SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
__________________________________
January 18, 1995
Date of Report (Date of earliest event reported)
TANDY CORPORATION
(Exact name of registrant as specified in charter)
Delaware 1-5571 75-1047710
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
1800 Tandy Center, Fort Worth, Texas 76102
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code
(817) 390-3700
Index to Exhibits is on Page 4.
<PAGE>
Item 2. Acquisition or Disposition of Assets
On January 18, 1995 Tandy Credit Corporation ("Tandy
Credit"), a wholly owned subsidiary of Tandy Corporation (the
"Corporation"), entered into an agreement to sell its Radio
Shack and Tandy Name Brand Retail Group (McDuff,
VideoConcepts and The Edge in Electronics) private label
credit card portfolios to Hurley State Bank, a subsidiary of
SPS Transaction Services, Inc., a majority-owned subsidiary
of Dean Witter, Discover & Co., subject to regulatory
approval and rating agency consent. Tandy Credit anticipates
receiving, upon closing, approximately $293 million in cash
as well as an $83 million deferred payment amount. The
Corporation will not recognize any material gain or loss on
the transaction.
The dollar amounts indicated are approximate and subject to
final adjustments. The sale of the Tandy Name Brand and
Radio Shack private label credit card portfolios will be
recorded in 1995, subject to regulatory approval and rating
agency consent.
Pro forma financial information is presented under Item 7(b)
below. The unaudited pro forma consolidated statements of
income reflect the historical accounts of the Corporation
adjusted to give pro forma effect to the sale of the credit
card portfolios as if the transaction had occurred at the
beginning of 1993. The unaudited pro forma consolidated
balance sheet reflects the historical accounts of the
Corporation on September 30, 1994 adjusted to give effect to
the sale of the portfolios as if the sale had occurred on
September 30, 1994. The pro forma financial information
provided also includes the results of the Tandy Credit
transaction reported in the Corporation's Form 8-K, Item 5
disclosure dated December 30, 1994 and filed on January 6,
1995.
The pro forma financial information presented is not
necessarily indicative of the results of operations that
would have occurred had the sale been effective at the
beginning of each respective period nor is it necessarily
indicative of the results of operations which can be expected
for any subsequent period. The pro forma adjustments are
based upon available information and certain assumptions
that the Corporation believes are reasonable under the
circumstances. The pro forma financial information should be
read in conjunction with the consolidated financial
statements and the notes thereto included in the
Corporation's December 31, 1993 Annual Report on Form 10-K.
Item 7. Financial Statements and Exhibits
Listed below are the financial statements, pro forma
financial information and exhibits, if any, filed as a part
of this Report:
(a) None
(b) Pro Forma Financial Information
1 Pro Forma Consolidated Statements of Income for
the nine months ended September 30, 1994 and the
year ended December 31, 1993
2 Pro Forma consolidated balance sheet of the
Corporation as of September 30, 1994
3 Notes to Pro Forma Financial Statements
(c) Exhibits
1 Acquisition Agreement dated January 18, 1995
without exhibits
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized this 2nd day of February, 1995.
TANDY CORPORATION
(Registrant)
Date February 2, 1995 By: /S/ DWAIN H. HUGHES
-------------------
Dwain H. Hughes
Senior Vice President
and Chief Financial Officer
<PAGE>
INDEX TO EXHIBITS
Sequential
Page
Exhibit Description of Exhibit Number
(a) None
(b) Pro Forma Financial Information
(b) 1 Pro Forma Consolidated Statements of
Income for the nine months ended
September 30, 1994 and the year
ended December 31, 1993 5
(b) 2 Pro Forma consolidated balance sheet of
the Corporation as of September 30,
1994 7
(b) 3 Notes to Pro Forma Financial Statements 8
(c) Exhibits
(c) 1 Acquisition Agreement dated January 18,
1995 without exhibits 9
<PAGE>
<TABLE>
PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
For the nine months ended September 30, 1994
Tandy Corporation and Subsidiaries
(Unaudited)
<CAPTIONS>
(In thousands, Historical
except per share amounts) As Reported Adjustments Pro Forma
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales and operating revenues $ 3,120,567 $ -- $ 3,120,567
Cost of products sold 1,858,383 -- 1,858,383
----------- ----------- -----------
Gross profit 1,262,184 -- 1,262,184
----------- ----------- -----------
Expenses:
Selling, general and administrative 1,043,548 (24,322)(A) 1,019,226
Depreciation and amortization 62,269 (66)(A) 62,203
----------- ----------- -----------
Net operating income 156,367 24,388 180,755
Interest income 61,967 (35,262)(B) 26,705
Interest expense (20,599) 3,565 (C) (17,034)
----------- ----------- -----------
Net interest income 41,368 (31,697) 9,671
----------- ----------- -----------
Income before income taxes,
discontinued operations and
cumulative effect of change
in accounting principle 197,735 (7,309) 190,426
Provision for income taxes (75,334) 2,785 (D) (72,549)
----------- ----------- -----------
Income from continuing operations 122,401 (4,524) 117,877
Preferred dividends 5,120 -- 5,120
----------- ----------- -----------
Income from continuing operations
available to common shareholders $ 117,281 $ (4,524) $ 112,757
=========== =========== ===========
Income from continuing operations
available per average common and
common equivalent share $ 1.51 $ 1.45
=========== ===========
Average common and common
equivalent shares outstanding 77,550 77,550
=========== ===========
See Notes to Pro Forma Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
For the year ended December 31, 1993
Tandy Corporation and Subsidiaries
(Unaudited)
<CAPTIONS>
(In thousands, Historical
except per share amounts) As Reported Adjustments Pro Forma
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales and operating revenues $ 4,102,551 $ -- $ 4,102,551
Cost of products sold 2,382,607 -- 2,382,607
----------- ----------- -----------
Gross profit 1,719,944 -- 1,719,944
Expenses:
Selling, general and administrative 1,354,676 (43,038)(A) 1,311,638
Depreciation and amortization 79,944 (67)(A) 79,877
----------- ----------- -----------
Net operating income 285,324 43,105 328,429
Interest income 65,538 (61,348)(B) 4,190
Interest expense (39,707) 5,906 (C) (33,801)
----------- ----------- -----------
Net interest income 25,831 (55,442) (29,611)
----------- ----------- -----------
Income before income taxes,
discontinued operations and
cumulative effect of change
in accounting principle 311,155 (12,337) 298,818
Provision for income taxes (115,523) 4,610 (D) (110,913)
----------- ----------- -----------
Income from continuing operations 195,632 (7,727) 187,905
Preferred dividends 7,135 -- 7,135
----------- ----------- -----------
Income from continuing operations
available to common shareholders $ 188,497 $ (7,727) $ 180,770
=========== =========== ===========
Income from continuing operations
available per average common and
common equivalent share $ 2.48 $ 2.37
=========== ===========
Average common and common
equivalent shares outstanding 76,184 76,184
=========== ===========
See Notes to Pro Forma Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
PRO FORMA CONSOLIDATED BALANCE SHEET
At September 30, 1994
Tandy Corporation and Subsidiaries
(Unaudited)
<CAPTIONS>
Historical
(In thousands) As Reported Adjustments Pro Forma
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets
Current assets:
Cash and short-term investments $ 221,024 $ 256,064 (E) $ 477,088
Accounts and notes receivable, less
allowance for doubtful accounts 557,411 (297,534)(F) 259,877
Inventories, at lower of cost or market 1,401,904 -- 1,401,904
Other current assets 125,125 (112)(F) 125,013
---------- ---------- ----------
Total current assets 2,305,464 (41,582) 2,263,882
Property, plant and equipment, at cost,
less accumulated depreciation 480,446 (352)(F) 480,094
Other assets, net of accumulated
amortization 193,683 (13,735)(F) 179,948
---------- ---------- ----------
$2,979,593 $ (55,669) $2,923,924
========== ========== ==========
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable $ 97,344 $ (42,000)(G) $ 55,344
Current portion of TESOP guarantee 9,800 -- 9,800
Accounts payable 385,849 -- 385,849
Income taxes payable 38,245 -- 38,245
Other current liabilities 312,359 -- 312,359
---------- ---------- ----------
Total current liabilities 843,597 (42,000) 801,597
---------- ---------- ----------
Notes payable, due after one year 76,723 -- 76,723
Guarantee of TESOP indebtedness 54,030 -- 54,030
Other non-current liabilities 50,972 (13,669)(F) 37,303
---------- ---------- ----------
Total other liabilities 181,725 (13,669) 168,056
---------- ---------- ----------
Stockholders' Equity:
Preferred stock 529,982 -- 529,982
Common stock 85,645 -- 85,645
Additional paid-in-capital 91,016 -- 91,016
Retained earnings 2,094,640 -- 2,094,640
Foreign currency translation effects 1,695 -- 1,695
Stock held in treasury, at cost (784,351) -- (784,351)
Unearned deferred compensation (64,356) -- (64,356)
---------- ---------- ----------
Total stockholders' equity 1,954,271 -- 1,954,271
---------- ---------- ----------
$2,979,593 $ (55,669) $2,923,924
========== ========== ==========
See Notes to Pro Forma Consolidated Financial Statements.
</TABLE>
<PAGE>
Notes to Pro Forma Consolidated Financial Statements
(A) To eliminate operating costs associated with Tandy
Credit Corporation, to adjust credit card discounts and
premiums to the rates which will prevail under merchant
services agreements enacted in conjunction with the sale of
the Radio Shack and Tandy Name Brand Retail Group private
label credit card portfolios which was completed January 18,
1995 and the sale of the Computer City and Incredible
Universe private label credit card portfolios which was
completed December 30, 1994 (collectively, the "Portfolios")
and to adjust insurance income to the amounts which would
have been realized under the newly enacted merchant services
agreements.
(B) To eliminate interest income realized on the Portfolios.
(C) To eliminate interest expense incurred in relation to
Tandy Credit Corporation's medium-term notes and other
borrowings of Tandy Corporation assumed retired with proceeds
from the sale of the Portfolios.
(D) To record the income tax effect of the pro forma
adjustments to the Consolidated Statements of Income.
(E) To record cash received from the sale of the Portfolios
and related assets based on September 30, 1994 book values,
net of cash assumed used to retire Tandy Credit Corporation's
medium-term notes payable (see Note (G) below).
(F) To remove net assets sold based on September 30, 1994
book values. The pro forma reduction of accounts and notes
receivable is net of the deferred payment amount that would
have been applicable at September 30, 1994.
(G) To remove Tandy Credit Corporation's medium-term notes
payable assumed retired with proceeds from the sale of the
Portfolios.
<PAGE>
Exhibit C
ACQUISITION AGREEMENT
(Phase II)
THIS ACQUISITION AGREEMENT is made as of the 18th
day of January, 1995 among TANDY NATIONAL BANK, a limited
purpose national banking association organized under the laws
of the United States and located in Gray, Tennessee ("TNB"),
TANDY CREDIT CORPORATION, a Delaware corporation with its
principal office located in Fort Worth, Texas ("TCC"), and
HURLEY STATE BANK, a South Dakota banking association located
in Sioux Falls, South Dakota ("Purchaser").
R E C I T A L S
TNB is a limited purpose credit card bank currently
issuing private label credit cards to customers of various
stores owned by Tandy Corporation, a Delaware corporation
with its principal office located in Fort Worth, Texas
("Tandy"), including company-owned Radio Shack stores and
participating dealer/franchise Radio Shack outlets and Tandy
company-owned McDuff, VideoConcepts, AV&C and The Edge in
Electronics stores (collectively, the "Tandy Stores").
TNB wishes to sell to Purchaser, and Purchaser
wishes to purchase from TNB, pursuant to the terms and
subject to the conditions hereof, all account relationships,
account balances, and certain other assets associated with
all credit cards currently issued by TNB to customers of, and
for use at the Tandy Stores (the "TNB Credit Cards" as
hereinafter further defined).
Pursuant to that certain Bank Receivables Purchase
Agreement between TNB and TCC dated as of May 12, 1994 (as
amended), TCC regularly acquires all credit card receivables
generated by TNB, including the receivables arising under the
TNB Credit Cards.
TCC also owns certain credit card account
relationships and account balances related to credit cards
issued by Tandy or TCC to customers of, and for use at the
Tandy Stores prior to the dates on which TNB began issuing
such credit cards (the "TCC Credit Cards" as hereinafter
further defined), and certain charged off account balances
related to TNB Credit Cards and TCC Credit Cards.
TCC wishes to sell to Purchaser, and Purchaser
wishes to purchase from TCC, pursuant to the terms and
subject to the conditions hereof, all account balances
relating to TNB Credit Cards, and all account relationships
(other than with respect to Accounts the Account Balances of
which are required to be sold to TRC under the TCC
Receivables Purchase Agreement), account balances, and
certain other assets associated with the TCC Credit Cards to
the extent not required to be sold to Tandy Receivables
Corporation ("TRC") under the TCC Receivables Purchase
Agreement.
Pursuant to that certain Agreement and Plan of
Merger ("Merger Agreement") of even date herewith among
Tandy, TCC, Purchaser and Hurley Receivables Corporation, a
Delaware corporation with its principal office located in
Riverwoods, Illinois and a wholly-owned subsidiary of
Purchaser ("HRC"), TCC will be merged into HRC (the "Merger")
immediately after it transfers the TCC Assets (as defined
below) to Purchaser pursuant to this Agreement. Upon
effectiveness of the Merger, the Merger Assets will become
assets of HRC.
ACCORDINGLY, TNB and TCC (sometimes collectively
referred to hereinafter as "Sellers"; it being understood
that neither Seller is responsible for, or a guarantor of,
the other's performance or obligations hereunder unless
otherwise expressly stated) and Purchaser agree, for good and
valuable consideration the sufficiency of which is hereby
acknowledged, and on the terms and conditions herein set
forth, as follows:
1. Definitions For purposes of this Agreement, the
following terms shall have the meanings indicated:
"Account" means a TCC Credit Card or TNB Credit
Card (as hereinafter defined) account (including any Interim
Account or charged-off Account) on which a purchase
transaction may be or has been made by (or by a person
authorized by) the Cardholder pursuant to a Credit Card, but
does not include (i) any commercial accounts; (ii) any
account as to which the Cardholder's address was not, on the
date such Account was opened, within the United States, the
District of Columbia, Puerto Rico or United States
territories and possessions (other than with respect to (x)
United States military on foreign assignment or (y) natural
persons currently residing in Canada and using the Credit
Card in the United States for purchases at United States
locations), (iii) any account which is not payable in United
States dollars or (iv) any account designated by Purchaser on
Exhibit 1 delivered at Closing which Purchaser in its
reasonable judgment has elected not to purchase due to
pending or threatened litigation alleging credit related
claims, counterclaims or defenses against either Seller or
its Affiliates and involving such Account or the related
Cardholder. A listing of such accounts involving such
pending or threatened litigation will be provided by Sellers
to Purchaser within ten days of the date of this Agreement.
Sellers will amend or supplement such listing from time to
time prior to the Closing Date and on the Closing Date.
"Account Balance" means, as to any Account, any and
all amounts owing in respect of such Account by the
Cardholder (including accrued interest, fees and other
finance and service charges) whether or not billed. This
definition shall not be construed as limiting the Accounts
purchased hereunder. An Account Balance may be zero or may
consist of a Credit Balance. For purposes of Section 3.2,
charged-off Accounts being transferred to Purchaser hereunder
shall be deemed to have Account Balances of zero.
"Adjustment Period" has the meaning set forth in
Section 3.5.
"Affiliate" means, as to any Person, any other
Person controlling, controlled by, or under common control
with, such Person.
"Agreement" means this Acquisition Agreement,including
all schedules and exhibits hereto, and, if amended, modified or
supplemented, as the same may be so amended,
modified or supplemented from time to time by written
agreement signed by the parties.
"Assets" means, collectively, the TNB Assets, the
TCC Assets and the Merger Assets.
"Assumption Agreements" means (i) the Amendment and
Assumption Agreement dated as of the date hereof by and among
TRC, TCC, Tandy and HRC, (ii) the Assumption Agreement dated
as of the date hereof by and among TRC, TNB and the Purchaser
and (iii) the Assumption Agreement dated as of the date
hereof by and among TRC, TNB, Bankers Trust Company, as
Trustee of the Tandy Master Trust and the Purchaser and
certain related documents and agreements as may be agreed to
by the parties hereto.
"Business Day" means any day falling on Monday
through Friday of any week except federal, state or religious
holidays on which Purchaser or any of the Sellers (including
any guarantor if any thereof) is closed for business.
"Call Report" means the Consolidated Report of
Condition and Income.
"Card Services Agreement" means that certain Card
Services Agreement dated as of October 3, 1986, as amended,
adopted by TCC and assigned to TNB.
"Cardholder" means a person to whom a Credit Card
is issued by a Seller or Tandy and in whose name the Account,
in connection with which the Credit Card may be used, is
established.
"Cardholder Agreement" means an agreement between a
Cardholder and a Seller, under which one or more Credit Cards
are issued.
"Cardholder Dispute" means, as to any Account, any
billing error dispute, product or service dispute, or any
other dispute raised by a Cardholder which arises out of or
relates to the business or operations of the Credit Card
Business prior to the Transfer Date or Subsequent Transfer
Date and which has not been resolved on or before the
Transfer Date or applicable Subsequent Transfer Date.
"Closing" has the meaning set forth in Section 4.
"Closing Date" means a date occurring within three
(3) Business Days following the first day on which a Trial
Balance for the end of an agreed upon cycle is available
after receipt of corporate approval, rating agency approvals,
regulatory approval and the passage of any applicable
statutory or regulatory waiting period, and mutually
agreeable to Sellers, Purchaser, Tandy and HRC, when the
Closing under this Agreement is consummated and the Merger
Agreement is executed and it or a certificate of merger is
filed with the Secretary of State of the State of Delaware.
"Closing Statement" means a statement prepared by
Sellers and Purchaser with respect to the books and records
of Sellers' respective Credit Card Businesses as of the
Transfer Date, substantially in the form of Exhibit 2.
"Credit Balance" means, as to any Account, any and
all amounts owing by a Seller to the Cardholder in respect of
such Account as a credit balance, whether or not billed.
"Credit Card" means any TNB Credit Card or TCC
Credit Card.
"Credit Card Business" means all of the business
and operations relating to Credit Cards, and all aspects of
the activities related thereto, including without limitation
any such business conducted by TRC.
"Deferred Amount" has the meaning set forth in
Section 3.3.
"Deferred Amount Payment" means each installment
payment of the Deferred Amount set forth in the Closing
Statement.
"Deferred Payment Date" means each date specified
in the Closing Statement on which a Deferred Amount Payment
is due from Purchaser.
"Eligible Account" means any Account which is not
an Ineligible Account as of its Transfer Date or Subsequent
Transfer Date, as applicable.
"HRC" has the meaning set forth in the recitals.
"Hurley Bank Receivables Purchase Agreement" means
the Bank Receivables Purchase Agreement dated as of December
30, 1994 between Purchaser and SPS Newco.
"Ineligible Account" means any Account which is
determined during the Adjustment Period to have been any of
the following:
(a) An Account with respect to which, prior
to the Transfer Date or Subsequent Transfer Date,
as applicable, neither of the Sellers has received
notice that the Cardholder has filed a petition or
a petition has been filed against the Cardholder
seeking relief under the federal bankruptcy law or
any other law dealing with the insolvency of a
consumer or the inability of a consumer to pay his
debt, and with respect to which neither Purchaser
nor any Seller has received subsequent notice that
such Cardholder has reaffirmed his or her
obligations with respect to such Account;
(b) An Account which, on the Transfer Date,
includes any amount that is more than 179 days past
due or otherwise represents a "charged-off" Account
on either of the Sellers' books;
(c) An Account as to which any of the Sellers
shall, at any time prior to the Transfer Date or
Subsequent Transfer Date, as applicable, have
received notification, not thereafter rescinded, of
an actual or possible fraud loss or lost or stolen
Credit Card.
(d) An Account as to which, prior to the
Transfer Date or Subsequent Transfer Date, as
applicable, either of the Sellers has received
notice that the Cardholder has died; or
(e) An Account as to which, prior to the
Transfer Date or Subsequent Transfer Date, as
applicable, either of the Sellers has received
notice that the Cardholder has not attained the age
of eighteen (18).
"Interim Account" means any Account originated by
TNB on or after the Transfer Date pursuant to Section 6.3.
"Merchant Services Agreement" means that certain
Merchant Services Agreement of even date herewith between
Purchaser and Tandy under which Purchaser will issue private
label credit cards for use at Tandy Stores.
"Merger Agreement" means that certain Agreement and
Plan of Merger among Tandy, TCC, Purchaser and HRC of even
date herewith, substantially in the form of Exhibit 18
hereto.
"Merger Assets" means the following properties and
assets of TCC;
(i) The TRC Stock; and
(ii) All other assets of TCC existing on the
Closing Date, other than the TCC Assets and the assets set
forth on Exhibit 3, provided that Exhibit 3 may be amended or
supplemented from time to time prior to the Closing upon
mutual agreement of the parties hereto.
"Person" means a natural person, corporation,
limited liability company or partnership, joint venture,
association, trust, sole proprietorship, unincorporated
organization or partnership.
"Pre-Transfer Period" means the period between the
date of this agreement to and including the Transfer Date.
"Purchase Price" has the meaning set forth in
Section 3.2.
"Receivables Purchase Agreement" means that certain
"Tandy National Bank - Bank Receivables Purchase Agreement"
between TNB and TCC dated as of May 12, 1994, as amended.
"Security Agreement" means that certain Amended and
Restated Security Agreement dated as of the Closing Date,
between SPS Newco, TCC and Tandy, granting Tandy and its
permitted successors and assigns a security interest in
certain Account Balances transferred to SPS Newco under the
Hurley Bank Receivables Purchase Agreement, as amended.
"Special Plan" means, as to any Account, any
payment plan with respect to any particular purchase of goods
or services which is identified as a Special Plan in Exhibit
4, provided that Exhibit 4 may be supplemented from time to
time prior to the Closing upon mutual agreement of the
parties hereto.
"Special Plan Account Balance" means, as to any
Account, any portion of the Account Balance which, pursuant
to the terms of a Special Plan, as of the Transfer Date or
Subsequent Transfer Date is not yet due and payable.
"SPS" means SPS Payment Systems, Inc., a Delaware
corporation.
"SPS Newco" means SPS Newco, Inc., a Delaware
corporation.
"SPS Newco Assignment Agreement" means the Hurley
Assignment, Assumption and Release Agreement dated as of the
Closing Date, between Purchaser and SPS Newco.
"SPS Guaranty" means the Guaranty of SPS, dated as
of the Closing Date, of all of the Purchaser's and its
assignees' obligations under this Agreement, substantially in
the form of Exhibit 5 hereto.
"Subsequent Transfer Date" means the date any
Interim Account is created.
"Tandy" means Tandy Corporation, a Delaware
corporation.
"Tandy Agreements" has the meaning set forth in
Section 11.9(b)(v).
"Tandy Assignment Agreement" means the agreement
between Tandy and TCC dated the Closing Date, substantially
in the form of Exhibit 19 hereto.
"Tandy Guaranty" means the Guaranty by Tandy, dated
as of the Closing Date, of all of each Seller's and their
respective assignees' obligations under this Agreement and
the Merger Agreement, substantially in the form of Exhibit 6
hereto.
"Tandy Securitization" has the meaning set forth in
Section 9.19.
"TCC Assets" has the meaning set forth in Section
2.3.
"TCC Credit Card" means any consumer credit card
issued prior to the last Subsequent Transfer Date by Tandy or
TCC or evidencing an account owned by TCC and bearing or
including the name, logo or symbol(s) of any of the Tandy
Stores.
"TCC Receivables Purchase Agreement" means the
Receivables Purchase Agreement dated as of May 1, 1991
between TCC and TRC, as amended and restated as of May 12,
1994.
"TCC Stock" means all of the issued and outstanding
shares of the stock of TCC.
"TNB Assets" has the meaning set forth in Section
2.1.
"TNB Credit Card" means any consumer credit card
issued prior to the last Subsequent Transfer Date by TNB or
evidencing an account owned by TNB and bearing or including
the name, logo or symbol(s) of any of the Tandy Stores.
"Transferred Account Balance" means, as to any
Account, any portion of the Account Balance which has been
transferred to TCC pursuant to the Receivables Purchase
Agreement or the Tandy Assignment Agreement.
"Transfer Date" means the closing of processing of
Accounts by SPS in the ordinary course of business on the
first date for which a Trial Balance for the end of an agreed
upon cycle is available after receipt of rating agency
approvals, regulatory approval and the passage of any
applicable statutory waiting periods, and mutually agreeable
to Purchaser and Sellers.
"TRC" means Tandy Receivables Corporation.
"TRC Stock" means all of the issued and outstanding
shares of the stock of TRC.
"Trial Balance" means, for any day, the schedule of
Account Balances, including credits, debits and other entries
posted as of such day, in the format generated by SPS in the
regular course of business as Form R-16. It is understood
that charged-off Accounts being transferred to Purchaser
hereunder shall not appear on the Trial Balance.
"TSI" means SPS Transaction Services, Inc., a
Delaware corporation.
"TSI Guaranty" means the Guaranty by TSI, dated as
of the Closing Date, of all of the Purchaser's obligations
under this Agreement, substantially in the form of Exhibit 7
hereto.
"24 Month Account Balance" means any Account
Balance owing in respect of a 24 month Special Plan under an
Account.
2. Sales, Purchases and Assumptions
2.1 Sale and Purchase of TNB Assets
On the Closing Date, as of the Transfer Date with
respect to Accounts that are not Interim Accounts and as of
the applicable Subsequent Transfer Date with respect to each
Interim Account, TNB agrees to sell, assign and transfer to
Purchaser, and Purchaser agrees to purchase from TNB, all
right, title and interest in and to the following properties
and assets (collectively, the "TNB Assets"):
(i) All Accounts related to TNB Credit Cards
(including all Account Balances other
than 24 Month Account Balances
thereunder not required to be
transferred to TRC pursuant to the TCC
Receivables Purchase Agreement);
(ii) All Cardholder Agreements relating to
TNB Credit Cards;
(iii) All records directly relating to TNB
Credit Card Accounts and Account
Balances of TNB; and
(iv) Related assets set forth on Exhibit 8
hereto, provided that Exhibit 8 may be
supplemented from time to time prior to
the Closing upon mutual agreement of the
parties hereto.
The sale to Purchaser of the Accounts (including
the Account Balances thereunder not required to be
transferred to TRC pursuant to the TCC Receivables Purchase
Agreement) and the other TNB Assets is made without recourse
to TNB, subject only to TNB's representations and warranties
under Section 8 and TNB's indemnification under Section 7.1.
2.2 Assumption of TNB Obligations under TNB
Assets; TCC Consent
Purchaser agrees to assume all obligations of TNB
to Cardholders under Cardholder Agreements relating to TNB
Credit Cards that are to be performed after the Transfer Date
or Subsequent Transfer Date, as applicable, and were not
required to be performed before the Transfer Date or
Subsequent Transfer Date, as applicable. TCC hereby consents
to the sale and assumption contemplated by Sections 2.1 and
2.2.
2.3 Sale and Purchase of TCC Assets
On the Closing Date, as of the Transfer Date, TCC
agrees to sell, assign and transfer to Purchaser, and
Purchaser agrees to purchase from TCC all right, title and
interest in and to the following properties and assets
(collectively, the "TCC Assets"):
(i) All Transferred Account Balances not
required to be transferred to TRC
pursuant to the TCC Receivables Purchase
Agreement and not constituting 24 Month
Account Balances;
(ii) All Accounts (other than Accounts the
Account Balances of which are required
to be transferred to TRC pursuant to the
TCC Receivables Purchase Agreement)
related to TCC Credit Cards (including
the Account Balances thereunder not
required to be transferred to TRC
pursuant to the TCC Receivables Purchase
Agreement);
(iii) All Cardholder Agreements relating to
TCC Credit Cards;
(iv) All records directly relating to
Transferred Account Balances and TCC
Credit Card Accounts; and
(v) Related assets set forth on Exhibit 8
hereto, provided that Exhibit 8 may be
supplemented from time to time prior to
the Closing upon mutual agreement of the
parties hereto.
The sale to Purchaser of the Transferred Account
Balances and the other TCC Assets is made without recourse to
TCC, subject only to TCC's representations and warranties
under Section 9 and TCC's indemnification under Section 7.2.
2.4 Assumption of TCC Obligations under TCC
Assets; TNB Consent
Purchaser agrees to assume all obligations of TCC
to Cardholders under Cardholder Agreements relating to TCC
Credit Cards that are to be performed after the Transfer Date
or Subsequent Transfer Date, as applicable, and were not
required to be performed before the Transfer Date or
Subsequent Transfer Date, as applicable. TNB consents to the
sale and assumption contemplated by Sections 2.3 and 2.4.
2.5 Accounting Books and Records; Rights of
Inspection
Each Seller shall retain its accounting books and
records relating to the Credit Cards for a period of seven
(7) years from and after the Closing Date or for such longer
time as may be required by law or applicable statutes of
limitation. Purchaser shall be provided access to such books
and records at such locations as they are normally kept and
may inspect and copy such records. Such inspection and
copying shall be conducted during Sellers' normal business
hours in a manner which does not reasonably interfere with
normal business operations, after giving reasonable prior
written notice.
3. Transfer Date; Consideration for Assets
3.1 Transfer Date
The purchases and sales hereunder shall be
effective as of the Transfer Date or each Subsequent Transfer
Date as specified in Sections 2.1 and 2.3 respectively.
3.2 Purchase Price
The amount to be paid by Purchaser to Sellers for
the Assets on the Closing Date (the "Purchase Price") shall
be an amount equal to (A) the Account Balance (other than any
24 Month Account Balance) of all Eligible Accounts, plus (B)
the amount then on deposit in the collection account pursuant
to the Tandy Securitization, less (C) the agreed upon amount
set forth in the Closing Statement, less (D) the unpaid
principal amount of the 8.25% Class A Asset Backed
Certificates issued in connection with the Tandy
Securitization plus the accrued and unpaid interest thereon.
The Purchase Price shall be payable in the manner set forth
in Section 3.3, subject to adjustment as hereinafter provided
in this Agreement (including without limitation Section 3.5
for Accounts later determined to be Ineligible Accounts and
further subject to adjustment as provided in this Agreement
under Section 3.6).
3.3 Method of Payment
At the Closing, Purchaser will pay to Sellers or
their respective assignees or designees the cash amount set
forth on the Closing Statement in immediately available funds
deposited as directed by Sellers; and the remainder will be
paid on a deferred basis (the "Deferred Amount"). The
Deferred Amount is calculated based on the total Special Plan
Account Balances (excluding 24 Month Account Balances) as of
the Transfer Date. The Deferred Amount shall be payable in
installments as described in the next sentence. On each
Deferred Payment Date, Purchaser shall pay to Sellers an
amount equal to the Deferred Amount Payment set forth in the
Closing Statement which is due on such Deferred Payment Date.
Deferred Amount Payments made by Purchaser will reduce the
outstanding balance of the Deferred Amount.
3.4 [Intentionally Left Blank]
3.5 Adjustments for Ineligible Accounts
With respect to the period from the Closing Date to
240 days after the Closing Date (the "Adjustment Period"), if
Purchaser is unable (by reason only of the matter or event
which rendered the Account ineligible and only to the extent
thereof) to collect from any Cardholder the full Account
Balance in respect of any Ineligible Account for which
Purchaser paid a portion of the Purchase Price described in
this Agreement, unless Purchaser shall be required to refund
any amounts to such Cardholder due to the event making such
Account an Ineligible Account, then Sellers will promptly
repay to Purchaser the uncollected portion of any such
Account Balance, or of such refund, as the case may be.
During the Adjustment Period, Purchaser will use the same
efforts to collect such Account Balances as Purchaser uses
with respect to other accounts owned by it. Payments
received by Purchaser during the Adjustment Period will be
applied in accordance with the applicable Cardholder
Agreement. Purchaser shall provide to each Seller a monthly
list of Ineligible Accounts currently uncollected. By 250
days after the Closing Date, Purchaser shall provide Sellers
a final settlement statement identifying all Ineligible
Accounts with respect to which Purchaser was unable to
collect from any Cardholder that portion of the Account
Balance for which payment was made on the Closing Date and
the amount of the uncollected Account Balance related
thereto, and payment shall be made to Purchaser by or on
behalf of Sellers of the total amount of such uncollected
Account Balances. Unless either Seller has notified
Purchaser of a dispute in the amount, Purchaser may set off
any amounts owed by Sellers under this Section 3.5 against
amounts owing by Purchaser to Tandy through the mechanism for
settlement under the Merchant Services Agreement.
Disagreements as to the proper amount of such uncollected
Account Balances shall be resolved in the manner set forth in
Section 15 of this Agreement.
3.6 Adjustments of Purchase Price
The Purchase Price shall be adjusted on or about
the 16th day of the calendar month following the calendar
month in which the Closing Date occurs to reflect (i)
required adjustments (for sales and clearing of payments in
process and suspense accounts) to the Trial Balance as of the
Transfer Date occurring in the normal course of business and
to reflect the Purchase Price due for any Interim Accounts;
(ii) account balances associated with Credit Cards which were
included as Accounts on the Closing Statement, but were later
determined not to be Accounts (as defined in Section 1
hereof); and (iii) 24 Month Account Balances inadvertently
included in the Trial Balance. All other adjustments as
permitted under this Agreement shall be made pursuant to the
settlement mechanism under the Merchant Services Agreement.
Disagreements as to the proper amount of such adjustments
shall be resolved in the manner set forth in Section 15 of
this Agreement.
3.7 Allocation of Purchase Price
(a) The Purchase Price shall be allocated as
reasonably determined by Purchaser on a schedule (the
"Schedule") to be prepared by Purchaser either prior to or
after the Closing and provided to Sellers as soon as the
Schedule is available, but in no event more than thirty (30)
calendar days after the Closing Date. Sellers shall have ten
(10) Business Days after the receipt of the Schedule to
object to any allocation set forth therein. Thereafter, the
parties shall negotiate in good faith to agree on a final
form of the Schedule. If the parties cannot agree on the
final form of the Schedule, any disputed items shall be
resolved in the manner set forth in Section 15 hereof.
(b) Within ten (10) calendar days after the final
determination of the Schedule as provided above, Purchaser
shall prepare, consistent with the allocations set forth in
the Schedule as finally determined, an IRS Form 8594 pursuant
to Section 1060 of the Code (and any comparable form under
state, local or foreign law) based on the Schedule as agreed
upon by the parties hereto and shall deliver such completed
IRS Form 8594 to Sellers for their review. Purchaser and
Sellers agree to report, and to cause their respective
Affiliates to report, this transaction for state, local,
federal and foreign tax purposes in all respects consistent
with and in accordance with the Schedule and the Form 8594
prepared by Purchaser (and any comparable form under state,
local or foreign law). Purchaser and each of the Sellers
shall file a Form 8594 with the Internal Revenue Service as
provided in the Internal Revenue Code of 1986, as amended,
and the regulations promulgated thereunder. If any state,
local, foreign or federal taxing authority challenges such
allocation, Purchaser and each of the Sellers shall cooperate
and shall cause their respective Affiliates to cooperate, in
good faith in responding to such challenge. The party
receiving such challenge shall give prompt written notice to
the other party of any such challenge.
3.8 Sales Taxes
Purchaser agrees to pay any and all sales, transfer
or similar taxes payable by reason of the purchase and sale
of the Assets and the transfer and assumption of Accounts and
Account Balances under this Agreement.
4. Closing
The closing in respect of the sale and purchase of
the Credit Card Business and the Merger (the "Closing") shall
take place on the Closing Date at 1800 One Tandy Center, Fort
Worth, Texas.
5. Agreements of Sellers during Pre-Transfer Period
During the Pre-Transfer Period:
5.1 Access to Records and Information
Sellers shall afford to Purchaser and its
authorized agents and representatives reasonable access to
the records, credit files and other information within each
Seller's possession relating to their respective Credit Card
Business. Each Seller shall during such period cause its
personnel to provide to Purchaser assistance in Purchaser's
investigation of matters relating to their respective Credit
Card Business and to the Assets; provided, however, that
Purchaser's investigation shall be conducted in a manner
which does not unreasonably interfere with such Seller's
normal operations.
5.2 Operation of Credit Card Business
Each Seller agrees to keep and maintain records and
books of account in the same manner as it has in the past and
as in effect on the date of this Agreement of all revenues
and expenses with respect to the business and operations of
its Credit Card Business; each Seller further agrees in
accordance with its past practices to use reasonable efforts
to collect or arrange for the collection of all revenues and
other receipts with respect to its Credit Card Business.
5.3 Conduct of Business Prior to Transfer Date
Except as may be otherwise required by law or
regulatory requirement or unless Purchaser otherwise consents
in writing, each Seller will manage and operate its Credit
Card Business in the ordinary course of business and in
substantially the same manner (except as otherwise required
hereunder) as heretofore managed and operated by such Seller;
provided that each Seller will promptly advise Purchaser in
writing of any material actions, suits or proceedings,
including but not limited to regulatory proceedings or
inquiries, which are made, commenced or threatened against or
affecting such Seller or its Credit Card Business in addition
to those set forth on Exhibit 9, and will promptly advise
Purchaser in writing of any other actual or, if within
Sellers' knowledge, prospective adverse change in the
financial condition, business or prospects of its Credit Card
Business; and provided further that neither Seller will
waive, any material claim owed to it in connection with its
Credit Card Business or breach any material obligation under
any contract, commitment or agreement relating to the Assets.
Neither Seller will, after the date hereof, settle or
compromise any material claim without the consent of the
Purchaser.
5.4 Due Diligence
Sellers shall assist Purchaser in all reasonable
respects in conducting its due diligence prior to the Closing
Date and Sellers and Purchaser agree to resolve all related
issues in good faith.
6. Certain Agreements of Purchaser and Sellers
6.1 Certain Filings and Consents
Sellers and Purchaser shall as soon as practicable
make or cause to be made any filings and applications
required to be filed in order to obtain all required
regulatory approvals, consents or waivers. Purchaser and
Sellers shall cooperate in the preparation of all such
filings and applications prior to filing. All such
applications shall be mutually acceptable to Purchaser and
Sellers. Purchaser and Sellers shall cooperate with one
another (A) in promptly determining what filings or
applications are required to be made or approvals, consents
or waivers are required to be obtained under any relevant
federal, state, local or foreign law or regulation and (B) in
promptly making any such filings or applications, furnishing
information required in connection therewith and seeking to
obtain any such approvals, consents or waivers in a timely
manner. Purchaser and Sellers shall use their reasonable
best efforts to take promptly, or cause to be taken promptly,
all other actions and to do promptly, or cause to be done
promptly, all other things necessary, proper or advisable
under applicable laws and regulations, to consummate and make
effective the transactions contemplated by this Agreement as
promptly as practicable.
6.2 Communications with Public
Neither Purchaser nor any of Sellers nor their
respective Affiliates shall issue any press releases or make
any public statements concerning this Agreement or the
transactions hereunder without the prior approval of each of
the other parties hereto of both the content and timing of
such press releases or statements. Both the content and
timing of communications with Cardholders concerning the
transactions contemplated by this Agreement are subject to
the prior approval of Sellers and Purchaser. Notwithstanding
the above, if any party hereto reasonably believes in good
faith that any press release, public statement or
communication is required by law or regulation, and any other
party hereto refuses to approve such press release, public
statement or communication, such press release, public
statement or communication may be made without prior
approval.
6.3 Operation of Credit Card Business After
Transfer Date
From the Transfer Date to the Closing Date, each
Seller shall continue to manage and operate the Credit Card
Business in the ordinary course of business and in
substantially the same manner (except as otherwise required
hereunder) as heretofore managed and operated by such Seller,
for the benefit of Purchaser. All applications for TNB
Credit Cards received by TNB on or after the Transfer Date,
but prior to the Closing Date, shall be acted upon by TNB in
the ordinary course of business and all credit extended
thereunder shall constitute the Interim Accounts. After the
Closing Date and until such time as Purchaser's credit card
applications and agreements are substituted for credit card
applications and agreements at all Tandy Stores, Sellers
shall act as agent for Purchaser for the limited purpose of
originating new credit card accounts to be issued by
Purchaser to customers of Tandy Stores pursuant to the
Merchant Services Agreement. Any credit card applications
received by Sellers for TNB Credit Cards on or after the
Transfer Date and not acted upon prior to the Closing Date
shall be delivered to Purchaser promptly upon receipt. All
credit card accounts opened pursuant to such applications
shall be deemed originated by Purchaser.
6.4 Cardholder Disputes
Cardholder Disputes relating to Accounts arising on
or before the Transfer Date or on or before the applicable
Subsequent Transfer Date shall be resolved in a manner
consistent with the provisions of the Merchant Services
Agreement as if such Cardholder Disputes had arisen with
respect to accounts subject to the provisions of the Merchant
Services Agreement. Sellers shall have no financial
responsibility under the Merchant Services Agreement to
Purchaser with respect to any Account beyond the disputed
amount or the Account Balance on the Transfer Date or
Subsequent Transfer Date, as applicable, which was included
in the Purchase Price, whichever is less.
6.5 Payments Received by Sellers
Each Seller will hold in trust for Purchaser all
monies, checks and other payments received by such Seller
after the Transfer Date on any Account purchased by Purchaser
from Sellers. Such amounts shall be remitted pursuant to the
settlement mechanism under the Merchant Services Agreement.
Each Seller hereby authorizes and empowers Purchaser to sign
and endorse such Seller's name on all checks, drafts, money
orders or other forms of payment relating to such Accounts
purchased by Purchaser.
6.6 Collection of Purchased Accounts
Subject to the provisions of any prior agreement
between Purchaser or any of its Affiliates and Sellers or any
of their Affiliates, Purchaser shall have the right to take,
or cause to be taken, such action to enforce Purchaser's
rights with respect to any Account purchased hereunder as
Purchaser may deem necessary or appropriate in the
circumstances. Any such collection or enforcement action, to
the extent reasonably deemed legally required by Purchaser,
may be carried out in either Seller's name or in Purchaser's
name, at the option of Purchaser, provided that Purchaser may
only carry out such action in a lawful manner in a Seller's
name with the prior written permission of such Seller. Each
Seller hereby constitutes and appoints Purchaser its true and
lawful attorney for such purpose, with full power of
substitution in the premises, which appointment shall include
(but shall not be limited to) the power to demand, sue for,
collect and receive any and all amounts owing at any time on
any Account purchased from such Seller and owned by
Purchaser, and to endorse checks, drafts, orders and other
instruments tendered in payment of such amounts and to
settle, compromise, prosecute or defend any claims Purchaser
or such Seller may have with respect thereto. This power of
attorney shall be deemed to be a power coupled with an
interest.
6.7 Sellers' Assurances
On and after the Closing Date, each Seller shall
(i) give such further assurances to Purchaser and shall
execute, acknowledge and deliver all such acknowledgements
and other instruments and take such further action as may be
reasonably necessary and appropriate effectively to vest in
Purchaser the full legal and equitable title to the Assets;
and (ii) cooperate with Purchaser in the orderly transition
of the operations acquired by Purchaser.
6.8 Purchaser's Assurances
On and after the Closing Date, Purchaser shall:
(i) give such further assurances to each Seller and shall
execute, acknowledge and deliver all such acknowledgements
and other instruments and take such further action as may be
necessary and appropriate to relieve and discharge
effectively such Seller from any obligations assumed by
Purchaser; and (ii) cooperate with Sellers in the orderly
transition of the operations acquired by Purchaser.
6.9 Audit Letter
At the request of the other party, at the
requesting party's expense and upon reasonable notice, the
requested party shall provide to the requesting party a
letter from its independent accounting firm reporting the
results of the accounting firm's review of the requested
party's records and internal procedures relating to the
Accounts.
6.10 Correction of Account Terms
After the Closing Date, Purchaser shall use
reasonable efforts to identify TNB Credit Card Accounts not
in compliance with current laws and regulations relating to
fees and charges which are not promptly debit ratified as to
Purchaser's terms. If Purchaser, in its sole and absolute
discretion, determines that it is possible to remedy any such
violations of laws or regulations with respect to (i) such
identified TNB Accounts and (ii) any TCC Credit Card Accounts
which have not been debit ratified as to Purchaser's terms
with respect to which Purchaser (without independent
investigation) has actual knowledge of any similar
violations, Purchaser shall make a good faith attempt to
remedy such violations.
7. Indemnification
7.1 Indemnification by TNB
(a) TNB hereby agrees to indemnify Purchaser and
hold Purchaser harmless from any liability, loss, cost or
expense, including reasonable outside attorneys' fees, to the
extent it is caused by or results from: (i) the breach by TNB
of its representations or warranties contained in this
Agreement; (ii) the breach by TNB of any of its covenants or
agreements herein contained; or (iii) any liability or
obligation, contingent or otherwise, arising out of or in
connection with TNB's conduct of its Credit Card Business
prior to the Closing Date; except, in the case of clause
(iii), to the extent that (A) such liability or obligation is
expressly assumed by Purchaser under this Agreement, or (B)
such liability, loss, cost or expense results from a breach
by SPS of SPS's obligations under the Card Services Agreement
or a violation of law by SPS, unless the act or omission
constituting such violation was within the control of any of
the Sellers, or (C) the act or omission causing such
liability, loss, cost or expense was directly within the
control of SPS.
(b) In case any claim is made, or any suit or
action is commenced, against Purchaser in respect of which
indemnification is sought by it under this Section 7.1,
Purchaser shall promptly give TNB notice thereof and TNB
shall be entitled to participate in (or, if Purchaser does
not desire to defend, to conduct) the defense thereof at
TNB's expense. TNB may (but need not) defend or participate
in the defense of any such claim, suit or action, but TNB
shall promptly notify Purchaser if TNB shall not desire to
defend or participate in the defense of any such claim, suit
or action, or if TNB disputes liability for indemnity under
this Section 7.1. Thereafter Purchaser shall defend and, so
long as TNB has not undertaken the defense or is not
participating in the defense, Purchaser may at any time
notify TNB of its intention to settle or compromise any
claim, suit or action against Purchaser in respect of which
payments may be sought by Purchaser hereunder, and Purchaser
may settle or compromise any such claim, suit or action
unless TNB notifies Purchaser in writing (within ten (10)
days after Purchaser has given written notice of its
intention to settle or compromise) TNB intends to conduct the
defense of such claim, suit or action. Any such permitted
settlement or compromise by Purchaser of, or any final
judgment or decree entered on or in, any claim, suit or
action which Purchaser has defended and of which TNB has not
elected to defend or to participate in the defense of in
accordance herewith, shall be deemed to have been consented
to by, and shall be binding upon, TNB as fully as if TNB had
assumed the defense thereof and a final judgment or decree
had been entered in such suit or action, or with regard to
such claim, by a court of competent jurisdiction for the
amount of such settlement, compromise, judgment or decree.
In all cases in which TNB is participating in the defense
with Purchaser, Purchaser shall not settle or compromise any
claim or action without TNB's prior written consent, which
shall not be unreasonably withheld.
7.2 Indemnification by TCC
(a) TCC hereby agrees to indemnify Purchaser and
hold Purchaser harmless from any liability, loss, cost or
expense, including reasonable outside attorneys' fees, to the
extent it is caused by or results from: (i) the breach by TCC
of TCC's representations or warranties contained in this
Agreement or the Merger Agreement; (ii) the breach by TCC of
any of its covenants or agreements contained herein or in the
Merger Agreement; or (iii) any liability or obligation,
contingent or otherwise, or arising out of or in connection
with TCC's conduct of its Credit Card Business prior to the
Closing Date; except, in the case of clause (iii), to the
extent that (A) such liability or obligation is expressly
assumed by Purchaser pursuant to this Agreement, or (B) such
liability, loss, cost or expense results from a breach by SPS
of SPS's obligations under the Card Services Agreement or a
violation of law by SPS, unless the act or omission
constituting such violation was within the control of any of
the Sellers, or (C) the act or omission causing such
liability, loss, cost or expense was directly within the
control of SPS.
(b) In case any claim is made, or any suit or
action is commenced, against Purchaser in respect of which
indemnification is sought by it under this Section 7.2,
Purchaser shall promptly give TCC notice thereof and TCC
shall be entitled to participate in (or, if Purchaser does
not desire to defend, to conduct) the defense thereof at
TCC's expense. TCC may (but need not) defend or participate
in the defense of any such claim, suit or action, but TCC
shall promptly notify Purchaser if TCC shall not desire to
defend or participate in the defense of any such claim, suit
or action or if TCC disputes liability for indemnity under
this Section 7.2. Thereafter Purchaser shall defend and, so
long as TCC has not undertaken the defense or is not
participating in the defense. Purchaser may at any time
notify TCC of its intention to settle or compromise any
claim, suit or action against Purchaser in respect of which
payments may be sought by Purchaser hereunder, and Purchaser
may settle or compromise any such claim, suit or action
unless TCC notifies Purchaser in writing (within ten (10)
days after Purchaser has given written notice of its
intention to settle or compromise) TCC intends to conduct the
defense of such claim, suit or action. Any such permitted
settlement or compromise by Purchaser of, or any final
judgment or decree entered on or in, any claim, suit or
action which Purchaser has defended and of which TCC has not
elected to defend or participate in the defense of in
accordance herewith, shall be deemed to have been consented
to by, and shall be binding upon, TCC as fully as if TCC had
assumed the defense thereof and a final judgment or decree
had been entered in such suit or action, or with regard to
such claim, by a court of competent jurisdiction for the
amount of such settlement, compromise, judgment or decree.
In all cases in which TCC is participating in the defense
with Purchaser, Purchaser shall not settle or compromise any
claim or action without TCC's prior written consent, which
shall not be unreasonably withheld.
7.3 Indemnification by Purchaser
(a) Purchaser hereby agrees to indemnify each
Seller and hold it harmless from any liability, loss, cost or
expense, including reasonable outside attorneys' fees, to the
extent it is caused by or results from: (i) the breach of any
of Purchaser's representations or warranties contained in
this Agreement or the Merger Agreement; (ii) the breach by
Purchaser of any of its covenants or agreements contained
herein or in the Merger Agreement; or (iii) any liability or
obligation, contingent or otherwise, arising out of or in
connection with Purchaser's conduct of the Credit Card
Business following the Closing Date and not relating to acts
or occurrences prior to the Closing Date; except, in the case
of clause (iii), to the extent that (A) such liability or
obligation is expressly assumed by such Seller pursuant to
this Agreement, (B) such liability, loss, cost or expense
results from a breach by either Seller of such Seller's
obligations under the Card Services Agreement or a violation
of law by either Seller, unless the act or omission
constituting such violation was within the control of SPS, or
(C) the act or omission causing such liability, loss, cost or
expense was directly within the control of Sellers.
(b) In case any claim is made, or any suit or
action is commenced against either Seller in respect of which
indemnification is sought by such Seller under this Section
7.3, such Seller shall promptly give Purchaser notice thereof
and Purchaser shall be entitled to participate in (or, if
such Seller does not desire to defend, to conduct) the
defense thereof at Purchaser's expense. Purchaser may (but
need not) defend or participate in the defense of any such
claim, suit or action, but Purchaser shall promptly notify
such Seller if Purchaser shall not desire to defend or
participate in the defense of any such claim, suit or action
or if Purchaser disputes liability for indemnity under this
Section 7.3. Thereafter such Seller shall defend and, so
long as Purchaser has not undertaken the defense or is not
participating in the defense, such Seller may at any time
notify Purchaser of its intention to settle or compromise any
claim, suit or action against such Seller in respect of which
payments may be sought by such Seller hereunder, and such
Seller may settle or compromise any such claim, suit or
action unless Purchaser notifies such Seller in writing
(within ten (10) days after such Seller has given Purchaser
written notice of its intention to settle or compromise) that
Purchaser intends to conduct the defense of such claim, suit
or action. Any such permitted settlement or compromise by
Sellers of, or any final judgment or decree entered on or in,
any claim, suit or action which such Seller has defended and
of which Purchaser has not elected to defend or participate
in the defense of in accordance herewith shall be deemed to
have been consented to by, and shall be binding upon,
Purchaser as fully as if Purchaser had assumed the defense
thereof and a final judgment or decree had been entered in
such suit or action, or with regard to such claim, by a court
of competent jurisdiction for the amount of such settlement,
compromise, judgment or decree. In all cases in which
Purchaser is participating in the defense with Sellers,
Sellers shall not settle or compromise any claim or actions
without Purchaser's prior written consent, which shall not be
unreasonably withheld.
8. Warranties and Representations of TNB
TNB represents and warrants to Purchaser asfollows:
8.1 Organization
TNB is a national banking association duly
organized and validly existing under the laws of the United
States of America and located in Tennessee. TNB is a limited
purpose credit card bank, and as such does comply, and has at
all times since the effective date of its charter complied,
with the restrictions of 12 U.S.C. ^U 1841(c)(2)(F).
8.2 Authority
TNB has the corporate power and authority to enter
into and perform this Agreement and to effect the
transactions contemplated hereby. The execution, delivery
and performance of this Agreement by TNB has been approved
(or will be approved on or before the Closing Date) by all
requisite corporate action on the part of TNB.
8.3 Financial Information
The financial information relating to the TNB
Credit Card Business heretofore provided to Purchaser by TNB
(i) consists of the most recent (on December 31, 1994) TNB
balance sheet and TNB Call Report heretofore provided to
Purchaser by TNB (except to the extent particular financial
information contained therein was materially derived from
information provided by SPS); (ii) was accurate in all
material respects as of the respective dates thereof; and
(iii) did not, as of such dates, contain any untrue
statements of a material fact. The Closing Statement will be
accurate in all material respects as of the date thereof.
8.4 Legal Proceedings
There are no actions, suits or proceedings,
including but not limited to regulatory proceedings or
inquiries, which are pending, or to the knowledge of TNB
threatened, against TNB or its Credit Card Business other
than as set forth on Exhibit 9; provided, however, that with
respect to actions, suits or proceedings against dealers or
franchisees of Tandy, such representation and warranty shall
be made only to the knowledge of TNB. Exhibit 9 shall be
delivered by TNB within ten days of the date hereof and may be
amended or supplemented by TNB from time to time prior to
the Closing subject to Purchaser's review and approval at
Closing.
8.5 Governmental Notices; No Regulatory Approvals
TNB has not received notice from any federal or
state governmental agency indicating that it would oppose or
not grant or issue its consent or approval, if required, with
respect to the transactions contemplated by this Agreement.
8.6 Finders or Brokers
TNB has not agreed to pay any fee or commission to
any agent, broker, finder or other person for or on account
of services rendered as a broker or finder in connection with
this Agreement or the transactions contemplated hereby or
thereby.
8.7 Compliance with Law and Other Instruments
The execution, delivery and performance by TNB of
this Agreement will not violate TNB's charter or by-laws or
any material contract or other agreement to which it is a
party or by which it is bound in any manner which would have
a material adverse effect on the transactions contemplated by
this Agreement. The business and operations of TNB's Credit
Card Business have been conducted by TNB in accordance with
all applicable laws, rules and regulations in all material
respects, provided, however, that any violation by TNB of an
applicable law, rule or regulation shall not constitute a
breach of this representation to the extent:
(a) TNB's violation was caused by a breach by SPS
of SPS's obligations under the Card Services
Agreement;
(b) TNB's violation was caused by a violation of
law by SPS, unless the act or omission
constituting such violation was within the
control of any of the Sellers; or
(c) the act or omission constituting such
violation was directly within the control of
SPS.
8.8 Valid Sale; Binding Obligations.
This Agreement constitutes a valid sale, transfer,
and assignment to Purchaser of all TNB Assets enforceable
against TNB, assuming that this Agreement has been duly
authorized, executed and delivered by and constitutes an
enforceable obligation of, Purchaser. Subject to the
foregoing assumption, this Agreement constitutes a legal,
valid and binding obligation of TNB enforceable in accordance
with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium,
receivership, conservatorship or other similar laws or
judicial decisions affecting the enforcement of creditors'
rights generally and the rights of creditors of national
banks and by general principles of equity, regardless of
whether such enforceability is considered in a proceeding in
equity or at law.
8.9 Condition of Assets
TNB is now, and immediately prior to the transfers
on the Transfer Date will be, the owner of all right, title
and interest in and to all TNB Assets, free and clear of all
assignments, security interests, claims, liens, encumbrances
and other rights of third parties whatsoever (other than
those arising under this Agreement, the Receivables Purchase
Agreement and the documents relating to the Tandy
Securitization). The obligation of the Cardholder under each
Eligible Account to pay the unpaid Account Balance will have
become fully effective as of the Transfer Date or Subsequent
Transfer Date, as applicable, except as provided under any
applicable Special Plan, and will not be subject to any
offset, counterclaim or other defense of any kind or nature
or be the subject of any pending litigation or other judicial
or administrative proceeding, as of the Transfer Date or
applicable Subsequent Transfer Date. The payment terms
applicable to the Cardholders or other obligors on the
Eligible Accounts shall not have been waived or modified by
TNB other than in the ordinary course of business. All
charge or credit transactions (including payments) as to
which the records thereof shall have been received by TNB on
or before the Transfer Date shall have been transmitted to
SPS on or before the close of business on the Transfer Date
or Subsequent Transfer Date, as applicable, except those not
included in the Trial Balance as of the Transfer Date for
which adjustment is to be made under Section 3.6.
8.10 TNB Agreements and Accounts
All forms of Cardholder Agreements in respect of
TNB Credit Cards, and all forms of related periodic
statements, are included in Exhibits 10 and 11 hereto,
respectively. There are no other forms of Cardholder
Agreements or periodic statements in use or in effect in
respect of TNB Credit Cards. The forms of Cardholder
Agreements and periodic statements related to TNB Credit
Cards included in Exhibits 10 and 11 all complied on their
respective effective dates in all material respects with all
applicable laws and regulations, provided, however, that any
violation by TNB of an applicable law, rule or regulation
shall not constitute a breach of this representation to the
extent:
(a) TNB's violation was caused by a breach by SPS
of its obligations under the Card Services
Agreement;
(b) TNB's violation was caused by a violation of
law by SPS, unless the act or omission
constituting such violation was within the
control of any of the Sellers; or
(c) the act or omission constituting such
violation was directly within the control of
SPS.
The forms of Cardholder Agreements and periodic
statements included in Exhibits 10 and 11 accurately
represent the agreements between TNB and Cardholders and the
methods of computing balances and finance charges as of the
effective dates of such agreements. Except for Cardholder
Agreements, any existing agreements with SPS and such other
agreements listed on Exhibit 12 to be delivered at Closing,
there are no leases, contracts or other agreements that are
material to the conduct of the TNB Credit Card Business. TNB
is not in breach of any material contract or agreement to be
sold or transferred to Purchaser hereunder. TNB shall, on
the Transfer Date or Subsequent Transfer Date, as applicable,
be in possession of a genuine, valid and enforceable
contractual obligation of the Cardholder under each Account
related to a TNB Credit Card sold to Purchaser, together with
all the applications, Cardholder Agreements, and Cardholder
correspondence relating to each such Account. It shall be
understood that the warranty in the preceding sentence shall
not be deemed breached to the extent that Purchaser shall
have been reimbursed for any losses, costs or liabilities
resulting from the failure of either Seller to possess the
related contract or any other related document or to the
extent Purchaser receives payments on the Account regardless
of such failure to possess such contract or document.
8.11 Operation of Credit Card Business
Since October 17, 1994, other than agreements
between the parties hereto, TNB has not (i) effected any
material or significant change in the accounting practices,
procedures or methods employed in connection with TNB's
Credit Card Business; (ii) effected any material or
significant change in its business, credit or collection
policies, re-aging policies, practices or procedures relating
to TNB's Credit Card Business; or (iii) entered into any
transaction or made any commitment or agreement in connection
with TNB's Credit Card Business other than in the ordinary
course of such business and on commercially reasonable terms.
Since October 17, 1994, there has not occurred any material
adverse change (financial or otherwise) in the condition,
business or assets of TNB or its Credit Card Business.
8.12 Fees and Charges; Compliance with Law
The fees and charges (i) charged by TNB with
respect to each TNB Credit Card Account prior to the Transfer
Date or applicable Subsequent Transfer Date or (ii) reserved
in the agreements evidencing such Account was debit ratified
to Purchaser's terms and conditions (except to the extent
that the law changed after the Transfer Date or applicable
Subsequent Transfer Date) do not exceed the fees and charges
permitted by applicable law. The methods of applying (except
to the extent that such application resulted from SPS's
noncompliance with Seller's instructions or with the
Cardholder Agreement) payments, credits, balances, finance
charges, debits and all other fees and charges complies with
all applicable laws and the Cardholder Agreements.
9. Warranties and Representations of TCC
TCC represents and warrants as follows:
9.1 Corporate Status of TCC
TCC is a corporation duly organized and validly
existing under the laws of the State of Delaware and has the
corporate power and authority and all material licenses and
permits required by governmental authority to own or lease
and operate its properties and to carry on its business as
now being conducted. TCC is qualified to do business in
Delaware and in every other jurisdiction where the failure to
so qualify would have a material adverse effect on the
business and operations of TCC.
9.2 Authority
TCC has the corporate power and authority to enter
into and perform this Agreement and the Merger Agreement and
to effect the transactions contemplated hereby and thereby.
The execution, delivery and performance of this Agreement and
the Merger Agreement each has been or will be approved by all
requisite corporate actions on the part of TCC.
9.3 Financial Information
The financial information relating to TCC and the
TCC Credit Card Business heretofore provided to Purchaser by
TCC (i) consists of (A) all of the financial information
contained in the most recent (on December 31, 1994) TCC
Annual Report of Form 10-K and TCC Quarterly Report on Form
10-Q, and (B) as of December 31, 1994, the average percentage
of Cardholders who pay their Accounts in full for each
billing cycle and the uncollectible loss and recovery history
of the TCC Credit Card Business (except to the extent
particular financial information contained therein was
materially derived from information provided by SPS); (ii)
was accurate in all material respects as of the respective
dates thereof; and (iii) did not, as of such dates, contain
any untrue statement of a material fact. The Closing
Statement will be accurate in all material respects as of the
date thereof.
9.4 Legal Proceedings
There are no actions, suits or proceedings,
including but not limited to regulatory proceedings or
inquiries, which are pending or, to the knowledge of TCC,
threatened against TCC or its Credit Card Business other than
as set forth on Exhibit 9; provided, however, that with
respect to actions, suits or proceedings against dealers or
franchisees of Tandy, such representation and warranty shall
be made only to the knowledge of TCC. Exhibit 9 shall be
delivered by TCC within ten days of the date hereof and may
be amended or supplemented by TCC from time to time prior to
the Closing subject to Purchaser's review and approval at
Closing.
9.5 Governmental Notices; No Regulatory Approvals
TCC has not received notice from any federal or
state governmental agency indicating that it would oppose or
not grant or issue its consent or approval, if required, with
respect to the transactions contemplated by this Agreement or
the Merger Agreement.
9.6 Finders or Brokers
TCC has not agreed to pay any fee or commission to
any agent, broker, finder or other person for or on account
of services rendered as a broker or finder in connection with
this Agreement, the Merger Agreement or the transactions
contemplated hereby or thereby.
9.7 Compliance with Law and Other Instruments
The execution, delivery and performance by TCC of
this Agreement or the Merger Agreement will not violate TCC's
charter or by-laws or any material contract or other
agreement to which it is a party or by which it is bound in
any manner which would have a material adverse effect on the
transactions contemplated by this Agreement or the Merger
Agreement. The business and operations of TCC's Credit Card
Business have been conducted by TCC in accordance with all
applicable laws, rules and regulations in all material
respects, provided, however, that any violation by TCC of an
applicable law, rule or regulation shall not constitute a
breach of this representation to the extent:
(a) TCC's violation was caused by a breach by SPS
of SPS's obligations under the Card Services
Agreement;
(b) TCC's violation was caused by a violation of
law by SPS, unless the act or omission
constituting such violation was within the
control of any of the Sellers; or
(c) the act or omission constituting such
violation was directly within the control of
SPS.
9.8 Valid Sale; Binding Obligations.
This Agreement constitutes a valid sale, transfer,
and assignment to Purchaser of all the TCC Assets,
enforceable against TCC, assuming that this Agreement has
been duly authorized, executed and delivered by, and
constitutes an enforceable obligation of, Purchaser. Subject
to the foregoing assumption, this Agreement constitutes a
legal, valid and binding obligation of TCC enforceable in
accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws or judicial decisions affecting the
enforcement of creditors' rights generally and by general
principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at
law.
9.9 Condition of Assets
TCC is now, and as of immediately prior to the
transfers on the Transfer Date will be, the owner of all
right, title and interest in and to all TCC Assets and the
Merger Assets, free and clear of all assignments, security
interests, claims, liens, encumbrances and other rights of
third parties whatsoever (other than those arising under this
Agreement or the documents relating to the Tandy
Securitization). The obligation of the Cardholder under each
Eligible Account to pay the unpaid Account Balance will have
become fully effective as of the Transfer Date or Subsequent
Transfer Date, as applicable, except as provided under any
applicable Special Plan, and will not be subject to any
offset, counterclaim or other defense of any kind or nature
or be the subject of any pending litigation or other judicial
or administrative proceeding, as of the Transfer Date or
applicable Subsequent Transfer Date. The payment terms
applicable to Cardholders or other obligors in the Eligible
Accounts shall not have been waived or modified by TCC other
than in the ordinary course of business. All charge or
credit transactions (including payments) as to which the
records thereof shall have been received by TCC on or before
the Transfer Date shall have been transmitted to SPS on or
before the close of business on the Transfer Date or
Subsequent Transfer Date, as applicable, except those not
included in the Trial Balance as of the Transfer Date for
which adjustment is to be made under Section 3.6.
9.10 TCC Agreements and Accounts
All forms of Cardholder Agreements in respect of
TCC Credit Cards used by TCC or Tandy as of the date on which
TCC commenced issuing Credit Cards, and all forms of related
periodic statements, complied on their respective effective
dates in all material respects with all applicable laws and
regulations as of such effective dates, provided, however,
that any violation by TCC of an applicable law, rule or
regulation that shall not constitute a breach of this
representation to the extent:
(a) TCC's violation was caused by a breach by SPS
of its obligations under the Card Services
Agreement;
(b) TCC's violation was caused by a violation of
law by SPS, unless the act or omission
constituting such violation was within the
control of any of the Sellers; or
(c) the act or omission constituting such
violation was directly within the control of
SPS.
The forms of Cardholder Agreements and periodic statements to
the extent included in Exhibits 13 and 14 hereto,
respectively, related to TCC Credit Cards accurately
represent the agreements between Tandy or TCC and the
Cardholders subject thereto and the methods of computing
balances and finance charges as of the effective dates of
such agreements. Exhibits 13 and 14 may be supplemented by
TCC from time to time prior to the Closing, subject to review
and approval by Purchaser at Closing. Except for Cardholder
Agreements, any existing agreements with SPS and such other
agreements listed on Exhibit 15 to be delivered at Closing,
there are no leases, contracts or other agreements that are
material to the conduct of the TCC Credit Card Business. TCC
is not in breach of any material contract or agreement to be
sold or transferred to Purchaser hereunder. TCC shall, on
the Transfer Date or Subsequent Transfer Date, as applicable,
be in possession of a genuine, valid and enforceable
contractual obligation of the Cardholder under each Account
related to a TCC Credit Card sold to Purchaser, together with
all the applications, Cardholder Agreements and Cardholder
correspondence relating to each such Account. It shall be
understood that the warranty in the preceding sentence shall
not be deemed breached to the extent that Purchaser shall
have been reimbursed for any losses, costs or liabilities
resulting from the failure of either Seller to possess the
related contract or any other related document or to the
extent Purchaser receives payments on the Account regardless
of such failure to possess such contact or document.
9.11 Operation of Credit Card Business
Since October 17, 1994, other than agreements
between the parties hereto, TCC has not (i) effected any
material or significant change in the accounting practices,
procedures or methods employed in connection with TCC's
Credit Card Business; (ii) effected any material or
significant change in its business, credit or collection
policies, re-aging policies, practices or procedures relating
to TCC's Credit Card Business; or (iii) entered into any
transaction or made any commitment or agreement in connection
with TCC's Credit Card Business other than in the ordinary
course of such business and on commercially reasonable terms.
Since October 17, 1994, there has not occurred any material
adverse change (financial or otherwise) in the condition,
business or assets of TCC or its Credit Card Business.
9.12 Fees and Charges; Compliance with Law
The fees and charges (i) charged by TCC with
respect to each TCC Credit Card Account prior to the Transfer
Date or applicable Subsequent Transfer Date or (ii) reserved
in the agreements evidencing each such Account prior to or as
of the date on which such Account was debit ratified to
Purchaser's terms and conditions (except to the extent that
the law changed after the Transfer Date or applicable
Subsequent Transfer Date) do not exceed the fees and charges
permitted by applicable law. The methods of applying (except
to the extent that such application resulted from SPS's
noncompliance with Seller's instructions or with the
Cardholder Agreement) payments, credits, balances, finance
charges, debits and all other fees and charges complies with
all applicable laws and the Cardholder Agreements.
9.13 Title to TCC Stock.
Tandy is the record and beneficial owner of all of
the TCC Stock free and clear of any security interests,
claims, liens (including tax liens), pledges, penalties,
charges, encumbrances, buy-sell agreements, rights-of-first
refusal, or rights of others whatsoever. The TCC Stock held
by Tandy constitutes all of the outstanding shares of the
capital stock of TCC.
9.14 Capital Stock of TCC
The authorized capital stock of TCC consists
entirely of 1,000 shares of Common Stock, $10.00 par value
per share. All of the shares of the TCC Stock have been duly
and validly issued and are fully paid and nonassessable.
There are no outstanding subscriptions, options, convertible
securities, or other agreements or commitments obligating TCC
to issue any additional shares of stock.
9.15 Assets and Liabilities of TCC
Upon the transfer of the TCC Assets to Purchaser
hereunder, TCC shall have no assets of any kind whatsoever
except the Merger Assets, and shall have no liabilities or
obligations of any kind whatsoever, whether absolute or
contingent, known or unknown, whether required to be
disclosed under GAAP or otherwise, except as disclosed in
Exhibit 16, which shall be delivered on or before Closing.
9.16 Title to TRC Stock
TCC is the record and beneficial owner of all of
the TRC Stock free and clear of any security interests,
claims, liens (including tax liens), pledges, penalties,
charges, encumbrances, buy-sell agreements, rights-of-first
refusal, or rights of others whatsoever; the TRC Stock held
by TCC constitutes all of the outstanding shares of the
capital stock of TRC.
9.17 Corporate Status of TRC
TRC is a corporation duly organized, validly
existing, and in good standing under the laws of the State of
Delaware, and has the corporate power and authority and all
material licenses and permits required by governmental
authority to own or lease and operate its properties and to
carry on its business as now being conducted. TRC is
qualified to do business in Delaware and is not required to
qualify to do business in any other jurisdiction where the
failure to so qualify would have a material adverse effect on
the business and operations of TRC.
9.18 Capital Stock of TRC
The authorized capital stock of TRC consists
entirely of 1,000 shares of Common Stock, $1.00 par value per
share. All of the shares of the TRC Stock have been duly and
validly issued and are fully paid and nonassessable. There
are no outstanding subscriptions, options, convertible
securities, or other agreements or commitments obligating TRC
to issue any additional shares of stock.
9.19 Tandy Securitization
Each representation, warranty and covenant provided
by TRC, TCC, TNB or Tandy under or in connection with any
document executed in connection with the issuance on June 18,
1991 by the TRC/Tandy Master Trust of $350,000,000 8.25%
Class A Asset Backed Certificates, Series A ("Tandy
Securitization") was true and correct in all material
respects on the dates when made and no event of termination
or default or unmatured event of termination or default has
occurred thereunder. As of the date hereof and on the
Closing Date, the transferor interest retained by TRC in
connection with the Tandy Securitization shall equal or
exceed 15% of the aggregate amount of principal receivables
in the master trust established pursuant to such
securitization. On the Closing Date, the actual principal
amount of the 8.25% Class A Asset Backed Certificates, Series
A, including the actual accrued and unpaid interest thereon,
and the Class B Certificate issued in connection with the
Tandy Securitization shall be as shown in the Closing
Statement.
9.20 Corporate Records
The minute books of TCC and TRC made available to
Hurley to review contain complete and accurate records (to
the extent in existence) of all meetings and other material
corporate actions (including written actions in lieu of
meetings) taken by the Board of Directors and Stockholders of
TCC and TRC.
9.21 Employees
TCC has no employees and is not subject to any
employment agreement on the date hereof, and will have no
employees and will not be subject to any employment agreement
on the Closing Date.
10. Warranties and Representations of Purchaser
Purchaser represents and warrants as follows:
10.1 Organization
Purchaser is a banking corporation duly organized
and existing under the laws of the State of South Dakota and
is authorized to conduct its business under those laws.
10.2 Organization of HRC
HRC, when organized, will be a corporation duly
organized and existing under the laws of the State of
Delaware.
10.3 Authority
Purchaser has the corporate power and authority to
enter into and perform this Agreement and the Merger
Agreement and to effect the transactions contemplated hereby
and thereby. The execution, delivery and performance of this
Agreement has been approved (or will be approved on or before
the Closing Date) by all requisite corporate action on the
part of Purchaser.
10.4 Authority of HRC
HRC will, prior to the Closing Date, have the
corporate power and authority to enter into and perform the
Merger Agreement and to effect the transactions contemplated
thereby. The execution, delivery and performance of the
Merger Agreement will be approved on or before the Closing
Date by all requisite corporate action on the part of HRC.
10.5 Financial Information
The financial information relating to Purchaser
heretofore provided to Sellers (i) consists of all of the
financial information contained in the most recent (on
December 31, 1994) TSI Annual Report on Form 10-K, Quarterly
Report on Form 10-Q and Purchaser's Call Report (except to
the extent particular financial information contained therein
was materially derived from information provided by Sellers
or their Affiliates); (ii) is accurate in all material
respects as of the respective dates thereof; and (iii) did
not, as of such dates, contain any untrue statements of a
material fact.
10.6 Legal Proceedings
There are no actions, suits or proceedings,
including but not limited to regulatory proceedings or
inquiries, which are pending, or to the knowledge of
Purchaser threatened, against Purchaser or HRC other than as
set forth on Exhibit 17. Exhibit 17 shall be delivered by
Purchaser within ten days of the date hereof and may be
amended or supplemented by Purchaser from time to time prior
to the Closing, subject to review and approval by Sellers at
Closing.
10.7 Governmental Notices; No Regulatory Approvals
Neither Purchaser nor HRC has received notice from
any federal or state governmental agency indicating that it
would oppose or not grant or issue its consent or approval,
if required, with respect to the transactions contemplated by
this Agreement.
10.8 Finders or Brokers
Neither Purchaser nor HRC has agreed to pay any fee
or commission to any agent, broker, finder or other person
for or on account of services rendered as a broker or finder
in connection with this Agreement, the Merger Agreement or
the transactions contemplated hereby or thereby.
10.9 Compliance with Law and Other Instruments
The execution, delivery and performance of this
Agreement by Purchaser will not violate Purchaser's charter
or by-laws or any material contract or other agreement to
which it is a party or by which it is bound in any manner
which would have a material adverse effect on the
transactions contemplated by this Agreement.
10.10 Compliance with Law and Other
Instruments--HRC
The execution, delivery and performance of the
Merger Agreement by HRC will not violate HRC's charter or
by-laws or any material contract or other agreement to which
it is a party or by which it is bound in any manner which
would have a material adverse effect on the transactions
contemplated by the Merger Agreement.
10.11 Binding Obligations
Assuming that this Agreement and the Merger
Agreement each has been duly authorized, executed and
delivered by, and constitutes an enforceable obligation of
each of the other parties thereto, this Agreement and the
Merger Agreement each constitutes a legal, valid and binding
obligation of Purchaser and HRC enforceable in accordance
with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium,
receivership, conservatorship or other similar laws or
judicial decisions affecting the enforcement of creditors'
rights generally and the rights of creditors of
federally-insured banks and by general principles of equity,
regardless of whether such enforceability is considered in a
proceeding in equity or at law.
10.12 Operation of Business
Since October 17, 1994, Purchaser has not (i)
effected any material or significant change in the accounting
practices, procedures or methods employed in connection with
its business; or (ii) entered into any transaction or made
any commitment or agreement other than in the ordinary course
of such business and on commercially reasonable terms. Since
October 17, 1994, there has not occurred any material adverse
change (financial or otherwise) in the condition, business or
assets of Purchaser.
10.13 Security Interest
Assuming the filing of appropriate UCC-1 financing
statements, the accuracy or the certifications and listings
related to such financing statements delivered at Closing
pursuant to the Security Agreement, and assuming the truth of
the representations and the warranties set forth in Sections
8.9 and 9.9, on the Closing Date, Tandy will have a first
priority perfected security interest in the Account Balances
in the Accounts identified in Exhibit 1 to the Security
Agreement. Assuming the proper filing of the UCC-1 financing
statements and the continued truth of the representations and
warranties set forth in Sections 8.9 and 9.9, on the date of
the addition of any Account Balances and the addition of any
Accounts to the Accounts identified in Exhibit 1 to the
Security Agreement, TCC will have a first priority perfected
security interest in the Account Balances of the Accounts so
added to Exhibit 1 to the Security Agreement.
10.14 Tandy Securitization
To the extent that such Certificates are not then
held by the Purchaser, Purchaser will repurchase the Investor
Certificates issued in connection with the Tandy
Securitization as promptly as is reasonably practicable, and
shall repurchase such Certificates, if not earlier, promptly
after the optional repurchase thereunder is permitted
pursuant to Section 4 of the Series A Supplement to the
Pooling and Servicing Agreement for the Securitization
Transaction.
11. Conditions Precedent to the Obligations of
Purchaser
The obligations of Purchaser to consummate the
purchase provided for herein are subject to the fulfillment
(except to the extent, if any, waived by Purchaser) of the
following conditions at or prior to the Closing Date:
11.1 Regulatory Approvals
All required licenses, approvals, consents and
notifications of any relevant state and federal regulatory
agencies in respect of the transactions provided for herein
and the Merchant Services Agreement, including without
limitation the approval of the Federal Deposit Insurance
Corporation and the South Dakota State Banking Commission,
shall have been obtained or made and all necessary
conditions, including all legally required waiting, notice or
protest periods, of such licenses, approvals, consents and
notifications shall have been fully satisfied.
11.2 Absence of Litigation
There shall not be pending on the Closing Date any
action or proceeding instituted by any person, entity or
governmental authority against either Seller, Purchaser,
Tandy or HRC to prevent the consummation of the sale of the
Credit Card Business by the Sellers to Purchaser pursuant
hereto or the Merger pursuant to the Merger Agreement, and on
the Closing Date there shall be no injunction, decree or
similar legal restraint issued by a court or regulatory
agency preventing the consummation of such sale or the
Merger.
11.3 Truth of Representations
The representations and warranties of Sellers set
forth in Sections 8 and 9 of this Agreement shall be true in
all material respects as if made on the date hereof, the
Closing Date, the Transfer Date, and the applicable
Subsequent Transfer Date as applicable.
11.4 No Change in Financial Condition
The financial information underlying the Closing
Statement to be submitted to Purchaser on the Closing Date,
taken in the aggregate, will not differ materially from such
financial information previously provided to Purchaser by the
Sellers, except for changes in the ordinary course of
business and changes contemplated by this Agreement.
11.5 Performance of Covenants
The covenants and agreements of Sellers set forth
in this Agreement and to be performed on or before the
Closing Date shall have been performed in all material
respects.
11.6 Merger Agreement
Tandy, TCC Purchaser and HRC shall have entered
into the Merger Agreement substantially in the form of
Exhibit 18 hereto.
11.7 Rating Agency Approval/Receipt of Consents and
Opinions Under Tandy Securitization
All consents and approvals (including, without
limitation, letters confirming their respective ratings)
required pursuant to the terms of the documentation for the
Tandy Securitization to be received from the rating agencies
then rating the TRC/Tandy Master Trust $350,000,000 8.25%
Class A Asset Backed Certificates, Series A, shall have been
received by Tandy and Purchaser.
11.8 Divestiture of Non-Merger Assets
TCC shall have divested itself of all assets other
than the Merger Assets.
11.9 Items to be Delivered by Sellers
Sellers shall have delivered to Purchaser:
(a) The following duly executed assignment
documents:
[None]
(b) A favorable opinion or opinions of
counsel to Sellers, dated the Closing Date, to the
effect in the aggregate that:
(i) Each of the Sellers and Tandy, as
appropriate, has duly and validly
authorized, executed and delivered this
Agreement, the Merger Agreement and the
conveyance documents (if any) referred
to in Section 11.10(a);
(ii) TNB is a nationally chartered credit
card bank duly organized and existing
under the laws of the United States of
America and located in Tennessee, with
full corporate power to enter into and
perform its obligations under this
Agreement;
(iii) TNB is a limited purpose credit card
bank exempt from the definition of
"bank" under the Bank Holding Company
Act of 1956, pursuant to the exemption
set forth at 12 U.S.C. 1841(c)(2)(F);
(iv) TCC is a duly organized and existing
Delaware corporation with full
corporate power to enter into and
perform its obligations under this
Agreement and the Merger Agreement;
(v) Tandy is a duly organized and existing
Delaware corporation with full
corporate power to enter into and
perform its obligations under the Tandy
Assignment Agreement and Tandy Guaranty
(collectively, the "Tandy Agreements")
and the Merger Agreement.
(vi) Neither the execution and delivery of
this Agreement or the Merger Agreement,
nor either Seller's performance
thereof, is restricted by or violates
(x) the charter or by-laws of such
Seller, (y) the documents executed and
delivered in connection with the Tandy
Securitization or (z) any contractual
or other obligation of such Seller of
which such counsel has knowledge after
reasonable investigation, in any manner
which would have a material adverse
effect on the transactions contemplated
by this Agreement;
(vii) Neither the execution and delivery of
the Tandy Agreements or the Merger
Agreement nor Tandy's performance of
each is restricted by or violates (x)
the charter or by-laws of Tandy or (y)
in a manner which would have a material
adverse effect on the transactions
contemplated by the Tandy Agreements,
any contractual or other obligation of
Tandy of which such counsel has
knowledge after reasonable
investigation;
(viii) All consents and approvals required by
law, this Agreement or the Merger
Agreement to be obtained by either
Seller at or prior to the Closing Date
to authorize and, to the best of such
counsel's knowledge, after due
investigation, to consummate the
transactions contemplated hereby have
been obtained and are in full force and
effect;
(ix) All consents and approvals required by
law or the Tandy Agreements or the
Merger Agreement to be obtained by
Tandy at or prior to the Closing Date
to authorize and, to the best of such
counsel's knowledge, after due
investigation, to consummate the
transactions contemplated by the Tandy
Agreements have been obtained and are
in full force and effect;
(x) Assuming that this Agreement and the
Merger Agreement each constitutes the
legal and binding obligation of
Purchaser and HRC, as appropriate, then
this Agreement and the Merger Agreement
each constitutes the legal and binding
obligation of each Seller enforceable
in accordance with its terms, except as
such enforceability may be limited by
bankruptcy, insolvency, reorganization,
moratorium, conservatorship,
receivership or other similar laws or
judicial decisions affecting the
enforcement of creditors' rights
generally and, with respect to TNB, the
rights of creditors of national banks
and by general principals of equity,
regardless of whether such
enforceability is considered in a
proceeding in equity or at law;
(xi) The Tandy Agreements and the Merger
Agreement each constitutes the legal
and binding obligation of Tandy in
accordance with its terms except as
such enforceability may be limited by
bankruptcy, insolvency, reorganization,
moratorium, conservatorship,
receivership or other similar laws or
judicial decisions affecting the
enforcement of creditors' rights
generally and by general principals of
equity, regardless of whither such
enforceability is considered in a
proceeding in equity or at law;
(xii) There are no proceedings or
investigations pending, or to the
knowledge of such counsel, threatened
to which either Seller or Tandy is or
would be a party (A) asserting the
invalidity or unenforceability of this
Agreement, the Tandy Agreements, or the
Merger Agreement, or (B) seeking to bar
the consummation of the transactions
contemplated under this Agreement, the
Tandy Agreements, or the Merger
Agreement; and
(xiii) The fees and charges reserved in the
Cardholder Agreements with TNB
evidencing the Accounts are not in
excess of fees and charges permitted by
applicable Tennessee law and can be
validly imposed on Cardholders residing
outside of Tennessee under the
authority of Section 85 of the
National Bank Act.
(c) A certificate signed by a duly authorized
officer of each Seller to the effect that (i) the
warranties and representations of each Seller in
this Agreement and the Merger Agreement are true in
all material respects as of the Transfer Date and
the Closing Date or, if any such warranties and
representations are not then true, specify the
deficiency in reasonable detail; and (ii) the
covenants and agreements of such Seller to be
performed hereunder and thereunder on or before the
Closing Date have been performed in all material
respects, or, if any such covenants have not been
so performed, specifying the deficiency in
reasonable detail.
(d) Resolutions of the Board of Directors of
each Seller, as appropriate, certified by its
Secretary or an Assistant Secretary, authorizing
the execution and delivery of this Agreement, the
Tandy Assignment Agreement, the Merchant Services
Agreement and the Merger Agreement, and with
respect to Tandy, resolutions of its Board of
Directors of the Executive Committee authorizing
each Seller to execute and deliver this Agreement,
the Tandy Assignment Agreement, the Merchant
Services Agreement and the Merger Agreement, as
appropriate, and the consummations of the
transactions contemplated hereby and thereby.
(e) Resolutions of the shareholder of TCC,
authorizing the execution and delivery of the
Merger Agreement, and the consummation of the
transactions contemplated hereby.
(f) The Closing Statement.
(g) Duly executed Uniform Commercial Code
financing statements, in proper form for filing
under the Uniform Commercial Code of the States of
Tennessee and Texas, by Purchaser, as Purchaser,
and Sellers, as Sellers, reflecting the sale of the
Accounts hereunder.
(h) A duly executed Tandy Guaranty,
substantially in the form of Exhibit 6.
(i) A duly executed Tandy Assignment
Agreement, substantially in the form of Exhibit 19.
(j) A duly executed Merger Agreement,
substantially in the form of Exhibit 18.
(k) Evidence satisfactory to counsel to
Purchaser that all assets other than the Merger
Assets have been divested by TCC.
(l) A duly executed certificate of merger as
required under Section 2.2 of the Merger Agreement.
(m) A cross-receipt acknowledging receipt of
the items described in Section 11.9.
(n) A duly executed Security Agreement.
(o) A duly executed Tax Sharing Agreement, in
the form and substance satisfactory to all of
parties hereto.
(p) Duly executed Assumption Agreements.
11.10 Merchant Services Agreement
Tandy shall have entered into Merchant Services
Agreements with Purchaser in form and substance satisfactory
to Purchaser.
11.11 Miscellaneous
Tandy shall deliver a certificate evidencing
Tandy's agreement to file a quarterly report on form 10-Q or
such other filings as may be required to be filed under
applicable securities laws with regard to TCC for 1995.
11.12 Books and Records
Except as otherwise permitted by Section 2.5, TCC
and TRC shall deliver to Purchaser at Closing all corporate
books and records maintained by and available to TRC that are
reasonably necessary to the operations and maintenance of
their respective businesses; other records will be delivered
by TCC and TRC to Purchaser after Closing upon request.
11.13 Sale of Class B Certificates
Each Seller agrees to use all reasonable efforts
within its control to assist in the proposed sale of the
Class 8 certificates under the Tandy Securitization to SPS
Newco or an affiliate.
12. Conditions Precedent to the Obligations of Sellers
The obligation of each Seller to consummate the
sale provided for herein is subject to the fulfillment
(except to the extent, if any, waived by such Seller) of the
following conditions at or prior to the Closing Date:
12.1 Regulatory Approvals
All required licenses, approvals, consents and
notifications of any relevant state and federal regulatory
agencies in respect of the transactions provided for herein,
in the Merger Agreement, and in the Merchant Services
Agreement, including without limitation the approval of the
Federal Deposit Insurance Corporation and the South Dakota
State Banking Commission, shall have been obtained or made
and all necessary conditions, including all legally required
waiting, notice or protest periods, of such licenses,
approvals, consents and notifications shall have been fully
satisfied.
12.2 Absence of Litigation
There shall not be pending on the Closing Date any
action or proceeding instituted by any person, entity or
governmental authority against either Seller, Purchaser,
Tandy or HRC to prevent the consummation of the sale of the
Credit Card Business by the Sellers to Purchaser pursuant
hereto or the Merger pursuant to the Merger Agreement, and on
the Closing Date there shall be no injunction, decree or
similar legal restraint issued by a court or regulatory
agency preventing the consummation of such sale or the
Merger.
12.3 Truth of Representations
The representations and warranties of Purchaser set
forth in Section 10 of this Agreement shall be true in all
material respects.
12.4 No Change in Financial Condition
As of the Closing Date, the financial condition of
Purchaser shall not differ materially from the financial
condition of Purchaser as represented in the most recent (on
December 31, 1994) TSI Annual Report on Form 10-K and
Quarterly Report on Form 10-Q previously provided to Sellers,
except for changes in the ordinary course of business and
changes contemplated by this Agreement.
12.5 Performance of Covenants
The covenants and agreements of Purchaser set forth
in this Agreement and the Merger Agreement and to be
performed on or before the Closing Date shall have been
performed in all material respects.
12.6 Merger Agreement
Tandy, TCC, Purchaser and HRC shall have entered
into the Merger Agreement.
12.7 Rating Agency Approval/Receipt of Consents and
Opinions Under Tandy Securitization
All consents and approvals (including, without
limitation, letters confirming their respective ratings)
required pursuant to the terms of the documentation for the
Tandy Securitization to be received from the rating agencies
then rating the TRC/Tandy Master Trust $350,000,000 8.25%
Class A Asset Backed Certificates, Series A, shall have been
received by Tandy and Purchaser.
12.8 Items to be Delivered by Purchaser
Purchaser shall have delivered to Sellers:
(a) A payment to each Seller in the aggregate
amount provided in Section 3.3.
(b) A favorable opinion of counsel to
Purchaser, dated the Closing Date, to the effect
that:
(i) Purchaser and HRC, as appropriate, each
has duly and validly authorized, executed
and delivered this Agreement and the
Merger Agreement;
(ii) Purchaser is a banking corporation duly
organized and existing under the laws of
South Dakota with full corporate power to
enter into and perform this Agreement;
(iii) HRC is a Delaware corporation duly
organized and existing under the laws of
Delaware with full corporate power to
enter into and perform the Merger
Agreement;
(iv) TSI has duly and validly authorized,
executed and delivered the TSI Guaranty;
(v) TSI is a Delaware corporation duly
organized and existing under the laws of
Delaware with full corporate power to
enter into and perform its obligation
under the TSI Guaranty;
(vi) Neither the execution and delivery of the
TSI Guaranty nor TSI's performance
thereof is restricted by or violates (x)
the charter or by-laws of TSI or (y) in
any manner which would have a material
adverse effect on the transactions
contemplated by the TSI Guaranty, any
contractual or other obligations of TSI
of which such counsel has knowledge after
reasonable investigation;
(vii) SPS has duly and validly authorized,
executed and delivered the SPS Guaranty;
(viii) SPS is a Delaware corporation duly
organized and existing under the laws of
Delaware with full corporate power to
enter into and perform its obligations
under the SPS Guaranty;
(ix) Neither the execution and delivery of the
SPS Guaranty nor SPS's performance
thereof is restricted by or violates (x)
the charter or by-laws of SPS or (y) in
any manner which would have a material
adverse effect on the transactions
contemplated by the SPS Guaranty, any
contractual or other obligations of SPS
of which such counsel has knowledge after
reasonable investigation;
(x) Neither the execution and delivery of
this Agreement or the Merger Agreement,
as appropriate, nor Purchaser's or HRC's
performance of either is restricted by or
violates (x) the charter or by-laws of
Purchaser or HRC or (y) in any manner
which would have a material adverse
effect on the transactions contemplated
by this Agreement or the Merger
Agreement, any contractual or other
obligation of Purchaser or HRC of which
such counsel has knowledge after
reasonable investigation;
(xi) All consents and approvals required by
law, this Agreement or the Merger
Agreement to be obtained by Purchaser,
TSI, SPS or HRC at or prior to the
Closing Date to authorize, and to the
best of such counsel's knowledge after
reasonable investigation, to consummate
the transactions contemplated hereby or
thereby have been obtained and are in
full force and effect;
(xii) Assuming that this Agreement and the
Merger Agreement each constitutes the
legal and binding obligation of each
Seller, as appropriate, then this
Agreement constitutes the legal and
binding obligations of Purchaser and HRC
enforceable in accordance with their
respective terms, except as such
enforceability may be limited by
bankruptcy, insolvency, reorganization,
moratorium, receivership or other similar
laws or judicial decisions affecting
creditors' rights generally and the
rights of federally-insured banks and by
general principles of equity, regardless
of whether such enforceability is
considered in a proceeding in equity or
at law;
(xiii) There are no proceedings or
investigations pending, or to the
knowledge of such counsel, threatened, to
which Purchaser, TSI, SPS or HRC is or
would be a party: (A) asserting the
invalidity or unenforceability of this
Agreement, the TSI Guaranty, the SPS
Guaranty or the Merger Agreement; or (B)
seeking to bar the consummation of the
transactions contemplated under this
Agreement, the TSI Guaranty, the SPS
Guaranty or the Merger Agreement;
(xiv) Each of the TSI Guaranty and the SPS
Guaranty constitutes the legal and
binding obligation of TSI or SPS,
respectively, enforceable in accordance
with its terms, except as such
enforceability may be limited by
bankruptcy, insolvency, reorganization,
moratorium, conservatorship, receivership
or other similar laws or judicial
decisions affecting the enforcement of
creditors' rights generally and by
general principles of equity, regardless
of whether such enforceability is
considered in a proceeding in equity or
at laws; and
(xv) There are no proceedings or
investigations pending, or to the
knowledge of such counsel, threatened, to
which TSI or SPS is or would be a party
(A) asserting the invalidity or
unenforceability of the TSI Guaranty or
the SPS Guaranty; or (B) seeking to bar
the consummation of the transactions
contemplated thereunder.
(c) A certificate signed by a duly authorized
officer of Purchaser to the effect that (i) the
warranties and representations of Purchaser in this
Agreement are true as of the Closing Date or, if
any such warranties and representations are not
then true, specifying the deficiency in reasonable
detail; and (ii) the covenants and agreements of
Purchaser to be performed hereunder on or before
the Closing Date have been performed in all
material respects, or, if any such covenants have
not been so performed, specifying the deficiency in
reasonable detail.
(d) Resolutions of the Board of Directors of
Purchaser and HRC, certified by their Vice
President, Secretary or an Assistant Secretary,
authorizing the execution and delivery of this
Agreement, the Merger Agreement and the Merchant
Services Agreement, with respect to TSI, the TSI
Guaranty, and the consummation of the transactions
contemplated hereby and thereby.
(e) Resolutions of the shareholder of HRC,
authorizing the execution and delivery of the
Merger Agreement and the consummation of the
transactions contemplated thereby.
(f) A duly executed Uniform Commercial Code
financing statement by Tandy (as defined in the
Merger Agreement), as Secured Party, against SPS
Newco, as Borrower, in proper form under the
Uniform Commercial Code of the State of Illinois to
properly perfect the security interest granted
under the Security Agreement.
(g) A duly executed SPS Guaranty and TSI
Guaranty, substantially in the form of Exhibits 5
and 8, respectively.
(h) A duly executed Merger Agreement,
substantially in the form of Exhibit 18.
(i) A duly executed Security Agreement.
(j) A duly executed SPS Newco Assignment
Agreement and a duly executed Hurley Bank
Receivables Purchase Agreement, each in form and
substance satisfactory to Sellers and Purchaser.
(k) Duly executed Assumption Agreements.
(l) A duly executed certificate of merger as
required under Section 2.2 of the Merger Agreement.
(m) A duly executed Tax Sharing Agreement, in
form and substance satisfactory to all of the
parties hereto.
13. Survival of Representations and Warranties
Notwithstanding any investigation made by or on
behalf of either party at any time, the warranties,
representations and indemnities set forth in Sections 7, 8, 9
and 10 of this Agreement shall survive the Closing Date and
be deemed to have been relied upon in connection with the
consummation of the transactions described herein by the
party or parties to whom they were made, even if such relying
party knew of any breach of such warranties or
representations unless such relying party failed to disclose
such knowledge to all other parties prior to the Closing.
14. Termination of Agreement
This Agreement and the sale herein provided for may
be terminated at any time prior to the Closing Date and shall
be of no further force or effect upon the occurrence of the
following:
(i) The expiration of thirty (30) days from
the date one party shall have given
notice to the other party (the
"Defaulting Party") of a breach or
default by the Defaulting Party in the
performance of any covenant, agreement,
representation or warranty hereunder or
under the Merger Agreement; provided,
however, that no such termination shall
be effective if, within such thirty (30)
day period, the Defaulting Party shall
have substantially corrected and cured
the grounds for termination as set forth
in such notice of termination; and
further provided that no party can
terminate under this clause 14(i) if such
party is in default of any of its
material obligations under this Agreement
or under the Merger Agreement;
(ii) There shall have been a material adverse
change (financial or otherwise) in the
condition, business or assets of Sellers
or Purchaser, or the Credit Card Business
since December 31, 1994;
(iii) Any party hereto (as applicable in this
clause (iii), the "Bankrupt Party")
becomes insolvent or generally fails to
pay, or admits in writing its inability
to pay, its debts as they become due; or
the Bankrupt Party applies for, consents
to, or acquiesces in the appointment of,
a trustee, conservator, receiver or other
custodian for the Bankrupt Party or any
property thereof, or makes a general
assignment for the benefit of creditors;
or in the absence of such application,
consent or acquiescence, a trustee,
conservator, receiver or other custodian
is appointed for the Bankrupt Party or
for a substantial part of its property
and is not discharged within ninety (90)
days; or any bankruptcy, reorganization,
debt arrangement, or other case or
proceeding under any bankruptcy or
insolvency law, or any dissolution or
liquidation proceeding, is commenced in
respect of the Bankrupt Party, and if
such case or proceeding is not commenced
by the Bankrupt Party, it is consented to
or acquiesced in by the Bankrupt Party or
remains for ninety (90) days undismissed;
or the Bankrupt Party takes any corporate
action to authorize, or in furtherance
of, any of the foregoing; or
(iv) Upon mutual agreement of the parties
hereto.
A notification of termination from the electing
party shall be required in the event of a termination of this
Agreement under clauses (i), (ii) or (v) above; in the case
of a termination under clause (iii) above, no such
notification shall be required and such termination shall be
automatic upon the occurrence of the event(s) described
therein. No termination of this Agreement shall release, or
be construed as releasing, either party hereto from any
liability or damage to the other party hereto arising out of,
in connection with or otherwise relating to, directly or
indirectly, such party's breach or default of any of its
representations, warranties, covenants, agreements, duties or
obligations arising hereunder.
15. Settlement
15.1 Settlement of Disputed Amounts
In the event that the parties hereto disagree as to
any monetary item or amount (or computation or determination
in accordance with the terms of this Agreement of any
monetary item or amount), other than the initial calculation
of the Purchase Price and the Deferred Amount (provided that
no party shall hereby be deemed to waive any other rights and
remedies it may have hereunder or under applicable law with
respect to the same), then any payment at the time required
to be made under this Agreement shall be made on the basis of
such items or amounts as to which the parties do not
disagree. Any party hereto shall thereupon be entitled to
request Coopers and Lybrand at a mutually agreeable office
location (or, if said firm shall be unwilling to act
hereunder, such other firm of nationally recognized
independent accountants as the parties hereto may jointly
designate which does not have a material relationship with
either any party hereto) (either Coopers and Lybrand or such
jointly designated alternative to be referred to in this
Section 16 as the "Firm") to determine, in accordance with
the provisions of this Agreement, such disputed item or
amount (or the computation or determination thereof). Any
such request shall be in writing and shall specify with
particularity the disputed items, amounts or computations
being submitted for determination, and the requesting party
shall furnish the other parties hereto with a copy of such
request at the same time it is submitted to the Firm. The
Firm shall as promptly as practicable determine, in
accordance with the provisions of this Agreement, the proper
amount of any disputed item or other amount, or the
computation thereof, and such determination shall be final,
conclusive and binding on all parties hereto. Before
submitting the final determination of any such dispute to the
parties, the Firm shall submit one draft of such
determination to all parties substantially simultaneously.
Any party may submit to the Firm such additional information
related to this draft determination as it wishes, provided
such additional information is provided within seven (7)
Business Days of delivery of the draft determination. The
Firm, in its sole discretion, may but is not required to
revise its draft determination in light of such additional
information. The determination will be submitted to the
parties in draft only one time before issuance of the final
determination, which shall be conclusive and binding on all
parties hereto. In acting pursuant to this Agreement, the
Firm shall be entitled to the privileges and immunities of
arbitrators. Each party hereto shall cooperate fully in
assisting the Firm in making any determination requested
hereunder, including giving the Firm full access to all
files, books and records relevant thereto and providing such
other information as the Firm may reasonably request in
connection with the determination to be made by it hereunder.
The fees and disbursements in connection with the Firm's
determination shall be borne equally by the parties hereto
unless the determination is adverse to a party in an amount
in excess of $25,000, in which case such party shall bear and
be responsible for the full amount of fees and disbursements
of the Firm. In the event that a determination by the Firm
pursuant to this Section 15.1 requires any previously
suspended payment to be made by any party, such payment shall
be made promptly (and in any event within 10 days) after
receipt by such party from the Firm of written notice of such
determination. The Firm shall promptly and substantially
simultaneously notify Purchaser and Sellers in writing of any
determination by it hereunder.
15.2 Interest
Any amount payable by any party to another party
pursuant to Section 15.1 shall bear interest from the date
such amount would originally have been required to be paid
hereunder had no dispute over such amount existing to the
date of payment at the rate of six percent (6%) per annum
during the period from and including the date due to the date
paid.
15.3 Records and Financial Information
Each party having control of relevant records and
financial information used in connection with any adjustment
provided for in this Section 15 shall certify the accuracy of
such records and financial information if so requested by
another party.
16. Default
Following the occurrence of a breach by any party
of any representation, warranty, agreement or covenant
hereunder, except for any failure to make a payment of the
Deferred Amount when due hereunder, any party to whom the
representation or warranty was made, or with whom the
agreement or covenant was made, may give written notice to
the party in breach identifying such breach, and the
breaching party shall have thirty (30) days following receipt
of such notice in which to cure such breach. If the breach
is not cured within such time, the party giving notice of the
breach may recover its damages as provided in this Agreement
or otherwise. If Purchaser fails to make a payment of the
Deferred Amount when due hereunder, or SPS Newco fails to
maintain the required level of security for the Deferred
Amount under the Security Agreement, either Seller or their
permitted assignees may give written notice to Purchaser of
such failure and Purchaser shall have fifteen (15) days
following the receipt of such notice in which to cure such
breach. A failure by Purchaser to cure any breach within the
applicable time period specified in the preceding sentence
shall entitle Sellers or their successors or permitted
assigns to recover their damages as provided in this
Agreement or otherwise and to accelerate and declare
immediately due and payable all of the unpaid Deferred Amount
and accrued interest thereon and to foreclose under any and
all security interests securing payment of the Deferred
Amount and accrued interest thereon.
17. Miscellaneous
17.1 Expenses
Except as is otherwise specifically provided in
this Agreement, each party shall pay its own costs and
expenses in connection with this Agreement, and the
transactions contemplated hereby, including, but not by way
of limitation, all regulatory fees, attorneys' fees,
accounting fees and other expenses.
17.2 Notices
All notices, demands and other communications
hereunder shall be in writing and shall be deemed to have
been duly given when received in person or by postage prepaid
United States certified or registered mail, with return
receipt requested, or otherwise actually received by
facsimile transmission or by nationally recognized private
courier service with receipt acknowledged in both instances,
and addressed as follows:
(i) If to TNB, to:
Tandy National Bank
1800 One Tandy Center
Fort Worth, Texas 76102
Attention: Ronald L. Parrish, President
with copies to:
Tandy Corporation
1800 One Tandy Center
Fort Worth, Texas 76102
Attention: General Counsel
(ii) If to TCC, to:
Tandy Credit Corporation
1800 One Tandy Center
Fort Worth, Texas 76102
Attention: Ronald L. Parrish, Vice President
with copies to:
Tandy Corporation
1800 One Tandy Center
Fort Worth, Texas 76102
Attention: General Counsel
(iii) If to Purchaser, to:
Hurley State Bank
811 East 10th Street
Sioux Falls, South Dakota 57103
Attention: Senior Vice President
with copies to:
SPS Payment Systems, Inc.
2500 Lake Cook Road
Riverwoods, Illinois 60015
Attention: President
Notwithstanding the foregoing, if any Person to
whom a properly addressed and prepaid (with return address
shown) notice is sent by United States certified or
registered mail as stated above, declines delivery thereof,
such notice shall be deemed received on the third (3rd)
Business Day following the date the same was deposited in the
United States mail. The persons or addresses to which
mailings or deliveries shall be made may be changed from time
to time by notice given pursuant to the provisions of this
Section 17.2.
17.3 Successors and Assigns
All terms and provisions of this Agreement
(including, but not limited to, independent provisions) shall
be binding upon and shall inure to the benefit of the parties
hereto and their respective permitted transferees, successors
and assigns, including, without limitation, under the Tandy
Assignment Agreement; provided, however, that this Agreement
and any right, privilege, duty and obligation of the parties
hereto may not be assigned or delegated by any party without
the written consent of the other parties, such consent not to
be unreasonably withheld. Notwithstanding the foregoing,
however, in the event of (i) a merger of any party hereto
with or into another party to this Agreement, or (ii) the
sale of all the stock of any party hereto to another party to
this Agreement or to such party's guarantor, or (iii) the
dissolution or liquidation of a party to this Agreement (such
party to be merged, dissolved or liquidated or whose stock is
to be sold being the "Affected Party"), the Affected Party,
without consent, may assign and delegate its rights,
privileges, duties and obligations under this Agreement to
the corporation guaranteeing its performance hereunder or to
a corporation owning 75% or more of its stock prior to the
event. Notwithstanding the foregoing, the parties hereto
hereby agree that Purchaser may assign its interest in
certain Account Balances purchased hereunder to SPS Newco,
and SPS Newco shall assume all payment and performance
obligations of Purchaser with respect to the Deferred Amount,
pursuant to the SPS Newco Assignment Agreement, Assumption
and Release Agreement and the Hurley Bank Receivables
Purchase Agreement.
17.4 Counterparts
This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute
one instrument.
17.5 Governing Law
The laws of the State of Delaware applicable to
contracts executed and wholly performed therein shall govern
the validity and interpretation hereof and the performance of
the parties hereto of their respective duties and obligations
hereunder.
17.6 Captions
The captions contained in this Agreement are for
convenience of reference only and do not form a part of this
Agreement.
17.7 Entire Agreement
The making, execution and delivery of this
Agreement by the parties hereto have been induced by no
representations, statements, warranties or agreements other
than those herein expressed. This Agreement and the other
written agreements specifically referred to herein embody the
entire understanding of the parties and there are no further
or other agreements or understandings, written or oral, in
effect between the parties relating to the subject matter
hereof. Except as provided herein, this Agreement is not
conditioned on the signing or execution of any other, future
agreement. This instrument and the agreements contained
herein may be amended or modified only by a written
instrument signed by both parties or their duly authorized
agents. Upon execution of this Agreement, the letter of
intent dated December 30, 1994, by and among Tandy, TNB, TCC,
Purchaser, SPS Newco and TSI, is deemed released and null and
void.
17.8 No Waiver of Rights
No party, by virtue of this Agreement, waives any
rights it may have to recover damages or to seek other relief
against any Person, including any party to this Agreement,
arising out of acts or omissions of such Person. No such
waiver is intended and none shall be deemed or implied.
17.9 No Consequential Damages
Neither Purchaser and its guarantors nor Sellers
and their guarantor shall be liable one to the other for any
indirect, incidental, or consequential damages as a result of
any breach of any covenant, warranty, representation or
obligation under this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the day and year first above
written.
TANDY NATIONAL BANK
By: \s\ Ronald L. Parrish
Name: Ronald L. Parrish
Title: President and Chief
Executive Officer
TANDY CREDIT CORPORATION
By: \s\ Ronald L. Parrish
Name: Ronald L. Parrish
Title: Vice President
HURLEY STATE BANK
By: \s\ R. Wieseneck
Name: Robert L. Wieseneck
Title: President
