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Exhibit 10.c
FINGERHUT FINANCIAL SERVICES RECEIVABLES, INC.
Buyer
and
FINGERHUT COMPANIES, INC.
Seller
PURCHASE AGREEMENT
Dated as of May 26, 1995
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 Definitions . . . . . . . . . . . . . . . 1
Section 1.2 Other Definitional Provisions . . . . . . 2
ARTICLE II
PURCHASE, CONVEYANCE AND SERVICING
OF RECEIVABLES . . . . . . . . . . . . . . . . . . . . 3
Section 2.1 Sale . . . . . . . . . . . . . . . . . . . 3
ARTICLE III
CONSIDERATION AND PAYMENT . . . . . . . . . . . . . . . 6
Section 3.1 Purchase Price . . . . . . . . . . . . . . 6
Section 3.2 Payment of Purchase Price . . . . . . . . 6
Section 3.3 Daily Reports . . . . . . . . . . . . . . 6
Section 3.4 Capital Contribution . . . . . . . . . . . . 6
ARTICLE IV
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . 7
Section 4.1 Seller's Representations and Warranties . 7
Section 4.2 Seller's Representations and
Warranties Regarding Receivables . . . . 10
Section 4.3 Representations and Warranties of
the Buyer . . . . . . . . . . . . . . . . 12
ARTICLE V
COVENANTS OF SELLER AND BUYER . . . . . . . . . . . . . 15
Section 5.1 Seller Covenants . . . . . . . . . . . . . 15
Section 5.2 Addition of Accounts . . . . . . . . . . . 17
Section 5.3 Buyer Covenant Regarding Sale Treatment . 17
ARTICLE VI
REPURCHASE OBLIGATION . . . . . . . . . . . . . . . . . 18
Section 6.1 Mandatory Repurchase . . . . . . . . . . . 18
Section 6.2 Conveyance of Reassigned
Receivables . . . . . . . . . . . . . . . 19
ARTICLE VII
CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . 20
Section 7.1 Conditions to the Buyer's
Obligations Regarding
Receivables . . . . . . . . . . . . . . . 20
Section 7.2 Conditions Precedent to the
Seller's Obligations . . . . . . . . . . 20
ARTICLE VIII
TERM AND TERMINATION . . . . . . . . . . . . . . . . . 22
Section 8.1 Termination . . . . . . . . . . . . . . . 22
ARTICLE IX
MISCELLANEOUS PROVISIONS . . . . . . 23
Section 9.1 Amendment . . . . . . . . . . . . . . . . 23
Section 9.2 Governing Law . . . . . . . . . . . . . . 23
Section 9.3 Notices . . . . . . . . . . . . . . . . . 23
Section 9.4 Severability of Provisions . . . . . . . 24
Section 9.5 Assignment . . . . . . . . . . . . . . . 24
Section 9.6 Further Assurances . . . . . . . . . . . 24
Section 9.7 No Waiver; Cumulative Remedies . . . . . 25
Section 9.8 Counterparts . . . . . . . . . . . . . . 25
Section 9.9 Binding Effect; Third-Party
Beneficiaries . . . . . . . . . . . . . 25
Section 9.10 Merger and Integration. . . . . . . . . 25
Section 9.11 Headings . . . . . . . . . . . . . . . . 25
Section 9.12 Schedules and Exhibits . . . . . . . . . 25
Section 9.13 No Bankruptcy Petition Against
the Buyer . . . . . . . . . . . . . . . 25
Section 9.14 Merger or Consolidation of, or
Assumption of the Obligations
of, the Seller . . . . . . . . . . . . . 26
Section 9.15 Protection of Right, Title and
Interest to Receivables . . . . . . . . 27
Exhibit A Form of Daily Report
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PURCHASE AGREEMENT
PURCHASE AGREEMENT, dated as of May 26, 1995
(the "Agreement"), by and between FINGERHUT COMPANIES,
INC., a Minnesota corporation ("Fingerhut" or the
"Seller"), and FINGERHUT FINANCIAL SERVICES RECEIVABLES,
INC., a Delaware corporation ("FFSRI" or the "Buyer").
W I T N E S S E T H :
WHEREAS, the Buyer desires to purchase from
time to time certain open-end or revolving credit
receivables (including, without limitation, MasterCard,
Visa and private label credit card receivables) generated
or acquired on or before the Initial Closing Date or to
be generated or acquired after the Initial Closing Date
by the Seller, the Bank or any Affiliate thereof in the
normal course of its business;
WHEREAS, the Seller desires to sell and assign
from time to time such receivables to the Buyer upon the
terms and conditions hereinafter set forth;
WHEREAS, the Buyer is an Affiliate of the
Seller;
NOW, THEREFORE, it is hereby agreed by and
between the Buyer and the Seller as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. For all purposes of
this Agreement, except as otherwise expressly provided
herein or unless the context otherwise requires,
capitalized terms used herein shall have the following
meanings assigned to them:
"Bank" shall mean Direct Merchants Credit Card
Bank, N.A.
"Credit Adjustment" shall have the meaning set
forth in Section 3.2(b) hereof.
"Involuntary Case" shall have the meaning set
forth in Section 2.1(c) hereof.
"Opinion of Counsel" shall mean a written
opinion of counsel acceptable to the Buyer and the
Seller, which counsel may be an employee of the Seller.
"Pooling and Servicing Agreement" shall mean
the Pooling and Servicing Agreement dated as of May 26,
1995 by and among the Bank, as Servicer, FFSRI, as
Transferor, and the Trustee.
"Purchase Price" shall have the meaning set
forth in Section 3.1 hereof.
"Sale Papers" shall have the meaning set forth
in Section 4.1(a) hereof.
"Secured Obligations" shall have the meaning
set forth in Section 2.1(f) hereof.
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Section 1.2 Other Definitional Provisions.
The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement or any Sale
Paper shall refer to this Agreement as a whole and not to
any particular provision of this Agreement; and Section,
Subsection, Schedule and Exhibit references contained in
this Agreement are references to Sections, Subsections,
Schedules and Exhibits in or to this Agreement unless
otherwise specified. All capitalized terms not otherwise
defined herein are defined in the Pooling and Servicing
Agreement. In the event that any term or provision
contained herein shall conflict with or be inconsistent
with any provisions contained in the Pooling and
Servicing Agreement, the terms and provisions contained
herein shall govern with respect to this Agreement.
[END OF ARTICLE I]
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ARTICLE II
PURCHASE, CONVEYANCE AND SERVICING
OF RECEIVABLES
Section 2.1 Sale. (a) In consideration for
the Purchase Price and upon the terms and subject to the
conditions set forth herein, the Seller does hereby sell,
assign, transfer, set-over, and otherwise convey to the
Buyer, and the Buyer does hereby purchase from the
Seller, on the terms and subject to the conditions
specifically set forth herein, all of the Seller's right,
title and interest in, to and under (i) the Receivables
now existing and hereafter created and arising in
connection with the Accounts and any accounts that meet
the definition of Additional Accounts, including, without
limitation, all accounts, general intangibles, chattel
paper, contract rights and other obligations of any
Obligor with respect to the Receivables, now or hereafter
existing, whether or not arising out of or in connection
with the sale or lease of goods or the rendering of
services, (ii) all monies and investments due or to
become due with respect thereto (including, without
limitation, the right to any Finance Charge Receivables,
including any Recoveries), (iii) all proceeds of such
Receivables and (iv) the Bank Receivables Purchase
Agreement. The foregoing sale, transfer, assignment,
set-over and conveyance does not constitute and is not
intended to result in a creation or an assumption by the
Buyer of any obligation of the Seller in connection with
the Receivables or any agreement or instrument relating
thereto, including, without limitation, any obligation to
any Obligors, merchant banks, merchant clearance systems,
VISA USA, Inc., MasterCard International Incorporated or
insurers.
(b) In connection with the foregoing sale, the
Seller agrees to record and file on or prior to the
Initial Closing Date, at its own expense, a financing
statement or statements with respect to the Receivables
and the other property described in Section 2.1(a) sold
by the Seller hereunder meeting the requirements of
applicable state law in such manner and in such
jurisdictions as are necessary to perfect and protect the
interests of the Buyer created hereby under the
applicable UCC against all creditors of and purchasers
from the Seller, and to deliver a file-stamped copy of
such financing statements or other evidence of such
filings to the Buyer within 10 days after the Initial
Closing Date.
(c) The Buyer shall not purchase Receivables
hereunder if the Seller shall become an involuntary party
to (or be made the subject of) any bankruptcy proceeding
or any other insolvency, readjustment of debt,
marshalling of assets and liabilities or similar
proceedings of or relating to the Seller or relating to
all or substantially all of its property (an "Involuntary
Case") upon receipt by the Seller at its head corporate
office of notice of such Involuntary Case.
(d) The Buyer shall not purchase Receivables
hereunder if the Seller shall admit in writing its
inability to pay its debts as they are due, or the Seller
shall commence a voluntary case under the federal
bankruptcy laws, as now or hereafter in effect, or any
present or future federal or state bankruptcy, insolvency
or similar law, or the Seller shall consent to the
appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator or
other similar official of the Seller or of any
substantial part of its property or the Seller shall make
an assignment for the benefit of creditors or the Seller
shall fail generally to pay its debts as such debts
become due or the Seller shall take corporate action in
furtherance of any of the foregoing.
(e) In connection with the sale and conveyance
hereunder, the Seller agrees, at its own expense, on or
prior to the Initial Closing Date and on each Business
Day thereafter, to indicate or cause to be indicated
clearly and unambiguously in its accounting records and
with respect to any Receivables purchased by the Seller
from the Bank to cause the Bank to indicate clearly and
unambiguously in the Bank's accounting records that such
Receivables and the other property described in clauses
(i), (ii), (iii) and (iv) of Section 2.1(a) have been
sold to the Buyer pursuant to this Agreement as of the
Initial Closing Date or such Business Day as applicable.
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(f) It is the express intent of the Seller and
the Buyer that the conveyance of the Receivables by the
Seller to the Buyer pursuant to this Agreement be
construed as a sale of such Receivables by the Seller to
the Buyer. It is, further, not the intention of the
Seller and the Buyer that such conveyance be deemed a
grant of a security interest in the Receivables by the
Seller to the Buyer to secure a debt or other obligation
of the Seller. However, in the event that,
notwithstanding the intent of the parties, the
Receivables are held to continue to be property of the
Seller, then (i) this Agreement also shall be deemed to
be and hereby is a security agreement within the meaning
of the UCC; and (ii) the conveyance by the Seller
provided for in this Agreement shall be deemed to be and
the Seller hereby grants to the Buyer a security interest
in and to all of the Seller's right, title and interest
in (w) the Receivables then existing and thereafter
created and arising in connection with the Accounts that
meet the definition of Additional Accounts, including,
without limitation, all accounts, general intangibles,
chattel paper, contract rights and other obligations of
any Obligor with respect to the Receivables, then or
thereafter existing, (x) all monies and investments due
or to become due with respect thereto (including, without
limitation, the right to any Finance Charge Receivables,
including any Recoveries), (y) all proceeds of such
Receivables and (z) the Bank Receivables Purchase
Agreement to secure (1) the obligations of the Seller and
(2) a loan to the Seller in the amount of the Purchase
Price as set forth in this Agreement (the "Secured
Obligations"). The Seller and the Buyer shall, to the
extent consistent with this Agreement, take such actions
as may be necessary to ensure that, if this Agreement
were deemed to create a security interest in the
Receivables, such security interest would be deemed to be
a perfected security interest of first priority in favor
of the Buyer under applicable law and will be maintained
as such throughout the term of this Agreement. The
Seller and the Buyer may rely upon an Opinion of Counsel
addressed to them as to what is required to provide the
Buyer with such security interest; and any such Opinion
of Counsel shall permit the Trustee, on behalf of the
Certificateholders, the Certificateholders (in the case
of any Series issued in a placement exempt from the
registration requirements of the Securities Act) and the
Rating Agencies to rely on it.
[END OF ARTICLE II]
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ARTICLE III
CONSIDERATION AND PAYMENT
Section 3.1 Purchase Price. The Purchase
Price for the Receivables and related property conveyed
to the Buyer under this Agreement shall be a dollar
amount equal to, for Receivables sold on any date, the
aggregate amount of all Principal Receivables sold as of
such date.
Section 3.2 Payment of Purchase Price.
(a) The Purchase Price for Receivables shall be paid or
provided for on the Initial Closing Date with respect to
the Receivables existing on the Initial Closing Date and
on each Business Day thereafter on which Receivables are
transferred hereunder, as the case may be, by payment in
immediately available funds. To the extent that the
total Purchase Price for Receivables is not paid in full
by the Buyer on the Initial Closing Date or on each
Business Day on which Receivables are purchased hereunder
in cash, the Seller shall be deemed to have contributed
Receivables in an aggregate principal amount equal to
such shortfall to the Buyer.
(b) The Purchase Price shall be adjusted on a
daily basis (the "Credit Adjustment") with respect to any
Receivable adjusted as provided in subsection 3.8 of the
Pooling and Servicing Agreement in an amount equal to the
amount of such Credit Adjustment specified in subsection
3.8 of the Pooling and Servicing Agreement. If the Buyer
is required thereunder to deposit amounts into the Excess
Funding Account, the Seller shall pay the amount so
adjusted to the Buyer.
Section 3.3 Daily Reports. On each Business
Day, the Seller shall deliver to the Buyer a Daily Report
(the "Daily Report") showing the aggregate Purchase Price
of Receivables generated, the aggregate amount, if any,
owing to the Buyer pursuant to Section 6.1 hereof and the
aggregate net amount of cash owing for Receivables
generated in each case for the period from and including
the preceding Business Day.
Section 3.4 Capital Contribution. The Seller
has contributed cash in exchange for 100 shares of common
stock of the Buyer, which 100 shares represent all of the
outstanding capital stock of the Buyer. In addition, in
connection with the sale of Receivables to the Buyer on
the Initial Closing Date, Principal Receivables equal to
$______________ shall be deemed paid for by the Buyer
with cash and such cash shall be retained by the Buyer
and will be considered to have been contributed to the
Buyer.
[END OF ARTICLE III]
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 Seller's Representations and
Warranties. The Seller represents and warrants to the
Buyer as of the Initial Closing Date, and shall be deemed
to represent and warrant as of the date of any Supplement
and the related Closing Date, that:
(a) Organization and Good Standing. The
Seller is a corporation duly organized and validly
existing in good standing under the laws of the State of
Minnesota and has the corporate power and authority and
legal right to own its property and conduct its business
as such properties are presently owned and as such
business is presently conducted and to execute, deliver
and perform its obligations under this Agreement and each
other document or instrument to be delivered by the
Seller hereunder (collectively, the "Sale Papers").
(b) Due Qualification. The Seller is duly
qualified to do business and is in good standing (or is
exempt from such requirements), as a foreign corporation
in any state required in order to conduct business, and
has obtained all necessary licenses and approvals with
respect to the Seller required under applicable law;
provided that no representation or warranty is made with
respect to any qualifications, licenses or approvals
which the Buyer would have to obtain to do business in
any state in which the Buyer seeks to enforce any
Receivable.
(c) Due Authorization. The execution and
delivery of the Sale Papers, and the consummation of the
transactions provided for herein and therein have been
duly authorized by the Seller by all necessary corporate
action on its part.
(d) Binding Obligation. Each of the Sale
Papers, and the consummation of the transactions provided
for therein, constitutes a legal, valid and binding
obligation of the Seller, enforceable in accordance with
its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereinafter in
effect, affecting the enforcement of creditors' rights in
general and as such enforceability may be limited by
general principles of equity (whether considered in a
proceeding at law or in equity).
(e) No Conflicts. The execution and delivery
of the Sale Papers and the performance of the
transactions contemplated thereby, do not (i) contravene
the Seller's charter or by-laws or (ii) violate any
material provision of law applicable to it or require any
filing (except for the filings under the UCC),
registration, consent or approval under, any law, rule,
regulation, order, writ, judgment, injunction, decree,
determination or award presently in effect having
applicability to the Seller, except for such filings,
registrations, consents or approvals as have already been
obtained and are in full force and effect.
(f) Taxes. The Seller has filed all material
tax returns required to be filed and has paid or made
adequate provision for the payment of all material taxes,
assessments and other governmental charges due from the
Seller or is contesting any such tax, assessment or other
governmental charge in good faith through appropriate
proceedings.
(g) No Violation. The execution and delivery
of the Sale Papers, the performance of the transactions
contemplated by the Sale Papers and the fulfillment of
the terms thereof, will not violate any Requirements of
Law applicable to the Seller, will not violate, result in
any breach of any of the material terms and provisions of
or constitute (with or without notice or lapse of time or
both) a default under any Requirement of Law applicable
to the Seller, or any material indenture, contract,
agreement, mortgage, deed of trust or other material
instrument to which the Seller is a party or by which it
or its properties are bound.
(h) No Proceedings. There are no proceedings
or investigations pending or, to the best knowledge of
the Seller, threatened against the Seller before any
Governmental Authority (i) asserting the invalidity of
the Sale Papers, (ii) seeking to prevent the consummation
of any of the transactions contemplated thereby, (iii)
seeking any determination or ruling that would materially
and adversely affect the performance by the Seller of its
obligations thereunder or (iv) seeking any determination
or ruling that would materially and adversely affect the
validity or enforceability thereof.
(i) All Consents Required. All approvals,
authorizations, consents, orders or other actions of any
Governmental Authority required in connection with the
execution and delivery of the Sale Papers, the
performance of the transactions contemplated by the Sale
Papers and the fulfillment of the terms hereof and
thereof, have been obtained.
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(j) Bona Fide Receivables. The Seller has no
knowledge of any fact which should have led it to expect
at the time of the classification of any Receivable as an
Eligible Receivable that such Receivable would not be
paid in full when due, and each Receivable classified as
an Eligible Receivable by the Seller in any document or
report delivered under this Agreement satisfies the
requirements of eligibility contained in the definition
of Eligible Receivable set forth in the Pooling and
Servicing Agreement.
(k) Place of Business. The principal
executive offices of the Seller are in Minnetonka,
Minnesota and the offices where the Seller keeps its
records concerning the Receivables and related Accounts
are in Salt Lake City, Utah, Omaha, Nebraska, Hennepin
County, Minnesota, Tulsa, Oklahoma and St. Cloud,
Minnesota.
(l) Use of Proceeds. No proceeds of the sale
of any Receivable hereunder received by the Seller will
be used by the Seller to purchase or carry any margin
stock.
(m) Pay Out Event. As of the Initial Closing
Date, no Pay Out Event and no condition that with the
giving of notice and/or the passage of time would
constitute a Pay Out Event, has occurred and is
continuing.
(n) Not an Investment Company. The Seller is
not an "investment company" within the meaning of the
Investment Company Act, or is exempt from all provisions
of such Act.
The representations and warranties set forth in
this Section 4.1 shall survive the sale of the
Receivables to the Buyer. The Seller hereby represents
and warrants to the Buyer, that the representations and
warranties of the Seller set forth in this Section 4.1
are true and correct as of such date. Upon discovery by
the Seller or the Buyer of a material breach of any of
the foregoing representations and warranties, the party
discovering such breach shall give prompt written notice
thereof to the other.
Section 4.2 Seller's Representations and
Warranties Regarding Receivables.
(a) Valid Sale, etc. The Seller (x) hereby
represents and warrants as of the Initial Closing Date,
with respect to the Receivables created on or prior to,
and outstanding on, such date and (y) shall be deemed to
represent and warrant as of the date of the creation or
acquisition and transfer to the Buyer of any Receivables
with respect to such Receivables, that:
(i) Each of this Agreement and the Bank
Receivables Purchase Agreement constitutes the
legal, valid and binding obligation of the Seller,
enforceable against the Seller in accordance with
its terms, except (A) as such enforceability may be
limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now
or hereafter in effect, affecting the enforcement of
creditors' rights in general, and (B) as such
enforceability may be limited by general principles
of equity (whether considered in a suit at law or in
equity).
(ii) The transfer of Receivables by the
Seller to the Buyer under this Agreement constitutes
a valid sale, transfer, assignment, set-over and
conveyance to the Buyer of all right, title and
interest of the Seller in and to the Receivables,
whether then existing or thereafter created and
arising in connection with the Accounts, and such
Receivables will be held by the Buyer free and clear
of any Lien of any Person claiming through or under
the Seller or any of its Affiliates except for
Permitted Liens. This Agreement constitutes a valid
sale, transfer, assignment, set-over and conveyance
to the Buyer of all right, title and interest of the
Seller in and to the Receivables purported to be
sold hereunder, whether then existing or thereafter
created and the proceeds thereof.
(iii) The Seller is not insolvent and
will not be rendered insolvent upon sale of the
Receivables to the Buyer.
(iv) The Seller is (or, with respect to
Receivables arising after the date hereof, will be)
the legal and beneficial owner of all right, title
and interest in and to each Receivable and each
Receivable has been or will be transferred to the
Buyer free and clear of any Lien other than
Permitted Liens.
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(v) All consents, licenses, approvals or
authorizations of or registrations or declarations
with any Governmental Authority required in
connection with the transfer of such Receivables to
the Buyer have been obtained.
(vi) Each Account classified as an
"Eligible Account" by the Seller in any document or
report delivered hereunder will satisfy the
requirements contained in the definition of Eligible
Account as of the date of such document or report
and each Receivable classified as an "Eligible
Receivable" by the Seller in any document or report
delivered hereunder will satisfy the requirements
contained in the definition of Eligible Receivable
as of the time of such document or report.
(vii) Each Receivable then existing has
been conveyed to the Buyer free and clear of any
Lien of any Person claiming through or under the
Seller or any of its Affiliates (other than
Permitted Liens) and in compliance, in all material
respects, with all Requirements of Law applicable to
the Seller.
(b) Daily Representations and Warranties. On
each day on which any new Receivable is created or
acquired by the Seller, the Seller shall be deemed to
represent and warrant to the Buyer that (A) each
Receivable purchased by the Buyer on such day has been
conveyed to the Buyer in compliance, in all material
respects, with all Requirements of Law applicable to the
Seller and free and clear of any Lien of any Person
claiming through or under the Seller or any of its
Affiliates (other than Permitted Liens) and (B) with
respect to each such Receivable, all consents, licenses,
approvals or authorizations of or registrations or
declarations with, any Governmental Authority required to
be obtained, effected or given by the Seller in
connection with the conveyance of such Receivable to the
Buyer have been duly obtained, effected or given and are
in full force and effect.
(c) Notice of Breach. The representations and
warranties set forth in this Section 4.2 shall survive
the sale, transfer and assignment of the respective
Receivables to the Buyer. Upon discovery by the Seller
or the Buyer of a breach of any of the representations
and warranties set forth in this Section 4.2, the party
discovering such breach shall give prompt written notice
thereof to the other. The Seller agrees to cooperate
with the Buyer in attempting to cure any such breach.
Section 4.3 Representations and Warranties of
the Buyer. The Buyer hereby represents and warrants and
agrees with, as of the date hereof and as of the Initial
Closing Date, the Seller and shall be deemed to represent
and warrant as of the date of the creation of any
Receivable sold to the Buyer hereunder that:
(a) Organization and Good Standing. The Buyer
is a corporation duly organized and validly existing in
good standing under the laws of the State of Delaware and
has the corporate power and authority and legal right to
own its property and conduct its business as such
properties are presently owned and such business is
presently conducted and to execute, deliver, and perform
its obligations under the Sale Papers.
(b) Due Qualification. The Buyer is duly
qualified to do business and is in good standing (or is
exempt from such requirements) as a foreign corporation
in any state required in order to conduct business and
has obtained all necessary licenses and approvals with
respect to the Buyer required under federal and Delaware
law.
(c) Due Authorization. The execution and
delivery of the Sale Papers and the consummation of the
transactions provided for in the Sale Papers have been
duly authorized by the Buyer by all necessary corporate
action on its part.
(d) No Conflicts. The execution and delivery
of the Sale Papers and the performance of the
transactions contemplated thereby do not (i) contravene
the Buyer's certificate of incorporation or by-laws or
(ii) violate any material provision of law applicable to
it, or require any filing (except for the filings under
the UCC), registration, consent or approval under, any
law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award presently in effect having
applicability to the Buyer, except for such filings,
registrations, consents or approvals as have already been
obtained and are in full force and effect.
(e) No Violation. The execution and delivery
of the Sale Papers, the performance of the transactions
contemplated by the Sale Papers, and the fulfillment of
the terms of the Sale Papers will not violate any
Requirements of Law applicable to the Buyer, will not
violate, result in any breach of any of the material
terms and provisions of, or constitute (with or without
notice or lapse of time or both) a default under any
Requirement of Law applicable to the Buyer, or any
material indenture, contract, agreement, mortgage, deed
of trust or other material instrument to which the Buyer
is a party or by which it or its properties are bound.
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(f) No Proceedings. There are no proceedings
or investigations pending or, to the best knowledge of
the Buyer, threatened against the Buyer, before any
Governmental Authority (i) asserting the invalidity of
the Sale Papers, (ii) seeking to prevent the consummation
of any of the transactions contemplated by the Sale
Papers, (iii) seeking any determination or ruling that
would materially and adversely affect the performance by
the Buyer of its obligations thereunder or (iv) seeking
any determination or ruling that would materially and
adversely affect the validity or enforceability of the
Sale Papers.
(g) All Consents Required. All approvals,
authorizations, consents, orders, or other actions of any
Governmental Authority required in connection with the
execution and delivery of the Sale Papers, the
performance of the transactions contemplated by the Sale
Papers, and the fulfillment of the terms of the Sale
Papers have been obtained.
(h) Solvency. The Buyer is not insolvent and
will not be rendered insolvent upon the purchase of the
Receivables.
The representations and warranties set forth in
this Section 4.3 shall survive the sale of the
Receivables to the Buyer. The Buyer hereby represents
and warrants to the Seller that the representations and
warranties of the Buyer set forth in Section 4.3 are true
and correct as of such date. Upon discovery by the Buyer
or the Seller of a breach of any of the foregoing
representations and warranties, the party discovering
such breach shall give prompt written notice to the
other.
[END OF ARTICLE IV]
ARTICLE V
COVENANTS OF SELLER AND BUYER
Section 5.1 Seller Covenants. The Seller
hereby covenants that:
(a) Receivables to be Accounts, General
Intangibles or Chattel Paper. The Seller will take no
action to cause any Receivable to be evidenced by any
instrument (as defined in the UCC as in effect in the
Relevant UCC State), except in connection with the
enforcement or collection of a Receivable. Except in
such circumstances, the Seller will take no action to
cause any Receivable to be anything other than an
"account," a "general intangible" or "chattel paper" (as
defined in the UCC as in effect in the Relevant UCC
State).
(b) Security Interests. Except for the
conveyances hereunder, the Seller will not sell, pledge,
assign or transfer to any other Person, or grant, create,
incur, assume or suffer to exist any Lien, on any
Receivable, whether now existing or hereafter created, or
any interest therein; the Seller will immediately notify
the Buyer of the existence of any Lien on any Receivable;
and the Seller shall defend the right, title and interest
of the Buyer in, to and under the Receivables, whether
now existing or hereafter created, against all claims of
third parties claiming through or under the Seller;
provided, however, that nothing in this subsection 5.1(b)
shall prevent or be deemed to prohibit the Seller from
suffering to exist upon any of the Receivables any
Permitted Lien.
11
(c) Periodic Finance Charges and Other Fees.
Except as otherwise required by any Requirement of Law,
or as is deemed by the Seller in its sole discretion to
be necessary in order to maintain its credit card
business on a competitive basis, it shall not at any time
reduce the annual percentage rates of the Periodic
Finance Charges assessed on the Receivables or other fees
charged on any of the Accounts if, as a result of any
such reduction, either (i) the Seller's reasonable
expectation is that such reduction will cause a Pay Out
Event to occur or (ii) such reduction is not also applied
to any comparable segment of consumer revolving credit
card accounts owned by the Seller that have
characteristics the same as, or substantially similar to,
such Accounts.
(d) Credit and Collection Policy and
Contracts. The Seller shall comply with and perform its
obligations under the Contracts relating to the Accounts
and the Credit and Collection Policy except insofar as
any failure so to comply or perform would not materially
and adversely affect the rights of the Trust or the
Certificateholders hereunder or under the Certificates.
Subject to compliance with all Requirements of Law, the
Seller may change the terms and provisions of the
Contracts or the Credit and Collection Policy with
respect to any of the Accounts in any respect (including
the calculation of the amount, or the timing, of charge-
offs and the Periodic Finance Charges and other fees to
be assessed thereon) only if in the reasonable judgment
of the Credit Card Originator (i) (if it owns a
comparable segment of receivables) such change is made
applicable to any comparable segment of the consumer
revolving credit card accounts owned by such Credit Card
Originator which have characteristics the same as, or
substantially similar to, such Accounts or (ii) (if it
does not own a comparable segment of receivables) such
change will not be made with the intent to materially
benefit the Credit Card Originator over the buyer or to
materially adversely affect the buyer, except as
otherwise restricted by an endorsement, sponsorship, or
other agreement between the Credit Card Originator and an
unrelated third party or by the terms of the Contracts.
The Seller further covenants that it will not
enter into any amendments to this Agreement that would
cause a Ratings Event to occur.
(e) Delivery of Collections. In the event
that the Seller receives Collections, the Seller agrees
to deposit such Collections into the Collection Account
as soon as practicable after the receipt thereof, but in
no event later than the second Business Day following the
Date of Processing thereof.
(f) Conveyance of Receivables. Except as
provided in Section 9.5, the Seller covenants and agrees
that it will not convey, assign, exchange or otherwise
transfer any Receivable, to any Person other than the
Buyer prior to the termination of this Agreement pursuant
to Article VIII; provided, however, that the Seller shall
not be prohibited hereby from conveying, assigning,
exchanging or otherwise transferring a Receivable in
connection with a transaction in which the Seller and its
successor agree to comply with provisions substantially
similar to those of Section 9.14.
(g) Notice of Liens. The Seller shall notify
the Buyer promptly after becoming aware of any Lien on
any Receivable other than Permitted Liens.
(h) Separate Business. The Seller will not
permit its assets to be commingled with those of the
Buyer and shall maintain separate corporate records and
books of account from those of the Buyer. The Seller
will not conduct its business in the name of the Buyer
and will cause the Buyer to conduct its business solely
in its own name so as not to mislead others as to the
identity of the entity with which those others are
concerned. The Seller will provide for its own operating
expenses and liabilities from its own funds. The Seller
will not hold itself out, or permit itself to be held
out, as having agreed to pay, or as generally being
liable for, the debts of the Buyer, except that the
organizational expenses of the Buyer may be paid by the
Seller and that the Seller will contribute to the
Transferor on the Initial Closing Date one or more demand
notes. The Seller shall cause the Buyer not to hold
itself out, or permit itself to be held out, as having
agreed to pay, or as being liable for, the debts of the
Seller. The Seller will maintain an arm's length
relationship with the Buyer with respect to any
transactions between the Seller, on the one hand, and the
Buyer, on the other.
Section 5.2 Addition of Accounts. Unless the
Seller specifies to the contrary, all Accounts that meet
the definition of Additional Accounts shall be included
as Accounts from and after the date upon which such
Additional Accounts are created or acquired and all
Receivables in such Additional Accounts, whether such
Receivables are then existing or thereafter created or
acquired, shall be automatically sold to the Buyer. For
the purposes of this Agreement, all receivables of such
Additional Accounts shall be treated as Receivables upon
their creation or acquisition and shall be subject to the
eligibility criteria specified in the definitions of
"Eligible Receivable" and "Eligible Account."
Section 5.3 Buyer Covenant Regarding Sale
Treatment. The Buyer agrees to treat this conveyance for
all purposes (including, without limitation, tax and
financial accounting purposes) as a sale on all relevant
books, records, tax returns, financial statements and
other applicable documents.
[END OF ARTICLE V]
12
ARTICLE VI
REPURCHASE OBLIGATION
Section 6.1 Mandatory Repurchase.
(a) Breach of Warranty. In the event of a
breach with respect to a Receivable of any of the
representations and warranties set forth in Section
4.1(j) or subsections 4.2(a)(iii) through (vii) or
4.2(b), or in the event that a Receivable is not an
Eligible Receivable on the date of its transfer to the
Buyer as a result of the failure to satisfy the
conditions set forth in the definition of Eligible
Receivable, such Receivable shall be designated an
"Ineligible Receivable" and the Seller shall pay to the
Buyer an amount in cash equal to the purchase price paid
for any such Ineligible Receivable by the Buyer to the
Seller. Such payment must be made by the close of
business on the next succeeding Business Day following
the day such Receivable has been designated an Ineligible
Receivable; provided, however, that such amount may be
offset against any amounts due from the Buyer to the
Seller with respect to the Purchase Price for Receivables
sold to the Buyer on such day. The obligation of the
Seller set forth in this Section shall constitute the
sole remedy respecting any breach of the representations
and warranties set forth in the above-referenced Sections
or failure to meet the conditions set forth in the
definition of Eligible Receivable with respect to such
Receivable available to the Buyer.
(b) Reassignment of the Sold Assets. In the
event of a breach of any of the representations and
warranties set forth in Section 4.1(a), (b), and (c) and
4.2(a)(i) and (ii), the Buyer by notice given in writing
to the Seller may direct the Seller to accept
reassignment of the Receivables at the amount specified
below within 60 days of such notice (or within such
longer period as may be specified in such notice), and
the Seller shall be obligated to accept reassignment of
the Receivables within such applicable period on the
terms and conditions set forth below; provided, however,
that no such reassignment shall be required to be made
if, at any time during such applicable period, the Seller
delivers to the Buyer an Officer's Certificate stating
that the representations and warranties contained in
Section 4.1(a), (b), and (c) and 4.2(a)(i) and (ii) shall
then be true and correct in all material respects as if
made on such day. The Seller shall pay to the Buyer on
the day of such reassignment an amount equal to the
aggregate Invested Amount plus accrued and unpaid
interest on the Investor Certificates. On the day on
which such amount has been paid, each Receivable shall be
sold and reassigned to the Seller, and the Buyer shall
execute and deliver such instruments of sale and
assignment, in each case without recourse, representation
or warranty, as shall be reasonably requested by the
Seller to vest in the Seller, or its designee or
assignee, all right, title and interest of the Buyer in
and to each Receivable. The obligation of the Seller to
purchase each Receivable pursuant to this Section shall
constitute the sole remedy available to the Buyer for a
breach of the representations and warranties contained in
Section 4.1(a), (b), and (c) and 4.2(a)(i) and (ii).
Section 6.2 Conveyance of Reassigned
Receivables. Upon the request of the Seller, the Buyer
shall execute and deliver to the Seller a reconveyance
substantially in such form and upon such terms as shall
be acceptable to the Seller, pursuant to which the Buyer
evidences the conveyance to the Seller of all of the
Buyer's right, title, and interest in any Receivables
reconveyed to the Seller pursuant to Section 6.1(b). The
Buyer shall (and shall cause the Trustee to) execute such
other documents or instruments of conveyance or take such
other actions as the Seller may reasonably require to
effect any repurchase of Receivables pursuant to this
Article VI.
[END OF ARTICLE VI]
13
ARTICLE VII
CONDITIONS PRECEDENT
Section 7.1 Conditions to the Buyer's
Obligations Regarding Receivables. The obligations of
the Buyer to purchase the Receivables on any Business Day
shall be subject to the satisfaction of the following
conditions:
(a) All representations and warranties of the
Seller contained in this Agreement shall be true and
correct on the Initial Closing Date and on the day of
creation of any Receivable created thereafter with the
same effect as though such representations and warranties
had been made on such date;
(b) All information concerning the Receivables
provided to the Buyer shall be true and correct in all
material respects as of the Initial Closing Date, in the
case of Receivables sold to the Buyer on the Initial
Closing Date, or the applicable Date of Processing, in
the case of Receivables created after the Initial Closing
Date;
(c) At the Initial Closing Date, the Seller
shall have substantially performed all other obligations
required to be performed by the provisions of this
Agreement;
(d) With respect to Receivables sold to the
Buyer on the Initial Closing Date, the Seller shall have
filed the financing statement(s) required to be filed
pursuant to Section 2.1(b); and
(e) All corporate and legal proceedings and
all instruments in connection with the transactions
contemplated by this Agreement shall be satisfactory in
form and substance to the Buyer, and the Buyer shall have
received from the Seller copies of all documents
(including, without limitation, records of corporate
proceedings) relevant to the transactions herein
contemplated as the Buyer may reasonably have requested.
Section 7.2 Conditions Precedent to the
Seller's Obligations. The obligations of the Seller to
sell Receivables on any Business Day shall be subject to
the satisfaction of the following conditions:
(a) All representations and warranties of the
Buyer contained in this Agreement shall be true and
correct with the same effect as though such
representations and warranties had been made on such
date;
(b) Payment or provision for payment of the
Purchase Price in accordance with the provisions of
Section 3.2 hereof shall have been made; and
(c) All corporate and legal proceedings and
all instruments in connection with the transactions
contemplated by this Agreement shall be satisfactory in
form and substance to the Seller, and the Seller shall
have received from the Buyer copies of all documents
(including, without limitation, records of corporate
proceedings) relevant to the transactions herein
contemplated as the Seller may reasonably have requested.
[END OF ARTICLE VII]
14
ARTICLE VIII
TERM AND TERMINATION
Section 8.1 Termination. Upon the termination
of the Trust pursuant to Section 12.1 of the Pooling and
Servicing Agreement and the surrender of the Exchangeable
Transferor Certificate, the Buyer shall return to the
Seller (without recourse, representation or warranty) all
right, title and interest of the Buyer in the
Receivables, whether then existing or thereafter created,
all moneys due or to become due with respect thereto, and
all proceeds thereof except for amounts held by the
Trustee pursuant to subsection 12.3(b) of the Pooling and
Servicing Agreement. The Buyer shall execute and deliver
such instruments of transfer and assignment, in each case
without recourse, as shall be reasonably requested by the
Seller to vest in the Seller all right, title and
interest which the Buyer had in the Receivables.
[END OF ARTICLE VIII]
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.1 Amendment. This Agreement and any
other Sale Papers and the rights and obligations of the
parties hereunder may not be changed orally, but only by
an instrument in writing signed by the Buyer and the
Seller. The Seller shall provide prompt written notice
of any such amendment to the Rating Agencies.
Section 9.2 Governing Law. THIS AGREEMENT AND
THE OTHER SALE PAPERS SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE
TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS,
RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 9.3 Notices. All demands, notices and
communications hereunder shall be in writing and shall be
deemed to have been duly given if personally delivered at
or mailed by registered mail, return receipt requested,
to:
(a) in the case of the Buyer, to:
Fingerhut Financial Services Receivables, Inc.
0000 Xxxxx Xxxx, Xxxxx X000
Xxxxxxxxxx, Xxxxxxxxx 00000
Attention: Treasurer
(612) 936-____
15
(b) in the case of the Seller, to:
Fingerhut Companies, Inc.
0000 Xxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxx 00000
Attention: Treasurer
(000) 000-0000
or, as to each party, at such other address as shall be
designated by such party in a written notice to each
other party.
Section 9.4 Severability of Provisions. If
any one or more of the covenants, agreements, provisions
or terms of the Sale Papers shall for any reason
whatsoever be held invalid, then such covenants,
agreements, provisions, or terms shall be deemed
severable from the remaining covenants, agreements,
provisions, or terms of the Sale Papers and shall in no
way affect the validity or enforceability of the other
provisions of the Sale Papers.
Section 9.5 Assignment. Notwithstanding
anything to the contrary contained herein, this Agreement
may not be assigned by the Buyer or the Seller except as
contemplated by this Section 9.5 and the Pooling and
Servicing Agreement; provided, however, that
simultaneously with the execution and delivery of this
Agreement, the Buyer shall assign all of its right, title
and interest herein to the Trustee for the benefit of the
Investor Certificateholders of all Series as provided in
Section 2.1 of the Pooling and Servicing Agreement, to
which the Seller hereby expressly consents; provided,
further, that except for the foregoing assignment, no
such assignment shall occur unless the Buyer shall have
received confirmation from the Rating Agencies that such
assignment shall not cause a reduction or withdrawal of
the rating of any Series of Certificates. The Seller
agrees to perform its obligations hereunder for the
benefit of the Trust and that the Trustee may enforce the
provisions of this Agreement, exercise the rights of the
Buyer and enforce the obligations of the Seller hereunder
without the consent of the Buyer.
Section 9.6 Further Assurances. The Buyer and
the Seller agree to do and perform, from time to time,
any and all acts and to execute any and all further
instruments required or reasonably requested by the other
party more fully to effect the purposes of the Sale
Papers, including, without limitation, the execution of
any financing statements or continuation statements or
equivalent documents relating to the Receivables for
filing under the provisions of the UCC or other laws of
any applicable jurisdiction.
Section 9.7 No Waiver; Cumulative Remedies.
No failure to exercise and no delay in exercising, on the
part of the Buyer or the Seller, any right, remedy, power
or privilege hereunder, shall operate as a waiver
thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any
other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are
cumulative and not exhaustive of any rights, remedies,
powers and privileges provided by law.
Section 9.8 Counterparts. The Sale Papers may
each be executed in two or more counterparts including
telefax transmission thereof (and by different parties on
separate counterparts), each of which shall be an
original, but all of which together shall constitute one
and the same instrument.
Section 9.9 Binding Effect; Third-Party
Beneficiaries. The Sale Papers will inure to the benefit
of and be binding upon the parties hereto and their
respective successors and permitted assigns.
Section 9.10 Merger and Integration. Except
as specifically stated otherwise herein, the Sale Papers
set forth the entire understanding of the parties
relating to the subject matter hereof, and all prior
understandings, written or oral, are superseded by the
Sale Papers. The Sale Papers may not be modified,
amended, waived or supplemented except as provided
herein.
Section 9.11 Headings. The headings herein
are for purposes of reference only and shall not
otherwise affect the meaning or interpretation of any
provision hereof.
Section 9.12 Schedules and Exhibits. The
schedules and exhibits attached hereto and referred to
herein shall constitute a part of this Agreement and are
incorporated into this Agreement for all purposes.
16
Section 9.13 No Bankruptcy Petition Against
the Buyer. The Seller hereby covenants and agrees that,
prior to the date which is one year and one day after the
payment in full of all Invested Amounts, it will not
institute against or join any other Person in instituting
against the Buyer any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings or
other similar proceeding under the laws of the United
States or any state of the United States.
Section 9.14 Merger or Consolidation of, or
Assumption of the Obligations of, the Seller. The Seller
shall not consolidate with or merge into any other
corporation or convey or transfer its properties and
assets substantially as an entirety to any Person,
unless:
(i) the corporation formed by such
consolidation or into which the Seller is merged or
the Person which acquires by conveyance or transfer
the properties and assets of the Seller
substantially as an entirety shall be a corporation
organized and existing under the laws of the United
States of America or any State or the District of
Columbia and, if the Seller is not the surviving
entity, shall expressly assume, by an agreement
supplemental hereto, executed and delivered to the
Buyer in form satisfactory to the Buyer, the
performance of every covenant and obligation of the
Seller hereunder (to the extent that any right,
covenant or obligation of the Seller, as applicable
hereunder, is inapplicable to the successor entity,
such successor entity shall be subject to such
covenant or obligation, or benefit from such right,
as would apply, to the extent practicable, to such
successor entity); and
(ii) the Seller shall have delivered to
the Buyer an Officer's Certificate that such
consolidation, merger, conveyance or transfer and
such supplemental agreement comply with this Section
9.14 and that all conditions precedent herein
provided for relating to such transaction have been
complied with and an Opinion of Counsel that such
supplemental agreement is legal, valid and binding
with respect to the successor entity and that the
entity surviving such consolidation, conveyance or
transfer is organized and existing under the laws of
the United States of America or any State or the
District of Columbia. The Rating Agencies shall
receive prompt written notice of such merger or
consolidation of the Seller.
Section 9.15 Protection of Right, Title and
Interest to Receivables.
(a) The Seller shall cause this Agreement, all
amendments hereto and/or all financing statements and
continuation statements and any other necessary documents
covering the Seller's and the Buyer's right, title and
interest to the Receivables to be promptly recorded,
registered and filed, and at all times to be kept
recorded, registered and filed, all in such manner and in
such places as may be required by law fully to preserve
and protect the right, title and interest of the Buyer
hereunder to the Receivables and proceeds thereof. The
Seller shall deliver to the Buyer file-stamped copies of,
or filing receipts for, any document recorded, registered
or filed as provided above, as soon as available
following such recording, registration or filing. The
Buyer shall cooperate fully with the Seller in connection
with the obligations set forth above and will execute any
and all documents reasonably required to fulfill the
intent of this subsection 9.15(a).
17
(b) Within 30 days after the Seller makes any
change in its name, identity or corporate structure which
would make any financing statement or continuation
statement filed in accordance with paragraph (a) above
materially misleading within the meaning of Section 9-
402(7) of the UCC as in effect in the Relevant UCC State,
the Seller shall give the Buyer written notice of any
such change and shall file such financing statements or
amendments as may be necessary to continue the perfection
of the Buyer's security interest in the Receivables and
the proceeds thereof.
(c) The Seller will give the Buyer prompt
written notice of any relocation of any office from which
it services Receivables or keeps records concerning the
Receivables or of its principal executive office and
whether, as a result of such relocation, the applicable
provisions of the UCC would require the filing of any
amendment of any previously filed financing or
continuation statement or of any new financing statement
and shall file such financing statements or amendments as
may be necessary to continue the perfection of the
Buyer's security interest in the Receivables and the
proceeds thereof. The Seller will at all times maintain
each office from which it services Receivables and its
principal executive office within the United States of
America.
[END OF ARTICLE IX]
IN WITNESS WHEREOF, the Buyer and the Seller
each have caused this Agreement to be duly executed by
their respective officers as of the day and year first
above written.
FINGERHUT FINANCIAL SERVICES
RECEIVABLES, INC.,
as Buyer
By:________________________
Title:
FINGERHUT COMPANIES, INC.,
as Seller,
By:________________________
Title:
EXHIBIT A
FORM OF DAILY REPORT
18
Exhibit 10.c(i)
ASSIGNMENT AND ASSUMPTION AGREEMENT
This ASSIGNMENT AND ASSUMPTION AGREEMENT (this
"Agreement"), dated as of September 16, 1996, by and
among FINGERHUT COMPANIES, INC., a Minnesota corporation
("FCI"), METRIS COMPANIES INC. a Delaware corporation
("Metris") and METRIS RECEIVABLES, INC. (formerly
Fingerhut Financial Services Receivables, Inc.), a Dela-
ware corporation ("Metris Receivables").
W I T N E S S E T H
WHEREAS, FCI and Metris Receivables have en-
tered into that certain Purchase Agreement, dated as of
May 26, 1995, as amended (the "Purchase Agreement")
pursuant to which Metris Receivables has agreed to pur-
chase, and FCI has agreed to sell, from time to time,
certain open-end or revolving credit receivables as
described therein;
WHEREAS, in connection with a business realign-
ment of FCI's subsidiaries, effective as of the date of
execution of this Agreement (the "Effective Date"),
Metris Receivables will become a direct wholly owned
subsidiary of Metris and Metris will be an indirect
wholly owned subsidiary of FCI;
WHEREAS, in connection with such business
realignment, FCI wishes to assign to Metris all of its
rights arising under the Purchase Agreement, effective as
of the Effective Date, Metris wishes to accept such
assignment and has agreed to assume and perform all of
FCI's duties and obligations under the Purchase Agree-
ment, and Metris Receivables consents to such assignment
and assumption;
NOW, THEREFORE, in consideration of the terms
and conditions hereof and for other good and valuable
consideration, the receipt of which is hereby acknowl-
edged, the parties hereby agree as follows:
SECTION 1. Definitions. Capitalized terms
used herein and not otherwise defined herein shall have
their respective meanings in the Purchase Agreement.
SECTION 2. Assignment and Assumption.
(a) FCI hereby assigns to Metris all of its
rights arising under the Purchase Agreement, effective as
of the Effective Date, and Metris hereby accepts such
assignment. FCI hereby delegates to Metris all of its
duties and obligations under the Purchase Agreement and,
for the benefit of FCI and Metris Receivables, Metris
hereby assumes and agrees to perform all of FCI's duties
and obligations under the Purchase Agreement. Metris
agrees that it shall be liable to Metris Receivables for
all of the obligations of FCI arising under and in accor-
dance with the Purchase Agreement, whether arising prior
to or after the Effective Date.
(b) In connection with such assignment and
assumption, Metris hereby confirms the conveyance of
property set forth in Sections 2.1(a) and 2.1(f) of the
Purchase Agreement and in consideration for the Purchase
Price and upon the terms and subject to the conditions
set forth in the Purchase Agreement and this Agreement,
Metris does hereby sell, assign, transfer, set-over, and
otherwise convey to Metris Receivables, and Metris Re-
ceivables does hereby purchase from Metris, on the terms
and subject to the conditions specifically set forth in
the Purchase Agreement and this Agreement, all of Metris'
right, title and interest in, to and under (i) the Re-
ceivables now existing and hereafter created and arising
in connection with the Accounts and any accounts that
meet the definition of Additional Accounts, including,
without limitation, all accounts, general intangibles,
chattel paper, contract rights and other obligations of
any Obligor with respect to the Receivables, now or
hereafter existing, whether or not arising out of or in
connection with the sale or lease of goods or the render-
ing of services, (ii) all monies and investments due or
to become due with respect thereto (including, without
limitation, the right to any Finance Charge Receivables,
including any Recoveries), (iii) all proceeds of such
Receivables and (iv) the Bank Receivables Purchase Agree-
ment. The foregoing sale, transfer, assignment, set-over
and conveyance does not constitute and is not intended to
result in a creation or an assumption by Metris Receiv-
xxxxx of any obligation of Metris in connection with the
Receivables or any agreement or instrument relating
thereto, including, without limitation, any obligation to
any Obligors, merchant banks, merchant clearance systems,
VISA USA, Inc., MasterCard International Incorporated or
insurers.
19
(c) In connection with the foregoing sale,
Metris agrees to record and file within five (5) business
after the Effective Date, at its own expense, a financing
statement or statements with respect to the Receivables
and the other property described in Section 2(b) of this
Agreement sold by Metris hereunder meeting the require-
ments of applicable state law in such manner and in such
jurisdictions as are necessary to perfect and protect the
interests of Metris Receivables created hereby under the
applicable UCC against all creditors of and purchasers
from Metris, and to deliver a file-stamped copy of such
financing statements or other evidence of such filings to
Metris Receivables within ten (10) days after the Effec-
tive Date.
(d) In connection with the sale and conveyance
hereunder, Metris agrees, at its own expense, within five
(5) Business Days after the Effective Date and on each
Business Day thereafter, to indicate or cause to be
indicated clearly and unambiguously in its accounting
records and with respect to any Receivables purchased by
Metris from the Bank to cause the Bank to indicate clear-
ly and unambiguously in the Bank's accounting records
that such Receivables and the other property described
above have been sold to Metris Receivables pursuant to
the Purchase Agreement and this Agreement as of the
Effective Date or such Business Day as applicable.
(e) It is the express intent of Metris and
Metris Receivables that the conveyance of the Receivables
by Metris to Metris Receivables pursuant to the Purchase
Agreement and this Agreement be construed as a sale of
such Receivables by Metris to Metris Receivables. It is,
further, not the intention of Metris and Metris Receiv-
xxxxx that such conveyance be deemed a grant of a securi-
ty interest in the Receivables by Metris to Metris Re-
ceivables to secure a debt or other obligation of Metris.
However, in the event that, notwithstanding the intent of
the parties, the Receivables are held to continue to be
property of Metris, then (i) the Purchase Agreement
together with this Agreement also shall be deemed to be
and hereby is a security agreement within the meaning of
the UCC; and (ii) the conveyance by Metris provided for
in the Purchase Agreement and this Agreement shall be
deemed to be and Metris hereby grants to Metris Receiv-
xxxxx a security interest in and to all of Metris's
right, title and interest in (w) the Receivables then
existing and thereafter created and arising in connection
with the Accounts that meet the definition of Additional
Accounts, including, without limitation, all accounts,
general intangibles, chattel paper, contract rights and
other obligations of any Obligor with respect to the
Receivables, then or thereafter existing, (x) all monies
and investments due or to become due with respect thereto
(including, without limitation, the right to any Finance
Charge Receivables, including any Recoveries), (y) all
proceeds of such Receivables and (z) the Bank Receivables
Purchase Agreement to secure (1) the obligations of
Metris and (2) a loan to Metris in the amount of the
Purchase Price as set forth in the Purchase Agreement and
this Agreement (the "Secured Obligations"). Metris and
Metris Receivables shall, to the extent consistent with
the Purchase Agreement and this Agreement, take such
actions as may be necessary to ensure that, if the Pur-
chase Agreement together with this Agreement were deemed
to create a security interest in the Receivables, such
security interest would be deemed to be a perfected
security interest of first priority in favor of Metris
Receivables under applicable law and will be maintained
as such throughout the term of the Purchase Agreement and
this Agreement. Metris and Metris Receivables may rely
upon an Opinion of Counsel addressed to them as to what
is required to provide Metris Receivables with such
security interest; and any such Opinion of Counsel shall
permit the Trustee, on behalf of the Certificateholders,
the Certificateholders (in the case of any Series issued
in a placement exempt from the registration requirements
of the Securities Act) and the Rating Agencies to rely on
it.
SECTION 3. Representations.
(a) FCI and Metris each represents to the
other and to Metris Receivables as follows with respect
to itself:
(i) Organization and Good
Standing. It is a corporation duly organized
and validly existing in good standing under the
laws of the state of its incorporation, and has
the corporate power and authority and legal
right to own its property and conduct its busi-
ness as such properties are presently owned and
such business is presently conducted and to
execute, deliver, and perform its obligations
under this Agreement.
20
(ii) Due Qualification. It is
duly qualified to do business and is in good
standing (or is exempt from such requirements)
as a foreign corporation in any state required
in order to conduct business and has obtained
all necessary licenses and approvals with re-
spect to it required under federal law and the
law of the jurisdiction of its incorporation.
(iii) Due Authorization. The
execution and delivery of this Agreement and
the consummation of the transactions contem-
plated herein have been duly authorized by all
necessary corporate action on its part.
(iv) No Conflicts/No Violation.
The execution and delivery of this Agreement
and the performance of the transactions contem-
plated hereby (i) do not contravene its certif-
icate of incorporation or by-laws, (ii) violate
any material provision of law applicable to it,
or (iii) result in any breach of any of the
terms and provisions of, or constitute (with or
without notice or lapse of time or both) a
default under, any material indenture, con-
tract, agreement, mortgage, deed of trust or
other material instrument to which it is a
party or by which it or its properties are
bound, and (iv) such action does not require
any filing (except for the UCC filings), regis-
tration, consent or approval under any law,
rule, regulation, order, writ, judgment, in-
junction, decree, determination or award pres-
ently in effect and applicable to it, except
for such filings, registrations, consents or
approvals as have already been obtained or made
and as are in full force and effect.
(v) No Proceedings. There are
no proceedings or investigations pending or, to
the best of its knowledge, threatened, against
it before any Governmental Authority (a) as-
serting the invalidity of this Agreement, (b)
seeking to prevent the consummation of any of
the transactions contemplated hereby, (c) seek-
ing any determination or ruling that would
materially and adversely affect the performance
by it of its obligations hereunder, or (d)
seeking any determination or ruling that would
materially and adversely affect the validity or
enforceability of this Agreement.
(b) FCI further represents to Metris that
(i) the Purchase Agreement is in full force and effect as
of the Effective Date, (ii) it has delivered to Metris,
on or prior to the Effective Date, all amendments, modifications
or supplements, as the case may be, to the
Purchase Agreement.
SECTION 4. References to FCI. The parties
agree that references in the Purchase Agreement to
"Fingerhut" or the "Seller" shall be deemed to refer, on
and after the Effective Date and wherever appropriate in
the context, to Metris.
21
SECTION 5. Amendments to Purchase Agreement.
The parties agree that the Purchase Agreement shall be
amended as follows:
(i) The definition of "Pooling
and Servicing Agreement" in Article I of the
Purchase Agreement shall be deleted in its
entirety and replaced with the following:
"Pooling and Servicing Agreement" shall mean
the Pooling and Servicing Agreement dated as of
May 26, 1995, as amended from to time, by and
among Direct Merchants Credit Card Bank, Na-
tional Association, as Servicer, Metris Receiv-
xxxxx, as Transferor, and the Trustee.
(ii) There shall be added in
appropriate alphabetical order to Article I of
the Purchase Agreement the following defined
term:
"Receivable" shall mean all of the indebtedness
of any Obligor under an Account, including the
right to receive payment of any interest or
finance charges and other obligations of such
Obligors with respect thereto. Each Receivable
includes, without limitation, all rights of the
Seller under the applicable Contract.
(iii) The reference to "Minneso-
ta" in Section 4.1(a) of the Purchase Agreement
shall be replaced with "Delaware."
(iv) Section 4.1(f) of the Pur-
chase Agreement shall be amended to add at the
beginning of the sentence contained therein the
phrase "Except as specified on Schedule 1 here-
to" and the Purchase Agreement shall be further
amended to add "as Schedule 1 thereto", after
the signature page thereof, "Schedule 1 as
attached hereto".
(v) The reference to
"Minnetonka, Minnesota" in Section 4.1(k) of
the Purchase Agreement shall be replaced with
"St. Louis Park, Minnesota."
SECTION 6. Consent of Metris Receivables.
Metris Receivables hereby consents to the assignment
herein by FCI to Metris of all of Metris' rights arising
under the Purchase Agreement and the delegation herein by
FCI to, and the assumption herein by, Metris of all of
FCI's duties and obligations under the Purchase Agree-
ment. Metris Receivables agrees that on and after the
Effective Date, Metris Receivables shall look only to
Metris for the performance of FCI's duties and obliga-
tions arising under the Purchase Agreement prior to the
Effective Date and Metris Receivables hereby releases FCI
from any and all claims Metris Receivables may have
against FCI arising under or in connection with the
Purchase Agreement.
SECTION 7. Conditions Precedent. FCI, Metris
and Metris Receivables agree that (i) the contribution by
FCI to Metris of the capital stock of the Bank and Metris
Receivables shall have occurred, (ii) the Assignment and
Assumption Agreement dated as of September 16, 1996,
among FCI, Metris and the Bank shall have been executed
by all parties thereto and be in full force and effect,
and (iii) Amendment No. 2 dated as of September 16, 1996,
among Metris Receivables as Transferor, the Bank as
Servicer and The Bank of New York (Delaware) as Trustee,
to the Pooling and Servicing Agreement dated as of May
26, 1995, and the conditions precedent to each of the
foregoing, shall be conditions precedent to the effec-
tiveness of this Agreement.
SECTION 8. Indemnification. FCI hereby agrees
to indemnify and hold harmless Metris from and against
any and all liabilities, losses, damages, claims, ac-
tions, and suits, and all costs and expenses relating
thereto, including reasonable legal fees, expenses and
costs of investigation (collectively, "Claims"), which
may at any time be imposed upon, incurred by or asserted
against Metris and in any way related to or arising out
of the breach of any of the agreements, representations
or warranties made by or on behalf of FCI in the Purchase
Agreement, except that FCI shall not be required to
indemnify Metris for any Claim resulting from (i) Metris'
own gross negligence, bad faith or willful misconduct,
(ii) the breach or inaccuracy of a representation, war-
ranty, agreement or covenant of Metris set forth herein
or in the Purchase Agreement, or (iii) any act of or
omission by any person or entity occurring subsequent to
the Effective Date.
22
SECTION 9. Indemnification Procedure. Not-
withstanding the provisions of Section 8 hereof, FCI
shall not be required to indemnify Metris under such
Section with respect to any Claim unless (a) Metris
notifies FCI promptly upon becoming aware of the exis-
tence, assertion or likely assertion of such Claim, and
in any event before the failure to so notify FCI adverse-
ly affects the ability of FCI to defend against such
Claim, (b) Metris permits FCI to assume and control the
defense of such Claim, and to negotiate and conclude a
settlement of such Claim if FCI elects to do so, and (c)
Metris cooperates with FCI in the defense of such Claim.
SECTION 10. GOVERNING LAW. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAWS PROVISIONS, AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED
IN ACCORDANCE WITH SUCH LAWS.
SECTION 11. Counterparts. This Agreement may
be executed in any number of counterparts, each of which
shall be deemed to be an original and all of which to-
gether shall be deemed to be one and the same instrument.
SECTION 12. Amendments. The terms of this
Agreement may not be amended, waived, modified or termi-
nated except by written instrument signed by the parties
hereto. No such amendment or waiver shall extend to or
affect any obligation not expressly amended or waived or
impair any rights consequent thereon.
SECTION 13. Notices. All notices and communi-
cations under this Agreement shall be in writing and
shall be mailed by registered or certified mail, postage
prepaid, or delivered by hand or transmitted by telex or
other communications device capable of transmitting or
creating a written record:
(a) if to FCI:
Fingerhut Companies, Inc.
0000 Xxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxx 00000
Attention: General Counsel
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
or at such other address as it may have furnished in
writing to Metris and Metris Receivables;
(b) if to Metris:
Metris Companies Inc.
000 Xxxxx Xxxxxxx 000, Xxxxx 0000
Xx. Xxxxx Xxxx, Xxxxxxxxx 00000
Attention: Chief Financial Officer
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
or at such other address as it may have furnished in
writing to FCI and Metris Receivables; and
(c) if to Metris Receivables:
Metris Receivables, Inc.
0000 Xxxxx Xxxx, Xxxxx X000
Xxxxxxxxxx, Xxxxxxxxx 00000
Attention: Treasurer
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
or at such other address as it may have furnished in
writing to FCI and Metris. Any notice so addressed and
mailed by registered or certified mail shall be deemed to
be given when received and any notice delivered by hand
or transmitted by telecommunications device shall be
deemed to be given when so delivered or transmitted as
applicable. Each party agrees that all notices or other
communications permitted or required to be given to FCI
under the Purchase Agreement shall be given to Metris at
the address set forth above or at such other address as
the Metris may have furnished in writing to the appropri-
ate party.
23
SECTION 14. Successors and Assigns. Neither
the obligations of FCI nor the obligations of Metris
hereunder, including any obligations assumed as a result
of this Agreement, shall be assigned to any person with-
out the prior written consent of the other parties here-
to. Subject to the preceding sentence, this Agreement
shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties hereto.
SECTION 15. Headings. The headings of Sec-
tions have been included herein for convenience only and
should not be considered in interpreting this Agreement.
SECTION 16. Survival of Representations. All
representations contained in this Agreement shall survive
the execution and delivery of this Agreement.
IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be duly executed as of the day
and year first above written.
FINGERHUT COMPANIES, INC.
By:________________________
Name:
Title:
METRIS COMPANIES INC.
By:________________________
Name:
Title:
METRIS RECEIVABLES, INC.
By:________________________
Name:
Title:
24
SCHEDULE 1
TAX RETURNS AND PAYMENTS
Metris and its subsidiaries have filed all applicable
federal, state and material local tax returns and have
paid or caused to be paid all associated taxes due and
payable on such returns or on any assessments received by
them; except that because one of Metris's subsidiaries,
Direct Merchants Credit Card Bank, National Association,
is a national banking entity (established in 1995) which
derives the majority of its income from Mastercard credit
cards, it may be subject to special financial institution
rules in certain states. Such rules attempt to impute
state income tax nexus to a credit card company it ob-
tains finance revenue and/or has credit card receivables
generated from customers in that state. Of the states
that have adopted such financial institution rules,
Minnesota is the only state where Metris and its subsid-
iaries are currently filing income or franchise tax
returns. States which currently have rules pursuant to
which they may attempt to impose income tax nexus based
upon such credit card activity include:
Arkansas Minnesota
California New Mexico
Hawaii Tennessee
Indiana West Virginia
Massachusetts
Direct Merchants Credit Card Bank, National Association
has not filed in states other than Minnesota because it
believes the above referenced financial institution rules
to be unconstitutional.
