SUPPLEMENT NO. 1 TO STOCK PURCHASE AGREEMENT AMONG FINGERHUT DIRECT MARKETING, INC. AND THE SUPPLEMENTAL PURCHASERS NAMED ON THE SUPPLEMENTAL SCHEDULE I HERETO Dated as of October 27, 2004

Exhibit 4.3

SUPPLEMENT NO. 1 TO STOCK PURCHASE AGREEMENT
AMONG
FINGERHUT DIRECT MARKETING, INC.
AND

THE SUPPLEMENTAL PURCHASERS NAMED ON
THE SUPPLEMENTAL SCHEDULE I HERETO

Dated as of October 27, 2004

SUPPLEMENT NO. 1 TO STOCK PURCHASE AGREEMENT

This SUPPLEMENT NO. 1 TO STOCK PURCHASE AGREEMENT (this “Supplement”) is made and entered into this 27^th day of October, 2004 (the “Purchase Date”) by and among Fingerhut Direct Marketing, Inc., a Delaware corporation (the “Company”), Xxxx Capital Venture Fund, L.P., a Delaware limited partnership (“Xxxx Capital”). certain entities related to Xxxx Capital listed on Supplemental Schedule I attached hereto, Battery Ventures VI, L.P., a Delaware limited partnership (“Battery Ventures”), certain Affiliates of Battery Ventures listed on Supplemental Schedule I, Petters Company, Inc., a Minnesota corporation (“PCI”), CIGPF I. Corp. (the “Warrant Investor” or the “Additional Purchaser” in its capacity as a holder of a Warrant or as a purchaser hereunder, and not its capacity as a lender) and the other purchasers listed on the Supplemental Schedule I (each such purchaser is referred to herein as a “Supplemental Purchaser,” and such purchasers collectively are referred to herein as the “Supplemental Purchasers”).

This Supplement supplements and amends that certain Stock Purchase Agreement dated as of February 24, 2004 (the “Purchase Agreement”) by and among the persons and entities named on Schedule I thereto (the “Existing Purchasers”), which Existing Purchasers include, but are not limited to, the Supplemental Purchasers other than the Additional Purchaser. The Existing Purchasers and the Supplemental Purchasers are collectively referred to as the “Purchasers.” Terms not defined in this Supplement have the meaning given them in the Purchase Agreement.

WITNESSETH

WHEREAS, the Company previously sold and issued an aggregate of 597,469,749 shares of Series A Preferred Stock pursuant to the Purchase Agreement;

WHEREAS, the Company desires to sell and issue to the Supplemental Purchasers listed on Supplemental Schedule I attached hereto 47,569,213 shares of Series A Convertible Preferred Stock;

WHEREAS, the Company desires to supplement and amend the Purchase Agreement to, among other things, reflect the aggregate number of shares of Series A Preferred Stock it desires to sell and issue; and

WHEREAS, Section 11.1 of the Purchase Agreement provides that the Purchase Agreement may be amended by a written instrument signed by the Company and holders of 75% of the shares of Series A Preferred Stock then outstanding;

WHEREAS, the Supplemental Purchasers hold more than 75% of the shares of Series A Preferred Stock currently outstanding;

NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties and covenants herein contained, the parties hereto hereby agree as follows:

1. Authorization of Additional Securities. The Company has authorized the issuance and sale to the Supplemental Purchasers of up to an additional 47,569,213 shares of its Series A Convertible Preferred Stock, par value $.00001 per share (the “Series A Preferred Stock”), which are convertible into shares of the Company’s common stock, par value $.00001 per share (the “Common Stock”), pursuant to an Amendment No. 1 to the Second Amended and Restated Certificate of Incorporation attached hereto as Exhibit A (the “Amended Charter”). For purposes of their Supplement, the term “Securities” shall include the shares of Series A Preferred Stock sold hereunder, as well as the shares of Common Stock into which such Series A Preferred Stock is convertible (the “Conversion Shares”).

2. Sale and Purchase; Supplemental Closing.

2.1. Purchase and Sale. Upon the terms and subject to the conditions herein contained, the Company agrees to sell to the Supplemental Purchasers, and each Supplemental Purchaser agrees, severally and not jointly, to purchase from the Company, at the Supplemental Closing (as defined below), the number of shares of Series A Preferred Stock set forth in the column “Shares Purchased” opposite such Supplemental Purchaser’s name on Supplemental Schedule I, for a purchase price per share of $0.10511 (the “Purchase Price”), payable in cash.

2.2. Supplemental Closing; Payment of Purchase Price. The supplemental closing (the “Supplemental Closing”) with respect to the transaction contemplated in Section 2.1 hereof shall take place at the offices of the Company at 10:00 a.m. on October ____, 2004, or at such other time and place as the Company and Supplemental Purchasers may agree (the “Supplemental Closing Date”). At the Supplemental Closing, the Company shall deliver to each Supplemental Purchaser a certificate representing the Series A Preferred Stock which such Supplemental Purchaser is purchasing at the Supplemental Closing, registered in the name of such Supplemental Purchaser, against delivery to the Company by such Supplemental Purchaser of a wire transfer in the amount of the Purchase Price therefor.

3. Other Transactional Documents.

3.1. Investor Rights Agreement. With respect to that certain Investor Rights Agreement dated as of February 24, 2004 among the Company, the Supplemental Purchasers and the other parties identified therein (the “Investor Rights Agreement”), the parties hereto acknowledge and agree that the Series A Preferred Stock issued and sold hereunder shall be deemed to be “Series A Preferred Stock,” and the Conversion Shares shall also be “Registrable Securities,” each with the meaning of the Investor Rights Agreement.

3.2. Stockholders Agreement. With respect to that certain Stockholders Agreement dated as of February 24, 2004 among the Company, the Supplemental Purchasers and the other parties identified therein (the “Stockholders Agreement”), the Supplemental Purchasers, including the Warrant Investor, holding more than 75% of the currently outstanding shares of Series A Preferred Stock, hereby:

(a) Designate the Securities as Excluded Securities within the meaning of Section 3.6 of the Stockholders Agreement pursuant to Section 3.6(g) thereof, and agree and acknowledge that, as a result, the Investors’ Purchase Rights (as defined in Section 3.1 of the Stockholders Agreement) shall not apply to the issuance of the Securities, and the parties hereto acknowledge and agree that the Series A Preferred Stock issued and sold hereunder shall also be “Series A Preferred Stock,” and the Securities shall also be “Shares,” each with the meaning of the Stockholders Agreement.

(b) Acknowledge and agree that with respect to 17,672,414 shares of Common Stock of the Company currently held by FAC Acquisition, LLC, such shares of Common Stock may be transferred to Xxxxxxxx Xxxxxx (“Deikel”) and then by him to Xxxxxx Xxxxxxx-Xxxxx, a step-daughter of Deikel, each as a Permitted Transferee within the meaning of the Stockholder Agreement (subject to her agreement in writing to be bound by the Stockholders Agreement).

(c) Consent to the consummation of the transactions contemplated by the Repurchase Agreement dated as of October 25, 2004 between the Company and Deikel (the “Repurchase Agreement”), and acknowledge and agree that the Stockholders Agreement shall not apply thereto, provided, however, that the foregoing is subject to consummation of such transaction consistent with the Capitalization Table attached hereto as Exhibit A.

3.3. Representations and Warranties of the Supplemental Purchasers; Register of Securities; Restrictions on Transfer. Each Supplemental Purchaser, severally as to itself and not jointly, represents and warrants to the Company as of the Supplemental Closing that the representations and warranties in Section 4 of the Purchase Agreement are true and correct in respect of such Purchaser as of the date hereof.

4. Representations and Warranties by the Company. The Company represents and warrants to each Supplemental Purchaser as of the Supplemental Closing that the representations and warranties of the Company in Section 4 of the Purchase Agreement, as supplemented and amended by this Section 4 of this Supplement, are true and correct as of the date hereof, except as set forth on the Disclosure Schedules attached to the Purchase Agreement and the Supplemental Disclosure Schedule attached hereto. To the extent that the following Sections of this Section 4 of this Supplement expressly provide that certain matters, facts or circumstances need not be disclosed in the Supplemental Disclosure Schedule, the existence of such matters, facts or circumstances which do not need to be disclosed shall not be deemed to be a breach of any of the representations and warranties in Section 4 of the Purchase Agreement, as supplemented and amended hereby. Solely for purposes of the Supplemental Closing, the representations and warranties of the Company in Section 4 of the Purchase Agreement are supplemented and amended by this Supplement as follows:

4.1. Material Contracts. With reference to Section 5.9 of the Purchase Agreement, the Supplemental Disclosure Schedule need not identify any Material Contracts which have been entered into by the Company or a Subsidiary since February 24, 2004, (i) which have

been approved by the Board of Directors, or (ii) which, by their terms involve, or would reasonably be expected to involve, aggregate payments by or to the Company or any Subsidiary of less than $1,000,000 (a Material Contract that meets the requirements of such clauses (i) and (ii), a “Substantial Contract”).

4.2. Absence of Certain Changes; Financial Statements. With reference to Section 5.13 of the Purchase Agreement, the “Balance Sheet Date” shall be August 31, 2004 and the “Financial Statements” shall refer to the Company’s financial statements as of such date. With reference to Section 5.13(b)(3), the Supplemental Disclosure Schedule need identify only Substantial Contracts entered into by the Company since February 24, 2004. With reference to Section 5.13(b)(4), the Supplemental Disclosure Schedule need not identify any matter, fact or circumstance referenced in Section 5.13(b)(4) that has been approved by the Board of Directors.

4.3. No Undisclosed Material Liabilities. With reference to Section 5.14(c) of the Purchase Agreement, the Supplemental Disclosure Schedule need not identify any liability referenced in Section 5.14(c)(i) which has been approved by the Board of Directors, or (ii) which involves, or would reasonably be expected to involve, aggregate payments by the Company or any Subsidiary of less than $1,000,000.

4.4. Absence of Changes. With reference to Section 5.26 of the Purchase Agreement, the date referenced in the introductory sentence shall be changed from October 31, 2003 to August 31, 2004. With reference to Section 5.26(1), effects resulting from a delay in consummating the transactions contemplated hereby shall not be deemed a “Material Adverse Effect” and the Supplemental Disclosure Schedule need not identify any such effect. Further, the representations and warranties made in Section 5.26(2) to (10) are made only to the knowledge of the Chief Executive Officer and General Counsel, and the Supplemental Disclosure Schedule need not identify any matter, fact or circumstance otherwise referenced therein which is not known to them.

4.5. Late Payments. With reference to Sections 5.8_; 5.9, 5.13 and 5.26 of the Purchase Agreement, to the extent that the failure to pay amounts owing to third parties when due (a “Late Payment”) would otherwise constitute a breach of the representations or warranties made therein, the Supplemental Disclosure Schedule need disclose such Late Payments only to the extent (i) such Late Payments are owed to any senior financial institution lender by the Company, (ii) are in excess of $1,000,000 owed to any one party, or (iii) are in the aggregate in excess of $2,000,0000 (in which case the Supplemental Disclosure Schedule need identify only the aggregate amount thereof).

5. Conditions of Parties’ Obligations.

5.1. Conditions of the Supplemental Purchasers’ Obligations. The obligations of each of the Supplemental Purchasers under this Supplement are subject to the fulfillment prior to or on the Supplemental Closing Date of 211 of the following conditions, any of which may be waived in whole or in part by such Supplemental Purchaser.

(a) Representations and Warranties. The representations and

warranties of the Company contained in this Agreement shall be true and correct in all respects on and as of the Supplemental Closing Date with the same effect as though such representations and warranties had been made on and as of the Supplemental Closing Date.

(b) Performance The Company shall have performed and complied with all agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with it on or before the Supplemental Closing.

(c) Amended Charter. The Amended Charter shall have been filed with the Secretary of State of the State of Delaware, and the Supplemental Purchasers shall have received confirmation from the Secretary of State of the State of Delaware reasonably satisfactory to them that such filing has occurred.

(d) Qualification Under State Securities Laws. All registrations, qualifications, permits and approvals, if any, required under applicable state securities laws shall have been obtained for the lawful execution, delivery and performance of this Agreement , including without limitation the offer and sale of the Securities.

(e) Consents and Waivers The Company shall have obtained all consents or waivers necessary to execute and perform its obligations under this Agreement, to issue the Series A Preferred Stock and the Conversion Shares, and to carry out the transactions contemplated hereby. All corporate and other action and governmental filings necessary to effectuate the terms of the Amended Charter, this Agreement, the Series A Preferred Stock and the Conversion Shares, and other agreements and instruments executed and delivered by the Company in connection herewith shall have been made or taken.

(f) Satisfaction of Obligations. Each of the other Supplemental Purchasers shall have simultaneously complied with their obligations under Section 2 hereof.

(g) Supporting Documents. The Purchasers at the Supplemental Closing shall have received the following:

(1) an opinion or opinions from counsel to the Company dated as of the Supplemental Closing Date;

(2) Copies of resolutions of the Board of Directors of the Company, certified by the Secretary of the Company, authorizing and approving the filing of the Amended Charter, the execution, delivery and performance of this Agreement and all other documents and instruments to be delivered pursuant hereto and thereto;

(3) Copies of resolutions of the stockholders of the Company, certified by the Secretary of the Company, authorizing and approving the filing of the Amended Charter and the transactions contemplated hereby; and

(4) A certificate of incumbency executed by the Secretary of the Company (A) certifying the names, titles and signatures of the officers authorized to execute the documents referred to in subparagraphs (2) and (3) above and (B) further certifying that the Amended Charter at the time of the execution of this Agreement has been validly adopted and has not been amended or modified.

(h) Purchaser Expenses. The Company shall have paid the expenses of Xxxx Capital and Battery Ventures, and the fees, expenses and disbursements of Ropes & Xxxx LLP, as counsel to Xxxx Capital and Battery Ventures, incurred in connection with the transactions contemplated hereby up to a maximum of $

(i) Compliance Certificates. The Company shall have delivered to the Supplemental Purchasers a Compliance Certificate, executed by the President of the Company, dated as of the Supplemental Closing Date to the effect that the conditions specified in subsections (a) through (e) and (h) of this Section 5.1 have been satisfied.

(j) Material Adverse Change; Market Conditions. (i) The Company shall not have suffered any Material Adverse Effect with respect to its business, financial condition, results of operations, assets, liabilities or prospects (excluding any Material Adverse Effect that does not need to be disclosed in the Supplemental Disclosure Schedule); and (ii) there shall have been no material adverse change in general market conditions as determined in the reasonable discretion of Xxxx Capital and Battery Ventures.

5.2. Conditions of the Company’s Obligations. The obligations of the Company under Section 2 hereof are subject to the fulfillment prior to or on the Supplemental Closing Date of all of the following conditions, any of which may be waived in whole or in part by the Company.

(a) Covenants; Representations and Warranties. (i) Each of the Supplemental Purchasers at the Supplemental Closing Date shall have performed in all material respects all of its obligations hereunder required to be performed by it at or prior to the Supplemental Closing Date and (ii) the representations and warranties of each of the Supplemental Purchasers at the Supplemental Closing Date contained in this Agreement shall be true and correct in all material respects at and as of the Supplemental Closing Date as if made at and as of the Supplemental Closing Date (except to the extent expressly made as of an earlier date, in which case as of such earlier date).

5.3. Conditions of Each Party’s Obligations. The respective obligations of each party to consummate the transactions contemplated hereunder are subject to the parties being reasonably satisfied as to the absence of (a) litigation challenging or seeking damages in connection with the transactions contemplated by this Supplement and (b) any statute, rule, regulation, injunction, order or decree, enacted, enforced, promulgated, entered, issued or deemed applicable to this Agreement or the transactions contemplated hereby (or in the case of any statute, rule or regulation, awaiting signature or reasonably expected to become law), by any court, government or governmental authority or agency or legislative body, domestic, foreign or

supranational, that would, or would reasonably be expected to, prohibit or enjoin the transactions contemplated by this Supplement.

6. Miscellaneous. Except as supplemented and amended hereby, the Purchase Agreement shall continue in full force and effect.

IN WITNESS WHEREOF, the parties hereto have caused this Supplement to be duly executed as of the day and year first above written.


THE COMPANY FINGERHUT DIRECT MARKETING, INC.
By:	/s/ Xxxxx Xxxxx
	Name:	Xxxxx Xxxxx
	Title:	CEO


THE SUPPLEMENTAL PURCHASERS XXXX CAPITAL VENTURE FUND, L.P.
By:	Xxxx Capital Venture Partners, L.P. its general partner


By:	Xxxx Capital Investors, LLC its general partner


By:	/s/ Xxxxxxx Xxxxxx
	Name:	Xxxxxxx Xxxxxx
	Title:	Authorized Person

BCIP ASSOCIATES III, LLC
By:	BCIP Associates III, its manager

BCIP ASSOCIATES III-B, LLC
By:	BCIP Associates III-B, its manager


By:	Xxxx Capital Investors, LLC their Managing Partner


By:	/s/ Xxxxxxx Xxxxxx
	Name:	Xxxxxxx Xxxxxx
	Title:	Authorized Person

Brookside Capital Partners Fund, L.P.
By:	/s/ [ILLEGIBLE]

RGIP, LLC
By:	/s/ [ILLEGIBLE]
	Name:
	Title:	Managing Member


BATTERY VENTURES VI, L.P.
By:	Battery Partners VI, LLC General Partner

/s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: Member Manager

BATTERY INVESTMENT PARTNERS VI, LLC
/s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: Member Manager

PETTERS COMPANY, INC.
/s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: CEO

/s/ Xxxxx Xxxxx
Xxxxx Xxxxx

CIGPF I Corp.
By:	/s/ Xxx Xxxxxxxxx
	Name:	Xxx Xxxxxxxxx
	Title:	Vice President

SUPPLEMENTAL SCHEDULE I


Supplemental Purchaser	Shares Purchased		Purchase Price
Xxxx Capital Venture Fund, L.P.		5,116,573	$	537,802.99
BCIP Associates III, LLC		911,564	$	95,814.49
BCIP Associates III-B, LLC		63,563	$	6,681.11
RGIP, LLC		61,532	$	6,467.63
Brookside Capital Partners Fund, L.P.		6,153,231	$	646,766.11
Battery Ventures VI, L.P.		11,814,204	$	1,241,790.98
Battery Investment Partners VI, LLC		492,259	$	51,741.34
Petters Company, Inc.		20,826,322	$	2,189,054.71
Xxxxx Xxxxx		227,196	$	23,880.57
CIGPF I Corp.		1,902,769	$	200,000.05
TOTAL		47,569,213	$	4,999,999.96

EXHIBIT A

SUPPLEMENTAL CONSENT

The undersigned is a holder of Series A Convertible Preferred Stock, but is not a Supplemental Purchaser. Whether or not the undersigned’s consent is otherwise required, for avoidance of doubt, the undersigned hereby consents to the Supplement and the transactions contemplated thereby, including, without limitation, with respect to those matters set forth in Section 3 of above.



		Xxxxxxxx Xxxxxx

Schedule 5.1(a)

Capitalization Table after giving effect to the Amended and Restated Certificate of Incorporation and Closing.


	Cannot												Series A First Closing																	Pro Forma Series A Second Closing & Redemption
Fingerhut Direct Marketing, inc.					Fully										Addl			Additional			Fully											Addl			Additional
Cap Table 10.2704	Series A		Fully Diluted		Diluted Series A					Outstanding			Achill Equity		Equity			Series A	Fully Diluted		Diluted			Pfd			OUtstanding			Addtl Equity		Equity			Series A		Fully Diluted		Fully			Pfd
Sodas A	Investment		Shares		%		'1			%			Investment		%			Shares	Shares		%			%			%			Investment		%			Shares		Shares		Diluted			%			OutstendIng
Series A (Two Ctosings)
Bain/Battery Investors	$	32,500,000		309,200,109	35.0	%		51.8	%		48.2	%	5	2,587,065		51.7	%	24,612,626		333,813,035		39.7	%		51.8	%		460	%	$	0960.464		52.8	%		68,505,178		400.319,213		42.4	%		53.8	%		48.9	%
Petters	5	27.500,000		281,930,881	33.0	%		43.8	%		301	%	S	2,189.055		43.8	%	20,826,322		282,457,183		33.8	%		43.8	%		39.4	%	5	5,915,008		44.5	%		56,274,458		338,731,541		35.9	%		45.3	%		41.4	%
Smah	5	300,000		2,854,155	0.4	%		0.5	%		0.4	%	5	23,881		0.6	%	227,186		3,081,351		0.4	%		0.5	%		0.4	%	$	84,527		0.5	%		813,803		3.695.254		0.4	%		0.5	%		0505
Dental	$	2.500,000		23.784.824	3.0	%		4.0	%		3.6	%	$			0.0	%			23,784,624		2.8	%		3.7	%		3.3	%	$			0.0	%						0.0	%		0.0	%		0.0	%

Subtotal	$	62,800,000		597,4614748	75.4	%		100.0	%		88.3	%	S	4,800,000		86.0	%	45,868444		643,136,193		75.6	%		99.7	%		89.7	%	$	12.970,000		97.9	%		123,384,539		742,746,108		78.7	%		99.4	%		90.7	%
Citigroup (1)	$				0.0	%		0.0	%		0.0	%	$	200.000		4.0	%	1,902,769		1,902,769		0.2	%		0.3	%		0.3	%	$	280,000		2.1	%		2,663.876		4,566,845		0.5	%		0.8	%		0.9	%

Series A Subtotal	$	62,800.000		597,489,749	75.4	%		100.0	%		89.3	%	$	5,000.000		100.0	%	47,569,213		645,038,962		76,8	%		100.11	%		90.0	%	$	13,250,000		100.9	%		128,058,415		747,312,753		79.2	%		100.0	%		91.2	%
Common Xxxxx
Xxxxxxx				32,758,621	4.1	%					4.9	%								32,758.621		3.9	%					4.6	%									32,758,621		3.5	%					4.0	%
FAC/Delkel (2)				28,850,862	3.6	%					4.3	%								28,850,862		3.4	%					4.0	%									28,850,862		3.1	%					3.5	%
FITS (3)				1,321,552	0.2	%					0.2	%								1,321.552		0.2	%					02	%									1,321,552		0.1	%					02	%

Outstanding Common				62,931,035	7.9	%					9.4	%								62,931,035		7.5	%					8.8	%									62,931,035		6.7	%					7.7	%
Existing Xxxx! Option				.3,983233	0.5	%														3,983,333		0.5	%															3,983,333		0.4	%
New Delkel Option				18,1113,658	2.0	%														16,103,658		1.9	%															16,103.655		1.7	%

Subtotal				20,086,991	2.5	%														20,088,991		2.4	%															20086,891		2.1	%
Management Option Pool (4)				63,378,157	8.0	%					1.3	%								63,378,157		7.5	%					1.2	%									63,378.157		6.7	%					1.1	%
atiGroup Warrant				31,689,078	4.0	%														31,669,078		3.8	%															31,689,078		3.4	%
Additional CIiGroup Warrant					0.0	%		..-														0.0	%															1,427,076		0.2	%
Epsilon Warrant				4,779,840	0.6	%														4,779,640		0.6	%															4,779,640		0.5	%
ChenyTree Warrant				7,135,387	0.9	%														7,135,387		0.8	%															7,135,387		0.8	%
Piper Warrant				4,756,925	0.6	%														4,766,925		0.6	%															4.756.925		0.5	%

Subtotal				48,361,030	6.1	%														48,381,030		5.5	%															48,788,108		5.3	%

Common Subtotal				184,757,213	24.6	%					10.7	%								194.757,213		23.2	%					10.0	%									196,184,289		20.8	%					8.8	%
	Per Share																	Per Share												Per Share

Total		00.1051 to 1		702,226962	100.0	%					100.0	%		50.1051101						839,796,175		100.01,						100.0	%		50.1051101							943,497,442		100.0	%					100.0	%

Total BainlBattery Ownership					30.0	%					46.2	%										39.7	%					45.6	%											42.4	%					48.9	%
Total Petters Ownership					38.6	%					.45.7	%										38.9	%					45.6	%											40.6	%					46.8	%
Total Demi Ownership					7.8	%					6.2	%										7.3	%					5.8	%											4.0	%					2.2	%
Total Ckigroup Ownership					4.0	%					0.0	%										4.0	%					0.3	%											4.0	%					0,6	%


(1)		Actually held by CIGPF I Corp.

(2)		Of FAC’s common ownership, 11,178,448 is allocable lo Petters and 17,672,414 is allocable to Deiket Delkers common share to be transferred to family member.

(3)		Of RTB’s ownership, 226,000 is allocable to Petters

(4)		Subject to confirmation, approximately 8.7 million restricted shares have been issued under the 2003 Equity Incentive Plan.


	Current													Series A First Closure																		Pro Forma Series A Second Closing & Redemption
FIngerhut Direct Marketing, inc.					Fully						Outstan					Add'!			Additional				Fully						Outstare					Add"			Additional				Fully
Cap Table 10-27-04	Series A		Fully Diluted		Diluted Series A						ding			Addll Equity		Equity			Series A		Fully Diluted		Diluted			Pfd			ding			Adrift Equity		Equity			Series A		Fully Diluted		Diluted			Pfd			Outstanding
Series A	Investment		Shares		%			%			%			Investment		%			Shares		Shares		%			%			%			Investment		'Y.			Shares		Shams		%			•			%

Series A (Two (l051505)
Xxxx/Battery Investors	$	32.500.000		309,200,109		39.0	%		51.8	%		462	%	$	2,587,066		51.7	%		24,612,928		333,813,035		39.7	%		51,614			46.6	%	$	6,990,464		52.8	%		68,506,176		400,319,213		42.4	%		53.8	%		48.8	%
Petters	S	27.500.000		281,630,861		33.0	%		43.8	%		39.1	%	$	2,189,065		43.8	%		20,826,322		282.457,183'		33.6	%		43.8	%		39.4	%	$	5,915,008		44.5	%		58,274,458		338,731,841		35.9	%		45.3	%		41.4	%
Xxxxx	$	300,000		2,854,155		0.4	%		0.5	%		0.4	%	$	23,881		0.5	%		227,196		3,681,351		0.4	%		0.5	%		0.4	%	6	64,627		0.5	%		613,903		3,695,254		0.4	%		0.5	%		0.5	%
Deikel	$	2.500,000		23,764,624		3.0	%		4.0	%		3.6	%	S			0.0	%				23,784,624		2.8	%		3.7	%		3.3	%	$			0.0	%		—				0.0	%		0.0	%		0.0	%

Subtotal	$	62,800,000		507,469,749		75.4	%		100.0	%		89.3	%	$	4,800,000		' 96.0	%		45,666,444		643,138,193		76.6	%		99.7	%		99.7	%	S	12,970,000		97.9	%		123,394,539		742,749108		78.7	%		99.4	%		90.7	%
Ckigroup (1)	$	—		—		0.0	%		0.0	%		0.0	%	$	200,000		4.0	%		1,902,769		1,902,769		0.2	%		0.3	%		0.3	%	$	280.500		2.1	%		2.663,876		4.556.645		0.5	%		0.6	%		0.6	%

Series A Subtotal	$	62,800,000		597,469.749		75.4	%		100.0	%		89.3	%	$	5900,000		100.0	%		47,569,213		645,038,962		78.8	%		100.9	%		90.0	%	6	13,250.000		100.0	%		129058,415		747,312,753		79.2	%		100.0	%		91.2	%
Common Shares
Petters				32,758,621		4.1	%					4.9	%									32,768,621		3.9	%					4.6	%									32,758,621		3.5	%					4.0	%
FACrDeikel (2)				28,650,862		3.6	%					4.3	%									28,550,862		3.4	%					4.0	%									28,850,862		3.1	%					3.5	%
RTS (3)				1,321,552		0.2	%					0.2	%									1,321,552		0.2	%					0.2	%									1.321,552		0.1	%					0.2	%

Outstanding Common				62,931935		7.9	%					9.4	%									62,931,035		7.5	%					8.8	%									62.931,035		6.7	%					7.7	%
				3,989333		0.5	%															3,083,333		0.5	%															3,983,333		04	%
Existing Deikel Option
New Deikel Option				16,103,658		2.0	%															15,103,658		1.9	%															16,103668		1.7	%

Subtotal				29086,9131		2.5	%															20.086,991		2,4	%															29086,991		2.1	%
Management Option Pool (4)				83,378,157		8.0	%					1.3	%									63,378,157		7.5	%					1.2	%									69378.157		6.7	%					1.1	%
CiliGroup Warrant				31,699,078		4.0	%															31.889,078		3.8	%															31,689,078		3.4	%
Additional CitiGroup Warrant				—		0.0	%																	0.0	%															1,427,076		0.2	%
Epsilon Warrant				4,779640		0.6	%															4,779,643		0.8	%															4,779.040		0.5	%
ChenyTree Warrant				7,135,387		0.9	%															7.135,387		0.8	%															7,135,387		0.8	%
Piper Warrant				4,756,925		0.6	%															4,756,925		0.6	%															4,756,925		0.5	%

Subtotal				48,381,030		6.1	%															48,381.030		5.8	%															49,788,106		5.3	%

Common Subtotal				194,757,213		246	%					10.7	%									194,757,213		232	%					10.0	%									199,184,289		20.8	%					8.8	%
	Per Share													Per Share																		Per Share

Total	$	0.1051101		792,228,962		100.0	%					100.0	%		50.105110							839,796,175		100.0	%					100.0	%	$	0.105110							943,497,042		100.0	%					100.0	%

Total Xxxx/Battery Ownership						39.0	%		.			46.2	%											39.7	%					46.6	%											42_4	%					48.9	%
Total Petters Ownership						38.6	%					45.7	%											389	%					45,8	%											40.6	%					48.8	%
Total Deikel Ownership						7.8	%					6.2	%											7.3	%					5.8	%											4.0	%					2.2	%
Total CiOgroup Ownership						4.0	%					0.0	%											4.0	%					0.3	%											4.0	%					0.6	%


(1)		Actually held by CIGPF I Corp.

(2)		Of PAC’s common ownership, 11,178,448 is allocable to Petters and 17,672,414 is allocable to Deikel: Delkers common share to be transferred 10 family member.

(3)		Of RTS’s ownership, 226,000 is allocable to Petters

(4)		Subject to confirmation, approximately 8.7 million restricted shares have been issued under the 2003 Equity Incentive Plan.

Schedule 5.10¹

Schedule 5.10 of the February 24, 2004 Stock Purchase Agreement is supplemented by including the rights granted to investors under the related documents to the February 24, 2004 Stock Purchase Agreement, including:

	•		Investor Rights Agreement by and among FDM, Xxxx, Battery, PCI, FAC, Epsilon, CIGPF, Xxxxx Xxxxxxx and Cherry Tree, dated February 24, 2004;

	•		Stockholders Agreement by FDM, PCI, FAC, RTB Holdings, Xxxx, Battery, Epsilon, CIGPF, Xxxxx Xxxxxxx, Cherry Tree and Deikel, dated February 24, 2004;

	•		Management Rights Letter among FDM, Battery and Xxxx, dated February 24, 2004;

	•		CIGPF Warrant to Subscribe for and Purchase Common Stock of FDM, dated February 24, 2004;

	•		Second Amendment to Xxxxxxxx Loan Agreement, dated February 24, 2004;

	•		Epsilon Warrant to Subscribe for and Purchase Common Stock of FDM, dated February 24, 2004;

	•		Fingerhut Direct Marketing, Inc. 2003 Equity Incentive Plan ;

	•		Letter Agreement with Xxxxx Xxxxxxx, dated February 10, 2004;

	•		Letter Agreement with Cherry Tree, dated February 10, 2004;

	•		Xxxxx Xxxxxxx Warrant to Subscribe for and Purchase Common Stock of FDM, dated February 18, 2004;

	•		Cherry Tree Warrant to Subscribe for and Purchase Common Stock of FDM, dated February 18, 2004;

	•		Financing Agreement with CIT Group/ Business Credit, Inc. dated April 9, 2003

	•		Subordinated Loan Agreement among Xxxxxxxx Xxxxx, Ltd, Various Lenders and FDM, dated April 9, 2003.


¹		Schedules attached to this Section are intended to supplement the disclosures made to the Stock Purchase Agreement dated February 24, 2004, and reflect only those additional disclosures herein required occurring from February 24, 2004 to the present.

Schedule 5.13¹

5.13(b)(3) See List of Material Contracts entered after February 2004 listed in Schedule 5.9.


¹		Schedules attached to this Section are intended to supplement the disclosures made to the Stock Purchase Agreement dated February 24, 2004, and reflect only those additional disclosures herein required occurring from February 24, 2004 to the present.

Schedule 5.14¹

See Schedule 5.9


¹		Schedules attached to this Section are intended to supplement the disclosures made to the Stock Purchase Agreement dated February 24, 2004, and reflect only those additional disclosures herein required occurring from February 24, 2004 to the present.

Schedule 5.15¹

Litigation:

	1)		The Company has received notice of a claim for a house fire caused by a fan that was allegedly purchased from Fingerhut. No formal litigation has been initiated. Claimant has not provided details as to the extent (dollar amount) of the claimed damage. The claim has been turned over to our general liability insurance carrier for investigation. To date, claimant has not provided any proof of purchase or any information regarding the date of the purchase of the fan Fingerhut Direct Marketing, Inc. does not have any record of any sale to the claimant or any purchase to the claimant’s address. Claimant does not show up in Fingerhut Direct Marketing, Inc.’s records as a customer.1

	2)		The Company is aware of potential litigation that may be brought in the future by Xxxxx Xxxxxxxxx in connection with the termination of her employment.


¹		Schedules attached to this Section are intended to supplement the disclosures made to the Stock Purchase Agreement dated February 24, 2004, and reflect only those additional disclosures herein required occurring from February 24, 2004 to the present.

Schedule 5.17¹

None.


¹		Schedules attached to this Section are intended to supplement the disclosures made to the Stock Purchase Agreement dated February 24, 2004, and reflect only those additional disclosures herein required occurring from February 24, 2004 to the present.

Schedule 5.19¹

Pursuant to February 10, 2004 Engagement as Financial Advisor, upon the closing of this financing, Xxxxx Xxxxxxx is owed a one time fee of $250,000.


¹		Schedules attached to this Section are intended to supplement the disclosures made to the Stock Purchase Agreement dated February 24, 2004, and reflect only those additional disclosures herein required occurring from February 24, 2004 to the present.

Schedule 5.21¹

Xxxx has been abandoned.

Xxxx has been renewed.

Xxxx has been reserved.

[ILLEGIBLE]

Trademark / Servicemark

Serial No./

Reg. No./

Rolling

Current

Action Pending/

Name

Goods / Services

Filling Date

Reg. Date

History

Status

Date Due

Notification Date

FEEL THE POWER

Class: 35, 42, 100, 101, 102

74/522942
4/29/1994

2146923
3/31/1998

3/1/04 — Abandonded.

Abandoned

~~3/31/04, Affidavid of Use~~

[ILLEGIBLE]

INSTANT FIT

Class: 24, 42, 50

74/679114

2084514
7/29/1997

7/28/01 Filed o mth. Ext. Final DOU due 1/29/01. 1/16/04 — Abandoned.

Abandoned

~~7/29/03, Affidavit of Use~~

ACCOLADE

Audio amplifiers, microphones (Class 9) Electric guitars, acoustical guitars, guitar bags, guitar cases, keyboards, keyboard stands, keyboard benches, keyboard carrying cases, guitar tuners, drum sets, music stands, violins, wind instruments (Class 15)

75/225,624
8/15/1997

2,186,721
9/1/1998

8/23/04, Notified M&G to cancel.

Abandoned

9/1/04, Affidavit of Use 9/1/08, Next Renewal

FASHION ELEMENTS

Class: 25

75/121616
6/14/1996

2192586
9/29/1998

8/30/04, Notified M&G to cancel.

Abandoned

9/29/04, Affidavit of Use 9/29/08, Next Renewal

8/18/2004

[ILLEGIBLE]

FINGERHUT

Class: 7, 9, 12, 14, 16

72/465973
8/20/1973

999881
12/17/1974

Registered

12/17/04, Next Renewal

11/5/2004

[ILLEGIBLE]

ACCOLADE AND DESIGN

Class: 9, 15

75/341841
8/15/1997

2232979
3/16/1999

9/20/04, Notified M&G to cancel.

Abandoned

3/16/05, Affidavit of Use 3/16/09, Next Renewal

2/2/2005

MIRACLE FIT

Class: 20, 24

75/152771
8/19/1996

2247997
5/25/1999

Registered

5/25/05, Affidavit of Use 5/25/09, Next Renewal

4/13/2005

Schedules attached to this Section are intended to supplement th disclosures made to the Stock Purchase Agreement dated February 24, 2004, and reflect only those additional disclosures herein required occurring from February 24, 2004 to the present.

Xxxx has been abandoned.

Xxxx has been renewed.

Xxxx has been reserved.

[ILLEGIBLE]

Trademark / Servicemark

Serial No./

Reg. No./

Rolling

Current

Action Pending/

Name

Goods / Services

Filling Date

Reg. Date

History

Status

Date Due

Notification Date

COLOR FOCUS

Class: 24

74/709674
7/31/1995

2253887
6/15/1999

Registered

6/15/05, Affidavit of Use
6/15/09, Next Renewal

5/4/2005

BACKYARD LIVING

Class: 35

75/406940
12/17/1997

2274991
8/31/1999

Registered

8/31/05, Affidavit of Use
8/31/09, Next Renewal

7/20/2005

SPORTS CENTRAL

Class: 35

75/457034
3/25/1998

2279009
9/21/1999

10/5/04, Notified M&G to cancel.

Abandoned

9/21/05, Affidavit of Use
9/21/09, Next Renewal

ri2005

QUALITY ASSURED & DESIGN

Class: 42

74/414587
7/16/1993

1931994
10/31/1995

Registered

10/31/05, Next Renewal

9/19/2005

SUPER CHEF

Class: 11

74/376304

1933548

Registered

11/7/05, Next Renewal

9/26/2005

4/5/1993

11/7/1995

LIFE XXX

Xxxxx: 9, 10

75/978794

2312598

Registered

1/25/06, Affidavit of Use

12/14/2005

6/17/1999

1/25/2000

1/25/2010, Next Renewal

THE ACCENTS ON OUTERWEAR

Class: 35

75/541585

2315853

Registered

2/8/06, Affidavit of Use

12/26/2005

8/24/1998

2/8/2000

2/8/2010, Next Renewal

TAKE TIME FOR KIDS

Class: 35

75/651672

2329075

Registered

3/14/06, Affidavit of Use

1/31/2006

3/2/1999

3/14/2000

3/14/2010, Next Renewal

INSTANT FIT

Class: 20

75/251786

2333507

Registered

3/21/06, Affidavit of Use

2/7/2006

3/4/1997

3/21/2000

3/21/2010, Next Renewal

BULL’S HEAD & CHEF’S

Class: 8

73/565985

1393812

Registered

5/20/06, Next Renewal

4/7/2006

HAT LOGO

10/31/1985

5/20/1986

FASHION JEWELRY BAZAAR

Class: 35

75/499505

2352633

Registered

5/23/06, Affidavit of Use

4/10/2006

6/10/1998

5/23/2000

5/23/2010, Next Renewal

THE XXXX’X BOOK

Class: 35

2363151

Registered

6/27/06, Affidavit of Use

5/16/2006

7/28/1998

6/27/2000

6/27/2010, Next Renewal

THE XXXX’X BOOK

Class: 35

75/526973

2363143

Registered

6/27/06, Affidavit of Use

5/16/2006

(STYLIZED)

7/28/1998

6/27/2000

6/27/2010, Next Renewal

CORNER SHOP

Class: 42

73/571696

1401719

Registered

7/15/06, Next Renewal

6/2/2006

12/5/1985

7/15/1986

GOLD KEY

Class: 35

75/719834

2368354

Registered

7/18/06, Affidavit of Use

6/6/2006

6/3/1999

7/18/2000

7/18/2010, Next Renewal

Xxxx has been abandoned.

Xxxx has been renewed.

Xxxx has been reserved.

[ILLEGIBLE]

Trademark/Servicemark

Serial No./

Reg. No./

Rolling

Current

Action Pending/

Name

Goods/Services

Filling Date

Reg. Date

History

Status

Date Due

Notification Date

HOLIDAY BIG BOOK

Class: 35

75/498298
6/8/1998

2386204
9/12/2000

Registered

9/12/06, Affidavit of Use 9/12/2010, Next Renewal

8/1/2006

DIGITAL ZONE.

Class: 35

75/638137
2/10/1999

2398630
10/24/2000

Abandonded

10/21/06, Affidavit Use of

9/12/2006

LIFE XXX

Xxxxx: 11, 25

75/979831
8/15/1997

2411462
12/5/2000

Registered

12/5/06, Affidavit of Use 12/05/2010. Next Renewal

10/24/2006

TREASURE CREEK

Class: 35

75/731771

2435895

Registered

3/13/07, Affidavit of Use

1/30/2007

6/18/1999

3/13/2001

3/13/2011, Next Renewal

AL AND DESIGN

Class: 35

76/040531

2453125

Registered

5/22/07, Affidavit of Use

4/10/2007

5/4/2000

5/22/2001

5/22/2011, Next Renewal

SPRING BIG BOOK

Class: 35

75/659741

2476310

Registered

8/7/07, Affidavit of Use

6/19/2007

3/12/1999

8/7/2001

8/7/2011, Next Renewal

CHEF’S XXXX

Class: 7, 11

75/980599

2489361

Registered

9/11/07, Affidavit of Use

7/24/2007

8/15/1997

9/11/2001

9/11/2011, Next Renewal

LIFE XXX

Xxxxx: 28

74/709163

2099973

Registered

9/23/07, Next Renewal

8/13/2007

7/31/1995

9/23/1997

CHEF’S XXXX PREFERRED

Class: 7, 11

75/980739

2497159

Registered

10/9/07. Affidavit of Use

8/28/2007

QUALITY & DESIGN

8/15/1997

10/9/2001

10/9/2011, Next Renewal

SUITE LUXURIES

Class: 35

75/668055

2496775

Registered

10/9/07, Affidavit of Use

8/28/2007

3/25/1999

10/9/2001

10/9/2011, Next Renewal

FIN GERHUT HOME

Class: 35

76/010637

2523477

Registered

12/25/07, Affidavit of Use

11/13/2007

3/27/2000

12/25/2001

12/25/2011, Next

ST. CROIX COLORS AND DESIGN

Class: 7, 9, 11, 21, 24

75/981028

2530650

Registered

1/15/08, Affidavit of Use

12/4/2007

8/15/1997

1/15/2002

1/15/2012, Next Renewal

ST. CROIX COLORS AND DESIGN

Class: 20

75/341622

2552910

Registered

3/26/08. Affidavit of Use

2/13/2008

8/15/1997

3/26/2002

3/26/2012, Next Renewal

ST. CROIX COLORS

Class: 7, 11, 21, 24, 27

75/981566

2579749

Registered

6/11/08, Affidavit of Use

4/30/2008

8/15/1997

6/11/2002

6/11/2012, Next Renewal

SENSOMA

Class: 20, 24

75/397546

2601356

Registered

7/30/08, Affidavit of Use

6/18/2008

12/1/2007

7/30/2002

7/30/2012, Next Renewal

Xxxx has been abandoned.

Xxxx has been renewed.

Xxxx has been reserved.

[ILLEGIBLE]

Trademark / Servicemark

Serial No./

Reg. No./

Rolling

Current

Action Pending/

Name

Goods / Services

Filling Date

Reg. Date

History

Status

Date Due

Notification Date

CAREFREE LIVING

Class: 35

73/701228
12/14/1997

1505333
9/20/1988

Registered

9/20/08, Next Renewal

8/8/2008

CHEF’S XXXX

Class: 8, 21, 24

75/341842

2645988

Registered

11/5/08, Affidavit of Use

9/24/2008

8/15/1997

11/5/2002

11/05/2012, Next Renewal

FALL BIG BOOK

Class: 35

76/239983

2655853

Registered

12/3/08, Affidavit of Use

10/22/2008

4/12/2001

12/3/2002

12/3/2012, Next Renewal

CHEF’S XXXX PREFERRED

Class: 8, 21, 24

75/341494

2659758

Registered

12/10/08, Affidavit of Use

10/29/2008

QUALITY & DESIGN

8/15/1997

12/10/2002

12/10/2012, Next Renewal

ST. CROIX COLORS

Class: 20

75/341826

2681467

Registered

1/28/09, Affidavit of Use

12/17/2008

8/15/1997

1/28/2003

1/28/2013, Next Renewal

COUNTRY BEAR

Class: 7, 11, 24

76/172068

2782394

Registered

11/11/09, Affidavit of Use

9/30/2009

11/28/2000

11/11/2003

11/11/2013, Next Renewal

GOOD DEALS, GREAT BUYS

Class: 35

75/699395

2503225

Registered

10/30/2011, Next Renewal

9/19/2011

5/7/1999

10/30/2001

ROOMS FOR LIVING

Class: 42

74/138822

1693689

Registered

6/9/2012, Next Renewal

4/27/2012

2/13/1991

6/9/1992

GATE ONE LUGGAGE (AND DESIGN)

Class: 18

74/147438

1722969

Registered

10/6/2012, Next Renewal

8/24/2012

3/13/1991

10/6/1992

GATE ONE (AND DESIGN)

Class: 18

74/147437

1724645

Registered

10/13/2012, Next

8/31/2012

3/13/1991

10/13/1992

FINGERHUT

Class: 35

72/428394

973080

Registered

11/13/2013, Next

10/2/2013

6/26/1972

11/13/1973

HOME DEALS

Class: 35

75/838,383
11/2/1999

N/A

Pending — Filed 4th
Ext. on 8/6/04

Registered

1/9/05, Next Renewal

Schedule 5.22¹

FDM Agreements with Related Parties


	COMPANY
	FDM, FFI or
TITLE	FAC	NOTES / KEYWORDS
xXxx.xxx	FFI	Letter of Intent dated 7/2/04

Fulfillment Services Agreement	FDM	Between FDM & Petters Group Worldwide, LLC; Schwans Project — Agreement in Final Stages — waiting for signature


¹		Schedules attached to this Section are intended to supplement the disclosures made to the Stock Purchase Agreement dated February 24, 2004, and reflect only those additional disclosures herein required occurring from February 24, 2004 to the present.

Schedule 5.26¹

5.26(7) In October 2004, the Company incurred and paid a Minnesota State tax debt in the amount of $150,000 that was not anticipated or included in the budget.


¹		Schedules attached to this Section are intended to supplement the disclosures made to the Stock Purchase Agreement dated February 24, 2004, and reflect only those additional disclosures herein required occurring from February 24, 2004 to the present.

Schedule 5.4¹

Subsidiaries to the Company:

FDM AR-1, Inc. was dissolved on March 23, 2004

Fingerhut Fulfillment, Inc. remains as the only subsidiary to the Company.


^I		Schedules attached to this Section are intended to supplement the disclosures made to the Stock Purchase Agreement dated February 24, 2004, and reflect only those additional disclosures herein required occurring from February 24, 2004 to the present.

Schedule 5.5¹

Consent is required for the conveyance of any interest in Company for the following:

	1)		Building One Lease for property located at 00 XxXxxxxx Xxxx, Xx. Xxxxx, XX dated November 26, 2003 by and between Fingerhut Direct Marketing, Inc. and FAC Acquisition, LLC. The Company has obtained Landlord’s (FAC Acquisition, LLC) written consent.

	2)		Office Lease for property located at 0000 Xxxxx Xxxx, Xxxxxxxxxx, XX dated May 1, 2003 by and between Fingerhut Direct Marketing, Inc. and FAC Acquisition, LLC. The Company has obtained Landlord’s (FAC Acquisition, LLC) written consent.

	3)		Building Lease for property located at 0000 Xxxxxxxxx Xxxx, Xx. Xxxxx, XX dated November 26, 2003 by and between Fingerhut Direct Marketing, Inc. and FAC Acquisitions, LLC. The Company has obtained Landlord’s (FAC Acquisition, LLC) written consent.


¹		Schedules attached to this Section are intended to supplement the disclosures made to the Stock Purchase Agreement dated February 24, 2004, and reflect only those additional disclosures herein required occurring from February 24, 2004 to the present.

Schedule 5.8

5.8 (b) The Company is past due on various inventory and expense payables under various agreements and contracts. The aggregate amount of past due amounts as of October 27, 2004, was $4,105,044.61. The Company intends to satisfy its obligations following closing of this Agreement and other related transactions.

Schedule 5.9¹

None.


¹		Schedules attached to this Section are intended to supplement the disclosures made to the Stock Purchase Agreement dated February 24, 2004, and reflect only those additional disclosures herein required occurring from February 24, 2004 to the present.

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Table of Contents

SUPPLEMENT NO. 1 TO STOCK PURCHASE AGREEMENT AMONG FINGERHUT DIRECT MARKETING, INC. AND THE SUPPLEMENTAL PURCHASERS NAMED ON THE SUPPLEMENTAL SCHEDULE I HERETO Dated as of October 27, 2004

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