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EXHIBIT 10.42
EXECUTION COPY
RECEIVABLES PURCHASE AGREEMENT
RECEIVABLES PURCHASE AGREEMENT, dated as of May 31, 2000 (this
"Agreement"), by and between THE CREDIT STORE, INC., a Delaware corporation
("TCSI" or the "Seller"), and TCS FUNDING IV, INC., a Delaware corporation (the
"Buyer").
WHEREAS, the Buyer, an Affiliate of the Seller, wishes to purchase from
time to time certain consumer revolving credit card receivables owned by the
Seller on or after the Closing Date in connection with certain consumer
revolving credit card accounts.
WHEREAS, the Seller desires to sell and assign from time to time such
receivables to the Buyer upon the terms and conditions hereinafter set forth.
NOW THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Buyer and the Seller hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. For all purposes of this Agreement, except as
otherwise expressly provided herein or unless the context otherwise requires,
capitalized terms used herein shall have the following meanings assigned to
them:
"Account(s)" means each credit card account established between an
Issuing Bank and another Person that either (i) was listed on an Account
Schedule on the Closing Date or (ii) becomes an Additional Account after
the Closing Date. The term "Account" refers to an Additional Account only
from and after the Addition Date on which it is listed in the Account
Schedule. An Account includes any related "relationship account" resulting
from the earlier account having been reported as lost or stolen.
"Account Schedule" means the printed list of Accounts the receivables
of which are sold to the Buyer pursuant to this Agreement, such list to be
delivered to the Buyer on the Closing Date and on any Addition Date, as
such list may be amended or supplemented from time to time pursuant to the
terms of this Agreement.
"Addition Date" means any Settlement Date on which the Buyer and Seller
agree that certain specified consumer revolving credit card accounts will
be Additional Accounts, such agreement to be evidenced by a supplement to
the Account Schedule delivered by the Seller to the Buyer.
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"Additional Account" means each additional credit card account
established between an Issuing Bank and another Person that satisfies the
conditions for an Eligible Account and the receivables of which the Seller
agrees to sell and the Buyer agrees to purchase pursuant to this Agreement,
which accounts will be listed on a supplement to the Account Schedule
delivered to the Buyer on the applicable Addition Date.
"Conveyed Property" has the meaning set forth in Section 2.1(a).
"Credit Agreement" means the Master Credit and Security Agreement of
even date herewith by and between the Buyer, as borrower, the Seller, as
servicer, and Miller & Schroeder Investments Corporation, a Minnesota
corporation, as lender.
"Date of Processing" means, with respect to any transaction giving rise
to a Receivable, the date on which such transaction is settled according to
the Servicer's computer records.
"Dilution" means a downward adjustment in the amount of any Receivable
because of a return, rebate, refund, unauthorized charge, or billing error
to an Obligor, because such Receivable was created in respect of
merchandise which was refused or returned by an Obligor, or because such
Receivable was discovered to have been created through a fraudulent or
counterfeit charge.
"Ineligible Receivable" has the meaning given such term in Section
6.1(a).
"Official Body" means any government or political subdivision or any
agency, authority, bureau, central bank, commission, department, or
instrumentality of any such government or political subdivision or any
court, tribunal, grand jury, or arbitrator, in each case whether foreign or
domestic.
"Proceeds" means "proceeds" as defined in Section 9-306(1) of the UCC.
"Purchase Price" has the meaning set forth in Section 3.1.
"Relevant UCC State" means each jurisdiction in which the filing of a
UCC financing statement is necessary to perfect the ownership interest and
security interest of the Buyer established under this Agreement.
"Requirements of Law" for any Person means the certificate of
incorporation or articles of association and by-laws or other
organizational or governing documents of such Person, and any material law,
treaty, rule or
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regulation, or determination of an arbitrator or Official Body, in each
case applicable to or binding upon such Person or to which such Person is
subject.
Section 1.2 Other Definitional Provisions. The words "hereof,"
"herein," and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. Section and Schedule references contained in this
Agreement are references to Sections and Schedules in or to this Agreement
unless otherwise specified. All capitalized terms not otherwise defined herein
are defined in the Credit Agreement. In the event that any term or provision
contained herein shall conflict with or be inconsistent with any provisions
contained in the Credit Agreement, the terms and provisions contained herein
shall govern with respect to this Agreement.
Section 1.3 Computation of Time Periods. Unless otherwise stated in
this Agreement, in the computation of a period of time from a specified date to
a later specified date, the word "from" means "from and including" and the words
"to" and "until" each means "to but excluding."
ARTICLE II
PURCHASE AND CONVEYANCE
Section 2.1 Sale.
(a) Assets Conveyed. In consideration for the Purchase Price and upon
the terms and subject to the conditions set forth herein, the Seller does
hereby sell, assign, transfer, set-over, and otherwise convey to the Buyer,
and the Buyer does hereby purchase from the Seller, all of the Seller's
right, title, and interest in, to, and under (i) the Receivables now
existing and hereafter created and arising in connection with the Accounts
(including Additional Accounts), including, without limitation, all
accounts, general intangibles, chattel paper, contract rights, and other
obligations of any Obligor with respect to the Receivables, now or
hereafter existing, including, without limitation, any interest, or other
fees received by the Seller with respect to such Receivables, (ii) all
Collections in respect of, and other Proceeds of, such Receivables,
including, without limitation, net recoveries with respect to any defaulted
Receivables, (iii) all substitutions and replacements for any of the
foregoing, and (iv) all Proceeds of any of the foregoing (all of the
foregoing collectively, the "Conveyed Property") as of May 24, 2000 or the
Addition Date, as applicable. The foregoing sale, transfer, assignment,
set-over, and conveyance does not constitute and is not intended to result
in a creation or an assumption by the Buyer of any obligation of the Seller
in connection with the Conveyed Property or any agreement or instrument
relating thereto, including, without limitation, any obligation to any
Obligors, Issuing Banks, merchant banks, merchant clearance systems,
VISA(R), MasterCard(R), or insurers. Each
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Account in existence on the Closing Date shall be listed by account number
in an Account Schedule delivered to the Buyer on the Closing Date. Each
Additional Account shall be identified by account number in a supplement to
the Account Schedule delivered on the applicable Addition Date.
(b) Financing Statements. In connection with the foregoing sale, the
Seller agrees to record and file on or prior to the Closing Date, at its
own expense, a financing statement or statements with respect to the
Conveyed Property meeting the requirements of applicable state law in such
manner and in such jurisdictions as are necessary to perfect and protect
the interests of the Buyer created hereby under the applicable UCC against
all creditors of and purchasers from the Seller, and to deliver a
file-stamped copy of such financing statements or other evidence of such
filings to the Buyer within 10 days after the Closing Date.
(c) Bankruptcy of Seller. The Buyer shall not purchase Receivables
hereunder if the Seller shall become an involuntary party to (or be made
the subject of), by receipt at its head corporate office of notice of, any
bankruptcy proceeding or any other insolvency, readjustment of debt,
marshalling of assets and liabilities, or similar proceedings of or
relating to the Seller or relating to all or substantially all of its
property.
(d) Insolvency of Seller. The Buyer shall not purchase Receivables
hereunder if (i) the Seller shall admit in writing its inability to pay its
debts as they are due, (ii) the Seller shall commence a voluntary case
under the federal bankruptcy laws, as now or hereafter in effect, or any
present or future federal or state bankruptcy, insolvency, or similar law,
(iii) the Seller shall consent to the appointment of or taking possession
by a receiver, liquidator, assignee, trustee, custodian, sequestrator, or
other similar official of the Seller or of any substantial part of its
property, (iv) the Seller shall make an assignment for the benefit of
creditors, (v) the Seller shall fail generally to pay its debts as such
debts become due, or (vi) the Seller shall take corporate action in
furtherance of any of the foregoing.
(e) Marking Records. In connection with the sale and conveyance
hereunder, the Seller agrees, at its own expense, on or prior to the
Closing Date and on each Addition Date thereafter, to indicate or cause to
be indicated clearly and unambiguously in its accounting records that the
Conveyed Property has been sold to the Buyer pursuant to this Agreement as
of the Closing Date or such Addition Date as applicable.
(f) Sale Intended; Security Interest. It is the express intent of the
Seller and the Buyer that the conveyance of the Conveyed Property by the
Seller to the Buyer pursuant to this Agreement be construed as a true sale
thereof by the Seller to the Buyer and not a grant of a security interest
in the
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Conveyed Property by the Seller to the Buyer to secure a debt or other
obligation of the Seller. However, if notwithstanding the intent of the
parties, a court of competent jurisdiction holds that the conveyance of the
Conveyed Property is not a true sale of the Conveyed Property from the
Seller to the Buyer, then (i) this Agreement also shall be deemed to be and
hereby is a security agreement within the meaning of the UCC, (ii) this
Agreement and the Seller's books and records shall evidence the Buyer's
obligation to pay the Purchase Price, and (iii) the conveyance by the
Seller provided for in this Agreement shall be deemed to be, and the Seller
hereby grants to the Buyer a security interest in and to, all of the
Seller's right, title, and interest in the Conveyed Property to secure all
obligations now or hereafter arising of the Seller to the Buyer, including,
without limitation, loans to the Seller in the amount of the Purchase Price
as set forth in this Agreement. The Seller and the Buyer shall, to the
extent consistent with this Agreement, take such action as may be necessary
to ensure that, if this Agreement were deemed to create a security interest
in the Conveyed Property, such security interest would be deemed to be a
first priority perfected security interest in favor of the Buyer under
applicable law and will be maintained as such throughout the term of this
Agreement. The Seller and the Buyer may rely upon an opinion of counsel
addressed to them as to what is required to provide the Buyer with such
security interest; and any such opinion of counsel shall permit the Lender
to rely on it.
Section 2.2 Addition of Accounts. From time to time during the term of
this Agreement, the Seller may agree to sell to the Buyer and the Buyer may
agree to purchase from the Seller the receivables under additional credit card
accounts pursuant to this Agreement. On each Addition Date, the Seller may
deliver a supplement to the Account Schedule listing the credit card accounts to
be treated as Additional Accounts on such Addition Date and such Additional
Accounts shall be included as Accounts from and after such Addition Date.
Furthermore, in consideration of the Purchase Price and upon the terms and
subject to the conditions set forth herein, the Seller shall hereby sell,
assign, transfer, set-over, and otherwise convey to the Buyer, and the Buyer
shall hereby purchase from the Seller, all of the Seller's right, title, and
interest in, to, and under all Receivables and other Conveyed Property related
to such Additional Accounts as of the applicable Addition Date.
ARTICLE III
CONSIDERATION AND PAYMENT
Section 3.1 Purchase Price. The purchase price for the Conveyed
Property (the "Purchase Price") shall be a dollar amount equal to, (a) for that
portion of the Conveyed Property sold on the Closing Date and that portion of
the Conveyed Property sold on any Addition Date that consists of Receivables in
Additional Accounts designated on such Addition Date as security for an
Additional Loan under
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the Credit Agreement, 85% of the aggregate amount of all Receivables sold as of
such respective dates, and (b) for all other Conveyed Property sold after the
Closing Date, 100% of the aggregate amount of all Receivables sold as of such
date, adjusted pursuant to Section 3.2(b).
Section 3.2 Payment of Purchase Price.
(a) The Purchase Price for Receivables shall be paid or provided for
(i) on the Closing Date with respect to the Receivables existing on the
Closing Date by execution and delivery from the Buyer to the Seller a
promissory note in the amount of expected cash proceeds from the Initial
Loans and (ii) on each Business Day thereafter for Receivables purchased
since the immediately preceding Business Day and for which the Seller has
received reporting with respect to such Receivables, by payment in
immediately available funds. To the extent that the total Purchase Price
for Receivables is not paid in full by the Buyer in cash on such Business
Day, the Seller shall be deemed to have contributed Receivables in an
aggregate principal amount equal to such shortfall to the Buyer.
(b) The Purchase Price shall be adjusted with respect to any Receivable
adjusted as a result of Dilution in an amount equal to the amount of such
Dilution. If such adjustment results in a negative Purchase Price, the
Seller shall pay such negative amount to the Buyer in immediately available
funds.
Section 3.3 Monthly Reports. On each Settlement Date, the Seller shall
deliver to the Buyer a monthly report (the "Monthly Report") showing the
aggregate Purchase Price of Receivables purchased, the aggregate amount, if any,
owing to the Buyer pursuant to Section 6.1 and the aggregate capital
contribution (if any) made for Receivables purchased during the immediately
preceding Monthly Period.
Section 3.4 Capital Contribution. The Seller has initially contributed
cash in the amount of $5,000.00 in exchange for shares of the Common Stock of
the Buyer representing all of the outstanding capital stock of the Buyer.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 Seller's Representations and Warranties. The Seller
represents and warrants to the Buyer, that:
(a) Organization and Good Standing. The Seller is a corporation duly
organized and validly existing in good standing under the laws of the State
of Delaware and has the corporate power and authority and legal right to
own its property and conduct its business as such properties are presently
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owned and as such business is presently conducted and to execute, deliver,
and perform its obligations under this Agreement and each other document or
instrument to be delivered by the Seller hereunder.
(b) Due Qualification. The Seller is duly qualified to do business and
is in good standing (or is exempt from such requirements), as a foreign
corporation in any state required in order to conduct business. The Seller
has complied in all material respects with all licenses and approval
requirements with respect to the Seller required under applicable law
except insofar as any failure to so comply would not have a Material
Adverse Effect.
(c) Due Authorization. The execution and delivery of this Agreement,
and the consummation of the transactions provided for herein, have been
duly authorized by the Seller by all necessary corporate action on its
part.
(d) Binding Obligation. This Agreement, and the consummation of the
transactions provided for herein, constitutes a legal, valid, and binding
obligation of the Seller, enforceable in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other similar laws now or hereinafter in
effect, affecting the enforcement of creditors' rights in general.
(e) No Conflicts. The execution and delivery of the this Agreement, and
the performance of the transactions contemplated hereby, do not (i)
contravene the Seller's certificate of incorporation or by-laws or (ii)
violate any material provision of law applicable to it or require any
filing (except for the filings under the UCC), registration, consent, or
approval under, any law, rule, regulation, order, writ, judgment,
injunction, decree, determination, or award presently in effect having
applicability to the Seller, except for such filings, registrations,
consents, or approvals as have already been obtained and are in full force
and effect.
(f) Taxes. The Seller has filed all material tax returns required to be
filed and has paid or made adequate provision for the payment of all
material taxes, assessments, and other governmental charges due from the
Seller or is contesting any such tax, assessment, or other governmental
charge in good faith through appropriate proceedings and has set up
appropriate reserves.
(g) No Violation. The execution and delivery of this Agreement, the
performance of the transactions contemplated hereby, and the fulfillment of
the terms hereof will not violate any Requirements of Law applicable to the
Seller, will not violate or result in any breach of any of the material
terms and provisions of, or constitute (with or without notice or lapse of
time or both) a default under, any Requirement of Law applicable to the
Seller, or any
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material indenture, contract, agreement, mortgage, deed of trust, or other
material instrument to which the Seller is a party or by which it or its
properties are bound.
(h) No Proceedings. There are no proceedings or investigations pending
or, to the best knowledge of the Seller, threatened against the Seller,
before any Official Body (i) asserting the invalidity of this Agreement,
(ii) seeking to prevent the consummation of any of the transactions
contemplated hereby, (iii) seeking any determination or ruling that would
materially and adversely affect the performance by the Seller of its
obligations hereunder, or (iv) seeking any determination or ruling that
would materially and adversely affect the validity or enforceability
hereof.
(i) All Consents Required. All approvals, authorizations, consents,
orders, or other actions of any Official Body required in connection with
the execution and delivery of this Agreement, the performance of the
transactions contemplated hereby, and the fulfillment of the terms hereof
have been obtained.
(j) Bona Fide Receivables. The Seller has no knowledge of any fact
which should have led it to expect at the time of the classification of any
Receivable as an Eligible Receivable that such Receivable would not be paid
in full when due, and each Receivable classified as an Eligible Receivable
by the Seller in any document or report delivered under this Agreement
satisfies the requirements of eligibility contained in the definition of
"Eligible Receivable" set forth in the Credit Agreement. No selection
criteria adverse to the Buyer or the Lender have been applied to the
Receivables purchased hereunder.
(k) Place of Business. The principal executive offices of the Seller
are in Sioux Falls, South Dakota and the offices where the Seller keeps its
records concerning the Receivables and related Accounts are in Sioux Falls,
South Dakota.
(l) Not an Investment Company. The Seller is not an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended, or is exempt from all provisions of such Act.
(m) Tradenames, Etc. As of the date hereof: (i) the Seller's chief
executive office is located at the address for notices set forth in Section
9.3 and (ii) the Seller has, within the last five (5) years, operated only
under its current legal name except as described below and, within the last
five (5) years, has not changed its name, identity or corporate structure,
merged with or into or consolidated with any other corporation, or been the
subject of any proceeding under the United States Bankruptcy Code except
the following:
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March 3, 1972 Valley West Development Corporation
incorporated in Utah
April 25, 1995 Valley West Development Corporation,
incorporated in Delaware
May 17, 1995 Valley West Development Corporation
(Utah) merged into Valley West
Development Corporation (Delaware)
October 11, 1996 Valley West Development Corporation
changed its name to Credit Store, Inc.
February 17, 1998 Service One Holdings, Inc. (a Delaware
corporation) merged into Credit Store, Inc.
February 17, 1998 Credit Store Mortgage, Inc. (a Delaware
corporation) merged into Credit Store, Inc.
March 2, 1998 Service One International Corporation (a
South Dakota corporation) merged into
Credit Store, Inc. and name changed to
The Credit Store, Inc.
(n) ERISA. Each of the Seller and its ERISA Affiliates is in compliance
in all material respects with ERISA and no lien exists in favor of the PBGC
on any of the Receivables.
(o) Preference; Voidability. The Seller warrants that the conveyance of
the applicable Receivables and Collections to the Buyer, and each such
conveyance, shall not have been made for or on account of an antecedent
debt owed by the Seller to the Buyer and no such transfer is or may be
voidable under any Section of the United States Bankruptcy Code.
(p) No Restriction on Transfer. To the best of Seller's knowledge, no
Account or related Account Agreement requires the prior written consent of
an Obligor or contains any other restriction relating to the transfer or
assignment of rights of payment under such Account or Account Agreement
(other than a consent or waiver of such restriction that has been obtained
prior to the related purchase date).
(q) Accuracy of Information. All information heretofore furnished by
the Seller to the Buyer for purposes of or in connection with this
Agreement or any transaction contemplated hereby is, and all such
information hereafter furnished by the Seller to the Buyer will be, true
and accurate in every material respect, on the date such information is
stated or certified.
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The representations and warranties set forth in this Section 4.1 shall survive
the sale of the Receivables to the Buyer. The Seller hereby represents and
warrants to the Buyer, that the representations and warranties of the Seller set
forth in this Section 4.1 are true and correct as of the Closing Date. Upon
discovery by the Seller or the Buyer of a material breach of any of the
foregoing representations and warranties, the party discovering such breach
shall give prompt written notice thereof to the other.
Section 4.2 Seller's Representations and Warranties Regarding the
Receivables.
(a) Valid Sale, Etc. The Seller (x) hereby represents and warrants as
of the Closing Date, with respect to the Receivables transferred to the
Buyer as of such date, and (y) shall be deemed to represent and warrant as
of the date of sale to the Buyer of any Receivables after the Closing Date
with respect to such Receivables, that:
(i) This Agreement constitutes the legal, valid, and binding
obligation of the Seller, enforceable against the Seller in accordance
with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or other
similar laws now or hereafter in effect, affecting the enforcement of
creditors' rights in general.
(ii) The transfer of Receivables by the Seller to the Buyer under
this Agreement constitutes a valid sale, transfer, assignment,
set-over, and conveyance to the Buyer of all right, title, and interest
of the Seller in and to the Receivables, whether then existing or
thereafter created and arising in connection with the Accounts
(including any Additional Accounts), and the Receivables will be held
by the Buyer free and clear of any Adverse Claim of any Person (other
than the Buyer and the Lender) claiming through or under the Seller or
any of its Affiliates. This Agreement constitutes a valid sale,
transfer, assignment, set-over, and conveyance to the Buyer of all
right, title, and interest of the Seller in and to the Conveyed
Property purported to be sold hereunder, whether existing on the
Closing Date or thereafter created, and the Proceeds thereof.
(iii) The Seller is Solvent and will remain Solvent upon sale of
the Receivables to the Buyer.
(iv) Immediately preceding the sale of the Receivables and related
property pursuant to this Agreement, the Seller is (or, with respect to
Receivables sold after the date hereof, will be on the date of sale)
the legal and beneficial owner of all right, title, and interest in and
to each Receivable and each Receivable has been or will be transferred
to the Buyer free and clear of any Adverse Claim.
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(v) All consents, licenses, approvals, or authorizations of or
registrations or declarations with any Official Body required in
connection with the transfer of such Receivables to the Buyer have been
obtained.
(vi) Each Account listed on an Account Schedule is an Eligible
Account as of the date of such Account Schedule is delivered by the
Seller and each Receivable classified as an Eligible Receivable by the
Seller in any document or report delivered hereunder will satisfy the
requirements contained in the definition of "Eligible Receivable" as of
the time of such document or report.
(b) Daily Representations and Warranties. On each day on which any new
Receivable is sold by the Seller to the Buyer, the Seller shall be deemed
to represent and warrant to the Buyer that all representations and
warranties contained in Section 4.1 and Section 4.2(a) are true and correct
on and as of such date (in addition to the Closing Date) as though made on
and as of such date.
(c) Notice of Breach. The representations and warranties set forth in
this Section 4.2 shall survive the sale, transfer, and assignment of the
Receivables to the Buyer. Upon discovery by the Seller or the Buyer of a
breach of any of the representations and warranties set forth in this
Section 4.2, the party discovering such breach shall give prompt written
notice thereof to the other. The Seller agrees to cooperate with the Buyer
in attempting to cure any such breach.
Section 4.3 Representations and Warranties of the Buyer. The Buyer
hereby represents and warrants as of the Closing Date, and shall be deemed to
represent and warrant as of the date of the creation of any Receivable sold to
the Buyer hereunder, that:
(a) Organization and Good Standing. The Buyer is a corporation duly
organized and validly existing in good standing under the laws of the State
of Delaware and has the requisite power and authority and legal right to
own its property and conduct its business as such properties are presently
owned and such business is presently conducted and to execute, deliver, and
perform its obligations under this Agreement.
(b) Due Qualification. The Buyer is duly qualified to do business and
is in good standing (or is exempt from such requirements) as a foreign
corporation in any state required in order to conduct business and has
obtained all necessary licenses and approvals with respect to the Buyer
required under federal and Delaware law.
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(c) Due Authorization. The execution and delivery of this Agreement and
the consummation of the transactions provided for herein have been duly
authorized by the Buyer by all necessary corporate action on its part.
(d) No Conflicts. The execution and delivery of this Agreement and the
performance of the transactions contemplated hereby do not (i) contravene
the Buyer's certificate of incorporation or by-laws or (ii) violate any
material provision of law applicable to it, or require any filing (except
for the filings under the UCC), registration, consent, or approval under,
any law, rule, regulation, order, writ, judgment, injunction, decree,
determination, or award presently in effect having applicability to the
Buyer, except for such filings, registrations, consents, or approvals as
have already been obtained and are in full force and effect.
(e) No Violation. The execution and delivery of this Agreement, the
performance of the transactions contemplated hereby, and the fulfillment of
the terms hereof will not violate any Requirements of Law applicable to the
Buyer, will not violate or result in any breach of any of the material
terms and provisions of, or constitute (with or without notice or lapse of
time or both) a default under, any Requirement of Law applicable to the
Buyer or any material indenture, contract, agreement, mortgage, deed of
trust, or other material instrument to which the Buyer is a party or by
which it or its properties are bound.
(f) No Proceedings. There are no proceedings or investigations pending
or, to the best knowledge of the Buyer, threatened against the Buyer,
before any Official Body (i) asserting the invalidity of this Agreement,
(ii) seeking to prevent the consummation of any of the transactions
contemplated hereby, (iii) seeking any determination or ruling that would
materially and adversely affect the performance by the Buyer of its
obligations hereunder, or (iv) seeking any determination or ruling that
would materially and adversely affect the validity or enforceability
hereof.
(g) All Consents Required. All approvals, authorizations, consents,
orders, or other actions of any Official Body required in connection with
the execution and delivery of this Agreement, the performance of the
transactions contemplated hereby, and the fulfillment of the terms hereof
have been obtained.
(h) Solvency. The Buyer is Solvent and will remain Solvent upon the
purchase of the Receivables.
The representations and warranties set forth in this Section 4.3 shall survive
the sale of the Receivables to the Buyer. The Buyer hereby represents and
warrants to the Seller that the representations and warranties of the Buyer set
forth in Section 4.3 are true and correct as of the Closing Date. Upon discovery
by the Buyer or the Seller of
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a breach of any of the foregoing representations and warranties, the party
discovering such breach shall give prompt written notice to the other.
ARTICLE V
COVENANTS OF SELLER AND BUYER
Section 5.1 Seller Covenants. The Seller hereby covenants that:
(a) Receivables to be Accounts, General Intangibles, or Chattel Paper.
The Seller will take no action to cause any Receivable to be evidenced by
any instrument (as defined in the UCC as in effect in the Relevant UCC
State), except in connection with the enforcement or collection of a
Receivable. Except in such circumstances, the Seller will take no action to
cause any Receivable to be anything other than an "account," a "general
intangible," or "chattel paper" (as defined in the UCC as in effect in the
Relevant UCC State).
(b) Security Interests. Except for the conveyances hereunder and the
security interest of Coast Business Credit, a division of Southern Pacific
Bank, which shall be released on the Initial Funding Date, the Seller will
not sell, pledge, assign, or transfer to any other Person or grant, create,
incur, assume, or suffer to exist, any Adverse Claim on any Receivable,
whether now existing or hereafter created, or any interest therein. The
Seller will immediately notify the Buyer of the existence of any Adverse
Claim on any Receivable and will defend the right, title, and interest of
the Buyer in, to, and under the Receivables, whether now existing or
hereafter created, against all claims of third parties claiming through or
under the Seller.
(c) Credit and Collection Policy and Account Agreements. The Seller
shall comply with the Credit and Collection Policy in regard to the
Receivables, except insofar as any failure to so comply could not be
reasonably expected to impair the collectibility of the Receivables, on the
whole, or a substantial amount thereof, or otherwise have a Material
Adverse Effect and the Receivables shall be serviced in all respects in a
manner consistent with and similar to the revolving credit consumer credit
card accounts and receivables owned by the Seller.
(d) Delivery of Collections. In the event that the Seller receives
Collections (other than in the Lockbox Account), the Seller agrees to
deposit such Collections into the Collection Account as soon as practicable
after the receipt thereof, but in no event later than the second Business
Day following the Date of Processing thereof.
(e) Conveyance of Receivables. The Seller covenants and agrees that it
will not convey, assign, exchange, or otherwise transfer any Receivable
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arising in an Account, to any Person other than the Buyer prior to the
termination of this Agreement pursuant to Article VIII.
(f) Notice of Adverse Claims. The Seller shall notify the Buyer
promptly after becoming aware of any Adverse Claim on any Receivable.
(g) Separate Business. The Seller will not permit its assets to be
commingled with those of the Buyer and shall maintain separate records
(corporate or otherwise) and books of account from those of the Buyer. The
Seller will not conduct its business in the name of the Buyer and will
cause the Buyer to conduct its business solely in its own name so as not to
mislead others as to the identity of the entity with which those others are
concerned. The Seller will provide for its operating expenses and
liabilities from its own funds. The Seller will not hold itself out, or
permit itself to be held out, as having agreed to pay, or as generally
being liable for, the debts of the Buyer, except that the organizational
expenses of the Buyer may be paid by the Seller. The Seller shall cause the
Buyer not to hold itself out, or permit itself to be held out, as having
agreed to pay, or as being liable for, the debts of the Seller. The Seller
will maintain an arm's length relationship with the Buyer with respect to
any transactions between the Seller, on the one hand, and the Buyer, on the
other.
(h) Conduct of Business. The Seller will do, and will cause each of its
subsidiaries to do, all things necessary to remain duly incorporated,
validly existing, and in good standing as a domestic corporation in its
jurisdiction of incorporation and will maintain all requisite authority to
conduct its business in each jurisdiction in which its business is
conducted.
(i) Compliance with Laws. The Seller shall comply in all material
respects with all laws, rules, regulations, orders, writs, judgments,
injunctions, decrees, or awards to which it may be subject, except where
such failure to comply would not have a Material Adverse Effect.
(j) Furnishing of Information and Inspection of Records. The Seller
shall furnish to the Buyer from time to time such information with respect
to the Receivables as the Buyer may reasonably request, including, without
limitation, listings identifying the Obligor and the outstanding principal
balance for each Receivable. The Seller shall, at any time and from time to
time during regular business hours and upon reasonable notice, permit the
Buyer or its agents or representatives (i) to examine and make copies of
and take abstracts from all documents, books, records, and other
information (including, without limitation, computer programs, tapes,
discs, punch cards, data processing software, and related property and
rights) maintained with respect to Receivables and the related Obligors,
(ii) to visit the offices and properties of the Seller, (iii) to discuss
matters relating to the Receivables or
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the Seller's performance hereunder with any of the officers, directors,
employees, or independent public accountants of the Seller having knowledge
of such matters, and (iv) to conduct as many audits of the Receivables
during the term of this Agreement as the Buyer may reasonably request;
provided, however, that the Seller shall only be required to reimburse the
Buyer for the cost of one such audit per year.
(k) Keeping of Records and Books of Account. The Seller will maintain a
system of accounting established and administered in accordance with GAAP,
consistently applied, and will maintain and implement administrative and
operating procedures and keep and maintain all documents, books, records,
and other information, reasonably necessary or advisable for the collection
of all Receivables (including, without limitation, records adequate to
permit the identification of each new Receivable and all Collections of and
adjustments to each existing Receivable). The Seller will give the Buyer
and the Lender notice of any material change in the administrative and
operating procedures of the Seller referred to in the previous sentence.
(l) ERISA. The Seller shall promptly give the Buyer written notice upon
becoming aware that the Seller or any of its subsidiaries is not in
compliance in all material respects with ERISA or that any ERISA lien on
any of the Receivables exists.
Section 5.2 Buyer Covenant Regarding Sale Treatment. The Buyer agrees
to treat this conveyance for all purposes (other than for tax purposes) as a
sale of the Conveyed Property by the Seller to the Buyer.
ARTICLE VI
REPURCHASE OBLIGATION
Section 6.1 Mandatory Repurchase.
(a) Breach of Warranty. In the event of a breach with respect to a
Receivable of any of the representations and warranties set forth in
Section 4.1(j) or Sections 4.2(a)(iii) through (vi) or Section 4.2(b), or
in the event that a Receivable is not an Eligible Receivable on the date of
its transfer to the Buyer as a result of the failure to satisfy the
conditions set forth in the definition of "Eligible Receivable," such
Receivable shall be designated an "Ineligible Receivable" and the Seller
shall pay to the Buyer an amount in cash equal to the Purchase Price paid
for any such Ineligible Receivable by the Buyer to the Seller plus any
costs and expenses of the Buyer associated therewith less any amounts
collected by the Buyer on such Receivable. Such payment must be made by the
close of business on the next succeeding
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Settlement Date following the day such Receivable has been designated an
Ineligible Receivable; provided, however, that such amount may be offset
against any amounts due from the Buyer to the Seller with respect to the
Purchase Price for Receivables sold to the Buyer on such day. The
obligation of the Seller set forth in this Section 6.1 shall constitute the
sole remedy respecting any breach of the representations and warranties set
forth in the above-referenced Sections or failure to meet the conditions
set forth in the definition of "Eligible Receivable" with respect to such
Receivable available to the Buyer.
(b) Reassignment of the Sold Assets. In the event of a breach of any of
the representations and warranties set forth in Sections 4.1(a), (b), and
(c), and 4.2(a)(i) and (ii), the Buyer by notice given in writing to the
Seller may direct the Seller to accept reassignment of the Receivables at
the amount specified below within 60 days of such notice (or within such
longer period as may be specified in such notice), and the Seller shall be
obligated to accept reassignment of the Receivables within such applicable
period on the terms and conditions set forth below; provided, however, that
no such reassignment shall be required to be made if, at any time during
such applicable period, the Seller delivers to the Buyer an officer's
certificate stating that the representations and warranties contained in
Sections 4.1(a), (b), and (c) and 4.2(a)(i) and (ii) shall then be true and
correct in all material respects as if made on such day. The Seller shall
pay to the Buyer on the day of such reassignment an amount equal to the
Aggregate Loan Balance. On the day on which such amount has been paid, each
Receivable shall be sold and reassigned to the Seller, and the Buyer shall
execute and deliver such instruments of sale and assignment, in each case
without recourse, representation, or warranty, as shall be reasonably
requested by the Seller to vest in the Seller, or its designee or assignee,
all right, title, and interest of the Buyer in and to each Receivable. The
obligation of the Seller to purchase each Receivable pursuant to this
Section 6.1 shall constitute the sole remedy available to the Buyer for a
breach of the representations and warranties contained in Section 4.1(a),
(b), and (c) and 4.2(a)(i) and (ii).
Section 6.2 Conveyance of Reassigned Receivables. Upon the request of
the Seller, the Buyer shall execute and deliver to the Seller a reconveyance
substantially in such form and upon such terms as shall be acceptable to the
Seller, pursuant to which the Buyer evidences the conveyance to the Seller of
all of the Buyer's right, title, and interest in any Receivables reconveyed to
the Seller pursuant to Section 6.1(b). The Buyer shall (and shall cause the
Lender to) execute such other documents or instruments of conveyance or take
such other actions as the Seller may reasonably require to effect any repurchase
of Receivables pursuant to Section 6.1.
Section 6.3 Sales are Non-Recourse. Other than the obligations to
repurchase Receivables under the limited circumstances set forth in Section 6.1
and to
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make payments with respect to Dilution under Section 3.2(b), the sales of
Receivables under this Agreement shall be without recourse to the Seller.
ARTICLE VII
CONDITIONS PRECEDENT
Section 7.1 Conditions to the Buyer's Obligations Regarding
Receivables. The obligations of the Buyer to purchase the Receivables on any
Business Day shall be subject to the satisfaction of the following conditions:
(a) All representations and warranties of the Seller contained in this
Agreement shall be true and correct on the Closing Date and on the day of
sale of any Receivable created thereafter with the same effect as though
such representations and warranties had been made on such date,
(b) All information concerning the Receivables provided to the Buyer
shall be true and correct in all material respects as of the Closing Date,
in the case of Receivables sold to the Buyer on the Closing Date, or the
applicable Business Day, in the case of Receivables sold to the Buyer after
the Closing Date,
(c) At the Closing Date, the Seller shall have substantially performed
all other obligations required to be performed by the provisions of this
Agreement,
(d) With respect to Receivables sold to the Buyer on the Closing Date,
the Seller shall have filed the financing statement(s) required to be filed
pursuant to Section 2.1(b), and
(e) All corporate and legal proceedings and all instruments in
connection with the transactions contemplated by this Agreement shall be
satisfactory in form and substance to the Buyer, and the Buyer shall have
received from the Seller copies of all documents (including, without
limitation, records of corporate proceedings) relevant to the transactions
herein contemplated as the Buyer may reasonably have requested.
Section 7.2 Conditions Precedent to the Seller's Obligations. The
obligations of the Seller to sell Receivables on any Business Day shall be
subject to the satisfaction of the following conditions:
(a) All representations and warranties of the Buyer contained in this
Agreement shall be true and correct with the same effect as though such
representations and warranties had been made on such date,
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(b) Payment or provision for payment of the Purchase Price in
accordance with the provisions of Section 3.2 shall have been made, and
(c) All corporate and legal proceedings and all instruments in
connection with the transactions contemplated by this Agreement shall be
satisfactory in form and substance to the Seller, and the Seller shall have
received from the Buyer copies of all documents (including, without
limitation, records of corporate proceedings) relevant to the transactions
herein contemplated as the Seller may reasonably have requested.
ARTICLE VIII
TERM AND TERMINATION
Section 8.1 Termination. This Agreement shall terminate upon payment in
full by the Buyer of all Obligations under the Credit Agreement.
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.1 Amendment. This Agreement and the rights and obligations of
the parties hereunder may not be changed orally, but only by an instrument in
writing signed by the Buyer and the Seller. The Seller shall provide prompt
written notice of any such amendment to the Lender.
Section 9.2 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF MINNESOTA, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS, AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 9.3 Notices. All demands, notices, and communications hereunder
shall be in writing and shall be deemed to have been duly given if personally
delivered at or mailed by registered mail, return receipt requested, to:
(a) in the case of the Buyer, to:
TCS Funding IV, Inc.
3401 North Louise Avenue, Suite 105
Sioux Falls, South Dakota 57105
Attention: Corporate Counsel
Telephone: (605) 339-7571
Telecopy: (605) 338-3486
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with a copy to:
Miller & Schroeder Investments Corporation
150 South Fifth Street, Suite 3000
Minneapolis, Minnesota 55402
Attention: [Senior Vice President-Banking Group]
Telephone:[(612) 376-1500]
Telecopy:[(612) 376-1412]
(b) in the case of the Seller, to:
The Credit Store, Inc.
3401 N. Louise Avenue
Sioux Falls, South Dakota 57105
Attention: Chief Financial Officer
Telephone: (605) 339-7577
Telecopy: (605) 338-3486
or, as to each party, at such other address as shall be designated by such party
in a written notice to each other party.
Section 9.4 Severability of Provisions. If any one or more of the
covenants, agreements, provisions, or terms of this Agreement shall for any
reason whatsoever be held invalid, then such covenants, agreements, provisions,
or terms shall be deemed severable from the remaining covenants, agreements,
provisions, or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement.
Section 9.5 Assignment. This Agreement may not be assigned by the Buyer
or the Seller without the written consent of the other party and the Lender.
Section 9.6 Further Assurances. The Buyer and the Seller agree to do
and perform, from time to time, any and all acts and to execute any and all
further instruments required or reasonably requested by the other party to more
fully effect the purposes of this Agreement, including, without limitation, the
execution of any financing statements or continuation statements or equivalent
documents relating to the Receivables for filing under the provisions of the UCC
or other laws of any applicable jurisdiction.
Section 9.7 No Waiver; Cumulative Remedies. No failure to exercise and
no delay in exercising, on the part of the Buyer or the Seller, any right,
remedy, power, or privilege hereunder, shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, remedy, power, or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, remedy, power, or privilege. The rights, remedies, powers, and
privileges herein provided are
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cumulative and not exhaustive of any rights, remedies, powers, and privileges
provided by law.
Section 9.8 Counterparts. This Agreement may be executed in two or more
counterparts including telecopy transmission thereof (and by different parties
on separate counterparts), each of which shall be an original, but all of which
together shall constitute one and the same instrument.
Section 9.9 Binding Effect. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective successors and
permitted assigns.
Section 9.10 Merger and Integration. Except as specifically stated
otherwise herein, this Agreement sets forth the entire understanding of the
parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by this Agreement.
Section 9.11 Headings. The headings herein are for purposes of
reference only and shall not otherwise affect the meaning or interpretation of
any provision hereof.
Section 9.12 Schedules. The schedules attached hereto and referred to
herein shall constitute a part of this Agreement and are incorporated into this
Agreement for all purposes.
Section 9.13 No Bankruptcy Petition Against the Buyer. The Seller
hereby covenants and agrees that, prior to the date which is one year and one
day after the payment in full of the Obligations due under the Credit Agreement
it will not institute against or join any other Person in instituting against
the Buyer any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other similar proceeding under the laws of the United States or
any state of the United States.
Section 9.14 Merger or Consolidation of, or Assumption of the
Obligations of, the Seller. The Seller shall not consolidate with or merge into
any other corporation or entity or convey or transfer its properties and assets
substantially as an entirety to any Person, unless:
(a) the corporation or entity formed by such consolidation or into
which the Seller is merged or the Person which acquires by conveyance or
transfer the properties and assets of the Seller substantially as an
entirety shall be a corporation or entity organized and existing under the
laws of the United States of America or any State or the District of
Columbia and, if the Seller is not the surviving entity, shall expressly
assume, by an agreement supplemental hereto, executed and delivered to the
Buyer in form satisfactory to the Buyer and the Lender, the performance of
every covenant and obligation of the Seller
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hereunder (to the extent that any right, covenant, or obligation of the
Seller, as applicable hereunder, is inapplicable to the successor entity,
such successor entity shall be subject to such covenant or obligation, or
benefit from such right, as would apply, to the extent practicable, to such
successor entity); and
(b) the Seller shall have delivered to the Buyer (i) an officer's
certificate that such consolidation, merger, conveyance, or transfer and
such supplemental agreement comply with this Section 9.14 and that all
conditions precedent herein provided for relating to such transaction have
been complied with and (ii) the Lender shall have received an opinion of
legal counsel reasonably acceptable to it that this Agreement is a legal,
valid, and binding obligation of such successor corporation or entity,
enforceable against such successor corporation or entity in accordance with
its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance, fraudulent transfer and other similar
laws affecting creditors' rights generally, and to the application of
general principles of equity.
Section 9.15 Protection of Right, Title and Interest to Receivables.
(a) The Seller shall cause this Agreement, all amendments hereto, all
financing statements and continuation statements, and any other necessary
documents covering the Seller's and the Buyer's right, title, and interest
to the Conveyed Property to be promptly recorded, registered, and filed,
and at all times to be kept recorded, registered, and filed, all in such
manner and in such places as may be required by law to fully preserve and
protect the right, title, and interest of the Buyer hereunder to the
Conveyed Property and the proceeds thereof. The Seller shall deliver to the
Buyer file-stamped copies of, or filing receipts for, any document
recorded, registered, or filed as provided above, as soon as available
following such recording, registration, or filing. The Buyer shall
cooperate fully with the Seller in connection with the obligations set
forth above and will execute any and all documents reasonably required to
fulfill the intent of this Section 9.15(a).
(b) Within 30 days after the Seller makes any change in its name,
identity, or corporate structure which would make any financing statement
or continuation statement filed in accordance with Section 9.15(a)
materially misleading within the meaning of Section 9-402(7) of the UCC as
in effect in the Relevant UCC State, the Seller shall give the Buyer
written notice of any such change and shall file such financing statements
or amendments as may be necessary to continue the perfection of the Buyer's
security interest in the Conveyed Property and the proceeds thereof.
(c) The Seller will give the Buyer prompt written notice of any
relocation of any office from which it services Receivables or keeps
records concerning the Receivables or of its principal executive office and
whether, as
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a result of such relocation, the applicable provisions of the UCC would
require the filing of any amendment of any previously filed financing or
continuation statement or of any new financing statement and shall file
such financing statements or amendments as may be necessary to continue the
perfection of the Buyer's security interest in the Conveyed Property and
the proceeds thereof. The Seller will at all times maintain each office
from which it services Receivables and its principal executive office
within the United States of America.
(Signature Page to Follow)
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IN WITNESS WHEREOF, the Buyer and the Seller each have caused this
Agreement to be duly executed by their respective officers as of the day and
year first above written.
TCS FUNDING IV, INC., as Buyer
By:
--------------------------------------------------
--------------------------------------------------
Its
-----------------------------------------------
THE CREDIT STORE, INC., as Seller,
By:
--------------------------------------------------
--------------------------------------------------
Its
-----------------------------------------------
(Signature Page 1 of 1 to the Receivables Purchase Agreement)
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ACCOUNT SCHEDULE TO
RECEIVABLES PURCHASE AGREEMENT
DATED AS OF MAY 31, 2000
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