EXHIBIT 10.1.12
AMENDMENT TO CREDIT CARD PROCESSING AGREEMENT
This Amendment to Credit Card Processing Agreement ("Amendment") is entered
into as of this 28th day of January, 2005 ("Effective Date") between World
Financial Network National Bank (the "Bank") and Lane Xxxxxx, Inc. (the
"Corporation") and Sierra Nevada Factoring, Inc. ("Factoring") (Corporation and
Factoring being collectively referred to herein as the "Company").
R E C I T A L S :
WHEREAS, Bank and Company entered into a Credit Card Processing
Agreement dated as of January 31, 1996, as amended by Memorandum dated
March 4, 1996 (regarding Low Score/Low Limit accounts), memo dated December
3, 1997 (regarding Low Score/Low Limit accounts), Student Program Addendum
to Credit Card Processing Agreement effective August 4, 1998, Amendment to
Student Program Addendum effective August 4, 1998, Charge and Send Program
letter dated April 22, 1999, Low Score/Low Limit Addendum Effective
September 12, 1999, Amendment to Credit Card Processing Agreement dated
October 5, 2000 and Low Score/Low Limit Addendum Effective June 4, 2002 (as
amended, the "Agreement"); and
WHEREAS, Company and Bank now desire to amend the Agreement as set
forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, the parties hereto agree as follows:
1. Definitions; References. Each term used herein which is not defined herein
shall have the meaning assigned to such term in the Agreement. Each
reference to "hereof", "hereunder", "herein" and "hereby" and each other
similar reference and each reference to "this Agreement" and each other
similar reference contained in the Agreement shall from and after the date
hereof refer to the Agreement amended hereby.
2. Extension of Term. Bank and Company agree to extend the initial term of the
Agreement. Therefore, Section 11.1 of the Agreement is deleted in its
entirety and replaced with the following:
11.1 Term. This Agreement shall remain in effect until October 31,
2007, unless earlier terminated (a) by the Bank or the Company in the
event of a material breach by the other party of any of such other
party's obligations under this Agreement if any such breach remains
uncured 30 days after written notice thereof to such party, or (b)
automatically in the event that the Bank or the Company commences a
voluntary case or other proceeding seeking liquidation, reorganization
or other relief with respect to itself or its debt under any
bankruptcy, insolvency or similar law now or hereinafter in effect,
seeks the appointment of a trustee, receiver, liquidator, custodian or
other similar official of it or any substantial part of its assets,
consents to any such relief or to the appointment of or taking
possession by any such official in an involuntary case or other
proceeding commenced against it, makes a general assignment for the
benefit of creditors, or fails generally to pay its
debts as they become due. The Term of this Agreement shall not
automatically renew. Subject to Section 11.2, the termination of this
Agreement shall not affect the obligations of the Cardholders to the
Bank, the obligation of the Company and the Bank to make the payments
required under Section 4 with respect to Transactions that occurred
before the date of termination, the rights (and obligations) of the
Bank under Sections 4.4, 7.4 and 9.2 and the rights of the Company
under Section 9.1. Sections 10, 11 and 12 of this Agreement shall
survive any such termination.
3. Discount Rate. Section 4.1.5 of the Agreement is amended by adding the
following at the end thereof:
Notwithstanding the foregoing, the discount rate referred to in
Section 4.1.1 shall be .20% for the period of December 1, 2004 through
January 31, 2006. Commencing February 1, 2006 until the termination of
this Agreement, the discount rate shall be 0%.
4. Marketing Contribution. The Bank agrees to pay to the Company a one time
marketing contribution in the amount of one million dollars ($1,000,000.00)
to be paid on January 3, 2006. Failure to pay such amount on January 3,
2006 shall be a default by Bank under the Agreement.
5. Effect of Termination. Section 11.2 of the Agreement is deleted in its
entirety and replaced as follows:
11.2 Effect of Termination. (a) Upon termination or expiration of this
Agreement, Company will have the option to purchase from Bank, free and
clear of all liens, claims and encumbrances, but otherwise without
recourse, those certain Credit Card accounts and the account balances
related thereto described as follows (the "Purchased Accounts"): (i) those
Credit Card accounts (regardless of whether originated through the
Company's retail Business or through the Lane Xxxxxx catalogue/mail order
business) where greater than 50% of the total amount of purchases, plus
tax, plus shipping and handling, less any refunds (the "Net Credit Sales")
under such Credit Card accounts were incurred at Company's Lane Xxxxxx
retail Business (including in stores and via e-commerce at the Company's
web site) during the twelve (12) month period ending ninety (90) days prior
to termination of this Agreement; and (ii) those certain Credit Card
accounts which were originated through the Company's Lane Xxxxxx retail
Business (as opposed to being originated through the Lane Xxxxxx
catalogue/mail order business) which have not had any purchases during the
twelve (12) month period ending ninety (90) days prior to termination of
this Agreement (including, without limitation, inactive accounts, never
active accounts, and active accounts with no sales during such twelve (12)
month period). However, subject to the right of first refusal set forth in
subparagraph (e) below, Purchased Accounts shall not include any Credit
Card Accounts where the account balances related thereto have been
previously written off by Bank ("Written-Off Accounts"). Bank shall retain
all other Credit Card Accounts and the account balances related thereto;
provided, however, that upon termination or expiration of this Agreement,
Bank shall no longer authorize transactions for any Credit Card bearing the
"Lane Xxxxxx" name or any derivative thereof and shall cease issuing any
Credit Cards bearing such trade
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name. Bank shall be permitted to use such trade name solely for purposes of
collecting the account balances on the Credit Card accounts which are not
Purchased Accounts. Bank shall have the right to issue replacement cards to
Cardholders of accounts which are not Purchased Accounts provided the
replacement cards do not include the Lane Xxxxxx tradename. Other than as
expressly set forth in Section 1 of this Agreement, and as otherwise
limited herein, nothing herein shall be deemed a grant of a right or
license by Company to Bank to use any tradename of Company.
(b) The purchase price for the Purchased Accounts shall be equal to
one hundred percent (100%) of the book value of the account balances
related to the Purchased Accounts, including without limitation all accrued
finance charges and fees (whether or not billed or posted to the accounts,
subject to post-closing true-up). Beginning in October 2006, and continuing
on a quarterly basis thereafter, Bank shall provide to Company a report
showing the accounts that as of that time would constitute the Purchased
Accounts. Bank shall also provide company with access to the program used
by Bank to determine the Purchased Accounts and Company shall have the
right to verify such program used by Bank to determine the Purchased
Accounts and the book value of the account balances of the Purchased
Accounts. The purchase of the Purchased Accounts shall include the purchase
of the Cardholder names, Cardholder addresses, Cardholder Account status
information, Cardholder Account repayment terms and such other Account
related information and account data requested by Company and agreed upon
by Bank, such agreement not to be unreasonably withheld. Bank shall, within
180 days prior to expiration of the Term, upon Company's prior written
request, provide to or permit Company to review such due diligence
information relating to the Credit Card Accounts as Company shall
reasonably request and as agreed to by Bank (such agreement not to be
unreasonably withheld provided the request is in accordance with standard
industry practice for a sale of credit card assets in a similar type of
portfolio deconversion), in order to enable Company to perform appropriate
financial and legal compliance due diligence prior to exercising its option
to purchase the Purchased Accounts.
(c) All payments by the Company pursuant to this Section 11.2 shall be
made not later than the time at which Bank shall deliver the Purchased
Accounts to Company, and shall be by wire transfer of immediately available
funds. If Company exercises its option to purchase the Purchased Accounts,
then Bank and the Company shall negotiate in good faith to enter into a
purchase agreement for the sale and purchase, free and clear of all liens,
claims and encumbrances but otherwise without recourse, of the Purchased
Accounts upon the terms and conditions set forth herein and such other
mutually satisfactory terms and conditions (in accordance with standard
industry practice for a sale of credit card assets in a similar type of
portfolio deconversion).
(d) Effective from and after the Closing Date, Company shall not be
required to accept any Credit Cards which are not related to the Purchased
Accounts.
(e) If at any time during the five (5) year period after termination
of this Agreement, Bank desires or intends to sell, assign or otherwise
transfer the Written-Off Accounts which were originated through the
Company's retail Business to any third party, then Company shall have the
first right and/or option of purchasing the Written-Off Accounts on the
same terms otherwise available to such third party. In such event Bank
shall obtain a bona fide written offer from the third
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party to purchase the Written-Off Accounts (on terms which Bank is willing
to accept) (the "Offer"). Bank shall promptly notify Company of the Offer
(together with a copy of the Offer) and Company shall have the option for a
period of thirty (30) days after receipt of the Offer to elect to purchase
the Written-Off Accounts on the same terms as are otherwise set forth in
the Offer, except that closing thereunder shall not occur until the later
of the date set forth in the Offer or sixty (60) days after Company's
receipt of the notice of the Offer. Failure on the part of Company to elect
to purchase the Written-Off Accounts pursuant to the Offer shall be deemed
a waiver of this option right as to such particular Offer only and if a
sale is not consummated pursuant to such Offer, Company shall have the
right to purchase the Written-Off Accounts under this section if subsequent
Offers are received by Bank. In addition to the foregoing, prior to
offering the Written-Off Accounts for sale, Bank shall first contact
Company and provide to Company the right of first negotiation as to the
purchase of the Written-Off Accounts. At the end of such five (5) year
period, Bank shall offer Company the option of purchasing the Written-Off
Accounts which were originated through the Company's retail Business on
terms which Bank is willing to accept from a third party and Company shall
have the option for a period of thirty (30) days after receipt of such
offer to elect to purchase the Written-Off Accounts on the same terms and
conditions as are set forth in the Offer. If Company elects not to purchase
the Written-Off Accounts Company shall have no further rights to purchase
the Written-Off Accounts under this Section and Bank shall have no further
obligations to offer to sell to Company.
6. Effective Date of Amendment. This Amendment shall be effective as of the
Effective Date set forth above, unless otherwise noted above.
7. Counterparts. This Amendment may be executed in any number of counterparts,
each of which when so executed shall be deemed to be an original, but all
of such counterparts shall together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed
by their duly authorized officers.
WORLD FINANCIAL NETWORK LANE XXXXXX, INC.
NATIONAL BANK
By: By:
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Name: Name:
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Title: Title:
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SIERRA NEVADA FACTORING, INC.
By:
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Name:
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Title:
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