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
Delaware corporation ("Metris Receivables").
W I T N E S S E T H:
WHEREAS, FCI and Metris Receivables have
entered into that certain Purchase Agreement, dated as of
May 26, 1995, as amended (the "Purchase Agreement")
pursuant to which Metris Receivables has agreed to
purchase, 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
realignment 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
Agreement, 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
acknowledged, 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
accordance 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
Receivables 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 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 Metris Receivables 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.
(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
requirements 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 Effective 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
clearly 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
Receivables that such conveyance be deemed a grant of a
security interest in the Receivables by Metris to Metris
Receivables 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
Receivables 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
Purchase 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
business as such properties are presently owned
and such business is presently conducted and to
execute, deliver, and perform its obligations
under this Agreement.
(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
respect 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
contemplated 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
contemplated hereby (i) do not contravene its
certificate 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, contract, 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), registration, consent or approval
under any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or
award presently 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)
asserting the invalidity of this Agreement, (b)
seeking to prevent the consummation of any of
the transactions contemplated hereby, (c)
seeking 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.
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,
National Association, as Servicer, Metris
Receivables, 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
"Minnesota" in Section 4.1(a) of the Purchase
Agreement shall be replaced with "Delaware."
(iv) Section 4.1(f) of the
Purchase Agreement shall be amended to add at
the beginning of the sentence contained therein
the phrase "Except as specified on Schedule 1
hereto" 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
Agreement. 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
obligations 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
effectiveness 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,
actions, 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,
warranty, 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.
SECTION 9. Indemnification Procedure.
Notwithstanding 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
existence, assertion or likely assertion of such Claim,
and in any event before the failure to so notify FCI
adversely 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
together 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
terminated 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
communications 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
appropriate party.
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
without the prior written consent of the other parties
hereto. 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
Sections 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:
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
obtains 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
subsidiaries 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.
