EXHIBIT 10.3
REVOLVING CREDIT PROGRAM AGREEMENT
[Portions of this Exhibit have been omitted pursuant to a request for
confidential treatment under Rule 24b-2 under the Securities Exchange Act of
1934, as amended. A copy of this Exhibit with the portions intact has been filed
separately with the Securities and Exchange Commission]
This Program Agreement ("Agreement") is made as of the 17th day of May,
1999, by and between GREEN TREE FINANCIAL CORPORATION, a Delaware corporation,
its successors and assigns ("Green Tree"), with its executive offices at 1100
Landmark Towers, 000 Xxxxx Xxxxx Xxxxxx, Xx. Xxxx, Xxxxxxxxx 00000, and SELECT
COMFORT CORPORATION, a Minnesota corporation and its subsidiaries ("Select
Comfort"), with its executive offices at 0000 Xxxxxxx Xxxx Xxxxx, Xxxxxxxxxxx,
Xxxxxxxxx 00000.
WHEREAS, Select Comfort conducts business through its retail locations
and direct marketing and desires to have Green Tree provide revolving credit
financing to its qualified customers, and
WHEREAS, Green Tree is willing to provide revolving credit financing
(including the issuance of Credit Cards) to qualified Select Comfort customers
as set forth herein during the term of this Agreement,
NOW THEREFORE, in consideration of the terms and conditions stated herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Green Tree and Select Comfort agree as follows:
SECTION 1. DEFINITIONS
The following words shall have the following meanings when used in this
Agreement:
"Account" means all of the accounts, receivables and contract rights
created between an Accountholder and Green Tree pursuant to the Program.
"Accountholder" means any person to whom Green Tree has extended credit
under the Program.
"Authorization" means permission from Green Tree to make a sale of
services, products, or goods to a cardholder pursuant to the Credit Agreement
that is charged to an Account.
"Chargeback" means the refusal of Green Tree to pay Select Comfort for a
Sales Slip or the return to Select Comfort and reimbursement to Green Tree of a
Sales Slip for which Select Comfort was previously paid.
"Consumer Direct Program" means Purchases made by Accountholders through
Select Comfort's direct marketing activities.
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"Credit Agreement" means the open-end revolving credit agreement between
Green Tree and each Accountholder, together with any modifications or amendments
which may be made to such agreement.
"Credit Card" means a plastic card issued and owned by Green Tree under the
Program that may be used exclusively for the purchase of Products from Select
Comfort.
"Default" means any Event of Default or the occurrence of any event which
would be an Event of Default with the giving of notice or lapse of any
applicable grace period.
"Event of Default" has the meaning given in Section 7.01.
"Loss Rate" means the total annual dollar amount of charged-off Accounts,
net of recoveries, divided by the average annual amount of outstandings.
"Presentment Warranty" means each of the warranties set forth in this
Agreement made by Select Comfort each time a Purchase is presented to Green Tree
for approval and settlement.
"Products" means all products and services which may be purchased by an
Accountholder from Select Comfort including sales or use tax, transportation and
other miscellaneous charges.
"Program" means the program, including both the Consumer Direct Program and
the Retail Program established by Green Tree on the terms and conditions
outlined in this Agreement pursuant to which Green Tree will offer to qualified
Select Comfort customers the revolving credit facility described in Section 2.02
hereof. The term includes the extension of credit by Green Tree, xxxxxxxx,
collections, accounting between Green Tree and Select Comfort, and all aspects
of the customized revolving credit plan contemplated herein.
"Program Documents" has the meaning given in Section 3.01.
"Purchase" means a purchase of Products from Select Comfort for which Green
Tree has extended credit to an Accountholder.
"Retail Program" means Purchases made by Accountholders through retail
stores and road show events.
"Sales Slip" means information regarding a sale including Accountholder
name, Account number, Authorization, amount of sale, description of Products
sold, and other similar information created at the time of sale to document such
sales transaction either in printed or electronic format.
"Vision 21 System" means Green Tree's data and application processing
system.
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SECTION 2. ESTABLISHMENT OF PROGRAM
SECTION 2.01 COMMENCEMENT OF PROGRAM. The Program shall commence at such
date and time as is mutually agreed to by Green Tree and Select Comfort.
SECTION 2.02 REVOLVING CREDIT FACILITY. Under the Program, Green Tree
agrees to offer qualified Select Comfort customers an unsecured revolving line
of credit that will include (i) a Credit Card that may be used exclusively for
Purchases, and (ii) a cash advance feature that will enable Accountholders to
obtain cash advances from Green Tree by requesting a specific cash advance
utilizing personalized convenience checks furnished by Green Tree.
SECTION 2.03 CREDIT TERMS. (i) Green Tree shall establish all of the terms
and conditions of the Credit Agreement and the terms and conditions under which
credit is extended to Accountholders, including without limitation the interest
rate and fees and charges applicable to Purchases. Green Tree shall establish a
variable rate of interest which will yield an interest rate for Purchases of
Prime plus 14.15%. (Prime will be the Prime Rate as listed on the last business
day of the month in the Wall Street Journal.) Green Tree may from time to time
in its sole discretion modify such terms and conditions of the Credit Agreement
to the extent it deems necessary. (ii) Green Tree agrees to offer special credit
promotions on Purchases in accordance with the terms and conditions as may be
mutually agreed to by the parties. (iii) Green Tree's financing of the Purchases
is amortized over the life of the Account with a payment factor of 3.0% of the
high balance after the most recent purchase or $15.00, whichever is greater.
Convenience checks will be added to the balance and amortized over the life of
the Account.
SECTION 2.04 SELECT COMFORT TO HONOR CREDIT CARD. Select Comfort hereby
agrees to participate in the Program and to honor the Credit Card for Purchases.
Select Comfort shall honor the Credit Card only in accordance with the
procedures outlined in Section 4 hereof, as the same may be amended from time to
time in accordance with the terms of Section 4.01.
SECTION 2.05 GREEN TREE TO EXTEND CREDIT. Subject to (i) the terms of this
Agreement, (ii) the credit limits applicable to each Account, and (iii) the
terms and conditions in the Credit Agreement, Green Tree shall extend credit to
Accountholders in accordance with Section 4.
SECTION 2.06 CONFIDENTIAL INFORMATION. In connection with the performance
of this Agreement, Green Tree and Select Comfort may disclose to the other, in
writing or orally, information concerning its business, marketing techniques and
methods of operation including financial statements, if any are provided (the
"Confidential Information"). Each shall treat the Confidential Information of
the other as confidential and shall not disclose the same to any other person,
or use the same except in connection with the performance of this Agreement.
Green Tree and Select Comfort each agrees that it will limit access to the
Confidential Information of the other to those of its employees, agents or
subcontractors who reasonably require the same to carry out the purposes of this
Agreement. The obligations set out in this Section shall not apply to any
Confidential Information that the recipient can establish by documentary
evidence that: (a) was known to the recipient at the time it was disclosed to
the recipient; (b) was in the public domain at the time it was disclosed to the
recipient; or (c) had entered into the public domain subsequent to disclosure to
the recipient through no unlawful act of the recipient. Green Tree and Select
Comfort acknowledge that the Confidential Information of the other constitutes a
unique and valuable asset of the other, and that any disclosure or use of the
Confidential Information except as specifically authorized herein would be
wrongful and would cause
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irreparable harm, and that it would be difficult to compensate fully with
damages for a violation of this Section. Accordingly, each agrees that the other
shall be entitled to temporary and permanent injunctive relief to enforce this
Section; this provision shall not however be deemed to diminish or supplant the
right of Green Tree and Select Comfort to claim and recover money damages for
any breach hereof in addition to obtaining equitable relief therefor.
SECTION 2.07. SELECT COMFORT'S CUSTOMER LIST AND PROGRAM ACTIVITY. The
names of Select Comfort customers who make application to become Accountholders
and credit and other information relating to them does not constitute
"Confidential Information." Information relating to Program activity does not
constitute "Confidential Information."
SECTION 2.08. SELECT COMFORT COMMITMENT. Select Comfort agrees to give
Green Tree the right of first refusal of all private label financed business.
Select Comfort guarantees to Green Tree a minimum of $xxxxxxxxxx in net
Purchases shall be generated each year under the Program. If a minimum of
$xxxxxxxxxx in net Purchases is not generated in any year under the Program,
Green Tree may, as its sole remedy for failure to reach such minimum: (i)
propose an adjustment to the discount fees and participation fees in Section
2.09, and, (ii) if such proposed adjustment is not accepted by Select Comfort,
terminate the Program with 150 days written notice.
Notwithstanding other provisions within this Agreement, following the thirty
sixth month of the Program, Select Comfort may terminate this Agreement with a
minimum of 150 days notice, at any time following the month in which net
Purchases under this Agreement first exceed $xxxxxxxxxx in a consecutive 12
month period. Net Purchases shall mean Purchases less amounts refunded for
Chargebacks, returned merchandise and other credits to Accounts.
[Portions of this section have been omitted pursuant to a request for
confidential treatment under Rule 24b-2 under the Securities Exchange Act of
1934, as amended. A copy of this Exhibit with the portions intact has been filed
separately with the Securities and Exchange Commission]
SECTION 2.09. FEES, DISCOUNTS AND CHARGES - Fees, discounts and charges are
identified in Exhibit A.
SECTION 2.10 MARKETING FUND. Green Tree will form a jointly managed
marketing fund ("Fund"). The Fund will be jointly managed by Green Tree and
Select Comfort to be utilized for promotion of the Program. Green Tree will
allocate $xxxxxxxxxx to the Fund as of the commencement of the Program. Green
Tree will allocate xxxxxxxxxx to the Fund in each subsequent Program month if
the Program generates a minimum of $xxxxxxxxxx in annual net Purchases during
the previous twelve months. If the Program generates net Purchases that are less
than $xxxxxxxxxx, the Fund will be reduced at Green Tree's discretion. Select
Comfort will match the Green Tree allocation to the Fund as of the commencement
of the Program and on each subsequent Program anniversary. Upon termination of
the Program, any allocation remaining in the Fund will be allocated
proportionately to the contributing party. Expenditures from the Fund shall be
as mutually agreed to by both Green Tree and Select Comfort. The Fund will not
require cash payments until such time as expenditures are required. Green Tree
will maintain a record of net allocations made to the Fund.
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Notwithstanding provisions to the contrary, Select Comfort will have full
discretion of the uses of xx% of the Fund the first year subject to (ii) below.
Select Comfort shall have full discretion of the uses of xx% of the fund for
each year thereafter as long as: (i) Select Comfort's volume requirement in
Section 2.08 was met in the first 12 months of the Program and volume increases
by xx% each year thereafter, and (ii) cost incurred are designed to encourage
and can be directly related to Purchases under the Program. It is anticipated
that the following activities are examples of costs which would be funded under
this Agreement; (a) pro rata share of the cost (based on proportionate amount of
print space relating to the financing offer, applications, etc.) of printing and
mailing brochures which reference financing offered under this Agreement, (b)
cost associated with preapproved credit offers, (c) employee contests relating
to credit offers, or (d) retail signage.
[Portions of this section have been omitted pursuant to a request for
confidential treatment under Rule 24b-2 under the Securities Exchange Act of
1934, as amended. A copy of this Exhibit with the portions intact has been filed
separately with the Securities and Exchange Commission]
SECTION 3. ADMINISTRATION OF PROGRAM
SECTION 3.01 PREPARATION OF DOCUMENTS. Green Tree and Select Comfort shall
cooperate and assist each other in the preparation of all documents to be used
in connection with the Program. Green Tree shall provide Select Comfort with the
form and content of credit applications, Credit Agreements, Credit Cards, and
other forms used in connection with the Program and using the name Green Tree or
any of its subsidiaries or affiliated companies (hereinafter referred to as
"Program Documents"), as well as all necessary instructions to complete such
forms in compliance with all applicable laws. All Program Documents shall
clearly disclose that Green Tree is the creditor. Select Comfort shall not use
any Program Document unless Green Tree has expressly approved its form and
content. Select Comfort shall not refer to Green Tree, except in approved
Program Documents.
SECTION 3.02 CREDIT DECISIONS. Green Tree, in its sole discretion, shall
determine the creditworthiness of individual applicants under the Program and
the range of credit limits to be made available to individual Accountholders.
Green Tree may suspend or terminate the credit privileges of any Accountholder
at any time.
At any time during the term of this Agreement, Select Comfort may request
that Green Tree modify the Program to allow additional approval options. Within
30 days of this request, Green Tree shall provide pricing and conditions for
such modifications. Terms and discounts will be mutually agreed to prior to
modifications and implemented within 15 days of such agreement . The mutually
agreed upon changes will be reduced to written agreements which shall be signed
by Select Comfort and Green Tree.
SECTION 3.03 OWNERSHIP OF ACCOUNTS. Green Tree shall be the sole and
exclusive owner of all Accounts, Credit Cards, Credit Agreements, Accountholder
data (including Accountholder lists), Sales Slips, credit slips and receipts or
evidences of payment or Purchases by Accountholders and other Program Documents,
and shall be entitled to receive all payments made by Accountholders on
Accounts, and Select Comfort acknowledges and agrees that it has no right, title
or interest in the Accounts, Credit Cards, Credit Agreements, Accountholder
data, Sales Slips, credit slips, receipts or evidence of payments or Purchases
by Accountholders and
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other Program Documents and has no right to any payments made by Accountholder
on Accounts. Green Tree shall be identified to Accountholders as the creditor
for all purposes.
Notwithstanding the foregoing, Green Tree agrees that to the extent permitted by
applicable law, during the term of this Agreement, Select Comfort may utilize
the Accountholder List at no charge for promotion of this Program and its goods
and services. Nothing in this Section 3.03 shall preclude Select Comfort's use
of any list of its customers maintained by it provided, that no information on
such list was obtained solely through the operation of the Program.
SECTION 3.04 PERIODIC STATEMENTS. Green Tree shall be responsible for
mailing periodic statements to Accountholders and collecting all amounts due on
the Accounts. Select Comfort shall not have any responsibilities regarding
billing or collections on Accounts and, except as otherwise provided herein,
shall not be responsible for uncollectible Accounts. Select Comfort authorizes
and empowers Green Tree to sign and endorse Select Comfort's name on all checks,
drafts, money orders, or other forms of payment with regard to the Accounts.
SECTION 3.05 ENHANCEMENTS. Green Tree and its affiliates may from time to
time make other products and services available to Accountholders that enhance
the features of the Program or the Accounts, including without limitation,
credit insurance and a credit card protection plan. Legal services and auto
clubs may be offered with Select Comforts reasonable approval. With respect to
credit insurance, Select Comfort may offer credit insurance as a customer option
in connection with each Account. Optional credit insurance enrollment forms will
be provided by Green Tree.
SECTION 3.06 PROMOTIONS. Select Comfort and Green Tree may from time to
time, upon mutual agreement, develop marketing programs pursuant to which Green
Tree will offer revolving lines of credit to Select Comfort customers. The
mutually agreed upon marketing programs will be reduced to written agreements
which shall be signed by Select Comfort and Green Tree.
SECTION 3.07 MARKETING. Select Comfort may not, in any advertisement or
promotion of its products or services, advertise the availability of financing
through Green Tree without the prior written approval of Green Tree.
SECTION 4. OPERATING PROCEDURES
SECTION 4.01 GENERAL. Green Tree and Select Comfort shall follow the
operating procedures outlined in this Section 4 for Accounts booked under the
Program. Green Tree may amend or supplement such operating procedures from time
to time in its sole discretion to the extent it deems necessary or desirable to
comply with applicable law.
SECTION 4.02 SOLICITATION OF ACCOUNTS. The following procedures shall be
followed for the solicitation of Accounts and the processing of credit
applications:
(a) In connection with the sale of Products, Select Comfort may take credit
applications on behalf of Green Tree using the credit application and disclosure
forms provided or approved by Green Tree.
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(b) Select Comfort shall forward promptly to Green Tree, by mail,
telephone, facsimile transmission, or electronically via the Vision 21 System,
completed credit applications.
(c) All credit applications will be reviewed by Green Tree for approval and
establishment of the applicable credit limit. Green Tree will communicate credit
approvals and denials to both the customer and Select Comfort.
SECTION 4.03 NEW ACCOUNT FULFILLMENT. Green Tree shall be solely
responsible for Account fulfillment, including the mailing of Accountholder
welcome letters, Credit Cards, Credit Agreements and convenience checks.
SECTION 4.04 PROCEDURES FOR PURCHASES AND CREDITS.
(a) Consumer Direct Program
(i)Select Comfort shall deliver copies of the Sales Slip to Green
Tree, if requested by Green Tree, within ten (10) business days of
Green Tree's request.
(ii) Select Comfort shall obtain the Accountholder's approval of the
Sales Slip once all of the Purchase information is complete. Select
Comfort warrants the identity of the Accountholder in all cases. The
only recourse regarding this warranty of identity shall be Chargebacks
under Section 5.
(iii) Select Comfort shall obtain the Accountholders name, Account
number and the appropriate authorization as described below. Select
Comfort shall obtain prior authorization for all Purchases and record
the authorization code on the Sales Slip. Authorization may be
obtained electronically through the Vision 21 System or by contacting
Green Tree at a designated telephone number established for the
purpose of issuing authorization under the Program.
(b) Retail Program.
(i) Select Comfort shall complete a Sales Slip for each Purchase and
imprint or write the Accountholder's name and Account number on the
Sales Slip.
(ii) Select Comfort shall obtain the Accountholder's signature on the
Sales Slip once all of the Purchase information is complete. If the
Accountholder does not have his/her Credit Card, the signature on the
Sales Slip must be reasonably similar to the signature on one form of
identification, one with a photograph, provided by the Accountholder.
A valid driver's license, military or state identification is required
as identification. Select Comfort warrants the identity of the
Accountholder in all cases. The only recourse regarding this warranty
of identity shall be Chargebacks under Section 5.
(iii) Select Comfort shall obtain prior authorization for all
Purchases and record the authorization code on the Sales Slip.
Authorization may be obtained electronically through the Vision 21
System or by contacting Green Tree at a designated telephone number
established for the purpose of issuing authorization under the
Program.
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SECTION 4.05 SETTLEMENT PROCEDURES.
(a) All sales data as outlined herein will be transmitted by Select Comfort
to Green Tree through daily reports ("Daily Reports"). Daily Reports shall
include the following: (i) the account number, authorization number, amount and
date of each Purchase, (ii) the account number, amount and date for each credit
slip issued with respect to the Accounts, and (iii) such other information that
Green Tree may reasonably request.
(b) Green Tree shall pay to Select Comfort the amount of each Purchase for
which all of the proper supporting documentation, as mutually agreed to, has
been provided less any applicable standard, promotional and returned merchandise
discounts. Green Tree shall be entitled to set off against amounts due to Select
Comfort for Purchases the amount of any credit slips issued for Purchases and
any Chargebacks pursuant to Section 5 hereof. Funds due to Select Comfort for
Purchases hereunder shall be forwarded to Select Comfort via the Automated
Clearing House System no later than the next business day after all of the
conditions to funding described herein have been met.
(c) Green Tree and Select Comfort shall cooperate in resolving any disputes
regarding amounts set forth in the Daily Reports or the supporting
documentation. Green Tree shall be entitled to withhold payment for the disputed
portion of any Daily Report, or for any Purchase for which the supporting
documentation, in Green Tree's reasonable opinion, is incomplete or
unsatisfactory.
SECTION 4.06 DISPUTE RESOLUTION PROCEDURES. Select Comfort shall cooperate
with Green Tree to promptly resolve any Accountholder Product related dispute.
Green Tree will notify Select Comfort via fax upon receipt of the Accountholder
dispute. Select Comfort will have twenty calendar days to settle or resolve the
dispute. Failure to resolve or settle the dispute based on a bona fide claim or
defense to the total satisfaction of the Accountholder will result in a
Chargeback pursuant to Section 5 hereof after consideration of Select Comfort's
published return and warranty policies.
SECTION 5. CHARGEBACK
SECTION 5.01 CHARGEBACK RIGHTS. Green Tree shall have the right, at its
option, to Chargeback to Select Comfort the amount of any Purchase if:
(a) Any Presentment Warranty made by Select Comfort pursuant to Section
6.01 proves to be false or inaccurate in any respect, after a reasonable
investigation by Green Tree;
(b) The Accountholder asserts any claim or defense against Green Tree as a
result of any act or omission of Select Comfort that violates any applicable
law, statute, ordinance, rule or regulation, after a reasonable investigation by
Green Tree;
(c) The Accountholder disputes the amount or existence of such Account with
respect to such Purchase or the Accountholder refuses to pay (including by
exercise of its right under the Fair Credit Billing Act or other similar law to
require Green Tree to credit its Account), alleging dissatisfaction with the
Products received, a breach of any warranty or representation by Select Comfort
in connection with the transaction, or an offset or counterclaim against Green
Tree
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based on an act or omission of Select Comfort, after a reasonable investigation
by Green Tree and after consideration of Select Comfort's published return and
warranty policies; or
(d) Select Comfort did not materially comply with the operating procedures
outlined in Section 4 herein.
SECTION 5.02 LIMITATION OF CHARGEBACK RIGHTS. In its reasonable discretion
Green Tree may compromise and settle any claim made by any Accountholder if such
claim may give Green Tree a right to Chargeback up to the face amount of any
Sales Slip. In the event of any such compromise or settlement, Green Tree shall
adjust the Accountholder's Account and Green Tree's right to Chargeback shall be
limited to the actual amount so compromised.
SECTION 5.03 EXERCISE OF CHARGEBACK. If Green Tree exercises its right of
Chargeback, Green Tree shall have the right to off set the amount of the
Chargeback against any amounts due Select Comfort under this Agreement or, if
Chargebacks exceed sums due Select Comfort, Green Tree may demand immediate
payment from Select Comfort for the full amount of such excess. If any Purchase
is charged back, Green Tree shall assign, without recourse, all right to payment
for such Purchase to Select Comfort upon the request of Select Comfort free and
clear of right, claim of title or lien. Green Tree will provide reasonable
documentation in connection with all Chargebacks.
SECTION 5.04 FRAUD LOSSES. Chargebacks to Select Comfort due to fraud shall
be limited to xx% of the Chargeback amount. Select Comfort shall be responsible
for xx% of all Chargebacks due to fraud for those Chargebacks which are in
excess of xxxxxxxxxx of the average annual outstanding portfolio balance in any
program year, calculated on an annual basis.
[Portions of this section have been omitted pursuant to a request for
confidential treatment under Rule 24b-2 under the Securities Exchange Act of
1934, as amended. A copy of this Exhibit with the portions intact has been filed
separately with the Securities and Exchange Commission]
SECTION 6. WARRANTIES AND COVENANTS
SECTION 6.01 PRESENTMENT WARRANTIES. Select Comfort represents and warrants
to Green Tree with respect to each Purchase (the following shall be deemed
restated, renewed and reaffirmed with respect to each Purchase presented to
Green Tree for approval and settlement):
(a)that the Sales Slip represents a bona fide sale and was actually
executed by the person named therein as Accountholder;
(b)that the signature on the Sales Slip for sales on the Retail Program
appears reasonably similar to the signature of the Accountholder on Credit Card
or the signature on other valid identification examined by Select Comfort;
(c)that the Sales Slip for sales on the Retail Program has not been
materially altered;
(d)that the Accountholder is of legal age and competent to open an Account;
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(e)that the Products are accurately described on the Sales Slip and any
Products described therein have been delivered into the possession of the
Accountholder and any Products described therein have been fully performed to
the Accountholder's satisfaction;
(f)that the transaction, including prior authorization, was conducted by
Select Comfort in accordance with the operating procedures set forth in Section
4 above (as same may be revised from time to time in accordance with Section 4
or Section 10.04);
(g)that the account number, name of Accountholder and authorization number
have been printed on each Sales Slip;
(h)that Select Comfort has not received, directly or indirectly, and will
refuse to accept, any reimbursement, payment or trade-in for the charges listed
on such Sales Slip (other than from Green Tree) and has not and will not, either
directly or indirectly, take or grant any right or security interest in any
Sales Slip or credit slip (other than to Green Tree) which is the subject of the
transaction;
(i)that the transaction was conducted by Select Comfort in accordance with
all applicable laws and regulations that pertain to the sale of Products by
Select Comfort;
(j)there is no fact nor any claim or defense of any Accountholder that
would impair the validity, enforceability, or collectability of the obligation
of the Accountholder evidenced by the Sales Slip except to the extent that such
claim or defense was the result of any act or omission of Green Tree as outlined
in Section 9.01;
(k)that Select Comfort has full and complete title to the Products subject
only to the rights of the Accountholder which exist by virtue of the Account;
(l)that there have been no representations or warranties made to the
Accountholder which are not contained in the Sales Slip other than Select
Comfort's standard warranties and return policies; and in the event Select
Comfort breaches a standard warranty, Select Comfort will cure the breach within
twenty (20) calendar days of notice of the breach;
(m) Select Comfort shall, within five (5) business days of its receipt,
provide Green Tree with a copy of any written complaint from any customer
relating to any Sales Slip;
(n)Except as provided below, or unless Green Tree is obligated to Select
Comfort under section 9.01, Select Comfort shall indemnify Green Tree and hold
it harmless from and against all losses, cost, damage, and expense, including
reasonable attorney's fees, at any time incurred by Green Tree because of any
violation of state or Federal law or regulation or other illegal or actionable
conduct; (i) resulting from acts or omissions by Select Comfort, its employees
or its agents in connection with the sale of any Products, or (ii) resulting
from the documents used in connection with the transaction, including but not
limited to documents given to Accountholder pertaining to warranties, service
agreements, credit disclosures, insurance, and sales, application and contracts
forms, or (iii) resulting from any liability Green Tree incurs by reason of the
Notice included on the Credit Agreement which is required by FTC Trade
Regulation Rule regarding Buyer's Claims and Defenses. However, Select Comfort
liability for sufficiency of document contents does not apply to any document
provided by Green Tree, but shall apply to any other failures or omissions by
Select Comfort or its agents related to any such document
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furnished by Green Tree, including, but not limited to Select Comfort's failure
in completing any such document, or properly delivering copies to Accountholders
as instructed by Green Tree;
(o)Select Comfort owns the Sales Slip free from any claims, liens, security
interest or other encumbrances.
SECTION 6.02 PROGRAM COVENANTS. Select Comfort covenants to do the
following during the term of this Agreement with respect to the operation of the
Program:
(a)Select Comfort shall cooperate with Green Tree promptly to resolve all
disputes with Accountholders.
(b)Select Comfort shall maintain a fair and equitable policy for the
exchange and return of Products and adjustment for Products rendered or not
rendered and shall promptly deliver a credit to the Accountholder and include
credit for each return in the Daily Reports furnished pursuant to Section 4.05
hereof.
(c)Select Comfort shall not seek or obtain any special agreement or
condition from, nor discriminate in any way against, any Accountholder with
respect to the terms of any transaction.
SECTION 6.03 GENERAL REPRESENTATIONS AND WARRANTIES OF SELECT COMFORT.
Select Comfort makes the following representations and warranties to Green Tree,
each and all of which shall survive the execution and delivery of this
Agreement, and each and all of which shall be deemed to be restated and remade
on each day on which any Account is opened, any Purchase is presented for
settlement pursuant to Section 4.05, or any action is taken with respect to the
Program:
(a)CORPORATE EXISTENCE. Select Comfort (i) is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Minnesota;
(ii) is duly qualified as a corporation and in good standing under the laws of
each jurisdiction where its ownership or lease of property or the conduct of its
business requires such qualification; (iii) has the requisite corporate power
and authority and the legal right to own, pledge, mortgage, and operate its
properties, to lease the properties it operates under lease, and to conduct its
business as now conducted and hereafter contemplated to be conducted; (iv) has
all necessary licenses, permits, consents, or approvals required for the conduct
of its business; and (v) is in compliance with its certificate of incorporation
and bylaws.
(b)CORPORATE POWER, AUTHORIZATION; ENFORCEABLE OBLIGATION. The execution,
delivery, and performance of this Agreement and all instruments and documents to
be delivered by Select Comfort hereunder: (i) are within Select Comfort's
corporate power; (ii) have been duly authorized by all necessary or proper
corporate action, including the consent of shareholders where required; (iii) do
not and will not contravene any provisions of Select Comfort's certificate of
incorporation or bylaws; (iv) will not violate any law or regulation or any
order or decree of any court or governmental instrumentality; (v) will not
conflict with or result in the breach of, or constitute a default under any
indenture, mortgage, deed of trust, lease, agreement, or other instrument to
which Select Comfort is a party or by which Select Comfort or any of its assets
or property are bound; and (vi) do not require any filing or registration with,
or the consent or approval of, any governmental body, agency, authority, or any
other person which has not been made or obtained previously, copies of which
have been provided to Green Tree. Green
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Tree consents that Select Comfort may file a copy of this Agreement with the
Security and Exchange Commission if it deems necessary. The Agreement has been
duly executed and delivered by Select Comfort and constitutes a legal, valid,
and binding obligation of Select Comfort enforceable against Select Comfort in
accordance with it terms.
SECTION 6.04 PROGRAM COVENANTS OF GREEN TREE. Green Tree covenants to
provide and maintain the Vision 21 System computer software required for the
Program.
SECTION 6.05 REPRESENTATIONS AND WARRANTIES OF GREEN TREE. Green Tree makes
the following representations and warranties to Select Comfort, each and all of
which shall be deemed to be made on each day on which Accounts are opened,
Purchase documentation is received for settlement pursuant to Section 4.05, or
any action is taken with respect to the Program on or after the Program
commencement date established pursuant to Section 2.01:
(a)CORPORATE EXISTENCE. Green Tree (i) is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware;
(ii) is duly qualified as a corporation and in good standing under the laws of
each jurisdiction where its ownership or lease of property or the conduct of its
business requires such qualification; (iii) has the requisite corporate power
and authority and the legal right to own, pledge, mortgage, and operate its
properties, to lease the properties it operates under lease, and to conduct its
business as now conducted and hereafter contemplated to be conducted; (iv) has
all necessary licenses, permits, consents, or approvals required for the conduct
of its business; and (v) is in compliance with its articles of incorporation and
bylaws.
(b)CORPORATE POWER, AUTHORIZATION; ENFORCEABLE OBLIGATION. The execution,
delivery, and performance of this Agreement and all instruments and documents to
be delivered by Green Tree hereunder; (i) are within Green Tree's corporate
power; (ii) have been duly authorized by all necessary or proper corporate
action, including the consent of shareholders where required; (iii) do not and
will not contravene any provision of Green Tree's certificate of incorporation
or bylaws; (iv) will not violate any law or regulation or an order or decree of
any court or governmental instrumentality; (v) will not conflict with or result
in the breach of, or constitute a default under any indenture, mortgage, deed of
trust, lease, agreement, or other instrument to which Green Tree is a party or
by which any of its assets or property are bound; and (vi) do not require any
filing or registration with or the consent or approval of any governmental body,
agency, authority, or any other person which has not been made or obtained
previously. This Agreement has been duly executed and delivered by Green Tree,
and constitutes the legal, valid, and binding obligation of Green Tree,
enforceable against Green Tree in accordance with its terms.
(c) FORMS AND INSTRUCTIONS. The forms, and instruction for completion of
such forms and for all action to be taken by Select Comfort in connection with
the performance of Green Tree's duties and obligations under this Agreement
comply with all applicable federal, state and local laws, and regulations
(including laws relating to usury, fees and charges, and rights of recission).
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SECTION 7. EVENTS OF DEFAULT; RIGHTS AND REMEDIES
SECTION 7.01 EVENTS OF DEFAULT. The occurrence of any one or more of the
following events shall constitute an "Event of Default" hereunder:
(a)Either Select Comfort or Green Tree shall fail to make any payment of
any amount due pursuant to this Agreement when due and payable or declared due
and payable, and the same shall remain unpaid for a period of fifteen (15) days
following written notice;
(b)Either Select Comfort or Green Tree shall fail or neglect to perform,
keep, or observe any term, provision, condition, or covenant contained in this
Agreement that is required to be performed, kept, or observed by either party,
and the same shall remain uncured for a period of thirty (30) days after the
other party shall have given written notice thereof.
(c)Any representation or warranty made or delivered by either Select
Comfort or Green Tree or any of its respective officers, employees, agents, or
representatives shall not be true and correct in any material respect as of the
date when made or reaffirmed;
(d)Select Comfort shall be acquired (whether by merger, consolidation,
change of control, as defined below, or otherwise) by any person not an
affiliate of Select Comfort. For purposes of this section "change of control"
shall mean any sale of all or substantially all of the assets of an entity
(whether in one or a series of transactions) or an entity is merged or
consolidated into another corporation or the capital stock of an entity is
transferred to a single entity;
(e)Either Select Comfort or Green Tree shall (i) file a petition seeking
relief pursuant to the Bankruptcy Code or any other applicable bankruptcy or
other similar law; (ii) consent to the institution of proceedings pursuant
thereto or to the filing of any such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee, trustee, or
sequestrate (or similar official) of either party of any substantial part of its
properties; (iii) fail generally to pay its debts as such debts become due; or
(iv) take corporate action in furtherance of any such action; or,
(f)A material adverse change shall occur in the operations, financial
condition, business or prospects of Select Comfort or Green Tree which has
impaired or is reasonably likely to impair, the ongoing operation or continued
viability of the Program, in each case, as determined by facts in evidence.
SECTION 7.02 REMEDIES. If any Event of Default shall have occurred and be
continuing the non-defaulting party shall have the right to terminate this
Agreement in the manner specified in Section 8 hereof.
SECTION 8. TERM/TERMINATION
SECTION 8.01 TERM. This Agreement shall continue in full force and effect
until the sixtieth month of the Program commencement date (established pursuant
to Section 2.01); thereafter, this Agreement shall renew automatically for
successive one year terms unless and until terminated by either Select Comfort
or Green Tree by written notice to the other party at least 150 days prior to
the end of the original or any renewal term.
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SECTION 8.02 TERMINATION FOR CAUSE. If an Event of Default under Section
7.01 (a), (b), (c) or (e) shall occur, the non-defaulting party shall have the
right immediately to terminate this Agreement upon notice. If an Event of
Default under Section 7.01 (d) or (f) shall occur, the non-defaulting party
shall have the right to terminate this Agreement with 150 days written notice.
SECTION 8.03 EFFECT OF TERMINATION. Upon termination, all of the rights and
obligation of the respective parties hereto shall cease; provided, however, that
the following shall survive the termination of this Agreement: (i) Select
Comfort's obligation to reimburse Green Tree for amounts due to Green Tree in
connection with the offering of special credit promotions and a grace period on
Purchases pursuant to Section 2.03; (ii) Green Tree's obligation to reimburse
Select Comfort for any amounts due and payable; (iii) Green Tree's Chargeback
rights pursuant to Section 5; and, (iv) the obligations of the parties related
to indemnification under Section 9. Upon termination, Green Tree shall cease to
honor Purchases and will terminate all privileges related to the Credit Cards.
Upon termination, Select Comfort may, at its option purchase from Green Tree all
Accounts then outstanding for cash in an amount as mutually agreed to. Upon such
payment, Green Tree will assign all such Accounts to Select Comfort without
recourse, except that Green Tree warrants that any such Account will not be
uncollectable as a result of any act or omission of Green Tree. If this warranty
is breached, Green Tree agrees that it will repurchase any such account which is
affected by the breach. No other consequence shall occur as a result of a breach
of this warranty. Green Tree makes no other warranties regarding these accounts.
At any time Green Tree has the right to sell the Accounts to a third party. If
at any time Green Tree sells the Accounts to a third party, this shall eliminate
Select Comfort's option to purchase the Accounts from Green Tree.
SECTION 9. INDEMNIFICATION
SECTION 9.01 BY GREEN TREE. Green Tree shall be liable to and shall
indemnify and hold harmless Select Comfort and its officers, directors and
employees from and against any Losses, as defined below, arising out of the
intentional or negligent act or omission of Green Tree in the performance of its
duties and obligations under this Agreement or its failure to comply with the
terms of this Agreement or any applicable laws or regulations applicable to it
or as it applies to forms provided to Select Comfort by Green Tree. Green Tree
shall indemnify Select Comfort for any products offered or sold by Green Tree.
SECTION 9.02 BY SELECT COMFORT. Except as limited by section 5 hereto,
Select Comfort shall be liable to and shall indemnify and hold harmless Green
Tree and its officers, directors and employees from and against any Losses, as
defined below, arising out of the intentional or negligent act or omission of
Select Comfort in the performance of its duties or obligations under this
Agreement or its failure to comply with the terms of this Agreement or any
applicable laws or regulations applicable to it. Select Comfort shall not
indemnify Green Tree for any Losses that result from any products or services
offered or sold by Green Tree.
SECTION 9.03 GENERAL. Select Comfort and Green Tree shall promptly notify
the other of any claim, demand, suit or threat of suit of which it becomes aware
(except with respect to a threat of suit either party might institute against
the other) which may give rise to a right of indemnification pursuant to this
Agreement. The indemnifying party will be entitled to participate in the
settlement or defense thereof and, if the indemnifying party elects, to take
over and control the settlement or defense thereof with counsel satisfactory to
the indemnified party.
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In any case, the indemnifying party and the indemnified party shall cooperate
(at no cost to the indemnified party) in the settlement or defense of any such
claim, demand, suit or proceeding. For purposes of this Section 9, the term
"Losses" shall mean any losses, damages, costs and expenses, liabilities,
settlements, including, without limitation, any attorneys' fees and
disbursements and court costs reasonably incurred by Green Tree or Select
Comfort, as the case may be but shall exclude lost business or future business.
SECTION 10. MISCELLANEOUS
SECTION 10.01 INDEPENDENT CONTRACTORS. In performing their respective
responsibilities under this Agreement, Green Tree and Select Comfort are
independent contractors. This Agreement is not intended to create and shall not
be construed to create, a relationship of partner or joint venturer or an
association for profit between Green Tree and Select Comfort.
SECTION 10.02 FINANCIAL STATEMENTS. At least annually or more often if
requested by Green Tree, Select Comfort shall provide Green Tree with audited
balance sheets and profit and loss statements and make available to Green Tree's
representatives such other financial information as may be reasonably requested
by Green Tree. Select Comfort understands and agrees that Green Tree may verify
any financial information provided by Select Comfort and may, from time to time,
seek credit and other information concerning Select Comfort from others. Select
Comfort has the right to reasonably audit records and Account information with
respect to Program at Select Comfort's expense and on Green Trees premises
during normal business hours.
SECTION 10.03 ASSIGNMENT; DELEGATION OF DUTIES. Without the express written
consent of the other party, neither Select Comfort nor Green Tree may assign
this Agreement or delegate any of its duties hereunder except that (a) either
Select Comfort or Green Tree may delegate such duties to any party which is then
a wholly owned subsidiary of the delegating party or a corporation under common
control with the delegating party, (b) Green Tree may assign this Agreement to a
wholly owned subsidiary, and (c) Green Tree may contract with a bank or other
financial institution in structuring the Program and in connection with such
contract may assign this Agreement or delegate duties to such financial
institution to the extent Green Tree deems necessary or desirable, but Green
Tree shall remain primarily obligated to Select Comfort notwithstanding any
assignment or delegation.
SECTION 10.04 AMENDMENT. Subject to the right of Green Tree to amend and
supplement the operating procedures pursuant to Section 4.01 hereof, this
Agreement may not be amended except by written instrument signed by both Green
Tree and Select Comfort.
SECTION 10.05 NON-WAIVER. No delay by Select Comfort or Green Tree hereto
in exercising any of its rights hereunder or partial or single exercise of such
rights, shall operate as a waiver of that or any other right. The exercise of
one or more of Select Comfort's or Green Tree's rights hereunder shall not be a
waiver of, nor preclude the exercise of, any rights or remedies available to
such party under this Agreement or in law or equity.
SECTION 10.06 SEVERABILITY. If any provision of this Agreement is held to
be invalid, void or unenforceable, all other provisions shall remain valid and
be enforced and construed as if such invalid provision were never a part of this
Agreement.
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SECTION 10.07 GOVERNING LAW. This Agreement and all rights and obligations
hereunder shall be governed by and construed in accordance with the substantive
laws of the State of Minnesota.
SECTION 10.08 ENTIRE AGREEMENT. This Agreement, including any addenda or
exhibits, constitutes the entire Agreement between Green Tree and Select Comfort
with respect to the Program and any matters relating thereto and all prior
agreements, negotiations and communications on such subject are hereby
superseded.
SECTION 10.09 CAPTIONS. Captions used in this Agreement are for convenient
reference only and shall not be construed as limiting or defining the
substantial content of this Agreement.
SECTION 10.10 USE OF SELECT COMFORT NAME AND XXXX. Select Comfort hereby
expressly gives Green Tree permission to use its name, logo, registered
trademarks and service marks (if any) in connection with the promotion of the
Program.
SECTION 10.11 RECOUPMENT. All financial dealings between the parties
pursuant to this Agreement shall be considered as a single continuing
transaction, and subject to the doctrines of setoff and recoupment.
SECTION 10.12 NOTICES. Except as otherwise provided in this Agreement, all
notices, demands and other communications hereunder shall be in writing and
shall be delivered personally or sent by facsimile, other electronic means or
nationally recognized overnight courier service addressed to the party to whom
such notice or other communication is to be given or made at such party's
address as set forth below, or to such other address as such party may designate
in writing to the other party from time to time in accordance with the
provisions hereof, and shall be deemed given when personally delivered, when
sent electronically or one (1) business day after being sent by overnight
courier.
To Green Tree:
Green Tree Financial Corporation
000 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xx. Xxxx, Xxxxxxxxx 00000
Attention: Xxxxx Xxxxxxxxxx
Facsimile: 800.488.6862
with copies to:
Green Tree Financial Corporation
1100 Landmark Towers
000 Xxxxx Xxxxx Xxxxxx
Xx. Xxxx, Xxxxxxxxx 00000
Attention: Xxxx Xxxxxxxxx, Esq.
Facsimile: 612.293.5746
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To Select Comfort:
Select Comfort
0000 Xxxxxxx Xxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Corporate Controller
Facsimile: (000) 000-0000
SECTION 10.12 MULTIPLE COUNTERPARTS. This Agreement may be executed in any
number of multiple counterparts, all of which shall constitute but one and the
same original.
IN WITNESS WHEREOF, Green Tree and Select Comfort have hereunto set their
hands as of the date first written above.
GREEN TREE FINANCIAL CORPORATION SELECT COMFORT CORPORATION
By: /s/Xxxx X. Xxxxxxxx By: /s/Xxx Xxxxx
Its: Executive Vice President Its: Chief Financial Officer
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Exhibit A
Fees, Discounts, Charges and Targets
[Portions of this Exhibit A have been omitted pursuant to a request for
confidential treatment under Rule 24b-2 under the Securities Exchange Act of
1934, as amended. A copy of this Exhibit A with the portions intact has been
filed separately with the Securities and Exchange Commission]
Subject to the provisions of Section 2.02 and Section 2.03 of the Revolving
Credit Program Agreement ("Agreement") to which this Exhibit A is attached, and
applicable law, the following shall be the initial fees, discounts, charges and
targets applicable under the Program. Capitalized terms used but not defined in
this Exhibit A shall have the meaning given such terms in the Agreement.
(a) TARGET LOSS RATE FOR RETAIL PROGRAM: xx%
(b) TARGET LOSS RATE FOR CONSUMER DIRECT PROGRAM: xx%
(c) CONSUMER DIRECT PROGRAM STANDARD DISCOUNT FEE: xx%
(d) RETAIL PROGRAM STANDARD DISCOUNT FEE: xxxxxxxxxx
(e) CONSUMER DIRECT PROGRAM PROMOTIONAL DISCOUNT FEE: For promotional financing
options offered under the Consumer Direct Program, Select Comfort shall pay
Green Tree the following discount fees in addition to the Standard Discount
Fee at the time of settlement for each Purchase:
i. 90 days no payments, no interest, the discount fee is xxxxxxx% of the
Purchase
ii. 120 days no payments, no interest the discount fee is xxxxxxx% of the
Purchase
iii. 150 days no payments, no interest, the discount fee is xxxxxxx% of the
Purchase
iv. 180 days no payments, no interest the discount fee is xxxxxxx% of the
Purchase
v. 210 days no payments, no interest, the discount fee is xxxxxxx% of the
Purchase
vi. 240 days no payments, no interest the discount fee is xxxxxxx% of the
Purchase
vii. 270 days no payments, no interest the discount fee is xxxxxxx% of the
Purchase
(f) RETAIL PROGRAM PROMOTIONAL DISCOUNT FEE: For promotional financing options
offered under the Retail Program, Select Comfort shall pay Green Tree the
following discount fees in addition to the Standard Discount Fee at the
time of settlement for each Purchase:
i. 90 days no payments, no interest, the discount fee is xxxxxxx% of the
Purchase
ii. 120 days no payments, no interest the discount fee is xxxxxxx% of the
Purchase
iii. 150 days no payments, no interest, the discount fee is xxxxxxx% of the
Purchase
iv. 180 days no payments, no interest the discount fee is xxxxxxx% of the
Purchase
v. 210 days no payments, no interest, the discount fee is xxxxxxx% of the
Purchase
vi. 240 days no payments, no interest the discount fee is xxxxxxx% of the
Purchase
vii. 270 days no payments, no interest the discount fee is xxxxxxx% of the
Purchase
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(g) CONVENIENCE USAGE CHARGE: xxxxxxxx
(h) RETURNED MERCHANDISE DISCOUNT FEE: In addition to any other fees or
discounts, a discount of xxxxxxx shall be added to all sales under the
Program. Any discounts under paragraphs (c), (d), (e), (f) or (h) shall be
refunded to Select Comfort for all purchases returned under Select
Comfort's return policies. This discount is based on an average return rate
of xxxxxxxx% and an average time from date of Purchase to return of 70
days. This discount may be adjusted quarterly on a pro rata basis based
solely on the changes in the assumptions as outlined above.
(i) FORMS FEE: xxxxxxxx
(j) CHARGEBACK FEE: xxxxxxxx
(k) INSERT FEE: xxxxxxxx
For a Purchase to qualify under a promotional financing option, the Purchase
must be at least $250.00.
Discount fees on the promotional financing options can also be adjusted upward
or downward as the case may be following the first anniversary of the Program
commencement date and on an annual basis thereafter. Any adjustments will be
based on the one year London Interbank Offered Rates ("LIBOR") as of the Program
commencement date. For each 10 basis point increase in the LIBOR, the discount
fee for each 30 day period on promotional financing options will be increased by
xxxxxxx. Decreases to the one year LIBOR will have the opposite effect.
Targeted Loss Rates are advisory only and do not represent a warranty or
covenant of Green Tree. Failure to meet targeted Loss Rates shall not be a
condition of Default under this Agreement. Green Tree warrants that if actual
Loss Rates vary materially from Targeted Loss Rates, it will use best efforts to
adjust credit scoring/approval methods and/or Program discounts accordingly for
future applications/Purchases.
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