Exhibit 10.35.1
SECOND AMENDMENT
TO THE
PURCHASE AGREEMENT
This Second Amendment to the Purchase Agreement (the "Agreement") is
made and entered into this 21st day of September 2001, by and between FIRST
NATIONAL BANK IN BROOKINGS (the "Bank") and THE CREDIT STORE, INC., a Delaware
corporation, formerly known as SERVICE ONE INTERNATIONAL CORPORATION (the
"Purchaser").
RECITALS:
WHEREAS, the Bank and Purchaser have entered into a certain Purchase
Agreement dated the 2d day of October 1997, which was subsequently amended the
31st day of August 1998 and the Bank and Purchaser deem a second amendment to
the existing Purchase Agreement is in the interests of the parties;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree to amend their
Agreement as follows:
1) Section 1.3 of the Purchase Agreement shall be amended to delete the
words Section 4.1 hereof" at the end of the paragraph and replaced
with the words "Section 4.1 and 4.2 hereof"
2) Section 1.5 of the aforementioned Purchase Agreement be deleted and
replaced with the following: "Section 1.5 Bank Fee. In consideration
of Bank's agreement to sell the Receivables to Purchaser, Purchaser
shall pay Bank a fee of $1.00 per Card for so long as this Agreement
remains in effect (the "Fixed Fee"). Purchaser shall pay Bank a
minimum Fixed Fee based upon 25,000 credit cards. The minimum Fixed
Fee shall be due and payable during each of the first twelve months
of the first year of this Agreement, provided that Purchaser shall be
under no obligation to continue to pay the minimum Fixed Fee if (1)
Bank materially alters its Credit Criteria and Standards, a copy of
which is attached hereto as Exhibit A, for the Marketer Card
Portfolio without the prior written consent of Purchaser, (2) the
marketing program generating the Marketer Card Portfolio cannot be
continued due to VISA or MasterCard regulations or state or federal
law, regulation, or ruling, (3) the Bankcard Marketing Agreement
between Bank and Purchaser is terminated, or (4) the Marketer Card
Portfolio is transferred to a financial institution other than Bank.
Purchaser shall pay the Fixed Fee on the 15th day of each month. The
Fixed Fee shall be based upon the number of Cards issued and
outstanding in the Marketer Card Portfolio as of the last day of the
prior month as shown on the reports of the third-party processor
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described in Section 1.6 of the Agreement. The Fixed Fee shall be
paid by cash or wire transfer."
3) Section 1.6(b) and the second subsection(v) of the Purchase Agreement
shall be amended to replace the words " within 5 days" with "within
fifteen (15) days".
4) Section 1.7 of the purchase Agreement shall be amended to delete the
words "Except for costs covered by the Base Fee, which cost shall be
paid for by Bank," and to capitalize the word "any".
5) Article 4 of the Purchase Agreement shall be amended to add the
following "Section 4.2 Purchase of Charged-off Card Accounts. If a
Card account charges-off in accordance with the Banks charge-off
policy, the Bank shall immediately convey the charged-off Card
account to the Purchaser. The purchase price for the charged-off Card
accounts shall be an amount equal to the par value of the outstanding
credit generated by balance transfers, cash advances, and purchases
on the Cards accounts that have not previously been purchased by
Purchaser under the Purchase Agreement."
6) Section 5.1 of the Purchase Agreement be deleted and replaced with
the following: "Section 5.1 Contingent Liability Fund. Purchaser
shall establish and fund a reserve account (the "Contingent Liability
Fund") at Bank. The Contingent Liability Fund shall be in the name of
Purchaser, but Purchaser shall only be entitled to withdraw funds or
other assets therefrom with the written consent of Bank. Purchaser
shall maintain a cash balance in the Contingent Liability Fund in an
amount not less than $500,000. In the event the Contingent Liability
Fund exceeds the aggregate amount of such unused credit lines, the
Bank shall from time to time (but no less often than quarterly)
permit the Purchaser to withdraw the amount of such excess from the
Contingent Liability Fund. The Contingent Liability Fund shall be
maintained after the termination of this Agreement and shall be
disbursed to Purchaser only after Bank has reasonably determined that
Purchaser's obligations to Bank hereunder have been completely
satisfied.
As security for Purchaser's obligations to Bank hereunder, Purchaser
hereby grants to Bank a security interest in the Contingent Liability
Fund. Bank shall have the right to set off and apply against all
obligations of Purchaser owed to Bank, at any time and without notice
to Purchaser, any and all deposits or other sums at any time credited
by or owing from Bank to Purchaser.
The Contingent Liability Fund established by Purchaser shall be in
the form of a Repurchase Agreement for mutually agreed upon and
identified obligations of the United States government. Each party
shall take all reasonable actions and execute
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such documents as necessary to perfect and protect the other party's
interest in the Repurchase Agreement and the government obligations
subject thereto.
7) On or before the date of this Amendment, the Bank shall remit to
Purchaser $250,000 of the current Contingent Liability Fund balance
bringing the balance to $500,000."
In all other respects the October 2, 1997 Purchase Agreement and the
August 31, 1998 Amended Purchase Agreement are confirmed and ratified.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date set forth above.
BANK: PURCHASER:
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FIRST NATIONAL BANK IN BROOKINGS THE CREDIT STORE, INC.
By ------------------------------- By -------------------------------
Its ------------------------------ Its -------------------------------
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