EXHIBIT 1
FINGERHUT MASTER TRUST
$_____________ % ASSET BACKED SECURITIES, SERIES 1998-_, CLASS A
$_____________ % ASSET BACKED SECURITIES, SERIES 1998-_, CLASS B
FINGERHUT RECEIVABLES, INC.
(TRANSFEROR)
UNDERWRITING AGREEMENT
April __, 1998
CHASE SECURITIES INC.
As Representative of the
Several Underwriters named
on Schedule I hereto,
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Fingerhut Receivables, Inc., a Delaware corporation (the
"TRANSFEROR"), proposes, subject to the terms and conditions stated herein, to
issue and sell $____________ of ______% Asset Backed Securities, Series 1998-_,
Class A (the "CLASS A SECURITIES") and $____________ of ______% Asset Backed
Securities, Series 1998-_, Class B (the "CLASS B SECURITIES"; together with the
Class A Securities, the "OFFERED SECURITIES") of the Trust (as defined herein).
Each Offered Security will represent a fractional undivided interest
in the Fingerhut Master Trust (the "TRUST") established pursuant to an Amended
and Restated Pooling and Servicing Agreement (as amended, supplemented or
otherwise modified from time to time, the "POOLING AND SERVICING AGREEMENT"),
dated as of March 18, 1998, among the Transferor, Fingerhut National Bank, a
national banking association ("FNB"), in its capacity as servicer (referred to
in such capacity as the "SERVICER") and The Bank of New York (Delaware), as
trustee (the "TRUSTEE"). The Offered Securities will be issued pursuant to the
Pooling and Servicing Agreement as supplemented by the Series 1998-_ Supplement,
dated as of April ___, 1998, among the Transferor, the Servicer and the Trustee
(the "SERIES SUPPLEMENT"). Concurrently with the issuance of the Offered
Securities, the Trust will issue the Floating Rate Collateralized Trust
Obligations ("COLLATERALIZED TRUST OBLIGATIONS"), Series 1998-_, and the 0%
Asset Backed Securities, Series 1998-_, Class D (together with the Offered
Securities and the Collateralized Trust Obligations, the "SERIES 1998-_
SECURITIES").
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The assets of the Trust include, among other things, receivables
generated from time to time in the ordinary course of business by FNB and
receivables previously generated by Fingerhut Corporation ("FINGERHUT"), a
Minnesota corporation, in each case in connection with the sale of merchandise,
financial service products or services (the "RECEIVABLES"), all monies due or to
become due in respect of the Receivables and all monies on deposit in certain
bank accounts of the Trust.
The Receivables were transferred to the Transferor by Fingerhut
pursuant to a Purchase Agreement (the "FINGERHUT PURCHASE AGREEMENT"), dated as
of June 29, 1994, between Fingerhut and the Transferor and an Amended and
Restated Purchase Agreement (the "FCI PURCHASE AGREEMENT"), dated as of March
18, 1998, between Fingerhut Companies, Inc., a Minnesota corporation ("FCI"),
and the Transferor, and are serviced for the Trust by the Servicer pursuant to
the Pooling and Servicing Agreement. The Receivables transferred to the
Transferor pursuant to the FCI Purchase Agreement were acquired by FCI from FNB
pursuant to an Amended and Restated Bank Purchase Agreement, dated as of March
18, 1998, between FCI and FNB (the "BANK PURCHASE AGREEMENT"; together with the
Fingerhut Purchase Agreement and the FCI Purchase Agreement, the "PURCHASE
AGREEMENTS"). Capitalized terms used and not otherwise defined herein shall
have the meanings given them in the Pooling and Servicing Agreement.
The Transferor has filed with the Securities and Exchange Commission
(the "COMMISSION") a registration statement on Form S-1 No. 333-45611,
including a related prospectus, for the registration under the Securities Act
of 1933, as amended (the "SECURITIES ACT"), of the Offered Securities and
Amendment No. 1 thereto. For purposes of this Agreement, "EFFECTIVE TIME"
means the date and time as of which such registration statement, or the most
recent post-effective amendment thereto, if any, was or is declared effective
by the Commission. "PRELIMINARY PROSPECTUS" means each prospectus included in
such registration statement, or amendments thereof, before it becomes effective
under the Securities Act, any prospectus filed with the Commission by the
Transferor pursuant to Rule 424(a) and the prospectus included in the
Registration Statement at the Effective Time that omits the information
permitted to be omitted from the Registration Statement when it becomes
effective pursuant to Rule 430A ("RULE 430A INFORMATION") under the Securities
Act. Such registration statement, as amended at the Effective Time,
including all Rule 430A Information, if any, is hereinafter referred to as the
"REGISTRATION STATEMENT", and the form of prospectus relating to the Offered
Securities, as first filed with the Commission pursuant to and in accordance
with Rule 424(b) or, if no such filing is required, as included in the
Registration Statement is hereinafter referred to as the "PROSPECTUS".
This is to confirm the agreement concerning the purchase of the
Offered Securities from the Transferor by the several Underwriters named in
Schedule 1 hereto (the "UNDERWRITERS").
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1. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE TRANSFEROR AND
FCI. Each of the Transferor (the representations and warranties as to the
Transferor being given by the Transferor) and FCI (the representations and
warranties as to the FCI, FNB and Fingerhut being given by FCI) represent and
warrant to and agree with the Underwriters that:
(a) At the Effective Time, the Registration Statement did or will, and
the Prospectus (and any supplements thereto) did or will, comply in all
material respects with the applicable requirements of the Securities Act,
and the rules and regulations (the "RULES AND REGULATIONS") of the
Commission and did not or will not include any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading. The Prospectus, at the Effective Time, if not filed pursuant
to Rule 424(b), or on the date of any filing pursuant to Rule 424(b), if
filed pursuant to Rule 424(b), and, in each case, on the Closing Date, did
not or will not, include any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
The preceding sentences do not apply to information contained in or omitted
from the Registration Statement or the Prospectus (or any supplement
thereto) in reliance upon and in conformity with written information
furnished to the Transferor by or on behalf of any Underwriter specifically
for use therein (the "UNDERWRITERS' INFORMATION").
(b) The Transferor is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware; the
Transferor has the corporate power and authority to conduct its business as
such business is presently conducted, and had at all relevant times, and
now has, the corporate power to acquire, own and sell the Receivables.
(c) FCI is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Minnesota; FCI is duly
qualified to do business and is in good standing in each state of the
United States where the conduct of its business requires it to be so
qualified, except where the failure to do so does not have a material
adverse effect on the financial condition or business of FCI; and FCI has
the corporate power to conduct its business as such business is presently
conducted.
(d) Fingerhut is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Minnesota; Fingerhut is
duly qualified to do business and is in good standing in each state of the
United States where the conduct of its business requires it to be so
qualified, except where the failure to do so does not have a
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material adverse effect on the financial condition or business of
Fingerhut; and Fingerhut has the corporate power to conduct its business as
such business is presently conducted.
(e) FNB is a national banking association formed under the laws of
the United States of America and is authorized to conduct the business of a
special purpose credit card bank; and FNB has the power and authority to
acquire, own and service the Accounts and the Receivables.
(f) Each of the Transferor and FCI has the power and authority to
execute and deliver this Agreement and to carry out its terms; and the
consummation of the transactions contemplated herein have been duly
authorized by each of the Transferor and FCI.
(g) This Agreement has been duly authorized, executed and delivered by
each of the Transferor and FCI.
(h) As of the Closing Date, the Offered Securities will be duly and
validly authorized and, when authenticated by the Trustee and delivered to
the Transferor in accordance with the Pooling and Servicing Agreement, and
following delivery to and payment therefor by the Underwriters as provided
herein, will be validly issued and outstanding and entitled to the benefits
afforded by the Pooling and Servicing Agreement and the Series Supplement.
(i) The execution, delivery and performance of this Agreement and the
consummation by each of the Transferor and FCI of the transactions
contemplated hereby will not (i) contravene the charter or by-laws of such
party, (ii) violate (A) any provision of law, statute, rule or regulation
applicable to such party or (B) any order applicable to such party of any
federal or state court, regulatory body, administrative agency or other
governmental authority having jurisdiction over such party (each a
"GOVERNMENTAL AUTHORITY"), except for such violations that are not
reasonably likely to have a material adverse effect on the financial
condition or business of the Transferor or FCI, as applicable
(iii) violate, result in a breach of or constitute (with or without notice
or lapse of time or both) a default under any such indenture, agreement or
other instrument to which such party is a party or by which any of them or
any of their property is or may be bound, except for such violations,
breaches or defaults that are not reasonably likely to have a material
adverse effect on the financial condition or business of the Transferor or
FCI, as applicable and (iv) except for the registration of the Offered
Securities under the Securities Act and such consents, approvals,
authorizations, registrations or qualifications as may be required under
the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and
applicable state securities laws in connection with the purchase and
distribution of the Offered Securities by the
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Underwriters, no permit, consent, approval of, or declaration to or filing
with, any Governmental Authority is required in connection with the
execution, delivery and performance of this Agreement or the consummation
of the transactions contemplated hereby.
(j) There are no proceedings or investigations pending or, to the best
knowledge of the Transferor or FCI threatened against the Transferor, FCI,
FNB or Fingerhut before any Governmental Authority having jurisdiction over
such party or its properties (i) asserting the invalidity of this Agreement
or any of the Series 1998-_ Securities,(ii) seeking to prevent the issuance
of any of the Series 1998-_ Securities or the consummation of any of the
transactions contemplated by this Agreement, the Pooling and Servicing
Agreement, the Series Supplement or the Purchase Agreements (collectively,
the "PROGRAM AGREEMENTS"),(iii) seeking any determination or ruling that
might materially and adversely affect the performance by the Transferor,
FCI, FNB or Fingerhut of their respective obligations under, or the
validity or enforceability of, this Agreement or any of the Program
Agreements, or (iv) seeking to adversely affect the federal or state income
or similar tax attributes of the Trust.
(k) The businesses of each of the Transferor, FCI, FNB and Fingerhut
conform in all material respects with the descriptions thereof contained in
the Registration Statement and the Prospectus, each as amended or
supplemented.
(l) Each of the Transferor, FCI, Fingerhut and FNB possesses all
material licenses, certificates, authorizations and permits issued by the
appropriate state, federal or foreign regulatory agencies or bodies
necessary to conduct their respective businesses as described in the
Prospectus, except where the failure to possess or make the same would not
have, singularly or in the aggregate, a material adverse effect on the
Receivables, the Offered Securities or the financial condition of the
Transferor, FCI, FNB or Fingerhut.
2. PURCHASE BY THE UNDERWRITERS. On the basis of the
representations, warranties and agreements contained herein, and subject to the
terms and conditions set forth herein, the Transferor agrees to sell to each of
the Underwriters, severally and not jointly, and each of the Underwriters,
severally and not jointly, agrees to purchase from the Transferor, the
respective principal amount of the Offered Securities set forth opposite the
name of such Underwriter in Schedule 1 hereto at a purchase price equal to (i)
with respect to the Class A Securities, 99.______% of the principal amount
thereof and (ii) with respect to the Class B Securities, 99.______% of the
principal amount thereof.
The Transferor shall not be obligated to deliver any of the Offered
Securities except upon payment for all the Offered Securities to be purchased as
provided herein.
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3. DELIVERY OF AND PAYMENT FOR THE OFFERED SECURITIES. Delivery of
and payment for the Offered Securities shall be made at the office of Skadden,
Arps, Slate, Xxxxxxx & Xxxx LLP, or at such other place as shall be agreed upon
by Chase Securities Inc., as representative of the Underwriters (the
"REPRESENTATIVE") and the Transferor, at 9:00 A.M., New York time, on April __,
1998, or at such other date or time, not later than seven full business days
thereafter, as shall be agreed upon by the Representative and the Transferor
(such date and time being referred to herein as the "CLOSING DATE"). On the
Closing Date, the Transferor shall deliver or cause to be delivered to the
Representative the Offered Securities against payment to or upon the order of
the Transferor of the purchase price in immediately available funds. Time shall
be of the essence, and delivery at the time and place specified pursuant to this
Agreement is a further condition of the obligations of each Underwriter
hereunder. Upon delivery, each Class of the Offered Securities shall be
represented by one or more global certificates registered in the name of Cede &
Co., as nominee of The Depository Trust Company ("DTC"). The interest of the
beneficial owners of the Offered Securities will be represented by book-entries
on the records of DTC and participating members thereof. Definitive
certificates representing the Offered Securities will be available only under
the limited circumstances described in the Pooling and Servicing Agreement.
4. FURTHER AGREEMENTS OF THE TRANSFEROR. The Transferor agrees with
each Underwriter:
(a) If the Effective Time is prior to the execution and delivery of
this Agreement, to file the Prospectus with the Commission pursuant to and
in accordance with Rule 424(b) within the time period prescribed by such
rule and to provide evidence satisfactory to the Underwriters of such
timely filing;
(b) It will advise the Representative promptly of any proposal to
amend the Registration Statement or amend or supplement the Prospectus and
will not effect any such amendment or supplement to which the
Representative reasonably objects; to advise the Representative promptly of
(i) the receipt of any comments from the Commission relating to, and of the
effectiveness of, the Registration Statement (in each case if the Effective
Time is subsequent to the execution and delivery of this Agreement), (ii)
the effectiveness of any post-effective amendment to the Registration
Statement, (iii) any request by the Commission for any amendment of the
Registration Statement or of the Prospectus or for any additional
information, (iv) the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
initiation or threatening of any proceedings for that purpose, (v) the
issuance by the Commission of any order preventing or suspending the use
of any prospectus relating to the Offered Securities or the initiation or
threatening of any proceedings for that purpose
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and (vi) the receipt by the Transferor of any notification with respect to
the suspension of the qualification of the Offered Securities for sale in
any jurisdiction or the initiation or threatening of any proceeding for
such purpose; and to use best efforts to prevent the issuance of any such
stop order or of any order preventing or suspending the use of any
prospectus relating to the Offered Securities or suspending any such
qualification and, if any such stop order or order of suspension is issued,
to obtain the lifting thereof at the earliest possible time.
(c) To furnish promptly to the Representative or to counsel for the
Underwriters a signed copy of the Registration Statement as originally
filed with the Commission and each amendment thereto filed with the
Commission, including all consents and exhibits filed therewith; and to
deliver promptly without charge to each Underwriter such number of the
following documents as such Underwriter may from time to time reasonably
request: (i) conformed copies of the Registration Statement as originally
filed with the Commission and each amendment thereto and (ii)each
Preliminary Prospectus, the Prospectus and any amended or supplemented
Prospectus;
(d) If the delivery of a prospectus is required at any time in
connection with the sale of Offered Securities and if at such time, any
event shall have occurred as a result of which the Prospectus, as then
amended or supplemented, would include an untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances when such Prospectus
is delivered, not misleading, or if for any other reason it shall be
necessary at such time to amend or supplement the Prospectus in order to
comply with the Securities Act, to notify the Representative immediately
thereof, and to promptly prepare and file with the Commission, subject to
paragraph (b) of this Section 4, an amended Prospectus or a supplement to
the Prospectus which will correct such statement or omission or effect such
compliance.
(e) To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the
Prospectus that may, in the judgment of the Transferor or the
Representative, be required by the Securities Act or that may be requested
by the Commission or be advisable in connection with the distribution of
the Offered Securities.
(f) For a period from the date of this Agreement until the retirement
of the Offered Securities, or until such time as each Underwriter shall not
maintain a secondary market in the Offered Securities, whichever occurs
first, to deliver to the Representative (i) the annual statements of
compliance, the annual servicer's certificate and the annual independent
public accountants' servicing report furnished to the Trustee
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pursuant to Sections 3.5 and 3.6 of the Pooling and Servicing Agreement,
and the monthly statements with respect to the Series 1998-_ Securities
furnished to the Trustee pursuant to Section 5.2 of the Pooling and
Servicing Agreement, as soon as such statements and reports are furnished
to the Trustee and (ii) from time to time, such other information
concerning the Transferor, FCI, Fingerhut, FNB and the Trust as any
Underwriter may reasonably request.
(g) From time to time to take such action as the Representative may
reasonably request to qualify the Offered Securities for offering and sale
under the securities laws of such states as the Representative may request
and to comply with such laws so as to permit the continuance of sales and
dealings therein in such states for as long as may be necessary to complete
the distribution of the Offered Securities; PROVIDED that in connection
therewith neither the Transferor nor any affiliate thereof shall be
required to qualify as a foreign corporation or to file a general consent
to service of process in any jurisdiction.
(h) To the extent, if any, that the ratings provided with respect to
the Offered Securities by a Rating Agency are conditional upon the
furnishing of documents or the taking of any other actions, to furnish such
documents and take any such other actions.
5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The respective
obligations of the several Underwriters hereunder are subject to the
accuracy, when made and on the Closing Date, of the representations and
warranties of the Transferor and FCI contained herein, to the accuracy of
the statements of the Transferor and FCI made in any certificates pursuant
to the provisions hereof, to the performance by the Transferor of its
obligations hereunder, and to each of the following additional terms and
conditions:
(a) If the Effective Time is not prior to the execution and delivery
of this Agreement, the Registration Statement shall have become effective,
and the Representative shall have received notice thereof, not later than
(i) 6:00 p.m., New York City time, on the date of determination of the
public offering price, if such determination occurred at or prior to 3:00
p.m., New York City time, on such date, (ii) 12:00 noon, New York City
time, on the business day following the day on which the offering price was
determined if such determination occurred after 3:00 p.m., New York City
time, on such date or (iii) such later date as shall have been consented to
by the Representative. Prior to the Closing Date, no stop order suspending
the effectiveness of the Registration Statement shall have been issued and
no proceedings for that purpose shall have been instituted or threatened by
the Commission. If the Transferor has elected to rely upon Rule 430A of
the
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Rules and Regulations, the price of the Offered Securities and any price-related
information previously omitted from the effective Registration Statement
pursuant to Rule 430A shall have been transmitted to the Commission for filing
pursuant to Rule 424(b) of the Rules and Regulations within the prescribed time
period, and prior to the Closing Date, the Transferor shall have provided
evidence satisfactory to the Representative of such filing, or a post-effective
amendment shall have been promptly filed and declared effective in accordance
with the requirements of Rule 430A.
(b) Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP shall have furnished to
the Representative their written opinions, as counsel to the Transferor,
FCI, FNB, and Fingerhut addressed to the Underwriters and dated the Closing
Date to the effect that:
(i) Each of the Program Agreements (other than the Bank
Purchase Agreement) (including, with respect to the Pooling and
Servicing Agreement and the Series Supplement, the allocation
provisions thereof) to which any of FCI, the Transferor, Fingerhut,
and the Servicer (the "Companies") is a party, constitutes a valid and
binding obligation of each of them, as applicable, enforceable against
each of the Companies in accordance with their respective terms,
except to the extent enforcement thereof may be limited by (a)
bankruptcy, insolvency, reorganization, moratorium, receivership or
other similar laws now or hereafter in effect relating to creditors'
rights generally and, in the case of FNB, creditors of national
banking associations, (b) general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or in
equity), and (c) the qualification that certain remedial provisions of
the Program Agreements may be unenforceable in whole or in part, but
the inclusion of such provisions does not affect the validity of any
such agreement taken as a whole and each of such agreements, together
with applicable law, contains adequate provisions for the practical
realization of the benefits of the security created by such agreement;
(ii) Neither the execution, delivery or performance by any of
the Companies of any of the Program Agreements to which it is a party
nor the compliance by any of the Companies with the terms and
provisions thereof will contravene any provision of any Applicable
Laws. For purposes of this paragraph (ii) and paragraph (iii) below,
"Applicable Laws" means those laws, rules and regulations of the State
of New York, the United States of America and the Delaware General
Corporation Law which, in such counsel's experience, are normally
applicable to transactions of the type contemplated by the Program
Agreements but do not include laws applicable
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due to the regulatory status or nature of the business of any party
thereto other than the Companies.
(iii) No Governmental Approval, which has not been obtained or
taken and is not in full force and effect, is required to authorize or
is required in connection with the execution, delivery or performance
of any of the Program Agreements and this Agreement, except for (a)
filings of Uniform Commercial Code financing statements with respect
to the transfer of certain of the Receivables from FNB to FCI pursuant
to the Bank Purchase Agreement and then from FCI to the Transferor
pursuant to the FCI Purchase Agreement, the transfer of certain of the
Receivables from Fingerhut to the Transferor pursuant to the Fingerhut
Purchase Agreement and the transfer of all of the Receivables from the
Transferor to the Trust pursuant to the Pooling and Servicing
Agreement and (b) such Governmental Approvals as may be required under
the securities or blue sky laws of any jurisdiction. For the purposes
of this paragraph (iii), the term "Governmental Approval" means any
consent, approval, license, authorization or validation of, or filing,
recording or registration with, any Governmental Authority pursuant to
Applicable Laws, and the term "Governmental Authority" means any New
York, Delaware or federal executive, legislative, judicial,
administrative or regulatory body.
(iv) The Offered Securities, the Program Agreements and this
Agreement conform in all material respects to the descriptions thereof
contained in the Registration Statement and the Prospectus;
(v) The Pooling and Servicing Agreement is not required to be
qualified under the Trust Indenture Act of 1939, as amended; neither
Fingerhut, FNB, FCI, the Transferor nor the Trust is required to be
registered under the Investment Company Act of 1940, as amended;
(vi) The statements in the Prospectus under the headings "Risk
Factors -- Transfer of the Receivables; Insolvency Risk
Considerations", "Certain Legal Aspects of the Receivables" and
"Certain Federal Income Tax Consequences", and "Employee Benefit Plan
Considerations" to the extent that they constitute matters of law or
legal conclusions with respect thereto, have been reviewed by such
counsel and are correct in all material respects;
(vii) Each of the Registration Statement, as of its effective
date and the Prospectus, as of its date, complied as to form in all
material respects to the requirements of the Securities Act and the
Rules and Regulations, except that in each case such counsel need not
express any opinion as to the financial and
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statistical data included therein or excluded therefrom or the
exhibits to the Registration Statement and, except as and, to the
extent set forth in paragraphs (iv), (vi) and (viii) such counsel does
not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement or
the Prospectus;
(viii) The information in the Prospectus under the heading
"Description of the Offered Securities", insofar as it constitutes a
summary of certain provisions of the Offered Securities and the
Pooling and Servicing Agreement, summarizes fairly such provisions;
(ix) When duly and validly executed by the Transferor and
authenticated by the Trustee and delivered to the Transferor in
accordance with the Pooling and Servicing Agreement and the Series
Supplement, and delivered to and paid for by the Underwriters in
accordance with this Agreement in the case of the Offered Securities
or delivered to and paid for by the purchasers in the case of the
Collateralized Trust Obligations and delivered to the Transferor in
exchange for a portion of the Exchangeable Transferor Security in the
case of the Class D Securities, the Series 1998-_ Securities will be
validly issued and outstanding and entitled to the benefits of the
Pooling and Servicing Agreement and the Series Supplement;
(x) The execution and delivery of the Purchase Agreements,
Pooling and Servicing Agreement, the Series Supplement or this
Agreement and the execution and delivery to the Trustee of the Series
1998-_ Securities, the performance of the transactions contemplated
thereby and the fulfillment of the terms thereof will not violate,
result in any breach of any of the material terms and provisions of,
or constitute (with or without notice or lapse of time or both) a
default under any currently existing indenture, contract, agreement,
mortgage, deed of trust or other instrument to which the Transferor is
bound and which has been specifically identified to such counsel in
writing by the Transferor as being material to the Transferor.
With respect to such counsel's opinion set forth in paragraph (iii)
above, such counsel shall consider only such consents, approvals,
authorizations, orders and filings which, in such counsel's experience, are
customarily required for transactions of the type contemplated by the
Purchase Agreements and Pooling and Servicing Agreement.
Such counsel shall have been advised by the Commission that the
Registration Statement was declared effective and, to the best of such
counsel's knowledge, no stop order suspending
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the effectiveness of the Registration Statement has been issued and no
proceeding for that purpose has been instituted or threatened by the
Commission.
Such counsel also shall state that they have participated in
conferences with officers and representatives of FCI, FNB, Fingerhut and
the Transferor, counsel for FCI, FNB, Fingerhut and the Transferor,
representatives of the independent accountants of FCI, FNB, Fingerhut and
the Transferor, and representatives of the Underwriters, at which the
contents of the Registration Statement, the Prospectus and related matters
were discussed and, although they are not passing upon, and do not assume
any responsibility for, the accuracy, completeness or fairness of the
statements contained in the Registration Statement and the Prospectus and
have made no independent check or verification thereof except as and to the
extent set forth in paragraphs (iv), (vi) and (viii) above, on the basis of
the foregoing, no facts have come to such counsel's attention that have led
such counsel to believe that the Registration Statement, at the time it
became effective, contained an untrue statement of a material fact or
omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading or the Prospectus,
as of the Closing Date, contains an untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that in each case such counsel need express no belief
with respect to financial and statistical data included therein or excluded
therefrom or the exhibits to the Registration Statement.
(c) Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP shall have furnished to
the Representative their written opinions, as counsel to the Transferor,
addressed to the Underwriters and dated the Closing Date, in form and
substance reasonably satisfactory to the Representative, to the effect that
for federal income tax purposes (i) the Offered Securities will be treated
as debt for federal income tax purposes and (ii) any entity constituted by
the Trust will not be an association taxable as a corporation or publicly
traded partnership treated as a corporation;
(d) Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP shall have furnished to
the Representative their written opinions, as counsel to the Transferor,
FCI, Fingerhut and FNB, addressed to the Underwriters and dated the Closing
Date, in form and substance reasonably satisfactory to the Representative,
with respect to the characterization of the transfers of Receivables by
Fingerhut to the Transferor pursuant to the Fingerhut Purchase Agreement as
a sale or the grant of a security interest and by FCI to the Transferor
pursuant to the FCI Purchase Agreement as a sale and the non-consolidation
of FCI and Fingerhut with the Transferor.
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(e) Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP shall have furnished to
the Representative their written opinions, as counsel to the Transferor,
FCI and Fingerhut, addressed to the Underwriters and dated the Closing
Date, in form and substance reasonably satisfactory to the Representative,
to the effect that (i) the Fingerhut Purchase Agreement is effective to
create a security interest in all right, title and interest of Fingerhut in
the Receivables and the proceeds thereof under Article 9 of the Uniform
Commercial Code, (ii) the FCI Purchase Agreement is effective to create a
security interest in all right, title and interest of FCI in the
Receivables and the proceeds thereof under Article 9 of the Uniform
Commercial Code and (iii) the Pooling and Servicing Agreement is effective
to create a security interest in all right, title and interest of the
Transferor in the Receivables and the proceeds thereof under Article 9 of
the Uniform Commercial Code.
(f) Faegre & Xxxxxx LLP shall have furnished to the Representative
their written opinion or opinions, addressed to the Underwriters and dated
the Closing Date, in form and substance satisfactory to the Representative
and its counsel (i) with respect to certain matters relating to the
transfers of the Receivables to FCI, the Transferor and the Trust and the
perfection of FCI's, the Transferor's and the Trust's interest in the
Receivables and certain other matters relating to insolvency considerations
and with respect to other related matters and (ii) to the effect the
Offered Securities will be characterized for Minnesota state income and
franchise tax purposes as debt and that Securityholders not otherwise
subject to taxation in Minnesota will not be subject to tax in respect of
the Offered Securities, in each case in a form previously approved by the
Representative and its counsel.
(g) Davenport, Evans, Xxxxxxx & Xxxxx LLP shall have furnished to the
Representative their written opinion or opinions, addressed to the
Underwriters and dated the Closing Date, in form and substance satisfactory
to the Representative and its counsel (i) with respect to certain matters
relating to the transfers of the Receivables to FCI and the perfection of
FCI's interest in the Receivables and certain other matters relating to
insolvency considerations and with respect to other related matters and
(ii) to the effect the Offered Securities will be characterized for South
Dakota state income and franchise tax purposes as debt and that
Securityholders not otherwise subject to taxation in South Dakota will not
be subject to tax in respect of the Offered Securities, in each case in a
form previously approved by the Representative and its counsel.
(h) Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP shall have furnished to
the Representative their written opinion, as counsel to the Transferor,
addressed to the Underwriters and dated the Closing Date, to the effect
that the Offered
14
Securities will be characterized as debt for Delaware state income and
franchise tax purposes, that the Trust will not be taxable as a corporation
for Delaware state income tax purposes and that Securityholders not
otherwise subject to taxation in Delaware will not be subject to tax in
respect of the Offered Securities.
(i) Xxxxxxx X. Xxxxxxx, General Counsel of FCI, shall have furnished
to the Representative his written opinion, addressed to the Underwriters
and dated the Closing Date to the effect that:
(i) FCI is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Minnesota.
(ii) Fingerhut is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of
Minnesota.
(iii) The Transferor is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware
and is duly qualified to transact business and is in good standing in
each state in which the conduct of its business requires such
qualification except where the failure to so qualify does not have a
material adverse effect on the financial condition or business of the
Transferor.
(iv) FNB is a national banking association formed under the
laws of the United States of America and is authorized to conduct the
business of a special purpose credit card bank, as described in the
Prospectus, and had at all relevant times and now has the power,
authority and legal right to acquire, own and service the Accounts and
the Receivables;
(v) Each Program Agreement to which FCI, Fingerhut, FNB or
the Transferor is a party has been duly and validly authorized,
executed and delivered by each of FCI, Fingerhut, FNB and the
Transferor, as applicable.
(vi) This Agreement has been duly and validly authorized,
executed and delivered by each of FCI and the Transferor.
(vii) The sale of the Series 1998-_ Securities and the
direction by the Transferor to the Trustee to execute, authenticate
and deliver the Series 1998-_ Securities have been duly authorized by
the Transferor. The Series 1998-_ Securities have been duly and
validly authorized and executed by the Transferor.
15
(viii) The execution and delivery of any Program Agreement or of
this Agreement and the execution and delivery to the Trustee of the
Series 1998-_ Securities, the performance of the transactions
contemplated by this Agreement or any Program Agreement and the
fulfillment of the terms thereof will not (i) violate any Applicable
Laws (assuming compliance with all applicable state securities and
Blue Sky laws, as to which such counsel expresses no opinion), (ii)
require any Governmental Approval (except for filings under the
Uniform Commercial Code, compliance with all applicable state
securities and Blue Sky laws, as to which such counsel expresses no
opinion and such filings or registrations as have already been made
and are in full force and effect) or (iii) violate, result in any
breach of any of the material terms and provisions of, or constitute
(with or without notice or lapse of time or both) a default under any
currently existing material indenture, contract, agreement, mortgage,
deed of trust or other instrument which has been attached as an
exhibit to the report on Form 10-K filed by FCI. For purposes of this
paragraph (viii), "Applicable Laws" means those laws, rules and
regulations of the State of Minnesota and the United States of America
which, in such counsel's experience, are normally applicable to the
ordinary business operations of FCI, Fingerhut or the Transferor and
transactions of the type contemplated by the Programs Agreements. For
the purposes of this paragraph (viii), the term "Governmental
Approval" means any consent, approval, license, authorization or
validation of, or filing, recording or registration with, any
Governmental Authority pursuant to Applicable Laws, and the term
"Governmental Authority" means any Minnesota or federal executive,
legislative, judicial, administrative or regulatory body.
(ix) There are no legal or governmental proceedings pending
or, to such counsel's knowledge, threatened that are required to be
disclosed in the Registration Statement, other than those disclosed
therein. There are no proceedings or investigations pending or, to the
best of such counsel's knowledge, threatened against Fingerhut, FCI or
the Transferor, before any Governmental Authority (i) asserting the
invalidity of any Program Agreement or of this Agreement, (ii) seeking
to prevent the consummation of any of the transactions contemplated
hereby or thereby, (iii) seeking any determination or ruling that
would materially and adversely affect the performance by Fingerhut,
FCI or the Transferor of its obligations thereunder, (iv) seeking any
determination or ruling that would materially and adversely affect the
validity or enforceability thereof or (v) seeking to affect adversely
the tax attributes of the Trust or the Series 1998-_ Securities.
16
(x) No consent, approval, authorization or order of, or
registration, filing (except for filings under the Uniform Commercial
Code) or declaration with, any court or governmental agency or body is
required in connection with (i) the execution, delivery and
performance by Fingerhut, FNB, FCI or the Transferor of any Program
Agreement or by FCI or the Transferor of this Agreement or (ii) the
offer, sale or delivery of the Series 1998-_ Securities, except such
as shall have been obtained or made, as the case may be, or will be
obtained or made, as the case may be, prior to the Closing Date and
except such as may be required under state securities or Blue Sky
laws.
(xi) FNB has the power and authority to sell and assign the
Receivables to FCI pursuant to the terms of the Bank Purchase
Agreement, has duly authorized such sale and assignment by all
necessary action.
(xii) FCI has full corporate power and authority to sell and
assign the Receivables to the Transferor pursuant to the terms of the
FCI Purchase Agreement, has duly authorized such sale and assignment
by all necessary corporate action.
(xiii) Fingerhut has full corporate power and authority to sell
and assign the Receivables to the Transferor pursuant to the terms of
the Fingerhut Purchase Agreement, has duly authorized such sale and
assignment by all necessary corporate action.
(xiv) The Transferor has full corporate power and authority to
transfer the Receivables to the Trust pursuant to the terms of the
Pooling and Servicing Agreement, has duly authorized such transfer by
all necessary corporate action.
(xv) Neither the execution, delivery and performance by FNB of
its obligations under the Bank Purchase Agreement or the Pooling and
Servicing Agreement, the transfer of the Receivables to FCI, the
issuance and sale of the Series 1998-_ Securities, nor the
consummation of any other of the transactions contemplated in the Bank
Purchase Agreement or the Pooling and Servicing Agreement will result
in a breach of or violation of any of the terms of, or constitute a
default under, the Articles of Association or by-laws of the FNB, each
as amended, or any Applicable Laws or the terms of any material
indenture or other material agreement or instrument known to such
counsel to which FNB is a party or by which it or its properties are
bound. For purposes of this paragraph (xii), "Applicable Laws" means
those laws, rules and regulations of the United States of America
which, in such counsel's experience, are normally applicable to the
17
ordinary business operations of FNB and transactions of the type
contemplated by the Program Agreements; and
(xvi) There are no actions, proceedings or investigations
pending or, to the best of such counsel's knowledge, threatened before
any court, administrative agency or other tribunal (x) asserting the
invalidity of the Bank Purchase Agreement or the Pooling and Servicing
Agreement or (y) seeking to prevent the issuance of the Series 1998-_
Securities or the consummation of any of the transactions contemplated
by the Bank Purchase Agreement or the Pooling and Servicing Agreement
or the Series 1998-_ Securities, which might materially and adversely
affect the performance by FNB of its obligations under, or the
validity or enforceability of, the Bank Purchase Agreement or the
Pooling and Servicing Agreement or the Series 1998-_ Securities.
(xvii) Each of FCI and Fingerhut is duly qualified to transact
business and is in good standing in each state in which the conduct of
its business requires such qualification except where the failure to
so qualify does not have a material adverse effect on the financial
condition or business of FCI or Fingerhut, as the case may be.
(xv) Each of Fingerhut, FNB, FCI and the Transferor possesses
all material licenses, certificates, authorities or permits issued by
the appropriate state or federal regulatory agencies or bodies
necessary to conduct the business now conducted by it and as described
in the Prospectus, except to the extent that the failure to have such
licenses, certificates, authorities or permits does not have a
material adverse effect on the Receivables or the Series 1998-_
Securities or the financial condition of Fingerhut, FNB, FCI or the
Transferor, and none of Fingerhut, FNB, FCI or the Transferor has
received any notice of proceedings relating to the revocation or
modification of any such license, certificate, authority or permit
which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would materially and adversely affect the
conduct of its business, operations or financial condition.
(j) The Representative shall have received from Xxxxxxx Xxxxxxx &
Xxxxxxxx, as counsel to the Underwriters, such opinion or opinions, dated
the Closing Date, with respect to such matters as the Representative may
require, and the Transferor, FCI, Fingerhut and FNB shall have furnished to
such counsel such documents as they reasonably request for enabling them to
pass upon such matters.
18
(k) Xxxxxxxx, Xxxxxx & Finger, Delaware counsel for the Trustee, and
Xxxxx, Xxxxxx & Xxxxxx, New York counsel for the Trustee, as appropriate,
shall have furnished to the Representative their written opinion, as
counsel to the Trustee, addressed to the Underwriters and dated the Closing
Date, in substantially the form of Exhibit C hereto.
(l) The Representative shall have received a letter dated the date of
delivery thereof (the "PROCEDURES LETTER") from KPMG Peat Marwick LLP
verifying the accuracy of such financial and statistical data contained in
the Prospectus as the Representative shall deem advisable and in
substantially the form heretofore agreed on by the Representative. In
addition, if any amendment or supplement to the Prospectus made after the
date of the Procedures Letter contains new financial or statistical data,
the Representative shall have received a letter dated the Closing Date
confirming the Procedures Letter and providing additional comfort on such
new data.
(m) The Representative shall have received certificates of each of
the Transferor and FCI, dated the Closing Date, of any one of the
President, any Vice President, the Chief Financial Officer or the Treasurer
of the Transferor or FCI, as the case may be, stating that (A) (i) the
representations and warranties of the Transferor or FCI, as the case may
be, contained in this Agreement and the Program Agreements, are true and
correct in all material respects on and as of the Closing Date and (ii) in
the FCI officer's certificate only, the representations and warranties of
Fingerhut or FNB, as the case may be, contained in this Agreement and the
Program Agreements to which each is a party, are true and correct in all
material respects on and as of the Closing Date, (B) (i) the Transferor or
FNB, as the case may be, has complied in all material respects with all
agreements and satisfied all conditions on its part to be performed or
satisfied hereunder and under the Program Agreements at or prior to the
Closing Date and (ii) in the FCI officer's certificate only, Fingerhut or
FNB, as the case may be, has complied in all material respects with all
agreements and satisfied all conditions on its part to be performed or
satisfied hereunder and under the Program Agreements at or prior to the
Closing Date and (C) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose
have been instituted or, to his or her knowledge, are threatened by the
Commission as of the Closing Date. Any officer making such certification
may rely upon his or her knowledge as to the proceedings pending or
threatened.
(n) The Representative shall have received evidence satisfactory to it
that each class of Offered Securities shall have been given a rating by a
Rating Agency that is equal to or better than the rating required for such
class of Offered
19
Securities as set forth in the Prospectus and such rating shall not have
been rescinded or lowered.
(o) Since the respective dates as of which information is given in the
Prospectus, there shall not have occurred any material change, or any
development involving a prospective material adverse change, in or
affecting the business or assets of the Trust, the Transferor, FNB or
Fingerhut or any material adverse change in the financial position or
results of operation of the Trust, the Transferor, FNB or Fingerhut
otherwise than as set forth or contemplated in the Prospectus which in any
such case makes it impracticable or inadvisable on the Representative's
good faith judgment to proceed with the public offering or the delivery of
the Offered Securities on the terms and in the manner contemplated in the
Prospectus as then amended or supplemented.
(p) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange or the American Stock Exchange
shall have been suspended or limited, or minimum prices shall have been
established on either of such exchanges by the Commission, by such exchange
or by any other regulatory body or governmental authority having
jurisdiction, or trading in securities of FCI on the New York Stock
Exchange or, with respect to its debt securities, the over-the-counter
market, shall have been suspended, or a general banking moratorium on
commercial banking activities shall have been declared by Federal or New
York state authorities or (ii) an outbreak or escalation of hostilities or
a declaration by the United States or a national emergency or war, the
effect of which with respect to either clause (i) or clause (ii) is to make
it, in the good faith judgment of a majority in interest of the several
Underwriters, impracticable to market the Offered Securities or to enforce
contracts for the sale of the Offered Securities.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to the Representatives.
6. TERMINATION. The obligations of the Underwriters hereunder may be
terminated by the Representative, in its absolute discretion, by notice given to
and received by the Transferor prior to delivery of and payment for the Offered
Securities if, prior to that time, any of the events described in Section 5(o)
shall have occurred or any of the conditions described in Section 5(m) or 5(n)
shall not be satisfied.
7. DEFAULTING UNDERWRITERS. (a) If, any one or more of the
Underwriters shall fail to purchase and pay for any of the Offered Securities
agreed to be purchased by such Underwriter or
20
Underwriters are obligated to purchase hereunder on the Closing Date, the
Representative may make arrangements for the purchase of such Offered Securities
by other persons satisfactory to the Transferor and the Representative,
including any of the Underwriters, but if no such arrangements are made by the
Closing Date, then each remaining non-defaulting Underwriter shall be severally
obligated to purchase the Offered Securities which the defaulting Underwriter or
Underwriters agreed but failed to purchase on the Closing Date in the respective
proportions which the principal amount of the Offered Securities set forth
opposite the name of each remaining non-defaulting Underwriter in Schedule 1
hereto bears to the aggregate principal amount of the Offered Securities set
forth opposite the names of all the remaining non-defaulting Underwriters in
Schedule 1 hereto; PROVIDED, HOWEVER, that the remaining non-defaulting
Underwriters shall not be obligated to purchase any of the Offered Securities on
the Closing Date if the aggregate principal amount of the Offered Securities
which the defaulting Underwriter or Underwriters agreed but failed to purchase
on such date exceeds one-tenth of the aggregate principal amount of the Offered
Securities to be purchased on the Closing Date, and any remaining non-defaulting
Underwriter shall not be obligated to purchase in total more than 110% of the
principal amount of the Offered Securities which it agreed to purchase on the
Closing Date pursuant to the terms of Section 2. If the foregoing maximums are
exceeded and the remaining Underwriters or other underwriters satisfactory to
the Representative and the Transferor do not elect to purchase the Offered
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase, this Agreement shall terminate without liability on the part of any
non-defaulting Underwriter or the Transferor, except that the Transferor will
continue to be liable for the payment of expenses to the extent set forth in
Sections 13 and except that the provisions of Sections 9 and 10 shall not
terminate and shall remain in effect. As used in this Agreement, the term
"Underwriter" includes, for all purposes of this Agreement unless the context
otherwise requires, any party not listed in Schedule 1 hereto who, pursuant to
this Section 7, purchases Offered Securities which a defaulting Underwriter
agreed but failed to purchase.
(b) Nothing contained herein shall relieve a defaulting Underwriter of
any liability it may have for damages caused by its default. If other
underwriters are obligated or agree to purchase the Offered Securities of a
defaulting Underwriter, either the Representative or the Transferor may postpone
the Closing Date for up to seven full business days in order to effect any
required changes in the Registration Statement, the Prospectus or in any other
document or arrangement, and the Transferor agrees to file promptly any
amendment or supplement to the Registration Statement or the Prospectus that
effects any such changes.
8. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If (a) notice shall have
been given pursuant to Section 6 preventing this Agreement from becoming
effective or (b) the Transferor shall fail
21
to tender the Offered Securities for delivery to the Underwriters for any reason
permitted under this Agreement other than pursuant to Section 7, the Transferor
shall reimburse the Underwriters for the reasonable fees and expenses of their
counsel and for such other out-of-pocket expenses as shall have been reasonably
incurred by them in connection with this Agreement and the proposed purchase of
the Offered Securities, and upon demand the Transferor shall pay the full amount
thereof to the Representative.
9. INDEMNIFICATION. (a) The Transferor and FCI each, jointly and
severally, hereby agree to and do indemnify and hold harmless each Underwriter
and each person, if any, who controls each Underwriter within the meaning of
Section 15 of the Securities Act (collectively referred to for the purposes of
this Section 9 and Section 10 as the Underwriter) against any loss, claim,
damage or liability, joint or several, to which that Underwriter may become
subject, under the Securities Act or otherwise, insofar as such loss, claim,
damage, liability or action arises out of or is based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus dated April __, 1998, the Registration Statement or the
Prospectus or in any amendment or supplement thereto or (ii) the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they are made, not misleading, and shall reimburse each Underwriter for
any legal or other expenses reasonably incurred by that Underwriter in
connection with investigating or preparing to defend or defending against any
such loss, claim, damage or liability, or any action in respect thereof, as such
expenses are incurred; PROVIDED, HOWEVER, that neither the Transferor nor FCI
shall be liable in any such case to the extent that any such loss, claim, damage
or liability (or any action in respect thereof) arises out of or is based upon
an untrue statement or alleged untrue statement in or omission or alleged
omission from any Preliminary Prospectus dated April __, 1998, the Registration
Statement or the Prospectus or any such amendment or supplement in reliance upon
and in conformity with the Underwriters' Information and PROVIDED, FURTHER, that
the foregoing indemnity is subject to the condition that, insofar as it relates
to any untrue statement or omission, or any alleged untrue statement or omission
made in a Preliminary Prospectus dated April __, 1998 but eliminated, corrected
or remedied in the Prospectus (as amended or supplemented), it shall not inure
to the benefit of any Underwriter if a copy of the Prospectus (as amended or
supplemented) was not delivered by such Underwriter to the person asserting any
loss, claim, damage, or liability (or any action in respect thereof) arising out
of or based upon such untrue statement or omission, or such alleged untrue
statement or omission, at or prior to the time required by the Securities Act.
(b) Each Underwriter, severally and not jointly, shall indemnify and
hold harmless FCI, the Transferor, each of their respective directors and
officers, each officer of the Transferor who signed the Registration Statement
and each person, if any, who
22
controls FCI and the Transferor within the meaning of the Securities Act
(collectively referred to for the purposes of this Section 9 and Section 10 as
the Transferor), against any loss, claim, damage or liability, joint or several,
or any action in respect thereof, to which the Transferor may become subject,
under the Securities Act or otherwise, insofar as such loss, claim, damage,
liability or action arises out of or is based upon (i) any untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Prospectus dated April __, 1998, the Registration Statement or the Prospectus or
in any amendment or supplement thereto or (ii) the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, but in each case only to the extent
that the untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Transferor through the Representative by or on behalf of that
Underwriter specifically for use therein, and shall reimburse the Transferor for
any legal or other expenses reasonably incurred by the Transferor in connection
with investigating or preparing to defend or defending against any such loss,
claim, damage, liability or action as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under this Section
9 of notice of any claim or the commencement of any action, the indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 9, notify the indemnifying party in
writing of the claim or the commencement of that action; PROVIDED, HOWEVER, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 9 except to the extent it has
been materially prejudiced by such failure; and, PROVIDED, FURTHER, that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this Section 9.
If any such claim or action shall be brought against an indemnified party, and
it shall notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, jointly with
any other similarly notified indemnifying party, to assume the defense thereof
with counsel reasonably satisfactory to the indemnified party. After notice
from the indemnifying party to the indemnified party of its election to assume
the defense of such claim or action, the indemnifying party shall not be liable
to the indemnified party under this Section 9 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; PROVIDED, HOWEVER, that,
if the defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to defend such action on behalf of
23
such indemnified party or parties. Upon receipt of notice from the indemnifying
party to such indemnified party of its election so to appoint counsel to defend
such action and approval by the indemnified party of such counsel, the
indemnifying party will not be liable to such indemnified party under this
Section 9 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel, approved by such Underwriter being indemnified in the case of
paragraph (a) of this Section 9, representing the indemnified parties under such
paragraph (a) who are parties to such action), (ii) the indemnifying party shall
not have employed counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of commencement of the
action or (iii) the indemnifying party has authorized the employment of counsel
for the indemnified party at the expense of the indemnifying party; and except
that, if clause (i) or (iii) is applicable, such liability shall be only in
respect of the counsel referred to in such clause (i) or (iii). Each
indemnified party, as a condition of the indemnity agreements contained in
Sections 9(a) and 9(b), shall use all reasonable efforts to cooperate with the
indemnifying party in the defense of any such action or claim. No indemnifying
party shall be liable for any settlement of any such action effected without its
written consent, but if settled with its written consent or if there be a final
judgment of the plaintiff in any such action, the indemnifying party agrees to
indemnify and hold harmless any indemnified party from and against any loss or
liability by reason of such settlement or judgment.
The obligations of the Transferor and FCI and the Underwriters, as the
case may be, in this Section 9 and in Section 10 are in addition to any other
liability which the Transferor, FCI or the Underwriters, as the case may be, may
otherwise have.
10. CONTRIBUTION. If the indemnification provided for in Section 9
is unavailable or insufficient to hold harmless an indemnified party under
Section 9(a) or (b), then each indemnifying party shall, in lieu of indemnifying
such indemnified party, contribute to the amount paid or payable by such
indemnified party as a result of such loss, claim, damage or liability (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Transferor and FCI on the one hand and the Underwriters on the
other from the offering of the Offered Securities or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Transferor and FCI on
the one hand and the Underwriters on the other with respect to the statements or
omissions which resulted in such loss, claim, damage or liability, as well as
any other relevant equitable considerations. The relative benefits received by
the Transferor
24
and FCI on the one hand and the Underwriters on the other with respect to such
offering shall be deemed to be in the same proportion as the total net proceeds
from the offering of the Offered Securities purchased under this Agreement
(before deducting expenses) received by the Transferor bear to the total
underwriting discounts and commissions received by the Underwriters with respect
to the Offered Securities purchased under this Agreement, in each case as set
forth in the table on the cover page of the Prospectus. The relative fault
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Transferor and
FCI on the one hand or the Underwriters on the other, the intent of the parties
and their relative knowledge, access to information and opportunity to correct
or prevent such untrue statement or omission.
The Transferor, FCI and the Underwriters agree that it would not be
just and equitable if contributions pursuant to this Section 10 were to be
determined by pro-rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take into account the equitable considerations referred to herein. The amount
paid or payable by an indemnified party as a result of the loss, claim, damage
or liability, or action in respect thereof, referred to above in this Section 10
shall be deemed to include, for purposes of this Section 10, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 10, no Underwriter shall be required to contribute
any amount in excess of the amount by which the total price at which the Offered
Securities underwritten by it and distributed to the public were offered to the
public less the amount of any damages which such Underwriter has otherwise paid
or become liable to pay by reason of any untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute as provided in
this Section 10 are several in proportion to their respective underwriting
obligations and not joint.
11. REPRESENTATIONS AND WARRANTIES OF THE UNDERWRITERS.
Each Underwriter severally and not jointly represents, warrants, covenants and
agrees with the Transferor that it has only issued or passed on and shall only
issue or pass on in the United Kingdom any document received by it in connection
with the issue of the Securities to a person who is of a kind described in
Article 11(3) of the Financial Services Xxx 0000 (Investment Advertisements)
(Exemptions) Order 1996 or who is a person to whom the document may otherwise
lawfully be issued or passed on, it has complied and shall comply with all
applicable provisions of the Financial
25
Services Xxx 0000 of Great Britain with respect to anything done by it in
relation to the Securities in, from or otherwise involving the United Kingdom
and if that Underwriter is an authorized person under the Financial Services Xxx
0000, it has only promoted and shall only promote (as that term is defined in
Regulation 1.02 of the Financial Services (Promotion of Unregulated Schemes)
Regulations 1991) to any person in the United Kingdom the scheme described in
the Prospectus if that person is of a kind described either in Section 76 (2) of
the Financial Services Xxx 0000 or in Regulation 1.04 of the Financial Services
(Promotion of Unregulated Schemes) Regulations 1991.
12. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall
inure to the benefit of and be binding upon the Underwriters, the Transferor and
FCI and their respective successors. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any person, firm or
corporation, other than the Underwriters, the Transferor and FCI and their
respective successors and the controlling persons and officers and directors
referred to in Sections 9 and 10 and their heirs and legal representatives, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any provision contained herein.
13. EXPENSES. The Transferor agrees with the Underwriters to pay (a)
the costs incident to the authorization, issuance, sale, preparation and
delivery of the Offered Securities to the Underwriters and any taxes payable in
that connection;(b) the costs incident to the preparation, printing and filing
under the Securities Act of the Registration Statement and any amendments and
exhibits thereto;(c) the costs of distributing to the Underwriters the
Registration Statement as originally filed and each amendment thereto and any
post-effective amendments thereof (including, in each case, exhibits), any
Preliminary Prospectus, the Prospectus and any amendment or supplement to the
Prospectus, all as provided in this Agreement; (d)the costs of reproducing this
Agreement;(e) the fees and expenses of qualifying the Offering Securities under
the securities laws of the several states as provided in Section 4(g) and of
preparing, reproducing and distributing Blue Sky Memoranda and Legal Investment
Surveys (including the reasonable fees and expenses of counsel to the
Underwriters in connection with such qualification and in connection with the
preparation of the Blue Sky Memoranda and Legal Investment Surveys);(f) any fees
charged by Standard & Poor's and Xxxxx'x for rating the Offered Securities;(g)
all fees and expenses of the Trustee and its counsel; and (h) all other costs
and expenses incident to the performance of the obligations of the Transferor,
FNB, Fingerhut and FCI under this Agreement. Except as otherwise provided in
this Section 13 and in Section 8, the Underwriters shall pay their own costs and
expenses, including the costs and expenses of their counsel, any transfer taxes
on the Offered Securities which they may sell and the expenses of advertising
any offering of the Offered Securities made by the Underwriters.
26
14. SURVIVAL. The respective indemnities, rights of contribution,
representations, warranties and agreements of the Transferor, FCI and the
Underwriters contained in this Agreement or made by or on behalf on them,
respectively, pursuant to this Agreement, shall survive the delivery of and
payment for the Offered Securities and shall remain in full force and effect,
regardless of any (i) termination or cancellation of this Agreement, (ii) any
investigation made by or on behalf of any of them or any person controlling any
of them or (iii) acceptance of and payment for the Offered Securities.
15. NOTICES, ETC. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(i)if to the Underwriters, shall be delivered or sent by mail or
facsimile transmission and confirmed to Chase Securities Inc., 000 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xx. Xxxxxxx X. Xxxxxxx, with a
copy to the Legal Department;
(j)if to the Transferor, shall be delivered or sent by mail or
facsimile transmission and confirmed to the address of the Transferor set
forth in the Registration Statement, Attention: President and Treasurer;
(k) if to FCI, shall be delivered or sent by mail or facsimile
transmission and confirmed to the following address: 0000 Xxxxx Xxxx,
Xxxxxxxxxx, Xxxxxxxxx 00000, Attention: General Counsel;
PROVIDED, HOWEVER, that any notice to an Underwriter pursuant to Section
9(c) shall be delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its acceptance telex to the
Representative, which address will be supplied to any other party hereto by the
Representative upon request. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Transferor
shall be entitled to act and rely upon any request, consent, notice or agreement
given or made on behalf of the Underwriters by the Representative.
16. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
17. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same instrument.
18. SEVERABILITY OF PROVISIONS. Any covenant, provision, agreement
or term of this Agreement that is prohibited or is held to be void or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such
27
prohibition or unenforceability without invalidating the remaining provisions
hereof.
19. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement and understanding of the parties hereto with respect to the matters
and transactions contemplated hereby and supersedes al prior agreement and
understandings whatsoever relating to such matters and transactions.
20. AMENDMENT. Neither this Agreement nor any term hereof may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against whom enforcement of the change, waiver,
discharge or termination is sought.
21. HEADINGS. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
28
If the foregoing is in accordance with your understanding of the
agreement among the Transferor, FCI and the Underwriters, kindly indicate your
acceptance in the space provided for that purpose below.
Very truly yours,
FINGERHUT RECEIVABLES, INC.
By
--------------------------------
Name:
Title:
FINGERHUT COMPANIES, INC.
By
--------------------------------
Name:
Title:
Accepted:
CHASE SECURITIES INC.
By
---------------------------
Name:
Title:
For itself and as Representative
of the Underwriters
SCHEDULE 1
PRINCIPAL PRINCIPAL
AMOUNT OF AMOUNT OF
CLASS A CLASS B
UNDERWRITER SECURITIES SECURITIES
----------- ---------- ----------
Chase Securities Inc. $___________ $___________
BancAmerica Xxxxxxxxx
Xxxxxxxx
NationsBanc Xxxxxxxxxx
Securities LLC
UBS Securities LLC
