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EXHIBIT 10.45
EXECUTION COPY
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CONVERTED ACCOUNTS/RECEIVABLES SALE AGREEMENT
dated as of October 31, 2000
by and among
CREDIT STORE SERVICES, INC.,
and
THE CREDIT STORE, INC.,
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CONVERTED ACCOUNTS/RECEIVABLES SALE AGREEMENT
CONVERTED ACCOUNTS/RECEIVABLES SALE AGREEMENT, dated as of October 31,
2000 (this "Agreement"), by and between THE CREDIT STORE, INC., a Delaware
corporation ("TCSI"), and CREDIT STORE SERVICES, INC., a Delaware corporation
(the "Buyer").
WHEREAS, the Buyer, an Affiliate of TCSI, owns Unconverted Accounts
and, in the ordinary course of attempting to collect such debt, TCSI, as the
"Servicer" pursuant to the Loan Agreement, offers certain of the Obligors the
opportunity to transfer such debt to a credit card issued by a third party.
WHEREAS, in connection with, and to facilitate, such conversion, the
Buyer wishes to transfer to TCSI all Unconverted Accounts owned by the Buyer on
which the respective Obligors have agreed to Convert such Unconverted Accounts
and TCSI wishes to transfer to the Buyer all Receivables in the related
Converted Accounts existing on the Conversion Date.
WHEREAS, the Buyer, wishes to purchase from time to time on or after
the Closing Date certain consumer revolving credit card receivables owned by
TCSI and arising in the Converted Accounts from time to time after the related
Conversion Dates.
WHEREAS, TCSI 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 TCSI 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 Documents" means customer agreements, notes, security
agreements, financial statements, and such other evidences of indebtedness or
documents and electronic tapes in the Buyer's possession relating to the
Unconverted Accounts.
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"Affiliate" means, as to any Person, any other Person which, directly
or indirectly, is in control of, is controlled by, or is under common
control with, such Person. A Person shall be deemed to control another
Person if the controlling Person possesses, directly or indirectly, the
power to direct or cause the direction of the management and policies of
the other Person, whether through the ownership of voting securities, by
contract or otherwise.
"Business Day" shall mean any day other than a Saturday or Sunday, or a
date on which TCSI or the Buyer or commercial banks in the States of
Minnesota and South Dakota generally are closed for regular business.
"Chattel Paper" means any "chattel paper," as such term is defined in
the Code.
"Closing Date" means October 31, 2000.
"Code" means the Uniform Commercial Code as the same may, from time to
time, be enacted and in effect in the State of South Dakota, including
after July 1, 2001.
"Collection Account" means account number 0000000000 at Xxxxx Fargo
Bank Minnesota, National Association or any other account designated by the
Buyer with the consent of the Lender.
"Collections" shall mean all payments made by Obligors on account of
the Receivables, together with any other collections, income, interest,
principal, penalty, late fees, extension fees, prepayment fees, or other
fees on account of the Receivables, and any proceeds from the sale or other
disposition of the Receivables.
"Conversion Date" means the date on which all or part of the
outstanding balance on an Unconverted Account is transferred to a newly
issued credit card account and the remaining balance, if any, of such
Unconverted Account is cancelled.
"Convert" means the act of causing the Obligor with respect to an
Unconverted Account to agree to convert all or part of the outstanding
balance of such Unconverted Account to a current outstanding balance on a
newly issued credit card.
"Converted Accounts" means each credit card account established between
an Issuing Bank and an Obligor as the result of the Obligor's decision to
Convert an Unconverted Account, the Receivables of which are transferred to
the Buyer pursuant to Section 2.2, and identified in the records of TCSI
and the buyer as Pool Identification Number 2000100.
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"Converted Receivables" means the credit card receivables outstanding
on a Converted Account immediately after an Unconverted Account is
Converted.
"Converted Conveyed Property" has the meaning set forth in Section
2.1(b).
"Conveyed Property" means the Converted Conveyed Property and the New
Receivables Conveyed Property.
"Credit and Collection Policy" shall mean those credit, collection,
customer relations and customer service policies and practices and other
written policies and procedures of TCSI relating to the Receivables as in
effect from time to time.
"Daily Purchase Report" shall mean a daily report prepared by TCSI
showing the Purchase Price of New Receivables generated since the previous
report, the aggregate amount, if any, owing to the Buyer pursuant to
Section 6.1 and the aggregate amount of cash owing for New Receivables.
"Date of Processing" means, with respect to any transaction with
respect to a Receivable or Collections, the date on which such transaction
is settled according to TCSI's computer records.
"Dilution" means a downward adjustment in the amount of any New
Receivable because of a return, rebate, refund, unauthorized charge, or
billing error to an Obligor, because such New Receivable was created in
respect of merchandise which was refused or returned by an Obligor, or
because such New Receivable was discovered to have been created through a
fraudulent or counterfeit charge.
"General Intangibles" means any "general intangibles," as such term is
defined in the Code.
"Governmental Authority" 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.
"Ineligible Receivable" has the meaning given such term in Section
6.1(a).
"Instruments" means any "instruments," as such term is defined in the
Code.
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"Issuing Bank" means First National Bank in Brookings, Bank of Xxxxx,
or any other banks that are members of MasterCard(R) or VISA(R) that issue
Converted Accounts in connection with the transfer of balances by TCSI to
such Issuing Banks under a purchase or similar agreement.
"Lender" means The Varde Fund IV-A, L.P., a Delaware limited
partnership, and its successors and permitted assigns under the Loan
Agreement.
"Lien" means a lien, security interest, pledge, hypothecation,
collateral assignment, charge, encumbrance, or other right or claim of any
Person other than an unfiled lien for tax accrued but not yet payable.
"Loan Agreement" means the Master Loan and Servicing Agreement of even
date herewith by and among the Buyer, as borrower, the Lender, as lender,
and TCSI, as servicer, as such agreement is amended, modified or
supplemented from time to time.
"Lockbox Account" shall mean the account established pursuant to the
Lockbox Agreement.
"Lockbox Agreement" shall mean that certain Amended and Restated
Lockbox Agreement of even date herewith among the Buyer, various Affiliates
of the Buyer, the Lender, TCSI (individually and as the Servicer), Xxxxx
Fargo Bank South Dakota, N.A., Xxxxx Fargo Bank Minnesota, N.A., as the
paying agent, and lenders of the Buyer's Affiliates, pursuant to which
amounts on deposit in the Lockbox Account relating to Collections received
from Obligors will be segregated and deposited in the Collection Account
and will contain intercreditor provisions, as such agreement may be
amended, restated, or otherwise modified or replaced from time to time.
"Material Adverse Effect" means, with respect to any event or
circumstance, a material adverse effect on:
(a) the ability of TCSI or the Buyer to perform its obligations
under this Agreement;
(b) the validity or enforceability of this Agreement;
(c) the status, existence, perfection, priority or enforceability
of the sale or transfer of the Converted Accounts or Receivables
pursuant to this Agreement; or
(d) the validity, enforceability or collectibility of the
Receivables, taken as a whole.
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"New Receivables" means credit card receivables originated on
Converted Accounts after the applicable Conversion Date.
"New Receivables Conveyed Property" has the meaning set forth in
Section 2.2.
"Obligor" means any Person obligated with respect to an
Unconverted Account or a Receivable.
"Person" means any natural person, limited liability company,
corporation, partnership, joint venture, firm, association, trust,
unincorporated organization, governmental agency or political
subdivision or any other entity, whether acting in an individual,
fiduciary or other capacity.
"Proceeds" means "proceeds" as defined in Section 9-306(1) of the
Code.
"Purchase Price" has the meaning set forth in Section 3.1.
"Receivables" means, collectively, Converted Receivables and New
Receivables.
"Relevant UCC State" means each jurisdiction in which the filing
of a Code 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 regulation, or determination of an arbitrator or
Governmental Authority, in each case applicable to or binding upon such
Person or to which such Person is subject.
"Unconverted Account(s)" means each charged off consumer debt,
including accounts receivable, other receivables, book debts and other
forms of obligations identified in the records of TCSI and the Buyer as
Pool Identification Number 2000100, including (a) "accounts," as such
term is defined in the Code (including any such obligation that may be
characterized as an account or contract right under the Code), (b)
Chattel Paper or Instruments, and (c) all General Intangibles
consisting of a right to receive a payment of money.
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
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references to Sections and Schedules in or to this Agreement unless
otherwise specified. All capitalized terms not otherwise defined herein are
defined in the Loan Agreement. In the event that any term or provision
contained herein shall conflict with or be inconsistent with any provisions
contained in the Loan 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
TRANSFERS, PURCHASE AND CONVEYANCE
Section 2.1 Exchange of Unconverted Accounts and Converted
Receivables. The transfers referred to in subsections (a) and (b) below
shall be deemed to occur concurrently on the Conversion Date with respect
to an Unconverted Account:
(a) Upon the terms and subject to the conditions set forth
herein, the Buyer does hereby assign, transfer, set-over, and otherwise
convey to TCSI, and TCSI does hereby accept the transfer from the
Buyer, all of the Buyer's right, title, and interest in, to, and under
(i) the Unconverted Accounts now existing and hereafter acquired that
become Converted Accounts, including, without limitation, all accounts,
General Intangibles, Chattel Paper, contract rights, Instruments and
other obligations of any Obligor with respect to such Unconverted
Accounts, now or hereafter existing, including, without limitation, (A)
the account relationship and (B) any Account Document with respect to
such Unconverted Accounts, (ii) the related Asset Purchase Agreements,
and (iii) all Proceeds of any of the foregoing.
(b) In consideration of the transfer to TCSI set forth in
Section 2.1(a) above and upon the terms and subject to the conditions
set forth herein, TCSI does hereby assign, transfer, set-over, and
otherwise convey to the Buyer, and the Buyer does hereby accept the
transfer from TCSI, all of TCSI's right, title, and interest in, to,
and under (i) the Converted Receivables now existing and hereafter
created in connection with the Converted Accounts including, without
limitation, all accounts, General Intangibles, Chattel Paper, contract
rights, and other obligations of any Obligor with respect to the
Converted Receivables, now or hereafter existing, including, without
limitation, any interest, or other fees received by TCSI with respect
to such Converted Receivables, (ii) all Collections in respect of, and
other Proceeds of, such Converted Receivables, including, without
limitation, net recoveries with respect to any defaulted Converted
Receivables, (iii) all substitutions and
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replacements for any of the foregoing, and (iv) all Proceeds of any of
the foregoing (all of the foregoing collectively, the "Converted
Conveyed Property"). The foregoing 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 TCSI in
connection with the Converted 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.
Section 2.2 Sale of New Receivables. In consideration for the
Purchase Price and upon the terms and subject to the conditions set forth
herein, TCSI does hereby sell, assign, transfer, set-over, and otherwise
convey to the Buyer, and the Buyer does hereby purchase from TCSI, all of
TCSI's right, title, and interest in, to, and under (i) the New Receivables
now existing and hereafter created in connection with the Converted
Accounts including, without limitation, all accounts, General Intangibles,
Chattel Paper, contract rights, and other obligations of any Obligor with
respect to the New Receivables, now or hereafter existing, including,
without limitation, any interest, or other fees received by TCSI with
respect to such New Receivables, (ii) all Collections in respect of, and
other Proceeds of, such New Receivables, including, without limitation, net
recoveries with respect to any defaulted New 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
"New Receivables Conveyed Property"). 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 TCSI in connection with the New Receivables 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.
Section 2.3 Marking Records. In connection with the sale and
conveyance hereunder, TCSI agrees, at its own expense, on or prior to the
Closing Date, 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.
Section 2.4 Sale Intended; Security Interest. It is the express
intent of TCSI and the Buyer that the conveyance of the Conveyed Property
by TCSI to the Buyer pursuant to this Agreement be construed as a true sale
thereof by TCSI to the Buyer and not a grant of a security interest in the
Conveyed Property by TCSI to the Buyer to secure a debt or other obligation
of TCSI. 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 TCSI to the Buyer, then
(i) this Agreement also shall be deemed to be and hereby is a security
agreement within the meaning of the Code, (ii) this Agreement and TCSI's
books and
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records shall evidence the Buyer's obligation to pay the Purchase Price,
and (iii) the conveyance by TCSI provided for in this Agreement shall be
deemed to be, and TCSI hereby grants to the Buyer a security interest in
and to, all of TCSI's right, title, and interest in the Conveyed Property
to secure all obligations now or hereafter arising of TCSI to the Buyer,
including, without limitation, loans to TCSI in the amount of the Purchase
Price as set forth in this Agreement. TCSI 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. TCSI 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 2.5 Financing Statements. In connection with the foregoing
concurrent transfers: (i) the Buyer agrees to sign and deliver to TCSI on
or prior to the Closing Date, at its own expense, a financing statement or
statements with respect to the Unconverted Accounts transferred to TCSI
pursuant to Section 2.1(a) meeting the requirements of applicable state law
in such manner and in such jurisdictions as are necessary to perfect and
protect the interests of TCSI created hereby under the Relevant UCC State
against all creditors of and purchasers from the Buyer, and (ii) TCSI
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 Relevant UCC State against
all creditors of and purchasers from TCSI, 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.
ARTICLE III
CONSIDERATION AND PAYMENT
Section 3.1 Purchase Price; Consideration. The purchase price for
the Conveyed Property (the "Purchase Price") sold on any day shall be a
dollar amount equal to, 100% of the aggregate amount of all New Receivables
sold as of such date, adjusted pursuant to Section 3.2(b). The
consideration for the Converted Receivables transferred to the Buyer is the
concurrent transfer of the related Unconverted Accounts from the Buyer to
TCSI.
Section 3.2 Payment of Purchase Price.
(a) The Purchase Price for New Receivables shall be paid or
provided for on each New Receivable purchased since the immediately
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preceding Business Day, in accordance with Section 2.2 of the Loan
Agreement.
(b) The Purchase Price shall be adjusted with respect to any New
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, TCSI shall pay such negative amount to the Buyer in
immediately available funds.
Section 3.3 Daily Reports. On each Business Day, TCSI shall
deliver to the Buyer the Daily Purchase Report.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 TCSI's Representations and Warranties. TCSI represents
and warrants to the Buyer as of the Closing Date, and shall be deemed to
represent and warrant as of each date thereafter on which TCSI transfers
Converted Receivables to the Buyer or the Buyer purchases New Receivables,
that:
(a) Organization and Good Standing. TCSI is a corporation duly
organized and validly existing in good standing under the laws of the
State of Delaware and has the corporate power and authority and legal
right to own its property and conduct its business as such properties
are presently owned and 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 TCSI hereunder.
(b) Due Qualification. TCSI 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 except
where the failure to be so qualified would not have a Material Adverse
Effect. TCSI holds all of the permits, licenses, certificates, consents
and other authorizations of applicable Governmental Authorities
required by law to own and service the Receivables, the absence of
which would 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 TCSI 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 TCSI, enforceable in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy,
insolvency,
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reorganization, moratorium, or other similar laws now or hereinafter in
effect, affecting the enforcement of creditors' rights in general and
general principles of equity.
(e) No Conflicts. The execution and delivery of this
Agreement, and the performance of the transactions contemplated hereby,
do not (i) contravene TCSI'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 Code), registration,
consent, or approval under, any law, rule, regulation, order, writ,
judgment, injunction, decree, determination, or award presently in
effect having applicability to TCSI, except for such filings,
registrations, consents, or approvals as have already been obtained and
are in full force and effect, or (iii) 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 material
indenture, contract, agreement, mortgage, deed of trust, or other
material instrument to which TCSI is a party or by which it or its
properties are bound.
(f) Taxes. TCSI 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
TCSI 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 Proceedings. There are no proceedings or investigations
pending or, to the best knowledge of TCSI, threatened against TCSI,
before any Governmental Authority (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
TCSI of its obligations hereunder, or (iv) seeking any determination or
ruling that would materially and adversely affect the validity or
enforceability hereof.
(h) All Consents Required. All approvals, authorizations,
consents, orders, or other actions of any Governmental Authority
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.
(i) Executive Offices, Collateral Locations, FEIN. The current
location of TCSI's chief executive office is 0000 Xxxxx Xxxxxx Xxxxxx,
Xxxxx Xxxxx, Xxxxx Xxxxxx 00000 and the place where records with
respect to the Conveyed Property is located is 0000 Xxxxx Xxxxxx
Xxxxxx, Xxxxx Xxxxx, Xxxxx Xxxxxx 00000. Neither of such locations has
changed within the twelve
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(12) months preceding the Closing Date. TCSI's federal employer
identification number is 00-0000000.
(j) Tradenames, Etc. TCSI has, within the last five (5) years,
operated only under its current legal name except as described below
and its trade name "The Credit Store." TCSI has not, within the last
five (5) years, 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 Bankruptcy Code except the
following:
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.
(k) Preference; Voidability. TCSI warrants that the conveyance
of the Receivables and related Conveyed Property to the Buyer, and each
such conveyance, shall not have been made for or on account of an
antecedent debt owed by TCSI to the Buyer and no such transfer is or
may be voidable under any section of the Bankruptcy Code.
(l) No Restriction on Transfer. To the best of TCSI's
knowledge, no Converted Account or related Account Document 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 Converted Account or Account Document (other than a consent
or waiver of such restriction that has been obtained prior to the
related purchase date).
The representations and warranties set forth in this Section 4.1 shall
survive the transfer of Converted Receivables to the Buyer and the sale of
the New Receivables to the Buyer. Upon discovery by TCSI 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 TCSI's Representations and Warranties Regarding
the New Receivables. TCSI shall be deemed to represent and warrant as of
the date on which
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TCSI transfers Converted Receivables to the Buyer or the Buyer purchases
New Receivables, that:
(a) The transfer of Receivables by TCSI 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 TCSI in and to the Receivables, whether then existing or thereafter
created and arising in connection with the Converted Accounts, and the
Receivables will be held by the Buyer free and clear of any Lien of any
Person (other than the Buyer and the Lender) claiming through or under
TCSI 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 TCSI in and to the Conveyed Property
purported to be sold hereunder, whether existing on the Closing Date or
thereafter created, and the Proceeds thereof.
(b) Immediately preceding the transfer or sale of the
Receivables and related property pursuant to this Agreement, TCSI is
(or, with respect to Receivables transferred or sold after the date
hereof, will be on the date of transfer or 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 Lien.
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 TCSI 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. TCSI 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 transferred or sold to the Buyer hereunder and the date
of any transfer of an Unconverted Account to TCSI 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. TCSI holds all of the permits, licenses, certificates,
consents and other authorizations of
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applicable Governmental Authorities required by law to own and service
the Receivables, the absence of which would have a Material Adverse
Effect; provided, however, that no representation or warranty is made
with respect to any qualifications, licenses, or approvals that the
Buyer would have to obtain to do business in any state in which the
Buyer seeks to enforce any Receivable.
(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, (ii)
violate any material provision of law applicable to it, or require any
filing (except for the filings under the Code), 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 or (iii) 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 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.
(e) No Proceedings. There are no proceedings or investigations
pending or, to the best knowledge of the Buyer, threatened against the
Buyer, before any Governmental Authority (i) asserting the invalidity
of 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.
(f) All Consents Required. All approvals, authorizations,
consents, orders, or other actions of any Governmental Authority
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.
The representations and warranties set forth in this Section 4.3 shall
survive the sale or transfer of the Receivables to the Buyer and the
transfer of an Unconverted Account to TCSI hereunder. Upon discovery by the
Buyer or TCSI of a breach of any of the foregoing representations and
warranties, the party discovering such breach shall give prompt written
notice to the other.
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ARTICLE V
COVENANTS OF TCSI AND BUYER
Section 5.1 TCSI Covenants. TCSI hereby covenants that:
(a) Receivables to be Accounts, General Intangibles, or
Chattel Paper. TCSI will take no action to cause any Receivable to be
evidenced by any instrument (as defined in the Code as in effect in the
Relevant UCC State), except in connection with the enforcement or
collection of a Receivable. Except in such circumstances, TCSI 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 Code as in effect in the Relevant UCC State).
(b) Security Interests. Except for the conveyances hereunder,
TCSI will not sell, pledge, assign, or transfer to any other Person or
grant, create, incur, assume, or suffer to exist, any Lien on any
Receivable, whether now existing or hereafter created, or any interest
therein. TCSI will immediately notify the Buyer of the existence of any
Lien 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 TCSI.
(c) Credit and Collection Policy and Account Agreements. TCSI
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 TCSI.
(d) Delivery of Collections. In the event that TCSI receives
Collections (other than in the Lockbox Account), TCSI 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 New Receivables. TCSI covenants and agrees
that it will not convey, assign, exchange, or otherwise transfer any
New Receivable to any Person other than the Buyer prior to the
termination of this Agreement pursuant to Article VIII.
(f) Notice of Liens. TCSI shall notify the Buyer promptly
after becoming aware of any Lien on any Receivable.
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(g) Separate Business. TCSI will not permit its assets to be
commingled with those of the Buyer (except for temporary commingling of
Collections in the Lockbox Account) and shall maintain separate records
(corporate or otherwise) and books of account from those of the Buyer.
TCSI 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. TCSI will provide for its operating expenses and
liabilities from its own funds. TCSI 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 and the Buyer's expenses in
connection with the negotiation, execution and delivery of this
Agreement, the Loan Agreement and the related documents may be paid by
TCSI. TCSI 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 TCSI. TCSI will maintain an arm's length relationship with
the Buyer with respect to any transactions between TCSI, on the one
hand, and the Buyer, on the other.
(h) Conduct of Business. TCSI will 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. TCSI 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. TCSI
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. Upon reasonable
notice, TCSI shall permit the Buyer or the Lender, at the expense of
the Buyer or the Lender, as applicable, to visit and inspect any of the
properties, books and financial reports of TCSI with respect to the
Accounts all at such reasonable times during ordinary business hours of
TCSI and as often as the Buyer or the Lender may reasonably request for
the purpose of determining compliance with this Agreement; provided,
however, that the Buyer and the Lender will use reasonable efforts to
conduct (or have conducted) any such examination or inspection so as to
minimize disruptions to the operations of TCSI.
(k) Keeping of Records and Books of Account. TCSI will
maintain a system of accounting established and administered in
accordance with
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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). TCSI will give the Buyer and the Lender notice of any
material change in the administrative and operating procedures of TCSI
referred to in the previous sentence.
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 TCSI 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 New Receivable of any of the representations and warranties set
forth in Section 4.2, all Receivables with respect to the related
Converted Account shall be designated as "Ineligible Receivables" and
TCSI shall pay to the Buyer an amount in cash equal to the Purchase
Price paid for any such Ineligible Receivables by the Buyer to TCSI
plus any costs and expenses of the Buyer associated therewith less any
amounts collected by the Buyer on such Receivables. Such payment must
be made by the close of business on the next succeeding Settlement Date
following the day such Receivables have been designated as Ineligible
Receivables; provided, however, that such amount may be offset against
any amounts due from the Buyer to TCSI with respect to the Purchase
Price for New Receivables sold to the Buyer on such day. The obligation
of TCSI 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.
(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), (c) and (d), the Buyer by notice given in writing to TCSI may
direct TCSI to accept reassignment of all 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 TCSI 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, TCSI demonstrates to the Buyer that the
representations and warranties contained in Sections 4.1(a), (c) and
(d)
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shall then be true and correct in all material respects as if made on
such day. TCSI shall pay to the Buyer on the day of such reassignment
an amount equal to the aggregate Purchase Price paid for all
Receivables plus any costs and expenses of the Buyer associated
therewith less the aggregate amounts collected by the Buyer on the
Receivables. On the day on which such amount has been paid, each
Receivable shall be sold and reassigned to TCSI, 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 TCSI to vest in TCSI, or its designee or
assignee, all right, title, and interest of the Buyer in and to each
Receivable. The obligation of TCSI 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), (c) and (d).
Section 6.2 Conveyance of Reassigned Receivables. Upon the
request of TCSI, the Buyer shall execute and deliver to TCSI a reconveyance
substantially in such form and upon such terms as shall be acceptable to
TCSI, pursuant to which the Buyer evidences the conveyance to TCSI of all
of the Buyer's right, title, and interest in any Receivables reconveyed to
TCSI 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 TCSI may reasonably require to effect any
repurchase of Receivables pursuant to Section 6.1.
Section 6.3 Transfers and Sales are Non-Recourse. Other than
the obligations to repurchase Receivables under the limited circumstances
set forth in Section 6.1 and to make payments with respect to Dilution
under Section 3.2(b), the transfers and sales of Receivables under this
Agreement shall be without recourse to TCSI. All transfers of Unconverted
Accounts from the Buyer to TCSI under this Agreement shall be without
recourse to the Buyer.
ARTICLE VII
CONDITIONS PRECEDENT
Section 7.1 Conditions to the Buyer's Obligations. The
obligations of the Buyer to purchase or acquire the Receivables or to
transfer to TCSI any Unconverted Accounts on any Business Day shall be
subject to the satisfaction of the following conditions:
(a) All representations and warranties of TCSI contained in
this Agreement shall be true and correct on the Closing Date and on the
day of sale or transfer of any Receivable created thereafter with the
same effect as though such representations and warranties had been made
on such date,
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(b) With respect to the sale of New Receivables only, all
information concerning the New Receivables provided to the Buyer shall
be true and correct in all material respects as of the Closing Date, in
the case of New Receivables sold to the Buyer on the Closing Date, or
the applicable purchase date, in the case of New Receivables sold to
the Buyer after the Closing Date,
(c) At the Closing Date, TCSI shall have substantially
performed all other obligations required to be performed by the
provisions of this Agreement,
(d) TCSI shall have filed the financing statement(s) required
to be filed pursuant to Section 2.5, 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 TCSI 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 TCSI's Obligations. The
obligations of TCSI to sell or transfer Receivables or to accept transfer
of any Unconverted Accounts on any Business Day shall be subject to the
satisfaction of the following conditions:
(a) All representations and warranties of the Buyer contained
in this Agreement shall be true and correct with the same effect as
though such representations and warranties had been made on such date,
(b) With respect to the sale of New Receivables only, 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 TCSI, and TCSI shall have
received from the Buyer copies of all documents (including, without
limitation, records of corporate proceedings) relevant to the
transactions herein contemplated as TCSI may reasonably have requested.
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ARTICLE VIII
TERM AND TERMINATION
Section 8.1 Termination. This Agreement shall terminate upon
payment in full by the Buyer of all Loans and other obligations under the
Loan Agreement and the termination of the Loan 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 TCSI. TCSI 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:
Credit Store Services, Inc.
0000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxxxx, Xxxxx Xxxxxx 00000
Attention: Corporate Counsel
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
The Varde Fund IV-A, L.P.
c/o Varde Partners, L.P.
0000 Xxxx 00xx Xxxxxx, Xxxxx 000
Xxxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxx
Telephone No.: (000) 000-0000
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Facsimile No.: (000) 000-0000
(b) in the case of TCSI, to:
The Credit Store, Inc.
0000 X. Xxxxxx Xxxxxx
Xxxxx Xxxxx, Xxxxx Xxxxxx 00000
Attention: Chief Financial Officer
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
or, as to each party, at such other address as shall be designated by such
party in a written notice to each other party.
Section 9.4 Severability of Provisions. If any one or more of
the covenants, agreements, provisions, or terms of 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 TCSI without the written consent of the other party and the
Lender; provided, however, that the Buyer's rights hereunder may be
collaterally assigned to the Lender.
Section 9.6 Further Assurances. The Buyer and TCSI 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 New Receivables for
filing under the provisions of the Code 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 TCSI, any
right, remedy, power, or privilege hereunder, shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy,
power, or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, remedy, power, or privilege.
The rights, remedies, powers, and privileges herein provided are cumulative
and not exhaustive of any rights, remedies, powers, and 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
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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. TCSI
hereby covenants and agrees that, prior to the date which is one year and
one day after the payment in full of all Loans and all amounts due under
the Loan 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, TCSI. TCSI 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 TCSI is merged or the Person which acquires by conveyance or
transfer the properties and assets of TCSI 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 TCSI 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 TCSI hereunder (to the
extent that any right, covenant, or obligation of TCSI, 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
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(b) TCSI 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 New
Receivables.
(a) TCSI shall cause this Agreement, all amendments hereto,
all financing statements and continuation statements, and any other
necessary documents covering TCSI'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. TCSI 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 TCSI 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 TCSI 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 Code as in effect in the Relevant UCC State, TCSI 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) TCSI will give the Buyer prompt written notice of any
relocation of any office from which it services New Receivables or
keeps records concerning the New Receivables or of its principal
executive office and whether, as a result of such relocation, the
applicable provisions of the Code 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
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to continue the perfection of the Buyer's security interest in the
Conveyed Property and the proceeds thereof.
(Signature Page to Follow)
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IN WITNESS WHEREOF, the Buyer and TCSI each have caused this
Agreement to be duly executed by their respective officers as of the day
and year first above written.
CREDIT STORE SERVICES, INC.
By:
---------------------------------------
Its
-----------------------------------
THE CREDIT STORE, INC.,
By:
-----------------------------------
Its
-------------------------------
(Signature Page 1 of 1 to the Converted Accounts/ Receivables Sale Agreement)
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