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THIS EXHIBIT CONTAINS CONFIDENTIAL INFORMATION WHICH HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
CONFIDENTIAL TREATMENT REQUEST UNDER RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED. THE CONFIDENTIAL INFORMATION ON PAGE 3 HAS BEEN REPLACED WITH
ASTERISKS.
Exhibit 10.20
RECEIVABLE PURCHASE AGREEMENT
RECEIVABLE PURCHASE AGREEMENT, dated as of August 28, 1998,
between XXXXXXXXXX XXXX CREDIT CORPORATION, a Delaware corporation, with offices
located at 000 Xxxxx Xxxxx, Xxx Xxxxx, Xxxxxx 00000 ("MWCC"), MONOGRAM CREDIT
CARD BANK OF GEORGIA, a Georgia banking corporation with offices located at 0000
Xxxxxxx Xxxx, Xxxxxxx, Xxxxxxx 00000 ("Monogram") and MIDLAND CREDIT MANAGEMENT,
INC., a Kansas corporation with offices located at 000 Xxxx Xxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxx 00000 ("Buyer").
W I T N E S S E T H:
WHEREAS, each Seller (as hereinafter defined) wishes to sell
to Buyer, on each Periodic Purchase Date, certain secured and unsecured
receivables owned by such Seller, which receivables arose in connection with the
use of MW or Lechmere (both as hereinafter defined) credit cards and were
written off by such Seller during the Write-Off Period corresponding to such
Periodic Purchase Date; and
WHEREAS, Buyer wishes to purchase the aforementioned
receivables on each Periodic Purchase Date on the terms and conditions herein
set forth;
NOW, THEREFORE, in consideration of the premises and the
mutual agreements of the parties hereto, and for other good and valuable
consideration, Sellers and Buyer hereby agree as follows:
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Section 1. Definitions. As used in this Agreement, the
following terms shall have the following meanings unless otherwise defined
herein and, wherever from the context it appears appropriate, all terms
expressed herein in the singular or the plural shall include the singular and
the plural:
"Account" means any retail credit card account with respect to
which there is a Receivable.
"Account Debtor" means any person obligated on an
Account.
"Account Document" means any application, agreement, billing
statement, abstract of cardholder account, remittance check, notice,
correspondence or other information relating to an Account that is in Sellers'
possession, in whatever form, if any, it exists in Sellers' possession.
"Affiliate" means, with respect to any entity, each
corporation that controls, is controlled by, or is under common control with
that entity.
"Agreement" means this Receivable Purchase Agreement,
including any Exhibits or Schedules hereto.
"Xxxx of Sale" means a document substantially in the
form of Exhibit A hereto.
"Business Day" means a day other than a Saturday, a Sunday or
a day on which banks are required or permitted to be closed in New York.
"Buyer" shall have the meaning assigned to such term in the
introductory paragraph hereto.
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* Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment
request.
"Cut-Off Date" means, for any Periodic Purchase Date, the date
two days prior to such Periodic Purchase Date or, if the date two days prior to
such Periodic Purchase Date is not a Business Day, the Business Day immediately
preceding such date.
"Financing Statement" means a UCC-1 financing statement
substantially in the form of Exhibit B hereto.
"Future Sales" shall have the meaning assigned to such term in
Section 13.1 hereof.
"Lechmere" means Lechmere, Inc.
"Monogram" shall have the meaning assigned to such term in the
introductory paragraph hereto.
"MW" means Xxxxxxxxxx Xxxx & Co., Incorporated.
"MWCC" shall have the meaning assigned to such term in
the introductory paragraph hereto.
"Non-Conforming Accounts" shall have the meaning assigned to
such term in Section 8.1 hereof.
"Periodic Purchase Date" shall mean July 31, 1998, August 10,
1998, September 10, 1998, September 25, 1998, November 10, 1998, December 10,
1998 and December 31, 1998 (or, with respect to any such date, such earlier date
as may be agreed to by the parties in writing), each of which days Sellers shall
sell, and Buyer shall purchase, the Receivables on the Periodic Receivables
Schedule for such date.
"Periodic Purchase Price" means, on each Periodic Purchase
Date, an amount equal to (a) [*] multiplied by (b) the balance of the
Receivables being sold on such Periodic
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Purchase Date as of the Cut-Off Date, as reflected on the Periodic Receivable
Schedule (as indicated by Sellers prior to such Periodic Purchase Date).
"Periodic Receivable Schedule" means, for each Periodic
Purchase Date, the specific computer-generated master file list on an electronic
medium (e.g., tape, CD or cartridge) prepared by Sellers identifying receivables
relating to the MW or Lechmere credit cards which were written off by Sellers
during the Write- Off Period corresponding to such Periodic Purchase Date, each
of which listing shall contain the following information as maintained on
Sellers' master file as of 11:59 p.m. on the CutOff Date: Account Debtor's
account number, date of write-off, name and social security number (where known)
of the Account Debtor, the write-off balance (as indicated in the field labeled
ACAMT), the outstanding balance as of the Cut-Off Date (as indicated by adding
the amounts in the fields labeled ACBAL, ABL1, ABL2, ABL3, ABL4 and ABL5) and
such other information, if any, as is maintained by Sellers on their master
file(s).
"Receivables" means certain of the retail credit card
receivables relating to MW and Lechmere credit cards and written off by Sellers
pursuant to their accounting practices which are being sold to Buyer pursuant to
the terms of this Agreement, all to the extent such receivables are listed on a
Periodic Receivable Schedule for a Periodic Purchase Date, whether Sellers'
interest arises as owner, co-owner, cosigner, secured party or otherwise,
together with all cash and non-cash proceeds/
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products thereof including, but not limited to, notes, drafts, checks,
instruments, credit insurance proceeds, indemnity proceeds, warranty and
guaranty proceeds.
"Required Affidavit" means an affidavit required by (i) a
court where suit relating to a Receivable purchased by Buyer hereunder is to be
filed, or (ii) the attorney collecting a Receivable purchased by Buyer hereunder
after consultation with Buyer as to the necessity for such affidavit, any of
which shall be in a form substantially similar to Exhibit C hereto.
"Securities Laws" shall have the meaning set forth in
Section 2.6 hereof.
"Seller" means MWCC and Monogram, each with respect to the
Receivables owned by it and sold to Buyer hereunder.
"To the Best of [a party's] Knowledge" means the party has
made a reasonably best effort inquiry to determine the facts with respect to
which the knowledge is asserted, including talking to current employees who in
the normal scope of their employment should have knowledge of the matter and
taking such other actions, if reasonably necessary, to discover the facts with
respect to which knowledge is asserted.
"Write-Off Period" means the following for each
Periodic Purchase Date:
September 4, 1998 (or such the period commencing March 1,
earlier date as may be 1998 through and including
agreed to in writing) May 28, 1998
September 25, 1998 (or such the period commencing May 29,
earlier date as may be 1998 through and including
agreed to in writing) August 15, 1998
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Periodic Purchase Date:
October 30, 1998 (or such the period commencing August 16,
earlier date as may be 1998 through and including October
agreed to in writing) 22, 1998
November 28, 1998 (or such the period commencing October 23,
earlier date as may be 1998 through and including November
agreed to in writing) 25, 1998
December 31, 1998 (or such the period commencing November
earlier date as may be 26, 1998 through and including
agreed to in writing) December 28, 1998
Section 2. Purchase and Sale of Receivables; Payment
and Transfer.
Section 2.1 Purchase and Sale. On the terms and subject to the
conditions set forth below, each of Sellers agrees to sell to Buyer, without
recourse and without warranty of any kind (including, without limitation,
warranties pertaining to title, validity, collectability, accuracy or
sufficiency of information) except as specifically set forth herein, and Buyer
agrees to purchase from Sellers on each Periodic Purchase Date, free and clear
of all liens, subordinations and security interests, the Receivables listed on
the Periodic Receivable Schedule for that Periodic Purchase Date.
Section 2.2 Payment and Transfer. On each Periodic Purchase
Date, Buyer will remit to MWCC an amount equal to the Periodic Purchase Price.
Payment of each Periodic Purchase Price shall be made by Buyer via wire transfer
of federal funds to a bank designated by MWCC.
Section 2.3 Xxxx of Sale and UCC Financing Statements.
After MWCC's receipt of payment in full of each Periodic Purchase
Price on each Periodic Purchase Date, (i) Sellers will execute
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and deliver to Buyer a Xxxx of Sale relating to the Receivables sold on such
Periodic Purchase Date, (ii) each Seller will execute and deliver to Buyer a
Financing Statement relating to the Receivables it sold on such Periodic
Purchase Date for state and local filing in the state and county where its chief
executive office is located, and (iii) Sellers will deliver to Buyer a copy of
the Periodic Receivables Schedule corresponding to such Periodic Purchase Date.
At Buyer's reasonable request, Sellers shall execute any additional financing
statements prepared by Buyer and necessary to evidence the transactions
contemplated herein.
Section 2.4 No Assumption of Liabilities Relating to Sellers.
Buyer, in acquiring Receivables pursuant to this Agreement, is not assuming any
liability or obligation of any Seller including, without limitation, any
liability or obligation in respect of any outstanding net credit balance or any
litigation threatened, pending or instituted against such Seller for any event,
act or omission undertaken or committed by such Seller or its agents prior to
the Periodic Purchase Date for the Receivables at issue, provided, however,
that, on each Periodic Purchase Date, Buyer assumes any and all liability and
any and all obligation for events, acts or omissions undertaken or committed by
Buyer or its agents (including litigations caused as a result thereof) that
occur in respect of such Receivables after the Periodic Purchase Date for such
Receivables.
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Section 2.5 Use of Receivables. Buyer, any purchaser of
Receivables permitted under Section 9.1 hereof and any person acting on behalf
of Buyer or such purchaser shall only collect the Receivables and shall not use,
sell or transfer any information with respect to Receivables or Account Debtors
other than for purposes of collection. Without limiting the generality of the
foregoing, it is agreed that Buyer, any purchasers of Receivables permitted
under Section 9.1 hereof and any person acting on behalf of Buyer or such person
shall not use, sell or transfer any information with respect to the Receivables
or Account Debtors for any other purposes whatsoever, including without
limitation, marketing to Account Debtors or marketing the names and/or addresses
of Account Debtors. Notwithstanding the foregoing, but subject to its
confidentiality obligations hereunder, Buyer may provide to a third party such
information as may be necessary to assign, pledge, sell or securitize the
Receivables to the extent permitted hereunder.
Section 2.6 Purchaser's Intention. With respect to each
purchase of Receivables hereunder, Buyer is purchasing the Receivables for its
own account, for investment purposes and not with a view to the distribution
thereof. Buyer will not, directly or indirectly, offer, transfer, sell, assign,
securitize, pledge, hypothecate or otherwise dispose of any Receivables (or
solicit any offers to buy, purchase, or otherwise acquire any Receivables) or
any direct or indirect interests therein, except to the extent applicable in
compliance with federal and/or state
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securities and Blue Sky laws, rule, regulations and requirements (collectively,
the "Securities Laws").
Section 2.7 Receivables Not Securities. Buyer acknowledges and
agrees that (i) each proposed sale of Receivables does not involve, nor is it
intended in any way to constitute, the sale of a "security" within the meaning
of the Securities Laws and (ii) it is not contemplated that any filing will be
made with the Securities and Exchange Commission or pursuant to the Securities
Laws of any jurisdiction.
Section 2.8 Accredited Investor. Buyer is an "accredited
investor" (as that term is defined in Rule 501 of Regulation D under the
Securities Act of 1933, as amended) by reason of its business and financial
experience. Buyer has such knowledge, sophistication and experience in business
and financial matters as to be capable of evaluating both the information made
available with respect to Receivables and the merits and risks of each
prospective purchase, is able to bear the economic risk of each purchase, is
able to bear the risk that Buyer may be required to hold each Receivable for an
indefinite period of time and is able to afford a complete loss of each Periodic
Purchase Price for Receivables listed on the corresponding Periodic Receivables
Schedule.
Section 2.9 Opportunity to Ask Questions. As of each
Periodic Purchase Date, Buyer has been afforded the opportunity:
(i) to ask such questions as it has deemed necessary of, and to
receive answers from, representatives of Sellers concerning the
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terms and conditions of the offering of each Receivable listed on the
corresponding Periodic Receivables Schedule and the merits and risks of buying
such Receivables; and (ii) to obtain such additional information that Sellers
possess or can acquire.
Section 3. Conditions Precedent to Purchase and Sale
of Receivables.
(a) It shall be a condition precedent to Buyer's obligation to
purchase Receivables on any Periodic Purchase Date that the following shall be
true on such Periodic Purchase Date:
(i) Representations and Warranties. The
representations and warranties of Sellers set forth in this Agreement, including
Section 4, shall be true and correct in all material respects.
(ii) Compliance with Covenants and Agreements.
Each Seller shall have complied in all material respects with each of its
covenants and agreements set forth in this Agreement as applicable to the
Receivables being sold by such Seller on such Periodic Purchase Date.
(iii) No Violation of Law. The consummation of
such purchase and sale shall not violate any order of any court or governmental
body having jurisdiction or any law or regulation that applies to Buyer or any
Seller.
(iv) Approvals, Consents and Notices. Any
approvals, consents or other actions by, and any notices to or
filings with, any governmental authority, or any other person or
entity required for the consummation of such purchase and sale
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shall have been obtained or made as applicable to the Receivables being sold on
such Periodic Purchase Date.
(b) It shall be a condition precedent to Sellers' obligation
to sell Receivables on any Periodic Purchase Date that the following shall be
true on such Periodic Purchase Date:
(i) Representations and Warranties. The
representations and warranties of Buyer set forth in this Agreement, including
Sections 2.6 through 2.9 and Section 5, shall be true and correct.
(ii) Compliance with Covenants and Agreements.
Buyer shall have complied in all material respects with each of its covenants
and agreements set forth in this Agreement.
(iii) No Violation of Law. The consummation of
such purchase and sale shall not violate any order of any court or governmental
body having jurisdiction or any law or regulation that applies to Buyer or
Sellers.
(iv) Approvals, Consents and Notices. Any
approvals, consents or other actions by, and any notices to or filings with, any
governmental authority, or any other person or entity required for the
consummation of such purchase and sale shall have been obtained or made as
applicable to the Receivables being sold on such Periodic Purchase Date.
Section 4. Representations and Warranties of Sellers.
As to each periodic purchase, each Seller hereby makes the
following representations and warranties to Buyer:
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(a) Due Organization; Authorization, Etc. Such Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation, and, at all relevant times, had all
necessary power and authority to originate and/or acquire the Receivables. The
execution, delivery and performance by such Seller of this Agreement and the
transactions contemplated hereby are within its respective corporate powers and
have been duly authorized by all necessary corporate action. This Agreement has
been duly executed and delivered by such Seller and constitutes the legal, valid
and binding obligation of such Seller, enforceable against such Seller in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, reorganization, insolvency, moratorium and other similar
laws and general equitable principles.
(b) No Conflict. The execution, delivery and performance by
such Seller of this Agreement and the transactions contemplated hereby do not
and will not violate, conflict with or result in a breach or default under the
certificate of incorporation or bylaws of such Seller, any state or federal law
or regulation applicable to such Seller or any agreement or other document to
which such Seller is a party or by which it or any of its property is bound.
(c) Consents. No authorization, approval, consent or other
action by, and no notice to or filing with, any governmental authority or
regulatory body or other person is or
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will be required to be obtained or made by such Seller for the due execution,
delivery and performance of this Agreement and the transactions contemplated
hereby that has not been obtained or made by such Seller.
(d) Title to the Receivables. Such Seller is the lawful owner
of, or has the right to sell, each Receivable being sold by it on a Periodic
Purchase Date. To the Best of such Seller's Knowledge as of any Periodic
Purchase Date, the debt represented by each such Receivable was, at the time of
its origination, the legal, valid and binding obligation of the Account Debtor
thereon. Upon the purchase by Buyer of each Receivable owned by such Seller and
listed on a Periodic Purchase Schedule, Buyer shall acquire free, clear and
unencumbered title in and to each such Receivable. As of the Cut-Off Date, such
Seller has performed all of its obligations with respect to each Receivable
being sold by it on such Periodic Purchase Date and there is no requirement for
future advances or performance by such Seller.
(e) Receivables. To the Best of such Seller's Knowledge, (i)
each Periodic Receivable Schedule to be delivered to Buyer on the Periodic
Purchase Date shall be true and correct as of the Cut-Off Date for such Periodic
Purchase Date, (ii) as of the Cut-Off Date, each Receivable being sold by such
Seller is not a Non-Conforming Receivable, (iii) as of the Cut-Off Date, each
Receivable being sold by such Seller represents a bona fide indebtedness of the
Account Debtor with respect thereto and (iv)
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when originating and servicing each Receivable owned by it, such Seller complied
in all material respects with all federal and state laws.
(f) No Brokers or Finders. Such Seller has not employed any
investment banker, broker or finder in connection with the transaction
contemplated hereby who might be entitled to a fee or commission upon
consummation of the transaction contemplated by this Agreement.
Section 5. Representations and Warranties of Buyer. Buyer
hereby makes the following representations and warranties to Sellers, which
representations and warranties shall be deemed to be restated and remade on each
Periodic Purchase Date:
(a) Due Organization; Authorization, Etc. Buyer is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its formation. The execution, delivery and performance by
Buyer of this Agreement and the transactions contemplated hereby are within its
powers and have been duly authorized by all necessary action. This Agreement has
been duly executed and delivered by Buyer and constitutes the legal, valid and
binding obligation of Buyer, enforceable against Buyer in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
reorganization, insolvency, moratorium and other similar laws and general
equitable principles.
(b) No Conflict. The execution, delivery and
performance by Buyer of this Agreement and the transactions
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contemplated hereby do not and will not violate, conflict with or result in a
breach or default under the certificate of incorporation or by laws of Buyer,
any state or federal law or regulation applicable to Buyer or any agreement or
other document to which Buyer is a party or by which it or any of its property
is bound.
(c) Consents. No authorization, approval, consent or other
action by, and no notice to or filing with, any governmental authority or
regulatory body or other person is or will be required to be obtained or made by
Buyer of the due execution, delivery and performance of this Agreement and the
transactions contemplated hereby.
(d) Investigation of Receivables. Buyer has made such an
independent investigation as Buyer has deemed necessary as to the nature,
validity, collectability and value of the Receivables being purchased on each
Periodic Purchase Date, and as to all other facts that Buyer deems material to
such purchase. Buyer is making such purchase solely on the basis of such
investigation and its own judgment and the representations, warranties and other
information expressly set forth herein. Buyer is not acting in reliance on any
representation by Sellers except those set forth herein.
(e) Reporting Requirements. Buyer shall be solely responsible
for any reporting requirements and/or filings required by any federal, state or
local law or rule, with respect to the Receivables.
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(f) No Brokers or Finders. Buyer has not employed any
investment banker, broker or finder in connection with the transaction
contemplated hereby who might be entitled to a fee or commission upon
consummation of the transaction contemplated in this Agreement.
Section 6. Conduct of Business After Each Periodic
Purchase Date.
Section 6.1 Notice to Account Debtors. Following each Periodic
Purchase Date, any Seller, at no cost to Buyer, may, but shall not be obligated
to, give any Account Debtor written or oral notice of the transfer of the
Receivables to Buyer.
Section 6.2 Retrieval of Account Documents; Requests
for Oral Information on Accounts.
(a) Account Documents and Affidavits.
(i) From time to time and in accordance with
subsections (ii) and (iii) below, as applicable, Buyer may, with respect to any
Receivable, submit to the Seller of such Receivable: (a) reasonable requests for
Account Documents, which requests substantially shall be in the form of Exhibit
D hereto, and (b) reasonable requests for Required Affidavits. Such Seller shall
provide to Buyer each requested Account Document (to the extent such document is
in the possession of such Seller) and each signed Required Affidavit within
sixty (60) days after its receipt of Buyer's reasonable request therefor.
(ii) During the first twelve (12) months after
each applicable Periodic Purchase Date, each Seller shall provide
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to Buyer, at no additional charge to Buyer (other than specified postage
charges): (a) the number of Account Documents not to exceed ten percent (10%) of
the number of Accounts sold by such Seller on the applicable Periodic Purchase
Date, provided that Buyer pays to such Seller within five (5) days after receipt
of an invoice therefor, all postage paid by such Seller in respect of provision
of such Account Documents, and (b) the number of signed Required Affidavits not
to exceed ten percent (10%) of the number of Accounts sold by such Seller on the
applicable Periodic Purchase Date, provided that Buyer submits said Required
Affidavits to such Seller completed by Buyer using information from such Seller,
with returned postage prepaid by Buyer.
(iii) At all times (a) after the date twelve
months after each applicable Periodic Purchase Date or (b) during the first
twelve months after each applicable Periodic Purchase Date but in excess of the
amounts specified in subsection (ii) above or not in accordance with the
requirements of subsection (ii) above, the Seller of Receivables shall provide
Buyer with any requested Account Documents or signed Required Affidavits if
Buyer pays to such Seller the following: (1) $.20 per Required Affidavit so
provided if such affidavit has been prepared by Buyer based on information from
such Seller and returned postage has been prepaid by Buyer, (2) $.50 per
Required Affidavit so provided if such affidavit was prepared by and/or mailed
at the expense of such Seller (which fee shall be increased by the
amount of any United States Postal Service rate increases for
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first class mail effective after the first Periodic Purchase Date), (3) $2.00
per automated purchase summary so provided, which such automated purchase
summary shall only be supplied for Receivables less than approximately thirty
six (36) months old (it being understood that accounts greater than thirty six
(36) months old shall require an account history transcript at the price
specified in subsection (b) below); (4) $10.00 per duplicate document, including
an account agreement, invoice or billing statement; and (5) $20.00 per account
history transcript.
(iv) Any contrary provision contained in this
Section 6.2(a) notwithstanding, the parties acknowledge and agree that: (a) if,
during any thirty (30) day period, Buyer reasonably requests from Sellers
Account Documents and/or Required Affidavits totalling, in the aggregate, more
than one thousand (1000), Sellers may provide the requested Account Documents
and Required Affidavits within a commercially reasonable time after Sellers'
receipt of each reasonable request by Buyer therefor, and (b) Sellers have no
obligation to provide to Buyer any document or information (including Account
Documents) not in the possession of Sellers and any failure to provide such
document or information in respect of a Receivable shall not render such
Receivable a Non-Conforming Receivable, constitute a breach of any Seller's
obligations hereunder, or otherwise subject any Seller to liability.
(b) Oral Information. Neither Sellers nor Buyer will
be obligated to furnish the other with any oral information. If
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a Seller or Buyer requests oral information from the other and the person to
whom the request is made has information that it elects to provide, the person
requesting oral information will pay such other person at the hourly rate of
$25.00 for the time and effort of such other person in collecting and
communicating to the person requesting oral information the information
requested.
Section 6.3 Collection of Receivables; Reporting to Credit
Reporting Agencies. If Buyer, any purchaser of Receivables permitted under
Section 9.1 hereof or any other person acting on behalf of Buyer or such person
collects or attempts to collect Receivables, Buyer or such person will at all
times:
(a) Comply with all state and federal laws applicable to debt
collection, including, without limitation, the federal Consumer Credit
Protection Act, the federal Fair Credit Reporting Act and the federal Fair Debt
Collection Practices Act;
(b) With respect to any Account for which the statute of
limitations has expired, not falsely represent directly or by implication that a
lawsuit may or will be filed if the Account Debtor thereon does not pay;
(c) Not increase the amount of the Receivables above the face
amount purchased from Sellers or add additional or other charges or fees to the
amount of the Receivables except as permitted by law; and
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(d) Not repossess or threaten to repossess any items securing
the Receivables (i) without first obtaining a judgment or order of replevin or
other similar judicial process or (ii) as part of a bankruptcy proceeding,
provided however that Buyer may accept a voluntary surrender by the Account
Debtor of the item subject to the security interest where such surrender has not
been requested by Buyer. Buyer acknowledges that Sellers may in their sole
discretion, at their cost, report Receivables to the appropriate credit
reporting agencies as either transferred, transferred to another lender, charged
off transferred, sold, charged off sold or a similar designation. If Buyer
elects to report Receivables to the appropriate credit reporting agencies, Buyer
shall, at its cost, report Receivables to such agencies as Buyer and transferee
of Receivables.
Section 6.4 Seller as Witness. Buyer shall not subpoena any
officers or employees of any Seller to appear at any trial, hearing or
deposition relating to a legal action instituted by Buyer to collect a
Receivable.
Section 6.5 Receipt of Funds. Within fifteen (15) days after
the end of each calendar month, each Seller shall provide Buyer with information
indicating the amounts of payments received by such Seller in respect of
Receivables previously purchased by Buyer (all to the extent such amounts were
received after the Cut-Off Dates for the applicable Receivables) and shall remit
to Buyer such amounts within thirty (30) days after its provision of such
report.
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Section 7. Use of Sellers' Names and Other Names. Buyer and
any permitted assignee of Buyer will not use or refer to "Monogram Credit Card
Bank of Georgia," "Xxxxxxxxxx Xxxx & Co., Inc.," "Lechmere, Inc." "Xxxxxxxxxx
Xxxx Credit Corporation", "Xxxxxxxxxx Xxxx Credit Services, Inc.," the names of
any Affiliates of the foregoing or any similar name, for any purpose relating to
any Receivable including, without limitation, the collection, promotion,
marketing, advertising, sale or transfer of any Receivable. In collecting the
Receivables, Buyer, purchasers of Receivables permitted under Section 9.1 or any
other person acting on behalf of Buyer or such purchaser shall only use their
own names and shall not imply that they are connected in any manner with, or
acting on behalf of, any person or entity operating under any of the foregoing
names. However, Buyer, purchasers of Receivables permitted under Section 9.1 and
any other person acting on behalf of Buyer or such purchaser may use the name of
MW or Lechmere (as appropriate) solely for purposes of identifying a Receivable
in communications with the Account Debtor obligated in respect of such
Receivable in order to collect amounts outstanding thereon, in connection with
filing suit in identifying such Receivable, in connection with the sale of such
Receivable in identifying it or in connection with entering into any servicing
arrangement in identifying the Receivable. In contacting an Account Debtor,
filing suit, or selling Receivables, neither Buyer nor any purchaser of each
Receivables permitted under Section 9.1 hereof nor any person
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acting on behalf of Buyer or any permitted purchaser will state or represent in
any way that it is taking such action for or on behalf of any Seller.
Section 8. Non-Conforming Receivables.
Section 8.1 Definition. For purposes of the Agreement, a
Receivable shall be considered a "Non-Conforming Receivable" if any of the
following conditions apply to such Receivable:
(a) on or before the Cut-Off Date for such Receivable, the
Account Debtor on such Receivable either was deceased or had filed for
protection under the bankruptcy laws;
(b) on or before the Cut-Off Date for such Receivable, the
Receivable, in the reasonable opinion of a Seller, was created as a result of
fraud or forgery or a Seller's mistake;
(c) on or before the Cut-Off Date for such Receivable, the
debt represented by such Receivable was satisfied;
(d) on or before the Cut-Off Date for such Receivable, a final
judgment was entered by a court of competent jurisdiction with respect to the
debt represented by such Receivable;
(e) on or before the Cut-Off Date for such Receivable, the
Account Debtor on such Receivable was released from liability on the Receivable
by a Seller;
(f) on or before the Cut-Off Date for such Receivable, a
representation or warranty of a Seller made herein as to such Receivable was
untrue or incorrect in any material respect; and
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(g) at any time, a Seller has determined, in its reasonable
legal opinion, that, as a result of actions taken or not taken on or prior to
the Cut-Off Date in respect of any Receivable (including, without limitation,
any actions in respect of legal compliance), such Receivable should not be
collected or should not have been sold.
Section 8.2 Duty/Right to Repurchase.
(a) During the first one hundred and eighty (180) days
after each applicable Periodic Purchase Date, Buyer (i) shall notify Sellers of
any determination by Buyer in its reasonable judgment that a Receivable is a
Non-Conforming Receivable because the Account Debtor on such Receivable had
filed for protection under the bankruptcy laws, and (ii) may notify Sellers of
any other determination by Buyer in its reasonable judgment that a Receivable is
a Non-Conforming Receivable. Any such notification shall include the information
contained on Exhibit E hereto and shall be transmitted to Sellers in a comma
delimited format either electronically or on a compact disk or 3 1/2" diskette.
Unless a Seller produces an automated purchase summary, billing statement,
transcript, any document signed by the Account Debtor or any other similar
document with respect to such Receivable which, in such Seller's opinion,
indicates that such Receivable is not a Non-Conforming Receivable (which
documentation shall be paid for by Buyer in accordance with the fees set forth
in Section 6.2 hereof), within sixty (60) days following such Seller's
confirmation of Buyer's determination, such Seller shall
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purchase such Receivable for an amount equal to (i) the original Periodic
Purchase Price for such Receivable, less (ii) any recoveries on such Receivable
that Buyer may have received or for which a credit was given to Buyer. In the
event that the sum of recoveries and credit given on the Receivable as specified
in (ii) in the previous sentence exceeds the Periodic Purchase Price for such
Receivable, such Seller shall pay Buyer nothing and Buyer shall pay such Seller
in cash the difference between the sum of the recoveries and credit given on the
Receivable and the original Periodic Purchase Price for such Receivable. In the
event that Buyer fails to properly notify a Seller of any determination by Buyer
that a Receivable is a Non-Conforming Receivable within one hundred and fifty
(150) days after the original Periodic Purchase Date (and no Seller has
exercised its rights under subsection (b) in respect thereof), said
Non-Conforming Receivable shall be solely the responsibility of Buyer and
Sellers shall have no obligation to repurchase such Non-Conforming Receivable.
(b) In the event that a Seller at any time determines that a
Receivable is a Non-Conforming Receivable, such Seller may advise Buyer that it
wishes to repurchase the same, in which event such Seller shall purchase such
Receivable for an amount equal to (i) the original Periodic Purchase Price
thereof, less (ii) any recoveries on such Receivable that Buyer may have
received or for which a credit was given to Buyer. In the event
that the sum of recoveries and credit given on the Receivable as
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specified in (ii) in the previous sentence exceeds the Periodic Purchase Price
for such Receivable, such Seller shall pay Buyer nothing and Buyer, on the date
specified by such Seller for repurchase, shall pay such Seller in cash the
difference between the sum of the recoveries and credit given on the Receivable
and the original Periodic Purchase Price for such Receivable.
(c) In the event that a Seller repurchases Receivables, Buyer
shall execute and deliver to such Seller a UCC financing statement relating to
the Receivables repurchased for the state and local filing in the state and
county where Buyer's chief executive office is located.
Section 9. Buyer's Right of Resale.
Section 9.1 Buyer may sell or transfer any of the
Receivables to a third party provided Buyer uses its best efforts to assure that
any subsequent purchaser is a reputable entity that shall provide Buyer with
industry typical indemnifications, and provided Buyer requires every subsequent
purchaser of all or part of the Receivables to agree to the same
representations, warranties, and terms (including those in respect of
Non-Conforming Accounts) and be subject to the same indemnities of Buyer as set
forth in this Agreement, including but not limited to this Section, as though
the third party buyer and any subsequent buyer were Buyer, and any agreement for
the sale of all or part of the Receivables by Buyer and any subsequent buyer
shall provide further that each Seller shall have a direct right of action
against all subsequent purchasers of all or part of the
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Receivables with respect to such representations, warranties, terms and
indemnities, and Buyer shall use no lower standards in selecting third party
purchasers of Receivables than it typically uses for its other receivable
portfolios. Buyer shall promptly inform Sellers of the identities of any
potential purchasers to whom Buyer furnishes any of the information with respect
to the Receivables, and of any subsequent purchasers of the Receivables and
Buyer shall only sell Receivables after making a good faith investigation of and
a determination that the potential purchaser's integrity and financial
reliability conform to the standards set forth in Exhibit F. Sale of some or all
Receivables shall not relieve Buyer of any obligation that Buyer has undertaken
under this Agreement and Buyer shall be liable to Sellers for the breach of any
representation, warranty or covenant or with respect to any indemnity that Buyer
is obligated to require that all subsequent buyers adhere to as specified above.
This Section 9.1 shall not apply to any resale, transfer or assignment of a
Receivable in connection with a securitization or financing so long as Buyer
continues to act as servicer of, and otherwise take all actions in respect of,
the Receivables (it being understood that, under such circumstances, Buyer shall
not be relieved of any obligation that Buyer has undertaken under this Agreement
and Buyer shall be liable to Sellers for any actions of other persons involved
in the securitization or financing). If Buyer does not continue to act as
servicer of, and otherwise take all actions in respect of, the Receivables
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resold, transferred or assigned in connection with the securitization or
financing, the other persons involved in the securitization or financing shall
be treated as subsequent purchasers for purposes of this Agreement.
Section 10. Indemnification.
Section 10.1 By Buyer. With respect to each periodic purchase,
Buyer shall indemnify and hold harmless Sellers, Sellers' Affiliates and any of
their respective shareholders, officers, directors, agents, employees,
representatives or assignees from and against any claim, loss, cost, liability,
damage or expense (including, without limitation, reasonable attorney's fees and
costs of suits) that arise from (a) any breach by Buyer or any subsequent buyer
of the representations, warranties, covenants or other responsibilities set
forth in this Agreement, or (b) any other act or omission by Buyer or any of its
respective officers, directors, agents, employees, representatives or assignees
with respect to the Receivables.
Section 10.2 By Sellers. With respect to each periodic
purchase, each Seller shall indemnify and hold harmless Buyer, Buyer's
Affiliates and any of their respective share holders, officers, directors,
agents, employees, representatives or assignees from and against any claims,
loss, cost, liability, damage or expense (including, without limitation,
reasonable attorney's fees and costs of suits) that arise from (a) any breach by
such Seller of its representations warranties, covenants or other
responsibilities set forth in this Agreement,
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or (b) any other act or omission by Seller or any of its respective officers,
directors, agents, employees, representatives or assignees with respect to the
Receivables.
Section 10.3 Indemnification Procedure. Whenever any claim of
the type which would occasion indemnification under Section 10 hereof is
asserted or threatened against any party hereto, that party shall promptly
notify the other party hereto. The notice shall include, if known, the facts
constituting the basis for such claim, including, if known, the amount or an
estimate of the amount of the liability arising therefrom. In the event of any
claim for indemnification hereunder resulting from or in connection with the
claim or legal proceedings of a claimant not a party to this Agreement, the
indemnifying party shall have the right, at its option, at its expense and with
its own counsel (which counsel shall be reasonably satisfactory to the party
seeking indemnification) to assume the defense of any such claim or any
litigation resulting from such claim or to participate with its own counsel
(which counsel shall be reasonably satisfactory to the indemnified party) in the
compromise or defense thereof. If the indemnifying party undertakes to assume
the defense of any such claim or litigation or participate in the compromise
thereof, it shall promptly notify the indemnified party of its intention to do
so, and, as a condition to the indemnifying party's indemnification obligation,
the indemnified party shall cooperate reasonably with the indemnifying party and
its counsel (but at the sole expense of
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the indemnifying party) in the defense against or compromise of any such claim
or litigation. Anything in this Section 10.3 to the contrary notwithstanding,
the indemnified party shall not compromise or settle any such claim or
litigation without the prior written consent of the indemnifying party, which
consent will not be unreasonably withheld; provided, however, that if the
indemnified party shall have any potential liability with respect to, or may be
adversely affected by, such claim or litigation, the indemnifying party shall
not settle or compromise such claim or litigation without the prior written
consent of the indemnified party.
Section 10.4 Insurance. With respect to each periodic
purchase, Buyer shall from and after the date of this Agreement and at all times
that Buyer owns or has obligations in respect of the Receivables, carry and
maintain, at Buyer's sole cost and expense, standard commercial general
liability insurance, including premises/operations, products, completed
operations, personal and advertising liability, including libel and slander, and
contractual liability coverages, naming Sellers as additional insureds by
endorsement to the policy, to afford protection to the limits of not less than
Two Million Dollars ($2,000,000) in the aggregate, which requirement may be
satisfied if such insurance is maintained by a servicer or by a party to whom
Buyer sells or assigns all of the Receivables. Such insurance shall be effected
under a valid enforceable policy (or policies) issued by an insurer of
recognized responsibility which is licensed in the
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States of Connecticut, Georgia, Illinois, Nevada and New York. Buyer shall,
contemporaneously with the execution of this Agreement, furnish to Sellers an
original certificate evidencing such coverage, and naming Sellers as additional
insureds, which certificate shall state that such insurance may not be changed
or cancelled without thirty (30) days prior written notice to Buyer and Sellers,
and thereafter a certificate of renewal shall be delivered to Sellers not less
than thirty (30) days prior to the expiration of the original policy or
preceding renewal.
Section 11. Notice of Claims.
Section 11.1 Buyer shall notify Sellers immediately of any
claim or threatened claim that may affect any Seller that is discovered by
Buyer.
Section 11.2 Sellers shall notify Buyer immediately of any
claim or threatened claim that may affect Buyer that is discovered by Sellers.
Section 12. Confidentiality. All oral and written information
about Sellers and Buyer, their credit card businesses, their customers,
including Account Holders, and this Agreement (including the Periodic Purchase
Price) (collectively, the "Records"), are valuable and proprietary assets.
Sellers and Buyer, their employees and their agents shall treat the Records as
strictly confidential and will not disclose such Records to anyone, provided
Buyer may disclose such Records to any subsequent or potential purchaser of the
Receivables (or any agents of Buyer retained by Buyer to facilitate a purchase)
to
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the extent such Records directly relate to the Receivables purchased or proposed
to be purchased, provided that Buyer requires said subsequent or potential
purchaser (or such agent) to agree to the terms of this confidentiality
provision. Each party hereto will use its best efforts to ensure that its
employees and agents maintain such confidentiality. Each party hereto will
notify the other party hereto immediately upon receiving a subpoena or other
legal process about the other party's Records and will cooperate with the other
party thereto to comply with or oppose the subpoena or legal process.
This Section 12 will not apply to information, documents, and
material that are in the public domain other than through a wrongful act or
omission of a party hereto.
Section 13. Termination.
Section 13.1 Termination. Notwithstanding any provision in
this Agreement to the contrary, the parties hereto acknowledge and agree that
any party may terminate this Agreement with respect to all purchases scheduled
to be made thereafter under this Agreement ("Future Sales") on sixty (60) days'
notice to the other parties, in which event the parties shall be released of any
obligations in respect of such Future Sales.
Section 14. Miscellaneous.
Section 14.1 Notices. All notices, demands, instructions and
other communications required or permitted to be given to or made upon any party
hereto shall be in writing and shall be personally delivered or sent by
registered or certified
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mail, postage prepaid, return receipt requested, by recognized carrier of
overnight mail or prepaid telegram (with messenger delivery specified), or by
telecopier (receipt confirmed). Notice given by registered or certified mail,
postage prepaid, shall be deemed to be given for purposes of this Agreement
three (3) Business Days after the date sent. Notice given by recognized carrier
of overnight mail shall be deemed to have been given on the second Business Day
after delivery thereof to the carrier. Notice given by personal delivery shall
be deemed to be given when delivered. Notice given by prepaid telegram or
telecopier as aforesaid, shall be deemed to be given when sent, if properly
addressed to the party to whom sent. Unless otherwise specified in a notice in
writing sent or delivered in accordance with the foregoing provisions of this
Section 14.1, notices, demands, instructions and other communications shall be
given to or made upon the respective parties hereto at their respective
addresses (or to their respective telecopier number) indicated below:
if to a Seller to: Xxxxxxxxxx Xxxx Credit Corporation
000 Xxxxx Xxxxx
Xxx Xxxxx, Xxxxxx 00000
Attention: President
and
Monogram Credit Card Bank of Georgia
0000 Xxxxxxx Xxxx
Xxxxxxx, XX 00000
Attention: President
with a copy to: General Electric Capital Corporation
0000 Xxxx Xxxxx
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00
Xxxxxxxx X, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Manager, Asset Management Group
if to Buyer to: Midland Credit Management, Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxx 00000
Attention: Xxxxx Xxxxxxxx
Any party hereto may change the person, address or telecopier number to which
notice shall be sent by giving written notice of such change to the other party
in the manner provided herein.
Section 14.2 Assignment. Except as provided in Section 9.1
hereof in respect of Buyer's Resale of Accounts, Buyer may not assign any of its
rights or obligations hereunder without Sellers' prior written consent, except
that this Section 13.2 shall not be deemed to prohibit Buyer from granting a
security interest in the Receivables (other than Non-Conforming Receivables) to
a lender or lenders in connection with a financing of the purchases made by
Buyer hereunder. Any Seller freely may assign its rights and/or obligations
hereunder without Buyer's consent.
Section 14.3 Expenses. Except as otherwise expressly provided
in this Agreement, Buyer and each Seller will each bear its own out-of-pocket
expenses in connection with the transaction contemplated by this Agreement.
Section 14.4 Entire Agreement. This Agreement contains the
entire agreement and understanding between the parties with regard to the
subject matter hereof, and supersedes all prior agreements and understanding
relating to the subject matter of this Agreement. The parties make no
representations or
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warranties to each other, except as specifically set forth in or specified by
this Agreement. All prior representations and statements made by any party or
its representatives, whether verbally or in writing, are deemed to have been
merged into this Agreement.
Section 14.5 Amendment. Neither this Agreement nor any of its
provisions may be changed, waived or discharged orally. Any change, waiver or
discharge may be effected only by a writing signed by the party against which
enforcement of such change, waiver or discharge is sought.
Section 14.6 Governing Law; Severability. This Agreement shall
be governed by, and construed in accordance with, the internal laws of the State
of New York. If any one or more of the provisions of this Agreement, for any
reason, is held to be invalid, illegal or unenforceable, the invalidity,
illegality or unenforceability will not affect any other provision of this
Agreement, and this Agreement will be construed without this invalid, illegal or
unenforceable provision.
Section 14.7 Waivers, Etc. No waiver of any single breach or
default of this Agreement shall be deemed a waiver of any other breach or
default of this Agreement. All rights and remedies, either under this Agreement
or by law or otherwise afforded to a party, will be cumulative and not
alternative.
Section 14.8 Remedies. If Buyer does not pay the full
amount due and owing Sellers on a Periodic Purchase Date or if
Buyer otherwise is in default under this Agreement, Sellers shall
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not be obligated to tender any and all remaining Receivables and Sellers may
sell the Receivables to another person. In such event, Buyer shall pay Sellers,
notwithstanding any other rights and remedies available to Sellers by law or
under this Agreement, for Sellers' damages resulting from Buyer's failure to
comply with the terms of this Agreement, all of Sellers' reasonable expenses,
including attorneys' fees to enforce this Agreement, and including without
limitation, the payment or enforcement of any obligations of Buyer and interest
at the highest lawful rate calculated on an annualized basis for the period of
time during which all sums due and owing under this Agreement remain unpaid.
Sellers' damages shall include, but shall not be limited to, the monetary
difference, if any, between what the Receivables are sold for and the amount
Buyer is otherwise obligated to pay Sellers under this Agreement. If Sellers do
not pay the full amount due and owing Buyer pursuant to this Agreement or if
Sellers otherwise are in default under this Agreement, Buyer shall have all
rights and remedies available to Buyer by law or under this Agreement.
Section 14.9 Survival. All the representations, warranties,
terms and covenants, including but not limited to indemnifications, shall
survive the sale of the Receivables from Sellers to Buyer.
Section 14.10 Headings. Paragraph headings are for
reference only, and will not affect the interpretation or meaning
of any provision of this Agreement.
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Section 14.11 Counterparts. This Agreement may be
signed in one or more counterparts, all of which taken together
will be deemed one original.
Section 14.12 Offsets. Any payment required to be made by a
Seller to Buyer may be offset by any payment required to be made by Buyer to any
Seller.
IN WITNESS WHEREOF, the parties have executed this Agreement
by their duly authorized officers as of the date first shown above.
XXXXXXXXXX XXXX CREDIT CORPORATION
By: /s/ XXXXXXX X. XXXXXXXXX
--------------------------------
MONOGRAM CREDIT CARD BANK OF GEORGIA
By: /s/ XXXX XXXXXX
--------------------------------
MIDLAND CREDIT MANAGEMENT, INC.
By: /s/ XXXXX XXXXXXXX
--------------------------------
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