Offer To Purchase for Cash All of the Outstanding Common Shares of Fingerhut Companies, Inc. at $25.00 Net Per Share by Bengal Subsidiary Corp., a direct, wholly owned subsidiary of Federated Department Stores, Inc. - -------------------------------------------------------------------------------- THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, MARCH 17, 1999, UNLESS THE OFFER IS EXTENDED. - -------------------------------------------------------------------------------- February 18, 1999 To Our Clients: Enclosed for your consideration are the Offer To Purchase, dated February 18, 1999 (the "Offer To Purchase"), and the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the "Offer") and other materials relating to the offer by Bengal Subsidiary Corp. ("Purchaser"), a direct, wholly owned subsidiary of Federated Department Stores, Inc. ("Parent"), to purchase all of the outstanding common shares (the "Shares") of Fingerhut Companies, Inc. (the "Company") at a purchase price of $25.00 per Share, net to the seller in cash, without interest, on the terms and subject to the conditions set forth in the Offer To Purchase and the related Letter of Transmittal enclosed herewith. Shareholders whose certificates for such Shares (the "Certificates") are not immediately available or who cannot deliver their Certificates and all other required documents to the Depositary or complete the procedures for book-entry transfer on or prior to the Expiration Date (as defined in the Offer To Purchase) must tender their Shares according to the guaranteed delivery procedures set forth in Section 3 of the Offer To Purchase. We are (or our nominee is) the holder of record of Shares held by us for your account. A tender of such Shares can be made only by us as the holder of record and pursuant to your instructions. The Letter of Transmittal accompanying this letter is furnished to you for your information only and cannot be used by you to tender Shares held by us for your account. Accordingly, we request instructions as to whether you wish to have us tender any or all of the Shares held by us for your account, upon the terms and subject to the conditions set forth in the Offer. Your attention is directed to the following: 1. The tender price is $25.00 per Share, net to the seller in cash without interest thereon, upon the terms and subject to the conditions set forth in the Offer. 2. The Offer is conditioned upon, among other things, there being validly tendered and not properly withdrawn prior to the Expiration Date that number of Shares that (together with any Shares then owned by Parent or any of its subsidiaries) constitutes a majority of the Shares outstanding on a fully diluted basis on the date of purchase. The Offer is also subject to the conditions set forth in the Offer To Purchase, including certain actions by the United States Comptroller of the Currency. See the Introduction and Sections 1, 14 and 15 of the Offer To Purchase. 3. The Offer is being made for all outstanding Shares. 4. Tendering Shareholders will not be obligated to pay brokerage fees or commissions to the Dealer Manager, the Depositary or the Information Agent or, except as set forth in Instruction 6 of the Letter of Transmittal, transfer taxes on the purchase of Shares by Purchaser pursuant to the Offer. However, federal income tax backup withholding at a rate of 31% may be required, unless an exemption is provided or unless the required taxpayer identification information is provided. See Instruction 10 of the Letter of Transmittal. 5. The Offer and withdrawal rights will expire at 12:00 midnight, New York City time, on Wednesday, March 17, 1999, unless the Offer is extended. 6. The Board of Directors of the Company has unanimously (with one director being absent) resolved to recommend that Shareholders accept the Offer and approve the Merger Agreement (as defined in the Offer To Purchase) and the Merger and has determined that the Offer and the Merger are fair to and in the best interests of the Company and the Shareholders. 7. Notwithstanding any other provision of the Offer, payment for Shares accepted for payment pursuant to the Offer will in all cases be made only after timely receipt by the Depositary of (a) Certificates for Shares or a timely Book-Entry Confirmation (as defined in the Offer To Purchase) with respect to such Shares pursuant to the procedures set forth in Section 3 of the Offer To Purchase, (b) the Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed with any required signature guarantees (or, in the case of book-entry transfers, an Agent's Message (as defined in the Offer To Purchase)), and (c) any other documents required by the Letter of Transmittal. Accordingly, payment may not be made to all tendering Shareholders at the same time depending upon when Certificates for or confirmations of book-entry transfer of such Shares are actually received by the Depositary. If you wish to have us tender any or all of the Shares held by us for your account, please so instruct us by completing, executing, detaching and returning to us the instruction form set forth below. Please forward your instructions to us in ample time to permit us to submit a tender on your behalf prior to the Expiration Date. An envelope to return your instructions to us is enclosed. If you authorize the tender of your Shares, all such Shares will be tendered unless otherwise specified on the instruction form set forth below. The Offer is not being made to (nor will tenders be accepted from or on behalf of) holders of Shares residing in any jurisdiction in which the making of the Offer or acceptance thereof would not be in compliance with the laws of such jurisdiction. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of the Purchaser by one or more registered brokers or dealers licensed under the laws of such jurisdictions. Instructions with Respect to the Offer To Purchase for Cash All of the Outstanding Common Shares of Fingerhut Companies, Inc. by Bengal Subsidiary Corp., a direct, wholly owned subsidiary of Federated Department Stores, Inc. The undersigned acknowledge(s) receipt of your letter, the enclosed Offer To Purchase, dated February 18, 1999, and the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the "Offer") in connection with the offer by Bengal Subsidiary Corp. (the "Purchaser"), a direct, wholly owned subsidiary of Federated Department Stores, Inc., to purchase all of the outstanding common shares (the "Shares") of Fingerhut Companies, Inc. at a purchase price of $25.00 per share without interest thereon, on the terms and subject to the conditions set forth in the Offer. This will instruct you to tender to the Purchaser the number of Shares indicated below (or if no number is indicated below, all Shares) which are held by you for the account of the undersigned, upon the terms and subject to the conditions set forth in the Offer. - -------------------------------------------------------------------------------- Number of Shares to be Tendered:* _________________ Shares Date: _______________________, 1999 SIGN HERE Signature(s): __________________________________________________________________ Print Name(s): _________________________________________________________________ Print Address(es): _____________________________________________________________ ________________________________________________________________________________ Area Code and Telephone Number(s): _____________________________________________ Taxpayer Identification or Social Security Number(s): - -------------------------------------------------------------------------------- * Unless otherwise indicated, it will be assumed that all Shares held by us for your account are to be tendered. THIS FORM MUST BE RETURNED TO THE BROKERAGE FIRM MAINTAINING YOUR ACCOUNT.