Exhibit 10.52
REVOLVING CREDIT AGREEMENT
BETWEEN
THE CREDIT STORE, INC.
AND
PLAINS COMMERCE BANK
March 15, 2002
4/9/02
REVOLVING CREDIT AGREEMENT
Dated as of March 15, 2002
The Credit Store, Inc., a Delaware corporation (the "Borrower") located
at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, and Plains
Commerce Bank, a South Dakota state bank (the "Bank") located at ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. As used in this Agreement the following terms
shall have the following meanings (and such meanings shall be equally applicable
to singular and plural forms of the terms defined):
"Advances" shall mean loans made by the Bank to the Borrower pursuant
to Section 2.3 of this Agreement.
"Borrowing Base" shall mean an amount equal to 60% of the Borrowing
Base Receivables which are subject to a first priority security interest in
favor of the Bank.
"Borrowing Base Receivables" shall mean all amounts which are (a) owed
by Cardholders under the Credit Card Accounts from time to time including,
without limitation, any amounts owing for the payment of goods and services and
for cash advances, annual membership fees, over limit fees, late payment fees,
periodic finance charges, and any other fee, expense or charge of every nature,
kind and description, and (b) included in the closing balance on the FDR CD 621
report (or any successor report including substantially similar information)
provided to Borrower by First Data Resources on a daily basis.
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"Business Day" shall mean any day other than a Saturday, Sunday or a
public holiday or the equivalent under the laws of the State of South Dakota.
"Cardholder" means any person obligated on a Credit Card Account.
"Collateral Receivables" shall mean all amounts which are owed by
Cardholders under the Credit Card Accounts from time to time including, without
limitation, any amounts owing for the payment of goods and services and for cash
advances, annual membership fees, over limit fees, late payment fees, periodic
finance charges, and any other fee, expense or charge of every nature, kind and
description.
"Credit Card Accounts" means all Visa USA, Inc. credit card accounts
which are owned by Bank and identified on the books and records of Borrower with
a permanent pool identification number of 2002200.
"Daily Activity Report" shall mean a report of Borrower substantially
in the form of Exhibit A which shows on a daily basis, among other things, the
Borrowing Base Receivables, and the principal balance of the Note, and which is
delivered to the Bank pursuant to Section 5.1(a).
"Discount Rate" shall mean the rate established by the Bank weekly as
its discount rate of interest for non-consumer loans. As of the date hereof, the
Discount Rate is 7 3/4 % per annum.
"Intercreditor Agreements" shall mean the Intercreditor Agreements, in
form and substance acceptable to Bank, with each of Coast Business Credit, a
division of Southern Pacific Bank ("Coast"), J.L.B. of Nevada, Inc. ("J.L.B."),
and ▇▇▇▇▇▇▇▇ A.L. Advisors, Inc., and Recovery Partners II, LLC (collectively
"▇▇▇▇▇▇▇▇"). "Loan Documents" shall mean this Agreement, the Note, the Security
Agreement, and all other documents to be executed in connection with this
Agreement.
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"Lockbox Agreement" shall mean the Lockbox Agreement dated as of
December 1, 2001, as amended, among the Borrower, ▇▇▇▇▇ Fargo Bank Minnesota,
National Association, First Premier Bank, Coast, The Varde Fund IV-A, L.P.
("Varde"), M M & S Investments Corporation ("MM&S"), and certain other parties.
The "Lockbox Paying Agent Agreement" shall mean the Lockbox Paying
Agent Agreement dated as of December 1, 2001, as amended, among the Borrower,
▇▇▇▇▇ Fargo Bank Minnesota, National Association, Coast, Varde, MM&S, and
certain other parties.
"Note" shall mean the note described in Section 2.2 and any and all
renewals, replacements, and amendments thereof.
"Person" shall mean an individual, corporation, partnership, joint
venture, trust or unincorporated organization or government or other agency or
political subdivision thereof.
"Requirements of Law" with respect to any Person shall mean any law,
ordinance, statute, treaty, rule, judgment, regulation or other determination or
finding of any arbitrator or governmental authority applicable to or binding
upon such Person or to which such Person is subject, whether federal, state,
county, local or otherwise (including without limitation usury laws, the Federal
Truth in Lending Act, the Fair Debt Collection Practices Act, the Federal Equal
Credit Opportunity Act, the Fair Credit Reporting Act, the Federal Deposit
Insurance Act, the National Bank Act, and Regulations B, E, and Z of the Board
of Governors of the Federal Reserve System), and all rules, regulations, and
operating policies of Visa USA, Inc. which in all cases if violated would
adversely affect the value or collectability of the Credit Card Accounts or
Collateral Receivables or could result in a claim being made by a Cardholder
with respect to the Credit Card Accounts.
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"Security Agreement" shall mean the security agreement described in
Subsection 3.1(b). "Subsidiary" shall mean any corporation of which
more than 50% of the outstanding capital stock
having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether or not any other class or classes of
stock of such corporation shall or might have voting power upon the occurrence
of any contingency) is at the time directly or indirectly owned by the Borrower,
by the Borrower and one or more other Subsidiaries, or by one or more other
Subsidiaries.
Section 1.2. Accounting and Other Terms. All accounting terms not
specifically defined in this Agreement shall be construed in accordance with
generally accepted accounting principles. Other terms defined herein shall have
the meanings ascribed to them herein.
ARTICLE II
REVOLVING LOAN
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Section 2.1. Revolving Loan. The Bank agrees, in accordance with the
terms and conditions of this Agreement, to make advances (the "Advances") to the
Borrower from time to time from April 4, 2002, to and including the earlier of
April 4, 2003 (the "Termination Date") or the termination of this Agreement
pursuant to its terms, in an aggregate principal amount not to exceed $3,000,000
outstanding at any one time; provided, however, that the aggregate principal
amount of Advances outstanding shall not at any time exceed the lesser of (i)
the Borrowing Base or (ii) $3,000,000. Within the limits contained herein the
Borrower may borrow, prepay pursuant to Section 2.6 and reborrow under this
Section 2.1.
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Section 2.2. The Note. The Advances made by the Bank shall be evidenced
by a Note which is in substantially the form of Exhibit B attached hereto and is
delivered to the Bank pursuant to Article III. The Note shall have a maturity of
April 4, 2003, and shall provide for interest at the rate of 2% over the
Discount Rate. The Note shall be secured by a first priority security interest
in the Collateral Receivables in favor of Bank; provided, however, upon the
request of Borrower which shall be no more often than once each month the Bank
agrees to release the receivables related to specific Credit Card Accounts
requested by Borrower from its security interest on the conditions that (a) no
Event of Default has occurred and is continuing hereunder, and (b) such release
will not cause the principal amount outstanding under the Note, after taking
into consideration any prepayment made concurrently with such requested release,
to exceed the Borrowing Base as shown on the most recent Daily Activity Report.
Section 2.3. Making of Advances. Borrower may request advances
("Advances") under this Agreement by giving notice to the Bank on the Daily
Activity Report no later than 2:00 p.m. Central Time on any Business Day. Any
request for an Advance shall be deemed to be a representation that the
Borrower's representations and warranties contained in Section 4.1 and the
information contained in its Daily Activity Reports are true and correct as of
the date of the Advance as though made on and as of such date and that no event
has occurred and is continuing, or will result from such Advance, which
constitutes an Event of Default or would constitute an Event of Default but for
the requirement that notice be given or time elapse or both. An Advance shall be
made by crediting immediately available funds in the amount of the Advance to
any of Borrower's deposit accounts maintained with the Bank as specified by the
Borrower from time to time.
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Section 2.4. Origination Fee. On the date hereof, the Borrower agrees
to pay to the Bank an origination fee (the "Origination Fee") in the amount of
$30,000 .
Section 2.5. Interest and Payments.
(a) The Borrower shall repay, and shall pay interest on, the
aggregate unpaid principal amount of all Advances in accordance with
the terms contained in this Agreement and the Note. All payments of
principal, interest and fees under this Agreement shall be made when
due to the Bank in immediately available funds. All computations of
interest shall be made by the Bank on the basis of the actual number of
days elapsed in a year of 360 days. Whenever any such payment shall be
due on a non-Business Day such payment shall be made on the next
succeeding Business Day, and such extension of time shall be included
in the computation of interest. The Bank is expressly authorized to
charge any principal or interest payment, when due, to any account of
Borrower maintained at the Bank. The Borrower shall pay all other fees
and charges as provided in this Agreement and the other Loan Documents.
(b) On a daily basis, Borrower shall pay or cause to be paid
and apply all payments and other amounts received on account of the
Collateral Receivables, as follows:
(i) First, to fund new Collateral Receivables
resulting from purchases and cash advances on the Credit Card
Accounts, and such new Collateral Receivables shall be subject
to the Bank's security interest and shall secure all of the
Borrower's obligations to Bank under this Agreement and the
Note; provided, however, to the extent amounts received by
Borrower are insufficient to fund such new purchases, cash
advances, and other required payments by Borrower on the
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Credit Card Accounts, Borrower covenants and agrees to fund
such amounts on a daily basis from other sources and Bank
shall have no liability or obligation to fund such amounts;
and
(ii) Second, all remaining amounts shall be wire
transferred to Bank in accordance with the terms of the
Lockbox Agreement and the Lockbox Paying Agent Agreement on
each Business Day for the purpose of paying principal and
other amounts owing under this Agreement and the Note. Such
payments shall be in addition to all payments required by the
Note.
Bank acknowledges that Borrower is a party to the Lockbox Agreement and the
Lockbox Paying Agent Agreement which provide, among other things, for a two-day
delay between the time of receipt of checks and other payments at the lockbox on
account of the Collateral Receivables and the release of such funds as provided
in the Lockbox Agreement and the Lockbox Paying Agent Agreement.
Section 2.6. Voluntary Prepayment. The Borrower may, upon notice to the
Bank without penalty or premium, prepay the Note in whole or in part.
Section 2.7. Mandatory Prepayment or Addition of Credit Card Accounts.
In the event that the aggregate outstanding principal amount of the Note shall
exceed the Borrowing Base as shown on the Daily Activity Report at any time, the
Borrower shall immediately (a) pay to the Bank the amount of such excess, or (b)
transfer additional credit card accounts into Borrower's pool #2002200 by
tagging such additional credit card accounts in Borrower's records with the
permanent identification number 2002200, so that the outstanding principal
amount of the Note no longer exceeds the Borrowing Base as shown on the most
recent Daily Activity Report.
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ARTICLE III
CONDITIONS OF LENDING
Section 3.1. Conditions Precedent to Initial Advance. The Bank shall
have no obligation to make the initial Advance hereunder unless the Bank shall
have received on or before the date of such Advance the following documents:
(a) The Note properly executed and delivered on behalf of the
Borrower.
(b) The Security Agreement properly executed and delivered on
behalf of the Borrower, granting to the Bank a first priority security
interest in all Collateral Receivables and other property described
therein as security for the performance of the Borrower's obligations
under this Agreement and the Note, together with any financing
statement, lockbox agreement or control agreement, or other document
deemed necessary or desirable by the Bank to perfect the security
interest granted by the Security Agreement.
(c) The Intercreditor Agreements acceptable to Bank in form
and substance.
(d) The Amendments to the Lockbox Agreement and the Lockbox
Paying Agent Agreement and Supplements to the Lockbox Agreement and
Lockbox Paying Agent Agreement, in all cases in form and substance
acceptable to Bank.
(e) An opinion of counsel to the Borrower in favor of the Bank
in a form and as to such matters as the Bank may request.
(f) A certificate by the secretary of the Borrower certifying
resolutions of the board of directors of the Borrower, approving the
execution and delivery of the Loan Documents and approving all other
matters contemplated by this Agreement.
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(g) A certificate by the secretary of the Borrower certifying
the names of the officer or officers of the Borrower authorized to sign
the Loan Documents, together with a sample of the true signature of
such officer or officers.
(h) A certificate of good standing for the Borrower dated
within 30 days of the date hereof, and articles of incorporation of the
Borrower certified by the Delaware Secretary of State as of a date
within 30 days of the date hereof.
(i) A certificate by the secretary of the Borrower certifying
the Borrower's bylaws.
(j) A Daily Activity Report as of the date of closing.
(k) (A) An amendment to the Bankcard Marketing Agreement dated
February 9, 1999, between the parties and an amendment to the Purchase
Agreement dated February 9, 1999, between the parties, both in form and
substance acceptable to the Bank, providing that an Event of Default
occurring under this Agreement shall be an additional event of
termination under the Bankcard Marketing Agreement and under the
Purchase Agreement, and providing for the delivery by Borrower of
certain agreements from purchasers and secured parties of Borrower, and
(B) agreements from Coast, J.L.B., Thornton, Varde, and North Division
Associates in form and in substance satisfactory to Bank and providing
for the application of payments received on account of certain credit
card accounts.
Section 3.2. Conditions Precedent to Each Advance. Each Advance
(including the initial Advance) shall be subject to the further conditions
precedent, that on the date of such Advance:
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(a) The representations and warranties contained in Section
4.1 of this Agreement are correct on and as of the date of such Advance
as though made on such date; and
(b) No event has occurred and is continuing, or will result
from such Advance, which constitutes an Event of Default or would
constitute an Event of Default but for the requirement that notice be
given or time elapse or both.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1. Representations and Warranties of the Borrower. To induce
the Bank to make Advances, the Borrower represents and warrants as follows:
(a) Existence of Borrower. The Borrower is a corporation duly
incorporated, validly existing and in good standing under the laws of
the State of Delaware.
(b) Authority to Execute. The execution, delivery and
performance by the Borrower of the Loan Documents are within the
Borrower's corporate powers, have been duly authorized by all necessary
corporate action, do not and will not conflict with any provision of
law or of the charter or by-laws of the Borrower or of any agreement or
contractual restriction binding upon or affecting the Borrower or any
of its property, and need no further shareholder or creditor consent
except the consent of Coast, J.L.B., and ▇▇▇▇▇▇▇▇.
(c) Binding Obligation. This Agreement is, and the other Loan
Documents when delivered hereunder will be, legal, valid and binding
obligations of the Borrower enforceable against the Borrower in
accordance with their respective terms.
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(d) Governmental Approval. No consent of, or filing with, any
governmental authority or court, including, without limitation, any
bankruptcy court is required on the part of Borrower in connection with
the execution, delivery or performance of any Loan Documents except for
the filing by Bank of financing statements to perfect its security
interest in the collateral.
(e) Financial Statements. The audited financial statements of
the Borrower as of June 30, 2001, and the unaudited financial
statements of the Borrower as of December 31, 2001, copies of which
have been furnished to the Bank, have been prepared in conformity with
generally accepted accounting principles consistently applied and
present fairly the financial condition of the Borrower as of such
dates, and the results of the operations of the Borrower for the
financial periods then ended, except for any necessary year-end
adjustments in the case of the unaudited statements, and since such
dates, there has been no materially adverse change in such financial
condition.
(f) Litigation. No material litigation or governmental
proceeding is pending or threatened against the Borrower or Borrower's
properties except for litigation described on Schedule 4.1(f). No
bankruptcy proceeding is pending or threatened against the Borrower.
(g) Title to Assets. Borrower has good and marketable title to
all assets reported on its most recent balance sheet, and none of such
assets is subject to any mortgage, pledge, lien, security interest or
encumbrance of any kind, except for current taxes not delinquent, and
except as listed on Schedule 4.1(g) to this Agreement.
(h) Taxes. The Borrower has filed all federal and state income
tax returns which are required to be filed, and has paid all taxes
shown on such returns to be due and
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all other tax assessments received by it to the extent that such
assessments have become due.
(i) ERISA. No Plan (as that term is defined in the Employees'
Retirement Income Security Act of 1974 ("ERISA")) of Borrower which is
subject to Part 3 of Subtitle B of Title 1 of ERISA had an accumulated
funding deficiency (as such term is defined in ERISA) as of the last
day of the most recent fiscal year of such Plan ended prior to the date
hereof, or would have had such an accumulated funding deficiency on
such date if such year were the first year of such Plan, and no
material liability to the Pension Benefit Guaranty Corporation has
been, or is expected by the Borrower to be, incurred with respect to
any such Plan. No Reportable Event (as defined in ERISA) has occurred
and is continuing in respect to any such Plan.
(j) Defaults. The Borrower is not in default in the payment of
principal or interest on any indebtedness for borrowed money and is not
in default under any instrument or agreement under or subject to which
any indebtedness for borrowed money has been issued, and no event has
occurred and is continuing which, with or without the lapse of time or
the giving of notice, or both, constitutes or would constitute an event
of default under any such instrument or agreement or an Event of
Default hereunder.
(k) Subsidiaries. All of Borrower's Subsidiaries are listed on
Schedule 4.1(k).
(l) Patents, Trademarks. The Borrower has good and marketable
title to all patents, trademarks, processes, copyrights, franchises and
licenses, title to which is necessary for the operation of Borrower's
businesses.
(m) Compliance by Borrower with Requirements of Law. The
Borrower has not, and to the knowledge of Borrower all prior owners of
the Collateral Receivables and
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Credit Card Accounts have not, failed to comply with all material
Requirements of Law. The Borrower has all governmental licenses,
permits and other authorities necessary to conduct its business and to
use its properties in the manner in which they are presently being
used.
(n) Collateral Receivables. With respect to each Collateral
Receivable: (a) such Collateral Receivable has arisen under a Credit
Card Account; (b) said Collateral Receivable has been originated in
compliance with all material Requirements of Law; (c) except as listed
in Schedule 4.1(g), Borrower has good and marketable title thereto free
and clear of any and all security interests and liens; (d) such
Collateral Receivable is not subject to offset, recoupment, adjustment
or any other claim or defense of a Cardholder other than as permitted
by the federal Truth in Lending Act and applicable rules of Visa USA,
Inc.; (e) with respect to the creation of such Collateral Receivables,
any and all licenses, approvals, authorizations, registrations, and/or
declarations with or of any governmental authority of the United States
or any state required to be obtained, effected or given by the Borrower
have been duly obtained, effected or given and all are in full force
and effect after such date of creation; (f) each Collateral Receivable
represents the legal, valid and binding payment obligation of the
relevant Cardholder collectable from such Cardholder in the ordinary
course and enforceable against such Cardholder in accordance with the
terms of the applicable credit card agreement except as enforcement may
be limited by equitable principles and bankruptcy and similar laws
relating to creditors' rights generally; and (f) Borrower has no reason
to believe that any Collateral Receivable is not collectable in the
ordinary course.
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(o) Servicing of Credit Card Accounts. All Credit Card
Accounts have been properly accounted for and all payments or monies
received by Borrower with respect to the payment of any Collateral
Receivable have been properly applied. Each Credit Card Account has
been properly maintained and serviced in all respects by Borrower in
accordance with the applicable credit card agreements, all material
Requirements of Law, all of Borrower's policies and procedures, and in
a manner consistent with, and not in violation of, any standard and
customary practices utilized by Borrower with respect to all other
credit card accounts and receivables which Borrower services and which
are not a part of the Credit Card Accounts.
ARTICLE V
COVENANTS OF THE BORROWER
Section 5.1. Affirmative Covenants. So long as the Note shall remain
unpaid or outstanding hereunder, the Borrower will, unless the Bank shall give
its prior written consent:
(a) Financial Reporting. Furnish to the Bank: (i) as soon as
available and in any event within 45 days after the end of each quarter
(except the final quarter) of each fiscal year of the Borrower, balance
sheets of the Borrower as of the end of such quarter and statements of
income and retained earnings of the Borrower for the period commencing
at the end of the previous fiscal year and ending with the end of such
quarter, certified by the chief financial officer of the Borrower and
in a format reasonably acceptable to the Bank; (ii) as soon as
available and in any event within 90 days after the end of each fiscal
year of the Borrower, a copy of the audited financial statements for
such year for the Borrower, certified in a manner acceptable to the
Bank by independent public accountants acceptable to the Bank; (iii)
promptly upon the sending or filing
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thereof copies of all public reports issued by the Borrower to its
security holders generally, to the Securities and Exchange Commission
or to any national securities exchange; (iv) on each Business Day, no
later than 10:00 a.m. Central Time, a Daily Activity Report; and (v)
such other information concerning the conditions or operations,
financial or otherwise, of the Borrower as the Bank from time to time
may reasonably request;
(b) Visitation Rights. At any reasonable time and from time to
time, permit the Bank or any agents, representatives or participants
thereof, to examine and make copies of and abstracts from the records
and books of account of, and visit the properties of, the Borrower, and
to discuss the affairs, finances and accounts of the Borrower with any
of its officers or directors; and permit the Bank or any agents,
representatives or participants thereof, to conduct an audit and
inspection, at Borrower's expense, of all of the Borrower's assets
securing this Agreement and the Note.
(c) Notification of Default. Notify the Bank as promptly as
practicable (but in any event not later than 2 Business Days) after
Borrower obtains knowledge of: (i) the occurrence of any event which
constitutes an Event of Default or which would constitute an Event of
Default with the passage of time or the giving of notice or both; or
(ii) the commencement of any litigation or governmental proceedings of
any type which could materially adversely affect the financial
condition or business operations of the Borrower.
(d) Compliance Certificate. At the time any financial
statement is required to be provided to Bank under this Agreement,
provide to Bank a certificate substantially in the form of Exhibit C
signed by the chief financial officer of the Borrower stating whether
or not such officer has knowledge of the occurrence of any Event of
Default or
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any event which would constitute an Event of Default with the passage
of time or the giving of notice or both, or, if such officer has
knowledge of such an event, stating in reasonable detail the
circumstances surrounding such event and action proposed by the
Borrower to cure such event.
(e) Keeping of Financial Records and Books of Account.
Maintain proper financial records in accordance with generally accepted
accounting principles consistently applied which fully and correctly
reflect all financial transactions and all assets and liabilities of
the Borrower.
(f) Maintenance of Insurance. Maintain such insurance with
reputable insurance carriers as is normally carried by companies
engaged in similar businesses and owning similar property.
(g) Maintenance of Properties. Maintain and preserve all of
its properties, necessary or useful in the proper conduct of its
business, in good working order and condition, ordinary wear and tear
excepted.
(h) Payment of Taxes. Pay all tax assessments and governmental
charges of any kind payable by it as such taxes, assessments and
charges become due and before any penalty shall be imposed, except as
Borrower shall contest in good faith and by appropriate proceedings
providing such reserves as are required by generally accepted
accounting principles.
(i) Compliance with ERISA. Cause each retirement plan of the
Borrower that is subject to the provisions of ERISA to comply and be
administered in accordance with those provisions of ERISA which are
applicable to such plan.
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(j) Preservation of Corporate Existence. Preserve and maintain
its corporate existence, rights, franchises and privileges in the
jurisdiction of its incorporation, and qualify and remain qualified, as
a foreign corporation in each jurisdiction in which such qualification
is necessary or desirable in view of its business and operations or the
ownership of its properties.
(k) Compliance by Borrower with Laws. Comply with all material
Requirements of Law; and continue to hold all governmental licenses,
permits and other authorities necessary to conduct its business and to
use its properties in the manner in which they will be used.
(l) Servicing. Continue to administer and service the Credit
Card Accounts and Collateral Receivables in accordance with the
Borrower's usual policies and procedures, and with the same exercise of
care and diligence as it exercises and has exercised with all of its
credit card portfolios.
Section 5.2. Negative Covenants. So long as the Note shall remain
unpaid or outstanding hereunder, the Borrower will not, unless the Bank shall
give its prior written consent:
(a) Merger. Merge or consolidate with any other Person; sell,
transfer, convey, lease or otherwise dispose of (whether in one
transaction or in a series of transactions) all or a substantial
portion of its assets (whether now owned or hereafter acquired) to any
other Person except for sales and financings of accounts receivable
(that are not Collateral Receivables) in the ordinary course of
Borrower's business.
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(b) Transactions with Affiliates. Engage after the date
hereof, in any transaction (including without limitation loans or
financial accommodations of any kind) with:
(i) any director, officer or employee of the
Borrower;
(ii) any person who, individually or with his
immediate family, beneficially owns or holds 5% or more of
voting interest of the Borrower; or
(iii) any company in which any Person described above
in Subsections 5.2(b)(i) and (ii) owns a 5% or greater equity
interest;
provided, such transactions (including agreements regarding the
employment of any director, officer, or employee) are permitted if they
are on terms no less favorable to the Borrower than would be obtainable
if no such relationship existed; further, provided, with the approval
of the board of directors of Borrower, Borrower may enter into a
consulting contract with ▇▇▇ ▇. ▇▇▇▇▇▇▇▇ or related entity providing
for payments in the amount of $25,000 or less per month in exchange for
consulting services relating to financing, capital structure, expertise
regarding asset class, and similar matters.
ARTICLE VI
DEFAULT
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Section 6.1. Event of Default. "Event of Default" in this Agreement
means any of the following events:
(a) Failure of the Borrower to pay all or any part of the
principal of the Note when due;
(b) Failure of the Borrower to pay any interest or fee
required to be paid hereunder or on the Note when due;
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(c) Any representation or warranty made by, or on behalf of,
Borrower in, or pursuant to, any Loan Document shall prove to have been
incorrect in any material respect adverse to the Bank when made;
(d) Default in performance of any other covenant or agreement
of Borrower in, or pursuant to, any Loan Document and continuance of
such default or breach for a period of 15 days after written notice
from Bank;
(e) Borrower shall generally not pay its debts as such debts
become due, or shall admit in writing its inability to pay its debts
generally, or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against Borrower
seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment,
custodianship, protection, relief, or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors, or seeking the entry of an order for relief, or the
appointment of a receiver, custodian, trustee, or other similar
official for it or for any substantial part of its property, and in the
case of an involuntary proceeding 60 days shall have elapsed since the
commencement of such proceeding; or Borrower shall take any corporate
action to authorize any of the actions set forth above in this
subsection (e);
(f) Borrower shall fail to pay any debt for borrowed money in
an original principal amount exceeding $ 25,000 (other than the debt
evidenced by the Note) of the Borrower, or any interest or premium
thereon, when due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) and such failure shall continue
after the applicable grace period, if any, specified in the agreement
or instrument relating to such
19
debt; or any other default under any agreement or instrument relating
to any such debt, or any other event, shall occur and shall continue
after the applicable grace period, if any, specified in such agreement
or instrument, if the effect of such default or event is to accelerate,
or to permit the acceleration of, the maturity of such debt; or any
such debt shall be declared to be due and payable, or required to be
prepaid (other than by a regularly scheduled required prepayment) prior
to the stated maturity thereof; provided, Borrower may contest in good
faith amounts payable in the ordinary course of business to its
vendors;
(g) The entry against Borrower of a final judgment, decree or
order for the payment of money in excess of $25,000 and the continuance
of such judgment, decree or order unsatisfied for a period of 30 days
without a stay of execution;
(h) Any Reportable Event (as defined in ERISA) shall have
occurred and continue for 30 days; or any Plan shall have been
terminated by Borrower not in compliance with ERISA, or a trustee shall
have been appointed by a court to administer any Plan, or the Pension
Benefit Guaranty Corporation shall have instituted proceedings to
terminate any Plan or to appoint a trustee to administer any Plan;
(i) A breach or default occurs under the Intercreditor
Agreements, or a breach or default occurs under the Lockbox Agreement
or the Lockbox Paying Agent Agreement described in Subsection 3.1(d)
(which breach or default has an adverse effect on the Collateral
Receivables), or a breach or default occurs under any of the agreements
described in Subsection 3.1(k);
(j) An event of termination occurs under the Bankcard
Marketing Agreement dated February 9, 1999, between Bank and Borrower,
as amended, or under the Purchase Agreement dated February 9, 1999,
between Bank and Borrower, as amended; or
20
(k) Any event or events occur which the Bank determines in
good faith reasonably might impair the prospect of due and punctual
payment of the Note, including without limitation any material
deterioration in the condition, financial or otherwise, of the
Borrower.
Section 6.2. Rights and Remedies. If any Event of Default shall occur
and be continuing, the Bank may exercise any or all of the following rights and
remedies:
(a) Refuse to make any further Advances to the Borrower under
the Note;
(b) Declare the Note, all interest thereon, and all other
obligations under, or pursuant to, any Loan Document to be immediately
due and payable, and upon such declaration the Note, interest and other
obligations shall immediately be due and payable, without presentment,
demand, protest or any notice of any kind, all of which are expressly
waived;
(c) Exercise any right or remedy under any of the Loan
Documents, or any other right or remedy of a secured party under the
Uniform Commercial Code as in effect in South Dakota; and
(d) Exercise any other right or remedy available to the Bank
at law or in equity.
Section 6.3. Indemnification. Borrower agrees to indemnify, defend and
hold Bank harmless against any and all claims, damage, liability, loss, cost or
expense (including without limitation reasonable attorneys' fees and expenses)
incurred or suffered by Bank by reason of or resulting from or arising out of
(a) the operation of business conducted by Borrower prior to the date hereof
with respect to the Credit Card Accounts and the Collateral Receivables
21
including but not limited to failures to comply with all Requirements of Law,
and (b) the breach of any of the Borrower's representations, warranties, and
covenants contained herein.
ARTICLE VII
MISCELLANEOUS
-------------
Section 7.1. No Waiver; Cumulative Remedies. No failure or delay on the
part of the Bank in exercising any right or remedy under, or pursuant to, any
Loan Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, remedy or power preclude other or further exercise
thereof, or the exercise of any other right, remedy or power. The remedies in
the Loan Documents are cumulative and are not exclusive of any remedies provided
by law.
Section 7.2. Amendments and Waivers. No amendment or waiver of any
provision of any Loan Document shall be effective unless such amendment or
waiver is in writing and is signed by the Bank, and such amendment or waiver
shall be effective only in the specific instance and for the specific purpose
for which it was given.
Section 7.3. Notices. All notices and other communications provided for
hereunder shall be in writing (including communication by facsimile) and mailed,
telecopied or delivered, if to the Borrower, at its address stated in the
preamble hereof, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President, and if to the Bank, at
its address stated in the preamble hereof, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
President; or, as to each party, at such other address as shall be designated by
such party in a written notice to the other party. All such notices and
communications shall when mailed be effective when deposited in the mails, or
when telecopied when transmission is complete and the confirmation notice has
been printed, addressed as aforesaid, except that
22
notices to the Bank pursuant to the provisions of Article II shall not be
effective until received by the Bank.
Section 7.4. Costs and Expenses. The Borrower agrees to pay on demand
all reasonable out-of-pocket costs and expenses of the Bank in connection with
the preparation of the Loan Documents, including reasonable attorneys fees and
legal expenses, as well as all reasonable out-of-pocket costs and expenses of
the Bank, including reasonable attorneys fees and expenses, in connection with
the administration and enforcement of the Loan Documents after an Event of
Default (whether suit is commenced or not).
Section 7.5. Right of Set-off. The Bank is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other indebtedness at any time owing by the Bank
to or for the credit or the account of the Borrower against any and all of the
obligations of the Borrower now or hereafter existing under any Loan Documents,
irrespective of whether or not the Bank shall have made any demand under any
Loan Documents. The rights of the Bank under this Section are in addition to
other rights and remedies (including, without limitation, other rights of
set-off) which the Bank may have.
Section 7.6. Governing Law. All Loan Documents shall be governed by the
laws of the State of South Dakota. Any term used in this Agreement and not
otherwise defined herein shall have the definition, if any, given that term in
the Uniform Commercial Code as in effect in the State of South Dakota from time
to time. If any term in this Agreement shall be held to be illegal or
unenforceable, the remaining portions of this Agreement shall not be affected,
and this Agreement shall be construed and enforced as if this Agreement did not
contain the term held to be illegal or unenforceable.
23
Section 7.7. Venue of Action. THE BORROWER HEREBY CONSENTS TO THE
EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT SITUATED IN, OR WHOSE
DISTRICT ENCOMPASSES, POTTER COUNTY, SOUTH DAKOTA, AND WAIVES ANY OBJECTIONS
BASED ON FORUM NON CONVENIENS, WITH REGARD TO ANY ACTIONS, CLAIMS, DISPUTES OR
PROCEEDINGS RELATING TO THIS AGREEMENT, THE NOTE, THE SECURITY AGREEMENT, ANY
RELATED DOCUMENT, OR ANY TRANSACTIONS ARISING THEREFROM, OR ENFORCEMENT AND/OR
INTERPRETATION OF ANY OF THE FOREGOING. Nothing herein shall affect the Lender's
right to bring proceedings against the Borrower in the competent courts of any
other jurisdiction or jurisdictions.
Section 7.8. Waiver of Jury Trial. THE BORROWER AND THE LENDER HEREBY
JOINTLY AND SEVERALLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT, THE NOTE, THE SECURITY AGREEMENT, AND ALL
DOCUMENTS RELATING TO THIS AGREEMENT, OR ANY TRANSACTION ARISING HEREFROM OR
CONNECTED HERETO. THE BORROWER AND THE LENDER EACH REPRESENTS TO THE OTHER THAT
THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY GIVEN.
Section 7.9. Binding Effect; Assignment. All Loan Documents shall be
binding upon and inure to the benefit of the Borrower and the Bank and their
respective successors and assigns. The Borrower shall not have the right to
assign its obligations or interest under the Loan Documents without the prior
written consent of the Bank.
24
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the date first above written.
THE CREDIT STORE, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. Philippe
-----------------------
Title: Chief Financial Officer
PLAINS COMMERCE BANK
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
25
Exhibits
--------
A - Daily Activity Report
B - Note
C - Compliance Certificate
Schedules
---------
4.1(f) Litigation
4.1(g) Encumbrances
4.1(k) Subsidiaries
A-1
EXHIBIT A
DAILY ACTIVITY REPORT
PLAINS COMMERCE BANK COMMERCIAL LOAN
DAILY ACTIVITY REPORT
FEB-02
DAILY ACTIVITY MONTHLY ACTIVITY
BEGINNING O/S RECEIVABLES 27-FEB-02 $2,215,758.54 28-FEB-02 $2,215,758.54
CARDHOLDER ACTIVITY:
Current Month Net Amt Purch - -
Current Month Net Amt Cash - -
CHARGES/CASH ADVANCES - -
Current Month Net Billed Int - -
Current Month Billed Late Chg - -
Current Month Billed OL Chg - -
Current Month Item Charge - -
Current Month Annual Charge - -
Current Month Statement Charges - -
Current Month Misc. Charges - -
------------------ --------------------
INTEREST/FEES ASSESSED
- -
PAYMENTS
- -
MISC ADJUSTMENTS
- -
CHARGE-OFFS/CLOSE-OUTS/UNWINDS
- -
ENDING O/S RECEIVABLES 28-FEB-02 $2,215,758.54 28-FEB-02 $ 2,215,758.54
================== ====================
CASH AVAILABILITY BASED ON DAILY SETTLEMENT:
PAYMENTS $ -
CARDHOLDER FUNDING
-
NET CARDHOLDER CASH ACTIVITY $ -
DAILY BORROWING BASE:
ENDING O/S RECEIVABLES $2,215,758.54 -
ADVANCE RATE - 60% 60.00%
MAXIMUM CREDIT LINE $1,329,455.12
LOAN RECONCILEMENT:
BEGINNING BORROWINGS
NET CARDHOLDER EXCESS CASH PAYDOWN
NEW BORROWINGS
ENDING BORROWINGS
CURRENT AVAILABILITY $1,329,455.12
MONTHLY INTEREST EARNED ON AVERAGE
BORROWINGS
9.75% Annualized Rate
A-2
EXHIBIT B
REVOLVING CREDIT NOTE
$3,000,000.00 March 15, 2002
FOR VALUE RECEIVED, THE UNDERSIGNED, THE CREDIT STORE, INC., A
DELAWARE CORPORATION (THE "BORROWER"), DOES HEREBY PROMISE TO
PAY TO THE ORDER OF PLAINS COMMERCE BANK (THE "BANK"), AT ITS
OFFICE AT HOVEN, SOUTH DAKOTA IN LAWFUL MONEY OF THE UNITED
STATES AND IN IMMEDIATELY AVAILABLE FUNDS, THE PRINCIPAL
AMOUNT OF THREE MILLION AND NO/100 DOLLARS ($3,000,000.00) OR
THE AGGREGATE UNPAID PRINCIPAL AMOUNT OF ALL ADVANCES (AS
DEFINED IN THE REVOLVING CREDIT AGREEMENT HEREAFTER DEFINED)
MADE TO THE BORROWER BY THE BANK PURSUANT TO THE REVOLVING
CREDIT AGREEMENT HEREINAFTER REFERRED TO, WHICHEVER IS LESS,
ON APRIL 4, 2003, AND TO PAY INTEREST ON THE UNPAID PRINCIPAL
AMOUNT OUTSTANDING FROM TIME TO TIME (COMPUTED ON THE BASIS OF
A YEAR OF THREE HUNDRED SIXTY (360) DAYS) FROM THE DATE OF
THIS REVOLVING CREDIT NOTE, IN LIKE MONEY, AT SAID OFFICE, AT
A RATE PER ANNUM EQUAL TO TWO PERCENT (2%) ABOVE THE RATE AS
ANNOUNCED FROM TIME TO TIME BY THE BANK AT ITS PRINCIPAL
OFFICE IN HOVEN, SOUTH DAKOTA AS ITS DISCOUNT RATE ("DISCOUNT
RATE") PAYABLE ON THE FIRST DAY OF EACH MONTH COMMENCING MAY
1, 2002. ANY AMOUNT OF PRINCIPAL HEREOF WHICH IS NOT PAID WHEN
DUE, WHETHER AT STATED MATURITY, BY ACCELERATION, OR
OTHERWISE, SHALL BEAR INTEREST FROM THE DATE WHEN DUE UNTIL
SAID PRINCIPAL AMOUNT IS PAID IN FULL, PAYABLE ON DEMAND, AT A
RATE PER ANNUM EQUAL AT ALL TIMES TO FOUR PERCENT (4%) ABOVE
THE DISCOUNT RATE. ANY CHANGE IN THE INTEREST RATE RESULTING
FROM A CHANGE IN THE DISCOUNT RATE SHALL BE EFFECTIVE AT THE
BEGINNING OF THE DAY ON WHICH SUCH CHANGE IN THE DISCOUNT RATE
BECOMES EFFECTIVE.
A-3
THIS REVOLVING CREDIT NOTE IS THE NOTE REFERRED TO IN THE REVOLVING
CREDIT AGREEMENT DATED MARCH 15, 2002, BETWEEN THE BORROWER
AND THE BANK (THE "REVOLVING CREDIT AGREEMENT"). THE REVOLVING
CREDIT AGREEMENT, AMONG OTHER THINGS, CONTAINS PROVISIONS FOR
ACCELERATION OF THE MATURITY OF THIS REVOLVING CREDIT NOTE
UPON THE HAPPENING OF CERTAIN STATED EVENTS AND ALSO FOR
PREPAYMENTS ON ACCOUNT OF THE PRINCIPAL OF THIS REVOLVING
CREDIT NOTE PRIOR TO THE MATURITY OF THE REVOLVING CREDIT NOTE
UPON THE TERMS AND CONDITIONS SPECIFIED IN THE REVOLVING
CREDIT AGREEMENT. THIS REVOLVING CREDIT NOTE IS SECURED BY A
SECURITY AGREEMENT REFERRED TO IN THE REVOLVING CREDIT
AGREEMENT, REFERENCE TO WHICH IS HEREBY MADE FOR A DESCRIPTION
OF THE COLLATERAL PROVIDED FOR UNDER THE SECURITY AGREEMENT
AND THE RIGHTS OF THE BORROWER AND THE BANK WITH RESPECT TO
SUCH COLLATERAL.
THE BORROWER HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY STATE
OR FEDERAL COURT SITUATED IN, OR WHOSE DISTRICT ENCOMPASSES, POTTER COUNTY,
SOUTH DAKOTA, AND WAIVES ANY OBJECTIONS BASED ON FORUM NON CONVENIENS, WITH
REGARD TO ANY ACTIONS, CLAIMS, DISPUTES OR PROCEEDINGS RELATING TO THIS
REVOLVING CREDIT NOTE, ANY RELATED DOCUMENT, OR ANY TRANSACTIONS ARISING
THEREFROM, OR ENFORCEMENT AND/OR INTERPRETATION OF ANY OF THE FOREGOING. Nothing
herein shall affect the Lender's right to bring proceedings against the Borrower
in the competent courts of any other jurisdiction or jurisdictions.
THE BORROWER AND THE LENDER HEREBY JOINTLY AND SEVERALLY WAIVE ANY
AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING
RELATING TO THIS REVOLVING CREDIT NOTE AND ALL DOCUMENTS
RELATING TO THIS REVOLVING CREDIT NOTE, OR ANY TRANSACTION
ARISING HEREFROM OR CONNECTED HERETO. THE BORROWER AND THE
LENDER EACH REPRESENTS TO THE OTHER THAT THIS WAIVER IS
KNOWINGLY, WILLINGLY AND VOLUNTARILY GIVEN.
THIS REVOLVING CREDIT NOTE SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF SOUTH DAKOTA. PRESENTMENT FOR PAYMENT, DISHONOR,
NOTICE OF DISHONOR, AND ALL OTHER NOTICES ARE HEREBY WAIVED BY
BORROWER.
THE CREDIT STORE, INC.
By:
------------------------------------
Its:
------------------------------------
A-5
EXHIBIT C
COMPLIANCE CERTIFICATE
I, ____________________ the Chief Financial Officer of The Credit
Store, Inc., a Delaware corporation (the "Borrower"), DO HEREBY CERTIFY, in
connection with the delivery by the Borrower of [describe financial statements]
to Plains Commerce Bank (the "Bank") on this date pursuant to the Revolving
Credit Agreement dated as of March ___, 2001, between the Borrower and the Bank
(the "Credit Agreement," the terms defined therein being used herein as therein
defined), that:
1. The representations and warranties of the Borrower contained in
Article IV of the Credit Agreement are correct on and as of the date hereof as
though made on and as of such date; and
2. No event has occurred and is continuing which constitutes an Event
of Default or would constitute an Event of Default but for the requirement that
notice be given or time elapse or both, or [if such officer has knowledge of
such an event, state in reasonable detail the circumstances surrounding the
event and the action proposed by the Borrower to cure such event].
IN WITNESS WHEREOF, I have signed this Certificate this ___ day of
________, 200__.
THE CREDIT STORE, INC.
By:
----------------------------------
Title: Chief Financial Officer
A-6