Exhibit 2.1
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PURCHASE, SALE AND SERVICING TRANSFER AGREEMENT
AMONG
GE CAPITAL CONSUMER CARD CO.,
GENERAL ELECTRIC CAPITAL CORPORATION,
DILLARDS, INC.
AND
DILLARD NATIONAL BANK
DATED AS OF AUGUST 7, 2004
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS.........................................................1
SECTION 1.1 Definitions of Certain Terms.............................1
SECTION 1.2 Interpretation..........................................12
ARTICLE II PURCHASE, SALE AND ASSUMPTION.....................................13
SECTION 2.1 Purchase and Sale of Assets.............................13
SECTION 2.2 Assumption of Liabilities...............................13
SECTION 2.3 Excluded Liabilities....................................13
SECTION 2.4 Purchase Price; Purchase Price Adjustment...............13
SECTION 2.5 Allocation of Purchase Price............................14
SECTION 2.6 Third-Party Consents....................................14
ARTICLE III CLOSING; ASSIGNMENT..............................................15
SECTION 3.1 The Closing.............................................15
ARTICLE IV REPRESENTATIONS OF THE PARTIES....................................15
SECTION 4.1 Representations of the Parent and the Bank..............15
SECTION 4.2 Representations of the Purchaser........................20
SECTION 4.3 No Other Representations or Warranties..................23
ARTICLE V COVENANTS..........................................................23
SECTION 5.1 Conduct of Business.....................................23
SECTION 5.2 Certain Changes.........................................23
SECTION 5.3 Access and Confidentiality..............................24
SECTION 5.4 Reasonable Efforts; Other Filings.......................25
SECTION 5.5 Additional Instruments..................................26
SECTION 5.6 Non-Solicitation........................................26
SECTION 5.7 Credit Card Mark; Branding..............................26
SECTION 5.8 Notice to Cardholders...................................27
SECTION 5.9 Cooperation in Obtaining Approval and Consents..........27
SECTION 5.10 Post-Closing Access....................................27
SECTION 5.11 Cooperation in Litigation..............................28
SECTION 5.12 Preservation of and Access to Books and Records........28
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TABLE OF CONTENTS
(continued)
Page
SECTION 5.13 Bulk Sales Law.........................................28
SECTION 5.14 DAF....................................................29
SECTION 5.15 Interim Processing.....................................29
SECTION 5.16 Securitization Transfer Covenant.......................29
ARTICLE VI TAX AND EMPLOYEE MATTERS..........................................29
SECTION 6.1 Taxes...................................................29
SECTION 6.2 Employees...............................................30
SECTION 6.3 Certain Obligations of the Purchaser....................31
ARTICLE VII CONDITIONS.......................................................32
SECTION 7.1 Conditions to Each Party's Obligations to Effect
the Purchase and Assumption...........................32
SECTION 7.2 Conditions to Obligations of the Purchaser..............34
SECTION 7.3 Conditions to Obligations of the Parent and the Bank....35
ARTICLE VIII TERMINATION.....................................................35
SECTION 8.1 Termination.............................................35
SECTION 8.2 Effect of Termination...................................36
ARTICLE IX SURVIVAL; INDEMNIFICATION.........................................36
SECTION 9.1 Survival................................................36
SECTION 9.2 Indemnification by the Parent and the Bank..............36
SECTION 9.3 Indemnification by the Purchaser........................37
SECTION 9.4 Notice, Settlements and Other Matters...................37
ARTICLE X MISCELLANEOUS......................................................39
SECTION 10.1 Notices................................................39
SECTION 10.2 Expenses...............................................40
SECTION 10.3 Successors and Assigns.................................41
SECTION 10.4 Entire Agreement; Amendment; Waiver....................41
SECTION 10.5 Counterparts...........................................41
SECTION 10.6 Governing Law..........................................41
SECTION 10.7 Waiver of Jury Trial...................................41
SECTION 10.8 Severability...........................................42
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TABLE OF CONTENTS
(continued)
Page
SECTION 10.9 No Petition............................................42
SECTION 10.10 Public Announcement...................................42
SECTION 10.11 Third-Party Beneficiaries.............................42
SECTION 10.12 Post-Closing Amounts Received and Paid................42
SECTION 10.13 Further Assurances....................................42
SCHEDULES AND ANNEXES
Schedule A Contracts
Schedule B Form of Closing Statement
Schedule C Personal Property
Schedule D Securitization Documents
Schedule E Write-Off Policy
Schedule F Allocation of Purchase Price
Schedule G Non-Solicitation Schedule
Schedule H Third Party Consents Required for Closing
Schedule I Indemnification
Schedule J Interim Servicing
Annex A Form of Program Agreement
Annex B Form of Instrument of Assignment and Assumption
Annex C Form of Lease Agreement
Annex D Form of Required Amendments
Annex E Form of Securitization Transfer Agreement
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PURCHASE, SALE AND SERVICING TRANSFER AGREEMENT, dated as of August
7, 2004 (this "Agreement"), among Dillards, Inc., a Delaware corporation (the
"Parent"), Dillard National Bank, a national banking association (the "Bank"),
GE Capital Consumer Card Co., a federal savings bank (the "Purchaser"), and
General Electric Capital Corporation, a Delaware corporation (the "Purchaser
Parent").
RECITALS
WHEREAS, the Parent is, among other things, (i) engaged in the
business of selling merchandise through retail stores and by other means and
(ii) directly and indirectly through certain of its Subsidiaries, including
the Bank, engaged in the Business (as defined herein);
WHEREAS, the Dillard Credit Card Master Trust I was formed pursuant
to that certain Amended and Restated Pooling and Servicing Agreement, dated as
of June 28, 2000, as amended and/or supplemented through the date of this
Agreement and as it may be further amended and/or supplemented through the
Closing Date to the extent permitted by this Agreement, including all series
supplements thereto (the "Pooling and Servicing Agreement"), by and among
Dillard Asset Funding Company, a Delaware business trust ("DAF"), as
transferor, the Bank, as servicer, and JPMorgan Chase Bank, as trustee;
WHEREAS, pursuant to this Agreement, the Parent and the Bank desire
to sell to the Purchaser, and the Purchaser desires to purchase from the
Sellers (as defined below), the Acquired Assets (as defined below) used in the
Business pursuant to the terms contained and in the manner described herein;
WHEREAS, on the date hereof, the Parent and the Purchaser are
entering into a Program Agreement (the "Program Agreement") in the form
attached hereto as Annex A, to become effective as of the Closing under this
Agreement, that provides for, among other things, the issuance of Dillard
proprietary cards, the issuance of existing and new credit related products to
be developed with the Purchaser, the processing and servicing of the related
accounts, and the conduct of related marketing activities; and
WHEREAS, simultaneously with the Closing under this Agreement, the
Sellers, the Purchaser and certain of their respective Affiliates desire to
enter into other agreements in connection with the transactions contemplated
hereby.
NOW, THEREFORE, in consideration of the premises, and of the mutual
representations and agreements contained in this Agreement, the parties agree
as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions of Certain Terms. (a) In this Agreement, the
following terms are used with the meanings assigned below:
"Account" means, as of the Cut-Off Time, any account identified by
name and account number under which a purchase or credit transaction may
be or has been
made by a Cardholder by means of a Credit Card, which is
recorded as an Account on the computer system of the Service Provider or
the Sellers' internal processing system, and for which an Account
Agreement is in effect as of the Closing Date, including any such account
that is a Written-Off Account.
"Account Agreement" means an agreement (including related
disclosure) between the Bank, Parent or its Affiliates and a Person or
Persons under which Accounts are established and pursuant to which Credit
Cards are issued to or on behalf of such Person or Persons, as such
agreement may be amended, modified or otherwise changed from time to time
(including pursuant to change of terms notices).
"Accrued Interest" means the aggregate amount of all finance charges
that were accrued and earned, but not posted on the Accounts as of the
Cut-Off Time.
"Acquired Assets" means all right, title and interest of the Sellers
in and to the following assets and properties, except to the extent they
constitute Excluded Assets:
(1) the Accounts and the Gross Receivables (other than
Securitization Receivables) accrued as of the Cut-Off Time related
to the Accounts;
(2) the applications for Accounts pending and solicitations for
Accounts outstanding;
(3) the Account Agreements, the Cardholder List and the Master
File;
(4) the Securitization Assets;
(5) the Assigned Contracts;
(6) the Books and Records;
(7) the Personal Property;
(8) the Credit Cards;
(9) rights, claims, credits, causes of action and rights of
set-off against third parties relating principally to the Business
or any Acquired Assets; and
(10) the Scoring Models.
"Action" means any claim, action, complaint, investigation,
petition, suit or other proceeding, whether civil, criminal or
administrative, in law or in equity, or before any arbitrator or
Governmental Authority.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common
control with such Person.
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"Ancillary Agreements" means the Program Agreement, the
Securitization Transfer Agreement, the Instrument of Assignment and
Assumption and the Lease Agreement.
"Applicable Order" means, with respect to any Person, a judgment,
injunction, writ, decree or order of any Governmental Authority, in each
case legally binding on that Person or on any of its property.
"Assigned Contracts" means the Contracts to the extent used in
connection with the Business other than the Securitizations (including
all Contracts listed on Schedule A), but excluding intercompany Contracts
between the Sellers and any of their Affiliates.
"Assumed Liabilities" means the following Liabilities of the Sellers
(other than Liabilities of the type described in clauses (1) through (5)
of the definition of Excluded Liabilities):
(1) all obligations to Cardholders from and after the Closing
Date in respect of Accounts to perform under Account Agreements,
including payment of credit balances as of the Cut-Off Time;
(2) all fees, normal operating assessments and other charges
relating to the Accounts that are incurred or accrue on or after the
Closing Date;
(3) all of the obligations of the Sellers, as servicer,
originator, transferor, or in any other capacity to the Master Trust
and under any Securitization Documents arising from the conduct of
the Purchaser or its designee after the Cut-Off Time, including all
obligations to accept reassignment of receivables pursuant to the
terms of the Pooling and Servicing Agreement;
(4) all obligations of the Sellers arising under the Assigned
Contracts from and after the Closing Date;
(5) all obligations related to the Employees and employee
benefit plans and programs to the extent set forth in Article VI;
and
(6) all Liabilities for Taxes relating to the Business or the
Acquired Assets to the extent set forth in Sections 6.1(d) and
6.1(e).
"Books and Records" means books, records, original documents, files
and papers maintained by or for the Sellers, whether in hard copy or
electronic format, including those relating to the Master Trust, in each
case to the extent within any Seller's control and/or possession and
principally used in the Business, other than any relating principally to
the Excluded Assets and other than Tax returns or Tax workpapers.
"Business" means the proprietary Credit Card business relating to
the Accounts, including the extension of credit to Cardholders, the
servicing of the Accounts (including servicing under the Pooling and
Servicing Agreement), billings, collections,
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processing of Account transactions and the administration of the Accounts
and Gross Receivables (including the Securitization Receivables).
"Business Day" means any day other than a Saturday, a Sunday or a
day on which banks located in Arizona, New York or Ohio generally are
required or authorized by law or executive order to close.
"Cardholder" means a Person or Persons (i) to whom a Credit Card is
or has been issued by the Bank and in whose name(s) an Account, in
connection with which the Credit Card may be used, has been established
pursuant to an Account Agreement or (ii) who is authorized to have a
Credit Card by a Person described in clause (i).
"Cardholder List" means a list of the names, addresses, telephone
numbers and, taxpayer identification numbers and social security numbers
of all Cardholders as of the Cut-Off Time if and to the extent within the
possession or control of the Parent or its Affiliates.
"Code" means the Internal Revenue Code of 1986.
"Constituent Documents" means the articles of association, articles
of incorporation, certificate of incorporation, by-laws and/or other
organizational documents, as appropriate, of any Person.
"Contract" means, with respect to any Person, any agreement,
undertaking, contract, indenture, deed of trust or other instrument,
document or agreement by which that Person, or any amount of its
properties, is bound and/or subject.
"Conversion Date" has the meaning assigned to such term in the
Program Agreement.
"Credit Card" means a proprietary card that may be used by the
related Cardholder to purchase goods and services at Parent or other
Persons authorized by Parent through open-end revolving credit, commonly
known as a credit, store or charge card.
"Cut-Off Time" means 11:59 PM Pacific time on the date immediately
preceding the Closing Date.
"Deductible Amount" has the meaning set forth on Schedule I.
"De Minimis Claim Amount" has the meaning set forth on Schedule I.
"Disclosure Schedule" means, with respect to the Sellers or the
Purchaser, a schedule delivered to the other party on or before the date
of this Agreement setting forth, among other things, items the disclosure
of which is required under this Agreement either in response to an
express disclosure requirement contained in a provision of this Agreement
or as an exception to one or more of the representations or covenants
contained in this Agreement; provided that the mere inclusion of an item
in a Disclosure Schedule as an exception to a representation will not be
considered an admission by the disclosing party that such item (or any
non-disclosed item or information of comparable or greater significance)
represents a material exception or fact, event or circumstance
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or that such item has had or is reasonably expected to result in a
Material Adverse Effect with respect to the disclosing party or the
Business.
"Eligible Receivables" means all Gross Receivables other than
receivables under Written-Off Accounts.
"Employees" means all full-time and part-time employees of the
Sellers or any of their Affiliates (whether or not on vacation, military
leave, sick leave, maternity leave, disability or other leave of absence)
who are employed principally in connection with the Business, other than
those excluded by mutual agreement of the parties hereto.
"Estimated Closing Statement" means a statement prepared by the
Sellers, substantially in the form of Schedule B, showing in reasonable
detail the calculation of the Estimated Purchase Price, based on data
available as of the close of business on the fifth Business Day preceding
the Closing Date.
"Estimated Purchase Price" means the amount payable by the Purchaser
on the Closing Date in accordance with the Estimated Closing Statement.
"Excluded Assets" means the assets of the Sellers and their
Affiliates not being acquired by the Purchaser hereunder, including the
following:
(1) cash and cash equivalents on hand and cash and cash
equivalents in bank accounts maintained by the Sellers or any of
their Affiliates other than in the Securitization Bank Accounts;
(2) insurance policies maintained by or for the benefit of the
Sellers and all claims accrued thereunder;
(3) Intellectual Property Rights other than rights to the
Cardholder List or the Master File;
(4) assets of any Seller or any of its Affiliates sold or
otherwise disposed of, or otherwise becoming no longer a part of the
Business, without violation of this Agreement during the period
prior to the Closing Date;
(5) assets relating to the Seller's employee benefit
agreements, plans or other arrangements, except as provided in
Article VI;
(6) rights, claims, credits, causes of action, or rights of
set-off against third parties not relating principally to the
conduct of the Business or the Acquired Assets or which relate
principally to an Excluded Liability;
(7) the national association charter of the Bank, and all
licenses, permits or other authorizations of any Governmental
Authorities held or used by the Sellers;
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(8) interests in real property (other than pursuant to the
Lease Agreement);
(9) personal property of the Sellers other than the Personal
Property;
(10) all right, title and interest of the Sellers in and to any
and all other assets and properties, of any kind whatsoever, that
are not principally used in the conduct of the Business as of the
Closing Date;
(11) all customer data relating to customers of the Sellers and
their Affiliates (whether or not duplicated in the Cardholder List,
the Master File and the Books and Records (all of which constitute
Acquired Assets));
(12) prepaid Taxes, Tax payments due from any of the Sellers'
Affiliates, and entitlements to refunds, credits, offsets or other
benefits for overpayment of Taxes relating to any period (or portion
thereof) prior to the Closing Date;
(13) Loan loss reserves; and
(14) Intercompany Contracts between the Sellers and any of
their Affiliates.
"Excluded Liabilities" means Liabilities of the Sellers (or any of
their respective predecessors), other than the Assumed Liabilities, of
any kind whatsoever, whether presently in existence or arising hereafter,
including:
(1) Except as provided in Sections 6.1(d) and (e), all
Liabilities for Taxes with respect to the Business, the Acquired
Assets or the Master Trust for any period (or portion thereof) prior
to the Closing Date;
(2) Liabilities that result from an act, or failure to act, by
any of the Sellers prior to the Closing Date that relate to any
claims by any current, former or putative employee of any of the
Sellers or any Employee, whether or not such claims are brought
prior to, on or after the Closing Date, and, except to the extent
provided in Article VI, Liabilities relating to employee benefits
(including any accrued vacation benefits) or compensation
arrangements existing prior to the Closing Date, including
Liabilities under any of the employee benefit agreements, plans or
other arrangements of the Sellers or in connection with workers
compensation or other medical claims made at any time against any of
the Sellers with respect to an illness or injury arising prior to
the Closing Date;
(3) the portion of any Liability principally related to an
Excluded Asset;
(4) any Liability of any Seller (or any of its Affiliates)
relating to or arising from the operation of the Business at or
prior to the Cut-Off Time or from
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any facts, circumstances or events existing or occurring at or prior
to the Cut-Off Time; and
(5) Liabilities related to the Variable Rate Certificates,
Series 1998-1 and 2002-1 (or the transaction documents entered into
in connection with the issuance thereof), each to be terminated in
accordance with Section 7.1(k).
"Federal Funds Rate" means the offered rate as reported in The
Wall Street Journal in the "Money Rates" section for reserves traded
among commercial banks for overnight use in amounts of one million
dollars or more or, if no such rate is published for a day, the rate
published for the preceding Business Day.
"Final Closing Statement" means a statement
prepared by the Purchaser, substantially in the form of Schedule B,
showing in reasonable detail the Purchaser's calculation of the
Purchase Price, based on the Accounts and the Acquired Assets as of
the Cut-Off Time.
"GAAP" means generally accepted accounting principles in the
United States.
"Governmental Authority" means any domestic or foreign
governmental, regulatory or self-regulatory authority, agency,
court, tribunal, commission or other governmental, regulatory or
self-regulatory entity exercising legislative, judicial, regulatory
or administrative functions.
"Gross Receivables" means all amounts owing (after deduction of
credit balances scheduled as of the Cut-Off Time and unapplied cash)
to the Sellers or to the Master Trust from Cardholders with respect
to Accounts (including outstanding loans, cash advances and other
extensions of credit; billed or posted but unbilled finance charges
and late charges; Accrued Interest; and any other fees, charges and
interest assessed on the Accounts) as of the Cut-Off Time (or,
solely with respect to the Estimated Closing Statement, as of the
close of business on the fifth Business Day preceding the Closing
Date).
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976.
"Indemnity Cap Amount" has the meaning set forth on Schedule I.
"Instrument of Assignment and Assumption" means the Instrument
of Assignment and Assumption in the form attached as Annex B, to be
entered into at Closing.
"Intellectual Property Right" means any intellectual property
right, including any trademark, service mark or other source
indicator, invention, patent, copyright, trade secret, know-how, and
any registration or application for registration of any of the
foregoing.
"Interim Servicing Amount" has the meaning set forth
on Schedule J.
"Knowledge" means, with respect to the Sellers, the actual
knowledge of the executive officers of the Parent and the Bank who
have managerial responsibility for
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conducting the Business and, with respect to the Purchaser, the
actual knowledge of the executive officers of the Purchaser and the
Purchaser Parent who have managerial responsibility for the relevant
area of the Purchaser's business or operations.
"Lease Agreement" means the Lease Agreement in the form
attached as Annex C, to be entered into at Closing, provided that
such Annex shall be amended to provide that the landlord shall
indemnify the tenant for pre-Closing environmental liabilities.
"Liability" means any debt, liability, commitment or
obligation, of any kind whatsoever, whether due or to become due,
known or unknown, accrued or fixed, absolute or contingent, or
otherwise.
"Lien" means, with respect to any property, any lien, security
interest, mortgage, pledge, charge or encumbrance relating to that
property, including the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention
agreement relating to such property.
"Master File" means the master file maintained by the Sellers
and the Service Provider with respect to the Accounts, including
identification and other customer data and Account information, the
names and addresses of Cardholders with respect to the Accounts and
any and all Account adjustments made by or on behalf of the Sellers.
"Master Trust" means the Dillard Credit Card Master Trust I.
"Material Adverse Effect" means:
(a) With respect to the Business, a material adverse change in,
or a material adverse effect upon, the results of operations or
financial condition of the Business, taken as a whole, excluding any
effect or change attributable to or resulting from (1) events,
conditions or occurrences in economic, business or financial
conditions generally affecting the credit card services, consumer
credit business, or banking industry, (2) financial market
conditions, including interest rates or changes therein, (3) changes
in laws, GAAP or regulatory accounting principles, (4) any action,
omission, change, effect, circumstance or condition contemplated by
this Agreement, or attributable to the signing and announcement of
this Agreement or the transactions contemplated by this Agreement
and the Ancillary Agreements or (5) any actions or omissions
required by the terms of this Agreement or the Ancillary Agreements;
and
(b) With respect to the Sellers or the Purchaser, a material
impairment of the ability of the relevant Person or Persons to
perform its or their material obligations under this Agreement.
"Permissible Liens" means (a) with respect to those Acquired
Assets that are Personal Property, restrictions or imperfections of
title that do not materially detract from the value or impair the
use of any Acquired Asset and (b) Liens for taxes,
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assessments and other governmental charges or levies not yet due or
which are being contested in good faith by appropriate action.
"Person" means any individual, corporation, business trust,
partnership, association, limited liability company
or similar organization, or any Governmental Authority.
"Personal Property" means the tangible assets listed on
Schedule C.
"Premium" means the amount designated as the premium on the
Final Closing Statement, determined in accordance with Schedule B.
"Previously Disclosed" means, with respect to the Seller or the
Purchaser, information set forth in a Disclosure Schedule, whether
in response to an express informational requirement or as an
exception to one or more representations or covenants.
"Purchase Price" means the purchase price payable in accordance
with the Final Closing Statement, as finally determined in
accordance with Section 2.4.
"Rating Agency Condition" has the meaning specified in the
Pooling and Servicing Agreement.
"Requirement of Law" means, with respect to any Person, any
law, ordinance, statute, treaty, rule or regulation or determination
of an arbitrator or of a Governmental Authority, in each case
binding on that Person or any material amount of its property.
"Required Amendments and Confirmations" means all amendments to
the Securitization Documents (in the form set forth on Annex D,
subject to changes required by any rating agency in connection with
the transactions contemplated by this Agreement) and the
satisfaction of all applicable Rating Agency Conditions and receipt
of all other consents required in order to consummate the
transactions contemplated hereby and by the Securitization Transfer
Agreement without violation of the terms of any Securitization
Document.
"Requisite Regulatory Approvals" means the consents,
registrations, approvals, permits or authorizations referred to in
clause (i) of Section 7.1(a).
"Residual Assets" means all of the assets relating to the
Master Trust that are owned by any Seller or any of their
Affiliates.
"Scoring Models" means the customer underwriting scorecard and
the customer behavioral scorecard developed on behalf of the Sellers
relating to the Accounts.
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"Securitization" means, generally, any transaction in which any
Person transferred loans, other debt instruments or interests
therein to a trust, either taking back or selling securities or
other similar interests evidencing the ownership of such trust.
"Securitization Assets" means the collective reference to (i)
the Transferor Certificate, as defined in the Securitization
Documents, and any other certificate or interest retained by DAF or
any other Affiliate of the Parent in the Master Trust; (ii) all
interests of the Sellers in the Securitization Bank Accounts; (iii)
all interests of the Sellers in and to the Securitization
Receivables; and (iv) all other rights and interests under each of
the Securitization Documents, including the Servicing Rights, all
other cash or proceeds, all other rights arising from certificated
or uncertificated securities and interests or rights purchased or
retained by a Seller in connection with a Securitization, including
repurchase options or similar rights arising in connection with a
Securitization.
"Securitization Assignment and Assumption" means the assignment
by the Sellers to the Purchaser (or, in the case of the Transferor
Interest, the Purchaser's Assignee) of the Sellers' rights and
interests in or relating to, and the assumption by the Purchaser of
the Sellers' obligations under or relating to, the Master Trust
pursuant to the Securitization Transfer Agreement.
"Securitization Bank Accounts" means any spread account,
reserve account, collection account, principal funding account or
other similar accounts created pursuant to the Securitization
Documents.
"Securitization Documents" means the Pooling and Servicing
Agreement and the other documents designated as such on
Schedule D.
"Securitization Receivables" means, as of any date, the Gross
Receivables that have been transferred to the Master Trust and that
have not been reassigned to the transferor under the Pooling and
Servicing Agreement.
"Securitization Transfer Agreement" means the Assignment and
Assumption Agreement dated as of the Closing Date among DAF, the
Purchaser, a special purpose entity that is an affiliate of the
Purchaser and the trustee of the Master Trust, in the form attached
hereto as Annex E.
"Sellers" means the Parent, the Bank and DAF.
"Service Provider" means any data processing service provider
used by the Sellers in connection with the Accounts.
"Servicing Rights" means all rights, privileges and benefits of
acting as servicer under the Pooling and Servicing Agreement or that
are incidental thereto including: (a) any and all rights to service
any Securitization Receivable; (b) all servicing fees or other
compensation payable to the servicer under the Pooling and Servicing
Agreement with respect to all periods after the Closing; and (c) any
late fees, investment income or similar payments or penalties with
respect to each Securitization Receivable payable to the servicer.
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"Special Excluded Liabilities" means any Excluded Liabilities
that result from an act, or failure to act, by any of the Sellers
prior to the Closing Date and (a) that relate to any Action by any
Cardholder brought on or after the Closing Date or (b) that arise
under any of the Securitization Documents prior to the Closing Date
and are asserted on or after the Closing Date.
"Special Representation" means any representation or warranty
set forth in Section 4.1(g) (except with respect to Personal
Property set forth on Schedule C).
"Subsidiary" means, with respect to any Person, any other
Person a majority of the outstanding voting securities of which
are owned directly or indirectly by such Person.
"Tax Return" means any return, declaration, report or similar
statement required to be filed with respect to any Taxes (including
any attached schedules) including any information return, claim for
refund, amended return and declaration of estimated Tax.
"Taxes" means (A) any income, alternative or add-on minimum
tax, gross receipts, sales, use, transfer, gains, ad valorem,
franchise, profits, license, withholding, payroll, employment,
excise, severance, stamp, occupation, premium, property,
environmental or windfall profit tax, custom, duty or other tax,
governmental fee or other like assessment or charge, together with
any interest or any penalty, addition to tax or additional amount
imposed by any Governmental Authority responsible for the imposition
of any such tax (domestic or foreign), and (B) any liability of the
Sellers for the payment of any amounts of the type described in
clause (A) above as a result of being a member of an affiliated,
consolidated, combined or unitary group for any period.
"Transferor Interest" has the meaning assigned to such term in
the Pooling and Servicing Agreement.
"Written-Off Accounts" means all Accounts that (i) have been
charged-off or written-off as of the Cut-Off Time or (ii) are
eligible for charge off or write-off as of the Cut-Off Time in
accordance with the write-off policy attached hereto as Schedule E.
(b) Each of the following terms is defined in the section of this
Agreement set forth opposite such term:
Term Section
---- -------
Agreement............................................. Preamble
Allocation Statement.................................. 2.5(a)
Bank.................................................. Preamble
Business.............................................. Recitals
Closing............................................... 3.1(a)
Closing Date.......................................... 3.1(a)
Confidentiality Agreement............................. 5.3(c)
Credit Card Marks..................................... 5.7
11
DAF................................................... Recitals
DSSI.................................................. 5.15
Employee Notification Acts............................ 6.2(b)
Employee Plans........................................ 4.1(m)
Exchange Act.......................................... 4.1(e)
Indemnified Party..................................... 9.4(a)
Indemnifying Party.................................... 9.4(a)
Losses................................................ 9.2
Parent................................................ Preamble
Pooling and Servicing Agreement....................... Recitals
Program Agreement..................................... Recitals
Purchase and Assumption............................... 3.1(a)
Purchaser............................................. Preamble
Purchaser Benefit Plans............................... 6.2(a)
Purchaser Parent...................................... Preamble
Purchaser Severance Plan.............................. 6.3(d)
SEC................................................... 4.1(e)
SEC Documents......................................... 4.1(e)
Securities Act........................................ 4.1(e)
Transferred Employee.................................. 6.2(a)
Vacation Policy....................................... 6.3(f)
SECTION 1.2 Interpretation. (a) In this Agreement, unless the
context otherwise requires, references to:
(i) the Preamble or the Recitals, Sections, Annexes or Schedules
refer to the Preamble or a Recital or Section of, or Annex or Schedule
to, this Agreement;
(ii) any Contract (including this Agreement) refer to the Contract
as amended, modified, supplemented or replaced from time to time;
(iii) any statute or regulation refer to the statute or regulation
as amended, modified, supplemented or replaced from time to time (and, in
the case of statutes, include any rules and regulations promulgated under
the statute) and to any section of any statute or regulation include any
successor to the section;
(iv) any Governmental Authority include any successor to the
Governmental Authority; and
(v) this Agreement are to this Agreement, the Schedules, the
Disclosure Schedule and to the Annexes hereto.
(b) The table of contents and headings contained in this Agreement
are for reference purposes only and do not limit or otherwise affect any of
the provisions of this Agreement.
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(c) Whenever the word "include," "includes" or "including" is used
in this Agreement, it will be deemed to be followed by the words "without
limitation."
(d) Unless the context otherwise requires, the word "or" when used
in this Agreement will be deemed to have the inclusive meaning represented by
the phrase "and/or."
(e) This Agreement is the product of negotiation by the parties
having the assistance of counsel and other advisers. It is the intention of
the parties that this Agreement not be construed more strictly with regard to
one party than with regard to the other.
ARTICLE II
PURCHASE, SALE AND ASSUMPTION
SECTION 2.1 Purchase and Sale of Assets. On the terms and subject to
the conditions of this Agreement at the time of the Closing and effective from
and after the Closing Date, the Sellers shall sell, convey and assign (or
cause their Subsidiaries to sell, convey and assign) to the Purchaser, free
and clear of all Liens, except Permissible Liens, the Acquired Assets, and the
Purchaser agrees to purchase all such Acquired Assets.
SECTION 2.2 Assumption of Liabilities. On the terms and subject to
the conditions of this Agreement from and after the Closing Date, the
Purchaser agrees to assume, pay, defend, discharge and perform as and when due
the Assumed Liabilities.
SECTION 2.3 Excluded Liabilities. Notwithstanding any provision in
this Agreement or any other writing to the contrary, the Purchaser is assuming
only the Assumed Liabilities and not any Excluded Liabilities. The Excluded
Liabilities will be retained by the Sellers.
SECTION 2.4 Purchase Price; Purchase Price Adjustment. (a) On the
second Business Day before the Closing, the Parent, on behalf of the Sellers,
will deliver to the Purchaser the Estimated Closing Statement reflecting the
Sellers' calculation of the Estimated Purchase Price to be paid by the
Purchaser at the Closing.
(b) Within sixty (60) Business Days after the Closing, Purchaser
will deliver to Parent the Final Closing Statement prepared based on the
information in the Master File and the other Acquired Assets as of the Cut-Off
Time and copies of the Master File as of the Cut-Off Time and all material
working papers relating to the Final Closing Statement.
(c) The Parent shall, within fifteen (15) days after receipt of the
Final Closing Statement, advise the Purchaser in writing and in reasonable
detail of any inaccuracies it believes were reflected in the Final Closing
Statement. In the event no such objection is delivered to the Purchaser within
such time period, the Final Closing Statement, as delivered to the Parent,
shall be final and binding upon the parties. In the event the Parent delivers
such an objection, the Sellers and the Purchaser shall attempt in good faith
to resolve their differences. In the event all differences are not resolved
within thirty (30) days following receipt of the Final Closing Statement by
the Parent, then the issues remaining unresolved shall be determined by an
independent public accountant mutually acceptable to the Parent and the
Purchaser (the "Accountant"). The Accountant shall resolve all disputed items
in accordance with the provisions of this Agreement. In making its
determination, the Accountant may only consider
13
those items and amounts as to which the Purchaser and the Sellers have
disagreed within the time periods and the permitted grounds specified. The
Accountant's determination will be conclusive and binding on the Purchaser and
the Sellers absent manifest error. The fees of the Accountant will be shared
by the Purchaser and the Sellers in proportion to the relative differences
between their respective calculations of the Purchase Price and the amount
determined by the Accountant.
(d) If the Estimated Purchase Price exceeds the Purchase Price, then
the Parent, on behalf of the Sellers, shall, within five (5) Business Days
after the Purchase Price has been finally determined pursuant to Section
2.4(c), pay such excess to the Purchaser, together with interest on such
excess for the period from and including the Closing Date to but excluding the
date of such payment at a rate per annum equal to the Federal Funds Rate. If
the Estimated Purchase Price is less than the Purchase Price, then the
Purchaser shall, within five (5) Business Days after the Purchase Price has
been finally determined pursuant to Section 2.4(c), pay such deficiency to pay
to the Parent on behalf of the Sellers, together with interest on such
deficiency for the period from and including the Closing Date to but excluding
the date of such payment at a rate per annum equal to the Federal Funds Rate.
Each party to this Agreement will make available to the other parties, and to
the Accountant, its and its accountants work papers, schedules and other
supporting data as may be reasonably requested by such party to enable it to
verify the amounts set forth in the Final Closing Statement.
SECTION 2.5 Allocation of Purchase Price. (a) The Purchase Price
(including Assumed Liabilities) shall be allocated among the acquired assets
as set forth on Schedule F (the "Allocation Statement"), which will be
modified appropriately to take into account subsequent adjustments or
additional payments which are properly treated as purchase price for US
federal income Tax purposes.
(b) The Purchaser and the Sellers shall report the allocation of the
total consideration among the Acquired Assets in a manner consistent with the
Allocation Statement and shall act in accordance with the Allocation Statement
in the preparation and filing of all Tax Returns (including filing Form 8594
with their respective Federal income tax returns for the taxable year that
includes the Closing Date and any other forms or statements required by the
Code, Treasury regulations, the Internal Revenue Service or any applicable
state or local taxing authority) and in the course of any Tax audit, Tax
review or Tax litigation relating thereto; provided, however, that the Sellers
will not be obligated to litigate any challenge to such allocation of the
Purchase Price by a Governmental Authority and shall cooperate, at Purchaser's
expense, with Purchaser in litigating any such challenge.
(c) The Purchaser and the Sellers will promptly inform each other of
any challenge by any Governmental Authority to any allocation made pursuant to
this Section 2.5 and shall to consult with and keep each other informed with
respect to the status of, and any discussion, proposal or submission with
respect to, such challenge.
SECTION 2.6 Third-Party Consents. (a) To the extent that any consent
needed to assign to the Purchaser any Assigned Contract has not been obtained
on or prior to the Closing Date, this Agreement and any document delivered
pursuant hereto will not constitute an assignment or attempted assignment
thereof if such assignment or attempted assignment would constitute a material
breach of such Assigned Contract or would give rise to a valid right of
14
termination thereof. If any such third-party consent will not be obtained on
or prior to the Closing Date, then the parties will cooperate in entering into
alternative arrangements at the Closing pursuant to which the Purchaser would
obtain all of the benefits and assume all of the obligations under such
Assigned Contract.
(b) The Purchaser will, and the Parent and the Bank will and will
cause DAF to, use commercially reasonable efforts (which for purposes of this
Section 2.6 shall not require any payment of money by the Sellers or the
Purchaser, except as agreed between them in writing) to seek any required
consents to the assignment of the Assigned Contracts which have not been
obtained as of the Closing Date, and any required consents to the assignment
of the Assigned Contracts which have not been obtained as of the Closing Date,
and promptly upon receipt of such consents will effect such assignments.
ARTICLE III
CLOSING; ASSIGNMENT
SECTION 3.1 The Closing. (a) The closing (the "Closing") of the
purchase and sale of the Acquired Assets and assumption of the Assumed
Liabilities hereunder (collectively, the "Purchase and Assumption") will take
place at the offices of Simpson Thacher & Bartlett LLP, 425 Lexington Avenue,
New York, New York, on the second Business Day after the last of the
conditions set forth in Sections 7.1, 7.2 and 7.3 (other than conditions
relating solely to the delivery of documents to be dated the Closing Date) has
been satisfied or waived in accordance with the terms of this Agreement or at
such other date as the parties hereto jointly designate in writing (the
"Closing Date").
(b) At the Closing, the Purchaser will, and the Parent and the Bank
will and will cause DAF to deliver or cause to be delivered to each other
instruments of sale, assignment, transfer and conveyance of the Acquired
Assets and the Assumed Liabilities, respectively, in substantially the forms
set forth in Annexes B, C, D and E, as appropriate, and such other instruments
as are necessary or appropriate to reflect any alternative arrangements
described in Section 2.6, appropriately executed by the Sellers and the
Purchaser.
(c) At the Closing, the Purchaser will pay the Estimated Purchase
Price by initiating a wire transfer of immediately available funds (in U.S.
dollars) prior to 11:00 a.m. Eastern time on the Closing Date to an account or
accounts specified by the Parent at least one Business Day prior to the
Closing Date.
ARTICLE IV
REPRESENTATIONS OF THE PARTIES
SECTION 4.1 Representations of the Parent and the Bank. Except as
Previously Disclosed, the Parent and the Bank jointly and severally represent
to the Purchaser as follows:
(a) Existence and Authority. The Bank is a national banking
association, validly existing and in good standing under the laws of the
United States of America. Each other Seller is duly organized and validly
existing under its jurisdiction of organization. Each Seller has the requisite
power and authority to own the Acquired Assets and to carry on the Business as
15
currently conducted, and is duly qualified to do business in each jurisdiction
where the ownership or operation of the Acquired Assets or the conduct of the
Business requires such qualification, except for any failure to have such
authority or be so qualified that would not reasonably be expected to have a
Material Adverse Effect on the Business or the Sellers.
(b) Authorization and Validity. Each Seller has the requisite
corporate power and authority to execute, deliver and perform its obligations
under this Agreement and each of the Ancillary Agreements to which it is a
party. Each of this Agreement and each Ancillary Agreement has been duly
authorized by each Seller party thereto. This Agreement has been duly executed
and delivered by each Seller and each Ancillary Agreement has been, or shall
have been at the Closing Date, duly executed and delivered by each Seller
party thereto. Assuming that this Agreement has been, and that the Ancillary
Agreements have been or will be on or prior to the Closing Date duly
authorized, executed and delivered by the Purchaser, this Agreement is, and
the Ancillary Agreements are or will be at the Closing Date, the legal, valid
and binding obligations of the Sellers party thereto, enforceable against such
Sellers in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, moratorium, reorganization, fraudulent transfer and
other laws affecting creditors' rights generally and to general equitable
principles.
(c) Governmental and Third-Party Consents. No notices, reports or
other filings are required to be made by the Sellers with, nor are any
consents, registrations, approvals, permits or authorizations required to be
obtained by the Sellers from, any Governmental Authority or any other third
party in connection with the execution, delivery or performance of this
Agreement and the Ancillary Agreements by the Sellers or the consummation by
them of the transactions contemplated by this Agreement or the Ancillary
Agreements, except for such notices, reports, filings, consents,
registrations, approvals, permits or authorizations the failure to obtain
which would not have a Material Adverse Effect on the Business or the Sellers.
(d) No Conflicts. The execution, delivery and performance by the
Sellers of this Agreement and the Ancillary Agreements do not, and (subject to
obtaining the Previously Disclosed governmental and third-party consents
referred to in Section 4.1(c)) the consummation of the transactions
contemplated by this Agreement and the Ancillary Agreements will not:
(i) Breach or violate the Constituent Documents of the
Sellers;
(ii) Breach or violate any Requirement of Law or
Applicable Order applicable to the Sellers;
(iii) Breach, violate or result in a default under the
terms, conditions or provisions of any Contract of any Seller,
or give any third party the right to terminate or cancel any
right of any Seller under any Contract of such Seller, or
accelerate the performance of its obligations thereunder, in
each case where such Contract relates to the Business or is
binding upon the Acquired Assets; or
(iv) Result in the creation of any Lien on any Acquired
Asset other than a Permissible Lien (with or without the giving
of notice or the lapse of time, or both);
16
except in each case described in clause (ii), (iii) or (iv), for any breach,
violation, default, termination, cancellation, acceleration or Lien that would
not reasonably be expected to have a Material Adverse Effect on the Business
or the Sellers.
(e) SEC Reports. The Master Trust and DAF have each filed with the
Securities and Exchange Commission ("SEC") all forms, reports and other
documents (including all prospectuses and registration statements) required to
be filed by it with respect to all periods commencing on or after January 1,
2002 (the "SEC Documents"). As of their respective filing dates (or effective
dates, in the case of prospectuses and registration statements), the SEC
Documents complied in all material respects with the requirements of the
Securities Act of 1933 (the "Securities Act") or the Securities Exchange Act
of 1934 (the "Exchange Act"), as applicable, and the rules and regulations of
the SEC promulgated thereunder, as modified by SEC staff no-action positions
relating to credit card securitizations.
(f) Absence of Certain Changes.
(i) Since December 31, 2003, the Business has been
conducted in the ordinary course and there has not been any
change in the financial condition or results of operations of
the Business that has had or would reasonably be expected to
have a Material Adverse Effect on the Business or the Sellers.
(ii) Set forth on Schedule E hereto is a true and complete
copy of the write-off policy of each of the Sellers as in
effect on March 1, 2004. Since March 1, 2004 (A) the Accounts
and Gross Receivables have been underwritten, established,
administered, serviced, collected, terminated and charged-off
in the ordinary course consistent with Sellers' past practice,
and (B) Sellers have not materially amended, modified or
supplemented or otherwise made any material changes to the
policies and procedures as in effect on such date.
(iii) As of the date hereof, there has been no early
amortization event or payout event under the Securitization
Documents (or any event which, with notice of time or lapse of
time or both, would constitute an early amortization event or
payout event).
(g) Title to Properties; Encumbrances. A Seller has good title to or
a valid leasehold interest in, or is licensed or otherwise entitled to use,
all of the Acquired Assets (other than the Accounts, to which Section 4.1(l)
is applicable), free and clear of all Liens other than Permissible Liens.
(h) Litigation. There are no Actions pending in arbitration or
before any Governmental Authority, against a Seller in connection with the
Business or any Acquired Asset, or to the Sellers' Knowledge, threatened
against any of the Sellers with respect to the Business or Acquired Assets, in
each case that would reasonably be expected to have a Material Adverse Effect
on the Business or the Sellers.
(i) Contracts. Except to the extent that any of the following would
not have a Material Adverse Effect on the Business or the Sellers, each
Assigned Contract is a valid, legally
17
binding agreement of the Seller party thereto and neither such Seller nor, to
the Sellers' Knowledge, any other party thereto is in default under the terms
of any such Contract. Schedule A sets forth a complete list of all material
Contracts primarily related to the Business or the Acquired Assets (other than
the Securitization Documents)
(j) Books and Records. All Books and Records of the Sellers relating
to the Business, including personnel files of any Transferred Employee of the
Sellers and the Business, have been maintained accurately and in accordance
with GAAP (where applicable) and with all Requirements of Law applicable to
the Sellers and the Business, except for any instances of inaccuracy or
noncompliance that would not reasonably be expected to have a Material Adverse
Effect on the Business or the Sellers.
(k) Compliance with Laws. Except to the extent that the following
would not reasonably be expected to have a Material Adverse Effect on the
Business or the Sellers:
(i) the Sellers are in compliance with all Requirements of
Law relating to the Business and the Acquired Assets; and
(ii) the Sellers are not subject to any capital plan or
supervisory agreement, order or memorandum between any of them
and any Governmental Authority.
(l) Account Agreements; Accounts; Gross Receivables. Except to the
extent that any of the following would not have a Material Adverse Effect on
the Business or the Sellers:
(i) A Seller is the sole owner of and has good title to
the Accounts, the Gross Receivables and the Securitization
Assets (subject in each case to (i) the rights, claims and
interests arising under the Securitization Documents and (ii)
prior to the Closing Date, the documents entered into in
connection with the Variable Rate Certificates, Series 1998-1
and 2002-1). This Agreement shall, following the Closing Date,
and subject to the filing of appropriate financing statements
and all required continuations, amendments and replacements
thereof, vest in the Purchaser all right, title and interest of
the Sellers in and to the Accounts, the Gross Receivables and
the Securitization Assets, free and clear of all Liens (but
subject in each case to the rights, claims and interests
arising under the Securitization Documents).
(ii) Each Account Agreement (other than any Account
Agreement with respect to any Written-Off Account) is a valid
and legally binding obligation of each obligor thereunder,
including any cosigner, guarantor or surety, in the full amount
thereof set forth in the Books and Records of the Business, and
is enforceable against such obligors in accordance with its
terms, subject to (A) claims and defenses on disputed card
transactions asserted by a Cardholder as indicated on the
Master File or the Books and Records, (B) applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and other laws relating to or affecting creditors'
rights generally and the effect of general equitable
principles, and (C) the Soldiers' and Sailors' Civil Relief Act
of 1940,
18
as amended. Representative forms of Cardholder Agreements are
set forth in Section 4.1(l) of the Disclosure Schedule, and
those forms contain all material terms of the Cardholder
Agreements as in effect as of the date of this Agreement;
provided that no representation or warranty is hereby given as
to the capacity, authority or any other factor relating to the
identity or status of the obligor which may effect the
enforceability of the Account Agreement to which it is party.
(iii) Each Gross Receivable is not subject to offset,
refund, recoupment, reversal, adjustment or any claim or
defense by any Person (other than claims or defenses on
disputed card transactions and refunds of credit balances, as
indicated on the Master File). No Gross Receivable and none of
the Accounts related thereto have been reaffirmed by the
applicable obligor in connection with or following any
bankruptcy, insolvency or similar Action involving such
obligor.
(iv) Other than the Written-Off Accounts, each Account
complies with the applicable Account Agreement.
(v) All Account applications have been taken and evaluated
and applicants notified in a manner that complied with all
applicable Requirements of Law.
(vi) All Accounts have been originated, maintained and
serviced in all material respects in compliance with all
applicable Requirements of Law.
(vii) All disclosures made in connection with the Accounts
complied in all material respects with all applicable
Requirements of Law.
(m) Employees.
(i) A complete list of each material "employee benefit
plan" (within the meaning of section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended), and all
stock purchase, stock option, severance, employment, stay-pay,
retention, change-in-control, fringe benefit, collective
bargaining, bonus, incentive, deferred compensation and all
other employee benefit plans, agreements, programs, policies or
other arrangements under which any Employee has any present or
future right to benefits sponsored or maintained by the Sellers
or any of their Affiliates (such plans, agreements, programs,
policies and arrangements, whether or not material, shall be
referred to hereinafter collectively as the "Employee Plans")
has been Previously Disclosed to the Purchaser. The Sellers
have made available to the Purchaser copies of all Employee
Plans and all amendments and summary plan descriptions, if
applicable, thereto.
(ii) None of the Employees is represented in his or her
capacity as an employee of Sellers by any labor organization,
nor have Sellers recognized any labor organization as the
collective bargaining agent of any Employees. As of the date
hereof, there are no pending proceedings for the certification
of a labor union involving any of the Employees or, to Sellers'
Knowledge, any union
19
organization activity involving any of the Employees. Sellers
are in compliance in all material respects with all laws,
regulations and orders relating to the employment of labor with
respect to the Business.
(n) Personal Property. Except as would not have a Material Adverse
Effect on the Sellers or the Business, all Personal Property is in
satisfactory operating condition to permit its use in the continuing
operations of the Business as such operations are presently conducted, subject
to normal wear and tear.
(o) No Brokers or Finders. The Assumed Liabilities do not include,
and the Sellers are solely responsible for and shall pay, any Liability
incurred by any of them or any of their Affiliates for any financial advisory
fees, brokerage fees, commissions or finder's fees directly or indirectly in
connection with this Agreement or the transactions contemplated hereby or by
the Ancillary Agreements.
(p) Tax Matters.
(i) To the extent any Securitizations are outstanding at
the Cut-Off Time, no elections have been made to treat any
Securitizations, or parts thereof, as "financial asset
securitization investment trusts" within the meaning of Section
860L(a) of the Code.
(ii) With respect to the Securitizations: (A) the Master
Trust is not an association taxable as a corporation, a
publicly traded partnership or a taxable mortgage pool, for
U.S. federal income Tax purposes; (B) no employer
identification number has ever been issued to the Master Trust
by the Internal Revenue Service; (C) the Master Trust
certificates issued to the public and any other securities
representing an interest in the Master Trust which was issued
to any Person other than Sellers and their Affiliates are
properly characterized as indebtedness for federal income Tax
purposes; and (D) none of the Sellers has (i) received written
notice from any taxing authority asserting a characterization
different than those in (A) and (C) hereof or (ii) entered into
any agreement with a taxing authority to change the
characterization described in (A) and (C) hereof.
(q) Accuracy of Information. The information contained in the Master
File, the Books and Records, and the Cardholder List delivered to Purchaser
prior to the date hereof was, and the information contained in the Master
File, the Cardholder List and the Books and Records delivered to Purchaser on
the Closing Date will be, complete and accurate in all material respects as of
the date of delivery and the Cut-Off Time, respectively.
SECTION 4.2 Representations of the Purchaser. Except as Previously
Disclosed, the Purchaser represents to the Sellers as follows:
(a) Existence and Authority. The Purchaser is a federal savings
bank, validly existing and in good standing under the laws of the United
States of America, and has the corporate power and authority to carry on
its business as now conducted and to acquire and
20
operate the Business. The Purchaser and its deposits are insured by the
Federal Deposit Insurance Corporation to the fullest extent permitted by
law.
(b) Authorization and Validity. The Purchaser has the requisite
corporate power and authority to execute, deliver and perform its
obligations under this Agreement and each of the Ancillary Agreements.
This Agreement and each Ancillary Agreement have been duly authorized by
the Purchaser. This Agreement has been duly executed and delivered by the
Purchaser and each Ancillary Agreement has been or shall have been, at
the Closing Date, duly executed and delivered by the Purchaser. Assuming
that this Agreement has been, and the Ancillary Agreements have been or
will be on or prior to the Closing Date, duly authorized, executed and
delivered by the Sellers party thereto, this Agreement is, and the
Ancillary Agreements will be at the Closing Date, the legal, valid and
binding obligations of the Purchaser, enforceable against the Purchaser
in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, moratorium, reorganization, fraudulent transfer
and other laws affecting creditors' rights generally and to general
equitable principles.
(c) Governmental and Third-Party Consents. No notices, reports or
other filings are required to be made by the Purchaser with, nor are any
consents, registrations, approvals, permits or authorizations required to
be obtained by it from, any Governmental Authority or any other third
party in connection with the execution, delivery and performance of this
Agreement and the Ancillary Agreements by the Purchaser or the
consummation by the Purchaser of the transactions contemplated by this
Agreement or the Ancillary Agreements, except for such notices, reports,
filings, consents, registrations, approvals, permits or authorizations
the failure to obtain which would not have a Material Adverse Effect on
the Purchaser or on the Business following the Closing Date.
(d) No Conflicts. The execution, delivery and performance by the
Purchaser of this Agreement and the Ancillary Agreements do not, and
(subject to obtaining the Previously Disclosed governmental and
third-party consents referred to in Section 4.2(c)) the consummation of
the transactions contemplated by this Agreement and the Ancillary
Agreements will not:
(i) Breach or violate the Purchaser's Constituent Documents;
(ii) Breach or violate any Requirement of Law or Applicable
Order applicable to the Purchaser;
(iii) Breach, violate or result in a default under the terms,
conditions or provisions of any Contract of the Purchaser, or give
any third party the right to terminate or cancel any right of the
Purchaser under any such Contract, or accelerate the performance of
its obligation thereunder; or
(iv) Result in the creation of any Lien on the properties or
assets of the Purchaser;
except in each case described in clause (ii), (iii) or (iv), for any breach,
violation, default, termination, cancellation, acceleration or Lien that would
not reasonably be expected to have a
21
Material Adverse Effect with respect to the Purchaser or on the Business
following the Closing Date.
(e) Absence of Certain Changes. Since December 31, 2003, there has
not been any change in the financial condition or results of operations of the
Purchaser that has had or would reasonably be expected to have a Material
Adverse Effect with respect to the Purchaser or on the Business following the
Closing Date.
(f) Compliance with Laws. Except to the extent that the following
would not reasonably be expected to have a Material Adverse Effect with
respect to the Purchaser or the Business after the Closing Date:
(i) the Purchaser is in compliance with all Requirements of Law
relating to its credit card business; and
(ii) the Purchaser is not subject to any capital plan or
supervisory agreement, order or memorandum between it and any
Governmental Authority.
(g) Servicing Qualifications. The Purchaser is, or as of the Closing
Date will be, licensed and qualified in all jurisdictions necessary to service
the Accounts in accordance with all applicable Requirements of Law, except
where the failure to be so qualified would not have a Material Adverse Effect
on the Purchaser or the Business or on the ability of the Purchaser to perform
its duties as servicer under the Pooling and Servicing Agreement following the
Closing Date.
(h) Financing. The Purchaser has sufficient cash, available lines of
credit or other sources of immediately available funds to enable it to pay the
Estimated Purchase Price as required by Section 3.1(c) and to timely pay any
other amounts to be paid by it under this Agreement. The Purchaser is not
subject to any capital plan or supervisory agreement, order or memorandum
between it and any Governmental Authority with jurisdiction over it that could
reasonably be expected to affect its ability to consummate the purchase of the
Business from the Sellers and fulfill its obligations under this Agreement and
the Ancillary Agreements.
(i) Litigation. There are no Actions pending, in arbitration or
before any Governmental Authority, against the Purchaser or any of its assets
that would be reasonably expected to have a Material Adverse Effect with
respect to the Purchaser or on the Business following the Closing Date.
(j) No Brokers or Finders. Any liability incurred by the Purchaser
or its Affiliates for any financial advisory fees, brokerage fees, commissions
or finder's fees directly or indirectly in connection with this Agreement or
the transactions contemplated hereby or by the Ancillary Agreements will be
borne by the Purchaser.
(k) Restricted Securities. The Purchaser understands that certain of
the Securitization Assets are "restricted securities" under applicable U.S.
federal and state securities laws and that, pursuant to such laws, Purchaser
must hold those securities indefinitely unless they are registered with the
SEC and qualified by applicable state Governmental Authorities or an exemption
from such registration and qualification is available.
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SECTION 4.3 No Other Representations or Warranties. Except as
expressly set forth in this Article IV and Article VI or in any of the
Ancillary Agreements, neither the Sellers nor the Purchaser have made or make
any other express or implied representations, or any express or implied
warranty, either written or oral, with respect to the Acquired Assets, the
Assumed Liabilities or the Sellers, the Business or the Purchaser,
respectively.
ARTICLE V
COVENANTS
SECTION 5.1 Conduct of Business. (a) Except as otherwise
contemplated hereby or by the Ancillary Agreements, and except for
transactions in the ordinary course of business, until the Closing Date, the
Parent and the Bank will, and will cause DAF to, use their respective
commercially reasonable efforts to preserve intact the business organizations
and relationships with third parties relating to the Business, to keep
available the services of required employees of the Business and to preserve
beneficial relationships with customers in connection with the Business,
following substantially the same material practices and standards, including
collection practices and accounting practices for charge-offs and reserves, as
in effect on March 1, 2004.
(b) Except as otherwise contemplated hereby or by the Ancillary
Agreements, and except for transactions in the ordinary course of business,
until the Closing Date, the Purchaser will use its respective commercially
reasonable efforts to preserve intact the business organizations and
relationships with third parties relating to its credit card business, to keep
available the services of required employees of its credit card business and
to preserve beneficial relationships with customers in connection with its
credit card business, following substantially the same material practices and
standards, including collection practices and accounting practices for
charge-offs and reserves, as in effect on the date hereof.
SECTION 5.2 Certain Changes. Without limiting Section 5.1, and
except as otherwise contemplated hereby or by the Ancillary Agreements or
required by applicable Requirements of Law, from the date hereof until the
Closing Date, without the prior written consent of the Purchaser (which
consent will not be unreasonably withheld or delayed), the Parent and Bank
will not, and will cause DAF not to:
(a) Enter into or amend any Contract except in the ordinary course
of the Business consistent with past practice and only to the extent such
entry or amendment would not have a Material Adverse Effect;
(b) Acquire, except in the course of collection, a material amount
of assets from any other Person or all or substantially all of the business or
assets of any Person if such business or assets would constitute Acquired
Assets;
(c) Increase the compensation or benefits of the Employees, except
for (i) increases in the ordinary course of business consistent with past
practice or as required by any Contract or Employee Plan or commitment in
effect on the date of this Agreement, (ii) new hires and promotions in the
ordinary course of business and (iii) payment of stay-pay and similar
retention compensation arrangements;
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(d) Change in any material respect its credit and underwriting,
posting, collection, charge-off or operating policies and procedures (or the
manner of application thereof) with respect to the Business as in effect on
March 1, 2004;
(e) Sell, lease or otherwise dispose of any of the Acquired Assets
except (1) in the ordinary course of business consistent with past practice
and in transactions that individually or in the aggregate with all such other
dispositions would not have a Material Adverse Effect on the Sellers or the
Business, (2) in connection with securitizations of receivables arising under
the Accounts (provided that the benefits thereof are transferable to the
Purchaser at the Closing), including the addition of receivables to the Master
Trust, (3) pursuant to the terms of Contracts or commitments existing as of
the date hereof or (4) as Previously Disclosed;
(f) Change any of the Cardholder Agreements;
(g) Breach or otherwise fail to perform any of their material duties
under the Securitization Documents; or
(h) Agree with any Person or otherwise commit themselves to do any
of the foregoing.
If Sellers contemplate taking any of the permitted actions set forth in
clauses (a) through (e) above, they shall provide prior notice of such action
to Purchaser.
SECTION 5.3 Access and Confidentiality.
(a) Until the Closing Date, upon reasonable prior notice and subject
to applicable Requirements of Law relating to the exchange of information, the
Parent and the Bank will and will cause DAF to, permit the Purchaser and its
authorized representatives to have reasonable access, during regular business
hours for purposes consistent with this Agreement (including reasonable access
to the servicing reports, systems and procedures of the Bank and DAF), to the
personnel (including the Employees), properties and financial Books and
Records relating to the Business, to the extent that such access does not
interfere with the business of the Sellers; provided, that the Purchaser and
such representatives comply with the confidentiality obligations contained
herein and in the Confidentiality Agreement; and provided, further that the
foregoing shall not (1) require the Sellers to permit any inspection, or to
disclose any information, that in their reasonable judgment would result in
the disclosure of any trade secrets of third parties or trade secrets of the
Sellers or their Affiliates unrelated to the Business or violate any
obligations of the Sellers to any third party with respect to confidentiality
if the Sellers shall have used commercially reasonable efforts to obtain the
consent of such third party to such inspection or disclosure or (2) require
any disclosure by the Sellers that could, as a result of such disclosure, have
the effect of causing the waiver of any attorney-client privilege.
(b) If this Agreement is terminated, the Purchaser, at its own
expense, will promptly deliver (without retaining any copies) to the
applicable Seller or (at the Sellers' option) confirm in writing to the
Sellers that it has completely destroyed, all information furnished to the
Purchaser or its representatives by the Sellers or any of their agents,
employees or representatives in connection with this Agreement, whether so
obtained before or after the
24
execution hereof, and all analyses, compilations, forecasts, studies or other
documents prepared by the Purchaser or its representatives that contain or
reflect any such information. The Purchaser will cause any information so
obtained to be kept confidential and will not use, or permit the use of, such
information in its business or in any other manner or for any other purpose
except as contemplated by this Agreement.
(c) In addition to the confidentiality arrangements contained
herein, all information provided or obtained in connection with the
transactions contemplated by this Agreement and by the Ancillary Agreements
(including pursuant to clause (a) above) will be held by the Purchaser in
accordance with the Confidentiality Agreement between the Purchaser and the
Parent (the "Confidentiality Agreement"). In the event of a conflict or
inconsistency between the terms of this Agreement and the Confidentiality
Agreement, the terms of this Agreement will govern.
(d) The Sellers and their Affiliates shall be entitled to specific
performance of the foregoing provisions of this Section 5.3 and the provisions
of the Confidentiality Agreement, in addition to any other remedies that they
may have at law or in equity.
SECTION 5.4 Reasonable Efforts; Other Filings. (a) Subject to the
terms and conditions of this Agreement, the Purchaser will, and the Parent and
the Bank will and will cause DAF to, use commercially reasonable efforts to
take, or cause to be taken, all actions and will do, or cause to be done, all
things necessary, proper or advisable under applicable Requirements of Law, so
as to permit consummation of the Purchase and Assumption as promptly as
reasonably practicable and otherwise to enable consummation of the
transactions contemplated by this Agreement and the Ancillary Agreements, and
will cooperate fully to that end.
(b) Without limiting Section 5.4(a), the Parent and Bank will, and
will cause DAF to, and the Purchaser will, use reasonable best efforts to
prepare all documentation, to effect all filings and to obtain all permits,
consents, approvals and authorizations of all Governmental Authorities
necessary to consummate the transactions contemplated by this Agreement and
the Ancillary Agreements, including taking any action necessary to defend
vigorously, lift, mitigate or rescind the effect of any litigation or
administrative proceeding involving any Governmental Authority adversely
affecting the transactions contemplated by this Agreement or this Agreement,
including promptly appealing any adverse court or administrative decision.
Each of the Sellers, on the one hand, and the Purchaser, on the other hand,
shall consult with the other with respect to the obtaining of such permits,
consents, approvals and authorizations and to keep the other apprised of the
status thereof. Subject to appropriate confidentiality protections, the
Sellers, the Purchaser and the Purchaser Parent shall each furnish to the
others such necessary information and reasonable assistance as any of the
other parties may request in connection with the foregoing and shall each
provide counsel for the other parties with copies of all filings made by such
party, and all correspondence between such party (and its advisors) with any
Governmental Authority and any other information supplied by such party and
such party's Affiliates to a Governmental Authority in connection with this
Agreement and the transactions contemplated hereby. Each party shall, subject
to applicable Requirements of Law, permit counsel for the other party to
review in advance any such proposed written communication to any Governmental
Authority.
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(c) Without limiting the foregoing, the Parent and Bank will, and
will cause DAF to, and the Purchaser will, use reasonable best efforts to
obtain the Requisite Regulatory Approvals in time to permit the Closing Date
to occur on or before December 31, 2004 or, if the Closing Date has not
occurred, as promptly after December 31, 2004 as reasonably practicable. Each
of the Parent and the Bank, on the one hand, and the Purchaser, on the other
hand further agrees, without any request or demand by the other, to complete
all necessary filings related to the Requisite Regulatory Approvals no later
than ten (10) Business Days from the execution and delivery of this Agreement
and to prosecute actively all such filings and pursue the receipt of each
Requisite Regulatory Approval.
(d) Each of the Parent and Bank, on the one hand, and the Purchaser,
on the other hand, agrees to take such actions with respect to the
Securitization Assets and Securitization Documents prior to the Closing Date
as may be reasonably necessary to obtain ratings confirmations from the rating
agencies in connection with the assumption by the Purchaser and the
Purchaser's Assignee of the roles of servicer and transferor, respectively,
thereunder.
(e) The Purchaser will promptly notify the Sellers in writing, and
the Parent and the Bank will and will cause DAF to promptly notify the
Purchaser in writing, upon (i) becoming aware of any order or decree or any
complaint praying for an order or decree restraining or enjoining the
execution of this Agreement or the Ancillary Agreements or the consummation of
the transactions contemplated hereunder and thereunder, or (ii) receiving any
notice from any Governmental Authority of its intention to (A) institute an
Action to restrain or enjoin the execution of this Agreement or the Ancillary
Agreements or the consummation of the transactions contemplated hereunder and
thereunder or (B) nullify or render ineffective this Agreement or the
Ancillary Agreements if such transactions are consummated.
(f) The filing fees under the HSR Act or any foreign antitrust
merger control laws shall be borne by Purchaser.
SECTION 5.5 Additional Instruments. At the reasonable request of the
Parent or the Bank, on the one hand, or the Purchaser, on the other hand, at
or after the Closing, the Person receiving such request will promptly execute
and deliver, or cause to be executed and delivered, to the requesting party
such assignments, bills of sale, assumption agreements, consents and other
similar instruments in addition to those required by this Agreement, in form
and substance satisfactory to the requesting party, as may be reasonably
necessary to carry out or implement any provision of this Agreement or any
Ancillary Agreement.
SECTION 5.6 Non-Solicitation. Except as contemplated by Section 6.2,
the Purchaser shall continue to comply with the provisions of the
Confidentiality Agreement during the two year period following the Closing
Date with respect to the Persons listed in Schedule G. The Sellers and their
Affiliates shall be entitled to specific performance of such provisions in
addition to any other remedies that they may have at law or in equity.
SECTION 5.7 Credit Card Mark; Branding. (a) It is expressly agreed
that, except for the limited license granted in the Program Agreement, the
Purchaser is not purchasing or acquiring any right, title or interest in the
name "Dillards" or any variation thereof or any
26
trademarks or service marks of the Sellers or their Affiliates as the Sellers
have used prior to the date of this Agreement (or will use or own thereafter)
in connection with the Accounts or the Business (collectively, the "Credit
Card Marks"). The Purchaser acknowledges that the Sellers or their Affiliates
own the Credit Card Marks and goodwill related thereto and symbolized thereby.
(b) Within sixty (60) days following the Conversion Date, the
Purchaser will replace, for active Cardholders, all plastics branded with the
Credit Card Marks with new plastics not, except as permitted by the Ancillary
Agreements, using any Credit Card Marks.
SECTION 5.8 Notice to Cardholders. (a) Promptly following the
Closing Date, the Purchaser will, and the Parent and the Bank will and will
cause DAF to, prepare jointly a form or forms of notice to each Cardholder to
the effect that such Cardholder's Account has been acquired by the Purchaser.
Such notice shall be in the form approved by both parties, which approval will
not be unreasonably withheld or delayed, and will comply with all applicable
Requirements of Law. The costs of preparation and mailing of such notices
shall be borne by the Purchaser. The mailing shall be made in such manner and
at such time as the Sellers and the Purchaser may mutually agree.
(b) From and after the date of this Agreement and until the Closing,
the Purchaser and its Affiliates shall not communicate with the Cardholders
(whether by mail, by telephone or otherwise) without the prior written consent
of the Sellers.
SECTION 5.9 Cooperation in Obtaining Approval and Consents. The
Purchaser agrees to cause Purchaser Parent or one or more of its Subsidiaries
to assume or to join as joint and several indemnitors, and irrevocable and
unconditional guarantor and surety of the obligations of the Purchaser (i) to
the extent requested by the applicable trustees or rating agencies and any
other party whose consent, approval or action is required in connection with
transfer of the Securitization Assets and related Liabilities of the Sellers
and (ii) with respect to any Assumed Liabilities.
SECTION 5.10 Post-Closing Access. The Purchaser will upon reasonable
notice afford to the Sellers, their Affiliates and their representatives
reasonable access (including the right to copy), without charge, during normal
business hours, to the Acquired Assets, the Books and Records relating
thereto, the Transferred Employees (to the extent then employed by the
Purchaser or any of its Affiliates) and any third party who maintains or
controls any of the foregoing for the Purchaser or its Subsidiaries, all as
may be reasonably requested by the Sellers or any Affiliate in order to enable
the Sellers to (i) perform any covenants required to be performed under this
Agreement and the Ancillary Agreements after the Closing Date by them; (ii)
permit the preparation of any Tax Return or other document required to be
filed with any Governmental Authority; (iii) respond to any Action by any
Governmental Authority or any other Person, including any Cardholder with
respect to matters that may constitute Excluded Liabilities; and (iv) permit
the processing of or response to any claim made under this Agreement or the
Ancillary Agreements, and the Purchaser shall reasonably cooperate with the
Sellers, if requested, in connection with the foregoing.
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SECTION 5.11 Cooperation in Litigation. (a) The Purchaser agrees to
take commercially reasonable actions necessary to make Transferred Employees
who are then employed by the Purchaser and knowledgeable with respect to the
matter in question available to the Sellers after the Closing Date with
respect to any Action to which a Seller is or becomes a party or is otherwise
involved with regard to the Business, commenced after the Closing Date. The
Purchaser agrees to use commercially reasonable efforts to provide that any
such employees who terminate their employment with the Purchaser or any of its
Affiliates and enter into termination agreements or similar agreements,
arrangements or understandings, will be obligated to continue to assist the
Sellers in the investigation, evaluation or defense of any such matters,
whether as consultants, expert witnesses, or otherwise. The Parent and Bank
will, and will cause DAF to, jointly and severally, reimburse the Purchaser
for reasonable out-of-pocket expenses incurred by the Purchaser in connection
with requests by any Seller pursuant to this Section 5.11 (excluding salary
and fringe benefits paid to such employees and related direct or indirect
overhead).
(b) The Sellers and the Purchaser shall cooperate, to the extent
reasonably requested by the other, in the handling and disposition of any
Actions, whether or not listed on the Disclosure Schedules and whether or not
pending or threatened prior to the Closing, that arise out of or are related
to any event or occurrence with respect to the Business prior to the Closing;
provided, however, that the party ultimately responsible for discharging such
Action shall have the authority to take such actions as it deems necessary or
advisable, in its sole discretion, to discharge such Action, subject, however,
to the provisions of this Agreement.
(c) The Sellers shall be entitled to keep copies of all litigation
filings, correspondence, Books and Records and other documentation of any kind
that the Sellers reasonably determine are necessary or desirable in connection
with its handling and disposition of Actions.
SECTION 5.12 Preservation of and Access to Books and Records. The
Purchaser shall preserve and keep all Books and Records of the Business and
all information relating to the accounting, business, financial and Tax
affairs of the Business in existence on the Closing Date or that come into
existence after the Closing Date but relate to the Business prior to the
Closing Date for a period of seven (7) years thereafter, or for any longer
period (i) as may be required by any federal, state, local or foreign
governmental body or agency, (ii) as may be reasonably necessary with respect
to the prosecution or defense of any audit or other Action that is then
pending or threatened, or (iii) that is equivalent to the period established
by any applicable statute of limitations (or any extension or waiver thereof)
with respect to matters pertaining to Taxes. For a period of four (4) years
following the seven (7) year period specified above, if the Purchaser wishes
to destroy such records, the Purchaser shall first provide the Sellers the
opportunity to take possession of the same.
SECTION 5.13 Bulk Sales Law. Purchaser hereby acknowledges that
Sellers do not intend to comply, in connection with the transactions
contemplated hereby, with the provisions of any applicable bulk sale or
similar Requirement of Law (including the Uniform Commercial Code Bulk
Transfer provisions).
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SECTION 5.14 DAF. The Parent shall take all lawful actions to cause
DAF to comply with all agreements and covenants applicable to it.
SECTION 5.15 Interim Processing. After the Closing, the Parent shall
cause Dillard Store Services, Inc. ("DSSI") to provide the Purchaser the same
services it currently provides to the Bank. Sellers acknowledge and agree that
the services referred to in the prior sentence shall be sufficient, when taken
together with the Acquired Assets and Assumed Liabilities, and assuming the
employment by Purchaser of the current employees of the Business, to permit
the Purchaser to conduct the Business following the Closing Date substantially
as such Business is currently being conducted. Such services to be provided by
DSSI may be terminated by the Purchaser at any time upon 5 business days'
notice. DSSI shall not be obligated to provide such services after the later
of the Conversion Date and March 31, 2005. The Purchaser shall pay monthly in
advance the Interim Servicing Amount per month for such services, with the
first such payment to be made on the Closing (appropriately adjusted based on
the number of days remaining in such month). If the services are terminated
prior to the end of a month, the Parent shall cause DSSI to return a pro rata
portion of the monthly fee based on the number of days after termination
remaining in such month. The Purchaser shall indemnify and hold harmless DSSI
and its Affiliates from any and all Losses arising from the performance of
such services, except to the extent any of the foregoing acted with gross
negligence or willful misconduct in performing such services.
SECTION 5.16 Securitization Transfer Covenant. The Purchaser shall
make or cause the transferee of the Securitization Assets to make such
representations and covenants as shall be required pursuant to the terms of
the Securitization Documents in order to effectuate the transfer of the
Securitization Assets pursuant to the terms thereof.
ARTICLE VI
TAX AND EMPLOYEE MATTERS
SECTION 6.1 Taxes. (a) Each of the Parent and the Bank hereby
represent and warrant to the Purchaser that the Sellers and the Master Trust
have timely filed all Tax Returns relating to the Business, the Acquired
Assets or the Securitization Receivables that they were required to file on or
before the date hereof (taking into account all applicable extensions), and
have timely paid all Taxes shown thereon as due and owing. There are no Liens
with respect to Taxes upon any of the Acquired Assets or the Securitization
Receivables other than with respect to Taxes not yet due and payable or which
are being contested in good faith by appropriate action.
(b) At the requesting party's expense, the parties hereto shall
furnish or cause to be furnished to each other, promptly upon reasonable
request, any information and assistance relating to the Acquired Assets and
the Business as the requesting party deems reasonably necessary in connection
with the filing of any Tax Returns, the preparation for any audit by any
Taxing authority, the response to any inquiry by a Taxing authority, the
mailing or filing of any notice and the prosecution or defense of any claim,
suit or proceeding relating to any Tax Returns or any other filing required to
be made with any Taxing authority or any other matter related to Taxes. The
Purchaser will, and the Parent and the Bank will and will cause DAF to,
29
cooperate with each other in the conduct of any audit or other proceeding
related to Taxes involving the Business prior to the Closing Date.
(c) Notwithstanding anything in this Agreement to the contrary, all
Tax Returns filed by the Sellers for periods ending on or before the Closing
Date shall remain the property of the Sellers.
(d) Notwithstanding anything in this Agreement to the contrary, all
excise, sales, use, transfer, documentary, stamp or similar Taxes that are
payable or that arise as a result of the consummation of the transactions
contemplated by this Agreement and the Ancillary Agreements and any recording
or filing fees with respect thereto will be borne by the Purchaser. Such Taxes
shall not be considered Excluded Liabilities.
(e) For all purposes of this Agreement, all property and ad valorem
Tax liabilities with respect to the Acquired Assets for taxable periods that
begin on or before the Closing Date and end after the Closing Date shall be
allocated to the Sellers, on the one hand, and to Purchaser on the other hand,
on a per diem basis. For Tax Returns with respect to such property and ad
valorem Taxes which are due on or prior to the Closing Date, Parent will file
or cause to be filed such Tax Returns. For Tax Returns with respect to such
property and ad valorem Taxes which are due after the Closing Date, the
Purchaser will file or cause to be filed such Tax Returns. The non-filing
party shall remit to the party filing such property or ad valorem Tax Returns
the portion of such Taxes allocated to such non-filing party
(f) The Purchaser shall, if the Sellers so request and at the
Sellers' expense (for reasonable out-of-pocket costs and expenses), cooperate
with the Sellers to file for and obtain any Tax refund that relates to any
period prior to the Closing Date.
SECTION 6.2 Employees. (a) The parties intend that there will be
continuity of employment with respect to all of the Employees. It is agreed
that prior to, or in connection with, the Closing, the Purchaser shall take no
action to cause the Sellers or their Affiliates to terminate the employment of
any Employee, and no Seller shall be under any obligation to terminate any
Employee prior to or on the Closing Date. The Purchaser shall offer employment
to, and will use its best efforts to hire, the Employees effective as of the
Closing Date, provided, that each Employee on short- or long-term disability
as of the Closing Date shall be offered employment as of the date such
Employee actually reports for active employment. The Purchaser will
communicate offers of employment in accordance with all applicable
Requirements of Law and on a schedule mutually acceptable to the Sellers and
the Purchaser. Each Employee who accepts the Purchaser's offer of employment
will be a "Transferred Employee" for purposes of this Agreement upon the date
such Employee commences employment with the Purchaser or one of its
Affiliates. With respect to Employees on short- or long-term disability as of
the Closing Date, references to the Purchaser's obligation to make offers of
employment as of the Closing Date shall be deemed to refer to the date such
Employee reports for active employment with the Purchaser. Except as required
by applicable Requirements of Law, as of the Closing Date (or such later date,
as applicable for Employees on disability) the Transferred Employees shall
cease to accrue further benefits under the Employee Plans and shall commence
participation in those employee benefit plans and arrangements maintained by
the Purchaser and its Affiliates (including as provided herein). All such
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Transferred Employees will be employed commencing on the Closing Date in a
position requiring comparable skills and abilities as, and with base salary,
or weekly or hourly rate of pay, and cash bonus target or opportunity, which
is at least equal to, such Employee's position and pay immediately prior to
the Closing Date. Except as otherwise expressly provided in this Article VI,
during the twenty-four (24) month period following the Closing Date, the
Purchaser will provide the Transferred Employees with benefits under employee
benefit plans, programs, and arrangements that are no less favorable, in the
aggregate, than the Employee Plans and other employee benefit plans, programs
and arrangements provided to such employees by the Sellers and their
Affiliates immediately prior to the Closing Date (the "Purchaser Benefit
Plans"). The Purchaser shall be liable for any amounts to which any Employee
becomes entitled under any benefit or severance policy, plan, agreement,
retention letter, arrangement or program set forth on Section 6.3(e) of the
Disclosure Schedule, or may be deemed to exist or arise, under any applicable
Requirement of Law, as a result of or in connection with the sale of the
Acquired Assets and the Business hereunder. Notwithstanding any provision
hereof, none of the Purchaser or any of its Affiliates will have any
obligation to continue the employment of any Transferred Employee for any
period following the Closing Date.
(b) The Purchaser acknowledges and agrees that for purposes of the
Worker Adjustment and Retraining Notification Act, 29 U.S.C. ss.ss. 2101 et
seq., or any other employee notification mandated by applicable laws
(collectively, the "Employee Notification Acts"), any Transferred Employee
shall be considered to be an employee of the Purchaser from and after the
Closing Date. The Purchaser shall comply with all Employee Notification Acts
regarding any terminations of employment of Transferred Employees on or
following the Closing Date. Notwithstanding Article IX or any other provision
of this Agreement, the Purchaser shall indemnify and defend the Sellers and
their Affiliates against all Losses under all Employee Notification Acts with
respect to any Transferred Employee, occurring or arising on or after the
Closing Date, that may be triggered in connection with this transaction. The
Purchaser will have no responsibility to comply with any Employee Notification
Acts or liability under this Agreement for any terminations of Employees that
occur prior to the Closing Date. The Parent and the Bank will and will cause
DAF to provide to the Purchaser on the Closing Date such personnel and
benefits files (other than medical records) for any Transferred Employee as
may be provided under applicable Requirements of Law without liability to the
Purchaser or the Sellers and their Affiliates, and the Purchaser shall provide
the Sellers and their Affiliates with reasonable access to such files for up
to two years following the Closing Date.
SECTION 6.3 Certain Obligations of the Purchaser. (a) The Purchaser
will recognize each Employee's service with the Sellers and their Affiliates
(and any other entity for which any such Seller or Affiliate recognizes
service for such purposes) for purposes of eligibility, vesting, benefit
commencement and level of benefits (but not benefit accruals under any defined
benefit pension plan) under the Purchaser Benefit Plans and for all purposes
with respect to severance benefits described in Section 6.3(d).
(b) Transferred Employees (and their covered dependents) will be
given credit under the Purchaser Benefit Plans in which they participate for
applicable deductibles, co-payments and out-of-pocket expenses incurred during
the portion of the plan year prior to such participation as though such
amounts had been incurred in accordance with the terms and conditions of the
Purchaser Benefit Plans. All waiting periods and pre-existing condition
31
limitations (if any) under such Purchaser Benefit Plans will be waived for the
Transferred Employees.
(c) The Sellers and their Affiliates will retain the responsibility
and liability for payment of all medical, dental, health and disability claims
incurred by any Transferred Employee (and their covered dependents) prior to
the Closing Date. The Purchaser will be responsible for all medical, dental,
health and disability claims incurred by Transferred Employees (and their
covered dependents) on or after the Closing Date. For purposes of this
paragraph (c), a claim is deemed to have been incurred when the medical or
other service giving rise to the claim is performed, except that disability
claims shall be deemed to have been incurred on the date the Transferred
Employee became disabled.
(d) In addition to the Purchaser's obligations under Section 6.2(a),
for the twenty-four (24) month period immediately following the Closing Date,
the Purchaser will provide severance benefits to all Employees equal to or
greater than the benefits determined under the severance plan applicable to
comparable employees in the Purchaser Parent's GE Consumer Finance-Americas
division (the "Purchaser Severance Plan") including with respect to severance
incurred as a result of the transactions contemplated by this Agreement and
the Ancillary Agreements. Severance benefits will be payable under the
circumstances set forth in the Purchaser Severance Plan.
(e) The Purchaser shall assume each employment, retirement,
severance or other agreement to which any Transferred Employee is a party and
under which such Transferred Employee (or any of his or her dependents or
beneficiaries) is entitled to current or future compensation or benefits, in
each case as set forth on Section 6.3(e) of the Disclosure Schedule, as well
as all liabilities and obligations thereunder (and shall release the Sellers
and their Affiliates from all liabilities and obligations thereunder).
(f) With respect to any accrued but unused vacation time to which
any Transferred Employee is entitled pursuant to the vacation policy
applicable to such Employee immediately prior to the Closing Date (the
"Vacation Policy"), the Purchaser shall allow such Employee to use such
accrued vacation; provided, however, that if the Purchaser deems it necessary
to disallow such employee from taking such accrued vacation, the Purchaser
shall be liable for and pay in cash to each such Employee an amount equal to
such vacation time in accordance with terms of the Vacation Policy; provided,
further, that Purchaser shall be liable for and pay in cash an amount equal to
such accrued vacation time to any Transferred Employee whose employment
terminates for any reason other than "cause" (as defined in Section 6.3(f) of
the Disclosure Schedule) prior to the close of business on the last calendar
day of the year during which the Closing Date occurs.
ARTICLE VII
CONDITIONS
SECTION 7.1 Conditions to Each Party's Obligations to Effect the
Purchase and Assumption. The respective obligations of the Parent, the Bank
and the Purchaser to effect the Purchase and Assumption are subject to the
fulfillment or written waiver, at or prior to the Closing Date, of the
following conditions:
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(a) Governmental and Regulatory Approvals. (i) The HSR waiting
period shall have expired or have been earlier terminated, applicable bank
regulatory approvals shall have been obtained, the applicable approval under
the Bank Merger Act shall have been obtained and (ii) all other authorizations
of, filings and registrations with, and notifications to, all Governmental
Authorities required to effect the transactions contemplated by this Agreement
(other than the Requisite Regulatory Approvals) shall have been obtained or
made and shall be in full force and effect and all waiting periods required by
applicable Requirements of Law in connection therewith shall have expired or
been terminated except to the extent that the failure to obtain any such other
approvals or authorizations would not be reasonably expected to have a
Material Adverse Effect on the Business, the Purchaser or the Sellers.
(b) Third Party Consents. The consents and approvals of third
Persons set forth in Schedule H shall have been obtained and shall be in full
force and effect.
(c) No Injunction or Prohibition. No Governmental Authority of
competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, by-law, judgment, decree, injunction or
other order (whether temporary, preliminary or permanent) that is in effect
and prohibits or makes illegal consummation of the transactions contemplated
by this Agreement or the Ancillary Agreements.
(d) Program Agreement. The Program Agreement shall have been duly
executed and delivered by the other party thereto.
(e) [Reserved]
(f) Lease Agreement. The Lease Agreement shall have been duly
executed and delivered by the other party thereto.
(g) Instrument of Assignment and Assumption. The Instrument of
Assignment and Assumption shall have been duly executed and delivered by the
other party thereto.
(h) Financing Statements. The Sellers shall have executed and
delivered UCC-1 financing statements to be filed in the Offices of the
Secretaries of State of the states of Arizona and Delaware and any other state
necessary to perfect the sale of Receivables purchased pursuant to the terms
and conditions hereof.
(i) Securitization Transfer Agreement. The Securitization Transfer
Agreement shall have been duly executed and delivered by the other party
thereto and all of the conditions to the effectiveness of the assignment and
assumption shall have been satisfied or, where permissible, waived prior to or
concurrently with the Closing Date.
(j) Required Amendments and Confirmations. The Required Amendments
and Confirmations shall have been obtained and shall have become effective in
accordance with their terms.
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(k) Variable Rate Certificates. Sellers shall have given all notices
and satisfied all conditions necessary to pay, and shall have paid in full,
the Variable Rate Certificates, Series 1998-1 and 2002-1.
SECTION 7.2 Conditions to Obligations of the Purchaser. The
obligations of the Purchaser to effect the Purchase and Assumption are subject
to the fulfillment or written waiver, at or prior to the Closing Date, of the
following additional conditions:
(a) Performance of Obligations. The Sellers shall have performed in
all material respects all their covenants and agreements set forth in this
Agreement, to the extent required at or prior to the Closing Date.
(b) Representations. The representations of the Sellers set forth in
this Agreement shall be true and correct as of (1) the date of this Agreement,
and (2) the Closing Date, except that representations that by their terms
speak as of the date of this Agreement or some other date shall be true and
correct only as of such date (in each case, without giving any effect to any
qualifications or limitations as to materiality or Material Adverse Effect
contained therein), except to the extent that any failure to be so true and
correct has not had, or is not reasonably likely to have, a Material Adverse
Effect on the Parent, the Bank or the Business.
(c) Certificate. The Purchaser shall have received a certificate
signed on the Sellers' behalf by an executive officer of the Parent, dated the
Closing Date, to the effect that the conditions set forth in Sections 7.2(a)
and 7.2(b) have been satisfied.
(d) Securitization Conditions.
(i) The Purchasers shall have received copies of any Tax
Opinions or opinion to the trustee required by the Securitization
Documents to be delivered on behalf of Sellers in order to
consummate the transactions contemplated hereby.
(ii) The duty of DAF to file reports under the Exchange Act
shall have been suspended and DAF shall have filed a Form 15 with
the SEC.
(iii) Securitization Rights. The Purchaser shall be recognized
by the Trustee, as defined in the Securitization Documents, as (i)
the servicer with respect to all Servicing Rights and, (ii) the
transferee of the Residual Assets.
(iv) Closing Sets. The Sellers shall furnish to the Purchaser a
complete set of closing documents relating to the Master Trust
Series 2000-1, the Master Trust Series 2002-2 transactions and any
other securitizations of the Sellers, including all amendments,
supplements and waivers related thereto.
(e) Each Seller shall have delivered to the Purchaser a non-foreign
affidavit dated as of the Closing Date, sworn under penalties of perjury and
in form and substance required under Treasury regulations issued pursuant to
Section 1445 of the Code stating that such Seller is not a foreign person as
defined in Section 1445 of the Code.
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SECTION 7.3 Conditions to Obligations of the Parent and the Bank.
The obligations of the Parent and the Bank to effect the Purchase and
Assumption are subject to the fulfillment or waiver in writing, at or prior to
the Closing Date, of the following additional conditions:
(a) Performance. The Purchaser shall have performed in all material
respects all its covenants and agreements set forth in this Agreement to the
extent required at or prior to the Closing Date.
(b) Representations. The representations of the Purchaser set forth
in this Agreement shall be true and correct as of (1) the date of this
Agreement, and (2) the Closing Date, except that any representations that by
their terms speak as of the date of this Agreement or some other date shall be
true and correct only as of such date (in each case, without giving any effect
to any qualifications or limitations as to materiality or Material Adverse
Effect contained therein), except to the extent that any failure to be so true
and correct has not had, or is not reasonably likely to have, a Material
Adverse Effect on the Purchaser and would not reasonably be expected to have a
Material Adverse Effect on the Business following the Closing Date.
(c) Certificate. The Sellers shall have received a certificate
signed on the Purchaser's behalf by an executive officer of the Purchaser,
dated the Closing Date, to the effect that the conditions set forth in
Sections 7.3(a) and 7.3(b) have been satisfied.
ARTICLE VIII
TERMINATION
SECTION 8.1 Termination. This Agreement may be terminated and the
transactions contemplated by this Agreement and the Ancillary Agreements may
be abandoned at any time before the Closing Date only:
(a) By the written consent of the parties hereto;
(b) By either the Purchaser, the Parent or the Bank, if (i) any
approval of a Governmental Authority, the lack of which would result in the
failure to satisfy the condition set forth in Section 7.1(a), has been denied
by the Governmental Authority, and (ii) in each case such party has no
opportunity to cure the fault giving rise to such denial, including through
reapplication or appeal;
(c) By either the Purchaser, the Parent or the Bank, if (i) any
permanent injunction or Action by any Governmental Authority of competent
jurisdiction prohibiting consummation of the transactions contemplated by this
Agreement or the Ancillary Agreements becomes final and nonappealable; (ii)
any law or regulation makes consummation of the transactions contemplated by
this Agreement or the Ancillary Agreements illegal or otherwise prohibited; or
(iii) consummation of the transactions contemplated by this Agreement or the
Ancillary Agreements would violate any nonappealable final order, decree or
judgment of any Governmental Authority having competent jurisdiction;
(d) By either the Purchaser, the Parent or the Bank if the
transactions contemplated by this Agreement and the Ancillary Agreements are
not consummated by
35
February 28, 2005; provided, however, that neither Purchaser, on the one
hand, nor the Parent or the Bank, on the other hand, may terminate this
Agreement pursuant to this Section 8.1(d) if its (or one of its Affiliate's)
breach of any representation, warranty or covenant contained herein has been
the cause of or resulted in the failure to consummate such transactions by
such date; or
(e) By either the Purchaser, on the one hand, or the Parent or the
Bank, on the other hand, in the event of a breach or default in the
performance by another party (other than any of its Affiliates) of any
representation, warranty, covenant or agreement hereunder, which breach or
default (i) would, individually or in the aggregate with all other uncured
breaches and defaults of such other party, constitute grounds for the
conditions set forth in Section 7.2(a) or (b) or Section 7.3(a) or (b), as the
case may be, not to be satisfied at the Closing Date and (ii) has not been, or
cannot be, cured within thirty (30) days after written notice, describing such
breach or default in reasonable detail, is given by the terminating party to
the breaching or defaulting party.
SECTION 8.2 Effect of Termination. If this Agreement is terminated,
no party hereto (or any of its Affiliates, directors, officers,
representatives or agents) will have any liability or further obligation to
any other party to this Agreement, except for (1) obligations which survive
termination as expressly provided for in Section 9.1 and (2) liabilities or
obligations arising out of or related to any knowing, willful or intentional
breach of this Agreement prior to such termination.
ARTICLE IX
SURVIVAL; INDEMNIFICATION
SECTION 9.1 Survival. (a) The representations or warranties of the
parties in this Agreement will survive the Closing until April 30, 2006;
provided, that the Special Representations and the representations contained
in Section 4.1(p) and Section 6.1 shall survive until the expiration of the
applicable statute of limitations.
(b) No agreement or covenant in this Agreement will survive the
Closing Date, other than (i) the covenants in Section 5.1 and 5.2 which shall
survive until April 30, 2006 and (ii) the covenants set forth in Sections 2.4,
2.5, 2.6, 5.3, 5.5, 5.6, 5.7, 5.8, 5.10, 5.11, 5.12, and 8.2, Article VI, this
Article IX and Article X.
(c) No claim for indemnification pursuant to this Article IX for
breach of any representation, warranty or covenant may be brought after the
date on which such representation, warranty or covenant no longer survives;
provided, that if any reasonably specific indemnification claim is validly
made prior to the termination of the applicable survival period, the
indemnifying party's obligation hereunder with respect to such indemnification
claim shall survive until such claim has been finally resolved.
SECTION 9.2 Indemnification by the Parent and the Bank. The Parent
and the Bank jointly and severally agree to indemnify the Purchaser and its
Affiliates against, and agree to hold each of them harmless from, any and all
damage, loss, liability, expense, judgment, settlement, claim, cost or penalty
(including reasonable expenses of investigation and reasonable
36
attorneys' fees and expenses in connection with any Action and enforcement of
any rights of indemnification against any Indemnifying Party or with respect
to any appeal) ("Losses") incurred or suffered by the Purchaser or any of its
Affiliates arising out of or resulting from, without duplication, (1) any
breach of a representation or warranty of the Parent or the Bank contained in
this Agreement or in any certificate delivered by the Parent or the Bank
pursuant to this Agreement, (2) any breach of an agreement or covenant made by
the Parent or the Bank in this Agreement, (3) any failure of the Parent, the
Bank or any of their Affiliates to comply with any applicable "bulk sales" or
similar Requirement of Law in connection with the consummation of the
transactions contemplated hereby or (4) any Excluded Liability.
Notwithstanding the foregoing, except for Special Representations, the
Purchaser and its Affiliates will not be entitled to indemnity pursuant to
clause (1) of this Section 9.2 or in respect of Special Excluded Liabilities:
(i) in respect of any individual Action or individual claim, fact or
occurrence or any series of related Actions, claims, facts or occurrences
(including any class action), until Losses in respect of such individual or
related Actions, claims, facts or occurrences are greater than the De Minimis
Claim Amount; or (ii) for any Losses, until the aggregate amount of all such
Losses incurred or suffered by the Purchaser or any of its Affiliates exceeds
the Deductible Amount, in which case the Purchaser and its Affiliates shall be
entitled to indemnification for the full amount of such Losses in excess of
such threshold; provided that, except in respect of any breach of the Special
Representations, in no event will Purchaser and its Affiliates be entitled to
indemnity for Losses pursuant to clause (1) of this Section 9.2 to the extent
that the amount of Losses, in the aggregate, incurred or suffered by the
Purchaser or any of its Affiliates exceeds the Indemnity Cap Amount.
SECTION 9.3 Indemnification by the Purchaser. The Purchaser and the
Purchaser Parent jointly and severally agree to indemnify each Seller and each
of their respective Affiliates against, and agree to hold each of them
harmless from, any and all Losses incurred or suffered by a Seller or any such
Affiliate arising out of or resulting from without duplication, (1) any breach
of a representation or warranty of the Purchaser contained in this Agreement
or in any certificate delivered by the Purchaser pursuant to this Agreement,
(2) any breach of an agreement or covenant made by the Purchaser in this
Agreement, (3) any Assumed Liability or (4) the operation of the Business from
and after the Closing. Notwithstanding the foregoing, the Sellers and their
Affiliates will not be entitled to indemnity pursuant to clause (1) of this
Section 9.3: (i) in respect of any individual Action or individual claim, fact
or occurrence or any series of related Actions, claims, facts or occurrences
(including any class action), until Losses in respect of such individual or
related Actions, claims, facts or occurrences are greater than the De Minimis
Claim Amount; or (ii) for any Losses, until the aggregate amount of all such
Losses incurred or suffered by the Sellers or any of their Affiliates exceeds
the Deductible Amount, in which case the Sellers and their Affiliates shall be
entitled to indemnification for the full amount of Losses in excess of such
threshold; provided that in no event will Sellers or their Affiliates be
entitled to indemnity for Losses pursuant to clause (1) of this Section 9.3 to
the extent that the amount of such Losses, in the aggregate, incurred or
suffered by the Sellers or their Affiliates exceeds the Indemnity Cap Amount.
SECTION 9.4 Notice, Settlements and Other Matters. (a) A party
seeking indemnification pursuant to Section 9.2 or 9.3 (an "Indemnified
Party") must give prompt written notice to the party from whom such
indemnification is sought (the "Indemnifying Party") of the assertion or
commencement of any Action, in respect of which indemnity may be sought
hereunder specifying in reasonable detail the individual items of such Losses
including the
37
amount, the date each such item was paid, or properly accrued or arose, and
the specific details of the breach of representation, warranty or covenant or
other claim or matter to which such item is related. Notwithstanding the
foregoing, the failure of the Indemnified Party to furnish the written notice
referred to in the preceding sentence in a prompt manner shall not effect its
right to indemnification to the extent the Indemnifying Party's right to
defend the matter is not materially prejudiced by such failure to give prompt
notice. In the event that any third party claim is made against the
Indemnified Party and the Indemnified Party notifies the Indemnifying Party of
the commencement thereof, the Indemnifying Party may elect at any time to
negotiate a settlement or a compromise of such Action or to defend such
Action, in each case at its sole cost and expense (subject to the limitations
set forth in Section 9.2, if the Sellers are the Indemnifying Party, or
Section 9.3, if the Purchaser is the Indemnifying Party) and with its own
counsel. If, within thirty (30) days of receipt from an Indemnified Party of
the notice referred to above the Indemnifying Party (i) advises the
Indemnified Party in writing that it will not elect to defend, settle or
otherwise compromise or pay such Action or (ii) fails to make such an election
in writing, the Indemnified Party may (subject to the Indemnifying Party's
continuing right of election in the preceding sentence), at its option,
defend, settle, compromise or pay such Action; provided that any such
settlement or compromise shall be permitted hereunder only with the written
consent of the Indemnifying Party, which consent shall not be unreasonably
withheld. Unless and until the Indemnifying Party makes an election in
accordance with this Section to defend, settle, compromise or pay such action
or claim, all of the Indemnified Party's reasonable costs arising out of the
defense, settlement, compromise or payment thereof will be Losses subject to
indemnification by the Indemnifying Party (subject to the provisions and
limitations of Sections 9.2 and 9.3, as applicable). Each Indemnified Party
shall make available to the Indemnifying Party all information reasonably
available to such Indemnified Party relating to such Action. If the
Indemnifying Party elects to defend any such Action, the Indemnified Party may
participate in such defense with counsel of its choice at the Indemnified
Party's sole cost and expense. If the Indemnifying Party elects to assume the
defense of (or otherwise elects to negotiate, settle or compromise) any Action
as described above, the Indemnified Party will reimburse the Indemnifying
Party for all costs and expenses incurred by the Indemnifying Party in
connection with such defense to the extent such costs and expenses do not
total an amount indemnifiable pursuant to Section 9.2 or Section 9.3, as
applicable.
(b) The Indemnified Party will have the right to reject any
settlement approved by the Indemnifying Party if the Indemnified Party is not
fully and unconditionally released from any liability resulting from that
claim or is required to pay any costs, expenses or damages to any Person as a
result of the Action that are not covered by the indemnity provided herein.
The Indemnified Party will not have the right to settle any third party Action
without the written consent of the Indemnifying Party if the Indemnifying
Party is contesting such Action in good faith and has assumed the defense of
such Action from the Indemnified Party or if the period for determining
whether or not to assume the defense of such Action from the Indemnified Party
has not expired.
(c) In calculating the amount of any Losses of an Indemnified Party
under this Article IX, there will be subtracted the amount of any (1)
insurance proceeds (net of Taxes actually incurred), and other than proceeds
received through self-insurance or insurance provided by Affiliates of such
Indemnified Party) actually received by the Indemnified Party with respect to
such Losses and (2) third-party payments actually received by the Indemnified
Party with
38
respect to such Losses. In the event that the
Indemnifying Party reimburses the Indemnified Party for any Losses prior to
the occurrence of any events contemplated by clauses (1) or (2) above, the
Indemnified Party will remit to the Indemnifying Party any such amounts that
the Indemnified Party subsequently receives or realizes with respect to such
Losses. Upon the payment in full of any claim hereunder, the Indemnifying
Party will be subrogated to the rights of the Indemnified Party against any
Person with respect to the subject matter of such claim.
(d) Without limitation of their respective rights and obligations as
set forth elsewhere in this Article IX, and subject to the procedures for
indemnification claims set forth in this Article IX, the Indemnified Party
will act in good faith, will use commercially reasonable efforts to mitigate
any Losses, will use similar discretion in the use of personnel and the
incurring of expenses as the Indemnifying Party would use if they were engaged
and acting entirely at their own cost and for their own account, and will
consult regularly with the Indemnifying Party regarding the conduct of any
Actions or the taking of any action for which indemnification may be sought.
(e) The Parent, the Bank and the Purchaser agree to treat and report
all indemnity payments as additional adjustments to the amount of the total
consideration paid for the Acquired Assets for all Tax purposes unless
required by applicable Requirements of Law.
(f) For purposes of this Article IX, all representations and
warranties herein shall be read to exclude any materiality or "Material
Adverse Effect" qualifiers appearing therein.
(g) Notwithstanding anything to the contrary contained herein, the
indemnification provided for herein shall not cover, and in no event shall any
party hereto be liable for, any indirect damages, including consequential,
incidental, exemplary or special damages, or punitive damages (except to the
extent necessary to reimburse an Indemnified Party for judgments actually
awarded to third parties in respect of such types of damages).
(h) After the Closing Date, other than as provided in Section 2.4
and except with respect to claims based on fraud and/or claims seeking
equitable remedies, this Article IX will constitute the Sellers' and the
Purchaser's exclusive remedy for any of the matters addressed herein or other
claim arising out of or relating to this Agreement.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Notices. All notices and other communications by the
Purchaser or the Sellers hereunder will be in writing to the other party and
will be deemed to have been duly given when delivered in person, when received
via facsimile or overnight courier, or when posted by United States registered
or certified mail, with postage prepaid, addressed as follows:
if to the Purchaser to:
GE Consumer Finance - Americas
1600 Summer Street
Stamford, Connecticut 06905
Attention: CEO and President
39
Facsimile: (203) 585-6103
with a copy to:
GE Consumer Finance - Americas
1600 Summer Street
Stamford, Connecticut 06905
Attention: Office of General Counsel
Facsimile: (203) 585-6297
with a copy to:
GE Capital Consumer Card Co.
5300 Kings Island Drive
Mason, Ohio 45040
Attention: President
Facsimile: (678) 518-3134
if to the Sellers to:
c/o Dillards, Inc.
1600 Cantrell Road
Little Rock, Arkansas 72201
Attention: Chief Financial Officer
Facsimile: (501) 376-5980
with a copy to:
Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, New York 10017
Attention: Gary I. Horowitz, Esq.
Maripat Alpuche, Esq.
Facsimile: (212) 455-2502
Notices and other communications may also be sent to such other
address or addresses as the Purchaser or the Sellers may from time to time
designate by notice as provided herein, except that notices of change of
address will be effective only upon receipt.
SECTION 10.2 Expenses. (a) Except as otherwise provided herein, all
legal and any other third-party costs and expenses incurred in connection
herewith and the transactions contemplated by this Agreement and the Ancillary
Agreements will be paid by the party incurring such expenses, except that all
fees or other amounts payable to any Governmental Authority in connection with
any Requisite Regulatory Approval shall be paid by the Purchaser.
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(b) Collection efforts and related expenses on all Accounts made or
incurred by the Sellers prior to the Closing Date will be the responsibility
of the Sellers, and all monies collected thereon prior to the Closing Date
(and all monies collected on Written-Off Accounts prior to the Closing Date)
shall be retained by the Sellers subject to their contractual obligations
under the Securitization Documents.
(c) The Purchaser shall be responsible for all fees of the rating
agencies in connection with confirming ratings and providing approvals for the
contemplated assumptions and any proposed amendments of the Securitization
Documents by the Purchaser.
(d) Subject to the Interim Processing Agreement, rents under any
leases assumed by the Purchaser and other items customarily apportioned in the
jurisdiction in which the real estate is situated, shall be apportioned
between the Sellers and the Purchaser on a per diem basis as of the opening of
business on the Closing Date.
SECTION 10.3 Successors and Assigns. This Agreement will be binding
upon and will inure to the benefit of the parties and their respective
successors and permitted assigns. This Agreement and the rights and
obligations hereunder may not be assigned by any party to any Person without
the prior written consent of the other party hereto, and any purported
assignment without such consent shall be void; provided, however, that the
Purchaser may assign its rights to purchase all or any portion of the Acquired
Assets hereunder to one or more of its Affiliates.
SECTION 10.4 Entire Agreement; Amendment; Waiver. This Agreement and
the Ancillary Agreements, including the Disclosure Schedule, Annexes and
Schedules hereto and thereto, embody the entire agreement of the parties
hereto with respect to the subject matter hereof and supersede all prior
agreements with respect thereto, other than the Confidentiality Agreement. No
representation, warranty, inducement, promise, understanding or condition not
set forth in this Agreement (or the other documents referred to in the
preceding sentence) has been made or relied on by any party in entering into
this Agreement. This Agreement may be amended, and any provision hereof
waived, but only in writing signed by the party against whom such amendment or
waiver is sought to be enforced.
SECTION 10.5 Counterparts. This Agreement may be executed in two or
more counterparts any of which may be delivered by facsimile transmission and
all of which will together constitute one and the same instrument.
SECTION 10.6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REFERENCE TO ITS CONFLICT OF LAWS PROVISIONS (OTHER THAN SECTION 5-1401 OF THE
NEW YORK GENERAL OBLIGATIONS LAW), AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF
THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 10.7 WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED
BY LAW, EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY
JURY IN ANY ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR THE ANCILLARY AGREEMENTS.
41
SECTION 10.8 Severability. In case any one or more of the provisions
contained herein will be invalid, illegal or unenforceable in any respect
under any law, the validity, legality and enforceability of the remaining
provisions contained herein will not in any way be affected or impaired
thereby.
SECTION 10.9 No Petition. The Purchaser covenants and agrees that it
will not, prior to the date that is one year and one day after the final
payment of any series of investor certificates or any other series issued by
the Master Trust, acquiesce, petition or otherwise invoke the process of any
Governmental Authority for the purpose of commencing or sustaining a case
against DAF or the Master Trust under any federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of DAF or the
Master Trust or any substantial part of its property or ordering the winding
up or liquidation of the affairs of DAF or the Master Trust.
SECTION 10.10 Public Announcement. Except for any notice which is
required by law or regulation, each of the Purchaser, on the one hand, and
each Seller, on the other hand, agrees that it will not issue a press release,
make any other public statement or make any statement to the Employees with
respect to the transactions contemplated by this Agreement or the Ancillary
Agreements without the prior written consent of the other, which consent will
not be unreasonably withheld or delayed. Each of the Purchaser, on the one
hand, and each Seller, on the other hand, agrees, if possible, to notify and
consult with the other at least one Business Day in advance of filing any
notice required by law or regulation.
SECTION 10.11 Third-Party Beneficiaries. Nothing in this Agreement,
expressed or implied, will confer on any Person, other than the parties hereto
and DAF or their respective successors, any rights, remedies, obligations or
liabilities; provided that the provisions of Article IX will inure to the
benefit of the Indemnified Parties.
SECTION 10.12 Post-Closing Amounts Received and Paid. From and after
the Closing Date, all amounts which are received by the Sellers or any of
their Affiliates in respect of any of the Acquired Assets shall be received by
such Person as agent, in trust for and on behalf of the Purchaser, and
following the Closing, the Parent shall, on a weekly basis, pay, or cause to
be paid, by wire transfer of immediately available funds to the Purchaser all
such amounts received by or paid to the Sellers or any of their Affiliates,
and shall provide Purchaser information as to the nature and source of all
such payments, including any invoice related thereto. All amounts received by
the Purchaser or any of its Affiliates following the Closing in respect of any
Excluded Assets shall be received by the Purchaser as agent, in trust for and
on behalf of Sellers, and the Purchaser shall, on a weekly basis, pay or cause
to be paid all such amounts over to the Parent by wire transfer of immediately
available funds and shall provide the Parent information as to the nature and
source of all such payments, including any invoice relating thereto.
SECTION 10.13 Further Assurances. Each of the parties hereto shall,
whenever and as often as reasonably requested to do so by another party
hereto, execute, acknowledge and deliver any and all such other and further
acts, assignments, endorsements, transfers and any instruments of further
assurance, approvals and consents as are necessary or proper in order to
complete, ensure and perfect (i) the Purchase and Assumption as contemplated
hereby, and (ii) the consummation of the other transactions contemplated
hereby.
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[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, this Agreement has been executed on behalf of
each of the parties hereto as of the day and year first above written.
GE CAPITAL CONSUMER CARD CO.
By /s/ Donald R. Ramon
---------------------------------
Name: Donald R. Ramon
Title: Chief Operating Officer
GENERAL ELECTRIC CAPITAL
CORPORATION, solely for
purposes of Section 5.4,
Article IX and Article X
By /s/ Mark W. Begor
---------------------------------
Name: Mark W. Begor
Title: Vice President
DILLARDS, INC.
By /s/ James I. Freeman
---------------------------------
Name: James I. Freeman
Title: Senior Vice President
DILLARD NATIONAL BANK
By /s/ Charles O. Unfried
---------------------------------
Name: Charles O. Unfried
Title: Chief Executive Officer
44