Exhibit 10.7
AMENDMENT TO
PURCHASE AND SALE AGREEMENT
This AMENDMENT TO PURCHASE AND SALE AGREEMENT (this "Amendment"), dated as
of May 25, 2004, amends the Purchase and Sale Agreement, dated as of January 16,
2004 (the "Agreement"), by and among CIRCUIT CITY STORES, INC., a Virginia
corporation ("Circuit City"), FIRST NORTH AMERICAN NATIONAL BANK, a wholly owned
subsidiary of Circuit City and a limited purpose credit card bank under the Bank
Holding Company Act ("FNANB"), TYLER INTERNATIONAL FUNDING, INC., a Delaware
corporation and a wholly owned subsidiary of Circuit City ("Tyler Funding"), and
BANK ONE, DELAWARE, NATIONAL ASSOCIATION, a national banking association
("Purchaser").
INTRODUCTION
Circuit City, FNANB, Tyler Funding and Purchaser have entered into the
Agreement.
Each of Circuit City, FNANB, Tyler Funding and Purchaser have now agreed to
amend the Agreement by this Amendment.
Accordingly, in consideration of the mutual agreements contained herein,
the parties agree as follows:
AMENDMENT
1. Section 1.01 is hereby amended by adding the following definitions:
"Deceased Accounts" shall have the meaning specified in Section 4.05.
"Deceased Accounts Adjustments" shall have the meaning specified in
Section 4.05.
"Initial Deceased Accounts Adjustment" shall have the meaning specified
in Section 4.05.
"Subsequent Deceased Accounts Adjustment(s)" shall have the meaning
specified in Section 4.05.
2. The information in Schedule 2.01(j) under the heading "UNIX & AS400" is
hereby amended and restated in its entirety in the form attached hereto as
Exhibit A.
3. The fourth sentence of Section 7.17 is hereby deleted in its entirety
and replaced with the following:
"The mailing shall be made as follows: (1) notices to Borrowers on active
Accounts will be mailed no later than 61 days after the Closing Date; (2)
notices to Borrowers on inactive Accounts whose last activity on the
Account has been within 12 months before the Closing Date will be mailed no
later than 90 days after the Closing Date; and (3) notices to Borrowers on
all remaining Accounts will be mailed no later than 120 days after the
Closing Date."
4. The first sentence of Section 4.01(a) is hereby amended by deleting the
word "or" immediately preceding clause (vii) thereof and inserting the following
at the end of such sentence:
"(ix) any Deceased Accounts Adjustments; or (x) the Additional
Promotions Adjustment"
The second sentence of Section 4.01(a) is hereby amended by deleting "(in
the case of clause (iv), (v), (vi), (vii) or (viii))" and replacing it with "(in
the case of clause (iv), (v), (vi), (vii), (viii), (ix) or (x))" and by
inserting the phrase "charge off" immediately preceding the word "chargeback".
5. The first sentence of Section 4.03 is hereby amended by inserting the
phrase "charge off" immediately preceding the word "chargeback".
6. Section 4.03 is hereby amended by inserting the following immediately
after the words "Closing Date" in the first sentence thereof:
"(or on or before the six-month anniversary of the Closing Date with
respect to a Deceased Accounts Adjustment)"
7. Article IV is hereby amended by adding the following Section 4.05 at the
end thereof:
SECTION 4.05. Deceased Accounts Adjustment.
(a) The Purchase Price shall be adjusted downward in an amount equal to
(i) 100% of the face amount of Receivables under Circuit City Credit Card
Accounts and (ii) 100% of the face amount of Receivables under Circuit City
Plus VISA Accounts, in each case outstanding on the date such Receivables
are charged off by Purchaser with respect to (1) Deceased Accounts
(excluding any Deceased Accounts described under clause (2) below) charged
off by Purchaser after having been identified as Deceased Accounts by means
of a "probate" scrub of delinquent Accounts (delinquent being defined as
one day or greater past due as of the Closing Date) performed within sixty
(60) days after the Closing Date (the "Initial Deceased Accounts
Adjustment(s)") and (2) Deceased Accounts (excluding any Deceased Accounts
described under clause (1) above) charged off by Purchaser in the ordinary
course of business consistent with FNANB's past practices on or before the
sixth-month anniversary of the Closing Date (the "Subsequent Deceased
Accounts Adjustment(s)", and together with the Initial Deceased Accounts
Adjustment, the "Deceased Accounts Adjustments"). "Deceased Accounts" shall
mean any Account with respect to which the only Borrower or all Borrowers
under such Account had died before the Cut-Off Time. Deceased Accounts
shall not include
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Accounts that have active credit insurance or debt cancellation with a life
coverage component.
(b) The Deceased Accounts Adjustments shall constitute Accounts-Based
Adjustments under Article IV. The Deceased Accounts Adjustments with
respect to Deceased Accounts charged off thirty (30) days or more before
the Settlement Date shall be reflected as a separate item or items on the
Settlement Date Statement. Any Deceased Accounts Adjustment that is not
reflected on the Settlement Date Statement pursuant to the immediately
preceding sentence of this Section 4.05(b) shall be an Accounts-Based
Adjustment that is settled in accordance with Section 4.03.
(c) Purchaser will use its commercially reasonable efforts consistent
with FNANB's customary practices and procedures for charged-off accounts to
collect payments and make recoveries with respect to any Deceased Account
that is charged off by Purchaser resulting in a Purchase Price adjustment
pursuant to Section 4.05(a).
(d) Unless otherwise agreed by Circuit City and Purchaser, Circuit City
shall be entitled to receive any payments or other recoveries with respect
to any Deceased Account charged off by Purchaser that are received or
realized by Purchaser on or after the date such Deceased Account is charged
off. Such payments and/or recoveries received by Purchaser during any
calendar month shall be remitted to Circuit City no later than thirty (30)
days after the end of such calendar month.
8. Section 7.01(xi) is hereby amended by inserting the following
immediately after the final sentence thereof:
"Notwithstanding anything in this Section 7.01(xi) to the contrary, Circuit
City, FNANB and Tyler shall be permitted to market, without the consent of
Purchaser, one or more 24-month no interest promotional financing plans
(the "Additional Promotions"), in addition to the March Promotion. With
respect to any such Additional Promotion, the Purchase Price shall be
reduced (the "Additional Promotions Adjustment") in an amount equal to the
product of (1) the aggregate sales under the Additional Promotions, times
(2) 320 basis points (which represents the difference between the cost of
24-month financing (9.5%) and 18-month financing (6.3%) under the Program
Agreement). The Additional Promotions Adjustment shall constitute an
Accounts-Based Adjustment under Article IV. Without limiting the generality
of the foregoing, the Additional Promotions Adjustment shall be reflected
as a separate item on the Settlement Date Statement delivered pursuant to
Section 4.02."
9. Section 3.03 is hereby amended by inserting the following sentence
immediately after the fourth sentence of Section 3.03:
"Sellers shall cause each holder of the Outstanding Private Series (i) to
deliver to Purchaser at least one Business Day prior to the Closing Date a
certificate as to the amount required to be paid to it in order for the
Outstanding Private Series to be paid in full (which certificates shall
each include wire instructions for such payment) and (ii) to immediately
notify Purchaser in writing upon receipt of such payment. In addition,
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Sellers shall deliver a copy of the original Investor Certificates
representing the Outstanding Private Series cancelled by the Trustee to
Purchaser upon payment in full thereof."
10. Sections 9.02(a)(vii) and 9.03(a)(vii) are both hereby amended to
delete the phrase "five (5) Business Days before" therefrom.
11. Definitions. Capitalized terms used but not defined in this Amendment
shall have the meaning ascribed to them in the Agreement.
12. Agreement Continuation. The Agreement, as modified herein, shall
continue in full force and effect according to its terms.
13. Headings. The headings contained in this Amendment are for reference
purposes only and shall not affect the meaning or interpretation of this
Amendment.
14. Counterparts. This Amendment may be executed by facsimile transmission
of original signatures in one or more counterparts, each of which counterparts
shall be deemed to be original, and all such counterparts shall constitute one
and the same instrument.
15. Instruments to be Read Together. This Amendment shall form a part of
the Agreement for all purposes and the Agreement and this Amendment shall
henceforth be read together.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their duly authorized officers.
CIRCUIT CITY STORES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Senior Vice President and
Chief Financial Officer
FIRST NORTH AMERICAN NATIONAL BANK
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
TYLER INTERNATIONAL FUNDING, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President and Secretary
BANK ONE, DELAWARE, NATIONAL ASSOCIATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Senior Vice President, Finance Director
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