Exhibit 10.10
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RECEIVABLES PURCHASE AGREEMENT
Dated as of September 1, 2002
between
CONN FUNDING II, L.P.
as Purchaser,
and
CONN APPLIANCES, INC., and
CAI, L.P.
collectively as Originator and Seller
and
CONN FUNDING I, L.P.
as Initial Seller
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS 1
SECTION 1.1 Certain Defined Terms 1
SECTION 1.2 Accounting and UCC Terms 4
ARTICLE II AMOUNTS AND TERMS OF THE PURCHASES 4
SECTION 2.1 Purchase of Receivables 4
SECTION 2.2 Purchase Price 5
SECTION 2.3 Payment of Purchase Price 5
SECTION 2.4 Repurchase of Ineligible Receivables 6
SECTION 2.5 Returns and Refinancings 6
SECTION 2.6 Finance Charges 7
SECTION 2.7 Allocations of Collections 7
ARTICLE III CONDITIONS TO PURCHASES 7
SECTION 3.1 Conditions Precedent to Purchaser's Initial Purchase 7
SECTION 3.2 Conditions Precedent to All Purchases 8
SECTION 3.3 Conditions Precedent to Originator's Initial Sale 9
ARTICLE IV REPRESENTATIONS AND WARRANTIES 9
SECTION 4.1 Representations and Warranties of the Parties 9
SECTION 4.2 Additional Representations of the Originator 10
ARTICLE V GENERAL COVENANTS 13
SECTION 5.1 Affirmative Covenants of the Originator and the Initial Seller 13
SECTION 5.2 Negative Covenants of the Originator and the Initial Seller 18
ARTICLE VI ADMINISTRATION AND COLLECTION OF PURCHASED RECEIVABLES 19
SECTION 6.1 Collection Procedures 19
SECTION 6.2 Purchase Information 20
SECTION 6.3 Compliance Statements 21
SECTION 6.4 [Reserved] 21
SECTION 6.5 Termination 21
SECTION 6.6 Limitation on Liability of the Originator, the Initial Seller and Others 21
SECTION 6.7 Responsibilities of the Originator 22
SECTION 6.8 Repossessed Merchandise 22
ARTICLE VII PURCHASE TERMINATION EVENTS 22
TABLE OF CONTENTS
(continued)
Page
SECTION 7.1 Purchase Termination Events 22
SECTION 7.2 Remedies 23
ARTICLE VIII INDEMNIFICATION 24
SECTION 8.1 Indemnities by the Originator and the Initial Seller 24
ARTICLE IX THE ORIGINATOR NOTE 26
SECTION 9.1 Originator Note 26
SECTION 9.2 Restrictions on Transfer of Originator Note 27
ARTICLE X MISCELLANEOUS 27
SECTION 10.1 Amendments, Etc 27
SECTION 10.2 Notices Etc 27
SECTION 10.3 No Waiver; Remedies 28
SECTION 10.4 Binding Effect; Governing Law 28
SECTION 10.5 Costs, Expenses and Taxes 28
SECTION 10.6 No Bankruptcy Petition 29
SECTION 10.7 Acknowledgment of Assignments 29
SECTION 10.8 Waiver of Setoff 29
SECTION 10.9 Severability 29
SECTION 10.10 Counterparts 29
SECTION 10.11 Grant of License to Use Trademarks 29
SECTION 10.12 Jurisdiction; Consent to Service of Process 30
SECTION 10.13 Third Party Beneficiaries 30
SECTION 10.14 Confirmation of Intent 30
SECTION 10.15 [Reserved] 31
SECTION 10.16 Section and Paragraph Headings 31
SECTION 10.17 Interpretation 31
SECTION 10.18 Interest 31
Exhibit A Form of Originator Note
Exhibit B Form of Purchase Report
Exhibit C Form of Non-Petition Letter
Schedule I Receivable Schedule
Schedule II Offices Where Books, Records, Etc. Evidencing Receivables are Kept
Schedule III [Reserved]
Schedule IV List of Trade Names
Schedule V Authorized Officers of Originator
Schedule VI Form of Revolving Charge Account Agreement and Installment Contract
Schedule VII Perfection Representations, Warranties and Covenants
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RECEIVABLES PURCHASE AGREEMENT
RECEIVABLES PURCHASE AGREEMENT dated as of September 1, 2002, by and
between CONN APPLIANCES, INC. ("Conn"), a Texas corporation, CAI, L.P. ("CAI"),
a Texas limited partnership, as originators and sellers (collectively, the
"Originator"), CONN FUNDING I, L.P., as initial seller (the "Initial Seller"),
and CONN FUNDING II, L.P., a Texas limited partnership, as purchaser (the
"Purchaser").
W I T N E S S E T H:
WHEREAS, the Originator intends to sell Receivables to the Purchaser on the
terms and subject to the conditions set forth in this Agreement;
WHEREAS, the Initial Seller intends to sell the Initial Receivables on the
Initial Closing Date, which were acquired from the Originator, to the Purchaser
on the terms and subject to the conditions set forth in this Agreement;
WHEREAS, to obtain the necessary funds to purchase such Initial Receivables
and other Receivables, the Purchaser and ▇▇▇▇▇ Fargo Bank Minnesota, National
Association, as Trustee ("Trustee"), have entered into the Base Indenture, dated
as of the date hereof (the "Indenture");
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Certain Defined Terms. Capitalized terms used in this Agreement
but not defined herein shall have the meanings assigned to such terms in the
Indenture. This Agreement is the Purchase Agreement referred to in the
Indenture. As used in this Agreement, the following terms shall have the
following meanings (such meanings to be equally applicable to both the singular
and plural forms of the terms defined):
"Adjusted Amount Financed" shall mean the amount disclosed for Truth in
Lending purposes as the "amount financed" on an Eligible Installment Contract
Receivable minus any component of such amount financed that represents any
amount refinanced from another Installment Contract Receivable previously
transferred to the Purchaser unless such previously transferred Installment
Contract Receivable had been repurchased by the Originator pursuant to Section
2.4.
"Authorized Officers" shall mean those officers of the Originator
designated in Schedule V hereto (or in such other Schedule as may be delivered
to the parties hereto from time to time) as duly authorized to execute and
deliver this Agreement and any instruments or documents in connection herewith
on behalf of such Originator and to take, from time to time, all other actions
on behalf of the Originator in connection herewith.
"Available Cash" shall mean, on any date, without duplication, the amount
on deposit in the Principal Account that exceeds the Principal Account Floor on
such date; provided that the amount of "Available Cash" shall be deemed to equal
zero if a Pay Out or a Potential Pay Out Event has occurred and is continuing.
"Business Day" shall mean a day on which each of Originator and Purchaser
is open at its respective address specified in this Agreement for the purpose of
conducting its business, except in respect of such performance or rights under
this Agreement as involve the Trustee then such term shall have the meaning
assigned to it by the Indenture.
"Cash Purchase Price" has the meaning assigned to that term in Section
2.3(a)
"Contingent Liability" means any agreement, undertaking or arrangement by
which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to, or otherwise to invest in, a
debtor, or otherwise to assure a creditor against loss) the indebtedness,
obligation or any other liability of any other Person (other than by
endorsements of instruments in the course of collection), or guarantees the
payment of dividends or other distributions upon the shares of any other Person.
The amount of any Person's obligation under any Contingent Liability shall
(subject to any limitation set forth therein) be deemed to be the outstanding
principal amount (or maximum outstanding principal amount, if larger) of the
debt, obligation or other liability guaranteed thereby.
"Date of Processing" means, with respect to any transaction, the date on
which such transaction is first recorded in the Originator's computer files
(without regard to the effective date of such recordation).
"Governmental Authority" means the United States of America, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Highest Lawful Rate" means the maximum nonusurious interest rate, if any,
that at any time or from time to time may be contracted for, taken, reserved,
charged or received under this Agreement, under laws applicable to the
Originator, the Initial Seller and the Purchaser that are presently in effect
or, to the extent allowed by law, under such applicable laws that may hereafter
be in effect and that allow a higher maximum nonusurious interest rate than
applicable laws now allow.
"Incipient Purchase Termination Event" shall mean any condition, act or
event specified in Section 7.1 that, with the giving of notice or the lapse of
time, or both, would become a Purchase Termination Event.
"Indenture" has the meaning assigned to that term in the recitals.
"Ineligible Receivables" has the meaning assigned to that term in Section
2.4(a).
"Initial Receivable" shall mean those Receivables owned by the Initial
Seller and conveyed to the Purchaser hereunder as of the Initial Closing Date.
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"Initiation Date" shall mean, with respect to any Receivable, the date of
the transaction that gave rise to the original Outstanding Principal Balance of
such Receivable.
"Installment Contract Receivable" shall mean any indebtedness of an Obligor
arising under an Installment Contract.
"Inventory Lender" shall mean any lender that shall finance any
Originator's inventory purchases and obtain a lien upon such inventory.
"Optional Retail Discount Percentage" shall mean, with respect to a
Purchased Receivable, a percentage that Purchaser and Originator have agreed
upon in writing at the time of sale of such Purchased Receivable (which shall
not exceed 100%).
"Originator Notes" shall have the meaning set forth in Section 9.1(a).
"Purchase Date" has the meaning assigned to that term in Section 2.3(a).
"Purchase Price" has the meaning assigned to that term in Section 2.2.
"Purchase Report" means a report in the form of Exhibit B.
"Purchase Termination Date" shall mean the date on which the Purchaser's
obligation to purchase Receivables shall terminate pursuant to Section 7.1.
"Purchase Termination Event" has the meaning assigned to that term in
Section 7.1.
"Purchased Receivable" shall mean any Receivable purchased (or purported to
be purchased) by the Purchaser pursuant to the terms hereof.
"Receivable" means the indebtedness of any Obligor under a Contract,
whether constituting an account, chattel paper, an instrument, a general
intangible, payment intangible, promissory note or otherwise, and shall include
(i) the right to payment of such indebtedness and any interest or finance
charges and other obligations of such Obligor with respect thereto (including,
without limitation, the principal amount of such indebtedness, periodic finance
charges, late fees and returned check fees), and (ii) all proceeds of, and
payments or Collections on, under or in respect of any of the foregoing. If an
Installment Contract is rewritten for credit reasons, the indebtedness under the
new Installment Contract shall, for purposes of the Transaction Documents,
constitute the same Receivable as existed under the original Installment
Contract, unless such indebtedness is a Non-Purchased Receivable (in which case,
the original Receivable shall cease to be a Receivable for purposes of the
Transaction Documents upon payment in accordance with Section 2.5 with respect
thereto). If an Installment Contract is refinanced in connection with the
purchase of additional Merchandise, the original Receivable shall cease to be a
Receivable for purposes of the Transaction Documents upon payment in accordance
with Section 2.5 with respect thereto and the indebtedness under the new
Installment Contract shall constitute a new Receivable for purposes of the
Transaction Documents upon the sale thereof to the Purchaser pursuant to Section
2.1.
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"Receivable File" means with respect to a Receivable, (i) the Installment
Contract or Revolving Charge Account Agreement related to such Receivable, (ii)
each UCC financing statement related thereto, if any, and (iii) the application,
if any, of the related Obligor to obtain the financing extended by such
Receivable; provided that such Receivable File may be converted to microfilm or
other electronic media within six months after the origination date for the
related Receivable.
"Receivables Schedule" shall mean the receivables schedule (which may be in
the form of a computer file or microfiche list) in the form of Schedule I as
supplemented for the addition of Subsequently Purchased Receivables in
accordance with Section 2.1(b).
"Repurchase Amount" shall have the meaning assigned to such term in Section
2.4(a).
"Retail Charges" shall mean any credits to a Revolving Charge Receivable
representing purchases by an Obligor of Merchandise.
"Solvent" means with respect to any Person that as of the date of
determination both (A)(i) the then fair saleable value of the property of such
Person is (y) greater than the total amount of liabilities (including Contingent
Liabilities) of such Person and (z) not less than the amount that will be
required to pay the probable liabilities on such Person's then existing debts as
they become absolute and matured considering all financing alternatives and
potential asset sales reasonably available to such Person; (ii) such Person's
capital is not unreasonably small in relation to its business or any
contemplated or undertaken transaction; and (iii) such Person does not intend to
incur, or believe (nor should it reasonably believe) that it will incur, debts
beyond its ability to pay such debts as they become due; and (B) such Person is
"solvent" within the meaning given that term and similar terms under applicable
laws relating to fraudulent transfers and conveyances. For purposes of this
definition, the amount of any contingent liability at any time shall be computed
as the amount that, in light of all of the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to become an
actual or matured liability.
"Subsequently Purchased Receivable" shall mean any Receivable purchased
hereunder as of any date after the Initial Closing Date.
SECTION 1.2 Accounting and UCC Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP; and all terms used in
Article 9 of the UCC that are used but not specifically defined herein are used
herein as defined therein.
ARTICLE II
AMOUNTS AND TERMS OF THE PURCHASES
SECTION 2.1 Purchase of Receivables.
(a) The Originator and, with respect to the Initial Closing Date, the
Initial Seller, each hereby sells, assigns, transfers and conveys to the
Purchaser on each Purchase Date, on the terms and subject to the conditions
specifically set forth herein, all of its respective right, title and interest,
in, to and under (i) all Receivables, other than Non-Purchased Receivables, now
existing or arising hereafter and prior to the Purchase Termination Date and all
payment and enforcement
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rights (but not any obligations) to, in and under the related Installment
Contracts and Revolving Charge Account Agreements, all Related Security and
Receivable Files, (ii) all monies due or to become due with respect to the
foregoing received on or after the Cut-Off Date, including any Finance Charges
arising in respect thereto, and all collateral security therefor, (iii) all
proceeds of the foregoing, including, without limitation, insurance proceeds
relating thereto and (iv) all Recoveries.
(b) On any Purchase Date, all of Originator's and, with respect to the
Initial Closing Date, the Initial Seller's right, title and interest in and to
the Purchased Receivables other than Non-Purchased Receivables shall be sold,
assigned, transferred and conveyed to the Purchaser by the sale, assignment,
transfer and conveyance set forth in paragraph (a) above without any further
action by the Originator. The Originator and, with respect to the Initial
Closing Date, the Initial Seller must deliver to the Purchaser and the Servicer
an updated Receivable Schedule which shall include all newly Purchased
Receivables, which updated Receivable Schedule shall be delivered on the Initial
Closing Date and thereafter with each Purchase Report delivered pursuant to
Section 6.2(a).
(c) The parties to this Agreement intend that the transactions contemplated
hereby shall be, and shall be treated as, a purchase by the Purchaser and a sale
by the Initial Seller and the Originator of the Purchased Receivables and not as
a lending transaction. All sales of Receivables by the Initial Seller and the
Originator hereunder shall be without recourse to, or representation or warranty
of any kind (express or implied) by, the Originator, except as otherwise
specifically provided herein. The foregoing sale, assignment, transfer and
conveyance does not constitute and is not intended to result in a creation or
assumption by the Purchaser of any obligation of the Originator, the Initial
Seller or any other Person in connection with the Purchased Receivables, the
Contracts or any other agreements relating thereto, including, without
limitation any obligation to any Obligor.
SECTION 2.2 Purchase Price. (a) The amount payable by the Purchaser (the
"Purchase Price") for (a) the Initial Receivables shall be $274,769,443.89, and
the assumption of the Initial Seller's note to CAI, L.P. (which note shall be
amended and restated), representing a portion of Initial Seller's purchase price
of the Initial Receivables and (b) the newly created Purchased Receivables sold
on any Purchase Date to the Purchaser under this Agreement shall equal the sum
of (i) the Adjusted Amount Financed on all Installment Contract Receivables
being purchased, and (ii) the sum of all Retail Charges on all Revolving Charge
Receivables being purchased, which sum may be multiplied by the Optional Retail
Discount Percentage.
SECTION 2.3 Payment of Purchase Price.
(a) The Purchase Price for Purchased Receivables shall be paid or provided
for in the manner provided below on the Initial Closing Date and each day
thereafter that a Purchase Report is prepared and delivered to the Purchaser in
accordance with Section 6.2 (each a "Purchase Date"). The Purchase Price shall
be paid by the Purchaser on each Purchase Date as follows:
(i) (A) in the case of the Initial Receivables, a cash payment made by
the Purchaser to the Initial Seller in the amount of $229,344,870.97, and
(B) a cash payment
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made by the Purchaser to the Originator in an amount not to exceed
Available Cash (the amount set forth in clause (A) or clause (B), the "Cash
Purchase Price"); and
(ii) the balance of the Purchase Price to the Originator shall be
payable by means of an increase in the principal amount of the Originator
Note.
(b) All payments hereunder shall be made not later than 4:00 p.m. (New York
time) on the date specified therefor in lawful money of the United States of
America in same day funds (i) if to the Originator, to the bank account
designated in writing by the Originator to the Purchaser and (ii) if to the
Purchaser, to the Collection Account. Whenever any payment to be made hereunder
shall be stated to be due on a day other than a Business Day, such payment shall
be made on the next succeeding Business Day.
SECTION 2.4 Repurchase of Ineligible Receivables.
(a) If any of the representations or warranties of the Originator contained
in subsection (a) or (b) of Section 4.2 was not true with respect to any
Purchased Receivable as of the applicable Purchase Date in any material respect
(any such Purchased Receivable, an "Ineligible Receivable"), the purchase of
such Ineligible Receivable shall be rescinded, the Originator to repurchase such
Ineligible Receivable from the Purchaser for an amount (the "Repurchase Amount")
equal to the Outstanding Principal Balance of such Ineligible Receivable on the
next Purchase Date or, if the Purchase Termination Date has occurred or if a Pay
Out Event or a Potential Pay Out Event has occurred and is continuing, on the
next Business Day. Prior to the Purchase Termination Date and if no Pay Out
Event or Potential Pay Out Event has occurred and is continuing, such Repurchase
Amount shall be paid (i) by reducing the Purchase Price payable by the Purchaser
to the Originator on the applicable Purchase Date pursuant to Section 2.2
hereof, and (ii) to the extent such Repurchase Amount exceeds the Purchase Price
payable on such Purchase Date, by reducing the amount of the Originator Note on
such Purchase Date (or, once the amount of the Originator Note has been reduced
to zero, by making a cash payment to the Collection Account). On or subsequent
to the Purchase Termination Date or if a Pay Out Event or a Potential Pay Out
Event has occurred and is continuing, such Repurchase Amount shall be paid by
wire transfer of cash to the Collection Account.
(b) The Purchaser and the Originator agree that after payment of the
Repurchase Amount for an Ineligible Receivable as provided in clause (a) above,
such Ineligible Receivable shall no longer constitute a Purchased Receivable for
purposes of this Agreement.
(c) Except as expressly set forth herein, the Originator shall not have any
right under this Agreement, by implication or otherwise, to repurchase from the
Purchaser any Purchased Receivables or to rescind or otherwise retroactively
affect any purchase of any Purchased Receivables after the Purchase Date
relating thereto.
SECTION 2.5 Returns and Refinancings. The Originator may accept a return of
Merchandise for full or partial credit to, or make an adjustment (including,
without limitation, any adjustment resulting from the exercise of any Cash
Option) in, the principal amount or finance or other charges accrued or payable
with respect to the related Receivable and may prior to the Purchase Termination
Date refinance any Receivable in connection with the purchase of
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additional Merchandise or for other reasons, provided that, with respect to
Purchased Receivables, such credit, adjustment or refinancing is made in
accordance with the Credit and Collection Policy. The aggregate amount of all
such credits, adjustments and refinancings made by the Originator subsequent to
each Purchase Date in accordance with the Credit and Collection Policy shall be
due and payable to the Purchaser on the next Purchase Date following the Date of
Processing in respect thereof or, if the Purchase Termination Date has occurred,
on the next Business Day following such Date of Processing. The amounts due to
the Purchaser pursuant to the preceding sentence shall be paid on the due date
therefor (i) by reducing the Purchase Price, if any, payable by the Purchaser on
such date, and (ii) to the extent the amount due exceeds the Purchase Price
payable on such date, by wire transfer of cash to the Collection Account.
SECTION 2.6 Finance Charges. Finance Charges, whenever created (whether
prior to or after the occurrence of a Purchase Termination Event) and whenever
received (prior to or after the occurrence of a Purchase Termination Event),
accrued in respect of Purchased Receivables shall be the property of the
Purchaser and all Collections with respect thereto shall be allocated and
treated as Collections in respect of Purchased Receivables.
SECTION 2.7 Allocations of Collections. For purposes of determining the
Outstanding Principal Balances of Purchased Receivables at any time, the
Purchaser, the Initial Seller and the Originator agree that the Initial Seller
and the Originator shall apply all Collections on a Receivable by Receivable
basis.
ARTICLE III
CONDITIONS TO PURCHASES
SECTION 3.1 Conditions Precedent to Purchaser's Initial Purchase. The
obligation of the Purchaser to purchase Receivables hereunder on the occasion of
the Initial Closing Date is subject to the conditions precedent (any one or more
of which can be waived by the Purchaser) that (a) the Indenture and the other
Transaction Documents shall be in full force and effect and all conditions to
the initial advance under the Indenture shall have been satisfied or waived, (b)
the Purchaser shall have received on or before such Purchase Date the following,
each (unless otherwise indicated) dated the Purchase Date and in form and
substance satisfactory to the Purchaser and (c) the conditions set forth in
clauses (iii), (iv) and (v) shall have been satisfied:
(i) a copy of duly adopted resolutions of the Board of Directors of
the Originator and the Initial Seller (or of its general partner, if
applicable) authorizing or ratifying the execution, delivery and
performance, respectively, of the Transaction Documents to which it is a
party, certified by the Secretary or Assistant Secretary of the Originator
or the Initial Seller (or of its general partner, if applicable), as
applicable;
(ii) a duly executed certificate of the Secretary or an Assistant
Secretary of the Originator and the Initial Seller (or of its general
partner, if applicable) certifying the names and true signatures of the
Authorized Officers authorized on behalf of the Originator and the Initial
Seller to sign the Transaction Documents to which it is a party;
(iii) the Originator and the Initial Seller, as applicable, shall have
filed and recorded, at its own expense, UCC-1 financing statements with
respect to the Purchased
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Receivables in such manner and in such jurisdictions as are necessary or
desirable to perfect the Purchaser's ownership interest thereof under the
UCC and delivered a file-stamped copy of such UCC-1 financing statements or
other evidence of such filings to the Purchaser and the Trustee on or prior
to the date hereof; and all other action necessary or desirable, in the
opinion of the Purchaser or the Trustee, to establish the Purchaser's
ownership of the Purchased Receivables shall have been duly taken;
(iv) the Originator and the Initial Seller, as applicable, shall have
delivered to the Purchaser and the Trustee the Receivable Schedule;
(v) the Purchaser and the Trustee shall have received photocopies of
reports of UCC searches in the central filing office of the Originator and
the Initial Seller and any necessary local offices of the Originator and
the Initial Seller with respect to the Purchased Receivables reflecting the
absence of Liens thereon, except the Liens created hereunder, pursuant to
the Indenture in favor of the Trustee and except for Liens as to which the
Purchaser has received UCC termination statements. With respect to Liens on
Inventory, the Originator and the Initial Seller shall have furnished
evidence that each Inventory Lender shall have no Liens in proceeds from
the sale of the Initial Seller's or the Originator's Inventory that
constitute Purchased Receivables; and
(vi) the Purchaser, the Trustee and any Notice Person shall have
received such other documents, certificates and opinions as the Purchaser,
the Trustee or such Notice Person may request.
SECTION 3.2 Conditions Precedent to All Purchases. The obligation of the
Purchaser to purchase Receivables hereunder on each Purchase Date (including the
Initial Closing Date) shall be subject to the further conditions precedent (any
one of which can be waived by the Purchaser) that on such Purchase Date:
(a) the following statements shall be true (and delivery by the Originator
of a Purchase Report and the acceptance by the Originator or the Initial Seller,
as applicable, of the Purchase Price for any Receivables on any Purchase Date
shall constitute a representation and warranty by such Originator or the Initial
Seller, as applicable, that on such Purchase Date such statements are true):
(i) the representations and warranties of the Originator and the
Initial Seller contained in Sections 4.1 and 4.2 shall be correct on and as
of such Purchase Date as though made on and as of such date; and
(ii) no Purchase Termination Event or Incipient Purchase Termination
Event shall have occurred and be continuing;
(b) the Originator and the Initial Seller, as applicable, shall have
clearly and unambiguously marked its accounting records evidencing the
Receivables being purchased hereunder on such Purchase Date with a legend
stating that such Receivables have been sold to the Purchaser in accordance with
this Agreement;
(c) no Pay Out Event shall have occurred and be continuing under the
Indenture;
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(d) no material change shall have occurred after the Initial Closing Date
with respect to the Originator's or the Initial Seller's systems, computer
programs, related materials, computer tapes, disks and cassettes, procedures and
record keeping relating to and required for the collection of the Purchased
Receivables by the Originator or the Initial Seller which makes them not
sufficient and satisfactory in order to permit the purchase and administration
and collection of the Purchased Receivables by the Purchaser in accordance with
the terms and intent of this Agreement;
(e) the Purchaser shall have received such other approvals, opinions or
documents as the Purchaser may reasonably request; and
(f) the Originator and the Initial Seller shall have complied with all of
the covenants and satisfied all of its obligations hereunder required to be
complied with or satisfied as of such date.
SECTION 3.3 Conditions Precedent to Originator's Initial Sale. The
obligation of the Originator and the Initial Seller to make its initial sale
hereunder is subject to the conditions precedent that the Originator and the
Initial Seller shall have received on or before the date of such sale the
following, each (unless otherwise indicated) dated the day of such sale and in
form and substance satisfactory to such Originator and the Initial Seller:
(a) a copy of duly adopted resolutions of the sole member of the
Purchaser's general partner authorizing this Agreement, the documents to be
delivered by the Purchaser hereunder and the transactions contemplated hereby,
certified by the Secretary or Assistant Secretary of the Purchaser (or of its
general partner, if applicable); and
(b) a duly executed certificate of the Secretary or Assistant Secretary of
the Purchaser (or its general partner, if applicable) certifying the names and
true signatures of the officers authorized on its behalf to sign this Agreement
and the other documents to be delivered by it hereunder.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1 Representations and Warranties of the Parties. The Purchaser,
the Initial Seller and the Originator each represents and warrants as to itself
as follows:
(a) Each of the Originator, the Initial Seller and the Purchaser has been
duly organized and is validly existing and in good standing under the laws of
the state of its organization, with full power and authority to own its
properties and to conduct its business as presently conducted. Each of the
Originator, the Initial Seller and the Purchaser is duly qualified to do
business and is in good standing as a foreign entity (or is exempt from such
requirements), and has obtained all necessary licenses and approvals, in each
jurisdiction in which failure to so qualify or to obtain such licenses and
approvals would have a material adverse effect on the conduct of the
Originator's, the Initial Seller's or the Purchaser's business.
(b) The sale of Receivables pursuant to this Agreement, the performance of
its obligations under this Agreement and the consummation of the transactions
herein contemplated
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have been duly authorized by all requisite action and will not conflict with or
result in a breach of any of the terms or provisions of, or constitute a default
under, or result in the creation or imposition of any lien, charge or
encumbrance (other than pursuant to this Agreement or the other Transaction
Documents) upon any of its property or assets or upon that of the Originator,
the Initial Seller or the Purchaser, pursuant to the terms of any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which it, the Originator, the Initial Seller or the Purchaser is a party by
which it, the Originator, the Initial Seller or the Purchaser is bound or to
which any property or assets of it, the Originator, the Initial Seller or the
Purchaser is subject, nor will such action result in any violation of the
provisions of its organizational documents or of any statute or any order, rule
or regulation of any federal or state court or governmental agency or body
having jurisdiction over it, the Originator, the Initial Seller or the Purchaser
or any of its their respective properties; and no consent, approval,
authorization, order, registration or qualification of or with any such court or
any such regulatory authority or other such governmental agency or body is
required to be obtained by or with respect to the Originator, the Initial Seller
or the Purchaser for the sale of Receivables or the consummation of the
transactions contemplated by this Agreement.
(c) This Agreement has been duly executed and delivered by the Originator,
the Initial Seller and the Purchaser and constitutes a valid and legally binding
obligation of the Originator, the Initial Seller and the Purchaser,
respectively, enforceable against the Originator, the Initial Seller and the
Purchaser, respectively, in accordance with its terms, except that the
enforceability thereof may be subject to (a) the effects of any applicable
bankruptcy, insolvency, reorganization, receivership, conservatorship or other
laws, regulations and administrative orders affecting the rights of creditors
generally and (b) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or law).
(d) There is no pending or, to its knowledge after due inquiry, threatened
action or proceeding affecting it or any of its Subsidiaries before any court,
governmental agency or arbitrator, that may reasonably be expected to materially
and adversely affect its condition (financial or otherwise), operations,
properties or prospects, or that purports to affect the legality, validity or
enforceability of this Agreement. None of the transactions contemplated hereby
is or is threatened to be restrained or enjoined (temporarily, preliminarily or
permanently).
SECTION 4.2 Additional Representations of the Originator. The Originator
and, as applicable, the Initial Seller additionally represent and warrant as
follows:
(a) Eligible Receivable. Unless otherwise specified to the Purchaser and
Trustee in writing prior to the applicable Purchase Date for each Receivable,
all Receivables (including the Initial Receivables, as to which the Originator
makes this representation and warranty) sold and assigned to the Purchaser
hereunder on the Initial Closing Date are Eligible Receivables as of such
Initial Closing Date and all Receivables sold and assigned to the Purchaser
hereunder on any Purchase Date subsequent to the Initial Closing Date will be
Eligible Receivables as of such Purchase Date.
(b) Sale of Receivables. The Originator is, as of the time of the transfer
to the Purchaser of each Receivable being sold to the Purchaser by it hereunder
on the Initial Closing Date, and will be, as of the time of the transfer to the
Purchaser of each Receivable sold to the
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Purchaser hereunder on any subsequent Purchase Date, and the Initial Seller is,
with respect to the Initial Receivables being sold to the Purchaser by it, the
sole owner of such Receivable free from any Lien other than those released at or
prior to such transfer. There is no effective financing statement (or similar
statement or instrument of registration under the law of any jurisdiction) now
on file or registered in any public office filed by or against the Originator,
the Initial Seller or any Subsidiary of the Originator or the Initial Seller or
purporting to be filed on behalf of the Originator, the Initial Seller or any
Subsidiary of the Originator covering any interest of any kind in any Purchased
Receivables and the Originator and the Initial Seller will not execute nor will
there be on file in any public office any effective financing statement (or
similar statement or instrument of registration under the laws of any
jurisdiction) or statements relating to such Purchased Receivables, except (i)
in each case any financing statements filed in respect of and covering the
purchase of the Purchased Receivables by the Purchaser pursuant to this
Agreement and the security interest created pursuant to the Indenture and (ii)
financing statements for which a release of Lien has been obtained or that has
been assigned to the Purchaser or the Trustee. All filings and recordings
(including pursuant to the UCC) required to perfect the title of the Purchaser
in each Receivable sold hereunder have been accomplished and are in full force
and effect and the Originator and the Initial Seller shall at their expense
perform all acts and execute all documents necessary or reasonably requested by
the Purchaser, any Notice Person or the Trustee at any time and from time to
time to evidence, perfect, maintain and enforce the title or the security
interest of the Purchaser or the Trustee in the Purchased Receivables and the
priority thereof.
(c) Accuracy of Receivable Schedule/ Information. As of each applicable
Purchase Date with respect to Receivables, each Receivable Schedule furnished by
Originator will be an accurate and complete listing of all the Purchased
Receivables as of that Purchase Date, as the case may be, and the information
contained therein with respect to such Purchased Receivables is true and correct
as of such date. All information heretofore furnished by, or on behalf of,
Originator to the Purchaser or the Trustee in connection with any Transaction
Document, or any transaction contemplated thereby, is true and accurate in every
material respect (without omission of any information necessary to prevent such
information from being materially misleading).
(d) Location of Office and Records. The principal place of business and
chief executive office of each of the Originator and the Initial Seller is
located at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇. Originals or duplicates
of any incidental Records evidencing Purchased Receivables that may be kept by
the Originator or the Initial Seller shall be kept at, and only at, said
offices, and each of the Originator and the Initial Seller will not move its
principal place of business and chief executive office or permit any Records or
any books evidencing the Purchased Receivables that it may hold in its
possession to be moved unless (i) the Originator or the Initial Seller, as
applicable, shall have given to the Purchaser, the Notice Persons and the
Trustee not less than 45 days' prior written notice thereof, clearly describing
the new location, and (ii) the Originator or the Initial Seller, as applicable,
shall have taken such action, satisfactory to the Purchaser and the Trustee, to
maintain the title or ownership of the Purchaser and any security interest of,
or any filing in respect of title of, the Purchaser or the Trustee in the
Purchased Receivables at all times fully perfected and in full force and effect.
The Originator or the Initial Seller, as applicable, may not, in any event, move
the location where it
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conducts any administration of the Purchased Receivables from ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, without the prior written consent of the Notice
Persons.
(e) Trade Names. Set forth on Schedule IV hereto is a complete and accurate
list of the trade names of the Originator and the Initial Seller for the
six-year period preceding the date of this Agreement.
(f) Financial Statements. The Originator has heretofore furnished to the
Purchaser and the Trustee copies of its consolidated and consolidating balance
sheets and statements of income and changes in financial condition as of and for
the fiscal years ended January 31, 2001 and January 31, 2002, audited by and
accompanied by the opinion of Ernst & Young independent public accountants.
Except as disclosed to the Trustee prior to the date of this Agreement, such
financial statements present fairly in all material respects the financial
condition and results of operations of Originator and its consolidated
subsidiaries as of such dates and for such periods; such balance sheets and the
notes thereto disclose all liabilities, direct or contingent, of the Originator
and its consolidated subsidiaries as of the dates thereof required to be
disclosed by GAAP and such financial statements were prepared in accordance with
GAAP applied on a consistent basis. Since January 31, 2002, there has been no
material adverse change in the condition (financial or otherwise), operations,
properties, assets or prospects of the Originator and its Subsidiaries, taken as
a whole except as disclosed in writing to the Trustee on or prior to the date
hereof.
(g) No Consent. No action, consent or approval of, registration or filing
with or any other action by any Governmental Authority is or will be required in
connection with execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated by this Agreement, except such as
have been made or obtained and are in full force and effect.
(h) Back-Up Servicer Can Perform. Upon the delivery by the Originator to
the Back-Up Servicer of the computer tapes, disks, cassettes and related
materials (in a generally acceptable readable format) relating to the
administration of the Purchased Receivables pursuant to Section 7.2, the Back-Up
Servicer shall have been furnished with all materials and data necessary to
permit immediate collection of the Purchased Receivables by the Back-Up Servicer
without the participation of the Originator or the Initial Seller, in such
collection.
(i) Revolving Charge Account Agreements. No part of the Originator's or the
Initial Seller's right to payment for goods sold under Revolving Charge Account
Agreements and none of the Revolving Charge Receivables are evidenced by a
negotiable instrument or any other instrument.
(j) Security Interest of Purchaser. This Agreement and all related
documents constitute a valid sale, transfer and assignment to the Purchaser of
all right, title and interest in the Purchased Receivables and the proceeds
thereof. Upon the filing of the financing statements described in Section
3.1(iii) and, in the case of the Subsequently Purchased Receivables hereafter
sold to the Purchaser and the proceeds thereof, upon the transfer thereof to the
Purchaser, the Purchaser shall have a first priority perfected ownership
interest in all of the property described in Section 2.1(a) (except to the
extent such first priority perfected security interest was assigned
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to the Trustee pursuant to the Indenture). Except as otherwise provided in this
Agreement, neither the Originator nor any Subsidiary of Conn other than
Purchaser nor any Person claiming through or under the Originator or any
Subsidiary of Conn other than Purchaser has any claim to or interest in any
Trust Account or the Post Office Box.
(k) Installment Contract Receivables. With respect to each Purchased
Receivable that is an Installment Contract Receivable, the related Installment
Contract Receivable (i) arises in connection with a bona fide final sale and
delivery of Merchandise by Originator as stated in the ordinary course of
business, (ii) is for a liquidated amount as stated in the Records relating
thereto, (iii) is enforceable against the Obligor in accordance with its terms,
(iv) is not subject to offset, defense, counterclaim or deduction, (v) bears a
signature of an Obligor which is genuine and not forged or unauthorized, or (vi)
is an Eligible Receivable except as otherwise reported to the Purchaser pursuant
to Section 4.2(a).
(l) No Material Adverse Change. Since January 31, 2002, there has been no
material adverse change in the collectibility of the Receivables or Originator's
ability to perform its obligations under any Transaction Document.
(m) Solvency. Each of the Originator and the Initial Seller is Solvent.
(n) Perfection Representations. Each of the Originator and the Initial
Seller agrees that the representations set forth on Schedule VII hereto shall be
a part of this Agreement for all purposes.
ARTICLE V
GENERAL COVENANTS
SECTION 5.1 Affirmative Covenants of the Originator and the Initial Seller.
So long as the Purchaser shall have any interest in any Purchased Receivable,
the Originator and the Initial Seller, as applicable, shall, unless the
Purchaser otherwise consents in writing:
(a) Financial Statements, Reports, Etc. Deliver or cause to be delivered to
the Purchaser and the Trustee:
(i) as soon as available and in any event within 90 days after the end
of each Fiscal Year of the Originator, a balance sheet of the Originator as
of the end of such year and statements of income and retained earnings and
of source and application of funds of the Originator for the period
commencing at the end of the previous Fiscal Year and ending with the end
of such year, in each case setting forth comparative figures for the
previous Fiscal Year, certified without material qualification in a manner
satisfactory to the Purchaser and the Trustee by Ernst & Young or other
nationally recognized, independent public accountants acceptable to the
Notice Persons, together with a certificate of such accounting firm stating
that in the course of the regular audit of the business of the Originator,
which audit was conducted in accordance with generally accepted auditing
standards in the United States, such accounting firm has obtained no
knowledge that a Purchase Termination Event or Incipient Purchase
Termination Event has occurred and is continuing, or if, in the opinion of
such accounting firm, such a
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Purchase Termination Event or Incipient Purchase Termination Event has
occurred and is continuing, a statement as to the nature thereof;
(ii) as soon as available and in any event within 45 days after the
end of each fiscal quarter, quarterly balance sheets and quarterly
statements of source and application of funds and quarterly statements of
income and retained earnings of the Originator, certified by the chief
financial or executive officer of the Originator (or of its general
partner, if applicable) (which certification shall state that such balance
sheets and statements fairly present the financial condition and results of
operations for such fiscal quarter, subject to year-end audit adjustments),
delivery of which balance sheets and statements shall be accompanied by a
certificate of such chief financial or executive officer to the effect that
no Purchase Termination Event or Incipient Purchase Termination Event has
occurred and is continuing; and
(iii) as soon as possible and in any event within three days after any
officer of the Originator becomes aware of the occurrence of a Servicer
Event of Default, a Purchase Termination Event or Incipient Purchase
Termination Event or an event of default under the Retailer Credit
Agreement or an event that, with the giving of notice or time elapse, or
both, would constitute a Servicer Event of Default, an officer's
certificate of the Originator setting forth details of such event and the
action that the Servicer or the Originator, as the case may be, proposes to
take with respect thereto.
(b) Compliance with Laws, Etc. Comply, and cause all of the Contracts
related to Purchased Receivables to comply, in all material respects with all
applicable laws, rules, regulations and orders applicable to the Originator or
the Initial Seller, and the Purchased Receivables, including, without
limitation, rules and regulations relating to truth in lending, retail
installment sales, fair credit billing, fair credit reporting, equal credit
opportunity, fair debt collection practices, privacy environmental matters,
labor, taxation and ERISA, where in any such case failure to so comply could
reasonably be expected to have an adverse impact on the Purchased Receivables or
the amount of Collections thereunder. It will comply in all material respects
with its obligations under the Contracts related to Purchased Receivables.
(c) Preservation of Existence. Preserve and maintain in all material
respects its corporate or limited partnership existence, as applicable,
corporate or limited partnership rights (charter and statutory) and franchises;
provided that Originator may change its corporate structure with the prior
written consent of the Notice Persons, which shall not be unreasonably withheld;
and, provided, further, that, so long as the Performance Guaranty is in full
force and effect at such time, the Initial Seller may be dissolved.
(d) Inspection Rights. Permit the Purchaser, the Trustee, any Notice Person
or their duly authorized representatives, attorneys or auditors to inspect the
Receivables, the related documents and the related accounts, records and
computer systems, software and programs used or maintained by the Originator or
the Initial Seller at such times as the Purchaser, the Trustee or any Notice
Person may reasonably request. Upon instructions from the Purchaser, the Trustee
or any Notice Person, the Originator or the Initial Seller, as applicable, shall
provide copies of relevant documents to the Purchaser, the Trustee or any
Enhancement Provider, as the case may be.
14
(e) Keeping of Records and Books of Account. Maintain and implement, or
cause to be maintained or implemented, administrative and operating procedures
necessary or advisable for the administration of all Purchased Receivables, and,
until the delivery to the Purchaser or its designee, keep and maintain, or cause
to be kept and maintained, all documents, books, records and other information
necessary or advisable for the administration of all Purchased Receivables.
(f) Performance and Compliance. Duly fulfill all obligations on its part to
be fulfilled under or in connection with the Purchased Receivables, including
complying with all requirements of law applicable thereto, and will do nothing
to impair the right, title and interest of the Purchaser in the Purchased
Receivables; provided, however, that an adjustment or compromise of a Purchased
Receivable pursuant to Section 2.5 shall not be deemed to be a violation of this
paragraph.
(g) Location of Records. Keep the chief executive office of the Originator
and the Initial Seller located at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
and keep originals or duplicates of any Records related to Purchased Receivables
that it maintains at, and only at, said offices, and neither the Originator nor
the Initial Seller will move its chief executive office or permit any Records
and books evidencing the Purchased Receivables that it may maintain to be moved
unless (i) the Originator or the Initial Seller, as applicable, shall have given
to the Purchaser and the Trustee not less than 45 days' prior written notice
thereof, clearly describing the new location, and (ii) the Originator or the
Initial Seller, as applicable, shall have taken such action, satisfactory to the
Purchaser and the Trustee, to maintain the title or ownership of the Purchaser
and any security interest of, or any filing in respect of title of, the
Purchaser or the Trustee in the Purchased Receivables at all times fully
perfected and in full force and effect. Neither the Originator nor the Initial
Seller may, in any event, move the location where it conducts any administration
of the Receivables from ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, without the
prior written consent of the Notice Persons.
(h) Credit and Collection Policy. Comply in all material respects with the
Credit and Collection Policy.
(i) Insurance. Keep its insurable properties adequately insured at all
times by financially sound and responsible insurers; maintain such other
insurance, to such extent and against such risks, including fire and other risks
insured against by extended coverage, as is customary with companies of the same
or similar size in the same or similar businesses; maintain in full force and
effect public liability insurance against claims for personal injury or death or
property damage occurring upon, in, about or in connection with the use of any
properties owned, occupied or controlled by it or any Subsidiary, as the case
may be, in such amounts and with such deductibles as are customary with
companies of the same or similar size in the same or similar businesses and in
the same geographic area; and maintain such other insurance as may be required
by law.
(j) Obligations and Taxes. Pay and discharge promptly when due all material
obligations, all sales tax and all material taxes, assessments and governmental
charges or levies imposed upon it or upon its income or profits or in respect of
its property before the same shall become in default, as well as all material
lawful claims for labor, materials and supplies or otherwise which, if unpaid,
might become a Lien or charge upon such properties or any part
15
thereof; provided, however, that it and each Subsidiary shall not be required to
pay and discharge or to cause to be paid and discharged any such tax,
assessment, charge, levy or claim so long as the validity or amount thereof
shall be contested in good faith by appropriate proceedings and for which the
Originator or the Initial Seller, as applicable, shall have set aside on its
books adequate reserves with respect thereto.
(k) Obligations with Respect to Purchased Receivables. Use all reasonable
measures to assist the Purchaser in preventing or minimizing any loss being
realized on a Purchased Receivable and take all reasonable steps to assist the
Purchaser in recovering the full amount of such loss. The Originator and the
Initial Seller shall, at their own expense, take any such steps as are necessary
to maintain perfection of the security interest created by each Purchased
Receivable in the related goods and merchandise subject thereto; provided,
however, that the Originator and the Initial Seller shall not be required to
file any UCC financing statement with respect to any Obligor.
(l) Furnishing Copies, Etc. Furnish to the Purchaser and the Trustee (i)
upon the Purchaser's or the Trustee's request, a certificate of the chief
financial or executive officer of the Originator or the Initial Seller (or of
the Originator's or the Initial Seller's general partner, if applicable), as
applicable, certifying, as of the date thereof, that no Purchase Termination
Event referred to in Section 7.1(b) has occurred and is continuing; (ii) as soon
as possible and in any event within one day after the occurrence of any Purchase
Termination Event or Incipient Purchase Termination Event, a statement of the
chief financial or executive officer of the Originator or the Initial Seller (or
of the Originator's or the Initial Seller's general partner, if applicable), as
applicable, setting forth details of such Purchase Termination Event or
Incipient Purchase Termination Event and the action that the Originator or the
Initial Seller, as applicable, proposes to take or has taken with respect
thereto; (iii) promptly after obtaining knowledge that a Purchased Receivable
was, at the time of the Purchaser's purchase thereof, not an Eligible Receivable
(unless specified as such pursuant to Section 4.2(a)), notice thereof; and (iv)
promptly following request therefor, such other information, documents, records
or reports with respect to the Purchased Receivables or the underlying Contracts
or the conditions or operations, financial or otherwise, of the Originator, as
the Purchaser or the Trustee may from time to time reasonably request.
(m) Obligation to Record and Report. To the fullest extent permitted by
GAAP and by applicable law, record each purchase of Purchased Receivables as a
sale on its books and records, reflect each Purchase in its financial statements
as a sale and recognize gain or loss, as the case may be, on each Purchase.
(n) Continuing Compliance with the Uniform Commercial Code. At its expense
perform all acts and execute all documents necessary or reasonably requested by
the Purchaser or the Trustee at any time to evidence, perfect, maintain and
enforce the title or the security interest of the Purchaser or the Trustee in
the Purchased Receivables and the priority thereof. The Originator and the
Initial Seller will execute and deliver financing statements relating to or
covering the Purchased Receivables sold to the Purchaser (reasonably
satisfactory in form and substance to the Purchaser) and the Originator and the
Initial Seller will authorize the Purchaser and the Trustee to file one or more
financing statements relating to or covering the Purchased Receivables and the
other property described in Section 2.1(a). The Originator and the Initial
16
Seller shall cause each Contract related to a Purchased Receivable to be stamped
in a conspicuous place (other than with respect to Contracts purchased on the
Initial Closing Date the originals of which have been copied on microfilm or
optically scanned and destroyed), and Records relating to the Purchased
Receivables to be marked, with a legend stating that it has been sold, assigned
and transferred to the Purchaser; provided that, subject to the immediately
preceding parenthetical, in the case of the Purchased Receivables purchased on
the Initial Closing Date, the Originator and the Initial Seller shall cause each
Contract related to such Purchased Receivables to be stamped on or prior to the
date that is sixty (60) days after the Initial Closing Date. The Originator and
the Initial Seller shall deliver the Receivable Files related to each Contract
to the Custodian; provided that while any Records evidencing Purchased
Receivables is in custody of the Originator or the Initial Seller, the
Originator or the Initial Seller, as applicable, will hold the same for the
benefit of the Purchaser. Neither the Originator nor the Initial Seller will
execute any effective financing statement (or similar statement or instrument of
registration under the laws of any jurisdiction) or statements relating to any
Purchased Receivables, except any financing statements filed or to be filed in
respect of and covering the purchase of the Purchased Receivables by the
Purchaser pursuant to this Agreement and the security interest created in favor
of the Trustee pursuant to the Indenture.
(o) Proceeds of Purchased Receivables. In the event that the Originator or
the Initial Seller receives any amounts in respect of Purchased Receivables
(including, without limitation, any In-Store Payments), use its best efforts to
deposit or otherwise credit, or cause to be deposited or otherwise credited, in
accordance with the procedures set forth in Section 2.02 of the Servicing
Agreement.
(p) Sales Tax Refunds. Claim all amounts which may be recovered from the
States of Texas or Louisiana or any other state as a rebate or refund of sales
taxes paid with respect to Purchased Receivables which became Uncollectible
Receivables and pay such amounts to the Purchaser as soon as practical upon
receipt from the related state refunding such amounts.
(q) Further Action Evidencing Purchases. Provide such cooperation,
information and assistance, and prepare and supply the Purchaser, the Servicer
and the Trustee with such data regarding the performance by the Obligors of
their obligations under the Purchased Receivables and the performance by the
Originator or the Initial Seller, as the case may be, of its obligations under
the Transaction Documents, as may be reasonably requested by the Purchaser, the
Servicer, any Notice Person or the Trustee from time to time.
(r) Financing Statement Changes. Within 30 days after the Originator or
Initial Seller makes any change in its, name, identity or corporate structure
which would make any financing statement or continuation statement filed in
accordance with this Agreement seriously misleading within the meaning of
Section 9-506 of the UCC, such Seller shall give the Purchaser notice of any
such change and shall file such financing statements or amendments to previously
filed financing or continuation statements as may be necessary to continue the
perfection of the interest of the Purchaser in the Receivables, the Related
Security and the Receivables Files, and the proceeds of the foregoing.
(s) Insurance Premiums. The Originator or the Initial Seller, as
applicable, shall, within sixty (60) days following the Initiation Date for any
Purchased Receivable, pay to the
17
appropriate insurance underwriters or agents writing insurance in connection
with the Purchased Receivables the amount of insurance premiums financed in
accordance with the Credit and Collection Policy with respect to such Purchased
Receivable.
SECTION 5.2 Negative Covenants of the Originator and the Initial Seller. So
long as the Purchaser shall have any interest in any Purchased Receivables,
neither the Originator nor the Initial Seller shall, unless the Purchaser
otherwise consents in writing:
(a) Liens. Sell, assign (by operation of law or otherwise) or otherwise
dispose of, or create or suffer to exist any Lien upon or with respect to, any
Purchased Receivables, or any Contracts with respect thereto, or assign any
right to receive proceeds in respect thereof except as created or imposed by
this Agreement or the Indenture.
(b) Change in Business. Make any material change in the nature of its
business as carried on at the date hereof or engage in or conduct any business
or activity that is materially inconsistent with such business.
(c) Extension or Amendment of Purchased Receivables. Extend, amend or
otherwise modify, or attempt or purport to extend, amend or, otherwise modify,
the terms of any Purchased Receivables, or amend or otherwise modify or waive
any term or condition of any underlying Contract with respect thereto, in each
case other than in accordance with the Credit and Collection Policy and the
terms of the Servicing Agreement and the Indenture.
(d) Change in Payment Instructions to Obligors. Instruct the Obligors on
any Purchased Receivables to make any payments with respect to such Purchased
Receivables to any place other than the places specified in Section 6.1.
(e) Sale of Receivables. Sell Receivables (other than Non-Purchased
Receivables) or transfer any interest therein to any Person other than the
Purchaser, without the prior written consent of the Notice Persons.
(f) Cause a Default. Take any action which would cause the Purchaser to be
in default under the Indenture, a copy of which has been furnished to each of
the Originator and the Initial Seller.
(g) [Reserved].
(h) Current Ratio. Permit the ratio of its current assets (determined on a
consolidated basis in accordance with GAAP) to its current liabilities
(determined on a consolidated basis in accordance with GAAP) to be less than
1.0:1.0 at the end of any fiscal quarter of the Originator.
(i) Mergers; Sales of Assets. Sell all or substantially all of its property
and assets to, or consolidate with or merge into, any other corporation, if the
effect of such sale or merger would cause a "default" or an "event of default"
under this Agreement or the Indenture. The Originator or the Initial Seller, as
applicable, shall promptly provide written notice to each Rating Agency of any
such sale, consolidation or merger which would cause a "default" or an "event of
default" under this Agreement or the Indenture.
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(j) No Amendments. (i) Amend, supplement or otherwise modify this Agreement
or (ii) otherwise take or fail to take any action under this Agreement that
could adversely affect the Purchaser's interests hereunder or the Trustee's
interests under the Indenture.
(k) Accounting Changes. Make any material change (i) in accounting
treatment and reporting practices except as permitted or required by GAAP, (ii)
in tax reporting treatment except as permitted or required by law, (iii) in the
calculation or presentation of financial and other information contained in any
reports delivered hereunder, or (iv) in any financial policy of the Originator
if such change could have an adverse effect on the Purchased Receivables or the
collection thereof.
(l) Maintenance of Separate Existence. (i) Fail to do all things necessary
to maintain its existence separate and apart from the Purchaser including,
without limitation, maintaining appropriate books and records (including current
minute books); (ii) except as required by applicable law, suffer any limitation
on the authority of its own directors and officers or partners to conduct its
business and affairs in accordance with their independent business judgment, or
authorize or suffer any Person other than its own officers and directors or
partners to act on its behalf with respect to matters (other than matters
customarily delegated to others under powers of attorney) for which a
corporation's or limited partnership's own officers and directors or partners
would customarily be responsible; (iii) fail to (A) maintain or cause to be
maintained by an agent of the Originator or the Initial Seller under the
Originator's or the Initial Seller's control physical possession of all its
books and records, (B) maintain capitalization adequate for the conduct of its
business, (C) account for and manage all of its liabilities separately from
those of any other Person, including, without limitation, payment by it of all
payroll and other administrative expenses and taxes from its own assets, (D)
segregate and identify separately all of its assets from those of any other
Person, (E) maintain employees, or pay its employees, officers and agents for
services performed for the Originator or the Initial Seller or (F) allocate
shared overhead fairly and reasonably; or (iv) commingle its funds with those of
the Purchaser or use the Purchaser's funds for other than the uses permitted
under the Transaction Documents.
ARTICLE VI
ADMINISTRATION AND COLLECTION OF PURCHASED RECEIVABLES
SECTION 6.1 Collection Procedures.
(a) On or before the Initial Closing Date, the Originator, the Initial
Seller and the Purchaser shall have established and shall maintain thereafter
the system of collecting and processing Collections of Purchased Receivables in
accordance with Section 2.02 of the Servicing Agreement.
(b) Each of the Originator and the Initial Seller shall cause all In-Store
Payments to be (i) processed as soon as possible after such payments are
received by the Originator or the Initial Seller, as applicable, but in no event
later than the Business Day after such receipt, and (ii) delivered to the
Servicer or, if a Daily Payment Event has occurred, deposited in the Collection
Account no later than the second Business Day following the date of such
receipt.
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(c) Each of the Originator and the Initial Seller and the Purchaser shall
deliver to the Servicer or, if a Daily Payment Event has occurred, deposit into
the Collection Account all Recoveries received by it within two Business Days
after the Date of Processing for such Recovery.
(d) Any funds held by the Originator or the Initial Seller, as applicable,
representing Collections of Purchased Receivables shall, until delivered to the
Servicer or deposited in the Collection Account, be held in trust by the
Originator or the Initial Seller, as applicable, on behalf of the Trustee as
part of the Trust Estate.
(e) Each of the Originator and the Initial Seller hereby irrevocably waives
any right to set off against, or otherwise deduct from, any Collections.
(f) Each of the Originator and the Initial Seller acknowledges that neither
the Originator nor the Initial Seller shall have any right, title or interest in
and to any Trust Account and hereby subordinates its rights in the Post Office
Box to the Trustee.
(g) Subject to the consent of the Notice Persons, the Purchaser has the
right to suspend In-Store Payments upon one Business Day's notice to the
Originator and the Initial Seller. If the Originator and the Initial Seller
receive notice from the Purchaser that the Purchaser has suspended In-Store
Payments, the Originator and the Initial Seller will inform all Obligors who
tender an In-Store Payment at the Originator's or the Initial Seller's locations
that the Originator and the Initial Seller can no longer accept In-Store
Payments and instruct such Obligors to make their payments at the Purchaser's
office or by mail to the Post Office Box. Neither the Originator nor the Initial
Seller will accept any In-Store Payments upon receipt of notice of suspension of
such right by the Purchaser.
SECTION 6.2 Purchase Information.
(a) On each Business Day, to the extent Receivables have been created, the
Originator or, with respect to the Initial Receivables, the Initial Seller shall
prepare and deliver, to the Purchaser and the Servicer a Purchase Report with
respect to Receivables the Date of Processing of which has occurred since the
preceding Business Day. Not later than the Distribution Date for each calendar
month, a summary of the Purchase Reports for the preceding Monthly Period shall
be delivered to the Trustee and the Back-Up Servicer.
(b) The Purchaser, the Initial Seller and the Originator agree that, upon
request of the Purchaser or Servicer, the Originator shall provide the Purchaser
or Servicer, as the case may be, with all information required to prepare
periodic reports that may be required to be furnished to the Trustee pursuant to
the Indenture or the Servicing Agreement, as promptly as possible on each
Purchase Date and Business Day, as the case may be, on the basis of the sales
and collections figures transmitted the previous day to the Originator's central
computer processing center.
(c) Upon discovery of any error in any report furnished to Purchaser or the
Trustee, the Trustee, the Notice Persons, the Purchaser, the Originator and the
Initial Seller (if relating to the Initial Receivables) shall confer and shall
agree upon any necessary adjustments to correct any such errors. Until
correction of such error, all Collections relating to such errors shall be
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retained in the Collection Account, to the extent such Collections have been
deposited in the Collection Account pursuant to the terms hereof. Unless the
Trustee has received actual notice of any discrepancy, the Trustee, the Notice
Persons and the Purchaser may rely on such reports for all purposes hereunder.
SECTION 6.3 Compliance Statements. Each of the Originator and the Initial
Seller shall deliver, or cause to be delivered, to the Purchaser and the
Trustee, (i) on or before April 1, 2003 and (ii) on or before each April 1
thereafter, an officer's certificate signed by the Chief Executive Officer, the
President, Executive Vice President or any Senior Vice President of the
Originator or the Initial Seller (or of the Originator's or the Initial Seller's
general partner, if applicable), dated as of January 31 of such year, stating
that (a) a review of the activities of the Originator or the Initial Seller, as
applicable, during the preceding 12-month period and of its performance under
this Agreement has been made under such officer's supervision and (b) to the
best of such officer's knowledge, based on such review, the Originator or the
Initial Seller, as applicable, has fulfilled its obligations under this
Agreement throughout such year and has complied in all respects with the Credit
and Collection Policy, or, if there has been a default in the fulfillment of any
such obligation, specifying each such default known to such officer and the
nature and status thereof.
SECTION 6.4 [Reserved].
SECTION 6.5 Termination. The Originator's obligation to sell Receivables
under this Agreement shall terminate on the Purchase Termination Date; provided,
however, that finance charges, late charges and other fees, charges and similar
items in respect of the Purchased Receivables shall continue to be the property
of the Purchaser after the Purchase Termination Date notwithstanding that such
amounts may arise or accrue after the Purchase Termination Date.
SECTION 6.6 Limitation on Liability of the Originator, the Initial Seller
and Others. No recourse under or upon any obligation or covenant of this
Agreement, or the Purchased Receivables, or for any claim based thereon or
otherwise in respect thereof, shall be had against any incorporator,
shareholder, employee, agent, limited partner, officer or director, in its
capacity as such, past, present or future, of the Originator, the Initial Seller
or of any successor thereto, either directly or through the Originator or the
Initial Seller, whether by virtue of any constitutory statute, or rule of law,
or by the enforcement of any assessment or penalty or otherwise; it being
expressly understood that this Agreement and the obligations issued hereunder
are solely its obligations, and that no such personal liability whatever shall
attach to, or is or shall be incurred by the incorporators, shareholders,
employees, agents, limited partners, officers or directors, as such, of the
Originator, the Initial Seller or of any successor thereto, or any of them,
because of the creation of the obligations hereby authorized, or under or by
reason of the obligations, covenants or agreements contained in this Agreement
or in the Purchased Receivables or implied therefrom; and that any and all such
personal liability, either at common law or in equity or by constitution or
statute, of, and any and all such rights and claims against, every such
incorporator, shareholder, employee, agent, officer or director, as such,
because of the creation of the indebtedness hereby authorized, or under or by
reason of the obligations or covenants contained in this Agreement or in the
Purchased Receivables or implied therefrom, are hereby expressly waived and
released as a condition of, and as a consideration for, the execution
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of this Agreement. The Originator, the Initial Seller, the Purchaser and the
Trustee and any director or officer or employee or agent of the Originator, the
Initial Seller, the Purchaser or the Trustee may rely in good faith on any
document of any kind prima facie properly executed and submitted by any Person
respecting any matters arising hereunder.
SECTION 6.7 Responsibilities of the Originator. Notwithstanding anything
herein to the contrary (i) each of the Originator and the Initial Seller shall
perform all its obligations under the Credit and Collection Policy related to
the Purchased Receivables to the same extent as if such Purchased Receivables
had not been transferred to the Purchaser hereunder, (ii) the exercise by the
Purchaser of any of its rights hereunder shall not relieve the Originator or the
Initial Seller from its obligations with respect to such Purchased Receivables
and (iii) except as provided by law, the Purchaser shall not have any obligation
or liability with respect to any Purchased Receivables or the underlying
Contracts, nor shall the Purchaser be obligated to perform any of the
obligations or duties of the Originator or the Initial Seller thereunder.
SECTION 6.8 Repossessed Merchandise. The Originator agrees to purchase
Merchandise repossessed by the Purchaser from an Obligor. The purchase price
payable by the Originator will be the fair market value of such unit of
repossessed Merchandise as mutually agreed upon between the Purchaser and the
Originator. Additionally, if any Purchased Receivable becomes a Charged-Off
Receivable, the Originator agrees to return to the Purchaser the amount (up to
the outstanding balance of such Purchased Receivable) of any premium for service
maintenance contracts or credit insurance (unless such amount has been paid
directly to the Purchaser by the applicable insurance company). Any amounts due
to the Purchaser in accordance with this Section (i) shall be paid in cash by
the Originator or, if no Purchase Termination Event or Series Pay Out Event has
occurred and is continuing, at the Purchaser's option, credited against the
principal amount owing on the Originator Note on the next Business Day following
such purchase or cancellation, (ii) shall constitute Recoveries and (iii) shall
be deposited in the Collection Account. The Purchaser shall be responsible for
delivering repossessed Merchandise to the Originator location.
ARTICLE VII
PURCHASE TERMINATION EVENTS
SECTION 7.1 Purchase Termination Events. If any of the following events
(each, a "Purchase Termination Event") shall occur and be continuing:
(a) any representation or warranty made or deemed made by or on behalf of
the Originator or the Initial Seller under or in connection with this Agreement
or any Purchase Report or other information or report delivered by the
Originator or the Initial Seller pursuant hereto shall prove to have been false
or incorrect in any material respect when made or deemed made; provided,
however, that the falsity or incorrectness of any representation made pursuant
to Section 4.2(a) with respect to any Purchased Receivable shall not constitute
a Purchase Termination Event so long as the Originator or the Initial Seller, as
applicable, has complied with its obligations in respect of such Purchased
Receivable pursuant to Section 2.4;
(b) the Originator or the Initial Seller shall fail to (i) perform or
observe any term, covenant or agreement contained in Sections 5.1(c), 5.1(d),
5.1(g), 5.1(h), 5.1(i), 5.1(j), 5.1(k),
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5.1(l), 5.1 (m), 5.1 (n), 5.1(o), 5.1(p) or 5.2 or (ii) make any payment or
deposit to be made by it hereunder within three Business Days after the same
became due and payable;
(c) the Originator or the Initial Seller shall fail to perform or observe
any other term, covenant or agreement contained in this Agreement on its part to
be performed or observed and any such failure shall remain unremedied for ten
days;
(d) the Originator or the Initial Seller shall generally not pay its debts
as such debts become due, or shall admit in writing its inability to pay its
debts generally, shall make a general assignment for the benefit of creditors,
or shall take any corporate action to authorize any of the actions set forth
above in this subsection (d) or the Originator or the Initial Seller shall be
the subject of an Event of Bankruptcy;
(e) the Originator or the Initial Seller transfers, sells or otherwise
disposes of (whether in one transaction or a series of transactions) all or
substantially all of its assets; provided that, so long as the Performance
Guaranty is in full force and effect, the Initial Seller may be dissolved; or
(f) the Indenture shall cease to be in full force and effect or a Pay Out
Event shall have occurred under the Indenture;
then, and in any such event, the Purchaser may, by notice to the Originator,
declare its obligation to purchase Receivables from the Originator to be
terminated, whereupon such obligation shall forthwith be terminated; provided,
however, that in the case of any event described in subsection (d) above, such
termination shall automatically occur upon the happening of such event. No
termination under this Section 7.1 of the Purchaser's obligation to purchase
Receivables shall affect the then-existing obligations of the Originator or the
Initial Seller hereunder (other than the Originator's obligations to sell
Receivables to the Purchaser pursuant hereto).
SECTION 7.2 Remedies. If a Purchase Termination Event has occurred and is
continuing:
(a) The Purchaser (and its assignees) shall have all of the rights and
remedies provided to a secured creditor or a purchaser of accounts or chattel
paper under the UCC by applicable law in respect thereto.
(b) The Purchaser (and its assignees) may at any time (i) notify the
respective Obligors of the Purchaser's ownership of the Purchased Receivables
and may direct that payment of all amounts due or to become due under the
Purchased Receivables be made directly to the Purchaser or its designee or (ii)
give notice, or require that the Originator and the Initial Servicer, at the
Originator's and the Initial Seller's expense, give notice of such ownership to
each such Obligor and direct that all payments be made directly to the Purchaser
or its designee.
(c) The Purchaser (and its assignees) may elect to (i) ▇▇▇ for collection
on any Purchased Receivables or (ii) sell any Purchased Receivables to any
Person for a price that is acceptable to the Purchaser (or its assignees). In
connection with any such sale, the Purchaser or its assignees shall have the
right to assign its rights under this Agreement to a third-party. Any
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such Purchased Receivable shall cease to be a Receivable for all purposes under
this Agreement as of the effective date of such sale.
(d) The Originator and the Initial Seller shall, upon the Purchaser's (or
its assignee's) request and at the Originator's expense (i) assemble all of the
Originator's and the Initial Seller's Records, (ii) deliver such documents to
the Purchaser or its designee at a place designated by the Purchaser or, at the
Purchaser's option, provide the Purchaser or its designee with access thereto
and (iii) deliver to the Purchaser, its designees or assignees all computer
programs, material and data necessary to the immediate collection of the
Purchased Receivables by the Purchaser, or a party designated by the Purchaser,
with or without the participation of the Originator or the Initial Seller.
(e) Each of the Originator and the Initial Seller hereby irrevocably
authorizes the Purchaser or its designee or assignees to take any and all steps
in the Originator's or the Initial Seller's name and on the Originator's or the
Initial Seller's behalf necessary or desirable, in the reasonable opinion of the
Purchaser, designee or assignee, to collect all amounts due under the Purchased
Receivables, including, without limitation, endorsing the Originator's or the
Initial Seller's name on checks and other instruments representing Collections,
enforcing the Purchased Receivables and the underlying Contracts and exercising
all rights and remedies in respect thereof.
(f) The Originator and the Initial Seller will make such arrangements with
respect to the collection of the Purchased Receivables as may be reasonably
required by the Trustee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Indemnities by the Originator and the Initial Seller. Without
limiting any other rights that the Purchaser may have hereunder or under
applicable law, each of the Originator and the Initial Seller hereby agrees to
indemnify the Purchaser (and its assignees) and each Indemnified Party from and
against any and all claims, losses and liabilities (including reasonable
attorneys' fees) (all the foregoing being collectively referred to as
"Indemnified Amounts") arising out of or resulting from this Agreement or in
respect of any Receivable or any Contract, excluding, however, Indemnified
Amounts to the extent resulting from gross negligence or willful misconduct on
the part of the Purchaser or such Indemnified Party, as the case may be (BUT
EXPRESSLY INCLUDING IN THE INDEMNITY SET FORTH IN THIS SECTION 8.1, INDEMNIFIED
AMOUNTS ATTRIBUTABLE TO THE ORDINARY, SOLE OR CONTRIBUTORY NEGLIGENCE OF
PURCHASER OR SUCH INDEMNIFIED PARTY, IT BEING THE INTENT OF THE PARTIES THAT, TO
THE EXTENT PROVIDED IN THIS SECTION 8.1, PURCHASER AND INDEMNIFIED PARTIES SHALL
BE INDEMNIFIED FOR THEIR OWN ORDINARY, SOLE OR CONTRIBUTORY NEGLIGENCE NOT
CONSTITUTING GROSS NEGLIGENCE OR WILLFUL MISCONDUCT). Without limiting or being
limited by the foregoing, the Originator shall pay on demand to the Purchaser or
any Indemnified Party any and all amounts necessary to indemnify such Person
from and against any and all Indemnified Amounts relating to or resulting from:
24
(a) the sale hereunder of any Receivable that is not at the date of such
sale an Eligible Receivable;
(b) reliance on any representation or warranty or statement made or deemed
made by the Originator or the Initial Seller (or any of their respective
officers) under or in connection with this Agreement or in any certificate
report or document delivered pursuant hereto that, in any such case, shall have
been false or incorrect in any material respect when made or deemed made;
(c) the failure by the Originator or the Initial Seller to comply with any
applicable law, rule or regulation with respect to any Receivable or the related
Contract, or the nonconformity of any Receivable or the related Contract with
any such applicable law, rule or regulation;
(d) the failure to have filed, or any delay in filing, financing statements
or other similar instruments or documents under the UCC of any applicable
jurisdiction or other applicable laws with respect to the Purchaser's interest
in any Purchased Receivables;
(e) any dispute, claim, offset or defense (other than discharge in
bankruptcy of the Obligor) of the Obligor to the payment of any Purchased
Receivable of the Originator or the Initial Seller (including, without
limitation, a defense based on such Receivable or the related Contract not being
a legal, valid and binding obligation of such Obligor enforceable against it in
accordance with its terms), or any other claim resulting from the sale of the
merchandise or services related to any such Purchased Receivable or the
furnishing or failure to furnish such merchandise or services;
(f) any failure of the Originator or the Initial Seller to perform its
duties or obligations under this Agreement or the applicable Contract;
(g) any products liability or warranty claim arising out of or in
connection with Merchandise that are the subject of any charge pursuant to any
Contract;
(h) the commingling of Collections of Purchased Receivables at any time
with other funds of the Originator or the Initial Seller, regardless or whether
such commingling shall be permitted by the Transaction Documents;
(i) any investigation, litigation or proceeding related to this Agreement
or in respect of any Purchased Receivable or any Contract;
(j) the payment by the Purchaser of any taxes owed by the Originator or the
Initial Seller, including, but not limited to, federal, state or local income
taxes, excise taxes or business taxes;
(k) the failure to vest, and maintain vested, in the Purchaser a valid and
enforceable (A) ownership interest or (B) a first priority perfected security
interest in the items described in Section 2.1(a) (except to the extent such
first priority perfected security interest was assigned to the Trustee pursuant
to the Indenture); or
25
(l) the Performance Guaranty shall cease to be effective or to be the
legally valid, binding and enforceable obligation of Conn, or Conn shall,
directly or indirectly, contest in any manner such effectiveness, validity,
binding nature or enforceability of its obligations thereunder.
Notwithstanding the foregoing, neither the Originator nor the Initial
Seller shall under any circumstances indemnify the Purchaser (or its assignees)
for any Indemnified Amounts that result solely from a default by an Obligor with
respect to a Purchased Receivable other than as described in clause (e) above or
resulting from the circumstances described in clauses (a), (c) or (f) above.
ARTICLE IX
THE ORIGINATOR NOTE
SECTION 9.1 Originator Note.
(a) On the Closing Date, the Purchaser shall issue to the Originator a
revolving subordinated note in the form attached hereto as Exhibit A (together
with the Initial Seller's note assumed by the Purchaser as amended and restated,
collectively, the "Originator Note"). The principal amount of the Originator
Note outstanding from time to time shall be determined in accordance with
Sections 2.3, 2.4 and 6.8. It is understood and agreed that no cash shall be
paid to the Originator in respect of the Originator Note as a result of the
principal amount of the Originator Note decreasing pursuant to the calculations
in Sections 2.4 and 6.8. Anything to the contrary notwithstanding, the Purchaser
shall have the right (but not the obligation) to offset or adjust the Originator
Note by any amounts owed by the Originator to the Purchaser under this
Agreement.
(b) Until the Issuer Obligations have been indefeasibly paid in full in
cash, no payments (whether for principal or interest) may be made, directly or
indirectly, by the Purchaser on the Originator Note except from amounts received
by the Purchaser under the Indenture. The Originator agrees not to ask, demand,
▇▇▇ for or take or receive from the Purchaser in cash or other property by
set-off (including, without limitation, from or by way of collateral), payment
of all or any part of the Originator Note, except as permitted by the Indenture.
The Originator agrees that upon any distribution of all or any of the assets of
the Purchaser to creditors of the Purchaser upon the dissolution, winding up,
total or partial liquidation, arrangement, reorganization, adjustment,
protection, relief, or composition of the Purchaser or its debts, any payment or
distribution of any kind in respect of the Originator Note that otherwise would
be payable or deliverable upon or with respect to the Originator Note, directly
or indirectly, by set-off or in any other manner, including, without limitation,
from or by way of collateral, shall be paid or delivered directly to the Trustee
for application (in the case of cash) to or as collateral (in the case of
non-cash property or securities) for the payment or prepayment in full of, the
Obligations until the obligations shall have been indefeasibly paid in full in
cash. All payments or distributions upon or with respect to the Originator Note
that are received by the Originator contrary to the provisions of the Indenture
or the Originator Note shall be received in trust for the benefit of the Secured
Parties, shall be segregated from other funds and property held by the
Originator and shall be forthwith paid over to the Trustee in the same form as
so received (with any necessary endorsement) to be applied (in the case of cash)
to, or held as collateral (in the
26
case of non-cash property or securities) for the payment or prepayment in full
of, the Issuer Obligations until the Issuer Obligations shall have been
indefeasibly paid in full in cash. The Originator agrees that no payment or
distribution to the Secured Parties pursuant to the provisions of the Originator
Note shall entitle the Originator to exercise any rights or subrogation in
respect thereof until the Obligations shall have been indefeasibly paid in full
in cash. The Originator and the Purchaser each hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Obligations and the Originator Note and any requirement that any Secured Party
protect, secure, perfect or insure any security interest or lien on any property
subject thereto or exhaust any right or take any action against the Purchaser or
any other Person or any Collateral.
(c) The Originator agrees and confirms that the Originator Note represents
solely the right to receive certain amounts from funds available to the
Purchaser under the Indenture and that the Originator Note does not represent a
security interest in the Purchased Receivables or their proceeds. No payments
may be received, directly or indirectly, by the Originator (and if received, the
Originator agrees to return such payments to the Purchaser) on the Originator
Note unless all amounts required pursuant to the Indenture to be paid prior to
the payments in respect of the Originator Note have been paid.
(d) The Originator agrees and confirms that the Trustee shall not have any
duty whatsoever to the Originator as holder of the Originator Note and that the
Trustee shall not be liable to the Originator for any action taken or omitted to
be taken with respect to the Originator Note.
SECTION 9.2 Restrictions on Transfer of Originator Note. Neither any
Originator Note, nor any right of the Originator to receive payments thereunder,
shall be assigned, transferred, exchanged, pledged, hypothecated, participated
or otherwise conveyed unless the Trustee shall have received a non-petition
letter in substantially the form attached hereto as Exhibit C.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Amendments, Etc. No amendment, modification or waiver of any
provision of this Agreement, or consent to any departure by the Originator or
the Initial Seller therefrom, shall in any event be effective unless the same
shall be in writing and signed by the Purchaser, the Enhancement Providers, the
Notice Persons of each Series and the Trustee and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given. No material amendment of this Agreement shall be effective
unless the Trustee shall have received written confirmation by the Rating
Agencies that such amendment shall not cause the rating on the then outstanding
Notes to be downgraded or withdrawn. The Purchaser shall, promptly following the
effective date thereof, provide a copy of each amendment to or consent or waiver
under this Agreement to the Trustee, which shall provide each Rating Agency with
a copy thereof.
SECTION 10.2 Notices Etc. All notices and other communications provided for
hereunder shall be in writing (including telegraphic, telex, facsimile or cable
communication) and mailed, telegraphed, telexed, transmitted, cabled or
delivered, if to the Initial Seller, at its
27
address at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ Attention: ▇▇▇▇▇ ▇▇▇▇▇; if
to the Originator, at its address at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇; if to the Purchaser, at its address at ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ Attention: ▇▇▇▇▇ ▇▇▇▇▇; or, as to each party, at
such other address as shall be designated by such party in a written notice to
the other parties. All such notices and communications shall when mailed or
telecopied be effective when deposited in the mails, or transmitted by
telecopier, respectively, except that notices to the Purchaser pursuant to
Article II shall not be effective until received by the Purchaser.
SECTION 10.3 No Waiver; Remedies. No failure on the part of the Purchaser
to exercise, and no delay in exercising, any right under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right preclude any other or further exercise thereof or the exercise of any
other right. The remedies herein provided are cumulative and not exclusive of
any remedies provided by law.
SECTION 10.4 Binding Effect; Governing Law. This Agreement shall be binding
upon and inure to the benefit of the Originator, the Initial Seller and the
Purchaser and their respective successors and assigns, except that the
Originator shall not have the right to assign its rights hereunder or any
interest herein without the prior written consent of the Purchaser and the
Notice Persons. This Agreement shall create and constitute the continuing
obligations of the parties hereto in accordance with its terms, and shall remain
in full force and effect until such time, after the Purchase Termination Date,
until the Purchaser shall not have any interest in any Purchased Receivables and
all obligations of the Originator and the Initial Seller hereunder shall have
been paid in full; provided, however, that the indemnification provisions of
Article VIII shall be continuing and shall survive any termination of this
Agreement. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York without regard to the conflict of laws
principles thereof (other than Section 5-1401 of the New York General
Obligations Law), except that the parties hereto agree that in order to
effectuate their intent that this Agreement evidences a sale, the determination
of whether the transfer by the Seller of the Purchased Receivables constitutes a
sale or whether it constitutes a grant of a security interest, by means of a
pledge or otherwise, shall be governed by, and construed in accordance with, the
laws of the State of Texas (without regard to the conflict of laws principles
thereof), including without limitation ss.9.109(e) of the Texas UCC.
SECTION 10.5 Costs, Expenses and Taxes. In addition to the rights of
indemnification granted to the Purchaser under Article VIII, the Originator and
the Initial Seller agree to pay on demand all costs and expenses of the
Purchaser and the Trustee in connection with the preparation, execution and
delivery of this Agreement, the Indenture and the other agreements and documents
to be delivered hereunder and thereunder, including, without limitation, the
reasonable fees and out-of-pocket expenses of counsel for the Purchaser and the
Trustee with respect thereto and with respect to advising the Purchaser and the
Trustee as to their rights and remedies under this Agreement, and all costs and
expenses (including, without limitation, reasonable counsel fees and expenses),
in connection with the enforcement (whether through negotiations, legal
proceedings or otherwise) of this Agreement and the documents to be delivered
hereunder. In addition, the Originator and the Initial Seller agree to pay any
and all stamp and other taxes and fees payable or determined to be payable in
connection with the execution, delivery, filing and recording of this Agreement
or the other documents to be
28
delivered hereunder, and agrees to hold the Purchaser harmless from and against
any and all liabilities with respect to or resulting from any delay in paying or
omitting to pay such taxes and fees.
SECTION 10.6 No Bankruptcy Petition. Each of the Originator and the Initial
Seller covenants and agrees that prior to the date which is one year and one day
after the payment in full of all Senior Indebtedness (as defined in the
Originator Note) it will not institute against, or join any other Person in
instituting against, the Purchaser any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings under any federal or
state bankruptcy or similar law. This Section 10.6 shall survive the termination
of this Agreement.
SECTION 10.7 Acknowledgment of Assignments. Each of the Originator and the
Initial Seller hereby acknowledges and consents to the assignment by the
Purchaser of Purchased Receivables and the rights of the Purchaser under this
Agreement to the Trustee pursuant to the Indenture. Each of the Originator and
the Initial Seller further acknowledges that, in accordance with the terms of
the Indenture, the Trustee may, under certain circumstances exercise some or all
of the rights of the Purchaser hereunder.
SECTION 10.8 Waiver of Setoff. All payments hereunder by the Originator and
the Initial Seller to the Purchaser or by the Purchaser to the Originator or the
Initial Seller shall be made without setoff, counterclaim or other defense and
each of the Purchaser, the Initial Seller and the Originator hereby waives any
and all of its rights to assert any right of setoff, counterclaim or other
defense to the making of a payment due hereunder to the Originator, the Initial
Seller or the Purchaser, as the case may be; provided, however; that,
notwithstanding the foregoing, the Purchaser hereby reserves any and all of its
rights to assert any such right of setoff, counterclaim or other defense against
the Originator or the Initial Seller with respect to the Purchase Price of
Receivables purchased from the Originator or the Initial Seller hereunder in the
ordinary course of the Purchaser's business.
SECTION 10.9 Severability. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under such law, such provision shall be ineffective only to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
SECTION 10.10 Counterparts. This Agreement and any amendment or supplement
hereto or any waiver granted in connection herewith may be executed in any
number of counterparts and by the different parties on separate counterparts and
each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same Agreement.
SECTION 10.11 Grant of License to Use Trademarks. For the sole purpose of
enabling the Purchaser (or its assignees) to perform the functions of servicing
and collecting the Purchased Receivables upon a Purchase Termination Event, each
of the Originator and the Initial Seller hereby grants to the Purchaser (or its
assignees) an irrevocable, non-exclusive license (exercisable without payment of
royalty or other compensation to the Originator or the Initial
29
Seller) to use, license, or sublicense any copyright, trade name, trademark or
similar rights or properties now owned or hereafter acquired by the Originator
and the Initial Seller, and wherever the same may be located, and including in
such license reasonable access to all media in which any of the licensed items
may be recorded or stored and to all computer and automatic machinery software
and programs used for the compilation or printout thereof. The aforementioned
servicing and collecting functions shall be performed in accordance with
customary business practices and in a manner which will not materially adversely
affect any of such licenses or licensed items.
SECTION 10.12 Jurisdiction; Consent to Service of Process.
(a) The Originator, the Initial Seller and the Purchaser hereby submit to
the nonexclusive jurisdiction of any United States District Court for the
Southern District of New York and of any New York state court sitting in New
York, New York for purposes of all legal proceedings arising out of, or relating
to, the Transaction Documents or the transactions contemplated thereby. The
Originator, the Initial Seller and the Purchaser hereby irrevocably waive, to
the fullest extent possible, any objection it may now or hereafter have to the
venue of any such proceeding and any claim that any such proceeding has been
brought in an inconvenient forum. Nothing in this Section 10.12 shall affect the
right of the Trustee, any Enhancement Provider or any Noteholder to bring any
action or proceeding against the Originator, the Initial Seller and the
Purchaser or its property in the courts of other jurisdictions.
(b) TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HERETO
IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF, OR IN CONNECTION WITH, ANY TRANSACTION DOCUMENT OR
ANY MATTER ARISING THEREUNDER.
SECTION 10.13 Third Party Beneficiaries. Each of the Secured Parties shall
be third-party beneficiaries of this Agreement.
SECTION 10.14 Confirmation of Intent. It is the express intent of the
parties hereto that the sale to the Purchaser pursuant to Section 2.1 hereof of
all of the Originator's and the Initial Seller's right, title and interest, in,
to and under (i) all Purchased Receivables now existing and hereafter arising,
all newly created Purchased Receivables and all rights (but not the obligations)
to, in and under the related Contract, (ii) all moneys due or to become due with
respect to the foregoing, (iii) all proceeds of the foregoing including, without
limitation, insurance proceeds relating thereto and (iv) all Recoveries on
account of Purchased Receivables, in each case shall be treated under applicable
state law and Federal bankruptcy law as a sale by the Originator or the Initial
Seller, as applicable, to the Purchaser. However, if it is determined contrary
to the express intent of the parties that the transfer is not a sale and that
all or any portion of the assets described in Section 2.1(a) continue to be
property of the Originator or the Initial Seller, then the Originator and the
Initial Seller hereby grant to the Purchaser a security interest in all of the
Originator's and the Initial Seller's right, title and interest in, to and under
all such assets and this Agreement shall constitute a security agreement under
applicable law. The Originator, the Initial Seller, the Purchaser and the
Trustee shall, to the extent consistent with the Indenture and this Agreement,
take such action as may be necessary to ensure that, if this Agreement were
deemed to create a security interest in the assets described in Section 2.1(a),
such interest would be
30
deemed to be a perfected security interest of first priority under applicable
law and will be maintained as such throughout the terms of this Agreement and
the Indenture.
SECTION 10.15 [Reserved].
SECTION 10.16 Section and Paragraph Headings. Section and paragraph
headings used in this Agreement are provided solely for convenience of reference
and shall not affect the meaning or interpretation of any provision of this
Agreement.
SECTION 10.17 Interpretation. The parties hereto acknowledge and agree that
all warranties, covenants, indemnities and other obligations of "the Originator"
hereunder shall be the joint and several obligations of each Person which is an
Originator hereunder.
SECTION 10.18 Interest. Without limitation to the express intent of the
parties set forth in the first sentence of Section 10.14, if the sales
contemplated under this Agreement are ever determined to constitute financing
arrangements, the parties hereto intend that Purchaser shall conform strictly to
usury laws applicable to it, if any. Accordingly, if the transactions
contemplated hereby would be usurious under applicable law, if any, then, in
that event, notwithstanding anything to the contrary in this Agreement or any
other agreement entered into in connection with this Agreement, it is agreed as
follows: (i) the aggregate of all consideration which constitutes interest under
applicable law that is contracted for, taken, reserved, charged or received by
Purchaser under this Agreement or under any other agreement entered into in
connection with this Agreement shall under no circumstances exceed the Highest
Lawful Rate and any excess shall be canceled automatically and, if theretofore
paid, shall at the option of Purchaser be applied on the principal amount due
Purchaser or refunded by Purchaser to the Originator or the Initial Seller, as
applicable, and (ii) in the event that the maturity of any amount due is
accelerated or in the event of any prepayment or repurchase, then such
consideration that constitutes interest under law applicable to Purchaser, may
never include more than the Highest Lawful Rate and excess interest, if any, to
Purchaser, provided for in this Agreement or otherwise shall be canceled
automatically as of the date of such acceleration, prepayment or repurchase and,
of theretofore paid, shall, at the option of Purchaser be credited by Purchaser
on the principal amount due to Purchaser or refunded by Purchaser to Originator
or the Initial Seller, as applicable. All sums paid or agreed to be paid to
Purchaser for the use, forbearance or detention of sums due hereunder shall, to
the extent permitted under applicable law, be amortized, prorated, allocated and
spread throughout the full term of the payments until payment in full so that
the rate or amount of interest or account of such payments does not exceed the
applicable usury ceiling. To the extent that Section 339.004 of the Texas
Finance Code is relevant to the Purchasers for purposes of determining the
Highest Lawful Rate, Purchaser hereby elects to determine the applicable rate
ceiling under such Article by the indicated (weekly) rate ceiling from time to
time in effect, subject to Purchaser's right subsequently to change such method
in accordance with applicable law and it is the express intent of the parties
hereto that Chapter 303 of the Texas Finance Code applies to all Sales occurring
under this Agreement.
[signature page follows]
31
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
CONN FUNDING II, L.P.,
as Purchaser
By: Conn Funding II GP, L.L.C.,
its general partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Secretary/Treasurer
CONN APPLIANCES, INC.,
as Originator
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: CEO and Chairman of the Board
CAI, L.P.,
as Originator
By: Conn Appliances, Inc.,
its general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: CEO and Chairman of the Board
CONN FUNDING I, L.P.,
as Initial Seller
By: Conn Funding, L.L.C.,
its general partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Secretary/Treasurer
S-1 Receivables Purchase Agreement
EXHIBIT A
ORIGINATOR NOTE
Beaumont, Texas
September 13, 2002
FOR VALUE RECEIVED, CONN FUNDING II, L.P., a Texas limited partnership
("CFLP") promises to pay to [Conn Appliances, Inc. "Conn")] [CAI, L.P. ("CAI")]
at the office of [CAI] at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, the
principal sum equal to the aggregate amount due and owing to [Conn] [CAI]
pursuant to Section 2.3 of the Receivables Purchase Agreement as adjusted from
time to time pursuant to Section 2.4 and 6.8 of the Receivables Purchase
Agreement (as the same may be increased or decreased from time to time), on the
Final Maturity Date.
Section 1.01. Receivables Purchase Agreement. This Note is an "Originator
Note" described in, and is subject to the terms and conditions set forth in, the
Receivables Purchase Agreement, dated as of September 1, 2002 (as amended,
supplemented, or otherwise modified from time to time, the "Receivables Purchase
Agreement"), between CFLP, as the Purchaser, and Conn Appliances, Inc., and CAI,
collectively as Originator, and Conn Funding I, L.P., as the Initial Seller.
Reference is hereby made to the Receivables Purchase Agreement for a statement
of certain other rights and obligations of CFLP and [Conn] [CAI]. In the case of
any conflict between the terms of this Note and the terms of the Receivables
Purchase Agreement, the terms of the Receivables Purchase Agreement shall
control.
Section 1.02. Definitions. Capitalized terms used (but not defined) herein
have the meanings ascribed thereto in the Receivables Purchase Agreement or in
the Indenture (as defined in the Receivables Purchase Agreement). In addition,
as used herein, the following terms have the following meanings:
"Final Maturity Date" means the date that falls one year and one day
after the later of (x) the Purchase Termination Date and (y) the date on
which the principal amount of the Notes shall have been reduced to zero and
all other amounts payable by CFLP to the Secured Parties under the
Transaction Documents shall have been paid in full.
"Junior Liabilities" means all obligations of CFLP to [Conn] [CAI]
under this Note.
"Senior Agent" means the Trustee.
"Senior Indebtedness" means all (a) obligations of CFLP under the
Indenture dated as of September 1, 2002 (as in effect from time to time,
the "Indenture") among CFLP, CAI and ▇▇▇▇▇ Fargo Bank Minnesota, National
Association, as Trustee (the "Trustee") and any renewal, extension,
restatement or
A-1
refunding thereof and together with any Series Supplement (the "Indenture")
and (b) all obligations of CFLP to the Senior Interest Holders, howsoever
created, arising or evidenced, whether direct or indirect, absolute or
contingent, now or hereafter existing, or due or to become due on or before
the Final Maturity Date.
"Senior Interest Holders" means, collectively, the Senior Agent and
the Secured Parties.
"Subordination Provisions" means, collectively, clauses (a) through
(k) of Section 1.07 hereof.
Section 1.03. Interest. Subject to the Subordination Provisions, CFLP
promises to pay interest on the aggregate unpaid principal amount of this Note
outstanding on each day at a variable rate per annum equal to the prime rate as
reported by the Wall Street Journal from time to time.
Section 1.04. Interest Payment Dates. Subject to the Subordination
Provisions, CFLP shall pay accrued interest on this Note on each Payment Date
and on the Final Maturity Date (or, if any such day is not a Business Day, the
next succeeding Business Day). CFLP also shall pay accrued interest on the
principal amount of each prepayment hereof on the date of each such prepayment.
Section 1.05. Basis of Computation. Interest accrued hereunder shall be
computed for the actual number of days elapsed on the basis of a 360-day year.
Section 1.06. Principal Payment Dates. Subject to the Subordination
Provisions, any unpaid principal of this Note shall be paid on the Final
Maturity Date (or, if such date is not a Business Day, the next succeeding
Business Day). Subject to the Subordination Provisions, the principal amount of
and accrued interest on this Note may be prepaid on any Business Day without
premium or penalty.
Section 1.07. Subordination Provisions. CFLP covenants and agrees, and
[Conn] [CAI] and any other holder of this Note, by its acceptance of this Note,
likewise covenants and agrees, that the payment of all Junior Liabilities is
hereby expressly subordinated in right of payment to the payment and performance
of the Senior Indebtedness to the extent and in the manner set forth in the
following clauses of this Section 1.07. To the extent this Section 1.07
conflicts with the terms of the Indenture, the terms of the Indenture shall
control.
(a) No payment or other distribution of CFLP's assets of any kind or
character, whether in cash, securities, or other rights or property, shall be
made on account of this Note except to the extent such payment or other
distribution is (i) permitted under the Indenture and (ii) made pursuant to
Section 1.04 or 1.06 of this Note;
(b) If an Event of Bankruptcy has occurred with respect to CFLP or the
Purchase Termination Date has occurred, then the Senior Indebtedness shall first
be paid and performed in full and in cash before [Conn] [CAI] or any other
holder of this Note shall be entitled to receive and to retain any payment or
distribution in respect of the Junior Liabilities. In order to implement the
foregoing: (x) all payments and distributions of any kind or character
A-2
in respect of the Junior Liabilities to which [Conn] [CAI] or any other holder
of this Note would be entitled except for this subsection 1.07(b) shall be made
directly to the Senior Agent (for the benefit of the Senior Interest Holders);
and (y) [Conn] [CAI] or any other holder of this Note hereby irrevocably agrees
that the Senior Agent, in the name of [Conn] [CAI] or any other holder of this
Note or otherwise, may demand, ▇▇▇ for, collect, receive and receipt for any and
all such payments or distributions, and file, prove and vote or consent in any
such proceeding with respect to any and all claims of [Conn] [CAI] or any other
holder of this Note relating to the Junior Liabilities, in each case until the
Senior Indebtedness shall have been paid and performed in full and in cash.
(c) In the event that [Conn] [CAI] or any other holder of this Note
receives any payment or other distribution of any kind or character from CFLP or
from any other source whatsoever, in respect of the Junior Liabilities, other
than as expressly permitted by the terms of this Note, such payment or other
distribution shall be received in trust for the Senior Interest Holders and
shall be turned over by [Conn] [CAI] or any other holder of this Note to the
Senior Agent (for the benefit of the Senior Interest Holders) forthwith. All
payments and distributions received by the Senior Agent in respect of this Note,
to the extent received in or converted into cash, may be applied by the Senior
Agent (for the benefit of the Senior Interest Holders) first to the payment of
any and all reasonable expenses (including, without limitation, reasonable
attorneys' fees and other legal expenses) paid or incurred by the Senior Agent
or the Senior Interest Holders in enforcing these Subordination Provisions, or
in endeavoring to collect or realize upon the Junior Liabilities, and any
balance thereof shall, solely as between [Conn] [CAI] or any other holder of
this Note and the Senior Interest Holders, be applied by the Senior Agent toward
the payment of the Senior Indebtedness in a manner determined by the Senior
Agent to be in accordance with the Indenture; but as between the Purchaser and
its creditors, no such payments or distributions of any kind or character shall
be deemed to be payments or distributions in respect of the Senior Indebtedness.
(d) Upon the final payment in full and in cash of all Senior Indebtedness,
[Conn] [CAI] or any other holder of this Note shall be subrogated to the rights
of the Senior Interest Holders to receive payments or distributions from CFLP
that are applicable to the Senior Indebtedness until the Junior Liabilities are
paid in full.
(e) These Subordination Provisions are intended solely for the purpose of
defining the relative rights of [Conn] [CAI] or any other holder of this Note,
on the one hand, and the Senior Interest Holders, on the other hand. Nothing
contained in the Subordination Provisions or elsewhere in this Note is intended
to or shall impair, as between CFLP, its creditors (other than the Senior
Interest Holders) and [Conn] [CAI] or any other holder of this Note, CFLP's
obligation, which is unconditional and absolute, to pay the Junior Liabilities
as and when the same shall become due and payable in accordance with the terms
hereof and of the Receivables Purchase Agreement or to affect the relative
rights of [Conn] [CAI] or any other holder of this Note and creditors of CFLP
(other than the Senior Interest Holders).
(f) [Conn] [CAI] or any other holder of this Note shall not, until the
Senior Indebtedness have been finally paid and performed in full and in cash,
(i) cancel, waive, forgive, transfer or assign, or commence legal proceedings to
enforce or collect, or subordinate to any obligation of CFLP, howsoever created,
arising or evidenced, whether direct or indirect, absolute
A-3
or contingent, or now or hereafter existing, or due or to become due, other than
the Senior Indebtedness, the Junior Liabilities, or any rights in respect
thereof or (ii) convert the Junior Liabilities into an equity interest in the
Purchaser, unless, in the case of each of clauses (i) and (ii) above, [Conn]
[CAI] or any other holder of this Note shall have received the prior written
consent of the Senior Agent in each case.
(g) [Conn] [CAI] or any other holder of this Note shall not, without the
advance written consent of the Senior Agent, commence, or join with any other
Person in commencing, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any federal or state
bankruptcy or similar law, with respect to CFLP until at least one year and one
day shall have passed since the Senior Indebtedness shall have been finally paid
and performed in full and in cash.
(h) If, at any time, any payment (in whole or in part) made with respect to
any Senior Indebtedness is rescinded or must be restored or returned by a Senior
Interest Holder (whether in connection with any Event of Bankruptcy or
otherwise), these Subordination Provisions shall continue to be effective or
shall be reinstated, as the case may be, as though such payment had not been
made.
(i) Each of the Senior Interest Holders may, from time to time, to the
extent consistent with the Transaction Documents, at its sole discretion,
without notice to [Conn] [CAI] or any other holder of this Note, and without
waiving any of its rights under these Subordination Provisions, take any or all
of the following actions: (i) retain or obtain an interest in any property to
secure any of the Senior Indebtedness; (ii) retain or obtain the primary or
secondary obligations of any other obligor or obligors with respect to any of
the Senior Indebtedness; (iii) extend or renew for one or more periods (whether
or not longer than the original period), alter or exchange any of the Senior
Indebtedness, or release or compromise any obligation of any nature with respect
to any of the Senior Indebtedness; (iv) amend, supplement, or otherwise modify
any Transaction Document; and (v) release its security interest in, or
surrender, release or permit any substitution or exchange for all or any part of
any rights or property securing any of the Senior Indebtedness, or extend or
renew for one or more periods (whether or not longer than the original period),
or release, compromise, alter or exchange any obligations of any nature of any
obligor with respect to any such rights or property.
(j) [Conn] [CAI] or any other holder of this Note hereby waives: (i) notice
of acceptance of these Subordination Provisions by any of the Senior Interest
Holders; (ii) notice of the existence, creation, non-payment or non-performance
of all or any of the Senior Indebtedness; and (iii) all diligence in
enforcement, collection or protection of, or realization upon the Senior
Indebtedness, or any thereof, or any security therefor.
(k) These Subordination Provisions constitute a continuing offer from CFLP
to all Persons who become the holders of, or who continue to hold, Senior
Indebtedness; and these Subordination Provisions are made for the benefit of the
Senior Interest Holders, and the Senior Agent may proceed to enforce such
provisions on behalf of each of such Persons.
Section 1.08. Amendments, Etc. No failure or delay on the part of [Conn]
[CAI] or any other holder of this Note in exercising any power or right
hereunder shall operate as a
A-4
waiver thereof, nor shall any single or partial exercise of any such power or
right preclude any other or further exercise thereof or the exercise of any
other power or right. No amendment, modification or waiver of, or consent with
respect to, any provision of this Note shall in any event be effective unless
(a) the same shall be in writing and signed and delivered by CFLP and [Conn]
[CAI] or any other holder of this Note, and (b) all consents required for such
actions under the Transaction Documents shall have been received by the
appropriate Persons.
Section 1.09. Limitation on Interest. Notwithstanding anything in this Note
to the contrary, CFLP shall never be required to pay unearned interest on any
amount outstanding hereunder, and shall never be required to pay interest on the
principal amount outstanding hereunder, at a rate in excess of the maximum
interest rate that may be contracted for, charged or received without violating
applicable federal or state law.
Section 1.10. No Negotiation. This Note is not negotiable.
Section 1.11. Governing Law. THIS NOTE SHALL GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF TEXAS WITHOUT REGARD TO CONFLICT OF
LAWS PRINCIPLES.
Section 1.12. Captions. Paragraph captions used in this Note are provided
solely for convenience of reference only and shall not affect the meaning or
interpretation of any provision of this Note.
A-5
IN WITNESS WHEREOF, the undersigned has caused this Note to be executed by
its officer thereunto duly authorized on the date first above written.
CONN FUNDING II, L.P.
By: Conn Funding II GP, L.L.C.,
Its general partner
By:
---------------------------------------
Name:
Title:
▇-▇
▇▇▇▇▇▇▇ ▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇-▇
[ON FILE WITH CONN]
EXHIBIT C
FORM OF NON-PETITION LETTER
C-1
SCHEDULE I
RECEIVABLE SCHEDULE
[ON FILE WITH THE TRUSTEE]
Schedule I-1
SCHEDULE II
OFFICES WHERE BOOKS, RECORDS, ETC.
EVIDENCING RECEIVABLES ARE KEPT
Conn Appliances, Inc.:
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
CAI, L.P.:
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Conn Funding I, L.P.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Schedule II-1
SCHEDULE III
[Reserved]
Schedule III-1
SCHEDULE IV
LIST OF TRADE NAMES
Conn Appliances, Inc., and CAI, L.P.:
"Appliance Parts & Service"
"Conn"
"Conn Appliances"
"Conn Rental"
"Conn Service"
"Conns"
"Conn's"
"Conn's Rental"
"Conn's Service"
Conn Funding I, L.P.:
None.
Schedule IV-1
SCHEDULE V
AUTHORIZED OFFICERS OF ORIGINATOR
Name Title
---- -----
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ CEO of Conn Appliances, Inc.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. President of Conn Appliances,
Inc.
▇. ▇. ▇▇▇▇▇ Executive Vice President and CFO of
Conn Appliances, Inc.
▇▇▇▇▇ ▇. ▇▇▇▇▇ Secretary, Treasurer and
Senior Vice President of Conn
Appliances, Inc.
Schedule V-1
SCHEDULE VI
FORM OF REVOLVING CHARGE ACCOUNT AGREEMENT
AND INSTALLMENT CONTRACT
[ON FILE WITH THE TRUSTEE]
Schedule VI-1
SCHEDULE VII
PERFECTION REPRESENTATIONS, WARRANTIES AND COVENANTS
In addition to the representations, warranties and covenants contained in the
Purchase Agreement, the Originator hereby represents, warrants, and covenants to
the Trustee as follows on the Closing Date:
General
1. The Purchase Agreement creates a valid and continuing security interest (as
defined in the applicable UCC) in the Purchased Receivables in favor of the
Purchaser, which security interest is prior to all other Liens, and is
enforceable as such as against creditors of and purchasers from the Originator.
2. The Purchased Receivables constitute "accounts", "tangible chattel paper" or
"electronic chattel paper" within the meaning of the UCC as in effect in the
States of Texas and New York.
3. The Trust Accounts constitute either a deposit account or a securities
account within the meaning of the UCC as in effect in the States of Texas and
New York.
Creation
4. The Originator owns and has good and marketable title to the Purchased
Receivables free and clear of any Lien, claim or encumbrance of any Person,
excepting only liens for taxes, assessments or similar governmental charges or
levies incurred in the ordinary course of business that are not yet due and
payable or as to which any applicable grace period shall not have expired, or
that are being contested in good faith by proper proceedings and for which
adequate reserves have been established, but only so long as foreclosure with
respect to such a lien is not imminent and the use and value of the property to
which the Lien attaches is not impaired during the pendency of such proceeding.
Perfection:
5. The Originator has caused or will have caused, within ten days after the
effective date of the Purchase Agreement, the filing of all appropriate
financing statements in the proper filing office in the appropriate
jurisdictions under applicable law in order to perfect the sale of the Purchased
Receivables from the Originator to the Purchaser, and the security interest in
the Purchased Receivables granted to the Trustee under the Indenture; and
Servicer has in its possession the original copies of such instruments,
certificated securities or tangible chattel paper that constitute or evidence
the Purchased Receivables, and all financing statements referred to in this
paragraph contain a statement that: "A purchase of or security interest in any
collateral described in this financing statement will violate the rights of the
Trustee."
Schedule VII-1
6. With respect to Purchased Receivables that constitute tangible chattel paper,
either:
(i) All original executed copies of each such tangible chattel paper have
been delivered to the Trustee;
(ii)(A) Such tangible chattel paper is in the possession of the Custodian
and the Trustee has received a written acknowledgment from the Custodian
that the Custodian is holding such tangible chattel paper solely on behalf
and for the benefit of the Trustee; (B) the Originator has marked on or
before the date that is sixty (60) days after the Initial Closing Date the
authoritative copy of each Contract or lease that constitutes or evidences
the Receivables with a legend to the following effect: "[Conn Appliances,
Inc.][CAI, L.P.] has sold all its rights and interest herein to Conn
Funding II, L.P."; and (C) such Contracts or leases do not have any other
marks or notations indicating that they have been pledged, assigned or
otherwise conveyed to any Person other than the Purchaser; or
(iii) A third party custodian received possession of such instruments or
tangible chattel paper after the Trustee received a written acknowledgment
from such custodian that such custodian is acting solely as agent of the
Trustee;
7. With respect to Receivables that constitute electronic chattel paper, either:
(a) The Originator has caused, or will have caused within ten days of the
effective date of the Purchase Agreement, the filing of financing statement
against the Originator in favor of the Purchaser in connection herewith
describing such Receivables and containing a statement that: "A purchase of or
security interest in any collateral described in this financing statement will
violate the rights of the Purchaser and the Trustee"; or
(b) All of the following are true:
(i) Only one authoritative copy of each such Contract or lease exists;
and each such authoritative copy (A) is unique, identifiable and
unalterable (other than with the participation of the Purchaser and the
Trustee in the case of an addition or amendment of an identified assignee
and other than a revision that is readily identifiable as an authorized or
unauthorized revision), (B) has been marked with a legend to the following
effect: "Authoritative Copy" and (C) has been communicated to and is
maintained by the Trustee or a custodian who has acknowledged in writing
that it is maintaining the authoritative copy of each electronic chattel
paper solely on behalf of and for the benefit of the Purchaser (or the
Trustee), or is acting solely as its agent; and
(ii) the Originator has marked the authoritative copy of each Contract
or lease that constitutes or evidences the Receivables with a legend to the
following effect: "[Conn Appliances, Inc.][CAI, L.P.] has sold all its
rights and interest herein to Conn Funding II, L.P." Such Contract or
leases do not have any other marks or notations indicating that they have
been pledged, assigned or otherwise conveyed to any Person other than the
Purchaser or the Trustee; and
Schedule VII-2
(iii) the Originator has marked all copies of each Contract or lease
that constitute or evidence the Receivables other than the authoritative
copy with a legend to the following effect: "This is not an authoritative
copy"; and
(iv) The records evidencing the Receivables have been established in a
manner such that (a) all copies or revisions that add or change an
identified assignee of the authoritative copy of each such electronic
chattel paper must be made with the participation of the Purchaser or the
Trustee and (b) all revisions of the authoritative copy of each such
electronic chattel paper must be readily identifiable as an authorized or
unauthorized revision.
Priority
8. Other than the transfer of the Purchased Receivables to the Purchaser under
the Purchase Agreement, the Originator has not pledged, assigned, sold, granted
a security interest in, or otherwise conveyed any of the Purchased Receivables
or the Trust Accounts. The Originator has not authorized the filing of, or is
aware of any financing statements against the Originator that include a
description of collateral covering the Purchased Receivables or the Trust
Accounts other than those that have been released and any financing statement
relating to the sale of the Purchased Receivables to the Purchaser, relating to
the security interest granted to the Trustee under the Indenture or that has
been terminated.
9. The Originator is not aware of any judgment, ERISA or tax lien filings
against the Originator.
10. Neither the Originator nor a custodian holding any Collateral that is
electronic chattel paper has communicated an authoritative copy of any loan
agreement or lease that constitutes or evidences the Receivables to any Person
other than the Purchaser or the Trustee.
11. None of the tangible chattel paper or electronic chattel paper that
constitutes or evidences the Purchased Receivables has any marks or notations
indicating that it has been pledged, assigned or otherwise conveyed to any
Person other than the Purchaser, other than the security interest assigned to
the Trustee pursuant to the Indenture.
12. Survival of Perfection Representations. Notwithstanding any other provision
of the Purchase Agreement or any other Transaction Document, the Perfection
Representations contained in this Schedule shall be continuing, and remain in
full force and effect (notwithstanding any replacement of the Servicer or
termination of Servicer's rights to act as such) until such time as the Issuer
Obligations under the Indenture have been finally and fully paid and performed.
13. No Waiver. The Purchaser shall not, without satisfying the Rating Agency
Condition, waive any of the Perfection Representations.
Schedule VII-3