CONTRIBUTION AGREEMENT
BETWEEN
BANKBOSTON (NH),
NATIONAL ASSOCIATION
AND
PARTNERS FIRST HOLDINGS, LLC
TABLE OF CONTENTS
Page
Parties.............................................................1
Recitals............................................................1
ARTICLE 1
DEFINITIONS.........................................................1
Section 1.1.Certain Defined Terms.......................1
ARTICLE 2
CONTRIBUTION OF ASSETS..............................................3
Section 2.1.Contributed Assets..........................3
Section 2.2.Excluded Assets.............................5
ARTICLE 3
ASSUMPTION OF OBLIGATIONS...........................................6
Section 3.1.Assumption of Obligations...................6
Section 3.2.Consideration...............................6
Section 3.3.Post-Closing Adjustments....................6
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER............................7
Section 4.1.Organization................................7
Section 4.2.Authority; Enforceability...................7
Section 0.0.Xx Conflicts................................7
Section 4.4.Ownership of Assets.........................7
Section 4.5.Cardholder and Related Agreements...........8
Section 4.6.Litigation..................................8
Section 4.7.Compliance with Applicable Law..............8
Section 4.8.Licenses to Carry on Credit Card Business...8
Section 4.9.Account Records.............................8
Section 4.10.Brokers....................................8
Section 4.11.Permits, Etc...............................9
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................9
Section 5.1.Organization................................9
Section 5.2.Authority; Enforceability...................9
Section 0.0.Xx Conflicts................................9
Section 5.4.Permits, Etc................................9
Section 5.5.Litigation.................................10
Section 5.6.Finder or Brokers..........................10
Section 5.7.Membership Interests.......................10
ARTICLE 6
CERTAIN TRANSITIONAL MATTERS.......................................10
Section 6.1.Transfers Requiring Consent................10
Section 0.0.Xxxxxxxx Records...........................10
Section 6.3.Further Assistance.........................11
Section 6.4.Communications with Cardholders............11
Section 6.5.Licensing Arrangements.....................11
ARTICLE 7
INDEMNIFICATION....................................................11
Section 7.1.Indemnity by the Seller....................11
Section 7.2.Indemnity by the Company...................12
Section 0.0.Xxxxxx.....................................12
Section 7.4.Time Limits................................13
Section 7.5.Exclusive Remedy; Damage Limitations.......13
ARTICLE 8
GENERAL............................................................14
Section 8.1.Investment Representations.................14
Section 8.2.Notices....................................14
Section 8.3.Entire Agreement...........................15
Section 8.4.Governing Law..............................15
Section 8.5.Consent to Jurisdiction....................15
Section 8.6.Waiver of Certain Damages..................15
Section 8.7.Sections and Sub-Section Headings..........15
Section 8.8.Assigns....................................15
Section 0.0.Xx Implied Rights or Remedies..............15
Section 8.10.Counterparts..............................16
Section 0.00.Xxxxxxxxxxxx..............................16
Section 8.12.Severability..............................16
Section 8.13.Survival..................................16
Section 8.14.Waiver of Right to Jury Trial.............16
Section 8.15.The BKB Value-Limited Credit Card Business16
Section 8.16.Disputes..................................16
Section 8.17.Remedies..................................16
Signature..........................................................16
SCHEDULES
Schedule 2.1(a) -- Accounts
Schedule 2.1(f) -- Assigned Contracts
Schedule 4.6 -- Litigation
EXHIBITS
Exhibit A -- Initial BKB Value-Limited Credit Card Business Accounts
Exhibit B -- Investment Representations
Exhibit C -- Form of Confidential Purchaser Questionnaire
Exhibit D-- Tax Basis and Value of Contributed Assets
CONTRIBUTION AGREEMENT
This is a Contribution Agreement, dated as of January 29, 1998 (as
in effect from time to time, this "Agreement"), between BankBoston (NH),
National Association, a national banking association (the "Seller"), and
(b) Partners First Holdings, LLC, a Delaware limited liability company
(the "Company").
Whereas, pursuant to a certain Master Agreement for the Formation
of a Limited Liability Company, dated as of September 2, 1997,
among
BankBoston Corporation,
Bankmont Financial Corp., Xxxxxx Trust and Savings Bank and First
Annapolis Consulting, Inc. (as amended and in effect from time to time,
the "Master Agreement"), it is contemplated that the Seller will
contribute to the Company the intangible assets associated with the
Credit Card Business (as hereinafter defined) of the Seller other than
the BKB Relationship Credit Card Business, the BKB International Credit
Card Business and the BKB Value-Limited Credit Card Business, subject to
certain terms and conditions set forth more fully therein; and
Whereas, the Seller wishes to contribute such assets to the
Company, and the Company wishes to acquire such assets from the Seller
and assume certain related liabilities, in consideration for $50 million
in stated value of Series A Units and a nineteen percent (19%)
share of all Common Units (collectively, the "Membership Interests").
Now, Therefore, in consideration of the foregoing and the mutual
covenants set forth below, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto hereby agree, intending to be legally bound, as follows:
ARTICLE 1
DEFINITIONS
Section 1.1.Certain Defined Terms. Capitalized terms used herein
without definition shall have the meanings assigned to such terms in the
Operating Agreement. Additionally, the following capitalized terms shall
have the following meanings:
"Accounts" has the meaning set forth in Section 2.1(a).
"Additional Agreements" means the contracts and agreements listed
on Schedule 2.1(f) hereto.
"Agreement" has the meaning set forth in the preamble.
"Assignment and Assumption" means the Assignment and Assumption
Agreement, dated as of the date hereof, by and between Seller and the
Company.
"Assistance Agreement" means the Assistance Agreement, dated as of
the date hereof, by and between the Company and Seller.
"Assumed Obligations" has the meaning set forth in Section 3.1.
"BIN" means VISA(R) Bank Identification Number.
"BKB Purchase Agreements" means (i) the Receivables Purchase and
Sale Agreement and (ii) the Overdue Receivables Purchase and Sale
Agreement, each dated as of the date hereof by and between the Seller and
Receivables LLC.
"Cardholder" means a holder of a Credit Card.
"Cardholder Agreements" means the agreements between the
Cardholders or obligors with respect to a Credit Card and the Seller,
including, without limitation, any agreements relating to credit
enhancements provided in connection with such Credit Card, as the same
has been amended or otherwise modified and in effect from time to time.
"Claim" has the meaning set forth in Section 7.3(a).
"Closing Date" means the date on which the transactions described
in this Agreement are consummated, except that for purposes of
determining Accounts, it shall mean the opening of business on the day on
which the transactions described in this Agreement are consummated.
"Company" has the meaning set forth in the preamble hereto.
"Company Indemnitees" has the meaning set forth in Section 7.1.
"Company Indemnity Representations" means the representations and
warranties of Company contained in Sections 5.4 and 5.5 of this
Agreement.
"Contributed Assets" has the meaning set forth in Section 2.1.
"Credit Card" means a MasterCard(R) or Visa(R) card issued by
Seller and associated solely with the Transferred Credit Card Business.
"Designated Agreements" means (i) the Cardholder Agreements and all
rights and privileges under the Cardholder Agreements, including, without
limitation, all rights to create, enforce and collect Receivables under
the Cardholder Agreements, all rights to enforce and collect amounts
owing under the Cardholder Agreements and all rights to amend and modify
the Cardholder Agreements, (ii) the Additional Agreements and all rights
and privileges under the Additional Agreements, (iii) all records and
information of Seller necessary for Seller to exercise its rights and
privileges under the Cardholder Agreements and the Additional Agreements
and (iv) the BIN numbers 432689 and 432690 and ICA numbers 544911 and
544912.
"Excluded Assets" has the meaning set forth in Section 2.2.
"Governmental Authority" means any federal, national, state,
municipal, local, territorial or other governmental department,
commission, board, bureau, agency, regulatory authority, instrumentality,
judicial or administrative body, domestic or foreign, and Visa(R) and
MasterCard(R).
"ICA" means the MasterCard(R) Interbank Card Account.
"Indemnified Party" has the meaning set forth in Section 7.3(a).
"Indemnifying Party" has the meaning set forth in Section 7.3(a).
"Losses" has the meaning set forth in Section 7.1.
"Master Agreement" has the meaning set forth in the recitals
hereto.
"MasterCard(R)" means MasterCard International Incorporated.
"Membership Interests" has the meaning set forth in the
recitals hereto.
"Operating Agreement" means the Limited Liability Company Agreement
dated as of the date hereof by and among the founding members of the
Company, as originally
executed and delivered.
"Qualified Transferee" has the meaning set forth in Section
6.5.
"Receivables" means any and all amounts payable by the Cardholders
(whether billed or unbilled, posted or not) in connection with the
Accounts, including, without limitation, all principal, outstanding
purchases, cash advances, interest (including accrued but unbilled
interest), annual fees, finance and service charges and other charges and
fees.
"Receivables Purchase Agreement" means the Receivables Purchase
Agreement, dated as of the date hereof, by and between Seller and
Receivables LLC relating to the purchase and sale of Receivables after
the date hereof.
"Retained Liabilities" has the meaning set forth in Section 3.1.
"Seller" has the meaning set forth in the preamble hereto.
"Seller Indemnitees" has the meaning set forth in Section 7.2.
"Seller Indemnity Representations" means the representations and
warranties of Seller contained in Sections 4.5 (except the first sentence
thereof), 4.6, 4.7, 4.8, 4.9 and 4.11 of this Agreement.
"Subject Losses" has the meaning set forth in Section 7.5.
"Third Party Claim" has the meaning set forth in Section 7.3(a).
"Transferred Credit Card Business" means the Credit Card Business
of the Seller (including, without limitation, that formerly conducted by
Bank of Boston Connecticut, which has been transferred to the Seller)
other than the BKB Relationship Credit Card Business, the BKB
International Credit Card Business and the BKB Value-Limited Credit Card
Business.
"Unassigned Contracts" has the meaning set forth in Section 6.1(c).
"Visa(R)" means Visa U.S.A., Inc.
ARTICLE 2
CONTRIBUTION OF ASSETS
Section 2.1.Contributed Assets. Subject to the terms and conditions
set forth in this Agreement, the Seller hereby contributes, assigns,
transfers and delivers to the Company, and the Company hereby accepts,
assumes, acquires and takes assignment and delivery of, all of the
Seller's right, title and interest in, to and under the following assets
(other than the Excluded Assets) as of the Closing Date (hereinafter
referred to collectively as the "Contributed Assets"):
(a) All of the credit card accounts associated with the
Transferred Credit Card Business, including, without limitation,
dormant accounts, in-active accounts, closed accounts, accounts
without outstanding balances, accounts classified as "substandard,"
"doubtful," or "loss" or treated as "other loans especially
mentioned" in the most recent report of examination prepared by any
Federal or State supervisory agency, accounts in nonaccrual status,
accounts on which principal or interest payments are more than 30
days past due, accounts whose terms have been renegotiated or
compromised due to the deteriorating financial condition of the
Cardholder and accounts which are statused by Seller on the Closing
Date as bankrupt, deceased, fraud, lost or stolen or charged off
(such status to be determined in a manner consistent with Seller's
customary practice consistently applied), and the credit card
accounts identified in Schedule<0- 32>2.1(a), which is attached
hereto and/or provided herewith and made a part hereof (which may,
in the Seller's sole discretion, be in the form of a computer file
or magnetic tape, which contains sufficient information to identify
each account and respective Cardholder including name, address,
social security number, account number, status codes, account
balance and such other information as is mutually agreed upon by
Purchaser and Seller, as identification of the respective
Cardholders) (the "Accounts");
(b) All unprocessed applications and preapproved offers
outstanding on the Closing Date for Credit Cards other than those
which if processed and accepted would result in an account
associated with the BKB Relationship Credit Card Business or the
BKB International Credit Card Business or with a Cardholder located
in Massachusetts, Rhode Island, Connecticut or New Hampshire.
(c) All other rights in and to the business relationship
between the Seller and the Cardholders in their capacities as such,
including the right to offer ongoing Credit Card services to
Cardholders and the right to offer and provide other products and
services on a non-exclusive basis to Cardholders;
(d) The right to direct the Seller to transfer all of its
rights under the Designated Agreement to any other party at any
time and from time to time (without any further consideration being
payable by the Company) provided that (i) the designee is legally
capable of performing the obligations of the Seller thereunder,
(ii) such designee expressly assumes the obligations of the Seller
under the Designated Agreements and (iii) such designee expressly
acknowl edges that its rights thereunder are subject to, and that
it is bound by, the BKB Purchase Agreements, the Assignment and
Assumption and the Receivables Purchase Agreement;
(e) Any and all books and records under the Seller's control
relating solely to the Cardholders and the Accounts, including,
without limitation, all Account applications, statements, records
and correspondence and all customer lists and other information
under the Seller's control relating solely to such Cardholders and
such Accounts, whether in paper, microfilm, microfiche or magnetic
tape form;
(f) The rights of Seller under the contracts and agreements
listed on Schedule 2.1(h) hereof, to the extent the same are
assignable without breach of same or Seller has obtained any
necessary consents to such assignment or as otherwise may be
transferred to the Company; and
(g) The right to assign, license or designate to others any
or all of the foregoing.
Section 2.2.Excluded Assets. Anything contained in the foregoing to
the contrary notwithstanding, the Seller is not transferring to the
Company and the Company is not acquiring pursuant to this Agreement, and
the term "Contributed Assets" shall not in any event include, any of the
following (the "Excluded Assets"):
(a) Any cash;
(b) Any fees, charges or other amounts payable by any
Cardholders and not arising in connection with the Accounts or the
Transferred Credit Card
Business;
(c) Any of the Seller's trademarks, service marks or trade
names, or any stationery, office supplies, business forms, manuals
or similar property bearing the Seller's trademarks, trade names,
service marks, logos or similar corporate identification, unless
such trademarks, trade names, service marks, logos or similar
corporate identification have been redacted therefrom;
(d) Any assets related solely to Retained Liabilities;
(e) Any income tax refunds or claims therefor which the
Seller may be entitled to receive from any federal, state or local
authorities;
(f) Any assets of the Seller not used solely in the
Transferred Credit Card Business (including any assets used in a
Permitted Business) or not separable from the Seller's other
businesses;
(g) Any rights to any security deposits or other amounts
deposited with any state or other jurisdiction or regulatory
authority in connection with the qualification, certification,
licensing or permitting of the Seller in connection with the
conduct of the Seller's business, including, without limitation,
the Transferred Credit Card Business;
(h) Any consideration received by the Seller (or any
of their
Affiliates) pursuant to this Agreement;
(i) Any rights of the Seller under this Agreement or
any other
Related Agreement;
(j) Any rights of the Seller under the Cardholder Agreements
to indemnification or reimbursement and not relating to a liability
which the Company has assumed, or any other claims or rights of the
Seller under such agreements, in each case relating to the conduct
of the Transferred Credit Card Business prior to the Closing Date;
and
(k) Any rights or assets transferred and/or assigned by
Seller pursuant to the BKB Purchase Agreements, the Assignment and
Assumption or the Receivables Purchase Agreement; and
(l) The Designated Agreements (subject to the Company's right
to cause the same to be transferred as herein set forth).
ARTICLE 3
ASSUMPTION OF OBLIGATIONS
Section 3.1.Assumption of Obligations. The Company hereby assumes,
and agrees to pay, perform, fulfill and discharge, all of the Seller's
obligations with respect to the Contributed Assets from and after the
Closing Date, including, without limitation, the following obligations of
the Seller (collectively, the "Assumed Obligations"):
(a) All of the Seller's obligations under or in connection
with the Credit Cards and the Accounts (including, without
limitation, any related credit enhancements transferred to the
Company or its designee and the contracts assigned to Company or
its designee hereby and listed on Schedule 2.1(h) hereto)
arising from and after the Closing Date; and
(b) All fees, normal operating assessments and other charges
of Visa(R) and MasterCard(R) relating solely to the Transferred
Credit Card Business and relating to the period after the Closing
Date, except for those charges (i) arising from the Seller's
violation of any by-laws, rules or operating regulations of
MasterCard(R) and/or Visa(R) or other directive from or agreement
with MasterCard(R) and/or Visa(R) which are binding upon the
Seller, or (ii) relating to any special assessments with
respect to periods up to and including the Closing Date.
All obligations and liabilities of Seller not assumed by the Company
pursuant to this Section 3.1 or assumed by separate written
agreement signed by the Company (the "Retained Liabilities") are retained
by Seller and the Company shall not be liable therefor.
Section 3.2. Consideration. In consideration of the transfer of the
Contributed Assets by the Seller to the Company hereunder, the Company
agrees on the Closing Date to assume the Assumed Obligations and to
transfer to the Seller or to a Permitted Transferee thereof designated by
the Seller, the Membership Interests. The Seller's tax basis in the
Contributed Assets and the value of the Contributed Assets is set forth
on Exhibit D hereto.
Section 3.3. Post-Closing Adjustments. It is the intent of the
parties hereto that the Seller transfer to the Company all Accounts
associated with the Transferred Credit Card Business and, accordingly, if
it comes to the attention of either party that any Account was improperly
included on or excluded from Schedule 2.1(a), the parties shall execute a
mutually acceptable agreement appropriately amending Schedule 2.1(a) and
shall take such other actions as may be appropriate in order to place the
parties in the same position as they would have been in if Schedule
2.1(a) as originally delivered had been modified in accordance with such
amendment.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby represents and warrants to the Company as
follows:
Section 4.1. Organization. The Seller is a national banking
association duly organized under the laws of the United States and is
authorized to conduct general banking business under such laws.
Section 4.2. Authority; Enforceability. The Seller has all requisite
power and authority (i) to enter into and carry out its obligations
under this Agreement, (ii) to hold the Contributed Assets being
contributed to the Company by the Seller and (iii) to contribute, assign
and transfer the Contributed Assets being contributed to the Company by
the Seller. The execution, delivery and performance of this Agreement
have been duly authorized by all necessary action on the part of the
Seller. This Agreement has been duly executed and delivered and
constitutes the legal, valid and binding obligation of the Seller,
enforceable against the Seller in accordance with its terms, except as
enforcement thereof may be limited by receivership, conservatorship and
supervisory powers of bank regulatory agencies generally, as well as
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium
or similar laws of general applicability relating to or affecting
creditors' rights or to general equity principles (regardless of whether
such matters are considered in a proceeding in equity or at law) and the
availability of equitable remedies.
Section 4.3. No Conflicts. The execution, delivery and performance
by the Seller of this Agreement does not violate (a) Seller's Articles of
Association or By-Laws, as applicable, (b) any material agreement or
instrument to which the Seller is a party or by which the Seller is bound
or which affects the Contributed Assets, or (c) any law, rule or
regulation applicable to the Seller or which affects the Contributed
Assets.
Section 4.4. Ownership of Assets. Seller is the sole owner of all
right, title and interest in, to and under all of the Contributed Assets
being contributed by Seller to the Company under this Agreement. The
Seller has the right, power and authority to contribute and transfer the
Contributed Assets being contributed by it to the Company, and the
Contributed Assets are not subject to any assignment, lien, charge,
encumbrance or security interest, except that such assets may be
encumbered by the Cardholder Agreements and to other rights of
Cardholders and other obligors pursuant to 12 C.F.R. Section 226.12(c) and
section 226.13. The Seller hereby contributes the Contributed Assets being
contributed by it to the Company free and clear of all assignments,
liens, charges, encumbrances and other security interests and of all
claims or rights of third parties except as such assets may be encumbered
by the Cardholder Agreements and to other rights of Cardholders and other
obligors pursuant to 12 C.F.R. Section 226.12(c) and Section 226.13.
Section 4.5. Cardholder and Related Agreements. Seller has
heretofore delivered (or afforded the Company the opportunity to inspect)
representative forms of the Cardholder Agreements (but not all variances
of such Cardholder Agreements setting forth different rates or other
economic terms) and representative copies of the forms of written
applications for Credit Cards currently in use and copies of all
contracts listed on Schedule 2.1(h) hereof. The Cardholder
Agreements are legally binding agreements, enforceable in all material
respects against the Seller and, to the best of Seller's knowledge,
against the Cardholders or other obligors party thereto in accordance
with their respective terms, except as enforcement thereof may be limited
by bankruptcy, fraudulent transfer, reorganization, moratorium or similar
laws of general applicability relating to or affecting creditors' rights
or to general equity principles (regardless of whether such matters are
considered in a proceeding in equity or at law) and the availability of
equitable remedies. The Seller is in compliance with the Cardholder
Agreements except where the failure to so comply would not have a
material adverse effect on the Contributed Assets. The Cardholder
Agreements and contract obligations are in full force and effect, the
Seller is not in default in any material respect thereunder and to the
best of Seller's knowledge no other party thereto is in default
thereunder.
Section 4.6. Litigation. Except for the litigation described on
Schedule 4.6, which is attached hereto and made a part hereof,
there are no actions, suits or proceedings pending or, to the knowledge
of the Seller, threatened against or affecting the Seller which would
reasonably be expected to cause any material adverse effect on the
Contributed Assets. There is no action, suit or proceeding pending
against the Seller which would prevent the Seller from consummating the
sale of the Contributed Assets to the Company hereunder.
Section 4.7. Compliance with Applicable Law. The Seller has complied
in all material respects with applicable federal and state laws, rules
and regulations, and judicial, administrative and arbitrator's orders
relating thereto, which are applicable to the Transferred Credit Card
Business and the Contributed Assets, including, without limitation, the
federal Truth-in-Lending Act, Equal Credit Opportunity Act, Fair Credit
Reporting Act, Fair Debt Collection Practices Act and Regulations B and Z
promulgated by the Board of Governors of the Federal Reserve System.
Section 4.8. Licenses to Carry on Credit Card Business. The Seller
is licensed to participate in the programs offered by Visa(R) and by
MasterCard(R) to the full extent necessary to satisfy the terms of this
Agreement and the Cardholder Agreements.
Section 4.9. Account Records. The Account records are accurate and
complete in all material respects, in each case, as of the date when each
such record was made.
Section 4.10. Brokers. Neither the Seller nor any of its Affiliates
has agreed to pay any fee or commission to any agent, broker, finder or
other person for or on account of services rendered as a broker or finder
in connection with this Agreement or the contribution of the Contributed
Assets hereunder.
Section 4.1. Permits, Etc. The Seller has obtained or as of the
Closing Date will have obtained all licenses, permits and approvals of
all Governmental Authorities necessary for the Seller to contribute to
the Company the Contributed Assets to be contributed by the Seller to the
Company and to consummate the other transactions contemplated hereby. The
Seller has not received notice from any Governmental Authority indicating
that it would oppose or not grant or issue its consent or approval, if
required, with respect to the contribution of the Contributed Assets
hereunder or any of the other transactions contemplated hereby.
The Seller makes no other representations or warranties, expressed
or implied with respect to the subject matter hereof, other than as
specifically set forth in this Article 4.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Seller as
follows:
Section 5.1. Organization. The Company is a limited liability
company duly organized, validly existing and in good standing under the
laws of the State of Delaware.
Section 5.2. Authority; Enforceability. The Company has the
requisite power and authority (i) to enter into and carry out its
obligations under this Agreement, (ii) to receive and hold the
Contributed Assets and (iii) to assume the Assumed Obligations. The
execution, delivery and performance of this Agreement have been duly
authorized by all necessary action on the part of the Company. This
Agreement has been duly executed and delivered by the Company and
constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as
enforcement thereof may be limited by receivership, bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium or similar
laws of general applicability relating to or affecting creditors' rights
or to general equity principles (regardless of whether such matters are
considered in a proceeding in equity or at law) and the availability of
equitable remedies.
Section 5.3. No Conflicts. The execution, delivery and performance
of this Agreement by the Company does not violate (a) the
Certificate of Formation or the Operating Agreement, (b) any
material agreement or instrument to which the Company is a party or by
which the Company is bound, or (c) any law, rule or regulation
applicable to the Company.
Section 5.4. Permits, Etc. The Company has obtained all licenses,
permits and approvals of all Governmental Authorities necessary for the
Company to operate the businesses contemplated to be operated by it
pursuant to the Operating Agreement and to consummate the transactions
contemplated hereby.
Section 5.5. Litigation. There is no action, suit or proceeding
pending or, to the knowledge of the Company, threatened against the
Company which challenges the validity, propriety or enforceability of, or
seeks to enjoin the performance of, the transactions contemplated by this
Agreement.
Section 5.6. Finder or Brokers. Neither the Company nor any
Affiliate of the Company has agreed to pay any fee or commission to any
agent, broker, finder or other person for or on account of services
rendered as a broker or finder in connection with this Agreement or the
transactions contemplated hereby.
Section 5.7. Membership Interests. The Membership Interests are duly
authorized and when issued pursuant to the terms hereof will be fully
paid and nonassessable, and upon issuance to the Seller or its designees
will be owned by the Seller or its designees free and clear of any
claims, liens, encumbrances or security interests, other than the
restrictions contained in the Operating Agreement.
ARTICLE 6
CERTAIN TRANSITIONAL MATTERS
Section 6.1. Transfers Requiring Consent. To the extent that any
asset is not transferable or assignable without the consent of any third
party or the transfer or assignment of which would result in a violation
of any law or order (a "Non-Transferable Asset"), this Agreement shall
not constitute an assignment or an attempted assignment thereof. Seller
shall use its reasonable efforts to obtain the required consent of any
such third party to the transfer or assignment of any such
Non-Transferable Asset to the Company. If any such consent shall not be
obtained, Seller shall cooperate with the Company in any reasonable
arrangement (including reimbursement of monies paid by the Company on
account of any such arrangement) designed to provide the Company with the
benefits intended to be assigned to it under the relevant
Non-Transferable Asset.
Section 6.2. Business Records. The Company acknowledges that
certain business records of the Seller relating to the Seller's
Transferred Credit Card Business prior to the Closing Date will be
conveyed to the Company as part of the Contributed Assets, and that the
Seller may from time to time require access to such records, and the
Company agrees that upon reasonable prior notice from the Seller, it
will, during normal business hours, either provide the Seller with access
to or, at the Company's option, copies of such records for such purposes.
The Seller agrees to hold any confidential information so provided in
confidence. The Company agrees that it will not destroy any such business
records during the three (3) year period after the date hereof, and it
will not within the two (2) year period after such date destroy any
business records prepared prior to the date hereof without first
notifying the Seller and affording them the opportunity to remove or copy
them.
Section 6.3. Further Assistance. On and after the Closing Date
Seller shall (i) execute, acknowledge and deliver all such
acknowledgments and other instruments and take such further action as may
be necessary and appropriate to effectively vest in the Company the full
legal and equitable title to the Contributed Assets, and (ii) assist the
Company in the orderly transition of the Contributed Assets to the
Company, and (iii) deliver such other information as the Company may
reasonably request. In the event Seller shall receive any payments on the
Contributed Assets attributable to the period after the Closing Date, the
Seller shall hold them in trust for the Company, promptly endorse and
transfer such payments to the Company and take all actions to vest such
monies in Company.
Section 6.4. Communications with Cardholders. Not later than sixty
(60) days after the initial re-designation of the Designated Agreements
in accordance with the terms of Section 6.5 of this Agreement, the
Company or its designee shall have notified Cardholders of the
transactions contemplated by this Agreement by sending them a joint
communication from the Seller and the Company. Such communication shall
be at the Company's expense. Such communication shall be in a form
consented to by both parties prior to mailing, but neither party shall
unreasonably withhold consent. The parties agree that such communication
shall include a telephone number so that Cardholders may contact the
Company or its designee and will notify Cardholders that they will not be
permitted to use drafts (including, without limitation, cash advance
checks and balance transfer forms or checks) previously sent them by the
Seller. The Seller will honor such drafts for such period of time
specified by the Company, which shall not be more than one hundred eighty
(180) days after such re-designation and the Company shall promptly
reimburse the Seller for each such draft honored by it.
Section 6.5. The Designated Agreements. The Seller and the Company
acknowledge that all Receivables and net Interchange fees related thereto
generated by the Seller under the Designated Agreements are to be sold by
the Seller to Receivables LLC, a wholly owned subsidiary of the Company,
pursuant to the BKB Purchase Agreements, the Assignment and Assumption
and the Receivables Purchase Agreement. The Seller further acknowledges
that its retention of the Designated Agreements is subject to the right
of the Company to direct the Seller and each and every subsequent
transferee thereof to transfer the Designated Agreements to whomsoever
the Company may elect provided that such transferee is legally capable of
performing the obligations of the Seller and each and every transferee
thereof under the Designated Agreements, expressly assumes the
obligations of the Seller and each and every transferee thereof under the
Designated Agreements and expressly acknowledges that it is taking its
rights subject to and will be bound by the terms of the BKB Purchase
Agreements, the Assignment and Assumption and the Receivables Purchase
Agreement (to the extent such agreements are then in effect) (each being
a "Qualified Transferee"). Upon the election of the Company to terminate
the Seller's obligations under the Assistance Agreement, the Company
shall direct the Seller to, and upon such direction the Seller shall,
transfer (without payment of any further consideration) the Designated
Agreements to such Qualified Transferee. The Seller agrees to execute
such instruments of assignment and transfer as may be reasonably required
by the Company in order to effectuate the transfer of the Designated
Agreements to a Qualified Transferee. It is expressly acknowledged and
agreed that the right of the Company to direct the Designated Agreements
to be transferred is subject only to the conditions explicitly herein
stated, and is otherwise absolute and unconditional and that the grant of
such right to the Company is a material inducement to the Company in
entering into this Agreement.
ARTICLE 7
INDEMNIFICATION
Section 7.1. Indemnity by the Seller. The Seller agrees to
indemnify and hold the Company and its affiliates, employees, officers,
directors, controlling persons, successors and assigns (the "Company
Indemnitees"), harmless from and with respect to any and all claims,
liabilities, losses, damages, costs and expenses, including without
limitation the reasonable fees and disbursements of counsel and expert
witnesses, net of insurance proceeds (collectively, "Losses"), related to
or arising directly or indirectly out of (a) any inaccuracies in any
representation or warranty made by the Seller in or pursuant to this
Agreement, but only to the extent that Losses relating to or arising
directly or indirectly out of such inaccuracies when taken together with
Losses (as that term is defined in the BKB Purchase Agreements) for which
the Seller is obligated to indemnify Purchaser Indemnitees (as defined in
the BKB Purchase Agreements) pursuant to Section 7.1(a) each of the BKB
Purchase Agreements, without duplication, exceed $100,000 in the
aggregate, (b) any failure or breach by the Seller of any covenant,
obligation, or undertaking made by the Seller in this Agreement, (c) the
operation of the Contributed Assets by the Seller prior to the date
hereof, (d) the Retained Liabilities, or (e) any out-of-balance condition
in the Cardholder records existing on the Closing Date, whether or not
then known, in each case, except to the extent that such Losses were
caused by any such Indemnified Party's gross negligence or willful
misconduct.
Section 7.2. Indemnity by the Company. The Company agrees to
indemnify and hold the Seller and its affiliates, employees, officers,
directors, controlling persons, successors and assigns (the "Seller
Indemnitees") harmless from and with respect to any and all Losses
related to or arising directly or indirectly out of (a) any
inaccuracies in any representation or warranty made by the Company in or
pursuant to this Agreement, but only to the extent that Losses relating
to or arising directly or indirectly out of such inaccuracies when taken
together with Losses (as that term is defined in the BKB Purchase
Agreements) for which Receivables LLC is obligated to indemnify the
Seller Indemnitees (as defined in the BKB Purchase Agreements) pursuant
to Section 7.2(a) of each of the BKB Purchase Agreements, without
duplication, exceed $100,000 in the aggregate, (b) any failure or
breach by the Company of any covenant, obligation or undertaking made by
the Company in this Agreement (including without limitation any failure
by the Company to pay or perform any of the Assumed Obligations), or
(c) the operation of the Contributed Assets by the Company after
the Closing Date, in each case except to the extent that such Losses were
caused by any such Indemnified Party's gross negligence or willful
misconduct.
Section 7.3. Claims. (a) Any party seeking indemnification
hereunder (the "Indemnified Party") shall promptly notify the party
hereto obligated to provide indemnification hereunder (the "Indemnifying
Party") of any action, suit, proceeding, demand or breach (a "Claim")
with respect to which the Indemnified Party claims indemnification
hereunder, provided that failure of the Indemnified Party to give such
notice shall not relieve the Indemnifying Party of its obligations under
this Article 7 except to the extent, if at all, that such Indemnifying
Party shall have been prejudiced thereby. If such Claim relates to any
action, suit, proceeding or demand instituted against the Indemnified
Party by a third party (a "Third Party Claim"), then upon receipt of such
notice from the Indemnified Party the Indemnifying Party shall be
entitled to participate in the defense of such Third Party Claim, and if
and only if each of the following conditions is satisfied, the
Indemnifying Party may assume the defense of such Third Party Claim, and
in the case of such an assumption the Indemnifying Party shall have the
authority to negotiate, compromise and settle such Third Party Claim:
(i) the Indemnifying Party confirms in writing that it is
obligated hereunder to indemnify the Indemnified Party with respect
to such Third Party Claim; and
(ii) there is no conflict of interest which would make
separate representation by the Indemnified Party's own counsel
advisable.
The Indemnified Party shall retain the right to employ its own counsel
and to participate in the defense of any Third Party Claim, the defense
of which has been assumed by the Indemnifying Party pursuant hereto, but
the Indemnified Party shall bear and shall be solely responsible for its
own costs and expenses in connection with such participation. The
Indemnifying Party shall not, without the prior written consent of the
Indemnified Party, settle or compromise any claim or consent to the entry
of any judgment that does not include as an unconditional term thereof
the giving by the claimant or the plaintiff to the Indemnified Party a
release from all liability in respect of such claim.
(b) In the event of any Claim under Section 7.1 or 7.2, the
Indemnified Party shall advise the Indemnifying Party in writing of the
amount and circumstances
surrounding such Claim.
Section 7.4. Time Limits. No claim for indemnification under this
Article 7 may be asserted for the first time for any breach of any
representation or warranty after June 30, 1999.
Section 7.5. Exclusive Remedy; Damage Limitations. The Seller and
the Company acknowledge and agree that, except for the right to seek
specific performance of covenants and other agreements, the
indemnification rights and remedies available to each party under this
Article 7 shall be the sole and exclusive rights and remedies of the
Company and the Seller with respect to any Losses arising out of or
relating in any way to (a) any breach of this Agreement, (b) the
acquisition of the Contributed Assets and the assumption of the Assumed
Obligations by the Company, or (c) the consumma tion of the transactions
contemplated hereby (collectively, the "Subject Losses"), including
without limitation any claims, rights or remedies for negligent
misrepresenta tion but excluding specifically, any claims, rights or
remedies for fraud. Without limiting the generality of the foregoing,
except for remedies for fraud and as specifically authorized by this
Article 7, the Company and the Seller hereby waive, release and disclaim
any claims, rights or remedies arising in tort, by statute, or otherwise,
with respect to the Subject Losses. As provided in Section 8.6, in no
event shall the Company or the Seller be entitled to recover from the
other party hereto for incidental, special, consequential, exemplary or
punitive damages, and for all purposes of this Agreement, the term
"Losses" shall be deemed not to include any such damages. The Seller's
maximum aggregate liability, and the right of recovery of the Company
Indemnitees against the Seller under this Article 7 for Losses, arising
as a result of breaches of the Seller Indemnity Representations contained
herein shall, in all events other than fraud by Seller, be limited in the
aggregate to $10,000,000 less all amounts paid by the Seller under
Article 7 of the BKB Purchase Agreements as a result of breaches by
Seller of the Seller Indemnity Representations (as that term is defined
in the BKB Purchase Agreements). The Company's maximum aggregate
liability, and the right of recovery of the Seller Indemnitees against
the Company under this Article 7 for Losses, arising as a result of
breaches of the Company Indemnity Representations contained herein shall,
in all events other than fraud by the Company, be limited in the
aggregate to $10,000,000 less all amounts paid by Receivables, LLC under
the BKB Purchase Agreements as a result of breaches by Receivables, LLC
of the Purchaser Indemnity Representations (as that term is defined in
the BKB Purchase Agreements).
ARTICLE 8
GENERAL
Section 8.1. Investment Representations. On the Closing Date, the
Seller shall cause the recipient or recipients of the Membership
Interests (a) to make to the Company each of the representations
set forth as Exhibit B hereto and (b) to execute and deliver to the
Company a completed Confidential Purchaser Questionnaire, the form of
which is attached hereto as Exhibit C.
Section 8.2. Notices. All notices, demands and other communications
hereunder shall be in writing or by written telecommunication, and shall
be deemed to have been duly given if delivered personally or if mailed by
certified mail, return receipt requested, postage prepaid or if sent by
overnight courier or sent by written facsimile (answerback confirmed), as
follows:
If to the Seller: BankBoston (NH), National
Association
c/o BankBoston Corporation
000 Xxxxxxx Xxxxxx, 00-00-00
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xx. Xxxxx X. Xxxxxxx
and Xxxx X. Xxxxxx, Esq.
with a copy sent contemporaneously to: Xxxxxxx Xxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
If to the Company: Partners First Holdings, LLC
000 Xxxxxxxx Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxxx
with a copy sent contemporaneously to: Partners First Holdings, LLC
000 Xxxxxxxx Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Any such communication shall be deemed to have been received (i) when
delivered, if personally delivered, or sent by nationally-recognized
overnight courier or sent via facsimile (answerback confirmed) or
(ii) on the third Business Day following the date on which the piece
of mail containing such communications is posted, if sent
by certified mail.
Section 8.3. Entire Agreement. This Agreement (including the
Exhibits and Schedules hereto) contains the entire understanding of the
parties hereto, and supersedes all prior agreements and understandings
relating to the subject matter hereof. This Agreement shall not be
amended except by a written instrument hereafter signed by all of the
parties hereto. No waiver of any provision of this Agreement shall be
effective unless evidenced by a written instrument signed by the waiving
party. Each of the parties hereto further acknowledges and agrees that,
in entering into this Agreement, it has not in any way relied upon any
oral or written agreements, statements, promises, information,
arrangements, understandings, representations or warranties, express or
implied, not specifically set forth in this Agreement.
Section 8.4. Governing Law. This Agreement shall be governed by,
and construed and enforced in accordance with, the laws of the State of
Delaware without regard to its conflict of laws rules.
Section 8.5. Consent to Jurisdiction. Each of the parties hereto
agrees that any suit, action or proceeding instituted against such party
under or in connection with this Agreement may be brought in a court of
competent jurisdiction in the State of Delaware. By execution hereof,
each party hereto irrevocably waives any objection to, and any right of
immunity on the grounds of, improper venue, the convenience of the forum,
the personal jurisdiction of such courts or the execution of judgments
resulting therefrom. Each party hereto hereby irrevocably accepts and
submits to the jurisdiction of such courts in any such action, suit or
proceeding.
Section 8.6 Waiver of Certain Damages. Each of the parties hereto
irrevocably waives, to the fullest extent permitted by law any rights
that it may have to punitive, incidental, special, exemplary or
consequential damages in respect of any litigation based upon, or arising
out of, this Agreement or any course of conduct, course of dealing,
statements or actions of any of the parties hereto relating thereto.
Section 8.7. Sections and Sub-Section Headings. The headings of
sections and subsections are for reference only and shall not limit or
control the meaning thereof.
Section 8.8. Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs,
successors and permitted assigns. Neither this Agreement nor the
obligations of any party hereunder shall be assignable or transferable by
such party without the prior written consent of the other party hereto.
Section 8.9. No Implied Rights or Remedies. Except as otherwise
expressly provided herein, nothing herein expressed or implied is
intended or shall be construed to confer upon or to give any Person,
except the parties hereto, any rights or remedies under or by reason of
this Agreement.
Section 8.10 Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
Section 8.1 Construction. The language used in this Agreement will
be deemed to be the language chosen by the parties hereto to express
their mutual intent, and no rule of strict construction will be applied
against any party hereto.
Section 8.12 Severability. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other
provisions hereof, and this Agreement shall be construed in all respects
as if such invalid or unenforceable provision were omitted.
Section 8.13 Survival. The representations, warranties and covenants
of the parties hereto shall survive indefinitely, unless otherwise
specified therein.
Section 8.14 Waiver of Right to Jury Trial. EACH OF THE PARTIES
HERETO WAIVES ITS RIGHTS TO A TRIAL BY JURY IN ANY LITIGATION IN ANY
COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF, THIS
AGREEMENT, OR THE VALIDITY, INTERPRETATION OR ENFORCEMENT HEREOF OR
THEREOF OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 8.15 The BKB Value-Limited Credit Card Business. For greater
certainty, the accounts associated with the BKB Value-Limited Credit Card
Business as of the date hereof are identified on Exhibit<0- 32>A hereto
(which may, in the Seller's sole discretion, be in the form of a computer
file or magnetic tape, which contains sufficient information to identify
each account and respective Cardholder including name, address, social
security number, account number, status codes, account balance and such
other information as is mutually agreed upon by Purchaser and Seller, as
identification of the respective Cardholders).
Section 8.16 Disputes. In the event of any dispute or disagreement
between the parties after the Closing Date, either with respect to the
interpretation of any provision of this Agreement or with respect to the
performance or nonperformance by any party hereto, upon the written
request of any party, corporate executives of Seller and the Company
shall attempt to resolve any such dispute.
Section 8.17 Remedies. Each party hereto will be entitled to enforce
its rights under this Agreement specifically (without posting a bond or
other security), to recover damages by reason of any breach of any
provision of this Agreement and to exercise all other rights existing in
their favor. The parties hereto agree and acknowledge that money damages
may not be an adequate remedy for any breach of the provisions of this
Agreement and that either party may in its sole discretion apply to any
court of law or equity of competent jurisdiction for specific performance
and/or injunctive relief in order to enforce or prevent any violation of
the provisions of this Agreement. In the event of any dispute involving
the terms of this Agreement, the prevailing party shall be entitled to
collect reasonable fees and expenses incurred by the prevailing party in
connection with such dispute from the other parties to such dispute.
IN WITNESS WHEREOF, and intending to be legally bound hereby, the
parties hereto have caused this Contribution Agreement to be duly
executed and delivered as a sealed instrument as of the date and year
first above written.
BANKBOSTON (NH), NATIONAL ASSOCIATION
By /s/ Xxxxxxx X. Parent
------------------------------------
Name: Xxxxxxx X. Parent
Title:Authorized Officer
PARTNERS FIRST HOLDINGS, LLC
By /s/ Xxxx X. Xxxxxxxxx
------------------------------------
Name: Xxxx X. Xxxxxxxxx
Title:President and Chief
Executive Officer
SCHEDULE 2.1(A)
ACCOUNTS
TAPE TO BE SUPPLIED BY FIRST ANNAPOLIS MARKETING INFORMATION SERVICES,
INC., AS AGENT FOR SELLER.
SCHEDULE 2.1(F)
TO BKB CONTRIBUTION AGREEMENT
ASSIGNED CONTRACTS
(1) None.
SCHEDULE 4.6 TO
BKB CONTRIBUTION AGREEMENT
LITIGATION
None
EXHIBIT A
INITIAL BKB VALUE-LIMITED
CREDIT CARD BUSINESS ACCOUNTS
TAPE TO BE SUPPLIED BY FIRST ANNAPOLIS MARKETING INFORMATION SERVICES,
INC., AS AGENT FOR SELLER.
EXHIBIT B
FORM OF INVESTMENT REPRESENTATIONS
The undersigned, __________________ (the "Recipient") is a
recipient of "Membership Interests" pursuant to that certain Contribution
Agreement (the "Contribution Agreement") dated as of January 29, 1998
between Partners First Holdings, LLC, a Delaware limited liability
company (the "Company") and BankBoston (NH), National Association, a
national banking association. The Recipient hereby makes the following
investment representations:
(a)(i) The Membership Interests will be acquired by the
Recipient for investment only, for the Recipient's own account and
not as a nominee or agent and not with a view to the sale or
distribution of any part thereof in violation of applicable federal
or state securities laws; and (ii) the Recipient has no
current intention of selling, granting any participation in or
otherwise distributing the Membership Interests in violation of
applicable federal or state securities laws. The Recipient has no
contract, undertaking, agreement or arrangement with any person to
sell, transfer or grant any participation to such person, or to any
third party, with respect to any of the Membership Interests in
violation of applicable federal or state securities laws.
(b) The Recipient understands that the Membership Interests
have not been registered under the Securities Act of 1933, as
amended (the "Securities Act"), on the basis that the exchange
provided for in the Contribu tion Agreement and the issuance of
securities thereunder is exempt from registration under the
Securities Act and that Company's reliance on such exemption is
predicated on the representations and warranties of the Recipient
set forth herein.
(c) The Recipient either (i) is an "accredited
investor" as defined in Rule 501 promulgated under the Securities
Act and has such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of the
Recipient's investment in Company, or (ii) has a "purchaser
representative" as defined in Rule 501.
(d) The Recipient will not sell, transfer or otherwise
dispose of the Membership Interests or any portion thereof without
registration under the Securities Act and applicable state
securities laws, or an exemption therefrom.
The Recipient understands that, in the absence of an effective
registration statement covering the Membership Interests or an
available exemption from registration under the Securities Act and
applicable state securities laws, the Membership Interests must be
held by the Recipient indefinitely. In particular, the Recipient
acknowledges that (i) the Recipient is aware that the
Membership Interests may not be sold pursuant to Rule 144
promulgated under the Securities Act unless all of the conditions
of such rule are met, and (ii) among the current conditions
for use of Rule 144 by certain holders is the availability to
the public of current information about Company, which information
may not be available.
(e) The Recipient (i) is capable of bearing the
economic risk of holding the unregistered Membership Interests for
an indefinite period of time and has adequate means for providing
for the Recipient's current needs and contingencies, (ii) can
afford to suffer a complete loss of this investment and (iii)
understands all risk factors related to the purchase of the
Membership Interests.
(f) The Recipient understands that (i) the purchase of
the Member ship Interests involves a high degree of risk, (ii)
there is no established market for the Membership Interests and
(iii) it is not likely that any public market for the
Membership Interests will develop in the near future.
(g) Neither the Recipient nor anyone acting on the
Recipient's behalf has paid any commission or other remuneration to
any person in connection with the purchase of the Membership
Interests.
(h) The Recipient (if not an individual person) was not
organized for the purpose of making an investment in Company.
Signed on this 29th day of January, 1998.
RECIPIENT
Signature:-----------------------------
Name Printed:--------------------------
EXHIBIT C
FORM OF CONFIDENTIAL
PURCHASER QUESTIONNAIRE
This Confidential Purchaser Questionnaire is to be completed by all
investors in connection with the proposed issuance of certain securities
(the "Securities") of Partners First Holdings LLC, a Delaware limited
liability company (the "Company"). The purpose of this questionnaire is
to ascertain whether investors satisfy the investor requirements of
Regulation D promulgated under the Securities Act of 1933 (the "Act") and
whether investors satisfy the investor requirements of applicable state
securities laws. This questionnaire does not constitute an offer by the
Company or by any member, director or officer of the Company to sell the
Securities, but is merely a request for information.
IF THE ANSWER TO ANY QUESTION IS "NONE" OR "NOT APPLICABLE", PLEASE
SO STATE
1. Please provide the following information:
Name:_______________________________________
Social Security or
Federal ID Number:____________________________
Residence Address
(individuals only):_____________________________
Main Business
Address:___________________________________________
___________________________________________
2. Please check all applicable boxes:
o The undersigned is a private business development company as
defined in Section 202(a)(22) of the Investment Advisers Act
of 1940.
o The undersigned is a national banking association, an
organization described in Section 501 (c)(3) of the Internal
Revenue Code, corporation, Massachusetts or similar business
trust, or a partnership, not formed for the specific purpose
of acquiring the securities offered, with total assets in
excess of $5,000,000.
o The undersigned is a director or executive officer of
the Company.
o The undersigned is an individual with a net worth
(either individually or jointly with his or her spouse) in
excess of $1,000,000 (For the purpose of determining net
worth, the undersigned's principal residence is valued at
cost, including the cost of improvements, net of current
encumbrances upon the property.)
o The undersigned is an individual who had an income in
excess of $200,000 in each of 1996 and 1997, or had a joint
income with his or her spouse in excess of $300,000 in each
of 1996 and 1997, and has a reasonable expectation of
reaching the same income level in 1998. (Income, for the
purpose of this response, is computed by adding the following
items to adjusted gross income for Federal income tax
purposes: any deductions for long term capital gain or
depletion, any exclusion for interest earned on tax-exempt
bonds, and any losses allocated from a limited partnership.)
o The undersigned is a trust with total assets in excess
of $5,000,000, not formed for the specific purpose of
acquiring the securities offered, whose purchase is directed
by a sophisticated person as described in Rule 506(b)(2)(ii)
of the General Rules and Regulations promulgated under the
Act.
o The undersigned is an entity in which all of the equity
owners are accredited investors.
o The undersigned is none of the above.
IF YOUR RESPONSE TO QUESTION 2 ABOVE WAS "NONE OF THE ABOVE", PLEASE
RESPOND TO THE REMAINDER OF THE INQUIRIES IN THIS QUESTIONNAIRE.
OTHERWISE, PLEASE SKIP QUESTION 3, AND SIGN AND DATE THE LAST PAGE OF
THIS QUESTIONNAIRE.
3. Investor knowledge and experience.
a. Do you have sufficient knowledge and experience in financial
and business matters so as to be capable of evaluating the
merits and risks associated with investing in the Company?
Yes ____ No ____
b. If the answer to question 3(a) is no, please name the
investment adviser, if any, with whom you have reviewed the
merits and risks of the Securities.
IF AN INVESTMENT ADVISER IS NAMED BELOW, SUCH INVESTMENT ADVISER MUST ACT
AS YOUR PURCHASER REPRESENTATIVE (AS DEFINED IN REGULATION D OF THE
SECURITIES ACT OF 1933, AS AMENDED) AND MUST COMPLETE A PURCHASER
REPRESENTATIVE QUESTIONNAIRE. PURCHASER REPRESENTATIVE QUESTIONNAIRES ARE
AVAILABLE FROM THE COMPANY UPON REQUEST.
Name:_________________________________
Firm:_________________________________
Address:______________________________
_________________________________
Telephone Number:
If the person named above acts as your Purchaser Representative:
(i) Do you understand the functions of a
Purchaser Representative?
Yes ____ No ____
(ii) Do you believe your Purchaser Representative has such
knowledge and experience in financial and business matters
that he is capable of evaluating the merits and risks of an
investment in the Company?
Yes ____ No ____
(iii) Have you reviewed the information contained in the completed
Purchaser Representative Questionnaire regarding such person?
Yes ____ No ____
c. Do you understand the nature of an investment in the Company and
the risks associated with such an investment?
Yes ____ No ____
d. Do you understand that there is no guarantee of any financial
return on this investment and that you run the risk of losing your entire
investment?
Yes ____ No ____
e. Do you understand that this investment provides limited
liquidity since the Securities are not freely transferable?
Yes ____ No ____
f. Do you have adequate means of providing for your current needs
and personal contingencies in view of the fact that this investment
provides limited liquidity?
Yes ____ No ____
g. Are you purchasing these securities for investment and not with
the intent to resell them?
Yes ____ No ____
h. You have the right and are encouraged to investigate the Company
and review relevant records and documents pertaining to the Company and
its business and to ask questions regarding this investment and the
operations and methods of doing business of the Company.
Have you conducted any such investigation, sought such
documents or asked questions?
Yes ____ No ____
i. Have you ever invested in securities?
Yes ____ No ____
j. Have you ever invested in investment partnership, venture
capital funds, or other non-marketable or restricted securities?
Yes ____ No ____
The undersigned hereby represents that, to the best of its
information and belief, the above information supplied in this
Confidential Purchaser Questionnaire by the undersigned is true and
correct in all respects.
----------------------- -------------------------
Date Signature
-------------------------
Name Printed
EXHIBIT D
TAX BASIS AND VALUE OF CONTRIBUTED ASSETS
1. The tax basis of the Contributed Assets is zero dollars.
2. The value of the Contributed Assets is Twenty-Six Million
Dollars ($26,000,000).
