EXHIBIT 10.7
MERCHANT SERVICES AGREEMENT
This MERCHANT SERVICES AGREEMENT (hereinafter the "Agreement") made as of
December 12, 1994, by and between XXXXXX STATE BANK ("Bank"), a banking
corporation organized and existing under the laws of the State of South Dakota,
with its offices at Sioux Falls, South Dakota, and THE CHILDREN'S PLACE RETAIL
STORES, INC. (the "Company"), a corporation organized and existing under the
laws of the State of Delaware, with its offices at Xxx Xxxxx Xxxxx, Xxxx
Xxxxxxxx, Xxx Xxxxxx 00000.
WITNESSETH:
WHEREAS, Bank intends to issue to consumers private label credit cards for
use at specific retail establishments and desires to offer to certain consumers
the ability to use a Bank- issued credit card with Company's name and logo
appearing on such card for the purchase of goods and services normally offered
by Company ("Authorized Services") at Company locations; and
WHEREAS, Company is in the business of providing Authorized Services and
desires to offer consumers the convenience of using a Bank-issued credit card
with Company's name and logo appearing on such card in payment therefor; and
WHEREAS, Bank directly or through its designee will operate and administer
a merchant authorization and settlement program whereby, subject to certain
conditions, Bank will authorize certain Bank-issued credit card transactions for
Company and Company or its designated agent will present Bank with transaction
records for payment; and
WHEREAS, Bank and Company acknowledge that this Agreement constitutes a
financial accommodation between the parties for purposes of federal bankruptcy
law.
NOW, THEREFORE, in consideration of the foregoing premises and mutual
covenants hereinafter set forth and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Bank and Company
agree as follows:
ARTICLE I - DEFINITIONS
1.1 DEFINITIONS. Except as otherwise specifically indicated, the following
terms shall have the meaning specified herein:
"Account" means a Card account. An Account may have more than one Card
issued for it. Any Account shall be deemed to be the property of Bank and Bank
shall establish the terms and conditions under which Accounts will be
established.
"Authorization" means permission from Bank to make a Card Sale.
"Authorization Center" means the facility designated by Bank as the
facility at which Card Sales are authorized.
"Business Day" means Mondays through Fridays except days when Bank is
closed for business.
"Card" means a credit card issued by Bank with Company's name and logo
appearing on such card or with such other design as mutually acceptable to the
parties, which evidences an Account. During the term of this Agreement Company
shall not issue, arrange to issue, or accept any other private label credit
card, or private label credit account, including any credit card or account
under any of its names or logos or that would otherwise compete with the Card
Plan except as provided hereunder.
"Card Plan" means the program under which Accounts will be established and
Cards issued to Cardholders.
"Card Sale" means any sale of Authorized Services that Company makes to a
Cardholder pursuant to this Agreement that is charged to an Account.
"Cardholder" means (i) the person in whose name an Account is maintained
and (ii) an authorized user of that Account.
"Chargeback" means the refusal of Bank to pay Company for a Card Sale or
Company's reimbursement of Bank for a Card Sale for which Company was previously
paid.
"Credit" means a non-cash refund issued by Company to a Cardholder of all
or a portion of the amount of a Card Sale.
"Credit Slip" means evidence of a Credit in paper form.
"Electronic Location" means a Company location at which there is an
Electronic Terminal.
"Electronic Terminal" means an electronic terminal or computer capable of
communicating by means of an on-line or dial-up electronic link (whether routed
through Bank's facilities or otherwise) with an Authorization Center to obtain
Authorization. Company agrees that the Electronic Terminals it uses hereunder
shall be those provided to Company by Bank or its designee (at Company's
expense) or shall be otherwise reasonably acceptable to Bank.
"Floor Limit" means the United States dollar amount designated by Bank, as
it may be changed from time to time, at or above which Authorization must be
obtained to make a Card Sale.
"Operating Regulations" means the standard operating procedures of Bank, as
they may be changed from time to time, which shall be provided to Company upon
written request therefor. For purposes of this Agreement, the Operating
Regulations shall be deemed an integral part of the Agreement and references to
the Agreement shall be deemed to include the Operating Regulations.
"Sales Data" means Card Sales and Credits whether in paper form, in the
form of magnetic tape, or in a form in which the data representing Card Sales
and Credits are electronically transmitted.
"Sales Slip" means evidence of a Card Sale in paper form.
"Settlement" means the reimbursement to Company for the net amount of Card
Sales and Credits remitted to Bank.
"Settlement Account" means the deposit account(s) at the financial
institution(s) designated by Company as the account(s) to be debited and/or
credited, as applicable, for the Settlement of Card transactions and the payment
of any fees and charges due hereunder.
1.2. CONSTRUCTION. Unless the context otherwise clearly indicates, words
used in the singular include the plural and words used in the plural include the
singular.
ARTICLE II - ISSUANCE OF ACCOUNTS AND ACCEPTANCE OF CARDS
2.1 CONDITIONS OF OPENING ACCOUNTS. Subject to the terms and conditions of
this Agreement, Bank shall receive Cardholder applications and approve or
decline Accounts in accordance with Bank's Account issuance criteria.
(a) WRITTEN APPLICATIONS. Applications which are received by Bank through
the mail and are not made contemporaneously with a sale shall be reviewed in
accordance with Bank's customary practice for written applications.
(b) APPLICATIONS WITH ACCOMPANYING SALE. Applications telephoned to Bank by
Company's employees in conjunction with a sale shall be reviewed by Bank in
accordance with Bank's criteria. Company shall be responsible for the following:
(i) Providing all information found on Customer's Application
which has been requested by Bank's representative.
(ii) Obtaining positive identification and verification of the
individual applying for the Account by obtaining a valid driver's
license number, state identification card number, or other
identification card number acceptable to Bank.
(iii) Obtaining the signature on the application of all persons
whose name will appear on the Account or will be responsible for the
Account.
(iv) Upon either approval or decline, the application must be
sent to Bank at the designated address within five (5) business days.
(v) The sale must be entered into Company's Electronic Terminal.
If requested to do so by Bank's representative, Company's employee
shall also enter into the Electronic Terminal the approval code
provided by Bank.
Failure to adhere to the above procedures shall result in a Chargeback in
accordance with paragraph 2.10 of this Agreement.
2.2 HONORING OF CARDS.
(a) CONDITIONS FOR HONORING CARDS. Subject to the terms and conditions of
this Agreement, Company agrees to accept the Card for payment of Authorized
Services in those instances when a Cardholder wishes to charge the purchase of
such Authorized Services to his/her Account and shall not attempt to suppress or
discriminate against use of a Card by a Cardholder (except in accordance with
this Agreement). Company shall accept the Card at all of its participating
locations in the United States for the purchase of Authorized Services, provided
the Card transactions resulting from such acceptance of the Card are submitted
to Bank in United States dollars. Bank will advise Company if it develops the
capability of accepting Card transactions in currencies other than United States
dollars. In such event, Card transactions may be made in such other currencies
upon terms and conditions to be mutually determined at that time. If any
facility or service is operated on Company premises under a franchise, lease or
license from Company and such franchisee, lessee or licensee (who is not a party
to a merchant services agreement with Bank) agrees with Company to accept Cards,
Card Sales incurred at such facility or service shall be subject to the terms
and conditions of this Agreement and must be handled through Company as if it
had transacted such Card Sales. Company shall be obligated to pay its
franchisee, lessee or licensee with respect to such Card Sales.
(b) COMMENCEMENT OF CARD ACCEPTANCE. Acceptance of Cards by Company shall
commence on or about the date of this Agreement or as soon thereafter as agreed
to by the parties and shall continue until the termination of the Agreement.
2.3 ACCEPTANCE OF CARDS. Company shall accept each Card presented by a
Cardholder as payment for Authorized Services provided that all of the following
conditions are met with respect to each Card Sale and that Company further
complies with all of the procedures set forth elsewhere in this Agreement and in
the Operating Regulations relating to the acceptance of Cards each time it makes
a Card Sale:
(a) The Card is presented to Company on or before the expiration date, if
any, shown on its face;
(b) The Card is used as payment for Authorized Services purchased by a
Cardholder;
(c) Company will not accept a Card for the purpose of advancing money to a
Cardholder or paying money to a Cardholder for any amount that is included in a
Card Sale;
(d) Company has followed the procedures for the completion of Sales Slips
as set forth in paragraph 2.5 below; and
(e) Company has obtained Authorization for the Card Sale if required
pursuant to paragraph 2.6 below.
2.4 OPERATING REGULATIONS. The Operating Regulations may be changed by Bank
from time to time upon sixty (60) days' prior written notice to Company,
provided, however, that changes which do not require major systems or
operational modifications and changes required for security measures shall be
made effective as soon as possible following Company's receipt of notice thereof
but in all events shall become effective within five (5) days of Company's
receipt of notice thereof. In the event of any conflict or inconsistency between
the terms of this Agreement and those of the Operating Regulations, the former
shall govern.
2.5 COMPLETION OF SALES SLIPs.
(a) GENERAL REQUIREMENTS. For each Card Sale, Company shall prepare a Sales
Slip using a form that is mutually acceptable to Bank and Company, e.g., a
universal sales slip. Each Sales Slip must be legible and fully completed with
the following information:
(i) The date and, unless otherwise provided to Bank, e.g. batch
reports, etc., location (city/state) of the Card Sale;
(ii) A brief description of the Authorized Services;
(iii) The total amount of the Card Sale, including tax;
(iv) The Account number;
(v) The expiration date, if any, of the Card;
(vi) The Authorization number or code (where applicable); and
(vii) Company's merchant number, unless otherwise provided to
Bank, e.g. batch reports.
Each Sales Slip shall be imprinted to obtain a clear imprint of the Card;
provided that in the case of Sales Data which are electronically produced by
Company, Company shall not be required to obtain an imprint of the Card. Company
shall include all Authorized Services purchased in a single transaction on one
Sales Slip except for customer deposits or partial payments. Company will not
collect tax separately in cash in connection with any Card Sale.
(b) CARDHOLDER'S SIGNATURE. A Sales Slip must be signed by the Cardholder
for each Card Sale at the time the Card Sale is made and in the presence of an
authorized representative or employee of Company. The signature on the Sales
Slip must be reasonably similar to the signature appearing on the signature
panel of the Card. After completion of the Card Sale, Company shall provide a
legible and completed copy of the Sales Slip to the Cardholder. If Company fails
to obtain the signature of the Cardholder on a Sales Slip and the Cardholder has
not authorized the Card Sale or denies the validity of the Card Sale, the Card
Sale shall be subject to Chargeback pursuant to paragraph 2.10 below.
2.6 AUTHORIZATION.
(a) GENERAL REQUIREMENTS. In accordance with the terms of this paragraph
2.6, Company shall obtain Authorization for each proposed Card Sale at or above
the Floor Limit. For purposes of this Agreement, the purchase of one or more
items or other Authorized Services made by a Cardholder at one Company location
and at one time shall be deemed to constitute a single Card Sale.
(b) FLOOR LIMIT. Except as provided in paragraph 2.6(c)(ii) below, the
Floor Limit shall be $0. Bank may change the Floor Limit upon notice to Company.
(c) OBTAINING AUTHORIZATION.
(i) ELECTRONIC LOCATIONS. To obtain Authorization for Card Sales
made at Electronic Locations, Company shall utilize an Electronic
Terminal in accordance with procedures applicable for the use of that
terminal. At an Electronic Location, if a referral code is displayed
on an Electronic Terminal, Company shall telephone Bank to obtain
further instructions, using a toll-free telephone number provided by
Bank for such purpose.
(ii) NON-ELECTRONIC AUTHORIZATION. To obtain Authorization when
Bank's electronic capability to provide Authorization or Company's
electronic capability to obtain Authorization is not operational,
Company shall contact Bank using a toll-free telephone number provided
by Bank for such purpose. If the Authorization Center approves the
Card Sale, Company will be given an Authorization code or number which
must be written on the Sales Slip. In the event that Bank's electronic
capability to provide Authorization is not operational, the downtime
Floor Limit shall be $50.00, or such other amount as Bank may
determine and communicate to Company.
(d) RIGHT OF CHARGEBACK. If Authorization for any Card Sale is required but
not obtained by Company, or requested by Company but declined by Bank, Bank may
process a Chargeback for such Card Sale pursuant to paragraph 2.10 below.
(e) CANCELLATION OF AUTHORIZATION. At its expense, Bank shall make
available during Bank's normal authorization hours, a toll-free number which
Company may call in the event a previously authorized Card Sale is cancelled by
the Cardholder.
2.7 SETTLEMENT OF CARD TRANSACTIONS.
(a) REMITTANCE OF SALES DATA BY COMPANY. At least weekly, Company shall
remit Sales Data to Bank. All such remittances shall be in Bank's form and
format. Remittances of Sales Data shall contain all of the information specified
in this Agreement and the Operating Regulations. Upon receipt thereof, Bank will
balance and edit the data submitted and make appropriate adjustments for errors
or invalid or incomplete transactions. In the event all or a portion of the
required data is not received by Bank or such data is unreadable, Bank shall not
be required to process the Sales Data containing the missing or unreadable data,
but shall promptly inform Company or its designated agent of the missing or
unreadable data. Company shall be responsible for retrieving and resubmitting
the Sales Data in completed form. Company shall be responsible for the loss,
damage or destruction of Sales Data until such Sales Data is received by Bank or
by Bank's designated processor.
(b) OBLIGATION TO REIMBURSE COMPANY FOR SALES DATA. Subject to Bank's right
of Chargeback, Bank shall reimburse Company for all Card Sales properly remitted
by Company and received by Bank. Bank will pay Company an amount equal to the
total amount of Card Sales submitted to and received by Bank, less the amount of
Credits, if any, submitted that Business Day by Company, plus or minus the
applicable amount, if any, for other adjustments to the amounts so submitted.
Bank shall not be required to reimburse Company for any Card Sale not submitted
within sixty (60) days of the date of the Card Sale.
(c) METHOD AND TIMING OF SETTLEMENT. For each electronic or tape remittance
of Sales Data received in Bank's form and format by 12:00 PM local time on a
Business Day at the location specified by Bank, Bank will use its best efforts
to initiate the appropriate credit or debit to the Settlement Account, as
applicable, by federal wire transfer ("Fed Wire") by the following Business Day.
With respect to each such remittance of Sales Data received by Bank after 12:00
PM local time on a Business Day, Bank will use its best efforts to initiate the
appropriate credit or debit to the Settlement Account, as applicable, by Fed
Wire by the second Business Day after receipt. Unless otherwise agreed to in
writing by the Bank, Bank shall not accept remittance of Sales Data in paper
form (hard copy). Company hereby authorizes Bank and its designated agents and
representatives to credit or debit the Settlement Account, as applicable, in
accordance with this Agreement and the rules and procedures of the settlement
institution. This authority shall remain in effect until five (5) Business Days
after Bank receives written notice from Company of its cancellation of such
authorization, provided that in the event of termination of this Agreement,
Company agrees to maintain the Settlement Account with sufficient funds until
such time as Company and Bank agree that all Chargebacks and other adjustments
are processed and to permit Bank to credit and debit such Settlement Account
until all charges, Chargebacks and other adjustments are settled as provided in
this Agreement. Bank shall not be liable to Company for any delays in receipt of
funds or errors in credit entries caused by Company or by third parties
including, but not limited to, a clearinghouse, Company's financial institution,
or any agent of Company.
2.8 CARDHOLDER CREDITS AND PAYMENTS. Unless specifically required by law,
Company will not give cash refunds to any Cardholder in connection with a Card
Sale. For each Credit issued by Company, Company will prepare and deliver to the
Cardholder a Credit Slip which Company will complete in accordance with the
Operating Regulations. Company shall submit Sales Data evidencing each Credit to
Bank within seven days after it is issued in order that the appropriate Credit
may be entered on the Cardholder's Account. Company will not accept payment for
a Card Sale from a Cardholder (other than through the use of the Card) unless
Authorization for such Card Sale is denied by Bank or such Card Sale is charged
back to Company by Bank.
2.9 BILLING INQUIRIES AND CARDHOLDER DISPUTES. Bank will notify Company on
a current basis when a Cardholder has made a billing inquiry or filed a billing
error notice relating to a Card Sale made by Company. Company agrees to
investigate and make a good faith effort to resolve each billing inquiry or
dispute referred to it by Bank or received directly from a Cardholder. Within
fifteen (15) Business Days from the date Bank sends a billing inquiry or dispute
to Company, Company shall notify Bank in writing of the resolution thereof or
the action Company will take which will resolve the billing inquiry or dispute.
Company shall provide Bank with all such information as Bank may reasonably
request in connection therewith.
2.10 CHARGEBACK RIGHTS AND PROCEDURES.
(a) CHARGEBACK RIGHTS. If Company has not complied with the terms of this
Agreement or with the Operating Regulations with respect to either the Opening
of Accounts or a Card Sale made by Company, or if, at the end of the fifteen
(15) Business Day billing inquiry dispute resolution period specified in
paragraph 2.9 above, the billing inquiry or dispute is not resolved (or Bank has
not been informed of the resolution or the action Company will take to resolve
the billing inquiry or dispute), Bank may process a Chargeback to Company for
the amount of the Card Sale, the Account balance or the disputed portion
thereof, as applicable. If Bank processes a Chargeback and the disputed amount
is subsequently paid by the Cardholder, Bank will reimburse Company for the
amount of the disputed Card Sale or disputed portion thereof.
(b) METHOD OF RECOURSE. Bank is not required to pay Company for a Card Sale
which is being charged back. If Bank has already paid Company for such Card
Sale, Bank, at its sole discretion, may deduct the amount to be charged back
from the Settlement Account or offset such amount from a future payment to
Company. Any Chargebacks which are not paid by the aforesaid means shall be due
and payable by Company promptly on demand.
(c) COMPLIANCE WITH LAWS. Notwithstanding anything to the contrary
contained herein, in the event a Cardholder, in accordance with the provisions
of applicable state law or the federal Truth in Lending Act and Regulation Z, as
they may be amended from time to time, files with Bank a billing error inquiry
or alleges a quality dispute with respect to goods or services purchased from
Company, Bank has the right of Chargeback against Company with respect to the
Card Sale which is the subject of such inquiry or dispute.
(d) EXCESSIVE CHARGEBACKS. If Chargebacks exceed 1.5% of the total number
of Card Sales submitted by Company with respect to an individual Company
location in any calendar quarter, Bank reserves the right to assess, and Company
agrees to pay, a fee of $7.50 for each Chargeback in excess of the 1.5% limit.
2.11 REPRESENTATIONS AND WARRANTIES. Company represents and warrants to
Bank that each Card Sale will arise out of a bona fide sale of Authorized
Services by Company and will not involve the use of a Card for any other
purpose.
2.12 REPORTS. Bank shall supply, at no additional charge, Company with
Bank's standard reports, including a monthly statement containing the following
information: Card Sales, Credits, Merchant Fees, any other fees and Daily
Remittances. Company may elect to receive reports available from Bank containing
additional information at Bank's then current price for such reports.
ARTICLE III - FEES
3.1 FEES.
(a) For each Card Sale made by Company, Bank shall charge and Company
agrees to pay a fee in an amount equal to 3.41% of the Card Sale (the "Merchant
Fee"), as calculated in accordance with paragraph 3.1 (c) below. Upon thirty
(30) days' prior written notice to Company, the Bank may change the Merchant Fee
effective as of the completion of the first twelve (12) months of the term of
this Agreement and, thereafter the Merchant Fee may be changed by Bank every
twelve (12) months upon thirty (30) days notice to Company, provided that Bank
shall not increase or decrease the Merchant Fee more than 25 basis points after
the initial twelve (12) months of the term and 25 basis points during any
subsequent twelve (12) month period. Such Merchant Fee change(s) shall be as a
result of such factors as: (i) actual losses absorbed by Bank, or (ii) material
differences between the Assumptions upon which the Merchant Fee is based as
reflected in Schedule B, attached hereto, and the actual performance of the Card
Plan. The foregoing limitations on the amount of increases to the Merchant Fee
shall not apply to the extent that such increases are based on adjustments to
the legally allowable finance charge rates in the states of residence of
Cardholders.
(b) The above Merchant Fee of 3.41% is based in part on the Prime Rate of
8.5%. The Prime Rate is the rate of interest listed as the highest "prime rate"
in the "Money Rates" section of THE WALL STREET JOURNAL on the last business day
of the month. Bank and Company agree that Bank shall directly pass through
changes in the Prime Rate to Cardholders by applying a variable rate annual
percentage rate to Accounts. If Bank and Company agree to change the annual
percentage rate to a fixed rate, Bank shall pass through to Company changes in
the cost of funds.
(c) On each day of each month, Bank shall:
(i) Determine the net amount of Card Sales made by Company during
that day;
(ii) Calculate the total amount of Credits and adjustments to
Accounts with respect to Card Sales made by Company during that day;
and
(iii) Calculate and collect the amount of the Merchant Fee based
on the net amount after making such calculations.
(d) Bank may offset the amount of the Merchant Fee and any other amounts
which become due and owing to Bank or Bank's affiliate from the Settlement
amount due Company, or Bank may debit the Settlement Account in the amount of
the Merchant Fee and any such other amounts. If Bank elects the former and the
Settlement amount due Company is insufficient to cover the Merchant Fee and any
such other amounts, Bank, at its option, may offset the Merchant Fee and any
such other amounts, or remaining portion thereof from subsequent amounts due
Company or debit the Settlement Account. Any amounts owed which cannot be paid
by the aforesaid means shall be due and payable by Company on demand.
(e) Bank acknowledges that Company has paid Bank a set-up fee and
conversion fee of $35,000 and Bank shall charge and Company agrees to pay such
other fees for services, forms or materials as set forth in Schedule A which is
attached hereto and incorporated herein.
ARTICLE IV- MISCELLANEOUS
4.1 INDEMNIFICATION.
(a) INDEMNIFICATION BY COMPANY. Company shall be liable to and shall
indemnify and hold harmless Bank and its officers, employees and directors from
any losses, damages, claims or complaints (including reasonable outside
attorney's fees and disbursements) incurred by Bank or its respective officers,
employees and directors arising out of:
(i) Any claim, complaint or setoff made by a Cardholder with
respect to Card Sales or Credits submitted by Company pursuant to this
Agreement;
(ii) Anything wrongfully done or not done by Company in
connection with the furnishing of any Authorized Services purchased by
Cardholders pursuant to this Agreement; and
(iii) The death or injury to any person or the loss, destruction
or damage to any property arising out of the furnishing by Company of
any Authorized Services purchased with the Card.
(iv) Any claim or complaint of a third party in connection with
the use of Company's name and logo on the Card or in advertisements
and promotions relating to the Card Plan.
(b) INDEMNIFICATION BY BANK. Bank shall be liable to and shall indemnify
and hold harmless Company and its officers, employees and directors from any
losses, damages, claims or complaints (including reasonable outside attorney's
fees and disbursements) incurred by Company or its officers, employees and
directors arising out of any claim or complaint by a Cardholder with respect to
anything wrongfully done or not done by Bank in connection with such
Cardholder's Account. Notwithstanding the foregoing, the indemnification by Bank
shall not apply to any claim or complaint relating to Company's failure to
resolve a billing inquiry or dispute with a Cardholder.
(c) NOTICE OF CLAIM. In the event that Bank or Company shall receive any
claim or demand or be subject to any suit or proceeding of which a claim may be
made against the other under this paragraph 4.1, the indemnified party shall
give prompt written notice thereof to the indemnifying party and the
indemnifying party will be entitled to participate in the settlement or defense
thereof and, if the indemnifying party elects, to take over and control the
settlement or defense thereof with counsel satisfactory to the indemnified
party. In any case, the indemnifying party and the indemnified party shall
cooperate (at no cost to the indemnified party) in the settlement or defense of
any such claim, demand, suit or proceeding.
(d) SURVIVAL. The terms of this paragraph 4.1 shall survive the termination
of the Agreement.
4.2 CARD PLAN PROMOTION; ADVERTISING AND SERVICEMARKS.
(a) LIMITED LICENSE. Company hereby authorizes Bank for purposes of this
Agreement to use Company's name, logo, registered trademarks and servicemarks
(if any), and any other proprietary designations on the Card and in advertising
and promoting the Card Plan, subject to Company's periodic reasonable review of
such use and to such reasonable specifications of Company to the extent such
specifications are directly related to the legal maintenance of Company's marks,
if any.
(b) PROMOTION OF THE CARD PLAN. Company shall prominently display at each
of its locations advertising and promotional materials relating to the Card
Plan, including without limitation take-one applications for the Card. Further,
to the extent Company displays other third party credit or charge card
materials, it shall display the advertising and promotional materials relating
to the Card Plan in a manner and with a frequency equal to or greater than that
accorded any other third party credit or charge card. Company shall only use or
display such materials in accordance with the Operating Regulations or in
accordance with any specifications provided by Bank. Bank and Company shall
cooperate in the development of advertising and display materials and such other
operating forms and materials necessary to promote the Card and make Card Sales.
Bank may charge Company and Company agrees to pay for any such materials and
forms provided to Company by Bank. Any such materials shall not be used by
Company following termination of this Agreement.
(c) CARDHOLDER SOLICITATION. For purposes of prospective Cardholder
solicitations by Bank, Company shall provide Bank with its customer lists and
any other lists of consumers that Company owns or with respect to which Company
possesses a right to use such list. Bank and Company shall mutually agree upon
plans for solicitation of Company's customers. Company shall be responsible for
the costs of such solicitations, including without limitation the cost of
obtaining lists of consumers who are potential Cardholders and providing the
same to Bank. Any such solicitations of Company's customers or any other
consumers by Bank shall be in accordance with Bank's policies and procedures,
and subject to its credit analysis and determination, provided that Bank shall
act reasonably in determining the number, frequency and nature of solicitations
for Cardholders. Cardholders' names and addresses shall be deemed the property
of Bank and (except for the names and addresses of Company's existing customer
base) not of Company. Company may use Cardholders' names and addresses to
conduct promotional programs for products and services other than credit and
payment programs, provided Company obtains Bank's prior written consent for each
such use of the names and addresses. Such Cardholder information may be used by
Bank for such purposes as it deems appropriate so long as (i) Bank does not use
such information in a manner that is anti-competitive and injurious to Company's
retail business, and (ii) Bank obtains prior written consent of Company for such
use.
(d) JOINT MARKETING FUNDS. Bank shall make available funds in the amount of
$70,000 for the development and execution of marketing programs in support of
the Card Plan, provided Company contributes $30,000 for such purposes. Bank and
Company shall jointly determine how the marketing programs will be accomplished;
and each party shall be responsible for managing and administering the marketing
funds it contributes.
4.3 BOOKS AND RECORDS. Company shall retain an original copy of each Sales
Slip and Credit Slip for one hundred and eighty (180) days following the date of
the Card Sale and a microfilm or other copy thereof for a total of seven (7)
years. Company will send to Bank the original or a legible copy of any Sales
Slip, Credit Slip or any other record relating to this Agreement retained by
Company within fifteen (15) Business Days of a request from Bank.
4.4 TERM AND TERMINATION.
(a) TERM. This Agreement shall be effective on the date first written above
when executed by authorized officers of each of the parties and shall remain in
effect for a period of five (5) years from the date of Commencement of Card
Acceptance set forth in paragraph 2.2(b) ("Initial Term"), and shall continue
thereafter for additional five (5) year periods ("Subsequent Term(s)") unless
either party provides written notice of termination at least one (1) year prior
to the end of the Initial Term or Subsequent Term(s). The termination of this
Agreement shall not affect the rights and obligations of the parties with
respect to transactions and occurrences which take place prior to the effective
date of termination, except as otherwise provided herein.
(b) TERMINATION. This Agreement may otherwise be terminated:
(i) by Bank or Company upon notice to the other in the event the
other party shall elect to wind up or dissolve its operation or is
wound up and dissolved; becomes insolvent or repeatedly fails to pay
its debts as they become due, or in the event Company otherwise
suffers a material adverse change in Company's financial condition
(for purposes of this Agreement a material adverse change in Company's
financial condition shall mean, but not be limited to a default in
payment or some other failure to meet a debt obligation of Company,
either of which is of such a material nature that a lender could
declare a default); makes an assignment for the benefit of creditors;
files a voluntary petition in bankruptcy or for reorganization or is
adjudicated as bankrupt or insolvent; or has a liquidator or trustee
appointed over its affairs and such appointment shall not have been
terminated and discharged within thirty (30) days thereof; or
(ii) by Bank or Company upon thirty (30) days notice to the other
in the event the other materially breaches its obligations hereunder
provided that such termination shall be deemed ineffective if the
breaching party cures its breach within the thirty (30) day period.
(iii) by Bank upon thirty (30) days' prior written notice to
Company in the event that Company closes or otherwise ceases operation
in one or more of its retail locations such that the aggregate of such
closures or cessations materially impacts the Cardholder's use or the
utility of their Cards.
(c) TERMINATION OF CARD ACCEPTANCE. Bank upon notice to the other party may
elect to terminate the acceptance of the Card at a particular Company location
if acceptance of the Card at such location is subject to high fraudulent
activity, excessive Chargebacks (that is, in excess of 1.50% of the total number
of Card Sales) or other course of business conduct that is injurious to the
business relationship between Bank and Company. Termination of an individual
Company location shall not affect this Agreement. Notwithstanding the foregoing,
if such termination of acceptance of the Card at individual Company locations
materially affects the volume of Card Sales generated by Company, Bank may elect
to terminate this Agreement upon thirty (30) days' prior written notice to
Company.
(d) DUTIES UPON TERMINATION. Upon termination of this Agreement, Company
will promptly submit to Bank all Sales Data made through the date of
termination.
(e) PURCHASE REQUIREMENTS. If Company terminates this Agreement under
paragraph 4.4(a) or if any event arises that would be a basis for termination of
this Agreement by Bank under paragraphs 4.4(b) (i), (ii) or (iii), 4.4(c) or
4.12, Bank or Bank's designee at its option, may cause Company, its successors
and assigns to purchase, or to cause Company's parent corporation, if any, to
purchase all of the outstanding Card receivables (subject to the terms of any
then current securitization agreement of Bank) under such terms and conditions
as are reasonably acceptable to Bank.
4.5 RESERVE ACCOUNT. If any event arises that would be a basis for
termination of this Agreement by Bank under paragraph 4.4(b)(i), Bank may
immediately establish a reserve account ("Reserve") against potential liability
to Cardholders for Credits and refunds for advance Card Sales. The amount of
such Reserve shall be determined by Bank based on Company's Chargeback history.
Company shall immediately pay to Bank the amount of such Reserve, or Bank may
debit the Settlement Account or withhold Settlement until the Reserve is fully
funded. Company agrees that Bank may set off against the Reserve any Credits,
Chargebacks or adjustments that Company does not or is unable to satisfy through
Settlement. Bank will release all remaining amounts held in the Reserve not
later than two hundred ten (210) days after the termination date of this
Agreement, upon satisfaction of all Company's obligations to Bank. Bank will
provide Company with an accounting of any amounts withdrawn from the Reserve.
4.6 SET-OFFS. Bank and Company agree that each time a Card Sale occurs, a
contingent and unmatured claim for payment accrues against Bank in favor of
Company, and simultaneously, a contingent and unmatured Chargeback claim accrues
against Company in favor of Bank. Company agrees that Bank has the right to
effect a Chargeback and set off any claim it has against any amounts that Bank
may owe Company from time to time, whether or not such amounts were derived from
the Card Sale out of which Bank's claim arose. Company irrevocably grants Bank a
right to set off in and to any funds held by Bank and all amounts now or
hereafter due to Company from Bank.
4.7 STATUS OF THE PARTIES. In performing their responsibilities pursuant to
this Agreement, Bank and Company are in the position of independent contractors.
This Agreement is not intended to create, nor does it create and shall not be
construed to create, a relationship of partner or joint venturer or an
association for profit between Bank and Company. Further, notwithstanding
anything contained in this Agreement to the contrary, any third party designated
by Company to obtain Authorization or perform data capture, remittance or
Settlement functions hereunder shall be subject to the approval of Bank and
shall be deemed to be the agent of Company for all such purposes and not the
agent of Bank and Company shall be fully liable for the fees and actions of any
such third party with respect to obtaining such Authorization or the performance
of such functions.
4.8 FORCE MAJEURE. Neither party to this Agreement shall be liable to the
other by reason of any failure in performance of this Agreement in accordance
with its terms if such failure arises out of causes beyond the control and
without the fault or negligence of such party. Such causes may include but are
not limited to acts of God or of the public enemy, acts of civil or military
authority, fires, strikes, unavailability of energy resources, delay in
transportation, riots or war. In the event of any force majeure occurrence, the
disabled party shall use its best efforts to meet its obligations as set forth
in this Agreement. The disabled party shall promptly and in writing advise the
other party if it is unable to perform due to a force majeure event, the
expected duration of such inability to perform, and of any developments (or
changes therein) that appear likely to affect the ability of that party to
perform any of its obligations hereunder in whole or in part.
4.9 CONFIDENTIALITY. In performing its obligations pursuant to this
Agreement, each party may have access to and receive certain confidential or
proprietary information about the other party, including, but not limited to:
such party's marketing philosophy and objectives, competitive advantages and
disadvantages, cardmember and customer names and addresses, financial results,
technological development, store locations, sales volume(s), merchandise mix or
other information of the business or affairs of each party, its parent company,
or its affiliated and subsidiary companies, which that party reasonably
considers confidential and/or proprietary (hereinafter collectively referred to
as "Confidential Information"). Both parties agree that they will reveal such
Confidential Information only to those of their directors, officers, or
employees (or, with regard to Company, directors, officers or employees of any
of its operating divisions/subsidiaries which accept or may consider accepting
the Card, and, with regard to Bank, directors, officers, or employees of Bank,
or its affiliates which are involved in the development of the Card program) who
are engaged in the implementation of policies, programs or procedures with
regard to the acceptance of the Card by Company. Each party agrees not to use
such Confidential Information nor to disclose Confidential Information to any
third party, except as may be necessary for that party to perform its
obligations pursuant to this Agreement and except as may be agreed upon by the
parties. If either should disclose Confidential Information to a third party,
such party shall cause said third party to agree to the confidentiality
provisions set forth in this paragraph 4.9.
Confidential Information shall not include information in the public
domain, information already known by the party receiving the information prior
to commencing the discussions that led to this Agreement, and information
lawfully obtained from a third party. The provisions of this paragraph 4.9 shall
survive the termination of this Agreement.
4.10 ACCESS TO CARDHOLDER LIST. Company may request from Bank the
Cardholder names and addresses of Cardholders who use their Cards to purchase
Authorized Services at participating locations. Bank shall charge and Company
agrees to pay the fee specified in Schedule A for such requests. Except as
provided in paragraph 4.2(c), Company may only use such Cardholder information
in connection with sales promotions of Authorized Services by Company during the
term of this Agreement; any other use of such Cardholder information including,
without limitation, the disclosure or sale of such information to third parties,
is prohibited and is subject to the terms of paragraph 4.9.
4.11 FINANCIAL INFORMATION. At least annually Company shall provide to Bank
audited financial statements prepared for Company by an independent public
accounting firm. Quarterly, Company shall provide to Bank quarterly financial
statements prepared by or for Company.
4.12 ASSIGNABILITY; SUCCESSORS AND ASSIGNS. This Agreement and any of the
rights, interests and obligations of either of the parties hereunder may be
assigned to a parent, subsidiary, or affiliate of either party. Bank may assign
this Agreement to a third party upon the sale of all or substantially all of its
assets or stock to such third party. This Agreement may not otherwise be
assigned without the prior written consent of the non-assigning party, which
consent shall not be unreasonably withheld or delayed. The rights and
obligations of the parties hereto shall inure to the benefit of and shall be
binding upon the successors and permitted assigns of each of them. Company shall
notify Bank within twenty (20) days after it or its parent corporation, if any,
is purchased by another entity or agrees to merge or be consolidated into or
transfer all or substantially all of either of their respective assets to
another entity. In such event, Bank may within thirty (30) days of its receipt
of Company's notice terminate this Agreement upon thirty (30) days notice to
Company.
4.13 AMENDMENT. Except as otherwise provided herein, neither this Agreement
nor any of its provisions shall be amended or modified except in writing
executed by a duly authorized officer of each party.
4.14 SEVERABILITY. If any provision, or portion thereof, of this Agreement
is held invalid, illegal, void or unenforceable by reason of any rule or law,
administrative order, judicial decision or public policy, all other provisions
of this Agreement shall nevertheless remain in full force and in effect.
4.15 ENTIRE AGREEMENT. This Agreement, including the Operating Regulations
and any exhibits and documents incorporated by reference, constitutes the entire
Agreement between the parties in connection with the acceptance of the Card by
Company and supersedes all prior agreements, negotiations and communications on
such subject matter.
4.16 GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the laws of the State of South Dakota.
4.17 APPLICABLE LAW OR REGULATION. It is expressly understood that changes
in the performance of either party's obligations under this Agreement
necessitated by a change in interpretation of any applicable federal or state
statute or regulation will not constitute a breach of this Agreement.
4.18 WAIVERS. Neither party shall be deemed to have waived any of its
rights, powers or remedies under this Agreement unless such waiver is approved
in writing by the waiving party.
4.19 NOTICES. Whenever notice or demand under this Agreement is given to or
made upon either party by the other party, such notice or demand shall be given
in writing, either (i) by depositing it in the United States mail addressed to
such party at its address as set forth below, with postage thereon prepaid, and
any notice or demand so mailed shall be deemed to have been given at the time
when it was mailed, or (ii) by courier, telecopier, or similar method, and such
notice or demand shall be deemed to have been given when the telex, cablegram,
writing, or other form of notice or demand is either personally delivered to the
party or delivered to the address set forth below. Notwithstanding the
foregoing, notice of intent to terminate this Agreement and notice of default
shall be sent by certified or registered mail, return receipt requested.
If to Bank: Xxxxxx State Bank
0000 Xxxx 00xx Xxxxxx
Xxxxx Xxxxx, Xxxxx Xxxxxx 00000
Attn: Senior Vice President
With a copy to: SPS Payment Systems, Inc.
0000 Xxxx Xxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Vice President- Controller
If to Company: The Children's Place Retail Stores, Inc.
Xxx Xxxxx Xxxxx
Xxxx Xxxxxxxx, Xxx Xxxxxx 00000
Attn: Controller
EITHER PARTY MAY CHANGE THE ADDRESS TO WHICH NOTICE SHALL BE SENT BY GIVING
WRITTEN NOTICE OF SUCH CHANGE TO THE OTHER PARTY IN THE MANNER PROVIDED HEREIN.
4.20 CAPTIONS. The captions used in this Agreement have been inserted for
convenience and for reference only and shall not be deemed to limit or define
the text of this Agreement.
4.21 COUNTERPARTS. This Agreement may be executed in separate counterparts,
each of which shall constitute an original but all of which shall constitute one
and the same Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first written above.
THE CHILDREN'S PLACE RETAIL XXXXXX STATE BANK
STORES, INC. (Accepted at its Home Office)
By: /s/ By: /s/
------------------------ --------------------------
Title: EVP - COO Title: SVP - Operations
SCHEDULE A
FEES
ITEM AMOUNT
1. In-store forms, including credit applications and sales Cost plus
and credit slips handling
2. Each tape file of Cardholder names and addresses in
excess of one per month
- Per request $150.00
3. System changes Cost
SCHEDULE B
ASSUMPTIONS
1. Anticipated average annual credit sales per
active Account $370.00
2. Percentage of aggregate Account balances that
incur finance charges 90%
3. Average active Account balance $150.00
