EX-10.3
4
exhibit10-3aug252008.htm
EXHIBIT 10.3 AUGUST 25, 2008
EXHIBIT
10.3
PRIVATE
LABEL CREDIT CARD PLAN AGREEMENT
BETWEEN
SPIRIT
OF AMERICA NATIONAL BANK
AND
ARIZONA
MAIL ORDER COMPANY, INC.
DATED
AS OF August 25, 2008
PRIVATE
LABEL CREDIT CARD PLAN AGREEMENT
TABLE OF
CONTENTS
|
SECTION
1.
|
DEFINITIONS
|
1
|
|
SECTION
2.
|
THE
PLAN
|
9
|
|
SECTION
3.
|
OPERATION
OF THE PLAN
|
19
|
|
SECTION
4.
|
REPRESENTATIONS
AND WARRANTIES OF AMO
|
24
|
|
SECTION
5.
|
COVENANTS
OF AMO
|
26
|
|
SECTION
6.
|
REPRESENTATIONS
AND WARRANTIES OF BANK
|
29
|
|
SECTION
7.
|
COVENANTS
OF BANK
|
30
|
|
SECTION
8.
|
INDEMNIFICATION
|
32
|
|
SECTION
9.
|
TERM,
EXPIRATION AND TERMINATION
|
34
|
|
SECTION
10.
|
MISCELLANEOUS
|
38
|
|
SCHEDULE
2.1(a)
|
|
2
|
|
Schedule
2.1(b)
|
Service
Standards
|
7
|
|
Schedule
2.3
|
OPERATING
PROCEDURES
|
8
|
|
Schedule
2.5(a)
|
Marketing
Promotions
|
11
|
|
Schedule
2.5(b)
|
Marketing
Funds
|
12
|
|
SCHEDULE
2.7
|
|
13
|
|
CREDIT
CRITERIA
|
|
13
|
|
Schedule
2.8
|
Monthly
Master File Information
|
16
|
|
Schedule
2.9(c)
|
Bank
Enhancement Marketing Services
|
19
|
|
Schedule
3.1
|
Cross-Shopping
|
20
|
|
Schedule
3.6(d)
|
Summary
of Rates and Fees
|
21
|
|
Schedule
3.11
|
Non-Competition
|
23
|
|
Schedule
3.13
|
Bank
Reports
|
24
|
|
APPENDIX
A
|
AMO
Businesses and AMO Brands and AMO Marks
|
25
|
PRIVATE
LABEL CREDIT CARD PLAN AGREEMENT
RIVATE
LABEL CREDIT CARD PROGRAM AGREEMENT
THIS
PRIVATE LABEL CREDIT CARD PLAN AGREEMENT is effective as of the 25th day of
August, 2008, and is entered into between Arizona Mail Order Company, Inc., a
Delaware corporation (“Arizona Mail Order” or “AMO”), and SPIRIT OF AMERICA
NATIONAL BANK, a national banking association with its principal office at 0000
Xxxxx Xxxxx, Xxxxxxx, Xxxx 00000 (hereinafter referred to as
“Bank”).
WITNESSETH:
WHEREAS,
pursuant to the Crosstown Traders Business Purchase/Sale Agreement (as defined
below), Xxxx Xxxxxxxx has agreed to acquire all of the issued and outstanding
shares of capital stock of Arizona Mail Order; and
WHEREAS,
prior to the date hereof, Bank has operated the Crosstown Traders
Program under which Bank has extended credit under the
Crosstown Traders Accounts and issued Crosstown Traders Credit Cards to
Crosstown Traders Credit Cardholders (as such capitalized terms are defined
below); and
WHEREAS,
AMO has requested that Bank continue to extend credit to qualifying individuals,
in the form of private label open-ended credit card accounts (including the
Crosstown Traders Program Accounts), for the purchase of Goods and/or Services
from AMO through its Sales Channels and to issue Credit Cards to such
individuals in a manner substantially similar to that in which it has operated
the Crosstown Traders Program, on the terms set forth herein, following Closing
until the Conversion or earlier expiration of the Term as provided herein (as
such capitalized terms are defined below); and
WHEREAS,
until the closing under any Account Portfolio Purchase/Sale Agreement, Bank
shall own all the Accounts, and Cardholder payments will be sent to such
location as Bank shall from time to time direct (as such capitalized terms are
defined below); and
WHEREAS,
Bank will operate the Plan subject to the terms and conditions as more fully set
forth herein;
NOW
THEREFORE, in consideration of the terms and conditions hereof, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
mutually acknowledged by the parties, AMO and Bank agree as
follows.
SECTION
1. DEFINITIONS
1.1 Certain
Definitions. As used herein and unless otherwise required by
the context, the following terms shall have the following respective
meanings.
PRIVATE
LABEL CREDIT CARD PLAN AGREEMENT
1
“Account”
shall mean an individual open-end revolving line of credit which is (i)
established by Bank for a Customer pursuant to the terms of a Credit Card
Agreement, (ii) marketed with an AMO Brand or combination of AMO Brands; and
(iii) which can be accessed by a Credit Card issued by Bank to correspond to
such Account; including without limitation the Crosstown Traders
Accounts.
“Account
Balance” means any and all amounts owing by the Cardholder thereunder, including
principal, accrued finance charges and other fees, whether or not
billed.
“Account
Portfolio Purchase/Sale Agreement” shall mean the WFNNB Account Portfolio
Purchase/Sale Agreement or such other agreement entered into by Bank and an
Approved Replacement Purchaser to effect the transfer of ownership and custody
of all or substantially all of the Accounts and receivables with respect
thereto.
“Accounts
Receivable “shall mean, as to any Account at the time of reference, any and all
amounts owing on such Account, including, without limitation, principal balances
from Purchases, purchases of AMO Enhancement Marketing Services, fees related to
Protection Programs and Bank Enhancement Marketing Services, accrued finance
charges (whether or not posted or billed to an Account), late fees, and all
other fees and charges assessed on the Accounts, less any payments and credits
received by Bank with respect to the Accounts. This definition specifically
excludes any amounts which have been written-off by Bank with respect to such
Accounts.
“Address
Verification Service” shall mean an adjunct process to the credit authorization
process where the Cardholder’s reported billing address is verified against the
Bank’s address on file for such Cardholder.
“Affiliate”
shall mean with respect to a party any entity that is owned by, owns,
or is under common control with such party.
“Agreement”
shall mean this
Private Label Credit Card Plan Agreement, including any
schedules, exhibits, addenda, and future amendments and supplements
hereto.
“AMO”
shall mean the party identified by such name in the first paragraph on Page 1 of
this Agreement.
“AMO
Brands” shall mean the brand name(s) chosen by AMO to identify the Accounts,
Credit Cards, etc. related to a corresponding AMO Business. No AMO Brand shall
do business using the AMO Brand of another AMO Business, although a single AMO
Business can do business under more than one (1) AMO Brand. For
instance, as of the Closing Date, the AMO Brands “Bedford Fair Lifestyles” and
“Willow Ridge” comprise a single AMO Business. All AMO Brands are also AMO
Marks, but not vice-versa. The AMO Brands are set forth on Appendix
A.
“AMO
Businesses” shall mean the business operations under which AMO operates, which
are set forth on Appendix A under the column entitled “AMO Businesses”.
PRIVATE
LABEL CREDIT CARD PLAN AGREEMENT
2
“AMO
Deposit Account” shall mean the one (1) deposit account (to be used for all AMO
Businesses) maintained by AMO and designated by it in writing to Bank as to
which Bank should direct its payments. See also Section 3.6
(a).
“XXX
Xxxx” shall mean a trademark, service xxxx, or name owned by or licensed (and
capable of being sublicensed) to AMO relating to the AMO Brands and designated
by AMO to Bank for use in connection with the Plan.
“Applicable
Law” shall mean any applicable federal, state or local law, rule, or regulation,
including, without limitation, any directive or guidance of the Office of the
Comptroller of the Currency.
“Applicant”
shall mean an individual who is a Customer and applies for an Account under the
Plan.
“Approved
Replacement Purchaser” means a bank or financial institution (i) reasonably
acceptable to AMO and Bank, which, notwithstanding the foregoing, shall include
each of the following: World Financial Network National Bank, any investment
fund managed by Golden Gate Private Equity, Inc., Orchard Brands Corporation,
Citigroup, Barclay’s, HSBC, GE Capital, Bank of America and XX Xxxxxx
Chase, any of the respective affiliates of any of the foregoing or any other
entity mutually agreed upon by AMO and Bank and (ii) which enters into a Program
Agreement with AMO.
“Bank”
shall mean the party to this Agreement identified in the first paragraph on Page
1 of this Agreement.
“Bank
Xxxx” shall mean a trademark, service xxxx, or name owned by or licensed (and
capable of being sublicensed) to Bank and designated by Bank to AMO for use in
connection with the Plan.
“Batch
Prescreen” shall mean a process where Bank’s offer of credit is made to certain
Customers prequalified by Bank (per its criteria), in a batch mode (often but
not exclusively within a direct to consumer environment).
“Billing
Statement” shall mean Bank’s periodic statement listing the amounts of Purchases
made, credits received, and other information, as required by Applicable Law
and/or deemed desirable by Bank.
“Business
Day” shall mean any day, except Saturday, Sunday or a day on which banks in Ohio
are required to be closed.
“Cardholder”
shall mean any natural person to whom an Account has been issued by Bank and/or
any authorized user of the Account; including without limitation the Crosstown
Traders Credit Cardholders.
“Card
Association” shall mean a nationwide payment clearing network such as MasterCard
International, Inc., Visa U.S.A. Inc., American Express, or Discover,
the
PRIVATE
LABEL CREDIT CARD PLAN AGREEMENT
3
credit
accounts and cards related to which are accepted universally in the retail
market place.
“Charge
Slip” shall mean a sales receipt, register receipt tape, invoice or other
documentation, whether in hard copy or electronic form, in each case evidencing
a Purchase that is to be charged to a Cardholder’s Account.
“Closing”
shall mean the transfer of ownership and custody of all issued and outstanding
shares of Arizona Mail Order from Crosstown Traders, Inc. to Xxxx Xxxxxxxx
Outfitters, Inc., as set forth in the Crosstown Traders Business Purchase/Sale
Agreement.
“Closing
Date” means the date of the Closing.
“Consumer
Personal Information” shall mean that non-public personal information regarding
Applicants, Customers, and Cardholders, including but not limited to Account
information consumer reports, and information derived from consumer reports,
that is subject to protection from publication under Applicable
Law.
“Conversion”
shall mean the transition of private label credit card services from Bank to a
Program Provider (who shall be an Approved Replacement Purchaser) pursuant to a
Program Agreement.
“Conversion
Date” shall mean the date of the closing of a Conversion.
“Conversion
Plan” shall mean the plan as set forth on Schedule 2.1 attached
hereto.
“Credit
Card” shall mean the credit card issued by Bank to Cardholders, corresponding to
a related Account for the purpose of purchasing Goods and/or Services pursuant
to this Agreement; including, without limitation, the Crosstown Traders Credit
Cards.
“Credit
Card Agreement” shall mean the open-end revolving credit agreement between a
Cardholder and Bank governing the Account and Cardholder’s use of the Credit
Card, together with any modifications or amendments which may be made to such
agreement.
“Credit
Sales Day” shall mean any day, whether or not a Business Day, on which Goods
and/or Services are sold by AMO through its Sales Channels.
“Credit
Slip” shall mean a sales credit receipt or other documentation, whether in hard
copy or electronic form, evidencing (i) a return or exchange of Goods, or (ii) a
credit on an Account as an adjustment by AMO for goodwill or for Services
rendered or not rendered by AMO to a Cardholder.
“Crosstown
Traders Accounts” shall mean the private label credit accounts issued under the
Crosstown Traders Program for the AMO Brands.
PRIVATE
LABEL CREDIT CARD PLAN AGREEMENT
4
“Crosstown
Traders Business Purchase/Sale Agreement” shall mean that Stock Purchase
Agreement, dated as of the date hereof, by and between Crosstown Traders, Inc.
and Xxxx Xxxxxxxx, under the terms of which Xxxx Xxxxxxxx. shall acquire all of
the issued and outstanding shares of capital stock of Arizona Mail
Order.
“Crosstown
Traders Credit Cards” shall mean the private label credit cards issued under the
Crosstown Traders Program, used to access Crosstown Traders Accounts for the AMO
Brands.
“Crosstown
Traders Credit Cardholders” shall mean those individuals to whom Crosstown
Traders Accounts and Crosstown Traders Credit Cards were issued.
“Crosstown
Traders Program” shall mean the private label credit account program operated by
Bank for Arizona Mail Order prior to the Closing Date relating to the AMO
Brands.
“Cross
Shopping” shall mean the reciprocal honoring, by different AMO Businesses, of
Accounts corresponding to other AMO Businesses. See also Schedule
3.1.
“Customer”
shall mean any individual consumer who is a customer or potential customer of an
AMO Business. Use of the term shall encompass all AMO Businesses
unless the context of the reference dictates otherwise.
“Deferred
Program” shall mean a program featuring special repayment terms approved by
Bank, including any one or more of the following: deferred and/or waived
interest, deferred payments, minimum purchase amounts, minimum monthly payments,
and any other terms and conditions set forth by Bank. Bank offers 60
day Deferred Programs at the Discount Fee set forth on Schedule
1.1. Any other Deferred Programs may be made part of this Agreement
only by written amendment.
“Deferred
Program Purchases” shall mean Purchases made under the terms of any Deferred
Program.
“Discount
Fee” shall have the meaning set forth in Schedule 1.1.
“Electronic
Customer Service (or eCS)” shall mean a web-based customer service system Bank
makes available on a Bank website.
“Equal
Payment Program” shall mean a program featuring special repayment terms,
approved by Bank, including repayment based on equal payments over a
predetermined period of time, and any other terms and conditions set forth by
Bank. As of the date hereof, there are no Equal Payment Programs. Equal Payment
Programs may be made part of this Agreement only by written
amendment.
“Equal
Payment Program Purchases” shall mean Purchases made under the terms of any
Equal Payment Program.
PRIVATE
LABEL CREDIT CARD PLAN AGREEMENT
5
“Financial
Products” shall mean credit card issuance or payment processing arrangements or
programs similar in purpose to those components of the Plan (including but not
limited to ones involving a credit card) dealing with the extension of credit
and repayment of debt extended to Customers as contemplated under this
Agreement, including cardless, Internet-based or Internet-only payment vehicles
and contactless payment vehicles to be used as devices and/or methods by
Customers to purchase Goods and/or Services.
“Forms”
shall have the meaning set forth in Section 2.4.
“Goods
and/or Services” shall mean those goods and/or services sold at retail by AMO
through its Sales Channels to the general public for individual, personal,
family or household use. Use of the term shall encompass all AMO
Businesses unless the context of the reference dictates
otherwise. This definition specifically excludes goods and services
that are sold to Customers by third-party vendors of AMO and not AMO
itself.
“Ineligible
Account” has the meaning set forth for such term in the WFNNB Account
Portfolio/Sale Agreement (as in effect as of the date hereof); provided that any
references therein to the “Transfer Date” shall be deemed references to the date
of the closing under any Account Portfolio/Purchase Sale Agreement.
“Initial
Term” shall have the meaning set forth in Section 9.1.
“Instant
Credit” shall mean an Account application procedure designed to open Accounts
whereby the application information is communicated to Bank either (i) verbally
at Point of Sale; or (ii) systemically during the order entry
process.
“IVR”
shall mean an interactive voice response system and/or procedure.
“Marketing
Fund” shall have the meaning set forth in Section 2.5(b).
“Net
Proceeds” shall mean Purchases less: (i) credits to
Accounts for the return or exchange of Goods, or a credit on an Account as an
adjustment by AMO for goodwill or for Services rendered or not rendered by AMO
to a Cardholder, all as shown in the Transaction Records (as corrected by Bank
in the event of any computational error), calculated each Business Day; (ii)
payments from Cardholders received by AMO from Cardholders on Bank’s behalf;
(iii) applicable Discount Fees, and (iv) any other amounts owed to or by Bank
pursuant to this Agreement. See Schedule 1.1
“Net
Sales” shall mean Purchases, less credits or refunds for Goods and/or Services,
all as shown in the Transaction Records (as corrected by Bank in the event of
any computational error), calculated each Business Day.
“Net
Sales on Regular Revolving Purchases” shall mean Regular Revolving Purchases,
less credits or refunds for Goods and/or Services, all as shown in the
Transaction Records (as corrected by Bank in the event of any computational
error), calculated each Business Day.
PRIVATE
LABEL CREDIT CARD PLAN AGREEMENT
6
“Net
Sales on Promotional Program Purchases” shall mean Promotional Program
Purchases, less credits or refunds for Goods and/or Services, all as shown in
the Transaction Records (as corrected by Bank in the event of any computational
error), calculated each Business Day.
“Xxxx
Xxxxxxxx” means Xxxx Xxxxxxxx Outfitters, Inc.
“On-Line
Prescreen” shall mean a process where an offer of credit is made to certain
pre-qualified Customers, in real time pre-approved manner, at the POS at the
time of a transaction.
“Operating
Procedures” shall mean Bank’s instructions and procedures regarding the Plan as
written by Bank and provided to AMO to be followed by AMO.
“Plan”
shall mean the private label credit card plan established and administered by
Bank for Customers by virtue of this Agreement which shall replace the Crosstown
Traders Program in its entirety.
“Plan
Documents” shall have the meaning set forth in Section 2.4.
“Plan
Year” shall mean each consecutive twelve (12) month period commencing on the
Closing Date (or the first day of the first full calendar month following the
Closing Date if the Closing Date is not the first day of a calendar month) and
each anniversary thereof.
`
“Point of
Sale (or POS)” shall mean the physical or electronic location at which
transactions (sales, credits, and returns) take place. This includes
but is not limited to a point of order entry or website (as
applicable).
“Prescreen
Acceptance” shall mean a POS process designed to recognize and activate Bank’s
pre-approved batch offers for Accounts for Customers.
“Program
Agreement” shall mean the WFNNB Program Agreement or any other agreement between
AMO and a Program Provider for the establishment and maintenance of private
label credit card services for the AMO Brands.
“Program
Provider” shall mean World Financial Network National Bank or any other Person
that provides private label credit card services to AMO for the AMO Brands
following the expiration of the Term of this Agreement (or earlier termination
in accordance with the terms hereof) pursuant to a Program
Agreement.
“Promotional
Programs” shall mean any special Cardholder payment terms approved by Bank (in
the form of an amendment) for certain Purchases, including without limitation
Deferred Programs and Equal Payment Programs. As of the date hereof, there are
no Promotional Programs. Promotional Programs may be made part of this Agreement
only by written amendment.
PRIVATE
LABEL CREDIT CARD PLAN AGREEMENT
7
“Promotional
Program Purchase” shall mean a Purchase made under the terms of a Promotional
Program.
“Purchase”
shall mean a purchase of Goods and/or Services, including without limitation all
applicable taxes and shipping costs, with a specific extension of credit by Bank
to a Cardholder using an Account as provided for under this
Agreement. The term shall be interpreted to include Regular Revolving
Purchases as well as Promotional Program Purchases unless the context of the
reference clearly indicates otherwise. Use of the term shall
encompass purchases from all AMO Businesses unless the context of the reference
dictates otherwise.
“Regular
Revolving Purchases” shall mean Purchases which are not subject to any
Promotional Programs.
“Sales
Channels” shall mean those certain sales channels (i.e., websites, catalogues,
etc.) through which AMO sells its Goods and/or Services under the AMO Brands
during the Term (and encompasses all AMO Businesses unless the context of the
reference dictates otherwise), which as of the Closing Date include website and
catalog. As a point of clarification, this definition includes
different or additional sales channels that are part of AMO’s expansion of its
business under the AMO Brands as then constituted, if such expansion does not
include an entity other than AMO or a brand other than an AMO Brand. For
example: the opening of a retail location (by AMO, or by its Affiliate or a
franchisee or licensee operating under an XXX Xxxx) through either (i) “organic
growth” or (ii) acquisition of the assets (but not the ownership interest) of
another business. (See also Section 3.14 regarding the internal development or
acquisition of a business that would be new to AMO’s business as then
constituted or that involves an entity other than AMO). However, the
ownership or operation by an AMO Affiliate of a business that is substantially
similar to that of AMO (at the then current point in time) shall be considered
an expansion of AMO for the purposes of this Agreement and such business (and
its owner entity) shall, at Bank’s option, be included in this Agreement by
amendment.
“Service
Standards” shall have the meaning set forth in Schedule 2.1 (b).
“Term”
shall mean the Initial Term as defined in Section 9.1.
“Transaction
Record” shall mean the following, with respect to each Purchase or with respect
to a credit or return related to a Purchase (as applicable), and each payment
received by AMO from a Cardholder on Bank’s behalf: (a) the Charge
Slip or Credit Slip corresponding to the Purchase, credit or return; or (b) a
computer readable tape/cartridge or electronic transmission containing the
following information: the Account number of the Cardholder, identification of
the AMO’s Sales Channel (location) where the Purchase, credit or return was made
(if applicable), the total of (i) the Purchase price of Goods or Services
purchased or amount of the credit, as applicable, plus (ii) the date of the
transaction, a description of the Goods or Services purchased, credited or
returned and the authorization code, if any, obtained by AMO prior to completing
the transaction; or (c) electronic record whereby AMO or one of its Sales
Channels electronically transmits the information described in subsection
(b)
PRIVATE
LABEL CREDIT CARD PLAN AGREEMENT
8
hereof to
a network provider (selected by AMO at its expense), which in turn transmits
such information to Bank by a computer tape/cartridge or electronic tape or
transmission.
“Web (or
Internet)” shall mean the world-wide web internet network as generally
understood in the greater business community.
“Web
Application” shall mean a web based new Account application procedure made
available by Bank. See also Section 2.2
(d).
“WFNNB
Program Agreement” means the Private Label Credit Card Plan Agreement, dated as
of the date hereof, between Xxxx Xxxxxxxx and World Financial Network National
Bank.
“WFNNB
Account Portfolio Purchase/Sale Agreement” shall mean that purchase agreement
dated as of the date hereof, by and between Bank (as seller), and
World Financial Network National Bank (as buyer) for the sale by Bank of certain
Accounts issued under the Crosstown Traders Program and the Plan and the
receivables related thereto (excluding Ineligible Accounts).
1.2 Other
Definitions. As used herein, terms defined in the introductory
paragraph hereof and in other sections of this Agreement shall have such
respective defined meanings. Defined terms stated in the singular
shall include reference to the plural and vice versa. The terms
“shall” and “will” have the identical meaning (i.e., that something is
compulsory and certain), and the use of one versus the other is not to be
interpreted as implying less certainty or a sense of possibility or
choice.
SECTION
2. THE
PLAN
2.1 Establishment and Operation
of the Plan/Conversion
Plan. (a) The Plan is established for the primary purposes of
providing Customer financing for purchasing Goods and/or Services through AMO
Brands. The Plan shall commence on the Closing
Date. Qualified Applicants desiring to use the Plan shall be granted
an Account by Bank with a credit line in an amount to be determined by Bank in
its discretion for each individual Applicant (but subject to
Section 2.7). Subject to Section 3.6 (d) and Applicable Law,
Bank shall determine the terms and conditions of the Account to be contained in
a Credit Card Agreement. For clarification, prior to the Closing,
Bank has operated the Crosstown Traders Program and pursuant to this Agreement,
Bank will operate the Plan following Closing until the Conversion or earlier
termination of the Term on the terms set forth herein, it being agreed that the
intent of this Agreement is for Bank to continue offering services to AMO,
consistent with the services provided under the Crosstown Traders Program as in
effect prior to the date hereof, until the Conversion or earlier termination of
this Agreement. Bank and AMO shall use their commercially reasonable
efforts to pursue completion of the Conversion by October 31, 2008 in accordance
with the Conversion Plan set forth in Schedule 2.1(a) and the parties hereby
agree that to the extent any modifications to the Conversion Plan are required
to ensure the successful and efficient transition of a fully operational private
label credit card program consistent with the Plan as operated hereunder to the
Program Provider the parties shall negotiate in good faith to implement such
mutually agreed-upon
PRIVATE
LABEL CREDIT CARD PLAN AGREEMENT
9
modifications. In
the event any requests for enhancement or revisions to the credit Plan contained
in this Agreement would conflict with the timely completion of the Conversion
Plan, the Conversion Plan shall take precedence. The parties shall
dedicate sufficient resources to the Conversion Plan as necessary to ensure its
timely completion.
(b) Bank
shall perform in accordance with the Service Standards. Bank will provide AMO
with a monthly summary of Bank’s performance regarding the Service Standards, as
set forth in Schedule 2.1 (b). Bank shall use commercially reasonable
efforts to meet the Service Standards set forth in
Schedule 2.1(b). Bank shall provide eCS, and AMO shall provide a
weblink to the eCS. Regardless of whether any Bank website related to
eCS is the same as any referenced in 2.2 (d) below, AMO shall be subject to the
same obligations and terms and conditions set forth therein with regard to
maintaining connections, use of Bank’s Xxxx, Applicable Law, etc.
2.2 Applications for Credit
Under the Plan;
Internet Services. (a) AMO shall not promote or participate in
any application by a Customer for financing the purchase of Goods and/or
Services other than for participation in the Plan as provided in Section
3.11. Applicants who wish to apply for an Account under the Plan must
submit a completed application on a form or in an electronic format approved by
Bank, and Bank shall grant or deny the request for credit based solely upon
Bank’s credit criteria. When facilitating any method of application,
AMO shall follow all applicable Operating Procedures. The application shall be
submitted to Bank by the Applicant or submitted by AMO on behalf of the
Applicant, as required in the Operating Procedures. If Bank grants
the request for an Account, Bank will issue a Credit Card to the Applicant to
accesses an individual line of credit in an amount determined by
Bank.
(b) Bank
shall make available, and AMO shall utilize, as applicable, the following
application procedures as of the Closing Date: Batch Prescreen Applications,
Address Verification Service, Instant Credit (Web and telephone based) and
mail-in application procedures. See also subsection
(d) below regarding the Web Application procedure. To the extent the
same are available under the Crosstown Traders Program as in effect on the date
hereof, the Bank further agrees to provide each Cardholder with the ability to
view its Account information and billing statements online, make payments on
such Cardholder’s Account via automated clearing house transfer or other payment
mechanism approved by the Bank and send other secure correspondence; obtain
billing statements; set up personal credit alert reminders; and request a credit
line increase on-line. Bank will make available the use of its smart
messaging system at no cost to AMO provided the messaging format and volume are
substantially similar to the Crosstown Traders Program currently
provided. See also clause (d) below. Bank hereby
represents that as of the date hereof and as of the Closing Date, it does not
provide On-Line Prescreen services to the Crosstown Traders
Program.
(c) Regarding
applications submitted in whole or in part by AMO, AMO agrees that it will (i)
protect and keep confidential any and all Applicant information (which
information shall be Bank Consumer Personal Information) acquired as a result of
participating in the submission of any such applications, and not disclose the
information (except as required by Applicable Law or legal process) to anyone
other than authorized representatives of Bank,
PRIVATE
LABEL CREDIT CARD PLAN AGREEMENT
10
and its
representatives and agents, and (ii) follow all Operating Procedures applicable
to such Bank Consumer Personal Information.
Bank
shall make available the Web Application procedure by establishing a website for
such purpose, which shall be accessible from AMO’s website. AMO
acknowledges that as of the date hereof, such website has been
established. Bank will maintain and operate the website and Web
Application procedure consistent with past practices. AMO shall appropriately
monitor its website to ensure proper functioning. In the event Bank
changes or otherwise modifies the website address for its designated website,
AMO will either update or modify its website thereto, as directed by
Bank. In providing Web Application on the AMO website, if
appropriate, AMO shall make it clear and conspicuous that the Customer is
leaving AMO’s website and is being directed to Bank’s website for the exclusive
purpose of accessing Bank’s website and submitting an application for
credit. AMO agrees that, in connection with the Web Application, it
will use Bank’s name, or any logo, statements, or any other information that is
related to Bank, only as directed by Bank, or as previously approved by Bank in
writing. Without limiting the generality of the scope of required approvals, but
by way of example, AMO shall seek Bank’s approval not only with respect to
content, but also with respect to any typestyle, color, or abbreviations used in
connection with the Web Application.
If
Accounts opened via Web Applications prove to be unprofitable to Bank, Bank
shall have the right upon thirty (30) days prior written notice to AMO to
propose that AMO pay Bank a certain fee related to Web
Applications. However, Bank shall not impose such fee if within such
thirty (30) days after receipt of Bank’s notice setting forth the amount of such
fee, AMO has rejected the fee and proposed an alternative. However,
Bank may choose to discontinue Web Applications if the parties cannot agree upon
a fee or an alternative.
(d) Bank
agrees that, to integrate and maintain the webpage and to ensure access to the
Plan website and reduce technical errors, it will use commercially reasonable
efforts to ensure that its software providing the link will function, and
continue to function, in a sound technical manner. Bank hereby represents and
warrants that as of the date hereof and as of the Closing Date, its software
providing the link functions in a sound technical manner consistent with past
practice (including cooperating with Charming Shoppes of Delaware, Inc. in
performing its obligations related thereto as set forth in Appendix A to that
certain Transition Services Agreement to be entered into between Charming
Shoppes of Delaware, Inc. and AMO). AMO branding style (including
color, font and type size), marketing content and marketing design format of the
Plan website shall be subject to approval by the parties. Bank shall
appropriately monitor the Plan website to ensure it is functioning properly. AMO
represents and warrants that, to integrate and maintain the link, and to ensure
access to the Plan website and reduce technical errors, it will use its
commercially reasonable efforts to ensure that its software providing the link
will function, and continue to function, in a sound technical manner. AMO shall
appropriately monitor the link to ensure it is functioning properly. In the
event Bank changes or otherwise modifies the website address for the Plan
website, AMO will either update or modify the link as reasonably requested by
Bank. AMO agrees that, in connection with the link, it will only use
Bank's name, or any logo, statements, or any other information that is related
to Bank, only in accordance with this Agreement, or as approved in advance and
in writing by Bank. Bank shall ensure that the Bank's Privacy Policy
is clearly and prominently posted on the pages of the Plan
website.
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11
(e) Each
party represents and warrants to the other with respect to its Internet site
used to support the Plan as of the Closing Date and during the Term of this
Agreement that such party has the license, right or privilege to use the
hardware, software and content acquired from third parties for use in its
respective Internet website, and that it is the owner (or licensee) of all
hardware, software and content used in its respective Internet website and that
neither the website as a whole, nor any part thereof, infringes upon or violates
any patent, copyright, trade secret, trademark, invention, proprietary
information, nondisclosure or other rights of any third party.
2.3 Operating
Procedures. Each of AMO and Bank shall observe and comply with
the Operating Procedures and such other reasonable procedures as Bank may
prescribe on not less than thirty (30) days’ prior notice to AMO or otherwise
required by Applicable Law. The Operating Procedures may be amended
or modified by Bank from time to time in its reasonable discretion; provided,
however, unless such changes are required by Applicable Law, a copy of any such
amendment or modification shall be provided to AMO at least thirty (30) days
before its effective date, and for those changes required by Applicable Law,
notice shall be given as soon as practicable. The initial Operating
Procedures are attached hereto as Schedule 2.3.
2.4 Plan Documents (Forms and
Collateral). (a) Forms - General.
Subject to (b) below, Bank shall design, determine the terms and conditions of,
and generate the form of the Credit Card Agreement, applications, Credit Card,
card mailers, privacy notices, Billing Statements (including backers),
Cardholder letters, templates, and other documents and forms to be
used under the Plan which (i) relate to the Plan, (ii) relate to Bank’s and/or
the Cardholder’s obligations, (iii) are used by Bank in maintaining and
servicing the Accounts; or (iv) are required by Applicable Law (collectively,
“Forms”). By way of clarification, Bank’s responsibilities do not
include any obligations AMO may have as a retailer, such as creating the form of
Charge Slips and Credit Slips. All Forms shall be in the English
language only unless otherwise agreed by the parties in writing, and there shall
be only one design for each Form as to each AMO Business (which are the five (5)
identified on Appendix A).
(b) Forms -
Conditions. The provisions of (a) above are subject to the
following conditions. First, Bank’s actions are subject to Section
3.6 (d), Applicable Law, and Section 2.10. Second, Bank and AMO shall
jointly design any Customer marketing aspects of Billing Statements, Credit
Cards, and card mailers.
(c) Collateral. AMO may
design and produce promotional material, direct mail pieces, catalog, newspaper,
radio and Internet advertisements, and other collateral documents (collectively,
“Collateral”) which reference the Plan. AMO shall submit all
Collateral to Bank for its review and approval of the Plan disclosures, as well
as references to the Plan and use of Bank Marks. Pursuant to this
review and approval process, AMO will make (or have made) all changes that Bank
requests to satisfy Applicable Law and/or in exercising its rights under this
Agreement promptly following such request. Except as otherwise set
forth in this Agreement, AMO shall otherwise have sole discretion as to any
action with respect to any catalogue mailing or circulation.
PRIVATE
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(d) Bank’s
Costs. Subject to subsection (e) below, Bank will at its
expense provide to AMO at one central location, the template of any appropriate
Forms.
(e) AMO’s
Costs.
(i) AMO Re-issuances. AMO shall pay
all costs related to any re-issuance of Credit Cards to Cardholders that AMO
requests or that is necessitated by AMO’s decisions and/or actions (collectively
“AMO Re-issuances”). The costs associated with an AMO Re-issuance
include those of the card itself (including all embossing and encoding), card
mailers, envelopes, Credit Card Agreements, other Forms, Collateral, and
postage. As a point of clarification, none of the following
constitutes an AMO Re-issuance: Bank’s replacement (on an Account-by-Account
basis) of lost or stolen Credit Cards, expired Credit Cards, or in response to
some other Cardholder request.
(ii) Variations from Bank’s
Standards. If, in Bank’s good faith determination, a request
or requirement (as applicable) of AMO with regard to any Plan Documents requires
a variation from Bank’s standard specifications, and such variation causes an
increase in any cost of Bank, the following shall apply. First, Bank will advise
AMO in writing of the variance and provide a written estimate of the related
cost increase. Second, AMO shall thereafter notify Bank in writing of
its decision to forego the request, to modify the request such that no cost
increase is generated, or agree to bear the additional expense. In the event any
Forms become obsolete as a result of changes requested by AMO or is reasonably
necessitated by its decisions and/or actions, AMO shall reimburse Bank for the
itemized and documented costs associated with any unused obsolete
Forms.
(iii) Mass Mailings. As
to any mass mailings requested by AMO (including but not limited to catalog
mailings, pre-approved mailings, and zero balance mailings), AMO shall pay all
costs of such mass mailings.
2.5 Marketing and Promotion of
Plan. (a) Throughout the Term of this Agreement, AMO shall
take commercially reasonable steps to actively and consistently market, promote,
participate in and support the Plan in a manner consistent with past practices,
which may include, without limitation, those marketing promotions set forth in
Schedule 2.5 (a) and such other methods mutually agreed upon by AMO and
Bank. AMO and Bank will jointly agree upon programs to market the
Plan, both initially and on a continuing basis. Once AMO and Bank agree upon
standards for the use of AMO Marks and Bank Marks, respectively, neither party
will deviate from such standards without express prior approval of the other
party. Bank must approve in advance AMO’s use of Bank’s Marks and any references
to the Plan. Any cross-marketing agreements between AMO and Bank are
subject to the mutual agreement of the parties at a later date.
(b) Bank
shall contribute the amounts, if any, set forth in Schedule 2.5 (b) to apply to
marketing and promotion expenses associated with the Plan. All of
such funds shall be referred to herein as the “Marketing Fund.” If
the Marketing Funds are not used in the Plan Year or other time period
contributed, they will roll over to the next Plan Year. AMO shall pay
all marketing and promotion expenses directly as they are incurred, and, if any
funds are then available in the Marketing Fund, shall send Bank an invoice for
the aggregate amount of
PRIVATE
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13
the
expenditures mutually agreed upon by the parties, together with copies of paid
invoices or other supporting documentation reasonably satisfactory to Bank for
such expenses. Bank shall then reimburse AMO (within 30 days of
Bank’s receipt of each individual’s reimbursement request) until Bank’s maximum
contribution amount for the applicable Plan Year has been met. Bank
shall have the right to cease the availability of the Marketing Funds
contributed by Bank for any future marketing or promotions if either party: (i)
terminates this Agreement, (ii) notifies the other party of an intent to
terminate or the fact that the notifying party has already terminated this
Agreement, or (iii) notifies the other of an intent to allow this Agreement to
expire. However, Bank shall renew the availability of the Marketing
Funds for the then current Plan Year on a retroactive basis under the following
circumstances. If, despite the occurrence of (i), (ii), or
(iii) but prior to this Agreement’s expiration or termination, the parties renew
this Agreement and/or extend the expiration date by at least one (1)
year.
2.6 Administration of Accounts
and Plan. Bank shall perform, in compliance with Applicable
Law, all functions necessary to administer and service the Accounts, including
but not limited to: processing of applications; Credit Card production and
issuance; making all necessary credit investigations; notifying Applicants in
writing of acceptance or rejection of credit under the Plan; preparing and
mailing Billing Statements; making collections; handling Cardholder inquiries;
and processing payments. Bank reserves the right to deny (or reverse)
an extension of credit for particular transactions in order to comply with
Applicable Law, which might include but not be limited to prohibitions against
transactions related to gambling.
2.7 Credit
Decision. Subject to the other provisions of this
Section 2.7, the decision to extend credit to any Applicant under the Plan
shall be Bank’s decision. Bank will work in good faith with AMO to
develop business strategies with respect to the issuance of Credit Cards which
are intended to maximize the potential of the Plan, and which are mutually
beneficial to AMO and Bank, provided the same are generally consistent with the
strategies utilized in connection with the Crosstown Traders
Program. In addition to Promotional Programs, commencing February 1,
2009 AMO may from time to time request Bank to consider offering certain other
types of special credit programs. Bank shall reasonably consider
AMO’s requests and negotiate with AMO in good faith. However, Bank
shall, in its sole discretion, subject to Applicable Laws and its safety and
soundness considerations, determine whether or not to offer any of such
programs. In the event Bank agrees to any special credit program,
such agreement shall be documented in the form of a written amendment, which
amendment shall set forth any applicable terms related thereto, including but
not limited to fees associated with the special credit program. The
Bank hereby agrees that in connection with the Plan it will continue to utilize
substantially similar credit criteria as it currently uses with respect to the
Crosstown Traders Program (which credit criteria are attached as Schedule 2.7
hereto) and that it shall continue to offer and maintain Accounts in a manner
substantially consistent with such credit criteria. Bank hereby
represents that the criteria attached as Schedule 2.7 accurately reflect the
credit criteria currently applied by Bank under the Crosstown Traders Program
and that Bank has no present intent to modify such criteria. In
addition, during the Term of this Agreement, except as may otherwise be required
to comply with Applicable Law, Bank shall offer and maintain Accounts in such a
manner that would not impair the ability of Bank to consummate a sale of the
Accounts under the WFNNB Account Portfolio Purchase/Sale Agreement (or after the
termination of the
PRIVATE
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14
WFNNB
Account Portfolio Purchase/Sale Agreement under any other Account Portfolio
Purchase/Sale Agreement). Bank hereby agrees that unless Bank
determines, in its reasonable discretion (after consultation with AMO) that
continued usage of such credit criteria would have a material adverse effect on
the Bank’s ability to consummate a sale of the Accounts under the WFNNB Account
Portfolio Purchase/Sale Agreement or unless otherwise required by Applicable
Law, it shall not amend, supplement or otherwise modify the aforementioned
credit criteria attached hereto as Schedule 2.7 unless Bank obtains AMO’s prior
written consent.
2.8 Ownership of Accounts and
Information. (a) The parties recognize that Cardholders are Customers,
and that each of Bank and AMO has certain ownership rights in information
relating to such individuals in their respective roles as Cardholders and
Customers. The parties acknowledge that the same or similar
information may be contained in the Bank Cardholder Information (defined below)
and the AMO Customer Information (defined below); such common information being
referred to herein as “Common Information”. Each such pool of data
shall therefore be considered separate information subject to the specific
provisions applicable to that data hereunder. For example, in
subsection (b) below Bank is authorized to use AMO Customer Information only for
certain limited purposes. For illustrative purposes only, presume
such information included names of both Customers who were Cardholders and
non-Cardholder Customers. The names of those who were both Customers and
Cardholders would be Common Information. So, Bank would not be limited by the
terms of subsection (b) as to such names. However, the names of non-Cardholder
Customers would not be Common Information, and thus would be subject to the
limitations set forth in subsection (b). Likewise, though subsection (c) below
limits what AMO can do with Bank Cardholder Information, such limitations do not
apply to that portion of Bank Cardholder Information that is comprised of Common
Information.
(b) The
Customer’s names and addresses and other Customer information collected by AMO
independent of Bank and set forth in AMO’s records shall be the exclusive
property of AMO; such information and AMO’s Common Information shall be referred
to collectively as “AMO Customer Information”. AMO Customer
Information might or might not be comprised exclusively of AMO’s Consumer
Personal Information. As requested by Bank, AMO shall provide the names and
addresses of Customers to Bank, to be used only for purposes of (i) evaluating
such Customer’s creditworthiness, (ii) soliciting such Customers for Credit
Cards, (iii) administering the Plan in accordance with the terms of
this Agreement and Applicable Law. Bank shall protect the confidentiality of
such information as set forth in Section 10.17.
(c) (i) The
Accounts and all information related thereto set forth in Bank’s records,
including without limitation the information listed in Schedule 2.8, the
information obtained through applications, the receivables, names, addresses,
credit, and transaction information of Cardholders shall be the exclusive
property of Bank during the Term, and thereafter (unless the Accounts are
purchased by AMO or its designee pursuant to Section 9.5). Such information and
Bank’s Common Information shall be referred to collectively as “Bank Cardholder
Information”. Bank Cardholder Information might or might not be comprised
exclusively of Bank’s Consumer Personal Information.
PRIVATE
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15
(ii) Bank
shall provide to AMO monthly one (1) master file extract, initially containing
the information set forth on Schedule 2.8 to the extent such information is
available to and may be shared by Bank, and subject to change by Bank at any
time. Bank shall also provide to AMO any other Bank Cardholder
Information agreed to by AMO and Bank, to the extent permitted by Applicable Law
and Bank’s privacy and security policies. AMO may use such information in
connection with maintaining and servicing the Accounts; furthermore, AMO may use
it to market its Goods and/or Services or its business in general to the
Cardholders, but in any event only as permitted by Applicable
Law. The parties recognize that AMO’s efforts related to such
approved purposes might necessitate disclosure of Bank Cardholder Information to
AMO’s vendors and contractors. Such disclosure shall be permitted,
provided the third-parties agree in writing to use the information only for the
aforementioned approved purposes and to protect the confidentiality of such
information as set forth in Section 10.17. Except as so provided,
unless Bank consents otherwise in advance and in writing, AMO shall keep such
Bank Cardholder Information confidential as set forth in Section 10.17, and
shall not disclose such information to any third party nor sell, lease, or
otherwise transfer such information to any third party.
(iii) Notwithstanding
any provision herein to the contrary, except as may be necessary to effectuate a
conversion or sale of the Accounts under Section 9.5 as set forth below, at no
time shall Bank have any right to use any information relating to the Plan, the
Accounts, the Customers or the Cardholders (other than any such information
which satisfies any of clauses (i) through (iv) of Section 10.17(a)) for any
marketing purposes whatsoever other than with respect to the Plan unless it
shall have previously obtained AMO’s consent in writing. For the
avoidance of doubt, nothing in this clause (iii) shall limit the ability of Bank
to use such information as may be required by Applicable Law. In
connection with a conversion or sale of the Accounts under Section 9.5, Bank or
the purchaser of the Accounts shall be entitled to market to the Cardholders any
of the programs permitted in connection with a wind up of the Plan under Section
9.5(b)(iii); provided, however, that in so marketing the card, Bank and such
purchaser shall not be entitled to use any sales history or other transaction
history or other information obtained or related to the usage of the Credit Card
which occurred during the operation of the Plan or the Crosstown Traders
Program. For clarification, once the Cardholders’ Accounts are
converted to non-AMO Accounts in accordance with Section 9.5, then such
Cardholders shall have an independent relationship with Bank and Bank’s use of
information obtained after the conversion date not in violation of this
Agreement, and so long as the same does not constitute Confidential Information
of AMO hereunder, shall not be subject to the restrictions herein.
2.9 Protection Programs and
Enhancement Marketing Services. (a) Protection Programs. AMO and
Bank agree that Bank will have the exclusive right but not the obligation to
make available to Cardholders* various types of debt cancellation and credit
related protection programs (collectively referred to herein as “Protection
Programs”) offered by Bank. Commencing February 1, 2009, Bank may but
is not obligated to offer such Protection Programs through direct marketing
channels including but not limited to telemarketing, call transfer (of inbound
calls to Bank and not inbound calls to AMO), inbound customer service call
offers (inbound calls to Bank and not inbound calls to AMO), call to confirm
programs,
PRIVATE
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16
IVR, and
eCS. Bank also has the right but not the obligation to make written
offers through Billing Statement bangtails and inserts Billing Statement
messaging, and direct mail. The fees for Protection Programs will be charged to
the applicable Cardholder’s Account. AMO will assist Bank’s effort to
offer Protection Programs so long as such assistance will not require AMO to
incur any direct expense or cost. Bank shall have the right but not
the obligation to immediately terminate any Protection Programs if and when
either party: (i) terminates this Agreement, (ii) notifies the other
party of an intent to terminate or that the notifying party has already
terminated this Agreement, or (iii) notifies the other of an intent to allow
this Agreement to expire.
*Recognizing that, with regard to
non-Cardholder Customers who have specifically rejected an offer of credit from
Bank (or offer to apply for same), AMO has the right to offer its own debt
cancellation and credit related protection programs and
products.
(b) Pursuant
and subject to the provisions of this Section 2.9 (b) and Schedule 2.9 (b),
commencing February 1, 2009, AMO shall have the right (but not the obligation)
to market to Customers products and services which are not Protection Programs
and which are sold to Customers by third-party vendors of AMO and not AMO itself
(collectively, “AMO Enhancement Marketing Services”). AMO Enhancement Marketing
Services shall include, but not be limited to, travel clubs, legal services, and
merchandise. The parties shall also adhere to the provisions set
forth in Schedule 2.9 (b).
(c) Pursuant
and subject to the provisions of this Section 2.9 (c), AMO’s rights under
Section 2.9 (b) and Schedule 2.9 (b), and AMO’s rights under this Section 2.9
(c) and Schedule 2.9 (c), commencing February 1, 2009 Bank may (but is not
obligated) to solicit Cardholders, through solicitations made in connection with
their Accounts, those products and services (which are not Protection Programs
and not competitive with Goods and/or Services, or AMO Enhancement Marketing
Services, which shall be referred to herein as “Bank Enhancement Marketing
Services”); provided, however, that Bank may not begin to market or sell any
particular AMO Enhancement Marketing Service without AMO’s prior written
approval of such AMO Enhancement Marketing Service (not to be unreasonably
withheld). It shall not be deemed unreasonable for AMO to fail to provide such
approval solely because AMO plans to market competing Goods and/or Services or
AMO Enhancement Marketing Services. Bank Enhancement Marketing
Services may. include, but not be limited to, travel clubs, legal services,
and merchandise products. Bank may but is not obligated to offer Bank
Enhancement Marketing Services through direct marketing channels including but
not limited to telemarketing, call transfer, inbound customer service call
offers, call to confirm programs, IVR and ECS. Bank also has the
right but not the obligation to make written offers through Billing Statement
bangtails and inserts, Billing Statement messaging, and direct mail. Bank will
notify AMO of proposed offers through direct mail, telemarketing, statement
inserts, and statement messaging prior to execution. The charges for
Bank Enhancement Marketing Services will be billed to the applicable
Cardholder’s Account when appropriate. Bank shall have the right but
not the obligation to immediately terminate any Bank Enhancement Marketing
Services if and when either party: (x) terminates this Agreement, (y)
notifies the other party of an intent to terminate or that the notifying party
has already terminated this Agreement, or (z) notifies the other of an intent to
allow this Agreement to expire. In addition, Bank shall also adhere to the
requirements set forth on Schedule 2.9 (c).
PRIVATE
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2.10 Ownership and Licensing of
the Party’s Marks. (a) Subject to the other
provisions of this Agreement, AMO hereby grants to Bank a non-exclusive (except
as to branded credit account and card plans per Section 3.11), non-transferable
license to use the AMO’s Marks solely in satisfaction of its duties, rights and
obligations described in this Agreement, including without limitation, using
same in any and all promotional materials, Account documentation, advertising,
websites, marketing, and solicitations related to the Plan, during the
Term. Bank shall use the trademark designations “®” or “TM” or such
other designation as AMO may specify or approve in connection with the AMO’s
Marks on the Credit Cards, Account documentation and promotional
materials. Bank agrees it will not use the AMO’s Marks on or in
connection with any products or services or for any other purpose other than as
explicitly described in this Agreement except as required by Applicable
Law. For the avoidance of doubt, Bank may not use AMO’s Marks in
connection with the marketing and sale of any Bank Enhancement Marketing Service
without the prior written consent of AMO.
(b) Anything
in this Agreement to the contrary notwithstanding, AMO shall retain all rights
in and to XXX Xxxx pertaining to such Accounts, and all goodwill associated with
the use of AMO Marks (whether under this Agreement or otherwise) shall inure to
the benefit of AMO. AMO shall have the right, in its sole and
absolute discretion, to prohibit the use of any AMO Marks in any Forms,
advertisements or other materials or references proposed to be used by Bank
which AMO in its reasonable business judgment deems objectionable or
improper. Bank shall cease all use of AMO Marks upon the termination
of this Agreement for any reason unless Bank retains the Accounts after
termination of the Agreement. In that case, Bank may use AMO Marks solely in
connection with the administration and collection of the balance due on the
Accounts.
(c) AMO
recognizes that Bank is the sole owner of the Bank Marks, that AMO has no rights
of ownership or license therein, and that AMO is not entitled to (and shall not)
use the Bank’s Marks other than as explicitly and specifically provided in this
Agreement. As a point of clarification, Bank has and retains all rights in and
to Bank’s Marks and the use thereof, and all goodwill associated with the use of
Bank’s Marks (whether under this Agreement or otherwise) shall inure to the
benefit of Bank. Bank shall have the right, in its sole and absolute
discretion, to prohibit the use of any Bank’s Marks in any Plan Documents,
advertisements, or other materials or references proposed to be used by AMO
which Bank in its reasonable business judgment deems objectionable or
improper. AMO shall cease all use of Bank’s Marks upon the
termination of this Agreement for any reason.
SECTION
3. OPERATION OF THE
PLAN
3.1 Honoring
Accounts. AMO agrees that each AMO Business will honor any
Account properly issued and authorized by Bank and bearing an AMO Brand that
corresponds with such AMO Business, as set forth in Appendix A. For example, the
AMO Business “Arizona Mail Order” shall be authorized to honor a properly issued
and authorized Account bearing the AMO Brand “Coward Shoes”, as long as that AMO
Brand remains related to that AMO Business. In addition, as of the Closing Date,
and subject to Schedule 3.1, there shall be Cross Shopping between and amongst
all the AMO Businesses and AMO
PRIVATE
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Brands.
Furthermore, AMO shall deliver to Bank all Transaction Records evidencing
transactions made under the Plan, in accordance with the provisions of this
Agreement and the Operating Procedures.
3.2 Re-Branding of Accounts with
Lost Utility. The parties agree that, in the event certain
Accounts (including their corresponding Credit Cards) lose utility with respect
to certain geographic market areas as a result of changes in AMO’s business,
Bank shall have the right to re-brand the Accounts for the affected Cardholders
and issue such Cardholders a replacement or substitute account (including, at
Bank’s discretion, a corresponding card) with such characteristics as Bank
considers appropriate. Such new accounts (and any corresponding
cards) shall not be part of the Plan nor governed by this Agreement, but also
shall not be issued in connection with any other retailer. Bank shall be
responsible for providing any affected Cardholders with notice of such
changes. The cost of designing and issuing such new cards shall be
borne by Bank. Prior to issuing any newly branded accounts for the
AMO Brands or AMO Businesses, Bank shall discuss the matter with
AMO.
3.3 Cardholder Disputes
Regarding Accounts, and Goods and/or Services. (a) AMO shall
promptly notify Bank regarding any Cardholder dispute regarding an
Account. This includes but is not limited to claims related to
outstanding balances, Bank reports to credit bureaus, finance charges, fees, and
collection efforts (e.g., notification that the Cardholder has filed bankruptcy
or wants collection communications directed to legal counsel,
etc.).
(b) AMO
shall act promptly to investigate and work to resolve disputes with Cardholders
regarding Goods and/or Services obtained through AMO pursuant to the
Plan. AMO shall timely process credits or refunds for Cardholders
utilizing the Plan.
3.4 No Special
Agreements. AMO will not extract any special agreement,
condition, fee, or security from Cardholders in connection with their use of a
Credit Card, unless approved in advance by Bank in writing.
3.5 Cardholder Disputes
Regarding Violations of Applicable Law. AMO shall assist Bank
in further investigating and using its reasonable efforts to help resolve any
Applicant or Cardholder claim, dispute, or defense which may be asserted under
Applicable Law.
3.6 Payment to AMO; Ownership of
Accounts; Fees; Accounting. (a) Unless otherwise
agreed to by the parties in a written amendment to this Agreement, there shall
be one (1) settlement for all AMO Businesses. AMO shall
electronically transmit all Transaction Records (from its main offices and/or
its Sales Channels) to Bank within a reasonable period of time and in a format
acceptable to Bank. Upon receipt, Bank shall use commercially reasonable efforts
to promptly verify and process such Transaction Records and, in the time frames
specified herein, Bank will remit to AMO an amount equal to the Net Proceeds
indicated by such Transaction Records for the Credit Sales Day(s) for which such
remittance is made. Bank will transfer funds via Automated Clearing House
(“ACH”) to an account designated in writing by AMO to Bank (the “AMO Deposit
Account”). The parties recognize and agree that the above referenced
designation may come as part of, and be subject to, a deposit account control
agreement entered into by the parties and one or more third-parties with whom
AMO has a relationship. If Transaction Records are received by
Bank’s
PRIVATE
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19
processing
center before 12 noon Eastern time on a Business Day, Bank will initiate such
ACH transfer no later than 12 noon on the second Business Day
thereafter. In the event that the Transaction Records are received
after 12 noon Eastern time on a Business Day, then Bank will initiate such
transfer no later than 12 noon on the third Business Day
thereafter. The term “initiate” shall mean that Bank shall transmit
an ACH file to Bank’s financial institution for settlement on the next Business
Day.
(b) Bank
shall own all the Accounts under the Plan from the time of establishment, and
except as otherwise provided herein, AMO shall not have any right to any
indebtedness on an Account or to any Account payment from a Cardholder arising
out of or in connection with any Purchases under the Plan. Effective
upon the delivery of each Charge Slip by AMO to Bank and payment to AMO by Bank
pursuant to Section 3.6(a), AMO shall be deemed to have transferred, conveyed,
assigned and surrendered to Bank all right, title or interest in all such Charge
Slips and in all other rights and writings evidencing such Purchases, if
any.
(c) All
Transaction Records are subject to review and acceptance by Bank. In
the event of a computational or similar error of an accounting or record keeping
nature with respect to such Transaction Records, Bank may credit to the AMO’s
Deposit Account or net against the Net Proceeds (as the case may be) the proper
amount as corrected. If the Net Proceeds are insufficient, AMO shall remit the
proper amount to Bank immediately upon written demand. Upon any such
correction, Bank shall give AMO prompt notice of same, including details of the
discrepancy and correction.
(d) The
Credit Card Agreement shall initially include the terms and conditions regarding
rates and fees as are set forth in Schedule 3.6 (d) (“Rates and
Fees”). Bank hereby represents that these Rates and Fees accurately
reflect such rates and fees charged in connection with the Crosstown Traders
Program as of the date hereof. In connection with its servicing of
the Accounts, Bank may make changes to the Credit Card Agreement on an
individual Account by Account basis and without notice to AMO. On
other than an Account by Account basis, Bank may make non-Rates and Fees changes
at any time, or as required by Applicable Law, but must provide notice of same
to AMO as is reasonable under the circumstances. With respect to any changes in
the Rates and Fees, Bank will, prior to making any such changes, notify AMO of
such changes and discuss such changes with AMO.
(e) AMO
shall obtain and maintain at its own expense such Point of Sale terminals, cash
registers, network (electronic communication interchange system), telephone or
other communication lines, software, hardware and other items of equipment as
are necessary for it to request and receive authorizations, transmit Charge Slip
and Credit Slip information, process applications and perform its obligations
under this Agreement. The computer programs and telecommunications protocols
necessary to facilitate communications between Bank and AMO (and/or Bank and
specific Sales Channels, if applicable) shall be determined by Bank from time to
time, subject to reasonable prior notice of any change in such programs,
equipment or protocols.
(f) AMO
shall be responsible for ensuring that all Promotional Program Purchases are
properly designated as such on the Transaction Record in accordance with Bank’s
instructions.
PRIVATE
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20
(g) Bank
may, if AMO fails to pay Bank any amounts due to Bank pursuant to this Agreement
for more than thirty (30) days after the due date, offset such amounts against
the Net Proceeds or any other amounts owed by Bank to AMO under this
Agreement.
(h) In
the event either party fails to pay the other party any sum when due hereunder
and such failure continues for ten (10) days after written notice that the same
is past due, interest shall commence to accrue on the unpaid amount at an annual
interest rate equal to twelve percent (12%) per annum from the date such sum was
due until the date the same is paid in full.
3.7 Bank Mailings; Insertion of
AMO’s Promotional Materials. Envelope space (including
bangtail) for Billing Statements and Credit Card mailers shall be allocated as
follows:
(a) “Priority
Materials”, defined as: legally required material, privacy notices, disclosures,
Cardholder notices, Billing Statements, new Credit Card mailers, Credit Card
Agreement, and notices sent by Bank;
(b) Bank’s
other inserts (including bangtail).
(c) AMO’s
promotional materials, subject to the following terms:
At AMO’s
request, Bank will include with the Billing Statements and new Credit Card
mailers AMO promotional materials (including those relating to AMO Enhancement
Marketing Services described in Schedule 2.9 (b)) provided by AMO (which
promotional materials shall be prepared and provided to Bank or its vendor at
AMO’s expense), so long as the materials: (i) are provided to Bank at
least thirty (30) days prior to the scheduled mailing date of such statements or
notices and pursuant to an insert schedule that AMO provided to Bank at least
sixty (60) days in advance; (ii) have been approved as to content by Bank (in
its reasonable discretion) with respect to any manner of reference to Bank or
the Plan; (iii) meet all size, weight, or other specifications for such inserts
as shall be reasonably set by Bank from time to time; (iv) would not require the
removal (in Bank’s standard envelope) of Priority Materials and/or Bank’s other
inserts; and (v) are paid for by AMO, along with all additional postage
costs caused by Bank’s insertion of such materials. Notwithstanding
the immediately preceding sentence, Bank must provide AMO reasonable advance
notice of any such additional postage charge. Furthermore, Bank shall
only insert AMO materials (and charge such additional expense to AMO) if AMO
approves such insertion regardless of the additional postage
costs. In addition to paying for the costs and expenses of the
promotional materials and additional postage expenses as set forth above AMO
shall pay Bank an insert fee for any AMO promotional materials inserted in
accordance with this Section 3.7 in an amount equal to $0.02 per billing
statement in which such insertion is inserted. Bank hereby represents
that the foregoing accurately represents the actual costs incurred by Bank in
performing the insertions as of the date hereof.
Bank
reserves the right to disallow any inserts which are in violation of Applicable
Law, conflict with any other provision of this Agreement, or whose subject
matter is reasonably deemed by Bank to be salacious in nature.
PRIVATE
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21
3.8 Payments. All
payments to be made by Cardholders with respect to any amounts outstanding on
the Accounts shall be made in accordance with the instructions of Bank and at
the location or address specified by Bank. AMO hereby authorizes
Bank, or any of its employees or agents, to endorse “Spirit of America National
Bank” upon all or any checks, drafts, money orders or other evidence of payment,
made payable to AMO and intended as payment on an Account, that may come into
Bank’s possession from Cardholders and to credit said payment against the
appropriate Cardholder’s Account. Bank has the sole right to receive
and retain all payments made with respect to all Accounts and to pursue
collection of all amounts outstanding, unless a Purchase is charged back to AMO
pursuant to the provisions of Section 3.9 and 3.10.
3.9 Chargebacks. Bank
shall have the right to charge back AMO the amount of any Purchase, including
the unpaid principal balance, applicable sales tax, accrued and billed finance
charges, fees, charges and any of such amounts written off by
Bank.
(a) If
any Applicant or Cardholder claim, defense, dispute, or basis for non-payment is
based on an alleged action or inaction by AMO and/or otherwise involves the
Goods and/or Services, including but not limited to an alleged: (i) breach of
warranty or representation; (ii) unauthorized use of the Credit Card; (ii)
charge for something other than an actual Purchase; (iii) the Charge Slip
related to the Purchase is a duplicate of one already paid and/or the price on
it differs from the price on the Cardholder’s copy of same; and/or (Bank’s
determination, upon receipt of a fraud affidavit from the Cardholder, that the
signature on any Charge Slip has been forged or is counterfeit; or
(b) If
Bank determines that, with respect to such Purchase or the Account
that: (i) there is a breach of any warranty or representation
made by or with respect to AMO under this Agreement; (ii) there is a failure by
AMO to comply with any term or condition of this Agreement, which failure shall
not have been cured within fifteen (15) days after receipt of written notice
thereof from Bank; or (iii) after; or
(c) For
any chargeback reason as set forth in the Operating Procedures.
3.10 Exercise of
Chargebacks. With respect to any amounts to be charged back
pursuant to Section 3.9, Bank will offset such amount as part of the Net
Proceeds to be paid to AMO, to the extent the balance thereof is sufficient or
Bank may demand payment from AMO in immediately available funds for the full or
any partial amount of such chargeback. Upon payment in full of the
related amount by AMO to Bank, or off-setting, as the case may be, Bank shall
transfer to AMO, without any representation, warranty or recourse, all of Bank’s
right to payments of such amounts charged back in connection with such
Purchase. Bank will exercise commercially reasonable efforts to
cooperate with AMO in any efforts by AMO to collect the chargeback
amount. Bank may reduce the amount owed by a Cardholder on any
Purchase subject to chargeback, but the related chargeback shall then be equal
to the reduced (or net) amount owed by the Cardholder. AMO shall not
resubmit or re-transmit any charged back Purchase to Bank, without Bank’s prior
written consent.
3.11 Non-Competition. (a)
AMO shall actively and consistently market, promote, participate in and support
the Plan as set forth in this Agreement. Furthermore, except as
PRIVATE
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22
otherwise
provided in subsections (b), (c) and (d) below, AMO agrees that, in
consideration of and as an inducement for Bank to make the Plan available to AMO
as provided in this Agreement, AMO (including its Affiliates) shall not, either
on its own or under contract or in concert with any third party, establish,
provide, own, accept or process any (i) “private label” or “co-brand” revolving
credit card, (ii) debit card that is “branded” (with an XXX Xxxx or
other xxxx related to or for the promotion of AMO and/or its Affiliates); or
(iii) other Financial Product.
(b) Notwithstanding
the provisions set forth in subsection (a) above or elsewhere in this Agreement,
nothing contained in this Agreement will be construed to prohibit or prevent AMO
from accepting (i) any Card Association credit account and/or card that is not
“branded”; (ii) any form of Card Association debit account and/or card that is
not “branded”; or (iii) any fixed payment (installment) credit programs for
Applicants declined by Bank.
(c) The
prohibitions set forth in subsection (a) will not apply: (i) as to a particular
state after Bank has terminated the operation of the Plan in such state pursuant
to Section 9.4; (ii) after termination or expiration of this Agreement, or (iv)
in cases where AMO is exercising its rights under Section 3.14 of this
Agreement.
(d) Following
the earlier to occur of January 31, 2009 or the date the WFNNB Account Portfolio
Purchase/Sale Agreement is terminated, if the sale under the WFNNB Account
Portfolio Purchase/Sale Agreement has not closed, Bank hereby acknowledges and
agrees that AMO shall be permitted to enter into a Program Agreement at any time
thereafter and its actions in connection therewith shall in no circumstances be
deemed to violate, or be limited or restricted by, this
Section 3.11.
(e) See also Schedule
3.11.
3.12 Postage. If
during the Term Bank’s aggregate cost of mailing Billing Statements, form
letters, or Credit Cards (including card mailers) increases due to an increase
in postage cost implemented by the United States Postal Service, the following
provisions shall apply. The parties shall evenly share any cost
increase. Adjustments will be made for any subsequent decreases in the cost of
postage. Bank will use commercially reasonable efforts to obtain the
best bulk rate discount for Plan related mailings.
3.13 Reports. Bank
will deliver to AMO the reports set forth in Schedule 3.13, as specified therein
and to the extent information is available and applicable. Bank may
provide any additional reports requested by AMO upon such terms and conditions
(including cost) as are mutually agreed to by the parties.
3.14 New Businesses and Existing
Credit Program Conversions.
(a) No Other AMO
Obligations. (AMO shall have no obligation to (1) include in
the Plan any credit card portfolios acquired in connection with any merger,
consolidation, acquisition or other transaction; (2) otherwise cause such
portfolios to be transferred to Bank; or (3) otherwise transfer any such
portfolios to Bank. The non-competition provisions set
PRIVATE
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23
forth in
Section 3.11 shall not apply to the ownership and/or administration of
accounts described in this Section 3.14, nor any additional accounts related
thereto.
(b) See also Schedule
3.11.
SECTION
4. REPRESENTATIONS AND
WARRANTIES OF AMO
AMO
hereby represents and warrants to Bank as follows:
4.1 Organization, Power and
Qualification. As of the date of execution of this Agreement
and as of the Closing, AMO is duly organized, validly existing and in good
standing under the laws of its formation or organization and has full power and
authority to enter into this Agreement and to carry out the provisions of this
Agreement. As of the date of execution of this Agreement and as of
the Closing, AMO is duly qualified and in good standing to do business in all
jurisdictions where located and/or conducting business, except where the failure
to be so qualified would not have a material adverse effect on AMO’s business,
AMO’s or Bank’s ability to perform as required under this Agreement, or
operation of the Plan.
4.2 Authorization, Validity and
Non-Contravention. As of the date of execution of this
Agreement and as of the Closing:
(a) This
Agreement has been duly authorized by all necessary corporate proceedings (or
analogous governing proceedings). Further, this Agreement has been
duly executed and delivered by AMO, and is a valid and legally binding agreement
of AMO and duly 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 equity principles).
(b) No
consent, approval, authorization, order, registration or qualification of or
with any court or regulatory authority or other governmental body having
jurisdiction over AMO is required for (nor would the absence of such adversely
affect) the legal and valid execution and delivery of this Agreement, and the
performance of the transactions contemplated by this Agreement.
(c) The
execution and delivery of this Agreement by AMO and the compliance by AMO with
all provisions of this Agreement: (i) will not conflict with or
violate any Applicable Law; and (ii) will not conflict with or result in a
breach of or default under any of the terms or provisions of any indenture, loan
agreement, or other contract or agreement to which AMO is a party (including but
not limited to any under which AMO is an obligor or by which its property is
bound) where such conflict, breach or default would have a material adverse
effect on AMO or the Plan, nor will such execution, delivery or compliance
violate or result in the violation of the Articles of Incorporation or By-Laws
(or analogous rules of governance) of AMO.
4.3 Accuracy of
Information. All factual information furnished by AMO to Bank
in writing at any time pursuant to any requirement of, or furnished in response
to any written request of Bank under this Agreement or any transaction
contemplated hereby has been,
PRIVATE
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24
and all
such factual information hereafter furnished by AMO to Bank will be, to AMO’s
best knowledge and belief, true and accurate in every respect material to the
transactions contemplated hereby on the date as of which such information was or
will be stated or certified.
4.4 Validity of Charge
Slips. (a) As of the date any Transaction Records
are presented to Bank in accordance with the provisions of this Agreement, each
Charge Slip relating to such Transaction Records shall represent the obligation
of a Cardholder in the respective amount set forth therein for Goods sold or
Services rendered, together with applicable taxes, if any, and shall not involve
any element of credit for any other purpose.
(b) As
of the date any Transaction Records are presented to Bank in accordance with the
provisions of this Agreement, AMO has no knowledge or notice of any fact or
matter which would immediately or ultimately impair the validity of any Charge
Slip relating to such Transaction Records, the transaction evidenced thereby, or
its collectability.
4.5 Compliance with
Law. AMO’s conduct of its business, including but not limited
to sales of Goods and/or Services and compliance with its obligations under the
Plan, is in compliance with all Applicable Law, including but not limited to not
engaging in: the sale of any illegal goods and/or services, the illegal sale of
otherwise legal goods and/or services, and sales in violation of federal and
state laws designed to prevent unlawful gambling, except where the failure to
comply individually or in the aggregate, does not or will not have a material
adverse effect on AMO, Bank or the Plan.
4.6 AMO’s
Marks. AMO has the legal right to use and to permit the Bank
to use, to the extent set forth herein, AMO Marks.
4.7 Intellectual Property
Rights. In the event AMO provides any software or hardware to
Bank, AMO has the legal right to such software or hardware and the right to
permit Bank to use such software or hardware, and such use shall not violate any
intellectual property rights of any third party. Any software,
hardware or technology provided by or on behalf of AMO is without warranty of
merchantability or warranty of fitness for any particular use, and is provided
“AS-IS”, but nothing in this Section 4.7 shall relieve AMO of its obligations
set forth elsewhere in this Agreement with respect to the performance of its
systems and operations. Any software or other technology developed by
or for AMO or its Affiliates, to facilitate the Plan, including but not limited
to, software and software modifications developed in response to Bank’s request
or to accommodate Bank’s special requirements and all derivative works,
regardless of the developer thereof, will remain the exclusive property of AMO
and/or its Affiliates. Nothing in this Agreement shall be deemed to
convey a proprietary interest to Bank or any third party in any of the software,
hardware, technology or any of the derivative works thereof which are owned or
licensed by AMO and/or its Affiliates, and Bank shall return to AMO all
materials containing such intellectual property upon termination of this
Agreement.
4.8 WFNNB Program
Agreement. AMO has entered into the WFNNB Program Agreement
with World Financial Network National Bank and the same is in full force and
effect on the date hereof and constitutes the legal and binding obligation of
AMO and, to
PRIVATE
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25
AMO’s
knowledge, World Financial Network National Bank. The anticipated
Conversion Date under the WFNNB Program Agreement is on or before October 31,
2008.
SECTION
5. COVENANTS OF
AMO
AMO
hereby covenants and agrees as follows:
5.1 Notices of
Changes. AMO will as soon as reasonably possible notify Bank
of any: (a) change in the name or form of business organization of
AMO, change in the location of its chief executive office or the location of the
office where its records concerning the Plan are kept; (b) merger or
consolidation of AMO, the sale of a significant portion of its stock (or other
form of ownership) or the sale of a substantial amount of its assets
not in the ordinary course of business, or any change in the control of AMO; (c)
material adverse change in its financial condition or operations; (d) the
planned opening or closing of any Sales Channels (including individual AMO
Businesses); (e) any change in business practices of AMO that would have a
material adverse effect on this Agreement or the Plan; or (f) any occurrence
that would constitute a Bank Termination Event under Section 9.2. AMO
will furnish such additional information with respect to any of the foregoing as
Bank may reasonably request, for the purpose of Bank’s evaluating the effect of
such change on the financial condition and operations of AMO and on the
Plan. Prior to the earliest to occur of (x) February 1, 2009, (y) the
closing under the WFNNB Account Portfolio Purchase/Sale Agreement and (z) the
date of termination of the WFNNB Account Portfolio Purchase/Sale Agreement, AMO
shall not discontinue or sell any Sales Channels or AMO Businesses (except that
AMO shall have the right, in its sole discretion, to discontinue or sell all or
any portion of the Xxx-Xxxxxx Brand and/or Xxx-Xxxxxx Business).
5.2 Conversion. AMO
shall use commercially reasonable good faith efforts to comply with the
Conversion Plan (as such Conversion Plan may modified by the parties in
accordance with Section 2.1(a)) and AMO shall not agree to any amendment or
modification of the WFNNB Program Agreement which would reduce World Financial
Network National Bank’s obligations with respect to the Conversion or extend or
delay the Conversion Date (as such term is defined in the WFNNB Program
Agreement) beyond January 31, 2009. AMO shall request that
World Financial Network National Bank comply with its obligations under the
WFNNB Program Agreement with respect to the Conversion.
5.3 Access
Rights. Subject to (b) below, AMO will permit, once per Plan
Year unless Bank has reasonable cause to do so more than once, authorized
representatives designated by Bank, at Bank’s expense, to visit its facilities
and inspect, to the extent permitted by Applicable Law, any of the books and
records of AMO and/or its Sales Channels pertaining to Applicants, Accounts,
Transaction Records and any category of payments owed by one party to the other,
and to make copies and take extracts there from, and to discuss the same with
its officers and independent public accountants, all at reasonable times during
normal business hours. In addition, AMO shall permit regulatory
bodies having jurisdiction over Bank to visit its facilities related to the Plan
during normal business hours with advance notice.
(b) AMO’s
obligations under (a) shall not be required to the extent that (i) such access
is prohibited by Applicable Law, (ii) such records are legally privileged, or
(iii) such
PRIVATE
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26
records
are AMO planning documents or those of any of its Affiliates, operating budgets,
management reviews or employee records.
5.4 AMO’s
Business. AMO shall do or cause to be done all things
necessary to preserve and keep in full force and effect its corporate existence
(or analogous business form) and to comply with all Applicable Laws in
connection with its business and the sale of Goods and/or Services, including,
but not limited to: (i) compliance with all applicable license requirements
related to its business, and (ii) fulfilling its obligations under the
Plan. AMO shall provide to Bank, annually, a forecast of the next
year in terms of AMO’s total sales, number of catalog mailings (in aggregate and
by Brand), and expansion or contraction of any Sales Channels.
5.5 Insurance. AMO
shall maintain insurance policies with insurers, and in such amounts and against
such types of loss and damage, as are customarily maintained by other companies
engaged in similar businesses within AMO’s industry.
5.6 Sales
Information. AMO shall furnish to Bank on a quarterly
basis a report showing AMO’s total sales of Goods and/or
Services, categorized by tender type.
5.7 Business
Continuation/Disaster Recovery Plan. AMO shall maintain a plan
designed to mitigate damages resulting from Force Majeure or other causes that
would threaten operation of AMO’s business and/or loss or exposure of
information requiring protection as described in Sections 2.8 and
10.17.
5.8 Compliance with Agreement
and Operating Procedures. AMO shall use commercially
reasonable efforts to ensure that its Affiliates, licensees, franchises,
officers, directors, associates and agents comply with the terms of this
Agreement and the Operating Procedures.
5.9 Compliance with Program
Agreement and Conversion. AMO will comply with its obligations
under any Program Agreement and will use its commercially reasonable efforts to
cooperate with Bank and the Program Provider in facilitating the
Conversion. AMO shall use its commercially reasonable efforts to
perform its obligations under the Conversion Plan and acknowledges that, in
connection with the Conversion, AMO will not request or require any system
interface elements beyond those set forth in the Conversion Plan.
5.10 Program Assets Sale
Agreement. If the WFNNB Account Portfolio/Sale Agreement is
terminated, AMO and Bank shall endeavor in good faith until the expiration of
the Term, or earlier termination of this Agreement in accordance with its terms
to identify an Approved Replacement Purchaser with which Bank shall enter into
an Account Portfolio/Sale Agreement (and Bank agrees to enter into an Account
Portfolio/Sale Agreement with an Approved Replacement Purchaser) in form and
substance reasonably acceptable to AMO and Bank, it being understood that an
Account Portfolio/Sale Agreement shall be deemed to be reasonably acceptable to
Bank so long as it contains terms that in the aggregate are not materially less
favorable to Bank than those contained in the WFNNB Account Portfolio/Sale
Agreement; provided that if such Account Portfolio/Sale Agreement provides for
(i) a sale to an Approved Replacement Purchaser for a purchase price of less
than 100% but greater than 80% of the aggregate Account Balances of the Accounts
transferred thereunder (other
PRIVATE
LABEL CREDIT CARD PLAN AGREEMENT
27
than with
respect to any Ineligible Accounts) and (ii) AMO agrees to pay to Bank an amount
equal to 50% of the shortfall between (x) the actual purchase price and (y) 100%
of the aggregate Account Balances of the Accounts transferred thereunder (other
than with respect to any Ineligible Accounts), up to a cap of 10% of such
aggregate Account Balances, then the purchase price under such Account
Portfolio/Sale Agreement shall be deemed to be not materially less favorable to
Bank than the purchase price contained in the WFNNB Account Portfolio/Sale
Agreement and the purchase price shall be deemed reasonably satisfactory to
Bank; provided, however if the Approved Replacement Purchaser is World Financial
Network National Bank, any investment fund managed by Golden Gate Private
Equity, Inc., Orchard Brands Corporation, or any of their respective affiliates
or subsidiaries, then, unless Bank otherwise agrees, the Account Portfolio/Sale
Agreement shall not be deemed reasonably acceptable to Bank unless the purchase
price is 100% of the aggregate Account Balances of the Accounts transferred
thereunder (other than with respect to any Ineligible Accounts). In
addition, in such event, Bank and AMO shall also endeavor in good faith until
the expiration of the Term or earlier termination of this Agreement in
accordance with its terms to identify a Program Provider with which AMO shall
enter into a Program Agreement reasonably acceptable to AMO (it being agreed
that such Program Agreement shall be deemed to be reasonably acceptable to AMO
if it contains terms which in the aggregate are not materially less favorable to
AMO than those contained in the WFNNB Program Agreement).
SECTION
6. REPRESENTATIONS AND
WARRANTIES OF BANK
Bank
hereby represents and warrants to AMO as follows:
6.1 Organization, Power and
Qualification. As of the date of execution of this Agreement
and as of the Closing, Bank is a national banking association, duly organized,
validly existing and in good standing under the laws of the United States of
America and has full power and authority to enter into this Agreement and to
carry out the provisions of this Agreement. As of the date of
execution of this Agreement and as of the Closing, Bank is duly qualified and in
good standing to do business in all jurisdictions where such qualification is
necessary for Bank to carry out its obligations under this
Agreement.
6.2 Authorization, Validity and
Non-Contravention. As of the date of execution of this
Agreement and as of the Closing,
(a) This
Agreement has been duly authorized by all necessary proceedings, has been duly
executed and delivered by Bank and is a valid and legally binding agreement of
Bank and duly 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 equity principles).
(b) No
consent, approval, authorization, order, registration or qualification of or
with any court or regulatory authority or other governmental body having
jurisdiction over Bank is required for (nor would the absence of such materially
adversely affect) the legal and valid execution and delivery of this Agreement,
and the performance of the transactions contemplated by this
Agreement.
PRIVATE
LABEL CREDIT CARD PLAN AGREEMENT
28
(c) The
execution and delivery of this Agreement by Bank hereunder and the compliance by
Bank with all provisions of this Agreement: (i) will not conflict
with or violate any Applicable Law; (ii) will not conflict with or result in a
breach of the terms or provisions of any indenture, loan agreement or other
contract or agreement to which Bank is a party (including but not limited to any
under by which Bank’s property is bound) where such conflict, breach or default
would have a material adverse effect on Bank, nor will such execution, delivery
or compliance violate or result in the violation of the Charter or By-Laws of
Bank.
6.3 Accuracy of
Information. All factual information furnished by Bank to AMO
in writing at any time pursuant to any requirement of, or furnished in response
to any written request of AMO under this Agreement or any transaction
contemplated hereby has been, and all such factual information hereafter
furnished by Bank to AMO will be, to Bank’s best knowledge and belief, true and
accurate in every respect material to the transactions contemplated hereby on
the date as of which such information has or will be stated or
certified.
6.4 Compliance with
Law. As of the date of execution, Bank’s conduct of its
business is in compliance with all Applicable Law, except where the failure to
comply individually or in the aggregate, does not or will not have a material
adverse effect on AMO, Bank or the Plan.
6.5 Intellectual Property
Rights. In the event Bank provides any software or hardware to
AMO, Bank has the legal right to such software or hardware and the right to
permit AMO to use such software or hardware, and such use shall not violate any
intellectual property rights of any third party. Any software,
hardware or technology provided by or on behalf of Bank is without warranty of
merchantability or warranty of fitness for any particular use, and is provided
“AS-IS”, but nothing in this Section 6.5 shall relieve Bank of its obligations
set forth elsewhere in this Agreement (including but not limited to Section 2
and Section 3 with respect the performance of its systems and
operations. Any software or other technology developed by Bank or its
Affiliates or developed for Bank or its Affiliates at Bank’s expense, to
facilitate the Plan, including but not limited to, software and software
modifications developed in response to AMO’s request or to accommodate AMO’s
special requirements and all derivative works, regardless of the developer
thereof, will remain the exclusive property of Bank and/or its
Affiliates. Nothing in this Agreement shall be deemed to convey a
proprietary interest to AMO or any third party in any of the software, hardware,
technology or any of the derivative works thereof which are owned or licensed by
Bank and/or its Affiliates, and AMO shall return to Bank all materials
containing such intellectual property upon termination of this
Agreement.
6.6 WFNNB Account Portfolio
Purchase/Sale Agreement. Bank has entered into the WFNNB
Account Portfolio Purchase/Sale Agreement with World Financial Network National
Bank and the same is in full force and effect on the date hereof and constitutes
the legal and binding obligation of Bank and, to the knowledge of Bank, World
Financial Network National Bank.
PRIVATE
LABEL CREDIT CARD PLAN AGREEMENT
29
SECTION
7. COVENANTS OF
BANK
Bank
hereby covenants and agrees as follows:
7.1 Notices of
Changes. Bank will as soon as reasonably possible notify AMO
of any: (a) change in the name or form of business organization of
Bank, change in the location of its chief executive office or the location of
the office where its records concerning the Plan are kept; (b) merger or
consolidation of Bank or the sale of a significant portion of its stock or of
any substantial amount of its assets not in the ordinary course of business or
any change in the control of Bank; (c) material adverse change in its financial
condition or operations; or (d) litigation, whether actual, pending or
threatened, which would have a material adverse effect on the Plan or on Bank’s
ability to fulfill any of its obligations hereunder or thereunder. Bank will
furnish such additional information with respect to any of the foregoing as AMO
may request for the purpose of evaluating the effect of such transaction on the
financial condition and operations of Bank and on the Plan.
7.2. Intentionally
Omitted.
7.3 Access
Rights. Subject to (b) below, Bank will permit, once per Plan
Year unless AMO has reasonable cause to do so more than once, authorized
representatives designated by AMO, at AMO’s expense, to visit its facilities
and inspect, to the extent permitted by Applicable Law, any of Bank’s
books and records pertaining to Purchases and any category of payments owed by
one party to the other, and to make copies and take extracts there from, and to
discuss the same with its officers and independent public accountants, all at
reasonable times during normal business hours. Bank shall permit AMO,
once per Plan Year, during normal business hours and upon reasonable notice, and
in a manner which does not disrupt the operations, to visit the offices at which
services relating to the Plan are provided, to review the activities of Bank and
its subcontractors.
(b) Bank’s
obligations under (a) shall not be required to the extent that (i) such access
is prohibited by Applicable Law, (ii) such records are legally privileged, (iii)
such records are Bank planning documents or those of any of its Affiliates,
operating budgets, management reviews or employee records, or (iv) such records
relate to other clients of, or credit programs operated by, Bank.
7.4 Bank’s
Business. Bank shall do or cause to be done all things
necessary to preserve and keep in full force and affect its corporate existence
and to comply with all Applicable Laws in connection with its business and the
issuance of credit by Bank.
7.5 Insurance. Bank
shall maintain insurance policies with insurers and in such amounts and against
such types of loss and damage as are customarily maintained by other banks
engaged in similar businesses as Bank.
7.6 Business
Continuation/Disaster Recovery Plan. Bank shall maintain a
plan designed to mitigate damages resulting from Force Majeure or other causes
that would threaten operation of Bank’s business and/or loss or exposure of
information requiring protection as described in Sections 2.8 and
10.17.
PRIVATE
LABEL CREDIT CARD PLAN AGREEMENT
30
7.7 Compliance with
Law. Any action or inaction taken by Bank (where Bank has a
duty to act) in connection with the Plan shall be in compliance with all
Applicable Law except where the failure to so comply does not or will not have
an adverse effect on the Bank, AMO or the Plan.
7.8
Termination of WFNNB
Account Portfolio Purchase/Sale Agreement; Termination of WFNNB Program
Agreement.
(i) Bank
shall not (i) extend the “Transfer Date” (as such term is defined in the WFNNB
Account Portfolio Purchase/Sale Agreement) beyond January 31, 2009 or (ii)
otherwise amend, waive, supplement or modify the WFNNB Account Portfolio
Purchase/Sale Agreement in any manner that would reasonably be expected to
materially adversely affect AMO or its Affiliates (including, after the Closing,
Xxxx Xxxxxxxx Outfitters Inc.), in each case, without the prior written consent
of AMO. If the WFNNB Account Portfolio Purchase/Sale Agreement is
terminated, Bank and AMO shall endeavor in good faith until the expiration of
the Term or earlier termination of this Agreement in accordance with its terms
to execute an Account Portfolio Purchase/Sale Agreement with an Approved
Replacement Purchaser which is in a form reasonably acceptable to AMO and Bank
and contains terms that in the aggregate are not materially less favorable to
Bank than those contained in the WFNNB Account Portfolio Purchase/Sale Agreement
as set forth in Section 5.10. Any sale pursuant to such Account
Portfolio Purchase/Sale Agreement entered into with an Approved Replacement
Purchaser shall be subject to the payment provisions set forth in the proviso to
Section 5.10.
(ii) In
connection with the termination of this Agreement on account of a Conversion,
Bank shall use commercially reasonable efforts to assist AMO with the transition
of the Plan to a Program Provider pursuant to a Program Agreement reasonably
acceptable to AMO. In connection therewith, Bank shall be responsible
for the items set forth as Bank’s obligations under the Conversion Plan
including the cost of transitioning the Plan from the current processing system
utilized by Bank to such Program Provider (it being agreed that Bank shall not
be responsible for any of such Program Provider’s costs in connection
therewith), but excluding any expenses incurred in the transition or development
of information technology systems that allow AMO to interface with such Program
Provider.
SECTION
8. INDEMNIFICATION
8.1 Indemnification
Obligations. (a) AMO shall be liable to and shall indemnify
and hold harmless Bank and its Affiliates and their respective officers,
directors, employees, subcontractors and their successors and assigns
(collectively “Bank Indemnified Parties”) from any and all Losses (as
hereinafter defined) incurred by them by reason of: (i) AMO’s breach
of any representation, warranty or covenant hereunder; (ii) AMO’s failure to
perform its obligations hereunder; (iii) any property damage or personal injury
damage caused by or related to Goods or Services charged to an Account; (iv) any
action or failure to act (where there was a duty to act) by AMO related to the
Plan and/or as otherwise provided for in this Agreement; (v) AMO having caused
Losses to third parties, where such third parties have sought recovery from Bank
Indemnified Parties; and (vi) Bank’s defending against claims described in
(v). In any case, AMO’s liability does not extend to Losses
proximately arising from an act or failure to act by Bank Indemnified
Parties.
PRIVATE
LABEL CREDIT CARD PLAN AGREEMENT
31
(b) Bank
shall be liable to and shall indemnify and hold harmless AMO and its Affiliates
and their respective officers, directors, employees, sub-contractors and their
successors and assigns (collectively, “AMO Indemnified Parties”) from any and
all losses incurred by reason of: (i) Bank’s breach of any
representation, warranty or covenant hereunder; (ii) Bank’s failure to perform
its obligations hereunder; and (iii) any action or failure to act (where there
was a duty to act) by Bank and its officers, directors, and employees relating
to the Plan and/or as otherwise provided for in this Agreement;
(iv) Bank having caused Losses to third-parties, where such
third-parties have sought recovery from AMO Indemnified Parties; and (v) Bank’s
defending against claims described in (iv). In any case, Bank’s
liability does not extend to Losses proximately arising from an act or failure
to act by AMO Indemnified Parties.
(c) For
purposes of this Section 8.1 the term “Losses” shall mean any liability, damage,
costs, fees, losses, judgments, penalties, fines, and expenses, including
without limitation, any reasonable attorneys’ fees, disbursements, settlements
(which require the other party’s consent which shall not be unreasonably
withheld), and court costs, reasonably incurred by Bank, AMO, or a third party,
as the case may be, without regard to whether or not such Losses would be deemed
material under this Agreement; provide however, that Losses shall not include
any overhead costs that either party would normally incur in conducting its
everyday business.
8.2 LIMITATION ON
LIABILITY. (a) IN NO EVENT SHALL EITHER PARTY BE
LIABLE TO THE OTHER PARTY FOR ANY INCIDENTAL, INDIRECT, PUNITIVE, SPECIAL OR
CONSEQUENTIAL DAMAGES THE OTHER PARTY INCURS OR CLAIMS TO HAVE INCURRED ARISING
OUT OF THIS AGREEMENT; PROVIDED, HOWEVER, THAT THIS LIMITATION SHALL NOT APPLY
WITH RESPECT TO A PARTY’S INTENTIONAL BREACH OF THIS AGREEMENT.
(b) BANK’S
TOTAL ANNUAL LIABILITY TO AMO FOR ALL DAMAGES INCURRED BY IT, FOR ANY CAUSE
WHATSOEVER DURING ANY CALENDAR YEAR OF THE TERM OF THIS AGREEMENT, SHALL NOT
EXCEED ONE MILLION DOLLARS ($1,000,000.00). BANK’S TOTAL CUMULATIVE
LIABILITY TO AMO FOR ALL DAMAGES INCURRED BY IT, FOR ANY CAUSE WHATSOEVER, SHALL
NOT EXCEED FIVE MILLION DOLLARS ($5,000,000.00); PROVIDED, HOWEVER, THAT THIS
LIMITATION SHALL NOT APPLY WITH RESPECT TO BANK’S INTENTIONAL BREACH OF THIS
AGREEMENT OR TO BANK’S OBLIGATION TO PAY ANY SPECIFIC AMOUNTS DUE AMO AS
SPECIFIED UNDER THIS AGREEMENT (SUCH AS NET PROCEEDS, ETC.).
(c) AMO’S
TOTAL ANNUAL LIABILITY TO BANK FOR ALL DAMAGES INCURRED BY IT, FOR ANY CAUSE
WHATSOEVER OCCURRING DURING ANY CALENDAR YEAR OF THE TERM OF THIS AGREEMENT,
SHALL NOT EXCEED ONE MILLION DOLLARS ($1,000,000.00). AMO’S TOTAL
CUMULATIVE LIABILITY TO BANK FOR ALL DAMAGES IT INCURS, FOR ANY CAUSE
WHATSOEVER, SHALL NOT EXCEED FIVE MILLION DOLLARS ($5,000,000.00); PROVIDED,
HOWEVER, THAT THIS LIMITATION SHALL NOT APPLY WITH RESPECT TO AMO’S INTENTIONAL
BREACH OF THIS AGREEMENT OR TO AMO’S OBLIGATION TO PAY ANY SPECIFIC AMOUNTS
DUE
PRIVATE
LABEL CREDIT CARD PLAN AGREEMENT
32
BANK AS
SPECIFIED UNDER THIS AGREEMENT (SUCH AS CHARGEBACKS, DISCOUNT FEES, INSERT FEES,
ETC.).
8.3 NO
WARRANTIES. EXCEPT AS PROVIDED HEREIN, THERE ARE NO EXPRESS OR
IMPLIED WARRANTIES, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE, RESPECTING THE SERVICES AND/OR OTHER PRODUCTS
SOLD OR PROVIDED BY BANK PURSUANT TO THIS AGREEMENT.
8.4 Notification of
Indemnification; Conduct of Defense. (a) In no case shall the
indemnifying party be liable under Section 8.1 of this Agreement with respect to
any claim or claims made against the indemnified party or any other person so
indemnified unless it shall be notified in writing of the nature of the claim
within a reasonable time after the assertion thereof. However, failure to so
notify the indemnifying party shall not relieve it from any liability which it
may have under other provisions of this Agreement, except to the extent that the
indemnifying party’s right to defend the matter is materially and irrevocably
prejudiced by such failure to give prompt notice.
(b) The
indemnifying party shall be entitled to participate, at its own expense, in the
defense of any suit brought against the indemnified party which gives rise to a
claim against the indemnifying party. Alternatively, the indemnified
party may elect to assume defense of such claim, but must do so within a
reasonable time after receiving notice of the claim. However, if the
indemnifying party so elects to assume the defense, such defense shall be
conducted by counsel chosen by the indemnifying party and approved by
the indemnified party (or the person or persons so indemnified, who are the
defendant or defendants in any suit so brought), which approval shall not be
unreasonably withheld. Once the indemnifying party has retained
counsel approved by the indemnifying party, the indemnified party (or the person
or persons so indemnified who are the defendant or defendants in the suit),
shall bear the fees and expenses of any additional counsel it chooses to
retain.
SECTION
9. TERM,
EXPIRATION AND TERMINATION
9.1 Term and
Expiration. Upon execution by authorized representatives of
both parties, and unless terminated as provided herein, this Agreement shall
become effective as of the date hereof and remain in effect until the earlier to
occur of (x) the Conversion Date and (y) January 31, 2010 (such period, the
“Term”).
9.2 Termination with Cause by
Bank; Bank Termination Events. Any of the following conditions
or events shall constitute a “Bank Termination Event” hereunder, and Bank may
terminate this Agreement immediately if such a Bank Termination Event occurs by
providing written notice of such decision to AMO setting forth Bank’s reason for
termination and the effective date of termination:
(a) If
AMO shall: (i) generally not pay its debts as they become due; (ii)
file, or consent by answer or otherwise to the filing against it, of a petition
for relief, reorganization or arrangement or any other petition in bankruptcy,
for liquidation or to take advantage of any bankruptcy or insolvency law of any
jurisdiction; (iii) make an assignment for the benefit of its creditors; (iv)
consent to the appointment of a custodian, receiver, trustee or other officer
with
PRIVATE
LABEL CREDIT CARD PLAN AGREEMENT
33
similar
powers of itself or of any substantial part of its property; (v) be adjudicated
insolvent or be liquidated; (vi) take corporate action for the purpose of any of
the foregoing and such event shall materially adversely affect the ability of
AMO to perform under this Agreement or the Plan; (vii) have a materially adverse
change in its financial condition; or (viii) receive an adverse opinion by its
auditors or accountants as to its viability as a going concern; or (ix) breach
or fail to perform or observe any covenant or other term contained in any
creditor loan agreement, debt instrument or any other material agreement to
which it is bound, which breach or failure, if left uncured could result in a
default of such agreement, except in each such case if the
creditor waives rights of foreclosure or acceleration under such agreement in
writing or such breach otherwise does not trigger an acceleration of amounts
owed under such agreement; or
(b) If
a court or government authority of competent jurisdiction shall enter an order
appointing, without consent by AMO, a custodian, receiver, trustee or other
officer with similar powers with respect to it or with respect to any
substantial part of its property, or if an order for relief shall be entered in
any case or proceeding for liquidation or reorganization or otherwise to take
advantage of any bankruptcy or insolvency law of any jurisdiction, or ordering
the dissolution, winding up or liquidation of AMO, or if any petition for any
such relief shall be filed against AMO and such petition shall not be dismissed
within sixty (60) days; or
(c) If
AMO shall materially default (or default in such a manner that it has a material
adverse impact on Bank and/or the Plan) in the performance of or compliance with
any term or violate any of the covenants, representations, warranties or
agreements contained in this Agreement and AMO shall not have remedied such
default within thirty (30) days after written notice thereof shall have been
received by AMO from Bank; or
(d) If
at any time the type of Goods and/or Services sold by AMO materially changes
from the type of Goods and/or Services sold by AMO on the date of execution of
this Agreement; or
(e) If
at any time AMO eliminates or ceases operations of Sales Channels which,
immediately prior to such elimination or cessation, account for more than twenty
percent (20%) of AMO’s sales volume in the aggregate (or announces or
notifies Bank of an intent or anticipation of the foregoing); or
(f) If
there are any changes in business practices of AMO that have a material adverse
effect on this Agreement or the Plan.
9.3 Termination with Cause by
AMO; AMO Termination Events. Any of the following conditions
or events shall constitute a “AMO Termination Event” hereunder, and AMO may
terminate this Agreement immediately if such AMO Termination Event occurs by providing written
notice of such decision to Bank setting forth AMO’s reason for termination and
the effective date of termination,:
(a) If
Bank shall: (i) generally not be paying its debts as they become due;
(ii) file or consent by answer or otherwise to the filing against it, of a
petition for relief, reorganization or arrangement or any other petition in
bankruptcy, for liquidation or to take advantage of any
PRIVATE
LABEL CREDIT CARD PLAN AGREEMENT
34
bankruptcy
or insolvency law of any jurisdiction; (iii) make an assignment for the benefit
of its creditors; (iv) consent to the appointment of a custodian, receiver,
trustee or other officer with similar powers for itself or of any substantial
part of its property; (v) be adjudicated insolvent or be liquidated; or (vi)
take corporate action for the purpose of any of the foregoing and such event
shall materially adversely affect the ability of Bank to perform under this
Agreement or the operation of the Plan and such event shall materially adversely
affect the ability of Bank to perform under this Agreement or the Plan; or (vii)
have a materially adverse change in its financial condition; or (viii) receive
an adverse opinion by its auditors or accountants as to its viability as a going
concern; or (ix) breach or fail to perform or observe any covenant or other term
contained in any creditor loan agreement, debt instrument or any other material
agreement to which it is bound, which breach or failure, if left uncured could
result in a default of such agreement except in each such case if the
creditor waives rights of foreclosure or acceleration under such agreement in
writing or such breach otherwise does not trigger an acceleration of amounts
owed under such agreement; or
(b) If
a court or government authority of competent jurisdiction shall enter an order
appointing, without consent by Bank, a custodian, receiver, trustee or other
officer with similar powers with respect to it or with respect to any
substantial part of its property, or if an order for relief shall be entered in
any case or proceeding for liquidation or reorganization or otherwise to take
advantage of any bankruptcy or insolvency law of any jurisdiction, or ordering
the dissolution, winding up or liquidation of Bank, or if any petition for any
such relief shall be filed against Bank and such petition shall not be dismissed
within sixty (60) days; or
(c) Except
with respect to the Service Standards, if Bank shall default in the performance
of or compliance with any term or violates any of the covenants,
representations, warranties or agreements contained in this Agreement and Bank
shall not have remedied such default within thirty (30) days (ten (10) days in
the case of failure to pay AMO pursuant to Section 3.6(a)) after written notice
of the default thereof shall have been received by Bank from AMO;
or
(d) If
Bank fails for three (3) consecutive months to perform any one of the same
Service Standards in a Service Factor Category, and such failure is not the
result of an act of AMO, or as a result of a force majeure event specified in
Section 10.11, and Bank fails to remedy such failure within thirty (30) days
after receipt of written notice from AMO;
(e) If
there are any changes in business practices of Bank that have a material adverse
effect on this Agreement or the Plan; or
(f) Upon
90 days’ prior written notice from AMO to Bank (and, for the avoidance of
doubt, without any further obligation under Section 5.10) (which notice may not
be delivered prior to the first to occur of (i) January 31, 2009 and (ii)
such date as World Financial Network National Bank shall have notified AMO (or
any of its Affiliates) that a closing under the WFNNB Account Portfolio
Purchase/Sale Agreement is not expected to occur (whether by reason of
termination of such WFNNB Account Portfolio Purchase/Sale Agreement or
otherwise)).
9.4 Termination of Particular
State. In addition, Bank may terminate the operation of the
Plan in a particular state or jurisdiction if the Applicable Law of the state or
jurisdiction
PRIVATE
LABEL CREDIT CARD PLAN AGREEMENT
35
is
amended or interpreted in such a manner so as to render all or any part of the
Plan illegal or unenforceable, and in such event Bank will, if requested, assist
AMO with finding a new credit provider for such state or
jurisdiction.
9.5 Liquidation/Purchase of
Accounts and
Additional Termination Provisions.
(a) AMO's Option to Purchase the
Accounts.
(i) If
this Agreement expires or is terminated by either party for whatever reason
prior to the closing under an Account Portfolio Purchase/Sale Agreement, AMO has
the option to purchase from, or arrange the purchase by a third party nominated
or selected by AMO (a "Nominated Purchaser") from, Bank the Accounts, except for
any Accounts which are charged off or inactive or otherwise mutually deemed
ineligible by AMO and Bank (it being agreed that the Ineligible Accounts as
defined in the WFNNB Account Portfolio Purchase/Sale Agreement shall be
ineligible Accounts), on such terms and conditions mutually acceptable to AMO
(or a Nominated Purchaser) and Bank, including commercially reasonable
representations and warranties. AMO and Bank hereby agree that the
terms of the WFNNB Account Portfolio Purchase/Sale Agreement are mutually
acceptable.
(ii) The
purchase option given by Section 9.5(i) is exercisable by AMO or the Nominated
Purchaser serving notice on Bank within sixty (60) days after the expiration or
termination of this Agreement.
(iii) If
such purchase option is exercised, AMO or the Nominated Purchaser must complete
the purchase of the Accounts within ninety (90) days after the notice has been
given pursuant to Section 9.5(ii); provided, however, that such times may be
extended for required regulatory approvals, rating agency consents, and to
complete any interim servicing obligation agreed to by AMO and Bank. The date of
such completion shall be the "Plan Purchase Date."
(iv) The
purchase price for the Accounts shall be shall be equal to 100% of the face
value of the Accounts (excluding ineligible accounts referred to in Section 9.5
(i) above) and the receivables related thereto, including without limitation all
accrued finance charges and fees.
(v) The
parties will use reasonable commercial efforts to minimize transaction costs.
Once a purchase agreement for purchase of Accounts has been executed, Bank shall
transfer to AMO or the Nominated Purchaser all right title and interest in and
to the Accounts and the related receivables and provide AMO or the Nominated
Purchaser with access to the Accounts and such other information related thereto
as agreed upon by Bank and AMO or the Nominated Purchaser.
(b) If Purchase Option Is not
Exercised.
If this
Agreement is terminated and AMO (or a Nominated Purchaser) does not give written
notice to Bank of the exercise of the its option to purchase the Accounts as set
forth in Section 9.5(a), in addition to all other remedies available to the
parties at law or in equity as a result of any default
hereunder:
PRIVATE
LABEL CREDIT CARD PLAN AGREEMENT
36
(i) subject
to clauses (ii) through (iv) below, AMO shall have no further rights whatsoever
in the Accounts;
(ii) Bank
may use AMO Marks solely to communicate with Cardholders in connection with the
billing and collection of Accounts and as otherwise required by Applicable Law
until the Account balances have been collected in full or written-off and
liquidated, prior notice of which shall be provided by Bank to AMO; provided
that Bank shall provide AMO with a reasonable opportunity to comment on all such
communications which use any XXX Xxxx;
(iii) Bank
shall, at its own expense, terminate and wind up the Plan which may include any
or all of the following, all of which shall be performed in accordance with
Applicable Law:
(1) in
the event the applicable Cardholder has an account under another credit card
program originated and maintained by Bank, Bank shall have the right to transfer
such Cardholder’s Account Balance to such other account;
(2) Bank
shall have the right to convert any or all of the Accounts to a general purpose
credit card account maintained by Bank (e.g. VISA, Mastercard,
etc.);
(3) Bank
shall have the right to sell any or all of the Accounts to a third party bank or
financial institution (which may but need not be an Approved Replacement
Purchaser), provided such sale shall not be subject to the provisions of Section
5.10); and
(4)
Bank shall be entitled to liquidate any or all of the Accounts in accordance
with its commercially reasonable collection policies and practices; provided,
however, in the event Bank determines to adopt collection policies and practices
for effectuating the liquidation process which differ from its policies and
practices applicable to its non-liquidating portfolios, Bank shall take into
account in making such determination the preservation of AMO’s existing customer
relationships as well as the efficiency of the liquidation process and the
recovery of the Account Balances. In the event AMO desires Bank to
send a letter to Cardholders that have receivable balances owed to the Bank
regarding the termination and/or liquidation of the Accounts, Bank shall send
such letter to such Cardholders (in form and content reasonably agreed by the
parties) at AMO’s sole cost and expense.
(c) Transition
Assistance. If the WFNNB Program Agreement shall terminate
prior to the end of the Term of this Agreement, AMO shall be responsible for any
expenses, fees or costs incurred by AMO or any new provider under a Program
Agreement during the course of such transition and conversion process except for
the conversion costs to be borne by Bank as set forth in the Conversion Plan
unless the WFNNB Program Agreement is terminated as a result of an AMO default
thereunder first occurring after the Closing Date (and the WFNNB Portfolio
Account Purchase/Sale Agreement is terminated as a result thereof), in which
event such costs shall be borne by AMO.
PRIVATE
LABEL CREDIT CARD PLAN AGREEMENT
37
SECTION
10. MISCELLANEOUS
10.1 Entire
Agreement. This Agreement constitutes the entire Agreement and
supersedes all prior agreements and understandings, whether oral or written,
among the parties hereto with respect to the subject matter hereof and merges
all prior discussions between them.
10.2 Coordination of Public
Statements. Except as required by Applicable Law, neither
party will make any public announcement of the Plan or provide any information
concerning the Plan to any representative of any news, trade or other media
without the prior approval of the other party, which approval will not be
unreasonably withheld. Neither party will respond to any inquiry from
any public or governmental authority, except as required by Applicable Law,
concerning the Plan without prior consultation and coordination with the other
party.
10.3 Amendment. Except
as otherwise provided for in this Agreement, the provisions herein may be
modified only upon the mutual written agreement of the parties; provided that,
prior to Closing, in no event shall any modification to this Agreement be made
or effective without the prior written consent of Xxxx Xxxxxxxx.
10.4 Successors and
Assigns. This Agreement and all obligations and rights arising
hereunder shall be binding upon and inure to the benefit of the parties hereto
and their respective successors, transferees and assigns. Assignment.
Neither party may assign this Agreement or any of its rights hereunder in any
manner without the prior written consent of the other party, except such consent
shall not be required if such assignment is in connection with an acquisition of
control of AMO by an entity other than an Affiliate of AMO, or an acquisition of
control of Bank by an entity other than an Affiliate of Bank, as the case may
be, or sale of substantially all of the assets of AMO or Bank, as the case may
be.
10.5 Waiver. No
waiver of the provisions hereto shall be effective unless in writing and signed
by the party to be charged with such waiver. No waiver shall be
deemed to be a continuing waiver in respect of any subsequent breach or default
either of similar or different nature unless expressly so stated in
writing. No failure or delay on the part of either party in
exercising any power or right under this Agreement shall be deemed to be a
waiver, nor does any single or partial exercise of any power or right preclude
any other or further exercise, or the exercise of any other power or
right.
10.6 Severability. If
any of the provisions or parts of the Agreement are determined to be illegal,
invalid or unenforceable in any respect under any applicable statute or rule of
law, such provisions or parts shall be deemed omitted without affecting any
other provisions or parts of the Agreement which shall remain in full force and
effect, unless the declaration of the illegality, invalidity or unenforceability
of such provision or provisions substantially frustrates the continued
performance by, or entitlement to benefits of, either party, in which case this
Agreement may be terminated by the affected party, without penalty.
10.7 Notices. All
communications and notices pursuant hereto to either party shall be in writing
and addressed or delivered to it at its address shown below, or at such other
address as may be designated by it by notice to the other party, and shall be
deemed given
PRIVATE
LABEL CREDIT CARD PLAN AGREEMENT
38
when
delivered by hand, or two (2) Business Days after being mailed (with postage
prepaid) or when received by receipted courier service:
|
If to Bank:
Spirit
of America National Bank
0000
Xxxxx Xxxxx
Xxxxxxx,
Xxxx 00000
Attn.:
President
With
a Copy to:
Spirit
of America National Bank
000
Xxxxx Xxxx
Xxxxxxxx,
XX 00000
Attn.: General
Counsel
|
If to AMO:
Arizona
Mail Company, Inc.
c/o
Orchard Brands, Inc.
00
Xxxxx Xxxx
Xxxxxxx,
XX 00000
Attn.: Xxxxx
Xxxxx
Chief
Financial Officer
With
a Copy to:
Xxxxxxxx
& Xxxxx LLP
000
Xxxxxxxxxx Xxxxxx
Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attn:
Xxxxxx Xxxxx
|
10.8 Captions and
Cross-References. The table of contents and various captions
in this Agreement are included for convenience only and shall not affect the
meaning or interpretation of any provision of this
Agreement. References in this Agreement to any Section are to such
Section of this Agreement.
10.9 GOVERNING LAW / WAIVER OF
JURY TRIAL. THIS AGREEMENT SHALL BE A CONTRACT MADE UNDER AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF OHIO, REGARDLESS OF THE DICTATES
OF OHIO CONFLICTS OF LAW, AND THE PARTIES HEREBY SUBMIT TO EXCLUSIVE
JURISDICTION AND VENUE IN THE UNITED STATES FEDERAL DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF OHIO OR ANY OF THE STATE COURTS LOCATED IN FRANKLIN COUNTY,
OHIO. EACH PARTY HEREBY WAIVES ITS RIGHT TO A JURY
TRIAL.
10.10 Counterparts. This
Agreement may be signed in one or more counterparts, all of which shall be taken
together as one agreement.
10.11 Force
Majeure. Neither party will be responsible for any failure or
delay in performance of its obligations under this Agreement because of
circumstances beyond its reasonable control, and not due to the fault or
negligence of such party, including, but not limited to, acts of God, flood,
criminal acts, fire, riot, computer viruses or hackers where such party has
utilized commercially reasonable means to prevent the same, accident, strikes or
work stoppage, embargo, sabotage, terrorism, inability to obtain material,
equipment or phone lines, government action (including any laws, ordinances,
regulations or the like which restrict or prohibit the providing of the services
contemplated by this Agreement), and other causes whether or not of the same
class or kind as specifically named above. In the event a party is
unable to perform substantially for any of the reasons described in this
Section, it will notify the other party promptly of its inability so to perform,
and if the inability continues for at least one hundred eighty (180) consecutive
days (thirty (30) days in the cases of credit authorizations and processing of
new Accounts), the party so notified may then terminate this Agreement
forthwith. This provision shall not, however, release the party
unable to perform
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from
using its best efforts to avoid or remove such circumstance and such party
unable to perform shall continue performance hereunder with the utmost dispatch
whenever such causes are removed.
10.12 Relationship of
Parties. This Agreement does not constitute the parties as
partners or joint venturers and neither party will so represent
itself.
10.13 Survival. No
termination of this Agreement shall in any way affect or impair the powers,
obligations, duties, rights, indemnities, liabilities, covenants or warranties
and/or representations of the parties with respect to times and/or events
occurring prior to such termination. No powers, obligations, duties,
rights, indemnities, liabilities, covenants or warranties and/or representations
of the parties with respect to times and/or events occurring after termination
shall survive termination except for the following Sections and their
corresponding schedules: Section 2.10, Section 3.3, Section 3.5, Section 3.6,
Section 3.8, Section 3.9, Section 3.10, Section 8, Section 9.5, Section 10.7,
Section 10.9, Section 10.11, Section 10.17 and Section 10.18.
10.14 Mutual
Drafting. This Agreement is the joint product of AMO and Bank
and each provision hereof has been subject to mutual consultation, negotiation
and agreement of AMO and Bank; therefore to the extent any language in this
Agreement is determined to be ambiguous, it shall not be construed for or
against any party based on the fact that either party controlled the drafting of
the document.
10.15 Independent
Contractor. The parties hereby declare and agree that Bank is
engaged in an independent business, and shall perform its obligations under this
Agreement as an independent contractor; that any of Bank’s personnel performing
the services hereunder are agents, employees, Affiliates, or subcontractors of
Bank and are not agents, employees, Affiliates, or subcontractors of AMO; that
Bank has and hereby retains the right to exercise full control of and
supervision over the performance of Bank’s obligations hereunder and full
control over the employment, direction, compensation and discharge of any and
all of the Bank’s agents, employees, Affiliates, or subcontractors, including
compliance with workers’ compensation, unemployment, disability insurance,
social security, withholding and all other federal, state and local laws, rules
and regulations governing such matters; that Bank shall be responsible for
Bank’s own acts and those of Bank’s agents, employees, Affiliates, and
subcontractors; and that except as expressly set forth in this Agreement, Bank
does not undertake by this Agreement or otherwise to perform any obligation of
AMO, whether regulatory or contractual, or to assume any responsibility for
AMO’s business or operations.
10.16 No Third Party
Beneficiaries. The provisions of this Agreement are for the
benefit of the parties hereto and not for any other person or entity; provided
that the parties agree that Xxxx Xxxxxxxx shall be a third party beneficiary of
the Agreement solely for purposes of Section 10.3.
10.17 Confidentiality and Security
Control.
(a) Confidential
Information. Except as specifically provided in this Section
10.17, neither party shall disclose any Confidential Information (defined below)
which it learns as a
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result of
negotiating or implementing this Agreement. “Confidential Information” shall
mean information not of a public nature concerning the business or properties of
the other party including, without limitation: the terms and conditions of this
Agreement (as well as proposed terms and conditions of any amendments, renewals,
or extensions of this Agreement), any proposed and/or agreed upon terms and
conditions of any other credit card program agreement between the parties and/or
their Affiliates, sales volumes, test results, and results of marketing
programs, Plan reports and files generated by Bank (in the case of Bank), trade
secrets, business and financial information, source codes, business methods,
procedures, know-how and other information (including but not limited to
intellectual property) of every kind that relates to the business of either
party. For the avoidance of doubt, the confidential information
protected by this Section 10.17 shall
include the names and addresses and other information relating to the
Cardholders, and such information shall be the exclusive property of AMO
following the Closing, recognizing that certain of such Cardholders may also
have made purchases from Bank and its affiliates other than AMO (other than
purchases under this Agreement) and the names and addresses and other
information relating to such Cardholders, to the extent such information relates
solely to such transactions with Bank and such Affiliates of Bank (other than
AMO) shall be the exclusive property of the Bank and its Affiliates following
the Closing.
However,
the definition of “Confidential Information” specifically excludes information
which:
(i) is
generally known to the trade or to the public at the time of such disclosure;
or
(ii) becomes
generally known to the trade or the public subsequent to the time of such
disclosure; provided, however, that such general knowledge is not the result of
a disclosure in violation of this Section 10.17; or
(iii) is
obtained by a party from a source other than the other party, without breach of
this Agreement or any other obligation of confidentiality or secrecy owed to
such other party or any other person or organization; or
(iv) is
independently conceived and developed by the disclosing party and proven by the
disclosing party through tangible evidence not to have been developed as a
result of a disclosure of information to the disclosing party, or any other
person or organization which has entered into a confidential arrangement with
the non-disclosing party.
(b) Other Protected
Information. The use and/or disclosure of any Consumer Personal
Information, AMO Customer Information, and/or Bank Cardholder Information shall
be subject to Applicable Law, Section 2.8, and this Section 10.17.
(c) Permitted Uses and
Disclosures.
(i)
Nothing in this Section 10.17 shall be interpreted to mean that a party is
restricted with respect to the use or disclosure of Confidential Information
which it owns. The parties may also disclose any Consumer Personal Information
or Confidential Information under the
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following
circumstances. First, to the extent disclosure is required by
Applicable Law. Second, to the extent disclosure is both permitted by
Applicable Law and either necessary for the performance of the disclosing
party’s obligation under this Agreement and/or agreed to in writing by the other
party, provided that: (i) prior to disclosing any such information to
any third party, the party making the disclosure (to the third party) shall give
notice to the other party of the nature of such disclosure and of the fact that
such disclosure will be made; and (ii) prior to filing a copy of this Agreement
(whole or partial) with any governmental authority or agency, the filing party
will consult with the other party with respect to such filing and shall redact
such portions of this Agreement which the other party requests be redacted,
unless, in the filing party’s reasonable judgment based on the advice of its
counsel (which advice shall have been discussed with counsel to the other
party), the filing party concludes that such request is inconsistent with the
filing party’s obligations under Applicable Law.
(ii)
Nothing in this Section 10.17 shall be interpreted to mean that a party is
restricted with respect to the use or disclosure of Confidential Information in
connection with disclosure (A) prior to January 31, 2009 (or the earlier
termination of the WFNNB Account Portfolio Purchase/Sale Agreement), to World
Financial Network National Bank in connection with the performance of the
obligations set forth in the WFNNB Account Portfolio Purchase/Sale Agreement and
the WFNNB Program Agreement and (B) thereafter, to prospective purchasers of the
Accounts and prospective program providers in connection with the efforts of AMO
and Bank to enter into a Account Portfolio Purchase/Sale Agreement and a Program
Agreement.
(d) Protecting Disclosed
Information. When, pursuant to subsection (c) above, one party discloses
the other party’s Confidential Information or Consumer Personal Information to
the disclosing party’s Affiliate or a third party, the disclosing party shall be
responsible for ensuring that such disclosure complies with Applicable
Law. Furthermore, the disclosing party shall ensure that the
Affiliate or third party executes a confidentiality agreement provided by or
approved in writing by the non-disclosing party, and that it keeps all such
information in confidence. Each party covenants that at all times it
shall have in place procedures designed to assure that each of its employees who
is given access to the other party’s Consumer Personal Information or
Confidential Information shall protect the privacy of such
information. Each party acknowledges that any breach of the
confidentiality provisions of this Agreement by it will result in irreparable
damage to the other party and therefore in addition to any other remedy that may
be afforded by law any breach or threatened breach of the confidentiality
provisions of this Agreement may be prohibited by restraining order, injunction
or other equitable remedies of any court. The provisions of this
Section 10.17 will survive termination or expiration of this
Agreement.
(e) Protecting Stored
Information. Each party shall
establish commercially reasonable controls to ensure the confidentiality of any
Consumer Personal Information and the other’s Confidential
Information. Each party shall also ensure that such information is
not disclosed contrary to the provisions of this Agreement, or any applicable
privacy, security or other laws, rules, and regulations. Without
limiting the foregoing, each party shall implement such physical and other
security measures as are necessary to (i) ensure the security and
confidentiality of any Consumer Personal Information and the other’s
Confidential Information, (ii) protect against any threats or hazards to the
security and integrity of such information, (iii) protect against any
unauthorized access to or use of such information, and
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(iv)
properly dispose of any Consumer Personal Information as required under
Applicable Law. AMO shall promptly notify Bank in the event it
believes, or has reason to believe, that a confidentiality or security breach,
or any other unauthorized intrusion, has occurred with respect to Consumer
Personal Information. AMO shall estimate the intrusion’s affect on
Bank and shall specify the corrective action taken and to be taken by
AMO.
(f) If,
upon expiration or termination of this Agreement, AMO or its designee does not
purchase the Accounts from Bank pursuant to Section and Schedule 9.5, AMO shall
take appropriate measures to destroy or remove from its systems Bank’s
Cardholder, Confidential, and Consumer Personal Information. This
includes but is not limited to any and all records regarding Cardholders,
whether in paper, electronic, or other form, that is maintained or otherwise
possessed by or on behalf of AMO, including a compilation of such
records.
If AMO or
its designee does purchase the Accounts at such time, AMO’s obligation to remove
or destroy information shall apply only to any Bank Confidential
Information that is not
comprised of Bank Cardholder
Information or Consumer Personal Information.
10.18 Taxes. AMO
will be responsible for, and agrees to pay, all sales, use, excise, and
value-added taxes, or taxes of a similar nature (excluding personal property
taxes and taxes based on Bank’s income which shall be borne by Bank), imposed by
the United States, any state or local government, or other taxing authority, on
all services provided by Bank under this Agreement. The parties agree
to cooperate with each other to minimize any applicable sales, use, or similar
tax and, in connection therewith, the parties shall provide each other with any
relevant tax information as reasonably requested (including without limitation,
resale or exemption certificates, multi-state exemption certificates,
information concerning the use of assets, materials and notices of
assessments). All amounts set forth in this Agreement are expressed
and shall be paid in lawful U.S. dollars.
[Signature
block on following page.]
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IN
WITNESS WHEREOF, the parties hereto have executed this Agreement in manner and
form sufficient to bind them as of the date first above written.
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ARIZONA
MAIL ORDER COMPANY, INC.
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SPIRIT
OF AMERICA NATIONAL BANK
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By: ________________________
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By: _________________________
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Printed
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Title
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