FINGERHUT RECEIVABLES, INC.
Buyer
and
FINGERHUT CORPORATION
Seller
PURCHASE AGREEMENT
Dated as of June 29, 1994
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 Settlement................................................... 6
Section 3.4 Capital Contribution......................................... 7
ARTICLE IV
REPRESENTATIONS AND WARRANTIES............................................ 8
Section 4.1 Seller's Representations and Warranties...................... 8
Section 4.2 Seller's Representations and Warranties
Regarding Receivables................................. 11
Section 4.3 Representations and Warranties of
the Buyer............................................. 13
ARTICLE V
COVENANTS OF SELLER AND BUYER............................................. 16
Section 5.1 Seller Covenants............................................. 16
Section 5.2 Addition of Receivables...................................... 18
Section 5.3 Buyer Covenant Regarding Sale Treatment...................... 18
ARTICLE VI
REPURCHASE OBLIGATION..................................................... 19
Section 6.1 Mandatory Repurchase......................................... 19
Section 6.2 Conveyance of Reassigned Receivables......................... 20
ARTICLE VII
CONDITIONS PRECEDENT...................................................... 21
Section 7.1 Conditions to the Buyer's Obligations
Regarding Receivables................................. 21
Section 7.2 Conditions Precedent to the Seller's
Obligations........................................... 21
ARTICLE VIII
TERM AND TERMINATION...................................................... 23
Section 8.1 Termination.................................................. 23
ARTICLE IX
MISCELLANEOUS PROVISIONS.................................................. 24
Section 9.1 Amendment................................................... 24
Section 9.2 Governing Law............................................... 24
Section 9.3 Notices..................................................... 24
Section 9.4 Severability of Provisions.................................. 24
Section 9.5 Assignment.................................................. 25
Section 9.6 Further Assurances.......................................... 25
Section 9.7 No Waiver; Cumulative Remedies.............................. 25
Section 9.8 Counterparts................................................ 26
Section 9.9 Binding Effect; Third-Party Beneficiaries................... 26
Section 9.10 Merger and Integration. ................................... 26
Section 9.11 Headings.................................................... 26
Section 9.12 Schedules and Exhibits...................................... 26
Section 9.13 No Bankruptcy Petition Against the Buyer.................... 26
Section 9.14 Merger or Consolidation of, or
Assumption of the Obligations of, the
Seller................................................ 27
Section 9.15 Protection of Right, Title and Interest
to Receivables........................................ 27
Exhibit A Form of Weekly Report
Schedule 1 Seller's Chief Executive Office
Schedule 2 Tax Returns and Payments
PURCHASE AGREEMENT
PURCHASE AGREEMENT, dated as of June 29, 1994 (the
"Agreement"), by and between FINGERHUT CORPORATION, a Minnesota
corporation ("Fingerhut" or the "Seller"), and FINGERHUT RECEIVABLES,
INC., a Delaware corporation ("FRI" or the "Buyer").
W I T N E S S E T H :
WHEREAS, the Buyer desires to purchase from time to time
certain installment sale contract receivables generated on or before the
Initial Closing Date or to be generated after the Initial Closing Date by
the Seller in the normal course of its business;
WHEREAS, the Seller desires to sell and assign from time
to time certain installment sale contract 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:
"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 June 29, 1994 by and among the
Transferor, Fingerhut 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(c) hereof.
"Secured Obligations" shall have the meaning set forth in
Section 2.1(f) hereof.
"Seller's Discount" shall mean, for any day on which
Receivables are conveyed hereunder, the discount used to determine the
Seller's accounting basis in the Receivables on such day.
"Termination Date" shall have the meaning set forth in
Section 8.1 hereof.
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]
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 all monies due
or to become due with respect thereto, (ii) Recoveries and (iii) all
proceeds of the foregoing. 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 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 that such
Receivables and the other property described in clauses (i), (ii) and
(iii) 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.
(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) all Receivables outstanding on the Initial Closing Date
and thereafter created by the Seller and all rights (but not the
obligations) relating to such Receivables, (x) with respect to the
Receivables, all accounts (as defined in the applicable UCC) outstanding
on the Initial Closing Date and thereafter created by the Seller, and all
rights (but not the obligations) relating thereto, (y) all monies due or
to become due with respect thereto and (z) all proceeds of the foregoing
to secure (1) the rights of the Buyer 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]
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 transferred
on any date, the product of (i) the aggregate Outstanding Balance of all
Receivables as of the Initial Closing Date, and (ii) one minus the then
applicable Seller's Discount.
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 such funds are available. 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 monthly
basis (a "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 Settlement. On each Tuesday (or if any Tuesday
is not a Business Day the next succeeding Business Day), the Seller shall
deliver to the Buyer a Weekly Report showing the aggregate Purchase Price
of Receivables generated, the aggregate amount of Receivables deemed to
have been contributed by the Seller to the Buyer, the aggregate amount,
if any, paid to the Buyer pursuant to Section 6.1 hereof, the aggregate
amount of cash paid for Receivables generated in each case for the period
from and including the preceding Tuesday (or next succeeding Business
Day, as applicable) to but not including such Tuesday.
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, Receivables with an Outstanding
Balance equal to $194,986,254.91 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 as capital surplus.
[END OF ARTICLE III]
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.
(c) Due Authorization. The execution and delivery of 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. Except as specified on Schedule 2, the Seller
has filed all tax returns required to be filed and has paid or made
adequate provision for the payment of all 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.
(j) Bona Fide Receivables. Each Receivable is or will be
an account receivable arising out of the sale of consumer goods, services
or financial service products by the Seller. 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 Contracts are
in Xxxxxxxxxx, Xxxxxxxxx xxx Xx. Xxxxx, Xxxxxxxxx.
(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 (a "Prospective 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 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 and
transfer to the Buyer of any Receivables with respect to such
Receivables, that:
(i) Each of this Agreement and the Pooling and
Servicing 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
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.
(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 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 by the Seller, the Seller shall be
deemed to represent and warrant to the Buyer that (A) each Receivable
purchased by the Seller 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 mate-
rial 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.
(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.
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 or General Intangibles. 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" (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 Per-
mitted Lien.
(c) Contracts and Credit and Collection Policies. The
Seller shall take all actions reasonably within its control to comply
with and perform its obligations under the Contracts relating to the
Receivables and the Credit and Collection Policy except insofar as any
failure to comply or perform would not materially and adversely affect
the rights of the Buyer. The Seller may change the terms and provisions
of the Contracts or the Credit and Collection Policy in any respect (i)
if it would not, in the reasonable belief of the Seller, materially
impair the collectibility of any Receivable or cause, immediately or with
the passage of time, a Pay Out Event to occur and (ii) if such change (A)
(if it owns a comparable segment of receivables) is made applicable to
the comparable segment of the receivables owned by the Buyer or Seller,
if any, which have characteristics the same as, or substantially similar
to, the Receivables that are the subject of such change and (B) (if it
does not own such a comparable segment of receivables) will not be made
with the intent to materially benefit the Seller over the Buyer or to
materially adversely affect the Buyer, except as otherwise restricted by
an endorsement, sponsorship, or other agreement between the Seller and
an unrelated third party or by the terms of the Contracts.
(d) [Reserved]
(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 except for transfers to the Fingerhut Credit Card Bank;
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 the Seller 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 a demand note. 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 Receivables.
All receivables which meet the definition of Receivables
shall be included as Receivables from and after the date upon which such
Receivables are created and all such Receivables, whether such
Receivables are then existing or thereafter created, shall be sold auto
matically to the Buyer upon creation by the Seller.
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]
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 fifth 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]
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 3.3 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]
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's 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 Receivables, Inc.
0000 Xxxxx Xxxx, Xxxxx X000
Xxxxxxxxxx, Xxxxxxxxx 00000
(000) 000-0000
(b) in the case of the Seller, to:
Fingerhut Corporation
0000 Xxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxx 00000
(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; provided, however, that the Seller may assign all of its
right, title and interest herein to a national banking association
formed by Fingerhut Corporation or any Affiliate thereof to own its
customer accounts and receivables.
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
privilege provided by law.
Section 9.8 Counterparts. The Sale Papers may 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.
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).
(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 RECEIVABLES, INC.,
as Buyer
By: /s/ Xxxxxx X. XxXxxxx
________________________
Title: President
FINGERHUT CORPORATION,
as Seller
By: /s/ Xxxxxx X. XxXxxxx
________________________
Title: Senior Vice President
Chief Financial Officer
and Treasurer
EXHIBIT A
FORM OF WEEKLY REPORT
Schedule 1
Seller's Chief Executive Office:
Fingerhut Corporation
0000 Xxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxx 00000
Schedule 2
TAX RETURNS AND PAYMENTS
The Seller has filed all applicable Federal, state and material local tax
returns and has paid or caused to be paid all associated taxes due and
payable on such returns or on any assessments received by them; except
that the Seller has not filed certain tax returns purported to be
required because the Seller believes the requirements are invalid and
unenforceable under the commerce clause of the United States Constitution
as interpreted by the Supreme Court in National Bellas Xxxx v. Department
of Revenue of Illinois, 386 U.S. 753 (1967) and the supporting lines of
cases, including Quill Corp. v. North Dakota, 112 S. Ct. 1904 (1992).
The following are the states in which the Seller is currently collecting
sales/use taxes:
California Ohio
Florida Pennsylvania
Illinois South Carolina
Iowa Tennessee
Minnesota Wisconsin
New York
Notwithstanding the Supreme Court decisions, the following states, to
the best knowledge of the Seller, currently have legislation in effect
which purports to require certain Subsidiaries of the Seller to collect
sales or use taxes:
Alabama Missouri
Arizona Nebraska
Arkansas Nevada
California New Mexico
Colorado New York
Connecticut North Carolina
Florida North Dakota
Georgia Ohio
Idaho Oklahoma
Illinois Rhode Island
Iowa South Carolina
Kansas South Dakota
Kentucky Tennessee
Louisiana Texas
Massachusetts Utah
Michigan Vermont
Minnesota Washington
Mississippi West Virginia
