CREDIT STORE INC
RECEIVABLES PURCHASE AGREEMENT DATED AS OF 5/31/00
<DOCUMENT>
<TYPE>EX-10.42
<SEQUENCE>3
<FILENAME>c59513ex10-42.txt
<DESCRIPTION>RECEIVABLES PURCHASE AGREEMENT DATED AS OF 5/31/00
<TEXT>

<PAGE>   1
                                                                   EXHIBIT 10.42

                                                                  EXECUTION COPY


                         RECEIVABLES PURCHASE AGREEMENT

         RECEIVABLES PURCHASE AGREEMENT, dated as of May 31, 2000 (this
"Agreement"), by and between THE CREDIT STORE, INC., a Delaware corporation
("TCSI" or the "Seller"), and TCS FUNDING IV, INC., a Delaware corporation (the
"Buyer").

         WHEREAS, the Buyer, an Affiliate of the Seller, wishes to purchase from
time to time certain consumer revolving credit card receivables owned by the
Seller on or after the Closing Date in connection with certain consumer
revolving credit card accounts.

         WHEREAS, the Seller desires to sell and assign from time to time such
receivables to the Buyer upon the terms and conditions hereinafter set forth.

         NOW THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Buyer and the Seller hereby agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

         Section 1.1 Definitions. For all purposes of this Agreement, except as
otherwise expressly provided herein or unless the context otherwise requires,
capitalized terms used herein shall have the following meanings assigned to
them:

         "Account(s)" means each credit card account established between an
     Issuing Bank and another Person that either (i) was listed on an Account
     Schedule on the Closing Date or (ii) becomes an Additional Account after
     the Closing Date. The term "Account" refers to an Additional Account only
     from and after the Addition Date on which it is listed in the Account
     Schedule. An Account includes any related "relationship account" resulting
     from the earlier account having been reported as lost or stolen.

         "Account Schedule" means the printed list of Accounts the receivables
     of which are sold to the Buyer pursuant to this Agreement, such list to be
     delivered to the Buyer on the Closing Date and on any Addition Date, as
     such list may be amended or supplemented from time to time pursuant to the
     terms of this Agreement.

         "Addition Date" means any Settlement Date on which the Buyer and Seller
     agree that certain specified consumer revolving credit card accounts will
     be Additional Accounts, such agreement to be evidenced by a supplement to
     the Account Schedule delivered by the Seller to the Buyer.
<PAGE>   2

         "Additional Account" means each additional credit card account
     established between an Issuing Bank and another Person that satisfies the
     conditions for an Eligible Account and the receivables of which the Seller
     agrees to sell and the Buyer agrees to purchase pursuant to this Agreement,
     which accounts will be listed on a supplement to the Account Schedule
     delivered to the Buyer on the applicable Addition Date.

         "Conveyed Property" has the meaning set forth in Section 2.1(a).

         "Credit Agreement" means the Master Credit and Security Agreement of
     even date herewith by and between the Buyer, as borrower, the Seller, as
     servicer, and Miller & Schroeder Investments Corporation, a Minnesota
     corporation, as lender.

         "Date of Processing" means, with respect to any transaction giving rise
     to a Receivable, the date on which such transaction is settled according to
     the Servicer's computer records.

         "Dilution" means a downward adjustment in the amount of any Receivable
     because of a return, rebate, refund, unauthorized charge, or billing error
     to an Obligor, because such Receivable was created in respect of
     merchandise which was refused or returned by an Obligor, or because such
     Receivable was discovered to have been created through a fraudulent or
     counterfeit charge.

         "Ineligible Receivable" has the meaning given such term in Section
     6.1(a).

         "Official Body" means any government or political subdivision or any
     agency, authority, bureau, central bank, commission, department, or
     instrumentality of any such government or political subdivision or any
     court, tribunal, grand jury, or arbitrator, in each case whether foreign or
     domestic.

         "Proceeds" means "proceeds" as defined in Section 9-306(1) of the UCC.

         "Purchase Price" has the meaning set forth in Section 3.1.

         "Relevant UCC State" means each jurisdiction in which the filing of a
     UCC financing statement is necessary to perfect the ownership interest and
     security interest of the Buyer established under this Agreement.

         "Requirements of Law" for any Person means the certificate of
     incorporation or articles of association and by-laws or other
     organizational or governing documents of such Person, and any material law,
     treaty, rule or

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<PAGE>   3

     regulation, or determination of an arbitrator or Official Body, in each
     case applicable to or binding upon such Person or to which such Person is
     subject.

         Section 1.2 Other Definitional Provisions. The words "hereof,"
"herein," and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. Section and Schedule references contained in this
Agreement are references to Sections and Schedules in or to this Agreement
unless otherwise specified. All capitalized terms not otherwise defined herein
are defined in the Credit Agreement. In the event that any term or provision
contained herein shall conflict with or be inconsistent with any provisions
contained in the Credit Agreement, the terms and provisions contained herein
shall govern with respect to this Agreement.

         Section 1.3 Computation of Time Periods. Unless otherwise stated in
this Agreement, in the computation of a period of time from a specified date to
a later specified date, the word "from" means "from and including" and the words
"to" and "until" each means "to but excluding."

                                   ARTICLE II

                             PURCHASE AND CONVEYANCE

         Section 2.1 Sale.


         (a) Assets Conveyed. In consideration for the Purchase Price and upon
     the terms and subject to the conditions set forth herein, the Seller does
     hereby sell, assign, transfer, set-over, and otherwise convey to the Buyer,
     and the Buyer does hereby purchase from the Seller, all of the Seller's
     right, title, and interest in, to, and under (i) the Receivables now
     existing and hereafter created and arising in connection with the Accounts
     (including Additional Accounts), including, without limitation, all
     accounts, general intangibles, chattel paper, contract rights, and other
     obligations of any Obligor with respect to the Receivables, now or
     hereafter existing, including, without limitation, any interest, or other
     fees received by the Seller with respect to such Receivables, (ii) all
     Collections in respect of, and other Proceeds of, such Receivables,
     including, without limitation, net recoveries with respect to any defaulted
     Receivables, (iii) all substitutions and replacements for any of the
     foregoing, and (iv) all Proceeds of any of the foregoing (all of the
     foregoing collectively, the "Conveyed Property") as of May 24, 2000 or the
     Addition Date, as applicable. The foregoing sale, transfer, assignment,
     set-over, and conveyance does not constitute and is not intended to result
     in a creation or an assumption by the Buyer of any obligation of the Seller
     in connection with the Conveyed Property or any agreement or instrument
     relating thereto, including, without limitation, any obligation to any
     Obligors, Issuing Banks, merchant banks, merchant clearance systems,
     VISA(R), MasterCard(R), or insurers. Each


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     Account in existence on the Closing Date shall be listed by account number
     in an Account Schedule delivered to the Buyer on the Closing Date. Each
     Additional Account shall be identified by account number in a supplement to
     the Account Schedule delivered on the applicable Addition Date.

         (b) Financing Statements. In connection with the foregoing sale, the
     Seller agrees to record and file on or prior to the Closing Date, at its
     own expense, a financing statement or statements with respect to the
     Conveyed Property meeting the requirements of applicable state law in such
     manner and in such jurisdictions as are necessary to perfect and protect
     the interests of the Buyer created hereby under the applicable UCC against
     all creditors of and purchasers from the Seller, and to deliver a
     file-stamped copy of such financing statements or other evidence of such
     filings to the Buyer within 10 days after the Closing Date.

         (c) Bankruptcy of Seller. The Buyer shall not purchase Receivables
     hereunder if the Seller shall become an involuntary party to (or be made
     the subject of), by receipt at its head corporate office of notice of, any
     bankruptcy proceeding or any other insolvency, readjustment of debt,
     marshalling of assets and liabilities, or similar proceedings of or
     relating to the Seller or relating to all or substantially all of its
     property.

         (d) Insolvency of Seller. The Buyer shall not purchase Receivables
     hereunder if (i) the Seller shall admit in writing its inability to pay its
     debts as they are due, (ii) the Seller shall commence a voluntary case
     under the federal bankruptcy laws, as now or hereafter in effect, or any
     present or future federal or state bankruptcy, insolvency, or similar law,
     (iii) the Seller shall consent to the appointment of or taking possession
     by a receiver, liquidator, assignee, trustee, custodian, sequestrator, or
     other similar official of the Seller or of any substantial part of its
     property, (iv) the Seller shall make an assignment for the benefit of
     creditors, (v) the Seller shall fail generally to pay its debts as such
     debts become due, or (vi) the Seller shall take corporate action in
     furtherance of any of the foregoing.

         (e) Marking Records. In connection with the sale and conveyance
     hereunder, the Seller agrees, at its own expense, on or prior to the
     Closing Date and on each Addition Date thereafter, to indicate or cause to
     be indicated clearly and unambiguously in its accounting records that the
     Conveyed Property has been sold to the Buyer pursuant to this Agreement as
     of the Closing Date or such Addition Date as applicable.

         (f) Sale Intended; Security Interest. It is the express intent of the
     Seller and the Buyer that the conveyance of the Conveyed Property by the
     Seller to the Buyer pursuant to this Agreement be construed as a true sale
     thereof by the Seller to the Buyer and not a grant of a security interest
     in the

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     Conveyed Property by the Seller to the Buyer to secure a debt or other
     obligation of the Seller. However, if notwithstanding the intent of the
     parties, a court of competent jurisdiction holds that the conveyance of the
     Conveyed Property is not a true sale of the Conveyed Property from the
     Seller to the Buyer, then (i) this Agreement also shall be deemed to be and
     hereby is a security agreement within the meaning of the UCC, (ii) this
     Agreement and the Seller's books and records shall evidence the Buyer's
     obligation to pay the Purchase Price, and (iii) the conveyance by the
     Seller provided for in this Agreement shall be deemed to be, and the Seller
     hereby grants to the Buyer a security interest in and to, all of the
     Seller's right, title, and interest in the Conveyed Property to secure all
     obligations now or hereafter arising of the Seller to the Buyer, including,
     without limitation, loans to the Seller in the amount of the Purchase Price
     as set forth in this Agreement. The Seller and the Buyer shall, to the
     extent consistent with this Agreement, take such action as may be necessary
     to ensure that, if this Agreement were deemed to create a security interest
     in the Conveyed Property, such security interest would be deemed to be a
     first priority perfected security interest in favor of the Buyer under
     applicable law and will be maintained as such throughout the term of this
     Agreement. The Seller and the Buyer may rely upon an opinion of counsel
     addressed to them as to what is required to provide the Buyer with such
     security interest; and any such opinion of counsel shall permit the Lender
     to rely on it.

         Section 2.2 Addition of Accounts. From time to time during the term of
this Agreement, the Seller may agree to sell to the Buyer and the Buyer may
agree to purchase from the Seller the receivables under additional credit card
accounts pursuant to this Agreement. On each Addition Date, the Seller may
deliver a supplement to the Account Schedule listing the credit card accounts to
be treated as Additional Accounts on such Addition Date and such Additional
Accounts shall be included as Accounts from and after such Addition Date.
Furthermore, in consideration of the Purchase Price and upon the terms and
subject to the conditions set forth herein, the Seller shall hereby sell,
assign, transfer, set-over, and otherwise convey to the Buyer, and the Buyer
shall hereby purchase from the Seller, all of the Seller's right, title, and
interest in, to, and under all Receivables and other Conveyed Property related
to such Additional Accounts as of the applicable Addition Date.

                                   ARTICLE III

                            CONSIDERATION AND PAYMENT

         Section 3.1 Purchase Price. The purchase price for the Conveyed
Property (the "Purchase Price") shall be a dollar amount equal to, (a) for that
portion of the Conveyed Property sold on the Closing Date and that portion of
the Conveyed Property sold on any Addition Date that consists of Receivables in
Additional Accounts designated on such Addition Date as security for an
Additional Loan under


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the Credit Agreement, 85% of the aggregate amount of all Receivables sold as of
such respective dates, and (b) for all other Conveyed Property sold after the
Closing Date, 100% of the aggregate amount of all Receivables sold as of such
date, adjusted pursuant to Section 3.2(b).

         Section 3.2 Payment of Purchase Price.

         (a) The Purchase Price for Receivables shall be paid or provided for
     (i) on the Closing Date with respect to the Receivables existing on the
     Closing Date by execution and delivery from the Buyer to the Seller a
     promissory note in the amount of expected cash proceeds from the Initial
     Loans and (ii) on each Business Day thereafter for Receivables purchased
     since the immediately preceding Business Day and for which the Seller has
     received reporting with respect to such Receivables, by payment in
     immediately available funds. To the extent that the total Purchase Price
     for Receivables is not paid in full by the Buyer in cash on such Business
     Day, the Seller shall be deemed to have contributed Receivables in an
     aggregate principal amount equal to such shortfall to the Buyer.

         (b) The Purchase Price shall be adjusted with respect to any Receivable
     adjusted as a result of Dilution in an amount equal to the amount of such
     Dilution. If such adjustment results in a negative Purchase Price, the
     Seller shall pay such negative amount to the Buyer in immediately available
     funds.

         Section 3.3 Monthly Reports. On each Settlement Date, the Seller shall
deliver to the Buyer a monthly report (the "Monthly Report") showing the
aggregate Purchase Price of Receivables purchased, the aggregate amount, if any,
owing to the Buyer pursuant to Section 6.1 and the aggregate capital
contribution (if any) made for Receivables purchased during the immediately
preceding Monthly Period.

         Section 3.4 Capital Contribution. The Seller has initially contributed
cash in the amount of $5,000.00 in exchange for shares of the Common Stock of
the Buyer representing all of the outstanding capital stock of the Buyer.

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

         Section 4.1 Seller's Representations and Warranties. The Seller
represents and warrants to the Buyer, that:

         (a) Organization and Good Standing. The Seller is a corporation duly
     organized and validly existing in good standing under the laws of the State
     of Delaware and has the corporate power and authority and legal right to
     own its property and conduct its business as such properties are presently

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<PAGE>   7

     owned and as such business is presently conducted and to execute, deliver,
     and perform its obligations under this Agreement and each other document or
     instrument to be delivered by the Seller hereunder.

         (b) Due Qualification. The Seller is duly qualified to do business and
     is in good standing (or is exempt from such requirements), as a foreign
     corporation in any state required in order to conduct business. The Seller
     has complied in all material respects with all licenses and approval
     requirements with respect to the Seller required under applicable law
     except insofar as any failure to so comply would not have a Material
     Adverse Effect.

         (c) Due Authorization. The execution and delivery of this Agreement,
     and the consummation of the transactions provided for herein, have been
     duly authorized by the Seller by all necessary corporate action on its
     part.

         (d) Binding Obligation. This Agreement, and the consummation of the
     transactions provided for herein, constitutes a legal, valid, and binding
     obligation of the Seller, enforceable in accordance with its terms, except
     as enforceability may be limited by applicable bankruptcy, insolvency,
     reorganization, moratorium, or other similar laws now or hereinafter in
     effect, affecting the enforcement of creditors' rights in general.

         (e) No Conflicts. The execution and delivery of the this Agreement, and
     the performance of the transactions contemplated hereby, do not (i)
     contravene the Seller's certificate of incorporation or by-laws or (ii)
     violate any material provision of law applicable to it or require any
     filing (except for the filings under the UCC), registration, consent, or
     approval under, any law, rule, regulation, order, writ, judgment,
     injunction, decree, determination, or award presently in effect having
     applicability to the Seller, except for such filings, registrations,
     consents, or approvals as have already been obtained and are in full force
     and effect.

         (f) Taxes. The Seller has filed all material tax returns required to be
     filed and has paid or made adequate provision for the payment of all
     material taxes, assessments, and other governmental charges due from the
     Seller or is contesting any such tax, assessment, or other governmental
     charge in good faith through appropriate proceedings and has set up
     appropriate reserves.

         (g) No Violation. The execution and delivery of this Agreement, the
     performance of the transactions contemplated hereby, and the fulfillment of
     the terms hereof will not violate any Requirements of Law applicable to the
     Seller, will not violate or result in any breach of any of the material
     terms and provisions of, or constitute (with or without notice or lapse of
     time or both) a default under, any Requirement of Law applicable to the
     Seller, or any

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<PAGE>   8

     material indenture, contract, agreement, mortgage, deed of trust, or other
     material instrument to which the Seller is a party or by which it or its
     properties are bound.

         (h) No Proceedings. There are no proceedings or investigations pending
     or, to the best knowledge of the Seller, threatened against the Seller,
     before any Official Body (i) asserting the invalidity of this Agreement,
     (ii) seeking to prevent the consummation of any of the transactions
     contemplated hereby, (iii) seeking any determination or ruling that would
     materially and adversely affect the performance by the Seller of its
     obligations hereunder, or (iv) seeking any determination or ruling that
     would materially and adversely affect the validity or enforceability
     hereof.

         (i) All Consents Required. All approvals, authorizations, consents,
     orders, or other actions of any Official Body required in connection with
     the execution and delivery of this Agreement, the performance of the
     transactions contemplated hereby, and the fulfillment of the terms hereof
     have been obtained.

         (j) Bona Fide Receivables. The Seller has no knowledge of any fact
     which should have led it to expect at the time of the classification of any
     Receivable as an Eligible Receivable that such Receivable would not be paid
     in full when due, and each Receivable classified as an Eligible Receivable
     by the Seller in any document or report delivered under this Agreement
     satisfies the requirements of eligibility contained in the definition of
     "Eligible Receivable" set forth in the Credit Agreement. No selection
     criteria adverse to the Buyer or the Lender have been applied to the
     Receivables purchased hereunder.

         (k) Place of Business. The principal executive offices of the Seller
     are in Sioux Falls, South Dakota and the offices where the Seller keeps its
     records concerning the Receivables and related Accounts are in Sioux Falls,
     South Dakota.

         (l) Not an Investment Company. The Seller is not an "investment
     company" within the meaning of the Investment Company Act of 1940, as
     amended, or is exempt from all provisions of such Act.

         (m) Tradenames, Etc. As of the date hereof: (i) the Seller's chief
     executive office is located at the address for notices set forth in Section
     9.3 and (ii) the Seller has, within the last five (5) years, operated only
     under its current legal name except as described below and, within the last
     five (5) years, has not changed its name, identity or corporate structure,
     merged with or into or consolidated with any other corporation, or been the
     subject of any proceeding under the United States Bankruptcy Code except
     the following:


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<PAGE>   9

            March 3, 1972           Valley West  Development Corporation
                                    incorporated in Utah

            April 25, 1995          Valley West Development Corporation,
                                    incorporated in Delaware

            May 17, 1995            Valley West Development Corporation
                                    (Utah) merged into Valley West
                                    Development Corporation (Delaware)

            October 11, 1996        Valley West Development Corporation
                                    changed its name to Credit Store, Inc.

            February 17, 1998       Service One Holdings, Inc. (a Delaware
                                    corporation) merged into Credit Store, Inc.

            February 17, 1998       Credit Store Mortgage, Inc. (a Delaware
                                    corporation) merged into Credit Store, Inc.

            March 2, 1998           Service One International Corporation (a
                                    South Dakota corporation) merged into
                                    Credit Store, Inc. and name changed to
                                    The Credit Store, Inc.

         (n) ERISA. Each of the Seller and its ERISA Affiliates is in compliance
     in all material respects with ERISA and no lien exists in favor of the PBGC
     on any of the Receivables.

         (o) Preference; Voidability. The Seller warrants that the conveyance of
     the applicable Receivables and Collections to the Buyer, and each such
     conveyance, shall not have been made for or on account of an antecedent
     debt owed by the Seller to the Buyer and no such transfer is or may be
     voidable under any Section of the United States Bankruptcy Code.

         (p) No Restriction on Transfer. To the best of Seller's knowledge, no
     Account or related Account Agreement requires the prior written consent of
     an Obligor or contains any other restriction relating to the transfer or
     assignment of rights of payment under such Account or Account Agreement
     (other than a consent or waiver of such restriction that has been obtained
     prior to the related purchase date).

         (q) Accuracy of Information. All information heretofore furnished by
     the Seller to the Buyer for purposes of or in connection with this
     Agreement or any transaction contemplated hereby is, and all such
     information hereafter furnished by the Seller to the Buyer will be, true
     and accurate in every material respect, on the date such information is
     stated or certified.

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<PAGE>   10

The representations and warranties set forth in this Section 4.1 shall survive
the sale of the Receivables to the Buyer. The Seller hereby represents and
warrants to the Buyer, that the representations and warranties of the Seller set
forth in this Section 4.1 are true and correct as of the Closing Date. Upon
discovery by the Seller or the Buyer of a material breach of any of the
foregoing representations and warranties, the party discovering such breach
shall give prompt written notice thereof to the other.

         Section 4.2 Seller's Representations and Warranties Regarding the
Receivables.


         (a) Valid Sale, Etc. The Seller (x) hereby represents and warrants as
     of the Closing Date, with respect to the Receivables transferred to the
     Buyer as of such date, and (y) shall be deemed to represent and warrant as
     of the date of sale to the Buyer of any Receivables after the Closing Date
     with respect to such Receivables, that:

              (i) This Agreement constitutes the legal, valid, and binding
         obligation of the Seller, enforceable against the Seller in accordance
         with its terms, except as such enforceability may be limited by
         applicable bankruptcy, insolvency, reorganization, moratorium, or other
         similar laws now or hereafter in effect, affecting the enforcement of
         creditors' rights in general.

              (ii) The transfer of Receivables by the Seller to the Buyer under
         this Agreement constitutes a valid sale, transfer, assignment,
         set-over, and conveyance to the Buyer of all right, title, and interest
         of the Seller in and to the Receivables, whether then existing or
         thereafter created and arising in connection with the Accounts
         (including any Additional Accounts), and the Receivables will be held
         by the Buyer free and clear of any Adverse Claim of any Person (other
         than the Buyer and the Lender) claiming through or under the Seller or
         any of its Affiliates. This Agreement constitutes a valid sale,
         transfer, assignment, set-over, and conveyance to the Buyer of all
         right, title, and interest of the Seller in and to the Conveyed
         Property purported to be sold hereunder, whether existing on the
         Closing Date or thereafter created, and the Proceeds thereof.

              (iii) The Seller is Solvent and will remain Solvent upon sale of
         the Receivables to the Buyer.

              (iv) Immediately preceding the sale of the Receivables and related
         property pursuant to this Agreement, the Seller is (or, with respect to
         Receivables sold after the date hereof, will be on the date of sale)
         the legal and beneficial owner of all right, title, and interest in and
         to each Receivable and each Receivable has been or will be transferred
         to the Buyer free and clear of any Adverse Claim.

                                      -10-

<PAGE>   11

              (v) All consents, licenses, approvals, or authorizations of or
         registrations or declarations with any Official Body required in
         connection with the transfer of such Receivables to the Buyer have been
         obtained.

              (vi) Each Account listed on an Account Schedule is an Eligible
         Account as of the date of such Account Schedule is delivered by the
         Seller and each Receivable classified as an Eligible Receivable by the
         Seller in any document or report delivered hereunder will satisfy the
         requirements contained in the definition of "Eligible Receivable" as of
         the time of such document or report.

         (b) Daily Representations and Warranties. On each day on which any new
     Receivable is sold by the Seller to the Buyer, the Seller shall be deemed
     to represent and warrant to the Buyer that all representations and
     warranties contained in Section 4.1 and Section 4.2(a) are true and correct
     on and as of such date (in addition to the Closing Date) as though made on
     and as of such date.

         (c) Notice of Breach. The representations and warranties set forth in
     this Section 4.2 shall survive the sale, transfer, and assignment of the
     Receivables to the Buyer. Upon discovery by the Seller or the Buyer of a
     breach of any of the representations and warranties set forth in this
     Section 4.2, the party discovering such breach shall give prompt written
     notice thereof to the other. The Seller agrees to cooperate with the Buyer
     in attempting to cure any such breach.

         Section 4.3 Representations and Warranties of the Buyer. The Buyer
hereby represents and warrants as of the Closing Date, and shall be deemed to
represent and warrant as of the date of the creation of any Receivable sold to
the Buyer hereunder, that:

         (a) Organization and Good Standing. The Buyer is a corporation duly
     organized and validly existing in good standing under the laws of the State
     of Delaware and has the requisite power and authority and legal right to
     own its property and conduct its business as such properties are presently
     owned and such business is presently conducted and to execute, deliver, and
     perform its obligations under this Agreement.

         (b) Due Qualification. The Buyer is duly qualified to do business and
     is in good standing (or is exempt from such requirements) as a foreign
     corporation in any state required in order to conduct business and has
     obtained all necessary licenses and approvals with respect to the Buyer
     required under federal and Delaware law.



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<PAGE>   12

         (c) Due Authorization. The execution and delivery of this Agreement and
     the consummation of the transactions provided for herein have been duly
     authorized by the Buyer by all necessary corporate action on its part.

         (d) No Conflicts. The execution and delivery of this Agreement and the
     performance of the transactions contemplated hereby do not (i) contravene
     the Buyer's certificate of incorporation or by-laws or (ii) violate any
     material provision of law applicable to it, or require any filing (except
     for the filings under the UCC), registration, consent, or approval under,
     any law, rule, regulation, order, writ, judgment, injunction, decree,
     determination, or award presently in effect having applicability to the
     Buyer, except for such filings, registrations, consents, or approvals as
     have already been obtained and are in full force and effect.

         (e) No Violation. The execution and delivery of this Agreement, the
     performance of the transactions contemplated hereby, and the fulfillment of
     the terms hereof will not violate any Requirements of Law applicable to the
     Buyer, will not violate or result in any breach of any of the material
     terms and provisions of, or constitute (with or without notice or lapse of
     time or both) a default under, any Requirement of Law applicable to the
     Buyer or any material indenture, contract, agreement, mortgage, deed of
     trust, or other material instrument to which the Buyer is a party or by
     which it or its properties are bound.

         (f) No Proceedings. There are no proceedings or investigations pending
     or, to the best knowledge of the Buyer, threatened against the Buyer,
     before any Official Body (i) asserting the invalidity of this Agreement,
     (ii) seeking to prevent the consummation of any of the transactions
     contemplated hereby, (iii) seeking any determination or ruling that would
     materially and adversely affect the performance by the Buyer of its
     obligations hereunder, or (iv) seeking any determination or ruling that
     would materially and adversely affect the validity or enforceability
     hereof.

         (g) All Consents Required. All approvals, authorizations, consents,
     orders, or other actions of any Official Body required in connection with
     the execution and delivery of this Agreement, the performance of the
     transactions contemplated hereby, and the fulfillment of the terms hereof
     have been obtained.

         (h) Solvency. The Buyer is Solvent and will remain Solvent upon the
     purchase of the Receivables.

The representations and warranties set forth in this Section 4.3 shall survive
the sale of the Receivables to the Buyer. The Buyer hereby represents and
warrants to the Seller that the representations and warranties of the Buyer set
forth in Section 4.3 are true and correct as of the Closing Date. Upon discovery
by the Buyer or the Seller of

                                      -12-

<PAGE>   13

a breach of any of the foregoing representations and warranties, the party
discovering such breach shall give prompt written notice to the other.

                                    ARTICLE V

                          COVENANTS OF SELLER AND BUYER

         Section 5.1 Seller Covenants. The Seller hereby covenants that:

         (a) Receivables to be Accounts, General Intangibles, or Chattel Paper.
     The Seller will take no action to cause any Receivable to be evidenced by
     any instrument (as defined in the UCC as in effect in the Relevant UCC
     State), except in connection with the enforcement or collection of a
     Receivable. Except in such circumstances, the Seller will take no action to
     cause any Receivable to be anything other than an "account," a "general
     intangible," or "chattel paper" (as defined in the UCC as in effect in the
     Relevant UCC State).

         (b) Security Interests. Except for the conveyances hereunder and the
     security interest of Coast Business Credit, a division of Southern Pacific
     Bank, which shall be released on the Initial Funding Date, the Seller will
     not sell, pledge, assign, or transfer to any other Person or grant, create,
     incur, assume, or suffer to exist, any Adverse Claim on any Receivable,
     whether now existing or hereafter created, or any interest therein. The
     Seller will immediately notify the Buyer of the existence of any Adverse
     Claim on any Receivable and will defend the right, title, and interest of
     the Buyer in, to, and under the Receivables, whether now existing or
     hereafter created, against all claims of third parties claiming through or
     under the Seller.

         (c) Credit and Collection Policy and Account Agreements. The Seller
     shall comply with the Credit and Collection Policy in regard to the
     Receivables, except insofar as any failure to so comply could not be
     reasonably expected to impair the collectibility of the Receivables, on the
     whole, or a substantial amount thereof, or otherwise have a Material
     Adverse Effect and the Receivables shall be serviced in all respects in a
     manner consistent with and similar to the revolving credit consumer credit
     card accounts and receivables owned by the Seller.

         (d) Delivery of Collections. In the event that the Seller receives
     Collections (other than in the Lockbox Account), the Seller agrees to
     deposit such Collections into the Collection Account as soon as practicable
     after the receipt thereof, but in no event later than the second Business
     Day following the Date of Processing thereof.

         (e) Conveyance of Receivables. The Seller covenants and agrees that it
     will not convey, assign, exchange, or otherwise transfer any Receivable

                                      -13-

<PAGE>   14

     arising in an Account, to any Person other than the Buyer prior to the
     termination of this Agreement pursuant to Article VIII.

         (f) Notice of Adverse Claims. The Seller shall notify the Buyer
     promptly after becoming aware of any Adverse Claim on any Receivable.

         (g) Separate Business. The Seller will not permit its assets to be
     commingled with those of the Buyer and shall maintain separate records
     (corporate or otherwise) and books of account from those of the Buyer. The
     Seller will not conduct its business in the name of the Buyer and will
     cause the Buyer to conduct its business solely in its own name so as not to
     mislead others as to the identity of the entity with which those others are
     concerned. The Seller will provide for its operating expenses and
     liabilities from its own funds. The Seller will not hold itself out, or
     permit itself to be held out, as having agreed to pay, or as generally
     being liable for, the debts of the Buyer, except that the organizational
     expenses of the Buyer may be paid by the Seller. The Seller shall cause the
     Buyer not to hold itself out, or permit itself to be held out, as having
     agreed to pay, or as being liable for, the debts of the Seller. The Seller
     will maintain an arm's length relationship with the Buyer with respect to
     any transactions between the Seller, on the one hand, and the Buyer, on the
     other.

         (h) Conduct of Business. The Seller will do, and will cause each of its
     subsidiaries to do, all things necessary to remain duly incorporated,
     validly existing, and in good standing as a domestic corporation in its
     jurisdiction of incorporation and will maintain all requisite authority to
     conduct its business in each jurisdiction in which its business is
     conducted.

         (i) Compliance with Laws. The Seller shall comply in all material
     respects with all laws, rules, regulations, orders, writs, judgments,
     injunctions, decrees, or awards to which it may be subject, except where
     such failure to comply would not have a Material Adverse Effect.

         (j) Furnishing of Information and Inspection of Records. The Seller
     shall furnish to the Buyer from time to time such information with respect
     to the Receivables as the Buyer may reasonably request, including, without
     limitation, listings identifying the Obligor and the outstanding principal
     balance for each Receivable. The Seller shall, at any time and from time to
     time during regular business hours and upon reasonable notice, permit the
     Buyer or its agents or representatives (i) to examine and make copies of
     and take abstracts from all documents, books, records, and other
     information (including, without limitation, computer programs, tapes,
     discs, punch cards, data processing software, and related property and
     rights) maintained with respect to Receivables and the related Obligors,
     (ii) to visit the offices and properties of the Seller, (iii) to discuss
     matters relating to the Receivables or


                                      -14-

<PAGE>   15

     the Seller's performance hereunder with any of the officers, directors,
     employees, or independent public accountants of the Seller having knowledge
     of such matters, and (iv) to conduct as many audits of the Receivables
     during the term of this Agreement as the Buyer may reasonably request;
     provided, however, that the Seller shall only be required to reimburse the
     Buyer for the cost of one such audit per year.

         (k) Keeping of Records and Books of Account. The Seller will maintain a
     system of accounting established and administered in accordance with GAAP,
     consistently applied, and will maintain and implement administrative and
     operating procedures and keep and maintain all documents, books, records,
     and other information, reasonably necessary or advisable for the collection
     of all Receivables (including, without limitation, records adequate to
     permit the identification of each new Receivable and all Collections of and
     adjustments to each existing Receivable). The Seller will give the Buyer
     and the Lender notice of any material change in the administrative and
     operating procedures of the Seller referred to in the previous sentence.

         (l) ERISA. The Seller shall promptly give the Buyer written notice upon
     becoming aware that the Seller or any of its subsidiaries is not in
     compliance in all material respects with ERISA or that any ERISA lien on
     any of the Receivables exists.

         Section 5.2 Buyer Covenant Regarding Sale Treatment. The Buyer agrees
to treat this conveyance for all purposes (other than for tax purposes) as a
sale of the Conveyed Property by the Seller to the Buyer.

                                   ARTICLE VI

                              REPURCHASE OBLIGATION

         Section 6.1 Mandatory Repurchase.


         (a) Breach of Warranty. In the event of a breach with respect to a
     Receivable of any of the representations and warranties set forth in
     Section 4.1(j) or Sections 4.2(a)(iii) through (vi) or Section 4.2(b), or
     in the event that a Receivable is not an Eligible Receivable on the date of
     its transfer to the Buyer as a result of the failure to satisfy the
     conditions set forth in the definition of "Eligible Receivable," such
     Receivable shall be designated an "Ineligible Receivable" and the Seller
     shall pay to the Buyer an amount in cash equal to the Purchase Price paid
     for any such Ineligible Receivable by the Buyer to the Seller plus any
     costs and expenses of the Buyer associated therewith less any amounts
     collected by the Buyer on such Receivable. Such payment must be made by the
     close of business on the next succeeding

                                      -15-

<PAGE>   16

     Settlement Date following the day such Receivable has been designated an
     Ineligible Receivable; provided, however, that such amount may be offset
     against any amounts due from the Buyer to the Seller with respect to the
     Purchase Price for Receivables sold to the Buyer on such day. The
     obligation of the Seller set forth in this Section 6.1 shall constitute the
     sole remedy respecting any breach of the representations and warranties set
     forth in the above-referenced Sections or failure to meet the conditions
     set forth in the definition of "Eligible Receivable" with respect to such
     Receivable available to the Buyer.

         (b) Reassignment of the Sold Assets. In the event of a breach of any of
     the representations and warranties set forth in Sections 4.1(a), (b), and
     (c), and 4.2(a)(i) and (ii), the Buyer by notice given in writing to the
     Seller may direct the Seller to accept reassignment of the Receivables at
     the amount specified below within 60 days of such notice (or within such
     longer period as may be specified in such notice), and the Seller shall be
     obligated to accept reassignment of the Receivables within such applicable
     period on the terms and conditions set forth below; provided, however, that
     no such reassignment shall be required to be made if, at any time during
     such applicable period, the Seller delivers to the Buyer an officer's
     certificate stating that the representations and warranties contained in
     Sections 4.1(a), (b), and (c) and 4.2(a)(i) and (ii) shall then be true and
     correct in all material respects as if made on such day. The Seller shall
     pay to the Buyer on the day of such reassignment an amount equal to the
     Aggregate Loan Balance. On the day on which such amount has been paid, each
     Receivable shall be sold and reassigned to the Seller, and the Buyer shall
     execute and deliver such instruments of sale and assignment, in each case
     without recourse, representation, or warranty, as shall be reasonably
     requested by the Seller to vest in the Seller, or its designee or assignee,
     all right, title, and interest of the Buyer in and to each Receivable. The
     obligation of the Seller to purchase each Receivable pursuant to this
     Section 6.1 shall constitute the sole remedy available to the Buyer for a
     breach of the representations and warranties contained in Section 4.1(a),
     (b), and (c) and 4.2(a)(i) and (ii).

         Section 6.2 Conveyance of Reassigned Receivables. Upon the request of
the Seller, the Buyer shall execute and deliver to the Seller a reconveyance
substantially in such form and upon such terms as shall be acceptable to the
Seller, pursuant to which the Buyer evidences the conveyance to the Seller of
all of the Buyer's right, title, and interest in any Receivables reconveyed to
the Seller pursuant to Section 6.1(b). The Buyer shall (and shall cause the
Lender to) execute such other documents or instruments of conveyance or take
such other actions as the Seller may reasonably require to effect any repurchase
of Receivables pursuant to Section 6.1.

         Section 6.3 Sales are Non-Recourse. Other than the obligations to
repurchase Receivables under the limited circumstances set forth in Section 6.1
and to


                                      -16-
<PAGE>   17


make payments with respect to Dilution under Section 3.2(b), the sales of
Receivables under this Agreement shall be without recourse to the Seller.

                                   ARTICLE VII

                              CONDITIONS PRECEDENT

         Section 7.1 Conditions to the Buyer's Obligations Regarding
Receivables. The obligations of the Buyer to purchase the Receivables on any
Business Day shall be subject to the satisfaction of the following conditions:

         (a) All representations and warranties of the Seller contained in this
     Agreement shall be true and correct on the Closing Date and on the day of
     sale of any Receivable created thereafter with the same effect as though
     such representations and warranties had been made on such date,

         (b) All information concerning the Receivables provided to the Buyer
     shall be true and correct in all material respects as of the Closing Date,
     in the case of Receivables sold to the Buyer on the Closing Date, or the
     applicable Business Day, in the case of Receivables sold to the Buyer after
     the Closing Date,

         (c) At the Closing Date, the Seller shall have substantially performed
     all other obligations required to be performed by the provisions of this
     Agreement,

         (d) With respect to Receivables sold to the Buyer on the Closing Date,
     the Seller shall have filed the financing statement(s) required to be filed
     pursuant to Section 2.1(b), and

         (e) All corporate and legal proceedings and all instruments in
     connection with the transactions contemplated by this Agreement shall be
     satisfactory in form and substance to the Buyer, and the Buyer shall have
     received from the Seller copies of all documents (including, without
     limitation, records of corporate proceedings) relevant to the transactions
     herein contemplated as the Buyer may reasonably have requested.

         Section 7.2 Conditions Precedent to the Seller's Obligations. The
obligations of the Seller to sell Receivables on any Business Day shall be
subject to the satisfaction of the following conditions:

         (a) All representations and warranties of the Buyer contained in this
     Agreement shall be true and correct with the same effect as though such
     representations and warranties had been made on such date,

                                      -17-

<PAGE>   18

         (b) Payment or provision for payment of the Purchase Price in
     accordance with the provisions of Section 3.2 shall have been made, and

         (c) All corporate and legal proceedings and all instruments in
     connection with the transactions contemplated by this Agreement shall be
     satisfactory in form and substance to the Seller, and the Seller shall have
     received from the Buyer copies of all documents (including, without
     limitation, records of corporate proceedings) relevant to the transactions
     herein contemplated as the Seller may reasonably have requested.

                                  ARTICLE VIII

                              TERM AND TERMINATION

         Section 8.1 Termination. This Agreement shall terminate upon payment in
full by the Buyer of all Obligations under the Credit Agreement.

                                   ARTICLE IX

                            MISCELLANEOUS PROVISIONS

         Section 9.1 Amendment. This Agreement and the rights and obligations of
the parties hereunder may not be changed orally, but only by an instrument in
writing signed by the Buyer and the Seller. The Seller shall provide prompt
written notice of any such amendment to the Lender.

         Section 9.2 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF MINNESOTA, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS, AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

         Section 9.3 Notices. All demands, notices, and communications hereunder
shall be in writing and shall be deemed to have been duly given if personally
delivered at or mailed by registered mail, return receipt requested, to:

                  (a)      in the case of the Buyer, to:

                           TCS Funding IV, Inc.
                           3401 North Louise Avenue, Suite 105
                           Sioux Falls, South Dakota 57105
                           Attention: Corporate Counsel
                           Telephone: (605) 339-7571
                           Telecopy: (605) 338-3486


                                      -18-

<PAGE>   19

                           with a copy to:

                           Miller & Schroeder Investments Corporation
                           150 South Fifth Street, Suite 3000
                           Minneapolis, Minnesota 55402
                           Attention: [Senior Vice President-Banking Group]
                           Telephone:[(612) 376-1500]
                           Telecopy:[(612) 376-1412]

                  (b)      in the case of the Seller, to:

                           The Credit Store, Inc.
                           3401 N. Louise Avenue
                           Sioux Falls, South Dakota 57105
                           Attention: Chief Financial Officer
                           Telephone: (605) 339-7577
                           Telecopy: (605) 338-3486

or, as to each party, at such other address as shall be designated by such party
in a written notice to each other party.

         Section 9.4 Severability of Provisions. If any one or more of the
covenants, agreements, provisions, or terms of this Agreement shall for any
reason whatsoever be held invalid, then such covenants, agreements, provisions,
or terms shall be deemed severable from the remaining covenants, agreements,
provisions, or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement.

         Section 9.5 Assignment. This Agreement may not be assigned by the Buyer
or the Seller without the written consent of the other party and the Lender.

         Section 9.6 Further Assurances. The Buyer and the Seller agree to do
and perform, from time to time, any and all acts and to execute any and all
further instruments required or reasonably requested by the other party to more
fully effect the purposes of this Agreement, including, without limitation, the
execution of any financing statements or continuation statements or equivalent
documents relating to the Receivables for filing under the provisions of the UCC
or other laws of any applicable jurisdiction.

         Section 9.7 No Waiver; Cumulative Remedies. No failure to exercise and
no delay in exercising, on the part of the Buyer or the Seller, any right,
remedy, power, or privilege hereunder, shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, remedy, power, or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, remedy, power, or privilege. The rights, remedies, powers, and
privileges herein provided are


                                      -19-

<PAGE>   20

cumulative and not exhaustive of any rights, remedies, powers, and privileges
provided by law.

         Section 9.8 Counterparts. This Agreement may be executed in two or more
counterparts including telecopy transmission thereof (and by different parties
on separate counterparts), each of which shall be an original, but all of which
together shall constitute one and the same instrument.

         Section 9.9 Binding Effect. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective successors and
permitted assigns.

         Section 9.10 Merger and Integration. Except as specifically stated
otherwise herein, this Agreement sets forth the entire understanding of the
parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by this Agreement.

         Section 9.11 Headings. The headings herein are for purposes of
reference only and shall not otherwise affect the meaning or interpretation of
any provision hereof.

         Section 9.12 Schedules. The schedules attached hereto and referred to
herein shall constitute a part of this Agreement and are incorporated into this
Agreement for all purposes.

         Section 9.13 No Bankruptcy Petition Against the Buyer. The Seller
hereby covenants and agrees that, prior to the date which is one year and one
day after the payment in full of the Obligations due under the Credit Agreement
it will not institute against or join any other Person in instituting against
the Buyer any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other similar proceeding under the laws of the United States or
any state of the United States.

         Section 9.14 Merger or Consolidation of, or Assumption of the
Obligations of, the Seller. The Seller shall not consolidate with or merge into
any other corporation or entity or convey or transfer its properties and assets
substantially as an entirety to any Person, unless:

         (a) the corporation or entity formed by such consolidation or into
     which the Seller is merged or the Person which acquires by conveyance or
     transfer the properties and assets of the Seller substantially as an
     entirety shall be a corporation or entity organized and existing under the
     laws of the United States of America or any State or the District of
     Columbia and, if the Seller is not the surviving entity, shall expressly
     assume, by an agreement supplemental hereto, executed and delivered to the
     Buyer in form satisfactory to the Buyer and the Lender, the performance of
     every covenant and obligation of the Seller


                                      -20-

<PAGE>   21

     hereunder (to the extent that any right, covenant, or obligation of the
     Seller, as applicable hereunder, is inapplicable to the successor entity,
     such successor entity shall be subject to such covenant or obligation, or
     benefit from such right, as would apply, to the extent practicable, to such
     successor entity); and

         (b) the Seller shall have delivered to the Buyer (i) an officer's
     certificate that such consolidation, merger, conveyance, or transfer and
     such supplemental agreement comply with this Section 9.14 and that all
     conditions precedent herein provided for relating to such transaction have
     been complied with and (ii) the Lender shall have received an opinion of
     legal counsel reasonably acceptable to it that this Agreement is a legal,
     valid, and binding obligation of such successor corporation or entity,
     enforceable against such successor corporation or entity in accordance with
     its terms, subject to applicable bankruptcy, insolvency, reorganization,
     moratorium, fraudulent conveyance, fraudulent transfer and other similar
     laws affecting creditors' rights generally, and to the application of
     general principles of equity.

         Section 9.15 Protection of Right, Title and Interest to Receivables.

         (a) The Seller shall cause this Agreement, all amendments hereto, all
     financing statements and continuation statements, and any other necessary
     documents covering the Seller's and the Buyer's right, title, and interest
     to the Conveyed Property to be promptly recorded, registered, and filed,
     and at all times to be kept recorded, registered, and filed, all in such
     manner and in such places as may be required by law to fully preserve and
     protect the right, title, and interest of the Buyer hereunder to the
     Conveyed Property and the proceeds thereof. The Seller shall deliver to the
     Buyer file-stamped copies of, or filing receipts for, any document
     recorded, registered, or filed as provided above, as soon as available
     following such recording, registration, or filing. The Buyer shall
     cooperate fully with the Seller in connection with the obligations set
     forth above and will execute any and all documents reasonably required to
     fulfill the intent of this Section 9.15(a).

         (b) Within 30 days after the Seller makes any change in its name,
     identity, or corporate structure which would make any financing statement
     or continuation statement filed in accordance with Section 9.15(a)
     materially misleading within the meaning of Section 9-402(7) of the UCC as
     in effect in the Relevant UCC State, the Seller shall give the Buyer
     written notice of any such change and shall file such financing statements
     or amendments as may be necessary to continue the perfection of the Buyer's
     security interest in the Conveyed Property and the proceeds thereof.

         (c) The Seller will give the Buyer prompt written notice of any
     relocation of any office from which it services Receivables or keeps
     records concerning the Receivables or of its principal executive office and
     whether, as



                                      -21-
<PAGE>   22

     a result of such relocation, the applicable provisions of the UCC would
     require the filing of any amendment of any previously filed financing or
     continuation statement or of any new financing statement and shall file
     such financing statements or amendments as may be necessary to continue the
     perfection of the Buyer's security interest in the Conveyed Property and
     the proceeds thereof. The Seller will at all times maintain each office
     from which it services Receivables and its principal executive office
     within the United States of America.






                           (Signature Page to Follow)



                                      -22-


<PAGE>   23



         IN WITNESS WHEREOF, the Buyer and the Seller each have caused this
Agreement to be duly executed by their respective officers as of the day and
year first above written.

                         TCS FUNDING IV, INC., as Buyer


                          By:
                             --------------------------------------------------

                             --------------------------------------------------

                             Its
                                -----------------------------------------------


                          THE CREDIT STORE, INC., as Seller,


                          By:
                             --------------------------------------------------

                             --------------------------------------------------
                             Its
                                -----------------------------------------------










          (Signature Page 1 of 1 to the Receivables Purchase Agreement)





                                      -23-


<PAGE>   24


                               ACCOUNT SCHEDULE TO
                         RECEIVABLES PURCHASE AGREEMENT
                            DATED AS OF MAY 31, 2000
















                                      -24-
</TEXT>
</DOCUMENT>
