EXHIBIT 10.A(iii)
_________________________________________________________
FINGERHUT RECEIVABLES, INC.
Transferor
FINGERHUT NATIONAL BANK
Servicer
and
THE BANK OF NEW YORK (DELAWARE)
Trustee
on behalf of the Series 1997-1 Certificateholders
SERIES 1997-1 SUPPLEMENT
Dated as of January 21, 1997
to
AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT
Dated as of January 12, 1997
____________________________________
FINGERHUT MASTER TRUST
Variable Funding Trust
Certificate, Series 1997-1, Class A
Variable Funding Trust
Certificate, Series 1997-1, Class B
_________________________________________________________
TABLE OF CONTENTS
Page
SECTION 1. Designation . . . . . . . . . . . . . . . . . 1
SECTION 2. Definitions . . . . . . . . . . . . . . . . . 1
SECTION 3. Reassignment Terms . . . . . . . . . . . . . . 18
SECTION 4. Delivery and Payment for the Series 1997-1
Certificates . . . . . . . . . . . . . . . . . 19
SECTION 5. Form of Delivery of Series 1997-1
Certificates . . . . . . . . . . . . . . . . . 19
SECTION 6. Article IV of Agreement . . . . . . . . . . . 19
ARTICLE IV RIGHTS OF CERTIFICATEHOLDERS AND
ALLOCATION AND APPLICATION OF
COLLECTIONS . . . . . . . . . . . . . . . 20
Section 4.4 Rights of Certificateholders . . . . 20
Section 4.5 Collections and Allocation;
Payments on Exchangeable Transferor
Certificate . . . . . . . . . . . . 20
Section 4.6 Determination of Interest for the
Series 1997-1 Certificates . . . . . 21
Section 4.7 Determination of Principal Amounts . 22
Section 4.8 Shared Principal Collections . . . . 24
Section 4.9 Application of Funds on Deposit in
the Collection Account for the
Certificates . . . . . . . . . . . . 25
Section 4.10 Coverage of Required Amount for the
Series 1997-1 Certificates . . . . . 33
Section 4.11 Payment of Certificate Interest . . 34
Section 4.12 Payment of Certificate Principal . . 35
Section 4.13 Investor Charge-Offs . . . . . . . . 35
Section 4.14 Reallocated Principal Collections
for the Series 1997-1 Certificates . 36
Section 4.15 Payment Reserve Account . . . . . . 37
SECTION 7. Article V of the Agreement . . . . . . . . . . 38
ARTICLE V DISTRIBUTIONS AND REPORTS TO INVESTOR
CERTIFICATEHOLDERS . . . . . . . . . . . 38
Section 5.1 Distributions . . . . . . . . . . . 38
Section 5.2 Certificateholders' Statement . . . 39
SECTION 8. Article VI of the Agreement . . . . . . . . . 41
ARTICLE VI THE CERTIFICATES . . . . . . . . . . . . 41
Section 6.15 Additional Class A Invested
Amounts . . . . . . . . . . . . . . 41
Section 6.16 Additional Class B Invested
Amounts. . . . . . . . . . . . . . . 43
Section 6.17 Extension . . . . . . . . . . . . . 44
SECTION 9. Series 1997-1 Pay Out Events . . . . . . . . . 46
SECTION 10. Series 1997-1 Termination . . . . . . . . . . 48
SECTION 11. Class A Pre-Payment . . . . . . . . . . . . . 48
SECTION 12. Legends; Transfer and Exchange; Restrictions
on Transfer of Series 1997-1 Certificates;
Tax Treatment . . . . . . . . . . . . . . . . 49
SECTION 13. Sale of Class B Certificates . . . . . . . . . 54
SECTION 14. Purchases of the Class A Certificates by the
Transferor . . . . . . . . . . . . . . . . . . 56
SECTION 15. Increased Costs . . . . . . . . . . . . . . . 56
SECTION 16. Replacement of Certain Investor
Certificateholders . . . . . . . . . . . . . . 58
SECTION 17. FCI Note . . . . . . . . . . . . . . . . . . . 59
SECTION 18. GOVERNING LAW . . . . . . . . . . . . . . . . 60
SECTION 19. Instructions in Writing . . . . . . . . . . . 60
SECTION 20. Amendments . . . . . . . . . . . . . . . . . . 60
SECTION 21. Ratification of Agreement . . . . . . . . . . 61
SECTION 22. Counterparts . . . . . . . . . . . . . . . . . 61
EXHIBITS
EXHIBIT A Form of Class A Investor Certificate
EXHIBIT B Form of Class B Investor Certificate
EXHIBIT C Form of Monthly Certificateholders' Statement
EXHIBIT D Form of 144A Exchange Notice and Certification
EXHIBIT E Form of Extension Notice
EXHIBIT F Form of Investor Certificateholder Election Notice
SERIES 1997-1 SUPPLEMENT, dated as of January
21, 1997 (this "Series Supplement") by and among
FINGERHUT RECEIVABLES, INC., a corporation organized and
existing under the laws of the State of Delaware, as
Transferor (the "Transferor"), FINGERHUT NATIONAL BANK, a
national banking association organized and existing under
the laws of the United States, as Servicer (the
"Servicer"), and THE BANK OF NEW YORK (DELAWARE), a
Delaware banking corporation organized and existing under
the laws of the State of Delaware, as trustee (together
with its successors in trust thereunder as provided in
the Agreement referred to below, the "Trustee") under the
Amended and Restated Pooling and Servicing Agreement,
dated as of January 12, 1997, as amended, supplemented or
otherwise modified from time to time (the "Agreement"),
among the Transferor, the Servicer and the Trustee.
Section 6.9 of the Agreement provides, among
other things, that the Transferor and the Trustee may at
any time and from time to time enter into a supplement to
the Agreement for the purpose of authorizing the issuance
by the Trustee to the Transferor, for execution and
redelivery to the Trustee for authentication, of one or
more Series of Certificates.
Pursuant to this Series Supplement, the
Transferor and the Trustee shall create a new Series of
Investor Certificates and shall specify the Principal
Terms thereof.
SECTION 1. Designation. There is hereby
created a Series of Investor Certificates to be issued
pursuant to the Agreement and this Series Supplement to
be known generally as the "Series 1997-1 Certificates."
The Series 1997-1 Certificates shall be issued in two
Classes, which shall be designated generally as the
Variable Funding Trust Certificates, Series 1997-1, Class
A (the "Class A Certificates") and the Variable Funding
Trust Certificates, Series 1997-1, Class B (the "Class B
Certificates"). Series 1997-1 shall be a Series of
Variable Funding Certificates.
SECTION 2. Definitions. In the event that any
term or provision contained herein shall conflict with or
be inconsistent with any provision contained in the
Agreement, the terms and provisions of this Series
Supplement shall govern with respect to the Series 1997-1
Certificates. All Article, Section or subsection
references herein shall mean Article, Section or
subsections of the Agreement, as amended or supplemented
by this Series Supplement, except as otherwise provided
herein. All capitalized terms not otherwise defined
herein are defined in the Agreement. Each capitalized
term defined herein shall relate only to the Series
1997-1 Certificates and no other Series of Certificates
issued by the Trust.
"Additional Class A Invested Amounts" shall
have the meaning specified in Section 6.15 of the
Agreement.
"Additional Class B Invested Amounts" shall
have the meaning specified in Section 6.16 of the
Agreement.
"Additional Interest" shall mean, at any time
of determination, the sum of Class A Additional Interest
and Class B Additional Interest.
"Amortization Period" shall mean the period
beginning on the day following the last day of the
Revolving Period and ending on the Series 1997-1
Termination Date.
"Amortization Period Commencement Date" shall
mean (i) the earlier of the first day of the May 1998
Monthly Period and the Pay Out Commencement Date or (ii)
if there is any Extension, the earlier of the date
specified as such in the most recent Extension Notice and
the Pay Out Commencement Date.
"Available Series 1997-1 Imputed Yield
Collections" shall have the meaning specified in
subsection 4.9(a) of the Agreement.
"Base Rate" shall mean, as of any Business Day,
the sum of (i) the Class A Certificate Rate, plus (ii)
the Series Servicing Fee Percentage.
"Benefit Plan" shall mean (i) an employee
benefit plan (as defined in Section 3(3) of ERISA) that
is subject to the provisions of Title I of ERISA, (ii) a
plan described in Section 4975(e)(1) of the Code or (iii)
any entity whose underlying assets include plan assets by
reason of a plan's investment in the entity.
"Carryover Class A Interest" shall mean any
Class A Interest due but not paid on any previous
Distribution Date.
"Carryover Class B Interest" shall mean any
Class B Interest due but not paid on any previous
Distribution Date.
"Class A Adjusted Invested Amount" shall mean,
with respect to any date of determination, an amount
equal to the Class A Invested Amount minus the Defeasance
Account Balance on such date of determination.
"Class A Available Commitment" shall mean
initially $417,600,000 but may be increased from time to
time to an amount not to exceed the Class A Maximum
Invested Amount by written notice from the Transferor and
The Chase Manhattan Bank to the Trustee and the Servicer
and shall be reduced by the amount of principal payments
made to the Class A Certificateholders pursuant to
subsection 11(a) of this Series Supplement; provided,
however, that if the Class A Certificateholders shall
permanently no longer be obligated to make future
purchases hereunder, the Class A Available Commitment
shall be zero.
"Class A Breakage Costs" shall have the meaning
specified in subsection 11(b) of this Agreement.
"Class A Certificateholders" shall mean the
Persons in whose names a Class A Certificate is
registered in the Certificate Register.
"Class A Certificateholders' Interest" shall
mean the portion of the Series 1997-1 Certificateholders'
Interest evidenced by the Class A Certificates.
"Class A Certificates" shall mean the variable
funding certificates executed by the Transferor and
authenticated by or on behalf of the Trustee,
substantially in the form of Exhibit A hereto.
"Class A Certificate Rate" shall mean with
respect to each Interest Accrual Period, a per annum rate
.35% in excess of the LIBOR Rate, as determined on the
related LIBOR Determination Date; provided, however, that
on and after the date of receipt of a rating of all or a
portion of the Class A Certificates of at least A by
Standard & Poor's or A2 by Moody's and for so long as
such a rating or higher rating shall remain in effect,
the Class A Certificate Rate with respect to such portion
of the Class A Invested Amount shall be a per annum rate
.25% in excess of the LIBOR Rate, as determined on the
related LIBOR Determination Date.
"Class A Costs" shall mean with respect to any
Business Day, the sum of (a) the increased costs, if any,
specified in Section 15 of this Series Supplement, (b)
Class A Breakage Costs and (c) the product of (i) a
fraction the numerator of which is the actual number of
days from but excluding the next preceding Business Day
to and including the current Business Day and the
denominator of which is the actual number of days in the
then current calendar year, (ii) the excess of the Class
A Available Commitment over the Class A Invested Amount
on such Business Day after giving effect to all
transactions on such Business Day and (iii) the sum of
(x) .125% multiplied by a fraction, the numerator of
which is the portion of the Class A Available Amount
which is rated at least A by Standard & Poor's or A2 by
Moody's on such Business Day, and the denominator of
which is the Class A Available Amount, plus (y) .175%
multiplied by a fraction, the numerator of which is the
Class A Available Amount minus the portion of the Class A
Available Amount which is rated at least A by Standard &
Poor's or A2 by Moody's on such Business Day, and the
denominator of which is the Class A Available Amount.
"Class A Floating Allocation Percentage" shall
mean, with respect to any Business Day, the percentage
equivalent of a fraction, the numerator of which is the
Class A Adjusted Invested Amount on such day after taking
into account all adjustments of the Class A Invested
Amount on such day and the denominator of which is the
greater of (a) the total amount of Principal Receivables
in the Trust and the amounts on deposit in the Excess
Funding Account as of the end of the preceding Business
Day and (b) the sum of the numerators with respect to all
Classes of all Series then outstanding used to calculate
the applicable allocation percentage; provided, however,
that with respect to the allocation of Principal
Collections on and prior to the Series 1994-1 Funding
Date, the numerator specified above shall be zero.
"Class A Interest" shall mean the interest
distributable in respect of the Class A Certificates as
calculated in accordance with subsection 4.6(a) of the
Agreement.
"Class A Invested Amount" shall mean, when used
with respect to any Business Day, an amount equal to (a)
$59,600,000, plus (b) the aggregate principal amount of
any Additional Class A Invested Amounts purchased
pursuant to Section 6.15 of the Agreement, minus (c) the
aggregate amount of principal payments made to Class A
Certificateholders through and including such Business
Day, minus (d) the aggregate amount of Class A Investor
Charge-Offs for all prior Distribution Dates, minus (e)
the Class A Invested Amount represented by any Class A
Certificates purchased by the Transferor on the secondary
market which have been cancelled by the Trustee at the
Transferor's request in accordance with Section 14 of
this Series Supplement, plus (f) the sum of the aggregate
amount allocated with respect to Class A Investor Charge-
Offs and available on all prior Distribution Dates
pursuant to subsection 4.9(a)(vi) of the Agreement and,
with respect to such subsection and pursuant to
subsections 4.10(a) and (b) and Section 4.14 of the
Agreement, and the amount designated pursuant to
subsection 4.13(c) of the Agreement for the purpose of
reinstating amounts reduced pursuant to the foregoing
clause (d).
"Class A Investor Charge-Offs" shall have the
meaning specified in subsection 4.13(b) of the Agreement.
"Class A Investor Percentage" shall mean, for
any Business Day, (a) with respect to Imputed Yield
Receivables and Defaulted Receivables at any time or
Principal Receivables during the Revolving Period, the
Class A Floating Allocation Percentage and (b) with
respect to Principal Receivables during the Amortization
Period, the Fixed/Floating Allocation Percentage.
"Class A Maximum Invested Amount" shall mean
$900,000,000 less the Class B Maximum Required Amount.
"Class A Outstanding Principal Amount" shall
mean with respect to the Class A Certificates, when used
with respect to any Business Day, an amount equal to (a)
$59,600,000, plus (b) the aggregate principal amount of
any Additional Class A Invested Amounts purchased by the
Class A Certificateholders on or prior to such Business
Day pursuant to Section 6.15 of the Agreement minus (c)
the aggregate amount of principal payments made to the
Class A Certificateholders on or prior to such Business
Day.
"Class A Percentage" shall mean a fraction the
numerator of which is the Class A Invested Amount and the
denominator of which is the sum of the Class A Invested
Amount and the Class B Invested Amount.
"Class A Principal" shall mean the principal
distributable in respect of the Class A Certificates as
calculated in accordance with subsection 4.7(a) of the
Agreement.
"Class A Required Amount" shall mean the amount
determined by the Servicer on each Business Day equal to
the excess, if any, of (x) the sum of (i) the amount
described in subsection 4.9(a)(i)(y) of the Agreement for
such Business Day, (ii) the Class A Floating Allocation
Percentage of the Servicing Fee for such Business Day,
(iii) the Class A Floating Allocation Percentage of the
Default Amount, if any, for such Business Day and, to the
extent not previously paid, for any previous Business Day
in such Monthly Period, (iv) on each Transfer Date the
Class A Percentage of the Series Allocation Percentage of
the Adjustment Payment required to be made by the
Transferor but not made on such Transfer Date and (v) the
amount of unreimbursed Class A Investor Charge-Offs over
(y) the Available Series 1997-1 Imputed Yield Collections
plus any Excess Imputed Yield Collections from other
Series and any Transferor Imputed Yield Collections
allocated with respect to the amounts described in
clauses (x)(i) through (v).
"Class B Certificateholder" shall mean the
Person in whose name a Class B Certificate is registered
in the Certificate Register.
"Class B Certificateholders' Interest" shall
mean the portion of the Series 1997-1 Certificateholders'
Interest evidenced by the Class B Certificates.
"Class B Certificate Rate" shall mean with
respect to each Interest Accrual Period, initially zero;
provided, however, that such certificate rate may be
increased pursuant to the terms of a supplemental
agreement or amended and restated series supplement
entered into in accordance with Section 13 of this Series
Supplement.
"Class B Certificates" shall mean any of the
certificates executed by the Transferor and authenticated
by or on behalf of the Trustee, substantially in the form
of Exhibit B hereto.
"Class B Daily Principal Amount" shall have the
meaning specified in subsection 4.9(c)(ii) of the
Agreement.
"Class B Fixed/Floating Allocation Percentage"
shall mean for any Business Day the percentage equivalent
of a fraction, the numerator of which is the Class B
Invested Amount at the end of the last day of the
Revolving Period (or, if the Pay Out Commencement Date
occurs prior to the Series 1994-1 Funding Date, the Class
B Invested Amount at the end of the day on the Series
1994-1 Funding Date) and the denominator of which is the
greater of (a) the sum of the aggregate amount of
Principal Receivables and the amount on deposit in the
Excess Funding Account at the end of the preceding
Business Day and (b) the sum of the numerators used to
calculate the allocation percentages with respect to
Principal Collections for all Series; provided, however,
that with respect to the allocation of Principal
Collections on and prior to the Series 1994-1 Funding
Date, the numerator specified above shall be zero.
"Class B Floating Allocation Percentage" shall
mean, with respect to any Business Day, the percentage
equivalent of a fraction, the numerator of which is the
Class B Invested Amount as of the end of the preceding
Business Day and the denominator of which is the greater
of (a) the total amount of Principal Receivables in the
Trust and the amount on deposit in the Excess Funding
Account as of the end of the preceding Business Day and
(b) the sum of the numerators with respect to all Classes
of all Series then outstanding used to calculate the
applicable allocation percentage; provided, however, that
with respect to the allocation of Principal Collections
on and prior to the Series 1994-1 Funding Date, the
numerator specified above shall be zero.
"Class B Interest" shall mean the interest
distributable in respect of the Class B Certificates as
calculated in accordance with subsection 4.6(b) of the
Agreement.
"Class B Invested Amount" shall mean, when used
with respect to any Business Day, an amount equal to (a)
upon the initial issuance of the Class B Certificate,
zero, plus (b) the aggregate principal amount of any
Additional Class B Invested Amounts pursuant to Section
6.16 of the Agreement, minus (c) the aggregate amount of
principal payments made to Class B Certificateholders
prior to such Business Day, minus (d) the aggregate
amount of Class B Investor Charge-Offs for all prior
Distribution Dates pursuant to subsections 4.13(a) and
4.13(c) of the Agreement, minus (e) the aggregate amount
of Reallocated Principal Collections for all prior
Business Days, plus (f) the sum of the aggregate amount
allocated and available on all prior Business Days
pursuant to subsection 4.9(a)(vii) of the Agreement and,
with respect to such subsection, pursuant to subsections
4.10(a) and (b) of the Agreement, for the purpose of
reinstating amounts reduced pursuant to the foregoing
clauses (d) and (e).
"Class B Investor Charge-Offs" shall have the
meaning specified in subsection 4.13(a) of the Agreement.
"Class B Investor Percentage" shall mean, for
any Distribution Date, (a) with respect to Imputed Yield
Receivables and Defaulted Receivables at any time or
Principal Receivables during the Revolving Period, the
Class B Floating Allocation Percentage and (b) with
respect to Principal Receivables during the Amortization
Period, the Fixed/Floating Allocation Percentage.
"Class B Maximum Required Amount" shall mean
initially zero; provided, however, that such Class B
Maximum Required Amount may be increased pursuant to the
terms of a supplemental agreement or amended and restated
series supplement entered into in accordance with Section
13 of this Series Supplement.
"Class B Outstanding Principal Amount" shall
mean, when used with respect to any Business Day, an
amount equal to (a) the aggregate principal amount of any
Additional Class B Invested Amounts pursuant to Section
6.16 of the Agreement, minus (b) the aggregate amount of
principal payments made to Class B Certificateholders
prior to such Business Day.
"Class B Percentage" shall mean a fraction the
numerator of which is the Class B Invested Amount and the
denominator of which is the sum of the Class A Invested
Amount and the Class B Invested Amount.
"Class B Principal" shall mean the principal
distributable in respect of the Class B Certificates as
calculated in accordance with subsection 4.7(b) of the
Agreement.
"Class B Principal Payment Commencement Date"
shall mean the earlier of (a) the first Distribution Date
in an Amortization Period on which the Class A Invested
Amount equals or is reduced to zero or, if there are no
Principal Collections allocable to the Series 1997-1
Certificates remaining after payments have been made to
the Class A Certificates on such Distribution Date, the
Distribution Date following the Distribution Date on
which the Class A Invested Amount is paid in full and (b)
the Distribution Date following a sale or repurchase of
the Receivables as set forth in Section 2.4(e), 9.2,
10.2, 12.1 or 12.2 of the Agreement or Section 3 of this
Series Supplement.
"Closing Date" shall mean January 21, 1997.
"Defeasance Account" shall have the meaning
specified in subsection 11(a) of this Series Supplement.
"Defeasance Account Balance" shall mean, with
respect to any date of determination, the principal
amount, if any, on deposit in the Defeasance Account on
such date of determination.
"Distribution Date" shall mean February 20,
1997, and the twentieth day of each month thereafter, or
if such day is not a Business Day, the next succeeding
Business Day; provided, that the final Distribution Date
with respect to the payment of principal and interest
shall be the Scheduled Series 1997-1 Termination Date.
"Early Amortization Period" shall mean the
period beginning on the day on which a Pay Out Event
occurs or is deemed to have occurred and ending on the
earlier of (i) the date on which the Class A Invested
Amount and the Class B Invested Amount have been paid in
full and (ii) the Series 1997-1 Termination Date.
"Election Date" shall have the meaning
specified in subsection 6.17(a) of the Agreement.
"Election Notice" shall have the meaning
specified in subsection 6.17(a) of the Agreement.
"Enhancement" shall mean, with respect to the
Class A Certificates, the subordination of the Class B
Invested Amount (including any portion thereof arising
pursuant to Section 6.16 of the Agreement in connection
with the cancellation of the Series 1994-1 Class D
Investor Certificates).
"Eurocurrency Reserve Requirements" shall mean,
for any day, the aggregate (without duplication) of the
rates (expressed as a decimal fraction) of reserve
requirements in effect on such day (including, without
limitation, basic, supplemental, marginal and emergency
reserves under any regulations of the Board or other
Governmental Authority having jurisdiction with respect
thereto) dealing with reserve requirements prescribed for
eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of the Board)
maintained by a member bank of the Federal Reserve
System.
"Excess Imputed Yield Collections" shall mean,
with respect to any Business Day, as the context
requires, either (x) the amount described in subsection
4.9(a)(x) of the Agreement allocated to the Series 1997-1
Certificates but available to cover shortfalls in amounts
paid from Imputed Yield Collections for other Series, if
any, or (y) the aggregate amount of Imputed Yield
Collections allocable to other Series in excess of the
amounts necessary to make required payments with respect
to such Series, if any, and available to cover shortfalls
with respect to the Series 1997-1 Certificates.
"Extension" shall mean the procedure by which
the Investor Certificateholders consent to the extension
of the Revolving Period to the new Amortization Period
Commencement Date set forth in the Extension Notice,
pursuant to Section 6.17 of the Agreement.
"Extension Date" shall mean April 20, 1998 or
if an Extension has already occurred, the date of the
next Extension Date set forth in the Extension Notice
relating to the Extension then in effect (or, if any such
date is not a Business Day, the next preceding Business
Day).
"Extension Notice" shall have the meaning
specified in subsection 6.17(a) of the Agreement.
"Extension Opinion" shall have the meaning
specified in subsection 6.17(a) of the Agreement.
"Extension Tax Opinion" shall have the meaning
specified in subsection 6.17(a) of the Agreement.
"FCI Note" shall have the meaning specified in
Section 17 of this Series Supplement.
"FCI Note Required Amount" shall have the
meaning specified in Section 17 of this Series
Supplement.
"Fixed/Floating Allocation Percentage" shall
mean for any Business Day the percentage equivalent of a
fraction, the numerator of which is the Invested Amount
at the end of the last day of the Revolving Period (or,
if the Pay Out Commencement Date occurs prior to the
Series 1994-1 Funding Date, the Invested Amount at end of
the day on the Series 1994-1 Funding Date) and the
denominator of which is the greater of (a) the sum of the
aggregate amount of Principal Receivables and the amount
on deposit in the Excess Funding Account as of the end of
the preceding Business Day and (b) the sum of the
numerators with respect to all Classes of all Series then
outstanding used to calculate the applicable allocation
percentage; provided, however, that with respect to the
allocation of Principal Collections on and prior to the
Series 1994-1 Funding Date the numerator specified above
shall be zero.
"Floating Allocation Percentage" shall mean for
any Business Day the sum of the applicable Class A
Floating Allocation Percentage and Class B Floating
Allocation Percentage for such Business Day.
"Interest Accrual Period" shall mean a Monthly
Period and, with respect to a Distribution Date, the
preceding Monthly Period; provided, however, that the
initial Interest Accrual Period shall be the period from
the Closing Date to and including the last day of the
Monthly Period preceding the initial Distribution Date.
"Invested Amount" shall mean, when used with
respect to any Business Day, an amount equal to the sum
of (a) the Class A Invested Amount as of such Business
Day and (b) the Class B Invested Amount as of such
Business Day; provided, however, that for purposes of
determining the Servicing Fee and the Aggregate Invested
Amount, the Invested Amount shall mean an amount equal to
the sum of the Class A Adjusted Invested Amount as of
such Business Day and the Class B Invested Amount as of
such Business Day; provided, further, that for so long as
the Series 1994-1 Certificates are outstanding, for
purposes of determining the Minimum Aggregate Principal
Receivables under the Agreement, the Invested Amount
shall be deemed to be zero.
"Investment Earnings" shall mean, with respect
to any Business Day, the investment earnings on amounts
on deposit in (i) the Payment Reserve Account, deposited
in the Collection Account pursuant to subsection 4.15(c)
of the Agreement and (ii) the Defeasance Account,
deposited in the Collection Account pursuant to
subsection 11(a) of this Series Supplement.
"Investor Certificateholder" shall mean the
Holder of record of an Investor Certificate of Series
1997-1.
"Investor Certificates" shall mean the Class A
Certificates and the Class B Certificates.
"Investor Charge-Offs" shall mean the sum of
Class A Investor Charge-Offs and Class B Investor Charge-
Offs.
"Investor Default Amount" shall mean, with
respect to each Business Day, an amount equal to the
product of the Default Amount identified since the prior
reporting date and the Floating Allocation Percentage
applicable for such Business Day.
"Investor Percentage" shall mean for any
Business Day, (a) with respect to Imputed Yield
Collections and Defaulted Amounts at any time or
Principal Collections during the Revolving Period, the
Floating Allocation Percentage and (b) with respect to
Principal Collections during the Amortization Period, the
Fixed/Floating Allocation Percentage.
"LIBOR Base Rate" shall mean, for any Interest
Accrual Period, the rate for deposits in United States
dollars for a period equal to such Interest Accrual
Period (commencing on the first day of the relevant
Interest Accrual Period) which appears on Telerate Page
3750 as of 11:00 A.M., London time, on the LIBOR
Determination Date for such Interest Accrual Period;
provided that, the LIBOR Base Rate for the Initial
Interest Accrual Period shall be 5.44531%. If such rate
does not appear on Telerate Page 3750, the rate for such
Interest Accrual Period will be determined on the basis
of the rates at which deposits in United States dollars
are offered by the Reference Banks (as defined below) at
approximately 11:00 A.M., London time, on such LIBOR
Determination Date to prime banks in the London interbank
market for a period equal to such Interest Accrual Period
(commencing on the first day of such Interest Accrual
Period). The Trustee will request the principal London
office of each of the Reference Banks to provide a
quotation of its rate. If at least two such quotations
are provided, the rate for such Interest Accrual Period
will be the arithmetic mean of the quotations. If fewer
than two quotations are provided, the rate for such
Interest Accrual Period will be the arithmetic mean of
the rates quoted by major banks in New York City,
selected by the Trustee, at approximately 11:00 A.M., New
York City time, on the first day of such Interest Accrual
Period for loans in United States dollars to leading
European banks for a period equal to such Interest
Accrual Period (commencing on the first day of such
Interest Period). As used in this definition, "Reference
Banks" means four major banks in the London interbank
market selected by the Trustee.
"LIBOR Determination Date" shall mean the
second Business Day prior to the commencement of each
Interest Accrual Period. For purposes of this
definition, a Business Day is any day on which banks in
London and New York are open for the transaction of
international business.
"LIBOR Rate" shall mean, with respect to each
day during each Interest Accrual Period, a rate per annum
determined for such day in accordance with the following
formula (rounded upward to the nearest 1/100th of 1%):
LIBOR Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Minimum Rating Condition" shall mean that a
rating of at least BBB by Standard & Poor's or Baa2 by
Moody's has been obtained with respect to the Class A
Maximum Invested Amount and has not been withdrawn or
reduced as a result of the failure to maintain the Stated
Class B Amount.
"Minimum Retained Percentage" shall mean 2%.
"Minimum Transferor Percentage" shall mean 0%;
provided, however, that in certain circumstances such
percentage may be increased.
"Monthly Period" shall have the meaning
specified in the Agreement, except that the first Monthly
Period with respect to the Series 1997-1 Certificates
shall begin on and include the Closing Date and shall end
on and include the last day of the then current fiscal
month of the Transferor.
"Net Revolving Principal Collections" shall
have the meaning specified in subsection 4.9(b) of the
Agreement.
"Negative Carry Amount" shall have the meaning
specified in subsection 4.10(a) of the Agreement.
"Paying Agent" shall mean, for the Series
1997-1 Certificates, The Bank of New York.
"Payment Reserve Account" shall have the
meaning specified in subsection 4.15 of the Agreement.
"Pay Out Commencement Date" shall mean the date
on which a Trust Pay Out Event is deemed to occur
pursuant to Section 9.1 of the Agreement or a Series
1997-1 Pay Out Event is deemed to occur pursuant to
Section 9 of this Series Supplement.
"Portfolio Yield" shall mean for the Series
1997-1 Certificates, with respect to any Monthly Period,
the annualized percentage equivalent of a fraction, the
numerator of which is an amount equal to the sum of the
aggregate amount of Available Series 1997-1 Imputed Yield
Collections for such Monthly Period (not including the
Floating Allocation Percentage of the portion of Imputed
Yield Collections for such period described in clause (D)
of the definition thereof or the amounts on deposit in
the Payment Reserve Account, if any), calculated on a
cash basis, minus the aggregate Investor Default Amount
for such Monthly Period and the Series Allocation
Percentage of any Adjustment Payments which the
Transferor is required but fails to make pursuant to the
Pooling and Servicing Agreement for such Monthly Period,
and the denominator of which is the average daily
Invested Amount for such Monthly Period.
"Principal Shortfalls" shall mean on any
Business Day (i) prior to the Amortization Period
Commencement Date, zero and (ii) after the Amortization
Period Commencement Date, the Invested Amount of the
Class then receiving principal payments after the
application of Principal Collections on such Business Day
(less the amount then on deposit in the Principal Account
for the benefit of such Class); provided, however, that
on and prior to the Series 1994-1 Funding Date the
Principal Shortfall for Series 1997-1 shall be equal to
the lesser of the amount specified above and the maximum
amount that will allow Shared Principal Collection
allocable with respect to any principal shortfall for the
Series 1994-1 Certificates to be equal to the full amount
of the principal shortfall for such Series.
"Rating Agency" shall mean with respect to any
Business Day each statistical rating agency selected by
the Transferor to rate the Class A Certificates which on
such Business Day has issued a rating which is
outstanding with respect to the Class A Certificates.
"Rating Agency Condition" shall mean, at any
time at which the Class A Certificates are rated by a
Rating Agency, the written confirmation of the Rating
Agency that a specified event or modification of the
terms of the Investor Certificates will not result in the
withdrawal or downgrade of the rating of the Class A
Certificates then in effect.
"Reallocated Principal Collections" shall have
the meaning specified in subsection 4.14 of the
Agreement.
"Required Amount" shall have the meaning
specified in subsection 4.10(b) of the Agreement.
"Revolving Period" shall mean the period from
and including the Closing Date to, but not including, the
Amortization Period Commencement Date.
"Scheduled Series 1997-1 Termination Date"
shall mean the October 2002 Distribution Date, unless (i)
a different date shall be set forth in any Extension
Notice, or (ii) a different date shall be specified in a
written notice from the Transferor to the Trustee as
necessary to satisfy the Minimum Rating Condition.
"Revolving Principal Collections" shall have
the meaning specified in subsection 4.9(b) of the
Agreement.
"Series 1994-1 Certificates" shall mean the
investor certificates issued pursuant to the Series
1994-1 Supplement.
"Series 1994-1 Funding Date" shall mean the
first Business Day on which an amount equal to the
invested amount of the Series 1994-1 Class A, Class B and
Class C Investor Certificates has been deposited in the
Principal Account for the benefit of such Series 1994-1
Certificates.
"Series 1994-1 Supplement" shall mean the
Series 1994-1 Supplement, dated as of June 29, 1994 by
and among Fingerhut Receivables, Inc., as Transferor,
Fingerhut Corporation (as predecessor servicer to
Fingerhut National Bank), as Servicer, and The Bank of
New York (Delaware), as Trustee under the Agreement, as
it may be amended from time to time.
"Series 1997-1" shall mean the Series of the
Fingerhut Master Trust represented by the Series 1997-1
Certificates.
"Series 1997-1 Certificates" shall mean the
Class A Certificates and the Class B Certificates.
"Series 1997-1 Certificateholder" shall mean
the holder of record of any Series 1997-1 Certificate.
"Series 1997-1 Certificateholders' Interest"
shall have the meaning specified in Section 4.4 of the
Agreement.
"Series 1997-1 Pay Out Event" shall have the
meaning specified in Section 9 of this Series Supplement.
"Series 1997-1 Termination Date" shall mean the
earlier to occur of (i) the day after the Distribution
Date on which the Series 1997-1 Certificates are paid in
full, or (ii) the Scheduled Series 1997-1 Termination
Date.
"Series Servicing Fee Percentage" shall mean
2.00% per annum.
"Servicing Fee" shall mean for any Business
Day, an amount equal to the product of (i) a fraction the
numerator of which is the actual number of days from but
excluding the next preceding Business Day to and
including the current Business Day and the denominator of
which is the actual number of days in the then current
calendar year, (ii) the applicable Series Servicing Fee
Percentage and (iii) the Invested Amount on such Business
Day after giving effect to all transactions on such
Business Day.
"Shared Principal Collections" shall mean, as
the context requires, either (a) the amount allocated to
the Series 1997-1 Certificates which, in accordance with
subsections 4.9(b) and 4.9(c)(iii) of the Agreement, may
be applied in accordance with Section 4.3(e) of the
Agreement or (b) the amounts allocated to the investor
certificates (other than Transferor Retained
Certificates) of other Series which the applicable Series
Supplements for such Series specify are to be treated as
"Shared Principal Collections" and which may be applied
to cover Principal Shortfalls with respect to the Series
1997-1 Certificates.
"Stated Class B Amount" shall mean initially
zero; provided, however, that such Stated Class B Amount
may be increased pursuant to the terms of a supplemental
agreement or amended and restated series supplement
entered into in accordance with Section 13 of this Series
Supplement or may be increased by written notice from the
Transferor to the Trustee in connection with obtaining
one or more ratings of the Class A Certificates and shall
thereafter be the amount specified in such written
notice.
"Targeted Holder" shall mean (i) each holder of
a right to receive interest or principal with respect to
investor certificates (or other interests in the Trust),
including the Class A Certificates, other than
certificates (or other such interests) with respect to
which an opinion is rendered that such certificates (or
other such interests) will be treated as debt for Federal
income tax purposes and (ii) any holder of a right to
receive any amount in respect of the Transferor Interest;
provided, that any person holding more than one interest
each of which would cause such person to be a Targeted
Holder shall be treated as a single Targeted Holder.
"Termination Payment Date" shall mean the
earlier of the first Distribution Date following the
liquidation or sale of the Receivables as a result of an
Insolvency Event and the occurrence of the Scheduled
Series 1997-1 Termination Date.
"Transferor Imputed Yield Collections" shall
mean on any Business Day the product of (a) the Imputed
Yield Collections for such Business Day, (b) the
Transferor Percentage and (c) the Series Allocation
Percentage.
"Transferor Retained Certificates" shall mean
investor certificates of any Series, including the Class
B Certificate, which the Transferor retains, but only to
the extent that and for so long as the Transferor is the
Holder of such Certificates.
SECTION 3. Reassignment Terms. The Series
1997-1 Certificates shall be subject to termination by
the Transferor at its option, in accordance with the
terms specified in subsection 12.2(a) of the Agreement,
on any Distribution Date on or after the Distribution
Date on which the Class A Invested Amount is reduced to
an amount less than or equal to 10% of the sum of the
highest invested amount during the Revolving Period of
the Class A Certificates plus, to the extent that the
Class B Certificates, any portion thereof or any other
Class of Series 1997-1 Certificates is sold by the
Transferor in accordance with the provisions of Section
13 of this Series Supplement, the highest invested amount
during the Revolving Period of such Class B Certificates
or other Class of Series 1997-1 Certificates sold by the
Transferor. The deposit required in connection with any
such termination and final distribution shall be equal to
the sum of the Class A Invested Amount, the Class B
Invested Amount and the invested amount of any other
Class of Series 1997-1 Certificates then outstanding plus
accrued and unpaid interest on the Series 1997-1
Certificates through the day prior to the Distribution
Date on which the final distribution occurs.
SECTION 4. Delivery and Payment for the Series
1997-1 Certificates. The Transferor shall execute and
deliver the Series 1997-1 Certificates to the Trustee for
authentication in accordance with Section 6.1 of the
Agreement. The Trustee shall deliver the Series 1997-1
Certificates to or upon the order of the Transferor when
authenticated in accordance with Section 6.2 of the
Agreement.
SECTION 5. Form of Delivery of Series 1997-1
Certificates. The Class A Certificates and the Class B
Certificates shall be delivered as Registered
Certificates as provided in Section 6.1 of the Agreement.
SECTION 6. Article IV of Agreement. Sections
4.1, 4.2 and 4.3 of the Agreement shall read in their
entirety as provided in the Agreement. Article IV of the
Agreement (except for Sections 4.1, 4.2 and 4.3 thereof)
shall read in its entirety as follows and shall be
applicable only to the Series 1997-1 Certificates:
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS
Section 4.4 Rights of Certificateholders. The
Series 1997-1 Certificates shall represent undivided
interests in the Trust, including the right to receive,
to the extent necessary to make the required payments
with respect to such Series 1997-1 Certificates at the
times and in the amounts specified in this Agreement, (a)
the Floating Allocation Percentage and the Fixed/Floating
Allocation Percentage (as applicable from time to time)
of Collections (including Imputed Yield Collections)
available in the Collection Account, (b) funds allocable
to the Series 1997-1 Certificates on deposit in the
Excess Funding Account and (c) funds on deposit in the
Interest Funding Account, the Principal Account, the
Distribution Account, the Payment Reserve Account and the
Defeasance Account (for such Series, the "Series 1997-1
Certificateholders' Interest"). The Class B Invested
Amount shall be subordinated to the Class A Certificates
to the extent provided in this Article IV. Except in
connection with a payment of Class B Daily Principal
pursuant to subsection 4.9(e) of this Agreement, the
Class B Certificates will not have the right to receive
payments of principal until the Class A Invested Amount
has been paid in full.
Section 4.5 Collections and Allocation;
Payments on Exchangeable Transferor Certificate.
(a) Collections. The Servicer will apply
or will instruct the Trustee to apply all funds on
deposit in the Collection Account and the Excess Funding
Account allocable to the Series 1997-1 Certificates, and
all funds on deposit in the Interest Funding Account, the
Principal Account, the Distribution Account, the Payment
Reserve Account and the Defeasance Account maintained for
this Series, as described in this Article IV.
(b) Payments to the Holder of the
Exchangeable Transferor Certificate. On each Business
Day, the Servicer shall determine whether a Pay Out Event
is deemed to have occurred with respect to the Series
1997-1 Certificates, and the Servicer shall allocate and
pay Collections in accordance with the Daily Report with
respect to such Business Day to the Holder of the
Exchangeable Transferor Certificate as follows:
(i) For each Business Day with respect to the
Revolving Period after the Series 1994-1 Funding
Date, in addition to amounts allocated and paid to
the Holder of the Exchangeable Transferor
Certificate pursuant to subsection 4.3(b) of the
Agreement, an amount equal to (w) the product of the
Floating Allocation Percentage and the amount of
Principal Collections on such Business Day, minus
(x) the portion thereof constituting a part of Net
Revolving Principal Collections to be deposited in
the Defeasance Account pursuant to subsection 4.9(b)
of the Agreement, minus (y) the Reallocated
Principal Collections for such Business Day minus
(z) the amount of any Class B Daily Principal for
such Business Day; and
(ii) For each Business Day during the
Amortization Period, the amount of payments of
Principal Collections made to the Holder of the
Exchangeable Transferor Certificate shall be
determined only as provided in subsection 4.3(b) of
the Agreement.
Notwithstanding the foregoing, amounts payable
to the Transferor pursuant to subsection 4.5(b)(i) of the
Agreement shall instead be deposited in the Excess
Funding Account to the extent necessary to prevent the
Transferor Interest from being less than the Minimum
Transferor Interest.
The allocations to be made pursuant to this
subsection 4.5(b) also apply to deposits into the
Collection Account that are treated as Collections,
including Adjustment Payments, payment of the
reassignment price pursuant to Section 2.4(e) of the
Agreement and proceeds from the sale, disposition or
liquidation of the Receivables pursuant to Section 9.2,
10.2, 12.1 or 12.2 of the Agreement and Section 3 of this
Series Supplement. Such deposits to be treated as
Collections will be allocated as Imputed Yield
Receivables or Principal Receivables as provided in the
Agreement.
Section 4.6 Determination of Interest for the
Series 1997-1 Certificates. (a) The amount of interest
(the "Class A Interest") allocable to the Class A
Certificates with respect to any Business Day shall be an
amount equal to the product of (i) the Class A
Certificate Rate and (ii) a fraction, the numerator of
which is the actual number of days from and including the
immediately preceding Business Day to but excluding such
Business Day, and the denominator of which is 360 and
(iii) the Class A Outstanding Principal Amount on such
Business Day after giving effect to all transactions on
such Business Day.
(b) The amount of interest (the "Class B
Interest") allocable to the Class B Certificates with
respect to any Business Day shall be an amount equal to
the product of (i) the Class B Certificate Rate and (ii)
a fraction, the numerator of which is the actual number
of days from and including the immediately preceding
Business Day to but excluding such Business Day, and the
denominator of which is 360 and (iii) the Class B
Outstanding Principal Amount on such Business Day after
giving effect to all transactions on such Business Day.
Section 4.7 Determination of Principal
Amounts. (a) The amount of principal (the "Class A
Principal") distributable from the Distribution Account
with respect to the Class A Certificates on each
Distribution Date with respect to (A) the Revolving
Period shall be an amount equal to the amounts deposited
into the Principal Account from the Defeasance Account
pursuant to Section 11 of this Series Supplement and (B)
the Amortization Period shall be equal to an amount
calculated as follows: the sum of (i) an amount equal to
the product of the Fixed/Floating Allocation Percentage
and the aggregate amount of Principal Collections (less
the amount of Reallocated Principal Collections) with
respect to the preceding Monthly Period (or, in the case
of the Distribution Date in the first Monthly Period in
the Amortization Period following the Series 1994-1
Funding Date, the Fixed/Floating Allocation Percentage of
Principal Collections from the day following the Series
1994-1 Funding Date), (ii) any amount on deposit in the
Excess Funding Account allocated to the Class A
Certificates pursuant to subsection 4.9(d) of the
Agreement with respect to the preceding Monthly Period,
(iii) the amount, if any, allocated to the Class A
Certificates pursuant to subsections 4.9(a)(iv), (v),
(vi) and (vii) of the Agreement and, with respect to such
subsections, pursuant to subsections 4.10(a) and (b) and
4.14 of the Agreement with respect to such Distribution
Date and, (iv) the amount of Shared Principal Collections
allocated to the Class A Certificates with respect to
such Distribution Date and pursuant to subsection 4.3(e)
and Section 4.8 of the Agreement; provided, however, that
with respect to any Business Day, Class A Principal may
not exceed the Class A Invested Amount; provided,
further, that with respect to the Scheduled Series 1997-1
Termination Date, the Class A Principal shall be an
amount equal to the Class A Invested Amount.
(b) The amount of principal (the "Class B
Principal") distributable from the Distribution Account
with respect to the Class B Certificates on each
Distribution Date, beginning with the Class B Principal
Payment Commencement Date, or in the case of
distributions of Class B Daily Principal pursuant to the
last proviso of this subsection 4.7(b) of the Agreement,
on each Business Day, shall equal an amount calculated as
follows: the sum of (i) an amount equal to the product
of the Fixed/Floating Allocation Percentage and the
aggregate amount of Principal Collections (less the
amount of Reallocated Principal Collections) with respect
to the preceding Monthly Period (or, in the case of the
first Distribution Date in the Amortization Period
following the date on which an amount equal to the Class
A Invested Amount is paid to the Class A
Certificateholders in respect of Class A Principal, the
Fixed/Floating Allocation Percentage of Principal
Collections from the date on which such deposit is made),
(ii) any amount on deposit in the Excess Funding Account
allocated to the Class B Certificates pursuant to
subsection 4.9(d) of the Agreement with respect to the
preceding Monthly Period, (iii) the amount, if any,
allocated to the Class B Certificates pursuant to
subsections 4.9(a)(iv), (v) and (vii) of the Agreement
and, with respect to such subsections, pursuant to
subsections 4.10(a) and (b) of the Agreement with respect
to such Distribution Date and (iv) the amount of Shared
Principal Collections allocated to the Class B
Certificates with respect to the preceding Monthly Period
pursuant to subsection 4.3(e) and Section 4.8 of the
Agreement on and after the Class B Principal Payment
Commencement Date; provided, however, that with respect
to any Distribution Date, Class B Principal may not
exceed the Class B Invested Amount; provided, further,
that with respect to the Scheduled Series 1997-1
Termination Date, the Class B Principal shall be an
amount equal to the Class B Invested Amount; provided
further, that on any Business Day during any period other
than an Early Amortization Period, the Transferor may
designate that either (x) an amount up to the lesser of
(i) the excess of the Class B Invested Amount over the
Stated Class B Amount on such day after taking into
account all adjustments of the Class A Invested Amount on
such day and (ii) (I) during the Revolving Period an
amount equal to (x) the product of the Class B Floating
Allocation Percentage and the amount of Principal
Collections on such Business Day minus (y) Reallocated
Principal Collections on such Business Day or (II) after
the Amortization Period Commencement Date an amount equal
to (x) the product of the Fixed/Floating Allocation
Percentage and the amount of Principal Collections on
such Business Day minus (y) the amount with of Principal
Collections to be applied with respect to Class A
Principal on such Business Day minus (z) Reallocated
Principal Collections on such Business Day (such
designated amount, the "Class B Daily Principal") shall
be distributed in accordance with subsection 4.9(e) or
(y) an amount up to the excess of the Class B Invested
Amount over the Stated Class B Amount on such day after
taking into account all adjustments of the Class B
Invested Amount on such day, shall be subtracted from the
Class B Invested Amount and added to the Transferor
Interest.
Section 4.8 Shared Principal Collections.
Shared Principal Collections allocated to the Series
1997-1 Certificates and to be applied pursuant to
subsections 4.9(b), 4.9(c)(i)(z) and 4.9(c)(ii)(z) for
any Business Day shall mean an amount equal to the sum of
(i) the product of (x) Shared Principal Collections for
all Series for such Business Day and (y) a fraction, the
numerator of which is the Principal Shortfall for the
Series 1997-1 Certificates for such Business Day and the
denominator of which is the aggregate amount of Principal
Shortfalls for all Series for such Business Day and (ii)
Shared Principal Collections for all Series for such
Business Day, less the amount thereof to be applied with
respect to Principal Shortfalls for all Series for such
Business Day to the extent provided below. Prior to the
Pay Out Commencement Date and with respect to the period
on and after the April 1997 Distribution Date, if the
Minimum Rating Condition is satisfied with respect to the
Class A Certificates, the amounts specified in clause
(ii) of the preceding sentence shall be applied to the
Series 1997-1 Certificates solely at the option of the
Transferor in accordance with Section 4.3(e) of the
Agreement. On and after the April 1997 Distribution
Date, if the Minimum Rating Condition is not satisfied
with respect to the Class A Certificates, the Transferor,
promptly following receipt by the Servicer and the
Trustee of written directions from Holders of Series
1997-1 Certificates evidencing Undivided Interests
aggregating more than 50% of the Class A Invested Amount,
shall direct the Servicer and the Trustee that the
amounts specified in clause (ii) of the first sentence of
this Section 4.8 be deposited in the Defeasance Account
or the Principal Account as specified in subsections
4.9(b) and 4.9(c)(i) and (ii) of the Agreement. If the
Minimum Rating Condition is not satisfied on the May 1997
Distribution Date, the amounts deposited in the
Defeasance Account or the Principal Account pursuant to
the preceding sentence shall be applied to make principal
payments with respect to the Class A Certificates or, if
the Minimum Rating Condition is satisfied on the May 1997
Distribution Date, such amounts shall be paid to the
Holder of the Exchangeable Transferor Certificate. On
and after the May 1997 Distribution Date, if the Minimum
Rating Condition was not satisfied on the May 1997
Distribution Date with respect to the Class A
Certificates, the Transferor shall direct the Servicer
and the Trustee that the amounts specified in clause (ii)
of the first sentence of this Section 4.8 be deposited in
the Defeasance Account or the Principal Account as
specified in subsection 4.9(b) and 4.9(c)(i) and (ii) of
the Agreement for distribution to the Certificateholders
on each subsequent Distribution Date.
Section 4.9 Application of Funds on Deposit in
the Collection Account for the Certificates. (a) On
each Business Day, the Servicer shall deliver to the
Trustee a Daily Report in which it shall instruct the
Trustee to withdraw, and the Trustee, acting in
accordance with such instructions, shall withdraw from
the Collection Account, to the extent of the sum of (w)
the Floating Allocation Percentage of Imputed Yield
Collections available in the Collection Account, (x)
Investment Earnings on deposit in the Collection Account
and (y) amounts on deposit in the Payment Reserve
Account, if any, if and to the extent so designated by
the Transferor (the "Available Series 1997-1 Imputed
Yield Collections") the amounts set forth in subsections
4.9(a)(i) through 4.9(a)(x) of the Agreement.
(i) Class A Interest. On each Business
Day during a Monthly Period, the Trustee, acting in
accordance with instructions from the Servicer,
shall allocate to the Class A Certificates and
withdraw first from the Collection Account and then
from the Payment Reserve Account and deposit into
the Interest Funding Account, to the extent of the
Available Series 1997-1 Imputed Yield Collections,
an amount equal to the lesser of (x) the Available
Series 1997-1 Imputed Yield Collections and (y) the
sum of (A) the Class A Interest for such Business
Day plus (B) the excess, if any, of the amount
required to be deposited pursuant to clause (A)
above on each prior Business Day over the amount on
deposit in the Interest Funding Account with respect
thereto on such Business Day plus (C) an amount
equal to the portion of Carryover Class A Interest
attributable to amounts required to be deposited
pursuant to clause (A) above that were not so
deposited prior to such Business Day minus the
amounts required to be deposited pursuant to clause
(B) above.
(ii) Class B Interest. On each Business
Day during a Monthly Period, the Trustee, acting in
accordance with instructions from the Servicer,
shall allocate to the Class B Certificates and
withdraw first from the Collection Account and then
from the Payment Reserve Account and deposit into
the Interest Funding Account, to the extent of the
Available Series 1997-1 Imputed Yield Collections
remaining after giving effect to the withdrawal
pursuant to subsection 4.9(a)(i) of the Agreement,
an amount equal to the lesser of (x) any such
remaining Available Series 1997-1 Imputed Yield
Collections and (y) the sum of (A) the Class B
Interest for such Business Day plus (B) the excess,
if any, of the amount required to be deposited
pursuant to clause (A) above on each prior Business
Day over the amount on deposit in the Interest
Funding Account with respect thereto on such
Business Day plus (C) an amount equal to the portion
of Carryover Class B Interest attributable to
amounts required to be deposited pursuant to clause
(A) above that were not so deposited prior to such
Business Day minus the amounts required to be
deposited pursuant to clause (B) above.
(iii) Investor Servicing Fee. On each
Business Day, the Trustee, acting in accordance with
instructions from the Servicer, shall withdraw first
from the Collection Account and then from the
Payment Reserve Account and distribute to the
Servicer, to the extent of any Available Series
1997-1 Imputed Yield Collections remaining after
giving effect to the withdrawals pursuant to
subsections 4.9(a)(i) and (ii) of the Agreement, an
amount equal to the lesser of (x) any such remaining
Available Series 1997-1 Imputed Yield Collections
and (y) the Servicing Fee for such Business Day plus
any Servicing Fees due with respect to any prior
Business Day but not distributed to the Servicer.
(iv) Investor Default Amount. On each
Business Day, the Trustee, acting in accordance with
instructions from the Servicer, shall withdraw first
from the Collection Account and then from the
Payment Reserve Account, to the extent of any
Available Series 1997-1 Imputed Yield Collections
remaining after giving effect to the withdrawals
pursuant to subsections 4.9(a)(i) through (iii) of
the Agreement, an amount equal to the lesser of (x)
any such remaining Available Series 1997-1 Imputed
Yield Collections and (y) the sum of (1) the
aggregate Investor Default Amount for such Business
Day plus (2) the unpaid Investor Default Amount for
each previous Business Day during such Monthly
Period, such amount to be (A) during the Revolving
Period treated as Shared Principal Collections, (B)
during the Amortization Period on and prior to the
day on which an amount equal to the Class A Invested
Amount is deposited in the Principal Account, to be
deposited in the Principal Account for distribution
to the Class A Certificateholders on the related
Distribution Date and (C) during the Amortization
Period, on and after the day on which such deposit
to the Principal Account with respect to the Class A
Invested Amount has been made and on and prior to
the day on which an amount equal to the Class B
Invested Amount is deposited in the Principal
Account, to be deposited in the Principal Account
for payment to the Class B Certificateholders on the
related Distribution Date.
(v) Adjustment Payment Shortfalls. On
each Business Day, the Trustee, acting in accordance
with instructions from the Servicer, shall withdraw
first from the Collection Account and then from the
Payment Reserve Account, to the extent of any
Available Series 1997-1 Imputed Yield Collections
remaining after giving effect to the withdrawals
pursuant to subsections 4.9(a)(i) through (iv) of
the Agreement, an amount equal to the lesser of (x)
any such remaining Available Series 1997-1 Imputed
Yield Collections and (y) an amount equal to the
Series Allocation Percentage of any Adjustment
Payment which the Transferor is required but fails
to make pursuant to subsection 3.8(a) of the
Agreement, such amount, (i) during the Revolving
Period, to be treated as Shared Principal
Collections, (ii) during the Amortization Period on
and prior to the day on which an amount equal to the
Class A Invested Amount is deposited in the
Principal Account, to be deposited in the Principal
Account for distribution to the Class A
Certificateholders on the next Distribution Date and
(iii) during the Amortization Period, on and after
the day on which such deposit to the Principal
Account with respect to the Class A Invested Amount
has been made and on and prior to the day on which
an amount equal to the Class B Invested Amount is
deposited in the Principal Account for payment to
the Class B Certificateholders on the related
Distribution Date.
(vi) Reimbursement of Class A Investor
Charge-Offs. On each Business Day, the Trustee,
acting in accordance with instructions from the
Servicer, shall withdraw first from the Collection
Account and then from the Payment Reserve Account,
to the extent of any Available Series 1997-1 Imputed
Yield Collections remaining after giving effect to
the withdrawals pursuant to subsections 4.9(a)(i)
through (v) of the Agreement, an amount equal to the
lesser of (x) any such remaining Available Series
1997-1 Imputed Yield Collections and (y) the
unreimbursed Class A Investor Charge-Offs, if any,
such amount to be applied to reimburse Class A
Investor Charge-Offs, and, during the Revolving
Period, to be treated as Shared Principal
Collections, and during the Amortization Period on
and prior to the day on which an amount equal to the
Class A Invested Amount is deposited in the
Principal Account to be deposited in the Principal
Account for distribution to the Class A
Certificateholders on the related Distribution Date.
(vii) Reimbursement of Class B Investor
Charge-Offs. On each Business Day, the Trustee,
acting in accordance with instructions from the
Servicer, shall withdraw first from the Collection
Account and then from the Payment Reserve Account,
to the extent of any Available Series 1997-1 Imputed
Yield Collections remaining after giving effect to
the withdrawals pursuant to subsections 4.9(a)(i)
through (vi) of the Agreement, an amount equal to
the lesser of (x) any such remaining Available
Series 1997-1 Imputed Yield Collections and (y) the
unreimbursed amount by which the Class B Invested
Amount has been reduced on prior Business Days
pursuant to clauses (d) and (e) of the definition of
Class B Invested Amount, if any, such amount,
(i) during the Revolving Period to be treated as
Shared Principal Collections, (ii) during the
Amortization Period, on and prior to the day on
which an amount equal to the Class A Invested Amount
is deposited in the Principal Account, to be
deposited in the Principal Account for distribution
to the Class A Certificateholders on the related
Distribution Date, and (iii) during the Amortization
Period, on and after the day on which such deposit
has been made and on and prior to the day on which
the Class B Invested Amount has been deposited in
the Principal Account, to be deposited in the
Principal Account for payment to the Class B
Certificateholders on the related Distribution Date.
(viii) Class A Costs. On each Business
Day, the Trustee acting in accordance with
instructions from the Servicer, shall withdraw first
from the Collection Account and then from the
Payment Reserve Account and deposit into the
Interest Funding Account, to the extent of any
Available Series 1997-1 Imputed Yield Collections
remaining after giving effect to the withdrawals
pursuant to subsections 4.9(a)(i) through (vii) of
the Agreement, an amount equal to the lesser of (x)
any such remaining Available Series 1997-1 Imputed
Yield Collections and (y) the Class A Costs for such
Business Day and any such amounts that remain unpaid
from any source from previous days to the extent not
included in Class A Costs for such Business Day.
(ix) Payment Reserve Account. On each
Business Day, the Trustee acting in accordance with
instructions from the Servicer, shall withdraw from
the Collection Account, to the extent of any
Available Series 1997-1 Imputed Yield Collections
remaining after giving effect to the withdrawals
pursuant to subsections 4.9(a)(i) through (viii) of
the Agreement an amount equal to the lesser of (x)
any such remaining Available Series 1997-1 Imputed
Yield Collections and (y) the amount designated by
the Transferor in writing (which includes facsimile
transmission) in its instructions to the Trustee on
such Business Day and deposit such amount, if any,
into the Payment Reserve Account.
(x) Excess Imputed Yield Collections.
Any amounts remaining in the Collection Account to
the extent of any Available Series 1997-1 Imputed
Yield Collections remaining after giving effect to
the withdrawals pursuant to subsections 4.9(a)(i)
through (ix) of the Agreement, shall be treated as
Excess Imputed Yield Collections, and the Servicer
shall direct the Trustee in writing on each Business
Day to withdraw such amounts from the Collection
Account and to first make such amounts available to
pay to Certificateholders of other Series to the
extent of shortfalls, if any, in amounts payable to
such certificateholders from Imputed Yield
Collections allocated to such other Series, then to
pay any unpaid commercially reasonable costs and
expenses of a Successor Servicer, if any, and then
pay any remaining Excess Imputed Yield Collections
to the Transferor.
(b) For each Business Day with respect to the
Revolving Period, the funds on deposit in the Collection
Account to the extent of the lesser of (A) the Class A
Invested Amount and (B) the sum of (x) product of (i) the
Floating Allocation Percentage and (ii) the amount of
Principal Collections on such Business Day (such product
the "Revolving Principal Collections") less the amount of
Reallocated Principal Collections on such Business Day
(the Revolving Principal Collections less the Reallocated
Principal Collections on the related Business Day, the
"Net Revolving Principal Collections"), and (y) Shared
Principal Collections allocated to the Series 1997-1
Certificates in accordance with Section 4.8 on such
Business Day may, at the option of the Transferor,
pursuant to instructions delivered to the Servicer and
the Trustee by facsimile or other similar means of
documented communication, or, to the extent specified in
subsection 4.8 of the Agreement, shall, be deposited into
the Defeasance Account and applied as provided in Section
11(b) of this Series Supplement. During the Revolving
Period, an amount equal to the Net Revolving Principal
Collections less any amount deposited to the Defeasance
Account pursuant to the immediately preceding sentence
shall be treated as Shared Principal Collections and
applied pursuant to the written direction of the Servicer
in the Daily Report for such Business Day, as provided in
Section 4.3(e) of the Agreement.
(c) For each Business Day on and after the
Amortization Period Commencement Date, the amount of
funds on deposit in the Collection Account and the other
amounts described below will be distributed, pursuant to
the written direction of the Servicer in the Daily Report
for such Business Day in the following priority:
(i) on and prior to the day on which an
amount equal to the Class A Invested Amount has been
deposited in the Principal Account to be applied to
the payment of Class A Principal, an amount (not in
excess of the Class A Invested Amount) equal to the
sum of (w) the product of the Fixed/Floating
Allocation Percentage and Principal Collections in
the Collection Account at the end of the preceding
Business Day (less the amount thereof to be applied
as Reallocated Principal Collections on such
Business Day), (x) any amount on deposit in the
Excess Funding Account allocated to the Class A
Certificates on such Business Day pursuant to
subsection 4.9(d) of the Agreement, (y) amounts to
be paid pursuant to subsections 4.9(a)(iv), (v),
(vi) and (vii) of the Agreement from Available
Series 1997-1 Imputed Yield Collections and from
amounts available pursuant to subsections 4.10(a)
and (b) and 4.14 of the Agreement on such Business
Day, and (z) the amount of Shared Principal
Collections allocated to the Series 1997-1
Certificates in accordance with subsection 4.3(e)
and Section 4.8 of the Agreement on such Business
Day, will be deposited into the Principal Account;
(ii) on and after the day on which an
amount equal to the Class A Invested Amount has been
deposited in the Principal Account to be applied to
the payment of Class A Principal, an amount (not in
excess of the Class B Invested Amount) equal to the
sum of (w) an amount equal to the product of the
Fixed/Floating Allocation Percentage and Principal
Collections in the Collection Account at the end of
the preceding Business Day (less the amount thereof
to be applied as Reallocated Principal Collections
on such Business Day), (x) any amount on deposit in
the Excess Funding Account allocated to the Class B
Certificates on such Business Day pursuant to
subsection 4.9(d) of the Agreement, (y) the amount,
if any, allocated to be paid to the Class B
Certificates pursuant to subsections 4.9(a)(iv), (v)
and (vii) of the Agreement from Available Series
Imputed Yield Collections and from amounts available
pursuant to subsections 4.10(a) and (b) of the
Agreement with respect to such Business Day, and (z)
the amount of Shared Principal Collections allocated
to the Series 1997-1 Certificates in accordance with
subsection 4.3(e) and Section 4.8 of the Agreement
on such Business Day (such sum, the "Class B Daily
Principal Amount") will be deposited into the
Principal Account;
(iii) an amount equal to the excess, if
any, of (A) the sum of the amounts described in
clauses (i)(w) and (y) and (ii)(w) and (y) above
over (B) the sum of Class A Principal and Class B
Principal will be treated as Shared Principal
Collections and applied as provided in subsection
4.3(e) of the Agreement.
(d) On the first Business Day of the
Amortization Period, funds on deposit in the Excess
Funding Account will be deposited in the Principal
Account; provided, however, that if any other Series
enters its Amortization Period, as defined in its related
Series Supplement, at the same time as Series 1997-1 the
amount of the foregoing deposit shall be equal to the
product of an amount equal to the amount of funds on
deposit in the Excess Funding Account and a fraction the
numerator of which is the Invested Amount and the
denominator of which is equal to the sum of the invested
amounts of each Series then entering its related
Amortization Period as defined in its related Series
Supplement; provided, further, that on any Business Day
prior to the Series 1994-1 Funding Date any amounts
allocated to the Series 1997-1 Certificates from the
Excess Funding Account as described above shall instead
be reallocated to the Series 1994-1 Certificates.
Amounts deposited in the Principal Account pursuant to
the foregoing sentence will be allocated in the following
order of priority: (i) to the Class A Certificates in an
amount not to exceed the Class A Principal after
subtracting therefrom any amounts to be paid to the Class
A Certificateholders with respect thereto pursuant to
subsections 4.9(c)(i)(w) and (y) of the Agreement, and
(ii) to the Class B Certificates in an amount not to
exceed the Class B Principal after subtracting therefrom
any amounts to be deposited in the Principal Account with
respect thereto pursuant to subsections 4.9(c)(ii)(w) and
(y).
(e) On each Business Day on which Class B
Daily Principal has been allocated pursuant to subsection
4.7(b) of the Agreement, funds on deposit in the
Collection Account in an amount equal to the Class B
Daily Principal Amount designated by the Transferor with
respect to such Business Day will be distributed to the
Class B Certificateholders.
Section 4.10 Coverage of Required Amount for
the Series 1997-1 Certificates. (a) To the extent that
any amounts are on deposit in the Excess Funding Account
on any Business Day, the Servicer shall apply, in the
manner specified for application of Available Series
1997-1 Imputed Yield Collections in subsections 4.9(a)(i)
through (ix), Transferor Imputed Yield Collections in an
amount equal to the excess of (x) the product of (a) the
Base Rate, (b) the amounts on deposit in the Excess
Funding Account and (c) the number of days elapsed since
the previous Business Day divided by the actual number of
days in such year over (y) the aggregate amount of all
earnings since the previous Business Day available from
the Cash Equivalents in which funds on deposit in the
Excess Funding Account are invested (the "Negative Carry
Amount").
(b) To the extent that on any Business Day
payments are being made pursuant to any of subsections
4.9(a)(i) through (ix), respectively, and the full amount
to be paid pursuant to any such subsection receiving
payments on such Business Day is not paid in full on such
Business Day, the Servicer shall apply, in the manner
specified for application of Available Series 1997-1
Imputed Yield Collections in subsections 4.9(a)(i)
through (ix), all or a portion of the Excess Imputed
Yield Collections from other Series with respect to such
Business Day allocable to the Series 1997-1 Certificates
in an amount equal to the excess of the full amount to be
allocated or paid pursuant to the applicable subsection
over the amount applied with respect thereto from
Available Series 1997-1 Imputed Yield Collections and
Transferor Imputed Yield Collections on such Business Day
(the "Required Amount"). Excess Imputed Yield
Collections allocated to the Series 1997-1 Certificates
for any Business Day shall mean an amount equal to the
product of (x) Excess Imputed Yield Collections available
from all other Series for such Business Day and (y) a
fraction, the numerator of which is the Required Amount
for such Business Day and the denominator of which is the
aggregate amount of shortfalls in required amounts or
other amounts to be paid from Imputed Yield Collections
for all Series for such Business Day.
Section 4.11 Payment of Certificate Interest.
On each Transfer Date, the Trustee, acting in accordance
with instructions from the Servicer set forth in the
Daily Report for such day, shall withdraw the amount on
deposit in the Interest Funding Account with respect to
the preceding Monthly Period allocable to the Series
1997-1 Certificates and deposit such amount in the
Distribution Account. On each Distribution Date, the
Paying Agent shall pay in accordance with Section 5.1 of
the Agreement (x) to the Class A Certificateholders from
the Distribution Account the amount deposited into the
Interest Funding Account during the preceding Monthly
Period pursuant to subsections 4.9(a)(i) and 4.9(a)(viii)
and Sections 4.10 and 4.14 with respect to the related
Interest Accrual Period and (y) the Class B
Certificateholders from the Distribution Account the
amount deposited into the Interest Funding Account during
the preceding Monthly Period pursuant to subsections
4.9(a)(ii) and Section 4.10 with respect to the related
Interest Accrual Period.
Section 4.12 Payment of Certificate Principal.
(a) On the Transfer Date preceding the first
Distribution Date in the Amortization Period and on each
Distribution Date thereafter, the Trustee, acting in
accordance with instructions from the Servicer set forth
in the Daily Report for such day, shall withdraw from the
Principal Account and deposit in the Distribution
Account, to the extent of funds available, an amount
equal to the Class A Principal for such Distribution
Date. On the first Distribution Date in the Amortization
Period and on each Distribution Date thereafter until the
Class A Invested Amount is paid in full, the Paying Agent
shall pay in accordance with subsection 5.1(a) to the
Class A Certificateholders from the Distribution Account
such amount deposited into the Distribution Account on
the related Transfer Date.
(b) On each Business Day the Trustee acting in
accordance with instructions from the Servicer set forth
in the Daily Report for such Business Day shall make
payments of principal to the Class B Certificateholders
of Class B Daily Principal, if any, designated by the
Transferor pursuant to Section 4.7(b) of the Agreement.
Any amounts remaining in the Principal Account
and allocable to the Series 1997-1 Certificates, after
the Class B Invested Amount has been paid in full, will
be treated as Shared Principal Collections and applied in
accordance with Section 4.3(e) of the Agreement.
Section 4.13 Investor Charge-Offs. (a) If,
on any Determination Date, the aggregate Investor Default
Amount and the Series Allocation Percentage of unpaid
Adjustment Payments, if any, for each Business Day in the
preceding Monthly Period exceeded the Available Series
1997-1 Imputed Yield Collections applied to the payment
thereof pursuant to subsections 4.9(a)(iv) and (v) of the
Agreement and the amount of Transferor Imputed Yield
Collections and Excess Imputed Yield Collections
allocated thereto pursuant to Section 4.10 of the
Agreement, and the amount of Reallocated Principal
Collections applied with respect thereto pursuant to
Section 4.14 of the Agreement, the Class B Invested
Amount will be reduced by the amount by which the
remaining aggregate Investor Default Amount and Series
Allocation Percentage of unpaid Adjustment Payments
exceed the amount applied with respect thereto during
such preceding Monthly Period (a "Class B Investor
Charge-Off").
(b) In the event that any such reduction of
the Class B Invested Amount would cause the Class B
Invested Amount to be a negative number, the Class B
Invested Amount will be reduced to zero, and the Class A
Invested Amount will be reduced by the amount by which
the Class B Invested Amount would have been reduced below
zero, but not more than the remaining aggregate Investor
Default Amount and Series Allocation Percentage of unpaid
Adjustment Payments for such Monthly Period (a "Class A
Investor Charge-Off").
(c) Following the occurrence of a Class A
Investor Charge-Off, if the Class B Invested Amount is
increased, including any increase thereof pursuant to
Section 6.16 of the Agreement, to the extent of the Class
B Invested Amount the amount of any unreimbursed Class A
Investor Charge-Off shall be reduced and, the Class A
Invested Amount shall be correspondingly increased in an
amount not to exceed the amount of such increased Class B
Invested Amount, the Class B Invested Amount shall be
correspondingly decreased and the amount of such decrease
shall be deemed to be a Class B Investor Charge-Off.
Section 4.14 Reallocated Principal Collections
for the Series 1997-1 Certificates. On each Business
Day, the Servicer will determine an amount equal to the
least of (i) the Class B Invested Amount, (ii) the
product of (x)(I) during the Revolving Period, the Class
B Floating Allocation Percentage or (II) during an
Amortization Period, the Class B Fixed/Floating
Allocation Percentage and (y) the amount of Principal
Collections with respect to such Business Day and (iii)
an amount equal to the Class A Required Amount for such
Business Day (such amount called "Reallocated Principal
Collections") and shall apply Principal Collections in an
amount equal to such amount to the components of the
Class A Required Amount in the same priority as amounts
are applied to such components from Available Series
1997-1 Imputed Yield Collections pursuant to subsection
4.9(a) of the Agreement.
Section 4.15 Payment Reserve Account
(a) The Servicer shall establish and maintain
or cause to be established and maintained with a
Qualified Institution, which may be the Trustee, in the
name of the Trustee, on behalf of the Certificateholders,
the "Payment Reserve Account," which shall be a
segregated trust account with the corporate trust
department of such Qualified Institution, bearing a
designation clearly indicating that the funds deposited
therein are held for the benefit of the
Certificateholders. The Trustee shall possess all right,
title and interest in all funds on deposit from time to
time in the Payment Reserve Account and in all proceeds
thereof. The Payment Reserve Account shall be under the
sole dominion and control of the Trustee for the benefit
of the Certificateholders. If, at any time, the
institution holding the Payment Reserve Account ceases to
be a Qualified Institution, the Trustee shall within 20
Business Days establish a new Payment Reserve Account
meeting the conditions specified above with a Qualified
Institution, and shall transfer any cash or any
investments to such new Payment Reserve Account. From
the date such new Payment Reserve Account is established,
it shall be the "Payment Reserve Account."
(b) The Transferor, at its discretion, may
withdraw on any Determination Date a part or all of any
amounts remaining in the Payment Reserve Account after
giving effect to any withdrawals required to be made
under Section 4.9(a) above.
(c) Funds on deposit in the Payment Reserve
Account shall be invested in Cash Equivalents by the
Trustee (or, at the direction of the Trustee, by the
Servicer on behalf of the Trustee) at the direction of
the Servicer. Funds on deposit in the Payment Reserve
Account on any Business Day, after giving effect to any
withdrawals from the Payment Reserve Account, shall be
invested in Cash Equivalents that will mature so that
such funds will be available for withdrawal on or prior
to the following Business Day. The proceeds of any such
investments shall be invested in Cash Equivalents that
will mature so that such funds will be available for
withdrawal on or prior to the following Business Day. On
each Business Day following a deposit of funds to the
Payment Reserve Account, the aggregate proceeds of any
such investment shall be deposited in the Collection
Account and treated as Investment Proceeds for
application as Available Series 1997-1 Imputed Yield
Collections.
SECTION 7. Article V of the Agreement.
Article V of the Agreement shall read in its entirety as
follows and shall be applicable only to the Series 1997-1
Certificates:
ARTICLE V
DISTRIBUTIONS AND REPORTS TO INVESTOR
CERTIFICATEHOLDERS
Section 5.1 Distributions.
(a) On each Distribution Date, the Paying
Agent shall distribute (in accordance with the Settlement
Statement delivered by the Servicer to the Trustee and
the Paying Agent pursuant to subsection 3.4(c)) to each
Class A Certificateholder of record on the preceding
Record Date (other than as provided in subsection 2.4(e)
or in Section 12.3 respecting a final distribution) such
Certificateholder's pro rata share (based on the
aggregate Undivided Interests represented by Class A
Certificates held by such Certificateholder) of amounts
on deposit in the Distribution Account as are payable to
the Class A Certificateholders pursuant to Section 4.11
and 4.12 of the Agreement by wire transfer to an account
or accounts designated by such Class A Certificateholders
by written notice given to the Paying Agent not less than
five days prior to the related Distributed Date;
provided, however, that with respect to amounts payable
pursuant to Section 4.11, the portion of such amounts
constituting increased costs and Class A Breakage Costs
shall be paid to Class A Certificateholders on the basis
of certifications provided to the Trustee and the
Servicer pursuant to Section 15 and subsection 11(b) of
this Series Supplement; provided, further, that the final
payment in retirement of the Class A Certificates will be
made only upon presentation and surrender of the Class A
Certificates at the office or offices specified in the
notice of such final distribution delivered by the
Trustee pursuant to Section 12.3.
(b) On each Distribution Date, the Paying
Agent shall distribute (in accordance with the Settlement
Statement delivered by the Servicer to the Trustee and
the Paying Agent pursuant to subsection 3.4(c)) to each
Class B Certificateholder of record on the preceding
Record Date (other than as provided in subsection 2.4(e)
or in Section 12.3 respecting a final distribution) such
Certificateholder's pro rata share (based on the
aggregate Undivided Interests represented by Class B
Certificates held by such Certificateholders) of amounts
on deposit in the Distribution Account as are payable to
the Class B Certificateholders pursuant to Section 4.11
and 4.12 of the Agreement by wire transfer to an account
or accounts designated by such Class B Certificateholder
by written notice given to the Paying Agent not less than
five days prior to the related Distributed Date;
provided, however, that the final payment in retirement
of the Class B Certificates will be made only upon
presentation and surrender of the Class B Certificates at
the office or offices specified in the notice of such
final distribution delivered by the Trustee pursuant to
Section 12.3.
Section 5.2 Certificateholders' Statement.
(a) On the 20th day of each calendar month (or if such
day is not a Business Day the next succeeding Business
Day), the Paying Agent shall forward to each
Certificateholder a statement substantially in the form
of Exhibit C prepared by the Servicer and delivered to
the Trustee and the Paying Agent on the preceding
Determination Date setting forth the following
information:
(i) the total amount distributed;
(ii) the amount of such distribution
allocable to Certificate Principal;
(iii) the amount of such distribution
allocable to Certificate Interest;
(iv) the amount of Principal Collections
received in the Collection Account during the
preceding Monthly Period and allocated in respect of
the Class A Certificates and the Class B
Certificates, respectively;
(v) the amount of Imputed Yield
Collections processed during the preceding Monthly
Period and allocated in respect of the Class A
Certificates and the Class B Certificates,
respectively;
(vi) the aggregate amount of Principal
Receivables, the Invested Amount, the Class A
Invested Amount, the Class B Invested Amount, the
Floating Allocation Percentage and, during the
Amortization Period, the Fixed/Floating Allocation
Percentage and Class B Fixed/Floating Allocation
Percentage, as of the end of the day on the last day
of the related Monthly Period;
(vii) the aggregate outstanding balance
of Receivables which are current, 30-59, 60-89, and
90 days and over delinquent as of the end of the day
on the last day of the related Monthly Period;
(viii) the aggregate Investor Default
Amount for the preceding Monthly Period;
(ix) the aggregate amount of Class A
Investor Charge-Offs and Class B Investor Charge-
Offs for the preceding Monthly Period;
(x) the amount of the Servicing Fee for
the preceding Monthly Period;
(xi) the amount of unreimbursed
Reallocated Principal Collections for the related
Monthly Period; and
(xii) the aggregate amount of funds in
the Excess Funding Account as of the last day of the
Monthly Period immediately preceding the
Distribution Date.
(b) Annual Certificateholders' Tax
Statement. On or before January 31 of each calendar
year, beginning with calendar year 1998, the Paying Agent
shall distribute to each Person who at any time during
the preceding calendar year was a Series 1997-1
Certificateholder, a statement prepared by the Servicer
containing the information required to be contained in
the regular report to Series 1997-1 Certificateholders,
as set forth in subclauses (i), (ii) and (iii) above,
aggregated for such calendar year or the applicable
portion thereof during which such Person was a Series
1997-1 Certificateholder, together with, on or before
January 31 of each year, beginning in 1998, such other
customary information (consistent with the treatment of
the Certificates as debt) as the Trustee or the Servicer
deems necessary or desirable to enable the Series 1997-1
Certificateholders to prepare their tax returns. Such
obligations of the Trustee shall be deemed to have been
satisfied to the extent that substantially comparable
information shall be provided by the Trustee pursuant to
any requirements of the Internal Revenue Code as from
time to time in effect.
SECTION 8. Article VI of the Agreement.
Article VI (except for Sections 6.1 through 6.14 thereof)
shall read in its entirety as follows and shall be
applicable only to the Series 1997-1:
ARTICLE VI
THE CERTIFICATES
Section 6.15 Additional Class A Invested
Amounts. Each Class A Certificateholder agrees, by
acceptance of the Class A Certificates, that the
Transferor may from time to time, other than after a Pay
Out Commencement Date, request that such Class A
Certificateholder acquire on any Distribution Date
additional undivided interests in the Trust in specified
amounts (such amounts, the "Additional Class A Invested
Amounts") in an aggregate amount equal to the excess of
the amount of the reduction in the invested amount of the
Series 1994-1 Certificates on such Distribution over the
amount of the increase of the Class B Invested Amount on
such Distribution Date; provided, however, that if such
an increase in the Class A Invested Amount would cause a
Trust Pay Out Event or a Series 1997-1 Pay Out Event to
occur, then the amount of the increase in the Class A
Invested Amount shall be limited on such Distribution
Date to the maximum increase in the Class A Invested
Amount that may be obtained without causing either a
Trust Pay Out Event or a Series 1997-1 Pay Out Event to
occur; provided further, that in no case shall the Class
A Invested Amount be increased above the lesser of (x)
the Class A Maximum Invested Amount and (y) the Class A
Available Commitment; and provided, further, that if the
Minimum Rating Condition is not satisfied with respect to
the Class A Certificates (i) on the April 1997
Distribution Date, after giving effect to any increase of
the Class A Invested Amount and Class B Invested Amount
on such Distribution Date, the Class A Invested Amount
shall not be increased on such Distribution Date, or (ii)
on the May 1997 Distribution Date, after giving effect to
any increase or decrease of the Class A Invested Amount
or Class B Invested Amount on such Distribution Date, the
Class A Invested Amount shall not be increased on such
Distribution Date or thereafter. The Additional Class A
Invested Amount on any Distribution Date shall not exceed
an amount equal to the excess of the sum of the aggregate
amount of Principal Receivables and amounts on deposit in
the Excess Funding Account over the greater of (a) the
sum of (i) the aggregate invested amount of each Series
then outstanding as of such day, including the Series
1997-1 Certificates (prior to giving effect to such
Additional Class A Invested Amount), minus amounts on
deposit in the Principal Account for any Series, if any,
and (ii) the Minimum Transferor Interest as of such day
or (b) the Minimum Aggregate Principal Receivables less
any principal repaid to the Series 1994-1 Certificates.
The Class A Certificateholders shall acquire such
Additional Class A Invested Amount, only if (a) the Class
B Invested Amount following the acquisition of such
Additional Class A Invested Amount shall be at least
equal to the Stated Class B Amount (including increases
to the Class B Invested Amount pursuant to Section 6.16
of the Agreement) and (b) after giving effect to the
proposed increase in the Class A Invested Amount no
Series 1997-1 Pay Out Event shall exist or occur as a
result of such increase. If the Class A
Certificateholders acquire such Additional Class A
Invested Amount, such Class A Certificateholders shall
pay an amount equal to the Additional Class A Invested
Amount to the Trustee and, in consideration of such
Certificateholder's payment of the Additional Class A
Invested Amount, the Servicer shall appropriately note
such Additional Class A Invested Amount (and the
increased Class A Invested Amount) on the next succeeding
Servicer's report and direct the Trustee in writing to
pay to the Transferor such Additional Class A Invested
Amount, and the Invested Amount of the Class A
Certificates will be equal to the Invested Amount of the
Class A Certificates stated in such Servicer's report.
The purchase of any Additional Class A Invested
Amount shall be in an aggregate principal amount that is
not less than $1,000,000 or integral multiples of
$100,000 in excess thereof.
Each Class A Certificateholder shall be and is
hereby authorized to record on the grid attached to its
Class A Certificate (or at such Class A Certificate-
holder's option, in its internal books and records) the
date and amount of its percentage interest in any
Additional Class A Invested Amount purchased by it, and
each repayment thereof; provided that failure to make any
such recordation on such grid or any error in such grid
shall not adversely affect such Class A
Certificateholder's rights with respect to its Class A
Invested Amount and its right to receive interest
payments in respect of the Class A Invested Amount held
by such Class A Certificateholder.
Section 6.16 Additional Class B Invested
Amounts.
On each Distribution Date while any Series
1997-1 Certificates are outstanding, the Transferor may
elect to increase the Class B Invested Amount and after
the Pay Out Commencement Date the Transferor agrees to
increase the Class B Invested Amount (such additional
amounts, "Additional Class B Invested Amounts") by
written notice to the Trustee on such date which notice
shall specify the effective date and the amount of such
increase in the Class B Invested Amount; provided,
however, that if such an increase in the Class B Invested
Amount would cause a Trust Pay Out Event or a Series
1997-1 Pay Out Event to occur, then the amount of the
increase in the Class B Invested Amount shall be limited
on such Business Day to the maximum increase in the Class
B Invested Amount that may be obtained without causing
either a Trust Pay Out Event or a Series 1997-1 Pay Out
Event to occur; provided further, that in no case shall
the Class B Invested Amount be increased above the Class
B Maximum Required Amount; and provided further that no
such increase in the Class B Invested Amount shall be
permitted under this Section 6.16 unless: (i) after
giving effect to the proposed increase in Class B
Invested Amount the Transferor Interest shall equal or
exceed the Minimum Transferor Interest and (ii) no Series
1997-1 Pay Out Event will occur as a result of such
increase in the Class B Invested Amount. The Transferor
agrees that, subject to satisfaction of the conditions
specified above, (i) the Transferor shall increase the
Class B Invested Amount on each Distribution Date after
the Pay Out Commencement Date by an amount equal to the
reduction of the invested amount of the Series 1994-1
Certificates on each such Distribution Date and (ii) on
the Business Day on which the aggregate invested amounts
of the Class A, Class B and Class C Investor Certificates
of Series 1994-1 are paid in full, the Transferor shall
increase the Class B Invested Amount by an amount equal
to the invested amount of the Series 1994-1 Class D
Investor Certificates on such Business Day and shall
cancel such Series 1994-1 Class D Investor Certificates
concurrently with such increase of the Class B Invested
Amount; provided, however, that in no event shall the
Transferor be required to increase the Class B Invested
Amount to an amount in excess of the lesser of (x) 30% of
the sum of the Class A Invested Amount and the Class B
Invested Amount and (y) the amount of Class B Invested
Amount relative to the then outstanding Class A Invested
Amount which is required by Standard & Poor's or βββββ'β
to satisfy the Minimum Rating Condition or, if such
rating shall be higher, to maintain the then current
rating of the Class A Certificates.
Section 6.17 Extension. (a) If a Pay Out
Event has not occurred on or before the 30th Business Day
preceding the Extension Date, the Transferor, in its sole
discretion, may deliver to the Trustee on or before such
date a notice substantially in the form of Exhibit E (the
"Extension Notice") to this Series Supplement. The
Trustee shall deliver a copy of the Extension Notice and
all documents annexed thereto to the Investor
Certificateholders of record on the date of receipt
thereof. The Transferor shall state in the Extension
Notice that it intends to extend the Revolving Period
until the later Amortization Period Commencement Date set
forth in the Extension Notice. The Extension Notice
shall also set forth the next Extension Date. The
following documents shall be annexed to the Extension
Notice: (i) a form of the Opinion of Counsel addressed
to the Transferor and the Trustee to the effect that
despite the extension the Trust will not be treated as an
association taxable as a corporation (the "Extension Tax
Opinion"); (ii) a form of the Opinion of Counsel
addressed to the Transferor and the Trustee (the
"Extension Opinion") to the effect that (A) the
Transferor has the corporate power and authority to
effect the Extension, (B) the extension has been duly
authorized by the Transferor, and (C) all conditions
precedent to the Extension required by this Section 6.17
have been fulfilled; and (iii) a form of Investor
Certificateholder Election Notice substantially in the
form of Exhibit F (the "Election Notice") to this Series
Supplement. In addition, the Extension Notice shall
state that any Investor Certificateholder electing to
approve the Extension must do so on or before the
Election Date (as defined below) by returning the annexed
Election Notice properly executed to the Trustee in the
manner described below. The Extension Notice shall also
state that an Investor Certificateholder may withdraw any
such election in whole or in part on or before the
Election Date, and the Transferor, in its sole
discretion, may, prior to the Election Date, withdraw its
election to extend the Revolving Period. Any Holder that
elects to approve an Extension hereunder shall deliver a
duly executed Election Notice to the Trustee at the
address designated in the Extension Notice on or before
3:00 p.m., New York City time, on or before the fifth
Business Day preceding the Extension Date (such Business
Day constituting the "Election Date").
(b) No extension shall occur unless each of
the following conditions have been satisfied prior to the
close of business on the Election Date: (i) no Pay Out
Event shall have occurred and be continuing, (ii) there
shall have been delivered to the Trustee (A) the
Extension Tax Opinion and the Extension Opinion, each
addressed to the Trustee and (B) written confirmation
from each Rating Agency rating any class of the
Certificates at the request of the Transferor at the time
of such Extension that the Extension will not cause such
Rating Agency to lower or withdraw its then current
rating of such Investor Certificates, (iii) each of the
holders of the Class A Certificates and the Class B
Certificates, shall have elected to approve the Extension
by returning to the Trustee on or before the Election
Date the executed Election Notice annexed to the
Extension Notice delivered to the Certificateholders
pursuant to subsection 6.17(a) of the Agreement. If, by
the close of business on the Election Date, all of the
conditions stated in this subsection 6.17(b) of the
Agreement have not been satisfied and all such documents
delivered to the Trustee pursuant to this subsection
6.17(b) of the Agreement are not in form satisfactory to
it, or if the Transferor has notified the Trustee, prior
to the Election Date, that the Transferor has exercised
its right to withdraw its election of an Extension, no
Extension shall occur.
(c) The execution by the required number of
Investor Certificateholders of the applicable Election
Notice and return thereof to the Trustee by the required
date and time, the continued election by the Transferor
to extend the Revolving Period at the Election Date, and
the compliance with all of the provisions of this Section
6.17, shall evidence an extension or renewal of the
obligations represented by the Investor Certificates, and
not a novation or extinguishment of such obligations or a
substitution with respect thereto.
(d) To the extent required by applicable laws
and regulations, as evidenced by an Opinion of Counsel
delivered by the Transferor to the Trustee, the
provisions of this Section 6.17 shall or may be modified
to comply with all applicable laws and regulations in
effect at the time of the Extension.
SECTION 9. Series 1997-1 Pay Out Events. If
any one of the following events shall occur with respect
to the Series 1997-1 Certificates:
(a) failure on the part of the Transferor
(i) to make any payment or deposit required to be made by
the Transferor by the terms of (A) the Agreement or (B)
this Series Supplement, on or before the date occurring
five Business Days after the date such payment or deposit
is required to be made herein, (ii) to perform in all
material respects the Transferor's covenant not to sell,
pledge, assign, or transfer to any person, or grant any
unpermitted lien on, any Receivable, except as expressly
provided in the Agreement; or (iii) duly to observe or
perform in any material respect any covenants or
agreements of the Transferor set forth in the Agreement
or this Series Supplement, which failure has a material
adverse effect on the Series 1997-1 Certificateholders
and which continues unremedied for a period of 60 days
after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given
to the Transferor by the Trustee, or to the Transferor
and the Trustee by the Holders of Series 1997-1
Certificates evidencing Undivided Interests aggregating
not less than 50% of any of the Class A Invested Amount
or the Class B Invested Amount, and continues to affect
materially and adversely the interests of the Series
1997-1 Certificateholders for such period;
(b) any representation or warranty made
by the Transferor in the Agreement or this Series
Supplement, (i) shall prove to have been incorrect in any
material respect when made, which continues to be
incorrect in any material respect for a period of 60 days
after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given
to the Transferor by the Trustee, or to the Transferor
and the Trustee by the Holders of the Series 1997-1
Certificates evidencing Undivided Interests aggregating
more than 50% of any of the Class A Invested Amount or
the Class B Invested Amount, and (ii) as a result of
which the interests of the Series 1997-1
Certificateholders are materially and adversely affected
and continue to be materially and adversely affected for
such period; provided, however, that a Series 1997-1 Pay
Out Event pursuant to this subsection 8(b) shall not be
deemed to have occurred hereunder if the Transferor has
accepted reassignment of the related Receivable, or all
of such Receivables, if applicable, during such period in
accordance with the provisions of the Agreement;
(c) the average of the Portfolio Yields
for any three consecutive Monthly Periods is reduced to a
rate which is less than the weighted average of the
weighted average Base Rates for such three consecutive
Monthly Periods;
(d) (i) the Transferor Interest shall be
less than the Minimum Transferor Interest, (ii) (A) the
Series Allocation Percentage of the sum of the total
amount of Principal Receivables plus amounts on deposit
in the Excess Funding Account shall be less than (B) the
sum of the Class A Outstanding Principal Amount and the
Class B Outstanding Principal Amount or (iii) the total
amount of Principal Receivables and the amount on deposit
in the Excess Funding Account shall be less than the
Minimum Aggregate Principal Receivables, in each case as
of any Determination Date;
(e) any Servicer Default shall occur
which would have a material adverse effect on the Series
1997-1 Certificateholders; or
(f) the amount on deposit in the Excess
Funding Account as a percentage of the sum of the
aggregate amount of Principal Receivables plus the amount
on deposit in the Excess Funding Account shall equal or
exceed 30% on the last day of three consecutive Monthly
Periods;
then, in the case of any event described in subparagraph
(a), (b) or (e), after the applicable grace period, if
any, set forth in such subparagraphs, the Holders of
Series 1997-1 Certificates evidencing Undivided Interests
aggregating more than 50% of any of the Class A Invested
Amount or the Class B Invested Amount by notice then
given in writing to the Trustee, the Transferor and the
Servicer may declare that a pay out event (a "Series
1997-1 Pay Out Event") has occurred as of the date of
such notice, and in the case of any event described in
subparagraphs (c), (d) or (f), a Series 1997-1 Pay Out
Event shall occur without any notice or other action on
the part of the Trustee or the Series 1997-1
Certificateholders immediately upon the occurrence of
such event.
SECTION 10. Series 1997-1 Termination. The
right of the Series 1997-1 Certificateholders to receive
payments from the Trust will terminate on the first
Business Day following the Series 1997-1 Termination Date
unless such Series is an Affected Series as specified in
Section 12.1(c) of the Agreement and the sale
contemplated therein has not occurred by such date, in
which event the Series 1997-1 Certificateholders shall
remain entitled to receive proceeds of such sale when
such sale occurs.
SECTION 11. Class A Pre-Payment. (a) The
Holder of the Exchangeable Transferor Certificate may
specify upon an Exchange, pursuant to Section 6.9 of the
Agreement, that the purchaser of a newly issued Series
deposit payment therefor, in full or in part, in the
Defeasance Account in an amount not to exceed the
Invested Amount on such date. On the Closing Date the
Trustee shall, for the benefit of the Certificateholders,
establish and maintain with a Qualified Institution in
the name of the Trust, a certain segregated trust account
(the "Defeasance Account"). Any amounts on deposit in
the Defeasance Account on any Business Day shall be
invested at the direction of the Servicer in Cash
Equivalents which mature on the next succeeding Business
Day. On each Business Day following a deposit of funds
to the Defeasance Account, the aggregate proceeds of any
such investment shall be deposited in the Collection
Account and treated as Investment Proceeds for
application as Available Series 1997-1 Imputed Yield
Collections.
(b) Upon the direction of the Servicer
any amounts, up to the Invested Amount, on deposit in the
Defeasance Account may, or upon the occurrence of a Pay
Out Event the amount on deposit in the Defeasance Account
shall, be deposited in the Principal Account for
distribution on a date to be specified by the Transferor
(which shall not be later than the Distribution Date in
the next succeeding Monthly Period) to be applied
first to the payment of Class A Principal and second to
the payment of Class B Principal. Such amounts shall be
applied and paid in accordance with Sections 4.7, 4.12
and 5.1 of the Agreement. In the event the date of
payment of such amounts is not a Distribution Date, a
Certificateholder may provide to the Trustee and the
Servicer within 30 days of such payment a written
certificate setting forth any reasonable loss or expense
that such Certificateholder sustained or incurred as a
consequence of such payment being made on a date other
than a Distribution Date (with respect to the Class A
Certificates, "Class A Breakage Costs") and an amount
equal to the Class A Breakage Costs shall be paid to
Class A Certificateholders to the extent of funds
available therefor pursuant to subsection 4.9(a)(viii) of
the Agreement and as further specified in Section 4.11
and subsection 5.1(a) of the Agreement. Subsequent to
any reduction of the Class A Invested Amount as a result
of payments pursuant to this Section 11, the Class A
Invested Amount may be increased pursuant to the terms
and conditions set forth in Section 6.15 of the
Agreement.
SECTION 12. Legends; Transfer and Exchange;
Restrictions on Transfer of Series 1997-1 Certificates;
Tax Treatment.
(a) Each Class A Certificate will bear a
legend substantially in the following form:
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAW. THE HOLDER HEREOF, BY PURCHASING
THIS CERTIFICATE, AGREES THAT THIS CERTIFICATE MAY
BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES
ACT AND OTHER APPLICABLE LAWS AND ONLY PURSUANT TO
RULE 144A UNDER THE SECURITIES ACT TO AN
INSTITUTIONAL INVESTOR THAT THE HOLDER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN
THE MEANING OF RULE 144A ("QIB") PURCHASING FOR ITS
OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF A
QIB, WHOM THE HOLDER HAS INFORMED, IN EACH CASE,
THAT THE REOFFER, RESALE, PLEDGE OR OTHER TRANSFER
IS BEING MADE IN RELIANCE ON RULE 144A, OR TO THE
TRANSFEROR. EACH CERTIFICATE OWNER BY ACCEPTING A
BENEFICIAL INTEREST IN THIS CERTIFICATE IS DEEMED TO
REPRESENT THAT IT IS A QIB PURCHASING FOR ITS OWN
ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF
ANOTHER QIB. THE TRANSFER OF THIS CERTIFICATE IS
SUBJECT TO CERTAIN CONDITIONS SET FORTH IN THE
POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
NO SALE, ASSIGNMENT, PARTICIPATION, PLEDGE,
HYPOTHECATION, TRANSFER OR OTHER DISPOSITION OF A
CLASS A CERTIFICATE (OR ANY INTEREST THEREIN) SHALL
BE MADE UNLESS THE TRANSFEROR SHALL HAVE GRANTED ITS
PRIOR CONSENT THERETO, WHICH CONSENT MAY NOT BE
UNREASONABLY WITHHELD. NOR MAY AN INTEREST IN THIS
CERTIFICATE BE MARKETED, ON OR THROUGH AN
"ESTABLISHED SECURITIES MARKET" WITHIN THE MEANING
OF SECTION 7704(B)(1) OF THE CODE AND ANY PROPOSED,
TEMPORARY OR FINAL TREASURY REGULATION THEREUNDER,
INCLUDING, WITHOUT LIMITATION, AN OVER-THE-COUNTER-
MARKET OR AN INTERDEALER QUOTATION SYSTEM THAT
REGULARLY DISSEMINATES FIRM BUY OR SELL QUOTATIONS.
(b) Each Class A Certificate and Class B
Certificate will bear a legend substantially in the
following form:
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE
BENEFIT OF FINGERHUT RECEIVABLES, INC. THAT, UNLESS
SUCH PURCHASER, AT ITS EXPENSE, DELIVERS TO THE
TRUSTEE, THE SERVICER AND THE TRANSFEROR AN OPINION
OF COUNSEL SATISFACTORY TO THEM TO THE EFFECT THAT
THE PURCHASE OR HOLDING OF A CLASS A CERTIFICATE OR
CLASS B CERTIFICATE BY SUCH PURCHASER WILL NOT
RESULT IN THE ASSETS OF THE TRUST BEING DEEMED TO BE
"ASSETS OF THE BENEFIT PLAN" AND SUBJECT TO THE
PROHIBITED TRANSACTION PROVISIONS OF ERISA AND THE
CODE AND WILL NOT SUBJECT THE TRUSTEE, THE
TRANSFEROR OR THE SERVICER TO ANY OBLIGATION IN
ADDITION TO THOSE UNDERTAKEN IN THE POOLING AND
SERVICING AGREEMENT, SUCH PURCHASER IS NOT (I) AN
EMPLOYEE BENEFIT PLAN (AS DEFINED IN SECTION 3(3) OF
THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974,
AS AMENDED ("ERISA")) THAT IS SUBJECT TO THE
PROVISIONS OF TITLE I OF ERISA, (II) A PLAN
DESCRIBED IN SECTION 4975(E)(1) OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), (III)
A GOVERNMENTAL PLAN, AS DEFINED IN SECTION 3(32) OF
ERISA, SUBJECT TO ANY FEDERAL, STATE, OR LOCAL LAW
WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO THE
PROVISIONS OF SECTION 406 OF ERISA OR SECTION 4975
OF THE CODE, (IV) AN ENTITY WHOSE UNDERLYING ASSETS
INCLUDE PLAN ASSETS BY REASON OF A PLAN'S INVESTMENT
IN THE ENTITY OR (V) A PERSON INVESTING "PLAN
ASSETS" OF ANY SUCH PLAN (INCLUDING FOR PURPOSES OF
CLAUSES (IV) AND (V), ANDY INSURANCE COMPANY GENERAL
ACCOUNT, BUT EXCLUDING ANY ENTITY REGISTERED UNDER
THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED).
(c) Each Class B Certificate will bear a
legend substantially in the following form:
THIS CERTIFICATE (OR ITS PREDECESSOR) WAS
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"). THIS CERTIFICATE
HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR
ANY APPLICABLE STATE SECURITIES LAW OF ANY STATE AND
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED UNLESS REGISTERED PURSUANT TO OR EXEMPT
FROM REGISTRATION UNDER THE SECURITIES ACT AND ANY
OTHER APPLICABLE SECURITIES LAW. FINGERHUT
RECEIVABLES, INC. SHALL BE PROHIBITED FROM
TRANSFERRING ANY INTEREST IN OR PORTION OF THIS
CERTIFICATE UNLESS, PRIOR TO SUCH TRANSFER, IT SHALL
HAVE DELIVERED TO THE TRUSTEE AN OPINION OF COUNSEL
TO THE EFFECT THAT SUCH PROPOSED TRANSFER WILL NOT
ADVERSELY AFFECT THE FEDERAL INCOME TAX
CHARACTERIZATION OF ANY OUTSTANDING SERIES OF
INVESTOR CERTIFICATES. THE TRANSFER OF THIS
CERTIFICATE IS SUBJECT TO CERTAIN CONDITIONS SET
FORTH IN THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN.
NO SALE, ASSIGNMENT, PARTICIPATION, PLEDGE,
HYPOTHECATION, TRANSFER OR OTHER DISPOSITION OF A
CLASS B CERTIFICATE (OR ANY INTEREST THEREIN) SHALL
BE MADE UNLESS THE TRANSFEROR SHALL HAVE GRANTED ITS
PRIOR CONSENT THERETO, WHICH CONSENT MAY NOT BE
UNREASONABLY WITHHELD. NOR MAY AN INTEREST IN THIS
CERTIFICATE BE MARKETED, ON OR THROUGH AN
"ESTABLISHED SECURITIES MARKET" WITHIN THE MEANING
OF SECTION 7704(B)(1) OF THE CODE AND ANY PROPOSED,
TEMPORARY OR FINAL TREASURY REGULATION THEREUNDER,
INCLUDING, WITHOUT LIMITATION, AN OVER-THE-COUNTER-
MARKET OR AN INTERDEALER QUOTATION SYSTEM THAT
REGULARLY DISSEMINATES FIRM BUY OR SELL QUOTATIONS.
(d) Upon surrender for registration of
transfer of a Class A Certificate or Class B Certificate
at the office of the Transfer Agent and Registrar,
accompanied by a certification by the potential purchase
substantially in the form attached as Exhibit D executed
by such purchaser or by such purchaser's attorney
thereunto duly authorized in writing, such Class A
Certificate or Class B Certificate shall be transferred
upon the register, and the Transferor shall execute, and
the Trustee shall authenticate and deliver, in the name
of the designated transferees one or more new registered
Class A Certificates or Class B Certificates of any
authorized denominations and of a like aggregate
principal amount and tenor. Transfers and exchanges of
Class A Certificates and Class B Certificates shall be
subject to the restrictions set forth in this Section 12,
to such restrictions as shall be set forth in the text of
the Class A Certificates and Class B Certificates and
such reasonable regulations as may be prescribed by the
Transferor. Successive registrations and registrations
of transfers as aforesaid may be made from time to time
as desired, and each such registration shall be noted on
the register.
(e) The Transferor shall be prohibited
from transferring any interest in or portion of the Class
B Certificate unless, prior to such Transfer, it shall
have delivered to the Trustee an Opinion of Counsel to
the effect that such proposed Transfer will not adversely
affect the Federal income tax characterization of any
outstanding Series of Investor Certificates. In no event
shall any interest in or portion of the Class B
Certificate be transferred to Fingerhut. Prior to the
transfer of any interest in the Class B Certificate by
the Transferor the conditions specified in Section 13 of
this Series Supplement must be satisfied.
(f) No transfer of a Class A Certificate
or Class B Certificate will be permitted to be made to a
Benefit Plan unless such Benefit Plan, at its expense,
delivers to the Trustee, the Servicer and the Transferor
an opinion of counsel satisfactory to them to the effect
that the purchase or holding of a Class A Certificate or
Class B Certificate by such Benefit Plan will not result
in the assets of the Trust being deemed to be "assets of
the Benefit Plan" and subject to the prohibited
transaction provisions of ERISA and the Code and will not
subject the Trustee, the Transferor or the Servicer to
any obligation in addition to those undertaken in the
Agreement. Unless such opinion is delivered, each person
acquiring a Class A Certificate or Class B Certificate or
the beneficial ownership of a Class A Certificate or
Class B Certificate will be deemed to represent to the
Trustee, the Transferor and the Servicer that it is not
(i) an employee benefit plan (as defined in Section 3(3)
of ERISA) that is subject to the provisions of Title I of
ERISA, (ii) a plan described in Section 4975(e)(1) of the
Code, (iii) a governmental plan, as defined in Section
3(32) of ERISA, subject to any federal, state or local
law which is, to a material extent, similar to the
provisions of Section 406 of ERISA or Section 4975 of the
Code, (iv) an entity whose underlying assets include plan
assets by reason of a plan's investment in the entity or
(v) a person investing "plan assets" of any such plan
(including for purposes of clauses (iv) and (v),
insurance company general account, but excluding any
entity registered under the Investment Company Act of
1940, as amended).
(g) The Class A Certificateholders shall
comply with their obligations under Section 3.7 of the
Agreement with respect to the tax treatment of the Class
A Certificates, except to the extent that a relevant
taxing authority has disallowed such treatment.
(h) In accordance with Section 6.2 of the
Agreement, no sale, assignment, participation, pledge,
hypothecation, transfer or other disposition of a Class A
Certificate or a Class B Certificate (or any interest
therein) shall be made unless the Transferor shall have
granted its prior consent thereto, which consent may not
be unreasonably withheld; provided, however, that for
purposes of this sentence, it shall in all cases be
reasonable for the Transferor to withhold consent to such
proposed sale, assignment, participation, pledge,
hypothecation, transfer or other disposition of all or
any part of a Class A Certificate or a Class B
Certificate (or any interest therein) if the transaction
would, if effected, give rise to any adverse tax
consequence, as determined in the sole and absolute
discretion of the Transferor.
(i) Each purchaser of an interest in a
Class A Certificate or a Class B Certificate shall
certify that it is a Person who is either (A)(i) a
citizen or resident of the United States, (ii) a
corporation or other entity organized in or under the
laws of the United States or any political subdivision
thereof or (iii) a Person not described in (i) or (ii)
whose ownership of the Class A Certificates or Class B
Certificates is effectively connected with a such
person's conduct of a trade or business within the United
States (within the meaning of the Code) and whose
ownership of any interest in a Class A Certificate or
Class B Certificate will not result in any withholding
obligation with respect to any payments with respect to
the Class A Certificates or Class B Certificates, as
applicable, by any Person or (B) an estate or trust the
income of which is includible in gross income for United
States federal income tax purposes. Each such purchaser
shall agree that if they are a Person described in clause
(A)(iii) above, they will furnish to the Person from whom
they are acquiring a Class A Certificate or Class B
Certificate, the Servicer and the Trustee, a properly
executed U.S. Internal Revenue Service Form 4224 and a
new Form 4224, or any successor applicable form, upon the
expiration or obsolescence of any previously delivered
form (and such other certifications, representations or
opinions of counsel as may be requested by the
Transferor, the Servicer or the Trustee).
(j) No subsequent transfer of a Class A
Certificate is permitted unless (i) such transfer is of a
Class A Certificate with a minimum principal amount of at
least $1,000,000 and (ii) the condition specified in
clause (h) above shall have been satisfied; provided,
that any attempted transfer that would cause the number
of Targeted Holders to exceed ninety-nine shall be void.
SECTION 13. Sale of Class B Certificates. The
Transferor may at any time, without the consent of the
Class A Certificateholders, (i) sell or transfer all or a
portion of the Class B Certificates in one or more
classes and (ii) in connection with any such sale or
transfer, enter into a supplemental agreement with the
Trustee or an amendment and restatement of this Series
Supplement pursuant to which the Transferor and the
Trustee may amend the Class B Certificate Rate, set forth
the amount of monthly interest due Class B
Certificateholders, provide for the payment of additional
amounts with respect to any shortfall in payments of such
Class B Interest and provide for such other provisions
with respect to the Class B Certificates as may be
specified in such agreement, provided that in each such
case (A) the Transferor shall have given notice to the
Trustee, the Servicer and any Rating Agencies then rating
the outstanding Class A Certificates at the request of
the Transferor of such proposed sale or transfer of the
Class B Certificates and such agreement at least five
Business Days prior to the consummation of such sale or
transfer and the execution of such proposed agreement;
(B) the Rating Agency Condition shall have been satisfied
prior to the consummation of such proposed sale or
transfer of Class B Certificates or the execution of such
agreement; (D) the Transferor shall have delivered an
Officer's Certificate, dated the date of the consummation
of such sale or transfer and the effectiveness of such
agreement, to the effect that, in the reasonable belief
of the Transferor, such action will not, based on the
facts known to such officer at the time of such
certification, cause a Pay Out Event to occur with
respect to any Series, and (E) the Transferor will have
delivered an Opinion of Counsel dated the date of such
sale or subdivision to the effect that (i) the
certificates issued and sold to third parties will be
characterized as indebtedness or an interest in a
partnership (not taxable as a corporation) for Federal
income tax purposes, (ii) the subdivision will not
adversely affect the Federal income tax characterization
of any outstanding Series of investor certificates or
outstanding Class of Series 1997-1 Certificates and (iii)
the subdivision will not be treated as a taxable sale,
exchange or other disposition for Federal income tax
purposes; provided, further, as a condition to the sale
or transfer of all or a portion of the Class B
Certificates the transferee shall be required to agree
not to institute against, or join any other Person in
instituting against, the Trust or the Transferor any
bankruptcy, reorganization, arrangement, insolvency or
liquidation proceeding, or other proceeding under any
federal or state bankruptcy or similar law, for one year
and one day after all Investor Certificates are paid in
full.
SECTION 14. Purchases of the Class A
Certificates by the Transferor. The Transferor may from
time to time, purchase Certificates on the secondary
market and request the Trustee to cancel such
Certificates held by the Transferor and reduce the
Invested Amount by a corresponding amount.
SECTION 15. Increased Costs. (a)
Notwithstanding any other provision herein, if after the
Closing Date), any change in applicable law or regulation
or in the interpretation or administration thereof by any
Governmental Authority charged with the interpretation or
administration thereof (whether or not having the force
of law) shall change the basis of taxation of payments to
any Class A Certificateholder that is a commercial bank
or controlled by a commercial bank of the principal of or
interest on any Class A Certificate (other than changes
in respect of taxes imposed on the overall net income of
such Class A Certificateholder by the jurisdiction in
which such Class A Certificateholder has its principal
office or by any political subdivision or taxing
authority therein), or shall impose, modify or deem
applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the
account of or credit extended by such Class A
Certificateholder, or shall impose on such Class A
Certificateholder or the London interbank market any
other condition affecting this Series Supplement or any
Class A Certificate owned by such Class A
Certificateholder, and the result of any of the foregoing
shall be to increase the cost to such Class A
Certificateholder of holding any Class A Certificate or
to reduce the amount of any sum received or receivable by
such Class A Certificateholder hereunder (whether of
principal or interest) in respect thereof by an amount
deemed by such Class A Certificateholder to be material,
then the Trustee will pay to such Class A
Certificateholder upon demand such additional amount or
amounts as will compensate such Class A Certificateholder
for such additional costs incurred or reduction suffered.
Any Class A Certificateholder claiming any additional
amounts payable pursuant to this Section 15 shall use
reasonable efforts (consistent with legal and regulatory
restrictions) to file any certificate or document
requested by the Transferor or the Trustee or to change
the jurisdiction of its applicable lending office if the
making of such a filing or change would avoid the need
for or reduce the amount of any additional amount which
may thereafter accrue and would not, in the sole
determination of such Class A Certificateholder, be
otherwise disadvantageous to such Class A
Certificateholder.
(b) If any Class A Certificateholder that
is a commercial bank or controlled by a commercial bank
shall have determined that the adoption after the Closing
Date of any other law, rule, regulation or guideline
regarding capital adequacy, or any change in any of the
foregoing or in the interpretation or administration of
any of the foregoing by any Governmental Authority,
central bank or comparable agency charged with the
interpretation or administration thereof, or compliance
by any such Class A Certificateholder (or any lending
office of such Class A Certificateholder) or any such
Class A Certificateholder's holding company with any
request or directive regarding capital adequacy (whether
or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the
effect of reducing the rate of return on such Class A
Certificateholder's capital or on the capital of such
Class A Certificateholder's holding company, if any, as a
consequence of this Series Supplement or the Class A
Certificates owned by such Class A Certificateholder to a
level below that which such Class A Certificateholder or
such Class A Certificateholder's holding company could
have achieved but for such adoption, change or compliance
(taking into consideration such Class A Certificate-
holder's policies and the policies of such Class A
Certificateholder's holding company with respect to such
capital adequacy) by an amount deemed by such Class A
Certificateholder to be material, then from time to time
the Trustee shall pay to such Class A Certificateholder
such additional amount or amounts as will compensate such
Class A Certificateholder or such Trustee's holding
company for any such reduction suffered after the date
hereof.
(c) A certificate of a Class A
Certificateholder setting forth such amount or amounts,
along with such Class A Certificateholder's method of
computation of such amounts, as shall be necessary to
compensate such Class A Certificateholder as specified in
paragraph (a) or (b) above, as the case may be, shall be
delivered to the Trustee and the Servicer and shall be
conclusive absent manifest error. The Trustee shall pay
each Class A Certificate- holder the amount shown as due
on any such certificate delivered by it on the
Distribution Date immediately succeeding the Monthly
Period in which such certificate is delivered; provided
however, that the amounts owing by the Trustee pursuant
to this Section 15 shall be payable solely from amounts
available therefor pursuant to subsections 4.9(a)(viii)
of the Agreement.
(d) Failure on the part of any eligible
Class A Certificateholder to demand compensation for any
increased costs or reduction in amounts received or
receivable or reduction in return on capital with respect
to any period shall not constitute a waiver of such Class
A Certificateholder's right to demand compensation with
respect to such period or any other period; provided,
however, that no Class A Certificateholder shall be
entitled to compensation for any such increased costs or
reductions unless it shall have submitted a certificate
under subsection 15(c) of this Series Supplement with
respect thereto not more than 90 days after the date that
such Class A Certificateholder knows that such increased
costs have been incurred or such reduction suffered.
Notwithstanding any other provision of this Section 15,
no Class A Certificateholder shall demand compensation
for any increased cost or reduction referred to above if
it shall not at the time be the general policy of such
Class A Certificateholder to demand such compensation in
similar circumstances under comparable provisions of
credit or other similar agreements, and each Class A
Certificateholder shall in good faith endeavor to
allocate increased costs or reductions fairly among all
of its affected commitments and credit extensions
(whether or not it seeks compensation from all affected
borrowers). The protection of this Section 15 shall be
available to each Class A Certificateholder that is a
commercial bank or controlled by a commercial bank
regardless of any possible contention of the invalidity
or inapplicability of the law, rule, regulation,
guideline or other change or condition which shall have
occurred or been imposed.
SECTION 16. Replacement of Certain Investor
Certificateholders. In the event that (i) a Class A
Certificateholder requests compensation pursuant to
Section 15 of this Series Supplement, (ii) a Holder of
Investor Certificates (a "Non-Consenting Holder") does
not consent to an amendment, supplement, waiver or other
modification with respect to this Series Supplement or to
the Agreement, as provided in Section 20 of this Series
Supplement within the time period specified for delivery
of such consent pursuant to the documentation associated
therewith and the amendment, supplement, waiver or other
modification is not approved in accordance with said
Section 20 of this Series Supplement, or (iii) an
Investor Certificateholder fails to approve any Extension
requested by the Transferor pursuant to Section 6.17 of
the Agreement, the Transferor shall have the right to
replace such Holder with a Person or Persons meeting the
requirements of Section 12 of this Series Supplement, by
giving three Business Days prior written notice to the
Trustee and such Holder, specifying the date on which
such Holder s Certificates shall be transferred;
provided, however that, (a) such transfer shall not
conflict with any law, rule or regulation or order of any
court or other Governmental Authority, and (b) in the
case of clause (ii) above, all Non-Consenting Holders
with respect to any one proposed amendment, supplement,
waiver or other modification or Extension must be
concurrently replaced in accordance with this Section 16.
In the event of the replacement of an Investor
Certificateholder, such Investor Certificateholder agrees
to assign, without recourse, its rights and obligations
hereunder to a replacement Holder selected by the
Transferor upon payment by the replacement Holder to such
Investor Certificateholder in immediately available funds
of the principal amount of such Investor
Certificateholder's outstanding Certificates and any
interest accrued and unpaid thereon and all other amounts
owing to such Investor Certificateholder hereunder and to
execute and/or deliver any certification or other
document required to be delivered pursuant to Section 12
of this Series Supplement.
SECTION 17. FCI Note. The Transferor has
received a note from Fingerhut Companies, Inc. in the
amount of $18,000,000 (such note, together with any
additional notes of Fingerhut Companies, Inc. held by the
Transferor at any time, the "FCI Note"). The Transferor
hereby agrees that at no time shall aggregate the
principal amount of the FCI Note be less than $1,000,000
(the "FCI Note Required Amount"). The FCI Note may not
be sold, transferred, assigned, pledged, hypothecated,
participated or otherwise conveyed or encumbered, nor may
the Transferor grant any security interest in the FCI
Note.
SECTION 18. GOVERNING LAW. THIS SERIES
SUPPLEMENT 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 19. Instructions in Writing. All
instructions or other communications given by the
Servicer or any other person to the Trustee pursuant to
this Series Supplement shall be in writing, and, with
respect to the Servicer, may be included in a Daily
Report or Settlement Statement.
SECTION 20. Amendments. Solely with respect
to any amendment pursuant to Section 13.1(b) of the
Agreement and any consent required pursuant thereto from
the Holders of Investor Certificates of Series 1997-1,
this Series Supplement and the Agreement may be amended
from time to time by the Servicer, the Transferor and the
Trustee with the consent of the Holders of Investor
Certificates evidencing Undivided Interests aggregating
not less than 66 2/3% of the Invested Amount of the
Series 1997-1 Certificates and (y) not less than 51% of
the Class A Invested Amount to the extent that such Class
would be adversely affected, for the purpose of adding
any provisions to or changing in any manner or
eliminating any of the provisions of this Series
Supplement or the Agreement or of modifying in any manner
the rights of the Certificateholders of any Class of the
Series 1997-1 Certificates then issued and outstanding;
provided, however, that no such amendment under this
Section 20 shall (i) reduce in any manner the amount of,
or delay the timing of, distributions which are required
to be made on any Investor Certificate of such Class
without the consent of all of the related Investor
Certificateholders; (ii) change the definition of or the
manner of calculating the interest of any Investor
Certificate of such Class without the consent of the
related Investor Certificateholders or (iii) reduce the
aforesaid percentage required to consent to any such
amendment, in each case without the consent of all such
Investor Certificateholders.
SECTION 21. Ratification of Agreement. (a) As
supplemented by this Series Supplement, the Agreement is
in all respects ratified and confirmed and the Agreement
as so supplemented by this Series Supplement shall be
read, taken, and construed as one and the same
instrument.
(b) For so long as any of the Class A
Certificates are outstanding, each of the Transferor, the
Servicer and the Trustee agree to cooperate with each
other to provide to any Class A Certificateholder and to
any prospective purchaser of Class A Certificates
designated by such a Class A Certificateholder upon the
request of such Class A Certificateholder or prospective
purchaser, any information required to be provided to
such holder or prospective purchaser to satisfy the
condition set forth in Rule 144A(d)(4) under the
Securities Act.
SECTION 22. Counterparts. This Series
Supplement may be executed in any number of counterparts,
each of which so executed shall be deemed to be an
original, but all of such counterparts shall together
constitute but one and the same instrument.
IN WITNESS WHEREOF, the Transferor, the
Servicer and the Trustee have caused this Series 1997-1
Supplement to be duly executed by their respective
officers as of the day and year first above written.
FINGERHUT RECEIVABLES, INC.
Transferor
By:/s/ βββββ β. βββββββ
----------------------------
Name: βββββ β. βββββββ
Title: Vice President,
Assistant Treasurer
FINGERHUT NATIONAL BANK
Servicer
By:/s/ βββββ β. ββββββ
---------------------------
Name: βββββ β. ββββββ
Title: Chief Executive Officer
THE BANK OF NEW YORK (DELAWARE)
Trustee
By:/s/ ββββββ β. βββββ
---------------------------
Name: ββββββ β. βββββ
Title: Assistant Vice President
Exhibit A
[FORM OF CLASS A VARIABLE FUNDING CERTIFICATE]
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAW. THE HOLDER HEREOF, BY PURCHASING
THIS CERTIFICATE, AGREES THAT THIS CERTIFICATE MAY
BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES
ACT AND OTHER APPLICABLE LAWS AND ONLY PURSUANT TO
RULE 144A UNDER THE SECURITIES ACT TO AN
INSTITUTIONAL INVESTOR THAT THE HOLDER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN
THE MEANING OF RULE 144A ("QIB") PURCHASING FOR ITS
OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF A
QIB, WHOM THE HOLDER HAS INFORMED, IN EACH CASE,
THAT THE REOFFER, RESALE, PLEDGE OR OTHER TRANSFER
IS BEING MADE IN RELIANCE ON RULE 144A, OR TO THE
TRANSFEROR. EACH CERTIFICATE OWNER BY ACCEPTING A
BENEFICIAL INTEREST IN THIS CERTIFICATE IS DEEMED TO
REPRESENT THAT IT IS A QIB PURCHASING FOR ITS OWN
ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF
ANOTHER QIB. THE TRANSFER OF THIS CERTIFICATE IS
SUBJECT TO CERTAIN CONDITIONS SET FORTH IN THE
POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
NO SALE, ASSIGNMENT, PARTICIPATION, PLEDGE,
HYPOTHECATION, TRANSFER OR OTHER DISPOSITION OF A
CLASS A CERTIFICATES (OR ANY INTEREST THEREIN) SHALL
BE MADE UNLESS THE TRANSFEROR SHALL HAVE GRANTED ITS
PRIOR CONSENT THERETO, WHICH CONSENT MAY NOT BE
UNREASONABLY WITHHELD. NOR MAY AN INTEREST IN THIS
CERTIFICATE BE MARKETED ON OR THROUGH AN
"ESTABLISHED SECURITIES MARKET" WITHIN THE MEANING
OF SECTION 7704(B)(1) OF THE CODE AND ANY PROPOSED,
TEMPORARY OR FINAL TREASURY REGULATION THEREUNDER,
INCLUDING, WITHOUT LIMITATION, AN OVER-THE-COUNTER-
MARKET OR AN INTERDEALER QUOTATION SYSTEM THAT
REGULARLY DISSEMINATES FIRM BUY OR SELL QUOTATIONS.
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE
BENEFIT OF FINGERHUT RECEIVABLES, INC. THAT, UNLESS
SUCH PURCHASER, AT ITS EXPENSE, DELIVERS TO THE
TRUSTEE, THE SERVICER AND THE TRANSFEROR AN OPINION
OF COUNSEL SATISFACTORY TO THEM TO THE EFFECT THAT
THE PURCHASE OR HOLDING OF A CLASS A CERTIFICATE OR
CLASS B CERTIFICATE BY SUCH PURCHASER WILL NOT
RESULT IN THE ASSETS OF THE TRUST BEING DEEMED TO BE
"ASSETS OF THE BENEFIT PLAN" AND SUBJECT TO THE
PROHIBITED TRANSACTION PROVISIONS OF ERISA AND THE
CODE AND WILL NOT SUBJECT THE TRUSTEE, THE
TRANSFEROR OR THE SERVICER TO ANY OBLIGATION IN
ADDITION TO THOSE UNDERTAKEN IN THE POOLING AND
SERVICING AGREEMENT, SUCH PURCHASER IS NOT (I) AN
EMPLOYEE BENEFIT PLAN (AS DEFINED IN SECTION 3(3) OF
THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974,
AS AMENDED ("ERISA")) THAT IS SUBJECT TO THE
PROVISIONS OF TITLE I OF ERISA, (II) A PLAN
DESCRIBED IN SECTION 4975(E)(1) OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), (III)
A GOVERNMENTAL PLAN, AS DEFINED IN SECTION 3(32) OF
ERISA, SUBJECT TO ANY FEDERAL, STATE, OR LOCAL LAW
WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO THE
PROVISIONS OF SECTION 406 OF ERISA OR SECTION 4975
OF THE CODE, (IV) AN ENTITY WHOSE UNDERLYING ASSETS
INCLUDE PLAN ASSETS BY REASON OF A PLAN'S INVESTMENT
IN THE ENTITY OR (V) A PERSON INVESTING "PLAN
ASSETS" OF ANY SUCH PLAN (INCLUDING FOR PURPOSES OF
CLAUSES (IV) AND (V), ANDY INSURANCE COMPANY GENERAL
ACCOUNT, BUT EXCLUDING ANY ENTITY REGISTERED UNDER
THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED).
No. _____ Percentage Interest: ___%
FINGERHUT MASTER TRUST
VARIABLE FUNDING TRUST
CERTIFICATE, SERIES 1997-1, CLASS A
Evidencing an undivided interest in a trust,
the corpus of which consists of receivables generated
from time to time in the ordinary course of business from
a portfolio of installment sale contracts or loans
generated or to be generated by Fingerhut Corporation
("Fingerhut") or Fingerhut National Bank (the "Bank" or
the "Servicer") and other assets and interests
constituting the Trust under the Agreement described
below.
(Not an interest in or a recourse obligation
of Fingerhut Receivables, Inc., Fingerhut, the Bank or
any affiliate thereof.)
This certifies that _________ (the
"Certificateholder") is the registered owner of a
fractional undivided interest in the Fingerhut Master
Trust (the "Trust") issued pursuant to the Amended and
Restated Pooling and Servicing Agreement, dated as of
January 12, 1997 (the "Pooling and Servicing Agreement";
such term to include any amendment thereto) by and
between Fingerhut Receivables, Inc., as Transferor (the
"Transferor"), the Bank, as Servicer, and The Bank of New
York (Delaware), as Trustee (the "Trustee"), and the
Series 1997-1 Supplement, dated as of January 21, 1997
(the "Series 1997-1 Supplement"), among the Transferor,
the Bank as Servicer and the Trustee (the Pooling and
Servicing Agreement, as supplemented by the Series 1997-1
Supplement, is herein referred to as the "Agreement").
The corpus of the Trust consists of all of the
Transferor's right, title and interest in, to and under
the Trust Property (as defined in the Agreement) and
Section 4.4 of the Agreement.
This Certificate does not purport to summarize
the Agreement and reference is made to the Agreement for
information with respect to the interests, rights,
benefits, obligations, proceeds, and duties evidenced
hereby and the rights, duties and obligations of the
Trustee. To the extent not defined herein, the
capitalized terms used herein have the meanings ascribed
to them in the Agreement. This Certificate is one of a
Class of Certificates entitled the "Fingerhut Master
Trust Variable Funding Trust Certificates, Series 1997-1,
Class A" (the "Class A Certificates"), each of which
represents a fractional undivided interest in the Trust,
and is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which
Agreement, as amended from time to time, the
Certificateholder by virtue of the acceptance hereof
assents and by which the Certificateholder is bound. In
the case of any conflict between terms specified in this
Certificate and terms specified in the Agreement, as
amended from time to time, the terms of the Agreement
shall govern.
The Transferor has structured the Agreement and
the Class A Certificates with the intention that the
Class A Certificates will qualify under applicable tax
law as indebtedness, and both the Transferor and each
holder of Class A Certificates (a "Class A
Certificateholder") or any interest therein by acceptance
of its Certificate or any interest therein, agrees to
treat the Class A Certificates for purposes of federal,
state and local income or franchise taxes and any other
tax imposed on or measured by income, as indebtedness.
Except in limited circumstance described in the
third succeeding paragraph no principal will be payable
to the Class A Certificateholders before the first
Business Day in the Amortization Period. Except in
connection with a payment of Class B Daily Principal, the
Class B Certificate will not have the right to receive
payments of principal until the Class A Invested Amount
has been paid in full.
Upon issuance, the Class A Certificates
represents the right to receive, on each Business Day, an
amount equal to the lesser of (x) the Available Series
1997-1 Imputed Yield Collections for such Business Day
and (y) the sum of (A) the product of (i) the Class A
Certificate Rate, (ii) a fraction the numerator of which
is the actual number of days from and including the next
preceding Business Day to but excluding such Business Day
and the denominator of which is 360, and (iii) the Class
A Outstanding Principal Amount as of the closed of
business on the preceding Business Day plus (B) the
excess, if any, of the amount payable to the Class A
Certificateholders pursuant to clause (A) on each prior
Business Day over the amount which has been deposited in
the Interest Funding Account with respect thereto on each
prior Business Day.
Principal will be distributed to the Class A
Certificateholders on each Distribution Date with respect
to the Amortization Period following the Series 1994-1
Funding Date.
On any Business Day during the Revolving
Period, the Transferor may specify an amount, not to
exceed the Net Revolving Principal Collections, to be
deposited into the Defeasance Account. Any amounts so
deposited, shall be paid to the Class A
Certificateholders in accordance with Section 11 of the
Agreement and upon payment shall reduce the Class A
Invested Amount by an amount equal to any such payment.
In addition the Transferor may specify, upon the issuance
of a new Series pursuant to an Exchange made at any time
during the Revolving Period that the proceeds of such
issuance be deposited into the Defeasance Account for
payment to the Class A Certificateholders pursuant to
Section 11 of the Agreement. The Class A Invested
Amount will be reduced by an amount equal to the amount
of any such payments made.
In addition, pursuant to Section 6.15 of the
Agreement, the holders of this Certificate may from time
to time be required, prior to the Pay Out Commencement
Date, to purchase Additional Class A Invested Amounts on
the terms and conditions specified therein. The holder
of this Certificate is authorized to record on the grid
attached to its Class A Certificates (or at such
Certificateholder's option, in its internal books and
records) the date and amount of any Additional Class A
Invested Amount purchased by it, and each repayment
thereof; provided that failure to make any such
recordation on such grid or any error in such grid shall
not adversely affect such Certificateholder's rights with
respect to its Class A Invested Amount and its right to
receive interest payments in respect of the Class A
Invested Amount held by such Certificateholder.
"Class A Invested Amount" means, when used with
respect to any Business Day, an amount equal to (a)
$59,600,000 plus (b) the aggregate principal amount of
any Additional Class A Invested Amounts purchased
pursuant to Section 6.15 of the Agreement, minus (c) the
aggregate amount of principal payments made to Class A
Certificateholders prior to such date, and minus (d) the
aggregate amount of Class A Investor Charge-Offs for all
prior Distribution Dates, and plus (e) the aggregate
amount of Available Series Imputed Yield Collections,
Transferor Imputed Yield Collections, Excess Imputed
Yield Collections and Reallocated Principal Collections
applied on all prior Distribution Dates for the purpose
of reimbursing amounts deducted pursuant to the foregoing
clause (d).
Subject to the Agreement, payments of principal
are limited to the unpaid Class A Invested Amount of the
Class A Certificates, which may be less than the unpaid
balance of the Class A Certificates pursuant to the terms
of the Agreement. All principal of and interest on the
Class A Certificates is due and payable no later than the
October 2002 Distribution Date, unless (i) a different
date shall be set forth in any Extension Notice, or (ii)
a different date shall be specified in a written notice
from the Transferor to the Trustee as necessary to
satisfy the Minimum Rating Condition (the "Scheduled
Series 1997-1 Termination Date"). After the Scheduled
Series 1997-1 Termination Date neither the Trust nor the
Transferor will have any further obligation to distribute
principal or interest on the Class A Certificates. In
the event that the Class A Invested Amount is greater
than zero on the Scheduled Series Termination Date, the
Trustee will sell or cause to be sold, to the extent
necessary, an amount of interests in the Receivables or
certain of the Receivables up to 110% of the Class A
Invested Amount and the Class B Invested Amount at the
close of business on such date (but not more than the
total amount of Receivables allocable to the Investor
Certificates), and shall pay the proceeds to the Class A
Certificateholders pro rata in final payment of the Class
A Certificates, then to the Class B Certificateholders
pro rata in final payment of the Class B Certificates.
Unless the certificate of authentication hereon
has been executed by or on behalf of the Trustee, by
manual signature, this Certificate shall not be entitled
to any benefit under the Agreement, or be valid for any
purpose.
IN WITNESS WHEREOF, the Transferor has caused
this Certificate to be duly executed.
FINGERHUT RECEIVABLES, INC.
By:
----------------------------
Name:
Title:
Dated:
CERTIFICATE OF AUTHENTICATION
This is the Class A Certificates referred to in
the within-mentioned Pooling and Servicing Agreement.
THE BANK OF NEW YORK
By:
----------------------------
Name:
Title:
Beginning Ending
Principal Principal
Date Balance Additions Payments Balance
---- --------- --------- -------- ---------
Exhibit B
[FORM OF CLASS B VARIABLE FUNDING CERTIFICATE]
THIS CERTIFICATE (OR ITS PREDECESSOR) WAS
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"). THIS CERTIFICATE
HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR
ANY APPLICABLE STATE SECURITIES LAW OF ANY STATE AND
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED UNLESS REGISTERED PURSUANT TO OR EXEMPT
FROM REGISTRATION UNDER THE SECURITIES ACT AND ANY
OTHER APPLICABLE SECURITIES LAW. FINGERHUT
RECEIVABLES, INC. SHALL BE PROHIBITED FROM
TRANSFERRING ANY INTEREST IN OR PORTION OF THIS
CERTIFICATE UNLESS, PRIOR TO SUCH TRANSFER, IT SHALL
HAVE DELIVERED TO THE TRUSTEE AN OPINION OF COUNSEL
TO THE EFFECT THAT SUCH PROPOSED TRANSFER WILL NOT
ADVERSELY AFFECT THE FEDERAL INCOME TAX
CHARACTERIZATION OF ANY OUTSTANDING SERIES OF
INVESTOR CERTIFICATES. THE TRANSFER OF THIS
CERTIFICATE IS SUBJECT TO CERTAIN CONDITIONS SET
FORTH IN THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN.
NO SALE, ASSIGNMENT, PARTICIPATION, PLEDGE,
HYPOTHECATION, TRANSFER OR OTHER DISPOSITION OF A
CLASS B CERTIFICATE (OR ANY INTEREST THEREIN) SHALL
BE MADE UNLESS THE TRANSFEROR SHALL HAVE GRANTED ITS
PRIOR CONSENT THERETO, WHICH CONSENT MAY NOT BE
UNREASONABLY WITHHELD. NOR MAY AN INTEREST IN THIS
CERTIFICATE BE MARKETED ON OR THROUGH AN
"ESTABLISHED SECURITIES MARKET" WITHIN THE MEANING
OF SECTION 7704(B)(1) OF THE CODE AND ANY PROPOSED,
TEMPORARY OR FINAL TREASURY REGULATION THEREUNDER,
INCLUDING, WITHOUT LIMITATION, AN OVER-THE-COUNTER-
MARKET OR AN INTERDEALER QUOTATION SYSTEM THAT
REGULARLY DISSEMINATES FIRM BUY OR SELL QUOTATIONS.
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE
BENEFIT OF FINGERHUT RECEIVABLES, INC. THAT, UNLESS
SUCH PURCHASER, AT ITS EXPENSE, DELIVERS TO THE
TRUSTEE, THE SERVICER AND THE TRANSFEROR AN OPINION
OF COUNSEL SATISFACTORY TO THEM TO THE EFFECT THAT
THE PURCHASE OR HOLDING OF A CLASS B CERTIFICATE BY
SUCH PURCHASER WILL NOT RESULT IN THE ASSETS OF THE
TRUST BEING DEEMED TO BE "ASSETS OF THE BENEFIT
PLAN" AND SUBJECT TO THE PROHIBITED TRANSACTION
PROVISIONS OF ERISA AND THE CODE AND WILL NOT
SUBJECT THE TRUSTEE, THE TRANSFEROR OR THE SERVICER
TO ANY OBLIGATION IN ADDITION TO THOSE UNDERTAKEN IN
THE POOLING AND SERVICING AGREEMENT, SUCH PURCHASER
IS NOT (I) AN EMPLOYEE BENEFIT PLAN (AS DEFINED IN
SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED ("ERISA")) THAT IS
SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (II)
A PLAN DESCRIBED IN SECTION 4975(E)(1) OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), (III) A GOVERNMENTAL PLAN, AS DEFINED IN
SECTION 3(32) OF ERISA, SUBJECT TO ANY FEDERAL,
STATE, OR LOCAL LAW WHICH IS, TO A MATERIAL EXTENT,
SIMILAR TO THE PROVISIONS OF SECTION 406 OF ERISA OR
SECTION 4975 OF THE CODE, (IV) AN ENTITY WHOSE
UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF A
PLAN'S INVESTMENT IN THE ENTITY OR (V) A PERSON
INVESTING "PLAN ASSETS" OF ANY SUCH PLAN (INCLUDING
FOR PURPOSES OF CLAUSES (IV) AND (V) ANY INSURANCE
COMPANY GENERAL ACCOUNT, BUT EXCLUDING ANY ENTITY
REGISTERED UNDER THE INVESTMENT COMPANY ACT OF 1940,
AS AMENDED).
No. Percentage Interest: ___%
FINGERHUT MASTER TRUST
VARIABLE FUNDING TRUST
CERTIFICATE, SERIES 1997-1, CLASS B
Evidencing an undivided interest in a trust,
the corpus of which consists of receivables generated
from time to time in the ordinary course of business from
a portfolio of installment sale contracts or loans
generated or to be generated by Fingerhut Corporation
("Fingerhut") of Fingerhut National Bank (the "Bank" or
the "Servicer") and other assets and interests
constituting the Trust under the Agreement described
below.
(Not an interest in or a recourse obligation of
Fingerhut Receivables, Inc., Fingerhut, the Bank or any
affiliate thereof.)
This certifies that _________ (the
"Certificateholder") is the registered owner of a
fractional undivided interest in the Fingerhut Master
Trust (the "Trust") issued pursuant to the Amended and
Restated Pooling and Servicing Agreement, dated as of
January 12, 1997 (the "Pooling and Servicing Agreement";
such term to include any amendment thereto) by and
between Fingerhut Receivables, Inc., as Transferor (the
"Transferor"), the Bank, as Servicer, and The Bank of New
York (Delaware), as Trustee (the "Trustee"), and the
Series 1997-1 Supplement, dated as of January 21, 1997
(the "Series 1997-1 Supplement"), among the Transferor,
the Bank as Servicer and the Trustee (the Pooling and
Servicing Agreement, as supplemented by the Series 1997-1
Supplement, is herein referred to as the "Agreement").
The corpus of the Trust consists of all of the
Transferor's right, title and interest in, to and under
the Trust Property (as defined in the Agreement) and
Section 4.4 of the Agreement.
This Certificate does not purport to summarize
the Agreement and reference is made to the Agreement for
information with respect to the interests, rights,
benefits, obligations, proceeds, and duties evidenced
hereby and the rights, duties and obligations of the
Trustee. To the extent not defined herein, the
capitalized terms used herein have the meanings ascribed
to them in the Agreement. This Certificate is one of a
Class of Certificates entitled "Fingerhut Master Trust
Variable Funding Trust Certificates, Series 1997-1, Class
B" (the "Class B Certificates"), each of which represents
a fractional undivided interest in the Trust, and is
issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement, as
amended from time to time, the Certificateholder by
virtue of the acceptance hereof assents and by which the
Certificateholder is bound. In the case of any conflict
between terms specified in this Certificate and terms
specified in the Agreement, as amended from time to time,
the terms of the Agreement shall govern.
[The Transferor has structured the Agreement,
the Class B Certificates, the Fingerhut Master Trust
Variable Funding Trust Certificate, Series 1997-1, Class
A (the "Class A Certificates ) with the intention that
the Class A Certificates and the Class B Certificates
will qualify under applicable tax law as indebtedness,
and both the Transferor and each holder of a Class B
Certificate (a "Class B Certificateholder") or any
interest therein by acceptance of its Certificate or any
interest therein, agrees to treat the Class B Certificate
for purposes of federal, state and local income or
franchise taxes and any other tax imposed on or measured
by income, as indebtedness.]
Principal will be payable to the Class B
Certificateholders on the Class B Principal Payment
Commencement Date, which is the Distribution Date either
on or following the Distribution Date, on which the Class
A Invested Amount had been paid in full. Except in
connection with a payment of Class B Daily Principal,
principal will be payable to the Class B
Certificateholders until all principal payments have been
made to the Class A Certificateholders.
"Class B Invested Amount" means an amount equal
to (a) the aggregate principal amount of any Additional
Class B Invested amount pursuant to Section 6.16 of the
Agreement minus (b) the aggregate amount of principal
payments made to Class B Certificateholders prior to such
date minus (c) the aggregate amount of Class B Investor
Charge-Offs for all prior Distribution Dates, minus (d)
the aggregate amount of Reallocated Principal Collections
for all prior Business Days and plus (e) the aggregate
amount of Available Series Imputed Yield Collections,
Transferor Imputed Yield Collections, Excess Imputed
Yield Collections and Reallocated Principal Collections
applied on all prior Distribution Dates for the purpose
of reimbursing amounts deducted pursuant to the foregoing
clauses (c) and (d).
Subject to the Agreement, payments of principal
are limited to the unpaid Class B Invested Amount of the
Class B Certificates, which may be less than the unpaid
balance of the Class B Certificate pursuant to the terms
of the Agreement. All principal of and interest on the
Class B Certificate is due and payable no later than the
October 2002 Distribution Date, unless (i) a different
date shall be set forth in any Extension Notice, or (ii)
a different date shall be specified in a written notice
from the Transferor to the Trustee as necessary to
satisfy the Minimum Rating Condition (the "Scheduled
Series 1997-1 Termination Date"). After the Scheduled
Series 1997-1 Termination Date neither the Trust nor the
Transferor will have any further obligation to distribute
principal or interest on the Class B Certificates. In
the event that the Class B Invested Amount is greater
than zero on the Scheduled Series 1997-1 Termination
Date, the Trustee will sell or cause to be sold, to the
extent necessary, an amount of interests in the
Receivables or certain of the Receivables up to 110% of
the Class A Invested Amount and the Class B Invested
Amount at the close of business on such date (but not
more than the total amount of Receivables allocable to
the Investor Certificates), and shall pay the proceeds to
the Class A Certificateholders pro rata in final payment
of the Class A Certificates, then to the Class B
Certificateholders pro rata in final payment of the Class
B Certificates.
Unless the certificate of authentication hereon
has been executed by or on behalf of the Trustee, by
manual signature, this Certificate shall not be entitled
to any benefit under the Agreement, or be valid for any
purpose.
IN WITNESS WHEREOF, the Transferor has caused
this Certificate to be duly executed.
FINGERHUT RECEIVABLES, INC.
By:
----------------------------
Name:
Title:
Dated:
CERTIFICATE OF AUTHENTICATION
This is one of the Class B Certificates referred to
in the within-mentioned Pooling and Servicing Agreement.
THE BANK OF NEW YORK
By:
----------------------------
Name:
Title:
Exhibit C
[Form of Monthly Certificateholders' Statement]
Exhibit D
____________, ____
Fingerhut Receivables, Inc.
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The Bank of New York (Delaware)
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Re: Class A Certificates, Series 1997-1
Ladies and Gentlemen:
In connection with our proposed purchase of
$___________ in principal amount of Fingerhut Master
Trust, Variable Funding Trust Certificates, Series 1997-
1, Class A (the "Class A Certificates"), we confirm that:
1. We have received such information and
documentation as we deem necessary in order to make our
investment decision. We understand that such information
and documentation speaks only as of its date and that
such information and documentation may not be correct or
complete as of any time subsequent to such date.
2. We agree to be bound by the restrictions and
conditions set forth in the Amended and Restated Pooling
and Servicing Agreement, dated as of January 12, 1997, as
supplemented by the Series 1997-1 Supplement dated as of
January 21, 1997 (the "Series 1997-1 Supplement" and
together with the Pooling and Servicing Agreement, each
as amended from time to time, the "Pooling and Servicing
Agreement"), each by and among Fingerhut Receivables,
Inc., as Transferor, Fingerhut National Bank, as
Servicer, and The Bank of New York (Delaware), as
Trustee, relating to the Class A Certificates, including
the obligation to purchase Additional Class A Invested
Amounts, as specified in Section 6.15 of the Pooling and
Servicing Agreement, and agree to be bound by, and not
reoffer, resell, pledge or otherwise transfer (any such
act, a "Transfer") the Class A Certificates except in
compliance with, such restrictions and conditions
including but not limited to those in Section 12 of the
Series 1997-1 Supplement.
3. We understand that the Class A Certificates
have not been and will not be registered under the
Securities Act of 1933, as amended (the "Securities Act")
or any state securities law and agree that the Class A
Certificates may be reoffered, resold, pledged or
otherwise transferred only in compliance with the
Securities Act and other applicable laws and only (i) to
the Transferor or (ii) pursuant to Rule 144A under the
Securities Act to a person that we reasonably believe is
a qualified institutional buyer within the meaning of
Rule 144A ("QIB") purchasing for its own account or a QIB
purchasing for the account of a QIB, whom we have
informed, in each case, that the reoffer, resale, pledge
or other transfer is being made in reliance on Rule 144A.
4. We have neither acquired nor will we Transfer
any Class A Certificate we acquire (or any interest
therein) or cause any Class A Certificate (or any
interest therein) to be marketed on or through an
"established securities market" within the meaning of
Section 7704(b)(1) of the Internal Revenue Code of 1986,
as amended (the "Code") and any treasury regulation
thereunder, including, without limitation, an over-the-
counter-market or an interdealer quotation system that
regularly disseminates firm buy or sell quotations.
5. We are not and will not become, for so long as
we hold any interest in the Class A Certificates, a
partnership, Subchapter S corporation or grantor trust
for United States federal income tax purposes.
6. We are a person who is either (A)(i) a citizen
or resident of the United States, (ii) a corporation or
other entity organized in or under the laws of the United
States or any political subdivision thereof or (iii) a
person not described in (i) or (ii) whose ownership of
the Class A Certificates is effectively connected with a
such person's conduct of a trade or business within the
United States (within the meaning of the Code) and our
ownership of any interest in a Class A Certificate will
not result in any withholding obligation with respect to
any payments with respect to the Class A Certificates by
any person or (B) an estate or trust the income of which
is includible in gross income for United States federal
income tax purposes. We agree that if we are a person
described in clause (A)(iii) above, we will furnish to
the person from whom we are acquiring a Class A
Certificate, the Servicer and the Trustee, a properly
executed U.S. Internal Revenue Service Form 4224 and a
new Form 4224, or any successor applicable form, upon the
expiration or obsolescence of any previously delivered
form (and such other certifications, representations or
opinions of counsel as may be requested by the
Transferor, the Servicer or the Trustee). We recognize
that if we are a tax-exempt entity, payments with respect
to the Class A Certificates may constitute unrelated
business taxable income.
7. We understand that no subsequent Transfer of a
Class A Certificate is permitted unless (i) such Transfer
is of a Class A Certificate with a minimum principal
amount of at least $1,000,000 and (ii) the Transferor
consents in writing to the proposed Transfer; provided,
that any attempted Transfer that would cause the number
of Targeted Holders to exceed ninety-nine shall be void.
8. We are a "qualified institutional buyer" (as
defined in Rule 144A under the Securities Act) purchasing
for our own account or for the account of a "qualified
institutional buyer" and we understand that the sale to
us is being made in reliance on Rule 144A under the
Securities Act.
9. We are acquiring each of the Class A
Certificates purchased by us for our own account or for a
single account (each of which is a "qualified
institutional buyer") as to which we exercise sole
investment discretion.
10. We are not (i) an employee benefit plan (as
defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") that is
subject to the provisions of Title I of ERISA, (ii) a
plan described in Section 4975(e)(1) of the Code, (iii) a
governmental plan, as defined in Section 3(32) of ERISA,
subject to any federal, state or local law which is, to a
material extent, similar to the provisions of Section 406
of ERISA or Section 4975 of the Code, (iv) an entity
whose underlying assets include plan assets by reason of
a plan's investment in the entity, or (v) a person
investing "plan assets" of any such plan (including for
purposes of clauses (iv) and (v) any insurance company
general account, but excluding any entity registered
under the Investment Company Act of 1940, as amended).
11. We understand that any purported Transfer of
any Class A Certificate in contravention of the
restrictions and conditions in paragraphs 1 through 10
above (including any violation of the representation in
paragraph 5 by an investor who continues to hold a Class
A Certificate occurring any time after the Transfer in
which it acquired such Class A Certificate) shall be null
and void and the purported transferee shall not be
recognized by the Trust or any other person as a Class A
Certificateholder for any purpose.
12. We further understand that, on any proposed
resale, pledge or transfer of any Class A Certificates,
we will be required to furnish to the Trustee and the
Registrar, such certification and other information as
the Trustee or the Registrar may reasonably require to
confirm that the proposed sale complies with the
foregoing restrictions and with the restrictions and
conditions of the Class A Certificates and the Pooling
and Servicing Agreement pursuant to which the Class A
Certificates were issued and we agree that if we
determine to Transfer any Class A Certificate, we will
cause our proposed transferee to provide the Transferor,
the Servicer and the Trustee with a letter substantially
in the form of this letter. We further understand that
Class A Certificates purchased by us will bear a legend
to the foregoing effect.
13. The person signing this letter on behalf of the
ultimate beneficial purchaser of the Class A Certificates
has been duly authorized by such beneficial purchaser of
the Class A Certificates to do so.
14. The Class A Certificates purchased by us should
be registered in the name and issued in the denominations
set forth on Schedule 1 hereto. All payments on the
Class A Certificates held by us should be wired to us in
accordance with the instructions set forth on Schedule 1
hereto unless we otherwise notify the Transferor, the
Servicer and the Trustee in writing.
You are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy
hereof to any interested party in any administrative or
legal proceeding or official inquiry with respect to the
matters covered hereby.
Very truly yours
[NAME OF PURCHASER]
By:
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Name:
Title:
Schedule 1
Registration and Payment Instructions
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Registration Instructions:
-------------------------
Full Legal Name of Purchaser:__________________________
Number and Denomination of Certificates:________________
________________
Payment Instructions:
--------------------
Name of Bank: ____________________
Address of Bank:____________________
Account Name: ___________________
Account Number:___________________
ABA Number: ___________________
Reference: ___________________
Exhibit E
FORM OF EXTENSION NOTICE
FINGERHUT MASTER TRUST, SERIES 1997-1
The undersigned, a duly authorized
representative of Fingerhut Receivables, Inc., a Delaware
corporation (the "Transferor"), as Transferor pursuant to
the Amended and Restated Pooling and Servicing Agreement
dated as of January 12, 1997 (the "Pooling and Servicing
Agreement"), by and among the Transferor, Fingerhut
National Bank, as servicer (the "Servicer"), and The Bank
of New York (Delaware), as trustee (the "Trustee"), as
supplemented by the Series 1997-1 Supplement, dated as of
January 21, 1997 (the "Series 1997-1 Supplement"), by and
between the Transferor, the Servicer and the Trustee (the
Pooling and Servicing Agreement, as supplemented by the
Series 1997-1 Supplement, and as each may from time to
time be amended, supplemented, or modified, the
"Agreement"), does hereby notify the Trustee (or any
successor Trustee) and the Investor Certificateholders:
A. Capitalized terms used but not defined in
this Certificate shall have the respective meanings set
forth in the Agreement. References herein to certain
sections and subsections are references to the respective
sections and subsections of the Agreement.
B. The undersigned is a [Vice President] or
more senior officer of the Transferor who is duly
authorized to execute and deliver this Certificate on
behalf of the Transferor.
C. This Certificate is being delivered
pursuant to Section 6.17(a) of the Agreement.
D. The Transferor is the Transferor under the
Agreement.
E. No Pay Out Event has occurred that has not
been remedied pursuant to the provisions of the
Agreement.
F. The Certificate is being delivered to the
Trustee on or before the date specified in subsection
6.17(a) for delivery.
G. NOTIFICATION OF EXTENSION
Pursuant to subsection 6.17(a) and in respect
of [ , ] (the "Current Extension Date"), the
Transferor hereby notifies the Trustee and the Investor
Certificateholders of the Transferor's intention to
extend the Revolving Period in respect of Series 1997-1
on the Current Extension Date pursuant to the provisions
of Section 6.17, until the date set forth below (such
extension, the "Extension").
H. REQUIREMENTS TO COMPLETE EXTENSION
(1) Annexed hereto is an election notice (an
"Election Notice") to be returned by any Investor
Certificateholder electing to approve the Extension. No
Extension shall occur unless Investor Certificateholders
holding at least more than fifty percent of each of the
aggregate principal amount of Class A Certificates and
Class B Certificates, respectively, shall return properly
executed Election Notices approving the Extension by the
Election Date (as defined below). Any Investor
Certificateholder electing to approve the Extension must
deliver a properly executed Election Notice at the office
of the Trustee, [ ] on or before 3:00 p.m., [] time, on
[ ,] (the "Election Date"). Any Investor
Certificateholder may withdraw any Election Notice
delivered by it to the Trustee by notifying the Trustee
in writing at the address set forth in the previous
sentence on or prior to the Election Date.
(2) THE EXTENSION SHALL NOT OCCUR UNTIL PRIOR
SATISFACTION OF CERTAIN CONDITIONS PRECEDENT BY THE CLOSE
OF BUSINESS ON THE ELECTION DATE, INCLUDING THE APPROVAL
OF SUCH EXTENSION BY THE INVESTOR CERTIFICATEHOLDERS
HOLDING THE REQUIRED AGGREGATE PRINCIPAL AMOUNT OF CLASS
A CERTIFICATES AND CLASS B CERTIFICATES THAT NO PAY OUT
EVENT SHALL HAVE OCCURRED AND BE CONTINUING, AND THAT
CERTAIN LEGAL OPINIONS AND RATING AGENCY CONFIRMATIONS
SHALL HAVE BEEN DELIVERED TO THE TRANSFEROR AND THE
TRUSTEE PURSUANT TO SECTION 6.17(b). THE TRANSFEROR MAY
IN ITS SOLE DISCRETION WITHDRAW THIS EXTENSION NOTICE AT
ANY TIME ON OR PRIOR TO THE ELECTION DATE BY DELIVERING
NOTICE OF SUCH WITHDRAWAL IN WRITING TO THE TRUSTEE. IF
ANY SUCH NOTICE OF WITHDRAWAL SHALL BE SO DELIVERED, NO
EXTENSION SHALL OCCUR.
I. NEW PROVISIONS TO BECOME EFFECTIVE ON THE
EXTENSION DATE
(1) The new Amortization Period Commencement
Date shall be the earlier of (a) [,] or (b) the Pay Out
Commencement Date.
(2) The new Extension Date shall be
[ , ].
[(3) The new Scheduled Series 1997-1
Termination Date shall be [,].]
(4) The new Class A Expected Payment Date is
______.
[(5) The following are additional provisions
that will apply to the Investor Certificates on and after
the Extension Date:
INSERT PROVISIONS]
J. Annexed hereto are the following:
(1) the form of Extension Tax Opinion.
(2) the form of Extension Opinion.
(3) the Election Notice.
IN WITNESS WHEREOF, the undersigned has duly
executed this certificate this [ ] day of [ , ].
FINGERHUT RECEIVABLES, INC.
By:
----------------------------
Name:
Title:
Exhibit F
FORM OF INVESTOR CERTIFICATEHOLDER ELECTION NOTICE
[INSERT NAME
AND ADDRESS OF TRUSTEE]
Re: Fingerhut Master Trust:
Election Notice to Extend Series 1997-1
Ladies and Gentlemen:
The undersigned hereby elects to approve the
extension of the Revolving Period for Series 1997-1 until
the Amortization Period Commencement Date set forth in
the Extension Notice dated [ , ] (the
"Extension Notice") and delivered to the undersigned
pursuant Section 6.17(a) of the Amended and Restated
Pooling and Servicing Agreement, dated as of January 12,
1997, including the Series 1997-1 Supplement thereto,
dated as of January 21, 1997, each by and among Fingerhut
Receivables, Inc., as transferor, Fingerhut National
Bank, as servicer, and The Bank of New York (Delaware),
as trustee (collectively, and as each may be amended,
supplemented or modified from time to time, the "Pooling
and Servicing Agreement"). The undersigned hereby
acknowledges that, commencing on the Current Extension
Date (as defined in the Extension Notice), the terms and
provisions of the Pooling and Servicing Agreement shall
be modified as set forth in the Extension Notice.
IN WITNESS WHEREOF, the undersigned registered
owner(s) has [have] executed this Election Notice as of
the date set forth below.
Dated:
Name(s):_______________________
Address:_______________________
(Please Print)
Signature(s):__________________