EXHIBIT 10.1
PURCHASE AND SALE AGREEMENT
BETWEEN
WORLD FINANCIAL NETWORK NATIONAL BANK,
AS PURCHASER
AND
REEDS FINANCIAL SERVICES, INC.,
AS SELLER
DATED AS OF DECEMBER 7, 2001
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS
1.1 Definition of Terms
ARTICLE 2 PURCHASE AND SALE
2.1 Purchase and Sale
2.2 Assumption of Rights and Liabilities
2.3 Reimbursement for Ineligible Accounts
ARTICLE 3 THE CLOSING
3.1 Time and Place of the Closing
3.2 Delivery of Instruments at the Closing
3.3 Purchase Price
3.4 Payments at Closing
3.5 Post-Closing Reconciliation
3.6 Audit Adjustment
3.7 Payment of Taxes and Other Charges
3.8 Other Adjustments
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF SELLER
4.1 Organization
4.2 Capacity; Authorization; Validity
4.3 Conflicts; Defaults; Etc.
4.4 Title to Subject Assets
4.5 Receivables and Accounts
4.6 Litigation and Claims
4.7 Conduct
4.8 Executive Offices
4.9 Solvency
4.10 Permits, Licenses, Etc.
4.11 Compliance with Applicable Laws
4.12 Absence of Undisclosed Liabilities
4.13 Agreements
4.14 Consents
4.15 Contracts With Third Parties
4.16 Finders or Brokers
4.17 Books and Records
4.18 Accuracy of Information
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TABLE OF CONTENTS, CONTINUED
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF PURCHASER
5.1 Organization
5.2 Capacity; Authority; Validity
5.3 Conflicts; Defaults; Etc.
5.4 Litigation
5.5 Finders or Brokers
5.6 Solvency
5.7 Permits, Licenses, Etc.
5.8 Consents
5.9 Accuracy of Information
ARTICLE 6 CERTAIN COVENANTS
6.1 Mutual Covenants and Agreements
6.2 Certain Covenants of Seller
ARTICLE 7 CONDITIONS OF CLOSING
7.1 Conditions to Obligations of Purchaser and Seller
7.2 Conditions Applicable to Purchaser
7.3 Conditions Applicable to Seller
ARTICLE 8 INDEMNIFICATION
8.1 Indemnification by Seller
8.2 Indemnification by Purchaser
8.3 Procedures
ARTICLE 9 TERMINATION
9.1 Termination
9.2 Expenses
ARTICLE 10 MISCELLANEOUS
10.1 Survival of Representations and Warranties
10.2 Notices
10.3 Assignment
10.4 Waiver
10.5 Entire Agreement
10.6 Amendments and Supplements
10.7 Captions
10.8 Counterparts
10.9 Governing Law
10.10 Binding Effect
10.11 Severability
10.12 Waiver of Jury Trial
10.13 Consent to Jurisdiction
10.14 Mutual Drafting
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TABLE OF CONTENTS, CONTINUED
EXHIBITS:
EXHIBIT 1.1 INELIGIBLE ACCOUNTS
EXHIBIT 3.2 ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT 4.15 ENHANCEMENT PRODUCTS AND VALUE
ADDED PROGRAMS
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PURCHASE AND SALE AGREEMENT
This Purchase and Sale Agreement is made and entered into this 7th day of
December, 2001 (this "Agreement"), between World Financial Network National Bank
("Purchaser") and Reeds Financial Services, Inc. (Seller"). All capitalized
terms contained in this Agreement that are not otherwise defined in this
Agreement shall have the respective meanings assigned to such terms in Article
1.
RECITALS
WHEREAS, Seller is currently the owner of the Subject Assets. Purchaser
desires to purchase, and Seller desires to sell, the Subject Assets on the terms
and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing premises and the
various agreements, promises and covenants contained in this Agreement, the
parties agree as follows:
ARTICLE 1
DEFINITIONS
1.1. Definition of Terms. As used in this Agreement:
"Account" shall mean (i) a Credit Card accessed open-end consumer
credit account established by Seller, and (ii) any and all rights, remedies,
benefits, interests and titles, both legal and equitable, to which Seller may be
entitled with respect to any of the foregoing; but excluding Non-Reaffirmed
Accounts.
"Account Balance" shall mean, with respect to any Account, the
outstanding balance of such Account at the time of determination, which shall
consist of, without limitation (i) the sum of (A) the aggregate outstanding
amount of Receivables posted to such Account at such time and those amounts
relating to a transaction which has occurred on or prior to such time, but has
not yet been posted, and (B) the aggregate amount of any and all fees and
charges posted to such Account at such time, including, without limitation,
interest and finance charges, returned check charges, late charges, insurance
premiums and attorneys' fees, minus (ii) the aggregate amount of all credits,
other adjustments and credit balances posted to such Account at such time.
"Account Documentation" shall mean, with respect to an Account, any and
all documentation from time to time relating to such Account, including, without
limitation, Cardholder Agreements, applications and all legally required forms,
notices and disclosures relating to such applications and Accounts, historical
statements and microfilm records thereof, paper and systemic records of customer
service and collection notes and letters, all computer master file records and
any records of whatever form or nature related to any of the foregoing, all
Transaction Records and all
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tangible and intangible information, arising from any of the foregoing or
pertaining thereto.
"Affiliate" shall mean any Person that, directly or indirectly, through
one or more entities controls or is controlled by or is under common control
with the Person specified.
"Ancillary Documents" shall mean any agreement, certificate or other
document delivered at or prior to the Closing in connection herewith.
"BHCA" means the Bank Holding Company Act of 1956, as amended.
"Books and Records" shall mean all books, records, files, credit or
collection information, periodic statements, applications, business records,
reports, correspondence, and other financial and computer data owned by Seller
for use in connection with, or relating to, the Credit Card Business or the
Subject Assets whether in documentary form or on microfilm, microfiche, magnetic
tape, computer disk or other form and whether maintained by Seller or an agent
or servicer of Seller.
"Business Contracts" shall have the meaning set forth in Section 4.15.
"Business Day" shall mean any day, other than a Saturday or Sunday, New
Years Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day.
"Cardholder" shall mean an individual (i) to whom a Credit Card has
been issued pursuant to a Cardholder Agreement, (ii) in whose name an Account,
in connection with which the Credit Card may be used, is established, or (iii)
who is or may become an obligor on the Account.
"Cardholder Agreement" shall mean an agreement between Seller, on the
one hand, and a Cardholder, on the other hand, under which Credit Cards are
issued, containing the terms and conditions applicable to an Account as such
agreement may be amended, modified and supplemented from time to time.
"Cardholder Lists" shall mean all lists of names and/or addresses of
Cardholders.
"Closing" shall have the meaning set forth in Section 3.1.
"Closing Date" shall have the meaning set forth in Section 3.1.
"Closing Date Statement" shall mean a statement prepared by Seller on
or before the Closing Date, a copy of which shall be delivered to Purchaser
which contains a computation of the Purchase Price as of the Cut-Off Time.
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"Credit Card" shall mean the plastic card or temporary card with the
name "Reeds Jewelers" on it which card is owned by Seller in respect of an
Account and evidences a Cardholder's ability to purchase goods and services on
credit.
"Credit Card Business" shall mean, collectively, all the Accounts and
Receivables and all of the elements of Seller's business of operating the
open-ended credit card revolving retail credit plan.
"Cut-Off Time" shall mean 11:59 p.m. eastern time on the Business Day
immediately preceding the Closing Date.
"GAAP" shall mean generally accepted accounting principles in the
United States applied on a basis consistent with the prior accounting practices
of the applicable party or parties.
"Governmental Authority" shall mean any government, any state, or any
other political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, in each case whether national, state or local.
"Ineligible Account" shall mean any Account meeting the criteria as
defined in Exhibit 1.1.
"Law" shall mean all laws, codes, statutes, ordinances, rules,
regulations, decrees and orders of any Governmental Authority.
"Lien" shall mean any mortgage, pledge, hypothecation, assignment,
claim, lien (statutory or other), right of first refusal, charge or encumbrance,
imperfection of title or other matters affecting title, and any rights of third
parties whatsoever, including, without limitation, any liens or encumbrances
arising in respect of taxes.
"Master File" means, at the time of determination, the computer files
containing the most recently-posted financial, non-financial Account status and
demographic information with respect to any of the Accounts, including, without
limitation, active, inactive and recovery Accounts, which computer files
represent the aggregate amount of Account Balances on such date, together with
corresponding control reports.
"Materials and Information" shall have the meaning set forth in Section
4.18.
"Non-Reaffirmed Accounts" shall mean Accounts as to which on before the
Cut-Off Time the Cardholder is the subject of a petition under Chapter 7 or
Chapter 13 of the United States Bankruptcy Code of 1978, as amended and Seller
has not executed reaffirmation agreements with the Cardholders that have been
approved by the bankruptcy court as of the Cut-Off-Time (such Accounts shall be
retained by Seller).
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"Permit" shall mean any license, permit, certificate, consent,
authorization, franchise or other approval from any Governmental Authority.
"Person" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation, limited
liability company, institution, public benefit corporation, entity or
Governmental Authority.
"Prime Rate" means, on the date of determination, the highest bank
prime loan rate reported in the "Money Rates" section of The Wall Street Journal
(or, if such publication is discontinued, such other publication of similar type
mutually agreed upon by the parties) as the "Prime Rate" on such date, whether
or not such rate is ever actually charged or paid by any Person.
"Private Label Program Agreement" shall mean that certain Private Label
Credit Card Program Agreement to be entered into by Purchaser and Reeds
Jewelers, Inc.
"Purchaser" shall have the meaning set forth in the first paragraph of
this Agreement.
"Receivables" shall mean any and all amounts owing by Cardholders on
all Accounts, net of credit balances including, without limitation, amounts owed
due to outstanding extensions of credit, interest and finance charges (whether
billed or accrued) and fees for returned checks, late payments or otherwise.
"Seller" shall have the meaning set forth in the first paragraph of
this Agreement.
"Settlement Master File" means the Master File as of the Cut-Off Time.
"Solvent" shall mean, when used with respect to any Person on a
particular date, that on such date (i) the fair value of the property of such
Person is greater than the total amount of liabilities, including, without
limitation, contingent liabilities, of such Person, (ii) the present fair
salable value of the assets of such Person is not less than the amount that will
be required to pay the probable liability of such Person on its debts as they
become absolute and matured, (iii) such Person is able to realize upon its
assets and pay its debts and other liabilities, contingent obligations and other
commitments as they mature in the normal course of business, (iv) such Person
does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such debts and liabilities
mature, and (v) such Person is not engaged in business or a transaction, and is
not about to engage in business or a transaction, for which such Person's
property would constitute unreasonably small capital.
"Subject Assets" shall have the meaning set forth in Section 2.1.
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"Transaction Records" shall mean all records (in any form, paper,
electronic, magnetic or otherwise) of charges, credits, adjustments, payments or
other items, received by Seller for posting to Cardholder's Accounts, including
but not limited to charge slips and credit or adjustment slips.
"UCC" shall mean the Uniform Commercial Code in effect in the state of
Ohio and in any other State where the filing of a financing statement is deemed
necessary by Purchaser.
ARTICLE 2
PURCHASE AND SALE
2.1. Purchase and Sale. (a) At the Closing, on the terms and
subject to the conditions set forth in this Agreement, Seller shall sell,
transfer, assign, convey and deliver to Purchaser in exchange for the Purchase
Price, and Purchaser shall purchase and acquire from Seller, free and clear of
all Liens, all of Seller's right, title and interest in and to all of the
following: all of the Accounts and the Receivables as of the Cut-Off Time which
includes all Account Documentation, all Books and Records, all pending Credit
Card applications and Seller's rights with respect to applications for new
Accounts, the Cardholder List and Business Contracts related thereto.
(b) The items to be sold, transferred, assigned and conveyed to
Purchaser pursuant to Section 2.1(a) are collectively referred to herein as the
"Subject Assets".
2.2. Assumption of Rights and Liabilities. (a) As of the Cut-Off
Time, Purchaser shall assume all of Seller's rights and perform or discharge (or
cause to be performed or discharged), Seller's obligations arising after the
Cut-Off Time with respect to the Subject Assets conveyed to Purchaser at the
Closing, including, but not limited to, (i) the right to receive all payments on
Accounts due from Cardholders after the Cut-Off Time, and (ii) the obligations
of Seller after the Cut-Off Time under the terms of the Cardholder Agreements,
but excluding Seller's obligation for any breach of the Cardholder Agreements
occurring before the Closing Date.
(b) Except as expressly provided herein, Purchaser does not
assume, agree to pay, perform or discharge or otherwise have, any liability or
obligation of any nature (whether fixed, contingent, accrued, unliquidated,
absolute or otherwise) of Seller or any other Person, whether arising or to be
paid, performed or discharged prior to, at, or after the Cut-Off Time.
2.3. Reimbursement for Ineligible Accounts. If during the ninety
(90) day period following the Closing Date, Purchaser shall determine that
Receivables related to any Ineligible Accounts were included in the calculation
of the Purchase Price, Seller shall pay to Purchaser an amount equal to the
portion of the Purchase Price attributable to such Ineligible Accounts. If
during the ninety (90) day period following the Closing Date the Purchaser
receives any payments on an Ineligible Account, the amount due Purchaser by
Seller will reflect a credit for such payments received.
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ARTICLE 3
THE CLOSING
3.1. Time and Place of the Closing. The closing of the
transactions contemplated hereby (the "Closing") shall take place on or before
February 28, 2002, after all of the conditions contained in Article 7 are
satisfied or waived by the appropriate party, or at such other time and/or date
as the parties hereto may agree (the date of the Closing being referred to
herein as the "Closing Date").
3.2. Delivery of Instruments at the Closing. At the Closing,
Seller shall execute and deliver to Purchaser and Purchaser shall deliver to
Seller an Assignment and Assumption Agreement (the "Assignment Agreement"),
which conveys to Purchaser on the Closing Date all of Seller's rights, title and
interest in and to the Subject Assets, free and clear of all Liens, and under
which Purchaser shall assume the liabilities to be assumed by Purchaser
hereunder. Said Assignment Agreement shall be in the form of Exhibit 3.2
attached hereto, dated as of the Closing Date, and shall be appropriately
completed and duly executed. Purchaser and Seller shall, at or prior to the
Closing, execute and deliver all such additional instruments, documents or
certificates as may be necessary for the consummation of the Closing of the
transactions contemplated by this Agreement. Seller shall have also delivered
such other documents and instruments as required under Article 7.
3.3. Purchase Price. The purchase price for the Subject Assets
(the "Purchase Price") shall be an amount equal to one hundred percent (100%)
multiplied by the total outstanding balance of all Receivables as of the Cut-Off
Time, excluding the Receivables related to Ineligible Accounts which shall not
be included in the purchase price calculation, but which Ineligible Accounts
shall be transferred to the Purchaser.
3.4. Payments at Closing. At the Closing, Purchaser shall pay to
Seller an amount in cash equal to the Purchase Price minus the Contingent
Purchase Price provided for in the Private Label Program Agreement, as reflected
on the Closing Date Statement. Such payment shall be made by wire transfer in
immediately available funds to an account of Seller specified to Purchaser in
writing.
3.5. Post-Closing Reconciliation. (a) As soon as practicable
after the Closing Date, but in no event more than thirty (30) days thereafter,
Purchaser and Seller shall recompute the Purchase Price based on the Settlement
Master File, and if there shall be a difference between the Purchase Price as
stated in the Closing Date Statement and the Purchase Price as recomputed based
on the Settlement Master File, the Purchaser shall pay to the Seller any
deficiency or the Seller shall refund to the Purchaser any excess amount paid by
Purchaser.
(b) If Purchaser and Seller are unable in good faith to reach
agreement with respect to the Purchase Price they shall jointly select and
engage a nationally recognized firm of independent certified public accountants
(the "Third-Party
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Accountants") to calculate the final Purchase Price based on the Settlement
Master File and the terms of this Agreement. The Third-Party Accountants'
determination of the final Purchase Price shall be conclusive and binding upon
the parties hereto. In determining the final Purchase Price, the Third Party
Accountants shall have no authority to resolve any disagreement which does not
relate directly to the determination of the final Purchase Price.
(c) Purchaser and Seller shall cooperate with any and all
reasonable requests by the Third-Party Accountants made in connection with the
Third-Party Accountants' determination of the Purchase Price, as described in
Section 3.5(b).
3.6. Audit Adjustment. (a) In the event the determination of the
final Purchase Price requires either party to make payment to the other of any
additional amount, such party shall make such payment no later than five (5)
Business Days following determination of the final Purchase Price plus interest
on any amount due at the Prime Rate for each day during such period.
(b) Purchaser and Seller shall each be responsible for the fees
and expenses of their respective personnel incurred in connection with the
examination and review described in this Article 3. The fees and expenses of the
Third-Party Accountants, if any, shall be paid equally by Purchaser and Seller.
3.7. Payment of Taxes and Other Charges. Seller shall pay, or
cause to be paid, promptly when due, (a) all taxes arising out of or relating to
the operations and conduct of the Credit Card Business and/or the Subject Assets
prior to the Cut-Off Time, (b) all taxes imposed on Seller and payable by reason
of the transactions contemplated hereby, and (c) use or transfer taxes imposed
with respect to the sale of the Subject Assets hereunder. Purchaser shall pay
all taxes arising out of or in connection with the operations and conduct of the
Credit Card Business and/or the Subject Assets after the Cut-Off Time, other
than taxes for which Seller is responsible under the first sentence of this
Section 3.7.
3.8. Other Adjustments. Payments Received Before Cut-Off Time.
Seller shall be entitled to retain all payments on Accounts from Cardholders
received and posted to Accounts by Seller prior to the Cut-Off Time.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser as of the date
hereof and as of the Closing Date as follows:
4.1. Organization. Seller is a corporation duly organized,
validly existing and in good standing under the Laws of the state of North
Carolina.
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4.2. Capacity; Authorization; Validity. Seller has all necessary
power and authority to enter into this Agreement and Ancillary Documents and to
perform all of the obligations to be performed by it under this Agreement and
Ancillary Documents. This Agreement and the consummation by Seller of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action of Seller, and this Agreement and Ancillary Documents
have been duly executed and delivered by Seller and this Agreement constitutes a
legal, valid and binding obligation of Seller, enforceable in accordance with
its terms, except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium, receivership, conservatorship, and other laws
relating to or affecting creditors' rights generally and by general equity
principles.
4.3. Conflicts; Defaults; Etc. Neither the execution and delivery
of this Agreement and Ancillary Documents by Seller nor the consummation of the
transactions contemplated hereby by Seller will (i) conflict with, result in the
breach of, constitute an event which would, or with the lapse of time or action
by a third party or both would, result in a default under, or accelerate the
performance required by, the terms of any contract, instrument or commitment to
which Seller is a party or by which it is bound; (ii) violate the articles of
incorporation or by-laws, or any other equivalent organizational document, of
Seller; (iii) result in the creation of any Lien upon any of the Subject Assets;
or (iv) require any consent or approval of any regulatory authority, or under
any judgment, order, writ, decree, permit or license to which Seller is a party
or bound or to which any of the Subject Assets are subject.
4.4. Title to Subject Assets. Seller has good and valid title to
all of the Subject Assets, free and clear of any Lien. No person other than
Seller and/or its Affiliates has owned at any time, or had any right, title or
interest in at any time, any of the Receivables or Accounts. The Assignment
Agreement and the consummation of the transactions contemplated hereby will vest
in the Purchaser all right, title and interest of Seller in and to the Subject
Assets, free and clear of any Lien.
4.5. Receivables and Accounts. (a) All underwriting and
origination of Accounts were performed in accordance with the then applicable
written policies and procedures of Seller, true and complete copies of which
have previously been furnished to Purchaser. The Credit Card Business has been
operated as a part of the business of Seller and under the control of Seller.
All aspects of the Credit Card Business have been operated solely by Seller.
There are no Receivables that have been criticized by any Governmental
Authority, regulatory authority or any internal auditor in any written
communication to Seller, or classified by any regulatory authority as "Other
Assets Specially Mentioned," "Substandard," "Doubtful," "Loss" or any similar
classifications.
(b) (i) Each of the Receivables and Accounts and the interest
rates, fees and charges in connection therewith comply, and have at all times
complied with, all applicable Laws; (ii) each Account, Receivable and the
related Cardholder Agreement is the legal, valid and binding obligation of the
Cardholder-obligor and any guarantor
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named therein and each is enforceable and legally collectible in accordance with
its terms under all applicable Laws, except as limited by bankruptcy,
insolvency, reorganization, moratorium, receivership, conservatorship and other
Laws affecting Creditor's rights generally and by general equity principles, and
to Seller's knowledge is subject to no defense, offset or counterclaim; (iii) a
Credit Card has been issued in connection with each Account; (iv) to Seller's
knowledge, all Accounts are with natural persons for use primarily for personal,
family or household purposes, and no Account has been entered into with any
corporation, partnership, association or other similar entity; (v) to Seller's
knowledge, no Receivable is a "commercial loan", as that term is used in the
BHCA; (vi) to Seller's knowledge each Receivable is free and clear of any and
all Liens incurred or existing by, through or on behalf of, or in favor of any
Person; (vii) each Receivable arose in connection with a bona fide sale and
delivery of merchandise or Services by Seller or parties permitted by Seller to
sell enhancement products and services; (viii) each Receivable is for an amount
payable in U.S. dollars, subject to returns, allowances and other adjustments in
the ordinary course of business; (ix) none of the Receivables arose out of any
fraud or malfeasance of any Cardholder, customer of Seller, or any other person,
or any fraud, malfeasance or negligence of any employee or agent of Seller; (x)
each Receivable consists of an "account", "chattel paper" or a "general
intangible", and is not an "instrument", under and as defined in Article or
Division 9 of the UCC; (xi) each Cardholder Agreement constitutes the entire
agreement of the Seller and the Cardholder and Seller has made no amendment,
modification or supplement to any Cardholder Agreement which is not reflected in
writing; and (xii) the Credit Card Business has been conducted by Seller in all
material respects in compliance with all applicable Laws.
4.6. Litigation and Claims. (a) To the best of Seller's knowledge,
after due inquiry, there is no claim, litigation, proceeding, arbitration,
investigation or material controversy pending against or affecting Seller or to
which Seller is a party, adversely affecting or which could adversely affect the
Subject Assets, the Credit Card Business or the ability of Seller to consummate
the transactions contemplated hereby or under the Ancillary Documents; (b) to
the best of Seller's knowledge, no such claim, litigation, proceeding,
arbitration, investigation or controversy has been threatened or is contemplated
and no facts exist which would provide a basis for any such claim or proceeding;
(c) the Subject Assets and Credit Card Business are subject to no proceeding
pursuant to the Soldiers' and Sailors' Civil Relief Act of 1940; (d) Seller is
not subject to any agreement with any regulatory authority with respect to its
operations affecting the Subject Assets, the Credit Card Business or the ability
of Seller to consummate the transactions contemplated hereby or under the
Ancillary Documents; and (e) there are no violations, with respect to which
refunds or restitutions on any Account may be required, cited in any compliance
report relating to the Credit Card Business as a result of an examination or
review by any regulatory authority.
4.7. Conduct. Since October 17, 2001, (a) there has been no
material adverse change in the results of operations of the Credit Card Business
jeopardizing the collectibility of the Accounts and there has been no material
adverse change with respect to the Subject Assets; Seller has not effected any
change in its policies,
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practices or procedures relating to the Accounts, Seller has not amended the
Cardholder Agreements; (b) Seller has carried on the Credit Card Business in the
ordinary course of business, diligently and in a manner consistent with its past
practices, and (c) except in the ordinary course of business, Seller has not
disposed of or discontinued any portion of its Credit Card Business or any
Receivables. Seller has performed all obligations required to be performed by it
to date under the Cardholder Agreements and is not in default under, and no
event has occurred which, with the lapse of time or action by a third party,
could result in a default under, any such agreements. All such agreements are
legal, valid and binding obligations of Seller, the Cardholder and any guarantor
named therein, fully enforceable by the respective parties thereto in accordance
with their respective terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium, receivership,
conservatorship, and other laws relating to or affecting creditors' rights
generally and by general equity principles.
4.8. Executive Offices. The chief executive office and principal
place of business of Seller is 0000 Xxxxx 00xx Xxxxxx, Xxxxxxxxxx, XX 00000.
4.9. Solvency. Seller is, and immediately after the consummation
of the transactions contemplated by this Agreement, will be, Solvent.
4.10. Permits, Licenses, Etc. Seller has all Permits that are
required in order to carry on the Credit Card Business (including, without
limitation, Permits relating to consumer finance) and to consummate the
transactions contemplated by this Agreement (collectively, the "Business
Permits"). Seller is not in violation or default of any of the Business Permits.
All the Business Permits are in full force and effect, and, to the knowledge of
Seller, no suspension, cancellation or non-renewal of any Business Permit is
threatened, nor does any basis for such suspension, cancellation or non-renewal
exist.
4.11. Compliance with Applicable Laws. Neither (a) the origination,
establishment, maintenance, servicing or use of any Account, any Receivable or
any of the other Subject Assets by Seller; (b) any of the Account Documentation;
(c) the conduct of the Credit Card Business by Seller, nor (d) the consummation
of the transactions contemplated by this Agreement or any Ancillary Document,
violates or has violated any Law now in effect or in effect when any Account,
Receivable, or any other Subject Asset was established or used. Seller has not
received any notice of any violation of Law applicable to the Credit Card
Business, any Account, any Receivable or any other Subject Asset, and to
Seller's knowledge no basis for the allegation of any such violation exists. No
Governmental Authority has placed any restriction on the Credit Card Business or
any of the Accounts, the Receivables or the other Subject Assets, or the
consummation of the transactions contemplated by this Agreement or any Ancillary
Document. No investigation or review by any Governmental Authority with respect
to the Credit Card Business or any of the Accounts, the Receivables, the other
Subject Assets or the consummation of the transactions contemplated by this
Agreement or any Ancillary Document is pending or, to Seller's knowledge,
threatened,
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nor to Sellers' knowledge has any Governmental Authority indicated an intention
to conduct such an investigation or review.
4.12. Absence of Undisclosed Liabilities. Seller has no liability
or obligation of any nature, secured or unsecured (whether accrued, absolute,
contingent or otherwise) which are reasonably likely to have an adverse effect
on the Subject Assets. To the best of Seller's knowledge and information, there
is no basis, for assertion against it as of the Closing Date of any liability or
obligation of any nature which are reasonably likely to have an adverse effect
on the Subject Assets.
4.13. Agreements. Seller has furnished to Purchaser true and
complete copies of the form of Cardholder Agreement, periodic statement,
application form and all notices relating to any change of terms regarding any
Cardholder Agreement.
4.14. Consents. No consent, authorization or approval of, or
exemption by, or filing with, any Governmental Authority or any other Person is
required to be obtained by Seller in connection with the execution, delivery and
performance by Seller of this Agreement or any other Ancillary Document to which
Seller is a party or the consummation by Seller of the transactions contemplated
hereby or thereby.
4.15. Contracts With Third Parties. (a) The enhancement products
to Accounts and value added programs, such as credit insurance, which have been
offered to Cardholders by Seller or any other third party are listed on Exhibit
4.15.
(b) Seller has delivered to Purchaser true and complete copies of
all agreements, contracts, and arrangements with respect to the Subject Assets
which shall be transferred, assigned and conveyed to Purchaser (the "Business
Contracts"), including all amendments to such Business Contracts to date. With
respect to each Business Contract (a) such Contract (i) has been duly authorized
and validly executed and delivered by Seller and such other third party and (ii)
is the legal, valid and binding obligation of Seller and such other third party,
and is enforceable against Seller and such other third party in accordance with
its terms, (b) each of Seller and such other third party has fulfilled, or taken
all action reasonably necessary to enable them to fulfill when due, all of its
obligations under such Contract, (c) there has not occurred and been continuing
any default, or any event which, with the lapse of time or the election of any
Person other than Seller, or any combination thereof, will become a default, by
Seller, nor to the knowledge of Seller has there occurred any default by any
other Person or any event which, with the lapse of time or the election of
Seller, will become a default by any other Person under such Contract, and no
waiver or indulgence has been granted by any of the parties thereto, (d) default
by a third-party under any such Contract shall not entitle Seller to any right
of set-off, counterclaim or any other defense arising thereof, as against
Purchaser, (e) Seller has the right to assign the Business Contracts to
Purchaser; and (f) Seller is not subject to any agreement with any Governmental
Authority which would prevent consummation by Seller of the transactions
contemplated by this Agreement and Ancillary Documents.
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4.16. Finders or Brokers. Seller has agreed to pay all fees or
commissions 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.
4.17. Books and Records. All of Seller's Books and Records are in
all material respects, complete and correct, and are and have been maintained in
all material respects in accordance with GAAP and all Laws applicable to the
Credit Card Business and/or all of the Subject Assets.
4.18. Accuracy of Information. This Agreement, the Master File of
Accounts and all reports, statements, lists, certificates and other documents
delivered, and any information heretofore or hereafter furnished, by Seller in
writing to Purchaser in connection with this Agreement or any of the
transactions contemplated hereby, and all written information supplied by Seller
in the due diligence review by Purchaser (collectively, the "Materials and
Information"), are true, materially complete with respect to all such
information presented therein and accurate and do not omit to state a material
fact required to be stated therein or necessary to make the statements herein or
therein, in the light of the circumstances under which they were made, not
misleading. Such Materials and Information shall be deemed to constitute
representations and warranties of Seller under this Agreement to the same extent
as if set forth in this Agreement in full. Seller has provided in writing all
information requested from it in writing by Purchaser.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as of the date
hereof and of the Closing Date as follows:
5.1. Organization. Purchaser is a national banking association
duly organized, validly existing and in good standing under the laws of the
United States.
5.2. Capacity; Authority; Validity. Purchaser has all necessary
power and authority to enter into this Agreement and the Ancillary Documents and
to perform all the obligations to be performed by it under this Agreement and
the Ancillary Documents. This Agreement and the Ancillary Documents and the
consummation by Purchaser of the transactions contemplated hereby and thereby
have been duly and validly authorized by all necessary corporate action of
Purchaser, and this Agreement and the Ancillary Documents have been duly
executed and delivered by Purchaser and this Agreement constitutes a legal,
valid and binding obligation of Purchaser, enforceable in accordance with its
terms.
5.3. Conflicts; Defaults; Etc. Neither the execution and delivery
of this Agreement by Purchaser nor the consummation of the transactions
contemplated hereby by Purchaser will: (a) violate the articles of incorporation
or by-laws of
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Purchaser; (b) require any consent or approval under any judgment, order, writ,
decrees, permit or license, to which Purchaser is a party or by which it is
bound; or (c) require the consent or approval of any Governmental Authority or
other Person.
5.4. Litigation. There is no claim, or any litigation, proceeding,
arbitration, investigation or controversy pending against or affecting Purchaser
and by which it is bound, which adversely affects in any material respect
Purchaser's ability to consummate the transactions contemplated hereby; to
Purchaser's knowledge and information, no such claim, litigation, proceeding,
arbitration, investigation or controversy has been threatened or is
contemplated; to Purchaser's knowledge, no facts exist which would provide a
basis for any such claim, litigation, proceeding, arbitration, investigation, or
controversy; and Purchaser is not subject to any agreement with any regulatory
authority which would prevent the consummation of the transactions contemplated
by this Agreement or the Ancillary Documents by the Purchaser.
5.5. Finders or Brokers. Purchaser has not 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 which would give rise to any claim against
Seller for any brokerage commission or finder's fee or like payment.
5.6 Solvency. Purchaser is, and immediately after the
consummation of the transactions contemplated by this Agreement, will be,
Solvent.
5.7 Permits, Licenses, Etc. Purchaser has all Permits that are
required in order to carry on its credit card and to consummate the transactions
contemplated by this Agreement (collectively, the "Business Permits"). Purchaser
is not in material violation or default of any of the Business Permits. All the
Business Permits are in full force and effect, and, to the knowledge or
Purchaser, no suspension, cancellation or non-renewal of any Business Permit is
threatened, nor does any basis for such suspension, cancellation or non-renewal
exist.
5.8 Consents. No consent, authorization or approval of, or
exemption by, or filing with, any Governmental Authority or any other Person is
required to be obtained by Purchaser in connection with the execution, delivery
and performance by Purchaser of this Agreement or any other Ancillary Document
to which Purchaser is a party or the consummation by Purchaser of the
transactions contemplated hereby or thereby.
5.9 Accuracy of Information. All reports, statements, and other
documents delivered, and any information furnished by Purchaser in writing to
Seller in connection with the due diligence review by Purchaser are true,
materially complete with respect to all such information presented therein and
accurate in all material respects and do not omit to state a material fact
required to be stated therein or necessary to make the statements herein or
therein, in the light of the circumstances under which they were made, not
misleading.
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ARTICLE 6
CERTAIN COVENANTS
6.1. Mutual Covenants and Agreements. Seller and Purchaser each
hereby covenant and agree that:
(a) Cooperation. It shall cooperate fully with the other party
hereto in furnishing any information or performing any action reasonably
requested by such party, which information or action is necessary to the speedy
and successful consummation of the transactions contemplated by this Agreement.
Subject to its further rights under this Agreement, it shall promptly cause the
Closing to occur at the earliest practicable time, with time being of the
essence.
(b) Confidentiality. All information furnished by one party (the
"Protected Party") to the other party in connection with this Agreement and the
transactions contemplated hereby shall be received in confidence and kept
confidential by such other party and shall be used by it only in connection with
this Agreement and the transactions contemplated hereby except to the extent
that such information: (i) is necessary or required to be disclosed to
Affiliates, auditors, legal counsel or rating agencies, provided that such party
is advised of the confidential nature of the information; (ii) is already
lawfully known to such other party when received; (iii) thereafter becomes
lawfully obtainable from other sources; (iv) is required to be disclosed to, or
by, a Governmental Authority; or (v) is, based on the advice of counsel,
required by Law to be disclosed by such other party; provided, however, that
notice of such disclosure has been given to the Protected Party, when legally
permissible, and that such other party making the disclosure uses its best
efforts to provide notice to permit a Protected Party to take legal action to
prevent the disclosure.
(c) Press Releases. Except as may be required by Law or a court
or Governmental Authority, neither Seller nor Purchaser, nor any of their
respective Affiliates, shall, prior to, on or after the Closing, issue a press
release or make a public announcement related to the transactions contemplated
hereby without the prior consent of the other party hereto, which consent shall
not be unreasonably withheld or delayed.
(d) Notice to Cardholders. Seller and Purchaser shall cooperate
with each other in good faith, consistent with applicable Law, to prepare, print
and mail on a timely basis to each Cardholder a notice notifying each Cardholder
of (i) the purchase of the Accounts by Purchaser; (ii) matters of which
Cardholders are required, in Purchaser's good faith judgment, by applicable Law
to be notified as a result of the transactions contemplated by this Agreement,
and (iii) other matters which Purchaser reasonably determines to be appropriate.
Each such notice shall be prepared, printed and mailed by Purchaser in such
manner and at such time as determined by Purchaser.
(e) Advice of Changes. Between the date hereof and the Closing
Date, each party shall promptly advise the other in writing of any fact which,
if existing or known at
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the date hereof, would have been required to be set forth or disclosed in or
pursuant to this Agreement or of any fact which, if existing or known at the
date hereof, would have made any of the representations contained herein untrue
in any material respect; provided, however, that for the purposes of determining
whether the conditions set forth in Section 7.2.(b) and Section 7.3.(b) are
satisfied, the representations and warranties set forth in Article 4 and Article
5 shall be unaffected by any update provided pursuant to this Section 6.1.(e).
6.2. Certain Covenants of Seller. Seller hereby agrees with
Purchaser as follows:
(a) Preservation of Credit Card Business. From the date of this
Agreement and continuing until the Closing Date, Seller shall: (i) maintain and
service the Accounts in substantially the same manner as previously maintained
and serviced and in compliance with applicable Law; (ii) not pledge, sell or
transfer any Account without the prior written consent of the Purchaser; (iii)
not make any change to their policies and procedures that could have an adverse
effect on the Accounts except as required by Law or without Purchaser's prior
written consent; (iv) not send a change in terms notice to Cardholders without
the prior written approval of Purchaser; (v) take no action or fail to take any
action which impairs any rights of Purchaser under this Agreement; (vi) not
amend any Cardholder Agreements; and (vii) not close any Accounts, except in
accordance with established policies and procedures in existence at the date of
this Agreement.
(b) Other Negotiations. During the period from the date of this
Agreement to the Closing Date, Seller shall not, directly or indirectly, (i)
initiate, solicit or encourage discussions with; (ii) provide (or permit access
to) information to, or (iii) approve or enter into a transaction with, any
Person or group of Persons concerning any proposed or possible transfer of any
of the Subject Assets (all such transactions being referred to herein as
"Acquisition Transactions"). Seller shall promptly communicate to Purchaser the
terms of any proposal which they may receive in respect of an Acquisition
Transaction and any request by or indication of interest on the part of any
third party with respect to initiation of any Acquisition Transaction or
discussions with respect thereto.
(c) Access. Seller shall permit Purchaser and its representatives
full access to its Books and Records. Seller shall furnish (or cause to be
furnished) Purchaser with true, accurate and complete copies of properties,
books, records, files, contracts and other records related to the Subject Assets
as Purchaser may reasonably request. Seller shall cause its personnel to provide
Purchaser assistance in Purchaser's investigation of matters related to the
Subject Assets; provided, however, that Purchaser's investigation shall be
conducted in a manner which does not unreasonably interfere with Seller's normal
operations, customer and employee relations.
(d) Further Assistance. On and after the Closing Date, Seller (i)
shall give such further assurances to Purchaser, execute, acknowledge and
deliver all such
Page 15
acknowledgments and other instruments and take such further action as may be
necessary and appropriate to carry out fully and effectively the transactions
contemplated hereby, including, without limitation, the conveyance of the
Subject Assets and full legal and equitable title to such Subject Assets, and to
discharge Purchaser from any obligations not otherwise assumed by Purchaser on
the Closing Date relating to the Subject Assets; and (ii) shall execute and
deliver such documents as are reasonable necessary in Purchaser's opinion to
vest in Purchaser, good and valid title to the Accounts and Receivables,
including, without limitation, UCC financing statements and amendments to
existing UCC financing statements. Seller may have filed UCC financing
statements with regard to certain Accounts and agrees, upon Purchaser's request,
that Seller shall at its expense release such UCC financing statements.
(e) Books and Records. At or prior to the Closing, Seller shall
deliver (or cause to be delivered), at its expense, to Purchaser, the originals
and all copies of all notices, Cardholder Lists, Books and Records, other than
the Credit Card Account applications which shall be provided to Purchaser from
time to time upon request. Such documents, when delivered shall be organized in
substantially the same manner as organized by Seller in the normal conduct of
the Credit Card Business. Any such documents not delivered at or prior to the
Closing, shall be delivered by Seller within twenty-four (24) hours (except in
the case in the case of credit card applications and agreements which shall be
provided as soon as practicable, but in no event later than ten (10) Business
Days) of any request for such documentation by Purchaser.
(f) Limited Right to Use Marks. Seller hereby grants Purchaser a
royalty-free license to use, after the Closing, the name "Reeds Jewelers" and
such other marks of Seller as have been used in connection with the Accounts and
the Receivables for identification purposes, to the extent permitted by Law, in
any collection efforts or other Cardholder communications and for the purpose of
otherwise enforcing all of Purchaser's rights in the Subject Assets. Purchaser
shall cease all use of the Marks when Purchaser no longer owns any Accounts.
ARTICLE 7
CONDITIONS OF CLOSING
7.1. Conditions to Obligations of Purchaser and Seller. The
obligations of Purchaser and Seller under this Agreement to consummate the
transactions contemplated by this Agreement are subject to the satisfaction of
the following conditions as of the Closing Date:
(a) Approvals and Authorizations. All necessary approvals and
authorizations of, filings and registrations with and notifications to, all
Governmental Authorities with respect to the transactions contemplated by this
Agreement shall have been duly obtained or made and shall be in full force and
effect at the Closing Date.
Page 16
(b) Program Agreement. Purchaser and Reeds Jewelers, Inc. shall
have executed and delivered the Private Label Program Agreement providing for
Purchaser's establishment and operation of open end credit card accounts
(including the Accounts to be purchased by Purchaser) for use by customers of
Reeds Jewelers of North Carolina, Inc. for purchasing merchandise and services
from Seller and such agreement shall be in force subject only to the execution
and delivery of this agreement and a condition that Reeds Jewelers of North
Carolina, Inc. has in place a two (2) year minimum working capital commitment of
thirty million dollars ($30,000,000).
7.2. Conditions Applicable to Purchaser. The obligations of
Purchaser under this Agreement to consummate the transactions contemplated by
this Agreement are, in addition to the condition contained in Section 7.1,
subject to the satisfaction of the following conditions as of the Closing Date:
(a) Performance of This Agreement. Each of the terms, covenants
and conditions of this Agreement to be complied with and performed by the Seller
at or prior to the Closing Date shall have been fully complied with and
performed in all material respects.
(b) Accuracy of Representations and Warranties. There shall be
no material inaccuracy in any of the representations and warranties of Seller
set forth in Article 4 as of the date of this Agreement or as of the Closing
Date, assuming that such representations and warranties are made anew with the
same force and effect on and as of the Closing Date.
(c) No Material Adverse Change. Since the date of this Agreement,
there shall have been no material adverse change in the condition (financial or
otherwise, including no material increase in the percentage of delinquent
accounts) of the Subject Assets or the Credit Card Business.
(d) Litigation. No action, suit, litigation, proceeding or
investigation related to any of the transactions contemplated hereby shall have
been threatened or instituted which in the opinion of the Purchaser is
reasonably likely to (i) materially restrict or prohibit or otherwise have a
material adverse effect on the consummation of any of the transactions
contemplated hereby, or (ii) have a material adverse effect on Purchaser, the
Subject Assets or the Credit Card Business.
(e) Seller's Certificate Concerning Agreement. Seller shall have
furnished to Purchaser a certificate dated the Closing Date, signed by an
authorized officer of Seller (no less senior than a Vice President) that, the
conditions set forth in Sections 7.2(a), 7.2(b) 7.2(c), and 7.2(d) have been
satisfied with respect to the Seller. Seller shall have furnished a Certificate
of Incumbency, signed by the Secretary of Seller, as to the title and status of
the authorized officers signing the above-referenced certificate.
(f) Effect of Acquisition. The acquisition of the Subject Assets
shall (i) be lawful for Purchaser under all applicable Laws; (ii) shall not
cause Purchaser or any of
Page 17
its parent companies or other Affiliates or to be in any respect not in
compliance with any Law. Neither Purchaser nor any of its Affiliates, as a
result of a change in any Law applicable thereto, shall be subject or face a
significant possibility of being subjected to any requirement, restriction or
condition with respect to its structure or operations which, in the judgment of
Purchaser exercised in good faith, will have a material adverse effect upon, or
will be materially burdensome with respect to Purchaser or any of its
Affiliates.
(g) Financing Statements. Seller shall have executed and
delivered to Purchaser for filing all such UCC financing statements, in a form
reasonably acceptable to Purchaser, as are reasonably required by Purchaser.
(h) Perfection. Purchaser shall have received evidence, in form
and substance reasonably satisfactory to it, that all actions necessary to
perfect its interest in and to the Accounts, the Receivables and the other
Subject Assets, and to ensure that Purchaser has good and valid title in and to
the Accounts, the Receivables and the other Subject Assets, have been taken.
(i) Licenses and Consents. Purchaser shall have received
evidence, in form and substance reasonably satisfactory to it, that all licenses
and consents required by or necessary for the consummation of the transactions
contemplated by this Agreement have been obtained.
(j) Governmental Authority. Purchaser shall have received
evidence, in form and substance reasonably satisfactory to it, that all
registrations and filings required by or with any Governmental Authority for the
consummation of the transactions contemplated by this Agreement have been taken.
(k) Identification of Accounts. The Accounts shall have been
identified and all Ineligible Accounts shall have been separately identified.
Purchaser and Seller are able to process such Accounts and Ineligible Accounts
separately.
(d) Reeds' Minimum Financing. Reeds Jewelers of North Carolina,
Inc. shall have in place a two (2) year minimum working capital financing
commitment with customary advance rates with effective capacity of approximately
thirty million dollars ($30,000,000).
7.3. Conditions Applicable to Seller. The obligations of Seller
under this Agreement to consummate the transactions contemplated hereby are, in
addition to the conditions contained in Section 7.1, subject to the satisfaction
of the following conditions as of the Closing Date:
(a) Performance of This Agreement. Each of the terms, covenants
and conditions of this Agreement to be complied with and performed by the
Purchaser at or prior to the Closing Date shall have been fully complied with
and performed in all material respects.
Page 18
(b) Accuracy of Representations and Warranties. There shall be
no material inaccuracy in the representations and warranties of Purchaser set
forth in Article 5 as of the date of this Agreement or as of the Closing Date,
assuming that such representations and warranties are made anew with the same
force and effect on and as of the Closing Date.
(c) Purchaser's Certificate Concerning Agreement. Purchaser shall
have furnished to Seller a certificate dated the Closing Date, signed by an
authorized officer of Purchaser (no less senior than a Vice President) that, to
the best of the knowledge and information of such officer, the conditions set
forth in Sections 7.3(a) and 7.3(b) have been satisfied with respect to
Purchaser. Purchaser shall have furnished a Certificate of Incumbency, signed by
the Secretary or Assistant Secretary of Seller, as to the title and status of
the authorized officers signing the above-referenced certificate.
ARTICLE 8
INDEMNIFICATION
8.1. Indemnification by Seller. Seller shall indemnify and hold
harmless Purchaser, its Affiliates, their respective officers, directors,
employees and agents from and against any and all claims, losses, liabilities,
actions or causes of action, assessments, damages, fines, penalties, costs and
expenses (including, without limitation, reasonable fees and disbursements of
counsel) (collectively, "Losses"), based upon, in connection with, arising out
of, or resulting from, any of the following:
(a) any inaccuracy of any of the representations or warranties
made by Seller in this Agreement or in any Ancillary Document;
(b) any breach or failure by Seller to perform any of its
covenants or agreements contained in this Agreement or in any
Ancillary Document;
(c) any act or omission of Seller and its agents and dealers with
respect to any of the Subject Assets prior to the Closing
Date; or
(d) any liability or obligation of any nature of Seller whether
arising or to be paid, performed or discharged prior to, at or
after the Cut-Off Time.
8.2. Indemnification by Purchaser. Purchaser shall indemnify and
hold harmless Seller, its Affiliates, their respective officers, directors,
employees and agents, which indemnification obligation shall not exceed the
aggregate the amount of the Purchase Price, from and against, any and all Losses
based upon, in connection with, arising out of, or resulting from any of the
following:
(a) any inaccuracy of any of the representations or warranties
made by Purchaser in this Agreement or in any Ancillary
Document;
Page 19
(b) any breach or failure by Purchaser to perform any of its
covenants or agreements contained in this Agreement or in any
Ancillary Document;
(c) all of Purchaser's liabilities and obligations under the
Cardholder Agreements to be performed by Purchaser after the
Cut-Off Time; or
(d) any act or omission of Purchaser and its agents with respect
to any of the Subject Assets after the Closing Date.
8.3. Procedures. Each party shall promptly notify the other party
of any claim, demand, suit or threat of suit of which that party becomes aware
(except with respect to a threat of suit either party might institute against
the other) which may give rise to a right of indemnification pursuant to this
Agreement. The indemnifying party will be entitled to participate in the
settlement or defense thereof and, if the indemnifying party elects, to take
over and control the settlement or defense thereof with counsel satisfactory to
the indemnified party. 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.
ARTICLE 9
TERMINATION
9.1. Termination. (a) In the event the requirements of Sections
7.2 or 7.3 are not satisfied or waived by February 28, 2002, either party may
terminate this Agreement without any further obligation or liability (except for
obligations which expressly survive) to the party who did not satisfy the
conditions of Section 7.2 or 7.3, as the case may be, effective upon filing
notice of such termination to such other party.
(b) Effect of Termination and Survival. If this Agreement is
terminated, the agreements of the parties hereto contained in Section 6.1(b),
Section 6.1(c), Section 9.2 and Article 8 shall survive such termination.
Termination of this Agreement will not relieve either party of liability for
breaches of this Agreement.
9.2. Expenses. Each party shall pay all of its own fees and
expenses incurred in connection with the transactions contemplated in this
Agreement, except as otherwise provided expressly herein.
ARTICLE 10
MISCELLANEOUS
10.1. Survival of Representations and Warranties. Notwithstanding
any investigation made by or on behalf of any party at any time, each
representation and warranty shall survive the Closing Date.
Page 20
10.2. Notices. All notices, consents, approvals and other
communications to be given hereunder shall be in writing, shall be deemed to
have been duly given upon receipt, and shall be delivered (i) in person, (ii) by
United States registered or certified mail, with postage prepaid, return receipt
requested, or (iii) by a nationally recognized overnight courier service that
provides written evidence of receipt, and addressed as follows:
(a) If to Purchaser:
World Financial Network With a Copy to:
National Bank Attn: Xxxxx X. Xxxxxxxx, Counsel
000 XxxxXxxxxx Xxxxx Fax: (000) 000-0000
Xxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx, President
Fax: (000) 000-0000
(b) If to Seller:
0000 Xxxxx 00xx Xxxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxx, President
Fax:__________________
With a copy to:
Xxxxxxx Xxxxxx
Xxxxxx and Xxxxxx
000 Xxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Fax:__________________
or to such other address or addresses as Purchaser and Seller may from time to
time designate by notice as provided herein, except that notices of change of
address shall be effective only upon receipt.
10.3. Assignment. No party hereto shall assign or delegate this
Agreement or any rights or obligations hereunder without the prior written
consent of the other party, except that either party shall be permitted to
assign its rights hereunder to any of its Affiliates without the other party's
consent.
10.4. Waiver. One party hereto may, by written notice to the other
party hereto, (a) extend the time for the performance of any of the obligations
or other actions of the other party under this Agreement; (b) waive any
inaccuracies in the representations or warranties of the other party contained
in this Agreement or in any document delivered pursuant to this Agreement; (c)
waive compliance with any of the conditions or covenants of the other party
contained in this Agreement; or (d) waive or modify performance of any of the
obligations of the other party under this Agreement. Except as provided in the
preceding sentence, no action taken pursuant to this Agreement,
Page 21
including, without limitation, any investigation by or on behalf of one party,
shall be deemed to constitute a waiver by such party of compliance with any of
the representations, warranties, covenants, conditions or agreements contained
in this Agreement. The waiver by one party hereto of a breach of any provision
of this Agreement shall not operate or be construed as a waiver of any
subsequent breach.
10.5. Entire Agreement. This Agreement (including the Exhibits
hereto) supersedes any other agreement, whether written or oral, that may have
been made or entered into by Seller and Purchaser relating to the matters
contemplated hereby, and together with the Private Label Credit Card Program
Agreement between Purchaser and Seller constitutes the entire agreement of the
parties.
10.6. Amendments and Supplements. This Agreement may be amended,
modified or supplemented only by the written agreement of the parties hereto.
10.7. Captions. The captions in this Agreement are for convenience
only and shall not be considered a part of or affect the construction or
interpretation of any provision of this Agreement.
10.8. Counterparts. This Agreement may be executed with
counterpart signature pages or in two or more counterparts, each of which shall
be an original, but all of which together shall constitute one and the same
instrument.
10.9. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Ohio without regard to
internal principles of conflict of laws.
10.10. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns, and the provisions of Article 8 shall inure to the benefit of
the indemnified parties referred to therein.
10.11. Severability. If any provision of this Agreement is held to
be invalid, void or unenforceable, all other provisions shall remain valid and
be enforced and construed as if such invalid provision were never a part of this
Agreement.
10.12. Waiver of Jury Trial. Each of the parties hereto shall, and
hereby does, waive trial by jury in any action or proceeding involving any of
the parties hereto on any matters whatsoever arising out of or in any way
connected with this Agreement; provided that such waiver shall not apply to
cross claims in any bona fide action originally involving a third-party and a
jury trial or any bona fide action brought by a third-party against one or more
of the parties hereto and involving a jury trial.
10.13. Consent to Jurisdiction. Each party (i) consents and submits
to the jurisdiction of the Courts of the State of Ohio and of the Courts of the
United States for the Eastern Division of the Southern District of Ohio for all
purposes of this Agreement,
Page 22
including, without limitation, any action or proceeding instituted for the
enforcement of any right, remedy, obligation or liability arising under or by
reason hereof or thereof.
10.14. Mutual Drafting. This Agreement is the joint product of
Seller and Purchaser and each provision hereof has been subject to mutual
consultation, negotiation and agreement of Seller and Purchaser and shall not be
construed for or against any party hereto.
Page 23
IN WITNESS WHEREOF, each of Seller and Purchaser have caused this
Agreement to be duly executed and delivered as of the date first above written.
REEDS FINANCIAL WORLD FINANCIAL
SERVICES, INC. NETWORK NATIONAL BANK
By: /s/ Xxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------- ----------------------------------
Name: Xxxx Xxxxxx Name: Xxxxxx X. Xxxxxxx
-------------------------------- --------------------------------
Title: President & CEO Title: President
------------------------------- -------------------------------
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EXHIBIT 1.1 TO PURCHASE AND SALE AGREEMENT
INELIGIBLE ACCOUNTS
An open-end credit card account shall be deemed an "Ineligible Account"
if as of the Cut-Off Time one or more of the following criteria shall be
applicable, whether or not the revelant facts are then known to Seller or
Purchaser:
1) as to which any Receivable has been written off by Seller or has not
been written off but was required to have been written off according to
the normal operating policies of Seller or has been referred to a
collection agency or an attorney for collection;
2) as to which the Cardholder is deceased or has been declared
incompetent;
3) as to which the Cardholder is the subject of any petition under the
United States Bankruptcy Code of 1978, as amended, or is a party to any
other insolvency proceedings under state law, except for Accounts where
the Cardholder is the subject of a Chapter 7 or Chapter 13 petition as
to which Seller has executed reaffirmation agreements with the
Cardholders that have been approved by the bankruptcy courts;
4) as to which the Cardholder's Account does not have in effect a valid
written Cardholder Agreement and the agreement is necessary, or is
subject to a dispute by the Cardholder;
5) which has been identified in the exercise of diligence and good faith
by Seller on its books and records as being fraudulent;
6) as to which the Cardholder is under the age of eighteen (18) years;
7) as to which the Cardholder is not an individual, or the account is
maintained in a corporate or other business name; or
8) as to which the Account is one-hundred eighty (180) or more days
contractually past due (aging of 7 and greater on Seller's system).
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EXHIBIT 3.2 TO PURCHASE AND SALE AGREEMENT
[FORM OF] ASSIGNMENT AND ASSUMPTION AGREEMENT
This Assignment and Assumption Agreement is made and delivered this
________ day of _____________, _______ by and between Reeds Financial Services,
Inc. ("Seller") and World Financial Network National Bank ("Purchaser"),
pursuant to the Purchase and Sale Agreement between the parties dated December
7, 2001 (the "Purchase Agreement"), and for the consideration and on the terms
stated therein, the terms defined therein being used herein shall have the
meaning defined in the Purchase Agreement.
1. Assignment. Seller does hereby sell, convey, transfer and assign to
Purchaser, its successors and assigns, for its own use and benefit forever, and
not as security for any indebtedness, all of the Subject Assets.
2. Assumption. Purchaser does hereby assume each of Seller's obligations
under the Cardholder Agreements relating to Accounts including the liability for
Credit Balances and the obligation to refund them, but excluding Seller's
obligations for any breach of such Cardholder Agreements occurring before the
Closing Date or arising from any act or omission of Seller or its dealers, all
subject to the terms and conditions of the Purchase Agreement.
3. Assignments; Governing Law. This Assignment and Assumption Agreement
shall inure to the benefit of and be binding upon the respective successors and
assigns of the parties hereto, and shall be governed by and construed and
interpreted in accordance with the Purchase Agreement, the internal laws of the
State of Ohio without reference to rules of conflicts of laws, and applicable
federal law.
4. Purchase Agreement Continued. Nothing herein shall be deemed to
supersede any of the obligations, agreements, covenants, representations or
warranties of Seller or Purchaser contained in the Purchase Agreement.
WORLD FINANCIAL NETWORK REEDS FINANCIAL
NATIONAL BANK SERVICES, INC.
By: By:
---------------------------------- ----------------------------------
Name: Name:
-------------------------------- --------------------------------
Title: Title:
------------------------------- -------------------------------
Page 26
EXHIBIT 4.15 TO PURCHASE AND SALE AGREEMENT
ENHANCEMENT PRODUCTS AND VALUE ADDED PROGRAMS
Contract between Seller and The Assurant Group for credit insurance products.
Page 27
