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Exhibit 10.76
ACCOUNT PURCHASE & CREDIT CARD MARKETING & SERVICES AGREEMENT
This agreement ("Agreement") is entered into as of the 9th day of March, 1999
("Effective Date"), by and among Capital One Services, Inc. ("COSI"), a Delaware
corporation and Capital One Bank ("COB"), a Virginia banking corporation
(jointly and severally, or as appropriate as to a particular party's
obligations, "Capital One"), and Hanover Direct, Inc., a Delaware corporation
located at 0000 Xxxxxx Xxxxxxxxx, Xxxxxxxxx, Xxx Xxxxxx 00000, on behalf of its
subsidiaries and affiliates other than Compagnie Financiere Richemont AG
("HDI").
RECITALS
A. General Electric Credit Corporation ("GECC") owns and services, among other
things, a portfolio of credit card receivables for a single-line house credit
card program as set forth in Exhibit A ("Existing Portfolio") pursuant to an
agreement between HDI and GECC (the "Existing Agreement") (which existing
Agreement has not been disclosed to Capital One) the terms of which provide that
a third party purchaser may purchase the Existing Portfolio under limited
conditions set forth in that certain Existing Agreement.
B. Capital One has offered to purchase the Existing Portfolio and HDI desires to
sell the Existing Portfolio and the proposed transaction has been consented to
by GECC pursuant to Section 12.3 and 12.5 of the Existing Agreement.
C. Capital One has offered to provide a dual-line credit card program to credit
card holders of the Existing Portfolio and to market and promote the dual-line
credit card program to prospective credit card applicants (the "Program") and
HDI desires to engage Capital One for the purpose of servicing such Program on
its behalf. "Dual-line" shall mean a private-label credit card line for HDI
merchant use and a standard Visa or MasterCard line of credit for third-party
use.
D. HDI owns and offers various products and services through several mail-order
catalog subsidiaries and limited liability companies ("Catalogs") and maintains
site(s) on the Internet, and owns and/or manages related Web sites
(collectively, the "HDI Sites") and markets the sale of Catalogs' goods and
services in a variety of direct response media, now known and hereafter
developed ("Media Channels").
E. HDI and Capital One desire to use all Media Channels available to them to
offer the Program to customers and prospective customers of both the Catalogs
and Capital One.
Therefore, the parties agree as follows:
I DEFINITIONS
A. "Accounts" = Credit account and related contractual agreements with
holders of a MasterCard or Visa credit account, whether or not a plastic
card has been issued against such account.
B. "Active Account" = Program Accounts which have an open outstanding
balance.
C. "Affiliate" = As defined in Rule 12b-2 under the Securities Exchange
Act of 1934, as amended, together with the rules and regulations
promulgated thereunder other than Compagnie Financiere Richemont AG.
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D. "Agreement" = As defined in the Preamble.
E. "Applicable Law" = All applicable laws of any jurisdiction, including
banking laws, consumer credit laws, securities laws, tax laws, tariff and
trade laws, ordinances, judgments, decrees, injunctions, writs and orders
or like actions of any Competent Authority and the rules, regulations,
orders, interpretations, licenses and permits of any Competent Authority.
F. "Capital One" = As defined in the Preamble.
G. "Capital One's Closing Conditions" = As defined in Section IV.B.5.
H. "Catalogs" = As defined in the Recitals.
I. "Charged-off Accounts" = HDI Accounts issued under the Program that
have been charged-off on the books and records of Capital One, net of
recoveries, pursuant to Applicable Law and, in every event, after 180 days
past due, under normal circumstances and immediately upon notice of
unusual events, including due to non-payment, death or otherwise.
J. "Closing" = As defined in Section IV.B.2.
K. "Closing Date" = As defined in Section IV.B.2.
L. "Competent Authority" = Any federal, state, county, local or municipal
governmental or quasi-governmental body, bureau, commission, board, board
of arbitration, instrumentality, authority, agent, court, department,
inspectorate, official or public or statutory person (whether autonomous
or not) having jurisdiction over this Agreement or any of the parties to
this Agreement.
M. "Credit Card Procedures" = Those policies and procedures adopted by
Capital One in the administration of credit card operations for itself or
its Affiliates and other third parties, as amended, from time to time in
the absolute discretion of Capital One.
N. "Delinquent Accounts" = Accounts which meet any one of the following
criteria: (i) one (1) or more days Past Due and over-limit, (ii) greater
than thirty (30) days Past Due, or (iii) is a Charged-off Account.
O. "Dual-line" = As defined in the Recitals.
P. "Encumbrance" = Any mortgage, lien, pledge, charge, assignment,
hypothecation, securitization, security interest, title retention,
preferential right, trust arrangement, lease, easement, servitude or
encumbrance of any kind.
Q. "Existing Portfolio" = As defined in the Recitals.
R. "Existing Portfolio Account Contract" = An agreement between HDI and an
account holder evidencing a Purchased Account.
S. "Existing Portfolio Account Holder List" shall mean the list of the
names and addresses of all account holders of a Purchased Account as of
the Closing Date.
T. "Existing Portfolio Account Information" = The following information
with respect to each Purchased Account: (a) the information contained in
the data fields listed
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on Exhibit A hereto; (b) the RM (returned mail) status of such Purchased
Account; (c) the original application for such Purchased Account (or a
copy thereof) as GECC may have in its files and (d) full file layout and
data dictionary with metadata.
U. "GECC" = As defined in the Recitals.
V. "HDI Account List" = A list of HDI Accounts for which an HDI Card has
been issued whether or not such Accounts are Active Accounts or
Charged-off Accounts.
W. "HDI Accounts" = Accounts issued under the Program pursuant to this
Agreement.
X. "HDI Card" = A plastic card bearing the HDI Xxxx issued to a customer
under an HDI Account.
Y. "HDI's Closing Conditions" = As defined in Section IV.B.6.
Z. "HDI Customer Data" = All names, addresses and other individual level
data associated with customers (i) originating with the Existing
Portfolio, (ii) originating with HDI offers for credit cards including but
not limited to HDI Customer Lists; and (iii) for customer orders for the
products sold by HDI.
aa. "HDI Customer List" = HDI Customer Data excluding individual level
data for customer orders for the products sold by HDI.
bb. "HDI Line of Credit" = The amount of credit available to a given HDI
Account for purchases solely of HDI products.
cc. "HDI Sites" = As defined in the Recitals.
dd. "Initial Term" = As defined in IV.A.1.
ee. "installment billing programs'" = Those programs which HDI offers to
its customers pursuant to which cardmembers may accept the offer to divide
a total transaction amount over 4 or 5 months.
ff. "Liaison" = As defined in Section IV.G.1.
gg. "Marks" = As to a party, means such party's trademarks, trade names,
logos, service marks, trade styles, trade dress and other proprietary
identifying marks whether or not registered or otherwise legally
determined to be owned by such party.
hh. "Media Channels" = As defined in the Recitals.
ii. "Models" = Criteria developed by Capital One for targeting and
identifying customers, credit products for such customers, or
restructuring credit products provided to existing Accounts, whether
mathematical or otherwise, including, without limitation, Confidential
Information of Capital One used or prepared in connection with the
development of such criteria, through analysis and modeling of risk
parameters and customer information, including from existing databases or
otherwise.
jj. "multi-pay accounts" = Those Accounts in which cardmembers have
accepted the offer to divide a total transaction amount over 4 or 5
months.
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kk. "open outstanding balance" = Accounts where an average daily balance
for a given period is greater than zero dollars.
ll. "Past Due" = An Account is past-due where payment has not been
received by the statement due date.
mm. "Person" = Any individual, corporation, partnership, limited liability
company, joint venture, association, joint stock company, trust,
unincorporated organization or government or any group or political
subdivision thereof.
nn. "Program" = As defined in the Recitals.
oo. "Program Launch Date" = The date of closing of the purchase and
conversion of the Purchased Accounts.
pp. "Purchased Account(s)" = Accounts from the purchased Existing
Portfolio on the Closing Date excluding accounts which are (i) more than
180 days past due or (ii) bankrupt, deceased or otherwise subject to
charge-off by GECC, at the Closing Date hereunder.
qq. "Purchase Date" = The date on which Purchased Accounts are purchased
by Capital One from GECC.
rr. "Set-up Period" = The period of time commencing from the Effective
Date and concluding on the Program Launch Date during which the parties
expect to undertake systems and operations preparations necessary to
establish the Program.
ss. "Solicitation" = An offering of the HDI Accounts to a group of Persons
identified as potential account holders through existing HDI Customer
Lists, the analysis and modeling of risk parameters and credit information
obtained from Credit Bureaus or otherwise via one or more of the following
marketing channels: (i) take-one or other similar applications; (ii)
direct mail; (iii) telemarketing and (iv) Internet-based application
forms.
tt. "Tape" = As defined in Section IV.B.3(b).
uu. "Tax" or "Taxes" = A United States or foreign federal, state or local
income, payroll, ad valorem, excise, sales, use, occupancy, real estate,
capital stock, or franchise tax or other governmental charge, including
any interest, fines, penalties, and additions relating to any such tax.
vv. "Tax Return" = Any statement, form, return or other document required
to be supplied to a taxing authority in connection with Taxes.
ww. "Term" = As defined in II.C.6(c).
xx. "Termination Date" = The date on which this Agreement shall terminate,
including for any reason set forth in IV.C.
yy. "Unbanked" / "Unbanked Consumer" = An individual who meet(s) either of
the following two (2) criteria:
i) no record in the credit bureaus; or
i) a record in the credit bureaus and
(a) an account that does not have at least 2 "trade lines"
on it; or
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(b) an account with 2 or more "trade lines" on it but the
individual consumer has a scoring report issued on it by
FAIR XXXXX (or a company with a similar scoring
mechanism) with a score of less than 600.
"Trade line" shall mean, for the purposes of this definition, a line of
credit issued by an entity which has extended credit to an individual and
reported it to the credit bureau. A credit inquiry shall not be deemed a
trade line.
zz. "Unbanked Market" = The consumer market wherein any entity may offer
for sale merchandise or services on credit where 40% or more of approved
applicants are Unbanked Consumers.
Section 1.1. Construction. With respect to all terms used in this
Agreement, words used in the singular include the plural and words used in the
plural include the singular. The word "including" means including without
limitation, and the words "herein", "hereby", "hereto" and "hereunder" refer to
this Agreement as a whole. Unless the context otherwise requires, references
herein: (i) to Articles, Sections and Exhibits mean the Articles and Section of
and the Exhibits attached to this Agreement; (ii) to an agreement, instrument or
other document means such agreement, instrument or other document as amended,
supplemented and modified from time to time, to the extent provided by the
provisions thereof and by this Agreement; and (iii) to a statute mean such
statute as amended from time to time. The Exhibits referred to herein shall be
construed with and as an integral part of this Agreement to the same extent as
if they were set forth verbatim herein.
II KEY POINTS OF RELATIONSHIP
A. REPLACEMENT OF GECC AS SERVICE PROVIDER OF HDI'S PRIVATE LABEL CREDIT
PROGRAM AND CONVERSION TO DUAL-LINE CREDIT CARD.
1. Replacement. Capital One shall provide services generally of a
type provided previously by GECC with respect to HDI's private label
credit card program. Capital One shall do this by (a) purchasing
from HDI the Existing Portfolio at a price equal to 100% of the par
value of the outstanding receivables of accounts excluding
Charged-off Accounts on the Closing Date and (ii) continuing to fund
the portfolio's growth pursuant to the provisions of this Agreement.
2. Selection of Card Association Capital One shall convert Purchased
Account holders over to a dual-line Visa or MasterCard with the
private label line that functions similar to the existing GECC
program. The final selection of Visa or MasterCard for the dual-line
card shall be made by HDI with the prior reasonable approval of
Capital One.
3. Visa or MasterCard Co-branded Incentive Dollars. HDI and Capital
One shall retain the right to jointly negotiate and share equally
(50:50) any Visa or MasterCard association "co-branded" incentive
dollars.
4. Risk offset Fee. Capital One will provide the dual-line private
label program to HDI for a Risk offset fee recognizing in part the
risk Capital One faces of potentially higher credit losses which
will be:
o $1.50 per Active Account per month.
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o $10 per Account originated under the Program paid once
per Account origination, settled on a quarterly basis
for all Accounts generated in the quarter.
5. It is the intention of Capital One to accommodate, consistent
with Applicable Law, funding to HDI of up to $2,000,000 in
receivables on HDI multi-pay accounts. Capital One shall use
good faith best efforts to offer a reasonable funding rate for
such accounts. HDI shall have the option to accept the offer,
re-negotiate the offer, or decline the offer. The parties
anticipate negotiating the terms of any such arrangement
during the Set-up Period.
B. SHARING OF COSTS AND PROFITS OF DUAL LINE CREDIT CARD ISSUED TO HDI'S
EXISTING CUSTOMER PORTFOLIO
1. Promotion. Subject to the provisions of Article III below, HDI
will be responsible for promoting the HDI Card, both for continued
use as well as to acquire new HDI Accounts in all Media Channels on
a mutually agreeable basis.
(a) Where these programs can be added to an HDI existing
customer contact ( i.e. on-page in existing catalogs, as a
package insert or inbound telemarketing ), costs will be borne
by HDI.
(b) For stand-alone credit promotions, if any, that do not use
an existing customer contact of HDI, the catalog, mailing and
telemarketing costs of the Program will be equally split
between HDI and Capital One. HDI alone will bear the cost and
risk of catalog inventory. Where such promotions are
anticipated, Capital One and HDI agree to prepare detailed
plans including a promotion budget which outlines expected
costs. Once completed, both parties shall agree in writing to
the budget and the sharing of promotion/mailing costs,
including any variances to the budget.
2. Credit Screening. As set forth in Article III below, Capital One
shall be responsible for the credit screen which Capital One may
deem necessary (pre-screening and at the point of application if
required), credit underwriting and account set-up costs. Capital One
shall be solely responsible for credit decisions, including credit
line. HDI and Capital One shall agree in advance to the standard
terms and conditions used for the Program. For Delinquent Accounts,
Capital One may at its own discretion modify the Delinquent
Account's terms and conditions; provided that Capital One will not
change terms for any such Account the first time such Account
becomes a Delinquent Account except Accounts that are bankrupt or
deceased, or that Capital One in good faith believes to be
fraudulent. Accounts which have become a Delinquent Account a second
time shall be referred to herein as a "Longstanding Delinquent
Account."
3. HDI Fees.
a) HDI will receive an annual fee to be paid quarterly by
Capital One, being 0.625% of the quarterly average
outstanding receivable balance (2.5% annualized) under
the dual-line product, excluding Delinquent Accounts.
(By way of illustration, on a $1,000 quarterly average
outstanding balance for an account holder, 0.625% or
$6.25 shall be paid by Capital One to HDI.)
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b) On a quarterly basis, a marketing offset fee of $10 per
HDI Account paid once per Account origination, settled
on a quarterly basis for all Accounts generated in the
quarter.
c) Such fees shall be the sole amount paid to HDI by
Capital One which shall otherwise retain all profits
associated with the dual-line product.
4. Shared Credit Risk for 18 Months. For a period of 18 months from
the Closing Date, HDI shall share the credit risk on the Purchased
Accounts with an assumed 8% total shared risk measured as a
percentage of average receivable balance, with monthly
reconciliation therefor. (By way of illustration, monthly
reconciliation will examine "charge-offs"; if total losses are 10%,
HDI shall be responsible to pay Capital One 1% of the losses; if
total losses are 6%, Capital One shall be responsible to pay HDI 1%
of the losses. If such month is after 18 months from the Purchase
Date, then HDI shall share no part of credit losses or gains above
or below 8%.)
5. By-Pass. No interchange fee will be required to be paid by HDI
for charges made to the private label line of the card with
transactions billed directly to Capital One as set forth below and
not sent through the Visa or MasterCard association payment system.
C. JOINT DEVELOPMENT OF PROGRAM TO BUILD 'UNBANKED' CREDIT PORTFOLIO
1. Program Development. HDI and Capital One agree to jointly develop
a program to build a portfolio of Program credit card members who
are Unbanked Consumers.
2. Marketing Responsibility. HDI will act as the marketing arm of
the two parties to generate Unbanked credit applicants. These
applicants will be submitted to Capital One for credit approval and
dual-line account set up.
3. Marketing Costs. Capital One shall pay HDI a marketing offset fee
of $10 per HDI Account paid once per Account origination, settled on
a quarterly basis for all Accounts generated in the quarter. HDI
will be responsible for the costs of all marketing, merchandising,
and promotions in generating the applications but all such media
materials will be created by Capital One, consistent with the
provisions of Article III below, subject to the reasonable right of
review of promotional copy as provided in Section II.E. below.
4. Credit Analysis Responsibility and Costs. Capital One will be
responsible for all credit evaluation, credit set up and all costs
associated with credit account management.
5. Account Approval Standards. Prior to each promotion by HDI to
generate accounts, HDI and Capital One will agree to the terms and
conditions required by Capital One to approve accounts for the
purpose of enabling HDI to make its promotions to a more selective
market, to more effectively take customer applications, and to
properly communicate with both Capital One and customers. This may
include such items as credit history (required positive or
prohibited negative credit bureau line items), required down
payment, APR, and account fees.
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6. Profit Sharing for Unbanked Consumers. HDI credit sales using HDI
Accounts by Unbanked Consumers shall result in profit sharing by the
parties on the following schedule and in recognition of Capital One
taking on potentially higher credit losses:
(a) During the 1st 12 months for each HDI Account, (i) HDI
will pay Capital One $2.00 per month for each Active Account.
(b) During the 2nd 12 months for each HDI Account:
(i) Capital One will pay HDI 4% of the average annual
receivable balance for each HDI Account excluding
Delinquent Accounts.
(ii) HDI will pay Capital One:
1. $1.50 per month for each Active Account.
2. 4% of net HDI sales on the HDI Account (net of
returns, cancellations, shipping, handling, tax and
royalties or revenue splits paid to 3rd parties).
(c) During the 3rd 12 months for each HDI Account, and
thereafter for all extensions of the Term:
(i) Capital One will pay HDI 4% of the average annual
receivable balance for each HDI Account excluding
Delinquent Accounts;
(ii) HDI will pay Capital One:
1. $1.00 per month for each Active Account;
2. 4% of net HDI sales on the HDI Account (net of
returns, cancellations, shipping, handling, tax and
royalties or revenue splits paid to 3rd parties).
(d) During the Term, HDI will pay Capital One a Risk offset
fee of $10 per Account originated under the Program in
recognition of the higher credit loss ratios experienced under
the Program.
Payments will generally be made on a quarterly basis consistent with
Section III.X.
X. INTELLECTUAL PROPERTY AND CONTENT OWNERSHIP AND LICENSE
1. Grant of License. Subject to the terms and conditions of this
Agreement, during the term of this Agreement, each of the parties,
to the extent that it has any such rights which may be sublicensed,
shall grant to the other party and does hereby grant to the other
party, a non-exclusive royalty-free sublicense to use, copy,
reproduce, distribute, transmit and publicly display, in the United
States of America and in all territories in which HDI's chosen Media
Channels are exposed, to the extent to which such party has the
right to grant such a license, the Marks which are customarily and
usually required to be in Promotion Copy (defined below in Section
II.E.) (as narrowly defined for the purposes of this Agreement,
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"Intellectual Property") with respect to such party, and to
sub-license their Intellectual Property, to existing wholly-owned
subsidiaries of such other party or to existing joint ventures in
which such party holds an ownership interest for the sole purpose of
using, reproducing, distributing, transmitting and publicly
displaying the licensor party's Intellectual Property but only for
the purposes described in and in accordance with this Agreement. A
sublicense granted to a party in the manner described herein is
personal to the sublicensee and shall not, without the written
consent of the licensor, be assigned, mortgaged, sublicensed or
otherwise encumbered by the sublicensee or by operation of law.
2. Card Design. Capital One in consultation with HDI, shall develop
HDI plastic card designs prominently featuring the HDI Marks.
Capital One and HDI shall have the right to approve any design in
their sole discretion to be issued to HDI Accounts. The designs
shall conform to MasterCard and Visa rules for affinity cards. Any
subsequent changes thereto by Capital One or HDI shall be subject to
the prior written approval of the other party. Subject to Section
7.1 and HDI rights to its own Marks, Capital One shall own all
rights, title, and interest in such HDI Card designs, provided,
however, that each party hereby disclaims any rights in any Xxxx of
the other party. Neither Capital One nor HDI may use, license or
transfer such card designs to any Person for any purpose without the
prior written consent of the other party.
3. Retention of Rights. Except as licensed or sub-licensed herein,
each of Capital One and HDI shall retain all right, title and
interest in and to their Intellectual Property and such shall remain
the exclusive property of such party or shall be properly licensed
to such party or an affiliate of such party.
4. Indemnification. Each party agrees to defend, indemnify, and hold
harmless the other against any claims or actions alleging that the
indemnifying party's Intellectual Property infringes any U.S. patent
or copyright or any third party trademark right and to pay costs and
damages to the other finally awarded in any such suit, provided that
the indemnifying party is notified promptly in writing of the suit
and, at the indemnifying party's request and expense, is given
control of the suit and all requested reasonable assistance for the
defense of the suit. The foregoing obligation shall not apply with
respect to any Intellectual Property (i) modified by any party other
than the indemnifying party where the alleged infringement relates
to such modification or (ii) combined with other products where the
alleged infringement relates to such combination.
5. Worldwide Exposure. As between HDI and Capital One, (a) HDI will
retain all right, title and interest in and to its Intellectual
Property worldwide, subject to the limited license granted to
Capital One hereunder, and (b) Capital One will retain all right,
title and interest in and to its Intellectual Property worldwide,
subject to the limited license granted to HDI hereunder.
6. Uses. All uses of the other party's Intellectual Property
hereunder shall be in accordance with each party's reasonable
policies regarding advertising and trademark usage as established
from time to time. Except as provided herein, neither party will
make any filing or other application for registration or recognition
by any governmental authority in any jurisdiction worldwide as to
any Xxxx of the other party.
7. Post-Term Use of Intellectual Property. Upon the expiration or
termination of this Agreement, each party will cease using the
Intellectual
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Property of the other except: (i) as the parties may agree in
writing; (ii) to the extent permitted by applicable law, or (iii) to
the extent permitted by the terms of this Agreement for the purposes
of wind-down operations.
E. RIGHT OF REVIEW AND APPROVAL OVER PROMOTION COPY
1. Review and Approval. Each of the parties and its legal counsel
shall have the right of prior approval over any use of its
Intellectual Property, including any use in connection with
marketing, promotion and advertising, which approval will not be
unreasonably withheld. Each party shall submit materials to the
other party via the Liaison for approval with enough lead time for
such party and its counsel to have at least one week to review. It
shall be the responsibility of each of Capital One and HDI to review
and comment upon or approve advertising and promotion copy submitted
to such party by the other party, in a timely manner, as follows:
(a) Each party's Liaison shall cause all drafts of all
prepared materials promoting or advertising the Program
containing promotion copy or use of Intellectual Property of
the other party, as well as notification of all modifications
(collectively "Promotion Copy"), to be delivered to the other
party's Liaison for review, comment, and approval or
disapproval by the appropriate person at least five (5)
business days in advance of a comment deadline imposed by or
upon such party's Liaison and also,
(1) in the case of HDI, with an additional copy to
Attention: Xxxx Xxxxx, Esq., Assistant General
Counsel, Hanover Direct, Inc., 0000 Xxxxxx
Xxxxxxxxx, Xxxxxxxxx, XX 00000, Telecopier
000-000-0000.
(2) in the case of Capital One, with an additional
copy to Attention: Xxxx Xxxxxxxx, Capital One
Services, Inc., 00000 Xxxx Xxxxx Xxxxxx, Xxxx
Xxxxx, XX 00000, Telecopier 000-000-0000.
(b) Capital One and its Liaison assume no responsibility or
liability for errors regarding HDI and its Promotion Copy
after it has been approved by HDI; provided, however, that
Capital One assumes liability for errors regarding HDI and its
Catalogs and the Program made by Capital One or its agents,
and shall indemnify HDI pursuant to Section III.I. below.
(c) HDI and its Liaison assume no responsibility or liability
for errors regarding Capital One and its Promotion Copy after
it has been approved by Capital One; provided, however, that
HDI assumes liability for errors regarding Capital One and the
Program made by HDI or its agents, and shall indemnify Capital
One pursuant to Section IV. H below.
(d) Neither party may amend, modify, or alter another party's
Promotion Copy in a material manner except with the explicit
written approval of the other party. "Material" shall include
Promotion Copy making implied or express claims and any Marks
or text associated with Marks.
2. Any breach of the terms of this Section II.E may cause
irreparable harm to a party.
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(a) in the event of any threatened breach, the party placed in
jeopardy shall be entitled to injunctive relief in addition to
any other available remedy; and
(b) any failure of a party and its Liaison to adhere to the
standards in this Section II.E which constitutes a material
breach of this Agreement shall be subject to Section IV.C.
below regarding "Termination."
F. USAGE REPORTS AND USER DATA
1. Each party will provide to the other party via email or other
agreed upon means such usage reports containing such
information as the Liaisons shall mutually agree is necessary
and desirable, including but not limited to information with
regard to open accounts for all HDI Customer Data, and
accounts in process of screening, Delinquent Accounts,
transaction data summaries, and open outstanding balances
(collectively as further defined, "User Data" and "Usage
Reports"). Each Usage Report will cover a calendar month and
will be delivered within fifteen (15) days following the end
of the applicable month. The parties may, by mutual written
agreement, alter the content of the Usage Reports.
2. EACH PARTY WILL USE REASONABLE EFFORTS TO ENSURE THE ACCURACY
OF THE USAGE REPORTS BUT NEITHER PARTY WARRANTS THAT THE USAGE
REPORTS WILL CONFORM TO ANY SPECIFICATIONS AT ANY GIVEN TIME.
NEITHER PARTY WILL BE HELD LIABLE FOR ANY CLAIMS AS THEY
RELATE TO SUCH USAGE REPORTS, EXCEPT TO THE EXTENT THAT SUCH
USAGE REPORTS SERVE AS THE BASIS FOR PAYMENTS UNDER THIS
AGREEMENT.
3. All information required to be reported by Capital One shall
be subject in all instances to compliance by Capital One, in
Capital One and its legal counsel's reasonable judgment, with
the requirements of Applicable Law. User Data shall be deemed
proprietary and confidential and subject to the
confidentiality provisions of this Agreement set forth in
Section IV.L. below.
4. Both parties acknowledge that any individual user of a Media
Channel such as the Internet could be a customer of Capital
One and/or HDI through activities unrelated to this Agreement.
Except as set forth in Section II.F(6)) below, both parties
further acknowledge that any User Data gathered independent of
this Agreement, even for credit card users that utilize both
parties' services, shall not be covered by this Agreement. The
parties also acknowledge that any information collected by
Capital One in media channels on which Capital One's name
and/or brands do not appear shall not be covered by this
Agreement.
5. Subject to the restrictions in this Section, the User Data
shall be deemed to be the joint property of the parties and
both parties shall retain all rights to any User Data obtained
through this Agreement. However, HDI agrees that it will not
use the User Data or transaction data to specifically target
or solicit Capital One credit card users as a subset of HDl's
Program credit card users (except as specifically provided
herein) either individually or in the aggregate during the
term of this Agreement.
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6. User Data Opt Out. Each party agrees that it will not sell,
disclose, transfer, or rent the User Data of any HDI Account
holder to any third party, nor will either party use said User
Data on behalf of any third party, without the consent (either
negative or affirmative as the case may be) by the Account
holder to such sales, disclosures, transfers or rentals. In
such cases where Account holder permission for dissemination
of User Data has been obtained, HDI or Capital One, as the
case may be, shall use all reasonable efforts to include and
enforce within such dissemination contracts or agreements
(e.g., list rental agreements) a requirement for the inclusion
of an unsubscribe feature in all direct mail and email
communications generated by, or on behalf of, third party
users of said User Data.
7. Privacy Policy. Each of Capital One and HDI shall cooperate
fully in the accurate depiction of the "Privacy Policy" and
"Opt Out" language to be posted on HDI Sites in order to
clearly and conspicuously inform customers and visitors to the
site about the uses that will be made of customer information.
Capital One does hereby agree to promptly comply with any
reasonable requests received to remove card applicants or card
users from any further contact or use of User Data by Capital
One itself or by any third parties to whom Capital One may
disclose User Data to the extent permitted hereunder if at
all.
8. Marketing Reports. Upon request, Capital One shall provide a
reasonable number of marketing reports to HDI in a format and
frequency requested by HDI and containing particular aggregate
data requested by HDI to enable HDI to understand the general
nature of HDI Accounts, including but not limited to the
evaluation of the general nature of Capital One's HDI Accounts
and the potential of particular promotions or success of past
promotions ("Marketing Reports"), and Capital One shall make
good faith efforts to cooperate with HDI for such reasonable
requests. Such Marketing Reports shall be deemed proprietary
to both of HDI and Capital One except that they shall not be
required to be returned after the Term of this Agreement as
Confidential Information defined in the attached
Confidentiality Agreement.
III. ISSUANCE AND MANAGEMENT OF ACCOUNTS.
A. Issuance of Accounts. Capital One shall be the sole and exclusive
issuer and creditor of HDI Accounts, HDI Cards and other Accounts
issued bearing the Marks of HDI. Nothing herein shall prevent or be
deemed to prevent HDI or its Affiliates from accepting as a means of
payment Accounts of other issuers. HDI Cards shall be secured or
unsecured Platinum, Gold or Classic Accounts as Capital One, in its
sole discretion, may determine based on credit quality. In general,
HDI Accounts shall use the dual-line Product. To the extent
permitted by Applicable Law, Capital One shall issue new plastic
cards to account holders in the Existing Portfolio, including
accounts that have been inactive for up to two years. Capital One
shall be solely responsible, at its expense, for the administration,
credit approval, pricing, billing, collecting, account management
and other servicing of HDI Accounts, including preparing and
distributing HDI Account agreements, customer disclosures, billing
statements, collection letters, and customer service materials.
Capital One, in its sole discretion, may have its standard vendors,
perform any or all of these functions; provided however, whether
such functions are performed by Capital One or third parties, the
functions shall be performed with the same degree of care as Capital
One customarily exercises with all Accounts of Capital One, and
further provided that
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the provisions of the Confidentiality Agreement incorporated herein
and made a part hereof shall apply to such third parties.
B. Solicitations for HDI Sales and Accounts. At any time during the
Term, the parties shall jointly work together with respect to the
creation and implementation of Solicitations for HDI sales and HDI
Accounts.
1. Creation of Solicitation Package. HDI shall be responsible for
the creative design and content of the marketing
communications to potential customers of HDI products and
services, including broadcast marketing, publications, other
advertising, catalogs, telemarketing and other direct mail
pieces. The parties shall work together jointly on the
creation and design of credit card marketing materials in
respect of Solicitations for HDI Accounts; provided, however,
that Capital One shall be responsible for the content of
marketing communications related to the offer of credit to be
made under the HDI Xxxx by Capital One, including content for
the preparation of appropriate customer disclosures to be made
in connection with such credit offer. HDI Liaisons shall work
with operational personnel of Capital One to ensure that
application creation and production and other Solicitation
processes, including online decisioning methodologies which
may be established from time to time and set forth in
subsection (3) below, are properly functioning. Each of HDI
and Capital One shall provide an initial Solicitation package
to the other for review based on the respective timeframes
established by the Liaisions to this Agreement prior to the
anticipated date of such Solicitation. Each of HDI and Capital
One agrees to respond to such initial Solicitation package
within the timeframes established. In any Solicitation, COB
shall provide the credit-related disclosures that it, in its
sole discretion, deems necessary for purposes of compliance
with Applicable Law, which disclosures shall be included, in
their entirety in the Solicitation package. The parties shall
continue to work together to ensure that each is mutually
satisfied with the content and form of all marketing
communications presented to potential customers; provided,
however, that Capital One shall have final approval over all
materials related to the offer of credit to be made by Capital
One to potential customers as described above.
2. HDI Customer List. In the event of any direct mail
Solicitation by Capital One which includes an offer of credit
on a "pre-approved" basis, HDI shall provide to Capital One,
or a third party designated by Capital One and reasonably
acceptable to HDI, a HDI Customer List no later than sixteen
weeks prior to such Solicitation. Capital One or such third
party shall return to HDI one or more of such lists. HDI
Customer Lists may be compiled by HDI, at its discretion and
at its own expense, from its own customer records, lists
provided by third-parties or otherwise. Nothing herein above
shall be deemed to prohibit Capital One from using other HDI
lists, in its sole discretion and expense only for credit
purposes.
3. Solicitations and On-Line Decisioning. (i) In the event that
the parties engage in a Solicitation which involves an offer
of credit anticipating application of "on-line decisioning"
(pursuant to which a HDI Customer service representative
obtains a credit decision while a HDI customer waits on the
telephone), and provided that the Capital One Liaison has
approved, the product launch date for on-line decisioning ,
Capital One
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shall be generally prepared to process and approve or
disapprove the applications generated by such Solicitations
online at the time of telephone application. During the Set-up
Period, the parties shall work together as may be mutually
agreeable to build the necessary infrastructure to support the
application of on-line decisioning by Capital One of HDI
customer applications for HDI Accounts. Each party shall bear
the cost of establishing the infrastructure within each
party's operational and system architectures.
4. Mailing of Mail Channel Solicitation Packages; Expenses. Upon
final approval, by HDI and Capital One of the Solicitation
package to be mailed to existing or potential HDI Account
customers, the applicable party shall undertake the
Solicitation in a timely manner as the parties may mutually
agree and as may be required by Applicable Law, including the
Fair Credit Reporting Act. Each of HDI and Capital One shall
provide to the other at the time of such approval projected
mailing dates and volumes, and at the time of mailing the
actual dates and volumes. Each party shall be responsible for
marketing costs as set forth above. Capital One shall be
responsible for costs associated with the processing of
applications including telephone responses (and all such calls
shall generally be directed to COSI's facilities).
5. Alternative Vehicles. In addition to Solicitation vehicles
described above, HDI and Capital One may use telemarketing or
similar means to acquire HDI Accounts; and the parties shall
coordinate their efforts so that outbound Solicitations for
HDI Accounts are made to customers on a mutually agreeable
basis. In the event of Solicitations by telemarketing by HDI,
HDI shall obtain Capital One's prior written approval of the
offer of credit and the portion of the telescripts pertaining
thereto. Telemarketing operations whether performed by HDI
third party vendors or otherwise shall meet the service
standards generally adhered to by HDI or as reasonably
requested by Capital One consistent with Applicable Law. In
all such oral communications, HDI and its employees and any
third party vendor shall clearly disclose that Capital One
solely is the issuer of the HDI Card. Based on its prior
review of relevant telemarketing scripts, Capital One shall
ensure that telemarketing scripts for offers of credit comply
with Visa or MasterCard regulations, including any
registration requirements and HDI shall ensure that offers of
credit are made in accordance with such telemarketing scripts.
If applicable, HDI shall be responsible for registering, at
its cost, as necessary, as an "independent service
organization" as required by Visa or MasterCard, respectively.
6. Limited Audit Rights.
(i) Subject to reasonable security requirements of
Capital One, Capital One shall grant HDI and its designated
representatives, at HDI's expense, reasonable access upon
advance notice during business hours to the premises and books
and records of Capital One relating to the HDI Accounts and
other activities undertaken by Capital One hereunder for the
purpose of auditing the financial results of such HDI Accounts
and compliance by Capital One with this Agreement, subject to
the confidentiality provisions of Section __ hereof. Any such
activity by
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HDI shall be conducted in such a manner as not to unreasonably
interfere with Capital One's normal business activities.
(ii) Subject to reasonable security requirements of HDI,
HDI shall grant Capital One and its designated representatives
and COB's primary regulatory agencies, at Capital One's
expense, reasonable access upon advance notice during business
hours to the premises and books and records of HDI relating to
the HDI Accounts and telemarketing and other Solicitation
activities being undertaken by HDI hereunder, for the purpose
of determining compliance by HDI with this Agreement, subject
to the confidentiality provisions of Section IV.L. hereof. Any
such activity by Capital One shall be conducted in such a
manner as not to unreasonably interfere with HDI's normal
business activities.
C. Credit Approval by Capital One. Capital One shall evaluate all
applications for HDI Accounts and shall approve such individual
applicants and establish such credit lines as it deems appropriate
in its sole discretion, subject to Applicable Law.
1. Decisioning. Prior to the launch of solicitations for HDI
Accounts and in addition to arrangements with respect to
on-line decisioning, the parties on a commercially reasonable
basis shall work jointly to ensure that mail and telephonic
linkages necessary to permit decisions to be made with respect
to prospective customers that seek a HDI Account are in place
and working properly. To the extent that HDI customer service
representatives are expected to take applications by
telephone, they shall ask for pre-determined information from
prospective customers and shall provide such information to
Capital One personnel. During the Set-up Period, Capital One
shall provide a list of information that HDI customer service
representatives shall request from prospective HDI Account
customers. From time to time during the Term, Capital One may
add or delete items from this list, in its discretion. In
addition, during the Set-up Period, the parties shall agree
upon the script and similar materials used by HDI customer
service representatives with respect to telephonic
applications for credit by prospective HDI customers. Such
scripts and customer service representatives shall generally
present themselves as representatives of HDI in communications
with existing and potential customers, consistent with
Applicable Law.
2. Responses. Within processing times to be established by the
parties during the Set-up Period, Capital One shall provide to
HDI's customer service representative a response to such
customer's application, including whether the application has
been approved or requires further review by Capital One
personnel and, if approved, the terms of such offer. Capital
One shall also provide to the HDI customer service
representative information regarding the amount of credit
available to such customer under the HDI Line of Credit.
Capital One shall be responsible, at its sole expense, for the
communication of any denial to a prospective customer by mail
or phone. Capital One, at its expense, shall be responsible
for all application processing, including credit bureau report
fees.
3. Credit Criteria. Capital One shall employ credit criteria and
offer credit lines to prospective HDI Accounts for HDI
Accounts as it may determine, in its sole discretion,
consistent with the Credit Card Procedures and safe
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and sound banking practices. Except as set forth herein, under
no circumstances, shall Capital One be required to disclose
information to HDI regarding individual customer credit data,
regarding credit policies or any other Confidential
Information of Capital One or any Affiliates thereof,
including delinquency, charge-off or any other data.
4. Response Time. Capital One shall meet response time standards
for decision processes for purposes of inquiries from
applicants concerning the approval or denial of their HDI
Account applications and increased credit line requests
consistent with the treatment of its own Accounts, the Credit
Card Procedures and Applicable Law.
5. Welcome Packages. Capital One shall be responsible, at its own
expense, for additional processing, including the creation and
mailing of letters to prospective customers approving or
denying an application, the mailing of a standard welcome kit
to approved customers and related actions.
D. HDI Account Management.
1. Management. Except as may otherwise be set forth herein,
Capital One shall perform all standard Account management and
operational functions related to the HDI Accounts originated
hereunder, in its sole discretion, and at its own expense,
including correspondence, statement rendering, and similar
communications with HDI Account customers of a type generally
set forth in the Credit Card Procedures, line increases,
payment processing and account repricing such Account
management shall cover both Active and Inactive Accounts,
including Accounts acquired in the purchase of the Existing
Portfolio.
2. Pricing. Capital One shall have the right to change the
pricing applicable to the HDI Accounts as set forth herein.
COB will provide 30 days advance notice to HDI of a full file
change to HDI Accounts, provided that COB shall not charge new
fees (fees not currently charged by Capital One to its
customers) without the prior consent of HDI, such consent not
to be unreasonably withheld. Such changes shall not affect
pricing between the parties pursuant to this Agreement. Except
with the prior consent of HDI, the parties hereto agree that
no annual fee shall be imposed upon HDI Accounts at any time
during the term of this Agreement except in limited
circumstances of Longstanding Delinquent Accounts.
3. Billing Statement Inserts. Subject to the reasonable agreement
between the Liaisons of each party, HDI shall have the right
to include inserts not to exceed more than 2 per quarter in
billing envelopes of HDI Accounts subject to Capital One
procedures and operational requirements. HDI shall be
responsible for the cost of preparing such inserts and Capital
One shall be responsible for the cost of stuffing and mailing
such inserts. If there shall be any unused stuffing or postage
capacity in any billing envelope, HDI shall be granted the
option to provide a statement insert for such mailing, for no
fee; provided, however, if there is an incremental verifiable
expense to Capital One for such participation by HDI (e.g.,
stuffing, postage), the payment thereof and exercise of such
option to participate in such mailing shall be in HDI's sole
discretion.
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E. Systems Upgrades. The parties agree to use commercially reasonable
efforts to invest in systems upgrades as may be necessary or reasonable to
ensure that their duties and the objectives set forth hereunder can
continue to be achieved during the Term. Each party agrees to give the
other party commercially reasonable notice of any system change or upgrade
that might require a system change or upgrade by the other party,
including those relating to time frames and quality assurance testing.
F. Compliance with Applicable Law. As the issuer and creditor and servicer
of the HDI Accounts, Capital One shall comply with Applicable Law in
respect of the HDI Cards and the HDI Accounts, including Applicable Law
pertaining to credit applications, finance charges, HDI Card transactions
and collections.
G. Status of HDI as Issuer
1. At no time will any party hereto represent to any Person that
HDI or any Affiliate thereof, or any entity other than Capital
One or a financial institution affiliate of COB, as the case
may be, is the Person extending credit to any holder of an HDI
Account; provided, however, that nothing shall limit HDI's
ability to promote multi-pay accounts or installment billing
programs to its customers.
2. Except as set forth in Section II.B.4 above (loss-sharing on
Purchased Accounts) HDI shall bear no credit risk or risk of
loss with respect to any HDI Account. HDI and its Affiliates
shall have no responsibility to Capital One or an Affiliate of
Capital One or to any Person for any chargebacks, claims or
defenses with respect to goods or services purchased, leased
or otherwise acquired through use of an HDI Card (except to
the extent that HDI is the merchant with respect to such goods
or services or as provided in Section III.I hereof).
3. Except as set forth herein, under no circumstances shall HDI
be required to disclose information to Capital One regarding
individual customer data not related to the provision of
credit, catalog mail strategies or policies or any other
Confidential Information of HDI.
H. Role of Each Party. Capital One will use reasonable efforts to respond
to inquiries from HDI Accounts relating to the HDI products and programs
working with HDI customer service representatives to resolve issues from a
credit perspective.
1. Inquiries regarding HDI Products and Services. Capital One
will refer inquiries concerning HDI products and services sold
by HDI to the Customer Service Department of HDI at telephone
numbers provided by HDI. HDI will use reasonable efforts to
address such inquiries in a timely and effective manner.
2. Inquiries re: Capital One Products and Services. HDI will
refer HDI Account holders' inquiries concerning HDI Accounts
to the Capital One's Customer Service Department at telephone
numbers provided by Capital One. Capital One will use
reasonable efforts to address any such inquiries in a timely
and effective manner consistent with the Credit Card
Procedures.
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3. Customer Service Support. Each of Capital One and HDI will
provide, at its own expense, one or more customer service
contacts who will be available during Capital One's or HDI's
respective normal business hours to assist the other party's
Customer Service Department in resolving all issues related to
the Program and disputes that may arise with customers.
I. Customer Disputes. HDI hereby agrees that the time limits and
procedures set forth in operating rules and restrictions of MasterCard and
Visa respecting billing disputes and charge back transactions shall not
apply to limit the rights of HDI Account holders or of Capital One, under
state or federal law, to respecting HDI products and services which are
disputed charges, billing errors, unauthorized charges, and charges for
which a customer can assert a "claim or defense" against HDI or other
similar right of such holder under federal or state law. HDI further
agrees that it shall cooperate fully with Capital One to resolve any such
issue as may arise from time to time.
The parties agree that they shall follow Visa/MasterCard rules regarding
interchange disputes, whether or not the Visa/MasterCard systems have been
used.
J. Statements and Payments. On or before the twentieth (20th) day after
the end of each calendar quarter during the Term, each party which is owed
fees hereunder ("Payee") shall deliver to the other party ("Payor") a
statement for the net fees due to Payee hereunder for the preceding
calendar quarter. Within five (5) days of receipt of such statement, the
receiving party shall confirm amounts owed by it and within three days
therefrom, Payor shall pay such invoice to Payee by wire transfer.
1. Statements sent to Capital One hereunder shall be delivered by
facsimile or overnight mail to Finance and Accounting Special
Projects Group;
2. Statements sent to HDI shall be delivered by facsimile or
overnight mail to the name and address set forth in Section
IV.G. and
3. All payments required to be made by wire transfer shall be
made by wire transfer pursuant to written instructions
provided by each party to the other at the Closing Date.
K. Daily Payments to HDI and By-pass of Card Payment Networks. On a daily
basis, HDI shall send to Capital One documentation confirming HDI Account
transactions involving the purchase of HDI products, as well as returned
item and dispute information, in the form and containing information as
the parties shall reasonably agree (which shall generally be the type of
information provided by HDI to its Visa or MasterCard merchant bank for
processing of non-Capital One Account charges). Such information shall be
processed by Capital One and, on the next Business Day following receipt
of such information, Capital One shall pay HDI by wire transfer the
aggregated amount, but net of credits made to HDI Accounts for returned
items. The Liaisons shall agree upon appropriate and reasonable procedures
for authorizing daily transactions.
L. Delinquent Accounts. Notwithstanding anything contained herein to the
contrary, Capital One shall be under no obligation to approve charges to a
HDI Account which would normally be denied approval pursuant to the Credit
Card Procedures, including Delinquent Accounts.
IV. GOVERNING PROVISIONS
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A. TERM
1. The term of this Agreement ("Term") will begin on the Effective
Date and will end on the close of business of the date thirty-six
(36) months from Effective Date ("Initial Term"), unless earlier
terminated pursuant to Section IV.C. below, and shall be
automatically renewed, except as provided below, at the end of such
period for additional consecutive one (1) year terms.
2. Notwithstanding the foregoing, the parties may notify each other
in writing, with no less than one hundred eighty (180) days notice,
of any desire not to automatically renew this Agreement for each
one-year additional term.
B. CLOSING OF SALE OF PURCHASED ACCOUNTS
1. Agreement of Purchase and Sale. On the terms and subject to the
conditions hereafter set forth, HDI shall use best efforts to cause
GECC to sell to HDI on or before the Closing Date in order that on
the Closing Date HDI shall be able to sell to Capital One and
Capital One shall be able to purchase from HDI all of HDI's right,
title and interest in and to the Purchased Accounts for an amount
equal to the par value of the outstanding receivables of all
accounts in the Existing Portfolio which are Purchased Accounts (the
"Purchase Price"). Unless otherwise expressly stated herein, Capital
One is not, and shall in no way be deemed to be, assuming any
liabilities, claims or other obligations of HDI or its Affiliates
with respect to the Purchased Accounts or otherwise, or in amounts
greater than the stated amounts assumed.
2. Closing. Subject to the satisfaction or waiver of Capital One's
Closing Conditions and HDI's Closing Conditions, and subject to all
other terms of this Agreement, the consummation of the purchase and
sale of the Purchased Accounts contemplated hereby (the "Closing")
shall take place at the offices of Capital One Bank, 00000 Xxxx
Xxxxx Xxxxxx, Xxxx Xxxxx, Xxxxxxxx or at such other time, place and
date, or by facsimile transmission as the parties shall agree in
writing (the "Closing Date").
3. Obligations of HDI at Closing. At or prior to Closing, HDI
shall:
(a) use best efforts (provided that nothing herein shall
obligate HDI to institute litigation in connection
therewith) to cause the Purchased Accounts to be legally
transferred to HDI by the Closing Date in order that HDI
shall be able to legally sell and transfer the Purchased
Accounts to Purchaser free and clear of any Encumbrance;
(b) use best efforts (provided that nothing herein shall
obligate HDI to institute litigation in connection
therewith) to cause to be delivered to Capital One a
magnetic tape containing the Existing Portfolio Account
Holder List and all Existing Portfolio Account
Information (the "Tape") and other data as reasonably
requested by Capital One;
(c) deliver to Capital One a certificate signed by an
officer of HDI certifying that: (i) the representations
and warranties of HDI
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contained in Section IV.I.3 are true and correct as of
the Closing Date; and (ii) all obligations and covenants
required by this Agreement to be performed or complied
with by HDI on or prior to the Closing have been duly
performed or complied with; and
(d) use best efforts (provided that nothing herein shall
obligate HDI to institute litigation in connection
therewith) to support the transfer of the Purchased
Accounts to Capital One and to cause GECC to support the
transfer of the Purchased Accounts to Capital One,
including, without limitation, providing adequate
personnel on a timely basis to enable Capital One to
proceed in a timely manner, and to provide transferred
data in a timely manner as may be reasonably requested
by Capital One. As between Capital One and HDI, HDI
shall be responsible for its own and GECC's costs of
conversion and Capital One shall not be responsible for
GECC's costs of conversion.
4. Obligations of Purchaser at Closing. At Closing Capital One
shall:
(a) pay to HDI the Purchase Price by wire transfer pursuant
to written instructions provided by HDI upon or prior to
the Closing; and
(b) deliver to HDI a certificate signed by an officer of
Capital One certifying that: (i) the representations and
warranties of Capital One contained in Section IV.I.1&2
are true and correct as of the Closing Date; and (ii)
all obligations and covenants required by this Agreement
to be performed or complied with by Capital One on or
prior to the Closing have been duly performed or
complied with.
5. Capital One's Conditions to Closing. Capital One's obligation
to purchase the Purchased Accounts shall be subject to the
satisfaction by HDI or waiver by Capital One of the following
conditions precedent ("Capital One's Closing Conditions"):
(a) Representations and Warranties. All of the
representations and warranties of HDI contained in this
Agreement shall be true, correct and complete as of the
Closing Date; all of the terms, covenants, agreements
and conditions of this Agreement to be complied with,
performed or satisfied by HDI on or before the Closing
Date shall have been duly complied with, performed or
satisfied; and Capital One shall have received a
certificate dated the Closing Date and signed by an
officer of HDI to the foregoing effect.
(b) No Litigation. No action or proceeding before a court or
any other Competent Authority shall have been instituted
or threatened to restrain or prohibit the transactions
contemplated by this Agreement.
(c) Consents. All necessary consents and approvals of, and
filings with, any Competent Authority or third party
relating to the
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consummation by HDI of the transactions contemplated
hereby, if any, shall have been obtained and made.
(d) Obligations. Any and all actions required to be taken or
documents to be delivered by HDI shall have been taken
or delivered by HDI.
6. HDI's Conditions to Closing. HDI's obligation to sell the
Purchased Accounts shall be subject to the satisfaction by
Capital One or waiver by HDI of the following conditions
precedent ("HDI's Closing Conditions"):
(a) Representations and Warranties. All of the
representations and warranties of Capital One contained
in this Agreement shall be true, correct and complete as
of the Closing Date; all of the terms, covenants,
agreements and conditions of this Agreement to be
complied with, performed or satisfied by Capital One on
or before the Closing Date shall have been duly complied
with, performed or satisfied; and HDI shall have
received a certificate dated the Closing Date and signed
by an officer of Capital One to the foregoing effect.
(b) No Litigation. No action or proceeding before a court or
any other Competent Authority shall have been instituted
or threatened to restrain or prohibit the transactions
contemplated by this Agreement.
(c) Consents. All necessary consents and approvals of, and
filings with, any Competent Authority or third party,
including GECC, relating to the consummation by HDI of
the transactions contemplated hereby, if any, shall have
been obtained and made.
(d) Obligations. Any and all actions required to be taken or
documents required to be delivered by Capital One shall
have been taken or delivered.
7. Conversion Matters
HDI shall use best efforts (provided that nothing herein shall
obligate HDI to institute litigation in connection therewith)
to provide assistance with respect to the conversion of the
Existing Portfolio, including the following:
1. HDI will cause GECC to produce file layouts and sample
files of all conversion-related data within two weeks of
a signed contract.
2. HDI will also provide both systems and operational
support capable of defining HDI and GECC business and
operational practices.
3. HDI will provide support and assistance for data mapping
and will facilitate the conversion.
4. HDI will support a full test conversion process one full
month prior to the conversion, and provide data and
resources to ensure successful conversion.
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5. HDI will provide all necessary files at time of
conversion to ensure successful conversion.
6. HDI will provide operational resources to design
conversion process and timeline to ensure continuous
customer service.
7. HDI will facilitate communication between COB and GECC.
C. TERMINATION
1. Material Breach in Performance of Contractual Obligations. At any
time after 3 months following the Purchase Date:
(a) if either party shall materially breach any term of this
Agreement, or fail, neglect or refuse to perform any of its
material obligations hereunder including, but not limited to,
its responsibility and that of its subcontractors to maintain
service levels satisfactory to the other party
("Neglect/Failure Breach"), or
(b) if either party shall have committed any act or do
anything that will injure or is reasonably likely to injure
the success or prospects of the other party or its businesses
("Possible Injury Breach").
Then at any time after a party learns of any such act or
omission by the other party, such party shall have the right,
at its sole option and subject to the next succeeding
sentence, to terminate this Agreement by giving written notice
containing a detailed description of the Neglect/Failure
Breach or Possible Injury Breach to the other party.
In the event that either party shall be accused of a
Neglect/Failure Breach or a Possible Injury Breach, then
within (10) days of receipt of notice, the defaulting party
shall submit a written plan to the non-defaulting party,
containing the detailed steps it plans to take to cure such
breach, in which case the non-defaulting party shall have five
(5) days to approve of such plan of cure. If disapproved, the
non-defaulting party shall have the option to terminate this
Agreement immediately, effective 90 days after receipt of such
notice by the other party. If approved, the defaulting party
shall take all steps described in the plan to cure such
breach.
2. Insolvency or Dissolution of Any Performing Party. If any of
the following occurs,
(a) the commencement of any voluntary bankruptcy, insolvency,
reorganization, readjustment of debt, dissolution, liquidation
of debt or other insolvency proceeding in which the other
party, is debtor; or
(b) the suspension or termination of the other party's
business or dissolution thereof or the appointment of a
receiver, trustee or similar officer to take charge of a
substantial part of such entity's assets;
either party may terminate this Agreement immediately upon
written notice to the other party.
(c) Force Majeure. This Agreement may be terminated by HDI on
the one hand, or COB and COSI on the other hand, on or after
the ninetieth (90th) day following the giving of notice to the
other party that such notice-giving party's
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performance is prevented or delayed by a force majeure event
listed in Section III.P herein, if the inability to perform
has not been cured at the end of such ninety (90) day period.
3. Wind Down of Operations. At the date of expiration of this
Agreement or earlier termination, as the case may be,
(a) Fulfillment Obligations. All fulfillment obligations of
HDI and Capital One with respect to credit card transactions
processed until the earlier to occur of the date of
termination or date of termination advertised to cardholders,
as mutually agreed-upon, shall continue with regard to orders
received prior to and through the close of business on the
termination date, including all items on backorder, in
compliance with the Mail and Telephone Merchandise Order Rule;
(b) Reporting Obligations. All reporting obligations and fee
payment of the parties required herein, shall continue until
there is nothing more contained in such reports, and nothing
more to be paid on account of orders taken up to and including
the termination date, including all orders for which credit
card billing has not yet been processed due to backorder
situations for which shipment is delayed;
(c) Profit Sharing Arrangements. Profit sharing arrangements
will continue in effect for existing customers until both
parties agree to an alternative profit sharing arrangement;
(d) Final Accounting and Reconciliation. Any final accounting
and reconciliation shall be done in accordance with the
requirements of this Agreement, including the verification and
audit of records; and
4. Survival of Provisions. The provisions of this Section, Section
II.F. (Usage Reports and User Data), Section II.D. (Trademark
Ownership and License), Section IV.L. (Confidentiality), Section
IV.I.4. (Warranty), Section IV.J. (Indemnity), Section IV.H.
(Insurance), Section IV.K. (Limitation of Liability) and Section
IV.F. (Dispute Resolution) will survive any termination or
expiration of this Agreement.
D. EXCLUSIVITY
1. Except as provided herein and other than existing ventures or
business on the date hereof, during the term of this Agreement, both
parties agree to engage in no new ventures or businesses with third
parties in the Unbanked Market;
2. The exclusivity agreement contained in Section IV.D.1. above
shall remain in effect until the following event occurs:
(a) If Capital One should have an offer of an opportunity in
the Unbanked Market, it shall provide 90 days advance written
notice to HDI of the intended date of its binding agreement
(or similar) to pursue such opportunity, with such notice
containing sufficient detail to enable HDI to construe its
competitive effect upon HDI in its agreement with Capital One
to pursue the Unbanked Market hereunder; and
(b) HDI, in its sole discretion, shall have the right and
option to permit Capital One to proceed with such third party
opportunity upon
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terms and conditions acceptable to HDI hereunder and this
Agreement will be amended to permit such activity upon
mutually agreeable terms; provided, however, if HDI chooses
not to permit such activity or amendment of this Agreement, it
shall declare such third party activity to be directly
competitive and the parties hereto shall declare a termination
of the exclusivity agreement between them, enabling each of
HDI and Capital One to pursue new ventures or businesses in
the Unbanked Market.
E. CUSTOMER DATA AND CAPITAL ONE MARKETING TO HDI CUSTOMERS
1. Except as set forth in Section III.D.2 below with respect to
Unbanked Consumers who become Program card members, all HDI Customer
Data shall be deemed proprietary and confidential and subject to the
confidentiality provisions of this Agreement set forth in Section
IV.L. below and shall be and/or shall remain the property of HDI.
However, Capital One may use the information for internal purposes
to market financial services and other Capital One products using
HDI Customer Data provided that such products and services do not
directly compete with HDI products and services.
(a) "competitive products and services" shall be as defined on
Appendix 2 attached hereto and made a part hereof;
(b) All such HDI Customer Data shall not be disclosed by
Capital One on an individual customer level to any third party
for any purpose, by sale, rental, gift, or otherwise, without
HDI's prior written consent, nor used by Capital One itself
for any purpose other than for the purposes of carrying out
its obligations under this Agreement and except as provided
herein, except with respect to Capital One's standard industry
credit reporting practices which Capital One is required to
make in the ordinary course of its business. Any breach of the
terms of this section may cause irreparable harm to HDI and in
the event of any breach or threatened breach, HDI shall be
entitled to injunctive relief in addition to any other
available remedy.
2. Unbanked Consumers. For Unbanked Consumers approved by Capital
One for a Program credit card account, HDI and Capital One shall
both have unencumbered rights to the customer and may use, sell,
transfer, or exchange such customer names and data in the same
manner as for its non-credit card program customers, including but
not limited to its discount buying club members;
3. Capital One understands that HDI makes a privacy pledge to its
customers. Except with respect to Capital One's standard industry
credit reporting practices which Capital One is required to make in
the ordinary course of its business, Capital One shall not promote,
sell, or transfer the HDI Customer Data if HDI informs Capital One
that such customer has opted out of such promotion, sale, or
transfer; and
4. Capital One and HDI agree to be in full compliance with all such
laws and regulations applicable to each of the parties respectively,
which may be in effect from time to time.
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5. During the Term, Capital One and HDI agree to work together to
ensure that customers do not from time to time receive competing
offers for products or services at the same time.
F. DISPUTE RESOLUTION
1. Disputes Regarding Intellectual Property and/or Confidentiality.
The parties agree that any breach of either of the parties'
obligations regarding the Marks and/or confidentiality would result
in irreparable injury for which there is no adequate remedy at law.
Therefore, in the event of any breach or threatened breach of a
party's obligations regarding the Marks or confidentiality, the
aggrieved party will be entitled to seek equitable relief in
addition to its other available legal remedies in a court of
competent jurisdiction.
2. All Other Disputes. In the event of disputes between the parties
arising from or concerning in any manner the subject matter of this
Agreement, other than disputes arising from or concerning the Marks
and/or confidentiality,
(a) the parties will first attempt to resolve the dispute(s)
through good faith negotiation. In the event that the
dispute(s) cannot be resolved through good faith negotiation,
the parties will refer the dispute(s) to a mutually acceptable
mediator for hearing in a mutually agreed-upon neutral county.
(b) in the event such disputes cannot be resolved through good
faith negotiation and mediation, the parties will refer the
dispute(s) to the American Arbitration Association for
resolution through binding arbitration by a single arbitrator
pursuant to the American Arbitration Association's rules
applicable to commercial disputes. The arbitration will be
held in a mutually agreed-upon neutral county.
3. Customer Disputes. For customer disputes, HDI and Capital One
agree to use the standard dispute resolution procedures as outlined
in the Visa/MasterCard merchant agreements unless otherwise required
by Applicable Law.
G. GENERAL MANAGEMENT
1. Each of HDI and Capital One hereby agrees to appoint a general
manager or liaison of its own (each, a "Liaison") for the purposes
of managing, staffing, overseeing, and bearing responsibility for
the business operations of the Program on a day-to-day basis. The
Liaison shall be an employee of the respective party in the offices
of such party. Each of the parties has appointed its Liaison prior
to the execution of this Agreement. They are as follows:
For HDI:
Primary Liaison: Xxxxxxx Xxxxxxxx, Chief Marketing Officer
Alternate Liaison: Xxxxx Xxxxxx, Vice President Corporate Marketing
For Capital One:
Primary Liaison: Xxxxx Xxxxxx, Director, Partnership Finance
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Alternate Liaison: Xxxx Xxxxxxxx, Manager, Partnership Finance
2. Each Liaison shall have the authority to make or convey decisions
on behalf of the respective party and to be the liaison with the
other party for all production and content matters.
3. Each Liaison shall cause there to be kept complete and accurate
books and records of all Program transactions of such party with
respect to its activities.
4. Each party shall have the right to examine or appoint an
independent certified public accountant to examine and audit, at the
expense of such party, not more than once a year, during normal
business hours, all records and accounts as may contain information
bearing upon the Program transactions maintained by the other party.
If such audit uncovers a deficiency in accounting of greater than
ten percent (10%), then the audited party shall immediately
reimburse the auditing party for the costs of such audit, which it
has reasonably verified.
H. INSURANCE
1. Capital One. Capital One shall have and continue to keep in force
for the Term of this Agreement, (i) full general liability insurance
coverage with a broad form vendor endorsement, in amounts not less
than $1 million per occurrence and $2 million in the aggregate and
(ii) full advertising injury liability insurance coverage for errors
and omissions relating to advertising claims for the Program credit
cards with the same limits of coverage. This general liability and
errors and omissions insurance coverage will list HDI as an
additional named insured, and will provide that the coverage will
not be modified or terminated without at least 30 days prior written
notice to HDI. Within thirty (30) days of execution of this
Agreement, Capital One shall provide HDI with a certificate
evidencing such insurance coverage.
2. HDI. HDI shall have and continue to keep in force for the life of
this Agreement , (i) full product liability insurance coverage with
a broad form vendor endorsement, in amounts not less than $1 million
per occurrence and $2 million in the aggregate and (ii) full
advertising injury liability insurance coverage for errors and
omissions relating to advertising claims for the Program catalogs
with the same limits of coverage. This product liability insurance
coverage will list Capital One Services, Inc. ("COS") and Capital
One Bank ("COB"), jointly and severally, as an additional named
insured, and will provide that the coverage will not be modified or
terminated without at least 30 days prior written notice to Capital
One. Within thirty (30) days of execution of this Agreement, HDI
shall provide to Capital One a certificate evidencing such insurance
coverage.
I. REPRESENTATIONS AND WARRANTIES
1. By Capital One.
(a) COSI. COSI represents and warrants to HDI that: (i) it is
a corporation organized, validly existing and in good standing
under the laws of the State of Delaware; (ii) it has the full
right, power and authority to enter into, and to perform the
obligations contemplated in, this Agreement, and the person
signing on its behalf has the full right, power and authority
to enter into this Agreement on behalf of COSI; (iii) the
Agreement constitutes a legal, valid and binding obligation of
COSI,
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enforceable in accordance with its terms except as such
enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium and other laws relating to or
affecting creditors' rights generally and by general
principles of equity; and (iv) the execution of this Agreement
will not conflict in any way with any pre-existing agreements
of COSI with any other person or entity.
COSI represents and warrants further as follows:
(b) None of the execution and delivery of this Agreement, the
performance by COS of its obligations hereunder nor the
consummation of the transactions contemplated by this
Agreement will conflict with, or result in a breach of the
terms, conditions, or provisions of, or constitute a default
under, and no condition exists that with notice or the lapse
of time or both would constitute a violation or default under,
or result in the violation or acceleration of, COS's charter
or bylaws, or their equivalent, or any agreement, order,
award, judgment, decree, statute, law, rule, regulation or any
other instrument to which COS is a party or by which it or its
properties may be bound. COS is not subject to any agreement
with any regulatory authority which would prevent the
consummation by COS of the transactions contemplated by this
Agreement.
(c) Except for those consents, licenses, permits, approvals,
authorizations, notices, reports, registrations, filings or
declarations which have been obtained or made no consent of
any Person (including, without limitation, any stockholder or
creditor of COS) and no consent, license, permit or approval
or authorization or exemption by notice of or report to, or
registration, filing or declaration with, any Competent
Authority is required in connection with the execution or
delivery of this Agreement by COS, the validity of this
Agreement with respect to COS, the enforceability of this
Agreement against COS, consummation by COS of the transactions
contemplated hereby, or the performance by COS of its
obligations hereunder.
(d) There is no claim, action, suit, trial, demand,
arbitration, governmental investigation or other proceeding
(whether or not purportedly on behalf of COS or its
Affiliates) (an "Action") pending, threatened against or
involving COS or any of the Purchased Accounts, which: (i)
might adversely affect the Purchased Accounts or COS's ability
to consummate the transactions contemplated by this Agreement;
(ii) questions the validity of this Agreement or (iii) seeks
to prohibit, enjoin, recover damages or otherwise challenge
any of the transactions contemplated in this Agreement and, to
the best of COS's knowledge and information, no facts exist
which would provide a basis for an Action.
(2) COB represents and warrants as follows:
(a) COB. COB represents and warrants to HDI that: (i) it
is a banking corporation organized, validly existing and in
good standing under the laws of the Commonwealth of Virginia;
(ii) it has the full right, power and authority to enter into,
and to perform the obligations contemplated in, this
Agreement, and the person signing on its behalf has the full
right, power and authority to enter into this Agreement on
behalf of
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COB; (iii) the Agreement constitutes a legal, valid and
binding obligation of COB, enforceable in accordance with its
terms except as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium and other laws relating
to or affecting creditors' rights generally and by general
principles of equity; and (iv) the execution of this Agreement
will not conflict in any way with any pre-existing agreements
of COB with any other person or entity.
(b) None of the execution and delivery of this Agreement, the
performance by COB of its obligations hereunder nor the
consummation of the transactions contemplated by this
Agreement will conflict with, or result in a breach of the
terms, conditions, or provisions of, or constitute a default
under, and no condition exists that with notice or the lapse
of time or both would constitute a violation or default under,
or result in the violation or acceleration of, COB's charter
or bylaws, or their equivalent, or any agreement, order,
award, judgment, decree, statute, law, rule, regulation or any
other instrument to which COB is a party or by which it or its
properties may be bound. COB is not subject to any agreement
with any regulatory authority which would prevent the
consummation by COB of the transactions contemplated by this
Agreement.
(c) Except for those consents, licenses, permits, approvals,
authorizations, notices, reports, registrations, filings or
declarations which have been obtained or made, no consent of
any Person (including, without limitation, any stockholder or
creditor of COB) and no consent, license, permit or approval
or authorization or exemption by notice of or report to, or
registration, filing or declaration with, any Competent
Authority is required in connection with the execution or
delivery of this Agreement by COB, the validity of this
Agreement with respect to COB, the enforceability of this
Agreement against COB, consummation by COB of the transactions
contemplated hereby, or the performance by COB of its
obligations hereunder.
(d) There is no Action pending, threatened against or
involving COB or any of the Purchased Accounts, which: (i)
might adversely affect the Purchased Accounts or COB's ability
to consummate the transactions contemplated by this Agreement;
(ii) questions the validity of this Agreement or (iii) seeks
to prohibit, enjoin, recover damages or otherwise challenge
any of the transactions contemplated in this Agreement and, to
the best of COB's knowledge and information, no facts exist
which would provide a basis for an Action.
3. By HDI.
(a) HDI represents and warrants to Capital One that: (i) it
is a corporation organized, validly existing and in good
standing under the laws of the State of Delaware; (ii)
it has the full right, power and authority to enter
into, and to perform the obligations contemplated in,
this Agreement, and the person signing on its behalf has
the full right, power and authority to enter into this
Agreement on behalf of HDI; (iii) the Agreement
constitutes a legal, valid and binding obligation of
HDI, enforceable in accordance with its terms except as
such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium and other laws
relating to or affecting
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creditors' rights generally and by general principles of
equity; and (iv) the execution of this Agreement will
not conflict in any way with any pre-existing agreements
or understandings of HDI with any other person or
entity, including GECC.
(b) It has received any consents, approvals or other
agreements of GECC necessary to perform the conversion
of the Existing Portfolio to Capital One.
(c) None of the execution and delivery of this Agreement,
the performance by HDI of its obligations hereunder nor
the consummation of the transactions contemplated by
this Agreement will conflict with, or result in a breach
of the terms, conditions, or provisions of, or
constitute a default under, and no condition exists that
with notice or the lapse of time or both would
constitute a violation or default under, or result in
the violation or acceleration of, HDI's charter or
bylaws, or their equivalent, or any agreement, order,
award, judgment, decree, statute, law, rule, regulation
or any other instrument to which HDI is a party or by
which it or its properties may be bound. HDI is not
subject to any agreement with any regulatory authority
which would prevent the consummation by HDI of the
transactions contemplated by this Agreement.
(d) Except for those consents, licenses, permits, approvals,
authorizations, notices, reports, registrations, filings
or declarations which have been obtained or made, no
consent of any Person (including, without limitation,
any stockholder or creditor of HDI) and no consent,
license, permit or approval or authorization or
exemption by notice of or report to, or registration,
filing or declaration with, any Competent Authority is
required in connection with the execution or delivery of
this Agreement by HDI, the validity of this Agreement
with respect to HDI, the enforceability of this
Agreement against HDI, consummation by HDI of the
transactions contemplated hereby, or the performance by
HDI of its obligations hereunder.
(e) There is no Action pending, threatened against or
involving HDI or any of the Purchased Accounts, which:
(i) might adversely affect the Purchased Accounts or
HDI's ability to consummate the transactions
contemplated by this Agreement; (ii) questions the
validity of this Agreement or (iii) seeks to prohibit,
enjoin, recover damages or otherwise challenge any of
the transactions contemplated in this Agreement and, to
the best of HDI's knowledge and information, no facts
exist which would provide a basis for an Action.
(f) Purchased Accounts
(i) All of the Purchased Accounts were validly and
lawfully established, and remain currently open
and eligible for charging.
(ii) Except as set forth on Schedule 3 hereto, neither
HDI nor any predecessor of HDI has charged off any
loan or portion thereof with respect to any
Purchased Account.
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(iii) To the knowledge of HDI, none of the Purchased
Accounts: (1) has a non-U.S. address; (2) has a
returned mail (RM) status; (3) has a deceased
account holder status; (4) is a fraudulent
account, (5) is a re-aged or re-affirmed account;
(6) is a bankrupt account, (7) is securitized or
has otherwise been sold by HDI; (8) is a co-brand
or affinity account or contains any brand name
other than that of Seller; or (9) is currently the
subject of any litigation or other Action.
(g) Immediately prior to and at the Closing, HDI will hold
good and unencumbered title to, and will be the sole owner of,
the Purchased Accounts and at Closing shall transfer to
Capital One good and valid title to the Purchased Accounts
free and clear of all Encumbrances. Immediately prior to and
at the Closing, each Existing Portfolio Account Contract will
be freely assignable by HDI, and the assignment of such
Existing Portfolio Account Contract shall not require the
approval of the account holder or any other third party.
(h) Validity of Accounts.
(i) HDI has no actual knowledge pursuant to information
provided by GECC, which would lead it to believe that
any Existing Portfolio Account Contract is not the
legal, valid and binding obligation of the account
holder enforceable against such account holder in
accordance with its terms under the applicable laws of
the state of Delaware (except as such enforcement may be
limited by bankruptcy, insolvency, reorganization,
moratorium and other laws relating to or affecting
creditors' rights generally and by general principles of
equity) and, upon consummation of the transactions
contemplated hereby, Capital One shall possess the
rights and obligations of lender to the Purchased
Accounts held by HDI immediately prior to Closing.
(ii) HDI has no actual knowledge pursuant to information
provided by GECC, which would lead it to believe that
either HDI or any account holder of a Purchased Account
has breached, closed, canceled or otherwise terminated
any Existing Portfolio Account Contract, and each
Existing Portfolio Account Contract has been and remains
in full force and effect. Except for the receipt by HDI
of a waiver delivered by GECC, HDI has not received
notice of any account holder's intention to cancel an
Existing Portfolio Account Contract.
(iii) HDI has no actual knowledge pursuant to
information provided by GECC, which would lead it to
believe that either HDI or any account holder is in
violation of, or in default under, and no condition
exists that with notice or lapse of time or both would
constitute a violation or default under, any Existing
Portfolio Account Contract.
(iv) HDI has no actual knowledge pursuant to information
provided by GECC, which would lead it to believe
otherwise than that (1) no proceeding has been
instituted by or against any account holder of a
Purchased Account seeking to adjudicate
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such account holder a bankrupt or insolvent; (2) no
receiver or trustee has been appointed for an account
holder of a Purchased Account and (3) no account holder
of a Purchased Account has made an assignment for the
benefit of its creditors, or is generally unable to pay
its debts as they become due.
(i) The solicitation, origination and administration by HDI of
the Purchased Accounts has been in compliance with all
Applicable Laws.
(j) HDI has filed all Tax Returns required to be filed on or
before the date hereof, if any, with respect to the Purchased
Accounts within the time prescribed by law (including
extensions of time approved by the appropriate taxing
authority). The Tax Returns so filed are complete and accurate
representations of the Tax liabilities of HDI in all material
respects and such Tax Returns accurately set forth or will
accurately set forth in all material respects all items to the
extent required to be reflected or included in such Tax
Returns.
(k) The Existing Portfolio Account Information and all
information generated or provided by HDI to Capital One in
connection with Capital One's due diligence or otherwise is
now, and was at the time such information was provided, true,
complete and accurate in all material respects.
4. DISCLAIMER OF WARRANTY EXCEPT AS SPECIFIED IN THIS AGREEMENT,
NEITHER PARTY MAKES ANY WARRANTY IN CONNECTION WITH THE SUBJECT
MATTER OF THIS AGREEMENT AND HEREBY DISCLAIMS ANY AND ALL IMPLIED
AND EXPRESS WARRANTIES, INCLUDING ALL IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, ACCURACY, AND
RELIABILITY REGARDING SUCH SUBJECT MATTER.
J. INDEMNIFICATION
1. Indemnification by Capital One. Capital One shall defend,
indemnify and hold harmless HDI, its subsidiaries and affiliated
companies and their respective officers, directors, shareholders,
partners, employees, licensees, agents, successors and assignees
from and against any and all liabilities, losses and expenses
whatsoever, including without limitation claims, damages, judgments,
awards, settlements, investigations, costs and expenses (including
without limitation reasonable attorneys fees and disbursements)
("Claims") which any of them may incur or become obligated to pay
arising out of or resulting from: (i) advertising and promotion of
the Capital One credit card, except to the extent that such
advertising was expressly approved upon review by HDI or its legal
counsel; (ii) Capital One services provided pursuant to this
Agreement; (iii) any Claim that Capital One infringes or violates
any third party's copyright, patent, trade secret, trademark, right
of publicity or right of privacy or contains any defamatory content;
(iv) any breach by Capital One of any of its representations,
warranties, covenants or obligations under this Agreement; (v) the
acts or omissions of its employees, subcontractors, and agents in
the performance of their obligations in connection with this
Agreement; or (vi) any errors caused by Capital One's transaction
data systems, including but not limited to errors in the amounts of
money to be collected for merchandise, insurance, or delivery
charges, and
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errors regarding the correct calculation, collection, and refund of
payments by customers except to the extent caused by HDI negligence.
2. Indemnification by HDI. HDI shall defend, indemnify and hold
harmless Capital One, jointly and severally, its parent, subsidiary
and affiliated companies and their respective officers, directors,
shareholders, partners, employees, licensees, agents, successors and
assignees from and against any and all Claims which any of them may
incur or become obligated to pay arising out of or resulting from
(i) advertising and promotion of the Program card, except to the
extent that such advertising was expressly approved upon review by
Capital One or its legal counsel; (ii) HDI services provided
pursuant to this Agreement; (iii) any alleged defects in, or product
liability Claims involving HDI merchandise; (iv) any Claim that HDI
infringes or violates any third party's copyright, patent, trade
secret, trademark, right of publicity or right of privacy or
contains any defamatory content; (v) any breach by HDI of any of its
representations, warranties, covenants or obligations under this
Agreement; or (vi) the acts or omissions of its employees,
subcontractors, and agents in the performance of their obligations
in connection with this Agreement; or (vii) any errors caused by
HDI's transaction data systems, including but not limited to errors
in the amounts of money to be collected for merchandise, insurance,
or delivery charges, and errors regarding the correct calculation,
collection, and refund of payments by customers except to the extent
caused by Capital One negligence.
3. Indemnification Procedure. Either party seeking indemnification
under subsection (a) or (b) immediately above (the "Indemnitee")
shall give the party from which indemnification is sought (the
"Indemnitor") prompt notice of any claim for which indemnification
is sought. The Indemnitor shall have control over the defense and
settlement of any such claims, except that the prior written consent
of the Indemnitee (which shall not be unreasonably conditioned,
delayed, or withheld) shall be required for any settlement that does
not involve only the payment of cash. To the extent reasonably
requested by the Indemnitor, the Indemnitee shall cooperate in such
defense, at the Indemnitor's cost and expense. The Indemnitee shall
have the right to participate in the defense of any such claim at
its own expense.
K. LIMITATION OF LIABILITY EXCEPT UNDER REPRESENTATIONS MADE BY EACH PARTY
HEREUNDER IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER WITH
RESPECT TO THE SUBJECT MATTER OF THIS AGREEMENT UNDER CONTRACT, TORT
(INCLUDING NEGLIGENCE), STRICT LIABILITY OR ANY OTHER LEGAL OR EQUITABLE
THEORY, WHETHER OR NOT THAT PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF
SUCH DAMAGE (I) FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES OR LOST
PROFITS; OR (II) IN ANY CASE, FOR ANY AMOUNTS IN EXCESS OF THE FEES PAID
TO EACH OF THE PARTIES HEREUNDER DURING THE TWELVE MONTH PERIOD PRIOR TO
THE DATE THE CAUSE OF ACTION AROSE.
L. CONFIDENTIAL INFORMATION
1. Each party agrees that all information conveyed by any party to
the other party relating to the disclosing party's business, whether
or not designated by the disclosing party as proprietary and
confidential, including without limitation the terms of this
Agreement, customer lists, merchandise, marketing techniques, sales
information, credit information, all code, inventions, algorithms,
know-how and ideas and all other business, technical and financial
information, and
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including all items defined as "Confidential Information" in the
Confidentiality Agreement between the parties dated as of September
15, 1998, attached hereto as Appendix 2, and made a part hereof,
shall be subject to that certain Confidentiality Agreement as
provided therein.
2. Except as such terms and conditions were and are required to be
submitted in whole or in extracted form to GECC, as agreed between
the parties, for its consideration in connection with its right of
first refusal contained in the agreement between HDI and GECC, the
terms and conditions of this Agreement, the letter of intent between
the parties dated as of December 23, 1998, and information contained
in usage reports shall be deemed the Confidential Information of
each party, subject to that Confidentiality Agreement dated as of
September 15, 1998 between the parties, and shall not be disclosed
without the written consent of the other party.
3. Existence of this Agreement / Publicity. Notwithstanding any
Section above, except as provided by law, neither party to this
Agreement shall refer to the existence of this Agreement or its
business relationship with the other party by virtue of this
Agreement in any press release, advertising or materials distributed
to prospective customers without the prior written consent of the
other party.
M. NOTICES Any notice under this Agreement shall be in writing and
delivered by personal delivery, express courier, confirmed facsimile,
confirmed email or certified or registered mail, return receipt requested,
and will be deemed given upon personal delivery, one (1) day after deposit
with express courier, upon confirmation of receipt of facsimile or email
or five (5) days after deposit in the mail. Notices will be sent to a
party at its address set forth below or such other address as that party
may specify in writing pursuant to this Section.
1. All notices to HDI shall have a copy delivered to its counsel at
Xxxxx Raysman Xxxxxxxxx Xxxxxx & Xxxxxxx, LLP, CityPlace I, 000
Xxxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxxx, XX 00000, Attention: Xxxxx X.
Xxxxxxx, Esq., Telecopier 000-000-0000.
2. All notices to Capital One shall have a copy delivered to its
counsel at Capital One Financial Corporation, 0000 Xxxxxxxx Xxxx
Xxxxx, Xxxxx 0000, Xxxxx Xxxxxx, XX 00000, Attention: Xxxxx X.
Xxxxxxxx, III, Telecopier 000-000-0000.
N. ASSIGNMENT
1. Except as provided in subsection 2 below, no party may, without
the other party's written consent (which consent shall not be
unreasonably withheld), assign, sublicense, encumber, pledge or
otherwise transfer its rights and obligations under this Agreement,
in whole or in part, and especially in connection with a merger,
reorganization or sale of all, or substantially all, of such party's
assets;
(a) this Agreement and the respective duties and
responsibilities of the parties hereunder may not be
assigned, in whole or in part, without the prior written
consent of the other parties except to a Related
Company. "Related Company" means (i) a company of which
more than 50% of the Voting Shares or Voting Interests
are owned by a party, (ii) a company that owns or
controls, directly or indirectly, more than 50% of the
Voting Shares or Voting Interests of a party, or (iii) a
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company of which more than 50% of the Voting Shares or
Voting Interests are under common control or ownership,
directly or indirectly, with the Voting Shares or Voting
Interests of a party. "Voting Shares" or "Voting
Interests" (for non-corporate entities) means
outstanding shares, interests, or securities
representing the right to vote for the election of
directors or other managing authority.
2. This Agreement may be assigned by either party, in whole or in
part, as without the prior written consent of the other party, as
long as
(a) the assignee is not deemed a competitor with the other
party, at the sole discretion of such other party; and
(b) the assignment shall not be deemed to be in conflict
with the provisions of any pre-existing agreement or any
agreement in a stage of active negotiation, at the sole
discretion of the other party; or
(c) the assignment is to a wholly-owned subsidiary of such
party or affiliate of a party's controlling (100%)
owner.
3. Any attempt to assign or transfer this Agreement other than as
permitted above will be null and void. This Agreement is binding on
the parties and their respective successors and permitted assigns.
O. GOVERNING LAW
1. With regard to any disputes arising between the parties hereto,
this Agreement shall be governed by and construed in accordance with
the laws of the State of New York applicable to contracts made and
to be performed within such state, notwithstanding the actual state
or country of residence or incorporation of the parties which
constitute Capital One, without regard to conflicts of laws
principles. In any action to enforce rights under this Agreement,
the prevailing party shall be entitled to recover costs and
reasonable attorneys' fees.
2. With regard to any disputes arising between the parties hereto
and any consumer, such dispute shall be governed by and construed in
accordance with the laws of the Commonwealth of Virginia applicable
to contracts made and to be performed within such state.
P. INTEGRATION / COSTS / SEVERABILITY
1. Entire Agreement. This Agreement is the complete and exclusive
agreement between the parties with respect to the subject matter
hereof, superseding any prior agreements and communications (both
written and oral) regarding such subject matter. This Agreement may
only be modified, or any rights under it waived, by a written
document executed by both parties. The invalidity or
unenforceability of any provision of this Agreement shall not affect
the enforceability or validity of any other provision.
2. Costs. Each party shall bear its own costs and expenses in
connection with the transactions contemplated hereby.
3. Severability. If any provision of this Agreement is declared
invalid or otherwise determined to be unenforceable for any reason,
such provision shall be
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deemed to be severable from the remaining provisions of this
Agreement, which shall otherwise remain in full force and effect.
4. Relationship of the Parties. The parties agree that in performing
their responsibilities pursuant to this Agreement they 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 any association for
profit between and among COB, COSI and HDI.
Q. WAIVER OF BREACH. The failure of either party hereto at any time to
enforce any of the provisions of this Agreement shall not be deemed or
construed to be a waiver of any such provisions, or in any way to affect
the right of any party hereto to thereafter enforce each and every
provision of this Agreement. No waiver of any breach of any provisions of
this Agreement shall be effective unless set forth in a written instrument
executed by the party against which enforcement of such waiver is sought;
and no waiver of any such breach shall be construed or deemed to be a
waiver of any other or subsequent breach.
R. FORCE MAJEURE. Any delay in or failure of performance by either party
of its obligations under this Agreement will not be considered a breach of
this Agreement and will be excused to the extent caused by any occurrence
beyond the fault or reasonable control of such party including, but not
limited to acts of "Force Majeure". "Force Majeure" shall mean any reason
which is beyond any party's control, such as boycotts, war, acts of God,
labor troubles, strikes, restraints of public authority, or any similar
occurrence in which a party is prevented from having another party render
its services hereunder or if a party is prevented from utilizing another
party's transaction systems, processing systems, supply systems, reporting
systems for a time.
S. FURTHER ASSURANCES. The parties agree to execute and deliver, or to
cause to be executed and delivered, such further instruments or documents,
and to take such other action, as may be reasonably required to carry out
the transactions contemplated by this Agreement, in each case provided the
same do not impose any additional liabilities or material obligations upon
the other party.
T. NO EXCLUSIVE COMMITMENT. Capital One, on the one hand, and HDI, on the
other hand, shall have no obligation to perform any services for or as
agent of the other party other than as specifically provided for in this
Agreement unless mutually agreed by the parties. Except as herein
otherwise provided, each party and any Affiliate thereof may engage in any
other business activities as it may in its sole discretion determine
during the Term of this Agreement and any renewals thereof, including
without limitation any solicitation, notwithstanding that such activities
may be similar to and competitive with the activities of another party,
provided that no such activity causes a breach of such party's obligations
under this Agreement.
U. PERFORMANCE BY SUBSIDIARY. HDI may cause any or all of its obligations
or duties to be performed by, or grant any of its rights to, any majority
owned subsidiary of HDI, which subsidiary, for the purpose of such
obligation, duty or right, shall be considered to be "HDI" as set forth in
this Agreement; provided that HDI shall continue to be responsible for and
guarantee the performance of all obligations hereunder.
V. COUNTERPARTS This letter may be executed by the parties hereto in
separate counterparts, which, taken together, shall constitute one and the
same agreement.
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IN WITNESS WHEREOF, the parties have caused this Account Purchase & Credit
Card Marketing & Services Agreement to be duly executed effective as of the date
first above written.
HANOVER DIRECT, INC. CAPITAL ONE SERVICES, INC.
By: /s/ Xxxxx Xxxxxxx By: /s/ Xxxxx Xxxxxx
----------------- ----------------
Xxxxx Xxxxxxx Xxxxx Xxxxxx
Chief Financial Officer Director, Partnerships
March 9, 1999 Date: March 9, 1999
1500 Harbor Boulevard 00000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000 Xxxx Xxxxx, Xxxxxxxx 00000
000-000-0000 (voice) 000-000-0000 (voice)
000-000-0000 (fax) 000-000-0000 (fax)
CAPITAL ONE BANK
By: /s/ Xxxxx Xxxxxx
----------------
Xxxxx Xxxxxx
Director, Partnerships
Date: March 9, 1999
00000 Xxxx Xxxxx Xxxxxx
Xxxx Xxxxx, Xxxxxxxx 00000
000-000-0000 (voice)
000-000-0000 (fax)
Attachments:
Appendix 1: Confidentiality Agreement dated as of September 15, 1998
[previously executed]
Appendix 2: Definition of "competitive products and services"
Exhibit A: Data Mapping Information
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APPENDIX 1
Confidentiality Agreement dated as of September 15, 1998
[To be added in conformed version]
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APPENDIX 2
"competitive products and services" shall be defined herein to include:
the following product categories:
Bedding
Bath
Furniture covers
Window treatments
Furniture
Furnishings (wall decor, rugs, accents, clocks etc.)
Lighting
Floor covering
Housewares
Table Linens
Tabletop (dinnerware, flatware)
Food prep (cookware, bakeware, gadgets, small electric, etc.)
Christmas decorations
Apparel (mens, womens, kids, accessories)
Books
Storage
Personal care
Home office
Cleaning supplies (other household chemicals)
Appliances
Pet products
Automotive products
Cleaning equipment
Tools
Lawn and Garden
Safety/security
Hardware
Collectibles
Jewelry
Watches
Sporting Goods
Electronics
In addition, the following services:
Magazine offers
Buyer clubs
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APPENDIX 3
Charged-Off Purchased Accounts
[To be added by the Parties at closing]
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EXHIBIT A
[List of Accounts of Existing Portfolio]
[To be added by the Parties at closing]
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Exhibit B
[Data Mapping Information]
[To be added by the Parties at closing]
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