FINGERHUT RECEIVABLES, INC.
Transferor
FINGERHUT NATIONAL BANK
Servicer
and
THE BANK OF NEW YORK (DELAWARE)
Trustee
on behalf of the Series 1998-1 Securityholders
SERIES 1998-1 SUPPLEMENT
Dated as of April 28, 1998
to
AMENDED AND RESTATED
POOLING AND SERVICING AGREEMENT
Dated as of March 18, 1998
____________________________________
FINGERHUT MASTER TRUST
$337,500,000 6.07% Asset Backed
Securities, Series 1998-1, Class A
$51,136,000 6.29% Asset Backed
Securities, Series 1998-1, Class B
$61,364,000 Floating Rate Asset Backed
Collateralized Trust Obligation, Series 1998-1
$61,364,000 0% Asset Backed Securities,
Series 1998-1, Class D
TABLE OF CONTENTS
Page
SECTION 1. Designation 1
SECTION 2. Definitions 1
SECTION 3. Reassignment Terms 24
SECTION 4. Delivery and Payment for the Series 1998-1
Securities 25
SECTION 5. Form of Delivery of Series 1998-1 Securities;
Denominations; Depositary 25
SECTION 6. Article IV of Agreement 27
ARTICLE IV
RIGHTS OF SECURITYHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS
SECTION 4.4 Rights of Securityholders 27
SECTION 4.5 Collections and Allocation; Payments on
Exchangeable Transferor Security 28
SECTION 4.6 Determination of Interest for the Series
1998-1 Securities 29
SECTION 4.7 Determination of Principal Amounts 31
SECTION 4.8 Shared Principal Collections 32
SECTION 4.9 Application of Funds on Deposit in the
Collection Account for the Securities 33
SECTION 4.10 Coverage of Required Amount for the Series
1998-1 Securities 41
SECTION 4.11 Payment of Interest on Securities 42
SECTION 4.12 Payment of Security Principal 42
SECTION 4.13 Series Charge-Offs 44
SECTION 4.14 Redirected Principal Collections for the
Series 1998-1 Securities 45
SECTION 4.15 Determination of LIBOR 47
SECTION 4.16 Defeasance Funding Account 47
SECTION 4.17 Defeasance Reserve Account 49
SECTION 4.18 Defeasance 50
SECTION 4.19 Revolving Receivables Reserve Account 51
SECTION 4.20 CTO Trigger 52
SECTION 4.21 CTO Reserve Account 53
SECTION 4.22 Payment Reserve Account 54
SECTION 4.23 Constituent Class D Securities 55
SECTION 7.Article V of the Agreement 56
ARTICLE V
DISTRIBUTIONS AND REPORTS TO INVESTOR
SECURITYHOLDERS
SECTION 5.1 Distributions 56
SECTION 5.2 Securityholders' Statement 58
SECTION 8. Series 1998-1 Pay Out Events 61
SECTION 9. Collateralized Trust Obligation Defaults and
Remedies 63
SECTION 10. Series 1998-1 Termination 64
SECTION 11. Legends; Transfer and Exchange; Restrictions
on Transfer of Series 1998-1 Securities;
Tax Treatment 64
SECTION 12. Compliance with Withholding Requirements 68
SECTION 13. Ratification of Agreement 68
SECTION 14. Counterparts 68
SECTION 15. GOVERNING LAW 68
SECTION 16. Instructions in Writing 69
SECTION 17. Paired Series 69
EXHIBITS
Exhibit A-1 Form of Class A Investor Security
Exhibit A-2 Form of Class B Investor Security
Exhibit A-3 Form of CTO Investor Security
Exhibit A-4 Form of Class D Investor Security
Exhibit B Form of Monthly Securityholder's Statement
Exhibit C Form of Clearing System Certificate
Exhibit D Form of Member Organization Certificate
Exhibit E Form of Regulation S Transfer Certificate
Exhibit F Form of Rule 144A Transfer Certificate
SERIES 1998-1 SUPPLEMENT, dated as of April 28,
1998 (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
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 March 18, 1998, 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 Securities.
Pursuant to this Series Supplement, the Transferor and
the Trustee shall create a new Series of Investor Securities and
shall specify the Principal Terms thereof.
SECTION 1. Designation. There is hereby created a
Series to be issued pursuant to the Agreement and this Series
Supplement to be known generally as the "Series 1998-1
Securities." Series 1998-1 shall consist of four Classes, which
shall be designated generally as the 6.07% Asset Backed
Securities, Series 1998-1, Class A (the "Class A Securities"),
the 6.29% Asset Backed Securities, Series 1998-1, Class B (the
"Class B Securities"), the Floating Rate Asset Backed
Collateralized Trust Obligations, Series 1998-1 (the
"Collateralized Trust Obligations") and the 0% Asset Backed
Securities, Series 1998-1, Class D (the "Class D Securities").
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 1998-1 Securities. All Article, Section or
subsection references herein shall mean Articles, Sections 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 1998-1 Securities and no other Series of
Securities issued by the Trust.
"ABC Adjusted Invested Amount" shall mean as of any
Business Day the sum of the Class A Adjusted Invested Amount, the
Class B Adjusted Invested Amount and the CTO Adjusted Invested
Amount minus the amount then on deposit in the Defeasance Funding
Account.
"ABC Invested Amount" shall mean as of any Business Day
the sum of the Class A Invested Amount, the Class B Invested
Amount and the CTO Invested Amount.
"Additional Interest" shall mean, at any time of
determination, the sum of the Class A Additional Interest, Class
B Additional Interest and CTO Additional Interest.
"Adjusted Invested Amount" shall mean as of any
Business Day the Invested Amount minus the sum of the amount then
on deposit in the Principal Account and the Series 1998-1
Percentage of the amount then on deposit in the Excess Funding
Account.
"Amortization Period" shall mean the period commencing
on the Amortization Period Commencement Date and continuing until
the earlier of (x) the Invested Amount of the Securities being
paid in full or (y) the Series 1998-1 Termination Date.
"Amortization Period Commencement Date" shall mean the
earlier of the first day of the August 2000 Monthly Period or the
Pay Out Commencement Date.
"Available Defeasance Reserve Account Amount" shall
mean, with respect to any Business Day, the lesser of (a) the
amount on deposit in the Defeasance Reserve Account as of such
Business Day (before giving effect to any withdrawal made or to
be made pursuant to Section 4.17 of the Agreement from the
Defeasance Reserve Account on such Transfer Date) and (b) the
Required Defeasance Reserve Account Amount for such Transfer
Date.
"Available Series 1998-1 Finance Charge Collections"
shall have the meaning specified in subsection 4.9(a) of the
Agreement.
"Available Series 1998-1 Principal Collections" shall
mean, with respect to any Monthly Period or portion thereof
commencing on the Amortization Period Commencement Date, an
amount equal to the sum of (i) an amount equal to the Fixed/
Floating Percentage on each Business Day during such period of
all Principal Collections (less the amount of Redirected
Principal Collections) received during such period, (ii) any
amount on deposit in the Excess Funding Account allocated to the
Series 1998-1 Securities pursuant to subsection 4.3(f) of the
Agreement with respect to such period , (iii) an amount equal to
the sum of the aggregate Series Default Amount with respect to
such period and the Series 1998-1 Percentage of any unpaid
Adjustment Payments paid pursuant to subsections 4.9(a)(v) and
4.9(a)(vi) of the Agreement with respect to such period and any
reimbursements of unreimbursed Series Charge-Offs pursuant to
subsections 4.9(a)(vii), (x), (xi) and (xii) of the Agreement
with respect to such period plus in each case, amounts applied
with respect thereto pursuant to subsections 4.10(a) and (b),
4.14(a), (b) and (c), 4.16(b) and 4.17(b), (c) and (d) of the
Agreement, and (iv) the aggregate Shared Principal Collections
allocated to the Series 1998-1 Securities pursuant to Section 4.8
of the Agreement with respect to such period.
"Base Rate" shall mean, with respect to any Monthly
Period, the sum of (i) the weighted average of the Class A
Interest Rate, the Class B Interest Rate, the CTO Interest Rate
and, if an interest rate is assigned to the Class D Securities
pursuant to Section 4.23 of the Agreement, the Class D Interest
Rate as of the last day of such Monthly Period (weighted based on
the Class A Invested Amount, the Class B Invested Amount, the CTO
Invested Amount and, following the assignment of an interest rate
to the Class D Securities, the Class D Invested Amount or portion
thereof with respect to which an interest rate has been assigned,
respectively, as of the last day of such Monthly Period) plus
(ii) the product of 2.00% per annum and the percentage equivalent
of a fraction the numerator of which is the Adjusted Invested
Amount and the denominator of which is the Invested Amount, each
as of the beginning of the day on the first day of such Monthly
Period.
"Carryover Class A Monthly Interest" shall mean with
respect to any Business Day (a) any Class A Monthly Interest
Shortfall with respect to the Distribution Date in the then
current Monthly Period plus (b) any Class A Additional Interest
due on the Distribution Date in the next succeeding Monthly
Period.
"Carryover Class B Monthly Interest" shall mean with
respect to any Business Day (a) any Class B Monthly Interest
Shortfall with respect to the Distribution Date in the then
current Monthly Period plus (b) any Class B Additional Interest
due on the next succeeding Distribution Date in the next
succeeding Monthly Period.
"Carryover CTO Monthly Interest" shall mean with
respect to any Business Day (a) any CTO Monthly Interest
Shortfall with respect to the Distribution Date in the then
current Monthly Period plus (b) any CTO Additional Interest due
on the next succeeding Distribution Date in the next succeeding
Monthly Period.
"Class A Additional Interest" shall have the meaning
specified in subsection 4.6(a) of the Agreement.
"Class A Adjusted Invested Amount" shall mean, for any
date of determination, an amount not less than zero equal to the
then current Class A Invested Amount minus the amount then on
deposit in the Principal Account on such date of determination.
"Class A Charge-Offs" shall have the meaning specified
in subsection 4.13(d) of the Agreement.
"Class A Controlled Amortization Amount" shall mean
$22,500,000.
"Class A Controlled Distribution Amount" shall mean,
with respect to any Distribution Date, an amount equal to the
Class A Controlled Amortization Amount plus any existing Class A
Deficit Controlled Amortization Amount determined on the
preceding Distribution Date, if any.
"Class A Deficit Controlled Amortization Amount" shall
mean zero on the initial Distribution Date with respect to the
Controlled Amortization Period and, on any subsequent
Distribution Date, the excess, if any, of (i) the Class A
Controlled Distribution Amount over (ii) the Available Series
1998-1 Principal Collections with respect to the related Monthly
Period.
"Class A Expected Final Payment Date" shall mean the
November 2001 Distribution Date.
"Class A Fixed/Floating Percentage" shall mean for any
Business Day on or after the Amortization Period Commencement
Date, the percentage equivalent of a fraction, the numerator of
which is the Class A Invested Amount at the end of the last day
of the Revolving Period 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 applicable floating or
fixed/floating percentages with respect to all Participations and
all Classes of all Series then outstanding.
"Class A Floating 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 as of
the beginning of such Business Day after giving effect to any
deposits to be made to the Principal Account on such Business Day
and the denominator of which is the greater of (a) the sum of the
aggregate amount of Principal Receivables as of the beginning of
such Business Day and the amount on deposit in the Excess Funding
Account as of the beginning of such Business Day after giving
effect to any deposits or withdrawals to be made to the Excess
Funding Account on such Business Day and (b) the sum of the
numerators used to calculate the applicable floating or
fixed/floating percentages with respect to all Participations and
all Classes of all Series then outstanding.
"Class A Initial Invested Amount" shall mean
$337,500,000.
"Class A Interest Rate" shall mean 6.07% per annum.
"Class A Invested Amount" shall mean, with respect to
any Business Day, an amount equal to (a) the Class A Initial
Invested Amount minus (b) the aggregate amount of principal
payments made to Class A Securityholders through and including
such Business Day, minus (c) the aggregate amount of Class A
Charge-Offs for all prior Distribution Dates, plus (d) the sum of
the aggregate amount reimbursed with respect to reductions of the
Class A Invested Amount through and including such Business Day
pursuant to subsection 4.9(a)(vii) of the Agreement plus, with
respect to such subsection, amounts applied thereto pursuant to
subsections 4.10(a) and (b) and 4.14(a), (b) and (c) of the
Agreement, for the purpose of reimbursing amounts deducted
pursuant to the foregoing clause (c); provided, however, that the
Class A Invested Amount may not be reduced below zero.
"Class A Monthly Interest" shall mean the interest
distributable in respect of the Class A Securities as calculated
in accordance with subsection 4.6(a) of the Agreement.
"Class A Monthly Interest Shortfall" shall have the
meaning specified in subsection 4.6(a) of the Agreement.
"Class A Outstanding Principal Amount" shall mean, with
respect to the Class A Securities, when used with respect to any
Business Day, an amount equal to (a) the Class A Initial Invested
Amount minus (b) the aggregate amount of principal payments made
to the Class A Securityholders 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,
the Class B Invested Amount and the CTO Invested Amount.
"Class A Principal" shall mean the principal
distributable in respect of the Class A Securities as calculated
in accordance with subsection 4.7(a) of the Agreement.
"Class A Required Amount" shall mean the amount
determined by the Servicer for each Business Day equal to the
excess, if any, of (x) the sum of (i) the Class A Monthly
Interest for the Interest Accrual Period beginning in the then
current Monthly Period, (ii) any Carryover Class A Monthly
Interest, (iii) the Class A Percentage of the Monthly Servicing
Fee for the then current Monthly Period, (iv) the Class A
Percentage of the Series Default Amount, if any, for such
Business Day and for any previous Business Day in such Monthly
Period and (v) the Class A Percentage of the Series 1998-1
Percentage of any Adjustment Payment the Transferor is required
but fails to make pursuant to subsection 3.8(a) of the Agreement
on such Business Day and on each previous Business Day during
such Monthly Period over (y) the Available Series 1998-1 Finance
Charge Collections plus any Excess Finance Charge Collections
from other Series and any Transferor Finance Charge Collections
allocated with respect to the amounts described in clauses (x)(i)
through (v) above with respect to such Business Day and all
previous Business Days in such Monthly Period.
"Class A Securities" shall mean any of the Securities
executed by the Transferor and authenticated by or on behalf of
the Trustee, substantially in the form of Exhibit A-1 hereto.
"Class A Securityholder" shall mean the Person in whose
name a Class A Security is registered in the Security Register.
"Class A Securityholders' Interest" shall mean the
portion of the Series 1998-1 Securityholders' Interest evidenced
by the Class A Securities.
"Class B Additional Interest" shall have the meaning
specified in subsection 4.6(b) of the Agreement.
"Class B Adjusted Invested Amount" shall mean, for any
date of determination, an amount not less than zero equal to the
then current Class B Invested Amount minus the excess, if any, of
the amount on deposit in the Principal Account over the Class A
Invested Amount on such date of determination.
"Class B Charge-Offs" shall have the meaning specified
in subsection 4.13(c) of the Agreement.
"Class B Controlled Amortization Amount" shall mean
$17,045,333.33.
"Class B Controlled Distribution Amount" shall mean,
with respect to any Distribution Date, an amount equal to the
Class B Controlled Amortization Amount plus any existing Class B
Deficit Controlled Amortization Amount determined on the
preceding Distribution Date, if any.
"Class B Deficit Controlled Amortization Amount" shall
mean zero on the Class B Principal Payment Commencement Date and,
on any subsequent Distribution Date, means the excess, if any, of
(i) the Class B Controlled Distribution Amount over (ii) the
Available Series 1998-1 Principal Collections with respect to the
related Monthly Period.
"Class B Expected Final Payment Date" shall mean the
February 2002 Distribution Date.
"Class B Fixed/Floating Percentage" shall mean for any
Business Day on or after the Amortization Period Commencement
Date, 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 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 beginning of such Business Day after giving
effect to any deposits or withdrawals to be made to the Excess
Funding Account on such Business Day and (b) the sum of the
numerators used to calculate the applicable floating or
fixed/floating percentages with respect to all Participations and
all Classes of all Series then outstanding.
"Class B Floating Percentage" shall mean, with respect
to any Business Day, the percentage equivalent of a fraction, the
numerator of which is the Class B Adjusted Invested Amount as of
the beginning of such Business Day after giving effect to any
deposits to be made to the Principal Account on such Business Day
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 beginning of such
Business Day after giving effect to any deposits or withdrawals
to be made to the Excess Funding Account on such Business Day and
(b) the sum of the numerators used to calculate the applicable
floating or fixed/floating percentages with respect to all
Participations and all Classes of all Series then outstanding.
"Class B Initial Invested Amount" shall mean
$51,136,000.
"Class B Interest Rate" shall mean 6.29% per annum.
"Class B Invested Amount" shall mean, with respect to
any Business Day, an amount equal to (a) the Class B Initial
Invested Amount, minus (b) the aggregate amount of principal
payments made to Class B Securityholders through and including
such Business Day, minus (c) the aggregate amount of Class B
Charge-Offs for all prior Distribution Dates, minus (d) the
aggregate amount of Redirected Class B Principal Collections
through and including such Business Day for which neither the
Class D Invested Amount nor the CTO Invested Amount has been
reduced on all prior Distribution Dates pursuant to subsection
4.14(d) of the Agreement, plus (e) the sum of the aggregate
amount reimbursed with respect to reductions of the Class B
Invested Amount through and including such Business Day pursuant
to subsection 4.9(a)(x) of the Agreement plus, with respect to
such subsection, amounts applied thereto pursuant to subsections
4.10(a) and (b) and 4.14(a) and (b) of the Agreement, for the
purpose of reimbursing amounts deducted pursuant to the foregoing
clauses (c) and (d); provided, however, that the Class B Invested
Amount may not be reduced below zero.
"Class B Monthly Interest" shall mean the interest
distributable in respect of the Class B Securities as calculated
in accordance with subsection 4.6(b) of the Agreement.
"Class B Monthly Interest Shortfall" shall have the
meaning specified in subsection 4.6(b) of the Agreement.
"Class B Outstanding Principal Amount" shall mean, with
respect to the Class B Securities, when used with respect to any
Business Day, an amount equal to (a) the Class B Initial Invested
Amount minus (b) the aggregate amount of principal payments made
to the Class B Securityholders on or 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,
the Class B Invested Amount and the CTO Invested Amount.
"Class B Principal" shall mean the principal
distributable in respect of the Class B Securities 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 Distribution Date on which the Class
A Invested Amount is paid in full or, if the Class A Invested
Amount is paid in full on the Class A Expected Final Payment
Date, and the Early Amortization Period has not commenced, the
Distribution Date following the Class A Expected Final Payment
Date and (b) the Distribution Date following a sale or repurchase
of the Receivables as set forth in Section 2.4(e), 10.2(a), 12.1
or 12.2 of the Agreement or Section 3 of this Series Supplement.
"Class B Required Amount" shall mean the amount
determined by the Servicer for each Business Day equal to the
excess, if any, of (x) the sum of (i) the Class B Monthly
Interest for the Interest Accrual Period beginning in the then
current Monthly Period, (ii) any Carryover Class B Monthly
Interest, (iii) the Class B Percentage of the Monthly Servicing
Fee for the then current Monthly Period, (iv) the Class B
Percentage of the Series Default Amount, if any, for such
Business Day and for any previous Business Day in such Monthly
Period and (v) the Class B Percentage of the Series 1998-1
Percentage of any Adjustment Payment the Transferor is required
but fails to make pursuant to subsection 3.8(a) of the Agreement
on such Business Day and on each previous Business Day during
such Monthly Period over (y) the Available Series 1998-1 Finance
Charge Collections plus any Excess Finance Charge Collections
from other Series and any Transferor Finance Charge Collections
allocated with respect to the amounts described in clauses (x)(i)
through (v) above with respect to such Business Day and all
previous Business Days in such Monthly Period.
"Class B Securities" shall mean any of the Securities
executed by the Transferor and authenticated by or on behalf of
the Trustee, substantially in the form of Exhibit A-2 hereto.
"Class B Securityholder" shall mean the Person in whose
name a Class B Security is registered in the Security Register.
"Class B Securityholders' Interest" shall mean the
portion of the Series 1998-1 Securityholders' Interest evidenced
by the Class B Securities.
"Class D Charge-Offs" shall have the meaning specified
in subsection 4.13(a) of the Agreement.
"Class D Excess Amounts" shall mean, with respect to
any Business Day, the excess of the Class D Invested Amount over
the Stated Class D Amount on such Business Day after taking into
account all adjustments of the ABC Adjusted Invested Amount on
such day.
"Class D Fixed/Floating Percentage" shall mean for any
Business Day on or after the Amortization Period Commencement
Date, the percentage equivalent of a fraction, the numerator of
which is the Class D Invested Amount at the end of the last day
of the Revolving Period 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 beginning of such Business Day after giving
effect to any deposits or withdrawals to be made to the Excess
Funding Account on such Business Day and (b) the sum of the
numerators used to calculate the applicable floating or
fixed/floating percentages with respect to all Participations and
all Classes of all Series then outstanding.
"Class D Floating Percentage" shall mean, with respect
to any Business Day, the percentage equivalent of a fraction, the
numerator of which is the Class D Invested Amount as of the
beginning of such Business Day and the denominator of which is
the greater of (a) the sum of the aggregate amount of Principal
Receivables as of the beginning of such Business Day and the
amount on deposit in the Excess Funding Account as of the
beginning of such Business Day after giving effect to any
deposits or withdrawals to be made to the Excess Funding Account
on such Business Day and (b) the sum of the numerators used to
calculate the applicable floating or fixed/floating percentages
with respect to all Participations and all Classes of all Series
then outstanding.
"Class D Initial Invested Amount" shall mean
$61,364,000.
"Class D Interest Rate" shall have the meaning
specified in subsection 4.23 of the Agreement.
"Class D Invested Amount" shall mean with respect to
any Business Day, an amount equal to (a) the Class D Initial
Invested Amount, minus (b) the aggregate amount of principal
payments made to Class D Securityholders through and including
such Business Day and reductions of the Class D Invested Amount
pursuant to subsection 4.12(d), minus (c) the aggregate amount of
Class D Charge-Offs for all prior Distribution Dates, minus (d)
the aggregate amount of Redirected Principal Collections through
and including such Business Day for which the Class D Invested
Amount has been reduced pursuant to subsection 4.14(d) of the
Agreement, plus (e) the aggregate amount reimbursed with respect
to reductions of the Class D Invested Amount through and
including such Business Day pursuant to subsection 4.9(a)(xii) of
the Agreement plus, with respect to such subsection, amounts
applied thereto pursuant to subsections 4.10(a) and (b) of the
Agreement, for the purpose of reimbursing amounts deducted
pursuant to the foregoing clauses (c) and (d); provided, however,
that the Class D Invested Amount may not be reduced below zero.
"Class D Outstanding Principal Amount" shall mean, with
respect to the Class D Securities, when used with respect to any
Business Day, an amount equal to (a) the Class D Initial Invested
Amount minus (b) the aggregate amount of principal payments made
to Class D Securityholders prior to such Business Day.
"Class D Principal" shall mean the principal
distributable in respect of the Class D Security as specified in
subsection 4.7(d) of the Agreement.
"Class D Principal Payment Commencement Date" shall
mean the earlier of (a) during the Amortization Period, the first
Distribution Date on which the CTO Invested Amount is paid in
full or, if there are no Principal Collections allocable to the
Series 1998-1 Securities remaining after payments have been made
to the Collateralized Trust Obligations on such Distribution
Date, the Distribution Date following the first Distribution Date
on which the CTO 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), 10.2(a), 12.1 or 12.2
of the Agreement or Section 3 of this Series Supplement.
"Class D Securities" shall mean any of the Securities
executed by the Transferor and authenticated by or on behalf of
the Trustee, substantially in the form of Exhibit A-4 hereto.
"Class D Securityholder" shall mean the Person in whose
name a Class D Security is registered in the Security Register.
"Class D Securityholders' Interest" shall mean the
portion of the Series 1998-1 Securityholders' Interest evidenced
by the Class D Security.
"Clearing System Certificate" shall mean a certificate
in substantially the form of Exhibit C hereto or such other form
of certificate as shall be satisfactory to the Trustee, the
Euroclear Operator and Cedel.
"Closing Date" shall mean April 28, 1998.
"Collateralized Trust Obligations" shall mean any of
the Securities executed by the Transferor and authenticated by or
on behalf of the Trustee, substantially in the form of Exhibit A-
3 hereto.
"Controlled Amortization Period" shall mean, with
respect to the Series 1998-1 Securities, unless a Pay Out Event
shall have occurred with respect to such Series prior thereto,
the period commencing on the Amortization Period Commencement
Date and ending upon the earliest to occur of (x) the payment in
full to the Series 1998-1 Securityholders of the Invested Amount,
and (y) the Series 1998-1 Termination Date.
"CTO Additional Interest" shall have the meaning
specified in subsection 4.6(c) of the Agreement.
"CTO Adjusted Invested Amount" shall mean, for any date
of determination, an amount not less than zero equal to the then
current CTO Invested Amount minus the excess, if any, of the
amount then on deposit in the Principal Account over the Class A
Invested Amount and the Class B Invested Amount on such date of
determination.
"CTO Charge-Offs" shall have the meaning specified in
subsection 4.13(b) of the Agreement.
"CTO Default" shall have the meaning specified in
Section 9.
"CTO Exchange Date" shall mean the 40th day after the
later of the commencement of the offering and the Closing Date.
"CTO Expected Final Payment Date" means the April 2002
Distribution Date.
"CTO Fixed/Floating Percentage" shall mean for any
Business Day on or after the Amortization Period Commencement
Date, the percentage equivalent of a fraction, the numerator of
which is the CTO Invested Amount at the end of the last day of
the Revolving Period 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
beginning of such Business Day after giving effect to any
deposits or withdrawals to be made to the Excess Funding Account
on such Business Day and (b) the sum of the numerators used to
calculate the floating or fixed/floating percentages with respect
to all Participations and all Classes of all Series then
outstanding.
"CTO Floating Percentage" shall mean, with respect to
any Business Day, the percentage equivalent of a fraction, the
numerator of which is the CTO Adjusted Invested Amount as of the
beginning of such Business Day after giving effect to any deposit
to be made to the Principal Account on such Business Day and the
denominator of which is the greater of (a) the sum of the
aggregate amount of Principal Receivables as of the beginning of
such Business Day and the amount on deposit in the Excess Funding
Account as of the beginning of such Business Day after giving
effect to any deposits or withdrawals to be made to the Excess
Funding Account on such Business Day and (b) the sum of the
numerators used to calculate the applicable floating or
fixed/floating percentages with respect to all Participations and
all Classes of all Series then outstanding.
"CTO Global Security" shall mean a CTO Temporary
Regulation S Global Security, a CTO Regulation S Global Security
or a CTO Rule 144A Global Security.
"CTO Initial Invested Amount" shall mean $61,364,000.
"CTO Interest Rate" shall mean 6.45625% per annum from
the Closing Date through and including June 14, 1998 and, with
respect to each Interest Accrual Period thereafter, a per annum
rate .80% in excess of LIBOR as determined on the related LIBOR
Determination Date.
"CTO Invested Amount" shall mean with respect to any
Business Day, an amount equal to (a) the CTO Initial Invested
Amount minus (b) the aggregate amount of principal payments made
to CTO Securityholders through and including such Business Day,
minus (c) the aggregate amount of CTO Charge-Offs for all prior
Distribution Dates, minus (d) the aggregate amount of Redirected
CTO Principal Collections and Redirected Class B Principal
Collections through and including such Business Day for which the
Class D Invested Amount has not been reduced pursuant to
subsection 4.14(d) of the Agreement, plus (e) the aggregate
amount reimbursed with respect to reductions of the CTO Invested
Amount through and including such Business Day pursuant to
subsection 4.9(a)(xi) of the Agreement plus, with respect to such
subsection, amounts applied thereto pursuant to subsections
4.10(a) and (b) and 4.14(a) of the Agreement, for the purpose of
reimbursing amounts deducted pursuant to the foregoing clauses
(c) and (d); provided, however, that the CTO Invested Amount may
not be reduced below zero.
"CTO Monthly Interest" shall mean the interest
distributable in respect of the Collateralized Trust Obligations
as calculated in accordance with subsection 4.6(c) of the
Agreement.
"CTO Monthly Interest Shortfall" shall have the meaning
specified in subsection 4.6(c) of the Agreement.
"CTO Outstanding Principal Amount" shall mean, with
respect to the Collateralized Trust Obligations when used with
respect to any Business Day, an amount equal to (a) the CTO
Initial Invested Amount minus (b) the aggregate amount of
principal payments made to CTO Securityholders prior to such
Business Day.
"CTO Percentage" shall mean a fraction the numerator of
which is the CTO Invested Amount and the denominator of which is
the sum of the Class A Invested Amount, the Class B Invested
Amount and the CTO Invested Amount.
"CTO Principal" shall mean the principal distributable
in respect of the Collateralized Trust Obligations as calculated
in accordance with subsection 4.7(c) of the Agreement.
"CTO Principal Payment Commencement Date" shall mean
the earlier of (a) the Distribution Date on which the Class A
Invested Amount and the Class B Invested Amount have each been
paid in full or, if the Class B Invested Amount is paid in full
on the Class B Expected Final Payment Date and the Early
Amortization Period has not commenced, the Distribution Date
following the Class B Expected Final Payment Date and (b) the
Distribution Date following a sale or repurchase of the
Receivables as set forth in subsections 2.4(e), 10.2(a), 12.1 or
12.2 of the Agreement or Section 3 of this Series Supplement.
"CTO Regulation S Global Security" shall mean a
Collateralized Trust Obligation, sold in an offshore transaction
in reliance on Regulation S under the Securities Act, represented
by one or more Global Securities in definitive, fully registered
form without interest coupons, deposited with DTC, as initial
Clearing Agency, or any successor, with the applicable legends
set forth in Exhibit A-3 hereto included in the form of such
Collateralized Trust Obligation.
"CTO Required Amount" shall mean the amount determined
by the Servicer for each Business Day equal to the excess, if
any, of (x) the sum of (i) the CTO Monthly Interest for the
Interest Accrual Period beginning in the then current Monthly
Period, (ii) any Carryover CTO Monthly Interest, (iii) the CTO
Percentage of the Monthly Servicing Fee for the then current
Monthly Period, (iv) the CTO Percentage of the Series Default
Amount, if any, for such Business Day and for any previous
Business Day in such Monthly Period and (v) the CTO Percentage of
the Series 1998-1 Percentage of any Adjustment Payment the
Transferor is required but fails to make pursuant to subsection
3.8(a) of the Agreement on such Business Day and on each previous
Business Day during such Monthly Period over (y) the Available
Series 1998-1 Finance Charge Collections plus any Excess Finance
Charge Collections from other Series and any Transferor Finance
Charge Collections allocated with respect to the amounts
described in clauses (x)(i) through (v) above with respect to
such Business Day and all previous Business Days in such Monthly
Period.
"CTO Reserve Account" shall have the meaning specified
in subsection 4.21(a) of the Agreement.
"CTO Rule 144A Global Security" shall mean a
Collateralized Trust Obligation, sold within the United States to
U.S. persons that are QIBs, issued in definitive, fully
registered form without interest coupons, in the form of
beneficial interests in one or more Global Securities, deposited
with DTC, as initial Clearing Agency, or any successor, with the
applicable legends set forth in Exhibit A-3 hereto included in
the form of such Collateralized Trust Obligation.
"CTO Securityholder" shall mean the Person in whose
name a Collateralized Trust Obligation is registered in the
Security Register.
"CTO Securityholders' Interest" shall mean the portion
of the Series 1998-1 Securityholders' Interest evidenced by the
Collateralized Trust Obligations.
"CTO Temporary Regulation S Global Security" shall mean
a Collateralized Trust Obligation, sold in an offshore
transaction in reliance on Regulation S under the Securities Act,
represented by one or more Global Securities in definitive, fully
registered form without interest coupons, deposited with DTC, as
initial Clearing Agency , or any successor, with the applicable
legends set forth in Exhibit A-3 hereto included in the form of
such Collateralized Trust Obligation.
"CTO Trigger Event" shall have the meaning specified in
subsection 4.20.
"Defeasance" shall have the meaning specified in
subsection 4.18 of the Agreement.
"Defeasance Funding Account" shall have the meaning set
forth in subsection 4.16 of the Agreement.
"Defeasance Funding Account Balance" shall mean, with
respect to any date of determination during the Amortization
Period, the principal amount, if any, on deposit in the
Defeasance Funding Account on such date of determination.
"Defeasance Funding Account Investment Proceeds" shall
mean, with respect to each Transfer Date following the initial
deposit to the Defeasance Funding Account, the investment
earnings on funds on deposit in the Defeasance Funding Account,
if any, (net of investment losses and expenses) for the related
Interest Accrual Period.
"Defeasance Reserve Account" shall have the meaning set
forth in subsection 4.17 of the Agreement.
"Defeasance Reserve Account Funding Date" shall mean
the first day of the Monthly Period prior to the Defeasance, or
such earlier date as the Transferor may determine.
"Distribution Date" shall mean June 15, 1998 and the
fifteenth day of each month thereafter, or if such day is not a
Business Day, the next succeeding Business Day.
"DTC" shall mean The Depository Trust Company.
"Early Amortization Period" shall mean the period
beginning on the earlier of (a) the day on which a Pay Out Event
occurs or is deemed to have occurred and (b) the CTO Expected
Final Payment Date if the CTO Invested Amount has not been paid
in full on or prior to such date, and ending on the earlier of
(i) the date on which the Class A Invested Amount, the Class B
Invested Amount, the CTO Invested Amount and the Class D Invested
Amount have been paid in full and (ii) the Scheduled Series 1998-
1 Termination Date.
"Enhancement" shall mean, with respect to each Class,
the amount, if any, on deposit from time to time in the Revolving
Receivables Reserve Account and with respect to the Class A
Securities, the subordination of the Class B Invested Amount, the
CTO Invested Amount, and the Class D Invested Amount, with
respect to the Class B Securities, the subordination of the CTO
Invested Amount and the Class D Invested Amount, and with respect
to the Collateralized Trust Obligations, the subordination of the
Class D Invested Amount and the amount, if any, on deposit from
time to time in the CTO Reserve Account.
"Excess Finance Charge Collections" shall mean, with
respect to any Business Day, as the context requires, either (x)
the amount described in subsection 4.9(a)(xviii) of the Agreement
allocated to the Series 1998-1 Securities but available to cover
shortfalls in amounts paid from Finance Charge Collections for
other Series, if any, or (y) the aggregate amount of Finance
Charge 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 1998-1 Securities.
"Fixed/Floating Percentage" shall mean for any Business
Day on or after the Amortization Period Commencement Date, the
sum of the Class A Fixed/Floating Percentage, the Class B
Fixed/Floating Percentage, the CTO Fixed/Floating Percentage and
the Class D Fixed/Floating Percentage.
"Floating Percentage" shall mean for any Business Day
the sum of the applicable Class A Floating Percentage, Class B
Floating Percentage, CTO Floating Percentage, and Class D
Floating Percentage.
"Initial Invested Amount" shall mean an amount equal to
the sum of (i) the Class A Initial Invested Amount; (ii) the
Class B Initial Invested Amount; (iii) the CTO Initial Invested
Amount; and (iv) the Class D Initial Invested Amount.
"Interest Accrual Period" shall mean, with respect to a
Distribution Date, the period from and including the preceding
Distribution Date to but excluding such Distribution Date;
provided, however, that the initial Interest Accrual Period shall
be the period from the Closing Date to but excluding 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, (b) the Class B Invested
Amount as of such Business Day, (c) the CTO Invested Amount as of
such Business Day and (d) the Class D Invested Amount as of such
Business Day.
"Investor Percentage" shall mean, (a) with respect to
Finance Charge Collections prior to the commencement of the Early
Amortization Period, Default Amounts at any time and Principal
Collections during the Revolving Period, the Floating Percentage
and (b) with respect to Finance Charge Collections during the
Early Amortization Period and Principal Collections during the
Amortization Period, the Fixed/Floating Percentage, and with
respect to any other Series of Securities, the percentage
specified in the related Supplement.
"Investor Securityholder" shall mean the Holder of
record of an Investor Security of Series 1998-1.
"LIBOR" shall have the meaning specified in subsection
4.15(a) of the Agreement.
"LIBOR Determination Date" shall mean the second
Business Day prior to the commencement of the second and each
subsequent 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.
"Member Organization Certificate" shall mean a
certificate substantially in the form of Exhibit D hereto or such
other form of certificate as shall be satisfactory to the
Trustee, the Euroclear Operator and Cedel.
"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 1998-1 Securities shall begin on and include the
Closing Date and shall end on and include May 29, 1998.
"Monthly Servicing Fee" shall mean for any Monthly
Period, an amount equal to the product of (i) a fraction, the
numerator of which is the actual number of days in such Monthly
Period and the denominator of which is 365 or 366, (ii) the
Series Monthly Servicing Fee Percentage and (iii) the Adjusted
Invested Amount as of the beginning of the day on the first day
of such Monthly Period, or, in the case of the first Distribution
Date, the Initial Invested Amount.
"Negative Carry Amount" shall have the meaning
specified in subsection 4.10(a) of the Agreement.
"Paired Series" shall have the meaning specified in
Section 17 of this Series Supplement.
"Paying Agent" shall mean, for the Series 1998-1
Securities, initially The Bank of New York and in certain limited
circumstances the Banque Generale du Luxembourg, S.A.
"Payment Reserve Account" shall have the meaning
specified in subsection 4.22 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 1998-1 Pay Out Event is
deemed to occur pursuant to Section 8 of this Series Supplement.
"Portfolio Yield" shall mean, with respect to any
Monthly Period, the annualized percentage equivalent of a
fraction, the numerator of which is the sum of (i) the aggregate
amount of Available Series 1998-1 Finance Charge Collections for
each Business Day during such Monthly Period (not including (a)
the amounts withdrawn from the Payment Reserve Account, (b)
Adjustment Payments made by the Transferor with respect to
Adjustment Payments required to be made but not made in prior
Monthly Periods, if any, and (c) the amount of any Finance Charge
Collections received with respect to the final payment of any
Closed End Receivable that is refinanced with a receivable
arising under a revolving credit card account) and (ii) amounts
withdrawn from the Defeasance Reserve Account with respect to
such Monthly Period calculated on a cash basis after subtracting
the aggregate Series Default Amount for such Monthly Period and
the Series 1998-1 Percentage of any Adjustment Payments which the
Transferor is required but fails to make pursuant to the Pooling
and Servicing Agreement for each Business Day during such Monthly
Period, and the denominator of which is the average daily
Invested Amount during such Monthly Period; provided, however,
that Excess Finance Charge Collections applied for the benefit of
the Series 1998-1 Securityholders may be added to the numerator
if the Transferor shall have provided ten Business Days prior
written notice of such action to each Rating Agency and the
Transferor, the Servicer and the Trustee shall have received
notification in writing that such action will not result in
Standard & Poor's reducing or withdrawing its then existing
rating of the Investor Securities of any outstanding Series or
Class with respect to which it is a Rating Agency.
"Principal Shortfalls" shall mean for any Business Day
(x) for Series 1998-1, (i) during the Controlled Amortization
Period on or prior to the CTO Principal Payment Commencement
Date, the excess of the Class A Controlled Distribution Amount or
the Class B Controlled Distribution Amount, as applicable, over
the aggregate amount applied with respect thereto for such
Business Day and for each prior Business Day in such Monthly
Period, and (ii) at all other times, the Invested Amount of the
Class then receiving principal payments, if any, after the
application of Principal Collections on such Business Day or (y)
for any other Series the amounts specified as such in the
Supplement for such other Series.
"QIB" shall mean a "qualified institutional buyer"
within the meaning of Rule 144A under the Securities Act.
"Rating Agency" shall mean Standard & Poor's and
Moody's
"Redirected Class B Principal Collections" shall have
the meaning specified in subsection 4.14(c) of the Agreement.
"Redirected Class D Principal Collections" shall have
the meaning specified in subsection 4.14(a) of the Agreement.
"Redirected CTO Principal Collections" shall have the
meaning specified in subsection 4.14(b) of the Agreement.
"Redirected Principal Collections" shall mean the sum
of Redirected Class B Principal Collections, Redirected CTO
Principal Collections and Redirected Class D Principal
Collections.
"Regulation S Transfer Certificate" shall mean a
certificate substantially in the form of Exhibit E hereto.
"Required Amount" shall have the meaning specified in
subsection 4.10(b) of the Agreement.
"Required Defeasance Reserve Account Amount" shall
mean, with respect to any Business Day on or after the Defeasance
Reserve Account Funding Date, an amount equal to the excess of
the sum of the Class A Monthly Interest, the Class B Monthly
Interest and the estimated amount of the CTO Monthly Interest
over the estimated amount of investment earnings on amounts in
the Defeasance Funding Account, as estimated by the Transferor,
for each of the Interest Accrual Periods during the period from
the date of the deposit to the Defeasance Funding Account through
the April 2002 Distribution Date.
"Reserve Account Investment Proceeds" shall mean, with
respect to any Business Day, the sum of the investment earnings
on funds on deposit in (i) the CTO Reserve Account available in
accordance with subsection 4.21(c) of the Agreement on such
Business Day and (ii) the Payment Reserve Account available in
accordance with subsection 4.22(c) of the Agreement on such
Business Day.
"Revolving Period" shall mean the period from and
including the Closing Date to, but not including, the
Amortization Period Commencement Date.
"Revolving Receivables Reserve Account" shall have the
meaning specified in subsection 4.19 of the Agreement.
"Rule 144A Transfer Certificate" shall mean a
certificate substantially in the form of Exhibit F hereto.
"Scheduled Series 1998-1 Termination Date" shall mean
the February 2005 Distribution Date.
"Series 1998-1" shall mean the Series of the Fingerhut
Master Trust represented by the Series 1998-1 Securities.
"Series 1998-1 Pay Out Event" shall have the meaning
specified in Section 8 of this Series Supplement.
"Series 1998-1 Percentage" shall mean, on any date of
determination, the percentage equivalent of a fraction the
numerator of which is the Invested Amount and the denominator of
which is the sum of the Invested Amounts relating to all other
Series then outstanding.
"Series 1998-1 Securities" shall mean the Class A
Securities, the Class B Securities, the Collateralized Trust
Obligations and the Class D Security.
"Series 1998-1 Securityholder" shall mean the holder of
record of any Series 1998-1 Security.
"Series 1998-1 Securityholders' Interest" shall have
the meaning specified in Section 4.4 of the Agreement.
"Series 1998-1 Termination Date" shall mean the earlier
to occur of (i) the day after the Distribution Date on which the
Series 1998-1 Securities are paid in full, or (ii) the Scheduled
Series 1998-1 Termination Date.
"Series Charge-Offs" shall mean the sum of Class A
Charge-Offs, Class B Charge-Offs, CTO Charge-Offs and Class D
Charge-Offs.
"Series 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
Percentage for such Business Day.
"Series Monthly Servicing Fee Percentage" shall mean
2.00% per annum.
"Shared Principal Collections" shall mean, as the
context requires, (a) the amount of Principal Collections for any
Business Day allocated to the Series 1998-1 Securities which, in
accordance with subsections 4.9(b) and 4.9(c)(ii) of the
Agreement, may be applied in accordance with Section 4.3(d) of
the Agreement or (b) the amounts allocated to the Investor
Securities of other Series which the applicable Series
Supplements for such Series specify are to be treated as "Shared
Principal Collections" or (c) the amounts specified in any
Participation Supplement to be treated as "Shared Principal
Collections" and which may be applied to cover Principal
Shortfalls with respect to the Series 1998-1 Securities.
"Specified CTO Reserve Amount" shall mean, on any date
of determination following a CTO Trigger Event, subject to
Section 9 of this Supplement, the amount, if any, which if added
to the numerator of the Target Percentage on such date would
cause such percentage to be equal to 6%; provided, however, that
except as specified in the immediately succeeding proviso, the
Specified CTO Reserve Amount shall not exceed the product of 5%
and the Invested Amount on any Business Day; and provided,
further, that following a CTO Default, in the circumstances
specified in Section 9 of this Series Supplement, the Specified
CTO Reserve Amount will be equal to the CTO Outstanding Principal
Amount.
"Specified Revolving Receivables Reserve Amount" shall
mean, on any date of determination, an amount equal to the
product of (x) the Floating Percentage on such date and (y) 1% of
the aggregate amount of Principal Receivables which are Revolving
Receivables on such date; provided, however, that such percentage
may be reduced at the option of the Transferor at any time if the
Rating Agency Condition shall have been satisfied with respect
thereto.
"Stated Class D Amount" shall mean on any Business Day
the greater of (i) zero and (ii) a number rounded to the nearest
Dollar equal to 13.64% of the ABC Adjusted Invested Amount as of
such Business Day; provided, however, that during any Early
Amortization Period the Stated Class D Amount shall be equal to
the Stated Class D Amount immediately preceding the commencement
of the Early Amortization Period; provided, further, that on any
Business Day after the earlier of (a) the Class A Expected Final
Payment Date if the Class A Invested Amount was not paid in full
on the Class A Expected Final Payment Date or (b) the Class B
Expected Final Payment Date if the Class B Invested Amount was
not paid in full on the Class B Expected Final Payment Date the
Stated Class D Amount shall be equal to the Stated Class D Amount
on the Class A Expected Final Payment Date or the Class B
Expected Final Payment Date, as applicable; and provided,
further, that there shall be no reduction in the Stated Class D
Amount on any day on which the amount on deposit in the Revolving
Receivables Reserve Account is less than the Specified Revolving
Receivables Reserve Amount or the amount on deposit in the CTO
Reserve Account is less than the Specified CTO Reserve Amount
and; provided, further, that the Stated Class D Amount shall not
be less than $15,340,920 prior to the date on which each of the
Class A Outstanding Principal Balance, the Class B Outstanding
Principal Balance and the CTO Outstanding Principal Balance have
been reduced to zero.
"Target Percentage" shall have the meaning specified in
subsection 4.20 of the Agreement.
"Telerate Page 3750" shall mean the display page
currently so designated on the Dow Jones Telerate Service (or
such other page as may replace that page on that service for the
purpose of displaying comparable rates or prices).
"Transferor Finance Charge Collections" shall mean on
any Business Day the Series 1998-1 Percentage of the Finance
Charge Collections allocable to the Exchangeable Transferor
Security.
"Transferor Retained Securities" shall mean Investors
Securities of any Series which the Transferor retains, including
the Class D Securities for so long as they are held by the
Transferor, but only to the extent that and for so long as the
Transferor is the Holder of such Securities.
SECTION 3. Reassignment Terms. The Series 1998-1
Securities 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 sum of the Class A Invested
Amount, the Class B Invested Amount and the CTO Invested Amount
would be reduced to an amount less than or equal to 10% of the
sum of the Class A Initial Invested Amount, the Class B Initial
Invested Amount and the CTO Initial Invested Amount. The deposit
required in connection with any such termination and final
distribution shall be equal to the sum of the unpaid Class A
Invested Amount, the unpaid Class B Invested Amount and the
unpaid CTO Invested Amount plus accrued and unpaid interest on
the Class A Securities, Class B Securities and Collateralized
Trust Obligations through the day prior to the Distribution Date
on which the final distribution occurs, in each case after giving
effect to any payments on such date.
SECTION 4. Delivery and Payment for the Series 1998-
1 Securities. The Transferor shall execute and deliver the
Series 1998-1 Securities to the Trustee for authentication in
accordance with Section 6.1 of the Agreement. The Trustee shall
deliver the Series 1998-1 Securities 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 1998-1
Securities; Denominations; Depositary. The Class A Securities,
the Class B Securities and the Collateralized Trust Obligations
shall be delivered as Book-Entry Securities as provided in
Sections 6.1 and 6.10 of the Agreement. The Class A Securities
and the Class B Securities shall be issued in minimum
denominations of $1,000 and integral multiples thereof. The
Collateralized Trust Obligations shall be issued in minimum
denominations of $100,000 and integral multiples of $1,000 in
excess thereof. The Class D Security shall be delivered as a
Registered Security as provided in Section 6.1 of the Agreement.
The Depositary for Series 1998-1 shall be DTC and the
Class A Securities and the Class B Securities shall be initially
registered in the name of Cede & Co., its nominee and will
initially be held by the Trustee as custodian for DTC.
The Transferor shall execute and the Trustee shall
authenticate (i) one or more CTO Temporary Regulation S Global
Securities, (ii) one or more CTO Regulation S Global Securities,
and (iii) one or more CTO Rule 144A Global Securities, each
having a principal balance as shall have been indicated to the
Trustee by the Transferor and having an aggregate principal
balance equal to the CTO Invested Amount as of the date of
execution of such Global Securities by the Transferor.
The CTO Global Securities (i) shall be delivered by the
Trustee to DTC acting as the initial Clearing Agency, and (ii) in
each case shall be registered in the name of Cede & Co. The CTO
Global Securities shall bear a legend substantially in the form
set forth in Exhibit A-3. The CTO Global Securities initially
will be held by the Trustee as custodian for DTC.
So long as any of the CTO Global Securities remains
outstanding and are held by or on behalf of the Clearing Agency,
transfers of beneficial interests in any of such CTO Global
Securities may be made only in accordance with this Section 5 and
in accordance with the rules of the Clearing Agency and the
Euroclear Operator or Cedel.
A beneficial interest in the CTO Temporary Regulation
S Global Security may be transferred to a transferee that takes
delivery in the form of a beneficial interest in the CTO Rule
144A Global Securities only upon receipt by the Trustee of a Rule
144A Transfer Certificate.
On and after the CTO Exchange Date, a beneficial
interest in the CTO Temporary Regulation S Global Security may be
transferred to a transferee that takes delivery in the form of a
beneficial interest in the CTO Regulation S Global Security only
upon receipt by the Trustee of a Clearing System Certificate from
the Euroclear Operator or Cedel, as applicable, and a Member
Organization Certificate, relating to the appropriate portion of
the CTO Temporary Regulation S Global Security.
A beneficial interest in a CTO Rule 144A Global
Security may be transferred to a transferee that takes delivery
in the form of a beneficial interest in a CTO Regulation S Global
Security or CTO Temporary Regulation S Global Security only upon
receipt by the Transfer Agent and Registrar of a Regulation S
Transfer Certificate.
No restrictions shall apply with respect to the
transfer or registration of transfer of (x) a beneficial interest
in a CTO Rule 144A Global Security to a transferee that takes
delivery in the form of a beneficial interest in the CTO Rule
144A Global Security, or (y) a beneficial interest in a CTO
Regulation S Global Security to a transferee that takes delivery
in the form of a beneficial interest in the CTO Regulation S
Global Security.
An exchange of a beneficial interest in the CTO
Temporary Regulation S Global Security for a beneficial interest
in the CTO Regulation S Global Security, may be made only on or
after the CTO Exchange Date and only upon receipt by the Trustee
of a Clearing System Certificate from the Euroclear Operator or
Cedel, as applicable, relating to the appropriate portion of the
CTO Temporary Regulation S Global Security.
Upon acceptance for transfer of a beneficial
interest in any CTO Global Security for a beneficial interest in
another CTO Global Security as provided herein, the Trustee shall
(or shall request the Clearing Agency to) endorse on the
schedules affixed to each of such CTO Global Securities (or on
continuations of such schedules affixed to each of such CTO
Global Securities and made parts thereof) appropriate notations
evidencing the date of such transfer and (x) in the case of the
CTO Global Security from which such transfer is made, a decrease
in the outstanding balance of such CTO Global Security equal to
the outstanding balance being transferred and (y) in the case of
the CTO Global Security into which such transfer is made, an
increase in the outstanding balance of such CTO Global Security
equal to the outstanding balance being transferred.
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 1998-1
Securities:
ARTICLE IV
RIGHTS OF SECURITYHOLDERS ANDALLOCATION
AND APPLICATION OF COLLECTIONS
SECTION 4.4 Rights of Securityholders.
The Series 1998-1 Securities 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 1998-1 Securities at the
times and in the amounts specified in this Agreement,
(a) the Floating Percentage and the Fixed/Floating
Percentage (as applicable from time to time) of
Collections (including Finance Charge Collections)
available in the Collection Account, (b) funds
allocable to the Series 1998-1 Securities on deposit in
the Excess Funding Account and (c) funds on deposit in
the Interest Funding Account, the Principal Account,
the Revolving Receivables Reserve Account, the
Defeasance Funding Account, the Defeasance Reserve
Account, the Distribution Account, the CTO Reserve
Account and the Payment Reserve Account (for such
Series, the "Series 1998-1 Securityholders' Interest").
The Class B Invested Amount, the CTO Invested Amount
and the Class D Invested Amount shall be subordinated
to the Class A Securities; the CTO Invested Amount and
the Class D Invested Amount shall be subordinated to
the Class B Securities; and the Class D Invested Amount
shall be subordinated to the Collateralized Trust
Obligations, in each case to the extent provided in
this Article IV. The Class B Securities will not have
the right to receive payments of principal until the
Class A Invested Amount has been paid in full. The
Collateralized Trust Obligations will not have the
right to receive payments of principal until the Class
A Invested Amount and the Class B Invested Amount have
been paid in full. The Class D Securities will not
have the right to receive payments of principal, other
than to the extent of Class D Excess Amounts, until the
Class A Invested Amount, the Class B Invested Amount
and the CTO Invested Amount have been paid in full.
SECTION 4.5 Collections and Allocation;
Payments on Exchangeable Transferor Security.
Collections and Allocations. 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 1998-1
Securities, and all funds on deposit in the Interest
Funding Account, the Principal Account, the Revolving
Receivables Reserve Account, the Defeasance Funding
Account, the Defeasance Reserve Account, the
Distribution Account, the CTO Reserve Account and the
Payment Reserve Account, as described in this Article
IV. On each Business Day, (i) the amount of Finance
Charge Collections available in the Collection Account
allocable to the Series 1998-1 Securities shall be
determined by multiplying the aggregate amount of such
Finance Charge Collections by (x) prior to the Pay Out
Commencement Date, the Floating Percentage and (y) on
and after the Pay Out Commencement Date, the
Fixed/Floating Percentage, (ii) the amount of Principal
Collections available in the Collection Account
allocable to the Series 1998-1 Securities shall be
determined by multiplying the aggregate amount of such
Principal Collections by (x) during the Revolving
Period, the Floating Percentage and (y) during any
Amortization Period, the Fixed/Floating Percentage, and
(iii) the Default Amount on such Business Day allocable
to the Series 1998-1 Securities shall be determined by
multiplying the Default Amount by the Floating
Percentage. In addition, on the Closing Date the
Transferor shall make a deposit to the Interest Funding
Account in the amount of $2,000,000 to be allocated to
the Series 1998-1 Securities and applied as Available
Series 1998-1 Finance Charge Collections in accordance
with subsection 4.9(a) of the Agreement.
Payments to the Holder of the Exchangeable
Transferor Security. On each Business Day, the
Servicer shall allocate and pay Collections in
accordance with the Daily Report to the Holder of the
Exchangeable Transferor Security in accordance with
subsection 4.3(b) of the Agreement; provided, however,
that such amounts shall be applied in accordance with
Section 4.10 hereof to the extent specified therein.
Notwithstanding the foregoing and any other
provisions of this Supplement, amounts payable to the
Transferor 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.
SECTION 4.6 Determination of Interest for
the Series 1998-1 Securities. The amount of monthly
interest (the "Class A Monthly Interest") which shall
accrue for the benefit of the Class A Securities with
respect to any Interest Accrual Period shall be an
amount equal to one-twelfth of the product of (i) the
Class A Interest Rate and (ii) the Class A Outstanding
Principal Amount as of the close of business on the
first day of such Interest Accrual Period (or in the
case of the initial Distribution Date, an amount equal
to the product of (u) the Class A Initial Invested
Amount, (v) 47 divided by 360, and (w) the Class A
Interest Rate).
On the first Business Day of each Monthly
Period, the Servicer shall determine an amount (the
"Class A Monthly Interest Shortfall") with respect to
the Distribution Date in such Monthly Period equal to
the excess, if any, of (x) the Class A Monthly Interest
for the Interest Accrual Period ending in such Monthly
Period over (y) the amount available to be paid to the
Class A Securityholders in respect of interest on such
Distribution Date. If there is a Class A Monthly
Interest Shortfall with respect to any Distribution
Date, an additional amount ("Class A Additional
Interest") shall be payable as provided herein with
respect to the Class A Securities on each Distribution
Date following such Distribution Date, to and including
the Distribution Date on which such Class A Monthly
Interest Shortfall is paid to Class A Securityholders,
equal to one-twelfth of the product of (i) the Class A
Interest Rate and (ii) such Class A Monthly Interest
Shortfall remaining unpaid. Notwithstanding anything
to the contrary herein, Class A Additional Interest
shall be payable or distributed to Class A
Securityholders only to the extent permitted by
applicable law.
The amount of monthly interest (the "Class
B Monthly Interest") which shall accrue for the benefit
of the Class B Securities with respect to any Interest
Accrual Period shall be an amount equal to one-twelfth
of the product of (i) the Class B Interest Rate and
(ii) the Class B Invested Amount as of the close of
business on the first day of such Interest Accrual
Period (or in the case of the initial Distribution
Date, an amount equal to the product of (u) the Class B
Initial Invested Amount, (v) 47 divided by 360, and (w)
the Class B Interest Rate).
On the first Business Day of each Monthly
Period, the Servicer shall determine an amount (the
"Class B Monthly Interest Shortfall") with respect to
the Distribution Date in such Monthly Period equal to
the excess, if any, of (x) the aggregate Class B
Monthly Interest for the Interest Accrual Period ending
in such Monthly Period over (y) the amount available to
be paid to the Class B Securityholders in respect of
interest on such Distribution Date. If there is a
Class B Monthly Interest Shortfall with respect to any
Distribution Date, an additional amount ("Class B
Additional Interest") shall be payable as provided
herein with respect to the Class B Securities on each
Distribution Date following such Distribution Date, to
and including the Distribution Date on which such Class
B Monthly Interest Shortfall is paid to Class B
Securityholders, equal to one-twelfth of the product of
(i) the Class B Interest Rate and (ii) such Class B
Monthly Interest Shortfall remaining unpaid.
Notwithstanding anything to the contrary herein, Class
B Additional Interest shall be payable or distributed
to Class B Securityholders only to the extent permitted
by applicable law.
The amount of monthly interest (for the
Series 1998-1 Securities, the "CTO Monthly Interest")
which shall accrue for the benefit of the
Collateralized Trust Obligations with respect to any
Interest Accrual Period shall be an amount equal to the
product of (i) the CTO Interest Rate for the related
Interest Accrual Period, (ii) a fraction the numerator
of which is the actual number of days in the related
Interest Accrual Period and the denominator of which is
360 and (iii) the CTO Invested Amount as of the close
of business on the first day of such Interest Accrual
Period (or in the case of the initial Distribution
Date, an amount equal to the product of (u) the CTO
Initial Invested Amount, (v) 48 divided by 360, and
(w) the CTO Interest Rate for the initial Interest
Accrual Period).
On the first Business Day of each Monthly
Period, the Servicer shall determine an amount (the
"CTO Monthly Interest Shortfall") with respect to the
Distribution Date in such Monthly Period equal to the
excess, if any, of (x) the aggregate CTO Monthly
Interest for the Interest Accrual Period ending in such
Monthly Period over (y) the amount available to be paid
to the CTO Securityholders in respect of interest on
such Distribution Date. If there is a CTO Monthly
Interest Shortfall with respect to any Distribution
Date, an additional amount ("CTO Additional Interest")
shall be payable as provided herein with respect to the
Collateralized Trust Obligations on each Distribution
Date following such Distribution Date, to and including
the Distribution Date on which such CTO Monthly
Interest Shortfall is paid to CTO Securityholders,
equal to the product of (i) the CTO Interest Rate, (ii)
such CTO Monthly Interest Shortfall remaining unpaid
and (iii) a fraction the numerator of which is the
actual number of days in the related Interest Accrual
Period and the denominator of which is 360.
Notwithstanding anything to the contrary herein, CTO
Additional Interest shall be payable or distributed to
CTO Securityholders only to the extent permitted by
applicable law.
SECTION 4.7 Determination of Principal
Amounts. The amount of principal (the "Class A
Principal") distributable from the Distribution Account
with respect to the Class A Securities for each
Distribution Date with respect to the Amortization
Period shall be equal to the Available Series 1998-1
Principal Collections on deposit in the Principal
Account with respect to the related Monthly Period;
provided, however, that with respect to any
Distribution Date during the Controlled Amortization
Period, Class A Principal shall not exceed the lesser
of (i) the Class A Controlled Distribution Amount and
(ii) the Class A Invested Amount; provided, further
that with respect to any Distribution Date with respect
to the Early Amortization Period following a
Defeasance, Class A Principal shall be equal to the
lesser of (i) the Defeasance Funding Account Balance
and (ii) the Class A Invested Amount; provided, further
that with respect to the Series 1998-1 Termination
Date, Class A Principal shall be an amount equal to the
Class A Invested Amount.
The amount of principal (the "Class B
Principal") distributable from the Distribution Account
with respect to the Class B Securities for each
Distribution Date, beginning on the Class B Principal
Payment Commencement Date, shall be equal to the
Available Series 1998-1 Principal Collections remaining
on deposit in the Principal Account with respect to the
related Monthly Period after application thereof to
Class A Principal, if any; provided, however, that with
respect to any Distribution Date during the Controlled
Amortization Period, Class B Principal shall not exceed
the lesser of (i) the Class B Controlled Distribution
Amount and (ii) the Class B Invested Amount; provided,
further that with respect to any Distribution Date with
respect to the Early Amortization Period following a
Defeasance, Class B Principal shall be equal to the
lesser of (i) the Defeasance Funding Account Balance
after application of amounts on deposit therein to
Class A Principal and (ii) the Class B Invested Amount;
provided, further that with respect to the Series 1998-
1 Termination Date, Class B Principal shall be an
amount equal to the Class B Invested Amount.
The amount of principal (the "CTO
Principal") distributable from the Distribution Account
with respect to the Collateralized Trust Obligations
for each Distribution Date, beginning on or after the
CTO Principal Payment Commencement Date, shall be equal
to the Available Series 1998-1 Principal Collections
remaining on deposit in the Principal Account with
respect to the related Monthly Period after application
thereof to Class A Principal and Class B Principal, if
any; provided that with respect to any Distribution
Date with respect to the Early Amortization Period
following a Defeasance, CTO Principal shall be equal to
the lesser of (i) the Defeasance Funding Account
Balance after application of amounts on deposit therein
to Class A Principal and Class B Principal and (ii) the
CTO Invested Amount; provided, further with respect to
the Series 1998-1 Termination Date, CTO Principal shall
be an amount equal to the CTO Invested Amount.
The amount of principal (the "Class D
Principal") distributable from the Distribution Account
with respect to the Class D Securities for each
Distribution Date, beginning on the Class D Principal
Payment Commencement Date, and on each Distribution
Date thereafter until the Trust is terminated or until
the Class D Invested Amount is paid in full, shall be
equal to the Available Series 1998-1 Principal
Collections remaining on deposit in the Principal
Account with respect to the related Monthly Period
after application thereof to Class A Principal, Class B
Principal and CTO Principal, if any, and the Trustee,
acting in accordance with instructions from the
Servicer, will withdraw such amounts from the Principal
Account and, to the extent of the Class D Invested
Amount, deposit such amounts in the Distribution
Account for distribution to the Class D Securityholder
on the next succeeding Distribution Date.
SECTION 4.8 Shared Principal Collections.
Shared Principal Collections allocated to Available
Series 1998-1 Principal Collections for the Series 1998-
1 Securities and to be applied to Class A Principal,
Class B Principal, CTO Principal and Class D Principal
pursuant to subsection 4.9(c)(i)(y) of the Agreement
for any Business Day with respect to the Amortization
Period shall be equal to 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 1998-1 Securities
for such Business Day and the denominator of which is
the aggregate amount of Principal Shortfalls for all
Series for such Business Day. For any Business Day
with respect to the Revolving Period, Shared Principal
Collections allocated to Available Series 1998-1
Principal Collections for the Series 1998-1 Securities
shall be zero.
SECTION 4.9 Application of Funds on
Deposit in the Collection Account for the Securities.
Available Series 1998-1 Finance Charge Collections. 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
amounts from the appropriate accounts, to the extent of
the sum of (i) the amount of Finance Charge Collections
allocated to the Series 1998-1 Securities pursuant to
subsection 4.5(a) of the Agreement, (ii) amounts on
deposit in the Payment Reserve Account, if any, if and
to the extent the Transferor designates that such
amounts are to be so applied, (iii) Reserve Account
Investment Proceeds and investment earnings on amounts
on deposit in the Interest Funding Account and the
Principal Account and (iv) Defeasance Funding Account
Investment Proceeds and other amounts withdrawn from
the Defeasance Reserve Account pursuant to subsections
4.17(b), (c) and (d) and the Revolving Receivables
Reserve Account pursuant to subsections 4.19(c), (d)
and (e), which amounts shall be applied on each
Transfer Date as if such amounts had been available on
the last Business Day of the preceding Monthly Period
(collectively, the "Available Series 1998-1 Finance
Charge Collections"; provided that with respect to the
Closing Date the amount deposited by the Transferor
into the Interest Funding Account pursuant to
subsection 4.5(a) of the Agreement shall also
constitute Available Series 1998-1 Finance Charge
Collections; and provided further that, with respect to
any Business Day, amounts applied pursuant to Section
4.10 and Section 4.14 of the Agreement shall be applied
as if such amounts were Available Series 1998-1 Finance
Charge Collections). The Trustee shall apply Available
Series 1998-1 Finance Charge Collections in the
priority set forth below:
Class A Monthly Interest. On each Business
Day during a Monthly Period, the Trustee, acting in
accordance with instructions from the Servicer, shall
deposit into the Interest Funding Account for
distribution on the next Distribution Date to the Class
A Securityholders, to the extent of the Available
Series 1998-1 Finance Charge Collections for such
Business Day, an amount equal to the lesser of (x) the
Available Series 1998-1 Finance Charge Collections and
(y) the excess of (1) the sum of Class A Monthly
Interest for the Interest Accrual Period beginning in
such Monthly Period and Carryover Class A Monthly
Interest over (2) any amounts with respect thereto
previously deposited into the Interest Funding Account
during such Monthly Period. Notwithstanding anything
to the contrary herein, the portion of Carryover Class
A Monthly Interest that constitutes Class A Additional
Interest shall be payable or distributable to Class A
Securityholders only to the extent permitted by
applicable law.
Class B Monthly Interest. On each Business
Day during a Monthly Period, the Trustee, acting in
accordance with instructions from the Servicer, shall
deposit into the Interest Funding Account for
distribution on the next Distribution Date to the Class
B Securityholders, to the extent of any Available
Series 1998-1 Finance Charge Collections remaining
after giving effect to the application pursuant to
subsection 4.9(a)(i) of the Agreement, an amount equal
to the lesser of (x) any such remaining Available
Series 1998-1 Finance Charge Collections and (y) the
excess of (1) the sum of Class B Monthly Interest for
the Interest Accrual Period beginning in such Monthly
Period and Carryover Class B Monthly Interest over (2)
any amounts with respect thereto previously deposited
into the Interest Funding Account during such Monthly
Period. Notwithstanding anything to the contrary
herein, the portion of Carryover Class B Monthly
Interest that constitutes Class B Additional Interest
shall be payable or distributable to Class B
Securityholders only to the extent permitted by
applicable law.
CTO Monthly Interest. On each Business Day
during a Monthly Period, the Trustee, acting in
accordance with instructions from the Servicer, shall
deposit into the Interest Funding Account for
distribution on the next Distribution Date to the CTO
Securityholders, to the extent of any Available Series
1998-1 Finance Charge Collections remaining after
giving effect to the applications 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 1998-1 Finance Charge Collections and
(y) the excess of (1) the sum of CTO Monthly Interest
for the Interest Accrual Period beginning in such
Monthly Period and Carryover CTO Monthly Interest over
(2) any amounts with respect thereto previously
deposited into the Interest Funding Account during such
Monthly Period. Notwithstanding anything to the
contrary herein, the portion of Carryover Class C
Monthly Interest that constitutes CTO Additional
Interest shall be payable or distributable to CTO
Securityholders only to the extent permitted by
applicable law.
Monthly Servicing Fee. On each Business
Day during a Monthly Period, the Trustee, acting in
accordance with instructions from the Servicer, shall
distribute to the Servicer, to the extent of any
Available Series 1998-1 Finance Charge Collections
remaining after giving effect to the applications
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 1998-1 Finance Charge
Collections and (y) the excess of (i) the Monthly
Servicing Fee for such Monthly Period plus any unpaid
Monthly Servicing Fees from prior Monthly Periods over
(ii) any amounts with respect thereto previously
distributed to the Servicer during such Monthly Period.
Series Default Amount. On each Business
Day during a Monthly Period, the Trustee, acting in
accordance with instructions from the Servicer, shall
apply to the extent of any Available Series 1998-1
Finance Charge Collections remaining after giving
effect to the applications 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 1998-1 Finance Charge Collections and (y) the
sum of (1) the aggregate Series Default Amount for such
Business Day plus (2) the unpaid Series Default Amount
for each previous Business Day during such Monthly
Period, such amount to be (A) treated as Shared
Principal Collections during the Revolving Period, and
(B) treated as Available Series 1998-1 Principal
Collections during the Amortization Period.
Adjustment Payment Shortfalls. On each
Business Day, the Trustee, acting in accordance with
instructions from the Servicer, shall apply to the
extent of any Available Series 1998-1 Finance Charge
Collections remaining after giving effect to the
applications 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 1998-1 Finance
Charge Collections and (y) an amount equal to the
Series 1998-1 Percentage of any Adjustment Payment
which the Transferor is required but fails to make
pursuant to subsection 3.8(a) of the Agreement on such
Business Day and on each previous Business Day during
such Monthly Period less any amounts previously
withdrawn pursuant to this subsection 4.9(a)(vi) on
account of such unpaid Adjustment Payments, such amount
to be (i) treated as Shared Principal Collections
during the Revolving Period, and (ii) treated as
Available Series 1998-1 Principal Collections during
the Amortization Period.
Reimbursement of Class A Charge-Offs. On
each Business Day, the Trustee, acting in accordance
with instructions from the Servicer, shall apply to the
extent of any Available Series 1998-1 Finance Charge
Collections remaining after giving effect to the
applications 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 1998-1 Finance
Charge Collections and (y) the unreimbursed Class A
Charge-Offs, if any, in order to reimburse Class A
Charge-Offs, such amount to be (A) treated as Shared
Principal Collections during the Revolving Period, and
(B) treated as Available Series 1998-1 Principal
Collections during the Amortization Period.
Unpaid Class B Monthly Interest. On each
Business Day, the Trustee, acting in accordance with
the instructions from the Servicer, shall deposit in
the Interest Funding Account for distribution to the
Class B Securityholders on the next Distribution Date,
to the extent of any Available Series 1998-1 Finance
Charge Collections remaining after giving effect to the
applications 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 1998-1
Finance Charge Collections and (y) the sum of (1) the
amount of interest which would accrue with respect to
the Class B Securities on the Class B Outstanding
Principal Amount at the Class B Interest Rate during
the related Interest Accrual Period beginning in the
then current Monthly Period but which has not been
deposited into the Interest Funding Account or paid to
the Class B Securityholders and (2) any additional
interest (to the extent permitted by applicable law) at
the Class B Interest Rate on interest that was payable
on any prior Distribution Date pursuant to this
subsection but was not deposited in the Interest
Funding Account or paid to the Class B Securityholders.
Unpaid CTO Monthly Interest. On each
Business Day, the Trustee, acting in accordance with
the instructions from the Servicer, shall deposit in
the Interest Funding Account for distribution to the
CTO Securityholders on the next Distribution Date, to
the extent of any Available Series 1998-1 Finance
Charge Collections remaining after giving effect to the
applications 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 1998-1
Finance Charge Collections and (y) the sum of (1) the
amount of interest which would accrue with respect to
the Collateralized Trust Obligations on the CTO
Outstanding Principal Amount at the CTO Interest Rate
during the Interest Accrual Period beginning in the
then current Monthly Period but which has not been
deposited into the Interest Funding Account or paid to
the CTO Securityholders and (2) any additional interest
(to the extent permitted by applicable law) at the CTO
Interest Rate on interest that was payable on any prior
Distribution Date pursuant to this subsection but was
not deposited in the Interest Funding Account or paid
to the CTO Securityholders.
Reimbursement of Certain Reductions of
Class B Invested Amount. On each Business Day, the
Trustee, acting in accordance with instructions from
the Servicer, shall apply, to the extent of any
Available Series 1998-1 Finance Charge Collections
remaining after giving effect to the applications
pursuant to subsections 4.9(a)(i) through (ix) of the
Agreement, an amount equal to the lesser of (x) any
such remaining Available Series 1998-1 Finance Charge
Collections and (y) the unreimbursed amount by which
the Class B Invested Amount has been reduced on prior
Business Days pursuant to clauses (c) and (d) of the
definition of Class B Invested Amount, if any, such
amount to be (A) treated as Shared Principal
Collections during the Revolving Period, and (B)
treated as Available Series 1998-1 Principal
Collections during the Amortization Period.
Reimbursement of Certain Reductions of CTO
Invested Amount. On each Business Day, the Trustee,
acting in accordance with instructions from the
Servicer, shall apply, to the extent of any Available
Series 1998-1 Finance Charge Collections remaining
after giving effect to the applications pursuant to
subsections 4.9(a)(i) through (x) of the Agreement, an
amount equal to the lesser of (x) any such remaining
Available Series 1998-1 Finance Charge Collections and
(y) the unreimbursed amount by which the CTO Invested
Amount has been reduced on prior Business Days pursuant
to clauses (c) and (d) of the definition of CTO
Invested Amount, if any, such amount to be (A) treated
as Shared Principal Collections during the Revolving
Period, and (B) treated as Available Series 1998-1
Principal Collections during the Amortization Period.
Reimbursement of Certain Reductions of
Class D Invested Amount. On each Business Day, the
Trustee, acting in accordance with instructions from
the Servicer, shall apply, to the extent of any
Available Series 1998-1 Finance Charge Collections
remaining after giving effect to the applications
pursuant to subsections 4.9(a)(i) through (xi) of the
Agreement, an amount equal to the lesser of (x) any
such remaining Available Series 1998-1 Finance Charge
Collections and (y) the unreimbursed amount by which
the Class D Invested Amount has been reduced on prior
Business Days pursuant to clauses (c) and (d) of the
definition of Class D Invested Amount, if any, such
amount to be (A) treated as Shared Principal
Collections during the Revolving Period, and (B)
treated as Available Series 1998-1 Principal
Collections during the Amortization Period.
Class D Interest. On each Business Day
during a Monthly Period, the Trustee, acting in
accordance with the instructions from the Servicer,
shall deposit in the Interest Funding Account for
distribution to the Class D Securityholders on the next
Distribution Date, to the extent of any Available
Series 1998-1 Finance Charge Collections remaining
after giving effect to the applications pursuant to
subsections 4.9(a)(i) through (xii) of the Agreement,
an amount equal to the lesser of (x) any such remaining
Available Series 1998-1 Finance Charge Collections and
(y) the sum of (1) the amount of interest which has
accrued with respect to the Class D Securities on the
Class D Outstanding Principal Amount at the applicable
Class D Interest Rate but which has not been deposited
into the Interest Funding Account on any prior Business
Day or paid to the Class D Securityholders and (2) any
additional interest (to the extent permitted by
applicable law) at the Class D Interest Rate on
interest that was payable during a prior Monthly Period
pursuant to this subsection but was not deposited in
the Interest Funding Account or paid to the Class D
Securityholders.
Revolving Receivables Reserve Account. On
each Business Day, the Trustee, acting in accordance
with instructions from the Servicer, shall deposit in
the Revolving Receivables Reserve Account, to the
extent of any Available Series 1998-1 Finance Charge
Collections remaining after giving effect to the
applications pursuant to subsections 4.9(a)(i) through
(xiii) of the Agreement an amount equal to the lesser
of (x) any such remaining Available Series 1998-1
Finance Charge Collections and (y) an amount equal to
the excess, if any, of the Specified Revolving
Receivables Reserve Amount on such date over the amount
then on deposit in the Revolving Receivables Reserve
Account.
Defeasance Reserve Account. At the option
of the Transferor, on each Business Day on and after
the Defeasance Reserve Account Funding Date, but prior
to the date on which a Defeasance occurs pursuant to
subsection 4.18 of the Agreement, the Trustee, acting
in accordance with instructions from the Servicer,
shall deposit in the Defeasance Reserve Account, to the
extent of any Available Series 1998-1 Finance Charge
Collections remaining after giving effect to the
applications pursuant to subsections 4.9(a)(i) through
(xiv) of the Agreement, an amount equal to the lesser
of (x) any such remaining Available Series 1998-1
Finance Charge Collections and (y) the excess, if any,
of the Required Defeasance Reserve Account Amount over
the Available Defeasance Reserve Account Amount.
CTO Reserve Account. Following the
occurrence of a CTO Trigger Event, on each Business
Day, the Trustee, acting in accordance with
instructions from the Servicer, shall deposit in the
CTO Reserve Account, to the extent of any Available
Series 1998-1 Finance Charge Collections remaining
after giving effect to the applications pursuant to
subsections 4.9(a)(i) through (xv) of the Agreement, an
amount equal to the lesser of (x) any such remaining
Available Series 1998-1 Finance Charge Collections and
(y) an amount equal to the excess, if any, of the
Specified CTO Reserve Amount on such date over the
amount then on deposit in the CTO Reserve Account.
Payment Reserve Account. On each Business
Day, the Trustee, acting in accordance with
instructions from the Transferor, shall deposit in the
Payment Reserve Account, to the extent of any Available
Series 1998-1 Finance Charge Collections remaining
after giving effect to the applications pursuant to
subsections 4.9(a)(i) through (xvi) of the Agreement,
an amount equal to the lesser of (x) any such remaining
Available Series 1998-1 Finance Charge Collections and
(y) the amount, if any, designated by the Transferor in
writing (which includes facsimile transmission) in its
instructions to the Trustee on such Business Day.
Excess Finance Charge Collections. Any
Available Series 1998-1 Finance Charge Collections
remaining after giving effect to the applications
pursuant to subsection 4.9(a)(i) through (xvii) of the
Agreement shall be treated as Excess Finance Charge
Collections, and the Servicer shall direct the Trustee
in writing on each Business Day to first make such
amounts available to pay to Securityholders of other
Series to the extent of shortfalls, if any, in amounts
payable to such Securityholders from Finance Charge
Collections allocated to such other Series, then to pay
any unpaid commercially reasonable costs and expenses
of a Successor Servicer, if any, then to reserve for
(or pay when due) any taxes and related expenses
anticipated by the Servicer to be payable by the Trust
with respect to the related Monthly Period or prior
Monthly Periods and then on each Business Day to pay
any remaining Excess Finance Charge Collections to the
Transferor.
Revolving Period Principal Collections.
For each Business Day with respect to the Revolving
Period, the funds on deposit in the Collection Account
to the extent of the product of (i) the Floating
Percentage and (ii) Principal Collections (less the
amount of Redirected Principal Collections) with
respect to such Business Day will 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.
Amortization Period Principal Collections
and Other Funds. For each Business Day on and after
the Amortization Period Commencement Date, the amount
of funds on deposit in the Collection Account or the
Excess Funding Account as 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:
an amount (not in excess of the Invested
Amount) equal to the sum of (v) the product of the
Fixed/Floating Percentage and Principal Collections
(less the amount thereof applied as Redirected
Principal Collections) for such Business Day, (w) any
amount on deposit in the Excess Funding Account
allocated to the Series 1998-1 Securities on such
Business Day pursuant to subsection 4.3(f) of the
Agreement, (x) amounts to be treated as Available
Series 1998-1 Principal Collections for such Business
Day pursuant to subsections 4.9(a)(v), (vi), (vii),
(x), (xi) and (xii) of the Agreement (including amounts
available pursuant to subsections 4.10(a) and (b) and
4.14(a), (b) and (c) of the Agreement for such Business
Day) and (y) the amount of Shared Principal Collections
allocated to the Series 1998-1 Securities in accordance
with Section 4.8 of the Agreement for such Business
Day, will be deposited into the Principal Account;
provided, however, that with respect to any Monthly
Period during the Controlled Amortization Period, the
aggregate amount required to be deposited in the
Principal Account pursuant to this subsection 4.9(c)(i)
shall not exceed the sum of (I) (A) prior to the
Monthly Period related to the Class B Principal Payment
Commencement Date, the Class A Controlled Distribution
Amount, (B) during and after the Monthly Period related
to the Class B Principal Payment Commencement Date but
prior to the Monthly Period related to the CTO
Principal Payment Commencement Date, the Class B
Controlled Distribution Amount or (C) during and after
the Monthly Period related to the CTO Principal Payment
Commencement Date but prior to the Monthly Period
related to the Class D Principal Payment Commencement
Date, the CTO Invested Amount and (II) at the option of
the Transferor, the Class D Excess Amount; and
an amount equal to the excess, if any, of
(A) the sum of the amounts described in subsection
4.9(c)(i)(v) and (x) above over (B) the sum of Class A
Principal, Class B Principal, CTO Principal and Class D
Principal will be treated as Shared Principal
Collections and applied as provided in subsection
4.3(e) of the Agreement.
SECTION 4.10 Coverage of Required Amount
for the Series 1998-1 Securities. Coverage of
Negative Carry Amount. 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 1998-1
Finance Charge Collections in subsections 4.9(a)(i)
through (xiii) of the Agreement, Transferor Finance
Charge Collections in an amount (the "Negative Carry
Amount") equal to the excess of (x) the product of (a)
the Base Rate, (b) the product of (i) the amounts on
deposit in the Excess Funding Account and (ii) the
number of days elapsed since the previous Business Day
divided by 360 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.
Required Amount from Other Series Excess
Finance Charge Collections. To the extent that on any
Business Day payments are being made pursuant to any of
subsections 4.9(a)(i) through (xiii) of the Agreement,
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 1998-1 Finance Charge
Collections in subsections 4.9(a)(i) through (xiii) of
the Agreement, all or a portion of the Excess Finance
Charge Collections from other Series with respect to
such Business Day allocable to the Series 1998-1
Securities 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 1998-1 Finance
Charge Collections and Transferor Finance Charge
Collections on such Business Day (the "Required
Amount"). Excess Finance Charge Collections allocated
to the Series 1998-1 Securities for any Business Day
shall mean an amount equal to the product of (x) Excess
Finance Charge 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 Finance Charge
Collections for all Series for such Business Day.
SECTION 4.11 Payment of Interest on
Securities. 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 1998-1 Securities 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 to (w) the Class A
Securityholders from the Distribution Account such
amount deposited into the Distribution Account on the
related Transfer Date allocable thereto from amounts
deposited in the Interest Funding Account pursuant to
subsection 4.9(a)(i) of the Agreement, (x) the Class B
Securityholders from the Distribution Account the
amount deposited into the Distribution Account on the
related Transfer Date allocable thereto from amounts
deposited in the Interest Funding Account pursuant to
subsections 4.9(a)(ii) and (viii) of the Agreement,
(y) the CTO Securityholders from the Distribution
Account the amount deposited into the Distribution
Account on the related Transfer Date allocable thereto
from amounts deposited in the Interest Funding Account
pursuant to subsections 4.9(a)(iii) and (ix) of the
Agreement, and (z) the Class D Securityholder from the
Distribution Account the amount deposited into the
Distribution Account on the related Transfer Date
allocable thereto from amounts deposited in the
Interest Funding Account pursuant to subsection
4.9(a)(xiii) of the Agreement.
SECTION 4.12 Payment of Security Principal.
Class A Principal. On the Transfer Date
preceding each Distribution Date with respect to the
Amortization Period, 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 or, following the occurrence of a
Defeasance, from the Defeasance Funding Account, and
deposit into the Distribution Account, to the extent of
funds available, an amount equal to the Class A
Principal for such Distribution Date. On each
Distribution Date with respect to the Amortization
Period until the Class A Invested Amount is paid in
full, the Paying Agent shall pay in accordance with
Section 5.1 of the Agreement to the Class A
Securityholders from the Distribution Account such
amounts deposited with respect to Class A Principal
into the Distribution Account on the related Transfer
Date.
Class B Principal. On the Transfer Date
preceding the Class B Principal Payment Commencement
Date and each Transfer 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 or, following
the occurrence of a Defeasance, the Defeasance Funding
Account and deposit in the Distribution Account, to the
extent of funds available, an amount equal to the Class
B Principal for the related Distribution Date. On and
after the Class B Principal Payment Commencement Date,
on each Distribution Date until the Class B Invested
Amount is paid in full, the Paying Agent shall pay in
accordance with Section 5.1 of the Agreement to the
Class B Securityholders from the Distribution Account
such amounts deposited with respect to Class B
Principal into the Distribution Account on the related
Transfer Date.
CTO Principal. On the Transfer Date
preceding the CTO Principal Payment Commencement Date
and each Transfer 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 or, following the occurrence
of a Defeasance, the Defeasance Funding Account and
deposit in the Distribution Account, to the extent of
funds available, an amount equal to the CTO Principal
for the related Distribution Date. On and after the
CTO Principal Payment Commencement Date, on each
Distribution Date until the CTO Invested Amount is paid
in full, the Paying Agent shall pay in accordance with
Section 5.1 of the Agreement to the CTO Securityholders
from the Distribution Account such amounts deposited
with respect to CTO Principal into the Distribution
Account on the related Transfer Date.
Class D Principal. On the Transfer Date
preceding the Class D Principal Payment Commencement
Date and each Transfer Date thereafter, or, in the case
of distributions of Class D Excess Amounts, on each
Transfer Date during the Controlled Amortization Period
preceding a Distribution Date on which a distribution
shall be made of Class D Excess Amounts, 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 after giving effect to withdrawals pursuant
to subsections 4.12(a), (b) or (c) of the Agreement, an
amount equal to the Class D Principal for the related
Distribution Date. On the Class D Principal Payment
Commencement Date after the payment of any principal
amounts to the Class A Securities, the Class B
Securities and the Collateralized Trust Obligations on
such day, and on each Distribution Date thereafter
until the Class D Invested Amount is paid in full and
on each Distribution Date during the Controlled
Amortization Period on which amounts are to be
distributed with respect to Class D Excess Amounts, the
Paying Agent shall pay in accordance with Section 5.1
of the Agreement to the Class D Securityholder from the
Distribution Account such amounts deposited with
respect to Class D Principal into the Distribution
Account on the related Transfer Date. Notwithstanding
the foregoing, if so designated in writing by the
Transferor with respect to any such Transfer Date, any
such payment of Class D Principal shall not be made to
the Class D Securityholder but such amount shall
nonetheless be subtracted from the Class D Invested
Amount and added to the Transferor Interest and Class D
Excess Amounts may be subtracted from the Class D
Invested Amount and added to the Transferor Interest
whether or not such amount has been deposited into the
Distribution Account..
Any amounts remaining in the Principal
Account and allocable to the Series 1998-1 Securities,
after the Class D 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 Series Charge-Offs. If, on
any Determination Date, the sum of the aggregate Series
Default Amount and the Series 1998-1 Percentage of
unpaid Adjustment Payments, if any, required to be made
by the Transferor but not made for all Business Days in
the preceding Monthly Period exceeds the sum of (x) the
aggregate amount of the Available Series 1998-1 Finance
Charge Collections applied to the payment thereof
pursuant to subsections 4.9(a)(v) and (vi) of the
Agreement, (y) the aggregate amount of Transferor
Finance Charge Collections and Excess Finance Charge
Collections allocated thereto pursuant to Section 4.10
of the Agreement, and (z) the aggregate amount of
Redirected Principal Collections applied with respect
thereto pursuant to Section 4.14 of the Agreement, the
Class D Invested Amount will be reduced by the
aggregate amount of such excess (a "Class D Charge-
Off").
In the event that any such reduction of the
Class D Invested Amount would cause the Class D
Invested Amount to be a negative number, the Class D
Invested Amount will be reduced to zero, and the CTO
Invested Amount will be reduced by the amount by which
the Class D Invested Amount would have been reduced
below zero, but not by more than the remaining
aggregate Series Default Amount and Series 1998-1
Percentage of unpaid Adjustment Payments for such
Monthly Period (a "CTO Charge-Off").
In the event that any such reduction of the
CTO Invested Amount would cause the CTO Invested Amount
to be a negative number, the CTO Invested Amount will
be reduced to zero, and the Class B Invested Amount
will be reduced by the amount by which the CTO Invested
Amount would have been reduced below zero, but not by
more than the remaining aggregate Series Default Amount
and Series 1998-1 Percentage of unpaid Adjustment
Payments for such Monthly Period (a "Class B Charge-
Off").
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 by more than the remaining
aggregate Series Default Amount and Series 1998-1
Percentage of unpaid Adjustment Payments for such
Monthly Period (a "Class A Charge-Off").
SECTION 4.14 Redirected Principal
Collections for the Series 1998-1 Securities. On
each Business Day, the Servicer will apply or cause the
Trustee to apply an amount equal to the least of (i)
the Class D Invested Amount, (ii) the product of (x)(I)
during the Revolving Period, the Class D Floating
Percentage or (II) during an Amortization Period, the
Class D Fixed/Floating Percentage and (y) the amount of
Principal Collections with respect to such Business Day
and (iii) an amount equal to the sum of (a) the Class A
Required Amount for such Business Day, (b) the Class B
Required Amount for such Business Day and (c) the CTO
Required Amount for such Business Day (such amount
called "Redirected Class D Principal Collections") and
shall apply Principal Collections allocable to the
Series 1998-1 Securities in an amount equal to such
amount in accordance with subsection 4.9(a) as if such
amounts were Available Series 1998-1 Finance Charge
Collections.
On each Business Day, the Servicer will
apply or cause the Trustee to apply an amount equal to
the least of (i) the CTO Invested Amount, (ii) the
product of (x)(I) during the Revolving Period, the CTO
Floating Percentage or (II) during an Amortization
Period, the CTO Fixed/Floating Percentage and (y) the
amount of Principal Collections for such Business Day
and (iii) an amount equal to the sum of (a) the excess,
if any, of the Class A Required Amount for such
Business Day over the amount of Redirected Class D
Principal Collections applied with respect thereto for
such Business Day and (b) the excess, if any, of the
Class B Required Amount for such Business Day over the
amount of Redirected Class D Principal Collections
applied with respect thereto for such Business Day
(such amount called "Redirected CTO Principal
Collections") and shall apply Principal Collections
allocable to the Series 1998-1 Securities in an amount
equal to such amount in accordance with subsection
4.9(a) as if such amounts were Available Series 1998-1
Finance Charge Collections.
On each Business Day, the Servicer will
apply or cause the Trustee to apply 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 Percentage or (II) during an
Amortization Period, the Class B Fixed/Floating
Percentage and (y) the amount of Principal Collections
for such Business Day and (iii) an amount equal to the
excess, if any, of the Class A Required Amount for such
Business Day over the sum of the amount of Redirected
Class D Principal Collections and Redirected CTO
Principal Collections applied with respect thereto for
such Business Day (such amount called "Redirected Class
B Principal Collections") and shall apply Principal
Collections allocable to the Series 1998-1 Securities
equal to such amount in accordance with subsection
4.9(a) as if such amounts were Available Series 1998-1
Finance Charge Collections.
On each Distribution Date, the Class D
Invested Amount will be reduced by the aggregate amount
of unreimbursed Redirected Principal Collections for
the related Monthly Period. In the event that such
reduction would cause the Class D Invested Amount to be
a negative number, the Class D Invested Amount will be
reduced to zero and the CTO Invested Amount will be
reduced by the amount by which the Class D Invested
Amount would have been reduced below zero. In the event
that the amount of unreimbursed Redirected Principal
Collections for such Distribution Date would cause the
CTO Invested Amount to be a negative number, the CTO
Invested Amount will be reduced to zero and the Class B
Invested Amount will be reduced by the amount by which
the CTO Invested Amount would have been reduced below
zero. In the event that the amount of unreimbursed
Redirected Principal Collections would cause the Class
B Invested Amount to be a negative number on any
Distribution Date, the amount of Class B Redirected
Principal Collections on such Distribution Date will be
an amount not to exceed the amount which would cause
the Class B Invested Amount to be reduced to zero.
SECTION 4.15 Determination of LIBOR.
"LIBOR" shall mean, as of any LIBOR Determination Date,
the rate for deposits in United States dollars for one
month (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.
If such rate does not appear on Telerate Page 3750, the
rate for such LIBOR Determination Date will be
determined on the basis of the rates at which deposits
in United States dollars are offered by four major
banks in the London interbank market selected by the
Servicer 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 one month
(commencing on the first day of the relevant Interest
Accrual Period). The Trustee will request the
principal London office of each such bank to provide a
quotation of its rate. If at least two such quotations
are provided, the rate for such LIBOR Determination
Date will be the arithmetic mean of the quotations. If
fewer than two quotations are provided as requested,
the rate for such LIBOR Determination Date will be the
arithmetic mean of the rates quoted by four major banks
in New York City, selected by the Trustee, at
approximately 11:00 a.m., New York City time, on the
LIBOR Determination Date for loans in United States
dollars to leading European banks for a period equal to
one month (commencing on the first day of such Interest
Accrual Period).
The CTO Interest Rate applicable to the
then current and the immediately preceding Interest
Accrual Periods may be obtained by any CTO
Securityholder by telephoning the Trustee at (212) 815-
5737.
On each LIBOR Determination Date, the
Trustee shall send to the Servicer by facsimile
notification of LIBOR for such LIBOR Determination
Date.
SECTION 4.16 Defeasance Funding Account.
Establishment of the Defeasance Funding
Account. 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 Series 1998-1
Securityholders, the "Defeasance Funding 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 Series 1998-1 Securityholders. The
Trustee shall possess all right, title and interest in
all funds on deposit from time to time in the
Defeasance Funding Account and in all proceeds thereof.
The Defeasance Funding Account shall be under the sole
dominion and control of the Trustee for the benefit of
the Series 1998-1 Securityholders. If, at any time,
the institution holding the Defeasance Funding Account
ceases to be a Qualified Institution, the Trustee shall
within 10 Business Days establish a new Defeasance
Funding Account meeting the conditions specified above
with a Qualified Institution, and shall transfer any
cash or any investments to such new Defeasance Funding
Account. From the date such new Defeasance Funding
Account is established, it shall be the "Defeasance
Funding Account." The Trustee and the Transferor shall
have the right to make deposits to the Defeasance
Funding Account in accordance with Section 4.18. The
Trustee, at the written direction of the Servicer,
shall (i) make withdrawals from the Defeasance Funding
Account from time to time, in the amounts and for the
purposes set forth in this Series Supplement, and (ii)
on each Transfer Date from and after the commencement
of the Defeasance and prior to termination of the
Defeasance Funding Account make a deposit into the
Principal Account in the amount specified in, and
otherwise in accordance with, subsection 4.12 of the
Agreement.
Investment of Funds in Defeasance Funding
Account. Funds on deposit in the Defeasance Funding
Account shall be invested by the Trustee at the
direction of the Servicer in Cash Equivalents maturing
no later than the following Transfer Date. Investment
earnings (net of investment losses and expenses) on
funds on deposit in the Defeasance Funding Account (the
"Defeasance Funding Account Investment Proceeds") will
be applied on each Transfer Date as if such amount were
Available Series 1998-1 Finance Charge Collections on
the last Business Day of the preceding Monthly Period.
If, for any Interest Accrual Period, the Defeasance
Funding Account Investment Proceeds for the related
Monthly Period are less than the sum of the Class A
Monthly Interest, the Class B Monthly Interest and the
CTO Monthly Interest for such Interest Accrual Period,
the amount of such deficiency will be paid from the
Defeasance Reserve Account to the extent of the
Available Defeasance Reserve Account Amount and applied
on the applicable Transfer Date as Available Series
1998-1 Finance Charge Collections as if such amounts
were available to be applied pursuant to subsection
4.9(a) on the last Business Day of the preceding
Monthly Period.
Termination of Defeasance Funding Account.
The Defeasance Funding Account shall be terminated
following the earliest to occur of (a) the termination
of the Trust pursuant to the Agreement, (b) the date on
which the ABC Invested Amount is paid in full and (c)
after Defeasance, the earlier of the first Transfer
Date with respect to the Early Amortization Period and
the CTO Expected Final Payment Date. Upon the
termination of the Defeasance Funding Account, all
amounts remaining on deposit therein after the payment
in full of the Series 1998-1 Securities shall be
treated as Shared Principal Collections.
SECTION 4.17 Defeasance Reserve Account.
Establishment of the Defeasance Reserve Account. 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 Series 1998-1
Securityholders, the "Defeasance 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 Series 1998-1 Securityholders. The
Trustee shall possess all right, title and interest in
all funds on deposit from time to time in the
Defeasance Reserve Account and in all proceeds thereof.
The Defeasance Reserve Account shall be under the sole
dominion and control of the Trustee for the benefit of
the Series 1998-1 Securityholders. If, at any time,
the institution holding the Defeasance Reserve Account
ceases to be a Qualified Institution, the Trustee shall
within 10 Business Days establish a new Defeasance
Reserve Account meeting the conditions specified above
with a Qualified Institution, and shall transfer any
cash or any investments to such new Defeasance Reserve
Account. From the date such new Defeasance Reserve
Account is established, it shall be the "Defeasance
Reserve Account." The Trustee, at the written
direction of the Servicer, shall (i) make withdrawals
from the Defeasance Reserve Account from time to time,
in the amounts and for the purposes set forth in this
Series Supplement, and (ii) on each Transfer Date (from
and after the Defeasance Reserve Account Funding Date)
prior to a Defeasance, make a deposit into the
Defeasance Reserve Account in the amount specified in,
and otherwise in accordance with, subsection 4.9(a)(xv)
of the Agreement.
Administration of Defeasance Reserve
Account. On or before each Transfer Date following
Defeasance and on the first Transfer Date with respect
to the Early Amortization Period, the Trustee at the
direction of the Servicer shall withdraw from the
Defeasance Reserve Account, up to the Available
Defeasance Reserve Account Amount, an amount equal to
the excess of the sum of the Class A Monthly Interest,
the Class B Monthly Interest, the CTO Monthly Interest
and the amount of monthly interest payable with respect
to the Class D Securities for the related Interest
Accrual Period over the Defeasance Funding Account
Investment Proceeds with respect to such Transfer Date,
and the amount of such withdrawal shall be applied as
Available Series 1998-1 Finance Charge Collections as
if such amounts were available to be applied pursuant
to subsection 4.9(a) on the last Business Day of the
preceding Monthly Period.
Investment of Funds in Defeasance Reserve
Account. Funds on deposit in the Defeasance Reserve
Account shall be invested by the Trustee at the
direction of the Servicer in Cash Equivalents maturing
no later than the following Transfer Date. The
interest and other investment income (net of investment
expenses and losses) earned on such investments will be
retained in the Defeasance Reserve Account (to the
extent the amount on deposit therein is less than the
Required Defeasance Reserve Account Amount) or applied
on each Transfer Date as Available Series 1998-1
Finance Charge Collections as if such amounts were
available to be applied pursuant to subsection 4.9(a)
on the last Business Day of the preceding Monthly
Period.
Termination of Defeasance Reserve Account.
The Defeasance Reserve Account shall be terminated
following the earliest to occur of (a) the termination
of the Trust pursuant to the Agreement, (b) the date on
which the ABC Invested Amount is paid in full, (c)
prior to Defeasance, the Pay Out Commencement Date and
(d) after Defeasance, the earlier of the first Transfer
Date with respect to the Early Amortization Period and
the CTO Expected Final Payment Date. Upon the
termination of the Defeasance Reserve Account, all
amounts on deposit therein (after giving effect to any
withdrawal from the Defeasance Reserve Account on such
date as described above) shall be applied as Available
Series 1998-1 Finance Charge Collections as if such
amounts were available to be applied pursuant to
subsection 4.9(a) on the last Business Day of the
preceding Monthly Period.
SECTION 4.18 Defeasance. On the date
during the Amortization Period that the following
conditions shall have been satisfied: (i) an amount
shall have been deposited (x) in the Defeasance Funding
Account equal to the sum of the Class A Outstanding
Principal Amount, the Class B Outstanding Principal
Amount and the CTO Outstanding Principal Amount, which
amount shall be invested in Cash Equivalents and (y) in
the Defeasance Reserve Account equal to or greater than
the excess of the sum of the Class A Monthly Interest,
the Class B Monthly Interest and the estimated CTO
Monthly Interest over the estimated amount of
investment earnings on amounts in the Defeasance
Funding Account, as estimated by the Transferor, for
each of the Interest Accrual Periods during the period
from the date of the deposit to the Defeasance Funding
Account through the CTO Expected Final Payment Date
(the "Required Defeasance Reserve Account Amount");
(ii) the Transferor shall have delivered to the Trustee
an Opinion of Counsel to the effect that such deposit
and termination of obligations will not result in the
Trust being required to register as an "investment
company" within the meaning of the Investment Company
Act and an Opinion of Counsel to the effect that
following such deposit none of the Trust, the
Defeasance Reserve Account or the Defeasance Funding
Account will be deemed to be an association (or
publicly traded partnership) taxable as a corporation;
(iii) the Transferor shall have delivered to the
Trustee a certificate of an officer of the Transferor
stating that the Transferor reasonably believes that
such deposit and termination of its obligations will
not constitute a Pay Out Event or any event that, with
the giving of notice or the lapse of time, would cause
a Pay Out Event to occur; and (iv) the Rating Agency
Condition shall have been satisfied; then, the Series
1998-1 Securities will no longer be entitled to the
security interest of the Trust in the Receivables and,
except those set forth in clause (i) above, other Trust
assets ("Defeasance"), the percentages applicable to
the allocation to the Series 1998-1 Securityholders of
Principal Collections, Finance Charge Collections,
unpaid Adjustment Payments and Default Amounts shall be
reduced to zero and the Monthly Servicing Fee shall be
reduced to zero; provided, however, that no such
Defeasance shall occur for so long as any Class A
Charge-Offs, Class B Charge-Offs or CTO Charge-Offs
exist. Upon the satisfaction of the foregoing
conditions, the Class D Invested Amount shall be
reduced to zero.
SECTION 4.19 Revolving Receivables Reserve
Account. Establishment of the Revolving Receivables
Reserve Account. 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 Series 1998-1
Securityholders, the "Revolving Receivables 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 Series 1998-1 Securityholders. The
Trustee shall possess all right, title and interest in
all funds on deposit from time to time in the Revolving
Receivables Reserve Account and in all proceeds
thereof. The Revolving Receivables Reserve Account
shall be under the sole dominion and control of the
Trustee for the benefit of the Series 1998-1
Securityholders. If at any time, the institution
holding the Revolving Receivables Reserve Account
ceases to be a Qualified Institution, the Trustee shall
within 10 Business Days establish a new Revolving
Receivables Reserve Account meeting the conditions
specified above with a Qualified Institution, and shall
transfer any cash or any investments to such new
Revolving Receivables Reserve Account. From the date
such new Revolving Receivables Reserve Account is
established, it shall be the "Revolving Receivables
Reserve Account."
Deposits to the Revolving Receivables
Reserve Account. On the Closing Date, the Transferor
shall make an initial deposit of $200,000 to the
Revolving Receivables Reserve Account. Amounts shall
be deposited in the Revolving Receivables Reserve
Account on each Business Day to the extent specified
pursuant to subsection 4.9(a)(xiv) of the Agreement.
Withdrawals from the Revolving Receivables
Reserve Account. Funds on deposit in the Revolving
Receivables Reserve Account shall be withdrawn by the
Servicer on each Transfer Date to the extent of any
shortfalls in amounts to be paid or deposited pursuant
to subsections 4.9(a)(i) through (xiii) of the
Agreement as of the end of the day on the last Business
Day of the preceding Monthly Period and shall be
applied in accordance with subsections 4.9(a)(i)
through (xiii) of the Agreement as Available Series
1998-1 Finance Charge Collections as if such amounts
were available on the last Business Day of the
preceding Monthly Period.
Investment of Funds in Revolving
Receivables Reserve Account. Funds on deposit in the
Revolving Receivables Reserve Account shall be invested
by the Trustee at the direction of the Servicer in Cash
Equivalents maturing no later than the following
Transfer Date. The interest and other investment
income (net of investment expenses and losses) earned
on such investments will be retained in the Revolving
Receivables Reserve Account (to the extent the amount
on deposit therein is less than the Required Reserve
Account Amount) or applied on each Transfer Date as
Available Series 1998-1 Finance Charge Collections as
if such amounts were available to be applied pursuant
to subsection 4.9(a) of the Agreement on the last
Business Day of the preceding Monthly Period.
Termination of Revolving Receivables
Reserve Account. The Revolving Receivables Reserve
Account shall be terminated following the earliest to
occur of (a) the termination of the Trust pursuant to
the Agreement and (b) the date on which the ABC
Invested Amount is paid in full. Upon the termination
of the Revolving Receivables Reserve Account, all
amounts on deposit therein (after giving effect to any
withdrawal from the Revolving Receivables Reserve
Account on such date as described above) shall be
applied as Available Series 1998-1 Finance Charge
Collections as if such amounts were available to be
applied pursuant to subsection 4.9(a) of the Agreement
on the last Business Day of the preceding Monthly
Period.
SECTION 4.20 CTO Trigger Event. If (i)
the rating of Fingerhut Companies, Inc.'s senior
secured notes and, if rated, the rating of Fingerhut
Companies, Inc.'s corporate revolving lines of credit
facility is reduced below BBB from Standard & Poor's
and below Baa2 from Moody's (a "CTO Trigger Event") and
(ii) with respect to any Business Day (x) the
percentage equivalent of a fraction the numerator of
which is the Series 1998-1 Percentage of the Transferor
Interest and the denominator of which is the sum of the
Invested Amount and the Series 1998-1 Percentage of the
Transferor Interest (the "Target Percentage") is less
than 6%, and (y) the amount on deposit in the CTO
Reserve Account is less than the Specified CTO Reserve
Amount, then (a) the Transferor shall, in connection
with increases in the aggregate amount of Principal
Receivables in the Trust, the scheduled paydown of
other Series or, with respect to any Series of Variable
Funding Securities, an optional payment of principal,
allow the Transferor Interest to increase such that the
Target Percentage shall be equal to or in excess of 6%
and/or (b) the Servicer shall cause amounts available
pursuant to subsection 4.9(a)(xvi) of the Agreement to
be deposited in the CTO Reserve Account until the
amount on deposit therein is equal to the Specified CTO
Reserve Amount. The Transferor may allow the
Transferor Interest to decrease on any Business Day, to
the extent that it exceeds the Minimum Transferor
Interest and the amount on deposit in the CTO Reserve
Account following any such decrease and after giving
effect to any deposit therein on such Business Day is
at least equal to the Specified CTO Reserve Amount.
SECTION 4.21 CTO Reserve Account.
Establishment of the CTO Reserve Account. The
Servicer, for the benefit of the CTO Securityholders,
shall, upon the occurrence of a CTO Trigger Event,
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 CTO Securityholders, the "CTO 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 CTO Securityholders. The Trustee shall
possess all right, title and interest in all funds on
deposit from time to time in the CTO Reserve Account
and in all proceeds thereof. The CTO Reserve Account
shall be under the sole dominion and control of the
Trustee for the benefit of the CTO Securityholders.
If, at any time, the institution holding the CTO
Reserve Account ceases to be a Qualified Institution,
the Trustee shall within 10 Business Days establish a
new CTO Reserve Account meeting the conditions
specified above with a Qualified Institution, and shall
transfer any cash or any investments to such new CTO
Reserve Account. From the date such new CTO Reserve
Account is established, it shall be the "CTO Reserve
Account."
Administration of CTO Reserve Account. On
each Business Day following the occurrence of a CTO
Trigger Event, amounts will be deposited in the CTO
Reserve Account in accordance with subsection
4.9(a)(xvi) of the Agreement. Funds on deposit in the
CTO Reserve Account shall be withdrawn by the Servicer
and applied in accordance with subsection 4.9(a)(xi) of
the Agreement as if they were Available Series 1998-1
Finance Charge Collections on any Business Day after
the payment in full of the Class A Invested Amount and
the Class B Invested Amount to the extent of the
aggregate amount of CTO Charge-Offs, if any. Amounts
on deposit in the CTO Reserve Account in excess of the
Specified CTO Reserve Amount on any Business Day shall
be released therefrom and paid to the Transferor. All
amounts on deposit in the CTO Reserve Account shall be
released therefrom and paid to the Transferor, if the
rating of Fingerhut Companies, Inc.'s senior secured
notes or, if rated, the rating of Fingerhut Companies,
Inc.'s corporate revolving lines of credit facility is
subsequently increased to BBB or higher by Standard &
Poor's and Baa2 or higher by Moody's or the CTO
Invested Amount has been paid in full.
Investment of Funds in CTO Reserve Account.
Funds on deposit in the CTO Reserve Account shall be
invested by the Trustee (or, at the direction of the
Trustee, by the Servicer on behalf of the Trustee) at
the direction of the Servicer in Cash Equivalents that
will mature so that such funds will be available for
withdrawal on or prior to the following Business Day.
The interest and other investment income (net of
investment expenses and losses) earned on such
investments will be retained in the CTO Reserve Account
(to the extent the amount on deposit therein is less
than the Specified CTO Reserve Amount) or applied on
each Business Day as Reserve Account Investment
Proceeds.
Termination of CTO Reserve Account. The
CTO Reserve Account shall be terminated following the
earliest to occur of (a) the termination of the Trust
pursuant to the Agreement and (b) the date on which the
CTO Invested Amount is paid in full. Upon the
termination of the CTO Reserve Account, all amounts on
deposit therein (after giving effect to any withdrawal
from the CTO Reserve Account on such date as described
above) shall be released therefrom and paid to the
Transferor.
SECTION 4.22 Payment Reserve Account.
Establishment of the Payment Reserve Account. 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 Series 1998-1
Securityholders, 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
Series 1998-1 Securityholders. 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 Series
1998-1 Securityholders. If, at any time, the
institution holding the Payment Reserve Account ceases
to be a Qualified Institution, the Trustee shall within
10 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."
Administration of Payment Reserve Account.
The Transferor, at its discretion, may on any Business
Day withdraw all or a part of any amounts then on
deposit in the Payment Reserve Account and apply such
funds as Available Series 1998-1 Finance Charge
Collections in accordance with Section 4.9(a) of the
Agreement.
Investment on Funds in Payment Reserve
Account. Funds on deposit in the Payment Reserve
Account shall be invested by the Trustee (or, at the
direction of the Trustee, by the Servicer on behalf of
the Trustee) at the direction of the Servicer in Cash
Equivalents that will mature so that such funds will be
available for withdrawal on or prior to the following
Business Day. The interest and other investment income
(net of investment expenses and losses) earned on such
investments will be applied on each Business Day as
Reserve Account Investment Proceeds.
Termination of Payment Reserve Account.
The Payment Reserve Account shall be terminated
following the earliest to occur of (a) the termination
of the Trust pursuant to the Agreement and (b) the date
on which the ABC Adjusted Invested Amount is paid in
full. Upon the termination of the Payment Reserve
Account, all amounts on deposit therein (after giving
effect to any withdrawal from the Payment Reserve
Account on such date as described above) shall be
applied as if they were Available Series 1998-1 Finance
Charge Collections available to be applied pursuant to
subsection 4.9(a) on the last Business Day of the
preceding Monthly Period.
SECTION 4.23 Constituent Class D
Securities. The Transferor as holder of the Class D
Securities may at any time (i) subdivide the Class D
Securities into two or more subsidiary Securities, or
(ii) redirect all or any portion of the amounts
distributable to the Class D Securityholders (pursuant
to the application of collections allocable to the
Class D Securityholders) to any other Securityholder.
In connection with such subdivision, the Transferor may
assign an interest rate to the Class D Securities, the
"Class D Interest Rate," or a portion thereof and make
payments of interest with respect to such Securities
from amounts initially allocated to the Series 1998-1
Securities and available pursuant to subsection
4.9(a)(xiii). Before any Class D Securities can be
subdivided or transferred, the following conditions
must be met: (i) the Trustee and the Transferor shall
have received an Opinion of Counsel that such transfer
does not adversely affect the conclusions reached in
any of the federal or state income tax opinions issued
in connection with the original issuance of the Series
1998-1 Securities, (ii) the Transferor shall deliver to
the Trustee an officers' certificate stating that in
the reasonable belief of the Transferor, such
subdivision would not cause a Trust Pay Out Event or a
Series 1998-1 Pay Out Event to occur, or an event
which, with notice or lapse of time or both, would
constitute a Trust Pay Out Event or a Series 1998-1 Pay
Out Event, and (ii) the Rating Agency Condition shall
have been satisfied.
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 1998-1 Securities:
ARTICLE V
DISTRIBUTIONS AND REPORTS TO INVESTORSECURITYHOLDERS
SECTION 5.1 Distributions. 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
Securityholder 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
Securityholder's pro rata share (based on the aggregate
Undivided Interests represented by each Class A
Security held by such Securityholder) of amounts on
deposit in the Distribution Account as are payable to
the Class A Securityholders pursuant to Sections 4.11
and 4.12 of the Agreement by check mailed to each Class
A Securityholder at such Securityholder's address as it
appears on the Security Register or, in the case of
Class A Securityholders holding Class A Securities
evidencing not less than 80% of the Class A Invested
Amount, by wire transfer, at the expense of such Class
A Securityholder, to an account or accounts designated
by such Class A Securityholder by written notice given
to the Paying Agent not less than five days prior to
the related Distribution Date; provided, however, that
the final payment in retirement of the Class A
Securities will be made only upon presentation and
surrender of the Class A Securities at the office or
offices specified in the notice of such final
distribution delivered by the Trustee pursuant to
Section 12.3.
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 Securityholder 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 Securityholder's pro rata share
(based on the aggregate Undivided Interests represented
by Class B Securities held by such Securityholder) of
amounts on deposit in the Distribution Account as are
payable to the Class B Securityholders pursuant to
Sections 4.11 and 4.12 of the Agreement by check mailed
to each Class B Securityholder at such Securityholder's
address as it appears on the Security Register or, in
the case of Class B Securityholders holding Class B
Securities evidencing not less than 80% of the Class B
Invested Amount, by wire transfer, at the expense of
such Class B Securityholder, to an account or accounts
designated by such Class B Securityholder by written
notice given to the Paying Agent not less than five
days prior to the related Distribution Date; provided,
however, that the final payment in retirement of the
Class B Securities will be made only upon presentation
and surrender of the Class B Securities at the office
or offices specified in the notice of such final
distribution delivered by the Trustee pursuant to
Section 12.3.
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
CTO Securityholder 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
Securityholder's pro rata share (based on the aggregate
Undivided Interests represented by Collateralized Trust
Obligations held by such Securityholder) of amounts on
deposit in the Distribution Account as are payable to
the CTO Securityholders pursuant to Sections 4.11 and
4.12 of the Agreement by check mailed to each CTO
Securityholder at such Securityholder's address as it
appears on the Security Register or, in the case of
Securityholders holding Collateralized Trust
Obligations evidencing not less than 80% of the CTO
Invested Amount, by wire transfer, at the expense of
such CTO Securityholder, to an account or accounts
designated by such CTO Securityholder by written notice
given to the Paying Agent not less than five days prior
to the related Distribution Date; provided, however,
that the final payment in retirement of the
Collateralized Trust Obligations will be made only upon
presentation and surrender of the Collateralized Trust
Obligations at the office or offices specified in the
notice of such final distribution delivered by the
Trustee pursuant to Section 12.3.
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 D Securityholder of record other than the
Transferor on the preceding Record Date (other than as
provided in subsection 2.4(e) or in Section 12.3
respecting a final distribution) such Securityholder's
pro rata share (based on the aggregate Undivided
Interests represented by Class D Securities held by
such Securityholder) of amounts on deposit in the
Distribution Account as are payable to the Class D
Securityholders pursuant to Sections 4.11 and 4.12 of
the Agreement by wire transfer to each Class D
Securityholder to an account or accounts designated by
such Class D Securityholder by written notice given to
the Paying Agent not less than five days prior to the
related Distribution Date; provided, however, that the
final payment in retirement of the Class D Securities
will be made only upon presentation and surrender of
the Class D Securities 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 Securityholders' Statement.
On the 15th 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
Securityholder and the Rating Agencies a statement
substantially in the form of Exhibit B prepared by the
Servicer and delivered to the Trustee and the Paying
Agent on the preceding Determination Date setting forth
the following information (which, in the case of (i),
(ii) and (iii) below, shall be stated on the basis of
an original principal amount of $1,000 per Security
and, in the case of (ix) and (x), shall be stated on an
aggregate basis and on the basis of an original
principal amount of $1,000 per Security):
the total amount distributed;
the amount of such distribution allocable
to Class A Principal, Class B Principal, CTO Principal
and Class D Principal;
the amount of such distribution allocable
to Class A Monthly Interest and Carryover Class A
Monthly Interest, Class B Monthly Interest and
Carryover Class B Monthly Interest, CTO Monthly
Interest and Carryover CTO Monthly Interest and any
amounts payable to the Class D Securityholders with
respect to interest;
the amount of Principal Collections
processed in the Collection Account during the
preceding Monthly Period and allocated in respect of
the Class A Securities, the Class B Securities, the
Collateralized Trust Obligations and the Class D
Securities, respectively;
the amount of Finance Charge Collections
processed during the preceding Monthly Period and
allocated in respect of the Class A Securities, the
Class B Securities, the Collateralized Trust
Obligations and the Class D Securities, respectively,
and, after the Defeasance Reserve Account Funding Date,
the amount of Defeasance Funding Account Investment
Proceeds and investment earnings on amounts on deposit
in the Defeasance Reserve Account;
the aggregate amount of Principal
Receivables, the Invested Amount, the Class A Invested
Amount, the Class B Invested Amount, the CTO Invested
Amount, the Class D Invested Amount, the Floating
Percentage and, during the Amortization Period, the
Fixed/Floating Percentage as of the end of the day on
the last day of the related Monthly Period;
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;
the aggregate Series Default Amount for the
preceding Monthly Period;
the aggregate amount of Class A Charge-
Offs, Class B Charge-Offs, CTO Charge-Offs and Class D
Charge-Offs for the preceding Monthly Period;
the amount of the Monthly Servicing Fee for
the preceding Monthly Period;
the amount of unreimbursed Redirected Class
B Principal Collections, Redirected CTO Principal
Collections and Redirected Class D Principal
Collections for the related Monthly Period;
the aggregate amount of funds in the Excess
Funding Account as of the last day of the Monthly
Period immediately preceding the Distribution Date;
whether a CTO Trigger Event has occurred
and, if so, the Specified CTO Reserve Amount and the
amount then on deposit in the CTO Reserve Account;
the number of new Accounts the Receivables
in which have been added to the Trust during the
related Monthly Period;
the Portfolio Yield for the related Monthly
Period;
the Base Rate for the related Monthly
Period;
the Defeasance Funding Account Balance on
the related Transfer Date;
the Revolving Receivables Reserve Account
balance on the related Transfer Date; and
the amount of Defeasance Funding Account
Investment Proceeds deposited in the Collection Account
on the related Transfer Date, the Required Defeasance
Reserve Account Amount and the Available Defeasance
Reserve Account Amount as of the related Transfer Date.
Annual Securityholders' Tax Statement. On
or before January 31 of each calendar year, beginning
with calendar year 1999, the Paying Agent shall
distribute to each Person who at any time during the
preceding calendar year was a Series 1998-1
Securityholder, a statement prepared by the Servicer
containing the information required to be contained in
the regular report to Series 1998-1 Securityholders, 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
1998-1 Securityholder, together with, on or before
January 31 of each year, beginning in 1999, such other
customary information (consistent with the treatment of
the Securities as debt) as the Trustee or the Servicer
deems necessary or desirable to enable the Series 1998-
1 Securityholders 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 Series 1998-1 Pay Out Events. If any one of
the following events shall occur with respect to the Series 1998-
1 Securities:
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; 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 1998-1 Securityholders 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 1998-1 Securities evidencing
Undivided Interests aggregating not less than 50% of the Invested
Amount of this Series 1998-1, and continues to affect materially
and adversely the interests of the Series 1998-1 Securityholders
for such period;
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 1998-1 Securities evidencing
Undivided Interests aggregating more than 50% of the Invested
Amount of this Series 1998-1, and (ii) as a result of which the
interests of the Series 1998-1 Securityholders are materially and
adversely affected and continue to be materially and adversely
affected for such period; provided, however, that a Series 1998-1
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 (or such longer
period as the Trustee may specify) in accordance with the
provisions of the Agreement;
(c) Fingerhut shall consent to the appointment of a
bankruptcy trustee or receiver or liquidator in any bankruptcy
proceeding or any other insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of
or relating to all or substantially all of its property; or a
decree or order of a court or agency or supervisory authority
having jurisdiction in the premises for the appointment of a
bankruptcy trustee or receiver or liquidator in any bankruptcy
proceeding or any other insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or
for the winding-up or liquidation of its affairs, shall have been
entered against Fingerhut; or Fingerhut shall admit in writing
its inability to pay its debts generally as they become due, file
a petition to take advantage of any applicable insolvency or
reorganization statute including the U.S. bankruptcy code, make
an assignment for the benefit of its creditors or voluntarily
suspend payment of its obligations;
(d) the average of the Portfolio Yields for any three
consecutive Monthly Periods is reduced to a rate which is less
than the weighted average Base Rates for such three consecutive
Monthly Periods;
(e) (i) the Transferor Interest shall be less than the
Minimum Transferor Interest, (ii) 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 or (iii) the Retained Percentage shall be equal to or
less than 2%, in each case as of any Determination Date and, in
each case, shall not exceed the required amount on or prior to
the tenth Business Day following such Determination Date;
(f) any Servicer Default shall occur which would have
a material adverse effect on the Series 1998-1 Securityholders;
then, in the case of any event described in subparagraph (a), (b)
or (f), after the applicable grace period, if any, set forth in
such subparagraphs, the Holders of Series 1998-1 Securities
evidencing more than 50% of the Invested Amount of this Series
1998-1, by notice then given in writing to the Trustee, the
Transferor and the Servicer may declare that a pay out event (a
"Series 1998-1 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 (e), a Series 1998-1 Pay Out Event
shall occur without any notice or other action on the part of the
Trustee or the Series 1998-1 Securityholders immediately upon the
occurrence of such event.
SECTION 9 Collateralized Trust Obligation Defaults and
Remedies. (a) "CTO Default," wherever used herein, means any
one of the following events (whatever the reason for such CTO
Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree
or order of any court or any order, rule or regulation of any
administrative or governmental body):
(1) There is a CTO Monthly Interest Shortfall on two
consecutive Distribution Dates; or
(2) There is a CTO Charge-Off on three consecutive
Distribution Dates.
(b) If a CTO Default shall have occurred, upon the
direction of CTO Securityholders holding more than 50% of the CTO
Invested Amount:
(i) the Specified CTO Reserve Amount shall thereafter
be equal to the CTO Outstanding Principal Amount;
(ii) following the payment in full of the Class A
Invested and the Class B Invested Amount, the Trustee shall sell
or cause to be sold, and the Trustee shall pay the proceeds to
the Series 1998-1 Securityholders in final payment of all
principal of and accrued interest on such Series to be applied
first to the CTO Invested Amount until paid in full and then to
the Class D Invested Amount until paid in full, an amount of
Principal Receivables and the related Finance Charge Receivables
(or interests therein) up to 110% of the Invested Amount at the
close of business on such date; provided, that the amount of such
Principal Receivables shall not exceed the sum of (1) the product
of (A) the Transferor Percentage on the date of any such sale,
(B) the aggregate outstanding Principal Receivables on such date
and (C) a fraction the numerator of which is the Invested Amount
on such date and the denominator of which is the sum of the
invested amounts of all Series and the aggregate Participation
Amounts of all Participations then outstanding and (2) the
Invested Amount on such date. The Transferor shall be permitted
to purchase such Receivables in such case and shall have a right
of first refusal with respect thereto to the extent of a bona
fide offer by an unrelated third party for fair value. Any
proceeds of such sale in excess of such principal and interest
paid shall be paid to the Transferor. Upon such sale, final
payment of all amounts allocable to any Class of such Series
shall be made in the manner provided in Section 12.3 of the
Agreement.
The Servicer shall provide written notice to the Rating Agencies
of any such direction of a majority of the CTO Invested Amount.
SECTION 10 Series 1998-1 Termination. The right of
the Series 1998-1 Securityholders to receive payments from the
Trust will terminate on the first Business Day following the
Series 1998-1 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 1998-1 Securityholders shall remain entitled to
receive proceeds of such sale when such sale occurs.
SECTION 11 Legends; Transfer and Exchange;
Restrictions on Transfer of Series 1998-1 Securities; Tax
Treatment. Each Class A Security, Class B Security and
Collateralized Trust Obligation will bear a legend or legends in
substantially the following form:
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE
BENEFIT OF FINGERHUT RECEIVABLES, INC. AND THE TRUSTEE
THAT 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") THAT IS
SUBJECT TO SECTION 4975 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"
(AS DEFINED IN 29 C.F.R. SECTION 2510.3-101 OR
OTHERWISE UNDER ERISA) BY REASON OF A PLAN'S INVESTMENT
IN THE ENTITY OR (V) A PERSON INVESTING "PLAN ASSETS"
OF ANY SUCH PLAN (INCLUDING WITHOUT LIMITATION, FOR
PURPOSES OF CLAUSE (IV) AND THIS CLAUSE (V), AS
APPLICABLE, AN INSURANCE COMPANY GENERAL ACCOUNT, BUT
EXCLUDING ANY ENTITY REGISTERED UNDER THE INVESTMENT
COMPANY ACT OF 1940, AS AMENDED).
Each Security Owner by virtue of its beneficial
interest in the Class A Securities or Class B Securities, as
applicable, shall be deemed to have made the representations and
warranties stated in such legend.
Each Class A Security and Class B Security and each
Collateralized Trust Obligation that is a CTO Global Security
deposited with DTC, or a custodian on behalf of DTC, shall bear
the following legend:
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW
YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE &
CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
Each Collateralized Trust Obligation that is issued
pursuant to Rule 144A shall bear the following legend:
THIS SECURITY HAS NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS.
THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, AGREES
THAT THIS SECURITY MAY BE REOFFERED, RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE
SECURITIES ACT AND OTHER APPLICABLE LAWS AND ONLY (1)
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT TO A
PERSON WHO THE HOLDER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER ("QIB") WITHIN THE
MEANING OF RULE 144A, PURCHASING FOR ITS OWN ACCOUNT,
OR A QIB PURCHASING FOR THE ACCOUNT OF A QIB, WHOM THE
HOLDER HAS INFORMED, IN EACH CASE, THAT SUCH REOFFER,
RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A OR (2) IN AN OFFSHORE TRANSACTION
IN ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S
UNDER THE SECURITIES ACT. EACH SECURITY OWNER BY
ACCEPTING A BENEFICIAL INTEREST IN THIS SECURITY,
UNLESS SUCH PERSON ACQUIRED THIS SECURITY IN A TRANSFER
DESCRIBED IN CLAUSE (2) ABOVE, IS DEEMED TO REPRESENT
THAT IT IS EITHER A QIB PURCHASING FOR ITS OWN ACCOUNT
OR A QIB PURCHASING FOR THE ACCOUNT OF ANOTHER QIB.
Each Collateralized Trust Obligation that is issued
pursuant to Regulation S shall bear the following legend:
THIS SECURITY HAS NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND PRIOR TO
THE DATE THAT IS 40 DAYS AFTER THE LATER OF THE
COMMENCEMENT OF THE OFFERING AND THE CLOSING DATE MAY
NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
IN THE UNITED STATES OR TO A U.S. PERSON EXCEPT
PURSUANT TO AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT.
Each Class D Security will bear legends substantially
in the following form:
THIS SECURITY WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"). THIS SECURITY 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. TRANSFERS OF THIS
SECURITY SHALL BE SUBJECT TO THE RESTRICTIONS SET FORTH
IN THE POOLING AND SERVICING AGREEMENT.
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE
BENEFIT OF FINGERHUT RECEIVABLES, INC. AND THE TRUSTEE
THAT 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") THAT IS
SUBJECT TO SECTION 4975 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
(AS DEFINED IN 29 C.F.R. SECTION 2510.3-101 OR
OTHERWISE UNDER ERISA) BY REASON OF A PLAN'S INVESTMENT
IN THE ENTITY OR (V) A PERSON INVESTING PLAN ASSETS OF
ANY SUCH PLAN (INCLUDING WITHOUT LIMITATION, FOR
PURPOSES OF CLAUSE (IV) AND THIS CLAUSE (V), AS
APPLICABLE, AN INSURANCE COMPANY GENERAL ACCOUNT, BUT
EXCLUDING ANY ENTITY REGISTERED UNDER THE INVESTMENT
COMPANY ACT OF 1940, AS AMENDED).
SECTION 12 Compliance with Withholding
Requirements. Notwithstanding any other provision of the
Agreement, the Trustee and any Paying Agent shall comply with all
Federal withholding requirements with respect to payments to the
Series 1998-1 Securityholders of interest, original issue
discount, or other amounts that the Trustee, any Paying Agent,
the Servicer or the Transferor reasonably believes are applicable
under the Internal Revenue Code. The consent of the Series 1998-
1 Securityholders shall not be required for any such withholding.
In the event the Trustee or the Paying Agent withholds any amount
from payments made to any Series 1998-1 Securityholder pursuant
to federal withholding requirements, the Trustee or the Paying
Agent shall indicate to such Series 1998-1 Securityholder the
amount withheld and all such amounts shall be deemed to have been
paid to such Series 1998-1 Securityholders and the Series 1998-1
Securityholders shall have no claim therefor.
SECTION 13 Ratification of Agreement. 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. The Transferor hereby
confirms the conveyance of the Trust Property to the Trustee for
the benefit of the Series 1998-1 Securityholders.
For so long as any of the Collateralized Trust
Obligations are "restricted securities" within the meaning of
Rule 144(a)(3) under the Securities Act and during any period in
which the Trust is not subject to Section 13 or 15(d) of the
Exchange Act, each of the Transferor, the Servicer and the
Trustee agree to cooperate with each other to provide to any CTO
Securityholder, and to any prospective purchaser of
Collateralized Trust Obligations designated by such CTO
Securityholder upon the request of such CTO Securityholder or
prospective purchaser, the information required by Rule
144A(d)(4) under the Securities Act.
SECTION 14 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.
SECTION 15 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 16 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 17. Paired Series. Subject to the
satisfaction of the Rating Agency Condition, prior to the
commencement of the Early Amortization Period the Series 1998-1
Securities may be paired with one or more other Series (each, a
"Paired Series"). Each Paired Series either will be pre-funded
with an initial deposit to a pre-funding account in an amount up
to the initial principal amount of such Paired Series primarily
from the proceeds of the sale of such Paired Series or will have
a variable principal amount. Any such pre-funding account will
be held for the benefit of such Paired Series and not for the
benefit of the Series 1998-1 Securityholders. As amounts are
paid for the benefit of the Class A Securityholders, Class B
Securityholders and CTO Securityholders, either (i) in the case
of a pre-funded Paired Series, an equal amount of funds on
deposit in any pre-funding account for such pre-funded Paired
Series will be released (which funds will be distributed to the
Transferor) or (ii) in the case of a Paired Series having a
variable principal amount, an interest in such variable Paired
Series in an equal or lesser amount may be sold by the Trust (and
the proceeds thereof will be distributed to the Transferor) and,
in either case, the invested amount in the Trust of such Paired
Series will increase by up to a corresponding amount. Upon
payment in full of the Series 1998-1 Securities, assuming that
there have been no unreimbursed charge-offs with respect to any
related Paired Series, the aggregate invested amount of such
related Paired Series will have been increased by an amount up to
an aggregate amount equal to the Invested Amount paid to the
Series 1998-1 Securityholders since the issuance of such Paired
Series. The issuance of a Paired Series will be subject to the
conditions described in subsection 6.9(b) of the Agreement.
SECTION 18 Registration of the Class A Securities
under the Securities Exchange Act of 1934. The Transferor shall
cause the Class A Securities to be registered under the
Securities Exchange Act of 1934, as amended, on or before
February, 1999.
IN WITNESS WHEREOF, the Transferor, the Servicer and
the Trustee have caused this Series 1998-1 Supplement to be duly
executed by their respective officers as of the day and year
first above written.
FINGERHUT RECEIVABLES, INC.
Transferor
By: /s/ James M. Wehmann
Name: James M. Wehmann
Title:President and Treasurer
FINGERHUT NATIONAL BANK
Servicer
By: /s/ James M. Wehmann
Name: James M. Wehmann
Title:Treasurer
THE BANK OF NEW YORK (DELAWARE)
Trustee
By: /s/ Cheryl L. Laser
Name: Cheryl L. Laser
Title:Assistant Vice President
Exhibit A-1
FORM OF CLASS A INVESTOR SECURITY
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO THE TRUSTEE OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO.
OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO.
HAS AN INTEREST HEREIN.
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE BENEFIT
OF FINGERHUT RECEIVABLES, INC. AND THE TRUSTEE THAT 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") THAT IS SUBJECT TO SECTION 4975 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" (AS
DEFINED IN 29 C.F.R. SECTION 2510.3-101 OR OTHERWISE UNDER
ERISA) BY REASON OF A PLAN'S INVESTMENT IN THE ENTITY OR (V)
A PERSON INVESTING "PLAN ASSETS" OF ANY SUCH PLAN (INCLUDING
WITHOUT LIMITATION, FOR PURPOSES OF CLAUSE (IV) AND THIS
CLAUSE (V), AS APPLICABLE, AN INSURANCE COMPANY GENERAL
ACCOUNT, BUT EXCLUDING ANY ENTITY REGISTERED UNDER THE
INVESTMENT COMPANY ACT OF 1940, AS AMENDED).
No. ___ $_________
CUSIP NO. 31786YAD2
FINGERHUT MASTER TRUST
6.07% ASSET BACKED SECURITY,
SERIES 1998-1, 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 consumer
revolving consumer credit card accounts and closed-end
installment sale or closed-end loan contracts transferred or to
be transferred by Fingerhut Receivables, Inc. (the "Transferor")
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 Companies, Inc., Fingerhut
National Bank or any affiliate of any of them.)
This certifies that _________ (the "Securityholder") 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
March 18, 1998 (the "Pooling and Servicing Agreement"; such term
to include any amendment thereto) by and between the Transferor,
Fingerhut National Bank, as Servicer (the "Servicer"), and The
Bank of New York (Delaware) as Trustee (the "Trustee"), and the
Series 1998-1 Supplement, dated as of April 28, 1998 (the "Series
1998-1 Supplement"), among the Transferor, the Servicer and the
Trustee. The Pooling and Servicing Agreement, as supplemented by
the Series 1998-1 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).
This Security does not purport to summarize the
Agreement and reference is made to that 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 Security is one of a series of
Securities entitled "Fingerhut Master Trust 6.07% Asset Backed
Securities, Series 1998-1, Class A" (the "Class A Securities"),
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 Securityholder by virtue of the
acceptance hereof assents and by which the Securityholder is
bound.
The Transferor has structured the Agreement, the Class
A Securities, the Fingerhut Master Trust 6.29% Asset Backed
Securities, Series 1998-1, Class B (the "Class B Securities" and
collectively with the Class A Securities, the "Offered
Securities") and the Fingerhut Master Trust Floating Rate Asset
Backed Securities, Series 1998-1, Collateralized Trust
Obligations (the "Collateralized Trust Obligations") with the
intention that the Offered Securities and the Collateralized
Trust Obligations will qualify under applicable tax law as
indebtedness, and both the Transferor and each holder of a Class
A Security (a "Class A Securityholder") or any interest therein
by acceptance of its Security or any interest therein, agrees to
treat the Class A Securities for purposes of federal, state and
local income or franchise taxes and any other tax imposed on or
measured by income, as indebtedness.
No principal will be payable to the Class A
Securityholders until the first Distribution Date in the
Amortization Period. No principal will be payable to the Class B
Securityholders, CTO Securityholders or Class D Securityholders
(other than with respect to Class D Excess Amounts) until all
principal payments have been made to the Class A Securityholders.
Interest on the Class A Securities will be payable on
June 15, 1998 and on the 15th day of each month thereafter or, if
such day is not a business day, on the next succeeding business
day (each, a "Distribution Date"), in an amount equal to the
product of (i) the Class A Interest Rate, (ii) a fraction the
numerator of which is the actual number of days in the related
Interest Accrual Period and the denominator of which is 360 and
(iii) the outstanding principal balance of the Class A Securities
as of the close of business on the first day of such Interest
Accrual Period provided that interest for the first Distribution
Date will be an amount equal to the product of (u) the initial
Class A Invested Amount, (v) 47 divided by 360, and (w) the Class
A Interest Rate.
Interest payments on the Class A Securities on each
Distribution Date will be funded from Available Series 1998-1
Finance Charge Collections with respect to the preceding Monthly
Period (or, with respect to the first Distribution Date, such
collections from and including the Closing Date to and including
May 29, 1998 plus the amount of the initial deposit to the
Interest Funding Account to be made on the Closing Date) and from
certain other funds allocated as set forth in the Pooling and
Servicing Agreement to the respective classes of the Securities
and deposited on each business day during such Monthly Period in
the Interest Funding Account.
"Class A Invested Amount" shall mean, with respect to
any Business Day, an amount equal to (a) the Class A Initial
Invested Amount minus (b) the aggregate amount of principal
payments made to Class A Securityholders through and including
such Business Day, minus (c) the aggregate amount of Class A
Charge-Offs for all prior Distribution Dates, plus (d) the sum of
the aggregate amount reimbursed with respect to reductions of the
Class A Invested Amount through and including such Business Day
pursuant to subsection 4.9(a)(vii) of the Agreement plus, with
respect to such subsection, amounts applied thereto pursuant to
subsections 4.10(a) and (b) and 4.14(a), (b) and (c) of the
Agreement, for the purpose of reimbursing amounts deducted
pursuant to the foregoing clause (c); provided, however, that the
Class A Invested Amount may not be reduced below zero.
Subject to the Agreement, payments of principal are
limited to the unpaid Class A Invested Amount of the Class A
Securities, which may be less than the unpaid balance of the
Class A Securities pursuant to the terms of the Agreement. All
principal on the Class A Securities is due and payable no later
than the February 2005 Distribution Date (or if such day is not a
Business Day, the next succeeding Business Day) (the "Scheduled
Series 1998-1 Termination Date"). After the earlier to occur of
(i) the Scheduled Series 1998-1 Termination Date and (ii) the day
after the Distribution Date on which the Series 1998-1 Securities
are paid in full (the "Series 1998-1 Termination Date") neither
the Trust nor the Transferor will have any further obligation to
distribute principal or interest on the Class A Securities. In
the event that the Class A Invested Amount is greater than zero
on the Series 1998-1 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, the Class B Invested Amount, the CTO
Invested Amount and the Class D Invested Amount at the close of
business on such date (but not more than the total amount of
Receivables allocable to the Series 1998-1 Securities), and shall
pay the proceeds to the Class A Securityholders pro rata in final
payment of the Class A Securities, then to the Class B
Securityholders pro rata in final payment of the Class B
Securities, then to the CTO Securityholders pro rata in final
payment of the Collateralized Trust Obligations and finally to
the Class D Securityholders pro rata in final payment of the
Class D Securities.
Unless the certificate of authentication hereon has
been executed by or on behalf of the Trustee, by manual
signature, this Security shall not be entitled to any benefit
under the Agreement, or be valid for any purpose.
IN WITNESS WHEREOF, the Transferor has caused this
Security to be duly executed.
FINGERHUT RECEIVABLES, INC.
By:
Name:
Title:
Dated:
CERTIFICATE OF AUTHENTICATION
This is one of the Class A Securities referred to in
the within-mentioned Pooling and Servicing Agreement.
THE BANK OF NEW YORK (DELAWARE)
By:
Name:
Title:
Exhibit A-2
FORM OF CLASS B INVESTOR SECURITY
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE
BENEFIT OF FINGERHUT RECEIVABLES, INC. AND THE TRUSTEE
THAT 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") THAT IS
SUBJECT TO SECTION 4975 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"
(AS DEFINED IN 29 C.F.R. SECTION 2510.3-101 OR
OTHERWISE UNDER ERISA) BY REASON OF A PLAN'S INVESTMENT
IN THE ENTITY OR (V) A PERSON INVESTING "PLAN ASSETS"
OF ANY SUCH PLAN (INCLUDING WITHOUT LIMITATION, FOR
PURPOSES OF CLAUSE (IV) AND THIS CLAUSE (V), AS
APPLICABLE, AN INSURANCE COMPANY GENERAL ACCOUNT, BUT
EXCLUDING ANY ENTITY REGISTERED UNDER THE INVESTMENT
COMPANY ACT OF 1940, AS AMENDED).
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO THE TRUSTEE OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO.
OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO.
HAS AN INTEREST HEREIN.
No. ___ $__________
CUSIP NO. 31786YAE0
FINGERHUT MASTER TRUST
6.29% ASSET BACKED SECURITY,
SERIES 1998-1, 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 consumer
revolving consumer credit card accounts and closed-end
installment sale or closed-end loan contracts transferred or to
be transferred by Fingerhut Receivables, Inc. (the "Transferor")
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 Companies, Inc., Fingerhut
National Bank or any affiliate of any of them.)
This certifies that __________ (the "Securityholder")
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
March 18, 1998 (the "Pooling and Servicing Agreement"; such term
to include any amendment thereto) by and between the Transferor,
Fingerhut National Bank, as the Servicer (the "Servicer"), and
The Bank of New York (Delaware), as Trustee (the "Trustee"), and
the Series 1998-1 Supplement, dated as of April 28, 1998 (the
"Series 1998-1 Supplement"), among the Transferor, the Servicer
and the Trustee. The Pooling and Servicing Agreement, as
supplemented by the Series 1998-1 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).
This Security does not purport to summarize the
Agreement and reference is made to that 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 Security is one of a series of
Securities entitled "Fingerhut Master Trust 6.29% Asset Backed
Securities, Series 1998-1, Class B" (the "Class B Securities"),
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 Securityholder by virtue of the
acceptance hereof assents and by which the Securityholder is
bound.
The Transferor has structured the Agreement, the Class
B Securities, the Fingerhut Master Trust 6.07% Asset Backed
Securities, Series 1998-1, Class A (the "Class A Securities" and
collectively with the Class B Securities the "Offered
Securities") and the Fingerhut Master Trust Floating Rate Asset
Backed Securities, Series 1998-1, Collateralized Trust
Obligations (the "Collateralized Trust Obligations") with the
intention that the Offered Securities and the Collateralized
Trust Obligations will qualify under applicable tax law as
indebtedness, and both the Transferor and each holder of a Class
B Security (a "Class B Securityholder") or any interest therein
by acceptance of its Security or any interest therein, agrees to
treat the Class B Securities for purposes of federal, state and
local income or franchise taxes and any other tax imposed on or
measured by income, as indebtedness.
No principal will be payable to the Class B
Securityholders until the earlier of the Class B Expected Final
Payment Date and, upon the occurrence of a Pay Out Event, the
Distribution Date following the Monthly Period in which the Pay
Out Event occurs but in no event earlier than the Distribution
Date either on or following the Distribution Date on which the
Class A Invested Amount had been paid in full. No principal will
be payable to the Class B Securityholders until all principal
payments have been made to the Class A Securityholders. No
principal payments will be made to the CTO Securityholders or
Class D Securityholders (other than with respect to Class D
Excess Amounts) until the Distribution Date either on or
following the Distribution Date on which the Class B Invested
Amount has been paid in full.
Interest on the Offered Securities will be payable on
June 15, 1998 and on the 15th day of each month thereafter or, if
such day is not a business day, on the next succeeding business
day (each, a "Distribution Date"), in an amount equal to (1) with
respect to the Class A Securities an amount equal to the product
of (i) the Class A Interest Rate, (ii) a fraction the numerator
of which is the actual number of days in the related Interest
Accrual Period and the denominator of which is 360 and (iii) the
outstanding principal balance of the Class A Securities as of the
close of business on the first day of such Interest Accrual
Period and (2) with respect to the Class B Securities (a) the
product of (i) the Class B Interest Rate, (ii) a fraction the
numerator of which is the actual number of days in the related
Interest Accrual Period and the denominator of which is 360 and
(iii) the outstanding principal balance of the Class B Securities
as of the close of business on the first day of such Interest
Accrual Period (or in the case of the initial Distribution Date,
an amount equal to the product of (u) the initial Class B
Invested Amount, (v) 47 divided by 360, and (w) the Class B
Interest Rate.
Interest payments on the Class A Securities on each
Distribution Date will be funded from Available Series 1998-1
Finance Charge Collections with respect to the preceding Monthly
Period (or, with respect to the first Distribution Date, such
collections from and including the Closing Date to and including
May 29, 1998 plus the amount of the initial deposit to the
Interest Funding Account to be made on the Closing Date) and from
certain other funds allocated as set forth in the Pooling and
Servicing Agreement to the respective classes of the Securities
and deposited on each business day during such Monthly Period in
the Interest Funding Account.
Subject to the prior payment of interest on the Class A
Securities, interest payments on the Class B Securities on each
Distribution Date will be funded from the portion of Available
Series 1998-1 Finance Charge Collections with respect to the
preceding Monthly Period and from certain other funds allocated
as set forth in the Pooling and Servicing Agreement to the Class
B Securities and deposited on each business day during such
Monthly Period in the Interest Funding Account.
"Class B Invested Amount" shall mean, with respect to
any Business Day, an amount equal to (a) the Class B Initial
Invested Amount minus (b) the aggregate amount of principal
payments made to Class B Securityholders through and including
such Business Day, minus (c) the aggregate amount of Class B
Charge-Offs for all prior Distribution Dates, minus (d) the
aggregate amount of Redirected Class B Principal Collections
through and including such Business Day for which neither the
Class D Invested Amount nor the CTO Invested Amount has been
reduced on all prior Distribution Dates pursuant to subsection
4.14(e) of the Agreement, and plus (e) the sum of the aggregate
amount reimbursed with respect to reductions of the Class B
Invested Amount through and including such Business Day pursuant
to subsection 4.9(a)(x) of the Agreement plus, with respect to
such subsection, amounts applied thereto pursuant to subsections
4.10(a) and (b) and 4.14(a) and (b), of the Agreement, for the
purpose of reimbursing amounts deducted pursuant to the foregoing
clauses (c) and (d); provided, however, that the Class B Invested
Amount may not be reduced below zero.
Subject to the Agreement, payments of principal are
limited to the unpaid Class B Invested Amount of the Class B
Securities, which may be less than the unpaid balance of the
Class B Securities pursuant to the terms of the Agreement. All
principal on the Class B Securities is due and payable no later
than the February 2005 Distribution Date (or if such day is not a
Business Day, the next succeeding Business Day) (the "Scheduled
Series 1998-1 Termination Date"). After the earlier to occur of
(i) the Scheduled Series 1998-1 Termination Date and (ii) the day
after the Distribution Date on which the Series 1998-1 Securities
are paid in full (the "Series 1998-1 Termination Date") neither
the Trust nor the Transferor will have any further obligation to
distribute principal or interest on the Class B Securities. In
the event that the Class B Invested Amount is greater than zero
on the Series 1998-1 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, the Class B Invested Amount, the CTO
Invested Amount and the Class D Invested Amount at the close of
business on such date (but not more than the total amount of
Receivables allocable to the Series 1998-1 Securities), and
shall pay the proceeds to the Class A Securityholders pro rata -
in final payment of the Class A Securities, then to the Class B
Securityholders pro rata in final payment of the Class B
Securities, then to the CTO Securityholders pro rata in final
payment of the Collateralized Trust Obligations and finally to
the Class D Securityholders pro rata in final payment of the
Class D Securities.
Unless the certificate of authentication hereon has
been executed by or on behalf of the Trustee, by manual
signature, this Security shall not be entitled to any benefit
under the Agreement, or be valid for any purpose.
IN WITNESS WHEREOF, the Transferor has caused this
Security to be duly executed.
FINGERHUT RECEIVABLES, INC.
By:
Name:
Title:
Dated:
CERTIFICATE OF AUTHENTICATION
This is one of the Class B Securities referred to in
the within-mentioned Pooling and Servicing Agreement.
THE BANK OF NEW YORK (DELAWARE)
By:
Name:
Title:
Exhibit A-3
FORM OF COLLATERALIZED TRUST OBLIGATION
[Each Collateralized Trust Obligation that is a CTO
Global Security deposited with DTC, or a custodian on behalf of
DTC, shall bear the following legend:]
UNLESS THIS SECURITY IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND
ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.
[Each Collateralized Trust Obligation that is issued
pursuant to Rule 144A shall bear the following legend:]
THIS SECURITY HAS NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS.
THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, AGREES
THAT THIS SECURITY MAY BE REOFFERED, RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE
SECURITIES ACT AND OTHER APPLICABLE LAWS AND ONLY
(1) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT TO A
PERSON WHO THE HOLDER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER ("QIB") WITHIN THE
MEANING OF RULE 144A, PURCHASING FOR ITS OWN ACCOUNT,
OR A QIB PURCHASING FOR THE ACCOUNT OF A QIB, WHOM THE
HOLDER HAS INFORMED, IN EACH CASE, THAT SUCH REOFFER,
RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A OR (2) IN AN OFFSHORE TRANSACTION
IN ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S
UNDER THE SECURITIES ACT. EACH SECURITY OWNER BY
ACCEPTING A BENEFICIAL INTEREST IN THIS SECURITY,
UNLESS SUCH PERSON ACQUIRED THIS SECURITY IN A TRANSFER
DESCRIBED IN CLAUSE (2) ABOVE, IS DEEMED TO REPRESENT
THAT IT IS EITHER A QIB PURCHASING FOR ITS OWN ACCOUNT
OR A QIB PURCHASING FOR THE ACCOUNT OF ANOTHER QIB.
[Each Collateralized Trust Obligation that is issued
pursuant to Regulation S shall bear the following legend:]
THIS SECURITY HAS NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND PRIOR TO
THE DATE THAT IS 40 DAYS AFTER THE LATER OF THE
COMMENCEMENT OF THE OFFERING AND THE CLOSING DATE MAY
NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
IN THE UNITED STATES OR TO A U.S. PERSON EXCEPT
PURSUANT TO AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT.
[Each Collateralized Trust Obligation shall bear the
following legends:]
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE
BENEFIT OF FINGERHUT RECEIVABLES, INC. AND THE TRUSTEE
THAT 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") THAT IS
SUBJECT TO SECTION 4975 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"
(AS DEFINED IN 29 C.F.R. SECTION 2510.3-101 OR
OTHERWISE UNDER ERISA) BY REASON OF A PLAN'S INVESTMENT
IN THE ENTITY OR (V) A PERSON INVESTING "PLAN ASSETS"
OF ANY SUCH PLAN (INCLUDING WITHOUT LIMITATION, FOR
PURPOSES OF CLAUSE (IV) AND THIS CLAUSE (V), AS
APPLICABLE, AN INSURANCE COMPANY GENERAL ACCOUNT, BUT
EXCLUDING ANY ENTITY REGISTERED UNDER THE INVESTMENT
COMPANY ACT OF 1940, AS AMENDED).
No. ___ $__________
CUSIP NO. 31786YAH3
FINGERHUT MASTER TRUST
FLOATING RATE ASSET BACKED
COLLATERALIZED TRUST OBLIGATION, SERIES 1998-1
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 consumer
revolving consumer credit card accounts and closed-end
installment sale or closed-end loan contracts transferred or to
be transferred by certain subsidiaries of Fingerhut Receivables,
Inc. (the "Transferor") 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 Companies, Inc., Fingerhut
National Bank or any affiliate of any of them.)
This certifies that ___________________ (the
"Securityholder") 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 March 18, 1998 (the "Pooling and
Servicing Agreement"; such term to include any amendment thereto)
by and between the Transferor, Fingerhut National Bank as the
Servicer (the "Servicer"), and The Bank of New York (Delaware),
as Trustee (the "Trustee"), and the Series 1998-1 Supplement,
dated as of April 28, 1998 (the "Series 1998-1 Supplement"),
among the Transferor, the Servicer and the Trustee. The Pooling
and Servicing Agreement, as supplemented by the Series 1998-1
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).
This Security does not purport to summarize the
Agreement and reference is made to that 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 Security is one of a series of
Securities entitled "Fingerhut Master Trust Floating Rate Asset
Backed Securities, Series 1998-1, Collateralized Trust
Obligations (the "Collateralized Trust Obligations"), 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 CTO Securityholder by virtue of the acceptance
hereof assents and by which the CTO Securityholder is bound.
The Transferor has structured the Agreement, the
Collateralized Trust Obligations, the Fingerhut Master Trust
6.07% Asset Backed Securities, Series 1998-1, Class A (the
"Class A Securities") and the Fingerhut Master Trust 6.29% Asset
Backed Securities, Series 1998-1, Class B (the "Class B
Securities") with the intention that the Class A Securities,
Class B Securities and Collateralized Trust Obligations will
qualify under applicable tax law as indebtedness, and both the
Transferor and each holder of a Collateralized Trust Obligation
(a "CTO Securityholder") or any interest therein by acceptance of
its Collateralized Trust Obligation or any interest therein,
agrees to treat the Collateralized Trust Obligations for purposes
of federal, state and local income or franchise taxes and any
other tax imposed on or measured by income, as indebtedness.
No principal will be payable to the CTO Securityholders
until the earlier of the Class C Expected Final Payment Date and,
upon the occurrence of a Pay Out Event, the Distribution Date
following the Monthly Period in which the Pay Out Event occurs
but in no event earlier than the Distribution Date either on or
following the Distribution Date on which the Class A Invested
Amount and the Class B Invested Amount have been paid in full.
No principal payments will be payable to the CTO Securityholders
until the Distribution Date either on or following the
Distribution Date on which the Class A Invested Amount and Class
B Invested Amount have been paid in full.
Interest on the Collateralized Trust Obligations will
be payable on June 15, 1998 and on each Distribution Date
thereafter, in an amount equal to the product of (i) a per annum
rate .80% in excess of LIBOR (the "CTO Interest Rate"), (ii) a
fraction the numerator of which is the actual number of days in
the related Interest Accrual Period and the denominator of which
is 360 and (iii) the CTO Invested Amount as of the close of
business on the first day of such Interest Accrual Period (or in
the case of the initial Distribution Date, an amount equal to the
sum of (I) the product of (u) the initial CTO Invested Amount,
(v) 48 divided by 360, and (w) the CTO Interest Rate.
Subject to the prior payment of interest on the Class A
Securities and Class B Securities, interest payments on the
Class C Securities on each Distribution Date will be funded from
the portion of Available Series 1998-1 Finance Charge Collections
with respect to the preceding Monthly Period and from certain
other funds allocated as set forth in the Pooling and Servicing
Agreement to the Collateralized Trust Obligations and deposited
on each business day during such Monthly Period in the Interest
Funding Account.
"CTO Invested Amount" shall mean with respect to any
Business Day, an amount equal to (a) the CTO Initial Invested
Amount minus (b) the aggregate amount of principal payments made
to CTO Securityholders through and including such Business Day,
minus (c) the aggregate amount of CTO Charge-Offs for all prior
Distribution Dates, minus (d) the aggregate amount of Redirected
CTO Principal Collections and Redirected Class B Principal
Collections through and including such Business Day for which the
Class D Invested Amount has not been reduced pursuant to
subsection 4.14(d) of the Agreement, plus (e) the aggregate
amount reimbursed with respect to reductions of the CTO Invested
Amount through and including such Business Day pursuant to
subsection 4.9(a)(xi) of the Agreement plus, with respect to such
subsection, amounts applied thereto pursuant to subsections
4.10(a) and (b) and 4.14(a), of the Agreement, for the purpose of
reimbursing amounts deducted pursuant to the foregoing clauses
(c) and (d); provided, however, that the CTO Invested Amount may
not be reduced below zero.
Subject to the Agreement, payments of principal are
limited to the unpaid CTO Invested Amount of the Collateralized
Trust Obligations, which may be less than the unpaid balance of
the Collateralized Trust Obligations pursuant to the terms of the
Agreement. All principal on the Collateralized Trust Obligations
is due and payable no later than the February 2005 Distribution
Date (or if such day is not a Business Day, the next succeeding
Business Day) (the "Scheduled Series 1998-1 Termination Date").
After the earlier to occur of (i) the Scheduled Series 1998-1
Termination Date and (ii) the day after the Distribution Date on
which the Series 1998-1 Securities are paid in full (the "Series
1998-1 Termination Date") neither the Trust nor the Transferor
will have any further obligation to distribute principal or
interest on the Collateralized Trust Obligations. In the event
that the CTO Invested Amount is greater than zero on the 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, the Class B Invested Amount, the CTO Invested Amount and
the Class D Invested Amount at the close of business on such date
(but not more than the total amount of Receivables allocable to
the Series 1998-1 Securities), and shall pay the proceeds to the
Class A Securityholders pro rata in final payment of the Class A
Securities, then to the Class B Securityholders pro rata in final
payment of the Class B Securities, then to the CTO
Securityholders pro rata in final payment of the Collateralized
Trust Obligations and finally to the Class D Securityholders pro
rata in final payment of the Class D Securities.
Unless the certificate of authentication hereon has
been executed by or on behalf of the Trustee, by manual
signature, this Security shall not be entitled to any benefit
under the Agreement, or be valid for any purpose.
IN WITNESS WHEREOF, the Transferor has caused this
Security to be duly executed.
FINGERHUT RECEIVABLES, INC.
By:
Name:
Title:
Dated:
CERTIFICATE OF AUTHENTICATION
This is one of the Collateralized Trust Obligations
referred to in the within-mentioned Pooling and Servicing
Agreement.
THE BANK OF NEW YORK (DELAWARE)
By:
Name:
Title:
Exhibit A-4
FORM OF CLASS D INVESTOR SECURITY
THIS SECURITY WAS ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"). THIS SECURITY 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. TRANSFERS OF
THIS SECURITY SHALL BE SUBJECT TO THE RESTRICTIONS SET FORTH
IN THE POOLING AND SERVICING AGREEMENT.
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE BENEFIT
OF FINGERHUT RECEIVABLES, INC. AND THE TRUSTEE THAT 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") THAT IS SUBJECT TO SECTION 4975 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 (AS
DEFINED IN 29 C.F.R. SECTION 2510.3-101 OR OTHERWISE UNDER
ERISA) BY REASON OF A PLAN'S INVESTMENT IN THE ENTITY OR (V)
A PERSON INVESTING PLAN ASSETS OF ANY SUCH PLAN (INCLUDING
WITHOUT LIMITATION, FOR PURPOSES OF CLAUSE (IV) AND THIS
CLAUSE (V), AS APPLICABLE, AN INSURANCE COMPANY GENERAL
ACCOUNT, BUT EXCLUDING ANY ENTITY REGISTERED UNDER THE
INVESTMENT COMPANY ACT OF 1940, AS AMENDED).
No. ___ $_________
FINGERHUT MASTER TRUST
0% ASSET BACKED
SECURITY, SERIES 1998-1, CLASS D
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 consumer
revolving consumer credit card accounts and closed-end
installment sale or loan contracts transferred or to be
transferred by Fingerhut Receivables, Inc. (the "Transferor") 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 Companies, Inc., Fingerhut
National Bank or any affiliate of any of them.)
This certifies that ______________ (the
"Securityholder") 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 March 18, 1998 (the "Pooling and Servicing
Agreement"; such term to include any amendment or Supplement
thereto) by and between the Transferor, Fingerhut National Bank
as the Servicer (the "Servicer"), and The Bank of New York
(Delaware), as Trustee (the "Trustee"), and the Series 1998-1
Supplement, dated as of April 28, 1998 (the "Series 1998-1
Supplement"), among the Transferor, the Servicer and the Trustee.
The Pooling and Servicing Agreement, as supplemented by the
Series 1998-1 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).
This Security does not purport to summarize the
Agreement and reference is made to that 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 Security is one of a series of
Securities entitled "Fingerhut Master Trust 0% Asset Backed
Securities, Series 1998-1, Class D" (the "Class D Securities"),
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 Securityholder by virtue of the
acceptance hereof assents and by which the Securityholder is
bound.
Fingerhut Receivables, Inc. shall be prohibited from
transferring any interest in or portion of the Class D Security.
No principal will be payable to the Class D
Securityholders (other than with respect to Class D Excess
Amounts) until the earlier of the Expected Final Payment Date
and, upon the occurrence of a Pay Out Event, the Distribution
Date following the Monthly Period in which the Pay Out Event
occurs but in no event earlier than the Distribution Date either
on or following the Distribution Date on which Class A Invested
Amount, Class B Invested Amount and the CTO Invested Amount have
been paid in full. No principal will be payable to the Class D
Securityholders until all principal payments have first been made
to the Class A Securityholders, Class B Securityholders and CTO
Securityholders.
"Class D Invested Amount" shall mean with respect to
any Business Day, an amount equal to (a) the Class D Initial
Invested Amount, minus (b) the aggregate amount of principal
payments made to Class D Securityholders through and including
such Business Day and reductions of the Class D Invested Amount
pursuant to subsection 4.12(d), minus (c) the aggregate amount of
Class D Charge-Offs for all prior Distribution Dates, minus (d)
the aggregate amount of Redirected Principal Collections through
and including such Business Day for which the Class D Invested
Amount has been reduced pursuant to subsection 4.14(d) of the
Agreement, plus (e) the aggregate amount reimbursed with respect
to reductions of the Class D Invested Amount through and
including such Business Day pursuant to subsection 4.9(a)(xii) of
the Agreement plus, with respect to such subsection, amounts
applied thereto pursuant to subsections 4.10(a) and (b) of the
Agreement, for the purpose of reimbursing amounts deducted
pursuant to the foregoing clauses (c) and (d); provided, however,
that the Class D Invested Amount may not be reduced below zero.
Subject to the Agreement, payments of principal are
limited to the unpaid Class D Invested Amount of the Class D
Securities, which may be less than the unpaid balance of the
Class D Securities pursuant to the terms of the Agreement. All
principal on the Class D Securities is due and payable no later
than the February 2005 Distribution Date (or if such day is not a
Business Day, the next succeeding Business Day) (the "Scheduled
Series 1998-1 Termination Date"). After the earlier to occur of
(i) the Scheduled Series 1998-1 Termination Date or (ii) the day
after the Distribution Date on which the Series 1998-1 Securities
are paid in full (the "Series 1998-1 Termination Date") neither
the Trust nor the Transferor will have any further obligation to
distribute principal or interest on the Class D Securities. In
the event that the Class D Invested Amount is greater than zero
on the 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, the Class B Invested Amount, the CTO Invested
Amount and the Class D Invested Amount at the close of business
on such date (but not more than the total amount of Receivables
allocable to the Investors Securities), and shall pay the
proceeds to the Class A Securityholders pro rata in final payment
of the Class A Securities, then to the Class B Securityholders
pro rata in final payment of the Class B Securities, then to the
CTO Securityholders pro rata in final payment of the
Collateralized Trust Obligations and finally to the Class D
Securityholders pro rata in final payment of the Class D
Securities.
Unless the certificate of authentication hereon has
been executed by or on behalf of the Trustee, by manual
signature, this Security shall not be entitled to any benefit
under the Agreement, or be valid for any purpose.
IN WITNESS WHEREOF, the Transferor has caused this
Security to be duly executed.
FINGERHUT RECEIVABLES, INC.
By:
Name:
Title:
Dated:
CERTIFICATE OF AUTHENTICATION
This is one of the Class D Securities referred to in
the within-mentioned Pooling and Servicing Agreement.
THE BANK OF NEW YORK (DELAWARE)
By:
Name:
Title:
EXHIBIT B
[Form of Monthly Securityholders' Statement]
EXHIBIT C
FORM OF CLEARING SYSTEM CERTIFICATE
Fingerhut Receivables, Inc.
4400 Baker Road, Suite F470
Minnetonka, Minnesota 55343
The Bank of New York (Delaware)
White Clay Center
Route 273
Newark, Delaware 19711
Re: Fingerhut Master Trust Series 1998-1
Ladies and Gentlemen:
Reference is hereby made to the Amended and Restated
Pooling and Servicing Agreement dated as of March 18, 1998, as
supplemented by the Series 1998-1 Supplement thereto, dated April
28, 1998 (collectively, 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. Capitalized terms used but not defined
herein shall have the meanings given to them in the Pooling and
Servicing Agreement.
This is to certify that, based solely on certifications
we have received in writing, by telex or by electronic
transmission from member organizations appearing in our records
as Persons being entitled to a portion of the principal amount
set forth below (our "Member Organizations"), as of the date
hereof, $ principal amount of the Fingerhut Master
Trust, Series 1998-1, Collateralized Trust Obligations (the
"CTOs") (i) is beneficially owned by persons that are not U.S.
persons or (ii) is owned by U.S. persons who purchased the CTOs
in transactions that did not require registration under the
United States Securities Act of 1933, as amended (the "Securities
Act"). As used in this paragraph, the term "U.S. person" has the
meaning given to it by Regulation S under the Securities Act.
We further certify (i) that we are not making available
herewith for exchange (or, if relevant, for the payment of
interest on) any portion of the Temporary Regulation S Global
Security excepted in such Member Organization certifications and
(ii) that as of the date hereof we have not received any
notification from any of our Member Organizations to the effect
that the statements made by such Member Organizations with
respect to any portion of the part submitted herewith for
exchange (or, if relevant, for the payment of interest on) are no
longer true and cannot be relied upon at the date hereof.
We understand that this certification is required in
connection with certain tax laws of the United States. In
connection therewith, if administrative and legal proceedings are
commenced or threatened in connection with which this
certification is or would be relevant, we irrevocably authorize
you to produce this certification to any interested party in such
proceedings.
Date: ___ *.
Yours faithfully,
[MORGAN GUARANTY TRUST COMPANY OF NEW
YORK, Brussels office, as operator of
the Euroclear System
or
CEDEL BANK, SOCIETE ANONYME]**
By:_______________________________
EXHIBIT D
FORM OF MEMBER ORGANIZATION CERTIFICATE
Fingerhut Receivables, Inc.
4400 Baker Road, Suite F470
Minnetonka, Minnesota 55343
The Bank of New York (Delaware)
White Clay Center
Route 273
Newark, Delaware 19711
Re: Fingerhut Master Trust Series 1998-1
Ladies and Gentlemen:
Reference is hereby made to the Amended and Restated
Pooling and Servicing Agreement dated as of March 18, 1998, as
supplemented by the Series 1998-1 Supplement thereto, dated April
28, 1998 (collectively, 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. Capitalized terms used but not defined
herein shall have the meanings given to them in the Pooling and
Servicing Agreement.
This is to certify that, as of the date hereof and
except as set forth below, the Fingerhut Master Trust, Series
1998-1, Collateralized Trust Obligations (the "CTOs") held by you
for our account (i) are beneficially owned by persons that are
not U.S. persons or (ii) are owned by U.S. persons who purchased
the CTOs in transactions that did not require registration under
the United States Securities Act of 1933, as amended (the
"Securities Act"). As used in this paragraph, the term "U.S.
person" has the meaning given to it by Regulation S under the
Securities Act.
We undertake to advise you promptly by tested telex on
or prior to the date on which you intend to submit your
certification relating to the CTOs held by you for our account in
accordance with your documented procedures if any applicable
statement herein is not correct on such date, and in the absence
of any such notification it may be assumed that this certificate
applies as of such date.
This certificate excepts and does not relate to U.S.
$_______ in principal amount of CTOs held by you for our account,
in respect of which we are not able to certify beneficial
ownership. We understand that exchange and delivery of
beneficial interests in the Regulation S Global Security or Rule
144A Global Security cannot be made until we do so certify.
We understand that this certificate is required in
connection with certain securities and tax laws of the United
States of America. If administrative or legal proceedings are
commenced or threatened in connection with which this certificate
is or would be relevant, we irrevocably authorize you to produce
this certificate or a copy thereof to any interested party in
such proceedings. As used herein, "United States" means the
United States of America (including the States and the District
of Columbia), its territories, its possessions (including Puerto
Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island,
and Northern Mariana Islands) and other areas subject to its
jurisdiction.
Dated: , 199_*
Yours faithfully,
[Name of Person giving
the certificate]
By:
EXHIBIT E
FORM OF REGULATION S TRANSFER CERTIFICATE
Fingerhut Receivables Inc.
4400 Baker Road, Suite F470
Minnetonka, Minnesota 55343
The Bank of New York (Delaware)
White Clay Center
Route 273
Newark, Delaware 19711
Attention: Corporate Trust Division
Re: Fingerhut Master Trust Series 1998-1
Ladies and Gentlemen:
Reference is hereby made to the Amended and Restated
Pooling and Servicing Agreement dated as of March 18, 1998, as
supplemented by the Series
1998-1 Supplement thereto, dated April 28, 1998 (collectively,
the "Pooling and Servicing Agreement") each by and among
Fingerhut Receivables, Inc. as Transferor, and Fingerhut National
Bank, as Servicer and The Bank of New York (Delaware), as
Trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Pooling and Servicing
Agreement.
[NOTE: INSERT [A] FOR A TRANSFER PRIOR TO THE EXCHANGE DATE OF AN
INTEREST IN A RULE 144A GLOBAL SECURITY TO A TRANSFEREE THAT
TAKES DELIVERY IN THE FORM OF AN INTEREST IN A TEMPORARY
REGULATION S GLOBAL SECURITY. INSERT [B] FOR A TRANSFER ON OR
AFTER THE EXCHANGE DATE OF AN INTEREST IN A RULE 144A GLOBAL
SECURITY TO A TRANSFEREE THAT TAKES DELIVERY IN THE FORM OF AN
INTEREST IN A REGULATION S GLOBAL SECURITY.]
[A] This letter relates to U.S. $______ in principal
amount of Fingerhut Master Trust, Series 1998-1, Collateralized
Trust Obligations (the "CTOs") which are held as a beneficial
interest in the CTO Rule 144A Global Security (CUSIP No. ______)
with DTC in the name of [insert name of transferor] (the
"Transferor"). The Transferor has requested an exchange or
transfer of such beneficial interest for an interest in a CTO
Temporary Regulation S Global Security (CUSIP No. ______) to be
held with [the Euroclear System] [Cedel Bank, Societe Anonyme]
through DTC.
[B] This letter relates to U.S. $_________ in principal
amount of Fingerhut Master Trust, Series 1998-1, Collateralized
Trust Obligations (the "CTOs"), which are held as a beneficial
interest in the CTO Rule 144A Global Security (CUSIP No. ______)
with DTC in the name of [insert name of transferor] (the
"Transferor"). The Transferor has requested an exchange or
transfer of such beneficial interest for an interest in a CTO
Regulation S Global Security (CUSIP No. ______) to be held with
[the Euroclear System][Cedel Bank, Societe Anonyme] through DTC.
[NOTE: INSERT [C] IN ALL CASES UNLESS [D] IS INSERTED IN
ACCORDANCE WITH THE NEXT SENTENCE. AT THE OPTION OF THE
TRANSFEROR, [C] MAY BE INSERTED IN PLACE OF [D] ON AND AFTER THE
CTO EXCHANGE DATE IN CASES OF A TRANSFER INTO A CTO REGULATION S
GLOBAL SECURITY.]
[C] In connection with such request and in respect of
such CTOs, the Transferor does hereby certify that such exchange
or transfer has been effected in accordance with the transfer
restrictions set forth in the Pooling and Servicing Agreement and
such CTOs and pursuant to and in accordance with Regulation S
under the Securities Act of 1933, as amended (the "Securities
Act"), and accordingly the Transferor does hereby certify that:
(i) the offer of the CTOs was not made to a Person in the
United States,
(i) [ at the time the buy order was originated, the
transferee was outside the United States, or the Transferor and
any Person acting on its behalf reasonably believed that the
transferee was outside the United States,]**
[(2) the transaction was executed in, on or through the
facilities of a designated offshore securities market and
neither the Transferor nor any Person acting on its behalf
knows that the transaction was pre-arranged with a buyer in
the United States,]*
(i) no directed selling efforts have been made in
contravention of the requirements of Rule 903(b) or 904(b) of
Regulation S, as applicable, and
(i) the transaction is not part of a plan or scheme to
evade the registration requirements of the Securities Act.
[D] In connection with such request and in respect of
such CTOs, the Transferor does hereby certify that such transfer
has been effected in accordance with the transfer restrictions
set forth in the Pooling and Servicing Agreement and the CTOs,
and that the CTOs are being transferred in a transaction
permitted by Rule 144A under the Securities Act.
This certificate and the statements contained herein
are made for the benefit of the Trustee and the benefit of the
Transferor and the initial purchaser.
[Insert Name of Transferor]
By:___________________
Name:
Title:
Dated: _________________
EXHIBIT F
FORM OF RULE 144A TRANSFER CERTIFICATE
Fingerhut Receivables
4400 Baker Road, Suite F470
Minnetonka, Minnesota 55343
The Bank of New York (Delaware)
White Clay Center
Route 273
Newark, Delaware 19711
Re: Fingerhut Master Trust
Series 1998-1
Ladies and Gentlemen:
Reference is hereby made to the Amended and Restated
Pooling and Servicing Agreement, dated as of March 18, 1998, as
supplemented by the Series 1998-1 Supplement thereto, dated April
28, 1998 (collectively, 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. Capitalized terms used but not defined
herein shall have the meanings given to them in the Pooling and
Servicing Agreement.
[NOTE: INSERT [A] FOR A TRANSFER PRIOR TO THE EXCHANGE DATE OF AN
INTEREST IN A TEMPORARY REGULATION S GLOBAL SECURITY TO A
TRANSFEREE THAT TAKES DELIVERY IN THE FORM OF AN INTEREST IN A
RULE 144A GLOBAL SECURITY. INSERT [B] FOR A TRANSFER AFTER THE
EXCHANGE DATE OF AN INTEREST IN A REGULATION S GLOBAL SECURITY TO
A TRANSFEREE THAT TAKES DELIVERY IN THE FORM OF AN INTEREST IN A
RULE 144A GLOBAL SECURITY.]
[A] This letter relates to U.S. $_______ in principal
amount of Fingerhut Master Trust, Series 1998-1, Collateralized
Trust Obligations (the "CTOs") which are held in the form of a
beneficial interest in the CTO Temporary Regulation S Global
Security (CUSIP No. _________) with [The Euroclear System] [Cedel
Bank, Societe Anonyme] (Common Code No. _______) through DTC in
the name of [insert name of transferor] (the "Transferor"). The
Transferor has requested a transfer of such beneficial interest
in the CTOs for a beneficial interest in the CTO Rule 144A Global
Security (CUSIP No. _________) to be held with DTC in the name of
[insert name of transferee].
[B] This letter relates to U.S. $_______ in principal
amount of Fingerhut Master Trust, Series 1998-1, Collateralized
Trust Obligations (the "CTOs") which are held in the form of a
beneficial interest in the CTO Regulation S Global Security
(CUSIP No. _________) with [The Euroclear System] [Cedel Bank,
Societe anonyme] (Common Code No. _______) through the DTC in the
name of [insert name of transferor] (the "Transferor"). The
Transferor has requested a transfer of such beneficial interest
in the CTOs for a beneficial interest in the CTO Rule 144A Global
Security (CUSIP No. _________) to be held with the DTC in the
name of [insert name of transferee].
In connection with such request, and in respect of such
CTOs, the Transferor does hereby certify that such CTOs are being
transferred in accordance with (i) the transfer restrictions set
forth in the Pooling and Servicing Agreement and the CTOs and
(ii) Rule 144A under the Securities Act to a transferee that the
Transferor reasonably believes is purchasing the CTOs for its own
account or an account with respect to which the transferee
exercises sole investment discretion and the transferee and any
such account is a "qualified institutional buyer" within the
meaning of Rule 144A, and such transferee is aware that the sale
to it is being made in reliance upon Rule 144A, in each case in a
transaction meeting the requirements of Rule 144A and in
accordance with any applicable securities laws of any state of
the United States or any other jurisdiction.
This certificate and the statements contained herein
are made for the benefit of the Trustee, the benefit of the
Transferor and the initial purchaser.
[Insert Name of Transferor]
By:
Name:
Title:
Dated: ,
_______________________________
* This certificate is to be dated on the CTO Exchange Date or,
if applicable, the subsequent date on which the CTO
Regulation S Global Security is delivered to the undersigned
in definitive form.
** Delete the inappropriate reference.
* This certificate must be dated no earlier than 15 days prior
to the CTO Exchange Date.
** Insert one of these two provisions, which come from the
definition of "offshore transaction" in Regulation S.