PURCHASE, SALE AND SERVICING TRANSFER AGREEMENT

EXHIBIT 2.1

 

 

P URCHASE , S ALE AND S ERVICING T RANSFER A GREEMENT

 

AMONG

 

HSBC B ANK N EVADA , N.A.,

 

HSBC F INANCE C ORPORATION ,

 

T HE N EIMAN M ARCUS G ROUP , I NC .

 

AND

 

B ERGDORF G OODMAN , I NC .

 

D ATED AS OF J UNE 8, 2005

 

TABLE OF CONTENTS

 

 

i

 

 

ii

SCHEDULES AND ANNEXES*

 

 

*	Neiman Marcus hereby agrees to furnish supplementally a copy of any omitted schedule or annex to the Securities and Exchange Commission upon its request.

 

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PURCHASE, SALE AND SERVICING TRANSFER AGREEMENT , dated as of June 8, 2005 (this “ Agreement ”), among The Neiman Marcus Group, Inc., a Delaware corporation (the “ Parent ”), Bergdorf Goodman, Inc., a New York corporation (“BG”), HSBC Bank Nevada, N.A., a national credit card bank (the “ Purchaser ”), and HSBC Finance Corporation, a Delaware corporation (the “ Purchaser Parent ”).

 

RECITALS

 

WHEREAS, the Parent and BG are, among other things, (i) engaged in the business of selling merchandise through retail stores and by other means and (ii) directly and indirectly through certain of their subsidiaries engaged in the Business (as defined herein);

 

WHEREAS, the Neiman Marcus Group Credit Card Master Trust was formed pursuant to that certain Amended and Restated Pooling and Servicing Agreement, dated as of July 2, 2000, as amended and/or supplemented through the date of this Agreement and as it may be further amended and/or supplemented through the Closing Date to the extent permitted by this Agreement, (including all series supplements thereto, the “ Pooling and Servicing Agreement ”), by and among Neiman Marcus Funding Corporation, a Delaware corporation (“ NFC ”), as seller, the Parent, as servicer, and The Bank of New York, as trustee;

 

WHEREAS, pursuant to this Agreement, the Parent and BG desire to sell to the Purchaser, and the Purchaser desires to purchase from the Sellers (as defined below), the Acquired Assets pursuant to the terms contained and in the manner described herein;

 

WHEREAS, on the date hereof, the Parent and the Purchaser are entering into a Program Agreement (the “ Program Agreement ”) in the form attached hereto as Annex A, to become effective as of the Closing under this Agreement, that provides for, among other things, the issuance of Neiman Marcus proprietary cards, the issuance of existing and new credit related products to be developed with the Purchaser, the processing and servicing of the related Accounts, and the conduct of related marketing activities; and

 

WHEREAS, simultaneously with the Closing under this Agreement, the Parent, the Purchaser and certain of their respective Affiliates desire to enter into other agreements in connection with the transactions contemplated hereby.

 

NOW, THEREFORE , in consideration of the premises, and of the mutual representations and agreements contained in this Agreement, the parties agree as follows:

 

ARTICLE I

DEFINITIONS

 

SECTION 1.1. Definitions of Certain Terms. (a) In this Agreement, the following terms are used with the meanings assigned below:

 

“ Accounts ” means, as of the Cut-Off Time, any account identified by name and account number under which a purchase, cash advance or credit transaction may be or has been made by a Cardholder by means of (A) a Credit Card or (B) a Non-Card

Payment Plan, which is recorded as an Account on the computer system of the Service Provider or the Sellers’ internal processing system, and for which an Account Agreement is in effect as of the Closing Date, including any such account that is a Charged Off Account.

 

“ Account Agreement ” means an agreement (including related disclosure) between the Parent or BG and a Person or Persons under which Accounts are established and Credit Cards or Non-Card Payment Plans are issued to or on behalf of such Person or Persons, as such agreement may be amended, modified or otherwise changed from time to time (including pursuant to change of terms notices).

 

“Accrued Interest” means the aggregate amount of all finance charges that were accrued and earned, but not posted, on the Accounts as of the close of business on the Business Day immediately preceding the Cut-Off Time.

 

“Acquired Assets” means all right, title and interest of the Sellers in and to the following assets and properties:

 

(1) the Accounts and the Gross Receivables (other than Securitization Receivables) accrued as of the Cut-Off Time related to the Accounts;

 

(2) the applications for Accounts pending and solicitations for Accounts outstanding;

 

(3) the Account Agreements, the Cardholder List and the Master File;

 

(4) the Securitization Assets and any New Securitization Assets that may exist at Closing;

 

(5) the Books and Records; and

 

(6) rights, claims, credits, causes of action or rights of set-off against third parties relating principally to the assets referred to in (1) through (5) above.

 

“Affiliate” means, with respect to any Person, each Person that controls, is controlled by, or is under common control with, such Person. For purposes of this definition, “control” of a Person means the possession, directly or indirectly, of the power to direct or cause the direction of its management or policies, whether through the ownership of voting securities, by contract or otherwise.

 

“Ancillary Agreements” means the Program Agreement, the Servicing Agreement, the Purchaser Parent Guarantee, the Securitization Transfer Agreement and the Instrument of Assignment and Assumption.

 

“Applicable Order” means, with respect to any Person, a judgment, injunction, writ, decree or order of any Governmental Authority, in each case legally binding on that Person or on any material amount of its property.

 

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“Assumed Liabilities” means the following Liabilities of the Sellers:

 

(1) all obligations to Cardholders in their capacity as such or to perform under Account Agreements, including payment of credit balances;

 

(2) all of the obligations of the Sellers, as servicer, originator, transferor, or in any other capacity to the Master Trust and under any Securitization Documents, including all obligations to accept reassignment of receivables pursuant to the terms of the Pooling and Servicing Agreement; and

 

(3) all Liabilities for Taxes relating to the Business, the Acquired Assets, the Assumed Liabilities or the Master Trust to the extent set forth in Article VI.

 

“Books and Records” means books, records, original documents, files and papers maintained by the Sellers, whether in hard copy or electronic format, including those relating to the Master Trust, in each case to the extent within the Sellers’ control and possession and exclusively used in the Business, other than the Cardholder List, the Master File and any of the foregoing relating principally to the Excluded Assets and other than Tax Returns or Tax work papers. For the avoidance of doubt, the term “Books and Records” does not include any NMG Shopper Data, NMG Systems (as defined in the Program Agreement) or any of the Sellers’ minute books, stock ledgers, internal accounting records or other corporate records and documents.

 

“Business ” means the proprietary credit business relating to the Credit Cards and Accounts, including the extension of credit to Cardholders, the servicing of the Accounts (including servicing under the Pooling and Servicing Agreement), billings, collections, processing of Account transactions, the administration of the Accounts and Gross Receivables (including the Securitization Receivables), but excluding (i) the operations, systems and facilities of the Parent and all employees, including those dedicated to the origination, servicing and collection of Accounts and (ii) the Excluded Assets.

 

“Business Day” means any day, other than a Saturday or Sunday, on which each of the Parent, Purchaser and Purchaser Parent are open for business at their respective U.S. headquarters.

 

“Cardholder” means a Person or Persons to whom a Credit Card or Non-Card Payment Plan is or has been issued by the Parent and in whose name(s) an Account, in connection with which the Credit Card or Non-Card Payment Plan may be used, has been established pursuant to an Account Agreement.

 

“Cardholder List ” means a list of the names, addresses, telephone numbers and taxpayer identification numbers and social security numbers of all Cardholders as of the Cut-Off Time if and to the extent maintained by Parent.

 

“Charged Off Accounts” means all Accounts that, as of the Cut-Off Time, have been charged off in accordance with the Sellers’ standard policies and procedures as in effect on January 1, 2005.

 

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“ Class” has the meaning set forth in the Pooling and Servicing Agreement.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Constituent Documents” means the articles of association, articles of incorporation, certificate of incorporation, by-laws and/or other organizational documents, as appropriate, of any Person.

 

“Contract” means, with respect to any Person, any agreement, undertaking, contract, indenture, deed of trust or other instrument, document or agreement by which that Person, or any amount of its properties, is bound and/or subject.

 

“Credit Card” means a proprietary card that may be used by the holder to purchase goods and services of Parent or its Subsidiaries or their respective licensees through open-end revolving credit, commonly known as a credit or charge card; provided that the term does not include: (i) any gift card; (ii) any debit card, stored value card, electronic or digital cash card or any other card that does not provide the holder thereof with the ability to obtain credit other than through an overdraft line or similar feature; or (iii) any card issued to the holder of a securities brokerage account that allows the holder to obtain credit through a margin account.

 

“Cut-Off Time” means 11:59 PM Pacific time on the date immediately preceding the Closing Date.

 

“Deductible Amount” has the meaning set forth on Schedule F.

 

“ De Minimis Claim Amount ” has the meaning set forth on Schedule F.

 

“Disclosure Schedule” means, with respect to the Sellers or the Purchaser, a schedule delivered to the other party on or before the date of this Agreement setting forth, among other things, items the disclosure of which is required under this Agreement either in response to an express disclosure requirement contained in a provision of this Agreement or as an exception to one or more of the representations or covenants contained in this Agreement; provided that the mere inclusion of an item in a Disclosure Schedule as an exception to a representation shall not be considered an admission by the disclosing party that such item (or any non-disclosed item or information of comparable or greater significance) represents a material exception or fact, event or circumstance or that such item has had or is reasonably expected to result in a Material Adverse Effect with respect to the disclosing party or the Business.

 

“ Escrow Agent ” means an escrow agent to be selected by the Parties, who shall act as the escrow agent in connection with the transactions contemplated by this Agreement pursuant to an escrow agent agreement to be entered into among such escrow agent and the Parties.

 

“ Estimated Closing Statement ” means a statement prepared by the Sellers, substantially in the form of Schedule A, showing in reasonable detail the calculation of the Estimated Purchase Price, based on data available as of the fifth Business Day preceding the Cut-Off Time.

 

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“Estimated Purchase Price” means the amount payable by the Purchaser on the Closing Date in accordance with the Estimated Closing Statement.

 

“Excluded Assets” means the assets of the Sellers and their Affiliates not being acquired by the Purchaser hereunder, including the following:

 

(1) all rights under any Contracts other than the Securitization Documents and the Account Agreements;

 

(2) all cash and cash equivalents on hand and cash and cash equivalents in bank accounts maintained by the Sellers or any of their Affiliates, other than in the Securitization Bank Accounts;

 

(3) all insurance policies maintained by or for the benefit of the Sellers or any of their Affiliates and all claims accrued thereunder;

 

(4) all Intellectual Property Rights, other than rights to the Cardholder List and the Master File (in each case, subject to the restrictions set forth in the Program Agreement);

 

(5) all rights, claims, credits or other rights to payment, causes of action, or rights of set-off against third parties, other than those set forth in clause (6) of “Acquired Assets”;

 

(6) all licenses, permits or other authorizations of any Governmental Authorities held or used by the Sellers;

 

(7) all interests in real property of the Sellers and their Affiliates, whether or not related to or used in the Business;

 

(8) all tangible personal property of the Sellers and their Affiliates, whether or not related to or used in the Business;

 

(9) all right, title and interest of the Sellers and their Affiliates in and to any and all other assets and properties, of any kind whatsoever, that are not principally used in the conduct of the Business;

 

(10) all customer data relating to customers of the Sellers and their Affiliates (whether or not any portion thereof is duplicated in the Cardholder List and the Master File); and

 

(11) all current Taxes receivable, deferred Tax assets and prepaid Taxes, Tax payments due from Affiliates, and entitlements to refunds or credits for overpayment of Taxes, all to the extent set forth in Article VI.

 

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“Excluded Liabilities” means Liabilities of the Sellers, their Subsidiaries and Affiliates (or any of their respective predecessors), other than the Assumed Liabilities, of any kind whatsoever, whether presently in existence or arising hereafter, including:

 

(1) Liabilities for Taxes relating to the Business, the Acquired Assets, the Assumed Liabilities or the Master Trust to the extent set forth in Article VI;

 

(2) the portion of any Liability principally related to an Excluded Asset;

 

(3) Liabilities related to, associated with or arising out of any action, claim, suit or proceeding arising out of or relating to the operation of the Business, the Acquired Assets or the Master Trust, including any breach of the Securitization Documents, prior to the Closing, whether such action, claim, suit or proceeding is brought prior to, on or after the Closing;

 

(4) all loan loss reserves maintained by the Sellers in respect of (i) the Accounts and (ii) the amounts owing in respect thereof from Cardholders; and

 

(5) all Liabilities constituting, arising out of or incurred in connection with any Merger Financing Arrangement or New Securitization Assets.

 

“Federal Funds Rate” means the offered rate as reported in The Wall Street Journal in the “Money Rates” section for reserves traded among commercial banks for overnight use in amounts of one million dollars or more or, if no such rate is published for a day, the rate published for the preceding Business Day, calculated on a daily basis based on a 365-day year.

 

“Final Closing Statement” means a statement prepared by the Parent, substantially in the form of Schedule A, showing in reasonable detail the Parent’s calculation of the Purchase Price, based on the data with respect to the Accounts and the Acquired Assets as of the Cut-Off Time.

 

“GAAP” means generally accepted accounting principles in the United States.

 

“Governmental Authority” means any domestic or foreign governmental, regulatory or self-regulatory authority, agency, court, tribunal, commission or other governmental, regulatory or self-regulatory entity exercising legislative, judicial, regulatory or administrative functions.

 

“Gross Receivables” means amounts owing (net of credit balances) to the Sellers from Cardholders with respect to Accounts (including outstanding loans, cash advances and other extensions of credit; billed or posted but unbilled finance charges and late charges; Accrued Interest; and any other fees, charges and interest assessed on the Accounts).

 

“ HSR Act ” means the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended.

 

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“ Indemnity Claim Amount” has the meaning set forth on Schedule F.

 

“Intellectual Property Right” means any intellectual property right, including any trademark, service mark or other source indicator and all goodwill associated therewith, invention, patent, copyright, trade secret, know-how, and any registration or application for registration of any of the foregoing.

 

“ Instrument of Assignment and Assumption ” means the Instrument of Assignment and Assumption in the form attached as Annex B, to be entered into at Closing.

 

“ Investor Certificateholder” has the meaning set forth in the Pooling and Servicing Agreement.

 

“Knowledge” means, with respect to the Sellers, the actual knowledge of the persons named in Section 1.1(a) of the Seller Disclosure Schedules, after reasonable inquiry, with respect to Sellers and, with respect to the Purchaser, the actual knowledge of the persons named in Section 1.1 of the Disclosure Schedules, after reasonable inquiry, with respect to Purchaser.

 

“Liability” means any debt, liability, commitment or obligation, of any kind whatsoever, whether due or to become due, known or unknown, accrued or fixed, absolute or contingent, or otherwise.

 

“Lien” means, with respect to any property, any lien, security interest, mortgage, pledge, charge or encumbrance relating to that property, including the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such property.

 

“Master File” means the master file maintained by the Sellers and the Service Provider with respect to the Accounts, including identification and other customer data and Account information, the names and addresses of Cardholders with respect to the Accounts and any and all adjustments made with respect to the Accounts.

 

“Master Trust” means the Neiman Marcus Group Credit Card Master Trust.

 

“Material Adverse Effect” means:

 

(a) With respect to the Business, a material adverse change in, or a material adverse effect upon, the results of operations or financial condition of the Business, taken as a whole, excluding any effect or change attributable to or resulting from (1) events, conditions or trends in economic, business or financial conditions generally or affecting the credit card services or consumer credit business, the banking or financial services industry or the retail department store industry, (2) financial market conditions, including interest rates or changes therein, (3) changes in laws, GAAP or regulatory accounting principles, (4) any action, omission, change, effect, circumstance or condition contemplated by this Agreement, or attributable to the signing and announcement of this Agreement or the transactions contemplated by this Agreement and the Ancillary Agreements or (5) any actions or omissions required by the terms of this Agreement or the Ancillary Agreements or any action taken or not taken at the request or direction of the other party or parties hereto; and

 

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(b) With respect to the Sellers or the Purchaser, a material impairment of the ability of the relevant Person or Persons to perform its or their material obligations under this Agreement or the Ancillary Agreements.

 

“Merger Agreement” the Agreement and Plan of Merger, dated as of May 1, 2005, as the same may be amended, supplemented or modified from time to time, among Newton Acquisition Inc., Newton Acquisition Merger Sub, Inc. and the Parent.

 

“Merger Closing” means the closing of the Merger contemplated by the Merger Agreement.

 

“Merger Financing Arrangement” the incurrence of indebtedness secured by any or all of the Acquired Assets, the issuance of New Securitization Assets, the transfer of Securitization Assets or New Securitization Assets and/or the payment of dividends in connection with the foregoing, in each case in order to finance all or any portion of the merger consideration and other amounts payable in connection with the Merger Closing.

 

“New Securitization Assets” means any new certificates or interests issued to any Person pursuant to the Securitization Documents in connection with, or securing, any Merger Financing Arrangement.

 

“New Seller” means any direct or indirect wholly-owned Subsidiary of Parent established in connection with any Merger Financing Arrangement that holds some or all of the Securitization Assets or New Securitization Assets.

 

“ NMG Shopper Data ” has the meaning set forth in the Program Agreement.

 

“Non-Card Payment Plan” means the payment plans referred to in Section 1.1(b) of the Seller Disclosure Schedules and such other payment plans not associated with a Credit Card as may be offered by Sellers following the date hereof and prior to the Closing Date pursuant to which the obligor thereunder may purchase goods and services of the Parent and its Subsidiaries and their respective licensees through revolving credit or pursuant to a retail installment sale arrangement.

 

“Permissible Liens” means (a) restrictions or imperfections of title that do not materially detract from the value or impair the use of the Acquired Asset, and (b) Liens (i) for taxes, assessments and other governmental charges or levies (1) not yet due or (2) which are being contested in good faith by appropriate action and as to which adequate reserves for contested amounts have been set aside in accordance with GAAP, (ii) created under the Securitization Documents or (iii) created to secure the obligations arising upon or after the Merger Closing under any Merger Financing Arrangement, provided that such Liens shall be released at or prior to the Closing.

 

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“Person” means any individual, corporation, business trust, partnership, association, limited liability company or similar organization, or any Governmental Authority.

 

“Previously Disclosed” means, with respect to the Sellers or the Purchaser and the Purchaser Parent, information set forth in the Disclosure Schedule with respect to the Sellers or the Purchaser and the Purchaser Parent, respectively, whether in response to an express informational requirement or as an exception to one or more representations or covenants.

 

“Purchase Price” means the purchase price payable in accordance with the Final Closing Statement, as finally determined in accordance with Section 2.4.

 

“Purchaser Parent Guaranty” means the guaranty of the Purchaser Parent in favor of the Sellers, in the form set forth as Annex F.

 

“Purchaser’s Designee” means HSBC Funding (USA) Inc. VIII.

 

“Rating Agency Condition” has the meaning specified in the Pooling and Servicing Agreement.

 

“Requirement of Law” means, with respect to any Person, any law, ordinance, statute, treaty, rule or regulation or determination of an arbitrator or of a Governmental Authority, in each case binding on that Person or any material amount of its property.

 

“Required Amendments and Confirmations” means all amendments to the Securitization Documents (substantially in the form set forth on Annex C, subject to (i) changes required by any rating agency in connection with the transactions contemplated by this Agreement, (ii) changes required to provide for the origination, ownership and contribution to the Master Trust of Non-Card Payment Plan receivables by an Affiliate of Purchaser) and the satisfaction of any applicable Rating Agency Conditions in order to consummate the transactions contemplated hereby and by the Securitization Transfer Agreement without violation of the terms of any Securitization Document and (iii) such other changes as are approved and agreed to by the Sellers and Purchaser to effectuate the consummation of the transactions contemplated by this Agreement.

 

“Requisite Regulatory Approvals” means the consents, registrations, approvals, permits or authorizations designated as such in the Disclosure Schedule of the Sellers with respect to Section 4.1(c) and of the Purchaser with respect to Section 4.2(c) of this Agreement.

 

“Securitization Assets” means the collective reference to (i) the Seller Certificate, as defined in the Securitization Documents, and any other certificate or interest retained by NFC or any other Affiliate of Parent in the Master Trust; (ii) all interests of the Sellers and NFC in the Securitization Bank Accounts; (iii) all interests of the Sellers in and to the Securitization Receivables; and (iv) all other rights and interests of Sellers under each of the Securitization Documents.

 

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“ Securitization Assignment and Assumption ” means the assignment by the Sellers to the Purchaser (or, in the case of the Sellers’ Interest and the Seller Retained Certificates (as defined in the Pooling and Servicing Agreement), the Purchaser’s Designee) of the Sellers’ rights and interests in or relating to, and the assumption by the Purchaser or its designee of the Sellers’ obligations under or relating to, the Master Trust pursuant to the Securitization Transfer Agreement.

 

“Securitization Bank Accounts” means any spread account, reserve account, collection account, principal funding account or other similar accounts created pursuant to the Securitization Documents.

 

“Securitization Documents” means the Pooling and Servicing Agreement and the other documents designated as such on Schedule B.

 

“Securitization Receivables” means, as of any date, the Gross Receivables that have been transferred to the Trust and that have not been reassigned to the relevant seller under the Pooling and Servicing Agreement.

 

“Securitization Transfer Agreements” means the Assignment and Assumption Agreements dated as of the Closing Date among the Sellers, the Purchaser Parent, the Purchaser Designee and the trustee of the Master Trust, substantially in the form attached hereto as Annex D, subject to (i) changes required to provide for the origination, ownership and contribution to the Master Trust of Non-Card Payment Plan receivables by an Affiliate of Purchaser and (ii) such other changes as are approved and agreed to by the Sellers and Purchaser to effectuate the consummation of the transactions contemplated by this Agreement.

 

“Seller Interest” has the meaning assigned to such term in the Pooling and Servicing Agreement.

 

“Sellers” means the Parent, BG and NFC and, if the Closing occurs after the Merger Closing, any New Seller established at the time of the Merger Closing.

 

“Sellers’ Securitization Counsel” means Mayer, Brown, Rowe & Maw LLP.

 

“Service Provider” means PaySys and any other data processing service provider used by the Sellers in connection with the Accounts.

 

“Servicing Agreement” means the Servicing Agreement between NMG and Household Corporation, in the form attached hereto as Annex E.

 

“Subsidiary” when used with respect to any Person, means another Person, an amount of the voting securities, other voting ownership or voting partnership interests of which is sufficient to elect at least a majority of its board of directors or similar governing body (or if there are not such voting interests, more than fifty percent (50%) of the equity interest of which) is owned directly or indirectly by such first Person or by another Subsidiary of such Person.

 

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“Tax Opinion” has the meaning assigned to such term in the Pooling and Servicing Agreement.

 

“Tax Return” means any return, declaration, report or similar statement required to be filed with respect to any Taxes (including any attached schedules) including any information return, claim for refund, amended return and declaration of estimated Tax.

 

“Taxes” means any income, corporate franchise, alternative or add-on minimum tax, gross receipts, sales, use, transfer, gains, ad valorem, franchise, profits, license, withholding, payroll, employment, excise, severance, stamp, occupation, premium, property, environmental or windfall profit tax, custom, duty or other tax, governmental fee or other like assessment or charge, together with any interest or any penalty, addition to tax or additional amount imposed by any Governmental Authority responsible for the imposition of any such tax (domestic or foreign).

 

(b) Each of the following terms is defined in the section of this Agreement set forth opposite such term:

 

 

SECTION 1.2. Interpretation. (a) In this Agreement, unless the context otherwise requires, references to:

 

(1) the Preamble or the Recitals, Sections, Annexes or Schedules refer to the Preamble or a Recital or Section of, or Annex or Schedule to, this Agreement;

 

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(2) any Contract (including this Agreement ) refer to the Contract as amended, modified, supplemented or replaced from time to time;

 

(3) any statute or regulation refer to the statute or regulation as amended, modified, supplemented or replaced from time to time (and, in the case of statutes, include any rules and regulations promulgated under the statute) and to any section of any statute or regulation include any successor to the section;

 

(4) any Governmental Authority include any successor to the Governmental Authority; and

 

(5) this Agreement are to this Agreement and the Schedules to it.

 

(b) The table of contents and headings contained in this Agreement are for reference purposes only and do not limit or otherwise affect any of the provisions of this Agreement.

 

(c) Whenever the word “include,” “includes” or “including” is used in this Agreement, it will be deemed to be followed by the words “without limitation.”

 

(d) This Agreement is the product of negotiation by the parties having the assistance of counsel and other advisers. It is the intention of the parties that this Agreement not be construed more strictly with regard to one party than with regard to the other.

 

ARTICLE II

PURCHASE, SALE AND ASSUMPTION

 

SECTION 2.1. Purchase and Sale of the Acquired Assets . On the terms and subject to the conditions of this Agreement at the time of the Closing and effective from and after the Closing Date, Parent and BG shall, and shall cause NFC to, sell, convey and assign (or cause their Subsidiaries to sell, convey and assign) to the Purchaser or its designee, free and clear of all Liens, except Permissible Liens, the Acquired Assets, and the Purchaser or its designee shall purchase the Acquired Assets.

 

SECTION 2.2. Assumption of Liabilities. On the terms and subject to the conditions of this Agreement, at the Closing and effective from and after the Closing Date the Purchaser or (without limiting the Purchaser’s and Purchaser Parent’s obligations under Article IX) the Purchaser’s designee shall assume, pay, defend, discharge and perform as and when due the Assumed Liabilities.

 

SECTION 2.3. Excluded Liabilities . Notwithstanding any provision in this Agreement or any other writing to the contrary, the Purchaser is assuming only the Assumed Liabilities and not any Excluded Liabilities. The Excluded Liabilities shall be retained by the Sellers.

 

SECTION 2.4. Purchase Price; Purchase Price Adjustment . (a) On the second Business Day before the Closing, the Parent, on behalf of the Sellers, shall deliver to the Purchaser the Estimated Closing Statement reflecting the Sellers’ calculation of the Estimated Purchase Price to be paid by the Purchaser at the Closing.

 

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(b) Within sixty (60) Business Days after the Closing, the Parent, on behalf of the Sellers, shall deliver to the Purchaser the Final Closing Statement prepared based on the information in the Master File as of the Cut-Off Time and copies of the Master File as of the Cut-Off Time.

 

(c) The Purchaser shall, within thirty (30) days after receipt of the Final Closing Statement, advise the Sellers in writing and in reasonable detail if it believes that the Final Closing Statement did not accurately reflect the items required to be included therein in accordance with the provisions of this Agreement and Schedule B hereto, in each case stating in reasonable detail the basis of its belief. In the event the Purchaser delivers such an objection, the Sellers and the Purchaser shall attempt in good faith to resolve their differences. In the event all differences are not resolved within forty-five (45) days following receipt of the Final Closing Statement by the Purchaser, then the issues remaining unresolved shall be determined by PricewaterhouseCoopers LLP (the “ Accountant ”). The Accountant shall resolve all disputed items in accordance with the provisions of this Agreement. In making its determination, the Accountant may only consider those items and amounts as to which the Purchaser and the Sellers have disagreed within the time periods and on the grounds specified. The Accountant’s determination shall be conclusive and binding on the Purchaser and the Sellers absent manifest error. The fees of the Accountant shall be shared by the Purchaser and the Sellers in proportion to the relative differences between their respective calculations of the Purchase Price and the amount determined by the Accountant.

 

(d) If the Estimated Purchase Price exceeds the Purchase Price, then the Parent, on behalf of the Sellers, shall, within five (5) Business Days after the Purchase Price has been finally determined pursuant to Section 2.4(c), pay such excess to the Purchaser, together with interest on such excess for the period from and including the Closing Date to but excluding the date of such payment at a rate per annum equal to the Federal Funds Rate. If the Estimated Purchase Price is less than the Purchase Price, then the Purchaser shall, within five (5) Business Days after the Purchase Price has been finally determined pursuant to Section 2.4(c), pay such deficiency to the Parent, on behalf of the Sellers, together with interest on such deficiency for the period from and including the Closing Date to but excluding the date of such payment at a rate per annum equal to the Federal Funds Rate.

 

(e) Each party to this Agreement shall make available to the other parties, and to the Accountant, its and its accountant’s work papers, schedules and other supporting data as may be reasonably requested by such other parties to enable them to verify the amounts set forth in the Final Closing Statement.

 

ARTICLE III

CLOSING; ASSIGNMENT

 

SECTION 3.1. The Closing . (a) The closing (the “Closing” ) of the purchase and sale of the Acquired Assets and assumption of the Assumed Liabilities hereunder

 

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(collectively, the “Purchase and Assumption” ) shall, subject to Section 10.5, take place at the offices of Simpson Thacher & Bartlett LLP, 425 Lexington Avenue, New York, New York, on the second Business Day after the last of the conditions set forth in Sections 7.1, 7.2 and 7.3 (other than conditions relating solely to the delivery of documents to be dated the Closing Date) has been satisfied or waived in accordance with the terms of this Agreement or at such other date or location as the parties hereto jointly designate in writing (the “Closing Date” ).

 

(b) At the Closing, the Purchaser and Purchaser Parent shall, and the Parent shall and shall cause the Sellers and the Trustee to, deliver or cause to be delivered to each other instruments of sale, assignment, transfer, amendment and conveyance of the Acquired Assets and the Assumed Liabilities, respectively, in substantially the forms set forth in Annexes C and D, as appropriate, appropriately executed by the Sellers, the Trustee, the Purchaser and the Purchaser Parent.

 

(c) At the Closing, the Purchaser shall pay the Estimated Purchase Price by wire transfer of immediately available funds (in U.S. dollars) prior to 11:00 a.m. Eastern time on the Closing Date to an account or accounts specified by the Parent at least one Business Day prior to the Closing Date.

 

(d) In the event that the Closing occurs after the Merger Closing, the Purchaser shall pay the Estimated Purchase Price by wire transfer of immediately available funds (in U.S. dollars) prior to 11:00 am Eastern time on the Closing Date to the Escrow Agent. Upon receipt by the Escrow Agent of a certificate from the Parent to the effect that the Estimated Purchase Price, together with any additional funds made available by the Parent or its Affiliates at Closing, is sufficient to cause Sections 7.2(f) and (g) to be satisfied upon release of all or a portion of the Estimated Purchase Price to the Parent or a third party designated by the Parent, including to any lender or agent acting on behalf of the lenders under the terms of any Merger Financing Arrangement, the Escrow Agent shall release the Estimated Purchase Price to the Parent and/or such third party designated by the Parent.

 

ARTICLE IV

REPRESENTATIONS OF THE PARTIES

 

SECTION 4.1. Representations of the Parent . Except as Previously Disclosed, the Parent represents to the Purchaser as follows:

 

(a) Existence and Authority . Each Seller is duly organized and validly existing under its jurisdiction of organization. Each Seller has the requisite power and authority to own the Acquired Assets and to carry on the Business as currently conducted, and is duly qualified to do business in each jurisdiction where the ownership or operation of the Acquired Assets or the conduct of the Business requires such qualification, except for any failure to have such authority or be so qualified that would not reasonably be expected to have a Material Adverse Effect on the Business or the Sellers.

 

(b) Authorization and Validity . Each Seller has the requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement (if applicable) and each of the Ancillary Agreements to which it is a party. Each of this

 

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Agreement and each Ancillary Agreement has been duly authorized by each Seller party thereto by all necessary corporate action. This Agreement has been duly executed and delivered by each Seller party hereto and each Ancillary Agreement has been, or shall have been at the Closing Date, duly executed and delivered by each Seller party thereto. Assuming that this Agreement has been, and that the Ancillary Agreements have been or shall be on or prior to the Closing Date duly authorized, executed and delivered by the Purchaser, this Agreement is, and the Ancillary Agreements are or shall be at the Closing Date, the legal, valid and binding obligations of the Sellers party hereto and thereto, enforceable against such Sellers in accordance with their respective terms, subject to applicable bankruptcy, insolvency, moratorium, reorganization, fraudulent transfer and other laws affecting creditors’ rights generally and to general equitable principles.

 

(c) Governmental and Third-Party Consents . No notices, reports or other filings are required to be made by the Sellers with, nor are any consents, registrations, approvals, permits or authorizations required to be obtained by the Sellers from, any Governmental Authority or any other third party in connection with the execution, delivery or performance of this Agreement and the Ancillary Agreements by the Sellers or the consummation by them of the transactions contemplated by this Agreement or the Ancillary Agreements, except for the Requisite Regulatory Approvals and the other Previously Disclosed regulatory and third party approvals and for such other notices, reports, filings, consents, registrations, approvals, permits or authorizations the failure to obtain which would not reasonably be expected to have a Material Adverse Effect on the Business or the Sellers.

 

(d) No Conflicts . The execution, delivery and performance by the applicable Sellers of this Agreement and the Ancillary Agreements do not, and (subject to obtaining the Requisite Regulatory Approvals and other Previously Disclosed governmental and third-party consents, registrations, approvals, permits and authorizations referred to in Section 4.1(c)) the consummation of the transactions contemplated by this Agreement and the Ancillary Agreements will not:

 

(1) breach or violate the Constituent Documents of the Sellers;

 

(2) breach or violate any Requirement of Law or Applicable Order applicable to the Sellers;

 

(3) breach, violate or result in a default under the terms, conditions or provisions of any Contract of any of the Sellers, or give any third party the right to terminate or cancel any right of any of the Sellers under any Contract of such Seller, or accelerate the performance of its obligations thereunder, in each case where such Contract relates to the Business or is binding upon the Acquired Assets; or

 

(4) result in the creation of any Lien on any Acquired Asset other than a Permissible Lien (with or without the giving of notice or the lapse of time, or both);

 

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except in each case described in clause (2), (3) or (4), for any breach, violation, default, termination, cancellation, acceleration or Lien that would not reasonably be expected to have a Material Adverse Effect on the Business or the Sellers.

 

(e) Absence of Certain Changes . Since January 29, 2005, the Business has been conducted in the ordinary course and there has not been any change in the financial condition or results of operations of the Business that has had or would reasonably be expected to have a Material Adverse Effect on the Business or the Sellers.

 

(f) Title to Properties; Encumbrances . A Seller has good title to or a valid leasehold interest in, or is licensed or otherwise entitled to use, all of the Acquired Assets (other than the Accounts, to which Section 4.1(j) is applicable), free and clear of all Liens other than Permissible Liens.

 

(g) Litigation . There are no actions, suits, proceedings or claims pending in arbitration or before any Governmental Authority, against the Sellers in connection with the Business or any Acquired Asset, or to the Sellers’ Knowledge, threatened against any of the Sellers with respect to the Business or Acquired Assets, in each case that would reasonably be expected to have a Material Adverse Effect on the Business or the Sellers.

 

(h) Books and Records . All Books and Records of the Sellers have been maintained accurately and in accordance with all Requirements of Law applicable to the Sellers and the Business, except for any instances of inaccuracy or noncompliance that would not reasonably be expected to have a Material Adverse Effect on the Business or the Sellers.

 

(i) Compliance with Laws . Except to the extent that any of the following would not reasonably be expected to have a Material Adverse Effect on the Business or the Sellers, the Sellers are in compliance with all Requirements of Law relating to the Business and the Acquired Assets.

 

(j) Accounts . Except to the extent that any of the following would not reasonably be expected to have a Material Adverse Effect on the Business or the Sellers:

 

(1) A Seller is the sole owner of and has good title to the Accounts, the Gross Receivables and the Securitization Assets (subject in each case to Permissible Liens). This Agreement shall, following the Closing Date, and subject to the filing of appropriate financing statements and all required continuations, amendments and replacements thereof, vest in the Purchaser all right, title and interest of the Sellers in and to the Accounts, the Gross Receivables and the Securitization Assets, free and clear of all