (the "Series 1999-2 Termination Date") neither the
Trust nor the Transferor will have any further obligation to distribute
principal or interest on the Class A Securities. In the event that the Class A
Invested Amount is greater than zero on the Series 1999-2 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 and the Class B Invested Amount at the close of business
on such date (but not more than the total amount of Receivables allocable to the
Investor Securities), and shall pay the proceeds to the Class A Securityholders
pro rata in final payment of the Class A Securities, then to the Class B
Securityholders pro rata in final payment of the Class B Securities.
Unless the certificate of authentication hereon has been
executed by or on behalf of the Trustee, by manual signature, this Security
shall not be entitled to any benefit under the Agreement, or be valid for any
purpose.
IN WITNESS WHEREOF, the Transferor has caused this Security to
be duly executed.
METRIS RECEIVABLES, INC.
By:
Name:
Title:
Dated: __________ , ______
CERTIFICATE OF AUTHENTICATION
This is one of the Class A Securities referred to in the
within-mentioned Pooling and Servicing Agreement.
THE BANK OF NEW YORK
By:
Name:
Title:
Exhibit A-2
FORM OF CLASS B INVESTOR SECURITY
THIS SECURITY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"). THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR ANY
APPLICABLE STATE SECURITIES LAW OF ANY STATE AND MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED UNLESS REGISTERED PURSUANT TO OR EXEMPT FROM
REGISTRATION UNDER THE SECURITIES ACT AND ANY OTHER APPLICABLE SECURITIES LAW.
TRANSFERS OF THIS SECURITY SHALL BE SUBJECT TO THE RESTRICTIONS SET FORTH IN THE
POOLING AND SERVICING AGREEMENT.
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. ___ $_________
METRIS MASTER TRUST
ASSET BACKED
SECURITY, SERIES 1999-2, 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 "Securityholder") is
the registered owner of a fractional undivided interest in the Metris Master
Trust (the "Trust") issued pursuant to the Amended and Restated Pooling and
Servicing Agreement, dated as of July 30, 1998 (the "Pooling and Servicing
Agreement"; such term to include any amendment or Supplement 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 1999-2 Supplement, dated as of September 22,
1999 (the "Series 1999-2 Supplement"), among the Transferor, the Servicer and
the Trustee. The Pooling and Servicing Agreement, as supplemented by the Series
1999-2 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 Security does not purport to summarize the Agreement and
reference is made to that Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds, and duties evidenced hereby
and the rights, duties and obligations of the Trustee. To the extent not defined
herein, the capitalized terms used herein have the meanings ascribed to them in
the Agreement. This Securities is one of a series of Securities entitled "Metris
Master Trust Asset Backed Securities, Series 1999-2, Class B" (the "Class B
Securities"), each of which represents a fractional undivided interest in the
Trust, and is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement, as amended from time to time,
the Securityholder by virtue of the acceptance hereof assents and by which the
Securityholder is bound.
Metris Receivables, Inc. shall be prohibited from transferring
any interest in or portion of the Class B Securities.
No principal will be payable to the Class B Securityholders
(other than with respect to Class B Excess Amounts) until the earlier of the
Scheduled Final Payment Date and, upon the occurrence of a Pay Out Event or
Principal Payment Event, the Distribution Date following the Monthly Period in
which the Pay Out Event or Principal Payment Event occurs but in no event
earlier than the Distribution Date either on or following the Distribution Date
on which Class A Invested Amount has been paid in full. No principal will be
payable to the Class B Securityholders until all principal payments have first
been made to the Class A Securityholders.
"Class B Invested Amount" shall mean, when used with respect
to any Business Day, the greater of (x) zero and (y) an amount equal to (a) the
initial principal balance of the Class B Securities, minus (b) the aggregate
amount of principal payments made to Class B Securityholders through and
including such Business Day, minus (c) the aggregate amounts by which the
Transferor has reduced the Class B Invested Amount pursuant to subsection
4.12(b) of the Agreement, minus (d) the aggregate amount of Class B Charge-Offs
for all prior Distribution Dates, minus (e) the aggregate amount of Redirected
Principal Collections for all prior Distribution Dates plus (f) the sum of the
aggregate amount reimbursed with respect to reductions of the Class B Invested
Amount through and including such Business Day pursuant to subsection 4.9(a)(x)
of the Agreement plus, with respect to such subsection, amounts applied thereto
pursuant to subsections 4.10(a) and (b), 4.19(b) and 4.20(b), (c) and (d) of the
Agreement, for the purpose of reimbursing amounts deducted pursuant to the
foregoing clauses (d) and (e); provided, however that the Class B Invested
Amount may not be reduced below zero.
Unless a Pay Out Event has occurred resulting in the commencement of
the Early Amortization Period, principal with respect to the Class A Securities
is expected to be paid on the Scheduled Final Payment Date, provided that the
Class A Securityholders will receive payments of principal earlier than such
date if the Servicer elects not to extend the Initial Principal Payment Date (a
"Principal Payment Event"). The "Initial Principal Payment Date" will initially
be October 20, 2004, but will automatically be extended to the Distribution Date
following the then-current Initial Principal Payment Date on September 20, 2004
and each successive Distribution Date thereafter unless and until the Servicer,
no later than the Distribution Date prior to the then-current Initial Principal
Date, elects not to cause such extension. In the event that the Servicer elects
not to extend any Initial Principal Payment Date, the Revolving Period or the
Accumulation Period, as applicable, will end, and the Principal Payment Period
will commence. The "Principal Payment Period" means the period beginning on the
Initial Principal Payment Date following the Servicer's election not to extend
such Initial Principal Payment Date and ending on the earliest to occur of (i)
the commencement of the Early Amortization Period, (ii) the payment in full of
the Invested Amount and (iii) the Series 1999-2 Termination Date. During the
Principal Payment Period, interest will be paid monthly on each Distribution
Date, and amounts then on deposit in the Principal Funding Account and Available
Series 1999-2 Principal Collections with respect to each Distribution Date
commencing on the Initial Principal Payment Date will be paid first to the Class
A Securityholders until the earlier of the date on which the Class A Invested
Amount is paid in full or the Series 1999-2 Termination Date and then to the
Class B Securityholders until the earlier of the date on which the Class B
Invested Amount is paid in full or the Series 1999-2 Termination Date.
Subject to the Agreement, payments of principal are limited to
the unpaid Class B Invested Amount of the Class B Securities, which may be less
than the unpaid balance of the Class B Securities pursuant to the terms of the
Agreement. All principal on the Class B Securities is due and payable no later
than the January 2010 Distribution Date (or if such day is not a Business Day,
the next succeeding Business Day) (the "Scheduled Series 1999-2 Termination
Date"). After the earlier to occur of (i) the Scheduled Series 1999-2
Termination Date or (ii) the day after the Distribution Date on which the Series
1999-2 Securities are paid in full (the "Series 1999-2 Termination Date")
neither the Trust nor the Transferor will have any further obligation to
distribute principal or interest on the Class B Securities. In the event that
the Class B Invested Amount is greater than zero on the Series Termination Date,
the Trustee will sell or cause to be sold, to the extent necessary, an amount of
interests in the Receivables or certain of the Receivables up to 110% of the
Class A Invested Amount and the Class B Invested Amount at the close of business
on such date (but not more than the total amount of Receivables allocable to the
Investor Securities), and shall pay the proceeds to the Class A Securityholders
pro rata in final payment of the Class A Securities and then to the Class B
Securityholders pro rata in final payment of the Class B Securities.
Unless the certificate of authentication hereon has been
executed by or on behalf of the Trustee, by manual signature, this Security
shall not be entitled to any benefit under the Agreement, or be valid for any
purpose.
IN WITNESS WHEREOF, the Transferor has caused this Security to
be duly executed.
METRIS RECEIVABLES, INC.
By:
Name:
Title:
Dated: _____________, ______
CERTIFICATE OF AUTHENTICATION
This is one of the Class B Securities referred to in the
within-mentioned Pooling and Servicing Agreement.
THE BANK OF NEW YORK
By:
Name:
Title:
EXHIBIT B
Metris Receivables, Inc. Metris Master Trust Monthly Report
Securityholder's Statement Series 1999-2 Month-Year
Section 5.2 Class A Class B Total
(i) Security Amount
(ii) Security Principal Distributed
(iii) Security Interest Distributed
(iv) Principal Collections
(v) Finance Charge Collections
Recoveries
Initial Interest Funding Account Deposit
Interest Earned on Accounts
Total Finance Charge Collections
Total Collections
(vi) Aggregate Amount of Principal Receivables
Invested Amount (End of Month)
Floating Allocation Percentage
Fixed/Floating Allocation Percentage
Invested Amount (Beginning of Month)
Average Daily Invested Amount
(vii) Receivable Delinquencies (as a % of Total Receivables) Current 30 Days
to 59 Days (1 to 29 Days Contractually Delinquent) 60 Days to 89 Days
(30 to 59 Days Contractually Delinquent) 90 Days and Over (60+ Days
Contractually Delinquent)
Total Receivables
(viii) Aggregate Investor Default Amount
As a % of Average Daily Invested Amount
(Annualized based on 366 days/year) (ix) Charge-Offs (x) Servicing Fee
(xi) Unreimbursed Redirected Principal Collections (xii) Excess Funding Account
Balance (xiii) New Accounts Added (xiv) Average Gross Portfolio Yield
Average Net Portfolio Yield
(xv) Minimum Base Rate
Excess Spread
(xvi) Principal Funding Account Balance (xvii) Accumulation Shortfall (xviii)
Scheduled date for the commencement
of the Accumulation Period
Accumulation Period Length
(xix) Principal Funding Account Investment Proceeds Deposit
Required Reserve Account Amount
Available Reserve Account Amount
Covered Amount
(xx) Aggregrate Interest Rate Caps Notional Amount
Deposit to the Caps Proceeds Account
(xxi) Policy Claim Amount
