Exhibit 2.1
PURCHASE AND SALE AGREEMENT
BY AND AMONG
CIRCUIT CITY STORES, INC.,
FIRST NORTH AMERICAN NATIONAL BANK,
TYLER INTERNATIONAL FUNDING, INC.,
AND
BANK ONE, DELAWARE, NATIONAL ASSOCIATION
Dated as of January 16, 2004
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions...........................................................................2
SECTION 1.02. Construction.........................................................................20
ARTICLE II
PURCHASE AND SALE
SECTION 2.01. Sale by FNANB........................................................................20
SECTION 2.02. Sale by Tyler Funding................................................................21
SECTION 2.03. Retained Assets......................................................................22
SECTION 2.04. Assumed Liabilities..................................................................23
SECTION 2.05. Retained Liabilities.................................................................24
SECTION 2.06. Purchase Price.......................................................................25
SECTION 2.07. Allocation of Purchase Price.........................................................25
SECTION 2.08. Use of Names and Trademarks..........................................................25
SECTION 2.09. Collections Adjustment Amount........................................................26
ARTICLE III
CLOSING
SECTION 3.01. The Closing..........................................................................28
SECTION 3.02. Valuation Date Statements............................................................29
SECTION 3.03. Payments on the Closing Date.........................................................29
SECTION 3.04. Proceedings at Closing...............................................................30
SECTION 3.05. Delivery of Books and Records........................................................30
SECTION 3.06. Transfer of Absolute Title; Filing of Financing Statements...........................30
SECTION 3.07. Power of Attorney....................................................................31
ARTICLE IV
POST-CLOSING PURCHASE PRICE ADJUSTMENTS
SECTION 4.01. Accounts-Based Adjustments...........................................................31
SECTION 4.02. Settlement Date Adjustments..........................................................32
SECTION 4.03. Post-Settlement Date Adjustments.....................................................33
SECTION 4.04. Resolution of Disputes...............................................................33
ii
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF CIRCUIT CITY, FNANB AND TYLER
FUNDING
SECTION 5.01. Organization; Good Standing..........................................................34
SECTION 5.02. Authority; Validity..................................................................34
SECTION 5.03. Conflicts; Defaults..................................................................35
SECTION 5.04. Approvals............................................................................35
SECTION 5.05. Litigation...........................................................................35
SECTION 5.06. Compliance with Requirements of Law..................................................36
SECTION 5.07. Intellectual Property................................................................36
SECTION 5.08. Absence of Certain Changes...........................................................37
SECTION 5.09. Licenses and Permits.................................................................37
SECTION 5.10. Accounts and Receivables.............................................................37
SECTION 5.11. Marketing Agreements.................................................................40
SECTION 5.12. Certain Contracts....................................................................40
SECTION 5.13. Securitization Matters; Trust........................................................40
SECTION 5.14. Effective Transfer...................................................................43
SECTION 5.15. Ratings 43
SECTION 5.16. Books and Records....................................................................43
SECTION 5.17. Exchange Act Reports.................................................................43
SECTION 5.18. Approval and Authorization...........................................................44
SECTION 5.19. Disclosure...........................................................................44
SECTION 5.20. Insurance Contracts; Credit Protector Contracts......................................44
SECTION 5.21. Card Processor.......................................................................45
SECTION 5.22. Employee Benefit Plans; Employee Matters.............................................45
SECTION 5.23. Taxes ............................................................................47
SECTION 5.24. Insurance............................................................................47
SECTION 5.25. Finders or Brokers...................................................................47
SECTION 5.26. Leased Real Property.................................................................48
SECTION 5.27. Substantially All Assets.............................................................48
SECTION 5.28. Environmental Matters................................................................48
SECTION 5.29. Financial Ability to Perform.........................................................49
SECTION 5.30. No Pending Change of Control.........................................................49
SECTION 5.31. No Other Representations or Warranties...............................................49
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER
SECTION 6.01. Organization.........................................................................49
SECTION 6.02. Authority; Validity..................................................................49
SECTION 6.03. Conflicts; Defaults..................................................................50
SECTION 6.04. Approvals............................................................................50
SECTION 6.05. Litigation...........................................................................50
iii
SECTION 6.06. Compliance with Requirements of Law..................................................51
SECTION 6.07. Licenses and Permits.................................................................51
SECTION 6.08. Financial Ability to Perform.........................................................51
SECTION 6.09. VISA Member..........................................................................51
SECTION 6.10. Servicing Qualifications.............................................................51
SECTION 6.11. Finders or Brokers...................................................................51
SECTION 6.12. No Other Representations or Warranties...............................................51
ARTICLE VII
COVENANTS
SECTION 7.01. Preservation of Credit Card Business.................................................52
SECTION 7.02. Preservation of Accounts.............................................................53
SECTION 7.03. Reasonable Access....................................................................53
SECTION 7.04. Confidentiality......................................................................54
SECTION 7.05. Books and Records....................................................................56
SECTION 7.06. Publicity; Press Releases............................................................56
SECTION 7.07. Delivery of Required Securitization Amendments and
Securitization Transfer Agreements; Exchange Act Registration........................56
SECTION 7.08. Advice of Changes....................................................................57
SECTION 7.09. Efforts; Filings.....................................................................57
SECTION 7.10. No Solicitation......................................................................59
SECTION 7.11. Miscellaneous Agreements and Consents................................................59
SECTION 7.12. Assignment of Contracts; Approvals and Consents......................................59
SECTION 7.13. Notice of Proceedings................................................................60
SECTION 7.14. Guaranties; Intercompany Agreements..................................................60
SECTION 7.15. Bulk Sales Law.......................................................................61
SECTION 7.16. VISA Agreement.......................................................................61
SECTION 7.17. Notice to Borrowers..................................................................61
SECTION 7.18. Employee Matters.....................................................................62
SECTION 7.19. Further Assurances...................................................................65
SECTION 7.20. Limitations on Duties................................................................66
SECTION 7.21. Covenant to Comply with Account Agreements...........................................66
SECTION 7.22. Assumed Liabilities..................................................................66
SECTION 7.23. Credit Insurance Policies............................................................66
SECTION 7.24. Credit Protector Contracts...........................................................68
SECTION 7.25. Fleet Interim Servicing Agreement....................................................69
SECTION 7.26. Status of the Trust..................................................................69
SECTION 7.27. Pre-Closing Initiatives; Pre-Closing Transition Activities...........................69
SECTION 7.28. Amendment of Circuit City Interest Rate Caps.........................................70
ARTICLE VIII
Tax matters
SECTION 8.01. Liability for Taxes; Refunds and Credits.............................................70
SECTION 8.02. Filing Responsibility................................................................71
iv
SECTION 8.03. Cooperation; Exchange of Information; Tax Proceedings................................72
SECTION 8.04. Tax Sharing Agreements...............................................................75
SECTION 8.05. Transfer Taxes.......................................................................76
SECTION 8.06. Survival 76
SECTION 8.07. Post-Closing Dispositions............................................................76
SECTION 8.08. Tax Treatment of Payments............................................................76
SECTION 8.09. Recovered Sales Taxes on Charged-Off Accounts........................................76
Article IX
CONDITIONS TO CLOSING
SECTION 9.01. Conditions of All Parties to Closing.................................................76
SECTION 9.02. Conditions to Obligations of Purchaser to Close......................................77
SECTION 9.03. Conditions to Obligations of Circuit City, FNANB
and Tyler Funding to Close...........................................................79
ARTICLE X
INDEMNIFICATION
SECTION 10.01. Survival of Representations and Warranties and Covenants.............................81
SECTION 10.02. Indemnification Obligations of Circuit City, FNANB and Tyler Funding.................82
SECTION 10.03. Indemnification Obligations of Purchaser.............................................82
SECTION 10.04. Claims ............................................................................82
SECTION 10.05. Limitations on Indemnification.......................................................84
SECTION 10.06. Insurance; Tax Benefits..............................................................85
SECTION 10.07. Remedies Exclusive...................................................................85
SECTION 10.08. Mitigation...........................................................................86
SECTION 10.09. Tax Indemnification..................................................................86
SECTION 10.10. Termination of Indemnification.......................................................86
ARTICLE XI
TERMINATION
SECTION 11.01. Termination..........................................................................86
SECTION 11.02. Effect of Termination................................................................87
ARTICLE XII
MISCELLANEOUS
SECTION 12.01. Notices..............................................................................88
SECTION 12.02. Assignment...........................................................................89
SECTION 12.03. Binding Agreement; No Third Party Beneficiaries......................................89
SECTION 12.04. Entire Agreement.....................................................................89
v
SECTION 12.05. Amendments and Waivers...............................................................89
SECTION 12.06. Expenses.............................................................................90
SECTION 12.07. No Joint Venture.....................................................................90
SECTION 12.08. Governing Law........................................................................90
SECTION 12.09. Jurisdiction; Venue; Consent to Service of Process...................................90
SECTION 12.10. Specific Performance and Other Equitable Relief......................................91
SECTION 12.11. Waiver of Jury Trial.................................................................91
SECTION 12.12. Severability.........................................................................92
SECTION 12.13. Headings.............................................................................92
SECTION 12.14. Counterparts.........................................................................92
Exhibits and Schedules
Exhibit A Form of Assignment, Xxxx of Sale and Assumption Agreement
Exhibit B Circuit City, FNANB and Tyler Funding Persons with Knowledge
Exhibit C Purchaser Persons with Knowledge
Exhibit D Form of Licensing Agreement
Exhibit E Form of Program Agreement
Exhibit F Form of Settlement Date Statement
Exhibit G Term Sheet for Transition Services Agreement
Exhibit H Form of Valuation Date Statements
Exhibit I Reaging Policies
Exhibit J Form of Master File
Exhibit K Form of Xxxxxxxx-Xxxxx Certification
Exhibit L Form of Sublease of Leased Real Property
Exhibit M Form of Richmond Sublease
Exhibit N Pre-Closing Initiatives
Exhibit O Form of Gateway Software Licensing Agreement
Exhibit P Sellers' Retention Policy
Exhibit Q Form of Closing Month Certification
Exhibit R Records Retention Standards
Exhibit S Pre-Closing Transition Activities
Schedule 1.01-3 Leased Real Property
Schedule 2.01(i) Intellectual Property Rights
Schedule 2.01(j) Fixed Assets
Schedule 2.01(l)(1) Assumed Contracts
Schedule 2.01(l)(2) Excluded Contracts
Schedule 2.03(i) Other Retained Assets
Schedule 2.04(j) Other Assumed Liabilities
Schedule 2.08 FNANB Credit Card Marks
Schedule 7.14(a) Guaranties
Schedule 7.14(b) Terminations, Releases, and Consents
Schedule 7.18 Kennesaw and Richmond Senior Management Employees;
Retained Employees
Schedule 9.01(e) Consents and Approvals
Schedule 9.02(g) Consents to Assumed Contracts
vi
Seller Disclosure Schedule
Purchaser Disclosure Schedule
vii
PURCHASE AND SALE AGREEMENT
This PURCHASE AND SALE AGREEMENT (this "Agreement") is made
and entered into as of January 16, 2004 and is by and among CIRCUIT CITY STORES,
INC., a Virginia corporation ("Circuit City"), FIRST NORTH AMERICAN NATIONAL
BANK, a wholly owned subsidiary of Circuit City and a limited purpose credit
card bank under the Bank Holding Company Act ("FNANB"), TYLER INTERNATIONAL
FUNDING, INC., a Delaware corporation and a wholly owned subsidiary of Circuit
City ("Tyler Funding"), and BANK ONE, DELAWARE, NATIONAL ASSOCIATION, a national
banking association ("Purchaser"). Circuit City, FNANB, Tyler Funding, and
Purchaser are sometimes collectively referred to herein as the "Parties", and
each, individually, as a "Party."
RECITALS
WHEREAS, Circuit City is, through FNANB, engaged in the Credit
Card Business (as defined herein), and FNANB owns the Accounts (as defined
herein);
WHEREAS, Circuit City and FNANB have caused the creation of
the Circuit City Credit Card Master Trust (the "Trust") through which the
Receivables (as defined herein) relating to the Accounts have been securitized;
WHEREAS, FNANB desires to sell to Purchaser, and Purchaser
desires to purchase from FNANB, on the terms set forth herein, the Accounts and
certain other assets related to the Credit Card Business;
WHEREAS, FNANB desires to assign to Purchaser, and Purchaser
desires to assume, FNANB's rights and obligations as Servicer under the
Securitization Documents (as defined herein);
WHEREAS, Tyler Funding desires to sell and assign to
Purchaser, and Purchaser desires to purchase and assume, on the terms set forth
herein, Tyler Funding's rights and obligations under the Securitization
Documents (as defined herein) and Tyler Funding's interests in the
Securitization Retained Interests (as defined herein);
WHEREAS, Circuit City and Purchaser desire to enter into a
Program Agreement that will provide for, among other things, the operation by
Purchaser of the private-label Circuit City Credit Card and co-branded Circuit
City Plus VISA Credit Card business being conveyed pursuant hereto and the
introduction and operation of a co-branded Circuit City Reward VISA Credit Card;
and
WHEREAS, the Parties and their respective Affiliates desire to
enter into certain other agreements in connection with the transactions
contemplated hereby.
1
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises and
covenants set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound, the Parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. Except as otherwise specifically indicated, the
following terms shall have the meanings specified herein.
"Account" shall mean any Circuit City Plus VISA Account or
Circuit City Credit Card Account, which accounts are contained in the Master
File provided to Purchaser (including such Accounts that are Charged-off
Accounts or are inactive) and are owned by FNANB as of the Cut-Off Time.
"Account Agreement" shall mean an account agreement (including
related disclosure) between FNANB and the related Borrower governing the terms
and conditions of an Account, as such agreement may be amended, modified or
otherwise changed from time to time (including pursuant to change of terms
notices).
"Account Guidelines" shall mean the written policies and
procedures and practices of FNANB relating to the operation of its Circuit City
Plus VISA Account and Circuit City Credit Card Account business as in effect on
the date of this Agreement, including the policies and procedures for
determining the creditworthiness of customers and the extension of credit to
customers and relating to the maintenance of Circuit City Plus VISA Accounts and
Circuit City Credit Card Accounts and the collection of the Receivables.
"Accountant" shall have the meaning specified in Section 4.04.
"Accounts-Based Adjustments" shall have the meaning specified
in Section 4.01.
"Accrued Interest" shall mean, as of the relevant date, all
accrued but unbilled finance charges (including on unexpired promotional
balances) on the Accounts.
"Acquired Borrower Information" shall mean all information
included in the Master File and the Borrower List.
"Adjusted Purchase Price" shall mean, subject to the
resolution of any disputes in accordance with Section 4.04, the Purchase Price
for the Purchased Assets reflected on the Settlement Date Statement, as
increased or decreased by the net of all Accounts-Based Adjustments reflected in
the Settlement Date Statement or a notice delivered by a Party in accordance to
Section 4.03.
"Adverse Environmental Condition" shall mean any of the
following: (i) the existence, or the continuation of the existence, of a Release
or threatened Release (including sudden or non-sudden, accidental or
non-accidental Releases) at, in or from or related to the
2
Leased Real Property caused by an act or omission of Circuit City, FNANB or
Tyler Funding, without regard to whether Circuit City, FNANB or Tyler Funding
had Knowledge thereof; or (ii) any violation, or alleged violation, under any
Environmental Law, or any violation of permits or licenses of, by or from any
Governmental Authority pursuant to Environmental Laws related to the Leased Real
Property, caused by an act or omission of Circuit City, FNANB or Tyler Funding,
without regard to whether Circuit City, FNANB or Tyler Funding had Knowledge
thereof.
"Affiliate" shall mean, with respect to any Person, any other
Person that directly or indirectly, through one or more intermediaries,
controls, is controlled by or is under common control with such first Person.
The term "control" (including its correlative meanings "controlled by" and
"under common control with") shall mean possession, directly or indirectly, of
power to direct or cause the direction of management or policies (whether
through ownership of securities or partnership or other ownership interests, by
contract or otherwise).
"Agreement" shall have the meaning specified in the Preamble
of this Agreement.
"Allocation Statement" shall have the meaning specified in
Section 2.07(a).
"Assignment and Assumption Agreement" shall mean the
Assignment, Xxxx of Sale and Assumption Agreement dated as of the Closing Date
among FNANB, Tyler Funding, and Purchaser, substantially in the form of Exhibit
A attached hereto.
"Assumed Contracts" shall have the meaning specified in
Section 2.01(l).
"Assumed Liabilities" shall have the meaning specified in
Section 2.04.
"Bank Holding Company Act" shall mean the Bank Holding Company
Act of 1956, as amended.
"Bank Merger Act" shall mean the Bank Merger Act of 1960, as
amended.
"Bank One Corporation" shall mean Bank One Corporation, a
Delaware corporation and the parent of Purchaser.
"Benefit Item" shall mean any loss, deduction, credit, or
other item that decreases Taxes paid or payable or increases Tax basis.
"Books and Records" shall mean all of the existing books,
records, original documents, correspondence, customer lists, books of account,
Credit Card applications, customer service and collection records, billing
tapes, month-end tapes, files, papers, statement forms, plastics, application
forms and other supplies and data maintained by or on behalf of FNANB, whether
in hard copy or electronic format or any other form, to the extent used or held
for use by FNANB in the Credit Card Business other than those relating
principally to any Retained Assets and other than any Tax Returns or Tax work
papers, including all information included in the FNANB Data Warehouse; and such
term shall also mean all of FNANB's proprietary information relating to the
Accounts (whether or not included in such books, records, files and papers),
including the Borrower List and all information relating to the Accounts, the
Borrowers
3
and any Persons (including those Persons who may employ any Borrowers) with
which FNANB has a relationship in connection with the Accounts, as such
proprietary information is reported on FNANB's data processing systems or
otherwise retained directly or indirectly, by or on behalf of FNANB. For
purposes of clarification and notwithstanding the foregoing, "Books and Records"
(i) shall not include any Excluded Proprietary Information but shall include all
files and information relating to Accounts as they exist as of the Closing Date
whether segregated by Borrower or by document type or record, (ii) shall not
include FNANB's accounting books and records to the extent such books and
records reflect the consolidation of the operations of the Credit Card Business
with other of FNANB's operations or Circuit City and (iii) shall not include
Sellers' minute books, stock ledgers or other corporate records.
"Borrower" shall mean, with respect to any Account, an
applicant and, if applicable, co-applicant in whose name(s) an Account was
properly established, without regard to whether the applicable Borrower utilizes
Credit Cards or convenience checks, or both, to borrow under the applicable
Account Agreement and/or who is obligated to make payments with respect to such
Account, including any guarantor thereof.
"Borrower List" shall mean a list of the names, addresses,
telephone numbers and taxpayer identification numbers and social security
numbers of all Borrowers as of the Cut-Off Time, together with such other
proprietary information as is maintained by or on behalf of FNANB with respect
to such Borrowers (other than any Excluded Proprietary Information).
"Business Day" shall mean any day other than Saturday, Sunday
or a day on which banking institutions in New York, New York, Richmond,
Virginia, Wilmington, Delaware, Chicago, Illinois or Atlanta, Georgia are
authorized or obligated by law or regulation to be closed.
"Business Employee" shall mean any individual (i) actively
employed by Circuit City or FNANB primarily in or in support of the Credit Card
Business on the Closing Date, and (ii) employed by any such party primarily in
or in support of the Credit Card Business who are absent from work on the
Closing Date on account of vacation, sickness, short-term or long-term
disability, or an absence for which an obligation to recall, rehire or otherwise
return to employment exists under applicable law, and such employee is released
to return and returns to active employment within twelve (12) weeks (or longer
if required by law) after the leave began or upon the expiration of the leave,
whichever, is earlier. "Business Employee" shall not include (a) any independent
contractor, retiree or person hired through a temporary agency, (b) the persons
listed on Schedule 7.18 under the heading "Retained Employees" or (c) any
seasonal employee (as defined in Section 5.22(e)) who does not become a Business
Employee prior to Closing. Business Employees as defined in clause (ii) of this
paragraph who receive and accept employment offers from Purchaser will commence
employment and become Continuing Business Employees as defined in Section
7.18(a) on the date they are released to return and do return to active
employment, rather than on the Closing Date.
"Business Material Adverse Effect" shall mean (i) any change,
event or effect that is, or would reasonably be expected to be, individually or
in the aggregate, materially adverse to the business, assets, results of
operations or financial condition of the Credit Card Business, taken as a whole,
excluding any such change, event or effect arising out of or in connection with
4
or resulting from: (A) general economic or business conditions or changes
therein; (B) adverse developments in economic, business or financial conditions
generally affecting the credit card industry to the extent such adverse
developments do not have a disproportionate effect on the Credit Card Business
relative to other entities operating businesses similar to the Credit Card
Business; (C) financial market conditions, including interest rates, or changes
therein; (D) changes in law, GAAP or regulatory accounting principles after the
date of this Agreement; or (E) any action, omission, change, effect,
circumstance or condition contemplated by this Agreement, or attributable to the
execution, performance or announcement of this Agreement or the transactions
contemplated hereby (including the impact thereof on relationships with
Borrowers, customers, suppliers, or employees); or (ii) a change or effect
reasonably expected to materially impair or materially delay the ability of
FNANB or any of its Affiliates to perform timely their respective obligations
under this Agreement, the Related Agreements, the Required Securitization
Amendments or the Securitization Transfer Agreements or to consummate the
transactions contemplated hereby or thereby on a timely basis.
"Cap" shall have the meaning specified in Section 10.05(a).
"Card Association" shall mean VISA and its Affiliates. VISA(R)
is a trademark of Visa USA, Inc., and each place in this Agreement or any
Related Agreement where the term VISA is referenced, such references shall be
deemed to have the symbol (R) appended thereto.
"Certificate" shall have the meaning specified in the Pooling
and Servicing Agreement.
"Certificateholder" shall have the meaning specified in the
Pooling and Servicing Agreement.
"Charged-off Account" shall mean an Account that fits one or
more of the following descriptions as of the Cut-Off Time:
(i) Accounts that have been identified on FNANB's processing
system in a type code, credit rating or user status code as charged-off;
(ii) Accounts with balances that are equal to or more than 180
days contractually delinquent, which occurs upon a Borrower's failure to
pay, when due, a minimum payment; or
(iii) Accounts that are not statused as charged-off on FNANB's
processing system but should have been so statused prior to the Cut-Off
Time in accordance with the Account Guidelines applicable to such Account.
"Circuit City Affiliated Group" shall mean any consolidated,
combined, affiliated or unitary group, for Tax purposes, in which any member of
the Circuit City Group is included or of which any member of the Circuit City
Group is the common parent.
"Circuit City Credit Card Account" shall mean a credit card
account owned by FNANB and related to Circuit City's U.S. consumer private-label
credit card business.
5
"Circuit City Data Warehouse" shall mean (i) any and all
customer information (including any such information purchased or otherwise
acquired from third-party sources) in any database maintained by or on behalf of
Circuit City or any of its Affiliates, licensees, franchisees or dealers other
than Sellers, including data relating to (A) customer demographics and contacts
and (B) customer purchases from Circuit City, any of its Affiliates, licensees,
franchisees or dealers; and (ii) any analysis, compilation, study, report or
other document prepared on the basis of any of the foregoing information.
"Circuit City Group" shall mean Circuit City and any
Subsidiary of Circuit City (other than the Trust).
"Circuit City Interest Rate Caps" shall mean the interest rate
caps between Circuit City and Wachovia Bank entered into on May 7, 2002 (which
interest rate caps appear on the Tyler Funding balance sheet as of November 30,
2003 under account number 205100).
"Circuit City Plus VISA Account" shall mean a VISA credit card
account owned by FNANB and related to Circuit City's U.S. consumer co-branded
general purpose bankcard business.
"Closing" shall have the meaning specified in Section 3.01.
"Closing Date" shall have the meaning specified in Section
3.01.
"Closing Month" shall mean the month during which the Closing
Date occurs.
"Closing Time" shall have the meaning specified in Section
3.01.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Collection Account" shall mean the segregated trust account
established and maintained by the Trustee, on behalf of the Trust, pursuant to
Section 4.1(a) of the Pooling and Servicing Agreement.
"Collection Period" shall mean the period from and including
the first day of a calendar month to and including the last day of such calendar
month.
"Collections" shall have the meaning specified in the Pooling
and Servicing Agreement.
"Confidentiality Agreement" shall mean the Confidentiality
Agreement, dated as of June 6, 2003, between Circuit City (or its Affiliates)
and Bank One Corporation (or its Affiliates) together with the Addendum thereto,
dated as of November 6, 2003.
"Continuing Business Employee" shall have the meaning
specified in Section 7.18(a).
"Contract" shall mean, with respect to any Person, any
agreement, undertaking, contract, obligation, promise, indenture, deed of trust,
or other instrument, document, or
6
agreement (whether written or oral and whether express or implied) by which that
Person, or any amount of its properties or assets, is bound or subject.
"Credit Balances" shall mean, with respect to any Borrower,
the net amount, if any, owing to such Borrower on the related Account as of the
Cut-Off Time.
"Credit Card" shall mean any credit card issued by FNANB to a
Borrower or an authorized user or other access device (including cash advance
checks and balance transfer checks) that may be used from time to time to obtain
open-ended credit pursuant to an Account Agreement.
"Credit Card Business" shall mean the FNANB Circuit City Plus
VISA Account and Circuit City Credit Card Account programs and business
involving the Accounts, including the extension of credit to Borrowers, the
servicing of the Accounts, xxxxxxxx, collections, processing of Account
transactions, the administration and management of the Accounts and related
Receivables, and all aspects of the proprietary Circuit City Credit Card Account
and co-branded Circuit City Plus VISA Account program relating to the Accounts,
including servicing under the Pooling and Servicing Agreement.
"Credit Insurance Charges" shall mean, with respect to any
Account, the monthly premiums charged to the related Borrower with respect to
any Credit Insurance Policies.
"Credit Insurance Policies" shall have the meaning specified
in Section 7.23(a).
"Credit Protector Contract" shall have the meaning specified
in Section 5.20(a).
"Cut-Off Time" shall mean 11:59:59 p.m., Eastern Time on the
day immediately preceding the Closing Date.
"Damages" shall mean all actions, costs, damages,
disbursements, penalties, Liabilities, losses, expenses, assessments, judgments,
injunctions, orders, decrees, rulings, dues, fines, fees, settlements or
deficiencies (including any interest, penalty, investigation, reasonable legal,
accounting and other professional fees, and other cost or expense incurred in
the investigation, collection, prosecution and defense of any action, suit,
proceeding or claim and amounts paid in settlement) that are imposed upon or
otherwise incurred and actually paid by the Indemnified Party, but not including
indirect, incidental, exemplary, special, consequential or punitive damages
awarded by any Governmental Authority or arbitrator.
"Debt Cancellation Charges" shall mean, with respect to any
Account, the monthly fees charged to the related Borrower with respect to any
Credit Protector Contracts.
"Deductible" shall have the meaning specified in Section
10.05(a).
"Deutsche Bank" shall mean Deutsche Bank Trust Company
Americas (formerly known as Bankers Trust Company), a New York banking
corporation, and its successors and assigns.
7
"Disclosure Schedule" shall mean, with respect to Circuit
City, FNANB and Tyler Funding, on the one hand (the "Seller Disclosure
Schedule"), and Purchaser, on the other hand (the "Purchaser Disclosure
Schedule"), a schedule delivered by one Party (or Parties) to the other Party
(or Parties) on or before the execution and delivery 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 warranties contained in this Agreement; provided, however,
that the mere inclusion of an item in a Disclosure Schedule as an exception to a
representation or warranty will not be deemed 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 or that such item has had, or is reasonably expected to have, a
Business Material Adverse Effect or a Purchaser Material Adverse Effect, as
applicable.
"Distribution Date" shall have the meaning specified in the
Pooling and Servicing Agreement.
"Early Amortization Event" shall have the meaning specified in
the Pooling and Servicing Agreement.
"Eligible Receivable" shall have the meaning specified in the
Pooling and Servicing Agreement.
"Employment Agreements" shall mean individual Contracts for
the employment of any Business Employee pursuant to which the Business Employee
is promised continuing employment for any specified period of time or is
promised severance pay, retention pay or change of control benefits under
specified circumstances; provided, however, that a Business Employee's
participation in any Seller Benefit Plan shall not be deemed to create an
Employment Agreement.
"Environmental Law" shall mean any applicable domestic,
foreign, federal, state or local law (including common law), statute, rule,
regulation, ordinance or other Requirement of Law pertaining to the protection
of human health and safety, the environment or natural resources, including the
Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA")
(42 U.S.C. ss. 9601 et seq.), the Hazardous Material Transportation Act (49
U.S.C. ss. 1801 et seq.), the Federal Water Pollution Control Act (33 U.S.C. ss.
1251 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. ss. 6901 et
seq.), the Clean Air Act (42 U.S.C. ss. 7401 et seq.), the Toxic Substances
Control Act (15 U.S.C. ss. 2601 et seq.), and the environmental provisions of
the Occupational Safety and Health Act all as now or hereafter amended or
supplemented, and the regulations promulgated pursuant thereto, and judicial
interpretations thereof, as well as common law rights of action under theories
of nuisance, trespass and strict liability.
"Environmental Loss" shall mean any loss, cost, damage,
Liability, deficiency, fine, penalty or expense (including reasonable attorneys'
fees, engineering and other professional or expert fees), the cost of any
Remedial Action (voluntarily or involuntarily incurred) and damage to, loss of
the use of or decrease in value of any Purchased Asset arising out of or related
8
to any Adverse Environmental Condition which occurred prior to the Closing Date
and which is or was actionable under any Environmental Laws.
"Excess Funding Account" shall mean the segregated trust
account established and maintained by the Trustee, on behalf of the Trust, for
the benefit of the Certificateholders, pursuant to Section 4.1(f) of the Pooling
and Servicing Agreement.
"Excess Spread Percentage" shall mean the average of the
Excess Spread Percentages (as defined in the Series 2002-1 Supplement) for the
two consecutive Collection Periods preceding the Closing Month.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Exchangeable Transferor Certificate" shall mean the
certificate representing the ownership interest in the Trust not represented by
any Series.
"Excluded Contracts" shall have the meaning specified in
Section 2.01(l)
"Excluded Proprietary Information" shall mean all information,
including information residing in the FNANB Data Warehouse, that does not relate
to a Borrower or an Account.
"Excluded Taxes" shall mean, without duplication, (i) Taxes
(including Transfer Taxes) imposed on any member of the Circuit City Group or
the Circuit City Affiliated Group (including such Taxes attributable to the
income of the Trust) with respect to (A) a Pre-Closing Tax Period or (B) the
portion of a Straddle Period deemed to end before the Closing Date (in the
manner determined pursuant to Section 8.02(c) hereof) and (ii) Taxes imposed on
any member of the Circuit City Group or the Trust under Section 1.1502-6 of the
Treasury Regulations promulgated under the Code (and corresponding provisions of
state, local or foreign law) solely as a result of being a member of any
federal, state, local or foreign affiliated, consolidated, unitary or combined
group for a taxable period ending before the Closing Date; provided, however,
that Excluded Taxes shall not include (a) Taxes attributable to amounts
reflected on the Settlement Date Statement, (b) Taxes resulting from any action
taken on or after the Closing Date by Purchaser or the Trust, except for any
action taken in the ordinary course of business that results in a Tax cost to
Purchaser with respect to a Pre-Closing Tax Period or (c) Taxes attributable to
an adjustment to the Purchase Price made in favor of Purchaser pursuant to
Article IV.
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"FNANB" shall have the meaning specified in the Preamble of
this Agreement.
"FNANB Credit Card Marks" shall mean any of the FNANB marks
identified on Schedule 2.08.
"FNANB Data Warehouse" shall mean any and all Borrower or
Account information (including any such information purchased or otherwise
acquired from third-party sources) in any database maintained by or on behalf of
FNANB, any of its licensees, franchisees or dealers.
9
"Federal Funds Rate" shall mean the Federal Funds target rate
as published in the "Money Rates" column of The Wall Street Journal, Eastern
Edition on the most recent Friday edition prior to any required payment or
settlement date. In the event The Wall Street Journal ceases publication of such
rate, the Federal Funds Rate will be the Intended Federal Funds Rate as
published by the U.S. Federal Reserve Board at its website,
xxxx://xxx.xxxxxxxxxxxxxx.xxx/xxxx/xxxxxxxxx.xxx, or such successor site as it
may designate. If the Federal Funds Rate ceases to be published, the Parties
will designate the successor rate or a similar rate.
"Final Closing Tape" shall mean the Master File tape
reflecting all transactions posted as of the Cut-Off Time.
"Finance Charge Receivables" shall have the meaning specified
in the Pooling and Servicing Agreement.
"Finance Charges" shall have the meaning specified in the
Account Agreement applicable to each Account.
"Financing Statements" shall mean such financing statements as
Purchaser reasonably determines are necessary or appropriate to fully preserve,
maintain and protect the interest of Purchaser in the Purchased Assets and
proceeds thereof.
"GAAP" shall mean generally accepted accounting principles as
in effect in the United State as of the date hereof.
"Gateway Software Licensing Agreement" shall mean the Gateway
Software Licensing Agreement in the form attached as Exhibit O.
"Governmental Authority" shall mean any federal, state or
local domestic, foreign or supranational governmental, regulatory or
self-regulatory authority, agency, court, tribunal, commission or other
governmental, regulatory or self-regulatory entity.
"Guaranties" shall have the meaning specified in Section
7.14(a).
"Hazardous Materials" shall mean any material, substance or
waste that is defined, classified or otherwise regulated as a "hazardous waste,"
"hazardous material," "hazardous substance," "solid waste," "restricted
hazardous waste," "industrial waste," "contaminant," "pollutant," "toxic waste,"
"toxic substance" or term of similar meaning or regulatory effect under any
provision of Environmental Law.
"HSR Act" shall mean the Xxxx Xxxxx Xxxxxx Antitrust
Improvements Act of 1976, as amended.
"Improvements" shall mean all material buildings, structures,
fixtures, building systems and equipment included in the Leased Real Property.
"Indemnified Party" shall have the meaning specified in
Section 10.04(a).
10
"Indemnifying Party" shall have the meaning specified in
Section 10.04(a).
"Indemnity Payments" shall mean amounts payable by the
Indemnifying Party to the Indemnified Party in respect of any Damages for which
such Indemnified Party is entitled to indemnification under this Agreement.
"Insurance Contract" shall have the meaning specified in
Section 5.20(a).
"Intellectual Property Rights" shall mean all (a) trademarks,
service marks, designs, created works, trade secrets, patents, copyrights and
pending applications for any of the foregoing, designs, plans, specifications,
technology, Software, know-how, methods, concepts, and other proprietary rights,
whether or not registered, that are used by FNANB in the conduct of the Credit
Card Business; and (b) rights under any licenses of FNANB to use any of the
foregoing.
"Interchange" shall mean interchange fees, if any, payable to
FNANB, in its capacity as credit card issuer, through the Card Association, with
respect to the Accounts.
"Invested Amount" shall have the meaning specified in the
Pooling and Servicing Agreement.
"Investor Certificate" shall have the meaning specified in the
Pooling and Servicing Agreement.
"Investor Certificateholder" shall have the meaning specified
in the Pooling and Servicing Agreement.
"Knowledge" shall mean, with respect to Circuit City and FNANB
and their respective Affiliates, the actual knowledge and actual knowledge after
due inquiry of the individuals set forth on Exhibit B and, with respect to
Purchaser, shall mean the actual knowledge and actual knowledge after due
inquiry of the individuals set forth on Exhibit C.
"Leased Real Property" shall mean the leasehold or
subleasehold estates and other rights to use or occupy any land, building,
structures, Improvements, fixtures or other interest in real property held by
Sellers or any of their Affiliates that is used or held primarily for use in the
Credit Card Business and is set forth on Schedule 1.01-3.
"Leases" shall mean all leases, subleases, licenses or other
agreements, including all amendments, extensions, renewals, guaranties or other
agreements with respect thereto, pursuant to which the Sellers use or hold any
Leased Real Property.
"Liability" or "Liabilities" shall mean any debt, liability,
commitment, obligation, claim or cause of action of any kind whatsoever, whether
due or to become due, known or unknown, accrued or fixed, absolute or
contingent, or otherwise.
"Licensing Agreement" shall mean the Licensing Agreement in
the form attached as Exhibit D.
11
"Lien" shall mean, with respect to any property, any security
interest, mortgage, pledge, hypothecation, assignment, participation, deposit
arrangement, deed of trust, encumbrance, lien (statutory or other), preference,
privity right or interest or other security agreement or preferential
arrangement of any kind or any nature whatsoever, including any conditional sale
or other title retention agreement, and any financing lease having substantially
the same economic effect as any of the foregoing.
"Master File" shall mean the master file maintained by TSYS on
behalf of FNANB with respect to the Accounts, including identification and other
customer data and Account information, the names and addresses of Borrowers with
respect to the Accounts and any and all Account adjustments made by or on behalf
of FNANB, in substantially the form of Exhibit J attached hereto.
"OCC" shall mean the Office of the Comptroller of the
Currency.
"Operating Regulations" shall mean the bylaws, rules and
regulations of the Card Association.
"Other Assumed Liabilities" shall mean all Liabilities set
forth in Schedule 2.04(j).
"Other Retained Assets" shall mean all assets set forth in
Schedule 2.03(i).
"Outstanding Private Series" shall mean (i) the Investor
Certificates issued pursuant to the Series 1998-2 Supplement dated as of
November 12, 1998, as amended, among Tyler Funding, as Transferor, FNANB, as
Servicer, and Deutsche Bank, as Trustee, and (ii) the Investor Certificates
issued pursuant to the Series 2003-1 Supplement dated as of February 28, 2003
among Tyler Funding, as Transferor, FNANB, as Servicer, and Deutsche Bank, as
Trustee.
"Outstanding Public Series" shall mean the Series 2002-1
Certificates and the Series 2003-2 Certificates.
"Outstanding Series" shall mean, collectively, all Outstanding
Public Series and all Outstanding Private Series.
"Permitted Lien" shall mean any Lien (i) for Taxes,
assessments and other governmental charges that are not yet due and payable;
(ii) deemed to be created by this Agreement; or (iii) created by the
Securitization Documents.
"Person" shall mean any individual, corporation, business
trust, partnership, association, limited liability company, unincorporated
organization or similar organization, or any Governmental Authority.
"Pooling and Servicing Agreement" shall mean the Amended and
Restated Master Pooling and Servicing Agreement dated as of December 31, 2001
among Tyler Funding, as Transferor, FNANB, as Transferor under the Prior Pooling
and Servicing Agreement and as Servicer, and Deutsche Bank, as Trustee, as
amended by Amendment No. 1 to Amended and Restated Master Pooling and Servicing
Agreement dated as of November 30, 2002, Amendment
12
No. 2 to Amended and Restated Master Pooling and Servicing Agreement dated as of
February 6, 2003 and Amendment No. 3 to Amended and Restated Master Pooling and
Servicing Agreement dated as of April 28, 2003, in each case among Tyler
Funding, as Transferor, FNANB, as Servicer, and Deutsche Bank, as Trustee.
"Post-Closing Tax Period" shall mean any taxable period
beginning on or after the Closing Date.
"Pre-Closing Tax Period" shall mean any taxable period ending
before the Closing Date.
"Preliminary Valuation Date" shall have the meaning specified
in Section 3.02.
"Preliminary Valuation Date Statement" shall mean a statement,
substantially in the form of Exhibit H attached hereto, dated the Preliminary
Valuation Date, that contains FNANB's computation of the Purchase Price in
accordance with Section 2.06, determined as of the Preliminary Valuation Date.
"Prior Pooling and Servicing Agreement" shall mean the Master
Pooling and Servicing Agreement dated as of October 4, 1994, as amended prior to
December 31, 2001, between FNANB, as Transferor and as Servicer, and Deutsche
Bank, as Trustee.
"Program Agreement" shall mean the Consumer Credit Card
Program Agreement, dated as of the date hereof between Circuit City and
Purchaser, substantially in the form of Exhibit E attached hereto.
"Protected Party" shall have the meaning specified in Section
7.04(a).
"Purchase Price" shall have the meaning specified in Section
2.06.
"Purchased Assets" shall mean the items listed in Section 2.01
together with the items listed in Section 2.02.
"Purchaser" shall mean Bank One Delaware, National
Association.
"Purchaser Disclosure Schedule" shall have the meaning
specified in the definition of Disclosure Schedule.
"Purchaser Indemnified Parties" shall have the meaning
specified in Section 10.02.
"Purchaser Material Adverse Effect" shall mean: (i) any
change, event or effect that is, or would reasonably be expected to be,
individually or in the aggregate, materially adverse to the business, assets,
results of operations or financial condition of the credit card business of
Purchaser, taken as a whole, excluding any such change, event or effect arising
out of or in connection with or resulting from: (A) general economic or business
conditions or changes therein; (B) adverse developments in economic, business or
financial conditions generally affecting the credit card industry, the consumer
finance industry, the insurance industry and/or
13
the financial services industry to the extent such adverse developments do not
have a disproportionate effect on the credit card business of Purchaser relative
to other entities operating businesses similar to Purchaser; (C) financial
market conditions, including interest rates, or changes therein; (D) changes in
law, GAAP or regulatory accounting principles after the date of this Agreement;
or (E) any action, omission, change, effect, circumstance or condition
contemplated by this Agreement, or attributable to the execution, performance or
announcement of this Agreement or the transactions contemplated hereby; or (ii)
a change or effect reasonably expected to materially impair or materially delay
the ability of Purchaser or any of its Affiliates to perform timely their
obligations under this Agreement, the Related Agreements or the Securitization
Transfer Agreements or to consummate the transactions contemplated hereby or
thereby on a timely basis.
"Purchaser Permits" shall mean all licenses (including any
licenses to participate in the Circuit City Plus VISA and Circuit City Credit
Card program), franchises, permits, certificates, approvals or other similar
authorizations affecting, or relating in any way to, the Purchaser's Credit Card
Business.
"Rating Agencies" shall mean Standard & Poor's Ratings
Service, a Division of The XxXxxx-Xxxx Companies, Inc., Xxxxx'x Investors
Service, Inc. and Fitch, Inc.
"Receivable" shall mean any amount owing (after giving effect
to Credit Balances) by a Borrower under an Account from time to time, including
amounts owing for the purchase of goods and services and for cash advances,
Credit Insurance Charges, Debt Cancellation Charges, Finance Charges and any and
all other fees and charges assessed on such Account.
"Receivables Purchase Agreement" shall mean the Receivables
Purchase Agreement dated December 31, 2001 between FNANB, as Seller, and Tyler
Funding, as Purchaser, as amended by Amendment No. 1 to Receivables Purchase
Agreement dated as of April 28, 2003 between FNANB, as Seller, and Tyler
Funding, as Purchaser.
"Receiving Party" shall have the meaning specified in Section
7.04(a).
"Registration Statement" shall mean the Registration Statement
on Form S-3 (Registration Nos. 333-81936 and 333-81936-01), including the
amendments thereto and the form of prospectus contained therein, filed under the
Securities Act with respect to the Trust.
"Related Agreements" shall mean the Assignment and Assumption
Agreement, Licensing Agreement, Gateway Software License Agreement, Transition
Services Agreement, Sublease of the Leased Real Property, Richmond Sublease and
Program Agreement.
"Release" shall mean any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal or leaching into the
outdoor environment of Hazardous Materials.
"Remedial Action" shall mean any action required by any
Governmental Authority or Environmental Law to (i) clean up, remove, treat or in
any other way address any Hazardous Material; (ii) prevent the Release of any
Hazardous Material so it does not endanger
14
or threaten to endanger public health or welfare or the indoor or outdoor
environment; (iii) perform pre-remedial studies and investigations or
post-remedial monitoring and care; or (iv) obtain compliance with Environmental
Laws.
"Relevant UCC State" shall mean all jurisdictions where a UCC
filing is required to perfect and maintain the security interest of the Trust in
the Receivables and the proceeds thereof.
"Required Securitization Amendments" shall mean the amendments
to the Securitization Documents and the amendments to the documents related to
the Outstanding Private Series, in each case in a form reasonably satisfactory
to Sellers and, in the case of the amendments to the Securitization Documents,
in a form reasonably satisfactory to Purchaser, required for Sellers, Circuit
City, and Purchaser to consummate the transactions contemplated hereby and by
the Securitization Transfer Agreements without violating the terms of any
Securitization Document or the terms of any document relating to any Outstanding
Private Series.
"Requirements of Law" shall mean, with respect to any Person,
any law (including common law), ordinance, judgment, order, decree, injunction,
permit, statute, treaty, rule or regulation or determination of (or an agreement
with) an arbitrator or a Governmental Authority or Card Association (including
the Operating Regulations), in each case applicable to or binding on that Person
or any amount of its property or assets or to which such Person, its property or
assets is subject.
"Retained Assets" shall have the meaning specified in Section
2.03.
"Retained Liabilities" shall have the meaning specified in
Section 2.05.
"Richmond Sublease" shall mean the agreement referred to in
Section 9.02(a)(v).
"SEC" shall mean the U.S. Securities and Exchange Commission
and its successors.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Securitization Cash Collateral" shall mean all cash and cash
equivalents maintained by or for the benefit of the Trust as of the Cut-Off Time
in the Spread Accounts and any securities, instruments or other investments in
which amounts on deposit in the Spread Accounts are invested as of the Cut-Off
Time.
"Securitization Documents" shall mean the Pooling and
Servicing Agreement, the Series 2002-1 Supplement and the Series 2003-2
Supplement.
"Securitization Retained Interests" shall mean all right,
title, and interest of Tyler Funding in the Trust as of the Closing Date, which
right, title and interest is represented by the Exchangeable Transferor
Certificate, the Series 2002-1 Retained Certificates and the Series 2003-2
Retained Certificates.
15
"Securitization Transfer Agreements" shall mean the transfer
agreements and other related documents (other than the Required Securitization
Amendments), in each case in a form reasonably satisfactory to Sellers and
Purchaser, required for Sellers, Circuit City and Purchaser to consummate the
transactions contemplated hereby.
"Seller Benefit Plan" shall mean each deferred compensation
and each bonus or other incentive compensation, equity compensation plan,
"welfare" plan, fund or program (within the meaning of Section 3(1) of ERISA);
"pension" plan, fund or program (within the meaning of Section 3(2) of ERISA);
and each other employee benefit plan, fund, program, agreement or arrangement,
in each case, that is sponsored, maintained or contributed to or required to be
contributed to by Circuit City or by any trade or business, whether or not
incorporated (an "ERISA Affiliate"), that together with Circuit City would be
deemed a "single employer" within the meaning of Section 4001(b) of ERISA, or to
which Circuit City or an ERISA Affiliate is party, whether written or oral, for
the benefit of any Business Employee.
"Seller Business Documents" shall have the meaning specified
in Section 5.06(b).
"Seller Disclosure Schedule" shall have the meaning specified
in the definition of Disclosure Schedule.
"Seller Indemnified Parties" shall have the meaning specified
in Section 10.03.
"Seller Permits" shall mean all licenses (including any
licenses to participate in the Circuit City Plus VISA Account or Circuit City
Credit Card Account program), franchises, permits, certificates, approvals or
other similar authorizations affecting, or relating in any way to, the Purchased
Assets or the Assumed Liabilities.
"Seller Pro Rata Share" shall mean the percentage equivalent
of a fraction, (i) the numerator of which is the number of days from and
including the first day of the Closing Month to but excluding the Closing Date
and (ii) the denominator of which is the total number of days in the Closing
Month.
"Sellers' Reaging Policies" shall mean the reaging policies
set forth in Exhibit I hereto.
"Sellers" shall mean FNANB and Tyler Funding.
"Series" shall have the meaning specified in the Pooling and
Servicing Agreement.
"Series 2002-1 Certificates" shall mean the Series 2002-1
Rated Certificates and the Series 2002-1 Retained Certificates.
"Series 2002-1 Early Amortization Event" shall mean an Early
Amortization Event with respect to the Series 2002-1 Certificates.
"Series 2002-1 Rated Certificates" shall mean (i) the Class A
Floating Rate Asset Backed Certificates, Series 2002-1, (ii) the Class B
Floating Rate Asset Backed Certificates,
16
Series 2002-1, and (iii) the Collateralized Trust Obligations, Series 2002-1, in
each case issued pursuant to the Series 2002-1 Supplement.
"Series 2002-1 Retained Certificates" shall mean (i) the Class
D Floating Rate Asset Backed Certificates, Series 2002-1, and (ii) the Class E
Floating Rate Asset Backed Certificates, Series 2002-1, in each case issued
pursuant to the Series 2002-1 Supplement.
"Series 2002-1 Spread Account" shall mean the segregated trust
account established and maintained by the Servicer in the name of the Trustee,
for the benefit of the holders of the Collateralized Trust Obligations, Series
2002-1, and the holders of the Class D Floating Rate Asset Backed Certificates,
Series 2002-1, pursuant to Section 4.12 of the Series 2002-1 Supplement.
"Series 2002-1 Supplement" shall mean the Series 2002-1
Supplement dated as of May 7, 2002 among Tyler Funding, as Transferor, FNANB, as
Servicer, and Deutsche Bank, as Trustee.
"Series 2003-2 Certificates" shall mean the Series 2003-2
Rated Certificates and the Series 2003-2 Retained Certificates.
"Series 2003-2 Early Amortization Event" shall mean an Early
Amortization Event with respect to the Series 2003-2 Certificates.
"Series 2003-2 Rated Certificates" shall mean (i) the Class A
Floating Rate Asset Backed Certificates, Series 2003-2, (ii) the Class B
Floating Rate Asset Backed Certificates, Series 2003-2, and (iii) the
Collateralized Trust Obligations, Series 2003-2, in each case issued pursuant to
the Series 2003-2 Supplement.
"Series 2003-2 Retained Certificates" shall mean the Class D
Floating Rate Asset Backed Certificates, Series 2003-2, issued pursuant to the
Series 2003-2 Supplement.
"Series 2003-2 Spread Account" shall mean the segregated trust
account established and maintained by the Servicer in the name of the Trustee,
for the benefit of the holders of the Collateralized Trust Obligations, Series
2003-2, pursuant to Section 4.12 of the Series 2003-2 Supplement.
"Series 2003-2 Supplement" shall mean the Series 2003-2
Supplement dated as of April 25, 2003 among Tyler Funding, as Transferor, FNANB,
as Servicer, and Deutsche Bank, as Trustee.
"Servicer" shall mean FNANB, in its capacity as servicer under
the Securitization Documents before the Closing Date, and Purchaser in its
capacity as servicer under the Securitization Documents on and after the Closing
Date.
"Servicer Default" shall have the meaning specified in Section
10.1 of the Pooling and Servicing Agreement.
17
"Servicer Rights" shall mean all rights of an entity to act as
the Servicer under the Securitization Documents and to collect the corresponding
fees and charges under the Securitization Documents.
"Settlement Date" shall mean the date, mutually agreed to by
FNANB (on behalf of itself, Tyler Funding and Circuit City) and Purchaser but in
any event not later than seventy-five (75) days after the Closing Date, on which
the parties make any adjustment to the Purchase Price as contemplated in Section
4.02.
"Settlement Date Statement" shall mean a statement,
substantially in the form of Exhibit F attached hereto, that contains the
information and calculations required by Section 4.02(a).
"Software" shall mean any computer software, including source
code, object code, and executable electronic files; together with any related
user interfaces, and any related user manuals or other documentation relating to
the functionality of such computer software.
"Spread Accounts" shall mean the Series 2002-1 Spread Account
and the Series 2003-2 Spread Account.
"Straddle Period" shall mean any taxable period that begins
before and ends after the Closing Date.
"Sublease of the Leased Real Property" shall mean the Sublease
referred to in Section 9.02(a)(iv).
"Subsequent Valuation Date" shall have the meaning given
thereto in Section 3.02(b).
"Subsequent Valuation Date Statement" shall mean a statement,
substantially in the form of Exhibit H attached hereto, dated the Subsequent
Valuation Date, that contains FNANB's computation of the Purchase Price in
accordance with Section 2.06, determined as of the Subsequent Valuation Date.
"Subsidiaries" shall mean, with respect to any Person, any
other Person of which the first Person (either alone or through or together with
any other Subsidiary), owns, directly or indirectly, a majority of the
outstanding equity securities or securities carrying a majority of the voting
power in the election of the board of directors or other governing body of such
Person.
"Tax" or "Taxes" shall mean any federal, state, local or
foreign net income, gross income, gross receipts, windfall profit, severance,
property, production, sales, use, license, excise, franchise, employment,
payroll, withholding, alternative or add-on minimum, ad valorem, value added,
transfer, stamp, or environmental tax, or any other tax of any kind whatsoever,
together with any interest or penalty, addition to tax or additional amount
imposed thereon by any Governmental Authority.
"Tax Benefit" shall mean the Tax effect of any Benefit Item,
including any interest with respect thereto or interest that would have been
payable but for such item.
18
"Tax Proceeding" shall mean any Tax audit, contest,
litigation, defense or other tax proceeding with or against any Governmental
Authority.
"Tax Return" shall mean any return, declaration, report, claim
for refund, information return or similar statement filed or required to be
filed with any Governmental Authority with respect to any Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"Termination Date" shall have the meaning specified in Section
11.01(c).
"Transfer Taxes" shall have the meaning specified in Section
8.05.
"Transition Services Agreement" shall mean the Transition
Services Agreement to be entered into at the Closing, which shall incorporate
the terms set forth in the term sheet attached hereto as Exhibit G.
"Trust" shall have the meaning specified in the Recitals of
this Agreement.
"Trustee" shall mean Deutsche Bank, in its capacity as Trustee
under the Pooling and Servicing Agreement.
"TSYS" shall mean Total Systems Services, Inc.
"Tyler Funding" shall have the meaning specified in the
Preamble of this Agreement.
"Tyler Funding Interest Rate Caps" shall mean the 1992 ISDA(R)
Master Agreement dated as of May 7, 2002, as supplemented by the schedule and
the credit support annex thereto, between Tyler Funding and Wachovia Bank, as
further supplemented by (A) the Confirmation dated as of May 7, 2002 (relating
to an initial notional amount of $217,500,000) between Tyler Funding and
Wachovia Bank, (B) the Confirmation dated as of May 7, 2002 (relating to an
initial notional amount of $34,500,000) between Tyler Funding and Wachovia Bank
and (C) the Confirmation dated as of May 7, 2002 (relating to an initial
notional amount of $28,500,000) between Tyler Funding and Wachovia Bank.
"UCC" shall mean the Uniform Commercial Code (or similar
personal property law) in effect in the applicable jurisdiction.
"Unauthorized Use" shall mean use that was made by a Person
other than the Borrower who did not have actual, implied or apparent authority
for such use of the Account and from which the Borrower received no benefit.
"Unreasonable Condition" shall mean any modification,
divestiture, restriction or condition imposed in connection with obtaining any
approval, registration, permit, consent or other authorization required to be
received from an applicable Governmental Authority in order to satisfy the
conditions set forth in Article IX that would result in loss of benefits or
costs to one or both Parties that are significant in amount.
19
"VISA" shall mean Visa U.S.A., Inc.
"VISA Agreement" shall mean the agreement dated May 20, 1992,
as amended, by and between FNANB and VISA providing for the issuance by FNANB of
consumer VISA Credit Cards.
"Wachovia Bank" shall mean Wachovia Bank, National
Association, a national banking association.
SECTION 1.02. Construction. The Parties acknowledge that they and their
counsel have participated jointly in the negotiation and drafting of this
Agreement. If an ambiguity or question of intent or interpretation arises, no
rule of construction to the effect that any ambiguities are to be resolved
against the drafting Party shall be employed in the interpretation hereof, and
this Agreement or any amendment hereto shall be construed as if drafted jointly
by the Parties. Any references to any agreement defined herein shall be deemed
to include reference to any amendment, restatement, or other modification made
thereto in accordance with the terms thereof. Any reference to any federal,
state, local, or foreign statute or law shall be deemed also to refer to all
rules and regulations promulgated thereunder, unless the context requires
otherwise. The words "include," "includes" and "including" shall mean, in each
case, "including without limitation." Words (including capitalized terms defined
herein) in the singular shall be held to include the plural and vice versa as
the context requires. The words "herein," "hereinafter," "hereunder" and words
of similar import used in this Agreement shall, unless otherwise stated, refer
to this Agreement as a whole and not to any particular provision of this
Agreement. As used herein, accounting terms not defined or to the extent not
defined shall have the meanings given to them under GAAP. All references to "$"
or "dollars" in this Agreement and the other agreements contemplated hereby
shall refer to United States dollars (unless otherwise specified expressly).
References to any Person are also intended to include the successors and
permitted assigns of such Person.
ARTICLE II
PURCHASE AND SALE
SECTION 2.01. Sale by FNANB. On the Closing Date, and subject to the terms
and conditions of this Agreement, FNANB shall sell, assign, transfer and convey
to Purchaser, and Purchaser shall purchase, acquire and accept from FNANB, free
and clear of all Liens other than Permitted Liens, all of FNANB's right, title
and interest in, to and under all of the following:
(a) all Accounts;
(b) all Receivables existing as of or created after the Cut-Off Time, all
monies due or to become due, including Accrued Interest, and all amounts
received with respect to such Receivables, all proceeds of such Receivables and
all Interchange payable with respect to transactions occurring after the Cut-Off
Time;
(c) each Account Agreement;
(d) each Credit Card and blank convenience check with respect to any
Account;
20
(e) the Books and Records;
(f) the Servicer Rights (to the extent set forth in the Securitization
Transfer Agreements);
(g) the Securitization Documents (to the extent set forth in the
Securitization Transfer Agreements);
(h) [INTENTIONALLY OMITTED];
(i) the Intellectual Property Rights other than the Intellectual Property
Rights set forth on Schedule 2.01(i);
(j) the equipment, furniture, fixtures, office supplies and other tangible
personal property set forth in Schedule 2.01(j) (the "Fixed Assets");
(k) all rights to Tax refunds (or credits) related to the operations of the
Credit Card Business or to the Purchased Assets or the Trust (or their
respective assets) after the Closing Date;
(l) the Contracts listed in Schedule 2.01(l)(1) (the "Assumed Contracts")
but excluding the Contracts set forth in Schedule 2.01(l)(2) (the "Excluded
Contracts");
(m) the Master File;
(n) the Acquired Borrower Information;
(o) the ICA numbers and bank identification numbers ("BIN") relating to the
Accounts;
(p) all rights, claims, causes of action and suits that FNANB has or may
have against any third party to the extent they relate to the Assumed
Liabilities;
(q) all good will associated with the Accounts including amortizable
intangible assets;
(r) all inventories and other goods in stock and periodic statements,
plastics, applications and other supplies used or held for use by FNANB in
connection with the Accounts or the Credit Card Business;
(s) [INTENTIONALLY OMITTED];
(t) the pro rata portion of periodic fees, if any, associated with the
Accounts relating to any period following the Cut-Off Time; and
(u) any other rights or assets solely and directly relating to the
foregoing.
SECTION 2.02. Sale by Tyler Funding. On the Closing Date, and subject to
the terms and conditions of this Agreement, Tyler Funding shall sell, assign,
transfer and convey to Purchaser, and Purchaser shall purchase, acquire and
accept from Tyler Funding, free and
21
clear of all Liens other than Permitted Liens, all of Tyler Funding's right,
title and interest in, to and under all of the following:
(a) all Receivables existing as of or created after the Cut-Off Time, all
monies due or to become due, including Accrued Interest, and all amounts
received with respect to such Receivables, all proceeds of such Receivables and
all Interchange payable with respect to transactions occurring after the Cut-Off
Time;
(b) the Securitization Cash Collateral;
(c) the Securitization Retained Interests (to the extent set forth in the
Securitization Transfer Agreements);
(d) the Securitization Documents (to the extent set forth in the
Securitization Transfer Agreements);
(e) the Tyler Funding Interest Rate Caps;
(f) all rights to Tax refunds (or credits) related to the operations of the
Credit Card Business or to the Purchased Assets or the Trust (or their
respective assets) after the Closing Date; and
(g) any and all property of the Trust and all other rights or assets solely
and directly relating to the foregoing.
SECTION 2.03. Retained Assets. FNANB and Tyler Funding, as the case may be,
shall retain ownership of their existing right, title and interest in, to and
under the following assets (the "Retained Assets"), which shall not be included
as Purchased Assets:
(a) cash-on-hand (other than any xxxxx cash-on-hand at the Leased Real
Property) and cash and cash equivalents in bank accounts maintained by FNANB
and/or Tyler Funding related to the operation of the Credit Card Business or
otherwise, but excluding (i) any Collections of Finance Charge Receivables
allocated to either Outstanding Public Series with respect to the period from
and including the first day of the Closing Month to but excluding the Closing
Date, (ii) any Class D Subordinated Principal Collections or Class E
Subordinated Principal Collections (in each case as defined in the Series 2002-1
Supplement) required to be deposited into the Collection Account pursuant to
Section 2.09(c) of this Agreement, (iii) any Class D Subordinated Principal
Collections (as defined in the Series 2003-2 Supplement) required to be
deposited into the Collection Account pursuant to Section 4.2(b) of the Series
2003-2 Supplement with respect to the period from and including the first day of
the Closing Month to but excluding the Closing Date, (iv) any Securitization
Cash Collateral and (v) any other cash or cash equivalents allocated to either
Outstanding Public Series with respect to the period from and including the
first day of the Closing Month to but excluding the Closing Date required by the
Securitization Documents to be deposited on or before the Closing Date into the
Collection Account, the Excess Funding Account (as defined in the Pooling and
Servicing Agreement), either Spread Account or any other account established for
the benefit of the holders of the Series 2002-1 Certificates or the Series
2003-2 Certificates;
22
(b) all equipment, furniture, fixtures and other tangible personal
property, other than as provided in Schedule 2.01(j);
(c) all rights to Tax refunds (or credits) related to the operations of the
Credit Card Business or to the Purchased Assets or the Trust (or their
respective assets) before the Closing Date, or otherwise attributable to Taxes
for which Circuit City or Sellers or any successors-in-interest thereto are
liable pursuant to this Agreement;
(d) (1) all assets not referenced in Section 2.01 or Section 2.02 and (2)
all assets not used or held for use in the Credit Card Business, including: (i)
all assets, contractual rights and other property (whether real or personal and
whether tangible or intangible) used or held for use in or relating to the
retail merchandizing businesses of Circuit City or any of its Affiliates; (ii)
all of the capital stock or equivalent ownership interests of any Subsidiary or
Affiliate of Circuit City; (iii) any assets held in Seller Benefit Plans; (iv)
subject to Section 2.08 and the Licensing Agreement, the FNANB Credit Card Marks
and any Intellectual Property Rights set forth in Schedule 2.01(i); (v) Seller
Permits; (vi) Excluded Contracts and other Contracts not entered into primarily
in connection with the Credit Card Business; (vii) any assets relating
exclusively to FNANB's non private label and non co-branded credit card business
and operations; (viii) the Leases; and (ix) all rights, claims, causes of action
and suits that FNANB has or may have against any third party to the extent they
relate to the Retained Liabilities;
(e) all insurance covering Retained Liabilities;
(f) all rights under the Account Agreements or any of the other Purchased
Assets to reimbursements under such agreements that relate to periods before
Closing, and any indemnification, hold harmless or similar rights in favor of
FNANB or its Affiliates relating to the conduct of the Credit Card Business
before the Closing;
(g) all rights to any security deposits or other amounts deposited with any
state or other jurisdiction or regulatory authority in connection with the
qualification, certification, licensing or permitting of FNANB or Tyler Funding;
(h) the Circuit City Data Warehouse;
(i) the Other Retained Assets as set forth in Schedule 2.03(i).
SECTION 2.04. Assumed Liabilities. On the Closing Date, Purchaser shall
assume and agree to pay, perform and discharge, and shall pay, perform and
discharge as they become due, the following Liabilities of Sellers (the "Assumed
Liabilities"):
(a) all obligations and Liabilities of Sellers to Borrowers under the
Account Agreements that exist as of, or are incurred or accrue after, the
Cut-Off Time, other than any such obligation or Liability that arises from any
breach or default or violations of any Requirements of Law by Sellers occurring
before the Cut-Off Time;
(b) all fees and expenses relating to the Accounts that are incurred or
accrue after the Cut-Off Time;
23
(c) all fees, normal operating assessments and other charges of the Card
Association relating to the Accounts that are incurred or accrue after the
Cut-Off Time except for those fees and charges (i) arising from FNANB's or any
of its Affiliates' violation prior to the Cut-Off Time of any Operating
Regulation or (ii) arising from or relating to any special assessments with
respect to periods up to and including the Cut-Off Time;
(d) all obligations and Liabilities of FNANB under the terms of the
Securitization Documents that are incurred or accrue after the Cut-Off Time;
(e) all obligations and Liabilities of Tyler Funding under the terms of the
Securitization Documents and the Tyler Funding Interest Rate Caps that are
incurred or accrue after the Cut-Off Time;
(f) except to the extent addressed under clauses (a) through (c) above, all
obligations and Liabilities under each of the Assumed Contracts that exist as
of, or are incurred or accrue after, the Cut-Off Time, other than any such
obligation or Liability that arises from any breach, default or occurrence under
the Assumed Contracts by FNANB or any of its Affiliates prior to the Cut-Off
Time;
(g) all obligations and Liabilities assumed pursuant to Section 7.18;
(h) all obligations and Liabilities for Taxes relating to the Credit Card
Business, the Purchased Assets, or the Trust (or their respective assets) to the
extent provided in Article VIII;
(i) all other obligations and Liabilities arising out of or relating to the
Purchased Assets or the Credit Card Business to the extent attributable to acts
or occurrences arising after the Cut-Off Time other than any such obligation or
Liability that arises from any act of Circuit City or Sellers after the Cut-Off
Time; and
(j) the Other Assumed Liabilities as set forth in Schedule 2.04(j).
Except as specifically provided above, the Purchaser shall not assume any
liability, commitment or any other obligation of Circuit City, FNANB and Tyler
Funding, whether absolute, contingent or otherwise, known or unknown of any
nature, kind or description whatsoever, arising from or related to the operation
of the Sellers' business prior to or after the Cut-Off Time. FNANB hereby agrees
that during the period beginning on the Closing Date and ending on the 150th day
after the Closing Date (i) it shall be solely responsible for any draft
retrievals, chargebacks, representments or incorrectly posted transactions that
occur prior to the Cut-Off Time and that relate to an Account that bears FNANB's
ICA number or BIN, (ii) it shall be solely responsible for any draft retrievals,
chargebacks, representments or incorrectly posted transactions that occur prior
to the Closing Date and that relate to an Account that bears FNANB's ICA number
or BIN, and (iii) it shall be responsible for all expenses related to the
Accounts and activity thereon prior to the Cut-Off Time. FNANB shall be
responsible for all expenses charged by TSYS for preparing the Final Closing
Tape.
SECTION 2.05. Retained Liabilities. Purchaser shall not assume, or be
deemed to have assumed, and Circuit City or Sellers shall be solely and
exclusively liable with respect to, all Liabilities of Sellers other than the
Assumed Liabilities (the "Retained Liabilities")
24
(it being understood that the Retained Liabilities shall include all obligations
and Liabilities of Sellers with respect to the Circuit City Interest Rate Caps
and all obligations and Liabilities of Sellers under the documents relating to
the Outstanding Private Series).
SECTION 2.06. Purchase Price. The purchase price for the Purchased Assets
(the "Purchase Price") shall be an amount, determined as of the Cut-Off Time,
calculated as set forth in Exhibit H.
SECTION 2.07. Allocation of Purchase Price.
(a) Purchaser and Circuit City shall endeavor in good faith to agree,
within 120 days after the Closing Date, on an allocation of the total
consideration among the Purchased Assets (the "Allocation Statement"). If
Purchaser and Circuit City have not agreed on the Allocation Statement by such
date, Purchaser and Circuit City shall each use its own allocation. The
Allocation Statement, if any, shall be prepared in accordance with Section 1060
of the Code and the rules and regulations promulgated thereunder.
(b) Provided Purchaser and Circuit City agree in writing to the allocation
of the total consideration among the Purchased Assets pursuant to Section
2.07(a), Purchaser and Circuit City and FNANB agree to report such allocation in
accordance with the Allocation Statement and agree to act in a manner consistent
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 Tax authority) and in the course of any
Tax audit, Tax review or Tax litigation relating thereto; provided that
Purchaser, Circuit City and FNANB shall cooperate with each other and use
commercially reasonable efforts to uphold the allocation of the total
consideration among the Purchased Assets as set forth in the Allocation
Statement in the event that such allocation is challenged by any Governmental
Authority.
(c) Purchaser and Circuit City and FNANB shall promptly inform one another
of any challenge by any Governmental Authority to any allocation made pursuant
to this Section 2.07 and agree to consult and keep one another informed with
respect to the status of, and any discussion, proposal or submission with
respect to, such challenge.
SECTION 2.08. Use of Names and Trademarks.
(a) Limited Rights. FNANB and Purchaser agree that Purchaser may replace
Borrower's Credit Cards at any time after the Closing with Credit Cards not
bearing any of the FNANB Credit Card Marks; provided, however, Purchaser shall
be required to replace the Borrowers' Credit Cards with Credit Cards not bearing
any of the FNANB Credit Card Marks upon the earlier of (x) reissuance of such
Credit Cards, and (y) twenty-four (24) months after the Closing Date. Purchaser
shall have the right to use the FNANB Credit Card Marks pursuant to the terms of
the Licensing Agreement.
(b) Rights Reserved by FNANB. It is expressly agreed that, except as
contemplated by Section 2.08(a) and the Licensing Agreement, Purchaser is not
purchasing or acquiring any right, title or interest in the FNANB Credit Card
Marks. Purchaser acknowledges that FNANB
25
or its Affiliates exclusively own each of the FNANB Credit Card Marks and
goodwill related thereto and symbolized thereby. Purchaser shall not combine the
FNANB Credit Card Marks with any other xxxx or term (other than those of VISA)
except as permitted by the Licensing Agreement, and shall not use the FNANB
Credit Card Marks in any manner that will materially damage or diminish FNANB's
or its Affiliates' goodwill. Purchaser shall promptly upon receipt of written
notice from FNANB, which notice shall provide detailed information about
inconsistent usage of the FNANB Credit Card Marks, cease any act or practice
that in FNANB's good faith reasonable opinion could reasonably be expected to
damage or diminish the goodwill of FNANB or its Affiliates. In the event any
provision of this Section 2.08 shall conflict with the provisions of the
Licensing Agreement, the provisions of the Licensing Agreement shall govern.
SECTION 2.09. Collections Adjustment Amount.
(a) FNANB shall deposit into the Collection Account, on or before the
Closing Date, all Collections of Finance Charge Receivables allocated to either
Outstanding Public Series with respect to the period from and including the
first day of the Closing Month to but excluding the Closing Date
(notwithstanding any right that FNANB may have under the Securitization
Documents to cease depositing such Collections during such period or to deposit
such Collections on a net basis). If FNANB receives any Collections with respect
to the Closing Date or any day after the Closing Date, it shall promptly remit
such Collections to Purchaser as soon as practicable and in any event no later
than the Business Day following such receipt.
(b) On the Distribution Date in the month following the Closing Month,
Purchaser shall, subject to Section 2.09(e), pay to Sellers the following
amounts:
(i) an amount equal to the Seller Pro Rata Share of the amount paid to
Purchaser (as holder of the Exchangeable Transferor Certificate) on such
Distribution Date pursuant to Section 4.1(h) of the Pooling and Servicing
Agreement; plus
(ii) an amount equal to the Seller Pro Rata Share of the amount
included in Available Principal Collections (as defined in the Series
2002-1 Supplement) for such Distribution Date pursuant to Section
4.6(a)(iii), Section 4.8(a) (to the extent that such section relates to
Section 4.6(a)(iii)) and Sections 4.8(b), (d), (e), (i), (j), (k), (l), (p)
and (q) of the Series 2002-1 Supplement; plus
(iii) an amount equal to the Seller Pro Rata Share of the amount
included in Available Principal Collections (as defined in the Series
2003-2 Supplement) for such Distribution Date pursuant to Section
4.6(a)(iii), Section 4.8(a) (to the extent that such section relates to
Section 4.6(a)(iii)) and Sections 4.8(b), (d), (e), (i), (j), (m) and (n)
of the Series 2003-2 Supplement; plus
(iv) an amount equal to the amount paid to Purchaser (as holder of the
Exchangeable Transferor Certificate) on such Distribution Date pursuant to
Section 4.1(b) of the Pooling and Servicing Agreement (less any portion of
such amount
26
attributable to amounts deposited by Purchaser into the Collection Account
after the Closing Date); plus
(v) an amount equal to the Seller Pro Rata Share of the amount paid to
Purchaser (as Servicer) on such Distribution Date pursuant to Sections
4.6(a)(ii), (b)(ii), (c)(ii), (d)(i) and (e)(i), Section 4.8(a) (to the
extent that such section relates to Section 4.6(a)(ii)), Section 4.8(c) (to
the extent that such section relates to Section 4.6(b)(ii)) and Sections
4.8(h) and (o) of the Series 2002-1 Supplement (including any amounts
payable pursuant to any such section but netted against deposits to the
Collection Account); plus
(vi) an amount equal to the Seller Pro Rata Share of the amount paid to
Purchaser (as Servicer) on such Distribution Date pursuant to Sections
4.6(a)(ii), (b)(ii), (c)(ii) and (d)(i), Section 4.8(a) (to the extent that
such section relates to Section 4.6(a)(ii)), Section 4.8(c) (to the extent
that such section relates to Section 4.6(b)(ii)) and Sections 4.8(g) and
(h) of the Series 2003-2 Supplement (including any amounts payable pursuant
to any such section but netted against deposits to the Collection Account);
plus
(vii) an amount equal to the interest accrued on the Series 2002-1
Retained Certificates and the Series 2003-2 Retained Certificates from and
including the Distribution Date in the Closing Month to but excluding the
Closing Date; plus
(viii) an amount equal to the Class D Subordinated Principal
Collections (as defined in the Series 2003-2 Supplement), if any, deposited
into the Collection Account pursuant to Section 4.2(b) of the Series 2003-2
Supplement with respect to the period from and including the first day of
the Closing Month to but excluding the Closing Date (excluding any such
Collections applied on such Distribution Date pursuant to Section 4.9 of
the Series 2003-2 Supplement to fund any deficiency pursuant to Section
4.6(a)(i), (b)(i) or (c)(i)).
(c) If the Excess Spread Percentage is less than 2.50%, FNANB shall deposit
into the Collection Account, on or before the Closing Date, all Class D
Subordinated Principal Collections and Class E Subordinated Principal
Collections (in each case as defined in the Series 2002-1 Supplement) with
respect to the period from and including the first day of the Closing Month to
but excluding the Closing Date. On the Distribution Date in the month following
the Closing Month, Purchaser shall, subject to Section 2.09(e), pay to Sellers
an amount equal to the amount of Collections deposited in accordance with the
preceding sentence (excluding any such Collections applied on such Distribution
Date pursuant to Section 4.9 of the Series 2002-1 Supplement to fund any
deficiency pursuant to Section 4.6(a)(i), (b)(i) or (c)(i)).
(d) On the Distribution Date in the month following the Closing Month,
Sellers shall, subject to Section 2.09(e), pay to Purchaser the following
amounts:
(i) an amount equal to the Seller Pro Rata Share of the amount, if any,
withdrawn on such Distribution Date pursuant to Section 4.12(d) of the
Series 2002-1 Supplement (but only to the extent that such amount is
applied to fund any deficiency pursuant to Section 4.6(c)(i) of the Series
2002-1 Supplement); plus
27
(ii) an amount equal to the Seller Pro Rata Share of the amount, if
any, withdrawn on such Distribution Date pursuant to Section 4.12(d) of the
Series 2003-2 Supplement (but only to the extent that such amount is
applied to fund any deficiency pursuant to Section 4.6(c)(i) of the Series
2003-2 Supplement); plus
(iii) an amount equal to the Seller Pro Rata Share of any reduction in
the Invested Amount (as defined in the Series 2002-1 Supplement) made with
respect to the Closing Month (but only to the extent that such reduction
results from (A) Investor Charge-Offs (as defined in the Series 2002-1
Supplement) or (B) reductions made pursuant to Section 4.7 of the Series
2002-1 Supplement; plus
(iv) an amount equal to the Seller Pro Rata Share of any reduction in
the Invested Amount (as defined in the Series 2003-2 Supplement) made with
respect to the Closing Month (but only to the extent that such reduction
results from (A) Investor Charge-Offs (as defined in the Series 2003-2
Supplement) or (B) reductions made pursuant to Section 4.7 of the Series
2003-2 Supplement.
(e) The aggregate amount payable by Purchaser to Sellers pursuant to
Sections 2.09(b) and (c) and the amount payable by Sellers to Purchaser pursuant
to Section 2.09(d) shall be netted in determining the amount payable on the
Distribution Date in the month following the Closing Month pursuant to this
Section 2.09.
(f) FNANB shall contact the Trustee prior to the Closing Date and request
that the Trustee pay to Purchaser (as holder of the Exchangeable Transferor
Certificate) on the Distribution Date in the month following the Closing Month
all interest and other investment earnings attributable to amounts deposited by
FNANB into the Collection Account on or before the Closing Date (to the extent
such interest and other investment earnings were not distributed on a prior
Distribution Date). If the Trustee makes such payment, the amount paid shall be
included in calculating the amount to be paid to Sellers under Section
2.09(b)(iv). If the Trustee does not make such payment, on the Distribution Date
in the second month following the Closing Month, Purchaser shall pay to Sellers
an amount equal to the amount paid to Purchaser (as holder of the Exchangeable
Transferor Certificate) on such Distribution Date pursuant to Section 4.1(b) of
the Pooling and Servicing Agreement (less any portion of such amount
attributable to amounts deposited by Purchaser into the Collection Account after
the Closing Date). FNANB shall work with the Trustee to ensure that all interest
and other investment earnings on funds on deposit in the Collection Account are
allocated correctly between Purchaser and Sellers.
ARTICLE III
CLOSING
SECTION 3.01. The Closing. The closing of the transactions contemplated
hereby (the "Closing") shall take place (i) subject to Article XI, as promptly
as practicable when the last of the conditions required to be satisfied or
waived pursuant to Article IX is either satisfied or waived (other than any such
condition that this Agreement contemplates may be satisfied at the Closing), and
(ii) at 10:00 a.m. Eastern Time at the offices of McGuireWoods LLP, 000 Xxxx
Xxxx Xxxxxx, Xxxxxxxx, XX 00000, or at such other time or place and in such
28
other manner (including via facsimile) as may be mutually agreed to by the
Parties hereto; provided, however, that the Closing Date shall occur after the
Distribution Date in the Closing Month (such time and date being referred to
herein as the "Closing Time" and the "Closing Date," respectively). Upon the
Closing, Purchaser shall own the Purchased Assets as of the Closing Date, and
shall assume and perform and discharge, in accordance with their respective
terms, the Assumed Liabilities. Thereafter, Circuit City and the Sellers shall
have no further income participation or ownership interest in any of the
Purchased Assets.
SECTION 3.02. Valuation Date Statements.
(a) Not later than ten (10) Business Days prior to the Closing Date (the
"Preliminary Valuation Date"), FNANB shall deliver to Purchaser the Preliminary
Valuation Date Statement, along with sufficient reports and other supporting
calculations so as to verify the calculations set forth in the Preliminary
Valuation Date Statement, calculated as of the Preliminary Valuation Date.
Purchaser shall have the right to review the Preliminary Valuation Date
Statement, together with any supporting documents reasonably requested by
Purchaser to verify the accuracy and completeness of the computations set forth
therein, and the Preliminary Valuation Date Statement shall be revised to
reflect any modifications thereto mutually agreed to by Purchaser and FNANB.
(b) Not later than three (3) Business Days prior to the Closing Date (the
"Subsequent Valuation Date"), FNANB shall deliver to Purchaser the Subsequent
Valuation Date Statement, along with sufficient reports and other supporting
calculations so as to verify the calculations set forth in the Subsequent
Valuation Date Statement, calculated as of the Subsequent Valuation Date. In the
event that the Subsequent Valuation Date Statement deviates from the Preliminary
Valuation Date Statement by less than five percent (5%), then the Closing shall
occur based on the Subsequent Valuation Date Statement. In the event that the
Subsequent Valuation Date Statement deviates from the Preliminary Valuation Date
Statement by more than five percent, then the Parties shall attempt in good
faith to resolve any such deviation. If FNANB and Purchaser are unable to reach
an agreement as to such deviation on or prior to the day prior to the Closing,
the Closing shall occur based on the lesser of the valuation set forth in the
Preliminary Valuation Date Statement and the Subsequent Valuation Date Statement
and the dispute shall be resolved and the Subsequent Valuation Date Statement
shall be determined by the Accountants in accordance with Section 4.04.
SECTION 3.03. Payments on the Closing Date.
(a) If either Outstanding Private Series is outstanding at the close of
business on the Distribution Date immediately preceding the Closing Date, the
Parties shall jointly select and engage an escrow agent to accept and transfer
payments pursuant to this Section 3.03(a). Purchaser and Sellers shall each bear
one-half of any fees or charges assessed by the escrow agent. Purchaser shall
pay to the escrow agent, at the Closing (subject to satisfaction of the closing
conditions set forth in Article IX (including satisfaction of Section 9.02(h) by
establishing a procedure in accordance with this Section 3.03(a) by which the
Outstanding Private Series will be paid in full on the Closing Date)), the
Purchase Price set forth in the appropriate Valuation Date Statement as set
forth in Section 3.02. The Parties shall cause the escrow agent to apply such
payment, in each case on the Closing Date, (i) first, to pay the
29
Outstanding Private Series in full and (ii) second, upon receiving confirmation
that the Outstanding Private Series have been paid in full, to pay FNANB (for
the account of Sellers and Circuit City) the portion of the Purchase Price not
applied to pay the Outstanding Private Series in full. The Parties shall cause
the escrow agent to make the payments described in clauses (i) and (ii) above by
wire transfer of immediately available dollars to accounts designated in writing
by FNANB. FNANB shall provide the escrow agent with wire instructions no later
than two (2) Business Days prior to the Closing Date. The Parties shall work
together to ensure that any amendments to the documents related to the
Outstanding Private Series and the procedure by which the Outstanding Private
Series are paid in full do not cause the Trust to fail to qualify as a
qualifying special purpose entity under applicable accounting guidelines in
effect on the date of this Agreement. If there is a change in applicable
accounting guidelines between the date of this Agreement and the Closing Date,
Sellers and Circuit City shall take such reasonable actions as may be requested
by Purchaser to ensure that such amendments and such procedure do not cause the
Trust to fail to qualify as a qualifying special purpose entity under such
changed accounting guidelines (it being understood that Sellers and Circuit City
shall only be obligated to take such actions as they would reasonably be
expected to take to maintain the status of the Trust as a qualifying special
purpose entity if this Agreement were not in effect).
(b) If the Outstanding Private Series have been paid in full on or before
the Distribution Date immediately preceding the Closing Date, Purchaser shall
pay FNANB (for the account of Circuit City and Sellers), at the Closing (subject
to satisfaction of the closing conditions set forth in Article IX), the Purchase
Price set forth in the appropriate Valuation Date Statement as set forth in
Section 3.02. Purchaser shall make such payment by a wire transfer of
immediately available dollars to an account designated in writing by FNANB.
FNANB shall provide Purchaser with wire instructions no later than two (2)
Business Days prior to the Closing Date.
SECTION 3.04. Proceedings at Closing. All proceedings to be taken and all
documents to be executed and delivered by the Parties at the Closing shall be
deemed to have been taken and executed simultaneously, and, except as permitted
hereunder, no proceeding shall be deemed taken, payment made, nor any documents
executed and delivered until all have been taken, made, executed, and delivered.
SECTION 3.05. Delivery of Books and Records. Except as otherwise provided
in the Transition Services Agreement and subject to all Requirements of Law,
FNANB shall deliver the Books and Records to Purchaser on the Closing Date or as
soon as practicable thereafter, but, in any event, FNANB shall deliver the Books
and Records to Purchaser no later than five (5) days after the expiration or
termination of the Transition Services Agreement; provided, that any Books and
Records located at the Leased Real Property or the FNANB facility in Richmond,
Virginia, or included in electronic files transferred to Purchaser on the
Closing Date shall be deemed to be delivered by FNANB to Purchaser on the
Closing Date.
SECTION 3.06. Transfer of Absolute Title; Filing of Financing Statements.
(a) The Parties intend that, for all purposes, the transactions
contemplated hereby shall be treated as a purchase and sale of the Purchased
Assets. Upon Purchasers' purchase of the Purchased Assets pursuant to this
Agreement, all of Sellers' right, title and interest therein shall
30
be transferred to Purchaser or its permitted assigns as provided in Sections
2.01 and 2.02. It is the express intent of the Parties that the conveyance of
the Purchased Assets by Sellers to the Purchaser pursuant hereto be construed as
a purchase and sale, free and clear of all Liens or adverse claims, for
accounting, regulatory, tax and all other purposes, other than Permitted Liens.
(b) To the extent that any Seller retains any interest in Purchased Assets
that constitute "Accounts," "Account Documentation," "Indebtedness" (as
"Accounts," "Account Documentation" and "Indebtedness" are defined in the
Program Agreement and referred to herein collectively, including any proceeds of
any of these, as the "Secured Assets") it is the intention of the parties hereto
that this Agreement shall constitute a security agreement under applicable law,
and such Seller hereby grants to the Purchaser a security interest in all of
such Seller's right, title and interest, in, to and under the Secured Assets
conveyed by such Seller to secure a loan in an amount equal to the portion of
the Purchase Price allocable to such Secured Assets. Sellers hereby authorize
Purchaser to file, and Sellers shall cooperate with Purchaser in preparing,
financing statements (the "Financing Statements") and any continuation
statements and amendments thereto in all jurisdictions and with all filing
offices as Purchaser may reasonably determine are necessary or appropriate to
protect the interest of Purchaser in the Secured Assets. The Financing
Statements may describe the Secured Assets in the same manner as described
herein or may contain an indication or description of collateral that describes
such property in a manner as Purchaser may reasonably determine is necessary or
appropriate to ensure the perfection of a security interest in the Secured
Assets in favor of Purchaser. Following filing of the Financing Statements in
such jurisdictions as Purchaser may reasonably determine is necessary or
appropriate to fully preserve, maintain and protect the interest of Purchaser in
the Secured Assets, Purchaser shall provide FNANB with file-stamped copies of,
or filing receipts for, such Financing Statements as soon as available following
such filing.
SECTION 3.07. Power of Attorney. Effective upon consummation of the
Closing, FNANB hereby irrevocably names, constitutes, and appoints Purchaser and
any of Purchaser's officers, agents, employees, or representatives its duly
authorized attorney and agent with full power and authority to (i) endorse in
FNANB's name any check, draft, or other instrument of payment relating to the
Accounts, including through the use of a rubber stamp with the signature of
FNANB thereon, (ii) receive and collect any and all monies due under such
Accounts, and (iii) enforce performance of all Purchased Assets purchased by
Purchaser pursuant to this Agreement. The power of attorney granted by this
provision is coupled with an interest and is irrevocable.
ARTICLE IV
POST-CLOSING PURCHASE PRICE ADJUSTMENTS
SECTION 4.01. Accounts-Based Adjustments.
(a) The parties agree that the Purchase Price paid at the Closing shall be
adjusted in accordance with Section 4.02 and/or Section 4.03, as applicable, if
any of the following events shall occur (collectively, the "Accounts-Based
Adjustments"): (i) Purchaser is paid by VISA and/or Circuit City or Circuit City
West Coast, Inc. after the Cut-Off Time for a chargeback in
31
respect of which FNANB provided a Borrower a credit on an Account prior to the
Cut-Off Time; (ii) a check from a Borrower in payment of amounts owed on an
Account, which was credited to such Account prior to the Cut-Off Time, is
returned unpaid by the drawee after the Cut-Off Time; (iii) Purchaser receives
Interchange related to transactions occurring before the Cut-Off Time; (iv)
Purchaser provides a credit on an Account with respect to Unauthorized Use of an
Account prior to the Closing Date; (v) Purchaser provides a credit on an Account
in connection with a transaction posted before the Cut-Off Time as a result of
rights asserted by the Borrower under 12 CFR ss.226.12(c) or 12 CFR
ss.226.13(d); (vi) Purchaser charges off an Account after the Cut-Off Time that
Sellers' charge-off policy required to be charged off by Sellers on or before
the Cut-Off Time or that such policy, in the absence of the transactions
contemplated by this Agreement, would have required to be charged off based on
an event that occurred on or before the Cut-Off Time; (vii) the Purchaser pays
VISA fees for activities occurring prior to the Cut-Off Time; or (viii) Circuit
City or Sellers receive a payment or other amount prior to the Cut-Off Time, but
such payment or amount is not posted until after the Cut-Off Time. An adjustment
to the Purchase Price shall be made in favor of FNANB (in the case of clause
(i), (ii) or (iii)) or Purchaser (in the case of clause (iv), (v), (vi), (vii),
or (viii)) in the amount of such chargeback, check, Interchange, credit or
payment, as the case may be.
(b) Purchaser shall pay any charge-back or credit with respect to the
pre-Cut-Off Time account activity of the Accounts; provided that, Purchaser
shall pay only for those aforesaid liabilities that are submitted and processed
at all times within the required time periods prescribed by, and in full
accordance with both (i) all Requirements of Law and (ii) the Operating
Regulations.
SECTION 4.02. Settlement Date Adjustments.
(a) Settlement Date Statement. At least thirty (30) days prior to the
Settlement Date, Purchaser shall deliver to FNANB a statement (the "Settlement
Date Statement") setting forth (i) the Purchase Price, calculated as of the
Cut-Off Time, along with applicable supporting calculations for the Accrued
Interest and (ii) the aggregate amount of any Accounts-Based Adjustments as to
which Purchaser has Knowledge as of the date of such Settlement Date Statement.
Purchaser agrees that it shall provide to FNANB mutually acceptable supporting
documentation in a mutually agreed format and accompanied by a file layout
relied upon in determining the Purchase Price and the aggregate amount of any
Accounts-Based Adjustments set forth in the Settlement Date Statement. Purchaser
shall deliver, or cause to be delivered, to FNANB the Final Closing Tape no
later than thirty (30) days prior to the Settlement Date.
(b) Payments on the Settlement Date. On the Settlement Date, if the
Adjusted Purchase Price is greater than the Purchase Price paid by Purchaser on
the Closing Date, Purchaser shall remit the difference to Circuit City, together
with interest on such amount at the Federal Funds Rate divided by 360 for each
day during the period from and including the Closing Date to but excluding the
Settlement Date. If the Adjusted Purchase Price is less than the Purchase Price
paid by Purchaser on the Closing Date, FNANB (on behalf of itself and Tyler
Funding) shall remit the difference to Purchaser together with interest on such
amount at the Federal Funds Rate divided by 360 for each day during the period
from and including the Closing Date to but excluding the Settlement Date.
Payments on the Settlement Date shall be remitted no later than 10:00 a.m.
Eastern Time by a wire transfer of immediately available dollars to an account
32
designated in writing by the Party to which payment is due. Wire instructions
shall be forwarded to the paying Party no later than two (2) Business Days prior
to the Settlement Date.
SECTION 4.03. Post-Settlement Date Adjustments. If facts or circumstances
arise after the date of the Settlement Date Statement but on or before the 150th
day after the Closing Date that give rise to additional Accounts-Based
Adjustments, then, after the Settlement Date, in accordance with Section 4.01,
the Parties agree that a further adjustment to the Adjusted Purchase Price shall
be made in favor of Sellers or Purchaser, as applicable, in the amount of the
chargeback, check, Interchange, credit or payment, as the case may be, resulting
in any such Accounts-Based Adjustment. The Party with knowledge of the facts
relating to the facts or circumstances giving rise to such Accounts-Based
Adjustment shall provide to the other Party written notice and supporting
documentation (to the extent available to such Party) as promptly as practicable
after discovering such facts or circumstances, and in any case within 30 days of
the discovery thereof. FNANB (or Circuit City on its behalf) or Purchaser, as
the case may be, shall, within five Business Days after receipt of said notice
or the resolution of any dispute related thereto in accordance with Section 4.04
(but in no event earlier than five Business Days after the Settlement Date),
reimburse the other Party to which such payment is owed, in immediately
available funds, for the amount of said adjustment, together with interest on
the reimbursed amount computed from the Closing Date to the date of
reimbursement at an interest rate equal to the Federal Funds Rate divided by 360
for each day during such period.
SECTION 4.04. Resolution of Disputes. The Parties agree that (i) FNANB
shall have the right to dispute any calculation or amount set forth in the
Settlement Date Statement and (ii) any Party may dispute any calculation or
amount contained in a written notice delivered by any other Party in accordance
with Section 4.03. If a Party wishes to dispute any such calculations, the Party
disputing such calculation shall deliver a written notice to the other Parties
within ten (10) Business Days of receipt of the Settlement Date Statement or
notice pursuant to Section 4.03, as the case may be, specifying with
particularity the disputed amounts. Thereafter, the Parties shall negotiate in
good faith for a period of up to fifteen (15) Business Days to resolve any such
dispute. If such dispute is not resolved within such fifteen (15) Business Day
period, then the Parties shall, within ten (10) Business Days after the end of
such fifteen (15) Business Day period, jointly retain a mutually agreed upon,
nationally recognized independent public accounting firm (the "Accountant") to
reconcile any financial items in dispute. The Accountant shall not have provided
services to Circuit City or its Affiliates or to Bank One Corporation or its
Affiliates during the preceding 12 months. The Accountant shall be required to
complete its assessment within fifteen (15) Business Days and the findings of
the Accountant shall be final and binding upon the parties without any rights of
appeal. Each of Purchaser and its Affiliates and Sellers and their Affiliates
shall cooperate fully in assisting the Accountant in its review, including by
providing the Accountant with reasonable access during normal business hours to
all files, books, and records relevant thereto and providing such other
information as the Accountant may reasonably request in connection with such
review. The fees, costs, and expenses incurred by the Parties in connection with
the retention of and performance by the Accountant shall be borne equally by
Sellers (or Circuit City on their behalf) and Purchaser provided, however that
if the Accountant determines that the calculation of the Purchase Price (prior
to any increase or decrease in respect of Accounts-Based Adjustments) set forth
in the Settlement Date Statement is to be decreased by less than 10% or
increased by 10% or more, then all fees, costs, and expenses incurred by the
Parties in connection with the
33
retention of and performance by the Accountant shall be borne by Purchaser; and
provided, further, that if the Accountant determines that the calculation of the
Purchase Price (prior to any increase or decrease in respect of any
Accounts-Based Adjustments) set forth in the Settlement Date Statement is to be
decreased by 10% or more or increased by less than 10%, then all fees, costs,
and expenses incurred by the parties in connection with the retention of and
performance by the Accountant shall be borne by Sellers (or Circuit City on
their behalf). Any Adjusted Purchase Price and/or Accounts-Based Adjustments
determined by the Accountant in accordance with the procedures set forth in this
Section 4.04 shall be utilized to determine the amount of any payments to be
made in accordance with Section 4.02(b) or Section 4.03.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF CIRCUIT CITY,
FNANB AND TYLER FUNDING
Except as set forth in the Seller Disclosure Schedule, Circuit City, FNANB
and Tyler Funding severally represent and warrant to Purchaser, as of the date
hereof and as of the Closing Date (or as of such other date as may be expressly
provided in any representation or warranty), as set forth below. Information
disclosed in any section of the Seller Disclosure Schedule shall be deemed to be
disclosed with respect to such other sections of this Agreement or the Seller
Disclosure Schedule to which such disclosure shall reasonably pertain in light
of the form and substance of the disclosure made.
SECTION 5.01. Organization; Good Standing. Circuit City is a corporation
duly organized, validly existing, and in good standing under the laws of the
Commonwealth of Virginia. FNANB is a wholly owned subsidiary of Circuit City,
duly organized, validly existing and in good standing under the laws of the
United States as a limited purpose credit card bank under the Bank Holding
Company Act. Tyler Funding is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Delaware. Each of FNANB and
Tyler Funding has all requisite corporate power and authority to own, lease and
operate the portion of the Purchased Assets owned, leased, or operated by it and
to carry on the Credit Card Business as currently conducted and Tyler Funding is
duly authorized, qualified or licensed to do business as a foreign entity and is
in good standing, in each jurisdiction where the ownership or operation of the
portion of the Purchased Assets or operation of the Credit Card Business
requires such authorization, qualification or licensing.
SECTION 5.02. Authority; Validity. Each of Circuit City, FNANB and Tyler
Funding has all necessary corporate power and authority to enter into this
Agreement and the Related Agreements and to perform all of the obligations to be
performed by it under this Agreement and the Related Agreements. The making,
execution, delivery, and performance of this Agreement and the Related
Agreements and the consummation by each of Circuit City, FNANB and Tyler Funding
of the transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action on the part of such Party. This
Agreement has been, and as of the Closing Date the Related Agreements will be,
duly and validly executed and delivered by each of Circuit City, FNANB or Tyler
Funding that is a party hereto or thereto. Assuming the due authorization,
execution, and delivery by Purchaser, this Agreement and the Related Agreements
will constitute the valid and binding obligations of each of Circuit City, FNANB
and Tyler Funding that is a party hereto or thereto, enforceable against it
34
in accordance with its respective terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium, receivership,
conservatorship, the rights and obligations of receivers and conservators of
insured depository institutions under 12 U.S.C. ss.1821(d) and (e), and other
laws relating to or affecting creditors' rights generally and by general equity
principles.
SECTION 5.03. Conflicts; Defaults. Assuming the consents and approvals
referred to in Section 5.04 are obtained and the Securitization Transfer
Agreements and Required Securitization Amendments are validly executed and
delivered by the Parties thereto, neither the execution and delivery of this
Agreement and the Related Agreements by Circuit City, FNANB and Tyler Funding,
nor the consummation of the transactions contemplated hereby or thereby by such
Parties will violate, conflict with, result in the breach of, constitute a
default under, is prohibited by, require any additional approval under,
accelerate the performance required by, require the assumption of, give any
third party the right to terminate, or result in any other change, right or
obligation or the loss of benefit under (x) any terms, conditions, or provisions
of Circuit City's, FNANB's or Tyler Funding's organizational documents or
bylaws, (y) any mortgage, indenture, deed of trust, loan or credit agreement or
other material agreement or instrument to which Circuit City, FNANB, or Tyler
Funding is now a party or by which it is bound, or (z) any Requirement of Law
applicable to Circuit City, FNANB or Tyler Funding.
SECTION 5.04. Approvals. Subject to Article VII, no notices, approvals,
reports or other filings are required to be made by Circuit City, FNANB or Tyler
Funding with, nor are there any consents, registrations, approvals, permits or
other authorizations required to be obtained by such Parties from, any
Governmental Authority or other third party in order for such Parties to execute
or deliver this Agreement, the Related Agreements or the Securitization Transfer
Agreements or to consummate the transactions contemplated hereby or thereby
(except any required filings pursuant to the HSR Act and the Bank Merger Act and
any related approvals) other than (A) the Required Securitization Amendments,
and (B) the consents set forth in Section 5.04 of the Seller Disclosure
Schedule. To the Knowledge of Circuit City, FNANB or Tyler Funding, there are no
facts, events, circumstances or conditions relating to such Parties or any of
their Affiliates now in existence or reasonably likely to exist prior to the
Closing, which facts, events, circumstances or conditions could reasonably be
expected to result in the imposition of an Unreasonable Condition by any
applicable Governmental Authority.
SECTION 5.05. Litigation. There is no action, suit, proceeding, claim,
authorization, or other litigation pending, or any investigation by any
Governmental Authority pending or, to the Knowledge of Circuit City, FNANB or
Tyler Funding, any action, suit, proceeding, claim or other litigation or
governmental investigation threatened, against such Parties or any of their
Affiliates (i) with respect to the transactions contemplated by this Agreement
or (ii) which, if adversely decided would reasonably be expected to have,
individually or in the aggregate, a Business Material Adverse Effect. There are
no judgments, injunctions, writs, orders or decrees binding upon the Purchased
Assets, the Assumed Liabilities, or the Credit Card Business or on Circuit City,
FNANB or Tyler Funding or any of their respective Affiliates that (i) would
reasonably be expected to prevent the consummation of the transactions
contemplated hereby, or (ii) would (A) be binding upon Purchaser following
consummation of such transactions, or (B) adversely affect the conduct of the
Credit Card Business by Purchaser in any material respect. No audit,
investigation, inspection, or other
35
review or inquiry by any Governmental Authority concerning or involving the
Credit Card Business conducted since March 1, 2003 has reported any material
violation by Circuit City, FNANB or Tyler Funding of any material Requirement of
Law.
SECTION 5.06. Compliance with Requirements of Law.
(a) Circuit City, FNANB and Tyler Funding are in compliance in all material
respects with all applicable Requirements of Law relating to or in any way
affecting the Credit Card Business or in any way relating to any Business
Employee. Since March 1, 2003, such Parties have not (i) violated in any
material respect any Requirement of Law relating to the Credit Card Business or
in any way relating to any Business Employee or (ii) received any written or, to
the Knowledge of such Parties, oral notice from (and otherwise does not have any
Knowledge of) any Governmental Authority that alleges any material noncompliance
(or that such Parties are under investigation by any such Governmental Authority
for such alleged noncompliance) with any Requirements of Law relating to the
Credit Card Business or in any way relating to any Business Employee.
(b) Circuit City, FNANB and Tyler Funding have timely filed all regulatory
reports, schedules, forms, registrations, and other documents, together with any
amendments required to be made with respect thereto, that each was required to
file since March 1, 2003 with any Governmental Authority with respect to the
Credit Card Business (the "Seller Business Documents") and have timely paid all
fees and assessments due and payable in connection therewith. There is no
material unresolved violation or exception by any such Governmental Authority
with respect to any of the Seller Business Documents. As of their respective
dates, the Seller Business Documents complied, and the Seller Business Documents
filed subsequent to the date hereof will comply as of their respective dates, in
all material respects with all Requirements of Law.
(c) Circuit City, FNANB and Tyler Funding are not delinquent in payments to
any Business Employee for any wages, salaries, commissions, bonuses, benefits,
expenses or other compensation for any services performed by such Business
Employee or amounts required to be reimbursed by them.
SECTION 5.07. Intellectual Property. Section 5.07 of the Seller Disclosure
Schedule sets forth a list, as of the date hereof, of all registered patents,
trademarks and copyrights, including Software, and applications therefor which
are used by FNANB in the conduct of the Credit Card Business. Except as may be
indicated on Section 5.07 of the Seller Disclosure Schedule, (a) Circuit City
and FNANB own or possess adequate licenses or other valid rights to use the
Intellectual Property Rights to conduct the Credit Card Business as now being
conducted, (b) the conduct of business of the Credit Card Business as now being
conducted does not conflict with, infringe, violate or misappropriate any
intellectual property rights of others, and Sellers have no Knowledge of any
challenge or threatened challenge asserting any such conflict, infringement,
violation or misappropriation, and (c) to the Knowledge of Circuit City and
FNANB, none of the Intellectual Property Rights are being infringed upon.
36
SECTION 5.08. Absence of Certain Changes. Except as set forth in Section
5.08 of the Seller Disclosure Schedule or as permitted by Section 7.01, since
March 1, 2003 the Credit Card Business has been conducted in the ordinary course
and there has not been:
(a) any Account Agreement entered into, Account opened or Credit Card or
Account number issued other than in the ordinary course of business and in
compliance in all material respects with all Requirements of Law and the Account
Guidelines;
(b) any change in: (x) any financial accounting practices, policies or
procedures (to the extent any such change would be binding on or otherwise
affect the Credit Card Business or Purchaser following the Closing, in each case
except to the extent contemplated by this Agreement and the Related Agreements,
and except for any change in accounting practices, policies and procedures
required by reason of a concurrent change in GAAP; (y) any collections, pricing,
origination, charge-off, reaging, credit or underwriting practices, policies and
procedures of FNANB with respect to the Accounts, or (z) in the servicing
practices, policies and procedures of the Servicer with respect to the
Receivables;
(c) any creation or incurrence of any Lien (other than a Permitted Lien) on
any Purchased Asset;
(d) any change in the strategy of the Credit Card Business;
(e) any sale, encumbrance, assignment or transfer of any assets or
properties that would have been included in the Purchased Assets, other than (i)
the transfer and assignment of the Receivables to the Trust, (ii) any such sale,
encumbrance, assignment or transfer in the ordinary course of business
consistent with past practice or (iii) Permitted Liens;
(f) any amendment or termination of any material Assumed Contract or any
Securitization Document or waiver of any rights thereunder, other than in the
ordinary course of business consistent with past practice; or
(g) any damage, destruction, or loss, whether or not covered by insurance,
materially affecting either the Credit Card Business, the prospects thereof or
the Purchased Assets.
SECTION 5.09. Licenses and Permits. (i) All of the Seller Permits are valid
and in full force and effect in every state in the United States where they are
required under applicable law; (ii) none of Circuit City, FNANB or Tyler Funding
is in default, and no condition exists that with notice or lapse of time or
otherwise would constitute a default, under the Seller Permits; and (iii) except
as set forth in Section 5.09(iii) of the Seller Disclosure Schedule, none of the
Seller Permits shall be terminated or impaired or become terminable, in whole or
in part, as a result of the transactions contemplated hereby and by the Related
Agreements.
SECTION 5.10. Accounts and Receivables.
(a) Each Account and each Receivable is in all material respects as
described in the Master File and, when delivered to Purchaser, the Final Closing
Tape; and, when delivered to Purchaser, the information contained in the Final
Closing Tape will be correct in all material respects as of the Cut-Off Time.
37
(b) FNANB has provided representative forms of Account Agreements to
Purchaser in effect as of the date hereof. The terms of the Account Agreements
have not been waived (other than on a case-by-case basis as reflected in the
Books and Records in all material respects), impaired, altered or modified in
any material respect by FNANB.
(c) Each Account complies in all material respects with the applicable
Account Agreement.
(d) Each Account and each Receivable has been solicited, originated,
created, maintained and serviced in compliance in all material respects with (i)
the Account Guidelines, and (ii) all applicable Requirements of Law.
(e) The Credit Card Business is operated as a part of the business of
Sellers and under the control (as defined in Section 1.01) of Sellers. While
Sellers rely on independent contractors to provide certain services and
operations related to the Credit Card Business, all aspects of the Credit Card
Business are ultimately managed solely by Sellers;
(f) (i) All disclosures made in connection with the Accounts attributable
to FNANB or Tyler Funding complied in all material respects with all applicable
Requirements of Law as of the time made, and (ii) as of the date hereof, no
Requirements of Law requires any supplemental disclosures which have not already
been made in all material respects.
(g) Except as set forth in Section 5.10(g) of the Seller Disclosure
Schedule, each Account Agreement is the legal, valid and binding obligation of
the Borrower, each other obligor thereon and FNANB and is enforceable in
accordance with its terms against the Borrower except (i) as such enforcement
may be subject to bankruptcy, receivership, insolvency, reorganization,
moratorium, fraudulent transfer and other laws relating to or affecting the
rights of creditors generally and by legal and equitable limitations on the
enforceability of specific remedies and (ii) for the rights of Borrowers under
12 C.F.R.ss.226.12(c), 12 C.F.R. ss.226.13(d) and the Soldiers and Sailors Civil
Relief Act and similar state laws.
(h) The interest rates, fees, charges and minimum payments in connection
with the Accounts comply in all material respects with all applicable
Requirements of Law and applicable Account Agreements.
(i) All Account Agreements and Accounts are freely assignable by FNANB, no
Account Agreement or Account requires the approval or consent of any Borrower or
any other Person to effectuate the valid assignment of the same in favor of
Purchaser.
(j) FNANB has performed in all material respects its obligations required
to be performed by FNANB under the Account Agreements and FNANB is not in
default under, and no event has occurred with respect to FNANB's performance
under the Account Agreements, which, with the lapse of time or action by a third
party, would be reasonably likely to result in a default by FNANB under any such
Account Agreements.
(k) As of the date that a Receivable was transferred to the Trust, such
Receivable was an Eligible Receivable.
38
(l) Each and every Account was acquired or established and has been
maintained in all material respects in compliance with all Requirements of Law
and is not subject to any claim of usury or offset due to failure by FNANB to
comply with any such Requirements of Law. Sellers' assignment, when executed and
delivered in accordance with the terms of this Agreement, will (i) vest in the
Purchaser all of the right, title and interest of Sellers in and to the Accounts
free and clear of all Liens, other than Permitted Liens and (ii) constitute a
valid assignment of the Accounts enforceable against all other Persons,
including all creditors of and purchasers of Sellers. Except to the extent that
the Accounts are or have been participated or securitized, Sellers have not
previously assigned, sold, transferred, encumbered or permitted to exist any
lien on, the Accounts, other than Permitted Liens.
(m) Sellers have taken no action to impair Purchaser's rights in the
Accounts or to prevent Purchaser from collecting the Receivables.
(n) There has not been any reaging of any Accounts, including the
classification of delinquent to current other than pursuant to and in accordance
with Sellers' Reaging Policies and Requirements of Law.
(o) All Accounts are with individuals, and no Accounts have been entered
into with any corporation, partnership, association or other entity.
(p) No Receivable is a "commercial loan," as that term is used in the Bank
Holding Company Act.
(q) There are no acts or practices, with respect to which refunds or
restitutions on any Account may be required, of which Sellers have Knowledge or
which has been cited in any compliance report relating to the Credit Card
Business as a result of an examination or review by any Governmental Authority.
(r) To Sellers' Knowledge, except for payment defaults, there is no
default, breach, violation or event of acceleration existing under any Account
and no event which, with the passage of time or with notice and the expiration
of any grace or cure period, would constitute a default, breach, violation or
event of acceleration that would materially and adversely affect Purchaser's
ability to collect any of the Accounts. Except for payment defaults and except
in the ordinary course in accordance with Sellers' Account Guidelines, neither
Seller has waived any default, breach, violation or event of acceleration with
respect to the Accounts that would materially and adversely affect Purchaser's
ability to collect any of such Accounts.
(s) Sellers have applied their Charge-Off Practices in a manner consistent
with prior practice in all respects during the twelve (12) months prior to the
Cut-Off Time.
(t) [INTENTIONALLY OMITTED]
(u) To the extent Sellers have determined that a Borrower or Borrowers on
an Account have filed for bankruptcy and the Borrower or Borrowers entered into
a reaffirmation agreement related to the Account pursuant to applicable
bankruptcy law and other Requirements of Law then each such reaffirmation
agreement is enforceable in compliance with applicable bankruptcy law and
applicable Requirements of Law and the reaffirmed
39
Account, and all reaffirmed amounts owing thereunder, are the legal, valid and
binding obligations of the applicable Borrower enforceable in accordance with
the terms of the reaffirmation agreement except (i) as such enforcement may be
subject to bankruptcy, receivership, insolvency, reorganization, moratorium,
fraudulent transfer and other laws relating to or affecting the rights of
creditors generally and by legal and equitable limitations on the enforceability
of specific remedies and (ii) for the rights of Borrowers under 12
C.F.R.ss.226.12(c), 12 C.F.R. ss.226.13(d) and the Soldiers and Sailors Civil
Relief Act and similar state laws.
(v) The Receivables are payable only in United States dollars. It is
Sellers' policy to open Accounts only with individuals who, at the time such
Account is opened, have a billing address inside a state, territory or
dependency of the United States (including the District of Columbia) or the
Commonwealth of Puerto Rico, or an APO or FPO military addresses.
SECTION 5.11. Marketing Agreements. Except as set forth in Section 5.11 of
the Seller Disclosure Schedule, there are and have been no Contracts, licenses,
plans, arrangements or commitments to which Circuit City, FNANB or Tyler Funding
is a party or by which such parties or any of the assets of the Credit Card
Business are or were bound or obligated that relate to the marketing of any
product or service to the Borrowers obligated on any Account or that relate to
the Accounts, which in any such case are material to the Credit Card Business or
would in any way be binding upon Purchaser.
SECTION 5.12. Certain Contracts.
(a) Sellers have made available and delivered true and complete copies of
each material Assumed Contract.
(b) Except as set forth in Section 5.12(b) of the Seller Disclosure
Schedule, each Assumed Contract, is the legal, valid and binding obligation of
FNANB or Tyler Funding, as the case may be, and, to the Knowledge of such
Parties, of each other party thereto, enforceable in accordance with its terms
subject to bankruptcy, receivership, insolvency, reorganization, moratorium,
fraudulent transfer and other laws relating to or affecting the rights of
creditors in general or the rights of creditors of depository institutions whose
accounts are insured by the FDIC and by legal and equitable limitations on the
enforceability of specific remedies. None of FNANB or Tyler Funding nor, to the
Knowledge of such Parties, any other party, is in violation or default of any
term of any such material Assumed Contract and, except as set forth in Section
5.12(b) of the Seller Disclosure Schedule, no condition or event exists which
with the giving of notice or the passage of time, or both would constitute a
violation or default by FNANB or Tyler Funding as the case may be, or any other
party thereto or permit the termination, modification, cancellation or
acceleration of performance of the obligations of such Party or any other party
to any material Assumed Contract.
SECTION 5.13. Securitization Matters; Trust.
(a) The representations and warranties of Tyler Funding, as Transferor, and
FNANB, as Servicer, in the Pooling and Servicing Agreement are true and correct.
40
(b) The Series 2002-1 Certificates and the Series 2003-2 Certificates have
been duly authorized and validly executed, issued and delivered and are entitled
to the benefits provided by the Pooling and Servicing Agreement as supplemented
by the Series 2002-1 Supplement or the Series 2003-2 Supplement, as applicable.
(c) The Registration Statement was prepared and filed with the SEC in
accordance with the provisions of the Securities Act and the rules and
regulations of the SEC thereunder. The Registration Statement was declared
effective by the SEC pursuant to the General Instructions of the Form on which
it was filed.
(d) As of its effective date, the Registration Statement conformed in all
material respects to the requirements of the Securities Act and did not contain
an untrue statement of any material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading; provided, however, that the foregoing representation shall not apply
to any statement that has been modified or superseded by any statement in a
subsequently filed document. As of their respective filing dates and as of the
closing date for the related Outstanding Public Series, the final prospectus and
the final prospectus supplement for each Outstanding Public Series conformed in
all material respects to the requirements of the Securities Act and did not
contain an untrue statement of any material fact or omit to state any material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading; provided, however, that the
foregoing representation shall not apply to any statement that has been modified
or superseded by any statement in a subsequently filed document.
(e) The sale of the Purchased Assets by the Sellers and the purchase of the
Purchased Assets and assumption of the Assumed Liabilities by the Purchaser,
including the assumption by the Purchaser of the roles of Transferor and
Servicer under the Pooling and Servicing Agreement, will not require the consent
of any holders of the Outstanding Public Series.
(f) Each of FNANB and Tyler Funding and, to the Knowledge of FNANB and
Tyler Funding, each other party to any of the Securitization Documents has
performed in all material respects each obligation to be performed by it under
each of the Securitization Documents, including the filing of any financing
statements, continuation statements or amendments under the UCC of each
applicable jurisdiction with the appropriate filing offices. Each of the
Securitization Documents to which FNANB, the Trust, or Tyler Funding is a party
is in full force and effect and is a valid, binding and enforceable obligation
of such Party and, to the Knowledge of FNANB and Tyler Funding, the other
parties thereto, except as enforcement thereof may be subject to bankruptcy,
receivership, insolvency, moratorium, reorganization, fraudulent transfer or
similar laws affecting the enforcement of the rights of creditors generally and
the rights of creditors of depository institutions whose accounts are insured by
the FDIC and by legal and equitable limitations on the enforceability of
specific remedies. True and complete copies of the Securitization Documents have
been made available to Purchaser and there have been no amendments or
modifications to the Securitization Documents made since the date such copies
were made available to Purchaser.
41
(g) The Pooling and Servicing Agreement is not required to be qualified
under the Trust Indenture Act of 1939, as amended, and the Trust is not required
to be registered as an investment company under the Investment Company Act of
1940, as amended.
(h) No event or condition exists that is or with either notice or the
passage of time would constitute a Series 2002-1 Early Amortization Event or a
Series 2003-2 Early Amortization Event, and no event or condition exists that
constitutes or is reasonably likely to constitute a Servicer Default or other
similar event permitting the termination of the Servicer under the
Securitization Documents. Assuming the consents and approvals referred to in
Section 5.04 are obtained and the Securitization Transfer Agreements and
Required Securitization Amendments are validly executed and delivered by the
parties thereto, the consummation of the transactions contemplated hereby will
not cause the occurrence of any such early amortization event, Servicer Default,
or other similar event, or any event that with either notice or the passage of
time would constitute any such early amortization event, Servicer Default, or
other similar event, nor shall such consummation or the receipt of such required
consents in connection therewith trigger any requirement under any
Securitization Document to fund an increase in any spread account, reserve
account or similar account, or any draw on any such account under the terms of
any Securitization Document or to otherwise increase any credit enhancement
required under the Securitization Documents.
(i) The Outstanding Series and the Exchangeable Transferor Certificate
represent the entire interest in the Trust. Tyler Funding is the sole owner of
the Securitization Retained Interests. The Trust is not, and will not be as a
result of the transfer of the Purchased Assets, an association taxable as a
corporation for federal income tax purposes.
(j) There are no pending or, to the Knowledge of FNANB, threatened
proceedings, stop orders, lawsuits, or administrative actions alleging
violations of the Securities Act or the Exchange Act relating to the Trust or
any Outstanding Series.
(k) All contracts relating to the Outstanding Private Series will be
completely terminated on or before the Closing Date. The Securitization
Documents and the Tyler Funding Interest Rate Caps will constitute all of the
contracts relating to the Trust to which the Trust is a party as of the Closing
Date (after giving effect to the termination of the contracts relating to the
Outstanding Private Series). The transfer of the Purchased Assets does not
violate federal or state securities laws and is not a transaction required to be
registered under the Securities Act.
(l) No interests in the Trust have been issued since April 25, 2003 (it
being understood that an increase in the Invested Amount of an Outstanding
Private Series shall not constitute the issuance of an interest in the Trust for
purposes of this paragraph).
(m) The Exchangeable Transferor Certificate, the Series 2002-1 Retained
Certificates and the Series 2003-2 Retained Certificates are valid, binding and
enforceable obligations of the Trust, except as enforcement thereof may be
subject to bankruptcy, receivership, insolvency, moratorium, reorganization,
fraudulent transfer or similar laws affecting the enforcement of the rights of
creditors from time to time in effect.
42
(n) The Trust qualifies as a qualifying special purpose entity under
applicable accounting guidelines in effect on the date of this Agreement.
SECTION 5.14. Effective Transfer. Except as set forth in Section 5.14 of
the Seller Disclosure Schedule, FNANB or Tyler Funding collectively are the sole
owners of and control good and marketable title to the Purchased Assets free and
clear of any Liens (other than Permitted Liens). Upon consummation of the
transactions contemplated by this Agreement at the Closing, including the
execution and delivery of the documents to be delivered, at the Closing
Purchaser or its permitted assigns shall be vested with good and marketable
title in and to the Purchased Assets, free and clear of all Liens, except
Permitted Liens, and the Securitization Transfer Agreements, when executed and
delivered to Purchaser at the Closing, shall constitute a valid assignment of
FNANB's interests in the Servicer Rights and in FNANB's and Tyler Funding's
rights and, to the extent specified therein, obligations in the Securitization
Documents and the Tyler Funding Interest Rate Caps enforceable against each of
FNANB and Tyler Funding, upon the filing of the Financing Statements, against
all other Persons. Sellers have taken no action to impair Purchaser's rights in
the Purchased Assets or to prevent Purchaser from collecting the Receivables.
SECTION 5.15. Ratings. None of the Rating Agencies has indicated that it
has under surveillance or review its rating of any of the Outstanding Series
and, to the Knowledge of Circuit City, FNANB and Tyler Funding, there exists no
circumstance or condition reasonably likely to cause any rating of any of the
Outstanding Series to be modified, qualified, lowered or placed under such
surveillance.
SECTION 5.16. Books and Records. The Books and Records with respect to the
Accounts accurately reflect the terms and conditions of the Accounts. No third
party has rights to use or market the information contained in the Books and
Records and the Borrower List.
SECTION 5.17. Exchange Act Reports. The Trust has filed with the SEC all
forms, reports and other documents required to be filed by the Trust under the
Exchange Act and the rules and regulations of the SEC thereunder (other than any
such form, report or other document required to be filed with respect to
Investor Certificates paid in full on or before the Closing Date)]. As of their
respective filing dates, such forms, reports and other documents complied in all
material respects with all applicable requirements of the Exchange Act and the
rules and regulations of the SEC thereunder, as modified by no-action positions
of the SEC relating to credit card securitizations, and did not contain an
untrue statement of any material fact or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided, however, that the foregoing
representation shall not apply to any statement that has been modified or
superseded by any statement in a subsequently filed document. Sellers have been
advised that the Class A Floating Rate Asset Backed Certificates, Series 2002-1,
and the Class A Floating Rate Asset Backed Certificates, Series 2003-2, were
owned, in each case at the conclusion of the offering of such certificates to
the public, by 100 or more investors independent of the Trust and of one
another. The Trust registered the Class A Floating Rate Asset Backed
Certificates, Series 2002-1, under the Exchange Act within 120 days after the
fiscal year of the Trust during which the
43
offering of such certificates to the public occurred, and such registration has
not been suspended or terminated.
SECTION 5.18. Approval and Authorization. FNANB has received or given any
and all consents, licenses, approvals or authorizations of or registrations or
declarations with any Governmental Authority of the United States or any state
("Authorizations") required to be obtained, effected or given by FNANB to
originate, own and operate the Accounts. All Accounts have been properly
accounted for and all payments or monies received by FNANB with respect to the
payment of any Receivable have been properly applied. Each Account has been
properly originated, maintained and serviced in all material respects solely by
FNANB or TSYS in a manner consistent with any standard and customary practices
utilized by prudent lenders engaged in the business of lending money through
credit card accounts. Each Seller has received all Authorizations required to
conduct the Credit Card Business as conducted by it and has conducted the Credit
Card Business and operated each of the Purchased Assets owned by it at all times
in compliance in all material respects with all such Authorizations. No
Governmental Authority has placed any written restriction on the Credit Card
Business or the Purchased Assets or Circuit City, FNANB, or Tyler Funding
specifically with respect to the consummation of the transactions contemplated
herein or in the Program Agreement. Circuit City, FNANB, and Tyler Funding are
not in default under, and no event has occurred which with the lapse of time or
action by a third party could result in a default under, the terms of any
judgment, order, writ, decree, permit or license of any Governmental Authority.
SECTION 5.19. Disclosure. No statement or description contained in any
document provided or delivered by Circuit City, FNANB or Tyler Funding to
Purchaser in connection with the series of transactions contemplated hereby set
forth in Section 5.19 of the Seller Disclosure Schedule (the "Reviewed
Documents"), as of the date of such statement or description, contained any
untrue statement of a material fact, or omitted to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading; provided, however, that (i) in the
case of an untrue statement of a material fact, neither Circuit City nor either
Seller will be liable for any such untrue statement or alleged untrue statement
made in a Reviewed Document to the extent such untrue statement or alleged
untrue statement was corrected in a document subsequently provided or delivered
by Circuit City, FNANB or Tyler Funding to Purchaser and (ii) in the case of an
omission to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, neither Circuit City nor either Seller will be liable for any such
omission or alleged omission to the extent such omission or alleged omission was
rectified in another document provided or delivered by Circuit City, FNANB or
Tyler Funding to Purchaser. Circuit City or FNANB has informed Purchaser, in
writing, of any and all features, reward programs, benefits, enhancements,
promotional rate programs, balance transfer programs, introductory rate
strategies, and usage or activation strategies utilized by Circuit City or FNANB
that remain in effect with respect to the Accounts, or which continue to affect
any Account, as of the Cut-Off Time.
SECTION 5.20. Insurance Contracts; Credit Protector Contracts.
(a) Schedule 5.20 of the Seller Disclosure Schedule sets forth (i) each
insurance agreement and arrangement maintained by Sellers or their Affiliates
with any insurance agent,
44
insurance company, or reinsurance company for the purpose of providing to
Borrowers credit life, health, accident, disability, unemployment, or any other
credit related insurance ("Insurance Contract") and (ii) each agreement with a
Borrower relating to the cancellation of indebtedness upon the occurrence of
certain triggering events ("Credit Protector Contract").
(b) As of the Closing, complete and current copies of each Insurance
Contract and Credit Protector Contract have been provided to Purchaser.
(c) Neither Seller is in default, and no condition exists that with notice
or lapse of time or otherwise would constitute a default with respect to either
Seller, under any Insurance Contract or Credit Protector Contract.
(d) Sellers are not subject to any Liabilities arising from any Insurance
Contract or Credit Protector Contract other than (i) commitments or obligations
arising under the terms and provisions of such agreement and (ii) Liabilities
for which adequate reserves have been reflected in Circuit City's consolidated
financial statements.
SECTION 5.21. Card Processor. TSYS has been informed and is aware of the
assumption of its agreement with FNANB by Purchaser. TSYS has indicated to FNANB
that TSYS will cooperate and assist with the transition from FNANB to Purchaser.
SECTION 5.22. Employee Benefit Plans; Employee Matters.
(a) Section 5.22(a)-1 of the Seller Disclosure Schedule lists each Seller
Benefit Plan. Section 5.22(a)-2 of the Seller Disclosure Schedule lists each
Employment Agreement for any Business Employee, and any collective bargaining or
similar agreements to which Circuit City or any of its Affiliates are party with
any labor organization or union representing any of the Business Employees.
Notwithstanding disclosure on Section 5.22(a)-2 of the Seller Disclosure
Schedule, Purchaser shall not assume or be liable for any of Sellers' Employment
Agreements.
(b) With respect to each Seller Benefit Plan, FNANB has heretofore
delivered or made available to Purchaser true and complete copies of the Seller
Benefit Plans and any amendments thereto, and, with respect to the Circuit City
Savings Plan, a copy of the most recent annual report on Internal Revenue
Service Form 5500, a copy of the most recent summary plan description (including
supplements) required under ERISA with respect thereto, a copy of any related
trust or other funding vehicle documents and the latest financial statements
thereof, the most recent reports or summaries required to be filed or disclosed
under ERISA or the Code and the most recent determination letter received from
the Internal Revenue Service.
(c) Each of the Seller Benefit Plans (i) is in compliance in all material
respects with the applicable provisions of ERISA, the Code, and all other
applicable laws and (ii) has been administered, operated and managed in
accordance with its governing documents. Each Seller Benefit Plan which is
intended to be "qualified" within the meaning of Code section 401(a) has
received a favorable determination letter to such effect from the Internal
Revenue Service, which has not been revoked, and no event has occurred and no
condition exists that could reasonably be expected to cause or result in the
revocation of such determination letter. None of Circuit City, FNANB or Tyler
Funding has engaged in any "prohibited transaction" (as
45
defined in section 4975 of the Code or Section 406 of ERISA), which could
subject any of the Seller Benefit Plans or their related trusts, Circuit City,
FNANB or Tyler Funding, any of their subsidiaries or any person that such
entities have an obligation to indemnify, to any material tax or penalty imposed
under Section 4975 of the Code or Section 502 of ERISA. Any Seller Benefit Plan
previously terminated by Circuit City, FNANB or Tyler Funding, or any ERISA
affiliate was terminated in accordance with its terms and all applicable law,
including ERISA and the Code.
(d) No liability under Title IV of ERISA or under Section 302 of ERISA has
been incurred by Circuit City or any ERISA Affiliate (including FNANB) that has
not been satisfied in full.
(e) FNANB has delivered to Purchaser a true and complete copy of the master
Business Employee database (or one or more similar databases) which list
includes the following information (or equivalent information) as of the most
recent practicable date with respect to each Business Employee (other than any
seasonal employee): (i) date of hire and effective service date, (ii) job title
or position held, (iii) Fair Labor Standards Act status, (iv) base salary or
current wages and target bonus, (v) to the extent available, scheduled salary
increase date and anticipated amount, (vi) to the extent available, most recent
performance ratings and/or other performance data, salary increase and bonus,
(vii) employment status (i.e., active or on leave, short-term disability or
long-term disability and full-time, part-time or reduced schedule), indicating
for any employees on any leave the anticipated return to work date, if known,
and (viii) for Business Employees on or requiring employer-sponsored work
authorization, the type of authorization and expiration date. FNANB shall
provide an update to this information to Purchaser as soon as possible after the
date of this Agreement and shall provide a subsequent update seven (7) business
days prior to the Closing Date. References in this Agreement to "seasonal
employees" shall mean employees hired by FNANB to address peak periods in its
business.
(f) There are no pending or threatened claims (other than claims for
benefits in the ordinary course), lawsuits or arbitrations which have been
asserted or instituted, and, to the Knowledge of Sellers, no set of
circumstances exists which may reasonably give rise to a claim (other than
claims for benefits in the ordinary course) or lawsuit, against the Seller
Benefit Plans, any fiduciaries thereof with respect to their duties to the
Seller Benefit Plans or the assets of any of the trusts under any of the Seller
Benefit Plans which could reasonably be expected to result in any material
liability of Circuit City to the Pension Benefit Guaranty Corporation, the
Department of Treasury, the Department of Labor, any multi-employer plan, any
Seller Benefit Plan, any participant in a Seller Benefit Plan, or any other
person.
(g) With respect to the Business Employees, no labor organization or group
of employees of any Seller currently represents or has made a pending demand for
recognition or certification, and there are no representation or certification
proceedings or petitions seeking a representation proceeding presently pending
or threatened to be brought or filed, with the National Labor Relations Board or
any other labor relations tribunal or authority.
46
SECTION 5.23. Taxes.
(a) All Tax Returns required to have been filed by or with respect to the
Credit Card Business, Tyler Funding, the Purchased Assets, or the Trust (or
their respective assets) have been filed on a timely basis, and (ii) all Taxes
shown to be due on such Tax Returns have been paid. All such Tax Returns were
true, correct and complete in all material respects.
(b) Except as set forth in Section 5.23(b) of the Seller Disclosure
Schedule, (i) no written notice has been received of any deficiencies for Taxes
claimed, proposed or assessed by any Governmental Authority with respect to the
Credit Card Business, Tyler Funding, the Purchased Assets, or the Trust (or
their respective assets) for which Circuit City, FNANB, Tyler Funding, or the
Trust may have any Liability; (ii) no Governmental Authority has proposed in
writing to commence an audit, suit, proceeding, investigation, claim or
administrative proceeding for or relating to any liability in respect of any
such Taxes and, to the Knowledge of Circuit City, FNANB and Tyler Funding, none
is pending currently; (iii) there are no outstanding written agreements or
waivers extending the statutory period of limitations applicable to any Tax
Returns required to be filed with respect to the Trust, nor is any request for
any such agreement or waiver pending; (iv) no amounts are or will be due from
the Trust under any tax-sharing or tax-allocation agreement; (v) the Trust has
not received a ruling from any Governmental Authority relating to Taxes; (vi) no
closing agreement pursuant to Section 7121 of the Code (or any similar provision
of state, local or foreign law) has been entered into by or with respect to the
Trust, and (vii) to the best of Sellers' Knowledge, Sellers have received no
oral advice or other communication with respect to any matter referenced in
clause (i), (ii), or (iii) of this Section 5.23(b).
(c) It is agreed and understood by the parties that except for the
representations and warranties contained in this Section 5.23, no
representations or warranties are made by Circuit City, FNANB, Tyler Funding or
their respective Affiliates, including any member of the Circuit City Affiliated
Group or the Circuit City Group, relating to Taxes.
(d) Nothing in this Section 5.23 shall cause Circuit City, FNANB, Tyler
Funding, or any successors in interest thereto, including any member of the
Circuit City Affiliated Group or the Circuit City Group, to be liable for any
Taxes for which Circuit City, FNANB, Tyler Funding or any successors-in-interest
thereto are not expressly liable pursuant to Article VIII.
SECTION 5.24. Insurance. Circuit City, FNANB and Tyler Funding maintain
insurance policies and fidelity bonds (including financial institutions bond,
property and casualty insurance and workers' compensation insurance) related to
the Credit Card Business of the type and in amounts customarily carried by
persons conducting similar businesses; provided, however, that Tyler Funding
does not maintain professional liability errors and omissions insurance. None of
such Parties has any Knowledge of any threatened termination of or material
alteration of coverage under any of such policies or bonds.
SECTION 5.25. Finders or Brokers. None of FNANB or any of its Affiliates
has agreed to pay any fee or commission to any agent, broker, finder, or other
Person for or on account of services rendered as a broker or finder in
connection with this Agreement or the
47
transactions contemplated hereby that would give rise to any valid claim against
Purchaser for any brokerage commission or finder's fee or like payment.
SECTION 5.26. Leased Real Property. (a) Schedule 1.01-3 sets forth the
address or other description of each parcel of Leased Real Property. True,
correct and complete copies of Sellers' real estate files for the Leased Real
Property have been provided. There are no Contracts for the Leased Real Property
that are not contained within the real estate files which would increase the
obligations or decrease the rights of Sellers in respect of the Leased Real
Property. With respect to the Leases for each Leased Real Property: (i) there
are no disputes with respect to such Lease; (ii) no security deposit or portion
thereof deposited with respect to such Lease has been applied in respect of a
breach or default under such Lease which has not been redeposited in full; (iii)
the Sellers do not owe any brokerage commissions or finder's fees with respect
to such Lease; (iv) the Sellers have not subleased, licensed or otherwise
granted any Person the right to use or occupy such Leased Real Property or any
portion thereof; (v) the Sellers have not collaterally assigned or granted any
other security interest in such Lease or any interest therein; and (vi) there
are no Liens on the estate or interest created by such Lease except for
Permitted Liens.
(b) To the Knowledge of Circuit City, FNANB and Tyler Funding, (i) all
Improvements are in reasonably good condition and repair and sufficient for the
operation of the Credit Card Business, as currently conducted, subject to
reasonable wear and tear, and (ii) there are no facts or conditions affecting
any of the Improvements which would interfere in any respect with the use or
occupancy of the Improvements or any portion thereof in the operation of the
Credit Card Business, as currently conducted.
SECTION 5.27. Substantially All Assets. The sale of the Purchased Assets to
Purchaser constitutes a transfer of each Seller's properties and assets
"substantially as an entirety" for purposes of Section 7.2 (in the case of Tyler
Funding) and Section 8.2 (in the case of FNANB) of the Pooling and Servicing
Agreement.
SECTION 5.28. Environmental Matters. (i) The Purchased Assets are and have
been in compliance with all Environmental Laws; (ii) no judicial or
administrative proceedings are pending or, to the Knowledge of Circuit City,
FNANB and Tyler Funding, threatened against Circuit City, FNANB or Tyler Funding
relating to the Purchased Assets, including the Leased Real Property, that
allege the violation of or seek to impose Liability pursuant to any
Environmental Law and, there are no investigations pending or, to the Knowledge
of Circuit City, FNANB and Tyler Funding, threatened against Circuit City, FNANB
or Tyler Funding with respect to the Purchased Assets, including the Leased Real
Property, which in any case could give rise to Environmental Losses; (iii) to
the Knowledge of Circuit City, FNANB and Tyler Funding, there are no facts,
circumstances or conditions relating to, arising from or attributable to the
Purchased Assets, including the Leased Real Property, that are reasonably likely
to give rise to Environmental Losses; and (iv) Circuit City, FNANB and Tyler
Funding have provided Purchaser with copies of all environmentally related
audits, assessments, studies, reports, analyses and results of investigations
related to the Purchased Assets, including any Leased Real Property, that are in
the possession, custody or control of Circuit City, FNANB and Tyler Funding.
There are no pending, or to the Knowledge of Circuit City, FNANB and Tyler
Funding threatened, investigations, actions, proceedings or claims of whatsoever
nature arising
48
under any Environmental Law involving the Purchased Assets, including the Leased
Real Property.
SECTION 5.29. Financial Ability to Perform. Each of Circuit City, FNANB,
and Tyler Funding is fully capable from a financial standpoint of performing its
obligations under this Agreement and the Related Agreements and has no Knowledge
of any facts, circumstances or conditions that could reasonably be expected to
render such Party financially incapable of performing its obligations under this
Agreement or the Related Agreements.
SECTION 5.30. No Pending Change of Control. As of the date of this
Agreement, Circuit City has not executed any agreements, or entered into any
negotiations or discussions with any third party, that, if completed, would
result in a Change in Control (as defined in the Program Agreement) of Circuit
City on or after the date of this Agreement.
SECTION 5.31. No Other Representations or Warranties. Except for the
representations and warranties contained in this Agreement (including the
Exhibits hereto and Schedules hereto and thereto), none of Circuit City, FNANB
nor any agent, Affiliate, officer, director, employee or representative of any
such Parties, nor any other Person, makes or shall be deemed to make any
representation or warranty to Purchaser. Purchaser shall only be entitled to
rely on the representations, warranties or statements that are expressly set
forth herein and Purchaser will not have any right or remedy arising out of any
other representation, warranty, or statement.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Except as set forth in the Purchaser Disclosure Schedule, Purchaser
represents and warrants to each of Circuit City, FNANB and Tyler Funding as of
the date hereof and as of the Closing Date (or as of such other date as may be
expressly provided in any representation or warranty), as set forth below.
Information disclosed in any section of the Purchaser Disclosure Schedule shall
be deemed to be disclosed with respect to such other sections of this Agreement
or the Purchaser Disclosure Schedule to which such disclosure shall reasonably
pertain in light of the form and substance of the disclosure made.
SECTION 6.01. Organization. Purchaser is a national banking association
duly organized, validly existing, and in good standing under the laws of the
United States of America. Purchaser has all requisite corporate power and
authority to own, lease and operate its property as now operated. Purchaser has
all requisite corporate power and authority to own the Purchased Assets and to
carry on the Credit Card Business in a manner similar to that currently
conducted and, as of the Closing Date.
SECTION 6.02. Authority; Validity. Purchaser has all necessary corporate
power and authority to enter into this Agreement and the Related Agreements and
to perform all of the obligations to be performed by it under this Agreement and
the Related Agreements. The making, execution, delivery, and performance of this
Agreement and the Related Agreements and the consummation by Purchaser of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action on the part of Purchaser. This
49
Agreement has been, and as of the Closing Date the Related Agreements will be,
duly and validly executed and delivered by Purchaser. Assuming the due
authorization, execution, and delivery by each of Circuit City, FNANB and Tyler
Funding that is a party hereto and thereto, each of this Agreement and the
Related Agreements will constitute the valid and binding obligations of
Purchaser enforceable against it in accordance with its respective terms, except
as such enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium, receivership, conservatorship, the rights and obligations of
receivers and conservators of insured depository institutions under 12 U.S.C.
ss.1821(d) and (e), and other laws relating to or affecting creditors' rights
generally and by general equity principles.
SECTION 6.03. Conflicts; Defaults. Assuming the consents and approvals
referred to in Section 6.04 are obtained and the Securitization Transfer
Agreements and Required Securitization Amendments are validly executed and
delivered by the parties thereto, neither the execution and delivery of this
Agreement and the Related Agreements by Purchaser, nor the consummation of the
transactions contemplated hereby or thereby by such Parties, will violate,
conflict with, result in the breach of, constitute a default under, be
prohibited by, require any additional approval under, accelerate the performance
required by, require the assumption of, give any third party the right to
terminate, or result in any other change, right or obligation or the loss of a
benefit under (x) any terms, conditions, or provisions of Purchaser's
organizational documents or bylaws, (y) any mortgage, indenture, deed of trust,
loan or credit agreement or other material agreement or instrument to which
Purchaser is now a party or by which it is bound, or (z) any Requirement of Law
applicable to Purchaser, other than, in the case of clauses (y) and (z).
SECTION 6.04. Approvals. Subject to Section 7.07 (and except any required
filings pursuant to the HSR Act and Bank Merger Act and any related approvals),
no notices, approvals, reports or other filings are required to be made by
Purchaser, nor are there any consents, registrations, approvals, permits, or
other authorizations required to be obtained by Purchaser from, any Governmental
Authority or other third party in order for such Parties to execute or deliver
this Agreement, the Related Agreements, or the Securitization Transfer
Agreements or to consummate the transactions contemplated hereby and thereby. To
the Knowledge of Purchaser, there are no facts, events, circumstances or
conditions relating to Purchaser or any of its Affiliates now in existence or
reasonably likely to exist prior to the Closing, which facts, events,
circumstances or conditions could reasonably be expected to result in the
imposition of an Unreasonable Condition by any applicable Governmental
Authority.
SECTION 6.05. Litigation. There is no action, suit, proceeding, claim or
other litigation pending, or any investigation by any Governmental Authority
pending or, to the Knowledge of Purchaser, any action, suit, proceeding, claim
or other litigation or governmental investigation threatened, against Purchaser
or any of its Affiliates (i) with respect to the transactions contemplated by
this Agreement or (ii) which, if adversely decided would reasonably be expected
to have, individually or in the aggregate, a Purchaser Material Adverse Effect.
There are no judgments, injunctions, writs, orders or decrees binding upon
Purchaser or any of its Affiliates that (i) would reasonably be expected to
prevent the consummation of the transactions contemplated hereby, or (ii) would
adversely affect the conduct of the Credit Card Business by Purchaser in any
material respect. No audit, investigation, inspection, or other review or
inquiry by any Governmental Authority concerning or involving the Purchaser
50
conducted since January 1, 2003 has reported any material violation by Purchaser
of any material Requirement of Law.
SECTION 6.06. Compliance with Requirements of Law. Except as set forth in
the Purchaser Disclosure Schedule, Purchaser is in compliance in all material
respects with all applicable Requirements of Law relating to or in any way
affecting its credit card business. Since January 1, 2003, Purchasers have not
(i) violated in any material respect any Requirements of Law relating to its
credit card business or (ii) received any written or, to the Knowledge of
Purchaser, oral notice from (and otherwise do not have any Knowledge of) any
Governmental Authority that alleges any material noncompliance (or that
Purchaser is under investigation by any such Governmental Authority for such
alleged noncompliance) with any Requirements of Law relating to its credit card
business.
SECTION 6.07. Licenses and Permits. Except as set forth in the Purchaser
Disclosure Schedule: (i) the Purchaser Permits are valid and in full force and
effect in every state in the United States where they are required under
applicable law; (ii) Purchaser is not in default, and no condition exists that
with notice or lapse of time or otherwise would constitute a default, under the
Purchaser Permits; and (iii) none of the Purchaser Permits shall be terminated
or impaired or become terminable, in whole or in part, as a result of the
transactions contemplated hereby and by the Related Agreements.
SECTION 6.08. Financial Ability to Perform. Purchaser is fully capable from
a financial standpoint of performing its obligations under this Agreement and
the Related Agreements and has no Knowledge of any facts, circumstances or
conditions that could reasonably be expected to render it financially incapable
of performing its obligations under this Agreement or the Related Agreements.
Purchaser has and will at the Closing have cash, cash equivalents, available
lines of credit, or other sources of immediately available funds readily
available, or commitments to obtain such cash, cash equivalents, or such other
sources funds, sufficient to enable Purchaser to purchase the Purchased Assets
on the Closing Date, and to pay all fees and expenses incurred by Purchaser
related thereto.
SECTION 6.09. VISA Member. Purchaser is qualified to participate in, and is
a member in good standing of, the VISA credit card program.
SECTION 6.10. Servicing Qualifications. Purchaser is, or as of the Closing
will be, qualified to service the Accounts in all jurisdictions where such
qualification is necessary, in accordance with all Requirements of Law.
SECTION 6.11. Finders or Brokers. Purchaser has not agreed to pay any fee
or commission to any agent, broker, finder, or other Person for or on account of
services rendered as a broker or finder in connection with this Agreement or the
transactions contemplated hereby which would give rise to any valid claim
against Circuit City, FNANB, Tyler Funding, or their respective Affiliates for
any brokerage commission or finder's fee or like payment.
SECTION 6.12. No Other Representations or Warranties. Except for the
representations and warranties contained in this Agreement (including the
Exhibits hereto and
51
Schedules hereto and thereto), neither Purchaser nor any agent, Affiliate,
officer, director, employee or representative of Purchaser, nor any other
Person, makes or shall be deemed to make any representation or warranty to
Circuit City, FNANB or Tyler Funding. Circuit City, FNANB and Tyler Funding
shall only be entitled to rely on the representations, warranties or statements
that are expressly set forth herein and Circuit City, FNANB and Tyler Funding
will not have any right or remedy arising out of any other representation,
warranty, or statement.
ARTICLE VII
COVENANTS
SECTION 7.01. Preservation of Credit Card Business. Except as set forth on
Section 7.01 of the Seller Disclosure Schedule, from the date of this Agreement
and continuing until the Closing Date, Circuit City, FNANB and Tyler Funding
shall, and shall direct their respective agents, to:
(i) maintain and service the Accounts in substantially the same manner
as currently maintained and serviced and in accordance with the Account
Guidelines,
(ii) maintain and service the Accounts in compliance in all material
respects with applicable Requirements of Law;
(iii) preserve intact the business operations and use commercially
reasonable efforts to preserve relationships with third parties, in
accordance with their terms, relating to the Credit Card Business;
(iv) follow substantially the same practices and standards, including
collection practices and accounting practices for charge-offs (including
the sale of charged-off Receivables in the ordinary course of business
consistent with past practices), to the extent that any change in such
accounting practices and standards would be binding on or otherwise affect
the Credit Card Business or the Purchaser following the Closing, as in
effect on the date hereof;
(v) not, without the prior written consent of Purchaser, which consent
shall not be unreasonably withheld or delayed, make any change to the
Account Guidelines except as required by law, safe or sound banking
practices or the Operating Regulations. Circuit City, FNANB and Tyler
Funding shall, and shall direct their respective agents to, post all
payments received prior to the Cut-Off Time to the applicable Account as of
the Cut-Off Time;
(vi) not, except as required by law or with the prior written consent
of Purchaser, enter into any employment arrangements, severance agreements,
bonus or similar agreements or increase the rates of compensation payable
or to become payable to any Business Employee; provided, however, Sellers
may (i) enter into new or modify existing severance or retention agreements
to the extent payable by Circuit City or Sellers and payable only with
respect to a Business Employee's continued employment to the Closing Date
with Purchaser's prior consent, which shall not be unreasonably withheld,
(ii) make regularly scheduled salary or wage increases or promotional
increases consistent with past practices and (iii) hire seasonal employees
in the ordinary course of
52
business consistent with past practices with Purchaser's prior consent,
which shall not be unreasonably withheld;
(vii) use commercially reasonable efforts to keep available the
services of the Business Employees consistent with the terms and provisions
of the retention policy attached hereto as Exhibit P (however, Circuit
City, FNANB and Tyler Funding shall bear any retention costs);
(viii) not effectuate any reaging of Accounts inconsistent with
Sellers' Reaging Policies other than as permitted by Sellers' operating
procedures in effect as of the date of this Agreement;
(ix) not encumber sell, assign, lease or otherwise transfer or dispose
of the Purchased Assets, other than (i) the transfer and assignment of the
Receivables to the Trust (ii) any such sale, encumbrance, assignment or
transfer in the ordinary course of business consistent with past practice
or (iii) Permitted Liens;
(x) not to communicate with Cardholders except in the ordinary course
of business; and
(xi) not market any reduced rate to Cardholders without the prior
written consent of Purchaser, which consent shall not be withheld subject
to Purchaser's commercially reasonable discretion, other than (1)
promotional financing plans of the types identified without an asterisk in
Exhibit 2.6(c) to the Program Agreement and (2) a 24-month no interest/no
payment promotion scheduled for March 2004 (the "March Promotion");
provided that the Purchase Price to be paid at Closing shall be reduced in
an amount, if any, equal to the product of (y) 4.5% times (z) the
incremental amount of aggregate sales under the March Promotion in excess
of $20 million. It is understood that with respect to any promotional
financing programs (other than the promotional financing plans described in
clauses (1) and (2) above) to which Purchaser consents, the Purchase Price
to be paid at Closing shall be reduced in an amount agreed by the Parties
in their commercially reasonable discretion.
SECTION 7.02. Preservation of Accounts. From the date of this Agreement and
continuing until the Closing Date, Circuit City, FNANB and Tyler Funding shall:
(i) other than in accordance with the Receivables Purchase Agreement and the
Pooling and Servicing Agreement, not sell, assign, transfer or pledge, any
Account without the prior written consent of Purchaser; (ii) not take any action
with respect to the Accounts that will impair any rights of Circuit City, FNANB
or Tyler Funding, and shall not amend any Account Agreement other than on a per
customer basis in accordance with the Account Guidelines; and (iii) comply in
all material respects with the terms and conditions of the Account Agreements,
as then in effect.
SECTION 7.03. Reasonable Access.
(a) From the date hereof to the Closing, subject to applicable Requirements
of Law, (i) each of Circuit City, FNANB and Tyler Funding will permit Purchaser
and its representatives to have full access, during regular business hours and
upon reasonable advance notice for purposes reasonably consistent with this
Agreement, to their respective properties, premises,
53
facilities, employees and representatives and books and records, including all
computer tapes and similarly stored data, but only to the extent that such
access does not unreasonably interfere with the business of Circuit City, FNANB,
Tyler Funding or their respective Affiliates and only to the extent related to
the transactions contemplated by this Agreement or by the Related Agreements and
(ii) each of Circuit City, FNANB and Tyler Funding shall direct their respective
employees, agents and representatives and shall cause the employees, agents and
representatives of their Affiliates, to cooperate fully with Purchaser and its
representatives; provided, however that, in each case, Purchaser, its Affiliates
and their respective representatives shall comply with the confidentiality
obligations contained herein; provided, further, that the foregoing shall not
(i) require Circuit City or any of its Affiliates to permit any inspection, or
to disclose any information, that (x) would result in the disclosure of any
trade secrets of third parties, or any trade secrets of Circuit City, FNANB,
Tyler Funding or of any of their respective Affiliates, or (y) violate any
obligations of Circuit City, FNANB or Tyler Funding, or their respective
Affiliates, to any third party with respect to confidentiality; or (ii) require
any disclosure by Circuit City, FNANB or Tyler Funding or any of their
respective Affiliates, that would reasonably be expected, as a result of such
disclosure, and in the opinion of counsel, to have the effect of causing the
waiver of any attorney-client privilege.
(b) To the fullest extent not prohibited by Requirements of Law, in
furtherance of the terms of Section 7.03(a) and subject to the provisos set
forth therein, from the date hereof to the Closing Date, (i) senior officers of
the Credit Card Business and of the credit card business of Purchaser shall meet
on a regular basis (no less than bi-weekly) to review the financial performance
and operational affairs of the Credit Card Business to achieve an orderly
integration of the Credit Card Business by Purchaser as of the Closing, and (ii)
no later than ten (10) Business Days from the date hereof, Sellers and Purchaser
shall each appoint three officers with knowledge of, and experience, in, the
credit card business to comprise a transition team (the "Transition Team") which
shall meet on a regular basis to discuss and implement reasonable steps
necessary to achieve an orderly integration of the Credit Card Business by
Purchaser as of the Closing and to attempt to minimize Purchaser's reliance on
interim services from Sellers following the Closing. The Transition Team shall
negotiate in good faith the terms of the Transition Services Agreement which
shall incorporate the terms and provisions set forth on Exhibit G, pursuant to
which Sellers and their respective Affiliates shall provide to Purchaser and its
Affiliates all interim services as are necessary, including the provision of
services provided by third parties under certain Contracts that are Retained
Assets, in combination with the Purchased Assets, the Business Employees and the
rights of Purchaser to conduct the Credit Card Business in substantially the
same manner as it will be conducted immediately prior to the Closing.
(c) Following the Closing, the terms and conditions of the Program
Agreement shall govern the access rights of the Parties hereto.
SECTION 7.04. Confidentiality.
(a) All information furnished by a Party (the "Protected Party") to another
Party (the "Receiving Party") in connection with this Agreement and the
transactions contemplated hereby shall be received in confidence and kept
confidential by such other Party, and shall be used by it only in connection
with this Agreement and the transactions contemplated hereby,
54
except to the extent that such information: (i) is already lawfully known to
such other party when received; (ii) thereafter becomes lawfully obtainable from
other sources other than as a result of disclosure by such other Party; (iii) is
required to be disclosed to VISA or to a Governmental Authority having authority
over such Party; (iv) is disclosed to its auditors or counsel (each of whom the
disclosing Party shall cause to use commercially reasonable efforts to keep such
information confidential and to use the same only in connection with this
Agreement) or is required to be disclosed strictly on a need to know basis to
its lenders, investors, or rating agencies; or (v) is required by law,
regulation or court order to be disclosed by such other party; provided,
however; that prior notice of such disclosure (other than to its Affiliates,
auditors, counsel, rating agencies or lenders) has been given to the Protected
Party, when legally permissible, and that the Party which is required to make
the disclosure uses commercially reasonable efforts to provide sufficient notice
to permit the Protected Party to take legal action to prevent the disclosure. In
protecting such information from disclosure, the Receiving Party shall use at
least the same level of care that it uses to protect its own proprietary
information, but in no event shall the Receiving Party use less than reasonable
care in taking security measures to protect the information. If the transactions
contemplated by this Agreement shall fail to be consummated, such other Party,
at the request of the Protected Party, shall as soon as practicable cause all
originals and copies of documents or extracts thereof containing all information
and data furnished by the Protected Party to be returned to the Protected Party
or destroyed and shall cause an officer to so certify to the Protected Party.
Notwithstanding the foregoing, each Party may retain one copy of the
confidential information subject to the terms hereof with its general counsel
solely for the purpose of dealing with claims arising under this Section 7.04.
This Section 7.04 shall survive any termination of this Agreement. Following the
Closing, if there is any conflict between the terms of this Section 7.04(a) and
the terms of the Program Agreement, the terms of the Program Agreement shall
govern.
(b) Notwithstanding anything herein to the contrary, except as reasonably
necessary to comply with applicable securities laws, each Party (and each
employee, representative, or other agent of such Party) is permitted to disclose
the Tax Treatment and Tax Structure (as such terms are hereinafter defined) of
the transaction contemplated by this Agreement (including all materials of any
kind, including opinions and other tax analyses, to the extent such materials
relate solely to such Tax Treatment and Tax Structure); provided, however, that
such disclosure may not be made until the earlier of (i) the date of the public
announcement of discussions relating to this transaction; (ii) the date of the
public announcement of this transaction; or (iii) the date of the execution of
this Agreement to enter into this transaction. In addition, each Party's ability
to consult any tax advisor (including a tax advisor independent from all other
entities involved in the transaction) regarding the Tax Treatment or Tax
Structure of the transaction contemplated hereby is not limited in any way. For
purposes of this provision, "Tax Treatment" means the purported or claimed state
or Federal income tax treatment of the transaction contemplated by this
Agreement and "Tax Structure" means any fact that may be relevant to
understanding the Tax Treatment. For this purpose, disclosure is limited to any
statements or information relating to the U.S. state or federal income tax
treatment or tax structure of the transaction and does not include any other
information furnished by any Party to another Party in connection with this
Agreement and the transactions contemplated hereby.
55
SECTION 7.05. Books and Records. Each Party hereto shall preserve and keep
all books and records and all information relating to the accounting, business,
and financial affairs that are retained by FNANB or its Affiliates or obtained
by Purchaser or its Affiliates hereunder, as the case may be, which information
relates to the Purchased Assets, the Assumed Liabilities or the Credit Card
Business, for a reasonable period (three (3) years or such longer period set
forth in Exhibit R) after the Closing Date, or for any longer period (i) as may
be required by any Governmental Authority and (ii) as may be reasonably
necessary with respect to the prosecution or defense of any audit or other legal
action that is then pending or threatened and with respect to which the
requesting Party has notified the other Parties as to the need to retain such
books, records or information. Each Party shall allow the other Parties
reasonable access to such Books and Records and the right to make copies thereof
at reasonable times upon reasonable notice and shall provide, upon reasonable
notice, copies thereof if such Books and Records are required in connection with
any claim or proceeding in which such Party is involved, provided, however, that
this Section 7.05 shall not require any Party to provide such access or copies
to another Party with respect to any claims or proceedings of one Party against
another Party. Commencing on the Closing Date, the Books and Records shall be
the property of Purchaser; provided that Circuit City, FNANB, Tyler Funding or
their Affiliates may retain possession of such copies thereof as may be required
to meet legal, regulatory, tax, accounting and auditing requirements and with
respect to the prosecution or defense of any audit or other legal action and may
use such copies solely for those purposes. Except for any Books and Records that
Circuit City, FNANB, Tyler Funding or their Affiliates cannot reasonably segment
from books and records relating to the credit card accounts not being sold to
Purchaser hereunder, Circuit City, FNANB, Tyler Funding and their Affiliates
will make the Books and Records available for delivery to Purchaser on the
Closing Date. If the Books and Records delivered by Circuit City, FNANB, Tyler
Funding or their Affiliates contain information on accounts not being sold to
Purchaser hereunder, Purchaser shall comply with the confidentiality provisions
contained herein with respect to such information and shall not use such
information for any purpose.
SECTION 7.06. Publicity; Press Releases. Except as may be required by any
Requirement of Law, neither Circuit City, FNANB, Tyler Funding, Purchaser nor
any of their respective Affiliates, subsequent to the date hereof and continuing
after the Closing Date, shall issue a press release or make any public
announcement or statement related to the transactions contemplated hereby, this
Agreement, or the financial terms hereof without the prior consent of the other
Parties hereto, which consent shall not be unreasonably withheld or delayed.
Circuit City, FNANB, Tyler Funding, and Purchaser agree, to the extent possible
and legally permissible, to notify and consult with such other Parties at least
48 hours in advance of filing any notice required by any Requirement of Law.
This Section 7.06 shall survive any termination of this Agreement.
SECTION 7.07. Delivery of Required Securitization Amendments and
Securitization Transfer Agreements; Exchange Act Registration. Circuit City,
FNANB and Tyler Funding shall cause the Required Securitization Amendments and
the Securitization Transfer Agreements to be executed by the parties thereto on
or before the Closing Date. Purchaser shall reasonably cooperate with Circuit
City, FNANB and Tyler Funding in connection therewith. FNANB, Tyler Funding and
Purchaser shall cause the Trust to file any and all SEC documents relating to
the Required Securitization Amendments and the
56
Securitization Transfer Agreements within the appropriate time after the
effectiveness thereof. The costs associated with the preparation and filing of
such SEC documents shall be borne by the Party that is required to make such
filing. Purchaser shall be primarily responsible for any and all such filings
(and any related certifications to the SEC) after Closing; provided, however,
that FNANB shall provide to Purchaser on the Closing Date (i) a certification,
substantially in the form of Exhibit K attached hereto, with respect to periods
commencing after February 29, 2004 and ending prior to the Closing Date and (ii)
a certification, substantially in the form of Exhibit Q attached hereto, with
respect to the period from and including the first day of the Closing Month to
but excluding the Closing Date. Sellers shall cause the Class A Floating Rate
Asset Backed Certificates, Series 2003-2, to be registered under the Exchange
Act on or before the Closing Date.
SECTION 7.08. Advice of Changes. From the date hereof to the Closing Date,
Circuit City, FNANB and Tyler Funding, on the one hand, and Purchaser, on the
other hand, shall promptly advise the other in writing upon acquiring Knowledge
of any fact which, if existing or known at the date hereof, would have been
required to be set forth or disclosed pursuant to this Agreement or of any fact
which, if existing or known at the date hereof, would have made any of the
representations of such Party contained herein untrue in any material respect.
No such information shall impact any representation or warranty made as of the
date hereof of the Party disclosing such information or any rights or remedies
available to the Party receiving such information in connection with any breach
of any representation or warranty; provided, however, that a breach of this
Section 7.08 shall not be considered for purposes of determining the
satisfaction of the closing conditions set forth in Article IX or give rise to a
right of termination under Article XI if the underlying breach or breaches with
respect to which a Party failed to give notice would not result in the failure
of the closing conditions set forth in Article IX or would not result in the
ability of any non-breaching Party to terminate this Agreement under Article XI,
as the case may be.
SECTION 7.09. Efforts; Filings.
(a) Subject to the terms and conditions of this Agreement, each of Circuit
City, FNANB, Tyler Funding, and Purchaser shall use its Reasonable Best Efforts
to take, agree to take, or cause to be taken, any and all actions and to do, or
cause to be done, any and all things necessary, proper or advisable under
Requirements of Law or otherwise, so as to, as promptly as practicable: (i)
permit consummation of the purchase of the Purchased Assets and the assumption
of the Assumed Liabilities and (ii) otherwise enable consummation of the
transactions contemplated by this Agreement, the Related Agreements and the
Securitization Transfer Agreements, and each shall, and shall cause its
respective Affiliates to, cooperate fully to that end. As used in this Section
7.09, "Reasonable Best Efforts" shall be deemed to include promptly agreeing to
take, taking, or causing to be taken any and all actions required by any
Governmental Authority, including the U.S. Federal Trade Commission, the
Antitrust Division of the U.S. Department of Justice, or any state attorney
general, or any state insurance regulator, to the extent necessary to consummate
the transactions contemplated by this Agreement as promptly as reasonably
practicable, so long as such actions are expressly conditioned on the Closing of
the transactions contemplated by this Agreement; provided, that such actions do
not result and would not reasonably be likely to result in (i) an Unreasonable
Condition or (ii) a divestiture, change in business practice, modification of
business model, or
57
entry into a consent decree or similar accord with a Governmental Authority
which the applicable Party shall determine, in its sole discretion, not to be in
its best interests.
(b) As promptly as practicable but in no event later than fifteen (15)
Business Days after the date of this Agreement, if and to the extent required
under the HSR Act or the Bank Merger Act, Circuit City, FNANB, Tyler Funding,
and Purchaser shall prepare and file all documents and notifications with the
Federal Trade Commission and the U.S. Department of Justice, or with the
applicable banking Governmental Authorities, as are required to comply with the
HSR Act or the Bank Merger Act, and the rules and regulations promulgated
thereunder. Purchaser, with the good faith cooperation of Circuit City, FNANB
and Tyler Funding, shall use its Reasonable Best Efforts to take or cause to be
taken as promptly as practicable all such additional actions as may be necessary
to obtain such prior approval. Each Party shall file with the OCC any report
that is required to be filed by it with the OCC periodically, including any
report that is required to be filed pursuant to 12 U.S.C. ss. 161, as of the
date hereof. The Parties shall cooperate with each other in good faith in the
preparation and coordination of all such filings and responses, and shall do, or
cause to be done, all things and take, or cause to be taken, all actions
required to obtain the prompt termination of any waiting period thereunder.
(c) Without limiting the foregoing, each of Circuit City, FNANB, Tyler
Funding, and Purchaser agrees to use its commercially reasonable efforts to
prepare all documentation, to effect all filings and to obtain all permits,
consents, clearances, approvals and authorizations of all Governmental
Authorities and other Persons (including, if applicable, the Card Association
and TSYS) necessary to consummate the transactions contemplated by this
Agreement, the Related Agreements and Securitization Transfer Agreements as
promptly as practicable. In connection with effecting any such filing or
obtaining any such permit, consent, clearance, approval or authorization
necessary to consummate the transactions contemplated by this Agreement, the
Related Agreements and Securitization Transfer Agreements, each of such Parties
shall, subject to applicable law, (i) permit counsel for the other Parties to
review in advance, and consider in good faith the views of the other party in
connection with, any proposed written communication to any Governmental
Authority, and (ii) 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 or received
from such a Governmental Authority; provided, however, that materials may be
redacted or withheld (x) to the extent they concern the valuation of the Credit
Card Business or alternatives to the transactions contemplated by this Agreement
and (y) as necessary to comply with contractual arrangements. Each of Circuit
City, FNANB, Tyler Funding, and Purchaser agrees not to participate, or to
permit its respective Affiliates to participate, in any substantive meeting or
discussion, either in person or by telephone, with any Governmental Authority in
connection with the consummation of the transactions contemplated hereby unless
it consults with the other Parties in advance and, to the extent not prohibited
by such Governmental Authority, gives the other Parties the opportunity to
attend and participate.
(d) Circuit City, FNANB, and Tyler Funding, on the one hand, and Purchaser,
on the other hand, shall each pay half of the filing fee relating to any filing
required under the HSR Act.
58
SECTION 7.10. No Solicitation. Neither Circuit City, FNANB, Tyler Funding
nor any of their respective Affiliates shall, or permit any of their
Subsidiaries to, or authorize or permit any director, officer or employee of
such Parties or any of their respective Subsidiaries or any investment banker,
attorney, accountant or other advisor or representative of the such Parties or
any of their respective Subsidiaries to, directly or indirectly, solicit,
initiate or encourage, take any other action knowingly to facilitate, enter
into, continue or otherwise participate in any negotiations regarding, or
furnish to any person any information with respect to, or otherwise cooperate in
any way with, any inquiry, proposal or offer from any Person relating to, or
that is reasonably likely to lead to, any direct or indirect acquisition, in one
transaction or a series of transactions, including any merger, consolidation,
exchange offer, binding share exchange, business combination, recapitalization,
liquidation, dissolution, joint venture or similar transaction, of any assets
(other than (i) as permitted under Section 7.01 or (ii) to the extent such
assets would not reasonably be expected to be included in the Purchased Assets),
stock (or other equity or voting interests) or businesses of the Credit Card
Business.
SECTION 7.11. Miscellaneous Agreements and Consents. Subject to the terms
and conditions contained herein, each Party shall use commercially reasonable
efforts to take, or cause to be taken, all action, and to do, or cause to be
done, all things necessary, appropriate or desirable hereunder and under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement and the Related Agreements. Each
Party will use commercially reasonable efforts to obtain consents of all third
parties and any Governmental Authority necessary for the consummation of the
transactions contemplated by this Agreement. The Parties and their respective
officers, directors and/or employees shall use commercially reasonable efforts
to take such further actions subsequent to the Closing Date as are reasonably
necessary, appropriate or desirable to carry out the purposes of this Agreement.
SECTION 7.12. Assignment of Contracts; Approvals and Consents.
(a) Notwithstanding anything in this Agreement to the contrary, this
Agreement shall not constitute an agreement to assign any Assumed Contract or
Intellectual Property Right or any claim, right or benefit arising thereunder or
resulting therefrom if an attempted assignment thereof, without the consent of a
third party thereto, would constitute a breach or other contravention thereof,
be ineffective with respect to any party thereto or in any way adversely affect
the rights of any of Circuit City, FNANB, Tyler Funding or their respective
Affiliates, as applicable, or Purchaser thereunder.
(b) With respect to any Assumed Contract and any claim, right or benefit
arising thereunder or resulting therefrom, FNANB, Circuit City and Tyler Funding
will use commercially reasonable efforts to obtain as expeditiously as possible,
to the extent required under such Assumed Contract, the written consent of the
other parties to such Assumed Contract for the assignment or, if required,
novation thereof to Purchaser or amendment. In furtherance of the foregoing, as
soon as practicable following the date hereof, Circuit City, FNANB and Tyler
Funding shall submit to the other party or parties to any such Assumed Contract
documentation seeking the written approval of such other contracting party or
parties thereto to the transfer, assignment, novation or amendment of all of the
applicable Circuit City, FNANB and Tyler Funding claims, rights, benefits and
liabilities thereunder to Purchaser. In no event, however, shall Circuit City,
FNANB, Tyler Funding, or Purchaser be obligated to
59
pay any money to any Person or to offer or grant other financial or other
accommodations to any Person in connection with obtaining any consent,
confirmation, novation, amendment or approval with respect to any Assumed
Contract that would be reasonably likely to result in loss of benefits or costs
to Purchaser, on the one hand, or Sellers, on the other hand, that are
significant in amount.
(c) If any consent, confirmation, novation or approval is not obtained with
respect to any Assumed Contract, Circuit City, FNANB, Tyler Funding, and
Purchaser will cooperate to establish an agency type or other similar
arrangement reasonably satisfactory to Circuit City, FNANB, Tyler Funding, and
Purchaser under which Purchaser would obtain, to the fullest extent practicable
and not prohibited by any applicable Requirements of Law or any Contract, the
claims, rights and benefits and assume the corresponding liabilities and
obligations thereunder in accordance with this Agreement (including by means of
any subcontracting, sublicensing or subleasing arrangement) or under which
Circuit City, FNANB, Tyler Funding or their respective Affiliates, as
applicable, would enforce at the direction of and for the benefit of Purchaser,
with Purchaser assuming and agreeing to pay such Party's obligations and
expenses, any and all claims, rights and benefits of such Party against a third
party thereto. In such event (i) such Party, as applicable, will promptly pay,
assign and remit to Purchaser when received all monies and other consideration
relating to the period after the Closing Date received by it under any Contract
or any claim, right or benefit arising thereunder not transferred pursuant to
this Section 7.12 and (ii) Purchaser will promptly pay, perform or discharge
when due any obligation or liability (including any Tax Liability) arising
thereunder after the Closing Date.
SECTION 7.13. Notice of Proceedings. Purchaser will promptly notify Circuit
City, FNANB and Tyler Funding in writing, and Circuit City, FNANB and Tyler
Funding will promptly notify Purchaser in writing, upon (a) 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 consummation of the
transactions contemplated hereunder, or (b) receiving any notice from any
Governmental Authority of its intention (i) to institute a suit or proceeding to
restrain or enjoin the execution of this Agreement or the consummation of the
transactions contemplated hereby, or (ii) to nullify or render ineffective this
Agreement or such transactions if consummated.
SECTION 7.14. Guaranties; Intercompany Agreements.
(a) To the extent that Circuit City, FNANB or Tyler Funding would otherwise
retain liability thereunder with respect to any post-Closing period, Purchaser
shall cause itself or one or more of its Affiliates to be substituted in all
respects for any such Party, effective as of the Closing, in respect of all
obligations of each such Party under each of the guaranties, bonding
arrangements, letters of credit and letters of comfort identified in Schedule
7.14(a) (the "Guaranties"), each of which was obtained by any such Party for the
benefit of the Credit Card Business. If Purchaser is unable to effect such a
substitution with respect to any Guaranty after using commercially reasonable
efforts to do so, Purchaser shall hold Circuit City, FNANB, Tyler Funding and
their respective Affiliates harmless with respect to the obligations covered by
each of the Guaranties for which Purchaser does not effect such substitution. As
a result, neither Circuit City, FNANB, Tyler Funding nor any of their respective
Affiliates shall from
60
and after the Closing have any obligation whatsoever arising from or in
connection with the Guaranties with respect to matters arising on or after the
Closing Date except for obligations, if any, for which such Party will be
indemnified by Purchaser as set forth in Article X hereof.
(b) Except as set forth on Schedule 7.14(b) or as otherwise contemplated by
this Agreement, FNANB shall, and shall cause its respective Affiliates to,
immediately prior to the Closing, execute and deliver such releases, termination
agreements and discharges as are necessary to (i) release and discharge FNANB
and its Affiliates (other than the Trust) from any and all obligations owed (x)
to the Trust or (y) in connection with the Credit Card Business, to Circuit City
and any of its Affiliates, (ii) release and discharge the Trust from any and all
obligations owed to Circuit City, FNANB, or any Affiliate thereof (other than
the Trust) and (iii) terminate all arrangements, commitments, contracts and
understandings among Circuit City, FNANB, and any Affiliate thereof which would,
absent such termination, constitute a Purchased Asset or an Assumed Liability.
SECTION 7.15. Bulk Sales Law. Purchaser hereby waives compliance by Circuit
City and Sellers, or any of their respective Affiliates, in connection with the
transactions contemplated hereby, with the provisions of any applicable bulk
sales law (including any applicable bulk transfer provisions). Circuit City and
Sellers will, jointly and severally, indemnify and hold harmless Purchaser from
any and all Damages (including all damages from claims made by creditors of
Sellers) relating to provisions of the bulk sales laws of any state or other
jurisdiction which may be applicable to the transactions contemplated hereby and
from all costs (including reasonable attorney's fees) incurred in the defense of
any claims made under such laws. All rights and obligations under this Section
7.15 shall survive the Closing Date and continue until sixty (60) days after the
expiration of all applicable statutes of limitation (including extensions
thereof).
SECTION 7.16. VISA Agreement. From the date hereof until the Closing Date,
Circuit City, FNANB and Tyler Funding shall, and shall cause their respective
Affiliates to, operate and conduct the Credit Card Business in a manner that
continues to observe the terms of the VISA Agreement to the same extent that the
operation and conduct of the Credit Card Business by Circuit City and its
Affiliates would have been subject to the terms of the VISA Agreement had the
transactions contemplated by this Agreement and the Related Agreements not
occurred. Circuit City, FNANB, Tyler Funding and Purchaser shall cooperate in
good faith to terminate (including providing releases and other customary
documents upon such termination) or amend any terms of the VISA Agreement, as
reasonably directed by Purchaser.
SECTION 7.17. Notice to Borrowers. Promptly following the Closing Date,
FNANB and Purchaser shall prepare jointly a form or forms of notice to each
Borrower to the effect that such Borrower's Account has been acquired by
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 Purchaser. The mailing shall be made prior to the 60th
day after the Closing Date in such manner as FNANB and Purchaser may mutually
agree. Purchaser shall bear the expenses of such notices, including costs of
mailing; provided, however, that no costs shall be assessed against Purchaser in
the event any such notices are provided in the form of a billing statement
message. FNANB and Purchaser shall include such other billing statement
61
messages in the mailings described above as shall be mutually agreed upon by
FNANB and Purchaser.
SECTION 7.18. Employee Matters.
(a) Employment of Continuing Business Employees. Effective as of the
Closing Date, Purchaser shall offer employment, subject to Purchasers' standard
pre-employment drug screenings and criminal background check, to:
(i) those Business Employees employed at the FNANB facility located in
Kennesaw, Georgia, other than the senior management-level employees listed
on Schedule 7.18 (the "Kennesaw Senior Management Employees");
(ii) those Business Employees employed at the FNANB facility in
Richmond, Virginia in information systems (other than the senior
management-level employee(s) listed on Schedule 7.18) and
accounting/settlements; and
(iii) those Kennesaw Senior Management Employees and other Business
Employees employed at the FNANB facility in Richmond, Virginia ("Other
Richmond Employees"), and identified by the Transition Team pursuant to
Section 7.18(f),
for active employment commencing immediately upon the Closing for the same or
similar number of hours per week employed by Circuit City or FNANB immediately
prior to the Closing, with base pay at least equal to such Business Employee's
base rate of pay as in effect immediately prior to the Closing Date, and with
incentive pay and employee benefits that are at least equal to the incentive
opportunities and employee benefits that are available to similarly situated
employees of the Purchaser and its Affiliates. In addition, Kennesaw Business
Employees shall be offered employment by Purchaser within 30 miles of the Leased
Real Property. Each Business Employee who accepts such offer of employment
(including Business Employees described in clause (ii) of the definition
thereof) with Purchaser is referred to herein as a "Continuing Business
Employee." Such employment by Purchaser shall commence effective as of the
Closing Date (except as otherwise provided in the definition of "Business
Employee"). Purchaser shall have no liability with respect to Business Employees
who do not become Continuing Business Employees. Notwithstanding the foregoing,
Continuing Business Employees shall be considered "at-will" employees of
Purchaser, and Purchaser shall have no obligation to retain Continuing Business
Employees for any specific period of time following the Closing Date, unless
otherwise required by law. For purposes of this Section 7.18, Continuing
Business Employees employed at FNANB's Kennesaw, Georgia facility are called
"Kennesaw Continuing Business Employees," and Continuing Business Employees
employed at FNANB's Richmond, Virginia facility are called "Richmond Continuing
Business Employees."
(b) Preexisting Conditions; Deductibles; Credited Service. Effective as of
the Closing, Purchaser shall (i) cause to be waived all limitations as to
preexisting conditions, exclusions and waiting periods with respect to
participation and coverage requirements applicable to Continuing Business
Employees under any welfare plan of Purchaser or its Subsidiaries or Affiliates
in which such Continuing Business Employees may be eligible to participate after
62
the Closing, to the extent that such conditions, exclusions and waiting periods
would have been waived or satisfied under the corresponding welfare plan in
which any such Continuing Business Employee participated immediately prior to
the Closing, (ii) cause to be provided to each Continuing Business Employee
credit for any co-payments and deductibles paid prior to the Closing, in respect
of the calendar year in which the Closing Date occurs, in satisfying any
applicable deductible or out-of-pocket requirements under any welfare plans of
Purchaser or its Subsidiaries or Affiliates in which such Continuing Business
Employees may be eligible to participate after the Closing, (iii) cause to be
provided to each Continuing Business Employee credit for purposes of eligibility
and vesting for all service recognized by Sellers under the corresponding
Circuit City Benefit Plan, under each employee benefit plan, program or
arrangement of Purchaser or its Subsidiaries or Affiliates in which such
Continuing Business Employees are eligible to participate after the Closing and
(iv) cause to be provided to each Continuing Business Employee credit for amount
of benefits for all service with Sellers for purposes of the vacation policies
and severance plans or policies maintained or provided by Purchaser or its
Subsidiaries or Affiliates in which such Continuing Business Employees are
eligible to participate after the Closing. Notwithstanding the foregoing,
Continuing Business Employees' service with Circuit City, FNANB and Tyler
Funding shall not be recognized for purposes of benefit accruals under any
defined pension benefit plan sponsored by Purchaser.
(c) COBRA. Circuit City shall retain responsibility for continuation
coverage under Sections 601 et seq. of ERISA and any state continuation coverage
requirements ("COBRA Obligations") to all Business Employees (and their
qualified beneficiaries) for whom a "qualifying event" under COBRA occurs on or
prior to Closing. Purchaser shall be responsible for COBRA Obligations with
respect to the Continuing Business Employees and their beneficiaries for whom a
"qualifying event" under COBRA occurs after the Closing.
(d) Retirement Plans. As soon as practicable following the Closing Date,
Purchaser shall permit Continuing Business Employees to rollover, in cash, their
account balances in the Circuit City Savings Plan into Purchaser's Savings and
Investment Plan (the "Purchaser's Savings Plan") to the extent the Administrator
of Purchaser's SIP determines such rollover to be qualified.
(e) WARN Act. The Parties agree to cooperate in good faith to determine
whether any notification may be required under the WARN Act as a result, in
whole or in part, of the transactions contemplated by this Agreement. Sellers
will be responsible for providing any notification that may be required under
the WARN Act with respect to any Business Employee.
(f) Selection of Business Employees for Employment Offers. The Transition
Team shall identify which Kennesaw Senior Management Employees and Other
Richmond Employees shall be offered employment by Purchaser; provided, that
while the representatives of Purchaser shall consult with the representatives of
the Sellers on all hiring decisions, the decision with respect to whether or not
to extend offers shall be made by Purchaser. The Transition Team shall develop a
process for making hiring decisions as promptly as practicable after the
execution of this Agreement and Purchaser shall use commercially reasonable
efforts to complete all hiring decisions and extend offers to Business Employees
within sixty (60) days after the execution of this Agreement.
63
(g) Cooperation. Circuit City, Sellers and Purchaser shall cooperate in
good faith, and Circuit City, Sellers and Purchaser and their respective
Affiliates shall provide access to such information as is reasonably necessary
or appropriate, to facilitate implementation of the provisions of this Section
7.18. Circuit City, Sellers and Purchaser shall cooperate in good faith, in the
preparation of communications to Business Employees regarding the Purchaser's
offers of employment contemplated by Section 7.18(a) and the transition of the
Credit Card Business to Purchaser.
(h) Non-Solicitation. Circuit City, FNANB and Tyler Funding shall not, on
behalf of themselves or any other person, for a period of two (2) years from the
date of this Agreement, directly or indirectly,
(i) induce to terminate employment or solicit for employment, hire, or
employ at Circuit City's corporate headquarters in Richmond, Virginia, or
at any Circuit City store located in the Richmond, Virginia metropolitan
area, any Richmond Continuing Business Employee; or
(ii) induce to terminate employment or solicit for employment at
Circuit City's corporate headquarters in Richmond, Virginia, or at any
Circuit City store located in the Atlanta, Georgia metropolitan area, any
Kennesaw Continuing Business Employee or any other employee of Purchaser of
whom Circuit City, FNANB or Tyler Funding became aware as a result of
negotiating or implementing this Agreement, or any such employee of
Purchaser who left Purchaser voluntarily within the three months prior to
the date of this Agreement; provided, however, this Agreement shall not
prohibit Circuit City, FNANB and Tyler Funding from hiring any such
employee of Purchaser who become known to those entities because such
employees responded to a public announcement or general advertisement
placed by Circuit City, FNANB or Tyler Funding, which announcement or
advertisement is made to the public at large.
Notwithstanding anything to the contrary in this Section 7.18(h), none of
Circuit City, FNANB or Tyler Funding shall be prohibited from soliciting,
hiring, or employing any Continuing Business Employee, or any other employee of
Purchaser, who is terminated by Purchaser, with or without cause.
(i) Liability. Purchaser shall assume no liability with respect to any
claims or causes of actions by or on behalf of Continuing Business Employees
with respect to any actions, omissions or events occurring prior to Closing (or,
for employees falling under clause (ii) of the definition of "Business
Employees", the date they become Continuing Business Employees on or after
Closing). Purchaser shall assume no liability regarding employees, officers or
directors other than that expressly assumed in this Agreement.
(j) No Assumption of or Liability for Seller Benefit Plans. Purchaser will
not assume sponsorship of or liability under any Seller Benefit Plans. Sellers
or Circuit City shall retain all assets of all Seller Benefit Plans and all
liabilities for any benefits or payments due to employees of Circuit City, FNANB
and Tyler Funding thereunder.
64
(k) Amendment of Certain Retention Agreements. Within sixty (60) days after
the date of this Agreement, the Transition Team shall identify and provide to
FNANB a list of those Business Employees that the Transition Team deems
necessary for an efficient and successful transition of the Credit Card Business
to Purchaser (the "Transition Business Employees"). Promptly upon receipt of
such list from the Transition Team, FNANB shall use commercially reasonable
efforts to amend, effective as of the Closing Date, the existing retention
agreements (the "Original Retention Agreements" and the retention agreements as
so amended, the "Amended Retention Agreements") with the Transition Business
Employees to provide that each Transition Business Employee who accepts an offer
of employment with Purchaser on the terms contemplated by this Section 7.18 and
is either (i) continuously employed by Purchaser for six (6) months after the
Closing Date, or (ii) terminated by Purchaser without cause within six (6)
months after the Closing Date, shall receive a lump sum payment equal to the
lump sum payment that otherwise would have been payable to such Transition
Business Employee pursuant to the terms of that Transition Business Employee's
Original Retention Agreement had the Transition Business Employee not accepted
an offer of employment with Purchaser as of the Closing Date. Purchaser shall
promptly make all payments due or owing to the Transition Business Employees
under the Amended Retention Agreements and shall provide notice to Circuit City
regarding the total payments made along with supporting documentation reasonably
satisfactory to Circuit City. Within ten (10) business days following Circuit
City's receipt of such notice and supporting documentation, Circuit City shall
reimburse Purchaser for the amount of the total payments made by Purchaser to
the Transition Business Employees pursuant to this Section 7.18(k).
SECTION 7.19. Further Assurances.
(a) After the Closing Date, each of Circuit City, FNANB, Tyler Funding, and
Purchaser shall use commercially reasonable efforts from time to time to execute
and deliver at the reasonable request of the other Parties such additional
documents and instruments (including any assignments, bills of sale, assumption
agreements, consents and other similar instruments in addition to those required
by this Agreement) as may be reasonably required to give effect to this
Agreement and the transactions contemplated hereby, to provide whatever
documents or other evidence of ownership as may be reasonably requested by
Purchaser to confirm Purchaser's ownership of the Purchased Assets and to
provide whatever documents or other evidence as may be reasonably requested by
Circuit City, FNANB, Tyler Funding or their respective Affiliates to confirm
Purchaser's assumption of the Assumed Liabilities. On and after the Closing
Date, Circuit City, FNANB, Tyler Funding, and Purchaser shall give such
reasonable further assurances to the other Parties and their Affiliates,
respectively, and shall execute, acknowledge and deliver all such
acknowledgments and other instruments and take such further action as may be
reasonably necessary and appropriate effectively to relieve and discharge
Purchaser from any Retained Liability and Circuit City, FNANB, Tyler Funding and
their respective Affiliates from any Assumed Liabilities, respectively.
(b) Each Party agrees to use its respective commercially reasonable efforts
and to proceed diligently to obtain at or prior to the Closing Date any
consents, licenses, permits, approvals, authorizations or exemptions required in
connection with the execution or delivery by such Party, and the validity or
enforceability, of this Agreement and the other agreements contemplated hereby,
and otherwise satisfy each of the conditions set forth in this Article VII
65
that is applicable to it or any of its Affiliates. Each Party shall promptly
notify the others if any such consent, license, permit, approval, authorization
or exemption is declined, denied or delayed. Each Party agrees to promptly
inform the others of any circumstances that create or give rise to a reasonable
likelihood that any such consent, license, permit, approval or authorization or
exemption will not be obtained at or prior to the time the same must be obtained
in order to permit the transactions contemplated herein to be consummated on the
Closing Date.
SECTION 7.20. Limitations on Duties. Circuit City, FNANB, Tyler Funding,
and Purchaser and their respective Affiliates shall be obligated to perform such
duties and only such duties as are specifically set forth in this Agreement and
no implied covenants or obligations shall be read into this Agreement against
such Parties.
SECTION 7.21. Covenant to Comply with Account Agreements. On and after the
Closing Date, Purchaser will comply with the terms and conditions of the Account
Agreements, as they may be amended by Purchaser from time to time (subject to
the Program Agreement), the Operating Regulations and all laws and regulations
applicable to the Purchased Assets.
SECTION 7.22. Assumed Liabilities. On and after the Closing Date, Purchaser
shall discharge the Assumed Liabilities in accordance with the terms thereof.
SECTION 7.23. Credit Insurance Policies.
(a) No Insurance Contract shall be an Assumed Contract without Purchaser's
written consent. Complete and current copies (as of the Closing Date) of each
(i) group master policy issued pursuant to the Insurance Contracts, (ii)
certificate of insurance issued under such group master policy, and (iii)
individual credit insurance policy associated with Accounts and issued pursuant
to the Insurance Contracts (the "Credit Insurance Policies") shall be provided
to Purchaser within thirty (30) days after the Closing Date. The agreements
referenced in clauses (i), (ii) and (iii) above are referred to collectively as
"Policies".
(b) From the date hereof through the Closing Date, Sellers shall use
commercially reasonable efforts to cause each Insurance Contract and Policy to
remain in effect and shall not change any terms thereof; provided, however, that
terms of any Insurance Contract or Policy may be changed and individual
Borrowers' coverages may be suspended or terminated in the ordinary course of
business consistent with past practice. Without limiting the generality of the
foregoing, from the date hereof through the Closing Date, Sellers shall not
change coverage, services, pricing, or other features of any Policies; provided,
however, that such terms may be modified, and individual coverages may be
suspended or terminated, in the ordinary course of business consistent with past
practice. From the date hereof through the Closing Date, Sellers shall maintain
any and all existing procedures relating to services, claims adjudication,
claims activation and payments for Credit Insurance Policies; provided, however,
that such procedures may be changed in the ordinary course of business
consistent with past practice.
(c) From the date hereof through the Closing Date, Sellers shall, to the
extent commercially reasonable, cooperate with Purchaser in either, at
Purchaser's discretion,
66
(i) assigning the Policies to Purchaser, or the benefits thereunder, at Closing
or (ii) converting such Policies to another insurance policy or policies
maintained by Purchaser, which shall take effect as of the Closing Date. In the
case of clause (c)(i), the assigned Policies shall become Assumed Contracts.
(d) Upon the request of Purchaser, (i) Sellers shall terminate, or have
terminated, all reinsurance agreements covering any credit insurance related to
the Accounts, between Sellers or any of its Affiliates and any insurance company
("Credit Insurance Reinsurance Agreements"), or (ii) subject to the mutual
agreement of the Parties negotiating in good faith, before the Closing, Sellers
shall (1) assign to Purchaser's designee(s), effective as of the Closing Date
and on terms mutually agreed to by the Parties in their commercially reasonable
discretion, all Credit Insurance Reinsurance Agreements, (2) use commercially
reasonable efforts to obtain the consent to such assignment(s) of the third
party insurance companies that are parties to the Credit Insurance Reinsurance
Agreements, and (3) no later than thirty (30) days after the Closing Date,
compute and transfer to Purchaser's designee, by electronic fund transfer to an
account designated by such designee, reserves in an amount mutually agreed by
the Parties in their commercially reasonable discretion based on normal and
customary actuarial practices and in an amount sufficient to fulfill the
obligations and liabilities associated with the Credit Insurance Policies. In
the case of clause (d)(ii), the assigned Credit Insurance Reinsurance Agreements
shall become Assumed Contracts. If the Parties cannot reach agreement for such
assignment(s) on or before the Closing Date, Sellers shall terminate the Credit
Insurance Reinsurance Agreements, effective as of the Closing Date.
(e) Subject to the mutual agreement of the Parties, negotiating in good
faith, Sellers shall assign or cause to be assigned, effective as of the Closing
Date, each of the Insurance Contracts, other than the Credit Insurance
Reinsurance Agreements which shall be subject to the provisions of Section
7.23(d). In that case, the assigned Insurance Contracts shall become Assumed
Contracts. In the event that the Parties cannot reach an agreement for
assignment under this Section 7.23(e) of any of the Insurance Contracts, Seller
shall terminate effective as of the Closing Date any such Insurance Contract not
assigned and Purchaser may establish replacement contracts with appropriate
third parties.
(f) After Closing, Purchaser shall have the right to make changes at its
sole discretion to the Credit Insurance Policies and the related services.
Without limiting the foregoing, after Closing, Purchaser may, in its sole
discretion, seek to (1) continue the assigned Policies and enter into new
contracts with the insurers of the assigned Policies; or (2) convert the
insurance to another insurance policy, in compliance with Requirements of Law.
In any case, the administrative and, subject to transfer of the reserve amount
contemplated by Section 7.23(d)(ii)(3), financial obligations and Liabilities of
Circuit City, Sellers and their respective Affiliates in respect of the
Policies, Credit Insurance Agreement, Insurance Contracts and Sellers' credit
insurance program shall terminate as of the Cut-Off Time. Sellers shall use
commercially reasonable efforts to assist Purchaser as Purchaser may reasonably
request in effecting the transition for Borrowers from the Credit Insurance
Policies in effect prior to Closing to those in effect afterwards. If Purchaser
determines to convert the assigned Policies to another insurance policy, such
conversion shall not be effective until after Closing. Seller shall use
commercially reasonable efforts to assist Purchaser in changing the name of the
creditor from Seller to Purchaser under such assigned Policies.
67
(g) No later than sixty (60) days after the Closing Date, Purchaser shall
give notice to each Borrower in accordance with all Requirements of Law
concerning the actions taken under this Section 7.23.
(h) It is the intent of the Parties in this Section 7.23, that all of the
rights and/or economic benefits currently held or received by Sellers or any of
their Affiliates related to or arising out of the Insurance Contracts or the
Policies be transferred in full to Purchaser or its Affiliates as of the Closing
Date, on terms mutually agreed by the Parties in their commercially reasonable
discretion (but without any additional consideration therefore by Purchaser
other than the Purchase Price paid by Purchaser hereunder), and the Parties
agree to execute such documents, and take such actions, as are reasonably
necessary or appropriate to effect such transfer(s). Any such actions shall be
conducted in accordance with applicable Requirements of Law.
SECTION 7.24. Credit Protector Contracts.
(a) From the date hereof through the Closing Date, Sellers shall use
commercially reasonable efforts to cause each Credit Protector Contract to
remain in effect and shall not change the terms thereof; provided, however, that
terms of any Credit Protector Contract may be changed and individual Borrowers'
coverages may be suspended or terminated in the ordinary course of business
consistent with past practice. Without limiting the generality of the foregoing,
from the date hereof through the Closing Date, Sellers shall not change
coverage, services, pricing, or other features of any Credit Protector Contract;
provided, however, that such terms may be modified, and individual coverages may
be suspended or terminated in the ordinary course of business consistent with
past practice. From the date hereof through the Closing Date, Sellers shall
maintain any and all existing procedures relating to services, claims
adjudication, claims activation and payments for Credit Protector Contracts;
provided, however, that such procedures may be changed in the ordinary course of
business consistent with past practice.
(b) From the date hereof through the Closing Date, Sellers shall, to the
extent commercially reasonable, cooperate with Purchaser in replacing Sellers
with Purchaser as a party to such Credit Protector Contracts, said replacement
to be effective as of the Closing Date.
(c) Subject to the mutual agreement of the Parties, negotiating in good
faith, before the Closing, Sellers shall (i) either (1) cancel, effective as of
the Closing Date, any contingent liability policy created for Sellers' debt
cancellation/suspension program, or (2) assign, or cause to be assigned, an
equivalent liability policy to Purchaser or its designee, and shall use
commercially reasonable efforts to obtain the consent to such assignment of the
insurer thereunder and (ii) no later than thirty (30) days after the Closing
Date, compute and transfer to Purchaser, by electronic fund transfer to an
account designated by Purchaser, reserves in an amount mutually agreed by the
Parties in their commercially reasonable discretion, determined in accordance
with normal and customary actuarial practices and in an amount sufficient to
fulfill the obligations and liabilities associated with Credit Protector
Contracts in an active benefit status at the time of the Closing. In the case of
clause (c)(2), the assigned contingent liability policy shall become Assumed
Contracts.
68
(d) If the Parties cannot reach an agreement as contemplated by Section
7.24(c), then Sellers shall terminate, effective as of the Closing Date, the
Credit Protector Contracts, any contingent liability policy created for Sellers'
debt cancellation/suspension program and any other agreements related to
Sellers' debt cancellation/suspension program.
(e) If Sellers are replaced by Purchaser as the party to the Credit
Protector Contracts as contemplated by Section 7.24(c)(i), such Credit Protector
Contracts shall be Assumed Contracts. In any case, the administrative and,
subject to transfer of the reserve amount contemplated by Section 7.24(d)(ii),
financial obligations and Liabilities of Circuit City, Sellers and their
respective Affiliates in respect of the Credit Protector Contracts and Sellers'
credit debt cancellation/suspension program shall terminate as of the Cut-Off
Time.
(f) No later than sixty (60) days after the Closing Date, Purchaser shall
give notice to each Borrower in accordance with all Requirements of Law
concerning the actions taken under this Section 7.24.
SECTION 7.25. Fleet Interim Servicing Agreement. Sellers and Circuit City
shall take all actions necessary to ensure that any agreement or activities
relating to the interim servicing of assets sold thereby to Fleet Bank (RI),
National Association or any Affiliate thereof do not create any obligations,
actual or contingent, that apply to Purchaser or any Affiliate of Purchaser.
SECTION 7.26. Status of the Trust. Sellers and Circuit City (i) shall not
take any action on behalf of the Trust (or cause the Trust to take any action)
that would reasonably be expected to cause the Trust to fail to qualify as a
qualifying special purpose entity under applicable accounting guidelines in
effect on the date of this Agreement and (ii) shall take such actions on behalf
of the Trust (or cause the Trust to take such actions) as may be necessary to
ensure that the Trust does not fail to qualify as a qualifying special purpose
entity under such accounting guidelines. If there is a change in applicable
accounting guidelines between the date of this Agreement and the Closing Date,
Sellers and Circuit City shall take such reasonable actions as may be requested
by Purchaser to ensure that the Trust does not fail to qualify as a qualifying
special purpose entity under such changed accounting guidelines (it being
understood that Sellers and Circuit City shall only be obligated to take such
actions as they would reasonably be expected to take to maintain the status of
the Trust as a qualifying special purpose entity if this Agreement were not in
effect).
SECTION 7.27. Pre-Closing Initiatives; Pre-Closing Transition Activities.
(a) From the date hereof through the Closing Date, FNANB and Purchaser
shall each use its commercially reasonable efforts to support the pre-closing
initiatives set forth in Exhibit N (the "Pre-Closing Initiatives"). FNANB and
Purchaser shall jointly determine which Business Employees shall be assigned to
work on the Pre-Closing Initiatives and how much time is to be allocated by such
Business Employees to the tasks assigned.
(b) From the date hereof through the Closing Date, FNANB and Purchaser
shall each use its commercially reasonable efforts to complete the pre-closing
transition activities set forth in Exhibit S (the "Pre-Closing Transition
Activities").
69
(c) The Pre-Closing Initiatives and Pre-Closing Transition Activities shall
be subject to the approval, or supervisory non-objection, of the OCC.
SECTION 7.28. Amendment of Circuit City Interest Rate Caps. On or prior to
Closing, Circuit City shall use its commercially reasonable efforts to amend the
Circuit City Interest Rate Caps to terminate the call option in favor of
Wachovia Bank with respect thereto.
ARTICLE VIII
TAX MATTERS
SECTION 8.01. Liability for Taxes; Refunds and Credits.
(a) Circuit City shall be responsible for and shall indemnify Purchaser and
its Affiliates (excluding the Trust) (the "Purchaser Tax Indemnitees") from and
against all:
(i) Excluded Taxes; and
(ii) Taxes resulting from any breach of any covenant by Circuit City or
any Seller contained in this Article VIII (but then only to the extent
appropriate to reflect the relative fault of Circuit City, on the one hand,
and Purchaser, on the other hand, with respect to such Tax);
For the absence of doubt, the Trust itself shall have no right or claim against
Circuit City under this Section 8.01(a). Circuit City (or a member of the
Circuit City Affiliated Group or the Circuit City Group, as designated by
Circuit City) shall be entitled to any refunds (or credits) of or against any
Excluded Taxes or any other Taxes for which Circuit City is responsible under
this Section 8.01(a) and any refund (or credit) to the extent so provided in
Section 8.09.
(b) Purchaser shall be responsible for and shall indemnify, jointly and
severally, Circuit City, FNANB, Tyler Funding and their respective Affiliates
(the "Seller Tax Indemnitees") from and against all:
(i) Taxes of or relating to the Credit Card Business, the Purchased
Assets or the Trust (or their respective assets) with respect to (A) a
Post-Closing Tax Period or (B) the portion of the Straddle Period deemed to
begin on or after the Closing Date (in the manner determined pursuant to
Section 8.02(c) hereof).
(ii) Taxes resulting from any breach of any covenant by Purchaser
contained in Section 2.07 or this Article VIII (but then only to the extent
appropriate to reflect the relative fault of Purchaser, on the one hand,
and Circuit City, on the other hand, with respect to such Tax), and
(iii) Taxes described in clause (a), (b) or (c) of the proviso of the
definition of Excluded Taxes.
Purchaser and its Affiliates shall be entitled to any refunds (or credits)
of or against Taxes of Purchaser and its Affiliates (including the Trust) except
for (x) refunds (or credits) of Taxes of the Trust received or credited prior to
the Closing Date (except to the extent, if any, that such
70
refunds or credits are reflected as a Tax asset on the Settlement Date
Statement) and (y) any other refunds (or credits) to which Circuit City is
entitled to under Section 8.01(a).
(c) Circuit City and Purchaser agree to use commercially reasonable efforts
to resolve any disputes relating to the relative fault of each party for Taxes
under this Section 8.01. In the absence of agreement by the parties on the level
of relative fault, Circuit City and Purchaser agree to mediate any dispute in a
manner consistent with Section 4.04 hereof.
SECTION 8.02. Filing Responsibility.
(a) Circuit City shall prepare and file, or cause to be prepared and filed,
when due:
(i) all consolidated, combined, affiliated or unitary Tax Returns of
the Circuit City Affiliated Group,
(ii) any Tax Return of, or which includes, Circuit City or any member
of the Circuit City Group, whether combined, consolidated, affiliated,
unitary or otherwise,
(iii) any Tax Return relating to the Credit Card Business, the
Purchased Assets or the Trust required to be filed prior to the Closing
Date, and
(iv) any other Tax Return of or with respect to the Credit Card
Business, the Purchased Assets or the Trust (or its assets) for any
Pre-Closing Tax Period.
Circuit City shall pay or cause to be paid all Taxes due and payable in respect
of all such Tax Returns (subject to any indemnification obligations of Purchaser
under this Article VIII).
(b) Purchaser shall, except to the extent that filing such Tax Returns is
the responsibility of Circuit City under Section 8.02(a), prepare and file, or
cause to be prepared and filed, all Tax Returns relating to the Credit Card
Business, the Purchased Assets and the Trust (or its assets) for the taxable
periods beginning on or after the Closing Date. In the case of any Tax Return
required to be prepared and filed by Purchaser pursuant to this subsection for
which any Taxes are the responsibility of Circuit City, such Tax Return shall be
prepared and filed in a manner that is consistent with Circuit City's prior
practices, if any, or in a manner to which Circuit City has given its prior
written consent, such consent not to be unreasonably withheld, and Purchaser
shall deliver a draft of such Tax Return to Circuit City for its review at least
thirty (30) Business Days prior to the due date of such Tax Return (taking into
account valid extensions) and shall provide Circuit City with Purchasers'
calculation, in reasonable detail, of Circuit City's share of the Taxes with
respect to such Tax Return (determined in the case of a Straddle Period in
accordance with Section 8.02(c)); provided, however, that such drafts of any
such Tax Return and such calculations of Circuit City's share of the Taxes with
respect to such Tax Return shall be subject to Circuit City's review and
approval, which approval shall not be unreasonably withheld, conditioned or
delayed. If Circuit City disputes any Tax Item on such Tax Return or Purchasers'
calculation of Circuit City's share of the Taxes with respect to such Tax
Return, it shall notify Purchaser (by written notice within ten (10) Business
Days of receipt of Purchasers' calculation) of such disputed item (or items) and
the basis for its objection. Circuit City and Purchaser shall act in good faith
to resolve any such dispute prior to the date on which the Tax Return is
required to be filed. If
71
Circuit City and Purchaser cannot resolve any disputed item, the item in
question shall be resolved by the Accountant in accordance with the standards
set forth in this Section 8.02(b) as promptly as practicable. The fees and
expenses of the Accountant shall be shared equally by Circuit City and
Purchaser. In the event the disputed item cannot be resolved in accordance with
this Section 8.02(b) prior to the date on which the Tax Return is required to be
filed, Purchaser shall timely file such Tax Return and pay or cause to be paid
to the applicable Tax authority all Taxes due and payable in respect of such Tax
Return required to be prepared by Purchaser pursuant to this subsection. Upon
resolution of the dispute pursuant to Section 4.04, Circuit City shall pay
immediately to Purchaser its determined share of Taxes in immediately available
funds.
(c) In order to apportion appropriately any Taxes relating to a Straddle
Period between the portion of such Straddle Period ending before the Closing
Date and the portion of such Straddle Period beginning on and after the Closing
Date, the Parties shall, to the extent permitted under applicable law, elect
with the relevant Tax authority to treat for all Tax purposes the day preceding
the Closing Date as the last day of a taxable period. In the case of any other
Taxes for a Straddle Period for which such election to close the taxable period
is not permitted, the portion of such Taxes that are allocable to the portion of
the Straddle Period ending before the Closing Date shall be: (i) in the case of
ad valorem or similar Taxes that are imposed on a periodic basis, deemed to be
the amount of such Taxes for the entire period (or, in the case of such Taxes
determined on an arrears basis (such as real property taxes), the amount of such
Taxes for the immediately preceding period) multiplied by a fraction the
numerator of which is the number of days in the Straddle Period ending before
the Closing Date and the denominator of which is the number of days in the
entire relevant Straddle Period; and (ii) in the case of Taxes not described in
(i) (such as Taxes that are either (x) based upon or related to income, receipts
or premiums, or (y) imposed in connection with any sale or other transfer or
assignment of property (real or personal, tangible or intangible)), deemed equal
to the amount that would be payable if the taxable period ended before the
Closing Date; provided, however, that Transfer Taxes shall be allocated between
and paid by the parties in accordance with Section 8.05.
SECTION 8.03. Cooperation; Exchange of Information; Tax Proceedings.
(a) The Parties shall cooperate with each other and furnish or cause to be
furnished to each other, upon request, as promptly as practicable, such
information (including access to books and records) and assistance relating to
the Business, the Purchased Assets or the Trust (or its assets) as is reasonably
requested for the preparation or filing of any Tax Returns, for the preparation
or conduct of any Tax Proceeding and for the satisfaction of legitimate Tax or
accounting requirements. Such cooperation and information shall include
Purchasers' facilitation of Circuit City's exercise of its rights under this
Article VIII to prepare and file, or cause to be prepared and filed, Tax Returns
of the Credit Card Business, the Purchased Assets, or the Trust and conduct Tax
Proceedings relating thereto (for example, by way of execution of appropriate
powers of attorney in favor of Circuit City or by designation of an officer of
Circuit City as an officer of the Trust for such purposes).
(b) Notwithstanding the definition of Books and Records, Purchaser shall be
entitled to copies of any Tax work papers of the Trust that are in the
possession of Circuit City or any
72
Subsidiary of Circuit City. Circuit City shall be entitled to retain all
original Tax Returns and Tax work papers relating to FNANB, Tyler Funding, the
Trust or the Purchased Assets.
(c) Circuit City and Purchaser shall, and shall cause their respective
Subsidiaries to, cooperate in the preparation of all Tax Returns that are
required to be filed after the Closing Date relating to Pre-Closing Tax Periods
or to Straddle Periods and any Tax Returns of the Trust.
(d) Purchaser shall promptly notify Circuit City upon receipt by Purchaser
or any of its Subsidiaries (including the Trust) of notice of any claim,
assessment or dispute relating to any Tax Proceeding for which Circuit City has
liability pursuant to Section 8.01(a) (or relating to refunds or credits to
which Circuit City or any member of the Circuit City Affiliated Group or Circuit
City Group is entitled) and shall promptly forward to Circuit City any
communications received from or sent to any Tax authority in connection with any
such Tax Proceeding; provided, however, that a failure by Purchaser to give such
notice will not affect the Purchaser Tax Indemnitees' rights to indemnification
pursuant to Section 8.01(a) except to the extent Circuit City is prejudiced as a
consequence of such failure.
(e) Circuit City shall have the sole right to control, contest, resolve and
defend, at Circuit City's sole expense, any Tax Proceeding (including having the
right to determine whether, when and on what terms to settle any Tax Proceeding)
with respect to (i) any consolidated, combined, affiliated or unitary Tax
Returns (or Taxes) of the Circuit City Affiliated Group; (ii) any Tax Return of,
or which includes, (or Taxes of) Circuit City or any member of the Circuit City
Group, whether combined, consolidated, unitary, affiliated or otherwise;
provided, however, the Tax Proceeding does not include a Tax Return of
Purchaser; and (iii) the Trust for a Pre-Closing Tax Period. Any expenses
incurred by Purchaser in connection with any Tax Proceeding covered by this
Section 8.03(e) shall be borne by Purchaser.
(f) In the case of (A) any Tax Proceeding with respect to Taxes concerning
the Credit Card Business, the Purchased Assets or the Trust for a Straddle
Period (other than a Tax Proceeding covered by Section 8.03(e) above) or (B) any
Tax Proceeding relating to the Credit Card Business, the Trust or the Purchased
Assets (other than a Tax Proceeding covered by Section 8.03(e) above) for which
Circuit City may have liability pursuant to Section 8.01(a) (or relating to
refunds or credits to which Circuit City or any member of the Circuit City
Affiliated Group or the Circuit City Group may be entitled),
(i) if the Tax Proceeding involves a claim for Taxes which would be
borne by Circuit City if the Tax authority were successful with respect to
such claim in the Tax Proceeding (a "Circuit City Tax Claim") and a claim
for Taxes which would be borne by Purchaser if the Tax authority were
successful with respect to such claim in the Tax Proceeding (a "Purchaser
Tax Claim") and the relevant Tax authority agrees to permit the Circuit
City Tax Claim and the Purchaser Tax Claim to be separately contested and
settled, then (x) the Circuit City Tax Claim and the Purchaser Tax Claim
shall be separately contested, (y) Circuit City shall be the Controlling
Party (and Purchaser shall be the Non-Controlling Party) with respect to
any Circuit City Tax Claim and the provisions of Section 8.03(g) below
shall apply with respect to the Tax Proceeding in
73
respect of the Circuit City Tax Claim and (z) Purchaser shall be the
Controlling Party (and Circuit City shall be the Non-Controlling Party)
with respect to any Purchaser Tax Claim and the provisions of Section
8.03(g) below shall apply with respect to the Tax Proceeding in respect of
the Purchaser Tax Claim,
(ii) if the Tax Proceeding involves a Circuit City Tax Claim and a
Purchaser Tax Claim and the Circuit City Tax Claim is not separable from
the Purchaser Tax Claim, then the Controlling Party shall be whichever of
Circuit City and Purchaser would bear the greater Tax with respect to such
Tax Proceeding if the Tax authority were successful in the Tax Proceeding,
the Non-Controlling Party shall be whichever of Circuit City and Purchaser
are not the Controlling Party (unless the Tax Proceeding is with respect to
a Tax Return of a consolidated, combined, unitary or affiliated group of
which Purchaser or any Affiliate of Purchaser (other than the Trust) is the
common parent, in which case the Controlling Party shall be Purchaser and
the Non-Controlling Party shall be Circuit City) and the provisions of
Section 8.03(g) shall apply,
(iii) if the Tax Proceeding involves solely a Circuit City Tax Claim,
then Circuit City shall be the Controlling Party, Purchaser shall be the
Non-Controlling Party (unless the Tax Proceeding is with respect to a Tax
Return of a consolidated, combined, unitary or affiliated group of which
Purchaser or any Affiliate of Purchaser (other than the Trust) is the
common parent, in which case the Controlling Party shall be Purchaser and
the Non-Controlling Party shall be Circuit City) and the provisions of
Section 8.03(g) below shall apply and
(iv) if the Tax Proceeding involves solely a Purchaser Tax Claim, then
Purchaser shall be the Controlling Party, Circuit City shall be the
Non-Controlling Party and the provisions of Section 8.03(g) below shall
apply.
(g) The Controlling Party may elect to control, contest, resolve and defend
any Tax Proceeding as to which such party is the Controlling Party. If the
Controlling Party desires to elect to control any such Tax Proceeding, the
Controlling Party shall, within fifteen (15) Business Days of receipt of the
notice of the Tax Proceeding from the Non-Controlling Party or from the Tax
authority, notify the Non-Controlling Party in writing of its intent to do so.
If the Controlling Party timely elects to control any such Tax Proceeding, then
the Controlling Party shall have the right to determine whether, when and on
what terms to settle such Tax Proceeding; provided, however, that
(i) the Controlling Party shall provide the Non-Controlling Party with
a timely and reasonably detailed account of each stage of such Tax
Proceeding,
(ii) the Controlling Party shall consult with the Non-Controlling Party
before taking any significant action in connection with such Tax
Proceeding,
(iii) the Controlling Party shall consult with the Non-Controlling
Party and offer the Non-Controlling Party an opportunity to comment before
submitting any written materials prepared or furnished in connection with
such Tax Proceeding,
74
(iv) the Controlling Party shall defend such Tax Proceeding diligently
and in good faith as if the Controlling Party were responsible for 100
percent of the Taxes claimed to be due in the Tax Proceeding,
(v) in the case of Tax Proceedings covered by the parenthetical
language in Section 8.03(f)(ii) or (iii), the consent of Circuit City, not
to be unreasonably withheld, conditioned or delayed, shall be required
prior to the submission of any written materials prepared or furnished in
connection with such Tax Proceedings that relate to the Circuit City Tax
Claim, and
(vi) except in the case of Tax Proceedings covered by the parenthetical
language in Section 8.03(f)(ii) or (iii), the Controlling Party shall not
settle such Tax Proceeding without the consent of the Non-Controlling
Party, not to be unreasonably withheld, conditioned or delayed; provided,
however, that if the Non-Controlling Party withholds its consent to a
proposed settlement under this clause (vi), then the Controlling Party's
Liability with respect to such Tax Proceeding shall be limited to the
amount that such Liability would have been under such proposed settlement.
If the Controlling Party does not elect to control a Tax Proceeding which it is
entitled to control pursuant to this subsection (or, after assuming control, the
Controlling Party fails to pursue such Tax Proceeding), the Non-Controlling
Party may, without affecting any rights to indemnification under this Article
VIII, assume and control such Tax Proceeding; provided, however, that such
Non-Controlling Party may not settle such Tax Proceeding without the consent of
the Controlling Party, which consent shall not be unreasonably withheld,
conditioned or delayed; provided further, however, that if the Controlling Party
withholds its consent to a proposed settlement, then the Non-Controlling Party's
Liability with respect to such Tax Proceeding shall be limited to the amount
that such Liability would have been under such proposed settlement.
The Controlling Party shall bear any expenses incurred by it, and the
Non-Controlling Party shall bear any expenses incurred by it, in connection with
any Tax Proceeding to which this Section 8.03(g) applies.
(h) Notwithstanding any other provision of this Agreement or the Related
Agreements, neither Purchaser, the Trust nor any of their respective
Subsidiaries or Affiliates shall be entitled to participate in any Tax
Proceeding with respect to any consolidated, combined, affiliated or unitary Tax
Return which includes Circuit City or any member of the Circuit City Affiliated
Group or the Circuit City Group, and neither Purchaser, the Trust nor any of
their respective Subsidiaries or Affiliates shall be entitled to any information
regarding or copy of any such Tax Return, except to the extent that such Tax
Proceeding or Tax Return relates solely to the Trust.
SECTION 8.04. Tax Sharing Agreements. Notwithstanding anything in any other
agreement to the contrary, all liabilities and obligations between Circuit City
or any of its Affiliates (other than the Trust), on the one hand, and the Trust,
on the other hand, under any Tax allocation or Tax sharing agreement in effect
prior to the Closing Date (other than this Agreement) shall cease and terminate
as of the Closing Date.
75
SECTION 8.05. Transfer Taxes. Circuit City shall pay, or cause to be paid,
all documentary, sales, use, real property transfer, real property gains,
registration, value added, transfer, stamp, recording and similar Taxes, fees
and costs together with any interest thereon, penalties, fines, costs, fees,
additions to tax or additional amounts with respect thereto incurred in
connection with the transactions contemplated by this Agreement ("Transfer
Taxes"). Circuit City shall be responsible for preparing and timely filing any
Tax Returns required with respect to any such Transfer Taxes. Purchaser shall
cooperate with Circuit City and its Affiliates in preparing and filing such
forms or statements necessary to secure all available exemptions from Transfer
Taxes which, but for such exemption, would be incurred by or imposed upon
Circuit City or its Affiliates in connection with the transactions contemplated
by this Agreement.
SECTION 8.06. Survival. All rights and obligations under this Article VIII
shall survive the Closing Date and continue until sixty (60) days after the
expiration of all applicable statutes of limitation (including extensions
thereof); provided, however, that if written notice of any bona fide claim for
indemnification under this Article VIII shall have been given in accordance
herewith within the applicable survival period, the rights and obligations that
are the subject of such claim for indemnification shall survive with respect to
such claim until such time as such claim is fully and finally resolved.
SECTION 8.07. Post-Closing Dispositions. For the absence of doubt, the
covenants of Purchaser and the Trust set forth in this Article VIII shall apply
to Purchaser and the Trust regardless of any post-Closing disposition of the
Trust by Purchaser or any of their Affiliates.
SECTION 8.08. Tax Treatment of Payments. Circuit City, Purchaser and their
respective Affiliates shall treat any and all payments under this Article VIII
or Article IV or Article X (and the amount of any Receivables posted to accounts
on or prior to the Closing Date but on or after the Cut-Off Time) as an
adjustment to the Purchase Price for all Tax purposes unless they are required
to treat such payments otherwise pursuant to a determination (as defined in
Section 1313(a) of the Code or any similar state or local Tax law).
SECTION 8.09. Recovered Sales Taxes on Charged-Off Accounts. Purchaser and
Circuit City shall cooperate with one another, and each shall use commercially
reasonable efforts, to seek to obtain refunds of sales tax with respect to
Account balances that are charged off by FNANB prior to the Cut-Off Time, but no
Party will be obligated to take any action which it determines, reasonably and
in good faith, would violate any Requirement of Law. Sales tax recoveries with
respect to such charged-off Account balances will belong 100% to Circuit City or
one of Circuit City's Affiliates, as applicable.
ARTICLE IX
CONDITIONS TO CLOSING
SECTION 9.01. Conditions of All Parties to Closing. The respective
obligations of each Party hereunder to consummate the transactions contemplated
hereby shall be subject to the satisfaction or waiver, at or prior to the
Closing Date, of the following conditions:
(a) Regulatory Waiting Periods. The waiting period (and any extensions
thereof), if any, under the HSR Act, and/or Bank Merger Act, applicable to the
consummation of the
76
transactions contemplated by this Agreement shall have expired or been
terminated. The notice period required under the WARN Act with respect to any
WARN Act notice, if any, given to any Business Employee shall have been
satisfied.
(b) Other Regulatory Approvals. All approvals or authorizations of, filings
and registrations with, and notifications to, all applicable Governmental
Authorities and the Card Association with respect to the Credit Card Business,
if any, required to effect the transactions contemplated hereby or by the
Related Agreements shall be in full force and effect and all waiting periods
required by law shall have expired or been terminated, and no Unreasonable
Condition shall have been imposed by any applicable Governmental Authority in
connection therewith.
(c) No Pending Litigation. There shall not be pending or threatened any
suit, action, injunction, investigation, inquiry or other proceeding against any
Seller or Purchaser before any Governmental Authority, which has resulted or
will likely result in an order staying or judgment restraining or prohibiting
the transactions contemplated by this Agreement or subject a Party to Liability
on the grounds that it has breached any Requirement of Law or otherwise acted
improperly in connection with the transactions contemplated hereby.
(d) No Injunction. No Governmental Authority of competent jurisdiction
shall have enacted, issued, promulgated, enforced, or entered any statute, rule,
regulation, judgment, decree, injunction, or other order (whether temporary,
preliminary, or permanent) that, in each case, prohibits consummation of the
transactions contemplated hereby.
(e) Consents. FNANB and Tyler Funding shall have obtained (i) all consents
and approvals required to be obtained by the Securitization Documents, the Tyler
Funding Interest Rate Caps or the documents related to the Outstanding Private
Series in connection with the consummation of the transactions contemplated by
this Agreement and the Related Agreements (including all required confirmations
of ratings with respect to the Outstanding Public Series) and (ii) the consents
listed on Schedule 9.01(e).
(f) Fleet Interim Servicing Agreement. The Interim Servicing Agreement,
dated as of November 18, 2003, among FNANB, Circuit City and Fleet Credit Card
Services, L.P., shall have been terminated.
SECTION 9.02. Conditions to Obligations of Purchaser to Close. The
obligation of Purchaser to consummate the transactions contemplated by this
Agreement is subject to the satisfaction or waiver (in their sole discretion),
prior to or at the Closing, of each of the following conditions:
(a) Deliveries. Circuit City, FNANB and Tyler Funding, as the case may be,
shall deliver to Purchaser:
(i) the Related Agreements, duly executed and dated as of the Closing
Date;
(ii) the Required Securitization Amendments (other than the Required
Securitization Amendments relating to the Outstanding Private Series), duly
executed and dated as of the Closing Date;
77
(iii) the Securitization Transfer Agreements, duly executed and dated
as of the Closing Date;
(iv) Sublease of the Leased Real Property, substantially in the form of
Exhibit L, duly executed and delivered as of the Closing Date;
(v) Sublease with respect to space at Circuit City's Richmond, Virginia
headquarters, substantially in the form of Exhibit M, duly executed and
delivered as of the Closing Date;
(vi) subject to Section 7.28, an assignment of the Circuit City
Interest Rate Caps by Circuit City, duly executed and delivered as of the
Closing Date;
(vii) if required pursuant to Section 3.03(a), an escrow agreement in
form and substance mutually acceptable to the Parties and the escrow agent,
duly executed and delivered no later than five (5) Business Days before the
Closing Date;
(viii) any consents and certificates required to be duly executed and
delivered as of the Closing Date by Sellers to Purchaser in accordance with
this Article IX;
(ix) all such other deeds and instruments of sale, transfer,
conveyance, endorsements, and assignments, duly executed and delivered as
of the Closing Date, as Purchaser and their counsel reasonably may request
or as may be necessary to vest in Purchaser or their permitted assigns good
and marketable title to the Purchased Assets and effect the transactions
contemplated by Sections 2.01 and 2.02;
(x) the Securitization Documents and such other related documents as
Purchaser may reasonably request;
(xi) the Annual Report on Form 10-K filed by the Trust for the fiscal
year ended February 29, 2004, a certification to Purchaser substantially in
the form of Exhibit K attached hereto and a certification to Purchaser
substantially in the form of Exhibit Q attached hereto; and
(xii) a certificate of good standing, dated as of a date reasonably
close to the Closing Date, for the jurisdictions in which each of Circuit
City, FNANB, and Tyler Funding is organized.
(b) Accuracy of Representations and Warranties. Each of the representations
and warranties of Circuit City, FNANB and Tyler Funding made in this Agreement
which is not, by its terms, qualified by a materiality standard, shall have been
true and correct in all material respects as of the date hereof and shall be
true and correct in all material respects on and as of the Closing Date as
though made on and as of the Closing Date (and the representations and
warranties of such Parties contained in this Agreement that are, by their terms,
qualified by a materiality standard, shall have been true and correct on the
date hereof and shall be true and correct on and as of the Closing Date as
though made on and as of the Closing Date), except for representations and
warranties specifically relating to a time or times other than the date hereof
or thereof, which shall be true and correct in all material respects (to the
extent they are
78
not, by their terms, qualified by a materiality standard, and shall be true and
correct to the extent they are so qualified) at such specified time or times,
and except for changes thereto permitted or contemplated by this Agreement.
(c) Performance of this Agreement. Each of Circuit City, FNANB or Tyler
Funding shall have duly and fully complied in all material respects with each of
the obligations to be complied with by it on or prior to the Closing Date
pursuant to the terms of this Agreement.
(d) Board Resolutions; Incumbency Certificates. Purchaser shall have
received from each of Circuit City, FNANB and Tyler Funding (i) certified
resolutions of the Board of Directors of such Party authorizing the execution
and delivery of this Agreement and the Related Agreements and the consummation
of the transactions contemplated hereby and thereby, and (ii) a certificate as
to incumbency and signatures of officers authorized to execute this Agreement
and the Related Agreements, and (iii) a certificate dated as of the Closing Date
and validly executed on behalf of each of Circuit City, FNANB and Tyler Funding
by an appropriate officer certifying that the conditions specified in Section
9.02(b)-(c) have been satisfied.
(e) List of Accounts. FNANB shall have delivered to Purchaser a list of
Accounts as of the Cut-Off Time in computer tape form containing with respect to
each Account, the account number and information supporting calculation of
Accrued Interest.
(f) No Business Material Adverse Effect. Neither FNANB, Tyler Funding, nor
Circuit City shall have suffered a Business Material Adverse Effect.
(g) Assumed Contracts. All consents to assumption of the Assumed Contracts
listed on Schedule 9.02(g) shall have been obtained.
(h) Payment of Outstanding Private Series. The Outstanding Private Series
shall have been paid in full on or before the Distribution Date immediately
preceding the Closing Date or a procedure shall have been established in
accordance with Section 3.03(a) by which the Outstanding Private Series will be
paid in full on the Closing Date.
SECTION 9.03. Conditions to Obligations of Circuit City, FNANB and Tyler
Funding to Close. The obligation of Circuit City, FNANB and Tyler Funding to
consummate the transactions contemplated by this Agreement is subject to the
satisfaction or waiver (in their sole discretion), prior to or at the Closing,
of each of the following conditions:
(a) Deliveries. Purchaser shall deliver to Circuit City, FNANB and Tyler
Funding:
(i) the Purchase Price;
(ii) the Related Agreements, duly executed and dated as of the Closing
Date;
(iii) the Securitization Transfer Agreements, duly executed and
delivered as of the Closing Date;
79
(iv) Sublease of the Leased Real Property, substantially in the form of
Exhibit L, duly executed and delivered as of the Closing Date;
(v) Sublease with respect to space at Circuit City's Richmond, Virginia
headquarters, substantially in the form of Exhibit M, duly executed and
delivered as of the Closing Date;
(vi) subject to Section 7.28, an assignment of the Circuit City
Interest Rate Caps by Circuit City, duly executed and delivered as of the
Closing Date;
(vii) if required pursuant to Section 3.03(a), an escrow agreement in
form and substance mutually acceptable to the Parties and the escrow agent,
duly executed and delivered no later than five (5) Business Days before the
Closing Date;
(viii) any consents and certificates, duly executed and delivered as of
the Closing Date, required to be delivered by Purchaser to Sellers in
accordance with this Article IX;
(ix) a certificate of good standing, dated as of a date reasonably
close to the Closing Date, for the jurisdictions in which Purchaser is
organized;
(x) all such other deeds and instruments of sale, transfer, conveyance,
endorsements, and assignments, duly executed and delivered as of the
Closing Date, as may be necessary for or reasonably requested by FNANB on
behalf of itself and its Affiliates in connection with the Closing so as to
effect the transaction contemplated hereby.
(b) Accuracy of Representations and Warranties. Each of the representations
and warranties of Purchaser made in this Agreement which is not, by its terms,
qualified by a materiality standard, shall have been true and correct in all
material respects as of the date hereof and shall be true and correct in all
material respects on and as of the Closing Date as though made on and as of the
Closing Date (and the representations and warranties of Purchaser contained in
this Agreement that are, by their terms, qualified by a materiality standard,
shall have been true and correct on the date hereof and shall be true and
correct on and as of the Closing Date as though made on and as of the Closing
Date), except for representations and warranties specifically relating to a time
or times other than the date hereof or thereof, which shall be true and correct
in all material respects (to the extent they are not, by their terms, qualified
by a materiality standard, and shall be true and correct to the extent they are
so qualified) at such specified time or times, and except for changes thereto
permitted or contemplated by this Agreement.
(c) Performance of this Agreement. Purchaser shall have duly and fully
complied in all material respects with each of the obligations to be complied
with by it on or prior to the Closing Date pursuant to the terms of this
Agreement.
(d) Board Resolutions; Incumbency Certificates. Circuit City and Sellers
shall have received from Purchaser (i) certified resolutions of Purchaser's
Board of Directors authorizing the execution and delivery of this Agreement and
the Related Agreements and the
80
consummation of the transactions contemplated hereby and thereby, (ii)
certificates as to incumbency and signatures of officers authorized to execute
this Agreement and the Related Agreements, and (iii) a certificate dated as of
the Closing Date and validly executed on behalf of Purchaser by an appropriate
officer certifying that the conditions specified in Section 9.03(b)-(c) have
been satisfied.
(e) No Purchaser Material Adverse Effect. Purchaser shall not have suffered
a Purchaser Material Adverse Effect.
(f) OCC Non-Objection to Plan of Liquidation. FNANB shall have received
from the OCC a written statement of supervisory non-objection to FNANB's
proposed plan of liquidation.
(g) Other Consents. Circuit City, FNANB and Tyler Funding shall have
received any required consents to the transactions contemplated hereby from the
other party to any contract, instrument, or commitment to which such Party is a
party, including, where applicable, the Rating Agencies, other than those that
the failure to receive would not reasonably be expected to have a Business
Material Adverse Effect.
ARTICLE X
INDEMNIFICATION
SECTION 10.01. Survival of Representations and Warranties and Covenants.
(a) Except for the representations and warranties set forth in Sections
5.22, 5.25 and 6.11 which representations and warranties shall survive through
the expiration of any applicable statute of limitations, the representations and
warranties of each Party contained in this Agreement or in any certificates or
other instruments delivered pursuant to this Agreement and the right to commence
any claim under this Article X with respect to the representations and
warranties set forth herein shall survive until the date that is twenty-four
(24) months after the Closing Date, on which date such representations and
warranties and such right shall terminate; provided, however, that if written
notice of any bona fide claim for indemnification under Section 10.04(a) shall
have been given in accordance herewith within the applicable survival period
setting forth in reasonable detail (including a reasonable specification of the
legal and factual basis for such claim), the representations and warranties that
are the subject of such indemnification claim shall survive with respect to such
claim until such time as such claim is fully and finally resolved.
(b) Those covenants that contemplate or may involve actions to be taken or
obligations in effect after the Closing shall survive in accordance with their
terms. This Section 10.01 shall not limit any covenant or agreement of the
parties contained in this Agreement that by its terms contemplates performance
after the Closing, and shall not extend the applicability of any covenant or
agreement of the parties contained in this Agreement that by its terms relates
only to a period between the date hereof and the Closing.
81
SECTION 10.02. Indemnification Obligations of Circuit City, FNANB and Tyler
Funding. Subject to the terms of this Article X, from and after the Closing
Date, Circuit City, FNANB and Tyler Funding each agree to jointly and severally
indemnify, defend, save, and hold harmless Purchaser and its Affiliates and
their respective officers, directors and employees ("Purchaser Indemnified
Parties"), from and against (whether in connection with a third party claim or a
direct claim) any and all Damages resulting from, arising out of, or relating
to: (i) the Retained Liabilities; (ii) the Retained Assets; (iii) the inaccuracy
of any representation or the breach of any warranty of Circuit City, FNANB or
Tyler Funding contained in this Agreement or the Related Agreements (excluding
the Licensing Agreement, Gateway Software License Agreement, Sublease of the
Leased Real Property, Richmond Sublease and Program Agreement, each of which
shall stand on its own); (iv) the failure by Circuit City, FNANB or Tyler
Funding timely to perform any of its covenants or agreements contained in this
Agreement or the Related Agreements (excluding the Licensing Agreement, Gateway
Software License Agreement, Sublease of the Leased Real Property, Richmond
Sublease and Program Agreement, each of which shall stand on its own); (v) the
operation of the Credit Card Business prior to the Cut-Off Time, including
liability for any securities law violations committed prior to the Cut-Off Time;
(vi) operation of the Trust prior to the Cut-Off Time; (vii) any action taken by
any Governmental Authority as a result of the actions or omissions of Circuit
City, FNANB and Tyler Funding occurring prior to the Cut-Off Time; and (viii)
any Damages directly resulting from Sellers' failure to deliver at Closing the
Account Agreement or Account Agreements that are the subject of a claim made by
a third party.
SECTION 10.03. Indemnification Obligations of Purchaser. Subject to the
terms of this Article X, from and after the Closing Date, Purchaser agrees to
jointly and severally indemnify, defend, save, and hold harmless Circuit City,
FNANB and Tyler Funding and their respective Affiliates and their respective
officers, directors and employees ("Seller Indemnified Parties") from and
against (whether in connection with a third party claim or a direct claim) any
and all Damages resulting from, arising out of, or relating to: (i) the Assumed
Liabilities, (ii) the inaccuracy of any representation or the breach of any
warranty of Purchaser contained in this Agreement or the Related Agreements
(excluding the Licensing Agreement, Gateway Software License Agreement, Sublease
of the Leased Real Property, Richmond Sublease and Program Agreement, each of
which shall stand on its own); (iii) the failure by Purchaser timely to perform
any of its covenants or agreements contained in this Agreement or the Related
Agreements (excluding the Licensing Agreement, Gateway Software License
Agreement, Sublease of the Leased Real Property, Richmond Sublease and Program
Agreement, each of which shall stand on its own); (iv) the operation of the
Credit Card Business after the Cut-Off Time, including liability for any
securities law violations committed after the Cut-Off Time; (v) operation of the
Trust after the Cut-Off Time; and (vi) any action taken by any Governmental
Authority as a result of the actions or omissions of Purchaser occurring after
the Cut-Off Time.
SECTION 10.04. Claims.
(a) Notice of Third Party Claims. The parties agree that if any claim is
made, any suit or action is commenced, or any knowledge is received of a state
of facts which, if not corrected, may give rise to a right of indemnification
for such party hereunder (an "Indemnified Party") from the other party (the
"Indemnifying Party"), the Indemnified Party will give written notice to the
Indemnifying Party as promptly as practicable after the receipt
82
by the Indemnified Party of notice or knowledge of such claim, suit, action or
state of facts. Notice to the Indemnifying Party under the preceding sentence
shall be given no later than 15 days after receipt by the Indemnified Party of
service of process if a suit or action has commenced or 30 days under all other
circumstances. The failure to give prompt notice shall not relieve an
Indemnifying Party of its obligation to indemnify except to the extent the
Indemnifying Party is prejudiced by such failure. Such written notice shall
describe such claim in reasonable detail including the sections of this
Agreement that form the basis of such claim, copies of all material written
evidence thereof, and the estimated amount of the Damages that have or may be
sustained by the Indemnified Party. The Indemnified Party shall make available
to the Indemnifying Party and its counsel and accountants at reasonable times
and for reasonable periods, during normal business hours, all books and records
of the Indemnified Party relating to any such possible claim for
indemnification, and each party hereunder will render to the other such
assistance as it may reasonably require of the other in order to insure prompt
and adequate defense of any suit, claim or proceeding based upon a state of
facts which may give rise to a right of indemnification hereunder. The
Indemnifying Party shall have the right to defend, compromise and settle any
third party suit, claim or proceeding in the name of the Indemnified Party to
the extent that the Indemnifying Party may be liable to the Indemnified Party in
connection therewith. The Indemnifying Party shall notify the Indemnified Party
within 30 days of having been notified pursuant to this Section 10.04(a) if the
Indemnifying Party elects to assume the defense of any such claim, suit or
proceeding and employ counsel. The Indemnified Party shall have the right to
employ its own counsel if the Indemnifying Party so elects to assume such
defense, but the fees and expenses of such counsel shall be at the Indemnified
Party's sole expense. If the Indemnifying Party shall undertake to compromise or
defend any such claim, it shall promptly notify the Indemnified Party of its
intention to do so, and the Indemnified Party agrees to cooperate fully with the
Indemnifying Party and its counsel in the compromise of, or defense against, any
such claim; provided, however, that the Indemnifying Party shall not settle,
compromise, or discharge, or admit any liability with respect to, any such claim
without the prior written consent of the Indemnified Party (which consent will
not be unreasonably withheld or delayed) unless the relief consists solely of
money damages and includes a provision where the plaintiff or claimant in the
matter releases the Indemnified Party from all liability with respect thereto.
Notwithstanding an election to assume the defense of such action or proceeding,
the Indemnifying Party shall have the right to employ separate counsel and to
participate in the defense of such action or proceeding, and the Indemnifying
Party shall bear the reasonable fees, costs and expenses of such separate
counsel if (i) the Indemnified Party shall have determined in good faith that an
actual or potential conflict of interest makes such representation by the same
counsel or the counsel selected by the Indemnifying Party inappropriate, or (ii)
the Indemnifying Party shall have authorized the Indemnified Party to employ
separate counsel at the Indemnifying Party's expense. In any event, the
Indemnified Party and Indemnifying Party and their counsel shall cooperate in
the defense of any claim subject to this Article X and keep such Persons
informed of all developments relating to any such claims, and provide copies of
all relevant correspondence and documentation relating thereto. Also, in any
event, the Indemnified Party shall have the right at its own expense to
participate in the defense of such asserted liability. If the Indemnifying Party
receiving such notice of claim does not elect to defend such claim or does not
defend such claim in good faith, the Indemnified Party shall have the right, in
addition to any other right or remedy it may have hereunder, at the Indemnifying
Party's expense, to
83
defend such claim; provided, however, that (i) the Indemnified Party shall not
have any obligation to participate in the defense of, or defend, any such claim;
(ii) the Indemnified Party's defense of or participation in the defense of any
such claim shall not in any way diminish or lessen the obligations of the
Indemnifying Party under this Article X; and (iii) the Indemnified Party shall
not settle, compromise, or discharge, or admit any liability with respect to,
any such claim without the written consent of the Indemnifying Party (which
consent will not be unreasonably withheld or delayed).
(b) Direct Claims. Each Party hereto also agrees that any direct claim that
such Party may bring against any other Party hereto under the provisions of this
Agreement shall be governed exclusively by the provisions of this Article X,
other than Section 10.04(a).
(c) Settlement of Claims. The Indemnified Party may at any time notify the
Indemnifying Party of its intention to settle or compromise any claim, suit or
action against the Indemnified Party without the consent of the Indemnifying
Party; provided, however that the Indemnifying Party shall have no further
liability in respect thereof.
(d) Subrogation. The Indemnifying Party shall be subrogated to any claims
or rights of the Indemnified Party as against any other Persons with respect to
any amount paid by the Indemnifying Party under this Article X. The Indemnified
Party shall cooperate with the Indemnifying Party, at the Indemnifying Party's
expense, in the assertion by the Indemnifying Party of any such claim against
such other Persons.
SECTION 10.05. Limitations on Indemnification.
(a) Notwithstanding anything contained in this Agreement to the contrary,
(i) Circuit City, FNANB and Tyler Funding shall not be liable in the aggregate
for any amounts for which Purchaser Indemnified Parties are otherwise entitled
to indemnification pursuant to Section 10.02(iii) unless (x) a claim is timely
asserted during the survival period specified in Section 10.01(a), and (y) the
aggregate amount of all Damages for which Purchaser Indemnified Parties are
entitled to indemnification pursuant to Section 10.02(iii) exceeds, on a
cumulative basis, $5 million (the "Deductible"), and then only to the extent of
such excess, and (ii) Circuit City, FNANB and Tyler Funding shall not be
required to make indemnification payments pursuant to Section 10.02(iii) to the
extent indemnification payments thereunder would exceed in the aggregate $125
million (the "Cap"). The limitations contained in this Section 10.05(a) shall
not apply in respect of the first sentence of Section 5.14.
(b) Notwithstanding anything contained in this Agreement to the contrary,
(i) Purchaser shall not be liable for any amounts for which Seller Indemnified
Parties are otherwise entitled to indemnification pursuant to Section 10.03(ii)
unless (x) a claim is timely asserted during the survival period specified in
Section 10.01(a) and (y) the aggregate amount of all Damages for which Seller
Indemnified Parties are entitled to indemnification pursuant to Section
10.03(ii) exceeds, on a cumulative basis, the Deductible, and then only to the
extent of such excess, and (ii) Purchaser shall not be required to make
indemnification payments pursuant to Section 10.03(ii) to the extent
indemnification payments thereunder would exceed in the aggregate the Cap.
84
(c) Other than with respect to a breach of Section 7.04, in determining the
foregoing Deductible and in otherwise determining the amount to which
Indemnified Parties are entitled to assert a claim for indemnification pursuant
this Article X, no claim for indirect, incidental, exemplary, special,
consequential or punitive damages, lost profits or opportunity costs shall be
taken into account.
(d) Indemnity Payments shall be paid in immediately available funds within
ten (10) Business Days after the later of (i) the receipt of a written request
from the party entitled to such Indemnity Payment and (ii) the date of payment
of the amount that is the subject of the Indemnity Payment by the party entitled
to receive the Indemnity Payment, except to the extent contested by the
Indemnifying Party. All such Indemnity Payments shall be made to the designated
account of, and in the manner specified in writing by, the party entitled to
such Indemnity Payments.
(e) For purposes of indemnification under this Article X, a breach or
inaccuracy of a representation, warranty, covenant or agreement contained in
this Agreement, shall be deemed to occur or exist if such representation,
warranty, covenant or agreement would have been so breached or inaccurate if it
had not contained any limitation or qualification as to materiality or the
Party's Knowledge; provided, however, that Section 5.19 shall for purposes of
indemnification under this Article X be qualified by materiality as set forth
therein.
SECTION 10.06. Insurance; Tax Benefits.
(a) Notwithstanding anything herein to the contrary, Damages shall be net
of any insurance or other recoveries actually received by the Indemnified Party
or its Affiliates in connection with the facts giving rise to the right of
indemnification, including any third-party payments actually received by the
Indemnified Party. If an Indemnified Party shall have used commercially
reasonable best efforts to recover any amounts recoverable under insurance
policies and shall not have recovered the applicable Damages in full within one
hundred twenty (120) days, the Indemnifying Party shall promptly pay upon
written request the amount with interest accrued thereon, by which such Damages
exceeds the amounts actually recovered.
(b) The Indemnified Party shall claim on the appropriate Tax Return any
Benefit Item arising from the incurrence or payment of Damages if the
Indemnified Party believes such Benefit Item is allowable or if the Indemnifying
Party provides the Indemnified Party with a written opinion of a nationally
recognized law firm or accounting firm (which firm and opinion shall be
reasonably acceptable to the Indemnified Party) to the effect that such Benefit
Item "should" be allowable. Not more than ten (10) Business Days after filing
the Tax Return on which such Benefit Item is claimed, the Indemnified Party
shall pay the Indemnifying Party the amount of any realized Tax Benefit arising
from such Benefit Item (net of the Tax cost, including the net present value of
any reasonably anticipated future Tax cost, to the Indemnified Party or its
Affiliates arising from the receipt of the indemnification payment).
SECTION 10.07. Remedies Exclusive. Except in cases of common law fraud or
as otherwise specifically provided herein, the remedies provided in Article VIII
or this Article X shall be the exclusive monetary remedies (including equitable
remedies that involve monetary payment, such as restitution or disgorgement,
other than specific performance, to enforce any
85
payment or performance due hereunder) of the parties hereto from and after the
Closing in connection with any breach of a representation or warranty, or
non-performance, partial or total, of any covenant or agreement contained
herein.
SECTION 10.08. Mitigation. Each Indemnified Party shall use commercially
reasonable efforts to mitigate any claim or liability that an Indemnified Party
asserts or is reasonably likely to assert under Article VIII or this Article X.
If an Indemnified Party shall fail to make such commercially reasonable efforts
to mitigate any such claim or liability, then notwithstanding anything else to
the contrary contained herein, none of Circuit City, FNANB, Tyler Funding, or
Purchaser as the case may be, shall be required to indemnify any Indemnified
Party for that portion of any Damages that could reasonably be expected to have
been avoided if the Indemnified Party had made such efforts.
SECTION 10.09. Tax Indemnification. Except as expressly as provided in
Article VIII or this Article X, this Article X shall not apply to
indemnification with respect to Taxes.
SECTION 10.10. Termination of Indemnification. Except as otherwise
expressly provided in this Article X, the obligations to indemnify and hold
harmless any Party pursuant to Sections 10.02 and 10.03 shall not terminate.
ARTICLE XI
TERMINATION
SECTION 11.01. Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing Date only:
(a) by the mutual written consent of Circuit City, FNANB, Tyler Funding,
and Purchaser;
(b) by either Circuit City, FNANB, Tyler Funding, or Purchaser upon
notification of the non-terminating Parties by the terminating Party, if any
permanent injunction or action by any Governmental Authority of competent
jurisdiction prohibiting consummation of the transactions contemplated by this
Agreement shall have been issued or taken and shall have become final and
nonappealable, provided, however, that no Party shall have the right to
terminate this Agreement pursuant to this subsection if such injunction or
action shall be due to the failure of the Party seeking to terminate this
Agreement to perform or observe the covenants and agreements of such Party set
forth herein;
(c) by either Circuit City, FNANB, Tyler Funding, or Purchaser if the
Closing shall not have occurred on or before September 30, 2004 (the
"Termination Date"), except to the extent that such failure arises out of, or
results from, a material breach by the Party seeking to terminate this Agreement
of any representation, warranty, or covenant of such Party contained herein;
provided, however, that if the failure to consummate the transactions
contemplated hereby by the Termination Date is caused by a delay in satisfying
Section 9.01(a) or obtaining any approval of a Governmental Authority necessary
to satisfy Section 9.01(b), no Party shall have the right to terminate this
Agreement pursuant to this Section 11.01(c) until the date that is three months
after the Termination Date;
86
(d) by Circuit City, FNANB or Tyler Funding (i) if Purchaser shall have
breached or failed to perform in any material respect any of its
representations, warranties, covenants, or other agreements contained in this
Agreement, which breach or failure to perform would render any condition to
Circuit City's, FNANB's or Tyler Funding's obligations under Sections 9.01 or
9.03 incapable of being satisfied; provided, however, that if such breach or
failure to perform is curable by Purchaser through the exercise of commercially
reasonable efforts, and for so long as such Party continues to exercise such
commercially reasonable efforts, none of Circuit City, FNANB or Tyler Funding
may terminate this Agreement under this Section 11.01(d); provided, further,
that the preceding proviso shall not in any event be deemed to extend the
Termination Date, or (ii) if a condition under Section 9.01 or Section 9.03 to
Circuit City's, FNANB's or Tyler Funding's obligations hereunder has been
rendered incapable of being satisfied; provided, however, that no Party shall
have the right to terminate this Agreement if such Party is then in breach of
any material representation or warranty contained herein or is in default in any
material respect in the observance or in the timely performance of any of its
covenants or agreements contained herein; or
(e) by Purchaser, (i) if Circuit City, FNANB or Tyler Funding shall have
breached or failed to perform in any material respect any of its
representations, warranties, covenants, or other agreements contained in this
Agreement, which breach or failure to perform would render any condition to
Purchaser's obligations under Sections 9.01 or 9.02 incapable of being
satisfied; provided, however, that if such breach or failure to perform is
curable by Circuit City, FNANB or Tyler Funding through the exercise of
commercially reasonable efforts, and for so long as such Party continues to
exercise such commercially reasonable efforts, Purchaser may not terminate this
Agreement under this Section 11.01(e); provided, further, that the preceding
proviso shall not in any event be deemed to extend the Termination Date, or (ii)
if a condition under Section 9.01 or Section 9.02 to Purchaser's obligations
hereunder has been rendered incapable of being satisfied; and provided, further,
that no Party shall have the right to terminate this Agreement if such Party is
then in breach of any material representation or warranty contained herein or is
in default in any material respect in the observance or in the timely
performance of any of its covenants or agreements contained herein.
(f) by Purchaser, if: Circuit City, FNANB or Tyler Funding is adjudged
bankrupt or insolvent by a Governmental Authority of competent jurisdiction;
insolvency proceedings are instituted against Circuit City, FNANB or Tyler
Funding; a Governmental Authority of competent jurisdiction appoints a receiver,
liquidator, conservator or trustee for Circuit City, FNANB or Tyler Funding or
all or substantially all of their assets, or approves any petition filed against
Circuit City, FNANB or Tyler Funding seeking their reorganization.
(g) by Circuit City, FNANB or Tyler Funding, if: Purchaser is adjudged
bankrupt or insolvent by a Governmental Authority of competent jurisdiction;
insolvency proceedings are instituted against Purchaser; a Governmental
Authority of competent jurisdiction appoints a receiver, liquidator, conservator
or trustee for Purchaser or all or substantially all of its assets, or approves
any petition filed against Purchaser seeking its reorganization.
SECTION 11.02. Effect of Termination. If this Agreement shall be terminated
pursuant to this Article XI, all further obligations of the Parties (and their
respective Affiliates, directors, officers, representatives or agents) under
this Agreement (other than obligations
87
contained in Sections 7.04, 7.06 and 12.06, all of which shall survive
termination) shall be terminated without any further Liability or obligation on
the part of any Party to the other, provided that nothing herein shall relieve
any Party from Liability for any knowing, willful, or fraudulent breach of this
Agreement prior to termination.
ARTICLE XII
MISCELLANEOUS
SECTION 12.01. Notices. All notices, demands, and other communications
required to be given to any Party under this Agreement shall be in writing and
shall be deemed to have been duly given when delivered by hand, courier or
nationally recognized overnight delivery service, or, if mailed, three (3)
Business Days after deposit in the United States mail, certified or registered
mail, return receipt requested and with first class postage prepaid, or, in the
case of facsimile notice, when sent and transmission is confirmed, and
regardless of method, addressed to the Party at its address or facsimile number
set forth below:
If to Circuit City, FNANB or Tyler Funding:
Circuit City Stores, Inc.
0000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: President
copy to:
McGuireWoods LLP
One Xxxxx Center
000 X. Xxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx, Esq.
Fax Number: (000) 000-0000
If to Purchaser:
Bank One, Delaware, National Association
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxx
Fax Number: (000) 000-0000
Bank One, Delaware, National Association
Xxx Xxxx Xxx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxxxxxx
Fax Number: (000) 000-0000
88
Bank One, Delaware, National Association
0 XxxxXxx Xxxxx
Xxxxxxx, XX 6067
Attn: Xxxxxx X. Xxxxxx
Fax Number: (000) 000-0000
copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
0 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxxxx, Esq.
Fax Number: (000) 000-0000
or to such other addresses or facsimile number as a Party may from time to time
designate by notice as provided herein, except that notices of change of address
shall be effective only upon actual receipt.
SECTION 12.02. Assignment. Notwithstanding anything to the contrary
contained herein, this Agreement may not be assigned by any of the Parties
hereto without the prior written approval of the other Parties hereto (which
consent may not be unreasonably withheld) and any purported assignment without
such consent shall be void. Notwithstanding the foregoing, after the Closing
FNANB may assign all of its rights and obligations under this Agreement to
Circuit City or any Affiliate of Circuit City; provided, that such assignment by
FNANB shall not diminish the indemnification obligations of Circuit City under
Article X.
SECTION 12.03. Binding Agreement; No Third Party Beneficiaries. This
Agreement will inure to the benefit of and be binding upon the Parties hereto
and their respective successors and permitted assigns. Nothing contained in this
Agreement, express or implied, shall confer any rights, benefits, claims or
remedies upon any Person other than the Parties and their respective successors
and permitted assigns; provided, however, that the provisions of Article X will
inure to the benefit of the Indemnified Parties.
SECTION 12.04. Entire Agreement. This Agreement, together with the Related
Agreements and all Exhibits and Schedules hereto and thereto, which constitute a
part of and are incorporated into this Agreement and the Related Agreements,
constitutes the entire agreement among the Parties and supersedes any other
agreement (including the Confidentiality Agreement), whether written or oral,
that may have been made or entered into by any of the Parties (or by any officer
or officers of any of such Parties) relating to the matters contemplated hereby.
The Parties intend that this Agreement shall constitute the complete and
exclusive statement of its terms and that no extrinsic evidence whatsoever may
be introduced in any judicial proceeding involving this Agreement.
SECTION 12.05. Amendments and Waivers. This Agreement may be amended,
modified, superseded, or canceled, and any of the terms, representations,
warranties or covenants hereof may be waived, only by written instrument
executed by each of the parties or, in the case of a waiver, by the Party
waiving compliance. In the course of the planning and
89
coordination of this Agreement, written documents have been exchanged between
the parties. Such written documents shall not be deemed to amend or supplement
this Agreement. The failure of any party at any time or times to require
performance of any provision hereof shall in no manner affect the right at a
later time to enforce the same. No waiver by any party of any condition or of
any breach of any term, representation, warranty or covenant under this
Agreement, whether by conduct or otherwise, in any one or more instances, shall
be deemed to be or construed as a further or continuing waiver of any other
condition or of any breach of any such condition of breach or waiver of any
other condition or of any breach of any other term, representation, warranty or
covenant under this Agreement.
SECTION 12.06. Expenses. Except as otherwise provided herein, the Parties
will each bear their own legal, accounting and other costs in connection with
the transactions contemplated hereby, including taxes, if any, that are imposed
upon a Party attributable to its activities hereunder whether or not the
transactions contemplated hereby are consummated.
SECTION 12.07. No Joint Venture. Nothing in this Agreement shall be deemed
to create a partnership or joint venture between Sellers and Purchaser. Except
as expressly set forth herein, no Party shall have any authority hereunder to
bind or commit the other Party.
SECTION 12.08. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO ITS
CONFLICTS OF LAW PROVISIONS (OTHER THAN SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW), AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 12.09. Jurisdiction; Venue; Consent to Service of Process.
(a) Each Party hereby irrevocably and unconditionally submits, for itself
and its property, to the jurisdiction of the state courts of the State of New
York located in the City of New York, or any federal court sitting in the City
of New York in New York County and any appellate court from any such court, in
any suit, action or proceeding arising out of or relating to this Agreement or
the Related Agreements, or for recognition or enforcement of any judgment
resulting from any such suit, action or proceeding, and each Party hereby
irrevocably and unconditionally agrees that all claims in respect of any such
suit, action or proceeding may be heard and determined in any court in the State
of New York located in the City of New York or, to the extent permitted by law,
by removal or otherwise, in such federal court. The Parties further agree, to
the extent permitted by law, that final and nonappealable judgment against any
of them in any action or proceeding contemplated above shall be conclusive and
may be enforced in any other jurisdiction within or outside the United States by
suit on the judgment, a certified copy of which shall be conclusive evidence of
the fact and amount of such judgment.
(b) To the extent that any Party has or hereafter may acquire any immunity
from jurisdiction of any court or from any legal process (whether through
service or notice, attachment prior to judgment, attachment in aid of execution,
execution or otherwise) with respect to itself or its property, each of such
Parties hereby irrevocably waives such immunity in respect of its obligations
with respect to this Agreement.
90
(c) It shall be a condition precedent to each Party's right to bring any
suit, action or proceeding arising out of or relating to this Agreement that
such suit, action or proceeding, in the first instance, be brought in a state
court located in the State of New York located in the City of New York or, to
the extent permitted by law, by removal or otherwise, in such federal court
(unless such suit, action or proceeding is brought solely to obtain discovery or
to enforce a judgment), and if each of the state courts in the State of New York
located in the City of New York and such federal court refuses to accept
jurisdiction with respect thereto, such suit, action or proceeding may be
brought in any other court with jurisdiction.
(d) No Party may move to (i) transfer any such suit, action or proceeding
from a state court in the State of New York located in the City of New York or
such federal court to another jurisdiction, (ii) consolidate any such suit,
action or proceeding brought in a state court in the State of New York located
in the City of New York or such federal court with a suit, action or proceeding
in another jurisdiction or (iii) dismiss any such suit, action or proceeding
brought in a state court in the State of New York located in the City of New
York or such federal court for the purpose of bringing the same in another
jurisdiction.
(e) Each Party hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, (i) any objection that it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement in a state court in the
State of New York located in the City of New York or any federal court sitting
in the City of New York, (ii) the defense of an inconvenient forum to the
maintenance of such suit, action or proceeding in any such court and (iii) the
right to object, with respect to such suit, action or proceeding, that such
court does not have jurisdiction over such Party.
(f) Each Party irrevocably consents to service of process in the manner
provided for the giving of notices pursuant to Section 12.01. Nothing in this
Section 12.09 shall affect the right of any Party to serve process in any other
manner permitted by law.
SECTION 12.10. Specific Performance and Other Equitable Relief. The parties
hereby expressly recognize and acknowledge that immediate, extensive and
irreparable damage would result, no adequate remedy at law would exist and
damages would be difficult to determine if any provision of this Agreement is
not performed in accordance with its specific terms or otherwise breached. In
addition to, and not in limitation of, any other remedy available to the
Parties, an aggrieved Party under this Agreement would be entitled to seek
specific performance of the terms hereof and immediate injunctive relief,
without the necessity of proving the inadequacy of money damages as a remedy.
Such remedies and any and all other remedies provided for in this Agreement
shall be cumulative in nature and not exclusive and shall be in addition to any
other remedies whatsoever that any Party may otherwise have.
SECTION 12.11. 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, SUIT, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
91
SECTION 12.12. Severability. If any provision of this Agreement or portion
thereof is held invalid, illegal, void or unenforceable by reason of any rule of
law, administrative or judicial provision or public policy, such provision shall
be ineffective only to the extent invalid, illegal, void or unenforceable, and
the remainder of such provision and all other provisions of this Agreement shall
nevertheless remain in full force and effect. To the extent permitted by
applicable law, the parties waive any provision that renders any provision of
this Agreement invalid, illegal, void or unenforceable in any respect. The
parties shall, to the extent lawful and practicable, use their commercially
reasonable efforts to enter into arrangements to reinstate the intended
benefits, net of the intended burdens, of any such provision held invalid,
illegal, void, or unenforceable.
SECTION 12.13. Headings. The headings in this Agreement are inserted for
convenience of reference only and shall not be considered a part of or affect
the construction or interpretation of any provision of this Agreement.
SECTION 12.14. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same instrument, and such counterparts may be
delivered by facsimile transmission.
[SIGNATURE PAGE FOLLOWS]
92
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first written above.
CIRCUIT CITY STORES, INC.
By: /s/Xxxxxxx X. Xxxx
------------------------------------------------
Name: Xxxxxxx X. Xxxx
Title: Senior Vice President and
Chief Financial Officer
FIRST NORTH AMERICAN NATIONAL BANK
By: /s/Xxxxxx X. Xxxxxxx
-----------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President
TYLER INTERNATIONAL FUNDING, INC.
By:/s/Xxxxxx X. Xxxx
------------------------------------------------
Name: Xxxxxx X. Xxxx
Title: President and Secretary
BANK ONE, DELAWARE, NATIONAL ASSOCIATION
By:/s/Xxxxx X. Xxxx
------------------------------------------------
Name: Xxxxx X. Xxxx
Title: Senior Vice President,
Finance Director
S-1
